STAKE TECHNOLOGY LTD.
2838 Highway 7
Norval, Ontario, Canada L0P 1K0
T:(905) 455-1990 F:(905) 455-2529
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NOTICE OF ANNUAL and SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 2003
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To the holders of the Common Shares of Stake Technology Ltd:
Notice is hereby given that the Annual and Special Meeting of Shareholders of
STAKE TECHNOLOGY LTD. (the "Company") will be held on June 18, 2003 at 4:00 p.m.
local time, in the "Windsor Ballroom" at Le Royal Meridien, King Edward Hotel,
37 King Street East, Toronto, Canada for the following purposes:
1. to receive the Audited Consolidated Financial Statements of the Company
for the year ended December 31, 2002 and the Auditors' Report thereon;
2. to elect ten Directors;
3. to appoint Auditors of the Company for 2003 and to authorize the Directors
to fix their remuneration;
4. to consider, and if deemed advisable pass, as a special resolution, a
resolution authorizing the Company to apply for amending articles changing
the name of the Company to SunOpta Inc. A copy of the special resolution
is annexed to the Information Circular as Exhibit "B".
5. to approve the Employee Stock Purchase Plan that is annexed to the
Information Circular as "Exhibit "C", and
6. to consider and take action upon such other matters as may properly come
before the meeting or any adjournment or adjournments thereof.
This Notice is accompanied by a Form of Proxy, Information Circular, the Annual
Report of the Company which includes the Audited Consolidated Financial
Statements for the year ended December 31, 2002, a Return Card for shareholders
to request continued information plus an envelope to return the Proxy and Return
Card.
All shareholders are cordially invited to attend the meeting.
DATED this 28th day of April, 2003
By Order of the Board of Directors
Jeremy N. Kendall
Chairman and Chief Executive Officer
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In order to be represented by proxy at the Annual and Special Meeting, you
must complete and submit the enclosed Form of Proxy or other appropriate
Form of Proxy.
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STAKE TECHNOLOGY LTD.
2838 Highway 7
Norval, Ontario, Canada
L0P 1K0
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INFORMATION CIRCULAR and PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
THIS INFORMATION CIRCULAR AND PROXY STATEMENT ("Information Circular") IS
FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF STAKE
TECHNOLOGY LTD. ("the Company") OF PROXIES FOR USE at the Annual and Special
Meeting ("the Meeting") of Shareholders to be held on June 18, 2003 at 4:00 p.m.
local time, in the "Windsor Ballroom" at Le Royal Meridien King Edward Hotel, 37
King Street East, Toronto, Ontario, Canada and at any adjournment thereof, for
the purposes set forth in the accompanying Notice of Annual and Special Meeting
of Shareholders.
The Company expects to mail this Information Circular and the accompanying form
of Proxy on or about May 16, 2003.
Any shareholder giving a Proxy may revoke it at any time before it is exercised.
A Proxy given pursuant to this solicitation may be revoked by instrument in
writing executed by the shareholder or his or her attorney duly authorized in
writing and deposited either at the corporate office of the Company at 2838
Highway 7, Norval, Ontario, Canada L0P 1K0, at any time prior to the date of the
meeting at which the proxy is to be used, or by delivering it prior to a vote to
the Chairman of the meeting on the day of the meeting or any adjournment
thereof.
The persons named in the form of Proxy are Directors and Officers of the Company
and will vote the shares in respect of which they are appointed Proxy holders in
accordance with the directions of the shareholder appointing them. IN THE
ABSENCE OF SUCH DIRECTION, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS AUDITORS, FOR THE
CHANGE OF THE COMPANY'S NAME TO "SUNOPTA INC." AND FOR THE ADOPTION OF THE
EMPLOYEE STOCK PURCHASE PLAN.
If a shareholder appoints some person other than the persons named in the form
of Proxy to represent him or her, such person will vote the shares in respect of
which he or she is appointed proxy holder in accordance with the directions of
the shareholder appointing him or her. In the absence of such direction, such
person may vote such shares at his or her discretion.
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, or other matters, which may properly come before the
Meeting. At the time of printing this Information Circular, the management of
the Company knows of no such amendments, variations or other matters to come
before the Meeting.
The Company will bear the cost of preparing, assembling and mailing all proxy
materials that may be sent to the Shareholders in connection with this
solicitation. In addition to the solicitation of proxies by use of the mails,
officers and regular employees of the Company may solicit proxies without
additional compensation, by telephone, fax or e-mail. The Company does not
expect to pay any additional compensation for the solicitation of proxies.
The Annual Report of the Company, which contains the Audited Consolidated
Financial Statements for the fiscal year ended December 31, 2002, accompanies
this Information Circular. Receipt at the Meeting of the Audited Consolidated
Financial Statements of the Company for the year ended December 31, 2002 and the
auditors' report thereon will not constitute approval or disapproval of any of
the matters referred to in such reports and statements.
Unless otherwise indicated, all dollar amounts herein are expressed in US
dollars.
VOTING SECURITIES
The Board of Directors has fixed April 28, 2003 as the record date for
determining shareholders entitled to Notice of the Meeting.
Shareholders of Common Shares of record on April 28, 2003 are entitled to one
vote for each share registered in the name of the shareholder on each matter
properly brought before the Meeting. As of April 28, 2003 there were 42,616,999
common shares issued and outstanding.
Item 1 - ELECTION OF DIRECTORS
Ten directors will be elected to serve until the next Annual Meeting or until
their successors are elected. There are no family relationships among the
Directors. The accompanying form of proxy will be voted for the election as
Director of the nominees listed below, unless the proxy contains contrary
instructions. Each of the nominees has consented to be named herein and to serve
as a Director. Management has no reason to believe that any of the nominees will
not be a candidate or will be unable to serve as a Director. However, in the
event that any of the nominees should become unable to serve as a Director, the
persons named in the accompanying form of proxy reserve the right to vote for
another person at their discretion. The Board of Directors of the Company has
been established at a minimum of five and a maximum of fifteen and presently
consists of eleven directors. The Board has determined to reduce the number of
directors to be elected to ten effective June 18, 2003.
The following are Management's nominees:
a) Identification of Directors:
The following table shows certain information as of April 28, 2003, with respect
to the Company's nominees as Directors, all of whom are currently Directors:
==============================================================================================================
Name Age Year First Position with
Elected Company
Directors: Director
/Officer
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Jeremy N. Kendall 63 1978 Chairman of the Board, CEO & Director
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Cyril A. Ing 70 1984 Secretary and Director
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Joseph Riz 55 1986 Director
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James Rifenbergh 72 1996 Director
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Allan Routh 52 1999 Director and President of the Grains & Soy Products Group
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Dennis Anderson 58 2000 Director
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Katrina Houde 44 2000 Director
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Camillo Lisio 49 2001 Director
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Stephen Bronfman (A) 39 2001 Director
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Robert Fetherstonhaugh (A) 47 2001 Director
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(A) Pursuant to a subscription agreement between the Company and Claridge and
the Claridge Group dated September 28, 2001, so long as a member of the Claridge
Group remains the beneficial owner of at least five percent (5%) of the
Company's issued and outstanding common shares, the Company will nominate for
election and recommend to its shareholders a person designated by Claridge to
serve on the Company's Board of Directors. For so long as the beneficial
holdings of Claridge shall be at least fifteen percent (15%) of the Company's
issued and outstanding common shares, the Company shall nominate a second
designee of Claridge. Claridge currently beneficially owns more than fifteen
percent (15%) of the Company's issued and outstanding common shares. Messrs.
Bronfman and Fetherstonhaugh presently serve on the Company's Board of Directors
pursuant to this agreement.
b) Committees of the Board:
The Company presently has two Committees (1) Audit Committee; and (2) Corporate
Governance Committee (which also acts as the Compensation Committee). The
Company is not required to have an Executive Committee. The Board has appointed
individuals from its members to serve on these committees. The membership of
these two committees is composed entirely of non-employee directors.
(c) Set forth below is a biographical description of each Director of the
Company:
Jeremy Kendall has served as a Director of the Company since September 1978. In
June 1983, he was elected Chairman of the Board and Chief Executive Officer of
the Company. He is Chairman of the Board of all of the Company's subsidiaries
except 1108176 Ontario Limited. He is also Chairman of Jemtec Inc. (6/91 to
present) and Easton Minerals Ltd. (1/95 to present). In the past 5 years, Mr.
Kendall has served on the following Boards of Directors: BI Inc. (9/81 to
2
11/00), Brigdon Resources Inc. (6/93 to 2/99), Redaurum Ltd. (6/94 to 12/98) and
Wisper Inc. (6/95 to 3/02). Mr. Kendall is also a Director of a number of
private and charitable organizations.
Cyril Ing is a Professional Engineer, was elected a Director in January 1984 and
became an employee in August 1985. He was an independent consultant specializing
in engineering projects involving the combustion of biomass from May of 1982 to
August 1985. Mr. Ing retired from full time employment in March 1990. For the 10
years prior to retirement he was President of the Conat Group, a holding
company, whose major subsidiary, Westair Systems Inc., is a distributor and
manufacturer of industrial dehumidification equipment. In the past 5 years, Mr.
Ing has served on the following Boards of Directors: Wisper Inc. (11/99 to
present) and Jemtec Inc. (11/99 to present).
Joseph Riz was elected a Director of the Company in July 1986 and currently
serves as Chairman of the Company's Audit Committee and as a member of the
Corporate Governance Committee. He is presently Managing Director of Tricapital
Management Ltd., a merchant banking and financial advisory firm. From 1983 to
1985 he was an Executive Vice President of Crowntek, Inc.. In the past 5 years,
Mr. Riz has served on the Board of Directors of Telepanel Systems Inc. (4/89 to
present).
