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Schedule 14C Information
Information Statement Pursuant to
Section 14(c) of the
Securities Exchange Act of 1934
(Amendment No. _____)
Check the appropriate box:
| x | Preliminary Information Statement
| | Confidential, for Use of the Commission Only (as permitted by
| | Definitive Statement
(Name of Registrant as Specified in Charter)
| x | $125 per Exchange Act Rules 0-11(c)(1)(ii) or 14c-5(g)
| | Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
| | Fee paid previously with preliminary materials
| | Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11 (a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPY
CAPITAL ASSOCIATES, INC.
7175 WEST JEFFERSON AVENUE
SUITE 4000
LAKEWOOD, COLORADO 80235
INFORMATION STATEMENT
This Information Statement is furnished to the holders of the
common stock, par value $.008 per share (the "Common Stock"), of Capital
Associates, Inc. (the "Company"), to inform them as to an action to be taken by
the Company with the written consents of MCC Financial Corporation, a Delaware
Corporation ("MCC"), Mr. Gary M. Jacobs and Mr. Jack Durliat (the "Consenting
Stockholders"). The Consenting Stockholders are the record holders of, in the
aggregate, 6,315,179 shares of the Common Stock (representing 61.7% of the
10,232,447 shares outstanding as of October 2, 1995).
The Board of Directors of the Company has approved a
one-for-two reverse Common Stock split (the "Reverse Split"). Since certain
stockholders may hold numbers of shares not evenly divided by two, it is
anticipated that fractional shares of Common Stock will result. Following the
Reverse Split, rather than issue fractional shares, the Company will pay cash to
such persons otherwise entitled to receive fractional shares. Under Delaware
law, the affirmative vote of a majority of the outstanding stock entitled to
vote thereon is required to approve the amendment to the Company's Certificate
of Incorporation that will effect the Reverse Split. The Consenting Stockholders
gave their written consent to the Reverse Split on October 3, 1995. Since the
Consenting Stockholders own more than fifty percent of the outstanding Common
Stock entitled to vote thereon, the Reverse Split has been approved by the
necessary vote of stockholders. Accordingly, the Company is not seeking written
consents from any of its other stockholders.
WE ARE NOT ASKING YOU FOR A CONSENT OR PROXY AND
YOU ARE REQUESTED NOT TO SEND US A CONSENT OR PROXY
This Information Statement is being mailed on or about October
__, 1995, to stockholders of record on October 2, 1995. The Company intends to
take all necessary action to consummate the Reverse Split on or after October
__, 1995 (20 days from the date of the mailing of this Information Statement)
(the "Effective Date").
On October 2, 1995, the closing price of the Company's Common
Stock on the Nasdaq National Market was $____.
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VOTING SECURITIES
The close of business on October 2, 1995, has been fixed by
the Board of Directors as the record date for determination of stockholders
entitled to execute written consents to authorize the Reverse Split. The
securities entitled to consent to the Reverse Split consist of shares of Common
Stock. Each share of Common Stock entitles its owner to one vote. Common Stock
is the only outstanding class of voting securities authorized by the Company's
Articles of Incorporation. The Company's Articles of Incorporation grant to the
Board of Directors the discretion to issue Preferred Stock in series, with
various rights, preferences and privileges, including, among others, voting
rights. None of the Preferred Stock is presently outstanding, and the Board of
Directors has no present plan to issue Preferred Stock.
The following table sets forth, as of September 29, 1995, the
number of shares and percentage of the outstanding Common Stock beneficially
owned by each person known by the Company to own more than 5% of the outstanding
Common Stock:
Beneficial Ownership
------------------------------------
Number of Shares Percent(3)
James D. Walker (1) 1,533,249.5 14.98%
8180 Greensboro Drive
Suite 1000
McLean, Virginia 22102
William H. Buckland (1) 1,526,649.5 14.92%
8180 Greensboro Drive
Suite 1000
McLean, Virginia 22102
Jack Durliat 1,350,015 13.20%
18 Borealis Way
Castle Rock, Colorado 80104
Gary M. Jacobs (2) 1,946,067 18.99%
2995 Baseline Road
Boulder, Colorado 80303
All directors and officers as a 6,583,358 64.05%
group (11 persons)
- --------------------
(1) MCC is the record owner of 3,046,499 shares of Common Stock. Messrs.
Walker and Buckland, who are otherwise unrelated to each other, each
own 50% of the issued and outstanding stock of MCC. Mr. Walker owns
10,000 vested stock options. Mr. Buckland owns 3,400 vested stock
options.
