EXHIBIT 4 (bb)
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THE TIREX CORPORATION
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Amendment to 10%
Convertible Subordinated Debenture,
Securities Purchase Agreement, and
Registration Rights Agreement
This Amendment is made as of September 8, 1998 between ___________________
(the "Debentureholders") and The Tirex Corporation ("Tirex")
Whereas, on April 9, 1998, the Debentureholders purchased from Tirex a
unit (the "Unit") of Tirex's securities, consisting of one 10% Convertible
Subordinated Debenture (the "Debenture") in the principal amount of US $250,000,
redeemable at 125% of face value plus interest one year from the date of
issuance (the "Maturity Date"), and warrants to purchase an aggregate of one
million (1,000,000) shares of the common stock of Tirex at a per share price of
$.001 (the "Warrants");
Whereas, Tirex was, at the time of the Debentureholder's purchase of the
Unit, and currently remains, a thinly capitalized development stage Company;
Whereas, the purchase and sale of the securities comprising the Unit were
effected pursuant to the terms of a securities purchase agreement (the
"Securities Purchase Agreement") and a registration rights agreement (the
"Registration Rights Agreement") between Tirex and the Debentureholders, dated
April 9, 1998;
Whereas, Paragraph (b) of Article 2 of the Registration Rights Agreement
provides for liquidated damages (the "Liquidated Damages") to be paid by Tirex
for each thirty-day period subsequent to September 8, 1998 during which the
registration statement filed by Tirex on May 21, 1998 (the "Registration
Statement"), registering the common stock underlying the Debenture and Warrants,
has not been declared effective, unless the delay in achieving effectiveness is
caused by the Securities and Exchange Commission;
Whereas, because of unforeseen circumstances, and notwithstanding the
continuing best efforts of Tirex to have the Registration Statement declared
effective as expeditiously as possible, as of the date hereof, the Registration
Statement has not yet been declared effective and the Company is not able to
state at this time, when the said Registration Statement will be declared
effective;
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Whereas, the Debentureholders believe that it would not be in their best
interests, as investors in Tirex, to require Tirex to: (i) carry the Debentures
on its financial statements as a short-term liability due and payable within the
current fiscal year, thereby diminishing Tirex's ability to obtain bank or other
short-term debt financing; or (ii) pay the Liquidated Damages, because such
obligation would constitute a significant financial burden which, at this stage
of the development of Tirex's business, could cause substantial and possibly
irreparable adverse financial consequences which could seriously delay, and
possibly destroy, Tirex's ability to commence its TCS-1 Plant manufacturing and
TCS-1 Plant Operating businesses, on commercial bases;
Whereas, subsequent to April 9, 1998, the parties amended the Debenture
and the Securities Purchase Agreement to provide that the Debenture would not be
convertible during the period commencing on the date preceding the filing by
Tirex of the Registration Statement and terminating on the earlier of: (i) 120
days from the filing of the Registration Statement with the Securities and
Exchange Commission; or (ii) the effective date of the said Registration
Statement;
Whereas, the parties believe it is in their mutual best interests: (i) to
extend the Maturity Date of the Debenture to December 31, 1999; (ii) to have the
Debenture (including all interest accrued thereon through the date of
conversion) be immediately convertible; and (iii) in consideration for the
accommodations hereby made by the Debentureholders, pending the effective date
of the Registration Statement, to reduce the conversion ratio of the Debenture,
on a monthly basis, at a rate of one percent (1%) of the average closing bid
price of Tirex's common stock for each month between September 11, 1998 and
December 11, 1998, and one and one-half percent (1.5%) per month for each month
between December 12, 1998 and April 11, 1999;
Whereas, Tirex has also agreed, upon effectiveness of the Registration
Statement, to provide the Debentureholders and/or their broker, with such
quantity of prospectuses as are reasonably necessary to effect the resale of
shares of Tirex common stock underlying the Debentures and Warrants.
Now, therefore, in consideration of the premises and of the mutual
promises hereinafter set forth, the parties agree as follows:
A. AMENDMENT OF DEBENTURE
1. Maturity Date. The Maturity Date of the Debenture is hereby amended such that
all unpaid principal and all accrued and unpaid interest thereon shall be due
and payable on December 31, 1999.
