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ZYDECO ENERGY, INC.
2170 PLAZA OF THE AMERICAS
700 NORTH PEARL STREET
DALLAS, TEXAS 75201
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND SEC RULE 14F-1
NOTICE OF CHANGE IN THE
MAJORITY OF THE BOARD OF DIRECTORS
MAY 24, 2000
We are furnishing this Information Statement to all of our stockholders of
record at the close of business on May 23, 2000 of our common stock, par value
$.001 per share. This notice is required by Section 14(f) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 14f-1 of the Securities and
Exchange Commission ("SEC").
NO VOTE OR OTHER ACTION BY ZYDECO'S STOCKHOLDERS IS REQUIRED IN RESPONSE TO
THIS INFORMATION STATEMENT. PROXIES ARE NOT BEING SOLICITED.
INTRODUCTION
Zydeco Energy, Inc. a Delaware corporation, has entered into a Merger
Agreement with DataVoN Inc., a Texas corporation. DataVoN is a privately-held
wholesale provider of internet telephone services. The merger is expected to be
completed on or about June 9, 2000. As a result of the merger, the stockholders
of DataVoN will own approximately 80% of the voting stock of Zydeco Energy,
which will change its name to DataVoN Inc. The merger will not require the
approval of stockholders of Zydeco.
Under the Merger Agreement, the current sole member of the board of
directors of Zydeco, Sam B. Myers, Jr., will resign as a director effective upon
completion of the merger, and that Hugh Simpson will be appointed as a new sole
director to fill the vacancy created by this resignation. Mr. Simpson is the
President and Chief Executive Officer of DataVoN and the owner of substantially
all of DataVoN's outstanding capital stock. Mr. Simpson will not begin his term
until after the expiration of the ten day period beginning on the later of the
date of the filing of this Information Statement with the SEC pursuant to Rule
14f-1 or the date of mailing of this Information Statement to Zydeco's
stockholders and after completion of the merger.
Because of the change in ownership of voting stock and the composition of
the board after the merger as described below, there will be a change in control
of Zydeco upon completion of the merger.
As of May 21, 2000, Zydeco had 10,039,096 shares of its common stock issued
and outstanding. The common stock is Zydeco's only outstanding class of voting
securities that
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would be entitled to vote for directors at a stockholders meeting if one were to
be held, each share being entitled to one vote.
Please read this Information Statement carefully. It describes the terms
of the Merger Agreement and its effect on Zydeco and contains biographical and
other information concerning the executive officer and director after the
merger. Additional information about the merger and DataVoN is contained in
Zydeco's current annual and quarterly reports on file with the SEC, as well as
in Zydeco's Current Report on Form 8-K ("Form 8-K") dated May 23, 2000, which
was filed with the SEC on May 24, 2000. All Zydeco filings, and exhibits
thereto, may be inspected without charge at the public reference section of the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
of this material also may be obtained from the SEC at prescribed rates. The SEC
also maintains a website that contains reports, proxy and information statements
and other information regarding public companies that file reports with the SEC.
Copies of Zydeco filings may be obtained from the SEC's website at
http://www.sec.gov.
THE MERGER AGREEMENT
On May 23, 2000, Zydeco, and its wholly owned subsidiary, DVN Acquisition
Corporation and DataVoN entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which DVN Acquisition will merge with and into
DataVoN, with DataVoN continuing as the surviving corporation.
Upon the completion of the merger, all of the outstanding shares of common
stock of DataVoN will be converted into:
. 32,623,851 shares of Zydeco common stock; and
. 7,190 shares of Zydeco Series A Convertible Senior Preferred Stock, $.001
par value convertible into 7,190,000 shares of Zydeco common stock (or
1,000 shares of common stock for each share of preferred stock).
The Zydeco preferred stock, which will be issued entirely to Mr. Simpson in
the merger, will vote together with the Zydeco common stock on an "as converted"
basis. That is, each of the 7,190 shares of Zydeco preferred stock issued in the
merger will be entitled to 1,000 votes on all matters with the Zydeco common
stock, subject to certain exceptions.
The Zydeco preferred stock is being issued in the merger because the
Certificate of Incorporation of Zydeco currently authorizes Zydeco to issue
50,000,000 shares of common stock and 1,000,000 shares of preferred stock, the
latter with such powers and preferences as the board of directors of Zydeco
shall determine. As of May 21, 2000, Zydeco had outstanding 10,039,096 shares of
common stock and had reserved an additional 4,713,786 shares of its common stock
for issuance from its authorized but unissued shares upon exercise of its
outstanding options and warrants. Under the Merger Agreement, an additional
2,522,459 shares of Zydeco common stock is required to be reserved for issuance
upon exercise of DataVoN stock options assumed by Zydeco in the merger.
