EXHIBIT 2
SHAREHOLDER AGREEMENT
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Enron Capital & Trade Resources Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
This Letter Agreement is being delivered to you by The Samarac
Corporation, a Canadian corporation (the "Stockholder") pursuant to Section
7.0(i) of the Subscription Agreement referred to below. It is understood that
Enron Capital & Trade Resource Corp., a Delaware corporation ("ECT"), is relying
on this letter in making its decision to purchase the Securities referred to
below.
1. Introduction. The Kafus Capital Corporation (the "Company") has
entered into a Subscription Agreement, dated as of July 16, 1997 (the
"Subscription Agreement"), with ECT, pursuant to which ECT has agreed to
purchase from the Company, and the Company has agreed to sell to ECT. The
execution and delivery of this Shareholder Agreement is a condition to the
consummation by ECT of the purchase of the Securities pursuant to the
Subscription Agreement.
2. Definitions. Initially capitalized terms used but not defined
herein have the meanings ascribed to them in the Subscription Agreement. As
used herein, the following terms shall have the meanings set forth below.
"Common Stock" means the Common Stock, without par value, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Restricted Period" has the meaning specified therefor in Section 3 of this
Agreement.
"SEC" means the United States Securities and Exchange Commission.
"Shares" has the meaning specified therefor in Section 3 of the Agreement.
3. Agreement by the Stockholder. The Stockholder represents and
warrants to ECT that, as of the date hereof, such Stockholder is the beneficial
owner (as defined under Rule 13d-3 promulgated by the SEC under the Exchange
Act) of the number of shares of Common Stock set forth on Annex A to this
Shareholder Agreement (the "Shares"). The Stockholder owns the Shares free and
clear of all Liens. The Stockholder agrees that it will not sell more than 5%
of the Shares during any period of 12 consecutive months during the period
commencing on the date hereof and ending on the third anniversary of the date of
this Shareholder Agreement (the "Restricted Period"). In addition, the
Stockholder covenants and agrees with ECT that (i) in the event any applicable
law,
rule or regulation (including any regulation of any securities exchange on which
the Common Stock is or becomes traded) requires that the conversion of the
Preference Shares or the exercise of any Warrants or Additional Warrants be
approved by the Board of Directors or the shareholders of the Company, or (ii)
Purchaser requests that its designee be elected as a director of the Company, as
contemplated by Section 6.0 of the Subscription Agreement, then the Stockholder,
in each case, shall vote all of the Shares owned by the Stockholder in favor of
any such proposal, and shall take such other actions as may reasonably be
necessary to allow such conversion or exercise or to elect any such designee
submitted for election to the shareholders, at the earliest practicable time.
4. Communications. All notices and demand provided for hereunder
shall be in writing, by telecopy (confirmed by overnight courier), air courier
guaranteeing overnight delivery or personal delivery, to the following
respective addresses:
to ECT:
Enron Capital & Trade Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention:
Telecopier:
to The SAMARAC Corporation:
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0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X, Xxxxxx
Attention: Xx. Xxx Xxxxxxxxx
Telecopier: (000) 000-0000
or to such other address as such Person may designate in writing. All such
notices and communications and all notices and communications shall be deemed to
have been duly given at the time delivery by hand if personally delivered; when
receipt acknowledged, if telecopied; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
5. Binding Effect: Assignment. This Shareholder Agreement shall be
binding upon the Stockholder and its respective successors and permitted
assigns. Except as expressly provided in this Shareholder Agreement, this
Shareholder Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the parties to this Shareholder Agreement,
and their respective successor and permitted assigns.
6. Governing Law. The laws of the state of New York, U.S.A. will
govern this Shareholder Agreement, without regard to principles of conflicts of
laws.
7. Severability of Provisions. Any provision of this Shareholder
Agreement which is prohibited or
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unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting or impairing the validity or
enforceability of such provision in any other jurisdiction.
8. Headings. The Section headings used or contained in this
Shareholder Agreement are for convenience of references only and shall not
affect the construction of this Shareholder Agreement.
IN WITNESS WHEREOF, the Stockholder has executed this Shareholder
Agreement, effective as of the ___ day of July, 1997.
THE SAMARAC CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: President
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ANNEX A
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Number of Shares of
Record Owner Common Stock of Company
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The SAMARAC Corporation 10,000,324 (55.87%)
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