SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
and Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[x] Definitive Information Statement
Gulfport Energy Corporation, Inc.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check Appropriate Box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
1) Title of each class of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
GULFPORT ENERGY CORPORATION
6307 Waterford Blvd., Suite 100
Oklahoma City, Oklahoma 73118
INFORMATION STATEMENT
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This Information Statement is being furnished to the stockholders of
Gulfport Energy Corporation, a Delaware corporation (the "Company"), in
connection with the election of five directors for the coming year.
On August 24, 2000, the Board of Directors also nominated five persons to
serve on the Board of Directors of the Company for the coming year.
Under Delaware law, the affirmative vote of the holders of a majority of
the outstanding shares of the Company's Common Stock is required to elect the
nominated directors. On September 1, 2000, in accordance with Delaware law, the
holders of a majority of the outstanding shares of the Company's Common Stock
executed a written consent electing the five directors for the next year.
ACCORDINGLY, WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE NOT REQUESTED TO
SEND US A PROXY.
September 15, 2000 has been fixed as the record date (the "Record Date")
for the determination of the Company stockholders entitled to notice of, and to
vote for the nominated directors. The Company had 10,145,400 shares outstanding
as of the Record Date.
This Information Statement is being furnished by the Company and was first
mailed on or about October 5, 2000 to the holders of the Company Stock as of
the close of business on the Record Date.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISION HAS PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS INFORMATION STATEMENT. ANY
REPRESENTATIONS TO THE CONTRARY IS UNLAWFUL.
The date of this Information Statement is October 5, 2000.
ELECTION OF DIRECTORS
On August 24, 2000 the Board of Directors nominated five persons to serve
on as the Board of Directors of the Company for the coming year. On September
1, 2000, in accordance with Delaware law, the holders of a majority of the
outstanding shares of the Company's Common Stock executed a written consent
electing the five nominated persons as Directors of the Company. Each director
will serve until the next annual meeting or until he is succeeded by another
qualified director who has been elected.
All five of the persons elected are now members of the Board of Directors.
The following information about the directors was provided by the directors:
Biographical Information
The following table sets forth the name and age of each director and his
principal position with the Company.
NAME AGE POSITION
Mike Liddell 47 Chairman of the Board,
Chief Executive Officer and
Director
Robert E. Brooks 52 Director
David L. Houston 47 Director
Mickey Liddell 39 Director
Dan Noles 53 Director
Mike Liddell has served as a director of Gulfport since July 11, 1997, as
Chief Executive Officer since April 28, 1998 and as Chairman of the Board since
July 28, 1998 and President since July 15, 2000. In addition, Mr. Liddell served
as Chief Executive Officer of DLB Oil & Gas, Inc. from October 1994 to April 28,
1998, and as a director of DLB from 1991 through April 1998. From 1991 to 1994,
Mr. Liddell was President of DLB. From 1979 to 1991, he was President and Chief
Executive Officer of DLB Energy. He received a B.S. degree in education from
Oklahoma State University. He is the brother of Mickey Liddell and
brother-in-law of Dan Noles.
Robert E. Brooks has served as a director of Gulfport since July 11, 1997.
Mr. Brooks is currently a partner with Brooks Greenblatt, a commercial finance
company located in Baton Rouge, Louisiana that was formed by Mr. Brooks in July
1997. Mr. Brooks is a Certified Public Accountant and was Senior Vice President
in charge of Asset Finance and Managed Assets for Bank One, Louisiana between
1993 and July 1997. He received his B.S. degree from Purdue University in
mechanical engineering in 1969. He obtained graduate degrees in finance and
accounting from the Graduate School of Business at the University of Chicago in
1974.
David Houston has served as a director of Gulfport since July 1998. Since
1991, Mr. Houston has been the principal of Houston & Associates, a firm that
offers life and disability insurance, compensation and benefits plans and estate
planning. Prior to 1991, he was President and Chief Executive Officer of Equity
Bank for Savings, F.A. He currently serves on the board of directors and
executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, and is the
former chair of the Oklahoma State Ethics Commission and the Oklahoma League of
Savings Institutions. He received a Bachelor of Science degree in business from
Oklahoma State University and a graduate degree in banking from Louisiana State
University.
Mickey Liddell has served as a director of Gulfport since January 1999.
Mr. Liddell is currently the President of Banner Entertainment, Inc., a motion
picture production company in Los Angeles, California. Prior to 1994, Mr.
