As filed with the Securities and Exchange Commission on January 18, 2000
File No.__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 13 or 15(d) of The Securities Exchange Act of 1934
Millenia Tea Masters, Inc.
(Name of small business issuer in its charter)
Texas 75-2785941
------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
16910 Dallas Parkway, Suite 100 (972) 248-1922
Dallas, TX 75248 ------------------
(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 13 of the Act: none
Securities to be registered under Section 15(d) of the Act:
Common Stock, $.00001 par value per share
<PAGE>
PART I
Item 1 DESCRIPTION OF BUSINESS
General
Millennia Tea Masters, 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 August 4, 1998 under the laws of the State of
Texas and shortly thereafter commenced its operations as an importer of high
quality tea products from Sri Lanka.
Industry Overview and Opportunity
We import our teas from Sri Lanka, formerly known as Ceylon. Ceylon tea has been
acclaimed as the best tea in the world for over a century. Unlike the coffee
market in the United States, which thanks to companies such as Starbucks has
immensely upgraded the quality and choices of coffees available, the U.S. tea
market is still dominated by relatively low-grade tea from companies such as
Lipton, Tetley, Luzianne etc. In the opinion of the Company, there exists a
tremendous opportunity to make available a more upscale product to the masses at
comparable prices to the existing low grade products. It is the goal of the
Company for it to become the primary tea supplier of high-grade tea products in
the United States.
Market Overview
In order to understand the tea market and the opportunities it presents, one
first needs to look into the background of not only tea, but also more
importantly the coffee market.
The coffee market in the United States up until recently gave consumers very few
choices. All major brands basically had the same commodity, and what separated
one from the other was mainly due to clever and heavily financed advertising
campaigns. Order coffee in eating establishments in the early 90's was not
different from 40 years ago - you asked for, and got a cup of coffee. Then a
major revolution took place.
Today it is difficult to find just an ordinary cup of coffee in a restaurant.
You are now asked whether you want espresso, cappuccino, cafe latte and a whole
slew of other choices. Exotic coffees can now be found in bookstores, gas
stations, convenience stores and other places once never have been thought
possible.
Now let us look at the tea market. In supermarkets today the domineering brand
is still the same old Lipton(R) found in stores for many decades which does not
measure up to high grown Ceylon teas. As the coffee "revolution" can attest to,
people today are seeking more upscale products, and are willing to pay for them.
Our teas come from Ceylon, now known as Sri Lanka. Ceylon tea has been acclaimed
as the best tea in the world for over a century. The Sri Lankan climate varies
tremendously from the central highlands to the southern plains. These varying
climatic conditions impart distinct flavors and aromas on our teas. Sri Lanka
produces the world renowned "Seasonal Teas" which are grown on the mystic hills
of Sri Lanka, with fragrances unmatched by teas from any other parts of the
world.
We buy our teas at auctions, package them under the "Millennia" label and ship
them from Sri Lanka to our warehouse in Dallas, Texas. Our goals are to give the
consumer a choice between the ordinary teas found in supermarkets and high grown
black Ceylon tea, which we consider far superior. In addition to the English
Breakfast tea, which is consumed each and every day by millions of people around
the world, the Millennia label also features the world renowned Earl Grey tea
which is usually consumed in the afternoon and evenings. Additionally, we
feature a selection of both flavored and unflavored iced teas. Americans, unlike
the rest of the world, love their iced tea. Of the 2.2 billion gallons of tea we
drink yearly, about 80% is served cold.
<PAGE>
When viewing the present status of the tea market, one must also pay close
attention to the health aspect of the product. Even though we do not make any
health claims, many well known medical journals and other research studies have
indicated that tea may have many benefits such as helping to fight cancer and
heart disease.
Competition
The tea market is highly competitive. A number of companies with significantly
greater resources and past business history can make the penetration of the
existing tea market a very difficult task for any new entrant.
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 is considered a development stage company and as such has generated
no significant operating revenues and has incurred cumulative operating losses.
Item 3 DESCRIPTION OF PROPERTY
The Company does not own any properties.
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 January 17, 2000 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
- --------------------------------------------------------------------------------
Kevin B. Halter 521,343 30.1%
16910 Dallas Parkway
Suite 100
Dallas, TX 75248
KL Halter Family Partnership Ltd. 100,000 5.8%
16910 Dallas Parkway
Suite 100
Dallas, TX 75248
KP Halter Family Partnership Ltd. 478,657 27.7%
16910 Dallas Parkway
Suite 100
Dallas, TX 75248
Halter Financial Corporation 163,501 9.4%
16910 Dallas Parkway
Suite 100
Dallas, TX 75248
<PAGE>
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 Secretary, Treasurer & 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
father of Kevin B. Halter, Jr.
Kevin B. Halter, Jr. has served as Secretary 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 pays limited 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 calendar year ended December 31, 1998. During calendar year
1999, the Company paid $7,692.00 in total compensation to its President and
Chief Executive Officer for work performed on behalf of the Company.
Item 7 CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
None
Item 8 DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 10,000,000 shares of
preferred stock with a par value of $0.00001 per share, and 10,000,000 shares of
common stock with a par value of $0.00001 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.
<PAGE>
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 December 1, 1999 all 100,000 of the 100,000 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
Item 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is not currently a party to any proceedings which in the opinion of
the Company would have a material adverse effect on the Company's business,
financial condition or results of operation.
PART III
Item 1 INDEX TO EXHIBITS
3.1 Articles of Incorporation of Millennia Tea Masters, Inc.
3.2 Bylaws of Millennia Tea Masters, Inc.
27 Financial Data Schedule
Item 2 DESCRIPTION OF EXHIBITS
3.1 Articles of Incorporation of Millennia Tea Masters, Inc.
3.2 Bylaws of Millennia Tea Masters, Inc.
27 Financial Data Schedule
<PAGE>
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.
Millennia Tea Masters, Inc.
January ___, 2000 By: /s/ Kevin B. Halter
-------------------------------
Kevin B. Halter, President
<PAGE>
MILLENNIA TEA MASTERS, INC.
CONTENTS
Page
Reports of Independent Certified Public Accountants F-2
Annual Financial Statements
Balance Sheet as of December 31, 1998 F-3
Statement of Operations and Comprehensive Income
for the period from August 3, 1998 (date of inception)
through December 31, 1998 F-4
Statement of Changes in Stockholders' Equity
for the period from August 3, 1998 (date of inception)
through December 31, 1998 F-5
Statement of Cash Flows
for the period from August 3, 1998 (date of inception)
through December 31, 1998 F-6
Notes to Financial Statements F-7
Interim Financial Statements
Balance Sheet as of September 30, 1999 F-9
Statement of Operations and Comprehensive Income
for the nine and three months ended September 30, 1999 F-10
Statement of Changes in Stockholders' Equity
for the period from January 1, 1999 through September 30, 1999 F-11
Statement of Cash Flows
for the nine or three months ended September 30, 1999 F-12
Notes to Financial Statements F-13
F-1
<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 Stockholders
Millennia Tea Masters, Inc
We have audited the accompanying balance sheet of Millennia Tea Masters, Inc. (a
Texas corporation) as of December 31, 1998 and the related statement of
operations and comprehensive income, changes in stockholders' equity and cash
flows for the period from August 3, 1998 (date of inception) through December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Millennia Tea Masters, Inc. as
of December 31, 1998 and the related statements of operations, changes in
stockholders' equity and cash flows for the period from August 3, 1998 (date of
inception) to December 31, 1998, in conformity with generally accepted
accounting principles.
