PLACEMENT AGENCY AGREEMENT
THIS PLACEMENT AGENCY AGREEMENT ("Agreement") is made as of this
8th day of June, 2000, by and between Majestic Companies, Ltd., a
Nevada Corporation ("Company"), and May Xxxxx Group, Inc., a
Maryland corporation (the "Agent").
WITNESSETH:
WHEREAS, the Company proposes to issue and sell, pursuant to the
Securities Purchase Agreement, Five Hundred Twenty Thousand
dollars ($520,000) of debentures (the "Debentures"), no par value
per share (the "Securities"), resulting in gross proceeds to the
Company of $520,000 (the "Offering") in one or more series of
transactions not involving a public offering and without
registration under the Securities Act of 1933, as amended (the
"Act"), pursuant to exemptions from the registration requirements
of the Act of Section 4(2) and/or under Rule 506 of Regulation D
promulgated under the Act ("Regulation D"), as described below;
and
WHEREAS, the Company proposes to sell, pursuant to a Line of
Credit Agreement, Debentures (the "Line of Credit Debentures")
resulting in gross proceeds to the Company of up to $2,000,000
in one or more series of transactions not involving a public
offering and without registration under the Securities Act of
1933, as amended (the "Act"), pursuant to exemptions from the
registration requirements of the Act of Section 4(2) and/or under
Rule 506 of Regulation D promulgated under the Act ("Regulation
D"), as described below; and
WHEREAS, the Agent has offered to assist the Company in placing
the Securities on a "best efforts basis, all or none" basis and
the Company desires to secure the services of the Agent on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties
hereto do hereby agree as follows:
1. Engagement of Agent. The Company hereby appoints the Agent
as its exclusive placement agent for the Offering pursuant to the
Securities Purchase Agreement, to sell Debentures on a "best
efforts" resulting in gross proceeds to the Company of $520,000
(the "Maximum Amount") and to sell up to $2,000,000 worth of
Debentures pursuant to the Line of Credit resulting in gross
proceeds to the Company of up to $2,000,000 Dollars. The Agent,
on the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set
forth, accepts such appointment and agrees to use its best
efforts to find purchasers for the Securities. This appointment
shall be irrevocable for the period commencing as of the date
hereof and ending as further described in Section 8, which period
may be extended by the consent of the Company and the Agent (the
"Offering Period").
2. Representations and Warranties of the Company. In order to
induce the Agent to enter into this Agreement, the Company hereby
represents and warrants to and agrees with the Agent as follows:
2.1. Organization and Qualification. The Company and its
subsidiaries are corporations duly organized and validly existing
in good standing under the laws of the jurisdiction in which they
are incorporated, and have the requisite corporate power to own
their properties and to carry on their business as now being
conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
2.2. Authorization, Enforcement, Compliance with Other
Instruments. The Company has the requisite corporate power and
authority to enter into and perform this Agreement. This
Agreement has been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by
the Company, its Board of Directors or its stockholders. This
Agreement, constitutes the valid and binding obligations of the
Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors' rights
and remedies.
2.3. No Conflicts. Except as disclosed in Schedule 2.3, the
execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations,
Preferences, and Rights of any outstanding series of preferred
stock of the Company or By-laws or (ii) conflict with or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company
or any of its subsidiaries is a party, or, to the best of the
Company's knowledge, result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and
regulations of The Nasdaq Stock Market, Inc.'s OTC Bulletin Board
on which the common stock, $0.001 par value per share, of the
Company ("Common Stock") is quoted) applicable to the Company or
any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected. Except
as disclosed in Schedule 2.3, neither the Company nor its
subsidiaries is in violation of any term of or in default under
its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. To the
best knowledge of the Company, the business of the Company and
its subsidiaries is not being conducted, and the Company shall
use its best efforts to assure that it shall not be conducted in
violation of any law, ordinance, regulation of any governmental
entity. Except as specifically contemplated by this Agreement
and as required under the Act and any applicable state securities
laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms
hereof or thereof. Except as disclosed in Schedule 2.3, all
consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date
hereof. The Company and its subsidiaries are unaware of any
facts or circumstances, which might give rise to any of the
foregoing.
