PLACEMENT AGENCY
AGREEMENT
Roth Capital
Partners, LLC
24 Corporate Plaza
Newport Beach, CA 92660
Majesco
Entertainment Company, a Delaware corporation (the “
Company ”), proposes, subject to the terms and
conditions of this Placement Agency Agreement (this “
Agreement ”), to issue and sell an aggregate of up to
$9.63 million in shares (the “ Shares ”) of its
Common Stock, $0.001 par value per share (the “ Common
Stock ”), directly to various investors (collectively,
the “ Investors ”) pursuant to the Subscription
Agreements in the form attached as Exhibit B hereto (the
“ Subscription Agreements ” and each, a “
Subscription Agreement ”). The Company hereby confirms
its agreement with the Placement Agent (as defined below) as
follows:
Section 1. Agreement to Act as Placement
Agent .
(a) On the
basis of the representations, warranties and agreements of the
Company herein contained, and subject to all the terms and
conditions of this Agreement between the Company and Roth Capital
Partners, LLC (“ Roth Capital ”), Roth Capital
shall be the Company’s exclusive placement agent (in such
capacity, the “ Placement Agent ”), on a best
efforts basis, in connection with the issuance and sale by the
Company of the Shares in the proposed takedown from a shelf
registration statement on Form S-3, including the exhibits thereto,
as amended at the date of this Agreement (Registration Statement
No. 333-159980) (the “ Registration Statement
”), with the terms of such takedown to be subject to market
conditions and negotiations between the Company, Roth Capital and
the prospective Investors (such takedown shall be referred to
herein as the “ Offering ”). As compensation for
services rendered, and provided that any of the Shares are sold to
Investors in the Offering, on the Closing Date (as defined below)
of the Offering, the Company shall pay to the Placement Agent an
amount equal to (a) 6.5% and 1.0% (non-accountable) (for a
total of 7.5%) of the gross proceeds received by the Company from
the sale of the Shares; and (b) the Placement Agent’s
out-of-pocket expenses and legal expenses in excess of $20,000, up
to a maximum of $30,000 for legal expenses. Any expenses in excess
of $60,000 in the aggregate shall require prior written approval of
the Company. Air travel must be coach or economy class.
This Agreement
shall not give rise to any commitment by the Placement Agent to
purchase any of the Shares, and the Placement Agent shall have no
authority to bind the Company. The Placement Agent shall act on a
best efforts basis to solicit offers to purchase the Shares and to
procure performance by the Investors in the Shares; provided
, however , that the Placement Agent does not guarantee that
it will be able to raise new capital in the prospective Offering.
The Company acknowledges that any advice given by Roth Capital to
the Company is solely for the benefit and use of the Board of
Directors of the Company and may not be used, reproduced,
disseminated, quoted or referred to, without the Placement
Agent’s prior written consent. The Placement Agent may, with
the prior written consent of the Company, retain other brokers or
dealers to act as sub-agents on its behalf in connection with any
Offering.
(b) The
term of the Placement Agent’s exclusive engagement (the
“ Engagement Period ”) will be six months;
however, the Company may terminate the engagement at any time upon
thirty (30) days written notice to the Placement Agent. Upon
termination, the Placement Agent will be entitled to collect all
fees earned and, to the extent provided herein, to be reimbursed
for expenses incurred through the date of termination.
Notwithstanding anything to the contrary contained herein, in no
event shall Roth
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be entitled to
any commission with respect to any sales of securities to any
person or entity after the termination of the Engagement Period;
provided , however , that if the Offering is not
consummated during the Engagement Period and during the six
(6) months following termination of this Agreement the Company
completes an offering of its securities with any person introduced
by Roth during the Engagement Period, the Company agrees to pay
Roth upon the closing of such transaction the full cash fee in the
amount that would otherwise have been payable to Roth had such
transaction occurred during the Engagement Period. Nothing in this
Agreement shall be construed to limit the ability of the Placement
Agent or its affiliates to pursue, investigate, analyze, invest in,
or engage in investment banking, financial advisory or any other
business relationship with entities or persons other than the
Company.
