Line of Credit Agreement (2000)Full Document 

Start of Preview
LINE OF CREDIT AGREEMENT dated as of 8th day of June 2000, (the
"Agreement") between GMF Holdings (the "Investor"), MAY DAVIS
GROUP (the "Placement Agent") located  at One World Trade Center,
New York, New York, a corporation organized under the laws of
Maryland, and MAJESTIC COMPANIES, LTD., a corporation organized
and existing under the laws of the State of Nevada (the
"Company").

WHEREAS, the parties desire that, upon the terms and subject to
the conditions contained herein, the Company shall issue and sell
to the Investor, from time to time as provided herein, and the
Investor shall purchase up to Two Million ($2,000,000) Dollars of
Debentures for a total purchase price of Two Million ($2,000,000)
Dollars; and

WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("Section 4(2)") and the Regulation D
("Regulation D") of the Securities Act of 1933, as amended, and
the regulations promulgated there under (the "Securities Act"),
and or upon such other exemption from the registration
requirements of the Securities Act as may be available with
respect to any or all of the investments in the Debentures to be
made hereunder; and

NOW, THEREFORE, the parties hereto agree as follows:

                            ARTICLE I
                     Certain Definitions

Section 1.1  "Advance" shall mean each occasion the Company
elects to exercise its right to tender an Advance Notice
requiring the Investor to advance funds to the Company, subject
to the terms of this Agreement.

Section 1.2  "Advance Date" shall mean the date of an Advance
by the Investor to the Company.

Section 1.3  "Advance Notice" shall mean a written notice to
the Investor setting forth the Advance Amount that the Company
requests from the Investor and Compliance Certification from the
Company as attached hereto as Exhibit B.

Section 1.4  "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.

Section 1.5  "Closing" shall mean one of the closings of a
purchase and sale of the Debentures pursuant to Section 2.1.

Section 1.6  "Commitment Amount" shall mean the $2,000,000 up
to which the Investor has agreed to provide to the Company in
order to purchase the Debentures pursuant to the terms and
conditions of this Agreement.

Section 1.7  "Commitment Period" shall mean the period
commencing on the earlier to occur of the Effective Date, or (ii)
such earlier date as the Company and the Investor may mutually
agree in writing, and expiring on the earliest to occur of (x)
the date on which the Investor shall have purchased Debentures
pursuant to this Agreement in the amount of at least $2,000,000
unless such date is extended by the Investor, (y) the date this
Agreement is terminated pursuant to Section 2.4, or (z) the date
occurring two years from the date hereof.

Section 1.8  "Common Stock" shall mean the Company's common
stock, par value $0.001 per share.

Section 1.9  "Condition Satisfaction Date" shall have the
meaning set forth in Section 7.2.

Section 1.10  "Damages" shall mean any loss, claim, damage,
liability, costs and expenses (including, without limitation,
reasonable attorney's fees and disbursements and costs and
expenses of expert witnesses and investigation).

Section 1.11  "Debentures" shall mean the Debenture in the form
of Exhibit C annexed hereto.

Section 1.12  "Effective Date" shall mean the date on which the
SEC first declares effective a Registration Statement registering
the resale of the Registrable Securities as set forth in Section
7.2(a).

Section 1.13  "Escrow Agent" shall be First Union National
Bank or its successors.

Section 1.14  "Escrow Agreement" shall mean the document which
is annexed hereto and referenced in Section 2 of this Agreement.

Section 1.15  "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations
promulgated there under.

Section 1.16  "Legend" shall mean that legend as set forth in
Section 9.1.

Section 1.17  "Material Adverse Effect" shall mean any effect on
the business, Bid Price, operations, properties, prospects, or
financial condition of the Company that is material and adverse
to the Company and its subsidiaries and affiliates, taken as a
whole, and/or any condition, circumstance, or situation that
would prohibit or otherwise materially interfere with the ability
of the Company to enter into and perform any of its obligations
under this Agreement, the Debenture, the Registration Rights
Agreement or the Escrow Agreement in any material respect.

Section 1.18  "Maximum Advance Amount" on any Advance Date shall
be equal to the difference between (i) the amount indicated
opposite the range of the 30 Day Average Daily Trading Volume on
such Advance Date, as set forth in the table below and (ii) the
sum of the Advances made pursuant to this Agreement, in the 30
calendar days immediately preceding the Advance Notice:

30-Day Average Daily Trading (1)           Maximum Advance Amount (2)

$25,000 -  $ 50,000                                  $100,000
$50,001 -  $100,000                                  $200,000
$100,001 - $200,000                                  $350,000
$200,001 and Over                                    $500,000

(1)  The 30-Day Average Trading Volume shall be equal to the
average of the Bid Price multiplied by the volume for each of the
30 calendar days preceding the Advance Date.

(2)  Assuming that no Advances have been made pursuant to this
Agreement during the preceding 30 calendar days.

Section 1.19  "NASD" shall mean the National Association of
Securities Dealers, Inc.

Section 1.20  "Person" shall mean an individual, a corporation,
a partnership, an association, a trust or other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.

Section 1.21  "Principal Market" shall mean the Nasdaq National
Market, the Nasdaq Small Cap Market, the American Stock Exchange
or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.

Section 1.22  "Registrable Securities" shall mean the shares of
Common Stock (i) in respect of which the Registration Statement
has not been declared effective by the SEC, (ii) which have not
been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force)
under the Securities Act ("Rule 144") are met or (iii) which have
not been otherwise transferred to holder who may trade such
shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend.

Section 1.23  "Registration Rights Agreement" shall mean the
agreement regarding the filing of the Registration Statement for
the resale of the Registrable Securities, entered into between
the Company and the Investor on the Subscription Date annexed
hereto as Exhibit D.

Section 1.24  "Registration Statement" shall mean a registration
statement on Form S-3 (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

End of Preview