As filed with the Securities and Exchange Commission on October_, 1997
Registration No. 33
U.S. Securities and Exchange Commission
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MILLENNIA ENTERTAINMENT, INC.
(Exact name of small business registrant as specified in its charter)
Texas 75-2691537
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
16910 Dallas Parkway, Suite 100, Dallas, Texas
75248, (972) 248-1922 (Address and
telephone number of principal executive
offices)
Kevin B. Halter, 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248
(972) 248-1922
(name, address and telephone number of agent for service)
Copies to:
Richard Braucher, Esq.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
(972) 248-1922
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each class Amount to be Proposed maximum offering Proposed maximum aggregate Registration fee
of securities to be registered (1) price per share (1) offering price (1)
registered
COMMON STOCK 568,900 shares $0.10 $56,890 $1778.
Note: (1) Estimated solely for the purpose of calculating the registration fee.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PRELIMINARY PROSPECTUS
(subject to completion)
MILLENNIA ENTERTAINMENT, INC.
568,900 SHARES OF COMMON STOCK (no par value)
This Prospectus is being furnished by Millennia, Inc., a Delaware corporation
whose stock is listed on the American Stock Exchange, (the "Parent") in
connection with the distribution as a stock dividend (the "Distribution") of
568,900 shares of the Common Stock of Millennia Entertainment, Inc. (the
"Company") to the Parent's shareholders who are shareholders of record on
____________, 1997 (the "Record Date"). Based on the fact that there are
currently 2,275,635 shares of the common stock of the Parent issued and
outstanding, each shareholder of the Parent will receive one share of the Common
Stock for each four shares of Millennia Inc owned on the record date. The
Distribution will result in approximately 5 % of the issued and outstanding
Common Stock of the Company being distributed to the holders of the Parent's
common stock on a probate basis. Neither the Company nor Millennia, Inc. will
receive any of the proceeds from the Distribution.
There is no current public market for the Common Stock. The Company expects that
the Common Stock will be traded on the over-the-counter market maintained by
members of the National Association of Securities Dealers, Inc. (the "OTC
Bulletin Board") upon effectiveness of this Registration Statement.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING AT PAGE 4 FOR A DISCUSSION OF
CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UP THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Price to Public (1) Proceeds to the Company(2).
Per Share ............ $ 0.10 None
Total ................. $56,890 None
(1) Estimated in accordance with Rule 457.
(2) All expenses associated with this offering will be paid by the Company.
The date of this Prospectus is October ___, 1997.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This prospectus contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of the Company or
management as well as assumptions made by and information currently available to
the Company or management. When used in this document, the words "anticipate,"
"believe," "estimate," "expect, " and "intend" and similar expressions, as they
relate to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company regarding future events and are subject to certain risks, uncertainties
and assumptions, including the risks and uncertainties noted. Should one or more
of these risks or uncertainties materialize, or should the underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended. In
each instance, forward-looking information should be considered in light of the
accompanying meaningful cautionary statements herein.
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere in this
Prospectus. Reference is made to, and this summary is qualified in its entirety
by, the more detailed information contained elsewhere in this Prospectus, which
should be read in its entirety.
Distributing Company
Millennia, Inc. (the "Parent"), a Delaware corporation whose
stock is traded on the American Stock Exchange
Distributed Company
Millennia Entertainment, Inc. (the "Company") is a Texas
corporation which is a wholly-owned subsidiary of the
Parent. The Company is a start-up operation which is
primarily a distributor of general entertainment videos on a
contract basis to resellers. The Company obtains the
appropriate duplication and distribution rights to various
titles selected by its customers and contracts with third
parties to duplicate the requested titles.
Shares to be Distributed
568,900 shares of the Company's Common Stock. No fractional
shares will be distributed. The shares to be distributed
constitute approximately 5% of the issued and outstanding
shares of Common Stock of the Company.
Distribution Ratio
Each shareholder of the Parent will receive one share of the
Common Stock of the Company for every four shares of the
Parent's common stock held on the Record Date.
Fractional Share Interests
No fraction of a share of Common Stock will be issued as a
result of the Distribution. All fractional shares which
would otherwise be issuable as a result of the Distribution
will be rounded up to the nearest whole share and the
shareholder will be issued one full share in lieu thereof.
See "The Distribution -- Manner of Effecting the
Distribution."
Trading Market
OTC Bulletin Board
Distribution Agent
Securities Transfer Corporation
Record Date
_____________, 1997
Mailing Date
The Distribution Agent will mail share certificates
commencing about ten days after the effective date of this
Registration Statement.
Tax Consequences
See "The Distribution -- Federal Income Tax Consequences of
the Distribution.
Risk Factors
See "Risk Factors"
3
THE COMPANY
Millennia Entertainment, Inc., a Texas corporation (the "Company"), is a
start-up operation, having started business in February of 1997. The Company's
primary business is to seek out wholesale buyers of video tape programming, to
obtain the rights to duplicate the programming and to outsource the duplication
of the video tape programming and printing. The Company's executive office is
located at 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 and its
telephone number is (972) 248-1922.
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING THE COMPANY
AND ITS BUSINESS BEFORE PURCHASING THE COMMON STOCK.
LACK OF PROFITABILITY AND LACK OF OPERATING HISTORY
The Company has only been in business since February 20, 1997 and has a net loss
from operations through June 30, 1997 of $34,965. The Company has a working
capital deficit of $48,759 and negative shareholder's equity of $33,965. The
Parent had advanced $20,250 to the Company for working capital as of June
30,1997. These advances are noninterest bearing and are payable on demand.
The Company's operations are subject to all of the risks inherent in the
establishment of a new business enterprise, including the lack of operating
history and the inability to obtain capital from non-related parties. The
likelihood of success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the establishment of a new business. There can be
no assurance that future operations of the Company will be profitable . Future
revenues and profits, if any, will depend upon numerous factors, many of which
are beyond the control of the Company's management including general economic
conditions and the nature and speed of technological development relating to
video tapes and possible future competing devices and services.
ECONOMIC AND INDUSTRY CONDITIONS
Demand for the Company's services is likely to be affected by general economic
conditions. This demand is likely to fluctuate as a consequence of changes in
the economy and future trends in the usage of video tapes, as well as the
possible development of competing products which may be cheaper, more
technologically advanced or more appealing to users. The Company anticipates
that its sales and operating results will fluctuate from time to time as a
result of these factors.
COMPETITION
There are numerous competitors in the Company's industry, many of whom are
larger, have a record of profitable operation, and have greater financial,
technical and human resources. Such companies may develop products or services
that may be viewed as more effective than the Company's products and services
and they may be more successful in marketing their products and services. This
industry is competitive with respect to both price and service. While the
Company has had some success in obtaining the rights to duplicate programming
from many sources, there can be no assurance that it will be able to expand
these sources significantly or, if so, how quickly. No assurance can be given
that the Company will be able to compete successfully.
DEPENDENCE ON KEY PERSONNEL; CONTROL BY PARENT
The Company's future success will depend in large part upon the continued
services of its key manager. Given the Company's limited operating history, the
Company's success will also be dependent upon its ability to attract and retain
qualified personnel to develop and expand its operations. No assurance can be
given that the Company will be able to retain its current manager and that it
will be able to obtain the services of the personnel necessary for the Company's
growth and success.
The Company, after the distribution of the stock dividend contemplated herein,
will be owned 95% by the Parent. Accordingly, the Parent will determine the
composition of the Company's Board of Directors and thereby direct the affairs
of the Company. This fact may affect the Company's future growth and
development, as well as the marketability and price of its stock.
4
LACK OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this Offering, there has been no public market for the Company's common
stock. There can be no assurance that an active public market will develop for
the Common Stock. The Company believes that such factors as quarterly variations
in the Company's financial results, announcements regarding operations of the
Company and developments affecting the Company, its market or products and
services could cause significant fluctuation in the market price of the Common
Stock. In addition, the stock market in general has recently experienced price
and volume fluctuations which appear to be unrelated to the operating
performance of individual companies. Broad market fluctuations may adversely
affect the market price of the Common Stock.
POSSIBLE ADVERSE TAX CONSEQUENCES
Holders of the Parent's common stock may incur tax liability upon the
Distribution without any attendant cash payment. See "The Distribution- Federal
Income Tax Consequences of the Distribution."
PLAN OF DISTRIBUTION
Reasons for the Distribution
The Board of Directors of Millennia, Inc. has determined that it is in the best
interest of that company and its shareholders to make the Distribution in the
manner described herein. The Parent is a diversified management company engaged,
through its subsidiaries, in various unrelated businesses. The Distribution will
result in the Company being a separate publicly held company. The Parent's Board
of Directors believes that the Distribution will allow investors to better
evaluate the Company and its future prospects independently, enhancing the
likelihood that it will achieve appropriate market recognition regarding its own
performance and potential. The Parent's Board of Directors believes that, by
distributing the Common Stock to the Parent's shareholders, the potential for
increasing the long-term value of each shareholder's investment in the Parent
will be enhanced. In addition, the Company may expand its business through
acquisitions of existing businesses (although at the present time none are
specifically contemplated) and the Boards of Directors of the Parent and the
Company believe that having a public market for the Common Stock will allow the
Company to more readily make such acquisitions in the future by structuring them
as stock transactions.
