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
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
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.
<PAGE>

     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.
<PAGE>

     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.
<PAGE>

     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/ Thomas R. King
                                 Thomas R. King


                                 /s/ Donald R. Brattain
                                 Donald R. Brattain


                                 OPTIONEE:


                                 /s/ Peter J. King
                                 Peter J. King