As filed with the Securities and Exchange Commission on October 30, 1999
File No. __________
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
Thoroughbred Racing Associates, Inc.
(Name of small business issuer in its charter)
Delaware 75-2534769
- ------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
16910 Dallas Parkway, Suite 100, Dallas, TX 75248 (972) 248-1922
- ------------------------------------------------- ------------------
(Address of principal executive offices) (Telephone Number)
Kevin B. Halter
16910 Dallas Parkway, Suite 100, Dallas, TX 75248
------------------------------------------------------
(Name, address and phone number for agent for service)
Copies to:
Dominic M. Federico, Esq.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
(972) 248-1922
Securities to be registered under Section 12(b) of the Act: none
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
General
Thoroughbred Racing Associates, Inc. ("Company") is filing this Form 10-SB on a
voluntary basis in order to make the company's financial information equally
available to all parties, including potential investors, and to meet certain
listing requirements for publicly traded securities.
History of the Company
The Company was incorporated on April 13, 1994 under the laws of the State of
Delaware. The Company trains and races thoroughbred horses principally for its
own account and, in prior years, for other unrelated third parties.
Industry Overview and Opportunity
The competitive racing of horses is one of humankind's most ancient sports,
having its origins among the prehistoric nomadic tribesmen of Central Asia who
first domesticated the horse about 4500 BC. For thousands of years, horse racing
has flourished as the "Sport of Kings" and the nobility.
The history of Horse Racing dates to the first millennium BC and took place in
ancient Greece. Thoroughbred horses were developed in Great Britain in the 17th
century. HorseRacing was brought to North America with the American colonies.
Thoroughbred racing is a sport of speed and high drama dominated by equine
athletes whose grace and beauty have become legendary. A thoroughbred's speed
depends on its individual ability, track conditions, weight carried, and
distance run. The horses are high-spirited and nervous, and some tend to develop
unsoundness of wind and limb.
All thoroughbreds are descended from three Oriental stallions imported into
England between 1689 and 1724.
Today, thoroughbred racing is a major spectator sport in the United States with
over half of the States having pari-mutuel racetracks. The horses compete for
purse moneys anywhere from a few thousand dollar-claiming races, to
multi-million dollar stake races.
Generally, the purse distribution from a race gives 60% of the purse to the
winner, 20% of the purse to the second place finisher, 10% of the purse to the
third placed horse, with 6% and 4% respectively going to the 4th and 5th place
finishers.
The Companies buy horses with a view towards winning purse moneys in excess of
expenses, thus making a profit on its operations. However, this is not an easy
scenario. First, all horses are susceptible to injuries which may limit the
number of races in which they can participate in each year. Secondly, the owner
of racehorses have substantial expenses, which include daily training fees,
veterinarian bills etc. Further, the trainers usually receive 10% from all
winnings and the jockey also receives 10% of the purse of a winning horse.
Historically, horse owners in general have lost money in their day to day
operations, unless they were fortunate enough to own one or higher caliber stake
horses who can compete for multi-million dollar purses.
<PAGE>
Market Overview
The industry of thoroughbred horse racing is highly regulated. All states have
licensing requirements for owners, trainers, jockeys, agents and other persons
associated with the thoroughbred racing industry. In addition, racetracks engage
in self-regulation designed to insure the integrity of their particular
racetrack. The Company is extremely sensitive to changes in licensing
requirements since ineligibility of a trainer or a suspension for any reason
could have a deleterious effect upon the business of the Company. The viability
of the Company will depend upon continued legislative acceptance of thoroughbred
racing as a form of legalized gambling as well as the ability of thoroughbred
racing to compete successfully with other forms of legalized gambling and
professional sports.
Thoroughbred racing as a form of entertainment is dependent upon the amount of
discretionary income that the general public has to spend on entertainment. In
times of downturn of the general economy, revenues of entertainment industries
have historically decreased. In that event, the size of purses at thoroughbred
racetracks, which is a substantial source of the Company's revenue, may be
greatly reduced.
Competition
The racing of thoroughbred horses is highly competitive. The Company is in
competition with entities that have greater financial resources and greater
experience than the Company, thus having greater ability to purchase and race
better quality horses than the Company.
Environmental Matters
The Company is not aware of any environmental liability relating to its
operations that would have a material adverse effect on the Company, its
business, assets or results of operations.
