<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by Registrant.
[ ] Filed by Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GOTHIC ENERGY CORPORATION
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
___________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
___________________________________________________________________________
___________________________________________________________________________
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):
___________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
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 Number:_______________________
3) Filing Party:__________________________________________________________
4) Date Filed:____________________________________________________________
<PAGE>
GOTHIC ENERGY CORPORATION
5727 South Lewis Avenue - Suite 700
Tulsa, Oklahoma 74105
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 6, 1998
Notice is hereby given that the Annual Meeting of Shareholders of Gothic
Energy Corporation (the "Company") will be held at the Southern Hills Marriott
Hotel, 1902 East 71/st/ Street, Tulsa, Oklahoma 74136, on Thursday, August 6,
1998, at 10:00AM, for the following purposes:
1. To elect three (3) directors of the Company to hold office until
the next Annual Meeting of Shareholders in 1999 and until their
respective successors are elected and qualified;
2. To transact such other business as may properly come before the
meeting, or any adjournments thereof.
Information with respect to the above is set forth in the Proxy Statement
which accompanies this Notice. Only holders of shares of the Company's Common
Stock of record at the close of business on July 6, 1998 (the "Record Date") are
entitled to notice of and to vote at the Meeting.
We hope that all of our shareholders who can conveniently do so will attend
the Meeting. Shareholders who do not expect to be able to attend the Meeting
are requested to mark, date and sign the enclosed proxy and return the same in
the enclosed addressed envelope which requires no postage and is intended for
your convenience.
R. Andrew McGuire, Secretary
Dated: July 9, 1998
<PAGE>
GOTHIC ENERGY CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by the Board of Directors of Gothic Energy
Corporation, an Oklahoma corporation (the "Company"), from the holders of shares
of Common Stock, $.01 par value ("Common Stock") to be voted at the Annual
Meeting of Shareholders (the "Meeting") to be held at the Southern Hills
Marriott Hotel, 1902 East 71/st/ Street, Tulsa, Oklahoma 74136, on Thursday
August 6, 1998, at 10:00AM, and at any adjournments thereof.
The only business which the Board of Directors intends to present or knows
that others will present at the Meeting is the election of three Directors of
the Company to hold office until the next Annual Meeting of Shareholders in 1999
and until their successors have been elected and qualified. Management does not
know of any other business to be brought before the Meeting but it is intended
that as to any other business, a vote may be cast pursuant to the proxy in
accordance with the judgment of the person or persons acting thereunder. If
proxies in the enclosed form are properly executed and returned, the Common
Stock represented thereby will be voted at the Meeting in accordance with the
shareholder's direction. Unless otherwise specified, proxies in the enclosed
form will be voted for the election of three Directors named as nominees. Any
shareholder giving a proxy has the power to revoke it at any time before the
proxy is voted by revoking it in writing, by executing a later dated proxy or
appearing at the Meeting and voting in person. Any writing revoking a proxy
should be addressed to R. Andrew McGuire, Secretary of the Company, at the
address set forth below.
The Directors to be elected at the Meeting will be elected by a plurality
of the votes cast by the holders of Common Stock present in person or by proxy
and entitled to vote. With regard to the election of Directors, votes may be
cast for or withheld from each nominee. Votes that are withheld will have no
effect on the outcome of the election because Directors will be elected by a
plurality of votes cast.
Under the rules of the New York Stock Exchange, brokers who hold shares in
street name have the authority to vote on certain routine matters on which they
have not received instructions from beneficial owners. Brokers holding shares
of the Company's Common Stock in street name who do not receive instructions are
entitled to vote on the election of Directors.
Only holders of record of Common Stock as of the close of business on July
6, 1998 are entitled to vote at the Meeting or any adjournments thereof. On
such date,
<PAGE>
the Company had outstanding voting securities having the right to vote at the
meeting consisting of 16,261,640 shares of Common Stock, each of which shares is
entitled to one (1) vote on all proposals submitted to a vote of shareholders at
the Meeting.
The Company's principal executive office address is Gothic Energy
Corporation, 5727 South Lewis Avenue, Suite 700, Tulsa, Oklahoma 74105, and its
telephone number is (918) 749-5666. This Proxy Statement and the enclosed Form
of Proxy will be mailed to the Company's shareholders on or about July 9, 1998.