Liddell owned and managed wholesale nutrition product stores in Los Angeles.
Mr. Liddell received a Bachelor of Arts from the University of Oklahoma in
Communications in 1984 and a graduate degree from Parson School of Design in New
York, New York in 1987. He is the brother of Mike Liddell and brother-in-law of
Dan Noles.
Dan Noles has served as a director of Gulfport since January 2000. Mr. Noles
has served as the president of Atoka Management Company, an oilfield equipment
company since 1993. Mr. Noles received his Bachelor degree in Finance from the
University of Oklahoma in 1970. Mr. Noles is the brother-in-law of Mike Liddell
and Mickey Liddell.
Service on the Board
Term of Board Service. Mike Liddell and Robert Brooks were appointed to
the Board of Directors on July 11, 1997. David Houston was appointed to the
Board in July 1998. Mickey Liddell was appointed to the Board in January 1999.
Dan Noles was appointed to the Board in January 2000.
Board Meetings and Committees. The Board of Directors held five meetings
in 1999. No director missed more than 25% of the meetings held by the Board
except Robert Brooks who missed three meetings. In addition to the five
meetings, the Board adopted one resolution by written consent.
The Board of Directors maintained an Audit Committee which held its first
meeting of the year in March 1999 with all members participating. The Audit
Committee recommends to the whole Board of Directors the selection of
independent certified public accountants to audit annually the books and records
of the Company, reviews the activities and report of the independent certified
public accountants, and reports the results of such review to the whole Board of
Directors. The Audit Committee also monitors the internal controls of the
Company. In 1999 the Audit Committee was composed of Robert E. Brooks, David
Houston and Mickey Liddell, all of whom are non-employee directors at the time
of the first meeting.
The Board of Directors established a Compensation Committee in May 1999.
The Compensation Committee held its first meeting on May 18, 1999. At the first
meeting, the Compensation Committee voted to enter into employment agreements
with the Company's President and Chief Executive Officer, adopt an Option Plan
for employees, consultants and directors of the Company, and to terminate the
Administrative Service Agreement. The Compensation Committee held its second
meeting on September 21, 1999 and voted to adopt a 401(k) Plan and Profit
Sharing Plan as well as a Life Insurance Plan for Key Executives. The
Compensation Committee is comprised of Robert Brooks, David Houston and Mickey
Liddell.
In 1999, the Board did not delegate its functions to any other standing
committee, and thus did not create executive, nominating or other similar
committees.
Director Compensation. The Company pays its non-employee directors a monthly
retainer of $1,000 and a per meeting fee of $500 and reimburses all ordinary and
necessary expenses incurred in the conduct of the Company's business.
Liability of Directors and Officers and Indemnification. As permitted by the
Delaware General Corporate Law (the "DGCL"), the Company's Certificate of
Incorporation eliminates in certain circumstances the monetary liability of the
directors for a breach of their fiduciary duty. These provisions do not
eliminate liability of the directors for (i) a breach of the director's duty of
loyalty to the Company or its Stockholders, (ii) acts or omissions by a director
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) liability arising under Section 174 of the DGCL (relating to the
declaration of dividends and purchase or redemption of shares in violation of
the DGCL) or (iv) any transaction from which the director derived an improper
personal benefit. In addition, these provisions do not eliminate the liability
of a director for violations of the Federal securities laws, nor do they limit
the rights of the Company or its Stockholders, in appropriate circumstances, to
seek equitable remedies such as injunctive or other forms of non-monetary
relief. Such remedies may not be effective in all cases.
The Bylaws provide that the Company shall indemnify its directors and
officers to the fullest extent permitted by the DGCL. Under such provisions,
any director or officer, who in his capacity as such, is made or threatened to
be made a party to any suit or proceeding, may be indemnified if the Board of
Directors determines such director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Company. The Bylaws and the DGCL, further provide that such indemnification
is not exclusive of any other rights to which such individuals may be entitled
under the Certificate of Incorporation, the Bylaws, any agreement, vote of
Stockholders or disinterested directors or otherwise.
OTHER INFORMATION ABOUT DIRECTORS, OFFICERS,
AND CERTAIN STOCKHOLDERS
Beneficial Ownership of Directors, Officers and Certain Stockholders
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1999, by (i) each
director, (ii) each named executive officer in the Summary Compensation Table,
(iii) each person known or believed by the Company to own beneficially five
percent or more of the Common Stock and (iv) all directors and executive
officers as a group.