2.4. SEC Documents: Financial Statements. Since [ ], the
Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the Securities
and Exchange Commission ("SEC") pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to as the "SEC Documents").
The Company has delivered to the Agent or its representative, or
made available through the SEC's electronic web site located at
xxxx://xxx.xxx.xxx, true and complete copies of the SEC
Documents. As of their respective dates, the financial
statements of the Company disclosed in the SEC Documents (the
"Financial Statements") complied as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or
on behalf of the Company to the Buyer which is not included in
the SEC Documents, including, without limitation, information
referred to in Section 2.6 of this Agreement, contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light
of the circumstance under which they are or were made, not
misleading.
2.5. Absence of Litigation. Except as disclosed on Schedule 2.5,
there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-
regulatory organization or body pending or, to the knowledge of
the Company or any of its subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's
subsidiaries, wherein an unfavorable decision, ruling or finding
would (i) have a material adverse effect on the transactions
contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the
documents contemplated herein or (iii) except as expressly
disclosed in the SEC Documents, have a material adverse effect on
the business, operations, properties, financial condition or
results of operation of the Company and its subsidiaries taken as
a whole.
2.6. No Materially Adverse Contracts, Etc. Except as set forth
in the SEC Documents, neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is
expected in the future to have a material adverse effect on the
business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries.
Neither the Company nor any of its subsidiaries is a party to any
contract or agreement which in the judgment of the Company's
officers has or is expected to have a material adverse effect on
the business, properties, operations, financial condition,
results of operations or prospects of the Company or its
subsidiaries.
3. Issue, Sale and Delivery of the Securities.
3.1. Deliveries of Securities. Certificates in such form that,
subject to applicable transfer restrictions as described in the
Securities Purchase Agreement proposed to be entered into between
the Company and investors ("Purchase Agreement"), they can be
negotiated by the purchasers of (issued in such denominations and
in such names as the Agent may direct the Company to issue) the
Securities, and warrants representing the Agent's warrant
compensation described in Section 3.4(b) below ("Warrants"),
shall be delivered by the Company to counsel to the Agent, with
copies made available to the Agent for checking at least one (1)
full business day prior to the Closing Date, it being understood
that the directions from the Agent to the Company shall be given
at least two (2) full business days prior to the Closing Date.
The certificates for the Securities and the Warrants shall be
delivered at the Closing (as hereinafter defined).
3.2. Escrow of Funds. Pending Closing purchasers shall place all
funds for purchase of Securities in an escrow account with an
escrow agent to be designated by the Company and the Placement
Agent ("Escrow Agent") and as set up by the Company in accordance
with the terms of an escrow agreement between the Company, the
Agent and the Escrow Agent. The Company shall have the right to
approve or object to the subscriptions of any purchaser. At such
time as purchasers purchasing all 50 Securities have delivered to
the Agent a signed Purchase Agreement, and provided those
purchasers have been approved by the Company and all other
Closing conditions have been met, Escrow Agent shall release the
subscription funds to the Company and the Company shall release
the certificates representing the Securities to the subscribers
(the "Closing"). In the event the Closing is not held on or
before June [ ], 2000, all subscription proceeds shall be
immediately returned to purchasers without deduction or charge by
the Escrow Agent.
3.3. Closing Date. The Closing shall take place at the offices
of Xxxxxx Xxxxxxxx, L.L.P., 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0,
Xxxxx, Xxx Xxxxxx 00000 at such time and date ("Closing Date") as
will be fixed either orally or in writing by notice to be given
by the Agent to the Company after consultation with the Company,
such Closing Date to be not less than one (1) full business day
after the date on which such notice shall have been given. The
Closing Date may be changed by mutual written agreement of the
Agent and the Company.
