SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
And Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[x] Definitive Information Statement
Gulfport Energy Corporation, Inc.
---------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check Appropriate Box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transactions 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 No.:
3) Filing Party:
4) Date Filed:
GULFPORT ENERGY CORPORATION, INC.
14313 N. MAY AVENUE, SUITE 100
OKLAHOMA CITY, OKLAHOMA 73134
NOTICE OF ACTION WITHOUT A MEETING
To the Stockholders of
Gulfport Energy Corporation, Inc.:
This Information Statement is being furnished on or about April 30, 2004 by
Gulfport Energy Corporation, a Delaware corporation (the "Company"), to holders
of the Company's outstanding common stock as of the record date, March 29, 2004
(the "Record Date"), pursuant to Rule 14c-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The purpose of this Information
Statement is (1) to inform the Company's stockholders that the five directors
nominated by the Company's Board of Directors have been elected by the written
consent of a majority of the Company's outstanding voting shares that are
entitled to vote on these matters and (2) to serve as notice of the foregoing
actions in accordance with Section 228(e) of the Delaware General Corporation
Law.
On March 29, 2004, the Board of Directors nominated five persons to serve
on the Board of Directors of the Company until the next annual meeting of
stockholders or until their successors are duly elected and qualified or until
each such director's earlier resignation or removal.
March 29, 2004 has been fixed as the Record Date for the determination of
the Company stockholders entitled to receive this Information Statement. The
Company had 10,146,566 shares of common stock outstanding as of the Record Date.
Each share of common stock entitles the holder thereof to one vote on matters
submitted to the stockholders.
Under Delaware law, the affirmative vote of the holders of a majority of
the outstanding shares of the Company's Common Stock is required to elect the
nominated directors. On April 15, 2004, in accordance with Delaware law, the
holders of a majority of the outstanding shares of the Company's Common Stock
executed a written consent electing the five directors for the next year.
ACCORDINGLY, WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
This Information Statement is being furnished by the Company and was first
mailed on or about April 30, 2004 to the holders of the Company's common stock
as of the close of business on the Record Date.
Sincerely,
Mike Liddell
Chief Executive Officer
April 30, 2004
GULFPORT ENERGY CORPORATION, INC.
14313 N. MAY AVENUE, SUITE 100
OKLAHOMA CITY, OKLAHOMA 73134
INFORMATION STATEMENT
Section 228(a) of the General Corporation Law of the State of Delaware
states that, unless otherwise provided in the certificate of incorporation, any
action that may be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if consents in
writing, setting forth the action so taken, are signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and those consents are
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. The Company's certificate of incorporation contains no provision or
language in any way limiting the right of our stockholders to take action by
written consent. On April 15, 2005, holders of more than a majority of the
outstanding shares of our voting stock executed a written consent approving the
directors nominated by the Company's Board of Directors to serve until the next
annual meeting of stockholder or until their successors are duly elected and
qualified or until each such director's earlier resignation or removal. This
consent was executed following approval of the actions by the Company's Board of
Directors on March 29, 2004. Because the actions have been approved by the
holders of the required majority of the outstanding shares that are entitled to
cast votes, no other stockholder approval of these actions is necessary. This
Information Statement will also serve as notice of actions taken without a
meeting as required by Section 228(e) of the Delaware General Corporation Law.
No further notice of the actions described herein will be given to you.
This Information Statement is provided to the Company's stockholders for
informational purposes only, and you need not take any further action in
connection with this Information Statement. The Company will bear all costs of
preparing and delivering this Information Statement.
Pursuant to the Company's certificate of incorporation, the Company
currently has authorized for issuance 20,000,000 shares of common stock, par
value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01
per share. As of the Record Date, the Company's only issued and outstanding
shares were 10,146,566 shares of common stock and 12,533.58 shares of preferred
stock. Each share of the Company's common stock outstanding is entitled to one
vote on all matters submitted to a vote of the stockholders.
This Information Statement is being mailed on or about April 30, 2004 to
the Company's stockholders of record on the Record Date, which is March 29,
2004. Section 213(b) of the Delaware General Corporation Law sets forth the
rules for ascertaining the record date to determine which stockholders of a
corporation are eligible to consent to action by written consent pursuant to
Section 228 of the Delaware General Corporation Law. Pursuant to Section 213(b),
the Company's Board of Directors determined that stockholders of record on the
Record Date were entitled to consent to the actions described in this
Information Statement.
The April 15, 2004 written consent of stockholders referenced above and
described in this Information Statement was executed by stockholders holding
over 67.2% of the shares eligible to vote on those matters on that date.
ACCORDINGLY, WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
1
ELECTION OF DIRECTORS
On March 29, 2004, the Board of Directors nominated five persons to serve
on the Company's Board of Directors of the Company until the next annual meeting
of stockholders or until their successors are duly elected and qualified or
until each such director's earlier resignation or removal. On April 15, 2004,
in accordance with Delaware law, the holders of a majority of the outstanding
shares of the Company's Common Stock executed a written consent electing the
five nominated persons as Directors of the Company.
The Company's Board of Directors consists of five individuals. All five of
the persons elected are now members of the Board of Directors. The following
information about the directors was provided by the directors:
Name Age Position
---- --- --------
Mike Liddell 50 Chairman of the Board, Chief Executive Officer
and Director
Robert E. Brooks 57 Director
David L. Houston 51 Director
Mickey Liddell 42 Director
Dan Noles 56 Director
MIKE LIDDELL, has served as a director of the Company since July 11, 1997,
as Chief Executive Officer since April 28, 1998 and as Chairman of the Board
since July 28, 1998 and President since July 15, 2000. In addition, Mr. Liddell
served as Chief Executive Officer of DLB Oil & Gas, Inc. from October 1994 to
April 28, 1998, and as a director of DLB from 1991 through April 1998. From
1991 to 1994, Mr. Liddell was President of DLB. From 1979 to 1991, he was
President and Chief Executive Officer of DLB Energy. He received a B.S. degree
in education from Oklahoma State University. He is the brother of Mickey
Liddell and brother-in-law of Dan Noles.
