[ ]
|
Preliminary
Proxy Statement
|
[ ]
|
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
[x]
|
Definitive
Proxy Statement
|
[ ]
|
Definitive
Additional Materials
|
[ ]
|
Soliciting
Material Pursuant to §240.14a-12
|
[x]
|
No
fee required.
|
[ ]
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
|
1)
|
Title
of each class of securities to which transaction applies:
|
|
2)
|
Aggregate
number of securities to which transaction applies:
|
|
3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was determined):
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|
4)
|
Proposed
maximum aggregate value of transaction:
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5)
|
Total
fee paid:
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[ ]
|
Fee
paid previously with preliminary materials
|
[ ]
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee
was paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
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|
1)
|
Amount
Previously Paid:
|
|
2)
|
Form,
Schedule or Registration Statement No.:
|
|
3)
|
Filing
Party:
|
|
4)
|
Date
Filed:
|
(2)
|
Such
other business as may properly come before the Annual Meeting and
at any
adjournments thereof.
|
NOMINEES:
|
Charles
B. Crowell
|
Carmen
J. Lotito
|
Martin
B. Oring
|
Matthew
R. Silverman
|
Dr.
Anthony K. Yeats
|
·
|
Charles
B. Crowell, age
64, was appointed to serve as our Chairman of the Board and Chief
Executive Officer in July 2007. Mr. Crowell has served as a
director of the Company since February 2007 and was a member and
chairman
of the Audit and Compensation Committees. In addition to his
service to the Company, Mr. Crowell has been a practicing attorney
and an
officer and consultant to oil and gas companies for 38
years. Mr. Crowell has held executive positions at several
public and private companies, including manager and principal of
Enigma
Energy Company, LLC, Dallas, Texas, and Executive Vice President
of
Administration of Triton Energy Corporation. In addition to his
services as a director of the Company, Mr. Crowell has also served
and
continues to serve as a director in several other public companies,
including PetroHunter Energy, Inc., Denver Colorado (2002-present)
and
Vice Chairman of the Board (2003-present); Comanche Energy, Inc.,
Tulsa,
Oklahoma (1999-2000); Arakis Energy Corporation, Calgary, Alberta,
Canada
(1997-1998); Aero Services International, Inc., Newtown, Pennsylvania
(1989-1993) (Chairman of the Board 8/90-12/92); and Triton Europe,
plc.,
The Hague, The Netherlands (1989-1993). Mr. Crowell holds a BA
degree from John Hopkins and a JD from University of
Arkansas. He was admitted to the practice of law in Texas in
1974.
|
·
|
Carmen
J. Lotito, age
63, has been a director of the Company since May 2006 and the Executive
Vice President – Business Development since October 2007. He
previously served as the Executive Vice President, Chief Financial
Officer, Treasurer, and Secretary of the Company at various times
from May
2006 to October 2007. Mr. Lotito is also the Executive
Vice President – Business Development of PetroHunter Operating
Company. Mr. Lotito has been a director and chairman of
the audit and compensation committees of Gasco Energy, Inc. since
April 2001, and was a director of Galaxy Energy Corporation from
November 2002 to August 2006. He served as chief financial
officer and treasurer of Galaxy Energy Corporation from November 2002
to July 2005, and as executive vice president from August 2004
to July 2005. Both PetroHunter Energy and Galaxy Energy
are subject to the reporting requirements of the Securities Exchange
|
·
|
Martin
B. Oring, age
62, became a director in July 2007. Mr. Oring is an executive
in the financial services and energy industries. Prior to
forming his current business in 2001, Wealth Preservation, LLC, he
had
extensive experience as a member of management in several companies,
including Prudential Securities (Managing Director of Executive Services),
Chase Manhattan Corporation (Manager of Capital Planning), and Mobil
Corporation (Manager, Capital Markets & Investment
Banking). He has served and will continue to serve as a
director of Parallel Petroleum Corporation, located in Midland,
Texas. Mr. Oring received a B.S. degree in mechanical
engineering from the Carnegie Institute of Technology in 1966 and
an
M.B.A. degree from in production management, finance and marketing
from
Columbia University in 1968. Mr. Oring chairs the audit,
compensation and nominating committees of our board of directors
and is a
qualified financial expert.