3.4. Agent's Compensation. The Company shall pay the Agent:
(a) A commission of ten percent (10%) of the gross subscription
proceeds received by the Company, pursuant to the sale of the
Convertible Debentures pursuant to the Securities Purchase
Agreement at the Closing to be paid in cash or Common Stock of
the Company as determined by the Agent (the "Gross Proceeds");
and
(b) In addition to the fees and reimbursement of costs set forth
in Sections 3.4(a) and 3.5 of this Agreement, upon closing with
respect to the sale of the Series A Preferred Shares at the
Closing, the Company shall issue to the Agent, and/or its
assignees warrants to purchase Eighty Four Thousand (84,000)
shares of the Company's Common Stock. Such warrants shall be
exercisable at a price of 110% of the Closing Bid Price on the
day of Closing. The Warrants shall have cashless exercise
provisions. The term of the Warrants shall be five years. The
Warrants and the shares of Common Stock issuable upon exercise of
the Warrants shall have registration rights as described in the
Registration Rights Agreement, it being understood that, if the
SEC requires removal of the Warrants from any registration
statement in which the Warrants have a right by contract to be
included, the removal of the Warrants shall not constitute a
breach of contract by the Company, and the Company will use best
efforts to include the Warrants (or underlying shares) in a
registration statement in a manner acceptable to the SEC. Except
as set forth in the immediately preceding sentence, it is
specifically understood by the Company that the Company must
register the Shares underlying the Warrants for the Agent in the
same registration statement described in the Registration Rights
Agreements between the Company and purchasers and contemplated by
the Purchase Agreement. The Warrants shall be delivered by the
Company to the Agent simultaneous with and contingent upon a
Closing with respect to the Maximum Amount.
(c) On each advance date pursuant to the Line of Credit the
Company shall pay the Placement Agent an amount equal to 8.4% of
the advance.
(d) In addition to the fees and reimbursement of costs set forth
in Sections 3.4(a) and 3.5 of this Agreement, upon execution of
the Line of Credit, the Company shall issue to the Agent, and/or
its assignees warrants to purchase Two Hundred and Fifty Two
Thousand (252,000) shares of the Company's Common Stock. Such
warrants shall be exercisable at a price of 110% of the Closing
Bid Price on the day of Closing. The Warrants shall have
cashless exercise provisions. The term of the Warrants shall be
five years. The Warrants and the shares of Common Stock issuable
upon exercise of the Warrants shall have registration rights as
described in the Registration Rights Agreement, it being
understood that, if the SEC requires removal of the Warrants from
any registration statement in which the Warrants have a right by
contract to be included, the removal of the Warrants shall not
constitute a breach of contract by the Company, and the Company
will use best efforts to include the Warrants (or underlying
shares) in a registration statement in a manner acceptable to the
SEC. Except as set forth in the immediately preceding sentence,
it is specifically understood by the Company that the Company
must register the Shares underlying the Warrants for the Agent in
the same registration statement described in the Registration
Rights Agreements between the Company and purchasers and
contemplated by the Purchase Agreement. The Warrants shall be
delivered by the Company to the Agent simultaneous with and
contingent upon a Closing with respect to the Maximum Amount.
3.5. Payment of Fees. The Escrow Agent shall be instructed to
pay the Placement Agent's fees and all of the reasonable legal,
administrative, and escrow fees, associated with the sale of the
Series A Preferred Shares, of Agent's counsel, Xxxxxx Xxxxxxxx,
LLP, in the amount of Twenty Thousand Dollars ($20,000), directly
to the Agent's counsel from the proceeds of the sale of the
Convertible Debentures pursuant to the Securities Purchase
Agreement at the Closing, simultaneous with the transfer of
proceeds to the Company. The sum of Twenty Five Thousand
($25,000) Dollars, to Xxxxxx Xxxxxxxx, L.L.P. for legal,
administrative, and escrow fees associated with the Line of
Credit Agreement, of which Five Thousand ($5,000) is payable from
the gross proceeds of the sale of the Convertible Debentures
pursuant to the Securities Purchase Agreement and Twenty Thousand
($20,000) is payable on the first day the Registration Statement
becomes effective. Subsequently on each advance date pursuant
to the Line of Credit Agreement, the Company will pay Xxxxxx
Xxxxxxxx, LLP, the sum of Five Hundred ($500) Dollars for legal,
administrative, and escrow fees.
