GULFPORT ENERGY CORPORATION, INC.
6307 WATERFORD BLVD., SUITE 100
OKLAHOMA CITY, OKLAHOMA 73118
INFORMATION STATEMENT
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 February 25, 2002, the Board of Directors nominated five persons to serve on
the Board of Directors of the Company for the coming year.
March 5, 2002 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 10,146,566 shares outstanding as of
the Record Date. Each share of common stock entitles the holder thereof to one
vote on matters submitted to the stockholders.
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 March 5, 2002, 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.
This Information Statement is being furnished by the Company and was first
mailed on or about April 30, 2002 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 April 30, 2002.
ELECTION OF DIRECTORS
On February 25, 2002, the Board of Directors nominated five persons to
serve on as the Board of Directors of the Company for the coming year. On March
5, 2002, 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:
NAME AGE POSITION
---- --- ----------------------------------------------
Mike Liddell 48 Chairman of the Board, Chief Executive Officer
and Director
Robert E. Brooks 55 Director
David L. Houston 49 Director
Mickey Liddell 40 Director
Dan Noles 54 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 Entertainment Services, LLC, 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.
BOARD MEETINGS AND COMMITTEES
Board of Directors. The Board of Directors held four meetings in 2001. In
addition to the four meetings, the Board adopted resolutions by written consent.
Audit Committee. The Audit Committee 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. During 2001, the Audit Committee held four
meetings, and was composed of Dan Noles, David Houston and Mickey Liddell, all
of whom are non-employee directors.
Compensation Committee. The Compensation Committee considers executive
employment agreements, adoption of employee benefit plans and other issues
related to compensation and employee benefits. The Compensation Committee is
comprised of Robert Brooks, David Houston and Mickey Liddell, all of whom are
non-employee directors. The Committee held no meetings during 2001.
Other Functions. In 2001, the Board did not delegate its functions to any
other standing committee, and thus did not create executive, nominating or other
similar committees.
AUDIT COMMITTEE REPORT
This disclosure statement is being provided to inform shareholders of the
Audit Committee oversight with respect to the Company's financial reporting.
The Company's Audit Committee charter is attached to this Proxy Statement as
Appendix 1.
The Audit Committee has reviewed and discussed the audited financial statements
and footnotes thereto with management and the independent auditors. Based on
these discussions with management and the independent auditors, the Audit
Committee believes the Company's financial statements are fairly presented in
conformity with Generally Accepted Accounting Principles ("GAAP") in all
material respects. The Audit Committee has not been apprised of any
misstatements or omissions in the financial statements. In addition, the Audit
Committee discussed with the independent auditors the matters required to be
disclosed by Statement of Auditing Standards No. 61.
The Audit Committee discussed with the Company's auditors the independence of
such auditors from management of the Company and received written disclosure
concerning the auditors' independence required to be made by the auditors of the
Company by the Independence Standards Board. We also have discussed with
management of the Company and the independent auditors such other matters and
received such assurance from them, as we deemed appropriate.
Management is responsible for the Company's internal controls and the financial
reporting process. The independent auditors are responsible for performing an
independent audit of the Company's financial statements in accordance with GAAP
and issuing a report thereon. The Committee's responsibility is to monitor and
oversee this process.
Based on the foregoing review and discussions with management and the
independent auditors, and relying thereon, we have recommended to the Company
and Board of Directors the inclusion of the Audited Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001.
AUDIT COMMITTEE
David Houston
Dan Noles
Mickey Liddell
DIRECTOR COMPENSATION
The Company pays its non-employee directors a monthly retainer of $1,000
and a per meeting attendance fee of $500 and reimburses all ordinary and
necessary expenses incurred in the conduct of the Company's business.
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, 2001, in all capacities in which they served during that
period.
Long Term
Name and Principal Compensation All Other
Position Year Annual Compensation (1) Awards Awards (2)
- -------------------------------------------------------------------------------
Salary Bonus
------ -----
Mike Liddell 2001 $200,000 $24,000 --- ---
Chief Executive 2000 200,000 16,667 (4) ---
Officer (5) 1999 200,000 4,166 (3) ---
Mark Liddell 2001 --- --- --- ---
President (6) 2000 --- --- --- ---
1999 200,000 4,166 (3) ---
Michael Moore 2001 105,000 12,600 (7) ---
Vice President & 2000 --- --- --- ---
Chief Financial 1999 --- --- --- ---
Officer
Lisa Holbrook 2001 90,000 10,800 (8) ---
Vice President & 2000 --- --- --- ---
General Counsel 1999 --- --- --- ---
(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) Mike Liddell and Mark Liddell each received stock options exercisable at
$2.00 per share for 253,635 shares. These options had no readily
determinable market value at the date of issuance. Mark Liddell's options
were surrendered to Gulfport upon his death at December 24, 1999.
