<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] 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-11(c) or 240.14a-12
GULF CANADA RESOURCES LIMITED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
(GULF LOGO)
GULF CANADA RESOURCES LIMITED
NOTICE OF
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
An Annual and Special Meeting (the "Meeting") of the holders
("Shareholders") of ordinary shares ("Ordinary Shares") of GULF CANADA RESOURCES
LIMITED (the "Company") will be held in the Auditorium, 3rd floor, Gulf Canada
Square, 401 - 9th Avenue S.W., Calgary, Alberta, Canada on Wednesday, the 29th
day of April, 1998, at the hour of 2:00 p.m. (Calgary time) for the purposes of:
1. receiving the report of the directors and the Consolidated Financial
Statements of the Company and its subsidiaries for the year ended
December 31, 1997, and the Auditors' Report thereon;
2. electing directors of the Company;
3. appointing auditors, with remuneration to be fixed by the directors;
4. considering and, if deemed advisable, ratifying the Shareholder
Rights Plan; and
5. transacting such further and other business as may properly come
before the Meeting.
Shareholders are invited to attend the Meeting. Only Shareholders of record
at the close of business on March 12, 1998 will be entitled to vote at the
Meeting except to the extent that a person has transferred any Ordinary Shares
of the Company after that date and the new holder of such shares establishes
proper ownership and requests not later than ten days before the Meeting to be
included in the list of Shareholders eligible to vote at the Meeting.
Shareholders who are unable to attend the Meeting are requested to date,
sign and return the enclosed form of proxy in the envelope provided for this
purpose to the Company c/o Montreal Trust Company of Canada, 600, 530 - 8th
Avenue S.W., Calgary, Alberta, T2P 3S8.
DATED at Calgary, Alberta, Canada this 23rd day of March, 1998.
By Order of the Board,
"CRAIG S. GLICK"
Craig S. Glick
Secretary
<PAGE> 3
GULF CANADA RESOURCES LIMITED
401 - 9TH AVENUE S.W.
CALGARY, ALBERTA
T2P 2H7
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR ("PROXY CIRCULAR") IS FURNISHED IN
CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF GULF CANADA RESOURCES
LIMITED ("GULF" OR THE "COMPANY") OF PROXIES FOR USE AT THE ANNUAL AND SPECIAL
MEETING OF SHAREHOLDERS OF THE COMPANY (THE "MEETING") to be held at the time
and place and for the purposes set forth in the accompanying Notice of Annual
and Special Meeting. The solicitation will be primarily by mail but proxies may
also be solicited personally or by telephone by regular employees of the Company
without special compensation. In accordance with regulatory requirements, Gulf
will pay brokers or nominees holding Ordinary Shares of Gulf in their names or
in the names of their principals for their proper expenses in sending
solicitation material to their principals. The cost of solicitation will be
borne by the Company. Information contained in this Proxy Circular is given as
of March 2, 1998 unless otherwise specifically stated.
This Proxy Circular and the accompanying notice and form of proxy are being
mailed to Shareholders on or about March 23, 1998. The annual report to
shareholders for the Company's financial year ended December 31, 1997 is also
being mailed to shareholders contemporaneously with this Proxy Circular,
although the annual report does not form a part of the material for the
solicitation of proxies.
APPOINTMENT OF PROXIES
Shareholders desiring to be represented at the Meeting by a proxyholder
must deposit their proxies with Montreal Trust Company of Canada, 600, 530 - 8th
Avenue S.W., Calgary, Alberta, T2P 3S8, no later than 4:30 p.m. (Calgary time)
on April 28, 1998 or with the Chairman of the Meeting prior to the commencement
of the Meeting.
A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER OF GULF), OTHER THAN PERSONS DESIGNATED IN THE FORM OF PROXY
ACCOMPANYING THIS PROXY CIRCULAR, AS NOMINEE TO ATTEND AND ACT FOR AND ON BEHALF
OF SUCH SHAREHOLDER AT THE MEETING AND MAY EXERCISE SUCH RIGHT BY INSERTING THE
NAME OF SUCH PERSON IN THE BLANK SPACE PROVIDED ON THE FORM OF PROXY. PROXIES
MAY BE REVOKED ANY TIME PRIOR TO THEIR USE BY DELIVERING A DOCUMENT EXECUTED BY
THE BENEFICIAL OWNER OR HIS OR HER ATTORNEY, AUTHORIZED IN WRITING, EITHER TO
THE ATTENTION OF THE CORPORATE SECRETARY AT 1600, 401 - 9TH AVENUE S.W.,
CALGARY, ALBERTA PRIOR TO 4:30 P.M. (CALGARY TIME) ON APRIL 28, 1998, OR TO THE
CHAIRMAN OF THE MEETING PRIOR TO THE COMMENCEMENT OF THE MEETING. PROXIES MAY BE
REVOKED AT ANY TIME PRIOR TO THEIR USE.
VOTING RIGHTS
As at March 2, 1998, there were outstanding 348,795,944 Ordinary Shares,
each of which carries the right to one vote. The presence in person or by proxy
of shareholders holding at least 5 per cent of the Ordinary Shares will
constitute a quorum for the transaction of business at the Meeting. The Ordinary
Shares represented by proxy will be voted or withheld from voting in accordance
with the instructions of the beneficial shareholder on any ballot that may be
called for and, where the person whose proxy is solicited specifies a choice
with respect to any matter to be voted upon, the Ordinary Shares shall be voted
in accordance with the specification so made. IF NO CHOICE IS SPECIFIED, THE
ORDINARY SHARES REPRESENTED BY SUCH A PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS, "FOR" THE APPOINTMENT OF ERNST & YOUNG AS AUDITORS, WITH REMUNERATION
TO BE FIXED BY THE DIRECTORS AND "FOR" THE RATIFICATION OF THE SHAREHOLDER
RIGHTS PLAN.
The form of proxy confers discretionary authority with respect to
amendments to matters identified in the Notice of Annual and Special Meeting of
Shareholders or other matters which may properly come before the Meeting or any
adjournment thereof, including the replacement of any nominee identified for
election to the Board of Directors if such nominee is unable to serve or will
not serve.
Under corporate law applicable to the Company, shares that are registered
in the name of a nominee, including brokers, and not beneficially owned by the
nominee may not be voted on any matter in the absence of instructions from the
beneficial owner of the shares.
1
<PAGE> 4
Every question submitted to the Meeting shall be decided in the first
instance on a show of hands. A shareholder or proxyholder entitled to vote at
the Meeting may demand a ballot either before or after any vote by show of
hands. In case of an equality of votes, the chairman of the meeting shall both
on a show of hands and at a poll have a second or casting vote in addition to
the vote or votes to which he may be entitled as a shareholder or proxy nominee.
Directors will be elected by a plurality of votes cast by shareholders. The
twelve nominees receiving the highest vote totals will be elected as directors
of the Company. The auditors of the Company will also be appointed by a
plurality of the votes cast. Therefore, abstentions will have no effect on such
matters. A simple majority of the votes cast at the Meeting is required to
ratify the Shareholder Rights Plan or to approve any other matter which may be
voted on at the Meeting.
The Board of Directors has fixed the close of business on March 12, 1998 as
the record date (the "Record Date"). All of the holders of record of Ordinary
Shares of the Company at the close of business on March 12, 1998 will be
entitled to vote at the Meeting except that if a shareholder transfers Ordinary
Shares after such date, the person who acquires the Ordinary Shares may vote
those Ordinary Shares at the Meeting if, not later than 10 days before the
Meeting, that person requests the Company to add his or her name to the list of
shareholders entitled to vote at the Meeting and establishes that the person
owns such Ordinary Shares.
BENEFICIAL OWNERSHIP OF SECURITIES
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth, as of February 17, 1998, certain
information with respect to the ownership of Ordinary Shares as to all persons
or groups known by the Company to be the beneficial owners of 5% or more of the
outstanding Ordinary Shares, the Cumulative Redeemable Auction Perpetual Senior
Preference Shares, Series 1 ("Series 1 Preferred Shares") and Cumulative
Redeemable Auction Perpetual Senior Preference Shares, Series 2 ("Series 2
Preferred Shares") and of: (i) each director, (ii) each nominee for director,
(iii) each of the executive officers named in the Summary Compensation Table
("Named Executive Officers") who are currently employed by Gulf and (iv) all
executive officers and directors of the Company as a group. Unless otherwise
indicated, each of the following persons may be deemed to have sole voting and
dispositive power with respect to such shares. Information set forth in the
table with respect to beneficial ownership of Ordinary Shares has been obtained
from filings made by the named beneficial owners with the Canadian securities
regulators or the U.S. Securities and Exchange Commission ("Commission") or, in
the case of executive officers and certain directors of the Company, has been
provided to the Company by such individuals. The address of the Company's
directors is care of Gulf Canada Resources Limited, One Norwest Center, Suite
5000, 1700 Lincoln Street, Denver, Colorado, 80203-4525.
