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AGREEMENT TO FACILITATE MERGER
THIS AGREEMENT TO FACILITATE MERGER (this "Agreement") is dated as of
January 31, 2000, by and among THE KING MANAGEMENT CORPORATION, a Minnesota
corporation ("King Management"), XXXXX X. XXXX ("Xxxx"), XXXXXXX X. XXXXXXX
("Xxxxxxx"), as trustee under each of the XXXXXXX X. XXXX STOCK TRUST UA DATED
NOVEMBER 21, 1989 FOR THE BENEFIT OF XXXXXXX X. XXXX (the "WBK Trust") and the
XXXXXXX X. XXXX STOCK TRUST UA DATED NOVEMBER 11, 1989 FOR THE BENEFIT OF
XXXXXXX X. XXXX (the "RSK Trust") (King Management, King, Higgins, the WBK Trust
and the RSK Trust are collectively referred to as the "Sunrise Shareholders" and
each individually as a "Sunrise Shareholder"), and XXXXXXX X. XXXXXXX, as sole
trustee under each of the SEPARATE TRUST FOR THE BENEFIT OF XXXXXXX X. XXXX UA
DATED APRIL 28, 1995 (the "WBK Separate Trust"), the SEPARATE TRUST FOR THE
BENEFIT OF XXXXXXX X. XXXX UA DATED APRIL 28, 1995 (the "RSK Separate Trust"),
the GST TRUST FOR THE BENEFIT OF XXXXXXX X. XXXX UA DATED APRIL 28, 1995 (the
"WBK GST Trust") and the GST TRUST FOR THE BENEFIT OF XXXXXXX X. XXXX UA DATED
APRIL 28, 1995 (the "RSK GST Trust") (the Sunrise Shareholders and the WBK
Separate Trust, the RSK Separate Trust, the WBK GST Trust and the RSK GST Trust
are collectively referred to as the "Shareholders" and each individually as a
"Shareholder").
A. The Sunrise Shareholders are the legal or beneficial owners of
approximately 3,802,126 shares, representing approximately 57.3%, of the common
stock, par value $.01 per share ("Sunrise Common Stock"), of Sunrise
International Leasing Corporation, a Delaware corporation ("Sunrise"), and
options to acquire an aggregate of 916,506 shares of Sunrise Common Stock held
by King which are fully exercisable ("Sunrise Options").
X. Xxxx Management and Sunrise intend to enter into an Agreement and
Plan of Merger ("Merger Agreement") of even date herewith pursuant to which
Sunrise will merge with and into King Management (the "Merger") upon the terms
and subject to the conditions set forth in the Merger Agreement, and as a
result, at the effective time of the Merger all of the outstanding shares of
Sunrise Common Stock held by the shareholders of Sunrise (other than King
Management or any of its direct or indirect subsidiaries) will convert into the
right to receive $5.25 per share.
C. Prior to the Effective Time of the Merger, the Shareholders desire
to reorganize their common stock ownership of Sunrise and King Management
pursuant to the terms and subject to the conditions set forth in this Agreement
in order to (i) create a new holding company that would hold all of the
outstanding common stock of King Management, and (ii) in the case of all of the
Sunrise Shareholders (other than King Management) eliminate their Sunrise Common
Stock ownership and options to acquire shares of Sunrise Common Stock (the
"Reorganization").
D. It is understood and acknowledged by the Shareholders that the
execution of the Merger Agreement by Sunrise and King Management is being done
in reliance, in part, upon the prior or contemporaneous execution and delivery
of this Agreement, that both Sunrise and King Management will incur substantial
expenses proceeding towards consummation of the Merger as contemplated by the
Merger Agreement, and that such expenses will be undertaken, in part, in
reliance upon and as a result of the agreements and undertakings of the
Shareholders set forth herein.
E. Capitalized terms used herein and not defined will have the meanings
ascribed thereto in the Merger Agreement.
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In consideration of the foregoing, and in order to induce King
Management to execute the Merger Agreement and to proceed as contemplated by the
Merger Agreement toward the consummation of the Merger, and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Reorganization. Between the date hereof and the Effective Time of
the Merger (the "Reorganization Period"), each Shareholder agrees to perform, or
to take any and all actions necessary to ensure the performance of, all of the
actions set forth in this Section 1 in order to accomplish the Reorganization;
provided, however, that if the Merger Agreement terminates in accordance with
its terms prior to the completion of the actions set forth in this Section 1,
the Shareholders will have no further obligation to comply with this Section 1
and all actions taken by any of the Shareholders prior to such termination will
be null and void or will be reversed to the extent reasonably practicable and
necessary:
(a) Formation of the Parent. The Shareholders will cause to be
formed a new Minnesota corporation (the "Parent"). The Parent will
initially have 1,000,000 common shares authorized ("Parent Common
Stock").
(b) Contribution of King Management Shares to the Parent. Following
the completion of the formation of the Parent, the Shareholders (other
than King Management) will contribute all of their outstanding shares
of common stock of King Management (the "KM Common Stock") owned by
such Shareholders to the Parent in exchange for an equal number of
shares of Parent Common Stock. As a result of this exchange, the Parent
will be owned by the Shareholders (other than King Management) in
proportion to their respective ownership in King Management and all of
the outstanding shares of common stock of King Management will be owned
one hundred percent (100%) by the Parent, such that King Management
will become a wholly-owned subsidiary of the Parent.
(c) Contribution of Sunrise Shares to King Management.
Simultaneously with the completion of the formation of the Parent and
the contribution of KM Common Stock thereto, the Sunrise Shareholders
(other than King Management) will contribute all of their outstanding
shares of Sunrise Common Stock owned by such Sunrise Shareholders to
the Parent in exchange for shares of Parent Common Stock. The number of
shares of Parent Common Stock issued to such Sunrise Shareholders in
exchange for their respective contributions of shares of Sunrise Common
Stock will be based on the relative values of the shares of Sunrise
Common Stock and Parent Common Stock at that time, as determined in
good faith by the Board of Directors of the Parent. Thereafter, the
Parent will contribute all of the shares of Sunrise Common Stock
received from such Sunrise Shareholders to King Management.
(d) Sunrise Options. Any outstanding vested options to purchase
shares of Sunrise Common Stock granted under the Sunrise 1991 Stock
Option Plan (the "Option Plan") and held by any of the Sunrise
Shareholders at the Effective Time of the Merger will be cancelled upon
the Effective Time of the Merger as provided in the Merger Agreement,
and such Sunrise Shareholders will be entitled to receive, in
cancellation and settlement thereof, the Option Consideration pursuant
to the terms of the Merger Agreement. Any outstanding vested options to
purchase shares of Sunrise Common Stock that were not granted under the
Option Plan (the "Non-Plan Options") and are held by any of the Sunrise
Shareholders at the Effective Time of the Merger will be cancelled upon
the Effective Time of the Merger as provided in the Merger Agreement,
and such Sunrise Shareholders will be entitled to receive, in
cancellation and settlement thereof, options to purchase shares of
Parent Common Stock (the "Parent Options") under the same terms and
conditions as the Non-Plan Options. The number of shares of Parent
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Common Stock and the exercise price per share for each Parent Option
will be determined based on the relative values of the shares of
Sunrise Common Stock and Parent Common Stock at the Effective Time of
the Merger, as determined in good faith by the Board of Directors of
the Parent.
(e) No Right to Receive Merger Consideration. As a result of the
actions performed pursuant to Sections 1(c) and (d) above, the Sunrise
Shareholders at the Effective Time of the Merger will have no share
ownership, or right to receive any shares of capital stock, of Sunrise,
and will therefore have no right to receive any Merger Consideration
paid pursuant to the terms of the Merger Agreement.
(f) Appointment of Proxy. The Shareholders hereby irrevocably
appoint Xxxxx X. Xxxx, during the Reorganization Period, as proxy for
and on behalf of the Shareholders to perform the matters in the manner
contemplated by this Section 1.
2. Vote in Favor of Merger. During the period commencing on the date
hereof and terminating upon the earlier of the Effective Time of the Merger and
the termination of the Merger Agreement in accordance with its terms, each
Sunrise Shareholder, in his, her or its capacity as a shareholder of Sunrise or
as a representative with the authority to vote shares of Sunrise Common Stock,
agrees to vote (or cause to be voted) (a) all shares of Sunrise Common Stock
presently owned by such Sunrise Shareholder or for which such Sunrise
Shareholder has voting power, (b) all shares of Sunrise Common Stock issued upon
the exercise of Sunrise Options from and after the date of this Agreement, and
(c) all shares of Sunrise Common Stock with respect to which such Sunrise
Shareholder acquires ownership or voting power (whether by purchase or
otherwise) from and after the date of this Agreement, at any meeting of the
shareholders of the Sunrise (or any adjournment thereof), and in any action by
written consent of the shareholders of Sunrise, (i) in favor of the approval,
consent, and ratification of the Merger Agreement, the Merger and the
transactions contemplated thereby, and (ii) against any Acquisition Proposal,
any amendment of the Sunrise's Certificate of Incorporation or Bylaws or other
proposal or transaction involving Sunrise which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement and any action that would result in any breach of a
representation, warranty covenant or agreement of the Sunrise Shareholders or
Sunrise under the Merger Agreement. To the extent inconsistent with the
foregoing provisions of this Section 2, each Sunrise Shareholder hereby revokes
any and all prior powers of attorney, proxies and consents given by such Sunrise
Shareholder with respect to any shares of Sunrise Common Stock that such Sunrise
Shareholder owns or has the right to vote. Nothing in this Agreement will be
deemed to restrict or limit each Sunrise Shareholder's right to act in his, her
or its capacity as an officer or director of Sunrise consistent with his, her or
its fiduciary obligations in such capacity as permitted under the Merger
Agreement.
3. Appraisal Rights. In connection with the Merger, to the extent
permitted by law, each Sunrise Shareholder agrees to waive and not exercise any
rights to appraisal such Sunrise Shareholder may have with respect to any shares
of Sunrise Common Stock owned (of record or beneficially) by the Sunrise
Shareholder pursuant to Section 262 of the Delaware General Corporation Law.
4. No Sale of Sunrise or KM Common Stock. Except as otherwise provided
in Section 1 of this Agreement, during the period commencing on the date hereof
and terminating upon the earlier of the Effective Time of the Merger or the
termination of the Merger Agreement in accordance with its terms, each
Shareholder agrees not to make any sales, gifts, transfers, pledges, or other
dispositions of Sunrise Common Stock (including any shares of Sunrise Common
Stock issued upon the exercise of Sunrise Options) or KM Common Stock, deposit
any Sunrise Common Stock (including any shares of Sunrise Common Stock issued
upon the exercise of Sunrise Options) or KM Common Stock into a voting trust or
enter into any voting agreement or arrangement with respect thereto, or enter
into any contract, option or
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other arrangement or undertaking with respect to the direct or indirect
acquisition, sale, assignment transfer or other disposition of Sunrise Common
Stock (including any shares of Sunrise Common Stock issued upon the exercise of
Sunrise Options) or KM Common Stock, without first making any such transferee,
assignee or pledgee fully aware of the obligations under this Agreement and
obtaining such transferee's or pledgee's written agreement to comply with the
terms hereof.
5. Representations and Warranties of Shareholders. Each Shareholder
represents and warrants to each other that such Shareholder has the legal
capacity to enter into and perform all of such Shareholder's obligations under
this Agreement without the consent or approval of any other person. If this
Agreement is being executed in a representative or fiduciary capacity, the
person signing this Agreement has the full power and authority to enter into and
perform such agreement. Each Shareholder is the sole, true, lawful and
beneficial or record owner of the number of Sunrise Common Stock and Sunrise
Options, as applicable, set forth next to such Shareholder's name on the
signature page hereof and there are no restrictions on such Shareholder's voting
rights or rights to disposition pertaining thereto. None of the Shareholders'
shares of Sunrise Common Stock (including any shares of Sunrise Common Stock
issued upon the exercise of Sunrise Options) or KM Common Stock are subject to
any voting trust or other agreement (other than this Agreement, the Voting Trust
Agreement dated as of May 27, 1998 among the Sunrise Shareholders and the Voting
Trust Agreement dated as of March 1, 1996 among the Shareholders) or arrangement
with respect to the voting of such shares. The execution, delivery, and
performance of this Agreement by each Shareholder will not violate any other
agreement to which such Shareholder is a party, including, without limitation,
any voting agreement, shareholders agreement, or voting trust. This Agreement
has been duly executed and delivered by each Shareholder and constitutes a
legal, valid, and binding agreement of such Shareholder, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws, now or hereafter in effect.
6. Miscellaneous.
(a) Successors and Assigns; Benefit. This Agreement will be binding
upon any permitted purchasers, donees, pledgees, and other transferees
of Sunrise Common Stock legally or beneficially owned by Shareholder.
Nothing in this Agreement, expressed or implied, will be construed to
give any person other than the parties hereto any legal or equitable
right, remedy, or claim under or by reason of this Agreement or any
provision contained herein, except that Sunrise will be a third-party
beneficiary of Section 2 of this Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement is not
performed according to the terms hereof and that the parties will be
entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
(c) Enforceability. If any provision of this Agreement will be
invalid or unenforceable under applicable law, such provisions will be
ineffective only to the extent of such invalidity or unenforceability,
without in any way affecting the remaining provisions of this
Agreement.
(d) Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original and all of
which together will constitute one and the same document.
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(f) Further Assurances. Consistent with or subject to the fiduciary
duty of the Shareholder in his, her or its capacity as a director of
Sunrise, each Shareholder will execute and deliver such additional
documents and take such further action as may be necessary or desirable
to consummate the transactions contemplated by this Agreement.
(g) Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of Minnesota (without giving
effect to the principles of conflicts of laws thereof) applicable to
contracts made and to be performed therein.
(h) Jurisdiction and Venue. The parties agree that any proceeding
relating to this Agreement will be brought in a court of Minnesota.
Each of the parties consents to personal jurisdiction in any such
action brought in any such Minnesota court, consents to service of
process by registered mail made upon such party and such party's agent,
and waives any objection to venue in any such Minnesota court or to any
claim that any such Minnesota court is an inconvenient forum.
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The Shareholders have caused this Agreement to Facilitate Merger to be
executed as of the date and year first above written.
400,818 shares of Sunrise Common Stock THE KING MANAGEMENT CORPORATION
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Chief Executive Officer
/s/ Xxxxx X. Xxxx
517,158 shares of Sunrise Common Stock ------------------------------------
8,361.3762 shares of KM Common Stock Xxxxx X. Xxxx
916,506 of Sunrise Options
1,621,768 shares of Sunrise Common Stock THE XXXXXXX X. XXXX STOCK TRUST UA
3,119.7611 shares of KM Common Stock DATED NOVEMBER 21, 1989 FOR THE
BENEFIT OF XXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Co-Trustee
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Co-Trustee
1,262,382 shares of Sunrise Common Stock THE XXXXXXX X. XXXX STOCK TRUST UA
3,759.8142 shares of KM Common Stock DATED NOVEMBER 11, 1989 FOR THE
BENEFIT OF XXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Co-Trustee
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Co-Trustee
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1,195.01985 shares of KM Common Stock THE SEPARATE TRUST FOR THE BENEFIT OF
XXXXXXX X. XXXX UA DATED APRIL 28, 1995
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Trustee
554.96675 shares of KM Common Stock THE SEPARATE TRUST FOR THE BENEFIT OF
XXXXXXX X. XXXX UA DATED APRIL 28, 1995
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Trustee
136.7839 shares of KM Common Stock THE GST TRUST FOR THE BENEFIT OF
XXXXXXX X. XXXX UA DATED APRIL 28, 1995
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Trustee
136.7839 shares of KM Common Stock THE GST TRUST FOR THE BENEFIT OF
XXXXXXX X. XXXX UA DATED APRIL 28, 1995
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Trustee
17,264.5059 shares of KM Common Stock VOTING TRUST UA DATED MARCH 1, 1996
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Sole Voting Trustee
3,466,797 shares of Sunrise Common Stock VOTING TRUST UA DATED MAY 27, 1998
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Sole Voting Trustee
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