Proxy Statement
Pursuant to Section 14(a)
of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ' 240-14a-11(c) or
' 240.14a-12.
CREDO PETROLEUM CORPORATION
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Names of Person(s) Filing Proxy Statement)
CREDO PETROLEUM CORPORATION
________________________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held March 11, 2004
________________________________________________________________
You are invited to attend or to be represented by proxy at
the Annual Meeting of Shareholders of CREDO Petroleum
Corporation, a Colorado corporation, to be held at the Wells
Fargo Center, J. D. Hershner Room, (Lobby), 1700 Lincoln Street,
Denver, Colorado, on March 11, 2004 at 2:30p.m., MST, for the
purposes set forth below.
1. To elect two Class I directors to serve until the
year 2007 Annual Meeting of Shareholders.
2. To ratify the appointment of independent auditors for
the fiscal year 2004.
3. To transact such other business as may properly
come before the meeting or any adjournment thereof.
Shareholders of record at the close of business on
January 30, 2004 are entitled to vote at the meeting. You are
cordially invited to attend the meeting in person.
Whether or not you plan to attend the meeting, it is
important that you return your signed proxy. Your vote is
important regardless of the number of shares you own.
BY ORDER OF THE BOARD OF DIRECTORS
William F. Skewes
Secretary and General Counsel
January 30, 2004
Denver, Colorado
________________________________________________________________
PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY SO THAT YOUR VOTE CAN BE RECORDED WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
You May Revoke Your Proxy And Vote In Person
If You Attend The Meeting.
________________________________________________________________
CREDO PETROLEUM CORPORATION
1801 Broadway, Suite 900, Denver, Colorado 80202
_______________________
PROXY STATEMENT
_______________________
ANNUAL MEETING OF SHAREHOLDERS, MARCH 11, 2004
Your proxy in the enclosed form is solicited by the Board of
Directors of CREDO Petroleum Corporation for use at the Annual
Meeting of Shareholders to be held on Thursday, March 11, 2004 at
2:30 p.m., MST, at the Wells Fargo Center, J. D. Hershner Room,
(Lobby), 1700 Lincoln Street, Denver, Colorado, and any
adjournment thereof. These proxy materials were first mailed to
shareholders on or about February 6, 2004.
Only shareholders of record at the close of business on
January 30, 2004 will be entitled to vote at the meeting. On
that date, there were 4,014,121 shares of common stock
outstanding and entitled to vote, excluding 320,088 shares held
in the Company's treasury.
All shares represented by properly executed, unrevoked
proxies timely received in proper form will be voted in
accordance with the directions specified thereon. Any such proxy
on which no direction is specified will be voted in favor of the
election of the nominees named herein to the Board of Directors
and for ratification of the appointment of Hein + Associates LLP
as independent auditors for the Company for fiscal 2004. In
addition, all proxies will be voted in accordance with the
judgement of the proxy holders with respect to any other matter
which may properly come before the meeting. Any shareholder
giving a proxy may revoke that proxy at any time before it is
voted at the meeting by executing a later dated proxy, by voting
by ballot at the meeting, or by filing with the Election Judge an
instrument of revocation.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The $.10 par value common stock of the Company is the only
class of capital stock outstanding. Each outstanding share of
common stock is entitled to one vote with respect to each matter
to be voted on by the shareholders, which vote may be given in
person or by proxy duly authorized in writing. Cumulative voting
is not permitted. A majority of the shares of outstanding common
stock will constitute a quorum for transaction of business at the
meeting. The affirmative vote of the majority of the total
number of shares represented and voted at the meeting, assuming a
quorum is present, is necessary for the approval of each of the
matters being voted upon. Shares that withhold votes for a
nominee for director or shares that either abstain from voting on
other proposals presented or which lack authority to vote will
have no effect in the tabulation of votes although they will be
counted toward the presence of a quorum.
