<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-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.
[ ] Fee computed on table below per Exchange Act Rules 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
Two Warren Place - Suite 1200
6120 South Yale Avenue
Tulsa, Oklahoma 74136
Notice of Annual Meeting of Shareholders
June 6, 2000
Notice is hereby given that the Annual Meeting of Shareholders of Gothic
Energy Corporation (the "Company") will be held at The Main Ballroom, 19th
Floor, Two Warren Place, 6120 South Yale Avenue, Tulsa, Oklahoma on Tuesday,
June 6, 2000, 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 2001 and until their respective
successors are elected and qualified; and
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 April 28, 2000 (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: May 5, 2000
<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 Main Ballroom, 19th
Floor, Two Warren Place, 6120 South Yale Avenue, Tulsa, Oklahoma, on Tuesday,
June 6, 2000, 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 2001
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. Votes may be cast for or withheld from each nominee as a
Director. 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 April
28, 2000 are entitled to vote at the Meeting or any adjournments thereof. On
such date, the Company had outstanding voting securities having the right to
vote at the meeting consisting of 18,685,765 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.
<PAGE>
The Company's principal executive office address is Gothic Energy
Corporation, Two Warren Place, Suite 1200, 6120 South Yale Avenue, Tulsa,
Oklahoma 74136, 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 May 5, 2000.
ELECTION OF DIRECTORS
At the Meeting, it is proposed to elect three Directors to hold office
until the next Annual Meeting of Shareholders in 2001 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:
Name Age Position With Company
---- --- ---------------------
John J. Fleming 60 Chairman of the Board and
Director
Michael K. Paulk 51 President and Director
Brian E. Bayley 47 Director
John J. Fleming: Mr. Fleming was elected a Director of the Company in
October 1994. Mr. Fleming is currently President of Bonanza Energy Ltd.,
engaged in oil and gas exploration and diversified investments. From August
1995 through December 1999, he was Chairman, President and Chief Executive
Officer of Profco Resources Ltd., engaged in oil and gas exploration. In
December 1998, it merged with GHP Exploration Ltd. to form TransAtlantic
Petroleum Corp. 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 Imco Recycling Inc., Newfoundland Capital Corporation, CHC
Helicopter Corporation, TransAtlantic Petroleum Corp., Poco Petroleum Ltd.,
Southwestern Gold Corporation and Canabrava Diamond Corporation.
-2-
<PAGE>
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 President of Quest Management Corp., a private
management company, since December 1996, and of Quest Ventures Ltd., a private
merchant banking company, since December 1996. Prior to April 1997, Mr. Bayley
held a variety of positions with Quest Oil & Gas Inc., including Vice President,
Corporate Administration from September 1986 to October 1990, President and
Chief Executive Officer from October 1990 to October 1996, and Secretary from
October 1996 to April 1997. He was a Director from November 1990 to April 1997.
Mr. Bayley is a Director of a number of other corporations, none of which are
reporting companies under the Securities Exchange Act of 1934, as amended.
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, 1999.
-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:
Name Age Position With Company
---- --- --------------------
Michael K. Paulk 51 President
Steven P. Ensz 48 Vice-President, Finance and
Chief Financial Officer
Bennett G. Shelton 43 Vice-President of Land and Contract
Administration
Richard O. Mulford 47 Vice-President of Operations
Robert G. Snead 62 Exploitation Manager
David Evans 44 Petroleum Engineer
R.L. Hilbun 52 Full-Time Consultant, Drilling
and Completion Engineer
R. Andrew McGuire 33 Secretary and Controller
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.
Bennett G. Shelton: Mr. Shelton was elected Vice-President of Land and
Contract Administration on December 9, 1998. Prior thereto, he was 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 was elected Vice-President of Operations
on December 9, 1998. From April 1995 to November 1998, he was employed as
Operations Manager of the Company. 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.
-4-
<PAGE>
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.
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.
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, 1999 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, 1999:
-5-
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
- --------------------------------------------------------------------------------------------------------------------------
Compensation
--------------------------------------
Other Long-Term
Name and Annual Awards/ All Other
Principal Position Year Salary Bonus Comp. Option(#) Comp.