|
·
|
Matthew
R. Silverman,
age 54, became a director in February 2007. Mr. Silverman is
Exploration Manager with Robert L. Bayless, Producer LLC, an oil
and gas
company that is active in the central and southern Rocky Mountain
regions. Such projects have included exploration for
conventional oil and natural gas, tight gas, and coalbed methane
development in several basins. Mr. Silverman directs Bayless's
geology and land departments in its Denver offices. From 1989
to 2000, he was employed by Gustavson Associates, Inc., an international
oil and gas consulting group, where he was responsible for technical
evaluation and capital formation for exploration and production
opportunities around the world. His work included appraising
oil and gas assets (producing and exploratory), preparing on-site
oil and
gas field feasibility studies, and business development. Mr.
Silverman was previously employed by TOTAL Minatome and its predecessors,
CSX Oil & Gas and Texas Gas Exploration, from 1982 to 1989 in Denver,
Colorado, and by Evans Energy from 1976 to 1982. He received an
A.B. degree from Brown University in 1975 and an M.S. degree in Geological
Sciences from the University of Colorado in 1983. Mr. Silverman
is a Certified Petroleum Geologist.
|
·
|
Dr.
Anthony K. Yeats,
age 61, became a director in February 2006. Dr. Yeats has
participated in the development of numerous exploration ventures
in oil
and gas opportunities around the world. His career has included
the role of Chief Geologist, Geophysicist and Team Leader for Royal
Dutch
Shell in the Middle East, Africa and the Far East, Exploration Coordinator
for BP’s Global Basin Group, and Chief Geologist for a number of regional
acquisitions undertaken by British Petroleum at a variety of locations
throughout the Middle East, Africa, Canada and Europe. Before
joining the Company, in 1999 Dr. Yeats started Cambridge Earth
Sciences Limited, which provides private research and consulting
services
for companies engaging in geology and exploration management, which
Dr. Yeats continues to run. Prior to 1999, Dr. Yeats
was Co-coordinator for World Wide New Ventures for Total in Paris
and
finally Exploration Manager for Total in the Former Soviet Union
where he
managed teams undertaking hydrocarbon exploration in Kazakhstan,
Azerbaijan, and Russia. In this post he was responsible for the
generation of new ventures, including the acquisition of already
existing
discoveries. Over the years he has developed extensive contacts
with the financial community in Edinburgh and London, which specialize
in
the raising of capital for oil and gas ventures particularly from
UK,
French, Canadian and Middle East
sources.
|
Name
and Address of Beneficial Owner (1)
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of Class (2)
|
Marc
A. Bruner
29
Blauenweg
Metzerlen,
Switzerland 4116
|
189,800,000
(3)
|
53.8%
|
MAB
Resources LLC
1875
Lawrence Street, Suite 1400
Denver,
CO 80202
|
187,800,000
(4)
|
53.2%
|
Name
and Address of Beneficial Owner (1)
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of Class (2)
|
Nobu
Ventures, Inc.
Austrasse
15
Vaduz
9490, Switzerland
|
30,000,000
|
9.4%
|
Global
Project Finance AG
Sunnaerai
1
Sachsein
6072, Switzerland
|
19,320,400
(5)
|
5.8%
|
Martin
B. Oring
|
3,808,334
(6)
|
1.2%
|
Charles
B. Crowell
|
3,450,000
(7)
|
1.1%
|
David
E. Brody
|
2,503,334
(8)
|
0.8%
|
Carmen
J. Lotito
|
2,050,000
(9)
|
0.6%
|
Thomas
S. Ahlbrandt
|
600,000
(10)
|
0.2%
|
Jim
Bob Byrd
|
580,000
(11)
|
0.2%
|
Matthew
R. Silverman
|
550,000
(12)
|
0.2%
|
Lyle
R. Nelson
|
543,000
(13)
|
0.2%
|
Anthony
K. Yeats
|
360,000
(14)
|
0.1%
|
Kyle
WhiteJohnson
|
170,000
(15)
|
0.1%
|
Lori
Rappucci
|
120,000
(16)
|
(17)
|
All
officers and directors as a group (11 persons)
|
14,734,668
(18)
|
4.4%
|
(1)
|
To
our knowledge, except as set forth in the footnotes to this table
and
subject to applicable community property laws, each person named
in the
table has sole voting and investment power with respect to the shares
set
forth opposite such person’s name.
|
(2)
|
This
table is based on 319,109,507 shares of Common Stock outstanding
as of
January 22, 2008. If a person listed on this table has the right
to obtain
additional shares of Common Stock within sixty (60) days from January
22,
2008, the additional shares are deemed to be outstanding for the
purpose
of computing the percentage of class owned by such person, but are
not
deemed to be outstanding for the purpose of computing the percentage
of
any other person.
|
(3)
|
Included
in Mr. Bruner’s share ownership are 154,000,000 shares owned of record by
MAB Resources LLC and 2,000,000 shares owned of record by BioFibre
Technology International, Inc. Mr. Bruner is a control person
of both these entities. Also included in Mr. Bruner’s share
ownership are 33,800,000 shares issuable upon exercise of vested
stock
options and warrants held by MAB Resources LLC.
|
(4)
|
Includes
1,800,000 shares issuable upon exercise of vested stock options and
32,000,000 shares issuable upon exercise of warrants.
|
(5)
|
Includes
16,600,000 shares issuable upon exercise of warrants held by Global
Project Finance AG.
|
(6)
|
Includes
475,000 shares issuable upon exercise of vested stock options, 1,666,667
shares issuable upon conversion of debentures and 1,666,667 shares
issuable upon exercise of warrants.
|
(7)
|
Includes
1,450,000 shares issuable upon exercise of vested stock options,
1,000,000
shares issuable upon conversion of debentures and 1,000,000 shares
issuable upon exercise of warrants.
|
(8)
|
Includes
970,000 shares issuable upon exercise of vested stock options, 666,667
shares issuable upon conversion of debentures and 666,667 shares
issuable
upon exercise of warrants.
|
(9)
|
Includes
200,000 shares held of record by Mr. Lotito’s wife and 1,850,000 shares
issuable upon exercise of vested stock options.
|
(10)
|
Includes
600,000 shares issuable upon exercise of vested stock options.
|
(11)
|
Includes
175,000 shares held jointly with Mr. Byrd’s wife and 405,000 shares
issuable upon exercise of vested stock options.
|
(12)
|
Includes
350,000 shares issuable upon exercise of vested stock options.
|
(13)
|
Includes
503,000 shares issuable upon exercise of vested stock options.
|
(14)
|
Includes
360,000 shares issuable upon exercise of vested stock options.
|
(15)
|
Includes
170,000 shares issuable upon exercise of vested stock options.
|
(16)
|
Includes
120,000 shares issuable upon exercise of vested stock options.
|
(18)
|
Includes
7,253,000 shares issuable upon exercise vested stock options, 3,333,334
shares issuable upon conversion of debentures, and 3,333,334 shares
issuable upon exercise of warrants.
|
Name
|
Age
|
Position
|
Charles
B. Crowell
|
64
|
Chairman
of the Board and Chief Executive Officer
|
Carmen
J. Lotito
|
63
|
Executive
Vice President – Business Development
|
Lori
Rappucci
|
46
|
Vice
President and Chief Financial Officer
|
David
E. Brody
|
59
|
Vice
President, General Counsel and Secretary
|
Thomas
S. Ahlbrandt
|
59
|
Vice
President of Exploration and Chief Geologist
|
Lyle
R. Nelson
|
60
|
Vice
President of Operations and Production
|
Jim
Bob Byrd
|
48
|
Vice
President of Land and Business Development
|
Kyle
L. WhiteJohnson
|
50
|
Vice
President of Administration and Assistant
Secretary
|
·
|
to
assist the Board in its responsibility relating to fair and competitive
compensation of key employees of
PetroHunter;
|
·
|
to
assure that key employees, which includes all officers, are compensated
in
a manner consistent with the compensation philosophy and strategy
of the
Board and in compliance with the requirements of appropriated regulatory
bodies and any exchange rules to which we may be
subject;
|
·
|
to
review and approve our compensation philosophy and our compensation
programs, plans and awards;
|
·
|
to
administer our long and short term incentive plans and stock option
plans;
|
·
|
to
review the compensation of our Chief Executive Officer and recommendations
of the Chief Executive Officer as to appropriate compensation for
the
other executive officers and key personnel;
and
|
·
|
to
review and approve our general employee benefit plans as
needed.
|
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
|
Equity
compensation plans approved by security holders
|
24,965,000
(a)
|
$1.31
|
15,035,000
|
Equity
compensation plans not approved by security holders
|
9,895,000
|
$0.50
|
(b)
|
Total
|
34,860,000
|
15,035,000
|
(a)
|
Typically,
options vest 20% on grant date and 20% each year on the anniversary
of the
grant date but each vesting schedule is also determined by the
Compensation Committee. Most initial grants to directors vest 50%
on grant
date and 50% on the one-year anniversary of the initial grant date.
Subsequent grants (subsequent to the initial grant) to directors
typically
vest 100% at the grant date. In special circumstances, the board
may elect
to modify vesting schedules upon the termination of selected employees
and
contractors.
|
(b)
|
The
equity compensation plan not
approved by stockholders is comprised of non-qualified stock options
granted to employees and non-employee consultants on May 21,
2007. The options were granted at an exercise price of $0.50
per share and vest 60% at grant date and 20% per year at the one-
and
two-year anniversaries of the grant date. The options expire on
May 21, 2012.
|
SUMMARY
COMPENSATION TABLE
|
||||||
Name
and principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards ($)
|
All
Other
Compensa-
tion
($)
|
Total
($)
|
Kelly
H. Nelson
Chief
Executive Officer(1)
|
2007
|
$220,000
|
--
|
$208,154
(3)
|
(2)
|
$428,154
|
Thomas
S. Ahlbrandt
Chief
Executive Officer and Vice President of Exploration (4)
|
2007
|
$160,000
|
$80,000
|
$404,584
(3)(
5)
|
(2)
|
$644,584
|
Charles
B. Crowell
Chief
Executive Officer (6)
|
2007
|
$177,750
(7)
|
--
|
$600,298
(8)
|
(2)
|
$755,548
|
Carmen
J. Lotito
Chief
Financial Officer
|
2007
|
$240,000
|
--
|
$208,154
(3)
|
$37,193
(9)
|
$485,347
|
Garry
Lavold
President
and Chief Operating Officer (10)
|
2007
|
$270,000
|
$29,856
|
$208,154
(3)
|
$18,575
(11)
|
$526,585
|
David
E. Brody
Vice
President & General Counsel
|
2007
|
$200,000
|
--
|
$416,308
(3)
|
(2)
|
$616,308
|
Lyle
R. Nelson
Vice
President of Operations and Production
|
2007
|
$186,800
|
$9,469
|
$104,077
(3)
|
$36,950
(12)
|
$337,296
|
Jim
Bob Byrd
Vice
President of Land and Business Development
|
2007
|
$150,000
|
$30,000
|
$104,077
(3)
|
(2)
|
$284,077
|
Thomas
Schandle
President
and Managing Director of Sweetpea (13)
|
2007
|
$170,000
|
--
|
$104,077
(3)
|
(2)
|
$274,077
|
____________
|
|
(1)
|
Mr.
Nelson served as the Chief Executive Officer through February 7,
2007. He
continued to serve as the Chairman of the Board and Chief Executive
Officer of one of the Company’s subsidiaries, Paleo Technology Inc. until
August 31, 2007 when Paleo Technology was sold.
|
(2)
|
Pursuant
to the requirements of Item 402 of Regulation S-K, disclosure of
perquisites and personal benefits has been excluded for a named officer
if
that officer’s total is less than $10,000.
|
(3)
|
The
Company granted non-qualified stock options on May 21, 2007 that
were
valued at $0.42 per share which represents the FAS 123(R) value of
the
option on that date. Under FAS 123(R), the grant date fair value
of each
stock option award is calculated on the date of grant using the
Black-Scholes option valuation model. The Black-Scholes model was
used
with the following assumptions: volatility rate of 69.66%; risk-free
interest rate of 4.5% based on a U.S. Treasury rate of five years;
and a
3.25-year expected option life. The options vest 60% at grant date
and 20%
at the one-and two-year anniversaries of the grant date. The options
are
exercisable at $0.50 per share and expire on May 21, 2012.
|
(4)
|
Mr.
Ahlbrandt served as the Chairman of the Board and Chief Executive
Officer
from February 7, 2007 to July 2, 2007. He served as Vice President
of
Exploration throughout the 2007 fiscal year.
|
(5)
|
The
Company granted options to purchase 500,000 shares under its 2005
Stock
Option Plan on May 2, 2007. The FAS 123(R) value of the option on
that
date was $0.60 per share, using the Black-Scholes option valuation
model
and the following assumptions: volatility rate of 69.66%; risk-free
interest rate of 4.5% based on a U.S. Treasury rate of five years;
and a
3.75-year expected option life. The options vest 20% at grant date
and 20%
on each anniversary of the grant date. The options are exercisable
at
$1.11 per share and expire on May 2, 2012.
|
(6)
|
Mr.
Crowell became the Chairman of the Board and Chief Executive Officer
on
July 2, 2007.
|
(7)
|
Includes
$22,500 in director fees earned before Mr. Crowell became an officer.
|
(8)
|
The
Company granted options to purchase 500,000 shares under its 2005
Stock
Option Plan on February 7, 2007 upon Mr. Crowell becoming a director
of
the Company and 1,000,000 shares on July 2, 2007 upon Mr. Crowell
assuming
the office of Chairman of the Board and Chief Executive Officer.
The FAS
123(R) value of the option on for the February 7, 2007 grant date
was
$0.66 per share, using the Black-Scholes option valuation model and
the
following assumptions: volatility rate of 70.35%; risk-free interest
rate
of 4.75% based on a U.S. Treasury rate of five years; and a 2.75-year
expected option life. The options vest 50% at grant date and 50%
on the
one-year anniversary of the grant date. The options are exercisable
at
$1.38 per share and expire on February 7, 2012. The FAS 123(R) value
of
the option on for the July 2, 2007 grant date was $0.27 per share,
using
the Black-Scholes option valuation model and the following assumptions:
volatility rate of 71.32%; risk-free interest rate of 4.89% based
on a
U.S. Treasury rate of five years; and a 3.75-year expected option
life.
The options vest 20% at grant date and 20% on each anniversary of
the
grant date. The options are exercisable at $0.49 per share and expire
on
July 2, 2012.
|
(9)
|
All
other compensation consists of: $13,276 for commuting expenses and
$23,917
for meals.
|
(10)
|
Mr.
Lavold resigned his position effective September 30, 2007.
|
(11)
|
All
other compensation consists of: $15,247 for personal travel, $2,575
for
meals and $753 for the purchase of a cell phone.
|
(12)
|
All
other compensation consists of: $16,512 for commuting expenses, $19,000
for housing expenses and $1,438 for moving expenses.
|
(13)
|
Mr.
Schandle resigned his position effective December 3, 2007.
|
GRANTS
OF PLAN-BASED AWARDS
|
|||||
Name
|
Grant
Date
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($/Sh)
|
Closing
Market Price on Grant Date (1)
|
Grant
Date Fair Value of Stock and Option Awards (2)
|
Kelly
H. Nelson
|
5/21/07
|
500,000
|
$0.50
|
$0.70
|
$208,154
|
Thomas
S. Ahlbrandt
|
5/02/07
5/21/07
|
500,000
250,000
|
$1.11
$0.50
|
$1.11
$0.70
|
$300,507
$104,077
|
Charles
B. Crowell
|
2/07/07
7/02/07
|
500,000
1,000,000
|
$1.38
$0.49
|
$1.38
$0.49
|
$328,760
$271,538
|
Carmen
J. Lotito
|
5/21/07
|
500,000
|
$0.50
|
$0.70
|
$208,154
|
Garry
Lavold
|
5/21/07
|
500,000
|
$0.50
|
$0.70
|
$208,154
|
David
E. Brody
|
5/21/07
|
1,000,000
|
$0.50
|
$0.70
|
$416,308
|
Lyle
R. Nelson
|
5/21/07
|
250,000
|
$0.50
|
$0.70
|
$104,077
|
Jim
Bob Byrd
|
5/21/07
|
250,000
|
$0.50
|
$0.70
|
$104,077
|
Thomas
Schandle
|
5/21/07
|
250,000
|
$0.50
|
$0.70
|
$104,077
|
(1)
|
The
May 21, 2007 option grants were made to meet commitments that had
been
made to employees of the Company in 2006 when the market value of
the
stock was $0.50 per share.
|
(2)
|
Non-qualified
stock option awards made on May 21, 2007 were valued at $0.42 per
share
which represents the FAS 123(R) value of the option on that date.
Under
FAS 123(R), the grant date fair value of each stock option award
is
calculated on the date of grant using the Black-Scholes option valuation
model. The Black-Scholes model was used with the following assumptions:
volatility rate of 69.66%; risk-free interest rate of 4.5% based
on a U.S.
Treasury rate of five years; and a 3.25-year expected option life.
The
options vest 60% at grant date and 20% at the one-and two-year
anniversaries of the grant date.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|||||
Name
|
OPTION
AWARDS
|
||||
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable (1)
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
|
Kelly
H. Nelson
|
1,200,000
300,000
300,000
|
800,000
450,000
200,000
|
--
--
--
|
$0.50
$2.10
$0.50
|
8/11/2010
8/11/2011
5/21/2012
|
Thomas
S. Ahlbrandt
|
300,000
100,000
150,000
|
450,000
400,000
100,000
|
--
--
--
|
$2.10
$1.11
$0.50
|
8/11/2011
5/02/2012
5/21/2012
|
Charles
B. Crowell
|
250,000
200,000
|
250,000
800,000
|
--
--
|
$1.38
$0.49
|
2/07/2012
7/02/2012
|
Carmen
J. Lotito
|
1,200,000
300,000
300,000
|
800,000
450,000
200,000
|
--
--
--
|
$0.50
$2.10
$0.50
|
8/11/2010
8/11/2011
5/21/2012
|
Garry
Lavold (2)
|
750,000
500,000
|
0
0
|
--
--
|
$2.10
$0.50
|
8/11/2011
5/21/2012
|
David
E. Brody
|
300,000
600,000
|
450,000
400,000
|
--
--
|
$2.10
$0.50
|
8/11/2011
5/21/2012
|
Lyle
R. Nelson
|
300,000
150,000
|
450,000
100,000
|
--
--
|
$2.10
$0.50
|
8/11/2011
5/21/2012
|
Jim
Bob Byrd
|
200,000
150,000
|
300,000
100,000
|
--
--
|
$2.10
$0.50
|
8/11/2011
5/21/2012
|
Thomas
Schandle
|
200,000
150,000
|
300,000
100,000
|
--
--
|
$2.10
$0.50
|
8/11/2011
5/21/2012
|
(1)
|
The
unexercisable stock options with a strike price of $2.10 vest 20%
on
8/11/06 and 20% on each anniversary of that date. The unexercisable
stock
options with a strike price of $0.50 vest 60% on 5/21/07 and 20%
on the
one- and two-year anniversaries of that date. The unexercisable stock
options with a strike price of $1.11 vest 20% on 5/2/07 and 20% on
each
anniversary of that date. The unexercisable stock options with a
strike
price of $1.38 vest 50% on 2/7/07 and 50% on 2/7/08. The unexercisable
stock options with a strike price of $.49 vest 20% on 7/2/07 and
20% on
each anniversary of that date.
|
(2)
|
Effective
September 30, 2007, the vesting of all stock options granted to Garry
Lavold was accelerated.
|
OPTION
EXERCISES AND STOCK VESTED
|
||
Name
|
OPTION
AWARDS
|
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
|
Kelly
H. Nelson
|
-0-
|
--
|
Thomas
S. Ahlbrandt
|
-0-
|
--
|
Charles
B. Crowell
|
-0-
|
--
|
Carmen
J. Lotito
|
-0-
|
--
|
Garry
Lavold
|
-0-
|
--
|
David
E. Brody
|
-0-
|
--
|
Lyle
R. Nelson
|
-0-
|
--
|
Jim
Bob Byrd
|
-0-
|
--
|
Thomas
Schandle
|
-0-
|
--
|
DIRECTOR
COMPENSATION
|
||||
Name
|
Fees
Earned or Paid in Cash ($)
|
Option
Awards ($)
|
All
Other Compensation ($)
|
Total
($)
|
Martin
B. Oring
|
$1,050
(1)
|
$61,256
(2)
|
(3)
|
$62,306
|
Matthew
R. Silverman
|
$36,000
(4)
|
$328,760
(5)
|
(3)
|
$364,760
|
Anthony
K. Yeats
|
$51,000
(6)
|
$41,631
(7)
|
(3)
|
$92,631
|
(1)
|
At
September 30, 2007, we owed $1,050 in director’s fees to Mr. Oring.
|
(2)
|
Mr.
Oring’s options to purchase 750,000 shares granted on September 21, 2007
was valued at $.08 per share which represents the FAS 123(R) value
of the
option on that date. Under FAS 123(R), the grant date fair
value of each stock option award is calculated on the date of grant
using
the Black-Scholes option valuation model. The Black-Scholes
model was used with the following assumptions: volatility rate of
62.46%;
risk-free interest rate of 4.16% based on a U.S. Treasury rate of
five
years; and a 2.75-year expected option life. The options vest
50% upon grant date and 50% on the one-year anniversary of the grant
date. The options are exercisable at $0.19 per share and expire
September 21, 2012.
|
(3)
|
Pursuant
to the requirements of Item 402 of Regulation S-K, disclosure of
perquisites and personal benefits has been excluded for a named director
if that director’s total is less than $10,000.
|
(4)
|
At
September 30, 2007, we owed $4,500 in director’s fees to Mr. Silverman.
|
(5)
|
Mr.
Silverman’s options to purchase 500,000 shares granted on February 7, 2007
was valued at $0.66 per share which represents the FAS 123(R) value
of the
option on that date. Under FAS 123(R), the grant date fair
value of each stock option award is calculated on the date of grant
using
the Black-Scholes option valuation model. The Black-Scholes
model was used with the following assumptions: volatility rate of
70.35%;
risk-free interest rate of 4.75% based on a U.S. Treasury rate of
five
years; and a 2.75-year expected option life. The options vest
50% upon grant date and 50% on the one-year anniversary of the grant
date. The options are exercisable at $1.38 per share and expire
February 7, 2012.
|
(6)
|
At
September 30, 2007, we owed $27,000 in director’s fees to Dr. Yeats.
|
(7)
|
Dr.
Yeats options to purchase 100,000 shares granted on May 21, 2007
was
valued at $0.42 per share which represents the FAS 123(R) value of
the
option on that date. Under FAS 123(R), the grant date fair value
of each
stock option award is calculated on the date of grant using the
Black-Scholes option valuation model. The Black-Scholes model was
used
with the following assumptions: volatility rate of 69.66%; risk-free
interest rate of 4.5% based on a U.S. Treasury rate of five years;
and a
3.25-year expected option life. The options vest 60% upon grant date
and
20% on the one- and two-year anniversaries of the grant date. The
options
are exercisable at $0.50 per share and expire May 21, 2012.
|
2007
|
2006
|
|||||||
Audit Fees | 370,000 | 125,000 | ||||||
Audit Related Fees | -- | -- | ||||||
Tax Fees | -- | -- | ||||||
Other Fees | -- | -- | ||||||
Total
|
$ | $370,000 | $ | $125,000 |
i.
|
MAB
and the Company each owned an
undivided 50% working interest in all oil and gas leases, production
facilities and related assets (collectively, the
“Properties”).
|
ii.
|
The
Company was named as Operator,
and had appointed a related controlled entity, MAB Operating Company
LLC,
as sub-operator. The Company and MAB agreed to sign a joint operating
agreement, governing all
operations.
|
iii.
|
Each
party was to pay its
proportionate share of costs and receive its proportionate share
of
revenues, subject to the Company bearing the following
burdens:
|
(a)
|
Each
assignment of Properties from
MAB to the Company reserved an overriding royalty equivalent to 3%
of
8/8ths (proportionately reduced to 1.5% of the Company’s undivided 50%
working interest in the Properties) (the “MAB Override”), payable to MAB
out of production and sales.
|
(b)
|
Each
EDA provided that the Company
would pay 100% of the cost of acquisitions and operations (“Project
Costs”) up to a specified amount, after which time each party shall pay
its proportionate 50% share of such costs. The maximum specified
amount of
Project Costs of which the Company was to pay 100%, under the Development
Agreement for properties acquired in the future, was $100.0 million
per project. There was no “before payout” or “after payout” in the
traditional sense of a “carried interest” because the Company’s obligation
to expend the specified amount of Project Costs and MAB’s receipt of its
50% share of revenues applied without regard to whether or not “payout”
had occurred. Therefore, the Company’s payment of all Project Costs up to
such specified amount may have occurred before actual payout, or
may have
occurred after actual payout, depending on each project and set of
Properties.
