SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
Filed by
the
Registrant
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Filed by
a Party other than the Registrant
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
For Use of the
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Definitive
Proxy Statement
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Commission
Only (as
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Definitive
Additional Materials
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permitted
by Rule 14a-6(e)(2))
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Soliciting
Material Under Rule 14a-12
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KODIAK
ENERGY, INC.
(Name of
Registrant as Specified in Its Charter)
____________________________________________________________
(Name of
Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction applies:
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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):
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(4)
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maximum aggregate value of transaction:
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paid previously with preliminary materials:
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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.
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previously paid:
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Form,
Schedule or Registration Statement No.:
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KODIAK ENERGY, INC.
NOTICE
OF ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
DECEMBER
3, 2008
To the
Stockholders of Kodiak Energy, Inc.:
You are
cordially invited to attend the 2008
Annual and Special Meeting
of
Stockholders. Regardless of whether you plan to attend, please take a
moment to vote your proxy. The
Annual and Special Meeting
will be held as follows:
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WHEN:
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Wednesday,
December 3, 2008
3:00
p.m., Mountain Time
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WHERE:
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Ramada
Hotel
Niagara
Room
708
– 8 Avenue S.W.
Calgary,
Alberta, Canada
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ITEMS
OF BUSINESS:
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·
Elect five directors for terms expiring at the 2009 annual meeting
of stockholders and until their successors are elected and
qualified.
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Approve amendments to our Stock Option Plan.
·
Ratify the appointment of Meyers Norris Penny LLP as our
independent registered public accounting firm (referred to as “independent
auditor” in Canada) for the fiscal year ending December 31,
2008.
·
Approve an amendment to our Certificate of Incorporation to
authorize 10,000,000 shares of preferred stock which may be issued in one
or more series, with such rights, preferences, privileges and restrictions
as shall be fixed by the Board of Directors from time to
time.
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Consider any other matters that may properly come before the Annual
Meeting.
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RECORD
DATE:
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Tuesday,
October 14, 2008
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VOTING
BY PROXY:
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Your
vote is important
. You may vote by returning the proxy
card in the envelope provided.
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On the
following pages, we provide answers to frequently asked questions about the
Annual and Special
Meeting
. A copy of the 2007 Annual Report on Form 10-K is
enclosed.
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By
Order of the Board of Directors,
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Mark
Hlady
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Chairman
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KODIAK ENERGY, INC.
TABLE
OF CONTENTS
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KODIAK ENERGY, INC.
Suite
460, 734 – 7 Avenue S.W.
Calgary,
Alberta, T2P 3P8, Canada
+1
(403) 262-8044
PROXY
STATEMENT
This
proxy statement is being furnished to our stockholders beginning on or about
Tuesday, October 28,
2008
, in connection with the
solicitation of proxies by the Board
of Directors of Kodiak Energy, Inc.
(the Company), to be used at the
Annual and Special Meeting of
Stockholders
(the Meeting) on
Wednesday, December 3, 2008
,
at the
Ramada Hotel, Niagara
Room, 708 – 8 Avenue S.W., Calgary, Alberta, Canada
, and at all
adjournments or postponements of the Meeting for the purposes listed in the
preceding Notice of Annual and Special Meeting of Stockholders
All
references to currency in the Proxy Statement are in United States dollars,
unless otherwise indicated.
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
What
am I voting on?
The election of five nominees to serve
on our Board of Directors for terms expiring at the 2009 annual meeting of
stockholders and until their successors are elected and qualified.
The approval of amendments to our Stock
Option Plan.
The ratification of the appointment of
Meyers Norris Penny LLP as our independent registered public accounting firm
(referred to as “independent auditor” in Canada) for the fiscal year ending
December 31, 2008.
The approval of an amendment to our
Certificate of Incorporation to authorize 10,000,000 shares of preferred stock
which may be issued in one or more series, with such rights, preferences,
privileges and restrictions as shall be fixed by the Board of Directors from
time to time.
Any other matters that may properly
come before the Board of Directors.
What
are the board's voting recommendations?
Our Board of Directors recommends a
vote FOR each of the five director nominees.
Our Board of Directors recommends a
vote FOR the approval of amendments to our Stock Option Plan.
Our Board of Directors recommends a
vote FOR the ratification of the appointment of Meyers Norris Penny LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2008.
Our Board of Directors recommends a
vote FOR the approval of an amendment to our Certificate of Incorporation to
authorize 10,000,000 shares of preferred stock which may be issued in one or
more series, with such rights, preferences, privileges and restrictions as shall
be fixed by the Board of Directors from time to time.
What is the vote
required for each proposal?
Once a quorum has been established, the
following votes are required for approval of the respective
matters:
Proposal 1
– A plurality of
the votes duly cast is required for the election of directors (i.e., the five
nominees receiving the greatest number of votes will be elected). Abstentions
and broker “non-votes” will not affect the outcome of the voting on election of
directors.
Proposals 2 and 3
– The
affirmative vote of the holders of a majority of the shares of common stock
present in person or represented by proxy and entitled to vote at the Meeting is
required for approval of the amendments to the Kodiak Energy Inc. Stock Option
Plan and for ratification of the appointment of Meyers Norris Penny LLP as the
independent registered public accounting firm of the Company for the fiscal year
ending December 31, 2008. An abstention will have the same effect as
voting against either of these proposals. Broker “non-votes” are not
counted for purposes of approving either the amendments to the Kodiak Energy
Inc. Stock Option Plan or the ratification of our accounting firm, and thus will
not affect the outcome of the voting on either of these proposals.
Proposal 4
– The affirmative
vote of a majority of the outstanding shares of common stock entitled to vote at
the Meeting is required for the approval of the amendment to our Certificate of
Incorporation to authorize 10,000,000 shares of preferred
stock. Abstentions and broker “non-votes” will have the same effect
as voting against this proposal.
Who
can vote?
Common stockholders of record as of the
close of business on the record date are entitled to vote. The record
date for the Meeting is Tuesday, October 14, 2008. Each outstanding
share of our common stock is entitled to one vote upon the proposals
presented.
How
do I vote?
If you are the record holder of your
shares, there are five ways to vote:
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1.
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By
completing and mailing the enclosed proxy
card.
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The
prompt return of your completed proxy card vote will assist us in preparing for
the Meeting. You can specify your choices by marking the appropriate
boxes on the proxy card. Date, sign and return the accompanying proxy
card to the transfer agent, Computershare Investor Services, in the
postage-prepaid envelope enclosed for that purpose.
OR
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2.
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By
completing and delivering the enclosed proxy card via
facsimile.
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If you
wish to deliver your proxy card via facsimile, please specify your choices by
marking the appropriate boxes on the proxy card, copy both the front and back of
the signed proxy card and fax the same to Computershare Investor Services at +1
(312) 601-2312. The facsimile number is valid
internationally.
OR
If you
wish to vote your proxy by Internet, log on to the Internet and go to
www.investorvote.com/KEI. Follow the steps outlined on the secured
website.
OR
Registered
stockholders in the United States, Canada, and Puerto Rico with a touch tone
telephone may also vote their proxy by dialing +1 (800)
962-4284. There is no charge for the telephone
call. Follow the instructions provided by the recorded
message.
OR
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5.
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By
written ballot at the Meeting.
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If you
attend the Meeting, please specify your choices by marking the appropriate boxes
on the proxy card, and you may deliver your completed proxy card in person or
fill out and return a ballot that will be supplied to you.
If your shares are held by your broker
as your nominee (that is, in street name), you will need to obtain a proxy form
from the institution that holds your shares and follow the instructions included
on that form regarding how to instruct your broker to vote your shares or obtain
an authorization from your broker allowing you to vote your shares at the
Meeting in person or by proxy.
If you do not give instructions to your
broker, your broker can vote your shares with respect to “discretionary” items,
but not with respect to “non-discretionary” items. Discretionary
items are proposals considered routine on which your broker may vote shares held
in street name in the absence of your voting instructions. On
non-discretionary items for which you do not give your broker instructions, the
shares will be treated as broker “non-votes.”
The
proposal for the election of directors and the proposal to ratify the
appointment of Meyers Norris Penny LLP as our independent registered public
accounting firm are considered discretionary and therefore may be voted upon by
your broker if you do not give instructions to your broker. The
proposal to amend the Kodiak Energy, Inc. Stock Option Plan and the proposal to
amend our Certificate of Incorporation to authorize preferred stock are
considered non-discretionary and therefore may not be voted upon by your broker
if you do not give instructions to your broker.
What
does it mean if I get more than one proxy?
It means your shares are held in more
than one account. Please vote all proxies to ensure all your shares
are voted.
What
constitutes a quorum?
As of the record date, Tuesday, October
14, 2008, there were 110,023,998
shares of our common
stock outstanding. In order to conduct the Meeting, a majority of the
outstanding shares entitled to vote must be represented in person or by
proxy. This is known as a “quorum”. Abstentions and shares
which are the subject of broker “non-votes” will count toward establishing a
quorum.
Can
I change my vote?
If you are the record holder of your
shares, you can change your vote or revoke your proxy at any time prior to the
closing of the polls, by:
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returning
a later-dated proxy card; or
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attending
the Meeting and voting your shares in person;
or
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notifying
the Company by written revocation
letter.
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Any revocation should be filed with
William E. Brimacombe, Chief Financial Officer of the Company, at our corporate
headquarters at Suite 460, 734 – 7 Avenue S.W., Calgary, Alberta, T2P 3P8,
Canada.
If your shares are held in street name
and you previously instructed your broker, bank or nominee on how to vote your
shares, you will need to contact your broker, bank or nominee in order to change
your vote.
Attendance at the Meeting will not in
itself constitute revocation of a proxy. All shares entitled to vote
and represented by properly completed proxies timely received and not revoked
will be voted as you directed. If no direction is given, the proxies
will be voted as our Board of Directors recommends.
Who
conducts the proxy solicitation?
Our Board of Directors is soliciting
these proxies. The Company will bear the cost of the solicitation of
proxies. Our regular employees may solicit proxies by mail, by
telephone, personally or by other communications, without compensation apart
from their normal salaries.
Who
will count the votes?
Our Board of Directors have appointed
Global Corporate Compliance to serve as an Inspector of Election to tabulate the
voted proxies.
PROPOSAL 1 – ELECTION OF DIRECTORS
The
current term of office of all of our directors expires at the 2008 Annual and
Special Meeting. Our Board of Directors has proposed the election of
each nominee for a one-year term expiring at the 2009 Annual Meeting or until
their respective successors have been duly elected and
qualified. Directors will be elected by a plurality of the votes cast
by the shares entitled to vote, as long as a quorum is
present. “Plurality” means that the individuals who receive the
largest number of votes are elected as directors up to the maximum number of
directors to be chosen. Therefore, shares not voted, whether by
withheld authority or otherwise, have no effect in the election of
directors.
The
nominees have consented to being nominated and to serve if
elected. In the event that any nominee becomes unable to serve for
any reason, the proxies will be voted for a substitute nominee selected by our
Board of Directors.
Nominees for Election of Directors
Please
refer to Appendix D for the Canadian disclosure presentation on the Company’s
Directors.
William S. Tighe
, 57, has
held the positions of Chief Operating Officer, President and Director of the
Company since September 2005 and Chief Executive Officer of the Company since
December 2007. Since 2005, Mr. Tighe has focused on developing
Kodiak’s business interests. His past experience
includes approximately thirty years in management, operations, maintenance,
and more recently major and minor projects for both Canadian and other
international energy companies. These positions were in a
variety of field settings from the heavy oil industry, sour gas and liquids
plants in Alberta and British Columbia and the sub-arctic in Canada, to
design offices, construction, construction and startup, and operation of large
gas/liquids processing operations in Southeast Asia. Since 2004, Mr.
Tighe has worked for Suncor Energy Ltd. as a Business Services Manager, Growth
Planning and Development. From 2000 until 2004, Mr. Tighe worked for
Petro China International as Operations Development and Commissioning
Manager. Prior to that, Mr. Tighe had extensive experience in
both Alberta and internationally in the oil and gas industry. Mr.
Tighe attended the University of Calgary where he studied general science and
computer science. He is a director of Tamm Oil and Gas Corp., a
junior heavy oil exploration and development company based in Calgary, Alberta,
Canada. Mr. Tighe holds an Interprovincial Power Engineering
Certification II Class.
Glenn Watt
, 34, has been a
director of the Company since November 2005 and Vice President Operations of the
Company since April 2007. Prior to joining the Company, Mr. Watt
worked primarily in the Western Canadian Sedimentary Basin and
from May 2003 to March 2007, was drilling and completions superintendent for a
large Canadian oil and gas royalty trust. Prior to that, he worked
for a major oil and gas company as a completions superintendent. He has
additional field experience working on drilling rigs in Alberta and British
Columbia. Mr. Watt has an honors diploma in Petroleum Engineering
Technology from the Northern Alberta Institute of Technology and a Bachelor
of Applied Petroleum Engineering Technology Degree from the Southern Alberta
Institute of Technology.
Peter Schriber
, 66, has been
a director of the Company since November 2005. Mr. Schriber is
currently an independent financial consultant. He is active in mergers and
acquisitions as well as debt and equity financing for private and public
companies. Prior to 1999, Mr. Schriber was a director and partner of
a Vancouver based brokerage firm. Prior to that, Mr. Schriber was a
Vice President and Manager of Corporate Lending with the Canadian division of a
Swiss Bank. He has a degree in Commerce from a Swiss Institution, and
he graduated as a Fellow of the Institute of Canadian Bankers. Mr.
Schriber is also a member of the Canadian Bankers Association.
Marvin Jones
, 71, has been a
director of the Company since April 2006 and has more than forty-five years of
North American and international oil and gas experience, with the last thirty
years being at the management level in oil and gas drilling and services
industries. Mr. Jones is a past President of Trinidad Drilling, a
past Vice President of Challenger International Services, and a past Vice
President of Thomson Industries. He is a recipient of the Canadian
Association of Oilwell Drilling Contractors (CAODC) Honorary Life Membership
Award and a past President of CAODC and many other charitable, sports and public
organizations.
