<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
==================
Schedule 13E-4
==================
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
==================
SUNRISE PRESCHOOLS, INC.
------------------------
(Name of Issuer)
SUNRISE PRESCHOOLS, INC.
------------------------
(Name of Person(s) Filing Statement)
Redeemable Common Stock Purchase Warrants
-----------------------------------------
(Title of Class of Securities)
867693 11 1
----------------------------------
(CUSIP Number of Class of Securities)
Mr. James R. Evans
SUNRISE PRESCHOOLS, INC.
9128 E. San Salvador Drive, Suite 200
Scottsdale, Arizona 85258
(602) 860-1611
-Copy to-
Christopher D. Johnson, Esq.
Squire, Sanders & Dempsey
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
(602) 528-4000
--------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the
Person(s) Filing Statement)
October 4, 1995
--------------------------------------
(Date Tender Offer First Published,
Sent or Given to Security Holders)
<PAGE> 2
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
Transaction Valuation Amount of Filing Fee
--------------------- --------------------
<S> <C>
62,500 shares of Common Stock
to be issued upon the exercise
of the Warrants at $1.00 per
Warrant = $62,500 $12.50
</TABLE>
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of filing.
<TABLE>
<S> <C>
Amount Previously Paid: $1,150
Form or Registration No.: Form S-3 Registration Statement No. 33-15724
Filing Party: SUNRISE PRESCHOOLS, INC.
Date Filed: July 10, 1987
</TABLE>
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<PAGE> 3
This Schedule 13E-4 relates to the actions taken by SUNRISE PRESCHOOLS,
INC. (the "Company") to reduce the exercise price of its outstanding Redeemable
Common Stock Purchase Warrants (the "Warrants") for the remaining term of the
Warrants. A copy of the Company's Prospectus dated April 28, 1995, as
supplemented through September 28, 1995 (the "Prospectus") is attached hereto as
Exhibit (1) and is incorporated herein by this reference. The Prospectus is part
of the Company's Registration Statement No. 33-15724, which was declared
effective by the Securities and Exchange Commission on April 28, 1995. The
Prospectus relates to the issuance of up to 1,000,000 shares of the Company's
common stock, $.01 par value (the "Common Stock") upon exercise of the Warrants.
The Warrants were scheduled to expire on September 22, 1995. However, the
Company has extended the expiration date of the Warrants to November 6, 1995
(the "Warrant Expiration Date"). The Company has also reduced the exercise price
of each Warrant from $5.00 per share to $1.00 per share for their remaining
term. As conditions to extension of the Warrants and reduction of their exercise
price, the Company has provided that each holder of Warrants (a "Warrantholder")
may exercise only one of each sixteen Warrants held, and that the Warrants shall
be non-transferable for their remaining term. Exercises of the Warrants into
less than whole share increments will not be accepted.
Warrantholders electing to exercise their Warrants prior to the Warrant
Expiration Date may revoke such election, so long as notice of such revocation
is received by the Company on or prior to the Warrant Expiration Date. All
Warrants exercised and not revoked, on or prior to the Warrant Expiration Date
will be accepted by the Company and the Common Stock issuable upon the exercise
of such Warrants will be delivered to the respective Warrantholders as soon as
practicable after the Warrant Expiration Date.
Item 1. Security and Issuer.
(a) The name of the issuer and the address of its
principal executive office are: Sunrise Preschools, Inc., 9128 E. San Salvador
Drive, Suite 200, Scottsdale, Arizona 85258.
(b) The exact title and amount of the class of securities
being sought are all Warrants of the Company. As of September 22, 1995, there
were 1,000,000 Warrants outstanding. Each eligible Warrant is exercisable for
one share of Common Stock and the exercise price of each Warrant is $1.00;
however, each Warrantholder may exercise only one of each sixteen Warrants held.
Exercises of the Warrants into less than whole share increments will not be
accepted. The Warrants expire on November 6, 1995.
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<PAGE> 4
The following officers, directors and affiliates of the Company own
Warrants:
<TABLE>
<CAPTION>
Number of Warrants
Name and Title Beneficially Held
-------------- ------------------
<S> <C>
James R. Evans 16,300(1)
Chairman of the Board and President
Barbara L. Owens 2,300(2)
Executive Vice President, Director, Secretary and Treasurer
Robert A. Rice 35,000
Director
</TABLE>
- -------------------
(1) Of Mr. Evans' 16,300 Warrants, 300 of such Warrants are held in a
trust for the benefit of Mr. Evan's children, of which Mr. Evans is
the trustee.
(2) Of Ms. Owens' 2,300 Warrants, 150 of such Warrants are held in a trust
for the benefit of Ms. Owens' children, of which Ms. Owens is the
trustee.
(c) Trading activity with respect to the Company's Common Stock
has been limited and the volume of transactions should not of itself be deemed
to constitute an "established public trading market." A public trading market
having the characteristics of depth, liquidity and orderliness depends upon the
existence of market makers as well as the presence of willing buyers and
sellers, which are circumstances over which the Company does not have control.
The Common Stock is quoted in the National Daily Quotation Service
("Pink Sheets") published daily by the National Quotation Bureau, Inc. under the
symbol SUNR. Quotations are also available for the Common Stock through the
Electronic Bulletin Board operated by the National Association of Securities
Dealers, Inc. under the symbol 3SUNR. The following table sets forth the high
and low bid prices for the Common Stock based on closing transactions during
each specified period as reported by the National Quotation Bureau, Inc., which
prices reflect inter-dealer prices without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions:
<TABLE>
<CAPTION>
Fiscal 1995 Bid Fiscal 1994 Bid
--------------------------------- -----------------------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter $1.375 $1.000 $1.000 $.750
Second Quarter 1.688 .938 1.250 .875
Third Quarter 1.563 1.125 1.500 .750
Fourth Quarter 2.625 1.250 1.625 .875
</TABLE>
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<PAGE> 5
Until September 22, 1995, at which time the Warrants became
non-transferable, the Warrants were quoted in the Pink Sheets under the symbol
SUNRW and on the Electronic Bulletin Board under the symbol 3SUNRW. The
following table sets forth the high and low bid prices for the Warrants based on
closing transactions for each specified period as reported by the National
Quotation Bureau, Inc.