Manner of Effecting the Distribution
The Parent will effect the Distribution by delivering shares of the Company's
Common Stock to Securities Transfer Corporation as the distribution agent (the
"Distribution Agent") for distribution to holders of record of the Parent's
common stock on the Record Date. The distribution will be made on the basis of
one share of the Common Stock for every four shares of the Parent's common stock
issued and outstanding on the Record Date. Currently, there are 2,275,635 shares
of the Parent's common stock issued and outstanding. All such shares of the
Common Stock will be fully paid and nonassessable and the holders thereof will
not be entitled to preemptive rights. See "Description of Common Stock". The
Distribution Agent will begin to mail the certificates representing shares of
Common Stock which are being distributed as a dividend to the Parent's
shareholders about ten days after the effective date of this Registration
Statement.
No certificates or scrip representing fractional shares of Common Stock will be
issued as part of the Distribution. All fractional shares will be rounded up to
the nearest whole share and each stockholder who would otherwise be entitled to
a fraction of a share will be issued one full share in lieu thereof.
No holder of the Parent's common stock will be required to submit any
documentation to the Distribution Agent or to pay any cash or other
consideration for the shares of Common Stock received in the Distribution or to
surrender or exchange any shares of the Parent's common stock in order to
receive the Common Stock which is being distributed as a dividend. The
distribution will not affect the number of, or rights attaching to, outstanding
shares of the parent's common stock.
Listing and Trading of the Common Stock
The Company expects that the Common Stock will initially be traded on the OTC
Bulletin Board upon the effectiveness of the Registration Statement. Shares of
Common Stock distributed to the Parent's shareholders will be freely
transferable, except for shares received by persons who may be deemed to be
"affiliates" of the Company under the Securities Act. Persons who may be deemed
to be affiliates of the Company after the Distribution include individuals or
entities that control, are controlled by or under common control with the
Company, and may include directors and principal executive officers of the
Company, as well as any stockholder owning 5% or more of the total stock issued
and outstanding. Persons who are affiliates of the Company will be permitted to
sell their shares of Common Stock only pursuant to an effective registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act which is applicable to them. In addition to
the three individuals listed as directors and executive management of the
Company (See "Management"), Halter Capital Corporation is an affiliate of the
Company. After the Distribution the Company is expected to have approximately
1500 shareholders.
5
Federal Income Tax Consequences of the Distribution
Millennia, Inc. has received the opinion of Richard Braucher, Esq., counsel to
the Company and the Parent, regarding the federal income tax consequences of the
Distribution under the Internal Revenue Code, as amended (the "Code"). The
opinion generally provides as follows:
(i) Each shareholder of the Parent will be considered to have received a
taxable distribution in an amount equal to the fair market value on the Record
Date of the Common Stock received. Such a taxable distribution would be taxed as
a dividend received with respect to the shares of common stock of the Parent
then owned by the shareholder.
(ii) A shareholder's basis in the Common Stock received in the Distribution
will be equal to the fair market value of the Common Stock on the Record Date
and the shareholder's holding period will begin on the Record Date. The
stockholder's basis of the common stock of the Parent will not be affected by
the Distribution.
(iii) Millennia, Inc will recognize gain, but not loss, in an amount equal
to the difference between the fair market value of the Common Stock distributed
and its basis in that stock.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS WHO ARE NOT
CITIZENS OR RESIDENTS OF THE UNITED STATES OF AMERICA OR WHO ARE OTHERWISE
SUBJECT TO SPECIAL TREATMENT UNDER THE CODE. ALL STOCKHOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION
TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
DESCRIPTION OF COMMON STOCK
The Company's Articles of Incorporation authorizes the issuance of
25,000,000 shares of the Common Stock, with no par value. Holders of Common
Stock are entitled to one vote for each share owned on each matter submitted to
a vote of the shareholders. After the completion of this Distribution, there
will be issued and outstanding 11,400,000 shares of Common Stock. The Company's
Board of Directors has the legal authority to issue the remaining unissued
authorized shares, without shareholder approval, for any purpose deemed to be in
the best interest of the Company. Shares could be issued to deter or delay a
takeover or other change of control of the Company.
All outstanding shares of Common Stock of record are fully paid, validly
issued and nonassessable and the holders of Common Stock have no preemptive
rights to subscribe for or to purchase any additional securities issued by the
Company. Upon liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to share ratably in the distribution of assets
after payment of debts and expenses. There are no conversion, sinking fund or
redemption provisions, or any restrictions on alienability with respect to the
Common Stock.
The holders of the Common Stock are entitled to receive dividends, when and
if declared by the Board of Directors, out of funds legally available therefor.
See "Dividend Policy,"
Dividend Policy
The Company has never paid or declared any cash dividend on its Common
Stock and does not intend to pay cash dividends on its Common Stock in the
foreseeable future. The Company presently expects to retain its earnings, if
any, to finance the development and expansion of its business. The payment by
the Company of dividends, if any, on its Common Stock in the future is subject
to the discretion of the Board of Directors and will depend on the Company's
earnings, financial condition, capital requirements and other factors.
Use of Proceeds
The Company will not receive any proceeds from the issuance and
distribution of the shares of Common Stock covered by this Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
The following discussion and analysis should be read in connection with the
Company's financial statements and the notes associated with them as contained
elsewhere in this document. This discussion should not be construed to imply
that the results discussed herein will necessarily continue into the future or
that any conclusion reached herein will necessarily be indicative of actual
operating results in the future. Such discussion
6
represents only the best present assessment of management of the Company.
Caution Regarding Forward-Looking Information
This Registration Statement contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or its management as well as assumptions made by and information currently
available to the Company or management. When used in this document, the words
"anticipate", "believe", "estimate", "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, the forward-looking information should be considered
in light of the accompanying meaningful cautionary statements herein.
Results of Operations
The Company was incorporated under the laws of the State of Texas in
February of 1997, as a wholly-owned subsidiary of Millennia, Inc., a publicly
owned corporation whose stock trades on the American Stock Exchange. The Company
began operations concurrently with its formation and, accordingly, has had
limited business operations due to the start-up nature of its business. The
Company is primarily a distributor of general entertainment videotapes on a
contract basis to resellers. The Company obtains the appropriate duplication and
distribution rights to various titles selected by its customers and contracts
for third parties to duplicate the requested titles; this work is usually done
by an affiliate of the Company.
During the initial four months of operations, the Company generated limited
sales activity with total sales of approximately $3,300. Due to the start-up
costs of production and the need to produce samples, the Company incurred costs
of goods sold of approximately $13,900. Additionally, initial marketing costs of
approximately $7,600 and administrative costs of approximately $16,500
contributed to the overall net operating loss of approximately $35,000 for the
period ended June 30, 1997.
As the Company generates sales and incurs costs on a "contracted by
project" basis, the Company's operations will, in essence, continue to be driven
by customer demand for the Company's services. Thus, management continually
monitors production costs and administrative overhead costs in the preparation
of price quotations for its services for prospective customers.
Capital Resources
During the Company's organizational phase approximately $15,200 was
expended on capital assets, principally office furniture and related equipment.
The Company does not currently have any further material commitments for capital
expenditures and does not anticipate any in the foreseeable future.
Liquidity
For the period ended June 30, 1997, the Company used approximately $8000 of
cash in operating activities. This operating deficit was met primarily through
working capital advances from its parent company. The Company currently meets
its operating requirements through daily operations, although its parent company
has affirmed its intent to fund cash and/or working capital deficiencies, if
any, should they occur. Management is also of the opinion that either future
bank financing or equity placements may be available to provide liquidity in
future periods. However, there is no assurance that such financing or equity
placements will be available at amounts or rates favorable to the Company.
The Company is a component of the consolidated Federal and State Income Tax
Returns of its parent. As such, the Company has no separate company net
operating loss carryforwards available to offset taxable income, if any, in
future periods.
Other Comments
The Company's sales operations are directed from Florida but its customer
base is both national and international in scope. At the present time, with
limited operations, virtually all sales activity has been located in the United
States. The Company's sales levels will be directly related to its marketing
efforts, competitive pricing and customer demand. Accordingly, a fluctuation in
any one or all of these factors could have a material impact on the Company's
financial stability. In providing contracted service, the Company's activities
historically have not been, and in the near term are nor expected to be,
materially affected by inflation or changing prices in general.