James Rifenbergh was elected to the Board of Directors in April 1996 and
currently serves on the Audit Committee. Mr. Rifenbergh is Past President and
Chairman of Brown Printing Company of Waseca, Minnesota, a large printing
company with plants throughout the United States. He is also a Director of a
number of other private companies and organizations. In the past 5 years, Mr.
Rifenbergh has not served on any other reporting issuers.
Allan Routh was elected to the Board of Directors in September 1999. Mr. Routh
is President of the Company's Grains and Soy Products Group, and prior to that
was Chief Executive Officer of the SunRich Food Group, Inc., a wholly-owned
subsidiary of the Company. Mr. Routh has been involved in the soy industry since
1984. Mr. Routh is presently serving a term on the Board of Directors of the
Soyfoods Association of North America and served as its President between 1999
and 2000. In the past 5 years, Mr. Routh has not served on any other reporting
issuers Board of Directors.
Dennis Anderson was elected to the Board of Directors in September 2000. Mr.
Anderson was the Executive Vice President of the SunRich Food Group, Inc., a
wholly owned subsidiary of the Company prior to stepping down from day to day
operations in June 2002. Mr. Anderson was the owner of Northern Food and Dairy,
Inc. for five years prior to it's acquisition by the Company. In the past 5
years, Mr. Anderson has not served on any other reporting issuers Board of
Directors.
Katrina Houde was elected to the Board of Directors in December 2000. Ms. Houde
is currently an independent consultant and serves as a member of the Audit
Committee. For the five years prior to her election to the Company's Board, Ms.
Houde was with Cuddy International Corp., a large international poultry company
with 2,200 employees worldwide. Ms. Houde held several senior executive
positions at Cuddy International Corp., and served as President of Cuddy Food
Products. In the past 5 years, Ms. Houde has not served on any other reporting
issuers Board of Directors.
Camillo Lisio spent 18 years with Saputo Inc., most recently as President and
Chief Operating Officer, until his decision to pursue other business and
personal interests in 2001. He was elected to the Board of Directors in 2001 and
serves on the Corporate Governance Committee as Chairman. Mr. Lisio has been
active in business and civic affairs. In addition to serving on the Board of
Directors of Saputo Inc., he was also a director of the Santa Cabrini Hospital,
the International Dairy Foods Association and the National Dairy Council of
Canada. Early in his career, he was with CFMB, a multilingual radio station in
Montreal, where as interim President, he transitioned the station following the
death of the founder. In the past 5 years, Mr. Lisio has served on the following
Boards of Directors: Saputo Inc. (3/98 to 4/01) and Uniforet Inc. (10/98 to
4/01).
Stephen Bronfman is Chairman of Claridge Inc. The Claridge group currently owns
approximately 19.9% of the issued and outstanding common shares of the Company.
Mr. Bronfman has been active in numerous business and civic affairs. Mr.
Bronfman sits on the Board of Directors of The David Suzuki Foundation; The
Saidye Bronfman Centre for the Arts; The Samuel and Saidye Bronfman Family
Foundation; and The Summit School Foundation. In the past five years Mr.
Bronfman served on the Board of Directors of The Seagram Company, Ltd. and was
Co-Chairman of the Executive Committee of the Montreal Expos Baseball Club and
Co-Chairman of Grand Entertainment.
Robert Fetherstonhaugh is a Chartered Accountant and is the President of
Claridge Inc. He was elected to the Board of Directors in 2001 and serves on the
Corporate Governance Committee as the Chairman. Mr. Fetherstonhaugh has a broad
business background both in North America and internationally, previously
serving as Deputy Chairman of Trader Classified Media, an international
publishing company, and a former partner at KPMG. In the past five years Mr.
Fetherstonhaugh served as a director of Trader Classified Media and Cryopak
Industries Inc.
3
(d) Director not standing for re-election:
Mr. Larry (Andy) Anderson is retiring from the Board and thus will not be
standing for re-election as a Director of the Company.
SECURITY OWNERSHIP OF CERTAIN OWNERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning share ownership of
all persons as known by the Company to own beneficially 5% or more of the
Company's outstanding Common Shares and all directors and officers of the
Company as a group as of April 28, 2003.
========================================================================================================
Name and Address Class of Amount of Ownership Percent of Class (2)
of Holder Share
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Claridge Israel LLC Common 8,481,812 19.9%
c/o Davies Ward Phillips & Vineberg LLP
625 Madison Avenue Floor 12
New York, New York 10022 (3)
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Gruber & McBaine Capital Management Common 3,416,600 8.0%
50 Osgood Place, San Francisco
California USA 94133 (4)
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Dennis Anderson Common 2,806,335 6.6%
2214 Geneva Road NE, Alexandria
Minnesota USA 56308 (3)
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All Directors and Executive Officers Common (1) 1,796,570(a) 4.2%(a)
As a group (sixteen)-(a) excluding Dennis 4,602,905(b) 10.82%(b)
Anderson who is disclosed above and
(b) not excluding Mr. Anderson's shares
========================================================================================================
(1) For details of shares owned by Executive Officers and Directors see Share
Ownership of Directors and Executive Officers below.
(2) Percentage ownership is calculated based on total Common Shares
outstanding at April 28, 2003 of 42,616,999. This total does not include
warrants or options that have vested or have not yet vested.
(3) Record and beneficial holder.
(4) Beneficial holders not known.
4
Share Ownership of Directors and Executive Officers as at April 28, 2003 is set
forth below:
=============================================================================================================
Number of Shares Beneficially
Name Class of Owned/Number of Vested Options Percentage of
Directors: Shares (2) Class (1)
-------------------------------------------------------------------------------------------------------------
Jeremy N. Kendall Common 457,317/369,000 1.87%
-------------------------------------------------------------------------------------------------------------
Cyril A. Ing Common 61,335/68,875 0.30%
-------------------------------------------------------------------------------------------------------------
Joseph Riz Common 33,600/69,500 0.23%
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James Rifenbergh Common 313,448/119,500 0.98%
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Allan Routh Common 553,781/140,000 1.57%
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Dennis Anderson Common 2,806,335/6,000 6.37%
-------------------------------------------------------------------------------------------------------------
Larry (Andy) Anderson Common 367,089/4,500 0.84%
-------------------------------------------------------------------------------------------------------------
Katrina Houde Common 0/22,000 0.05%
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Camillo Lisio Common 0/22,000 0.05%
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Stephen Bronfman Common 0/16,000 0.04%
-------------------------------------------------------------------------------------------------------------
Robert Fetherstonhaugh Common 0/16,000 0.04%
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All Directors and Executive Officers as a Common 4,602,905/930,875 12.54%
group (fourteen)
=============================================================================================================
(1) Percentage ownership is calculated based on 42,616,999 total common shares
outstanding at April 28, 2003, plus all common shares subject to options
currently exercisable, which at April 28, 2003 totaled 1,501,270 and of
which 930,875 are related to Directors and Officers noted above. The
remaining 581,395 are options vested to other officers and employees of
the Company. This calculation does not include options that have not
vested or warrants or underwriter options/warrants currently outstanding.
Therefore, the "Percentage of Class" column is based on 44,118,269 common
shares.
(2) The exercise price of vested options range from $1.06 to $3.72
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our Directors and
Executive Officers to file reports of holdings and transactions in the Company's
shares with the SEC and NASDAQ. Based on our records and other information, we
believe that in 2002 our Directors and Executive Officers met, on a timely
basis, all applicable SEC filing requirements.
EXECUTIVE COMPENSATION
The following tables set forth all remuneration paid by the Company and its
subsidiaries during the last three years ended December 31, 2002, 2001, and 2000
to its CEO and top six Executive Officers/Divisional Presidents earning in
excess of US$100,000:
5
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
==============================================================================================================================
Name and Principal Occupation Year Salary Bonus Other Annual Restricted Option LTIP All Other
Compensation Stock SARs Pay-outs Compensation
(3) Awards (4)
------------------------------------------------------------------------------------------------------------------------------
Jeremy N. Kendall - CEO 2002 $176,391 $18,149 $11,173 -- -- -- --
2001 $167,332 $13,347 $14,001 -- -- -- $269,123
2000 $169,263 $45,590 $ 6,910 -- -- -- --
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Steven R. Bromley - Executive 2002 $118,926 $ 6,992 $18,056 -- -- -- --
Vice President & CFO (5) 2001 $ 60,282 $ 6,236 $10,425 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
David Kruse - President, 2002 $ 86,730 3,828 $10,246 -- -- -- --
Environmental Industrial Group 2001 $ 83,925 $ 1,358 $11,049 -- -- -- $ 12,345
2000 $ 62,618 $ 8,457 $12,345 -- -- -- --
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Allan Routh - Director and 2002 $130,000 -- $ 2,906 -- -- -- --
President of the Grains & Soy 2001 $116,923 $40,000 $ 5,370 -- -- -- --
Products Group 2000 $110,000 $20,000 $ 6,555 -- -- -- --
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Dennis Anderson - Director and 2002 -- $19,878 -- -- -- -- --
Executive Vice President of 2001 $130,960 $18,689 $ 2,619 -- -- -- --
Operations of the SunRich Food 2000 $ 18,689 -- $ 761 -- -- -- --
Group (1)
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Arthur J. McEvily - President of 2002 $ 17,833 -- -- -- -- -- --
the Specialty Food Ingredients
Group (2)
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(1) Mr. Dennis Anderson did not receive a salary in 2002.
(2) Arthur McEvily joined the Company in December 2002; therefore his
compensation reflects the month of December, 2002 only.
(3) Other Annual Compensation represents taxable benefits for automobile
personal use or reimbursement of costs, life insurance, retirement savings
contributions, and interest on short-term loans.
(4) All Other Compensation is the value received over exercise price of stock
options exercised.
(5) Mr. Bromley joined the Company in June 2001 and therefore had no
remuneration from the Company in 2000.
