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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)
CAPITAL ASSOCIATES, INC.
(Name of Issuer)
CAPITAL ASSOCIATES, INC.
(Name of Person(s) Filing Statement)
STOCK OPTIONS TO PURCHASE COMMON STOCK
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
John E. Christensen
Senior Vice President and Chief Financial Officer
Capital Associates, Inc.
7175 West Jefferson Avenue, Suite 4000
Lakewood, CO 80235
(303) 980-7323
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the Person(s)
Filing Statement)
Copy to:
Lyle B. Stewart, Esq.
Ballard Spahr Andrews & Ingersoll
1225 17th Street, Suite 2300
Denver, CO 80202
(303) 299-7314
MAY 31, 1996
(Date Tender Offer First Published, Sent or Given to Security Holders)
<TABLE>
<CAPTION>
CALCULATION OF FILING FEE
<C> <C>
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Transaction Valuation* Amount of Filing Fee
$609,150.00 $121.83
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*Based upon $1.31 cash per option for 465,000 options.
[ ] Check here 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 its filing.
Amount Previously Paid:_______ Not Applicable Filing Party: __________ Not Applicable
Form or Registration No.:_____ Not Applicable Date Filed:_____________ Not Applicable
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</TABLE>
<PAGE>
ITEM 1: Security and Issuer.
--------------------
(a) Issuer: Capital Associates, Inc. (the "Company") 7175 West Jefferson
Avenue, Suite 4000 Lakewood, CO 80235
(b) This Schedule 13E-4 relates to the offer of the Company to purchase options
covering up to 465,000 Shares (approximately 50% of the Options currently
held by employees and directors). The title of the securities being sought
is Stock Options (the "Options") issued under the Company's Second Amended
and Restated Stock Option Plan, any predecessor plans thereto, and
Non-Employee Director Stock Option Plan (the "Plans"). Such Options entitle
the holder to purchase, at the exercise price of the Options, shares of the
Company's Common Stock, $.008 par value (the "Shares"). At May 29, 1996,
there were Options to purchase 1,100,000 Shares outstanding. The Company
will pay for each Option a price equal to the difference between $2.45 and
the exercise price of such Option times the number of Shares covered by the
Option. -----
(c) The information in Section 7 on pages 9 and 10 of the Offer to Purchase
attached hereto is incorporated herein by reference.
(d) This Schedule 13E-4 is being filed by the Company.
ITEM 2: Source and Amount of Funds or Other Consideration.
--------------------------------------------------
(a) The information in Section 9 on page 11 of the Offer to Purchase attached
hereon as Exhibit A is incorporated herein by reference.
(b) Not applicable.
ITEM 3: Purpose of the Tender Offer and Plans or Proposals of the Issuer or
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Affiliate.
----------
(a) The information in "Introduction" on pages 1 and 2 and in Section 10 on
pages 11 and 15 of the Offer to Purchase attached hereto as Exhibit A is
incorporated herein by reference.
(b)-(j) Not applicable.
ITEM 4: Interest in Securities of the Issuer.
-------------------------------------
The information in Section 8 on pages 10 and 11 of the Offer to
Purchase attached hereon as Exhibit A is incorporated herein by reference.
ITEM 5: Contracts, Arrangements, Understandings or Relationships With Respect to
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the Issuer's Securities.
------------------------
The information in Section 8 on pages 10 and 11 of the Offer to
Purchase attached hereon as Exhibit A is incorporated herein by reference.
ITEM 6: Persons Retained, Employed or to Be Compensated.
------------------------------------------------
None
ITEM 7. Financial Information.
----------------------
The financial information in Section 10 on pages 11 - 15 of the Offer
to Purchase attached hereto as Exhibit A is incorporated herein by reference.
<PAGE>
ITEM 8. Additional Information.
-----------------------
(a) and (e) The information in Sections 12, 13 and 16 on pages 15 - 18 of the
Offer to Purchase attached hereto as Exhibit A is incorporated herein by
reference.
(b), (c) and (d) Not applicable.
ITEM 9. Material to be Filed as Exhibits.
---------------------------------
Exhibit 99.a(1) - Form of Offer to Purchase, dated May 31, 1996
Exhibit 99.a(2) - Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9)
Exhibit 99.a(3) - Letter to Holders
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 an
correct.
May 31, 1996 /s/John E. Christensen
-----------------------------------------------
(Signature)
John E. Christensen, Senior Vice President, CFO
-----------------------------------------------
(Name and title)
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.a(1) Form of Offer to Purchase, dated May 31, 1996
99.a(2) Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number of Substitute
Form W-9)
99.a(3) Letter to Holders
CAPITAL ASSOCIATES, INC.
Offer to Purchase for Cash Stock Options to Purchase
Up to 465,000 Shares of The Company's Common Stock
at a Purchase Price Equal to the Difference Between
$2.45 and the Exercise Price of Each Option Purchased
Times the Number of Shares Covered by such Option
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, DENVER TIME, ON JUNE 27, 1996
UNLESS THE OFFER IS EXTENDED.
Capital Associates, a Delaware corporation (the "Company"), invites
current employees and directors of the Company who are holders of options under
the Company's Second Amended and Restated Stock Option Plan, its predecessor
plans and the Company's Non-Employee Director Stock Option Plan (the "Plans") to
tender any amount, not to exceed seventy-five percent (75%), of their options
(the "Options") to purchase shares of its Common Stock, par value $.008 per
share (the "Shares"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and the related Letter of Transmittal (which together
constitute the "Offer"). All Options properly tendered will be purchased at a
purchase price equal to the difference between $2.45 and the exercise price of
each Option purchased times the number of Shares covered by such Option (the
"Purchase Price"), upon the terms and subject to the conditions of the Offer,
including its proration terms.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM
NUMBER OF OPTIONS BEING TENDERED.
The Shares are listed and principally traded on The Nasdaq Stock
Market, Inc. National Market ("Nasdaq"). On May 29, 1996, the closing per Share
sales price as reported on the Nasdaq was $2.69. The Purchase Price offered
hereby is below the current market price for the Shares. The Company urges
stockholders to obtain current market quotations for the Shares. See Section 7.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO ANY HOLDER AS TO WHETHER TO TENDER OR TO REFRAIN FROM TENDERING OPTIONS
PURSUANT TO THE OFFER. EACH HOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER
OPTIONS AND, IF SO, HOW MANY OPTIONS TO TENDER.
May 31, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
Page
INTRODUCTION................................................................. 1
1. Number of Options; Proration........................................ 2
2. Tenders by Owners of Options Covering Fewer than
100 Shares.......................................................... 4
3. Procedures for Tendering Options.................................... 5
4. Withdrawal Rights................................................... 5
5. Purchase of Options and Payment of Purchase Price................... 6
6. Certain Conditions of the Offer..................................... 6
7. Price Range of Shares; Dividends.................................... 9
8. Interest of Directors and Executive Officers;
Transactions and Arrangements Concerning the
Options............................................................. 10
9. Source and Amount of Funds.......................................... 11
10. Background and Purpose of the Offer, Certain
Information About the Company....................................... 11
11. Effects of the Offer on the Market; Registration
under the Exchange Act.............................................. 15
12. Certain Legal Matters; Regulatory Approvals......................... 15
13. Certain Federal Income Tax Consequences............................. 16
14. Extension of the Offer; Termination; Amendments..................... 16
15. Fees and Expenses................................................... 17
16. Miscellaneous....................................................... 17
Schedule 1................................................................... 19
<PAGE>
INTRODUCTION
The Company invites current employees and directors of the Company who
are holders of Options under the Plans to tender any amount, not to exceed
seventy-five percent (75%), of their Options (except for Odd Lot Owners
described in Section 2) at the Purchase Price set forth on the cover hereof,
upon the terms and subject to the conditions of the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF OPTIONS BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
SHORT-SWING PROFIT LIABILITY FOR CERTAIN HOLDERS. The purchase of
Options tendered by a director, owner of more than ten percent (10%) of the
Shares or an executive officer of the Company who is subject to Section 16 of
the Securities Exchange Act of 1934, as amended, will be a "sale" for the
purposes of the short-swing profit liability provisions of that Act. Such
persons may be liable for any "profit" realized when such sale is matched with a
"purchase" made either six months before or after the Expiration Date. While
grants of Options under each of the Plans qualify for an exemption under Rule
16b-3 promulgated by the SEC and, therefore, are not generally treated as a
"purchase" for purposes of the short-swing matching provisions of Section 16(b),
such exemption requires that the Options or the underlying Shares can not be
sold within six months of the grant. The tender and purchase of Options that
were granted within the six months before the Expiration Date of this Offer
would negate the exemption provided by Rule 16b-3 for the grant of such Options,
and the grant and sale of such Options would be matched for Section 16 purposes
and the holder, if subject to Section 16, would be liable to the Company for any
profit on sale of those Options. For this reason, the Company advises its
directors, ten percent (10%) owners of Shares and executive officers subject to
Section 16 not to tender any Options granted within six months prior to the
Expiration Date.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer Options for more than 465,000 Shares are properly
tendered, the Company will buy Options first from all Odd Lot Owners (as defined
in Section 2) who properly tendered all their Options (and did not withdraw them
prior to the expiration of the Offer) and then on a pro rata basis from all
other holders of Options who properly tendered Options (and did not withdraw
them prior to the expiration of the Offer). See Sections 1 and 2. The Company
will confirm the amount of Options not purchased pursuant to the Offer promptly.
Tendering holders will not be obligated to pay brokerage commissions,
solicitation fees or transfer taxes because of the Company's purchase of Options
<PAGE>
pursuant to the Offer. In addition, the Company will pay all fees and expenses
in connection with the Offer. See Section 15.
The Shares are listed and principally traded on the Nasdaq under the
symbol "CAII". On May 29, 1996, the closing per Share sales price as reported on
the Nasdaq was $2.69. The Purchase Price offered hereby is below the current
market price of the Shares. THE COMPANY URGES HOLDERS TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO ANY HOLDER AS TO WHETHER TO TENDER OR TO REFRAIN FROM TENDERING OPTIONS
PURSUANT TO THE OFFER. EACH HOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER
OPTIONS AND, IF SO, HOW MANY OPTIONS TO TENDER.
The Options that the Company is offering to purchase pursuant to the
Offer represent approximately 50% of the Options owned by employees and
directors under the Plans as of May 29, 1996.
The Company is making the Offer because its Board of Directors believes
that, given the Company's business, cash position, assets and prospects, and the
recent market prices of the Shares, the purchase of Options pursuant to the
Offer is an attractive investment for the Company. The Offer will also provide
the Company's current employees and directors with the opportunity to
immediately monetize their Options, including Options that have not yet vested,
without being subject to the restrictions contained in the Plans. Whether or not
the maximum number of Options are purchased pursuant to this Offer, after
expiration of the Offer and depending upon market conditions and other factors,
the Company may purchase additional Options or Shares in the open market, in
privately negotiated transactions or otherwise. See Sections 8 and 10. Transfer
restrictions that are contained in holder Stock Option Agreements do not apply
to the Offer or are waived by the Board of Directors.
1. Number of Options; Proration.
-----------------------------
Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment and pay for (and thereby purchase) Options covering up
to 465,000 Shares (representing approximately 50.0% of the Options held by
current employees and directors under the Plans as of May 29, 1996) or such
lesser number of Shares as are properly tendered and not withdrawn prior to the
Expiration Date at the Purchase Price. The term "Expiration Date" means 12:00
Midnight, Denver time, on Thursday, June 27, 1996, unless and until the Company
shall have extended the period of time during which the Offer will remain open
in which event the term "Expiration Date" shall refer to the latest time and
<PAGE>
date at which the Offer, as so extended by the Company, shall expire. See
Section 14 for a description of the Company's rights to extend the time during
which the Offer is open and to delay, terminate or amend the Offer. See also
Section 6. Subject to Section 2, if the Offer is over-subscribed, Options
tendered and not withdrawn prior to the Expiration Date will be eligible for
proration. The proration period also expires at the Expiration Date.
Eligible holders may tender up to seventy-five percent (75%) of all of
the Options owned by them by completing the enclosed Letter of Transmittal. (Odd
Lot Owners defined in Section 2 may tender all their Options.) Holders may
tender Options which have not yet vested, or may tender only part of the Options
that expire on any specific date. The Letter of Transmittal must indicate both
the vesting date and the expiration date of the Options that are tendered, as
well as the exercise price and the grant date. Questions regarding these matters
and how to complete the Letter of Transmittal should be addressed to David L.
Fabian at (303) 980-7475.
The Company reserves the right to purchase Options covering more than
465,000 Shares pursuant to the Offer; but does not currently plan to do so.
If
(a) the Company increases or decreases the price to be paid for
the Options, or the Company increases the number of Options being
sought and any such increase in the number of the Options being sought
exceeds 2% of the outstanding Options, or the Company decreases the
number of Options being sought, and
(b) the Offer is scheduled to expire less than ten business days
from and including the date that notice of such increase or decrease is
first published, sent or given in the manner set forth in Section 14,
then, the Offer will be extended so that it will not expire until at least the
end of the tenth business day from and including the date of such notice. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 A.M.
through Midnight, Denver time.
The number of Options not purchased pursuant to the Offer, including
Options not purchased because of proration, will be confirmed to the tendering
holders by the Company as promptly as practicable following the Expiration Date.
<PAGE>
The Company shall promptly return to each holder revised Stock Option Agreement
Schedules showing the number of Options that continue to be owned by the holder.
Such Options shall continue to be governed by the applicable Stock Option
Agreement.
Upon the terms and subject to the conditions of the Offer, if the
number of Options properly tendered and not withdrawn prior to the Expiration
Date cover 465,000 or less Shares, the Company will accept for payment at the
Purchase Price all Options so tendered.
Upon the terms and subject to the conditions of the Offer, in the event
that at the Expiration Date Options covering a greater number of Shares than
465,000 Shares are properly tendered, the Company will accept Options for
payment in the following order of priority:
(a) first, all Options properly tendered and not withdrawn prior
to the Expiration Date by any Odd Lot Owner (as defined in Section 2)
who tenders all Options beneficially owned by such Odd Lot Owner
(partial tenders not qualifying for this preference); and
(b) second, after all of the foregoing Options are accepted for
payment, all other Options properly tendered and not withdrawn prior to
the Expiration Date on a pro rata basis (with adjustments to avoid
purchases of fractions) based upon the number of such Options.
In the event that proration of tendered Options is required, the
Company will determine the final proration factor as promptly as practicable
following the Expiration Date. The Company will announce the final results of
any proration as promptly as practicable following the Expiration Date.
2. Tenders by Owners of Options Covering Fewer than 100 Shares.
------------------------------------------------------------
Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment without proration all Options properly tendered and not
withdrawn prior to the Expiration Date by or on behalf of holders who
beneficially owned as of the close of business on May 29, 1996, and beneficially
own as of the time of tendering, Options covering fewer than 100 Shares ("Odd
Lot Owners"). See Section 1. To avoid proration an Odd Lot Owner must properly
tender all Options that such Odd Lot Owner beneficially owns (and not withdraw
any such Options), since partial tenders will not qualify for this preference.
This preference is not available to beneficial owners of Options covering 100 or
more Shares. See Section 3.
<PAGE>
3. Procedures for Tendering Options.
---------------------------------
PROPER TENDER OF OPTIONS. For Options to be properly tendered pursuant
to the Offer, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal, must be received prior to the Expiration Date by the Company,
together with a copy of the holder's Stock Option Agreement Schedules showing
all Options granted to the holder.
It is a violation of Section 10(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Rule 10b-4 promulgated thereunder,
for a person to tender Options for such person's own account unless the person
so tendering owns such Options. Section 10(b) and Rule 10b-4 contain a similar
restriction applicable to a tender or guarantee of a tender on behalf of another
person.
The acceptance of Options by the Company for payment will constitute a
binding agreement between the tendering holder and the Company upon the terms
and subject to the conditions of the Offer, including the tendering holder's
representation that (i) such holder owns the Options being tendered within the
meaning of Rule 10b-4 and (ii) the tender of such Options complies with Rule
10b-4.
DETERMINATION OF VALIDITY; REJECTION OF OPTIONS; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Options
to be accepted, the price to be paid therefor and the form, eligibility,
validity (including time of receipt) and acceptance for payment of any tender of
Options will be determined by the Company, in its sole discretion, which
determinations shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders it determines not to be in
proper form or the acceptance for payment of or payment for which may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any defect or irregularity in the tender of any
particular Options. No tender of Options will be deemed to be properly made
until all defects and irregularities have been cured or waived. The Company or
any other person is not or will not be obligated to give notice of any defects
or irregularities in tenders, and they will not incur any liability for failure
to give such notice.
4. Withdrawal Rights.
------------------
Except as otherwise provided in this Section 4, a tender of Options
made pursuant to the Offer is irrevocable. Options tendered pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date and, unless
<PAGE>
theretofore accepted for payment by the Company, may also be withdrawn after
12:00 Midnight, Denver time, on July 26, 1996.
For a withdrawal to be effective, the Company must timely receive a
written, telegraphic, telex or facsimile transmission notice of withdrawal at
its address set forth on the Letter of Transmittal. Any notice of withdrawal
must specify the name of the person who tendered the Options to be withdrawn,
the number of Options tendered, the number of Options to be withdrawn and the
name of the registered holder, if different from that of the person who tendered
such Options. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Company, in its sole
discretion, which determinations shall be final and binding on all parties. The
Company or any other person is not or will not be obligated to give notice of
any defects or irregularities in any notice of withdrawal, and none of them will
incur any liability for failure to give such notice. Any Options properly
withdrawn will thereafter be deemed not tendered for purposes of the Offer.
Withdrawn Options may, however, be retendered prior to the Expiration Date by
again following any of the procedures set forth in Section 3.
5. Purchase of Options and Payment of Purchase Price.
--------------------------------------------------
Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment and pay the Purchase Price for Options covering up to
465,000 Shares or such lesser number as are properly tendered, as promptly as
practicable following the Expiration Date. In the event of proration, the
Company will determine the final proration factor and pay for Options accepted
for payment as promptly as practicable following the Expiration Date. However,
the Company does not expect to be able to announce the final results of any
proration immediately after the Expiration Date. The results of any proration
will be confirmed as promptly as practicable following the Expiration Date. The
Company shall promptly return to each holder revised Stock Option Agreement
Schedules showing the number of Options that continue to be owned by the holder.
Such Options shall continue to be governed by the applicable Stock Option
Agreement. Under no circumstances will the Company pay interest on the aggregate
Purchase Price or any portion thereof.
The Company will pay the transfer taxes, if any, payable on account of
the transfer to it of Options purchased pursuant to the Offer.
6. Certain Conditions of the Offer.
--------------------------------
Notwithstanding any other provision of the Offer, the Company shall not
be required to accept for payment or pay for any Options tendered, and may
<PAGE>
terminate or amend the Offer or may postpone the acceptance for payment of or
the payment for Options tendered, if at any time on or after May 31, 1996, and
at or before the time of acceptance for payment of or payment for any such
Options, any of the following events shall have occurred (or shall have been
determined by the Company to have occurred) which, in the Company's sole
judgment in any such case and regardless of the circumstances giving rise
thereto (including any action or omission to act by the Company), makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
payment:
(a) Norwest Bank Colorado, N.A., for itself and as Agent for the
Company's lending banks objects to this Offer or will not approve the
completion of the Company's repurchase of Options as provided herein;
or
(b) there shall be any claim, action or proceeding threatened,
pending or instituted, or any consent, license, authorization, permit,
or approval withheld, or any statute, rule, regulation, judgment, order
or injunction threatened, proposed, sought, promulgated, enacted,
entered, amended, enforced or deemed to be applicable to the Offer or
the Company or any of its subsidiaries, by or before any court or any
government or governmental, regulatory or administrative authority,
agency or tribunal, domestic or foreign, which challenges the making of
the Offer or the acquisition of Options pursuant to the Offer or which
could directly or indirectly:
(1) make the acceptance for payment of, or payment for, some
or all of the Options illegal or otherwise restrict or prohibit
consummation of the Offer;
(2) delay or restrict the ability of the Company, or render
the Company unable, to accept for payment or pay for some or all
of the Options; or
(3) in the Company's sole judgment, materially affect the
business, condition (financial or other), income, operations or
prospects of the Company and its subsidiaries, taken as a whole,
or otherwise materially impair in any way the contemplated future
conduct of the business of the Company or any of its subsidiaries
or materially impair the Offer's contemplated benefits to the
Company; or
(c) there shall have occurred:
<PAGE>
(1) the declaration of any banking moratorium or suspension
of payments in respect of banks in the United States;
(2) any general suspension of trading in, or limitation on
prices for, securities on any United States national securities
exchange or in the over-the-counter market;
(3) the commencement of a war, armed hostilities or any
other national or international crisis directly or indirectl
involving the United States;
(4) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority
on, or any event that, in the Company's sole judgment, might
affect, the extension of credit by banks or other lending
institutions in the United States;
(5) any significant decrease in the market price of the
Shares or in the market prices of equity securities generally in
the United States or any change in the general political,
economic or financial conditions in the United States or abroad
that, in the Company's sole judgment, could have a material
adverse effect on the business, condition (financial or
other),income, operations or prospects of the Company and its
subsidiaries, taken as a whole; or
(6) in the case of any of the foregoing existing at the time
of the commencement of the Offer a material acceleration or
worsening thereof; or
(d) any change shall occur or be threatened in the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, which, in the Company's
sole judgment, is or may be material to the Company or its holders; or
(e) a tender or exchange offer for any or all of the Shares, or
any merger, business combination or other similar transaction with or
involving the Company or any of its subsidiaries, shall have been
proposed, announced or made by any person; or
(f) (i) any entity, "group" (as that term is used in Section
13(d) (3) of the Exchange Act) or person (other than entities, groups
or persons, if any, who have filed with the Securities and Exchange
Commission (the "Commission") on or before May 29, 1996, a Schedule 13G
or a Schedule 13D with respect to any of the Shares) shall have
<PAGE>
acquired or proposed to acquire beneficial ownership of more than 5.0%
of the outstanding Shares, or (ii) any entity, group or person that has
publicly disclosed beneficial ownership of more than 5.0% of the
outstanding Shares prior to such date shall have acquired or proposed
to acquire beneficial ownership of additional Shares constituting more
than 1.0% of the outstanding Shares or shall have been granted any
option or right to acquire beneficial ownership of more than 1.0% of
the outstanding Shares.
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition (including any action or omission to act by the Company) or may be
waived by the Company in whole or in part. The Company's failure at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time. Any determination by the Company concerning
any of the events described in this Section 6 shall be final and binding on all
parties.
7. Price Range of Shares; Dividends.
---------------------------------
The Shares are principally traded on the Nasdaq. The following table
sets forth for the periods indicated the high and low closing per Share sales
prices on Nasdaq. On November 2, 1995, a 1 for 2 reverse stock split was
effected by the Company. The prices in the following table for periods prior to
such date have been adjusted to reflect such reverse split.
HIGH LOW
---- ---
Fiscal 1995
1st Quarter........................ 1 7/8 1 1/4
2nd Quarter........................ 1 7/8 1 1/4
3rd Quarter........................ 1 7/16 15/16
4th Quarter........................ 1 7/16 7/8
Fiscal 1996
1st Quarter........................ 1 5/32 1 1/4
2nd Quarter........................ 2 1/8 3/4
3rd Quarter........................ 1 7/8 1 3/8
4th Quarter*....................... 3 5/16 1 5/8
*As of May 29, 1996
<PAGE>
No dividends have been paid during the periods indicated and the
Company does not anticipate paying dividends on its common stock in the
foreseeable future.
On May 29, 1996, the closing per Share sales price as reported on
Nasdaq was $2.69. The Purchase Price offered hereby is below the current market
price of the Shares. THE COMPANY URGES HOLDERS TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
8. Interest of Directors and Executive Officers; Transactions and
-----------------------------------------------------------------------
Arrangements Concerning the Options.
------------------------------------
As of May 29, 1996, the Company's directors and executive officers as a
group beneficially owned an aggregate of approximately 66.0% of the outstanding
Options. The Company has not been advised whether any of its directors or
executive officers intends to tender any Options pursuant to the Offer. This
Offer to Purchase shall be amended to disclose the number of Shares covered by
Options tendered by the Company's executive officers and directors.
Except as set forth in Schedule l hereto, based upon the Company's
records and upon information provided to the Company by its directors and
executive officers, neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any of the directors or executive officers of the Company
or any of its subsidiaries nor any associates of any of the foregoing has
effected any transactions in Options or Shares during the forty business days
prior to the date hereof. During the first and second quarters of fiscal 1996,
the Company purchased 129,350 Shares under its previously announced Share
repurchase program. The total Shares purchased to date is 129,350 Shares out of
the 250,000 Shares authorized to be repurchased under such program. Until at
least ten business days after the expiration of the Offer, the Company may not
purchase Shares pursuant to such Share repurchase program or otherwise.
Subsequently, depending upon market conditions and other factors, the Company
may purchase additional Shares under the program. See Section 10.
Except as set forth in this Offer to Purchase, neither the Company nor,
to the Company's knowledge, any of its directors or executive officers or any of
the executive officers or directors of its subsidiaries, is a party to any
contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to the Offer, with respect to any securities
of the Company (including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies, consents or authorizations).
<PAGE>
On November 10, 1995 and January 10, 1996, MCC Financial Corporation
("MCC") acquired 615,120 shares of Company common stock from two shareholders of
CAI. MCC beneficially owns and/or has voting control over a total of 2,833,369
shares of Company common stock constituting 56.0% of the outstanding shares of
Company common stock. Of the 2,833,369 shares, 695,000 shares are not owned by
MCC, but MCC is entitled to vote these shares pursuant to proxies executed by
the current owners, and MCC has entered into the Stock Purchase Agreements to
purchase these shares in the future. James D. Walker and William K. Buckland
each own 50.0% of the common stock of MCC, and are Directors of the Company.
Gary M. Jacobs, a director and former executive officer of the Company and Jack
Durliat, a former director and executive officer of the Company are the selling
shareholders.
9. Source and Amount of Funds.
---------------------------
Assuming that the Company purchases Options covering 465,000 Shares
pursuant to the Offer at a Purchase Price of $1.31 per Share (which is equal to
$2.45 minus the average exercise price of Options outstanding on May 29, 1996),
the Company expects the maximum aggregate cost, including all fees and expenses
related to the Offer, to be approximately $620,000. It is anticipated that the
funds required to pay all such costs will be obtained from the cash on hand of
the Company.
10. Background and Purpose of the Offer, Certain Information About the
-----------------------------------------------------------------------
Company.
--------
The Company, Capital Associates, Inc., was incorporated as a holding
company in October 1986. Its principal operating subsidiary, Capital Associates
International, Inc., was incorporated in December 1976. The Company is
principally engaged in (1) buying, selling, leasing and remarketing new and used
equipment, (2) managing equipment on and off-lease, (3) sponsoring,
co-sponsoring, managing and co-managing publicly- registered income funds and
(4) arranging equipment-related financing. The Company's principal business
office is located at 7175 West Jefferson Avenue, Suite 4000, Lakewood, Colorado
80235, and their telephone number is (303) 980-1000.
