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EXHIBIT 4
[Execution Version]
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
This Amendment to Registration Rights Agreement dated as of June 28, 2000 (this
"Agreement"), is entered into by Kafus Industries, Ltd., a British Columbia
corporation (the "Company"), and ECT Merchant Investments Corp., a Delaware
corporation (the "Purchaser"), amending the Registration Rights Agreement dated
as of June 5, 2000 (as modified from time to time, the "Registration Rights
Agreement"), between the Company and the Purchaser. The defined terms of the
Registration Rights Agreement are used herein unless otherwise defined herein.
INTRODUCTION
The Company and the Purchaser are entering into (a) the Second Amendment to Note
Agreements dated as of June 28, 2000 (the "Amendment to Note Agreements"),
amending the Amended and Restated Note Agreement dated as of March 11, 1999,
between the Company and the Purchaser, and (b) the Second Amendment to Warrant
Agreement dated as of June 28, 2000 (the "Amendment to Warrant Agreement"),
amending the Warrant Agreement dated as of March 11, 1999, between the Company
and the Purchaser.
In connection with the Amendment to Note Agreements and the Amendment to Warrant
Agreement, and on the conditions set forth herein, the Company will issue and
sell to the Purchaser and the Purchaser will purchase from the Company the
U.S.$685,000 Convertible Promissory Note (Term Loan E) (the "$685,000 Term Loan
E Note"), dated as of June 28, 2000, and the Warrant for 68,500 Shares of Common
Stock dated as of June 28, 2000, issued by the Company to the Purchaser in
connection therewith (the "Term Loan E Warrant"). In connection with the
foregoing, in order to entitle the holder of the Term Loan E Warrant to the
rights and benefits conferred under the Registration Rights Agreement, the
Company and the Purchaser agree as follows:
Section 1. Amendments to Registration Rights Agreement
1.1 The Recitals of the Registration Rights Agreement are modified
by deleting therefrom the parenthetical definitions of "Conversion
Shares," "Warrant Shares," and "Warrants."
1.2 Section 1.1 of the Registration Rights Agreement is amended by
inserting, in appropriate alphabetical order, the following
definitions:
"Conversion Shares" means the Common Stock issuable upon conversion of
the Term Loan Notes.
"Warrants" means, collectively, (a) the Term Loan D Warrant, and (b)
the Term Loan E Warrant.
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"Warrant Shares" means the Common Stock issuable upon exercise of the
Warrants.
"$1,000,000 Term Loan E Note" means the U.S.$685,000 Convertible
Promissory Note (Term Loan E) dated as of June 28, 2000, made by the
Company and payable to the order of the Purchaser.
"Term Loan E Warrant" means the Warrant for 68,500 Shares of Common
Stock dated as of June 28, 2000, issued by the Company to the Purchaser
in connection with the $685,000 Term Loan E Note.
"Term Loan Notes" means, collectively, (a) the $1,000,000 Term Loan D
Note, and (b) the $685,000 Term Loan E Note.
1.3 Section 2(b) of the Registration Rights Agreement is amended
by replacing such Section in its entirety with the following:
(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 Term
Loan Notes 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) 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.
1.4 Section 9(c) of the Registration Rights Agreement is amended
by replacing such Section in its entirety with the following:
(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 Term Loan 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
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Transferee").
Section 2. Effect on Warrant Documents.
2.1 Except as amended herein, the Registration Rights Agreement
and the other Warrant Documents remain in full force and effect. The
Company represents and warrants that it has no defenses to the
enforcement of the Registration Rights Agreement, as amended. The
Company further agrees that nothing herein shall act as a waiver of any
of the Purchaser's rights under the Warrant Documents as amended,
including any waiver of any default or event of default, however
denominated. The Company must continue to comply with the terms of the
Warrant Documents, as amended.
2.2 This Agreement is a Warrant Document for the purposes of the
provisions of the other Warrant Documents.
Section 3. Effectiveness. This Agreement shall become effective and the
Warrant Documents shall be amended as provided herein effective as of the date
first set forth above when the Company and the Purchaser shall have duly and
validly executed originals of this Agreement.
Section 4. Miscellaneous.
4.1 Expenses. The Company shall pay directly or reimburse the
Purchaser for all reasonable expenses of the Purchaser, including
charges and disbursements of legal counsel for the Purchaser, in
connection with the amendment, modification, waiver, or interpretation
of this Agreement and the other Warrant Documents, and the preservation
or enforcement of any rights of the Purchaser hereunder or thereunder,
including the expenses of the Purchaser prior to the execution of this
Agreement or the other Warrant Documents. The provisions of this
paragraph shall survive any purported termination of this Agreement
that does not expressly reference this paragraph.
4.2 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, and applicable United States Federal law. This Agreement may
be signed in any number of counterparts, each of which shall be an
original, and may be executed and delivered by telecopier.
4.3 No Further Agreements. THIS WRITTEN AGREEMENT AND THE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
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THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
EXECUTED as of the date first above written.
KAFUS INDUSTRIES LTD.
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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[Amendment to Registration Rights Agreement]
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