Les Owens,
44, is standing
for nomination as director of the Company. Mr. Owens has more than
twenty-five years of oil and gas experience primarily in completions and
production services. He is currently General Manager at Canadian
Sub-Surface, Energy Services, a provider of cased-hole completion, production
and evaluation services. From October 2001 to April 2008, Mr. Owens
was in management positions with Ultraline Services Corp., a provider of
wireline services. Prior to that, from October 1999 to October 2001,
he was in sales with Plains Perforating Ltd., a provider of perforating
services. His previous experience was with various oil and gas
service companies, in positions progressing from sales to senior
management. Mr. Owens’ position as director to the Board is subject
to Toronto Venture Exchange (TSX-V Exchange) approval.
Board of Directors and Committees of the Board
Our
business affairs are conducted under the direction of our Board of
Directors. We have adopted a written
Board of Directors Mandate
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which defines our Board of Directors’ stewardship
responsibilities. Under this mandate, the directors’ principal
responsibilities are to supervise and evaluate management, to oversee the
conduct of the business, to set policies appropriate for the business and to
approve corporate strategies and goals. In addition, the Board of
Directors has also specifically assumed responsibility for succession planning
and monitoring senior management, the Company’s communications policy, and the
integrity of the Company’s internal control and management information
systems. In carrying out these responsibilities, the Board of
Directors is entitled to place reasonable reliance on management. The mandate
and responsibilities of the Board of Directors are to be carried out in a manner
consistent with the fundamental objective of protecting and enhancing the value
of the Company and providing ongoing benefit to the stockholders. The
Board of Directors Mandate can be viewed on the Company’s website at
www.kodiakpetroleum.com
. Any
amendments or granting of waivers, including any implicit waiver, from a
provision of the mandate to our directors or executive officers, will also be
disclosed on our website along with the nature of such amendment or
waiver.
The board
exercises its independent supervision over the Corporation’s management through
a combination of formal meetings of the board as well as informal discussions
amongst the board members. The independent directors can also hold scheduled
meetings at which non-independent directors and members of management are not in
attendance. Where matters arise at board meetings which require
decision making and evaluation that is independent of management and interested
directors, the meeting breaks into an
in camera
session among the
independent and disinterested directors.
We have
adopted a
Code of
Conduct
, which sets standards for ethical business conduct and applies to
all of our directors, officers, employees, and consultants to the fullest extent
permitted under the applicable laws of the country where such employees are
domiciled. The Code of Conduct has the fundamental principles of
honesty, loyalty, fairness, forthrightness and use of common sense in
general. An integral part of the Code of Conduct is that the
management of the Company be conducted full transparency, and in the best
interests of the stockholders and other stakeholders of the
Company. If we make any amendments to the Code of Conduct or grant
any waiver, including any implicit waiver, from a provision of the code to our
directors or executive officers, we will disclose the nature of such amendment
or waiver on our website at
www.kodiakpetroleum.com
.
The Board
of Directors has determined that the following directors meet the standards of
independence under the applicable NASDAQ and TSX-V Exchange listing standards,
and applicable Canadian Securities laws: Peter Schriber, Marvin Jones
and director nominee, Les Owens. In accordance with Item
407(a)(1)(i), (ii) and (2) of SEC Regulation S-K, the Company has chosen to
select the NASDAQ independence standard for directors even though the Company is
not listed on the NASDAQ exchange.
In
accordance with Item 401(d) of SEC Regulation S-K, there is a family
relationship between Bill Tighe and Glenn Watt, as Mr. Watt is married to Mr.
Tighe’s niece.
During fiscal 2007, our Board of
Directors held 15 meetings, our Audit Committee held 5 meetings, and our
Compensation Committee held 3 meetings. Each director attended at
least 75% of the board meetings and committee meetings during the period he
served as a member, except that Mr. Jones attended 17 of 23 such board and
committee meetings. We encourage our directors to attend our annual
meetings of stockholders. All of our directors attended our 2007
Annual Meeting. Our Board of Directors has two standing
committees: the Audit Committee and the Compensation
Committee. Our Audit Committee Charter and our Compensation Committee
Mandate, as well as the Board of Directors Mandate and Code of Conduct, are
available on our website at
www.kodiakpetroleum.com
,
on EDGAR at
www.sec.gov
and SEDAR at
www.sedar.com
under the
Company’s profile. These documents are also available in print to any
stockholder upon request by contacting the Company at Kodiak Energy, Inc., c/o
Investor Relations, Suite 460, 734 – 7 Avenue S.W., Calgary, Alberta, T2P 3P8,
Canada. We may revise these policies from time to time and will
promptly post revisions on our website.
The
Audit Committee
is governed by
its charter that is attached as Appendix A to this proxy
statement. The Audit Committee assists our Board of Directors in
overseeing the accounting and financial reporting processes of the Company and
audits of our financial statements, including the integrity of our financial
statements, compliance with legal and regulatory requirements, our independent
public accountants’ qualifications and independence, the performance of our
internal audit function and independent public accountants, and such other
duties as may be directed by our Board of Directors
The Audit
Committee Charter requires that the Audit Committee consist of three or more
board members who satisfy the “independence” requirements of the SEC and listing
standards of the TSX-V Exchange. The current members of the Audit
Committee are Mr. Schriber, who is the committee chair, Mr. Jones and Mr.
Watt. The Board has determined that Mr. Schriber and Mr. Jones
satisfy the above-referenced independence requirements, and that Mr. Watt does
not, as he is an officer and a remunerated consultant of the
Company. In order to meet the Audit Committee Charter requirements,
the Company is endeavoring to add a qualified, independent director who will
replace Mr. Watt on the Audit Committee. Our Board of Directors
believes that each member of the Audit Committee is able to read and understand
financial statements and that at least one member, Mr. Schriber, has past
employment experience or background which results in his financial
sophistication. The Board of Directors believes that Mr. Schriber
qualifies as an audit committee financial expert as defined in Item
407(d)(5)(ii) of SEC Regulation S-K.
The
Compensation Committee
assists
our Board of Directors with its duties and responsibilities in monitoring,
approving and disclosing our compensation policies and practices. The
Compensation Committee’s responsibilities include:
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Reviewing
and approving compensation strategy for our management and general trends
for operations/finance.
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Ensuring
that annual compensation is administered in accordance with our stated
compensation strategy and any requirements of appropriate regulatory
bodies.
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Communicating
our compensation policies to stockholders, as required by securities as
required by securities regulatory authorities in Canada and the United
States.
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Reviewing
and approving our personnel benefit and incentive
programs.
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Reviewing
with the Chief Executive Officer and advising the Board of Directors with
regard to executive officer succession and planning.
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Performing
such other duties and responsibilities as the Board of Directors shall
assign.
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The
current members of the Compensation Committee are Mr. Jones, who is the
committee chair, Mr. Schriber and Mark Hlady. Mr. Hlady is a
non-independent director and is not standing for re-election at the Company's
Meeting. The Company is presenting Les Owens for nomination as a
qualified independent director and he will serve on the Compensation Committee
upon election. The Compensation Committee will then consist of Mr.
Jones, Mr. Schriber and Mr. Owens, all of whom are independent, non-employee
directors.
Director Nominations
We do not
have a standing Nominating Committee, nor have we adopted a charter addressing
the director nomination process. The Board of Directors believes that
it is appropriate for us not to have a Nominating Committee because the entire
Board of Directors can adequately serve the function of considering potential
director nominees from time to time as needed. Our Board of
Directors, as a whole, assesses, recommends, and approves director
nominations. All members of the Board of Directors are encouraged to
identify prospective additions to the Board. Any recommendations
would be approved by the entire Board and elected annually by the
stockholders. In accordance with the TSX-V Exchange listing
standards, all of the Company’s directors also require approval by the
TSX-Venture Exchange. Characteristics of nominees to the Board of
Directors should include:
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Integrity:
Directors should demonstrate high ethical standards and integrity in
their personal and professional dealings;
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·
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Accountability:
Directors should be willing to be accountable for their decisions as
directors;
|
|
|
·
|
Judgment:
Directors should possess the ability to provide wise and thoughtful
counsel on a broad range of issues;
|
|
|
·
|
Responsibility:
Directors should interact with each other in a manner that
encourages responsible, open, challenging and inspired discussion;
and
|
|
|
·
|
High
Performance Standards: Directors should have a history of
achievements that reflects high standards for themselves and
others.
|
We do not
have a formal method of communicating director nominees from
stockholders. We do not have any restrictions on stockholder
nominations under our certificate of incorporation or by-laws. The
only restrictions are those generally applicable under Delaware corporate law
and the federal proxy rules. The Board of Directors will consider
suggestions from individual stockholders, subject to evaluation of the nominee’s
merits. Stockholders may communicate nominee suggestions directly to
any of the board members, accompanied by biographical details and a statement of
support for the nominees. The suggested nominee must also provide a
statement of consent to being considered for nomination. Although
there are no formal criteria for nominees, the board of directors believes that
persons should be actively engaged in business endeavors, have a financial
background, and be familiar with acquisition strategies and money
management.
Nominations
should be delivered to the Board of Directors at the following
address:
Kodiak
Energy, Inc.
c/o Chief
Financial Officer
Suite
460, 734 – 7 Avenue S.W.
Calgary,
Alberta, T2P 3P8, Canada
Security Holder Communications with the Board of
Directors
Our
security holders may send communications to members of our Board of Directors by
directing such communications to our Chief Financial Officer, William E.
Brimacombe. Communications may be sent to Mr. Brimacombe via mail at
our corporate office at the address listed above; via fax at +1 (403) 513-2670;
or via e-mail at
b.brimacombe@kodiakpetroleum.com
. Mr.
Brimacombe will direct all relevant communications to the appropriate Board
member(s). All communications are confidential.
Recommendation of Our Board of Directors
Our Board
of Directors recommends that you vote
“FOR”
all the director
nominees.
PROPOSAL 2 – PROPOSAL TO AMEND THE KODIAK ENERGY, INC. STOCK OPTION
PLAN
Stockholders
are being asked to approve amendments to the Kodiak Energy, Inc. Stock Option
Plan, as amended (Plan), which were adopted, subject to stockholder approval, by
the Board of Directors on October 9, 2008.
The
following summary of the Plan is qualified in its entirety by the full text of
the Plan, as amended, which is attached as Appendix B to this proxy
statement. In connection with the Company’s 2007 listing on the TSX-V Exchange
in Canada, the Company agreed to make amendments to the Plan so that the Plan
would be in compliance with the policies of the TSX-V Exchange. The
Board of Directors believes that, in order to continue to attract and retain
directors, officers, employees and consultants of the highest caliber, provide
increased incentive, and to continue to promote the well-being of the Company,
it is in the best interest of the Company and its stockholders to provide the
directors, officers, employees and consultants an opportunity to acquire a
proprietary interest in the Company.
The Plan
provides that the Board of Directors of the Company may from time to time, in
its discretion and in accordance with the requirements of the TSX-V Exchange,
grant to directors, senior officers or employees of, or consultants or any other
person providing services to, the Company or any subsidiary of the Company
pursuant to a written contract (collectively, Eligible Participants), options to
purchase common stock, provided that the number of shares of common stock
reserved for issuance under the Plan will not exceed 8,000,000 shares, subject
to adjustment in certain circumstances, including a change in the outstanding
common stock by reason of stock dividend or split, recapitalization, merger or
arrangement. The closing price of the Company’s common stock on
Tuesday, October 14, 2008 was $0.85 on the TSX-V Exchange and $0.75 on the OTC
Bulletin Board.
Summary of the Amendments to the Plan
The
amendments to the Plan, among other things, provide that:
|
|
·
|
All
options granted pursuant to the Plan are now subject to the rules and
policies of the TSX-V Exchange and all benefits, rights and options
accruing to any one Eligible Participant in accordance with the terms and
conditions of the Plan are not transferable or assignable, except in
limited circumstances as more particularly provided for in the Plan, or to
the extent, if any, permitted by the TSX-V
Exchange.
|
|
|
·
|
Eligible
Participants may hold options granted to them in an incorporated entity
wholly owned by them.
|
|
|
·
|
The
exercise price of an option has been modified so that no option can be
granted at less than “Fair Market Value” and that the exercise price of an
option, once granted, may only be reduced upon the Board of Directors
approval and, in the case of options held by insiders of the Company, the
exercise price of an option may be reduced only if disinterested
shareholder approval is obtained. As defined in the Plan, “Fair
Market Value” means, subject to applicable Exchange requirements, the
greater of the ten day weighted average calculation up to and including
the last closing price for Common Shares on the OTC Bulletin Board or the
Exchange or if the Common Shares are not listed or admitted to trading on
any exchange, as determined by any other appropriate method selected by
the Board.
|
|
|
·
|
Options
granted to an Eligible Person performing investor relations activities are
now required to contain vesting provisions such that vesting occurs over
at least twelve months with no more than three quarters of the options
vesting in any 3-month period. If a Participant ceases to be an
Eligible Person for any reason other than termination for cause or death,
any vested option held by such Participant may continue to be exercised by
the Participant to and until the earlier of the applicable expiration of
the option period in respect of such option and 30 days after the date on
which such Participant ceases to be an Eligible
Person.
|
|
|
·
|
In
connection with any merger, arrangement or consolidation which results in
the holders of outstanding common stock owning less than a majority of the
outstanding voting securities of the surviving corporation or any sale or
transfer by the Company of all or substantially all of its assets or any
tender offer or exchange offer for or the acquisition by any person or
group of all or a majority of the then outstanding voting securities of
the Company (collectively, a Change of Control), the Plan now provides
that options granted to each director and/or officer of the Company will
become immediately exercisable in full or part prior to the effective date
of such Change of Control, as the case may
be.
|
|
|
·
|
The
ability of an Eligible Participant to exercise options and the obligation
of the Company to issue and deliver shares in accordance with the Plan is
now subject to any approvals that may be required from stockholders of the
Company and any regulatory authority or stock exchange having jurisdiction
over the securities of the Company. If the underlying common
stock cannot be issued to any Eligible Participant under the Plan for
whatever reason, the obligation of the Company to issue the common stock
shall terminate and any option exercise price paid to the Company shall be
returned to the Eligible
Participant.
|
Terms of the Grants Under the Plan
The Board
of Directors administers the Plan. Options granted under the Plan to
Eligible Participants will be exercisable for a period of up to 5 years from the
date of grant. In connection with the foregoing, the number of shares
of common stock with respect to which options may be granted under the plan in
any one year to: (a) any one Eligible Participant will not exceed either the
lesser of 2% of the issued and outstanding common stock or 500,000 shares of
common stock; and (b) in the aggregate, all employees and consultants conducting
investor relations activities will not exceed 2% of the issued and outstanding
common stock. Subject to certain provisions, options granted under
the Plan are non-transferable, and may be exercised no later than ninety days,
or thirty days if the Eligible Participant is engaged in investor relations
activities, following cessation of the Eligible Participant’s position with the
Company; provided, however, that if the cessation of the Eligible Participant’s
position with the Company was by reason of death, the option may be exercised
within a maximum period of one year after such death, all subject to the
expiration date of such option. No options held by an Eligible
Participant who is terminated for cause (as such term is defined at common law)
may be exercised following the date on which such termination
occurred.