Name and Address of Beneficial Owner(1) Beneficial Ownership
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Shares Percentage(2)
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Mike Liddell(3) 757,145 7.46%
6307 Waterford Blvd., Suite 100
Oklahoma City, OK 73118
Charles E. Davidson(4) 4,358,995 42.96%
411 West Putnam Avenue
Greenwich, CT 06830
Wexford Management, LLC(5) 1,795,860 17.70%
411 West Putnam Avenue
Greenwich, CT 06830
Peter M. Faulkner(6) 777,384 7.66%
767 Third Avenue, Fifth Floor
New York, New York 10017
Robert Brooks * *
343 3rd Street
Suite 205
Baton Rouge, LA 70801
David Houston * *
1120 N.W. 63rd, Suite 360
Oklahoma City, OK 73116
Mickey Liddell * *
8265 Sunset Blvd.,Suite 200
Los Angeles, CA 90046
Ronald D. Youtsey (7) * *
Raymond P. Landry (8) * *
All directors and executive officers as a group 353,857 10.30%
(8 individuals)
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* Less than one percent.
(1) Unless otherwise indicated, each person or group has sole voting power
with respect to all listed shares.
(2) Each listed person's percentage ownership is determined by assuming that
options, warrants and other convertible securities that are held by such
person and that are exercisable or convertible within sixty (60)
days have been exercised.
(3) Includes shares of Common Stock held of record by Liddell Investments,
L.L.C. Mr. Liddell is the sole member of Liddell Investments, L.L.C.
(4) Includes 1,322,251 shares of Common Stock held by CD Holding, L.L.C.
and 27,073 shares of Common Stock held in an IRA for Mr. Davidson. Mr.
Davidson is the sole member of CD Holding, L.L.C. Does not include
555,948 shares of Common Stock held by the Wexford Entities (as defined
below). Mr. Davidson is the Chairman and controlling member of Wexford
Management, L.L.C. Mr. Davidson disclaims beneficial ownership of the
555,948 shares owned by the Wexford Entities.
(5) Includes shares of Common Stock owned by the following investment funds
(the "Wexford Entities") that are affiliated with Wexford Management:
Wexford Special Situations 1996, L.P.; Wexford Special Situations 1996
Institutional, L.P.; Wexford Special Situations 1996, Limited;
Wexford-Euris Special Situations 1996, L.P.; Wexford Spectrum Investors,
L.L.C.; Wexford Capital Partners II, L.P.; Wexford Overseas Partners I,
L.P.
(6) Includes shares of Common Stock owned by the following investment funds:
PMF Partners, L.L.C., Rumpere Capital, L.P., and Rumpere Capital Fund,
Ltd.
(7) Ronald Youtsey served as the Company's Chief Financial Officer from July
1997 until October 1998.
(8) Mr. Landry's share ownership reflects options for 1,200 shares, which
are currently exercisable.
Executive Compensation
The following table sets forth the compensation paid or accrued to the
Chief Executive Officer and any other executive officer whose annual
compensation exceeded $100,000 (the "named executives") through the three years
ended December 31, 1999, in all capacities in which they served during that
period.
Long Term
Name and Principal Annual Compensation All Other
Position Year Compensation(1)(2) Awards Compensation
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Salary Bonus
-------- ------
Mike Liddell 1999 $200,000 $ 4,166 253,635 options ---
Chief Executive 1998 $133,333 --- --- ---
Officer(3)
Mark Liddell 1999 $200,000 $ 4,166 253,635 options ---
President(4) 1998 $133,333 --- --- ---
Raymond P. Landry 1998 $156,000 --- --- ---
Executive Vice - 1997 $156,000 $78,000 $60,000 ---
President (5)
Ronald Youtsey 1998 $104,166
Chief Financial
Officer(6)
Wayne A. Benninger 1998 --- --- --- ---
Vice-President 1997 $ 95,506 $65,500 --- ---
Strategic Planning(7)
Thomas Stewart 1998 --- --- --- ---
Vice-President of 1997 $ 83,359 $53,000 --- ---
Operations(8)
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(1) Amounts shown include cash and non-cash compensation earned and received
by the named executives as well as amounts earned but deferred at their
election.