<TABLE>
<CAPTION>
Fiscal 1995 Bid Fiscal 1994 Bid
-------------------------------------- -----------------------------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter $.188 $.063 $.188 $.063
Second Quarter .188 .063 .188 .063
Third Quarter .375 .063 .188 .063
Fourth Quarter .375 .063 .250 .125
</TABLE>
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
(a) The consideration offered by the Company upon the exercise
of a Warrant and the payment of the applicable exercise price on the terms and
conditions hereinabove described is one share of Common Stock.
(b) Not applicable.
Item 3. Purpose of the Tender Offer and Plans or Proposals of the
Issuer or Affiliate.
The Company has announced that it has entered into a letter of intent
to undertake a public offering of securities. In connection with planning for
such offering, the Company decided to make a proposal to the Warrantholders
which would result in the final disposition of the Warrants. Accordingly, the
Company has reduced the exercise price of the Warrants and extended their
expiration date through November 6, 1995. As a condition to such reduction and
extension, the Company has provided that Warrantholders can exercise only one of
every sixteen Warrants held, and that the Warrants shall be non-transferable for
their remaining term. The Company had extended the expiration date of the
Warrants several times over the past several years. The Company believes that
this final extension through November 6, 1995 in combination with the reduction
in the exercise price of the Warrants will provide Warrantholders an opportunity
to benefit from exercise of a portion of their Warrants.
Item 4. Interest in Securities of the Issuer.
On September 22, 1995, James R. Evans acquired 16,000 Warrants at a
price of $0.15 per Warrant. Mr. Evans acquired these Warrants in the open
market.
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Item 5. Contracts, Arrangements, Understandings or Relationships with Respect
to the Issuer's Securities.
None.
Item 6. Persons Retained, Employed or to be Compensated.
None.
Item 7. Financial Information.
(a) None.
(b) Not applicable.
Item 8. Additional Information.
(a) None.
(b) Not applicable.
(c) Not applicable.
(d) None.
(e) Additional information with respect to the Warrants is
included in the Prospectus, which is hereby incorporated herein by reference in
its entirety.
Item 9. Material to be filed as Exhibits
(1) Prospectus, dated April 28, 1995 as supplemented
through Sepbember 28, 1995.
(2) Letter to Registered Holders of Warrants.
(3) Letter to Beneficial Holders of Warrants.
(4) Response Form (Beneficial Holders).
(5) Response Form (Registered Holders).
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: October 4, 1995.
SUNRISE PRESCHOOLS, INC.
By /s/ James R. Evans
-----------------------------
James R. Evans, President
<PAGE> 8
EXHIBIT INDEX
Exhibit (1) Prospectus dated April 28, 1995, as supplemented through
September 28, 1995.
Exhibit (2) Letter to Registered Holders of Warrants.
Exhibit (3) Letter to Beneficial Holders of Warrants.
Exhibit (4) Response Form (Beneficial Holders).
Exhibit (5) Response Form (Registered Holders).
-8-
<PAGE> 1
EXHIBIT 1
PROSPECTUS
1,000,000 COMMON SHARES
SUNRISE PRESCHOOLS, INC.
The securities offered hereby are 1,000,000 Common Shares, $.01 par
value (the "Common Shares"), to be issued upon the exercise of the outstanding
redeemable common stock purchase warrants (the "Warrants") of the Company. The
Warrants were initially issued in 1987 in connection with an offering of units
(the "Units"). Each Unit consisted of one Common Share and one Warrant.
Each Warrant is exercisable at any time prior to September 11, 1995 to
purchase one Common Share for $5.00, subject to adjustment in certain events,
such as mergers, reorganizations or stock splits, to prevent dilution. The
Company may redeem the Warrants at a price of $.05 each provided that the
average closing bid for the Common Shares shall have been $5.75 or more for any
20 consecutive trading day period ending within 30 days prior to the giving of
the notice of redemption. The Warrants were to initially expire on September 11,
1989; however, the Company has extended the Warrant expiration date on five
occasions since the initial issuance of the Warrants. All expenses in connection
with the registration of the Common Shares will be borne by the Company. See
"Risk Factors" and "Plan of Distribution."
The Common Shares and the Warrants are quoted on the National Daily
Quotation Service ("Pink Sheets") published by the National Quotation Bureau,
Inc. Quotations are also available through the "Electronic Bulletin Board"
recently instituted by the National Association of Securities Dealers, Inc. On
April 10, 1995, the closing prices of the Common Shares and the Warrants, as
reported on the Electronic Bulletin Board, were $1.18 and $0.13, respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY NOR
HAS THE COMMISSION OR ANY SUCH AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE
CONSIDERED ONLY BY PERSONS ABLE TO SUSTAIN A TOTAL
LOSS OF THEIR INVESTMENT. SEE "RISK FACTORS."
The date of this Prospectus is April 28, 1995.
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission can be inspected and
copied at public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; 219 South Dearborn Street, Chicago, Illinois
60604; and 26 Federal Plaza, New York, New York 10278. Copies of such materials
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
The Company has filed with the Commission a registration statement
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended ("Securities Act") with
respect to the securities offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement and the
exhibits thereto, copies of which may be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the fees prescribed by the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement for
a full statement of the provisions thereof; each such statement contained herein
is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission by the
Company and are hereby incorporated by reference into this Prospectus: (i) the
Company's Annual Report on Form 10-KSB for the fiscal year ended July 30, 1994;
(ii) the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended
October 29, 1994; (iii) the Company's Quarterly Report on Form 10-QSB for the
fiscal quarter ended January 31, 1995; (iv) the Company's Form 8-K Current
Report dated February 10, 1995; (v) the Company's Form 8-K Current Report dated
April 11, 1995; (vi) the description of the Company's Common Shares contained in
the Company's Registration Statement on Form 8-A filed with the Commission
pursuant to Section 12(g) of the Exchange Act dated December 7, 1987; and (vii)
the description of the Preferred Share Purchase Rights contained in the
Company's Registration Statement on Form 8-A filed with the Commission pursuant
to Section 12(g) of the Exchange Act dated February 13, 1995. All other
documents and reports filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act from the date of this Prospectus and prior to the termination
of the offering shall be deemed to be incorporated by reference herein and shall
be deemed to be a part hereof from the date of the filing of such reports and
documents.
