<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 Rule 14a-11(c) or Rule 14a-12
SEVEN SEAS PETROLEUM INC.
- --------------------------------------------------------------------------------
(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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(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
previously paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SEVEN SEAS PETROLEUM INC.
Suite 1700, 5555 San Felipe
Houston, Texas 77056
(713) 622-8218 (Telephone)
(713) 621-9770 (Telecopier)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"Meeting") of SEVEN SEAS PETROLEUM INC. (the "Corporation") will be held in the
Auditorium at the Marathon Oil Tower Conference Center, 5555 San Felipe,
Houston, Texas, 77056, on Thursday, June 10, 1999, at 9:00 a.m. (Central
Daylight Time) for the following purposes:
1. to elect directors to hold office until the next annual meeting of the
Corporation's shareholders;
2. to appoint the auditors of the Corporation for the ensuing year and to
authorize the directors to fix the remuneration to be paid to such auditors;
and
3. to transact such other business as may properly come before the Meeting or
any adjournment thereof.
Copies of the Annual Report and the consolidated financial statements of
the Corporation for the year ended December 31, 1998 and the auditors' report
thereon accompany this Notice of Annual Meeting of Shareholders.
The Board of Directors has fixed the close of business on May 5, 1999, as
the record date for determination of shareholders who are entitled to notice of
and to vote either in person or by proxy at the Meeting and any adjournment
thereof.
Shareholders who are unable to attend the Meeting are requested to
complete, sign and date the enclosed form of proxy and return it in the
addressed envelope provided for that purpose. To be effective, proxies must be
received before 5:00 p.m. (Eastern Daylight Time) on Tuesday, June 8, 1999, by
Montreal Trust Company of Canada, Proxy Department, 151 Front Street West, 8th
Floor, Toronto, Ontario M5J 2N1.
DATED April 30, 1999.
By Order of the Board of Directors of
SEVEN SEAS PETROLEUM INC.
/s/ Robert A. Hefner III
Robert A. Hefner III
Chairman of the Board
<PAGE> 3
SEVEN SEAS PETROLEUM INC.
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE MANAGEMENT OF SEVEN SEAS PETROLEUM INC. (THE
"CORPORATION") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS (THE "MEETING") OF
THE CORPORATION TO BE HELD IN THE AUDITORIUM AT THE MARATHON OIL TOWER
CONFERENCE CENTRE, 5555 SAN FELIPE, HOUSTON, TEXAS, 77056, ON THURSDAY, JUNE 10,
1999 AT 9:00 A.M. (CENTRAL DAYLIGHT TIME) FOR THE PURPOSES SET FORTH IN THE
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS (THE "NOTICE") ACCOMPANYING THIS
MANAGEMENT INFORMATION CIRCULAR. The solicitation of proxies will be primarily
by mail and possibly supplemented by telephone or other personal contact to be
made, without special compensation, by regular officers and employees of the
Corporation. The Corporation does not reimburse shareholders, nominees or agents
for the cost incurred in obtaining from their principals authorization to
execute forms of proxy. No solicitation will be made by specifically engaged
employees or soliciting agents. The cost of the solicitation of proxies will be
borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed form of proxy are directors and officers
of the Corporation. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED
NOT BE A SHAREHOLDER), OTHER THAN THE PERSONS NAMED, AS THE PROXY OF THE
SHAREHOLDER AND MAY EXERCISE THIS RIGHT EITHER BY INSERTING THAT PERSON'S NAME
IN THE BLANK SPACE PROVIDED IN THE ACCOMPANYING FORM OF PROXY AND STRIKING OUT
THE OTHER NAMES OR BY COMPLETING ANOTHER PROPER FORM OF PROXY. To be effective,
proxies must be received before 5:00 p.m. (Eastern Daylight Time) on Tuesday,
June 8, 1999, by Montreal Trust Company of Canada, Proxy Department, 151 Front
Street West, 8th Floor, Toronto, Ontario M5J 2N1.
Proxies given by shareholders for use at the Meeting may be revoked at any
time before their use. In addition to revocation in any other manner permitted
by law, a proxy may be revoked by depositing an instrument in writing signed by
the shareholder or by the shareholder's attorney duly authorized in writing at
the principal office of the Corporation, Suite 1700, 5555 San Felipe, Houston,
Texas, USA 77056, or at the Corporation's registered office, 2093 Second Avenue,
Whitehorse, Yukon Territory, Canada Y1A 1B5, on or before the last business day
preceding the date of the Meeting, or any adjournment thereof, or with the
Chairman of the Meeting on the day of the Meeting, or any adjournment thereof.
VOTING AND DISCRETION OF PROXIES
The common shares of the Corporation (the "Common Shares") represented by
proxies solicited by management of the Corporation pursuant to this Management
Information Circular will be voted in accordance with the directions contained
therein. IF NO DIRECTIONS ARE GIVEN, THE COMMON SHARES WILL BE VOTED FOR THE
ELECTION OF MANAGEMENT'S NOMINEES AS DIRECTORS OF THE CORPORATION AND FOR THE
APPOINTMENT OF MANAGEMENT'S NOMINEE AS AUDITORS OF THE CORPORATION AND
AUTHORIZING THE DIRECTORS TO FIX THEIR REMUNERATION. THE ACCOMPANYING FORM OF
PROXY CONFERS DISCRETIONARY AUTHORITY ON THE PERSONS NAMED THEREIN IN RESPECT OF
AMENDMENTS OR VARIATIONS TO THE MATTERS REFERRED TO IN THE NOTICE AND IN RESPECT
OF OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT
THEREOF.
At the date of this Management Information Circular, management knows of no
such amendments or variations or other matters that may properly come before the
Meeting but, if any such amendments, variations or other matters are properly
brought before the Meeting, the persons named in the proxies solicited by
management of the Corporation pursuant to this Management Information Circular
will vote thereon in accordance with their best judgment.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The Corporation is authorized to issue an unlimited number of Common Shares
(without par value), and an unlimited number of Class A Preferred Shares. As at
March 31, 1999, 37,778,420 Common Shares and no Class A Preferred Shares were
issued and outstanding.