ROBERT E. BROOKS, has served as a director of Gulfport since July 11, 1997.
Mr. Brooks is currently president of Delphi Oil & Gas, Inc. From 1997 to 2002,
Mr. Brooks was a partner with Brooks Greenblatt, a commercial finance company
located in Baton Rouge, Louisiana that was formed by Mr. Brooks in July 1997.
Mr. Brooks is a Certified Public Accountant and was Senior Vice President in
charge of Asset Finance and Managed Assets for Bank One, Louisiana between 1993
and July 1997. He received his B.S. degree from Purdue University in mechanical
engineering in 1969. He obtained graduate degrees in finance and accounting
from the Graduate School of Business at the University of Chicago in 1974.
DAVID L. HOUSTON, has served as a director of the Company since July 1998.
Since 1991, Mr. Houston has been the principal of Houston & Associates, a firm
that offers life and disability insurance, compensation and benefits plans and
estate planning. Prior to 1991, he was President and Chief Executive Officer of
Equity Bank for Savings, F.A. He currently serves on the board of directors and
executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, and is the
former chair of the Oklahoma State Ethics Commission and the Oklahoma League of
Savings Institutions. He received a Bachelor of Science degree in business from
Oklahoma State University and a graduate degree in banking from Louisiana State
University.
MICKEY LIDDELL, has served as a director of the Company since January 1999.
Since 2001, Mr. Liddell has been the President of Berlanti-Liddell
Entertainment, LLC, a television and motion picture production company. From
2000 through 2001, Mr. Liddell served as President of Entertainment Services,
LLC. From 1994 through 1999, Mr. Liddell served as President of Banner
Entertainment, LLC. Both Banner Entertainment LLC and Mr. Liddell filed for
bankruptcy in 1999. Mr. Liddell received a Bachelor of Arts from the University
of Oklahoma in Communications in 1984 and a graduate degree from Parson School
of Design in New York, New York in 1987. He is the brother of Mike Liddell and
brother-in-law of Dan Noles.
DAN NOLES, has served as a director of the Company since January 2000. Mr.
Noles is the President of Dan Noles Construction LLC. Prior to that he served
as the President of Atoka Management Company, an oilfield equipment company.
Mr. Noles received his Bachelor degree in Finance from the University of
Oklahoma in 1970. Mr. Noles is the brother-in-law of Mike Liddell and Mickey
Liddell.
2
BOARD MEETINGS, COMMITTEES AND CORPORATE GOVERNANCE
Board Meetings and Committees
The Board of Directors held four meetings in 2003. In addition to the four
meetings, the Board adopted resolutions by unanimous written consent. The
Company's Board of Directors has two standing committees: the audit committee
and the compensation committee. Each of the directors attended at least 75% of
the aggregate of the total number of meetings held by the Board of Directors
and, if applicable, all meetings of committees of the Board of Directors on
which such director served during 2003.
The audit committee's functions include the following: (a) assist the Board
in its oversight responsibilities regarding (1) the integrity of the Company's
financial statements, (2) the Company's compliance with legal and regulatory
requirements, (3) the independent accountant's qualifications and independence
and (4) the accounting and financial reporting processes of the Company and the
audits of the financial statements of the Company; (b) prepare the report
required by the SEC for inclusion in the Company's annual proxy or information
statement; (c) appoint, retain, compensate, evaluate and terminate the Company's
independent accountants; (d) approve audit and non-audit services to be
performed by the independent accountants; and (e) perform such other functions
as the Board of Directors may from time to time assign to the audit committee.
During 2003, the audit committee held four meetings. From January to November
2003, the audit committee was composed of Dan Noles, David Houston and Mickey
Liddell, all of who are non-employee directors. In November 2003, the Board of
Directors added Robert Brooks to the audit committee. Mr. Houston serves as
Chairman of the audit committee and is designated as the "audit committee
financial expert" as such term is defined in Item 401(e) of Regulation S-B. Mr.
Houston and Mr. Brooks are "independent" within the meaning of the NASD's
director independence standards. Mickey Liddell and Dan Noles are not
independent due to their famial relationship to Mike Liddell. The Board of
Directors has adopted an Audit Committee Charter which is attached to this
Information Statement as Annex A.
The Compensation Committee considers executive employment agreements,
adoption of employee benefit plans and other issues related to compensation and
employee benefits. The Compensation Committee is comprised of Robert Brooks,
David Houston and Mickey Liddell, all of whom are "non-employee directors" as
defined by Rule 16b-3 promulgated under the Exchange Act and "outside directors"
as defined by Section 162(m) of the Internal Revenue Code. The Compensation
Committee held one meeting during 2003.
The Company's Board of Directors does not have a standing nominating
committee. The entire Board of Directors of the Company participates in the
consideration of director nominees. The Board does not deem it necessary to
establish a nominating committee because the Company's Board of Directors is
relatively small in size and believes it can operate more effectively in
concert. Further, because there has not been turnover in the Board, there has
been no need to nominate new directors.
Identifying and Evaluating Nominees for Directors
The Company's Board of Directors utilizes a variety of methods for
identifying and evaluating nominees for director. In the event that vacancies
are anticipated, or otherwise arise, the Company's Board of Directors considers
various potential candidates for director. Candidates may come to the attention
of the Company's Board of Directors through current board members, professional
search firms, stockholders or other persons. These candidates are evaluated at
regular or special meetings of the Company's Board of Directors, and may be
considered at any point during the year. In evaluating a board candidate, the
Company's Board of Directors will consider the skills and experience of the
candidate in the context of the needs of the board, as well as the candidate's
qualification as independent for board and committee service under the
applicable standards. Each of the Company's directors must represent the
interests of all stockholders.
The Company's Board of Directors may review materials provided by
professional search firms or other parties in connection with a nominee. In
evaluating such nominations, the Company's Board of Directors will seek to
achieve a balance of knowledge, experience and capability on the board. After
completing its evaluation, the Company's Board of Directors makes a
determination as to the slate of nominees and makes its recommendation with
respect to such nominees to its controlling stockholder for approval.
