SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 1998
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.)
1710 Two Allen Center, 1200 Smith Street
Houston, Texas
(Address of principal executive offices)
77002
(Zip Code)
(713) 659-2222
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.001 par value
Warrants to Purchase One Share of Common Stock
Units Consisting of One Share of Common Stock and Two Warrants
(Title of Class)
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
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S) 229.405 under the Securities Exchange Act of 1934) is
not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. ____
As of March 22, 1999, there were 10,357,096 shares of Zydeco Energy, Inc.
Common Stock, $.001 par value, issued and outstanding, of which 6,775,643
shares, having an aggregate market value of approximately $2,329,466 were held
by non-affiliates of the registrant (affiliates being, for these purposes only,
directors, executive officers, and holders of more than 5% of the registrant's
Common Stock).
DOCUMENTS INCORPORATED BY REFERENCE
Part III, Items 10 through 13 are incorporated from the registrant's
definitive Proxy Statement to be filed in connection with its Annual Meeting of
Stockholders.
- --------------------------------------------------------------------------------
<PAGE>
Explanation:
This amendment to Form 10-K is being filed to include Part III of the Form 10-K
for the year ended December 31, 1998.
<PAGE>
[OBJECT OMITTED].
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS
Set forth below is information concerning each of the five directors of
the Company who were serving on the Board of Directors at December 31, 1998. All
of the directors except Mr. Myers resigned as directors during the first quarter
of 1999. Mr. Myers' term as sole director will continue until the next Annual
Meeting of Stockholders or until his successor has been duly elected and
qualified.
SAM B. MYERS, JR., age 61, has served since December 1995 as Director,
Chairman of the Board of Directors, and Chief Executive Officer and, until
October 1996, President of the Company and in the same capacity for Zydeco
Exploration, Inc. ("Zydeco Exploration"), the Company's subsidiary, since its
formation in March 1994. Mr. Myers has been an independent oil and gas operator
and private investor since 1961. In addition, Mr. Myers has served as Chairman
of the Board of Directors of Search Capital Group, Inc. ("Search"), a publicly
held specialty financial services company, from August 1985 until May 1995 when
he voluntarily resigned and as President and Chief Executive Officer from August
1985 until August 1993 and from November 1994 to January 1995. Mr. Myers served
as interim President and Chief Executive Officer of Search, and certain of its
finance subsidiaries, for 30 days commencing December 1994, after the
resignation of Search's former President and Chief Executive Officer. After Mr.
Myers' departure, eight finance subsidiaries, whose assets consist primarily of
automobile loan portfolios, voluntarily filed for protection under Chapter 11 of
the federal bankruptcy code in August 1995.
EDWARD R. PRINCE, JR., age 69, has acted as Director and Vice Chairman
of the Board of Directors of the Company since December 1995, served in the same
capacity for Zydeco Exploration since August 1994 and acted as Secretary of the
Company from January 1998 to March 1998. Mr. Prince has been involved in the
geophysical service industry for 35 years. Mr. Prince was a founder of Digicon
Inc., a publicly held geophysical contractor, which is now part of Veritas DGC,
Inc. In 1994, he retired as Chief Executive Officer of Digicon, a position he
held for more than 24 years. Mr. Prince has served the geophysical industry in
various capacities including Chairman of the International Association of
Geophysical Contractors and as a director of the National Ocean Industries
Association and was awarded an honorary membership by the Society of Exploration
Geophysicists. Mr. Prince also serves as a director of GeoScience Corporation, a
publicly held designer and manufacturer of seismic data acquisition systems,
geoscientific software and related products and as a director of JetFax, Inc., a
publicly held manufacturer of multi-function product office equipment.
HARRY C. JOHNSON, age 66, was appointed a Director of the Company in
December 1995. He has over 40 years experience in the oil and gas industry. He
was founder and served as Chief Executive Officer of Red Eagle Resources
Corporation until February 1995. Mr. Johnson has also been actively involved as
a principal in various businesses, including banking, agriculture and aviation.