The Board
of Directors grants options under the Plan at its
discretion. Although it is the intention of the Board of Directors to
grant options under the Plan in 2008, no determination has been made as to the
total number of shares of common stock that will be subject to such
options. Therefore, the benefits or amounts that will be received by
or allocated to Eligible Participants in 2008 under the Plan are not
determinable. The following table sets forth the amount of all
options previously received, and options expected to be received in 2008, under
the Plan by those listed. Other than current directors and executive
officers of the Company, no other employee, associate, person or group has
received options at any time under the Plan.
|
|
Kodiak
Energy, Inc. Stock Option Plan
|
|
Name
and Position
|
All
Options Previously Received
|
Options
Received in 2008
|
Total
|
|
Mark
Hlady,
Chairman,
Former Chief Executive Officer
|
200,000
|
-
|
200,000
|
|
Peter
Schriber,
Director
Nominee
|
200,000
|
-
|
200,000
|
|
Marvin
Jones,
Director
Nominee
|
200,000
|
-
|
200,000
|
|
William
S. Tighe,
President,
Chief Executive Officer, Chief Operating Officer, and Director
Nominee
|
200,000
|
-
|
200,000
|
|
Glenn
Watt,
Vice
President Operations, and Director Nominee
|
200,000
|
-
|
200,000
|
|
William
E. Brimacombe,
Chief
Financial Officer
|
280,000
|
-
|
280,000
|
|
Current
Executive Officers, as a group
|
680,000
|
-
|
680,000
|
|
Current
Directors who are not Executive Officers, as a group
|
600,000
|
-
|
600,000
|
|
All
employees who are not Executive Officers, as a group
|
755,000
|
25,000
|
416,666
(1)
|
|
(1)
|
Excludes
363,334 options that expired in
2008.
|
United States Federal Income Tax Consequences
The
federal income tax consequences of the Plan under current United States federal
law, which is subject to change, are summarized in the following
discussion. This summary is not intended to be exhaustive and, among
other considerations, does not describe state, local or international tax
consequences or tax consequences for non-U.S. persons.
The
options granted under the Plan are “non-qualified stock options” and do not
qualify as incentive stock options for U.S. federal income tax
purposes. In general, Eligible Participants will not realize taxable
income upon the grant of a non-qualified stock option, and the Company will
generally not be entitled to a deduction. Upon exercise of a
non-qualified stock option, the excess of the fair market value of the shares on
the date of exercise over the exercise price will be taxable to the Eligible
Participant as ordinary income. The amount included in the gross
income of the Eligible Participant will also be deductible by the
Company. The tax basis of shares acquired by the Eligible Participant
will be equal to the exercise price plus the amount includable in the gross
income of the Eligible Participant as ordinary income.
Recommendation of Our Board of Directors
Our Board
of Directors recommends that you vote
“FOR”
the approval of
amendments to the Stock Option Plan.
PROPOSAL 3 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Meyers
Norris Penny LLP (Meyers Norris Penny) was our independent registered public
accounting firm (referred to as “independent auditor” in Canada) for the year
ended December 31, 2007, and has reported on our consolidated financial
statements in the annual report that accompanies this proxy
statement. Our independent registered public accounting firm is
appointed by our Audit Committee. The Audit Committee intends to
reappoint Meyers Norris Penny as our independent registered public accounting
firm for the year ending December 31, 2008. A representative of
Meyers Norris Penny is expected to be present at the Annual Meeting, will have
an opportunity to make a statement and will be available to respond to
appropriate questions. In the event that the stockholders do not
approve Meyers Norris Penny as our independent registered public accounting
firm, the selection of our independent registered public accounting firm will be
reconsidered by the Audit Committee.
Recommendation of Our Board of Directors
Our Board
of Directors recommends that you vote
“FOR”
the ratification of
Meyers Norris Penny as our independent registered public accounting firm for the
fiscal year ending December 31, 2008.
PROPOSAL 4
– APPROVAL OF AN AMENDMENT TO THE COMPANY’S
CERTIFICATE OF INCORPORATION TO AUTHORIZE 10,000,000 SHARES OF PREFERRED STOCK
WHICH MAY BE ISSUED IN ONE OR MORE SERIES, WITH SUCH RIGHTS, PREFERENCES,
PRIVILEGES AND RESTRICTIONS AS SHALL BE FIXED BY THE BOARD OF DIRECTORS FROM
TIME TO TIME
The Board
of Directors is recommending that the stockholders approve an amendment to the
Company’s Certificate of Incorporation to increase the Company’s authorized
capital stock by authorizing preferred stock.
The
Company is currently authorized to issue up to 300,000,000 shares of common
stock, $.001 par value, and no preferred stock. The Board of Directors has
determined that it is advisable and in the Company’s best interests to increase
the Company’s authorized capital stock by amending the Certificate of
Incorporation to authorize preferred stock. If stockholders approve and
authorize this amendment, the Company will file a Certificate of Amendment
amending the Certificate of Incorporation to authorize preferred stock
consisting of up to 10,000,000 shares, $.001 par value. The amendment
will become effective upon filing the prescribed Certificate of Amendment with
the Delaware Secretary of State. The full text of the proposed Certificate
of Amendment of Certificate of Incorporation is attached hereto as Appendix
C.
The
preferred stock to be authorized would, when issued, have such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including dividend or
interest rates, conversion prices, voting rights, redemption prices, maturity
dates and similar matters, as shall be expressed from time to time in the
resolution or resolutions providing for the issuance of such preferred stock as
adopted by the Board of Directors. As such, the preferred stock would
be available for issuance without further action by stockholders, except as may
be required by applicable law or pursuant to the requirements of the exchange
upon which the Company’s securities may then be listed.
The
authorization of this type of preferred stock would give the Board of Directors
the flexibility to issue preferred stock on such terms and conditions as the
Board of Directors deems to be in the best interests of the Company and its
stockholders. The proposed preferred stock would assure that the
Company has shares of preferred stock available for general corporate needs and
would provide the Board of Directors with the necessary flexibility to issue
preferred stock in connection with private placements or public offerings of
equity securities or other financings and as consideration in share exchanges,
mergers or other acquisitions without the expense and delay incidental to
obtaining stockholder approval of an amendment to the Certificate of
Incorporation at the time of such action.
The
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the Company’s common stock cannot be stated until the Board of
Directors determines the specific rights of the holders of such preferred
stock. However, the effects might include, among other things,
restricting dividends on the common stock, diluting the voting power of the
common stock, diluting the equity interest of the existing holders of common
stock if the preferred stock is convertible into common stock, reducing the
market price of the common stock, or impairing the liquidation rights of the
common stock.
Any
issuance of preferred stock with voting rights could, under certain
circumstances, have the effect of delaying or preventing a change in control of
the Company by increasing the number of outstanding shares entitled to vote and
by increasing the number of votes required to approve a change in control of the
Company. Shares of voting or convertible preferred stock could be
issued, or rights to purchase such shares could be issued, to render more
difficult or discourage an attempt to obtain control of the Company by means of
a tender offer, proxy contest, merger or otherwise. The ability of
the Board of Directors to issue such additional shares of preferred stock, with
the rights and preferences it deems advisable, could discourage an attempt by a
party to acquire control of the Company by tender offer or other
means. Such issuances could therefore deprive stockholders of
benefits that could result from such an attempt, such as the realization of a
premium over the market price that such an attempt could
cause. However, the preferred stock has not been proposed for an
anti-takeover-related purpose and the Company has no knowledge of any current
efforts to obtain control of the Company or to effect large accumulations of the
Company’s voting stock. The Company does not currently have any
definitive plans, arrangements or understandings with respect to the issuance of
any of the proposed shares of preferred stock.
Recommendation of Our Board of Directors
Our Board
of Directors recommends that you vote
“FOR”
the amendment to the
Certificate of Incorporation to authorize 10,000,000 shares of preferred
stock.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation
Program Objectives
The
Company’s compensation policies and programs are designed to be competitive with
similar junior oil and gas companies and to recognize and reward executive
performance consistent with the success of the Company’s
business. These policies and programs are intended to attract and
retain capable and experienced people. The Compensation Committee’s
role and philosophy is to ensure that the Company’s compensation goals and
objectives, as applied to the actual compensation paid to the Company’s Chief
Executive Officer and other executive officers, are aligned with the Company’s
overall business objectives and with shareholder interests.
In
addition to informal industry comparables from publicly available information,
the Compensation Committee considers a variety of factors when determining both
compensation policies and programs and individual compensation
levels. These factors include the long-range interests of the Company
and its stockholders, overall financial and operating performance of the
Company, and the Compensation Committee’s assessment of each executive’s
individual performance and contribution toward meeting corporate objectives.
Superior performance is recognized through the Company’s incentive
policy.
Role
of Executive Officers in Determining Compensation
The
Compensation Committee reviews and recommends compensation policies and programs
to the Company, as well as salary and benefit levels for our
executives. Our Chairman, President, Chief Executive Officer, Chief
Financial Officer, and Chief Operating Officer may not be present during
meetings of the Compensation Committee at which their compensation is being
discussed. The Board of Directors makes the final determination
regarding the Company’s compensation programs and practices.
Elements
of the Compensation Program for Fiscal Year 2007
The total
compensation plan for executive officers is comprised of two
components: base salary or consulting fees, and stock
options. We do not presently have a long-term incentive plan for our
named executive officers. There is no policy or target regarding
allocation between cash and non-cash elements of the Company’s compensation
program. The Compensation Committee annually reviews the total
compensation package of each of the Company’s executives on an individual basis,
against the backdrop of the compensation goals and objectives described above
and make recommendations to the Board of Directors concerning the individual
components of their compensation.
Base
Salary
As a
general rule for establishing base salaries, the Compensation Committee reviews
competitive market data for each of the executive positions and determines
placement at an appropriate level in a range. Compensation levels are
typically negotiated with the candidate for the position prior to his or her
final selection as an executive officer. Salaries for the executive
officers are normally reviewed annually to reflect external factors such as
inflation as well as overall corporate performance and the results of internal
performance reviews.
Consulting
Fees
As a
general rule for establishing consulting fees, the Compensation Committee
reviews competitive market data for each of the executive positions and
determines placement at an appropriate level in a range. Compensation
levels are typically negotiated with the candidate for the position prior to his
or her final selection as an executive officer. Consulting fees for
the executive officers are normally reviewed annually to reflect external
factors such as inflation as well as overall corporate performance and the
results of internal performance reviews.
Incentive
Payments
The
Company does not have an incentive payment program at this time due to the
Company’s current stage of growth and size.
Stock
Options
The
Company has a Stock Option Plan (the Plan) for the granting of stock options to
the directors, officers, employees and consultants of the Company, or its
subsidiaries. The purpose of granting such options is to assist the
Company in compensating, attracting, retaining and motivating such persons and
to closely align the personal interests of such persons to that of the
stockholders. For a description of the Plan, see Proposal 2 above and
in Appendix B. During the fiscal year ended December 31, 2007, the
Company did not grant stock options to directors of the Company who were not
officers of the Company.
Perquisites and Other
Personal Benefits
The
Company’s named executive officers are not generally entitled to significant
perquisites or other personal benefits not offered to our
employees. The Company does not sponsor a qualified tax-deferred
savings plan in accordance with the provisions of Section 401(k) of the U.S.
Internal Revenue Code of 1986, as amended (the Code).
Summary Compensation Table
The
following table summarizes the compensation for the periods indicated of our
named executive officers, as that term is defined in Section 402 of Regulation
S-K.
|
Name
and Principal Position
|
Year
|
|
Salary
|
|
Bonus
|
Stock
Awards
|
Option
Awards
(5)
|
Non-Equity
Incentive Plan Compensa-tion
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
All
Other Compensation
|
|
Total
|
|
Mark
Hlady,
|
2007
|
|
$
51,125
|
|
-
|
-
|
$72,266
|
-
|
-
|
-
|
|
$123,391
|
|
Chairman and former Chief
Executive Officer
(1)
|
2006
|
|
$
53,247
|
|
-
|
-
|
$13,859
|
-
|
-
|
-
|
|
$
67,106
|
|
William
S. Tighe,
|
2007
|
|
$108,624
|
|
-
|
-
|
$72,266
|
-
|
-
|
-
|
|
$180,890
|
|
President, Chief Executive
Officer and Chief Operating Officer
(2)
|
2006
|
|
$
83,259
|
|
-
|
-
|
$13,859
|
-
|
-
|
-
|
|
$
97,118
|
|
Glenn
Watt,
|
2007
|
|
$
86,550
|
|
-
|
-
|
$72,266
|
-
|
-
|
-
|
|
$158,816
|
|
Vice President
Operations
(3)
|
2006
|
|
-
|
|
-
|
-
|
$13,859
|
-
|
-
|
-
|
|
$
13,859
|
|
William
E. Brimacombe,
|
2007
|
|
$128,711
|
|
-
|
-
|
$67,481
|
-
|
-
|
-
|
|
$196,192
|
|
Chief Financial
Officer
(4)
|
2006
|
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
(1)
|
Mr.
Hlady resigned as Chief Executive Officer on November 30,
2007. His compensation was paid to MHC Corporation, a company
owned by Mr. Hlady for services rendered by him as Chief Executive
Officer. At the Company’s 2008 Meeting, Mr. Hlady will not be
standing for re-election as a
director.
|
|
(2)
|
Mr.
Tighe assumed the position of Chief Executive Officer on December 1,
2007. Mr. Tighe ’s compensation was paid to Sicamous Oil and
Gas Consultants Ltd., a company owned by Mr. Tighe, for services rendered
by him as President, Chief Executive Officer and Chief Operating
Officer.
|
|
(3)
|
Mr.
Watt assumed the position of Vice President Operations on April 1,
2007. Mr. Watt’s compensation was paid to Harbour Oilfield
Consulting Ltd., a company owned by Mr. Watt for services rendered by him
as Vice President Operations.
|
|
(4)
|
Mr.