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME AND ADDRESS CLASS OF SHARES OF CLASS
---------------- ----- ---------- --------
<S> <C> <C> <C>
A&G RESOURCES CORPORATION................................... Ordinary 52,205,476(1) 14.96
c/o 141 Adelaide Street West
Suite 310
Toronto, Ontario M3H 3L9
PARTICIPANTS GROUP.......................................... Ordinary 42,830,772(2) 12.28
c/o Torch Energy Advisors Incorporated
1221 Lamar, Suite 6000
Houston, Texas 77010
NEUBERGER & BERMAN LLC...................................... Ordinary 31,255,324 8.96
605 Third Avenue
New York, New York 10158-3698
ALLIANCE CAPITAL MANAGEMENT L.P.(3)......................... Ordinary 33,880,528 9.71
787 Seventh Avenue
New York, New York 10019
ROBERT H. ALLEN............................................. Ordinary 37,001(4) *
RICHARD H. AUCHINLECK....................................... Ordinary 388,642(5) *
STANLEY H. HARTT............................................ Ordinary 12,001(5) *
RAYMOND H. HEFNER, JR....................................... Ordinary 202,136(6) *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME AND ADDRESS CLASS OF SHARES OF CLASS
---------------- ----- ---------- --------
<S> <C> <C> <C>
H. EARL JOUDRIE............................................. Ordinary 15,201(5) *
T. MICHAEL LONG............................................. Ordinary 14,269,366(7) 4.09
THE RIGHT HONOURABLE DONALD F. MAZANKOWSKI.................. Ordinary 13,425(5) *
ALAN H. MICHELL............................................. Ordinary 14,501(5) *
HELMUT M. NELDNER........................................... Ordinary 38,311(5) *
Preferred 10,000 *
(Series 1)
WALTER B. O'DONOGHUE, Q.C................................... Ordinary 21,656(5) *
RONALD N. ROBERTSON, Q.C.................................... Ordinary 14,248(5) *
MAUREEN SABIA............................................... Ordinary 0 *
CRAIG S. GLICK.............................................. Ordinary 0 *
DENNIS G. FEUCHUK........................................... Ordinary 1,438 *
HARRY R. HERBST............................................. Ordinary 2,378 *
All directors and executive officers as a group (18 persons) Ordinary 16,181,753(8) 4.64
Preferred 10,300 *
(Series 1)
</TABLE>
*Means less than 1 per cent.
Notes:
1. Shares owned by A&G Resources Corporation ("AGRC") are pledged to (and under
U.S. securities law may be deemed to be indirectly beneficially owned by)
four former lenders to Olympia & York Resources Credit Corp., which filed
for protection under the Companies' Creditors Arrangements Act (Canada)
("CCAA"). Due to this pledge arrangement, one of these lenders, The Hongkong
and Shanghai Banking Corporation Limited, may be deemed to have indirect
beneficial ownership of 34,153,658 (9.79%) Ordinary Shares. The other
lenders may be deemed to have indirect beneficial ownership of less than 5%
of the Ordinary Shares. See "Shareholders Agreement" for additional
information on the lenders.
2. The Participants Group is composed of ten entities which entered into a
shareholders agreement ("Shareholders Agreement") and certain other
agreements with Gulf and AGRC in connection with the acquisition of Ordinary
Shares in 1995. The Participants are Torchmark Corporation, Torch Energy
Advisors Incorporated, The 1818 Fund, L.P., Ontario Teachers' Pension Plan
Board, Wand/Gulf Investments, L.P., Medard Trust, University of Chicago,
Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company and
Bonray, Inc. None of the participants individually owns 5% or more of the
outstanding Ordinary Shares. See "Shareholders Agreement" for additional
information on the Participants.
3. The Alliance Capital Management L.P. Group includes Alpha Assurances Vie
Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA
Courtage Assurance Mutuelle, AXA-UAP, Donaldson, Lufkin & Jenrette
Securities Corporation, Equitable Companies Inc. and the Equitable Life
Assurance Society of the United States.
4. Includes 10,000 Ordinary Shares owned by Mr. Allen's wife and 12,000 shares
subject to stock options which may be exercised within the next 60 days.
5. For each director other than Mr. Auchinleck, this number includes 12,000
shares subject to stock options which may be exercised within the next 60
days. The number of shares held by Mr. Auchinleck includes 388,642 shares
subject to stock options which may be exercised within the next 60 days.
6. These Ordinary Shares are owned by Bonray, Inc., which is a member of the
Participants Group. Mr. Hefner is the President of Bonray, Inc. and owns,
together with his wife and adult children, all of the capital stock of
Bonray. Mr. Hefner may be deemed to be the beneficial owner of the Ordinary
Shares owned by Bonray. Also includes 12,000 shares subject to options owned
by Mr. Hefner which may be exercised within the next 60 days.
7. Represents 14,257,366 Ordinary Shares owned by the 1818 Fund II, L.P. Brown
Brothers Harriman & Co. ("BBH&Co.") is the general partner of the 1818 Fund.
By virtue of a resolution adopted by BBH&Co. designating Mr. Long and Mr.
Lawrence Tucker (also a general partner of BBH&Co.) or either of them, as
the sole and exclusive partners of BBH&Co. having voting power (including
the power to vote or direct the vote) and investment power (including the
power to dispose or direct the disposition) with respect to the Ordinary
Shares owned by the 1818 Fund, Mr. Long may be deemed to beneficially own
the shares owned by the 1818 Fund. Also includes 12,000 options owned by Mr.
Long which may be exercised within the next 60 days.
8. The directors and officers as a group hold 15,470 shares and 342,500 options
which may be exercised within the next 60 days of Gulf Indonesia Resources
Limited (cumulatively less than one percent). Gulf owns approximately 72% of
this subsidiary.
3
<PAGE> 6
ELECTION OF DIRECTORS
The following persons are nominees proposed by management for election as
directors of the Company to serve until the next annual meeting of the
shareholders of the Company or until their successors are duly elected or
appointed. If any vacancies occur in the slate of such nominees because any
nominee is unable to serve or will not serve, the discretionary authority
conferred by the proxies appointing management nominees will be exercised to
vote such proxies for the election of any other person or persons nominated by
management. The Company, however, does not anticipate any such occurrence. The
nominees for election as directors, their ages, cities of residence, principal
occupations for the past 5 years and the year in which each became a director of
the Company are set forth below.
ROBERT H. ALLEN (Age: 70)
Director since 1995
Houston, Texas
Managing Partner, Challenge Investment Partners (mining related
investments) since 1992; Chairman of the Board of Gulf Indonesia Resources
Limited (oil and gas exploration and production) Director of Federal
Express Corporation (delivery services), University of Texas Investment
Management Company (money management), GeoQuest International Holdings,
Inc. (oil and gas information) and Nuevo Energy Company (oil and gas
exploration and production).
RICHARD H. AUCHINLECK (Age: 46)
Director since 1998
Denver, Colorado
President and Chief Executive Officer of Gulf; President since 1998, Senior
Vice President of Gulf since 1995 and Vice President of Gulf since 1993;
CEO and Director of Gulf Indonesia Resources Limited (oil and gas
exploration and production).
STANLEY H. HARTT (Age: 60)
Director since 1993
Toronto, Ontario
Chairman, Salomon Smith Barney Canada Inc. (investment bankers) since 1996,
Chairman and Chief Executive Officer of Camdev Corporation (real estate)
since 1993 director of O&Y Properties Corporation (real estate), Sun Life
Assurance Co. of Canada (insurance), The Oshawa Group Limited (foods).
RAYMOND H. HEFNER, JR. (Age: 70)
Director since 1995
Oklahoma City, Oklahoma
President of Bonray, Inc. (oil and gas investments) since 1992, President
of HBH Holding Corporation, the general partner of HBH Enterprises A
Limited Partnership (investment company); director of Liberty Mutual
Insurance Company (insurance company) and Liberty Financial Companies, Inc.
(investment company).
H. EARL JOUDRIE (Age: 63)
Director since 1993
Toronto, Ontario
Chairman of the Board of Gulf, director of Abitibi Consolidated Inc.
(ground wood paper producer), Algoma Steel Inc (steel manufacturer),
Canadian General Insurance Group Limited (insurance), Consolidated Carma
Corporation (real estate development), Canadian Tire Corporation, Limited
(retail), Canadian Utilities Limited (utilities), Rayrock Yellowknife
Resources Inc. (minerals exploration), Trenton Works Ltd. (steel car maker)
and Zargon Oil & Gas Ltd. (oil and gas exploration).
4
<PAGE> 7
T. MICHAEL LONG (Age: 54)
Director since 1995
Greenwich, Connecticut
General Partner of Brown Brothers Harriman & Co. (private bankers) since
1983; Co-Manager of the 1818 Fund L.P. and the 1818 Fund II L.P. (private
equity investments); director of Gulf Indonesia Resources Limited (oil and
gas exploration and production) Columbia/HCA Health Care, Inc. (health
care) and Vaalco Energy Company (oil and gas exploration and production).
THE RIGHT HONOURABLE DONALD F. MAZANKOWSKI (Age: 62)
Director since 1993
Vegreville, Alberta
Corporation Director and Business Consultant since 1993 when he retired
from political office where he had held various Cabinet positions with the
federal government of Canada; Director of Gulf Indonesia Resources Limited
(oil and gas exploration and production), Power Group of Companies
(diversified holding companies), Canadian Utilities Limited (utilities),
Shaw Communications Incorporated (communications), Weyerhauser Company
(forestry products), IMC Global Inc (fertilizers), Great West Life
Assurance Investors Group (insurance) and Golden Star Resources (mining).
ALAN H. MICHELL (Age: 67)
Director since 1993
Montreal, Quebec
President of A.H. Michell Consultants Inc. (management consulting) since
1990; director of Royal Trust Corporation of Canada and of The Royal Trust
Company (trust companies), Abitibi Consolidated Inc. (ground wood paper
products), Unitel Communications Inc. (communications) and AT&T Canada,
Long Distance Services (communications).
HELMUT M. NELDNER (Age: 59)
Director since 1995
Edmonton, Alberta
Corporate Director since 1994, prior to which he was President and Chief
Executive Officer of TELUS Corporation (telecommunications) since 1990;
Director of ATCO Ltd. (utilities) Canadian Utilities Limited (utilities),
Alberta Power Limited (utilities), CU Power International Limited
(utilities) and ATCO Structures Inc. (manufacturing).