Any statement contained in a document incorporated or deemed
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that is also deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom a Prospectus is delivered upon written or oral request of each person, a
copy of any document incorporated herein by reference, (not including exhibits
to the document that have been incorporated herein by reference unless such
exhibits are specifically incorporated by reference in the document which this
Prospectus incorporates). Requests should be directed to President, Sunrise
Preschools, Inc., 9128 East San Salvador, Suite 200, Scottsdale, Arizona 85258,
telephone (602) 860-1611.
2
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference
to the detailed information and consolidated financial statements, including the
notes thereto, incorporated by reference in this Prospectus. Each prospective
investor is urged to read this Prospectus in its entirety, and particularly the
information set forth in "Risk Factors."
THE COMPANY
The Company was organized under Delaware law in May 1987, and
currently operates 21 preschools in the Phoenix, Arizona metropolitan area and
six preschools in Hawaii.
The Company is a successor to Venture Educational Programs, Inc.,
an Arizona corporation, formed in 1980, and Sunrise Preschools, Inc., an Arizona
corporation, formed in 1985. The Company has one wholly owned subsidiary,
Sunrise Preschools Hawaii, Inc., formed in fiscal 1990.
During fiscal 1993 and 1994, the Company expanded its child care support
services by opening 12 additional sites (eight in 1993 and four in 1994) through
cooperative efforts with various outside agencies. These ventures required a
minimal capital investment by the Company while expanding its licensed capacity
by approximately 420 children. Management is continuing to pursue relatively low
risk, low cost programs in an effort to improve cash flow and profitability.
Effective February 1, 1994, the Company's Hawaii operations were assumed
by a Hawaii nonprofit corporation, Preschool Services, Inc. (PSI). The purpose
of this action is to enable PSI to participate in numerous grants and fundings
available to nonprofit child care entities operating in the State of Hawaii. In
exchange for a fee, the Company will provide PSI with management,
administration, educational programs and operation of PSI's preschools.
The Company has its principal office at 9128 E. San Salvador, Suite
200, Scottsdale, Arizona 85258 (telephone 602/860-1611).
THE OFFERING
Securities offered 1,000,000 Common Shares
COMPANY'S CAPITALIZATION
Common Shares outstanding
as of April 10, 1995 2,935,894 Common Shares
Preferred Shares outstanding
as of April 10, 1995 500,000 shares of Preferred Stock
Electronic Bulletin Board Symbol
Common Shares SUNR
Warrants SUNRW
3
<PAGE> 4
RISK FACTORS
An investment in the securities offered hereby involves a high degree
of risk. Prospective investors should give careful consideration, among other
things, to the following factors in analyzing this offering:
No Assurance of Continued Profitable Operations. For the fiscal years
ended July 30, 1994 and July 31, 1993, the Company had net income of $880,649
($0.34 per share) and $113,719 ($0.03 per share), respectively. Operating income
for the fiscal years ended July 30, 1994 and July 31, 1993 was $477,640 and
$177,490, respectively. The improvements in net income and operating income for
the 1994 fiscal year as compared to the 1993 fiscal year is primarily
attributable to (1) better margins; (2) strong enrollments; (3) the recognition
of a deferred tax asset of $475,358 in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes; and (4)
the formation of Preschool Services, Inc. (PSI), a nonprofit corporation for the
Company's Hawaiian operations. Although the Company had profitable operations
its last two fiscal years, there can be no assurance that the Company will, in
the future, remain profitable.
Competition. The child care industry is highly competitive. In addition
to competition from national chains, the Company competes with local, community
and church-affiliated or other nonprofit child care centers, individually owned
proprietary child care centers, licensed child care homes, in-home individual
child care providers, public schools and businesses that provide child care for
their employees. A number of the Company's competitors have substantially
greater resources than the Company.
Adverse Publicity. Some providers of child care have received negative
publicity concerning alleged child abuse, inadequate supervision and on-site
accidents. Although the Company has not been the subject of any adverse
publicity, any such publicity, whether accurate or not, could result in
decreased enrollment and have a material adverse effect on the Company.
Insurance. Recently the Company and other operators of child care
centers have experienced greater difficulty in obtaining liability insurance at
reasonable rates. Although the Company maintains liability insurance, there can
be no assurance such insurance will continue to be available to the Company in
the future or that increased premiums for such insurance will not require the
Company to increase the cost of providing child care services. If insurance is
not available to the Company, or if amounts of coverage are not adequate, the
Company may be materially and adversely affected.
Expansion Plans. The Company's initial growth was achieved primarily
through developing and constructing its own facilities. The Company's long-term
growth will most likely come from build-to-suit opportunities, where child care
facilities can be developed as an amenity to an overall project, and partnership
and managed child care programs that provide relatively low risk expansion
opportunities. The Company will also continue to evaluate opportunities related
to employer-owned centers and developer-assisted programs as they arise. If the
Company were to pursue more aggressive expansion, additional outside financing
would be required. There can be no assurance that identification and acquisition
of sites and construction of preschools, can be achieved on a cost-effective
basis or that appropriate construction or permanent financing can be obtained.
Construction of centers is subject to risk of delays and cost overruns, and such
occurrences could have a material adverse effect on the Company.
Government Regulation. Child care centers must comply with various
state and local statutes and regulations. Centers receive periodic inspection by
state licensing agencies to review adherence to child care standards, including,
among other things, appropriate staffing, cleanliness and safety. The
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<PAGE> 5
Company has not experienced any difficulty in complying with various legal
requirements. Additional regulation or changes in existing regulation might
impose additional compliance costs on the Company, which could have an adverse
effect on the Company.
Dependence Upon Key Personnel. The success of the Company will be
largely dependent upon the efforts and abilities of James R. Evans, president,
Barbara Owens, executive vice president, and other executive officers. The
Company has entered into employment agreements with Mr. Evans and Ms. Owens;
however, the loss of such individuals could have a material adverse effect on
the Company. The Company is attempting to acquire, but does not currently
maintain key man life insurance on Mr. Evans. In addition, the Company's success
is also dependent upon its ability to hire additional qualified personnel, and
there can be no assurance that the Company will be able to hire or retain the
necessary personnel.
Charter and Bylaw Provisions. Among other matters, certain provisions
of the Company's Certificate of Incorporation and Bylaws limit or eliminate
director liability for certain actions, permit issuance of preferred stock
without shareholder approval and require approval of greater than 50% of the
shares eligible to vote on certain matters. These and other provisions could,
under certain circumstances, prevent redress by stockholders for certain actions
taken by the directors and management and make it more difficult for an outsider
to obtain control of the Company.