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael K. Paulk 1999 $189,000 $180,000 -0- 375,000 $179,000(1)
1998 180,000 125,000 -0- 375,000 -0-
1997 150,000 75,000 -0- -0- -0-
Steven P. Ensz(2) 1999 157,500 130,000 -0- 375,000 -0-
1998 118,750 100,000 -0- 125,000 -0-
Richard O. Mulford 1999 109,000 15,000 -0- 70,000 -0-
1998 72,000 10,000 -0- 50,000 -0-
1997 66,000 5,500 -0- 40,000 -0-
Bennett G. Shelton 1999 109,000 15,000 -0- 75,000 -0-
1998 72,000 10,000 -0- 50,000 -0-
1997 66,000 5,500 -0- 40,000 -0-
</TABLE>
______________
(1) On September 14, 1999, the Board of Directors of the Company authorized the
forgiveness of the repayment of a note owing by Mr. Paulk to the Company.
(2) Mr. Ensz was employed by the Company in March 1998.
Option Grants in Year Ended December 31, 1999.
- ----------------------------------------------
The following table provides information with respect to the above named
executive officers regarding options granted to such persons during the
Company's year ended December 31, 1999.
<TABLE>
<CAPTION>
% of Total
Number of Options Market
Securities SARs Granted Exercise or Price on
Name Underlying SARs Employees in Base Price Expiration Date of
Options Granted(#) Fiscal Year ($/Share) Date Grant
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Michael K. Paulk 250,000(1) 19% $0.53 02/03/2004 $0.53
125,000(2) 10% 0.15 12/31/2004 0.15
Steven P. Ensz 250,000(1) 19% 0.53 02/03/2004 0.53
125,000(2) 10% 0.15 12/31/2004 0.15
Richard O. Mulford 70,000(3) 5% 0.40 07/22/2004 0.40
Bennett G. Shelton 75,000(3) 6% 0.40 07/22/2004 0.40
</TABLE>
__________________________
-6-
<PAGE>
(1) Of which, options to purchase 125,000 shares become exercisable on February
3, 2000 and options to purchase the remaining 125,000 shares become
exercisable on February 3, 2001, provided, however, such options become
immediately fully exercisable in the event of a "change of control," as
defined, of the Company.
(2) Of which, options to purchase 62,500 shares become exercisable on December
31, 2000 and options to purchase the remaining 62,500 shares become
exercisable on December 31, 2001, provided, however, such options become
immediately fully exercisable in the event of a "change of control," as
defined, of the Company.
(3) Of which, options to purchase 35,000 shares and 37,500 shares,
respectively, become exercisable on July 22, 2000 and options to purchase
the remaining 35,000 shares and 37,500 shares, respectively, become
exercisable on July 22, 2001, provided, however, such options become
immediately fully exercisable in the event of a "change of control," as
defined, of the Company.
Stock Option Holdings at December 31, 1999.
- ------------------------------------------
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, 1999 (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 31,1999 at December 31, 1999 (1)
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael K. Paulk 312,500 562,500 -0- -0-
Steven P. Ensz 62,500 437,500 -0- -0-
Richard O. Mulford 105,000 95,000 -0- -0-
Bennett G. Shelton 100,000 100,000 -0- -0-
</TABLE>
____________________________
(1) Based on the closing sales price on December 31,1999 of $0.15.
Employment Agreements
The Company has entered into an employment agreement with Michael Paulk
effective January 1, 1999 pursuant to which he is employed as the President of
the Company. Mr. Paulk currently receives a base salary of $225,000 per year.
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. The term of
Mr. Paulk's agreement is for a period of three years and at the end of the first
year and at the end of each succeeding year the agreement is automatically
extended for one year such that at the end of each year there will automatically
be three years remaining on the
-7-
<PAGE>
term of the agreement. Mr. Paulk can terminate the agreement at the end of the
initial term and any succeeding term on not less than six months notice. In the
event the employment agreement is terminated by the Company (other than for
cause, as defined), Mr. Paulk is entitled to receive a payment representing all
salary due under the remaining full term of his agreement and the Company is
obligated to continue his medical insurance and other benefits provided under
the agreement 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 employment agreement with the Company within sixty days
thereafter, whereupon the Company would be obligated to pay to him a sum equal
to three years his base salary under the agreement plus a lump sum payment of
$250,000.