|
(c)
|
Under
the Development Agreement,
the Company was to pay to MAB monthly project development costs
representing a specified portion of MAB’s “carried” Project Costs. The
total amount incurred to MAB by the Company was to be deducted from
MAB’s
portion of the Project Costs carried by the Company. During 2007,
2006 and
2005, we paid MAB $1.8 million, $4.5 million and
$0.9 million, respectively, for Project costs which are classified on
the consolidated statements of operations asProject development
costs — related party.
|
i.
|
MAB
conveyed to the Company its
entire remaining undivided 50% working interest in all rights and
benefits
under each EDA, and the Company assumed its share of all duties and
obligations under each individual EDA (such as drilling and development
obligations), with respect to said remaining undivided 50% working
interest,
|
ii.
|
A
consulting agreement was agreed
upon, including the Company’s obligation to pay fees in the amount of
$25,000 per month for services rendered to us for which we paid a
total of
$0.2 million, during the year ended September 30,
2007,
|
iii.
|
As
a result of MAB’s
above-referenced conveyance of its remaining undivided 50% working
interest to us, the Company’s working interest in certain oil and gas
properties increased from 50% to
100%,
|
iv.
|
The
Company’s obligation to pay up
to $700.0 million in capital costs for MAB’s 50% interest as well as
the monthly project cost advances against such capital costs was
eliminated,
|
v.
|
The
Company became obligated for
monthly payments in the amount of $0.2 million under a
$13.5 million promissory
note,
|
vi.
|
MAB’s
overriding royalty interest
(the “Override”) was increased from 3% to 5%, half of which accrues but is
deferred for three years. The Override does not apply to the Company’s
Piceance II properties, and did not apply to certain other properties
to the extent that the Override would cause the Company’s net revenue
interest to be less than
75%,
|
vii.
|
MAB
would receive 7% of the issued
and outstanding shares of any new subsidiary with assets comprised
of the
subject properties,
|
viii.
|
MAB
received 50.0 million
shares of PetroHunter Energy Corporation common stock, and would
receive
up to an additional 50.0 million shares (the “Performance Shares”) if
the Company met certain thresholds based on proven
reserves.
|
·
|
By
$8.0 million in exchange
for 16.0 million shares of our common stock with a value of
$3.7 million based on the closing price of $0.23 per share at
November 15, 2007, and warrants to acquire 32.0 million shares
of our common stock at $0.50 per share. The warrants expire on
November 14, 2009;
|
·
|
By
$2.5 million in exchange
for our release of MAB’s obligation to pay the equivalent amount as
guarantor of the performance of Galaxy Energy Corporation under the
subordinated unsecured promissory note dated August 31, 2007
and;
|
·
|
A
reduction to the note payable to
MAB of $0.5 million for cash payments to be made by us subsequent to
September 30, 2007.
|
1.
|
ELECTION
OF DIRECTORS - The Board of Directors recommends a vote FOR the listed
nominees.
|
FOR
|
WITHHOLD
|
FOR
|
WITHHOLD
|
||
Charles
B. Crowell
|
[ ]
|
[ ]
|
Matthew
R. Silverman
|
[ ]
|
[ ]
|
Carmen
J. Lotito
|
[ ]
|
[ ]
|
Anthony
K. Yeats
|
[ ]
|
[ ]
|
Martin
B. Oring
|
[ ]
|
[ ]
|
2.
|
In
their discretion, to transact such other business as may properly
come
before the meeting and any adjournments thereof.
|
Signature
1 – Please keep
Signature
within the box
|
Signature
2 – Please keep
Signature
within the box
|
Date
(mm/dd/yyyy)
|
[_________________________]
|
[_________________________]
|
[______/________/________]
|
·
|
By
enclosing this proxy in the return envelope provided and mailing
it.
|
·
|
By
faxing this proxy to (303)
_________________.
|
·
|
By
scanning this proxy and emailing it to
kwhitejohnson@petrohunter.com.
|