1
EXHIBIT 4
[Execution Version]
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of June 5, 2000 by and between Kafus Industries Ltd., a British
Columbia corporation (the "Company"), and ECT Merchant Investments Corp., a
Delaware corporation (the "Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser are parties to the Amended and
Restated Note Agreement dated as of March 11,1999 (as modified from time to
time, the "Note Agreement"), governing certain Notes as defined therein (the
"Notes"), several of which Notes were originally issued to Enron Capital & Trade
Resources Corp. ("ECT") pursuant to the Note Agreement dated as of December 31,
1998, between the Company and ECT, which Notes have been assigned by ECT to the
Purchaser as described in the Note Agreement.
WHEREAS, the Company and the Purchaser, together with other purchasers
of the Notes, are entering into the Amendment to Note Agreements dated as of
June 5, 2000 (the "Amendment"), amending the Note Agreement and the related note
agreement to provide for the issuance and sale by the Company and the purchase
by the Purchaser of the U.S.$1,000,000 Convertible Promissory Note (Term Loan D)
(the "$1,000,000 Term Loan D Note"), dated as of June 5, 2000, and made by the
Company payable to the order of the Purchaser.
WHEREAS, the Company and the Purchaser are parties to the Warrant
Agreement dated as of March 11,1999 (as modified from time to time, the "Warrant
Agreement"), governing certain existing warrants.
WHEREAS, in connection with the issuance of the $1,000,000 Term Loan D
Note, the Company and the Purchaser are entering into the Amendment to Warrant
Agreement dated as of June 5, 2000, to govern the Term Loan D Warrant as defined
therein (the "Warrants").
WHEREAS, the Purchaser desires that the Company register the Common
Stock issuable upon conversion of the $1,000,000 Term Loan D Note (the
"Conversion Shares") and the Common Stock issuable upon the exercise of the
Warrants (the "Warrant Shares") upon the terms and subject to the conditions set
forth in this Agreement.
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the Purchaser's obligations under the Amendment.
NOW, THEREFORE, the parties hereto, intending legally to be bound,
hereby agree as follows:
2
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
ascribed to them below:
(a) "Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
(b) "Applicable Rate" shall mean 1.5% monthly with respect to the first
month and 2% monthly for each subsequent month, until the Registration Statement
shall become effective.
(c) "Business Day" means any Monday, Tuesday, Wednesday, Thursday, or
Friday that is not a day on which banking institutions in the City of New York,
New York, or Toronto, Ontario, are required by law, regulation or executive
order to close.
(d) "Holder" shall mean the Purchaser, and any other Person who has
become a Permitted Transferee pursuant to Section 9(c).
(e) "Registrable Securities" means (a) the Conversion Shares, (b) the
Warrant Shares, (c) all other shares of Common Stock owned by the Purchaser and
its Affiliates as of the date of filing of the Registration Statement (or which
they shall have the right to purchase or acquire as of such date), and (d) any
securities issued or issuable in respect of or in exchange for any of the shares
of Common Stock referred to in clauses (a) through (c) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, reclassification, merger, consolidation, or exchange offer
("Distribution Securities"). For purposes of this Agreement, a Registrable
Security ceases to constitute a Registrable Security hereunder (i) when such
Registrable Security shall have been effectively registered under the Securities
Act and disposed of in a public market transaction pursuant to a Registration
Statement, (ii) when such Registrable Security shall have been sold pursuant to
Rule 144 (or any successor provision) under the Securities Act, (iii) when such
Registrable Security shall have been otherwise transferred and a new certificate
for such Registrable Security not bearing a legend restricting further transfer
shall have been delivered by the Company, (iv) with respect to a particular
Holder, at any time when all of such Holder's remaining Registrable Securities
can be sold in a single transaction in compliance with Rule 144 under the
Securities Act, (v) on the second anniversary of the original issuance date of
such Registrable Security, provided that the Holder of such Registrable Security
is not an Affiliate of the Company as of such date, and has not been an
Affiliate of the Company for a period of three months preceding such date, or
(vi) when such Registrable Security shall have ceased to be outstanding.
(f) "Registration Statement" shall have the meaning set forth in
Section 2.
(g) "Registration Termination Date" means, the first date on which all
Conversion Shares and Warrant Shares (and any Distribution Securities with
respect thereto) cease to be Registrable Securities.
3
(h) "Securities Act" means the Securities Act of 1933, as amended.
(i) "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
(j) "SEC" means the United States Securities Exchange Commission, or
any successor agency thereto.
Other capitalized terms shall have the meanings ascribed to them in the
other sections of this Agreement or in the Note Agreement or in the Warrant
Agreement in each case if not defined by the prior agreement listed.