S. W. HATFIELD, CPA
Dallas, Texas
August 25, 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-2
<PAGE>
MILLENNIA TEA MASTERS, INC.
BALANCE SHEET
December 31, 1998
ASSETS
1998
Current assets
Cash on hand and in bank $ 53,686
Accounts receivable, net of allowance for
doubtful accounts of $52 --
Inventory 277,836
---------
Total current assets 331,522
---------
TOTAL ASSETS $ 331,522
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable trade $ --
Sales taxes payable 262
Advances from affiliates 37,725
---------
Total liabilities 37,987
---------
Commitments and contingencies
Stockholders' equity Common stock - $0.001 par value
25,000,000 shares authorized
1,308,565 shares issued and outstanding 1,309
Additional paid-in capital 308,256
Accumulated deficit (16,030)
---------
Total stockholders' equity 293,535
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 331,522
=========
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
MILLENNIA TEA MASTERS, INC.
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
Period from August 3, 1998 (date of inception) through December 31, 1998
Period from
August 3, 1998
(date of inception)
to December 31,
1998
-----------------
Revenues
Tea and specialty foods $ 3,174
Cost of Sales
Tea and specialty foods 153
-----------
Gross Profit 3,021
-----------
Operating expenses
Wages and related expenses 2,205
Marketing, promotion and product development 8,796
General and administrative expenses 8,050
-----------
Total operating expenses 19,051
-----------
Loss from operations (16,030)
Other income (expense) --
-----------
Loss before income taxes (16,030)
Provision for income taxes --
-----------
Net Loss (16,030)
Other comprehensive income --
-----------
Comprehensive Loss $ (16,030)
===========
Loss per weighted-average share of common
stock outstanding, computed on net loss -
basic and fully diluted $(0.02)
======
Weighted-average number of
common shares outstanding 1,062,090
===========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
MILLENNIA TEA MASTERS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from August 3, 1998 (date of inception) through December 31, 1998
Additional
Common Stock paid-in Accumulated
# shares amount capital deficit Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balances at
August 3, 1998 -- $ -- $ -- $ -- $ --
Shares issued to founders
at inception 1,000,000 1,000 -- -- 1,000
Stock sold pursuant to
private placement 308,565 309 308,256 -- 308,565
Net loss for the year -- -- -- (16,030) (16,030)
--------- --------- --------- --------- ---------
Balances at
December 31, 1998 1,308,565 $ 309 $ 308,256 $ (16,030) $ 292,535
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
MILLENNIA TEA MASTERS, INC.
STATEMENT OF CASH FLOWS
Period from August 3, 1998 (date of inception) through December 31, 1998
Period from
August 3, 1998
(date of inception)
to December 31,
1998
-----------------
Cash flows from operating activities
Net loss for the year $ (16,030)
Adjustments to reconcile net loss to net
cash provided by operating activities
Bad debt expense 52
(Increase) Decrease in
Accounts receivable (52)
Inventory (277,836)
Increase (Decrease) in
Sales taxes payable 262
---------
Net cash used in operating activities (293,604)
---------
Cash flows from investing activities --
---------
Cash flows from financing activities
Advances from affiliates 37,725
Proceeds from sale of common stock 309,565
---------
Net cash provided by financing activities 347,290
---------
INCREASE IN CASH 53,686
Cash at beginning of year --
---------
Cash at end of year $ 53,686
=========
Supplemental disclosure of interest and income taxes paid
Interest paid for the period $ --
=========
Income taxes paid for the period $ --
=========
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
MILLENNIA TEA MASTERS, INC.
NOTES TO FINANCIAL STATEMENTS
Note A - Organization and Description of Business
Millennia Tea Masters, Inc. (Company) was incorporated on August 3, 1998 under
the laws of the State of Texas. The Company was formed to engage in the
marketing and sale of imported teas. The Company began operations in October
1998. The Company has elected a year-end of December 31 and uses the accrual
method of accounting.
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's principal product is imported tea grown in Sri Lanka. In the event
of any disruption in the availability of Sri Lankan teas, if any, the Company
may experience a negative economic impact. The Company believes that other teas
of comparable quality and price are available and that no interruption of
product availability will occur.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, 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. Inventory
---------
Inventory consists of imported tea products from Sri Lanka and are valued
at the lower of cost or market using the first-in, first-out method. The
product life of imported teas is approximately three (3) years and,
accordingly, the Company anticipates no obsolescence or deterioration in
its products' quality.
3 Organization costs
------------------
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
F-7
<PAGE>
MILLENNIA TEA MASTERS, INC.
NOTES TO FINANCIAL STATEMENTS
Note B - Summary of Significant Accounting Policies - Continued
4. Income Taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. At December 31, 1998, the deferred tax asset and deferred tax
liability accounts, as recorded when material to the financial statements,
are entirely the result of temporary differences. Temporary differences
represent differences in the recognition of assets and liabilities for tax
and financial reporting purposes, primarily accumulated depreciation and
amortization, allowance for doubtful accounts and vacation accruals.
As of December 31, 1998, the deferred tax asset related to the Company's
net operating loss carryforward is fully reserved. If this carryforward is
not utilized, they will begin to expire in 2018.
5. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of December 31, 1998, the Company had no
warrants and/or options outstanding.
Note C - Equity Transactions
In August 1998, the Company issued an aggregate 1,000,000 shares of restricted,
common stock to its founders at par value for the initial capitalization of the
Company.
In the fourth quarter of 1998, the Company sold an aggregate 308,565 shares of
restricted, unregistered common stock to its founders at a price of $1.00 per
share for aggregate proceeds of approximately $308,565 to various investors.
F-8
<PAGE>
MILLENNIA TEA MASTERS, INC.
BALANCE SHEET
September 30, 1999
(Unaudited)
ASSETS
------
1999
---------
Current assets
Cash on hand and in bank $ 26,317
Inventory - at cost 531,570
---------
Total current assets 557,887
---------
TOTAL ASSETS $ 557,887
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable - trade $ 8,886
Advances from affiliates 248,441
---------
Total liabilities 257,327
---------
Commitments and contingencies
Stockholders' equity Common stock - $0.001 par value
25,000,000 shares authorized
1,730,939 shares issued and outstanding 1,731
Additional paid-in capital 358,934
Accumulated deficit (60,105)
---------
Total stockholders' equity 300,560
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 557,887
=========
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management
without audit by independent certified public accountants.