<PAGE> 4
The holders of Common Shares are entitled to one vote at the Meeting for
each Common Share held. Holders of Common Shares of record on May 5, 1999 are
entitled to receive notice of, and to vote at, the Meeting. The affirmative vote
of a majority of the votes cast at the Meeting is required for the approval of
each matter set forth in this Management Information Circular. This Management
Information Circular and accompanying proxy are initially being mailed to
shareholders on or about May 7, 1999.
The following table sets forth certain information as of March 31, 1999,
with respect to the beneficial ownership of the Common Shares, by (i) each
person known by the Corporation to own beneficially more than 5% of the issued
and outstanding Common Shares, (ii) each director of the Corporation and each of
the Named Executive Officers (as defined below), and (iii) all executive
officers and directors of the Corporation as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
BENEFICIAL OWNER COMMON SHARES (1) OF CLASS
- ---------------- ----------------- --------
<S> <C> <C>
Robert A. Hefner III........................................ 5,535,917(2) 14.7%
c/o Seven Seas Petroleum Inc.
Suite 1700, 5555 San Felipe
Houston, Texas 77056
Breene M. Kerr.............................................. 2,635,919(3) 7.0%
c/o Brookside Company
115 Bay Street
Easton, Maryland 21601
George Soros and Stanley F. Drukenmiller.................... 2,858,000(4) 7.6%
888 Seventh Avenue, 33rd Floor
New York, New York 10106
Robert W. Moore............................................. 2,542,000 6.8%
MTV Investment Limited Partnership
3600 West Main Street, Suite 150
Norman, Oklahoma 73072
State Street Research & Management Company.................. 2,765,200 7.4%
One Financial Centre, 30th Floor
Boston, Massachusetts 02111-2690
Brian F. Egolf.............................................. 174,569(5) *
Sir Mark Thomson BT......................................... 385,899(6) 1.0%
Robert B. Panero............................................ 42,445(7) *
Gary F. Fuller.............................................. 89,000(8) *
James D. Scarlett........................................... 58,333(9) *
Herbert C. Williamson III................................... 350,256(10) *
Larry A. Ray................................................ 323,883(11) *
William W. Daily............................................ 524 *
Robert M.D. Cross........................................... --(12) *
All executive officers and directors as a group (11 9,550,915(13) 25.3%
persons)..................................................
</TABLE>
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* Less than 1%
(1) The information as to Common Shares beneficially owned, controlled or
directed is not within the knowledge of the Corporation and has been
furnished by the proposed nominees individually. Unless otherwise
indicated, each of the nominees listed has sole voting and investment power
over the Common Shares owned. The number of Common Shares indicated
includes, in each case, the number of Common Shares issuable upon exercise
of options to purchase Common Shares ("Options") subject to the
Corporation's 1996 Stock Option Plan, as amended (the "1996 Stock Option
Plan"), and the Corporation's 1997 Stock Option Plan, as amended (the "1997
Stock Option Plan"), to the extent that such Options are currently
exercisable. For purposes of this table, Options are deemed to be
"currently exercisable" if they may be exercised within 60 days following
March 31, 1999.
2
<PAGE> 5
(2) Includes 300,000 Common Shares currently issuable upon exercise of Options
and 15,000 Common Shares held by an entity in which Mr. Hefner has a
substantial interest.
(3) Includes 75,000 Common Shares currently issuable upon exercise of an Option
and 2,560,919 Common Shares beneficially owned by a limited partnership in
which Mr. Kerr serves as a general partner.
(4) Of the Common Shares identified, Mr. Soros, Mr. Drukenmiller and Soros Fund
Management LLC may be deemed the beneficial owner of 1,176,400 Common
Shares. Mr. Drukenmiller and Duquesne Capital Management, LLC may also be
deemed the beneficial owner of the remaining 1,681,600 Common Shares.
(5) Includes 112,833 Common Shares currently issuable upon exercise of Options
and 25,000 Common Shares owned by a trust for the benefit of members of Mr.
Egolf's family.
(6) Includes 58,333 Common Shares currently issuable upon exercise of an
Option.
(7) Includes 41,666 Common Shares currently exercisable upon exercise of an
Option and 779 Common Shares held by Mr. Panero's wife.
(8) Includes 75,000 Common Shares currently issuable upon exercise of Options.
Also includes 4,000 Common Shares owned by a limited liability company of
which Mr. Fuller and his wife each own a 50% interest and share voting and
investment powers and 10,000 Common Shares owned by a limited partnership
of which Mr. Fuller has the voting and investment power as the trustee of a
trust which is the sole general partner. Mr. Fuller has a 35.65% interest
in the partnership as a limited partner. Excludes 3,500 Common Shares owned
by Mr. Fuller's wife as to which he disclaims beneficial ownership.
(9) Includes 58,333 Common Shares issuable upon exercise of Options. Mr.
Scarlett surrendered these Options upon his resignation as a director of
the Corporation effective April 5, 1999.
(10) Includes 350,000 Common Shares issuable upon the exercise of Options. Mr.
Williamson surrendered these Options upon his resignation as a director and
officer of the Corporation effective April 5, 1999.
(11) Includes 183,333 Common Shares currently issuable upon exercise of an
Option and an additional 104,500 Common Shares owned by Mr. Ray's wife.
(12) Subsequent to March 31, 1999, options to acquire 75,000 Common Shares were
granted to Mr. Cross upon joining the Board of Directors, of which 25,000
are currently exercisable.
(13) Includes 1,254,498 Common Shares issuable upon exercise of Options.
MATTERS FOR CONSIDERATION AT THE MEETING
ELECTION OF DIRECTORS
The articles of the Corporation provide that the Corporation shall have a
minimum of three (3), and a maximum of fifteen (15) directors to be elected
annually. The number of directors is currently fixed at nine (9).