(4) Mike Liddell received stock options exercisable at $2.00 per share for
203,635 shares. These options had no readily determinable market value at
the date of issue.
(5) 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 an 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".
(6) 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 an
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. Mr. Liddell passed away on December 24,
1999.
(7) Mr. Moore received 10,000 stock options exercisable at $2.00 a share.
These options had a monthly value of $22,500 at date of issuance.
(8) Ms. Holbrook received 10,000 stock options exercisable at $2.00 a share.
These options had a monthly value of $3,750 at date of issuance.
Employment Agreements
The Company entered into a five year employment agreement with its Chief
Executive Officer, Mike Liddell on June 1, 1999. The employment agreement
provides an annual base salary of $200,000. The employment agreement contains a
change of control provision which guarantees Mr. Liddell one-year salary upon
the occurrence of a change of control in the Company.
Stock Options
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 are 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 were to become
exercisable and vest on June 1, 2001, and the remaining shares were to 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 Gulfport.
On January 17, 2000 and July 15, 2000, respectively, Lisa Holbrook and
Mike Moore each received 10,000 options. The options vest in three equal
installments and are exercisable at $2.00 per share.
The Option Agreements for Mike Liddell, Lisa Holbrook, and Mike Moore
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.
No options were granted to the named executives or directors in 2001.
The following table sets forth the number of unexercised options held by
named executives as of December 31, 2001. No options were exercised in 1999 or
2000.
Number of Number of
Unexercised Unexercised Value of Unexercised Value of Unexercised
Options at Fiscal Options at Fiscal In the Money Options In the Money Options
Year End Year End Year End Year End
Name Exercisable Un-exercisable Exercisable Un-exercisable
- --------------------------------------------------------------------------------------------------
Mike Liddell (1) 248,817 208,454 $634,483 $531,558
Lisa Holbrook (1) 3,500 6,500 8,925 16,575
Mike Moore (1) 3,500 6,500 8,925 16,575
(1) These options were exercisable at $2.00 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company is comprised of all non-employee
directors of Gulfport, which include Robert Brooks, David Houston and Mickey
Liddell. Mickey Liddell is the President of Entertainment Services, LLC. Mike
Liddell is a member of Entertainment Services, LLC and assists in making
compensation decisions for Mickey Liddell. Other than herein disclosed, no
member of the Committee is a former or current officer or employee of the
Company and no employee of the Company serves or has served on the compensation
committee (or board of directors of a corporation lacking a compensation
committee) of a corporation employing a member of this Committee.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") is
currently comprised of three non-employee directors. The Committee is
responsible for setting and administering the policies that govern annual
executive salaries, bonuses (if any) and stock ownership programs. The
Committee evaluates the performance, and determines the compensation, of the
Chief Executive Officer ("CEO") and the other executive officers of the Company
based upon a mix of achievement of the corporate goals, individual performance
and comparisons with other exploration and production companies. The CEO is not
present during the discussion of his compensation.
The policies of the Committee with respect to executive officers, including
the CEO, are to provide compensation sufficient to attract, motivate and retain
executives of outstanding ability and potential and to establish an appropriate
relationship between executive compensation and the creation of shareholder
value. To meet these goals the Committee has adopted a mix among the
compensation elements of salary, bonus and stock options, with a bias towards
options to emphasize the link between executive general, the salaries and stock
option awards of executive officers are not determined by the Company's
achievement of specific performance criteria. Instead, the Committee determines
the salaries based upon a review of salary surveys and general knowledge of
salaries paid in the exploration and production business in the local markets.
Bonuses are provided to executive officers in connection with the Company's
company-wide bonus plan. Payment of bonuses is linked to the attainment of
specific corporate goals set each year. The corporate performance goals for
bonuses seek to balance the desire for immediate earnings and the long-term goal
of enhancing shareholder value by bringing to market an attractive asset.
The executive officers receive stock options under a broad based stock
option plan adopted in 1999. This reflects the Board's view that ownership of
the Company's shares should be pervasive throughout the Company. The overall
intent is to encourage each employee to be and behave like, an owner of the
business.
It is the intention of the Company to have compensation paid to its three
officers to qualify as performance-based compensation deductible for federal
income tax purposes under Section 162(m) of the Internal Revenue Code of 1986.
Current cash compensation paid to each of the Company's executive officers is
less than $1 million per year and is thus fully deductible to the Company. In
addition, the Company expects to receive a federal income tax deduction in
connection with the exercise of stock options granted to the Names Executive
Officers.
THE COMPENSATION COMMITTEE
Robert Brooks
David Houston
Mickey Liddell
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.
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 1999
price reflects the closing price of the stock on last trading day in 1999. The
2000 price reflects the closing price of stock on the last trading day in 2000.
The 2001 price reflects closing price of $4.55 per share on December 31, 2001.
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.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG GULFPORT ENERGY CORP.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPHIC OMITED]
ASSUMES $100 INVESTED ON JULY 11, 1997
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2001
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.
CERTAIN TRANSACTIONS
Line of Credit
On June 28, 2000, the Company established a credit facility at Bank of
Oklahoma ("BOK") in the amount of $1,600,000. The BOK credit facility calls for
interest to be paid monthly in addition to twelve monthly principal reductions
of $100,000 each with the remaining balance due August 31, 2001. On March 1,
2001, Gulfport refinanced the outstanding balance due under this facility.
Under the terms of the new agreement, monthly principal payments of $110,000 are
to be made beginning July 1, 2001, with the remaining outstanding principal due
October 1, 2002. The refinance note bears interest at Chase Manhattan Prime
rate plus 1%.
NOTE PAYABLE - RELATED PARTY
On May 22, 2001, the Company entered into a revolving line of credit agreement
with Gulfport Funding, LLC, ("Gulfport Funding") which is owned by the Company's
largest shareholder and his affiliates (the "Wexford Entities"). Under the
terms of the agreement, the Company may borrow up to $3,000,000, with borrowed
amounts bearing interest at Bank of America Prime Rate plus 4%. The Company
paid a facility commitment fee of $60,000 in connection with this line of
credit. This fee will be amortized over the life of the agreement. As of
December 31, 2001, the Company had borrowed the $3,000,000 available under this
line. All outstanding principal amounts along with accrued interest were due on
February 22, 2002.
PREFERRED OFFERING
In March 2002, the Company commenced a Private Placement Offering
("Offering") of $10.0 million dollars consisting of 10,000 Units. Each Unit
consists of (i) one share of Cumulative Preferred Stock, Series A, of the
Company ("Preferred") and (ii) a warrant to purchase up to 250 shares of common
stock, par value $0.01 per share. Dividends shall accrue on the Preferred Stock
prior to the Mandatory Redemption Date (as defined below) at the rate of 12% per
annum payable quarterly in cash or, at the option of the Company for a period
not to exceed two years from the Closing Date, payable in whole or in part in
additional shares of the Preferred based on the Liquidation Preference (as
defined below) of the Preferred at the rate of 15% per annum. No other
dividends shall be declared or shall accrue on the Preferred. To the extent
funds are legally available, the Company is obligated to declare and pay the
dividends on the Preferred. The Warrants have a term of ten years and an
exercise price of $4.00. The Company is required to redeem the Preferred on the
fifth anniversary of the first issuance and the Company may at its sole option,
choose to redeem the Preferred at any time before the expiration of the five
years.
Two-thirds of the Preferred Stockholders can affect any Company action which
would effect their preference position. The Preferred cannot be sold or
transferred by its holders and the Company must use its best efforts to register
with the Securities and Exchange Commission ("SEC") the common stock issued in
connection with the exercise of the Warrants or, if possible, piggyback the
issued common stock if the Company participates in a public offering with the
SEC.
The Offering was made available to stockholders and affiliates of the Company as
of December 31, 2001 who were known to be accredited investors by the Company.
Purchasers were able to participate up to their pro rata share of ownership in
the Company as of December 31, 2001. The Offering was backstopped by the
Wexford Entities. The Offering's initial closing began March 29, 2002 and
concluded April 15, 2002. Mike Liddell, the Company's CEO, shall have until
September 30, 2002 to subscribe for his proportionate share of the Offering.
On March 29, 2002, Gulfport Funding which is owned by the Wexford Entities
participated in the Offering through a conversion of its $3.0 million dollar
loan along with the accumulated interest due from the Company for 3,262.98
Units. Additionally, on March 29, 2002 entities controlled by the majority
shareholder initially funded a share of the Preferred Offering in the amount of
2,738.00 Units.
On April 17, 2002, the Wexford Entities satisfied their backstop obligation by
funding $2,090,020 for an additional 2,090.02 Units.
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, 2001, 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.
December 31, 2001
Beneficial Ownership
--------------------
Name and Address of Beneficial Owner (1) Shares Percentage (2)
- --------------------------------------------- ------ --------------
Mike Liddell (3)
6307 Waterford Blvd., Suite 100
Oklahoma City, OK 73118 961,233 9.47%
Charles E. Davidson (4)(5)(6)
411 West Putnam Avenue
Greenwich, CT 06830 6,154,855 60.66%
Peter M. Faulkner (7)
767 Third Avenue, Fifth Floor
New York, NY 10017 777,384 7.66%
Lisa Holbrook
6307 Waterford Blvd., Suite 100
Oklahoma City, OK 73118 * *
Michael G. Moore
6307 Waterford Blvd., Suite 100
Oklahoma City, OK 73118 * *
Robert Brooks
343 3rd Street, Suite 205
Baton Rouge, LA 70801 * *
David Houston
1120 NW 63rd, Suite 360
Oklahoma City, OK 73116 * *
Mickey Liddell
8265 Sunset Blvd., Suite 200
Los Angeles, CA 90046 * *
All directors and executive officers
as a group (10 individuals) 961,233 9.47%
* 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. Mr.
