GLAS-AIRE INDUSTRIES GROUP LTD.
Common Stock
Purchase Agreement
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July 7, 1999
Xx. Xxxxxx X. Xxxx
00000 Xxxxxxxxx Xxxxxx
Xxxxx XX 00000
Dear Xx. Xxxx:
Glas-Aire Industries Group Ltd., a Nevada corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you (the "Purchaser"), an aggregate of 144,000 shares of the Company's Common
Stock $0.01 par value (the "Securities") in exchange for 594,000 shares of the
common stock of Regency Affiliates, Inc. (the "Regency Shares"). This
transaction in being undertaken in reliance upon Rule 506 adopted under the
United States Securities Act of 1933, as amended (the "Act"). It is our
understanding that you are an "accredited investor" (within the meaning of Rule
501 adopted under the Act).
1. The Company represents and warrants to, and agrees with, the Purchaser
that:
(a) Copies of the Company's Forms 10-KSB for the years ended January
31, 1999 and 1998, the Company's Forms 10-QSB for the quarters ended April
30, 1999 and 1998, the Company's Form 10-QSB for the quarter ended July 31,
1998, the Company's Form 10-QSB for the quarter ended October 31, 1998, and
the Company's Form 8-K relating to the recent change in control of the
Company, have been provided to the Purchaser. The documents referred to in
the previous sentence that have been filed with the United States
Securities and Exchange Commission shall hereinafter be referred to at the
"1934 Act Reports."
(b) The Company has not sustained since the date of the latest audited
financial statements included in the Form 10-KSB for the year ended January
31, 1999 (the "Latest 10-K"), any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, and, since the date as of which information is
given in the Latest 10-K there has not been any material change in the
capital stock or long-term debt of the Company or any material adverse
change, or development in the general affairs, financial position,
stockholders' equity or results of operations of the Company otherwise than
as set forth or contemplated in the 1934 Act Reports;
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Nevada, with corporate
power and authority to own its properties and conduct its business as
described in the 1934 Act Reports; and the Company has full corporate power
and authority to execute and deliver, and perform its obligations under,
this Agreement;
(d) The Company has an authorized capitalization as set forth in the
Latest 10-K, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
nonassessable;
(e) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed, issued
and delivered; and the Securities conform, in all material respects, to the
descriptions thereof in the 1934 Act Reports;
(f) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities and this Agreement and
the consummation of the transactions herein and therein contemplated will
not materially conflict with or result in a material breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, sale/leaseback agreement, loan
agreement, or other agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the property or assets
of the Company is subject;
(g) Other than as set forth or contemplated in the 1934 Act Reports,
there are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject other than litigation or
other proceedings which, in the opinion of the Company, will not in the
aggregate have a material adverse effect on the general affairs, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries, on a consolidated basis (a "Material Adverse Effect");
and, to the best of the knowledge of the Company's officers, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others; and
(h) This Agreement has been duly authorized, executed and delivered by
the Company.
2. Subject to the terms and conditions herein set forth, the Company agrees
to issue and sell to the Purchaser, and the Purchaser agrees to purchase from
the Company, 144,000 shares of the Securities in exchange for the Regency
Shares. The parties agree that the value of the Securities being issued is $3.63
per share and that the value of the Regency Shares being exchanged for the
Securities is equal to or greater than the value of the Securities.
3. The Purchaser hereby represents, warrants and agrees with the Company
that:
(a) He is the beneficial owner of the Regency Shares which he is
exchanging for the Securities in this transaction. Further, he is
transferring the Regency Shares free of any liens, claims, pledges,
judgments or other encumbrances.
(b) He is a sophisticated investor with such knowledge and experience
in financial matters that he is capable of evaluating the relative risks
and merits of acquiring the Securities.
(c) He has thoroughly read this Agreement, and has had the opportunity
to review this Agreement with a competent legal and/or financial
professional advisor of his choice.
(d) He has reviewed and is familiar with the Company's 1934 Act
Reports, and has been provided with copies of all recent filings with the
Securities and Exchange Commission.
(e) He will execute and deliver to the Company any documents, or do
any other act or thing, which the Company may reasonably request in
connection with the acquisition of the Securities.
(f) He is able to bear the economic risk of an investment in the
Securities for an indefinite period of time, and further, could bear a
total loss of the investment and not change his standard of living which
existed at the time of such investment.
(g) He is acquiring the Securities for his own account for investment
and without the intention of redistributing the same on the open market.
Further, he is aware that the Securities have not been registered under the
Securities Act of 1933 nor the securities act of any state and other than a
resale in an exempt transaction may not be sold, transferred for value,
pledged, hypothecated, or otherwise encumbered in the absence of an
effective registration of them under the Securities Act of 1933 and/or the
securities laws of any applicable state or in the absence of an opinion of
counsel acceptable to the Company and/or its stock transfer agent that such
registration is not required under such act or acts. Further, he is aware
that the Certificates evidencing the Securities purchased hereunder may
include the above-described restrictions. He acknowledges that the Company
is transferring the Securities pursuant to an exemption from registration
under the Securities Act of 1933, as amended, and applicable exemptions
from such state securities acts. He expressly understands that the Company
shall not have any obligations to register the Securities for any purpose,.
4. All statements, requests, notices and agreements hereunder shall be in
writing, and shall be delivered or sent by mail, telex or facsimile transmission
to:
If to the Purchaser: Xx. Xxxxxx X. Xxxx
00000 Xxxxxxxxx Xxxxxx
Xxxxx XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company: Glas-Aire Industries Group Ltd
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, X.X. X0X 0X0 Xxxxxx
Telephone: (000)000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxxx
Xxxxxxxxx & Associates, P.C.
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000)000-0000
Any such statements, requests, notices, or agreements shall take effect upon
receipt thereof.
5. This Agreement shall be binding upon, and inure solely to the benefit of
the Purchaser and the Company, and their respective heirs, executors,
administrators, successors, and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement.
6. Time shall be of the essence of this Agreement.
7. This Agreement shall be governed by and construed in accordance with the
laws of the State of Nebraska.
8. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your under standing, please sign and
return to us three counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between you and the Company.
Very truly yours,
GLAS-AIRE INDUSTRIES GROUP LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, Chairman
/s/ Xxxxxx X. Xxxx
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Xx. Xxxxxx X. Xxxx
