AGREEMENT AND PLAN OF SHARE EXCHANGE
Exhibit
10-1
THIS AGREEMENT AND PLAN OF SHARE
EXCHANGE (hereinafter referred to as the “Agreement”), is entered into as
of 11th day of June 2010 , by and among, EXTREME HOME STAGING, INC., a
publicly-owned Nevada corporation (“EXSG”), and Q LOTUS, INC., a Nevada corporation (“QLI”), sometimes
hereinafter collectively referred to as the “Parties” and individually as a
“Party.”)
W
I T N E S S E T H
WHEREAS, EXSG is a
publicly-owned Nevada corporation with 7,339,999 shares of common
stock, par value $0.0001 per share, issued and outstanding (the “EXSG Common
Stock”) and is quoted on the Over the Counter Bulletin Board under the symbol
“EXSG”.
WHEREAS, the QLI Shareholders
listed on Schedule
I hereto own all of the issued and outstanding shares of the common stock
of QLI (the “QLI Common Stock”).
WHEREAS, the Parties desire
that EXSG acquire all of the QLI Common Stock from the QLI Shareholders solely
in exchange for an aggregate of 10,000,000 newly issued shares of common stock
(the “Exchange Shares”) pursuant to the terms and conditions set forth in this
Agreement.
WHEREAS, immediately upon
consummation of the Closing (as hereinafter defined), the Exchange Shares will
be issued to the QLI Shareholders on a pro rata basis, in proportion to the
ratio that the number of shares of QLI Common Stock held by such QLI Shareholder
bears to the number of shares of QLI Common Stock held by all the QLI
Shareholders as of the date of the Closing.
WHEREAS, following the Closing,
QLI will become a wholly-owned subsidiary of EXSG and the Exchange Shares will
represent approximately fifty eight percent (58%) of the total outstanding
shares of Common Stock of EXSG.
WHEREAS, the Parties intend
that the transaction contemplated herein (the “Transaction”) qualify as a
reorganization and tax-free exchange under Section 368(a) of the Internal
Revenue Code of 1986, as amended.
NOW THEREFORE, on the stated
premises and for and in consideration of the foregoing recitals which are hereby
incorporated by reference, the mutual covenants and agreements hereinafter set
forth and the mutual benefits to the Parties to be derived herefrom and for
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the Parties hereto agree as follows:
ARTICLE
I
PLAN
OF EXCHANGE
1.1 The
Exchange. At the Closing (as hereinafter defined), each share of QLI
Common Stock issued and outstanding immediately prior to the Closing Date
(1,000,000 shares in aggregate) shall be exchanged for 10 shares of EXSG Common
Stock. The aggregate number of shares of EXSG Stock exchanged for the
QLI Shares pursuant to this Agreement shall be 10,000,000. From and
after the Closing Date, the QLI Shareholders shall no longer own any shares of
QLI Common Stock, and the stock certificates formerly representing shares of QLI
Common Stock shall represent the pro rata portion of the Exchange Shares
issuable in exchange therefor pursuant to this Agreement. Any
fractional shares that would result from such exchange will be rounded up to the
next highest whole number.
1.2 No
Dilution. EXSG shall neither effect, nor fix any record date with
respect to, any stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the EXSG Stock between the date of this
Agreement and the Effective Time.
1.3 Closing.
The closing (“Closing”) of the transactions contemplated by this Agreement shall
occur immediately following the execution of this Agreement providing the
closing conditions set forth in Articles V and VI have been satisfied or waived
(the “Closing Date”).
1.4 Closing
Events. At the Closing, each of the respective parties hereto shall
execute, acknowledge, and deliver (or shall cause to be executed, acknowledged,
and delivered) any and all stock certificates, officers’ certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings, or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, and the documents and certificates provided in Sections 5.2, 5.4, 6.2,
6.4 and 6.5, together with such other items as may be reasonably requested by
the parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby. If agreed to by the
parties, the Closing may take place through the exchange of documents (other
than the exchange of stock certificates) by efax, fax, email and/or express
courier. At the Closing, the Exchange Shares shall be issued in the
names and denominations provided by QLI.