Brimacombe assumed the position of Chief Financial Officer on January 3,
2007.
|
|
(5)
|
This
is the estimated cost of stock options granted and calculated in
accordance with FAS 123R valuation
methods.
|
Grants of Plan Based Awards Made in Fiscal 2007
The
following table summarizes each grant of a stock option award made to a named
executive officer in the last completed fiscal year.
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
All
Other Stock Awards: Number of Shares of Stock or Units (#)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($/Sh)
|
Grant
Date Fair Value of Stock and Option Awards ($)
|
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
|
William
E. Brimacombe,
Chief
Financial Officer
|
01/03/07
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
280,000
|
$1.29
|
$201,600
(1)
|
|
|
(1)
|
This
is the estimated cost of stock options granted and calculated in
accordance with FAS 123R valuation
methods.
|
Outstanding Equity Awards at Fiscal 2007 Year-End
The
following table summarizes unexercised options, stock that has not vested, and
equity incentive plan awards for each named executive officer outstanding in the
last completed fiscal year.
|
|
Option
Awards
|
|
Name
|
Number
of Securities
Underlying
Unexercised Options Exercisable
|
Number
of Securities Underlying Unexercised Options Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of Securities Underlying Unexercised Unearned Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
|
Mark
Hlady
|
66,666
|
133,334
(1)
|
-
|
$1.50
|
10/23/11
|
|
William
S. Tighe
|
66,666
|
133,334
(1)
|
-
|
$1.50
|
10/23/11
|
|
Glenn
Watt
|
66,666
|
133,334
(1)
|
-
|
$1.50
|
10/23/11
|
|
William
E. Brimacombe
|
-
|
280,000
(2)
|
-
|
$1.29
|
1/03/12
|
|
|
(1)
|
Options
vest 66,667 on October 23, 2008 and 66,667 on October 23,
2009.
|
|
|
(2)
|
Options
vest 93,333 on January 3, 2008; 93,334 on January 3, 2009 and 93,334 on
January 3, 2010.
|
Employment Agreements and Payments Made Upon Termination of
Employment
Other
than as set forth herein, the Company has no existing employment agreements with
any of its named executive officers.
The Company has not provided
compensation, monetary or otherwise, during the preceding fiscal year, to any
person who now or previously has acted as a named executive officer of the
Company, in connection with or related to the retirement, termination or
resignation of such person and the Company has provided no compensation to such
persons as a result of change of control of the Company, its subsidiaries or
affiliates. There is no compensation plan, contract or arrangement,
whereby a named executive officer is entitled to receive more than $100,000 from
the Company or its subsidiaries, including periodic payments or installments, in
the event of: (i) the resignation, retirement or any other termination of the
named executive officer’s employment with the Company or any of its
subsidiaries; (ii) any change of control of the Company or any of its
subsidiaries; and (iii) a change in the named executive officers’
responsibilities following a change of control.
Pursuant
to the Company’s Stock Option Plan, as proposed to be amended, in connection
with any merger, arrangement or consolidation which results in the holders of
the Company’s outstanding common stock owning less than a majority of the
outstanding voting securities of the surviving corporation or any sale or
transfer by the Company of all or substantially all of its assets or any tender
offer or exchange offer for or the acquisition by any person or group of all or
a majority of the then outstanding voting securities of the Company
(collectively, a Change of Control), options granted to each director and/or
officer of the Company will become immediately exercisable in full or part prior
to the effective date of such Change of Control, as the case may
be.
From
January to November 2007, the Company had a formal consulting agreement with MHC
Corporation (MHC), a company wholly owned by Mr. Mark Hlady. Under
the terms of the agreement, MHC provided Mr. Hlady to the Company to provide
services relating to those normally provided by a president and chief operating
officer of an oil and gas reporting issuer, including providing overall
leadership and direction in the creation, development and evolution of the
Company’s vision, business strategy and resultant business and operational
plans. During that period, MHC was paid CDN$5,000 per month for the
services that were provided by Mr. Hlady to the Company under the agreement, and
MHC was reimbursed by the Company for all reasonable expenses, including travel
and car mileage, incurred by Mr. Hlady, in connection with the services provided
thereunder, up until Mr. Hlady’s resignation as Chief Executive Officer of the
Company on December 1, 2007. No compensation to MHC Corporation has
been paid after this date.
On
September 1, 2005, the Company entered into a consulting agreement with Sicamous
Oil and Gas Consultants Ltd. (Sicamous), a company wholly owned by William S.
Tighe, the Chief Operating Officer and President of the Company, and his wife,
Diane Tighe. The agreement was terminated on December 31,
2007. Under the terms of the agreement, Sicamous provided Mr. Tighe
to the Company to provide services relating to those normally provided by a
president and chief operating officer of an oil and gas reporting issuer,
including providing overall leadership and direction in the creation,
development and evolution of the Company’s vision, business strategy and
resultant business and operational plans. Sicamous was paid
CDN$10,000.00 per month for the services that were provided by Mr. Tighe to the
Company under the agreement, and Sicamous was reimbursed by the Company for all
reasonable expenses, including travel and car mileage, incurred by Mr. Tighe, in
connection with the services provided thereunder. On January 1, 2008,
Mr. Tighe became an employee of the Company. Under the terms of the
employment agreement dated January 1, 2008, Mr. Tighe provided services relating
to those normally provided by a president and chief operating officer of an oil
and gas reporting issuer, including providing overall leadership and direction
in the creation, development and evolution of the Company’s vision, business
strategy and resultant business and operational plans. Mr. Tighe was
paid CDN$10,000.00 per month for the services that he provided to the Company
under the employment agreement, and Mr. Tighe was reimbursed by the Company for
all reasonable expenses, including travel and car mileage, incurred by Mr.
Tighe, in connection with the services provided thereunder.
On
January 3, 2007, the Company entered into a consulting agreement with William E.
Brimacombe, the Chief Financial Officer of the Company. Under the
terms of the agreement, Mr. Brimacombe has agreed to provide services relating
to those normally provided by chief financial officers of reporting issuers,
including preparing the financial statements and management’s discussion and
analysis for the Company. During 2007, Mr. Brimacombe was paid
CDN$100.00 per hour for services that was provided by him to the Company under
the agreement, and Mr. Brimacombe was reimbursed by the Company for all
reasonable expenses, including travel and car mileage, incurred by him in
connection with the services provided thereunder. Effective January
1, 2008, Mr. Brimacombe’s is paid CDN$110.00 per hour for services that are
provided by him to the Company under the agreement and a monthly vehicle
allowance of CDN$800.00, and Mr. Brimacombe is reimbursed by the Company for all
reasonable expenses, including travel and car mileage, incurred by him in
connection with the services provided thereunder. The agreement may
be terminated by any party upon thirty days written notice.
On April
1, 2007, the Company entered into a consulting agreement with Harbour Oilfield
Consulting Ltd. (Harbour), a company owned by Mr. Glenn Watt. Under
the terms of the agreement, Harbour provides Mr. Watt to the Company to provide
services relating to those normally provided by a vice president of operations
of an oil and gas reporting issuer, including providing overall direction and
guidance to the operational activities of the Company, identifying and leading
new business development opportunities, and interacting with management to
ensure the Company’s operational activities are aligned with Company goals and
policies. Harbour is paid CDN$10,000.00 per month for the services
that are provided by Mr. Watt to the Company under the agreement, and Harbour is
reimbursed by the Company for all reasonable expenses, including travel and car
mileage, incurred by Mr. Watt, in connection with the services provided
thereunder.
Director Compensation Table
The
following table summarizes compensation of the directors for the last completed
fiscal year.
|
Name
|
Fees
Earned
|
Stock
Awards
(1)
|
Option
Awards
(2)
|
Non-Equity
Incentive
Plan
Compensation
|
Change
in Pension Value and
Nonqualified
Deferred Compensation Earnings
|
All
Other
Compensation
|
Total
|
|
Peter
Schriber
|
-
|
-
|
$72,267
|
-
|
-
|
-
|
$72,267
|
|
Marvin
Jones
|
-
|
-
|
$72,267
|
-
|
-
|
-
|
$72,267
|
|
Glenn
Watt
(3)
|
-
|
-
|
$18,067
|
-
|
-
|
-
|
$18,067
|
|
|
(1)
|
No
stock awards were made during 2007, 2006 or 2005 to non-officer
directors.
|
|
|
(2)
|
This
is the estimated cost of stock options granted and calculated in
accordance with FAS 123R valuation
methods.
|
|
|
(3)
|
Mr.
Watt became Vice President, Operations of the Company as at April 1,
2007. Only his compensation to that date is shown in the above
Director Compensation Table.
|
During
the fiscal year ended December 31, 2007, the Company paid no cash compensation
(including salaries, director’s fees, commissions, bonuses paid for services
rendered, bonuses paid for services rendered in a previous year, and any
compensation other than bonuses earned by the directors for services rendered)
to the directors in their capacity as directors for services rendered except
that the Company reimburses the out-of-pocket expenses of its directors incurred
in connection with attendance at or participation in meetings of the board of
directors and other reasonable expenses, incurred by them in the exercise of
their duties.
Executive
officers of the Company, who also act as directors of the Company, do not
receive any additional compensation for services rendered in such capacity,
other than as paid by the Company to such executive officers in their capacity
as executive officers.
Compensation Committee Interlocks and Insider
Participation
During
the fiscal year ended December 31, 2007, our Compensation Committee consisted of
Messrs. Marvin Jones, Peter Schriber and Mark Hlady. During 2007, Mr.
Hlady was an officer and employee of the Company and its
subsidiaries. As at December 1, 2007, Mr. Hlady resigned as an
officer and employee of the Company. None of our executive officers
serves as a member of the Board of Directors or Compensation Committee of any
entity that has one or more executive officers serving on our Board of Directors
or Compensation Committee.
Compensation Committee Report on Executive
Compensation
The
below filed report of the Compensation Committee will not be deemed to be
‘‘soliciting material’’ or to be ‘‘filed’’ with the Securities and Exchange
Commission, nor shall such information be incorporated by reference in any of
our filings under the Securities Act of 1933 or the Securities and Exchange Act
of 1934, each as amended, except to the extent that we specifically so
incorporate the same be reference.
The
Compensation Committee of the Company has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
with management and, based upon such review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in this proxy statement.
|
|
THE
COMPENSATION COMMITTEE
|
|
|
|
|
|
Marvin
Jones, Chairman
|
|
|
Peter
Schriber
|
|
|
Mark
Hlady
|
OTHER INFORMATION
Executive Officers
The
following table sets forth the name, age and current office of our executive
officer who do not also serve on our Board of Directors. Following
the table are descriptions of all positions held by such individual and his
business experience for at least the past five years.
|
Name
|
|
Age
|
|
Title
|
|
William
E. Brimacombe
|
|
65
|
|
Chief
Financial Officer
|
William E. Brimacombe
is a
Canadian Chartered Accountant and since January 2007 has been our Chief
Financial Officer. From 2000 to 2006, Mr. Brimacombe was
Vice-President Finance of AltaCanada Energy Corp., a publicly traded Canadian
oil and gas company. Prior thereto, Mr. Brimacombe has over thirty
years financial experience working for a number of public and private oil and
gas companies with operations in Canada, the United States and other countries,
including experience as an independent financial consultant during the years
1988 to 2000. Mr. Brimacombe is a member of both the Canadian
Institute of Chartered Accountants and the Institute of Chartered Accountants of
Alberta.
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The
following table sets forth information as of September 16, 2008, with respect to
the beneficial ownership of our common stock by: (i) each person
(including any group) known to us to own more than 5% of our common stock, (ii)
each of our directors and each of our named executive officers, and (iii) our
named executive officers and directors as a group. Except as
otherwise indicated, all shares are owned directly and the percentage shown is
based on 110,023,998 shares of common stock issued and outstanding on September
16, 2008. We have no other class of equity securities
outstanding.
In
accordance with Item 401(d) of SEC Regulation S-K, there is a family
relationship between Bill Tighe and Glenn Watt, as Mr. Watt is married to Mr.
Tighe’s niece.
|
Name
of Beneficial Owner
|
Ownership
|
Options/Warrants
Exercisable Within 60 Days
|
Beneficial
Ownership
(1)
|
Percent
of Class
(2)
|
|
Executive Officers and
Directors
:
|
|
|
|
|
|
|
Mark
Hlady
|
3,400,000
|
66,666
|
3,466,666
|
|
3.15%
|
|
Peter
Schriber
|
3,000,000
|
66,666
|
3,066,666
|
|
2.79%
|
|
Marvin
Jones
|
380,000
|
66,666
|
446,666
|
|
*
|
|
William
S. Tighe
|
12,919,000
|
66,666
|
12,985,666
|
(3)
|
11.80%
|
|
Glenn
Watt
|
9,012,000
|
66,666
|
9,078,666
|
(4)
|
8.25%
|
|
William
E. Brimacombe
|
-
|
93,333
|
93,333
|
|
|
|
All
executive officers and directors
as a
group (6 persons)
|
28,711,000
|
426,633
|
29,137,663
|
|
26.38%
|
|
|
|
|
|
|
|
|
5%
stockholders
:
|
|
|
|
|
|
|
Thunder
River Energy Inc.
|
9,000,000
|
-
|
9,000,000
|
(5)
|
8.18%
|
|
(1)
|
Represents
sum of shares owned and shares that may be purchased upon exercise of
options exercisable within 60 days of September 16,
2008.
|
|
(2)
|
Any
securities not outstanding which are subject to options, warrants or
conversion privileges exercisable within 60 days of September 16,
2008, are deemed outstanding for the purpose of computing the percentage
of outstanding securities of the class owned by any person holding such
securities but are not deemed outstanding for the purpose of computing the
percentage of the class owned by any other person. Unless
otherwise noted, the persons identified in this table have sole voting and
investment power with regard to the shares beneficially
owned.
|
|
(3)
|
Includes
12,900,000 shares held by Sicamous Oil and Gas Consultants Ltd., a company
owned by Mr. Tighe and his wife, Diane
Tighe.
|
|
(4)
|
Includes
3,000,000 shares held by 697580 Alberta Ltd., a company wholly-owned by
Kathleen, Jana and Ryan Tighe, and of which Mr. Watt is the sole officer
and director.
|
|
(5)
|
Includes
2,000,000 shares held under address of P.O. Box 636, Station “M”, Calgary,
Alberta, T2J 2J3, Canada, and 7,000,000 shares held under address of c/o
Research Capital Corp., 199 Bay Street, Suite 4600, Commerce Court West,
Toronto, Ontario, M5L 1G2, Canada.
|
Equity Compensation Plan Information
The
following table sets forth certain information as of December 31, 2007,
about our equity compensation plans under which our equity securities are
authorized for issuance.
|
Plan
Category
|
|
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 column
(a))
|
|
Equity
compensation plans approved by security holders
|
|
2,035,000
|
|
$1.62
|
|
5,965,000
|
|
Equity
compensation plans not approved by security holders
|
|
-
|
|
-
|
|
-
|
|
Total
|
|
2,035,000
|
|
$1.62
|
|
5,965,000
|
See
Proposal 2 – Proposal to Amend the Kodiak Energy, Inc. Stock Option Plan, for a
summary of the Plan.