(2) Includes (a) 21,942 shares of Common Stock that Mr. Jacobs is entitled
to acquire upon the exercise of vested stock options and (b) 6,000
shares held in the name of Mr. Jacobs' minor children for which he
disclaims beneficial ownership.
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(3) Calculated in accordance with Rule 13d-3(d) of the Securities and
Exchange Commission.
REVERSE SPLIT OF COMMON STOCK
General
The Board of Directors of the Company has approved an
amendment to the Company's Certificate of Incorporation (the "Certificate of
Incorporation") to effect a one-for-two reverse split of the issued and
outstanding shares of Common Stock. A copy of the amendment to the Certificate
of Incorporation effecting the Reverse Stock Split, in substantially the form in
which it is proposed to be filed, is attached as Exhibit A. The Consenting
Stockholders have approved the Reverse Split which is expected to become
effective on the Effective Date. Each share of Common Stock issued and
outstanding immediately prior to that Effective Date will be reclassified as,
and changed into, one-half of one share of Common Stock.
The Reverse Split will not materially affect any stockholder's
proportionate equity interest in the Company or the relative rights,
preferences, privileges or priorities of any stockholder. In addition, pursuant
to the terms of the Company's stock option and rights plans, the number of
shares issuable upon exercise of outstanding options and rights, and the
exercise price per share, will be proportionately adjusted.
Purpose and Effect of the Reverse Stock Split
The Common Stock is trading at or below $1.00 which is the
minimum bid price for continued listing on the Nasdaq National Market, unless,
as an alternative test, the market value of the public float in the Company's
Common Stock is $3 million or more and the Company's net tangible assets equal
$4 million or more. Currently, the "public float" for the purpose of this test
is approximately 3,000,000 shares, and on that basis the Company has not met the
alternative test. The National Association of Securities Dealers, Inc. (the
"NASD"), which operates the Nasdaq National Market, has informed the Company
that it may remove the Company from listing on the Nasdaq National Market if the
minimum bid price requirement is not met. In order to avoid such action by the
NASD, the Company's Board of Directors has determined to propose the Reverse
Split. The principal effect of the Reverse Split will be to decrease the number
of outstanding shares of Common Stock from 10,232,447 (as of October 2, 1995) to
approximately 5,116,224 shares, providing that no additional shares have been
issued subsequent to October 2, 1995. The Common Stock issued pursuant to the
Reverse Split will be fully paid and nonassessable. The respective voting rights
and other rights that accompany the Common Stock will not be altered by the
Reverse Split (other than as a result of payment of cash in lieu of fractional
shares (as discussed below)), and the par value of the Common Stock will remain
at $.008 per share. Consummation of the Reverse Split will not alter the number
of authorized shares of the Company's capital stock, which will remain at
17,500,000. Such authorized shares of capital stock consist of 15,000,000 shares
of Common Stock and 2,500,000 shares of preferred stock (none of which shares of
preferred stock has been issued). After giving effect to the Reverse Split, the
number of outstanding shares of Common Stock (as of October 2, 1995) would be as
set forth above, with the result that approximately 9,883,776 shares of Common
Stock would constitute authorized but unissued shares, with approximately
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1,460,813 of such shares of Common Stock being reserved for issuance pursuant
to the Company's stock option and rights plans. At this time, the Company has no
plans to issue additional shares of its Common Stock other than pursuant to
outstanding options and rights.
The Board of Directors believes that a decrease in the number
of shares of Common Stock outstanding without any material alteration of the
proportionate economic interest in the Company represented by individual
shareholdings may increase the trading price of the Common Stock, although no
assurance can be given that the market price of the Common Stock will rise in
proportion to the reduction in the number of shares outstanding resulting from
the Reverse Split.
There can be no assurance that the Reverse Split will not
adversely impact the market price of the Common Stock, that the marketability of
the Common Stock will improve as a result of the Reverse Split or that the
Reverse Split will otherwise have any of the effects described herein. If the
Company's stock is removed from listing on the Nasdaq National Market, price
information will be available on the NASD OTC Bulletin Board. However, such
information is not as widely available as Nasdaq National Market information in
newspapers and other publications.