Inflation
Inflation has not historically been a material effect on the Company's
operations and is not expected to have a material impact on the Company or its
operations in the future.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's operations from a financial perspective during the past two years
have been marginal at best. For the year ended December 31, 1998 the Company had
a net loss of $5,300 compared to a profit of $8,946 for the comparable period in
1998. For the six months ended June 30, 1999 the Company lost $9,625 compared to
a profit of $8,910 for the comparable period in 1998. The marginal financial
results however compare favorably to the $681,016 loss the Company has suffered
through its inception in 1994 through December 31, 1998. The substantial
reduction in loss is directly attributable to the sizeable reduction of the
number of horses owned by the Company to the current operations. Additionally,
in the past, the Company conducted its own operations with its own employees,
whereas currently the Company utilizes the services of other trainers.
It is the intent of the Company to continue a low scale operation with fewer
horses. Under our current plan, we intend to purchase young two year old horses
who are at the beginning of their racing careers and whose full potential has
not yet been established. Currently the Company has two horses at a Florida race
track: a four year old filly named Scatter Buy who the Company purchased for
$50,000 when she was two years old and Book a Double, a two year old filly which
the Company recently purchased for $12,500.
To date, Scatter Buy has won purses in excess of $130,000.
Item 3. DESCRIPTION OF PROPERTY
The Company does not own any properties.
<PAGE>
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information table sets forth certain information regarding the
Company's common stock ownership on November 1, 1999 by (1) any person
(including any "group") who is known by the Company to own beneficially more
than 5% of its outstanding Common Stock, (2) each director and executive
officer, and (3) all executive officers and directors as a group.
Name and address Shares Owned Percentage
- -------------------------- ------------ ----------
Halter Capital Corporation 2,500,000 100%
16910 Dallas Parkway
Suite 100
Dallas, TX 75248
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors and officers of the Company are listed below with information
about their respective backgrounds.
Name Age Position
- -------------------- --- ------------------------------------
Kevin B. Halter 64 Chairman, President, CEO & Director
Kevin B. Halter, Jr. 39 Treasurer & Director
Pam J. Halter 44 Secretary & Director
Kevin B. Halter has served as Chairman, President, CEO and a director of the
Company since its inception. Mr. Halter has served as Chairman of the Board,
President and Chief Executive Officer of Halter Capital Corporation, a privately
held investment and consulting company, since 1987. Mr. Halter has served as
Chairman of the Board and President of Millennia, Inc. and Chairman of the Board
of Digital Communications Technology Corporation since 1994. Mr. Halter is the
husband of Pam Halter and the father of Kevin B. Halter, Jr.
Pam J. Halter has served as Secretary and as a Director of the Company since
inception. Ms. Halter has been involved in various facets of horse racing since
age sixteen, culminating with her successful record as a trainer. Since her
retirement from training she has been an unpaid consultant and advisor to the
Company. Ms. Halter is the wife of Kevin B. Halter.
Kevin B. Halter, Jr. has served as Treasurer and a Director of the Company since
inception. Mr. Halter also serves as Vice President, Secretary and a Director of
Halter Capital Corporation. He is the President of Securities Transfer
Corporation, a stock transfer agency registered with the Securities and Exchange
Commission, a position he has held since 1987. Mr. Halter has served as Vice
President, Secretary and a director of Millennia, Inc. and Digital
Communications Technology Corporation since 1994. He is the son of Kevin B.
Halter.
Item 6. EXECUTIVE COMPENSATION
The Company currently pays no compensation to its officers and directors and has
paid no compensation in any amount or of any kind to its executive officers or
directors for the fiscal years ended December 31, 1997 and 1998.
Item 7. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
None.
<PAGE>
Item 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 shares of
common stock with a par value of $0.0001 per share. The holders of common stock
(1) are entitled to one non-cumulative vote per share on all matters that the
stockholders may vote on at meetings of stockholders; (2) do not have
pre-emptive, subscription or conversion rights, and there are no redemption of
sinking fund provisions applicable thereto; and (3) are entitled to share
ratably in the assets of the Company, after the payment of all debts and
liabilities, available for distribution to holders of common stock upon the
liquidation, dissolution or winding up of affairs of the Company. The Company
has no preferred stock, debentures, warrants, options or other instruments
outstanding or that could be converted into common stock of the Company.
Holders of shares of the common stock do not have cumulative voting rights,
which means that the holders of more than 50% of such outstanding shares
("majority shareholders", when voting for the election or directors, can elect
all of the directors and, in such situations, the holders of the remaining
shares will not be able to elect as the Company's directors anyone other than
those candidates supported by the majority shareholders. Holders of shares of
the common stock are entitled to receive dividends if and when declared by the
Board of Directors out of funds legally available therefore.