(2) The Company provides various perquisites to certain employees, including
the named executives. In each case, the aggregate value of the perquisite
provided to the named executives did not exceed 10% of such named executive's
annual salary and bonus.
(3) Mr. Mike Liddell became the Chief Executive Officer of the Company on
April 28, 1998. Mr. Liddell's salary was not paid directly by Gulfport until
after June 1, 1999. Through June 1, 1999, his services were provided pursuant
to the Administrative Services Agreement and the compensation amount reflects
the portion of his compensation from DLB Equities, L.L.C. that was allocated to
the Company under such agreement. See "Certain Transactions".
(4) Mr. Mark Liddell was named President of the Company on April 28, 1998.
Mr. Liddell's salary was not directly paid by Gulfport until after June 1, 1999.
Through June 1, 1999, his services were provided pursuant to the Administrative
Services Agreement and the compensation amount reflects the portion of his
compensation from DLB Equities, L.L.C. that was allocated to the Company under
such agreement. See "Certain Transactions". Mr. Liddell passed away on
December 24, 1999.
(5) Mr. Landry received a $25,000 sign-on bonus per the terms of his
employment contract, payment of which was deferred to 1996. Mr. Landry received
$78,000 in compensation during 1997 as a participant of the employee stay bonus
program. Mr. Landry ceased to be an Executive Vice President on May 5, 1998,
but continued to serve as an employee of the Company until July 11, 1999.
(6) Mr. Ronald Youtsey served as the Company's Chief Financial Officer from
July 1997 until October 1998. During the period from January 1, 1998 until
April 28, 1998, Mr. Youtsey's compensation was paid by DLB Oil & Gas, Inc. under
the First Administrative Service Agreement. From April 28, 1998 until October
1998, Mr. Youtsey's compensation was paid by DLB Equities, LLC pursuant to the
Amended Administrative Service Agreement. The compensation amount reflects the
portion of his compensation allocated to the Company in 1998.
(7) Mr. Beninger resigned as Vice President of Strategic Planning on August
31, 1997. During 1997, Mr. Beninger received $65,500 in compensation as a
participant of the employee stay bonus program.
(8) Mr. Stewart resigned as Vice President of Operations on July 11, 1997.
During 1997, Mr. Stewart received $53,000 in compensation as a participant of
the employee stay bonus program.
Stock Options Granted
Stock Options Granted
On June 1, 1999, Mike Liddell, Chief Executive Officer and Chairman of the
Board, received a grant of options for 2.5% of the issued shares of Common Stock
at an exercise price of $2.00 per share. The options shall be exercisable and
vest as to 35% of the shares on June 1, 2000, an additional 35% of the shares
will become exercisable and vest on June 1, 2001, and the remaining shares will
become exercisable and vest on June 1, 2002. On January 17, 2000, Mr. Liddell
was granted an additional 203,635 giving him a total of 457,270 options at the
date of this filing.
On June 1, 1999, Mark Liddell, President, received a grant of options for
2.5% of the outstanding shares of Common Stock at an exercise price of $2.00 per
share. The options were scheduled to be exercisable and vest as to 35% of the
shares on June 1, 2000, an additional 35% of the shares will become exercisable
and vest on June 1, 2001, and the remaining shares will become exercisable and
vest on June 1, 2002. On December 24, 1999, Mr. Liddell died. Pursuant to the
terms of Mr. Liddell's Stock Option Agreement, all of his options were
surrendered to the Company.
On September 15, 1999, the non-employee board members were granted 10,000
options each with an exercise price of $2.00. The options shall vest 3,333 on
October 1, 1999, 3,333 on October 1, 2000, and 3,334 on October 1, 2001. On
January 17, 2000, each of the non-employee board members were granted an
additional 10,000 options with the option vesting as to one-third on each
anniversary of the grant for three years.
The Option Agreements for Mike Liddell and the Directors provide that if
the Company at any time increases the number of outstanding shares of the
Company or alters the capitalization of the Company in any other way, the stock
options shall be adjusted to reflect such changes.
The following table sets forth information concerning the grant of stock options
during 1999 to the named executives and directors.