John Taylor, President and COO resigned his office and directorship from the
Company effective January 31, 2003. Mr. Taylor's annual salary for 2002 was
$110,921 plus benefits. In the first quarter of 2003 Mr. Taylor exercised
201,000 options for net proceeds to the Company of $369,078.
6
The following table contains information concerning individual grants of stock
options made during the last completed fiscal year, to the following Executive
Officers:
OPTION GRANTS IN PAST FISCAL YEAR TO EXECUTIVE OFFICERS
===============================================================================================================================
Name Options % of Total Options Exercise on Expiration Date Potential Realizable Value at
Granted (1) Granted to base price Assumed Annual rates of Stock
Employees in Fiscal (US$/Share) Price Appreciation for Option
Year term (2)
-------------------------------------------------------------------------------------------------------------------------------
5% 10%
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Jeremy N. Kendall - 40,000 9.7% $3.00 12/16/07 $32,850 $ 73,261
CEO
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Steven R. Bromley - 30,000 18.1% $2.15 03/11/07 $14,717 $ 31,902
Executive Vice 20,000 $3.07 08/13/07 $15,875 $ 34,863
President & CFO 25,000 $3.00 12/16/07 $20,531 $ 45,331
------ ------- --------
75,000 $51,123 $112,096
===============================================================================================================================
(1) 20% of options granted are exercisable immediately with the remainder
exercisable equally over the next four years on the anniversary of the
grant date.
(2) The potential realizable value is calculated based upon the term of the
option at its time of grant. It is calculated assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option, and that the option
is exercised and sold on the last day of its term for the appreciated
stock price.
Aggregate Option Exercises in 2002 and Year-End Option Values
The following table details certain information concerning exercises of stock
options by the named Executive Officers during fiscal year ended December 31,
2002 and the value of unexercised options at December 31, 2002:
DECEMBER 31, 2002 OPTION VALUES
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(a) (b) (c)
-------------------------------------------------------------------------------------------------------------------------
Name Number of Unexercised Options at Value of Unexercised in the Money Options at
12/31/02 Vested/Not Yet Vested 12/31/02 Vested/Not Yet Vested
-------------------------------------------------------------------------------------------------------------------------
Jeremy N. Kendall - CEO 369,000/33,500 $471,672/$5,025
=========================================================================================================================
Steven R. Bromley - Executive Vice 35,000/90,000 $39,470/$72,600
President & CFO
=========================================================================================================================
David Kruse - President, 23,500/1,500 $41,941/$3,131
Environmental Industrial Group
=========================================================================================================================
Allan Routh - Director and President 140,000/60,000 $292,180/$125,220
of the Grains & Soy Products Group
=========================================================================================================================
Dennis Anderson- Director and 6,000/4,000 $11,022/$7,348
Executive Vice President of the
Sunrich Food Group
=========================================================================================================================
(1) These amounts represent the difference between the exercise price of the
stock options and the closing price of the Company's common shares on the
last trading day of the year on the NASDAQ Small Cap market. On December
31, 2002, the closing price was U.S. $ 3.15.
No Executive Officers exercised options during 2002.
7
Executive employment contracts
Mr. Jeremy Kendall, Chairman & CEO, entered into an employment contract with the
Company in October 2001 for a period through February 26, 2020. The contract
anticipates that on February 26, 2005, his 65th birthday, Mr. Kendall may elect
to relinquish the role of CEO and maintain being the Chairman of the Board,
subject to shareholder and Board approval, at a reduced level of compensation.
The contract provides for consulting fees to be paid on a sliding scale over
time until February 20, 2020 to Mr. Kendall or his spouse. These consulting fees
are to be paid even if Mr. Kendall retires fully, the Company no longer requires
his services or if Mr. Kendall passes away before February 26, 2020.
Mr Allan Routh, President of the Grains & Soy Products Group has an annual
employment contract of a minimum base salary of $100,000, renewable on a mutual
basis between Mr. Routh and the Company each August 1st.
Mr. Arthur McEvily, President of the Specialty Food Ingredients Group has an
employment contract including provisions for termination with or without cause.
None of the other executives listed in the Summary Compensation Table above have
employment contacts.
INDEBTEDNESS OF DIRECTORS/OFFICERS
Mr. Kendall, Chairman & CEO is indebted to the Company for $38,542 as at
December 31, 2002 and as at April 28, 2003. The original loan proceeds were
provided to Mr. Kendall for the purchase of a vehicle used by Mr. Kendall to
conduct the Company's business. The interest rate on this loan is 5%. The
highest balance during the year was $50,938.
COMPENSATION OF DIRECTORS
In addition to annual grants of options, Directors who are not Company employees
receive an annual retainer of CDN $4,000, a directors fee of CDN $1,500 for each
board meeting attended in person as well as CDN $500 for participating in
committee meetings and telephone meetings. In addition, all Directors are
reimbursed for travel and administrative expenses to attend meetings and manage
their Board responsibilities. The Corporate Secretary receives an additional CDN
$500 per quarter for his additional responsibilities.
DIRECTORS' AND OFFICERS LIABILITY INSURANCE
The Company's comprehensive insurance policies include coverage, which
indemnifies the directors and officers of the Company. The approximate annual
cost of this coverage is $75,000 and the policy contains a deductible of $67,000
for Canadian claims and $167,000 for U.S. claims and does not cover liability
for failure to act honestly and in good faith.
The Company has also provided run-off insurance to the Directors of the Board
Opta Food Ingredients Inc prior to the acquisition by the Company. This
insurance provides coverage for a period of six years for any undisclosed claims
that may still arise during the former Boards tenure.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
On December 4, 2002, Stake issued to Claridge Israel LLC (Claridge), the
Company's largest shareholder, a $5 million convertible debenture. If not
converted the debenture is due and fully payable on November 30, 2004. Interest
is payable quarterly at an annual rate of 5.5%. The debenture is convertible at
the option of the holder at any time after November 30, 2003 or earlier under
certain circumstances at the conversion price of $3.00 per common share. The
Company has the option to repay the debenture at anytime subject to certain
restrictions within its amended and restated banking facility. In addition, the
Company issued Claridge 250,000 warrants exercisable into an equivalent number
of common shares of the Company at a price of $3.25 per common share. These
warrants expire November 30, 2004. Claridge has collateralised the convertible
debenture with a second priority security interest on certain of the Company's
Canadian and U.S properties.
8
ATTENDANCE AND COMMITTEES OF THE BOARD
Board Meetings and Attendance
During 2002 the Board of Directors held four regularly scheduled meetings and
four special telephonic meetings. All board members attended 75% of the meetings
of the Board and Committees in which they served, with the exception of Mr.
Dennis Anderson and Mr. Stephen Bronfman.
Corporate Governance Committee
The following three Directors are members of the Corporate Governance Committee:
Camillo Lisio (Chairman), Joseph Riz and Robert Fetherstonhaugh.
Mr. Lisio is Chairman of the Corporate Governance Committee. This committee also
acts as the Company's Compensation Committee. The Company and the Corporate
Governance Committee have developed a set of formal Corporate Governance
Policies that are monitored on an ongoing basis to ensure that the Company is in
compliance with its Corporate Governance Policies (See "Corporate Governance
Disclosure").
The function of the Corporate Governance Committee, in its capacity of the
Compensation Committee, is to determine the compensation of the CEO as well as
to review and approve the compensation recommended by the CEO for all other
Senior Officers and employees of the Company. In addition, this committee
oversees the Option Plans of the Company.
The Governance Committee met formally four times during 2002. In addition,
several telephonic meetings were held during the year for administrative matters
connected to the responsibilities of this Committee.
Audit Committee
The following three independent Directors are members of the Audit Committee:
Joseph Riz, James Rifenbergh and Katrina Houde.
Mr. Riz is Chairman of the Audit Committee. The Audit Committee's duties and
responsibilities are documented in a formal Audit Committee Charter. These
duties include (a) providing oversight of the financial reporting process and
management's responsibility for the integrity, accuracy and objectivity of
financial reports and related financial reporting practices; (b) recommending to
the Board of Directors the appointment of the Company's auditors; (c) providing
oversight of the adequacy of the Company's system of internal and related
disclosure controls; and (d) providing oversight of management practices
relating to ethical considerations and business conduct, including compliance
with laws and regulations. A copy of the Audit Committee Charter, adopted in
November, 2001, is attached as Exhibit A.
The Audit Committee meets formally four times a year, once to review the Form
10-K and annual Audited Consolidated Financial Statements and before each
quarter's earnings are filed to review interim financial statements and Form
10-Q which is filed with the Securities and Exchange Commission/NASDAQ in the
U.S. and the Toronto Stock Exchange and Ontario Securities Commission in Canada.
Other meetings may be held as at the discretion of the Chair of the Audit
Committee. During 2002, the Audit Committee met four times. The Audit Committee
has free and unfettered access to PricewaterhouseCoopers LLP, the Company's
auditors.
During 2002 the committee implemented a company wide policy related to reporting
of concerns in accounting or internal controls. This policy gives all employees
of the Company direct access to the Audit Committee for concerns dealing with
accounting practices, internal controls or other matters affecting the Company's
well being.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company has reviewed and discussed with Senior
Management the Audited Consolidated Financial Statements of the Company for the
fiscal year ended December 31, 2002. The Audit Committee has discussed with
PricewaterhouseCoopers LLP, the independent auditors of the Company, the matters
required to be discussed by the Statement on Auditing Standards (SAS) No.61
(Communication with Audit Committee), amended by SAS No. 89 (Audit Adjustments)
and SAS No. 90 (Audit Committee Communication). The Audit Committee has also
received the written disclosures and the letter from PricewaterhouseCoopers LLP
required by Independence Standards Board Standard No. 1
9
(which relates to the auditor's independence from the Company and its related
entities) and the Audit Committee has discussed with PricewaterhouseCoopers LLP
their independence as auditor of the Company. Based on the review and
discussions, the Audit Committee of the Company has recommended to the Board of
Directors and the Board has approved that the Audited Consolidated Financial
Statements of the Company be included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2002.
This report is dated as of March 19, 2003 and has been submitted by Joseph Riz
(Chairman), James Rifenbergh, and Katrina Houde, all of the members of the Audit
Committee.
The information contained in this Audit Committee report to the Board of
Directors shall not be deemed to be "soliciting material" or to be "filed" with
the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act of
1933, as amended, or the 1934 Securities Exchange Act, as amended, except to the
extent that the Company specifically incorporates it by reference in such
filing.
CORPORATE GOVERNANCE DISCLOSURE
Statement of Stake Technology Ltd's Corporate Governance Practices
Guidelines Practices
---------- ---------
1. The Board of the Directors In accordance with the Canada Business Corporations Act, the
is responsible for the business of the Company is managed under the direction of
stewardship of the Company, its Board of Directors. The Chairman and Chief Executive
and specifically for Officer makes recommendations to the Board of Directors with
respect to matters of corporate policy after discussion,
when appropriate, with the members of Senior Management. The
Board of Directors then takes the decisions which it deems
appropriate and supervises the execution of such decisions
and reviews the results obtained.
a. adoption of a strategic The duties of the Board of Directors includes the review on
planning process an annual basis of the three-year strategic plan for each
operating group of the Company.
b. identification of principal The Board of Directors' duties includes the review of
risks, and implementing risk overall business risks and of the Company's practices and
managing systems policies for dealing with these risks.
In addition, the Audit Committee assesses principal risks
which the Company faces and, where appropriate, proposes the
implementation of risk management systems.
c. succession planning and The Corporate Governance Committee reviews, reports, and
monitoring senior management where appropriate, provides recommendations to the Board of
Directors on succession planning matters and, with the Audit
Committee and the Board of Directors, monitors the
performance of senior management.
10
d. communications policy Each of the Board of Directors and the Audit Committee
reviews, and where required, approves statutory disclosure
documents prior to their distribution to shareholders.
In addition, the Company has a shareholder relations process
to respond to shareholder questions and concerns. All
communications from shareholders are referred to the
Chairman or the appropriate Corporate Officer for response.
Management promptly advises the Board of Directors if any
significant issues are raised by shareholders. In addition,
the Company communicates with its shareholders, securities
analysts and the media regularly on developments in its
business and results, through the annual report, interim
financial statements and reports to shareholders, press
releases and material change reports, as per the
Communications Policy.
e. integrity of internal The Board of Directors' duties includes the assessment of
control and management the integrity of the Company's internal controls and
information systems information systems. In addition, the Audit Committee has
oversight responsibility of internal controls and management
information systems.
2. Majority of Directors should The Board of Directors is composed of eleven persons. Of the
be "unrelated" (independent eleven Directors, six are "unrelated" under the Guidelines
of management and free from and the five others are Senior Officers or beneficially hold
conflicting interest) to the over 10% of the outstanding shares of the Company. The
Company and the Company's composition of the Board of Directors fairly reflects,
significant shareholder, if therefore, the investment in the Company by the
any. shareholders.
3. Disclose for each Director Jeremy N. Kendall Related Chairman and Chief Executive
whether he is related, and Officer
how that conclusion was Allan Routh Related Director and President of the
reached Grains and Soy Products Group
Larry (Andy) Anderson Related Director and Part-time Financial
Officer Food Operations
Robert Fetherstonhaugh Related Claridge is the beneficial owner of
greater than 10% of the outstanding
shares of the Company
Stephen Bronfman Related Claridge is the beneficial owner
of greater than 10% of the
outstanding shares of the Company
Dennis Anderson Unrelated Director
Cyril A. Ing Unrelated
Joesph Riz Unrelated
James Rifenbergh Unrelated
Katrina Houde Unrelated
Camillo Lisio Unrelated
4. Appoint a Committee of The Chairman of the Board or other Directors submit to the
Directors responsible for Corporate Governance Committee candidates to fill vacancies
proposing to the full Board on the Board of Directors. If the candidacy is endorsed by
of Directors new nominees to the Corporate Governance Committee, it is then submitted to
the Board and for assessing the approval of the Board of Directors. New Directors are
Directors on an ongoing then included in an orientation and education program (see
basis Item 6).
11
5. The Corporate Governance The Corporate Governance Committee is composed of three
Committee is composed outside Directors.
exclusively of outside
Directors
6. Implement a process for An annual review of Board members is undertaken by the
assessing the effectiveness Corporate Governance Committee with advice from the Chairman
of the Board of Directors, and CEO.
its Committees and
individual Directors in
accordance with overall
Governance Policy
7. Provide orientation and New Directors participate in an initial information session
education programs for new on the Company in the presence of Management
Directors representatives. In addition, they are furnished with
appropriate documentation relating to the commercial
activities of the Company and the internal organization of
the Company. Monthly reports detailing the commercial
activities of the Company and the internal organization of
the Company are supplied to all Directors. The meetings in
which new Directors participate (including annual strategic
planning sessions) as well as discussions with other
Directors and with management permit new Directors to
familiarize themselves rapidly with the operations of the
Company. Facility visits can also be arranged for new
Directors.
8. Consider reducing the size The Board of Directors is of the view that its size and
of the Board of Directors, composition is somewhat larger than ideal and intends to
with a view to improving reduce its size from 11 to 9 over a period of time reducing
effectiveness both related and unrelated Directors.
9. The Board of Directors The Corporate Governance Committee, which also acts as the
should review compensation Compensation Committee, of the Board of Directors
of Directors in light of periodically reviews compensation policies in light of
risks and responsibilities market conditions and practices and in light of risks and
responsibilities.
10. Committees of the Board of The Corporate Governance Committee is composed of three
Directors should generally outside Directors, two that are unrelated. This Committee
be composed of unrelated also acts as the Compensation Committee. The Corporate
(non-management) Directors, Governance Committee has the responsibility, upon the
a majority of whom are recommendation of the Chairman and Chief Executive Officer,
unrelated Directors for defining salary classes and levels and extent of
participation in incentive programs. In addition, this
Committee determines, based on the proposal of the Chairman
of the Board, the persons eligible to benefit from the stock
option plan and in which proportion, according to their
position. The Corporate Governance Committee also assesses
the performance of the Chairman and Chief Executive Officer
and the Committee's recommendations in this regard are then
presented to the Board of Directors. When a vacancy on the
Board of Directors needs to be filled, the Chairman of the
Board recommends the person or persons whom he deems
appropriate to fill the vacancy and submits his proposal to
the Corporate Governance Committee. The Corporate Governance
Committee can then endorse such recommendations, which, if
endorsed, are presented to the Board of Directors.
11. The Board of Directors The Corporate Governance Committee is responsible for
should expressly assume developing and monitoring the Company's approach to
responsibility for, or governance issues, the Company's response to the required
assign to a committee the Guidelines and recommending these policies to the Board of
general responsibility for, Directors.
approach to corporate
governance issues
12.a. Define limits to
Management's
responsibilities by
developing mandates for:
12
(i) the Board of Directors The Board of Directors is, by law, responsible for managing
the business and affairs of the Company. Any responsibility
which is not delegated to either Management or a Committee
remains with the Board of Directors. In general, all matters
of policy and all actions proposed to be taken which are not
in the ordinary course of business require the prior
approval of the Board of Directors or of a Board Committee
to which approval authority has been delegated.
(ii) the CEO The corporate objectives which the Chairman and Chief
Executive Officer is responsible for meeting, with the rest
of Management placed under his supervision, are determined
by the strategic plans and the budget as they are approved
each year by the Board of Directors. Performance of the
Chairman and Chief Executive Officer and Management is
assessed against the achievement of the strategic plans and
the budget.
b. the Board of Directors The Board of Directors governs the strategic plan and
should approve CEO's budgets for the Company.
corporate objectives
12. Establish procedures to While there are no formal structures in place to ensure that
enable the Board of the Board of Directors can function independently of
Directors to function Management, the Board of Directors of the Company is free to
independently of management ask one or more members of Management to withdraw during
certain discussions. In addition, the Directors of the
Company would not hesitate to meet without the presence of
the members of Management who are also Directors, including
the Chairman and Chief Executive Officer, if the
circumstances were to so require.
13.a. establish an Audit Committee The roles and responsibilities of the Audit Committee have
with a specifically defined been specifically defined and approved by the Board of
mandate Directors and include the review of the annual and interim
financial statements and related statutory filings of the
Company. The Audit Committee has direct communication
channels with both the internal financial management and
external auditors to discuss and review specific issues, as
appropriate.
b. all members should be The Audit Committee is composed of three outside Directors,
non-management Directors all of whom are "unrelated" and are advised by the Executive
Vice President and Chief Financial Officer.
14. Implement a system to enable Individual Directors may, if required, retain outside
individual Directors to advisors at the Company's expense.
engage outside advisors, at
the Company's expense
13
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the common shares of the Company to the cumulative
total return of the TSE300 Total Return Index and the NASDAQ Industrial Index
for the period which commenced December 31, 1997 and ended on December 31, 2002.
Comparison of the five-year cumulative total shareholder return
[LINE CHART OMITTED]
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
NASDAQ Industrial Index 100.00 106.27 182.83 121.15 113.10 83.64
TSE Index 100.00 96.81 125.59 133.35 114.76 98.73
Stake Technology Ltd. 100.00 33.71 46.29 82.29 124.00 180.00
(1) Assumes that $100.00 was invested in common shares of the Company and in
each of the indices on December 31, 1997
Item 2 - APPOINTMENT OF AUDITORS
The Board of Directors has reappointed PricewaterhouseCoopers LLP ("PWC") as
independent auditors for the year 2003. The shareholders are being asked to
ratify the appointment of PWC for the year 2003 and to authorize the Board of
Directors to fix their remuneration.
The Board of Directors recommend that the shareholders vote for the appointment
of PWC, formed from the merger in 1998 of Price Waterhouse, Chartered
Accountants, and Coopers & Lybrand, Chartered Accountants, who have been the
Company's auditors since 1975. In the event that the Shareholders fail to ratify
the appointment, the Board of Directors will reconsider its selection.
A representative of PWC will attend the Annual Meeting and will have the
opportunity to make a statement if he desires to do so and will be available to
respond to appropriate questions from shareholders in attendance.
During the Company's fiscal year ended December 31, 2002, the Company was billed
the following aggregate fees by PWC.
14
Audit Fees
The total fees billed by PWC for professional services rendered for the audit of
the Company's Consolidated Financial Statements for the fiscal year ended
December 31, 2002 and the reviews of the financial statements included in the
Company's Forms 10-Q for that fiscal year was $263,000.
Financial Information Systems Design and Implementation Fees
No fees were billed by PWC to the Company for professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X (financial information
systems design and implementation services).
All Other Fees
PWC billed the Company $45,000 for services related to compliance and advice on
tax matters.
The Audit Committee did consider and conclude that the provision of the
non-audit services is compatible with maintaining PWC's independence.
Item 3 - AMENDMENT TO THE COMPANY'S ARTICLES TO CHANGE THE NAME OF THE COMPANY
The Board of Directors has recommended passage of a special resolution to change
the name of the Company to "SunOpta Inc." and unanimously recommends that the
Company's shareholders pass this special resolution. The full text of the
special resolution to change the Company's name is set forth in Exhibit B.
The Board has recommended the adoption of the special resolution because the
Company's current name no longer fits with the stated mission and focus on
development of vertically integrated natural and organic food businesses. The
Board of Directors believes the proposed name more accurately reflects the
current business of the Company.
Passage of the special resolution authorizing the application for amending
articles to change the name of the Company from Stake Technology Ltd. to SunOpta
Inc. requires the affirmative vote of two thirds (2/3) of the votes cast at the
meeting. Proxies received in favour of management will be voted for the approval
of the application for amending articles, unless a shareholder has specified in
the proxy that his or her shares are to be voted against such resolution.
In the event the special resolution is not passed by the necessary majority, the
name of the Company will not be changed and management has no alternative plans
at the present time.
If the resolution is passed, Management will not file the Amended Articles until
such time as it's transition plans are completed.
The Board of Directors recommends a vote "For" the Special Resolution.
15
Item 4 - ADOPTION OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN
General
On May 7, 2003, the Board of Directors adopted, subject to shareholder approval,
the Stake Technology Ltd. ("the Company") Employee Stock Purchase Plan (the
"Purchase Plan"). The Board of Directors approved the Purchase Plan because the
Directors believe that it is desirable to offer employees an inducement to
acquire an ownership interest in the Company on a tax-favoured basis.
Set forth below is a general description of the terms of the Purchase Plan,
which is qualified in its entirety by reference to the Purchase Plan a copy of
which is attached hereto as Exhibit C.
The Purchase Plan
All employees who work 20 hours or more per week and more than five months in a
calendar year and who have been continuously employed by the Company or a
Designated Subsidiary for at least the six months immediately prior to any
offering period are eligible to participate in the Purchase Plan. However, any
employee who would own more than 5% of the voting power of the Company's stock
immediately after a grant under the Purchase Plan is not eligible to participate
and no participant may purchase more than $25,000 of common stock in any one
calendar year, based on the undiscounted value of the common stock at the
beginning of each offering period.
The Purchase Plan is implemented by a series of offering periods, with a new
offering period starting on January 1 of each year (or such other times as may
be determined by the Board of Directors). If the Purchase Plan is approved, the
first offering period will begin on January 1, 2004. To participate in the
Purchase Plan, an eligible employee will authorize the Company to deduct up to
10% of the employee's pay, not to exceed $25,000 per year, beginning on the
first day of each designated offering period. On the first day of each offering
period, each eligible employee who has elected to participate in the Purchase
Plan will be granted an option to purchase shares of the Company's common stock.
Unless a participating employee withdraws from the Purchase Plan prior to the
end of the offering period, on the last day of the offering period the option
will be automatically exercised for the purchase of a number of shares of the
Company's common stock determined by dividing the employees' contributions
during the offering period by the lesser of 90% of (or such other amount as
determined by the Board not to exceed 85%) of (i) the fair market value of the
common stock on the first day of the Offering period, or (ii) the fair market
value of the common stock on the last day of the offering period. Under the
Purchase Plan, the fair market value of a share of common stock on a given date
shall be based on the closing sale price of the common stock on that trading
date, as reported on the NASDAQ Small Cap Market or such other NASDAQ market on
which the common stock may be reported for U.S. and foreign residents and as
reported on the Toronto Stock Exchange for Canadian residents.
A participant may, on one occasion only during an offering period, decrease the
amount of payroll deductions or may withdraw from participation in the Purchase
Plan at any time. If a participant withdraws from the Purchase Plan or becomes
ineligible to participate in the Purchase Plan, any accumulated employee
contributions are paid back to such participant.
The Board of Directors may amend or terminate the Purchase Plan at any time and
in any respect without shareholder approval unless shareholder approval of the
amendment in question is required under Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"), any national securities exchange or system on
which the common stock is then listed or reported, or under any other applicable
laws, rules, or regulations. The Purchase Plan will continue in effect until
June 30, 2025, subject to the right of the Board of Directors to terminate the
Purchase Plan at any earlier time.
Certain Tax Consequences
United States Tax Consequences
The Purchase Plan is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Code and, as a result, participants
will be afforded favorable tax treatment under Sections 421 and 423 of the Code.
A participant in an offering under the Purchase Plan will not recognize income
subject to Federal income tax at the commencement of an offering period or at
the time shares are purchased. However, any discount from the market price on
the purchase date may be subject to employment taxes (FICA and FUTA). No Federal
income tax consequences result to the Company at the commencement of an offering
period under the Purchase Plan, upon the subsequent purchases of Common Stock by
participants, or upon the disposition of shares acquired under the Purchase Plan
other than with respect to a disqualifying disposition (as described below). If
no disposition of the common stock purchased in an offering period is made
within two years from the commencement of such offering period or within one
year from the date the common stock are transferred to the employee, then upon
subsequent disposition of the shares, the participant will recognize ordinary
income equal to the
16
lesser of the gain recognized or 10 percent of the market price of the common
stock on such commencement date under the discount factor currently fixed at 10
percent under the purchase plan. Any additional gain will be capital gain, and
any loss recognized will be capital loss.
If the common stock's are disposed of within either two years after the option
is granted or within one year after the participant receives the shares (a
so-called disqualifying disposition), the participant will recognize ordinary
income at the time of such disposition in an amount equal to the difference
between the fair market value of the common stock at the time such shares were
purchased and the purchase price of the common stocks, and the Company will
generally be entitled to a corresponding deduction from its income. Any
difference between such fair market value and the disposition price will be
treated as capital gain or loss to the participant and will not be deductible by
the Company.
Canadian Tax Consequences
The Purchase Plan does not qualify for any special treatment under the Income
Tax Act (Canada). Section 7 of the Act governs the issuance of securities to
employees and provides that the employee, upon acquiring securities, is deemed
to have acquired a taxable benefit of the amount by which the value of the
securities of the date of acquisition exceeds the acquisition price.
Other Information
It is not possible to determine the benefits that U.S. and Canadian employees
will receive under the Purchase Plan since the number of shares and exercise
prices for the options granted under the Purchase Plan depend on fluctuating
market prices and cannot be determined until the end of each offering period.
The Board of Directors recommends that the stockholders vote FOR approval of the
adoption of the Company's Employee Stock Purchase Plan and the reservation of
1,000,000 shares of the Company's common stock for issuance under the plan.
Passage of the resolution approving the adoption of the proposed employee stock
purchase plan requires a simple majority of the votes cast at the meeting.
Proxies received in favour of management will be voted for the adoption of such
plan, unless a shareholder has specified in the proxy that his or her shares are
to be voted against such resolution. In the event shareholder approval of the
adoption of the plan is not given, the plan will not be implemented.
SHAREHOLDERS' PROPOSALS
All proposals of Shareholders intended to be presented at the Company's Annual
Meeting of Shareholders in 2004, must be received at the Company's Executive
Office no later than February 15, 2004 for inclusion in the Information Circular
and Form of Proxy related to that meeting. The Company's next Annual Meeting of
Shareholders is planned for June 2004.
OTHER MATTERS
NASDAQ corporate governance rules state that the required quorum for the Annual
Meeting of Shareholders cannot be represented by less than 33 1/3% of the
outstanding common shares. Therefore shareholders of at least 14, 205,650 common
shares must participate directly or be present by proxy to validate the quorum
requirements.
The Company encourages all of its shareholders to participate in the Annual and
Special Meeting.
The Management of the Company does not know of any matters other than those
stated in this Information Circular, which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, proxies
will be voted on the other matters in accordance with the best judgement of the
persons voting the proxies.
The Directors of the Company have approved the contents and the sending of this
Information Circular.
Dated this 28th day of April, 2003.
By Order of the Board of Directors
\s\ Jeremy N. Kendall
Jeremy N. Kendall
Chairman of the Board and Chief
Executive Officer
17
FORM 10-K
The Company will provide without charge to beneficial owners of common shares of
the Company, upon written request, a copy of the Company's Annual Report on Form
10-K for the year ended December 31, 2002 including financial statements and
schedules thereto, as filed with the Securities and Exchange Commission,
Washington, D.C. and the Ontario Securities Commission, Toronto, Ontario.
Written requests should be directed to Susan Wiekenkamp, Information Officer of
the Company, 2838 Highway 7, Norval, Ontario, Canada, L0P 1K0, or by fax at
(905) 455-2529 or by e-mail at swiekenkamp@staketech.com.