Mr. Johnson was formerly a registered principal with the National Association of
Securities Dealers, Inc. and was an allied member of The New York Stock
Exchange. Mr. Johnson is a registered professional engineer with a degree in
petroleum engineering from the University of Oklahoma.
CHARLES E. BRADLEY, SR., age 69, was appointed a Director of the
Company in December 1995. He is one of the founders of Stanwich Partners, Inc.,
a private investment firm which engages in leveraged buyouts, and has been
President, a Director and a shareholder of that company since its formation in
1982. Mr. Bradley serves in executive capacities for numerous companies,
including Chairman of the Board of Consumer Portfolio Services, Inc., Reunion
Industries Corp. (also Chief Executive Officer), DeVlieg-Bullard, Inc., Chatwins
Group, Inc., Texon Energy Corporation (also President), Sanitas, Inc. (also
President) and as a Director of General Housewares Corp. and Audit & Survey's
Inc., all of which are publicly-held corporations. Mr. Bradley's previous
experience also includes a position as a general partner in Price Waterhouse, an
international accounting firm.
PHILIP A. TUTTLE, age 57, served as President, Chief Executive Officer,
Chairman of the Board, and a Director of the Company from its formation in June
1993 until December 1995. Mr. Tuttle has continued to serve as a Director of the
Company since December 1995. Since June 1989, he has been a general partner of
Davis Venture Partners, L.P., a private investment partnership and since August
1997, he has been a general partner of Davis, Tuttle Venture Partners, L.P. From
November 1990 until October 1995, Mr. Tuttle was a Director of Quality Tubing,
Inc., a manufacturer of steel coil tubing for the energy services industry,
becoming Chairman of the Board in May 1992. Mr. Tuttle is a founder and was
formerly President of the Houston Venture Capital Association. He was also
President and a Director of the Houston Chapter of the Association for Corporate
Growth, Chairman of the Accounting Council at Rice University-Jones Graduate
School of Administration, and a member of the Board of Governors of the National
Association of Small Business Investment Companies. In addition, Mr. Tuttle
serves on the Board of Drypers Corp., a publicly traded company that
manufactures and distributes disposable diapers. He is a Certified Public
Accountant and Fellow of the Institute of Directors, London, England.
EXECUTIVE OFFICERS
Mr. Myers and Mr. Prince were serving in the offices of Chief Executive
Officer and Vice Chairman, respectively, as of December 31, 1998. Mr. Prince
resigned as an officer and director of the Company in March 1999, but has
remained an employee of the Company.
Dr. Norman S. Neidell, age 59, joined the Company as Vice President in
July 1997. Dr. Neidell founded Wavefield Image, Inc. in September 1995 and
served as Chairman and President. In June 1989, he co-founded Gandalf Explorers
International, Ltd. (now MMS Petroleum PLC), of which he currently serves as a
Director and technical advisor and which is an Irish company also traded on the
London AIM Stock Exchange. In June 1977, he co-founded Zenith Exploration Co.,
Inc., an oil and gas company which developed high technology methods for seismic
stratigraphic exploration and served as a Director from inception until February
1987 and as its Chairman and President from 1985 to 1987. In October 1973, he
co-founded GeoQuest International, Inc. and was a major shareholder and a
Director until April 1980. Dr. Neidell left this geological and geophysical
consulting company in September 1982. Dr. Neidell was a lecturer and an Adjunct
Professor in the Geology Department of the University of Houston from 1971 to
1987. He is a Past President and Honorary Member of the Geophysical Society of
Houston, a Distinguished Lecturer of the Society of Exploration Geophysicists
("SEG"), a Past Associate Editor of Geophysics, and a member of several AAPG and
SEG committees. He graduated with a BS in Mathematics from New York University,
a Post Graduate Diploma in Applied Geophysics from Imperial College, and a Ph.D.
in Geodesy and Geophysics from Cambridge University.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than ten percent of the Company's common
stock, to file reports of ownership and changes in ownership with the Commission
and The Nasdaq Stock Market. Based on the Company's review of the copies of such
reports received by the Company and on written representations received by the
Company, the Company believes that no director, officer or holder of more than
ten percent of the Common Stock or Preferred Stock failed to file on a timely
basis the reports required by Section 16(a) of the Exchange Act during fiscal
1997.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to
the Company and its subsidiaries for the years ended December 31, 1998, 1997,
and 1996, for each of (i) the Chief Executive Officer, (ii) all other executive
officers of the Company serving as of December 31, 1998 and (iii) two former
executive officers who terminated their employment prior to the end of 1998
(collectively, the "Named Executives").