4. Offering of the Securities on Behalf of the Company.
4.1. In offering the Securities for sale, the Agent
shall offer them solely as an agent for the Company, and such
offer shall be made upon the terms and subject to the conditions
set forth in the Purchase Agreement and Line of Credit Agreement.
The Agent shall commence making such offer as an agent for the
Company as soon as possible following delivery of the Purchase
Agreement.
4.2. The Agent will not make offers to sell the Securities to, or
solicit offers to subscribe for any Securities from, persons or
entities that are not "accredited investors" as defined in
Regulation D.
5. Non-Circumvention. The Company hereby agrees as follows:
5.1. The Company agrees to maintain the confidentiality of the
Agent's clients, except as required by applicable law. Such
clients shall be those entities, which invest or have been
offered an opportunity to invest by the Agent in the Offering
(the "Clients"). For a period of two years from the Closing, the
Company will not solicit or enter into any financing transaction
with the Clients without the written consent of Agent and payment
to Agent compensation no less than the compensation to be paid to
Agent hereunder for raising a like amount.
5.2. In the event that Company breaches Section 5.1 of this
Agreement, Agent shall be entitled to receive compensation in the
same proportion to the financing done without Agent's
participation as the compensation to Agent under this Agreement
bears to the financing raised in this Offering.
6. Covenants of the Company. The Company covenants and agrees
with the Agent that:
6.1. After the date hereof, the Company will not at any time,
prepare and distribute any amendment or supplement to the
Purchase Agreement, of which amendment the Agent shall not
previously have been advised and the Agent and its counsel
furnished with a copy within a reasonable time period prior to
the proposed adoption thereof, or to which the Agent shall have
reasonable objected in writing on the ground that it is not in
compliance with the Act or the Rules and Regulations under the
Act (if applicable).
6.2. The Company will pay, whether or not the transactions
contemplated hereunder are consummated or this Agreement is
prevented from becoming effective or is terminated, all costs and
expenses incident to the performance of its obligations under
this Agreement, including all expenses incident to the
authorization of the Securities and their issue and delivery to
the purchasers, any original issue taxes in connection therewith,
all transfer taxes, if any, incident to the initial sale of the
Securities, the fees and expenses of the Company's counsel and
Agent's counsel as set forth in Section 3.5 (except as provided
below) and accountants, the cost of reproduction and furnishing
to the Agent copies of the Purchase Agreement as herein provided.
6.3. As a condition precedent to the Closing, the Company will
deliver to the Agent a true and correct copy of the Certificate
of Incorporation of the Company, and all amendments and
certificates of designation of preferences of preferred stock,
including without limitation the certificate of designation of
preferences regarding the Securities, certified by the Secretary
of State of Nevada.
6.4. Prior to the Closing Date, and during the normal business
hours, the Company will cooperate with the Agent in such
investigation as it may make or cause to be made of all of the
properties, business and operations of the Company in connection
with the Offering of the Securities. The Company will make
available to it in connection therewith such information in its
possession as the Agent may reasonably request and will make
available to the Agent such persons as the Agent shall deem
reasonably necessary and appropriate in order to verify or
substantiate any such information so supplied.
6.5. The Company shall be responsible for making any and all
filings required by the Blue Sky authorities and filings required
by the laws of the jurisdictions in which the purchasers who are
accepted for purchase of Securities are located, if any. Agent
shall assist Company in this respect, but such filings shall be
the responsibility of Company.