The Company has also entered into an employment agreement with Steven P. Ensz
effective January 1, 1999 pursuant to which he is employed as the Vice President
and Chief Financial Officer of the Company. Mr. Ensz currently receives a base
salary of $187,500 per year. In addition, he is to receive a cash bonus as may
be determined by the Company's Board of Directors. Mr. Ensz is also entitled to
participate in such incentive compensation and benefit programs as the Company
makes available. The term of Mr. Ensz' agreement is for a period of three years
and at the end of the first year and at the end of each succeeding year the
agreement is automatically extended for one year such that at the end of each
year there will automatically be three years remaining on the term of the
agreement. Mr. Ensz can terminate the agreement at the end of the initial term
and any succeeding term on not less than six months notice. In the event the
employment agreement is terminated by the Company (other than for cause, as
defined), Mr. Ensz is entitled to receive a payment representing all salary due
under the remaining full term of his agreement and the Company is obligated to
continue his medical insurance and other benefits provided under the agreement
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. Ensz has the right to
terminate his employment agreement with the Company within sixty days
thereafter, whereupon the Company would be obligated to pay to him a sum equal
to three years his base salary under the agreement plus a lump sum payment of
$200,000.
Directors Compensation
Each non-employee Director of the Company received a fee of $15,000 for
serving in that capacity during 1999, and each non-employee Director is
reimbursed for his out-of-pocket expenses in attending meetings.
Certain Relationships and Related Transactions
At December 31, 1998, Mr. Paulk was indebted to the Company in the amount
of $179,000 under an interest bearing promissory note dated September 1, 1997
due, as extended,
-8-
<PAGE>
on January 31, 2000. On September 14, 1999, the Board of Directors of the
Company authorized the forgiveness of the repayment of this note.
On January 23, 1998, the Company completed the Amoco Acquisition pursuant to
which, 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.
On April 27, 1998, the Company completed a transaction, entered into on
March 31, 1998, with Chesapeake Energy Corporation ("Chesapeake") pursuant to
which it (i) executed a participation agreement (the "Participation Agreement")
granting to Chesapeake a 50% interest in substantially all of the Company's
undeveloped acreage, (ii) sold for $20.0 million a 50% interest in the Company's
natural gas and oil properties in the Arkoma basin, and (iii) sold 50,000 shares
of Series B Preferred Stock and a common stock purchase warrant. The Series B
Preferred Stock had a liquidation preference of $50.0 million and a dividend
rate per annum equal to 12 1/2% of the aggregate liquidation preference payable
in additional shares of Series B Preferred Stock, provided that, after April 1,
2000, at the Company's option, dividends may be paid in cash. On June 30, 2008,
the Series B Preferred Stock is mandatorily redeemable in shares of Common Stock
valued at the fair market value on the date of redemption. The Company has the
option at any time prior to April 30, 2000 to redeem the Series B Preferred
Stock, in whole or in part, at 105% of the liquidation preference payable in
cash out of the net proceeds of a public or private offering of any equity
security. After April 30, 2000, the Series B Preferred Stock can be redeemed,
in whole or in part, at a redemption price equal to the liquidation preference.
After April 20, 2000, the Series B Preferred Stock is convertible into a number
of shares of Common Stock determined by dividing the liquidation preference by
the higher of $2.04167 or the fair market value on the date the Series B
Preferred Stock is converted. Notwithstanding the foregoing, no holder or group
can convert the Series B Preferred Stock to the extent that the conversion of
such shares would cause such holder or group to own more than 19.9% of the
Company's outstanding Common Stock. The shares of Series B Preferred Stock have
no voting rights except as required by Oklahoma law. At December 31, 1999,
reflecting dividends paid, Chesapeake held 59,216 shares of Series B Preferred
Stock. The Series B Preferred Stock ranks senior to all classes of Common Stock
and other series and classes of preferred stock with respect to dividend rights
and rights on liquidation, winding up and dissolution.
On August 17, 1999, Chesapeake fully exercised the common stock purchase
warrant issued in April 1998 and purchased 2,394,125 shares of the Company's
Common Stock. The shares were issued pursuant to the cashless exercise
provisions of the warrant that permitted Chesapeake to surrender the right to
exercise the warrant for a number of shares of Common Stock having a market
value equivalent to the total exercise price. The total exercise price was
$23,941.25 or $0.01 per share. An aggregate of 45,121 warrants were surrendered
in payment of the total exercise price.
-9-
<PAGE>
Pursuant to the Participation Agreement, the Company sold Chesapeake the
right through April 30, 2003 to participate in up to 50% of the Company's
interest in the development of any of the Company's non-producing leasehold
interests (other than the Arkoma basin and certain New Mexico properties).
Chesapeake also was sold the right to participate in up to 50% of the Company's
interest in any subsequently acquired properties. During the year ended
December 31, 1999, Chesapeake elected to participate to the extent of 50% of the
Company's interest in the development of 29 non-producing properties and no
acquired properties.
