SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Amendment No. 1
Proxy Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] | Preliminary Information Statement |
[ ] | Confidential, for Use of the Commission (only as permitted by Rule 14c-5(d)(2)) |
[] | Definitive Information Statement |
[ ] | Definitive Additional Materials |
BIG SKY ENERGY CORPORATION |
(Name of Registrant as Specified in its Charter) |
(Name of Person(s) Filing Information Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box):
[X] | No fee required. | ||
[ ] | Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. | ||
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11(set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: 0 | ||
(5) | Total fee paid: 0 | ||
[ ] | Fee paid previously with Preliminary materials. | ||
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing fee for which the offsetting fee was paid previously. Identify the previous filing by registration filing. | ||
(1) | Amount Previously Paid: | ||
(2) | Form, Schedule or Registration Statement No. | ||
(3) | Filing Party: | ||
Date Filed: January 20, 2006 |
BIG SKY ENERGY CORPORATION
Principal Place of Business: Business Centre "Granit" +7.3272.597.623 | Executive and Administrative Offices: 750, 440 – 2 Avenue S.W. Calgary, Alberta Canada T2P 5E9 403.234.8885 |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 28, 2006
To the Shareholders of Big Sky Energy Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of Shareholders of Big Sky Energy Corporation, a Nevada corporation (the "Company"), will be held at 3:00 p.m., local time, on February 28, 2006, at 17 Old Park Lane, 7th Floor, London UK W1K 1QT for the following purposes:
a) | To elect 8 members to the Company’s Board of Directors to serve until the next Annual Meeting of Shareholders of the Company or until their successors are duly elected and qualified; |
b) | To ratify the Board of Directors' selection of independent registered public accounting firm, BDO Kazakhstanaudit LLP, for the 2005 fiscal year; |
c) | To approve amendments to the Big Sky Energy Corporation Stock Award Plan; |
d) | To approve the increase in share capital of Big Sky Energy Corporation to 350,000,000 shares of common stock; |
e) | To consider and transact such other business as may properly come before the Annual Meeting and any adjournments thereof |
In accordance with the provisions of the Company's By-laws, the Board of Directors has fixed the close of business, Calgary, Alberta time, onFriday, January 13, 2006 as the date for determining the shareholders of record entitled to receive notice of, and to vote at, the Annual Meeting and any adjournments thereof.
Dated: January 20, 2006
By Order of the Board of Directors,
/s/ Selami Ahmet Sehsuvaroglu
Chief Executive Officer
SHAREHOLDERS ARE URGED TO FILL IN, DATE, SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
It is desirable that as many shareholders as possible be represented, in person or by proxy, at the Annual Meeting. Consequently, whether or not you now expect to be present, please execute and return the enclosed proxy. You have the power to revoke your proxy at any time before it is voted, and the giving of a proxy will not affect your right to vote in person if you attend the Annual Meeting.
2
BIG SKY ENERGY CORPORATION
Principal Place of Business: Business Centre "Granit" +7.3272.597.623 | Executive and Administrative Offices: 750, 440 – 2 Avenue S.W. Calgary, Alberta Canada T2P 5E9 403.234.8885 |
PRELIMINARY
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
February 28, 2006
This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Big Sky Energy Corporation (the "Company") for use at the Company's Annual Meeting of Shareholders to be held on February 28, 2006, and at any adjournment thereof (the "Annual Meeting"). Further, solicitation of proxies may be made personally, or by telephone or facsimile, by officers, directors and consultants of the Company, who will receive no additional compensation. The cost of soliciting proxies will be borne by the Company which may enlist the assistance, and reimburse the reasonable expenses, of banks and brokerage houses in the additional solicitation of proxies and proxy authorizations, particularly from their customers whose stock is not registered in the owner's name, but in the name of such banks or brokerage houses. As of the date of the mailing of these proxy materials, the Company had not entered into any contract or arrangement for the solicitation of proxies with any bank or brokerage house.
A copy of the Company’s amended Annual Report on Form 10-KSB/A for the fiscal year ended December 31, 2004 (the "2004 Fiscal Year"), including financial statements (as amended and restated), is being mailed concurrently herewith (on or aboutJanuary 30, 2006) to all shareholders of record at the close of business, Calgary, Alberta time, onJanuary 13, 2006. The Annual Report does not constitute a part of the proxy solicitation material for the Annual Meeting.
VOTING SECURITIES
Only shareholders of record at the close of business, Calgary, Alberta time, onJanuary 13, 2006are entitled to vote at the Annual Meeting. The total number of shares of common stock, par value $.001 per share (the "Common Stock"), of the Company, issued, outstanding and entitled to be voted as of January 13, 2006 was 142,348,697shares. The Company does not have any other class of voting securities. Each of such shares of Common Stock is entitled to one vote upon all matters to be acted upon at the Annual Meeting. The holders of a majority of the outstanding votes in number 71,174,349 shall constitute a quorum which is necessary for the transaction of business at the Annual Meeting. In accordance with the Company's Articles of Incorporation and By-laws, and applicable law:
-
the election of directors shall be by a plurality of the votes cast; and
-
the ratification of the Board of Directors' selection of independent registered public accounting firm and the ratification and approval of all other business placed before the Annual Meeting, shall be by a majority of the votes cast.
All shares represented at the Annual Meeting by proxies will be voted, provided that such proxies are properly signed and dated. In cases where a choice is indicated, the shares represented will be voted in accordance with the specifications so made. In cases where no specifications are made, the shares represented will be voted FOR the election as directors of the nominees listed under “Proposal 1”, FOR the ratification of the Board of Directors' selection of independent registered public accounting firm, FOR the approval of amendments to the Big Sky Energy Corporation Stock Award Plan, FOR the approval of an increase in share capital to 350,000,000 shares of common stock; and FOR the approval of any other business placed before the Annual Meeting.
The directors will be elected by plurality of the votes of shares present and entitled to vote. Accordingly, the nominees for election as directors who receive the highest number of votes actually cast will be elected. Broker non-votes will be treated as shares that neither are capable of being voted nor have been voted and accordingly, will have no effect on the outcome of election of directors.
3
Any shareholder executing and returning a proxy has the power to revoke such proxy at any time prior to the voting thereof by: (a) written notice to the Secretary of the Company at the Company's Calgary office delivered prior to the commencement of the Annual Meeting, (b) providing a signed proxy bearing a later date, or (c) appearing in person and voting at the Annual Meeting.