6.6 Corporation Condition. The Company's condition is as
described in the Purchase Agreement and the SEC Documents
referred to therein, except for changes in the ordinary course of
business and normal year-end adjustments that are not
individually or in the aggregate materially adverse to the
Company.
6.7 No Material Adverse Change. Except as may be reflected in
or contemplated by the Purchase Agreement prior to the Closing,
there shall not have been any material adverse change in the
condition, financial, or otherwise, or in the results of
operations of the Company or in its business taken as a whole.
7. Indemnification.
7.1. The Company agrees to indemnify and hold harmless the Agent,
each person who controls the Agent within the meaning of Section
15 of the Act and the Agent's employees, accountants, attorneys
and agents (the "Agent's Indemnitees") against any and all
losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act or any
other statute or at common law for any legal or other expenses
(including the costs of any investigation and preparation)
incurred by them in connection with any litigation, whether or
not resulting in any liability, but only insofar as such losses,
claims, damages, liabilities and litigation arise out of or are
based upon any untrue statement of material fact contained in the
Purchase Agreement or any amendment thereto or any application or
other document filed in any state or jurisdiction in order to
qualify the Securities under the Blue Sky or securities laws
thereof, or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, under the circumstances under which they were made, not
misleading, all as of the date of the Purchase Agreement or of
such amendment as the case may be; provided, however, that the
indemnity agreement contained in this Section 7.1 shall not apply
to amounts paid in settlement of any such litigation, if such
settlements are made without the consent of the Company, nor
shall it apply to the Agent's Indemnitees in respect to any such
losses, claims, damages or liabilities arising out of or based
upon any such untrue statement or alleged untrue statement or any
such omission or alleged omission, if such statement or omission
was made in reliance upon information furnished in writing to the
Company by the Agent specifically for use in connection with the
preparation of the Purchase Agreement or any such amendment
thereto or any application or other document filed in any state
or jurisdiction in order to qualify the Securities under the Blue
Sky or securities law thereof. This indemnity agreement is in
addition to any other liability, which the Company may otherwise
have to the Agent's Indemnitees. The Agent's Indemnitees agree,
within ten (10) days after the receipt by them of written notice
of the commencement of any action against them in respect to
which indemnity may be sought from the Company under this Section
7.1, to notify the Company in writing of the commencement of such
action; provided, however, that the failure of the Agent's
Indemnitees to notify the Company of any such action shall not
relieve the Company from any liability which it may have to the
Agent's Indemnitees on account of the indemnity agreement
contained in this Section 7.1, and further shall not relieve the
Company from any other liability which it may have to the Agent's
Indemnitees, and if the Agent's Indemnitees shall notify the
Company of the commencement thereof, the Company shall be
entitled to participate in (and, to the extent that the Company
shall wish, to direct) the defense thereof at its own expense,
but such defense shall be conducted by counsel of recognized
standing and reasonably satisfactory to the Agent's Indemnitees,
defendant or defendants, in such litigation. The Company agrees
to notify the Agent's Indemnitees promptly of the commencement of
any litigation or proceedings against the Company or any of the
Company's officers or directors of which the Company may be
advised in connection with the issue and sale of any of the
Securities and to furnish to the Agent's Indemnitees, at their
request, to provide copies of all pleadings therein and to permit
the Company's Indemnitees to be observers therein and apprise the
Agent's Indemnitees of all developments therein, all at the
Company's expense.