No Dividends. The Company has not paid any dividends on its Common
Shares since its inception, and it is not anticipated that any dividends will be
paid in the foreseeable future. There are currently issued and outstanding
500,000 shares of the Company's Series B Convertible Preferred Stock (the
"Preferred Stock"). Each share of Preferred Stock has a $1.00 liquidation
preference, carries a $.10 per share annual cumulative dividend and is
convertible into one Common Share. Cumulative dividends on the Preferred Stock,
as of July 30, 1994, were $215,833. The payment of the such dividends is at the
discretion of the Company's Board of Directors; provided that such dividends
must be paid prior to the payment of dividends (except dividends payable in
Common Shares) on any other class of the Company's capital stock or the
repurchase by the Company of any of its capital stock. The payment of such
cumulative dividends could adversely affect the Company's liquidity; however, as
of the date hereof, the Company has not determined when such cumulative
dividends will be declared or paid.
Shares Eligible for Future Sale. As of April 10, 1995, the Company had
issued and outstanding 2,935,894 Common Shares and 500,000 shares of its
Preferred Stock (each share of the Preferred Stock is convertible into one
Common Share). An additional 198,589 Common Shares are issuable upon exercise of
outstanding options to purchase Common Shares. Such shares, subject to certain
limitations, may be available in the future for resale in the open market
pursuant to Rule 144 promulgated under the Securities Act, as amended or
pursuant to registration of such shares under the Securities Act. The foregoing
resales, if any, may have an adverse effect on the market price of the Common
Shares.
Outstanding Options; Potential Dilution and Adverse Impact on
Additional Financing; Recent Exercise of Warrants. As of April 10, 1995, the
Company had granted and/or sold outstanding options to purchase an aggregate of
198,589 Common Shares, at a weighted average exercise price of $1.46 per share.
To the extent that the outstanding options are exercised, dilution to the
interests of the Company's stockholders may occur. For the life of such options,
the holders will have the opportunity to profit from a rise in the price of the
underlying securities. The existence of such options may adversely affect the
terms on which the Company can obtain additional financing, and the holders of
such options can be expected to exercise them at a time when the Company would,
in all likelihood, be able to obtain additional capital by an offering of its
unissued capital stock on terms more favorable to the Company than those
provided by such options. On April 6, 1995, the holders of warrants to
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<PAGE> 6
purchase an aggregate of 500,000 Common Shares at an exercise price of $1.00 per
share, exercised such warrants. Such shares are registered on a Form S-3 and may
be sold in accordance with the applicable federal and state securities laws.
Anti-Takeover Effects of Rights Agreement. The Company has adopted a
Preferred Shares Rights Agreement, dated as of February 10, 1995 (the "Rights
Agreement"). The Rights Agreement provides for the type of plan commonly called
a "poison pill." The Rights Agreement is intended to prevent abusive hostile
takeover attempts. However, the Rights Agreement could have the effect of
deterring or preventing an acquisition of the Company even if a majority of the
Company's stockholders would be in favor of such acquisition, and could also
have the effect of making it more difficult for a person or group to gain
control of the Company or to change existing management.
USE OF PROCEEDS
Assuming that all of the Warrants are exercised, the net proceeds to
the Company are estimated to be approximately $5,000,000. The proceeds will be
allocated to the Company's working capital for its operations.
DETERMINATION OF OFFERING PRICE
The Common Shares are issuable upon the exercise of the Warrants. The
terms of the Warrants provide that the per share exercise price shall be $5.00
per share. The subsequent sale of the Common Shares received upon the exercise
of the Warrants will be determined by the holders of recipient of such Common
Shares and may be based on market prices prevailing at the time of sale, at
prices relating to such prevailing market prices, or at negotiated prices.
PLAN OF DISTRIBUTION
Upon notification to the Company by the holders of the Warrants of such
holders' intent to exercise their Warrants, the Company shall issue to such
holders' the Common Shares subject to the Warrants so exercised upon the receipt
of the applicable exercise price. The Common Shares may then be sold from time
to time to purchasers directly, either in privately negotiated transactions or
through the facilities of the Electronic Bulletin Board or otherwise, by the
holders thereof. Alternatively, the holders of the Common Shares may from time
to time sell the Common Shares through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from such holders and/or the purchasers of the Common Shares for
whom they may act as agent. The holders of the Common Shares and any
underwriter, dealer or agent that participates in the distribution of the Common
Shares may be deemed to be underwriters, and any profit on the sale of the
Common Shares by them and any discounts, commissions or concessions received by
any such underwriters, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act.
Alternatively, the holder of the Common Shares issued upon the exercise
of the Warrants may from time to time effect sales of the Common Shares in one
or more transactions pursuant to Rule 144 under the Securities Act, or
otherwise, at market prices prevailing at the time of sale, at prices relating
to such prevailing market prices, or at negotiated prices. It is anticipated
that broker-dealers participating in such sales of Common Shares will receive
the usual and customary selling commissions.
The Company will pay substantially all of the expenses incident to the
registration of the Common Shares offered hereby. The Company will not pay any
expenses incident to the offering and sale of the
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<PAGE> 7
Common Shares to the public, including, but not limited to, commissions and
discounts of underwriters, dealers or agents.
DESCRIPTION OF SECURITIES
For a description of the Company's Common Shares and the Warrants, see
the Company's Registration Statement on Form 8-A dated December 7, 1987, filed
with the Commission and incorporated by reference into this Prospectus.
On February 10, 1995, the Board of Directors of the Company declared a
distribution of one right for each outstanding Common Share (the "Rights"). For
a description of the Rights, see the Company's Registration Statement on Form
8-A, dated February 13, 1995, filed with the Commission and incorporated by
reference into this Prospectus.
LEGAL MATTERS
Certain legal matters have been passed upon for the Company by Streich
Lang, P.A., Phoenix, Arizona.
EXPERTS
The consolidated financial statements of the Company as of July 30,
1994, and for each of the years in the two-year period ended July 30, 1994,
incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report, with
respect thereto, and such consolidated financial statements are incorporated by
reference herein in reliance upon the authority of such firm as experts in
accounting and auditing in giving said report.
7
<PAGE> 8
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS WITH RESPECT TO THE
OFFERING MADE HEREBY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR
IN THE BUSINESS OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents . . . . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . 6
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . 7
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
================================================================================
================================================================================
SUNRISE PRESCHOOLS, INC.
