-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LGHOnVHCMwUQ4KSwLmqmO9miXWabq36MnWynNddqsvjUefOSbNDqmpseYBJUebbT y7V83f+674szns1He7XDPg== /in/edgar/work/0000899243-00-002514/0000899243-00-002514.txt : 20001116 0000899243-00-002514.hdr.sgml : 20001116 ACCESSION NUMBER: 0000899243-00-002514 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZYDECO ENERGY INC CENTRAL INDEX KEY: 0000908246 STANDARD INDUSTRIAL CLASSIFICATION: [1311 ] IRS NUMBER: 760404904 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-22076 FILM NUMBER: 768240 BUSINESS ADDRESS: STREET 1: 635 WEST CAMPBELL RD STREET 2: SUITE 130 CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 9727830284 MAIL ADDRESS: STREET 1: 1710 TWO ALLEN CENTER STREET 2: 1200 SMITH STREET CITY: HOUSTON STATE: TX ZIP: 77002-4312 FORMER COMPANY: FORMER CONFORMED NAME: TN ENERGY SERVICES ACQUISITION CORP DATE OF NAME CHANGE: 19930701 10QSB 1 0001.txt FORM 10-QSB FOR QUARTER ENDED SEPTEMBER 30, 2000 U.S SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER: 0-22076 ZYDECO ENERGY, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 76-0404904 (I.R.S. Employer Identification No.) 635 WEST CAMPBELL ROAD, SUITE 130 RICHARDSON, TEXAS (Address of principal executive offices) 75080 (Zip Code) (972) 783-0284 (Registrant's telephone number, including area code) (Former address of Registrant's principal executive offices, if changed from last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] As of November 9, 2000 there were 42,775,951 shares of Zydeco Energy, Inc. Common Stock, $.001 par value, issued and outstanding. 1 FORM 10-QSB TABLE OF CONTENTS Page Number ------ Part I. Financial Information Item 1. Consolidated Financial Statements Consolidated Balance Sheets.................. 4 Consolidated Statements of Operations........ 5 Consolidated Statements of Cash Flows........ 6 Notes to Consolidated Financial Statements... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 11 Part II. Other Information Item 1. Legal Proceedings............................ 16 Item 6. Exhibits and Reports on Form 8-K............. 16 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. 3 ZYDECO ENERGY, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 2,788,096 394,740 Certificates of deposit 100,000 -- Accounts receivable 194,873 621,535 Vendor deposit 35,209 360,000 Deferred tax asset 392,600 16,947 Prepaid expenses 43,634 -- Other 1,424 29,889 ----------- --------- Total current assets 3,555,836 1,423,111 Certificates of deposit -- 96,290 Investment in Wavefield Imaging Technology 651,801 -- Property and equipment, net 1,179,180 147,845 Deferred tax asset 599,700 -- Goodwill, net (note 1) 24,928,527 -- Other assets 138,385 -- ----------- --------- $31,053,429 1,667,246 =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable to related party (note 4) $ 250,000 -- Note payable for equipment (note 4) 298,869 -- Line of credit (note 4) 190,555 -- Accounts payable 861,115 305,375 Unearned revenue 671,508 493,882 Accrued liabilities and other 625,722 326,108 Customer deposit -- 360,000 Current installments of obligations under capital leases 11,879 22,432 ----------- --------- Total current liabilities 2,909,648 1,507,797 Obligations under capital leases, excluding current installments 14,943 61,049 ----------- --------- Total liabilities 2,924,591 1,568,846 Stockholders' equity: Preferred stock, $.001 par value; 1,000,000 shares authorized and 7,190 shares issued and outstanding in 2000 7 -- Common stock, $.001 par value; 50,000,000 shares authorized, 42,775,951 and 32,623,855 issued and outstanding in 2000 and 1999, respectively 42,776 1,000 Additional paid in capital 29,894,823 -- Retained earnings (accumulated deficit) (1,817,392) 97,400 Accumulated Other Comprehensive Income 8,624 -- ----------- --------- Total stockholders' equity 28,128,838 98,400 ----------- --------- Contingency (note 5) $31,053,429 1,667,246 =========== ========= See accompanying notes to consolidated financial statements. 4 ZYDECO ENERGY, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2000 1999 2000 1999 -------- ---------- ---------- --------- Revenues: Net service revenue $ 3,087,466 2,151,005 8,372,795 5,587,646 Other revenue 56,669 -- 82,669 -- ----------- ---------- ---------- ---------- Total revenues 3,144,135 2,151,005 8,455,464 5,587,646 Operating expenses: Cost of services 2,000,405 1,555,902 4,808,771 3,865,149 Selling and marketing 30,532 200,955 68,398 614,977 General and administrative 825,747 183,278 1,683,183 394,176 Amortization of unearned stock compensation 460,335 -- 1,652,042 -- Amortization of goodwill 1,328,890 -- 1,649,280 -- Depreciation and amortization 56,607 4,018 110,010 12,054 ----------- ---------- ---------- ---------- Total operating expenses 4,702,516 1,944,153 9,971,684 4,886,356 ----------- ---------- ---------- ---------- Operating income (loss) (1,558,381) 206,852 (1,516,220) 701,290 Loss on disposal of fixed asset 3,011 -- 3,011 -- Interest income 31,020 2,342 59,064 3,709 Interest expense 8,687 10 24,843 229 ----------- ---------- ---------- ---------- Income (loss) before income taxes (1,539,059) 209,184 (1,485,010) 704,770 Income tax expense (benefit) (77,762) 9,413 (739,529) 31,715 ----------- ---------- ---------- ---------- Net income (loss) $(1,461,297) 199,771 (745,481) 673,055 =========== ========== ========== ========== Net income (loss) per common share: Basic and diluted $ (0.03) 0.01 (0.02) 0.02 =========== ========== ========== ========== Weighted average common shares outstanding: Basic 49,965,951 39,813,855 44,024,522 39,813,855 =========== ========== ========== ========== Diluted 49,965,951 39,813,855 44,024,522 39,813,855 =========== ========== ========== ========== Pro forma data (note 1): Income tax expense (benefit) 77,398 66,491 260,919 ---------- ---------- ---------- Net income (loss) 131,786 (1,551,501) 443,851 ========== ========== ========== Net income (loss) per common share: Basic and diluted 0.00 (0.04) 0.01 ========== ========== ========== Weighted average common shares outstanding: Basic and diluted 39,813,855 44,024,522 39,813,855 ========== ========== ========== See accompanying notes to consolidated financial statements.
5 ZYDECO ENERGY, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) NINE MONTHS ENDED SEPTEMBER 30, 2000 1999 --------- ------- Cash flows from operating activities: Net income (loss) $ (745,481) 673,055 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,759,290 12,054 Loss on disposal of asset 3,011 Amortization of unearned stock compensation 1,652,042 -- Deferred tax (benefit) expense (975,353) -- Changes in assets and liabilities: Accounts receivable 535,388 136,749 Customer deposit (360,000) -- Accounts payable and accrued liabilities 589,155 351,144 Unearned revenue 177,626 (255,576) Vendor deposit 324,791 -- Prepaid expenses (43,634) -- Other 29,253 (45,234) ----------- -------- Net cash provided by operating activities 2,946,088 935,622 ----------- -------- Cash flows from investing activities: Purchase of certificates of deposit -- (95,000) Cash acquired in the merger, net of direct costs (note 1) 432,414 -- Capital expenditures (155,414) (30,136) ----------- -------- Net cash provided by (used in) investing activities 277,000 (125,136) ----------- -------- Cash flows from financing activities: Proceeds from notes payable to related parties 250,000 -- Principal payments on notes to related parties -- (27,103) Principal payments on obligations (232,286) -- Payments of dividends (847,446) (316,927) ----------- -------- Net cash used in financing activities (829,732) (344,030) ----------- -------- Net increase in cash and cash equivalents 2,393,356 466,456 Cash and cash equivalents at beginning of period 394,740 159,996 ----------- -------- Cash and cash equivalents at end of period $ 2,788,096 626,452 =========== ======== Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 2,164 229 =========== ======== Cash paid during the period for income taxes $ 27,180 7,259 =========== ======== Supplemental disclosure of noncash investing and financing activities: Disposal of captialized lease asset $ 51,745 -- =========== ======== Purchase of equipment in exchange for note payable (note 4) $ 709,473 -- =========== ======== Reverse acquisition of Zydeco by DataVoN (note 1) $27,962,700 -- =========== ======== See accompanying notes to consolidated financial statements. 6 Zydeco Energy, Inc. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2000 and 1999 (Unaudited) 1) Merger and Basis of Financial Reporting On June 9, 2000, DataVoN, Inc. (DataVoN) merged (the Merger) with Zydeco Energy, Inc. (Zydeco) and DataVoN became a subsidiary of Zydeco. Shareholders of DataVoN received shares of Zydeco equal to a majority of the shares of Zydeco outstanding after the transaction. Accordingly, the business combination has been accounted for as a reverse acquisition of Zydeco by DataVoN using the purchase method of accounting. Accordingly, the historical financial statements of DataVoN prior to the Merger have become the financial statements of the registrant, and the results of operations of Zydeco have been combined with DataVoN beginning on June 9, 2000. References to the "Company" refer to operations of DataVoN prior to the Merger and the combined operations of DataVoN and Zydeco subsequent to the Merger. The purchase price totals approximately $28 million, which is comprised of the traded market value of Zydeco's outstanding common stock and the fair value of Zydeco's outstanding options and warrants at the date the Merger was agreed and announced, and direct acquisition costs. A substantial portion of the purchase price was allocated to goodwill that is being amortized to expense over a five-year period. This goodwill is subject to an impairment test. As a result, an impairment of goodwill may be required in the near term, and if so required, could be material to the results of operations and financial position. The purchase price allocation is based on preliminary estimates. The final allocation of the purchase price may differ from that reflected in the accompanying consolidated financial statements as of and for the nine months ended September 30, 2000 upon completion of the analysis of the fair values of the assets acquired and liabilities assumed. Specifically, Zydeco had a net operating loss carryforward for tax purposes of approximately $18.4 million as of December 31, 1999. The Company is assessing the impact the Merger had on any limitations to the ultimate use of this net operating loss carryforward by the Company in periods subsequent to the Merger and no conclusion has been reached. To the extent that a deferred tax asset can ultimately be recognized in the final purchase price allocation, there