F-9
<PAGE>
<TABLE>
<CAPTION>
MILLENNIA TEA MASTERS, INC.
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
Nine and Three months ended September 30, 1999
(Unaudited)
Nine months Three months
ended ended
September 30, September 30,
1999 1999
------------- -------------
<S> <C> <C>
Revenues
Tea and specialty foods $ 6,586 $ 1,187
Cost of Sales
Tea and specialty foods 2,199 1,076
----------- -----------
Gross Profit 4,387 111
----------- -----------
Operating expenses
Wages and related expenses 221 48
Marketing, promotion and product development 6,250 636
General and administrative expenses 41,991 8,666
----------- -----------
Total operating expenses 48,462 9,350
----------- -----------
Loss from operations (44,075) (9,239)
Other income (expense) -- --
----------- -----------
Loss before income taxes (44,075) (9,239)
Provision for income taxes -- --
----------- -----------
Net Loss (44,075) (9,239)
Other comprehensive income -- --
----------- -----------
Comprehensive Loss $ (44,075) $ (9,239)
=========== ===========
Loss per weighted-average share of common
stock outstanding, computed on net loss -
basic and fully diluted $(0.03) $(0.01)
====== ======
Weighted-average number of common shares outstanding 1,409,392 1,544,446
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management
without audit by independent certified public accountants.
F-10
<PAGE>
<TABLE>
<CAPTION>
MILLENNIA TEA MASTERS, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Nine months ended September 30, 1999
(Unaudited)
Additional
Common Stock paid-in Accumulated
# shares amount capital deficit Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balances at
January 1, 1999 1,308,565 $ 1,309 $ 308,256 $ (16,030) $ 293,535
Sales of common stock 422,374 422 50,678 -- 51,100
Net loss for the period -- -- -- (44,075) (44,075)
--------- --------- --------- --------- ---------
Balances at
September 30, 1999 1,730,939 $ 1,731 $ 358,934 $ (60,105) $ 300,560
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management
without audit by independent certified public accountants.
F-11
<PAGE>
MILLENNIA TEA MASTERS, INC.
STATEMENT OF CASH FLOWS
Nine months ended September 30, 1999
(Unaudited)
Nine months
ended
September 30,
1999
-------------
Cash flows from operating activities
Net loss for the year $ (44,075)
Adjustments to reconcile net loss to net
cash provided by operating activities
(Increase) Decrease in
Inventory (253,734)
Increase (Decrease) in
Accounts payable and accrued liabilities 8,624
---------
Net cash used in operating activities (289,185)
---------
Cash flows from investing activities --
---------
Cash flows from financing activities
Advances from affiliates 210,716
Proceeds from sale of common stock 51,100
---------
Net cash provided by financing activities 261,816
---------
INCREASE IN CASH (27,369)
Cash at beginning of year 53,686
---------
Cash at end of year $ 26,317
=========
Supplemental disclosure of interest and income taxes paid
Interest paid for the period $ --
=========
Income taxes paid for the period $ --
=========
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management
without audit by independent certified public accountants.
F-12
<PAGE>
MILLENNIA TEA MASTERS, INC.
NOTES TO FINANCIAL STATEMENTS
Note A - Organization and Description of Business
Millennia Tea Masters, Inc. (Company) was incorporated on August 3, 1998 under
the laws of the State of Texas. The Company was formed to engage in the
marketing and sale of imported teas. The Company began operations in October
1998. The Company has elected a year-end of December 31 and uses the accrual
method of accounting.
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's principal product is imported tea grown in Sri Lanka. In the event
of any disruption in the availability of Sri Lankan teas, if any, the Company
may experience a negative economic impact. The Company believes that other teas
of comparable quality and price are available and that no interruption of
product availability will occur.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, 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.
F-13
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MILLENNIA TEA MASTERS, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note B - Summary of Significant Accounting Policies - Continued
2. Inventory
---------
Inventory consists of imported tea products from Sri Lanka and are valued
at the lower of cost or market using the first-in, first-out method. The
product life of imported teas is approximately three (3) years and,
accordingly, the Company anticipates no obsolescence or deterioration in
its products' quality.
3 Organization costs
------------------
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
4. Income Taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. At September 30, 1999, the deferred tax asset and deferred tax
liability accounts, as recorded when material to the financial statements,
are entirely the result of temporary differences. Temporary differences
represent differences in the recognition of assets and liabilities for tax
and financial reporting purposes, primarily accumulated depreciation and
amortization, allowance for doubtful accounts and vacation accruals.
As of September 30, 1999, the deferred tax asset related to the Company's
net operating loss carryforward is fully reserved. If this carryforward is
not utilized, they will begin to expire in 2018.
5. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of September 30, 1999, the Company had no
warrants and/or options outstanding.
Note C - Equity Transactions
During 1999, the Company sold an aggregate 422,374 shares of restricted,
unregistered common stock for total gross proceeds of approximately $51,100.
F-14
EXHIBIT 3.1.
ARTICLES OF INCORPORATION
MILLENNIA TEA MASTERS, INC.
ARTICLE I
The name of this CORPORATION is Millennia Tea Masters, Inc.
ARTICLE II
The period of duration is perpetual.
ARTICLE III
PURPOSES
The purposes for which this CORPORATION is organized are to conduct any
type of business endeavor which is legal pursuant to the laws of the State of
Texas.
ARTICLE IV
SHARES
The total number of shares of stock which the CORPORATION shall
have authority to issue is Twenty five Million (25,000,000) shares of Common
Stock. The par value of each of such shares is One Mill ($0.001) amounting in
the aggregate to Twenty Five Thousand Dollars ($25,000).
ARTICLE V
COMMENCE BUSINESS
The CORPORATION will not commence business until it has received
for the issuance of its shares consideration of the value of One Thousand
Dollars ($1,000.00), consisting of money, labor done, or property actually
received.
ARTICLE VI
MAJORITY VOTE
With respect to any action to be taken by the shareholders of the
CORPORATION under the Texas Business Corporation Act or otherwise, the vote or
occurrence of the holders of a majority of the issued and outstanding shares of
the CORPORATION shall control.
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ARTICLE VII
NO CUMULATIVE VOTING
Cumulative voting is expressly prohibited. At each election of
directors, every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose election he has
a right to vote; no shareholders shall be entitled to cumulate his votes by
giving one candidate as many votes as the number of such directors multiplied by
his shares shall equal, or by distributing such votes on the same principal
among any number of such candidates.
ARTICLE VIII
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 these Articles or of any additional stock of any class
to be issued by reason of any increase of the authorized stock of the
CORPORATION or of any bonds, certificates of indebtedness, debentures, warrants,
options or other securities convertible into any class or stock of the
CORPORATION, but any stock authorized by these Articles 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 decide in its discretion without
offering any thereof on the same terms or on any terms to the shareholders then
of record or to any class of shareholders, provided only that such issuance may
not be inconsistent with any provision of law or with any of the provisions of
these Articles.
ARTICLE IX
CERTAIN INSIDER TRANSACTIONS
Any contract or other transaction between the CORPORATION and one
or more of its directors, or between the CORPORATION and any firm of which one
or more of its directors are members or employees, or in which they are
interested, or between the CORPORATION and any corporation or association of
which one or more of its directors are shareholders, members, directors,
officers or employees, or in which they are interested, shall be valid for all
purposes, notwithstanding the presence of the director or directors at the
meeting of the Board of Directors of the CORPORATION that acts upon, or in
reference to, the contract or transaction, and notwithstanding his or their
participation in the action, if the facts of such interest shall be disclosed or
known to the Board of Directors and the Board of Directors shall, nevertheless,
authorize or ratify the contract or transaction, the interested director or
directors to be counted in determining whether a quorum is present and to be
entitled to vote on such authorization of ratification. This Article shall not
be construed to invalidate any contract or other transaction that would
otherwise be valid under the common and statutory law applicable to it.
ARTICLE X
INDEMNIFICATION
The CORPORATION may indemnify any person made a party to any
action, suit or proceeding, whether civil or criminal, by reason of the fact
that he or she, his or her testator, or intestate, is or was a director,
officer, or employee of the CORPORATION, or of any CORPORATION, which he or she
served in such capacity at the request of the CORPORATION, against the
reasonable expenses, including attorney's fees, actually and reasonably incurred
by him or her in connection with the defense of the action, suit or proceeding
or in connection with any appeal in it. This right to indemnification conferred
by this Article shall not restrict the power of the CORPORATION to make any
other type of indemnification permitted by law.
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ARTICLE XI
INSURANCE
The CORPORATION shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the CORPORATION, or who is or was serving at the request of the
CORPORATION as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such a
person, whether or not the CORPORATION would have the power to indemnify him
against such liability by statute.
ARTICLE XII
LIMITATION ON 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
him 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 be corrected 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 any attorney
hired by or representing the CORPORATION.
ARTICLE XIII
BYLAWS
Except to the extent such power may be modified or divested by
action of the shareholders representing a majority of the issued and outstanding
shares of the Common Stock of the CORPORATION taken at a regular or special
meeting of the shareholders, the power to adopt, alter, amend or repeal the
Bylaws of the CORPORATION shall be vested in the Board of Directors.
ARTICLE XIV
REGISTERED OFFICE AND REGISTERED AGENT
The post office address of its initial registered office and the
name of its initial registered agent at such address are:
Registered Office: 16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Registered Agent: Kevin B. Halter
15
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ARTICLE XV
DIRECTORS
The number of Directors constituting the initial Board of
Directors is two, and the name and address of the persons who are to serve as
Director until the first annual meeting of the shareholders or until their
successors are elected and qualified is:
Name Address
---- -------
Kevin B. Halter 16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Kevin B. Halter, Jr. 16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
ARTICLE XVI
OFFICERS
Until the first annual meeting of shareholders the officers of
this CORPORATION shall be:
President: Kevin B. Halter
Vice President and Secretary: Kevin B. Halter, Jr.
ARTICLE XVII
INCORPORATOR
The name address of the Incorporator is:
Name Address
---- -------
Kevin B. Halter 16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation on this 7th day of December, 1997.
WHISPERING OAKS INTERNATIONAL, INC.
By________________________________
Kevin B. Halter
16
EXHIBIT 3.2
BYLAWS OF MILLENNIA TEA MASTERS, INC.
ARTICLE I
GENERAL
1.1 GENERAL OFFICES Unless otherwise determined by resolution of the
Board of Directors, the principal office of the Corporation shall be located in
the City of Dallas, County of Dallas, State of Texas. The Corporation may have
such other offices, either within or without the State of Texas, as the Board of
Directors may determine or as the affairs of the Corporation may require from
time to time.
1.2 REGISTERED OFFICE The Corporation shall have and continuously
maintain in the State of Texas a registered office which may be, but need not
be, the same as the principal office in the State of Texas. The address of the
registered office may be changed from time to time by the Board of Directors.
1.3 REGISTERED AGENT The Corporation shall have and continuously
maintain in the State of Texas, a registered agent, which agent may be either an
individual resident of the State of Texas whose business office is identical
with the Corporation's registered office, or a domestic corporation, or a
foreign corporation authorized to transact business in the State of Texas which
has a business office identical with the Corporation's registered office. The
registered agent may be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
2.1 ANNUAL SHAREHOLDERS' MEETINGS An annual meeting of the shareholders
shall be held each year on a day to be selected by the Chairman of the Board of
Directors or the President within six months after the end of the Corporation's
fiscal year, for the purpose of electing Directors and for the transaction of
such other business as may come before the meeting. The annual meeting shall not
be held on a date declared a legal holiday by the State of Texas. If the
election of the Directors shall not be held on the date selected for any annual
meeting of Shareholders, or at any adjournment thereof, the Board of Directors
shall cause the election to be held at a special meeting of the shareholders as
soon thereafter as conveniently may be held.
2.2 SPECIAL MEETINGS Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute or these Bylaws, may
be called by the Chairman of the Board, President, the Board of Directors, or
the holders of not less than 25% of all outstanding shares of the Corporation
entitled to vote at the meeting. Business translated at a special meeting shall
be limited to the purposes state in the notice of the meeting.
2.3 PLACE OF MEETING The Chairman of the Board of Directors or the
President may designate any place, either within or without the State of Texas,
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting of shareholders. A waiver of notice signed by
all shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Texas, unless otherwise prescribed by statute, as
the place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
office of the Corporation in the State of Texas.
2.4 NOTICE OF MEETING Written or printed notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board,
President, the Secretary, or the person(s) calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States Mail
addressed to the shareholder at this address as it appears on the stock transfer
book of the Corporation, with postage thereon prepaid.
17
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2.5 ACTION WITHOUT MEETING Unless otherwise provided by the Articles of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders, or any action which may be taken at any annual or special
meeting, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be give to those stockholders who have not
consented in writing.
2.6 FIXING THE RECORD DATE For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors of the Corporation may fix in advance a date as the record date for
such determination of shareholders, such date in any case to be not more than
fifty (50) days and not less than ten (10) days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend, the date on which notice of the meeting is mailed
or the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof except where the
determination has been made through the closing of stock transfer books and the
stated period of closing has expired.
2.7 VOTING LISTS
A. The officer or agent having charge of the stock transfer books for
shares of the Corporation shall make, at least ten (10) days before each
meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting or any adjournment thereof, arranged in alphabetical
order, with the address of and the number of shares held by each, which
list, for a period of ten (10) days prior to such meeting, shall be kept
at the registered office of the Corporation or the principal office of the
Corporation, if it be other than the registered office, and shall be
subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection by any
shareholder during the meeting. The original stock transfer book shall be
prima facie evidence as to who are the shareholders entitled to examine
such list or transfer books or to vote at any meeting of shareholders.
B. Failure to comply with the requirements of this Section shall not
affect the validity of any action taken at such meeting.
C. An officer or agent having charge of the stock transfer books who shall
fail to prepare the list of shareholders or keep the same on file for a
period of ten (10) days, or produce and keep it open for inspection at the
meeting, as provided in this Section, shall be liable to any shareholder
suffering damage on account of such failure, to the extent of such damage.
In the event that such officer or agent does not receive notice of a
meeting of shareholders sufficiently in advance of the date of such
meeting reasonable to enable him or her to comply with the duties
prescribed by this Section, the Corporation, but not such officer or
agent, shall be liable to any shareholder suffering damage on account of
such failure, to the extent of such damage.
2.8 QUORUM OF SHAREHOLDERS The holders of a majority of the shares of
the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. The vote of the holders of a
majority of the shares entitled to vote at any meeting of shareholders at which
a quorum is present, shall be the act of that shareholders' meeting, unless the
vote of a greater number is required by law.
2.9 VOTING OF SHARES
A. Each outstanding share, regardless of class, shall be entitled to one
vote on any matter submitted to a vote of the shareholders, except to the
extent that the Articles of Incorporation provide for more or less than
one vote per share or limit or deny voting rights to the holders of the
shares of any class or series, and except as otherwise provided by the
General Corporation Law or Texas Business Corporation Act.
18
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B. Treasury shares, shares of this Corporation's stock owned by another
corporation, the majority of the voting stock of which is owned or
controlled by this Corporation, and shares of this Corporation's stock
held by this corporation in a fiduciary capacity shall not be voted,
directly or indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares at any given time.
C. A shareholder may vote either in person or by a proxy executed in
writing by the shareholder or by the shareholder's duly authorized
attorney in fact. No proxy shall be valid after eleven (11) months from
the date of its execution unless otherwise specifically provided in the
proxy. Each proxy shall be revocable unless expressly provided therein to
be irrevocable and unless otherwise made irrevocable by law.
D. At each election for Directors every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the
number of shares owned by the shareholder for as many persons as there are
Directors to be elected and for whose election the shareholder has a right
to vote.
2.10 METHOD OF VOTING Voting on any question or in any election shall
be by written ballot.
2.11 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.
2.12 CUMULATIVE VOTING Cumulative voting is expressly prohibited by the
Articles of Incorporation for this Corporation,
2.13 PRE-EMPTIVE RIGHTS No holder of any stock of the Corporation shall
be entitled as a matter of right to purchase or subscribe for any part of any
stock of the Corporation authorized by the Articles of Incorporation or of any
additional stock of any class to be issued by reason of any increase of the
authorized stock of the Corporation, or of any bonds, certificates of
indebtedness, debentures, warrants, options or other securities convertible into
any class of stock of the Corporation, but any stock authorized by the Articles
of Incorporation or any such additional authorized issue of any stock or
securities convertible into any stock may be issued and disposed of by the Board
of Directors to such persons, firms, corporations or associations for such
consideration and upon such terms and in such manner as the Board of Directors
may in its discretion determine without offering any thereof on the same terms
or on any terms to the shareholders then of record or to any class of
shareholders, provided only that such issuance may not be inconsistent with any
provision of law or with any of the provisions of the Articles on Incorporation.
ARTICLE III
DIRECTORS
3.1 MANAGEMENT The business and affairs of the Corporation shall be
managed by its Board of Directors. Directors need not be residents of Texas or
shareholders of the Corporation in order to qualify as a director.
3.2 NUMBER The number of directors of the Corporation shall consist of
from one to three members as shall be elected by the shareholders from time to
time. The number of directors may be increased or decreased from time to time by
amendment to this Section of the Bylaws, but no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
3.3 ELECTION At the first annual meeting of shareholders and at each
annual meeting thereafter, the shareholders shall elect directors to hold office
until the next succeeding annual meeting.
3.4 TERM OF OFFICE Unless removed in accordance with these Bylaws each
director shall hold office for the term for which the director is elected and
until the director's successor shall have been elected and qualified.
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3.5 REMOVAL The entire Board of Directors or any director may be
removed from office, either with or without cause, at any special meeting of
shareholders by the affirmative vote of a majority in number of shares of the
shareholders present in person or by proxy at such meeting and entitled to vote
for the election of such director or directors if notice of intention to act
upon the question of removing such director shall have been stated as one of the
purposes for the calling of such meeting and such meeting shall have been called
in accordance with these Bylaws.
3.6 VACANCY
A. Any vacancy occurring in the Board of Directors may be filled in
accordance with paragraph C of this Section or may be filled by the
affirmative vote of a majority of the remaining directors, though less
than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in
office.
B. A directorship to be filled by reason of an increase in the number of
directors may be filled in accordance with paragraph C of this Section or
may be filled by the Board of Directors for a term of office continuing
only until the next election of one or more directors by the shareholders;
provided that the Board of Directors may not fill more than two such
directorships during the period between any two successive annual meetings
of shareholders.
C. Any vacancy occurring in the Board of Directors or any directorship to
be filled by reason of an increase in the number of directors may be
filled by election at an annual or special meeting of shareholders called
for that purpose.
3.7 QUORUM A majority of the number of directors fixed by these Bylaws
shall constitute a quorum for the transaction of business unless a greater
number is required by law or these Bylaws. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors, unless a greater number is required by law or these
Bylaws.
3.8 ANNUAL DIRECTORS' MEETINGS Immediately after the annual meeting of
the shareholders and at the place such meeting of the shareholders has been
held, the Board of Directors shall meet each year for the purpose of electing
the officers of the Corporation and consideration of any other business that may
properly be brought before the meeting. No notice of any kind to either old or
new members of the Board of Directors for this annual meeting shall be
necessary.
3.9 REGULAR MEETINGS The Board of Directors may provide by resolution
the time and place, either within or without the State of Texas, for the holding
of regular meetings without other notice that such resolution.
3.10 SPECIAL MEETINGS Special meetings of the Board of Directors may be
called by the Chairman of the Board , the President or shall be called at the
request of any two members of the Board of Directors and shall be held upon
notice by letter, telegram, or fax, delivered for transmission not later than
during the third business day immediately preceding the day for the meeting, or
by word of mouth, telephone, or radiophone received not later than during the
second business day immediately preceding the day for the meeting. Notice of any
special meeting of the Board of Directors may be waived before or after the time
of the meeting. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Texas, as the place for holding any special meeting of the Board of Directors
called by them.
3.11 NO STATEMENT OF PURPOSE OF MEETING REQUIRED Neither the business
proposed to be transacted, nor the purpose of any regular or special meeting of
the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.12 COMPENSATION By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at such meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefore.