1,000,000 Common Shares
--------------------------------
PROSPECTUS
-------------------------------
April 28, 1995
===============================================================================
<PAGE> 9
SUPPLEMENT DATED SEPTEMBER 28, 1995 TO PROSPECTUS DATED APRIL 28, 1995
1,000,000 COMMON SHARES
SUNRISE PRESCHOOLS, INC.
The second paragraph on the front cover page of the Prospectus dated
April 28, 1995 is amended and replaced in its entirety as follows:
Each Warrant was originally exercisable for one Common Share at a price
of $5.00 per share, subject to adjustment under certain circumstances. On
September 21, 1995, the Company announced that it had extended the expiration
date of the Warrants through November 6, 1995 (the "Warrant Expiration Date")
and reduced the exercise price of each exercisable warrant to $1.00 for the
period remaining prior to the Warrant Expiration Date. As conditions to
extension of the Warrant and reduction of the exercise price, the Company has
provided that each holder of Warrants may exercise only one of each sixteen
Warrants held, and that the Warrants will be non-transferable for their
remaining term. Exercises of the Warrants into less than whole share increments
will not be accepted. The exercise of the Warrants in accordance with the terms
described above is also subject to effective registration of the underlying
shares or an available exemption from registration in the state of such holder's
residence. Holders of Warrants electing to exercise their Warrants prior to the
Warrant Expiration Date may revoke such election, so long as notice of such
revocation is received by the Company on or prior to the Warrant Expiration
Date. All Warrants exercised and not revoked on or prior to the Warrant
Expiration Date will be accepted by the Company and the Common Shares issuable
upon the exercise of such Warrants will be delivered to the respective holders
of Warrants as soon as practicable after the Warrant Expiration Date. Assuming
all of the eligible Warrants are exercised, the proceeds to the Company are
estimated to be approximately $62,500, prior to expenses associated with the
registration of the Common Shares and the extension and reduction of the
exercise price of the Warrants. The proceeds will be allocated to the Company's
working capital for general corporate purposes.
To the extent that any statement in this Prospectus Supplement
conflicts with a statement contained in the Prospectus, the statement in this
Prospectus Supplement shall control.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS ABLE TO SUSTAIN A TOTAL LOSS OF THEIR INVESTMENT. SEE "RISK FACTORS."
--------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY NOR HAS THE COMMISSION OR ANY
SUCH AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 10
SUPPLEMENTAL INFORMATION
The Prospectus is further amended to include the following additional
information:
HOLDINGS OF OFFICERS AND DIRECTORS
The following officers, directors and affiliates of the Company own
Warrants:
<TABLE>
<CAPTION>
Number of Warrants
Name and Title Beneficially Held
-------------- ------------------
<S> <C>
James R. Evans 16,300(1)
Chairman of the Board and President
Barbara L. Owens 2,300(2)
Executive Vice President, Director, Secretary and Treasurer
Robert A. Rice 35,000
Director
- -------------------
</TABLE>
(1) Of Mr. Evans' 16,300 Warrants, 300 of such Warrants are held in a
trust for the benefit of Mr. Evans' children, of which Mr. Evans is
the trustee. Mr. Evans acquired 16,000 of the Warrants he owns in the
open market on September 22, 1995 at a price of $0.15 per Warrant.
(2) Of Ms. Owens' 2,300 Warrants, 150 of such Warrants are held in a trust
for the benefit of Ms. Owens' children, of which Ms. Owens is the
trustee.
MARKET FOR COMMON STOCK AND WARRANTS
Trading activity with respect to the Company's Common Stock has been
limited and the volume of transactions should not of itself be deemed to
constitute an "established public trading market." A public trading market
having the characteristics of depth, liquidity and orderliness depends upon the
existence of market makers as well as the presence of willing buyers and
sellers, which are circumstances over which the Company does not have control.
The Common Stock is quoted in the National Daily Quotation Service
("Pink Sheets") published daily by the National Quotation Bureau, Inc. under
the symbol SUNR. Quotations are also available for the Common Stock through
the Electronic Bulletin Board operated by the National Association of
Securities Dealers, Inc. under the symbol 3SUNR. The following table sets forth
the high and low bid prices for the Common Stock based on closing transactions
during each specified period as reported by the National Quotation Bureau, Inc.,
which prices reflect inter-dealer prices without retail mark- up, mark-down or
commission and may not necessarily represent actual transactions:
2
<PAGE> 11
<TABLE>
<CAPTION>
Fiscal 1995 Bid Fiscal 1994 Bid
-------------------------------------- -----------------------------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter $1.375 $1.000 $1.000 $.750
Second Quarter 1.688 .938 1.250 .875
Third Quarter 1.563 1.125 1.500 .750
Fourth Quarter 2.625 1.250 1.625 .875
</TABLE>
Until September 22, 1995, at which time the Warrants became
non-transferable, the Warrants were quoted in the Pink Sheets under the symbol
SUNRW and on the Electronic Bulletin Board under the symbol 3SUNRW. The
following table sets forth the high and low bid prices for the Warrants based on
closing transactions for each specified period as reported by the National
Quotation Bureau, Inc.
<TABLE>
<CAPTION>
Fiscal 1995 Bid Fiscal 1994 Bid
-------------------------------------- -----------------------------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter $.188 $.063 $.188 $.063
Second Quarter .188 .063 .188 .063
Third Quarter .375 .063 .188 .063
Fourth Quarter .375 .063 .250 .125
</TABLE>
PURPOSE OF PROPOSAL TO WARRANTHOLDERS
The Company has announced that it has entered into a letter of intent
to undertake a public offering of securities. In connection with planning for
such offering, the Company decided to make a proposal to the Warrantholders
which would result in the final disposition of the Warrants. Accordingly, the
Company has reduced the exercise price of the Warrants and extended their
expiration date through November 6, 1995, all as described in this Prospectus
Supplement. The Company had extended the expiration date of the Warrants
several times over the past several years. The Company believes that this final
extension through November 6, 1995 in combination with the reduction in the
exercise price of the Warrants will provide Warrantholders an opportunity to
benefit from exercise of a portion of their Warrants.
3
<PAGE> 1
Exhibit 2
October 4, 1995
TO ALL REGISTERED HOLDERS OF
THE SUNRISE PRESCHOOLS, INC.