Voting Securities and Principal Holders Thereof
The following table sets forth information concerning the beneficial ownership of our outstanding common stock as of January 13, 2006 for:
· | each of our directors, nominees to the board and executive officers individually; |
· | each person or group that we know owns beneficially more than 5% of our common stock; and |
· | all directors and executive officers as a group. |
Name and Address | Number of Shares | Percent of |
Officers and Directors | ||
Matthew Heysel 750, 444 2nd Avenue SW Calgary, AB | 5,837,299(1) | 4.1% |
Daming Yang #4, Mou Gate 25 Baiwanzhuang Xicheng District Beijing, China, 100037 | 4,023,750 | 2.8% |
Thomas Milne 224 Sienna Hills Drive SW Calgary, AB, Canada, T3H 2Z1 | 1,583,002(2) | 1.1% |
Bruce Gaston La Rieulle Plenee Jugon 22640, Bretagne France | 1,000,000(3) | 0.70% |
Philip Pardo c/o KBTU Almaty, Kazakhstan | 300,000 | 0.21% |
Barry Swersky Box 110, 47100 Ramat Hasharon Israel | 300,000 | 0.21% |
S.A. Sehsuvaroglu 3 Ave. des Baumettes 06000 Nice France | 4,000,000 | 2.81% |
N. U. Balgimbayev 5 Chaykina Street Almaty, Kazakhstan | 1,000,000(3) | 0.70% |
4
Servet Harunoglu Sezai Selek Sok. No. 15/3 Nisantasi Istanbul, Turkey | 300,000 | 0.21% | |
Officers and Directors as a Group | 18,344,051 | 13.23% | |
5% Shareholders | |||
ARC Energy Fund C/o Royal Trust Corporation of Canada 200 Bay Street Toronto, Ontario M5J 2J5 | 8,000,000 | 5.6% | |
Ingalls & Snyder 61 Broadway New York, NY 10006 | 12,565,745 | 8.8% | |
(1) | Includes 594,422 shares which are owned by Big Sky Holdings, a company over which Mr. Heysel has control, 2,719,910 shares which are owned by MH Financial Management Ltd., a company over which Mr. Heysel has control, 2,000,000 stock options currently vested and 559,467 shares which Mr. Heysel owns directly. | ||
(2) | Includes 692,802 shares which are owned by Precise Details, Inc., a company over which Mr. Milne has control, 285,200 shares owned directly by Mr. Milne and 5,000 shares owned by Mr. Milne indirectly through his spouse, and fully vested options to acquire 600,000 shares. | ||
(3) | Represents stock options fully vested. |
Rule 13d-3 under the Securities Exchange Act defines the term, "beneficial ownership". Under this rule, the term includes shares over which the indicated beneficial owner exercises voting and/or investment power. The rules also deem common stock subject to options currently exercisable, or exercisable within 60 days, to be outstanding for purposes of computing the percentage ownership of the person holding the options but do not deem such stock to be outstanding for purposes of computing the percentage ownership of any other person. The applicable percentage of ownership for each shareholder is based on 142,348,697 shares of common stock outstanding as of January 13, 2006, together with applicable options for that shareholder. Except as otherwise indicated, we believe the beneficial owners of the common stock listed below, based on information furnished by them, have sole voting and investment power over the number o f shares listed opposite their names.
Voting by Directors and Executive Officers
It is anticipated that the directors and the named executive officers of the Company will vote FOR the election as directors of the nominees listed under “Proposal 1”, FOR the ratification of the Board of Directors' selection of independent registered public accounting firm, FOR the approval of amendments to the Big Sky Energy Corporation Stock Award Plan, FOR the increase in share capital to 350,000,000 shares, and FOR the approval of any other business placed before the Annual Meeting. Such directors and executive officers, and their affiliates, hold 18,344,051of the votes entitled to be cast at the Annual Meeting.
Nurlan U. Balgimbayev- Director
Mr. Nurlan Balgimbayev has been a member of our Board since March 29, 2005. Mr. Balgimbayev is a former Prime Minister of the Republic of Kazakhstan, (November 1997-November 1999), a former Minister of Oil and Gas (1994-1997), and a former President of the government-owned National Oil and Gas Company “Kazakhoil” (November 1999-February 2002). Mr. Balgimbayev served as a director of Nelson Resources Limited (April 2002- May 2004) and currently is a director of Herson Oil Refinery System (Ukraine) since November 1999. He is also a Member of the Kazakhstan Board for the Stable Development of the Republic of Kazakhstan.
Mr Balgimbayev will not be standing for re-election to the Board of Directors.
5
Bruce Hill Gaston – Chief Financial Officer, Director
Mr. Gaston has been a member of our Board since December, 2004 and has served as our Chief Financial Officer since April 18, 2005. Mr. Gaston has 20 years experience as a financial control, risk management, capital markets, and corporate finance specialist with a significant background in the Eurasian oil and gas marketplace. Mr. Gaston was previously a Senior Associate Director of Deutsche Morgan Grenfell from 1992 to 1998 based initially in London and then in Tokyo.
Mr. Gaston has been a consultant with a boutique Eurasian corporate finance and risk management consultancy since late 1999, supporting clients including the Royal Bank of Scotland Asia. Mr. Gaston has also served as a Director of Deloitte & Touche Central Asia through 2002 and was previously head of Russian Equities for Commerzbank AG in 1998 and 1999. Mr. Gaston served with Credit Suisse Financial Products as an Accountant and with Bankers Trust NA as an Assistant Treasurer.
Mr. Gaston's educational achievements include a BA in July 1987 from the University of New Brunswick, followed by an M. Sc. in Economics from the University of London in December 1990. Bruce has been a member of the World Economic Forum and is a member of the Institute of Directors (IoD).
Mr. Gaston serves Big Sky as a Director and Chief Financial Officer
Matthew J. Heysel –Executive Chairman of the Board, Director
Mr. Heysel has served as Chairman of the Board of Directors since April 14, 2000 and has served as Chief Executive Officer from April 14, 2000 to May 10, 2005. Mr. Heysel has been the Chairman of Big Sky Energy Kazakhstan Ltd. since July 2003 and Vice-Chairman of KoZhaN LLP since August 2003. From April 1999 to December 2001, he was the President of New Energy West Corporation. Prior to this, he served as an Investment Banker at Yorkton Securities, a Canadian independent securities firm, where he was responsible for corporate finance in the oil and gas sector from April 1997 through April 1999.
Thomas G. Milne - Director
Mr. Milne has served on our Board of Directors since April 14, 2000. He has also served as our Chief Financial Officer from April 14, 2000 until April 18, 2005. From September 2002 to February 2004, Mr. Milne was the Regional Advisory Services Partner for Meyers Norris Penny LLP, a chartered accountancy and business advisory firm located in Calgary, Alberta. From 2000 to 2002, Mr. Milne was employed by China Energy Ventures Corp. on a full-time basis. From 1985 through 1997, Mr. Milne was Vice President and Treasurer of NOVA Corporation, and director of NOVA Finance International. He was the Vice President, Finance and Chief Financial Officer of Arakis Energy, which was acquired by Talisman Energy Corp., from September, 1997 to October, 1998, an oil and gas company traded on the NASDAQ. Since March 1998, Mr. Milne has served as Chief Executive Officer of Precise Details, Inc., a consulting, investment management, real esta te and automotive services company. Mr. Milne also currently serves as a director of The Alberta Performing Arts Stabilization Fund and the Investment Committee of the University of Calgary Pension and Endowment Funds.
Mr Milne will not be standing for re-election to the Board of Directors.
Philip Dean Pardo – Director, Chairman of Audit and Nominating & Compensation Committees
Dr. Pardo has been a member of our Board since December 3, 2004. Dr. Pardo is Vice Rector on Academic Affairs and Director of Business School of Kazakh British Technical University. Previously (September 2000 to September 2004), he held the post of Associate Dean of the College of Continuing Education for the Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP) where he taught courses in Small Business, Franchising, Public Administration and Finance. He was Director, Business Valuation for the Rice Group, Central Asia LLP from July 2000 to January 2003. Dr. Pardo served as Strategic Planning Manager with Maverick Development Corp. and Golden Eagle Services from July 2003 to December 2003 on a part-time basis. He has worked for Deloitte & Touche as Tax Director as well as LeBoeuf, Lamb, Greene & MacRae, from November 1997 till June 2000.
Dr. Pardo serves as an independent director and is Chairman of the Audit Committee and Chairman of the Nominating & Compensation Committee.
6
S.A .(Al) Sehsuvaroglu – Chief Executive Officer, President & Director
Mr. Sehsuvaroglu has been serving as our President and a member of the Board since March 9, 2005 and was appointed Chief Executive Officer on May 10, 2005. He has been a Registered Professional Engineer in Texas since 1990. Commencing his 20-year career with Halliburton Energy Services in early 1978 through June 2000, he had increasing levels of responsibility in engineering in Algeria, France, Netherlands, United States, United Kingdom and Kazakhstan. From June 2000 through December 2001, he was Country Director for Kellogg Brown & Root Energy Services in Kazakhstan. From December, 2001until February, 2005, Mr. Sehsuvaroglu was Senior Vice-President of Operations with Nelson Resources. On May 10, 2005, Mr Sehsuvaroglu assumed the role of Chief Executive Officer of the Company.