3
Communications with the Board
Individuals may communicate with the Company's Board of Directors or
individual directors by writing to the Company's secretary at Gulfport Energy
Corporation, Inc., 14313 N. May Avenue, Suite 100, Oklahoma City, Oklahoma
73134. The secretary will review all such correspondence and forward to the
Board of Directors a summary of all such correspondence and copies of all
correspondence that, in the opinion of the secretary, relates to the functions
of the Board or committees thereof or that he otherwise determines requires
their attention. Directors may review a log of all such correspondence received
by the Company and request copies. Concerns relating to accounting, internal
controls or auditing matters will be immediately brought to the attention of the
chairman of the audit committee and handled in accordance with its procedures
established with respect to such matters.
Code of Ethics
On November 14, 2003, the Company adopted a code of ethics which applies to
its chief executive officer and chief financial officer. A copy of the
Company's code of ethics has been filed as an exhibit to its Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2003.
AUDIT COMMITTEE REPORT
This disclosure statement is being provided to inform stockholders of the
audit committee's oversight with respect to the Company's financial reporting.
The audit committee has reviewed and discussed the audited financial statements
as of and for the year ended December 31, 2003 (the "Audited Financial
Statements") and footnotes thereto with management and the independent auditors.
In addition, the audit committee discussed with the independent auditors the
matters required to be disclosed by Statement of Auditing Standards No. 61. The
audit committee discussed with the Company's auditors the independence of such
auditors from management of the Company, including a review of audits and
non-audit fees, and received written disclosures concerning the auditors'
independence required to be made by the auditors of the Company by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). The audit committee has also discussed with management of the
Company and the independent auditors such other matters and received such
assurance from them, as the audit committee deemed appropriate.
Management is responsible for the preparation and presentation of the Audited
Financial Statements and the Company's internal controls over financial
reporting. The independent auditors are responsible for performing an
independent audit of the Company's financial statements in accordance with GAAP
and issuing a report thereon. The audit committee's responsibility is to
monitor and oversee this process.
Based on the foregoing review and discussions with management and the
independent auditors, and relying thereon, we have recommended to the Company
and Board of Directors the inclusion of the Audited Financial Statements in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2003 for
filing with the SEC.
AUDIT COMMITTEE
David Houston
Dan Noles
Mickey Liddell
Robert Brooks
4
DIRECTOR COMPENSATION
Members of the Company's Board of Directors who are also officers or
employees of the Company do not receive compensation for their services as
directors. The Company pays its non-employee directors a monthly retainer of
$1,000 and a per meeting attendance fee of $500 and reimburses all ordinary and
necessary expenses incurred in the conduct of the Company's business.
EXECUTIVE OFFICERS
The officers of the Company are as follows:
Name Age Position
---- --- --------
Mike Liddell 50 Chairman of the Board, Chief Executive Officer
and Director
Michael G. Moore 47 Vice President and Chief Financial Officer
Lisa Holbrook 33 Vice President, General Counsel and Secretary
MICHAEL G. MOORE, has served as Vice President and Chief Financial Officer
of the Company since July 2000. From May 1998 through July 2000, Mr. Moore
served as Vice President and Chief Financial Officer of Indian Oil Company. From
September 1995 through May 1998, Mr. Moore served as Controller of DLB Oil &
Gas, Inc. Prior to that, Mr. Moore served as Controller of LEDCO, Inc., a
Houston based gas marketing company. Mr. Moore received both his B.B.A degree in
finance and his M.B.A. from the University of Central Oklahoma.
LISA HOLBROOK, has served as Vice President and Secretary of the Company
since November 5, 1999, and as General Counsel since April 28, 1998. In
addition, Ms. Holbrook served as Assistant General Counsel of DLB until April
1998. In 1996, Ms. Holbrook received her J.D. from Oklahoma City University
Law School where she graduated with highest distinction.
EXECUTIVE COMPENSATION
The following table sets forth the compensation information earned during
2003, 2002 and 2001 by the Chief Executive Officer and by the two other most
highly compensated executive officers of the Company whose annual salary and
bonus exceeded $100,000 (the "named executives"), in all capacities in which
they served during that period.
Long Term
Name and Principal Compensation
Position Year Annual Compensation (1) Awards
- ------------------------------------------------------------------
Salary Bonus
------ -----
Mike Liddell 2003 $218,566 $24,000 $19,500
Chief Executive 2002 200,000 24,000 19,142
Officer 2001 200,000 16,667 17,516
Michael Moore 2003 105,000 13,800 $7,128
Vice President & 2002 105,000 23,800 8,094
Chief Financial 2001 105,000 12,600 6,623
Officer
Lisa Holbrook 2003 105,000 $13,800 $7,128
Vice President & 2002 103,750 23,650 7,983
General Counsel 2001 90,000 10,800 5,448
(1) Amounts shown include cash and non-cash compensation earned and received by
the named executives as well as amounts earned but deferred at their
election. The Company provides various perquisites to certain employees,
including the named executives. In each case, the aggregate value of the
perquisite provided to the named executives did not exceed 10% of such
named executive's total annual salary and bonus.
5
(2) Amounts for Mike Liddell include the Company's matching 401(k) plan
contributions of $12,000, $13,717 and $10,291 during 2003, 2002 and 2001
respectively and life insurance premium payments of $7,500, $5,425 and
$7,225 during 2003, 2002 and 2001 respectively. Amounts for Michael Moore
and Lisa Holbrook represent the Company's matching 401(k) plan
contributions during each of the indicated years.
Stock Options
No options were granted to the named executives or directors in 2003.
The following table sets forth the number of unexercised options held by
named executives as of December 31, 2003. No options were exercised by named
executives in 2001, 2002 or 2003.
Number of Number of
Unexercised Unexercised Value of Unexercised Value of Unexercised
Options at Fiscal Options at Fiscal In the Money Options In the Money Options
Year End Year End Year End Year End
Name Exercisable Un-exercisable Exercisable Un-exercisable
- --------------------------------------------------------------------------------------------------
Mike Liddell (1) 457,270 - $411,543 -
Lisa Holbrook (1) 10,000 - 9,000 -
Mike Moore (1) 10,000 - 9,000 -
(1) These options were exercisable at $2.00 per share. The Company's common
stock closed at $2.90 on December 31, 2003 as reported by the NASD OTC
Bulletin Board.