7.2. The Agent agrees, in the same manner and to the same extent
as set forth in Section 7.1 above, to indemnify and hold harmless
the Company, and the Company's employees, accountants, attorneys
and agents (the "Company's Indemnitees") with respect to (i) any
statement in or omission from the Purchase Agreement or any
amendment thereto or any application or other document filed in
any state or jurisdiction in order to qualify the Securities
under the Blue Sky or securities laws thereof, or any information
furnished pursuant to Section 3.4 hereof, if such statement or
omission was made in reliance upon information furnished in
writing to the Company by the Agent on its behalf specifically
for use in connection with the preparation thereof or supplement
thereto, or (ii) any untrue statement of a material fact made by
the Agent or its agents not based on statements in the Purchase
Agreement or authorized in writing by the Company, or with
respect to any misleading statement made by the Agent or its
agents resulting from the omission of material facts which
misleading statement is not based upon the Purchase Agreement, or
information furnished in writing by the Company or, (iii) any
breach of any representation, warranty or covenant made by the
Agent in this Agreement. The Agent's liability hereunder shall
be limited to the amount received by it for acting as Agent in
connection with the Offering. The Agent shall not be liable for
amounts paid in settlement of any such litigation if such
settlement was effected without its consent. In case of the
commencement of any action in respect of which indemnity may be
sought from the Agent, the Company's Indemnitees shall have the
same obligation to give notice as set forth in Section 7.1 above,
subject to the same loss of indemnity in the event such notice is
not given, and the Agent shall have the same right to participate
in (and, to the extent that it shall wish, to direct) the defense
of such action at its own expense, but such defense shall be
conducted by counsel of recognized standing reasonably
satisfactory to the Company. The Agent agrees to notify the
Company's Indemnitees and, at their request, to provide copies of
ail pleadings therein and to permit the Company's Indemnitees to
be observers therein and apprise them of all the developments
therein, all at the Agent's expense.
8. Effectiveness of Agreement. This Agreement shall become
effective upon the date of the execution hereof and shall remain
in full force and effect until June [ ] , 2000, or until the
Closing, if earlier.
9. Conditions of the Agent's Obligations. The Agent's
obligations to act as agent of the Company hereunder and to find
purchasers for the Securities shall be subject to the accuracy,
as of the Closing Date, of the representations and warranties on
the part of the Company herein contained, to the fulfillment of
or compliance by the Company with all covenants and conditions
hereof, and to the following additional conditions:
9.l. Counsel to the Agent shall not have objected in writing or
shall not have failed to give his consent to the Purchase
Agreement (which objection or failure to give consent shall not
have been done unreasonably).
9.2. The Agent shall not have disclosed to the Company that the
Purchase Agreement, or any amendment thereof, contains an untrue
statement of fact, which, in the opinion of counsel to the Agent,
is material, or omits to state a fact, which, in the opinion of
such counsel, is material and is required to be stated therein,
or is necessary to make the statements therein, under the
circumstances in which they were made, not misleading.
9.3. Between the date hereof and the Closing Date, the Company
shall not have sustained any loss on account of fire, explosion,
flood, accident, calamity or any other cause of such character as
would materially adversely affect its business or property
considered as an entire entity, whether or not such loss is
covered by insurance.
9.4. Between the date hereof and the Closing Date, there shall be
no litigation instituted or threatened against the Company, and
there shall be no proceeding instituted or threatened against the
Company before or by any federal or state commission, regulatory
body or administrative agency or other governmental body,
domestic or foreign, wherein an unfavorable ruling, decision or
finding would materially adversely affect the business,
franchises, license, permits, operations or financial condition
or income of the Company.
9.5. Except as contemplated herein or as set forth in the
Purchase Agreement, during the period subsequent to the most
recent financial statements referred to in the Purchase
Agreement, if any, and prior to the Closing Date, the Company (i)
shall have conducted its business in the usual and ordinary
manner as the same is being conducted as of the date hereof and
(ii) except in the ordinary course of business, the Company shall
not have incurred any liabilities or obligations (direct or
contingent) or disposed of any assets, or entered into any
material transaction or suffered or experienced any substantially
adverse change in its condition, financial or otherwise. At the
Closing Date, the equity account of the Company shall be
substantially the same as reflected in the most recent balance
sheet referred to in the Purchase Agreement without considering
the proceeds from the sale of the Securities.
