FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as
of June 8, 2000, is made and entered into by and between
Majestic Companies, Ltd., a Nevada corporation (the "Company"),
and the Schedule of Buyers attached to the Securities Purchase
and the Investor for the Equity Line of Credit (collectively, the
"Investor").
WITNESSETH:
WHEREAS, the Company and the Investor (the "Convertible
Investor") have entered into a Securities Purchase Agreement,
dated as of the date hereof (the "Securities Purchase
Agreement"), pursuant to which the Company issued and sold to
Investors identified on Schedule I to the Securities Purchase
Agreement, $520,000 worth of convertible debentures (the
"Convertible Debentures" ), which may be converted into shares of
the Company's common stock, (the "Common Stock"), pursuant to the
terms of the Convertible Debenture; and
WHEREAS, in connection with the sale of the Convertible
Debentures the Company is granting to the Convertible Investor
the right to purchase upon the conversion of Debentures the
number of shares of common stock of the Company, par value $0.001
per share (the ?Common Stock?) equal to (i) the principal amount
of the Debentures (ii) divided by 120 % of the Bid Price of the
Common Stock on the date of Conversion; and
WHEREAS, pursuant to the terms of, and in partial consideration
for, the Investor's agreement to enter into the Securities
Purchase Agreement, the Company has agreed to provide the
Convertible Investor with certain registration rights with
respect to the Registrable Securities;
WHEREAS, the Company and the Investor identified on the line of
credit agreement (the "Line of Credit Investor") have entered
into a Line of Credit, dated as of the date hereof (the "Line of
Credit Agreement"), pursuant to which the Company shall issue and
sell to the Investor, from time to time as provided in the Line
of Credit Agreement, and the Investor shall purchase up to Two
Million ($2,000,000) Dollars of Debentures (the "Line of Credit
Convertible Debentures")for a total purchase price of Two Million
($2,000,000) Dollars; and
WHEREAS, in connection with the sale of the Line of Credit
Debentures the Company is granting to the Line of Credit Investor
the right to purchase upon the conversion of Line of Credit
Convertible Debentures the number of shares of common stock of
the Company, par value $0.001 per share (the ?Common Stock?)
equal to (i) the principal amount of the Debentures (ii) divided
by 80% of the Bid Price of the Common Stock on the date of
Conversion.
WHEREAS, pursuant to the terms of, and in partial consideration
for, the Line of Credit Investor's agreement to enter into the
Line of Credit Agreement, the Company has agreed to provide the
Line of Credit Investor with certain registration rights with
respect to the Registrable Securities;
NOW, THEREFORE, in consideration of the premises, the
representations, warranties, covenants and agreements contained
herein and in the Securities Purchase Agreement, and for other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, intending to be legally bound
hereby.
Definitions
All capitalized terms not hereinafter defined shall have the
meanings ascribed to them in the Line of Credit Agreement and the
Securities Purchase Agreement.
"Bid Price" shall mean , on any date, the closing bid price (as
reported by Bloomberg L.P.) of the Common Stock on the Principal
Market, or if the Common Stock is not traded on a Principal
Market, the highest reported bid price for the Common Stock, as
furnished by the National Association of Securities Dealers,
Inc., for the five trading days immediately preceding such date.
"Commission." United States Securities and Exchange Commission
or any successor regulatory body.
"Common Stock." As defined in the fourth recital hereof.
"Company." As defined in the Line of Credit Agreement.
"Convertible Debenture." As defined in the Convertible Debenture.
"Convertible Investor." As defined in the first recital hereof.
"Exchange Act." Securities Exchange Act of 1934, as amended.
"Line of Credit Convertible Debentures." As defined in the
Line of Credit Agreement.
"Line of Credit Investor." As defined in the third recital
hereof.
"Offering." As defined in the first recital hereof.
"Registration." A registration effected by preparing and filing
a registration statement or statements or similar documents in compliance with
the Securities Act and the declaration or ordering of effectiveness of such
registration statement or document by the Commissioner; included
in such definition shall be correlative terms "Register" and
"Registered".
"Registrable Securities." The shares of Common Stock issuable
upon the conversion of the Debentures that have not previously
been sold pursuant to a Registration Statement or Rule 144 and
that are not eligible for sale under Rule 144(k) (or any
successor provision.).