Barry Raymond Swersky – Director, Co-Chairman & Vice-President, New Developments
Mr. Swersky has served as a member of our Board and as Co-Chairman & Vice-President since December 3, 2004. Mr. Swersky, with many years of experience as an international attorney, has consulted on technology investments in Israel together with the Meitav group since 2000. Since December, 2000, he has been on the board and is currently serving as Chairman of Netline Communications Technologies (NCT). In Israel he is also serving on various other boards, including Suntree Ltd. (since 1993), where he acts as Chairman and CEO and MACS Ltd. (since 1990). He served on the board of Ongas Limited in England from January 2000 to March 2004). Previously, and within the framework of his activities in energy in Kazakhstan, Mr. Swersky served on the board of AES Suntree Power Limited. He is engaged in an oil and oil products transport logistics project between Kazakhstan and China. He is on the board of the Israel Festival, Jerusalem and, since O ctober 2000 he has served as a Board Member of Tel-Aviv University's Jaffee Center for Strategic Studies.
Daming Yang - Director
Mr. Yang served as our President from April 14, 2000 until March 9, 2005. He continues to serve as a member of our Board of Directors, which he has done since April 14, 2000. He also served as the President and a member of the board of directors of both Big Sky Network Canada Ltd. and Chengdu Big Sky Technology Services Ltd., which were previous subsidiaries of Big Sky. Mr. Yang was a director of Sichuan Huayu Big Sky Network Ltd. Mr. Yang was the President of Big Sky Energy Kazakhstan Ltd. from July 2003 until May 10, 2005 and Chairman of KoZhaN LLP from August 2003 until May, 2005.
Mr Yang will not be standing for re-election to the Board of Directors.
Dr. Servet Harunoglu - Director
Dr Servet Harunoglu was appointed to the Board on May 10, 2005. Dr. Harunoglu holds a Ph.D in Electrical Engineering from Northwestern University, Chicago, IL (1973) and is a past Chairman of the Turkish Kazakh Businessmen’s Association, having held the chair for 7 years. From January, 1991 to the present, Dr Harunoglu held many posts, including but not limited to, Board membership of Fintraco Construction and Contracting Co. Inc., Tarkim Tarimsal Kimya A.S (October, 2003 to present)., Pimsa Poliuretan Manufacturing Co. Inc. (July, 1975 to present) and Donau Express Shiffarts GmBH. In addition, from June, 1998 to May, 2005, Dr Harunoglu was Chairman of Matin JV, based in Atyrau, Kazakhstan as well as Chairman of Polfin Consortium S.A. Dr Harunoglu has also been a member of the World Economic Forum and a member of the International Advisory Council of the Executives Club of Chicago.
None of the directors or executive officers is a party to any proceedings which is adverse to the Company or has material interest which is adverse to the Company. None of our executive officers or directors have been involved in any bankruptcy proceedings within the last five years, been convicted in or has pending any criminal proceeding, been subject to any order, judgment or decree enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity or been found to have violated any federal, state or provincial securities or commodities laws.
Board Committees and Attendance Records
There are currently five standing committees of the Board - the Nominating & Compensation Committee, the Audit Committee, the Corporate Governance Committee, the Mergers & Acquisitions Committee and the Reserves Committee.
7
The Audit Committee
The Audit Committee of Big Sky Energy Corporation was formed on February 8, 2001. The Committee’s written charter was adopted by the Board of Directors ("Board") on March 27, 2001 and subsequently amended on November 12, 2003 and April 30, 2004. In accordance with the written charter, the Audit Committee of the Board ("Committee") assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of Big Sky Energy Corporation
On December 3, 2004, Dr. Philip D. Pardo was appointed as the Chair of the Committee and as the financial expert of the Committee. On May 10, 2005, Dr. Servet Harunoglu joined the Committee. The Committee is composed of two directors, both of whom are independent directors. The Audit Committee met on 4 occasions in 2004 and 3 occasions in the first nine months of 2005. All members were in attendance at all meetings. The Committee reviewed the audited financial statements of Big Sky Energy Corporation for the fiscal year ended December 31, 2004, with management and our independent registered public accounting firm. Management has the responsibility for the preparation of Big Sky Energy Corporation's financial statements and the independent registered public accounting firm has responsibility for the examination of those statements.
In discharging its oversight responsibility as to the audit process, the Committee obtained from the independent registered public accounting firms a written statement describing all relationships between the independent registered public accounting firm and the Company that might bear on the independent registered public accounting firm' independence consistent with Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees”, discussed with the independent registered public accounting firm any relationships that may impact their objectivity and independence and satisfied itself as to the independent registered public accounting firm' independence.
The Committee discussed and reviewed with our current and former independent registered public accounting firms all communications required by generally accepted auditing standards as reflected by the standards set by the Public Accounting Oversight Board, including those described in Statement on Auditing Standards No. 61, as amended, "Communication with Audit Committees," and, with management present, discussed and reviewed the results of the independent registered public accounting firms' examination of the financial statements.
Based on the above-mentioned review and discussions with management and our current and former independent registered public accounting firms, the Committee and Board of Directors approved that Big Sky Energy Corporation’s audited financial statements be included in its Annual Report on Form 10-KSB for the year ended December 31, 2004, for filing with the Securities and Exchange Commission.
Subsequent to this filing, an error was discovered in such financial statements and on September 19, 2005, the Audit Committee caused the Company to file a Form 8-K giving notice that such financials could not be relied upon. On November 15, 2005, an amendment to Form 10-KSB for December 31, 2004, containing amended and restated financial statements was filed with the US Securities and Exchange Commission.
The Committee and Board of Directors also approved the appointment, subject to shareholder approval, of BDO Kazakhstanaudit LLP, as our current independent registered public accounting firm.
Principal Accounting Firm Fees
Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by Deloitte & Touche LLP, our former independent registered public accounting firm, for the audit of our annual financial statements and review of financial statements included in our Form 10-QSB quarterly reports and services normally provided in connection with statutory and regulatory filings or engagements was $262,073 for the fiscal year ended 2004 and $126,151 for the fiscal year ended 2003.
Audit-Related Fees
There were no fees for other audit related services for the fiscal years ended 2004 and 2003.
8
Tax Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by Deloitte & Touche LLP,our former independent registered public accounting firm, for tax compliance, tax advice, and tax planning was $9,485 for the fiscal year ended 2004 and $17,000 for the fiscal year ended 2003. The fees charged for 2003 included assistance with the completion and filing of our Canadian income tax returns.
All Other Fees
There were no other aggregate fees billed in either of the last two fiscal years for products and services provided by Deloitte & Touche LLP, our former independent registered public accounting firm, other than the services reported above.
Pre-approval Policy and Procedure
The following policy and procedure has been adopted and incorporated into our Audit Committee charter, as amended:
All services provided by the independent auditor whether they be audit related or non-audit related, shall be pre-approved in writing prior to the commencement of the contemplated services.
The Chairman of the Audit Committee or the designated Financial Expert, should they also be, at the time of approval, an independent director, are empowered to approve the contemplated services to be provided by the independent auditor on behalf of the committee. All approvals taken by the Chairman or Financial Expert must be disclosed to the committee as a whole either a) in writing or by e-mail at the time of the approval; or b) verbally at a subsequent committee meeting.
During the first nine months of 2005, our Audit Committee has approved all services provided by Deloitte & Touche LLP., our former independent registered public accounting firm, and BDO Kazakhstanaudit LLP, our current independent registered public accounting firm.