9.6. The authorization of the Securities by the Company and all
proceedings and other legal matters incident thereto and to this
Agreement shall be reasonably satisfactory in all respects to
counsel to the Agent, who shall have furnished the Agent on the
Closing Date with such favorable opinion with respect to the
sufficiency of all corporate proceedings and other legal matters
relating to this Agreement as the Agent may reasonably require,
and the Company shall have furnished such counsel such documents
as he may have requested to enable him to pass upon the matters
referred to in this subparagraph.
9.7. The Company shall have furnished to the Agent the opinion,
dated the Closing Date, addressed to the Agent, from counsel to
the Company, as required by the Purchase Agreement.
9.8. The Company shall have furnished to the Agent a certificate
of the Chief Executive Officer and the Chief Financial Officer of
the Company, dated as of the Closing Date, to the effect that:
(a) the representations and warranties of the Company in this
Agreement are true and correct in all material respects at and as
of the Closing Date (other than representations and warranties
which by their terms are specifically limited to a date other
than the Closing Date), and the Company has complied with all the
agreements and has satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; and
(b) the respective signers have each carefully examined the
Purchase Agreement, and any amendments thereto, and, to the best
of their knowledge, all statements contained in the Purchase
Agreement are true and correct, and neither the Purchase
Agreement, nor any amendment thereto, includes any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, under the circumstances in which they were made, not
misleading; except as set forth in the Purchase Agreement, since
the respective dates as of which or the periods for which the
information is given in the Purchase Agreement and prior to the
date of such certificate, (a) there has not been any
substantially adverse change, financial and otherwise, in the
affairs of condition in the Company, and (b) the Company has not
incurred any material liabilities, direct or contingent, or
entered into any material transactions, otherwise than in the
ordinary course of business.
10. Termination.
10.1. This Agreement may be terminated by the Agent by
written notice to the Company in the event that the Company shall
have failed or been unable to comply with any of the terms,
conditions or provisions of this Agreement on the part of the
Company to be performed, complied with or fulfilled within the
respective times, if any, herein provided for, unless compliance
therewith or performance or satisfaction thereof shall have been
expressly waived by the Agent in writing.
10.2. This Agreement may be terminated by the Company by
written notice to the Agent in the event that the Agent shall
have failed or been unable to comply with any of the terms,
conditions or provisions of this Agreement on the part of the
Agent to be performed, complied with or fulfilled within the
respective times, if any, herein provided for, unless compliance
therewith or performance or satisfaction thereof shall have been
expressly waived by the Company in writing.
10.3. Any termination of this Agreement pursuant to this
Section shall be without liability of any character (including,
but not limited to, loss of anticipated profits or consequential
damages) on the part of any party thereto, except that the
Company shall remain obligated to pay the costs and expenses
provided to be paid by it specified in Sections 3.5; and the
Company and the Agent shall be obligated to pay, respectively,
all losses, claims, damages or liabilities, joint or several,
under Section 7.1 in the case of the Company and Section 7.2 in
the case of the Agent.
11. Agent's Representations, Warranties, and Covenants. The
Agent represents and warrants to and agrees with the Company
that:
11.1. Agent is a corporation duly incorporated and existing
under the laws of the State of Maryland. Agent is registered
with the Securities Exchange Commission and is a member in good
standing of the NASD.
11.2. Agent understands and acknowledges that the Securities
are not being registered under the Act, and that the Offering is
to be conducted pursuant to Regulation D. Accordingly, in
conducting its activities under this Agreement, Agent shall offer
Securities only to "accredited investors," as defined in
Regulation D.
11.3. Neither the Agent nor any of its Affiliates will take
any action which will impair the effectiveness of the
transactions contemplated by this Agreement.
11.4. All corporate actions by Agent required for the
execution, delivery and performance of this Agreement have been
taken. The execution and delivery of this Agreement by the Agent,
the observance and performance thereof, and the consummation of
the transactions contemplated herein or in the Purchase Agreement
do not and will not constitute a material breach of, or a
material default under, any instrument or agreement by which the
Agent is bound, and does not and will not, to the best of the
Agent's knowledge, contravene any existing law, decree or order
applicable to it. This Agreement constitutes a valid and binding
agreement of Agent, enforceable in accordance with its terms.