PART II
Item 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
RELATED SHAREHOLDER MATTERS
As of the date of this filing, there is no public market for the Company's
common stock. As of November 1, 1999 all 2,500,000 of the 2,500,000 shares
issued and outstanding are deemed to be "restricted securities" as defined in
Rule 144 under the Securities Act. Restricted shares may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rule 144 promulgated under the Securities Act.
In general, under Rule 144, any person, or persons whose shares are aggregated,
who has beneficially owned restricted shares for at least one year is entitled
to sell, within any three-month period, a number of shares that does not exceed
the greater of 1% of thee then outstanding shares of common stock, or the
average weekly trading volume during the four calendar weeks preceding such
sales. Sales under Rule 144 are also subject to the requirements as to the
manner of sale, notice and availability of current public information about the
Company. In addition, restricted shares, which have been beneficially owned for
at least two years and which are held by non-affiliates, may be sold free of any
restrictions under Rule 144.
Dividend Policy
The Company has never paid or declared a cash dividend on its Common Stock. The
Board of Directors does not intend to declare or pay cash dividends in the
foreseeable future. It is the current policy to retain all earnings if any, to
support future growth and expansion.
Item 2. LEGAL PROCEEDINGS
The Company is not a party to any pending litigation nor is it aware of any
threatened legal proceedings.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES
None.
<PAGE>
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's bylaws provide that the Company will indemnify its directors and
officers to the full extent authorized or permitted under Delaware law.
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers and controlling persons of the Company, the registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy and is unenforceable.
PART III
Item 1. INDEX TO EXHIBITS
Exibit Number Description
- ------------- -----------
3.1 Articles of Incorporation
3.2 By-Laws
27 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Thoroughbred Racing Associates, Inc.
November 23, 1999 By: /s/ Kevin B. Halter
--- --------------------------------
Kevin B. Halter, President
<PAGE>
THOROUGHBRED
RACING ASSOCIATES,
INC.
(a wholly-owned subsidiary of
Halter Capital Corporation)
Financial Statements
and
Auditor's Report
December 31, 1998 and 1997
S. W. HATFIELD, CPA
certified public accountants
Use our past to assist your future sm
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
CONTENTS
Page
----
Report of Independent Certified Public Accountants F-3
Annual Financial Statements
Balance Sheets
as of December 31, 1998 and 1997 F-4
Statements of Operations and Comprehensive Income
for the years ended December 31, 1998 and 1997 F-5
Statement of Changes in Stockholder's Equity
for the years ended December 31, 1998 and 1997 F-6
Statements of Cash Flows
for the years ended December 31, 1998 and 1997 F-7
Notes to Financial Statements F-8
Interim Financial Statements
Balance Sheets
as of September 30, 1999 and 1998 F-10
Statements of Operations and Comprehensive Income
for the nine and three months ended September 30, 1999 and 1998 F-11
Statements of Cash Flows
for the nine months ended September 30, 1999 and 1998 F-12
Notes to Financial Statements F-13
F-2
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: 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
Thoroughbred Racing Associates, Inc.
We have audited the accompanying balance sheets of Thoroughbred Racing
Associates, Inc. (a Delaware corporation and a wholly owned subsidiary of Halter
Capital Corporation) as of December 31, 1998 and 1997 and the related statements
of operations and comprehensive income, changes in stockholder's equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Thoroughbred Racing Associates,
Inc. (a wholly owned subsidiary of Halter Capital Corporation) as of December
31, 1998 and 1997, and the results of its operations and its cash flows for each
of the years then ended in conformity with generally accepted accounting
principles.