"Registration Statement." The registration statement under the
Securities Act covering the resale of the Registrable Securities.
"Rule 144". Rule 144 under the Securities Act.
"Rule 415." Rule 415 under the Securities Act, or any successor
rule providing for offering securities on a continuous basis.
"Securities Act." As defined in the third recital hereof.
"The Investors." Collectively the Convertible Investors and the
Line of Credit Investors.
"Violations." As defined in Section 4.01 (a) hereof.
ARTICLE I
REGISTRATION RIGHTS
Section 1.1 Form S-1, SB-2 or S-3 Registration Statements.
(a) Filing of Registration Statement. Subject to the terms and
conditions of this Agreement, the Company shall prepare and,
within forty five (45) days following hereof (the "Filing
Deadline"), file with the Securities and Exchange Commission
("SEC") a registration statement on Form S-1 or SB-2 (or, if the
Company is then eligible, on Form S-3) under the Securities Act
(the "Initial Registration Statement") for the registration for
the resale by all Investors who purchased Convertible Debentures
pursuant to the Securities Purchase Agreement up to 6,000,000
shares of Common Stock and up to 100,000 shares underlying the
Warrants (the "Convertible Warrants") issued pursuant to Section
4(k) of the Securities Purchase Agreement to May Xxxxx Group,
Inc. (the "Placement Agent"), 15,000,000 shares of Common Stock
covering the resale of the Registrable Securities issuable upon
the conversion of the Debentures pursuant to the Line of Credit
Agreement, (the "Debenture Shares") and up to 300,000 shares
underlying the Warrants issued pursuant to Section 13.4(b) Line
of Credit Agreement to May Xxxxx Group, Inc., (the "Line of
Credit Warrants") to be declared effective and the Company shall
cause the Registration Statement to remain effective until all of
the Registrable Securities have been sold. (collectively
referred to as the "Registrable Securities"). Prior to the
filing of the Initial Registration Statement with the SEC, the
Company shall furnish a copy of the Initial Registration
Statement to Investors, the Placement Agent and Xxxxxx Xxxxxxxx
for their review and comment together with a Selling Shareholder
Questionnaire in form prepared by the Company. Investors, the
Placement Agent and Xxxxxx Xxxxxxxx, LLP shall furnish comments
on the Initial Registration Statement and an executed Selling
Shareholder Questionnaire to the Company within five (5) days of
the receipt thereof from the Company. Thereafter, if the Company
desires to issue to the Investor and/or the Investor desires to
convert any Registrable Securities in addition to the Initial
Registrable Securities, the Company shall first file with the SEC
a registration statement on Form S-1 or SB-2 (or, if the Company
is then eligible, on Form S-3) under the Securities Act (the
Initial Registration Statement and any subsequent registration
statement, each, a "Registration Statement").
(b) Effectiveness of the Initial Registration Statement. The
Company shall use its commercially reasonable efforts (i) to have
the Initial Registration Statement declared effective by the SEC
by no later than one hundred and twenty (120) days after the date
hereof (the "Scheduled Effective Deadline") and (ii) to insure
that the Initial Registration Statement and any subsequent
Registration Statement remains in effect throughout the term of
this Agreement as set forth in Section 4.2, subject to the terms
and conditions of this Agreement.
(c) Failure to File or Obtain Effectiveness of the Initial
Registration Statement. In the event the Registration Statement
is not filed by the Company with the SEC by the Filing, the
Conversion Percentage to be used in determining the Conversion
Price shall be reduced by (i) an additional 2% for the first (30)
days and every thirty (30) days thereafter the Registration
Statement is not filed.
In the event the Registration Statement is not declared
effective by the SEC by the applicable Scheduled Effective
Deadline then the Conversion Percentage to be used in determining
the Conversion Price shall be reduced by an additional 2% for the
first (30) days and every thirty (30) days thereafter the
Registration Statement is not declared effective.