will be a reduction to goodwill. Under the terms of the Merger, DataVoN's shareholders received 32,623,855 shares of common stock and 7,190 shares of preferred stock of Zydeco. The preferred shares will automatically convert into 7,190,000 common shares when sufficient additional common shares of Zydeco are authorized by its stockholders, and vote with the Zydeco common shares on an as if converted basis on all matters, except as required by law. Zydeco intends to issue a proxy statement in the near term to obtain stockholder approval to increase its authorized common shares. Stockholders' equity has been converted from DataVoN's capital structure to Zydeco's capital structure to reflect the exchange of shares pursuant to the Merger. Accordingly, all share and per share information has been revised to reflect the exchange ratio on a retroactive basis. The preferred shares are included in weighted average common shares outstanding during the periods presented for both basic and diluted earnings per share on an as if converted basis since the former DataVoN shareholders currently have the 7 ability to authorize sufficient additional common shares of Zydeco and the authorization is essentially a formality. In connection with the Merger, DataVoN converted from an S corporation into a C corporation. Accordingly, the Company eliminated DataVoN's retained earnings and established deferred federal income taxes at the date of the Merger. The corresponding deferred tax benefit of $643,969 was recognized in the statement of operations for the nine months ended September 30, 2000. The unaudited pro forma statement of operations data presented on the face of the statements of operations for the nine months ended September 30, 2000 and the three months and nine months ended September 30, 1999 are based upon the Company's historical statements of operations and give effect to pro forma income taxes as if the Company was a C corporation for the entire duration of these periods. Unaudited pro forma results, as if the Merger had occurred at the beginning of the period presented and including pro forma income taxes as if DataVoN was a C corporation for the entire duration of both periods, are as follows. These unaudited pro forma results do not purport to be indicative of results which would actually have occurred if the Merger had been consummated at the beginning of the period presented. For the nine months ended September 30, 2000 1999 ----------- ----------- Pro forma revenues $ 8,512,409 $ 5,788,201 =========== =========== Goodwill amortization $ 3,986,671 $ 3,986,671 =========== =========== Pro forma net loss $(4,626,147) $(4,896,873) =========== =========== Pro forma diluted loss per share $ (0.09) $ (0.09) =========== =========== The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting solely of normal adjustments) considered necessary to present fairly the financial position, results of operations and cash flows of the Company. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These interim unaudited financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 1999 included in the Form 8-K filed by Zydeco with the Securities and Exchange Commission on June 19, 2000. These interim unaudited financial statements should also be read in conjunction with the audited financial statements of Zydeco for the year ended December 31, 1999 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2000. (2) Stock Compensation In March 2000, the Company adopted a stock option plan. Under the plan, the Company may grant to officers, directors, consultants and employees options to 8 purchase shares of the Company's common stock. In March 2000, the Company granted options to purchase 2,522,459 shares of its common stock for an exercise price of $0.49 per share. These options have a 10 year life and vest over a three-year period, subject to certain exceptions. Stock compensation totaling approximately $5.2 million is being recognized over the vesting period. During the third quarter 500,000 options were forfeited when an employee left the Company and the corresponding compensation expense previously recognized was reversed. (3) Segment Information As a result of the Merger, the Company is now organized along two lines of business, DataVoN and Zydeco. DataVoN provides Internet protocol bandwidth capacity to a number of major domestic and international carriers and IP providers desiring to employ the benefits of Voice over Internet Protocol (VoIP) technology and networking. Zydeco is an independent energy company that has been engaged in the exploration for oil and gas utilizing advanced three-dimensional seismic and computer-aided exploration techniques. Because of market conditions, Zydeco's operations were curtailed prior to the Merger and it had focused its efforts on (1) conserving cash resources; (2) concentrating on marketing salable assets; and (3) seeking alternate sources of capital for possible drilling participation and general working capital, including potential business combinations outside of the oil and gas industry. The Company is considering its alternatives with respect to the operations of Zydeco. Zydeco's revenues and net loss for the period from the Merger date to September 30, 2000 are insignificant. The following is a summary of total assets by reportable segment: September 30, December 31, 2000 1999 ------------- ------------ DataVoN $ 4,413,564 1,667,246 Zydeco 1,711,338 -- Goodwill from the Merger 24,928,527 -- ----------- --------- Total assets $31,053,429 1,667,246 =========== ========= (4) Notes Payable In March 2000, the Company entered into a note payable arrangement with a vendor for the purchase of network equipment. The note bears interest at 9% and requires monthly payments of $44,010, until the final balance is due on April 1, 2001. On May 1, 2000, the Company entered into a Security Agreement and Note Payable with a related party for $250,000. The note bears interest at 9% per annum. The note is due on demand but no later than January 15, 2001. The note is secured by substantially all assets of the Company. On June 21, 2000, the Company entered into a Loan and Security Agreement with Bank of Texas that provides access to a $500,000 revolving credit facility. The line of credit is secured by a lien on all trade receivables. Interest accrues daily on the unpaid principal of the facility at an annual rate equal to the prime rate, as defined in the Loan and Security Agreement, plus .5%. As of 9 September 30, 2000, no borrowings had been made under the Loan and Security Agreement. On September 28, 2000, the Company entered into an equipment line of credit with Comerica that provides access to a $275,000 line of credit. This line of credit is secured by a lien on equipment. Interest accrues daily on the unpaid principal at an annual rate equal to the prime rate, as defined in the agreement, plus 1%. As of September 30, 2000, $190,555 had been drawn down to purchase equipment. (5) Contingency The Company is currently involved in litigation with a former sales agent in regards to commissions allegedly owed to the former commissioned agent by the Company. The Company has countersued the former agent for $230,000 owed by the former agent to the Company. The litigation is in its early stages and no determination of the outcome is possible at this time. The former agent alleges maximum economic damages of approximately $4 million. Management of the Company is vigorously defending against this claim. No reserve for the claim, or receivable for the counterclaim, has been established for this litigation as of September 30, 2000. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis of the Company's financial condition and results of operations for the three months and nine months ended September 30, 2000 should be read in conjunction with the consolidated financial statements and footnotes for the three months and nine months ended September 30, 2000 included herein. The Company believes that all necessary adjustments (consisting of normal recurring adjustments) have been included in the amounts stated below to present fairly the following quarterly information. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results for interim periods are not necessarily indicative of results for the year. OVERVIEW The Company is a wholesale provider of voice and data services over a next generation packet switched network. As of October 31, 2000, the Company was providing services to several domestic carriers and is currently operating in 14 markets with points of presence ("POP's") in 25 cities. Through its network, the Company transports a large volume of "toll quality" voice and data services. The entrance point for communications traffic over its network is referred to as a POP (point of presence). The Company's customers interconnect with its network by connecting dedicated voice circuits from their facilities to gateways located in one of its POP's. The Company was incorporated in 1993. The Company conducted oil & gas seismic exploration operations beginning in 1993. On June 9, 2000, the Company merged with DataVoN Inc. ("DataVoN"). As a result of this merger, the former shareholders of DataVoN now own approximately 80% of the voting power of the Company's common stock. The merger was accounted for as a reverse acquisition of the Company by DataVoN under the purchase method of accounting. Accordingly, the historical financial statements of DataVoN prior to the merger have become the Company's financial statements, and the Company's results of operations will be combined with those of DataVoN from and after the date of the merger. As the oil and gas seismic exploration operations are not currently material to the Company's combined results of operations, the Company does not discuss them below. The Company's primary source of revenue is the fees that it receives from customers for transporting and completing calls over its network. This revenue is dependent on the volume of voice and data traffic carried over the network, which is measured in minutes. The Company charges its customers fees based upon a per minute or flat rate charge prior to the service being offered and recognizes this revenue in the period in which the call is completed. The Company's most significant costs and expenses are data communications and 11 telecommunications expenses which are comprised primarily of collocation facility fees, transport fees, termination fees, and equipment expenses. Collocation facility fees are paid for lease of rack space, power and associated services to "host" the equipment. Transport fees are paid to a "backbone provider" to carry traffic between POP's where the equipment is located. Termination fees are paid to