2. SHELF REGISTRATION.
(a) Effective Registration. On or before June 29, 2001 (the "Filing
Deadline"), the Company shall file with the SEC under the Securities Act a
Registration Statement on Form F-1 ("Registration Statement"), or on such other
registration form under the Securities Act as the Company shall deem
appropriate, covering the sale by the Holders on a continuous or delayed basis
pursuant to Rule 415 thereunder (or any similar rule that may be adopted by the
SEC) of (i) the Conversion Shares and (ii) the Warrant Shares. The Company shall
use its best efforts to cause each Registration Statement to be declared
effective on or prior to the one hundred and fiftieth (150th) day following the
Filing Deadline and shall thereafter keep such Registration Statement
continuously effective until the Registration Termination Date.
(b) Delay in Effectiveness. In the event any Registration Statement is
not declared effective by the SEC within 150 days after the Filing Deadline (the
"Effectiveness Deadline"), or in the event the effectiveness of any Registration
Statement is suspended or terminated at any time after its Effectiveness
Deadline and prior to the Registration Termination Date, then, at the election
of the Holder: (1) for each month (or portion thereof) such Registration
Statement is not so effective, the Company shall pay to the Holder, as
liquidated damages and not as a penalty, an amount equal to the product of (x)
the number of shares of Common Stock that are or could become, if the $1,000,000
Term Loan D Note were converted and the Warrants were exercised, Registrable
Securities multiplied by the closing price of the Common Stock on the first day
of the month as to which liquidated damages are payable and (y) outstanding
principal amount of the Notes eligible for conversion to Common Stock and the
Applicable Rate or (2) the Holder may seek remedies at law or in equity. In
either case, the Company shall pay any damages to each Holder based upon the
proportion of the Registrable Securities owned by such Holder. Such payments
shall be made on the first Business Day of each month following any month in
which such Registration Statement is not effective, with a final payment within
five (5) Business Days after such Registration Statement becomes effective.
3. REGISTRATION PROCEDURES.
(a) Company Procedures. In connection with the Company's registration
obligations pursuant to Section 2, the Company shall keep each Registration
Statement continuously effective for the period of time provided in Section 2,
to permit the sale of Registrable Securities covered by such Registration
Statement in accordance with the intended method or methods of distribution
4
thereof specified in such Registration Statement or in the related
prospectus(es), and shall:
(i) comply with such provisions of the Securities Act
as may be necessary to facilitate the disposition of all
Registrable Securities covered by such Registration Statement
during the applicable period in accordance with the intended
method or methods of disposition thereof set forth in such
Registration Statement or such prospectus or supplement
thereto;
(ii) notify the Holders, promptly (A) when each
Registration Statement, prospectus, or supplement thereto or
further post-effective amendment has been filed, and, with
respect to each Registration Statement or further
post-effective amendment, when it has become effective, (B) of
any request by the SEC for amendments or supplements to any
Registration Statement or prospectus or for additional
information, (C) of the issuance by the SEC of any comments
with respect to any filing and of any stop order suspending
the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (D) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of any Registrable Securities
for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose, (E) of the happening of
any event that makes any statement made in any Registration
Statement, prospectus, or any other document incorporated
therein by reference untrue or that requires the making of any
changes in such Registration Statement, prospectus, or any
document incorporated therein by reference in order that such
documents not contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (F) of the Company's determination that a
further post-effective amendment to such Registration
Statement would be appropriate;
(iii) furnish to each Holder, without charge, as many
conformed copies as may reasonably be requested by such
Holder, of each Registration Statement and any further
post-effective amendments thereto, including financial
statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by
reference);
(iv) deliver to each Holder, without charge, as many
copies of the then effective prospectus covering such
Registrable Securities and any amendments or supplements
thereto as such Holder may reasonably request;
(v) register, qualify, obtain an exemption therefrom,
or cooperate with the Holders and their counsel in connection
with the registration or qualification or exemption therefrom
of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as may be
reasonably requested in writing by the Holders and do any and
all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable
Securities covered by the then effective Registration
Statements; provided, however, that the Company shall not be
required to (A) qualify as a foreign corporation or generally
to transact business in any jurisdiction where it is not then
so qualified, (B) qualify as a dealer (or other similar
entity) in securities, (C) otherwise subject itself to
taxation in connection with such
5
activities, or (D) take any action which would subject it to