7
BUSINESS
The Company is a start-up operation which commenced operations in February of
1997. The Company's primary business is to seek out wholesale buyers of video
tape programming, to obtain the rights to duplicate the programming, and to
outsource the duplication of the video tape programming and printing. By
securing the buyer of the duplicated video tape programming before purchasing
any inventory, the Company eliminates the need to hold inventory, thus keeping
its capital requirements to a minimum.
Customers. The Company has not yet had any significant sales and thus far no
dependence has been established on any single customer or group of customers.
The Company anticipates that the market for its services is such that, in the
future, it will not be dependent on a single customer for any significant part
of its sales.
Raw materials. The Company purchases its duplication services and video
cassettes from an affiliated company, Digital Communications Technology
Corporation ("DCT"). All purchases are at arms length and the prices and terms
are the same as DCT provides to its best customers. The raw materials used by
DCT are readily available on the open market.
Employees. The Company currently has one full time employee, its President, Jim
Weinberg. Mr. Weinberg is responsible for all sales and administrative functions
of the Company.
Competition. There are numerous competitors in the Company's industry, many of
whom are larger, have a record of profitable operation, and have greater
financial, technical and human resources. Such companies may develop products or
services that may be viewed as more effective than the Company's products and
services and they may be more successful in marketing their products and
services. This industry is competitive with respect to both price and service.
While the Company has had some success in obtaining the rights to duplicate
programming from many sources, there can be no assurance that it will be able to
expand these sources significantly or, if so, how quickly. No assurance can be
given that the Company will be able to compete successfully.
Properties. The Company's operations as currently conducted require no warehouse
or storage space. The Company's administrative and operated out of a small
office in Florida. The Company pays no rent for this office.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
Jim Weinberg 41 President and Chief Operating Officer
Kevin B. Halter 62 Chairman of the Board and Chief Executive Officer
Kevin B. Halter, Jr. 36 Vice President, Secretary and Director
Jim Weinberg has served as President and Chief Operating Officer of the Company
since October l997. Mr. Weinberg served as Chief Operating Officer of Digital
Communications Technology Corporation ("DCT") from May 1997 until September
1997, a position which he also held with DCT from April 1996 to March 1997. A
co-founder of DCT in 1987, Mr. Weinberg served as its Executive Vice President
until March 1996. From 1978 to 1987, Mr. Weinberg was the owner of Television
Services, Inc., a video production company specializing in national television
commercials and sporting events.
Kevin B. Halter has served as a director of the Company and Chairman of the
Board since its founding and as its President until March 1997. Mr. Halter has
served as President, Chairman of the Board, Chief Executive Officer and a
director of Millennia, Inc., the Company's parent, since 1994. In addition, Mr.
Halter has served as Chairman of the Board and Chief Executive Officer of Halter
Capital Corporation, a privately-held investment and consulting company, since
1987. Kevin B. Halter is the father of Kevin B. Halter, Jr.
Kevin B. Halter, Jr. has served as a director of the Company since its founding
and as its Vice President and Secretary since February 1997. Mr. Halter has also
served as Vice President, Secretary and a director of Millennia, Inc., the
Company's parent, since 1994. In addition, Mr. Halter also serves
8
as Vice President and Secretary of Halter Capital Corporation. He is the
President of Securities Transfer Corporation, a registered stock transfer
company, a position which he has held since 1987. Kevin B. Halter, Jr. is the
son of Kevin R. Halter
EXECUTIVE COMPENSATION
The officers and directors of the Company were not compensated in any way for
their service to the Company in the period beginning February 20, 1997 (the
inception of the Company) through September 30, 1997, although they receive
compensation from the Parent. Mr. Weinberg commenced full-time employment on
October 1, 1997 at an annual salary of $75,000.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of September 30, 1997 with
regard to the beneficial ownership of the Common Stock by (i) each person known
to the Company to be the beneficial owner of 5% or more of its outstanding
shares; (ii) by the officers and directors of the Company individually and (iii)
by the officers and directors as a group.
Name and Address of Beneficial Owner Amount Owned Percent
Millennia, Inc. 11,400,000 (1) 100 %
16910 Dallas Parkway, Suite 100 10,831,900 (2) 95%
Dallas, Texas 75248
Kevin B. Halter none 0
Kevin B. Halter, Jr. none 0
Jim Weinberg none 0
All Officers and Directors as a Group none 0
(1) pre distribution
(2) post distribution
CERTAIN TRANSACTIONS
During 1997, the Parent advanced $20,250 to the Company for working capital. As
of September 30, 1997, the Company owed $20,250 to the Parent as noninterest
bearing advances which are repayable upon demand. The Company utilizes the video
duplication services and certain administrative personnel of Digital
Communications Technology Corporation ("DCT"), an affiliate of Millennia, Inc.
As of September 30, 1997, the Company owed approximately $6000 to DCT under this
arrangement. It is anticipated that the Parent will continue to make advances
for working capital on the same terms in the future and that the Company will
continue to obtain the same services from DCT for the foreseeable future on the
same terms as are currently offered.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Richard Braucher, attorney at law.
EXPERTS
The financial statements of the Company for the period ended June 30, 1997
included herein have been audited by S.W. Hatfield +Associates, certified public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm in giving said report.
ADDITIONAL INFORMATION
Upon completion of this offering, the Company will be subject to the reporting
requirements of the Securities and Exchange Act of 1934, as amended, and in
accordance therewith will file periodic reports and other information with the
Securities and Exchange Commission (the "Commission). Such
9
reports and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
75 Park Place, 14th Floor, New York, New York, 10007, and Suite 1400,
Northwestern Atrium Center, 500 West Madison St., Chicago, Illinois 60661.
Copies of such material may be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.,
20549.
The Company has filed with the Commission a Registration Statement on Form SB-2
under the Securities Act of 1933, as amended, with respect to the Common Stock
covered by this Prospectus. For further information about the Company and the
Common Stock, reference is made to the Registration Statement and to the
financial statements and exhibits filed as a part thereof, copies of which can
be inspected and made at the addresses referenced above. Statements contained in
the Prospectus as to the contents of any contract or any other document are not
necessarily complete and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
The Company's bylaws provide that the Company will indemnify its directors and
officers to the full extent authorized or permitted under Texas law.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. ln the event that a claim for indemnification against such
liabilities (other than payment by the registrant of expenses incurred or paid
by a director, officer or controlling person in connection with the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
10
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Certified Public Accountants F-2
Financial Statements
Balance Sheet as of June 30, 1997 F-3
Statement of Operations
for the period from February 20, 1997 (date of inception)
through June 30, 1997 F-4
Statement of Changes in Shareholder's Equity
for the period from February 20, 1997 (date of inception)
through June 30, 1997 F-5
Statement of Cash Flows
for the period from February 20, 1997 (date of inception)
through June 30, 1997 F-6
Notes to Financial Statements F-7
F-1
S. W. HATFIELD + ASSOCIATES
certified public accountants
Members: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholder
Millennia Entertainment, Inc.
We have audited the accompanying balance sheet of Millennia Entertainment, Inc.
(a Texas corporation and a wholly-owned subsidiary of Millennia, Inc.) as of
June 30, 1997 and the related statement of operations, changes in shareholder's
equity and cash flows for the period from February 20, 1997 (date of inception)
through June 30, 1997. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Millennia Entertainment, Inc.
as of June 30, 1997, and the results of its operations and its cash flows for
the period from February 20, 1997 (date of inception) through June 30, 1997 in
conformity with generally accepted accounting principles.
/s/ SW Hatfield + Associates
----------------------------
S. W. HATFIELD + ASSOCIATES
Dallas, Texas
July 24, 1997 (except for Note A
as to which the date is October 1, 1997)
Use our past to assist your future sm
P. O. Box 820392 o Dallas, Texas 75382-0392 o 214-342-9635
9236 Church Road, Suite 1040 o Dallas, Texas 75231 o 800-244-0639
214-342-9601 (fax) o SWHCPA@aol.com (e-mail)
F-2
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
BALANCE SHEET
June 30, 1997
ASSETS
------
Current assets
Cash and cash equivalents $ 3,238
Accounts receivable - trade 103
------
Total current assets 3,341
------
Property and equipment
Video tape masters 13,650
Office furniture, fixtures and equipment 1,588
------
15,238
Accumulated depreciation (444)
------
Net property and equipment 14,794
------
TOTAL ASSETS $18,135
======
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Accounts payable and accrued liabilities
Trade $25,800
Parent company 20,250
Affiliate 6,050
------
Total current liabilities 52,100
------
Contingencies and commitments
Shareholder's equity Common stock - no par value.
Class A - 25,000,000 shares authorized.
11,400,000 shares issued and outstanding 1,000
Class B - 10,000,000 shares authorized.
None issued and outstanding -
Accumulated deficit (34,965)
------
Total shareholder's equity (33,965)
------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $18,135
======
The accompanying notes are an integral part of these financial statements.