Deloitte & Touche LLP has advised us that, in connection with the audit of our financial statements for the year ended December 31, 2004, only full-time, permanent employees of Deloitte & Touche LLP performed the audit work.
The Nominating & Compensation Committee
The Company's Nominating & Compensation Committee (formerly the Human Resources and Compensation Committee) was formed on February 8, 2001. At the first meeting of the reconstituted committee on May 18, 2004, it was decided to restructure the Committee to meet the new rules and regulations set forth by the United States Securities and Exchange Commission. To this end, the Committee changed its name to the Nominating & Compensation Committee and amended its charter to address its new mandate. The Company’s Nominating & Compensation Committee’s Charter is available on its website at www.bigskycanada.com/investor/governance.php.
The Committee is composed of three directors, two being independent directors. The Committee met four times in 2004, and on 2 occasions during the first nine months of 2005. All members were in attendance for all meetings. As of May 10, 2005, Messrs. Pardo, Heysel and Balgimbayev sit on the Committee with Dr. Pardo serving as chairman. Messrs. Pardo and Balgimbayev are independent directors.
The Nominating & Compensation Committee’s mandate is to ensure that the Board is properly constituted to meet its fiduciary obligations to stockholders and to assist the Board in the discharge of their fiduciary responsibilities relating to the fair and competitive compensation of the employees of the Company. The Nominating & Compensation Committee is responsible for determining salaries, incentives and other forms of compensation for our officers, employees and consultants and administers our incentive compensation and benefit plans. The Nominating & Compensation Committee also holds responsibility for director selection and governance with respect to the conduct of our Board.
In order to carry out their purpose, the Committee will be compiling policy and procedures to:
1)
identify prospective director nominees and recommend to the Board the director nominees for the next annual meeting or special meeting of stockholders at which directors are to be elected, and recommend individuals to the Board to fill any vacancies or newly created directorships that may occur between such meetings;
2)
develop the specific, minimum qualifications that the Committee believes must be met by a Committee-recommended nominee for a position on Company’s board of directors, and describe any specific qualities or skills that the Committee believes are necessary for one or more of the registrant’s directors to possess;
9
3)
develop the Committee’s process for identifying and evaluating nominees for director, including nominees recommended by stockholders;
4)
oversee the evaluation of the Board and management from a corporate governance perspective;
5)
identify and recommend to the Board directors for membership on Board committees;
6)
review and approve the Company’s compensation philosophy;
7)
review and approve compensation programs, plans and awards;
8)
administer the Company’s short- and long-term incentive plans and other stock or stock-based plans; andissue an annual report on executive compensation. Such report is included in the Company’s Form 10-KSB/A under Item 10 provided herewith as part of the proxy materials.
The Committee will consider security holder nominations for director. Nominations for director submitted to the Committee by security holders will be evaluated according to the Company’s overall needs and the nominee’s knowledge, experience and background. A nominating security holder must give appropriate notice to the Company of the nomination not less than 120 days prior to the first anniversary of the preceding year’s annual meeting. In the event that the date of the annual meeting is advanced by more than 30 days, the notice by the security holder must be delivered not later than the close of business on the later of the 45th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such annual meeting is first made.
The stockholder’s notice shall include all information required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act, and the rules thereunder, as well as, the name of the stockholder, their address of record, the class and number of shares of the Company beneficially held by the stockholder, a description of all arrangements or understandings between the stockholder and each proposed nominee and any other persons pursuant to which nomination(s) are to be made by such stockholder, a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the person(s) named in its notice and a written consent of the proposed nominee(s) to be named as a director.
The nominees approved by the Committee for inclusion on enclosed proxy card (other than nominees who are executive officers or who are directors standing for re-election), were recommended by the category of persons or entities indicated alongside such nominee’s name below:
Nominee | Recommended By: |
Daniel Caleb Feldman | Security holder |
Guglielmo A.C. Moscato | Non-management director |
The Corporate Governance Committee was formed on May 10, 2005. The Committee is composed of two members, Messrs. Barry Swersky (Chairman) and Daming Yang, Mr Yang being an independent director. The Committee is responsible for developing and recommending to the Board for approval the Company’s approach to corporate governance issues. To the extent that any director believes it is appropriate to engage an outside advisor in connection with that person’s role as a director, this committee is authorized to engage special advisors at the Corporation’s expense. The Board is in process of adopting the Committee’s charter, which then will be made available on the Company’s website.
The Mergers & Acquisitions Committee(M&A Committee) was formed on May 10, 2005. The Committee is composed of four directors, Messrs. Daming Yang (Chairman), Matthew Heysel, Al Sehsuvaroglu and Bruce Gaston, with Mr Yang the sole independent director sitting. The Committee is responsible for reviewing of management’s mergers and acquisitions strategy and policies for the Company’s projects for growth, considering any reports submitted to the committee by management with respect to acquisitions and for reporting to the Board with respect to potential mergers. The Board is in process of adopting the Committee’s charter, which then will be made available on the Company’s website.
The Reserves Committee was formed on May 10, 2005. The Committee is composed of two directors, Mr. Nurlan Balgimbayev (Chairman) and Dr. Servet Harunoglu, both of whom are independent directors. The Committee is responsible for the review of the Company’s appointment of the independent qualified oil and gas evaluator and its report on the Company’s oil and gas reserves and their present value, and for public disclosures of reserves and present value data. The Board is in process of adopting the Committee’s charter, which then will be made available on the Company’s website.
10
Insider Participation and Interlocks
While the Company has had transactions with companies and firms with which certain members of the Committee are, or at some point during fiscal year 2004 were, affiliated as an officer and/or director, there are no such relationships in which members of the Committee have a direct or indirect material interest. In addition, there are no interlocking relationships of the nature described above involving members of the Committee.
Director and Executive Compensation
We employ our executive officers as consultants. The following table sets forth the compensation paid to our Chief Executive Officer and two other most highly compensated executive officers for the years indicated. No other executive officer of Big Sky Energy Corporation earned a salary and bonus for such fiscal year in excess of $100,000.
On March 22, 2002 the Board of Directors approved the Alternative Compensation Plan to provide opportunities for officers, directors, employees and contractors to receive all or a portion of their compensation in the form of shares of common stock instead of cash. The Alternative Compensation Plan was approved at our Annual Shareholders’ Meeting held on June 14, 2002. The Plan allowed for maximum compensation of 2,000,000 shares. This maximum was reached in the third quarter of 2002 and an expense in the amount of $163,463, relating to the future issuance of 2,000,000 shares of common stock, was accrued under the Alternative Compensation Plan in 2002. Shares are issued upon request of the beneficiaries and no further compensation cost is recorded at that time. During 2005, no shares were issued under the Alternative Compensation Plan, leaving a balance of 1,317,198 shares still to be issued at September 30, 2005.
11
Option Grants
The following table sets forth information regarding stock option grants to our officers and directors as of January 6, 2006:
Individual Grants | |||||
Name | Number of Securities Underlying Options Granted (#) | % of Total Options Granted(1) | Exercise or Base Price ($/Share)(2) | Expiration Date | |
Matthew Heysel | 2,000,000 | 9.8% | $0.50 | March 8, 2008 | |
Thomas Milne | 600,000 | 2.9% | $0.50 | March 8, 2008 | |
S.A. Sehsuvaroglu | 4,000,000(3) | 19.7% | $0.50 | March 8, 2008 | |
Bruce H. Gaston | 1,000,000 | 4.9% | $0.50 | March 8, 2008 | |
Barry R. Swersky | 300,000 | 1.4% | $0.50 | March 8, 2008 | |
Philip D. Pardo | 300,000 | 1.4% | $0.50 | March 8, 2008 | |
Servet Harunoglu | 300,000 | 1.4% | $0.50 | March 8, 2008 | |
N. U. Balgimbayev | 1,000,000(4) | 4.9% | $0.89 | March 28, 2008 | |
(1) | Based on options exercisable to acquire a total 20,300,000 shares to executive officers, directors and employees as at January 6, 2006. | ||||
(2) | The exercise price per share was equal to or greater than the fair market value of the common stock on the date of grant as determined by the Board of Directors. Each option expires five years from the date of grant. None are fully vested. | ||||
(3) | Mr. Sehsuvarolgu was awarded an additional grant of 3,000,000 options on July 26, 2005. These options are to be granted upon an increase in the shares available under the 2000 Stock Award Plan, which resolution shall be presented to the next Annual Meeting of Shareholders. | ||||
(4) | Mr. Balgimbayev was awarded a total of 5,000,000 options by this grant. The balance of 4,000,000 options are to be granted upon an increase in the shares available under the 2000 Stock Award Plan, which resolution shall be presented to the next Annual Meeting of Shareholders |
Option Exercises
None of our Named Executive Officers exercised options as of January 6, 2006.
The following table sets forth details of each exercise of stock options as of January 6, 2006 by any of the Named Executive Officers, and the January 6, 2006 value of unexercised options on an aggregate basis.
Aggregated Options Exercised
Name | Securities Acquired on Exercise (#) | Aggregate Value Realized ($) | Unexercised Options as of January 6, 2006 Exercisable/ Unexercisable | Value of Unexercised in the Money-Options at January 6, 2006 Exercisable/ Unexercisable(1) |
Matthew Heysel | Nil | Nil | 0 (exercisable) 2,000,000 (unexercisable) | 0 (exercisable) $3,860,000 (unexercisable) |
S.A. Sehsuvaroglu | Nil | Nil | 0 (exercisable) 4,000,000 (unexercisable) | 0 (exercisable) $7,720,000 (unexercisable) |
Bruce Gaston | Nil | Nil | 0 (exercisable) 1,000,000 (unexercisable) | 0 (exercisable) $1,930,000 (unexercisable) |
(1) | Based on closing price of $1.93 on January 6, 2006. |
Prior to December 31, 2004, we did not pay our directors any cash or stock compensation. Independent directors received stock options as compensation for their services to the Corporation.
12
Effective May 10, 2005, the Board of Directors of Big Sky voted to start paying independent directors a stipend of US$4,000 per calendar quarter. Such payments commenced June 30, 2005. Directors who are executive officers do not receive this cash payment. Prior to May 10, 2005, we solely reimbursed directors for out-of-pocket expenses for attending board and committee meetings and we did not provide additional compensation for committee participation or special assignments of the board of directors.
On May 10, 2005, the Board approved the following fee and payment schedule:
o
a stipend of $5,000 per year for independent directors only;
o
an attendance fee for each Board meeting of $5,000 per meeting;
o
where a director attends the meeting via remote communication, the fee is $3,000 for the first such meeting and $1,000 for any subsequent remote attendance;
o
attendance fee for each Board committee meeting shall be $1,500. Most committee meetings may be conducted by phone;
o
additional work performed by a member as per Chairman’s request will be compensated with $1,500 per event; and
o
for being Chairman of a committee, $5,000 per year.
Our independent directors have also been granted stock options to purchase shares of our common stock. The terms of stock option grants made to independent directors are determined by the board of directors. See “Option Grants”. Directors will be compensated for actual expenses related to the meetings attended.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
We either directly or through our subsidiaries, have entered into consulting agreements with key individuals, including our executive officers, who perform services for us, as specified in the agreements. We use a standard form of consulting agreement, which defines terms of the agreement, services to be performed, compensation and benefits, confidentiality and individual specific benefits based on the requirements of the position. The following contracts are in place at January 6, 2006.
Matthew Heysel Consulting Agreement: Mathew Heysel provides services on a full-time basis through his company, M. H. Financial Management Ltd. under a consulting agreement, which expires December 31, 2005. M. H. Financial Management is paid at a rate of $1,500 per day to a minimum of $25,000 per month exclusive of travel expenses and Goods and Services Tax for Mr. Heysel’s services. The agreement contains non-compete provisions that restrict Mr. Heysel from doing any business whatsoever with our partners and/or contractees or doing substantially similar work for a period of one year in the event Mr. Heysel is no longer contracted by us for any reason. Mr. Matthew Heysel’s consulting contract provides that should we terminate the agreement, Mr. Heysel would be paid $300,000 at the time of termination. The agreement provides that in the event of a change of control, Mr. Heysel is to be paid five percent (5%) of the value of t he sale of our assets or the value of the transaction which would constitute a takeover of Big Sky. This amount is to be paid within 10 days of the transaction. A takeover of Big Sky is defined as:
- | any change in the holding, either direct or indirect, of shares of Big Sky, or any reconstruction, reorganization, recapitalization, consolidation, amalgamation, merger, arrangement or other transaction, that results in a person who was, or a group of persons acting in concert who were, not previously in a position to exercise effective control of Big Sky, in excess of the number that would entitle the holders thereof to cast twenty (25%) percent or more of the votes attaching to all shares of Big Sky, and |
- | the exercise of such effective control to cause or result in the election or appointment of two or more directors of Big Sky, or of the successor to Big Sky, who were not previously directors of Big Sky. |
Daming Yang Consulting Agreement: Daming Yang provided Big Sky services as our President on a full-time basis under a consulting agreement, which expired in December 15, 2005. This contract has not been renewed. We pay a consulting fee in the monthly amount of $5,000, subject to annual adjustments at the discretion of our board of directors, for Mr. Yang’s services. The agreement contains non-competition provisions that restrict Mr. Yang from doing any business
13
whatsoever with our partners and/or contractees or doing substantially similar work for a period of one year in the event Mr. Yang is no longer contracted by us for any reason. Mr. Yang resigned as President, effective March 1; 2005, Mr Yang remains a director however he does not intend to stand for re-election to the Board.Barry Raymond Swersky Consulting Agreement: Mr. Swersky provides consulting services to Big Sky through his company, Suntree Ltd. Big Sky and Suntree Ltd. executed a consulting agreement as of November 18, 2004 terminating on March 31, 2006. Suntree Ltd. is compensated at a rate of $10,000 per month, plus expenses including travel.
A.S. Sehsuvaroglu Employment Agreement: Mr. Sehsuvaroglu commenced providing services as President of Big Sky on March 1, 2005. An employment agreement was entered into as of that date for a term to continue until February 9, 2008. The compensation under this agreement was initially set at the rate of $395,000 per annum, paid monthly, together with stock options for 3,250,000 shares of common stock of Big Sky. By resolution of the Board of Directors dated March 29, 2005, the number of stock options was increased to 4,000,000 and by a vote of the Board of Directors, Mr Sehsuvaroglu became Chief Executive Officer on May 10, 2005.
Bruce H Gaston Consulting Agreement:Mr Gaston has provided services to Big Sky as Chief Financial Officer and as a Director since March 31, 2005. A consulting agreement was entered into on or about April 16, 2005, between Big Sky and Arcdan Inc., a company controlled by Mr Gaston, for a term of 3 years with compensation to be at the rate of $212,000 per annum, paid monthly, exclusive of taxes and expenses. Mr Gaston has the right of participation in the Big Sky Stock Award plan.
INTEREST OF CERTAIN PERSON IN MATTERS TO BE ACTED UPON
No person that has been a director or executive officer of Big Sky at any time since the beginning of the last fiscal year, is a nominee for election as a director of Big Sky, or that is an associate of any of the foregoing persons has any interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the Annual Meeting.
CERTAIN TRANSACTIONS
In March 2005, the Corporation paid $80,000 to a company affiliated with Mr Bruce Gaston, a director since December 3, 2004, for introduction to potential investors. Certain of these potential investors subsequently participated in the private placement of $13.7 million raised by the Corporation in February 2005
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires any person who is our director or executive officer or who beneficially holds more than 10% of any class of our securities which have been registered with the Securities and Exchange Commission, to file reports of initial ownership and changes in ownership with the Securities and Exchange Commission. These persons are also required under the regulations of the Securities and Exchange Commission to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on our review of the copies of the Section 16(a) reports furnished to us and a review of our shareholders of record for the fiscal year ended 2004, the first, second and third quarters of 2005, filing delinquencies were as follows:
Insider | Filing | Due Date | Filing Date | Reason for Deficiency |
Matthew Heysel | Form 13G | 01/10/04 | 04/12/04 | Delay in completing transaction |
Daming Yang | Form 13G | 01/10/04 | 03/18/04 | Delay in completing transaction |
Wei Yang | Form 4 | 03/2/04 | 03/22/04 | Traveling |
L-R Offshore Managers LLC | Form 3 | 05/17/04 | 06/14/04 | Difficulty in obtaining signatures |
Matthew Heysel | Form 4 | 05/09/04 | 05/13/04 | Traveling |
Matthew Heysel | Form 4 | 10/01/04 | 10/12/04 | Traveling |
Matthew Heysel | Form 4 | 01/04/05 | 01/11/05 | Traveling |
A.S. Sehsuvaroglu | Form 3 | 03/19/05 | 04/01/05 | Awaiting notarized signature on Form ID |
Nurlan U. Balgimbayev | Form 3 | 03/19/05 | 04/11/05 | Awaiting notarized signature on Form ID |
Servet Harunoglu | Form 3 | 05/14/05 | 06/15/05 | Awaiting notarized signature on Form ID |
14
In addition to the above noted delinquent filings, the following filings were delayed by the Corporation due to rescheduling of the Board meetings required to pass the necessary enacting resolutions.
Insider | Filing | Due Date | Filing Date | Reason for Deficiency |
Barry Raymond Swersky | Form 3 | 12/13/04 | 03/10/05 | Delayed by Corporation |
Bruce Hill Gaston | Form 3 | 12/13/04 | 03/10/05 | Delayed by Corporation |
Philip Dean Pardo | Form 3 | 12/13/04 | 03/10/05 | Delayed by Corporation |
All other Section 16(a) filing requirements applicable to our directors, executive officers and holders of more than 10% of any class of our registered securities were, to the best of our knowledge, timely complied with.
Code of Business Conduct and Ethics
On March 29, 2004, our board of directors approved and adopted our Code of Business Conduct and Ethics, which applies to all our officers, directors, employees and consultants. The Code is available on our website atwww.bigskycanada.com. A copy of the Code is available free of charge upon written request made to the office of the Corporate Secretary by either facsimile at 403-265-8808 or by mail at Big Sky Energy Corporation, 750, 440-2 Avenue SW, Calgary, Alberta, T2P 5E9.
PROPOSAL 1 - ELECTION OF DIRECTORS
Nine (9) directors are to be elected at the meeting. The individuals named in the enclosed form of proxy will vote, if so authorized, FOR the persons named below as directors of the Company, each of whom has served as a director of the Company for the periods so indicated. Each such person is to be elected to hold office until the next succeeding Annual Meeting of Shareholders or until his successor is duly elected and qualified. Management of the Company is not aware of any reason why any of the nominees will not be able to serve. If a nominee should subsequently become unavailable for election, the persons voting the accompanying proxy may, in their sole discretion, vote FOR such substitute nominee the present Board of Directors may recommend. For further information on the nominees who are currently serving as Directors and Officers, see the section of this Proxy entitled “Directors and Executive Officers”. Further information on nominees first proposed is detailed below.
Nominees for election to serve as directors for the coming year are:
Name | Age | Position | Since |
Daniel Caleb Feldman | 35 | Director | |
Bruce H. Gaston | 40 | Director and Chief Financial Officer | Director -December 3, 2004 Chief Financial Officer - April 18, 2005 |
Servet Harunoglu | 61 | Director | May 10, 2005 |
Matthew J. Heysel | 49 | Executive Chairman of the Board, & Director | April 14, 2000 |
Guglielmo A.C. Moscato | 69 | Director | |
Philip D Pardo | 49 | Director | December 3, 2004 |
S.A (Al) Sehsuvaroglu | 50 | Chief Executive Officer, President & Director | March 9, 2005 |
Barry Swersky | 66 | Director | December 3, 2004 |
Guglielmo Antonio Claudio Moscato
Guglielmo Moscato has some 40 years of Exploration and Production experience in the petroleum industry. From 1996 to 1999 he was Chairman of the Board of Directors of Eni S.p.A. In June 2005 he retired as a main board member of Eni S.p.A. During the period 1991 to 1997 he was respectively Managing Director in Agip for Exploration, Engineering, Purchasing, Contracts and Production Services and thereafter Chairman and Chief Executive of Agip S.p.A., part of the Eni group. As Agip Chief Executive and Eni Chairman, he negotiated and finalized the acquisition of the Karachaganak field and the Eni Caspian permits (including Kashagan) in Kazakhstan as well as the Libyan gas development and export to Italy. He has a proven track record of creating significant corporate value by acquiring new exploration and production licenses all over the world. From 1999 to the present date Mr. Moscato ac ts as Chairman of the Board of Eni Fondazione
15
Enrico Mattei, a no-profit, no-partisan research institution established to carry out research in the field of sustainable development based in Trieste, Italy. He holds a degree ofDottore Ingegnere in Ingegneria Industriale Sezione Elettrotecnicafrom the Politecnico di Milano, awarded in 1961.
Daniel Caleb Feldman
Mr. Feldman is a practicing attorney who was educated in the United States. He obtained a B.A. in Soviet Studies in 1992 from Trinity College, Hartford, CT, followed by a J.D from Boston University School of Law between August, 1992 and June, 1995 completing his education with the attainment of a L.L.M degree in Securities and Financial Regulation from Georgetown University Law School in June, 1997. Mr. Feldman has held positions with the US Securities and Exchange Commission as a Senior Attorney in the Enforcement Division from 1997 to 2000, as an attorney in the Corporate Department with the firm of Goodwin Procter from July, 2000 to September, 2001. In April, 2002 he joined Ernst & Young as an attorney until January, 2003 when he joined Yukos Oil Company as the Corporate Secretary in March, 2003 where he remains to date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE-LISTED NOMINEES FOR ELECTION AS DIRECTORS.
PROPOSAL 2 - RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF PRINCIPAL ACCOUNTANTS
On April 18, 2005, Deloitte & Touche LLP (“Deloitte & Touche”), the independent registered public accounting firm previously engaged to audit our financial statements, resigned as our independent registered public accounting firm. Deloitte & Touche audited our consolidated financial statements for the two most recent fiscal years ended December 31, 2004.
The report of Deloitte & Touche accompanying the audit for our two most recent fiscal years ended December 31, 2004, as included in Form 10-KSB/A, was not qualified or qualified as to audit scope or accounting principles. However, such report did contain a modification with regards to substantial doubt about our ability to continue as a going concern.
During our two most recent fiscal years ended December 31, 2004, preceding the date of resignation there were no disagreements between us and Deloitte & Touche on any matter of accounting principles or practices, financial statements disclosure, or auditing scope or procedure.
During our two most recent fiscal years ended December 31, 2004, preceding the date of resignation there were no reportable events as such term is defined by paragraph (a)(1)(iv) of Item 304 of Regulation S-B promulgated by the Securities and Exchange Commission.
Subject to shareholder ratification, the Board has selected BDO Kazakhstanaudit LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2005, or until its successor is selected. BDO Kazakhstanaudit LLP was appointed by the Board of Directors on May 17, 2005, following the resignation of Deloitte & Touche LLP on April 18, 2005.
Representatives of BDO Kazakhstanaudit LLP are being invited to attend the Annual Meeting. Representatives of Deloitte & Touche are not expected to be present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF AN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
16
PROPOSAL 3 – APPROVAL OF AMENDMENTS TO THE
BIG SKY ENERGY CORPORATION STOCK AWARD PLAN
General
The Board of Directors and the Shareholders approved the China Broadband Corp. 2000 Stock Plan (the "2000 Stock Option Plan") on April 13, 2000 and June 29, 2001, respectively. The 2000 Stock Option Plan was then amended at the Company’s last annual meeting of shareholders held on December 3, 2004. The purpose of the 2000 Stock Option Plan is to enable us to attract and retain the services of eligible employees and consultants and to provide them with increased incentive to exert their best efforts on our behalf by increasing their personal stake in Big Sky Energy Corporation. The Nominating & Compensation Committee of the Board of Directors has amended the 2000 Stock Option Plan in the following manner, pending shareholder approval:
1)
The 2000 Stock Option Plan will henceforth be referred to as the “Big Sky Energy Corporation Stock Award Plan”.
2)
The number of shares of our common stock authorized for issuance will increase from 15,000,000 to no less than 15% of the issued and outstanding shares at any given time. As of January 13, 2006, we had a total of 142,348,697issued and outstanding shares. The shares underlying the Big Sky Energy Corporation Stock Award Plan have not been registered.
3)
The shareholders will authorize the Board of Directors, in cases that the Board deems are necessary and reasonable, to grant options with automatic and full vesting. Under the previously amended 2000 Stock Option Plan, all options vested over a period of four (4) years, with the first vesting to occur not until one (1) year from the grant date. Under the proposed amendment to the Big Sky Energy Corporation Stock Award Plan, the Board would empower the Plan Administrator to determine a vesting schedule appropriate to the grant being awarded so as to permit the Big Sky Energy Corporation Stock Award Plan to support staffing and consultancy opportunities that the Board believes is in the Company’s best interests.
Summary of the Plan
Under the Big Sky Energy Corporation Stock Award Plan, the Board of Directors or a committee thereof shall administer the plan. The administrator may grant incentive or non-qualified options and restricted stock to our directors, officers, employees and consultants. As of January 6, 2006, our Board has granted options exercisable to acquire 13,250,000shares of common stock. The closing bid price of Big Sky’s common stock, as quote on the Over-the-Counter/Bulletin Board, under the symbol “BSKO”, as of January 6, 2006, was $1.93. There is no direct consideration to be received by Big Sky for the issuance of the securities under this Plan. The plan is intended to retain the services of our valued key employees and consultants and others that the plan administrator may select to:
•
encourage our employees and consultants to acquire a greater proprietary interest in Big Sky Energy Corporation;
•
serve as an aid and inducement in the hiring of new employees; and
•
provide an equity incentive to consultants and others selected by the Board of Directors and the plan administrator.
The primary difference between "incentive stock options" and non-qualified options is the tax treatment of the option holder. If a holder complies with Internal Revenue Service rules regarding incentive stock options, a holder of an incentive stock can defer recognition of income for tax purposes until the shares underlying the options are sold. A holder of a non-qualified option generally recognizes income on the date of exercise. Incentive stock options may be granted to any individual who, at the time the option is granted, is an employee of Big Sky Energy Corporation or any related corporation. Non-qualified stock options may be granted to employees and to others at the discretion of the plan administrator. Participants in the Big Sky Energy Corporation Stock Award Plan are obligated to pay to the Company an amount required to be withheld under applicable tax laws.
The plan administrator fixes the exercise price for options in the exercise of its sole discretion, except that the exercise price for an incentive stock option must be at least the fair market value per share of the common stock at the date of grant (as determined by the plan administrator in good faith), or in the case of greater-than ten percent shareholders, at least one hundred and ten percent (110%) of the fair market value per share. The exercise price may be paid in cash or, with the approval of the plan administrator, by other means, including withholding of option shares, delivery of previously held shares, a promissory note or cancellation of indebtedness by the Company to the optionee.
17
Options granted and restricted stock awards under the plan vest, unless otherwise determined by the plan administrator, over a three-year period, with one-third becoming exercisable at the end of one year of continuous status as an employee or consultant and the remaining two-thirds vesting pro rata annually over the balance of the term, unless otherwise determined by the plan administrator. The plan administrator may accelerate the vesting of options in its sole discretion. Any unexercised portion of an option which expires or becomes unexercisable for any reason becomes available for future grant under the Big Sky Energy Corporation Stock Award Plan. Any shares of restricted stock awarded under the Big Sky Energy Corporation Stock Award Plan which rights have not vested shall be returned to the Company and may be used for future awards under the Big Sky Energy Corporation Stock Award Plan. Options are non-t ransferable except by will or the laws of descent and distribution or subject to a qualified domestic relations order. With some exceptions, vested but unexercised options terminate upon the earlier of:
•
the expiration of the option term specified by the plan administrator at the date of grant;
•
the expiration of ninety (90) days from the date of an optionee's termination of services with us or any related corporation; or
•
the expiration of one year from the date of death or disability (as defined in the plan) of the optionee.
If an optionee's services are terminated by death, any option held by the optionee is exercisable only by the person or persons to whom such optionee's rights under the option pass by the optionee's will or by the laws of descent and distribution of the state or county of the optionee's domicile at the time of death. Unless accelerated in accordance with the plan, unvested options terminate immediately upon termination of services of the optionee by us for any reason, including death or disability. The plan administrator may amend or modify the plan, except that no amendment with respect to an outstanding option may be made over the objection of the holder of the option (other than those provisions triggering acceleration of vesting of outstanding options).
In the event of a proposed dissolution or liquidation of the Company, the plan administrator must notify the participants as least fifteen (15) days prior to such proposed transaction and to the extent not previously exercised, awards will terminate immediately prior to the consummation of such action.
In the event of a Change of Control, as defined in the Big Sky Energy Corporation Stock Award Plan, each option that is outstanding shall automatically accelerate so that each option shall become 100% vested immediately prior to the specified effective date for the Change of Control unless it is determined that:
a)
it would render unavailable “pooling of interest” accounting for a transaction that would otherwise qualify for such accounting treatment; or
b)
such option is to be assumed by the successor corporation or replaced with a comparable award for the purchase of shares of the stock of the successor corporation.
If such award is assumed or replaced in the Change of Control, vesting of all of the unvested shares subject to such award shall be accelerated in the event the participant’s services should subsequently terminate within six months following the Change of Control, unless the services are terminate by the Company for Good Reason, as defined in the Big Sky Energy Corporation Stock Award Plan.
