Unassociated Document


    

      Exhibit
        10.1


      THIS
        NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES LAWS.
        THEY
        MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
        OF AN
        EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
        OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
        NOT
        REQUIRED.

      


      CONVERTIBLE
        PROMISSORY NOTE

       

      
        	Principal Amount: $500,000.00	
                Date
                  of Note: December 13,
                  2005

              


      

      
1. PROMISE
        TO PAY.
        DECORIZE, INC. a Delaware corporation (“Borrower”) promises to pay to QUEST
        CAPITAL ALLIANCE II, L.L.C., a Missouri limited liability company (“Lender”),
        3140 E. Division, Springfield, Missouri 65802, or order, in lawful money
        of the
        United States of America, the principal amount of Five Hundred Thousand and
        no/100’s Dollars ($500,000) or so much as may be outstanding, together with
        interest on the unpaid outstanding principal balance of each advance as provided
        for herein. 

      


      2. LINE
        OF CREDIT. This
        Note
        evidences a revolving line of credit. Advances under this Note may be requested
        orally or in writing by Borrower by an Authorized Person. Borrower hereby
        agrees
        to provide Lender with written notice of the individuals who may request
        advances under this Note (each, an “Authorized Person”). Lender may, but need
        not, require that all oral requests be confirmed in writing. Borrower agrees
        to
        be liable for all sums advanced in accordance with the instructions of an
        Authorized Person. The unpaid principal balance owing on this Note at any
        time
        may be evidenced by endorsements on this Note or by Lender’s internal records.
        Lender may, at any time, in its sole discretion, decline to make any further
        advances on this Note or any agreement that Borrower has with Lender, including
        any of the Related Documents. 

      


      3. PAYMENT.
        Unless
        sooner accelerated, Borrower will pay this loan in full on April 13, 2006
        (“Maturity Date”). Unless otherwise agreed or required by applicable law,
        payments will be applied first to any unpaid collection costs and any late
        charges, then to any unpaid interest, and any remaining amount to principal.
        Borrower will pay Lender at Lender’s address shown above or at such other place
        as Lender may designate in writing.

      


      4. COMMITMENT
        FEE.
        In
        consideration of the loan to Borrower evidenced by this Note, the Borrower
        will
        pay Lender a commitment fee equal to Thirty-Three Thousand, Three Hundred
        Thirty-Three and 33/100’s Dollars ($33,333.33) on or before December 13,
        2005.

      


      5. PREPAYMENT.
        Borrower
        may pay without penalty all or a portion of the amount owed earlier than
        it is
        due. Any partial prepayment shall be credited first, to the satisfaction
        of any
        outstanding costs or expenses incurred by Lender, second to the accrued interest
        and, third, to the principal due hereunder and no partial prepayment shall
        affect the obligation to make the payments of principal and interest at the
        time
        and in the amounts provided for herein.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      6. INTEREST
        AFTER MATURITY OR DEFAULT.
        Upon the
        occurrence of an Event of Default (as defined below), including failure to
        pay
        upon the Maturity Date, the unpaid outstanding principal balance will thereafter
        accrue interest
        at a
        rate equal to Eighteen percent (18%) per annum (the
        “Default Interest Rate”). NOTICE:
        UNDER NO CIRCUMSTANCES WILL THE INTEREST RATE ON THIS NOTE BE MORE THAN THE
        MAXIMUM RATE ALLOWED BY APPLICABLE LAW.

      


      7. DEFAULT.
        Each of
        the following shall constitute an event of default (“Event of Default”) under
        this Note:

      


      A. Payment
        Default.
        Borrower
        fails to make any payment when due under this Note.

      


      B. Other
        Defaults.
        Borrower
        fails to comply with or to perform any other term, obligation, covenant or
        condition contained in this Note or in any other related documents executed
        by
        Borrower in favor of Lender in connection with this Note (collectively, the
        “Related Documents”) or to comply with or to perform any term, obligation,
        covenant or condition contained in any other agreement between Lender and
        Borrower, and fails to cure such default within ten (10) days after Lender
        gives
        written notice of same to Borrower.

      


      C. Default
        In Favor of Third Parties.
        Borrower
        defaults under any loan, extension of credit, security agreement, purchase
        or
        sales agreement, or any other agreement, in favor of any other creditor or
        person that may materially affect any of Borrower’s property or Borrower’s
        ability to repay this Note or perform Borrower’s obligations under this Note or
        any of the Related Documents.