The Company's Board of Directors has determined that, given the
Company's business, cash position, assets and prospects, and the recent market
prices of the Shares, the purchase of Options pursuant to the Offer is an
attractive investment for the Company. The Offer will also provide the Company's
current employees and directors with the opportunity to immediately monetize
their Options, without being subject to the restrictions contained in the Plans,
including Options that have not vested.
<PAGE>
In order for the Company to complete the Offer being made hereby, the
Company must seek the approval of its lenders. While the Company has informed
its lenders, through the agent bank, of this Offer, such approval has not been
obtained as of May 31, 1996. See Section 6.
Holders whose Options are not purchased in the Offer, upon the exercise
of those Options, may obtain a proportionate increase in their ownership
interests in the Company as a result of the Offer.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO ANY HOLDER AS TO WHETHER TO TENDER OR TO REFRAIN FROM TENDERING ANY OR ALL OF
SUCH HOLDER'S OPTIONS AND HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. EACH HOLDER IS URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THIS OFFER, CONSULT HIS OWN INVESTMENT AND TAX ADVISORS AND MAKE HIS OWN
DECISION WHETHER TO TENDER OPTIONS AND, IF SO, HOW MANY OPTIONS TO TENDER.
If Options covering fewer than 465,000 Shares are purchased pursuant to
the Offer, after expiration of the Offer, the Company may repurchase the
remainder of such Options in the open market in privately negotiated
transactions or otherwise. In addition, the Board of Directors of the Company
previously authorized a program to purchase up to 250,000 Shares of which
129,350 Shares have been acquired. After expiration of the Offer, the Company
may purchase additional Shares under such program or otherwise. Rule 13e-4 under
the Exchange Act prohibits the Company and its affiliates from purchasing any
Options or Shares, other than pursuant to the Offer, until at least ten business
days after the Expiration Date. Any possible future purchases of Options or
Shares by the Company will depend on many factors, including the market price of
the Shares, the results of the Offer, the Company's business and financial
position and general economic and market conditions.
Options purchased pursuant to the Offer will be cancelled and will not
increase the amount of Options available for grant under the Plans.
SUMMARY HISTORICAL FINANCIAL INFORMATION
The following table sets forth certain summary consolidated historical
financial information of the Company and its subsidiaries. The historical
financial information as of and for the years ended May 31, 1994 and May 31,
1995 has been summarized from the Company's audited consolidated financial
statements incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995 (the "1995 10-K"). The historical
<PAGE>
financial information as of and for the nine-month periods ended February 29,
1996 and February 28, 1995 has been summarized from the unaudited consolidated
financial statements incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the nine-month period ended February 29, 1996 (the "Form
10-Q"). The impact of the Offer on this information is not material. The
following summary of historical financial information is qualified in its
entirety by, and should be read in conjunction with, such audited consolidated
financial statements and unaudited consolidated financial statements and related
notes. Copies of the 1995 10-K and Form 10-Q are available from the Company and
in the manner and at the places set forth under "Available Information" below.
<PAGE>
CAPITAL ASSOCIATES, INC.
SUMMARY HISTORICAL FINANCIAL INFORMATION
(in thousands, except per share data and ratios)
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
May 31 -------------------------
-------------------- February 29, February 28,
1995 1994 1996 1995
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales of continuing operations................ $104,944 $154,965 $124,016 $72,636
Income from continuing operations................. 1,116 710 253 288
Income from discontinued operations............... 0 0 0 0
Net income ....................................... 1,116 710 253 288
Earnings per common and common
equivalent share:
Continuing operations........................... $0.21 $0.13 $0.05 $0.05
Discontinued operations......................... $0.00 $0.00 $0.00 $0.00
Net income...................................... $0.21 $0.13 $0.05 $0.05
Average Shares outstanding including any
common equivalent Shares........................ 5,325 5,451 5,315 5,416
Ratio of earnings to fixed charges of
continuing operations (unaudited)*.............. 179% 158% 124% 143%
Balance Sheet Data (at end of period):
Working capital**.................................
Total assets...................................... 158,672 209,725 119,153 156,542
Notes and loans payable and current maturities
of long-term debt (recourse debt):..............
Working Capital Facility........................ 1,531 49 748 1,298
Warehouse Facility.............................. 12,156 0 12,106 7,838
Term Loan....................................... 10,833 18,718 7,583 11,917
Long-term debt:...................................
Obligations under capital leases
and deferred gain arising from
sale-leaseback transactions..................... 21,024 32,337 11,684 23,952
Discounted lease rentals........................ 77,192 128,505 46,678 85,380
Stockholders' equity.............................. 22,490 21,099 22,515 21,609
Book value per share.............................. $4.40 $4.32 $4.51 $4.25
</TABLE>
* The ratio of earnings to fixed charges of continuing operations was
calculated by dividing income from continuing operations before income
taxes plus fixed charges, excluding capitalized interest, by fixed
charges. Fixed charges consist of interest, including capitalized
interest, amortization of debt expenses, and one-third of rent expense
which approximates the interest portion of rentals.
** As the Company's operating cycle is longer than one year, the inclusion
of items in current assets or current liabilities is not required under
Reg. 210.4-05 and, therefore, working capital was not calculated.