In addition if the Registration Statement is not declared
effective by the SEC by the applicable Scheduled Effective Deadline, or if
after the Registration Statement has been declared effective by the SEC,
sales cannot be made pursuant to the Registration Statement
(whether because of a failure to keep the Registration Statement
effective, to disclose such information as is necessary for sales
to be made pursuant to the Registration Statement, to register
sufficient shares of Common Stock or otherwise), then, as partial
relief for the damages to any holder by reason of any such delay
in or reduction of its ability to sell the underlying shares of
Common Stock (which remedy shall not be exclusive of any other
remedies at law or in equity), the Company will pay liquidated
damages to the Investor in immediately available funds into an
account designated by the Investor an amount equal to one percent
(1%) of the aggregate Purchase Price of all of the Registrable
Securities then held by the Investor for the each thirty (30)
calendar day period (prorated for partial periods) of such
Ineffective. The payments required by this Section 1.1(d) shall
be made on the first Trading Day after the expiration of an
Ineffective Period (or if an Ineffective Period shall last more
than thirty (30) calendar days, the expiration of each additional
thirty (30) calendar day period of an Ineffective Period).
(e) Deferral or Suspension During a Blackout Period. Sections
1.1(c) and (d) notwithstanding, if the Company shall furnish to
the Investor notice (a "Blackout Notice") signed by the Chief
Executive Officer or Chief Financial Officer of the Company
stating that he has determined in good faith that it would be
seriously detrimental to the Company and its shareholders for the
Initial Registration Statement to be filed (or for any
Registration Statement to remain in effect) and it is therefore
desirable to defer the filing of such Initial Registration
Statement (or temporarily suspend the effectiveness of any
Registration Statement or use of the related prospectus), the
Company shall have the right (i) immediately to defer such filing
for a period of not more than thirty (30) days beyond the date by
which such Initial Registration Statement was otherwise required
hereunder to be filed or (ii) suspend the effectiveness of any
Registration Statement for a period of not more than thirty (30)
days (any such deferral or suspension period of up to thirty
days, a "Blackout Period"). The Investor acknowledges that it
would be seriously detrimental to the Company and its
shareholders for such initial Registration Statement to be filed
(or for any Registration Statement to remain in effect) during a
Blackout Period and therefore essential to defer such filing (or
suspend such effectiveness) during such Blackout Period and
agrees to cease any disposition of Registrable Securities during
such Blackout Period. The Company may not utilize any of its
rights under this Section 1.1(e) to defer the filing of a
Registration Statement (or suspend its effectiveness) more than
twice in any twelve (12) month period.
(f) Liquidated Damages. The Company and the Investor hereto
acknowledge and agree that the sums payable under subsections
1(c) or 1(d) above shall constitute liquidated damages and not
penalties. The parties further acknowledge that (i) the amount of
loss or damages likely to be incurred is incapable or is
difficult to precisely estimate, (ii) the amounts specified in
such subsections bear a reasonable relationship to, and are not
plainly or grossly disproportionate to the probable loss likely
to be incurred in connection with any failure by the Company to
obtain or maintain the effectiveness of a Registration Statement,
(iii) one of the reasons for the Company and the Investor
reaching an agreement as to such amounts was the uncertainty and
cost of litigation regarding the question of actual damages, and
(iv) the Company and the Investor are sophisticated business
parties and have been represented by sophisticated and able legal
counsel and negotiated this Agreement at arm's length.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1 Filings; Information. The Company will effect the
registration and sale of the Registrable Securities in accordance
with the intended methods of disposition thereof. Without
limiting the foregoing, the Company in each such case will do the
following as expeditiously as possible, but in no event later
than the deadline, if any, prescribed therefor in this Agreement:
(a) The Company shall (i) prepare and file with the SEC a
Registration Statement on Form S-1 or SB-2 (or, if the Company is
then eligible, Form S-3) within forty five (45) days from the
date of this document (if use of such form is then available to
the Company pursuant to the rules of the SEC and, if not, on such
other form promulgated by the SEC for which the Company then
qualifies, that counsel for the Company shall deem appropriate
and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the
provisions of this Agreement and in accordance with the intended
method of distribution of such Registrable Securities); (ii) use
commercially reasonable efforts to cause such filed Registration
Statement to become effective within one hundred and twenty (120)
days of the date of this document and remain effective during the
period set forth in Section 1.1(b) hereof (pursuant to Rule 415
under the Securities Act or otherwise); (iii) prepare and file
with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may
be necessary to keep such Registration Statement effective for
the time period prescribed by Section 1.1(b); and (iv) comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration
Statement during such period in accordance with the intended
methods of disposition by the Investor set forth in such
Registration Statement.
(b) The Company shall file all necessary amendments and
supplements to any Registration Statement in order to effectuate
the purpose of this Agreement and the Securities Purchase
Agreement.