       

      D. False
        Statements.
        Any
        warranty, representation or statement made or furnished to Lender by Borrower
        or
        on Borrower’s behalf under this Note or the Related Documents is false or
        misleading in any material respect, either now or at the time made or furnished
        or becomes false or misleading at any time thereafter.

      


      E. Insolvency
        or Change in Organization.
        The
        dissolution or termination of Borrower’s existence as a going business
        (regardless of whether election to continue is made), the insolvency of
        Borrower, the appointment of a receiver for any part of Borrower’s property, any
        assignment for the benefit of creditors, any type of creditor workout, or
        the
        commencement of any proceeding under any bankruptcy or insolvency laws by
        or
        against Borrower.

      


      F. Defective
        Collateralization.
        Any
        Related Document ceases to be in full force and effect (including failure
        of any
        collateral document to create a valid and perfected security interest or
        lien)
        at any time and for any reason.

      


      G. Creditor
        or Forfeiture Proceedings.
        Commencement of foreclosure or forfeiture proceedings, whether by judicial
        proceeding, self-help, repossession or any other method, by any creditor
        of
        Borrower or by any governmental agency against any collateral securing the
        loan.
        However, this Event of Default shall not apply it there is a good faith dispute
        by Borrower as to the validity or reasonableness of the claim which is the
        basis
        of the creditor or forfeiture proceeding and if Borrower gives Lender written
        notice of the creditor or forfeiture proceeding and deposits with Lender
        monies
        or a surety bond for the creditor or forfeiture proceeding, in an amount
        determined by Lender, in its sole discretion, as being an adequate reserve
        or
        bond for the dispute.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      H. Judgment.
        The
        entry of a judgment against Borrower or guarantor, pledgor, accommodation
        party
        or other obligor which Lender deems to be of a material nature, in Lender’s sole
        discretion.

      


      I. Default
        by Affiliates.
        Any
        affiliate of Borrower defaults under any loan, extension of credit, security
        agreement, purchase or sales agreement, or any other agreement, in favor
        of
        Lender or any other creditor. 

      


      J. Adverse
        Change.
        A
        material adverse change occurs in Borrower’s financial condition, or Lender
        believes the prospect of payment or performance of this Note is
        impaired.

      


      K. Insecurity.
        Lender
        in good faith believes itself insecure.

      


      8. LENDER’S
        RIGHTS.
        Upon
        default, Lender may declare the entire unpaid principal balance on this Note
        and
        all accrued unpaid interest immediately due, and then Borrower will pay that
        amount.

      


      9. REMEDIES.
        The
        remedies of Lender as provided in this Note shall be cumulative and concurrent,
        and in addition to any other remedies available at law or in equity, and
        may be
        pursued singly, successively or together against the Borrower, any guarantors,
        or any other security at the sole discretion of Lender, and such remedy shall
        not be exhausted by any exercise thereof but may be exercised as often as
        the
        occasion therefor shall occur. Lender shall not by any acts of omission or
        commission be deemed to have waived any rights or remedies hereunder unless
        such
        waiver is in writing and signed by Lender, and then only to the extent
        specifically set forth therein; a waiver on one event shall not be construed
        as
        continuing or as a bar to or waiver of such right or remedy on a subsequent
        event. 

      


      10. CONVERSION.

      


      A. Commencing
        on the day after the Maturity Date of this Note, the Lender may at any time
        convert the principal amount and all accrued interest of this Note (the
“Conversion Amount”) into fully paid and nonassessable shares of the Common
        Stock, par value $.001 per share, of the Borrower (the “Common Stock”), on the
        basis of one share of such stock for each $0.20 (the “Conversion Price”) of the
        Conversion Amount. Such conversion shall be effected by the surrender of
        this
        Note at the principal office of the Borrower at any time during usual business
        hours, together with notice in writing that the Lender wishes to convert
        this
        Note, which notice shall also state the name(s) (with addresses) and
        denominations in which the certificate(s) for Common Stock shall be issued
        and
        shall include instructions for delivery thereof. Such conversion shall be
        deemed
        to have been effected as of the close of business on the date on which this
        Note
        shall have been surrendered and such notice shall have been received, and
        at
        such time (the “Conversion Date”) the rights of the Lender with respect to the
        Conversion Amount shall cease and the person(s) in whose name(s) any
        certificate(s) for Common Stock are to be issued upon such conversion shall
        be
        deemed to have become the holder or holders of record of the shares of Common
        Stock represented by such certificate(s). As soon as practicable after the
        Conversion Date, the Borrower shall deliver to, or as directed by, the Lender,
        certificates representing the number of shares of Common Stock issuable by
        reason of such conversion registered in such name or names and such denomination
        or denominations as the Lender shall have specified, together with cash as
        provided in Section 9(D) in respect of any fraction of a share of such stock
        otherwise issuable upon such conversion. 

