STOCK EXCHANGE AGREEMENT
THIS
STOCK EXCHANGE AGREEMENT (the “Agreement”), dated as of the 1st
day of
April, 2008, is by and between Decorize, Inc., a Delaware corporation (the
“Company”), and Quest Capital Alliance II, L.L.C., a Missouri limited liability
company (“Quest”).
WHEREAS,
on September 11, 2006, the Company issued to Quest that certain Promissory
Note
in the original principal amount of $750,000.00, which was amended by that
certain Extension and Modification Agreement (collectively, the “Note”);
and
WHEREAS,
the Company desires to issue and sell to Quest, and Quest desires to purchase
from the Company, 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 Quest upon the receipt of the consideration
described herein, and Quest 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 $100,000.00 (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 an 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
Quest stock certificate(s) representing the Shares, issued in the name of Quest
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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2.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company hereby represents and warrants to Quest 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.
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.
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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.
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.
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2.8. Validity
of Shares.
The
Shares, when issued by the Company to Quest upon payment in full of the Purchase
Price, will be validly issued, fully paid and non-assessable.
3.
REPRESENTATIONS
AND WARRANTIES OF QUEST.
Quest
represents and warrants to the Company as follows:
3.1. Due
Authorization.
Quest
has full capacity to enter into this Agreement and to carry out its obligations
hereunder. This Agreement has been duly executed and delivered by Quest and
constitutes the legal, valid and binding obligations of Quest, enforceable
against it in accordance with its terms.
3.2. Investment
Representations.
Quest
further represents and warrants as follows:
| 3.2.1. |
Quest
is purchasing the Shares for their 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.
Quest
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.
Quest
understands that there is a very limited public market for the Shares and it
may
not be possible for Quest to readily liquidate its investment. As a consequence,
Quest 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.
Quest 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.
Quest
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.
Quest
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. Quest
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.
3.2.6.
Quest
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 Quest.
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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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IN
WITNES
WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
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DECORIZE,
INC.
|
Quest
Capital Alliance II, L.L.C.
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a
Delaware corporation
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a
Missouri limited liability company
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By:
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/s/ Xxxxx Xxxxxxx
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By:
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/s/ Xxxxx Xxx
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Xxxxx Xxxxxxx
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Xxxxxx Xxx
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President
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General Manager
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