REDEEMABLE COMMON STOCK PURCHASE
WARRANTS ISSUED SEPTEMBER 11, 1987
(THE "WARRANTS")
Notice is hereby given that SUNRISE PRESCHOOLS, INC. (the "Company")
has reduced the exercise price of its Warrants [CUSIP No. 867693 11 1] from
$5.00 per Warrant to $1.00 per Warrant, and has extended the expiration date of
the Warrants to November 6, 1995. As conditions to such reduction and extension,
the Company has provided that each Warrantholder will be permitted to exercise
only one of each sixteen Warrants he or she holds, and that the Warrants shall
be non-transferable for their remaining term. Warrantholders desiring to
exercise their Warrants should send their Warrants and a check for the aggregate
exercise price to American Securities Transfer Incorporated, the Warrant Agent,
in accordance with the instructions set forth in the Response Form which is
attached hereto. The Company will only accept exercises in whole share
increments.
Enclosed is a Prospectus relating to the Common Stock into which the
Warrants are exercisable. On April 28, 1995, the Registration Statement
registering the securities issuable upon the exercise of the Warrants was
declared effective by the United States Securities and Exchange Commission (the
"SEC"). The SEC has determined that reduction of the exercise price of the
Warrants is an issuer tender offer. Accordingly, the enclosed materials also
serve as notice to the holders of the Company's Warrants that the Company has
commenced a tender offer for all of its outstanding Warrants.
Because the SEC has determined that the reduction of the Warrant
exercise price constitutes an issuer tender offer, the Company is unable to
forward the securities into which the Warrants are exercisable until after
November 6, 1995. The Company will forward such securities to the appropriate
persons as soon as practicable after November 6, 1995. Persons exercising
Warrants prior to November 6, 1995, may revoke such election so long as such
revocation is received by the Company prior to November 6, 1995.
<PAGE> 2
Warrant exercises will be accepted only from Warrantholders who reside
in states where there is an effective registration of the shares of Common Stock
issuable upon exercise of the Warrants, unless the state in which such
Warrantholder resides has an available registration exemption. This offer is
void where prohibited.
Additional information regarding the exercise price reduction and the
tender offer is contained in the materials accompanying this notice.
Instructions regarding the method of exercising the Warrants are also
contained in the materials accompanying this notice. Any questions regarding the
exercise price reduction, the tender offer or the exercise of the Warrants
should be directed to the undersigned, at (602) 860-1611.
Very truly yours,
Ronald J. O'Connor
Controller
<PAGE> 1
Exhibit 3
October 4, 1995
TO ALL BENEFICIAL HOLDERS OF
SUNRISE PRESCHOOLS, INC.
REDEEMABLE PURCHASE COMMON STOCK
WARRANTS (THE "WARRANTS")
Notice is hereby given that SUNRISE PRESCHOOLS, INC. (the "Company")
has reduced the exercise price of its Warrants [CUSIP No. 867693 11 1] from
$5.00 per Warrant to $1.00 per Warrant, and has extended the expiration date of
the Warrants to November 6, 1995. As conditions to such reduction and extension,
the Company has provided that each Warrantholder will be permitted to exercise
only one of each sixteen Warrants he or she holds, and that the Warrants shall
be non-transferable for their remaining term. Beneficial owners of Warrants
desiring to have their Warrants exercised by the nominee record holder of such
Warrants should complete the attached Response Form and sent it with a check for
the aggregate exercise price to their nominee record holder, in accordance with
the instructions set forth in the Response Form. The Company will only accept
exercises in whole share increments.
Enclosed is a Prospectus relating to the Common Stock into which the
Warrants are exercisable. On April 28, 1995, the Registration Statement
registering the securities issuable upon the exercise of the Warrants was
declared effective by the United States Securities and Exchange Commission (the
"SEC"). The SEC has determined that reduction of the exercise price of the
Warrants is an issuer tender offer. Accordingly, the enclosed materials also
serve as notice to the holders of the Company's Warrants that the Company has
commenced a tender offer for all of its outstanding Warrants.
Because the SEC has determined that the reduction of the Warrant
exercise price constitutes an issuer tender offer, the Company is unable to
forward the securities into which the Warrants are exercisable until after
November 6, 1995. The Company will forward such securities to the appropriate
persons as soon as practicable after November 6, 1995. Persons exercising
Warrants prior to November 6, 1995, may revoke such election so long as such
revocation is received by the Company prior to November 6, 1995.
<PAGE> 2
Warrant exercises will be accepted only from Warrantholders who reside
in states where there is an effective registration of the shares of Common Stock
issuable upon exercise of the Warrants, unless the state in which such
Warrantholder resides has an available registration exemption. This offer is
void where prohibited.
Additional information regarding the exercise price reduction and the
tender offer is contained in the materials accompanying this notice.
Instructions regarding the method of exercising the Warrants are also
contained in the materials accompanying this notice. Any questions regarding the
exercise price reduction, the tender offer or the exercise of the Warrants
should be directed to the undersigned, at (602) 860-1611.
Very truly yours,
Ronald J. O'Connor
Controller
<PAGE> 1
Exhibit 4
PLEASE READ THE ATTACHED INSTRUCTIONS BEFORE COMPLETING
SUNRISE PRESCHOOLS, INC.
RESPONSE FORM
For beneficial owners of Redeemable Common Stock Purchase Warrants issued
September 11, 1987 [CUSIP NO. 867693 11 1] (the "Warrants").
A COPY OF THIS RESPONSE FORM ACCOMPANIED BY PAYMENT OF THE FULL SUBSCRIPTION
PRICE SHOULD BE SUBMITTED TO THE FORWARDING AGENT AS FOLLOWS:
BY HAND OR MAIL:
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
(the "nominee record holder" and "Forwarding Agent")
The undersigned, as beneficial owner of the Warrant Certificates described
below, hereby subscribes for shares of Common Stock offered by the Company's
Prospectus dated April 28, 1995, as supplemented through September 28, 1995,
receipt of which is hereby acknowledged, pursuant to exercise of the Warrants as
follows:
<TABLE>
<CAPTION>
Number of Warrants Shares Subscribed Subscription Price Payment Enclosed*
<S> <C> <C> <C>
X 1/16 = X $1.00 = U.S. $
--------------- ----------------- -------------
* Make check payable to "American Securities Transfer Incorporated" or to the nominee record holder.
