▇▇▇▇▇▇▇▇▇ Road LLC
c/o Citco Trustees (Cayman)
Limited
Commercial Centre
P.O. Box 31106 SMB
Grand Cayman
Cayman Islands
British West Indies
May 1, 2000
Forest Glade International, Inc.
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Attention: President
Re: Forest Glade International, Inc. (the "Company").
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Gentlemen:
Reference is made to the Convertible Debenture Purchase Agreement (the
"Purchase Asreement"), of even date hereof, between the Company and the
undersigned the "Purchasers"), pursuant to which the Company will issue and sell
to the Purchasers an aggregate principal amount of $3,500,000 of the Company's
7% Convertible Debentures due May 1, 2003 (the "Initial Debentures") and Common
Stock purchase warrants, each in the form of Exhibit D to the Purchase
Agreement, pursuant to which the Purchasers shall have the right to acquire
shares of Common Stock at an exercise price per share of 120% of the average
closing bid price for the Common Stock for the five Trading Days immediately
preceding the date of issuance (the "Initial Warrants"). All references in this
letter to $ (dollars) shall be to US$ (United States dollars). Capitalized terms
used and not otherwise defined in this letter that are defined in the Purchase
Agreement shall have the meanings set forth in the Purchase Agreement. The
Initial Warrants and the Initial Debentures are sometimes collectively referred
to herein as the "Initial Securities."
Each Purchaser hereby, severally and not jointly, commits, subject to
and upon the terms and conditions hereof, to purchase from the Company, and the
Company shall sell to the Purchasers (A) on the First Additional Closing Date
(as defined herein): (i) the principal amount of the Company's 7% Convertible
Debentures, due three years from the date of their issuance, set forth below
such Purchaser's name on the signature page of this letter (the "First
Additional Debentures")
and (ii) additional warrants pursuant to which the holders thereof shall have
the right at any time and from time to time thereafter through the fifth
anniversary of the First Additional Closing Date to acquire a number of shares
of Common Stock equal to 20% of the principal amount of the First Additional
Debentures (the "First Additional Warrants" and together with the First
Additional Debentures, the "First Additional Securities"), for an aggregate
purchase price of $3,250,000 (the "First Additional Purchase Price") and (B) on
the Second Additional Closing Date (as defined herein): (i) the principal amount
of the Company's 7% Convertible Debentures, due three years from the date of
their issuance, set forth below such Purchaser's name on the signature page of
this letter (the "Second Additional Debentures" and together with the First
Additional Debentures, the "Additional Debentures") and (ii) additional warrants
pursuant to which the holders thereof shall have the right at any time and from
time to time thereafter through the fifth anniversary of the Second Additional
Closing Date to acquire a number of shares of Common Stock equal to 20% of the
principal amount of the Second Additional Debentures (the "Second Additional
Warrants" and together with the First Additional Warrants, the "Additional
Warrants") (the Second Additional Debentures and the Second Additional Warrants
are collectively, the "Second Additional Securities"), for an aggregate purchase
price of $3,250,000 (the "Second Additional Purchase Price").
The commitment set forth in this letter is subject to the
terms, conditions and qualifications set forth below.
1. Form of Additional Debentures. The Additional Debentures
shall be identical to the Initial Debentures, mutatis mutandis, and shall rank
pari passu with the Initial Debentures except that the Initial Conversion Price
(as defined in the Initial Debentures) applicable to conversion of (i) the First
Additional Debentures shall equal 120% of the average of the Per Share Market
Values for the five Trading Days preceding the First Additional Closing Date and
(ii) the Second Additional Debentures shall equal 120% of the average of the Per
Share Market Values for the five Trading Days preceding the First Additional
Closing Date.
2. Form of Additional Warrants. The Additional Warrants shall
be identical to the Initial Warrants, except that the Exercise Price (as defined
in the Initial Warrants) applicable to (i) the First Additional Warrants, shall
be equal to 120% of the average of the Per Share Market Values for the five
Trading Days immediately preceding the First Additional Closing Date and (ii)
the Second Additional Warrants, shall be equal to 120% of the average of the Per
Share Market Values for the five Trading Days immediately preceding the Second
Additional Closing Date.
3. First Additional Documentation. In order to effectuate a
purchase and sale of the First Additional Securities, prior to their issuance,
the Company and the Purchasers shall enter into the following agreements: (a) a
convertible debenture purchase agreement substantially identical to the Purchase
Agreement, mutatis mutandis and shall include updated Schedules (the "First
Additional Purchase Agreement"), (b) a registration rights agreement
substantially identical to the Registration Rights Agreement, mutatis mutandis
and shall include updated Schedules (the "First Additional Registration Rights
Agreement") and (c) a Pledge Agreement substantially identical to the Pledge
Agreement, mutatis mutandis (the "First Additional Pledge Agreement" and
together with the First Additional Purchase Agreement, the First Additional
Registration Rights Agreement and
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the First Additional Warrants, collectively the "First Additional Transaction
Documents"). The Purchasers shall prepare the First Additional Transaction
Documents.