3.13 ATTENDANCE AND PRESUMPTION OF ASSENT Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. A director who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless that director's dissent shall be
entered in the minutes of the meeting or unless that director shall file a
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
20
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registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.14 EXECUTIVE AND OTHER COMMITTEES The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members an Executive Committee and one or more other committees,
each of which, to the extent provided in such resolution or in these Bylaws,
shall have and may exercise all of the authority of the Board of Directors,
except that no such committee shall have the authority of the Board of Directors
in reference to amending the Articles of Incorporation of the Corporation,
approving a plan of merger or consolidation, recommending to the shareholders
the sale, lease, or exchange of all or substantially all of the property and
assets of the Corporation other than in the usual and regular course of the
Corporation's business, recommending to the shareholders a voluntary dissolution
of the Corporation or a revocation thereof, amending, altering, or repealing
these Bylaws or adopting new Bylaws, filling vacancies in the Board of Directors
or any committee, filling any directorship to be filled by reason of an increase
in the number of directors, electing or removing officers or members of any such
committee, fixing the compensation of any member of such committee. No committee
shall have the power or authority to declare a dividend or to authorize the
issuance of shares of the Corporation. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
3.15 REMOVAL OF COMMITTEE MEMBERS Any member of a committee elected by
the Board of Directors may be removed from said committee, whenever in the
judgment of the Board of Directors the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of a member of
a committee shall not itself create any contract right.
3.16 WAIVER BY UNANIMOUS CONSENT IN WRITING Any action required or
permitted to be taken at a meeting of the Board of Directors, any Executive
Committee or any other committee of the Board of Directors, may be taken without
a meeting if a consent in writing, setting forth the action so taken is signed
by all of the members of the Board of Directors, the Executive Committee or any
other committee of the Board of Directors, as the case may be, and then
delivered to the Secretary of the Corporation of inclusion in the Minute Book of
the Corporation. Such consent shall have the same force and effect as a
unanimous vote at a meeting, and may be stated as such in any document or
instrument filed with Secretary of State.
3.17 TELEPHONE MEETING Subject to the provisions required or permitted
by the General Corporation Law of Texas for notice of meetings, unless otherwise
restricted by the Articles of Incorporation, members of the Board of Directors,
or members of any committee designated by the Board of Directors, may
participate in and hold a meeting of the Board of Directors or that committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE IV
OFFICERS
4.1 NUMBER The principal officers of the corporation shall consist of a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers
and agents as may be deemed necessary may be elected or appointed by the Board
of Directors. Any two (2) or more offices may be held by the same person. No
officer need be a shareholder, a director, or a resident of Texas.
4.2 ELECTION AND TERM OF OFFICE The officers of the Corporation shall
be elected by the Board of Directors at its annual meeting or as soon thereafter
as conveniently possible. New or vacated offices may be filled at any meeting of
the Board of Directors. The subordinate officers and agents not elected or
appointed by the Board of Directors shall be appointed by the President or any
other principal officer to whom the President shall delegate that authority.
Each officer shall hold office until that officer's successor shall have been
fully elected and shall have qualified or until that officer's death or until
that officer shall resign or shall have been removed in the manner hereafter
provided. Election or appointment of an officer or agent shall not of itself
create contract rights.
21
<PAGE>
4.3 REMOVAL Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
4.4 VACANCIES A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term as herein provided.
4.5 AUTHORITY Officers and agents shall have such authority and perform
such duties in the management of the Corporation as are provided in these Bylaws
or as may be determined by resolution of the Board of Directors not inconsistent
with these Bylaws.
4.6 PRESIDENT Unless the Board of Directors elects a Chairman of the
Board and designates him as the principal executive officer of the Corporation,
the President shall be the principal executive officer of the Corporation and
shall have general and active management of the business and affairs of the
Corporation. Unless a Chairman of the Board has been elected, the President
shall preside at all meetings of the Shareholders and of the Board of Directors.
The President may sign, with the Secretary or an Assistant Secretary,
certificates for shares of the Corporation, any deeds, mortgages, bonds,
contracts, or other instruments which the Board of Directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed. The President shall see that all orders and resolutions of
the Board of Directors are carried into effect, and shall perform all duties
incident to the office of President and such other duties as may be prescribed
by the Board of Directors from time to time.
4.7 VICE PRESIDENT In the absence of the President or in the event of
the President's death, inability or refusal to act the Vice President, or in the
event there be more than one Vice President, the Vice Presidents in the order
designated by the Board of Directors or in the absence of any designation then
in the order of their election, shall perform all the duties of the President,
and when so acting shall have all the powers of and be subject to all the
restrictions upon the President. The Vice President shall perform such other
duties as from time to time may be assigned by the Chairman of the Board,
President or by the Board of Directors.
4.8 SECRETARY The Secretary shall keep the minutes of the Shareholders'
and Board of Directors' meetings in appropriate minute books; see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation is affixed to all documents
and instruments which have been duly executed by this Corporation in accordance
the provision s of these Bylaws or the Articles of Incorporation for this
Corporation or as required or permitted by law; keep a register of the mailing
address for each shareholder as it has been furnished to the Secretary by such
shareholder; sign with the President stock certificates representing shares of
the Corporation, the issue of which shall have been authorized by resolution of
the Board of Directors; have general charge of the stock transfer books of the
Corporation; and in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned by the
Chairman of the Board, President or by the Board of Directors.
4.9 TREASURER The Treasurer shall be the principal financial officer of
the Corporation and shall have charge and custody and be responsible for all
funds and securities of the Corporation; receive and give receipts for monies
due and payable to the Corporation from any source whatsoever, and deposit all
such monies in the name of the Corporation in such banks, trust companies or
other depositories as shall be selected by the Board of Directors; render to the
Chairman of the Board, the President and the Board of Directors, whenever the
same shall be required, an account of all transactions as Treasurer and of the
financial condition of the Corporation; if required by the Board of Directors
give bond for the faithful performance of the duties of this office and for the
restoration to the Corporation, in case of the Treasurer's death, resignation,
retirement, or removal from office, of all books, papers, vouchers, money, and
other property of whatever kind in the Treasurer's possession or under his
control belonging to the Corporation; and in general perform all of the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned by the Chairman of the Board, President or by the Board of
Directors.
4.10 ASSISTANT TREASURER AND ASSISTANT SECRETARY The Assistant
Treasurer shall, if required by the Board of Directors, give bond for the
faithful discharge of his duties in such sums and with such sureties as the
Board of Directors shall determine. The Assistant Secretary as authorized by the
22
<PAGE>
Board of Directors may sign with the President stock certificates representing
shares of the Corporation, the issue of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurer and Assistant
Secretary, in general, shall perform such duties as shall be assigned to them by
the Treasurer or the Secretary, respectively, or by the Board of Directors.
4.11 SALARIES The salaries of the principal officers shall be fixed
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that the officer is also a
director of the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 CONTRACTS, DEEDS, MORTGAGES AND OTHER DOCUMENTS Subject always to
the specific direction of the Board of Directors, all deeds and mortgages made
by the Corporation and all other written contracts and agreements to which the
Corporation shall be a party shall be executed in its name by the President or
Vice President (or one of the Vice Presidents if there are more than one), and
when requested, the Secretary shall attest to such signatures and affix the
corporate seal to the instruments.