Certificates and Fractional Shares
The Reverse Split will occur on the Effective Date without any
action on the part of stockholders of the Company and without regard to the date
or dates certificates presently representing shares of the Common Stock are
physically surrendered for certificates representing the number of shares of the
Common Stock such stockholders are entitled to receive as a consequence of the
Reverse Split. The certificates presently representing shares of Common Stock
will be deemed to represent one-half the number of shares of Common Stock after
the Effective Date of the Reverse Split. New certificates of Common Stock will
be issued in due course as old certificates are tendered to the Exchange Agent
for exchange or transfer. No fractional shares of Common Stock will be issued
and, in lieu thereof, stockholders holding a number of shares of Common Stock
not evenly divisible by two, and stockholders holding less than two shares of
Common Stock prior to the Effective Date, upon surrender of their old
certificates, will receive cash in lieu of fractional shares of Common Stock.
Such cash payment will not be made until a stockholder presents his old
certificates to the Exchange Agent. The price payable by the Company for the
fractional shares of Common Stock will be equal to the product of (a) the number
of old shares that appears in the numerator of the fraction of a new share,
times (b) the average of either (i) the high bid and low asked prices of one old
share, as reported on the NASD OTC Bulletin Board, or (ii) the closing price of
one old share, as reported on the Nasdaq National Market, whichever alternative
is applicable, for the ten business days immediately preceding the Effective
Date of the Reverse Split for which transactions in the Common Stock are
reported.
Only the fractional shares will be purchased by the Company,
as a result, whole shares will remain outstanding. For example, if stockholder Z
owns 125 old shares. Dividing 125 shares by 2, the Reverse Split ratio, would
cause stockholder Z to hold after the reverse split 62.5 new shares. Stockholder
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Z would be issued a stock certificate for 62 new shares and would receive a cash
payment (calculated as described above) for his .5 new share fractional
interest.
Source of Funds; Number of Holders
The funds required to purchase the fractional shares are
available and will be paid from the current cash reserves of the Company. The
Company's stockholder list indicates that a portion of the outstanding Common
Stock is registered in the names of clearing agencies and broker nominees. It
is, therefore, not possible to predict with certainty the number of fractional
shares and the total amount that the Company will be required to pay for
fractional share interests. However, it is not anticipated that the funds
necessary to effect the cancellation of fractional shares will be material.
As of October 2, 1995, approximately 225 persons were holders
of record of Common Stock. The Company does not anticipate that the Reverse
Split and the payment of cash in lieu of fractional shares will result in a
significant reduction in the number of holders of record of Common Stock. The
Company does not presently intend to seek, either before or after the Reverse
Split, any change in the Company's status as a reporting company for federal
securities law purposes.
Exchange of Stock Certificates
As soon as practicable after the Effective Date, the Company
will send a letter of transmittal to each shareholder of record on the Effective
Date for use in transmitting certificates representing shares of Common Stock
("Old Certificates") to the Exchange Agent. The letter of transmittal will
contain instructions for the surrender of Old Certificates to the Exchange Agent
in exchange for certificates representing the appropriate number of whole shares
in new Common Stock. No new certificates will be issued to a shareholder until
such shareholder has surrendered all Old Certificates together with a properly
completed and executed letter of transmittal to the Exchange Agent.
Upon proper completion and execution of the letter of
transmittal and return thereof to the Exchange Agent, together with all Old
Certificates, shareholders will receive a new certificate or certificates
representing the number of whole shares of new Common Stock into which their
shares of Common Stock represented by the Old Certificates have been converted
as a result of the Reverse Split. Until surrendered, outstanding Old
Certificates held by shareholders will be deemed for all purposes to represent
the number of whole shares of new Common Stock to which such shareholders are
entitled as a result of the Reverse Split. Shareholders should not send their
Old Certificates to the Exchange Agent until they have received the letter of
transmittal. Shares not presented for surrender as soon as practicable after the
letter of transmittal is sent shall be exchanged at the first time they are
presented for transfer.
No service charges will be payable by holders of shares of
Common Stock in connection with the exchange of certificates, all expenses of
which will be borne by the Company. However, if a transfer of ownership is
requested, a fee may be charged.
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Federal Income Tax Consequences
Except as described below with respect to cash received in
lieu of fractional share interests, the receipt of Common Stock in the Reverse
Split should not result in any taxable gain or loss to stockholders for federal
income tax purposes. The tax basis of Common Stock received as a result of the
Reverse Split (including any fractional share interests to which a stockholder
is entitled) will be equal, in the aggregate, to the basis of the shares
exchanged for the Common Stock. For tax purposes, the holding period of the
shares immediately prior to the effective date of the Reverse Stock Split will
be included in the holding period of the Common Stock received as a result of
the Reverse Split, including any fractional share interests to which a
stockholder is entitled. A stockholder who receives cash in lieu of fractional
shares of Common Stock will be treated as first receiving such fractional shares
and then receiving cash as payment in exchange for such fractional shares of
Common Stock, and will recognize capital gain or loss in an amount equal to the
difference between the amount of cash received and the adjusted basis of the
fractional shares treated as surrendered for cash.
THE FEDERAL INCOME TAX DISCUSSION WITH RESPECT TO THE REVERSE
SPLIT SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY. ALL
STOCKHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS AS TO ANY FEDERAL,
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES APPLICABLE TO THEM WHICH COULD RESULT
FROM THE REVERSE SPLIT.
Effectiveness
In accordance with Delaware law and notwithstanding approval
of the amendment by Consenting Stockholders, at any times prior to the filing of
the Certificate of Amendment, the Board of Directors may, in its sole
discretion, abandon the proposed amendment without any further action by
stockholders.
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EXHIBIT A
Article IV of the Certificate of Incorporation of Capital Associates, Inc. will
be amended by the addition of the following paragraph immediately following
paragraph 3 thereof:
"4. Simultaneously with the effective date of this amendment (the
"Effective Date"), each share of Common Stock issued and outstanding
immediately prior to the Effective Date (the "Old Common Stock") shall
automatically and without any action on the part of the holder thereof
be reclassified as, and changed into, one-half (1/2) of a share of
Common Stock (the "New Common Stock"), subject to the treatment of
fractional share interests, as described below. Such reclassification
and change of Old Common Stock into New Common Stock shall not change
the par value per share of the shares reclassified and changed, which
par value shall remain $.008 per share. Each holder of a certificate
or certificates which immediately prior to the Effective Date
represented outstanding shares of Old Common Stock (the "Old
Certificates", whether one or more) shall be entitled to receive upon
surrender of such Old Certificates to the Corporation's Exchange Agent
for cancellation, a certificate or certificates (the "New
Certificates", whether one or more) representing the number of whole
shares of New Common Stock into which and for which the shares of the
Old Common Stock formerly represented by such Old Certificates so
surrendered, are reclassified under the terms hereof. From and after
the Effective Date, Old Certificates shall represent only the right to
receive New Certificates (and, where applicable, cash in lieu of
fractional shares, as provided below) pursuant to the provisions
hereof. No certificates or scrip representing fractional share
interests in New Common Stock will be issued, and no such fractional
share interest will entitle the holder thereof to vote, or to any
rights of a stockholder of the Corporation. A holder of Old
Certificates shall receive, in lieu of any fraction of a share of New
Common Stock to which the holder would otherwise be entitled, a cash
payment therefor in an amount equal to the product of (a) the number
of shares of Old Common Stock that appears in the numerator of such
fraction times (b) the average of either (i) the high bid and low
asked prices of one share of Old Common Stock, as reported on the NASD
OTC Bulletin Board, or (ii) the closing price of one share of Old
Common Stock, as reported on the Nasdaq National Market, whichever
alternative is applicable, for the ten business days immediately
preceding the Effective Date for which transactions in Old Common
Stock are reported. If more than one Old Certificate shall be
surrendered at one time for the account of the same stockholder, the
number of full shares of New Common Stock for which New Certificates
shall be issued shall be computed on the basis of the aggregate number
of shares represented by the Old Certificates so surrendered. In the
event that the Exchange Agent becomes aware that a holder of Old
Certificates has not tendered all the holder's certificates for
exchange, the Exchange Agent shall carry forward any fractional share
until all certificates of that holder have been presented for exchange
such that payment for fractional shares to any one holder shall not
exceed the value of one share of Old Common Stock. If any New
Certificate is to be issued in a name other than that in which the Old
Certificates surrendered for exchange are issued, the Old Certificates
so surrendered shall be properly endorsed and otherwise in proper form
for transfer, and the person or persons requesting such exchange shall
affix any requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish to the
satisfaction of the Exchange Agent that such taxes are not payable.
From and after the Effective Date, the amount of capital represented
by the shares of the New Common Stock into which and for which the
shares of the Old Common Stock are reclassified under the terms hereof
shall be the same as the amount of capital represented by the shares
of Old Common Stock so reclassified, until thereafter reduced or
increased in accordance with applicable law."