On February 29, 2000, the Company and Chesapeake entered into agreements to
substantially revise the Participation Agreement and provide for the Company to
redeem its Series B Preferred Stock and Common Stock held by Chesapeake (the
"Securities") as part of a plan of restructuring. The redemption of the
Securities and the various revisions to the Participation Agreement are subject
to material conditions including approval by certain lenders of the Company.
The revised agreement and Securities redemption include the following
significant terms:
. Extension of the Participation Agreement for three years with an immediate
exclusion of the state of Texas south of latitude 34o North from the
provisions of the Participation Agreement.
. Granting a right of first refusal to Chesapeake on any property
dispositions made by the Company, provided the foregoing does not apply to
a sale of substantially all of the Company's assets to an unaffiliated
third party through a merger, reorganization, consolidation or the sale of
all of the Company's equity ownership.
. Segregation of first development rights, with the Company having the first
right to future drilling, completion and operating activities in its core
operating area in the Watonga-Chickasha Trend and also to its undeveloped
acreage in Potato Hills, Carter Knox, Cottonwood Creek, Oklahoma and Pecos
Slope, New Mexico. Chesapeake will have first right in all other areas
containing Participation Agreement acreage. Additionally, Chesapeake will
assume operations of 28 wells which were drilled pursuant to the
Participation Agreement by Chesapeake but had been operated since first
production by the Company.
. A permanent assignment to Chesapeake of the undeveloped leasehold interest
originally assigned to Chesapeake on March 31, 1998 that was subject to
reassignment to the Company by Chesapeake in 2003.
-10-
<PAGE>
. A permanent assignment to Chesapeake of the Company's remaining undeveloped
leasehold in 16 counties located in the Anadarko and Arkoma basins in
Oklahoma and Kansas. The acreage in this assignment excludes 15 proved
undeveloped locations retained by the Company. The Company's remaining 50%
interest in undeveloped acreage outside the 16 county areas will not be
conveyed to Chesapeake, and specifically, undeveloped acreage in Watonga-
Chickasha Trend and the Cement Field is not being conveyed.
. Chesapeake will have the right to acquire all of the Company's
participation in wells in the 16 county area (excluding the participation
in the 15 proved undeveloped locations retained by the Company) that are
drilled between February 1, 2000 and the closing of this transaction.
Chesapeake's cost to acquire these wells will be the reimbursement of the
Company's un-recovered cost of drilling, completing and operating the
wells.
. Redemption by the Company of its entire issue of Series B Preferred Stock
having a liquidation preference of approximately $61 million, at February
29, 2000, and of approximately 2.4 million shares of the Company's Common
Stock.
-11-
<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 April 28, 2000. As
of April 28, 2000, the Company had 18,685,765 shares of Common Stock
outstanding.
<TABLE>
<CAPTION>
Name and Address of Beneficial
Holder, Identity of Group (1) (2) Amount (3) Percent of Class
-------------------------------------- --------------------- ------------------
<S> <C> <C>
Michael Paulk 1,049,891(4) 6.6%
John Fleming 712,500(5) 3.7%
Brian E. Bayley 712,500(6) 3.7%
Stratum Group, L.L.C. (7) 1,000,000(8) 5.1%
650 Fifth Avenue
New York, New York 10019
Carl C. Icahn (7) 1,600,000 8.6%
High River Limited Partnership (7)
Riverdale LLC (7)
Little Meadow Corp. (7)
100 South Bedford Road
Mount Kisco, New York 10549
Amoco Corporation (7) 1,500,000(9) 7.4%
200 East Randolph Drive
Chicago, Illinois 60601
Chesapeake Energy Corporation(10) 2,394,125 12.8%
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
OppenheimerFunds, Inc. (11) 1,265,913 6.3%
Two World Trade Center, 34th Floor
New York, New York 10048
All Officers and Directors as a 3,374,891 15.4%
Group
(6 persons)
</TABLE>
________________________________
(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
-12-
<PAGE>
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, 6120 South Yale Avenue, Suite
1200, Tulsa, Oklahoma 74136. The address of Mr. Fleming is 1500, 340 12th
Avenue SW, Calgary, Alberta T2R 1L5. The address of Mr. Bayley is c/o
Quest Management Corp., 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
March 1, 2000 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 (i) 312,500 shares issuable upon exercise of options at an
exercise price of $0.40 per share and (ii) 187,500 shares issuable upon
exercise of options at an exercise price of $0.40 per share, which become
exercisable on April 28, 2000. Also includes 250,000 shares issuable on
exercise of options at an exercise price of $0.53 per share, of which
options to purchase 125,000 shares become exercisable on February 4, 2000
and options to purchase the remaining 125,000 shares become exercisable on
February 4, 2001. Also includes 125,000 shares issuable on exercise of
options at an exercise price of $0.15 per share, of which options to 62,500
shares become exercisable on December 31, 2000 and options to purchase the
remaining 62,500 shares become exercisable on December 31, 2001. In the
event of a "change of control" of Gothic Energy, as defined in the option
agreements, such remaining options become immediately exercisable.