S. W. HATFIELD, CPA
Dallas, Texas
August 26, 1999 (except for
Note A as to which the date
is November 9, 1999)
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
F-3
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
BALANCE SHEETS
December 31, 1998 and 1997
ASSETS
------
1998 1997
--------- ---------
Current assets
Cash on hand and in bank $ 2,468 $ 3,269
--------- ---------
Total current assets 2,468 3,269
--------- ---------
Livestock and equipment
Livestock 50,000 310,005
Accumulated depreciation (20,833) (53,889)
--------- ---------
Net livestock and equipment 29,167 256,116
--------- ---------
TOTAL ASSETS $ 31,635 $ 259,385
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current liabilities
Cash overdraft $ 9,979 $ --
Accounts payable and accrued liabilities 13,542 8,171
Advances from
Parent and affiliates 601,018 838,818
Officer 88,112 88,112
--------- ---------
Total current liabilities 712,651 935,101
--------- ---------
Commitments and contingencies
Stockholder's equity (deficit)
Common stock - $0.001 par value
50,000,000 shares authorized
2,500,000 shares issued and outstanding 2,500 2,500
Additional paid-in capital 7,500 7,500
Accumulated deficit (691,016) (685,716)
--------- ---------
Total stockholder's equity (deficit) (681,016) (675,716)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 31,635 $ 259,385
========= =========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended December 31, 1998 and 1997
1998 1997
----------- -----------
Revenues
Racing purses and commissions $ 92,266 $ 180,745
----------- -----------
Expenses
Training, veterinary and other horse expenses 130,968 166,121
General and administrative expenses (852) 5,324
Depreciation 45,623 38,512
----------- -----------
Total expenses 175,739 209,957
----------- -----------
Loss from operations (83,473) (29,212)
Other income (expenses)
Gain on sale of livestock 77,473 38,158
----------- -----------
Income (Loss) before income taxes (5,300) 8,946
Income taxes -- --
----------- -----------
Net Income (Loss) (5,300) 8,946
Other comprehensive income -- --
----------- -----------
Comprehensive Income (Loss) $ (5,300) $ 8,946
=========== ===========
Income (Loss) per weighted-average share of
common stock outstanding, computed on
Net Income (Loss) nil nil
=== ===
Weighted-average number of common shares outstanding 2,500,000 2,500,000
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
Years ended December 31, 1998 and 1997
Common Stock Additional
------------ paid-in Accumulated
Shares Amount capital deficit Total
--------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balances at
January 1, 1997 2,500,000 $ 2,500 $ 7,500 $ (694,662) $(684,662)
Net income for the year -- -- -- 8,946 8,946
--------- --------- ---------- ----------- ---------
Balances at
December 31, 1997 2,500,000 2,500 7,500 (685,716) (675,716)
Net loss for the year -- -- -- (5,300) (5,300)
--------- --------- ---------- ----------- ---------
Balances at
December 31, 1998 2,500,000 $ 2,500 $ 7,500 $ (691,016) $(681,016)
========= ========= ========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
STATEMENTS OF CASH FLOWS
Years ended December 31, 1998 and 1997
1998 1997
--------- ---------
Cash flows from operating activities
Net income (loss) for the year $ (5,300) $ 8,946
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation 45,623 38,512
Gain on sale of livestock and equipment (77,473) (38,158)
Increase (Decrease) in:
Accounts payable and accrued expenses 5,370 (7,786)
--------- ---------
Net cash used in operating activities (31,780) 1,514
--------- ---------
Cash flows from investing activities
Purchase of livestock and equipment -- (284,005)
Cash received from sale of livestock and equipment 258,800 39,975
--------- ---------
Net cash used in investing activities 258,800 (244,030)
--------- ---------
Cash flows from financing activities
Increase in cash overdraft 9,979 --
Cash advanced by (repaid to) parent company - net (237,800) 191,710
Cash advanced by officer -- 46,000
--------- ---------
Net cash provided by financing activities (227,821) 237,710
--------- ---------
Increase (Decrease) in cash (801) (4,806)
Cash at beginning of year 3,269 8,075
--------- ---------
Cash at end of year $ 2,468 $ 3,269
========= =========
Supplemental disclosures of
interest and income taxes paid
Interest paid during the period $ -- $ --
========= =========
Income taxes paid during the period $ -- $ --
========= =========
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Thoroughbred Racing Associates, Inc. (Company) was incorporated on April 13,
1994 under the laws of the State of Delaware. The Company trains and races
thoroughbred horses principally for its own account and, in prior years, for
other unrelated third parties.
On November 9, 1999, the Company amended its Certificate of Incorporation to
allow for the issuance of up to 50,000,000 shares of $0.001 par value common
stock from its initial authorization to issue up to 1,000 shares of $0.00001 par
value common stock. Additionally, concurrent with the increase to the authorized
number of shares of common stock, the Company effected a 2,500 for 1 forward
split of its issued and outstanding common stock. As a result of these events,
the Company has 2,500,000 shares of $0.001 par value common stock issued and
outstanding. The accompanying financial statements present the effects of these
events as of the first day 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, in banks and on deposit with brokerage houses, 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.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Livestock
---------
Livestock is recorded at historical cost. Depreciation is provided in
amounts sufficient to relate the asset cost to operations over the
estimated useful life of three years using straight-line and accelerated
methods.
Gains and/or losses from the disposition of livestock are recognized as
incurred and are included in operations.