general service of process in any jurisdiction where it is not
then so subject;
(vi) upon the occurrence of any event contemplated by
clauses (E) or (F) of paragraph (ii) above, promptly prepare
and file, if necessary, a further post-effective amendment to
each Registration Statement or a supplement to the related
prospectuses or any document incorporated therein by reference
or file any other required document so that each Registration
Statement and the related prospectuses will not thereafter
contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein not misleading;
(vii) in no event later than five (5) Business Days
before filing any Registration Statement, any further
post-effective amendment thereto, any prospectus or any
amendment or supplement thereto (other than any amendment or
supplement made solely as a result of incorporation by
reference of documents), furnish to the Holders copies of all
such documents proposed to be filed;
(viii) not file any Registration Statement or
amendment thereto or any prospectus or any supplement thereto
(other than any amendment or supplement made solely as a
result of incorporation by reference of documents) to which
the Holders holding a majority of the Registrable Securities
shall have reasonably objected in writing, within three (3)
Business Days after receipt of such documents, to the effect
that such Registration Statement or amendment thereto or
prospectus or supplement thereto does not comply in all
material respects with the requirements of the Securities Act
(including, without limitation respect of any information
describing the manner in which the Holders acquired such
Registrable Securities and the intended method or methods of
distribution of such Registrable Securities), (provided that
the foregoing shall not limit the right of any Holder
reasonably to object, within three (3) Business Days after
receipt of such documents, to any particular information
relating specifically to such Holder that is to be contained
in any Registration Statement, prospectus or supplement
including without limitation, any information describing the
manner in which such Holder acquired such Registrable
Securities and the intended method or methods of distribution
of such Registrable Securities), and if the Company is unable
to file any such document due to the objections of the
Holders, the Company shall exert commercially reasonable
efforts to cooperate with the Holders to prepare, as soon as
practicable, a document that is responsive in all material
respects to the reasonable objections of the Holders, provided
however, that the Effectiveness Deadline (as defined in
Section 2(b)) shall be extended by the period, during which
the Company is prevented from filing a Registration Statement
or amendment thereto by reason of this paragraph 3(a)(viii);
(ix) promptly after the filing of any document that
is to be incorporated by reference into any Registration
Statement or prospectus, provide copies of such document to
the Holder;
(x) cause all Registrable Securities covered by each
Registration Statement to be listed on the NASDAQ National
Market, American Stock Exchange, any national securities
exchange, an over-the-counter market, or, if the Common Stock
securities of
6
the Company are not listed thereon, on the primary exchanges,
markets, or inter-dealer quotations systems (including NASDAQ)
if any, on which similar securities issued by the Company are
then listed, prior to the date on which such Registrable
Securities were issued;
(xi) take all actions reasonably required to prevent
the entry of any stop order by the Securities and Exchange
Commission or by any state securities regulators or to remove
any such order if entered; and
(xii) file post-effective amendments to any
Registration Statement or supplement the related prospectus,
as required, to permit sales of Registrable Securities covered
thereby to be made by Permitted Transferees of the Holders.
(b) Holder Procedures.
(i) The Company may require each Holder to furnish to
the Company such information regarding such Holder and the
proposed distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing
and which is necessary for compliance with applicable law.
(ii) Each Holder agrees to cooperate with the Company
in all reasonable respects in connection with the preparation
and filing of the Registration Statement, any Amendment, any
prospectus, and any prospectus supplement.
(c) Additional Information Available. So long as any
Registration Statement is effective covering the resale of Registrable
Securities owned by a Holder, the Company will furnish to such
Holder(s):
(i) as soon as practicable after it becomes available
(but in the case of the Company's Annual Report to
Stockholders, within 140 days after the end of each fiscal
year of the Company), one copy of: (A) its Annual Report to
Stockholders (which Annual Report shall contain financial
statements audited in accordance with Canadian generally
accepted accounting principles by a national firm of certified
public accountants); (B) its Annual Report on Form 20-F; and
(C) its Quarterly Reports on Form 6-K; and
(ii) upon the reasonable request of a Holder, all
exhibits to the Annual Report on Form 20-F; and the Company,
upon the reasonable request of a Holder, will meet with such
Holder or a representative thereof at the Company's
headquarters to discuss all information relevant for
disclosure in any Registration Statement and will otherwise
cooperate with any Holder conducting an investigation for the
purpose of reducing or eliminating such Holder's exposure to
liability under the Securities Act including the reasonable
production of information at the Company's headquarters.