local service providers to terminate calls. Equipment costs are capitalized and depreciated over their useful lives and minor items are expensed directly. Other expenses include charges for connections between the Company's POP's and its vendors for termination services and software support and management systems required in maintaining its network. RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1999 NET SERVICE REVENUE. The Company's net service revenue increased by $0.9 million to $3.1 million for the three months ended September 30, 2000, from $2.2 million for the three months ended September 30, 1999. The increase in net revenue resulted from an increase in the amount of traffic carried over the Company's network to approximately 460.5 million minutes for the three months ended September 30, 2000, from approximately 286.0 million minutes for the three months ended September 30, 1999. COST OF SERVICES. Cost of services increased by approximately $0.4 million to $2.0 million for the three months ended September 30, 2000, from $1.6 million for the three months ended September 30, 1999. The increase in expense was driven by the increase in traffic described above. Collocation facility fees increased to $67,800 for the three months ended September 30, 2000, from $9,300 for the three months ended September 30, 1999. Telecommunications fees increased to $1.8 million for the three months ended September 30, 2000 from $1.5 million for the three months ended September 30, 1999. As a percentage of net service revenue, cost of services expense decreased to approximately 65% for the three months ended September 30, 2000, from approximately 72% for the three months ended September 30, 1999. SELLING AND MARKETING EXPENSES. Selling and marketing expenses include expenses relating to the salaries, payroll taxes, benefits and commissions that the Company pays for sales personnel and the expenses associated with the development and implementation of its promotion and marketing campaigns, including expenses relating to its outside public relations firm and industry analysts. Selling and marketing expenses decreased by $168,066 to $30,532 for the three months ended September 30, 2000 from $200,955 for the three months ended September 30, 1999. This decrease is attributable to the Company replacing commissioned sales agents with employees. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses include salary, payroll tax and benefit expenses and related costs for general corporate functions, including executive management, administration, office facilities, information technology and human resources. General and administrative expenses increased by $0.6 million to $0.8 million for the three months ended September 30, 2000, from $0.2 million for the three months ended September 30, 1999. General and administrative expenses increased primarily due to an increase in the number of personnel and an increase in consulting and 12 professional fees. As a percentage of net revenue, general and administrative expenses increased to approximately 26% for the three months ended September 30, 2000, from 9% for the three months ended September 30, 1999 due to the factors described above. DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense increased by $1.4 million for the three months ended September 30, 2000, from $4,018 for the three months ended September 30, 1999. This increase primarily resulted from amortization of goodwill associated with the merger. AMORTIZATION OF UNEARNED STOCK COMPENSATION. This expense totaled $460,335 and represents amortization of stock compensation related to options the Company issued in March 2000. The stock compensation is being amortized over the vesting period of the options, which equals the estimated period of benefit. INTEREST INCOME AND INTEREST EXPENSE. Interest expense is primarily comprised of interest on the Company's notes payable, and various capital leases. Interest income is primarily composed of income earned on the Company's cash and cash equivalents and certificates of deposit. RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1999 NET SERVICE REVENUE. The Company's net service revenue increased by $2.8 million to $8.4 million for the nine months ended September 30, 2000, from $5.6 million for the nine months ended September 30, 1999. The increase in net revenue resulted from an increase in the amount of traffic carried over the Company's network to approximately 1.2 billion minutes for the nine months ended September 30, 2000, from approximately 0.7 billion minutes for the nine months ended September 30, 1999. COST OF SERVICES. Cost of services expense increased by $0.9 million to $4.8 million for the nine months ended September 30, 2000, from $3.9 million for the nine months ended September 30, 1999. The increase in expense was driven by the increase in traffic described above. Collocation facility fees increased to $106,303 for the nine months ended September 30, 2000, from $13,624 for the nine months ended September 30, 1999. Telecommunications fees increased to $4.5 million for the nine months ended September 30, 2000, from $3.9 million for the nine months ended September 30, 1999. As a percentage of net revenue, cost of services expense decreased to approximately 57% for the nine months ended September 30, 2000, from approximately 69% for the nine months ended September 30, 1999. SELLING AND MARKETING EXPENSES. Selling and marketing expenses include expenses relating to the salaries, payroll taxes, benefits and commissions that the Company pays for sales personnel and the expenses associated with the development and implementation of its promotion and marketing campaigns, including expenses relating to its outside public relations firm and industry analysts. Selling and marketing expenses decreased by $0.5 million to $68,398 for the nine months ended September 30, 2000 from $0.6 million for the nine months ended September 30, 1999. This decrease is attributable to the Company replacing commissioned sales agents with employees. As a percentage of net revenue, selling and marketing expenses decreased to approximately 1% for the nine months ended September 30, 2000, from approximately 11% for the nine months ended September 30, 1999. 13 GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses include salary, payroll tax and benefit expenses and related costs for general corporate functions, including executive management, administration, office facilities, information technology and human resources. General and administrative expenses increased by $1.3 million to $1.7 million for the nine months ended September 30, 2000, from $0.4 million for the nine months ended September 30, 1999. General and administrative expenses increased primarily due to an increase in the number of personnel and an increase in consulting and professional fees. DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization expense increased by $1.8 million for the nine months ended September 30, 2000, from $12,054 for the nine months ended September 30, 1999. This increase primarily resulted from amortization of goodwill associated with the merger. AMORTIZATION OF UNEARNED STOCK COMPENSATION. This expense totaled $1,652,042 and represents amortization of stock compensation related to options the Company issued in March 2000. The stock compensation is being amortized over the vesting period of the options, which equals the estimated period of benefit. INTEREST INCOME AND INTEREST EXPENSE. Interest expense is primarily comprised of interest on the Company's notes payable, and various capital leases. Interest income is primarily composed of income earned on the Company's cash and cash equivalents and certificate of deposit. LIQUIDITY AND CAPITAL RESOURCES The Company's principal capital and liquidity needs historically and currently have related to the development of its network infrastructure, its sales and marketing activities, and general capital needs. The Company's capital needs have been met, in large part, from cash flow generated from operations. As the Company has placed greater emphasis on expanding its network infrastructure, the Company also plans to meet an increasing portion of its capital needs through vendor capital leases and other equipment financing. The Company has also established a $500,000 line of credit with a bank. Net cash provided by operating activities was $2.9 million for the nine months ended September 30, 2000, as compared to $0.9 million for the nine months ended September 30, 1999. The increase was primarily attributable to increased revenue from voice and data services over IP. Net cash provided by investing activities was $0.3 million for the nine months ended September 30, 2000, as compared to $0.1 million used by investing activities for the nine months ended September 30, 1999. Net cash used in financing activities was $0.8 million for the nine months ended September 30, 2000, as compared to net cash used in financing activities of $0.3 million for the nine months ended September 30, 1999. In March 2000, the Company entered into a notes payable arrangement with a vendor for the purchase of network equipment. The notes bears interest at 9% and requires monthly payments of $44,010, until the final balance is paid on April 1, 2001. The balance outstanding at September 30, 2000 was $298,869. 