Document:

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TOWARD
RESALE OR DISTRIBUTION. THIS WARRANT MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT.

                           FORM OF
                MAJESTIC COMPANIES LIMITED
              WARRANT TO PURCHASE COMMON STOCK

Warrant No.:                           Number of Shares Issuable
Date of Issuance:

Majestic Companies, Ltd., a Nevada corporation (the "Company"),
hereby certifies that, for [$INSERT], and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, [INSERT] the registered holder hereof or its
permitted assigns, is entitled, subject to the terms set forth
below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but
not after 5:00 P.M. Eastern Standard Time on the Expiration Date
(as defined herein) [ INSERT] fully paid nonassessable shares of
Common Stock (as defined herein) of the Company (the "Warrant
Shares") at the Warrant Exercise Price per share provided in
Section l(b) below;

Section 1.

(a)  Letter Agreement.  This Warrant is one of the warrants (the
" Warrants") issued pursuant to the terms of [Securities Purchase
Agreement /Equity Line of Credit/ Placement Agent Agreement]
between the Company and [ INSERT], dated June    [     ] , 2000.

(b)  Definitions.  The following words and terms as used in this
Warrant shall have the following meanings:

(i)  "Common Stock" means (i) the Company's common stock, par
value 0.001 per share, and (ii) any capital stock into which such
Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.

(ii)  "Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such
time, plus the number of shares of Common Stock deemed to be
outstanding pursuant to Sections 8(b)(i) and 8(b)(ii) hereof
regardless of whether the Options (as defined below) are actually
exercisable or convertible at such time, but excluding any shares
of Common Stock owned or held by or for the account of the
Company or issuable upon exercise of the Warrants.

(iii)  "Convertible Securities"  means any stock or securities
(other than Options) directly or indirectly convertible into or
exchangeable for Common Stock.

(iv)  "Expiration Date" means the date five (5) years from the
date of the issuance of the Warrant or, if such date falls on a
Saturday, Sunday or other day on which banks are required or
authorized to be closed in the City of New York or the State of
New York (a "Holiday"), the next preceding date that is not a
Holiday.

(v)  "Options"  means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.

"Other Securities"  means other Warrants.

(vii)  "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department
or agency thereof.

(viii)  "Principal Market"  means the Nasdaq Bulletin
Board System or Nasdaq Small-Cap Market.

(ix)  "Securities Act" means the Securities Act of 1933, as amended.

(x)  "Warrant" shall mean this warrant and all warrants issued in
exchange, transfer or replacement of any thereof.

(xi)  "Warrant Exercise Price" shall be equal to $_____,
subject to adjustment as hereinafter provided.

(b)  Other Definitional Provisions.

(i)  Except as otherwise specified herein, all references herein
(A) to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to
herein, shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to
time.

(ii)  When used in this Warrant, the words "herein," "hereof," and
"hereunder," and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and
the words "Section," "Schedule," and "Exhibit" shall refer to
Sections of, and Schedules and Exhibits to, this Warrant unless
otherwise specified.

(iii)  Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number
includes the plural, and vice versa.

Section 2.  Exercise of Warrant.

(a)  Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of
the Company, in whole or in part, at any time on any  business
day or after the opening of business on the date hereof and prior
to 11:59 P.M. Eastern Standard Time on the Expiration Date by (i)
delivery of a written notice, in the form of the subscription
notice attached as Exhibit A hereto, of such holder's election to
exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, (ii) (A) payment to the Company
of an amount equal to the Warrant Exercise Price multiplied by
the number of Warrant Shares as to which the Warrant is being
exercised (plus any applicable issue or transfer taxes) (the
"Aggregate Exercise Price") in cash or by check or wire transfer,
or (B) by notifying the Company that it should subtract from the
number of Warrant Shares Issuable to the holder upon such
exercise an amount of warrant shares having a  last reported sale
price (as reported by Bloomberg) or fair market value on the date
immediately preceding the date of the subscription notice equal
the Aggregate Exercise Price of the Warrant shares for which this
warrant is being exercised (a "Cashless Exercise"), and (iii) the
surrender of this Warrant, to a common carrier for delivery to
the Company as soon as practicable following such date, this
Warrant (or an indemnification undertaking with respect to this
Warrant in the case of its loss, theft, or destruction); provided
that if such Warrant Shares are to be issued in any name other
than that of the registered holder of this Warrant, such issuance
shall be deemed a transfer and the provisions of Section 7 shall
be applicable.  In the event of any exercise of the rights
represented by this Warrant in compliance with this Section 2, a
certificate or certificates for the Warrant Shares so purchased,
in such denominations as may be requested by the holder hereof
and registered in the name of, or as directed by, the holder,
shall be delivered at the Company's expense to, or as directed
by, such holder as soon as practicable after such rights shall
have been so exercised, and in any event no later than five (5)
business days after the Company's receipt of the Exercise Notice,
the Aggregate Exercise Price and this Warrant (or indemnification
undertaking with respect to this Warrant in the case of its loss,
theft or destruction)  Upon delivery of the Exercise Notice and
Aggregate Exercise Price referred to in clause (ii) (A) above or
notification to the Company of a Cashless exercise referred to in
clause (ii) (B) above, the holder of this Warrant shall be deemed
for all corporate purposes to have become the holder of record of
the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of this Warrant
as required by clause (iii) above or the certificates evidencing
such Warrant Shares.  In the case of a dispute as to the
determination of the Warrant Exercise Price or the Average Market
Price of a security or the arithmetic calculation of the Warrant
Shares, the Company shall promptly issue to the holder the number
of shares of Common Stock that is not disputed and shall submit
the disputed determinations or arithmetic calculations to the
holder via facsimile within five (5) business days of receipt of
the holder's subscription notice. If the holder and the Company
are unable to agree upon the determination of the Warrant
Exercise Price or Average Market Price or arithmetic calculation
of the Warrant Shares within five (5) business days of such
disputed determination or arithmetic calculation being submitted
to the holder, then the Company shall immediately submit via
facsimile (i) the disputed determination of the Warrant Exercise
Price or the Average Market Price to an independent, reputable
investment banking firm or (ii) the disputed arithmetic
calculation of the Warrant Shares to its independent, outside
accountant. The Company shall cause the investment banking firm
or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the
holder of the results no later than forty-eight (48) hours from
the time it receives the disputed determinations or calculations.
Such investment bank's or accountant's determination or
calculation, as the case may be, shall be deemed conclusive
absent manifest error and the Company shall be liable for the
costs and expenses related to such determination or calculation.

(b)  Unless the rights represented by this Warrant shall have
expired or shall have been fully exercised, the Company shall, as
soon as practicable and in any event no later than five (5)
business days after any exercise and at its own expense, issue a
new Warrant identical in all respects to the Warrant exercised
except (i) it shall represent rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise
under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant is exercised, and (ii) the
holder thereof shall be deemed for all corporate purposes to have
become the holder of record of such Warrant Shares immediately
prior to the close of business on the date on which the Warrant
is surrendered and payment of the amount due in respect of such
exercise and any applicable taxes is made, irrespective of the
date of delivery of certificates evidencing such Warrant Shares,
except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed,
such person shall be deemed to have become the holder of such
Warrant Shares at the opening of business on the next succeeding
date on which the stock transfer books are open.  Upon
presentation of a duly executed Subscription Form in the Form of
Exhibit A to this Warrant, the holder shall be entitled to
exercise this Warrant in whole or in part, if the holder shall
have previously exercised and surrendered this Warrant and the
Company shall not have issued a new Warrant representing the
number of shares issuable following such prior exercise.

(c)  No fractional shares of Common Stock are to be issued
upon the exercise of this Warrant, but rather the number of
shares of Common Stock issued upon exercise of this Warrant shall
be rounded up or down to the nearest whole number.

(d)  If the Company shall fail for any reason or for no
reason to issue to holder on a timely basis as described under
this Section 2, a certificate for the number of shares of Common
Stock to which the holder is entitled upon the holder's exercise
of this Warrant or a new Warrant for the number of shares of
common stock to which such holder is entitled pursuant to section
2(b) hereof, the Company shall, in addition to any other remedies
under this Agreement or otherwise available to such holder pay as
additional damages in cash to such holder for each day such
issuance is not timely effected an amount equal to one percent
(1%) of the product of (A) the sum of the number of shares of
Common Stock not issued to the holder on a timely basis and to
which the holder is entitled and/or, the number of shares
represented by the portion of this Warrant which is not being
converted, as the case may be, and (B) the sum derived by
subtracting (1) the Warrant exercise price then in effect, from
(2) the average of the Closing Bid Price of the Common Stock on
the last possible date which the Company could have issued Common
Stock or Warrant, as the case may be, to the holder without
violating this Section 2.