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ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF QLI
As an
inducement to, and to obtain the reliance of EXSG, QLI represents and warrants
as follows:
2.1 Organization. QLI
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada. QLI has the power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, including qualification to do business as a foreign
corporation in jurisdictions in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of QLI’s
organizational documents. QLI has taken all action required by laws,
its certificate of incorporation, certificate of business
registration, or otherwise to authorize the execution and delivery of this
Agreement. QLI has full power, authority, and legal right and has taken or will
take all action required by law, its Certificate of Incorporation,
and otherwise to consummate the transactions herein contemplated.
2.2 Capitalization. All
issued and outstanding shares of QLI are legally issued, fully paid, and
non-assessable and were not issued in violation of the pre-emptive or other
rights of any person. QLI has no outstanding options, warrants, or
other convertible securities.
2.3 Financial
Statements.
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(a)
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QLI
has filed all local income tax returns required to be filed by it from its
inception to the date hereof. All such returns are complete and
accurate in all material respects.
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(b)
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QLI
has no liabilities with respect to the payment of federal, county, local,
or other taxes (including any deficiencies, interest, or penalties),
except for taxes accrued but not yet due and payable, for which QLI may be
liable in its own right or as a transferee of the assets of, or as a
successor to, any other corporation or
entity.
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(c)
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No
deficiency for any taxes has been proposed, asserted or assessed against
QLI. There has been no tax audit, nor has there been any notice
to QLI by any taxing authority regarding any such tax audit, or, to the
knowledge of QLI, is any such tax audit threatened with regard to any
taxes or QLI tax returns. QLI does not expect the assessment of
any additional taxes of QLI for any period prior to the date hereof and
has no knowledge of any unresolved questions concerning the liability for
taxes of QLI.
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(d)
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The
books and records, financial and otherwise, of QLI are in all material
respects complete and correct and have been maintained in accordance with
good business and accounting
practices.
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2.4 Information. The
information concerning QLI set forth in this Agreement and the QLI Schedules (as
that term is defined herein) are and will be complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading as of the date
hereof and as of the Closing Date.
2.5 Common Stock
Equivalents. There are no existing options, warrants, calls,
commitments of any character or other common stock equivalents relating to the
authorized and unissued QLI Common Stock.
2.6 Absence of Certain Changes
or Events. Except as set forth in this Agreement or the QLI
Schedules (as that term is defined herein):
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(a)
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except
in the normal course of business, there has not been (i) any material
adverse change in the business, operations, properties, assets, or
condition of QLI; or (ii) any damage, destruction, or loss to QLI (whether
or not covered by insurance) materially and adversely affecting the
business, operations, properties, assets, or condition of
QLI;
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(b)
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QLI
has not (i) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent)
not otherwise in the ordinary course of business, and except for capital
raised by issuance of debt or equity in a private placement or other
capital raising transaction deemed advisable by QLI; (ii) paid any
material obligation or liability not otherwise in the ordinary course of
business (absolute or contingent) other than current liabilities reflected
in or shown on the most recent QLI consolidated balance sheet, and current
liabilities incurred since that date in the ordinary course of business;
(iii) sold or transferred, or agreed to sell or transfer, any of its
assets, properties, or rights not otherwise in the ordinary course of
business; (iv) made or permitted any amendment or termination of any
contract, agreement, or license to which they are a party not otherwise in
the ordinary course of business if such amendment or termination is
material, considering the business of QLI; or (v) issued, delivered, or
agreed to issue or deliver any stock, bonds or other corporate securities
including debentures (whether authorized and unissued or held as treasury
stock).
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2.7 Litigation and
Proceedings. There are no actions, suits, proceedings, or
investigations pending or, to the knowledge of QLI, threatened by or against
QLI, or affecting QLI, or its properties, at law or in equity, before any court
or other governmental agency or instrumentality, domestic or foreign, or before
any arbitrator of any kind.
2.8 No Conflict With Other
Instruments. The execution of this Agreement and the
consummation of the transactions contemplated by this Agreement will not result
in the breach of any term or provision of, or constitute an event of default
under, any material indenture, mortgage, deed of trust, or other material
contract, agreement, or instrument to which QLI is a party or to which any of
its properties or operations are subject.
2.9 Contracts. QLI
has provided, or will provide EXSG, copies of all material contracts,
agreements, franchises, license agreements, or other commitments to which QLI is
a party or by which it or any of its assets, products, technology, or properties
are bound.