ELECTION OF DIRECTORS
At the Meeting, it is proposed to elect three Directors to hold office
until the next Annual Meeting of Shareholders in 1999 and until their respective
successors are elected and qualified. It is intended that, unless otherwise
indicated, the shares of Common Stock represented by proxies solicited by the
Board of Directors will be voted for the election as Directors of the three
nominees hereinafter named. If, for any reason, any of said nominees shall
become unavailable for election, which is not now anticipated, the proxies will
be voted for the other nominees and may be voted for a substitute nominee
designated by the Board of Directors. Each nominee has indicated that he is
willing and able to serve as a Director if elected, and, accordingly, the Board
of Directors does not have in mind any substitute.
The nominees as Director, their ages and position with the Company are as
follows:
<TABLE>
<CAPTION>
Name Age Position With Company
- ---- --- ---------------------
<S> <C> <C>
John J. Fleming 57 Chairman of the Board and
Director
Michael K. Paulk 49 President and Director
Brian E. Bayley 45 Director
</TABLE>
JOHN J. FLEMING: Mr. Fleming was elected a Director of the Company in
October 1994. Mr. Fleming is currently Chairman, President and Chief Executive
Officer of Profco Resources, Ltd., which engages in oil and gas exploration.
From 1992 through December 1995, Mr. Fleming was Chairman and chief executive
officer of Excel Energy, Inc., engaged in oil and gas exploration. Prior
thereto, commencing in
-2-
<PAGE>
1989 he was Chairman and chief executive officer of Trical Resources, Inc. and
its successor Voyager Energy, Inc. Mr. Fleming was Chairman of the Board of
American Natural Energy Corporation ("ANEC") from August 1993 to July 1994. He
has been involved in the oil and gas industry as president, chairman or chief
executive officer of a number of corporations for more than the past fifteen
years. Mr. Fleming is also a Director of Poco Petroleum Ltd., Imco Recycling
Inc., Newfoundland Capital Corp., and Canadian Helicopters Limited.
MICHAEL K. PAULK: Mr. Paulk was elected President and Director of the
Company in October 1994. Mr. Paulk has been engaged in the oil and gas industry
for more than fifteen years. He was President of ANEC from its inception in
1985 until his resignation in September 1994 after its acquisition by Alexander
Energy Corporation in July 1994.
BRIAN E. BAYLEY: Mr. Bayley was elected a Director of the Company in
February 1996. He has been since December 1996 a partner of Quest Management
Corp. and Quest Ventures, Ltd., private merchant banking companies. Prior
thereto through April 1997, he held a variety of positions with Quest Oil and
Gas, Inc. (formerly Quest Capital Corporation), including President from October
1990 to October 1996 and Director and Secretary from October 1996 to April 1997.
Mr. Bayley holds an MBA degree from Queen's University, Kingston, Ontario. Mr.
Bayley is a Director of Kinetic Ventures, Ltd., as well as a number of other
corporations that do not file reports under the Exchange Act.
DIRECTOR AND OFFICER SECURITIES REPORTS
The Federal securities laws require the Company's Directors and executive
officers, and persons who own more than ten percent (10%) of a registered class
of the Company's equity securities to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
any equity securities of the Company. Copies of such reports are required to be
furnished to the Company. To the Company's knowledge, based solely on a review
of the copies of such reports and other information furnished to the Company,
all persons subject to these reporting requirements filed the required reports
on a timely basis with respect to the Company's year ended December 31, 1997.
-3-
<PAGE>
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The Company's executive officers and other employees who are expected to
make a significant contribution to the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position With Company
- ---- --- ---------------------
<S> <C> <C>
Michael K. Paulk 49 President
Steven P. Ensz 46 Vice-President, Finance and
Chief Executive Officer
James S. Blair 45 Vice-President, Corporate
Development
Bennett G. Shelton 40 Land Contracts Manager
Richard O. Mulford 44 Operations Manager
Robert G. Snead 59 Geologist
John Coughlon 40 Geologist
David Evans 41 Petroleum Engineer
R.L. Hilbun 49 Full-Time Consultant, Drilling
and Completion Engineer
R. Andrew McGuire 31 Secretary and Controller
</TABLE>
MICHAEL K. PAULK: Mr. Paulk's employment background is described above.
STEVEN P. ENSZ: Mr. Ensz has been Vice-President, Finance and Chief
Financial Officer of the Company since March 18, 1998 and is responsible for the
financial activities of the Company. From July 1991 to February 1998, he was
Vice-President, Finance of Anglo-Suisse, Inc., an oil and natural gas
exploration and producing company. From December 1983 to June 1991, he held
various positions within the energy industry, including President of Waterford
Energy, an independent oil and gas producer. Prior to December 1983, he was a
partner with Oak, Simon & Ott, CPAs. He is a certified public accountant.