The only persons known to own of record or beneficially more
than 5% of the Company's common stock as of January 30, 2004 are
set forth below.
Amount and Nature of Percent
Name and Address Beneficial Ownership of Class
---------------- -------------------- --------
James T. Huffman
6919 S. Steele Street
Littleton, Colorado 80122 569,796(1) 14.2%
R. K. O'Connell
P.O. Box 2003
Casper, Wyoming 82602 203,303(2) 5.1%
_______________________
(1) Mr. Huffman is the Company's President and Chairman of
the Board. Includes 179,736 shares owned by members
of Mr. Huffman's family.
(2) Includes 15,380 shares owned by Mr. O'Connell's wife
and by a corporation for which he serves as an officer.
DIRECTORS AND OFFICERS
Election of Directors (Item 1 on Proxy Card)
The Articles of Incorporation, as amended, classify members
of the Board of Directors into three classes having staggered
terms of three years each. The Board of Directors consists of
six directors, including five outside directors, who have
particular expertise in areas considered essential to the
Company's business--namely geology, land, petroleum engineering,
legal and accounting.
The directors to be elected to the Board in Class I at the
2004 Annual Meeting of Shareholders will serve until the 2007
Annual Meeting and until their successors are duly elected and
qualified. Class III and Class II directors will continue to
serve until the 2005 and 2006 Annual Meetings of Shareholders,
respectively, and until their successors are duly elected and
qualified.
The Class I nominees named below are presently members of
the Board of Directors. Unless your proxy contains contrary
instructions, it will be voted for the nominees. Should the
nominees become unable to serve, which is not anticipated, the
proxies will vote for such substitute nominee as recommended by
the Board of Directors. Any vacancy occurring in a class
following the election of that class may be filled by the Board
of Directors. A director selected to fill a vacancy in a class
will hold office for a term expiring at the annual meeting at
which the term of that class expires and until a successor is
duly elected and qualified.
The following table sets forth certain information with
respect to each nominee and each director whose term of office
will continue after the meeting.
Information Concerning Director Nominees and Continuing Directors
Shares of Common
Name, Age, Business Experience Stock Owned
Position with and Directorships Beneficially
Company and in Other Public or and Percent
Term as Director Investment Companies of Class(1)
---------------- -------------------------- -------------------
CLASS I - NOMINEES FOR ELECTION AT THE 2004 ANNUAL MEETING
WHOSE TERMS WILL EXPIRE AT THE 2007 ANNUAL MEETING
Oakley Hall Independent businessman since 35,533 (0.9%)(3)(4)
Age: 57; 2000; previously a
Director PricewaterhouseCoopers
since 2000 partner
William F. Skewes Attorney in private practice 53,689 (1.3%)(3)
Age: 58; Corporate since 1988; previously a
Secretary and partner in the Denver law
General Counsel; firm of Kelly, Stansfield &
Director O'Donnell from 1977 to 1988
since 1980
CLASS III - DIRECTORS WHOSE TERMS WILL EXPIRE AT THE
2005 ANNUAL MEETING
William N. Beach Independent oil operator and 75,133 (1.9%)(3)(5)
Age: 79; Director President of Beach Exploration,
since 1980 Inc. since 1975
Richard B. Stevens Independent businessman and 161,157 (4.0%)(3)
Age: 74; oil operator since 1987;
Director President of SECO Energy
since 1987 Corporation from 1981 to 1987
CLASS II - DIRECTORS WHOSE TERMS WILL EXPIRE AT THE
2006 ANNUAL MEETING
James T. Huffman Chairman and President since 569,796 (14.2%)(2)(3)
Age: 56; Chairman of 1981
the Board, President;
Director since 1978
Clarence H. Brown Independent businessman and 34,333 (0.9%)(3)
Age: 69; oil operator since
Director December 2000;
since 2000 Executive Vice President,
Chief Operating Officer
and Director of Columbus
Energy, Inc. from 1989 to
November 2000; previously
Chairman and Chief Executive
Officer of Kimbark Oil and
Gas Company
All Directors and Officers as a Group
(seven persons) 929,641 (23.2%)
_______________________
(1) Owned of record and beneficially unless otherwise indicated.