2.10 Compliance With Laws and
Regulations. QLI has complied with all applicable statutes and
regulations of any national, county, or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or condition of
QLI.
2.11 Approval of
Agreement. The board of directors of QLI (the “QLI Board”) and
the QLI Shareholders have authorized the execution and delivery of this
Agreement by QLI and have approved the transactions contemplated
hereby.
2.12 QLI
Schedules. QLI will deliver, as soon as practicable, the
following schedules, which are collectively referred to as the “QLI Schedules”
and which consist of separate schedules dated as of the date of execution of
this Agreement and instruments and data as of such date, all certified by the
chief executive officer of QLI as complete, true and correct:
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(a)
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a
schedule containing complete and correct copies of the organizational
documents, as amended, of QLI in effect as of the date of this Agreement;
and
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(b)
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a
schedule as requested by EXSG, containing true and correct copies of all
material contracts, agreements, or other instruments to which QLI is a
party or by which it or its properties are bound, specifically including
all contracts, agreements, or arrangements referred to in Section
2.9.
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2.13 Title and Related
Matters. QLI has good and marketable title to all of its
properties, interest in properties, and assets, real and personal, which are
reflected in the QLI balance sheet or acquired after that date (except
properties, interest in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges, or encumbrances except:
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(a)
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statutory
liens or claims not yet delinquent;
and
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(b)
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as
described in the QLI Schedules.
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2.14 Governmental
Authorizations. QLI has all licenses, franchises, permits, and
other government authorizations, that are legally required to enable it to
conduct its business operations in all material respects as conducted on the
date hereof. Except for compliance with federal and state securities or
corporation laws, as hereinafter provided, no authorization, approval, consent,
or order of, or registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution and delivery by
QLI of this Agreement and the consummation by QLI of the transactions
contemplated hereby.
2.15 Continuity of Business
Enterprises. QLI has no commitment or present intention to
liquidate QLI or sell or otherwise dispose of a material portion of its business
or assets following the consummation of the transactions contemplated
hereby.
2.16 Ownership of QLI
Shares. The QLI Shareholders are the legal and beneficial
owners of 100% of the QLI Common Stock as set forth on Schedule I, free and
clear of any claims, charges, equities, liens, security interests, and
encumbrances whatsoever, and the QLI Shareholders have full right, power, and
authority to transfer, assign, convey, and deliver their respective QLI Common
Stock; and delivery of such common stock at the Closing will convey to EXSG good
and marketable title to such shares free and clear of any claims, charges,
equities, liens, security interests, and encumbrances except for any such
claims, charges, equities, liens, security interests, and encumbrances arising
out of such shares being held by EXSG.
2.17 Brokers. QLI
has not entered into any contract with any person, firm or other entity that
would obligate QLI or EXSG to pay any commission, brokerage or finders’ fee in
connection with the transactions contemplated herein.
2.18 Nominees. The
nominees of QLI to serve as EXSG's directors and officers following the Closing
(the "Nominees"), whose names and signatures appear on Schedule II hereto,
represent that no event listed in Sub-paragraphs (1) through (4) of Subparagraph
(d) of Item 401 of Regulation S-B has occurred with respect to any of the
Nominees during the past five years which is material to an evaluation of the
ability or integrity of such Nominee.
2.19 Subsidiaries and Predecessor
Corporations. QLI does not have any subsidiaries and does not
own, beneficially or of record, any shares or other equity interests of any
other corporation or entity.
ARTICLE
III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF
EXSG
As an
inducement to, and to obtain the reliance of QLI, EXSG represents and warrants
as follows:
3.1 Organization. EXSG
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada, and has the corporate power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, and there is no jurisdiction in which it is not
qualified in which the character and location of the assets owned by it or the
nature of the business transacted by it requires qualification. Included in the
EXSG Schedules (as hereinafter defined) are complete and correct copies of the
Articles of Incorporation and bylaws of EXSG, and all amendments thereto, as in
effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of EXSG’s Articles of Incorporation or bylaws. EXSG has
taken all action required by law, its Certificate of Incorporation, its bylaws,
or otherwise to authorize the execution and delivery of this Agreement, and EXSG
has full power, authority, and legal right and has taken all action required by
law, its Certificate of Incorporation, By-Laws, or otherwise to consummate the
transactions herein contemplated.