Compliance with Section 16(a) of the Securities Exchange
Act of 1934
Section
16(a) of the Exchange Act requires the Company's directors and named executive
officers, and persons who own more than 10% of the outstanding shares of the
Company's common stock, to file initial reports of beneficial ownership and
reports of changes in beneficial ownership of shares of common stock with the
SEC. Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based
solely upon reviews of Forms 3 and 4 and amendments thereto furnished to the
Company during the year ended December 31, 2007, Forms 5 and amendments thereto
furnished to the Company with respect to the year ended December 31, 2007, or
upon written representations received by the Company from certain reporting
persons that no Forms 5 were required for those persons, there were no late
filings by the officers and directors and other 10% holders of common stock,
except that a Form 3 for Mr. Brimacombe, Chief Financial Officer of the Company,
that should have been filed by January 9, 2007 was filed on January 19, 2007 and
a Form 4 for Mr. Schriber, a director of the Company, that should have been
filed in September 2006, was filed in January 2007.
THE
FOLLOWING REPORT OF THE AUDIT COMMITTEE SHALL NOT BE
DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SEC UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY SAID DOCUMENT SO FILED.
AUDIT
COMMITTEE REPORT
The
following is the report of the Audit Committee with respect to Kodiak Energy,
Inc.’s audited consolidated financial statements for the fiscal year ended
December 31, 2007.
The Audit
Committee has reviewed and discussed the Company’s audited consolidated
financial statements with management. The Audit Committee has
discussed with Meyers Norris Penny, the Company’s independent accountants, the
matters required to be discussed by Statement of Auditing Standards No. 61,
Communication with Audit Committees, which includes, among other items, matters
related to the conduct of the audit of the Company’s consolidated financial
statements. The Audit Committee has also received written disclosures
and the letter from Meyers Norris Penny required by Independence Standards Board
Standard No. 1, which relates to the auditor’s independence from the Company and
its related entities, and has discussed with Meyers Norris Penny their
independence from the Company.
Based on
the review and discussions referred to above, the Audit Committee recommended to
the Company’s Board of Directors that the Company’s audited consolidated
financial statements be included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2007.
|
|
AUDIT
COMMITTEE
Peter
Schriber, Chairman
Marvin
Jones
Glenn
Watt
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On
February 21, 2006, the Company retained Meyers Norris Penny as its new
independent registered public accounting firm. The Company had not
previously consulted with Meyers Norris Penny regarding any of the matters
specified in Item 304(a)(2) of Regulation S-K. Effective February 21,
2006, the Company dismissed Madsen & Associates as its independent
registered public accounting firm. The Company’s Board of Directors
participated in and approved the decision to change independent
accountants.
The
report of Madsen & Associates on the Company’s 2004 and 2003 financial
statements contained no adverse opinion, disclaimer of opinion or modification
of the opinion as to uncertainty, audit scope or accounting principles. The
audit report for the year ending March 31, 2004 and nine months ending December
31, 2004 contained a going concern note.
In
connection with its audits for the then two most recent fiscal years and review
of unaudited financial statements through September 30, 2005 and to February 21,
2006, there were no disagreements with Madsen & Associates, on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Madsen & Associates would have caused them to make reference thereto in
their report on the financial statements.
During
the then two most recent fiscal years and through February 21, 2006, there were
been no reportable events, as defined in Regulation S-K Item
304(a)(1)(v).
The
foregoing disclosures were previously reported in a Form 8-K/A that the Company
filed with the SEC on March 2, 2006. The Company provided Madsen
& Associates with a copy of the disclosure prior to the time the Form 8-K/A
was filed with the SEC, and requested that Madsen & Associates furnish the
Company a letter addressed to the SEC stating whether it agreed with the
statements made by the Company in the Form 8-K/A and, if not, stating the
respects in which it did not agree. A copy of the letter, dated
February 27, 2006, furnished by Madsen & Associates in response to that
request was filed as Exhibit 16.1 to the Form 8-K/A.
Independent Registered Public Accounting Firm’s
Fees
The
Company paid the following fees to Meyers Norris Penny to provide services that
were billed for the years ended December 31, 2007 and 2006 in the following
categories and amount:.
|
Fiscal
Year Ending
|
Audit
Fees
|
Audit
Related Fees
|
Tax
Fees
|
All
Other Fees
|
Total
Fees
|
|
2007
|
$161,829
|
$66,760
(1)
|
$0
|
$20,773
(3)
|
$249,362
|
|
2006
|
$131,974
|
$43,769
(2)
|
$0
|
$0
|
$175,743
|
|
(1)
|
2007
Audit Related Fees relate to independent audit testing of Sarbanes-Oxley
controls.
|
|
(2)
|
2006
Audit Related Fees relate to the review and accounting restatements for
December 31, 2005, March 31, 2006 and June 30,
2006.
|
|
(3)
|
2007
All Other Fees relate to fees in connection with the September 2007
financing and the December 2007 listing of the Company’s common shares on
the TSX-V Exchange in Canada.
|
Pre-Approval Policies and Procedures
In
accordance with Section 10A(i) of the Securities Exchange Act of 1934, before
the Company engages its independent accountant to render audit or non-audit
services, the engagement will be approved by the board of directors and the
audit committee. The Company’s audit committee approved all the fees
referred to in “Independent Registered Public Accounting Firm’s Fees” above
for 2006 and 2007.
The Audit
Committee has adopted procedures requiring the Audit Committee to review and
approve in advance of all particular engagements for services provided by the
Company’s independent auditor. Consistent with applicable laws, the
procedures permit limited amounts of services, other than audit, review or
attest services, to be approved by one or more members of the Audit Committee
pursuant to authority delegated by the Audit Committee, provided the Audit
Committee is informed of each particular service. All of the
engagements and fees for 2007 were pre-approved by the Audit Committee. The
Audit Committee reviews with Meyers Norris Penny LLP whether the non-audit
services to be provided are compatible with maintaining the auditor’s
independence. Permissible non-audit services will be limited to fees
for tax services, accounting assistance or audits in connection with
acquisitions, and other services specifically related to accounting or audit
matters.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other
than as set forth herein, the Company is not aware of any transaction, since the
beginning of the Company’s last fiscal year, or any currently proposed
transaction, in which the Company was or is to be a participant and the amount
involved exceeds $120,000, and in which any related person, as defined in
Section 404 of Regulation S-K, had or will have a direct or indirect material
interest.
The
charter of the Audit Committee of the Board of Directors requires the Audit
Committee to review and approve related party transactions and other potential
conflicts of interest situations where appropriate.
STOCKHOLDER PROPOSALS FOR THE 2009 ANNUAL MEETING
We must
receive stockholder proposals intended to be presented at our next annual
meeting of stockholders prior to June 2, 2009, to be considered for inclusion in
our proxy statement relating to that meeting. If we change the date
of our next annual meeting by more than 30 days from the date of this year’s
annual meeting, then the deadline is a reasonable time before we begin to print
and mail our proxy materials for the next annual meeting. You should
also be aware that your proposal must comply with SEC regulations regarding
inclusion of stockholder proposals in company-sponsored proxy
materials. Our Board of Directors will review any proposals from
eligible stockholders that it receives by that date and will determine whether
any such proposals will be included in our proxy solicitation
material.
DISCRETIONARY VOTING OF PROXIES
Pursuant
to Rule 14a-4 promulgated by the Securities and Exchange Commission,
stockholders are advised that the Company’s management will be permitted to
exercise discretionary voting authority under proxies it solicits and obtains
for the 2009 annual meeting of stockholders with respect to any proposal
presented by a stockholder at such meeting, without any discussion of the
proposal in the proxy statement for such meeting, unless the Company receives
notice of such proposal at its principal office, not later than September 14,
2009.
INCORPORATION BY REFERENCE
This
management information and proxy circular incorporates by reference certain
information included in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2007, including the audited financial statements and
supplementary data, management’s discussion and analysis of financial condition
and results of operations, and quantitative and qualitative disclosures about
market risk.
GENERAL
Our 2007
Annual Report on Form 10-K, containing audited consolidated financial statements
but without exhibits, accompanies this proxy statement. The Form 10-K
as filed with the SEC including exhibits is available on our website at
www.kodiakpetroleum.com
. Stockholders
may also obtain a copy of the Form 10-K, without charge, upon written request
to:
Kodiak
Energy, Inc.
Attention: Chief
Financial Officer
Suite
460, 734 – 7 Avenue S.W.
Calgary,
Alberta T2P 3P8
Fax: +1
(403) 513-2670
As of the
date of this proxy statement, our Board of Directors knows of no business that
will be presented for consideration at the Annual Meeting other than the matters
stated in the accompanying Notice of Annual Meeting of Stockholders and
described in this proxy statement. If, however, any matter incident
to the conduct of the Annual Meeting or other business properly comes before the
meeting, the persons acting under the proxies intend to vote with respect to
those matters or other business in accordance with their best judgment, and the
proxy includes discretionary authority to do so.
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
Mark
Hlady
Chairman
|
Calgary,
Alberta
October
28, 2008
APPENDIX A
AUDIT
COMMITTEE CHARTER
The
purpose of the Audit Committee (the “Committee”) of the Board of Directors (the
“Board”) of Kodiak Energy, Inc. (“Kodiak” or the “Company”) is to assist the
Board with its duties and responsibilities in supervising the Company’s audit
and reporting requirements. The Committee shall:
|
|
a)
|
Monitor
the integrity of the Company’s financial statements and reporting
system;
|
|
|
b)
|
Ensure
that the Company complies with legal and regulatory
requirements;
|
|
|
c)
|
Monitor
the independent auditors’ qualifications and
independence;
|
|
|
d)
|
Monitor
the performance of the Company’s internal auditors and independent
auditors;
|
|
|
e)
|
Monitor
the Company’s corporate risk exposure and the procedures the Company has
undertaken to monitor, control, and report corporate
risk;
|
|
|
f)
|
Monitor
the business practices and ethical standards of the Company;
and
|
|
|
g)
|
Perform
such other duties and responsibilities as the Board shall approve and
assign to the Committee.
|
The
Company’s independent auditors shall report directly to the Committee but the
independent auditors are ultimately accountable to the Board, as representatives
of the Company’s shareholders.
2.1 Members
The
Committee shall consist of three or more directors, who shall be appointed by
the Board and may be removed by the Board. All members of the Committee
shall have the necessary education and experience to read and understand the
Company’s financial statements. At least one member should be an “audit
committee financial expert,” as defined by the Securities and Exchange
Commission (“SEC”). All members of the Committee shall be independent (as
defined by Section 10A(m)(3) of the Securities Exchange Act of 1934 and
regulations promulgated thereunder), and shall fulfill the independence
requirements of the listing standards of the Toronto Stock Exchange – Venture
Exchange (“TSX-V”). The Chair of the Committee shall be designated by the
Board.
Committee
members may not simultaneously serve on the audit committees of more than three
public companies, including the Company, unless the Board determines that such
simultaneous service does not impair the ability of such member to effectively
serve on the Committee.
APPENDIX
A
2.2 Operation
The
Committee shall be provided the resources necessary to satisfy its
responsibilities, including the authority to institute special investigations
and engage independent counsel, independent auditors and other advisors, as the
Committee deems necessary at a reasonable cost within budgeted amounts.
The Committee shall have complete access to company management and the
records of the Company.
The Board
believes the duties and responsibilities of the Committee should remain flexible
in order to best react to changing conditions and to enable it to assure that
the Company’s financial systems and reporting practices are in accordance with
all legal and regulatory requirements and are of the highest quality. The
Committee is therefore authorized to take such further actions as are consistent
with the following described functions and to perform such other actions as
required by law, the listing standards of the TSXV, the Company’s charter
documents and the Board.
|
|
a)
|
Meetings.
The Committee shall meet a minimum of four times per year and shall
periodically meet separately with:
|
|
|
(i)
|
Management;
|
|
|
(ii)
|
Internal
auditors of the Company; and
|
|
|
(iii)
|
The
Company’s independent auditors.
|
The
Committee shall meet in person or telephonically at such times and at such
places determined by the Committee Chair, and may act by unanimous written
consent.
|
|
b)
|
Quorum.
A majority of the members of the Committee, but in no event less
than two members, shall constitute a quorum for the meetings of the
Committee.
|
|
|
c)
|
Record
Keeping. The Committee Chair shall be responsible for establishing
the agenda for a Committee meeting and the agenda shall be distributed to
the Committee members prior to each meeting. Minutes of all meetings shall
be prepared and submitted for approval at a subsequent Committee
meeting.
|
|
|
d)
|
Charter.