Individual Grants Potential Realizable
Number of #of Total Value Assumed Annual
Securities Options Rates at of Stock Price
Underlying Granted Appreciation for Option
Options Employers Exercise Terms()
Name Granted(#) in 1999 Price ($/SH) 5%($) 10%($)
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Mike Liddell 253,635 47% $2.00
Mark Liddell 253,635 47% $2.00
Robert Brooks 10,000 02% $2.00
David Houston 10,000 02% $2.00
Mickey Liddell 10,000 02% $2.00
No options were granted to the named executives or directors in 1998. The
following table sets forth information concerning the grant of stock options
during 1997 to the named executives.
Individual Grants Potential Realizable
Number of #of Total Value Assumed Annual
Securities Options Rates at of Stock Price
Underlying Granted Appreciation for Option
Options Employers Exercise Terms()
Name Granted(#) in 1997 Price ($/SH) 5%($) 10%($)
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Raymond P. Landry 1,817 100% $3.50 $
(1) The assumed annual rates of increase are based on an annually compounded
increase of the exercise price of $3.50 per share through a presumed ten year
option term.
(2) Mr. Landry's options were granted under an employment agreement that was
part of the Plan of Reorganization. On March 5, 1999, the Company conducted a
50 to 1 reverse stock split which reduced Mr. Landry's options to 1,200. On
September 15, 1999 the Company issued an additional 6,700,000 shares in
connection with its Regulation D offering. The Additional issuance increased
Mr. Landry's options to 1,817.
Stock Option Holdings
The following table sets forth the number of unexercised options held by
named executives as of December 31, 1999. No options were exercised in 1997 or
1998 and no options were in-the-money as of December 31, 1999.
Number of Unexercised
Options at FY-End
Name Exercisable Unexercisable
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Mike Liddell(1) --- 253,635
Mark Liddell(1) 253,635
Robert Brooks(1) 3,333 6,667
David Houston(1) 3,333 6,667
Mickey Liddell(1) 3,333 6,667
Raymond P. Landry (2) --- 1,817
(1) These options were exercisable at $2.00 per share.
(2) These options were exercisable at $3.50 per share.
Stock Option Holdings
The following table sets forth the number of unexercised options held by
named executives as of December 31, 1998. No options were exercised in 1997 and
no options were in-the-money as of December 31, 1998.
Number of Unexercised
Options at FY-End(1)
Name Exercisable Unexercisable
- ---------------------------------------------------------------------------
Raymond P. Landry --- 1,200
(1) These options were exercisable at $3.50 per share.
Stock Options Granted 2000
On December 24, 1999 Mark Liddell died. Mr. Liddell had previously been
granted 253,635 options. Pursuant to the terms of Mr. Liddell's Stock Option
Agreement, all of his options were surrendered to the Company. The following is
a table of stock option grants made after December 31, 1999 and before the date
of this filing.
Options Options Total
Name At December 31, 1999 Granted 2000 Options Granted
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Mike Liddell 253,635 203,635 457,270
Robert Brooks 10,000 10,000 20,000
David Houston 10,000 10,000 20,000
Mickey Liddell 10,000 10,000 20,000
Dan Noles -- 20,000 20,000
Employees -- 60,000 60,000
* All options reflected on this table are exercisable at $2.00 a share and
vest in three equal installments.
Compensation Report
Administrative Services Agreement. When the Company was reorganized
effective July 11, 1997, it entered into an administrative services agreement
with the DLB Oil & Gas, Inc. (the "Services Agreement"), which was then a
publicly traded, oil and gas company and the Company's largest stockholder. By
entering into the Services Agreement, the Company shared management and
personnel costs with DLB Oil & Gas, Inc. and substantially reduced the general
and administrative costs it had historically paid. When DLB Oil & Gas, Inc. was
subsequently acquired by Merger with Chesapeake Energy Corporation, the Company
shares that DLB Oil & Gas, Inc. had held were distributed to the former DLB
shareholders and DLB Oil & Gas, Inc. ceased to hold shares in the Company. The
Merger also required that DLB Oil & Gas, Inc. be relieved of its obligations
under the Services Agreement and that all amounts due it be paid. To satisfy
this requirement, Mark Liddell and Mike Liddell, directors, executive officers
and principal stockholders of the Company, formed DLB Equities, LLC ("DLB
Equities"), which assumed the DLB Oil & Gas, Inc. obligations and paid all
amounts due DLB Oil & Gas, Inc., including amounts due under the Services
Agreement. The Company then became obligated to DLB Equities and DLB Equities
undertook to provide management and administrative services to the Company. See
Certain Transactions -- Administrative Services Agreement below.