(e)  The Company shall not affect any exercise of any
Warrant and no holder of any Warrant shall have the right to
exercise any Warrant pursuant to Section 2 to the extent that
after giving to such exercise such person (together with such
Persons affiliates) (A) would beneficially owned in excess of
4.9% of the outstanding shares of Common Stock following such
conversion and (B) would have acquired, through exercise of any
Warrant or otherwise, in excess of 4.9% of the outstanding shares
of the Common Stock following such exercise during the 60-day
period ending on and including such exercise date.  For purposes
of the foregoing sentence, the number of shares of Common Stock
beneficially owned by a person and its affiliates or acquired by
a person and its affiliates, as the case may be, shall include
the number of shares of Common Stock issuable upon the exercise
of the Warrants with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of
Common Stock which would be issuable upon (i) exercise of the
remaining, non exercisable Warrants beneficially owned by such
person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company subject to limitation on conversion or exercise analogous
to the limited contained herein beneficially owned by such Person
and its affiliates.  Except as set forth in the preceding
sentence, for purposes of this section 2(e), beneficial ownership
shall be calculated in accordance with Section 13 (d) of the
Securities Exchange Act of 1934, as amended.  Notwithstanding
anything to the contrary contained herein, each Exercise Notice
shall constitute a representation by the holder submitting such
Exercise Notice that, after giving effect to such Exercise Notice
(A) the holder will not beneficially own (as determined in
accordance with this Section 2(e)) and (B) during the 60-day
period ending on and including such exercise date, the holder
will not have acquired, through exercise of any Warrant or
otherwise, a number of shares of Common Stock in excess of 4.9%
of the outstanding shares of Common Stock as reflected in the
Company's most recent Form 10-Q or Form 10-K, as the case may be,
or more recent public release or other public notice by the
Company setting forth the number of Shares of Common Stock
outstanding, but after giving effect to exercise of any Warrant
by such holder since the date as of which such numbers of
outstanding shares of the Common Stock was reported.

Section 3.  Covenants as to Common Stock.  The Company hereby
covenants and agrees as follows:

(a)  This Warrant is issued in substitution for or
replacement of this Warrant will upon issuance be, duly
authorized and validly issued.

(b)  All Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon
issuance, be validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue
thereof.

(c)  During the period within which the rights represented
by this Warrant may be exercised, the Company will at all times
have authorized and reserved at least the number of shares of
Common Stock needed to provide for the exercise of the rights
then represented by this Warrant and the par value of said shares
will at all times be less than or equal to the applicable Warrant
Exercise Price.

(d)  The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of this Warrant
upon each national securities exchange or automated quotation
system, if any, or over-the-counter-bulletin board upon which
shares of Common Stock are then listed or quoted (subject to
official notice of the over-the-counter bulletin board of
issuance upon exercise of this Warrant) and shall maintain, so
long as any other shares of Common Stock shall be so listed or
quoted, such listing or quotation of all shares of Common Stock
from time to time issuable upon the exercise of this Warrant; and
the Company shall so list or obtain quotation on each such
national securities exchange, automated quotation system or over-
the-counter bulletin board, as the case may be, and shall
maintain such listing in quotation of, any other shares of
capital stock of the Company issuable upon the exercise of this
Warrant if and so long as any shares of the same class shall be
listed on such national securities exchange, automated quotation
system or over-the-counter bulletin board.

(e)  The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant
and in the taking of all such action as may reasonably be
requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution
or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing,
the Company (i) will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this
Warrant.

(f)  This Warrant will be binding upon any entity succeeding
to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.

(g)  If at any time the Company proposes to file with the
Securities and Exchange Commission a registration statement
relating to an offering for its own account or the account of
others under the Securities Act of any of its Securities (other
than on Form S-4 or Form S-8 (or their equivalents at such time)
relating to securities to be issued solely in connection with any
acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee
benefit plans the Company shall promptly send to the Holder's
written notice of the Company's intention to file a registration
statement and of the holder's rights under this section and, if
within twenty (20) days after receipt of such notice, the holder
hereof shall so request in writing, the Company shall include in
such registration statement all or any part of the Common Stock
underlying this Warrant the holder requests to be registered.  If
a registration pursuant this section is to be an underwritten
public offering and the managing underwriters advise the Company
in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the
number of shares of Company common stock which may be included in
the registration statement is necessary to facilitate and not
adversely affect the proposed offering, then the Company shall
included in such registration : (1) first, all securities the
Company proposes to sell for its own account, (2) second, up to
the full number of securities proposed to be registered for the
account of the holders of securities entitled to inclusion of
their securities requested to be registered by the holder hereof
and other holders of securities entitled to participate in the
registration, as of the date hereof, drawn from them pro rata
based on the number each has requested to be included in such
registration.

Section 4.  Taxes.  The Company shall not be required to pay
any tax or taxes attributable to the initial issuance of the
Warrant Shares or any permitted transfer involved in the issue or
delivery of any certificates for Warrant Shares in a name other
than that of the registered holder hereof or upon any permitted
transfer of this Warrant.

Section 5.  Warrant Holder Not Deemed a Stockholder.  Except
as otherwise specifically provided herein, no holder, as such, of
this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of the Company for any purpose, nor
shall anything contained in this Warrant be construed to confer
upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the
issuance to the holder of this Warrant of the Warrant Shares
which he or she is then entitled to receive upon the due exercise
of this Warrant.

In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on such holder to purchase any
securities or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide
the holder of this Warrant with copies of the same notices and
other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.

Section 6.  Representations of Holder.  The holder of this
Warrant, by the acceptance hereof, represents (and any assignor
shall represent) that it is acquiring this Warrant and the
Warrant Shares for its own account for investment purposes and
not with a view to, or for sale in connection with, any
distribution hereof, and not with any present intention of
distributing any of the same. The holder of this Warrant further
represents (and any assignor shall represent), by acceptance
hereof, that, as of this date, such holder is an "accredited
investor" as such term is defined in Rule 501(a)(1) of Regulation
D promulgated by the Securities and Exchange Commission under the
Securities Act (an "Accredited Investor"). Upon exercise of this
Warrant, the holder shall, if requested by the Company, confirm
in writing, in a form satisfactory to the Company, that the
Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a nominee for any other party,
for investment, and not with a view toward distribution or resale
and that such holder is an Accredited Investor. If such holder
cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder's exercise of
the Warrant that the Company receive such other representations
as the Company considers reasonably necessary to assure the
Company that the issuance of its securities upon exercise of the
Warrant shall not violate any United States Federal or state
securities laws.

Section 7.  Ownership and Transfer.

(a)  The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this
Warrant, in which the Company shall record the name and address
of the person in whose name this Warrant has been issued, as well
as the name and address of each permissible transferee. The
Company may treat the person in whose name any Warrant is
registered on the register as the owner and holder thereof for
all purposes, notwithstanding any notice to the contrary, but in
all events recognizing any transfers made in accordance with the
terms of this Warrant.

(b)  This Warrant and the rights granted to the holder
hereof are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly executed warrant power in
the form of Exhibit B attached hereto; provided, however, that
any transfer or assignment shall subject to the conditions set
forth in Section 6 above and Section 7(c) below.

(c)  The holder of this Warrant understands that this
Warrant has not been and is not expected to be, registered under
the Securities Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (a)
subsequently registered thereunder, or (b) such holder shall have
delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the
effect that the securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption
from such registration.  Any sale of such securities made in
reliance on Rule 144 promulgated under the Securities Act may be
made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any resale of such securities
under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or
the rules and regulations of the Securities and Exchange
Commission thereunder; and neither the Company nor any other
person is under any obligation to register the Series A Preferred
Share Warrants under the Securities Act or any state securities
laws or to comply with the terms and conditions of any exemption
thereunder except as set forth in Section 7(d) below.

(d)  The Company is obligated to register the Warrant Shares
for resale under the Securities Act pursuant to the Registration
Rights Agreement dated as of June [   ] , 2000, by and between
the Company and the Buyers listed on the signature page thereto
(the "Registration Rights Agreement") and the initial holder of
this Warrant (and certain assignees thereof) is entitled to the
registration rights in respect of the Warrant Shares as set forth
in the Registration Rights Agreement.

Section 8.  Adjustment of Warrant Exercise Price.  In order to
prevent dilution of the rights granted under this Warrant, the
Warrant Exercise Price shall be adjusted from time to time as
follows:

(a)  Adjustment of Warrant Exercise Price upon Subdivision or
Combination of Common Stock. If the Company at any time after the
date of issuance of this Warrant, subdivides (by any stock split,
stock dividend, re-capitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater
number of shares, the Warrant Exercise Price in effect
immediately prior to such subdivision will be proportionately
reduced and the number of shares of Common Stock obtainable upon
exercise of this Warrant will be proportionately increased. If
the Company at any time after the date of issuance of this
Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the Warrant
Exercise Price in effect immediately prior to such combination
will be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be
proportionately decreased.

(b)  Reorganization, Reclassification, Consolidation, Merger or
Sale.  Any re-capitalization, reorganization reclassification,
consolidation, merger, sale of all or substantially all of the
Company's assets to another Person or other similar transaction
which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as in "Organic
Change." Prior to the consummation of any Organic Change, the
Company will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Warrants then outstanding) to insure that, upon the consummation
of such Organic Change, each of the holders of the Warrants will
thereafter have the right to acquire and receive in lieu of the
Common Stock, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of the Warrants had such
Organic Change not taken place. In any such case, the Company
will make appropriate provision (in form and substance reasonably
satisfactory to the holders of a majority of the Warrants then
outstanding) with respect to such holders' rights and interests
to insure that the provisions of this Section 8(b) will
thereafter be applicable to the Warrants.

(c)  Notices.

(i)  Immediately upon any adjustment of the Warrant
Exercise Price pursuant to this Section 8, the Company will give
written notice thereof to the holder of this Warrant, setting
forth in reasonable detail and certifying the calculation of such
adjustment.

(ii)  The Company will give written notice to the holder
of this Warrant at least twenty (20) days prior to the date on
which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock,
(B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect
to any Organic Change, dissolution or liquidation, except that in
no event shall such notice be provided to such holder prior to
such information being made known to the public.

(iii)  The Company will also give written notice to
the holder of this Warrant at least twenty (20) days prior to the
date on which any Organic Change, dissolution or liquidation will
take place.

Section 9.  Lost, Stolen, Mutilated or Destroyed Warrant.  If
this Warrant is lost, stolen, mutilated or destroyed, the Company
shall, on receipt of an indemnification undertaking, issue a new
Warrant of like denomination and tenor as the Warrant so lost,
stolen, mutilated or destroyed.

Section 10.  Notice.  Any notices, consents, waivers, or other
communications required or permitted to be given under the terms
of this Warrant must be in writing and will be deemed to have
been delivered (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile, provided a copy is mailed
by U.S. certified mail, return receipt requested; (iii) three (3)
days after being sent by U.S. certified mail, return receipt
requested; or (iv) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

If to the Company:

Majestic Companies, Ltd.
8880 Rio San Diego - 8th Floor
San Diego, CA 92108
Attention:  Francis Zubrowski, President
Telephone:  (619) 209-6077
Facsimile:  (619) 209-6078

With a copy to:

Law Offices of Marc C. Tow
3900 Birch Street
Suite # 113
Newport Beach, CA 92660
Attention:  James DeOlden, Esq.
Telephone:  (949) 975-0544
Facsimile:  (949) 975-0547

If to a holder of this Warrant, to it at the address set
forth below such holder's signature on the signature page hereof.
Each party shall provide five (5) days' prior written notice to
the other party of any change in address or facsimile number.

Section 11.  Amendments.  This Warrant and any term hereof may
be changed, waived, discharged, or terminated only by an
instrument in writing signed by the party or holder hereof
against which enforcement of such change, waiver, discharge or
termination is sought.

Section 12.  Date.  The date of this Warrant is June [   ] ,
2000. This Warrant, in all events, shall be wholly void and of no
effect after the close of business on the Expiration Date, except
that notwithstanding any other provisions hereof, the provisions
of Section 7 shall continue in full force and effect after such
date as to any Warrant Shares or other securities issued upon the
exercise of this Warrant.

Section 13.  Amendment and Waiver.  Except as otherwise
provided herein, the provisions of the Warrants may be amended
and the Company may take any action herein prohibited, or omitted
to perform any act herein required to be performed by it, only if
the Company has obtained the written consent of the holders of
Warrants representing a majority of the shares of Common Stock
obtainable upon exercise of the Warrants then outstanding,
provided that no such action may increase the Warrant Exercise
Price of the Warrants or decrease the number of shares or class
of stock obtainable upon exercise of any warrants with out the
written consent of the holder of such warrant.

Section 14.  Descriptive Headings; Governing Law. The
descriptive headings of the several sections of this Warrant are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. This Warrant 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.

This Warrant has been duly executed by the Company as of the date
first set forth above.

                              MAJESTIC COMPANIES, LTD.

                              By: /s/  Francis Zubrowski
                              Francis Zubrowski, President and Chief
                              Executive Officer

[HOLDER]

By:       _______________________________
Name:_________________________________
Title:    _______________________________
Address:  _______________________________
          _______________________________
          _______________________________

                            EXHIBIT A

                      FORM OF SUBSCRIPTION

(Complete and sign only exercise of the Warrant in whole or in
part.)

TO:  Majestic Companies, Ltd.

The undersigned, the holder of the attached Warrant to which
this Form of Subscription applies, hereby irrevocably elects to
exercise the purchase rights represented by such warrant for and
to purchase thereunder _______ shares of Common Stock, no par
value per share (the "Shares"), from Majestic Companies, Ltd.,
(or such other securities issuable pursuant to the terms of the
Warrant) and either: (i) herewith makes payment of $_______
therefor in cash or by certified or official bank check or (ii)
elects to make payment upon a cashless basis pursuant to Section
2(b) of the Warrant and hereby exercises ______ Warrants and the
Average Market Price Per Share for purposes hereof is $_______.
The undersigned hereby requests that the certificate(s)
representing such securities be issued in the name(s) and
delivered t the address(es) as follows:

Name:       _____________________________________________
Address:    _____________________________________________
Social Security Number:
            _____________________________________________
Deliver to: _____________________________________________
Address:    _____________________________________________

This the foregoing subscription evidences an exercise of the
Warrant to purchase fewer than all of the Shares (or other
securities issuable pursuant to the terms of the Warrant) to
which the undersigned is entitled under such warrant, please
issue a new warrant, of like tenor, relating to the remaining
portion of the securities issuable upon exercise of such warrant
(or other securities issuable pursuant to the terms of such
warrant) in the name(s), and deliver the same to the address(es),
as follow:

Name:       ______________________________________________
Address:    ______________________________________________
            ______________________________________________
Dated:      ______________________________________________

(Name of Holder)            (Social Security or Taxpayer Identification
                             Number of Holder, if applicable)

_____________________________
(Signature of Holder or Authorized
Signatory)

Signature Guaranteed:  __________________________________

                          EXHIBIT B

                   FORM OF WARRANT POWER

FOR VALUE RECEIVED, the undersigned does hereby assign and
transfer to ____________________________________________ Federal
Identification No.______, a warrant to purchase shares of the
capital stock of Majestic Companies, Ltd., a Nevada corporation,
represented by warrant certificate No._________, standing in the
name of the undersigned on the books of said corporation. The
undersigned does hereby irrevocably constitute and appoint
____________________________, attorney to transfer the warrants
of said corporation, with full power of substitution in the
premises.

Dated: _______________________

By:  _________________________
Its: _________________________LINE OF CREDIT AGREEMENT

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
qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale of
the Registrable Securities to be registered there under in
accordance with the provisions of this Agreement and the
Registration Rights Agreement, and in accordance with the
intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable
Securities under the Securities Act.

Section 1.25  "Regulation D" shall have the meaning set forth in
the recitals of this Agreement.

Section 1.26  "SEC" shall mean the Securities and Exchange
Commission.

Section 1.27  "Section 4(2)" shall have the meaning set forth in
the recitals of this Agreement.

Section 1.28  "Securities Act" shall have the meaning set forth
in the recitals of this Agreement.

Section 1.29  "SEC Documents" shall meant the Form 10-KSB, Form
10-QSB's, Form 8-K's, Proxy Statements of the Company as
supplemented to the date hereof, filed by the Company for a
period of at twelve (12) months immediately preceding the date
hereof or the Advance Date, as the case may be, until such time
as the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the
Registration Rights Agreement.

Section 1.30  "Subscription Date" shall mean the date on which
this Agreement is executed and delivered by the parties hereto.

Section 1.31  "Trading Day" shall mean any day during which the
New York Stock Exchange shall be open for business.

                           ARTICLE II
                            Advances

Section 2.1  Investments.

(a)  Advances.  Upon the terms and conditions set forth herein
(including without limitation, the provisions of Article VII
hereof), on any Advance Date the Company may request an Advance
by the Investor by the delivery of an Advance Notice.  The amount
of the Debenture that the Investor shall receive pursuant to such
Advance shall be equal to the amount of the Advance specified in
the Advance Notice, which Advance shall not exceed the Maximum
Advance Amount on such date.

Section 2.2  Mechanics.

(a)  Advance Notice.  At any time during the Commitment Period,
the Company may deliver an Advance Notice to the Investor,
subject to the conditions set forth in Section 2.4; provided,
however, the amount for each Advance as designated by the Company
in the applicable Advance notice shall not be (i) less than
$25,000, or (ii) more than the Maximum Advance Amount.  The
aggregate amount of the Advances pursuant to this Agreement shall
not exceed the Commitment Amount, unless otherwise agreed by the
Investor in the Investor's sole and absolute discretion.

(b)  Date of Delivery of Advance Notice.  An Advance Notice shall
be deemed delivered on (i) the Trading Day it is received by
facsimile or otherwise by the Investor if such notice is received
prior to 12:00 noon Eastern Time, or (ii) the immediately
succeeding Trading Day if it is received by facsimile or
otherwise after 12:00 noon Eastern Time on a Trading Day or at
any time on a day which is not a Trading Day.  No Advance Notice
may be deemed delivered, on a day that is not a Trading Day.

Section 2.3  Closings.  On each Advance Date for an Advance,
which shall be within five (5) Trading Days of an Advance Notice,
(i) the Company shall deliver to the Escrow Agent one or more
Debentures at the Investor's option, representing the amount of
the Advance by the Investor pursuant to Section 2.1 herein,
registered in the name of the Investor and (ii) the Investor
shall deliver to escrow the amount of the Advance specified in
the Advance Notice by wire transfer of immediately available
funds to the Escrow Agent on or before the Advance Date.  In
addition, on or prior to the Advance Date, each of the Company
and the Investor shall deliver to the Escrow Agent all documents,
instruments and writings required to be delivered or reasonably
requested by either of them pursuant to this Agreement in order
to implement and effect the transactions contemplated herein.
Payment of funds to the Company and delivery of the Debentures to
the Investor shall occur out of escrow in accordance with the
conditions set forth above and those contained in the Escrow
Agreement referred to in Section 7.2(j); provided, however, that
to the extent the Company has not paid the fees, expenses, and
disbursements of the Investor's counsel, Escrow Agent, and the
Placement Agent in accordance with Section 13.4, the amount of
such fees, expenses, and disbursements must be paid by the
Company in immediately available funds from the Amount of the
Advance held by the Escrow Agent, at the direction of the
Investor, to Investor's counsel, the Escrow Agent, and the
Placement Agent with no reduction in the amount of Debenture on
such Advance Date.

Section 2.4  Termination of Investment.  The obligation of the
Investor to make an Advance to the Company pursuant to this
Agreement shall terminate permanently (including with respect to
an Advance Date that has not yet occurred) in the event that (i)
there shall occur any stop order or suspension of the
effectiveness of the Registration Statement for an aggregate of
twenty (20) Trading Days during the Commitment Period, for any
reason other than deferral or suspensions in accordance with the
Registration Rights Agreement as a result of corporate
developments subsequent to the Subscription Date that would
require such Registration Statement to be amended to reflect such
event in order to maintain its compliance with the disclosure
requirements of the Securities Act or (ii) the Company shall at
any time fail materially to comply with the requirements of
Section 6.3, 6.4 or 6.6.

Section 2.5  Agreement to Advance Funds.

(a)  The Investor agrees to advance the amount specified in the
Advance Notice to the Company within five Trading Days after the
completion of each of the following conditions and the other
conditions set forth in this Agreement:

(i)  the execution and delivery by the Company, and the Investor,
or this Agreement, and all Exhibits and Attachments hereto;

(ii)  delivery into escrow by the Company of the original Debenture;

(iii)  the Company's Registration Statement with respect to
the resale of the Registrable Securities in accordance with the
terms of the Registration Rights Agreement shall have been
declared effective by the SEC;

(iv)  the Company shall have obtained all permits and
qualifications required by any applicable state for the offer and
sale of the Registrable Securities, or shall have the
availability of exemptions therefrom.  The sale and issuance of
the Registrable Securities shall be legally permitted by all laws
and regulations to which the Company is subject; and

(v)  payment of fees as set forth in Section 13.4 below.

                             ARTICLE III
            Representations And Warranties Of Investor

Investor represents and warrants to, and agrees with, the Company
that:

Section 3.1  Organization and Authorization.  Investor is duly
incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all
requisite power and authority to purchase and hold the securities
issuable hereunder.  The decision to invest and the execution and
delivery of this Agreement by such Investor, the performance by
such Investor of its obligations hereunder and the consummation
by such Investor of the transactions contemplated hereby have
been duly authorized and requires no other proceedings on the
part of the Investor.  The undersigned has all right, power and
authority to execute and deliver this Agreement and all other
instruments ( including, without limitations, the Registration
Rights Agreement), on behalf of the Investor.  This Agreement has
been duly executed and delivered by the Investor and, assuming
the execution and delivery hereof and acceptance thereof by the
Company, will constitute the legal, valid and binding obligations
of the Investor, enforceable against the Investor in accordance
with its terms.

Section 3.2  Evaluation of Risks.  The Investor has such
knowledge and experience in financial tax and business matters as
to be capable of evaluating the merits and risks of, and bearing
the economic risks entailed by, an investment in the Company and
of protecting its interests in connection with this transaction.
It recognizes that its investment in the Company involves a high
degree of risk.  The Investor acknowledges that it has been
furnished with, and has carefully read the applicable form of
Debenture and form of  Registration Rights Agreement.

Section 3.3  Independent Counsel.  The Investor acknowledges
that it has been advised to consult with its own attorney
regarding legal matters concerning the Company and to consult
with its tax advisor regarding the tax consequences of acquiring
the securities issuable hereunder.

Section 3.4  No Registration.  The Investor understands that
the Debenture and Common Stock underlying the Debenture issuable
hereunder have not been registered under the Act or any other
securities laws but are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of
Federal and State securities laws and that the Company is relying
upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Investor
set forth herein in order to determine the applicability of such
exemptions and the suitability of the Investor to acquire the
securities hereunder.

Section 3.5  Investment Purpose.  The securities are being
purchased by the Investor for its own account, for investment and
without any view to the distribution, assignment or resale to
others or fractionalization in whole or in part.  The Investor is
neither an underwriter, nor a dealer in, the Debenture or the
Common Stock issuable on conversion thereof.  The Investor agrees
not to assign or in any way transfer the Investor's rights to the
securities or any interest therein and acknowledges that the
Company will not recognize any purported assignment or transfer.
No other person has or will have a direct or indirect beneficial
interest in the securities.  The Investor agrees not to sell,
hypothecate or otherwise transfer the Investor's securities
unless the securities are registered under Federal and applicable
state securities law or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such laws is
available.

Section 3.6  Accredited Investor.  Accredited Investor Status.  Each
Investor is an "accredited investor" as that term is defined in Rule
501(a)(3) of Regulation D.

Section 3.7  Information.  Such Investor and its advisors (and
his or, its counsel), if any, have been furnished with all
materials relating to the business, finances and operations of
the Company and information he deemed material to making an
informed investment decision,  which have been requested by such
Investor.  Such Investor and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its
management.  Neither such inquiries nor any other due diligence
investigations conducted by such Investor or its advisors, if
any, or its representatives shall modify, amend or affect such
Investor's right to rely on the Company's representations and
warranties contained in Section 4 below.  Such Investor
understands that its investment involves a high degree of risk.
Investor is in a position regarding the Company, which, based
upon employment, family relationship or economic bargaining
power, enabled and enables Investor to obtain information from
the Company in order to evaluate the merits and risks of this
investment.  Such Investor has sought such accounting, legal and
tax advice, as it has considered necessary to make an informed
investment decision with respect to this transaction.

Section 3.8  Receipt of Documents.  Such Buyer and his or its
counsel has received and read in their entirety:  (i) this Agreement and each
representation, warranty and covenant set forth herein, the
Certificate of Designations, and the Escrow Agreement; (ii) all
due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and
covenants; (iii) the Company's Form 10-KSB for the year ended
1999; (iv) the Company's Forms 10-QSB for the periods ended
March 31, 2000; and (v) answers to all questions the Buyer
submitted to the Company regarding an investment in the Company;
and the Buyer has relied on the information contained therein and
has not been furnished any other documents, literature,
memorandum or prospectus.

Section 3.9  Registration Rights.  The parties have entered
into the Registration Rights Agreement.

Section 3.9  No Advertisements.  The Investor is not entering
into this Agreement as a result of or subsequent to any
advertisement, article, notice or other communication published
in any newspaper, magazine, or similar media or broadcast over
television or radio, or presented at any seminar or meeting.

Section 3.10  Not an Affiliate.  The Investor is not an officer,
director or "affiliate" (as that term is defined in Rule 405 of
the Securities Act) of the Company.  The Investor agrees that
following the date of the Agreement it will not, and will cause
its Affiliates not to engage in any short sales, swaps,
purchasing of puts, or other hedging activities with respect to
the Common Stock or any activity that involves the direct or
indirect use of Common Stock to hedge its investment in the
Debentures until the expiration of the conversion period of the
Debentures.

Section 3.11  Authorization, Enforcement.  This Agreement
has been duly and validly authorized, executed and delivered on
behalf of such Investor and is a valid and binding agreement of
such Investor enforceable in accordance with its terms, except as
such enforceability may be limited by general principles of
equity and to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement   of applicable creditors'
rights and remedies.

Section 3.12  Due Formation of Corporate and Other
Investors.  If the Investor is a corporation, trust, partnership
or other entity that is not an individual person,  it has been
formed and validly exists and has not been organized for the
specific purpose of this transaction and is not prohibited from
doing so.

Section 3.13  Due Authorization of Fiduciary Investors.  If
the Investor is purchasing the Securities in a fiduciary capacity
for another person or entity, including without limitation a
corporation, partnership, trust or any other entity, the Investor
has been duly authorized and empowered to execute this Agreement
and such other person fulfills all the requirements for this
transaction and agrees to be bound by the obligations,
representations, warranties, and covenants contained herein.
Upon request of the Company, the Investor will provide true,
complete and current copies of all relevant documents creating
the Investor, authorizing its investment in the Company and/or
evidencing the satisfaction of the foregoing.

Section 3.14  Further Representations by Foreign Investors.
If Investor is not a U.S. Person (as defined), such Investor
hereby represents that such Investor is satisfied as to full
observance of the laws of such Investor jurisdiction in
connection with any invitation to subscribe for the securities or
any use of this Agreement, including: (i) the legal requirements
of such Investor's jurisdiction for the purchase of the
securities, (ii) any foreign exchange restrictions applicable to
such purchase, (iii) any governmental or other consents that may
need to be obtained, and (iv) the income tax and other tax
consequences, if any, which may be relevant to the purchase,
holding, redemption, sale, or transfer of the securities.  Such
Investor's subscription and payment for, and such Investor's
continued beneficial ownership of, the securities will not
violate any applicable securities or other laws of such
Investor's jurisdiction.  The term "U.S. Person" as used herein
shall mean any person who is a citizen or resident of the United
States or Canada, or any state, territory or possession thereof,
including but not limited to any estate of any such person, or
any corporation, partnership, trust or other entity created or
existing under the laws thereof, or any entity controlled or
owned by any of the foregoing.

                             ARTICLE IV
          Representations and Warranties of the Company

Except as stated below or on the Disclosure Schedule attached
hereto as Exhibit G (the "Disclosure Schedule"), the Company
hereby represents and warrants to, and covenants with, the
Investors that the following are true and correct as of the date
hereof and as of the Advance Date:

Section 4.1  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.

Section 4.3.  Authorization, Enforcement, Compliance with
Other Instruments.  (i) The Company has the requisite corporate
power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and any related agreements, and to
and to consummate the transactions contemplated hereby in
accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Registration Rights Agreement
and any related agreements by the Company and the consummation by
it of the transactions contemplated hereby and thereby, shares of
Common Stock upon the conversion of the Debentures (the
"Debenture Shares"), have 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, (iii) this Agreement and the Registration Rights
Agreement and any related agreements have been duly executed and
delivered by the Company, (iv) this Agreement, the Registration
Rights Agreement and any related agreements constitute the valid
and binding obligations of the Company enforceable against the
Company in accordance with their 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.

Section 4.2  Capitalization.  .  As of the date hereof,
the authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, of which as of June 8, 2000,
35,989,070 shares were issued and outstanding, and 0 shares of
preferred stock, of which as of June 8, 2000, 0 shares were
issued and outstanding.  All of such outstanding shares have been
validly issued and are fully paid and nonassessable.  Except as
disclosed in Schedule 3(c), no shares of Common Stock are subject
to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company.  Except as
disclosed in Schedule 3(c), as of the date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares
of capital stock of the Company or any of its subsidiaries, or
contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to
issue additional shares of capital stock of the Company or any of
its subsidiaries or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, (ii) there are
no outstanding debt securities and (iii) there are no agreements
or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except pursuant to the
Registration Rights Agreements).  There are no securities or
instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Series A Preferred
Shares, the Conversion Shares, the Warrants, or the Warrant
Shares as described in this Agreement.  The Company has furnished
to the Buyers true and correct copies of the Company's
Certificate of Incorporation, as amended and as in effect on the
date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as in effect on the date hereof (the "By-
laws"), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

Section 4.4  No Conflict.  Except as disclosed in
Disclosure Schedule  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, 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
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 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
Disclosure Schedule, 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.  The business of the Company and its
subsidiaries is not being conducted, and shall not be conducted
in violation of any material law, ordinance, regulation of any
governmental entity.  Except as specifically contemplated by this
Agreement and as required under the 1933 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 or the Registration Rights
Agreement in accordance with the terms hereof or thereof.  Except
as disclosed in S Disclosure Schedule , 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
circumstance, which might give rise to any of the foregoing.

Section 4.6  No Default.  Except as described in the Disclosure
Schedule, the Company is not in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or
by which it is or its property is bound and neither the
execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement or any of
the Exhibits or attachments hereto, including the conversion
provision of the Debentures, will conflict with or result in the
breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of
any lien or charge on any assets or properties of the Company
under, any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or instrument to
which the Company is a party or by which it is bound, other than
anti-dilution provisions of certain agreements and instruments
with respect to warrants and other Common Stock equivalents, or
any statute or the memorandum or Articles of the Company or any
decree, judgment, order rules of regulation of any court or
governmental agency or body having jurisdiction over the Company
or its properties, in each case which default, lien or charge is
likely to cause a material adverse effect on the Company's
business and financial condition.

Section 4.7  Absence of Events of Default.  Except for matters
described in the SEC Documents, the Disclosure Schedule and/or
this Agreement, no Event of Default, as defined in the respective
agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would
become an Event of Default (as so defined), has occurred and is
continuing, which would have a material adverse effect on the
Company's business, properties, prospects, financial condition or
results of operations.

Section 4.8  Governmental Consent, etc.  Except for matters
described in the Disclosure Schedule, no consent, approval or
authorization of or designation, declaration or filing with any
governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this
Agreement, or the offer, sale or issuance of the securities
hereunder, or the consummation of any other transaction
contemplated hereby.

Section 4.9  Intellectual Property Rights.  The Company
and its subsidiaries own or possess adequate rights or licenses
to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations,
trade secrets and rights necessary to conduct their respective
businesses as now conducted.  Except as set forth on Schedule
3(n), none of the Company's trademarks, trade names, service
marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, government
authorizations, trade secrets, or other intellectual property
rights have expired or terminated, or are expected to expire or
terminate in the near future.  The Company and its subsidiaries
do not have any knowledge of any infringement by the Company or
its subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service
marks, service mark registrations, trade secret or other similar
rights of others, or of any such development of similar or
identical trade secrets or technical information by others and,
except as set forth on Schedule 3(n), to the knowledge of the
Company, there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened
against, the Company or its subsidiaries regarding trademark,
trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service mark
registrations, trade secret or other infringement; and the
Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.  The
Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all
of their intellectual properties.

Section 4.10  Employee Relations.  Neither the Company nor any
of its subsidiaries is involved in any labor dispute nor, to the knowledge of
the Company or any of its subsidiaries, is any such dispute
threatened.  None of the Company's or its subsidiaries' employees
is a member of a union and the Company and its subsidiaries
believe that their relations with their employees are good.

Section 4.11  Environmental Laws.  The Company and its
subsidiaries are (i) in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received all permits, licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

Section 4.12  Title.  The Company and its subsidiaries have good
and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to
the business of the Company and its subsidiaries, in each case free and clear
of all liens, encumbrances and defects except such as are
described in Schedule 3(p), are disclosed in the SEC Documents or
such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries.  Any real
property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries.

Section 4.13  Insurance.  The Company and each of its
subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts
as management of the Company believes to be prudent and customary
in the businesses in which the Company and its subsidiaries are
engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither
the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business
or operations of the Company and its subsidiaries, taken as a
whole.

Section 4.14  Regulatory Permits.  The Company and its
subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.

Section 4.15  Internal Accounting Controls.  The Company
and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken
with respect to any differences.

Section 4.16  No Materially Adverse Contracts, etc.  Except as
set forth in the SEC Documents, and the Disclosure Schedule,
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.

Section 4.17  Litigation.  Except as disclosed in the SEC
Documents and/or the Disclosure Schedule, 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.

Section 4.18  Title to Assets.  Except as set forth in the SEC
Documents, the Company has good and marketable title to all
properties and material assets described in the SEC Documents as
owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company.

Section 4.19  Subsidiaries.  Except as disclosed in the SEC
Documents, the Company does not presently own or control,
directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.

Section 4.20  Required Governmental Permits.  Except as set
forth in the SEC Documents, the Company is in possession of and
operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal
and other regulatory authorities which are material to the
conduct of its business, all of which are valid and in full force
and effect.

Section 4.21  Other Outstanding Securities/Financing
Restrictions.  As of the date hereof only, other than warrants
and options to acquire shares of Common Stock as disclosed in the
SEC Documents, there are no other warrants and options registered
with the SEC, which are available for sale as unrestricted ("free
trading") stock.

Section 4.22  Use of Proceeds.  The Company represents that the
net proceeds from this offering will be used for working capital
purposes and/or general corporate purposes.  However, in no event
shall the net proceeds from this offering be used by the Company
for the payment   (or loaned to any such person for the payment)
of any judgment, or other liability, incurred by any executive
officer, officer, director, or employee of the Company.

Section 4.23  Further Representation and Warranties of the
Company.  For so long as any securities issuable hereunder held
by the Investor remain outstanding, the Company acknowledges,
represents, warrants and agrees that it will use commercially
reasonable efforts to maintain the listing of its Common Stock on
the NASDAQ Small Cap Stock Market and/or NASDAQ Bulletin Board .

Section 4.24  SEC Filings/Full Disclosure.  Since January
20, 2000 the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with
the SEC under 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 Buyers or their representatives,
or made available through the SEC's website at
http://www.sec.gov., 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, 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 circumstances
under which they were made, not misleading.

Section 4.25  Full Disclosure.  There is no fact known to the
Company (other than general economic conditions known to the
public generally) that has not been disclosed in writing to the
Investor that (i) could reasonably be expected to have a material
adverse effect on the financial condition or in the earnings,
business affairs, business prospects, properties or assets of the
Company, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement.

Section 4.26  Opinion of Counsel.  Investor shall receive an
opinion letter from counsel to the Company (updated where
applicable) prior to each Closing substantially to the effect
that:

(a)  the Company is incorporated and validly existing in the
jurisdiction of its incorporation.  The Company and/or its
subsidiaries are duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where,
to such counsel's knowledge, the Company and/or its subsidiaries
owns or leases properties, maintains employees or conducts
business, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect on the Company,
and has all requisite corporate power and authority to own its
properties and conduct its business.

(b)  to such counsel's knowledge, except for matters disclosed in
the SEC Documents,  there is no action, proceeding or
investigation pending, or threatened against the Company which
might result, either individually or in the aggregate, in any
material adverse change in the business or financial condition of
the Company.

(c)  to such counsel's knowledge, except for matters disclosed in
the SEC Documents, the Company is not a party to or subject to
the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality.

(d)  the shares of Common Stock issuable upon the conversion of
the Debentures, based on the Bid Price on the day of such
closing, have been duly authorized and upon issuance will be
validly issued under the laws of the Company's state of
incorporation.

(e)  this Agreement, the issuance of the Debentures hereunder,
and the shares of Common Stock issuable upon conversion of the
Debentures, have been duly approved by all required corporate
action and that all such shares of Common Stock, upon execution
and delivery that shall be validly issued and outstanding, fully
paid and nonassessable.

(f)  the issuance of the Debentures and the shares of Common
Stock issuable upon conversion thereof, does not violate the
applicable listing agreement between the Company and any
securities exchange or market on which the Company's securities
are listed.

(g)  the authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, $0.001 par value per share,
and 0 shares of preferred stock.

(h)  the Common Stock is registered pursuant to Section 12(g) of
the Securities and Exchange Act of 1934

Section 4.27  Opinion of Counsel.  The Company will obtain for
the Investor, at the Company's expense, any and all opinions of
counsel which may be reasonably required in order to convert,
exercise or sell the securities issuable hereunder, including,
but not limited to, obtaining for Investors, at the Company's
expense an opinion of counsel, subject only to receipt of a
Notice of Conversion in the form of Exhibit F, duly executed by
the Investor which shall be satisfactory to the Transfer Agent,
directing the Transfer Agent to remove the self-liquidating
legend.

Section 4.28  Dilution.  The Company is aware and acknowledges
that conversion of the Debentures could cause dilution to
existing shareholder and could significantly increase the
outstanding number of shares of Common Stock.

Section 4.29  Tax Status.  The Company and each of its subsidiaries has
made or filed allfederal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its
subsidiaries has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) and
has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on
such returns, reports and declarations, except those being
contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply.  There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis
for any such claim.

                               ARTICLE V
     Representations and Warranties of the Company and Investor

The Investor and the Company represent to the other the following
with respect to itself:

Section 5.1  Line of Credit Agreement.  This Agreement has been
duly authorized, validly executed and delivered on behalf of the
Company and  the Investor and is a valid and binding agreement in
accordance with its terms, subject to general principles of
equity and to bankruptcy or other laws affecting the enforcement
of creditors? rights generally.

Section 5.2  Non-contravention.  Subject to the exceptions
referred to elsewhere in this Agreement (including the Disclosure
Schedule) the execution and delivery of this Agreement along with
all Exhibits and Attachments, and the consummation of the
issuance of the securities and the transactions contemplated by
this Agreement do not and will not conflict with or result in a
breach by the Company or the Investor of any of the terms or
provisions of, or constitute a default under, the articles of
incorporation or by-laws of the Company or the Investor, or any
indenture, mortgage, deed of trust of other material agreement or
instrument to which the Company or the Investor is a party or by
which it or any of its properties or assets are bound, or any
existing applicable law, rule or regulation or any applicable
decree, judgment or order of any court, Federal or State
regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or Investor or any of its
properties or assets.

Section 5.3  Approvals.  Neither the Company nor Investor is
aware of any authorization, approval or consent of any
governmental body which is legally required for the issuance and
sale of the securities.

Section 5.4  Indemnification.  Each of the Company and the
Investors agree to indemnify the other and to hold the other
harmless from and against any and all losses, damages,
liabilities, costs and expenses (Including reasonable attorneys?
fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty
or covenant made by it in this Agreement.

                             ARTICLE VI
                     Covenants of the Company

Section 6.1  Registration Rights.  The Company shall cause the
Registration Rights Agreement to remain in full force and effect
and the Company shall comply in all material respects with the
terms thereof.

Section 6.2  Reservation of Common Stock.  The Company shall
authorize and  reserve and keep available at all times, free of
preemptive rights, 15,000,000 shares of Common Stock for the
purpose of enabling the Company to satisfy any obligation to
issue shares of Common Stock underlying the Debentures, such
number of shares of Common Stock to be reserved shall be
calculated based upon the Bid Price of the Common Stock from time
to time while such Debentures are outstanding.  The number of
shares so reserved from time to time, while such Debentures are
outstanding, as theretofore increased or reduced as hereinafter
provided, may be limited to shares issuable under outstanding
Debentures at the Bid Price reduced by the number of shares
actually delivered pursuant to the Debentures and the number of
shares so reserved shall be increased or decreased to reflect
potential increases or decreases in the Common Stock that the
Company may thereafter be so obligated to issue.

Section 6.3  Listing of Common Stock.  The Company further
agrees, if the Company applies to have the Common Stock traded on
any Principal Market, other than the Nasdaq Small Cap Market, it
will include in such application the shares of Common Stock
issuable upon the conversion of the Debentures and will take such
other action as is necessary or desirable in the opinion of the
investor to cause the Common Stock to be listed on such other
Principal Market as promptly as possible and will use
commercially reasonable efforts to comply in all respects with
the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market.

Section 6.4  Exchange Act Registration.  The Company will cause
its Common Stock to continue to be registered under Section 12(g)
of the Exchange Act, will use its best efforts to comply in all
respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document
(whether or not permitted by Exchange Act or the rules there
under to terminate or suspend such registration or to terminate
or suspend its reporting and filing obligations under said Act.

Section 6.5  Legends.  The certificates evidencing the Common
Stock to be sold by the Investor pursuant to Section 9.1 shall be
free of legends, except as set forth herein.

Section 6.6  Corporate Existence.  The Company will take all
steps necessary to preserve and continue the corporate existence
of the Company.

Section 6.7  Notice of Certain Events Affecting Registration:
Suspension of Right to Make an Advance.  The Company will
immediately notify the Investor upon its becoming aware of the
occurrence of any of the following events in respect of a
registration statement or related prospectus relating to an
offering of Registrable Securities; (i) receipt of any request
for additional information by the SEC or any other federal or
state governmental authority during the period of effectiveness
of the Registration Statement for amendments or supplements to
the 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 the
Registration Statement or 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) subject to the Registration
Rights Agreement the happening of any event that makes any
statement made in the Registration Statement or related
prospectus of 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 the Registration
Statement, related prospectus or documents so that, in the case
of the 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, 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 the Registration Statement would be
appropriate; and the Company will promptly make available to the
Investor any such supplement or amendment to the related
prospectus.  The Company shall not deliver to the Investor any
Advance Notice during the continuation of any of the foregoing
events.

Section 6.8  Expectations Regarding Advance Notices.  Within
ten (10) days after the commencement of each calendar quarter
occurring subsequent to the commencement of the Commitment
Period, the Company must notify the Investor, in writing, as to
its reasonable expectations as to the dollar amount it intends to
raise during such calendar quarter, if any, through the issuance
of Advance Notices.  Such notification shall constitute only the
Company's good faith estimate and shall in no way obligate the
Company to raise such amount, or any amount, or otherwise limit
its ability to deliver Advance Notices.  The failure by the
Company to comply with this provision can be cured by the
Company's notifying the Investor, in writing, at any time as to
its reasonable expectations with respect to the current calendar
quarter.

Section 6.9  Consolidation: Merger.  The Company shall not, at
any time after the date hereof, effect any merger or
consolidation of the Company with or into, or a transfer of all
or substantially all the assets of the Company to another entity
(a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the investor such shares
of stock and/or securities as the Investor is entitled to receive
pursuant to this Agreement.

Section 6.10  Issuance of Debentures.  The sale of the
Debentures and the issuance of the shares of Commons Stock
pursuant to conversion hereof shall be made in accordance with
the provision and requirements of Section 4(2) of the Securities
Act, or Regulation D and any applicable state securities law.

                          ARTICLE VII
       Conditions for Advance and Conditions to Closing

Section 7.1  Conditions Precedent to the Obligation of the
Company to Issue and Sell the Debentures.  The obligation
hereunder of the Company to issue and sell the Debentures to the
Investor incident to each Closing is subject to the satisfaction,
or waiver by the Company, at or before each such Closing, of each
of the conditions set forth below.

(a)  Accuracy of the Investor's Representation and Warranties.
The representations and warranties of the Investor shall be true
and correct in all material respects as of the date of this
Agreement and as of the date of each such Closing as though made
at each such time.

(b)  Performance by the Investor.  The Investor shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Investor at or
prior to such Closing.

Section 7.2  Conditions Precedent to the Right of the Company
to Deliver an Advance Notice and the Obligation of the Investor
to Purchase Debentures.  The right of the Company to deliver an
Advance Notice and the obligation of the Investor hereunder to
acquire and pay for the Debentures incident to a Closing is
subject to the satisfaction or waiver by the Investor, on (i) the
date of delivery of such Advance Notice and (ii) the applicable
Advance Date (each a "Condition Satisfaction Date"), of each of
the following conditions:

(a)  Registration of the Common Stock with the SEC.  The Company
shall have filed with the SEC a Registration Statement with
respect to the resale of the Registrable Securities in accordance
with the terms of the Registration Rights Agreement.  As set
forth in the Registration Rights Agreement, the Registration
Statement shall have previously become effective and shall remain
effective on each Condition Satisfaction Date and (i) neither the
Company nor the Investor shall have received notice that the SEC
has issued or intends to issue a stop order with respect to the
Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so
(unless the SEC's concerns have been addressed and the Investor
is reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of the
use or withdrawal of the effectiveness of the Registration
Statement or related prospectus shall exist.  The Registration
Statement must have been declared effective by the SEC prior to
the first Advance Date.

(b)  Authority.  The Company shall have obtained all permits and
qualifications required by any applicable state in accordance
with the Registration Rights Agreement for the offer and sale of
the Debentures and the shares of Common Stock issuable upon the
conversion thereof, or shall have the availability of exemptions
therefrom.  The sale and issuance of the Debentures and the
shares of Common Stock issuable upon the conversion thereof shall
be legally permitted by all laws and regulations to which the
Company is subject.

(c)  Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be true
and correct in all material respects as of each Condition
Satisfaction Date as though made at each such time (except for
representations and warranties specifically made as of a
particular date) with respect to all periods, and as to all
events and circumstances occurring or existing to and including
each Condition Satisfaction Date, except for any conditions which
have temporarily caused any representations or warranties herein
to be incorrect and which have been corrected with no continuing
impairment to the Company or the Investor.

(d)  Performance by the Company.  The Company shall have
performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by this
Agreement, the Debenture and the Registration Rights Agreement to
be performed, satisfied or complied with by the Company at or
prior to each Condition Satisfaction Date.

(e)  No Injunction.  No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits or directly
and adversely affects any of the transactions contemplated by
this Agreement, and no proceeding shall have been commenced that
may have the effect of prohibiting or adversely affecting any of
the transactions contemplated by this Agreement.

(f)  Adverse Changes. Since the date of filing of the Company's
most recent SEC Document, no event that had or is reasonably
likely to have a Material Adverse Effect has occurred, other than
possible de-listing of the Common Stock from the Nasdaq  Smallcap
Market.

(g)  No Suspension of Trading In or Delisting of Common Stock.
The trading of the Common Stock is not suspended by the SEC or
the Principal Market (if the Common Stock is traded on a
Principal Market).  The issuance of shares of Common Stock with
respect to the applicable Closing, if any, shall not violate the
shareholder approval requirements of the Principal Market (if the
Common Stock is traded on a Principal market).  The Company shall
not have received any notice threatening the listing of the
Common Stock on the Principal Market (if the Common Stock is
traded on a Principal Market).

(h)  Maximum Advance Amount.  The amount of the advance requested
by the Company does not exceed the Maximum Advance Amount.

(i)  No Knowledge.  The Company has no knowledge of any event
more likely than not to have the effect of causing such
Registration Statement to be suspended or otherwise ineffective
(which event is more likely than not to occur within the fifteen
(15) Trading Days following the Trading Day on which such Notice
is deemed delivered).

(j)  Escrow Agreement.  The parties hereto shall have entered
into the Escrow Agreement in the form annexed hereto.

(k)  Other.  On each Condition Satisfaction Date, the Investor
shall have received and been reasonably satisfied with such other
certificates and documents as shall have been reasonably
requested by the Investor in order for the Investor to confirm
the Company's satisfaction of the conditions set forth in this
Section 7.2, including, without limitation, a certificate in
substantially the form and substance of an Exhibit hereto,
executed in either case by an executive officer of the Company
and to the effect that all the conditions to such Closing shall
have been satisfied as at the date of each such certificate.

