EXHIBIT 7.2
STOCK PURCHASE AGREEMENT
BETWEEN XXXXXXX XXXXXXXXXX AND
ALC HOLDINGS, LLC
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into this
3rd day of September 2003 (the "Effective Date") by and between Xxxxxxx
Xxxxxxxxxx, an individual (the "Seller") and ALC Holdings, LLC, a Colorado
limited liability company (the "Purchaser"). Seller and Purchaser will be
collectively referred to herein as the "Parties."
RECITALS
A. Seller desires to sell all his right, title and interest in and to
631,757 shares of $0.01 par value common stock ("Shares") of Glas-Aire
Industries Group, Ltd., a Nevada corporation located at 0000 Xxxxxxxxxxx Xxx,
Xxxxxxxx, X.X. X0X 0X0 ("Glas-Aire") to Purchaser for the aggregate amount of
$350,000, as set forth in Article One.
B. Purchaser is willing to purchase such Shares, upon the terms and
conditions hereinafter provided.
C. Seller is a member of the Board of Directors of Glas-Aire and Purchaser
is an entity that is controlled by a group of individuals including Xxxxx
Xxxxxxxx, the President and Chief Executive Officer of Glas-Aire ("Xxxxxxxx").
NOW, THEREFORE, in consideration of the Recitals, which shall be deemed to
be a substantive part of this Agreement, and the mutual covenants, promises,
agreements, representations and warranties hereinafter set forth, the Parties
hereto agree as follows:
ARTICLE ONE
SALE OF SHARES
On and subject to the terms and conditions of this Agreement, Purchaser
agrees to purchase from Seller, and Seller agrees to sell to Purchaser the
Shares of Glas-Aire.
1.1 Purchase and Sale. On the terms and subject to the conditions set forth
in this Agreement, Seller agrees to sell and transfer to Purchaser, and
Purchaser agrees to purchase and accept from Seller, the Shares owned by Seller
for the Purchase Price set forth below.
1.2 Purchase Price. The Purchase Price for the Shares shall be an aggregate
purchase price of $350,000 (the "Purchase Price"). Seller and Purchaser
acknowledge that the Purchase Price for the Shares has been arrived at through
arms length negotiations between Seller and Purchaser.
1.3 Payment of Purchase Price. The Purchase Price shall be paid by
Purchaser to Seller as follows: (i) $57,399.34 to be paid at Closing by funds
wired by the Purchaser to the Xxxxxxxxx & Associates, P.C. trust account, (ii)
promissory notes from the Purchaser, in the form attached hereto as Exhibit A
(individually the "Note" and collectively the "Notes"), with the principal
amounts of $ 166,690.66, $100,000, and $25,910, each bearing interest at a rate
of 7.0% per annum compounded daily.
ARTICLE TWO
THE CLOSING
2.1 Closing. Seller agrees to sell and Purchaser agrees to purchase the
Shares subject to the terms and conditions hereof and in reliance upon the
written representations and warranties of Seller and Purchaser. The Closing of
this Agreement (the "Closing") shall be held at the offices of Xxxxxxxxx &
Associates, P.C. ("S&A"), located at 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxx 00000 on the Effective Date.
2.2 Deliveries at Closing. At the Closing (i) Purchaser shall deliver: (1)
$57,399.34 to be paid at Closing by funds wired by the Purchaser to the
Xxxxxxxxx & Associates, P.C. trust account, (2) the Notes, (3) personal
guarantees for each Note signed by each member of Purchaser, attached hereto as
Exhibit B; (4) the Xxxxxxxx Note and (5) Xxxxxxxx'x executed Waiver of Change of
Control Letter, pursuant to Section 5.6 of this Agreement, and (ii) Seller shall
deliver: (1) the stock certificates for 631,757 of the shares to Purchaser, duly
endorsed for transfer on Glas-Aire's books to Purchaser, and (2) Seller's
executed resignation letter as a member of the Board of Directors of Glas-Aire.
