<PAGE> 1
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 9th day of March, 1998.
By Order of the Board,
/Craig S. Glick/
Craig S. Glick
Secretary
<PAGE> 2
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.
<PAGE> 3
2
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.
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 Stock") and Cumulative
Redeemable Auction Perpetual Senior Preference Shares, Series 2 ("Series 2
Preferred Stock") 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
OF PERCENT
NAME AND ADDRESS CLASS SHARES OF CLASS
---------------- ----- ------ --------
<S> <C> <C> <C>
A&G Resources Limited 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
Torch Energy Advisors Incorporated
C/o 1221 Lamar, Suite 6000
Houston, Texas 77010
</TABLE>
<PAGE> 4
3
<TABLE>
<CAPTION>
NUMBER
OF PERCENT
NAME AND ADDRESS CLASS SHARES OF CLASS
---------------- ----- ------ --------
<S> <C> <C> <C>
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) *
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) *
Craig S. Glick Ordinary 0 *
Dennis G. Feuchuk Ordinary 1,438 *
Harold R. Herbst Ordinary 2,378 *
All directors and executive officers as a group Ordinary 16,181,753(8) 4.64
(18 persons)
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
<PAGE> 5
4
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 Shareholder Agreement 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.
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).
<PAGE> 6
5
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
developer), 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 (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).
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. (forestry company),
Unitel Communications Inc. (communications) and AT&T Canada, Long Distance
Services (communications).
<PAGE> 7
6
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 since 1990 (telecommunications);
Director of ATCO Ltd. (utilities) Canadian Utilities Limited (utilities),
Alberta Power Limited (utilities), CU Power International Limited
(utilities) and ATCO Structures Inc. (manufacturing company).
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 and gas exploration and production).
Ronald N. Robertson, Q.C. (Age: 67)
Director since 1995
Toronto, Ontario
Partner, Fasken Campbell Godfrey (law firm) since 1964.
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, a
privately held company which is part of the Shareholder Agreement Group.
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:
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
<PAGE> 8
7
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 - 1998 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
1996 - present Vice President, Marketing of Gulf
1990 - 1996 Vice President , Marketing of Amerada Hess Canada Ltd.
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.
<PAGE> 9
8
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$1.4267.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
============================================================================================================================
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------
AWARDS PAYOUT
- ----------------------------------------------------------------------------------------------------------------------------
OTHER SECURITIES RESTRICTED
ANNUAL UNDER SHARES OR ALL OTHER
COMPEN- OPTIONS/ RESTRICTED LTIP COMPEN-
NAME AND SALARY BONUS SATION SARS SHARE UNITS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($) GRANTED (#) ($) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------
<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
EXECUTIVE OFFICER 1996 800,004 800,000 136,849 (1) 964,000 32,000
1995 738,893 300,000 2,642,000 30,000
- ----------------------------------------------------------------------------------------------------------------------------
R.H. AUCHINLECK 1997 404,501 499,345 181,053 (2) 253,495 42,129
SENIOR VICE PRESIDENT,
INTERNATIONAL AND 1996 275,004 275,000 42,830 29,183
MARKETING
1995 266,254 128,802 378,500 11,779
- ----------------------------------------------------------------------------------------------------------------------------
C.S. GLICK 1997 416,509 499,345 181,213 (2) 253,495 17,571
CHIEF FINANCIAL OFFICER,
SENIOR VICE PRESIDENT, 1996 275,004 275,000 42,830 11,911
CORPORATE AND CORPORATE
SECRETARY 1995 253,997 128,802 378,500 10,313
- ----------------------------------------------------------------------------------------------------------------------------
D.G. FEUCHUK 1997 297,006 240,399 172,040 (2) 165,000 30,856
VICE PRESIDENT AND
CONTROLLER 1996 195,000 129,675 21,435 8,963
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
AND STRATEGIC PLANNING 1996 275,004 153,248 30,000 12,688
1995 253,997 110,002 240,000 10,721
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Expenses incurred by the Company for personal travel.
2. Includes moving allowance of US$142,670.
STOCK OPTIONS GRANTED AND EXERCISED
The following table sets forth certain information with respect to
stock options granted under the Incentive Stock Option Plan 1994 (the "1994
Plan") during the financial year ended December 31, 1997 to each of the Named
Executive Officers. The exercise price of the options granted to the Named
Executive Officers was the market price of the Ordinary Shares on the date of
the grant.
<PAGE> 10
9
OPTIONS/SAR GRANTS DURING THE MOST
RECENTLY COMPLETED FINANCIAL YEAR
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARKET VALUE OF
% OF TOTAL SECURITIES
SECURITIES, UNDER OPTIONS/SARS UNDERLYING
OPTIONS IN GULF OPTIONS/SARS GRANTED TO EXERCISE OR BASE OPTIONS/SARS ON
CANADA RESOURCES GRANTED EMPLOYEES IN PRICE THE DATE OF GRANT EXPIRATION
LIMITED (#) FINANCIAL YEAR ($/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 owned approximately 72%
of GIRL.
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 $10.00, the value of unexercised options at such year end.