JAMES S. BLAIR: Mr. Blair has been Vice-President, Corporate Development
of the Company since June 1997 and is responsible for the management and
coordination of acquisition and divestiture activities. From January 1989 to
June 1997, he was Vice-President, Land and Acquisitions of Toreador Royalty
Corporation where he was responsible for implementing the Company's
restructuring plan, and in charge of increasing production through acquisitions
and joint ventures. From May 1988 to January 1989, he was Vice-President of
Business Development of German Oil
-4-
<PAGE>
Company, and from 1980 to May 1988, he was employed by Tenneco Oil Company where
he was involved with business development and acquisitions.
BENNETT G. SHELTON: Mr. Shelton has been employed by the Company as Land
Contracts Manager since May 1995. From August 1994 to May 1995, he was a Senior
Landman with AEOK and prior thereto he was a Land and Acquisition Manager with
ANEC. Prior to April 1991, he was a staff landman with Santa Fe Minerals, Inc.
for approximately ten years.
RICHARD O. MULFORD: Mr. Mulford has been employed as Operations Manager
with the Company since April 1995. From April 1985 to April 1995, he was a
Production Superintendent with ANEC and has been employed in the oil and natural
gas industry since 1978.
ROBERT G. SNEAD: Mr. Snead, who has served as a geologist for the Company
on a full-time consulting basis since April 1997, was hired as a full-time
employee effective September 1, 1997. Between early 1994 and April 1997, he was
employed as an independent geologist and from 1985 to 1994 was the Senior Vice-
President/ Exploration Manager of LOGO, Inc., an oil and natural gas well
operating company.
JOHN COUGHLON: Mr. Coughlon has been employed by the Company since March
1998. Prior thereto, he was, commencing in December 1994, employed by Amoco
Production Company, most recently as Senior Staff Geologist. From October 1993
to December 1994 he served as Geological Consultant/Principle of Tower Energy
Corporation, and prior thereto he was, from July 1987 to October 1993, Senior
Geologist for Nicor Oil & Gas, and from April 1980 to July 1987 he was employed
by Mobil Oil Corp.
DAVID EVANS: Mr. Evans was hired by the Company as a petroleum engineer in
November 1997. Prior thereto, he was Production Manager for Petroleum
Properties Management Co. from March 1996 to October 1997. From April 1992 to
March 1996, he was Engineering Manager for AEOK and from September 1987 to April
1992 he was Vice-President of Exploration and Production for Bradmar Petroleum
Corporation.
R.L. HILBUN: Mr. Hilbun is a full-time consultant to the Company serving
as a drilling and completion engineer. He has served in this capacity since
March 1997. Prior thereto, commencing in 1982, he was Vice-President,
Operations of PSEC, Inc., a natural gas and oil well operating company. He has
been employed in the natural gas and oil industry since 1970.
-5-
<PAGE>
R. ANDREW MCGUIRE: Mr. McGuire has been employed by the Company as
Controller since November 1994. Mr. McGuire is also Secretary of the Company.
From February 1991 to October 1994, he was employed as Accounting Manager of
ANEC. From May 1988 to February 1991, he was employed by OXY-USA, Inc., a
subsidiary of Occidental Petroleum Corp., as an accountant. Mr. McGuire is a
certified public accountant.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation paid
during the Company's three fiscal years ended December 31, 1997 to the Company's
chief executive officer and all other executive officers who received
compensation exceeding $100,000 and who served in such capacities at December
31, 1997:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
__________________________________________________________________________________________________
COMPENSATION
----------------------------
OTHER LONG-TERM
NAME AND ANNUAL AWARD'S OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMP. (#) COMP.
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael K. Paulk 1997 $150,000 $150,000 -0- -0- -0-
1996 $107,458 $ 50,000 -0- 125,000 -0-
1995 $ 96,000 -0- -0- -0- -0-
John Rainwater 1997 $125,000 /(1)/ -0- -0- -0- -0-
1996 $107,458 -0- -0- 125,000 -0-
1995 $ 96,000 -0- -0- -0- -0-
</TABLE>
__________________________
(1) Mr. Rainwater resigned as an executive officer of the Company effective on
February 18, 1998.
No options were granted to either Mr. Paulk or Mr. Rainwater during 1997.
-6-
<PAGE>
STOCK OPTION HOLDINGS AT DECEMBER 31, 1997.