<TABLE>
<CAPTION>
Long Term
ANNUAL COMPENSATION COMPENSATION AWARDS
OTHER ANNUAL STOCK ALL OTHER
NAME AND POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS GRANTED COMPENSATION($) (1)
- ----------------- ---- ---------- --------- ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sam B. Myers, Jr. 1998 $ 150,000 $ - $ - $ 6,893
Chief Executive Officer 1997 $ 150,000 $ - $ - $ 11,957
1996 $ 150,500 $ - $ - $ 9,651
Edward R. Prince, Jr. 1998 $ 150,000 $ - $ - $ 6,569
Vice Chairman 1997 $ 150,000 $ - $ - $ 1,346
1996 $ 150,000 $ - $ - $ -
Norman S. Neidell 1998 $ 150,000 $ - $ - $ 10,050
Vice President 1997 $ 75,000 (2) $ - $ - 150,000 $ 5,011
1996 $ - $ - $ - $ -
John O. Smith (3) 1998 $ 143,750 $ - $ - 100,000 $ 9,488
Former President and Chief 1997 $ 150,000 $ - $ - $ 11,948
Operating Officer 1996 $ 37,500 (4) $ - $ - 200,000 $ 28,670 (5)
John W. McTigue, Jr. (6) 1998 $ 143,750 $ - $ - $ 7,068
Former Vice President 1997 $ 108,333 $ - $ - $ 7,908
1996 $ 100,000 $ - $ - $ 5,922
</TABLE>
- ------------------------------
(1) Includes the Company's portion of expenses incurred under the Company's
health and long-term disability plans under the same terms and
conditions as available to all employees.
(2) Dr. Neidell's employment with the Company commenced July 1, 1997.
(3) Mr. Smith resigned as an officer and director and terminated his
employment with the Company on December 11, 1998.
(4) Mr. Smith's employment with the Company commenced October 7, 1996.
(5) Includes $27,156 in consulting fees paid to Mr. Smith in 1996
for services rendered prior to his employment by the Company.
(6) Mr. McTigue resigned as an officer and terminated his employment with
the Company effective December 10, 1998.
OPTION GRANTS
The following table sets forth information with respect to the options
to purchase shares of common stock granted under all stock option plans to the
Chief Executive Officer or the other Named Executives in the fiscal year ended
December 31, 1998:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATEs
OF STOCK PRICES APPRECIATION
INDIVIDUAL GRANTS FOR THE OPTION TERM (1)
- ---------------------------------------------------------------------------------------- -----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEE IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) (2) DATE 5% ($) 10% ($)
- ----------------------- ------------ -------------- -------------- -------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John O. Smith (3) 150,000 45.2% $2.063 5/20/08 (5) $194,564 $493,064
(4)
</TABLE>
- -----------------------
(1) These amounts represent assumed rates of appreciation in the price of
the Company's Common Stock during the ten-year term of the options.
Actual gains, if any, on stock option exercises will depend on the
future price of the Common Stock and overall stock market conditions.
There is no representation that the rates of appreciation reflected in
this table will be achieved. No such values will be achieved since
these options have expired unexercised.
(2) The exercise price of all options granted during 1998 was equal to the
market values of the underlying Common Stock on the date of grant.
(3) Mr. Smith resigned as an officer and director and terminated his
employment with the Company on December 11, 1998.
