STOCK EXCHANGE AGREEMENT
THIS
STOCK EXCHANGE AGREEMENT (the “Agreement”), dated as of the 28th day
of April, 2008, is by and between Decorize, Inc., a Delaware corporation (the
“Company”), and Xxxxx X. Xxxxxxx, an individual (“Xxxxxxx”).
WHEREAS,
on June 15, 2001, the Company issued to Xxxxxxx that certain Promissory Note
in
the original principal amount of $925,000.00, which was amended by certain
Note
Modification Agreements to extend the applicable maturity date and was further
amended by that certain Amended and Restated Promissory Note in the original
principal amount of $609,467.69 on May 5, 2006 (collectively, the “Note”);
and
WHEREAS,
the Company desires to issue and sell to Xxxxxxx, and Xxxxxxx desires to
purchase from the Company, 1,500,000 shares (the “Shares”) of the common stock,
$0.001 par value per share, of the Company (“Common Stock”), in exchange for a
reduction of the principal balance of the Note, as further set forth
below;
NOW,
THERFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
| 1. |
PURCHASE
AND SALE
|
| 1.1. |
Sale
of Shares.
Upon the terms and subject to the conditions set forth in this Agreement,
the Company hereby agrees to issue the Shares to Xxxxxxx upon the
receipt
of the consideration described herein, and Xxxxxxx hereby agrees
to
purchase from the Company, all right, title and interest in and to
all of
the Shares, free of all liens, claims and
encumbrances.
|
| 1.2. |
Consideration.
The aggregate purchase price for the Shares is the sum of $300,000.00
(the
“Purchase Price”), at a price of $0.20 per share, which shall be paid by
applying the Purchase Price against the outstanding principal balance
of
the Note. The reduction in the outstanding principal balance of the
Note
shall be evidenced by the issuance of a Second Amended and Restated
Promissory Note, in the form of Exhibit A to this Agreement (the
“New
Note”), which shall be issued in full replacement and substitution for
the
Note. Upon issuance of the New Note and the Shares, the Note shall
cease
to be of any further force or
effect.
|
| 1.3. |
Closing
Procedure.
Concurrent with the execution of this Agreement, the Company shall
deliver
to Xxxxxxx stock certificate(s) representing the Shares, issued in
the
name of Xxxxxxx and this Agreement (the “Closing Documents”). All actions
taken on the date hereof with respect to the transactions contemplated
hereunder shall be deemed to have been taken simultaneously at the
time
the last of any such actions is taken or
completed.
|
| 1.4. |
Removal
of Restrictive Legends.
In connection with any proposed sale of the Shares, any legend endorsed
on
a certificate pursuant to Section 3.2(d) and any related stop transfer
instructions with respect to any Shares shall be removed, and the
Company
shall within ten (10) business days request its transfer agent to
issue
promptly a certificate without such legend to the holder thereof,
if (i)
such Shares shall be registered under the Securities Act of 1933,
as
amended (the “Securities Act”), (ii) such legend may be properly removed
under the terms of Rule 144 under the Securities Act or (iii) such
holder
shall provide the Company with an opinion of counsel, satisfactory
to the
Company, to the effect that a sale, transfer or assignment of such
Shares
may be made pursuant to Rule 144(k) under the Securities
Act.
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Page
1 of 6
| 2. |
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Xxxxxxx as
follows:
|
| 2.1. |
Organization
and Good Standing.
The Company is a corporation duly organized, validly existing and
in good
standing under the laws of the State of Delaware, and has all necessary
corporate power and authority to own or lease its assets and to carry
on
its business as now being conducted and presently proposed to be
conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which
its
ownership or leasing of assets, or the conduct of its business, makes
such
qualification necessary, except where the failure to be so qualified
would
not result in a material and adverse change in the business, assets,
financial condition, results of operations, affairs or prospects
of the
Company and its subsidiaries, taken as a whole (“Material Adverse
Change”). Except for any subsidiaries disclosed in its SEC Documents (as
defined in Section 2.3), the Company has no subsidiaries and no equity
interests in any corporation, partnership, joint venture or other
entity.
|
| 2.2. |
Requisite
Power and Authorization.
The Company has all necessary corporate power and authority to execute
and
deliver the Closing Documents and to perform its obligations under
each of
the Closing Documents, including without limitation the issuance
of the
Shares hereunder. All corporate actions of the Company required for
the
execution and delivery of the Closing Documents and the issuance
and
delivery of the Shares has been duly and effectively taken, and no
further
actions, authorizations or consents, including, without limitation,
any
consents of the stockholders of the Company, are required. Each of
the
Closing Documents constitutes the valid and binding obligation of
the
Company, enforceable against the Company in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditor’s rights, and (ii) as limited by general
principles of equity that restrict the availability of equitable
remedies.