The following table provides information with respect to the above named
executive officers regarding Company options held at the end of the Company's
year ended December 31, 1997 (such officers did not exercise any options during
the most recent fiscal year).
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31,1997 AT DECEMBER 31, 1997 /(1)/
- ----------------------------------------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael K. Paulk 312,500 /(2)/ 62,500 -0- -0-
John Rainwater 312,500 /(2)/ 62,500 -0- -0-
</TABLE>
____________________________
(1) Based on the closing sales price on December 31,1997 of $2.375.
(2) Includes 250,000 shares exercisable at $2.50 per share and 62,500 shares
exercisable at $2.56 per share.
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with Michael Paulk
pursuant to which he is employed as the President of the Company. Mr. Paulk
currently receives a base salary of $150,000 per year, plus such additional
amounts as may be determined from time to time by the Company's Board of
Directors. In addition, he is to receive a cash bonus as may be determined by
the Company's Board of Directors. Mr. Paulk is also entitled to participate in
such incentive compensation and benefit programs as the Company makes available.
Mr. Paulk's agreement expires on December 31, 1999 and is thereafter
automatically extended for successive three-year terms. In the event the
employment agreement is terminated by the Company (other than for cause, as
defined) or is not automatically extended on any termination date for a
successive three-year term, Mr. Paulk is entitled to receive payment equal to
three times his then base salary, together with any sums unpaid under the terms
of the employment agreement, and the Company is obligated to continue his
medical insurance in effect for a period of one year after such termination. In
the event of a change in control, as defined, of the Company, Mr. Paulk has the
right to terminate his
-7-
<PAGE>
employment agreement with the Company within sixty days thereafter, whereupon
the Company would be obligated to pay to him the same sums and other benefits
described above as if such agreement had been terminated by the Company without
cause. The agreement also contains certain provisions restricting Mr. Paulk from
engaging in business activities in competition with the Company for a period of
one year.
DIRECTORS COMPENSATION
During 1997, Directors of the Company did not receive any compensation for
serving in that capacity; however, they are reimbursed for their out-of-pocket
expenses in attending meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 30, 1996, Quest Oil & Gas, Inc. ("Quest"), a corporation of
which Mr. Bayley, a Director of the Company, was an officer and Director at the
time, exchanged $1,290,000 principal amount of a loan in the aggregate amount of
$1,850,000 from Quest for 1,290 shares of the Company's 7 1/2% Cumulative
Convertible Preferred Stock. After reflecting the exchange of $1,290,000
principal amount for 1,290 shares of 7 1/2% Cumulative Convertible Preferred
Stock, the remaining $560,000 of principal and accrued interest of $173,000 on
the loan and other obligations aggregating $92,000 owing to Quest was replaced
with a Subordinated Note in the principal amount of $825,000 bearing interest at
7 1/2% per annum, due, together with all accrued interest thereon, ten years
from its date of issuance. The $825,000 note was prepaid on March 13, 1996 and
subsequently Quest sold its shares of 7 1/2% Convertible Preferred Stock.
On November 14, 1995, Quest purchased the Company's secured notes in the
principal amount of $333,333 and common stock purchase warrants to purchase
83,333 shares of the Company's Common Stock at an exercise price of $2.40 per
share the proceeds of which were used to fund a portion of the purchase price
for certain producing natural gas and oil properties. The note, which bore
interest at 1% per month compounded monthly, was repaid on January 30, 1996 and
bore interest at 1% per month, compounded monthly and subsequently Quest sold
the common stock purchase warrants.
-8-
<PAGE>
Mr. Paulk is indebted to the Company in the amount of $169,110 under a non-
interest bearing promissory note dated September 1, 1997. On February 26, 1998,
the Compensation Committee of the Board of Directors approved the extension of
the due date of the Note from January 31, 1998 to January 31, 1999.
On January 23, 1998, the Company completed the acquisition from Amoco
Production Company ("Amoco"), a subsidiary of Amoco Corporation, of certain
natural gas producing properties and in consideration therefor, among other
things, the Company issued to Amoco a five-year common stock purchase warrant to
purchase 1.5 million shares of Common Stock exercisable at $3.00 per share.