(5) Includes 100,000 shares issuable on exercise of options at an exercise
price of $0.40 per share which are exercisable during the five-year period
beginning July 11, 1995, 50,000 shares issuable on exercise of options at
an exercise price of $0.40 per share which are exercisable during the five-
year period beginning July 16, 1996, 150,000 shares issuable on exercise of
options at an exercise price of $0.40 per share which are exercisable
during the five year period beginning April 28, 1998, and 250,000 shares
issuable on exercise of options at an exercise price of $0.53 per share
which are exercisable during the five-year period beginning February 4,
1999. Also includes 162,500 shares issuable on exercise of options at an
exercise price of $0.15 per share, of which 81,250 shares become
exercisable on December 31, 2000 and options to purchase the remaining
81,250 shares become exercisable on December 31, 2001.
(6) Includes 150,000 shares issuable on exercise of options at an exercise
price of $0.40 per share which are exercisable during the five-year period
beginning July 16, 1996, 150,000 shares issuable on exercise of options at
an exercise price of $0.40 per share which are exercisable during the five-
year period beginning April 28, 1998, and 250,000 shares issuable on
exercise of options at an exercise price of $0.53 per share which are
exercisable during the five-year period beginning February 4, 1999. Also
includes 162,500 shares issuable on exercise of options at an exercise
price of $0.15 per share, of which 81,250 shares become exercisable on
December 31, 2000 and options to purchase the remaining 81,250 shares
become exercisable on December 31, 2001.
(7) Based on information contained in Schedule 13D provided by such person.
(8) Issuable on exercise of common stock purchase warrants at $2.67 per share,
as adjusted. 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
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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.
(9) Issuable on exercise of common stock purchase warrants at $2.59 per share,
as adjusted.
(10) In addition, as of April 28, 2000, Chesapeake holds approximately 62,827
shares of Senior Redeemable Preferred Stock Series B with a liquidation
value of $1,000 per share. Commencing April 30, 2000, such shares are
convertible into shares of Gothic Energy Common Stock by dividing the
liquidation value by the conversion price currently $2.04167 per share of
Common Stock. The Company entered into an option agreement on February
28, 2000 to redeem the shares of Common Stock and Preferred Stock held by
Chesapeake, the consummation of which is subject to the fulfillment of
certain conditions.
(11) Based on information contained in Schedule 13G/A provided by such person.
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 three (3) meetings during the year
ended December 31, 1999. The compensation committee held two (2) meetings in
1999 and the audit committee held one (1) meeting in 1999.
INDEPENDENT AUDITORS
Although the Company has not selected its independent accountants for the
year 2000, it expects to select the firm of PricewaterhouseCoopers LLP.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
1994 and management of the Company believes it is in the Company's best interest
to continue to have PricewaterhouseCoopers LLP audit the Company's financial
statements for the year ended December 31, 2000.
PricewaterhouseCoopers LLP served as the Company's independent accountants
in 1999. Representatives of that firm are expected to be present at the annual
meeting with the opportunity
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to make a statement if they so desire and are expected to be available to
respond to appropriate questions.
SUBMISSION OF SHAREHOLDERS' PROPOSALS FOR 2001 ANNUAL MEETING
Any proposals which shareholders intend to present for a vote of
shareholders at the Company's 2001 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 January 5, 2001.
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,
1999, including financial statements, is being mailed to shareholders herewith.
However, that report is not part of the proxy soliciting information.
By Order of the Board of Directors
R. Andrew McGuire, Secretary
Dated: May 5, 2000
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Appendix: Form of Proxy
GOTHIC ENERGY CORPORATION
Two Warren Place - Suite 1200
6120 South Yale Avenue
Tulsa, Oklahoma 74136
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 April 28, 2000 at the annual meeting of
shareholders to be held on June 6, 2000 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.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
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: _______________, 2000 _____________________________________
Signature
Title (if required)
_____________________________________
Signature (if held jointly)
