Annual Meeting of Shareholders
June 25, 1996
Dear Shareholder:
It is my pleasure to invite you to attend the 1995 Annual General Meeting
of Shareholders of Canada Southern Petroleum Ltd. which will be held at The
Bristol Place Hotel, 950 Dixon Road, Toronto International Airport, Rexdale,
Ontario, Canada, Wednesday, June 25, 1996 at 9:00 A.M.
While we are aware that most of our shareholders are unable personally to
attend the Annual Meeting, proxies are solicited to insure that each shareholder
has an opportunity to vote on all matters scheduled to come before the meeting.
Whether or not you plan to attend, please take a few minutes now to sign, date
and return your proxy in the enclosed postage-paid envelope. Regardless of the
number of shares you own, your vote is important.
In addition to helping us conduct business at the annual meeting, there is
an important personal reason for you to return your proxy vote card. Under the
abandoned property law of some jurisdictions, a shareholder may be considered
"missing" if that shareholder has failed to communicate with the Company in
writing. To that end, the return of your proxy vote card qualifies as written
communication.
The Notice of Meetings and Proxy Statement accompanying this letter
describe the business to be acted on at the meeting.
As in the past, members of management will review with you the Company's
results and will be available to respond to questions.
We look forward to seeing you at the meeting.
Sincerely,
Charles J. Horne
May 24, 1996 President
<PAGE>
CANADA SOUTHERN PETROLEUM LTD.
Suite 1410, One Palliser Square
125 Ninth Avenue S.E.
Calgary, Alberta, Canada T2G 0P6
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Shareholders
of CANADA SOUTHERN PETROLEUM LTD. (the "Company") will be held at The Bristol
Place Hotel, 950 Dixon Road, Toronto International Airport, Rexdale, Ontario,
Canada at 9:00 A..M., local time, to receive and consider the report of the
auditors and the financial statements for the fiscal year ended December 31,
1995 and for the following additional purposes:
1. To elect one director of the Company;
2. To appoint independent auditors of the Company for the fiscal year
ending December 31, 1996 and to authorize the Board of Directors to
fix the remuneration of such auditors; and
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
This notice and proxy statement are being sent to Shareholders of
record at the close of business on May 24, 1996 together with the enclosed
proxy, to enable such Shareholders to state their instructions with respect to
the voting of the shares. Proxies should be returned in the reply envelope
provided.
By Order of the Board of Directors
Kelly B. Johnson
Secretary
Dated: May 24, 1996
- -------------------------------------------------------------------------------
RETURN OF PROXIES
WE URGE EACH SHAREHOLDER, REGARDLESS OF THE NUMBER OF SHARES HELD, WHO IS
UNABLE TO ATTEND THE ANNUAL GENERAL MEETING OF SHAREHOLDERS TO VOTE BY PROMPTLY
SIGNING, DATING AND RETURNING THE ACCOMPANYING PROXY IN THE REPLY ENVELOPE
PROVIDED.
- -------------------------------------------------------------------------------
<PAGE>
CANADA SOUTHERN PETROLEUM LTD.
Suite 1410, One Palliser Square
125 Ninth Avenue S.E.
Calgary, Alberta, Canada T2G 0P6
-------------------
PROXY STATEMENT
-------------------
GENERAL INFORMATION
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF CANADA
SOUTHERN PETROLEUM LTD. (the "Company") for use at the Annual General Meeting of
Shareholders to be held at The Bristol Place Hotel, 950 Dixon Road, Toronto
International Airport, Rexdale, Ontario, Canada at 9:00 A..M., local time, and
at any adjournments or postponements thereof. The notice of meetings, proxy
statement and proxy are being mailed to Shareholders on or about May 28, 1996.
The Company expects to solicit proxies primarily by mail. To the extent
necessary to assure sufficient representation of shares at the Annual General
Meeting proxies may be solicited in person and by telephone at a nominal cost to
the Company, and the Company will request brokers, banks and other nominees to
forward copies of proxy material to beneficial owners or persons for whom they
hold shares and to obtain authority for the execution and delivery of proxies.
