UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13a-16 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of November 2002
Commission File Number: 0-28466
HURRICANE HYDROCARBONS LTD.
(Exact name of registrant as specified in its charter)
Suite 1460, Sun Lite Plaza, North Tower, 140-4th Avenue S.W.,
Calgary, Alberta T2P 3N3
------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F Form 40-F X
---- ----
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1)._____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):_____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in
paper of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws of
the jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
----- -----
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-______
EXPLANATORY NOTE
In reviewing its recent filings, Hurricane Hydrocarbons Ltd. (the
"Company") became aware that the copy of its Management Proxy Circular dated
March 1, 2002 (the "Proxy"), which was prepared in connection with the
Comapany's annual and special meeting of shareholders held on May 8, 2002, and
was furnished on paper to the Securities and Exchange Commission (the
"Commission") on April 19, 2002 under cover of a Report of Foreign Private
Issuer on Form 6-K, had not been reflected as having been filed with the
Commission on the Commission's database.
The Company is therefore re-furnishing the Proxy under this Report
of Foreign Private Issuer on Form 6-K, dated the date hereof.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HURRICANE HYDROCARBONS LTD.
(Registrant)
Date: November 27, 2002 By: /s/ Ihor P. Wasylkiw
---------------------------------
Ihor P. Wasylkiw
Vice President - Investor Relations
HURRICANE HYDROCARBONS LTD.
NOTICE OF ANNUAL AND SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 8, 2002
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting (the
"Meeting") of the Class A common shareholders of Hurricane Hydrocarbons Ltd.
("Hurricane" or the "Corporation") will be held at The Albany Club of Toronto,
91 King Street East, Toronto, Ontario, on Wednesday, May 8, 2002, at 11:00 a.m.,
Toronto time, for the following purposes, namely:
(a) to receive and consider the consolidated financial statements
of the Corporation for the year ended December 31, 2001,
together with the report of the auditors thereon;
(b) to elect directors for the ensuing year;
(c) to appoint the auditors for the ensuing year and to authorize
the directors to fix their remuneration;
(d) to consider, and if thought advisable, to pass a resolution,
with or without variation, approving an amendment to the
Corporation's incentive stock option plan (the "Stock Option
Plan") increasing the maximum number of Class A common shares
reserved for issuance upon the exercise of options granted
thereunder by 3,240,000; and
(e) to transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
Only holders ("Shareholders") of record at the close of business on
April 3, 2002 (the "Record Date") of Class A common shares (the "Common Shares")
are entitled to notice of and to attend the Meeting or any adjournment or
adjournments thereof and to vote thereat unless after the Record Date a holder
of record transfers its Common Shares and the transferee, upon producing
properly endorsed certificates evidencing such shares or otherwise establishing
ownership of such shares, requests, not later than ten days before the Meeting,
that the transferee's name be included in the list of shareholders entitled to
vote, in which case such transferee shall be entitled to vote such shares at the
Meeting.
Shareholders may vote in person at the Meeting or any adjournment or
adjournments thereof, or they may appoint another person (who need not be a
Shareholder) as their proxy to attend and vote in their place.
SHAREHOLDERS UNABLE TO BE PRESENT AT THE MEETING ARE REQUESTED TO DATE
AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT TO THE CORPORATION'S AGENT,
COMPUTERSHARE TRUST COMPANY OF CANADA, 600, 530 - 8TH AVENUE, S.W., CALGARY,
ALBERTA, T2P 3S8 ON OR BEFORE 4:00 P.M., CALGARY TIME, ON MAY 7, 2002 IN THE
ENCLOSED ENVELOPE PROVIDED FOR THAT PURPOSE.
A management proxy circular relating to the business to be conducted at
the Meeting and an Annual Report containing the audited financial statements of
the Corporation for the fiscal year ended December 31, 2001 accompany this
Notice.
BY ORDER OF THE BOARD OF DIRECTORS
(signed) Anthony Peart
March 1, 2002 Senior Vice-President, General Counsel and Corporate Secretary
HURRICANE HYDROCARBONS LTD.
MANAGEMENT PROXY CIRCULAR
FOR THE ANNUAL AND SPECIAL MEETING
OF THE SHAREHOLDERS TO BE HELD
ON MAY 8, 2002
THIS MANAGEMENT PROXY CIRCULAR (the "Circular") IS FURNISHED IN
CONNECTION WITH THE SOLICITATION OF PROXIES BY OR ON BEHALF OF THE MANAGEMENT OF
HURRICANE HYDROCARBONS LTD. ("Hurricane" or the "Corporation") for use at the
Annual and Special Meeting of the Class A common shareholders of the Corporation
to be held at The Albany Club of Toronto, 91 King Street East, Toronto, Ontario,
on Wednesday, May 8, 2002, at 11:00 a.m., Toronto time, and any adjournment or
adjournments thereof (the "Meeting") for the purposes set forth in the
accompanying Notice of Meeting.
SOLICITATION OF PROXIES
Solicitation of proxies by management will be primarily by mail, but
may also be in person or by telephone. The cost of solicitation will be borne by
the Corporation.
RECORD DATE AND QUORUM
Only holders (the "Shareholders") of Class A common shares (the "Common
Shares") of record on April 1, 2002 are entitled to notice of and to attend and
vote at the Meeting or any adjournment or adjournments thereof and to vote
thereat unless after the Record Date a holder of record transfers its Common
Shares and the transferee, upon producing properly endorsed certificates
evidencing such shares or otherwise establishing ownership of such shares,
requests, not later than ten days before the Meeting, that the transferee's name
be included in the list of shareholders entitled to vote, in which case such
transferee shall be entitled to vote such shares at the Meeting. The presence,
in person or by proxy, of holders of at least 5% of the total number of issued
and outstanding Common Shares is necessary for a quorum of Shareholders at the
Meeting.
APPOINTMENT AND RE VOCATION OF PROXIES
The persons named in the enclosed form of proxy hold the offices of
Senior Vice-President and Chief Financial Officer and of Senior Vice-President,
General Counsel and Corporate Secretary of the Corporation. A SHAREHOLDER
SUBMITTING A PROXY HAS THE RIGHT TO APPOINT A PERSON TO REPRESENT HIM OR HER AT
THE MEETING OTHER THAN THE PERSON OR PERSONS DESIGNATED IN THE FORM OF PROXY
FURNISHED BY THE CORPORATION. TO EXERCISE THIS RIGHT THE SHAREHOLDER SHOULD
INSERT THE NAME OF THE DESIRED REPRESENTATIVE IN THE BLANK SPACE PROVIDED IN THE
FORM OF PROXY AND STRIKE OUT THE OTHER NAMES OR SUBMIT ANOTHER APPROPRIATE
PROXY. In order to be effective, unless otherwise extended by the Corporation,
the proxy must be mailed so as to be deposited at the office of the
Corporation's agent, Computershare Trust Company of Canada ("Computershare"),
600, 530 - 8 Avenue, S.W., Calgary, Alberta, T2P 3S8, not later than 4:00 p.m.,
Calgary time, on May 7, 2002. No instrument appointing a proxy shall be valid
after the expiration of 12 months from the date of its execution. The instrument
appointing a proxy shall be in writing under the hand of the Shareholder or his
or her attorney, or, if such Shareholder is a corporation, under its corporate
seal, and executed by a duly authorized director, officer or attorney.