                         ARTICLE VIII
  Due Diligence Review; Non-Disclosure of Non-Public Information

Section 8.1  Due Diligence Review.  Prior to the filing of the
Registration Statement the Company shall make available for
inspection and review by the Investor, advisors to and
representatives of the Investor, any underwriter participating in
any disposition of the Registrable Securities on behalf of the
Investor pursuant to the Registration Statement, any such
registration statement or amendment or supplement thereto or any
blue sky, NASD or other filing, all financial and other records,
all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be
reasonably necessary for the purpose of such review, and cause
the Company's officers, directors and employees to supply all
such information reasonably requested by the Investor or any such
representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after
the filing and effectiveness of the Registration Statement for
the sole purpose of enabling the Investor and such
representatives, advisors and underwriters and their respective
accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the
Registration Statement.

Section 8.2  Non-Disclosure of Non-Public Information.

(a)  The Company shall not disclose non-public information to the
Investor, advisors to or representatives of the Investor unless
prior to disclosure of such information the Company identifies
such information as being non-public information and provides the
Investor, such advisors and representatives with the opportunity
to accept or refuse to accept such non-public information for
review.  The Company may, as a condition to disclosing any non-
public information hereunder, require the Investor's advisors and
representatives to enter into a confidentiality agreement in form
reasonably satisfactory to the Company and the Investor.

(b)  Nothing herein shall require the Company to disclose non-
public information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any investors who purchase
stock in the Company in a public offering, to money managers or
to securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove
provided, immediately notify the advisors and representatives of
the Investor and, if any, underwriters, of any event or the
existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware,
constituting non-public information (whether or not requested of
the Company specifically or generally during the course of due
diligence by such persons or entities), which, if not disclosed
in the prospectus included in the Registration Statement would
cause such prospectus to include a material misstatement or to
omit a material fact required to be stated therein in order to
make the statements, therein, in light of the circumstances in
which they were made, not misleading.  Nothing contained in this
Section 8.2 shall be construed to mean that such persons or
entities other than the Investor (without the written consent of
the Investor prior to disclosure of such information) may not
obtain non-public information in the course of conducting due
diligence in accordance with the terms of this Agreement and
nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration
Statement contains an untrue statement of material fact or omits
a material fact required to be stated in the Registration
Statement or necessary to make the statements contained therein,
in light of the circumstances in which they were made, not
misleading.

                           ARTICLE IX
                             Legends

Section 9.1  Legends.  The Debentures will bear, and the Common
Stock will also bear a similar a legend, substantially in the
form below (the "Legend"):

THESE SECURITIES AND THE SHARES ISSUABLE UPON CONVERSION HEREOF,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ?SECURITIES ACT?), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

                         ARTICLE X
               Choice of Law/Jurisdiction

Section 10.1  Choice of Law: Venue: Jurisdiction.  This
Agreement will be construed and enforced in accordance with and
governed by the laws of the State of New York, except for matters
arising under the Act, without reference to principles of
conflicts of law.  Each of the parties consents to the
jurisdiction of the 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 in connection with any
dispute arising under this Agreement and hereby waives, to the
maximum extent permitted by law, any objection, including any
objection based on forum non conveniens  to the bringing of any
such proceeding in such jurisdictions.  Each party hereby agrees
that if another party to this Agreement obtains a judgment
against it in such a proceeding, the party which obtained such
judgment may enforce same by summary judgment in the courts of
any country having jurisdiction over the party against whom such
judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of
such a judgment.  Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.

                           ARTICLE XI
                   Assignment; Termination

Section 11.1  Assignment.  Neither this Agreement nor any rights
of the Investor or the Company hereunder may be assigned by
either party to any other person.  Notwithstanding the foregoing,
(a) the provisions of this Agreement shall insure to the benefit
of, and be enforceable by, any permitted transferee of any of the
Debentures purchased or acquired by the Investor hereunder with
respect to the Common Stock held by such person, and (b) upon the
prior written consent of the Company, which consent shall not
unreasonably be withheld, the Investor's interest in this
Agreement may be assigned at any time, in whole or in part, to
any other person or entity (including any affiliate of the
Investor) who agrees to make the representations and warranties
contained in Article III and who agrees to be bound by the
covenants of Article V.

Section 11.2  Termination.  The obligations of the Investor to
make Advances under Article II hereof  shall terminate two (2)
years after the date hereof.

                             ARTICLE XII
                               Notices

Section 12.1  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 (i) personally served, (ii) deposited
in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service
with charges prepaid, or (iv) 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.

Any notice or other communication requested or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number
designed 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 (b) on upon actual receipt of
any  mailing or delivery, whichever shall first occur.  The
addresses for such communications shall be:

If to the Company:

8880 Rio San Diego Drive - 8th Floor
San Diego, CA 92108
Attn: President

If to the Investor, at the address listed on Schedule A.

Either party hereto may from time to time change its address or
facsimile number for notices under this Section 12.1 by giving at
least ten (10) days? prior written notice of such changed address
or facsimile number to the other party hereto.

                           ARTICLE XIII
                           Miscellaneous

Section 13.1  Counterparts/Facsimile/Amendments.  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.  Except as
otherwise stated herein, in lieu of the original documents, a
facsimile transmission or copy of the original documents shall be
as effective and enforceable as the original This Agreement may
be amended only by a writing executed by all parties.

Section 13.2  Entire Agreement.  This Agreement, the Exhibits or
Attachments hereto, which include but are not limited to the
Debenture, the Escrow Agreement, and the Registration Rights
Agreement set forth the entire agreement and understanding of the
parties relating to the subject matter hereof and supersedes all
prior and contemporaneous agreements, negotiations and
understanding between the parties, both oral and writing relating
to the line of credit.

Section 13.3  Reporting Entity for the Common Stock.  The
reporting entity relied upon for the determination of the trading
price or trading volume of the Common Stock on any given Trading
Day for the purposes of this Agreement shall be Bloomberg, L.P.
or any successor thereto.  The written mutual consent of the
Investor and the Company shall be required to employ any other
reporting entity.

Section 13.4  Fees and Expenses.

(a)  Legal Fees.  Each of the parties shall pay its own fees
and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with
this Agreement and the transactions contemplated hereby, except
that the Company will pay the sum of Twenty Five Thousand
($25,000) Dollars, to Butler Gonzalez, L.L.P. for legal,
administrative, and escrow fees, Five Thousand ($5,000) Dollars
immediately, and Twenty Thousand ($20,000) on the first day the
Registration Statement becomes effective.   Subsequently on each
advance date, the Company will pay Butler Gonzalez, LLP, the sum
of Five Hundred ($ 500) Dollars for escrow fees.

(b)  Placement Agent Fees.  Upon the execution of the Agreement
the Company will issue Warrants to purchase 252,000 shares of
Common Stock to the May Davis Group (the "Placement Agent").  On
each advance date the Company shall pay the Placement Agent an
amount equal to 8.4% of the advance.  The Company hereby agrees
that if such payment, as is described above, is not made by the
Company on the advance date, such payment will be made at the
direction of the Investor as outlined and mandated by Section 2.3
of this Agreement.

Section 13.5  Brokerage.  Each of the parties hereto represents
that it has had no dealings in connection with this transaction
with any finder or broker who will demand payment of any fee or
commission from the other party, other than the Placement Agent.
The Company on the one hand, and the Investor, on the other
hand, agree to indemnify the other against and hold the other
harmless from any and all liabilities to any person claiming
brokerage commissions or finder's fees on account of services
purported to have been rendered on behalf of the indemnifying
party in connection with this Agreement or the transactions
contemplated hereby.

Section 13.6  Confidentiality.  If for any reason the
transactions contemplated by this Agreement are not consummated,
each of the parties hereto shall keep confidential any
information obtained from any other party (except information
publicly available or in such party's domain prior to the date
hereof, and except as required by court order) and shall promptly
return to the other parties all schedules, documents,
instruments, work papers or other written information without
retaining copies thereof, previously furnished by it as a result
of this Agreement or in connection herein.

IN WITNESS WHEREOF, the parties hereto have caused this Line of
Credit Agreement to be executed by the undersigned, thereunto
duly authorized, as of the date first set forth above.

PLACEMENT AGENT:

THE MAY DAVIS GROUP, INC.

By: /s/  Michael Jacobs
Name: Michael Jacobs
Title:  Managing Director

COMPANY:

MAJESTIC COMPANIES, LTD.

By: /s/  Francis Zubrowski
Name: Francis Zubrowski
Title: President and Chief Executive Officer

INVESTOR

GMF HOLDINGS

By: /s/ Diego Davis
Name: Diego Davis
Title: Managing Director

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