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          B.
            Reservation
            of Common Stock.

        

      

      


      1. The
        Borrower will at all times from and after the date of this Note reserve and
        keep
        available out of its authorized but unissued shares of Common Stock or its
        treasury shares, or otherwise, solely for the purpose of issuance upon the
        conversion of this Note, such number of shares of Common Stock as shall then
        be
        issuable upon the conversion of this Note. 

      


      2. Borrower
        will not take any action which would result in any adjustment of the number
        of
        shares of Common Stock acquirable upon conversion of this Note if the total
        number of shares issuable after such action upon conversion of this Note,
        together with the total number of shares of Common Stock then outstanding,
        would
        exceed the total number of shares of Common Stock then authorized under the
        Borrower’s Certificate of Incorporation which are not reserved or required to be
        reserved for any purpose other than the purpose of issue upon conversion
        of this
        Note. 

       

      3. The
        issuance of certificates for shares of Common Stock upon conversion of this
        Note
        shall be made without charge to the Lender for any issuance tax or other
        cost
        incurred by the Borrower in connection with such conversion and the related
        issuance of shares of Common Stock. 

      


      4. If
        any
        shares of Common Stock required to be reserved for purposes of conversion
        of
        this Note require, before such shares may be issued upon conversion,
        registration with or approval of any governmental authority under any federal
        or
        state law (other than any registration under the Securities Act of 1933,
        as then
        in effect, or any similar federal statute then in force, or any state securities
        law, required by reason of any transfer involved in such conversion) or listing
        on any domestic securities exchange, the Borrower will, at its expense and
        as
        expeditiously as possible, use its best efforts to cause such shares to be
        duly
        registered or approved for listing or listed on such domestic securities
        exchange, as the case may be.

       

      C. Shares
        to Be Fully Paid and Non-assessable.
        All
        shares of Common Stock issued upon the conversion of this Note shall be validly
        issued, fully paid and non-assessable and free from all preemptive rights
        of any
        shareholder, and from all taxes, liens and charges with respect to the issue
        thereof (other than transfer taxes).

      


      D. No
        Fractional Shares to Be Issued.
        If any
        fraction of a share would be issuable on the conversion of this Note, the
        Borrower will (a) if the fraction of a share otherwise issuable is equal
        to or
        less than one-half, round down to the largest whole number of shares to which
        Lender is otherwise entitled, or (b) if the fraction of a share otherwise
        issuable is greater than one-half, round up to one share in addition to the
        largest whole number of shares to which Lender is otherwise
        entitled.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      E. Anti-Dilution
        Provisions.
        The
        Conversion Price in effect at any time and the number of Shares and kind
        of
        securities purchasable upon the conversion of this Note shall be subject
        to
        adjustment from time to time upon the happening of any of the following
        events:

      


      1. In
        case
        at any time the Borrower shall subdivide its outstanding shares of Common
        Stock
        into a greater number of shares, the Conversion Price in effect immediately
        prior to such subdivision shall be proportionately reduced. In case at any
        time
        the outstanding shares of Common Stock of the Borrower shall be combined
        into a
        smaller number of shares, the Conversion Price in effect immediately prior
        to
        such combination shall be proportionately increased.

       