ARTICLE THREE
CONDITIONS TO CLOSING
The purchase of and payment for the Shares to be sold and delivered to
Purchaser is subject to the accuracy of all representations and warranties by
Seller and Purchaser contained herein and to the performance by Seller and
Purchaser of all terms and conditions to be performed hereunder:
3.1 Proceedings and Documents. All proceedings taken or to be taken in
connection with the transactions contemplated by this Agreement to be
consummated at or prior to the Closing, and all documents and certificates
contemplated hereunder shall each be satisfactory in form and substance to
Seller and Purchaser.
ARTICLE FOUR
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants, as of the Closing, that each of the
representations and warranties contained herein are true and correct:
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4.1 Review of Agreement. Seller 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.
4.2 Possible Future Appreciation of Shares. Seller understands that by
transferring the Shares to Purchaser, Seller may be foregoing the possibility of
substantial appreciation in the future with regard to the Shares. Seller has
determined, after making the inquiries referred to in this Agreement and after
consideration of all material and significant facts relating to Glas-Aire, that
the purchase price outlined above is reasonable and fair. Seller acknowledges
that his determination of value is the result of arms-length negotiations with
Purchaser.
4.3 Knowledge of Glas-Aire. Seller represents that he is a sophisticated
investor with knowledge and experience in business and financial matters, that,
as a member of the Board of Directors of Glas-Aire, he has been given access to
full and complete information regarding Glas-Aire and has utilized such access
to his satisfaction, or waived the opportunity to do so, for the purpose of
obtaining information about and asking questions and receiving answers
concerning Glas-Aire.
4.4 Beneficial Owner. Seller represents that he is the sole record owner of
631,757 shares of Glas-Aire common stock, which are intended to be sold to
Purchaser in this transaction, with absolute right, title and interest to such
Shares. Further, the Shares are owned by Seller free and clear of all options,
mortgages, restrictions (other than restrictions under applicable state and
federal securities laws), liens, charges, assessments, pledges, security
interests, adverse claims, equities, limitations or other encumbrances. Seller
has due and sufficient right and authority to enter into this Agreement and to
transfer all of his right, title and interest to and ownership of the Shares to
Purchaser on the terms and conditions set forth herein. Upon Seller's transfer
of the Shares, Purchaser will, as a result, receive good and marketable title to
the Shares purchased, free and clear of all liens and encumbrances, subject to
applicable state and federal securities laws.
4.5 Reliance. Seller understands the significance to Purchaser of the above
representations and they are made with the intention that Purchaser may rely
upon them.
4.6 Resignation. At the Closing, Seller hereby agrees to resign as a member
of the Board of Directors by tendering his resignation, effective upon and
concurrently with the execution, acknowledgement, sealing and delivery of this
Agreement. Seller shall execute a resignation letter from Glas-Aire's Board of
Directors.
4.7 Right to Compensation Pursuant to the Directors Compensation Plan.
Seller acknowledges that he understands and agrees that he is not entitled to
any compensation for services as a director pursuant to the Glas-Aire Directors
Compensation Plan for the current fiscal year ended December 31, 2003.
4.8 Brokerage Fees. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement. Seller hereby agrees to indemnify and hold
harmless Purchaser from any such fee or charge claimed by any broker or other
party claiming to represent Seller as broker or agent.
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4.9 Indemnification. Seller acknowledges that he understands the meaning
and legal consequences of the representations and warranties contained above and
he hereby agrees to indemnify and hold harmless Purchaser from and against any
and all loss, damage or liability due to or arising out of a breach of any
representation or warranty of Seller contained in this Agreement, provided that
(a) any amounts due under this indemnification shall be limited to the aggregate
amount of cash consideration paid by Purchaser pursuant to Section 1.3 for the
Shares sold pursuant to this Agreement, with such aggregate amount determined as
of the of date the claim for indemnification was made.
4.10 Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Seller is subject.
4.11 Documentation. Seller will execute and deliver to Purchaser and/or
Glas-Aire any document, or do any other act or thing, which Purchaser and/or
Glas-Aire may reasonably request in connection with the transfer of the Shares
and the resignation of Seller as a director and officer of Glas-Aire.
ARTICLE FIVE
PURCHASER'S REPRESENTATIONS AND WARRANTIES
In order to induce Seller to sell the Shares to Purchaser, Purchaser hereby
warrants, represents and covenants to Seller that:
5.1 Review of Agreement. Purchaser has thoroughly read this Agreement and
had the opportunity to review this Agreement with a competent legal and/or
financial professional advisor of his choice.
5.2 Due Authority. Purchaser is a limited liability company duly formed and
in good standing with the State of Colorado. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary company action and approved by all
members of Purchaser. This Agreement is the valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.
5.3 Knowledge of Glas-Aire. Purchaser understands that it will have the
full risk of any depreciation in the value of the Shares and acknowledges that
Seller makes no representation of any kind regarding the present or future value
of the Shares. Purchaser has knowledge and therefore is aware of all significant
and material facts relating to Glas-Aire and its operations, which relate to the
financial position of and plans for Glas-Aire.
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Purchaser further represents that it is a sophisticated investor with
knowledge and experience in business and financial matters, that it has been
given access to full and complete information regarding Glas-Aire and has
utilized such access to its satisfaction, or waived the opportunity to do so,
for the purpose of obtaining information about and asking questions and
receiving answers concerning Glas-Aire.
5.4 Documentation. Purchaser will execute and deliver to Seller and/or
Glas-Aire any document, or do any other act or thing, which Seller and/or
Glas-Aire may reasonably request in connection with the acquisition of the
Shares.
5.5 Reliance. Purchaser understands the significance to Seller of the above
representations and they are made with the intention that such parties may rely
upon them.
5.6 Brokerage Fees. Purchaser has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement. Purchaser hereby agrees to
indemnify and hold harmless Seller from any such fee or charge claimed by any
broker or other party claiming to represent Purchaser as broker or agent.
5.7 Waiver of Change of Control. Xxxxxxxx, who is a manager of Purchaser,
and as an individual, hereby agrees in connection with this Agreement, that he
will enter into a waiver of change of control letter for the benefit of
Glas-Aire, in the form attached hereto as Exhibit C. In the Waiver of Change of
Control Letter, Xxxxxxxx acknowledges that the purchase of the Shares by
Purchaser pursuant to this Agreement shall not be considered a "Change of
Control" as set forth in either of his Executive Employment Agreements with
Glas-Aire. Further, Xxxxxxxx acknowledges and agrees that the purchase of the
Shares by Purchaser pursuant to this Agreement, is not considered a termination
of Xxxxxxxx'x employment and he is not entitled to terminate his employment
pursuant to any change of control provision and may not collect any severance
compensation as set forth in his Executive Employment Agreements.
5.8 Indemnification. Purchaser acknowledges that it understands the meaning
and legal consequences of the representations and warranties contained above and
it hereby agrees to indemnify and hold harmless Seller from and against any and
all loss, damage or liability due to or arising out of a breach of any
representation or warranty of its contained in this Agreement; provided that (a)
any amounts due under this indemnification shall be limited to the aggregate
amount of cash consideration paid by Purchaser pursuant to Section 1.3 for the
Shares sold pursuant to this Agreement, with such aggregate amount determined as
of the date the claim for indemnification was made.
5.9 Securities Laws. Purchaser is aware that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act") or the
securities act of any state or province and the Shares may not be sold,
transferred for value, pledged, hypothecated, or otherwise encumbered in the
absence of an effective registration of them under the Act, and/or the
securities laws of any applicable state or province or in the absence of an
opinion of counsel acceptable to Glas-Aire that such registration is not
required under such act or acts. Purchaser is further aware that the
certificates evidencing the Shares purchased hereunder may include the
above-described restrictions. Purchaser acknowledges that Seller is transferring
the Shares pursuant to an exemption from registration under the Act,
specifically under the so called Section 4 (1-1/2) exemption, which has been
recognized in various releases by the Securities and Exchange Commission, and
applicable exemptions from such state or provincial securities acts.
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Purchaser further represents that it understands that it may not dispose of
or transfer any of the Shares to be acquired pursuant to this Agreement in any
manner without first obtaining (i) an opinion of counsel satisfactory to
Glas-Aire that such proposed disposition or transfer lawfully may be made
without the registration of the Shares for such purpose pursuant to the Act, as
then amended, and applicable state or provincial securities laws; and (ii)
Glas-Aire shall not have any obligations to register the Shares for any purpose.
5.10 Investment. Purchaser represents and warrants that it is acquiring the
Shares for its own account and for investment and without the intention of
reselling or redistributing the same, that it has made no agreement with others
regarding any of the Shares to be purchased pursuant to this Agreement.
Purchaser further represents that it is able to bear the economic risk of an
investment in the Shares for an indefinite period of time, and further, could
bear a total loss of the investment and not change its members standard of
living which existed at the time of such investment.
5.11 Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Purchaser is subject.
ARTICLE SIX
ADDITIONAL PROVISIONS
6.1 Assignment. Any attempt by Seller or Purchaser to assign any rights,
duties or obligations which arise under this Agreement without the prior written
consent of the other party shall be void and shall constitute a breach of the
terms of this Agreement. However, this Section 6.1 is not intended to otherwise
impede the ability of the Seller to sell, transfer, assign or hypothecate any of
the Notes under this Agreement.
6.2 Notices. Any notices, request, demand or other communication required
or permitted hereunder shall be deemed properly given when personally served in
writing or when deposited in the United States mail, postage prepaid, addressed
to the other party at the following address:
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If to Seller: If to Purchaser xx Xxxxxxxx:
Xxxxxxx Xxxxxxxxxx Xx. Xxxxx Xxxxxxxx
0000 Xxxxx Xxxxx Xxxx c/o Schlueter & Associates, P.C.
Xxxxxxxx, Xxxxxxxx 00000 0000 x0xx Xx., Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Copy to:
Xxxxxxxxx & Associates, P.C.
0000 x0xx Xx., Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Each notice given by registered or certified mail shall be deemed delivered
and effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery thereof. Each party may change its address for notice by
giving notice thereof in the manner provided above.
6.3 Benefit of Agreement. This Agreement shall inure to the benefit of and
be binding upon the Parties, their respective legal representatives,
administrators, executors, and successors.
6.4 Governing Law; Jurisdiction and Venue. This Agreement shall be
construed in accordance with the laws of the State of Colorado without giving
effect to principles of conflicts of laws of such state. Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself or himself and
its or his property, to the nonexclusive jurisdiction of any Colorado State
court or federal court of the United States of America sitting in the city of
Denver, State of Colorado and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such Colorado State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Each of the parties hereto
irrevocably and unconditionally waives, to the fullest extent it or he may
legally and effectively do so, any objection that it or he may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to the Agreement in any Colorado State or federal court. Each of the
parties hereto irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court. The parties further agree that to the maximum extent
permitted by law, the mailing by certified or registered mail, return receipt
requested to the other party, of any process required by any such court shall
constitute valid and lawful service of process against them, without the
necessity for service by any other means provided by law. In addition,
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notwithstanding the foregoing, Purchaser and Xxxxxxxx hereby designates
Xxxxxxxxx & Associates P.C. ("Agent") as their designated agent for service of
process and hereby agrees that the service of process upon Agent in any manner
permitted by Colorado law shall constitute valid and lawful service of process
on Purchaser. Purchaser and Xxxxxxxx may, by giving to the Seller notice in the
manner provided above, at any time designate another law firm having at least
three full time licensed and practicing attorneys to serve as Agent in the place
and stead of Xxxxxxxxx & Associates PC, provided such agent also maintains a
physical office, and an office address (which may not be a post office address)
for delivery, within Denver, Colorado. Any such notice replacing the Agent must
include the full address for delivery of the law firm that will serve as Agent
for the purposes of this Agreement and include the written consent of the law
firm to its appointment as the new Agent.
6.5 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
6.6 Entire Agreement. This Agreement supersedes all prior written and
verbal promises and agreements between the parties as to this subject matter.
This Agreement constitutes the entire agreement between the parties hereto and
may be amended, modified or superseded only by a written agreement signed by
both parties hereto.
6.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument; but in making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.
6.8 Specific Performance. If any of the Parties so required under this
Agreement fails to sell stock, provide a share certificate or provide a
promissory note then, and in any such event, if the failure continues for thirty
(30) days after written notice to the party in default, Seller or Purchase, as
the case may be, may initiate and maintain a proceeding to compel specific
performance of this Agreement by the party in default, as the parties agree that
in the event of any default by the parties hereto, there is no adequate remedy
at law for redress of such default.
6.9 Severability. In case any one or more of the provisions of this
Agreement shall be found to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. Further, any
provision found to be invalid, illegal or unenforceable shall be deemed, without
further action on the part of the parties hereto, to be modified, amended and/or
limited to the minimum extent necessary to render such clauses and/or provisions
valid and enforceable.
6.10 Disclosure and Waiver of Conflicts. The Parties acknowledge and agree
that Xxxxx X. Xxxxxxxxx of Xxxxxxxxx & Associates, P.C. the attorney that
prepared this Stock Purchase Agreement (the "Attorney") has advised the Parties
in the past and that the Attorney represents Glas-Aire. Notwithstanding the
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foregoing, the Parties jointly and severally forever waive any claim that the
Attorney's representation of Glas-Aire or preparation of this Stock Purchase
Agreement constitutes a conflict of interest. Further, each of the Parties
acknowledge that they have executed conflict waiver letters for the benefit of
Attorney in connection with this transaction.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
SELLER
/s/ Xxxxxxx Xxxxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxxxx
PURCHASER
ALC HOLDINGS, LLC
/s/ Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx, Manager
XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx, an individual
The undersigned hereby consents to the appointment as Agent for Service of
Process for each of ALC Holdings, LLC and Xxxxx Xxxxxxxx, Individually:
XXXXXXXXX & ASSOCIATES PC
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxxx
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STATE OF COLORADO )
) ss.
COUNTY OF ____________)
SUBSCRIBED AND SWORN TO before me this ____ day of ___________, 2003 by
Xxxxxxx Xxxxxxxxxx.
My commission expires:_______________
WITNESS my hand and official seal.+
_____________________________________
(SEAL) Notary Public
STATE OF _____________)
) ss.
COUNTY OF ____________)
SUBSCRIBED AND SWORN TO before me this ____ day of ___________, 2003 by
Xxxxx Xxxxxxxx, as Manager of ALC Holdings, LLC.
My commission expires:_______________
WITNESS my hand and official seal.
_____________________________________
(SEAL) Notary Public
STATE OF _____________)
) ss.
COUNTY OF ____________)
SUBSCRIBED AND SWORN TO before me this ____ day of ___________, 2003 by
Xxxxx Xxxxxxxx, Individually.
My commission expires:_______________
WITNESS my hand and official seal.
_____________________________________
(SEAL) Notary Public
-------------------- ------------------------
Initials (ALC Holdings) Initials (Xxxxxxxxxx)
EXHIBIT A
FORM OF PROMISSORY NOTE
EXHIBIT B
PERSONAL GUARANTEES FROM EACH MEMBER OF PURCHASER
EXHIBIT C
XXXXXXXX WAIVER OF CHANGE OF CONTROL LETTER