Employment Agreements
In June 2003, the Company renewed a five year employment agreement with its
Chief Executive Officer, Mike Liddell. The employment agreement provides an
annual base salary of $200,000 adjusted for cost of living increases. The
employment agreement contains a change of control provision which guarantees Mr.
Liddell one-year salary upon the occurrence of a change of control in the
Company.
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth certain information, as of December 31,
2003, with respect to all compensation plans previously approved by the
Company's security holders, as well as compensation plans not previously
approved by the Company's security holders.
Number of Securities To be Issued Upon Exercise of Outstanding Options,
Warrants and Rights Weighted Average Exercise Price of Outstanding
Options, Warrants and Rights Number of Securities Remaining Available
For Future Issuance Under Equity Compensation Plans (Excluding Securities
Reflected in Far Left Column)
Equity compensation plans approved by security holders 627,337
- ------------------------------------------------------------ --------
$2.00 255,663
- ----- --------
Equity compensation plans not approved by security holders --
- ----------------------------------------------------------------- ---------
-- --
- --------- ---------
Total 627,337 $2.00 255,663
- ----- -------- ------ --------
6
perquisite
provided to the named executives did not exceed 10% of such named
executive's annual salary and bonus.
(3) Mike Liddell received stock options exercisable at $2.00 per share for
203,635 shares. These options had no readily determinable market value at
the date of issue.
(4) Mr. Moore received 10,000 stock options exercisable at $2.00 a share.
These options had a monthly value of $22,500 at date of issuance.
(5) Ms. Holbrook received 10,000 stock options exercisable at $2.00 a share.
These options had a monthly value of $3,750 at date of issuance.
Employment Agreements
The Company entered into a five year employment agreement with its Chief
Executive Officer, Mike Liddell on June 1, 1999. The employment agreement
provides an annual base salary of $200,000. The employment agreement contains a
change of control provision which guarantees Mr. Liddell one-year salary upon
the occurrence of a change of control in the Company.
Stock Options
On June 1, 1999, Mike Liddell, Chief Executive Officer and Chairman of the
Board, received a grant of options for 2.5% of the issued shares of Common Stock
at an exercise price of $2.00 per share. The options are exercisable and vest
as to 35% of the shares on June 1, 2000, an additional 35% of the shares will
become exercisable and vest on June 1, 2001, and the remaining shares will
become exercisable and vest on June 1, 2002. On January 17, 2000, Mr. Liddell
was granted an additional 203,635 giving him a total of 457,270 options at the
date of this filing.
On January 17, 2000 and July 15, 2000, respectively, Lisa Holbrook and
Mike Moore each received 10,000 options. The options vest in three equal
installments and are exercisable at $2.00 per share.
The Option Agreements for Mike Liddell, Lisa Holbrook, and Mike Moore
provide that if the Company at any time increases the number of outstanding
shares of the Company or alters the capitalization of the Company in any other
way, the stock options shall be adjusted to reflect such changes.
No options were granted to the named executives or directors in 2002.
The following table sets forth the number of unexercised options held by
named executives as of December 31, 2002. No options were exercised in 2001 or
2002.
Number of Number of
Unexercised Unexercised Value of Unexercised Value of Unexercised
Options at Fiscal Options at Fiscal In the Money Options In the Money Options
Year End Year End Year End Year End
Name Exercisable Un-exercisable Exercisable Un-exercisable
- --------------------------------------------------------------------------------------------------
Mike Liddell (1) 396,179 61,091 $415,988 $64,145
Lisa Holbrook (1) 7,000 3,000 7,350 3,150
Mike Moore (1) 7,000 3,000 7,350 3,150
(1) These options were exercisable at $2.00 per share.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons beneficially owning more that 10% of the
Company's stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and with the Company.
Based solely on a review of the reports sent to the Company and written
representations from the executive officers and directors, the Company believes
that each of its directors and executive officers met his Section 16(a) filing
obligations during 2003.
CERTAIN TRANSACTIONS
Management Services
The Company's personnel help manage oil and gas and oil and gas related
assets owned by affiliates of its largest stockholder. The Company is reimbursed
an amount equal to the pro rata share of time its employees spend performing
such services and overhead. In 2003, the Company received payments for such
services and overhead totaling approximately $764,000.
Issuance of Series A Preferred Stock
In March 2002, the Company commenced a private placement offering of 10,000
units. Each unit consisted of (i) one share of Cumulative Preferred Stock,
Series A, of the Company and (ii) a warrant to purchase up to 250 shares of
common stock, par value $0.01 per share, of the Company. Dividends accrue on
the Series A preferred stock prior to the mandatory redemption date at the rate
of 12% of the liquidation preference per annum payable quarterly in cash or, at
the option of the Company for a period not to exceed two years from the closing
date, payable in whole or in part in additional shares of Series A preferred
stock at the rate of 15% of the liquidation preference per annum. The Company
chose to pay dividends on the shares of Series A preferred stock with additional
shares of Series A preferred stock for the quarterly periods ended March 31,
June 30, September 30, and December 31, 2003 and March 31, 2004 and, as a
result, issued an additional 3,241.73 shares of Series A preferred stock as of
March 31, 2004. No other dividends will be declared or will accrue on the
Series A preferred stock. To the extent funds are legally available, the Company
is obligated to declare and pay the dividends on the Series A preferred stock.
The Company is required to redeem the Series A preferred stock on the fifth
anniversary of the first issuance and the Company may at its sole option, choose
to redeem the Series A preferred stock at any time before the fifth anniversary
of the issuance. Accordingly, the outstanding Series A preferred stock is
treated as redeemable stock on the Company's balance sheet.
The Warrants have a term of ten years and an exercise price of $4.00 per
share of common stock, subject to adjustment under certain circumstances. The
Company granted to holders of the Warrants certain demand and piggyback
registration rights with respect to shares of common stock issuable upon
exercise of the warrants.