The persons named in the accompanying form of proxy intend to vote for the
election as directors of the Corporation of the nine proposed nominees whose
names are set forth in the table below, all of whom are now directors of the
Corporation and have been since the dates indicated. If, before the Meeting, any
of the proposed nominees is unable or unwilling to serve as a director, the
persons named in the accompanying form of proxy are entitled to vote for other
nominees in their discretion. Management is not aware that any of the proposed
nominees is unable or unwilling to serve as a director. Each director elected
will hold office until the next annual meeting of shareholders or until his
office is vacated.
The following table sets forth the name and country of residence of each of
the proposed nominees for election as directors of the Corporation, their age,
the other positions and offices with the Corporation presently held by each of
them, their principal occupations or employment and their periods of service as
directors of the Corporation. Information as to the number of Common Shares
beneficially owned, controlled or directed by each of them is set forth above
under "Voting Shares and Principal Shareholders".
<TABLE>
<CAPTION>
NAME AND COUNTRY PRINCIPAL OCCUPATION AND
OF ORDINARY RESIDENCE AGE POSITION WITH THE CORPORATION DIRECTOR SINCE
- --------------------- --- ----------------------------- --------------
<S> <C> <C> <C>
ROBERT A. HEFNER III (1)............... 64 Chairman, Chief Executive Officer, November 8, 1996
Houston, Texas Managing Director and Director of the
United States Corporation; Managing Member of The GHK
Company L.L.C., a private and oil and
gas exploration company
BREENE M. KERR (1)(2)(3)............... 70 Vice Chairman and Director of the June 12, 1997
Easton, Maryland, Corporation; General Partner, Talbot
United States Fairfield II L.P., an oil and gas
exploration undertaking
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME AND COUNTRY PRINCIPAL OCCUPATION AND
OF ORDINARY RESIDENCE AGE POSITION WITH THE CORPORATION DIRECTOR SINCE
- --------------------- --- ----------------------------- --------------
<S> <C> <C> <C>
BRIAN F. EGOLF (2)..................... 51 Director of the Corporation; President November 8, 1996
Santa Fe, New Mexico, of Petroleum Properties Management
United States Corporation, a private oil and gas
exploration company
SIR MARK THOMSON BT (3)................ 59 Director of the Corporation; Managing June 12, 1997
Rotterdam, The Netherlands Director of B&N Investments Limited, an
investment management company
ROBERT B. PANERO....................... 70 Director of the Corporation; President June 12, 1997
New York, New York, of Robert Panero Associates,
United States international strategic policy and
project studies advisors
GARY F. FULLER (2)..................... 62 Director of the Corporation; Shareholder June 12, 1997
Oklahoma City, Oklahoma, and director of McAfee & Taft,
United States attorneys-at-law
LARRY A. RAY (1)....................... 51 Executive Vice President, Chief June 12, 1997
Houston, Texas, Operating Officer, Chief Financial
United States Officer and Director of the Corporation
WILLIAM W. DAILY....................... 55 Executive Vice President and Director of September 23, 1998
Bogota, Colombia the Corporation; President of GHK
Company Colombia
ROBERT M.D. CROSS (3).................. 40 Director of the Corporation; Founder and April 5, 1999
West Vancouver, British Columbia, Managing Director of Whytecliff Capital
Canada Corporation, a merchant bank
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Stock Option and Compensation Committee.
(3) Member of the Audit Committee.
Each of the proposed nominees for election as a director of the Corporation
has held the principal occupation identified above for not less than five years,
except for Mr. Hefner, who became an officer of the Corporation in May 1997; Mr.
Kerr, who served as Chairman and a director of Kerr Consolidated, an equipment
sales and leasing company, from 1969 to 1995; Mr. Ray, who was appointed Chief
Financial Officer of the Corporation on an interim basis effective April 5,
1999, and who was the Corporation's Executive Vice President -- Operations from
June 1997 to September 1997 and has served in a management capacity for The GHK
Company L.L.C. since 1990; Mr. Daily, who operated an international consulting
practice from 1993 to 1998, prior to which time he served as Vice President of
International Operations of Hondo Oil & Gas Company from 1989 to 1993; and Mr.
Cross, who was Chairman and Chief Executive Officer of Yorkton Securities Inc.,
an international investment banking firm, from 1994 to 1998.
Each director elected at the Meeting will hold office until the next annual
meeting of shareholders for the election of directors or until his successor has
been duly elected and qualified. Vacancies on the Board of Directors may be
filled by the remaining directors, and directors elected to fill such vacancies
will hold office until the next annual meeting of shareholders.
Effective on April 5, 1999, Mr. Herbert C. Williamson III resigned as a
director and Executive Vice President and Chief Financial Officer of the
Corporation, and Mr. James D. Scarlett resigned as a director of the
Corporation.
DIRECTORS' COMPENSATION
Directors who are also officers or employees of the Corporation are not
separately compensated for serving on the Board of Directors or as members of
Board committees. Directors who are not officers or employees of the Corporation
are eligible to participate in the 1996 Stock Option Plan and the 1997 Stock
Option Plan and are reimbursed for their out-of-pocket expenses incurred in
connection with their service as directors, including travel expenses. The
Corporation also maintains directors' and officers' liability insurance.
4
<PAGE> 7
In June 1997, the Corporation granted Mr. Ray an option to purchase 200,000
Common Shares at a price of US$10.70 per share. Such options vested one-third
immediately, with the remaining vesting 50% at the end of one year from the date
of grant and the remaining 50% at the end of the second year from the date of
grant. On September 9, 1997, the Corporation granted Mr. Ray options to purchase
an additional 200,000 Common Shares at a price of US$13.23 per share. Such
options will vest one-third each on the third, fourth and fifth anniversaries of
the date of grant.
The Corporation granted options at an exercise price of US$10.70 per share
to the other directors holding office on July 17, 1997 as follows: Mr. Hefner --
300,000; Mr. Egolf -- 75,000; Mr. Kerr -- 75,000; Mr. Fuller -- 75,000; Mr.
Panero -- 50,000; Mr. Scarlett -- 75,000; and Mr. Thomson -- 75,000. One-third
of the options vested immediately, with the remaining vesting 50% at the end of
one year from the date of grant and the remaining 50% at the end of the second
year from the date of grant. Mr. Panero's options vested as to 50% at the end of
one year from the date of grant and the remaining 50% will vest at the end of
the second year from the date of grant. Mr. Panero also received a payment of
US$37,500 in lieu of 25,000 options which would have vested immediately. All
unexercised vested and unvested options held by Mr. Scarlett were surrendered
effective April 5, 1999.
In September 1997, the Corporation granted Mr. Williamson an option to
purchase 500,000 Common Shares at an exercise price of US$13.23 per share, of
which options to purchase 150,000 Common Shares vested immediately, options to
purchase 150,000 Common Shares vested on September 9, 1998 and options to
purchase 50,000 Common Shares vest on each of September 9, 1999, 2000, 2001 and
2002, respectively. All unexercised vested and unvested options held by Mr.
Williamson were cancelled effective April 5, 1999.
On November 25, 1997, the Corporation granted options at an exercise price
of US$18.55 per share to the directors then holding office as follows: Mr.
Hefner -- 150,000; Mr. Williamson -- 150,000; Mr. Egolf -- 100,000; Mr. Kerr --
75,000; Mr. Fuller -- 75,000; Mr. Panero -- 25,000; Mr. Scarlett -- 25,000; Mr.
Thomson -- 25,000; and Mr. Ray -- 150,000. Such options vest one-third each on
the first, second, and third anniversaries of the date of grant. All unexercised
vested and unvested options held by Messrs. Williamson and Scarlett,
respectively, were cancelled effective April 5, 1999.
On August 21, 1998, the Corporation granted Mr. Egolf an option to purchase
18,000 Common Shares at an exercise price of US$14.09 per share, vesting monthly
in instalments of 1,500 shares beginning October 1, 1998.
On September 14, 1998, the Corporation granted Mr. Daily an option to
purchase 237,500 Common Shares at an exercise price of US$9.00 per share,
vesting one-third each on the first, second, and third anniversaries of the date
of grant.
On April 5, 1999, the Corporation granted Mr. Cross an option to purchase
75,000 Common Shares at an exercise price of US$4.81 per share, of which options
to purchase 25,000 Common Shares vested immediately and options to purchase
25,000 Common Shares vest on each of April 5, 2000 and 2001.
In each case, the Corporation granted these options at the approximate
prevailing market price on the date of grant.
MATERIAL INTEREST OF DIRECTORS
Mr. Hefner is the sole shareholder of The GHK Company L.L.C. ("GHK").
Effective July 1, 1997, the Corporation entered into an administrative services
agreement with GHK whereby the Corporation pays US$1,750 each month to GHK for
miscellaneous administrative expenses. The Corporation recognized US$21,000 of
expense in connection with this agreement in 1998. In addition, GHK pays certain
miscellaneous costs incurred on behalf of the Corporation. The Corporation
reimbursed GHK approximately US$100,000 in 1998 for such costs. For information
concerning other transactions between GHK, the Corporation and their respective
affiliates and insiders, please see "Interest of Management and Others in
Material Transactions".
Mr. Fuller is a shareholder and director of the McAfee & Taft law firm,
which provides legal services to the Corporation and its affiliates. In
addition, Mr. Scarlett, a former director, is a partner in the law firm of
McMillan Binch, the Corporation's Canadian legal counsel.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The United States Securities and Exchange Commission (the "Commission")
requires the Corporation's officers, directors, and certain beneficial owners to
file reports of ownership and changes in ownership with the
5
<PAGE> 8
Commission and the American Stock Exchange. Based on its review of such forms
received, the Corporation believes that during the period from January 1, 1998
through March 31, 1999, its officers, directors, and certain beneficial owners
complied with all applicable filing requirements, except that Robert A. Hefner
III and Breene M. Kerr were late in filing two monthly reports, and Sir Mark
Thomson BT, Brian F. Egolf and Larry A. Ray were each late in filing one monthly
report.
APPOINTMENT OF AUDITORS
The persons named in the accompanying form of proxy intend to vote for the
reappointment of Arthur Andersen LLP as auditors of the Corporation, to serve as
auditors until the close of the next annual meeting of shareholders. It is
proposed that the remuneration to be paid to the auditors be fixed by the Board
of Directors. Arthur Andersen LLP was first appointed auditors of the
Corporation on June 29, 1995. Representatives of Arthur Andersen LLP will be
present at the Meeting, will be offered the opportunity to make a statement if
such representatives desire to do so and will be available to respond to
appropriate questions.
STATEMENT OF EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid by the Corporation to its Chief Executive Officer and each of
the other persons who served as executive officers of the Corporation whose
annual salary and bonus exceeded C$100,000 (approximately US$68,000) for the
fiscal year ended December 31, 1998 (the "Named Executive Officers"). The table
does not include perquisites and other personal benefits for any individual for
whom the aggregate amount of such compensation does not exceed the lesser of (i)
C$50,000, or (ii) 10% of individual combined salary and bonus for the Named
Executive Officer in that year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PAYOUTS
ANNUAL COMPENSATION OTHER RESTRICTED SECURITIES ---------
NAME AND PRINCIPAL ------------------------------------ ANNUAL STOCK UNDERLYING LTIP
POSITION WITH THE SALARY BONUS COMPENSATION AWARD OPTIONS/ PAYOUTS
CORPORATION YEAR (US$) (US$) (US$) (US$) SARS (#) (US$)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert A. Hefner III, 1998 450,000 -- -- -- -- --
Chairman, Chief
Executive Officer and 1997 -- -- -- -- 450,000 --
Managing Director 1996 -- -- -- -- 50,000(2) --
- ---------------------------------------------------------------------------------------------------------------------------
Larry A. Ray, 1998 262,500 -- -- -- -- --
Executive Vice President,
Chief Operating Officer 1997 139,062(3) -- -- -- 550,000 --
and Director
- ---------------------------------------------------------------------------------------------------------------------------
Herbert C. Williamson
III, 1998 100,000 -- -- -- -- --
Executive Vice President, 1997 29,167(3) -- -- -- 650,000 --
Chief Financial Officer
and Director
- ---------------------------------------------------------------------------------------------------------------------------
William W. Daily, 1998 120,000(4) -- -- -- 237,500 --
Executive Vice President
and Director
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------- ---------------
NAME AND PRINCIPAL ALL OTHER
POSITION WITH THE COMPENSATION
CORPORATION (US$)(1)
<S> <C>
Robert A. Hefner III, --
Chairman, Chief
Executive Officer and --
Managing Director --
- ------------------------------------------------------------
Larry A. Ray, --
Executive Vice President,
Chief Operating Officer 33,330(5)
and Director
- ----------------------------------------------------------------------------
Herbert C. Williamson
III,
Executive Vice President, 256(5)
Chief Financial Officer
and Director
- --------------------------------------------------------------------------------------------
William W. Daily, --
Executive Vice President
and Director
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Except as otherwise indicated, the dollar value of perquisites and other
personal benefits for each of the Named Executive Officers was less than
established reporting thresholds.
(2) Mr. Hefner was granted options exercisable for 50,000 Common Shares at
US$18.75 per share for his participation as a member of the Board of
Directors.
(3) Represents salary received from commencement of employment through December
31, 1997 from the Corporation, which amount does not reflect an annual rate
of compensation.
(4) Represents salary received from commencement of employment through December
31, 1998 from the Corporation, which amount does not reflect an annual rate
of compensation.
(5) Consists solely of amounts contributed by the Corporation to the Named
Executive Officer's account in the Corporation's 401(k) Plan.
6
<PAGE> 9
OPTION/SAR GRANTS DURING 1998
The following table sets forth information regarding individual grants of
options by the Corporation during the fiscal year ended December 31, 1998 to the
Named Executive Officers and their potential realizable values.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SHARES OPTIONS MARKET AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE OR VALUE OF SHARE PRICE APPRECIATION
OPTIONS EMPLOYEES BASE PRICE SHARES ON for Option Term (1)
GRANTED IN FISCAL PER SHARE THE DATE EXPIRATION ---------------------------
NAME (#) YEAR (US$/SHARE) OF GRANT DATE 5%(US$) 10%(US$)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William W. Daily 237,500 28.9% 9.00 9.00 09/14/2008 1,344,262 3,406,625
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The assumed rates of annual appreciation are calculated from the date of
grant through the assumed expiration date. Actual gains, if any, on option
exercises and Common Share holdings are dependent on the future performance
of the Common Shares and overall stock market conditions. There can be no
assurance that the value reflected in the table will be achieved.
No stock appreciation rights have been granted by the Corporation to the
Named Executive Officers or to other employees or directors of the Corporation.
AGGREGATED OPTION EXERCISES DURING 1998 AND FISCAL YEAR-END OPTION VALUES
The following table provides information relating to options exercised by
the Named Executive Officers during 1998 and the number and value of unexercised
options held by the Named Executive Officers at fiscal year-end. The Corporation
does not have any outstanding stock appreciation rights:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
SHARES OPTIONS, WARRANTS/SARS AT
ACQUIRED FISCAL YEAR-END
ON VALUE (#) (1)
EXERCISE REALIZED -------------------------------------
NAME (#) (US$) (1) EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert A. Hefner III -- -- 300,000 200,000
- --------------------------------------------------------------------------------------------------
Larry A. Ray -- -- 183,333 366,667
- --------------------------------------------------------------------------------------------------
Herbert C. Williamson III (3) -- -- 350,000 300,000
- --------------------------------------------------------------------------------------------------
William W. Daily -- -- -- 237,500
- --------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------- -------------------------------------
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS,
WARRANTS/SARS AT
FISCAL YEAR-END
(US$)(2)
-------------------------------------
NAME EXERCISABLE UNEXERCISABLE
<S> <C> <C>
Robert A. Hefner III -- --
- -------------------------------------------------------------------------------------------
Larry A. Ray -- --
- --------------------------------------------------------------------------------------------------
Herbert C. Williamson III (3) -- --
- --------------------------------------------------------------------------------------------------
William W. Daily -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Represents the difference between the exercise price of the option and the
closing price on the date of exercise.
(2) Based on a closing price on December 31, 1998 of US$6.69 per share. Options
are "in-the-money" at the fiscal year-end if the market value of the
underlying securities on that date exceeds the exercise price of the option.
(3) The options granted to Mr. Williamson were surrendered effective April 5,
1999.
EMPLOYMENT AGREEMENTS
The Corporation entered into a five-year employment agreement with Larry A.
Ray dated June 12, 1997 that provides for an annual base salary of US$262,500
and, in the sole discretion of the Stock Option and Compensation Committee of
the Board of Directors (the "Compensation Committee"), Mr. Ray may receive
annual merit increases, annual bonuses and stock option awards. As part of his
employment agreement, Mr. Ray was granted options to purchase 200,000 Common
Shares at an exercise price of US$10.70 per share. One-third of the options
vested immediately and the remainder vest one-half each on the first and second
anniversaries of the date of grant. On September 9, 1997, the Corporation
granted Mr. Ray options to purchase an additional 200,000 Common Shares at a
price of $13.23 per share. Of the latter options granted to Mr. Ray, 95,000 are
under the 1996 Stock Option Plan and 105,000 are under the 1997 Stock Option
Plan. Such options vest one-third each on the third, fourth, and fifth
anniversaries of the date of grant. The employment agreement may be terminated
for "cause", which includes death or serious incapacity. Under the terms of the
employment agreement, Mr. Ray will receive payments equal to the amounts
remaining to be paid under the agreement in the event of a "Change in Control"
and his employment terminates for any reason, including resignation by Mr. Ray.
For purposes of this agreement, the
7
<PAGE> 10
term "Change in Control" means (1) any merger, consolidation or reorganization
in which the Corporation is not the surviving entity (or survives only as a
subsidiary of an entity), (2) any sale, lease, exchange, or other transfer of
(or agreement to sell, lease, exchange, or otherwise transfer) all or
substantially all of the assets of the Corporation to any other person or entity
(in one transaction or a series of related transactions), (3) dissolution or
liquidation of the Corporation, (4) any person or entity, including a "group" as
contemplated by Section 13(d) of the United States Exchange Act of 1934,
acquires or gains ownership or control (including without limitation, power to
vote) of more than 45% of the outstanding shares of the Corporation's voting
stock (based upon voting power), or (5) as a result of or in connection with a
contested election of directors, the persons who were directors of the
Corporation before such election cease to constitute a majority of the Board of
Directors; provided, however, that the term "Change in Control" shall not
include any reorganization, merger, consolidation, sale, lease, exchange, or
similar transaction involving solely the Corporation and one or more previously
wholly-owned subsidiaries of the Corporation.
The Corporation entered into a five-year employment agreement with Mr.
Herbert C. Williamson III dated September 9, 1997 that provided for an annual
base salary of US$100,000 and, in the sole discretion of the Compensation
Committee, Mr. Williamson may receive annual merit increases, annual bonuses and
stock option awards. As part of his employment agreement, Mr. Williamson was
granted options to purchase 500,000 Common Shares at an exercise price of
US$13.23 per share. Options to purchase 150,000 Common Shares vest immediately,
options to purchase 150,000 Common Shares vested on September 9, 1998, and
options to purchase 50,000 Common Shares each vest on September 9, 1999, 2000,
2001 and 2002, respectively. Of the options granted to Mr. Williamson, 150,000
are under the 1996 Stock Option Plan and 350,000 are under the 1997 Stock Option
Plan. The remaining terms and conditions of Mr. Williamson's employment
agreement are substantially similar to Mr. Ray's employment agreement. Mr.
Williamson resigned his employment with the Corporation effective April 5, 1999.
Under the terms of a severance agreement with Mr. Williamson dated April 5,
1999, the Corporation agreed to pay a termination payment of US$175,000 to Mr.
Williamson and to maintain his medical benefits for a one year period. Mr
Williamson also agreed to surrender all rights in respect of options granted to
him under the Corporation's stock incentive plans.
The Corporation entered into a three-year employment agreement with Mr.
William W. Daily dated September 1, 1998 that provides for an annual base salary
of US$330,000 and, in the sole discretion of the Compensation Committee, Mr.
Daily may receive annual merit increases, annual bonuses and stock option
awards. As part of his employment agreement, Mr. Daily was granted options to
purchase 237,500 Common Shares at an exercise price of US$9.00 per share.
Options to purchase 79,167 Common Shares vest on each of September 14, 1999,
2000, and 2001. The options granted to Mr. Daily are under the 1997 Stock Option
Plan. The remaining terms and conditions of Mr. Daily's employment agreement are
substantially similar to Mr. Ray's employment agreement.
INDEBTEDNESS TO CORPORATION OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR
OFFICERS
On November 1, 1997, Mr. Ray obtained a US$200,000 loan from the
Corporation to finance the purchase of his residence. This loan bears a 6.06%
interest rate, is unsecured and is due on November 1, 2002. The Corporation
recognized interest income of approximately US$12,000 and US$2,000 in 1998 and
1997, respectively.
Since January 1, 1998, no other director, executive officer or senior
officer of the Corporation, or any associate or affiliate of any such director,
executive officer or senior officer is or has been indebted to the Corporation
or any of its subsidiaries, or is or has been indebted to another entity where
such indebtedness is or has been the subject of a guarantee, support agreement,
letter of credit or other similar arrangement or understanding provided by the
Corporation or any of its subsidiaries, other than routine indebtedness.
REPORT ON EXECUTIVE COMPENSATION
The Corporation's policy with respect to executive compensation and the
amount thereof is determined by the Compensation Committee. In establishing and
implementing compensation policy, the Compensation Committee considers the
recommendations of the Chief Executive Officer and considers comparative
industry data. Issues relating to compensation are considered by the
Compensation Committee periodically throughout the year as needed on a
case-by-case basis and in the early part of each year based upon individual and
corporate performance during the preceding year.
8
<PAGE> 11
The guiding philosophy of the Compensation Committee in the determination
of executive compensation is to attract and retain qualified and experienced
executives and provide reasonable base salaries and incentives for performance
geared to the Corporation's success. Since the Corporation does not presently
have any significant revenue, the Compensation Committee's focus has been not to
award cash bonuses and to provide incentives through stock option awards with
delayed vesting provisions. The Compensation Committee believes that stock
options, coupled with delayed vesting provisions to encourage continued service,
are the best way to link the interests of management with those of the
shareholders.
Robert A. Hefner III was appointed Chief Executive Officer of the
Corporation in May 1996. His compensation for 1998 consisted of a salary of
US$450,000, based on an assessment of his individual performance and
significance to the development of the Corporation's business. On the basis of
the Corporation's 1998 financial results, no options were granted to Mr. Hefner
during the year.
Submitted by the Compensation Committee:
Breene M. Kerr
Brian F. Egolf
Gary F. Fuller
PERFORMANCE GRAPH
The following graph charts performance of an investment in the Common
Shares against the TSE 300 Composite Index and the TSE Oil & Gas Index, assuming
an investment of US$100 on June 30, 1995. Between June 30, 1995 and February 6,
1997, the Common Shares were traded on the Canadian Dealing Network. The Common
Shares commenced trading on the TSE on February 7, 1997 and on the American
Stock Exchange on January 9, 1998. The Common Shares trade in U.S. dollars on
the TSE and the American Stock Exchange.
9
<PAGE> 12
CHART
10
<PAGE> 13
STATEMENT OF CORPORATE GOVERNANCE POLICIES
In accordance with the report of The Toronto Stock Exchange Committee on
Corporate Governance in Canada, companies listed on the TSE are required to
disclose their corporate governance practices with reference to the Guidelines
for Improved Corporate Governance in Canada (the "Guidelines") set out in the
TSE Company Manual, copies of which are available from the TSE or the
Corporation.
MANDATE AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS
The fundamental objective of the Board of Directors is to ensure that the
Corporation operates in a fashion which maximizes shareholder value over the
long term. The Board of Directors carries out all of its duties and
responsibilities in a manner consistent with that fundamental objective. The
principal duty and responsibility of the Board of Directors is to oversee the
management and operations of the Corporation, with the day-to-day management of
the business and affairs of the Corporation delegated by the Board of Directors
to the Chief Executive Officer and other executive officers.
Responsibilities of the Board of Directors also include overseeing the
conduct of the Corporation's business, providing leadership and direction to its
management and setting policies. Strategic direction for the Corporation is
developed through the Board of Directors' planning process. Through this
process, the Board of Directors adopts the operating plan for the coming year,
and monitors management's progress relating to that plan through a regular
reporting and review process. To date, no formal position descriptions for the
Board of Directors and the Chief Executive Officer have been developed as
recommended by the Guidelines.
The Board of Directors met four times during 1998, excluding periodic
telephone conference calls of directors. Three regular meetings of the Board of
Directors are currently scheduled for 1999. Each of the directors holding office
during 1998 attended all of the meetings of the Board of Directors and any
committee on which he served.
COMPOSITION AND SIZE OF THE BOARD OF DIRECTORS
The nine-member Board of Directors is elected by the shareholders of the
Corporation, with three directors, Robert A. Hefner III, William W. Daily and
Larry A. Ray, who are "related" to the Corporation within the meaning of the
Guidelines. In addition to serving as a director, Mr. Hefner is the
Corporation's Chairman and Chief Executive Officer, Mr. Daily is the Executive
Vice President and President of GHK Company Colombia, the Corporation's
principal operating subsidiary, and Mr. Ray is the Corporation's Executive Vice
President, Chief Operating Officer and interim Chief Financial Officer. In view
of the current developmental state of the Corporation's business, and the fact
that a majority of the directors are regularly involved in the business and
affairs of the Corporation, the Board of Directors has concluded that the
functions of Chairman and Chief Executive Officer of the Corporation do not need
to be separated at this time. The six "unrelated" directors are independent of
management and free from any interest, business or other relationships that
could, or could reasonably be perceived to, materially interfere with their
ability to act with a view to the best interests of the Corporation, other than
interests and relationships arising from shareholding. The Corporation does not
have a "significant shareholder", that is, a shareholder with the ability to
exercise a majority of the votes for the election of the Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation has established three standing committees of the Board of
Directors: an Executive Committee, an Audit Committee and a Compensation
Committee. Messrs. Hefner (Chairman), Kerr and Ray are members of the Executive
Committee. Messrs. Kerr, Thomson and Cross are members of the Audit Committee,
with Mr. Cross having joined the committee following Mr. Scarlett's resignation
in April 1999. Messrs. Kerr, Egolf and Fuller are members of the Compensation
Committee.
The Executive Committee is delegated, during the intervals between the
meetings of the Board of Directors, all the powers of the Board of Directors in
respect of the management and direction of the business and affairs of the
Corporation (except only those specified in subsection 116(2) of the Business
Corporations Act of the Yukon Territory (the "YBCA") in all cases in which
specified direction in writing shall not have been given by the Board of
Directors.
The Audit Committee consults with the auditors of the Corporation and such
other persons as the members deem appropriate, reviews the preparations for and
scope of the audit of the Corporation's annual financial statements, makes
recommendations concerning the engagement and fees of the independent auditors,
and performs
11
<PAGE> 14
such other duties relating to the financial statements of the Corporation as the
Board of Directors may assign from time to time.
The Compensation Committee has all the powers of the Board of Directors,
including the authority to issue shares or other securities of the Corporation,
in respect of any matters relating to the administration of the 1996 Stock
Option Plan, the 1997 Stock Option Plan and compensation of officers, directors,
employees and other persons performing substantial services for the Corporation.
The Guidelines contemplate that committees of the Board of Directors should
generally be composed of outside directors, a majority of whom are unrelated
directors. The Corporation complies with the requirements of the YBCA in that
the majority of the members of the Audit Committee are not officers or employees
of the Corporation or its affiliates. In addition, a majority of the members of
the Compensation Committee are unrelated directors. The Board of Directors feels
it is appropriate to have Messrs. Hefner and Ray serve on the Executive
Committee, as they possess particular expertise as to the operations of the
Corporation.
DECISIONS REQUIRING BOARD OF DIRECTORS APPROVAL AND EXPECTATIONS OF
MANAGEMENT
The Board of Directors has delegated to the Chief Executive Officer and
senior management responsibility for the day-to-day management of the business
of the Corporation. Matters of policy and issues outside the normal course of
business are brought before the Board of Directors for its review and approval,
along with all matters requiring the review and approval of the Board of
Directors under applicable legislation. The Chief Executive Officer and senior
management review the Corporation's progress in relation to the current
operating plan at Board of Directors meetings, which are held at regular
intervals during the year (usually quarterly). Financial, operational and
strategic issues facing the Corporation are reviewed, monitored and approved at
the Board of Directors meetings.
RECRUITMENT OF NEW DIRECTORS AND ASSESSMENT OF BOARD PERFORMANCE
The Board of Directors has not established a committee of non-management
directors with the responsibility for proposing new nominees to serve on the
Board of Directors and for assessing directors on an ongoing basis. Instead, any
director may propose new nominees to the Board of Directors for consideration by
the Board of Directors as a whole. In addition, although no formal orientation
and education program for new directors has been established, all recent
appointees to the Board of Directors have had extensive industry, legal or
corporate governance experience as a result of prior employment or service as a
director.
The Guidelines also contemplate that a corporate board should implement a
process to be carried out by an appropriate committee for assessing the
effectiveness of the board as a whole, the committees of the Board of Directors
and the contribution of individual directors. Due to the size and composition of
the Board of Directors, the Board of Directors is of the view that a formal
process of assessment is unnecessary and instead, the effectiveness of
committees and individual directors is assessed on an informal basis.
SHAREHOLDER FEEDBACK
Under the direction of the Chief Executive Officer, there is a shareholder
relations program in place which involves one of the directors, Mr. Egolf, being
available to respond to shareholder inquiries and concerns on a regular basis.
Shareholder concerns of a significant nature are directed to the Chief Executive
Officer for information and resolution, and management reports to the Board of
Directors on these matters and other major shareholder and investor matters.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
On November 1, 1997, the Executive Vice President and Chief Operating
Officer obtained a US$200,000 loan from the Corporation. This loan bears a 6.06%
interest rate and is due November 1, 2002. The Corporation recognized interest
income of approximately US$12,000 and US$2,000 in 1998 and 1997, respectively.
The Corporation's Chairman and Chief Executive Officer, Mr. Robert A.
Hefner III, beneficially owns 100% GHK. Effective July 1, 1997, the Corporation
has entered into an administrative service agreement with GHK. The Corporation
recognized fees of US$21,000 and US$10,500 of such expenses in 1998 and 1997,
respectively. In addition, GHK pays certain miscellaneous costs incurred on
behalf of the Corporation. The Corporation reimbursed GHK approximately
US$100,000 and US$400,000 in 1998 and 1997, respectively, for such costs.
12
<PAGE> 15
Mr. Hefner owns 100% of the shares of The GHK Corporation ("GHK Corp.").
GHK Corp. owns an executive aircraft, which Mr. Hefner and other executives and
employees of the Corporation use for certain business travel. The Corporation
has entered into an agreement with GHK Corp. whereby the Corporation pays GHK
Corp. the lesser of the cost of a first class airline ticket or the total actual
expenses for each specific flight. The Corporation incurred US$31,000 in
expenditures for such air travel during 1998.
MANAGEMENT CONTRACTS
Except as described under "Matters for Consideration of the Meeting --
Election of Directors -- Material Interest of Directors", there are no
management functions of the Corporation or its subsidiaries which are to any
substantial degree performed by a person other than the directors or senior
officers of the Corporation or its subsidiaries.
GENERAL
Information contained in this Management Information Circular is given as
of April 15, 1999 unless otherwise noted. The contents and the sending of this
Management Information Circular have been approved by the Board of Directors of
the Corporation.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Corporation at its principal
executive office by December 31, 1999 in order for such proposals to be included
in the Corporation's management information circular and form of proxy for such
meeting. Shareholders submitting such proposals are requested to address them to
the Secretary, Seven Seas Petroleum Inc., Suite 1700, 5555 San Felipe, Houston,
Texas, 77056.
DATED April 30, 1999
By Order of the Board of Directors of
SEVEN SEAS PETROLEUM INC.
/s/ Robert A. Hefner III
Robert A. Hefner III
Chairman of the Board
13
<PAGE> 16
SEVEN SEAS PETROLEUM INC.
FORM OF PROXY
SOLICITED BY MANAGEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
OF SEVEN SEAS PETROLEUM INC. TO BE HELD ON THURSDAY, JUNE 10, 1999
The undersigned holder of common shares of Seven Seas Petroleum Inc. (the
"Corporation") hereby appoints Robert A. Hefner III, Chairman of the Board,
Chief Executive Officer and Managing Director of the Corporation, or failing
him, Larry A. Ray, Executive Vice President and Chief Operating Officer of the
Corporation, or instead of either of them,
________________________________________________ , as the proxy of the
undersigned, with the power of substitution, to attend and act for and on behalf
of the undersigned at the annual meeting of shareholders of the Corporation to
be held on Thursday, June 10, 1999, and any adjournment thereof, with all the
powers that the undersigned could exercise if the undersigned were personally
present at the meeting, or any adjournment thereof, including the authority to
vote the common shares of the Corporation represented by this proxy (the "Common
Shares") in the proxyholder's discretion except as specified below.
The undersigned directs that the Common Shares shall be:
1. VOTED FOR [ ] or WITHHELD FROM VOTING [ ] in respect of the election of
directors.
2. VOTED FOR [ ] or WITHHELD FROM VOTING [ ] in respect of the appointment
of auditors and authorizing the directors to fix their remuneration.
3. VOTED IN THE PROXYHOLDER'S DISCRETION IN RESPECT OF AMENDMENTS OR
VARIATIONS TO MATTERS REFERRED TO IN THE ACCOMPANYING NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS AND IN RESPECT OF OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT THEREOF.
The Common Shares will be voted in
accordance with the directions
contained in this proxy. If no
directions are given, the Common Shares
will be voted FOR the election of
directors and FOR the appointment of
auditors and authorizing the directors
to fix their remuneration. This proxy
may be revoked by following the
procedure set forth in the accompanying
Management Information Circular.
DATED , 1999.
Signature of Shareholder(s)
(1) This form of proxy should be dated
and signed by the shareholder or by
the shareholder's attorney duly
authorized in writing. If the
shareholder is a corporation, this
form of proxy should be signed by
the duly authorized officer(s) of
the corporation or by the
corporation's attorney duly
authorized in writing. If this form
of proxy is not dated, it will be
deemed to bear the date on which it
is mailed by the person making the
solicitation.
(2) A SHAREHOLDER HAS THE RIGHT TO
APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) OTHER THAN THE PERSONS
NAMED ABOVE AS THE PROXY OF THE
SHAREHOLDER AND MAY EXERCISE THIS
RIGHT EITHER BY INSERTING THAT
PERSON'S NAME IN THE BLANK SPACE
PROVIDED IN THIS FORM OF PROXY AND
STRIKING OUT THE OTHER NAMES OR BY
COMPLETING ANOTHER PROPER FORM OF
PROXY.