3.2 Capitalization. EXSG’s
authorized capitalization (without including pending corporate actions) consists
of 200,000,000 shares of Common Stock, of which no more than
17,339,999 shares will be issued and outstanding at Closing, and
10,000,000 shares of preferred stock, par value $0.001 per share authorized (the
“Preferred Stock”), of which no shares are outstanding. All presently
issued and outstanding shares are legally issued, fully paid, and non-assessable
and not issued in violation of the pre-emptive or other rights of any
person. The Exchange Shares will be legally issued, fully paid and
non-assessable and shall not be issued in violation of the pre-emptive or other
rights of any other person.
3.3 Financial
Statements. Except as set forth within its filing of reports
with the Securities and Exchange Commission (the "SEC Reports"):
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(a)
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EXSG
has no liabilities with respect to the payment of any federal, state,
county, local, or other taxes (including any deficiencies, interest, or
penalties), except for taxes accrued but not yet due and payable, for
which EXSG may be liable in its own right, or as a transferee of the
assets of, or as a successor to, any other corporation or
entity.
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(b)
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EXSG
has filed all federal, state, or state tax returns required to be filed by
it from inception.
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(c)
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The
books and records, financial and otherwise, of EXSG are in all material
respects complete and correct and have been maintained in accordance with
good business and accounting
practices.
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(d)
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No
deficiency for any taxes has been proposed, asserted or assessed against
EXSG. There has been no tax audit, nor has there been any
notice to EXSG by any taxing authority regarding any such tax audit, or,
to the knowledge of EXSG, is any such tax audit threatened with regard to
any taxes or EXSG tax returns. EXSG does not expect the
assessment of any additional taxes of EXSG for any period prior to the
date hereof and has no knowledge of any unresolved questions concerning
the liability for taxes of EXSG.
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(e)
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EXSG
has good and marketable title to its assets and, except as set forth in
the EXSG Schedules, has no material contingent liabilities, direct or
indirect, matured or unmatured.
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3.4 Information. The
information concerning EXSG set forth in this Agreement and the EXSG Schedules
are and will be complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading as of the date hereof and as of the Closing
Date.
3.5 Common Stock
Equivalents. Except as set forth herein, there are no existing
options, warrants, calls, commitments of any character or other common stock
equivalents relating to authorized and unissued stock of EXSG.
3.6 Absence of Certain Changes
or Events. Except as described herein or in the EXSG
Schedules:
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(a)
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There
has not been (i) any material adverse change, financial or otherwise, in
the business, operations, properties, assets, or condition of EXSG
(whether or not covered by insurance) materially and adversely affecting
the business, operations, properties, assets, or condition of
EXSG;
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(b)
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EXSG,
(except for pending corporate actions not included herein) has
not (i) amended its Articles of Incorporation or by-laws; (ii) declared or
made, or agreed to declare or make any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or
purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of EXSG; (iv) made any
material change in its method of management, operation, or accounting; (v)
entered into any other material transactions; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation of any kind
or any severance or termination pay to any present or former officer or
employee; (vii) increased the rate of compensation payable or to become
payable by it to any of its officers or directors or any of its employees;
or (viii) made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement, made to, for, or with its officers,
directors, or employees;
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(c)
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EXSG
has not (i) granted or agreed to grant any options, warrants, or other
rights for its stocks, bonds, or other corporate securities calling for
the issuance thereof; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid or agreed to pay any material obligation or
liability (absolute or contingent) other than current liabilities
reflected in or shown on the most recent EXSG balance sheet and current
liabilities incurred since that date in the ordinary course of business
and professional and other fees and expenses incurred in connection with
the preparation of this Agreement and the consummation of the transactions
contemplated hereby; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, property, or rights (except assets, property,
or rights not used or useful in its business which, in the aggregate have
a value of less than $1,000), or canceled, or agreed to cancel, any debts
or claims (except debts or claims which in the aggregate are of a value of
less than $1,000); (v) made or permitted any amendment or termination of
any contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of EXSG; or
(vi) issued, delivered, or agreed to issue or deliver any stock, bonds, or
other corporate securities including debentures (whether authorized and
unissued or held as treasury stock), except in connection with this
Agreement;
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(d)
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EXSG
has no assets, liabilities or accounts payable of any kind or nature,
actual or contingent, in excess of $4,500 in the aggregate as of the
Closing Date; and
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(e)
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To
the best knowledge of EXSG, it has not become subject to any law or
regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or
condition of EXSG.
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3.7 Title and Related
Matters. EXSG has good and marketable title to all of its
properties, interest in properties, and assets, real and personal, which are
reflected in the EXSG balance sheet or acquired after that date (except
properties, interest in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges, or encumbrances except:
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(a)
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statutory
liens or claims not yet delinquent;
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(b)
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such
imperfections of title and easements as do not and will not materially
detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties;
and
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(c)
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as
described in the EXSG Schedules.
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3.8 Litigation and
Proceedings. There are no actions, suits, or proceedings
pending or, to the knowledge of EXSG, threatened by or against or affecting
EXSG, at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any
kind.
3.9 Contracts. EXSG
is not a party to any material contract, agreement, or other commitment, except
as specifically disclosed in its schedules to this Agreement.
3.10 No Conflict With Other
Instruments. The execution of this Agreement and the
consummation of the transactions contemplated by this Agreement will not result
in the breach of any term or provision of, or constitute a default under, any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which EXSG is a party or to which it or any of its assets or operations are
subject.
3.11 Governmental
Authorizations. EXSG is not required to have any licenses,
franchises, permits, and other government authorizations, that are legally
required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities or corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by EXSG of this Agreement and the consummation by EXSG of
the transactions contemplated hereby.
3.12 Compliance With Laws and
Regulations. To the best of its knowledge, EXSG has complied
with all applicable statutes and regulations of any federal, state, or other
applicable governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or conditions of EXSG or except to the extent
that noncompliance would not result in the incurrence of any material
liability.
3.13 Insurance. EXSG
owns no insurable properties and carries no casualty or liability
insurance.
3.14 Approval of
Agreement. The board of directors of EXSG (the “EXSG Board”)
has authorized the execution and delivery of this Agreement by EXSG and has
approved this Agreement and the transactions contemplated hereby.
3.15 Material Transactions of
Affiliations. Except as disclosed herein and in the EXSG
Schedules, there exists no material contract, agreement, or arrangement between
EXSG and any person who was at the time of such contract, agreement, or
arrangement an officer, director, or person owning of record or known by EXSG to
own beneficially, 10% or more of the issued and outstanding common stock of EXSG
and which is to be performed in whole or in part after the date hereof or was
entered into not more than three years prior to the date hereof. Neither any
officer, director, nor 10% stockholder of EXSG has, or has had during the last
preceding full fiscal year, any known interest in any material transaction with
EXSG which was material to the business of EXSG. EXSG has no commitment, whether
written or oral, to lend any funds to, borrow any money from, or enter into any
other material transaction with any such affiliated person.
3.16 Employment
Matters. EXSG has no employees other than its executive
officers.
3.17 EXSG
Schedules. Prior to the Closing, EXSG shall have delivered to
QLI the following schedules, which are collectively referred to as the “EXSG
Schedules,” which are dated the date of this Agreement, all certified by an
officer to be complete, true, and accurate:
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(a)
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a
schedule containing complete and accurate copies of the Certificate
of Incorporation and by-laws, as amended, of EXSG as in effect
as of the date of this Agreement;
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(b)
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a
schedule containing a copy of the federal income tax returns of EXSG
identified in Section 3.3(b); and
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(c)
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a
schedule setting forth any other information, together with any required
copies of documents, required to be disclosed in the EXSG
Schedules.
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3.18 Brokers. EXSG
has not entered into any contract with any person, firm or other entity that
would obligate QLI or EXSG to pay any commission, brokerage or finders’ fee in
connection with the transactions contemplated herein.
3.19 Subsidiaries. EXSG
does not have any subsidiaries and does not own, beneficially or of record, any
shares or other equity interests of any other corporation or other
entity.
ARTICLE
IV
SPECIAL
COVENANTS
4.1 Post-Closing
Covenants. Within ten (10) days following the Closing,
EXSG shall file a Preliminary Information Statement in accordance with the
provisions of Rule 14C of the Rules promulgated under the Securities Exchange
Act of 1934, as amended, to amend EXSG's Articles of Incorporation to provide
for the following: to change the name of the Corporation to "Q Lotus, Inc", or
such similar name as is available; to increase the number of EXSG's authorized
capital stock to 400,000,0000 shares of Common Stock and increase the preferred
shares to 100,000,000 shares of preferred stock, par value, $0.001
per share.
4.2 Shareholders’ Actions of
EXSG. Prior to the Closing, EXSG shall cause the following
actions to be taken by the written consent of the holders of a majority of the
outstanding shares of common stock of EXSG:
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(a)
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the
approval of this Agreement and the transactions contemplated hereby and
thereby; and
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(b)
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such
other actions as the directors may determine are necessary or
appropriate.
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4.3 Actions of QLI
Shareholders. Prior to the Closing, QLI shall cause the
following actions to be taken by the written consent of the holders of a
majority of the outstanding shares of common stock of QLI:
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(a)
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the
approval of this Agreement and the transactions contemplated hereby and
thereby; and
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(b)
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such
other actions as the directors may determine are necessary or
appropriate.
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4.4 Access to Properties and
Records. EXSG and QLI will each afford to the officers and
authorized representatives of the other reasonable access to the properties,
books, and records of EXSG or QLI in order that each may have full opportunity
to make such reasonable investigation as it shall desire to make of the affairs
of the other, and each will furnish the other with such additional financial and
operating data and other information as to the business and properties of EXSG
or QLI as the other shall from time to time reasonably request.
4.5 Delivery of Books and
Records. At the Closing, EXSG shall deliver to QLI, the
originals of the corporate minute books, books of account, contracts, records,
and all other books or documents of EXSG now in the possession or control of
EXSG or its representatives and agents.
4.6 Actions Prior to Closing by
both Parties.
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(a)
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From
and after the date of this Agreement until the Closing Date and except as
set forth in the EXSG or QLI Schedules or as permitted or contemplated by
this Agreement, EXSG and QLI will each: (i) carry on its business in
substantially the same manner as it has heretofore; (ii) maintain and keep
its properties in states of good repair and condition as at present,
except for depreciation due to ordinary wear and tear and damage due to
casualty; (iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it; (iv) perform
in all material respects all of its obligation under material contracts,
leases, and instruments relating to or affecting its assets, properties,
and business; (v) use its best efforts to maintain and preserve its
business organization intact, to retain its key employees, and to maintain
its relationship with its material suppliers and customers; and (vi) fully
comply with and perform in all material respects all obligations and
duties imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by federal or state governmental
authorities.
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|
(b)
|
From
and after the date of this Agreement until the Closing Date, neither EXSG
nor QLI will: (i) make any change in their organizational documents,
charter documents or bylaws; (ii) take any action described in Section 2.6
in the case of QLI, or in Section 3.6, in the case of EXSG (all except as
permitted therein or as disclosed in the applicable party’s schedules);
(iii) enter into or amend any contract, agreement, or other instrument of
any of the types described in such party’s schedules, except that a party
may enter into or amend any contract, agreement, or other instrument in
the ordinary course of business involving the sale of goods or services,
or (iv) make or change any material tax election, settle or compromise any
material tax liability or file any amended tax
return.
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4.7 Indemnification.
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(a)
|
QLI
hereby agrees to indemnify EXSG and each of the officers, agents and
directors of EXSG as of the date of execution of this Agreement against
any loss, liability, claim, damage, or expense (including, but not limited
to, any and all expense whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened,
or any claim whatsoever), to which it or they may become subject arising
out of or based on any inaccuracy appearing in or misrepresentation made
in Article II. The indemnification provided for in this paragraph shall
not survive the Closing and consummation of the transactions contemplated
hereby but shall survive the termination of this Agreement pursuant to
Section 7.1(b) of this Agreement.
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|
(b)
|
EXSG
hereby agrees to indemnify QLI and each of the officers, agents and
directors of QLI as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense (including, but not limited to,
any and all expense whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened,
or any claim whatsoever), to which it or they may become subject arising
out of or based on any inaccuracy appearing in or misrepresentation made
under Article III. The indemnification provided for in this paragraph
shall not survive the Closing and consummation of the transactions
contemplated hereby but shall survive the termination of this Agreement
pursuant to Section 7.1(c) of this
Agreement.
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ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF EXSG
The obligations of EXSG under this
Agreement are subject to the satisfaction, at or before the Closing, of the
following conditions:
5.1 Accuracy of Representations;
Performance. The representations and warranties made by QLI in
this Agreement were true when made and shall be true at the Closing Date with
the same force and effect as if such representations and warranties were made at
and as of the Closing Date (except for changes therein permitted by this
Agreement), and QLI shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by QLI
prior to or at the Closing. EXSG may request to be furnished with a certificate,
signed by a duly authorized officer of QLI and dated the Closing Date, to the
foregoing effect.
5.2 Officer’s
Certificates. EXSG shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
QLI to the effect that no litigation, proceeding, investigation, or inquiry is
pending or, to the best knowledge of QLI threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement, or, to the extent not disclosed in the QLI Schedules, by or
against QLI which might result in any material adverse change in any of the
assets, properties, business, or operations of QLI.
5.3 No Material Adverse
Change. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business, or
operations of QLI, nor shall any event have occurred which, with the lapse of
time or the giving of notice, may cause or create any material adverse change in
the financial condition, business, or operations.
5.4 Other
Items.
|
(a)
|
EXSG
shall have received such further documents, certificates, or instruments
relating to the transactions contemplated hereby as EXSG may reasonably
request.
|
|
(b)
|
Complete
and satisfactory due diligence review of QLI by
EXSG.
|
|
(c)
|
Approval
of the Transaction by the QLI Board and the QLI
Shareholders.
|
|
(d)
|
Any
necessary third-party consents shall be obtained prior to Closing,
including but not limited to consents necessary from QLI’s lenders,
creditors, vendors and lessors.
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ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF QLI
The
obligations of QLI under this Agreement are subject to the satisfaction, at or
before the Closing, of the following conditions:
6.1 Accuracy of Representations;
Performance. The representations and warranties made by EXSG
in this Agreement were true when made and shall be true as of the Closing Date
(except for changes therein permitted by this Agreement) with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date, and EXSG shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by EXSG
prior to or at the Closing. QLI shall have been furnished with a
certificate, signed by a duly authorized executive officer of EXSG and dated the
Closing Date, to the foregoing effect.
6.2 Officer’s
Certificate. QLI shall have been furnished with a certificate
dated the Closing Date and signed by a duly authorized executive officer of EXSG
to the effect that no litigation, proceeding, investigation, or inquiry is
pending or, to the best knowledge of EXSG threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement.
6.3 No Material Adverse
Change. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business, or
operations of EXSG nor shall any event have occurred which, with the lapse of
time or the giving of notice, may cause or create any material adverse change in
the financial condition, business, or operations of EXSG.
6.4 Good
Standing. QLI shall have received a certificate of good
standing from the Secretary of State of the State of Florida or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that EXSG is in good standing as a corporation in the State of
Florida and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
6.5 Other
Items.
|
(a)
|
QLI
shall have received a stockholder list of EXSG containing the name,
address, and number of shares held by each EXSG stockholder as of the date
of Closing certified by an executive officer of EXSG as being true,
complete, and accurate.
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|
(b)
|
QLI
shall have received such further documents, certificates, or instruments
relating to the transactions contemplated hereby as QLI may reasonably
request.
|
|
(c)
|
Complete
and satisfactory due diligence review of EXSG by
QLI.
|
|
(d)
|
Approval
of the Transaction by the EXSG Board and the stockholders of
EXSG.
|
|
(e)
|
There
shall have been no material adverse changes in EXSG, financial or
otherwise.
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(f)
|
There
shall be no EXSG Common Stock Equivalents outstanding as of immediately
prior to the Closing. For purposes of the foregoing, “EXSG
Common Stock Equivalents” shall mean any subscriptions, warrants, options
or other rights or commitments of any character to subscribe for or
purchase from EXSG, or obligating EXSG to issue, any shares of any class
of the capital stock of EXSG or any securities convertible into or
exchangeable for such shares.
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|
(g)
|
Any
necessary third-party consents shall be obtained prior to Closing,
including but not limited to consents necessary from EXSG’s lenders,
creditors; vendors, and lessors.
|
ARTICLE
VII
MISCELLANEOUS
7.1 Governing
Law. This Agreement shall be governed by, enforced, and
construed under and in accordance with the laws of the United States of America
and, with respect to matters of state law, with the laws of New
York. Any dispute arising under or in any way related to this
Agreement will be submitted to binding arbitration before a single arbitrator by
the American Arbitration Association in accordance with the Association’s
commercial rules then in effect. The arbitration will be conducted in New York,
New York. The decision of the arbitrator will set forth in reasonable detail the
basis for the decision and will be binding on the parties. The arbitration award
may be confirmed by any court of competent jurisdiction.
7.2 Notices. Any
notices or other communications required or permitted hereunder shall be
sufficiently given if personally delivered to it or sent by registered mail or
certified mail, postage prepaid, or by prepaid telegram and any such notice or
communication shall be deemed to have been given as of the date so delivered,
mailed, or telegraphed.
7.3 Attorney’s Fees. In
the event that any party institutes any action or suit to enforce this Agreement
or to secure relief from any default hereunder or breach hereof, the breaching
party or parties shall reimburse the non-breaching party or parties for all
costs, including reasonable attorneys’ fees, incurred in connection therewith
and in enforcing or collecting any judgment rendered therein.
7.4 Confidentiality.
EXSG, on the one hand, and QLI and the QLI Shareholders, on the other hand, will
keep confidential all information and materials regarding the other Party
designated by such Party as confidential. The provisions of this
Section 8.4 shall not apply to any information which is or shall become part of
the public domain through no fault of the Party subject to the obligation from a
third party with a right to disclose such information free of obligation of
confidentiality. EXSG and QLI agree that no public disclosure will be made by
either Party of the existence of the Transaction or the letter of intent or any
of its terms without first advising the other Party and obtaining its prior
written consent to the proposed disclosure, unless such disclosure is required
by law, regulation or stock exchange rule.
7.5 Expenses. Except
as otherwise set forth herein, each party shall bear its own costs and expenses
associated with the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, all
costs and expenses incurred by QLI and EXSG after the Closing shall be borne by
the surviving entity. After the Closing, the costs and expenses of
the QLI Shareholders shall be borne by the QLI Shareholders.
7.6 Schedules;
Knowledge. Each party is presumed to have full knowledge of
all information set forth in the other party’s schedules delivered pursuant to
this Agreement.
7.7 Third Party
Beneficiaries. This contract is solely between EXSG, QLI and
the QLI Shareholders, and, except as specifically provided, no director,
officer, stockholder, employee, agent, independent contractor, or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
7.8 Entire
Agreement. This Agreement represents the entire agreement
between the parties relating to the transaction. There are no other courses of
dealing, understandings, agreements, representations, or warranties, written or
oral, except as set forth herein.
7.9 Survival. The
representations and warranties of the respective parties shall survive the
Closing Date and the consummation of the transactions herein
contemplated.
7.10 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
7.11 Amendment or
Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and may be enforced concurrently herewith, and no waiver by any
party of the performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all parties hereto, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
(The
rest of this page left intentionally blank.)
IN WITNESS WHEREOF, the
corporate parties hereto have caused this Agreement to be executed by their
respective officers, hereunto duly authorized, as of the date first
above-written.
EXTREME
HOME STAGING, INC.
By:_/s/
Marckensie Theresias
Marckensie
Theresias , President, CEO
Q
LOTUS, INC.
By:___/s/
Marckensie Theresias
Markensie
Theresias, President, CEO
SCHEDULE
I
Dated:
The
following persons are the only owners of the capital stock of QLI:
|
Person/Entity
|
Shares
|
Percentage
|
EXSG Share Ownership
|
|||||
|
Marckensie
Theresias
|
1,000,000
|
100%
|
10,000,000
|
|||||
|
|
|
|||||||
SCHEDULE
II
to
STOCK
EXCHANGE AGREEMENT
|
Name:
|
Position(s)
|
Signature
|
|
Marckensie
Theresias
|
President,
Director
|
|
|
Director
|