The Series A preferred stock offering was made available to stockholders
(some of whom were affiliates) of the Company as of December 31, 2001 and who
were accredited investors. Purchasers were able to participate up to their pro
rata share of ownership in the Company as of December 31, 2001. As of April 15,
2002, the Company had closed on subscriptions totaling $9,292,000 for 9,291.85
units, which included the conversion by Gulfport Funding, LLC of its $3,000,000
loan along with the accumulated interest due from the Company for 3,262.98
units. Additionally, several affiliates of one of the Company's principal
stockholders participated in the offering by subscribing for $2,738,000 of
units.
Backstop Agreement and Credit Facility
In connection with the Company's proposed rights offering, the Company
entered into an agreement between with CD Holding, L.L.C., dated April 14, 2004,
pursuant to which CD Holding agreed, subject to certain conditions, to back-stop
the rights offering by purchasing all of the shares of the Company's common
stock that are not otherwise subscribed for by the other holders of subscription
rights under their basic subscription privileges and over-subscription
privileges. In return for its agreement to backstop this rights offering, CD
Holding will receive a commitment fee equal to 2% of the gross proceeds of the
rights offering.
7
Also in connection with the proposed rights offering, on April 30, 2004,
the Company entered into a $3.0 million revolving credit facility with the CD
Holding. Borrowings under the Credit Facility are due on April 30, 2005 and bear
interest at 10.0%. Pursuant to the Credit Facility, CD Holding as the right to
convert any borrowings made under such facility into shares of Common Stock at a
conversion price equal to the amount of the proposed Rights Offering per share
only if the proposed rights offering is not completed. CD Holding will pay the
subscription price for shares purchased in the proposed rights offering through
the forgiveness of an equal amount owed to CD Holding under the Credit Facility.
Any amounts that remain outstanding after such application will be repaid with a
portion of the cash proceeds from the proposed rights offering to the extent
such funds are available. If such funds are not sufficient, any outstanding
amounts will be repaid from other funds as they become available.
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OTHER INFORMATION ABOUT DIRECTORS, OFFICERS,
AND CERTAIN STOCKHOLDERS
Beneficial Ownership of Directors, Officers and Certain Stockholders
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date, by (i) each
director, (ii) each named executive officer, (iii) each person known or believed
by the Company to own beneficially five percent or more of the Common Stock, and
(iv) all directors and executive officers as a group.
Beneficial Ownership
--------------------
Name and Address of Beneficial Owner (1) Shares Percentage (2)
- --------------------------------------------- ------ --------------
Charles E. Davidson (3)
411 West Putnam Avenue
Greenwich, CT 06830 8,177,595 67.2%
Peter M. Faulkner (4)
767 Third Avenue, Fifth Floor
New York, NY 10017 602,565 5.9%
Mike Liddell (3) 1,169,416 11.0%
Robert Brooks (6) 20,000 *
David Houston (7) 20,000 *
Mickey Liddell (8) 20,000 *
Dan Noles (9) 20,000 *
Lisa Holbrook (10) 10,000 *
Michael G. Moore (11) 10,000 *
All directors and executive
officers as a group
(10 individuals) 1,269,416 11%
- -----------------------------
* Less than one percent
3
(1) Unless otherwise indicated, each person or group has sole voting and sole
dispositive power with respect to all listed shares. The address of the
Company's directors and executive officers is 14313 N. May Avenue, Suite
100, Oklahoma City, Oklahoma 73134.
(2) Beneficial ownership is determined in accordance with the SEC's rules. In
computing percentage ownership of each person, shares of common stock
subject to options held by that person that are currently exercisable, or
exercisable within 60 days of the Record Date, are deemed to be
beneficially owned. These shares, however, are not deemed outstanding for
the purpose of computing the percentage ownership of each other person. The
percentage of shares beneficially owned is based on 10,146,566 shares of
common stock outstanding on the Record Date.
(3) Includes 3,574,722 shares of Common Stock held by CD Holding, L.L.C. and
784,273 shares of Common Stock held in an IRA for Mr. Davidson. Mr.
Davidson is the sole member of CD Holding, L.L.C. Mr. Davidson is the
Chairman and controlling member of Wexford Management, L.L.C. In addition,
the amount includes 1,795,860 shares of Common Stock owned by the following
investment funds (the "Wexford Entities") that are affiliated with Wexford
Management: Wexford Special Situations 1996, L.P.; Wexford Special
9
Situations 1996 Institutional, L.P.; Wexford Special Situations 1996,
Limited; Wexford-Euris Special Situations 1996, L.P.; Wexford Spectrum
Investors, L.L.C.; Wexford Capital Partners II, L.P.; Wexford Overseas
Partners I, L.P. Includes 2,022,740 share of Common Stock issuable upon the
exercise of warrants that are currently exercisable obtained by the
following investment funds that are affiliated with Wexford Management:
Wexford Special Situations 1996, Limited; Wexford-Euris Special Situations
1996, L.P.; Wexford Spectrum Investors, L.L.C.; Wexford Capital Partners
II, L.P.; Wexford Overseas Partners I, L.P. Mr. Davidson disclaims
beneficial ownership of the 1,795,860 shares owned by the Wexford Entities.
(4) Represents shares of Common Stock owned by Rumpere Capital Trading
Partners, Ltd. and PMF Partners, LLC.
(5) Includes 712,146 shares of Common Stock held of record by Liddell
Investments, L.L.C. Mr. Liddell is the sole member of Liddell Investments,
L.L.C. and 457,270 shares of common stock issuable upon the exercise of
options that are currently exercisable or exercisable within 60 days of the
Record Date.
(6) Represents 20,000 shares of Common Stock issuable upon the exercise of
stock options that are currently exercisable or exercisable within 60 days
of the Record Date.
(7) Represents 20,000 shares of Common Stock issuable upon the exercise of
stock options that are currently exercisable or exercisable within 60 days
of the Record Date.
(8) Represents 20,000 shares of Common Stock issuable upon the exercise of
stock options that are currently exercisable or exercisable within 60 days
of the Record Date.
(9) Represents 20,000 shares of Common Stock issuable upon the exercise of
stock options that are currently exercisable or exercisable within 60 days
of the Record Date.