In addition, the Company has retained the firm of Morrow & Co., Inc. to assist
in the distribution of proxy solicitation materials for an estimated fee of
$7,000 plus out-of-pocket expenses. The only other expenses anticipated are the
ordinary expenses in connection with the preparation, assembling and mailing and
other distribution of the material, which will be borne by the Company.
Voting of Proxies and Record Date
Unless otherwise specified by the means provided in the enclosed proxy, the
shares represented by the proxy will be voted on any business as may properly
come before the meeting. If a choice is specified by the means provided in the
proxy, the shares represented by the proxy will be voted or withheld from voting
in accordance with the specification made. If no choice is specified, the named
Proxies will vote such shares at the Annual General Meeting of Shareholders in
favor of the election of Mr. C. Dean Reasoner as a director of the Company; and
in favor of appointing Ernst & Young as independent auditors of the Company, and
in favor of authorizing the Board of Directors to fix the auditors'
remuneration.
The proxy also confers discretionary authority with respect to amendments
or variations to matters identified in the accompanying Notice of Meeting or
other matters which may properly come before the meeting. The Board of Directors
knows of no matters which will be presented for consideration at the meeting
other than those matters referred to in this proxy statement.
<PAGE>
The total number of outstanding shares of the Company was 12,685,491
Limited Voting Shares at May 24,1996. Two or more shareholders present in person
and holding or representing by proxy not less than 25% of the total number of
issued shares constitute a quorum. A simple majority of the votes cast is
required to approve Proposals Number 1.and Number 2 (as set forth on the form of
proxy) at the Annual General Meeting and any other regular business that comes
before the Annual General Meeting.
At each General Meeting of Shareholders, each shareholder is entitled to
one vote for each share shown as registered in his name in the list of
shareholders, subject, however, to a provision in the Company's Memorandum of
Association (Articles of Continuance) to the effect that no person shall vote
more than 1,000 shares. Article 8 of the Company's Articles of Continuance
provides as follows:
8. Voting Restrictions
With respect to any matter to be voted upon at any meeting of Members
any one person, hereinafter defined, shall be entitled to vote:
(i) with respect to shares registered in his name on the books of the
Company which are beneficially owned by him, the number of shares, but in
no event more than 1,000;
(ii) with respect to shares registered in his name on the books of the
Company which he holds as a trustee other than as a nominee, the number of
shares but in no event more than 1,000; and
(iii) with respect to shares registered in his name as nominee and on
instructions from each one person who is the owner thereof a number of
shares owned by each such one person but in no event more than 1,000 with
respect to each such one person, provided that no such one person shall
vote or give instruction as to the voting of more than 1,000 shares in the
aggregate.
That for all purposes of these Articles:
(a) Any entity or group in the nature of and including:
(i) a corporation, its subsidiaries and affiliates; or
(ii) a trust; or
(iii) two or more trusts created by one person or having
substantially the same beneficiaries or remaindermen; or
(iv) an association, partnership, joint or common venture; or
<PAGE>
(v) all shareholders, security holders, officers, directors,
members and employees of one person who owns beneficially more than
10% of the shares of the Company;
shall be deemed to be one person;
(b) One person who has shares registered in his name who is not a
beneficial owner or nominee thereof, shall be deemed to hold such shares as a
trustee;
(c) No person shall be deemed beneficially to own shares of the Company if
such shares are subject to any agreement whereunder any other person either
certainly or contingently is or may become entitled to any interest in or right
to or control over such shares other than an agreement whereunder such shares
are bona fide mortgaged, pledged or charged to any bank, trust company or other
lending institution or to any brokerage firm to secure indebtedness;
(d) In order to determine the number of shares that any Member is entitled
to vote at any meeting of Members, the board of directors may require in or with
the notice of the meeting or an adjourned meeting that any Member must provide
as a condition precedent to his right to vote, such evidence as the board of
directors may require as to the beneficial ownership of the shares held by him;
and
(e) If the board of directors of the Company decides, or if the chairman
for the time being at any meeting of the Members believes that it is in the best
interests of the Company that any meeting of Members be adjourned to determine
the number of shares that any holder of shares is entitled to vote at such
meeting, then the chairman shall on his own motion adjourn once such meeting for
a period not exceeding 60 days.