14 On May 1, 2000, the Company entered into a Security Agreement and Note Payable with a related party for $250,000. The note bears interest at 9% per annum from the date of the note until paid. The note is due on demand but no later than January 15, 2001. The note is secured by substantially all of the Company's assets. On June 21, 2000, the Company entered into a Loan and Security Agreement with Bank of Texas that provides it with access to a $500,000 revolving credit facility. The line of credit is secured by a lien on all of the Company's trade receivables. Interest accrues daily on the unpaid principal of the facility at an annual rate equal to the prime rate, as defined in the Loan and Security Agreement, plus .5%. As of September 30, 2000, the Company had made no borrowings under the Loan and Security Agreement. On September 28, 2000, the Company entered into an equipment line of credit with Comerica that provides access to a $275,000 line of credit. This line of credit is secured by a lien on equipment. Interest accrues daily on the unpaid principal at an annual rate equal to the prime rate, as defined in the agreement, plus 1%. As of September 30, 2000, $190,555 had been drawn down to purchase equipment. Capital expenditures totaled approximately $0.9 million for the nine months ended September 30, 2000. Based on the Company's existing operations, the Company estimates total capital expenditures for 2000 to be approximately $3.0 million, mainly for equipment to expand its network infrastructure, which is expected to be funded by cash flows from operations and financing. However, there can be no assurance that the Company will be able to obtain such outside financing to fund these capital expenditures. If the Company is unable to obtain such outside financing, its planned expansion of its network infrastructure will be reduced. The Company believes that its cash on hand, cash flows from operations, borrowing availability under its revolving line of credit and other financing arrangements which it plans to pursue will be sufficient to satisfy existing commitments and plans, including those described above. However, there can be no assurance that the Company will be able to make planned borrowings, that its business will generate sufficient cash flows from operations, or that future borrowings will be available in an amount to enable the Company to make necessary capital or other expenditures. FORWARD-LOOKING STATEMENTS The information in this Form 10-QSB includes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. The Company includes this statement for the express purpose of availing itself of the protections of these safe harbor provisions with respect to all of the forward-looking statements the Company makes. The forward- looking statements in this Form 10-QSB reflect the Company's current views with respect to possible future events and financial performance. They are subject to certain risks and uncertainties, including without limitation the absence of significant revenues, financial resources, loss of key customers and/or personnel, significant competition, regulatory changes and those other risks and uncertainties discussed herein that could cause the Company's actual results to differ materially from the Company's historical results or those that the Company hopes to achieve. In this Form 10-QSB, the words, "anticipates," "plans," "believes," "expects," "intends," "future" and similar expressions identify certain forward-looking statements. Please do not place undue reliance on the forward-looking statements contained in this Form 10-QSB. The Company undertakes no obligation to announce publicly revisions it 15 makes to these forward-looking statements to reflect the effect of events or circumstances that may arise after the date of this Form 10-QSB. All written and oral forward-looking statements made subsequent to the date of this Form 10-QSB and attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this section. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. In a complaint filed on December 9, 1999 in the District Court of Tarrant County in the State of Texas, Teton Enterprises brought suit against DataVoN and Hugh Simpson. The complaint alleges that DataVoN owes the plaintiff, a former sales person doing business under a corporate name, certain commissions pursuant to a contract entered into between the parties. DataVoN has countersued the plaintiff for amounts owed by the plaintiff to DataVoN. The litigation is set for trial in July of 2001. Extensive discovery has been exchanged by both parties and pre-trial motion practice is the anticipated next step. No determination of the outcome is possible at this stage. The plaintiff alleges maximum economic damages in the amount of $4,222,970.54, which DataVoN believes is contradictory to the disclosures made by plaintiff regarding calculation of economic damages pled. DataVoN alleges in its counterclaim, among other claims pled, that the plaintiff owes DataVoN in excess of $200,000. Management of DataVoN can make no assurances as to the outcome of such litigation nor what effect it will have on the business of DataVoN or its financial condition. The defendants will continue to defend the action vigorously. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.1 Certificate of Incorporation and Certificates of Amendment thereto (incorporated by reference to Zydeco's Annual Report on Form 10-K for the year ended December 31, 1995). 3.2* Amended and Restated Bylaws. 3.3 Certificate of Designations of Series A Convertible Preferred Stock of Zydeco (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on June 19, 2000). 10.1 Warrant Agreement between Continental Stock Transfer & Trust Company and Zydeco Energy, Inc. (incorporated by reference to Registration Statement on Form S-1 (Reg. No. 33-65286)). 10.2 Form of Warrant Agreement by and among Zydeco Energy, Inc. and Brean Murray & Co., Inc. and Gaines, Berland Inc. (incorporated by reference to Registration Statement on Form S-1 (Reg. No. 333-27679)). 16 EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.3 Agreement and Plan of Merger among Zydeco Energy, Inc., DVN Acquisition Corporation and DataVoN Inc. dated as of May 23, 2000 (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on May 24, 2000). 10.4 Zydeco Energy, Inc. 2000 Stock Option Plan (formerly known as the DataVoN Inc. 2000 Stock Option Plan) (incorporated by reference to Registration Statement on Form S-8 (Reg. No. 333-41492) filed with the SEC on July 14, 2000. 27.1* Financial Data Schedule. * Filed herewith (b) Report on Form 8-K. On August 8, 2000, the Company filed a Report on Form 8-K pursuant to Item 4 disclosing the change of its accountants. On August 16, 2000, the Company filed Amendment No. 1 to Report on Form 8-K pursuant to Item 7 disclosing certain financial statements and pro forma information regarding the consummation of its merger with DataVoN Inc. 17 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ZYDECO ENERGY, INC. /s/ Marcia C. Kennedy --------------------------------------- Marcia C. Kennedy Chief Financial Officer Dated: November 14, 2000 18 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.1 Certificate of Incorporation and Certificates of Amendment thereto (incorporated by reference to Zydeco's Annual Report on Form 10-K for the year ended December 31, 1995). 3.2* Amended and Restated Bylaws. 3.3 Certificate of Designations of Series A Convertible Preferred Stock of Zydeco (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on June 19, 2000). 10.1 Warrant Agreement between Continental Stock Transfer & Trust Company and Zydeco Energy, Inc. (incorporated by reference to Registration Statement on Form S-1 (Reg. No. 33-65286)). 10.2 Form of Warrant Agreement by and among Zydeco Energy, Inc. and Brean Murray & Co., Inc. and Gaines, Berland Inc. (incorporated by reference to Registration Statement on Form S-1 (Reg. No. 333- 27679)). 10.3 Agreement and Plan of Merger among Zydeco Energy, Inc., DVN Acquisition Corporation and DataVoN Inc. dated as of May 23, 2000 (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on May 24, 2000). 10.4 Zydeco Energy, Inc. 2000 Stock Option Plan (formerly known as the DataVoN Inc. 2000 Stock Option Plan) (incorporated by reference to Registration Statement on Form S-8 (Reg. No. 333-41492) filed with the SEC on July 14, 2000. 27.1* Financial Data Schedule. *Filed herewith 19 EX-3.2 2 0002.txt BYLAWS EXHIBIT 3.2 AMENDED AND RESTATED BYLAWS OF ZYDECO ENERGY, INC. A Delaware Corporation TABLE OF CONTENTS Page ---- ARTICLE ONE: OFFICES............................... 1 1.1 Registered Office and Agent............. 1 1.2 Other Offices........................... 1 ARTICLE TWO: MEETINGS OF STOCKHOLDERS.............. 1 2.1 Annual Meeting.......................... 1 2.2 Special Meeting......................... 1 2.3 Place of Meetings....................... 2 2.4 Notice.................................. 2 2.5 Voting List............................. 2 2.6 Quorum.................................. 3 2.7 Required Vote; Withdrawal of Quorum..... 3 2.8 Method of Voting; Proxies............... 3 2.9 Record Date............................. 4 2.10 Conduct of Meeting...................... 4 2.11 Inspectors.............................. 5 ARTICLE THREE: DIRECTORS........................... 5 3.1 Management.............................. 5 3.2 Number; Qualification; Election; Term... 5 3.3 Change in Number........................ 6 3.4 Removal................................. 6 3.5 Vacancies............................... 6 3.6 Meetings of Directors................... 6 3.7 First Meeting........................... 6 3.8 Election of Officers.................... 7 3.9 Regular Meetings........................ 7 3.10 Special Meetings........................ 7 3.11 Notice.................................. 7 3.12 Quorum; Majority Vote................... 7 3.13 Procedure............................... 7 (ii) 3.14 Presumption of Assent................... 8 3.15 Compensation............................ 8 ARTICLE FOUR: COMMITTEES........................... 8 4.1 Designation............................. 8 4.2 Number; Qualification; Term............. 8 4.3 Authority............................... 8 4.4 Committee Changes....................... 8 4.5 Alternate Members of Committees......... 8 4.6 Regular Meetings........................ 9 4.7 Special Meetings........................ 9 4.8 Quorum; Majority Vote................... 9 4.9 Minutes................................. 9 4.10 Compensation............................ 9 4.11 Responsibility.......................... 9 ARTICLE FIVE: NOTICE............................... 9 5.1 Method.................................. 9 5.2 Waiver.................................. 10 ARTICLE SIX: OFFICERS ............................. 10 6.1 Number; Titles; Term of Office.......... 10 6.2 Removal................................. 10 6.3 Vacancies............................... 10 6.4 Authority............................... 10 6.5 Compensation............................ 10 6.6 Chairman of the Board................... 11 6.7 President............................... 11 6.8 Vice Presidents......................... 11 6.9 Treasurer............................... 11 6.10 Assistant Treasurers.................... 11 6.11 Secretary............................... 12 6.12 Assistant Secretaries................... 12 (iii) ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS.......... 12 7.1 Certificates for Shares.................... 12 7.2 Replacement of Lost or Destroyed........... 12 Certificates.......................................... 12 7.3 Transfer of Shares......................... 13 7.4 Registered Stockholders.................... 13 7.5 Regulations................................ 13 7.6 Legends.................................... 13 ARTICLE EIGHT: INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS............ 13 8.1 Indemnification of Directors and Officers.. 13 8.2 Indemnification of Others.................. 14 8.3 Insurance.................................. 14 8.4 Expenses................................... 