4. Second Additional Documentation. In order to effectuate a
purchase and sale of the Second Additional Securities, prior to their issuance,
the Company and the Purchasers shall enter into the following agreements: (a) a
convertible debenture purchase agreement substantially identical to the Purchase
Agreement, mutatis mutandis and shall include updated Schedules (the "Second
Additional Purchase Agreement"), (b) a registration rights agreement
substantially identical to the Registration Rights Agreement, mutatis mutandis
and shall include updated Schedules (the "Second Additional Registration Rights
Agreement") and (c) a Pledge Agreement substantially identical to the Pledge
Agreement, mutatis mutandis (the "Second Additional Pledge Agreement" and
together with the Second Additional Purchase Agreement, the Second Additional
Registration Rights Agreement and the Second Additional Warrants, collectively
the "Second Additional Transaction Documents"). The Purchasers shall prepare the
Second Additional Transaction Documents.
5. The First Additional Closing. (i) Subject to the terms and
conditions set forth in this letter, the Purchasers and the Company shall each
have the right to deliver a written notice to the other (the "First Additional
Financing Notice") requiring such other party to either sell or buy (severally
and not jointly), as the case may be, the First Additional Securities for the
First Additional Purchase Price. The First Additional Financing Notice may be
delivered no earlier than 120 days following the date the Underlying Shares
Registration Statement is declared effective by the Commission (such date of
effectiveness, the "First Target Date"), provided, that such 120th day following
the First Target Date shall at the Purchasers' option be extended for the number
of days during which the prospectus included in the Underlying Shares
Registration Statement may not be used by the Purchasers for the resale of
Registrable Securities (as defined in the Registration Rights Agreement), and no
later than the 200th day following the Target Date (plus such additional days)
described in the immediately preceding clause of that sentence or as otherwise
agreed to by the parties hereto. The closing of the purchase and sale of the
First Additional Securities (the "First Additional Closing") shall take place at
the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, on the fifth (5th) Business Day after the First Additional Financing
Notice is received by the Purchasers or the Company, as the case may be, or on
such other date as otherwise agreed to by the parties hereto; provided, that in
no case shall the First Additional Closing take place unless and until all of
the conditions listed in Section 7 of this letter shall have been satisfied by
the Company or waived by the Purchasers (it being understood that each Purchaser
may elect to waive or enforce such conditions in its own discretion). The date
of the First Additional Closing is hereinafter referred to as the ("First
Additional Closing Date"). Notwithstanding anything to the contrary contained in
this letter, each of the Purchasers may designate an Affiliate thereof to
acquire the Additional Securities.
(ii) At the First Additional Closing, the parties
shall deliver or shall cause to be delivered the following: (a) the Company
shall deliver to (x) each Purchaser or its designated Affiliate: (1) the First
Additional Debentures in the aggregate principal amount equal to such
Purchasers's pro rata portion of the First Additional Purchase Price, registered
in the name of such Purchaser or its designated Affiliate; (2) a First
Additional Warrant registered in the name of such Purchaser or its designated
Affiliate, entitling the holder thereof to purchase the aggregate number
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of shares of Common Stock set forth below such Purchaser's name on the signature
page of this letter, (3) a legal opinion in form and substance acceptable to
such Purchaser, and (4) executed First Additional Transaction Documents and the
Transfer Agent Instructions relating to the First Additional Securities, and (y)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, $10,000 as reimbursement of the legal fees and expenses
incurred by the Purchasers to prepare the First Additional Transaction Documents
and First Additional Debentures, which amount shall be deducted by the
Purchasers from the First Additional Purchase Price and shall be paid directly
to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and (b) each Purchaser shall deliver to the Company (1)
the pro rata portion of the First Additional Purchase Price, in United States
dollars in immediately available funds by wire transfer to an account designated
in writing by the Company for such purpose prior to the First Additional Closing
Date and (2) the executed First Additional Transaction Documents.