Under the Services Agreement, DLB Equities allocated that portion of its
general and administrative overhead attributable to the Company's operations to
the Company, which reimbursed DLB Equities on a monthly basis. General and
administrative overhead is composed of the actual cost of personnel and services
and third party charges. The Company's disinterested directors determined that
at that time, this arrangement was more cost effective than hiring executive and
other personnel directly and would result in lower general and administrative
costs. Mark Liddell and Mike Liddell, co-owners of DLB Equities, did not
participate in approving DLB Equities' assumption of the Services Agreement.
In May 1999, the Company created a Compensation Committee to review the
Administrative Services Agreement and the compensation paid to the executive
officers. During 1999, DLB Equities devoted the majority of its staff time to
the Company's business and the Services Agreement acted only as a pass through
arrangement where the Company was paying 100% of the general and administrative
costs of DLB Equities. As a result, the Compensation Committee voted to
terminate the Services Agreement on May 18, 1999 and employ the DLB Equities'
employees directly. The Company believes that under this
arrangement the financial statements of the Company will more accurately reflect
the Company's actual general and administrative expenses.
Dated: August 15, 1999 The Board of Directors of
Gulfport Energy Corporation
Mr. Mike Liddell, Chairman
Compensation Committee Interlocks and Insider Participation
From January 1, 1999 through June 1, 1999 the Company's executive officers
were compensated directly through a Services Agreement with DLB Equities. See
Compensation Report above and Certain Transactions -- Administrative Services
Agreement below. No executive officer or employee of the Company
participated in Board decisions about the Services Agreement or executive
compensation. In 1999, no member of the Board and no employee of the Company
served or had served on the compensation committee (or board of directors of a
corporation lacking a compensation committee) of a corporation employing a
member of the Board. In January 1999, Mickey Liddell joined the Board of the
Company and became one member on the three member compensation committee.
Mickey Liddell is the President of Banner Entertainment, LLC, a privately held
entertainment company. Mike Liddell and Mark Liddell are members and equity
owners of Banner Entertainment, LLC.
Employment Contracts
On June 1, 1999, the Company entered into a five-year employment agreement
with Mike Liddell, Chief Executive Officer and Chairman of the Board. The
employment agreement provides for a salary of $200,000 per year.
On June 1, 1999, the Company entered into a five-year employment agreement
with Mark Liddell, President and Director. The employment agreement provided
for a salary of $200,000 per year. The employment agreement with Mr. Liddell
terminated by its own terms with no further liability to the Company upon Mr.
Liddell's death on December 24, 1999.
As required in the Company's reorganization, the Company and Mr. Ray Landry
entered into a two-year employment agreement commencing July 11, 1997. This
employment agreement provided for a salary of $156,000 per year and stock
options to purchase 60,000 shares of the Company's common stock at $3.50 per
share pursuant to a stock option agreement to be established by the Company.
In March 1999, the Company effected a 50 to 1 reverse stock split. Accordingly,
Mr. Landry's options were decreased to 1,200. This employment agreement expired
on July 11, 1999 and was not renewed by the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons beneficially owning more that 10% of the
Company's stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and with the Company.
Based solely on a review of the reports sent to the Company and written
responses from the executive officers and directors, the Company believes that
each of its directors and executive officers met his Section 16(a) filing
obligations.
Certain Transactions
Administrative Service Agreement
Pursuant to the terms and conditions of the Administrative Services
Agreement, DLB Oil & Gas, Inc. agreed to make available to the Company
personnel, services, facilities, supplies, and equipment as the Company may
need, including executive and managerial, accounting, auditing and tax,
engineering, geological and geophysical, legal, land and administrative and
clerical services. The initial term was one year beginning on the date of the
Administrative Services Agreement. The Administrative Services Agreement
continues for successive one-year periods unless terminated by either party by
written notice no less than 60 days prior to the anniversary date of the
Administrative Services Agreement. During the year ended December 31, 1997, the
services of Gary C. Hanna and Ronald D. Youtsey, the Company's then President
and Secretary, respectively, were provided under this agreement. On April 28,
1998, in connection with the acquisition of DLB Oil & Gas, Inc. by Chesapeake
Energy Corporation, the obligations of DLB under the Administrative Services
Agreement were assigned to DLB Equities, L.L.C. From April 1998 through June 1,
1999, the services of Mike Liddell, Chief Executive Officer, and Mark Liddell,
President, were provided under the Administrative Services Agreement. DLB
Equities, L.L.C. is owned equally by Mike and Mark Liddell.