<PAGE>
ADDITIONAL INFORMATION. The Company is subject to the informational
reporting requirements of the Exchange Act and in accordance therewith
files periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other
matters. The Company is required to disclose in such reports and proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options
granted to them, the principal owners of the Company's securities and
any material interest of such persons in transactions with the Company.
The Company has also filed an Issuer Tender Offer Statement on Schedule
13E-4 (the "Schedule 13E-4") with the Commission which includes certain
additional information relating to the Offer.
Such material may be inspected and copied upon payment of the
prescribed rates at the public reference facilities of the Commission,
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its regional offices at Room 1400, 75 Park Place, New York, New York
10007 and Room 3190, Kluczynski Federal Building, 230 South Dearborn
Street, Chicago, Illinois 60604. Copies may also be obtained by mail
upon payment of the prescribed rates from the Commission's Public
Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Schedule 13E-4 will not be available at the Commission's regional
offices.
11. Effects of the Offer on the Market; Registration under the Exchange
-----------------------------------------------------------------------
Act.
----
The Company's purchase of Options pursuant to the Offer will reduce the
potential number of Shares that might otherwise trade publicly. For financial
reporting purposes, the fully diluted number of Shares outstanding will be
reduced by the purchase of Options. The Shares are registered under the Exchange
Act which requires, among other things, that the Company furnish certain
information to its holders and to the Commission and comply with the
Commission's proxy rules in connection with meetings of the Company's holders.
The Offer will not result in the Shares becoming eligible for deregistration
under the Exchange Act.
12. Certain Legal Matters; Regulatory Approvals.
--------------------------------------------
The Company is not aware of any license or regulatory permit that
appears to be material to its business that might be adversely affected by its
acquisition of Options pursuant to the Offer or of any approval or other action
by any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the Company's
<PAGE>
acquisition of Options pursuant to the Offer. Should any such approval or other
action be required, the Company currently contemplates that it will seek such
approval or other action. The Company cannot predict whether it may determine
that it is required to delay the acceptance for payment of or payment for
Options tendered pursuant to the Offer pending the outcome of any such matter.
There can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
the failure to obtain any such approval or other action might not result in
adverse consequence's to the Company's business. The Company's obligation under
the Offer to accept for payment and pay for Options is subject to certain
conditions. See Section 6.
13. Certain Federal Income Tax Consequences.
----------------------------------------
A holder who tenders his or her Options to the Company pursuant to the
Offer will recognize ordinary income in an amount equal to the aggregate
Purchase Price minus the aggregate amount, if any, paid by the holder for such
Options. The Company will withhold proper income/employment withholding tax
amounts from all payments made to a holder who is an employee (or former
employee). The withholding amount will be based on the amount of the payment,
such holder's overall wage level, the number of withholding exemptions claimed
by the holder and certain other factors. The Company will not withhold any
income/employment taxes from payments made to directors (or former directors).
14. Extension of the Offer; Termination; Amendments.
------------------------------------------------
The Company expressly reserves the right, at any time and from time to
time, to extend the period of time during which the Offer is open by giving
written notice of such extension to the holders of Options. The Company also
expressly reserves the right, in its sole discretion, to terminate the Offer and
not accept for payment or pay for any Options not theretofore accepted for
payment or paid for or, subject to applicable law, to postpone payment for
Options upon the occurrence of any of the conditions specified in Section 6 by
giving written notice of such termination or postponement to the holders of
Options. The Company's reservation of the right to delay payment for Options
which it has accepted for payment is limited by Rule 13e-4(f) (5) under the
Exchange Act, which requires that the Company pay the consideration offered or
return the Options tendered promptly after termination or withdrawal of the
Offer. Subject to compliance with applicable law, the Company further reserves
the right, in its sole discretion, to amend the Offer in any respect or to waive
the limitation on the maximum number of Options to be purchased pursuant to the
Offer. Amendments to and extension of the Offer may be made at any time and from
time to time. Any announcement made pursuant to the Offer will be disseminated
<PAGE>
promptly to holders in a manner reasonably designed to inform the holders.
Without limiting the manner in which the Company may choose to make an
announcement, except as required by applicable law, the Company shall have no
obligation to publish, advertise or otherwise communicate any such announcement.
If the Company materially changes the terms of the Offer or the
information concerning the Offer, or if it waves a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. These rules require that the
minimum period during which an offer must remain open following material changes
in the terms of an offer or the information concerning an offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
Options, or the Company increases the number of Options being sought and any
such increase in the number of Options being sought exceeds 2.0% of the
outstanding Options, or the Company decreases the number of Options being
sought, and (ii) the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that notice of such increase or decrease is first published, sent or given,
the Offer will be extended until at least the end of such tenth business day.
15. Fees and Expenses.
------------------
The Company will pay certain legal and other expenses in connection
with the Offer. The Company will not pay fees or commissions to any broker,
dealer, commercial bank, trust company or other person for soliciting tenders of
Options pursuant to the Offer. The Company will, however, reimburse such persons
for customary handling and mailing expenses incurred in forwarding materials in
respect of the Offer to the beneficial owners for which they act as nominees or
fiduciaries. No such broker, dealer, commercial bank, trust company or other
person has been authorized to act as the Company's agent for purposes of this
Offer. The Company will pay (or cause to be paid) any transfer taxes payable
because of its purchase of Options pursuant to the Offer, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
16. Miscellaneous.
--------------
The Company is not aware of any jurisdiction where the making of the
Offer is not in compliance with applicable law. If the Company becomes aware of
any jurisdiction where the making of the Offer is not in compliance with any
valid applicable law, the Company will make a good faith effort to comply with
such law.
<PAGE>
If, after such good faith effort, the Company cannot comply with such law, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Options residing in such jurisdiction.
CAPITAL ASSOCIATES, INC.
May 31, 1996
<PAGE>
Schedule 1
CERTAIN TRANSACTIONS INVOLVING OPTIONS AND SHARES
Shares
Sold Price Date Exchange
------ ----- ---- --------
David L. Fabian 11,000 $3 1/8 April 29, Nasdaq
Senior Vice President, per share 1996 National
Corporate Services Market
LETTER OF TRANSMITTAL
For Options to Purchase Common Stock
of
CAPITAL ASSOCIATES, INC.
Tendered Pursuant to the Offer to Purchase dated May 31, 1996
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
DENVER TIME, ON THURSDAY, JUNE 27, 1996, UNLESS THE OFFER IS EXTENDED
To: Capital Associates, Inc.
7175 West Jefferson Avenue, Suite 4000
Lakewood, CO 80235
Attention: David Fabian
DELIVERY OF THIS INSTRUMENT AND ALL OTHER REQUIRED DOCUMENTS TO AN
ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY TO THE
COMPANY.
This Letter of Transmittal is to be used to tender Options to purchase
common stock of Capital Associates, Inc. granted pursuant to the Company's
Second Amended and Restated Stock Option Plan, its predecessor plans and the
Company's Non-Employee Director Stock Option Plans (the "Plans") in connection
with the Offer to Purchase dated May 31, 1996. Holders must read carefully the
Offer to Purchase before tendering their Options pursuant to this Letter of
Transmittal.
Holders are reminded that they may tender less than, but may not tender
more than, seventy-five percent (75%) of their Options as defined in the Offer
to Purchase dated May 31, 1996.
HOLDERS MUST ATTACH COPIES OF THE OPTION SCHEDULES THAT WERE ATTACHED
TO EACH OF THEIR STOCK OPTION AGREEMENTS PURSUANT TO WHICH OPTIONS HAVE BEEN
GRANTED TO THEM. IF FOR ANY REASON, INCLUDING PRORATION, TENDERED OPTIONS ARE
NOT PURCHASED, THE COMPANY SHALL PROMPTLY RETURN TO THE HOLDER REVISED STOCK
OPTION AGREEMENT SCHEDULES INDICATING THE NUMBER OF OPTIONS THAT WERE NOT
PURCHASED.
DESCRIPTION OF OPTIONS TENDERED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Grant Vesting Expiration Exercise
Name as it appears in the Company's records. Date Date Date Price
- -------------------------------------------- ----- ------- ---------- --------
</TABLE>
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Capital Associates, Inc. (the
"Company"), the above-described Options as defined in the Offer to Purchase of
the Company dated May 31, 1996, upon the terms and subject to the conditions set
forth in such Offer to Purchase, receipt of which is hereby acknowledged, and in
this Letter of Transmittal (the "Offer").
Subject to and effective on the acceptance for payment of Options
tendered hereby in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to all such Options.
The undersigned hereby represents and warrants that:
(a) the undersigned "owns" the Options tendered hereby within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, and has full power and authority to validly tender, sell, assign and
transfer the Options tendered hereby;
(b) when and to the extent the Company accepts such Options for
payment, the Company will acquire good, marketable and unencumbered title to
them, free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to their sale or
transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any additional
documents the Company deems necessary or desirable to complete the assignment,
transfer and purchase of Options tendered hereby and accepted for payment; and
(d) the undersigned has read and agrees to all of the terms
of the Offer.
<PAGE>
HOLDER(S) SIGN HERE
Must be signed by registered holder(s) exactly as name(s) appear(s) on Stock
Option Agreement. If signature is by attorney-in-fact, executor, administrator,
trustee, guardian, partner, officer of a corporation or another acting in a
fiduciary or representative capacity, please set forth the signer's full title.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Holder(s)
Dated:____________________________________________________________________, 1996
Name(s)_________________________________________________________________________
(Please Print)
Area Code(s) and Telephone Number(s)____________________________________________
- --------------------------------------------------------------------------------
(Tax Identification or Social Security Number(s))
[CAI LETTERHEAD]
May 31, 1996
TO: Holders of Options to Purchase Common Stock of
Capital Associates, Inc.
Dear Holder:
Capital Associates, Inc. is offering to purchase approximately
50% of the outstanding options issued to current employees and directors. The
purchase price will be the difference between $2.45 per share and the exercise
price of the option. The Offer provides the current employees and directors with
an opportunity to immediately obtain cash for their Options (including unvested
options) without the requirement to fund exercising the stock option or without
paying a stock broker's commission or without being subject to the restrictions
contained in the stock option plans.
The Offer expires at 12:00 Midnight on June 27, 1996. Each
holder of options may tender up to 75% of the options he or she holds. If more
than 50% of the outstanding options are tendered, the Company will prorate the
options that it accepts and pays for. The Company will inform the holders of the
results of the tender offer as promptly as possible after the expiration date.
The ultimate decision whether to participate in this Offer is
yours, based on your individual circumstances. The Company will not judge you
for participating or not participating in this Offer.
Please read the enclosed offer to purchase and letter of
transmittal carefully before you decide to tender your options. To sell your
options, please complete the Letter of Transmittal in accordance with the
instructions in the Letter of Transmittal and the offer to purchase. If you have
any questions, please contact David Fabian at (303) 980-7475.
Very truly yours,
/s/David L. Fabian
------------------------------
David L. Fabian
Senior Vice President
