United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
Citizens Capital Corp.
(Name of Small Business Issuer as specified in its charter)
Texas 75-2368452
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation organization)
8214 Westchester, Suite 500, Dallas, Texas 75225*
Mailing Address: P.O. Box 670406, Dallas, Texas 75367
(Address of principal executive offices)
Issuer's telephone number, including area code: (972) 960-2643
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:
Class A; no par; common stock
(Title of class)
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TABLE OF CONTENTS
Page No.
Description of Business 3
Management's Discussion and Analysis 15
Description of Property 16
Security Ownership of Certain Beneficial Owners 17
and Management
Directors, Executive Officers, Promoters and 18
Control Persons
Executive Compensation 21
Certain Relationships and Related Transactions 22
Description of Securities 23
Market Price of and Dividends on the 26
Registrant's Common Equity and Other Shareholder
Matters
Legal Proceedings 27
Changes in and Disagreements with Accountants 27
Recent Sales of Unregistered Securities 27
Indemnification of Directors and Officers 29
Financial Statements Index 30
Exhibit Index 39
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Business
Citizens Capital Corp. (the "Company" ) is a development stage holding
company which acquires and/or develops those operating entities,
assets and/or marketing rights which may provide the Company with an
entrance into new market segments or serve as a complimentary addition
to existing operations, assets, products or services.
Through its three 97% owned subsidiaries: Landrush Realty Corporation
("Landrush"); Media Force Sports & Entertainment Inc. ("Media Force");
and SCOR Brands Inc. ("SCOR"), the Company's plans contemplate
operating in the following three segments: 1) residential mortgage
loan marketing; commercial and residential real estate investment and
development; 2) news print publishing and media advertising production
and 3) the design, marketing and distribution of branded athletic
shoes and apparel respectively.* Operations since inception have
primarily included expenditures related to the organization of the
Company's proposed business ventures and the prototype development of
its branded products and services. Unless otherwise noted, references
to the Company relate to Citizens Capital Corp. and its subsidiaries
Landrush; Media Force and SCOR, collectively.
THIS REGISTRATION STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS
(IDENTIFIED WITH AN ASTERISK "*") THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
FROM THE RESULTS DISCUSSED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE SECTION
ENTITLED "BUSINESS-RISK FACTORS" AND ELSEWHERE IN THIS REGISTRATION
STATEMENT. IN ADDITION TO THE OTHER INFORMATION IN THIS DOCUMENT, ANY
PROSPECTIVE INVESTOR IN SECURITIES OF THE COMPANY SHOULD CAREFULLY
CONSIDER THE SUBSECTION ENTITLED "BUSINESS-RISK FACTORS" IN EVALUATING
THE COMPANY AND ITS BUSINESS.
General
The Company was incorporated under the laws of the State of Texas on
March 12, 1991 as Let Us, Inc.. The Company's articles of
incorporation were amended in the State of Texas on March 30, 1992
changing the issuer's corporate name from Let Us, Inc. to Citizens
Capital Corp..
For the purpose of entering into the residential mortgage loan market
segment; the Company organized a subsidiary, Landrush Realty
Corporation on August 15, 1995. Also on August 15, 1995, the Company
sold the trademarks and exclusive marketing rights to two of its
residential home equity brands, The Texas Home Equity ReFund(R) and The
Cash-Out Mortgage ReFinancer(R) to Landrush in exchange for 19,000,000
shares of Landrush common stock. On June 13,1997, the Company sold
the trademark and exclusive marketing rights to its third residential
home equity brand: The Home Equity Cashier(R) to Landrush in exchange
for 333,334 shares of Landrush common stock.
For the purpose of entering into the print media market segment, the
Company organized a subsidiary, Media Force Sports & Entertainment
Inc. on June 13, 1997. Also on June 13, 1997, the Company sold the
trademark, publishing and exclusive marketing rights to its Black
Financial~News(R) print publication to Media Force in exchange for
19,333,334 shares of Media Force common stock.
For the purpose of entering into the athletic shoe and apparel market
segment, the Company organized a subsidiary, SCOR Brands Inc. on June
13, 1997. On November 20, 1997, the Company sold the trademark and
exclusive marketing rights to its SCOR(R) brand athletic shoe and
apparel logo to SCOR in exchange for 19,333,334 shares of SCOR common
stock.
Plan of Operation
The Company's plan of operation for the remainder of its 1999 fiscal
year is to: 1) take to market, the prototype products and/or services
contemplated by each of its three subsidiaries: Landrush; Media Force
and SCOR respectively; 2) to continue to evaluate and pursue suitable
merger and/or acquisition of existing operating entities; or acquire
those assets and/or product marketing rights which may provide the
Company with an entry into new markets or serve as a complimentary
addition to existing operations, assets, products and/or services; 3)
obtain sufficient financing to fund
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those merger and acquisition transactions deemed suitable by the
Company for final consummation and 4) obtain sufficient financing to
meet the Company's working capital requirements. *
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Product and Research Development
For the remainder of its 1999 fiscal year, the Company does not plan
to undertake any material level of product research.
For the remainder of its 1999 fiscal year, the Company's Landrush
subsidiary intends to initiate and further the development of its
contemplated residential and commercial real estate development
ventures. *
For the remainder of its 1999 fiscal year, the Company's Media Force
subsidiary does not plan any material level of product development.
For the remainder of its 1999 fiscal year, the Company's SCOR
subsidiary intends to further the development of additional
prototypes for its SCOR brand line of athletic shoes and apparel. *
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Acquisition of Plant and Equipment
The Company does not currently have any definitive written or verbal
agreements in place to acquire a plant or purchase any equipment. The
Company, however, anticipates that it may, from time to time, acquire
plant facilities or purchase certain production equipment as part of
its efforts to merge or acquire suitable operating entities or assets
which may provide the Company with an entrance into new market
segments or serve as a complimentary addition to existing operations,
assets, products or services. *
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Change in Numbers of Employees
The Company anticipates that it may have a material change in the
number of employees that are required to manage and support the
planning, administrative, finance and accounting, marketing, sales and
the day to day operational aspects of: 1) its current development
stage operations or 2) any operating entity which may be merged with
the Company or acquired by the Company. The Company may retain the
services of certain key personnel from any of those operating entity
it deems suitable to merge with or acquire.*
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
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Financial Information About Industry Segments
The Company is a development stage company. The following table sets
forth revenue; operating profit or loss; and identifiable assets; by
industry segment attributable to the Company's last two (2) fiscal
years. The initial launch and availability of the Company's products
and services into their respective market segments is intended for
implementation during the second; third and fourth quarter of the
Company's 1999 fiscal year.* As such, the Company's financial
performance set forth in the table hereof by industry segment may not
be indicative of future performance results. As such, any prospective
investor in securities of the Company should refer to and carefully
consider the Company's consolidated financial statements and the
accompanying notes thereto located in the section entitled "Financial
Statements Index".
Year
1997 1998
Sales to unaffiliated customers:
Real Estate: 0 0
Mortgage Loans 0 0
Residential/Commercial Development 0 0
Media: 0 0
Print 0 0
Athletic Products 0 0
Footwear 0 0
Apparel 0 0
Equipment 0 438
Inter-segment sales or transfers:
Real Estate 0 0
Media 0 0
Athletic Products 0 0
Operating profit or loss
Real Estate -5,722 -5,046
Media -1,575 -4,522
Athletic Products -2,360 -7,784
Identifiable assets:
Real Estate 0 150
Media 0 120
Athletic Products 0 90
Narrative Description of Business
Principal Products Produced and Services Rendered
The Company, through its Landrush; Media Force; and SCOR subsidiaries
intends to offer products and/or services in each of the following
three market segments:*
1) residential mortgage loan marketing; commercial and residential
real estate investment and development.
2) news print; entertainment and media productions.
3) the design, marketing and distribution of branded athletic shoes
and apparel.
The principal products intended to be offered by Landrush are The
Texas Home Equity ReFund(R), The Cash-Out Mortgage ReFinancer(R) and The
Home Equity Cashier(R) home equity products. Landrush owns the
registered trademarks and/or has the exclusive marketing rights to
each of the three products.
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The principal market for each of the three products are residential
homeowners whose home market value exceeds the remaining mortgage
balance on their home. The difference between a home's market value
and the mortgage loan balance owed on the home represents the
homeowner's equity in their property. By obtaining a new mortgage at
a value which approximates a percentage of the home's current market
value, a homeowner may utilize the cash proceeds from a newly issued
mortgage to pay off their existing mortgage loan balance. The
residual cash balance remaining after the homeowner pays off of their
existing mortgage loan balance represents the homeowner's home equity.
This residual cash balance may be utilized by the homeowner for any
personal or business purpose desired.
Each of Landrush's three home equity products are contemplated to be
distributed primarily through mortgage brokers; Realtors and general
sales agents.* For the fiscal year ended December 31, 1997 and
December 31, 1998, Landrush's three home equity products did not
contribute to the Company's consolidated revenue.
Landrush also may acquire existing residential, commercial,
industrial, retail and hotel properties to lease and/or operate.
Landrush may seek the purchase of raw land to facilitate the
development of mixed use projects to include residential, commercial,
industrial, retail and hotel sites.* For the fiscal year ended
December 31, 1997 and December 31, 1998, Landrush's proposed
residential and commercial development ventures did not contribute to
the Company's consolidated revenue.
The principal market for Landrush's proposed residential real estate
development ventures are current apartment residents and existing
homeowners who seek high quality housing solutions which are
conveniently located. Landrush may utilize local and/or regional real
estate professionals to market its proposed residential housing
products.*
The principal market for Landrush's contemplated commercial real
estate developments are anticipated to be businesses whose principal
activities involve the sale of retail products and/or services
directly to the public; point to point distribution; warehousing or
light manufacturing.* In order to market its proposed commercial real
estate ventures, Landrush may work directly with potential tenants, as
well as, with commercial real estate brokers.*
The principal product intended for production and distribution by
Media Force is the Black Financial~News(R). The Black Financial~News(R)
is scheduled to be a weekly news publication whose topics provide an
intersection where people, production, commerce and investment have an
opportunity to meet.*
The principal market for Media Force's Black Financial~News(R)
publication is the African American community and those merchandisers
who would like to target and promote the sell of their products and/or
services to the African American consumer market. *
Media Force intends to market its Black Financial~News(R) publication
through news stands, newspaper/magazine distributors, direct mail and
through various retail chain establishments.* For the fiscal year
ended December 31, 1997 and December 31, 1998, Media Force's Black
Financial~News(R) publication did not contribute to the Company's
consolidated revenue.
The principal products intended for production by SCOR are the SCOR(R)
brand line of athletic shoes and apparel.* The SCOR(R) brand line of
athletic shoes and apparel are intended to serve both the general
recreational and institutional sports markets.*
SCOR intends to utilize mail order catalogs to market its SCOR(R) brand
line of athletic shoes and apparel directly to consumers.* SCOR also
intends to market its SCOR(R) brand line of athletic shoes and apparel
through local, regional and national retail sporting goods and
footwear stores.* For the fiscal year ended December 31, 1997 and
December 31, 1998, SCOR contributed $0 and $438 respectively to the
Company's consolidated revenue. The $438 contributed by SCOR for the
fiscal year ended December 31, 1998 accounted for more than 15% of the
Company's consolidated revenue during said fiscal year.
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Description of the Status of Products or Services
Product prototypes have been developed for each of the Company's three
subsidiaries.
Landrush's Texas Home Equity ReFund(R), Cash-Out Mortgage ReFinancer(R)
and Home Equity Cashier(R) home equity brands have been developed.
Landrush has the exclusive marketing rights for each of the brands and
each brand may be marketed to the public at the discretion and timing
of Landrush.
A prototype of Media Force's Black Financial~News(R) publication has
been developed and may be produced and marketed to its targeted
audience; newspaper and magazine retailers; distributors and
advertisers at the discretion of Media Force.
Prototypes of SCOR's SCOR(R) brand basketball and cross training shoe
lines, as well as, samples of its apparel lines have been developed
and may be produced at the discretion of SCOR. From initial design to
production, a new style of SCOR(R) brand footwear may be produced within
a forty five (45) to ninety (90) day period.
The Company nor any of its subsidiaries has made any public
announcements concerning its products or services. However, the
Company does anticipate making said public announcement as the Company
and its subsidiaries move its products and services into the public
market place.* Moreover, the Company may be required to publicly
disclose certain events and activities related to its operations as a
reporting company pursuant to the requirements of the Exchange Act of
1934 (the "Exchange Act").
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Sources and Availability of Raw Materials
The intended operations of the Company's subsidiaries shall be
dependent upon sources and/or the availability of raw materials for
the initiation and completion of its contemplated business ventures.*
Landrush's purposed residential and commercial development ventures
are highly dependent upon sources and the availability of raw
materials.* Landrush may source and use such raw materials as: steel
beams, wood, bricks, cement, and plastic.* Landrush's general
building contractors may make direct use of said raw materials during
the course of any proposed, contracted building assignment.* All
material sources of raw materials which may be needed by Landrush to
carry out its contemplated residential and commercial development
ventures are generally available in sufficient supply.*
Media Force's Black Financial~News(R) publication shall be dependent
upon a ready source of paper and ink for print production. Media
Force intends to utilize the printing services of third party
commercial printer to carry out the initial printing of its Black
Financial~News(R) publication.* Sources of paper and ink are generally
available through a number of third party commercial printers which
are available to Media Force.
SCOR's prototype branded athletic shoes shall be dependent upon a
ready source of natural and synthetic rubber, vinyl and plastic
compounds, foam cushioning materials, nylon, canvas, and leather.*
SCOR's proposed apparel products are dependent upon the use of natural
and synthetic fabrics, treads and specialized performance fabrics
designed to repel rain, retain heat, or efficiently transport body
moisture. SCOR's contemplated athletic shoes and apparel lines shall
be produced by third party, contract manufacturers located in Mexico,
South Korea, China, Canada and/or the United
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States.* Said contract manufacturers typically buy raw materials in
bulk, as needed for production. Raw materials necessary to produce
SCOR's branded footwear is generally available in or is delivered to
the countries where the manufacturing process takes place. The
contract manufacturers who have been identified to produce SCOR's
branded shoe and apparel lines have not experienced any material level
of difficulties in satisfying raw material requirements used for
production.*
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Patents, Trademarks, Licenses, Franchises and Concessions
The Company utilizes trade and/or service marks on a substantial
number of the products and/or services proposed for offering by its
Landrush; Media Force; and SCOR subsidiaries. The Company believes
that having distinctive marks that are unique and readily identifiable
is a very important factor in creating and maintaining a market for
its products and services, in identifying the Company and its
subsidiaries and in distinguishing its products and services from the
other products and services offered in the market place.* The Company
and its subsidiaries consider its trade and service brands to be
amongst its most valuable assets.*
The Texas Home Equity ReFund(R); The Cash-Out Mortgage ReFinancer(R); The
Home Equity Cashier(R); and SCOR(R) brand marks are registered trademarks
of the Company and/or its subsidiaries. The Company and its
subsidiaries have the exclusive right to use and market said
trademarks in the market place. The registrations in effect for each
of the trademarks expires in the year 2008.
The Black Financial~News(R) brand mark is a registered trademark of the
Company and/or its subsidiaries. As such, the Company and its
subsidiaries have the exclusive right to use and market said
trademarks in the market place. The registrations in effect for the
trademark expires in the year 2008.
The SCOR brand mark is a registered trademark of the Company and/or
its subsidiaries. As such, the Company and its subsidiaries have the
exclusive right to use and market said trademarks in the market place.
The registrations in effect for the trademark expires in the year
2008.
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Seasonal Nature of Business
Demand for the products and services contemplated by the Company and
its subsidiaries are influenced by seasonal changes, as well as,
changes in consumer attitudes and demand.* The Company and its
subsidiaries may experience fluctuations in sales volume during a
given year as a result of seasonal changes or changes in consumer
attitudes.* The Company believes that the mix of its proposed product
for sale may vary considerably from time to time as a result of
changes in seasonal, gender and geographic demand.*
The Company believe that the relative popularity of various sports and
fitness activities, as well as, changing design trends may affect the
demand for SCOR's contemplated athletic shoes and apparel products.*
As such, SCOR believes that it must respond to trends and shifts in
consumer preferences by adjusting the mix of its contemplated product
offerings, develop new styles and categories and influence consumer
buying preferences through aggressive marketing and the utilization of
efficient production and inventory techniques.*
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The Company believes that changes or fluctuations in interest rates
may adversely impact Landrush's proposed home equity products as these
products are tied directly to the cost of money, as related to the
rate of interest charged to obtain a mortgage loan.* The Company also
believes that fluctuations in interest rates may impact Landrush's
ability to obtain financing necessary to hold funded mortgage loans
prior to the bundling, securitization and re-marketing of said
mortgage loans in the secondary mortgage market.
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Inventory Requirements
The athletic footwear and apparel industry that the Company's SCOR
subsidiary proposes to operate in is generally characterized by
specialized athletic shoe companies, apparel companies, sports
equipment companies and large companies having diversified lines of
products primarily serving the retail store market segment. Those
companies who have a large retail store customer base generally offer
ordering programs which allow their retailers to order product five to
six months in advance of delivery with the guarantee that a certain
percentage of the orders will be delivered within a preset time and at
a fixed price. These companies generally maintain strategically
located distribution facilities in order to warehouse new products
prior to delivery to their retail customers. In order to better
manage inventory and working capital, several of the larger companies
in the athletic footwear and apparel industry maintain company
operated retail outlets which primarily carry b-grade and close out
merchandise.
To maintain the lowest possible level of inventory and thereby better
manage working capital requirement, SCOR may market its proposed SCOR(R)
brand line of athletic shoes and apparel directly to customers
utilizing mail order catalogs.*
Sales generated by mail order catalog are generally pre-paid by the
customer. Prepaid sales generally allow a company to have a higher
level of control over inventory and correspondingly reduces working
capital requirements.
SCOR may also pre-determine the initial styles, colors and categories
of the products it will offer for a given sport. Once the styles and
categories are determined, SCOR may warehouse and maintain a minimum
120 day inventory of those products, style and color categories which
are known to take up to 90 days to design, produce and ship.*
SCOR may warehouse and maintain a minimum 30 day inventory of those
contemplated apparel items which are known to take up to 14 days to
design, produce and ship.* Said product and style categories shall
require pre-payment and may be shipped directly when ordered.* All
contemplated products to be produced may require that SCOR make
working capital investments in the production of said products prior
to delivery.* Payment for recreational customer direct purchases
shall generally be due and payable to SCOR at the time that a given
product is ordered.* SCOR may make thirty (30) day credit terms
available to certain institutional customers who are credit worthy and
may provide all of its customers with credits and/or refunds for
merchandise returned due to product defect.*
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Dependence of Segment on a Single Customer
Neither the Company nor any of its subsidiaries are dependent upon a
single customer or a few customers for the generation of product
sales.
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For its fiscal year ended December 31, 1998, the Company's SCOR
subsidiary was dependent on two customers, the San Antonio Independent
School District and the San Antonio Northside Independent School
District, for sales equal to 10% or more of its consolidated revenue.
The Company does not believe that the loss of any one or both of these
customers would have a material adverse effect on the Company or its
SCOR subsidiary.*
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Sales Order Backlog
Neither the Company nor any of its subsidiaries currently have any
firm or unfirm sales order backlog. Moreover, neither the Company nor
any of its subsidiaries have any firm or unfirm sales order backlog
for the fiscal years ended December 31st of 1997 and 1998
respectively.
Renegotiation; Termination of Business or Contracts
No portion of the Company's contemplated business nor the contemplated
business of any of its subsidiaries, were subject to any form of
renegotiation preceding nor were they subject to the renegotiation or
termination of any major or minor government contracts or contracts
otherwise for the fiscal years ended December 31st of 1997 and 1998
respectively.
Competition
The Company's Landrush subsidiary contemplates operating in the
residential mortgage loan market.* The residential mortgage loan
market is a competitive and widely disbursed market segment which
generally consist of either large or boutique financial institutions
who provide wholesale mortgage loan underwriting services through a
network of regional and/or national retail mortgage loan originators.
These mortgage loan originators may be affiliated representatives of
the funding mortgage underwriter or they be independent mortgage
brokers. The industry is characterized by keen interest rate
competition. The underwriting institutions who have access to the
capital markets are generally able to secure funds at a more favorable
overall cost. These cost factors, manifested in the form of loan
interest rates, are then passed to borrowers through the underwriter's
network of regional and/or national retail mortgage loan originators.
Countrywide Home loans; Fannie Mae; Freddie Mac, Cityscape Financial
Corporation, Coldwell Banker, Trammel Crow and Crescent Real Estate
Equities are amongst the industry's leading market participants.
Landrush believes that it may face tremendous competitive risk in its
attempts to gain market share from its more established competitors.*
However, Landrush believes that through the utilization of various
alternative methods of product creation; marketing, distribution,
property acquisition and gaining access to the capital markets it may
achieve a higher initial level of market results then would otherwise
be likely.*
The Company's Media Force subsidiary contemplates operating in the
specialty news and media production industry segment.* The specialty
news and media production industry segments are characterized by many
niche market publishers offering their publications to local, regional
and/or national audiences. Through its coverage content, each
publication attempts to appeal to the interests and/or needs of a
specific target market audience. Publishers then provide
merchandisers with a captive readership audience in which the
merchandiser's products and services may be advertised, promoted and
sold.
On a non material basis, Media Force anticipates that it will
generally always be in competition on a local level with various niche
market publishers whose target audience is the African American
community. The USA Today; Wall Street Journal; Black Enterprise
Magazine; Ebony and JET publications are amongst the leading national
specialty news and entertainment market participants who Media Force
shall be in competition with on various levels.*
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The Company believes that Media Force may face tremendous competitive
risk in its attempts to gain market share from its more established
competitors.* However, Media Force believes that through the
utilization of various alternative methods of product production,
marketing and distribution, it may achieve a higher initial level of
operational results then would otherwise be likely.*
The Company's SCOR subsidiary contemplates operating in the athletic
footwear and apparel industry.* The athletic footwear and apparel
industry is keenly competitive in the United States and on a worldwide
basis in the areas of new product development, price, product
identity, marketing, distribution, and customer service support. SCOR
anticipates that it will compete with an increasing number of
specialized athletic shoe and apparel companies.* The intense
competition and the rapid changes in technology, as well as, consumer
preferences for existing athletic footwear and apparel brands may
constitute significant risk factors for SCOR.*
Nike, Reebok, Adidas, Converse and Fila are amongst the leading market
participants in the footwear and apparel industry. Given the
proprietary nature existing production, marketing and distribution
processes, SCOR may face tremendous competitive risk in its attempts
to gain market share from its more established competitors.* However,
SCOR believes that through the utilization of various alternative
methods of product production, marketing and distribution, it may
achieve a higher initial level of market results then would otherwise
be attainable.*
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Research & Development Expenditures
The Company spent $9,657 and $17,516 on research and development for
its fiscal years ended December 31st 1997 and 1998 respectively.
The Company believes that the research and development efforts of the
Company and its subsidiaries are key factors in its future success.*
As such, the Company may increase the amount of manpower and financial
resources which are allocated to research and development as related
to the various products and services contemplated to be offered by the
Company and its subsidiaries.* Said increase in manpower and
financial resources shall only occur in proportion to the growth and
needs of the Company and its subsidiaries.
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Compliance with Federal, State, and Local Provisions
For the Company's fiscal year end December 31st; 1997 and 1998
respectively, there were no material or immaterial items or issues of
federal, state or local compliance as related to the developmental
operations of the Company or of any of its subsidiaries.
For the remainder of the Company's fiscal year end December 31, 1999,
the Company does not anticipate making any material or immaterial
capital expenditures on items or issues necessary for federal, state
or local compliance as related to the developmental operations of the
Company or of any of its subsidiaries.*
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* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
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Number of Employees
The Company currently employs one active employee. Until the Company
initiates and expands the contemplated operations of its three
subsidiary units and/or consummates future acquisition transactions as
they become available, the Company's Chief Executive Officer, Billy D.