14 8.5 Non-Exclusivity of Rights.................. 15 8.6 Survival of Rights......................... 15 8.7 Contractual Nature; Amendments............. 15 ARTICLE NINE: MISCELLANEOUS PROVISIONS................ 15 9.1 Dividends.................................. 15 9.2 Reserves................................... 15 9.3 Books and Records.......................... 15 9.4 Fiscal Year................................ 16 9.5 Seal....................................... 16 9.6 Resignations............................... 16 9.7 Securities of Other Corporations........... 16 9.8 Telephone Meetings......................... 16 9.9 Action Without a Meeting................... 16 9.10 Invalid Provisions......................... 17 9.11 Mortgages, etc............................. 17 9.12 Headings................................... 17 9.13 References................................. 17 9.14 Amendments................................. 17 (iv) AMENDED AND RESTATED BYLAWS OF ZYDECO ENERGY, INC. A DELAWARE CORPORATION PREAMBLE These bylaws are subject to, and governed by, the General Corporation Law of the State of Delaware (the "Delaware General Corporation Law") and the certificate of incorporation of Zydeco Energy, Inc., a Delaware corporation (the "Corporation"). In the event of a direct conflict between the provisions of these bylaws and the mandatory provisions of the Delaware General Corporation Law or the provisions of the certificate of incorporation of the Corporation, such provisions of the Delaware General Corporation Law or the certificate of incorporation of the Corporation, as the case may be, will be controlling. ARTICLE ONE: OFFICES 1.1 Registered Office and Agent. The registered office and registered agent of the Corporation shall be as designated from time to time by the appropriate filing by the Corporation in the office of the Secretary of State of the State of Delaware. 1.2 Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the board of directors may from time to time determine or as the business of the Corporation may require. ARTICLE TWO: MEETINGS OF STOCKHOLDERS 2.1 Annual Meeting. An annual meeting of stockholders of the Corporation shall be held each calendar year on such date and at such time as shall be designated from time to time by the board of directors and stated in the notice of the meeting or in a duly executed waiver of notice of such meeting. At such meeting, the stockholders shall elect directors and transact such other business as may properly be brought before the meeting. 2.2 Special Meeting. A special meeting of the stockholders may be called at any time by the Chairman of the Board, the President, the board of directors, and shall be called by the President or the Secretary at the request in writing of the stockholders of record of not less than ten percent of all shares entitled to vote at such meeting or as otherwise provided by the certificate of incorporation of the Corporation. A special meeting shall be held on such date and at such time as shall be designated by the person(s) calling the meeting and stated in the notice of the meeting or in a duly executed waiver of notice of such meeting. Only such business shall be transacted at a special meeting as may be stated or indicated in the notice of such meeting or in a duly executed waiver of notice of such meeting. 2.3 Place of Meetings. An annual meeting of stockholders may be held at any place within or without the State of Delaware designated by the board of directors. A special meeting of stockholders may be held at any place within or without the State of Delaware designated in the notice of the meeting or a duly executed waiver of notice of such meeting. Meetings of stockholders shall be held at the principal office of the Corporation unless another place is designated for meetings in the manner provided herein. 2.4 Notice. (a) Written or printed notice stating the place, day, and time of each meeting of the stockholders and, in case of a special meeting, the purpose or purposes for which the meeting is called shall be delivered not less than ten nor more than 60 days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or person(s) calling the meeting, to each stockholder of record entitled to vote at such meeting. If such notice is to be sent by mail, it shall be directed to such stockholder at his address as it appears on the records of the Corporation, unless he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, in which case it shall be directed to him at such other address. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy and shall not, at the beginning of such meeting, object to the transaction of any business because the meeting is not lawfully called or convened, or who shall, either before or after the meeting, submit a signed waiver of notice, in person or by proxy. (b) Notice shall not be required to be given to any stockholder to whom (a) notices of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to such stockholder during the period between such two annual meetings, or (b) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities during a twelve month period, have been mailed addressed to such stockholder at his address as shown on the records of the Corporation and have been returned undeliverable. Any action or meeting which shall be taken or held without notice to such stockholder shall have the same force and effect as if such notice had been duly given. If any such stockholder shall deliver to the Corporation a written notice setting forth his then current address, the requirement that notice be given to such stockholder shall be reinstated. 2.5 Voting List. At least ten days before each meeting of stockholders, the Secretary or other officer of the Corporation who has charge of the Corporation's stock ledger, either directly or through another officer appointed by him or through a transfer agent appointed by the board of directors, shall prepare a complete list of stockholders entitled to vote thereat, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. For a period of ten days prior to such meeting, such list shall be kept on file at a place within the city where the meeting is to be held, which place shall be specified in the notice of meeting or a duly executed waiver of notice of such meeting 2 or, if not so specified, at the place where the meeting is to be held and shall be open to examination by any stockholder during ordinary business hours. Such list shall be produced at such meeting and kept at the meeting at all times during such meeting and may be inspected by any stockholder who is present. 2.6 Quorum. The holders of a majority of the outstanding shares entitled to vote on a matter, present in person or by proxy, shall constitute a quorum at any meeting of stockholders, except as otherwise provided by law, the certificate of incorporation of the Corporation, or these bylaws. If a quorum shall not be present, in person or by proxy, at any meeting of stockholders, the stockholders entitled to vote thereat who are present, in person or by proxy, or, if no stockholder entitled to vote is present, any officer of the Corporation may adjourn the meeting from time to time, without notice other than announcement at the meeting (unless the board of directors, after such adjournment, fixes a new record date for the adjourned meeting), until a quorum shall be present, in person or by proxy. At any adjourned meeting at which a quorum shall be present, in person or by proxy, any business may be transacted which may have been transacted at the original meeting had a quorum been present; provided that, if the adjournment is for more than 30 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting. 2.7 Required Vote; Withdrawal of Quorum. When a quorum is present at any meeting, the vote of the holders of at least a majority of the outstanding shares entitled to vote who are present, in person or by proxy, shall decide any question brought before such meeting, unless the question is one on which, by express provision of statute, the certificate of incorporation of the Corporation, or these bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. 2.8 Method of Voting; Proxies. Except as otherwise provided in the certificate of incorporation of the Corporation or by law, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Elections of directors need not be by written ballot. At any meeting of stockholders, every stockholder having the right to vote may vote either in person or by a proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact, or by any proxy method permitted by the Delaware General Corporation Law. Each such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after three years from the date of its execution, unless otherwise provided in the proxy. If no date is stated in a proxy, such proxy shall be presumed to have been executed on the date of the meeting at which it is to be voted. Each proxy shall be revocable unless expressly provided therein to be irrevocable and coupled with an interest sufficient in law to support an irrevocable power or unless otherwise made irrevocable by law. 3 2.9 Record Date. (a) For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, for any such determination of stockholders, such date in any case to be not more than 60 days and not less than ten days prior to such meeting nor more than 60 days prior to any other action. If no record date is fixed: (i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. (iii) A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by law or these bylaws, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office in the State of Delaware, principal place of business, or such officer or agent shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by law or these bylaws, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action. 2.10 Conduct of Meeting. The Chairman of the Board, if such office has been filled, and, if not or if the Chairman of the Board is absent or otherwise unable to act, the President 4 shall preside at all meetings of stockholders. The Secretary shall keep the records of each meeting of stockholders. In the absence or inability to act of any such officer, such officer's duties shall be performed by the officer given the authority to act for such absent or non-acting officer under these bylaws or by some person appointed by the meeting. 