(4) One-fourth of these options vest on each of the first four anniversary
dates following the date of grant. Options are exercisable within the
ten-year period from the date of grant subject to the vesting schedule.
(5) These options expired unexercised in the first quarter of 1999 as the
result of Mr. Smith's resignation.
OPTION VALUES
The following table provides information concerning the value of
unexercised options held as of December 31, 1998, by the Company's Chief
Executive Officer and its other Named Executives. The value of all unexercised
options as December 31, 1998 was zero because the fair market value of the
shares of Common Stock underlying such options, determined by using the closing
price of the Company's Common Stock of $0.563 per share as of December 31, 1997,
was below all of the option exercise prices.
<PAGE>
<TABLE>
<CAPTION>
OPTION VALUES AT DECEMBER 31, 1998
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED OPTIONS AT
UNEXERCISED OPTIONS AT DECEMBER 31, 1998 DECEMBER 31, 1998
------------------------------------------ -------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------------- ---------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Sam B. Myers, Jr. - - - -
Edward R. Prince, Jr. (1) 292,502 - $ 0 $ -
Norman S. Neidell 37,500 112,500 $ - $ 0
John O. Smith (2) 50,000 250,000 $ 0 $ 0
John W. McTigue, Jr. (2) 625,004 - $ 0 $ -
</TABLE>
- -------------------------------
(1) Mr. Prince exercised options to acquire 20,000 shares of Common Stock
in 1998 at an exercise price of $1.60 per share. Mr. Prince realized a
value of $15,500 based on fair market value of such shares as of the
date of exercise. No other options were exercised in 1998 by persons
indicated in the table.
(2) All options held by Messrs. Smith and McTigue expired unexercised
in the first quarter of 1999 due to their resignations from the
Company in December 1999.
AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
In 1995, Zydeco Exploration entered into an employment agreement with
Mr. McTigue. The agreement provided (i) for a four year term ending December 31,
1998 (the "Primary Term"), (ii) that Zydeco Exploration may terminate employment
with or without cause during the Primary Term, (iii) for a base salary of
$150,000 and $100,000, subject to the Zydeco Exploration Board's discretion to
elect to defer up to 50% of the base salary for not more than one year, (iv) for
the payment of base salary for the entirety of the Primary Term if the employee
is terminated other than for death, disability or for cause, (v) if terminated
for "cause" during the Primary Term, the agreement is terminated immediately and
Zydeco Exploration shall have no further payment obligations and (vi) that the
employee will retain confidentiality of certain information and will not compete
in the Timbalier Trench or Louisiana Transition Zone with Zydeco Exploration for
a period ended one year after the expiration of the Primary Term or the
termination of the agreement, whichever occurs first. Mr. McTigue's agreement
also provided for the issuance of certain employee stock options under the
employee stock option plan then in effect for Zydeco Exploration. Mr. McTigue
resigned as an officer of the Company and his employment was terminated in
December 1998.
In connection with the acquisition of Wavefield Image, Inc.
("Wavefield"), the Company entered into an employment agreement with Dr. Norman
S. Neidell, the founder and principal shareholder of Wavefield. The agreement
provides (i) for an initial four year term ending July 1, 2001, ("Initial
Term"), (ii) that the Company may terminate employment with or without cause
during the Initial Term, (iii) for a base salary of $150,000, (iv) for the
payment of the base salary for the remainder of the Initial Term if Dr. Neidell
is terminated other than for death, disability or cause, or he terminates his
employment for good reason, (v) if terminated for "cause" during the Initial
Term, the agreement is terminated immediately and the Company shall have no
further payment obligations and (vi) that Dr. Neidell will retain
confidentiality of certain information and will not compete with the Company for
a period ending one year after the expiration of the Initial Term or the
termination of the agreement, whichever occurs first. In addition, the Company
agreed to pay Dr. Neidell $20,000 per year for four years commencing July 1,
1997, in connection with the rental of certain office furniture and equipment.
The Company has not entered into any other employment agreements.