The list of shareholders is available for inspection during usual business
hours at the offices of Daley, Black & Moreira, Suite 401, Toronto-Dominion Bank
Building, 1791 Barrington Street, Halifax, Nova Scotia and at the Annual General
Meeting of Shareholders. The list of Shareholders was prepared as of May
24,1996, the record date fixed for determining Shareholders entitled to notice
of the Annual General Meeting of Shareholders. If a person has acquired
ownership of shares since that date, he must establish such ownership in order
to be included in the list of shareholders entitled to vote. Abstentions and
brokers no-votes will be counted neither as votes "in favor" or votes "against"
any proposition brought before the meeting.
Revocation of Proxies
Any shareholder who has given his proxy has the right to revoke the same at
any time prior to the voting thereof. In addition to revocation in any other
manner permitted by law, a proxy may be revoked by an instrument in writing
executed by the shareholder, or by his attorney authorized in writing, and
deposited at the head office of the Company in Calgary, Alberta, Canada, at any
time up to and including the last business day preceding the day of the Annual
General Meeting of Shareholders to be held on June 25, 1996, or any adjournments
thereof, or with the chairman of such meeting on the day of such meeting, or any
adjournments thereof.
<PAGE>
Nomination of Proxy Holder
A shareholder has the right to appoint a person to attend and act for him
on his behalf at the Annual General Meeting other than the person or persons
designated in the enclosed proxy. To exercise this right, the shareholder may
insert the name of the desired person in the blank space provided in the proxy
and strike out the other names.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1995 FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION MAY BE
OBTAINED UPON WRITTEN REQUEST TO CANADA SOUTHERN PETROLEUM LTD., C/O G&O'D INC,
149 DURHAM ROAD, OAK PARK - UNIT 31, MADISON, CONNECTICUT 06443.
PROPOSAL 1. THE ELECTION OF ONE DIRECTOR
One director is to be elected to hold office for a term of five years which
expires at the fiscal year 2000 Annual General Meeting of Shareholders pursuant
to the Articles of Association of the Company, which established five classes of
directors to be elected on a rotating basis at each successive Annual General
Meeting of Shareholders. The named Proxies will vote the shares represented by
the proxy for the election of Mr. C. Dean Reasoner unless otherwise directed.
The following table sets forth information concerning the nominee for election
and those directors whose terms of office are to continue after the meeting.
<PAGE>
<TABLE>
<CAPTION>
Other Offices
Date Present Term Principal Occupation Director Held with Company
Name of Office Expires during Last Five Years* Since
Nominee for five-year term expiring 2000:
<S> <C> <C> <C> <C>
C. Dean Reasoner 1995 Annual Meeting Mr. Reasoner is a member of the law 1986 None
firm of Reasoner, Davis & Fox,
Washington, D.C., which firm has been
retained by the Company for many
years. He is a director of Coastal
Caribbean Oils & Minerals, ("CCO"),
Magellan Petroleum Corporation
("MPC") and Magellan Petroleum
Australia Limited ("MPAL"). Age
seventy-eight.
Directors continuing in office:
Eugene C. Pendery 1996 Annual Meeting Mr. Pendery has been President and a 1986 None
director of Recycled Plastic
Products, Inc., Littleton, Colorado
since 1991, a distributor of fencing
and other recycled plastic products.
He has also been associated with the
oil, gas and mining industries since
1966. Age fifty-eight.
Benjamin W. Heath 1997 Annual Meeting Mr. Heath is President and a director 1956 None
of CCO, a director of MPC, and
Chairman of the Board of Directors of
MPAL, a majority owned subsidiary of
MPC. Age eighty-one.