(c) The Company shall notify the Investor in accordance with the
notice provisions of Section 4.8 no later than ten (10) days
prior to filing any amendment or supplement to the Initial
Registration Statement or any subsequent Registration Statement
or prospectus, or any amendment or supplement thereto (excluding,
in each case, amendments deemed to result from the filing of
documents incorporated by reference therein), or such shorter
period as is reasonable under the circumstances, and if requested
by the Investor the Company shall deliver to the Investor and one
firm of counsel representing the Investor, in accordance with the
notice provisions of Section 4.8, copies of such Registration
Statement as proposed to be filed, together with exhibits
thereto, which documents will be subject to review by the
Investor and such counsel. Thereafter the Company shall deliver
to the Investor and such counsel, in accordance with the notice
provisions of Section 4.8, such number of copies of the
Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus
included in such Registration Statement (including each
preliminary prospectus) and such other documents or information
as the Investor or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities.
(d) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each seller of Registrable
Securities covered by a Registration Statement such number of
conformed copies of such Registration Statement and of each
amendment and supplement thereto (in each case including all
exhibits and documents incorporated by reference), such number of
copies of the prospectus contained in any Registration Statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424
promulgated under the Securities Act relating to such seller's
Registrable Securities, and such other documents, as such seller
may reasonably request to facilitate the disposition of its
Registrable Securities.
(e) After the filing of a Registration Statement, the Company
shall promptly notify the Investor of any stop order issued or
threatened by the SEC in connection therewith and take all
reasonable actions required to prevent the entry of such stop
order or to remove it if entered.
(f) The Company shall use its commercially reasonable efforts to
(i) register or qualify the Registrable Securities under such
other securities or blue sky laws of such jurisdictions in the
United States as the Investor may reasonably request in light of
its intended plan of distribution and (ii) cause the Registrable
Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may
be necessary by virtue of the business and operations of the
Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable the Investor to
consummate the disposition of the Registrable Securities in light
of its intended plan of distribution; provided, however, that the
Company will not be required to qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (f), subject itself to taxation in
any such jurisdiction, or consent or subject itself to general
service of process in any such jurisdiction.
(g) The Company shall immediately notify the Investor upon the
occurrence of any of the following events in respect of a
Registration Statement or related prospectus in respect of an
offering of Registrable Securities: (i) receipt of any request by
the SEC or any other federal or state governmental authority for
additional information, amendments or supplements to such
Registration Statement or related prospectus; (ii) the issuance
by the SEC or any other federal or state governmental authority
of any stop order suspending the effectiveness of such
Registration Statement or notification of the initiation of any
proceedings for that purpose; (iii) receipt of any notification
with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that
makes any statement made in such Registration Statement or
related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect
or that requires the making of any changes in such Registration
Statement, related prospectus or documents so that, in the case
of such Registration Statement, it will 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, in the light of the circumstances under
which they were made, and that in the case of the related
prospectus, it will 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, in
the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a
post-effective amendment to such Registration Statement would be
appropriate, and the Company will promptly make available to the
Investor any such supplement or amendment to the related
prospectus.
(h) The Company shall enter into customary agreements and take
such other customary actions as are reasonably required in order
to expedite or facilitate the disposition by the Investor of such
Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations,
warranties and covenants of the Company also be made to and for
the benefit of the Investor).
(i) The Company shall otherwise comply with all applicable rules
and regulations of the SEC, including, without limitation,
compliance with applicable reporting requirements under the
Exchange Act.
(j) The Company may require the Investor to promptly furnish in
writing to the Company such information as may be legally
required in connection with such registration including, without
limitation, all such information as may be requested by the SEC
or the NASD. The Investor agrees to provide such information
requested in connection with such registration within five (5)
calendar days after receiving such written request, or such
shorter period as is reasonable under the circumstances, and the
Company shall not be responsible for any delays in obtaining or
maintaining the effectiveness of any Registration Statement
caused by the Investor's failure to timely provide such
information.
(k) The Company shall use its best efforts either: (i) to secure
the inclusion for quotation on The Nasdaq Stock Market Inc.'s OTC
Bulletin Board Bulletin for such Registrable Securities, or (ii)
if, despite the Company's best efforts to satisfy the preceding
clause (i), the Company is unsuccessful in satisfying the
preceding clause (i), to secure the inclusion for quotation in
the "pink sheets" for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause
(i) or (ii), to arrange for at least two market makers to
register with the National Association of Securities Dealers,
Inc. ("NASD"), as such with respect to such Registrable
Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section
2(l).