-9-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information concerning the Common Stock ownership of all
persons known by the Company to own beneficially 5% or more of the Company's
Common Stock, and the Common Stock ownership of each Director of the Company and
all Directors and officers of the Company as a group, as of July 6, 1998. As of
July 6, 1998, the Company had 16,261,640 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL AMOUNT /(3)/ PERCENT OF CLASS
HOLDER, IDENTITY OF GROUP
/(1) (2)/
---------------------------------------------------------------------------
<S> <C> <C>
Michael Paulk 862,476 /(4)/ 5.1%
John Fleming 300,000 /(5)/ 1.8%
Morton A. Cohen 830,222 /(6)/ 5.0%
Brian E. Bayley 300,000 /(7)/ 1.8%
Stratum Group, L.L.C. /(8)/ 1,000,000 /(9)/ 5.8%
650 Fifth Avenue
New York, New York 10019
Cambridge Investments, Ltd. /(8)/ 1,161,800 7.1%
600 Montgomery Street - 27/th/ Floor
San Francisco, California 94111
Carl C. Icahn /(8)/ 1,600,000 9.8%
High River Limited
Partnership /(8)/
Riverdale LLC /(8)/
Little Meadow Corp. /(8)/
100 South Bedford Road
Mount Kisco, New York 10549
Amoco Corporation /(8)/ 1,500,000 /(10)/ 8.4%
200 East Randolph Drive
Chicago, Illinois 60601
Croft-Leonmister, Inc. /(11)/ 838,700 5.4%
207 East Redwood Street-Suite 208
Baltimore, Maryland 21202
All Officers and 2,417,698 14.7%
Directors as a Group
(5 persons)
</TABLE>
-10-
<PAGE>
________________________________
(1) This tabular information is intended to conform with Rule 13d-3 promulgated
under the Securities Exchange Act of 1934 relating to the determination of
beneficial ownership of securities. The tabular information gives effect
to the exercise of warrants or options exercisable within 60 days of the
date of this table owned in each case by the person or group whose
percentage ownership is set forth opposite the respective percentage and is
based on the assumption that no other person or group exercise their
option.
(2) The address of Mr. Paulk is c/o the Company, 5727 South Lewis Avenue, Suite
700, Tulsa, Oklahoma 74105. The address of Mr. Fleming is 1500, 340 12th
Avenue SW, Calgary, Alberta T2R 1L5. The address of Mr. Cohen is c/o
Clarion Capital Corporation, Ohio Savings Plaza, Suite 510, 1801 East Ninth
Street, Cleveland, Ohio 44114. The address of Mr. Bayley is c/o Quest Oil
& Gas, Inc., 1095 West Pender Street-Suite 850, Vancouver, British
Columbia, Canada V6E 2M6.
(3) Except as otherwise noted, shares beneficially owned by each person as of
July 6, 1998 were owned of record and each person had sole voting and
investment power with respect to all shares beneficially held by such
person.
(4) Includes 250,000 shares issuable upon exercise of options at an exercise
price of $2.50 per share, 125,000 shares issuable upon exercise of options
at an exercise price of $2.56 per share, of which options to purchase
62,500 shares became exercisable on July 16, 1997, and options to purchase
the remaining 62,500 shares become exercisable on July 16, 1998, and
375,000 shares issuable upon exercise of options at an exercise price of
$2.00 per share of which options to purchase 187,500 shares become
exercisable on April 28, 1999 and options to purchase the remaining 187,500
shares become exercisable on April 28, 2000. In the event of a "change of
control" of the Company, as defined in the option agreement, such remaining
options become immediately exercisable.
(5) Includes 100,000 shares issuable on exercise of options at an exercise
price of $1.50 per share which are exercisable during the five-year period
beginning July 11, 1996, 50,000 shares issuable on exercise of options at
an exercise price of $2.56 per share which are exercisable during the five-
year period beginning July 16, 1997, and 150,000 shares issuable upon
exercise of options at an exercise price of $1.75 per share of which
options to purchase 75,000 shares become exercisable on April 28, 1999 and
options to purchase the remaining 75,000 shares become exercisable on April
28, 2000.
(6) Includes shares held by Clarion Capital Corp., of which Mr. Cohen is an
officer, director and principal shareholder, and other entities affiliated
with Mr. Cohen, as well as 150,000 shares issuable on exercise of options
held by Mr. Cohen at an exercise price of $2.56 per share which are
exercisable during the five-year period beginning July 11, 1996, and
150,000 shares issuable upon exercise of options at an exercise price of
$1.75 per share of which options to purchase 75,000 shares become
exercisable on April 28, 1999 and options to purchase the remaining 75,000
shares become exercisable on April 28, 2000.