(2) Includes 179,736 shares owned by members of Mr. Huffman's family.
(3) Includes the following shares subject to currently exercisable
stock options: Mr. Huffman-16,083 shares; Mr. Brown-16,813 shares;
all other directors-4,333 shares each.
(4) Mr. Hall's shares are held in the name of an entity he controls.
(5) Includes 8,800 shares owned by members of Mr. Beach's family.
Information Concerning Meetings of the
Board of Directors and Board Committees
The Board of Directors met five times during fiscal 2003.
All directors were present for 80% of the meetings. It is
Company policy that Board members attend the Annual Meeting of
Shareholders unless health, family or other important personal
matters prohibit such attendance. All members of the Board of
Directors attended the Company's 2003 Annual Meeting.
The Board has an Executive Committee consisting of
Messrs. Hall, Huffman and Skewes. The Executive Committee did
not meet during fiscal 2003. There are no compensation or
nominating committees because such matters are considered by the
Executive Committee or the entire Board of Directors. The Board
of Directors consists of only six members and the Executive
Committee consists of only three members. The Board believes
that, due to their size and/or composition, either body is
capable and qualified to fulfill the function of a separate
nominating committee or compensation committee.
The Audit Committee of the Board of Directors consists of
three members: Mr. Hall, a CPA; Mr. Brown, a former oil company
executive; and Mr. Skewes, an attorney. Mr. Hall is a CPA and is
a retired PricewaterhouseCoopers audit partner. He is Chairman
of the Audit Committee and is qualified as an "audit committee
financial expert" under the applicable Commission rules.
Mr. Hall and Mr. Brown are "independent" directors under the
applicable National Association of Securities Dealers' listing
standards ("NASD Independent Director Standards"). Mr. Skewes,
an attorney in private practice, serves as the Company's General
Counsel and Corporate Secretary although he is not an employee of
the Company and has not received consulting services compensation
from the Company for the past three years. Because he is an
officer of the Company, Mr. Skewes does not technically meet the
definition of an "independent" director under the NASD
Independent Director Standards. Nevertheless, the Board of
Directors believes that Mr. Skewes is independent from management
of the Company and that his legal background and his knowledge of
financial statements qualify him for membership on the Audit
Committee.
Audit Committee Report
The responsibilities of the Audit Committee are set forth in
the Audit Committee Charter which has been adopted by the Board
of Directors and is attached to this Proxy Statement as
Appendix "A". A copy of the Charter was included as an
Appendix to the 2001 Proxy Statement and will be included at
least once every three years in future Proxy Statements.
The Audit Committee met four times during fiscal 2003 and
has met once since fiscal 2003 year-end. The Committee reviewed
and discussed the Company's audited financial statements for
fiscal 2003 with management and the Company's independent
auditors, and discussed with the Company's independent auditors
the matters required by Statement of Auditing Standards No. 61.
The Committee has received from the independent auditors
appropriate disclosures regarding the auditors' independence as
required by Independence Standards Board Standard No. 1. Based
on these reviews and discussions, the Audit Committee recommended
to the Board of Directors that the Company's audited financial
statements for the year ended October 31, 2003 be included in the
Company's Annual Report on Form 10-KSB.
Submitted by the Audit Committee of the Board of Directors
Oakley Hall, Chairman
Clarence H. Brown
William F. Skewes
Compensation of and Agreements with Non-Employee Directors
Non-employee directors receive $2,000 plus reimbursement for
out-of-pocket expenses for each meeting of the Board of Directors
attended and may be paid $100 per hour for committee meeting
attendance or for consulting services provided at the request of
the majority of the Board of Directors.