F-8
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
3. Income taxes
------------
The Company provides deferred income taxes, where material, based on the
asset and liability method under the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". At December
31, 1998 and 1997, respectively, the deferred tax asset and deferred tax
liability accounts, consisting solely of temporary differences in
accumulated depreciation, were not material to the financial statements and
no valuation allowance was provided against deferred tax assets.
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 of the Company's parent. No net
operating loss carryforwards exist as of December 31, 1998 and 1997,
respectively.
NOTE C - RELATED PARTY TRANSACTIONS
Halter Capital Corporation, the Company's parent, has advanced the Company
approximately $601,000 and $839,000 as of December 31, 1998 and 1997,
respectively, in funds used primarily for working capital purposes.
The advances are non-interest bearing and are repayable upon demand.
A Company officer has advanced the Company approximately $88,000 as of December
31, 1998 and 1997, respectively, which was used principally for livestock
purchases. The advances are non-interest bearing and are repayable upon demand.
F-9
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
BALANCE SHEETS
September 30, 1999 and 1998
(Unaudited)
ASSETS
------
1999 1998
--------- ---------
Current assets
Cash on hand and in bank $ 15,021 $ 3,870
--------- ---------
Total current assets 15,021 3,870
--------- ---------
Livestock and equipment
Livestock 63,313 97,925
Accumulated depreciation (33,333) (30,645)
--------- ---------
Net livestock and equipment 29,980 67,280
--------- ---------
TOTAL ASSETS $ 45,001 $ 71,150
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current liabilities
Cash overdraft $ -- $ --
Accounts payable and accrued liabilities 12,076 25,798
Advances from
Parent 640,728 645,418
Officer 88,112 88,112
--------- ---------
Total current liabilities 740,916 759,328
--------- ---------
Commitments and contingencies
Stockholder's equity (deficit)
Common stock - $0.001 par value
50,000,000 shares authorized
2,500,000 issued and outstanding 2,500 2,500
Additional paid-in capital 7,500 7,500
Accumulated deficit (705,915) (698,178)
--------- ---------
Total stockholder's equity (deficit) (695,915) (688,178)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 45,001 $ 71,150
========= =========
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Nine and Six months ended September 30, 1999 and 1998
(Unaudited)
Nine months Nine months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues
Racing purses and commissions $ 42,637 $ 42,531 $ 9,843 $ 11,555
------------- ------------- ------------- -------------
Expenses
Training, veterinary
and other horse expenses 57,102 103,393 25,100 26,838
General and administrative expenses 6,935 564 6,684 (76)
Depreciation 12,500 38,128 4,167 6,164
------------- ------------- ------------- -------------
Total expenses 76,537 142,085 35,951 32,926
------------- ------------- ------------- -------------
Loss from operations (33,900) (99,554) (26,108) (21,371)
Other income (expenses)
Gain on sale of livestock 19,000 87,092 -- --
------------- ------------- ------------- -------------
Income (Loss) before income taxes (14,900) (12,462) (26,108) (21,371)
Income taxes -- -- -- --
------------- ------------- ------------- -------------
Net Income (Loss) (14,900) (12,462) (26,108) (21,371)
Other comprehensive income -- -- -- --
------------- ------------- ------------- -------------
Comprehensive Income (Loss) $ (14,900) $ (12,462) $ (26,108) $ (21,371)
============= ============= ============= =============
Income (Loss) per weighted-average
share of common stock outstanding,
computed on Net Income (Loss) $ (0.01) $ (0.01) $ (0.01) $ (0.01)
============= ============= ============= =============
Weighted-average number of
common shares outstanding 2,500,000 2,500,000 2,500,000 2,500,000
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
<TABLE>
<CAPTION>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1999 and 1998
(Unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) for the period $ (14,900) $ (12,462)
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation 12,500 38,128
Gain on sale of livestock and equipment (19,000) (87,092)
Increase (Decrease) in:
Accounts payable and accrued expenses (1,466) 17,627
------------- -------------
Net cash provided by (used in) operating activities (22,865) (43,799)
------------- -------------
Cash flows from investing activities
Purchase of livestock and equipment -- --
Cash received from sale of livestock and equipment 19,000 237,800
------------- -------------
Net cash used in investing activities 19,000 237,800
------------- -------------
Cash flows from financing activities
Increase (Decrease) in cash overdraft (9,979) --
Cash advanced by (repaid to) parent company - net 39,710 (193,400)
------------- -------------
Net cash provided by financing activities 29,731 (193,400)
------------- -------------
Increase (Decrease) in cash 12,553 601
Cash at beginning of year 2,468 3,269
------------- -------------
Cash at end of year $ 15,021 $ 3,870
============= =============
Supplemental disclosures of
interest and income taxes paid
Interest paid during the period $ -- $ --
============= =============
Income taxes paid during the period $ -- $ --
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Thoroughbred Racing Associates, Inc. (Company) was incorporated on April 13,
1994 under the laws of the State of Delaware. The Company trains and races
thoroughbred horses for its own account. In prior years, the Company performed
these activities for other unrelated third parties.