(7) Includes 150,000 shares issuable on exercise of options at an exercise
price of $2.56 per share which are exercisable during the five-year period
beginning July 11, 1996, 150,000 shares issuable upon exercise of options
at an exercise price of $1.75 per share of which options to purchase 75,000
shares become exercisable on April 28, 1999 and options to purchase the
remaining 75,000 shares become exercisable on April 28, 2000, and 91,998
shares issuable on exercise of a warrant held by an affiliated partnership
exercisable at $2.40 per share.
(8) Based on information contained in Schedule 13D provided by such person.
(9) Issuable on exercise of common stock purchase warrants at $3.19 per share.
The general partner of Stratum Group, L.P. is Stratum Finance, L.L.C. and
the members of Stratum Finance, L.L.C. are Energy Investment Partners, a
New York general partnership, Joseph M. Rinaldi, Michael W. Walker, Richard
E. Bani, John C. Alvardo, Curt S. Taylor, and Betsy D. Cotton. Stratum
Finance, L.L.C. is managed by Energy Investment Partners, which has four
votes, Joseph M. Rinaldi, who has one vote, and Michael W. Walker,
appointed by the natural person members of Stratum Finance, L.L.C., who has
one vote. Energy Investment Partners has three general partners, SGLLC
Partners, L.P. ("SGLLC"), SGLLC Partners Offshore, L.P. ("Offshore") and
The Beacon Group Energy Investment Fund, L.P. ("Fund"). The sole general
partner of each of SGLLC and Offshore is SG-GP, L.P. whose sole general
partner is Energy Fund GPI, Inc. ("GPI"). The sole general partner of Fund
is Beacon Energy Investors, L.P. ("Investors"). The sole general partner
of Investors is BEIGP, Inc. ("BEIGP"). The names of the officers and
Directors of both GPI and BEIGP are Geoffrey Boisi, John McWilliams,
Preston Miller, Harold Pote, Faith Rosenfeld, Robert Semmens, David
Remmington, Thomas Mendell and Frank Murray.
(10) Issuable on exercise of common stock purchase warrants at $3.00 per share.
(11) Based on information contained in Schedule 13G provided by such person.
-11-
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has a Compensation Committee consisting of
Messrs. Fleming and Bayley and an Audit Committee consisting of Messrs. Fleming
and Bayley. The Compensation Committee makes determinations on behalf of the
Board of Directors concerning salaries and incentive compensation for officers
and employees of and consultants to the Company. The Audit Committee considers
the retention of the Company's independent accountants, reviews the Company's
annual financial statements and discusses the financial statements with the
Company's independent accountants, reviews the independence of accountants
conducting the audit, review the services of independent accountants, discusses
with management and the independent accountants the Company's accounting system
and related systems of internal control and consults as necessary with the
independent accountants and the Company's financial staff. The Board of
Directors does not have a nominating committee.
The Company's Board of Directors held six (6) meetings during the year
ended December 31, 1997. The audit, compensation and nominating committees held
one (1) meeting in 1997.
SUBMISSION OF SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Any proposals which shareholders intend to present for a vote of
shareholders at the Company's 1999 Annual Meeting and which such shareholders
desire to have included in the Company's proxy statement and form of proxy
relating to that meeting must be sent to the Company's executive office and
received by the Company not later than March 10, 1999.
-12-
<PAGE>
GENERAL
The cost of soliciting proxies will be borne by the Company. In addition
to solicitation by use of the mails, certain officers and regular employees may
solicit proxies personally and by telephone and the Company will request banks,
brokerage houses and nominees and fiduciaries to forward soliciting material to
their principals and will reimburse them for their reasonable out-of-pocket
expenses.
The Company's Annual Report on Form 10-KSB for the year ended December 31,
1997, including financial statements, is being mailed to shareholders herewith.
By Order of the Board of Directors
R. Andrew McGuire, Secretary
Dated: July 9, 1998
-13-
<PAGE>
APPENDIX: FORM OF PROXY
GOTHIC ENERGY CORPORATION
5727 South Lewis Avenue - Suite 700
Tulsa, Oklahoma 74105
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mr. Michael K. Paulk and Mr. R. Andrew
McGuire, and each of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of common stock of Gothic Energy Corporation held of
record by the undersigned on July 6, 1998 at the annual meeting of shareholders
to be held on August 6, 1998 or any adjournment thereof.
1. Election of Directors
[ ] For all nominees listed below (except as marked to contrary
below)
[ ] Withhold Authority to vote for all nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
John J. Fleming Brian E. Bayley
Michael K. Paulk
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH OF THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, AS EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated: _______________, 1998 _____________________________________
Signature
Title (if required)
_____________________________________
Signature (if held jointly)