Non-employee directors also receive director compensation in
the form of stock options granted under the Company's Stock
Option Plan. The option exercise price is the price of the
Company's common stock on the option grant date. The options
vest in one-third increments beginning on the date of grant and
then on each anniversary thereafter until fully vested, and they
expire on the fifth anniversary of the date of grant except for
options granted on June 13, 2003 which expire on their tenth
anniversary date. Mr. Brown was granted a stock option on
July 27, 2000 to purchase 30,000 shares at $4.11. He has
exercised 17,520 stock options and has 12,480 currently
exercisable stock options. Mr. Hall was granted a stock option
on December 21, 2000 to purchase 30,000 shares at $4.17 and has
exercised all of them. Amounts reported above are adjusted for a
20% stock dividend made during 2003. Each non-employee director
was granted a stock option on June 13, 2003 to purchase
13,000 shares at $13.34. None of the options have been
exercised.
The Company has entered into indemnification agreements with
each of its non-employee directors. Those agreements require the
Company to indemnify such directors to the fullest extent
permitted by Colorado Law and to advance expenses in connection
with certain claims against the directors.
Information Concerning Other Executive Officers and Significant Employees
In addition to the directors and executive officers listed above, the
following persons are executive officers or significant employees as defined
by Securities and Exchange Commission regulations.
Name Position Age Work Experience
-------------- ---------------- --- -----------------------------------
James P. Vice President 57 Prior to joining the Company,
Garrett, Jr. and Chief Manager of Internal Reporting
Financial Officer and Manager of Expenditure
since July 2003 Accounting from 2001 to mid-2003
for Cimarex Energy Corporation
and one of its predecessor
companies. Previously Controller
and Treasurer of Columbus Energy
Corporation from 1992 to 2000.
He is a member of the American
Institute of Certified Public
Accountants, the Colorado Society
of CPAs and is a Director of COPAS
Colorado.
Kenneth J. Manager-Petroleum 54 Prior to joining the Company,
DeFehr Engineering since Senior Reservoir Engineer for
October 1990 Axem Resources, Inc. from 1982
to 1990. Previously Reservoir
Engineer for Phillips Petroleum
Company. Registered Professional
Engineer.
Torie A. Manager-Geology 49 Prior to joining the Company,
Vandeven and Exploration Regional Geologist for Key
since August 1999 Production Company from 1997
to 1998. Previously Senior
Staff Geologist and Regional
Exploitation Geologist for
Amoco Production Company from
1995 to 1997 and from 1998 to
1999, respectively. Prior to
1995, Senior Staff Geologist
for Santa Fe Minerals, Inc.
Certified Petroleum Geologist.
Executive Compensation
The following table shows, for the fiscal year ended
October 31, 2003, the compensation paid or accrued by the Company
for services in all capacities to the chief executive officer of
the Company. No other executive officer had salary and bonus in
excess of $100,000.
Summary Compensation Table
Annual Compensation Long Term Compensation
----------------------------- ------------------------------
Awards Payouts
---------------------- -------
Securities All
Other Restricted Underlying Other
Name and Principal Annual Stock Options LTIP Compen -
Position Year Salary Bonus Compensation Award(s) (Shares) Payouts sation
------------------ ---- -------- ------- ------------ --------- -------- ------- ----------
James T. Huffman, 2003 $120,000 $50,000 $11,700(1) - - - $80,195(2)
Chief Executive 2002 $120,000 $30,000 $21,500(1) - - - $50,300(2)
Officer 2001 $120,000 $30,000 $25,800(1) - - - $17,800(2)
___________________
(1) Of this amount, approximately 50%, 82% and 82% represents health insurance premiums
in 2003, 2002 and 2001, respectively.
(2) Of this amount, approximately 11% in 2003, 15% in 2002 and 28% in 2001 represents life
insurance premiums, approximately 8% in 2003, 11% in 2002 and 29% in 2001 represents
employer matching 401(k) Plan contributions, and the remainder primarily represents payments
from oil and gas production.
Option Grants in Last Fiscal Year
There was one grant of stock options to the named executive
officer in 2003. The following table provides information
regarding the option.
Individual Grant
--------------------------------------------
Percent of
Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Exercise Annual Rates of Stock
Underlying Employees or Base Price Appreciation for
Options in Fiscal Price Expiration Option Term
---------------------
Name Granted Year ($/SH) Date 5% 10%
---------------- --------- --------- --------- ---------- -------- ---------
James T. Huffman 48,250 27% $13.34 6/12/13 $405,000 $1,026,000
The following table provides information on the
exercisability of options held by the named executive officer and
the value of such officer's unexercised options at
October 31, 2003. There were no option exercises during the
period and the Company has not awarded any stock appreciation
rights (SARs).
Aggregated Option/SAR Exercises in Last
Fiscal Year and Fiscal Year-End Option/SAR Values
Value of
Number of Unexercised
Unexercised In-the-Money
Number of Options/SARs Options/SARs
Shares at FY-End at FY-End(1)
Acquired Value (Exercisable/ (Exercisable/
Name on Exercise Realized Unexercisable) Unexercisable)
-------- ----------- -------- -------------- --------------
James T. Huffman - - 16,083/32,167 $63,000/$126,000
___________________
(1) Based on the fair market value of the Company's common stock at the
close of business on October 31, 2003 ($17.26 per share) minus the
exercise price of the option.
Number of
Securities
Number of Weighted-Average Remaining
Securities to be Exercise Available
Issued Upon Price of for Future
Exercise of Outstanding Issuance
Outstanding Options, Under Equity
Options, Warrants Warrants and Compensation
and Rights Rights Plan(s)(1)
Plan Category (a) (b) (c)
--------------------- ---------------- ---------------- ---------------
Equity compensation
plans approved
by security holders 322,980 $ 10.67 -
Equity compensation
plans not approved
by security holders - - -
Total 322,980 $ 10.67
======= ======= =======
___________________
(1) Excluding securities reflected in column (a).
SELECTION OF INDEPENDENT AUDITORS
(Item 2 on Proxy Card)
The Board of Directors has appointed, subject to
ratification by the shareholders, Hein + Associates LLP as the
independent auditors of the Company for fiscal 2004.
Representatives of Hein + Associates LLP will be present at the
Annual Meeting to make any statement they so desire and to answer
appropriate shareholder questions.
In the absence of contrary instructions by a shareholder,
the shares represented by the proxies will be voted FOR the
ratification of the appointment of Hein + Associates LLP as the
Company's independent auditors for fiscal 2004.
Audit Fees
The aggregate fees billed for professional services rendered
by Hein + Associates LLP for its audit of the Company's annual
financial statements and its reviews of the financial statements
included in the Company's Form 10-QSB were $36,500 and $37,100
for fiscal 2002 and 2003 respectively.
Audit Related Fees
The aggregate fees billed for assurance and related services
by Hein + Associates LLP totaled $700 and $1,600 in fiscal 2002
and 2003, respectively.
Tax Fees
The aggregate fees billed for tax services by Hein +
Associates LLP were none and $400 in fiscal 2002 and 2003,
respectively.
All Other Fees
Hein + Associates LLP provided no services during fiscal
2002 and 2003 other than the services described above, and thus,
no fees for such services were billed. The Audit Committee has
reviewed such fees and found that the provision of such other
services is compatible with maintaining the principal
accountant's independence.