(10) Represents 10,000 shares of Common Stock issuable upon the exercise of
stock options that are currently exercisable or exercisable within 60 days
of the Record Date.
(11) Represents 10,000 shares of Common Stock issuable upon the exercise of
stock options that are currently exercisable or exercisable within 60 days
of the Record Date.
Liability of Directors and Officers and Indemnification
As permitted by the Delaware General Corporate Law (the "DGCL"), the
Company's Certificate of Incorporation eliminates in certain circumstances the
monetary liability of the directors for a breach of their fiduciary duty. These
provisions do not eliminate liability of the directors for (i) a breach of the
director's duty of loyalty to the Company or its Stockholders, (ii) acts or
omissions by a director not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) liability arising under Section
174 of the DGCL (relating to the declaration of dividends and purchase or
redemption of shares in violation of the DGCL) or (iv) any transaction from
which the director derived an improper personal benefit. In addition, these
provisions do not eliminate the liability of a director for violations of the
Federal securities laws, nor do they limit the rights of the Company or its
Stockholders, in appropriate circumstances, to seek equitable remedies such as
injunctive or other forms of non-monetary relief. Such remedies may not be
effective in all cases.
The Bylaws provide that the Company shall indemnify its directors and
officers to the fullest extent permitted by the DGCL. Under such provisions,
any director or officer, who in his capacity as such, is made or threatened to
be made a party to any suit or proceeding, may be indemnified if the Board of
Directors determines such director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Company. The Bylaws and the DGCL, further provide that such indemnification
is not exclusive of any other rights to which such individuals may be entitled
under the Certificate of Incorporation, the Bylaws, any agreement, vote of
Stockholders or disinterested directors or otherwise.
INDEPENDENT ACCOUNTANTS
The firm of Hogan & Slovacek, PC served as the Company's independent
auditors for 2003. This firm has advised the Company that it has no direct or
10
indirect financial interest in the Company. The audit committee has not asked
the stockholders to ratify its selection of auditors, because stockholder
ratification is not required under applicable rules and regulations.
Auditors' Fees
The audit committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. These services may
include audit services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specific budget. All fees paid to the independent auditors in 2003
were pre-approved by the audit committee.
Audit Fees. For professional services rendered by the Company's independent
auditors for the audit of the Company's annual financial statements for 2003 and
reviews of the financial statements included in our Quarterly Reports on Form
10-QSB during 2003, Hogan & Slovacek, PC billed the Company fees in the
aggregate amount of $50,000 and $46,000 for 2003 and 2002 respectively.
Audit-Related Fees. Hogan & Slovacek, PC did not perform any audit-related
services other than those described above for the Company during 2003 and billed
the Company $6,500 in 2002 for audit related services consisting primarily of
accounting system design and implementation services.
Tax Fees. Hogan & Slovacek, PC did not perform any tax or tax-related
services for the Company during 2003 and billed the Company $800 during 2002 for
fees related to tax compliance, tax advice and tax planning.
All Other Fees. No other fees were billed to the Company in 2003 and 2002
by Hogan & Slovacek, PC for services performed for 2003 and 2002, other than the
fees described above.
INCORPORATION BY REFERENCE
With respect to any filings with the SEC into which this Information
Statement is incorporated by reference, the material under the headings
"Compensation Committee Report" and "Audit Committee Report" shall not be
incorporated into such filings.
ADDITIONAL INFORMATION
The Company's Annual Report to stockholders for the fiscal year ended
December 31, 2003, including financial statements, is being mailed herewith to
all stockholders entitled to notice of the actions described in this Information
Statement. The annual report does not constitute a part of this Information
Statement.
The Company's Annual report on Form 10-KSB, including the financial
statements and schedule thereto, for the year ended December 31, 2003, as filed
with the SEC, will be furnished without charge to any stockholder upon written
request addressed to Ms. Lisa Holbrook, General Counsel, Gulfport Energy
Corporation, 14313 N. May Avenue, Suite 100, Oklahoma City, Oklahoma 73134.
Stockholders requesting exhibits to the Form 10-KSB will be provided the same
upon payment of reproduction expenses.
By the Order of the Board of Directors
Lisa Holbrook
Secretary
April 30, 2004
Oklahoma City, Oklahoma
11
Annex A
Audit Committee Charter
4
GULFPORT ENERGY CORPORATION, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
This Charter identifies the purpose, composition, meeting requirements,
committee responsibilities, annual evaluation procedures and investigations and
studies of the Audit Committee (the "Committee") of the Board of Directors (the
"Board") of Gulfport Energy Corporation, Inc., a Delaware corporation (the
"Company").
I. PURPOSE
The Committee has been established to: (a) assist the Board in its
oversight responsibilities regarding (1) the integrity of the Company's
financial statements, (2) the Company's compliance with legal and regulatory
requirements, (3) the independent accountant's qualifications and independence
and (4) the accounting and financial reporting processes of the Company and the
audits of the financial statements of the Company; (b) prepare the report
required by the United States Securities and Exchange Commission (the "SEC") for
inclusion in the Company's annual proxy or information statement; (c) appoint,
retain, compensate, evaluate and terminate the Company's independent
accountants; (d) approve audit and non-audit services to be performed by the
independent accountants; and (e) perform such other functions as the Board may
from time to time assign to the Committee. In performing its duties, the
Committee shall seek to maintain an effective working relationship with the
Board, the independent accountants and management of the Company.
II. COMPOSITION
The Committee shall be composed of at least three, but not more than five,
members (including a Chairperson), all of whom shall be "independent directors,"
as such term is defined in the rules and regulations of the SEC and the National
Association of Securities Dealers ("NASD"). The members of the Committee and
the Chairperson shall be selected annually by the Board and serve at the
pleasure of the Board. A Committee member (including the Chairperson) may be
removed at any time, with or without cause, by the Board. The Board may
designate one or more independent directors as alternate members of the
Committee, who may replace any absent or disqualified member or members at any
meetings of the Committee. No person may be made a member of the Committee if
his or her service on the Committee would violate any restriction on service
imposed by any rule or regulation of the SEC or any securities exchange or
market on which shares of the common stock of the Company are traded.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices and at least one member of the Committee shall
be an "audit committee financial expert" as defined in the applicable rules and
regulations of the SEC. Committee members may enhance their familiarity with
finance and accounting by participating in educational programs conducted by the
Company or an outside consultant. The Chairperson shall maintain regular
communication with the chief executive officer, chief financial officer and the
lead partner of the independent accountant.