In return for the services rendered under the Administrative Services
Agreement, the Company paid a monthly service charge based on the pro rata
proportion of the Company's use of services, personnel, facilities, supplies and
equipment provided by DLB Equities, L.L.C. as determined by DLB Equities, L.L.C.
in a good-faith, reasonable manner. The service charge was calculated as the
sum of (i) DLB Equities, L.L.C.'s fully allocated internal costs of providing
personnel and/or performing services, (ii) the actual costs to DLB Equities,
L.L.C. of any third-party services required, (iii) the equipment, occupancy,
rental, usage, or depreciation and interest charges, and (iv) the actual cost to
DLB Equities, L.L.C. of supplies. The fees provided for in the Administrative
Services Agreement were approved by the Bankruptcy Court as part of the Plan and
the Company believes that such fees are comparable to those that would be
charged by an independent third party.
The Administrative Service Agreement was terminated on June 1, 1999.
Shareholder Line of Credit
On August 5, 1999, the Company entered into the Line of Credit for $3,238,000
with CD Holdings, LLC, Liddell Holdings, LLC, Liddell Investments, LLC and
Wexford Management, LLC (the "Affiliated Stockholders"). Borrowing under the
Line of Credit was due on September 15, 1999 and bore interest at LIBOR plus 3%.
Pursuant to the Line of Credit, the Company paid the Affiliated Eligible
Stockholders an aggregate commitment fee equal to $65,000 in common stock and
interest totaling $31,131. On September 15, 1999, the Affiliated Shareholders
converted $3,030,000 of this line of credit into 4,040,011 shares of the
Company's common stock in the Regulation D Private Placement Offering. The
Company repaid $208,314 of this Line of Credit in cash to Affiliated Eligible
Stockholders for debt not converted in the offering.
Performance Graph
The following graph compares the market values of the Company's Common
Stock to the Nasdaq Market Index and a group of companies selected by the
Company and with whom the Company competes (the "Peer Group"). The graph
assumes an investment of $100 on July 11, 1997 (the Plan Confirmation Date), and
that all dividends were reinvested and are weighted on a market capitalization
basis. Following confirmation of the Company's Plan on July 11, 1997, through
December 31, 1997, the Company's Common Stock traded sporadically in the
over-the-counter market. During the period, no bid/ask prices were posted. For
purposes of this graph, the Company has used the price of $3.50 per share as the
initial per share price on July 11, 1997. The $3.50 per share price was used
for the settlement of claims in the Company's Plan. The closing trade price in
December 1997 occurred on December 22, 1997, and was $3.50 per share. The 1998
price reflects the closing price of the stock on last trading day in 1998. The
1999 price reflects the closing price of stock on the last trading day in 1999.
The stock is currently trading in the over-the-counter market. Given the
sporadic trading and the lack of significant trading volume, the results shown
on the graph may not necessarily be indicative of long-term results.
[GRAPHIC OMITED]
The Peer Group is composed of Kelley Oil & Gas, Inc., PetroCorp Incorporated,
St. Mary Land & Exploration Company, Stone Energy Corporation and Texas Meridian
Resources Corporation. Pursuant to SEC rules, this section of the Proxy
Statement is not deemed "Filed" with the SEC and is not incorporated by
reference into the Company's Annual Report on Form 10-K.
OTHER INFORMATION ABOUT THE ANNUAL MEETING
Independent Accountants
The firm of Hogan & Slovacek LLP served as the Company's independent
auditors for 1999. This firm has advised the Company that it has no direct or
indirect financial interest in the Company. The Board has not asked the
Stockholders to ratify its selection of auditors, believing that stockholder
ratification is anachronous and unnecessary.
Additional Information
The Company's Annual report on Form 10-K, including the financial
statements and schedule thereto, for the year ended December 31, 1999, as filed
with the Securities and Exchange Commission, will be furnished without charge to
any stockholder upon written request addressed to Ms. Lisa Holbrook, General
Counsel, Gulfport Energy Corporation, 6307 Waterford Blvd., Suite 100, Oklahoma
City, OK 73118. Stockholders requesting exhibits to the form 10-K will be
provided the same upon payment of reproduction expenses.
By the Order of the Board of Directors
Lisa Holbrook
Secretary
October 5, 2000