F-3
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
STATEMENT OF OPERATIONS
Period from February 20, 1997 (date of inception) through June 30, 1997
Revenues
Video products and services $ 3,263
------
Cost of goods sold
Materials, contract services and other 13,622
Depreciation 255
------
Total cost of goods sold 13,877
------
(10,614)
------
Operating expenses
Selling expenses 7,630
General and administrative expenses 16,532
Depreciation and amortization 189
------
Total operating expenses 24,351
------
Loss from operations (34,965)
Income tax provision -
------
Net loss $(34,965)
Loss per adjusted weighted-average share
of common stock outstanding nil
===
Number of adjusted weighted-average
shares outstanding 11,400,000
==========
The accompanying notes are an integral part of these financial statements.
F-4
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY Period from February 20,
1997 (date of inception) through June 30, 1997
Common Stock Accumulated
------------
Shares Amount deficit Totals
---------- ------ ------- ------
Balances at February 20, 1997 - $ - $ - $ -
Issuance of common stock
to parent company 11,400,000 1,000 - 1,000
Net loss for the period - - (34,965) (34,965)
---------- -------- --------- ------
Balances at June 30, 1997 11,400,000 $1,000 $(34,965) $(34,965)
========== ===== ====== ======
The accompanying notes are an integral part of these financial statements.
F-5
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
STATEMENT OF CASH FLOWS
Period from February 20, 1997 (date of inception) through June 30, 1997
Cash flows from operating activities
Net loss for the period $(34,965)
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation and amortization 444
(Increase) decrease in:
Accounts receivable (103)
Increase (decrease) in:
Accounts payable and accrued liabilities 25,800
------
Net cash used in operating activities (8,824)
------
Cash flows from investing activities
Cash paid to acquire furniture and equipment (15,238)
------
Net cash used in investing activities (15,238)
------
Cash flows from financing activities
Cash advances from parent company 20,250
Cash advances from affiliate 6,050
Cash received for issuance of common stock 1,000
-------
Net cash provided by financing activities 27,300
------
Increase in cash 3,238
Cash and cash equivalents at beginning of period -
-------
Cash and cash equivalents at end of period $ 3,238
=======
Supplemental disclosures of
interest and income taxes paid
Interest paid during the year $ -
=======
Income taxes paid during the year $ -
=======
The accompanying notes are an integral part of these financial statements.
F-6
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Millennia Entertainment, Inc. (Company) is a Texas corporation headquartered in
Dallas, Texas with operations located in Florida. The Company is a wholly-owned
subsidiary of Millennia, Inc. The Company is primarily a distributor of general
entertainment videotapes on a contract basis. The Company arranges for the
appropriate duplication and distribution rights to the requested titles and
contracts for third-party duplication of bulk copies of the respective
program(s).
On October 1, 1997, in anticipation of filing a Registration Statement under The
Securities Act of 1933, the Company approved a forward split of the issued and
outstanding shares of common stock raising the number of issued shares from the
initially issued amount of 1,000 shares to 11,400,000 shares. All amounts
related to issued and outstanding shares in the accompanying financial
statements reflect the effect of this forward stock split as if the split had
occurred at the beginning of the first period presented.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Company is dependent upon its parent company for nominal working capital
support. The parent company intends to continue providing the necessary working
capital support for foreseeable future periods.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all cash on
hand and in banks, certificates of deposit and other highly liquid debt
instruments with a maturity of three months or less at the date of
purchase to be cash and cash equivalents.
2. Accounts Receivable
In the normal course of business, the Company extends unsecured credit to
virtually all of its customers, which are principally located in the
United States and Canada. Because of the credit risk involved, management
has provided an allowance for doubtful accounts which reflects its
opinion of amounts which will eventually become uncollectible. In the
event of complete non-performance by entities owing the Company
commissions, the maximum exposure to the Company is the outstanding
accounts receivable balance at the date of non-performance.
F-7
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
3. Property and Equipment
Property and equipment is recorded at its historical cost. Depreciation
is provided for in amounts sufficient to relate the asset cost to
operations over the estimated useful life (three to five years) using the
straight line method for financial reporting purposes.
Video tape masters are recorded at historical cost. Depreciation is
provided for using the straight-line method over a period of five (5)
years from the acquisition of the respective master, which approximates
the estimated useful life for duplication purposes of the respective
video tape master, in accordance with Statement of Financial Accounting
Standard No. 53, "Financial Reporting by Producers and Distributors of
Motion Picture Films."
Gains and losses from disposition of property and equipment are
recognized as incurred and are included in operations.
4. Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. At June 30, 1997, the deferred tax asset and deferred tax
liability accounts, consisting solely of temporary differences, were not
material to the financial statements and no valuation allowance was
provided against deferred tax assets. Temporary differences represent
differences in the recognition of assets and liabilities for tax and
financial reporting purposes, primarily accumulated depreciation.
The Company files its income tax returns as a component of its parent
company's consolidated tax return. Accordingly, all net operating losses
are offset against the tax liabilities, if any, of the Company's parent.
No separate company net operating loss carryforwards exist as of June 30,
1997.
NOTE C - RELATED PARTY TRANSACTIONS
The Company's parent, Millennia, Inc., has advanced approximately $20,250 to the
Company for working capital as of June 30, 1997. The advances are noninterest
bearing and are repayable upon demand.
The Company utilizes the video duplication services and certain administrative
personnel of Digital Communications Technology Corporation (DCT), an affiliate
of Millennia, Inc. As of June 30, 1997, the Company owed DCT approximately
$6,050 for various services related to the Company's operations which are
reflected in the accompanying statement of operations.
F-8
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with the offering herein contained, and if given or
made, such information or representation must not be relied upon as having been
authorized by the Company. This Propsectus does not constitute an offer to sell
any security other than the registered securities to which it relates, or an
offer to or solicitation of any person in any jurisdiction in which such offer
or solicitation would be unlawful. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that there has been no change in the facts set forth herein since the date
hereof.
TABLE OF CONTENTS
Page
Caution Regarding
Forward-Looking Information MILLENNIA ENTERTAINMENT, INC.
Prospectus Summary
The Company
Risk Factors
Plan of Distribution
Dividend Policy
Use of Proceeds
Management's Discussion and PROSPECTUS
Analaysis of Financial Condition
and Results of Operation
Business
Properties
Directors and Executive Officers 568,900 SHARES
Security Ownership of Beneficial
Owners and Management
Certain Transactions OF COMMON STOCK
Legal Matters
Experts
Additonal Information
Changes in and Disagreements with
Accountants on Accounting
and Financial Disclosure
Disclosure of Commission
Position on Indemnificaiton
for Securities Act Liabilities
Index to Financial Statements
11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of the offering, all of which are to be borne by the
Company, are as follows:
SEC Filing Fee $1778
Printing Expense $*
Accounting Fees and Expenses $*
Legal Fees and Expenses $*
Blue Sky Fees and Expenses -0-
TOTAL $*
*to be supplied by amendment
Item 16 Exhibits.
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
4.1 Specimen Certificate of Common Shares, no par value*
5.1 Opinion of Richard Braucher, Esq.*
8.1 Opinion of Richard Braucher, Esq., regarding tax matters*
23.1 Consent of S.W. Hatfield + Associates, C.P.A.
23.2 Consent of Richard Braucher, Esq
* to be supplied by amendment
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(a) To include any prospectus required under Section 10(a)(3) of the
Securities Act.
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and had duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Dallas, State of Texas, on the 29th day of October,
1997.
MILLENNIA ENTERTAINMENT, INC.
By /S/ Kevin B. Halter October 29, 1997
--------------------------------------
Kevin B. Halter, Chairman of the Board
POWER OF ATTORNEY
The Company and each person whose signature appears below hereby designates and
appoints Kevin B. Halter as its or his attorney-in-fact (the "Attorney-in-Fact")
with full power to act alone, and to execute in the name and on behalf of the
Company and each person, individually and in the capacity stated below, any
amendments (including post-effective amendments) to this Registration Statement,
which amendments may make such changes in this Registration Statement as the
Attorney-in-Fact deems appropriate, and to file each such amendment to this
Registration Statement together with all exhibits thereto and any and all
documents in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/S/ Jim Weinberg October 29, 1997
---------------------------------------------------
Jim Weinberg, President and Chief Operating Officer
/S/ Kevin B. Halter October 29, 1997
---------------------------------------------------
Kevin B. Halter, Chairman of the Board
(Principal Executive, Financial and Accounting Officer)
/S/ Kevin B. Halter, Jr. October 29, 1997
---------------------------------------------------
Kevin B. Halter, Jr., Vice President,
Secretary and Director
13
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
Millennia Entertainment, Inc.
ARTICLE ONE
The name of the corporation is Millennia Entertainment, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the corporation is organized are:
"To engage in the transaction of any or all lawful business for which
corporations may be incorporated under the Texas Business Corporation Act."