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Page
2 of 6
| 2.3. |
SEC
Documents.
The Company has filed with the Securities and Exchange Commission
(the
“SEC”) all reports, statements, schedules and other documents
(collectively, the “SEC Documents”) required to be filed by it pursuant to
the Securities Act and the Securities Exchange Act of 1934 (the “Exchange
Act”). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or
the
Exchange Act, as the case may be, and the rules and regulations of
the SEC
promulgated thereunder, and none of the SEC Documents, at the time
they
were filed with the SEC, contained any untrue statement of a material
fact
or omitted to state a material fact required to be stated therein
or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their
respective dates, the financial statements included in the SEC Documents
(the “Financial Statements”) complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Except (i) as may be
indicated in the notes to the Financial Statements or (ii) in the
case of
the unaudited interim statements, as permitted by Form 10-QSB under
the
Exchange Act, the Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied
and
fairly present in all material respects the financial position of
the
Company and its subsidiaries as of the dates thereof and the results
of
its operations and cash flows for the periods then ended (subject,
in the
case of unaudited statements, to normal recurring year-end adjustments
and
footnotes). Except as set forth in the Financial Statements filed
with the
SEC prior to the date hereof, neither the Company nor any of its
subsidiaries has any liabilities, whether absolute, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course
of
business subsequent to the date of such Financial Statements, (ii)
obligations under contracts and commitments incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be reflected in such Financial Statements, which liabilities
and obligations referred to in clauses (i) and (ii), individually
or in
the aggregate, are not material to the financial condition or operating
results of the Company or any of its subsidiaries and (iii) liabilities
and obligations incurred in connection with the Closing Documents
and the
transactions contemplated thereby.
|
| 2.4. |
No
Conflicts.
Neither the execution, delivery and performance by the Company of
this
Agreement, the other Closing Documents, and all instruments and documents
to be delivered by the Company, nor the consummation of the transactions
contemplated by any of the foregoing (i) has constituted or resulted
in,
or will constitute or result in, a default under or breach or violation
of
any term or provision of the Certificate of Incorporation or bylaws
of the
Company, as amended, or material contracts or instruments to which
the
Company or any of its subsidiaries is a party or federal, state or
local
laws, rules or regulations, writs, orders, judgments or decrees which
are
applicable to the Company, any of its subsidiaries or their assets,
(ii)
will result in the acceleration or termination of any rights under
any
contract or instrument to which the Company or any of its subsidiaries
is
a party or (iii) will result in the creation or imposition of any
liens,
charges or encumbrances upon any assets of the Company or any of
its
subsidiaries.
|
| 2.5. |
Consents.
No approval, consent, order, authorization or other action by, or
notice
to or filing with, any governmental authority or regulatory agency
or any
other person or entity, and no lapse of a waiting period, is required
in
connection with the execution, delivery or performance by the Company
of
this Agreement, any other Closing Document, the issuance and delivery
of
any of the Shares or any other transactions contemplated by any of
the
Closing Documents except for filings required under applicable state
“blue
sky” laws (which shall be duly filed and effective prior to the issuance
of the Shares if so required under such
laws).
|
| 2.6. |
No
Material Adverse Change.
Since the date of the most recent SEC Documents, the business of
the
Company and each subsidiary has been operated in the ordinary course
and
substantially consistent with past practice and there has not been
any
Material Adverse Change.
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3 of 6
| 2.7. |
Litigation.
There is no claim, action, suit, proceeding or investigation pending
or to
the Company’s knowledge, currently threatened against the Company or any
of its subsidiaries, or any of their respective directors or officers,
in
their capacities as such, (i) that questions the validity of this
Agreement or any other Closing Document or the issuance of the Shares,
or
the right of the Company to enter into this Agreement or any other
Closing
Document or to consummate the transactions contemplated by any Closing
Document or (ii) that might result, either individually or in the
aggregate, in any Material Adverse Change or in any change in the
current
equity ownership of the Company.
|
| 2.8. |
Validity
of Shares.
The Shares, when issued by the Company to Xxxxxxx upon payment in
full of
the Purchase Price, will be validly issued, fully paid and
non-assessable.
|
| 3. |
REPRESENTATIONS
AND WARRANTIES OF XXXXXXX.
Xxxxxxx represents and warrants to the Company as
follows:
|
| 3.1. |
Due
Authorization.
Xxxxxxx has full capacity to enter into this Agreement and to carry
out
his obligations hereunder. This Agreement has been duly executed
and
delivered by Xxxxxxx and constitutes the legal, valid and binding
obligations of Xxxxxxx, enforceable against him in accordance with
its
terms.
|
| 3.2. |
Investment
Representations.
Xxxxxxx further represents and warrants as
follows:
|
| 3.2.1. |
The
undersigned is purchasing the Shares for his own account and not
with a
view to resale or redistribution in a manner which would require
registration under the Securities Act, or any state securities laws,
or
for sale in connection with a “distribution” as that term is used in
Section 2(11) of the Securities Act, of the
shares.
|
| 3.2.2. |
The
undersigned understands that the Shares are not registered under
the
Securities Act or the securities laws of any state and may not be
disposed
of in whole or in part in the absence of registration under the Securities
Act or any state securities laws, unless an exemption from registration
is
available.
|
| 3.2.3. |
The
undersigned understands that there is a very limited public market
for the
Shares and it may not be possible for the undersigned to readily
liquidate
its investment. As a consequence, the undersigned may never be able
to
sell or dispose of such Shares and may thus have to bear the risk
of
investment in such Shares for a substantial period of time. The
undersigned has adequate means of providing for its current and future
contingencies and has no need for liquidity with regard to its investment
in the Shares.
|
| 3.2.4. |
The
undersigned has been informed and understands that the Shares, upon
issue,
will have such restrictive legends as are required by law or as the
Company may otherwise determine.
|
| 3.2.5. |
The
undersigned has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of
an
investment in the Shares and making an informed decision with respect
to
the purchase of the Shares. Xxxxxxx is not relying upon any representation
or warranty by the Company with respect to the value of the Shares,
and
accordingly no such representations or warranties are
made.
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Page
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| 3.2.6. |
The
undersigned has had an opportunity to ask questions of and receive
satisfactory answers from the Company, or any person or persons acing
on
the Company’s behalf, concerning the terms and conditions of this
investment, and all such questions have been answered to the full
satisfaction of Xxxxxxx.
|
| 4. |
MISCELLANEOUS
PROVISIONS
|
| 4.1. |
Assignment.
This Agreement shall be binding upon and inure to the benefit of
the
parties hereto and their respective successors, heirs and
assigns.
|
| 4.2. |
Counterparts.
This Agreement may be executed in any number of counterparts, each
of
which shall be deemed an original, but all of which together shall
constitute one and the same
instrument.
|
| 4.3. |
Entire
Agreement.
This Agreement and the documents referred to herein contain the entire
understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties,
conveyances or undertakings other than those expressly set forth
herein.
This Agreement supersedes any prior agreements and understandings
between
the parties with respect to the subject matter of this
Agreement.
|
| 4.4. |
Modification.
No change or modification of this Agreement shall be valid or binding
upon
the parties hereto, nor shall any waiver of any term or condition
in the
future be so binding, unless such change or modification or waiver
shall
be in writing and signed by the parties
hereto.
|
| 4.5. |
GOVERNING
LAW; VENUE.
NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF
THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS AGREEMENT
SHALL
BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF DELAWARE
AS
APPLIED TO AGREEMENTS AMONG DELAWARE RESIDENTS ENTERED INTO AND TO
BE
PERFORMED ENTIRELY WITHIN DELAWARE, WITHOUT REGARD TO THE CONFLICT
OF LAW
PROVISIONS OF SUCH JURISDICTION. VENUE FOR ANY ACTION TO ENFORCE,
INTERPRET OR RESOLVE ANY DISPUTE WITH RESPECT TO ANY PROVISION OF
THIS
AGREEMENT SHALL BE EXCLUSIVELY IN XXXXXX COUNTY, MISSOURI, AND ALL
PARTIES
HERETO AGREE THAT ANY LITIGATION DIRECTLY OR INDIRECTLY RELATING
TO THIS
AGREEMENT MUST BE BROUGHT BEFORE AND DETERMINED BY A COURT OF COMPETENT
JURISDICTION WITHIN SUCH COUNTY AND STATE. EACH OF THE PARTIES FURTHER
ACKNOWLEDGE THAT SUCH VENUE IS APPROPRIATE AND AGREE NOT TO RAISE
ANY
ARGUMENT THAT SUCH VENUE IS IN ANY WAY UNDULY INCONVENIENT FOR ANY
OF
THEM, WITH THEIR EXECUTION HEREOF BEING EVIDENCE OF THEIR AGREEMENT
TO
SUBMIT TO THE JURISDICTION OF SUCH
COURTS.
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Page
5 of 6
IN
WITNES
WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
DECORIZE,
INC.
A
Delaware corporation