2.11 Inspectors. The board of directors shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any of the inspectors so appointed shall fail to appear or act, or if inspectors shall not have been appointed, the chairman of the meeting shall, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the validity and effect of proxies and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots, or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request, or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as an inspector of an election of directors. Inspectors need not be stockholders. ARTICLE THREE: DIRECTORS 3.1 Management. The business and property of the Corporation shall be managed by the board of directors. Subject to the restrictions imposed by law, the certificate of incorporation of the Corporation, or these bylaws, the board of directors may exercise all the powers of the Corporation. 3.2 Number; Qualification; Election; Term. The number of directors which shall constitute the entire board of directors shall be not less than one. The first board of directors shall consist of the number of directors named in the certificate of incorporation of the Corporation or, if no directors are so named, shall consist of the number of directors elected by the incorporator(s) at an organizational meeting or by unanimous written consent in lieu thereof. Thereafter, within the limits above specified, the number of directors which shall constitute the entire board of directors shall be determined by resolution of the board of directors or by resolution of the stockholders at the annual meeting thereof or at a special meeting thereof called for that purpose. Except as otherwise required by law, the certificate of incorporation of the Corporation, or these bylaws, the directors shall be elected at an annual meeting of stockholders at which a quorum is present. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election of directors. Each director so chosen shall hold office until the first annual meeting of stockholders held after his election and until his successor is elected and qualified or, if earlier, until his death, resignation, 5 or removal from office. None of the directors need be a stockholder of the Corporation or a resident of the State of Delaware. Each director must have attained the age of majority. 3.3 Change in Number. No decrease in the number of directors constituting the entire board of directors shall have the effect of shortening the term of any incumbent director. 3.4 Removal. Except as otherwise provided in the certificate of incorporation of the Corporation or these bylaws, at any meeting of stockholders called expressly for that purpose, any director or the entire board of directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote on the election of directors; provided, however, that so long as stockholders have the right to cumulate votes in the election of directors pursuant to the certificate of incorporation of the Corporation, if less than the entire board of directors is to be removed, no one of the directors may be removed if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire board of directors. 3.5 Vacancies. Vacancies and newly-created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by the sole remaining director, and each director so chosen shall hold office until the first annual meeting of stockholders held after his election and until his successor is elected and qualified or, if earlier, until his death, resignation, or removal from office. If there are no directors in office, an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly-created directorship, the directors then in office shall constitute less than a majority of the whole board of directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly-created directorships or to replace the directors chosen by the directors then in office. Except as otherwise provided in these bylaws, when one or more directors shall resign from the board of directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in these bylaws with respect to the filling of other vacancies. 3.6 Meetings of Directors. The directors may hold their meetings and may have an office and keep the books of the Corporation, except as otherwise provided by statute, in such place or places within or without the State of Delaware as the board of directors may from time to time determine or as shall be specified in the notice of such meeting or duly executed waiver of notice of such meeting. 3.7 First Meeting. Each newly elected board of directors may hold its first meeting for the purpose of organization and the transaction of business, if a quorum is present, 6 immediately after and at the same place as the annual meeting of stockholders, and no notice of such meeting shall be necessary. 3.8 Election of Officers. At the first meeting of the board of directors after each annual meeting of stockholders at which a quorum shall be present, the board of directors shall elect the officers of the Corporation. 3.9 Regular Meetings. Regular meetings of the board of directors shall be held at such times and places as shall be designated from time to time by resolution of the board of directors. Notice of such regular meetings shall not be required. 3.10 Special Meetings. Special meetings of the board of directors shall be held whenever called by the Chairman of the Board, the President, or any director. 3.11 Notice. The Secretary shall give notice of each special meeting to each director at least 24 hours before the meeting. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice to him. Neither the business to be transacted at, 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 Quorum; Majority Vote. At all meetings of the board of directors, a majority of the directors fixed in the manner provided in these bylaws shall constitute a quorum for the transaction of business. If at any meeting of the board of directors there be less than a quorum present, a majority of those present or any director solely present may adjourn the meeting from time to time without further notice. Unless the act of a greater number is required by law, the certificate of incorporation of the Corporation, or these bylaws, the act of a majority of the directors present at a meeting at which a quorum is in attendance shall be the act of the board of directors. At any time that the certificate of incorporation of the Corporation provides that directors elected by the holders of a class or series of stock shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of directors shall refer to a majority or other proportion of the votes of such directors. 3.13 Procedure. At meetings of the board of directors, business shall be transacted in such order as from time to time the board of directors may determine. The Chairman of the Board, if such office has been filled, and, if not or if the Chairman of the Board is absent or otherwise unable to act, the President shall preside at all meetings of the board of directors. In the absence or inability to act of either such officer, a chairman shall be chosen by the board of directors from among the directors present. The Secretary of the Corporation shall act as the secretary of each meeting of the board of directors unless the board of directors appoints another person to act as secretary of the meeting. The board of directors shall keep regular minutes of its proceedings which shall be placed in the minute book of the Corporation. 7 3.14 Presumption of Assent. A director of the Corporation 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 unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward any dissent by certified or 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. 3.15 Compensation. The board of directors shall have the authority to fix the compensation, including fees and reimbursement of expenses, paid to directors for attendance at regular or special meetings of the board of directors or any committee thereof; provided, that nothing contained herein shall be construed to preclude any director from serving the Corporation in any other capacity or receiving compensation therefor. ARTICLE FOUR: COMMITTEES 4.1 Designation. The board of directors may, by resolution adopted by a majority of the entire board of directors, designate one or more committees. 4.2 Number; Qualification; Term. Each committee shall consist of one or more directors appointed by resolution adopted by a majority of the entire board of directors. The number of committee members may be increased or decreased from time to time by resolution adopted by a majority of the entire board of directors. Each committee member shall serve as such until the earliest of (i) the expiration of his term as director, (ii) his resignation as a committee member or as a director, or (iii) his removal as a committee member or as a director. 4.3 Authority. Each committee, to the extent expressly provided in the resolution establishing such committee, shall have and may exercise all of the authority of the board of directors in the management of the business and property of the Corporation except to the extent expressly restricted by law, the certificate of incorporation of the Corporation, or these bylaws. 4.4 Committee Changes. The board of directors shall have the power at any time to fill vacancies in, to change the membership of, and to discharge any committee. 4.5 Alternate Members of Committees. The board of directors may designate one or more directors as alternate members of any committee. Any such alternate member may replace any absent or disqualified member at any meeting of the committee. If no alternate committee members have been so appointed to a committee or each such alternate committee member is absent or disqualified, the member or members of such committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. 8 4.6 Regular Meetings. Regular meetings of any committee may be held without notice at such time and place as may be designated from time to time by the committee and communicated to all members thereof. 4.7 Special Meetings. Special meetings of any committee may be held whenever called by any committee member. The committee member calling any special meeting shall cause notice of such special meeting, including therein the time and place of such special meeting, to be given to each committee member at least 24 hours before such special meeting. Neither the business to be transacted at, nor the purpose of, any special meeting of any committee need be specified in the notice or waiver of notice of any special meeting. 4.8 Quorum; Majority Vote. At meetings of any committee, a majority of the number of members designated by the board of directors shall constitute a quorum for the transaction of business. If a quorum is not present at a meeting of any committee, a majority of the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. The act of a majority of the members present at any meeting at which a quorum is in attendance shall be the act of a committee, unless the act of a greater number is required by law, the certificate of incorporation of the Corporation, or these bylaws. 