Exhibit 4
[Execution Version]
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of December 31, 1998, by and between Kafus Environmental Industries
Ltd., a British Columbia corporation (the "Company"), and Enron Capital & Trade
Resources Corp., a Delaware corporation (the "Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser are parties to a Note Agreement
dated as of December 31, 1998 (as modified from time to time, the "Note
Agreement"), governing certain Notes as defined therein (the "Notes").
WHEREAS, the Company and the Purchaser are parties to a Warrant Agreement
dated as of December 31, 1998 (as modified from time to time, the "Warrant
Agreement"), governing certain Warrants as defined therein (the "Warrants").
WHEREAS, the Company has issued to ECT Securities Limited Partnership, an
Affiliate of the Purchaser, 100,000 shares of Common Stock of the Company in
connection with the closing of the CanFibre Lackawanna project finance (the
"CanFibre Lackawanna Shares").
WHEREAS, the Purchaser desires that the Company register the Common Stock
issuable upon conversion of the Notes (the "Conversion Shares"), the Common
Stock issuable upon the exercise of the Warrants (the "Warrant Shares"), and the
CanFibre Lackawanna 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 Note Agreement and certain
agreements related to the CanFibre Lackawanna project finance.
NOW, THEREFORE, the parties hereto, intending legally to be bound, hereby
agree as follows:
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, ECT Securities Limited Partnership,
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) the CanFibre Lackawanna Shares, (d) 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 (e) 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 (d) 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 third anniversary of the original issuance date of such Registrable
Security, provided that the Holder of such Registerable 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, Warrant Shares, and CanFibre Lackawanna Shares (and any
Distribution Securities with respect thereto) cease to be Registrable
Securities.
(h) "Securities Act" means the Securities Act of 1933, as amended.
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(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 30, 1999 (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, (ii) the Warrant Shares, and (iii) the
CanFibre Lackawanna 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 all Notes were
converted and Warrants were exercised, Registerable 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 Registerable
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
thereof specified in such Registration Statement or in the related
prospectus(es), and shall:
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(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
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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
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securities exchange, an over-the-counter market, or, if the Common Stock
securities of 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.
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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 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.
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(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 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.
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(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
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.
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(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 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 Environmental Industries Ltd.
000 Xxxxxx Xxxxxx
Xxxxxx XX 00000
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 any 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 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
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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.
(j) Enforcement by Purchaser. ECT Securities Limited Partnership is an
intended beneficiary of this Agreement with respect to the CanFibre Lackawanna
Shares and any Registrable Securities related thereto, and the rights of ECT
Securities Limited Partnership under this Agreement may be enforced by ECT
Securities Limited Partnership or by the Purchaser acting on behalf of ECT
Securities Limited Partnership.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
KAFUS ENVIRONMENTAL INDUSTRIES LTD.
By:___________________________
Name:_________________________
Title:________________________
ENRON CAPITAL & TRADE RESOURCES CORP.
By:___________________________
Name:_________________________
Title:________________________
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