Section 2. Representations, Warranties and
Agreements of the Company .
The Company hereby
represents, warrants and covenants to the Placement Agent as of the
date hereof, and as of the Closing Date of the Offering, as
follows:
(a)
Securities Law Filings . The Company has filed with the
Securities and Exchange Commission (the “ Commission
”) the Registration Statement, which became effective on
August 28, 2009, for the registration under the Securities Act
of 1933, as amended (the “ Act ”), of the
Shares. On the date of the filing of the Registration Statement and
the date on which the Registration Statement became effective, the
Company met the requirements for use of Form S-3 under the Act. The
Registration Statement meets the requirements set forth in
Rule 415(a)(1)(x) under the Act and complies in all other
material respects with said Rule. The Company will file with the
Commission pursuant to Rule 424(b) under the Act a supplement to
the form of prospectus included in the Registration Statement
relating to a placement of the Shares and the plan of distribution
thereof and the Company has advised the Placement Agent of all
further material information (financial and other) with respect to
the Company to be set forth therein. Such prospectus, in the form
in which it appears in the Registration Statement, is hereinafter
called the “ Base Prospectus ”; and the
supplemented form of prospectus, in the form in which it will be
filed with the Commission pursuant to Rule 424(b), is
hereinafter called a “ Prospectus Supplement .”
Any reference herein to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to
and include the documents incorporated by reference therein (the
“ Incorporated Documents ”) pursuant to
Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), on or before the date of this Agreement, or the issue
date of the Base Prospectus or Prospectus Supplement, as the case
may be; and any reference herein to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement, the Base Prospectus or the Prospectus
Supplement shall be deemed to refer to and include the filing of
any document under the Exchange Act after the date of this
Agreement and prior to the time of the Closing (as defined below),
or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be, deemed to be incorporated therein
by reference. All references in this Agreement to financial
statements and schedules and other information which is
“contained,” “included” or
“stated” in the Registration Statement or the
Prospectus Supplement (and all other references of like import)
shall be deemed to mean and include all such financial statements
and schedules and other information which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus Supplement, as the case may be.
(b) No
Stop Order . No stop order suspending the effectiveness of the
Registration Statement or the use of the Base Prospectus or the
Prospectus Supplement has been issued, and no proceeding for any
such purpose is pending or has been initiated or, to the
Company’s knowledge, is threatened by the
Commission.
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(c)
Compliance with Applicable Regulations . The Registration
Statement (and any further documents to be filed with the
Commission) contains all exhibits and schedules as required by the
Act. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, complied in all
material respects with the Act and the Exchange Act and the
applicable rules and regulations of the Commission thereunder and
did not and, as amended or supplemented, if applicable, will not,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading. Each of the Base Prospectus
and the Prospectus Supplement, as of its respective date, complied
in all material respects with the Act and the Exchange Act and the
applicable rules and regulations of the Commission thereunder. Each
of the Base Prospectus and the Prospectus Supplement, as amended or
supplemented, did not and will not contain as of the effective date
thereof any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The Incorporated Documents, when they became effective
or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Exchange Act and
the applicable rules and regulations of the Commission thereunder,
and none of such documents contained any untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein not misleading; and any further documents so
filed and incorporated by reference in the Base Prospectus or
Prospectus Supplement prior to the Closing, when such documents
become effective or are filed with the Commission, as the case may
be, will conform in all material respects to the requirements of
the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as applicable, and will not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading.
Notwithstanding the foregoing, the Company makes no representations
or warranties as to the information contained in or omitted from
the Prospectus Supplement or any amendment thereof or supplement
thereto in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the
Placement Agent specifically for use in the Registration Statement
or the Prospectus Supplement. No post-effective amendment to the
Registration Statement reflecting any facts or events arising after
the effective date thereof which represent, individually or in the
aggregate, a fundamental change in the information set forth
therein is required to be filed with the Commission.