Except for Board and Committee fees, a member of the Committee shall not be
permitted to accept any fees paid directly or indirectly for services as a
consultant, legal advisor or financial advisor or any other fees prohibited by
the rules of the SEC and the NASD. In addition, no member of the Committee may
be an affiliated person of the Company or any of its subsidiaries. Members of
the Committee may receive their Board and Committee fees in cash, Company stock
or options or other in-kind consideration as determined by the Board or the
Compensation Committee, as applicable, in addition to all other benefits that
other directors of the Company receive.
III. MEETING REQUIREMENTS
The Committee shall meet as necessary, but at least four times each year,
to enable it to fulfill its responsibilities. The Committee shall meet at the
call of its Chairperson, preferably in conjunction with regular Board meetings.
The Committee may meet by telephone conference call or by any other means
permitted by law or the Company's Bylaws. A majority of the members of the
Committee shall constitute a quorum. The Committee shall act on the affirmative
vote of a majority of members present at a meeting at which a quorum is present.
Without a meeting, the Committee may act by unanimous written consent of all
members. The Committee shall determine its own rules and procedures, including
designation of a chairperson pro tempore, in the absence of the Chairperson, and
designation of a secretary. The secretary need not be a member of the Committee
and shall attend Committee meetings and prepare minutes. The Committee shall
keep written minutes of its meetings, which shall be recorded or filed with the
books and records of the Company. Any member of the Board shall be provided
with copies of such Committee minutes if requested.
The Committee may ask members of management, employees, outside counsel,
the independent accountants or others whose advice and counsel are relevant to
the issues then being considered by the Committee, to attend any meetings and to
provide such pertinent information as the Committee may request.
The Chairperson of the Committee shall be responsible for leadership of the
Committee, including preparing the agenda, presiding over Committee meetings,
making Committee assignments and reporting the Committee's actions to the Board
from time to time (but at least once each year) as requested by the Board.
As part of its responsibility to foster free and open communication, the
Committee should meet periodically with management and the independent
accountants to discuss any matters that the Committee or any of these groups
believe should be discussed privately. In addition, the Committee or at least
its Chairperson should meet with the independent accountants and management
quarterly to review the Company's financial statements prior to their public
release consistent with the provisions set forth below in Section IV.
IV. COMMITTEE RESPONSIBILITIES
In carrying out its responsibilities, the Committee's policies and
procedures should remain flexible to enable the Committee to react to changes in
circumstances and conditions so that it can fulfill its oversight
responsibilities. In addition to such other duties as the Board may from time
to time assign, the Committee shall have the following responsibilities:
A. Oversight of the Financial Reporting Processes
1. In consultation with the independent accountants, review the integrity of
the Company's financial reporting processes, both internal and external.
2. Consider the independent accountant's judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting. Consider alternative accounting principles and estimates.
3. Annually review with management, and separately with independent
accountant, major issues regarding the Company's auditing and accounting
principles and practices and its presentation of financial statements, including
the adequacy of internal controls and special audit steps adopted in light of
material internal control deficiencies and any audit problems or difficulties.
4. Discuss with management and legal counsel the status of pending
litigation, taxation matters, compliance policies and other areas of oversight
applicable to the legal and compliance area as may be appropriate.
5. Review all analyst reports and press articles about the Company's
accounting and disclosure practices and principles.
6. Review all analyses prepared by management and the independent
accountants of significant financial reporting issues and judgments made in
connection with the preparation of the Company's financial statements, including
any analysis of the effect of alternative generally accepted accounting
principle ("GAAP") methods on the Company's financial statements and a
description of any transactions as to which management obtained Statement on
Auditing Standards No. 50 letters.
7. Review with management and the independent accountants the effect of
regulatory and accounting initiatives, as well as off-balance sheet structures,
on the Company's financial statements.
8. Prepare regular reports to the Board on all matters within the scope of
the Committee's functions.
B. Review of Documents and Reports
1. Review and discuss with management and the independent accountants the
Company's annual audited financial statements and quarterly financial statements
(including disclosures under the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operation") and any reports or
other financial information submitted to any governmental body, or the public,
including any certification, report, opinion or review rendered by the
independent accountants, considering, as appropriate, whether the information
contained in these documents is consistent with the information contained in the
financial statements and whether the independent accountants and legal counsel
are satisfied with the disclosure and content of such documents. These
discussions shall include consideration of the quality of the Company's
accounting principles as applied in its financial reporting, including review of
audit adjustments (whether or not recorded) and any such other inquires as may
be appropriate. Based on the review, the Committee shall make its
recommendation to the Board as to the inclusion of the Company's audited
consolidated financial statements in the Company's annual report on Form 10-KSB.
2. Review and discuss with management and the independent accountants
earnings press releases, as well as financial information and earnings guidance
provided to analysts and rating agencies. The Committee need not discuss in
advance each earnings release but should generally discuss the types of
information to be disclosed and the type of presentation to be made in any
earnings release or guidance.
3. Review reports from management and the independent accountants on the
Company's subsidiaries and affiliates, compliance with the Company's code(s) of
conduct, applicable law and insider and related party transactions.
4. Review with management and the independent accountants any correspondence
with regulators or government agencies and any employee complaints or published
reports that raise material issues regarding the Company's financial statements
or accounting policies.
5. Prepare the report required by the rules of the SEC to be included in the
Company's annual proxy or information statement.
6. Submit the minutes of all meetings of the Committee to, or discuss the
matters discussed at each Committee meeting with, the Board.
7. Review any restatements of financial statements that have occurred or
were recommended. Review the restatements made by other clients of the
independent accountants.
C. Independent Accountant Matters
1. Interview and retain the Company's independent accountants, considering
the accounting firm's independence and effectiveness and approve the engagement
fees and other compensation to be paid to the independent accountants.