COMPENSATION OF DIRECTORS
In 1998, nonemployee directors received fees of $1,000 per month for
serving on the Board of Directors and its Committees and reimbursement of
reasonable expenses incurred in attending meetings.
In addition, in 1996 the Company adopted the 1996 Non-employee
Directors Stock Option Plan (the "Directors Plan"). The Board granted 15,000
options to each of Messrs. Tuttle, Bradley and Johnson, pursuant to the
Directors Plan. The options granted vest in one-third increments annually with
the first one-third vesting April 1, 1997. The exercise price of the options
granted is $6.69, the average of the high bid price and low asked price for the
Common Stock on the date of the grant.
EXECUTIVE COMPENSATION POLICIES
In view of the resignation of all the executive officers and directors
of the Company, except Mr. Myers, in the first quarter of 1999, all decisions
concerning compensation of executive officers will be made by Mr. Myers, the
sole director of the Company, unless and until new directors are elected or
appointed and the Compensation Committee is reestablished.
Mr. Myers has elected to take no compensation from the Company after
February 28, 1999. Dr. Neidell receives compensation fixed in his employment
agreement. Mr. Myers is not an "outside director" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
COMMON STOCK PERFORMANCE GRAPH
Set forth below is a Performance Graph which has been prepared for
inclusion in this Annual Report on Form 10-K. The Performance Graph is not to be
included or incorporated by reference into any other filing required under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent the Performance Graph is specifically and expressly included with or
incorporated into such other filing.
The following line graph compares the cumulative total average
stockholder return of the Common Stock with the cumulative total returns since
the Company commenced business in December 1995 to (1) the S&P 500 Stock Index
and (2) an index composed of Crude Petroleum and Natural Gas Companies
classified as SIC codes 1310-1319 and whose stocks trade on either the New York
Stock Exchange, the American Stock Exchange or the NASDAQ ("Crude Petroleum and
Natural Gas Index"). Although the initial public trading date of the Company's
common stock was December 21, 1993, it did not actively engage in any business
and did not become an operating company with oil and gas exploration activities
until December, 1995. The graph tracks the performance of the Company's common
stock from December 29, 1995 and sets the level for indices at 100 on such date.
ToTAL RETURN
[INCLUDE PERFORMANCE GRAPH WITH THE FOLLOWING DATA]
<TABLE>
TOTAL RETURNS INDEX FOR: 12/29/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C>
Zydeco Energy, Inc. 100.0 94.3 34.0 8.5
S&P 500 Stocks 100.0 123.3 164.6 212.3
NYSE/AMEX/NASDAQ Stocks (SIC 1310-1319 US 100.0 131.3 130.6 81.9
Companies)
Crude Petroleum and Natural Gas
</TABLE>
Note:
Indexes provided by The Center for Research in Security Prices, The
University of Chicago Graduate School of Business.
GUIDELINES FOR INSIDER SALES
While the Company has generally discouraged officers, directors and
employees from selling Common Stock while the Company is in the initial
exploration phase, the Company acknowledges that sales by the Company's insiders
may occur periodically. The Company has implemented an insider trading policy
for officers, directors and employees designed to advise insiders who may trade
in Common Stock or other public securities of the Company of the restrictions on
such trading imposed by federal securities laws. The policy provides for advance
notice to Company management who, with the assistance of Company counsel, will
advise Company insiders on the possible existence of material non-public
information regarding the Company. Persons trading in Company stock in violation
of such policy are subject to discipline.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31,
1999, regarding beneficial ownership of Common Stock of each shareholder who is
known by the Company to beneficially own more than 5% of Common Stock, each
Director, each Named Executive, and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIAL OWNERSHIP
-----------------------------------------------------
NAME AND ADDRESS (IF REQUIRED) OF BENEFICIAL OWNER NUMBER OF SHARES PERCENTAGE OF TOTAL
- ------------------------------------------------------------- -------------------------- ---------------------
<S> <C> <C>
5% HOLDERS:
Richard L. Morgan 1,562,510 (1) 13.8%
700 North Pearl Street, Suite 2170
Dallas, Texas 75201
David M. Fender 1,558,393 (2) 13.7%
116 East Front Street
Tyler, Texas 75702
PRESENT EXECUTIVE OFFICERS AND DIRECTOR:
Sam B. Myers, Jr. 133,215 1.2%
Norman S. Neidell 37,500 (3) *
FORMER OFFICERS AND DIRECTORS:
John W. McTigue, Jr. -0- 0.0%
Edward R. Prince, Jr. 312,502 (3) 2.7%
Philip A. Tuttle 62,512 (3) *
John O. Smith -0- 0.0%
Charles E. Bradley, Sr. 15,000 (3) *
Harry C. Johnson 10,000 (3) *
Directors and Officers as a Group (2 Persons) 170,715 (3) 1.5%
</TABLE>
- ---------------------
* Less than 1%.