Section 2.2 Registration Expenses. In connection with each
Registration Statement, the Company shall pay all registration
expenses incurred in connection with the registration thereunder
(the "Registration Expenses"), including, without limitation:
(a) all registration, filing, securities exchange listing and
fees required by the NASD, (b) all registration, filing,
qualification and other fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and
disbursements of counsel for the Company), (c) all word
processing, duplicating, printing, messenger and delivery
expenses, (d) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), and (e)
reasonable fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public
accountants retained by the Company; but excluding underwriting
fees, discounts, transfer taxes or commissions, if any,
attributable to the sale of the Registrable Securities, which
shall be payable by each holder of Registrable Securities pro
rata on the basis of the number of Registrable Securities of each
holder that are included under this Agreement.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1 Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Investor, its partners,
Affiliates, officers, directors, employees, counsel and duly
authorized agents, and each Person or entity, if any, who
controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with
the partners, Affiliates, officers, directors, employees, counsel
and duly authorized agents of such controlling Person or entity
(collectively, the " Controlling Persons"), from and against any
loss, claim, damage, liability, costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements
and costs and expenses of investigating and defending any such
claim) (collectively, "Damages"), joint or several, and any
action or proceeding in respect thereof to which the Investor,
its partners, Affiliates, officers, directors, employees and duly
authorized agents, and any Controlling Person, may become subject
under the Securities Act or otherwise, as incurred, insofar as
such Damages (or actions or proceedings in respect thereof) arise
out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in any Registration
Statement, preliminary prospectus or prospectus relating to the
Registrable Securities or arises out of, or are based upon, any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which
they were made, except insofar as any such untrue statement,
alleged untrue statement, omission or alleged omission is made in
reliance upon and in conformity with written information
furnished to the Company by the Investor which is specifically
intended by the Investor for use in the preparation of any such
Registration Statement, preliminary prospectus or prospectus, and
shall reimburse the Investor, its partners, Affiliates, officers,
directors, employees, counsel and duly authorized agents, and
each such Controlling Person, for any legal and other expenses
reasonably incurred by the Investor, its partners, Affiliates,
officers, directors, employees, counsel and duly authorized
agents, or any such Controlling Person, as incurred, in
investigating or defending or preparing to defend against any
such Damages or actions or proceedings; provided, however, that
the Company shall not be liable to the Investor to the extent
that any such Damages arise out of or are based upon an untrue
statement or omission made in any preliminary prospectus if (i)
the Investor failed to send or deliver a copy of the final
prospectus delivered by the Company to the Investor with or prior
to the delivery of written confirmation of the sale by the
Investor to the Person asserting the claim from which such
Damages arise, and (ii) the final prospectus would have corrected
such untrue statement or alleged untrue statement or such
omission or alleged omission.
(b) Indemnification by the Investor. The Investor agrees to
indemnify and hold harmless the Company, its Affiliates,
officers, directors, employees, counsel and duly authorized
agents, and each Controlling Persons of the Company, from and
against any and all Damages, joint or several, and any action or
proceeding in respect thereof to which the Investor, its
partners, Affiliates, officers, directors, employees, counsel and
duly authorized agents, and any such Controlling Person, may
become subject under the Securities Act or otherwise, as
incurred, insofar as such Damages (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus
or prospectus relating to the Registrable Securities or arises
out of, or are based upon, any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances under which they were made, but only to the
extent that any such untrue statement, alleged untrue statement,
omission or alleged omission is made in reliance upon and in
conformity with written information furnished to the Company by
the Investor which is specifically intended by the Investor for
use in the preparation of any such Registration Statement,
preliminary prospectus or prospectus, and shall reimburse the
Company, its partners, Affiliates, officers, directors,
employees, counsel and duly authorized agents, and each such
Controlling Person, for any legal and other expenses reasonably
incurred by the Investor, its partners, Affiliates, officers,
directors, employees, counsel and duly authorized agents, or any
such Controlling Person, as incurred, in investigating or
defending or preparing to defend against any such Damages or
actions or proceedings.