ARTICLE FOUR
The maximum number of shares of stock that this corporation is authorized
to have issued and outstanding at any one time is 25,000,000 shares of common
stock without par value. The shareholders shall not have the preemptive right to
acquire additional, unissued or treasury shares of the corporation, or
securities of the corporation convertible into or carrying the right to
subscribe to or acquire shares. Shareholders do not have the right to cumulative
voting.
ARTICLE FIVE
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000), consisting of money, labor done or property actually received, which
sum is not less than One Thousand Dollars ($1,000).
ARTICLE SIX
The street address of its initial registered office is c/o C T CORPORATION
SYSTEM, 350 N. St. Paul Street, Dallas, Texas 75201, and the name of its initial
registered agent at such address is C T CORPORATION SYSTEM.
ARTICLE SEVEN
The number of directors of the corporation may be fixed by the by-laws. The
number of directors constituting the initial board of directors is One (1) and
the name and address of each person who is to serve as director until the first
annual meeting of the shareholders or until a successor is elected and qualified
are:
NAME ADDRESS
- ---- -------
Kevin B. Halter 16910 Dallas Parkway, #100
Dallas, Texas 75248
2
EXHIBIT 3.2
BYLAWS OF MILLENNIA ENTERTAINMENT, INC.
ARTICLE I
GENERAL
1.1 GENERAL OFFICES Unless otherwise determined by resolution of the Board
of Directors, the principal office of the Corporation shall be located in the
City of Dallas, County of Dallas, State of Texas. The Corporation may have such
other offices, either within or without the State of Texas, as the Board of
Directors may determine or as the affairs of the Corporation may require from
time to time.
1.2 REGISTERED OFFICE The Corporation shall have and continuously maintain
in the State of Texas a registered office which may be, but need not be, the
same as the principal office in the State of Texas. The address of the
registered office may be changed from time to time by the Board of Directors.
1.3 REGISTERED AGENT The Corporation shall have and continuously maintain
in the State of Texas, a registered agent, which agent may be either an
individual resident of the State of Texas whose business office is identical
with the Corporation's registered office, or a domestic corporation, or a
foreign corporation authorized to transact business in the State of Texas which
has a business office identical with the Corporation's registered office. The
registered agent may be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
2.1 ANNUAL SHAREHOLDERS' MEETINGS An annual meeting of the shareholders
shall be held each year on a day to be selected by the Chairman of the Board of
Directors or the President within six months after the end of the Corporation's
fiscal year, for the purpose of electing Directors and for the transaction of
such other business as may come before the meeting. The annual meeting shall not
be held on a date declared a legal holiday by the State of Texas. If the
election of the Directors shall not be held on the date selected for any annual
meeting of Shareholders, or at any adjournment thereof, the Board of Directors
shall cause the election to be held at a special meeting of the shareholders as
soon thereafter as conveniently may be held.
2.2 SPECIAL MEETINGS Special meetings of the shareholders, for any purpose
or purposes, unless otherwise prescribed by statute or these Bylaws, may be
called by the Chairman of the Board, President, the Board of Directors, or the
holders of not less than 25% of all outstanding shares of the Corporation
entitled to vote at the meeting. Business translated at a special meeting shall
be limited to the purposes state in the notice of the meeting.
2.3 PLACE OF MEETING The Chairman of the Board of Directors or the
President may designate any place, either within or without the State of Texas,
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting of shareholders. A waiver of notice signed by
all shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Texas, unless otherwise prescribed by statute, as
the place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
office of the Corporation in the State of Texas.
2.4 NOTICE OF MEETING Written or printed notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose 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 Chairman of the Board,
President, the Secretary, or the person(s) 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 this address as it appears on the stock transfer
book of the Corporation, with postage thereon prepaid.
2.5 ACTION WITHOUT MEETING Unless otherwise provided by the Articles of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders, or any action which may be taken at any annual or special
meeting, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be give to those stockholders who have not
consented in writing.
1
2.6 FIXING THE RECORD DATE For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment 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 of the Corporation may fix in advance a date as the record date for
such determination of shareholders, such date in any case to be not more than
fifty (50) days and not less than ten (10) days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If 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 stock transfer books and the
stated period of closing has expired.
2.7 VOTING LISTS
A. The officer or agent having charge of the stock transfer books for
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 adjournment 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 at the registered office of the Corporation or
the principal office of the Corporation, if it be other than the
registered office, 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 by any shareholder during the
meeting. The original stock transfer book 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.
B. Failure to comply with the requirements of this Section shall not
affect the validity of any action taken at such meeting.
C. An officer or agent having charge of the stock transfer books who
shall fail to prepare the list of shareholders or keep the same on
file for a period of ten (10) days, or produce and keep it open for
inspection at the meeting, as provided in this Section, shall be
liable to any shareholder suffering damage on account of such failure,
to the extent of such damage. In the event that such officer or agent
does not receive notice of a meeting of shareholders sufficiently in
advance of the date of such meeting reasonable to enable him or her to
comply with the duties prescribed by this Section, the Corporation,
but not such officer or agent, shall be liable to any shareholder
suffering damage on account of such failure, to the extent of such
damage.
2.8 QUORUM OF SHAREHOLDERS The holders of a majority of the shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. The vote of the holders of a
majority of the shares entitled to vote at any meeting of shareholders at which
a quorum is present, shall be the act of that shareholders' meeting, unless the
vote of a greater number is required by law.
2.9 VOTING OF SHARES
A. Each outstanding share, regardless of class, shall be entitled to
one vote on any matter submitted to a vote of the shareholders, except
to the extent that the Articles of Incorporation provide for more or
less than one vote per share or limit or deny voting rights to the
holders of the shares of any class or series, and except as otherwise
provided by the General Corporation Law or Texas Business Corporation
Act.
B. Treasury shares, shares of this Corporation's stock owned by
another corporation, the majority of the voting stock of which is
owned or controlled by this Corporation, and shares of this
Corporation's 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 outstanding shares
at any given time.
C. A shareholder may vote either in person or by a proxy executed in
writing by the shareholder or by the shareholder's duly authorized
attorney in fact. No proxy shall be valid after eleven (11) months
from the date of its execution unless otherwise specifically provided
in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable and unless otherwise made irrevocable by
law.
D. 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 the shareholder for as many persons as
there are Directors to be elected and for whose election the
shareholder has a right to vote.
2
2.10 METHOD OF VOTING Voting on any question or in any election shall be by
written ballot.
2.11 RULES OF PROCEDURE To the extent applicable, Robert's Rules of Order
may govern the conduct and procedure at all shareholders' meetings.
2.12 TELEPHONE MEETINGS Subject to the provisions required or permitted by
the General Corporation Law of Texas for notice of meetings, unless otherwise
restricted by the Articles of Incorporation or these Bylaws, shareholders may
participate in and hold a meeting of shareholders, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section shall constitute presence in person at such meeting,
except where a person participates in the 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.
2.13 CUMULATIVE VOTING Cumulative voting is expressly prohibited by the
Articles of Incorporation for this Corporation,
2.14 PRE-EMPTIVE RIGHTS No holder of any stock of the Corporation shall be
entitled as a matter of right to purchase or subscribe for any part of any stock
of the Corporation authorized by the Articles of Incorporation or of any
additional stock of any class to be issued by reason of any increase of the
authorized stock of the Corporation, or of any bonds, certificates of
indebtedness, debentures, warrants, options or other securities convertible into
any class of stock of the Corporation, but any stock authorized by the Articles
of Incorporation or any such additional authorized issue of any stock or
securities convertible into any stock may be issued and disposed of by the Board
of Directors to such persons, firms, corporations or associations for such
consideration and upon such terms and in such manner as the Board of Directors
may in its discretion determine without offering any thereof on the same terms
or on any terms to the shareholders then of record or to any class of
shareholders, provided only that such issuance may not be inconsistent with any
provision of law or with any of the provisions of the Articles on Incorporation.
ARTICLE III
DIRECTORS
3.1 MANAGEMENT The business and affairs of the Corporation shall be managed
by its Board of Directors. Directors need not be residents of Texas or
shareholders of the Corporation in order to qualify as a director.
3.2 NUMBER The number of directors of the Corporation shall consist of from
one to three members as shall be elected by the shareholders from time to time.
The number of directors may be increased or decreased from time to time by
amendment to this Section of the Bylaws, but no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
3.3 ELECTION At the first annual meeting of shareholders and at each annual
meeting thereafter, the shareholders shall elect directors to hold office until
the next succeeding annual meeting.
3.4 TERM OF OFFICE Unless removed in accordance with these Bylaws each
director shall hold office for the term for which the director is elected and
until the director's successor shall have been elected and qualified.
3.5 REMOVAL The entire Board of Directors or any director may be removed
from office, either with or without cause, at any special meeting of
shareholders by the affirmative vote of a majority in number of shares of the
shareholders present in person or by proxy at such meeting and entitled to vote
for the election of such director or directors if notice of intention to act
upon the question of removing such director shall have been stated as one of the
purposes for the calling of such meeting and such meeting shall have been called
in accordance with these Bylaws.