WALTER B. O'DONOGHUE, Q.C. (Age: 65)
Director since 1995
Calgary, Alberta
Partner, Bennett Jones Verchere (law firm) since 1980; Commissioner of the
Alberta Securities Commission; Chairman of the Board of Athabasca Oil Sands
Investments Inc. (oil sands trust); Director of Rayrock Yellowknife
Resources Ltd. (minerals exploration), TELUS Corporation (communications),
Wolcott Gas Processing Ltd. (gas processing) and Gibson Petroleum Company
Ltd. (oil transportation).
RONALD N. ROBERTSON, Q.C. (Age: 67)
Director since 1995
Toronto, Ontario
Partner, Fasken Campbell Godfrey (law firm) since 1964.
MAUREEN SABIA (Age: 56)
Toronto, Ontario
Corporate Director and President of Maureen Sabia International
(consulting) since 1986; Chairman of Export Development Corporation
(Canada's official export credit agency) from 1991-1994; Director of O&Y
Properties Corporation (real estate), Canadian Tire Corporation, Limited
(retail) and Hollinger Inc. (newspaper and publishing).
5
<PAGE> 8
Mr. Hartt is chairman of Salomon Smith Barney Canada Inc. Salomon Smith
Barney Canada Inc. and its predecessors have acted as underwriter on a number of
securities transactions undertaken by the Company for which it received
customary fees. Mr. O'Donoghue is a partner with Bennett Jones Verchere, a law
firm which acts for the Company on a variety of matters. Messrs. Hartt, Joudrie,
Michell and Robertson also serve as directors of A&G Resources Corporation.
In 1997, the Board of Directors held 14 meetings. Each director of the
Company attended at least 75% of the meetings of directors.
The Board of Directors has established three Committees, an Audit
Committee, an Executive Committee and a Compensation and Pension Committee. The
Audit Committee reviews and evaluates the scope of the audit, the accounting
policies and reporting practices, internal auditing, internal controls, certain
security procedures and other matters deemed appropriate and in so doing confers
with Gulf's auditors and Controller. This Committee held 4 meetings in 1997 and
is presently composed of R.H. Allen, A.H. Michell and W.B. O'Donoghue. Each
member of the Audit Committee attended each meeting of the Committee. An
Executive Committee was formed at a meeting of the Board held on February 19,
1998. Its members are Messrs. Joudrie, Allen, Long and Hartt. It remains subject
to approval by AGRC and the Participants. The Executive Committee has not yet
met. The Compensation and Pension Committee is further described in the
Executive Compensation section.
EMPLOYMENT HISTORY OF OFFICERS
The following provides certain information about executive officers of the
Company who are not directors of the Company:
<TABLE>
<S> <C>
CRAIG S. GLICK
1996 - present Chief Financial Officer, Senior Vice President, Corporate
and Corporate Secretary of Gulf
1995 - 1996 Senior Vice President, Law and Corporate Services and
Corporate Secretary of Gulf
1994 - 1995 Senior Vice President, Acquisitions of Torch Energy Advisors
Incorporated, an oil and gas advisory company ("Torch
Energy")
1993 - 1994 Partner with Vinson & Elkins L.L.P. (law firm)
DONALD HRAP
1997 - present Vice President, North America of Gulf
1993 - 1997 Employee of Gulf
DOUGLAS MANNER
1997 - present Vice President, International of Gulf
1993 - 1997 Senior Vice President of Ryder Scott Company, petroleum
engineering company
DENNIS G. FEUCHUK
1995 - present Vice President and Controller of Gulf
1974 - 1995 Employee of Gulf
HARRY R. HERBST
1995 - present Vice President, Strategic Planning and Treasurer of Gulf
1993 - 1995 Vice President, Taxation of Torch Energy
LYNNE WALKER
1997 - present Vice President, Human Resources and Corporate Services of
Gulf
1986 - 1997 Employee of Gulf
J.V. (JIM) BERTRAM
1997 - present Vice President, Marketing of Gulf
1996 - 1997 Director, Marketing of Gulf
1990 - 1996 Vice President, Marketing of Amerada Hess Canada Ltd.
</TABLE>
6
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following tables set forth all annual and long term compensation for
services in all capacities to the Company and its subsidiaries for the three
financial years ended December 31, 1997 (to the extent required by the
applicable securities legislation) in respect of J.P. Bryan, Gulf's former Chief
Executive Officer who held office in 1997, and each of the four most highly
compensated executive officers measured by salary and bonus at the end of the
financial year ended December 31, 1997.
Since a portion of the compensation described below was paid in U.S.
dollars, all U.S. denominated payments have been converted to Canadian currency
at the 1997 average exchange rate of US$1 = CDN$1.4267.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
===================================================================================================================================
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------------- ----------------------------
AWARDS PAYOUT
----------------------------
SECURITIES RESTRICTED
OTHER UNDER SHARES OR
ANNUAL OPTIONS/SARS RESTRICTED LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION GRANTED SHARE UNITS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($) $ ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J.P Bryan 1997 1,056,021 1,426,700 505,875(1) 214,000 42,129
President and Chief 1996 800,004 800,000 136,849(1) 964,900 32,000
Executive Officer 1995 738,893 300,000 2,642,900 30,000
- -----------------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 1997 404,501 499,345 181,053(2) 253,495 42,129
Senior Vice President, 1996 275,004 275,000 42,830 29,183
International and 1995 266,254 128,802 378,500 11,779
Marketing
- -----------------------------------------------------------------------------------------------------------------------------------
C.S. Glick 1997 416,509 499,345 181,213(2) 253,495 17,571
Chief Financial Officer, 1996 275,004 275,000 42,830 11,911
Senior Vice President, 1995 253,997 128,802 378,500 10,313
Corporate and Corporate
Secretary
- -----------------------------------------------------------------------------------------------------------------------------------
D.G. Feuchuk 1997 297,006 240,399 172,040(2) 165,000 30,856
Vice President and 1996 195,000 129,675 21,435 8,963
Controller 1995 167,003 70,003 210,000 15,500
- -----------------------------------------------------------------------------------------------------------------------------------
H.R. Herbst 1997 309,507 160,504 172,603(2) 165,000 14,987
Vice President, Finance 1996 275,004 153,248 30,000 12,688
and Strategic Planning 1995 253,997 110,002 240,000 10,721
===================================================================================================================================
</TABLE>
Notes:
1. Includes $453,180 incurred by the Company for personal travel in 1997.
2. Includes moving allowance of $142,670.
7
<PAGE> 10
STOCK OPTIONS GRANTED AND EXERCISED
The following table sets forth certain information with respect to stock
options granted under the Incentive Stock Option Plan 1994 (the "1994 Plan")
during the financial year ended December 31, 1997 to each of the Named Executive
Officers. The exercise price of the options granted to the Named Executive
Officers was the market price of the Ordinary Shares on the date of the grant.
OPTIONS/SAR GRANTS DURING THE MOST
RECENTLY COMPLETED FINANCIAL YEAR
<TABLE>
<CAPTION>
==========================================================================================================================
MARKET VALUE OF
% OF TOTAL SECURITIES
SECURITIES UNDER OPTIONS/SARS UNDERLYING
OPTIONS/SARS GRANTED TO EXERCISE OR BASE OPTIONS/SARS ON
OPTIONS IN GULF CANADA GRANTED EMPLOYEES IN PRICE THE DATE OF GRANT EXPIRATION
RESOURCES LIMITED (#) FINANCIAL YEAR ($/SECURITY) ($/SECURITY) DATE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J.P. Bryan 214,000 3.06% 10.50 10.50 April 29, 2007
- --------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 42,830 0.61% 10.50 10.50 April 29, 2007
210,665 3.01% 11.30 11.30 June 30, 2007
- --------------------------------------------------------------------------------------------------------------------------
C.S. Glick 42,830 0.61% 10.50 10.50 April 29, 2007
210,665 3.01% 11.30 11.30 June 30, 2007
- --------------------------------------------------------------------------------------------------------------------------
D.G. Feuchuk 30,000 0.43% 10.50 10.50 April 29, 2007
135,000 1.93% 11.30 11.30 June 30, 2007
- --------------------------------------------------------------------------------------------------------------------------
H.R. Herbst 30,000 0.43% 10.50 10.50 April 29, 2007
135,000 1.93% 11.30 11.30 June 30, 2007
- --------------------------------------------------------------------------------------------------------------------------
OPTIONS IN GULF INDONESIA
RESOURCES LIMITED
- --------------------------------------------------------------------------------------------------------------------------
J.P. Bryan 500,000 10.12% 27.82 27.82 Oct. 2, 2007
- --------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 250,000 5.06% 27.82 27.82 Oct. 2, 2007
- --------------------------------------------------------------------------------------------------------------------------
C.S. Glick 250,000 5.06% 27.82 27.82 Oct. 2, 2007
- --------------------------------------------------------------------------------------------------------------------------
D.G. Feuchuk 50,000 1.01% 27.82 27.82 Oct. 2, 2007\
- --------------------------------------------------------------------------------------------------------------------------
H.R. Herbst 50,000 1.01% 27.82 27.82 Oct. 2, 2007
==========================================================================================================================
</TABLE>
Note:
Gulf Indonesia Resources Limited ("GIRL")was a wholly owned subsidiary of the
Company. Gulf sold a portion of its interest in GIRL in an initial public
offering in 1997 and currently owns approximately 72% of GIRL.
8
<PAGE> 11
AGGREGATED OPTIONS/SAR EXERCISES DURING THE MOST
RECENTLY COMPLETED FINANCIAL YEAR AND
THE FINANCIAL YEAR END OPTIONS/SAR VALUES
The following table sets forth certain information with respect to stock
options held by the Named Executive Officers during the financial year ended
December 31, 1997 and based upon a closing Ordinary Share price on December 31,
1997 of $10.00, the value of unexercised options at such year end.
<TABLE>
<CAPTION>
===============================================================================================================================
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SECURITIES ACQUIRED AGGREGATE AT FINANCIAL YEAR END (#) AT FINANCIAL YEAR END ($)
ON EXERCISE VALUE REALIZED -----------------------------------------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J.P. Bryan 1,300,000 1,128,000 1,392,000 5,984,000 2,130,100
- -------------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 173,482 388,642 368,508 2,153,098 473,544
- -------------------------------------------------------------------------------------------------------------------------------
C.S. Glick 1,731,960 135,667 339,158 661,583 306,249
- -------------------------------------------------------------------------------------------------------------------------------
D.G. Feuchuk 550,150 145,625 235,375 711,163 273,638
- -------------------------------------------------------------------------------------------------------------------------------
H.R. Herbst 210,000 225,000 1,147,500 214,500
===============================================================================================================================
</TABLE>
BLACK SCHOLES VALUATION OF OPTIONS
The fair value of each Gulf option granted to the Named Executive Officers
is estimated at the financial year end using the Black Scholes option-pricing
model with the following assumptions: expected volatility of 30%, risk-free
interest rate of 5.4 per cent, no payment of common share dividend and actual
life.
<TABLE>
<CAPTION>
==========================================================================
EXERCISABLE VALUE UNEXERCISABLE VALUE
AT FINANCIAL YEAR END AT FINANCIAL YEAR END
NAME ($) ($)
- --------------------------------------------------------------------------
<S> <C> <C>
J.P. Bryan 7,272,056 6,797,158
- --------------------------------------------------------------------------
R.H. Auchinleck 2,630,499 1,723,600
- --------------------------------------------------------------------------
C.S. Glick 796,398 1,529,412
- --------------------------------------------------------------------------
D.G. Feuchuk 899,385 1,086,889
- --------------------------------------------------------------------------
H.R. Herbst 1,398,870 1,018,245
==========================================================================
</TABLE>
The fair value of each GIRL option granted to the Named Executive Officers
is estimated at the financial year end using the Black Scholes option-pricing
model with the following assumptions: expected volatility of 32%, risk-free
interest rate of 5.0 per cent, no payment of common share dividend and actual
life.
<TABLE>
<CAPTION>
==========================================================================
EXERCISABLE VALUE UNEXERCISABLE VALUE
AT FINANCIAL YEAR END AT FINANCIAL YEAR END
NAME ($) ($)
- --------------------------------------------------------------------------
<S> <C> <C>
J.P. Bryan 2,127,720 4,448,070
- --------------------------------------------------------------------------
R.H. Auchinleck 1,063,860 2,224,035
- --------------------------------------------------------------------------
C.S. Glick 1,063,860 2,224,035
- --------------------------------------------------------------------------
D.G. Feuchuk 212,772 444,807
- --------------------------------------------------------------------------
H.R. Herbst 212,772 444,807
==========================================================================
</TABLE>
COMPANY PENSION PLANS
The Company had a defined benefit and other pension plans for its executive
officers, all of which were either terminated or frozen in 1995. Of the Named
Executive Officers, only Messrs. Auchinleck and Feuchuk will receive benefits
from these plans. Payments to Mr. Auchinleck or Mr. Feuchuk from these plans
will commence upon their
9
<PAGE> 12
respective retirement and will be determined by a formula based on their highest
annual salary in the three years prior to retirement.
All Named Executive Officers participate in the Money Purchase Pension Plan
("MPP"), a defined contribution plan. For each Named Executive Officer, the
Company contributes to the MPP a percentage of salary based on years of pension
service. The years of pension service and corresponding percentages are outlined
in the following table:
<TABLE>
<S> <C>
=========================================================================
PERCENTAGE OF SALARY
NUMBER OF YEARS OF CONTRIBUTED TO THE MONEY
PENSION SERVICE PURCHASE PENSION PLAN
- -------------------------------------------------------------------------
0 to 5 years 4%
- -------------------------------------------------------------------------
6 years to 10 years 6%
- -------------------------------------------------------------------------
11 years to 15 years 8%
- -------------------------------------------------------------------------
15 years or more 10%
=========================================================================
</TABLE>
The maximum amount of contribution allowable by Revenue Canada for the 1997
calendar year is $13,500. If the Company's contribution exceeds the Revenue
Canada maximum, the excess is taxable income to the individual.
An individual must be registered in the MPP for a minimum of two years in
order for the contributions to vest. If an individual leaves Gulf's employment
within two years of plan membership, any funds contributed up to the date of
termination are forfeited. Officers that were relocated to the Denver office
continue to have pension assets in Canada.
A U.S. plan has been established with the same terms and conditions as the
MPP, although subject to different contribution limits. The contribution
schedule and vesting conditions are the same as those in Canada.
EMPLOYMENT AGREEMENTS
In January 1995, Gulf entered into employment agreements with J.P. Bryan,
C.S. Glick and H.R. Herbst. Mr. Auchinleck and Mr. Feuchuk entered into
employment agreements with the Company in February 1996. The term of each such
employment agreement shall continue at the discretion of the Board unless
voluntarily terminated by the employee. All of the aforementioned employment
agreements provide that the officer is entitled to severance upon being
terminated without cause or upon certain other specified events of constructive
dismissal and upon certain stated events, including without limitation, a change
of control in the ownership of Gulf.
If a Named Executive Officer is entitled to receive severance under his
employment agreement, then he is entitled to receive and Gulf is obligated to
pay or provide the following:
1. an undiscounted cash amount equal to one month's base salary
multiplied by the number of years of service of the Named Executive
Officer with the Company subject to a minimum entitlement and payment
equal to 24 months base salary and a maximum entitlement and payment
equal to thirty months base salary;
2. an undiscounted cash amount equal to the value of all those benefits
plans and programmes provided by the Company and equal to one month
for every year of service with the Company and a minimum entitlement
and payment equal to 24 months of benefits value and a maximum
entitlement and payment equal to thirty months of benefits value;
3. an undiscounted amount equal to the product obtained by multiplying
the target bonus under the Company's compensation plan by two;
4. all options for the purchase of shares of the Company which have been
granted by the Company to the Named Executive Officer prior to
January 31, 1995 under the Executive Stock Option Plan (1990) or
(1994) but which have not yet vested shall immediately vest on the
date of termination of the Named Executive Officer and the Named
Executive Officer shall be entitled to exercise all such options for
the purchase of shares of the Company for a period of five (5) years
from the date of termination;
5. all options for the purchase of shares of the Company granted by the
Company to the Named Executive Officer since January 1, 1995 under
the 1994 Plan or otherwise to the date of termination but which have
10
<PAGE> 13
not yet vested shall immediately vest on the date of termination and
the Named Executive Officer shall be entitled to exercise any or all
such options for the purchase of shares of the Company for a period
of two (2) years from the date of termination; and
6. normal and any supplementary pension benefits in effect on the date
of termination, determined on the basis of an additional two years of
credited service and age as of that date.
On February 6, 1998, the Board of Gulf accepted the resignation of Mr.
Bryan and appointed Mr. R.H. Auchinleck as President and Chief Executive Officer
of the Company, effective on that date.
DIRECTORS' FEES
The annual fee paid to each director, other than Mr. Joudrie, is $15,000
for his services as director. Mr. Joudrie receives $24,000 for services as the
non-executive Chairman of the Board. Directors, including Mr. Joudrie, are
entitled to an annual fee of $3,000 for their services as a member of any
committee of the board and $1,500 for acting as the Chairman of any committee of
the board provided such committee has met at least once during the calendar
year. Directors also receive $900 for each board and committee meeting attended
in person and $600 for each board and committee meeting attended by conference
call. Directors are paid quarterly. Directors have the option of receiving all
or a portion of their fees in Gulf Ordinary Shares instead of cash. The purchase
price is equal to the closing price for Gulf Ordinary Shares on The Toronto
Stock Exchange ("TSE") at the end of the quarter when payment is made.
Notwithstanding the above, directors who are employees of Gulf do not receive
compensation for service on the board or board committees. Each director is
reimbursed for all reasonable out-of-pocket expenses incurred incidental to
attending a board or committee meeting.
The Company's Directors have been granted options in the Company and in its
subsidiary, Gulf Indonesia Resources Limited.
SECURITIES AND OPTIONS GRANTED TO THE BOARD OF DIRECTORS(1)
<TABLE>
<CAPTION>
==========================================================================================================
SECURITIES, OPTIONS
GRANTED EXERCISE OR BASE PRICE
DATE OF GRANT (#) ($/SECURITY) EXPIRATION DATE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
April 30, 1997 6,000 10.50 April 29, 2007
- ----------------------------------------------------------------------------------------------------------
October 29, 1997 6,000 11.45 October 28, 2007
- ----------------------------------------------------------------------------------------------------------
October 3, 1997 GIRL -- 20,000/10,000(2) US$19.50 October 2, 2007
==========================================================================================================
</TABLE>
Notes:
1. These grants were made to all directors except Mr. Bryan.
2. Messrs. Allen, DeGroote, Long and Mazankowski, who also served on the Board
of GIRL in 1997, each received 20,000 options in GIRL and Messrs Hartt,
Hefner, Joudrie, Michell, Nelder, O'Donoghue and Robertson were each awarded
10,000 options in GIRL.
COMPOSITION OF THE COMPENSATION AND PENSION COMMITTEE
The members of the Compensation and Pension Committee (the "Compensation
Committee") at December 31, 1997 were Mr. Long (Chairman) and Messrs. Hartt and
Mazankowski. The Compensation Committee met 4 times in 1997. No current member
of the Compensation Committee was an officer or employee of the Company or any
of its subsidiaries during 1997, or formerly an officer of the Company or any of
its subsidiaries.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for administering the Company's
executive compensation program and stock incentive plans and oversees the
retirement plans. The Committee seeks to attract, retain and motivate a
qualified management team, which the Committee believes is essential to the
enhancement of shareholder value. The Compensation Committee believes that a
substantial portion of annual compensation should be "at risk" and received only
when the Company meets targeted goals approved by the Committee or when the
executive is a substantial factor in the success of major projects which benefit
the Company. The Compensation Committee also seeks over the long term to provide
significant equity based compensation in the form of share options to align the
interests of management with the interests of stockholders.
11
<PAGE> 14
In 1995, the Compensation Committee approved a compensation plan,
consisting of three components:
1. Base Salary: The Compensation Committee reviewed and analyzed salaries and
compensation paid by its competitors and others in its business provided by
management of the Company to determine an industry average for the various
executive offices of the Company. Under the compensation plan during 1997,
the Compensation Committee targeted base salaries at market or above for
each executive position, depending on the Committee's subjective judgment
as to the executive's ability to influence the Company's results.
2. Cash Bonus Program: The Compensation Committee expects that "at risk"
compensation in the form of annual bonuses will generally constitute
between one-half and one-quarter of an executive officer's total annual
compensation. At the beginning of each year, the Compensation Committee
approves corporate targets and weightings for production levels, reserve
additions, cash generation, costs and earnings. The Compensation Committee
approves bonuses to be allocated among officers and employees in the event
the targets for the year are met or exceeded. In 1997, the Company did not
achieve the corporate targets set by the Committee for bonus purposes. The
Compensation Committee however approved the payout of bonuses for
successful completion of corporate projects during the year, which were not
contemplated when establishing corporate targets at the beginning of the
year. The Compensation Committee authorized bonuses to certain executive
officers and employees of the Company for their role in certain major
corporate projects completed in 1997, including the highly successful
completion of the initial public offering of Gulf Indonesia Resources
Limited, the acquisition of Stampeder Exploration Ltd. and the completion
of the acquisition of Clyde Petroleum Plc and the integration of Clyde's
operations into the Company.
3. Share Option Program: Share options are a key element of the Company's
long-term executive compensation program. The Committee believes that share
options serve to align the interests of executive officers with those of
the shareholders over the long term. The number of options granted to a
particular executive officer is based on the Compensation Committee's
subjective determination as to each officer's ability to impact corporate
results. The number of options held by an executive is not a factor in
considering the grant of additional options. Options are generally granted
once a year and have an exercise price equal to the market price on the day
preceding the date of grant. Options granted generally vest proportionately
over a three year period. During 1997, 6,989,698 options were granted to
Gulf employees of which 1,050,990 were granted to the Named Executive
Officers.
The Company's executive officers who are resident in the United States are
employed by a wholly owned U.S. domiciled subsidiary of the Company. The U.S.
Omnibus Budget Reconciliation Act of 1993 places a limit on the amount of
certain types of compensation for executive officers which may be tax deductible
for U.S. federal income tax purposes by the Company's subsidiary which employs
the officers. The Company's policy is to design and administer compensation
plans which meet the goals and legal requirements described above. Where it is
consistent with this compensation policy, the Committee will also attempt to
structure compensation programs that are tax-deductible by the Company's
subsidiary.
Chief Executive Officer
The compensation of the Chief Executive Officer is determined by the
Compensation Committee under the Total Compensation Plan in the same manner as
the compensation of other executive officers. The Committee targeted the base
salary of Mr. Bryan during 1997 to place him in the top quartile of leading
international oil and gas producers. Mr. Bryan received a bonus of US$1,000,000
for 1997 performance in recognition of his involvement in major corporate
projects accomplished by the Company during 1997. During 1997, Mr. Bryan also
received options to purchase 214,000 Ordinary Shares of the Company and options
to purchase 500,000 common shares of GIRL.
T. Michael Long
Stanley H. Hartt
Donald F. Mazankowski
12
<PAGE> 15
FIVE YEAR TOTAL SHAREHOLDER RETURN COMPARISON
(COMPARISON OF CUMULATIVE TOTAL RETURNS CHART)
LIABILITY INSURANCE OF DIRECTORS AND OFFICERS
Gulf provides directors' and officers' liability insurance covering losses
to Gulf for reimbursement of directors and officers, where permitted, and direct
indemnity of directors and officers where corporate reimbursement is not
permitted by law. The insurance protects Gulf against liability, including
costs, subject to standard policy exclusions, which may be incurred by directors
and/or officers acting in their capacity as such for Gulf and its subsidiaries.
All directors and officers of Gulf and its subsidiaries are covered by the
policy on a blanket basis and the amount of insurance applies collectively to
all.
The annual premium in 1997 was $251,150 and was paid entirely by Gulf. No
allocation of premium was made to directors as a group or officers as a group.
The amount of insurance purchased is U.S. $50 million in any one year for any
combination of losses involving corporate reimbursement and/or direct indemnity
of directors and officers. Losses are subject to a deductible of U.S. $500,000
for corporate reimbursement with no deductible for indemnification of directors
and officers.
In January 1995, Gulf also purchased a Run-Off Policy for a period
commencing January 25, 1995 and expiring on January 25, 2001 to provide director
and officer liability insurance in the amount of U.S. $35 million, with a
similar deductible and for a premium (paid in 1995) of $1,097,500, for the
directors and officers who held their positions on January 25, 1995.
13
<PAGE> 16
SHAREHOLDERS AGREEMENT
ORDINARY SHARES OWNED BY AGRC
In 1989, Olympia & York Resources Credit Corp. ("Borrower"), the parent
corporation of AGRC, entered into loan agreements with certain lenders (together
with their successors and assigns, the "AGRC Lenders"). The Ordinary Shares of
Gulf currently owned by AGRC were pledged as collateral for the loans to the
Borrower. In 1992, Borrower and certain of its affiliates filed for protection
under the CCAA. In 1993, a plan was sanctioned under the CCAA and the AGRC
Lenders are free to realize on the pledged Ordinary Shares.
Based on the most recent Schedule 13D filed with the U.S. Securities and
Exchange Commission with respect to the Ordinary Shares owned by AGRC, there are
currently four AGRC Lenders which, due to the pledge arrangement, under U.S.
securities law may be deemed to have indirect beneficial ownership of the
Ordinary Shares owned by AGRC which beneficial ownership is expressly disclaimed
in the Schedule 13D and are described as follows:
<TABLE>
<CAPTION>
ORDINARY SHARES PERCENT
NAME OF LENDER BENEFICIALLY OWNED OF CLASS
-------------- ------------------ --------
<S> <C> <C>
Commerzbank International, S.A.................. 6,592,236 1.89
Credit Lyonnais................................. 3,353,781 0.96
The Hongkong and Shanghai Banking Corporation
Limited....................................... 34,153,658 9.79
TCW Special Credits Fund V -- The Principal
Fund.......................................... 8,105,801 2.32
---------- -----
Total........................................... 52,205,476 14.96
========== =====
</TABLE>
On January 25, 1995, the Company, AGRC and the Participants entered into a
shareholders agreement ("Shareholders Agreement") and a registration rights
agreement ("Registration Rights Agreement"). In addition, on January 25, 1995,
the Participants entered into an agreement among themselves ("Participants
Agreement"). Based on information filed with the SEC, AGRC currently owns
52,205,476 (14.96%) Ordinary Shares and the Participants currently own an
aggregate of 42,830,772 (12.28%) Ordinary Shares, or a total of 95,036,248
(27.2%) Ordinary Shares.
Under the Shareholders Agreement, the parties have agreed that the Board of
Directors will be composed of 12 persons. Based on their current holdings of
Ordinary Shares respectively, AGRC will have the right to nominate three
directors, the Participants will have the right to nominate three directors,
five directors will be independent directors and the CEO shall be the twelfth.
AGRC, the Participants and the Company have further agreed that one of the
Participants' nominees will be a person selected by The 1818 Fund II, L.P. AGRC
and the Participants have agreed to vote for the nominees selected by the other.
In the Participants Agreement, the Participants agree that the persons they
are entitled to nominate under the Shareholders Agreement shall be selected as
follows: (i) the 1818 Fund will have the right to nominate one director as
provided in the Shareholders Agreement; (ii) Liberty Mutual Insurance Company
("Liberty") will have the right to nominate the second director which the
Participants are entitled to elect and (iii) the Participants (other than 1818
Fund, Torchmark Corporation and Liberty) will be entitled to nominate the third
director.
Although AGRC and the Participants did not follow the formal notification
provisions in the Shareholders Agreement with respect to the election of their
respective nominees to the Board of Directors, at the last annual meeting, Mr.
Long was identified as the nominee of the 1818 Fund, Mr. Hefner was identified
as the nominee of Liberty and Mr. Neldner was the nominee of the other
Participants. In addition, Messrs. Hartt, Joudrie, Michell and Robertson were
identified as the nominees of AGRC. The remaining directors were nominated as
independent directors under the terms of the Shareholders Agreement.
The Shareholders Agreement and Participants' Agreement also contain
provisions granting the parties a right of first refusal on any sales of
Ordinary Shares and "piggy-back" rights with respect to sales of Ordinary Shares
owned by another party on January 25, 1995 and any not disposed of in accordance
with the Shareholders Agreement (such Ordinary Shares owned on January 25,1995
are referred to as "Subject Shares").
14
<PAGE> 17
The following table describes the ownership of the Ordinary Shares subject
to the Shareholders Agreement:
<TABLE>
<CAPTION>
TOTAL ORDINARY SHARES TOTAL SUBJECT
BENEFICIALLY OWNED(1) Shares Owned(1)
---------------------- --------------------
NAME OF PARTICIPANT NUMBER PERCENT NUMBER PERCENT
------------------- ----------- -------- ---------- -------
<S> <C> <C> <C> <C>
Torchmark Corporation................................... 935,157 0.27 935,157 0.27
The 1818 Fund II, L.P.(2)............................... 14,257,366 4.09 12,673,214 3.63
Ontario Teachers' Pension Plan Board.................... 12,298,242 3.53 7,128,571 2.04
Wand/Gulf Investments L.P.(3)........................... 1,791,571 0.51 1,791,571 0.51
Medard Trust(4)......................................... 2,851,473 0.82 2,534,643 0.73
University of Chicago................................... 1,000,000 0.29 1,000,000 0.29
Liberty Mutual Insurance Company........................ 8,556,145 2.45 7,605,462 2.18
Liberty Mutual Fire Insurance........................... 950,682 0.27 845,051 0.24
Bonray, Inc............................................. 190,136 0.05 169,010 0.05
---------- ----- ---------- -----
All Participants........................................ 42,830,772 12.28 34,682,679 9.94
========== ===== ========== =====
</TABLE>
Notes:
(1) All Ordinary Shares owned by a Participant are subject to the voting
provisions of the Shareholders Agreement while only Subject Shares, defined
as Ordinary Shares owned on January 25, 1995, are subject to the rights of
first refusal set forth in such agreement.
(2) BBH & Co. is the general partner of the 1818 Fund. BBH & Co. may be deemed
to own beneficially the Ordinary Shares owned by The 1818 Fund. By virtue of
the resolution adopted by BBH & Co. designating Mr. Lawrence C. Tucker and
Mr. T. Michael Long, or either of them, as the sole and exclusive partners
of BBH & Co. having voting power (including the power to vote or direct the
vote) and investment power (including the power to dispose or to direct the
disposition) with respect to the Ordinary Shares owned by the 1818 Fund,
each of Messrs. Long and Tucker may be deemed to own beneficially the shares
owned by the 1818 Fund.
(3) Shares indicated as beneficially owned by Wand/Gulf Investments, L.P. may
also be deemed to be beneficially owned by Wand (Gulf) Inc., its general
partner ("Wand (Gulf)") and Mr. Bruce W. Schnitzer by virtue of Wand
(Gulf)'s and Mr. Schnitzer's relationship with Wand/Gulf Investments. Mr.
Schnitzer, having voting power (including the power to vote or direct the
vote) and investment power (including the power to dispose or direct the
disposition) with respect to the Ordinary Shares owned by Wand/Gulf
Investments, may be deemed to own beneficially the shares owned by Wand/Gulf
Investments.
(4) Medard is the record owner of the Ordinary Shares which are beneficially
owned by Mr. Edmond Tavernier. Mr. Tavernier, as Trust Protector of Medard
with sole voting power (including the power to vote or to direct the vote)
and sole investment power (including the power to dispose or direct the
disposition) over the Ordinary Shares owned by Medard, may be deemed to
beneficially own the shares owned by Medard. Beneficiaries of Medard may
receive dividends on the Ordinary Shares and proceeds of sale of Ordinary
Shares.
The Participants and AGRC have agreed to consult on all matters submitted
to a vote of shareholders of Gulf under the Canada Business Corporations Act or
in accordance with a court order. If either the Participants (as a group) or
AGRC does not approve the matter to be voted on, each Participant and AGRC are
obligated to vote all Ordinary Shares owned against the matter. If both the
Participants (as a group) and AGRC approve the matter to be voted on, the
Participants and AGRC can vote on the matter in their discretion.
The provisions of the Shareholders Agreement relating to voting for
directors are subject to certain shareholding thresholds and terminate with
respect to the Participants or AGRC, as applicable, upon the earlier of (i)
either the Participants or AGRC, as applicable, ceasing to own 10% of the
outstanding Ordinary Shares and (ii) 10 years following the January 25, 1995
closing date. The provisions dealing with the voting of Ordinary Shares on
matters submitted to Shareholders terminate five years following the January 25,
1995 date or, if earlier, when either the Participants or AGRC no longer own 10%
of the outstanding Ordinary Shares.
The Registration Rights Agreement obligates the Company, subject to certain
limitations, upon request of AGRC and/or the Participants to register the shares
held by them. The selling shareholders under the Registration Rights Agreement
are required to pay all costs of the registrations effected under the agreement.
APPOINTMENT OF AUDITORS
Unless it is specified in a proxy that the Ordinary Shares represented
therein be withheld from voting on the appointment of auditors, the persons
named in the enclosed form of proxy intend to vote the Ordinary Shares
represented therein for the appointment of Ernst & Young as auditor of Gulf
until the next annual meeting of shareholders following the Meeting, at a
remuneration to be fixed by the Board of Directors. Ernst & Young have been
auditors of Gulf, either solely or jointly with another auditor, for more than
10 years.
15
<PAGE> 18
Representatives of Ernst & Young will be present at the Meeting and will
have the opportunity to make a statement and to respond to appropriate
questions.
ADOPTION OF SHAREHOLDER RIGHTS PLAN
At the Meeting, shareholders will be asked to ratify the Company's
Shareholder Rights Plan (the "Rights Plan"), the terms and conditions of which
are set out in the Shareholder Rights Plan Agreement (the "Rights Agreement")
dated as of February 19, 1998 between the Company and Montreal Trust Company of
Canada (the "Rights Agent"). Copies of the Rights Agreement may be obtained from
the Corporate Secretary or from the Rights Agent at no charge upon request.
RATIFICATION BY SHAREHOLDERS
The Rights Plan became effective upon its adoption by the Board of
Directors of the Company on February 19, 1998, subject to regulatory approval.
The rules of the TSE (on which the Ordinary Shares are listed) require that the
Company receive ratification of the Shareholder Rights Plan by its shareholders
within 180 days following the adoption of the Plan. Under the TSE rules and
terms of the Plan adopted pursuant to the TSE rules, the Rights and the Rights
Agreement will terminate if the Rights Agreement is not ratified by a majority
of the votes cast by Independent Shareholders at the Meeting. An Independent
Shareholder is any shareholder, excluding an Acquiring Person, a person making a
Takeover Bid and their affiliates or associates or persons acting jointly with
them. See Exhibit B for the text of the resolution approving the Rights Plan. In
addition, under the TSE rules, AGRC and the Participants are not entitled to
vote on this matter.
RECOMMENDATION OF THE BOARD OF DIRECTORS
In adopting the Rights Plan, the Board of Directors considered the
appropriateness of establishing a shareholder rights plan and concluded, for the
reasons discussed below, that it was in the best interests of the Company and
its shareholders to adopt the Rights Plan. ACCORDINGLY, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS CONFIRM THE RIGHTS AGREEMENT BY VOTING
IN FAVOUR OF THE RESOLUTION TO BE SUBMITTED TO THE MEETING.
PURPOSE OF THE RIGHTS PLAN
The Rights Plan was adopted by the Company to provide shareholders and the
Board of Directors with sufficient time to consider any take-over bid made for
the Ordinary Shares of the Company and to allow a reasonable period of time for
the Board of Directors to explore and develop alternatives to maximize
shareholder value. NEITHER AT THE TIME OF ADOPTION OF THE RIGHTS PLAN NOR AT THE
DATE OF THIS MANAGEMENT PROXY CIRCULAR WAS THE BOARD AWARE OF ANY PENDING OR
THREATENED TAKE-OVER BID OR OFFER FOR THE ORDINARY SHARES. It was not the
intention of the Board in adopting the Rights Plan to secure the continuance in
office of the existing members of the Board or to avoid an acquisition of
control of the Company in a transaction that is fair and in the best interests
of the shareholders. The rights of shareholders under existing law to seek a
change in the management of the Company or to influence or promote action of
management in a particular manner will not be affected by the Rights Plan. The
adoption of the Rights Plan does not affect the duty of the Board of Directors
to act honestly and in good faith with a view to the best interests of the
Company and its shareholders.
The Board of Directors believes that under the existing rules relating to
take-over bids and tender offers in Canada and the United States there is not
sufficient time for the directors to fully assess offers and to explore and
develop alternatives for shareholders in the event of an unsolicited take-over
bid. Under these rules, a take-over bid must remain open in Canada for a minimum
of 21 days and in the United States for a minimum of 20 business days. The time
required to consider and complete a change of control transaction for a company
of the size and complexity of the Company must be considered from both the
perspective of the Company and of potential purchasers. The result is that
shareholders may fail, in the absence of the Rights Plan, to realize the maximum
value for their shares. Accordingly, the directors believe that the Rights Plan
is an appropriate mechanism to ensure that they will be able to discharge their
responsibilities to assist shareholders in responding to a take-over bid or
tender offer.
The Board of Directors believes that the Rights Plan will not adversely
limit the opportunity for shareholders to dispose of their shares through a
take-over bid or tender offer for the Company which provides fair value to all
shareholders. The directors will continue to be bound to consider fully and
fairly any take-over bid or tender offer for
16
<PAGE> 19
shares of the Company and to discharge that responsibility with a view to the
best interests of the Company and its shareholders.
The provisions of the Rights Plan relating to Permitted Bids, which are
described below under "The Rights Plan -- Permitted Bid", will permit
shareholders to tender to a take-over bid or tender offer which is a "Permitted
Bid" regardless of the views of the Board of Directors as to the acceptability
of the bid or offer. If an acquiror determines not to meet the requirements of a
Permitted Bid, the Board of Directors may, through the opportunity to negotiate
with the acquirer, be able to influence the fairness of the terms of the
take-over bid or tender offer.
Shareholder rights plans have been adopted by a large number of publicly
held corporations in Canada and the United States. The terms of the Rights Plan,
set forth in the Rights Agreement, are substantially similar to those recently
adopted by other major Canadian corporations.
THE RIGHTS PLAN
The following is a summary description of the general operation of the
Rights Plan. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE TEXT
OF THE RIGHTS AGREEMENT.
Capitalized terms used below but not defined below have the meanings
ascribed to them in the Rights Agreement.
THE RIGHTS
The Rights were issued pursuant to the Rights Agreement between the Company
and the Rights Agent. Each Right entitles the registered holder thereof to
purchase from the Company on the occurrence of certain events, one Ordinary
Share at the price of $75 per share, subject to adjustments (the "Exercise
Price"). However, if a Flip-in Event occurs, each Right would then entitle the
registered holder to receive, upon payment of the Exercise Price, that number of
Ordinary Shares that have a market value at the date of that occurrence equal to
twice the Exercise Price. The Rights are not exercisable until the Separation
Time. The Rights expire on the termination of the annual meeting of shareholders
of the Company in the year 2001 unless earlier terminated by the Board.
OVERVIEW OF THE RIGHTS PLAN
The Rights Plan utilizes the mechanism of the Permitted Bid to ensure that
a person seeking control of the Company allows shareholders and the Board
sufficient time to evaluate the bid. The purpose of the Permitted Bid is to
allow a potential bidder to avoid the dilutive features of the Rights Plan by
making a bid in conformity with the conditions specified in the Permitted Bid
provisions. If a person makes a Take-over Bid that is a Permitted Bid, the
Rights Plan will not affect the transaction in any respect.
The Rights Plan should not deter a person seeking to acquire control of the
Company if that person is prepared to make a Take-over Bid pursuant to the
Permitted Bid requirements or is prepared to negotiate with the Board of
Directors. Otherwise, a person will likely find it impractical to acquire 20% or
more of the outstanding Ordinary Shares because the Rights Plan will
substantially dilute the holdings of a person or group that seeks to acquire
such an interest other than by means of a Permitted Bid or on terms approved by
the Board of Directors. When a person or group or their transferees become an
Acquiring Person, the Rights Beneficially Owned by those persons become void
thereby permitting their holdings to be diluted. The possibility of such
dilution is intended to encourage such a person to make a Permitted Bid or to
seek to negotiate with the Board the terms of an offer which is fair to all
shareholders.
TRADING OF RIGHTS
Until the Separation Time, the Rights will be evidenced only by outstanding
Ordinary Share certificates. The Rights Plan provides that, until the Separation
Time, the Rights will be transferred with and only with the associated Ordinary
Shares. Until the Separation Time, or earlier termination or expiration of the
Rights, each new share certificate issued after the Record Time, upon transfer
of existing Ordinary Shares or the issuance of additional Ordinary Shares, will
display a legend incorporating the terms of the Rights Agreement by reference.
As soon as practicable following the Separation Time, separate certificates
evidencing the Rights (the "Rights Certificates") will be mailed to the holders
of record of Ordinary Shares as of the close of business at the Separation Time,
and thereafter the Rights Certificates alone will evidence the Rights.
17
<PAGE> 20
SEPARATION TIME
The Rights will separate and trade apart from the Ordinary Shares after the
Separation Time. Separation Time means the close of business on the tenth
business day after the earlier of (i) the first date (the "Stock Acquisition
Date") of public announcement of facts indicating that a person has become an
Acquiring Person, (ii) the commencement of, or first public announcement of the
intent of any person, other than the Company or any corporation controlled by
the Company, to commence a Take-over Bid (other than a Permitted Bid or a
Competing Permitted Bid or a Take-over Bid in respect of which the Board of
Directors has determined to waive the application of the Rights Plan) or (iii)
the date upon which a Permitted Bid ceases to be a Permitted Bid or, in any
circumstances, such earlier or later date as may be determined by the Board,
acting in good faith.
ACQUIRING PERSON AND FLIP-IN EVENT
An Acquiring Person is, generally, a person who beneficially owns 20% or
more of the outstanding Ordinary Shares of the Company. Holders of 20% or more
of the outstanding Ordinary Shares as at the date of the Rights Agreement are
grandfathered provided that such person shall not thereafter acquire an
additional 1.0% of the outstanding Ordinary Shares from time to time except
pursuant to certain permitted exceptions. The Rights Agreement provides certain
other exceptions to that rule, including a person who acquires 20% or more of
the outstanding Ordinary Shares through a Permitted Bid Acquisition, an Exempt
Acquisition or in its capacity as an Investment Manager, Trust Company or Plan
Trustee, provided in these latter instances that the person is not making or
proposing to make a Take-over Bid. The term Acquiring Person does not include
the Company or any corporation controlled by the Company. If a person becomes an
Acquiring Person (a "Flip-in Event"), each Right will generally convert into the
right to purchase from the Company, upon exercise, a number of Ordinary Shares
having an aggregate Market Price on the date of the Flip-in Event equal to twice
the Exercise Price for an amount in cash equal to the Exercise Price. Holders of
Rights who do not exercise their Rights upon the occurrence of a Flip-in Event
may therefore suffer substantial dilution.
PERMITTED BID
A Flip-in Event does not occur if a Take-over Bid is a Permitted Bid. A
Permitted Bid is a Take-over Bid, made by means of a take-over bid circular,
which also:
(i) is made to all registered holders of Ordinary Shares (other than the
Offeror);
(ii) contains, and the take-up and payment for Ordinary Shares tendered or
deposited is subject to, an irrevocable and unqualified condition
that no Ordinary Shares will be taken up or paid for pursuant to the
Take-over Bid prior to the close of business on a date which is not
less than 45 days following the date of the Take-over Bid;
(iii) contains irrevocable and unqualified provisions that:
(a) unless the Take-over Bid is withdrawn, all Ordinary Shares may be
deposited pursuant to the Take-over Bid at any time prior to the
close of business on the date of first take-up or payment for
Ordinary Shares under the bid and that all Ordinary Shares
deposited pursuant to the Take-over Bid may be withdrawn at any
time prior to the close of business on such date;
(b) more than 50% of the outstanding Ordinary Shares held by persons,
other than the Offeror, its Affiliates or Associates and persons
acting jointly or in concert with the Offeror (the "Independent
Shareholders"), determined as at the date of first take-up or
payment for Ordinary Shares under the Take-over Bid, must be
deposited to the Take-over Bid and not withdrawn at the close of
business on the date of first take-up or payment for Ordinary
Shares; and
(c) in the event that more than 50% of the then outstanding Ordinary
Shares held by Independent Shareholders shall have been deposited
to the Take-over Bid, the Offeror will make public announcement of
that fact and the Take-over Bid will be extended on the same terms
for a period of not less than 10 business days from the date of
such public announcement.
The Rights Plan also provides for a "Competing Permitted Bid", which is a
Take-over Bid made during the currency of another Permitted Bid that satisfies
all of the requirements of a Permitted Bid except that, provided it is
outstanding for a minimum period of 21 days, it may expire on the same date as
the initial Permitted Bid.
18
<PAGE> 21
TAKE-OVER BID
A Take-over Bid is defined in the Rights Plan as an offer to acquire
Ordinary Shares or securities convertible into Ordinary Shares, where the
Ordinary Shares subject to the offer to acquire, together with the Ordinary
Shares into which the securities subject to the offer to acquire are
convertible, and the Offeror's Securities, constitute in the aggregate 20% or
more of the outstanding Ordinary Shares at the date of the offer.
WAIVER AND REDEMPTION
The Board of Directors of the Company may, prior to a Flip-in Event, waive
the dilutive effects of the Rights Plan in respect of a particular Flip-in Event
that would result from a Take-over Bid made by way of a take-over bid circular
to all holders of Ordinary Shares. In such case, such waiver would be deemed
also to be waiver, on the same terms and conditions, in respect of any other
Flip-in Event which occurs by reason of another Take-over Bid made prior to the
expiry of the Take-over Bid for which the initial waiver was given. The Board of
Directors of the Company may also waive the Rights Plan in respect of a
particular Flip-in Event that has occurred through inadvertence, provided that
the Acquiring Person that inadvertently triggered such Flip-in Event reduces its
beneficial holdings to less than 20% of the outstanding Ordinary Shares. Subject
to the prior consent of the holders of Ordinary Shares or of Rights, at any time
prior to the occurrence of a Flip-in Event, the Board of Directors may at its
option redeem all, but not less than all, of the outstanding Rights at a nominal
value.
PROPOSALS BY SHAREHOLDERS
Shareholders desiring to submit proposals at an annual meeting must comply
with applicable provisions of the Canada Business Corporations Act. Shareholders
may present proposals for inclusion in management's proxy circular to be mailed
in connection with the annual meeting of shareholders in 1999 provided that such
proposals are received in the Company's principal executive office on or before
November 26, 1998, and that proposals are required by the applicable terms of
the U.S. Securities Exchange Act of 1934 or Canada Business Corporations Act to
be included in the Company's proxy circular.
COMPLIANCE WITH SECTION 16 OF THE U.S. SECURITIES EXCHANGE ACT OF 1934
Section 16 of the U.S. Securities Exchange Act of 1934 ("Exchange Act")
requires that each director and executive officer and certain shareholders file
certain forms with the Commission reporting their beneficial ownership of
Ordinary Shares. A company which is a "foreign private issuer" as defined in the
Exchange Act is not subject to the provisions of Section 16. During 1997, the
Company was a foreign private issuer, except for three weeks. Based solely on
records available to the Company, it appears that each director and executive
officer of the Company complied with its reporting obligations under Section 16,
other than Mr. Michell who failed to file an initial Report on Form 3 within the
time required by the Exchange Act. All directors and officers of Gulf have
complied with all Canadian insider trading reporting obligations and the
information is publicly available.
DIRECTORS' APPROVAL
The contents and sending of this Proxy Circular have been approved by the
Directors of the Company.
GULF CANADA RESOURCES LIMITED
"CRAIG S. GLICK"
Craig S. Glick
Secretary
Calgary, Alberta
March 23, 1998
19
<PAGE> 22
SCHEDULE "A"
CORPORATE GOVERNANCE
The Toronto Stock Exchange Committee on Corporate Governance in Canada has
issued a series of proposed guidelines (the "TSE Guidelines") for effective
corporate governance. The TSE Guidelines address matters such as the
constitution and independence of corporate boards, the functions to be performed
by boards and their committees and the effectiveness and education of board
members.
Gulf's Board of Directors and senior management consider good corporate
governance to be central to the effective and efficient operation of Canadian
corporations and have addressed the TSE Guidelines below.
An "unrelated" director for the purposes of the TSE Guidelines is a
director who is free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially interfere with the
director's ability to act in the best interests of the Company, other than
interests arising from shareholding. In defining an unrelated director, the TSE
Guidelines placed emphasis on the ability of a director to exercise objective
judgment, independent of management. The TSE Guidelines also made an informal
distinction between inside and outside directors. The TSE Guidelines considers
an inside director a director who is an officer or employee of the Company or
any of its affiliates.
The composition of Gulf's Board of Directors may be impacted by the
Shareholder Agreement, which provides that AGRC and the Participants may each
nominate and support each other in voting for a certain number of directors,
depending on the percentage of outstanding Ordinary Shares held by that party.
As between AGRC and the Participants, the Shareholders Agreement provides that
at present shareholding levels, at the 1998 Annual and Special Meeting of
Shareholders, each shall be entitled to nominate three directors, with the
remaining six to be comprised of the Chief Executive Officer and five
independent directors (chosen by a committee composed of one Participant
nominee, one AGRC nominee and one independent director).
Gulf does not provide formal education programs for new directors, but does
provide such orientation and information as individual directors may request.
All directors, notwithstanding the manner in which they were nominated, are
required to act in the best interests of the Company.
Gulf's Board of Directors has three committees, an Executive Committee, a
Compensation and Pension Committee, as well as an Audit Committee. All members
of committees are non-management directors and a majority of all members are
unrelated, as required by the TSE Guidelines. Gulf believes that the size of its
Board is sufficiently small that certain matters that might otherwise be
delegated to committees can be dealt with effectively by the entire Board, such
as the consideration of environmental and corporate governance issues. Gulf
therefore does not have a committee specifically responsible for such issues.
The Compensation Committee has reviewed the compensation of the directors in
light of their risks and responsibilities, as required by the TSE Guidelines. As
a result of the review, each director was granted stock options pursuant to
Gulf's Incentive Stock Option Plan (1994) and options of Gulf Indonesia
Resources Limited to more closely align the interests of the directors with
those of Gulf's Shareholders. In addition, Gulf's Board of Directors has the
ability to function independently of management and has the ability to engage
outside advisors, at the Company's expense, should the Board of Directors or
individual directors so wish, as specified in the TSE Guidelines.
Gulf's Board of Directors is responsible under applicable law for the
management of the business and affairs of the Company. The Board retains all
powers which are not expressly delegated to management. In connection with the
delegation of power to management, the Board, as suggested in the TSE
Guidelines, explicitly retains the power to, and does, consider such matters as
the appointment and monitoring of senior management (although not the training
of senior management), short and long term strategic planning, and general
oversight of risk management strategies. The Board has also established the
position of internal auditor, who reports directly to the Audit Committee of the
Board, to monitor internal controls and management information systems. In
connection with the review by the Board of strategic planning matters, the Board
approves the corporate objectives of the Chief Executive Officer and senior
management, also as suggested by the TSE Guidelines.
A-1
<PAGE> 23
SCHEDULE "B"
RESOLUTION
SHAREHOLDER RIGHTS PLAN AGREEMENT
BE IT RESOLVED THAT:
1. The Shareholder Rights Plan Agreement made as of February 19, 1998 between
Gulf Canada Resources Limited (the "Company") and Montreal Trust Company of
Canada, as Rights Agent, as may be amended pursuant to its terms, be and
the same is hereby ratified.
2. Any director or officer of the Company be and is hereby authorized, for and
on behalf of the Company, to execute (whether under the corporate seal of
the Company or otherwise) and deliver such other documents and instruments
and take such other actions as such director or officer may determine to be
necessary or advisable to implement this resolution and the matters
authorized hereby, such determination to be conclusively evidenced by the
execution and delivery of any such documents or instruments and the taking
of any such actions.
B-1
<PAGE> 24
GULF CANADA RESOURCES LIMITED
ANNUAL AND SPECIAL MEETING, APRIL 29, 1998
PROXY
The undersigned shareholder of Gulf Canada Resources Limited (the
"Company") hereby appoints Richard H. Auchinleck, President and Chief Executive
Officer, or failing him, Craig S. Glick, Senior Vice President, Corporate and
Chief Financial Officer and Secretary, or instead of either of the
foregoing, .....................................................................
. as the nominee of the undersigned to attend and act for and on behalf of the
undersigned at the ANNUAL AND SPECIAL MEETING OF THE COMPANY TO BE HELD ON APRIL
29, 1998 (the "Meeting"), and at any adjournment or adjournments thereof, to the
same extent and with the same power as if the undersigned was personally present
at the said Meeting or such adjournment or adjournments thereof and, without
limiting the generality of the authorization and power hereby given, the said
nominee is specifically directed to vote the Ordinary Shares registered in the
name of the undersigned at the Meeting,
<TABLE>
<S> <C> <C>
[ ]FOR the election as directors of all or [ ]WITHHOLD FROM VOTING for all nominees
nominees listed below (except as listed below
marked to the contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW).
R.H. Allen, R.H. Auchinleck, S.H. Hartt, R.H. Hefner, Jr., H.E. Joudrie,
T.M. Long, D.F. Mazankowski, A.H. Michell, H.M. Neldner, W. O'Donoghue, R.N.
Robertson, M. Sabia
[ ]FOR the appointment of Ernst & Young or [ ]WITHHOLD FROM VOTING on the
as auditors, with remuneration to be appointment of Ernst & Young as
fixed by the directors. auditors, with remuneration to be
fixed by the directors.
[ ]FOR the ratification of the or [ ]AGAINST the ratification of the
Shareholder Rights Plan as described Shareholder Rights Plan as described
in the accompanying Management Proxy in the accompanying Management Proxy
Circular. Circular.
</TABLE>
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE MANAGEMENT OF THE COMPANY AT
THE DIRECTION OF THE BOARD OF DIRECTORS. This proxy confers discretionary
authority with respect to amendments to matters identified in the Notice of
Annual and Special Meeting of Shareholders or other matters which may
properly come before the Meeting or any adjournment thereof. This proxy also
authorizes the replacement of any nominee identified above for election to
the Board of Directors if such nominee is unable to serve or will not serve.
Management knows of no such amendments, other matters or anticipated
replacements as at the date hereof. The Ordinary Shares represented by this
proxy, if appointing the persons designated as nominees above, will be voted
or withheld from voting in accordance with the instructions of the
shareholder on any ballot that may be called for and, where the person whose
proxy is solicited specifies a choice with respect to any matter to be voted
upon, the Ordinary Shares shall be voted in accordance with the specification
so made.
<PAGE> 25
IF NO CHOICE IS SPECIFIED, THE ORDINARY SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS ,"FOR" THE APPOINTMENT OF ERNST &
YOUNG AS AUDITORS, WITH REMUNERATION TO BE FIXED BY THE DIRECTORS AND "FOR"
THE RATIFICATION OF THE SHAREHOLDER RIGHTS PLAN.
A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER OF THE COMPANY) OTHER THAN THE PERSONS DESIGNATED AS NOMINEES
ABOVE TO ATTEND AND ACT FOR AND ON BEHALF OF SUCH SHAREHOLDER AT THE MEETING
AND MAY EXERCISE SUCH RIGHT BY INSERTING THE NAME OF SUCH PERSON IN THE BLANK
SPACE PROVIDED ABOVE.
This proxy must be executed by the shareholder or an attorney authorized
in writing or, if the shareholder is a corporation, its corporate seal must
be affixed or this form of proxy must be signed by an officer or attorney
thereof duly authorized indicating the capacity under which such officer or
attorney is signing.
Dated
------------------------------------------
(if undated, the proxy will be deemed to
bear the date on which it was mailed to
the shareholder)
Signature
--------------------------------------
(please sign, date and mail promptly in
the enclosed envelope)
Signature of Co-owner
--------------------------
TO BE EFFECTIVE, PROXIES MUST BE RECEIVED
BEFORE 4:30 P.M. (CALGARY TIME) ON APRIL 28,
1998, BY MONTREAL TRUST COMPANY OF CANADA, 600,
530 - 8TH AVENUE S.W., CALGARY, ALBERTA, T2P
3S8, OR BE DEPOSITED WITH THE CHAIRMAN OF THE
MEETING PRIOR TO THE COMMENCEMENT OF THE
MEETING. PROXIES MAY BE REVOKED AT ANY TIME
PRIOR TO THEIR USE.