Section 3.2 Conduct of Indemnification Proceedings. Promptly
after receipt by any person or entity in respect of which
indemnity may be sought pursuant to Section 3.1 (an "Indemnified
Party") of notice of any claim or the commencement of any action,
the Indemnified Party shall, if a claim in respect thereof is to
be made against the person or entity against whom such indemnity
may be sought (the "Indemnifying Party"), notify the Indemnifying
Party in writing of the claim or the commencement of such action.
In the event an Indemnified Party shall fail to give such notice
as provided in this Section 3.2 and the Indemnifying Party to
whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure
to give such notice, the indemnification provided for in Section
3.1 shall be reduced to the extent of any actual prejudice
resulting from such failure to so notify the Indemnifying Party;
provided, however, that the failure to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability
that it may have to an Indemnified Party otherwise than under
Section 3.1. If any such claim or action shall be brought against
an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate
therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the
defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defense of
such claim or action, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation;
provided, however, that the Indemnified Party shall have the
right to employ separate counsel to represent the Indemnified
Party and its Controlling Persons who may be subject to liability
arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party,
but the fees and expenses of such counsel shall be for the
account of such Indemnified Party, unless (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) in the reasonable judgment of
the Indemnifying Party and the Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them, it being
understood, however, that the Indemnifying Party shall not, in
connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local
counsel) at any time for all Indemnified Parties, or for fees and
expenses that are not reasonable. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party,
effect any settlement of any claim or pending or threatened
proceeding in respect of which the Indemnified Party is or could
have been a party and indemnity is sought hereunder by such
Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all
liability arising out of such claim or proceeding. Whether or not
the defense of any claim or action is assumed by the Indemnifying
Party, such Indemnifying Party will not be subject to any
liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
Section 3.3 Other Indemnification. Indemnification similar to
that specified in the preceding paragraphs of this Article III
(with appropriate modifications) shall be given by the Company
with respect to any required registration or other qualification
of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other
rights to indemnification, contribution or other remedies which
an Indemnified Party may have pursuant to law, equity, contract
or otherwise.
Section 3.4 Contribution. If the indemnification and
reimbursement obligations provided for in any section of this
Article III is unavailable or insufficient to hold harmless the
Indemnified Parties in respect of any Damages referred to herein,
then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such Damages as between
the Company on the one hand and the Investor on the other, in
such proportion as is appropriate to reflect the relative fault
of the Company and of the Investor in connection with such
statements or omissions, as well as other equitable
considerations. The relative fault of the Company on the one hand
and of the Investor on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such
party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission.
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 3.4 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. The amount paid or payable by an Indemnified Party as
a result of the Damages referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 3.4, the Investor shall in no event be
required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of the
Investor were sold to the public (less underwriting discounts and
commissions) exceeds the amount of any damages which the Investor
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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.
ARTICLE IV
MISCELLANEOUS
Section 4.1 No Outstanding Registration Rights. The Company
represents and warrants to the Investor that there is not in
effect on the date hereof any agreement by the Company pursuant
to which any holders of securities of the Company have a right to
cause the Company to register or qualify such securities under
the Securities Act or any securities or blue sky laws of any
jurisdiction, except for piggyback registration rights granted to
the May Xxxxx Group, Inc., for the Convertible and Line of Credit
Warrants due pursuant to the Placement Agency Agreement dated
June [ ] , 2000.
Section 4.2 Term. The obligations of the Company and the
rights provided to the holders of Registrable Securities
hereunder shall terminate at such time as all Registrable
Securities have been issued and have ceased to be Registrable
Securities. Notwithstanding the foregoing, Section 1.1(c) and
(d), Article III, Section 4.8, and Section 4.9 shall survive the
termination or expiration of this Agreement.
Section 4.3 Rule 144. The Company will use its commercially
reasonable efforts to file in a timely manner information,
documents and reports in compliance with the Securities Act and
the Exchange Act and will, at its expense, promptly take such
further action as holders of Registrable Securities may
reasonably request to enable such holders of Registrable
Securities to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act ("Rule 144"),
as such Rule may be amended from time to time, or (b) any similar
rule or regulation hereafter adopted by the SEC. If at any time
the Company is not required to file such reports, it will, at its
expense, forthwith upon the written request of any holder of
Registrable Securities, make available adequate current public
information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as
necessary to permit sales pursuant to Rule 144. Upon the request
of the Investor, the Company will deliver to the Investor a
written statement, signed by the Company's principal executive or
financial officer, as to whether it has complied with such
requirements.
Section 4.4 Certificate. The Company will, at its expense,
forthwith upon the request of any holder of Registrable
Securities, deliver to such holder a certificate, signed by the
Company's principal financial officer, stating (a) the Company's
name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the
Company's SEC file number, (d) the number of shares of each class
of capital stock outstanding as shown by the most recent report
or statement published by the Company, and (e) whether the
Company has filed the reports required to be filed under the
Exchange Act for a period of at least ninety (90) days prior to
the date of such certificate and in addition has filed the most
recent annual report required to be filed thereunder.
Section 4.5 Amendment and Modification. No provision of this
Agreement may be waived, unless such waiver is set forth in a
writing executed by both parties to this Agreement. The
provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may
not be given, unless the Company has obtained the written consent
of the holders of a majority of the then outstanding Registrable
Securities. Notwithstanding the foregoing, the waiver of any
provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities
whose securities are being sold pursuant to a Registration
Statement and does not directly or indirectly affect the rights
of other holders of Registrable Securities may be given by
holders of at least a majority of the Registrable Securities
being sold by such holders; provided that the provisions of this
sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding
sentence. No course of dealing between or among any Person having
any interest in this Agreement will be deemed effective to
modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this
Agreement.
Section 4.6 Successors and Assigns; Entire Agreement. This
Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The Investor may
assign its rights under this Agreement to any subsequent holder
of the Registrable Securities, provided that the Company shall
have the right to require any holder of Registrable Securities to
execute a counterpart of this Agreement as a condition to such
holder's claim to any rights hereunder. This Agreement, together
with the Securities Purchase Agreement, sets forth the entire
agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
Section 4.7 Severability. In the event that any provision of
this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision;
provided that such severability shall be ineffective if it
materially changes the economic benefit of this Agreement to any
party.
Section 4.8 Notices. All notices, demands, requests,
consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (a) personally served, (b) deposited
in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service
with charges prepaid, or (d) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or to such
other address as such party shall have specified most recently by
written notice given in accordance herewith. Any notice or other
communication required or permitted to be given hereunder shall
be deemed effective (i) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on
a business day during normal business hours where such notice is
to be received) or (ii) on the second business day following the
date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully
prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Company, to:
Majestic Companies, Ltd.
0000 Xxx Xxx Xxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy(which shall not
constitute notice), to:
Law Offices of Xxxx X. Tow
0000 Xxxxx Xxxxxx, Xxxxx # 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx XxXxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor, to:
Attention:
Telephone: (___) ___-____
Facsimile: (___) ___-____
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 4.8 by giving at
least ten (10) days' prior written notice of such changed address
or facsimile number to the other party hereto.
Section 4.9 Governing Law, Jurisdiction. This Agreement shall
be deemed to be made, governed by, interpreted under and
construed in all respects in accordance with the commercial rules
of JAMS. This chosen jurisdiction is irrespective of the country
or place of domicile or residence of either party. In the event
of controversy arising out of the interpretation, construction,
performance or breach of this agreement, the parties hereby
consent to adjudication under the commercial rules of JAMS. Said
venue of the arbitration shall be in New York County, New York.
Judgment on the award rendered by the arbitrator may be entered
in U.S. District Court sitting in the Southern District of the
State of New York or the state courts of the State of New York
sitting in Manhattan. The Laws of the State of New York shall
govern all disputes regarding this matter.
Section 4.10 Title and Subtitles. The titles and subtitles
used in this Agreement are used for the convenience of reference
and are not to be considered in construing or interpreting this
Agreement.
Section 4.11 Counterparts. This Agreement may be executed in
multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties
actually executing such counterparts and all of which together
shall constitute one and the same instrument. This Agreement,
once executed by a party, may be delivered to the other parties
hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the parties so delivering this
Agreement.
Section 4.12 Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
Section 4.13 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict
construction will be applied against any party.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be executed by the undersigned,
thereunto duly authorized, as of the date first set forth above.
MAJESTIC COMPANIES, LTD.
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: President and Chief Executive Officer
[Name of Investor]
By:
Name:
Title:
