Share listing, name change, stock split, etc.
NOTICE OF ANNUAL GENERAL MEETING
TO THE MEMBERS:
NOTICE IS HEREBY GIVEN that the annual general meeting of Kafus Environmental Industries Ltd. (the "Company") will be held at Suite 440, 755 Burrard Street, Vancouver, B.C. V6Z 1X6 on Tuesday, the 15th day of June, 1999 at the hour of 10:00 o'clock in the forenoon (Vancouver time) to transact the usual business of an annual general meeting and for the following purposes:
1. To receive and consider the Report of the Directors to the Members.
2. To receive and consider the financial statements of the Company and its subsidiaries, together with the auditor's report thereon for the fiscal year ended September 30, 1998 and for the transitional period ended December 31, 1998.
3. To consider and, if thought fit, to approve an ordinary resolution to set the number of directors at eight (8).
4. To elect directors to hold office until the next annual general meeting of the Company.
5. To appoint KMPG Canada, Chartered Accountants, as auditor for the Company to hold office until the next annual general meeting of the Company.
6. To authorize the directors to fix the remuneration to be paid to the auditor for the Company.
7. To consider and, if thought fit, approve an ordinary resolution to adopt a formal stock incentive plan (the "1999 Plan") providing for the granting to eligible employees, directors and consultants of the Company or any Related Entity (as defined in the 1999 Plan), such incentive awards as the Board of Directors or a committee of the Board of Directors appointed to administer the 1999 Plan may from time to time approve, provided that:
(a) the incentive awards may consist of stock options, stock appreciation rights, restricted stock and/or certain other rights and benefits;
(b) the maximum number of Common Shares of the Company that will be issuable pursuant to all awards granted under the 1999 Plan will be 4,783,453 Common Shares; and
(c) the 1999 Plan will be subject to the approval of the regulatory authorities.
8. To consider and, if thought fit, to approve an ordinary resolution to adopt a formal stock incentive plan (the "1999 US Plan" and together with the 1999 Plan, the "Plans") providing for the granting to eligible employees, directors and consultants of the Company or any Related Entity (as defined in the 1999 US Plan) who are resident in the United States and/or subject to taxation in the United States, such incentive awards as the Board of Directors or a committee of the Board of Directors appointed to administer the 1999 US Plan may from time to time approve, provided that:
(a) the incentive awards may consist of stock options, stock appreciation rights, restricted stock and/or certain other rights and benefits;
(b) the maximum number of Common Shares of the Company that will be issuable pursuant to all awards granted under the 1999 US Plan will be 2,004,167 Common Shares; and
(c) the 1999 US Plan will be subject to the approval of the regulatory authorities.
The 1999 Plan and the 1999 US Plan, if adopted, will supersede and replace the Company's existing stock option plan.
9. To consider, and if thought fit, pass an ordinary resolution approving the application to the American Stock Exchange to list up to an additional 6,875,000 shares of common stock of the Company, such shares having been reserved for issuance pursuant to conversion rights attaching to the Series VIII convertible redeemable preference shares without par value issued under that certain Asset Purchase Agreement between the Company and The Samarac Corporation Ltd. dated for reference December 31, 1998.
10. To consider, and if appropriate, pass an ordinary resolution approving the application to the American Stock Exchange to list up to an additional 19,375,000 shares of common stock of the Company, such shares having been reserved for issuance to Enron Capital & Trade Resources Corp. and certain of its affiliates in connection with preferred equity and convertible debt financing provided to the Company by Enron Capital & Trade Resources Corp. and its affiliate, ECT Merchant Investments Corp.
11. To consider and, if thought fit, to approve a special resolution approving the amendment to the Series I Preference Share Terms by amending Section 26.3 of the Articles of the Company.
12. To consider and, if thought fit, to approve a special resolution to alter the Memorandum of the Company by changing the name of the Company from "Kafus Environmental Industries Ltd." to "Kafus Industries Ltd.", or such other name as the directors in their absolute discretion may determine and is acceptable to the regulatory authorities.
13. To consider and, if thought fit, to approve a special resolution to approve a stock split of the Company's common shares on the basis of three (3) shares for every one (1) share held or on the basis of two (2) shares for every (1) share held.
14. To transact such further or other business as may properly come before the meeting and any adjournment or adjournments thereof.
The accompanying Information Circular provides additional information relating to the matters to be dealt with at the meeting and is deemed to form part of this notice.
A shareholder entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. If you are unable to attend the meeting in person, please complete, sign and date the enclosed form of Proxy and return it within the time and to the location in accordance with the instructions set out in the form of Proxy and Information Circular accompanying this Notice.
Please advise the Company of any change in your address.
DATED at Vancouver, British Columbia, this 6th day of May, 1999.
By Order of the Board of
KAFUS ENVIRONMENTAL INDUSTRIES LTD.
"Michael McCabe"
MICHAEL McCABE
President
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