11.5. Agent's representations and warranties under this
Section shall be true and correct as of the Closing, and shall
survive the Closing for a period of six months.
12. Notices. Except as otherwise expressly provided in this
Agreement:
12.1. Whenever notice is required by the provisions of this
Agreement to be given to the Company, such notice shall be in
writing, addressed to the Company, at:
If to Company:
Majestic Companies, Ltd.
0000 Xxx Xxx Xxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, President
With a copy to:
Law Offices of Xxxx X. Tow
0000 Xxxxx Xxxxxx
Xxxxx #000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx XxXxxxx, Esq.
12.2. Whenever notice is required by the provisions of
this Agreement to be given to the Agent, such notice shall be
given in writing, addressed to the Agent, at:
If to the Agent:
May Xxxxx Group, Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
With copy to:
Xxxxxx Xxxxxxxx, L.L.P.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx #0
Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
12.3. Any notice instructing the Escrow Agent to distribute
monies or Securities held in Escrow must be signed by authorized
agents of both the Company and the Agent in order to be valid.
13. Miscellaneous.
13.1. Benefit. This Agreement is made solely for the benefit
of the Agent and the Company, their respective officers and
directors and any controlling person referred to in Section 15 of
the Act and their respective successors and assigns, and no other
person may acquire or have any right under or by virtue of this
Agreement, including, without limitation, the holders of any
Securities. The term "successor" or the term "successors and
assigns" as used in this Agreement shall not include any
purchasers, as such, of any of the Securities.
13.2. Survival. The respective indemnities, agreements,
representations, warranties, covenants and other statements of
the Company and the Agent, or the officers, directors or
controlling persons of the Company and the Agent as set forth in
or made pursuant to this Agreement and the indemnity agreements
of the Company and the Agent contained in Section 7 hereof shall
survive and remain in full force and effect, regardless of (i)
any investigation made by or on behalf of the Company or the
Agent or any such officer, director or controlling person of the
Company or of the Agent; (ii) delivery of or payment for the
Securities; or (iii) the Closing Date, and any successor of the
Company or the Agent or any controlling person, officer or
director thereof, as the case may be, shall be entitled to the
benefits hereof.
13.3. Governing Law. 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.
13.4. Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be deemed an original
and all of which together will constitute one and the same
instrument.
13.5. Confidential Information. All confidential financial
or business information (except publicly available or freely
usable material otherwise obtained from another source)
respecting either party will be used solely by the other party in
connection with the within transactions, be revealed only to
employees or contractors of such other party who are necessary to
the conduct of such transactions, and be otherwise held in strict
confidence.
13.6. Public Announcements. Prior to the Closing Date,
neither party hereto will issue any public announcement
concerning the within transactions without the approval of the
other party, except as may be required by applicable securities
or other laws.
13.7. Finders. The parties acknowledge that no person has
acted as a finder in connection with the transactions
contemplated herein and each will agree to indemnify the other
with respect to any other claim for a finder's fee in connection
with the offering.
13.8. Financial Advisers. The parties acknowledge that the
Company has or may retain financial and other advisers in
connection with this transaction (the "Advisers"), and the
Company agrees to indemnify and hold the Placement Agent harmless
for any fees and expenses of the Advisers.
13.9. Recitals. The recitals to this Agreement are a
material part hereof, and each recital is incorporated into this
Agreement by reference and made a part of this Agreement.
13.10. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with regard to the subject
matter hereof and supersedes all prior agreements or
understandings between the parties.
IN WITNESS WHEREOF, the parties hereto have duly caused this
Agreement to be executed as of the day and year first above
written.
MAJESTIC COMPANIES, LTD.
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: President and Chief Executive Officer
MAY XXXXX GROUP, INC.
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title:
