SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
CONX CAPITAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 62-1736894
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
502 North Division Street, Carson City, Nevada, 89703
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (702) 886-0713
Securities to be Registered Pursuant to Section 12(b) of the Act:
None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
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CONX CAPITAL CORPORATION
FORM 10
TABLE OF CONTENTS
ITEM No. Page
________ ____
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. FINANCIAL INFORMATION . . . . . . . . . . . . . . . 17
ITEM 3. PROPERTIES . . . . . . . . . . . . . . . . . . . . 22
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . 23
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . 24
ITEM 6. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . 26
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS . . . . . . . . . . . . . . . . . . . 26
ITEM 8. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . 27
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . 27
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES . . . . . . 27
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE
REGISTERED . . . . . . . . . . . . . . . . . . . . 28
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . 29
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . 31
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . 31
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS . . . . . . . . . 31
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CONX CAPITAL CORPORATION
Common Stock
FORWARD LOOKING STATEMENTS
When used in this Form 10 or future filings by the Company
with the Securities and Exchange Commission, in the Company's
press releases or other public or shareholder communications, or
in oral statements made with the approval of an authorized
executive officer, the words or phrases "would be", "will allow",
"intends to", "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project", or similar
expressions are intended to identify "forward looking statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995.
The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only
as of the date made, and to advise readers that various factors,
including regional and national economic conditions, substantial
changes in levels of market interest rates, credit and other
risks of lending and investment activities and competitive and
regulatory factors, could affect the Company's financial
performance and could cause the Company's actual results for
future periods to differ materially from those anticipated or
projected. The Company does not undertake, and specifically
disclaims any obligation, to update any forward-looking
statements to reflect occurrences or unanticipated events or
circumstances after the date of such statements.
ITEM 1. BUSINESS
General
CONX Capital Corporation, a Delaware corporation (the
"Company" or "CONX"), with consolidated assets of approximately
$8.2 million as of December 31, 1999, is a specialty commercial
finance company engaged in the business of originating and
servicing loans and equipment leases to smaller businesses, with
a primary focus on regional trucking companies. The Company was
organized in April 1998 with its headquarters located in Carson
City, Nevada. The Company originates, directly or indirectly
through one or more subsidiaries and affiliates, long-term fixed
and variable rate loan and lease products and may sell such loans
and leases either through securitizations or whole loan sales to
institutional purchasers on a servicing retained basis. The
Company believes that its loan and lease products will be
attractive investments to institutional investors because of the
credit profile of its borrowers, relatively long loan and lease
terms, call protection through prepayment penalties and
appropriate risk-adjusted yields. The Company also may
periodically make equity investments or receive contingent equity
compensation as part of its core lending and leasing business.
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The Company originates loans and leases through marketing offices
located in Carson City, Nevada and Little Rock, Arkansas.
The Company's focus is to provide funding to industries that
have been historically underserved by banks and other traditional
sources of financing. This focus requires the Company to develop
specific industry expertise in the sectors which it will serve in
order to provide individualized financial solutions for its
borrowers. The Company believes that its industry expertise and
proprietary databases, combined with its responsiveness to
borrowers, flexibility in structuring transactions and broad
product offerings will give it a competitive advantage over more
traditional, highly regulated small business lenders. The
Company's borrowers are anticipated to be generally small
business operators, most of whom are independent with proven
operating experience and a history of generating positive cash
flows. To date, the Company's lease income has been derived from
one affiliated company, Continental Express SD, Inc. The Company
will rely primarily upon its assessment of enterprise value,
based in part possibly on independent third-party valuations, and
historical operating cash flows to make credit determinations, as
opposed to relying solely on the value of any collateral.
History
Harvey Incorporated, Continental Express, Inc., Continental
Express SD, Inc., and Dallas Carriers Corporation, all affiliates
of the Company by virtue of being under the common control of the
Company's majority stockholder, Edward M. Harvey, and members of
his family, historically financed tractor and trailer truck
equipment acquisitions and leases through financings made by
Navistar Financial Corporation, General Electric Capital
Corporation, Associates TransCapital, Heller Financial, Inc. and
Green Tree Financial Corp. The Company was formed to offer loans
and leases to such affiliated entities and to experienced,
similarly situated borrowers, and to expand into other commercial
financing sectors.
Business Strategy
The Company's goal is to become a leading national small
business lender in each of its target markets. The Company's
growth and operating strategy is based on the following key
elements:
Growth in the Trucking Equipment Industry. The Company
plans to concentrate in the tractor and trailer truck equipment
financing industry through focused product development, customer
service and support. The Company will form specialized teams to
assess customer needs, generate customer loyalty and enhance
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service and support. Management believes that its industry
experience and position, relationships with borrowers, and
expertise within this sector will assist the Company in
increasing its market share.
Controlled Expansion into New Sectors. Management believes
that substantial opportunities exist to extend the Company's
expertise into other business sectors. The Company believes that
its experience in lending to trucking equipment operators has
allowed it to develop a template for efficiently originating and
servicing loans and leases in other industry sectors. The
Company's philosophy is to provide complete business solutions to
identified industries by developing strategies and financial
products which are based on industry characteristics and each
borrower's specific needs. The Company carefully reviews industry
data, seeking business sectors with a combination of large
funding requirements, proven cash flow generating capabilities,
standardized operations, a scarcity of long-term, fixed rate
funding sources and characteristics attractive to secondary
market investors.
Maintenance of Credit Quality. The Company intends to
maintain extremely low delinquency and loss experience rates due
to lending to experienced operators, its detailed industry
knowledge, active oversight of its servicing portfolio, and
strict underwriting criteria.
Efficient Secondary Market Execution. The Company is
committed to maintaining effective secondary market execution on
loans and leases that it originates and sells.
Diversification of Revenue Sources. Management is committed
to developing a diversified revenue base to reduce revenue
volatility and enhance profitability. The Company will
continually monitor and adjust its loan and lease products and
securitization structures to improve the stability of its cash
flows. Revenue sources are anticipated to include loan and lease
origination points and fees, interest income earned prior to the
sale of the loans and leases, whole loan and lease sale profits,
securitization profits, loan and lease servicing fees and equity
investment returns.
Loan and Lease Products
The Company intends to offer loan and lease products and
provide other services in the Business Finance Lending sector.
The Company, in the future, may expand into the consumer lending
and advisory and investment services sectors.
Business Finance Lending. The Company's business finance
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lending activities are anticipated to include commercial
equipment leasing, asset based lending, and loan participations.
The Company is in the business of leasing equipment,
including truck and trailer equipment, and may possibly lease
office equipment machines, including copying, data processing,
communication, printing and manufacturing equipment, exclusively
to business users. Initial lease terms for truck and trailer
equipment typically will range from 24 months to 60 months. CONX
will commit to purchase this equipment only when it has a signed
lease with a lessee who satisfies its credit and funding
requirements. Substantially all the leases written by CONX will
be full-payout ("direct financing") leases that allow CONX to
sell or re-lease the equipment upon termination of the lease.
Since inception, the Company has entered into nine financing and
related lease transactions, as follows:
(i) on June 9, 1998, the Company financed the purchase
of 25 truck tractors from Navistar Financial Corporation
over a 48-month term at an interest rate of 7.4% per annum,
and leased said truck tractors to its affiliate, Continental
Express SD, Inc., on a net lease basis, for a 24-month term
at a monthly rental rate per truck tractor of $1,775, and
subject to late charges and service charges;
(ii) on June 16, 1998, the Company financed the
purchase of 32 additional truck tractors from Navistar
Financial Corporation over a 48-month term at an interest
rate of 7.4% per annum, and leased said truck tractors to
its affiliate, Continental Express SD, Inc., on a net lease
basis, for a 24-month term at a monthly rental rate per
truck tractor of $1,775, and subject to late charges and
service charges;
(iii) on September 16, 1998, the Company financed
the purchase of five trailers from Navistar Financial
Corporation over a 48-month term at an interest rate of 7.1%
per annum, and leased said trailers to its affiliate,
Continental Express SD, Inc., on a net lease basis, for a
24-month term at a monthly rental rate per trailer of $475,
and subject to late charges and service charges;
(iv) on September 16, 1998, the Company financed the
purchase of five additional trailers from Navistar Financial
Corporation over a 48-month term at an interest rate of 7.1%
per annum, and leased said trailers to its affiliate,
Continental Express SD, Inc., on a net lease basis, for a
24-month term at a monthly rental rate per trailer of $475,
and subject to late charges and service charges;
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(v) on September 29, 1998, the Company financed the
purchase of 10 additional trailers from Navistar Financial
Corporation over a 48-month term at an interest rate of 7%
per annum, and leased said trailers to its affiliate,
Continental Express SD, Inc., on a net lease basis, for a
24-month term at a monthly rental rate per trailer of $475,
and subject to late charges and service charges;
(vi) on December 14, 1998, the Company financed the
purchase of 40 additional trailers from Navistar Financial
Corporation over a 48-month term at an interest rate of 6.5%
per annum, and leased said trailers to its affiliate,
Continental Express SD, Inc., on a net lease basis, for a
24-month term at a monthly rental rate per trailer of $475,
and subject to late charges and service charges;
(vii) on January 5, 1999, the Company financed the
purchase of 17 additional truck tractors from Navistar
Financial Corporation over a 48-month term at an interest
rate of 6.5% per annum, and leased said truck tractors to
its affiliate, Continental Express SD, Inc., on a net lease
basis, for a 24-month term at a monthly rental rate per
truck tractor of $1,825, and subject to late charges and
service charges;
(viii) on January 13, 1999, the Company financed the
purchase of 18 additional truck tractors from Navistar
Financial Corporation over a 48-month term at an interest
rate of 6.5% per annum, and leased said truck tractors to
its affiliate, Continental Express SD, Inc., on a net lease
basis, for a 24-month term at a monthly rental rate per
truck tractor of $1,825, and subject to late charges and
service charges;
(ix) on January 25, 1999, the Company financed the
purchase of 16 additional truck tractors and 48 additional
trailers from Banc One Leasing Corporation over a 48- month
term at an interest rate of 6.5% per annum, and leased said
tractors and trailers to its affiliate, Continental Express
SD, Inc., on a net lease basis, for a 24-month term at a
monthly rental rate of $1,825 and $475 per truck tractor
and trailer, respectively, and subject to late charges and
service charges;
(x) on October 20, 1999, the Company financed the
purchase of 34 additional trailers from Fleet Capital
Leasing over a 48-month term at an interest rate of 7.83%, and
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leased said trailers to its affiliate, Continental
Express SD, Inc., on a net lease basis, for a 24-month term
at a monthly rental rate of $475 per trailer, and
subject to late charges and service charges;
(xi) on January 12, 2000, the Company financed the
purchase of 20 additional truck tractors from GE Capital
Corporation over a 48-month term at an interest rate of
8.26%, and leased said tractors to its affiliate,
Continental Express SD, Inc., on a net lease basis, for a
24-month term at a monthly rental rate of $1,875 per tractor,
and subject to late charges and service charges;
(xii) on February 7, 2000, the Company financed the
purchase of 20 additional truck tractors from Navistar
Financial Corporation over a 48-month term at an interest
rate of 8.42%, and leased said tractors to its affiliate,
Continental Express SD, Inc., on a net lease basis, for a
24-month term at a monthly rental rate of $1,875 per tractor,
and subject to late charges and service charges;
The Company also may purchase small portfolios of existing
equipment leases from brokers with whom it has established
relationships. These portfolios will be evaluated on an
individual basis according to the Company's established credit
policy. The Company believes that these acquisitions will allow
CONX to grow with greater efficiency than usual at a level of
decreased risk due to the portfolio aging that has occurred on
the books of the originating broker. CONX will use an established
computer system and related software systems to process lease
applications, book leases, post lease payments, and closely
monitor credit processing and collections. These systems have in
part been developed by CONX management.
Upon expiration of the initial lease terms of its
direct-financing leases, CONX expects, on average, to realize
slightly more than the "residual value" at which the leased
equipment is carried on CONX's books. CONX's ability to recover
the recorded estimated residual value depends on the accuracy of
initial estimates of the equipment's useful life, the market
conditions for used equipment when leases expire, and the
effectiveness of CONX's program for re-leasing or otherwise
disposing of leased equipment. Residual recovery, however, is not
required for CONX to achieve a profitable return on its
investment.
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CONX will use a non-cancelable lease, the terms and
conditions of which vary only slightly from transaction to
transaction. In substantially all of the leases, lessees are
obligated to: (i) remit all rents due, regardless of the
performance of the equipment, (ii) operate the equipment in a
careful and proper manner in compliance with governmental rules
and regulations, (iii) maintain and service the equipment, (iv)
insure the equipment against casualty losses and public
liability, bodily injury and property damage and (v) pay
directly, or reimburse CONX for, any taxes associated with the
equipment, its use, possession or lease, except those relating to
net income derived by CONX therefrom.
The lease will provide that CONX, in the event of a default
by a lessee, may declare the entire unpaid balance of rentals due
and payable immediately, and may seize and remove the equipment
for subsequent sale, re-lease or other disposition.
Underwriting. CONX maintains written credit policies that
CONX believes are prudent and customary within the lease finance
industry. Such policies form the basis for CONX's standardized
lease forms and approval processes. On occasion, CONX will make
exceptions to its written credit policy for lessees with whom
CONX has had past positive experience. In general, CONX's credit
policies encourage leasing of income-generating equipment. Within
these guidelines, there are few specific equipment or industry
prohibitions.
Under the Company's current underwriting guidelines, each
loan is originated after a review of the following criteria: (i)
the applicant's ability to repay the loan, (ii) the adequacy of
the cash flow of the borrower's operations, and (iii) the real
and tangible personal property that serves as collateral for such
loan. The Company has created an underwriting model which
incorporates historical operating results of the borrower and
compares them to industry statistics. The model helps outline the
loan proposal to fit the approval guidelines. Loan officers input
data provided by potential borrowers into the underwriting model
and determine as to whether or not a loan would qualify under the
Company's underwriting guidelines before submission to the credit
group. This pre-screening process allows for documentation once a
loan is accepted for underwriting. The Company's loan
originations typically range in size from $15,000 to $75,000 for
each truck equipment and trailer loan. To date, the Company's
sole borrower has been an affiliated company, Continental Express
SD, Inc. The majority of borrowers are anticipated to be
multiple unit operators.
Marketing. CONX markets its equipment lease products
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through its own in-house sales force and through its network of
professional equipment lease brokers. CONX's two person in-house
sales force solicit end user customers and vendors to market
their equipment lease transactions. In the future, CONX intends
to expand its marketing efforts to include more vendors. The
sales force also calls on CONX's network of professional
equipment lease brokers to solicit these professionals to send
their lease transactions to CONX.
CONX's broker advisory panel will consist of a group of
productive brokers who are brought together on an annual basis,
so that they may have an open interchange of ideas and
information regarding CONX and the leasing marketplace. CONX
believes the advisory panel will serve a multi-purpose function
by allowing CONX to reward those brokers that provide a
profitable base of business to CONX, and also provide CONX the
opportunity to market new ideas and concepts to those brokers
before a general release to the leasing community. CONX believes
that it will benefit by obtaining information on how the brokers
work with CONX's competitors (such as special programs and market
trends), and this information can then be used to drive future
marketing plans.
Asset Based Lending. The Company anticipates that it will
act as a senior secured asset-based lender with initial lending
activities in the Southeastern United States with an office
located in Little Rock, Arkansas. The Company will provide
asset-based lending to small-to medium-sized businesses with
annual revenues ranging from approximately $1 million to $100
million. The Company believes that CONX's relationships with
venture capital investors and its industry expertise contribute
to CONX's ability to distinguish itself from its competitors and
grow its lending relationships.
The Company believes that CONX's loan pricing will be
competitive with pricing charged by other commercial finance
companies. In addition, CONX attempts to be flexible in the
structuring of its revolving credit lines and to provide prompt
service in order to gain an advantage over its competitors. When
CONX competes against more traditional lenders, it competes less
on price and more on flexibility, speed of funding and the
relative simplicity of its documentation. CONX will strive to
fund its initial loan advance under a loan to an approved client
within two weeks of CONX's receipt of required information with
respect to the client, and strives to fund future advances
generally by the next business day after CONX's receipt of
required documentation.
Loan Products and Originations. CONX's loans will be
categorized based on the type of collateral securing the loan.
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CONX will make revolving loans primarily secured by accounts
receivable and secondarily by inventory. It also will make term
loans secured by real property, equipment or other fixed assets.
CONX also may periodically enter into participations with other
commercial finance companies. CONX's loans typically will have
maturities of two to five years, providing borrowers with greater
flexibility to manage their borrowing needs. These loans have an
automatic renewal for a one year period at the end of such
contract term unless terminated by either party (usually
requiring 60 days written notice prior to the end of such term).
Equipment loans are term loans typically with three to five-year
amortization periods, but are due and payable upon termination of
the master loan and security agreement. Accounts receivable loans
are revolving lines of credit that are collateralized principally
by accounts receivable. Each borrower's customers normally remit
their accounts receivable payments directly to CONX, usually on a
daily basis. CONX deposits the payments daily and applies the
funds to the borrowers' loan balances. CONX typically will lend
up to 80% of the principal balance of accounts receivable that
meet CONX's eligibility requirements. CONX's internal auditors
will conduct quarterly tests of the collateral and financial
condition of each borrower. Inventory loans are revolving lines
of credit collateralized by eligible inventory that is restricted
to raw materials and finished goods. Inventory loans will
generally be made in conjunction with accounts receivable loans
to qualifying borrowers. Borrowers are required to provide CONX
with monthly inventory designations that are supported by a
physical listing or a copy of a perpetual computer listing. These
reports are compared to the borrower's financial statements for
accuracy, and CONX advances the loan proceeds as a percentage of
the eligible inventory value. Inventory loans will primarily be
structured as revolving lines of credit, but under certain
circumstances may be structured to incorporate monthly
amortization. Participation loans consist of term loans or
revolving lines of credit in which CONX and other lenders (banks
or other asset-based lenders) jointly lend to borrowers when the
loan amount exceeds the lending limits of an individual lender.
Underwriting. Before a credit line proposal letter is issued
and a line of credit is established, CONX policy requires a
review of the prospective client, its principals, business and
customer base, including a review of financial statements and
other financial records, legal documentation, samples of invoices
and related documentation, operational matters, accounts
receivable and payable. In addition, CONX confirms certain
matters with respect to the prospective client's business and the
collectibility of the client's commercial receivables and other
potential collateral by conducting public record searches for
liens, conducting credit reviews of the prospective client and
its principals, contacting major customers and suppliers to
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identify potential problems, and conducting an on-site audit of
the prospective client's invoice, bookkeeping and collection
procedures to verify that they are properly conducted and
operationally compatible with CONX's operations.
After the preliminary review and due diligence, CONX will
require the prospective borrower to provide a deposit for fees
and orders appraisals if lending against inventory, equipment or
real estate and will schedule an audit. CONX's internal auditing
staff conducts an audit generally consisting of a due diligence
review of the prospective borrower's accounting and financial
records, including a statistical review of accounts receivable
and charge-off history. CONX internal auditors then submit their
audit reports and work papers to CONX's credit committee for
review prior to the extension of credit. In making a decision to
approve a credit line, CONX establishes credit limits under the
revolving credit line and analyzes the prospective client's
customer base to assure compliance with CONX's policies generally
limiting CONX's overall exposure to account debtors, especially
with respect to privately held or non-investment grade borrowers.
When deemed necessary for credit approval, CONX may obtain
guarantees or other types of security from a client or its
affiliates and may also obtain subordination and intercreditor
agreements from the borrower's other lenders. Although CONX's
underwriting guidelines specify a review of the factors described
above, CONX does not apply a rigid scoring system to prospective
borrowers. Decisions to enter into a relationship with a
prospective client are made on a case-by-case basis. CONX's
underwriting guidelines and policies provide that, prior to each
loan funding, the account executive assigned to the borrower (i)
obtains the original or a copy of the invoice to be sent to the
borrower and the purchase order (if one is required by CONX)
related to such invoice, (ii) confirms the validity and accuracy
of a representative sampling of invoices and (iii) mails a
letter, on the borrower's letterhead, to the new borrower's
customer which introduces CONX and requests that payment be made
directly to CONX.
Credit Monitoring and Controls. An assigned CONX account
executive monitors each borrower's credit, collateral and
advances. All account executives are required to meet with each
of their assigned borrowers at least quarterly to monitor the
borrower's business, physically inspect the borrower's facilities
and equipment, and discuss any potential problems the borrower
may be experiencing. CONX will monitor borrowers' accounts
receivable using three forms. The first form is an accounts
receivable aging analysis report prepared monthly by the loan
processor and reviewed by the account executive, and which
includes, among other things, details pertaining to account
concentrations and aging trends. The second is an accounts
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receivable activity summary prepared weekly by the loan processor
and reviewed by the account executive, summarizing borrowings,
repayments and pledged collateral. The third is a daily report
prepared by the borrower and reviewed by the account executive to
determine credit availability for a particular day. In addition
to the foregoing monitoring procedures, interim audits of all
borrowers are scheduled as deemed appropriate. Also, each account
is reviewed on its anniversary date and revolving lines are
reviewed and reconciled on a monthly basis. Where liquidation
is required for repayment of an outstanding loan, CONX attempts
to effect a consensual possession of the subject collateral
property and joint collection of accounts receivable. In certain
instances, court action may be required to ensure collection of
receivables and possession of pledged assets.
Marketing. CONX anticipates that it will obtain business
through referrals from banks, venture capitalists, accounting
firms, management consultants, existing borrowers, other finance
companies and independent brokers. CONX's marketing officers call
on CONX's referral sources to identify and receive introductions
to potential clients and to identify potential clients from
database searches. CONX anticipates that it will compensate its
marketing personnel with what it believes are competitive base
salaries and commissions based on funded transactions in order to
motivate and reward the creation of new business and the renewal
of existing business. Such commissions can be a significant
portion of the total compensation paid to CONX's marketing
personnel. CONX's marketing personnel have no credit decision
authority. The Company believes that CONX's marketing strengths
are its rapid response time and high level of service.
Financing
The Company is anticipated to have an ongoing need to
finance its lending activities, which is expected to increase as
the volume of loan and lease originations increases. The
Company's primary operating cash requirements will include the
funding of (i) loans and leases pending their sale, (ii) fees and
expenses incurred in connection with its securitization program,
(iii) overcollateralization or reserve account requirements in
connection with loans pooled and sold, (iv) interest, fees, and
expenses associated with the Company's warehouse credit and
repurchase facilities with certain financial institutions, (v)
federal and state income tax payments, and (vi) ongoing
administrative and other operating expenses. The Company
currently funds these cash requirements primarily by credit
facilities from commercial entities and financial institutions,
and anticipates that it will rely more heavily on
securitizations, whole loan and lease sales, and borrowings as
its cash requirements increase.
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Commercial Loans, Repurchase and Warehouse Facilities. The
Company is dependent upon its ability to access commercial loans,
repurchase facilities and warehouse lines of credit in order to
fund new originations and purchases. Historically, affiliates of
the Company have had various commercial loans, warehouse lines
and reverse repurchase facilities available to finance truck
equipment acquisitions.
To date, the Company has financed the entire purchase prices
of trucks and trailers through 48-month commercial loans made by
Navistar Financial Corporation at interest rates ranging from
6.5% per annum, by Banc One Leasing Corporation at interest
rates of 6.5% per annum, by GE Capital Corporation at interest
rates of 8.26%, and by Fleet Capital Leasing at interest rates
of 7.83%. Each of those nine commercial loans has been
guaranteed by Continental Express SD, Inc., the borrower which
is the Company's affiliate.
The Company, in the future, may enter into warehouse lines
of credit with Navistar Financial Corporation or other similarly
situated commercial finance institutions. Such warehouse lines of
credit are expected to provide additional financing for the
Company's continued growth in loan and lease originations. The
Company also intends to negotiate with a major financial
institution to provide additional financing for the Company's
continued growth in loan and lease originations.
Securitizations of Assets. As a fundamental part of its
business and financing strategy, the Company intends to sell
substantially all of its loans and leases through securitization,
except for loans held for investment. The Company believes that
securitizations provide it with greater operating leverage and a
reduced cost of funds. In a securitization, the Company sells
loans or leases that it has originated or purchased to a trust or
special purpose entity for a cash purchase price and an interest
in the loans or leases securitized. The cash price is raised
through an offering of pass-through certificates by the trust or
special purpose entity. Following the securitization, the
purchasers of the pass-through certificates receive the principal
collected and the investor pass-through interest rate on the
principal balance of the loans or leases, while the Company
receives the balance of the cash flows generated by the
securitized assets in the form of principal and interest on any
subordinate bonds or residual interests retained. These cash
flows represent the excess cash flow collected after credit
losses on loans or leases sold over the sum of the pass-through
interest rate plus a normal servicing fee, a trustee fee and,
where applicable, an insurance fee related to such loans or
leases over the life of the loans or leases.
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Each loan or lease securitization may have specific credit
enhancement requirements in the form of overcollateralization
which must be met before the Company receives cash flows due. As
the securitized assets generate cash flows, they may be used to
pay down the balance of the pass-through certificates until such
time as the ratio of securitized assets to pass-through
certificates reaches the overcollateralization requirement
specified in each securitization. This overcollateralization
amount is carried on the balance sheet as retained interest in
loan and lease securitizations. After the overcollateralization
requirement and the other requirements specified in the pooling
and servicing agreement have been met, the Company begins to
receive principal and interest on any subordinate bonds or
residual interests retained. It is anticipated that a substantial
portion of the Company's gross income will be recognized as gain
on sales of loans or leases, which represent the present value of
the estimated cash flows on the subordinate bonds or residual
interests retained, less origination and underwriting costs.
Interest-only and residual certificates in securitizations of
mortgage loans retained by the Company may be held as trading
securities and adjusted to their respective market value
quarterly with corresponding charges and credits made to income
in the adjustment period. Subordinate bonds retained by the
Company may be held as either trading or available for sale
securities in accordance with the Company's investment
objectives. To the extent that actual results are different from
the cash flows the Company estimated, the Company's subordinate
bonds, interest-only certificates or residual interest will be
adjusted quarterly with corresponding charges made against income
in that period.
Whole Loan and Lease Sales. Depending on market conditions,
the Company also intends to execute whole loan and lease sales in
which the Company disposes of its entire economic interest in the
loans and leases on a non-recourse basis (excluding servicing
rights) for cash. Whole loan and lease sale gains/losses will be
recognized at the time of sale and there are generally no
residuals. The Company seeks to maximize its premium on whole
loan sale revenues by closely monitoring institutional
purchasers' requirements and focusing on originating or
purchasing the types of loans and leases that meet those
requirements and for which institutional purchasers tend to pay
higher premiums. Whole loan and lease sales are made on a non-
recourse basis pursuant to a purchase agreement containing
customary representations and warranties by the Company regarding
the underwriting criteria applied by the Company and the
origination process. The Company, therefore, may be required to
repurchase or substitute loans in the event of a breach of its
representations and warranties. In addition, the Company may
commit to repurchase or substitute a loan if a payment default
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occurs within the first month following the date the loan is
funded, unless other arrangements are made between the Company
and the purchaser. The Company may be required either to
repurchase or to replace loans or leases which do not conform to
the representations and warranties made by the Company in the
pooling and servicing agreements entered into when the loans and
leases are pooled and sold through securitizations.
Loan and Lease Servicing and Credit Quality
The Company's Servicing Department is responsible for loan
and lease accounting, compliance monitoring and, as necessary,
collections. The Company's servicing operations are located in
Little Rock, Arkansas.
The loan and lease servicing function includes monthly
invoicing, payment collections, computing investor payments and
processing investor remittances. The primary method for borrower
payments is through automatic clearing house direct debiting.
Compliance monitoring procedures include a semi-annual
review of each borrower's compliance with stated covenants,
including fixed charge coverage ratios. In the event a borrower
fails to comply with such covenants, the borrower will be placed
on the Company's "Credit Watch List." Loans and lease on the
Credit Watch List are subject to increased scrutiny and
monitoring by the Company's servicing personnel. If a payment has
not been received by the due date, the loan or lease is
considered in default, and the Company will aggressively pursue
collection procedures, including collection calls and onsite
visits.
During the first month of a delinquency lasting 10 days or
more, the Company will contact the borrower to determine the
reason for the default and the likelihood and timing of any
payment. The Company will perform a credit investigation and
obtain updated financial statements from the borrower and current
Dun & Bradstreet and personal credit reports. The borrower's bank
and major trade creditors typically will be contacted to provide
first-hand verification of the financial status of the borrower.
The Company also may retain counsel in the state in which the
borrower is located, if it is determined that the borrower or a
related entity is in bankruptcy or there is a reason to believe
voluntary or involuntary bankruptcy will be declared.
Within 15 to 45 days of the delinquency, an officer of the
Company will meet in person with the delinquent borrower, the
nature of the borrower's financial difficulty will be re-examined
and the likelihood of repayment will be re-evaluated. The Company
will physically inspect the borrower's business unit, and
14
<PAGE>
industry consultants or other borrowers may be contacted to
evaluate the delinquent business unit.
After 60 days of delinquency, the loan or lease likely will
be accelerated, and the borrower sent a written notice demanding
payment of the full amount due in respect of the loan or lease.
The borrower may also be reminded that any other loans that the
borrower may have from other sources are likely to be in default.
If it appears unlikely that the borrower will cure the default,
the Company may decide to negotiate with the borrower to induce
the borrower to offer the business unit for sale to other
borrowers. In this manner the loans and leases could be assumed.
Interest Rate Risk Management
The Company's profits depend, in part, on the difference, or
"spread" between the effective rate of interest received by the
Company on the loans it originates or purchases and the interest
rates payable by the Company under its warehouse financing
facilities or for securities issued in its securitizations. The
spread can be adversely affected because of interest rate
increases during the period from the date the loans are
originated or purchased until the closing of the sale or
securitization of such loans.
The Company may be required by its warehouse lending
facilities to hedge all of its fixed-rate principal loan balance.
If that is required, the Company's hedging strategy likely will
include selling U.S. Treasury futures in such amounts and
maturities as to effectively hedge the interest rate volatility
of its portfolio. The Company likely will not maintain naked or
leveraged hedge positions.
In addition, the Company from time to time may use various
other hedging strategies to provide a level of protection against
interest rate risks on its fixed-rate loans. These strategies may
include forward sales of loans or loan-backed securities,
interest rate caps and floors, and buying and selling of futures
and options on futures. The Company's management determines the
nature and quantity of hedging transactions based on various
factors, including market conditions and the expected volume of
loan originations and purchases. While the Company believes that
its hedging strategies will be cost-effective and provide some
protection against interest rate risks, no hedging strategy can
completely protect the Company from such risks. Further, the
Company does not believe that hedging against interest rate risks
associated with adjustable-rate loans likely will be cost-
effective, and accordingly, likely will not utilize the hedging
strategies described above with respect to its adjustable-rate
loans.
15
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Competition
The Company faces intense competition in the business of
originating and selling loans and leases. Traditional competitors
in the financial services business include commercial banks,
thrift institutions, diversified finance companies, asset-based
lenders, and specialty finance companies. Many of these
competitors are substantially larger and have considerably
greater financial, technical and marketing resources than the
Company. Competition can take many forms including convenience in
obtaining a loan or lease, customer service, marketing and
distribution channels, amount and term of the loan, interest
rates charged to borrowers, and credit ratings. In addition, the
current level of gains realized by the Company's competitors on
the sale of their loans and leases could attract additional
competitors into these markets, with the possible effect of
lowering gains that may be realized on the Company's future loan
and lease sales.
The Company believes that its industry expertise and
proprietary databases, combined with its responsiveness to
borrowers, flexibility in structuring transactions and broad
product offerings give it a competitive advantage over more
traditional, highly regulated small business lenders.
Regulation
Lending Laws. Certain aspects of the Company's businesses
are subject to regulation and supervision at both the federal and
state level. Regulated matters include loan origination, credit
activities, maximum interest rates and finance and other charges,
disclosure to customers, the collection, foreclosure,
repossession and claims handling procedures to be utilized by the
Company, multiple qualification and licensing requirements for
doing business in various jurisdictions and other trade
practices.
Future Laws. The laws, rules and regulations applicable to
the Company are subject to modifications and change. There can be
no assurance that rules and regulations, or other such laws,
rules or regulations will not be adopted in the future which
could make compliance more difficult or expensive, restrict the
Company's ability to originate or sell loans, the amount of
interest and other charges earned on loans originated or sold by
the Company, or otherwise adversely affect the business or
prospects of the Company.
Employees
At December 31, 1999 the Company had no employees.
16
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Accordingly, the Company is not subject to any collective
bargaining agreement.
ITEM 2. FINANCIAL INFORMATION
The following table sets forth selected financial data and
other operating information of the Company for the fiscal years
ending December 31, 1998 and 1999 derived from the financial
statements and notes thereto included elsewhere herein audited by
Baird, Kurtz & Dobson, as set forth in the audit report also
included elsewhere herein. The following data should be read in
conjunction with Management s Discussion and Analysis of
Financial Condition and Results of Operations and the financial
statements of the Company and the notes thereto included
elsewhere in this Registration Statement.
17
<PAGE>
Statements of Income Data:
12/31/98 12/31/99 Period Ended
-------- --------- ------------
6/30/00
-------
(unaudited)
Lease Income $635,550 $2,894,050 $2,021,087
Operating expenses
Depreciation 408,196 1,662,136 1,217,314
Management Fees 60,000 30,000
Professional Fees 36,788 7,894 12,545
Rent 6,000 3,000
Directors' Fees 15,000 20,000 10,000
Taxes and Licenses 4,385 8,935
Interest Expense 161,727 539,815 348,107
------- ------- --------
Other 102 1,387 1354
------- ------- --------
621,813 2,301,617 1,631,255
------- --------- ---------
Income from Operations 13,737 592,433 389,832
------ --------- ---------
Other Income (expenses)
Interest income 2,830 3,386
Income before
income taxes 13,737 595,263 393,218
Provision for
income taxes 5,220 229,645 150,563
------- -------- ---------
Net income $8,517 $365,618 $242,655
======= ======== =========
Balance Sheet Data:
12/31/98 12/31/99 6/30/00
(unaudited)
Working capital $ 41,915 $ 205,006 $ 355,929
Total assets 4,687,816 8,201,753 11,931,299
Total liabilities 4,609,299 7,775,618 11,262,509
Stockholders'
equity 78,517 426,135 668,790
18
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis below should be read
in conjunction with the financial statements, including the notes
thereto, appearing elsewhere in this Registration Statement.
First Six Months Ended June 30, 2000
Lease income was $2,021,087 for the first six months ended
June 30, 2000. As of June 30, 2000, the Company had 173
tractors and 142 semi-trailers leased to its customers. Operating
expenses (consisting primarily of interest and depreciation) for
the first six months ended June 30, 2000 were $1,631,255, and
operating expenses as a percentage of lease income was 80.71%.
Income from operations for the first six months ended June 30,
2000 was $389,832. Other income for the first six months ended
June 30, 2000 was $3,386. Income before income taxes for the
first six months ended June 30, 2000 was $393,218, with provision
for income taxes of $150,563, resulting in net income for the
the first six months ended June 30, 2000 of $242,655.
Fiscal Year Ended December 31, 1999
Lease income was $2,894,050 for the fiscal year ended
December 31, 1999. As of December 31, 1999, the Company had 133
tractors and 142 semi-trailers leased to its customers. Operating
expenses (consisting primarily of interest and depreciation) for
the fiscal year ended December 31, 1999 were $2,301,617, and
operating expenses as a percentage of lease income was 79.5%.
Income from operations for the fiscal year ended December 31,
1999 was $592,433. Other income for the fiscal year ended
December 31, 1999 was $2,830. Income before income taxes for the
fiscal year ended December 31, 1999 was $595,263, with provision
for income taxes of $229,645, resulting in net income for the
fiscal year ended December 31, 1999 of $365,618.
Fiscal Year Ended December 31, 1998
Lease income was $635,550 for the fiscal year ended December
31, 1998. As of December 31, 1998, the Company had 57 tractors
and 60 semi-trailers leased to its customers. Operating expenses
(consisting primarily of interest and depreciation) for the
fiscal year ended December 31, 1998 were $621,813, and operating
expenses as a percentage of lease income was 97.8%. Income from
operations for the fiscal year ended December 31, 1998 was
$13,737. There was no other income or expense for the fiscal
20
<PAGE>
year ended December 31, 1998. Income before income taxes for the
fiscal year ended December 31, 1998 was $13,737, with provision
for income taxes of $5,220, resulting in net income for the
fiscal year ended December 31, 1998 of $8,517.
21
<PAGE>
Liquidity and Capital Resources
The Company's current assets and working capital are
sufficient to meet its needs for the next twelve months of
operation as the Company is currently operating. However, the
Company has an ongoing need to finance its lending activities.
This need is expected to increase as the volume of the Company's
loan and lease originations increase. The Company's primary cash
requirements include the funding of (i) loans and leases pending
their sale, (ii) fees and expenses incurred in connection with
its securitization program, (iii) overcollateralization or
reserve account requirements in connection with loans pooled and
sold, (iv) interest, fees, and expenses associated with the
Company's warehouse credit and repurchase facilities with certain
financial institutions, (v) federal and state income tax
payments, and (vi) ongoing administrative and other operating
expenses. To date, the Company currently has funded these cash
requirements by credit facilities granted by Navistar Financial
Corporation, Banc One Leasing Corporation, GE Capital Corporation
and Fleet Capital Leasing and guaranteed by the Company's
affiliate, Continental Express SD, Inc. The Company anticipates
that it will rely more heavily on securitizations, whole loan and
lease sales, and borrowings as its cash requirements increase.
The Company also has offered and sold its Common Stock to
fund its operations. In April 1998, the Company issued 7,000,000
shares of Common Stock for net proceeds of $70,000.
Inflation
The impact of inflation is reflected in the increased cost
of the Company's operating expenses, excluding depreciation and
interest expense. Interest rates have a greater impact on the
Company's performance than do the effects of general levels of
inflation. Inflation affects the Company primarily through
its effect on interest rates, since interest rates normally
increase during periods of high inflation and decrease during
periods of low inflation. The Company intends to manage its
exposure to inflationary interest rate risks by closely
monitoring the difference or spread between the effective
rate of interest received by the Company and the rates payable
by the Company. See Interest Rate Risk Management above.
ITEM 3. PROPERTIES
The Company's executive and administrative offices are
located at 502 North Division Street, Carson, City, Nevada, and
1406 Cantrell Road, Little Rock, Arkansas, and consist of an
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<PAGE>
aggregate of approximately 3,500 square feet. The lease on the
premises located in Carson City expires in 2000 and the current
annual rent is $1,200. No expense was incurred or recorded in
1999. The lease on the premises in Little Rock expires in 2000
and the current annual rent is $6,000.
The Company also anticipates that it will rent space for its
other offices. It is anticipated that each of these facilities
will aggregate approximately 3,000 square feet, and that the
terms of these leases will vary as to duration and rent
escalation provisions tied to either increases in the landlord's
operating expenses or fluctuations in the consumer price index in
the relevant geographical area.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of the Company's Common Stock as of the date
hereof by (i) each person known by the Company to be the
beneficial owner of more than five percent of its Common Stock;
(ii) each director; (iii) each executive officer listed in the
Summary Compensation Table in Item 6 of this Form 10; and (iv)
all directors and executive officers as a group. Unless
otherwise indicted, each of the following stockholders has sole
voting and investment power with respect to the shares
beneficially owned, except to the extent that such authority is
shared by spouses under applicable law.
Amount and
Name and Address of Nature of Percentage of
Beneficial Owner Beneficial Outstanding
Ownership Shares
------------------- --------- -------------
Edward M. Harvey (1)(2) 4,505,200 67.75%
Bonnie P. Harvey (1)(3) 350,000 5.26%
Charles Harvey (1)(4) 350,000 5.26%
Deborah Harvey (1)(5) 350,000 5.26%
Jill Pryor (1)(6) 350,000 5.26%
Darby Boyd (1)(7) 350,000 5.26%
Mark Guffin (1)(8) 350,000 5.26%
Diane Miller (1)(9) 44,800 *
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<PAGE>
All executive officers
and directors as a
group (5 persons 4,505,200 68.78%
------------------
* Denotes less than one percent (1%) of the outstanding
shares.
(1) CONX Capital Corporation and each of such persons may be
reached at 502 North Division Street, Carson City, Nevada,
89703, or 1406 Cantrell Road, Little Rock, Arkansas, 72201.
(2) Edward M. Harvey is the spouse of Bonnie P. Harvey and the
father of Charles Harvey, Deborah Harvey and stepfather of
Jill Pryor, Darby Boyd, and Mark Guffin. Mr. Harvey
disclaims beneficial ownership over any of the shares held
by all such persons.
(3) Bonnie P. Harvey is the spouse of Edward M. Harvey and the
stepmother of Charles Harvey and Deborah Harvey, and the
mother of Jill Pryor, Darby Boyd and Mark Guffin. Mrs.
Harvey disclaims beneficial ownership over any of the shares
held by all such persons.
(4) Charles Harvey is the son of Edward M. Harvey.
(5) Deborah Harvey is the daughter of Edward M. Harvey.
(6) Jill Pryor is the daughter of Bonnie Harvey.
(7) Darby Boyd is the daughter of Bonnie Harvey.
(8) Mark Guffin is the son of Bonnie Harvey.
(9) Ms. Miller's address is 18 Masters Place Cove, Maumelle,
Arkansas, 72113.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The names of the directors and executive officers of the
Company, as well as their respective ages and positions with the
Company, are as follows:
Name Age Position
---------------- ---- --------------------------
Edward M. Harvey 68 President and Chairman of
the Board of Directors
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<PAGE>
Todd W. Tiefel 33 Secretary, Treasurer and
Director
John P. Flahavin 63 Director
Theodore C. Skokos 52 Director
Michael Kelly Woodridge 41 Director
_____________________
Edward M. Harvey has been the President and the Chairman of
the Company's Board of Directors since its inception. Prior to
founding the Company, Mr. Harvey founded and continues to own and
serve as the Chairman of the Board of Harvey Incorporated and
affiliated companies, including Harvey Industries, Inc., Harvey
Manufacturing Corporation and Advanced Sawmill Machinery, Inc.
(Manufacturing), Continental Express SD, Inc. (Trucking), Preston
National Bank (Banking) and Continental Lumber Company and Travis
Lumber Company, Inc. (Timber).
Todd W. Tiefel has served as the Secretary, Treasurer and a
Director since its inception, and has been the Chief Financial
Officer of Harvey Incorporated since 1995. Prior thereto and
since before 1993, Mr. Tiefel served in different capacities with
Baird, Kurtz & Dobson, Certified Public Accountants, most
recently as Audit/Tax Supervisor. Mr. Tiefel is a Certified
Public Accountant.
John P. Flahavin has served as a Director of the Company
since its inception. Since 1973, Mr. Flahavin has served as the
President of John Flahavin & Associates, an apparel manufacturer
and representative of designer manufacturers. In addition, during
the 1992 to 1995 period, Mr. Flahavin also served as the
President of Teri Jon N.Y., a dress and suit manufacturer
generating sales volume of approximately $21,000,000.
Theodore C. Skokos has served as a Director of the Company
since its inception. Mr. Skokos is involved with several other
businesses, principally in the telecommunications field, and has
served since 1991 as the President of Skokos Cellular
Communications of Arkansas, Inc., as President of New Hampshire
One Cellular Telephone Company, Inc., and as President of Cardiac
Concepts, Inc., a medical device company. In addition, Mr.
Skokos has been a member of the law firm of Skokos, Bequette &
Billingsley, P.A., since before 1993, and served as that firm's
President during 1993-1994.
Michael Kelly Wooldridge has served as a Director of the
25
<PAGE>
Company since its inception. Mr. Wooldridge has served as the
President of Gibraltar National Insurance Company since 1988.
Directors of the Company are elected annually by the
stockholders of the Company to serve for a term of one year or
until their successors are duly elected and qualified. Officers
serve at the pleasure of the Board of Directors subject to any
rights under employment agreements. Each director receives cash
compensation of $1,000 per fiscal quarter. All directors will
receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board. No other
compensation is, or will be, paid to directors for services
rendered as directors. From the Company's inception to the date
of this filing, there have been no meetings of the Company's
Board of Directors. Other actions of the Company's Board of
Directors were taken pursuant to unanimous written consents.
There are no family relationships between any directors or
officers of the Company.
ITEM 6. EXECUTIVE COMPENSATION
The Company's executive officers and directors are presently
not compensated for their services in such capacities.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The officers and directors are required to devote only so
much of their time to the Company's affairs as is necessary for
the effective conduct of the Company's business. Each of the
directors and officers has, and may continue to have, occupations
and sources of income other than as a director or officer of the
Company.
To date, the Company's lease income has been derived from
one affiliated company, Continental Express SD, Inc., and
Continental Express SD, Inc. has guaranteed each of the Company's
existing credit facilities granted by Navistar Financial
Corporation, Banc One Leasing Corporation, Fleet Capital Leasing,
and GE Capital Corporation. Edward M. Harvey, the President and
Chairman of the Board of Directors of the Company, owns 67.75% of
the issued and outstanding shares of Common Stock of the Company,
and is the President and the controlling and majority shareholder
of Continental Express SD, Inc.
Except as set forth above, there have not been any
transactions and currently there are no proposed transactions in
which the amount involved exceeds $60,000 and in which any
director, officer or five percent (5%) shareholder is involved
since the Company's inception.
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<PAGE>
ITEM 8. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company
is a party or to which any of the Company's assets or properties
are subject.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is not presently traded on an
established public trading market. Following the filing on this
Form 10, the Company anticipates that it will submit its Common
Stock for listing on the OTC Electronic Bulletin Board.
The Company has not declared or paid any cash dividends on
its Common Stock and does not intend to declare any dividends in
the foreseeable future. The payment of dividends, if any, is
within the discretion of the Board of Directors and will depend
on the Company's earnings, if any, its capital requirements and
financial condition, and such other factors as the Board of
Directors may consider. In addition, if the Company is able to
negotiate new credit facilities, such facilities may include
restrictions on the Company's ability to pay dividends.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
In April 1998, the Company issued unregistered securities to
the initial shareholders of the Company resulting in the issuance
and delivery of 7,000,000 shares of the Company's Common Stock.
Such securities were issued at $.01 par value pursuant to the
exemptions from registration provided under the Delaware General
Corporation Law and the exemption provided by Section 4(2) of the
Securities Act of 1933, as amended, for issuances of securities
not involving any public offering. The following table sets forth
the names of the recipients and amounts received in connection
with said transaction:
Number of Shares of Amount
Name of Stockholder Common Stock Acquired Received
------------------- --------------------- --------
Edward M. Harvey 4,505,200 $ 45,052
Bonnie P. Harvey 350,000 3,500
Charles Harvey 350,000 3,500
Deborah Harvey 350,000 3,500
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<PAGE>
Jill Pryor 350,000 3,500
Darby Boyd 350,000 3,500
Mark Guffin 350,000 3,500
Ralph Bradbury 350,000 3,500
Diane Miller 44,800 448
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The authorized capital stock of the Company consists of
25,000,000 shares of Common Stock, $.01 par value (the "Common
Stock"), and 5,000,000 shares of Preferred Stock, $.01 par value
(the "Preferred Stock"). At December 31, 1999, the Company had
6,650,000 shares of Common Stock outstanding and held of record
by nine (9) persons. At such date, there were no shares of
Preferred Stock issued and outstanding.
Common Stock
Each share of Common Stock entitles the holder thereof to
one vote for each share on all matters submitted to the
stockholders. The Common Stock is not subject to redemption or
to liability for further calls. Holders of Common Stock will be
entitled to receive such dividends as may be declared by the
Board of Directors of the Company out of funds legally available
therefor and to share pro rata in any distribution to
stockholders. The stockholders have no conversion, preemptive or
other subscription rights. Shares of authorized and unissued
Common Stock are issuable by the Board of Directors without any
further stockholder approval.
28
<PAGE>
Preferred Stock
The Board of Directors is authorized, without further action
by the stockholders, to issue from time to time shares of
Preferred Stock in one or more classes or series and to fix the
designations, voting rights, liquidation preferences, dividend
rights, conversion rights, rights and terms of redemption
(including sinking fund provisions) and certain other rights and
preferences of the Preferred Stock. The issuance of shares of
Preferred Stock under certain circumstances could adversely
affect the voting power of the holders of Common Stock and may
have the effect of delaying, deferring or preventing a change in
control of the Company. As of the date of this Prospectus, the
Company has no plan or arrangement for the issuance of any shares
of Preferred Stock.
1998 Stock Compensation Plan. In April 1998, the Company
instituted its 1998 Stock Compensation Plan (the "Stock
Compensation Plan") for the purpose of compensating eligible non-
employee directors by granting them shares of the Company's
Common Stock in lieu of annual director's fees. A total of
100,000 shares are reserved for issuance pursuant to the Stock
Compensation Plan. The Stock Compensation Plan is administered
by the Board of Directors and provides that members of the Board
of Directors who are neither officers nor employees of the
Company or of any subsidiary shall receive, on November 15 of
each year, 1,000 shares of Common Stock. The Common Stock will be
granted only to directors who are not full-time employees as of
the grant date. The Stock Compensation Plan may be terminated or
amended either by the Board of Directors or by the Board of
Directors and the stockholders, but not more often than once
every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder. Unless the Stock Compensation Plan
is amended, neither the number nor type of securities to be
granted to directors pursuant to the Stock Compensation Plan may
be changed. No shares of the Company's Common Stock have been
issued under the Stock Compensation Plan to date.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that,
except to the extent prohibited by the Delaware General
Corporation Law (the "DGCL"), its directors shall not be
personally liable to the Company or its stockholders for monetary
damages for any breach of fiduciary duty as directors of the
Company. Under Delaware law, the directors have fiduciary duties
to the Company that are not eliminated by this provision of the
Certificate of Incorporation and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-
29
<PAGE>
monetary relief will remain available. In addition, each director
will continue to be subject to liability under Delaware law for
breach of the director's duty of loyalty to the Company for acts
or omissions that are found by a court of competent jurisdiction
to be not in good faith or involving intentional misconduct, for
knowing violations of law, for action leading to improper
personal benefit to the director and for payment of dividends or
approval of stock repurchases or redemptions that are prohibited
by Delaware law. This provision also does not affect the
director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.
In addition, the Company intends to maintain liability insurance
for its officers and directors.
Section 145 of the DGCL permits the Company to, and the
Certificate of Incorporation provides that the Company may,
indemnify each person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was, or
has agreed to become, a director or officer of the Company, or is
or was serving, or has agreed to serve, at the request of the
Company, as a director, officer or trustee of, or in a similar
capacity with, another corporation, partnership, joint venture,
trust or other enterprise s(including any employee benefit plan),
or by reason of any action alleged to have been taken or omitted
in such capacity, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him or on his behalf in connection
with such action, suit or proceeding and any appeal therefrom.
Such right of indemnification shall inure to such individuals
whether or not the claim asserted is based on matters that
antedate the adoption of the Certification of Incorporation. Such
right of indemnification shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit
of the heirs and personal representatives of such a person. The
indemnification provided by the Certificate of Incorporation
shall not be deemed exclusive of any other rights that may be
provided now or in the future under any provision currently in
effect or hereafter adopted by the Certificate of Incorporation,
by any agreement, by vote of stockholders, by resolution of
directors, by provision of law or otherwise. Insofar as
indemnification for liabilities arising under the Securities Act
may be permitted to directors of the Company pursuant to the
foregoing provision, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
Section 102(b)(7) of the DGCL permits a corporation to
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eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL relating to unlawful
dividends, stock purchases or redemptions or (iv) for any
transaction from which the director derived an improper personal
benefit. Section 102(b)(7) of the DGCL is designed, among other
things, to encourage qualified individuals to serve as directors
of Delaware corporations. The Company believes this provision
will assist it in securing the services of qualified directors
who are not employees of the Company. This provision has no
effect on the availability of equitable remedies, such as
injunction or rescission. If equitable remedies are found not to
be available to stockholders in any particular case, stockholders
may not have any effective remedy against actions taken by
directors that constitute negligence or gross negligence.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and Schedules required to be filed
hereunder are enclosed on Pages F-1 through F-22. Also attached
is required interim data.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Baird, Kurtz & Dobson, Certified Public Accountants, have
served as the Company's principal accountant since the Company's
formation. There were no accounting or auditing disagreements
between the Company and Baird, Kurtz & Dobson.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements - See Index to Financial
Statements on Pages F-1 and F-12 of this Information Sheet.
(b) Exhibits -
3.1 Certification of Incorporation
3.2 Bylaws
10.1 Registrant's 1998 Stock Compensation Plan
23.1 Consent of Baird, Kurtz & Dobson, Certified Public
Accountants
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Company has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONX CAPITAL CORPORATION,
Dated August 3, 2000 By: /s/ Edward M. Harvey
_________________________________
Edward M. Harvey, President
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CONX CAPITAL CORPORATION
FORM 10
INDEX TO EXHIBITS
Exhibits Page
-------- -----
3.1 Certificate of Incorporation of the Registrant . . . . . . 35
3.2 Bylaws of the Registrant . . . . . . . . . . . . . . . . . 45
10.1 Registrant's 1998 Stock Compensation Plan . . . . . . . . 63
23.1 Consent of Baird, Kurtz & Dobson, Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . 70
________________________________________________
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EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
CONX CAPITAL CORPORATION
FIRST: The name of the corporation is CONX Capital
Corporation (hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1013 Centre Road, in the
City of Wilmington, County of New Castle. The name of the
registered agent of the Corporation at that address is
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law").
FOURTH: (a) General. The maximum number of shares of
capital stock that the Corporation is authorized to have
outstanding at any one time is thirty million (30,000,000)
shares, consisting of: (i) twenty-five million (25,000,000)
shares of Common Stock, par value $0.01 per share (the "Common
Stock") and (ii) five million (5,000,000) shares of Preferred
Stock, par value $0.01 per share (the "Preferred Stock").
(b) Preferred Stock. Authority is
hereby expressly vested in the Board of Directors of the
Corporation, subject to the provisions of this ARTICLE FOURTH and
to the limitations prescribed by law, to authorize the issuance
from time to time of one or more series of Preferred Stock. The
authority of the Board of Directors with respect to each series
shall include, but not be limited to, the determination or fixing
of the following by resolution or resolutions adopted by the
affirmative vote of a majority of the total number of the
Directors then in office:
(i) The designation of such series;
(ii) The dividend rate of such series, the conditions and
dates upon which such dividends shall be payable, the relation
which such dividends shall bear to the dividends payable on any
other class or classes or series of the Corporation's capital
stock and whether such dividends shall be cumulative or non-
cumulative;
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(iii) Whether the shares of such series shall be subject
to redemption for cash, property or rights, including securities
of any other corporation, by the Corporation or upon the
happening of a specified event and, if made subject to any such
redemption, the times or events, prices, rates, adjustments and
other terms and conditions of such redemptions;
(iv) The terms and amount of any sinking fund provided
for the purchase or redemption of the shares of such series;
(v) Whether or not the shares of such series shall be
convertible into, or exchangeable for, at the option of either
the holder or the Corporation or upon the happening of a
specified event, shares of any other class or classes or of any
other series of the same class of the Corporation's capital stock
and, if provision be made for conversion or exchange, the times
or events, prices, rates, adjustments and other terms and
conditions of such conversions or exchanges;
(vi) The restrictions, if any, on the issue or reissue of
any additional Preferred Stock;
(vii) The rights of the holders of the shares of such
series upon the voluntary or involuntary liquidation, dissolution
or winding up of the Corporation; and
(viii) The provisions as to voting, optional and/or other
special rights and preferences, if any, including, without
limitation, the right to elect one or more Directors.
(c) Common Stock. Except as otherwise
provided by the Delaware General Corporation Law or this
Certificate of Incorporation (the "Certificate"), the holders of
Common Stock (i) subject to the rights of holders of any series
of Preferred Stock, shall share ratably in all dividends payable
in cash, stock or otherwise and other distributions, whether in
respect of liquidation or dissolution (voluntary or involuntary)
or otherwise and (ii) are subject to all the powers, rights,
privileges, preferences and priorities of any series of Preferred
Stock as provided herein or in any resolution or resolutions
adopted by the Board of Directors pursuant to authority expressly
vested in it by the provisions of Section (b) of this ARTICLE
FOURTH.
(i) The Common Stock shall not be convertible into, or
exchangeable for, shares of any other class or classes or of any
other series of the same class of the Corporation's capital
stock.
(ii) No holder of Common Stock shall have any preemptive,
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subscription, redemption, conversion or sinking fund rights with
respect to the Common Stock, or to any obligations convertible
(directly or indirectly) into stock of the Corporation whether
now or hereafter authorized.
(iii) Except as otherwise provided by the Delaware
General Corporation Law or this Certificate, and subject to the
rights of holders of any series of Preferred Stock, all of the
voting power of the stockholders of the Corporation shall be
vested in the holders of the Common Stock, and each holder of
Common Stock shall have one vote for each share held by such
holder on all matters voted upon by the stockholders of the
Corporation.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: In furtherance and not in limitation of the powers
conferred by the Delaware General Corporation Law, the Board of
Directors of the Corporation is expressly authorized to make,
alter, amend, change, add to or repeal the By-laws of the
Corporation by the affirmative vote of a majority of the total
number of Directors then in office. Any alteration or repeal of
the By-laws of the Corporation by the stockholders of the
Corporation shall require the affirmative vote of at least a
majority of the voting power of the then outstanding shares of
capital stock of the Corporation entitled to vote on such
alteration or repeal, subject to ARTICLE NINTH hereof and
applicable provisions of the Corporation's By-laws.
SEVENTH: (a) Stockholder Action. Election of Directors
need not be by written ballot unless the By-laws of the
Corporation so provide. Subject to any rights of holders of any
series of Preferred Stock, from and after the date on which the
Common Stock of the Corporation is registered pursuant to the
Exchange Act, (i) any action required or permitted to be taken by
the stockholders of the Corporation must be effected at an annual
or special meeting of stockholders of the Corporation and may not
be effected in lieu thereof by any consent in writing by such
stockholders, (ii) special meetings of stockholders of the
Corporation may be called only by either the Board of Directors
pursuant to a resolution adopted by the affirmative vote of the
majority of the total number of Directors then in office or by
the chief executive officer of the Corporation, and (iii) advance
notice of stockholder nominations of persons for election to the
Board of Directors of the Corporation and of business to be
brought before any annual meeting of the stockholders by the
stockholders of the Corporation shall be given in the manner
provided in the By-laws of the Corporation.
(b) Number of Directors and Term of
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Office. Subject to any rights of holders of any series of
Preferred Stock to elect additional Directors under specified
circumstances, the number of Directors which shall constitute the
Board of Directors of the Corporation shall be fixed from time to
time in the manner set forth in the By-laws of the Corporation.
(c) Removal and Resignation. No
Director may be removed from office without cause and without the
affirmative vote of the holders of a majority of the voting power
of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
Directors voting together as a single class; provided, however,
that if the holders of any class or series of capital stock are
entitled by the provisions of this Certificate (it being
understood that any references to this Certificate shall include
any duly authorized certificate of designation) to elect one or
more Directors, such Director or Directors so elected may be
removed without cause only by the vote of the holders of a
majority of the outstanding shares of that class or series
entitled to vote. Any Director may resign at any time upon
written notice to the Corporation.
(d) Vacancies and Newly Created
Directorships. Subject to any rights of holders of any series of
Preferred Stock to fill such newly created Directorships or
vacancies, any newly created Directorships resulting from any
increase in the authorized number of Directors and any vacancies
in the Board of Directors resulting from death, resignation,
disqualification or removal from office for cause shall, unless
otherwise provided by law or by resolution approved by the
affirmative vote of a majority of the total number of Directors
then in office, be filled only by resolution approved by the
affirmative vote of a majority of the total number of Directors
then in office. Any Director so chosen shall hold office until
the next election of the class for which such Director shall have
been chosen, and until his successor shall have been duly elected
and qualified, unless he shall resign, die, become disqualified
or be removed for cause.
EIGHTH: (a) Dividends. The Board of Directors shall have
authority from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or
reserves as working capital or for any other purpose or purposes,
and to abolish or add to any such reserve or reserves from time
to time as said Board may deem to be in the interest of the
Corporation; and said Board shall likewise have power to
determine in its discretion, except as herein otherwise provided,
what part of the assets of the Corporation available for
dividends in excess of such reserve or reserves shall be declared
in dividends and paid to the stockholders of the Corporation.
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(b) Issuance of Stock. The shares of
all classes of stock of the Corporation may be issued by the
Corporation from time to time for such consideration as from time
to time may be fixed by the Board of Directors of the
Corporation, provided that shares of stock having a par value
shall not be issued for a consideration less than such par value,
as determined by the Board. At any time, or from time to time,
the Corporation may grant rights or options to purchase from the
Corporation any shares of its stock of any class or classes to
run for such period of time, for such consideration, upon such
terms and conditions, and in such form as the Board of Directors
may determine. The Board of Directors shall have authority, as
provided by law, to determine that only a part of the
consideration which shall be received by the Corporation for the
shares of its stock which it shall issue from time to time, shall
be capital; provided, however, that, if all the shares issued
shall be shares having a par value, the amount of the part of
such consideration so determined to be capital shall be equal to
the aggregate par value of such shares. The excess, if any, at
any time, of the total net assets of the Corporation over the
amount so determined to be capital, as aforesaid, shall be
surplus. All classes of stock of the Corporation shall be and
remain at all times nonassessable.
The Board of Directors is hereby expressly authorized, in its
discretion, in connection with the issuance of any obligations or
stock of the Corporation (but without intending hereby to limit
its general power so to do in other cases), to grant rights or
options to purchase stock of the Corporation of any class upon
such terms and during such period as the Board of Directors shall
determine, and to cause such rights to be evidenced by such
warrants or other instruments as it may deem advisable.
(c) Inspection of Books and Records.
The Board of Directors shall have power from time to time to
determine to what extent and at what times and places and under
what conditions and regulations the accounts and books of the
Corporation, or any of them, shall be open to the inspection of
the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the Corporation,
except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the Board of
Directors or of the stockholders of the Corporation.
(d) Location of Meetings, Books and
Records. Except as otherwise provided in the By-laws, the
stockholders of the Corporation and the Board of Directors may
hold their meetings and have an office or offices outside of the
State of Delaware and, subject to the provisions of the laws of
said State, may keep the books of the Corporation outside of said
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State at such places as may, from time to time, be designated by
the Board of Directors.
NINTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate in
the manner now or hereinafter prescribed herein and by the laws
of the State of Delaware, and all rights conferred upon
stockholders herein are granted subject to this reservation.
Notwithstanding anything contained in this Certificate to the
contrary, Sections (a), (b) and (c) of ARTICLE FOURTH, ARTICLE
TENTH, ARTICLE SEVENTH, and this ARTICLE NINTH of this
Certificate shall not be altered, amended or repealed and no
provision inconsistent therewith shall be adopted without the
affirmative vote of the holders of at least 66-2/3% of the voting
power of the then outstanding shares of capital stock of the
Corporation entitled to vote on such alteration, amendment or
repeal, voting together as a single class (other than any
alteration or amendment to Section (a) of ARTICLE FOURTH that
increases the authorized number of shares of Preferred Stock or
Common Stock).
TENTH: (a) Limitation of Liability.
(i) To the fullest extent permitted by the Delaware
General Corporation Law as it now exists or may hereafter be
amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto), and
except as otherwise provided in the Corporation's By-laws, no
Director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages arising from a breach of
fiduciary duty owed to the Corporation or its stockholders.
(ii) Any repeal or modification of
the foregoing paragraph by the stockholders of the Corporation
shall not adversely affect any right or protection of a Director
of the Corporation existing at the time of such repeal or
modification.
(b) Right to Indemnification. Each
person who was or is made a party or is threatened to be made a
party to or is otherwise involved (including involvement as a
witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by
reason of the fact that he or she is or was a Director or officer
of the Corporation or, while a Director or officer of the
Corporation, is or was serving at the request of the Corporation
as a Director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise,
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including service with respect to an employee benefit plan (an
"indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a Director or officer or in any
other capacity while serving as a Director or officer, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than
permitted prior thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased
to be a Director, officer, employee or agent and shall inure to
the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in
Section (c) of this ARTICLE TENTH with respect to proceedings to
enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or
part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. The right to indemnification
conferred in this Section (b) of this ARTICLE TENTH shall be a
contract right and shall include the obligation of the
Corporation to pay the expenses incurred in defending any such
proceeding in advance of its final disposition (an "advance of
expenses"); provided, however, that, if and to the extent that
the Delaware General Corporation Law requires, an advance of
expenses incurred by an indemnitee in his or her capacity as a
Director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made
only upon delivery to the Corporation of an undertaking (an
"undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal
(a "final adjudication") that such indemnitee is not entitled to
be indemnified for such expenses under this Section (b) or
otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the
Corporation with the same or lesser scope and effect as the
foregoing indemnification of Directors and officers.