      2. In
        case
        of any reclassification, capital reorganization or other change of outstanding
        shares of Common Stock, or in case of any consolidation, merger or other
        business combination of the Borrower with or into another corporation or
        other
        entity (other than a merger with a subsidiary in which merger the Borrower
        shall
        be the continuing corporation and which shall not result in any
        reclassification, capital reorganization or other change of outstanding shares
        of Common Stock of the class issuable upon conversion of this Note) or in
        case
        of any sale, lease or conveyance to another corporation or other entity of
        all
        or substantially all of the assets of the Borrower, the Borrower shall cause
        effective provisions to be made so that the Lender, upon exercise of the
        conversion of the Note after the consummation of such reclassification, change,
        consolidation, merger, sale, lease or conveyance, shall be entitled to receive
        for such conversion shares of common stock, the stock or other securities
        or
        property to which the Lender would have been entitled upon such consummation
        if
        such Note had been converted into shares of Common Stock immediately prior
        to
        such consummation. Any such provision shall include provisions for adjustments
        that shall be as nearly equivalent as may be practicable to the adjustments
        provided for in this Note. The foregoing provisions of this paragraph 9.D.(2)
        shall similarly apply to successive reclassifications, capital reorganizations
        and changes of shares of Common Stock and to successive consolidations, mergers,
        sales, leases or conveyances. In the event that, in connection with any such
        capital reorganization or reclassification, consolidation, merger, sale,
        lease
        or conveyance, additional shares of Common Stock shall be issued in exchange,
        conversion, substitution or payment, in whole or in part, for a security
        of the
        Company other than Common Stock, any such issue shall be treated as an issue
        of
        the Common Stock subject to the provisions of this Section 9.

      


      11. ATTORNEYS’
        FEES; EXPENSES.
        In the
        event Borrower defaults under this Note and suit is filed and/or arbitration
        proceedings initiated, and Lender prevails either wholly or partially in
        same,
        Borrower shall be liable for all costs of said proceedings, including without
        limitation, Lender’s attorneys’ and accountants’ fees and all costs of court or
        arbitration. To the extent permitted by the United States Bankruptcy Code,
        Borrower also agrees to pay the reasonable attorneys’ fees and costs Lender
        incurs to collect this debt as awarded by any court exercising jurisdiction
        under the Bankruptcy Code. All such costs and expenses of Lender in connection
        with the enforcement of this Note shall be and become a part of the amount
        due
        hereunder.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      12. GOVERNING
        LAW.
        This
        Note will be governed by, construed and enforced in accordance with federal
        law
        and the laws of the State of Missouri. This Note has been accepted by Lender
        in
        the State of Missouri.

      


      13. CHOICE
        OF VENUE.
        If there
        is a lawsuit, the parties agree that the jurisdiction of same shall be in
        the
        Circuit Court of Greene County, Missouri.

      


      14, SALE
        OF NOTE.
        Lender
        may sell or offer to sell this Note, together with the Related Documents,
        any
        and all documents guaranteeing, securing or executed in connection with this
        Note, to one or more assignees without notice to or consent of Borrower.
        Lender
        is hereby authorized to share any information it has pertaining to the loan
        evidenced by this Note, including without limitation credit information on
        the
        undersigned, any of its principals, or any guarantors of this Note, to any
        such
        assignee or prospective assignee.

      


      15. SUCCESSOR
        INTERESTS.
        The
        terms of this Note shall be binding upon Borrower, and upon Borrower’s
        successors and assigns, and shall inure to the benefit of Lender and its
        successors and assigns.

      


      16. GENERAL
        PROVISIONS.
        Lender
        may delay or forgo enforcing any of its rights or remedies under this Note
        without losing them. Borrower and any other person who signs, guarantees
        or
        endorses this Note, to the extent allowed by law, waive presentment, demand
        for
        payment, and notice of dishonor. Upon any change in the terms of this Note,
        and
        unless otherwise expressly stated in writing, no party who signs this Note,
        whether as maker, guarantor, accommodation maker or endorser, shall be released
        from liability. All such parties agree that Lender may renew or extend
        (repeatedly and for any length of time) this loan or release any party or
        guarantor or collateral; or impair, fall to realize upon or perfect Lender’s
        security interest in the collateral; and take any other action deemed necessary
        by Lender without the consent of or notice to anyone. All such parties also
        agree that Lender may modify this loan without the consent of or notice to
        anyone other than the party with whom the modification, is made.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      ORAL
        AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
        ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH
        DEBT
        ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND LENDER FROM MISUNDERSTANDING
        OR
        DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED
        IN
        THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT
        BETWEEN BORROWER AND LENDER, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY
        IT.

      


      PRIOR
        TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
        THIS
        NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.

      


      BORROWER
        ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY
        NOTE.

       

      
        	 	 	 
	 	BORROWER: DECORIZE, INC.,
                
	 	a
                Delaware corporation
	 
 	 
 	 
 
	 	By:  	 /s/
                Steve Crowder
	 	
                
Name:
                Steve Crowder
	 	President/CEO