Hawkins has served and will continue to serve as the managing director
of the Company and its subsidiaries.* Mr. Hawkins is currently in
charge of the day to day operations of the Company. Mr. Hawkins has
not and does not currently receive any salary compensation in exchange
for his services on behalf of the Company and its shareholders.
During the remainder of its1999 fiscal year, both the Company and its
subsidiaries may add additional staff as its contemplated ventures may
require.*
- ----------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Risk Factors
The following factors, among others, should be considered carefully in
evaluating the forward-looking statements made by the Company in this
registration statement and in evaluating the Company's business before
making a decision concerning the purchase of its securities.
Development Stage Status
The Company is a development stage company holding company
operating through three subsidiaries; LandRush, Media Force and
SCOR. Operations since inception have primarily included
expenditures related to development of the Company's proposed
business ventures. Since its inception, neither the Company nor
any of its subsidiaries have been profitable.
Product Quality and Development
Each of the three mortgage brands owned by the Company's Landrush
subsidiary are newly developed. There are no assurances that a market
will develop or can be maintained for any of the brands, if developed.
The Black Financial~News(R) brand proposed to be published by the
Company's Media Force subsidiary, is a new publication with no history
of publication or established circulation. There are no assurances
that the Black Financial~News(R) publication will be received in the
market place or establish a significant level of circulation.
For the Company's SCOR subsidiary to be perceived as a viable
replacement for existing and better known name brand athletic footwear
and apparel, the proposed SCOR products must be visually attractive
and solidly constructed. In order to remain in tune with changing
customer tastes and attitude, SCOR must establish and maintain an
active product development program. There is no assurance that a
market will develop for the SCOR brand line of athletic shoes and
apparel will develop.
Dependence on Advertising and Promotion
The success of the products and services proposed to be offered by
each of the Company's three subsidiaries are dependent on advertising
and promoting each of the products and services.
As new entries into the residential mortgage loan market, each of
Landrush's three mortgage brands must be heavily advertised and
promoted in order to be successful and to become recognized brand
names. Residential mortgage loans are not usually marketed as brand
name products.
12
<PAGE>
Media Force's Black Financial~News(R) publication is dependent on the
advertisement and promotion of its brand name as a financial~news
publication. As a financial~news publication, the publication is able
to fill a specific market niche and establish separation between
itself and other publications which target the African American
community.
The athletic shoe and apparel market is extremely marketing oriented.
The Company's SCOR subsidiary shall be highly dependent upon the
advertisement and promotion of its branded products in order to
generate a sufficient level of sales activity.
No Assurance of Profitability
The Company is a development stage company which has not generated a
material level of sales activity nor has the company generated a
profit. For the Company's fiscal years ended December 31, 1997 and
1998, the Company generated net losses of <$9,657> and <$17,353>
respectively. The Company's prospects must be considered in light of
the risks, expenses and difficulties frequently encountered by
development stage companies. To address these risks, the Company
must, among other things, establish its products and services in their
respective markets, respond to competitive developments, continue to
attract, retain and motivate qualified persons, and continue to
upgrade its technologies and commercialize its products and services
incorporating such technologies. There can be no assurance that the
Company can be in addressing these risks or that the Company can be
operated profitably, which depends on many factors, including the
success of the Company's marketing program, the control of expense
levels and the success of the Company's business activities.
Possible Under Capitalization and Need For Future Financing
The Company anticipates that a significant portion of its near-term
capital resources will be provided by borrowing against its
$50,100,000 Note Receivable held as collateral for a $50,100,000 loan
made to its 1998 Citizens Capital Corp. Employee Stock Ownership Plan
Trust in order to purchase 15,000,000 shares of the Company's common
stock. Said Note has a "demand call' provision that allows the
Company to demand the liquidation of up to 15,000,000 shares of the
Company's common stock, held by the trust, anytime the price of said
shares are priced in the public or private capital market at $5.00 per
share or more. If the Company is unable to obtain anticipated
financing utilizing the "demand call" provisions of its Note
Receivable held, there can be no assurance that the Company will be
able to successfully implement its business or meet working capital
requirements. While the Company intends to explore a number of
options in order to secure alternative financing in the event that
this anticipated financing is not obtained or is insufficient, there
can be no assurance that additional financing will be available when
needed or on terms favorable to the Company.
Dependence On Management
Shareholders of the Company are fully dependent upon management to
conduct the Company's business. Success of the business depends on
the skills and efforts of management and, to a large extent, on the
active participation of the Company's executive officers and key
employees. The Company provides stock options, which currently serve
to retain and motivate qualified management personnel or other key
employees. However, the inability to attract, retain and motivate
qualified management and other key employees could adversely affect
the Company's business.
Competition
As discussed above, the markets for which the Company's subsidiaries
propose to operate are intensely competitive, rapidly evolving and
subject to rapid fundamental and technological change. Except for
that of capital, there are no substantial barriers to initial entry,
and the Company expects competition to persist, intensify and increase
in the future. There can be no assurance that competitors will not
develop fundamental methods and technologies or products that render
the Company's products obsolete or less marketable, that the Company
will be able to compete successfully, that the Company will be able to
successfully enhance its products, or develop new products or lower
costs when and as needed.
13
<PAGE>
Proposed Expansion And Ability To Manage Growth
The Company intends to expand its current level of operations.
Expansion of the Company's operations will be dependent upon, among
other things, its ability to: (I) achieve significant market
acceptance for the Company's products and services; (II) hire and
retain skilled management, marketing, technical and other personnel;
(III) successfully manage growth, if any (including monitoring
operations, controlling costs, and maintaining effective quality
controls); and, (IV) obtain adequate financing when needed. The
Company's prospects for future growth will be largely dependent upon
its ability to achieve significant penetration of its products and
technologies in targeted markets, to successfully market its concepts,
to develop and commercialize applications of its design and production
technologies for the market and to enter into strategic alliances with
third-parties in connection with the exploitation of its technologies.
The Company could also seek to expand its operations through
acquisition.
[FORWARD-LOOKING STATEMENTS]
A number of the matters and subject areas discussed in the preceding
"Risk Factors" section that are not historical or current facts deal
with potential future circumstances and developments. The discussion
of these matters and subject areas is qualified by the inherent and
uncertainties surrounding future expectations generally, and also may
materially differ from the Company's actual future experience
involving any one or more of these matters or subject areas. The
Company has attempted to identify, in context, certain of the factors
that it currently believes may cause actual future experience and
results to differ from its current expectations regarding the relevant
matter or subject area.
Financial Information about Foreign and Domestic Operations and Export
Sales
The Company is a development stage company. The following table sets
forth domestic and foreign revenue; operating profit or loss;
identifiable assets; and export sales attributable to the Company's
last two fiscal years. The initial launch and availability of the
Company's products and/or services into their respective market
segments is intended for implementation during the second; third and
fourth quarter of the Company's 1999 fiscal year.* As such, the
Company's financial performance set forth in the table hereof for
domestic and/or foreign operations may not be indicative of future
performance results.
Year
1997 1998
Sales to unaffiliated customers:
United States 0 438
Foreign 0 0
Sales or transfers between geographic
areas:
United States 0 438
Foreign 0 0
Operating Profit or Loss:
United States: -9,657 -17,353
Foreign 0 0
Identifiable assets:
United States 0 1,685
Foreign 0 0
Export Sales: 0 0
14
<PAGE>
- ----------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations due to
factors described in "Business-Risk Factors, " and elsewhere in this
registration statement.
Management's Discussion and Analysis
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the
Financial Statements and the related Notes thereto included elsewhere
in this document. This discussion contains forward-looking statements
that involve risks and uncertainties. The Company's actual results
may differ materially from those anticipated in these forward-looking
statements as a result of certain factors including, but not limited
to, those set forth under "Risk Factors" and elsewhere in this
document.
Overview
The Company is a development stage holding company which acquires
and/or develops those operating entities, assets and/or marketing
rights which may provide the Company with an entrance into new market
segments or serve as a complimentary addition to existing operations,
assets, products or services.
The Company formed the following three subsidiaries: Landrush Realty
Corporation ("Landrush"); Media Force Sports & Entertainment Inc.
("Media Force"); and SCOR Brands Inc. ("SCOR"), in order to enter the
following three market segments: 1) residential mortgage loan
marketing; commercial and residential real estate investment and
development; 2) news print publishing and media advertising production
and 3) the design, marketing and distribution of branded athletic
shoes and apparel respectively.
Operations since inception have primarily included expenditures
related to the organization of the Company's proposed business
ventures and the prototype development of its branded products and
services.
Liquidity And Capital Resources
Since its inception, the Company has financed its operations primarily
from contributions from its principle stockholder and private
placements with related parties. For the period ending December 31,
1997 and 1998, contributions from its principal stockholder totaled
$9,307 and $15,563 respectively. The Company had $1,015 in cash as of
December 31, 1998.
The Company's operating activities generated a net loss of ($9,657)
and ($17,353) for the fiscal years ended December 31, 1997 and
December 31, 1998 respectively. Losses generated during these periods
were due to operating expenses exceeding revenue and an increase in
accounts payables for the fiscal year ended December 31, 1998.
As a development stage company, the Company's products and services
have not been established in the market place and thus have not
generated an ongoing stream of revenues to offset operating expenses
through the Company's fiscal year ended December 31, 1998.
For the fiscal year ended December 31, 1997 and December 31, 1998, the
Company used ($150) and $0 net cash respectively for investing
activities. As a development stage company, the Company has not
generated sufficient cash from operations to increase its investing
activities. All of the Company's available cash since inception has
generally been utilized to pay operating expense as incurred.
For the fiscal year ended December 31, 1997 and December 31, 1998, the
Company generated a net increase in cash of $0 and $1,015 respectively
from financing activities. As a development stage company, the
Company does not currently have any significant cash reserves nor has
it established any lines of credit or long term borrowings as of
December 31, 1998.
15
<PAGE>
At December 31, 1998, the Company's level of cash reserves and level
of working capital is not sufficient to allow the Company to introduce
its proposed products and services into the market place. During the
first, second and third quarters of fiscal year 1999, the Company
intends to establish lines of credit; short term and/or long term
borrowings necessary to fund its current working capital requirements.
As of the fiscal year ended December 31, 1998, the Company did not
have any material commitments for capital expenditures. During the
first, second and third quarters of fiscal year 1999, the Company
anticipates making capital expenditures necessary to pursue and
consummate the acquisition of various operating entities as deemed
suitable by the Company. The Company anticipates that the capital
necessary for its acquisition initiatives shall be in the form of on
balance sheet debt.
The Company anticipates that a significant portion of its short-term
liquidity and capital resources shall be obtained by the Company
borrowing against its $50,100,000 Note Receivable held as collateral
for a $50,100,000 loan made to its 1998 Citizens Capital Corp.
Employee Stock Ownership Trust in order for the trust to purchase
15,000,000 shares of the Company's common stock at $3.34 per share.
Said Note has a "demand call' provision that allows the Company to
demand the liquidation of up to 15,000,000 shares of the Company's
common stock, held by the trust, anytime the price of said shares are
priced in the public or private capital markets at $5.00 per share or
more.
The Company's borrowing against said $50,100,000 Note held may be in
the form a convertible debt instrument which may be converted into a
set number of the Company's common shares at a stated price per share.
Result of Operations
The Company is a development stage company whose products and services
have not been significantly introduced, advertised, promoted or
established into the market place as of the Company's fiscal year
ended December 31, 1998. As such, the Company has not yet generated a
material level of revenue. As such, operating expenses have outpaced
revenues generating net losses for each of the Company's fiscal years
ended December 31, 1997 and December 31, 1998.
It is the Company's opinion that once its products and services are
materially introduced, advertised, promoted and established into the
market place, there shall be a corresponding increase in the Company's
revenue and profitability. Also, the Company believes that the
initiation of its acquisition program will allow the company to "buy
revenue". These additional revenues shall generally have a
corresponding impact on both expenses and profitability.
The Company intends to utilize and rely heavily upon the merger and
acquisition process to grow and expand its operations by "buying
revenue" and various other assets, marketing and distribution rights
which may provide the Company with expansion opportunities in existing
market segments or with entry into new market segments..
Description of Properties.
The Company maintains executive offices located at: 8214 Westchester
Lane, Suite 500, Dallas, Texas 75225. In preparation for its
anticipated growth and the corresponding need for expanded office
accommodations , the Company maintains said executive offices on a
monthly rental basis.
The operations of each of the Company's three subsidiaries are
currently being operated out of the Company executive offices located
at: 8214 Westchester Lane, Suite 500, Dallas, Texas 75225.
As growth and expansion require, the Company and each of its three
subsidiaries may relocate to larger executive facilities during the
second; third and fourth quarters of the Company's 1999 fiscal year.
The Company and/or its subsidiaries may acquire various
administrative, manufacturing, and warehouse properties through its
merger and acquisition activities intended to be carried out for the
remainder of the Company's 1999 fiscal year.
16
<PAGE>
Security Ownership of Certain Beneficial Owners and Management.
The total outstanding common stock of the Company as of December 31,
1998, consists of 40,500,000 shares. All outstanding shares of common
stock are entitled to one vote per share.
Security Ownership of Certain Beneficial Owners
The following table sets forth as of December 31, 1998, each
stockholder known to the Company to beneficially own more than 5
percent of the Company's outstanding shares of common stock.
(1) Title of Class (2) Name and address (3) Amount and nature of (4) Percent
of beneficial owner beneficial ownership of class
Common Stock The 3H Corporation 24,500,001(1) 60.4%
P.O. Box 671304
Dallas, Texas 75367
Common Stock Citizens Capital 15,000,000(2)(3) 37.0%
Corp. Employee Stock
Ownership Trust
P.O. Box 670406
Dallas, Texas 75367
(1) The 3H Corporation directly owns 23,500,002 common shares of the
Company and in its role as the general partner of Brice Street
Partners Ltd., has sole voting and investment power over 999,999
additional common shares of the Company. Billy D. Hawkins, Chief
Executive Officer; Chairman of the Board and a Director of the
Company, has sole voting and investment control of The 3H Corporation.
As a result, Mr. Hawkins may be deemed to be the beneficial owner of
the shares owned and/or controlled by The 3H Corporation.
(2) Billy D. Hawkins, Chief Executive Officer; Chairman of the Board
and a Director of the Company; Dwight Washington, a Director of the
Company; and Hubert H. Hawkins, a Director of the Company are members
of the Citizens Capital Corp. Employee Stock Ownership Plan Executive
Committee. As a result, the Executive Committee consisting of Mr.
Hawkins; Mr. Washington and Mr. Hubert H. Hawkins may be deemed to
have shared investment power over the shares owned by the Citizens
Capital Corp. Employee Stock Ownership Trust. The address for each
member of the Citizens Capital Corp. Employee Stock Ownership Plan
Executive Committee is: P. O. Box 670406, Dallas, Texas 75367.
(3) Pursuant to the trust agreement which governs the Citizens Capital
Corp. Employee Stock Ownership Trust, the trust has a duration of 10
years and expires November 11, 2007.
Security Ownership of Management
The following table sets forth certain information regarding the
beneficial ownership as of December 31, 1998, of the Company's common
stock by (a) each person known by the Company to be a beneficial owner
of more than five percent of the outstanding common stock of the
Company, (b) each director of the Company, and (c) all directors and
executive officers of the Company as a group (5 persons), owned
beneficially 39,499,998 shares or 97.5% of the issued and outstanding
shares of common stock as set forth in the following table.
(1) Title of Class (2)Name of (3) Amount and Nature (4) Percent
Beneficial Owner of Beneficial Ownership of Class
Common Stock Billy D. Hawkins 24,500,001(1) 60.4%
Common Stock Dwight Washington 100,000(2) *
Common Stock Hubert H. Hawkins 100,000(3) *
Common Stock Enos Harris 100,000(4) *
Common Stock Directors and 15,000,000 (5) 37.0%
Executive Officers As
A Group (5) persons
17
<PAGE>
(*) Less than 1%
(1) The 3H Corporation directly owns 23,500,002 common shares and in
its role as the general partner of Brice Street Partners Ltd., has
sole voting and investment power over 999,999 additional shares.
Billy D. Hawkins, Chief Executive Officer; Chairman of the Board and a
Director of the Company, has sole voting and investment control over
The 3H Corporation. As a result, Mr. Hawkins may be deemed to be the
beneficial owner of the shares owned and/or controlled by both The
3H Corporation and Brice Street Partners Ltd..
(2) Dwight Washington in his role as Chief Financial Officer of the
Company has an option to buy 100,000 shares of the Company's class A;
common stock at $1.50 per share. Unless or until extended, said
option is for a period of four years beginning December 31, 1998. No
options have been exercised as of December 31, 1998.
(3) Hubert H. Hawkins in his role as Vice President of Benefits of the
Company has an option to buy 100,000 shares of the Company's class A;
common stock at $1.50 per share. Unless or until extended, said
option is for a period of four years beginning December 31, 1998. No
options have been exercised as of December 31, 1998.
(4) Enos Harris in his role as Chief Operating Officer of the Company
has an option to buy 100,000 shares of the Company's class A; common
stock at $1.50 per share. Unless or until extended, said option is
for a period of four years beginning December 31, 1998. No options
have been exercised as of December 31, 1998.
(5) Billy D. Hawkins, Chief Executive Officer; Chairman of the Board
and a Director of the Company; Dwight Washington, a Director of the
Company; and Hubert H. Hawkins, a Director of the Company are members
of the Citizens Capital Corp. Employee Stock Ownership Plan Executive
Committee. As a result, the Executive Committee consisting of Mr.
Hawkins; Mr. Washington and Mr. Hubert H. Hawkins may be deemed to
have shared investment power over the shares owned by the Citizens
Capital Corp. Employee Stock Ownership Trust. The address for each
member of the Citizens Capital Corp. Employee Stock Ownership Plan
Executive Committee is: P. O. Box 670406, Dallas, Texas 75367.
Changes in Control
The Company has no knowledge of any arrangements whereby its
securities or those of its parent, have been pledged, the subsequent
operation of which, would result in a change in control of the
Company.
Directors and Executive Officers.
Identification of Directors
Management of the Company is vested in its Board of Directors and
officers. The directors are elected by the shareholders. The
officers of the Company hold office at the discretion of the Board of
Directors. There currently are four directors.
The table below lists the Company's current Directors. Each Director
will serve until the Company's next annual meeting of shareholders or
until a successor shall be elected and shall qualify. There are no
current nominees to the Company's Board of Directors.
Name Age Positions Held Term of Office
Billy D. Hawkins 35 D; CEO.; COB 7 years
Dwight Washington 33 D; CFO; Treasurer 1 year
Hubert H. Hawkins 66 D; V.P. Benefits; Secretary 1 year
Enos Harris 43 D; COO 1 year
(D)=Director
(CEO)=Chief Executive Officer
(COO)=Chief Operating Officer
(COB)=Chairman of the Board
(CFO)=Chief Financial Officer
18
<PAGE>
Identification of Executive Officers
The table below lists the Company's current Executive Officers. Each
Executive Officer is chosen by the Company's Board of Directors and
shall continue in service as Officers until replaced or reassigned by
said Board of Directors..
Name Age Positions Held Term of Office
Billy D. Hawkins 35 D; CEO.; COB 7 years
Dwight Washington 33 D; CFO; Treasurer 1 years
Hubert H. Hawkins 66 D; V.P. Benefits; Secretary 1 years
Enos Harris 43 D; COO 1 years
Identification of Certain Significant Employees
Presently, the Company does not currently have any employees that are
not executive officers who are expected to make significant
contributions to the Company's business. As the Company enters new
markets and expands its business operations, it may add key personnel
whose contributions it shall consider as significant to meeting
itsoverall contemplated business objectives.
Family Relationships
Billy D. Hawkins, a Director, Chief Executive Officer and Chairman of
the Board of the Company is the blood son of Hubert H. Hawkins, a
Director and Secretary of the Company.
Enos Harris, a Director, and Chief Operating Officer of the Company is
the first cousin of Billy D. Hawkins, a Director, Chief Executive
Officer and Chairman of the Board of the Company. Mr. Harris is also
the blood nephew of Hubert H. Hawkins, a Director and Secretary of
the Company.
Business Experience
Billy D. Hawkins, Chief Executive Officer-- Mr. Hawkins, 35, a
director since 1991, is Chief Executive Officer and Chairman of the
Board of Directors of the Company. Mr. Hawkins founded and organized
the Company in 1991. Since 1991, Mr. Hawkins has had the lead role in
the planning and development of the Company's mergers and acquisition
program. Prior to 1991, Mr. Hawkins was a staff accountant with
Mobil Oil Corporation in Dallas, Texas. Mr. Hawkins attended Eastern
New Mexico University where he received a bachelors degree in finance
1986.
Dwight Washington, Chief Financial Officer--Mr. Washington, 33, a
director since 1998, Mr. Washington intends to join the Company on a
full time basis as Chief Financial Officer and Treasurer in 1999.
From 1994 to Present, Mr. Washington serves as controller of Ross
Aviation Inc. in Albuquerque, New Mexico. From 1992 to 1994, Mr.
Washington served as Audit Senior at Arthur Anderson & Co., in
Albuquerque, New Mexico. For the period of 1989 thru 1992, Mr.
Washington held the positions of bank examiner and audit coordinator
at Sunwest Bank in Albuquerque, New Mexico and the position of junior
auditor at Eastern New Mexico University in 1987. Mr. Washington
attended Eastern New Mexico University where he received a bachelors
degree in accounting in 1987 and attended the University of Phoenix
where he obtained his Masters of Business Administration in 1998.
Hubert H. Hawkins, Vice President of Benefits--Mr. Hawkins, 66,
secretary and a director since 1998, Mr. Hawkins intends to join the
Company on a full time basis as Vice President of Benefits in 1999.
From 1979 to 1995, Mr. Hawkins served as the director of personnel for
the San Antonio Housing Authority in San Antonio, Texas. Mr. Hawkins
retired from the San Antonio Housing Authority in January of 1995.
Enos Harris, Chief Operating Officer--Mr. Harris, 43, a director since
1998, Mr. Harris is one of the Company's original investors and
intends to join the Company on a full time basis as an Operating
Officer in 1999. From 1978 through 1998, Mr. Harris served as
supervisor of up to 150 employees which included clerks; carriers and
route examiners for the United States Postal Service in Houston,
Texas. Prior to 1978, Mr. Harris attended San Jacinto College in
Pasadena, Texas from 1975 to 1976. From 1976 to 1978, Mr. Harris
attended Texas Southern University in Houston, Texas.
19
<PAGE>
No person nominated nor serving in the role of director of the Company
currently holds any other directorship with any company with a class
of securities registered pursuant to section 12 of the Exchange Act of
1934 or any company subject to the requirements of section 15(d) of
said Act nor does any director of the Company hold any directorship
with any company registered as an investment company under the
Investment Company Act of 1940.
Involvement in Certain Legal Proceedings
(1) During the past five years, no petition under the federal
bankruptcy laws or any state insolvency law has been filed by or
against any director, person nominated to become a director or
executive officer of the Company. Nor has any receiver, fiscal agent
or similar officer been appointed by a court for the business or
property of such person, or any partnership, corporation or business
association in which said person was a general partner or executive
officer within two years before the time of any such filings.
(2) During the past five years, no director, person nominated to
become a director or executive officer of the Company been convicted
in a criminal proceeding or is a named subject of a pending criminal
proceeding.
(3) During the past five years, no director, person nominated to
become a director or executive officer of the Company, the subject of
any order, judgment, or decree, not subsequently reversed, suspended
or vacated by a court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting him from the
following activities:
(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant or any other person regulated by the
Commodity Futures Trading Commission, or any associated person of any
of the foregoing or as an investment adviser, underwriter, broker or
dealer in securities or as an affiliated person, director or employee
of any investment company, bank, savings and loan association or
insurance company, or engaging in or continuing any conduct or
practice in connection with such activity.
(ii) no director, person nominated to become a director or executive
officer of the Company is the subject of any order, judgment, or
decree, not subsequently reversed, suspended or vacated by a court of
competent jurisdiction, permanently or temporarily enjoining him from,
or otherwise limiting him from engaging in any type of business
practice; or
(iii) engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation
of Federal or State securities laws or Federal commodities laws.
(4) During the past five years, no director, person nominated to
become a director or executive officer of the Company is the subject
of any order, judgment, or decree, not subsequently reversed,
suspended or vacated by any Federal or State authority barring,
suspending or otherwise limiting said persons for more than 60 days
from engaging in any activity described in paragraph (3)(i) of this
section, or from being associated with persons engaged in any such
activity.
(5) During the past five years, no director, person nominated to
become a director or executive officer of the Company been found by a
court of competent jurisdiction in a civil action or by the Securities
and Exchange Commission to have violated any Federal or State
securities law and no judgment in such civil action or finding by the
Securities and Exchange Commission been subsequently reversed,
suspended or vacated.
(6) During the past five years, no director, person nominated to
become a director or executive officer of the Company been found by a
court of competent jurisdiction in a civil action or by the Commodity
Futures Trading Commission to have violated any Federal commodities
law, no judgment in such civil action or finding by the Commodity
Futures Trading Commission been subsequently reversed, suspended or
vacated.
Promoters and Control Persons
(1) Billy D. Hawkins, a Director, Chief Executive Officer and
Chairman of the Board of the Company is the only person of the Company
who may be considered a promoter and control person of the Company.
During the past five years, Mr. Hawkins has not and is not subject to
any of the events which have been enumerated in paragraphs (1) through
(6) of the above section titled; "Involvement in certain legal
proceedings".
20
<PAGE>
<TABLE>
Executive Compensation
The following table sets forth all compensation paid or earned for services
rendered to the Company by its executive officers in all capacities during
the fiscal year ended December 31, 1998. No executive officer received total
annual salary, bonus, or other compensation in excess of $100,000 during the
fiscal year ended December 31, 1998.
<CAPTION>
Summary Compensation Table
Annual compensation Long term compensation
Awards Payouts
Name and principal position Year Salary($) Bonus ($) Other Restricted Securities LTIP All other
annual stock underlying Payouts($) compen-
compen- award(s) options/SARs(#) sations($)
sation($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CEO, Billy D. Hawkins 1998 $0.00(1) $0.00(1) $0.00(1) $0.00(1) 100,000(1) $0.00(1) $0.00(1)
CFO, Dwight Washington 1998 $0.00(2) $0.00(2) $0.00(2) $0.00(2) 100,000(2) $0.00(2) $0.00(2)
COO, Enos Harris 1998 $0.00(3) $0.00(3) $0.00(3) $0.00(3) 100,000(3) $0.00(3) $0.00(3)
V.P. Benefits, Hubert H. Hawkins 1998 $0.00(4) $0.00(4) $0.00(4) $0.00(4) 100,000(4) $0.00(4) $0.00(4)
(1) In order to conserve the Company's financial resources during the early
stages of its growth and development, Billy D. Hawkins elected to forgo any form
of cash or non-cash salary or bonus as compensation for his role as the
Company's Chief Executive Officer for the fiscal year ended December 31, 1998.
(2) Mr. Washington did not receive any form or cash or non-cash salary or bonus
as compensation during the Company's fiscal year ended December 31, 1998. Mr.
Washington in his role as Chief Financial Officer of the Company was granted an
option to buy 100,000 shares of the Company's class A; common stock at $1.50 per
share. Said option is for a period of four years beginning December 31, 1998.
No options have been exercised as of December 31, 1998.
(3) Mr. Harris did not receive any form of cash or non-cash salary or bonus as
compensation during the Company's fiscal year ended December 31, 1998. Mr.
Harris in his role as Chief Operating Officer of the Company has an option to
buy 100,000 shares of the Company's class A; common stock at $1.50 per share.
Unless or until extended, said option is for a period of four years beginning
December 31, 1998. No options have been exercised as of December 31, 1998.
(4) Mr. Hawkins did not receive any form of cash or non-cash salary or bonus as
compensation during the Company's fiscal year ended December 31, 1998. Mr.
Hawkins in his role Vice President of Benefits of the Company has an option to
buy 100,000 shares of the Company's class A; common stock at $1.50 per share.
Unless or until extended, said option is for a period of four years beginning
December 31, 1998. No options have been exercised as of December 31, 1998.
1998 Stock Option Plan
The Company's 1998 Stock Option Plan ("1998 Plan") is intended to serve as an
equity incentive program for management, qualified employees, non-employee
members of the Board of Directors, and independent advisors or consultants. The
1998 Plan became effective on December 1, 1998 upon adoption by the Board of
Directors, and has been recommended for approval of shareholders at the March 1,
1999 annual meeting. Under the 1998 Plan, the total number of shares of common
stock reserved for issuance is 2,000,000, which may be Incentive Stock Options
("ISO") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, or non-qualified stock options.
The 1998 Plan provides participants with a four year vesting schedule. 25% of
the total options granted to participants may be vested immediately. 25% of the
total options granted to participants may be vested after 2 years. An
additional 25% of the total options granted to participants may be vested after
3 years. The final 25% of the total options granted to participants may be
vested after 4 years.
</TABLE>
21
<PAGE>
1998 ESOP Plan
The Company adopted an Employees Stock Ownership Plan ("ESOP" or
the "Plan") on May 1, 1998, which covers all employees with at
least a year of consecutive service that are not covered by a
collective bargaining agreement. The purpose of the Plan is to
enable participating employees of the Company to share in the
development and growth of the Company and to provide participants
with an opportunity to build capital for their retirement, the Plan
is designed to do so without any deductions from the participants'
paychecks and without any cash investment by participants. The
Plan provides for an allocation of Company stock to each
participant's account of the greater of 15% or the maximum
percentage allowable of participants' eligible compensation.
Participants in the Plan are vested after of three years of
uninterrupted service with the Company.
Certain Relationships and Related Transactions.
Transactions with Management and Others
On May 8, 1998, the Company sold 15,000,000 shares of its common stock
to its Employee Stock Ownership Plan (ESOP) Trust, the Citizens
Capital Corp. Employee Stock Ownership Trust for $3.34 per share or
$50,100,000.
Billy D. Hawkins, a director, Chief Executive Officer and Chairman of
the Board of the Company; Dwight Washington, a director and Chief
Executive Officer of the Company; and Hubert H. Hawkins, a director
and Vice President of the Company serve on the Executive Committee of
the Citizens Capital Corp. Employee Stock Ownership Trust. While
neither Mr. Billy D. Hawkins; Mr. Dwight Washington; nor Mr. Hubert H.
Hawkins separately hold any interest in the trust's assets, Mr. Billy
D. Hawkins; Mr. Dwight Washington; and Mr. Hubert H. Hawkins may be
said to have shared investment power over said assets.
Certain Business Relationships
For the Company's 1997 and 1998 fiscal years respectively, Billy D.
Hawkins, a director, Chief Executive Officer and Chairman of the Board
of the Company also served as Chief Executive Officer for the
Company's three (3) 97% owned subsidiaries: Landrush Realty
Corporation; Media Force Sports & Entertainment, Inc. and SCOR Brands
Inc.. Mr. Hawkins also currently maintains the role of Chairman of
the Board for each of said subsidiaries.
Indebtedness of Management
None of the following has been nor are they currently indebted to the
Company or its subsidiaries for any amount:
1) no director or executive officer of the Company;
2) no nominee for election as a director of the Company;
3) no member of the immediate family of any of the persons specified
in paragraph (1) or (2) of this subsection;
4) no corporation or organization, other than the Company or its
subsidiaries, of which any of the persons specified in paragraph (1)
or (2) of this subsection is an executive officer or partner or is
directly or indirectly, the beneficial owner of ten percent or more of
any class of equity securities;
5) Billy D. Hawkins, a director, Chief Executive Officer and Chairman
of the Board of the Company; Dwight Washington, a director and Chief
Executive Officer of the Company; and Hubert H. Hawkins, a director
and Vice President of the Company serve on the Executive Committee of
the Citizens Capital Corp. Employee Stock Ownership Trust.
On May 8, 1998, the Company sold 15,000,000 shares of its common stock
to the Citizens Capital Corp. Employee Stock Ownership Trust pursuant
to its1998 Employee Stock Ownership Plan (ESOP), for $3.34 per share
or $50,100,000.
22
<PAGE>
As payment for the 15,000,000 common shares, the Citizens Capital
Corp. Employee Stock Ownership Trust has executed a 5 year,
$50,100,000 promissory note bearing an annual interest rate of
fourteen and one-half percent (14.5%). Said promissory note is
secured by a security agreement collaterializing 15,000,000 shares of
Citizens Capital Corp.'s common stock held by the Citizens Capital
Corp. Employee Stock Ownership Trust.
Transactions with Promoters
As the sole founder and original investor of the Company, Billy D.
Hawkins, a Director, Chief Executive Officer and Chairman of the Board
of the Company is the only person who may currently be considered a
promoter of the Company.
As sole founder of the Company, Billy D. Hawkins held 7,833,334 shares
of the Company's common stock, through the The 3H Corporation, at
fiscal year end December 31, 1997. Pursuant to a (3) for (1) stock
split by the Company on May 3, 1998, Billy D. Hawkins, through The 3H
Corporation, holds 23,500,002 shares of the Company's common stock.
For the Company's 1997 and 1998 fiscal years respectively, Billy D.
Hawkins, a director, Chief Executive Officer and Chairman of the Board
of the Company also served as Chief Executive Officer for each of the
Company's three (3) 97% owned subsidiaries: Landrush Realty
Corporation; Media Force Sports & Entertainment, Inc. and SCOR Brands
Inc.. Mr. Hawkins maintained the role of Chairman of the Board for
each of the Company's (3) subsidiaries during fiscal year 1998.
On August 15, 1995, the Company sold the trademarks and exclusive
marketing rights to two (2) of its residential home equity brand
products: The Texas Home Equity ReFund(R) and The Cash-Out Mortgage
ReFinancer(R) to Landrush in exchange for 19,000,000 shares of Landrush
common stock.
On June 13, 1997, the Company sold the trademark and exclusive
marketing rights to its third residential home equity brand product:
The Home Equity Cashier(R) to Landrush in exchange for 333,334 shares of
Landrush common stock.
On November 20,, 1997, the Company sold the trademark, publishing and
exclusive marketing rights to its Black Financial~News(R) print
publication to Media Force in exchange for 19,333,334 shares of Media
Force common stock.
On November 20, 1997, the Company sold the trademark and exclusive
marketing rights to its SCOR(R) athletic shoe and apparel logo to SCOR
in exchange for 19,333,334 shares of SCOR common stock.
Description of Registrant's Securities
Capital Stock
The Company has 40,500,000 shares of class A; no par; common stock
outstanding and 1,000,000 shares of class A; $1.00; 7 1/4% cumulative
preferred stock outstanding as of December 31, 1998.
The Company is registering 39,500,000 shares of its class A; no par;
common stock. The remaining 1,000,000 class A; no par; common shares
are outstanding pursuant to an exemption from the requirements of
registration under Rule 230.504 of Regulation D under the Securities
Act of 1933, as amended.
The registration statement hereof shall cover the registration of all
40,500,000 shares of the Company's class A; no par; common stock
outstanding as a class.
Dividend Rights
All common shares outstanding have equal rights and full entitlement
to receive pro rata distribution of any earnings declared and payable
by the Company as dividends. The rights of common shareholders of the
Company to receive payment of any earnings which are declared as
dividends by the Company are subordinate to the rights of preferred
shareholders of the Company.
23
<PAGE>
Voting Rights
Each one (1) share of the Company's common stock is entitled one (1)
vote as to the selection of the Company's directors and other
important company matters.
The Company's common shares do not have any cumulative voting rights.
Liquidation Rights
In the event that the Company is liquidated, the claims of secured and
unsecured creditors and owners of bonds and preferred stock take
precedence over the claims of common shareholders.
Preemption Rights
The Company's class A; common shares are not entitled to any
preemptive rights regarding the issuance of additional common shares.
Alienability of Securities
There are no restrictions on the alienability of the Company's common
shares to be registered.
Discriminating Against Existing or Prospective Shareholders
The Company's class A; common shares do not have any provision which
discriminates against any existing or prospective shareholder as a
result of any shareholder owning a substantial amount of said
securities.
Modification of Shareholders Rights
The rights of the Company's common shareholders may be modified by a
66 2/3 percent vote of all said shareholder's shares outstanding,
voting as a class.
Preferred Stock
The Company is not registering any of its preferred stock outstanding.
The Company has 1,000,000 shares of class A; $1.00; 7 1/4% cumulative
preferred stock outstanding as of December 31, 1998. Said preferred
shares are outstanding pursuant to an exemption from the requirements
of registration under Rule 230.504 of Regulation D under the
Securities Act of 1933, as amended.
The preferred shares outstanding are entitled to the following rights:
Preference as to dividends
The 7 1/4%, $1.00, cumulative preferred stock shall rank senior to
all other classes of the Company's capital stock with respect to
dividends and as to rights upon liquidation, winding up or dissolution
of the Company. As long as any shares of the 7 1/4%, $1.00,
cumulative preferred stock remain outstanding, the Company will not
be entitled to authorize or issue any other class of securities that
are senior to or on parity with the 7 1/4%, $1.00, cumulative
preferred stock with respect to dividends or on liquidation, winding
up or dissolution, without the approval of holders of at least 66 2/3%
of the 7 1/4%, $1.00, cumulative preferred stock .
Voting Rights
Holders of shares of the 7 1/4%, $1.00, cumulative preferred stock
will not be entitled to vote with the holders of the Company's common
stock. Holders of the 7 1/4%, $1.00, cumulative preferred stock have
no cumulative voting rights or preemptive or other rights to subscribe
for shares.
If at any time the equivalent of six quarterly dividend payments on
the 7 1/4%, $1.00, cumulative preferred stock are in arrears and
unpaid, the holders of the 7 1/4%, $1.00, cumulative preferred stock
shall be entitled to vote with the
24
<PAGE>
Company's common stock holders. Additionally, the number of members
of the Board of Directors of the Company shall be increased by one and
the holders of the 7 1/4%, $1.00, cumulative preferred stock shall
have the exclusive right, voting separately as a class, to elect one
director of the Company such director to be in addition to the number
of directors constituting the Company's Board of Directors immediately
prior to the accrual of the right.
Such voting right will continue until all dividends accumulated and
payable on that stock have been paid in full, at which time such
voting right of the holders of the 7 1/4%, $1.00, cumulative preferred
stock shall terminate, subject to re-vesting in the event of a
subsequent, similar arrearage. Upon any termination of such voting
right, the term of office of the director elected by the holders of
the 7 1/4%, $1.00, cumulative preferred stock voting separately as a
class will terminate.
The approval of the holders of at least 66 2/3% of the shares of 7
1/4%, $1.00, cumulative preferred stock then outstanding, voting as a
class, will be required to (i)create, authorize or issue any capital
stock of the Company ranking, either as to payment of dividends or
upon liquidation, dissolution or winding up of the Company, on a
parity or senior to the 7 1/4%, $1.00, cumulative preferred stock ; or
(ii) change the attributes of the 7 1/4%, $1.00, cumulative preferred
stock in any material respect prejudicial to the holders of the 7
1/4%, $1.00, cumulative preferred stock .
Dividend Rights
The holders of the 7 1/4%, $1.00, cumulative preferred stock are
entitled to receive out of funds of the Company legally available
thereof, dividends at an annual rate of $0.07250 per share, payable
quarterly in arrears in four equal installments of $0.018125 per share
on the 15th day of March, June, September and December in each year.
Dividends on the 7 1/4%, $1.00, cumulative preferred stock will
accrue and cumulate from the date of first issuance and will be paid
to holders of record of the 7 1/4%, $1.00, cumulative preferred stock
as they appear on the books of the Company as of the close of business
on any record date for payment of dividends. The record dates for
payment of dividends shall be the last day of February, May, August
and November in each year which immediately precedes each respective
dividend payment date. The amount payable for the dividend period for
any other period less than a full quarterly dividend period will be
computed on the basis of a 365-day year. The initial dividend will
accrue from the date of issuance of the units which consist of the 7
1/4%, $1.00, cumulative preferred stock and will be payable 90 days
from the date the units which consist of the 7 1/4%, $1.00, cumulative
preferred stock are issued. Accumulation of dividends will not bear
interest.
So long as the 7 1/4%, $1.00, cumulative preferred stock are
outstanding, the Company may not declare or pay any dividend on the
common stock or other capital stock unless the full cumulative
dividends on the 7 1/4%, $1.00, cumulative preferred stock have been
paid in full or contemporaneously are declared and paid in full
through the last dividend payment date.
Redemption
The 7 1/4%, $1.00, cumulative preferred stock are redeemable in
whole, but not in part, at the option of the Company on a call basis,
so long as full cumulative dividends on all outstanding shares of the
7 1/4%, no-par, cumulative preferred stock have been or
contemporaneously are declared and paid for all past dividend periods.
The principal of said 7 1/4%, $1.00, cumulative preferred stock shall
be re-paid in full on or before December 31, 1999.
In the event that the 7 1/4%, $1.00, cumulative preferred stock are
redeemed by the Company during any year before it becomes due in 1999,
said redemption of the 7 1/4%, $1.00, cumulative preferred stock
shall be redeemed from the holders thereof at the following premiums
for each $1.00 face value amount:
1994 1,000,000 +15%
1995 1,000,000 +12%
1996 1,000,000 +10%
1997 1,000,000 + 9%
1998 1,000,000 + 8%
1999 1,000,000 + 7 1/4%
25
<PAGE>
Debt Securities
The Company is not registering any debt securities nor does the
Company have any debt securities outstanding as of December 31, 1998.
Warrants and Rights
Each of the Company's 1,000,000 shares of class A; 7 1/4%; $1.00
preferred stock outstanding is paired together with 1/10th warrant and
is outstanding as a unit. Each one (1) warrant purchases ten (10)
shares of common stock at $0.01 per share.
The Company has 100,000 class A warrants outstanding as of December
31, 1998. Each one (1) warrant gives the holder thereof the
entitlement to purchase from, the Company, ten (10) shares of the
Company's common stock at $0.01 per share. 1,000,000 shares of the
Company's class A common stock are subject to issuance from the
exercise of the 100,000 class A warrants outstanding.
Said warrants shall have a perpetual life until that time in which the
Common Stock of the Company is registered for public sale with the
Securities and Exchange Commission pursuant to the Securities Act of
1933 ("Act") or the Exchange Act of 1934 ("Exchange Act"). After such
time that the Company's registration statement for the public sale of
its Common Stock becomes effective, the warrants herein offered shall
no longer have a perpetual life. Instead, said warrants shall have a
life of 30 days. Said 30 days shall commence and take effect and be
counted from the date that the Company's registration statement for
the public sale of its common stock becomes effective under the
("Act") or ("Exchange Act") unless such time period is extended or
waived by a vote of the Company's Board of Directors.
Other Securities
The Company is not registering any other securities pursuant to this
registration statement other than the class A; common stock herein
afore described under the section entitled; Capital Stock.
Market Information for Securities other than Common Equity
The Company is not registering any other securities pursuant to this
registration statement other than the class A; common stock herein
afore described under the section entitled; Capital Stock, as such,
there is no market information to provide regarding other securities.
American Depository Receipts
The Company does not have any depository shares outstanding which are
represented by American Depository Receipts.
PART II
Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
Market Information
As of December 31, 1998, there is no established foreign nor domestic
public market for any class of the Company's common equity. While the
Company intends to take initiatives, on behalf of its shareholders, to
establish a public trading market in its common equity, the Company is
not sure if or when said public market shall occur. Unless and until
said market for the Company's securities are established, the
marketability and ability to liquidate said securities shall be
limited.
At December 31, 1998, the Company has 300,000 unissued shares of its
common stock which are subject to executive options to be allocated to
its non-chief executive level officers.
26
<PAGE>
The Company has 100,000 common stock purchase warrants outstanding as
of December 31, 1998. Each one (1) warrant purchases 10 shares of the
Company's common stock at $0.01 per share. There are 1,000,000 shares
of the Company's class A; common stock which are subject to the
exercise of said 100,000 warrants.
The Company has 40,500,000 shares of common stock and 1,000,000 shares
of preferred stock outstanding as of December 31, 1998.
Holders
There are approximately forty-five (43) known holders of the Company's
common equity outstanding and forty (40) holders of the Company's
preferred equity outstanding.
Dividends
The Company has not declared nor paid any cash dividends on any class
of its common or preferred equity for the past two (2) fiscal years
ending December 31, 1997 and December 31, 1998 respectively.
As a development stage company, the Company has not generated
sufficient earnings necessary to declare and payout any cash dividends
to its shareholders.
Neither the Company nor any of its subsidiaries are currently subject
to any restrictions which would limit the payment of dividends by: 1)
the Company's subsidiaries to the Company or 2) the Company to its
shareholders providing that the Company's cash reserves were
sufficient for said dividend declaration and distribution.
Legal Proceedings.
As of December 31, 1998, neither the Company nor any of its
subsidiaries are involved in, nor party to; any current legal
proceedings nor any pending litigation brought by any federal, state,
local court or regulatory agency.
Changes in and Disagreements with Accountants
The Board of Directors selected Hein + Associates LLP as its
independent accountant for the audit of its financial statements for
the fiscal years ending December 31, 1998 and 1997 and the period from
inception (March 12, 1991) to December 31, 1998. Prior to selecting
the independent accounting services of Hein + Associates LLP, the
Company did not have a previous independent accountant. The Company
has not had any disagreements with its current independent accountant
on any matters regarding accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
Recent Sales of Unregistered Securities
The following information relates to all securities of the Company
which have been sold by the Company within the past three years which
were not registered under the Securities Act of 1933, as amended or
the Exchange Act of 1934, as amended or pursuant to an exemption from
the requirements of registration thereof.
Securities Sold
On November 1, 1994, the Company sold 1,000,000 shares of its class A
preferred stock. Each share of preferred stock is paired together
with 1/10th warrant and is outstanding as a unit. Each one (1)
warrant purchases ten (10) shares of common stock at $0.01 per share.
On November 14, 1997, the Company sold 1,000,000 shares of its class A
common stock to The 3H Corporation; Brice Street Partners Ltd, and
Settler's Frontier Mortgage Trust. The 3H Corporation; Brice Street
Partners Ltd, and Settler's Frontier Mortgage Trust are entities which
are controlled by the Company's Chief Executive Officer, Billy D.
Hawkins. On May 11, 1998, the Company sold 15,000,000 shares of its
class A common stock to its Citizens Capital Corp. Employee Stock
Ownership Trust.
27
<PAGE>
Underwriters and Other Purchasers
On November 1, 1994, the Company sold 1,000,000 shares of it' class A;
preferred stock directly to investors. No broker/dealer or other
party served in an underwriting capacity regarding this issuance.
On November 14, 1997, the Company sold 1,000,000 shares of its class A
common stock directly to institutional investors. No broker/dealer or
other party served in an underwriting capacity regarding this
issuance.
On May 11, 1998, the Company sold 15,000,000 shares of its class A
common stock directly to its Employee Stock Ownership Plan Trust,
Citizens Capital Corp. Employee Stock Ownership Trust. No
broker/dealer or other party served in an underwriting capacity
regarding this issuance.
Consideration
On November 1, 1994, the Company sold 1,000,000 shares of its class A
preferred stock directly to investors in return for cash; merger and
acquisition; business advisory and administrative services rendered to
the Company.
On November 14, 1997, the Company sold 1,000,000 shares of its class A
common stock directly to investors in exchange for the conveyance of
production, marketing and distribution rights to certain trade; brand
and service marks.
On May 11, 1998, the Company sold 15,000,000 shares of its class A;
common stock directly to its Citizens Capital Corp. Employee Stock
Ownership Trust in exchange for a 5 year, fourteen and one-half
percent (14.5%), $50,100,000 promissory note. Said promissory note
was issued together with a security agreement fully collateralized by
15,000,000 shares of the Company's common stock held by the Citizens
Capital Corp. Employee Stock Ownership Trust.
Exemption from Registration Claimed
On November 1, 1994, the Company sold 1,000,000 shares of its class A
preferred stock directly to investors in return for merger and
acquisition; business advisory and administrative services rendered to
the Company. The securities sold hereof were sold pursuant to an
exemption from the requirements of registration under Rule 230.504 of
Regulation D of the Securities Act of 1933, as amended. The offerings
were made without the use of any general solicitation or advertising.
All investors had adequate access, through their relationship with the
Company, to information about the Company.
On November 14, 1997, the Company sold 1,000,000 shares of its class A
common stock directly investors in exchange for the conveyance of
production, marketing and distribution rights to certain trade; brand
and service marks. The securities sold hereof were sold pursuant to
an exemption from the requirements of registration under Rule 230.504
of Regulation D of the Securities Act of 1933, as amended. The
offerings were made without the use of any general solicitation or
advertising. All investors had adequate access, through their
relationship with the Company, to information about the Company.
On May 11, 1998, the Company sold 15,000,000 shares of its class A
common stock directly to its Citizens Capital Corp. Employee Stock
Ownership Trust in exchange for a 5 year, fourteen and one-half
percent (14.5%), $50,100,000 promissory note. Said promissory note
was issued together with a security agreement fully collateralized by
15,000,000 shares of the Company's common stock held by the Citizens
Capital Corp. Employee Stock Ownership Trust. The securities sold
hereof were sold pursuant to an exemption from the requirements of
registration under Rule 230.506 of Regulation D of the Securities Act
of 1933, as amended. The offering were made without the use of any
general solicitation or advertising. All plan participants had
adequate access, through their relationship with the Company, to
information about the Company.
28
<PAGE>
Terms of Conversion or Exercise
On November 1, 1994, the Company issued 1,000,000 shares of its class
A preferred stock. Each share of preferred stock is paired together
with 1/10th warrant and is outstanding as a unit. Each one (1)
warrant purchases ten (10) shares of common stock at $0.01 per share.
As such, at the occurrence of the full exercise of all 100,000
warrants outstanding, the Company shall be required to issue 1,000,000
shares of class A; common stock to warrant holders of record thereof.
Indemnification of Directors and Officers
All directors and officers of the Company shall be indemnified and/or
appropriately insured against any manner of liability which may occur
in his or her capacity providing that said directors and/or officers,
acting in an official capacity on behalf of the Company, acted in good
faith, received no improper personal benefit, acted in a interest of
the Company and, in the case of a criminal proceeding, had no
reasonable cause to believe that the conduct was unlawful.
As of December 31, 1998, there was no pending litigation or proceeding
involving a director, officer, employee or agent of the Company where
indemnification will be required. The Company is not aware of any
threatened litigation or proceeding which may result in a claim for
indemnification.
THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY
29
<PAGE>
FINANCIAL STATEMENTS INDEX
Page No.
Independent Auditor's Report 31
Financial Statements 31
Consolidated Balance Sheets 32
Consolidated Statements of Operations 33
Consolidated Statement of Stockholder's Equity 34
Consolidated Statements of Cash Flows 35
Notes to Consolidated Financial Statements 36
30
<PAGE>
INDEPENDENT AUDITOR'S REPORT
February 8, 1999
The Board of Directors
Citizens Capital Corp.
Dallas, Texas
We have audited the accompanying consolidated balance sheet of
Citizens Capital Corp. as of December 31, 1998, and the related
consolidated statements of operations, changes in stockholders' equity
and cash flows for the years ended December 31, 1998 and 1997 and the
period from inception (March 12, 1991) to 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
audits 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 Citizens
Capital Corp. as of December 31, 1998, and the results of its
operations and its cash flows for the years ended December 31, 1998
and 1997 and the period from inception (March 12, 1991) to December
31, 1998 in conformity with generally accepted accounting principles.
Certified Public Accountants
31
<PAGE>
<TABLE>
CITIZENS CAPTIAL CORP.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
December 31, 1998
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSET -
Cash $ 1,015
OFFICE EQUIPMENT, net of accumulated depreciation of $3,250 310
INTANGIBLE ASSETS, net 360
Total assets $ 1,685
===============
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES -
Accounts payable $ 1,000
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 stated value, 2,000,000 shares
authorized; 1,000,000 shares issued and outstanding 1,000,000
Common stock, no par value, 100,000,000 shares authorized;
40,500,000 shares issued and outstanding ($.01 stated value) 405,000
Additional paid-in capital 48,787,966
Note receivable from ESOP (50,100,000)
Deficit accumulated during the development stage (92,281)
Total stockholders' equity 685
Total liabilities and stockholders' equity $ 1,685
===============
See accompanying notes to consolidated financial statements.
32
</TABLE>
<PAGE>
<TABLE>
CITIZENS CAPTIAL CORP.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998 and 1997
and the period from inception (March 12, 1991)
to December 31, 1998
<CAPTION>
Period from
Year Ended December 31, March 12, 1991 to
1998 1997 December 31, 1998
<S> <C> <C> <C>
SALES $ 438 $ - $ 438
COST OF SALES 275 - 275
---------- --------- -----------
163 - 163
GENERAL AND ADMINISTRATIVE EXPENSES 17,516 9,657 92,444
---------- --------- -----------
NET LOSS $ (17,353) $ (9,657) $ (92,281)
========== ========= ===========
See accompanying notes to consolidated financial statements.
</TABLE>
33
<PAGE>
<TABLE>
CITIZENS CAPTIAL CORP.
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period from March 12, 1991 to December 31, 1998
<CAPTION>
ADDITIONAL NOTE
Preferred Stock Common Stock PAID-IN RECEIVABLE ACCUMULATE
Shares Amount Shares Amount CAPITAL FROM ESOP DEFICIT TOTALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock issued founder
upon incorporation - $ - 300 $ 3 $ (3) $ - $ - $ -
Common stock issued founder
December 24, 1993 - - 22,499,700 224,997 (224,997) - - -
Preferred stock issued
November 1, 1994 1,000,000 1,000,000 - - (988,000) - - 12,000
Contributions by stockholder
at various dates prior to 1997 - - - - 56,096 - - 56,096
Cumulative net loss through
December 31, 1996 - - - - - - (65,271) (65,271)
--------- --------- ---------- ------- ----------- ------------ -------- --------
BALANCES, December 31, 1996 1,000,000 1,000,000 22,500,000 225,000 (1,156,904) - (65,271) 2,825
Common stock issued for brand
and service marks November 14,
1997 - - 3,000,000 30,000 (30,000) - - -
Contributions by stockholder
during 1997 - - - - 9,307 - - 9,307
Net loss for the year - - - - - - (9,657) (9,657)
--------- --------- ---------- -------- ----------- ------------ -------- --------
BALANCES, December 31, 1997 1,000,000 1,000,000 25,500,000 255,000 (1,177,597) - (74,928) 2,475
Common stock issued to ESOP,
May 8, 1998 - - 15,000,000 150,000 49,950,000 (50,100,000) - -
Contributions by stockholder
during 1998 - - - - 15,563 - - 15,563
Net loss for the year - - - - - - (17,353) (17,353)
--------- --------- ---------- -------- ----------- ------------ -------- --------
BALANCES, December 31, 1998 1,000,000 $1,000,000 40,500,000 $405,000 $48,787,966 $(50,100,000) $(92,281) $ 685
========= ========== ========== ========= =========== ============ ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
34
<PAGE>
<TABLE>
CITIZENS CAPTIAL CORP.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
and the period from inception (March 12, 1991)
to December 31, 1998
<CAPTION>
Period from
Year Ended December 31, March 12, 1991 to
1998 1997 December 31, 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (17,353) $ (9,657) $ (92,444)
Adjustments to reconcile net loss to cash used
by operating activities:
Expenses paid by stockholder 15,563 9,157 76,154
Depreciation and amortization 790 500 3,290
Increase in accounts payable 1,000 - 1,000
---------- ----------- ------------
Net cash used by operating activities - - (12,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment - - (3,560)
Payment for intangible assets - (150) (250)
---------- ----------- ------------
Net cash used by investing activities - (150) (3,810)
CASH FLOWS FROM FINANCING ACTIVITIES -
Sale of stock and contribution by stockholder 1,015 150 16,825
---------- ----------- ------------
NET INCREASE IN CASH 1,015 - 1,015
CASH, beginning of period - - -
---------- ----------- ------------
CASH, end of period $ 1,015 $ - $ 1,015
========== =========== ============
See accompanying notes to consolidated financial statements.
</TABLE>
35
<PAGE>
1. General and Summary of Significant Accounting Policies
Company Background
Citizens Capital Corp. (the "Company") is a development stage
holding company with plans to acquire and/or develop operating
entities, assets and/or marketing rights which provide the Company
with an initial entry into new markets or serve as complementary
additions to existing operations, assets and/or products.
Currently, the Company's plans contemplate operating in the
following three market segments: 1) residential mortgage loan
marketing, commercial and residential real estate investment and
development; 2) news print publishing and 3) the design,
marketing and distribution of branded athletic shoes and apparel,
through its three 97% owned subsidiaries: Landrush Realty
Corporation ("Landrush"); Media Force Sports & Entertainment, Inc.
("Media Force"); and SCOR Brands, Inc. ("SCOR"). Operations since
inception have primarily included expenditures related to
development of the Company's proposed business ventures.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Office Equipment
Office equipment is carried at cost less accumulated depreciation.
Significant improvements and additions are capitalized.
Maintenance and repair costs are expensed as incurred.
Depreciation is computed on the straight line method over the
useful lives of the assets, which range from five to seven years.
When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are eliminated and
any profit or loss on disposition is reflected in income.
Intangible Assets
The Company, through its interest in Landrush Realty Corporation,
owns the registered trademark, distribution and exclusive marketing
rights to The Texas Home Equity ReFund(R), The Cash-Out Mortgage
ReFinancer(R) and The Home Equity Cashier(R) home equity product marks.
The Company, through its interest in Media Force Sports &
Entertainment Inc. owns the registered trademark, distribution and
exclusive marketing rights to the Black Financial-Newsr
publication.
The Company, through its interest in SCOR Brands Inc., owns the
registered trademark, distribution and exclusive marketing rights
to the SCOR(R) brand line of athletic shoes and apparel.
The Company accounts for the value of the trademarked products and
the corresponding exclusive marketing and distribution rights based
on the registration costs, which totaled $400. This intangible
asset is amortized on a straight line basis over ten years.
Income Taxes
The Company accounts for income taxes under the liability method,
which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on
the difference between the financial statements and tax bases of
assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. The Company
had no material deferred tax assets or liabilities at December 31,
1998.
36
<PAGE>
Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers
all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Use of Estimates
The preparation of the Company's consolidated financial statements
in conformity with generally accepted accounting principles
requires the Company's management to make estimates and assumptions
that affect the amounts reported in these financial statements and
accompanying notes. Actual results could differ from those
estimates.
2. Plan of Operation for the 1999 Fiscal Year
The Company's plan of operation for the 1999 fiscal year is to: (1)
develop the products and/or services currently offered by its three
subsidiaries: Landrush, Media Force and SCOR and (2) continue to
evaluate and pursue suitable mergers and/or acquisitions of
existing operating entities. The Company's cash requirements have
been funded to date by its principal stockholder. Management of
the Company anticipates cash needed to implement its plans and/or
make acquisitions can be obtained by accessing the public or
private capital markets.
The Company intends to register with the United States Securities
and Exchange Commission, 39,500,000 shares of its Class A common
stock for secondary market trading during 1999. The 39,500,000
common shares include the 15,000,000 common shares currently held
by the Company's ESOP (see Note 3).
3. Employee Stock ownership Plan and Note Receivable
The Company has an Employees Stock Ownership Plan ("ESOP" or the
"Plan"), which covers all employees with at least a year of
consecutive service that are not covered by a collective bargaining
agreement. The Plan provides for an allocation of Company stock to
each participant's account of the greater of 15% or the maximum
percentage allowable of participants' eligible compensation. No
shares have been allocated as of December 31, 1998 as there has
been no compensation to employees.
On May 11, 1998 the Company sold 15,000,000 shares of its Class A
common stock directly to the ESOP at $3.34 per share in exchange
for a five year, 14.5%, $50,100,000 promissory note. The
promissory note was issued together with a security agreement fully
collateralized by 15,000,000 shares of the Company's common stock
held by the ESOP. The promissory note has a "liquidating call
provision" which may be invoked by the Company or the noteholder.
The liquidating call provision gives the Company or the noteholder
the "demand right" to request that up to 15,000,000 shares of
Citizens Capital Corp. common stock, held by the ESOP, be
liquidated to pay down the outstanding principal amount of the note
and any accrued principal and interest thereof, any time the common
shares are selling in the public or private capital marketplace at
or above $5.00 per share. The initial face value of the promissory
note has been recorded in the stockholders' equity section of the
accompanying balance sheet.
4. Stockholders' Equity
Preferred Stock
On November 1, 1994, the Company issued 1,000,000 shares of its
Class A, 7 1/4%, $1.00 cumulative preferred stock. Each share of
preferred stock includes a warrant which entitles the holder to
purchase one share of common stock at $0.01 per share.
37
<PAGE>
The holders of the preferred stock are entitled to receive out of
legally available funds of the Company, dividends at an annual
rate of $0.0725 per share, payable quarterly in arrears, on a
cumulative basis. Dividends on the preferred stock have not been
declared or paid and have not been accrued in the accompanying
financial statements because the Company has no surplus from which
dividends can legally be paid. Cumulative dividends in arrears as
of December 31, 1998 are $314,164.
The preferred stock was initially scheduled to be repaid on
December 31, 1999. However, as permitted by the terms of the
preferred stock, in excess of 66-2/3% of the holders of the
preferred stock elected to eliminate any repayment requirement.
The Company may, at its election, redeem the preferred stock in
whole, but not in part, at a 7-1/4% premium, so long as the
cumulative dividends have been declared and paid.
The Company has authorized, but unissued 4,000,000 shares of
preferred stock which may be issued in such series and preferences
as determined by the Company's board of directors.
Common Stock
At December 31, 1996, the Company had 22,500,000 Class A, no par,
$0.01 stated value shares issued and outstanding.
On November 14, 1997, the Company issued 3,000,000 additional
shares of its Class A, no par, $0.01 stated value common stock, to
three institutional investors in exchange for the full conveyance
of production, marketing, distribution and trade rights to certain
brand and service marks.
On May 3, 1998, the Company voted to split its shares of Class A
common stock then outstanding on a 3 for 1 basis. The aggregate
number of Class A, no par value common shares outstanding after the
split were 25,500,000. All information in the accompanying
financial statements and notes is presented as if the split
occurred at the date of incorporation.
On May 8, 1998, the Company sold 15,000,000 shares of Class A, no
par, $0.01 stated value common stock directly to its ESOP at $3.34
per share (see Note 3).
Stock Options
Effective December 1, 1998, the Company adopted a stock option
plan, which provides for a maximum of 2,000,000 shares to be issued
under the plan. The Company granted options to three directors on
December 1, 1998 to acquire a total of 300,000 shares of common
stock. The exercise price is $1.50 per share. The options may be
exercised based on the following schedule: 25% vest immediately,
25% vest after two years, 25% vest after three years, and 25% vest
after four years. No options had been exercised as of December 31,
1998. The Company has estimated the fair value of the options to
be immaterial at December 31, 1998.
EXHIBIT INDEX
See "Exhibit Index" on page 39
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
Citizens Capital Corp. By: /s/ Billy D. Hawkins
(Registrant) Chief Executive Officer
Date:______________________________
38
<PAGE>
EXHIBIT INDEX
Exhibit No Description Page No.
3.1 Amended Articles of Incorporation 40
3.2 By-Laws 47
4.1 Instrument Defining The Rights of Shareholder 58
10.1 1998 Employee Stock Ownership Plan 61
10.2 1998 Stock Option Plan 74
21.1 Subsidiaries of the Registrant 88
27.1 Financial Data Schedule 89
39
Type: Exhibit- 3.1
Description: Amended Articles of Incorporation
Exhibit 3.1
THE STATE OF TEXAS
SECRETARY OF STATE
The undersigned, as Secretary of State of the State of Texas,
HEREBY CERTIFIES that the attached is a true and correct copy of
the following described instruments on file in this office:
CITIZENS CAPITAL CORP.
ARTICLES OF INCORPORATION MARCH 12, 1991
ARTICLES OF AMENDMENT MARCH 30,1992
IN TESTIMONY WHEREOF, I have hereunto signed my name officially and
caused to be impressed hereon the Seal of State at my office in the
City of Austin, on July 27, 1993.
/s/ John Hannah, Jr. [Deleted Seal]
________________________
John Hannah Jr., Secretary of State
40
<PAGE>
ARTICLES OF INCORPORATION (SHORT FORM)
ARTICLE ONE
The name of the corporation is: Let Us, Inc.
ARTICLE TWO
The Period of its duration is: Perpetual
ARTICLE THREE
The purpose for which the corporation is organized is the transaction
of any or all lawful business for which corporations may be
incorporated under the Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the corporation shall have
authority to issue is: 100 shares without par value.
ARTICLE FIVE
The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of not less than
One Thousand Dollars ($1,000) consisting of money, labor done, or
property actually received.
ARTICLE SIX
The street name of its initial registered office is:
5909 Harvest Hill, Ste. 1078, Dallas, Texas 75230
The name of its initial registered agent at such address is:
Billy D. Hawkins
ARTICLE SEVEN
The number of directors constituting the initial board of directors is
ONE, and the names and addresses of the person or persons who are to
serve as directors until the first annual meeting of the shareholders
or until their successors are elected and qualified are:
Billy D. Hawkins, 5909 Harvest Hill, Ste. 1078, Dallas, Texas 75230.
ARTICLE EIGHT
The name and address of the incorporator is:
Billy D. Hawkins, 5909 Harvest Hill, Ste. 1078, Dallas, Texas 75230.
Signed By:
/s/ Billy D. Hawkins
_______________________________ DATE: March 12, 1991
Billy D. Hawkins, Incorporator
STATE OF TEXAS
COUNTY OF DALLAS
Before me, a notary public, on this day personally appeared
Billy D. Hawkins, known to me to be the person whose name is
subscribed to the foregoing document and, being by me first duly
sworn, declared that the statements therein contained are true and
correct.
Given under my hand and seal of office this_____________day
of_______________________,A.D. 19_____.
/s/ Christine J. Baker
_______________________________ (Notary Seal)
Notary Public, State of Texas
Sworn to Date_________________,19____
Dallas County, Texas
My commission expires:___________________,19_____
41
<PAGE>
ARTICLES OF AMENDMENT
ARTICLE ONE
FILED
In the Office of the
Secretary of State of Texas
MAR 30 1992
Corporations Section
The name of the corporation is LET US, INC.
Charter Number 01185557-00
ARTICLE TWO
The following amendment to the Articles of Incorporation was
adopted on March 2, 1992.
Article I is amended to read:
Citizens Capital Corp.
ARTICLE THREE
The number of shares of the corporation outstanding and
entitled to vote at the time of such adoption was 100 common shares.
ARTICLE FOUR
The number of shares voted for such amendment was 100 common
shares. The number of shares voted against such amendment
was 0.
Before me, a notary public, on this day personally appeared
Billy D. Hawkins, known to me to be the person whose name is
subscribed to the foregoing document and, being by me first
duly sworn, declared that the statement therein contained
are true and correct.
/s/ Billy D. Hawkins Date 3/27/92
____________________________
Billy D. Hawkins, President
/s/ Gloria E. Martinez
____________________________
Notary Public
Dallas County, Texas
Sworn to Date 3/27/92
(Notary Seal)
GLORIA E. MARTINEZ
NOTARY PUBLIC
THE STATE OF TEXAS
COMMISSION EXPIRES
3-28-95
Corporate Address: 5909 Harvest Hill, Ste. 1078
Dallas, Texas 75230.
42
<PAGE>
THE STATE OF TEXAS
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
FOR
CITIZENS CAPITAL CORP.
CHARTER NUMBER 01185557
THE UNDERSIGNED AS SECRETARY OF STATE OF THE STATE OF TEXAS
HEREBY CERTIFIES THAT THE ATTACHED ARTICLES OF AMENDMENT FOR THE ABOVE
NAMED ENTITY HAVE BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO CONFORM
TO LAW.
ACCORDINGLY THE UNDERSIGNED, AS SECRETARY OF STATE AND BY VIRTUE
OF THE AUTHORITY VESTED IN THE SECRETARY BY LAW HEREBY ISSUES THIS
CERTIFICATE OF AMENDMENT.
DATED DEC. 23, 1993
EFFECTIVE DEC. 23, 1993
/S/ John Hannah, Jr.
_______________________________
John Hannah Jr., Secretary of State
43
<PAGE>
Articles of Amendment
ARTICLE ONE
The name of the corporation is: Citizens Capital Corp.
Charter Number 01185557-00
ARTICLE TWO
The following amendment to the Articles of incorporation was adopted
on December 1, 1993.
The general nature of the amendment is to give the corporation
authority to issue, at its discretion, preferred shares and
additional common shares.
Article 4 is amended to read:
The aggregate number of common shares which the corporation shall
have authority to issue is 10 million (10,000,000) shares, without
par value.
The aggregate number of preferred shares which the corporation shall
have authority to issue is 2 million (2,000,000) shares, without par
value.
ARTICLE THREE
The number of shares of the corporation outstanding and entitled to
vote at the time of such adoption was 100 common shares.
ARTICLE FOUR
The number of shares voted for such amendment was 100 common shares.
The number of shares voted against such amendment was 0.
Before me, a notary public, on this day personally appeared Billy D.
Hawkins, known to me to be the person whose name is subscribed to the
foregoing document and, being by me first duly sworn, declared that
the statement therein contained are true and correct.
/s/ Billy Hawkins
____________________________
Billy Hawkins, President DATE 12-22-93
/s/ Eva Gail Cook
____________________________
Notary Public [Notary Seal]
Sworn to Date: 12/23/93
Dallas County, Texas
Corporate Address: 5909 Harvest Hill, Ste. 1078
Dallas, Texas 75230.
44
<PAGE>
[DIFFERENT PAGE 49 FROM HARD COPY]
CERTIFICATE OF AMENDMENT
FOR
CITIZENS CAPITAL CORP.
CHARTER NUMBER 01185557
THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS,
HEREBY CERTIFIES THAT THE ATTACHED ARTICLES OF AMENDMENT FOR THE
ABOVE NAMED ENTITY HAVE BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO
CONFORM TO LAW.
ACCORDINGLY THE UNDERSIGNED, AS SECRETARY OF STATE, AND BY VIRTUE
OF THE AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY ISSUES THIS
CERTIFICATE OF AMENDMENT.
DATED APR. 27, 1998
EFFECTIVE APR. 27, 1998
45
<PAGE>
FILED
in the Office of the
Secretary of State of Texas
APR 27, 1998
Corporations Section
ARTICLES OF AMENDMENT
ARTICLE ONE
The name of the corporation is Citizens Capital Corp.
Charter Number .01185557-00
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted
on April 1, 1998.
The general nature of this amendment is to increase the number of
common shares authorized for issuance.
Article 4 is amended to read:
The aggregate number of common shares which the corporation shall
have authority to issue is: 100 million (100,000,000) shares, without
par value.
ARTICLE THREE
The number of shares of the corporation outstanding and entitled to
vote at the time of such adoption was 8,500,000 common shares.
ARTICLE FOUR
The number of shares voted for such amendment was 8,500.000 common
shares. The number of shares voted against such amendment was 0.
Before me, a notary public, on this day personally appeared Billy D.
Hawkins. known to me to be the person whose name is subscribed to the
foregoing document and, being by me first duly sworn, declared that
the statement therein contained are true and correct.
/s/ Billy D. Hawkins
__________________
Billy D. Hawkins, President Date: 4/22/98
/s/ Tina M. Harrison
____________________
Tina M. Harrison, Notary Public
Sworn to Date 4/22/98
Dallas County, Texas
(Notary Seal)
TINA M. HARRISON
NOTARY PUBLIC
STATE OF TEXAS
My Comm. Exp. 02-10-02
Corporate Address: 5909 Harvest Hill, Ste. 1078
Dallas, Texas 75230.
46
Type: Exhibit-3.2
Description: By-Laws
Exhibit 3.2
BY-LAWS
OF
Let Us, Inc.
Amended to read
Citizens Capital Corp.
1. REGISTERED OFFICE AND AGENT
The registered office of the corporation shall be main-
tained at
5909 Harvest Hill, Ste. 1078
Dallas, Texas 75230
in the State of Texas. The registered office or the registered
agent, or both, may be changed by resolution of the board of
directors, upon filing the statement required by law.
2. PRINCIPAL OFFICE
The principal office of the corporation shall be at
5909 Harvest Hill, Ste. 1078
Dallas, Texas 75230
provided that the board of directors shall have power to change
the location of the principal office in its discretion.
3. OTHER OFFICES
The corporation may also maintain other offices at such
places within or without the State of Texas as the board of
directors may from time to time appoint or as the business of
the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETING
All meetings of shareholders, both regular and special,
shall be held either at the registered office of the
corporation in Texas or at such other places, either within
or without the state, as shall be designated in the notice of
the meeting.
2. ANNUAL MEETING
The annual meeting of shareholders for the election of
directors and for the transaction of all other business which
may come before the meeting shall be held on the 25th day
by-laws 1
47
<PAGE>
of March in each year (if not a legal holiday and, if a
legal holiday, then on the next business day following) at the
hour specified in the notice of meeting.
If the election of directors shall not be held on the day
above designated for the annual meeting, the board of directors
shall cause the election to be held as soon thereafter as
conveniently may be at a special meeting of the shareholders
called for the purpose of holding such election.
The annual meeting of shareholders may be held for any
other purpose in addition to the election of directors which
may be specified in a notice of such meeting. The meeting may
be called by resolution of the board of directors or by a
writing filed with the secretary signed either by a majority of
the directors or by shareholders owning a majority in amount
of the entire capital stock of the corporation issued and out-
standing and entitled to vote at any such meeting.
3. NOTICE OF SHAREHOLDERS' MEETING
A written or printed notice staling the place, day and
hour of the meeting, and in case of a special meeting, the pur-
pose or purposes for which the meeting is called, shall be
delivered not less than ten (10) nor more than fifty (50) days
before the date of the meeting, either personally or by mail,
by or at the direction of the president, secretary or the officer
or person calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall
be deemed to be delivered when deposited in the United States
mail addressed to the shareholder at his address as it appears
on the share transfer books of the corporation, with postage
thereon prepaid.
4. VOTING OF SHARES
Each outstanding share, regardless of class, shall be
entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting
rights of the shares of any class or classes are limited or
denied by the Articles of Incorporation or by law.
Treasury shares, shares of its own stock owned by
another corporation the majority of the voting stock of which
is owned or controlled by this corporation, and shares of its
own stock held by this corporation in a fiduciary capacity
shall not be voted, directly or indirectly, at any meeting, and
shall not be counted in determining the total number of out-
standing shares at any given time.
A shareholder may vote either in person or by proxy
executed in writing by the shareholder or by his duly authorized
attorney in-fact. No proxy shall be valid after eleven (11)
months from the date of its execution unless otherwise provided
in the proxy. Each proxy shall be revocable unless expressly
provided therein to be irrevocable, and in no event shall it
remain irrevocable for a period of more than eleven (11) months.
by-laws 2
48
<PAGE>
At each election for directors every shareholder
entitled to vote at such election shall have the right to vote,
in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose
election he has a right to vote, or unless prohibited by the
articles of incorporation, to cumulate his votes by giving one
candidate as many votes as the number of such directors multi-
plied by the number of his shares shall equal, or by
distributing such votes on the same principal among any number
of such candidates. Any shareholder who intends to cumulate his
votes as herein authorized shall give written notice of such
intention to the secretary of the corporation on or before the
day preceding the election at which such shareholder intends to
cumulate his votes.
5. CLOSING TRANSFER BOOKS AND FIXING RECORD DATE
For the purpose of determining shareholders entitled to
notice of or to vote at -any meeting of shareholders or any ad-
journment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any
other proper purpose, the board of directors may provide that the
share transfer books shall be closed for a stated period not
exceeding fifty (50) days. If the stock transfer books shall be closed
for the purpose of determining shareholders entitled to notice of
or to vote at a meeting of shareholders, such books shall be
closed for at least ten (10) days immediately preceding such meeting.
In lieu of closing the stock transfer books, the by-laws or in the
absence of an applicable by-law the board of directors, may fix
in advance a date as the record date for any such determination
of shareholders, not later than fifty (50) days and, in case of
a meeting of shareholders, not earlier than ten (10) days prior
to the date on which the particular action, requiring such determina-
tion of shareholders is to be taken. If the share transfer
books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment
of a dividend, the date on which notice of the meeting is mailed or
the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except where the
determination has been made through the closing of share transfer books
and the stated period of closing has expired.
6. QUORUM OF SHAREHOLDERS
Unless otherwise provided in the articles of incorporation,
the holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders, but in no event shall a quorum consist of the
holders of less than one-third (1/3) of the shares entitled to vote and
thus represented at such meeting. The vote of the holders of a
majority of the shares entitled to vote and thus represented at a
meeting at
by-laws 3
49
<PAGE>
which a quorum is present shall be the act of the shareholders*
meeting, unless the vote of a greater number is required by law,
the articles of incorporation or the by-laws.
7. VOTING LISTS
The officer or agent having charge of the share transfer
books for the shares of the corporation shall make, at least ten
(10) days before each meeting of shareholders, a complete list of
the shareholders entitled to vote at such meeting or any ad-
journment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for
a period of ten (10) days prior to such meeting, shall be kept on
file at the registered office of the corporation and shall be
subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting.
The original share transfer books shall be prima-facie evidence
as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business and affairs of the corporation shall be
managed by a board of directors. Directors need not be residents
of the State of Texas or shareholders in the corporation.
2. NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be 2 provided
that the number may be increased or decreased from time to time
by an amendment to these by-laws, but no decrease shall have the
effect of shortening the term of any incumbent director. At each
annual election the shareholders shall elect directors to hold
office until the next succeeding annual meeting.
3. VACANCIES
Any vacancy occurring in the board of directors may be
filled by the affirmative vote of the remaining directors, though
less than a quorum of the board. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor
in office. Any directorship to be filled by reason of an increase
in the number of directors shall be filled by election at an
annual meeting or at a special meeting of shareholders called for
that purpose.
4. QUORUM OF DIRECTORS
A majority of the board of directors shall constitute a
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quorum for the transaction of business. The act of the majority
of the directors present at a meeting at which a quorum is
present shall be the act of the board of directors.
5. ANNUAL MEETING OF DIRECTORS
Within thirty days after each annual meeting of share-
holders the board of directors elected at such meeting shall
hold an annual meeting at which they shall elect officers and
transact such other business as shall come before the meeting.
6. REGULAR MEETING OF DIRECTORS
A regular meeting of the board of directors may be
held at such time as shall be determined from time to time
by resolution of the board of directors.
7. SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the board
of directors whenever requested to do so by the president or
by two directors. Such special meeting shall be held at the
time specified in the notice of meeting.
8. PLACE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular
or special) shall be held either at the principal office of the
corporation or at such other place, either within or without
the State of Texas, as shall be specified in the notice of
meeting.
9. NOTICE OF DIRECTORS* MEETINGS
All meetings of the board of directors (annual, regular
or special) shall be held upon five (5) days' written notice
slating the date, place and hour of meeting delivered to each
director either personally or by mail or at the direction of
the president or the secretary or the officer or person calling
the meeting.
In any case where all of the directors execute a waiver
of notice of the time and place of meeting, no notice thereof
shall be required, and any such meeting (whether annual, regular
or special) shall be held at the time and at the place (either
within or without the State of Texas) specified in the waiver
of notice. Attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where
the directors attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that
the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the
purpose of, any annual, regular or special meeting of the
board of directors need be specified in the notice or waiver
of notice of such meeting.
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10. COMPENSATION
Directors, as such, shall not receive any stated salary for
their services, but by resolution of the board of directors a
fixed sum and expenses of attendance, if any, may be allowed for
attendance at each annual, regular or special meeting of the
board, provided, that nothing herein contained shall be con-
strued to preclude any director from serving the corporation
in any other capacity and receiving compensation therefor.
ARTICLE IV - OFFICERS
1. OFFICERS ELECTION
The officers of the corporation shall consist of a
president, one or more vice-presidents, a secretary, and a
treasurer. All such officers shall be elected at the annual
meeting of the board of directors provided for in Article
III, Section 5. If any office is not filled at such annual
meeting, it may be filled at any subsequent regular or
special meeting of the board. The board of directors at such
annual meeting, or at any subsequent regular or special
meeting may also elect or appoint such other officers and
assistant officers and agents as may be deemed necessary. Any
two or more offices may be held by the same person, except
the offices of president and secretary.
All officers and assistant officers shall be elected to
serve until the next annual meeting of directors (following the
next annual meeting of shareholders) or until their successors
are elected; provided, that any officer or assistant officer
elected or appointed by the board of directors may be removed
with or without cause at any regular or special meeting of
the board whenever in the judgment of the board of directors
the best interests of the corporation will be served thereby,
but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any agent appointed
shall serve for such term, not longer than the next annual
meeting of the board of directors, as shall be specified,
subject to like right of removal by the board of directors.
2. VACANCIES
If any office becomes vacant for any reason, the
vacancy may be filled by the board of directors.
3. POWER OF OFFICERS
Each officer shall have, subject to these by-laws, in
addition to the duties and powers specifically set forth herein,
such powers and duties as are commonly incident to his office
and such duties and powers as the board of directors shall from
time to time designate. All officers shall perform their duties
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subject to the directions and under the supervision of the board
of directors. The president may secure the fidelity of any and
all officers by bond or otherwise.
4. PRESIDENT
The president shall be the chief executive officer of the
corporation. He shall preside at all meetings of the directors
and shareholders. He shall see that all orders and resolutions of
the board are carried out, subject however, to the right of the
directors to delegate specific powers, except such as may be by
statute exclusively conferred on the president, to any other
officers of the corporation.
He or any vice-president shall execute bonds, mortgages
and other instruments requiring a seal, in the name of the
corporation, and, when authorized by the board, he or any vice-
president may affix the seal to any instrument requiring the
same, and the seal when so affixed shall be attested by the
signature of either the secretary or an assistant secretary.
He or any vice-president shall sign certificates of stock.
The President shall be ex-officio a member of all stand-
ing committees.
He shall submit a report of the operations of the corpo-
ration for the year to the directors at their meeting next
preceding the annual meeting of the shareholders and to the
shareholders at their annual meeting.
5. VICE-PRESIDENTS
The vice-president shall, in the absence or disability
of the president, perform the duties and exercise the powers
of the president, and they shall perform such other duties as
the board of directors shall prescribe.
6. THE SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meeting of the board and
all meetings of the shareholders and shall record all votes
and the minutes of all proceedings and shall perform like duties
for the standing committees when required. He shall give or
cause to be given notice of all meetings of the shareholders
and all meetings of the board of directors and shall perform
such other duties as may be prescribed by the board. He shall
keep in safe custody the seal of the corporation, and when
authorized by the board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his
signature or by the signature of an assistant secretary.
The assistant secretary shall, in the absence or dis-
ability of the secretary, perform the duties and exercise the
powers of the secretary, and they shall perform such other duties
as the board of directors shall prescribe.
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In the absence of the secretary or an assistant secretary,
the minutes of all meetings of the board and shareholders shall
be recorded by such person as shall be designated by the president
or by the board of directors.
7. THE TREASURER AND ASSISTANT TREASURERS
The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corpo-
ration and shall deposit all moneys and other valuable effects
in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
The treasurer shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper
vouchers for such disbursements. He shall keep and maintain
the corporation's books of account and shall render to the
president and directors an account of all of his transactions
as treasurer and of the financial condition of the corporation
and exhibit his books, records and accounts to the president or
directors at any time. He shall disburse funds for capital ex-
penditures as authorized by the board of directors and in ac-
cordance with the orders of the president, and present to the
president for his attention any requests for disbursing funds
if in the judgment of the treasurer any such request is not
properly authorized. He shall perform such other duties as may
be directed by the board of directors or by the president.
If required by the board of directors, he shall give
the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board for the
faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resigna-
tion, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his
possession or under his control belonging to the corporation.
The assistant treasurers in the order of their seniority
shall, in the absence or disability of the treasurer, per-
form the duties and exercise the powers of the treasurer, and
they shall perform such other duties as the board of directors
shall prescribe.
ARTICLE V - CERTIFICATES OF STOCK; TRANSFER, ETC.
1 . CERTIFICATES OF STOCK
The certificates for shares of stock of the corporation
shall be numbered and shall be entered in the corporation as they
are issued. They shall exhibit the holder's name and number of
shares and shall be signed by the president or a vice-president
and the secretary or an assistant secretary and shall be sealed
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with the seal of the corporation or a facsimile thereof. If the
corporation has a transfer agent or a registrar, other than
the corporation itself or an employee of the corporation, the
signatures of any such officer may be facsimile. In case any
officer or officers who shall have signed or whose facsimile
signature or signatures shall have been used on any such certifi-
cate or certificates shall cease to be such officer or officers
of the corporation, whether because of death, resignation or
otherwise, before said certificate or certificates shall have
been issued, such certificate may nevertheless be issued by the
corporation with the same effect as though the person or persons
who signed such certificates or whose facsimile signature or
signatures shall have been used thereon had been such officer
or officers at the date of its issuance. Certificates shall be
in such form as shall in conformity to law be prescribed from time
to time by the board of directors.
The corporation may appoint from time to time transfer
agents and registrars, who shall perform their duties under the
supervision of the secretary.
2. TRANSFERS OF SHARES
Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation
to issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon
its books.
3. REGISTERED SHAREHOLDERS
The corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact
thereof and, accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the
part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by law.
4. LOST CERTIFICATE
The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or
certificates thereto fore issued by the corporation alleged
to have been lost or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate to be lost.
When authorizing such issue of a new certificate or certificates,
the board of directors in its discretion and as a condition
precedent to the issuance thereof, may require the owner of
such lost or destroyed certificate or certificates or his legal
representative to advertise the same in such manner as it shall
acquire or to give the corporation a bond with surety and in
.inform satisfactory to the corporation (which bond shall also
name the corporation's transfer agents and registrars, if any,
as obligees) in such sum as it may direct as indemnity against
any claim that may be made against the corporation or other
obligees with respect to the certificate alleged to have been
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lost or destroyed, or to advertise and also give such bond.
ARTICLE VI - DIVIDEND
1. DECLARATTON
The board of directors may declare at any annual,
regular or special meeting of the board and the corporation
may pay, dividends on the outstanding shares in cash, property
or in the shares of the corporation to the extent permitted
by, and subject to the provisions of, the laws of the State
of Texas.
2. RESERVES
Before payment of any dividend there may be set aside
out of any funds of the corporation availabe for dividends such
sum or sums as the directors from time to time in their
absolute discretion think proper as a reserve fund to meet
contingencies or for equalizing dividends or for repairing or
maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest
of the corporation, and the directors may abolish any such
reserve in the manner in which it was created.
ARTICLE VII - MISCELLANEOUS
1. INFORMAL ACTION
Any action required to be taken or which may be taken
at a meeting of the shareholders, directors or members of the
executive committee, may be taken without a meeting if a consent
in writing setting forth the action so taken shall be signed
by all of the shareholders, directors, or members of the
executive committee, as the case may be, entitled to vote with
respect to the subject matter thereof, and such consent shall
have the same force and effect as a unanimous vote of the
shareholders, directors, or members of the executive committee,
as the case may be, at a meeting of said body.
2. SEAL
The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its incorpo-
ration and the words "TEXAS," and "CORPORA1E SEAL" or an Image
of the Lone Star. The seal may be used by causing it or a
facsimile to be Impressed or affixed or In any other manner
reproduced. The corporate seal may be altered by order of the
board of directors at any time.
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3. CHECKS
All checks or demands for money and notes of the corpo-
ration shall be signed by such officer or officers or such other
person or persons as the board of directors may from
time to time designate.
4. FISCAL YEAR
The fiscal year of the corporation shall begin on
the 1st day of January in each and every year.
5. DIRECTORS' ANNUAL STATEMENT
The board of directors shall present at each annual
meeting of shareholders a full and clear statement of the
business and condition of the corporation.
6. CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the articles of incorporation of the corporation and
each certificate representing its issued and outstanding shares
states that the business and affairs of the corporation shall be
managed by the shareholders of the corporation rather than by a
board of directors, then, whenever the context so requires the
shareholders of the corporation shall be deemed the directors of the
corporation for purposes of applying any provision of these by-laws.
7. AMENDMENTS
These by-laws may be altered, amended or repealed in whole
or in part by the affirmative vote of the holders of a majority
of the shares outstanding and entitled to vote, but such power
may be delegated by the shareholders to the board of directors.
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57
Type: Exhibit-4.1
Description: Instrument Defining The Rights of Shareholder
Exhibit-4.1
The following instrument defines the rights of Citizens Capital Corp.
Shareholders.
Dividend Rights
All common shares outstanding have equal rights and full entitlement
to receive pro rata distribution of any earnings declared payable by
the Company as dividends. The rights of common shareholders of the
Company to receive payment of any earnings which are declared as
dividends by the Company are subordinate to the rights of preferred
shareholders of the Company.
Voting Rights
Each one (1) share of the Company's common stock is entitled one (1)
vote as to the selection of the Company's directors and other
important company matters.
The Company's common shares do not have any cumulative voting rights.
Liquidation Rights
In the event that the Company is liquidated, the claims of secured and
unsecured creditors and owners of bonds and preferred stock take
precedence over the claims of common shareholders.
Preemption Rights
The Company's common shares to be registered are not entitled to any
preemptive rights regarding the issuance of additional common shares.
Alienability of Securities
There are no restrictions on the alienability of the Company's common
shares to be registered.
Discriminating Against Existing or Prospective Shareholders
The Company's common shares to be registered do not have any provision
which discriminates against any existing or prospective shareholder as
a result of any shareholder owning a substantial amount of securities.
Modification of Shareholders Rights
The rights of the Company's common shareholders may be modified by a
66 2/3 percent vote of all said shareholder's shares outstanding,
voting as a class.
Preferred Stock
The Company is not registering any of its preferred stock outstanding.
The Company has 1,000,000 shares of class A; $1.00; 7 1/4% cumulative
preferred stock outstanding as of December 31, 1998. Said preferred
shares are outstanding pursuant to an exemption from the requirements
of registration under Rule 230.504 of Regulation D under the
Securities Act of 1933, as amended.
The preferred shares outstanding are entitled to the following rights:
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Preference as to dividends
The 7 1/4%, $1.00, cumulative preferred stock shall rank senior to
all other classes of the Company's capital stock with respect to
dividends and as to rights upon liquidation, winding up or dissolution
of the Company. As long as any shares of the 7 1/4%, $1.00,
cumulative preferred stock remain outstanding, the Company will not
be entitled to authorize or issue any other class of securities that
are senior to or on parity with the 7 1/4%, $1.00, cumulative
preferred stock with respect to dividends or on liquidation, winding
up or dissolution, without the approval of holders of at least 66 2/3%
of the 7 1/4%, $1.00, cumulative preferred stock .
Voting Rights
Holders of shares of the 7 1/4%, $1.00, cumulative preferred stock
will not be entitled to vote with the holders of the the Company's
common stock. Holders of the 7 1/4%, $1.00, cumulative preferred
stock have no cumulative voting rights or preemptive or other rights
to subscribe for shares.
If at any time the equivalent of six quarterly dividend payments on
the 7 1/4%, $1.00, cumulative preferred stock are in arrears and
unpaid, the holders of the 7 1/4%, $1.00, cumulative preferred stock
shall be entitled to vote with the Company's common stock holders.
Additionally, the number of members of the Board of Directors of the
Company shall be increased by one and the holders of the 7 1/4%,
$1.00, cumulative preferred stock shall have the exclusive right,
voting separately as a class, to elect one director of the Company
such director to be in addition to the number of directors
constituting the Company's Board of Directors immediately prior to the
accrual of the right.
Such voting right will continue until all dividends accumulated and
payable on that stock have been paid in full, at which time such
voting right of the holders of the 7 1/4%, $1.00, cumulative preferred
stock shall terminate, subject to re-vesting in the event of a
subsequent, similar arrearage. Upon any termination of such voting
right, the term of office of the director elected by the holders of
the 7 1/4%, $1.00, cumulative preferred stock voting separately as a
class will terminate.
The approval of the holders of at least 66 2/3% of the shares of 7
1/4%, $1.00, cumulative preferred stock then outstanding, voting as a
class, will be required to (i)create, authorize or issue any capital
stock of the Company ranking, either as to payment of dividends or
upon liquidation, dissolution or winding up of the Company, on a
parity or senior to the 7 1/4%, $1.00, cumulative preferred stock ; or
(ii) change the attributes of the 7 1/4%, $1.00, cumulative preferred
stock in any material respect prejudicial to the holders of the 7
1/4%, $1.00, cumulative preferred stock .
Dividend Rights
The holders of the 7 1/4%, $1.00, cumulative preferred stock are
entitled to receive out of funds of the Company legally available
thereof, dividends at an annual rate of $0.07250 per share, payable
quarterly in arrears in four equal installments of $0.018125 per share
on the 15th day of March, June, September and December in each year.
Dividends on the 7 1/4%, $1.00, cumulative preferred stock will
accrue and cumulate from the date of first issuance and will be paid
to holders of record of the 7 1/4%, $1.00, cumulative preferred stock
as they appear on the books of the Company as of the close of business
on any record date for payment of dividends. The record dates for
payment of dividends shall be the last day of February, May, August
and November in each year which immediately precedes each respective
dividend payment date. The amount payable for the dividend period for
any other period less than a full quarterly dividend period will be
computed on the basis of a 365-day year. The initial dividend will
accrue from the date of issuance of the units which consist of the 7
1/4%, $1.00, cumulative preferred stock and will be payable 90 days
from the date the units which consist of the 7 1/4%, $1.00, cumulative
preferred stock are issued. Accumulation of dividends will not bear
interest.
So long as the 7 1/4%, $1.00, cumulative preferred stock are
outstanding, the Company may not declare or pay any dividend on the
common stock or other capital stock unless the full cumulative
dividends on the 7 1/4%, $1.00, cumulative preferred stock have been
paid in full or contemporaneously are declared and paid in full
through the last dividend payment date.
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Redemption
The 7 1/4%, $1.00, cumulative preferred stock are redeemable in
whole, but not in part, at the option of the Company on a call basis,
so long as full cumulative dividends on all outstanding shares of the
7 1/4%, no-par, cumulative preferred stock have been or
contemporaneously are declared and paid for all past dividend periods.
The principal of said 7 1/4%, $1.00, cumulative preferred stock shall
be re-paid in full on or before December 31, 1999.
In the event that the 7 1/4%, $1.00, cumulative preferred stock are
redeemed by the Company during any year before it becomes due in 1999,
said redemption of the 7 1/4%, $1.00, cumulative preferred stock
shall be redeemed from the holders thereof at the following premiums
for each $1.00 face value amount:
1994 1,000,000 +15%
1995 1,000,000 +12%
1996 1,000,000 +10%
1997 1,000,000 + 9%
1998 1,000,000 + 8%
1999 1,000,000 + 7 1/4%
Warrants and Rights
Each of the Company's 1,000,000 shares of class A; 7 1/4%; $1.00
preferred stock outstanding is paired together with 1/10th warrant and
is outstanding as a unit. Each one (1) warrant purchases ten (10)
shares of common stock at $0.01 per share.
The Company has 100,000 class A warrants outstanding as of May 11,
1998. Each one (1) warrant gives the holder thereof the entitlement
to purchase from, the Company, ten (10) shares of the Company's common
stock at $0.01 per share. 1,000,000 shares of the Company's class A
common stock are subject to issuance from the exercise of the 100,000
class A warrants outstanding.
Said warrants shall have a perpetual life until that time in which the
Common Stock of the Company is registered for public sale with the
Securities and Exchange Commission pursuant to the Securities Act of
1933 ("Act") or the Exchange Act of 1934 ("Exchange Act"). After such
time that the Company's registration statement for the public sale of
its Common Stock becomes effective, the warrants herein offered shall
no longer have a perpetual life. Instead, said warrants shall have a
life of 30 days. Said 30 days shall commence and take effect and be
counted from the date that the Company's registration statement for
the public sale of its common stock becomes effective under the
("Act") or ("Exchange Act") unless such time period is extended or
waived by a vote of the Company's Board of Directors.
60
Type: Exhibit-10.1
Description: Citizens Capital Corp. 1998 Employee Stock Ownership Plan (ESOP)
Exhibit-10.1
CITIZENS CAPITAL CORP.
1998
EMPLOYEE STOCK OWNERSHIP PLAN
(ESOP)
FIRST OFFER
May 31, 1998
Administered By:
Citizens Capital Corp. Employee Stock Ownership Plan Committee:
Billy D. Hawkins
Dwight Washington
H. H. Hawkins
Plan Trust Custodian:
Southwest Guaranty Trust Company
Dallas, Texas
Citizens Capital Corp.: Federal ID #75-2368452
Citizens Capital Corp. Employee Stock Ownership Trust: Federal ID # 75-2733682
PLAN DATES
Records of the Plan are maintained on a fiscal year basis from January
1st to December 31st of each year. The Company's fiscal year
coincides with the plan year.
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TABLE OF CONTENTS
Page
SECTION 1. Plan Purpose and Operation 3
SECTION 2. Definitions 3
SECTION 3. Eligibility 5
SECTION 4. Enrollment 6
SECTION 5. Eligible Compensation 6
SECTION 6. Stock Allocation Percentage 6
SECTION 7. Plan Trust Account 8
SECTION 8. Investment of Plan Trust Assets 8
SECTION 9. Voting Rights 8
SECTION 10. Disclosure and Reporting 8
SECTION 11. Vesting And Forfeitures 9
SECTION 12. Benefits Upon Retirement or Death 10
SECTION 13. Distributions of Benefits 10
SECTION 14. Form of Allocations 10
SECTION 15. Right of First Refusal 10
SECTION 16. Plan of Administration 11
SECTION 17. Amendment and Termination 11
SECTION 18. Merger, Assignment, and Severability 12
Request for Plan Participation Form 13
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THIS DOCUMENT DATED MAY 31, 1998, IS RELATED TO SECURITIES WHICH HAVE
BEEN ISSUED IN ACCORD WITH AN EXEMPTION FROM THE REQUIREMENTS OF
REGISTRATION PURSUANT TO RULE 230.506 OF REGULATION D UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. UNLESS AND UNTIL SAID SECURITIES
ARE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE
EXCHANGE ACT OF 1934, AS AMENDED OR UNLESS SOME EXEMPTION THEREOF IS
UTILIZED, SAID SECURITIES ARE RESTRICTED AS TO THEIR TRANSFER AND
MANNER OF SALE.
SECTION 1. Plan Purpose and Operations
Citizens Capital Corp., a Texas corporation hereafter known as,
("CCC") and all of its directly, indirectly owned and/or affiliated
subsidiaries hereafter collectively known as ("The Company"), have
adopted this Citizens Capital Corp. 1998 Employee Stock Ownership Plan
("The Plan") to enable participating employees of the Company to share
in the development and growth of the Company and to provide
participants with an opportunity to build capital for their
retirement.
The plan is designed to do so without any deductions from
participants' paychecks and without any cash investment by
participants.
On May 8, 1998, (CCC) sold 15,000,000 shares of its class A; no par;
common stock to the Citizens Capital Corp. Employee Stock Ownership
Trust, a Texas trust hereafter known as ("The Trust"), for $3.34 per
share or $50,100,000. As payment for said shares, the trust, on
behalf of plan participants, has executed a 5 year; $50,100,000
liquidating promissory note and security agreement with CCC. Said
liquidating promissory note is fully collateralized by the 15,000,000
class A; no par; common shares purchased by the trust, on behalf of
plan participants, from CCC.
Since the primary purpose of the plan is to enable participants to
acquire an ownership interest in the Company, trust assets will be
invested primarily in company stock.
The plan is intended to qualify as an employee stock ownership plan
(ESOP) as defined in Section 4975(e) (7) of the Internal Revenue Code,
as amended, hereafter known as, ("The Code"). The plan is designed to
qualify under Section 401(a) of the code. Assets held in trust under
the plan as a result of earnings or other additions will be
administered, distributed, forfeited and otherwise governed by the
provisions of the plan, which is administered by the Citizens Capital
Corp. Employee Stock Ownership Plan Committee, hereafter known as,
("The Committee") for the exclusive benefit of plan participants and
their beneficiaries.
The first offering under the plan will commence on May 31, 1998, and
will end on the earlier of May 31, 2003 or the date on which all
approved shares (stock) under the plan have been allocated or
reinvested.
SECTION 2. Definitions
Accounts: Several accounts may be maintained in order to record the
interest of a participant in the plan, primarily a company stock
account and an other investments account.
Anniversary Date: December 31 of each year.
Annual Additions: The sum of the amounts credited to a participant's
accounts from plan contributions and forfeitures.
Approved Absence: An absence from work, including absence due to
temporary disability, granted to and approved for an employee by the
Company in a uniform and nondiscriminatory manner, or an absence from
work for service in the Armed Forces or other government services.
Beneficiary: The person or persons entitled to receive benefits under
the plan in the event of a participant's death.
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Break in Service: A plan year during which a participant has not
completed at least 1,000 hours or 9 consecutive months of service,
provided, however, that a break in service shall be measured by the
eligibility computation period.
CCC: Citizens Capital Corp., a Texas corporation.
Committee: The committee appointed by the board of directors of the
Company to administer the plan, direct the plan custodian, and to
serve as plan fiduciary.
Company: Citizens Capital Corp. and/or its directly, indirectly owned
and/or affiliated subsidiaries.
Company Stock: Shares of any class of stock, preferred or common,
voting or nonvoting, issued by CCC.
Custodian: Bank or Trust Company, designated by the committee, to
safekeep plan assets held by the Citizens Capital Corp. Employee Stock
Ownership Trust and to administer said plan assets in the carrying out
of any investment directives which may be made from time to time, by
the committee, for the benefit of plan participants
Eligible Compensation: The total salary; wages or commission paid or
accrued to a participant by the Company for each plan year, including
overtime, but excluding contributions to this or any other deferred
compensation plan, commissions and bonuses, and compensation paid or
accrued prior to the entry date on which an employee first becomes
eligible to participate.
Eligibility Period: The initial eligibility period is the first day,
of the first full month, after twelve consecutive months of service
with the Company. After such initial period, the subsequent
eligibility period shall be the twelve-month period ending on the last
day of the plan year.
Employee: A person employed by the Company or any of its directly,
indirectly and/or affiliated subsidiaries and any portion of whose
income is subject to withholding of income tax and/or for whom social
security contributions are made by the Company, as well as any other
person qualifying as a common law employee of the Company.
ERISA: The Employee Retirement Income Security Act of 1974, as amended
from time to time and administered by the Department of Labor.
Forfeiture: That portion of a participant's account that does not
become part of his/her plan benefit.
Hour of Service: An hour of service is each hour for which an employee
is paid by the Company or is entitled to back pay from the Company.
Limitation Year: For purposes of the limitations on contributions and
benefits imposed by Section 415 of the Internal Revenue Code, the
limitation year shall be the Company's fiscal year.
Participant: An employee of the Company or any of its directly,
indirectly and/or affiliated subsidiaries who is participating in the
plan.
Plan: The Citizens Capital Corp. 1998 Employee Stock Ownership Plan.
Plan Benefits: The amount(s) of the distribution(s) to which a
participant or beneficiary may be entitled to upon termination of
participation.
Plan Year: The twelve-month period ending on each anniversary date
(December 31 of each year).
Trust: The Citizens Capital Corp. Employee Stock Ownership Trust, the
trust which holds all plan assets pending investment or other
disposition.
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Valuation: Valuation of plan assets are computed on the plan
anniversary date (December 31 of each year).
Vesting Period: Those periods of in service time that a plan
participant spends with the Company which then qualifies him/her to
own or "vest" in the assets allocated to and held in, their individual
plan investment account.
Year of Service: Any plan year during which an employee is credited
with at least 1,000 hours or 12 consecutive months of service.
SECTION 3. Eligibility
3.1 Participation Eligibility
Any employee of the Company who has completed at least one year of
consecutive service from their employment commencement date and is
still employed by the Company, and is not included in a group of
employees covered by a collective bargaining agreement between
employee representatives and the Company, shall be eligible to become
a participant in this plan as of the first day, of the first month,
after said commencement date. For example:
Michael Dock was hired August 3, 1998, his one year anniversary
is August 3, 1999. He will become eligible to participate in the
plan on September 1, 1999, the first day, of the first month
following his one year anniversary.
Officers and directors of the Company who are also employees shall be
eligible to participate in the plan on the same basis as other
employees. All doubtful cases of eligibility to participate in the
plan shall be resolved by the committee.
Employees whose retirement benefits are subject to collective
bargaining are not eligible to participate in the plan unless the
collective bargaining agreement provides for such participation. For
purposes of eligibility and vesting, years of service shall include
years during which an employee is covered by a collective bargaining
agreement.
(a) Participation: Participation in the plan continues until it is
terminated by the participant's break in service, retirement, death,
total disability, or other termination of employment. A participant
who accumulates less than 1,000 hours of service or works less than 9
consecutive months during any plan year shall not share in the
allocation of trust assets and/or forfeitures for such plan year and
shall not be given a year of service for purposes of vesting, but such
participation shall continue until the occurrence of a break in
service.
A participant who incurs a break in service or who terminates
employment and is re-employed shall again resume participation in the
plan as of the date of re-employment. If the participant is re-
employed after a break in service and has no vested rights under the
plan, and if the number of consecutive breaks in service equals or
exceeds the aggregate number of years of service before the break,
such participant shall be treated as a new employee for purposes of
participation.
(b) Leaves of Absence: A participant's employment is not considered
terminated for purposes of the plan if the participant has been on a
leave of absence with the consent of the Company, provided that he/she
returns to the employ of the Company within thirty (30) days after the
leave or within such longer period as may be prescribed by law.
Leaves of absence shall mean leaves granted by the Company, in
accordance with the rules uniformly applied to all participants, for
reasons of health or public service or for reasons determined by the
Company to be in its best interest. For purposes of preventing a
break in service, a participant on such leave shall be credited with
eight hours of service for each business day of the leave. A
participant who does not return to the employ of the Company within
the prescribed time period shall be deemed to have terminated his
employment as of the date when his leave began, unless such failure to
return was the result of his death, total disability, or retirement.
Such participant must further remain in the employ of the Company for
at least thirty (30) days.
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(c) Suspended Participation: A participant who ceases to be an
eligible employee but who has not separated from the Company shall
become a suspended participant. During the period of suspension, no
amounts based on his covered compensation from and after the date of
suspension shall be credited to the participant's account. Amounts
previously credited to a participant's account shall continue to vest,
and the participant shall be entitled to benefits in accordance with
the other provisions of the plan throughout the period during which
the participant is on suspended status.
SECTION 4. Enrollment
Prior to your one year anniversary date, you will be given an
enrollment package. The enrollment package shall contain a "Request
for Plan Participation" form.
(b) Return your completed "Request for Plan Participation" form to
your local Human Resources representative. You should retain a copy
of the "Request for Plan Participation" form for your files.
SECTION 5. Eligible Compensation
For purposes of the plan, only base salary; wages or commissions (if
applicable) earned in each payroll period are considered eligible
compensation ("Eligible Compensation") in determining the percentage
of eligible compensation used in calculating the amount of company
stock allocated to each individual participant plan account. No
special payments of any kind are eligible in determining eligible
compensation. Special payments may include:
a) overtime
b) bonuses
c) field pay
d) shift differential
e) relocation
f) short-term disability.
NOTE:
Calculations of stock allocation percentages are taken only from
regular paychecks. Payments of long-term disability and workers'
compensation are not eligible in determining the amount of eligible
compensation used for computing stock allocation percentages.
SECTION 6. Stock Allocation Percentage
The plan shall compute the greater of fifteen (15) percent or the
maximum percentage then allowable under the code of a participants
eligible compensation in calculating the amount of company stock
allocated to each individual participant account. The percentage of
stock allocated to each individual plan participant account shall be
allocated in whole numbers only; no decimals or fractions will be
allocated.
6.1 Account Allocations
(a) Individual Accounts: The committee shall establish and maintain
individual accounts for each plan participant. Individual accounts
shall also be maintained for any former participant who still has an
interest in the plan. Such individual accounts shall not require a
segregation of the trust assets, and no participant, former
participant, nor beneficiary shall acquire any right to or interest in
any specific asset of the trust as a result of the allocation. One
such account shall consist of the allocated shares of company stock
purchased and paid for by the trust with forfeitures of company stock
and with stock dividends on company stock held in the account.
Allocations of company stock shall be reflected separately for each
class of such stock, and the committee shall maintain adequate records
of the percentage of company stock allocated to each participant's
company stock account based on eligible compensation.
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The investments account of each participant shall be credited
(debited) no less than once a year, at the end of the plan's fiscal
year ending December 31st with each share of the net income (loss) of
the trust, with cash dividends on company stock in each company stock
account including contributions and forfeitures in other than company
stock. It shall be debited for any payments on purchases of company
stock and, if applicable, any insurance premium payments.
(b) Allocation of Trust Contributions and Forfeitures: Trust
contributions and forfeitures shall be allocated as of the close of
business on December 31st of each plan year amongst the accounts of
employees who are participants in the plan on the last day of the year
or whose participation terminated during the year because of death,
total disability, or retirement in the proportion that each such
participants eligible compensation bears to the total eligible
compensation of all such participants for the year. Such allocation
may not exceed the lesser of $25,000 or 25 percent of eligible
compensation for any participant as adjusted by the cost of living.
For purposes of this paragraph, a person whose participation in the
plan terminates during a plan year for reasons other than death, total
disability, or retirement shall not be considered a participant in the
plan on the last day of that plan year.
The net income (loss) of the trust shall be determined at the close of
business on December 31st of each plan year. A portion of the net
income (loss) thereof shall be allocated to each participant's
investment account in the ratio on which the balance of his/her
investments account stood on the close of business at December 31st of
the preceding year. Account balances shall be reduced by amounts
distributed to participant's during the plan year. The net income
(loss) includes the increase (decrease) in the fair market value of
assets of the trust, interest, dividends, other income, and expenses
attributable to assets in the investments accounts since the close of
business on December 31st of the preceding year.
(c) Allocation Limitations: The total annual additions to a
participant's account for any fiscal year shall not exceed the lesser
of $30,000 (or such greater amount as may be permitted pursuant to
regulations issued under Section 415(d) of the Internal revenue code)
or 25 percent of the participant's total compensation for the year.
If the Company is contributing to another defined contribution plan,
as defined in Section 414(i) of the Internal Revenue Code, for
employees of the Company, any of whom may be participants in this
plan, then any such participant's annual additions in such other plan
shall be added to the participant's annual additions from this plan
for purposes of this limitation.
If a participant in this plan is also a participant in a defined
benefit plan, as defined in Section 414(j) of the Internal Revenue
Code, to which contributions are made by the Company, then such
participant shall be subject to the limitations set forth in Section
415(e) of the Internal Revenue Code. If company stock is purchased
from a shareholder of the Company and if such shareholder is also a
participant in this plan, then the total account balances of such
participant's accounts combined with the total balances in the account
of such participant's spouse, parents, grandparents, children, and
grandchildren shall not exceed 20 percent of the total of all accounts
balances under the plan.
If the account balances or the annual additions to a participant's
accounts would exceed the limitation described in the preceding
paragraphs, then the sum of the annual additions to this plan and any
other plan shall be reduced until the applicable limitation is
satisfied. The reduction shall be treated as a forfeiture and shall
be allocated in accordance with this section to the accounts of
participants who are not affected by this limitation. If any amount
cannot be so re-allocated, then such amount shall be deposited into a
suspense account and allocated to the maximum extent possible in
succeeding years.
SECTION 7. Plan Trust Account
Trust Custodian
The committee has selected Southwest Guaranty Trust Company. of
Dallas, Texas hereafter known as, (SGTC) to provide custodial services
for the plan trust assets. In order to participate in the plan, an
employee must have a completed "Request for Plan Participation" form
on file with the Company's human resource department. The Company
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will verify correct completion of the form; make the necessary copies
for the participants records and forward a copy of said form to (SGTC)
for execution and individual participant plan account setup.
For information regarding custodial trust services being provided for
the plan, (SGTC) may be contacted at the following address:
Southwest Guaranty Trust Company
5956 Sherry Lane Place, Ste. 504
Dallas, Texas 75225
(972) 363-0027
1 800 504 5956
SECTION 8. Investment of Plan Trust Assets
(a) Duties of Plan Committee: Upon direction from the plan committee,
all investments of the plan trust assets shall be executed by the plan
custodian.
(b) Authorized Investments: All trust assets or the income thereof
shall first be applied to pay any outstanding obligations of the trust
incurred for the purchase of company stock. After all outstanding
obligations of the trust are satisfied, the trust assets may then be
utilized to purchase additional shares of company stock from current
shareholders or newly issued shares from the Company. The plan
committee may also direct the custodian to invest funds of the plan
trust in savings accounts, asset loss insurance policies, or insurance
policies on the life of any key employee or stockholder, certificates
of deposit, short-term securities, other stocks or bonds, and other
investments deemed by the plan committee to be desirable for the plan
trust. Residual funds may be held in cash.
All purchases of company stock shall be made at prices that do not
exceed the fair market value of such stock at the time of the
transaction.
SECTION 9. Voting Rights
Company stock held by the plan trust shall be voted by the plan trust
custodian in accordance with instructions from the committee with
respect to any matter that under state law or corporate charter
requires more than a majority vote of shareholders.
Each individual plan participant shall be entitled to direct the
voting of shares which have been allocated to his/her account with
respect to any matter that by state law or corporate charter requires
more than a majority vote of shareholders.
SECTION 10. Disclosure and Reporting
(a) Summary Plan Description: Within 90 days after the receipt of a
favorable determination letter from the Internal Revenue Service
relating to the qualification of the plan, and thereafter within 120
days after a participant commences participation (or after a
beneficiary first receives benefits under the plan), the committee
shall furnish such participant (beneficiary) with a summary plan
description as required by Section 102(a) and 104(b) of ERISA. Such
summary plan description shall be updated from time to time as
required under ERISA and Department of Labor regulations thereunder.
(b) Summary Annual Report: Within 210 days after each anniversary
date, the committee shall furnish each participant (and each
beneficiary receiving benefits under the plan) with the summary annual
report of the plan required by Section 104(b) of ERISA, in the form
required by regulations of the Department of Labor.
(c) Annual Account Statement: As soon as practical after each
anniversary date, each participant shall receive a written statement
of accounts showing: the balance in each such account as of the
preceding anniversary date; the amount of
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allocations and forfeitures directed to the accounts for the year; the
adjustment to the accounts to reflect dividends, income, and expenses
for the plan trust for the year; and the new balances in each account,
including the number of shares of company stock.
If any error or miscalculation is discovered in an account, the
committee shall correct the same if correction is feasible.
Statements to participants are for reporting purposes only and no
allocation, valuation, or statement shall, of itself, vest any right
or title in any part of the plan trust.
(d) Additional Disclosure: The committee shall make available for
examination, by any participant or beneficiary, copies of the plan and
trust agreement and the latest annual report (Form 5500-C) of the plan
filed with the Department of Labor. Upon the written request of
participant or beneficiary, the committee shall furnish copies of such
documents, at a reasonable charge to cover the cost of such copies, as
provided in regulations of the Department of Labor.
SECTION 11. Vesting and Forfeitures
(a) Vesting Schedule: If a participant has a break in service or
termination of employment , participation in the allocation of company
contributions and forfeitures will terminate as of the anniversary
date preceding the break in service or termination of employment, and
the vesting of plan benefits shall be based upon years of service, as
determined by the vesting period and in accordance with the following
vesting schedule:
Years of Service Percentage of Vesting
Less than 3 years 0.00%
Three years, but less than 4 years 25.0
Four years, but less than 5 years 32.5
Five year, but less than 6 years 40.0
Six years, but less than 7 years 47.5
Seven years, but less than 8 years 55.0
Eight years, but less than 9 years 62.5
Nine years, but less than 10 years 70.0
Ten years, but less than 11 years 77.5
Eleven years, but than less 12 years 85.0
Twelve years, but less than 13 years 92.5
Thirteen years or more 100.0
(b) Forfeitures: Any remainder of a terminating participant's account
that is not vested in accordance with the foregoing provisions shall
be treated as a forfeiture. Forfeitures shall be first charged
against a participant's investments account with any balance charged
against the Company stock account. The disposition of such
forfeitures shall be as follows:
(1) If a participant is not re-employed on or before the
anniversary date of the plan year next following a break in service,
the balance of the accounts shall be allocated as a forfeiture as of
such anniversary date. Distribution of a participant's benefits
following termination of service may occur prior to the occurrence of
a break in service if so directed by the plan committee.
(2) If the participant is re-employed on or before the
anniversary date of the plan year next following the break in service,
the balance of the accounts shall be treated as a separate account
subject to distribution.
SECTION 12. Benefits Upon Retirement or Death
Participation terminates as of the anniversary date coinciding with or
next following a participant's retirement or death. A participant's
plan benefit upon retirement or death shall be the total of the
account balances as of the coinciding or next following anniversary
date. A participant shall be 100 percent vested upon death or upon
attainment of any of the following retirement dates: normal retirement
at age sixty-five; deferred retirement beyond age sixty-five upon
company request or company approval; disability retirement if the
committee determines in a nondiscriminatory manner, on the
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basis of a doctor's certificate, that a participant has become totally
disabled (i.e., the mental or physical inability of the participant to
be usefully employed as evidenced by the certificate of a medical
examiner satisfactory to the committee certifying such inability and
certifying that such condition is likely to be permanent); early
retirement after age sixty at the election of the participant, but the
vesting schedule of Section 11 may apply if the Company does not
concur.
SECTION 13. Distributions of Benefits
(a) Death or Retirement: Upon death or retirement a participant's
benefits shall be distributed in a single distribution not later than
sixty days after the anniversary date coinciding with or next
following death or retirement. The committee may, in its discretion,
distribute currently the accumulated benefits and distribute the
participant's share of the final year's allocations sixty days after
the anniversary date following the death or retirement. The committee
may, at its discretion and after conferring with the participant's
beneficiary, direct that the distribution be made in a single
distribution at a deferred retirement date or on a life-expectancy
installment basis.
(b) Other Terminations: If a participant ceases to participate for
reasons other than death or retirement, benefits will be distributed
as soon as possible after termination of service. The committee may,
at its discretion, direct that the distribution be made in a single
distribution at the anniversary date next following the termination of
service or within sixty days of each anniversary date; or in a single
distribution at death or retirement date (age sixty-five) or within
sixty days thereafter; or on an life-expectancy installment basis.
SECTION 14. Form of Allocations
Allocation of plan benefits shall be made in whole shares of company
stock except that the value of any fractional shares will be paid in
cash. Any balance in a participant's investment account will be
applied to acquire for distribution the maximum number of whole shares
of company stock at the then fair market value, and any unexpended
balance will be distributed in cash. Allocation of plan benefits may
be made entirely in cash or in the form of company stock.
Allocations shall be made to the participant, if living, and if not,
to the respective estate or beneficiary. A participant may designate
a beneficiary upon becoming a participant and may change such
designation at any time by filing a written designation with the
committee. If the participant is married, a designation of a
beneficiary other than the spouse shall be allowed only when a consent
in writing by the spouse of the participant is furnished to the
committee.
SECTION 15. Right of First Refusal
(a) Right of First Refusal: Unless company stock is publicly traded,
all shares of company stock allocated by the plan trust may, as
determined by the Company or the committee, be subject to a right of
first refusal. Such right shall provide that prior to any subsequent
transfer, the shares must first be offered by written offer to the
trust and, if refused, then to the Company. If the proposed transfer
is at less than fair market value, the price shall be determined by
the latest valuation date. If the proposed purchase is by a
prospective bona fide purchaser, the offer to the trust and the
Company shall be at the greater of market value, as determined by an
independent appraiser (appointed by the committee) as of the latest
valuation date, or the price offered by the prospective bona fide
purchaser. The trust and the Company, respectively, may accept the
offer at any time within fourteen days after receipt of such offer.
SECTION 16. Plan of Administration
The board of directors shall have the following duties and
responsibilities:
(1) Acting with respect to amending or terminating the plan;
(2) Acting with respect to the selection, retention, or removal of the
plan custodian;
(3) Appointing, retaining, and removing members of the committee;
(4) Periodically reviewing the performance of the plan custodian, the
members of the committee, and any appointed advisors;
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(5) Determining the form and amount of employer contributions.
The Company shall administer the plan and is designed as the "plan
administrator" under Section 3(16) of ERISA. The Company may delegate
all or part of its duties to the plan committee. The members of the
committee shall be comprised of three persons who shall be appointed
by the board of directors who may be removed by the board of directors
at any time with or without cause. The committee is designated as the
agent of the plan for the service of legal process and as the named
fiduciary of the plan. All decisions required to be made by the
committee involving the interpretation and administration of the plan
shall be resolved by majority vote either at a meeting or in writing
without a meeting.
The committee shall have the following duties and responsibilities:
(1) Providing for the fair market valuation of company stock as of
each annual valuation date (December 31st);
(2) Establishing and maintaining a funding policy for the plan;
(3) Determining the eligibility of employees for participation in and
benefits under the plan;
(4) Complying with the reporting and disclosure requirements
established by ERISA, IRS, and other units of government;
(5) Making recommendations to the board of directors with respect to
amendment or termination of the plan and contributions under the plan;
(6) Maintaining plan accounts and other records;
(7) Authorizing, allocating, and reviewing expenses incurred by the
plan;
(8) Communicating with plan participants and the plan custodian;
(9) Investing and directing the plan assets in a prudent manner.
The committee shall establish rules and regulations and shall take
such actions to carry out its duties and responsibilities as may be
necessary and proper.
SECTION 17. Amendment and Termination
(a) Amendment: The Company reserves the right to amend the plan at
any time, in whole or in part, including retroactive amendments
necessary or advisable to qualify the plan and trust under the
provisions of Section 401(a) of the Internal Revenue Code. No such
amendment shall cause any part of the assets of the plan and trust to
be recoverable by the Company, or be used for or diverted to purposes
other than the exclusive benefit of participants and beneficiaries, or
deprive any participant or beneficiary of any benefit already vested,
except to the extent that such amendment may be necessary to qualify
the plan or modify the duties or liabilities of the plan custodian.
(b) Termination: Although the Company has established the plan with
the intention of making contributions indefinitely, the Company shall
not be under any obligation to continue contributions or to maintain
the plan for any given length of time. The Company may in its
discretion discontinue such contributions or terminate the plan in
whole or in part in accordance with its provisions at any time without
any liability for such discontinuance or termination. If so
terminated, and the plan is not replaced by a comparable plan
qualified under Section 401(a) of the Internal Revenue Code, the
accounts of all participants affected by the termination shall become
non-forfeitable. The committee and the trust shall continue until the
plan benefits of each participant have been distributed.
If the Internal Revenue Service shall fail or refuse to issue a
favorable written determination or ruling with respect to the initial
qualification of the plan and exemption of the trust from tax under
Sections 401(a) and 501(a) of the Internal Revenue Code, all company
contributions together with any income received or accrued, less any
benefits or expenses paid, shall be distributed in accordance with the
preceding paragraph. However, if a contribution is made by the
Company due to mistake or if a contribution is conditioned on its
deductibility and the deduction is disallowed, then such contribution
may be returned to the Company within one year.
SECTION 18. Merger, Assignment, and Severability
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(a) Merger: If the Company merges or consolidates with or into
another corporation, or if substantially all of the Company shall be
transferred to a corporation, the plan shall terminate on the
effective date of such merger, consolidation, or transfer. If the
surviving corporation resulting from such merger or consolidation, or
the corporation to which the assets have been transferred , adopts the
plan, then the plan shall continue and said corporation shall succeed
to all powers and duties of the Company. The employment of any
employee who is continued in the employ of such successor corporation
shall not be deemed to have terminated.
(b) Assigned Prohibited: The benefits provided by this plan may not
be assigned or alienated. Neither the Company nor the plan custodian
shall recognize any transfer, mortgage, pledge, order, or assignment
by any participant or beneficiary of any interest hereunder, and such
interest shall not be subject in any manner to transfer by operation
of law and shall be exempt from the claims of creditors or other
claimants from all orders, decrees, levies, garnishments, or
executions against such participants or beneficiaries.
(c) Applicable Law and Severability: The plan shall be construed and
governed in accordance with ERISA and the Internal Revenue Code and,
to the extent not superseded by federal law, in accordance with the
laws of the state. If any provision is susceptible to more than one
interpretation, such interpretation shall be given as is consistent
with the Internal Revenue Code. If any provision of this instrument
shall be held by a court of competent jurisdiction to be invalid or
unenforceable, then the remaining provisions shall continue to be
fully effective.
This plan has been adopted by the appropriate officers of the Company
hereto on this 30th day of May 1998.
Citizens Capital Corp.
By: Billy D. Hawkins
President
By: H. H. Hawkins
Secretary
Citizens Capital Corp. Employee Stock Ownership Plan
(Request for Plan Participation Form)
Plan Participant Name: Social Security Number:
---- ----
Street Address: City:
State: Zip Code:
Department/Location: Telephone (Area Code & No.)
Plan Participant Signature: Date:___________________________
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Beneficiary Designation
Beneficiary Name: Social Security Number:
---- ----
Street Address: City:
State: Zip Code:
Telephone (Area Code & No.)
Beneficiary Signature: Date:___________________________
RETURN TO HUMAN RESOURCES (Personnel File)
73
Type: Exhibit-10.2
Description: Citizens Capital Corp. 1998 Stock Option Plan
Exhibit-10.2
CITIZENS CAPITAL CORP.
1998 STOCK OPTION PLAN
This 1998 Stock Option Plan ("Plan") provides for the grant
of options to acquire shares of class A; no par value; common stock
("Common Stock") of CITIZENS CAPITAL CORP., a Texas corporation
("Company"). Stock options granted under this Plan are referred to in
this Plan as "Options." Options that qualify under Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), are referred to in
this Plan as "Incentive Stock Options." Options granted under this
Plan that do not qualify under Section 422 of the Code are referred to
as "Non qualified Stock Options."
1.0 PURPOSES
I.I The purposes of this Plan are (i) to retain the
services of a management team, qualified employees of the Company and
non-employee advisors or consultants as the Plan Administrators shall
select in accordance with this Plan; (ii) to retain the services of
valued non-employee directors pursuant to Section 5.15 below; (iii) to
provide these persons with an opportunity to obtain or increase a
proprietary interest in the Company, to provide incentives for
effective service and high-level performance, to strengthen their
incentive to achieve the objectives of the shareholders of the
Company; and (iv) to serve as an aid and inducement in the hiring or
recruitment of new employees, consultants, non-employee directors and
other persons needed for future operations and growth of the Company.
Employees, non-employee advisors and consultants are referred to in
this Plan as "Service Providers."
2.0 ADMINISTRATION
2.1 This Plan shall be administered by, or in accordance
with the recommendation of, the Board of Directors of the Company
("Board"). The Board may, in its discretion, establish a committee
composed of two or more members of the Board to administer this Plan
("Committee") which may be an executive, compensation or other
committee, including a separate committee especially created for this
purpose. The Committee shall have the powers and authority as the
Board may delegate to it, including the power and authority to
interpret any provision of this Plan or of any Option. The members of
the Committee shall serve at the discretion of the Board. The Board,
and/or the Committee if one has been established by the Board, are
referred to in this Plan as the "Plan Administrators. "
2.2 Following registration of any of the Company's
securities under Section 12 of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), the Plan Administrators shall not take any
action which is not in full compliance with the exemption from Section
16(b) of the Exchange Act provided by Rule 16b-3, as amended, or any
successor rule or rules, and any other rules or regulations of the
Securities and Exchange Commission, a national exchange, the NASDAQ
Stock Market, the NASD Bulletin Board, or any other applicable
regulatory authorities, and any such action shall be void and of no
effect.
2.3 Except as limited by Section 5.15 below, and subject to
the provisions of this Plan, and with a view to effecting its purpose,
the Plan Administrators shall have sole authority, in their absolute
discretion, to (i) construe and interpret this Plan; (ii) define the
terms used in this Plan; (iii) prescribe, amend and rescind rules and
regulations relating to this Plan; (iv) correct any defect, supply any
omission or reconcile any inconsistency in this Plan; (v) select the
Service Providers to whom Options shall be granted under this Plan and
whether the Option is an Incentive Stock Option or a Nonqualified
Stock Option; (vi) determine the time or times at which Options shall
be granted under this Plan; (vii) determine the number of shares of
Common Stock subject to each Option, the exercise price of each
Option, the duration of each Option and the times at which each Option
shall become execrable; (viii) determine all other terms and
conditions of Options; (ix) approve the forms of agreement to be used
under the Plan; (x) to determine the "Fair Market Value", as defined
in Section 2.4 below; (xi) to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by the Option shall have declined since the date
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the Option was granted; (xii) to institute a program whereby
outstanding options are surrendered in exchange for options with a
lower exercise price; (xiii) to provide financial assistance to
Optionees in the exercise of their outstanding options by allowing the
individuals to deliver a full-recourse, interest-bearing promissory
note in payment of the exercise price and any associated withholding
taxes incurred in connection with the exercise; (xiv) to allow
Optionees to satisfy withholding tax obligations by electing to have
the Company withhold from the shares of Common Stock to be issued upon
exercise of an Option that number of shares having a Fair Market Value
equal to the amount required to be withheld. The Fair Market Value of
the shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by an
Optionee to have shares withheld for this purpose shall be made in
such form and under such conditions as the Plan Administrators may
deem necessary or advisable; (xiv) to authorize any person to execute
on behalf of the Company any instrument required to effect the grant
of an Option previously granted by the Plan Administrators; and (xv)
make all other determinations necessary or advisable for the
administration of this Plan. All decisions, determinations and
interpretations made by the Plan Administrators shall be binding and
conclusive on all participants in this Plan and on their legal
representatives, heirs and beneficiaries. None of the Plan
Administrators shall be liable for any action taken or determination
made in good faith with respect to the Plan or any grant.
2.4 "Fair Market Value" shall be deemed to be, as of any
date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, or if the principal market for
the Common Stock is the over-the-counter market, including without
limitation NASDAQ NMS or NASDAQ Small Cap of the NASDAQ Stock Market,
as the case may be, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported)
as quoted on such exchange or system for the last market trading day
immediately preceding the date of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems
reliable. If the principal market for the Common Stock is the NASD
Electronic Bulletin Board or other over-the-counter market other than
NASDAQ NMS or NASDAQ Small Cap of the NASDAQ Stock Market, its Fair
Market Value shall be the mean between the closing bid and asked
quotations for the Common Stock for the 20 trading days last preceding
the date of conversion.
(ii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
3.0 ELIGIBILITY
3.1 Incentive Stock Options may be granted to any
individual who, at the time the Option is granted, is an employee of
the Company or any parent, subsidiary or other corporation permitted
by the Code, including employees who are directors of the Company
("Employees"). Nonqualified Stock Options may be granted to Service
Providers as the Plan Administrators shall select, and to non-employee
directors of the Company pursuant to the formula set forth in Section
5.15 below. Options may be granted in substitution for outstanding
Options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other
reorganization between such other corporation and the Company or any
subsidiary of the Company. Options also may be granted in exchange for
outstanding Options. Any person to whom an Option is granted under
this Plan is referred to as an "Optionee."
4.0 NUMBER OF SHARES AVAILABLE
4.1 The Plan Administrators are authorized to grant Options to
acquire up to a total of Two Million (2,000,000) shares of the
Company's authorized but unissued, or reacquired. Common Stock. The
number of shares with respect to which Options may be granted
hereunder is subject to adjustment as set forth below in Section 5.14.
If any outstanding Option expires or is terminated for any reason, the
shares of Common Stock allocable to the unexercised portion of such
Option may again be subject to an Option to the same Optionee or to a
different person eligible under this Plan.
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5.0 TERMS AND CONDITIONS OF OPTIONS
5.1 Each Option granted under this Plan shall be evidenced
by a written agreement approved by the Plan Administrators
("Agreement"). Agreements may contain such additional provisions, not
inconsistent with this Plan, as the Plan Administrators in their
discretion may deem advisable. All Options also shall comply with the
following requirements.
5.2 Number of Shares and Type of Option. Each Agreement
shall state the number of shares of Common Stock to which it pertains
and designate whether the Option is intended to be an Incentive Stock
Option or a Nonqualified Stock Option. In the absence of action or
designation to the contrary by the Plan Administrators in connection
with the grant of an Option, all Options shall be Nonqualified Stock
Options. The aggregate Fair Market Value, determined at the Date of
Grant, as defined below, of the stock with respect to which Incentive
Stock Options are exercisable for the first time by the Optionee
during any calendar year, granted under this Plan and all other
Incentive Stock Option plans of the Company, a related corporation or
a predecessor corporation, shall not exceed $100,000, or such other
limit as may be prescribed by the Code as it may be amended from time
to time. Any Option which exceeds the annual limit shall not be void
but rather shall be a Nonqualified Stock Option.
5.3 Date of Grant. Each Agreement shall state the date the
Plan Administrators have deemed to be the effective date of the Option
for purposes of, and in accordance with, this Plan ("Date of Grant").
5.4 Option Price. Each Agreement shall state the price per
share of Common Stock at which it is exercisable. The exercise price
shall be fixed by the Plan Administrators at whatever price the Plan
Administrators may determine in the exercise of its sole discretion;
provided, that the per share exercise price for any Option granted
following the effective date of registration of any of the Company's
securities under the Exchange Act shall not be less than the Fair
Market Value per share of the Common Stock at the Date of Grant as
determined by the Plan Administrators in good faith; provided further,
that with respect to Incentive Stock Options granted to greater than
10 percent shareholders of the Company, as determined with reference
to Section 424 (d) of the Code, the exercise price per share shall not
be less than 110 percent of the Fair Market Value per share of the
Common Stock at the Date of Grant; and, provided further, that
Incentive Stock Options granted in substitution for outstanding
Options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other
reorganization involving such other corporation and the Company or any
subsidiary of the Company may be granted with an exercise price equal
to the exercise price for the substituted Option of the other
corporation, subject to any adjustment consistent with the terms of
the transaction pursuant to which the substitution is to occur.
5.5 Duration of Options. At the time of the grant of the
Option, the Plan Administrators shall designate, subject to paragraph
5.8 below, the expiration date of the Option, which date shall not be
later than 10 years from the Date of Grant; provided, that the
expiration date of any Incentive Stock Option granted to a greater-
than-IO percent shareholder of the Company (as determined with
reference to Section 424 (d) of the Code) shall not be later than five
years from the Date of Grant. In the absence of action to the contrary
by the Plan Administrators in connection with the grant of a
particular Option, and except in the case of Incentive Stock Options
as described above, all Options granted under this Plan shall expire
10 years from the Date of Grant.
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Vesting Schedule. No Option shall be exercisable until it has vested.
The vesting schedule for each Option shall be specified by the Plan
Administrators at the time of grant of the Option; provided, that if
no vesting schedule is specified at the time of grant or in the
Agreement, the entire Option shall vest according to the following
schedule:
Number of Years Percentage of Total Option
Following Date of Grant To Be Exercisable
Immediately 25%
2 25%
3 25%
4 25%
5.7 Acceleration of Vesting. The vesting of one or more
outstanding Options may be accelerated by the Plan Administrators at
such times and in such amounts as it shall determine in its sole
discretion. The vesting of Options also shall be accelerated under the
circumstances described below in Section 5.14.
5.8 Term of Option.
5.8.1 Vested Options shall terminate, to the extent not
previously exercised, upon the occurrence of the first of the
following events: (i) the expiration of the Option, as designated by
the Plan Administrators; (ii) the expiration of 30 days from the date
of an Optionee's termination of employment, contractual or director
relationship with the Company or any Related Corporation for any
reason whatsoever other than death or Disability, as defined below,
unless, in the case of a Nonqualified Stock Option, the exercise
period is otherwise defined by terms of an agreement with Optionee
entered into prior to the effective date of the Plan, or the exercise
period is extended by the Plan Administrators until a date not later
than the expiration date of the Option; or (iii) the expiration of one
year from (A) the date of death of the Optionee or (B) cessation of an
Optionee's employment, contractual or director relationship with the
Company or any Related Corporation by reason of Disability (as defined
below) unless, in the case of a Nonqualified Stock Option, the
exercise period is extended by the Plan Administrators until a date
not later than the expiration date of the Option. If an Optionee's
employment, contractual or director relationship with the Company or
any Related Corporation is terminated by death, any Option held by the
Optionee shall be exercisable only by the person or persons to whom
such Optionee's rights under such Option shall pass by the Optionee's
will or by the laws of descent and distribution of the state or county
of the Optionee's domicile at the time of death. "Disability" shall
mean that a person is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted
or can be expected to last for a continuous period of not less than 12
months. The Plan Administrators shall determine whether an Optionee
has incurred a Disability on the basis of medical evidence acceptable
to the Plan Administrators. Upon making a determination of Disability,
the Committee shall, for purposes of the Plan, determine the date of
an Optionee's termination of employment, contractual or director
relationship.
5.8.2 Unless accelerated as set forth above, unvested
Options shall terminate immediately upon termination of Optionee's
employment, contractual or director relationship with the Company or
any Related Corporation for any reason whatsoever, including death or
Disability. If, in the case of an Incentive Stock Option, an
Optionee's relationship with the Company changes (e.g., from an
employee to a non-employee, such as a consultant, or a non-employee
director), such change shall not necessarily constitute a termination
of an Optionee's contractual relationship with the Company but rather
the Optionee's Incentive Stock Option shall automatically be converted
into a Nonqualified Stock Option. For purposes of this Plan, transfer
of employment between or among the Company and/or any Related
Corporation shall not be deemed to constitute a termination of
employment with the Company or any Related Corporation. For purposes
of this subsection with respect to Incentive Stock Options, employment
shall be deemed to continue while the Optionee is on military leave,
sick leave or other bona fide leave of absence as determined by the
Plan Administrators. The foregoing notwithstanding, employment shall
not be deemed to continue beyond the first 90 days of such leave,
unless the Optionee's re-employment rights are guaranteed by statute
or by contract.
5.8.3 Unvested Options shall terminate immediately upon any
material breach, as determined by the Plan
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Administrators, by Optionee of any employment, non-competition, non-
disclosure or similar agreement by and between the Company and
Optionee.
5.9 Exercise of Options. Options shall be exercisable,
either all or in part, at any time after vesting, until the Option
terminates for any reason set forth under this Plan, unless the
exercise period is extended by the Plan Administrators until a date
not later than the expiration date of the Option. If less than all of
the shares included in the vested portion of any Option are purchased,
the remainder may be purchased at any subsequent time prior to the
expiration of the Option term. No portion of any Option for less than
ten thousand (10,000) shares, as adjusted pursuant to Section 5.14
below, may be exercised; provided, that if the vested portion of any
Option is less than ten thousand (10,000) shares, it may be exercised
with respect to all shares for which it is vested. Only whole shares
may be issued pursuant to an Option, and to the extent that an Option
covers less than one share, it is unexercisable. Options or portions
thereof may be exercised by giving written notice to the Company,
which notice shall specify the number of shares to be purchased, and
be accompanied by payment in the amount of the aggregate exercise
price for the Common Stock so purchased, which payment shall be in the
form specified in this Plan. The Company shall not be obligated to
issue, transfer or deliver a certificate of Common Stock to any
Optionee, or to his personal representative, until the aggregate
exercise price has been paid for all shares for which the Option shall
have been exercised and adequate provision has been made by the
Optionee for satisfaction of any tax withholding obligations
associated with such exercise. During the lifetime of an Optionee,
Options are exercisable only by the Optionee.
5.10 Payment upon Exercise of Option. Upon the exercise of
any Option, the aggregate exercise price shall be paid to the Company
in cash or by certified or cashier's check. In addition, upon approval
of the Plan Administrators, an Optionee may pay for all or any portion
of the aggregate exercise price by (i) delivering to the Company
shares of Common Stock previously held by Optionee which have been
owned by Optionee for more than six (6) months on the date of
surrender; (ii) having shares withheld from the amount of shares of
Common Stock to be received by the Optionee; (iii) delivery of an
irrevocable subscription agreement obligating the Optionee to take and
pay for the shares of Common Stock to be purchased within eighteen
months of the date of exercise, to be accompanied by a full-recourse,
interest-bearing promissory note in payment of the exercise price and
any associated withholding taxes incurred in connection with the
exercise; (iv) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the
Plan; (v) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program
or arrangement; or (vi) such other consideration and method of payment
for the issuance of shares to the extent permitted by Applicable Laws.
The shares of Common Stock received or withheld by the Company as
payment for shares of Common Stock purchased upon the exercise of
Options shall have a Fair Market Value at the date of exercise (as
determined by the Plan Administrators) equal to the aggregate exercise
price (or portion thereof) to be paid by the Optionee upon such
exercise.
5.11 Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to any shares covered by an
Option until such Optionee becomes a record holder of the shares,
irrespective of whether such Optionee has given notice of exercise.
Subject to the provisions of Section 5.14 of this Plan, no rights
shall accrue to an Optionee and no adjustments shall be made on
account of dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights
declared on, or created in, the Common Stock for which the record date
is prior to the date the Optionee becomes a record holder of the
shares of Common Stock covered by the Option, irrespective of whether
such Optionee has given notice of exercise.
5.12 Transfer of Option. Options granted under this Plan
and the rights and privileges conferred by this Plan may not be
transferred, assigned, pledged or hypothecated in any manner, whether
by operation of law or otherwise, other than by will or by applicable
laws of descent and distribution or, with respect to Nonqualified
Stock Options, pursuant to a domestic relations order, and shall not
be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose
of any Option or of any right or privilege conferred by this Plan
contrary to the provisions hereof, or upon the sale, levy or any
attachment or similar process upon the rights
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and privileges conferred by this Plan, such Option shall thereupon
terminate and become null and void.
5.13 Securities Regulation and Tax Withholding.
5.13.1 Shares shall not be issued with respect to an Option
unless the exercise of such Option and the issuance and delivery of
such shares shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws,
the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations thereunder and the requirements of any stock exchange
upon which such shares may then be listed. The issuance shall be
further subject to the approval of counsel for the Company with
respect to such compliance, including the availability of an exemption
from registration for the issuance and sale of such shares. The
inability of the Company to obtain from any regulatory body the
authority deemed by the Company to be necessary for the lawful
issuance and sale of any shares under this Plan, or the unavailability
of an exemption from registration for the issuance and sale of any
shares under this Plan, shall relieve the Company of any liability
with respect to the non-issuance or sale of such shares.
5.13.2 As a condition to the exercise of an Option, in
order to comply with federal or state securities laws the Plan
Administrators may require the Optionee to represent and warrant in
writing at the time of such exercise that the shares are being
purchased only for investment and without any then-present intention
to sell or distribute such shares. At the option of the Plan
Administrators, a stop-transfer order against such shares may be
placed on the stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel is provided staling that such
transfer is not in violation of any applicable law or regulation, may
be stamped on the certificates representing such shares in order to
assure an exemption from registration. The Plan Administrators also
may require such other documentation as may from time to time be
necessary to comply with federal and state securities laws.
THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR
THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
5.13.3 As a condition to the exercise of any Option
granted under this Plan, the Optionee shall make such arrangements as
the Plan Administrators may require for the satisfaction of any
federal, state or local withholding tax obligations that may arise in
connection with such exercise. Alternatively, the Plan Administrators
may provide that a Grantee may elect, to the extent permitted or
required by law, to have the Company deduct federal, state and local
taxes of any kind required by law to be withheld upon such exercise
from any payment of any kind due to the Grantee. Without limitation,
at the discretion of the Plan Administrators, the withholding
obligation may be satisfied by the withholding or delivery of shares
of Common Stock.
5.13.4 The issuance, transfer or delivery of certificates of
Common Stock pursuant to the exercise of Options may be delayed, at
the discretion of the Plan Administrators, until the Plan
Administrators are satisfied that the applicable requirements of the
federal and state securities laws and the withholding provisions of
the Code have been met.
5.14 Stock Dividend,, Reorganization or Liquidation.
5.14.1 If (i) the Company shall at any time be
involved in a transaction described in Section 424 (a) of the Code (or
any successor provision) or any "corporate transaction" described in
the regulations thereunder; (ii) the Company shall declare a dividend
payable in, or shall subdivide or combine, its Common Stock or (iii)
any other event with substantially the same effect shall occur, the
Plan Administrators shall, with respect to each outstanding Option,
proportionately adjust the number of shares of Common Stock and/or the
exercise price per share so as to preserve the rights of the Optionee
substantially proportionate to the rights of the Optionee prior to
such event, and to the extent that such action shall include an
increase or decrease in the number of shares of Common Stock subject
to outstanding
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Options, the number of shares available under Section 4.0 of this Plan
shall automatically be increased or decreased, as the case may be,
proportionately, without further action on the part of the Plan
Administrators, the Company or the Company's shareholders.
5.14.2 If the Company is liquidated or dissolved, the Plan
Administrators shall allow the holders of any outstanding Options to
exercise ail or any part of the unvested portion of the Options held
by them; provided, however, that such Options must be exercised prior
to the effective date of such liquidation or dissolution. If the
Option holders do not exercise their Options prior to such effective
date, each outstanding Option shall terminate as of the effective date
of the liquidation or dissolution.
5.14.3 The foregoing adjustments in the shares subject to
Options shall be made by the Plan Administrators, or by any successor
administrator of this Plan, or by the applicable terms of any
assumption or substitution document.
5.14.4 The grant of an Option shall not affect in any way
the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure, to merge, consolidate or dissolve, to liquidate or
to sell or transfer all or any part of its business or assets.
5.15 Option Grants to Non-Employee Directors.
5.15.1 Automatic Grants. Upon the initial appointment of a
Non-Employee Director, as defined below, the Plan Administrators are
authorized to grant initial Options ("Initial Options") to each Non-
Employee Director in such amounts and upon such terms, provisions and
vesting schedule as determined in the sole discretion of the Plan
Administrators. After the Initial Options are fully vested, or in the
event no Initial Options are granted to a Non-Employee Director,
Options shall be granted to Non-Employee Directors under the terms and
conditions of this Section 5.15 of this Plan. Unless the number of
shares available under Section 4.0 of this Plan shall have been
decreased to less than 50,000, immediately after each annual meeting
of shareholders at which he or she is elected a director, each Non-
Employee Director, as defined below, of the Company shall
automatically be granted a Nonqualified Stock Option to purchase
25,000 shares of Common Stock for each year included in the term for
which such he or she was elected a director at such meeting; provided,
however, that if a director is appointed to fill a vacancy in the
Company's Board of Directors, a Non-Employee Director shall be granted
a Nonqualified Stock Option to purchase that number of shares of
Common Stock equal to 25,000 multiplied by a fraction, the numerator
of which shall be equal to the number of months from the date of his
or her appointment until the next regularly scheduled annual meeting
of shareholders at which directors are to be elected (as determined by
the Company's bylaws and rounded to the nearest whole number) and the
denominator of which shall be twelve (12). "Non-Employee Director"
shall have the meaning set forth in Rule 16b-3 under the Exchange Act
as such rule is in effect on the date this Plan is approved by the
shareholders of the Company, as it may be amended from time to time,
or any successor rule or rules.
5.15.2 Option Price. The option price for the Options
granted under Section 5.15 shall be not less than one hundred percent
(100%) of the Fair Market Value of the shares of Common Stock on the
Date of Grant, as determined by the Plan Administrators in good faith
in accordance with the definition set forth in Section 2.4 of this
Plan. Each such Option shall have a four-year term from the Date of
Grant, unless earlier terminated pursuant to Section 5.8.
5.15.3 Vesting Schedule. No Option shall be exercisable by
a Non-Employee Director until it has vested. For Options granted in
connection with the election of a director at an annual meeting of
shareholders, each Option shall vest as to 25,000 shares of Common
Stock for each year of service as a director on each anniversary date
of the annual meeting. For Options granted in connection with the
appointment of a director, each Option shall vest as to 25,000 shares
of Common Stock for each year of service as a director on each
anniversary date of such appointment.
5.16 Common Stock Repurchase Rights
5.16.1 Repurchase Option. At the sole discretion of the
Plan Administrators, each Option granted under this Plan may contain
repurchase provisions pursuant to which, after exercise of the Option,
the Company is granted an irrevocable, exclusive option ("Repurchase
Option") to purchase from Optionee the Common Stock issued upon
exercise
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of the Option. If the Plan Administrators determine that Options
granted under the Plan will be subject to a Repurchase Option, Service
Providers shall be notified by the Plan Administrators of the terms,
conditions and restrictions of the Repurchase Option by means of a
Restricted Stock Purchase Agreement, and Options shall be accepted by
Service Providers by execution of a Restricted Stock Purchase
Agreement in the form determined by the Plan Administrators. Unless
the Plan Administrators determine otherwise, the Restricted Stock
Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death
or disability).
5.16.2 Purchase Price and Duration. The purchase price for
shares of Common Stock repurchased pursuant to the Restricted Stock
Purchase Agreement shall be the original price per share paid by the
purchaser, plus an amount equal to any federal or state income tax
liability incurred by purchaser upon exercise of a Nonqualified Stock
Option. The purchase price may be paid by cancellation of any
indebtedness of the purchaser to the Company. The Repurchase Option
shall lapse after one year following the date of exercise, unless the
repurchase period is shortened in accordance with a schedule
determined by the Plan Administrators.
5.16.3 Escrow of Shares. The Restricted Stock Purchase
Agreement may also provide that the shares of Common Stock be
delivered and deposited with an escrow holder designated by the
Company until such time as the Repurchase Option expires.
5.16.4 Other Provisions. The Restricted Stock Purchase
Agreement shall contain such other terms, provisions and conditions
not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.
5.16.5 Rights as a Shareholder. Once the Option is
exercised and unless and until the Repurchase Option is exercised by
the Company, the purchaser shall have the rights equivalent to those
of a shareholder, and shall be a shareholder when his or her purchase
is entered upon the records of the duly authorized transfer agent of
the Company.
5.17 Common Stock Resale Restrictions
5.17.1 Resale Restrictions. At the sole discretion of the
Plan Administrators, each Option granted under this Plan may contain
resale provisions pursuant to which, after exercise of the Option, the
purchaser of the Common Stock issued upon exercise of the Option shall
be limited to sales of Common Stock sold for the account of the
purchaser or an affiliate of the purchaser in an amount which shall
not exceed 250,000 shares of Common Stock during any three-month
period.
5.17.2 Duration. The Resale Restriction may continue for as
long as the purchaser beneficially owns the Common Stock issued upon
exercise of the Option, unless the Resale Restriction is shortened in
accordance with a schedule determined by the Plan Administrators.
6.0 EFFECTIVE DATE; TERM
6.1 This Plan shall be effective as of December 1, 1998.
The Plan shall include all options granted by Plan Administrators
prior to the effective date of the Plan, in accordance with the
effective Date of Grant and other terms of each agreement with
Optionee. Incentive Stock Options may be granted by the Plan
Administrators from time to time thereafter until December 1, 2003.
Nonqualified Stock Options may be granted until this Plan is
terminated by the Board in its sole discretion. Termination of this
Plan shall not terminate any Option granted prior to such termination.
Any Incentive Stock Options granted by the Plan Administrators prior
to the approval of this Plan by a majority of the shareholders of the
Company shall be granted subject to ratification of this Plan by the
shareholders of the Company within 12 months after this Plan is
adopted by the Board.
Without limiting the generality of the foregoing, the Plan
Administrators may modify grants to persons who are eligible to
receive Options under this Plan who are foreign nationals or employed
outside the United States to recognize differences in local law, tax
policy or custom.
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Date Approved by Board of Directors of Company: December 1, 1998
CITIZENS CAPITAL CORP.
by:_______________________________________
Corporate Secretary
CITIZENS CAPITAL CORP.
STOCK OPTION AGREEMENT
NEITHER THIS OPTION NOR THE UNDERLYING SHARES OF COMMON STOCK HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"). THIS OPTION OR THE UNDERLYING COMMON SHARES MAY
NOT BE SOLD OR TRANSFERRED UNLESS: (i) THERE IS AN EFFECTIVE
REGISTRATION COVERING THE OPTION OR SHARES, AS THE CASE MAY BE, UNDER
THE SECURITIES ACT AND APPLICABLE STATES SECURITIES LAWS; (ii) THE
COMPANY FIRST RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE
BOARD OF DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE
ATTORNEY THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATES SECURITIES LAWS; OR, (iii) THE
TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.
BETWEEN:
Name:_____________________________________ , ("Optionee")
Social Security Number:_______________________
AND
Citizens Capital Corp., ("Company")
a Texas corporation
Tax I.D. Number:_____________________________
1.0 RECITALS
I.I The Company has adopted the 1998 Stock Option Plan
("Plan"), incorporated herein by reference, that provides for the
grant of options to purchase shares of Common Stock ("Shares") of the
Company. Unless otherwise defined in this Agreement, the terms defined
in the Plan shall have the same defined meanings in this Agreement.
2.0 NOTICE OF GRANT
2.1 Optionee has been granted an option to purchase Shares
of the Company, subject to the terms and conditions of the Plan and
this Option Agreement, as follows:
GRANT NUMBER:
DATE OF GRANT:
VESTING COMMENCEMENT DATE:
EXERCISE PRICE PER SHARE:
TOTAL NUMBER OF SHARES GRANTED:
TOTAL EXERCISE PRICE: $
EXPIRATION DATE:
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TYPE OF OPTION:
: ___ Incentive Stock Option
___ Nonqualified Stock Option
VESTING SCHEDULE: This Option may be exercised, in whole or
in part, in accordance with the following schedule: 25% of the Shares
subject to the Option shall immediately vest and be immediately
exercisable any time after the date of grant, 25% of the Shares
subject to the Option shall be fully vested and be exercisable after
two (2) years following the date of grant, 25% of the Shares subject
to the Option shall be fully vested and be exercisable after three (3)
years following the date of grant, and 25% of the Shares subject to
the Option shall be fully vested and be exercisable after five (4)
years following the date of grant.
Number of Years Percentage of Total Option
Following Date of Grant To Be Exercisable
Immediately 25%
2 25%
3 25%
4 25%
TERMINATION PERIOD: This Option may be exercised for 30
days after Optionee ceases to be a Service Provider. Upon the death or
Disability of the Optionee, this Option may be exercised for such
longer period as provided in the Plan. In no event shall this Option
be exercised later than the Expiration Date as provided above.
3.0 GRANT OF OPTION
3.1 Subject to the terms and conditions of the Plan and of
this Agreement, the Plan Administrators of the Company grant to the
Optionee named above an option ("Option") to purchase the number of
Shares, as set forth above in Section 2.0 entitled "Notice of Grant",
at the exercise price per share set forth above in Notice of Grant
("Exercise Price"). Subject to any mutual amendments of the Plan, in
the event of a conflict between the terms and conditions of the Plan
and the terms and conditions of this Agreement, the terms and
conditions of the Plan shall prevail.
3.2 If designated in the Notice of Grant as an Incentive
Stock Option ("ISO"), this Option is intended to qualify as an
Incentive Stock Option under Section 422 of the Code. However, if this
Option is intended to be an Incentive Stock Option, to the extent that
it exceeds the $100,000 rule of Code Section 422 (d) it shall be
treated as a Nonqualified Stock Option ("NQO").
4.0 EXERCISE OF OPTION
4.1 Right to Exercise. This Option is exercisable during
its term in accordance with the Vesting Schedule set forth above in
the Notice of Grant and the applicable provisions of the Plan and this
Option Agreement.
4.2 Method of Exercise. This Option is exercisable by
delivery of an exercise notice, in the form attached as Exhibit A
("Exercise Notice"), which shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being
exercised ("Exercised Shares"), and such other representations and
agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise Notice shall be completed by the
Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of the fully executed Exercise Notice
accompanied by the aggregate Exercise Price.
83
<PAGE>
5.0 COMPLIANCE WITH APPLICABLE LAW
5.1 No Shares shall be issued pursuant to the exercise of
this Option unless such issuance and exercise complies with applicable
state or federal law, including securities laws, corporate laws, the
Code or any stock exchange or quotation system. If the Plan
Administrators at any time determine that registration or
qualification of the Shares or the Option under state or federal law,
or the consent approval of any governmental regulatory body is
necessary or desirable, then the Option may not be exercised, in whole
or in part, until such registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions
not acceptable to the Plan Administrators. Assuming compliance, for
income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
5.2 If required by the Company at the time of any exercise
of the Option in order to comply with federal or state securities
laws, as a condition to such exercise, the Employee shall enter into
an agreement with the Company in form satisfactory to counsel for the
Company by which the Employee: (i) shall represent that the Shares are
being acquired for the Employee's own account for investment and not
with a view to, or for sale in connection with, any resale or
distribution of such Shares; and, (ii) shall agree that if the
Employee should decide to sell, transfer, or otherwise dispose of any
such Shares, the Employee may do so only if the Shares are registered
under the Securities Act and the relevant state securities law,
unless, in the opinion of counsel for the Company, such registration
is not required, or the transfer is pursuant to the Securities and
Exchange Commission Rule 144.
6.0 METHOD OF PAYMENT
6.1 Payment of the aggregate Exercise Price shall be by any
of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
(b) certified or cashier's check;
(c) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the
Plan;
(d) with the Plan Administrator's consent, surrender of
other Shares which (i) in the case of Shares acquired upon exercise of
an option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (ii) have a Fair Market Value on
the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares; or
(e) with the Plan Administrator's consent, delivery of
Optionee's promissory note (the "Note") in the form approved by Plan
Administrators, in the amount of the aggregate Exercise Price of the
Exercised Shares and any associated withholding taxes incurred in
connection with the exercise, together with the execution and delivery
by the Optionee of a Security Agreement in the form approved by Plan
Administrators. The Note shall bear interest at the "applicable
federal rate" prescribed under the Code and its regulations at time of
purchase, and shall be secured by a pledge of the Shares purchased by
the Note pursuant to the Security Agreement.
7.0 NON-TRANSFERABILITY OF OPTION
7.1 This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee.
The terms of the Plan and this Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.
84
<PAGE>
8.0 TERM OF OPTION
8.1 This Option may be exercised only within the term set
forth above in the Notice of Grant, and may be exercised during that
term only in accordance with the Plan and the terms of this Option
Agreement.
9.0 TAX CONSEQUENCES
Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS
SUMMARY IS INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
9.1 Exercising the Option.
9.1.1 Nonqualified Stock Option. The Optionee may incur
regular federal income tax liability upon exercise of a NQO. The
Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of
the Fair Market value of the Exercised Shares on the date of exercise
over their aggregate Exercise Price. If the Optionee is an Employee or
a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor
the exercise and refuse to deliver Shares if these withholding amounts
are not delivered at the time of exercise.
9.1.2 Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax liability
upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price will be treated as an adjustment to
alternative minimum taxable income for federal tax purposes and may
subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but
remains a Service Provider, any Incentive Stock Option of the Optionee
that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonqualified Stock
Option on the date three (3) months and one (1) day following this
change of status.
9.2 Disposition of Shares.
9.2.1 NQO. If the Optionee holds NQO Shares for at least
one year, except for that portion treated as compensation income at
the time of exercise, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal income tax
purposes.
9.2.2 ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain
realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes. If the Optionee disposes
of ISO Shares within one year after exercise or two years after the
grant date, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (i) the difference between the
Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, (?r (ii) the difference between the sale
price of such Shares and the aggregate Exercise Price. Any additional
gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
9.3 Notice of Disqualifying Disposition of ISO Shares. If
the Optionee sells or otherwise disposes of any of the Shares acquired
pursuant to an ISO on or before the later of (i) two years after the
grant date, or (ii) one year after the exercise date, the Optionee
shall immediately notify the Company in writing of the disposition.
The Optionee agrees that he or she may be subject to income tax
withholding by the Company on the compensation income recognized from
such early disposition of ISO Shares by payment in cash or out of the
current earnings paid to the Optionee.
85
<PAGE>
10.0 RESALE RESTRICTIONS
10.1 Optionee acknowledges and agrees that Optionee,
together with Optionee's affiliates and donees, will not sell or
otherwise transfer or dispose of Shares of the Company issued upon
exercise of this Option in an amount which shall exceed 250,000 Shares
during any three-month period. Shares which are bona fide pledged,
when sold by the pledgee, or by a purchaser, after a default in the
obligation secured by the pledge shall be deemed to be excluded from
this limitation.
10.2 Optionee acknowledges and agrees that whatever period
determined appropriate by the Company, underwriter, or federal and
state regulatory officials including, but not limited to, the
Securities and Exchange Commission, National Association of Securities
Dealers and NASDAQ, following the effective date of a registration
statement of the Company covering common stock (or other securities)
of the Company to be sold on its behalf in an underwriting. Optionee
will not sell or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) Shares of the Company held by
Optionee at any time during such period except securities included in
that registration.
10.3 Optionee acknowledges and agrees that if for purposes
of a registration statement of the Company the underwriter or federal
or state regulatory officials fix a specific Common Stock or Option
lockup period, such fixed lockup period shall apply to Optionee under
this Agreement.
11.0 NO GUARANTEE OF CONTINUED SERVICE
11.1 Optionee acknowledges and agrees that the vesting of
shares pursuant to the vesting schedule set forth in this Agreement is
earned only by continuing as a Service Provider at the will of the
Company, and not through the act of being hired, being granted an
option or purchasing shares under this Agreement. Optionee further
acknowledges and agrees that this Agreement, the transactions
contemplated and the vesting schedule set forth in it do not
constitute an express or implied promise of continued engagement as a
Service Provider for the vesting period, for any period, or at all,
and shall not interfere with Optionee's right or the Company's right
to terminate Optionee's relationship as a Service Provider at any
time, with or without cause.
12.0 SIGNATURES:
Date________________________
CITIZENS CAPITAL CORP.
By:___________________________________
Billy D. Hawkins, President
Optionee acknowledges and represents that he or she has received a
copy of the Plan, has reviewed the Plan and this Agreement in their
entirety, is familiar with its and fully understands its terms and
provisions. Optionee accepts this Option subject to all the terms and
provisions of the Plan and this Agreement. Optionee has had an
opportunity to obtain the advice of counsel prior to executing this
Agreement. Optionee agrees to accept as binding, conclusive and final
all decisions or interpretations of the Plan Administrators upon any
questions arising under the Plan and Agreement. Optionee further
agrees to notify the Company upon any change in the residence address
indicated on the first page of this Agreement.
Date:__________________________
OPTIONEE:
_______________________________
Signature
_______________________________
Print Name
86
<PAGE>
Exhibit A
CITIZENS CAPITAL CORP. 1998 STOCK OPTION PLAN
EXERCISE NOTICE
TO: CITIZENS CAPITAL CORP.
Attention: Corporate Secretary
1.0 Exercise of Option. Effective as of today,
_____________________, the undersigned ("Purchaser") hereby elects to
purchase _________________ shares ("Shares") of the Common Stock of
Citizens Capital Corp. ("Company") pursuant to the 1998 Stock Option
Plan ("Plan") and the Stock Option Agreement dated December 1, 1998
("Agreement"). Purchaser herewith delivers to the Company the full
purchase price for the Shares of $________________, as required by the
Agreement.
2.0 Representations of Purchaser. Purchaser acknowledges
that Purchaser has received, read and understood the Plan and the
Agreement and agrees to abide by and be bound by their terms and
conditions.
3.0 Rights as Shareholder. Until the issuance (as evidenced
by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the Shares, no right to
vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Shares, notwithstanding the exercise of the
Option. The Shares shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to
the date of issuance, except as provided in the Plan.
4.0 Tax Consultation. Purchaser understands that Purchaser
may suffer adverse tax consequences as a result of Purchaser's
purchase or disposition of the Shares. Purchaser represents that
Purchaser has consulted with any tax consultants Purchaser deems
advisable in connection with the purchase or disposition of the Shares
and that Purchaser is not relying on the Company for any tax advice.
Submitted by: Accepted by:
PURCHASER: CITIZENS CAPITAL CORP.
___________________________ ____________________________
Signature Signature
___________________________ ____________________________
Print Name Title
Date:______________________ Date:______________________
Social Security Number:________________
Address: Address:
87
Type: Exhibit-21.1
Description: Subsidiaries of the Registrant
Exhibit-21.1
Citizens Capital Corp. (the "Company" ) is principally a holding
company which acquires and/or develops those operating entities,
assets and/or marketing rights which provide the Company with an
initial entry into new markets or serve as complimentary additions to
existing operations, assets and/or products.
The Company currently operates through the following three (3) 97%
owned subsidiaries:
Landrush Realty Corporation ("Landrush"); a Texas corporation,
organized to operate in residential mortgage loan marketing;
commercial and residential real estate investment and development.
Media Force Sports & Entertainment Inc. ("Media Force"); a Texas
corporation, organized to operate in print, graphic, broadcast and
entertainment media production.
SCOR Brands Inc. ("SCOR"), a Texas corporation, organized to operate
in the design, marketing and distribution of branded athletic shoes
and apparel.
88
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
company's consolidated financial statements consisting of its balance sheet;
statement of operations; statement of stockholder's equity; and statement of
cash flows and is qualified in its entirety by reference to such financial
statements contained herein.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,015
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,685
<PP&E> 310
<DEPRECIATION> 3,250
<TOTAL-ASSETS> 1,685
<CURRENT-LIABILITIES> 1,000
<BONDS> 0
0
1,000,000
<COMMON> 405,000
<OTHER-SE> (50,100,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,685
<SALES> 438
<TOTAL-REVENUES> 438
<CGS> 275
<TOTAL-COSTS> 275
<OTHER-EXPENSES> 17,516
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,353)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,353)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