5.2 LOANS No indebtedness shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
5.3 CHECKS, DRAFTS, ETC. All checks, drafts, notes, bonds, other orders
for the payment of money, or other evidences of indebtedness issued in the name
of the Corporation, shall be signed by such officer or officers, agent or agents
of the Corporation and in such manner as shall from time to time be determined
by a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
5.4 DEPOSITS All funds of the Corporation not otherwise employed, shall
be deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 CERTIFICATES FOR SHARES. The Corporation shall deliver stock
certificates representing all shares to which shareholders are entitled in such
form as may be determined by the Board of Directors. Each certificate
representing shares shall state upon the face thereof that the Corporation is
organized under the laws of the State of Texas; the name of the person to whom
it is issued; the number and class of shares and the designation of the series,
if any, which such certificate represents; the par value of each share
represented by such certificate, and any restrictions or statements required by
law. Such certificates shall be signed by the President or Vice President and
either by the Secretary or Assistant Secretary or such officer or officers as
the Board of Directors shall designate, and may be sealed with the seal of the
Corporation or a facsimile thereof.
6.2 FACSIMILE SIGNATURES The signatures of the President or Vice
President, Secretary or Assistant Secretary or such officer or officers as these
Bylaws or the Board of Directors of the Corporation shall prescribe upon a
certificate may be facsimiles , if the certificate is countersigned by a
transfer agent or registered by a registrar. In case any officer who has signed
or whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Corporation with the same effect as if he or she were such officer at the
date of its issuance.
6.3 ISSUANCE Shares (both treasury and authorized but unissued) may be
issued for such consideration, not less than the par value, f any of such shares
and to such persons as the Board of Directors may determine from time to time.
6.4 SUBSCRIPTIONS Unless otherwise provided in the subscription
agreement, subscriptions for shares, whether made before or after organization
of the Corporation, shall be paid in full at such time or in such installments
and at such times as shall be determined by the Board of Directors. Any call
made by the Board of Directors for payment on subscriptions shall be uniform as
to all shares of the same class or as to all shares of the same series, as the
case may be. Incase of default in the payment on any installment or call when
payment is due, the Corporation may proceed to collect the amount due in the
same manner as any other debt due to the Corporation.
23
<PAGE>
6.5 PAYMENT The consideration paid for the issuance of shares of the
Corporation shall consist of money actually paid, labor or services actually
performed, or property, both tangible and intangible, actually received.
Certificates for shares may not be issued until the full amount of the
consideration, fixed as provided by law, has been paid. When such consideration
shall have been paid to the Corporation or to a corporation of which all of the
outstanding shares of each class are owned by the Corporation, the shares shall
be deemed to have been issued and the subscriber or Shareholder entitled to
receive such issue shall be a Shareholder with respect to such shares, and the
shares shall be considered fully paid and non-assessable. Neither promissory
notes nor the promise of future services shall constitute payment or partial
payment for shares of the Corporation. In the absence of fraud in the
transaction, the judgment of the Board of Directors or the shareholders as the
case may be, as to the value of the consideration received for shares shall be
conclusive.
6.6 LIEN The Corporation shall have a first and prior lien on all
shares of its stock and upon all dividends being declared upon the same for any
indebtedness of the respective holders thereof to the Corporation.
6.7 REPLACEMENT OF LOST OR DESTROYED CERTIFICATES The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to
have been lost or destroyed, upon the making of an affidavit of fact by the
person claiming that the certificate or certificates representing shares has
been lost or destroyed. When authorizing the issuance of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or the owner's legal representative, to give the
Corporation a bond with a surety or sureties satisfactory to the Corporation
with respect to the certificate or certificates alleged to have been lost or
destroyed.
6.8 TRANSFER OF SHARES Shares of stock shall be transferable only on
the books of the Corporation by the holder thereof in person or by the holder's
duly authorized attorney. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation or its transfer agent shall issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6.9 REGISTERED SHAREHOLDERS The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE VII
DIVIDENDS AND RESERVES
7.1 DECLARATION AND PAYMENT Subject to provisions contained in the
statutes or the Articles of Incorporation (if any), dividends may be declared by
the Board of Directors at any regular or special meeting and may be paid in
cash, property, or in shares of the Corporation. Such declaration and payment
shall be at the discretion of the Board of Directors.
7.2 RECORD DATE The Board of Directors may fix in advance a record date
for the purpose of determining shareholders entitled to receive payment of any
dividend, such record date to be not more than fifty (50) days and not less than
ten (10) days prior to the payment date of such dividend. In the absence of any
action by the Board of Directors, the date upon which the Board of Directors
adopted the resolution declaring such dividend shall be the record date.
7.3 RESERVES There may be created by resolution of the Board of
Directors out of the earned surplus of the Corporation such reserve or reserves
as the Directors from time to time, in their discretion, think proper to provide
for contingencies, to pay dividends, or to repair or maintain any property of
the Corporation, or for such other purposes as the Directors shall think
beneficial to the Corporation, and the Directors may modify or abolish any such
reserve in the manner in that it was created.
24
<PAGE>
ARTICLE VIII
INDEMNIFICATION
8.1 DEFINITIONS In this Article:
A, "Corporation" includes any domestic or foreign predecessor entity of
the Corporation in a merger, consolidation, or other transaction in which
the liabilities of the predecessor are transferred to the Corporation by
operation of law and in any other transaction in which the Corporation
assumes the liabilities of the predecessor but does not specifically
exclude liabilities that are the subject matter of this Article VIII.
B. "Director" means any person who is or was a director of the Corporation
and any person who, while a director of the Corporation, is or was serving
at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary or
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise.
C. "Expenses" include court costs and attorneys' fees.
D. "Official capacity" means:
(1). When used with respect to a director, the office of director in
the Corporation, and
(2). When used with respect to a person other than a director, the
elective or appointive office in the Corporation held by the
officer or the employment or agency relationship undertaken by the
employee or agent in behalf of the Corporation, but
(3). In both Paragraphs (1) and (2) does not include service for any
other foreign or domestic corporation or any partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or
other enterprise.
E. "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative, 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.
25
<PAGE>
8.3 LIMITATIONS A director may not be indemnified under Section 8.2 of
this Article for obligations resulting from a proceeding:
A. In which the person is found liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted from
an action taken in the person's official capacity; or
B. In which the person is found liable to the Corporation.
8.4 TERMINATION OF A PROCEEDING The termination of a proceeding by a
judgment, order, settlement, or conviction, or on a plea of nolo contendere or
its equivalent is not of itself determinative that the person did not meet the
requirements set forth in Section 8.2 of this Article.