3.6 VACANCY
A. Any vacancy occurring in the Board of Directors may be filled in
accordance with paragraph C of this Section or may be filled by the
affirmative vote of a majority of the remaining directors, though less
than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in
office.
B. A directorship to be filled by reason of an increase in the number
of directors may be filled in accordance with paragraph
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C of this Section or may be filled by the Board of Directors for a
term of office continuing only until the next election of one or more
directors by the shareholders; provided that the Board of Directors
may not fill more than two such directorships during the period
between any two successive annual meetings of shareholders.
C. Any vacancy occurring in the Board of Directors or any directorship
to be filled by reason of an increase in the number of directors may
be filled by election at an annual or special meeting of shareholders
called for that purpose.
3.7 QUORUM A majority of the number of directors fixed by these Bylaws
shall constitute a quorum for the transaction of business unless a greater
number is required by law or these Bylaws. 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, unless a greater number is required by law or these
Bylaws.
3.8 ANNUAL DIRECTORS' MEETINGS Immediately after the annual meeting of the
shareholders and at the place such meeting of the shareholders has been held,
the Board of Directors shall meet each year for the purpose of electing the
officers of the Corporation and consideration of any other business that may
properly be brought before the meeting. No notice of any kind to either old or
new members of the Board of Directors for this annual meeting shall be
necessary.
3.9 REGULAR MEETINGS The Board of Directors may provide by resolution the
time and place, either within or without the State of Texas, for the holding of
regular meetings without other notice that such resolution.
3.10 SPECIAL MEETINGS Special meetings of the Board of Directors may be
called by the Chairman of the Board , the President or shall be called at the
request of any two members of the Board of Directors and shall be held upon
notice by letter, telegram, or fax, delivered for transmission not later than
during the third business day immediately preceding the day for the meeting, or
by word of mouth, telephone, or radiophone received not later than during the
second business day immediately preceding the day for the meeting. Notice of any
special meeting of the Board of Directors may be waived before or after the time
of the meeting. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Texas, as the place for holding any special meeting of the Board of Directors
called by them.
3.11 NO STATEMENT OF PURPOSE OF MEETING REQUIRED Neither the business
proposed to be transacted, nor the purpose of any regular or special meeting of
the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.12 COMPENSATION By resolution of the Board of Directors, the Directors
may be paid their expenses, if any, of attendance at such meeting of the Board
of Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefore.
3.13 ATTENDANCE AND PRESUMPTION OF ASSENT Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director 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. A director who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless that director's dissent shall be
entered in the minutes of the meeting or unless that director shall file a
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.14 EXECUTIVE AND OTHER COMMITTEES The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members an Executive Committee and one or more other committees, each of
which, to the extent provided in such resolution or in these Bylaws, shall have
and may exercise all of the authority of the Board of Directors, except that no
such committee shall have the authority of the Board of Directors in reference
to amending the Articles of Incorporation of the Corporation, approving a plan
of merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
Corporation other than in the usual and regular course of the Corporation's
business, recommending to the shareholders a voluntary dissolution of the
Corporation or a revocation thereof, amending, altering, or repealing these
Bylaws or adopting new Bylaws, filling vacancies in the Board of Directors or
any committee, filling any directorship to be filled by reason of an increase in
the number of directors, electing or removing officers or members of any such
committee, fixing the compensation of any member of such committee. No committee
shall have the power or authority to declare a dividend or to authorize the
issuance of shares of the Corporation. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
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3.15 REMOVAL OF COMMITTEE MEMBERS Any member of a committee elected by the
Board of Directors may be removed from said committee, 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. Election or appointment of a member of a
committee shall not itself create any contract right.
3.16 WAIVER BY UNANIMOUS CONSENT IN WRITING Any action required or
permitted to be taken at a meeting of the Board of Directors, any Executive
Committee or any other committee of the Board of Directors, may be taken without
a meeting if a consent in writing, setting forth the action so taken is signed
by all of the members of the Board of Directors, the Executive Committee or any
other committee of the Board of Directors, as the case may be, and then
delivered to the Secretary of the Corporation of inclusion in the Minute Book of
the Corporation. Such consent shall have the same force and effect as a
unanimous vote at a meeting, and may be stated as such in any document or
instrument filed with Secretary of State.
3.17 TELEPHONE MEETING Subject to the provisions required or permitted by
the General Corporation Law of Texas for notice of meetings, unless otherwise
restricted by the Articles of Incorporation, members of the Board of Directors,
or members of any committee designated by the Board of Directors, may
participate in and hold a meeting of the Board of Directors or that committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting, except where a person participates in the 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.
ARTICLE IV
OFFICERS
4.1 NUMBER The principal officers of the corporation shall consist of a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers
and agents as may be deemed necessary may be elected or appointed by the Board
of Directors. Any two (2) or more offices may be held by the same person. No
officer need be a shareholder, a director, or a resident of Texas.
4.2 ELECTION AND TERM OF OFFICE The officers of the Corporation shall be
elected by the Board of Directors at its annual meeting or as soon thereafter as
conveniently possible. New or vacated offices may be filled at any meeting of
the Board of Directors. The subordinate officers and agents not elected or
appointed by the Board of Directors shall be appointed by the President or any
other principal officer to whom the President shall delegate that authority.
Each officer shall hold office until that officer's successor shall have been
fully elected and shall have qualified or until that officer's death or until
that officer shall resign or shall have been removed in the manner hereafter
provided. Election or appointment of an officer or agent shall not of itself
create contract rights.
4.3 REMOVAL Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
4.4 VACANCIES A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term as herein provided.
4.5 AUTHORITY Officers and agents shall have such authority and perform
such duties in the management of the Corporation as are provided in these Bylaws
or as may be determined by resolution of the Board of Directors not inconsistent
with these Bylaws.
4.6 PRESIDENT Unless the Board of Directors elects a Chairman of the Board
and designates him as the principal executive officer of the Corporation, the
President shall be the principal executive officer of the Corporation and shall
have general and active management of the business and affairs of the
Corporation. Unless a Chairman of the Board has been elected, the President
shall preside at all meetings of the Shareholders and of the Board of Directors.
The President may sign, with the Secretary or an Assistant Secretary,
certificates for shares of the Corporation, any deeds, mortgages, bonds,
contracts, or other instruments which the Board of Directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed. The President shall see that all orders and resolutions of
the Board of Directors are carried into effect, and shall perform all duties
incident to the office of President and such other duties as may be prescribed
by the Board of Directors from time to time.
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4.7 VICE PRESIDENT In the absence of the President or in the event of the
President's death, inability or refusal to act the Vice President, or in the
event there be more than one Vice President, the Vice Presidents in the order
designated by the Board of Directors or in the absence of any designation then
in the order of their election, shall perform all the duties of the President,
and when so acting shall have all the powers of and be subject to all the
restrictions upon the President. The Vice President shall perform such other
duties as from time to time may be assigned by the Chairman of the Board,
President or by the Board of Directors.
4.8 SECRETARY The Secretary shall keep the minutes of the Shareholders' and
Board of Directors' meetings in appropriate minute books; see that all notices
are duly given in accordance with the provisions of these Bylaws or as required
by law; be custodian of the corporate records and of the seal of the Corporation
and see that the seal of the Corporation is affixed to all documents and
instruments which have been duly executed by this Corporation in accordance the
provision s of these Bylaws or the Articles of Incorporation for this
Corporation or as required or permitted by law; keep a register of the mailing
address for each shareholder as it has been furnished to the Secretary by such
shareholder; sign with the President stock certificates representing shares of
the Corporation, the issue of which shall have been authorized by resolution of
the Board of Directors; have general charge of the stock transfer books of the
Corporation; and in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned by the
Chairman of the Board, President or by the Board of Directors.
4.9 TREASURER The Treasurer shall be the principal financial officer of the
Corporation and shall have charge and custody and be responsible for all funds
and securities of the Corporation; receive and give receipts for monies due and
payable to the Corporation from any source whatsoever, and deposit all such
monies in the name of the Corporation in such banks, trust companies or other
depositories as shall be selected by the Board of Directors; render to the
Chairman of the Board, the President and the Board of Directors, whenever the
same shall be required, an account of all transactions as Treasurer and of the
financial condition of the Corporation; if required by the Board of Directors
give bond for the faithful performance of the duties of this office and for the
restoration to the Corporation, in case of the Treasurer's death, resignation,
retirement, or removal from office, of all books, papers, vouchers, money, and
other property of whatever kind in the Treasurer's possession or under his
control belonging to the Corporation; and in general perform all of the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned by the Chairman of the Board, President or by the Board of
Directors.
4.10 ASSISTANT TREASURER AND ASSISTANT SECRETARY The Assistant Treasurer
shall, if required by the Board of Directors, give bond for the faithful
discharge of his duties in such sums and with such sureties as the Board of
Directors shall determine. The Assistant Secretary as authorized by the Board of
Directors may sign with the President stock certificates representing shares of
the Corporation, the issue of which shall have been authorized by a resolution
of the Board of Directors. The Assistant Treasurer and Assistant Secretary, in
general, shall perform such duties as shall be assigned to them by the Treasurer
or the Secretary, respectively, or by the Board of Directors.
4.11 SALARIES The salaries of the principal officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that the officer is also a director
of the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 CONTRACTS, DEEDS, MORTGAGES AND OTHER DOCUMENTS Subject always to the
specific direction of the Board of Directors, all deeds and mortgages made by
the Corporation and all other written contracts and agreements to which the
Corporation shall be a party shall be executed in its name by the President or
Vice President (or one of the Vice Presidents if there are more than one), and
when requested, the Secretary shall attest to such signatures and affix the
corporate seal to the instruments.
5.2 LOANS No indebtedness shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
5.3 CHECKS, DRAFTS, ETC. All checks, drafts, notes, bonds, other orders for
the payment of money, or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
5.4 DEPOSITS All funds of the Corporation not otherwise employed, shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
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ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 CERTIFICATES FOR SHARES. The Corporation shall deliver stock
certificates representing all shares to which shareholders are entitled in such
form as may be determined by the Board of Directors. Each certificate
representing shares shall state upon the face thereof that the Corporation is
organized under the laws of the State of Texas; the name of the person to whom
it is issued; the number and class of shares and the designation of the series,
if any, which such certificate represents; the par value of each share
represented by such certificate, and any restrictions or statements required by
law. Such certificates shall be signed by the President or Vice President and
either by the Secretary or Assistant Secretary or such officer or officers as
the Board of Directors shall designate, and may be sealed with the seal of the
Corporation or a facsimile thereof.
6.2 FACSIMILE SIGNATURES The signatures of the President or Vice President,
Secretary or Assistant Secretary or such officer or officers as these Bylaws or
the Board of Directors of the Corporation shall prescribe upon a certificate may
be facsimiles , if the certificate is countersigned by a transfer agent or
registered by a registrar. In case any officer who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he or she were such officer at the date of its
issuance.
6.3 ISSUANCE Shares (both treasury and authorized but unissued) may be
issued for such consideration, not less than the par value, of any of such
shares and to such persons as the Board of Directors may determine from time to
time.
6.4 SUBSCRIPTIONS Unless otherwise provided in the subscription agreement,
subscriptions for shares, whether made before or after organization of the
Corporation, shall be paid in full at such time or in such installments and at
such times as shall be determined by the Board of Directors. Any call made by
the Board of Directors for payment on subscriptions shall be uniform as to all
shares of the same class or as to all shares of the same series, as the case may
be. In case of default in the payment on any installment or call when payment is
due, the Corporation may proceed to collect the amount due in the same manner as
any other debt due to the Corporation.
6.5 PAYMENT The consideration paid for the issuance of shares of the
Corporation shall consist of money actually paid, labor or services actually
performed, or property, both tangible and intangible, actually received.
Certificates for shares may not be issued until the full amount of the
consideration, fixed as provided by law, has been paid. When such consideration
shall have been paid to the Corporation or to a corporation of which all of the
outstanding shares of each class are owned by the Corporation, the shares shall
be deemed to have been issued and the subscriber or Shareholder entitled to
receive such issue shall be a Shareholder with respect to such shares, and the
shares shall be considered fully paid and non-assessable. Neither promissory
notes nor the promise of future services shall constitute payment or partial
payment for shares of the Corporation. In the absence of fraud in the
transaction, the judgment of the Board of Directors or the shareholders as the
case may be, as to the value of the consideration received for shares shall be
conclusive.
6.6 LIEN The Corporation shall have a first and prior lien on all shares of
its stock and upon all dividends being declared upon the same for any
indebtedness of the respective holders thereof to the Corporation.
6.7 REPLACEMENT OF LOST OR DESTROYED CERTIFICATES The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost or destroyed, upon the making of an affidavit of fact by the
person claiming that the certificate or certificates representing shares has
been lost or destroyed. When authorizing the issuance of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or the owner's legal representative, to give the
Corporation a bond with a surety or sureties satisfactory to the Corporation
with respect to the certificate or certificates alleged to have been lost or
destroyed.
6.8 TRANSFER OF SHARES Shares of stock shall be transferable only on the
books of the Corporation by the holder thereof in person or by the holder's duly
authorized attorney. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation or its transfer agent shall issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6.9 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
7
to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by law.
ARTICLE VII
DIVIDENDS AND RESERVES
7.1 DECLARATION AND PAYMENT Subject to provisions contained in the statutes
or the Articles of Incorporation (if any), dividends may be declared by the
Board of Directors at any regular or special meeting and may be paid in cash,
property, or in shares of the Corporation. Such declaration and payment shall be
at the discretion of the Board of Directors.
7.2 RECORD DATE The Board of Directors may fix in advance a record date for
the purpose of determining shareholders entitled to receive payment of any
dividend, such record date to be not more than fifty (50) days and not less than
ten (10) days prior to the payment date of such dividend. In the absence of any
action by the Board of Directors, the date upon which the Board of Directors
adopted the resolution declaring such dividend shall be the record date.
7.3 RESERVES There may be created by resolution of the Board of Directors
out of the earned surplus of the Corporation such reserve or reserves as the
Directors from time to time, in their discretion, think proper to provide for
contingencies, to pay dividends, or to repair or maintain any property of the
Corporation, or for such other purposes as the Directors shall think beneficial
to the Corporation, and the Directors may modify or abolish any such reserve in
the manner in that it was created.
ARTICLE VIII
INDEMNIFICATION
8.1 DEFINITIONS In this Article:
A, "Corporation" includes any domestic or foreign predecessor entity
of the Corporation in a merger, consolidation, or other transaction in
which the liabilities of the predecessor are transferred to the
Corporation by operation of law and in any other transaction in which
the Corporation assumes the liabilities of the predecessor but does
not specifically exclude liabilities that are the subject matter of
this Article VIII.
B. "Director" means any person who is or was a director of the
Corporation and any person who, while a director of the Corporation,
is or was serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary or another foreign or domestic corporation,
partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise.
C. "Expenses" include court costs and attorneys' fees.
D. "Official capacity" means:
(1). When used with respect to a director, the office of director in
the Corporation, and
(2).When used with respect to a person other than a director, the
elective or appointive office in the Corporation held by the officer
or the employment or agency relationship undertaken by the employee or
agent in behalf of the Corporation, but
(3).In both Paragraphs (1) and (2) does not include service for any
other foreign or domestic corporation or any partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise.
E. "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative,
8
or investigative, any appeal in such an action, suit, or proceeding, and
any inquiry or investigation that could lead to such an action, suit, or
proceeding.
8.2 POWER TO INDEMNIFY The Corporation may indemnify a person who was, is,
or is threatened to be made a named defendant or respondent in a proceeding
because the person is or was a director only if it is determined in accordance
with Section 8.6 of this Article that the person:
A. Conducted himself in good faith;
B. Reasonably believed:
(1) In the case of conduct in his official capacity as a director of
the Corporation, that his conduct was in the Corporation's best
interests; and
(2) In all other cases, that his conduct was at least not opposed to
the Corporation's best interests; and
C. In the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.
8.3 LIMITATIONS A director may not be indemnified under Section 8.2 of this
Article for obligations resulting from a proceeding:
A. In which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official
capacity; or
B. In which the person is found liable to the Corporation.
8.4 TERMINATION OF A PROCEEDING The termination of a proceeding by a
judgment, order, settlement, or conviction, or on a plea of nolo contendere or
its equivalent is not of itself determinative that the person did not meet the
requirements set forth in Section 8.2 of this Article.
8.5 PROCEEDING BROUGHT BY THE CORPORATION A person may be indemnified under
Section 8.2 of this Article against judgments, penalties, fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding, but if the proceeding was brought by or in behalf of the
Corporation, the indemnification is limited to reasonable expenses actually
incurred by the person in connection with the proceeding.
8.6 DETERMINATION OF INDEMNIFICATION A determination of indemnification
under Section 8.2 of this Article must be made:
A. By a majority vote of a quorum consisting of directors who at the
time of the vote are not named defendants or respondents in the
proceeding,
B. If such a quorum cannot be obtained, by a majority vote of a
committee of the Board of Directors, designated to act in the matter
by a majority vote of all Directors, consisting exclusively of
directors who at the time of the vote are not named defendants or
respondents in the proceeding,
C. By special legal counsel selected by the Board of Directors or a
committee of the Board by vote as set forth in Subsection A or B of
this Section 8.6, or, if such a quorum cannot be obtained and such a
committee cannot be established, by a majority vote of all Directors;
or
D. By the shareholders in a vote that excludes the shares held by the
directors who are named defendants or respondents in the proceeding.
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8.7 AUTHORIZATION OF INDEMNIFICATION Authorization of indemnification and
determination as to reasonableness of expenses must be made in the same manner
as the determination that indemnification is permissible, except that if the
determination that indemnification is permissible is made by special legal
counsel, authorization of indemnification and determination as to reasonableness
of expenses must be made in the manner specified by Subsection C of Section 8.6
of this Article, for the selection of special legal counsel. A provision
contained in the Articles of Incorporation, these Bylaws, a resolution of
Shareholders or Directors, or an agreement that makes mandatory the
indemnification permitted under Section 8.2 of this Article shall be deemed to
constitute authorization of indemnification in the manner required by this
Section 8.7 even though such provision may not have been adopted or authorized
in the same manner as the determination that indemnification is permissible.
8.8 INDEMNIFICATION OF A DIRECTOR
A. The Corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is named a
defendant or respondent because he is or was a director if he has been
wholly successful, on the merits or otherwise, in the defense of the
proceeding.
B. If, in a suit for the indemnification required by Section 8.8 of this
Article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
C. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonable entitled to indemnification in view of
all the relevant circumstances, whether or not he has met the requirements
set forth in Section 8.2 of this Article or has been adjudged liable in the
circumstances described in Section 8.3 of this Article, the court may order
the indemnification that the court determines is proper and equitable. The
court shall limit indemnification to reasonable expenses if the proceeding
is brought by or in behalf of the Corporation or if the director is found
liable on the basis that personal benefit was improperly received by him,
whether or not the benefit resulted from an action taken in the person's
official capacity.
D. Reasonable expenses incurred by a director who was, is or is threatened
to be made a named defendant or respondent in a proceeding may be paid or
reimbursed by the Corporation in advance of the final disposition of the
proceeding after:
1. The Corporation receives a written affirmation by the director of
his good faith belief that he has met the standard of conduct
necessary for indemnification under this Article and a written
undertaking by or on behalf of the director to repay the amount paid
or reimbursed if it is ultimately determined that he has not met those
requirements; and
2. A determination that the facts then known to those making the
determination would not preclude indemnification under this Article.
E. The written undertaking required by Subsection D of this Section 8.8
must be an unlimited general obligation of the director but need not be
secured. It may be accepted without reference to financial ability to make
repayment. Determinations and authorizations of payment under Subsection D
of this Section 8.8 must be made in the manner specified by Section 8.6 of
this Article for determining that indemnification is permissible.
F. Notwithstanding any other provision of this Article, a Corporation may
pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time
when he or is not a named defendant or respondent in the proceeding.
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8.9 INDEMNIFICATION OF OTHERS
A. An officer of the Corporation shall be indemnified as, and to the same
extent, provided by Subsections A, B and C of this Section 8.9 for a
director and is entitled to seek indemnification under those Subsections to
the same extent as a director. The Corporation may indemnify and advance
expenses to an officer, employee, or agent of the Corporation to the same
extent that it may indemnify and advance expenses to directors under this
Article.
B. The Corporation may indemnify and advance expenses to persons who are
not or were not officers, employees, or agents of the Corporation but who
are or were serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit
plan, or other enterprise to the same extent that it may indemnify and
advance expenses to directors under this Article.
C. The Corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Subsection B of this Section 8.9
and who is not a director to such further extent, consistent with law, as
may be provided by the Corporation's Articles of Incorporation, Bylaws,
general or specific action of its Board of Directors, or contract or as
permitted or required by common law.
8.10 INDEMNITY INSURANCE The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in such a capacity or arising out of his status as such a
person, whether or not the Corporation would have the power to indemnify him
against that liability under this Article.
8.11 REPORTS TO SHAREHOLDER Any indemnification of or advance of expenses
to a director in accordance with this Article shall be reported in writing to
the shareholders with or before the notice or waiver of notice of the next
shareholders' meeting or with or before the next submission to shareholders of a
consent to action without a meeting pursuant to the General Corporation Law of
Texas and, in any case, within the 12 month period immediately following the
date of the indemnification or advance.
8.12 EMPLOYEE BENEFIT PLANS For the purposes of this Article, the
Corporation is deemed to have requested a director to serve an employee benefit
plan whenever the performance of his duties to the Corporation also imposes
duties on or otherwise involves services by him to the plan or participants or
beneficiaries of the plan pursuant to applicable law. Action taken or omitted by
him with respect to an employee benefit plan in the performance of his duties
for a purpose reasonable believed by him to be in the interest of the
participants and beneficiaries of the plan is deemed to be for a purpose which
is not opposed to the best interests of the Corporation.
ARTICLE IX. MISCELLANEOUS
9.1 LIMITATION OF LIABILITY No person shall be liable to the Corporation
for any loss or damage suffered by it on account of any action taken or omitted
to be taken by that person as a director, officer or employee of the Corporation
in good faith, if, in the exercise of ordinary care, this person:
A. Relied upon financial statements of the Corporation represented to this
person to be correct by the President or the officer of the Corporation
having charge of its books of account, or stated in a written report by an
independent public or certified public accountant or firm of such
accountants, fairly to reflect the financial condition of the Corporation,
or considered the Corporation's assets to be of their book value; or
B. Relied upon the written opinion of an attorney for the Corporation.
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9.2 FISCAL YEAR The fiscal year of the Corporation shall be fixed by a
resolution of the Board of Directors.
9.3 SEAL The corporate seal shall be in such form as may be determined by
the Board of Directors. Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
9.4 BOOKS AND RECORDS The Corporation shall keep correct and complete books
and records of account and shall keep minutes of the proceedings of its
shareholders and the Board of Directors, and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its shareholders, giving the names and addressees of all
shareholders and the number and class of the shares held by each. Any books,
records and minutes may be in written form or in any other form capable of being
converted into written form within a reasonable time. Any person who shall have
been a holder of record of shares for at least six (6) months immediately
preceding demand, or shall be the holder of record of at least five percent (5%)
of all the outstanding shares of a corporation, upon written demand stating the
purpose thereof, shall have the right to examine, in person or by agent,
accountant, or attorney, at any reasonable time or times, for any proper
purpose, its relevant books and records of account, minutes and records of
shareholders, and to make copies thereof, all at such persons expense..
9.5 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, including a reasonably detailed balance sheet and income
statement.
9.6 RESIGNATION Any director, officer or agent may resign by giving written
notice to the Chairman of the Board, President or the Secretary. Such
resignation shall take effect at the time specified therein, or immediately if
no time is specified therein. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
9.7 AMENDMENT OF BYLAWS These Bylaws may be altered, amended, or repealed
either by unanimous written consent of the Board of Directors, in the manner
stated in Article 3.16 herein, or at any meeting of the Board of Directors at
which a quorum is present, by the affirmative vote of a majority of the
Directors present at such meeting, provided notice of the proposed alteration,
amendment, or repeal is contained in the notice of such meeting
9.8 INVALID PROVISIONS If any part of these Bylaws shall be held invalid or
inoperative for any reason, the remaining parts, so far as possible and
reasonable, shall be valid and operative.
9.9 HEADINGS The headings used in these Bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
their interpretation.
9.10 WAIVER OF NOTICE Whenever any notice is required to be given to any
shareholder or director of the Corporation, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be equivalent to the giving of such notice.
9.11 GENDER. Words which import one gender shall be applied to any gender
wherever appropriate and words which import the singular or plural shal1 be
applied to either the plural or singular wherever appropriate.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in Form SB-2 Registration Statement under The Securities
Act of 1933 of Millennia Entertainment, Inc. (a Texas corporation) of our report
dated July 24, 1997(except for Note A as to which the date is October 1, 1997)
on the financial statements of Millennia Entertainment, Inc. as of June 30, 1997
and for the period from February 20, 1997 (date of inception) through June 30,
1997, accompanying the financial statements contained in such Form SB-2
Registration Statement Under The Securities Act of 1933, and to the use of our
name and the statements with respect to us as appearing under the heading
"Experts".
/S/ SW Hatfiled + Associates
-------------------------------
S. W. HATFIELD + ASSOCIATES
Dallas, Texas
October 29, 1997
EXHIBIT 23.2
CONSENT OF ATTORNEY FOR REGISTRANT
The undersigned, as attorney for the registrant, Millennia Entertainment, Inc.,
hereby consents to the use in Form SB-2 Registration Statement under The
Securities Act of 1933, as amended, by Millennia Entertainment, Inc. of the
legal opinion and tax opinion rendered by the undersigned and referenced therein
and filed as exhibits thereto and the use of his name in said registration
statement.
Dallas, Texas /S/ Richard Braucher
October 29,1997 -------------------------
Richard Braucher, Esq.