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EXHIBIT 3
Agreement to Amend Registration Rights Agreements
December 23, 0000
Xxxxx Xxxxx Xxxxxxx
ECT Merchant Investments Corp.
Sundance Assets, L.P.
SE Thunderbird, L.P.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Re: Kafus Industries, Ltd.
Amendment of Registration Rights Agreements
Ladies and Gentlemen:
Reference is made to the Registration Rights Agreement dated as of
December 31, 1998 (the "December 31st Registration Rights Agreement"), made by
Kafus Industries, Ltd. (formerly Kafus Environmental Industries, Ltd.), a
British Columbia corporation (the "Company"), and Enron North America Corp.
(formerly "Enron Capital & Trade Resources Corp."), a Delaware corporation
("Enron"), the Amended and Restated Registration Rights Agreement dated as of
March 11,1999 between Sundance Assets, L.P. ("Sundance") and the Company (the
"Sundance Registration Rights Agreement"), and the Registration Rights Agreement
dated as of March 11,1999 between the Company and ECT Merchant Investments
Corp., a Delaware corporation and an Affiliate of Enron ("ECTMI") (the "ECTMI
Registration Rights Agreement"). The December 31st Registration Rights
Agreement, the Sundance Registration Rights Agreement and the ECTMI Registration
Rights Agreement are collectively referred to as the "Registration Rights
Agreements").
This Agreement To Amend Registration Rights Agreements (the
"Agreement") is intended to amend certain terms under the Registration Rights
Agreements pursuant to which the Company had agreed to seek effectiveness of a
registration statement, on or before the "Effectiveness Deadline," covering the
sale of certain securities in the Company. Unless otherwise indicated, all of
the capitalized terms used herein shall have the meanings ascribed to them in
the relevant Registration Rights Agreement.
Enron, ECTMI, and Sundance have now agreed to waive any of their rights
and remedies arising from or related to the Company's inability to have the
registration statements required by the Registration Rights Agreements declared
effective by the Effectiveness Deadline. The parties have further agreed to
amend the Registration Rights Agreements to change the Filing Deadlines to June
30, 2000 with respect to those shares that were to be registered pursuant to the
ECTMI Registration Rights Agreement and to December 31, 2000 with respect to
those shares that were to be registered pursuant to the Sundance Registration
Rights Agreement. The parties have further agreed to correspondingly amend the
dates by which the subject registration statements were to be declared effective
and certain penalty provisions were to be invoked.
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In consideration for the mutual covenants and agreements of the
parties, the Company, Enron, ECTMI, Sundance, and SE Thunderbird L.P.
("Thunderbird") now agree as follows:
1. Waiver. Enron, ECTMI, and Sundance hereby permanently waive and
voluntarily relinquish any and all rights and remedies arising from or related
to the Company's failure to file the above-referenced registration statements by
June 30, 1999 and/or have such registration statements declared effective on or
prior to the 150th day following such Filing Deadlines.
2. New Filing Deadlines. Section 2(a) of the December 31st Registration
Rights Agreement, as amended by the ECTMI Registration Rights Agreement, is
hereby amended to provide for a Filing Deadline of June 30, 2000. Section 2(a)
of the Sundance Registration Rights Agreement is hereby amended to provide for a
Filing Deadline of December 31, 2000. All other applicable dates and deadlines
are correspondingly adjusted and amended. The Company shall indemnify Enron,
Sundance, and ECTMI and hold them harmless from and against any and all taxes,
damages, liabilities, losses, claims, penalties, expenses, and costs, including
reasonable attorneys' fees and court costs, arising from the foregoing waivers,
adjustments, and amendments.
3. Demand Registration Right. At any time, ECTMI or Sundance (or their
respective transferees) may serve written notice on the Company (the "Amended
Filing Deadline Notice") requiring the Company to file within thirty (30) days
of receipt of such Amended Filing Deadline Notice a registration statement
covering any or all of the securities identified in the Amended Filing Deadline
Notice (whether or not such securities were previously covered by any of the
Registration Rights Agreements). Delivery of the Amended Filing Deadline Notice
to the Company shall constitute an immediate and effective amendment of the
Filing Deadlines set forth above. ECTMI and Sundance (or their respective
transferees) shall be limited to delivering no more than two (2) Amended Filing
Deadline Notices.
4. Amendment of July 16th Registration Rights Agreement. Except as
described below, nothing in this Agreement shall serve to amend the terms and
conditions of that certain Registration Rights Agreement dated as of July 16,
1997 between the Company and Enron. The Company shall promptly proceed to file a
registration statement covering those 9,000,000 shares formerly registered by
the Company (which registration statement has now lapsed) pursuant to such
agreement and 730,000 shares issued in payment of dividends owing on the Series
I Preference Shares ("Dividend Shares") held by Sundance. The Company shall
promptly amend such registration statement as necessary to cover any Dividend
Shares that may be issued in the future from time to time (including the 102,358
Dividend Shares owing with respect to the semiannual period ended June 30,
1999), as well as any other shares that may be Registrable Securities within the
meaning of such Registration Rights Agreement. The parties hereby confirm that
the terms of such Registration Rights Agreement apply in all respects to (i) the
Shares, as defined in the Subscription Agreement dated July 16, 1997 between the
Company and Enron (inclusive of the 1,999,999 share portion thereof assigned by
Enron to Thunderbird on December 21, 1999), (ii) the 750,000 shares transferred
to Enron pursuant to the Fee Agreement dated July 16, 1997 between Enron and The
CanFibre Group Ltd., (iii) all Dividend Shares that may be issued from time to
time, and (iv) any shares Enron might receive in payment for its Series I
Preference Shares pursuant to the Waiver And Amendment Agreement dated August
18,
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1998 between Enron and The Samarac Corporation, Ltd. Enron hereby permanently
waives and voluntarily relinquishes any and all rights and remedies arising from
or related to the Company's failure to keep such registration statement
effective prior to the date hereof.
5. Counterparts. This Agreement may be executed in counterparts which
together shall constitute one and the same instrument.
6. Choice of Law; Integration. This letter agreement shall be governed
and construed in accordance with the laws of the State of Texas, notwithstanding
any conflicts of law principles that would direct the application of the laws of
another jurisdiction. This letter agreement contains the entire agreement among
the parties with respect to the subject matter hereof.
EXECUTED as of the date first written above.
Very truly yours,
KAFUS INDUSTRIES, LTD., fka KAFUS
ENVIRONMENTAL INDUSTRIES, LTD.
By:
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Xxxx XxXxxx, President
AGREED TO AND ACCEPTED
as of the date first above written.
ENRON NORTH AMERICA CORP., fka
ENRON CAPITAL & TRADE RESOURCES CORP.
By:
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Name:
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Title:
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ECT MERCHANT INVESTMENTS CORP.
By:
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Name:
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Title:
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SUNDANCE ASSETS, L.P.
By: Ponderosa L.P., its general partner
By: Enron Ponderosa Management Holdings, Inc.
By:
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Name:
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Title:
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SE THUNDERBIRD L.P.
By: Blue Heron I LLC, its general partner
By: Whitewing Associates L.P., its sole member
By: Whitewing Management LLC, its general partner
By: Egret I LLC, its managing member
By:
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Name:
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Title:
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