The Committee shall annually review and assess the adequacy of this
Charter and conduct a self-evaluation of the Committee and its
activities.
|
APPENDIX
A
|
3.
|
Duties
and Responsibilities
|
The
Committee shall perform the following duties and responsibilities:
|
|
a)
|
Directly
select, appoint, compensate, evaluate and where appropriate, terminate and
replace the Company’s independent auditors, subject to Board
approval;
|
|
|
b)
|
Annually
obtain and review a report by the independent auditors
describing:
|
|
|
•
|
the
Company's internal control procedures;
|
|
|
•
|
any
material issue raised by the most recent internal control review, or peer
reviews of the Company; and
|
|
|
•
|
any
inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent audits
carried out by the firm, and any steps taken to deal with any such
issues;
|
|
|
c)
|
Review
the competence of partners and managers of the independent auditors who
lead the audit;
|
|
|
d)
|
Take
appropriate action to ensure that the independent auditors are independent
prior to their appointment and oversee the independence of the auditors
throughout the engagement; receive from the independent auditors a formal
written statement delineating all relationships between the independent
auditors and the Company; engage in a dialogue with the independent
auditors with respect to any disclosed relationships or services that may
impact the objectivity and independence of the auditor, as well as any
other matters which could affect the independence of the
auditors;
|
|
|
e)
|
Evaluate
the independent auditors' qualifications, performance and independence
and, prior toe-appointment, present this evaluation to the
Board;
|
|
|
f)
|
Pre-approve
all permissible non-audit services and all audit, review or attestation
engagements with the independent auditors and review the scope of audit
and non-audit services provided to the Company and its subsidiaries by the
independent auditors and the fees for such
services;
|
|
|
g)
|
Approve
all the engagement fees and terms of the independent auditors, including
the scope of the audit of the financial statements of the Company and its
subsidiaries; review and approve the independent auditors’ engagement
letters; direct the attention of the independent auditors to specific
matters or areas deemed by the Committee to be of special significance to
the Company and its subsidiaries; and authorize such auditors to perform
such supplemental reviews or audits as the Committee may deem necessary or
appropriate;
|
APPENDIX
A
|
|
h)
|
Receive
from the independent auditors, prior to the filing of its audit report, a
report concerning all matters required to be communicated by the
independent auditors to the Committee under auditing standards generally
accepted in the United States of America or the SEC rules and
regulations;
|
|
|
i)
|
Review
results of the audit with independent auditors, the Chief Executive
Officer, the Chief Financial Officer and the
Controller;
|
|
|
j)
|
Regularly
review with the independent auditors any audit problems or difficulties
and management’s response, including difficulties encountered in the
course of the audit work; any restrictions on the scope of the independent
auditors’ activities or on access to requested information; and any
significant disagreements with
management;
|
|
|
k)
|
Review
the Company’s significant accounting principles and policies and any
significant changes thereto; review proposed and implemented changes in
accounting standards and principles which have or may have a material
impact on the Company’s financial statements; review any material
correcting adjustments and off-balance sheet financings and relationships,
if any; review significant management judgments and accounting estimates
used in financial statement preparation; and review the accounting for
significant corporate transactions;
|
|
|
l)
|
Review
the adequacy of the Company’s system of internal controls over financial
reporting, including the reliability of its financial reporting systems;
confer with the Company’s internal and independent auditors with respect
to their consideration of such controls and systems; and review
management’s response to any significant deficiencies and material
weaknesses in the Company’s internal controls over financial reporting
which are reasonably likely to adversely affect the issuer’s ability to
record, process, summarize and report financial
data;
|
|
|
m)
|
Receive
reports from the Chief Executive Officer and Chief Financial Officer
related to their certifications for the Forms 10-K and 10-Q, including all
significant deficiencies in the design or operations of internal control
and financial reporting and any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company’s internal control and financial
reporting;
|
|
|
n)
|
Resolve
any disagreements or difficulties between the independent auditors and
management;
|
|
|
o)
|
Review
and discuss the annual audited financial statements and quarterly
financial statements with management and the independent auditors,
including the Company’s specific disclosures under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
and the notes thereto which are included in the Company’s annual report on
Form 10-K and quarterly reports on Form 10-Q; review the independent
auditors’ letter delivered in connection with their audit of the annual
financial statements to the Company and its
subsidiaries;
|
APPENDIX
A
|
|
p)
|
Review
and recommend approval of earnings press
releases;
|
|
|
q)
|
Discuss
policies with respect to risk assessment and risk management related to
the Company’s major financial risk exposures and the steps management has
taken to monitor and control such
exposures;
|
|
|
r)
|
Establish
formal procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls
or auditing matters; the confidential, anonymous submission by Company
employees of concerns regarding questionable accounting or auditing
matters, and the protection of reporting employees from
retaliation;
|
|
|
s)
|
Review
and oversee related party transactions and other potential conflicts of
interest situations where
appropriate;
|
|
|
t)
|
Prepare
the Committee report for the Company’s annual proxy statement as required
by the rules of the SEC;
|
|
|
u)
|
Periodically
review the Company’s policies with respect to conflicts of interest and
ethical conduct and recommend to the Board any changes in these policies
that the Committee deems appropriate;
and
|
|
|
v)
|
Review
annually the Company’s Code of Business Conduct and Ethics and Foreign
Corrupt Practices Act policy.
|
The
Committee shall report to and review with the Board not less than once each
year, any issues that arise with respect to:
|
|
a)
|
The
quality or integrity of the Company’s financial statements and reporting
system;
|
|
|
b)
|
The
Company’s compliance with legal or regulatory
requirements;
|
|
|
c)
|
The
performance and independence of the Company’s independent auditors or the
performance of the internal audit function;
and
|
|
|
d)
|
All
other significant issues which arise in the course of performing its
responsibilities.
|
The
Committee shall make recommendations for action by the full Board when
appropriate.
APPENDIX B
KODIAK
ENERGY, INC. STOCK OPTION PLAN, as Amended
The
purpose of the Stock Option Plan (the “Plan”) of Kodiak Energy, Inc. (herein
called the “Corporation”) is to advance the interests of the Corporation
by:
|
1.1.1.
|
providing
Eligible Persons with additional
incentive;
|
|
1.1.2.
|
encouraging
stock ownership by such Eligible
Persons;
|
|
1.1.3.
|
increasing
their proprietary interest in the success of the
Corporation;
|
|
1.1.4.
|
encouraging
them to remain with the Corporation or its Subsidiaries;
and
|
|
1.1.5.
|
attracting
new employees, officers and
directors.
|
Options
issued under this Plan will not be Incentive Stock Options under Internal
Revenue Code Section 422.
The Plan
shall be administered by the board of directors of the Corporation (the
“Board”). Subject to the limitations of the Plan, the Board shall
have the authority to:
|
1.2.1.
|
grant
options (“Options”) to acquire shares of common stock of the Corporation
(the “Common Shares”) to Eligible
Persons;
|
|
1.2.2.
|
determine
the terms, limitations, restrictions and conditions upon such
grants;
|
|
1.2.3.
|
interpret
the Plan and to adopt, amend and rescind such administrative guidelines
and other rules and regulations relating to the Plan as it shall from time
to time deem advisable; and
|
|
1.2.4.
|
make
all other determinations and to take all other actions in connection with
the implementation and administration of the Plan as it may deem necessary
or advisable. The Board’s guidelines, rules, regulations, interpretations
and determinations shall be conclusive and binding upon the Corporation
and all other persons.
|
No Option
shall be granted under the Plan unless recommended and approved by the
Board.
APPENDIX
B
For the
purposes of the Plan, the following terms shall have the following
meanings:
|
1.3.1.
|
“Code”
means the United States Internal Revenue Code of 1986, as
amended;
|
|
1.3.2.
|
“Eligible
Person” means a director, senior officer or employee of, or a consultant
or any other person providing services to, the Corporation or of any
Subsidiary pursuant to a written
contract;
|
|
1.3.3.
|
“Exchange”
means any stock exchange or exchanges on which the common shares of the
Corporation are then listed and any other regulatory body having
jurisdiction hereinafter;
|
|
1.3.4.
|
“Exercise
Price” has the meaning ascribed thereto in Section
2.3;
|
|
1.3.5.
|
“Fair
Market Value” means, subject to applicable Exchange requirements, the
greater of the ten day weighted average calculation up to and including
the last closing price for Common Shares on the OTC Bulletin Board or the
Exchange or if the Common Shares are not listed or admitted to trading on
any exchange, as determined by any other appropriate method selected by
the Board.
|
|
1.3.6.
|
“Insider”
if used in relation to the Corporation,
means:
|
|
|
1.3.6.1.
|
A
director, executive or senior officer of the
Corporation,
|
|
|
1.3.6.2.
|
A
director, executive or senior officer of a company that is an Insider or
subsidiary of the Corporation,
|
|
|
1.3.6.3.
|
A
person that beneficially owns or controls, directly or indirectly, voting
shares carrying more than 10% of the voting rights attached to all
outstanding voting shares of the Corporation,
or
|
|
|
1.3.6.4.
|
The
Corporation itself if it holds any of its own
securities.
|
|
1.3.7.
|
“Participant”
means an Eligible Person to whom Options have been
granted;
|
|
1.3.8.
|
“Subsidiary”
means any company that is a subsidiary of the Corporation as defined in
Section 424(f) of the Code;
|
|
1.3.9.
|
“Underlying
Share” means a Common Share issuable upon the exercise of an Option;
and
|
APPENDIX
B
|
1.3.10.
|
“Year”
with respect to any Option granted under the Plan means the period of 12
months commencing on the date of the granting of such Option or on any
anniversary thereof.
|
Words
importing the singular number only shall include the plural and vice versa and
words importing the masculine shall include the feminine.
The Plan
and all matters to which reference is made herein shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
All
shares of the Corporation issued under the Plan shall be Common Shares in the
capital stock of the Corporation. Options may be granted in respect
of authorized and unissued Common Shares.
The
maximum number of Common Shares which may be reserved for issuance under the
Plan shall be 8,000,000, which number is subject to adjustment in accordance
with the provisions of the Plan.
The
number of Underlying Shares subject to an option granted to any one Participant
shall be determined by the Board, but no one Participant shall be granted an
option which exceeds the maximum number permitted by the Exchange.
The
aggregate number of Common Shares with respect to which Options may be granted
to any one person (together with their associates) under this Plan, together
with all other incentive plans of the Corporation in any one year:
|
|
a)
|
shall
not exceed 500,000 Common Shares;
|
|
|
b)
|
shall
not exceed 2% of the total number of Common Shares outstanding;
and
|
|
|
c)
|
for
investor relations employees or consultants, in aggregate with all other
persons employed to provide investor relations activities, shall not
exceed 2% of the total number of common shares
outstanding.
|
Any
Common Shares subject to an Option that for any reason expires without having
been exercised shall again be available for grants under the Plan. No
fractional shares shall be issued, and the Board may determine the manner in
which fractional share value shall be treated.
In the
event of any change in the outstanding Common Shares by reason of any stock
dividend or split, recapitalization, merger, arrangement, consolidation,
combination or exchange of shares, or other corporate change, or in the event of
any issue of rights pursuant to a shareholder rights plan or other similar plan,
the Board shall make, subject to the prior approval of any relevant stock
exchange, appropriate substitution or adjustment in:
|
|
a)
|
the
number or kind of shares or other securities reserved for issuance
pursuant to the Plan; and
|
|
|
b)
|
the
number and kind of shares subject to unexercised Options theretofore
granted and in the Exercise Price of such Options; provided, however, that
no substitution or adjustment shall obligate the Corporation to issue or
sell fractional shares.
|
In the
event of the reorganization of the Corporation or the amalgamation, merger or
consolidation of the Corporation with another corporation, or the payment of a
special or extraordinary dividend, the Board may make such provision for the
protection of the rights of Participants as the Board in its sole discretion
deems appropriate.
Nothing
contained herein shall prevent the Corporation from adopting other or additional
compensation arrangements, subject to any required approval.
|
1.8.
|
Amendment
and Termination
|
No Option
shall be granted hereunder after October 31, 2015; provided, however, that the
Board may at any time prior to that date amend, suspend or terminate the Plan or
any portion thereof. No such amendments, suspension or termination
shall alter or impair any Options or any rights pursuant thereto granted
previously to any Participant without the consent of such
Participant. Any reduction in the exercise price of Options held by
Insiders at the time of the proposed amendment requires disinterested
shareholder approval. In the event of termination of the Plan, the
provisions of the Plan and any administrative guidelines, and other rules and
regulations adopted by the Board and in force at the time of the Plan
termination shall continue in effect during such time as an Option or any rights
pursuant thereto remain outstanding.
|
1.9.
|
Compliance
with Legislation
|
The Board
may postpone the exercise of any Option or the issue of any Underlying Shares
pursuant to the Plan for such time as the Board in its discretion may deem
necessary in order to permit the Corporation to effect or maintain registration
of the Plan or the Common Shares issuable pursuant thereto under the securities
laws of any applicable jurisdiction, or to determine that such shares and the
Plan are exempt from such registration. The Corporation shall not be
obligated by any provision of the Plan or grant thereunder to sell or issue
Common Shares in violation of the law of any government or exchange having
jurisdiction therein. In addition, the Corporation shall have no
obligation to issue any Common Shares pursuant to the Plan unless such Common
Shares shall have been duly listed, upon official notice of issuance, with a
stock exchange on which such Common Shares are listed for trading.
APPENDIX
B
All
benefits, rights and options accruing to any Participant in accordance with the
terms and conditions of the Plan shall not be transferable or assignable unless
specifically provided herein or to the extent, if any, permitted by the
Exchange. During the lifetime of a Participant any benefits, rights
and options may only be exercised by the Participant.
Subject
to compliance with applicable requirements of the Exchange, Participants may
elect to hold options granted to them in an incorporated entity wholly owned by
them and such entity shall be bound by the Plan in the same manner as if the
options were held by the Participant.
|
1.11.
|
Acceleration
of Exercisability of Options upon Occurrence of Certain
Events
|
In
connection with any merger, arrangement or consolidation which results in the
holders of the outstanding voting securities of the Corporation (determined
immediately prior to such merger or consolidation) owning, directly or
indirectly, less than a majority of the outstanding voting securities of the
surviving corporation (determined immediately following such merger or
consolidation), or any sale or transfer by the Corporation of all or
substantially all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Corporation, each Option
granted under the Plan to each director and officer of the Corporation; or at
the discretion of the Board, any other Eligible Person, shall become exercisable
in full or part, notwithstanding any other provision of the Plan or of any
outstanding Options granted thereunder, on and after:
|
|
a)
|
the
fifteenth day prior to the effective date of such merger, arrangement,
consolidation, sale, transfer or acquisition
or
|
|
|
b)
|
the
date of commencement of such tender offer or exchange offer, as the case
may be.
|
|
1.12.
|
Stock
Exchange Rules
|
All
options granted pursuant to this Plan shall be subject to rules and policies of
the Exchange.
APPENDIX
B
Subject
to the provisions of the Plan, the Board shall have the authority to determine
the limitations, restrictions and conditions, if any, in addition to those set
forth in Section 3 hereof, applicable to the exercise of an Option, including,
without limitation, the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of the Underlying Shares, and the
nature of the events, if any, and the duration of the period in which any
Participant’s rights in respect of the Underlying Shares may be
forfeited. An Eligible Person may receive Options on more than one
occasion under the Plan and may receive separate Options on any one
occasion. At the date of grant of any option hereunder, the Eligible
Person must be a bona fide director, officer, employee, consultant (or other
person providing services) of the Corporation or its Subsidiaries.
