EXHIBIT 10.5
INVESTOR REPRESENTATIONS AND WARRANTIES AGREEMENT
BETWEEN
XXXXXXXXXXXXXXXX.XXX, INC.
AND
LAGUNA PACIFIC PARTNERS, L.P.
DATED AUGUST 1, 2000
INVESTOR REPRESENTATIONS AND WARRANTIES AGREEMENT
THIS INVESTOR REPRESENTATIONS AND WARRANTIES AGREEMENT ("Agreement"),
dated as of August 21, 2000, is by and between XXXXXXXXXXXXXXXX.XXX, INC., a
Delaware corporation (the "Company") and LAGUNA PACIFIC PARTNERS, L.P. a
Delaware limited partnership (the "Investor") (collectively, the "Parties").
ARTICLE 1
RECITALS
This Agreement is part of an offering of Units of the Company (the
"Units"), issuable at $250,000 per Unit, each Unit consisting of one 6% Secured
Note, $250,000 principal amount (a "Note"), and one Warrant (a "Unit Warrant").
As part of the consideration provided to the Investor in exchange for this
investment, Investor shall be issued 1,579,669 shares of common stock of the
Company. The Unit has been issued pursuant to a Subscription Agreement of even
date herewith between the Company and the Investor (the "Subscription
Agreement"), which contains representations and warranties and additional
covenants of the Company with respect to the Unit. Capitalized terms not
otherwise defined herein shall have the meaning set forth in the Subscription
Agreement. THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT ARE INCORPORATED HEREIN
BY REFERENCE.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants that:
(a) Investor acknowledges that the securities issued pursuant to the
Subscription Agreement (the "Securities") will initially be "restricted
securities" (as such term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended ("Rule 144"), that the Securities will
include the foregoing restrictive legend, and, except as otherwise set forth in
the Subscription Agreement, that the Securities cannot be sold unless registered
with the United States Securities and Exchange Commission ("SEC") and qualified
by appropriate state securities regulators, or unless Investor otherwise
complies with an exemption from such registration and qualification (including,
without limitation, compliance with Rule 144).
(b) Investor has adequate means of providing for current needs and
contingencies, has no need for liquidity in the investment, and is able to bear
the economic risk of an investment in the Securities. Investor represents that
Investor is able to bear the economic risk of the investment and at the present
time could afford a complete loss of such investment. Investor has had a full
opportunity to inspect the books and records of the Company and to make any and
all inquiries of Company officers and directors regarding the Company and its
business as Investor has deemed appropriate.
(c) Investor is an "Accredited Investor" as defined in Regulation D of
the Securities Act of 1933 (the "Act") or Investor, either alone or with
Investor's professional advisers who are unaffiliated with, have no equity
interest in and are not compensated by the Company or any affiliate or selling
agent of the Company, directly or indirectly, has sufficient knowledge and
experience in financial and business matters that Investor is capable of
evaluating the merits and risks of an investment in the Securities offered by
the Company and of making an informed investment decision with respect thereto
and has the capacity to protect Investor's own interests in connection with
Investor's proposed investment in the Securities.
(d) Investor is acquiring the Securities solely for Investor's own
account as principal, for investment purposes only and not with a view to the
resale or distribution thereof, in whole or in part, and no other person or
entity has a direct or indirect beneficial interest in such Securities.
(e) Investor will not sell or otherwise transfer the Securities without
registration under the Act or an exemption therefrom and fully understands and
agrees that Investor must bear the economic risk of Investor's purchase for an
indefinite period of time because, among other reasons, the Securities have not
been registered under the Act or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and under
the applicable securities laws of such states or unless an exemption from
such registration is available.
ARTICLE 3
MISCELLANEOUS
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO THE RULES OF
CONFLICTS OF LAW.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
(c) This Agreement represents the entire agreement between the parties
relating to the subject matter hereof, superseding any and all prior to
contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing signed by the party against whom the modification or waiver is sought to
be enforced.
(d) The warranties and representations of the Investors contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing.
(e) The captions and headings contained herein are solely for
convenience of reference and do not constitute a part of this Agreement.
(f) There are no finder fees or commissions owed in connection with the
sale of the Units.
(g) The terms of the offering and of the Unit may only be amended or
modified by the agreement of Investors subscribing for and/or holders of a
majority of the Units.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The Investor hereby acknowledges that Xxxxxxx &Beam ("H&B" or "the
Firm") represents the Company with various legal matters and does not represent
the Investor in connection with this Agreement or the contemplated transaction
nor in any other respect. The Investor further acknowledge that H&B has drafted
this Agreement. The Investor has been given the opportunity to consult with
counsel of his choice regarding his rights under this Agreement. The Investor
also acknowledges that Laguna Pacific Partners, L.P., a Delaware limited
partnership, is making a concurrent investment into the Company. The Investor is
hereby advised that Strawberry Canyon Capital is a General Partner of Laguna
Pacific Partners, L.P., and that Xx. Xxxxxxxx X. Xxxxxxx is the sole shareholder
of Strawberry Canyon Capital as well as senior counsel of H&B; such
relationships may constitute a conflict of interest. The Investor hereby waives
any action he may have against H&B, Strawberry Canyon Capital, Laguna Pacific
Partners, L.P., and Xxxxxxxx X. Xxxxxxx, an individual, regarding such conflict
of interest.
INVESTOR:
LAGUNA PACIFIC PARTNERS, L.P.,
a Delaware limited partnership
By: THE MANHATTAN NETWORK, INC.,
a California corporation
Its: General Partner
/s/ Xxxxxx Xxxxxxx
------------------------------------
By: Xxxxxx Xxxxxxx
Its: President
By: STRAWBERRY CANYON CAPITAL, INC.
a California corporation
Its: General Partner
/s/ Xxxxxxxx X. Xxxxxxx
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By: Xxxxxxxx X. Xxxxxxx
Its: President