(1) Includes 781,255 shares owned by The SBM III Trust and 781,255 shares
owned by The MFM Trust; Mr. Morgan is trustee of both trusts. The SBM
III Trust is a trust established for the benefit of the children of Sam
B. Myers, III. The MFM Trust is a trust established for the benefit of
the children of Melanie F. Myers. Mr. Morgan has sole voting and
dispositive power with respect to such shares. Mr. Sam B. Myers, Jr.
does not have and disclaims any beneficial ownership of the shares
owned by the trusts.
(2) Includes 10,000 shares owned personally by Mr. Fender, 20,000 shares
held by trusts for the benefit of Mr. Fender's family members for which
Mr. Fender is trustee, and 1,528,393 shares owned by The Bon Temps
Trust for which Mr. Fender is trustee. The Bon Temps Trust is a trust
established for the benefit of the children of Sam B. Myers, Jr. Mr.
Fender has sole voting and dispositive power with respect to such
shares. Mr. Myers does not have and disclaims any beneficial ownership
of the shares owned by all of the trusts.
(3) These amounts include shares of Common Stock issuable upon exercise of
options that are presently exercisable within 60 days.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 1, 1997, the Company acquired all of the outstanding capital
stock of Wavefield Image, Inc. ("Wavefield"), the owner of the Wavefield Imaging
Technology, a patented data processing technique which has been utilized by the
Company in its seismic data acquisition phase of seismic surveys. Dr. Norman S.
Neidell, a principal shareholder of Wavefield and inventor of the Wavefield
Imaging Technology, entered into a four year employment agreement with the
Company and was appointed Vice President-Innovations of the Company. Under Dr.
Neidell's agreement, Dr. Neidell retained an option to obtain a limited,
nontransferable license to the Wavefield Imaging Technology under certain
conditions. The Company also granted him stock options, vesting over four years,
to purchase 150,000 shares of the Company's Common Stock. The Company and Dr.
Neidell have also agreed to negotiate in good faith to form an agreement between
them to own and exploit any non-seismic applications of the Wavefield Imaging
Technology. In addition, the Company pays Dr. Neidell $20,000 annually for the
rental of certain office furniture and equipment pursuant to an agreement that
expires in 2000.
The Company engaged the services of a law firm, including the services
of a partner in the firm who is a son of Mr. Prince. The Company incurred fees
of approximately $173,664 payable to this firm during the year ended December
31, 1998. Also in 1997, the Company paid $262,380 for software and related
services to a vendor of which Mr. Prince is a director.
The Company believes all of the transactions with related parties have
been on terms no less favorable to the Company than those terms which may have
been obtained from unrelated third parties.
None of the officers or directors of the Company is related to any
other executive officer or director of the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas.
ZYDECO ENERGY, INC.
(Registrant)
Date: April 29, 1999 By: /s/ Sam B. Myers, Jr.
----------------------------
Sam B. Myers, Jr.
Chairman of the Board
(Sole Director),
President, CEO and COO
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ Sam B. Myers, Jr. Chairman of the Board (Sole Director), President,
- ------------------------- CEO and COO (Principal Executive Officer and
Sam B. Myers, Jr. Principal Financial and Accounting Officer)
</TABLE>