6. The Second Additional Closing. (i) Subject to the terms
and conditions set forth in this letter, the Purchasers and the Company shall
each have the right to deliver a written notice to the other (the "Second
Additional Financing Notice") requiring such other party to either sell or buy
(severally and not jointly), as the case may be, the Second Additional
Securities for the Second Additional Purchase Price. The Second Additional
Financing Notice may be delivered (i) after the First Additional Closing Date
and (ii) no earlier than 120 days following the date the registration statement
meeting the requirements of the First Additional Registration Rights Agreement
entered into with respect to the First Additional Securities (the "First
Additional Securities Underlying Shares Registration Statement") is declared
effective by the Commission (such date of effectiveness, the "Second Target
Date"), provided, that such 120th day following the Second Target Date shall at
the Purchasers' option be extended for the number of days during which the
prospectus included in the First Additional Securities Underlying Shares
Registration Statement may not be used by the Purchasers for the resale of
registrable securities thereunder and no later than the 200th day following the
Second Target Date (plus such additional days) described in the immediately
preceding clause of that sentence or as otherwise agreed to by the parties
hereto. The closing of the purchase and sale of the Second Additional Securities
(the "Second Additional Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the fifth
(5th) Business Day after the Second Additional Financing Notice is received by
the Purchasers or the Company, as the case may be, or on such other date as
otherwise agreed to by the parties hereto; provided, that in no case shall the
Second Additional Closing take place unless and until all of the conditions
listed in Section 8 of this letter shall have been satisfied by the Company or
waived by the Purchasers (it being understood that each Purchaser may elect to
waive or enforce such conditions in its own discretion). The date of the Second
Additional Closing is hereinafter referred to as the ("Second Additional Closing
Date"). Notwithstanding anything to the contrary contained in this letter, each
of the Purchasers may designate an Affiliate thereof to acquire the Additional
Securities.
(ii) At the Second Additional Closing, the parties
shall deliver or shall cause to be delivered the following: (a) the Company
shall deliver to (x) each Purchaser or its designated Affiliate: (1) the Second
Additional Debentures in the aggregate principal amount equal to such
Purchasers's pro rata portion of the Second Additional Purchase Price,
registered in the name of such Purchaser or its designated Affiliate; (2) a
Second Additional Warrant registered in the name of such Purchaser or its
designated Affiliate, entitling the holder thereof to purchase the aggregate
number
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of shares of Common Stock set forth below such Purchaser's name on the signature
page of this letter, (3) a legal opinion in form and substance acceptable to
such Purchaser, and (4) executed Second Additional Transaction Documents and the
Transfer Agent Instructions relating to the Second Additional Securities, and
(y) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, $10,000 as reimbursement of the legal fees and expenses
incurred by the Purchasers to prepare the Second Additional Transaction
Documents and Second Additional Debentures, which amount shall be deducted by
the Purchasers from the Second Additional Purchase Price and shall be paid
directly to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and (b) each Purchaser shall deliver to the
Company (1) the pro rata portion of the Second Additional Purchase Price, in
United States dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose prior to the
Second Additional Closing Date and (2) the executed Second Additional
Transaction Documents.
7. Conditions precedent to the First Additional Closing.
Notwithstanding anything to the contrary contained in this letter, the
commitment of a Purchaser to acquire the First Additional Securities is subject
to the satisfaction or waiver by the Purchasers of each of the following
conditions:
(a) Closing of Initial Securities. The Closing of the
purchase and sale of the Initial Securities shall have occurred;
(b) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company contained in the Purchase
Agreement shall be true and correct as of the date when made and as of the First
Additional Closing Date as though made on and as of the First Additional Closing
Date (other than representations and warranties which relate to a specific date
(which shall not include representations and warranties relating to the "date
hereof") which representations and warranties shall be true as of such specific
date);
(c) Performance by the Company. The Company shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company between the Closing Date and the First Additional Closing
Date and no Event (as defined in the Registration Rights Agreement) shall have
occurred which has not been cured to the satisfaction of the Purchasers;
(d) Underlying Shares Registration Statement. The Underlying
Shares Registration Statement shall have been declared effective under the
Securities Act by the Commission and shall have remained effective at all times,
not subject to any actual or threatened stop order or subject to any actual or
threatened suspension at any time prior to the Additional Closing Date.
(e) No Injunction. Since the Closing Date, no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated, amended, modified or endorsed by any court of
governmental authority of competent jurisdiction or governmental authority,
stock market or trading facility which prohibits the consummation of any of the
transactions contemplated by the First Additional Transaction Documents or makes
impracticable the transactions contemplated thereby;
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(f) Adverse Changes. Since the Closing Date, no event or
series of events which reasonably would be expected to have or result in a
Material Adverse Effect shall have occurred;
(g) No Suspensions of Trading in Common Stock. The trading in
the Common Stock shall not have been suspended by the Commission or on the OTC
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company) at any time since
the Closing Date;
(h) Listing of Common Stock. The Common Stock shall have been
at all times since the Closing Date quoted on the OTC;
(i) Purchasers' Beneficial Ownership. The Purchasers shall
not beneficially own in excess of 9.999% of the outstanding shares of Common
Stock;
(j) Performance of Conversion/Exercise Obligations. The
Company shall have timely complied with its conversion and delivery obligations
under the Initial Securities and shall have timely complied with its exercise
and delivery requirements under the Initial Warrants;
(k) Closing Threshold. For the ten (10) Trading Days
immediately preceding the date of the Additional Financing Notice, the average
daily trading volume of the Common Stock on the OTC shall be at least 150,000
shares and the average of the Per Share Market Value for such ten (10) Trading
Day period shall be greater than $1.75 (subject to equitable adjustments for
stock splits, recombinations and similar events);
8. Conditions precedent to the Second Additional Closing.
Notwithstanding anything to the contrary contained in this letter, the
commitment of a Purchaser to acquire the Second Additional Securities is subject
to the satisfaction or waiver by the Purchasers of each of the following
conditions:
(a) Closing of First Additional Securities. The First
Additional Closing shall have occurred;
(b) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company contained in the Purchase
Agreement shall be true and correct as of the date when made and as of the
Second Additional Closing Date as though made on and as of the Second Additional
Closing Date;
(c) Performance by the Company. The Company shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by the Transaction Documents and the First Additional Closing
Transaction Documents to be performed, satisfied or complied with by the Company
between the Closing Date and the Second Additional Closing Date and no Event of
Default (as defined in the Convertible Debenture) whether or not declared, shall
have occurred with respect to the Initial Securities or the First Additional
Securities;
(d) Registration Statements. The Underlying Shares
Registration Statement and the First Additional Securities Underlying Share
Registration Statement shall each have been
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declared effective under the Securities Act by the Commission and shall have
remained effective at all times, not subject to any actual or threatened stop
order or subject to any actual or threatened suspension at any time prior to
the Second Additional Closing Date;
(e) No Injunction. Since the Closing Date, no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated, amended, modified or endorsed by any court of
governmental authority of competent jurisdiction or governmental authority,
stock market or trading facility which prohibits the consummation of any of the
transactions contemplated by the Second Additional Transaction Documents or
makes impracticable the transactions contemplated thereby;
(f) Adverse Changes. Since the Closing Date, no event or
series of events which reasonably would be expected to have or result in a
Material Adverse Effect shall have occurred;
(g) No Suspensions of Trading in Common Stock. The trading in
the Common Stock shall not have been suspended by the Commission or on the OTC
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company) at any time since
the Closing Date;
(h) Listing of Common Stock. The Common Stock shall have been
at all times since the Closing Date quoted on the OTC;
(i) Purchasers' Beneficial Ownership. The Purchasers shall
not beneficially own in excess of 9.999% of the outstanding shares of Common
Stock;
(j) Performance of Conversion/Exercise Obligations. The
Company shall have timely complied with its conversion and delivery obligations
under the Initial Debentures and the First Additional Debentures and shall have
timely complied with its exercise and delivery requirements under the Initial
Warrants and the First Additional Warrants;
(k) Closing Threshold. For the ten (10) Trading Days
immediately preceding the date of the Second Additional Financing Notice, the
average daily trading volume of the Common Stock on the OTC shall be at least
150,000 shares and the average of the Per Share Market Value for such ten (10)
Trading Day period shall be greater than $1.75 (subject to equitable adjustments
for stock splits, recombinations and similar events);
9. Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchaser hereunder, and neither Purchaser shall be
responsible in any way for the performance of the obligations of the other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at the Additional Closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this letter. Each Purchaser shall be entitled to protect and enforce its rights,
including without limitation the rights arising out of this
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letter or out of the Additional Transaction Documents, and it shall not be
necessary for the other Purchaser to be joined as an additional party in any
proceeding for such purpose.
10. Governing Law. This letter shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
11. Execution. This letter may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
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Please indicate your agreement with the foregoing by executing a
countersigned copy of this letter and returning the same to our attention,
whereupon effective immediately thereafter this letter shall become a legally
valid and binding agreement among the Purchasers and the Company.
We look forward to our continuing relationship.
Sincerely,
▇▇▇▇▇▇▇▇▇ ROAD LLC
By:
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Name:
Title:
Principal Amount of First Additional Debentures $3,250,000
Principal Amount of Second Additional Debentures $3,250,000
▇▇▇▇▇▇ and accepted
May 1, 2000
FOREST GLADE INTERNATIONAL, INC.
By:
--------------------------
Name:
Title:
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