(c) Procedure for Indemnification. Any
indemnification of a Director or officer of the Corporation or
advance of expenses under Section (b) of this ARTICLE TENTH shall
be made promptly, and in any event within forty-five (45) days
(or, in the case of an advance of expenses, twenty (20) days),
upon the written request of the Director or officer. If a
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determination by the Corporation that the Director or officer is
entitled to indemnification pursuant to this ARTICLE TENTH is
required, and the Corporation fails to respond within sixty (60)
days to a written request for indemnity, the Corporation shall be
deemed to have approved the request. If the Corporation denies a
written request for indemnification or advance of expenses, in
whole or in part, or if payment in full pursuant to such request
is not made within forty-five (45) days (or, in the case of an
advance of expenses, twenty (20) days), the right to
indemnification or advances as granted by this ARTICLE TENTH
shall be enforceable by the Director or officer in any court of
competent jurisdiction. Such person's costs and expenses
incurred in connection with successfully establishing his or her
right to indemnification, in whole or in part, in any such action
shall also be indemnified by the Corporation. It shall be a
defense to any such action (other than an action brought to
enforce a claim for the advance of expenses where the undertaking
required pursuant to Section (b) of this ARTICLE TENTH, if any,
has been tendered to the Corporation) that the claimant has not
met the standards of conduct which make it permissible under the
Delaware General Corporation Law for the Corporation to indemnify
the claimant for the amount claimed, but the burden of such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior
to the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the
applicable standard of conduct. The procedure for
indemnification of other employees and agents for whom
indemnification is provided pursuant to Section (b) of this
ARTICLE TENTH shall be the same procedure set forth in this
Section (c) for Directors or officers, unless otherwise set forth
in the action of the Board of Directors providing indemnification
for such employee or agent.
(d) Insurance. The Corporation may
purchase and maintain insurance on its own behalf and on behalf
of any person who is or was a Director, officer, employee or
agent of the Corporation or was serving at the request of the
Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss asserted
against him or her and incurred by him or her in any such
capacity, whether or not the Corporation would have the power to
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indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
(e) Service for Subsidiaries. Any
person serving as a Director, officer, employee or agent of
another corporation, partnership, limited liability company,
joint venture or other enterprise, at least 50% of whose equity
interests are owned by the Corporation (a "subsidiary" for this
ARTICLE TENTH) shall be conclusively presumed to be serving in
such capacity at the request of the Corporation.
(f) Reliance. Persons who after the
date of the adoption of this provision become or remain Directors
or officers of the Corporation or who, while a Director or
officer of the Corporation, become or remain a Director, officer,
employee or agent of a subsidiary, shall be conclusively presumed
to have relied on the rights to indemnity, advance of expenses
and other rights contained in this ARTICLE TENTH in entering into
or continuing such service. The rights to indemnification and to
the advance of expenses conferred in this ARTICLE TENTH shall
apply to claims made against an indemnitee arising out of acts or
omissions which occurred or occur both prior and subsequent to
the adoption hereof.
(g) Non-Exclusivity of Rights. The
rights to indemnification and to the advance of expenses
conferred in this ARTICLE TENTH shall not be exclusive of any
other right which any person may have or hereafter acquire under
this Certificate or under any statute, by-law, agreement, vote of
stockholders or disinterested Directors or otherwise.
(h) Merger or Consolidation. For
purposes of this ARTICLE TENTH, references to the "Corporation"
shall include, in addition to the resulting Corporation, any
constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its Directors, officers and employees or
agents, so that any person who is or was a Director, officer,
employee or agent of such constituent Corporation, or is or was
serving at the request of such constituent Corporation as a
Director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this ARTICLE TENTH with respect
to the resulting or surviving Corporation as he or she would have
with respect to such constituent Corporation if its separate
existence had continued.
ELEVENTH: The Corporation expressly elects not to be
governed by Section 203 of the Delaware General Corporation Law
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with respect to business combinations with interested
stockholders.
IN WITNESS WHEREOF, the undersigned hereby executed this
instrument and affirms, under penalty of perjury, that this
instrument is the act and deed of the undersigned and that the
facts stated herein are true, and accordingly have hereunto set
my hand this 14th day of April, 1998.
/s/ DOLORES CLEAVER
---------------------------------
DOLORES CLEAVER, Sole Incorporator
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
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EXHIBIT 3.2
BY-LAWS
OF
CONX CAPITAL CORPORATION,
A Delaware Corporation
(Adopted as of April 14, 1998)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of CONX
CAPITAL CORPORATION (the "Corporation") in the State of Delaware
shall be located at 1013 Centre Road, in the City of Wilmington,
Delaware, County of New Castle 19805. The name of the
Corporation's registered agent at such address shall be
Corporation Service Company. The registered office and/or
registered agent of the Corporation may be changed from time to
time by action of the Board of Directors.
Section 2. Other Offices. The Corporation may also have offices
at such other places, both within and without the State of
Delaware, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Annual Meeting. An annual meeting of the
stockholders shall be held each year within 150 days after the
close of the immediately preceding fiscal year of the Corporation
or at such other time specified by the Board of Directors for the
purpose of electing Directors and conducting such other proper
business as may come before the annual meeting. At the annual
meeting, stockholders shall elect Directors and transact such
other business as properly may be brought before the annual
meeting pursuant to Section 11 of ARTICLE II hereof.
Section 2. Special Meetings. Special meetings of the
stockholders may only be called in the manner provided in the
Certificate of Incorporation.
Section 3. Place of Meetings. The Board of Directors may
designate any place, either within or without the State of
Delaware, as the place of meeting for any annual meeting or for
any special meeting. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the
principal executive office of the Corporation. If for any reason
any annual meeting shall not be held during any year, the
business thereof may be transacted at any special meeting of the
stockholders.
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Section 4. Notice. Whenever stockholders are required or
permitted to take action at a meeting, written or printed notice
stating the place, date, time and, in the case of special
meetings, the purpose or purposes, of such meeting, shall be
given to each stockholder entitled to vote at such meeting not
less than 10 nor more than 60 days before the date of the
meeting. All such notices shall be delivered, either personally
or by mail, by or at the direction of the Board of Directors, the
chairman of the board, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed
to the stockholder at his, her or its address as the same appears
on the records of the Corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting,
except when the person attends for the express purpose of
objecting at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or
convened.
Section 5. Stockholders List. The officer having charge of the
stock ledger of the Corporation shall make, at least 10 days
before every meeting of the stockholders, a complete list of the
stockholders entitled to vote at such meeting arranged in
alphabetical order, showing the address of each stockholder and
the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting,
either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting
or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding
shares of capital stock entitled to vote, present in person or
represented by proxy, shall constitute a quorum at all meetings
of the stockholders, except as otherwise provided by the General
Corporation Law of the State of Delaware or by the Certificate of
Incorporation. If a quorum is not present, the holders of a
majority of the shares present in person or represented by proxy
at the meeting, and entitled to vote at the meeting, may adjourn
the meeting to another time and/or place. When a specified item
of business requires a vote by a class or series (if the
Corporation shall then have outstanding shares of more than one
class or series) voting as a class or series, the holders of a
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majority of the shares of such class or series shall constitute a
quorum (as to such class or series) for the transaction of such
item of business.
Section 7. Adjourned Meetings. When a meeting is adjourned to
another time and place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned
meeting the Corporation may transact any business which might
have been transacted at the original meeting. If the adjournment
is for more than 30 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the
affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders, unless (i)
by express provisions of an applicable law or of the Certificate
of Incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such
question, or (ii) the subject matter is the election of
Directors, in which case Section 2 of ARTICLE III hereof shall
govern and control the approval of such subject matter.
Section 9. Voting Rights. Except as otherwise provided by the
General Corporation Law of the State of Delaware, the Certificate
of Incorporation of the Corporation or any amendments thereto or
these By-laws, every stockholder shall at every meeting of the
stockholders be entitled to (i) one vote in person or by proxy
for each share of common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize
another person or persons to act for him or her by proxy, but no
such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest
with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. Any proxy is suspended
when the person executing the proxy is present at a meeting of
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stockholders and elects to vote, except that when such proxy is
coupled with an interest and the fact of the interest appears on
the face of the proxy, the agent named in the proxy shall have
all voting and other rights referred to in the proxy,
notwithstanding the presence of the person executing the proxy.
At each meeting of the stockholders, and before any voting
commences, all proxies filed at or before the meeting shall be
submitted to and examined by the secretary or a person designated
by the secretary, and no shares may be represented or voted under
a proxy that has been found to be invalid or irregular.
Section 11. Business Brought Before an Annual Meeting. At an
annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting.
To be properly brought before an annual meeting, business must be
(i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors,
(ii) brought before the meeting by or at the direction of the
Board of Directors or (iii) otherwise properly brought before the
meeting by a stockholder. For business to be properly brought
before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive
offices of the Corporation, not less than 60 days nor more than
90 days prior to the meeting;provided, however, that in the event
that less than 70 days' notice or prior public announcement of
the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later
than the close of business on the 10th day following the date on
which such notice of the date of the annual meeting was mailed or
such public announcement was made. A stockholder's notice to the
secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the
annual meeting, (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business,
(iii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (iv) any material
interest of the stockholder in such business. Notwithstanding
anything in these By-laws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the
procedures set forth in this section. The presiding officer of an
annual meeting shall, if the facts warrant, determine and declare
to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this section; if
he should so determine, he shall so declare to the meeting and
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any such business not properly brought before the meeting shall
not be transacted. For purposes of this section,"public
announcement" shall mean disclosure in a press release reported
by Dow Jones News Service, Associated Press or a comparable
national news service. Nothing in this section shall be deemed to
affect any rights of stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the
Board of Directors. In addition to such powers as are herein and
in the Certificate of Incorporation expressly conferred upon it,
the Board of Directors shall have and may exercise all the powers
of the Corporation, subject to the provisions of the laws of
Delaware, the Certificate of Incorporation and these By-laws.
Section 2. Number, Election and Term of Office. Subject to any
rights of the holders of any series of Preferred Stock to elect
additional Directors under specified circumstances, the number of
Directors which shall constitute the Board of Directors shall be
fixed at five (5), and hereafter such number shall be fixed from
time to time by resolution adopted by the affirmative vote of a
majority of the total number of Directors then in office. The
Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting
and entitled to vote in the election of Directors; provided that,
whenever the holders of any class or series of capital stock of
the Corporation are entitled to elect one or more Directors
pursuant to the provisions of the Certificate of Incorporation of
the Corporation (including, but not limited to, for purposes of
these By-laws, pursuant to any duly authorized certificate of
designation), such Directors shall be elected by a plurality of
the votes of such class or series present in person or
represented by proxy at the meeting and entitled to vote in the
election of such Directors. The Directors shall be elected and
shall hold office only in the manner provided in the Certificate
of Incorporation.
Section 3. Removal and Resignation. No Director may be removed
from office without cause and without the affirmative vote of the
holders of a majority of the voting power of the then outstanding
shares of capital stock entitled to vote generally in the
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election of Directors voting together as a single class;
provided, however, that if the holders of any class or series of
capital stock are entitled by the provisions of the Certificate
of Incorporation (it being understood that any references to the
Certificate of Incorporation shall include any duly authorized
certificate of designation) to elect one or more Directors, such
Director or Directors so elected may be removed without cause
only by the vote of the holders of a majority of the outstanding
shares of that class or series entitled to vote. Any Director may
resign at any time upon written notice to the Corporation.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the total number of Directors may
be filled only in the manner provided in the Certificate of
Incorporation.
Section 5. Nominations.
(a) Only persons who are nominated in
accordance with the procedures set forth in these By-laws shall
be eligible to serve as Directors. Nominations of persons for
election to the Board of Directors of the Corporation may be made
at a meeting of stockholders (i) by or at the direction of the
Board of Directors, or (ii) by any stockholder of the Corporation
who was a stockholder of record at the time of giving of notice
provided for in this By-law, who is entitled to vote generally in
the election of Directors at the meeting and who shall have
complied with the notice procedures set forth below in Section
5(b).
(b) In order for a stockholder to
nominate a person for election to the Board of Directors of the
Corporation at a meeting of stockholders, such stockholder shall
have delivered timely notice of such stockholder's intent to make
such nomination in writing to the secretary of the Corporation.
To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the
Corporation (i) in the case of an annual meeting, not less than
60 nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is changed by more than
30 days from such anniversary date, notice by the stockholder to
be timely must be so received not later than the close of
business on the 10th day following the earlier of the day on
which notice of the date of the meeting was mailed or public
disclosure of the meeting was made, and (ii) in the case of a
special meeting at which Directors are to be elected, not later
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than the close of business on the 10th day following the earlier
of the day on which notice of the date of the meeting was mailed
or public disclosure of the meeting was made. Such stockholder's
notice shall set forth (i) as to each person whom the stockholder
proposes to nominate for election as a Director at such meeting
all information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors,
or is otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving
as a Director if elected); (ii) as to the stockholder giving the
notice (A) the name and address, as they appear on the
Corporation's books, of such stockholder and (B) the class and
number of shares of the Corporation which are beneficially owned
by such stockholder and also which are owned of record by such
stockholder; and (iii) as to the beneficial owner, if any, on
whose behalf the nomination is made, (A) the name and address of
such person and (B) the class and number of shares of the
Corporation which are beneficially owned by such person. At the
request of the Board of Directors, any person nominated by the
Board of Directors for election as a Director shall furnish to
the secretary of the Corporation that information required to be
set forth in a stockholder's notice of nomination which pertains
to the nominee.
(c) No person shall be eligible to
serve as a Director of the Corporation unless nominated in
accordance with the procedures set forth in this section. The
chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this section, and if
he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded. A stockholder
seeking to nominate a person to serve as a Director must also
comply with all applicable requirements of the Exchange Act, and
the rules and regulations thereunder with respect to the matters
set forth in this Section.
Section 6. Annual Meetings. The annual meeting of the Board of
Directors shall be held without other notice than this By-law
immediately after, and at the same place as, the annual meeting
of stockholders.
Section 7. Other Meetings and Notice. Regular meetings, other
than the annual meeting, of the Board of Directors may be held
without notice at such time and at such place as shall from time
to time be determined by resolution of the Board of Directors.
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Special meetings of the Board of Directors may be called by the
chairman of the board, the president (if the president is a
Director) or, upon the written request of at least a majority of
the Directors then in office, the secretary of the Corporation on
at least 24 hours notice to each Director, either personally, by
telephone, by mail or by telecopy.
Section 8. Chairman of the Board, Quorum, Required Vote and
Adjournment. The Board of Directors shall elect, by the
affirmative vote of a majority of the total number of Directors
then in office, a chairman of the board, who shall preside at all
meetings of the stockholders and Board of Directors at which he
or she is present and shall have such powers and perform such
duties as the Board of Directors may from time to time prescribe.
If the chairman of the board is not present at a meeting of the
stockholders or the Board of Directors, the president (if the
president is a Director and is not also the chairman of the
board) shall preside at such meeting, and, if the president is
not present at such meeting, a majority of the Directors present
at such meeting shall elect one of their members to so preside. A
majority of the total number of Directors then in office shall
constitute a quorum for the transaction of business. Unless by
express provision of an applicable law, the Certificate of
Incorporation or these By-laws a different vote is required, the
vote of a majority of Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. If
a quorum shall not be present at any meeting of the Board of
Directors, the Directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Committees. The Board of Directors may, by
resolution passed by a majority of the total number of Directors
then in office, designate one or more committees, each committee
to consist of one or more of the Directors of the Corporation,
which to the extent provided in such resolution or these By-laws
shall have, and may exercise, the powers of the Board of
Directors in the management and affairs of the Corporation,
except as otherwise limited by law. The Board of Directors may
designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at
any meeting of the committee. Such committee or committees shall
have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors. Each committee
shall keep regular minutes of its meetings and report the same to
the Board of Directors upon request.
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Section 10. Committee Rules. Each committee of the Board of
Directors may fix its own rules of procedure and shall hold its
meetings as provided by such rules, except as may otherwise be
provided by a resolution of the Board of Directors designating
such committee. Unless otherwise provided in such a resolution,
the presence of at least a majority of the members of the
committee shall be necessary to constitute a quorum. Unless
otherwise provided in such a resolution, in the event that a
member and that member's alternate, if alternates are designated
by the Board of Directors, of such committee is or are absent or
disqualified, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in
place of any such absent or disqualified member.