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2. Amendment of Article 1. Conversion, Redemption and Registration
Paragraphs (a), (b) and (g) of Article 1 of the Debenture are hereby
amended so as to read as follows:
1. CONVERSION, REDEMPTION AND REGISTRATION.
(a) This Debenture is convertible in whole or in part at any time into
that number of shares of the Company's common stock, par value $.001 per share
("Common Stock") as is obtained by dividing the then unpaid principal face value
of the Debenture by an amount equal to a percentage of seventy-five percent
(75%) (the "Conversion Ratio") of the closing bid price of the Common Stock on a
securities exchange or on the National Association of Securities Dealers, Inc.
("NASD") Over-the-Counter Electronic Bulletin Board System (the "Market Price"),
on the trading date immediately preceding the date upon which notice of
conversion is properly provided to the Company by the holder (the "Conversion
Date"), subject to reduction as set forth below.
Until such time as the Registration Statement on Form SB-2 (Registration
No. 333-53255), registering the shares issuable upon the conversion of this
Debenture (the "Registration Statement"), has been declared effective, the
Conversion Ratio shall be reduced, on a monthly basis, at a rate of one percent
(1%) of the Market Price on the date preceding the Conversion Date, for each
month between September 11, 1998 and December 10, 1998, and at a rate of one and
one-half percent (1.5%) per month for each month between December 11, 1998 and
July 10, 1999, as follows:
CONVERSION DATE: CONVERSION RATIO
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April 9, 1998 - September 10, 1998 75%
September 11, 1998 - October 10, 1998 74%
October 11, 1998 - November 10, 1998 73%
November 11, 1998 - December 10, 1998 72%
December 11, 1998 - January 10, 1999 70.5%
January 11, 1999 - February 10, 1999 69%
February 11, 1999 - March 10, 1999 67.5%
March 11, 1999 - April 10, 1999 66%
April 11, 1999 - May 10, 1999 64.5%
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May 11, 1999 - June 10, 1999 63%
June 11, 1999 - July 10, 1999 61.5%
If the Common Stock is not listed on any securities exchange at the time a
notice of conversion is issued, the conversion price shall be such price as is
determined as the fair and reasonable price a third party not affiliated with
the Company would pay for the Common Stock as determined by the Board of
Directors. At the election of the Payee, all accrued but unpaid interest hereon
may also be converted into Common Stock in the manner prescribed herein. Such
shares of Common Stock are referred to herein as the "Conversion Shares." This
Debenture may be partially converted and in case of such partial conversion, the
Company, upon surrender hereof, will deliver to the Holder a new Debenture
representing the principal face value which has not been converted.
(b) This Debenture is convertible into shares of Common Stock at any time.
The Holder hereof shall have no conversion rights following payment in full of
the principal and interest owed by the Company to the Holder hereof. The
conversion rights represented by this Debenture may be exercised, in whole or in
part, by the Holder at any time, and from time to time, by delivery of: (i) this
Debenture for cancellation; and (ii) written notice to the Company of the amount
of the Debenture to be converted. Such delivery shall be made at the principal
executive office of the Company (or at such other office or agency of the
Company as it may designate), and may be made by fax with telephone confirmation
of receipt of such fax by the Company's corporate counsel. Any delivery made by
fax herewith shall be followed by delivery of the originals of such documents,
by mail. This Debenture shall be deemed to have been converted, in whole or in
part to the extent specified, immediately prior to the close of business on the
date on which delivery by fax (with telephone confirmation of receipt) shall be
made. Upon receipt of the foregoing, the Company shall immediately authorize its
transfer agent, Continental Stock Transfer & Trust Company, Inc. to (i) issue
the Conversion Shares; and (ii) deliver the certificate representing such
Conversion Shares to the Holder as the Holder shall direct.