No person
entitled to exercise any option granted under the Plan shall have any of the
rights or privileges of a shareholder of the Corporation in respect of any
Underlying Shares until certificates representing such Underlying Shares shall
have been issued and delivered.
The
exercise price of the Underlying Shares (the “Exercise Price”) subject to each
option shall be determined by the Board, subject to applicable Exchange
approval, at the time any option is granted. In no event shall such
exercise price be lower than the Fair Market Value.
Once the
exercise price has been determined by the Board, accepted by the Exchange and
the option has been granted, the exercise price of an option may be reduced upon
receipt of Board approval, provided that in the case of options held by insiders
of the Corporation (as defined in the policies of the Exchange), the exercise
price of an option may be reduced only if disinterested shareholder approval is
obtained.
The
Exercise Price shall be subject to adjustment in accordance with the provisions
of Section 1.6 hereof.
APPENDIX
B
The
following shall apply to the exercise of all options:
|
|
a)
|
Options
shall not be exercisable later than 5 years after the date of
grant. In no circumstances shall the duration of an Option
exceed the maximum term permitted by the
Exchange.
|
|
|
b)
|
The
Board may determine when any Option shall become exercisable and may
determine that the Option can be exercisable in
installments. Options granted to consultants performing
investor relations activities will contain vesting provisions such that
vesting occurs over at least 12 months with no more than 3/4 of the
options vesting in any 3 month
period.
|
Except as
otherwise determined by the Board:
|
|
a)
|
If
a Participant ceases to be an Eligible Person as a result of termination
for cause (as such term is defined at common law), no Option held by such
Participant may be exercised following the date on which such Participant
ceased to be an Eligible Person;
|
|
|
b)
|
If
a Participant ceases to be an Eligible Person for any reason other than
termination for cause or death, any vested Option held by such Participant
may continue be exercised by the Participant to and until the earlier of
the applicable expiration of the option period in respect of such Option
and 90 days after the date on which such Participant ceases to be an
Eligible Person. In the case of a Participant engaged in
investor relations activities, 90 shall be changed to 30
days.
|
|
|
c)
|
In
the event of death, the heirs, administrators or legal representatives of
a Participant may exercise the Participant’s Options within twelve months
after the date of the Participant’s death to the extent such Options were
by their terms exercisable prior to his death or within the period of
twelve months following his death; but for greater certainty no Option
shall be exercisable after its stated termination date. In the event that
the heirs, administrators or legal representatives of a Participant who
has died exercises the Participant’s Option in accordance with the terms
of the Plan, the Corporation shall have no obligation to issue the Common
Shares until evidence satisfactory to the Corporation has been provided by
such heirs, administrators or legal representatives that such heirs,
administrators or legal representatives are entitled to acquire the Common
Shares under the Plan.
|
APPENDIX
B
Except as
provided in paragraph (C) above, or as otherwise provided in the applicable
Option Agreement, during the lifetime of a Participant, Options held by such
Participant shall be exercisable only by him and no Option shall be transferable
other than by will or the laws of descent and distribution.
Each
Option shall be confirmed by an agreement executed by the Corporation and by the
Participant. In the case of employees or consultants of the
Corporation or Subsidiary, the option agreements to which they are party must
contain a representation of the Corporation that such employee or consultant, as
the case may be, is a bona fide employee or consultant of the Corporation or its
Subsidiaries.
If, as
and when any Common Shares have been duly issued upon the exercise of an Option
and in accordance with the terms of such Option and the Plan, such Underlying
Shares shall be conclusively deemed allotted as fully paid and non-assessable
shares of the Corporation.
Subject
to any vesting restrictions imposed by the Board, options may be exercised in
whole or in part at any time and from time to time during the option
period. To the extent required by the Exchange, no options may be
exercised under this Plan until this Plan has been approved by a resolution duly
passed by the shareholders of the Corporation. However, Options may
not be exercised for fewer than 1,000 Common Shares at any one time, unless the
Participant holds Options for less than 1,000 Underlying Shares.
The
exercise of any option will be contingent upon receipt by the Corporation at its
head office of a written notice of exercise, specifying the number of Underlying
Shares with respect to which the option is being exercised, accompanied by cash
payment, certified cheque or bank draft for the full purchase price of such
Underlying Shares with respect to which the option is exercised. No
Participant or his legal representatives, legatees or distributees will be, or
will be deemed to be, a holder of any common shares of the Corporation unless
and until the certificates for Underlying Shares issuable pursuant to options
under the Plan are issued to him or them under the terms of the
Plan.
|
3.3
|
Proceeds
from Sale of Shares
|
The
proceeds from the sale of Shares issued upon the exercise of options shall be
added to the general funds of the Corporation and shall thereafter be used from
time to time for such corporate purposes as the Board may
determine.
APPENDIX
B
The
ability of a Participant to exercise options and the obligation of the
Corporation to issue and deliver Underlying Shares in accordance with the Plan
is subject to any approvals which may be required from shareholders of the
Corporation and any regulatory authority or stock exchange having jurisdiction
over the securities of the Corporation. If any Underlying Shares
cannot be issued to any Participant for whatever reason, the obligation of the
Corporation to issue such Underlying Shares shall terminate and any option
exercise price paid to the Corporation will be returned to the
Participant.
The
amended Plan was approved by the Board of Directors on October 9, 2008
,
and is anticipated to be
approved by the stockholders of the Corporation at its next annual meeting of
shareholders. Prior to receipt of stockholder approval, no options
granted to any person under this plan may be exercised.
It shall
be a condition to the obligation of the Corporation to issue Common Shares upon
exercise of an Option that the Participant (or any beneficiary, transferee or
person entitled to act under paragraph 3.1(E) hereof) pay to the Corporation,
upon its demand, such amount as may be requested by the Corporation for the
purpose of satisfying any liability to withhold federal, state or local income
or other taxes. If the amount requested is not paid, the Corporation may refuse
to issue such Common Shares.
|
5.2.
|
Issuance
of Certificates; Legends
|
Common
Shares duly acquired under the terms of an Option shall be registered in the
name of the Participant and a share certificate representing the number of such
Common Shares shall be issued in the name of the Participant, his or her legal
representatives or as he, she or they may direct. The Corporation may
endorse such legend or legends upon the certificates for Common Shares issued
upon the exercise of an Option granted hereunder and may issue such “stop
transfer” instructions to its transfer agent in respect of such shares as, in
its absolute discretion, it determines to be necessary or
appropriate.
|
5.3.
|
Correction
of Defects, Omissions and
Inconsistencies
|
The Board
may correct any defect, supply any omission, or reconcile any inconsistency in
this Plan in the manner and to the extent it shall deem desirable to carry this
Plan into effect, subject to applicable regulatory approval if any.
APPENDIX
B
Nothing
contained in this Plan shall be construed to limit the authority of the
Corporation to exercise its corporate rights and powers, including but not by
way of limitation, the right of the Corporation to grant Options for proper
corporate purposes other than under the Plan with respect to any other person,
firm, corporation or association.
APPENDIX C
STATE
OF DELAWARE
CERTIFICATE
OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Kodiak
Energy, Inc., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the “Corporation”), does
hereby certify:
FIRST
: That at a meeting
of the Board of Directors of the Corporation, resolutions were duly adopted
setting forth a proposed amendment of the Certificate of Incorporation of the
Corporation, declaring said amendment to be advisable and calling a meeting of
the stockholders of the Corporation for consideration thereof. The
resolution setting forth the proposed amendment is as follows:
RESOLVED
, that the Certificate
of Incorporation of the Corporation be amended by changing the Article
thereof numbered “FOURTH” so that, as amended, said Article shall be and read as
follows:
“FOURTH
: The total
number of shares of stock of all classes which the Corporation shall have
authority to issue is 310,000,000 shares, of which 300,000,000 shares shall be
Common Stock, $.001 par value (“Common Stock”) and
10,000,000 shares shall be Preferred Stock, $.001 par value
(“Preferred Stock”).
|
1.
|
Preferred
Stock may be issued from time to time in one or more
series. Authority is hereby expressly granted to the Board of
Directors of the Corporation, subject to the provisions of this Article
FOURTH and to the limitations prescribed by law, to authorize the issue of
one or more series of Preferred Stock and, by filing a certificate
pursuant to the applicable law of the State of Delaware (the “Preferred
Stock Designation”), to establish with respect to each such series the
voting powers, full or limited, if any, of the shares of such series and
the designations, preferences, and relative, participating, optional, or
other special rights and the qualifications, limitations, or restrictions
thereof. The authority of the Board of Directors with respect
to each series shall include but not be limited to the determination or
fixing of the following:
|
|
|
(a)
|
The
designation of such series.
|
|
|
(b)
|
The
number of shares of the series, which number the Board of Directors may
thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease (but not below the number of shares
thereof then outstanding).
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|
|
(c)
|
The
dividend rate of such series, the conditions and dates upon which such
dividends shall be payable, the relation which such dividends shall bear
to the dividends payable on any other class or classes of stock, and
whether such dividends shall be cumulative or
noncumulative.
|
APPENDIX
C
|
|
(d)
|
Whether
the shares of such series shall be subject to redemption by the
Corporation and, if made subject to such redemption, the times, prices,
and other terms and conditions of such
redemption.
|
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(e)
|
The
terms and amount of any sinking fund provided for the purchase or
redemption of the shares of such
series.
|
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(f)
|
Whether
or not the shares of such series shall be convertible into or exchangeable
for shares of any other class or classes or of any other series of any
class or classes of stock of the Corporation, and, if provision be made
for conversion or exchange, the times, prices, rates, adjustments, and
other terms and conditions of such conversion or
exchange.
|
|
|
(g)
|
The
extent, if any, to which the holders of the shares of such series shall be
entitled to vote with respect to the election of directors or
otherwise.
|
|
|
(h)
|
The
restrictions, if any, on the issue or reissue of any additional Preferred
Stock.
|
|
|
(i)
|
The
rights of the holders of the shares of such series upon the dissolution
of, or upon the distribution of assets of, the
Corporation.
|
|
2.
|
The
Common Stock shall be subject to the express terms of the Preferred Stock
and any series thereof. Except as may otherwise be provided in
this Certificate of Incorporation, in a Preferred Stock Designation or by
applicable law, the holders of shares of Common Stock shall be entitled to
one vote for each such share upon all questions present to the
stockholders, the Common Stock shall have the exclusive right to vote for
the election of directors and for all other purposes, and holders of
Preferred Stock shall not be entitled to vote at or receive notice of any
meeting of stockholders.
|
|
3.
|
No
holder of stock of any class of the Corporation shall have, as such
holder, any preemptive or preferential right of subscription to any stock
of any class of the Corporation or to any obligations convertible into
stock of the Corporation, issued or sold, or to any right of subscription
to, or to any warrant or option for the purchase of any thereof, other
than such (if any) as the Board of Directors of the Corporation, in its
discretion, may determine from time to
time.
|
|
4.
|
The
Corporation may from time to time issue and dispose of any of the
authorized and unissued shares of Common Stock or of Preferred Stock for
such consideration not less than its par value, as may be fixed from time
to time by the Board of Directors, without action by the
stockholders. The Board of Directors may provide for payment
therefore to be received by the Corporation in cash, property, or
services. Any and all such shares of the Common Stock or
Preferred Stock of the Corporation the issuance of which has been so
authorized, and for which consideration so fixed by the Board of Directors
has been paid or delivered, shall be deemed fully paid stock and shall not
be liable to any further call or assessment
thereon.”
|
APPENDIX
C
SECOND
: That thereafter,
pursuant to resolution of its Board of Directors, a meeting of the stockholders
of the Corporation was duly called and held upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware at which
meeting the necessary number of shares as required by statute were voted in
favor of the amendment.
THIRD
: That said
amendment was duly adopted in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF
, the
Corporation has caused this certificate to be signed this____________ day of
____________, 2008.
|
|
By:
|
|
|
|
|
Authorized
Officer
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Print
or Type
|
APPENDIX D
CANADIAN
DISCLOSURE REQUIREMENTS
Some
of the following information is contained throughout the main body of the Proxy
Statement and presented in a different format. Canadian securities
laws require certain other information to be presented in accordance with
National Instruments 52-102 and 58-101 and Multilateral Instrument
52-110. The additional Canadian disclosure is presented
below.
Election
of Directors
The following table sets forth the name
of each of the persons proposed to be nominated for election as a director, all
positions and offices in the Company presently held by him, his municipality of
residence, his principal occupation at the present and during the preceding five
years, the period during which he has served as a director, and the number of
voting Common Shares of the Company that he has advised are beneficially owned
by him, directly or indirectly, or over which control or direction is exercised,
as of the Record Date.
Unless otherwise directed, it is the
intention of the Management Designees to vote proxies in the accompanying form
in favour of the ordinary resolution and the election of nominees hereinafter
set forth, as a group, as directors for the ensuing year.
APPENDIX
D
|
Name
and Municipality of Residence
|
Directorship
and First and Last Position Held (Date Appointed Director and/or
Officer)
|
Principal
Occupation During Past Five Years
|
Approximate
Number and Percentage of Kodiak Shares Held or Controlled
(3)
|
|
Peter Schriber
(
1)
(2
)
Gotthardstrase
38
ch-8002
Zurich,
Switzerland
Age
– 66
|
Director
(November
28, 2005)
|
Mr.
Schriber is currently and has been for the last five years self employed
as an independent financial consultant to various Canadian and
international investment firms and private clients.
|
3,000,000
(2.73%)
|
|
Marvin Jones
(
1)
(2
)
4,
1901 Varsity Estates Drive N.W.,
Calgary,
Alberta,
T3B
4T7, Canada
Age
– 71
|
Director
(April
24, 2006)
|
Mr.
Jones has more than forty-five years of North American and international
oil and gas experience. The last thirty years of Mr. Jones’
career was at the management level in oil and gas drilling and services
industries. Mr. Jones is a past President of Trinidad Drilling
Ltd., a past Vice President of Challenger International Services (supplier
of new and used drill pipe, related down hole tubulars and accessories),
and a past Vice President of Thomson Industries (an oil and gas service
company). He is a recipient of the Canadian Association of
Oilwell Drilling Contractors’ (CAODC) Honorary Life Membership Award and
is a past President of the CAODC.
|
380,000
(Less
than 1%)
|
|
William
S. Tighe
245
Citadel Way N.W.,
Calgary,
Alberta,
T3G
4W8, Canada
Age
– 57
|
President,
Chief Operating Officer, Director (September 19, 2005)
Chief
Executive Officer (December 1, 2007)
|
Since
2005, and after resigning from Suncor Energy Inc., Mr. Tighe has primarily
focused on developing Kodiaks’ business interests. In 2004, Mr.