Section 11. Communications Equipment. Members of the Board of
Directors or any committee thereof may participate in and act at
any meeting of such board or committee through the use of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear and
speak with each other, and participation in the meeting pursuant
to this section shall constitute presence in person at the
meeting.
Section 12. Waiver of Notice and Presumption of Assent. Any
member of the Board of Directors or any committee thereof who is
present at a meeting shall be conclusively presumed to have
waived notice of such meeting except when such member attends for
the express purpose of objecting at the beginning of the meeting
to the transaction of any business because the meeting is not
lawfully called or convened. Such member shall be conclusively
presumed to have assented to any action taken unless his or her
dissent shall be entered in the minutes of the meeting or unless
his or her written dissent to such action shall be filed with the
person acting as the secretary of the meeting before the
adjournment thereof or shall be forwarded by registered mail to
the secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply
to any member who voted in favor of such action.
Section 13. Action by Written Consent. Unless otherwise
restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a
meeting if all members of such board or committee, as the case
may be, consent thereto in writing, and the writing or writings
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are filed with the minutes of proceedings of the board or
committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be
elected by the Board of Directors and shall consist of a chairman
of the board, a chief executive officer, a president, one or more
vice-presidents, a secretary, a chief financial officer and such
other officers and assistant officers as may be deemed necessary
or desirable by the Board of Directors. Any number of offices may
be held by the same person, except that neither the chief
executive officer nor the president shall also hold the office of
secretary. In its discretion, the Board of Directors may choose
not to fill any office for any period as it may deem advisable,
except that the offices of president and secretary shall be
filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the
Corporation shall be elected annually by the Board of Directors
at its first meeting held after each annual meeting of
stockholders or as soon thereafter as convenient. Vacancies may
be filled or new offices created and filled at any meeting of the
Board of Directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her
earlier death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the Board
of Directors may be removed by the Board of Directors at its
discretion, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
Section 4. Vacancies. Any vacancy occurring in any office
because of death, resignation, removal, disqualification or
otherwise may be filled by the Board of Directors.
Section 5. Compensation. Compensation of all executive officers
shall be approved by the Board of Directors, and no officer shall
be prevented from receiving such compensation by virtue of his or
her also being a Director of the Corporation; provided, however,
that compensation of all executive officers may be determined by
a committee established for that purpose if so authorized by the
unanimous vote of the Board of Directors.
Section 6. Chairman of the Board. The chairman of the board
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shall preside at all meetings of the stockholders and of the
Board of Directors and shall have such other powers and perform
such other duties as may be prescribed to him or her by the Board
of Directors or provided in these By-laws.
Section 7. Vice-Chairman of the Board. Whenever the chairman of
the board is unable to serve, by reason of sickness, absence, or
otherwise, the vice-chairman shall have the powers and perform
the duties of the chairman of the board. The vice-chairman shall
have such other powers and perform such other duties as may be
prescribed by the chairman of the board, the board of directors
or these By-laws.
Section 8. Chief Executive Officer. The chief executive officer
shall have the powers and perform the duties incident to that
position. Subject to the powers of the Board of Directors and the
chairman of the board, the chief executive officer shall be in
the general and active charge of the entire business and affairs
of the Corporation, and shall be its chief policymaking officer.
The chief executive officer shall have such other powers and
perform such other duties as may be prescribed by the Board of
Directors or provided in these By-laws. The chief executive
officer is authorized to execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation,
except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation. Whenever the president
is unable to serve, by reason of sickness, absence or otherwise,
the chief executive officer shall perform all the duties and
responsibilities and exercise all the powers of the president.
Section 9. The President. The president of the Corporation
shall, subject to the powers of the Board of Directors, the
chairman of the board and the chief executive officer, have
general charge of the business, affairs and property of the
Corporation, and control over its officers, agents and employees.
The president shall see that all orders and resolutions of the
Board of Directors are carried into effect. The president is
authorized to execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other
officer or agent of the Corporation. The president shall have
such other powers and perform such other duties as may be
prescribed by the chairman of the board, the chief executive
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officer, the Board of Directors or as may be provided in these
By-laws.
Section 10. Vice-Presidents. The vice-president, or if there
shall be more than one, the vice-presidents in the order
determined by the Board of Directors or the chairman of the
board, shall, in the absence or disability of the president, act
with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other
duties and have such other powers as the Board of Directors, the
chairman of the board, the chief executive officer, the president
or these By-laws may, from time to time, prescribe. The vice-
presidents may also be designated as executive vice-presidents or
senior vice-presidents, as the Board of Directors may from time
to time prescribe.
Section 11. The Secretary and Assistant Secretaries. The
secretary shall attend all meetings of the Board of Directors,
all meetings of the committees thereof and all meetings of the
stockholders and record all the proceedings of the meetings in a
book or books to be kept for that purpose or shall ensure that
his or her designee attends each such meeting to act in such
capacity. Under the chairman of the board's supervision, the
secretary shall give, or cause to be given, all notices required
to be given by these By-laws or by law; shall have such powers
and perform such duties as the Board of Directors, the chairman
of the board, the chief executive officer, the president or these
By-laws may, from time to time, prescribe; and shall have custody
of the corporate seal of the Corporation. The secretary, or an
assistant secretary, shall have authority to affix the corporate
seal to any instrument requiring it and when so affixed, it may
be attested by his or her signature or by the signature of such
assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the
Corporation and to attest the affixing by his or her signature.
The assistant secretary, or if there be more than one, any of the
assistant secretaries, shall in the absence or disability of the
secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other
powers as the Board of Directors, the chairman of the board, the
chief executive officer, the president, or secretary may, from
time to time, prescribe.
Section 12. The Chief Financial Officer. The chief financial
officer shall have the custody of the corporate funds and
securities; shall keep full and accurate all books and accounts
of the Corporation as shall be necessary or desirable in
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accordance with applicable law or generally accepted accounting
principles; shall deposit all monies and other valuable effects
in the name and to the credit of the Corporation as may be
ordered by the chairman of the board or the Board of Directors;
shall cause the funds of the Corporation to be disbursed when
such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the Board of
Directors, at its regular meeting or when the Board of Directors
so requires, an account of the Corporation; shall have such
powers and perform such duties as the Board of Directors, the
chairman of the board, the chief executive officer, the president
or these By-laws may, from time to time, prescribe. If required
by the Board of Directors, the chief financial officer shall give
the Corporation a bond (which shall be rendered every six years)
in such sums and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful
performance of the duties of the office of chief financial
officer and for the restoration to the Corporation, in case of
death, resignation, retirement or removal from office of all
books, papers, vouchers, money and other property of whatever
kind in the possession or under the control of the chief
financial officer belonging to the Corporation.
Section 13. Other Officers, Assistant Officers and Agents.
Officers, assistant officers and agents, if any, other than those
whose duties are provided for in these By-laws, shall have such
authority and perform such duties as may from time to time be
prescribed by resolution of the Board of Directors.
Section 14. Absence or Disability of Officers. In the case of
the absence or disability of any officer of the Corporation and
of any person hereby authorized to act in such officer's place
during such officer's absence or disability, the Board of
Directors may by resolution delegate the powers and duties of
such officer to any other officer or to any Director, or to any
other person selected by it.
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ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the Corporation shall
be entitled to have a certificate, signed by, or in the name of
the Corporation by the chairman of the board, the chief executive
officer or the president and the secretary or an assistant
secretary of the Corporation, certifying the number of shares
owned by such holder in the Corporation. If such a certificate is
countersigned (i) by a transfer agent or an assistant transfer
agent other than the Corporation or its employee or (ii) by a
registrar, other than the Corporation or its employee, the
signature of any such chairman of the board, chief executive
officer, president, secretary or assistant secretary may be
facsimiles. In case any officer or officers who have signed, or
whose facsimile signature or signatures have been used on, any
such certificate or certificates shall cease to be such officer
or officers of the Corporation whether because of death,
resignation or otherwise before such certificate or certificates
have been delivered by the Corporation, such certificate or
certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates
or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation.
All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares
represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the Corporation.
Shares of stock of the Corporation shall only be transferred on
the books of the Corporation by the holder of record thereof or
by such holder's attorney duly authorized in writing, upon
surrender to the Corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons,
with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may
reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the
Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate or certificates and record
the transaction on its books. The Board of Directors may appoint
a bank or trust company organized under the laws of the United
States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class
or series of securities of the Corporation.
Section 2. Lost Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any
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certificate or certificates previously issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the
Corporation may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen
or destroyed certificate or certificates, or his or her legal
representative, to give the Corporation a bond sufficient to
indemnify the Corporation against any claim that may be made
against the Corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new
certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In
order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by the
Board of Directors, and which record date shall not be more than
60 nor less than 10 days before the date of such meeting. If no
record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at
a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is first given. A
determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Other Purposes. In order
that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or
allotment or any rights or the stockholders entitled to exercise
any rights in respect of any change, conversion or exchange of
stock, or for the purposes of any other lawful action, the Board
of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date
is adopted, and which record date shall be not more than 60 days
prior to such action. If no record date is fixed, the record date
for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
Section 5. Registered Stockholders. Prior to the surrender to
the Corporation of the certificate or certificates for a share or
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shares of stock with a request to record the transfer of such
share or shares, the Corporation may treat the registered owner
as the person entitled to receive dividends, to vote, to receive
notifications and otherwise to exercise all the rights and powers
of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have
express or other notice thereof.
Section 6. Subscriptions for Stock. Unless otherwise provided
for in the subscription agreement, subscriptions for shares shall
be paid in full at such time, or in such installments and at such
times, as shall be determined by the Board of Directors. Any call
made by the Board of Directors for payment on subscriptions shall
be uniform as to all shares of the same class or as to all shares
of the same series. In case of default in the payment of any
installment or call when such payment is due, the Corporation may
proceed to collect the amount due in the same manner as any debt
due the Corporation.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting, in accordance with applicable
law. Dividends may be paid in cash, in property or in shares of
the capital stock, subject to the provisions of the Certificate
of Incorporation. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for
dividends such sum or sums as the Directors from time to time, in
their absolute discretion, think proper as a reserve or reserves
to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or any
other purpose, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts or
other orders for the payment of money by or to the Corporation
and all notes and other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or
officers, agent or agents of the Corporation, and in such manner,
as shall be determined by resolution of the Board of Directors or
a duly authorized committee thereof.
Section 3. Contracts. In addition to the powers otherwise
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granted to officers pursuant to ARTICLE IV hereof, the Board of
Directors may authorize any officer or officers, or any agent or
agents, of the Corporation to enter into any contract or to
execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined
to specific instances.
Section 4. Loans. The Corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or
other employee of the Corporation or of its subsidiaries,
including any officer or employee who is a Director of the
Corporation or its subsidiaries, whenever, in the judgment of the
Directors, such loan, guaranty or assistance may reasonably be
expected to benefit the Corporation. The loan, guaranty or other
assistance may be with or without interest, and may be unsecured,
or secured in such manner as the Board of Directors shall
approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this section shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of
the Corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 6. Corporate Seal. The Board of Directors may provide a
corporate seal which shall be in the form of a circle and shall
have inscribed thereon the name of the Corporation and the words
"Corporate Seal, Delaware." The seal may be used by causing it or
a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 7. Voting Securities Owned By Corporation. Voting
securities in any other Corporation held by the Corporation shall
be voted by the chief executive officer, the president or a vice-
president, unless the Board of Directors specifically confers
authority to vote with respect thereto, which authority may be
general or confined to specific instances, upon some other person
or officer. Any person authorized to vote securities shall have
the power to appoint proxies, with general power of substitution.
Section 8. Inspection of Books and Records. The Board of
Directors shall have power from time to time to determine to what
extent and at what times and places and under what conditions and
regulations the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the stockholders; and no
stockholder shall have any right to inspect any account or book
61
<PAGE>
or document of the Corporation, except as conferred by the laws
of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or of the stockholders of
the Corporation.
Section 9. Section Headings. Section headings in these By-laws
are for convenience of reference only and shall not be given any
substantive effect in limiting or otherwise construing any
provision herein.
Section 10. Inconsistent Provisions. In the event that any
provision of these By-laws is or becomes inconsistent with any
provision of the Certificate of Incorporation, the General
Corporation Law of the State of Delaware or any other applicable
law, the provision of these By-laws shall not be given any effect
to the extent of such inconsistency but shall otherwise be given
full force and effect.
ARTICLE VII
AMENDMENTS
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly
authorized to make, alter, amend, change, add to or repeal these
By-laws by the affirmative vote of a majority of the total number
of Directors then in office. Any alteration or repeal of these
By-laws by the stockholders of the Corporation shall require the
affirmative vote of a majority of the outstanding shares of the
Corporation entitled to vote on such alteration or repeal;
provided, however, that Section 11 of ARTICLE II and Sections 2,
3, 4 and 5 of ARTICLE III and this ARTICLE VII of these By-laws
shall not be altered, amended or repealed and no provision
inconsistent therewith shall be adopted without the affirmative
vote of the holders of at least 662/3% of the outstanding shares
of the Corporation entitled to vote on such alteration or repeal.
62
<PAGE>
EXHIBIT 10.1
CONX CAPITAL CORPORATION
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement") dated as of ____________,
between CONX CAPITAL CORPORATION, an Delaware corporation (the
"Company"), and _____________________________ (the "Stockholder").
I. PURCHASE AND SALE OF STOCK
Pursuant to the CONX Capital Corporation 1998 Stock Incentive
Plan (the "Plan"), the Company hereby sells to Stockholder, and
Stockholder hereby purchases from the Company, __________________
shares of the Common Stock of the Company (the "Shares").
II. PURCHASE PRICE
The purchase price for the Shares shall be $ ______________ per
share, or an aggregate purchase price of $ ____________________.
Concurrently herewith, Stockholder shall deliver to the Company
cash or a check payable to the order of the Company in the amount
of the aggregate purchase price.
III. INVESTMENT REPRESENTATIONS
SECTION 3.01. Investment Intent. Stockholder hereby warrants
and represents that Stockholder is sufficiently aware of the
Company's business affairs and financial condition to reach an
informed and knowledgeable decision to acquire the Shares.
Stockholder hereby warrants and represents that Stockholder is
acquiring the Shares for Stockholder's own account and not with a
view to their resale or distribution and that Stockholder is
prepared to hold the Shares for an indefinite period and has no
present intention to sell, distribute or grant any participating
interests in the Shares. Stockholder hereby acknowledges that
the Shares have not been registered under the Securities Act of
1933, as amended (the "1933 Act"), and that the Company is
issuing the Shares to Stockholder in reliance on the
representations made by Stockholder herein.
SECTION 3.02. Restricted Securities. Stockholder hereby
confirms that Stockholder has been informed that the Shares may
not be resold or transferred unless the Shares are first
registered under the federal securities laws or unless an
63
<PAGE>
exemption from such registration is available. Accordingly,
Stockholder hereby acknowledges that Stockholder is prepared to
hold the Shares for an indefinite period and that Stockholder is
aware that Rule 144 of the Securities and Exchange Commission
issued under the 1933 Act is not presently available to exempt
the sale of the Shares from the registration requirements of the
1933 Act. Should Rule 144 subsequently become available,
Stockholder is aware that any sale of the Shares effected
pursuant to the Rule may, depending upon the status of
Stockholder as an "affiliate" or "non-affiliate" under the Rule,
be made only in limited amounts in accordance with the provisions
of the Rule, and that in no event may any Shares be sold pursuant
to the Rule until Stockholder has held the Shares for the
requisite holding period following payment in cash of the
aggregate purchase price for the Shares.
SECTION 3.03. Disposition of Shares. Stockholder hereby agrees
that Stockholder shall make no disposition of the Shares unless
and until:
(a) Stockholder shall have notified the Company of the
proposed disposition and provided a written summary of the terms
and conditions of the proposed disposition; and
(b) Stockholder shall have provided the Company with written
assurances from the Stockholder and the opinion of the Company's
counsel (at the Company's expense), in form and substance
reasonably satisfactory to the Company, that (i) the proposed
disposition does not require registration of the Shares under the
1933 Act, or (ii) all appropriate action necessary for compliance
with the registration requirements of the 1933 Act or of any
exemption from registration available under the 1933 Act has been
taken.