Amounts that will be received or allocated under the Big Sky 2000 Stock Option Plan, to the extent such benefits or amounts are determinable:
Name | Number of Shares | Dollar Value |
Matthew Heysel | 2,000,000 | $3,860,000.00 |
S.A. Sehsuvaroglu | 4,000,000(1) | $7,720,000.00 |
Bruce H. Gaston | 1,000,000 | $1,930,000.00 |
Barry R. Swersky | 300,000 | $579,000.00 |
Current Executive Officers as a Group | 7,300,000 | $14,089,000.00 |
Philip D. Pardo | 300,000 | $579,000.00 |
Thomas Milne | 600,000 | $1,158,000.00 |
Servet Harunoglu | 300,000 | $579,000.00 |
N. U. Balgimbayev | 1,000,000(2) | $1,930,000.00 |
Current Non-Executive Directors, as a Group | 2,200,000 | $4,246,000.00 |
18
Non- Executive Officer Employees & Others as a Group | 3,750,000 | $7,237,500.00 | |
(1) | Mr. Sehsuvarolgu was allocated an additional 3,000,000 options on July 26, 2005. These options are not currently granted subject to a decision of the Board of Directors and an increase in the shares available under the 2000 Stock Award Plan, which resolution shall be presented to the next Annual Meeting of Shareholders. | ||
(2) | Mr. Balgimbayev was allocated a further 4,000,000 options. These options will not be granted unless the number of shares available under the 2000 Stock Award Plan is increased, which resolution is proposed to be voted on at the Annual Meeting. |
Stock Option Agreement Summary
In addition to the terms in the Big Sky Energy Corporation Stock Award Plan, our standard stock option agreement and exercise notice include the following additional terms and conditions:
a)
If requested by the Company or any representative of underwriters (the “Managing Underwriter”) in connection with any registration of an offering of any securities of the Company under the Securities Act, the optionee agrees not sell or transfer any shares or other securities of the Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) following the effective date of a registration statement of the Company filed under the Securities Act. Such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act.
b)
Before any shares held by the optionee may be sold, the Company has a right of first refusal to purchase the shares. This Right of First Refusal shall terminate upon the completion of a proposed transfer of the shares obtained by exercising of an option to an unrelated third party.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE INCREASE IN THE NUMBER OF SHARES AVAILABLE UNDER THE BIG SKY ENERGY CORPORATION STOCK AWARD PLAN AND ALLOTHER AMENDMENTS AS DETAILED ABOVE
PROPOSAL 4 – APPROVAL OF INCREASE IN THE SHARE CAPITAL OF
BIG SKY ENERGY CORPORATION
The Board of Directors of Big Sky Energy Corporation propose that Big Sky increase its authorized shares from 150,000,000 shares of common stock, $0.001 par value to 350,000,000 shares of common stock, $0.001 par value, which it feels is a more adequate number of authorized shares to allow Big Sky to raise capital and acquire assets.
Big Sky does not have any current plans, proposals or arrangements, written or otherwise, to issue the authorized shares, at this time. However, as a result of the increase of Big Sky’s authorized capital, certain option holders holding options for an aggregate of Seven Million, Three Hundred Thousand (7,300,000) shares will be able to exercise their options, if they so choose. Such option holders had previously provided Big Sky with an undertaking not to exercise their options at any time prior to such time as the authorized share capital has been increased. This undertaking was necessary so that Big Sky had sufficient share capital available to shares of common stock in connection with its recent private placement.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE INCREASE IN THE SHARE CAPITAL OF BIG SKY ENERGY CORPORATION TO 350,000,000 SHARES OF COMMON STOCK
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware of any other matter, which is to be presented for action at the Annual Meeting. If any matter other than those described above does properly come before the Annual Meeting, the individuals named in the enclosed Proxy will, unless indicated otherwise, vote the shares represented thereby in accordance with their best judgment.
19
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Upon the written request of any shareholder of the Company, as record or beneficial owner, the Company will provide to such shareholder a copy of the Company's Annual Report on Form 10-KSB for its fiscal year ended December 31, 2004 including the financial statements and the schedules thereto, filed with the Securities and Exchange Commission. Any request should be directed to the Corporate Secretary, at the Company's Calgary office listed above. There will be no charge for the Form 10-KSB, unless one or more exhibits thereto are requested, in which event the Company's reasonable expenses of furnishing such exhibits may be charged.
FUTURE SHAREHOLDER PROPOSALS
From time to time, shareholders present proposals, which may be the proper subject for inclusion in the Company's Proxy Statement and for consideration at its annual meetings of shareholders. To be considered, proposals must be submitted on a timely basis. The Company expects to receive approval of its proposal to amend its articles of incorporation to require that its annual meeting of shareholders be held within 180 days of the end of each fiscal year. If such proposal is approved, it will hold its next annual meeting of shareholders no later than June 29, 2006. Therefore, shareholder proposals for the next Annual Meeting of Shareholders of the Company must be received by the Company no later than March 1, 2006, for inclusion, if proper, in next year's proxy solicitation materials. Any shareholder’s proposal received after May 15, 2006, will be considered untimely for consideration at the next Annual Meeting of Shareholders.
GENERAL
The Company will pay all of the costs of preparing, assembling and mailing the form of Proxy, Proxy Statement and other materials which may be sent to the shareholders in connection with this solicitation, as well as any costs of soliciting proxies in the accompanying form. Solicitation will be made by mail, and officers, directors and consultants of the Company may also solicit proxies by telephone, telegraph or personal interview for which they will receive no additional remuneration. The Company expects to request brokers and nominees who hold stock in their names to furnish this proxy material to their customers and to solicit proxies from them. The Company will reimburse such brokers and nominees for their out-of-pocket and reasonable clerical expenses in connection therewith. The Company estimates that it will expend a total of $35,000 in connection with this solicitation of proxies and has expended $5,500 to date.
WHILE YOU HAVE THE MATTER IN MIND, PLEASE COMPLETE, SIGN
AND RETURN THE ENCLOSED PROXY CARD.
January 20, 2006 | By Order of the Board of Directors, |
/s/ Selami Ahmet Sehsuvaroglu Chief Executive Officer |
20
Big Sky Energy Corporation
The undersigned hereby appointsS.A. Sehsuvaroglu and Bruce H Gaston, the true and lawful proxies of the undersigned, having full power to substitute, to represent the undersigned and to vote all shares of common stock, no par value (the “Common Stock”) of BIG SKY ENERGY CORPORATION, a Nevada corporation (“BSKO”), which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders of BIG SKY ENERGY CORPORATION (the “Annual Meeting”) to be held at 3:00 p.m., local time, on February 28, 2006 at 17 Old Park Lane, 7th floor London UK W1K 1QT , or any postponed or adjourned meetings thereof as indicated below.
a) | To elect an Eight (8) member Board of Directors to serve until the next Annual Meeting of Shareholders of the Company or until their successors are duly elected and qualified; | ||||||
Daniel Caleb Feldman | FOR | AGAINST | WITHHOLD | ||||
Bruce H. Gaston | FOR | AGAINST | WITHHOLD | ||||
Servet Harunoglu | FOR | AGAINST | WITHHOLD | ||||
Matthew Heysel | FOR | AGAINST | WITHHOLD | ||||
Guglielmo A.C. Moscato | FOR | AGAINST | WITHHOLD | ||||
Philip D. Pardo | FOR | AGAINST | WITHHOLD | ||||
S.A Sehsuvaroglu | FOR | AGAINST | WITHHOLD | ||||
Barry R. Swersky | FOR | AGAINST | WITHHOLD | ||||
b) | To ratify the Board of Directors' selection as independent registered public accounting firm, BDO Kazakhstanaudit LLP for the 2005 fiscal year; FOR AGAINST WITHHOLD | ||||||
c) | To approve the increase in share capital of BIG SKY ENERGY CORPORATION to 350,000,000 shares of common stock. FOR AGAINST WITHHOLD | ||||||
d) | To approve amendments to the BIG SKY ENERGY CORPORATION Stock Award Plan; FOR AGAINST WITHHOLD | ||||||
e) | To consider and transact such other business as may properly come before the Annual Meeting and any adjournments thereof FOR AGAINST WITHHOLD |
NOTE: Please date this proxy and sign it exactly as your name or names appear on your shares. If signing as an attorney, executor, administrator, guardian or trustee, please give full title as such. If a corporation, please sign full corporate name by duly authorized officer or officers, affix corporate seal and attach a certified copy of resolution or bylaws evidencing authority.
Name as it appears on share certificate (please print | Address: | Signature Date: |
Number of Shares |
21