2. Meet with the independent accountants and the Company's financial
management to review the scope of the proposed external audit for the current
year.
3. On an annual basis, the Committee shall evaluate the independent
accountant's qualifications, performance and independence. To assist in this
undertaking, the Committee shall require the independent accountants to submit a
report (which report shall be reviewed by the Committee) describing (a) the
independent accountant's internal quality-control procedures, (b) any material
issues raised by the most recent internal quality-control review, or peer
review, of the accounting firm or by any inquiry or investigations by
governmental or professional authorities (within the preceding five years)
respecting one or more independent audits carried out by the independent
accountants, and any steps taken to deal with any such issues and (c) all
relationships the independent accountants have with the Company and relevant
third parties to determine the impact, if any of such relationships on the
independence of the independent accountants. In making its determination, the
Committee shall consider not only auditing and other traditional accounting
functions performed by the independent accountants, but also consulting, legal,
information technology services and other professional services rendered by the
independent accountants and its affiliates. The Committee shall also consider
whether the provision of any of these non-audit services is compatible with the
independence standards under the guidelines of the SEC and other applicable
authorities (including, possibly, the Independence Standards Board and the
Public Company Accounting Oversight Board) and shall approve in advance any
audit services and permissible non-audit services to be provided by the
independent accountants.
4. Review on an annual basis the experience and qualifications of the senior
members of the external audit team. Discuss the knowledge and experience of the
independent accountants and the senior members of the external audit team with
respect to the Company's industry. The Committee shall ensure the regular
rotation of the lead audit partner and audit review partner as required by law
and consider whether there should be a periodic rotation of the Company's
independent accountants.
5. Review the performance of the independent accountants and terminate the
independent accountants when circumstances warrant.
6. Establish and periodically review hiring policies for employees or former
employees of the independent accountants.
7. Review with the independent accountants any problems or difficulties the
auditors may have encountered and any "management" or "internal control" letter
provided by the independent accountants and the Company's response to that
letter. Such review should include:
(a) any difficulties encountered in the course of the audit work, including
any restrictions on the scope of activities or access to required information
and any disagreements with management;
(b) any accounting adjustments that were proposed by the independent
accountants that were not agreed to by the Company;
(c) communications between the independent accountants and its national
office regarding any issues on which it was consulted by the audit team and
matters of audit quality and consistency;
(d) any changes required in the planned scope of the internal audit; and
(e) the responsibilities, budget and staffing of the Company's internal
audit function.
8. Communicate with the independent accountants regarding (a) alternative
treatments of financial information within the parameters of GAAP, (b) critical
accounting policies and practices to be used in preparing the audit report and
(c) such other matters as the SEC may direct by rule or regulation.
9. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fairness and accuracy of the
organization's financial statements.
10. Oversee the relationship with the independent accountants by discussing
with the independent accountants the nature and rigor of the audit process,
receiving and reviewing audit reports and ensuring that the independent
accountants have full access to the Committee (and the Board) to report on any
and all appropriate matters.
11. Discuss with the independent accountants prior to the audit the general
planning and staffing of the audit.
12. Obtain a representation from the independent accountants that Section
10A of the Securities Exchange Act of 1934 has been followed.
D. Internal Audit Control Matters
1. Establish regular and separate systems of reporting to the Committee by
each of management and the independent accountants regarding any significant
judgments made in management's preparation of the financial statements and the
view of each as to appropriateness of such judgments.
2. Following completion of the annual external audit, review separately with
each of management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions on the
scope of work or access to required information.
3. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices have been
implemented. This review should be conducted at an appropriate time subsequent
to implementation of changes or improvements, as decided by the Committee.
4. Review the procedures that the Company has implemented regarding
compliance with the Company's code of conduct.
5. Establish procedures for the receipt, retention and treatment of
accounting or auditing complaints and concerns and anonymous submissions from
employees and others regarding questionable accounting or auditing matters.
6. Periodically discuss with the chief executive officer and chief financial
officer (a) significant deficiencies in the design or operation of the internal
controls that could adversely affect the Company's ability to record, process,
summarize and report financial data and (b) any fraud that involves management
or other employees who have a significant role in the Company's internal
controls.
7. Ensure that no officer, director or any person acting under their
direction fraudulently influences, coerces, manipulates or misleads the
independent accountant for purposes of rendering the Company's financial
statements materially misleading.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with GAAP. This is the responsibility of management and the
independent accountants.
V. ANNUAL EVALUATION PROCEDURES
The Committee shall annually assess its performance to confirm that it is
meeting its responsibilities under this Charter. In this review, the Committee
shall consider, among other things, (a) the appropriateness of the scope and
content of this Charter, (b) the appropriateness of matters presented for
information and approval, (c) the sufficiency of time for consideration of
agenda items, (d) frequency and length of meetings and (e) the quality of
written materials and presentations. The Committee may recommend to the Board
such changes to this Charter as the Committee deems appropriate.
VI. INVESTIGATIONS AND STUDIES
The Committee shall have the authority and sufficient funding to retain
special legal, accounting or other consultants (without seeking Board approval)
to advise and assist the Committee. The Committee may conduct or authorize
investigations into or studies of matters within the Committee's scope of
responsibilities as described herein, and may retain, at the expense of the
Company, independent counsel or other consultants necessary to assist the
Committee in any such investigations or studies. The Committee shall have sole
authority to negotiate and approve the fees and retention terms of such
independent counsel or other consultants.
VII. MISCELLANEOUS
The Company shall give appropriate funding, as determined by the Committee,
for the payment of (i) compensation to the outside auditor, legal, accounting or
other advisors employed by the Committee and (ii) ordinary administrative
expenses of the Committee that are necessary or appropriate in carrying out its
duties. Nothing contained in this Charter is intended to expand applicable
standards of liability under statutory or regulatory requirements for the
directors of the Company or members of the Committee. The purposes and
responsibilities outlined in this Charter are meant to serve as guidelines
rather than as inflexible rules and the Committee is encouraged to adopt such
additional procedures and standards as it deems necessary from time to time to
fulfill its responsibilities.