The Company shall not be required (x) to transfer on its books
any Shares which have been sold or transferred in violation of
the provisions of this Section 3.03, or (y) to treat as the owner
of the Shares, or otherwise to accord voting or dividend rights
to, any transferee to whom the Shares have been transferred in
contravention of this Section 3.03.
IV. RESTRICTIVE LEGEND
In order to reflect the restrictions on disposition of the
Shares, the stock certificates for the Shares will be endorsed
with the following restrictive legend:
64
<PAGE>
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT") AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
WITH THE ACT AND THE RULES AND REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION PROMULGATED THEREUNDER.
V. GENERAL PROVISIONS
SECTION 5.01. Further Assurances. Stockholder shall promptly
take all actions and execute all documents requested by the Com-
pany which the Company deems to be reasonably necessary to effec-
tuate the terms and intent of this Agreement.
SECTION 5.02. Attorneys' Fees. In the event that any action,
suit or other proceeding is instituted upon any breach of this
Agreement, the prevailing party shall be paid by the other party
hereto an amount equal to all of the prevailing party's costs and
expenses, including attorneys' fees incurred in each and every
such action, suit or proceeding (including any and all appeals or
petitions therefrom). As used in this Agreement, "attorneys'
fees" shall mean the full and actual cost of any legal services
actually performed in connection with the matter involved
calculated on the basis of the usual fee charged by the attorney
performing such services and shall not be limited to "reasonable
attorneys' fees" as defined in any statute or rule of court.
SECTION 5.03. The Plan. This Agreement is made pursuant to the
Plan, and it is intended, and shall be interpreted in a manner,
to comply therewith. Any provision of this Agreement
inconsistent with the Plan shall be superseded and governed by
the Plan.
SECTION 5.04. Headings. Headings, titles and captions
contained in this Agreement are inserted for convenience of
reference only and do not constitute a part of this Agreement for
any other purpose.
SECTION 5.05. Successors and Assigns. The provisions of this
Agreement shall inure to the benefit of, and be binding upon, the
Company and its successors and assigns and the Stockholder and
the Stockholder's legal representatives, heirs, legatees,
distributees, assignees and transferees by operation of law,
whether or not any such person shall have become a party to this
Agreement and have agreed in writing to join herein and be bound
by the terms and conditions of this Agreement.
65
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, in
the case of the Company by its duly authorized officer, on the
day and year first indicated above.
"COMPANY" "STOCKHOLDER"
CONX CAPITAL CORPORATION,
By:
___________________________________ _________________________
Its: [Signature]
_______________________________
_________________________
[Type or Print Name]
_________________________
_________________________
_________________________
_________________________
[Print Address]
66
<PAGE>
EXHIBIT 10.1
CONX CAPITAL CORPORATION
1998 STOCK COMPENSATION PLAN
I. GENERAL PURPOSE OF PLAN
The name of this plan is CONX Capital Corporation 1998 Stock
Compensation Plan (the "Plan"). The purpose of the Plan is to
enable CONX Capital Corporation (the "Company") to obtain and
retain the services of the types of non-employee Directors and
advisors who will contribute to the Company's long range success
and to provide incentives that are linked directly to increases
in share value which will inure to the benefit of all
stockholders of the Company.
II. DEFINITIONS
For purposes of the Plan, the following terms shall be defined
as set forth below.
"Administrator" shall have the meaning as set forth in Article
III.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time or any successor thereto.
"Company" means CONX Capital Corporation, a corporation
organized under the laws of the State of Delaware (or any
successor corporation).
"Director" means a member of the Board.
"Eligible Person" means any Director of the Company that is not
a full-time employee (more than 1,000 hours of service annually)
of the Company, or any Parent or any Subsidiary of the Company.
Employees of the Company, any Parent or any Subsidiary may not be
Eligible Persons.
"Grant Date" means November 15 of each year of the Plan.
"Grantee" means an Eligible Person who is granted Stock pursuant
to the Plan.
"Parent" means any present or future corporation which would be
a "parent corporation" as that term is defined in Section 424 of
the Code.
"Plan" means CONX Capital Corporation 1998 Stock Compensation
Plan, as the same may be amended or supplemented from time to
time.
<PAGE>
"Stock" means the Common Stock, no par value per share, of the
Company.
"Subsidiary" means any present or future corporation which would
be a "subsidiary corporation" as that term is defined in Section
424 of the Code.
III. ADMINISTRATION
SECTION 3.01. The Administrator. The Plan shall be
administered by those persons appointed by the Board (the group
that administers the Plan is referred to as the "Administrator").
The Administrator shall not be an Eligible Person.
SECTION 3.02. Powers in General. The Administrator shall have
the power and authority to grant Stock to Eligible Persons,
pursuant to the terms of the Plan.
SECTION 3.03. Specific Powers. In particular, the
Administrator shall have the authority: (i) to construe and
interpret the Plan and apply its provisions; (ii) to promulgate,
amend and rescind rules and regulations relating to the
administration of the Plan; (iii) to authorize any person to
execute, on behalf of the Company, any instrument required to
carry out the purposes of the Plan; and (iv) to make any and all
other determinations which it determines to be necessary or
advisable for administration of the Plan.
IV. STOCK SUBJECT TO PLAN
Subject to adjustment as provided in Article VIII, the total
number of shares of Stock reserved and available for issuance
under the Plan shall be 100,000 shares.
V. ELIGIBILITY
Each Director of the Company who is an Eligible Person, shall be
eligible to be granted Stock hereunder subject to limitations set
forth in this Plan.
VI. STOCK GRANT
In lieu of Directors' fees, 1,000 shares of Stock shall be
granted to each eligible Person on each Grant Date.
VII. AMENDMENT AND TERMINATION
The Board may amend, alter or discontinue the Plan at any time.
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<PAGE>
VIII. CHANGES IN CAPITALIZATION; SPLITS, LIQUIDATIONS,
MERGERS AND REORGANIZATIONS
SECTION 8.01. Stock Splits. The aggregate shares of Stock that
may be granted to Eligible Persons under the Plan may be
proportionately adjusted by the Administrator for any increase or
decrease in the number of issued shares of Stock of the Company
resulting from a stock split, a reverse stock split, a
subdivision or consolidation of shares or other similar capital
adjustment, the payment of a stock dividend or any other increase
or decrease in such shares effected without receipt of
consideration by the Company. Any such determination by the
Administrator shall be conclusive.
SECTION 8.02. Reorganizations. Upon the dissolution or
liquidation of the Company or upon any reorganization, merger,
consolidation pursuant to which the Company does not survive
(except for a reincorporation of the Company in another state) or
sale of all or substantially all of the assets of the Company or
upon a change in composition of the Board (not approved by a
majority of the Board in office at the time of such change) that
results in a change of "control" of the Company (for purposes of
this Section, "control" is defined in Rule 405 of the Securities
and Exchange Commission promulgated under the Securities Act of
1933, as amended), the Plan shall terminate. The grant of Stock
pursuant to the Plan shall not affect in any way the abilities of
the Company to change or adjust its capital structure or to
merge, consolidate, dissolve, liquidate or to sell or transfer
all or any part of its business or assets.
IX. GENERAL PROVISIONS
SECTION 9.01. General Restrictions. (a) Issuance of Stock
and Compliance with Securities Act. The Company may postpone
the issuance and delivery of Stock to Eligible Persons until
the completion of such registration or other qualification of
such Stock under any state or Federal law, rule or regulation as
the Company shall determine to be necessary or advisable. Any
Eligible Person shall make such representations and furnish
such information as may, in the opinion of counsel for the
Company, be appropriate to permit the Company to issue Stock in
compliance with the provisions of the Securities Act of 1933, as
amended, and any applicable state law.
(b) Legends. All certificates for shares of Stock delivered
under the Plan shall be subject to such stop transfer orders and
other restrictions as the Administrator may deem advisable under
the rules, regulations and other requirements of the Securities
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<PAGE>
and Exchange Commission, any stock quotation system upon which
the Stock is then listed and any applicable federal or state
securities laws, and the Administrator may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
SECTION 9.02. Other Compensation Arrangements. Nothing
contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to
stockholder approval if such approval is required.
SECTION 9.03. Indemnification. In addition to such other
rights of indemnification as they may have, and to the extent
allowed by applicable law, the Administrator shall be indemnified
by the Company against the reasonable expenses, including
attorney's fees, actually incurred in connection with any action,
suit or proceeding or in connection with any appeal therein, to
which they or any one of them may be party by reason of any
action taken or failure to act under or in connection with the
Plan, and against all amounts paid by them in settlement thereof
(provided that the settlement has been approved by the Company,
which approval shall not be unreasonably withheld) or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such
Administrator did not act in good faith and in a manner which
such person reasonably believed to be in the best interests of
the Company, and in the case of a criminal proceeding, had no
reason to believe that the conduct complained of was unlawful;
provided, however, that within 60 days after institution of any
such action, suit or proceeding, such Administrator shall, in
writing, offer the Company the opportunity at its own expense to
handle and defend such action, suit or proceeding.
X. EFFECTIVE DATE OF PLAN
The Plan shall become effective on the date on which the Plan is
adopted by the Board and approved by its stockholders.
XI. TERM OF PLAN
No Stock shall be granted pursuant to the Plan on or after
December 31, 2008.
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<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion in the Form 10 of our report dated
January 11, 2000, with respect to the financial statements of
CONX Capital Corporation as of December 31, 1999 and 1998, and
for the year ended December 31, 1999 and the period April 21,
1998 through December 31, 1998.
/s/ Baird, Kurtz & Dobson
BAIRD, KURTZ & DOBSON
Little Rock, Arkansas
July 31, 2000
70
<PAGE>
CONX CAPITAL CORPORATION
DECEMBER 31, 1999
TABLE OF CONTENTS
-----------------
Page
____
INDEPENDENT ACCOUNTANTS' REPORT . . . . . . . . . . . . . . F-2
FINANCIAL STATEMENTS
Balance Sheets . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Income . . . . . . . . . . . . . . . . . . F-4
Statements of Changes in Stockholders' Equity . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . F-7
F-1
<PAGE>
Independent Accountants' Report
-------------------------------
Board of Directors
CONX Capital Corporation
Little Rock, Arkansas
We have audited the accompanying balance sheets of CONX CAPITAL
CORPORATION as of December 31, 1999 and 1998, and the related
statements of income, changes in stockholders' equity and cash
flows for the year ended December 31, 1999 and the period April
21, 1998 through December 31, 1998. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of CONX CAPITAL CORPORATION as of December 31, 1999 and 1998, and
the results of its operations and its cash flows for the year
ended December 31, 1999 and the period April 21, 1998 through
December 31, 1998, in conformity with generally accepted
accounting principles.
Little Rock, Arkansas
January 11, 2000
F-2
<PAGE>
CONX CAPITAL CORPORATION
BALANCE SHEETS
DECEMBER 31, 1999 and 1998
ASSETS
------
1999 1998
---- ----
Cash $ 97,203 $ 85,009
Accounts receivable - affiliated company 37,006
Note receivable - affiliated company 175,565
Equipment, at cost, net of accumulated
deprectiaton 7,891,979 4,602,807
--------- ---------
$ 8,201,753 $ 4,687,816
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Accounts payable - affiliated company $ 18,000 $ 26,610
Accrued expenses 86,768 16,484
Long-term debt 7,435,985 4,560,985
Deferred income taxes 234,865 5,220
--------- ---------
TOTAL LIABILITIES 7,775,618 4,609,299
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
authorized and issued 7,000,000 shares 70,000 70,000
Retained earnings 374,135 8,517
--------- ---------
444,135 78,517
Treasury stock, at cost, 350,000 shares (18,000)
---------- ---------
426,135 78,517
---------- ---------
$ 8,201,753 $ 4,687,816
=========== ===========
See Notes to Financial Statements
F-3
<PAGE>
CONX CAPITAL CORPORATION
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD
APRIL 21, 1998 THROUGH DECEMBER 31, 1998
1999 1998
---- ----
LEASE INCOME $ 2,894,050 $ 635,550
---------- ---------
OPERATING EXPENSES
Management fees 60,000
Depreciation 1,662,136 408,196
Professional fees 7,894 36,788
Directors fees 20,000 15,000
Rent 6,000
Taxes and licenses 4,385
Other 1,387 102
Interest expense 539,815 161,727
--------- ---------
2,301,617 621,813
--------- ---------
INCOME FROM OPERATIONS 592,433 13,737
--------- ---------
OTHER INCOME (EXPENSES)
Interest income 2,830
INCOME BEFORE INCOME TAXES 595,263 13,737
PROVISION FOR INCOME TAXES 229,645 5,220
--------- --------
NET INCOME $ 365,618 $ 8,517
========== =========
EARNINGS PER SHARE
Net Income $ 365,518 $ 5,220
Weighted average shares of
common stock 6,825,000 7,000,000
--------- ---------
Basic earnings per share $ 0.0536 $ 0.0012
====== ======
See Notes to Financial Statements
F-4
<PAGE>
CONX CAPITAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD
APRIL 21, 1998 THROUGH DECEMBER 31, 1998
Common Retained Treasury
Stock Earnings Stock Total
------- -------- ------- -----
BALANCE, APRIL 21, 1998 $ $ $ $
Issuance of common stock 70,000 70,000
Net income 8,517 8,517
------- ------- -------- -------
BALANCE, DECEMBER 31, 1998 70,000 8,517 78,517
Purchase of treasury
stock (18,000) (18,000)
Net income 365,618 365,618
------- ------- ------- -------
BALANCE, DECEMBER 31, 1999 $ 70,000 $ 374,135 $ (18,000) $ 426,135
======== ======== ========= ========
See Notes to Financial Statements
F-5
<PAGE>
CONX CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD
APRIL 21, 1998 THROUGH DECEMBER 31, 1998
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 365,618 $ 8,517
Items not requiring cash:
Depreciation 1,662,136 408,196
Deferred income taxes 229,645 5,220
Changes in:
Accounts receivable (37,006)
Accounts payable and accrued expenses 61,674 43,094
--------- --------
Net cash provided by operating
activities 2,282,067 465,027
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (4,951,308) (5,011,033)
Issuance of note receivable (175,565)
----------- -----------
Net cash used in investing
activities (5,126,873) (5,011,033)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock (18,000)
Issuance of common stock 70,000
Proceeds from issuance of long-term
debt 4,951,308 5,011,033
Payments on long-term debt (2,076,308) (450,018)
--------- ---------
Net cash provided by financing
activities 2,857,000 4,631,015
--------- ---------
NET INCREASE IN CASH 12,194 85,009
CASH, BEGINNING OF PERIOD 85,009
-------- ---------
CASH, END OF PERIOD $ 97,203 $ 85,009
======== =========
See Notes to Financial Statements
F-6
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations
--------------------
CONX Capital Corporation, a Delaware Corporation, is a
specialty commercial finance company engaged in the business of
originating and securing loans and equipment leases to smaller
businesses, with a primary initial focus on regional trucking
companies. The Company was organized in April 1998 with its
headquarters located in Carson City, Nevada. The Company
originates loans and leases through marketing offices located in
Carson City, Nevada, and Little Rock, Arkansas. For the periods
ended December 31, 1999 and 1998, all lease income was derived
from one affiliated company.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Equipment
---------
Equipment is depreciated over the estimated useful life of
each asset. Annual depreciation is computed using the straight-
line method. Estimated useful lives are as follows:
Tractors 5 years
Trailers 10 years
Income Taxes
------------
Deferred tax liabilities and assets are recognized for the
tax effects of differences between the financial statement and
tax bases of assets and liabilities. A valuation allowance is
established to reduce deferred tax assets if it is more likely
than not that a deferred tax asset will not be realized.
F-7
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 2: LONG-TERM DEBT
Note payable - Navistar Financial Corp. (A) $ 5,328,485
Note payable Banc One Leasing Corp. (B) 1,517,368
Note payable Fleet Capital Leasing (C) 590,132
----------
$ 7,435,985
==========
Aggregate annual maturities of long-term debt at December 31, 1999:
2000 $ 2,418,351
2001 2,594,615
2002 2,206,352
2003 216,667
---------
$ 7,435,985
=========
(A) Due in monthly installments through 2003 ranging from $2,253 to
$53,693; including interest from 6.5% to 7.4%; secured by
trucks and trailers. Notes are guaranteed by Continental
Express SD, Inc. (See Note 3)
(B) Due October 30, 2003; payable $14,892 monthly, including interest
at 7.83%; secured by trailers. Note is guaranteed by
Continental Express SD, Inc. (see Note 3)
(C) Due January 28, 2003; payable $45,367 monthly, including interest
at 6.5%; secured by tractors and trailers. Note is guaranteed
by Continental Express SD, Inc. (see Note 3)
NOTE 3: RELATED PARTY TRANSACTIONS
The Company leases all of its equipment to Continental
Express SD, Inc., an affiliated company, which has common
ownership with the Company. The lessor is required to pay all
executory costs (maintenance and insurance). The Company uses
the management and office supplies of Harvey, Inc., an affiliated
Company, which is owned by the Company's principal stockholder.
The Company paid Harvey, Inc. $60,000 during 1999 for management
fees.
At December 31, 1999, the Company had a receivable from Continental
Express SD, Inc. in the amount of $175,565.
<PAGE>
At December 31, 1999, the approximate future minimum lease
income under these operating leases are as follows:
2000 $ 2,394,175
2001 145,350
---------
$ 2,539,525
=========
F-8
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 4: INCOME TAXES
The provision for income taxes includes these components:
1999 1998
---- ----
Taxes currently payable $ $
Deferred income taxes 229,645 5,220
-------- -------
$ 229,645 $ 5,220
======== ========
A reconciliation of income tax expense at the statutory rate
to the Company's actual income tax expense is shown below:
1999 1998
---- ----
Computed at the statutory rate (34%) $ 202,389 $ 4,670
Increase resulting from:
State income taxes net of federal
tax benefit 27,256 550
-------- --------
Actual tax provision $ 229,645 $ 5,220
======= =======
The tax effects of temporary differences related to deferred
taxes shown on the balance sheets were:
1999 1998
---- ----
Deferred tax assets:
Net operating loss carryforwards
(expiring 2019) $ 276,864 $ 172,937
Deferred tax liabilities:
Accumulated depreciation
(511,729) (178,157)
Net deferred tax liability $(234,865) $ (5,220)
======== ========
F-9
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 5: EQUIPMENT
Equipment consists of the following at December 31, 1999 and
1998:
1999 1998
---- ----
Tractors $ 7,496,417 $ 3,960,053
Trailers 2,465,894 1,050,950
9,962,311 5,011,003
Less accumulated depreciation 2,070,332 408,196
--------- ---------
$ 7,891,979 $ 4,602,807
--------- ----------
NOTE 6: SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles require disclosure
of certain significant estimates and current vulnerabilities due
to certain concentrations. These matters include the following:
Year 2000 Issue
---------------
Like all entities, the Company is exposed to risks associated
with the Year 2000 Issue, which affects computer software and
hardware; transactions with customers, vendors and other
entities; and equipment dependent on microchips. The Company
recognizes that the Year 2000 Issue poses a risk beyond January
1, 2000 as errors may not become evident until after that date.
The Company has performed the remediation steps it believes
necessary to address the Year 2000 Issue.
It is not possible for any entity to guarantee the results of
its own remediation efforts or to accurately predict the impact
of the Year 2000 Issue on third parties with which it does
business. If remediation efforts of the Company or third parties
with which it does business are not successful, the Year 2000
problem could have negative effects on the Company's financial
condition and results of operation in the near term. The Company
does not believe any significant Year 2000 problems have
occurred.
F-10
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 7: ADDITIONAL CASH FLOW INFORMATION
1999 1998
---- ----
Interest paid $ 535,531 $ 145,243
======== ========
F-11
<PAGE>
CONX Capital Corporation
Accountants' Report and Financial Statements
June 30, 2000 and December 31, 1999
TABLE OF CONTENTS
_________________
Page
____
INDEPENDENT ACCOUNTANTS' REPORT . . . . . . . . . . . . . . F-13
FINANCIAL STATEMENTS
Balance Sheets . . . . . . . . . . . . . . . . . . . . . F-14
Statements of Income . . . . . . . . . . . . . . . . . . F-15
Statements of Changes in Stockholders' Equity . . . . . F-16
Statements of Cash Flows . . . . . . . . . . . . . . . . F-17
Notes to Financial Statements . . . . . . . . . . . . . F-18
F-12
<PAGE>
Independent Accountants' Report
--------------------------------
Board of Directors
CONX Capital Corporation
Little Rock, Arkansas
We have reviewed the condensed balance sheet of CONX CAPITAL
CORPORATION as of June 30, 2000 and the related condensed
statement of income and cash flows for the six-month period ended
June 30, 2000. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of December 31, 1999 and
the related statements of income, statements of changes in
stockholders' equity, and cash flows for the year then ended and
in our report dated January 11, 2000, we expressed an unqualified
opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed financial
statements as of December 31, 1999 is fairly stated, in all
material respects, in relation to the balance sheet from which it
has been derived.
BAIRD, KURTZ & DOBSON
Little Rock, Arkansas
July 12, 2000
F-13
<PAGE>
CONX CAPITAL CORPORATION
BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
ASSETS
------
2000
(Unaudited) 1999
--------- ----
Cash $ 287,485 $ 97,203
Accounts receivable - affiliated company 117,812 37,006
Prepaid expenses 5,000
Note receivable - affiliated company 175,565
Equipment, at cost, net of accumulated
depreciation 11,521,002 7,891,979
---------- ---------
$ 11,931,299 $ 8,201,753
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Accounts payable - affiliated company $ $ 18,000
Accrued expenses 54,368 86,768
Long-term debt 10,822,713 7,435,985
Deferred income taxes 385,428 234,865
---------- ---------
TOTAL LIABILITIES 11,262,509 7,775,618
---------- ---------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
authorized and issued 7,000,000
shares 70,000 70,000
Retained earnings 616,790 374,135
--------- --------
686,790 444,135
Treasury stock, at cost, 350,000 shares (18,000) (18,000)
--------- ---------
668,790 426,135
$ 11,931,299 $ 8,201,753
=========== ==========
<PAGE>
See Accountants Review Report and
Notes to Condensed Financial Statements
F-14
<PAGE>
CONX CAPITAL CORPORATION
STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND FOR THE YEAR ENDED DECEMBER 31, 1999
2000
(Unaudited) 1999
--------- ----
LEASE INCOME $ 2,021,087 $ 2,894,050
---------- ----------
OPERATING EXPENSES
Management fees 30,000 60,000
Depreciation 1,217,314 1,662,136
Interest expense 348,107 539,815
Professional fees 12,545 7,894
Directors fees 10,000 20,000
Rent 3,000 6,000
Taxes and licenses 8,935 4,385
Other 1,354 1,387
-------- --------
1,631,255 2,301,617
--------- ---------
INCOME FROM OPERATIONS 389,832 592,433
OTHER INCOME (EXPENSES)
Interest income 3,386 2,830
-------- --------
INCOME BEFORE INCOME TAXES 393,218 595,263
PROVISION FOR INCOME TAXES 150,563 229,645
------- -------
NET INCOME $ 242,655 $ 365,618
======== =========
EARNINGS PER SHARE
Net income $ 242,655 $ 365,618
<PAGE>
Weighted average shares of common
stock 6,650,000 6,825,000
--------- ---------
Basic earnings per share $ .0365 $ .0536
========= =========
See Accountants Review Report and
Notes to Condensed Financial Statements
F-15
<PAGE>
CONX CAPITAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND FOR THE YEAR ENDED DECEMBER 31, 1999
Common Retained Treasury
Stock Earnings Stock Total
------ -------- ------ -----
BALANCE, DECEMBER 31, 1998 $ 70,000 $ 8,517 $ $ 78,517
Purchase of treasury stock (18,000) (18,000)
Net income 365,618 365,618
------- -------- -------- -------
BALANCE, DECEMBER 31, 1999 70,000 374,135 (18,000) 426,135
Net income (unaudited) 242,655 242,655
------- ------- ------- -------
BALANCE, JUNE 30, 2000
(UNAUDITED) $ 70,000 $ 616,790 $ (18,000) $ 668,790
======= ========= ========= ========
See Accountants Review Report and
Notes to Condensed Financial Statements
F-16
<PAGE>
CONX CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND FOR THE YEAR ENDED DECEMBER 31, 1999
2000
(Unaudited) 1999
--------- ----
Net income $ 242,655 $ 365,618
Items not requiring cash:
Depreciation 1,217,314 1,662,136
Deferred income taxes 150,563 229,645
Changes in:
Accounts receivable (80,806) (37,006)
Prepaid expenses (5,000)
Accounts payable and accrued expenses (50,400) 61,674
---------- ---------
Net cash provided by operating
activities 1,474,326 2,282,067
========= =========
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (4,846,337) (4,951,308)
Issuance of note receivable (175,565)
Collections on note receivable 175,565
-------- ----------
Net cash used in investing
activities (4,670,772) (5,126,873)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock (18,000)
Proceeds from issuance of long-term
debt 4,846,337 4,951,308
<PAGE>
Payments on long-term debt (1,459,609) (2,076,308)
--------- ----------
Net cash provided by financing
activities 3,386,728 2,857,000
--------- ---------
INCREASE IN CASH 190,282 12,194
CASH, BEGINNING OF PERIOD 97,203 85,009
CASH, END OF PERIOD $ 287,485 $ 97,203
========= =========
See Accountants Review Report and
Notes to Condensed Financial Statements
F-17
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND DECEMBER 31, 1999
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations
--------------------
CONX Capital Corporation, a Delaware Corporation, is a
specialty commercial finance company engaged in the business of
originating and securing loans and equipment leases to smaller
businesses, with a primary initial focus on regional trucking
companies. The Company was organized in April 1998 with its
headquarters located in Carson City, Nevada. The Company
originates loans and leases through marketing offices located in
Carson City, Nevada, and Little Rock, Arkansas. For the periods
ended June 30, 2000 and December 31, 1999, all lease income was
derived from one affiliated company. The results of operations
for the six months ended June 30, 2000 are not necessarily
indicative of the results to be expected for the full year.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Equipment
---------
Equipment is depreciated over the estimated useful life of
each asset. Annual depreciation is computed using the straight-
line method. Estimated useful lives are as follows:
Tractors 5 years
Trailers 10 years
<PAGE>
Income Taxes
------------
Deferred tax liabilities and assets are recognized for the
tax effects of differences between the financial statement and
tax bases of assets and liabilities. A valuation allowance is
established to reduce deferred tax assets if it is more likely
than not that a deferred tax asset will not be realized.
See Accountants' Review Report
F-18
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND DECEMBER 31, 1999
NOTE 2: LONG-TERM DEBT
(Unaudited)
-----------
Note payable - Navistar Financial Corp. (A) $ 7,656,654
Note payable - Banc One Leasing Corp. (B) 1,291,439
Note payable - Fleet Capital Leasing (C) 522,794
Note payable - GE Capital Corp. (D) 1,351,826
-----------
$ 10,822,713
===========
Aggregate annual maturities of long-term debt at June 30, 2000:
2000 $ 1,765,694
2001 3,728,899
2002 3,409,945
2003 1,586,389
2004 331,786
----------
$ 10,822,713
===========
(A) Due in monthly installments through 2003 ranging from $2,253
to $53,693; including interest from 6.5% to 7.4%; secured by
trucks and trailers. Notes are guaranteed by Continental
Express SD, Inc. (See Note 3)
(B) Due October 30, 2003; payable $14,892 monthly, including interest
at 7.83%; secured by trailers. Note is guaranteed by
Continental Express SD, Inc. (see Note 3)
(C) Due January 28, 2003; payable $45,367 monthly, including interest
at 6.5%; secured by tractors and trailers. Note is
guaranteed by Continental Express SD, Inc. (see Note 3)
(D) Due January 13, 2004; payable $36,421 monthly, including interest
at 8.26%; secured by trucks. Note is guaranteed by
Continental Express SD, Inc. (see Note 3)
NOTE 3: RELATED PARTY TRANSACTIONS
The Company leases all of its equipment to Continental
Express SD, Inc., an affiliated company, which has common
ownership with the Company. The lessor is required to pay all
executory costs (maintenance and insurance). The Company uses
the management and office supplies of Harvey, Inc., an affiliated
Company, which is owned by the Company's principal stockholder.
The Company paid Harvey, Inc. $30,000 and $60,000 during the six
months ended June 30, 2000 and the year ended December 31, 1999,
respectively, for management fees.
<PAGE>
See Accountants' Review Report
F-19
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND DECEMBER 31, 1999
NOTE 3: RELATED PARTY TRANSACTIONS (Continued)
At December 31, 1999, the Company had a note receivable from
Continental Express SD, Inc. in the amount of $175,565. This
note bears no interest.
At June 30, 2000, the approximate future minimum lease income
under these operating leases are as follows:
(Unaudited)
---------
2000 $ 1,669,650
2001 1,683,500
2002 350,000
---------
$ 3,703,150
=========
NOTE 4: INCOME TAXES
The provision for income taxes includes these components:
2000
(Unaudited) 1999
--------- ----
Taxes Currently Payable $ $
Deferred income taxes 150,563 229,645
--------- --------
$ 150,563 $ 229,645
======== ========
A reconciliation of income tax expense at the statutory rate
to the Company's actual income tax expense is shown below:
2000
(Unaudited) 1999
----------- ----
Computed at the statutory rate (34%) $ 133,694 $ 202,389
<PAGE>
Increase resulting from:
State income taxes - net of
federal tax benefit 25,152 27,256
Other (8,283)
-------- -------
Actual tax provision $ 150,563 $ 229,645
See Accountants' Review Report
F-20
<PAGE>
CONX CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND DECEMBER 31, 1999
NOTE 4: INCOME TAXES (Continued)
The tax effects of temporary differences related to deferred
taxes shown on the balance sheets were:
2000
(Unaudited) 1999
----------- ----
Deferred tax assets:
Net operating loss carryforwards
(expiring 2019) $ 350,794 $ 276,864
Deferred tax liabilities:
Accumulated depreciation (736,222) (511,729)
-------- -------
Net deferred tax liability $ (385,428) $ (234,865)
======== =======
NOTE 5: EQUIPMENT
Equipment consists of the following at December 31, 1999 and 1998:
2000
(Unaudited) 1999
--------- ----
Tractors $ 12,342,754 $ 7,496,417
Trailers 2,465,894 2,465,894
--------- ---------
14,808,648 9,962,311
Less accumulated depreciation 3,287,646 2,070,332
--------- ---------
$ 11,521,002 $ 7,891,979
========== =========
NOTE 6: ADDITIONAL CASH FLOW INFORMATION
2000
(Unaudited) 1999
--------- ----
Interest paid $ 348,107 $ 535,531
========= ========
See Accountants' Review Report
F-21
CONX CAPITAL CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
<TABLE>
All adjustments made to the unaudited financial statements were of a normal recurring nature. In
the opinion of management, all adjustments necessary for a fair presentation of the results of interim
periods have been made.
<CAPTION>
For the quarter ended:
----------------------------------------------------------------------
6/30/2000 3/31/2000 12/31/99 9/30/99 6/30/99
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $ 1,075,108 $ 945,979 $ 768,950 736,650 $ 736,650
========== ======== ======== ======= ========
Net income $ 130,285 $ 112,370 $ 61,584 119,609 $ 104,602
========= ======== ======== ======== ========
<CAPTION>
For the quarter ended:
---------------------------------------
3/31/99 12/31/98 9/30/98
--------- --------- --------
<C> <C> <C>
Net sales $ 651,800 332,025 $ 303,525
========= ========= ========
Net income (loss) $ 79,823 (11,518) $ 20,035
========= ========= ========
EARNINGS PER SHARE
<CAPTION>
For the quarter ended:
---------------------------------------------------------------------
6/30/2000 3/31/2000 12/31/99 9/30/99 6/30/99
----------- ---------- ---------- --------- ---------
<C> <C> <C> <C> <C>
Net income $ 130,285 $ 112,370 $ 61,584 $ 119,609 $ 104,602
Weighted average shares
of common stock 6,650,000 6,650,000 6,650,000 6,672,826 7,000,000
--------- --------- --------- --------- ---------
Basic earnings per
share $ 0.0196 $ 0.0169 $ 0.0093 $ 0.0179 $ 0.0149
========= ======== ======== ======== ========
<CAPTION>
For the quarter ended:
---------------------------------------
3/31/99 12/31/98 9/30/98
--------- -------- -------
<C> <C> <C>
Net income (loss) $ 79,823 $ (11,518) $ 20,035
Weighted average shares
of common stock 7,000,000 7,000,000 7,000,000
--------- --------- ---------
Basic earnings per
share $ 0.0114 $ (0.0016 $ 0.0029
========== ========== ==========
F-22
</TABLE>