A Shareholder who has submitted a proxy may revoke it by an instrument
in writing executed by the Shareholder or his or her attorney authorized in
writing, or, if the Shareholder is a corporation, under its corporate seal and
executed by a duly authorized director, officer or attorney thereof and
deposited either with Computershare or the Corporation at its offices as
aforesaid at any time prior to 4:00 p.m., Calgary time, on the last business day
preceding the day of the Meeting, or any adjournment thereof, at which the proxy
is to be used, or with the chairman
of the Meeting prior to the commencement of the Meeting on the day of the
Meeting, and upon such deposit the previous proxy is revoked.
EXERCISE OF DISCRETION BY PROXIES
All Common Shares represented at the Meeting by properly executed
proxies will be voted, and where a choice with respect to any matter to be acted
upon has been specified in the instrument of proxy the Common Shares represented
by the proxy will be voted in accordance with such specification. IN THE ABSENCE
OF SUCH SPECIFICATION, SUCH COMMON SHARES WILL BE VOTED IN FAVOUR OF THE
RESOLUTIONS SET FORTH HEREIN. The enclosed form of proxy confers discretionary
authority upon the persons named therein with respect to amendments or
variations to matters identified in the Notice of Meeting and with respect to
other matters which may properly come before the Meeting. At the time of
printing of the Circular, management of the Corporation knows of no such
amendment, variation or other matter.
ADVICE TO BENEFICIAL HOLDERS OF SECURITIES
THIS INFORMATION SET FORTH IN THIS SECTION IS OF SIGNIFICANT IMPORTANCE
TO SHAREHOLDERS WHO DO NOT HOLD THEIR COMMON SHARES IN THEIR OWN NAME.
Shareholders who do not hold their shares in their own name (referred to in this
Circular as "Beneficial Shareholders") should note that only proxies deposited
by Shareholders whose names appear on the records of the Corporation as the
registered holders of Common Shares can be recognized and acted upon at the
Meeting. If Common Shares are listed in an account statement provided to a
Shareholder by a broker, then in almost all cases those shares will not be
registered in the Shareholder's name on the records of the Corporation. Such
shares will more likely be registered under the name of the Shareholder's broker
or an agent of that broker. In Canada, the vast majority of such shares are
registered under the name of CDS & Co. (the registration name for The Canadian
Depositary for Securities, which acts as nominee for many Canadian brokerage
firms). In the United States, the vast majority of such shares are registered in
the name of CEDE & Co., which company acts as a nominee for many US brokerage
firms. Common Shares held by brokers or their nominees can be only voted (for or
against resolutions) upon the instructions of the Beneficial Shareholder.
Without specific instructions, brokers/nominees are prohibited from voting
shares for their clients. The directors and officers of the Corporation do not
know for whose benefit the shares registered in the name of CDS & Co. or CEDE &
Co. or of other brokers/agents are held.
Applicable regulatory policy requires intermediaries/brokers to seek
voting instructions from Beneficial Shareholders in advance of shareholders'
meetings. Every intermediary/broker has its own mailing procedures and provides
its own return instructions, which should be carefully followed by Beneficial
Shareholders in order to ensure that their Common Shares are voted at the
Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its
brokers is identical to the form of proxy provided to registered Shareholders.
However, its purpose is limited to instructing the registered Shareholder how to
vote on behalf of the Beneficial Shareholder. The majority of brokers now
delegate responsibility for obtaining instructions from clients to Independent
Investor Communications Corporation ("IICC"). IICC typically applies a special
sticker to the proxy forms, mails those forms to the Beneficial Shareholders and
asks Beneficial Shareholders to return the proxy forms to IICC. IICC then
tabulates the results of all instructions received and provides appropriate
instructions respecting the voting of Common Shares to be represented at the
Meeting.
PLEASE NOTE THAT BENEFICIAL SHAREHOLDERS WHO RECEIVE THEIR MEETING
MATERIALS VIA IICC OR ADP PROXY SERVICES ("ADP") MUST RETURN THE PROXY FORMS,
ONCE VOTED, TO IICC OR ADP FOR THE PROXY TO BE VALID .
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Corporation is authorized to issue an unlimited number of Common
Shares and Class B Redeemable Preferred Shares. As of February 28, 2002 there
were 80,841,867 Common Shares issued and outstanding. No Class B Redeemable
Preferred Shares have been issued. The holders of Common Shares are entitled to
one vote for each share held.
2
Any Shareholder who either personally attends the Meeting or who
properly completes and delivers a proxy will be entitled to vote or have his or
her shares voted at the Meeting. However, a person appointed under the form of
proxy will be entitled to vote the shares represented by that form only if it is
effectively delivered in the manner set out under the heading "Appointment and
Revocation of Proxies." To the best of the knowledge of the directors and
officers of the Corporation, no person beneficially owns, directly or
indirectly, or exercises control or direction over Common Shares carrying more
than 10 percent of the votes attached to all of the issued and outstanding
Common Shares of the Corporation, other than:
PRINCIPAL SHAREHOLDERS NUMBER OF PERCENTAGE OF
AND MUNICIPALITY OF DESIGNATION OF COMMON COMMON SHARES
RESIDENCE CLASS NATURE OF OWNERSHIP SHARES OWNED OUTSTANDING
----------------------- -------------- ------------------- ------------ -------------
Central Asian Industrial Common Shares beneficial ownership 23,886,117 (1) 29.54%
Holdings N.V and/or control or
Curacao, The Netherlands direction
Antilles
Note:
(1) Pursuant to a shareholders agreement between the Corporation and
Central Asian Industrial Holdings N.V., ("CAIH"), CAIH is required
to vote, or cause to be voted, the Common Shares in respect of the
nominees of management of the Corporation (the "Management
Nominees") for election as directors, other than designees of CAIH,
as follows:
(a) with respect to that number of the Common Shares which equals
20% of the total issued and outstanding Common Shares, CAIH may
vote or cause such Common Shares to be voted in its sole and
unfettered discretion; and
(b) with respect to the balance of the Common Shares, CAIH shall
vote or withhold from voting, or cause to be voted or withheld
from voting, such Common Shares in the same proportion as the
Shareholders, including CAIH and its affiliates as a group,
have voted or withheld from voting with respect to the election
of the Management Nominees.
The information contained in the above table is based partly on
information publicly filed with the Alberta Securities Commission and partly on
information received by the Corporation from Central Asian Industrial Holdings
N.V.
MATTERS TO BE ACTED UPON AT THE MEETING
1. CONSOLIDATED FINANCIAL STATEMENTS AND AUDITORS' REPORT
Pursuant to the provisions of the BUSINESS CORPORATIONS ACT (Alberta)
and the Corporation's by-laws, the directors of the Corporation will submit to
the Shareholders at the Meeting, the consolidated financial statements of the
Corporation for the fiscal year ended December 31, 2001 and the auditors' report
thereon. During 2000, Hurricane transferred its consolidated financial reporting
function to Kazakhstan. As a result, the primary audit relationship for the
auditor of the Corporation has been transferred to the auditors' Almaty
Kazakhstan office. Therefore, Deloitte & Touche, Almaty, Kazakhstan has issued
the auditors' report.
NO VOTE BY THE SHAREHOLDERS WITH RESPECT TO THIS MATTER IS REQUIRED.
2. ELECTION OF DIRECTORS
Action is to be taken at the Meeting with respect to the election of
directors. The board of directors of the Corporation (the "Board of Directors")
presently consists of seven members. It is proposed that at the Meeting, the
undermentioned persons will be nominated by management of the Corporation for
election as directors of the Corporation. Each director elected will hold office
until the next annual meeting of Shareholders, or until his successor is duly
elected or appointed, unless his office is vacated earlier in accordance with
the Corporation's bylaws.
The following information relating to the nominees as directors is
based on information received by the Corporation from the nominees and sets
forth the name and address of each of the persons proposed to be nominated
3
for election as a director, his principal occupation at present, all other
positions and offices in the Corporation held by him, the year in which he was
first elected a director and the number of securities of the Corporation that he
has advised are beneficially owned by him, directly or indirectly, or over which
control or direction is exercised by him as of February 28, 2002.
NAME AND ADDRESS OF POSITION NUMBER OF
NOMINEE PRESENTLY HELD PRINCIPAL OCCUPATION DIRECTOR SINCE SECURITIES(6)
----------------------------------------------------------------------------------------------------------------
Bernard F. Isautier Chairman of the Chairman of the Board, 1996 7,701,440
London, England Board, President, President, Chief Executive
Chief Executive Officer and Director of the
Officer and Corporation
Director
----------------------------------------------------------------------------------------------------------------
Hon. Robert P. Kaplan (1) Director International business 1995 472,310
Toronto, Ontario consultant
----------------------------------------------------------------------------------------------------------------
Louis W. MacEachern(2)(3) Director President, Fortune Industries 1989 364,000
Calgary, Alberta Ltd., a business management
consulting company
----------------------------------------------------------------------------------------------------------------
James B.C. Doak(1)(2)(3) Director President and Managing 2000 136,000
Toronto, Ontario Partner, Enterprise Capital
Management Inc., a
Canadian private hedge fund.
----------------------------------------------------------------------------------------------------------------
Askar Alshinbaev(1)(2)(5) Director Managing Director of OJSC 2000 136,000
Almaty, Kazakhstan Kazkommertsbank, a Kazakh
private bank
----------------------------------------------------------------------------------------------------------------
Nurzhan S. Director Chairman of the Board of 2000 136,000
Subkhanberdin(2)(5) OJSC Kazkommertsbank, a
Almaty, Kazakhstan Kazakh private bank
----------------------------------------------------------------------------------------------------------------
Jacques Lefevre(1) Director Vice-Chairman of Lafarge 2001 136,000
Paris, France S.A.
----------------------------------------------------------------------------------------------------------------
Notes:
(1) Member of the Corporation's Audit Committee.
(2) Member of the Corporation's Compensation Committee.
(3) Member of the Corporation's Corporate Governance Committee.
(4) Hurricane does not have an executive committee.
(5) On March 31, 2000, the Corporation acquired all of the shares of OJSC
Shymkentnefteorgsyntez ("ShNOS") held by Central Asian Industrial
Investments N.V. (now Central Asian Industrial Holdings N.V.)
("CAIH"). See "Voting Shares and Principal Holders Thereof". At the
time of that acquisition, an agreement was entered into between the
Corporation and CAIH (the "Shareholders' Agreement") whereunder the
Corporation agreed that it would nominate for election to the Board of
Directors during the term of the Shareholders' Agreement that number
of persons designated by CAIH equal to the product of (i) the total
number of directors constituting the Board of Directors at that time
multiplied by (ii) the percentage that the aggregate number of Common
Shares owned at that time by CAIH bears to the total number of Common
Shares then outstanding. CAIH is entitled to designate two persons for
nomination for election to the Board of Directors at the Meeting. CAIH
has designated Askar Alshinbaev and Nurzhan S. Subkhanberdin as its
nominees for election to the Board of Directors at the Meeting.
(6) The number of securities held by each director includes common shares
and options to acquire common shares. Each of Messrs. Isautier, Kaplan
and MacEachern owns beneficially, directly or indirectly, 4,385,440,
155,230 and 306,000 common shares, respectively.
IT IS THE INTENTION OF THE MANAGEMENT DESIGNEES, IF NAMED AS PROXY, TO
VOTE "FOR" THE ELECTION TO THE BOARD OF DIRECTORS OF THE PERSONS REFERRED TO
ABOVE UNLESS OTHERWISE DIRECTED. EXCEPT AS REFERRED TO ABOVE, MANAGEMENT DOES
NOT CONTEMPLATE THAT ANY OF SUCH NOMINEES WILL BE UNABLE TO SERVE AS A DIRECTOR.
HOWEVER, IF FOR ANY REASON ANY OF THE PROPOSED NOMINEES DOES NOT STAND FOR
4
ELECTION OR IS UNABLE TO SERVE AS SUCH, THE MANAGEMENT DESIGNEES, IF NAMED AS
PROXY, RESERVE THE RIGHT TO VOTE FOR ANY OTHER NOMINEE IN THEIR SOLE DISCRETION.
3. APPOINTMENT OF AUDITOR
The management designees, if named as proxy, intend to vote for the
appointment of Deloitte & Touche, Almaty, Kazakhstan, as the auditor of the
Corporation, to hold office until the next annual meeting of the Shareholders,
at a remuneration to be fixed by the Board of Directors. The international audit
firm Deloitte Touche Tohmatsu has been the auditor of the Corporation since
1997.
The Corporation is required to have an audit committee. The Audit Committee
consists of Messrs. Kaplan, Doak and Alshinbaev.
4. AMENDMENT TO STOCK OPTION PLAN
The Corporation maintains an incentive stock option plan entitled the
"Incentive Stock Option Plan" (the "Stock Option Plan") pursuant to which
directors, officers and key employees of and consultants to the Corporation may
be granted options to purchase Common Shares. The Stock Option Plan was adopted
by shareholders of the Corporation in November, 1996 and was subsequently
amended in August, 1997 and March, 2000 to increase the number of Common Shares
reserved for issuance upon the exercise of options granted thereunder.
Currently, the maximum number of Common Shares that may be reserved for issuance
upon the exercise of options granted under the Stock Option Plan is 8,776,500.
As at February 28, 2002, 3,940,450 options for Common Shares have been
exercised under the Stock Option Plan, leaving a remaining number of Common
Shares reserved for issuance under the Stock Option Plan of 4,836,050. The
Corporation has issued options to acquire 4,831,993 Common Shares and,
therefore, the Corporation only has 4,057 Common Shares available for future
grants under the Stock Option Plan. In order to provide for the grants of stock
options as incentives to persons eligible under the Stock Option Plan, an
increase of 3,240,000 Common Shares to the maximum number of stock options
presently available under the Stock Option Plan is required. If shareholders
approve the increase, the number of Common Shares reserved for issuance under
the Stock Option Plan will be 8,076,050 Common Shares, which constitutes 9.9% of
the issued and outstanding Common Shares of the Corporation.
MAXIMUM
NUMBER OF
STOCK OPTIONS
-------------
Common Shares reserved on February 28, 2002 4,836,050
Increase requested 3,240,000
---------
Total Common Shares reserved for issuance 8,076,050
---------
Percent of Common Shares outstanding 9.9%
---------
---------
The Shareholders of the Corporation are being asked to approve the
aforementioned increase in the maximum number of Common Shares that may be
reserved for issuance upon the exercise of options granted under the Stock
Option Plan. The purpose of the amendment is to ensure that sufficient options
are available to be granted to facilitate recruiting and retaining a highly
qualified senior management and other key employees.
The Toronto Stock Exchange (the "TSE") requires that, in order to
become effective, the amendment to the Stock Option Plan to provide for an
increase in the number of Common Shares reserved for issuance thereunder must be
approved by a majority of the votes cast at the Meeting.
5
The text of the resolution approving an increase in the number of
Common Shares issuable under the Stock Option Plan follows.
"APPROVAL OF AMENDMENT TO STOCK OPTION PLAN
BE IT RESOLVED THAT:
1. the amendment to the terms of the Corporation's Incentive Stock
Option Plan to increase the maximum number of Class A common shares
("Common Shares") reserved for issuance upon the exercise of options
granted thereunder by 3,240,000 Common Shares, be and the same is
hereby approved; and
2. any director or officer of the Corporation is hereby authorized and
directed, for and in the name of and behalf of the Corporation, to do
all such acts and things and to execute, whether under corporate seal
or otherwise, and deliver all such documents and instruments, as he may
determine to be necessary or advisable to give effect to the foregoing
provisions of this resolution."
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR"
THE RESOLUTION APPROVING THE INCREASE IN THE NUMBER OF COMMON SHARES RESERVED
FOR ISSUANCE UPON THE EXERCISE OF OPTIONS GRANTED UNDER THE STOCK OPTION PLAN.
IT IS THE INTENTION OF THE MANAGEMENT DESIGNEES, IF NAMED AS PROXY, TO VOTE
"FOR" THE AMENDMENT TO THE STOCK OPTION PLAN UNLESS OTHERWISE DIRECTED.
REPORT TO THE SHAREHOLDERS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
exercises general responsibility regarding the overall employee and executive
officer compensation.
During 2001, the Committee was composed of three members of the Board
of Directors of the Corporation, being Messrs. Louis W. MacEachern (Chairman),
James B.C. Doak and Nurzhan S. Subkhanberdin, who are all independent directors
and are not eligible to participate in any of the Corporation's executive
compensation programs other than the Corporation's Stock Option Plan.
The Committee meets with the President and Chief Executive Officer to
review salaries, other than his own, for executive officers of the Corporation
and its subsidiaries, as well as any bonuses, if declared. Direct approval of
salaries and bonuses is required by the Board of Directors.
The Corporation's executive and employee compensation policy continues
to evolve as the Corporation adjusts to compete within the industry to attract
and retain individuals of high calibre to serve as officers. The Committee
continues to review methods to motivate executive performance in order to
achieve the strategic objectives of the Corporation and to parallel the
interests of executive officers with the interests of the Shareholders. The
primary compensation policy is to pay for performance and accordingly, the
performance of the Corporation and that of the President and Chief Executive
Officer as an individual are both examined by the Committee. In assessing
performance, many facets are examined by the Committee.
The principal components in the overall compensation currently consist
of a base salary and participation in the Stock Option Plan and may or may not
include the payment of a bonus based on performance of the individual. In
addition, Calgary based officers participate in the Canadian Matching Savings
Plan and UK based officers participate in the UK Pension Contribution (see
"Other Benefit Plans").
Presented by the Compensation Committee
6
Louis W. MacEachern (Chairman)
James B.C. Doak
Nurzhan S. Subkhanberdin
During the past fiscal year, the Board accepted all of the
recommendations of the Compensation Committee.
PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total
shareholder return over the last five years as at December 31 of a Cdn.$100
investment in the Corporation's Common Shares with the cumulative total return
of the TSE 300 Composite Total Return Index and the TSE Oil & Gas Producers
Total Return Index, Common Shares closed at $10.80 on the TSE. assuming the
reinvestment of dividends, where applicable, for the comparable period. On
December 31, 2001, the Common Shares closed at $10.80 on the TSE
[GRAPHIC]
Index 1996 1997 1998 1999 2000 2001
Hurricane 100 179 28 53 123 239
TSE 300 100 113 111 142 151 130
TSE Oil & Gas Producers 100 89 62 76 111 114
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation earned during
the fiscal years ended December 3l, 1999, December 31, 2000 and December 31,
2001, by the Chief Executive Officer and each of the Corporation's four most
highly compensated executive officers whose salary and bonus in 2001 exceeded
$100,000 (collectively the "named executive officers"). The following dollar
information is expressed in Canadian currency, unless otherwise indicated.
7
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Compensation
Awards
Other Annual Securities Under All Other
Salary Bonus Compensation Options Granted(9) Compensations
Name and Principal Position Year (Cdn $) (Cdn $) (Cdn $) (#) (Cdn $)
-------------------------------------------------------------------------------------------------------------------
Bernard F. Isautier(1) President, 2001 616,000(2) nil nil 491,000 nil
Chief Executive Officer, 2000 616,000(2) nil 8,250(3) 2,800,000 nil
Chairman of the Board and
Director of the Corporation 1999 nil nil 62,250(3) 1,000,000 nil
-------------------------------------------------------------------------------------------------------------------
Marlo Thomas 2001 412,504 65,625 255,796(5) 46,900 nil
President of OJSC Hurricane 2000 328,125 30,965 nil nil nil
Kumkol Munai and of OJSC
Shymkentnefteorgsyntez(4) 1999 279,000 21,000 nil 115,000 nil
-------------------------------------------------------------------------------------------------------------------
Michael Azancot 2001 354,688 nil 20,430(5) 26,000 67,500(6)
Senior Vice-President 2000 84,375 nil 15,188 100,000 292,248(7)
Exploration and Production
-------------------------------------------------------------------------------------------------------------------
Christian B. Cleret(8) 2001 340,500 nil 13,620(5) 26,000 40,860(6)
Senior Vice-President, Refining 2000 84,375 nil 13,500(5) 100,000 37,385(6)
Marketing and Trading
-------------------------------------------------------------------------------------------------------------------
Anthony R. Peart(8) 2001 319,650 nil 13,620 76,000 38,356(6)
Senior Vice-President, 2000 23,554 nil nil 50,000 nil
General Counsel and Corporate
Secretary
-------------------------------------------------------------------------------------------------------------------
Notes:
(1) Mr. Isautier was appointed an officer of the Corporation on September 28,
1999. Prior thereto he was, and remains, a director of the Corporation.
(2) The Board of Directors approved annual compensation to Mr. Bernard Isautier
of US$400,000 effective April 1, 2000 and US$500,000 effective January 1,
2002. Mr. Isautier has not yet drawn any of such salary. See "Employment
Contracts and Termination of Employment".
(3) These amounts represent directors' fees paid to Mr. Isautier as a director
of the Corporation.
(4) OJSC Hurricane Kumkol Munai and OJSC Shymkentnefteorgsyntez are
subsidiaries of the Corporation incorporated in Kazakhstan.
(5) These amounts relate to car allowances and payments for other items,
including, in the case of Mr. Thomas, reimbursement for the payment of
taxes.
(6) These amounts relate to contributions by the Corporation to benefit plans
on behalf of the named executive officer.
(7) These amounts were paid by the Corporation to Mr. Azancot under consulting
contracts.
(8) Mr. Cleret became an officer of t he Corporation in September, 2000. Mr.
Peart became an officer of the Corporation in December, 2000.
(9) Represents the number of options granted to an executive officer during
each fiscal year.
INCENTIVE PLANS
The following sets forth individual grants of stock options made to the
named executive officers during the fiscal year ended December 31, 2001. The
following dollar information is expressed in Canadian currency.
8
OPTION GRANTS DURING THE FISCAL YEAR ENDED DECEMBER 31, 2001
SECURITIES % OF TOTAL MARKET VALUE OF
UNDER OPTIONS EXERCISE OR BASE SECURITIES UNDERLYING
OPTIONS GRANTED IN PRICE OPTION ON THE DATE OF
NAME GRANTED (#) FINANCIAL YEAR (CDN $/SHARE) GRANT (CDN $/SHARE) EXPIRATION DATE
-------------------------------------------------------------------------------------------------------------------
Bernard F. Isautier 171,000 10.6 9.00 9.00 August 22, 2005
320,000 19.8 9.64 9.64 December 17, 2006
-------------------------------------------------------------------------------------------------------------------
Marlo Thomas 6,900 0.42 9.00 9.00 August 22, 2005
40,000 2.48 9.02 9.02 October 16, 2006
-------------------------------------------------------------------------------------------------------------------
Michael Azancot 6,000 0.37 9.00 9.00 August 22, 2005
20,000 1.24 9.02 9.02 October 16, 2006
-------------------------------------------------------------------------------------------------------------------
Christian B. Cleret 6,000 0.37 9.00 9.00 August 22, 2005
20,000 1.24 9.02 9.02 October 16, 2006
-------------------------------------------------------------------------------------------------------------------
Anthony R. Peart 50,000 3.1 10.45 10.45 May 14, 2006
6,000 0.37 9.00 9.00 August 22, 2005
20,000 1.24 9.02 9.02 October 16, 2006
-------------------------------------------------------------------------------------------------------------------
The following table sets forth each exercise of options during the
fiscal year ended December 31, 2001 by the named executive officers and details
of options held by them at year end. The following dollar information is
expressed in Canadian currency.
AGGREGATE OPTION EXERCISES DURING THE FISCAL YEAR ENDED DECEMBER 31, 2001
AND YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
IN-THE-MONEY
SECURITIES AGGREGATE UNEXERCISED OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 2001 (#), DECEMBER 31, 2001(2)
NAME EXERCISE (#) REALIZED (1) ($) EXERCISABLE/UNEXERCISABLE (CDN $)
-----------------------------------------------------------------------------------------------------------------
Bernard F. Isautier 25,000 205,750 725,000/ 2,591,000 7,238,000
-----------------------------------------------------------------------------------------------------------------
Marlo Thomas nil nil 67,500/ 94,400 1,288,020
-----------------------------------------------------------------------------------------------------------------
Michael Azancot nil nil 50,000/ 76,000 1,086,020
-----------------------------------------------------------------------------------------------------------------
Christian B. Cleret nil nil 25,000/ 101,000 571,020
-----------------------------------------------------------------------------------------------------------------
Anthony R. Peart nil nil 12,500/ 113,500 576,020
-----------------------------------------------------------------------------------------------------------------
Note:
(1) On September 13, 2001, Mr. Isautier exercised options to acquire
25,000 Common Shares. The closing price of the Common Shares on The
Toronto Stock Exchange on September 13, 2001 was $10.15 per share.
(2) Based on the December 31, 2001 closing price of the Common Shares on
The Toronto Stock Exchange of $10.80 per share.
OTHER BENEFIT PLANS
The Corporation does not have a pension plan but does have a Matching
Savings Plan (the "Canadian Matching Savings Plan") for employees of the
Corporation that are based in the Corporation's Calgary, Alberta office. The
Canadian Matching Savings Plan allows an employee to contribute up to 10% of his
or her base salary which is then matched by Hurricane. The Canadian Matching
Savings Plan is comprised of a group Registered Retirement Savings Plan and a
group Non-Registered Savings Plan both of which are administered by an
9
independent trustee. Employees may select a variety of mutual funds, interest
bearing certificates and Common Shares of the Corporation as investments.
Contributions are transmitted to the trustee on a monthly basis.
The Corporation pays to its UK based employees and officers, in
addition to their salary, a cash amount equal to 10% of their salary, in the
case of employees, and 12% to 16% of their salary, in the case of officers, as a
pension contribution (the "UK Pension Contribution"). This amount is paid
directly to the UK based employees on a monthly basis.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
The Board of Directors approved annual compensation to Mr. Bernard
Isautier of US$400,000 effective April 1, 2000 and US$500,000 effective January
1, 2002. The Board of Directors also approved a severance provision of the
payment of an amount equal to three years salary and benefits to Mr. Isautier in
the event of termination by the Board of Directors of his employment (without
cause) with Hurricane or of his resignation upon a change of control of
Hurricane. Mr. Isautier has not yet drawn any of such salary.
Mr. Marlo Thomas has entered into an employment contract with the
Corporation providing for a monthly salary and a completion bonus equal to 15%
of the total amount of the salary of Mr. Thomas under the contract.
The Corporation and each of Messrs. Michael Azancot, Christian Cleret,
Anthony Peart and Marlo Thomas have entered into agreements which provide for
payments to each of these individuals in the event that: (a) their employment
with Hurricane is terminated without just cause within six months after the
occurrence of a change of control of Hurricane, or (b) such executive officer,
after a change of control of Hurricane, does not continue to be employed by
Hurricane at a level of responsibility or of compensation at least commensurate
with such executive officer's level of responsibility and compensation
immediately prior to the change of control and such executive officer elects,
within six months after the occurrence of the change of control, to treat his
employment as being terminated as a result thereof, or (c) such executive
officer is required by Hurricane to relocate his base of operations to a city
other than in the United Kingdom (in the case of Messrs. Azancot, Cleret and
Peart) or other than Almaty, Kazakhstan (in the case of Mr. Thomas), except for
required travel, and such executive officer elects, within six months after the
occurrence of a change of control of Hurricane, to treat his employment as being
terminated as a result thereof, or (d) such executive officer elects in writing
within six months after the occurrence of a change of control of Hurricane, to
treat his employment as being terminated, such termination to take effect at the
end of the six month period following such change of control. The amount to be
paid to the executive officer upon such occurrence will be equal to 12 times
each of (i) such executive officer's monthly salary at the time of the
termination of employment, (ii) Hurricane's monthly contributions paid on behalf
of the executive officer to any group benefits plan of Hurricane, and (iii) in
the cas e of Mr. Thomas, an amount equal to the most recent annual bonus paid by
the Corporation to Mr. Thomas prior to the date of the termination of his
employment, conditional upon such bonus having been paid within the period of 12
months prior to such termination date. The agreements also provide that upon
termination of employment, all unexercised and unvested stock options then held
by the executive officer shall forthwith vest and become exercisable for a
period of 60 days after termination, after which period such options will
terminate.
For the purposes of the above agreements, a "change of control" of
Hurricane is defined to mean: (i) the sale, lease or transfer of all or
substantially all of Hurricane's assets; (ii) any change in the registered
holdings or beneficial ownership of Common Shares of Hurricane which result in
any person or group of persons, acting jointly or in concert, or any affiliate
of such persons or group of persons, owning, holding or controlling, directly or
indirectly, more than 30% of the outstanding Common Shares; (iii) the "incumbent
directors" of Hurricane no longer constituting a majority of the Board of
Directors; or (iv) any determination by a majority of non-management "incumbent
directors" that a change of control has or is about to occur. The "incumbent
directors" are defined as, at any time, the directors of Hurricane at the time
of the execution of the agreements with the executive officers who continue to
be directors at that time plus any other director at that time whose election to
the Board of Directors was approved by a majority of the incumbent directors at
the time of such election.
10
COMPENSATION OF DIRECTORS
Prior to September 15, 2000, Hurricane compensated outside directors at
a rate of Cdn.$9,000 per year and Cdn.$750 per meeting for participation in
meetings, including committee meetings, of the Board of Directors. Effective
September 15, 2000, these amounts were revised such that (i) outside directors
are paid an annual director's fee of US$11,000 per year, (ii) chairmen of
committees of the Board of Directors are paid an annual fee of US$3,500, (iii)
outside directors are paid an additional fee of US$1,000 for each meeting of the
Board of Directors or of a committee of the Board of Directors attended in
person and US$750 for each meeting of the Board of Directors or of a committee
of the Board of Directors attended by telephone, and (iv) for each occasion on
which an outside director is required to attend a meeting of the Board of
Directors or of a committee of the Board of Directors outside of his home
country, a fee of US$1,000 for each two days of travel time per trip. During the
fiscal year ended December 3l, 2001, the total amounts paid or payable to
Hurricane's six outside directors for such directors' fees was Cdn.$397,188.
Effective November 1, 1998, Robert P. Kaplan, a director of the
Corporation, entered into a consulting services contract with Hurricane for
annual compensation of Cdn.$120,000 per year, which expired on October 31,
2001. During Hurricane's fiscal year ended December 31, 2001, Mr. Kaplan
received Cdn.$100,000, as a result of such consulting services contract.
These annual compensation fees were in addition to the regular directors'
fees referred to in the paragraph above.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
At no time during the year ended December 31, 2001 was there any
indebtedness of any director or officer, or any associate of any such director
or officer, to (a) the Corporation or (b) any other entity which is or, at any
time since the beginning of the most recently completed fiscal year, has been
the subject of a guarantee, support agreement, letter of credit or other similar
arrangement or understanding provided by the Corporation, and which was not
repaid prior to the date of this Circular.
INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS
There are no material interests, direct or indirect, of directors or
officers of the Corporation or any Shareholder that beneficially owns more than
ten percent of the Common Shares of the Corporation (each, an "insider") or any
known associate or affiliate of the same in any transaction known to the
Corporation since the commencement of the Corporation's last fiscal year or in
any proposed transaction which has materially affected or would materially
affect the Corporation other than disclosed herein and set out below as follows:
(a) On February 23, 2001, the Corporation redeemed a total of
4,943,020 outstanding Series 5 Warrants of the Corporation at a
price of $2.90 per warrant. The Series 5 Warrants were each
exercisable into one Common Share at an exercise price of $6.25
per share. The following insiders of the Corporation held
Series 5 Warrants that were so redeemed by the Corporation:
NUMBER OF SERIES 5
NAME WARRANTS REDEEMED
----- ------------------
Bernard F. Isautier, London, England 9,000
Central Asian Industrial Holdings N.V.,
Curacao, The Netherlands Antilles 2,034,547
(b) On August 3, 2001, the Corporation issued US$200 million
principal amount of 12% senior notes (the "Senior Notes") due
August 4, 2006, by way of a special dividend declared on June
15, 2001 on each Common Share of the US dollar equivalent of
Cdn$4.00. The record date for determining shareholders of the
Corporation entitled to receive the special dividend was August
2, 2001. The
11
Senior Notes were issued only in denominations of US$10,000 and
integral multiples of US$10,000. Accordingly, the Corporation
withheld distribution of Senior Notes to shareholders who would
have otherwise received a fraction of a Senior Note and instead
paid cash (the "Cash Portion") to these shareholders in lieu of
a fractional Senior Note. The following insiders of the
Corporation were shareholders of the Corporation of record as
of August 2, 2001 and received a distribution of the special
dividend in the form of Senior Notes and/or a Cash Portion as
indicated below. The following information relating to the
insiders of the Corporation is based on information received by
the Corporation from the insiders.
PRINCIPAL AMOUNT
NAME OF SENIOR NOTES CASH PORTION
---- ---------------- ------------
Bernard F. Isautier, London, England US$8,050,000 US$5,064
Hon. Robert P. Kaplan, Toronto, Ontario US$330,000 US$8,377
Louis W. MacEachern, Calgary, Alberta US$660,000 US$18,000
Anthony Peart, London, England Nil US$7,742
Ihor Wasylkiw, Calgary, Alberta US$40,000 US$1,056
Central Asian Industrial Holdings N.V.,
Curacao, The Netherlands Antilles US$54,899,906 US$15,303
OTHER MATTERS COMING BEFORE THE MEETING
Management knows of no other matters to come before the Meeting other
than those referred to in the Notice of Meeting. Should any other matters
properly come before the Meeting, the Common Shares represented by proxy
solicited hereby will be voted on such matters in accordance with the best
judgement of the person voting such proxy.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
In February, 1995, The Toronto Stock Exchange Committee on Corporate
Governance in Canada issued a report (the "TSE Report") which included proposed
guidelines for effective corporate governance. These guidelines, which are not
mandatory, deal with the constitution of boards of directors and board
committees, their functions, their independence from management and other means
of addressing corporate governance practices. The TSE has, in accordance with
the recommendation contained in the TSE Report, imposed a disclosure requirement
on every TSE listed company incorporated in Canada to disclose on an annual
basis its approach to corporate governance with reference to the guidelines set
out in the TSE Report. Hurricane and its Board of Directors are committed to
ensuring that Hurricane and its directors not only comply at all times with
their legal duties to the Corporation's shareholders (and, where applicable,
other stakeholders) but also that the Corporation establish and maintain
corporate governance policies and procedures that (i) satisfy the expectations
of its shareholders and the investing public, and (ii) are responsive to the
unique challenges facing Hurricane and the environment in which it carries on
business. In this context, corporate governance is generally considered to mean
the process and structure used to (i) direct and manage the business and affairs
of the Corporation, and (ii) define the division of power and achieve
accountability among shareholders, the Board of Directors and management of the
Corporation. The Board of Directors and senior management of the Corporation
consider good corporate governance to be central to the effective and efficient
operation of the Corporation. Listed below are the 14 guidelines proposed by the
TSE Report and a brief discussion of the Corporation's compliance with each
guideline.
1. THE BOARD OF DIRECTORS SHOULD EXPLICITLY ASSUME RESPONSIBILITY FOR THE
STEWARDSHIP OF THE CORPORATION, AND SPECIFICALLY FOR: (a) ADOPTION OF A
STRATEGIC PLANNING PROCESS, (b) IDENTIFICATION OF PRINCIPAL RISKS AND
ENSURING THE IMPLEMENTATION OF APPROPRIATE SYSTEMS TO MANAGE THESE
RISKS, (c) SUCCESSION PLANNING,
12
INCLUDING APPOINTING, TRAINING AND MONITORING SENIOR MANAGEMENT, (d)
COMMUNICATIONS POLICY FOR THE CORPORATION, AND (e) INTEGRITY OF THE
CORPORATION'S INTERNAL CONTROL AND MANAGEMENT INFORMATION SYSTEMS.
The Board of Directors has implicitly and explicitly acknowledged its
responsibility for the stewardship of the Corporation:
(a) As part of the Board of Directors' responsibility for the
strategic planning process of the Corporation, the Board of
Directors establishes the goals of the business of the
Corporation with the input of management and strategies and
policies within which the Corporation is managed. Management is
required to seek approval of the Board of Directors for
material deviations, financial or otherwise, from the approved
business goals, strategies and policies.
(b) The Board of Directors identifies the principal risks to the
Corporation's business and oversees the implementation of
systems to manage those risks.
(c) The Corporation has not as yet developed a formal succession
plan, however, the Board of Directors takes responsibility for
the appointment, appraisal and monitoring of the Corporation's
senior management. The Corporation's policy is to attract
management personnel whose prior experience results in them
having been well trained for their responsibilities with the
Corporation. The Board of Directors encourages senior
management to participate in appropriate professional and
personal development activities, courses and programs, and
supports management's commitment to the training and
development of all permanent employees.
(d) The Board of Directors oversees the policy of communications by
the Corporation with its shareholders and, in conjunction with
management, continues to review the methods by which the
Corporation communicates with its shareholders, regulatory
bodies, governments, media and the public.
(e) The Board of Directors, directly, through the Audit Committee
and through the external auditors, assesses the integrity of
the Corporation's internal control and management information
systems.
2. MAJORITY OF DIRECTORS SHOULD BE "UNRELATED" (FREE FROM CONFLICTING
INTEREST).
The TSE Report provides that the term "unrelated director" means a
director who is independent of management and 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 with a view to the best interests of the Corporation,
other than interests and relationships arising from shareholdings. The
Board of Directors consists of seven members, six of whom are
unrelated directors and one of whom is a related director.
3. DISCLOSE FOR EACH DIRECTOR WHETHER HE OR SHE IS RELATED, AND HOW THAT
CONCLUSION WAS REACHED.
The current Board of Directors is comprised of seven members. As an
officer of the Corporation, Bernard F. Isautier is a related director.
The remaining directors, Louis W. MacEachern, Hon. Robert P. Kaplan,
James B.C. Doak, Askar Alshinbaev, Nurzhan S. Subkhanberdin and
Jacques Lefevre are unrelated directors.
4. APPOINTMENT OF A COMMITTEE RESPONSIBLE FOR APPOINTMENT/ASSESSMENT OF
DIRECTORS AND THAT IS COMPRISED EXCLUSIVELY OF OUTSIDE (I.E.,
NON-MANAGEMENT) DIRECTORS, A MAJORITY OF WHOM ARE UNRELATED DIRECTORS.
The Corporate Governance Committee of the Board of Directors, which is
comprised entirely of outside and unrelated directors, has been given
the responsibility of assessing the effectiveness of the Board of
Directors and its individual members as well as the committees of the
Board of Directors. In addition, the Corporate Governance Committee has
responsibility for identifying prospective nominees for the Board of
13
Directors and recommending them to the Board of Directors as well as
for establishing criteria for Board of Directors membership and
retirement therefrom.
5. IMPLEMENT A PROCESS FOR ASSESSING THE EFFECTIVENESS OF THE BOARD AS
A WHOLE AND ITS COMMITTEES AND INDIVIDUAL DIRECTORS.
The Corporate Governance Committee of the Board of Directors assesses,
at least annually, the effectiveness of the Board of Directors and its
individual members as well as the committees of the Board of Directors.
6. PROVIDE ORIENTATION AND EDUCATION PROGRAMS FOR NEW DIRECTORS.
As new directors assume office, the Corporation provides a full
orientation for them.
7. CONSIDER THE SIZE OF THE BOARD OF DIRECTORS AND THE IMPACT OF THE
NUMBER ON THE BOARD'S EFFECTIVENESS.
The Board of Directors consists of seven directors. The Board of
Directors has concluded that the proposed composition and number of
directors is appropriate for the size and complexity of the
Corporation.
8. THE BOARD SHOULD REVIEW THE ADEQUACY AND FORM OF THE COMPENSATION OF
DIRECTORS TO ENSURE COMPENSATION REALISTICALLY REFLECTS
RESPONSIBILITIES AND RISKS INVOLVED.
The Compensation Committee, which is comprised entirely of outside and
unrelated directors, regularly reviews the adequacy and form of
compensation of directors of the Corporation with a view to ensuring
that compensation realistically reflects the responsibilities and risks
involved.
9. COMMITTEES OF THE BOARD SHOULD GENERALLY BE COMPOSED OF OUTSIDE
DIRECTORS, A MAJORITY OF WHOM ARE UNRELATED, ALTHOUGH SOME COMMITTEES,
SUCH AS THE EXECUTIVE COMMITTEE, MAY INCLUDE ONE OR MORE INSIDE
DIRECTORS.
The Board of Directors has established three committees: the Audit
Committee, the Compensation Committee and the Corporate Governance
Committee. All committees are comprised of outside directors, a
majority of whom are unrelated directors.
10. THE BOARD SHOULD EXPRESSLY ASSUME RESPONSIBILITY FOR, OR ASSIGN TO A
COMMITTEE OF DIRECTORS, THE GENERAL RESPONSIBILITY FOR DEVELOPING THE
CORPORATION'S APPROACH TO GOVERNANCE ISSUES.
The Corporate Governance Committee has the responsibility of developing
the Corporation's approach to governance issues, and administering the
Board of Directors' relationship with management. This includes
responsibility for: (i) assessing, at least annually, the effectiveness
of the Board of Directors as a whole and the committees of the Board of
Directors, (ii) reviewing annually the mandates of the Board of
Directors and its committees and making recommendations for change,
(iii) recommending procedures to permit the Board of Directors to
function independently from management, (iv) reviewing and, if
appropriate, approving requests from directors for the engagement of
outside advisors, (v) preparing and maintaining corporate governance
policies for the Corporation, and (vi) identifying prospective nominees
for the Board of Directors and recommending them to the Board of
Directors and establishing criteria for the Board of Directors
membership and retirement therefrom.
11. THE BOARD SHOULD DEFINE LIMITS TO MANAGEMENT'S RESPONSIBILITIES BY
DEVELOPING (a) MANDATES FOR THE BOARD AND THE CHIEF EXECUTIVE OFFICER
OF THE CORPORATION AND (b) THE CORPORATE OBJECTIVES FOR WHICH THE
CHIEF EXECUTIVE OFFICER IS RESPONSIBLE.
The Board of Directors is responsible for the overall stewardship of
the Corporation and in furtherance thereof supervises the officers of
the Corporation in their management of the business and affairs of the
14
Corporation and manages the Corporation's strategic planning process.
The Board of Directors has developed mandates and corporate objectives
for which the Chief Executive Officer is responsible. The Board of
Directors requires the Chief Executive Officer and other management of
the Corporation to keep the Board of Directors informed in a timely and
candid manner of the progress towards the achievement of the
established goals and of any material deviation from such goals and
from the Corporation's strategies and polices as approved by the Board
of Directors.
12. ESTABLISH PROCEDURES TO ENABLE THE BOARD TO FUNCTION INDEPENDENTLY OF
MANAGEMENT.
The ability of the Board of Directors to function independently of
management is an objective fully endorsed by the Corporation and its
management. For the purposes of carrying out the Corporation's business
in Kazakhstan, however, it is considered that the Chief Executive
Officer functions more efficiently if he also holds the office of
Chairman of the Board.
13. ESTABLISH AN AUDIT COMMITTEE WITH A SPECIFICALLY DEFINED MANDATE AND
DIRECT COMMUNICATION CHANNELS WITH INTERNAL AND EXTERNAL AUDITORS,
WITH ALL MEMBERS BEING OUTSIDE DIRECTORS. THE AUDIT COMMITTEE'S DUTIES
SHOULD INCLUDE OVERSIGHT RESPONSIBILITY FOR MANAGEMENT REPORTING ON
INTERNAL CONTROL AND SHOULD ENSURE THAT MANAGEMENT HAS DESIGNED AND
IMPLEMENTED AN EFFECTIVE SYSTEM OF INTERNAL CONTROL.
The Board of Directors has an Audit Committee, all the members of which
are outside directors. The roles and responsibilities of the Audit
Committee include responsibility for reviewing and making
recommendations to the Board of Directors on (i) financial statements
and the related reports of management and external auditors, (ii)
accounting and financial reporting procedures and methods, (iii)
internal audit procedures and reports, and (iv) matters relating to
external auditors, including the appointment and terms of engagement of
external auditors and their reports relating to accounting, financial
and internal audit matters. The Audit Committee has direct
communication channels with the external auditors. The Corporation has
developed formal internal audit procedures.
14. IMPLEMENT A SYSTEM TO ENABLE AN INDIVIDUAL DIRECTOR TO ENGAGE OUTSIDE
ADVISORS AT THE CORPORATION'S EXPENSE. THE ENGAGEMENT OF THE OUTSIDE
ADVISOR SHOULD BE SUBJECT TO THE APPROVAL OF AN APPROPRIATE COMMITTEE
OF THE BOARD.
The Corporation allows any member of the Board of Directors to engage
an outside advisor at the expense of the Corporation in appropriate
circumstances, subject to the approval of the Corporate Governance
Committee.
DIRECTORS APPROVAL
The contents and the sending of this Circular have been approved by
the directors of the Corporation.
AVAILABILITY OF CERTAIN DOCUMENTS
The Corporation shall provide to any person, without charge, following
a written or oral request to Mr. Ihor Wasylkiw, Vice-President, Investor
Relations of Hurricane at Suite 1460 Sun Life Plaza, North Tower, 140 - 4th
Avenue S.W., Calgary, Alberta, T2P 3N3 (telephone: 403-221-8435) or to Mr.
Anthony Peart, Senior Vice-President, General Counsel and Corporate Secretary
of Hurricane at Royal Albert House, 31 Sheet Street, Windsor, Berkshire, SL4 1
BE United Kingdom (telephone: 441753 410020) a copy of this Circular, the
Corporation's Annual Report, any interim financial statements since December 31,
2001, and any other documents incorporated therein by reference.
Under National Policy 41, adopted by the Canadian Securities
Administrators, a person or company who wishes to receive interim financial
statements from the Corporation must deliver written request for such material
to the Corporation, together with a signed statement that the person or company
is the owner of securities (other than debt instruments) of the Corporation.
Shareholders who wish to receive interim financial statements are encouraged
15
to send the enclosed return card, together with the completed form of proxy, in
the addressed envelope provided to the Corporation. The Corporation will
maintain a supplemental mailing list of persons and companies wishing to receive
interim financial statements.
CERTIFICATE
The foregoing contains no untrue statement of a material fact and does
not omit to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in the light of the circumstances
in which it was made.
(signed) Bernard F. Isautier (signed) Anthony R. Peart
President, Chief Executive Officer Senior Vice-President,
and Chairman of the Board General Counsel and Corporate
Secretary
16