Liddell owns 712,416 shares of Common Stock and has 248,817 options that
could be exercised by Mr. Liddell.
(4) Includes 3,574,722 shares of Common Stock held by CD Holding, L.L.C.
and 784,273 shares of Common Stock held in an IRA for Mr. Davidson. Mr.
Davidson is the sole member of CD Holding, L.L.CMr. Davidson is the
Chairman and controlling member of Wexford Management, L.L.C. Mr. Davidson
disclaims beneficial ownership of the 1,795,860 shares owned by the Wexford
Entities (as defined below). However, Mr. Davidson controls 61% of the
issued stock of Gulfport. As a result, Mr. Davidson is able to influence
significantly and possibly control matters requiring approval of the
shareholders including the election of directors.
(5) Includes 1,795,860 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) Does not include 2,022,743 warrants obtained in the Preferred Offering
by the following investment funds that are affiliated with Wexford
Management: 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.
(7) 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.
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.
INDEPENDENT ACCOUNTANTS
The firm of Hogan & Slovacek PC served as the Company's independent
auditors for 2001. 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.
Auditors' Fees
Audit Fees. For professional services rendered by them for the audit of
our annual financial statements for 2001, and reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for 2001, Hogan &
Slovacek PC billed us fees in the aggregate amount of $45,000.
Financial Information Systems Design and Implementation Fees. Hogan &
Slovacek PC billed us no fees for professional services rendered by them for
2000 in connection with financial information systems design and implementation.
All Other Fees. For professional services other than those described above
rendered by them for 2001, Hogan & Slovacek billed us fees in the aggregate
amount of $0.00.
ADDITIONAL INFORMATION
The Company's Annual report on Form 10-K, including the financial
statements and schedule thereto, for the year ended December 31, 2001, as filed
with the SEC, 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
April 30, 2002
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIREDIN INFORMATION STATEMENT
SCHEDULE C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
And Exchange Act of 1934
Check the appropriate box:
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Gulfport Energy Corporation, Inc.
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(Name of Registrant as Specified in Its Charter)
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AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
1. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Company to the
Securities and Exchange Commission or the public; the Company's systems of
internal controls regarding finance, accounting, legal compliance and ethics
that management and the Board have established; and the Company's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Company's policies, procedures and practices at
all levels. The Audit Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
- Review and appraise the audit efforts of the Company's independent
accountants.
- Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, a majority of whom shall be independent directors and
free from any relations that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
The Board has determined that a director is independent if he (i) is not
currently or has not previously been an employee of the Company, (ii) does not
receive compensation from the Company other than directors fees and compensation
provided to all directors, (iii) is not a major shareholder of the Company, (iv)
is not a major shareholder or director of one of the Company's primary vendors
or purchasers. All members of the Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of the
Committee shall have accounting or related financial management experience.
Committee members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Company or an outside
consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by a majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management and the accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believe should be discussed privately. In addition, the Committee
or the Committee Chair shall meet with the independent accountants quarterly to
review the Company's financials consistent with IV.3 below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
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1. Review and update this Charter periodically as conditions dictate.
2. Review the Company's annual financial statements and any reports or other
financial information submitted to the Securities and Exchange Commission
or the public, including any certification, report, opinion or review
rendered by the independent accountants.
3. Review with financial management and the independent accountants the 10-Q
prior to its filing or prior to its release of earnings. The Chair
of the Committee may represent the entire Committee for purposes of
this review.
4. Review with financial management and the independent accountants the
Company's compliance with any loan and indenture covenants and
restrictions.
Independent Accountants
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5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Company to determine the accountants independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
7. Periodically consult with the independent about internal controls and the
fullness and accuracy of the Company's financial statements.
Financial Reporting Processes
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8. In consultation with the independent accountants, review the integrity of
the Company's financial reporting processes.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
10. Consider and approve, if appropriate, major changes in the Company's
auditing and accounting principles and practices as suggested by the
independent accountants or management.
Process Improvement
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11. Establish regular and separate systems of reporting to the Audit
Committee by management and the independent accountants regarding
any significant judgments made in management's preparation of the
financial statements and the view of each as to the appropriateness of
such judgments.
12. Following completion of the annual audit, review separately with each of
management and the independent accountants any significant difficulties
encountered during the course of the audit including any restrictions
on the scope of the work, access to the required information.
13. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial
statements.
14. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented.
15. Perform any other activities consistent with this Charter, the Company's
Bylaws and governing law, as the Committee or the Board deems necessary
or appropriate.
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