EXHIBIT 9
July 16, 1997
The Kafus Capital Corporation
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Gentlemen:
This letter is written in connection with, and in fulfillment of a condition to,
the consummation of the transactions contemplated by the Subscription Agreement
dated as of July 16, 1997, between The Kafus Capital Corporation, a British
Columbia corporation (the "Company"), and Enron Capital & Trade Resources Corp.,
a Delaware corporation ("ECT"). Initially capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Subscription
Agreement. In consideration of the execution, delivery and performance by the
Company of its obligations under the Subscription Agreement, ECT hereby agrees
as follows:
1. ECT agrees, with respect to 5,000 Preference Shares (the "Shares"), that it
will not exercise its right to convert such Shares into shares of Common
Stock of the Company prior to January 16, 1998 (the "Determination Date"),
without the prior written consent of the Company.
2. In the event (i) the trade weighted average of the prices for the Common
Stock during any period of 30 consecutive days ending on or prior to the
Determination Date (a "Measurement Period") exceeds U.S. $7.00 per share
(such price to be appropriately adjusted for any stock split, reverse stock
split or similar recapitalization after the date hereof) and (ii) the
Common Stock is listed on a U.S. national securities exchange or the NASDAQ
National Market throughout such 30-day period, then the Company shall have
the right (but shall
The Kafus Corporation
July 16, 1997
Page 2
have no obligation), to purchase from ECT any or all of the Shares for a
cash purchase price equal to U.S. $1,200 per Share, plus all dividends
accrued (whether or not declared) on the Shares (collectively, the
"Purchase Price"). To exercise its right to purchase the Shares pursuant to
this paragraph 2, the Company shall, within 10 days following a Measurement
Date in which the conditions specified in (i) and (ii) above are satisfied,
notify ECT of such election. The Company may make only one election to
purchase Shares hereunder. The consummation of any purchase of the Shares
upon an exercise of the rights hereunder (the "Closing") shall take place
at the offices of ECT, on the 5th Business Day following the receipt by ECT
of such notice from the Company. At the Closing (a) ECT shall deliver to
the Company certificates representing the Shares, duly endorsed in blank or
accompanied by stock powers executed in blank and (b) the Company shall
deliver to ECT by wire transfer an amount equal to the Purchase Price for
the Shares purchased.
Nothing herein shall be deemed to limit in any way the ability of ECT to
convert any Preference Shares other than the Shares or its ability to sell
or transfer the Shares to an Affiliate of ECT or, upon receipt of the prior
written consent of the Company, which will not be unreasonably withheld, to
any other Person who agrees in writing to be bound by the terms hereof.
The Company may assign its rights hereunder to (i) SAMARAC Corporation or
(ii) any other Person, provided in the case of (ii) the Company has
obtained the prior written consent of ECT to such transfer (which will not
be unreasonably withheld). This letter agreement shall terminate and the
Company shall have no further rights hereunder as of the Determination
Date, unless extended by the parties in writing.
Very truly yours,
ENRON CAPITAL & TRADE RESOURCES CORP.
The Kafus Corporation
July 16, 1997
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By: /s/ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title: Vice President
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