Tighe acted as Business Services Manager, Growth Planning and Development,
for Suncor Energy Inc., a publicly traded oil and gas
exploration and development company. From 2000 until 2004, Mr.
Tighe worked for Petro China International, a company engaged in the
business of oil and gas exploration and development in Indonesia, as
Operations Development and Commissioning Manager.
|
12,919,000
(4)
(11.74%)
|
|
Glenn Watt
(1)
3405
– 15 Street S.W.,
Calgary,
Alberta,
T2T
5X3, Canada
Age
– 34
|
Vice
President, Operations (April 1, 2007)
Director
(November 16, 2005)
|
Prior
to his appointment with the Corporation as Vice President, Operations, and
from May 2003 until April 2007, Mr. Watt was the drilling and
completions superintendent for Enerplus Resources Fund, a large oil and
gas royalty trust. From August 1999 until May 2003, Mr. Watt
worked for Penn West Petroleum Ltd., an oil and gas company, as a
completions superintendent.
|
9,012,000
(5)
(8.19%)
|
|
Les Owens
(1)(2)
18
Tuscany Hills Crescent N.W.,
Calgary,
Alberta,
T3L
1Z8, Canada
Age
– 44
|
Director
Nominee
|
Mr.
Owens has more than twenty-five years of oil and gas experience primarily
in completions and production services. He is currently General
Manager at Canadian Sub-Surface, Energy Services, a provider of cased-hole
completion, production and evaluation services. From October
2001 to April 2008, Mr. Owens was in management positions with Ultraline
Services Corp., a provider of wireline services. In one of his
positions at Ultraline Services Corp. as Vice President, Operations, he
reviewed and approved the financial statements for his
division. Prior to that, from October 1999 to October 2001, he
was in sales with Plains Perforating Ltd., a provider of perforating
services. His previous experience was with various oil and gas
service companies, in positions progressing from sales to
management. Mr. Owens’ position as director to the Board is
subject to TSX-V Exchange approval.
|
35,000
(Less
than 1%)
|
APPENDIX
D
|
(1)
|
Member
of the Audit Committee. Pending election as a Director, Les
Owens will be an independent member of the Audit
Committee.
|
|
(2)
|
Member
of the Compensation Committee. Pending election as a Director,
Les Owens will be an independent member of the Compensation
Committee.
|
|
(3)
|
Assumes
110,023,998 common shares are issued and outstanding. Does not
include the common shares issuable upon the exercise of options to
purchase common shares and
warrants.
|
|
(4)
|
These
shares are held by Sicamous Oil & Gas Consultants Ltd., a company
wholly owned by William S. Tighe and his wife, Diane
Tighe.
|
|
(5)
|
Of
these shares, 3,000,000 are held by 697580 Alberta Ltd., a company who
Glenn Watt is the sole officer and
director.
|
Corporate
Cease Trade Orders or Bankruptcies
None of those persons who are proposed
directors of the Company is, or has been within the past ten years, a director,
chief executive officer or chief financial officer of any company, including the
Company (and any personal holding companies), that, while such person was acting
in that capacity, was the subject of a cease trade or similar order or an order
that denied the company access to any exemption under securities legislation,
for a period of more than 30 consecutive days, or after such persons ceased to
be a director, chief executive officer or chief financial officer of the
company, was the subject of a cease trade or similar order or an order that
denied the company access to any exemption under securities legislation, for a
period of more than 30 consecutive days, which resulted from an event that
occurred while acting in such capacity.
In addition, none of those persons who
are proposed directors of the Company is, or has been within the past ten years,
a director or executive officer of any company, including the Company, that,
while such person was acting in that capacity, or within a year of that person
ceasing to act in that capacity became bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency or was subject to or instituted
any proceedings, arrangement or compromise with creditors or had a receiver,
receiver manger or trustee appointed to hold its assets.
Penalties
or Sanctions
None of those persons who are proposed
directors of the Company (or any personal holding companies) have been subject
to any penalties or sanctions imposed by a court relating to securities
legislation or by a securities regulatory authority or has entered into a
settlement with a securities regulatory authority or been subject to any other
penalties or sanctions imposed by a court or regulatory body that would likely
be considered important to a reasonable shareholder in deciding whether to vote
for a proposed director. Other than as set forth below, no proposed
director of the Company has been subject to any penalties or sanctions imposed
by a court relating to securities legislation or by a securities regulatory
authority or has entered into a settlement agreement with a securities
regulatory authority or been subject to any other penalties or sanctions imposed
by a court or regulatory body that would likely be considered important to a
reasonable investor in making an investment decision.
APPENDIX
D
Personal
Bankruptcies
No proposed director of the Company, or
a personal holding company of any such person has, within the past ten years,
become bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or was subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of such person.
Corporate
Governance
Board
of Directors
Other Board
Positions
Mr. Mark
Hlady, the Chairman of the Company, is also a director of Critical Outcome
Technologies Inc. He was also a director of International Petro Real
Oil Corporation until August 7, 2008. Both companies are reporting
issuers in Canada. Mr. William S. Tighe, Director, President, Chief
Executive Officer, and Chief Operating Officer of the Company, is also a
director of Tamm Oil and Gas Corp., a reporting issuer in the United
States.
Orientation and Continuing
Education
Given the current size of the Company
and the Board, the Company provides only a limited orientation and education
program for new directors. This process includes discussions with
management and the Board, with respect to the business and operations of the
Company. Additionally, each new Board member is introduced to the
Company’s auditors, legal counsel and consulting staff. Each new
Board member is also entitled to review all previous minutes of the Board and
the shareholders. Communication on all material matters is continual
by email, phone and written documentation. In addition, the majority
of the board meetings are for information and discussion purposes related to the
Company’s business.
Assessments
The full
board has responsibility for assessing the effectiveness of the board as a
whole, the committees of the board and the contribution of individual
directors. Owing to the small size of the board, this task has not
been assigned to any committee of directors and no formal process is in
place.
Indebtedness
of Directors and Executive Officers
No
director, executive officer, employee, former director, former executive officer
or former employee of the Company, or any associate or affiliate of the
foregoing, has been indebted to the Company or any of its subsidiaries since the
beginning of the most recently completed financial year. None of the
persons described in the preceding sentence has, since the beginning of the most
recently completed financial year, been indebted to another entity to which the
indebtedness was the subject of a guarantee, “support agreement”, letter of
credit or other similar arrangement or understanding provided by the Company or
any of its subsidiaries.
APPENDIX
D
For the
purposes of the above, “support agreement” includes, but is not limited to, an
agreement to provide assistance in the maintenance or servicing of any
indebtedness and an agreement to provide compensation for the purpose of
maintaining or servicing any indebtedness of the borrower.
Interest
of Informed Persons in Material Transactions
Other
than as set forth herein, the Company is not aware of any material interest,
direct or indirect, of any “informed person” of the Company, any proposed
director of the Company or any associate or affiliate of any “informed person”
or proposed director, in any transaction since the commencement of the Company’s
most recently completed financial year or in any proposed transaction which has
materially affected or would materially affect the Company or any of its
subsidiaries
For the
purposes of the above, “informed person” means: (a) a director or executive
officer of the Company; (b) a director or executive officer of a person or
company that is itself an informed person or subsidiary of the Company; (c) any
person or company who beneficially owns, directly or indirectly, voting
securities of the Company or who exercises control or direction over voting
securities of the Company or a combination of both carrying more than 10% of the
voting rights attached to all outstanding voting securities of the Company other
than voting securities held by the person or company as underwriter in the
course of a distribution; and (d) the Company after having purchased, redeemed
or otherwise acquired any of its securities, for so long as it holds any of its
securities.
Compensation
of Executive Officers
Securities
legislation requires the disclosure of compensation received by each “Named
Executive Officer” of the Company for the three most recently completed
financial years. “Named Executive Officer” is defined by the
legislation to mean (i) each of Chief Executive Officer and Chief Financial
Officer of the Company, regardless of the amount of compensation of that
individual, (ii) each of the Company’s three most highly compensated executive
officers, other than the Chief Executive Officer and Chief Financial Officer,
who were serving as executive officers at the end of the most recently completed
financial year and whose total salary and bonus exceeds $150,000, and (iii) any
additional individual for whom disclosure would have been provided under (ii)
but for the fact that the individual was not serving as an executive officer of
the Company at the end of the most recently completed financial year end of the
Company.
“Executive
Officer” is defined by the legislation to mean (i) a chair, a vice-chair or
president of the Company, (ii) a vice-president of the Company in charge of a
principal business unit, division or function including sales, finance or
production, or (iii) an officer of the issuer or any of its subsidiaries or any
other person who performed a policy-making function in respect of the
Company.
APPENDIX
D
During
the Company’s most recently completed financial year, the Company had three (3)
Named Executive Officers, namely William S. Tighe, President, Chief Executive
Officer and Chief Operating Officer, Mark Hlady, Chairman and former Chief
Executive Officer and William E. Brimacombe, Chief Financial
Officer.
|
|
|
Annual
Compensation
|
Long-Term
Compensation
|
|
|
|
|
|
|
|
Awards
|
Payouts
|
|
|
Name
and Principal Position
|
Period
|
Salary
or Fees
($)
|
Bonus
($)
|
Other
Annual
Compensation
($)
|
Securities
Under Option/ SARs
(1)
Granted
(#)
|
Shares
or Units Subject to Resale Restrictions
(#)
|
LTIP
(2)
Payouts
($)
|
All
Other Compensation
($)
|
|
Mark Hlady
(4)
Chairman
|
2007
2006
2005
|
$51,125
(7)
$53,247
(7)
$27,897
(7)
|
$0
$0
$0
|
$0
$0
$0
|
0
200,000
0
|
0
200,000
0
|
$0
$0
$0
|
$0
$0
$0
|
|
William S. Tighe
(3)
President,
Chief Executive Officer and Chief Operating Officer
|
2007
2006
2005
|
$108,624
(6)
$83,259
(6)
$40,744
(6)
|
$0
$0
$0
|
$0
$0
$0
|
0
200,000
0
|
0
200,000
0
|
$0
$0
$0
|
$0
$0
$0
|
|
William
E. Brimacombe
(5)
Chief
Financial Officer
|
2007
|
$128,711
|
$0
|
$0
|
280,000
|
280,000
|
$0
|
$0
|
|
Glenn
Watt
(8)
Vice
President, Operations
|
2007
2006
|
$86,550
(8)
$0
|
$0
$0
|
$0
$0
|
0
200,000
|
0
200,000
|
$0
$0
|
$0
$0
|
|
Mary
Kennedy
former
Chief Financial Officer
|
2006
|
$29,508
|
$0
|
$0
|
0
|
0
|
$0
|
$0
|
|
(1)
|
“SAR”
or “stock appreciation right” means a right granted by the Company or any
of its subsidiaries as compensation for employment services or office to
receive cash or an issue or transfer of securities based wholly or in part
on changes in trading price of publicly traded
securities.
|
|
(2)
|
“LTIP”
or “long term incentive plan” means any plan which provides compensation
intended to serve as incentive for performance to occur over a period
longer than one financial year, but does not include option or stock
appreciation right plans or plans for compensation through shares or units
that are subject to restrictions on
resale.
|
|
(3)
|
William
S. Tighe was appointed Chief Executive Officer on December 1, 2007,
President on January 2, 2006 and Chief Operating Officer on September 19,
2005.
|
|
(4)
|
Mark
Hlady was appointed Chief Executive Officer and Chairman of the Company on
September 19, 2005. On December 1, 2007, Mr. Hlady resigned
from his position as Chief Executive
Officer.
|
|
(5)
|
William
E. Brimacombe was appointed Chief Financial Officer on January 3,
2007.
|
|
(6)
|
This
amount was paid to Sicamous Oil and Gas Consultants Ltd., a company wholly
owned by Mr. William S. Tighe and his wife, Diane Tighe, for consulting
services rendered by it, including providing Mr. Tighe to the Company to
perform duties related to the position of Chief Operating Officer and
President..
|
|
(7)
|
This
amount was paid to MHC Corporation., a company wholly owned by Mr. Mark
Hlady, for consulting services rendered by it, including providing Mr.
Hlady to the Company to perform duties related to the position of Chief
Executive Officer.
|
|
(8)
|
This
amount was paid to Harbour Oilfield Consulting Ltd., a company wholly
owned by Mr. Glenn Watt, from April to December 2007, for consulting for
consulting services rendered by it, including providing Mr. Watt to the
Company to perform duties related to the position of Vice President,
Operations.
|
APPENDIX
D
Stock
Option Plan and Stock Options
The
Company did not during the financial year ended December 31, 2007 re-price
downward any options or freestanding SARs held by any of its Named Executive
Officer
.
The
following table sets forth information in respect of all stock options granted
during the financial year ended December 31, 2007 to the Named Executive
Officers of the Company.
|
Name
and Principal Position of Named Executive Officers
|
Securities
Under Options Granted
(#)
|
Percent
of Total Options Granted to Employees in Financial Year
(%)
|
Exercise
or Base Price per Security
($)
|
Market
Value of Securities Underlying Options on the Date of Grant
(1)
($)
|
Expiration
Date
|
|
Mark
Hlady
Chairman
|
0
|
0%
|
$0
|
$0
|
N/A
|
|
William
S. Tighe
President,
Chief Executive Officer and Chief Operating Officer
|
0
|
0%
|
$0
|
$0
|
N/A
|
|
Glenn
Watt
Vice
President, Operations
|
0
|
0%
|
$0
|
$0
|
N/A
|
|
William
E. Brimacombe
Chief
Financial Officer
|
280,000
|
30.8%
|
$1.29
(1)
|
$1.29
|
January
3, 2012
|
|
(1)
|
The
exercise price of each Kodiak Option represents the weighted average
trading price for the five trading days of the Kodiak Shares on the OTCBB
preceding the date of grant of the Kodiak Option, such date being January
3, 2007.
|
During the financial year ended
December 31, 2007, there were no options to purchase common shares
exercised or exercisable held by the Named Executive Officers of the Company
described above.
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