8.5 PROCEEDING BROUGHT BY THE CORPORATION A person may be indemnified
under Section 8.2 of this Article against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the person in
connection with the proceeding, but if the proceeding was brought by or in
behalf of the Corporation, the indemnification is limited to reasonable expenses
actually incurred by the person in connection with the proceeding.
8.6 DETERMINATION OF INDEMNIFICATION A determination of
indemnification under Section 8.2 of this Article must be made:
A. By a majority vote of a quorum consisting of directors who at the time
of the vote are not named defendants or respondents in the proceeding,
B. If such a quorum cannot be obtained, by a majority vote of a committee
of the Board of Directors, designated to act in the matter by a majority vote
of all Directors, consisting exclusively of directors who at the time of the
vote are not named defendants or respondents in the proceeding,
C. By special legal counsel selected by the Board of Directors or a
committee of the Board by vote as set forth in Subsection A or B of this
Section 8.6, or, if such a quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all Directors; or
D. By the shareholders in a vote that excludes the shares held by the
directors who are named defendants or respondents in the proceeding.
8.7 AUTHORIZATION OF INDEMNIFICATION Authorization of indemnification and
determination as to reasonableness of expenses must be made in the same manner
as the determination that indemnification is permissible, except that if the
determination that indemnification is permissible is made by special legal
counsel, authorization of indemnification and determination as to reasonableness
of expenses must be made in the manner specified by Subsection C of Section 8.6
of this Article, for the selection of special legal counsel. A provision
contained in the Articles of Incorporation, these Bylaws, a resolution of
Shareholders or Directors, or an agreement that makes mandatory the
indemnification permitted under Section 8.2 of this Article shall be deemed to
constitute authorization of indemnification in the manner required by this
Section 8.7 even though such provision may not have been adopted or authorized
in the same manner as the determination that indemnification is permissible.
8.8 INDEMNIFICATION OF A DIRECTOR
A. The Corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is named a defendant
or respondent because he is or was a director if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.
26
<PAGE>
B. If, in a suit for the indemnification required by Section 8.8 of this
Article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
C. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonable entitled to indemnification in view of all the
relevant circumstances, whether or not he has met the requirements set forth in
Section 8.2 of this Article or has been adjudged liable in the circumstances
described in Section 8.3 of this Article, the court may order the
indemnification that the court determines is proper and equitable. The court
shall limit indemnification to reasonable expenses if the proceeding is brought
by or in behalf of the Corporation or if the director is found liable on the
basis that personal benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official capacity.
D. Reasonable expenses incurred by a director who was, is or is threatened to be
made a named defendant or respondent in a proceeding may be paid or reimbursed
by the Corporation in advance of the final disposition of the proceeding after:
1. The Corporation receives a written affirmation by the director of his
good faith belief that he has met the standard of conduct necessary for
indemnification under this Article and a written undertaking by or on
behalf of the director to repay the amount paid or reimbursed if it is
ultimately determined that he has not met those requirements; and
2. A determination that the facts then known to those making the
determination would not preclude indemnification under this Article.
E. The written undertaking required by Subsection D of this Section 8.8 must be
an unlimited general obligation of the director but need not be secured. It may
be accepted without reference to financial ability to make repayment.
Determinations and authorizations of payment under Subsection D of this Section
8.8 must be made in the manner specified by Section 8.6 of this Article for
determining that indemnification is permissible.
F. Notwithstanding any other provision of this Article, a Corporation may pay or
reimburse expenses incurred by a director in connection with his appearance as a
witness or other participation in a proceeding at a time when he or is not a
named defendant or respondent in the proceeding.
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
27
<PAGE>
Corporation's Articles of Incorporation, Bylaws, general or specific action of
its Board of Directors, or contract or as permitted or required by common law.
8.10 INDEMNITY INSURANCE The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in such a capacity or arising out of his status as such a
person, whether or not the Corporation would have the power to indemnify him
against that liability under this Article.
8.11 REPORTS TO SHAREHOLDER Any indemnification of or advance of
expenses to a director in accordance with this Article shall be reported in
writing to the shareholders with or before the notice or waiver of notice of the
next shareholders' meeting or with or before the next submission to shareholders
of a consent to action without a meeting pursuant to the General Corporation Law
of Texas and, in any case, within the 12 month period immediately following the
date of the indemnification or advance.
8.12 EMPLOYEE BENEFIT PLANS For the purposes of this Article, the
Corporation is deemed to have requested a director to serve an employee benefit
plan whenever the performance of his duties to the Corporation also imposes
duties on or otherwise involves services by him to the plan or participants or
beneficiaries of the plan pursuant to applicable law. Action taken or omitted by
him with respect to an employee benefit plan in the performance of his duties
for a purpose reasonable believed by him to be in the interest of the
participants and beneficiaries of the plan is deemed to be for a purpose which
is not opposed to the best interests of the Corporation.
ARTICLE IX. MISCELLANEOUS
9.1 LIMITATION OF LIABILITY No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken by that person as a director, officer or employee of the
Corporation in good faith, if, in the exercise of ordinary care, this person:
A. Relied upon financial statements of the Corporation represented to this
person to be correct by the President or the officer of the Corporation having
charge of its books of account, or stated in a written report by an independent
public or certified public accountant or firm of such accountants, fairly to
reflect the financial condition of the Corporation, or considered the
Corporation's assets to be of their book value; or
B. Relied upon the written opinion of an attorney for the
Corporation.
9.2 FISCAL YEAR The fiscal year of the Corporation shall be fixed by a
resolution of the Board of Directors.
9.3 SEAL The corporate seal shall be in such form as may be determined
by the Board of Directors. Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
9.4 BOOKS AND RECORDS The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
shareholders and the Board of Directors, and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its shareholders, giving the names and addressees of all
shareholders and the number and class of the shares held by each. Any books,
records and minutes may be in written form or in any other form capable of being
converted into written form within a reasonable time. Any person who shall have
been a holder of record of shares for at least six (6) months immediately
preceding demand, or shall be the holder of record of at least five percent (5%)
of all the outstanding shares of a corporation, upon written demand stating the
28
<PAGE>
purpose thereof, shall have the right to examine, in person or by agent,
accountant, or attorney, at any reasonable time or times, for any proper
purpose, its relevant books and records of account, minutes and records of
shareholders, and to make copies thereof, all at such persons expense.
9.5 RESIGNATION Any director, officer or agent may resign by giving
written notice to the Chairman of the Board, President or the Secretary. Such
resignation shall take effect at the time specified therein, or immediately if
no time is specified therein. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
9.6 AMENDMENT OF BYLAWS These Bylaws may be altered, amended, or
repealed either by unanimous written consent of the Board of Directors, in the
manner stated in Article 3.16 herein, or at any meeting of the Board of
Directors at which a quorum is present, by the affirmative vote of a majority of
the Directors present at such meeting, provided notice of the proposed
alteration, amendment, or repeal is contained in the notice of such meeting
9.7 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.
9.8 HEADINGS The headings used in these Bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
their interpretation.
9.9 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.
9.10 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.
29
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