Policies and Procedures for Approval of Audit
and Non-Audit Services
The Audit Committee pre-approves estimates of audit and
non-audit services expected to be performed by Hein + Associates
LLP in any fiscal year. In addition, the Audit Committee may
delegate authority to its Chairman to pre-approve additional
audit and non-audit services by Hein + Associates LLP, and
ensures that the independent auditors shall not be engaged to
perform the specific non-audit services that are prohibited by
law or regulation. The Audit Committee Chairman must report the
amount of any such additional pre-approved services at the next
scheduled Audit Committee Meeting. The Audit Committee
pre-approved 100% of Hein + Associates LLP fees for audit and
non-audit services in fiscal 2002 and 2003. There were no hours
expended on the Hein + Associates LLP audit of the Company's most
recent financial statements by persons other than Hein +
Associates LLP's full-time, permanent employees.
The Audit Committee has concluded that services rendered by
Hein + Associates LLP and the related fees paid to Hein +
Associates LLP are compatible with maintaining Hein + Associates
LLP's independence.
The Board of Directors recommends a vote FOR this proposal
and will be governed by the decision of a majority of shares
voting.
CODE OF ETHICS
The Company is in the process of adopting a Code of Ethics
that applies to, among others, its executive officers, principal
financial officer, and other persons, if any, performing similar
functions. Once adopted the Company's Code of Ethics will be
posted on its Internet website (www.credopetroleum.com). In
addition, a copy of the Code of Ethics can be obtained from the
Company, without charge, by written request to the Chief
Financial Officer at the Company's address.
MANNER AND EXPENSES OF SOLICITATION
Solicitation of proxies will be by mail. The total expenses
of such solicitation will be borne by the Company and will
include reimbursement of brokerage firms and others for their
expenses in forwarding solicitation material regarding the
meeting to beneficial owners. Solicitation of proxies may be
made by telephone or oral communication by regular employees of
the Company who will not be directly compensated. In addition,
the Company may employ a proxy solicitor. Costs of a proxy
solicitor, if any, will be paid by the Company and will not
exceed $100,000.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
AND SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Any proposal which a shareholder intends to present for
consideration and action at the next annual meeting of
shareholders must be received in writing by the Company no later
than October 11, 2004 and must conform to applicable Securities
and Exchange Commission rules and regulations.
The Board of Directors attends each Annual Meeting and the
individual directors are available to answer appropriate
questions. Appropriate questions generally relate to the Board's
responsibility to establish overall policy and direction for the
Company, its responsibility to retain and evaluate management,
and its responsibilities related to certain functions related to
the Audit Committee. In the past five years, the Company has not
received formal shareholder communications addressed to the
Board, and has not adopted a formal process for shareholder
communications to the Board, or its individual members. If such
communications are received, the Company's informal policy is for
the Chairman of the Board to review them and to present those
that he deems, in his sole judgement, to be within the scope of
the Board's responsibility to the Board at its next regular
meeting. The Board will then determine, in its sole judgement,
whether a response to any such communication is appropriate.
Pursuant to recently issued SEC rules, the Board will formalize a
policy and guidelines regarding shareholder communications to
directors in the near future.
OTHER MATTERS
The Company knows of no other matters to be brought before
the Annual Meeting. However, if other matters come to their
attention before the meeting, it is the intention of the persons
named in the proxy to vote such proxy in accordance with their
judgement on such matters.
A copy of the Company's Annual Report for the fiscal year
ended October 31, 2003, which includes financial statements, is
enclosed for your information. The Annual Report is not a part
of the proxy solicitation material.
APPENDIX A
CREDO PETROLEUM CORPORATION
Audit Committee Charter
Composition
The Audit Committee is established as a standing committee
of the Board of Directors. The membership of the Audit Committee
shall consist of at least three non-employee directors who are
(or will become within a reasonable time after appointment)
financially literate, including at least one member who will be
qualified as an "audit committee financial expert" under
applicable rules of the Securities and Exchange Commission
("SEC") and The NASDAQ Stock Market, Inc. ("NASDAQ"). Each
member of the Audit Committee shall be free of any relationship
that, in the opinion of the Board of Directors, would interfere
with the exercise of his or her independent judgment and shall
meet the independence requirements of the applicable federal
securities laws, SEC and NASDAQ then in effect.