Charles J. Horne 1998 Annual Meeting Mr. Horne has served as President of 1984 President
the Company since 1980 and has been
associated with the Company and its
predecessor since 1950. Age seventy.
M. A. Ashton 1999 Annual Meeting Mr. Ashton has served as Executive 1989 Executive Vice
Vice President since 1993. He had President
been Vice President-Exploration since
December 1988 and was elected a
director in 1989. Mr. Ashton is a
professional petroleum geologist with
thirty years experience in
exploration projects in western
Canada and the United States. Age
sixty.
- ---------------------
<FN>
* All of the named companies are engaged in oil, gas or mineral exploration
and/or development except where noted.
</FN>
</TABLE>
<PAGE>
There are no arrangements or understandings between any director and any
other person or persons pursuant to which such director was or is to be selected
as a director. There are no family relationships between any director, executive
officer, or person nominated or chosen by the Company to become a director.
Committees of the Board of Directors: Attendance at Meetings
The full Board of Directors of the Company serves as the Audit Committee
whose duties are: the engagement and discharge of auditors, reviewing with the
auditors the plan and results of the auditing engagement, reviewing the
independence of the auditors and reviewing the adequacy of the Company's system
of internal accounting controls. The Board of Directors acting as the Audit
Committee met once during the fiscal year ended December 31, 1995.
The Company has no standing nominating or compensation committees. The
functions that would be performed by such committees are performed by the full
Board of Directors. During the fiscal year ended December 31, 1995, all of the
directors attended at least 75% of the aggregate number of meetings of the Board
of Directors and Committees on which they serve (a total of ten meetings).
ADDITIONAL INFORMATION CONCERNING EXECUTIVE OFFICERS
AND DIRECTORS
Unless otherwise indicated, all dollar figures set forth herein are
expressed in Canadian currency.
Executive Compensation
The following table sets forth certain summary information concerning the
compensation of Mr. Charles J. Horne, who is President and Chief Executive
Officer of the Company. No executive officer of the Company received or earned
any compensation in excess of U.S. $100,000 during fiscal year 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term All Other
Annual Compensation Compensation Award Compensation ($)
- ------------------------------- ------------------------------------------ ----------------------- --------------------
Name and Principal Position Fiscal Period Salary ($) Options/SARs(#)
- ------------------------------- ----------------------------- ------------ ----------------------- --------------------
<S> <C> <C> <C> <C>
Charles J. Horne, President Year ended Dec. 31, 1995 61,000
Year ended Dec. 31, 1994 60,275 75,000 -
Six months ended
Dec. 31, 1993 38,265 - -
Year ended June 30, 1993 76,225 50,000 6,250*
- ------------------------------- ----------------------------- ------------ ----------------------- --------------------
<FN>
*Payment in lieu of Pension Plan Contribution
</FN>
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
Stock Options
- -------------------------------------------------------------------------------
The following table provides information about stock options exercised
during fiscal 1995 and unexercised stock options held by the President of the
Company at the end of fiscal year 1995.
<TABLE>
<CAPTION>
============================================================================================================================
Aggregated Option/SAR Exercises in 1995 and at December 31, 1995
Option/SAR Values Table
============== ----------------- --------------- ------------------------------------ ==================================
Shares Number of Unexercised Value of Unexercised In-The-Money
Acquired Value Options/SARs Options/SARs
On Exercise (#) Realized ($) at December 31, 1995 at December 31, 1995 ($)
============== ----------------- --------------- ----------------- ----------------- ---------------- ================
Name Exercisable Unexercisable Exercisable Unexercisable
============== ================= =============== ================= ================= ================ ================
<S> <C> <C> <C> <C> <C> <C>
Charles J. -0- -0- 125,000 - 397,000 -
Horne
============== ================= =============== ================= ================= ================ ================
</TABLE>
Defined Benefit or Actual Plan Disclosure
All employees who were eligible for a contributory pension plan have now
reached retirement age as specified in the plan and are receiving benefits.
Consequently, the plan has been discontinued. Mr. Horne receives an annual
benefit of $35,816.
Compensation of Directors
Messrs. Heath and Pendery each receive directors' fees of $25,000 per year.
On January 29, 1991, the Company granted interests to certain of its
officers, employees, directors, counsel and consultants amounting to an
aggregate of 7.8% of any and all benefits to the Company after expenses from the
litigation in Canada relating to the Kotaneelee field. The Company has reserved
a 2.2% interest in such net recoveries for possible future grants to persons who
may include officers and directors of the Company.
Compensation Committee and Insider Participation in Compensation Committee
The entire board of directors serves as the compensation committee. Charles
J. Horne and M. A. Ashton are directors and the President and Executive
Vice-President, respectively of the Company. Mr. C. Dean Reasoner, a director,
is a partner in the law firm of Reasoner, Davis & Fox which received U.S.
$133,000 for legal services for the year ended December 31, 1995.
Mr. Benjamin W. Heath, a director, and Mr. Reasoner also serve as directors
of Coastal Caribbean Oils & Minerals, Ltd. ("CCO") and Magellan Petroleum
Corporation ("MPC"). Reasoner, Davis & Fox also renders services to CCO and MPC.
<PAGE>
Board Compensation Committee Report
The Compensation Committee, consisting of the entire board of directors,
submits the following report for the year ended December 31, 1995:
The Board of Directors does not maintain specific compensation policies
applicable to the Company's executive officers, and the Board has established no
specific relationship between corporate performance and executive compensation.
Compensation has been determined based on the skills, experience and leadership
executive officers have brought to the performance of their duties, and on their
ability to protect, defend and pursue the Company's ability to realize value on
the Company's oil and gas interests.
M. A. Ashton Eugene C. Pendery
Benjamin W. Heath C. Dean Reasoner
Charles J. Horne
Tax Deductibility of Compensation
At this time, the Company does not expect that it will comply with the U.S.
Revenue Reconciliation Act of 1993 regarding executive compensation because it
is not likely that compensation to any executive will exceed $1 million and the
Company is a Canadian company not subject to the tax laws of the United States.
CORPORATE GOVERNANCE
In February 1995, the Toronto Stock Exchange Committee on Corporate
Governance in Canada issued a report (the "TSE Report") setting out a series of
guidelines for effective corporate governance. These guidelines deal with
matters such as the constitution and independence of corporate boards, their
function, the role of board committees and the selection and education of board
members. The Toronto Stock Exchange now requires that each listed company
disclose on an annual basis its approach to corporate governance with reference
to the guidelines. The Company's approach to corporate governance is described
below.
Mandate of the Board
The mandate of the board includes:
(a) approving objectives for the Corporation and the overall operating and
financial plans to achieve them;
(b) identifying and managing the principal risks of the Corporation's
business;
(c) verifying the integrity of the Corporation's internal financial,
control and management information systems;
<PAGE>
(d) selecting the Chief Executive Officer and approving the selection of
other senior executives; and
(e) monitoring the Corporation's communications with shareholders, other
stakeholders and the general public.
Composition of the Board
The TSE Report recommends that the Board of Directors be constituted with a
majority of individuals who qualify as unrelated directors. An unrelated
director is a director who is independent of management and is free from any
interest in any business or other relationship which could, or could reasonably
be perceived to, materially interfere with the director's ability to act with a
view to the best interests of the Company. Two of the Company's directors,
Messrs. Heath and Pendery, are unrelated.
Messrs. Horne and Ashton are related, within the meaning of the TSE Report,
because they are members of management, and Mr. Reasoner is related because he
is a partner in a firm which receives significant fees from the Company (see
"Certain Business Relationships", page 12).
The Board does not believe that the factors which result in Messrs. Horne,
Ashton and Reasoner being related directors under the TSE Report interfere with
their ability to act with a view to the best interests of the Company.
The TSE Report recommends that every board of directors should examine its
size with respect to its effectiveness. The board believes its present size of
five directors is the most effective size at this time. The board has not
established an executive committee because of its size.
Board Committees (See also "Committees of the Board of Directors", page 6)
Audit Committee
The TSE Report recommends that an audit committee of every board be
comprised only of outside directors. The full Board of Directors serves as the
Audit Committee.
Nominating Committee
The TSE Report recommends that the board appoint a committee of outside
directors with responsibility of proposing new nominees to the board. The TSE
Report also recommends that the Nominating Committee or the appropriate
committee implement a process to assess the effectiveness of the board and the
contribution of the individual directors.
The board believes that the full board of directors should perform these
functions because of the relatively small size of the board.
<PAGE>
Orientation and Education of New Directors
The TSE Report recommends an orientation and education program for new
recruits to the board. The board believes that given the size and situation of
the Company, it provides and will continue to provide the necessary information
for a new board member to perform the duties of a director.
Compensation of Directors
The TSE Report recommends that the board review the adequacy and form of
compensation of directors and ensure the compensation reflects the
responsibilities and risk involved in being an effective director. The board
reviews the compensation of its members periodically, and believes that the
current compensation of directors reflects the recommendation of the TSE Report.
Management's Responsibilities
The TSE Report recommends that the board develop position descriptions for
the board and CEO with definitions of the limits of management's responsibility.
Management is responsible for the day to day operations of the Company. Any
matters which are material to the Company are discussed and approved by the full
Board. The senior officers of the Company are required to (whenever practicable)
report to the Board in a comprehensive manner on any significant proposed
activities and transactions of Canada Southern, the progress being made on
activities and transactions which have been undertaken, the abandonment of
activities or transactions, and the results of all activities and transactions
being conducted or having been concluded. Whenever practicable, all such reports
are furnished to the directors in writing and subsequently also orally
discussed, whenever their importance justifies.
Independence from Management
The TSE Report recommends that the board ensure that it can operate
independent of management. There are three nonmanagement directors and two
management directors, therefore, the board believes that it can effectively
operate independently of management.
The TSE Report also recommends that an individual director have the ability
to engage an outside advisor at corporate expense in appropriate circumstances.
The Board will consider that issue in the event that such a circumstance arises.
Shareholder Relations
The Company has appointed a representative for shareholders to contact for
information, questions or concerns regarding the Company. Company personnel and
consultants report to the board on any concerns that have been expressed by
shareholders.
<PAGE>
Performance Graph
The graph below compares the cumulative total returns, including
reinvestment of dividends, if applicable, of Company Stock with companies in the
NASDAQ Index and an Industry Group Index. (Media General's Oil, Natural Gas
Production Industry Group)
The chart displayed below is presented in accordance with SEC requirements.
Shareholders are cautioned against drawing any conclusions from the data
contained therein, as past results are not necessarily indicative of future
performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Canada Southern 100 143.59 120.51 210.26 189.74 261.54
NASDAQ Stock Index 100 128.38 129.64 155.50 163.26 211.77
Industry Group 100 112.71 110.43 132.26 148.50 157.77
</TABLE>
<PAGE>
Security Ownership of Certain Beneficial Owners
The Company knows of no person or group that owns beneficially more than 5%
of the outstanding Limited Voting Shares of the Company.
Security Ownership of Management
The following table sets forth information as to the number of shares of
the Company's Limited Voting Shares owned beneficially on May 1,1996 by
directors of the Company and by all executive officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Individual or Group Beneficial Ownership % of Class
Shares Options
<S> <C> <C> <C>
M. A. Ashton - 90,000 *
Benjamin W. Heath 3,734 72,000 *
Charles J. Horne 11,017 125,000 1.0
Eugene C. Pendery 10,000 70,000 *
C. Dean Reasoner 8,962 - *
Directors and Officers as a
Group (a total of 5) 33,713 357,000 3.0
- --------------------
<FN>
* The percent of class owned is less than 1%.
</FN>
</TABLE>
Changes in Control
The Company is aware of no arrangement which may at a subsequent date
result in a change in control of the Company.
Certain Business Relationships
Reasoner, Davis & Fox
Fees paid or accrued for legal services rendered to the Company by
Reasoner, Davis & Fox, of which firm Mr. C. Dean Reasoner, a director of the
Company, is a partner, during the year 1995 amounted to U.S. $133,000. Mr.
Reasoner does not receive a director's fee.
Royalty Interests
The following directors have royalty interests in certain of the Company's
oil and gas properties (present or past) which were received directly or
indirectly from the Company: Mr. C. Dean Reasoner, interests ranging from
<PAGE>
1.772% to 2%; Mr. Benjamin W. Heath, interests ranging from 1.772% to 2%; and
a trust (in which Mr. Heath has a 54.4% beneficial interest), interests
ranging from 7.603% to 7.8%. In each case, the applicable percentage depends on
the property on which the royalty is paid.
During 1995, the Company and third-party operators and/or owners of
properties made payments to Mr. Reasoner and Mr. Heath in the amounts of U.S.
$6,159 and U.S. $12,777, respectively.
PROPOSAL 2. APPOINTMENT OF INDEPENDENT AUDITORS
The Board has proposed that Ernst & Young, which has served the Company
since its organization in 1954, be appointed to audit the accounts of the
Company for the fiscal year ending December 31, 1996. A vote for or against the
appointment of auditors, or the abstaining from such vote may be indicated by
checking the appropriate box on the proxy. Unless otherwise specified, the named
Proxies will vote the shares represented by the enclosed proxy in favor of the
appointment of Ernst & Young and to authorize the Board of Directors to fix the
remuneration of such auditors. Representatives of Ernst & Young are not expected
to be present at the Annual General Meeting.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL
SHAREHOLDER PROPOSALS
Notice of Business to be Brought Before a Shareholders' Meeting
Article 76 of the Company's Articles of Association provide in
part that
At an ordinary general meeting of the members, only such
business shall be conducted as shall have been properly brought before
the meeting. To be properly brought before an annual meeting, business
must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the board of directors, (b)
otherwise properly brought before the meeting by or at the direction of
the board of directors, or (c) otherwise properly brought before the
meeting by a member. For business to be properly brought before an
annual meeting by a member, the member must have given timely notice
thereof in writing to the Secretary of the Company. To be timely, a
member's notice must be delivered to or mailed and received at the
principal executive offices of the Company, not less than ninety (90)
days before the anniversary date of the previous annual meeting of
Shareholders.
A member's notice to the Secretary shall set forth as to each
matter the member proposes to bring before the annual meeting.
(a) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business
at the annual meeting;
(b) the name and address, as they appear on the Company's books,
of the member intending to propose such business; (c) the class and
number of shares of the Company which are beneficially owned by the
member;
<PAGE>
(c) the class and number of shares of the Company which are
beneficially owned by the member;
(d) a representation that the member is a holder of record of
capital stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to present such
business; and
(e) any material interest of the member in such business.
Notwithstanding anything in these Articles to the contrary, no
business shall be conducted at an annual meeting except in accordance
with the procedures set forth in this Article 76. The presiding officer
of an annual meeting shall, if the facts warrant, determine and declare
to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this Article 76, and
if he should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not be
transacted.
Shareholder proposals relating to the Company's 1996 Annual General
Meeting of Shareholders must be received by the Company at its principal office,
Suite 1410, One Palliser Square, 125 Ninth Avenue, S.E., Calgary, Alberta,
Canada T2G 0P6 no later than January 16, 1997. The fact that a Shareholder
proposal is received in a timely manner does not insure its inclusion in the
proxy material, since there are other requirements in the proxy rules relating
to such inclusion.
The contents and the sending of this Proxy Statement have been approved
by the directors of the Company.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY; THEREFORE,
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL GENERAL MEETING IN PERSON
ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE REPLY ENVELOPE
PROVIDED.
By Order of the Board of Directors.
Kelly B. Johnson
Dated May 24, 1996
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