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EXHIBIT 10.44
INCO HOMES CORPORATION
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "AGREEMENT") is made as of
December 23, 1996, by and among INCO HOMES CORPORATION, a Delaware corporation
(the "COMPANY"), with its principal office located at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, P. O. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and OVERLAND OPPORTUNITY
FUND, LLC, a California limited liability company, with its principal office
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "PURCHASER").
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Authorization and Sale of Common Stock
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1.1 Authorization. The Company has authorized the sale and
issuance of up to 1,200,000 shares (the "SHARES") of its Common Stock, par
value $.01 per share (the "COMMON STOCK") pursuant to this Agreement.
1.2 Purchase and Sale of Common Stock. Subject to the terms and
conditions of this Agreement, the Company agrees to issue and sell to the
Purchaser and the Purchaser agrees to purchase from the Company an aggregate of
1,200,000 Shares in three installments of 400,000 Shares each, closing on the
dates and pursuant to the terms set forth in Section 2.1 below. In exchange
for the specified Shares, the Purchaser shall deliver, as set forth in Section
2, below, to the Company a check or money order in an amount (the "PURCHASE
PRICE") equal to the Share Price (defined below) times the number of Shares
purchased by the Purchaser in each such installment.
The Share Price shall be $.625 per share, which was determined in
arms' length negotiations between the Company and the Purchaser.
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Closing Date; Escrow Holder; Deliveries
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2.1 Closing Date. The closing of the issuance, purchase and sale
of each of the three installments of 400,000 Shares (the closing of each
installment referred to as a "CLOSING") shall be held at the offices of the
Company at the address set forth above, the first such closing occurring on
December 23, 1996, the second such closing occurring on January 10, 1997, and
the third such closing occurring on January 31, 1997, or at such other times
and place upon which the Company and the Purchaser shall agree. The date of
the Closing of each installment is hereinafter referred to as a "CLOSING DATE".
2.2 Deliveries.
(a) Company's Deliveries on or before Closing. On or
before each Closing Date, the Company shall deliver to the Purchaser a
certificate of good standing issued by the Secretary of State of Delaware
issued within two (2) days prior to such Closing Date and reflecting the
corporate and state tax good standing of the Company in the State of Delaware.
(b) Company's Deliveries at Closing. At each Closing,
the Company will deliver to the Purchaser a certificate (individually, a
"CERTIFICATE", and collectively, the "CERTIFICATES"), registered in the
Purchaser's name, representing the number of Shares to be purchased in the
installment to be closed on that date; provided, however, that the Certificate
to be delivered at the closing of the first installment shall be delivered at
the closing of the second installment, but Purchaser shall be deemed the holder
of 400,000 Shares as of the Closing Date of the first installment,
notwithstanding that no Certificate is delivered on that date.
(c) Purchaser's Deliveries at Closing. At each Closing,
the Purchaser shall deliver to the Company the following items:
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(i) a certificate signed by the Purchaser stating
that the Purchaser believes that it has received all of the information it
considers necessary or appropriate for deciding whether to purchase the Shares,
and further that Purchaser is aware of the Company's business affairs and
financial condition, has had an opportunity to ask questions and receive
responses to inquiries from representatives of the Company, and has had access
to and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares; and
(ii) a check or money order in an amount equal to
the Purchase Price for the installment of Shares to be purchased on that
Closing Date.
The deliveries required by this Section 2 shall be deemed a covenant
and agreement of the Company and the Purchaser, respectively, for the purposes
of Sections 6.2 and 7.2 hereof.
2.3 Option To Purchase Commercial Acreage. Provided that
Purchaser purchases all of the Shares as set forth above on or before January
31, 1997, the Company will grant to the Purchaser an exclusive option to
purchase approximately 71 acres of commercial real estate located in Eagle
Ranch in Victorville, California, such option to be substantially in the form
attached hereto as Exhibit A.
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Due Diligence
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3.1 Deliveries by Company.