Accordingly, the Zydeco preferred stock was issued because of the limitations on
the number of issued and reserved shares of Zydeco common stock.
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It is expected that the Certificate of Incorporation will be proposed to
Zydeco stockholders for amendment after completion of the merger to increase the
number of shares of common stock that Zydeco is authorized to issue. If the
Certificate of Incorporation is so amended, all outstanding shares of the Zydeco
preferred stock issued in the merger will be automatically converted into Zydeco
common stock by their terms.
The Merger Agreement contemplates that Mr. Myers, the sole current director
of Zydeco will resign and that Mr. Simpson will be appointed by Mr. Myers as
existing director of Zydeco to take office upon the effective time of the merger
to serve until his respective successor is elected and qualify.
In connection with the merger negotiations, Zydeco will issue upon closing
of the merger warrants to purchase 523,756 shares of Zydeco common stock at
$0.08 per share to two individuals for broker services related to the merger.
PROPOSED CHANGE IN CONTROL OF THE COMPANY
Giving effect to the merger and the issuance of Zydeco common stock and
Zydeco preferred stock to the DataVoN shareholders:
. the shareholders of DataVoN (including Mr. Simpson) will own 76.5% of the
outstanding Zydeco common stock and approximately 80% of the outstanding
voting stock of Zydeco; and
. Mr. Simpson will own 74.0% of the outstanding Zydeco common stock and
approximately 78% of the outstanding voting stock of Zydeco; and
. Mr. Simpson will be the sole director of Zydeco.
As a result of his majority voting stock ownership and sole director status upon
completion of the merger, Mr. Simpson will be in control of the business and
affairs of Zydeco.
DATAVON
DataVon is currently building one of the nation's first "next-generation"
packet switched internet protocol ("IP") networks to provide voice and data
services in over 80 domestic market areas. A unique, meshed IP backbone will
transport "toll quality" traffic to any of DataVoN's connected cities. DataVoN
believes that this network architecture will drastically reduce the cost of
originating, transporting and terminating traffic while providing network
scalability for future growth.
DataVon had revenues of $8.27 million in 1999 and $2.5 million (unaudited)
for the first quarter 2000. Operating income was $806,000 in 1999 and $832,000
(unaudited) for the first quarter 2000. Earnings before taxes, interest,
depreciation and amortization ("EBITDA") for those same periods were $848,000
and $839,000, respectively. Total assets were $1.67 million at December 31, 1999
and $2.3 million (unaudited) at March 31, 2000.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of May 21, 2000,
regarding beneficial ownership of Common Stock by (i) each person known by
Zydeco to be the beneficial owner of more than 5% of the outstanding shares of
its common stock, (ii) each current director, nominee and executive director of
Zydeco, (iii) all current officers and directors as a group, and (iv) all
proposed directors and officers of Zydeco after giving effect to the merger.
The information is determined in accordance with Rule 13d-3 promulgated under
the Exchange Act based upon information furnished by the persons listed or
contained in filings made by them with the SEC. Except as indicated below, the
stockholders listed possess sole voting and investment power with respect to
their shares. Except as otherwise indicated in the table below, the business
address of each of the persons listed is c/o Zydeco Energy, Inc., 2170 Plaza of
the Americas, 700 North Pearl Street, Dallas, Texas 75201.
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CURRENT HOLDINGS/(1)/ AFTER MERGER CLOSING/(2)/
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AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL PERCENTAGE OF BENEFICIAL PERCENTAGE OF
OWNER OWNERSHIP TOTAL OWNERSHIP TOTAL
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Richard L. Morgan 1,562,510/(3)/ 15.56% 1,562,510/(3)/ 3.66%
700 North Pearl Street, Suite 2170
Dallas, Texas 75701
David M. Fender 1,558,393/(4)/ 15.52% 1,558,393/(4)/ 3.65%
116 East Front Street
Tyler, Texas 75702
Sam B. Myers, Jr. 133,215 1.3% 133,215 *
Hugh Simpson 0 0.0% 38,738,877/(5)/ 77.71%/(5)/
Current directors and officers as 133,215 1.3% 133,215 *
a group (1 person)
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* Less than 1%.
/(1)/ Based on 10,039,096 shares of Zydeco common stock actually outstanding as
of May 21, 2000.
/(2)/ Based on 42,662,947 shares of Zydeco common stock potentially outstanding
after the closing of the merger. Does not include an additional 7,190,000
shares of Zydeco common stock issuable upon conversion of the Zydeco
preferred stock issued to Mr. Simpson in the merger in the event an
amendment to Zydeco's Certificate of Incorporation to increase the number
of shares of Common Stock is authorized and approved.
/(3)/ 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.
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/(4)/ Includes 30,000 shares owned personally by Mr. Fender 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 the trust.