(g) The Company shall use its best efforts to cause the Registration
Statement to be declared effective by the SEC as soon as practicable and to keep
such registration statement effective at all times until the delivery of a
prospectus is no longer required in connection with the sale of the Conversion
Shares. Moreover, if at any time the Registration Statement is not effective,
the Company intends to file an unrelated registration statement, other than a
registration statement on Form S-8, under the Securities Act, then, not later
than twenty days prior to the intended filing date for such registration
statement, the Company shall give written notice to the Holder of its intention
to file a registration statement and the Holder shall have the right, upon
written instructions, received by the Company within ten days of the intended
filing date of the registration statement,
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to have included in such registration statement the number of Conversion Shares
issued or issuable to them as such Holder shall so instruct. The Company shall
use its best efforts to cause such registration statement to be declared
effective by the SEC as promptly as possible and to keep such registration
statement effective at all times, as set forth above.
B. AMENDMENT OF SECURITIES PURCHASE AGREEMENT
1. Amendment of Article 1. Purchase and Sale of Securities
Article 1 of the Securities Purchase Agreement is hereby amended to as to
read as follows:
1. Purchase and Sale of Securities. Upon the basis of the
representations and warranties, and subject to the terms and conditions
set forth in this Agreement, the Company covenants and agrees to sell to
the Purchaser on the Closing Date (as hereinafter defined) 10 Units, each
consisting of: (i) a 10% Convertible Subordinated Debenture in the
principal amount of $25,000 United States Dollars (each a "Debenture");
and (ii) 100,000 Warrants to purchase a like number of shares of its
Common Stock, par value $.001 per share (the "Common Stock") at an
exercise price of $.001 per share (the "Warrants"). The Debenture is
convertible, at any time, in accordance with the terms and conditions of
the Debenture, as amended the date hereof.
The Company has filed a registration statement under the Act
covering the Conversion Shares. The Company will use its best efforts to
cause such registration statement to be declared effective by the SEC as
promptly as practicable. If a Debenture is not converted, it may be
redeemed by the holder any time after maturity at 125% of the principal
amount of the Debenture plus all interest accrued thereon.
C. AMENDMENT OF REGISTRATION RIGHTS AGREEMENT
1. Elimination of Article 2(b)
Paragraph (b) of Article 2 of the Registration Rights Agreement, is hereby
canceled, terminated, void and of no further force or effect to the end that
Tirex shall have no obligations or liabilities under the said Paragraph 2(b),
and the Debentureholders do hereby remise, release, discharge, indemnify and
hold harmless Tirex, and each shareholder, officer, director, affiliate,
associate, agent, and employee of Tirex of and from manner of actions and cause
of action, suits, debts, dues, accounts, bonds, wages, benefits, covenants,
contracts, agreements, judgments, claims and demands whatsoever in law or in
equity, and including without limitation all such actions, claims and demands,
etc. arising out of, being based upon, or being in any way connected with or
related to the said Paragraph 2(b).
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D. FURTHER AMENDMENTS
To the extent necessary to give effect to the amendments, contained herein
(the "Amendments"), to the Debenture, Securities Purchase Agreement, and
Registration Rights Agreement, all remaining provisions of such agreements,
which may be inconsistent with the Amendments, are hereby deemed amended so as
to be consistent with the intents and purposes of, and are included among, the
Amendments.
E. NO OTHER AMENDMENTS
Except as expressly provided in this Amendment, all of the terms and
conditions of the Debenture, Securities Purchase Agreement, and Registration
Rights Agreement remain in full force and effect.
F. TIMELY DELIVERY OF PROSPECTUS
The Company hereby agrees that upon effectiveness of its registration
statement on Form SB-2 registering the resale of the shares underlying the
Debentures and Warrants, it will promptly provide the Debentureholders and/or
their broker with a reasonably sufficient quantity of Prospectus to effect such
resales.
G. COUNTERPARTS
This Amendment may be executed in any number of counterparts and by each
party on a separate counterpart, each of which when so executed and delivered
shall be an original, but all of which together shall constitute one Amendment.
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In Witness Whereof, the parties hereto have caused this Amendment to be
executed the day and year first above written.
THE TIREX CORPORATION
By _________________________________
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