NONQUALIFIED STOCK OPTION AGREEMENT
SUNRISE RESOURCES, INC.
THIS AGREEMENT is made effective as of the 18th day of June 1997 by and
between Sunrise Resources, Inc., a Minnesota corporation (the "Company"), and
Xxxxx X. Xxxx ("Optionee").
W I T N E S S E T H:
WHEREAS, Optionee on the date hereof serves as the Chairman of the Board of
Directors ("Chairman") and as an officer and director of the Company;
WHEREAS, in consideration of Optionee's past services to the Company and
his agreeing to serve the Company in his capacity as Chairman, the Company
wishes to grant a non-qualified stock option to Optionee to purchase shares of
the Company's Common Stock; and
WHEREAS, the Company's Board of Directors has authorized the grant of a
non-qualified stock option to Optionee and has determined that, as of the
effective date of this Agreement, the fair market value of the Company's Common
Stock was $3.375 per share;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee as of the date
set forth above (the "Date of Grant"), the right and option (the "Option") to
purchase all or portions of an aggregate of Two Hundred Seventy Thousand Seven
Hundred Fifty-three (270,753) shares of Common Stock at a per share price of
$3.375, on the terms and conditions set forth herein, which the Company deems to
be the fair market value of the stock as of June 18, 1997. This Option is a
nonqualified stock option and will not be treated as an incentive stock option,
as defined under Section 422, or any successor provision, of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder.
2. Duration and Exercisability.
a. The term during which this Option may be exercised shall terminate on
June 18, 2002, unless terminated earlier under the provisions of Paragraphs 2(c)
or 2(d) below. This Option shall be immediately exercisable in full. Optionee
may continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If Optionee
does not purchase upon an exercise of this Option the full number of shares
which Optionee is then entitled to purchase, Optionee may purchase upon any
subsequent exercise prior to this Option's termination such previously
unpurchased shares.
b. During the lifetime of Optionee, the Option shall be exercisable only by
Optionee or by Optionee's guardian or other legal representative, and shall not
be assignable or transferable by Optionee, in whole or in part, other than by
will or by the laws of descent and distribution. If Optionee attempts to
transfer any part of this Option during his lifetime, such transfer shall be
void and this Option shall, to the extent not fully exercised, terminate.
c. If Optionee dies while in the employ of the Company, this Option must be
exercised within twelve months following his death by his personal
representative or the person or persons to whom Optionee's rights have passed by
his will or by the laws of descent and distribution. To the extent this Option
is not exercised within the one-year period following his death, all rights
under this Option shall be forfeited.
d. If Optionee ceases to be an employee of the Company due to his total
disability, this Option must be exercised by Optionee or his duly-appointed
guardian within twelve months following his termination of employment. To the
extent Optionee or his duly-appointed guardian does not exercise this Option
within the one-year period, all rights under this Option shall be forfeited.
3. Manner of Exercise
a. The Option may be exercised only by Optionee (or other proper party in
the event of Optionee's death or incapacity) by delivering within the option
period written notice of exercise to the Company at its principal office. The
notice shall state the number of shares as to which the Option is being
exercised and shall be accompanied by payment in full of the option price for
all shares designated in the notice. The exercise of the Option shall be deemed
effective upon receipt of such notice by the Company and the appropriate payment
that complies with the terms of this Agreement. The Option may be exercised with
respect to any number or all of the shares as to which it can then be exercised
and, if partially exercised, may be so exercised as to the unexercised shares
any number of times during the Option period as provided herein.
b. Payment of the option price by Optionee shall be in the form of cash,
personal check or previously acquired shares of Common Stock of the Company, or
any combination thereof; provided, however, that the Board may, in its sole
discretion, limit the form of payment to cash or personal check and may exercise
its discretion any time prior to the termination of this Option or upon any
exercise of this Option by Optionee. Any stock so tendered as part of such
payment shall be valued at its fair market value. As soon as practicable after
the effective exercise of all or any part of the Option, Optionee shall be
recorded on the stock transfer books of the Company as the owner of the shares
purchased, and the Company shall deliver to Optionee one or more duly issued
stock certificates evidencing such ownership. For purposes of this Agreement,
"previously acquired shares of Common Stock" shall include shares of Common
Stock that are already owned by Optionee at the time of exercise.
4. Miscellaneous.
a. This Agreement shall not confer on Optionee any right with respect to
continuance of employment by the Company or service as Chairman nor will it
interfere in any way with the right of the Company to terminate such employment.
Optionee shall have no rights as a shareholder with respect to shares subject to
this Option until such shares have been issued to Optionee upon exercise of this
Option.
b. Optionee agrees that, if an acquisition of the Company through the sale
of substantially all of the Company's assets and the consequent discontinuance
of its business or through a merger, consolidation, exchange, reorganization,
reclassification, extraordinary dividend, divestiture or liquidation of the
Company is treated as a "pooling of interests" under generally accepted
accounting principles and Optionee is an "affiliate" of the Company or any
Subsidiary (as defined in applicable legal and accounting principles) at the
time of such change of control transaction, Optionee will comply with all
requirements of Rule 145 of the Securities Act of 1933, as amended, and the
requirements of such other legal or accounting principles, and will execute any
documents necessary to ensure such compliance.
c. The Administrator may require that the certificates for any shares of
Common Stock purchased by Optionee (or, in the case of death, Optionee's
successors) shall bear an appropriate legend to reflect the fact that the shares
are not freely tradeable.
d. Certain changes in the number or character of the Common Stock of the
Company (through sale, merger, consolidation, exchange, reorganization,
divestiture (including a spin-off), liquidation, recapitalization, stock split,
stock dividend or otherwise) shall result in an appropriate adjustment,
reduction or enlargement by the Board of Directors, to reflect any such changes,
in Optionee's rights with respect to any unexercised portion of the Option
(i.e., Optionee shall have such "anti-dilution" rights under the Option with
respect to such events, but shall not have "preemptive" rights).
e. The Company shall at all times during the option term reserve and keep
available such number of shares as will be sufficient to satisfy the
requirements of this Agreement.
f. The Company may take such action as it deems appropriate to insure that
all applicable federal and state payroll, income or other taxes are withheld
from any amounts payable by the Company to Optionee. If the Company is unable to
withhold such federal and state taxes, for whatever reason, Optionee hereby
agrees to pay to the Company an amount equal to the amount the Company would
otherwise be required to withhold under federal or state law. Optionee may,
subject to the approval and discretion of the Board of Directors or such other
administrative rules it may deem advisable, elect to have all or a portion of
such tax withholding obligations satisfied by delivering shares of the Company's
Common Stock having a fair market value equal to such obligations.
g. At the request of the Optionee, the Company agrees that it will register
the Option and the underlying shares of Common Stock with the Securities and
Exchange Commission on a Form S-8 Registration Statement, or any successor
registration statement.
h. This Agreement shall bind and inure to the benefit of the Company and
its successors and assigns and Optionee and any successor or successors of
Optionee permitted by Paragraphs 2(c) and 2(d) above.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
SUNRISE RESOURCES, INC.
By Special Committee of the Board of Directors
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
OPTIONEE:
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