Shareholders should note that the Form 10-K, as well as Form 10-Q and press
releases can be directly downloaded from www.sedar.com, www.edgar.com or from
the Company's web site at www.staketech.com,
18
Exhibit A
STAKE TECHNOLOGY LTD.
AUDIT COMMITTEE CHARTER
--------------------------------------------------------------------------------
1. Overall Purpose/Objectives
The Audit Committee will assist the board in fulfilling its oversight
responsibilities. The Audit Committee will review the financial reporting
process, the system of internal and disclosure control and management of
financial risks, the audit process, and the company's process for monitoring
compliance with laws and regulations and its own code of business conduct. In
performing its duties, the Audit Committee will maintain effective working
relationships with the Board of Directors, management, and the internal and
external auditors.
2. Authority
The Board authorizes the Audit Committee, within the scope of its
responsibilities, to:
o Seek any information it requires from:
- Any employee (and all employees are directed to co-operate
with any request made by the Audit Committee).
- External parties.
o Obtain outside legal or other professional advisers.
o Ensure the attendance of company officers at meetings as appropriate.
3. Organization
Membership
3.1 The Audit Committee will comprise three (3) members all of which will be
non-executive directors.
3.2 Each member should be capable of making a valuable contribution to the
committee.
3.3 All members should be independent of management.
3.4 The Chairman of the Audit Committee will be nominated by the Board from
time to time.
3.5 Members will be appointed annually.
3.6 A quorum for any meeting will be two (2) members.
3.7 The Secretary of the Audit Committee will be the Company Secretary, or
such other person as nominated by the Board.
Attendance at Meetings
3.8 The Audit Committee may invite such other persons (e.g. the CEO, CFO) to
its meetings, as it deems necessary.
3.9 The internal and external auditors should be invited to make presentations
to the Audit Committee as appropriate.
3.10 Meetings shall be held not less that four (4) times a year. Special
meetings may be convened as required. Internal audit or the external
auditors may convene a meeting if they consider that it is necessary.
3.11 The proceedings of all meetings will be recorded in minutes for approval
and signature.
19
4. Roles and Responsibilities
The Audit Committee will:
Internal Control
4.1 Evaluate whether management is setting the appropriate "control culture"
by communicating the importance of internal control and the management of
risk and ensuring that all employees have an understanding of their roles
and responsibilities.
4.2 Consider how management is held to account for the security of computer
systems and applications, and the contingency plans for processing
financial information in the event of a systems breakdown.
4.3 Gain an understanding of whether internal control recommendations made by
internal and external auditors have been implemented by management.
Financial Reporting
a) General
4.4 Gain an understanding of the current areas of greatest financial risk and
how management is managing these effectively.
4.5 Consider with the internal and external auditors any fraud, illegal acts,
deficiencies in internal control or other similar issues
4.6 Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements, and understand their impact on
the financial statements.
4.7 Ask management and the internal and external auditors about significant
risks and exposures and the plans to minimize such risks.
4.8 Review any legal matters which could significantly impact the Consolidated
Financial Statements.
b) Financial Statements
4.9 Review the annual and quarterly Consolidated Financial Statements and
determine whether they are complete and consistent with the information
known to committee members; assess whether the Consolidated Financial
Statements reflect appropriate accounting principles.
4.10 Pay particular attention to complex and/or unusual transactions such as
restructuring charges and derivative disclosures.
4.11 Focus on judgmental areas, for example those involving valuation of assets
and liabilities; warranty, product or environmental liability; litigation
reserves; and other commitments and contingencies.
4.12 Meet with management and the external auditors to review the Consolidated
Financial Statements and the results of the audit.
4.13 Review the other sections of the Annual Report before its relapse and
consider whether the information is understandable and consistent with
members' knowledge about the company and its operations.
c) Preliminary Announcements, Interim Financial Statements and Analysts
Briefings
4.14 Be briefed on how management develops preliminary announcements, interim
financial information and analysts briefings; the extent of internal audit
involvement; and the extent to which the external auditors review such
information.
4.15 Assess the fairness of the preliminary and interim statements and
disclosures, and obtain explanations from management and internal and
external auditors on whether:
20
- Actual financial results for the interim period varied significantly
from budgeted or projected results.
- Changes in financial ratios and relationships in the interim
financial statements are consistent with changes. in the Company's
operations and financing practices.
- Generally accepted accounting principles have been consistently
applied.
- There are any actual or proposed changes in accounting or financial
reporting practices.
- There are any significant or unusual events or transactions.
- The company's financial and operating controls are functioning
effectively.
- The preliminary announcements and interim financial statements
contain adequate and appropriate disclosures.
Internal Audit (when applicable)
4.16 Review the activities and organizational structure of the internal audit
function and ensure no unjustified restrictions or limitations are made.
4.17 Review the qualifications of internal audit personnel and concur in the
appointment, replacement, reassignment or dismissal of the director of
internal audit.
4.18 Review the effectiveness of the internal audit function.
4.19 Meet separately with the director of internal audit to discuss any matters
that the committee or auditors believe should be discussed privately.
4.20 Ensure that significant findings and recommendations made by the internal
auditors are received and discussed on a timely basis.
4.21 Ensure that management responds to recommendations by the internal
auditors.
External Audit
4.22 Review the external auditors' proposed audit scope and approach and ensure
no unjustified restrictions or limitations have been placed on the scope.
4.23 Review the performance of the external auditors.
4.24 Consider the independence of the external auditor, including reviewing the
range of services provided in the context of all consulting services
bought by the Company.
4.25 Make recommendations to the Board regarding the reappointment of the
external auditors.
4.26 Meet separately with the external auditors to discuss any matters that the
committee or auditors believe should be discussed privately.
4.27 Ensure that significant finds and recommendations made by the external
auditors are received and discussed on a timely basis.
4.28 Ensure that management responds to recommendations by the external
auditors.
Compliance with Laws and Regulations
4.29 Review the effectiveness of the system for monitoring compliance with laws
and regulations and the results of management's investigation and
follow-up (including disciplinary action) of any fraudulent acts or
non-compliance.
4.30 Obtain regular updates from management and company's legal counsel
regarding compliance matters.
4.31 Be satisfied that all regulatory compliance matters have been considered
in the preparation of the financial statements.
4.32 Review the findings of any examinations by regulatory agencies.
21
Compliance with the Company's Code of Conduct
4.33 Ensure that the code of conduct is in writing and that arrangements are
made for all employees to be aware of it.
4.34 Evaluate whether management is setting the appropriate "tone at the top"
by communicating the importance of the code of conduct and the guidelines
for acceptable behavior.
4.35 Review the process for monitoring compliance with the code of conduct.
4.36 Obtain regular updates from management regarding compliance.
Reporting Responsibilities
4.37 Regularly update the Board about committee activities and make appropriate
recommendations.
4.38 Ensure the Board is aware of matters which may significantly impact the
financial condition or affairs of the business.
Other Responsibilities
4.39 Perform other oversight functions as requested by the full Board.
4.40 If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist.
4.41 Review and update the Audit Committee Charter; receive approval of changes
from the Board.
4.42 Evaluate the committee's own performance on a regular basis.
22
Exhibit B
SPECIAL RESOLUTION
RESOLVED THAT:
As a special resolution the Articles of the Company are hereby amended to change
the name of the Company from Stake Technology Ltd. to SunOpta Inc.
23
Exhibit C
STAKE TECHNOLOGY LTD.
EMPLOYEE STOCK PURCHASE PLAN
Subject to shareholder approval, the Employee Stock Purchase Plan (the
"Plan") was approved by the Board of Directors (the "Board") of Stake Technology
Ltd. ("the Company"), on May 7, 2003, at which time 1,000,000 common shares
("common stock"), without par value, were reserved for the grant of Options
under the Plan.
1. Purpose. The purpose of the Plan is to provide Employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company. It is the intention of the Company to have the Plan qualify as an
"Employee Stock Purchase Plan" under Section 423 of the Code. The provisions of
the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company, or a
committee of the Board of Directors named by the Board to administer the Plan.
(b) "Code" shall mean the United States Internal Revenue Code of
1986, as amended.
(c) "Common Stock" shall mean common shares without par value, of
the Company.
(d) "Company" shall mean Stake Technology Ltd.
(e) "Compensation" shall mean all compensation that is taxable
income for federal income tax purposes, including, payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses, commissions and
other compensation received from the Company or a Designated Subsidiary, but
excludes relocation expense reimbursements, tuition or other reimbursements and
income realized as a result of participation in any stock option, stock purchase
or similar plan of the Company or a Designated Subsidiary.
(f) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(g) "Contributions" shall mean all amounts credited to the account
of a participant pursuant to the Plan.
(h) "Discount Factor" shall mean 90% or such other amount as
determined by the Board, up to a maximum of 85% provided that such change is
announced at least 15 days prior to the scheduled beginning of an Offering
Period.
(i) "Designated Subsidiaries" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(j) "Employee" shall mean any person who is customarily employed for
at least 20 hours per week and more than five months in a calendar year by the
Company or one of its Designated Subsidiaries.
(k) "Exercise Date" shall mean the last business day of each
Offering Period of the Plan.
(l) "Exercise Price" shall mean with respect to an Offering Period,
an amount equal to the Fair Market Value (as defined in paragraph 7(b)) of a
share of Common Stock on the Offering Date or on the Exercise Date, whichever is
lower, multiplied by the Discount Factor; provided, however, that in the event
(i) of any stockholder-approved increase in the amount of common stock available
for issuance under the Plan, and (ii) all or a portion of such additional common
stock is to be issued with respect to the Offering Period that is underway at
the time of such increase ("Additional Shares"), and (iii) the Fair Market Value
of the Common Stock on the date of such increase (the "Approval Date Fair Market
Value") is higher than the Fair Market Value on the Offering Date for any such
Offering Period, then in such instance the Exercise
24
Price with respect to Additional Shares shall be the Approval Date Fair Market
Value or the Fair Market Value on the Exercise Date, whichever is lower,
multiplied by the Discount Factor.