<PAGE> 11
10
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SAR IN-THE-MONEY OPTIONS/SARS
SECURITIES, AGGREGATE AT FINANCIAL YEAR END AT FINANCIAL YEAR END
ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED -------------------------------------------------------------
NAME (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J.P. Bryan 1,300,000 1,128,000 1,392,000 5,984,000 2,130,100
- -----------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 173,482 388,642 368,508 2,153,098 473,544
- -----------------------------------------------------------------------------------------------------------------------
C.S. Glick 1,731,960 135,667 339,158 661,583 306,249
- -----------------------------------------------------------------------------------------------------------------------
D.G. Feuchuk 550,150 145,625 235,375 711,163 273,638
- -----------------------------------------------------------------------------------------------------------------------
H.R. Herbst 210,000 225,000 1,147,500 214,500
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
BLACK SCHOLES VALUATION OF OPTIONS
The fair value of each Gulf option granted to the Named Executive
Officers is estimated at the financial year end using the Black Scholes
option-pricing model with the following assumptions: expected volatility of 30%,
risk-free interest rate of 5.4 per cent, no payment of common share dividend and
actual life.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
EXERCISABLE VALUE UNEXERCISABLE VALUE
NAME AT FINANCIAL YEAR END AT FINANCIAL YEAR END
($) ($)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
J.P. Bryan 7,272,056 6,797,158
- ----------------------------------------------------------------------------------------------
R.H. Auchinleck 2,630,499 1,723,600
- ----------------------------------------------------------------------------------------------
C.S. Glick 796,398 1,529,412
- ----------------------------------------------------------------------------------------------
D.G. Feuchuk 899,385 1,086,889
- ----------------------------------------------------------------------------------------------
H. R. Herbst 1,398,870 1,018,245
- ----------------------------------------------------------------------------------------------
</TABLE>
The fair value of each Gulf Indonesia option granted to the Named
Executive Officers is estimated at the financial year end using the Black
Scholes option-pricing model with the following assumptions: expected volatility
of 32%, risk-free interest rate of 5.0 per cent, no payment of common share
dividend and actual life.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
EXERCISABLE VALUE UNEXERCISABLE VALUE
NAME AT FINANCIAL YEAR END AT FINANCIAL YEAR END
($) ($)
- ----------------------------------------------------------------------------------------------
<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 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:
---------------------------------------------------------------------
Number of Years of Percentage of Salary
Pension Service Contributed to the Money
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%
---------------------------------------------------------------------
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.
<PAGE> 12
11
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
new 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
<PAGE> 13
12
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 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 $600 for each board and committee meeting attended by conference
call. Directors are paid quarterly. Directors have the option of receiving all
or a portion of their fees in Gulf Ordinary Shares instead of cash. The purchase
price is equal to the closing price for Gulf Ordinary Shares on The Toronto
Stock Exchange (the "TSE") at the end of the quarter when payment is made.
Notwithstanding the above, directors who are employees of Gulf do not receive
compensation for service on the board or board committees. Each director is
reimbursed for all reasonable out-of-pocket expenses incurred incidental to
attending a board or committee meeting.
The Company's Directors have been granted options in the Company and in
its subsidiary, Gulf Indonesia Resources Limited.
<PAGE> 14
13
SECURITIES AND OPTIONS GRANTED TO THE BOARD OF DIRECTORS (1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SECURITIES, OPTIONS GRANTED EXERCISE OR BASE PRICE EXPIRATION DATE
DATE OF GRANT (#) ($/SECURITY)
- ------------------------------------------------------------------------------------------------------------------------------
<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 Gulf Indonesia in 1997, each received 20,000 options in
Gulf Indonesia Resources Limited and Messrs Hartt, Hefner, Joudrie,
Michell, Nelder, O'Donoghue and Robertson were each awarded 10,000
options in Gulf Indonesia.
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
COMPENSATION COMMITTEE REPORT
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.
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.
<PAGE> 15
14
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 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
FIVE YEAR TOTAL SHAREHOLDER RETURN COMPARISON
[CHART]
<PAGE> 16
15
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.
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>
SHAREHOLDERS AGREEMENT
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
<PAGE> 17
16
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 Shareholder Agreement; (ii) Liberty Mutual Insurance Company
("Liberty") will have the right to nominate the second director which the
Participant's 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 and "piggy-back" rights
with respect to any 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").
The following table describes the ownership of the Ordinary Shares
subject to the Shareholders Agreement:
<TABLE>
<CAPTION>
Total Ordinary
Shares Beneficially Total Subject
Owned (1) Shares Owned (1)
Name of -------------------------- ---------------------
Reporting Person 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 4.08 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 Company 950,682 0.27 845,051 0.24
Bonray, Inc. 190,136 0.05 169,010 0.05
All Participants 42,830,772 12.27 34,682,679 9.94
</TABLE>
<PAGE> 18
17
(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, 1885, 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 and Warrants 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 and Warrants
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 and Warrants.
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, 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.
<PAGE> 19
18
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.
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 obtain 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 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.
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
<PAGE> 20
19
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 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
<PAGE> 21
20
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.
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
<PAGE> 22
21
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.
<PAGE> 23
22
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.
<PAGE> 24
23
DIRECTORS' APPROVAL
The contents and sending of this Proxy Circular have been approved by the
Directors of the Company.
GULF CANADA RESOURCES LIMITED
/s/ Craig S. Glick
Craig S. Glick
Secretary
Calgary, Alberta
March 9, 1998
<PAGE> 25
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.
<PAGE> 26
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.
<PAGE> 27
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,
_____ FOR the election as directors of all nominees listed below (except as
marked to the contrary below)
or
_____ WITHHOLD FROM VOTING for all nominees listed 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, [to be named]
_____ FOR the appointment of Ernst & Young as auditors, with remuneration to
be fixed by the directors.
or
_____ WITHHOLD FROM VOTING on the appointment of Ernst & Young as auditors,
with remuneration to be fixed by the directors.
_____ FOR the ratification of the Shareholder Rights Plan as described in the
accompanying Management Proxy Circular.
or
_____ AGAINST the ratification of the Shareholder Rights Plan as described in
the accompanying Management Proxy Circular.
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
<PAGE> 28
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 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.