(a) Concurrently with the execution of this Agreement,
the Company shall provide to the Purchaser each of the following items:
(i) certified true copies of the Certificate of
Incorporation (as amended) and the Bylaws (as amended) of the Company;
(ii) a resolution of the board of directors of the
Company approving this Agreement, the issuance of the Shares on the terms of
this Agreement and authorizing a person or persons to execute this Agreement on
behalf of the Company and to issue and affix the corporate seal of the Company
on the Certificates;
(iii) copies of all documents that the Company was
required to file with the Securities and Exchange Commission (the "SEC") under
Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), during the twelve (12) months preceding the date of this
Agreement, including without limitation all 8-K filings of the Company during
such period and the 10-K filings for the year ended December 31, 1995; and
(iv) copies of all statements and/or circulars
dispatched to the shareholders or to any class of creditors of the Company
within the twelve (12) month period preceding the first Closing Date.
(b) Within three (3) days after receipt of a written
request from Purchaser for the instruments or other documents evidencing any of
the items disclosed in this Agreement, including Exhibit C hereto, the Company
shall deliver such items to the requesting party.
3.2 Due Diligence Review. In the event that the Purchaser
disapproves any of the items set forth in Section 3.1 or disclosed in Section 4
or on Exhibit C hereto, the Purchaser shall have the right, upon delivery of
written
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notice thereof to the Company, to immediately cancel this Agreement. In the
event of such cancellation and upon receipt of a written statement detailing
the fees and expenses incurred by the Company in connection with this
Agreement, the Purchaser shall pay to the Company its reasonable fees and
expenses incurred in connection with this Agreement.
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Representations and Warranties of the Company
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The Company represents and warrants to the Purchaser as of each
Closing Date as set forth below in this Section 4 (the "COMPANY WARRANTIES").
At all times prior to the Closing, the Company shall notify the Purchaser
immediately upon its becoming aware of any event which may cause any of the
Company Warranties set forth in this Section 4 to be incorrect, incomplete,
misleading or breached in any material respect or which may have any adverse
affect on the assets or liabilities of the Company.
4.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State
of Delaware and is in good standing as a domestic corporation under the laws of
said state.
4.2 Corporate Power; Authorization. The Company has all requisite
legal and corporate power and has taken all necessary corporate action to
execute and deliver this Agreement, to sell and issue the Shares and to carry
out and perform all of its obligations under this Agreement. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally.
4.3 Non-Contravention. The execution and delivery of this
Agreement does not, and the performance of this Agreement and the compliance
with the provisions hereof, and the issuance, sale and delivery of the Shares
by the Company to the Purchaser will not materially conflict with, or result in
a material breach or violation of the terms, conditions or provisions of, or
constitute a material default under, or result in the creation or imposition of
any material lien pursuant to the terms of, the Certificate of Incorporation or
Bylaws of the Company or any statute, law, rule or regulation or any state or
federal order, judgment or decree or any indenture, mortgage, lease or other
material agreement or instrument to which the Company or any of its properties
is subject. There is not any agreement or arrangement between the Company and
any third party which will, by virtue of the transactions envisioned by this
Agreement or other performance of the terms of this Agreement, result in any
such third party being relieved of any obligation or becoming entitled to
exercise any right of termination or any right of preemption or other option
thereunder.
4.4 Issuance and Delivery of the Shares. The Shares, when issued
in compliance with the provisions of this Agreement, will be validly issued,
fully paid and nonassessable. The issuance and delivery of the Shares are not
subject to preemptive or any other similar rights of the stockholders of the
Company or any liens or encumbrances.
4.5 SEC Documents: Financial Statements. Each report or proxy
statement delivered to the Purchaser is a true and complete copy of such
document as filed by the Company with the SEC. The Company has filed in a
timely manner all documents that the Company is required to file with the SEC
under Sections 13, 14(a) and 15(d) of the Exchange Act, during the twelve (12)
months preceding the date of this Agreement. Except as disclosed on Exhibit C
attached hereto, as of their respective filing dates, all documents filed by
the Company with the SEC (the "SEC DOCUMENTS") complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "SECURITIES ACT"), as applicable. None of the SEC
Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not
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misleading. The financial statements of the Company included in the SEC
Documents (the "SEC FINANCIAL STATEMENTS") comply as to form in all material
respects with applicable accounting requirements of the Exchange Act and the
Securities Act and with the published rules and regulations of the SEC with
respect thereto. The SEC Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
4.6 Governmental Consents. All necessary consents, authorizations
and approvals of, and all necessary registrations and filings with, any
governmental or regulatory agency or body required in connection with the
issuance, sale and delivery of the Shares by the Company to the Purchaser have
been obtained or made or will be obtained or made prior to each Closing or
within such time period following each Closing as is required by such
governmental or regulatory agency or body. The issue of the Shares will not
infringe and will not be contrary to any applicable laws or regulations
(including but not limited to any and all applicable securities laws and
regulations) of any governmental or regulatory agency or body. Without
limiting the foregoing, compliance with the securities and blue sky laws in the
states in which the Shares are offered and/or sold will be effected in
accordance with such laws, and the filing of the Nasdaq National Market
Notification Form with the Nasdaq National Market and Form 10-C with the SEC,
if required, will be effected in accordance with federal laws and regulations.
4.7 No Litigation, Arbitration or Administrative Proceedings. The
Company is not involved in, nor is aware of any facts which might give rise to,
litigation, arbitration or administrative proceedings relating to claims or
amounts which are material in the context of the issue of the Shares or
material to the nature of the business of the Company. There are no
unfulfilled or unsatisfied judgments or court orders against the Company, and
the Company has not committed any criminal act or breach of contract or
statutory duty or any tortious or other unlawful, ultra ▇▇▇▇▇ or unauthorized
act the effect of which would or may materially adversely affect the nature of
the business of the Company or the issuance of the Shares.
4.8 Articles of Incorporation and Bylaws. There have been no
amendments to the Certificate of Incorporation of the Company or the Bylaws of
the Company except as reflected in such documents delivered to the Purchaser
pursuant to Section 3.1(a)(i) hereof, and such documents fully set out all
rights and restrictions attaching to each class of the share capital of the
Company. The stock transfer register of the Company and other statutory books
of the Company have been properly kept and contain a true, accurate and
complete record of the matters which are required by Delaware law to be dealt
with therein, and no notice or allegation that any of the same is incorrect or
should be rectified has been received.
4.9 Authorized Capital Stock. The authorized capital stock of the
Company consists of (i) 20,000,000 shares of Common Stock, par value $.01 per
share, of which, as of the date of this Agreement, 8,622,573 shares were
outstanding and (ii) 1,000,000 shares of Preferred Stock, per value $.01 per
share, of which as of the date of this Agreement, no shares were outstanding.
4.10 No Material Change in Financial Condition. Since September
30, 1996, to the date of this Agreement:
(a) the Company has not entered into any contracts or
commitments binding upon it outside the ordinary course of business;
(b) there has not been any acquisition or disposal by
the Company of material fixed or capital assets or any agreement to effect
the same;
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(c) there has not been any creation of liabilities by
the Company (other than expenses incurred in connection with this Agreement or
as set forth in the SEC Financial Statements or liabilities incurred in the
ordinary course of business);
(d) there has not been any capitalization of reserves or
creation or issue of any equity shares or loan capital by the Company;
(e) no resolution of the Company's board of directors or
shareholders has been passed, except as set forth in the corporate minute book;
(f) the Company has not created any mortgage or charge
on the whole or any part of its assets except in the ordinary course of
business;
(g) the Company has not declared, made or paid any
dividends or made any other distribution of capital, and no loans or loans or
loan capital has been repaid in whole or in part except in the ordinary course
of business;
(h) the Company has not borrowed or increased any secured
liability except in the ordinary course of business;
(i) no business material to the Company has been carried
on by the Company, except with respect to the development, construction,
marketing and sale of residential homes;
(j) no event has occurred which gives rise to a tax
liability to the Company on deemed (as opposed to actual) income or profits
or which results in the Company becoming liable to pay or bear a tax liability
directly or primarily chargeable against or attributable to another person,
firm or company;
(k) there have not been any changes in the assets,
liabilities, financial condition, business prospects or operations of the
Company from that reflected in the SEC Financial Statements or in any SEC
Document except changes in the ordinary course of business which have not been,
either individually or in the aggregate, materially adverse; and
(l) the Company does not have any material assets or
liabilities other than as set forth on the SEC Financial Statements as of the
dates thereof.
4.11 No Defaults. The Company is not in default in any material
respect under any material agreement to which it is a party or by which it is
bound, and to the Company's actual knowledge, (i) no party with whom the
Company has entered into any agreement or arrangement is in default in any
material respect thereunder and (ii) there are no circumstances likely to give
rise to such a default.
4.12 No Unusual Commitments. Except as set forth in the SEC
Financial Statements or on Exhibit C hereto, the Company is not a party to, nor
has any liability (present or future) under, any long-term, unusual,
non-routine, onerous or material contract or commitment involving obligations
or expenditures of an unusual or exceptional nature or magnitude or any
contract which cannot readily be fulfilled or performed by it on time and
without undue or unusual expenditure of money or effort, nor is the Company
party to, nor does it have any liability (present or future) under, any loan
agreement, debenture, guarantee, indemnity or letter of credit or leasing,
hiring, hire purchase, credit sale or conditional sale agreement, nor has it
entered into any contract or commitment involving, or likely to involve,
obligations or expenditure of an unusual or exceptional nature or magnitude.
4.13 No Options, Pledges, Liens. Except for rights granted under
or to be granted under the Company's 1992 Stock Option/Stock Issuance Plan,
there is no option, right to acquire, mortgage, charge, pledge, lien or other
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form of security or encumbrance on, over or affecting any of the Shares or any
part of the unissued share capital of the Company and there is no agreement or
commitment to give or create any of the foregoing, no claim has been made by
any person to be entitled to any of the foregoing which has not been waived in
its entirety or satisfied in full, and there is no agreement or commitment
outstanding which calls for the allotment or issue of or accords to any person
the right to call for the allotment or issue of any equity shares or debentures
in the Company.
4.14 Governmental Compliance with Respect to Business. The Company
and the directors and officers of the Company (in their capacity as such) have
complied with all legal requirements in relation to any transactions to which
the Company has been a party, and have obtained all licenses, permissions,
authorizations, consents and exceptions required for the carrying on of its
business, and such licenses, permissions, authorizations, consents and
exceptions are in full force and effect in each case, except as would not have a
material adverse effect on the Company and its subsidiaries taken as a whole.
There are no circumstances which indicate that any of such licenses,
permissions, authorizations, consents or exceptions may be revoked or not
renewed, in whole or in part except as would not have a material adverse effect
on the Company and its subsidiaries taken as a whole.
4.15 Corporate Affairs. The Company has conducted its corporate
affairs in all respects in accordance with its Certificate of Incorporation and
Bylaws from time to time in force, with the applicable Delaware corporate
statutes and, to the Company's actual knowledge, with all other applicable laws
and regulations of any jurisdiction, and to the Company's actual knowledge,
there is no violation of, or default with respect to, any ordinance, statute,
regulation, order, decree or judgment of any court or any governmental agency of
Delaware or any other jurisdiction which could reasonably have a material
adverse effect upon the assets or business of the Company.
4.16 No Capital Commitment. The Company has no capital commitment
and is not engaged in, nor contemplating the engagement in, any activity outside
of the ordinary course of business requiring the expenditure of capital.
4.17 No Factoring of Debts. The Company has not factored any of its
debts or engaged in financing outside of the ordinary course of business.
4.18 Insurance. The Company maintains those policies of insurance
in the amounts listed on Exhibit D hereto.
4.19 Taxation. The Company has complied with all other relevant
legal requirements relating to registration, notification, the filing of returns
and payment in connection with any form of taxation, charge, duty, levy, impost,
withholding, deduction or liability imposed to collect public or local revenue
by any local, state, federal and other governmental entity ("TAXATION"). The
Company has not incurred any Taxation other than in the ordinary course of
business. None of the returns which ought to have been made by or in respect of
the Company for any Taxation purposes are the subject of any dispute with any
Taxation or other relevant authority and there are no present circumstances
which are likely to give rise to any such dispute and provision has been made in
the SEC Financial Statements for all amounts which were or would have been shown
by any such return to be payable by the Company.
4.20 No Compensation for Loss of Office. The Company has not since
its incorporation paid compensation for loss of office or made or agreed to make
any payment to any of its present or former directors, officers or employees
other than payments in consideration for actual services provided by such
persons to the Company, other than payments made to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ pursuant to
a Settlement Agreement dated March 9, 1995 between the Company and ▇▇. ▇▇▇▇▇▇▇.
4.21 Employment, Service and Consulting Agreements. Except with
respect to indemnity agreements entered into with the directors and certain
officers of the Company (past and present) and except with respect to
indemnification and limitations on liability under the Company's Certificate of
Incorporation or Bylaws or under Delaware law, there is not now outstanding any
contract of employment or service or consulting agreement between the
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Company and any of its respective directors, officers, employees, agents,
advisers or consultants or any material liability on the part of the Company to
any person who is or has been a director, officer, employee, agent, adviser or
consultant of or to the Company and no former director, officer, employee or
agent of the Company has any claim or has asserted any claim against the
Company for compensation for loss of office or arising out of the termination
of his office or employment.
4.22 No Profit Sharing Plan or Share Option Plan. Other than the
Company's 1992 Stock Option/Stock Issuance Plan, the Company is not a party to
any profit sharing plan, share option plan, share incentive plan, or any other
plan under which any director, officer, employee or agent of the Company is
entitled to participate in the profits of the Company or has any rights in
respect of any shares or stock of the Company. The Company is not a party to
any pension or retirement plan, or any other plan under which any director,
officer, employee or agent of the Company is entitled to receive retirement or
pension benefits of any nature whatsoever. There are no beneficial loans or
other benefits in kind enjoyed by any director, officer, employee or agent of
the Company.
4.23 Receivers; Insolvency. No receiver has been appointed of the
whole or any part of the assets or undertaking of the Company, no petition has
been presented, no order has been made, and no resolution has been passed for
the winding-up or dissolution of the Company.
4.24 No Powers of Attorney. The Company has not given any power of
attorney or any other authority (express, implied or ostensible) which is still
outstanding or effective to any person to enter into any contract or commitment
or do anything on its behalf other than any authority of officers or employees
to enter into contracts and/or security documents in the normal course of
business.
4.25 Agreements Affecting Assets. There is no sale or purchase
option or similar agreement or arrangement affecting any assets owned or used by
the Company or by which the Company is bound except in the normal course of
business, there is no joint venture, consortium, partnership or profit sharing
agreement or arrangement of which the Company is a party other than such
arrangements entered into by the Company in the ordinary course of the Company's
business of developing, constructing, marketing and selling residential homes,
and there is no agreement (whether by way of guarantee, indemnity, warranty,
representation or otherwise) under which the Company is under any actual or
contingent liability in respect of (a) any disposal by the Company of its assets
(other than in the normal course of business) or disposal by the Company of its
business or any part thereof or (b) the obligations of any other person. Other
than loan documents, there is no contract which restricts the freedom of the
Company to carry on its business in the normal course of conduct.
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Representations, Warranties and Covenants of the Purchaser
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Purchaser hereby represents and warrants to the Company (the
"PURCHASER WARRANTIES"), effective as of each Closing Date, as follows:
5.1 Authorization. Purchaser represents and warrants to the
Company that: (i) Purchaser has all requisite legal and corporate or other
power and capacity and has taken all requisite corporate or other action to
execute and deliver this Agreement, to purchase the Shares to be purchased by it
and to carry out and perform all of its obligations under this Agreement; and
(ii) this Agreement constitutes the legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, or similar laws relating to
or affecting the enforcement of creditors' rights generally and (b) as limited
by equitable principles generally.
5.2 Investment Experience. Purchaser is an "accredited investor"
as defined in Rule 501(a) under the Securities Act. Purchaser has such business
and financial experience as is required to give it the capacity to protect its
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own interests in connection with the purchase of the Shares. Purchaser has
previously invested in securities and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that Purchaser is capable of
evaluating the merits and risks of the investment in the Common Stock. Purchaser
represents that it is an entity in which all of the equity owners are accredited
investors and which has not been organized for the purpose of acquiring the
Shares. Purchaser also represents that Purchaser has relied on Purchaser's own
independent judgment as to whether to enter into this Agreement or purchase the
Shares and has not relied upon the advice or the use of a broker, dealer or
finder in connection therewith.
5.3 Disclosure of Information. Purchaser understands that the
future price of the Shares after each Closing will be based on market conditions
and other factors. Neither the Company, nor officers or directors of the
Company, have made any representations to Purchaser regarding the price at which
shares of Common Stock of the Company will trade in the future or whether there
will continue to be a market for the Common Stock.
5.4 Investment Intent. Purchaser is purchasing the Shares for its
own account as principal, for investment purposes only, and not with a present
view to, or for, resale, distribution or fractionalization thereof, in whole or
in part, within the meaning of the Securities Act until such time as the Shares,
as the case may be, shall have been registered under the Securities Act and
applicable state securities law. Purchaser understands that its acquisition of
the Shares has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein. Purchaser has, in
connection with its decision to purchase the Shares, relied solely upon the SEC
Documents, the Company Warranties, and such other documents as are provided by
the Company to Purchaser pursuant to this Agreement. Purchaser will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares, except in compliance with the Securities Act and the
rules and regulations promulgated thereunder.
5.5 Registration or Exemption Requirements. Purchaser understands
that the Shares are characterized as "restricted securities" under the federal
securities laws inasmuch as they were initially acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations, such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
Purchaser represents that it is familiar with SEC Rule 144 as presently in
effect, and Purchaser understands the resale limitations imposed thereby and by
the Securities Act. Purchaser further acknowledges and understands that the
Shares may not be resold or otherwise transferred except in a transaction
registered under the Securities Act or unless an exemption from such
registration is available.
5.6 No Legal, Tax or Investment Advice. Purchaser understands
that nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
5.7 Legends. It is understood that the certificates evidencing
the Shares, when issued in the name of Purchaser, may bear the following legend,
or a legend substantially similar to such legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
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Conditions to the Obligation of the Purchaser
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The Purchaser's obligation to purchase the Shares is, at the option of
Purchaser, subject to the fulfillment or waiver of the following conditions:
6.1 Representations and Warranties. The Company Warranties shall
be true and correct in all material respects when made, and shall be true and
correct in all material respects on each Closing Date with the same force and
effect as if they had been made on and as of such date.
6.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to each Closing
Date shall have been performed or complied with in all material respects.
6.3 Exemption from Federal and State Securities Laws. The offer
and sale of the Shares shall be exempt from qualification or registration under
all state and federal securities laws.
6.4 Approval of Due Diligence Items. All of the documents and
evidence referred to in Sections 2.2(a), 3.1(a), 3.1(b) and 6.5 shall be in form
and substance reasonably satisfactory to the Purchaser.
6.5 Registration Rights Agreement. Concurrently with the
execution of this Agreement, the Company shall execute and deliver to the
Purchaser a registration rights agreement, which registration rights agreement
shall be substantially in the form attached hereto as Exhibit B.
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Conditions to the Obligations of Company
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The Company's obligation to sell and issue the Shares is, at the
option of the Company, subject to the fulfillment or waiver of the following
conditions:
7.1 Representations and Warranties. The Purchaser Warranties
shall be true and correct in all material respects when made, and shall be true
and correct in all material respects on each Closing Date with the same force
and effect as if they had been made on and as of such date.
7.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchaser on or prior to each Closing
Date shall have been performed or complied with in all material respects.
7.3 Exemption from Federal and State Securities Laws. The offer
and sale of the Shares shall be exempt from qualification or registration under
all state and federal securities laws.
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8
Restrictions on Transferability of Shares:
Compliance with Securities Act
------------------------------
8.1 No Transfer in Absence of Registration or Exemption. The Shares
shall not be transferable in the absence of a registration under the Securities
Act or an exemption therefrom or in the absence of compliance with any term of
this Agreement. The Purchaser hereby covenants with the Company not to make any
sale of the Shares except either (i) in accordance with the filing of a
registration statement under the Securities Act, in which case Purchaser
covenants to comply with the requirement of delivering a current prospectus, or
(ii) in accordance with SEC Rule 144, in which case Purchaser covenants to
comply with SEC Rule 144. The Company shall be entitled to give stop transfer
instructions to its transfer agent with respect to the Shares in order to
enforce the foregoing restrictions.
9
Miscellaneous
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9.1 Independent Counsel. Each of the parties to this Agreement
admits, acknowledges and represents to each of the other parties to this
Agreement that he or she has had the opportunity to consult with and be
represented by independent counsel of such party's choice in connection with the
negotiation, execution and amendment of this agreement. Each of such parties
further admits, acknowledges and represents to each of the other parties to this
Agreement that, except for the Warranties set forth in this agreement, none of
them rely or have relied on any representation or statement made by any other
party or by any of the attorneys or representatives of any other party with
regard to the subject matter, basis or effect of this Agreement.
9.2 Waivers and Amendments. The terms of this Agreement may be
waived or amended with the written consent of the Company and the Purchaser.
9.3 Broker's Fee. Each of the parties hereto hereby represents
that, on the basis of any actions and agreements by it, there are no brokers,
dealers or finders entitled to compensation in connection with the sale of the
Shares to the Purchaser.
9.4 Governing Law. This Agreement shall be governed in all
respects by and construed in accordance with the laws of the State of Delaware
without any regard to conflicts of laws principles.
9.5 Survival. The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by the
Company or the Purchaser and the Closing.
9.6 Successors and Assigns. The provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties to this Agreement. Notwithstanding the
foregoing, the Purchaser shall not assign this Agreement or any rights
hereunder without the prior written consent of the Company, which consent shall
not be unreasonably withheld.
9.7 Entire Agreement. This Agreement, together with (i) the
Confidentiality Agreement dated as of February 5, 1996, by and between the
Company and the Purchaser, and (ii) the Registration Rights Agreement of even
date herewith, by and between the Company and the Purchaser, constitute the
full and entire understanding and agreement between the parties with regard to
the subjects thereof. This Agreement, together with such Confidentiality
Agreement and Registration Rights Agreement, shall supersede all prior
agreements, contracts, letters of intent, and any other undertakings entered
into by and between the Purchaser and/or the Company relating to the subject
matter hereof.
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9.8 Notices, etc. All notices and other communications required
or permitted under this Agreement shall be in writing and may be delivered in
person, by telecopy, overnight delivery service or registered or certified
United States mail, addressed to the Company (Attention: President) or the
Purchaser, at their respective addresses set forth at the beginning of this
Agreement or at such other address as the Company or the Purchaser shall have
furnished to the other party in writing. All notices and other communications
shall be effective upon the earlier of actual receipt thereof by the person to
whom notice is directed or (i) in the case of notices and communications sent
by personal delivery or telecopy, one business day after such notice or
communication arrives at the applicable address or was successfully sent to the
applicable telecopy number, (ii) in the case of notices and communications sent
by overnight delivery service, at noon (local time) on the second business day
following the day such notice or communication was sent, and (iii) in the case
of notices and communications sent by United States mail, seven days after such
notice or communication shall have been deposited in the United State mail.
9.9 Severability of this Agreement. If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.11 Further Assurances. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
9.12 Expenses. Except as otherwise provided in Section 3.3, above,
the Company and the Purchaser shall bear its own expenses incurred on its
behalf with respect to this Agreement and the transactions contemplated hereby,
including fees of legal counsel.
9.13 Currency. All references to "dollars" or "$" in this
Agreement shall be deemed to refer to United States dollars.
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
INCO HOMES CORPORATION,
a Delaware corporation
By:
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Title:
---------------------------
Name:
---------------------------
"PURCHASER"
OVERLAND OPPORTUNITY FUND, LLC,
a California limited liability company
By:
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Title:
---------------------------
Name:
---------------------------
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