(m) "National Securities Exchange" shall mean the Toronto Stock
Exchange for Canadian resident employees and the NASDAQ Small Cap Market for
United States or other foreign resident employees, unless changed by the Board.
(n) "Offering Date" shall mean the first business day of each
Offering Period of the Plan.
(o) "Offering Period" shall mean an annual period of twelve months
commencing on January 1 of each year.
(p) "Plan" shall mean this Employee Stock Purchase Plan.
(q) "Subsidiary" shall mean a the Company, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such the Company now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
3. Eligibility.
(a) Any person who has been continuously employed as an Employee for six
months as of the Offering Date of a given Offering Period shall be eligible to
participate in such Offering Period under the Plan and further, subject to the
requirements of paragraph 5(a) and the limitations imposed by Section 423(b) of
the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose common stock would be attributed
to such Employee pursuant to Section 424(d) of the Code) would own common stock
and/or hold outstanding options to purchase common stock possessing five percent
or more of the total combined voting power or value of all classes of stock of
the Company or of any Subsidiary of the Company, or (ii) which permits his or
her rights to purchase stock under all employee stock purchase plans (described
in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a
rate which exceeds USD $25,000 of CDN $37,500 of fair market value of such stock
as defined in paragraph 7(b) (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any time. Any option
granted under the Plan shall be deemed to be modified to the extent necessary to
satisfy this paragraph 3(b).
4. Offering Periods. The Plan shall be implemented by a series of Offering
Periods, with a new Offering Period commencing on January 1 of each year (or at
such other time or times as may be determined by the Board of Directors). The
Plan shall continue until terminated in accordance with paragraph 19 hereof. The
Board shall have the power to change the duration and/or the frequency of
Offering Periods with respect to future offerings without stockholder approval
if such change is announced at least 15 days prior to the scheduled beginning of
the first Offering Period to be affected.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing an Enrollment Form provided by the Company and filing it with the
Company or its designee prior to the applicable Offering Date. The enrollment
form and its submission may be electronic as directed by the Company. The
enrollment form shall set forth the percentage of the participant's Compensation
(which shall be not less than 1% and not more than 10%) to be paid as
Contributions pursuant to the Plan.
(b) Payroll deductions shall commence with the first payroll
following the Offering Date and shall end on the last payroll paid on or prior
to the Exercise Date of the Offering Period to which the Enrollment Form is
applicable, unless sooner terminated as provided in paragraph 10.
6. Method of Payment of Contributions.
(a) Each participant shall elect to have payroll deductions made on
each payroll during the Offering Period in an amount not less than 1% and not
more than 10% of such participant's Compensation on each such payroll; provided
that the aggregate of such payroll deductions during the Offering Period shall
not exceed 10% of the participant's aggregate Compensation during said Offering
Period (or such greater percentage as the Board may establish from time to time
before an Offering Date). All payroll deductions made by a participant shall be
credited to his or her account under the Plan. A participant may not make any
additional payments into such account.
25
(b) A participant may discontinue his or her participation in the
Plan as provided in paragraph 10, or, on one occasion only during the Offering
Period, may decrease, but may not increase, the rate of his or her Contributions
during the Offering Period by completing and filing with the Company a new
Enrollment Form authorizing a change in the deduction rate. The change in rate
shall be effective as of the beginning of the next payroll period following the
date of filing of the new Enrollment Form, if the Enrollment Form is completed
at least ten days prior to such date, and, if not, as of the beginning of the
next succeeding payroll period.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and paragraph 3(b), a participant's payroll
deductions may be decreased to zero at such time and for so long as the
aggregate of all payroll deductions accumulated with respect to the current
Offering Period and any other Offering Period ending within the current calendar
year equals USD $25,000 or CDN $37,500.
7. Grant of Option.
(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on the Exercise Date of such Offering Period a number of shares of the
Common Stock determined by dividing such Employee's Contributions accumulated
prior to such Exercise Date and retained in the participant's account as of the
Exercise Date by the applicable Exercise Price; provided however, that such
purchase shall be subject to the limitations set forth in paragraphs 3(b) and
12. The fair market value of a share of the Common Stock shall be determined as
provided in paragraph 7(b).
(b) The fair market value of the common stock on a given date shall
be determined by the Board based on (i) if the Common Stock is listed on a
National Securities Exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, the closing or last sale
price of the common stock for such date (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date), on the
composite tape or other comparable reporting system or (ii) if the common stock
is not listed on a national securities exchange and such price is not regularly
reported, the mean between the bid and asked prices per share of the common
stock at the close of trading in the over-the-counter market.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in paragraph 10, his or her option for the purchase of shares will be
exercised automatically on the Exercise Date of the Offering Period, and the
maximum number of full shares of common stock subject to the option will be
purchased for him or her at the applicable Exercise Price with the accumulated
Contributions in his or her account. If a fractional number of shares results,
then such number shall be rounded down to the next whole number and any
unapplied cash shall be carried forward to the next Exercise Date, unless the
participant requests a cash payment. The common stock purchased upon exercise of
an option hereunder shall be deemed to be transferred to the participant on the
Exercise Date. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
9. Delivery. Upon the written request of a participant, certificates
representing the common stock purchased upon exercise of an option will be
issued as promptly as practicable after the Exercise Date of each Offering
Period to participants who wish to hold their shares in certificate form. Any
cash remaining in a participant's account under the Plan after a purchase by him
or her of common stock at the termination of each Offering Period shall be
carried forward to the next Exercise Date unless the participant requests a cash
payment.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
the Exercise Date of the Offering Period by giving written notice to the Company
or its designee. All of the participant's Contributions credited to his or her
account will be paid to him or her promptly after receipt of his or her notice
of withdrawal and his or her option for the current period will be automatically
terminated, and no further Contributions for the purchase of shares will be made
during the Offering Period.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Exercise Date of the Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under paragraph 14, and his or her option
will be automatically terminated.
(c) In the event an Employee fails to remain in Continuous Status as
an Employee for at least 20 hours per week during the Offering Period in which
the Employee is a participant, he or she will be deemed to have elected to
withdraw
26
from the Plan and the Contributions credited to his or her account will be
returned to him or her and his or her option terminated.
(d) A participant's withdrawal from an Offering Period will not have
any effect upon his or her eligibility to participate in a succeeding offering
or in any similar plan which may hereafter be adopted by the Company.
11. Interest. No interest shall accrue on the Contributions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of common stock which shall be made
available for sale under the Plan shall be 1,000,000 shares, subject to
adjustment upon changes in capitalization of the Company as provided in
paragraph 18. If the total amount of common stock which would otherwise be
subject to options granted pursuant to paragraph 7(a) on the Offering Date of an
Offering Period exceeds the amount of common stock then available under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the common stock
remaining available for option grants in as uniform a manner as shall be
practicable and as it shall determine to be equitable. Any amounts remaining in
an Employee's account not applied to the purchase of common stock pursuant to
this paragraph 12 shall be refunded on or promptly after the Exercise Date. In
such event, the Company shall give written notice of such reduction of the
amount of common stock subject to the option to each Employee affected thereby
and shall similarly reduce the rate of Contributions, if necessary.
(b) The participant will have no interest or voting right in common
stock covered by his or her option until such option has been exercised.
13. Administration. The Board shall supervise and administer the Plan and
shall have full power to adopt, amend and rescind any rules deemed desirable and
appropriate for the administration of the Plan and not inconsistent with the
Plan, to construe and interpret the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.
14. Designation of Beneficiary.
(a) A participant may designate a beneficiary who is to receive any
common stock and cash, if any, from the participant's account under the Plan in
the event of such participant's death subsequent to the end of the Offering
Period but prior to delivery to him or her of such common stock and cash. In
addition, a participant may designate a beneficiary who is to receive any cash
from the participant's account under the Plan in the event of such participant's
death prior to the Exercise Date of the Offering Period. If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective. Beneficiary designations shall
be made either in writing or by electronic delivery as directed by the Company.
(b) Such designation of beneficiary may be changed by the
participant (and his or her spouse, if any) at any time by submission of the
required notice, which may be electronic. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such common stock and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such common stock and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.
15. Transferability. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
common stock under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in paragraph 14) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with paragraph 10.
16. Reports. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees
promptly following the Exercise Date, which statements will set forth the
amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
17. Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of shares of Common Stock
covered by unexercised options under the Plan and the number of
27
shares of common stock which have been authorized for issuance under the Plan
but are not yet subject to options (collectively, the "Reserves"), as well as
the price per share of common stock covered by each unexercised option under the
Plan, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of common stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the common
stock, or any other increase or decrease in the number of shares of common stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of common stock subject
to an option.
In the event of the proposed dissolution or liquidation of the Company, an
Offering Period then in progress will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board. In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger, consolidation or other capital reorganization of the
Company with or into another the Company, each option outstanding under the Plan
shall be assumed or an equivalent option shall be substituted by such successor
the Company or a parent or subsidiary of such successor the Company, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Exercise Date (the "New Exercise Date"). If the Board shortens the
Offering Period then in progress in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board shall notify each participant in
writing, at least ten days prior to the New Exercise Date, that the Exercise
Date for his or her option has been changed to the New Exercise Date and that
his or her option will be exercised automatically on the New Exercise Date,
unless prior to such date he or she has withdrawn from the Offering Period as
provided in paragraph 10. For purposes of this paragraph, an option granted
under the Plan shall be deemed to be assumed if, following the sale of assets,
merger or other reorganization, the option confers the right to purchase, for
each share of common stock subject to the option immediately prior to the sale
of assets, merger or other reorganization, the consideration (whether stock,
cash or other securities or property) received in the sale of assets, merger or
other reorganization by holders of Common Stock for each share of Common Stock
held on the effective date of such transaction (and if such holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of common stock); provided, however, that if
such consideration received in such transaction was not solely common stock of
the successor the Company or its parent (as defined in Section 424(e) of the
Code), the Board may, with the consent of the successor the Company, provide for
the consideration to be received upon exercise of the option to be solely common
stock of the successor the Company or its parent equal in fair market value to
the per share consideration received by holders of common stock in the sale of
assets, merger or other reorganization.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the reserves, as well as the price per share
of common stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other the
Company.
18. Amendment or Termination.
(a) The Board may at any time terminate or amend the Plan. Except as
provided in paragraph 18, no such termination may affect options previously
granted, nor may an amendment make any change in any option theretofore granted
which adversely affects the rights of any participant provided that an Offering
Period may be terminated by the Board on an Exercise Date or by the Board's
setting a new Exercise Date with respect to an Offering Period then in progress
if the Board determines that termination of the Offering Period is in the best
interests of the Company and the stockholders or if continuation of the Offering
Period would cause the Company to incur adverse accounting charges in the
generally-accepted accounting rules applicable to the Plan. In addition, to the
extent necessary to comply with Section 423 of the Code (or any successor rule
or provision or any applicable law or regulation), the Company shall obtain
stockholder approval in such a manner and to such a degree as so required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
shall be entitled to change the Offering Periods, change the Discount Factor
between 0 and 15%, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than Canadian or United States dollars,
permit payroll withholding in excess of the amount designated by a participant
in order to adjust for delays or mistakes in the Company's processing of
properly completed withholding elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of Common Stock for each participant
properly correspond with amounts withheld from the participant's Compensation,
and establish such other limitations or procedures as the Board determines in
its sole discretion advisable that are consistent with the Plan.
28
19. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
20. Conditions Upon Issuance of Shares. Shares of common stock shall not
be issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares of common stock pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares of
common stock may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares of common stock are being purchased only for investment
and without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
21. Right to Terminate Employment. Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any Employee or other
optionee the right to continue in the employment of the Company or any
Subsidiary, or affect any right which the Company or any Subsidiary may have to
terminate the employment of such Employee or other optionee.
22. Rights as a Stockholder. Neither the granting of an option nor a
deduction from payroll shall constitute an Employee the owner of shares covered
by an option. No optionee shall have any right as a stockholder unless and until
an option has been exercised, and the shares of common stock underlying the
option have been registered in the Company's share register.
23. Term of Plan. The Plan became effective upon its adoption by the Board
in May 2003 and shall continue in effect until June 30, 2025 unless sooner
terminated under paragraph 19.
24. Applicable Law. This Plan shall be governed in accordance with the
laws of the Province of Ontario, applied without giving effect to any
conflict-of-law
29
[LOGO] StakeTech
STAKE TECHNOLOGY LTD.
April 28, 2003
To Registered and Beneficial Shareholders:
In accordance with National Instrument 54-101, shareholders may elect annually
to have their names added to Stake Technology Ltd.'s Supplemental Mailing List.
In order to receive Press Releases and Interim Financial Statements, please
complete the following and forward to the offices of:
Stake Technology Ltd.
2838 Highway 7, Norval, Ontario L0P 1K0
I HEREBY CERTIFY that I am a Shareholder of the Company, and as such, request
that you add me to your Supplemental Mailing List.
We are asking that you consider retrieving news, including financial information
through the Company's web site: www.staketech.com. Alternatively, the Company's
financial information can be accessed on both Sedar (www.sedar.com) and Edgar
(www.edgar.com).
INFORMATION REQUESTED: DISTRIBUTION METHOD:
|_| 10Q |_| E-mail
|_| 10K |_| Fax
|_| Press Release |_| Regular mail
Return by e-mail, fax or mail to: Susan Wiekenkamp, Information Officer
Stake Technology Ltd.
2838 Highway 7, Norval, Ontario Canada L0P 1K0
E-mail: swiekenkamp@staketech.com
Tel: (905) 455-2528, ext. 103
Fax: (905) 455-2529
Name: _____________________________________________________________________
(PLEASE PRINT)
Address: _____________________________________________________________________
E-mail: _____________________________________________________________________
Telephone: _____________________________ Fax: __________________________________
SIGNED: _______________________________
[LOGO] StakeTech
STAKE TECHNOLOGY LTD.
FORM OF PROXY
Annual and Special Meeting of Shareholders of Stake Technology Ltd.
================================================================================
This proxy is solicited by the Board of Directors and the Management of Stake
Technology Ltd. for use at the Annual and Special Meeting of Shareholders to be
held at the "Windsor Ballroom" at Le Royal Meridien King Edward Hotel, 37 King
Street East, Toronto, Ontario, Canada on Wednesday, June 18, 2003 at 4:00 p.m.
EDT, or any adjournment thereof, in the same manner, to the same extent and with
the same powers as if the undersigned were personally present at the said
meeting or any adjournment thereof.
Appointment of Proxy
I/We being shareholder(s) of Stake Technology Ltd. hereby appoint(s): Jeremy
Kendall, or failing him Cyril Ing, both officers of the Company
OR
Print the name of the person you are appointing as your proxyholder if this
person is someone other than Jeremy Kendall or Cyril Ing
________________________________________________________________________________
As my/our proxy with full power of substitution and to vote in accordance with
the following direction (or if no directions have been given, as the proxyholder
sees fit) and in their discretion on all other matters that may properly come
before the Annual and Special Meeting of Shareholders of Stake Technology Ltd.
1) Election of Directors
01 Dennis Anderson |_| FOR |_| WITHHOLD
02 Stephen Bronfman |_| FOR |_| WITHHOLD
03 Robert Fetherstonhaugh |_| FOR |_| WITHHOLD
04 Katrina Houde |_| FOR |_| WITHHOLD
05 Cyril Ing |_| FOR |_| WITHHOLD
06 Jeremy Kendall |_| FOR |_| WITHHOLD
07 Camillo Lisio |_| FOR |_| WITHHOLD
08 James Rifenbergh |_| FOR |_| WITHHOLD
09 Joseph Riz |_| FOR |_| WITHHOLD
10 Allan Routh |_| FOR |_| WITHHOLD
2) Appointment of Auditors
The Board of Directors recommends a vote FOR the Appointment of the
Auditors
Appointment of PricewaterhouseCoopers as Auditors of the Company for 2003
and to authorize the Directors to fix their remuneration.
|_| FOR |_| AGAINST |_| ABSTAIN
3) Change of Company Name
The Board of Directors recommends a vote FOR the passage of the special
resolution to change the Company name.
Approving change of Company name to SunOpta Inc.
|_| FOR |_| AGAINST |_| ABSTAIN
4) Adoption of Employee Stock Purchase Plan
The Board of Directors recommends a vote FOR the adoption of the Employee
Stock Purchase Plan.
Resolution approving the adoption of the Employee Stock Purchase Plan
|_| FOR |_| AGAINST |_| ABSTAIN
5) To consider and take action upon such other matters as may properly come
before the meeting, or any adjournment or adjournments thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder.
If the officers named in this proxy are appointed by the undersigned and no
direction is made, such officers will vote and vote for proposals 1, 2, 3 and 4.
If a person other than the officers named is appointed and no direction is made,
such person may vote such shares at his/her discretion. If any amendment or
variation to the matters identified above are proposed at the meeting,
discretionary authority is hereby conferred with respect thereto. Management is
not aware of any other matter to come before the meeting not disclosed above.
Authorized Signature(s) - Sign Here - This section must be completed for your
instructions to be executed.
I/We authorize you to act in accordance with my/our instructions set out above.
I/We hereby revoke any proxy previously given with respect to the Meeting. If no
voting preferences are indicated above, this form of proxy will be voted as
recommended by Management.
____________________________________ ________________________________________
Signature(s) Date
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE
NOTES OF PROXY:
1. You have the right to appoint a different person or company (with
appropriate documentation) of your choice, who need not be a shareholder,
to attend and act on your behalf at the Annual and Special Meeting of
Stake Technology Ltd. If you wish to appoint a person other than the
persons whose names are printed herein, please insert the name of your
chosen proxyholder in the space provided (see reverse). The common shares
represented by this form of proxy may be voted in the discretion of the
proxyholder with respect to amendments or variations to the matters
identified in the notice of meeting and with respect to other matters that
may properly be brought before the meeting.
2. If the common shares are registered in the name of more than one owner
(for example, joint ownership, trustees, executors, etc.), then all those
registered should sign this form of proxy. If you are voting on behalf of
a corporation or another individual, documentation evidencing your power
to sign this form of proxy with signing capacity stated may be required.
3. This instrument of proxy will not be valid and not be acted upon or voted
unless it is completed as outlined herein and delivered to the attention
of ADP Investor Communications, Proxy Department, 5970 Chedworth Way,
Mississauga, ON, L5R 4G5, by 4:00 p.m. E.D.T., on Wednesday, June 18, 2003
or by delivering it to the Chairman of the meeting on the day of the
meeting or any adjournment thereof prior to the time of voting.
4. In order to expedite your vote, you may use a touch-tone telephone or the
Internet. To vote by telephone, call toll free 1-800-474-7493 (English) or
1-800-474-7501 (French). You will be prompted to provide your 12 digit
number located below on this form. The telephone or Internet voting
service is not available on the day of the meeting and the telephone
system cannot be used if you plan to attend the meeting or designate
another person to attend on your behalf.
To vote via the Internet, go to www.proxyvotecanada.com and follow the
simple instructions.
You may send your completed and signed Proxy by facsimile to 905-507-7793
or 514-281-8911.
5. The form of proxy should be signed in the exact manner as the name appears
on the form of proxy.
6. If the form of proxy is not dated, it will be deemed to bear the date on
which it was mailed to the holder.
7. Proxy will be voted as directed.