4.9 Minutes. Each committee shall cause minutes of its proceedings to be prepared and shall report the same to the board of directors upon the request of the board of directors. The minutes of the proceedings of each committee shall be delivered to the Secretary of the Corporation for placement in the minute books of the Corporation. 4.10 Compensation. Committee members may, by resolution of the board of directors, be allowed a fixed sum and expenses of attendance, if any, for attending any committee meetings or a stated salary. 4.11 Responsibility. The designation of any committee and the delegation of authority to it shall not operate to relieve the board of directors or any director of any responsibility imposed by law upon the board of directors or such director. ARTICLE FIVE: NOTICE 5.1 Method. Whenever by statute, the certificate of incorporation of the Corporation, or these bylaws, notice is required to be given to any committee member, director, or stockholder and no provision is made as to how such notice shall be given, personal notice shall not be required and any such notice may be given (a) in writing, by mail, postage prepaid, addressed to such committee member, director, or stockholder at his address as it appears on the books or (in the case of a stockholder) the stock transfer records of the Corporation, or (b) by any other method permitted by law (including but not limited to overnight courier service, telegram, telex, or telefax). Any notice required or permitted to be given by mail shall be deemed to be delivered and given at the time when the same is deposited in the United States mail as aforesaid. Any 9 notice required or permitted to be given by overnight courier service shall be deemed to be delivered and given at the time delivered to such service with all charges prepaid and addressed as aforesaid. Any notice required or permitted to be given by telegram, telex, or telefax shall be deemed to be delivered and given at the time transmitted with all charges prepaid and addressed as aforesaid. 5.2 Waiver. Whenever any notice is required to be given to any stockholder, director, or committee member of the Corporation by statute, the certificate of incorporation of the Corporation, or these bylaws, 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. Attendance of a stockholder, director, or committee member at a meeting shall constitute a waiver of notice of such meeting, except where such person attends 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 SIX: OFFICERS 6.1 Number; Titles; Term of Office. The officers of the Corporation shall be a President, a Secretary, and such other officers as the board of directors may from time to time elect or appoint, including a Chairman of the Board, one or more Vice Presidents (with each Vice President to have such descriptive title, if any, as the board of directors shall determine), and a Treasurer. Each officer shall hold office until his successor shall have been duly elected and shall have qualified, until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. Any two or more offices may be held by the same person. None of the officers need be a stockholder or a director of the Corporation or a resident of the State of Delaware. 6.2 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 interest 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 an officer or agent shall not of itself create contract rights. 6.3 Vacancies. Any vacancy occurring in any office of the Corporation (by death, resignation, removal, or otherwise) may be filled by the board of directors. 6.4 Authority. Officers 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. 6.5 Compensation. The compensation, if any, of officers and agents shall be fixed from time to time by the board of directors; provided, however, that the board of directors may delegate the power to determine the compensation of any officer and agent (other than the officer 10 to whom such power is delegated) to the Chairman of the Board, or the President, or a committee of directors. 6.6 Chairman of the Board. The Chairman of the Board, if elected by the board of directors, shall have such powers and duties as may be prescribed by the board of directors. Such officer shall preside at all meetings of the stockholders and of the board of directors. Such officer may sign all certificates for shares of stock of the Corporation. 6.7 President. The President shall be the Chief Executive Officer of the Corporation and, subject to the board of directors, he shall have general executive charge, management, and control of the properties and operations of the Corporation in the ordinary course of its business, with all powers with respect to such properties and operations as may be reasonably incident to such responsibilities. If the board of directors has not elected a Chairman of the Board or in the absence or inability to act of the Chairman of the Board, the President shall exercise all of the powers and discharge all of the duties of the Chairman of the Board. As between the Corporation and third parties, any action taken by the President in the performance of the duties of the Chairman of the Board shall be conclusive evidence that there is no Chairman of the Board or that the Chairman of the Board is absent or unable to act. 6.8 Vice Presidents. If the board of directors elects or appoints one or more Vice Presidents, each Vice President shall have such powers and duties as may be assigned to him by the board of directors, the Chairman of the Board, or the President, and (in order of their seniority as determined by the board of directors or, in the absence of such determination, as determined by the length of time they have held the office of Vice President) shall exercise the powers of the President during that officer's absence or inability to act. As between the Corporation and third parties, any action taken by a Vice President in the performance of the duties of the President shall be conclusive evidence of the absence or inability to act of the President at the time such action was taken. 6.9 Treasurer. If the board of directors elects or appoints a Treasurer, the Treasurer shall have custody of the Corporation's funds and securities, shall keep full and accurate account of receipts and disbursements, shall deposit all monies and valuable effects in the name and to the credit of the Corporation in such depository or depositories as may be designated by the board of directors, and shall perform such other duties as may be prescribed by the board of directors, the Chairman of the Board, or the President. 6.10 Assistant Treasurers. If the board of directors elects or appoints one or more Assistant Treasurers, each Assistant Treasurer shall have such powers and duties as may be assigned to him by the board of directors, the Chairman of the Board, or the President. The Assistant Treasurers (in the order of their seniority as determined by the board of directors or, in the absence of such a determination, as determined by the length of time they have held the office of Assistant Treasurer) shall exercise the powers of the Treasurer during that officer's absence or inability to act. 11 6.11 Secretary. Except as otherwise provided in these bylaws, the Secretary shall keep the minutes of all meetings of the board of directors and of the stockholders in books provided for that purpose, and he shall attend to the giving and service of all notices. He may sign with the Chairman of the Board or the President, in the name of the Corporation, all contracts of the Corporation and affix the seal of the Corporation thereto. He may sign with the Chairman of the Board or the President all certificates for shares of stock of the Corporation, and he shall have charge of the certificate books, transfer books, and stock papers as the board of directors may direct, all of which shall at all reasonable times be open to inspection by any director upon application at the office of the Corporation during business hours. He shall in general perform all duties incident to the office of the Secretary, subject to the control of the board of directors, the Chairman of the Board, and the President. 6.12 Assistant Secretaries. If the board of directors elects or appoints one or more Assistant Secretaries, each Assistant Secretary shall have such powers and duties as may be assigned to him by the board of directors, the Chairman of the Board, or the President. The Assistant Secretaries (in the order of their seniority as determined by the board of directors or, in the absence of such a determination, as determined by the length of time they have held the office of Assistant Secretary) shall exercise the powers of the Secretary during that officer's absence or inability to act. ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS 7.1 Certificates for Shares. Certificates for shares of stock of the Corporation shall be in such form as shall be approved by the board of directors. The certificates shall be signed by the Chairman of the Board or the President or a Vice President and also by the Secretary or an Assistant Secretary or by the Treasurer or an Assistant Treasurer. Any and all signatures on the certificate may be a facsimile and may be sealed with the seal of the Corporation or a facsimile thereof. If any officer, transfer agent, or registrar who has signed, or whose facsimile signature has been placed upon, a certificate has ceased to be such officer, transfer agent, or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. The certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder's name and the number of shares. 7.2 Replacement of Lost or Destroyed Certificates. The board of directors may direct a new certificate or certificates to be issued in place of a certificate or certificates theretofore issued by the Corporation and alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate or certificates representing shares to be lost or destroyed. When authorizing such issue of a new certificate or certificates the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond with a surety or sureties satisfactory to the Corporation in such sum as it may direct as indemnity against any 12 claim, or expense resulting from a claim, that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost or destroyed. 7.3 Transfer of Shares. Shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives. 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. 7.4 Registered Stockholders. 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. 7.5 Regulations. The board of directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer, and registration or the replacement of certificates for shares of stock of the Corporation. 