</TABLE>
I represent that I am the beneficial owner of Warrants, entitling me to purchase
not less than the number of shares of Common Stock of SUNRISE PRESCHOOLS, INC.
listed above under "Shares Subscribed," that I have full authority to exercise
the Warrants and that I executed this Response Form. I hereby authorize the
nominee record holder of such Warrants beneficially owned by me, to use its best
efforts to exercise the Warrants, to obtain and deliver to the Warrant Agent the
Warrant Certificate(s) representing the Warrants, to execute any additional
documents necessary or desirable to complete the exercise transaction and to
otherwise cooperate with the Company in obtaining the Warrant Certificate(s) and
completing the exercise transaction. I understand that until the Warrant
Certificate(s) is delivered to the Warrant Agent or the record and beneficial
ownership of the Warrants is otherwise conclusively established, the
subscription funds delivered herewith to the Forwarding Agent, and subsequently
forwarded by the Forwarding Agent to the Warrant Agent, will be held in an
escrow account by the Warrant Agent. The Company may reject the within
subscription and direct the Warrant Agent to return the subscription funds to
the Forwarding Agent if and when it reasonably determines that the ownership of
the Warrants cannot be conclusively established or if it determines that
issuance of the Common Stock to me would violate the laws of the state in which
I reside. I understand that upon completion of the exercise transaction, the
Forwarding Agent will receive, on my behalf as beneficial owner, new
certificates representing, for each sixteen Warrants submitted, one (1) share of
Common Stock of the Company. See Instruction Number 3.
PLEASE SIGN AND DATE BELOW
Signature:
------------------------------
Signature:
------------------------------
Capacity:
------------------------------
Address:
------------------------------
Date:
------------------------------
Telephone: ( )
------------------------------
PLEASE READ THE ATTACHED INSTRUCTIONS BEFORE COMPLETING
PLEASE DO NOT WRITE IN SPACE BELOW
<TABLE>
<S> <C> <C>
No. Warrants Received No. Certificates No. and Denomination of New Certificates
</TABLE>
<PAGE> 2
INSTRUCTIONS
1. General. This response form is to be used by beneficial owners of
the Redeemable Common Stock Purchase Warrants (the "Warrants") (CUSIP No. 867693
11 1) issued on September 11, 1987 by Sunrise Preschools, Inc. (the "Company")
and held of record by the nominee record holder. If you are such a beneficial
owner and you desire to exercise your Warrants, you should complete and execute
the Response Form attached hereto and return it to the Forwarding Agent,
accompanied by full payment of the subscription price. Accordingly, if you
desire to exercise your Warrants, complete this Response Form and deliver it,
accompanied by payment of the full subscription price, to the Forwarding Agent
at the address indicated on the Response Form. This will permit the Forwarding
Agent to forward the Warrant Certificates, subscription price and other
documents necessary to complete the exercise transaction. If you properly
exercise your Warrants, for each Warrant surrendered, the Warrant Agent will
forward to the Forwarding Agent, to hold for your benefit, new certificates
representing one share of Common Stock.
2. Completion and Delivery of the Response Form. Please fill out the
shaded boxes on the Response Form, indicating the number of shares you wish to
purchase, which may not exceed one-sixteenth of the number of Warrants you own,
and calculate the amount of the payment for your subscription by multiplying the
number of Warrants by one-sixteenth to determine the number of shares issuable
upon the exercise of the Warrants. Once you have determined the number of shares
issuable upon the exercise of your Warrants, multiply the number of shares by
the per share subscription price of $1.00. The Warrants expire on November 6,
1995. Date, sign and provide any other information requested on the Response
Form.
3. Exercises On or Prior to November 6, 1995; Revocation. Exercises of
Warrants on or prior to November 6, 1995 are considered to be made pursuant to
an issuer tender offer. Accordingly, the Company is unable to issue the
securities into which the Warrants are exercisable until after November 6, 1995.
Warrantholders exercising on or prior to November 6, 1995, may revoke their
election to exercise. Revocations must be received by the Warrant Agent on or
prior to November 6, 1995. The method of delivery of the revocation is at the
option and risk of the Warrantholder but, delivery will be deemed made only when
actually received by the Warrant Agent. If such delivery is by mail, it is
suggested that registered mail with return receipt requested, properly issued,
be used.
4. Request for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of this Response Form, the Notice dated
October 4, 1995, and the Prospectus may be directed to the Warrant Agent at the
address set forth below or to the Forwarding Agent at the address set forth on
first page of this Response Form:
The Warrant Agent:
American Securities Transfer Incorporated
938 Quail Street, Suite 101
Lakewood, Colorado 80215-5513
Attn: John Harmon
(303) 254-5300
<PAGE> 1
Exhibit 5
PLEASE READ THE ATTACHED INSTRUCTIONS BEFORE COMPLETING
SUNRISE PRESCHOOLS, INC.
RESPONSE FORM
For Record Holders of Redeemable Common Stock Purchase Warrants issued
September 11, 1987 [CUSIP NO. 867693 11 1] (the "Warrants").
A COPY OF THIS RESPONSE FORM ACCOMPANIED BY PAYMENT OF THE FULL SUBSCRIPTION
PRICE AND WARRANT CERTIFICATES SHOULD BE SUBMITTED TO THE WARRANT AGENT AS
FOLLOWS:
IF HAND DELIVERED OR MAILED:
American Securities Transfer Incorporated
938 Quail Street, Suite 101
Lakewood, Colorado 80215-5513
Telephone: (303) 254-5300
The undersigned, as record holder of the Warrant Certificates described below,
hereby subscribes for shares of Common Stock offered by the Company's Prospectus
dated April 28, 1995, as supplemented through September 28, 1995, receipt of
which is hereby acknowledged, pursuant to exercise of the Warrants as follows:
<TABLE>
<CAPTION>
Number of Warrants Shares Subscribed Subscription Price Payment Enclosed*
<S> <C> <C> <C>
X 1/16 = X $1.00 = U.S. $
------------------- ------------------- -------------------
</TABLE>
* Make check payable to "American Securities Transfer Incorporated."