Meetings and Structure
The Board of Directors shall appoint one member of the Audit
Committee as chairperson. He or she shall be responsible for
leadership of the Audit Committee and reporting to the Board of
Directors.
The Audit Committee shall meet at least four times per year
and at such times and places and by such means as the Chair shall
determine. A majority of the members of the Audit Committee
shall constitute a quorum. Minutes of all Audit Committee
meetings will be prepared and filed with the minutes of the Board
of Directors.
Statement of Policy
The Audit Committee will provide assistance to the directors
in fulfilling their responsibilities to the shareholders and to
the investment community relating to accounting, reporting
practices and the quality and integrity of the financial reports
of the Company. To that end, it is the responsibility of the
Audit Committee to maintain free and open lines of communication
between the Board of Directors, the independent auditors and the
Company's accounting and financial management.
Responsibilities
The Audit Committee's primary responsibilities include:
(a) Review and make recommendations to the Board of
Directors as to which independent auditors should be
selected to audit the financial statements of the
Company and its subsidiaries. Confirm the regular
rotation of the lead audit partner and reviewing
partner as required by law.
(b) Meet with the independent auditors and financial
management of the Company to review the scope of the
proposed audit for the current year, and, after the
completion of the audit, to review the results of the
audit, including any comments or recommendations made
by the independent auditors.
(c) Pre-approve all audit and not-audit services to be
rendered by the independent auditors and shall not
engage the independent auditors to perform the specific
non-audit services proscribed by law or regulation.
The Audit Committee may delegate pre-approval authority
to the Chair of the Audit Committee, whose decisions
shall be presented to the full Audit Committee at its
next scheduled meeting.
(d) Review with the independent auditors and the Company's
financial and accounting personnel the adequacy and
effectiveness of the accounting and financial controls
of the Company, and elicit any recommendations from the
independent auditors regarding the improvement of those
internal control procedures or particular areas where
new or more detailed controls or procedures might be
necessary to protect material assets of the Company.
(e) Provide sufficient opportunity for the independent
auditors to meet with the members of the Audit
Committee without members of management present. Items
which could be discussed at such meetings include the
independent auditors' evaluation of the Company's
financial and accounting personnel, and the cooperation
that the independent auditors received during the
course of any current or recently completed audit.
(f) Review and approve in advance all related party
transactions as defined by SEC regulations with the
Company.
(g) Submit the minutes of all meetings of the Audit
Committee to, or discuss the matters discussed at each
Audit Committee meeting with, the Board of Directors.
(h) Investigate any matter brought to its attention within
the scope of its duties, with the power to retain, at
the Company's expense, outside legal counsel and other
advisors for this purpose if, in its judgment, that is
appropriate.
(i) Establish procedures for (i) the receipt, retention and
treatment of complaints received by the Company
regarding accounting, internal accounting controls or
auditing matters, and (ii) the confidential, anonymous
submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
(j) Review and reassess the adequacy of this Charter on an
annual basis.
The Board of Directors and the Audit Committee will have
ultimate authority and responsibility to select, evaluate and
replace the independent auditors. The independent auditors are
ultimately accountable to the Board of Directors and the Audit
Committee. The Audit Committee is responsible for (i) ensuring
that the independent auditors, on a periodic basis, submit a
formal written statement delineating all relationships between
the Company and the independent auditors; (ii) actively engaging
in a dialogue with the independent auditors with respect to any
disclosed relationships or services that may impact the
objectivity and independence of the independent auditors; and
(iii) recommending that the Board of Directors take appropriate
action to ensure the independence of the independent auditors.
In addition, the Audit Committee shall set clear hiring policies
with respect to the Company's hiring of employees or former
employees of the independent auditors that meet the applicable
federal securities laws, SEC regulations and NASDAQ standards.
In addition to the above responsibilities, the Audit
Committee shall undertake such other duties as the Board of
Directors delegates to it.
Revised: January 29, 2004