7.6 Legends. The board of directors shall have the power and authority to provide that certificates representing shares of stock bear such legends as the board of directors deems appropriate to assure that the Corporation does not become liable for violations of federal or state securities laws or other applicable law. ARTICLE EIGHT: INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS 8.1 Indemnification of Directors and Officers. The Corporation shall, to the maximum extent and in the manner permitted by the Delaware General Corporation Law, indemnify each of its directors and officers against expenses (including attorneys' fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the Corporation; provided, however, that the Corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers and, provided, further, that the Corporation shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless (a) such indemnification is expressly required to be made by law, (b) the proceeding was authorized in advance by the board of directors of the Corporation, (c) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the Delaware General Corporation Law or (d) such indemnification is required to be made pursuant to an individual contract. For purposes of this Section 8.1, a "director" or "officer" of the Corporation includes any person (i) who is or was a director or officer of the Corporation, (ii) who is or was serving at 13 the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a Corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation. 8.2 Indemnification of Others. The Corporation shall have the power, to the maximum extent and in the manner permitted by the Delaware General Corporation Law, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys' fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the Corporation. For purposes of this Section 8.2, an "employee" or "agent" of the Corporation (other than a director or officer) includes any person (a) who is or was an employee or agent of the Corporation, (b) who is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (c) who was an employee or agent of a Corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation. 8.3 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 is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the Delaware General Corporation Law. 8.4 Expenses. (a) The Corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or officer in connection with such proceeding, upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under these bylaws or otherwise; provided, however, that the Corporation shall not be required to advance expenses to any director or officer in connection with any proceeding (or part thereof) initiated by such person unless the proceeding was authorized in advance by the board of directors of the Corporation. (b) Notwithstanding the foregoing, unless otherwise determined pursuant to Section 8.5, no advance shall be made by the Corporation to an officer of the Corporation (except by reason of the fact that such officer is or was a director of the Corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, 14 administrative or investigative, if a determination is reasonably and promptly made (i) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Corporation. 8.5 Non-Exclusivity of Rights. The rights conferred on any person by these bylaws shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The Corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the Delaware General Corporation Law. 8.6 Survival of Rights. The rights conferred on any person by these bylaws shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person. 8.7 Contractual Nature; Amendments. The rights granted pursuant to this Article Eight shall be deemed contract rights, and any repeal or modification of these bylaws shall only be prospective and shall not affect the rights under these bylaws in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the Corporation. ARTICLE NINE: MISCELLANEOUS PROVISIONS 9.1 Dividends. Subject to provisions of law and the certificate of incorporation of the Corporation, dividends may be declared by the board of directors at any regular or special meeting and may be paid in cash, in property, or in shares of stock of the Corporation. Such declaration and payment shall be at the discretion of the board of directors. 9.2 Reserves. There may be created by the board of directors out of funds of the Corporation legally available therefor such reserve or reserves as the directors from time to time, in their discretion, consider proper to provide for contingencies, to equalize dividends, or to repair or maintain any property of the Corporation, or for such other purpose as the board of directors shall consider beneficial to the Corporation, and the board of directors may modify or abolish any such reserve in their discretion. 9.3 Books and Records. The Corporation shall keep correct and complete books and records of account, shall keep minutes of the proceedings of its stockholders and board of directors and shall keep at its registered office or principal place of business, or at the office of 15 its transfer agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders and the number and class of the shares held by each. 9.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by the board of directors; provided, that if such fiscal year is not fixed by the board of directors and the selection of the fiscal year is not expressly deferred by the board of directors, the fiscal year shall be the calendar year. 9.5 Seal. The seal of the Corporation shall be such as from time to time may be approved by the board of directors. 9.6 Resignations. Any director, committee member, or officer may resign by so stating at any meeting of the board of directors or by giving written notice to the board of directors, the Chairman of the Board, the President, or the Secretary. Such resignation shall take effect at the time specified therein or, if no time is specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 9.7 Securities of Other Corporations. The Chairman of the Board, the President, or any Vice President of the Corporation shall have the power and authority to transfer, endorse for transfer, vote, consent, or take any other action with respect to any securities of another issuer which may be held or owned by the Corporation and to make, execute, and deliver any waiver, proxy, or consent with respect to any such securities. 9.8 Telephone Meetings. Stockholders (acting for themselves or through a proxy), members of the board of directors, and members of a committee of the board of directors may participate in and hold a meeting of such stockholders, board of directors, or committee by means of a conference telephone or similar communications equipment by means of which 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. 9.9 Action Without a Meeting. (a) Unless otherwise provided in the certificate of incorporation of the Corporation, any action required by the Delaware General Corporation Law to be taken at any annual or special meeting of the stockholders, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders (acting for themselves or through a proxy) 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 the holders of all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders 16 are recorded. Every written consent of stockholders shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this Section 9.9(a) to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office, principal place of business, or such officer or agent shall be by hand or by certified or registered mail, return receipt requested. If any such action is taken by less then unanimous consent of the stockholders, prompt notice thereof shall be given to all nonconsenting stockholders. (b) Unless otherwise restricted by the certificate of incorporation of the Corporation or by these bylaws, any action required or permitted to be taken at a meeting of the board of directors, or of any committee of the board of directors, may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by all the directors or all the committee members, as the case may be, entitled to vote with respect to the subject matter thereof, and such consent shall have the same force and effect as a vote of such directors or committee members, as the case may be, and may be stated as such in any certificate or document filed with the Secretary of State of the State of Delaware or in any certificate delivered to any person. Such consent or consents shall be filed with the minutes of proceedings of the board or committee, as the case may be. 9.10 Invalid Provisions. If any part of these bylaws shall be held invalid or inoperative for any reason, the remaining parts, so far as it is possible and reasonable, shall remain valid and operative. 9.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage, or other instrument executed by the Corporation through its duly authorized officer or officers, the attestation to such execution by the Secretary of the Corporation shall not be necessary to constitute such deed, deed of trust, mortgage, or other instrument a valid and binding obligation against the Corporation unless the resolutions, if any, of the board of directors authorizing such execution expressly state that such attestation is necessary, or unless such attestation is required by law. 9.12 Headings. The headings used in these bylaws have been inserted for administrative convenience only and do not constitute matter to be construed in interpretation. 9.13 References. Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender should include each other gender where appropriate. 9.14 Amendments. These bylaws may be altered, amended, or repealed or new bylaws may be adopted by the stockholders or by the board of directors at any regular meeting of the 17 stockholders or the board of directors or at any special meeting of the stockholders or the board of directors if notice of such alteration, amendment, repeal, or adoption of new bylaws be contained in the notice of any such special meeting of the stockholders. The undersigned, the Secretary of the Corporation, hereby certifies that the foregoing bylaws were adopted by consent of the sole director of the Corporation as of October 2, 2000. /s/ Hugh D. Simpson ------------------- Hugh D. Simpson, Secretary 18 EX-27.1 3 0003.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-2000 SEP-30-2000 2,788,096 100,000 194,873 0 0 3,555,836 1,289,190 110,010 31,053,429 2,909,648 0 0 7 42,776 29,894,823 31,053,429 0 8,455,464 0 4,808,771 5,162,913 0 24,843 (1,485,010) (739,529) (745,481) 0 0 0 (745,481) (.02) (.02)
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