<TABLE>
<S> <C>
Name and Address of Record Holder: Certificate(s) Enclosed:
- -------------------------------------------------- ------------------------------------------------------------------
Certificate No. No. of Warrants
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Total Shares_______
------------------------------------------------------------------
</TABLE>
I represent that I am the record holder of Warrants, entitling me to purchase
not less than the number of shares of Common Stock of Sunrise Preschools, Inc.
listed above under "Shares Subscribed," that I have full authority to exercise
the Warrants and that I executed this Response Form. Alternatively, I represent
that I am the nominee record holder submitting the same for the beneficial owner
thereof who has made the foregoing representation to me. I will use my best
efforts to obtain and deliver to the Warrant Agent the Warrant Certificate(s)
representing the Warrants, will execute any additional documents necessary or
desirable to complete the exercise transaction and will otherwise cooperate with
the Company in obtaining the Warrant Certificate(s) and completing the exercise
transaction. I understand that until the Warrant Certificate(s) is delivered to
the Warrant Agent or the record and beneficial ownership of the Warrants is
otherwise conclusively established, the subscription funds delivered herewith
will be held in an escrow account by the Warrant Agent. The Company may reject
the within subscription and direct the Warrant Agent to return the subscription
funds to the undersigned subscriber if and when it reasonably determines that
the ownership of the Warrants cannot be conclusively established or if it
determines that issuance of the Common Stock to me would violate the laws of the
state in which I reside. I understand that upon completion of the exercise
transaction, I will receive new certificates representing, for each sixteen
Warrants submitted, one (1) share of Common Stock of the Company which will be
mailed to the name and address shown above or pursuant to this special mailing
instructions set forth below. See Instruction Number 4.
<TABLE>
<CAPTION>
PLEASE SIGN AND DATE BELOW IF CERTIFICATES ARE TO BE MAILED TO ANOTHER ADDRESS
<S> <C>
Signature: Mail to:
--------------------------------------------------- ------------------------------------------------
Signature: Name(s)
--------------------------------------------------- -------------------------------------------------
Capacity: Address
---------------------------------------------------- -------------------------------------------------
Address:
----------------------------------------------------- -------------------------------------------------
Date:
----------------------------------------------------- -------------------------------------------------
Telephone: ( )
--------- -------------------------------------
</TABLE>
PLEASE READ THE ATTACHED INSTRUCTIONS BEFORE COMPLETING
PLEASE DO NOT WRITE IN SPACE BELOW
<TABLE>
<S> <C> <C>
No. Warrants Received No. Certificates No. and Denomination of New Certificates
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
INSTRUCTIONS
1. General. This response form is to be used by record holders for the
exercise of Redeemable Common Stock Purchase Warrants issued September 11, 1987
(the "Warrants") (CUSIP No. 867693 11 1) by Sunrise Preschools, Inc. (the
"Company"). If you are such a record holder and you desire to exercise your
Warrants, you should complete and execute the Response Form attached hereto and
return it to the Warrant Agent, accompanied by full payment of the subscription
price and the Warrant Certificate(s). If you properly exercise your Warrants,
for each sixteen Warrants surrendered, the Warrant Agent will forward to you
new certificates representing one share of Common Stock.
2. Completion and Delivery of the Response Form. Please fill out the shaded
boxes on the Response Form, indicating the number of shares you wish to
purchase, which may not exceed one-sixteenth of the number of Warrants you own,
and calculate the amount of the payment for your subscription by multiplying the
number of Warrants by one-sixteenth to determine the number of shares issuable
upon the exercise of the Warrants. Once you have determined the number of shares
issuable upon the exercise of your Warrants, multiply the number of shares by
the per share subscription price of $1.00. The Warrants expire on November 6,
1995. Please print or type the name and address of the record holder of the
Warrants in the shaded box indicated. The name of the record holder should
correspond with the name in which the Warrants are registered, as written on the
face of the Warrant Certificate, without alteration, enlargement or any change
whatsoever. Indicate the "Warrant No." of the Warrant Certificate(s) surrendered
and the number of Warrants represented by each Certificate. Date, sign and
provide any other information requested on the Response Form, as appropriate.
The method of delivery of the Response Form and any other required documents is
at the option and risk of the holder but, delivery will be deemed made only when
actually received by the Warrant Agent. If such delivery is by mail, it is
suggested that registered mail with return receipt requested, properly insured,
be used.
3. Signatures on Response Form. If the Response Form is signed by the record
holder of the Warrants exercised hereby, the signature must correspond with the
name in which the Warrants are registered, as written on the face of the Warrant
Certificate(s), without alteration, enlargement or any change whatsoever. If the
Warrant Certificates tendered hereby are owned of record by two or more joint
owners, all such owners must sign the Response Form. If the Response Form is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
corporate officer or other person acting in a fiduciary capacity, such person
should so indicate when signing and proper evidence satisfactory to the Warrant
Agent of his authority so to act must be submitted. If the Response Form is
signed by the registered owner(s) of the Warrant Certificates transmitted
hereby, no endorsements of certificates or separate stock powers are required.
If the Response Form is signed by a person other than the registered owner(s) of
the Warrant Certificates transmitted hereby, the Certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners' appear(s) on the Certificates.
Signatures on such Certificates or stock powers must be guaranteed.
4. Exercises On or Prior to November 6, 1995; Revocation. Exercises of
Warrants on or prior to November 6, 1995 are considered to be made pursuant to
an issuer tender offer. Accordingly, the Company is unable to issue the
securities into which the Warrants are exercisable until after November 6, 1995.
Warrant holders exercising on or prior to November 6, 1995, may revoke their
election to exercise. Revocations must be received by the Warrant Agent on or
prior to November 6, 1995. The method of delivery of the revocation is at the
option and risk of the holder but, delivery will be deemed made only when
actually received by the Warrant Agent. If such delivery is by mail, it is
suggested that registered mail with return receipt requested, properly issued,
be used.
5. Request for Assistance or Additional Copies. Questions and requests for
assistance or additional copies of this Response Form, the Notice dated October
4, 1995, and the Prospectus may be directed to the Warrant Agent or to the
Company at the addresses set forth below:
<TABLE>
<CAPTION>
The Warrant Agent: The Company:
<S> <C>
American Securities Transfer Incorporated Ronald J. O'Connor, Controller
938 Quail Street, Suite 101 Sunrise Preschools, Inc.
Lakewood, Colorado 80215-5513 9128 E. San Salvador Drive, Suite 200
Attn: John Harmon Scottsdale, Arizona 85258
(303) 254-5300 (602) 860-1611
</TABLE>