On November 9, 1999, the Company amended its Certificate of Incorporation to
allow for the issuance of up to 50,000,000 shares of $0.001 par value common
stock from its initial authorization to issue up to 1,000 shares of $0.00001 par
value common stock. Additionally, concurrent with the increase to the authorized
number of shares of common stock, the Company effected a 2,500 for 1 forward
split of its issued and outstanding common stock. As a result of these events,
the Company has 2,500,000 shares of $0.001 par value common stock issued and
outstanding. The accompanying financial statements present the effects of these
events as of the first day of the first period presented.
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements contained elsewhere in this document.
The information presented herein does not include all disclosures required by
generally accepted accounting principles and the users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its annual audited financial statements contained
elsewhere in this document when reviewing the interim financial results
presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 1999.
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, in banks and on deposit with brokerage houses, 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.
F-13
<PAGE>
THOROUGHBRED RACING ASSOCIATES, INC.
(a wholly-owned subsidiary of Halter Capital Corporation)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
1. Cash and cash equivalents - continued
-------------------------
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Livestock
---------
Livestock is recorded at historical cost. Depreciation is provided in
amounts sufficient to relate the asset cost to operations over the
estimated useful life of three years using straight-line and accelerated
methods.
Gains and/or losses from the disposition of livestock are recognized as
incurred and are included in operations.
3. Income taxes
------------
The Company provides deferred income taxes, where material, based on the
asset and liability method under the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". At September
30, 1999 and 1998, respectively, the deferred tax asset and deferred tax
liability accounts, consisting solely of temporary differences in
accumulated depreciation, were not material to the financial statements and
no valuation allowance was provided against deferred tax assets.
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 of the Company's parent. No net
operating loss carryforwards exist as of September 30, 1999 and 1998,
respectively.
NOTE C - RELATED PARTY TRANSACTIONS
Halter Capital Corporation, the Company's parent, has advanced the Company
approximately $626,000 and $641,000 as of September 30, 1999 and 1998,
respectively, in funds used primarily for working capital purposes.
The advances are non-interest bearing and are repayable upon demand.
A Company officer has advanced the Company approximately $88,000 as of September
30, 1999 and 1998, respectively, which was used principally for livestock
purchases. The advances are non-interest bearing and are repayable upon demand.
F-14
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 and hour to be selected by the President of the
Board of Directors 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 therefore, 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 MEETING. Special meetings of the Shareholders, for any purpose
or purposes, unless otherwise prescribed by statute or these Bylaws, may be
called by the President, the Board of Directors, or the holders of not less than
one tenth 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 stated in the notice of the meeting.
2.3 PLACE OF MEETING. 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 President, the Secretary,
or the officer or person calling the meeting, to each Shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States Mail addressed to the Shareholder
at this address as it appears on the stock transfer book of the Corporation,
with postage thereon prepaid.
<PAGE>
2.5 ACTION WITHOUT MEETING. Unless otherwise provided by the Certificate
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 given to those stockholders who
have not consented in writing.
2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF 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 provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case, fifty (50) days. If the stock transfer books shall be closed for the
purpose of determining Shareholders entitled to notice of or to vote at a
meeting of Shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors 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, in case of a meeting of Shareholders, 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 the stock transfer books are
not closed and no record date is fixed for the determination of Shareholders
entitled to notice of or to vote at a meeting of Shareholders, or Shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of Shareholders. When a determination of Shareholders
entitled to vote at any meeting of Shareholders has been made as provided in
this Section, such determination shall apply to any adjournment thereof except
where the determination has been made through the closing of 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
on file 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
of any Shareholder during the whole time of 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 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, and thus represented at a meeting at which a quorum is
present, shall be the act of the Shareholders' meeting, unless the vote of a
greater number is required by law.
2
<PAGE>
2.9 VOTING OF SHARES.
A. Each outstanding share, regardless of class, shall be entitled to one
vote on such matter submitted to a vote of a meeting of 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 of series, and except as otherwise
provided by the General Corporation Law of 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 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 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. (For cumulative voting see Section 2.13 below.)
E. Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the Bylaws of
such corporation may authorize or, in the absence of such authorization,
as the Board of Directors of such corporation may determine; provided,
however, that when any foreign corporation without a permit to do
business in this State lawfully owns or may lawfully own or acquire stock
in the Corporation, it shall not be lawful for such foreign corporation
to vote said stock and participate in the management and control of the
business and affairs of the Corporation, as other Shareholders, subject
to all laws, rules and regulations governing Texas corporations and
especially subject to the provisions of the antitrust laws of the State
of Texas.
F. Shares held by an administrator, executor, guardian, or conservator
may be voted by him or her so long as such shares forming a part of the
estate being served by him or her, either in person or by proxy, without
a transfer of such shares into his or her name. Shares standing in the
name of a trustee may be voted by that trustee, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him or her
without a transfer of such shares into his or her name as trustee.
G. Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his name if
authority so to do be contained in a appropriate order of the court by
which such receiver was appointed.
H. A Shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into his name of the
pledged, and thereafter, the pledgee shall be entitled to vote the shares
so transferred.
2.10 METHOD OF VOTING. Voting on any question or in any election may be by
voice or show of hands unless the presiding officer shall order, or any
Shareholder shall demand, that voting be by written ballot.
3
<PAGE>
2.11 RULES OF PROCEDURE. To the extent applicable, Robert's Rule 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.
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 or
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 Shareholder then of record of 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 of 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 of
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 nine 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 of 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.
4
<PAGE>
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 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 Directorship 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 election of
officers 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 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 day immediately
preceding the day for the meeting, or by, word of mouth, telephone, or
radiophone received not later than during the second 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.
5
<PAGE>
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 of
any such 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, or
altering or repealing any resolution of the Board of Directors which by its
terms provides that it shall not be so amendable or repealable; and, unless such
resolution or these Bylaws expressly so provide, no such 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.
3.15 REMOVAL OF COMMITTEE MEMBERS. Any member of a committee elected by the
Board of Directors whenever in its judgment 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 contract rights.
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 Board of Directors, any 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 for 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 the Secretary of State.
3.17 TELEPHO14E 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 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.
6
<PAGE>
ARTICLE IV.
OFFICERS
--------
4.1 NUMBER. The principal officers of the Corporation shall consist of a
President, one or more Vice President (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 the 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 office shall resign or shall have been removed in the manner hereinafter
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. 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. The President shall preside at all meetings of the
Shareholders and of the Board of Directors, and 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.
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 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 one or more books provided for that purpose;
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 certificates for shares prior to the issue thereof and to the execution of
which on behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of the Bylaws; keep a register of the post office
address of each Shareholder which shall be furnished to the Secretary by such
Shareholder; sign with the President certificates for 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 President or by the
Board of Directors.
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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
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 so to do by the Board of Directors for the faithful
condition of the Corporation; if required so to do by the Board of Directors 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 or her 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 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 or her duties in such sums and with such sureties as the Board
of Directors shall determine. The Assistant Secretary as thereunto authorized
by the Board of Directors may sign with the President certificates for 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 President or the Board of Directors.
4.11 SALARIES. The salaries of the 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, ETC. 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, other than for office furniture and equipment
which does not exceed $10,000.00 in amount, 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, DRAFT, ETC. All checks, drafts, notes, bonds, bills of
exchange, other orders for the payment of money, notes 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 or other depositories as the Board of
Directors may select.
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 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 represented by such certificate,
or a statement 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 facsimilies, if the certificate is countersigned by a
transfer agent or registered by a registrar, either of which is other than the
Corporation itself or an employee of the Corporation. 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 par value, 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 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 thereto-fore issued by the Corporation alleged to
have been lost or destroyed, upon the making of an affidavit of fact by the
person claiming the certificate or certificates representing shares to be lost
or destroyed. When authorizing such issue 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 advertise the same in such
manner as it shall require and/or 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.
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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 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 of the statutes and 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 prior to the
payment date of such dividend, or the Board of Directors may close the stock
transfer books for such purpose for a period of not more than fifty (50) 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 adopt 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, or to equalize 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 which 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.
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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, 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 DIRECTOR LIMITATION. 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
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 (including excise
and similar taxes), 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;
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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 solely of two or more
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
Directors who are named defendants or respondents in the proceeding.
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, the 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 or her in connection with a proceeding in which
he or she is named defendant or respondent because he or she is or was a
Director if he or she 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 or she 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.
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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 she is not a named defendant or respondent in the
proceeding.