/(5)/ Includes 7,190,000 shares of Zydeco common stock issuable upon conversion
of the 7,190 shares Zydeco preferred stock issued to Mr. Simpson in the
merger upon the adoption of an amendment to Zydeco's Certificate of
Incorporation to increase the authorized number of shares of Zydeco common
stock. Mr. Simpson, in his positions as sole director and majority
shareholder of Zydeco after the merger, would have the power to cause such
an amendment to be adopted.
DIRECTORS AND EXECUTIVE OFFICERS
We expect that on or about June 9, 2000, the transactions contemplated by
the Merger Agreement will be completed and the current sole director of Zydeco,
Sam B. Myers, Jr. will be replaced by Hugh Simpson. Effective as of the closing
of the transactions pursuant to the Merger Agreement, the current member of the
Board, Sam B. Myers, Jr., will resign as director, and that Hugh Simpson will be
appointed as a new director to fill the vacancy created by the resignation. The
following table sets forth information regarding Zydeco's current executive
officer and director and the proposed executive officer and director of Zydeco
after the Merger.
Current Sole Executive Officer and Director
NAME AGE POSITION
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Sam B. Myers, Jr. 61 Chief Executive Officer, President,
Secretary, Chairman and Director
Mr. Myers has served since December 1995 as Director, Chairman of the
Board, Chief Executive Officer and, except for the period from October 1996 to
January 1999, President of Zydeco and in the same capacity for Zydeco
Exploration, Inc. ("Zydeco Exploration"), Zydeco's subsidiary, since its
formation in March 1994. Mr. Myers was also elected Secretary of Zydeco in May
2000. Additionally, Mr. Myers is a Director and President of Wavefield Image,
Inc. ("Wavefield"), Zydeco's other subsidiary. 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, as the sole director of Zydeco, performs all committee
functions, including those of the compensation, audit and nominating committees.
During the year ended December 31, 1999, the board met on two occasions.
After Mr. Myers became the sole director, Zydeco did not hold formal director
meetings but acted by unanimous consent.
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PROPOSED EXECUTIVE OFFICER AND SOLE DIRECTOR AFTER THE MERGER
NAME AGE POSITION
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Hugh Simpson 42 President, Chief Executive Officer, Chairman, and Director
Mr. Simpson founded DataVoN in 1997 and has served as its sole officer and
majority shareholder. In 1991, Mr. Simpson founded Travel Com 800 Inc., a
communications company serving military personnel for their calling card and
wireless needs, where he worked until 1996. Mr. Simpson's United States Marine
Corp Reserve Unit was activated for duty in Operation Desert Shield and Storm in
1990. Mr. Simpson was promoted to the rank of Lieutenant Colonel before joining
the inactive roles in June 1999. From 1988 to 1990, Mr. Simpson was employed by
International Telecharge, Inc. as a National Product Manager. Mr. Simpson served
as a board member of Total Communication, a private communications concern based
in Cedar Rapids, Iowa until September 1999. Mr. Simpson received a Bachelor
Degree from Sam Houston State University in 1979.
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to
Zydeco and its subsidiaries for the years ended December 31, 1999, 1998, and
1997, for Zydeco's only current officer, Mr. Myers.
ANNUAL COMPENSATION
OTHER ANNUAL
NAME AND POSITION YEAR SALARY BONUS COMPENSATION
----------------- ---- ------ ----- ------------
Sam B. Myers, Jr. 1999 $150,000 $-0- $-0-
Chief Executive Officer, 1998 $150,000 $-0- $-0-
President, Secretary, 1997 $150,000 $-0- $-0-
Chairman and Director
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act, as amended, requires Zydeco's executive
officers, directors and persons who beneficially own more than 10% of Zydeco's
Common Stock to file reports of their beneficial ownership and changes in
ownership (Forms 3, 4 and 5, and any amendment thereto) with the SEC. Executive
officers, directors, and greater-than-ten percent holders are required to
furnish Zydeco with copies of all Section 16(a) forms they file. Based solely on
a review of the copies of such forms furnished to Zydeco and written
representations from the executive officer and director, Zydeco believes that
all Section 16(a) filing requirements applicable to its executive officers and
directors were complied with during its fiscal year 1999.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 30, 1998, Zydeco sold a 6.25% working interest participation in
a prospect to a limited partnership. Two of the adult children of Zydeco's
current Chairman and Chief Executive Officer serve as officers of the general
partner of the limited partnership. The agreement provides that the limited
partnership pay to Zydeco a total consideration of $204,000 for this interest
which included the turnkey cost of drilling this prospect's first well. Pursuant
to the terms of the agreement with the limited partnership, the basis of this
partnership's participation in this prospect was on comparable terms of
participation by an unrelated party. During 1999, the first well was drilled on
this prospect. Zydeco and the limited partnership did not participate in the
completion attempt.
ZYDECO ENERGY, INC.
DATED: MAY 24, 2000
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