NONQUALIFIED STOCK OPTION AGREEMENT

                             SUNRISE RESOURCES, INC.


     THIS AGREEMENT is made  effective as of this 18th day of June,  1997 by and
between Sunrise  Resources,  Inc. a Minnesota  corporation (the "Company"),  and
Peter J. King ("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
the Company and as an officer and employee;

     WHEREAS,  in consideration  of Optionees past services to the Company,  the
reliance of his  continuing  to serve the Company in his capacity as Chairman of
the Board and his providing  certain services set forth in an agreement  between
the  Company  and Peter King and the King  Management  Corporation,  the Company
wishes to grant a  non-qualified  incentive 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 is $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 on 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  442, or any  successor  provision,  of the  Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder.

     2. Duration and Exercisability.

     a. Except as otherwise  provided in Paragraph  2(d) below,  the term during
which this Option may be exercised shall terminate on June 18, 2002.  Unless any
of the  events set forth in  Paragraph  2(c)  occur,  this  Option  shall not be
exercisable  until  June  18,  2001,  at  which  time the  Option  shall  become
exercisable  to the extent of one hundred  percent (100%) of the total number of
shares  granted if Optionee  meets the  conditions of Paragraph  2(d).  Once the
Option becomes  exercisable  to the extent of one hundred  percent (100%) of the
aggregate number of shares specified in Paragraph 1 above, 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 in addition to
those Optionee is otherwise entitled to purchase.
<PAGE>

     b. During the lifetime of Optionee,  this 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.  Notwithstanding  the  provisions of Paragraph  2(a) above,  this Option
shall become immediately exercisable in full on June 18, 1999, if there has been
no  interruption  of the  Company's  ability  to obtain  funding  for its vendor
programs  through  King  Management  or  through  conventional  sources.  If the
financial affairs of the Company improve to a point where the Board of Directors
determines  that Optionee's and King  Management's  commitment (as defined in an
agreement  between  Optionee  and the Company  dated June 16, 1997) is no longer
required,  this  Option  shall  become  immediately  exercisable  in full on the
earlier  of  June  18,  1999,  and  the  date  of  such  determination.  If  the
exercisability  of this Option is accelerated  under this Paragraph  2(c),  this
Option  may  thereafter  be  exercised  by  Optionee  at any  time  prior to the
expiration of the option term by Optionee;  provided,  however, that if Optionee
becomes totally  disabled or dies prior to exercising  this Option,  this Option
may be  exercised  at any time  prior to June 18,  2002,  or within  180 days of
Optionee's  death  or  total  disability,  whichever  is  later,  by  Optionee's
guardian,  personal  representative  or his estate. To the extent this Option is
not exercised  prior to expiration or within such 180-day  period,  whichever is
applicable, all rights under this Option shall be forfeited.

     d. If the exercisability of this Option does not accelerate under Paragraph
2(c) above, this Option will become immediately  exercisable in full on June 18,
2001, if on such date  Optionee  continues to serve as the Chairman of the Board
and as an officer and  employee of the  Company.  If  Optionee  becomes  totally
disabled or dies after June 18, 2001,  and has not exercised  this Option,  this
Option may be exercised  at any time prior to June 18, 2002,  or within 180 days
after  Optionee's death or total  disability,  whichever is later, by Optionee's
guardian,  personal  representative  or his estate. To the extent this Option is
not exercised  prior to expiration or within such 180-day  period,  whichever is
applicable, all rights under this Option shall be forfeited.

     3. Manner of Exercise.

     a. This Option may be exercised  only by Optionee (or other proper party in
the event of death or disability) 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.
<PAGE>

     b. Payment of the Option price by Optionee shall be in the form of cash, or
check 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).
<PAGE>

     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 herein.


     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/ Thomas R. King
                                Thomas R. King

                                /s/ Donald R. Brattain
                                Donald R. Brattain


                                OPTIONEE:


                                /s/ Peter J. King
                                Peter J. King