4. REGISTRATION EXPENSES.
All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees, and expenses of
7
compliance with state securities or blue sky laws (including fees and
disbursements of counsel in connection with blue sky qualifications or
registrations (or the obtaining of exemptions therefrom) of the Registrable
Securities), messenger and delivery expenses, internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), fees and disbursements of its counsel
and its independent certified public accountants, securities acts liability
insurance (if the Company elects to obtain such insurance), and reasonable fees
and expenses of any special experts retained by the Company in connection with
any registration hereunder (all of such expenses herein referred to as
"Registration Expenses"), shall be borne by the Company; provided, however, the
Registration Expenses shall not include any sales or underwriting discounts,
commissions, or fees attributable to the sale of the Registrable Securities or
the fees and expenses of counsel to the Holders (other than to the extent
provided in the Note Agreement and the Warrant Agreement).
5. INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless, to the full extent permitted by law, each Holder, and such
Holder's respective officers, directors, employees, representatives, agents, and
controlling persons (within the meaning of the Securities Act), against all
losses, claims, damages, liabilities, and expenses, but in no event greater than
the gross purchase price Holder paid to the Company for Registrable Securities,
resulting from any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any prospectus, or any amendment or
supplement thereto, or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except in each case insofar as the same directly arises out of or is
directly based upon an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a material fact in
such Registration Statement, prospectus, amendment, or supplement, as the case
may be, made or omitted, as the case may be, in reliance upon and in conformity
with information furnished to the Company in writing by such Holder expressly
for use therein.
(b) Indemnification by the Holders. Each Holder shall indemnify and
hold harmless, to the full extent permitted by law, the Company, its officers,
directors, employees, representatives, agents, and controlling persons (within
the meaning of the Securities Act), against all losses, claims, damages,
liabilities, and expenses (including, without limitation, reasonable costs of
investigation and legal expenses) resulting from any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
prospectus, or any amendment or supplement thereto, and any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, to the extent the same directly result
from any untrue statement or alleged untrue statement of a material fact or any
omission or alleged omission to state a material fact in such Registration
Statement, prospectus, amendment, or supplement, as the case may be, made or
omitted, as the case may be, in reliance upon and in conformity with information
furnished to the Company in writing by such Holder expressly for use therein.
The liability of each Holder under the indemnity and contributions provisions of
this Section 5 shall be several and not joint and shall be limited to an amount
equal to the gross price of the Registrable Securities sold by such Holder
pursuant to the Registration Statement.
(c) Conduct of Indemnification Proceedings. Each party entitled to
indemnification under this Section 5 (the "Indemnified Party") shall give
written notice to the party required to
8
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided, that counsel for the
Indemnifying Party who will conduct the defense of such claim or litigation, is
approved by the Indemnified Party (whose approval will not be unreasonably
withheld or delayed); and provided, further, that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations except to the extent that its defense of the claim or
litigation involved is prejudiced by such failure. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential conflicts of interest between the Indemnified Party
and any other party represented by such counsel in such proceeding. No
Indemnifying Party, in the defense of any such claim or litigation, except with
the consent of each Indemnified Party, shall consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of any claim or litigation, and no Indemnified
Party will consent to entry of any judgment or settle any claim or litigation
without the prior written consent of the Indemnifying Party (not to be
unreasonably withheld or delayed). Each Indemnified Party shall furnish such
information regarding himself, herself or itself and the claim in question as
the Indemnifying Party may reasonably request and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
(d) Contribution.
(i) If for any reason the indemnification provided for in this
Section 5 from an Indemnifying Party, although otherwise applicable by
its terms, is unavailable to an Indemnified Party hereunder, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by the Indemnified
Parties as a result of such losses, claims, damages, liabilities, or
expenses in such proportion as is appropriate to reflect the relative
fault of such Indemnifying Party and the Indemnified Parties in
connection with the actions that resulted in such losses, claims,
damages, liabilities, or expenses, as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party
and the Indemnified Parties shall be determined by reference to, among
other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact, has been made by, or
relates to information supplied by, such Indemnifying Party or the
Indemnified Parties, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities, and expenses referred to above
shall be deemed to include, subject to the limitations set forth in
Section 5(c), any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
9
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
6. RULE 144 REQUIREMENTS.
The Company agrees to:
(a) use its best efforts to make and keep public information available,
as those terms are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Securities Exchange Act; and
(c) furnish to each Holder upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
and of the Securities Act and the Securities Exchange Act.
7. INJUNCTIONS.
Each of the parties hereto acknowledges and agrees that one or more of
the parties would be damaged irreparably in the event the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the parties agrees that the other party shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties in the matter, in
addition to any other remedy to which it may be entitled, at law or in equity.
8. TERMINATION.
This Agreement shall terminate on the Registration Termination Date;
provided, however, that the provisions of Section 5, 6, and 7 shall survive the
termination of this Agreement.
9. MISCELLANEOUS.
(a) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, supplemented, or otherwise
modified, and waivers or consents to departures from the provisions hereof may
not be given, unless the Company shall have obtained the prior written consent
of the Holders holding more than 80% of the Registrable Securities at the time
of such amendment.
(b) Notices. Unless otherwise specified, all notices and other
communications provided for between the Company and the Purchaser in this
Agreement shall be in writing, including telecopy, and delivered or transmitted
to the addresses set forth below, or to such other address as shall be
designated by the Company or the Purchaser in written notice to the other party.
Notice sent by telecopy shall be deemed to be given and received when receipt of
such transmission is acknowledged, and delivered notice shall be deemed to be
given and received when receipted for
10
by, or actually received by, an authorized officer of the Company or the
Purchaser, as the case may be.
(i) if to the Purchaser, to such address as is specified for
the Purchaser under the terms of the Note Agreement or if to another
Holder, to the address indicated on the Company's register relating to
the Warrants or Registrable Securities held by such Holder or at such
other address as such Holder may have furnished to the Company in
writing.
(ii) if to the Company, at:
Kafus Industries Ltd.
000 Xxxxxx Xxxxxx
Xxxxxx XX 00000
Attn: Xx. Xxxxxxx X. XxXxxx
telephone: 000-000-0000
telecopier: 000-000-0000
With a copy to:
Kafus Industries Ltd.
0000 Xxxx Xxxxxxx Street, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attn: Xx. Xxxxxxx X. XxXxxx
telephone: 000-000-0000
telecopier: 000-000-0000
(c) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Company and each Holder and their respective
successors and assigns. The rights provided by this Agreement shall be
transferred automatically from the Purchaser to any Person to whom the
$1,000,000 Term Loan D Note, any Warrants, or any Registrable Securities are
transferred, provided that (x) the Company is given written notice of the
transfer and the name, address, telephone number, and facsimile number of the
transferees and (y) the subsequent transferee agrees in writing to be bound by
all of the terms of this Agreement (any transferee referred to in the foregoing
clauses being referred to herein as a "Permitted Transferee").
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings; Construction. The Section numbers and headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. Unless the context otherwise requires, all references
to Sections are to sections of this Agreement, and words in the singular include
the plural and vice versa. In computing any period of time specified in this
Agreement or in any notices, the date of the act or event from which such period
of time is to be measured shall be included, any such period shall expire at
5:00 p.m., New York time, on the last day of such period, and any such period
denominated in months shall expire on the date
11
in the last month of such period that has the same numerical designation as the
date of the act or event from which such period is to be measured; provided,
however, that if there is no date in the last month of such period that has the
same numerical designation as of the date of such act or event, such period
shall expire on the last day of the last month of such period.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of Texas, without regard to the principles of
conflicts of laws thereof which would select any other law.
(g) Arbitration. Disputes arising under this Agreement shall be settled
by one arbitrator pursuant to the rules of the American Arbitration Association
(the "AAA") for Commercial Arbitration (the "Rules"). Such arbitration shall be
held in New York, New York, or at such other location as mutually agreed to by
the parties to the dispute. Subject to any applicable limitations contained in
this Agreement, arbitration may be commenced at any time by any party giving
notice to the other party that a dispute has been referred to arbitration under
this Section. The arbitrator shall be selected by the joint agreement of the
parties hereto, but if they do not so agree within twenty (20) days after the
date of the notice referred to above, the selection shall be made pursuant to
the Rules from the panel of arbitrators maintained by the AAA. Any award of the
arbitrator shall be accompanied by a written opinion giving the reasons for the
award. The expense of the arbitration shall be borne by the parties in the
manner determined in writing by the arbitrator. This arbitration provision shall
be specifically enforceable by the parties. The determination of the arbitrator
pursuant to this Section shall be final and binding on the parties and may be
entered for enforcement before any court of competent jurisdiction.
(h) Severability. If one or more of the provisions hereof, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect, for any reason, the validity, legality. and
enforceability of the remaining provisions hereof shall not be in any way
affected or impaired thereby, and the provisions held to be invalid, illegal, or
unenforceable shall be reformed to the minimum extent necessary, and in a manner
as consistent with the purposes thereof as is practicable, so as to render it
valid, legal, and enforceable.
(i) Entire Agreement. This Agreement is intended by the parties hereto
to be a final expression thereof and is intended to be a complete and exclusive
statement of the agreement and understanding of such parties in respect of the
subject matter contained herein related to the Registrable Securities. This
Agreement supersedes all prior agreements and understandings among the Company
and any of the Holders with respect to such subject matter.
[signature page follows]
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
KAFUS INDUSTRIES LTD.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ECT MERCHANT INVESTMENTS CORP.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[Registration Rights Agreement]