(d)
Reports and Documents, etc . There are no documents required
to be filed with the Commission in connection with the transaction
contemplated hereby that (x) have not been filed as required
pursuant to the Act or (y) will not be filed within the
requisite time period. There are no contracts or other documents
required to be described in the Prospectus Supplement, or to be
filed as exhibits or schedules to the Registration Statement, which
have not been described or filed as required.
(e)
Offering Materials Furnished to the Placement Agent . The
Company has delivered, or will as promptly as practicable deliver,
to the Placement Agent complete conformed copies of the
Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and the Base Prospectus
and the Prospectus Supplement, as amended or supplemented, in such
quantities and at such places as the Placement Agent reasonably
requests.
(f)
Distribution of Offering Material . The Company has not
distributed and will not distribute, prior to the Closing Date, any
offering material in connection with the offering and sale of the
Shares other than the Base Prospectus and the Prospectus Supplement
or the Registration Statement and copies of the documents
incorporated by reference therein. For the avoidance of doubt, any
other material prepared and distributed solely by the Placement
Agent is not deemed to be distributed by the Company for purposes
of this paragraph (f).
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(g) The
Placement Agency Agreement . This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable against the Company in
accordance with its terms, except as rights to indemnification and
contribution hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general
equitable principles.
(h)
Authorization of the Shares . The Shares have been duly
authorized for issuance and sale, and the Shares, when issued and
delivered by the Company to the Investors against payment therefor
pursuant to this Agreement and the Subscription Agreements, will be
validly issued, fully paid and nonassessable.
(i) No
Material Adverse Change . Subsequent to the respective dates as
of which information is given in the Base Prospectus and in any
Prospectus Supplement: (i) there has been no material adverse
change or effect, or any development that could reasonably be
expected to result in a material adverse change or effect, in the
condition, financial or otherwise, or in the earnings, business,
operations or prospects of the Company and the Subsidiaries (as
defined below) taken as a whole (any such change or effect, where
the context so requires, is called a “ Material Adverse
Change ” or a “ Material Adverse Effect
”); (ii) the Company and the Subsidiaries have not
incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of
capital stock or repurchase or redemption by the Company of any
class of capital stock.
(j)
Independent Accountants . McGladrey & Pullen, LLP and
Goldstein Golub Kessler LLP, which have expressed their opinions
with respect to the financial statements (which term as used in
this Agreement includes the related notes and schedules thereto)
and supporting schedules filed with the Commission as a part of the
Registration Statement and incorporated by reference in the
Prospectus Supplement, are independent registered public accounting
firms as required by the Act and the Exchange Act.
(k)
Preparation of the Financial Statements . The financial
statements filed with the Commission as a part of the Registration
Statement or included or incorporated by reference in the Base
Prospectus or Prospectus Supplement present fairly in all material
respects the financial position of the Company and its consolidated
Subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified therein.
The supporting exhibits and schedules included in the Registration
Statement, if any, present fairly the information required to be
stated therein subject to the normal year-end adjustments which are
not expected to be material in amount. The assumptions used in
preparing the pro forma financial statements, if any, provide a
reasonable basis for presenting the significant effects
attributable to the transactions or events described therein, any
related pro forma adjustments comply with Regulation G and
give appropriate effect to the assumptions, and the pro forma
columns and reconciliations therein reflect the proper application
of adjustments to the corresponding historical financial
statements. Such financial statements and supporting schedules, if
any, have been prepared in conformity with generally accepted
accounting principles as applied in the United States (“
GAAP ”), as applicable, applied on a consistent basis
throughout the periods involved, except as may be expressly stated
in the related notes thereto and comply in all material respects
with the Act, the Exchange Act and the applicable rules and
regulations of the Commission thereunder. No other financial
statements or supporting schedules or exhibits are required by the
Act or the rules and regulations of the Commission thereunder to be
included in the Registration Statement or the Prospectus
Supplement.
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(l)
Incorporation and Good Standing . Each of the Company and
its subsidiaries set forth in Exhibit C hereto (the “
Subsidiaries ”) has been duly organized and is validly
existing and, as applicable, is a corporation in good standing
under the laws of its jurisdiction of incorporation with full
corporate power and authority to own its properties and other
assets and conduct its business as described in the Prospectus
Supplement, and is duly qualified or licensed to do business as a
foreign corporation and, as applicable, is in good standing under
the laws of each jurisdiction which requires such qualification or
license, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
(m)
Capitalization and Other Capital Stock Matters . The
authorized, issued and outstanding capital stock of the Company is
as set forth in the Registration Statement and in each Prospectus
Supplement (other than for issuances after the dates thereof, if
any, pursuant to employee benefit plans described in any Prospectus
Supplement or upon exercise of outstanding options or warrants
described in any Prospectus Supplement). The Shares conform in all
material respects to the description thereof contained in the Base
Prospectus and the Prospectus Supplement. As of September 15,
2009, there were 32,134,729 shares of Common Stock outstanding.
Since such date, the Company has not issued any securities other
than (i) Common Stock of the Company pursuant to the exercise
of previously outstanding options in connection with the
Company’s employee stock purchase and option plans (the
“ Plans ”), outstanding warrants and other
outstanding obligations, and (ii) options granted pursuant to
the Plans in the ordinary course of business consistent with past
practice, in each case as disclosed in the Base Prospectus and each
Prospectus Supplement. All the issued and outstanding shares of the
capital stock of the Company and the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and
have been issued in compliance, in all material respects, with
federal and state securities laws, as applicable. Except as set
forth in the Base Prospectus and each Prospectus Supplement, all of
the outstanding shares of capital stock of the Subsidiaries are
owned, directly or indirectly, by the Company. None of the
outstanding shares of capital stock of the Company or any
Subsidiary were issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or
purchase securities. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the
Company or any Subsidiary other than those described in the Base
Prospectus and each Prospectus Supplement. The description of the
Company’s stock option, stock bonus and other stock plans or
arrangements, and the options, warrants or other rights granted
thereunder, set forth in the Base Prospectus and the Prospectus
Supplement accurately and fairly presents the information required
by the Act to be shown with respect to such plans, arrangements,
options and rights. Except as set forth in the Base Prospectus or
in any Prospectus Supplement, the Company does not have any
subsidiaries or own directly or indirectly any of the capital stock
or other equity or long-term debt securities or have any equity
interest in any other person.
(n) Stock
Exchange Listing . The Common Stock is registered under the
Exchange Act and is listed on the NASDAQ Capital Market (“
NASDAQ ”), and the Company has taken no action
designed to, or likely to have the effect of terminating the
registration of the Common Stock under the Exchange Act or
suspending from trading the Common Stock from NASDAQ, nor has the
Company received any information suggesting that the Commission or
FINRA is contemplating terminating or suspending such registration
or quotation.
(o) No
Transfer Taxes or Other Fees . There are no transfer taxes or
other similar fees or charges under United States law or the laws
of any state or any political subdivision thereof, required to be
paid in connection with the execution and delivery of this
Agreement or the issuance and sale by the Company of the
Shares.
(p) No
Price Stabilization or Manipulation . The Company has not taken
and will not take, directly or indirectly, any action designed to
or that could reasonably be expected to cause or result
in
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stabilization
or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
(q) Blue
Sky; FINRA Matters. The Shares have been or will be qualified
for sale under the securities laws of such jurisdictions (United
States and foreign) as the Placement Agent and the Investors
determine, or are or will be exempt from the qualification and
broker-dealer requirements of such jurisdictions.
Any certificate
signed by an officer of the Company and delivered to the Placement
Agent in connection herewith or in connection with the Offering
shall be deemed to be a representation and warranty by the Company
to the Placement Agent as to the matters set forth
therein.
Section 3. Delivery and Payment
.
No later than the
day following execution of each Investor’s respective
Subscription Agreement, each Investor will remit by wire transfer
to an escrow account designated by the Company an amount equal to
the aggregate purchase price for the Shares purchased by such
Investor as set forth on the signature page to the Subscription
Agreement entered into between the Company and each of the
Investors. At 10:00 a.m., California time or at such other
time on the Closing Date as may be agreed upon by the Company and
the Placement Agent (the “ Closing Date ”), the
Company shall deliver to each Investor the Shares purchased by such
Investor via the Depository Trust Company’s (“
DTC ”) Deposit or Withdrawal at Custodian system via
the DTC instructions set forth on the signature page of such
Investor’s Subscription Agreement, such Shares to be
registered in such name or names as designated by the Investor on
the signature page to the Subscription Agreement. The closing of
the takedown (the “ Closing ”) shall take place
at the Company’s principal executive offices or at the
offices of the Company’s legal counsel. All actions taken at
the Closing shall be deemed to have occurred
simultaneously.
Section 4. Covenants of the
Company .
The Company
further covenants and agrees with the Placement Agent as
follows:
(a)
Registration Statement Matters . During the period beginning
on the date hereof and ending at the time of the Closing (such
period being referred to herein as the “ Prospectus
Delivery Period ”), the Company agrees to advise the
Placement Agent promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus
Supplement or any amended Prospectus Supplement has been filed and
to furnish the Placement Agent with copies thereof; to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus Supplement; to advise the
Placement Agent, promptly after it receives notices thereof
(i) of any request by the Commission to amend the Registration
Statement or to amend or supplement the Prospectus Supplement or
for additional information and (ii) of the issuance by the
Commission, of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or
any order directed at any Incorporated Document or any amendment or
supplement thereto or any order preventing or suspending the use of
the Base Prospectus or the Prospectus Supplement or any amendment
or supplement thereto or any post-effective amendment to the
Registration Statement, of the suspension of the qualification of
the Shares for offering or sale in any jurisdiction, of the
institution or threatened institution of any proceeding for any
such purpose, or of any request by the Commission for the amending
or supplementing of the Registration Statement or Prospectus
Supplement or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of the Base Prospectus or
6
Prospectus
Supplement or suspending any such qualification, promptly to use
its reasonable best efforts to obtain the withdrawal of such
order.
(b) Blue
Sky Compliance . The Company will cooperate with the Placement
Agent and the Investors in endeavoring to qualify the Shares for
sale or satisfy any applicable exemption(s) for sale of the Shares
under the securities laws of such jurisdictions (United States and
foreign) as the Placement Agent and the Investors may reasonably
request, and will furnish such information and execute such
applications and documents as may be reasonably required for that
purpose; provided that the Company shall not be required to
qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so
qualified or required to file such a consent, and provided
further that the Company shall not be required to produce
any new disclosure document other than the Prospectus Supplement.
The Company will, from time to time, prepare and file such
statements, reports and other documents as are or may be required
to continue such qualifications in effect for so long a period as
the Placement Agent may reasonably request for distribution of the
Shares.
(c)
Amendments and Supplements to the Prospectus Supplement and
Other Securities Act Matters . The Company will comply with the
Act and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the
distribution of the Shares as contemplated in this Agreement, the
Base Prospectus and any Prospectus Supplement. If during the
Prospectus Delivery Period, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable opinion
of the Placement Agent or counsel for the Placement Agent, it
becomes necessary to amend or supplement the Base Prospectus or any
Prospectus Supplement in order to make the statements therein, in
the light of the circumstances existing at the time the Prospectus
Supplement is delivered to a purchaser, not misleading, or, if it
is necessary at any time to amend or supplement the Base Prospectus
or any Prospectus Supplement to comply with any law, the Company
promptly will prepare and file with the Commission, and furnish at
its own expense to the Placement Agent and to dealers, an
appropriate amendment to the Registration Statement or supplement
to the Base Prospectus or any Prospectus Supplement so that the
Prospectu
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