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. A 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 or her and incurred by
him or her in such a capacity or arising out of his or her status as such a
person, whether or not the Corporation would have the power to indemnify him or
her against that liability under this Article.
8.11 REPORTS TO SHAREHOLDERS. 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 PLAN. For purpose of this Article, the Corporation is
deemed to have requested a Director to serve an employee benefit plan whenever
the performance by him or her duties to the Corporation also imposes duties on
or otherwise involves services by him or her to the plan or participants or
beneficiaries of the plan pursuant to applicable law are deemed fines. Action
taken or omitted by him or her with respect to an employee benefit plan in the
performance of his or her duties for a purpose reasonable believed by him or her
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.
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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 assets to be of their book value; or
B. Relied upon the written opinion of an attorney for the Corporation.
9.2 FISCAL YEAR. The Fiscal Year of the Corporation shall be fixed by
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 extracts therefrom.
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 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 be 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
interpretation.
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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 shall be
applied to either the plural or singular wherever appropriate.
I, the undersigned, being the Secretary of Halter Capital Corporation, do hereby
certify the foregoing to be the Bylaws of said Corporation, as adopted at a
meeting of the Directors held on the 4th day of December, 1987.
/s/ Kevin B. Halter
- --------------------------
Kevin B. Halter, Secretary
15
THOROUGHBRED RACING ASSOCIATES, INC.
* * * * * *
BY-LAWS
* * * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Dallas, State of Texas, at such place as may be
fixed from time to time by the board of directors, or at such other place either
within or without the State of Delaware as shall be designated from time to time
by the board of directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1994, shall be held on the first day of June if not a legal holiday and if a
legal holiday, then on the next secular day following, at 9:00 A.M., or at such
other date and time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
<PAGE>
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
<PAGE>
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, 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 given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than three (3) nor more than ten (10). The first board shall
consist of three (3) directors. Thereafter, within the limits above specified,
the number of directors shall be determined by resolution of the board of
directors or by the stockholders at the annual meeting. The directors shall be
elected at the annual meeting of the stockholders, except as provided in Section
2 of this Article, and each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase) , the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president
on five (5) days' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of two directors unless the
board consists of only one director; in which case special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of the sole director.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any 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 such participation in a meeting shall
constitute presence in person at the meeting.
<PAGE>
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation) adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
<PAGE>
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each 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 therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
<PAGE>
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
<PAGE>
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
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
directors, or in the absence of any designation, then in the order of their
election) shall perform 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-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
<PAGE>
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by, or in
the name of the corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that
the corporation will furnish without charge to each stockholder who so requests
the powers, designations, preferences and relative participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on a certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
<PAGE>
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates or uncertificated shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or uncertificated
shares, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be cancelled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the corporation.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
<PAGE>
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
<PAGE>
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
<PAGE>
State of Delaware
Office of the Secretary of State
--------------------------------
I, William T. Quillen, Secretary of State of the state of Delaware, do
hereby certify the attached is a true and correct copy of the certificate of
incorporation of "Thoroughbred Racing Associates, Inc.", filed in this office on
the thirteenth day of April, A.D. 1994, at 11:30 o'clock A.M.
A certified copy of this certificate has been forwarded to the new Castle
County Recorder of Deeds of Recording.
[Symbol omitted] /s/ William T. Quillen
--------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: 7087427
DATE: 04-13-94
<PAGE>
CERTIFICATE OF INCORPORATION
OF
THOROUGHBRED RACING ASSOCIATES, INC.
1. The name of the corporation is Thoroughbred Racing Associates, Inc.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) shares of common stock the par value
of each of such shares is One Thousandth of One Cent ($.00001) amounting in the
aggregate to One Cent ($.01).
5A. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
A. S. Wright Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
M. A. Humphrey Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
T. D. Woehrle Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
5B. The name and mailing address of each person, who is to serve as a
director until the first annual meeting of the stockholders or until a successor
is elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Morgan F. Johnston 16910 Dallas, Parkway,
Suite 200
Dallas, Texas 75248
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the corporation.
II
<PAGE>
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. The by-laws may provide that in the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or by-laws, expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with law, to sell,
lease or exchange all or substantially all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
III
<PAGE>
8. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from, time to time by the
board of directors or in the by-laws of the corporation.
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
threefourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
9. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders,, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law,, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit.
IV
<PAGE>
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 21st day of March, 1994.
/s/ A. S. Wright
-----------------------
A. S. Wright
/s/ M. A. Humphrey
-----------------------
M. A. Humphrey
/s/ T. D. Woehrle
-----------------------
T. D. Woehrle
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0
0
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