EXCHANGE AND ACQUISITION AGREEMENT BY AND AMONG ROYAL STYLE DESIGN, INC. AND FREGAT LTD. Dated DECEMBER 31, 2009
Exhibit
10.4
BY AND
AMONG
ROYAL
STYLE DESIGN, INC.
AND
FREGAT
LTD.
Dated
DECEMBER 31, 2009
THIS
EXCHANGE AGREEMENT (the "Agreement"), is made and entered into as of December
31, 2009, by and among Royal Style Design, Inc., a Florida corporation ("RSD"),
and Fregat Ltd, a limited company formed under the laws of
Russia ("FREGAT”), and the owners of FREGAT set forth on the
signature pages to this Agreement (collectively, the "FREGAT Owners" or
“Owners”), with respect to the following facts:
RECITALS
A. The
FREGAT Owners own 100% of the issued and outstanding ownership interests
(“Interests”) in FREGAT as set forth opposite their respective names on Schedule
I to this Agreement.
B. RSD
desires to acquire from the FREGAT Owners, and the FREGAT Owners desire to sell
and transfer to RSD, all of the FREGAT Interests owned by them on the Closing
Date in exchange for the issuance and delivery by RSD of shares of Common
Stock, par value $.001 per share, of RSD ("Common Stock"), as set
forth in Schedule I hereto, on the terms and conditions set forth below (the
"Exchange"); and
C. The
Exchange shall qualify as a transaction in securities exempt from registration
or qualification under the Securities Act and under the applicable securities
laws of each state or jurisdiction where Owners of the Company
reside.
NOW,
THEREFORE, in consideration of the foregoing premises and representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
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ARTICLE
I
EXCHANGE
OF SECURITIES
Section
1.1 The Exchange.
On the
terms and subject to the conditions of this Agreement, on the Closing Date, RSD
shall issue and deliver to each of the FREGAT Owners such number of shares of
Common Stock as is set forth opposite such FREGAT Owner name on Schedule I
hereto, and each such FREGAT Owner shall sell, transfer and deliver to RSD, the
number of issued and outstanding FREGAT Interests set forth opposite such FREGAT
Owner's name on Schedule I hereto along with a duly executed assignment endorsed
in favor of RSD or the FREGAT Acquisition Subsidiary, as specified by
RSD.
ARTICLE
II
THE
CLOSING
Section
2.1 Closing Date.
The
closing of the Exchange and the other transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of FREGAT at 11:00 AM
on December 31, 2009, or at such other location, date and
time as RSD and FREGAT may agree. The time and date upon which the Closing
actually occurs being referred to herein as the "Closing Date".
Section
2.2 Transactions at Closing.
At the
Closing, the following transactions shall take place and no transaction shall be
deemed to have been completed or any document delivered until all such
transactions have been completed and all required documents
delivered:
(a) RSD
shall deliver the following documents:
(i)
Validly executed stock certificates corresponding to the Common Stock issued in
the name of the FREGAT Owners in the amounts set forth in Schedule
I;
(ii)
Certificate of good standing from the Secretary of State of the State of
Florida, dated at or about the Closing Date, to the effect that RSD is in good
standing under the laws of said state;
(iii)
Certified copy of the Certificate of Incorporation of RSD, as certified by the
Secretary of State of the State of Florida at or about the Closing
Date;
(iv) An
officer's certificate duly executed by RSD's chief executive officer to the
effect that the conditions set forth in Section 7.1(a) below have been
satisfied, dated as of the date of the Closing; and
(v) Such
other documents and instruments as FREGAT may reasonably request.
(b)
FREGAT shall deliver or cause to be delivered the following documents and/or
shall take the following actions:
(i)
FREGAT shall deliver to RSD Interest certificates in the name of, or assigned
to, RSD or the FREGAT Acquisition Subsidiary, as specified by RSD, in respect of
all FREGAT Interests and shall register FREGAT Interests in the name of RSD or
the FREGAT Acquisition Subsidiary, as the case may be, in the Owners register of
FREGAT;
(ii)
Certificate of good standing from the Secretary of Russian Corporations, dated
at or about the Closing Date, to the effect that FREGAT is a corporation
organized and in good standing under the laws of said jurisdiction;
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2
(iii)
Certified copy of the Certificate of Incorporation of FREGAT, as amended to the
Closing Date;
(iv) An
officer's certificate duly executed by FREGAT 's chief executive officer to the
effect that the conditions set forth in Section7.2(a) below have been satisfied,
dated as of the date of the Closing;
(v) An
officer's certificate duly executed by FREGAT 's Chief Executive Officer and
Secretary certifying that the attached ownership register of FREGAT is an
accurate and complete ownership register of FREGAT as of the Closing Date;
and
(vi) Such
other documents and instruments as RSD may reasonably request, including
documents evidencing such resignations from and appointments to the governing
body of FREGAT, effective the Closing Date, as are set forth in Schedule II
hereto.
(c) The
FREGAT Owners shall deliver the following documents:
(i) to
RSD, duly executed assignments effecting the immediate and unconditional sale,
assignment and irrevocable transfer of FREGAT Interests to RSD or the FREGAT
Acquisition Subsidiary, as specified by RSD, free and clear of any liens, or any
other third party rights of any kind and nature, whether voluntarily incurred or
arising by operation of law; and
(ii) to
FREGAT, as agent for RSD, all certificates in respect of FREGAT
Interests.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF RSD
RSD
hereby makes the following representations and warranties to FREGAT and each
FREGAT Owner:
Section
3.1 Organization and Qualification.
RSD is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with the corporate power and authority to own and
operate its business as presently conducted, except where the failure to be or
have any of the foregoing would not have a Material Adverse Effect. RSD is duly
qualified as a foreign corporation to do business and is in good standing in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
for such failures to be so qualified or in good standing as would not have a
Material Adverse Effect. RSD has no subsidiaries and is not a participant in any
joint venture, partnership, or similar arrangement.
Section
3.2 Authorization.
RSD has
the requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the Exchange.
Section
3.3 Validity and Effect of Agreement.
This
Agreement has been duly and validly executed and delivered by RSD and, assuming
that it has been duly authorized, executed and delivered by the other parties
hereto, constitutes a legal, valid and binding obligation of RSD in accordance
with its terms except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally.
Section
3.4 No Conflict.
Neither
the execution and delivery of this Agreement by RSD nor the performance by such
parties of their respective obligations hereunder, nor the consummation of the
Exchange, will: (i) conflict with RSD's Certificate of Incorporation or Bylaws;
(ii) violate any statute, law, ordinance, rule or regulation, applicable to RSD
or any of the properties or assets of RSD; or (iii) violate, breach, be in
conflict with or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or permit the termination of
any provision of, or result in the termination of, the acceleration of the
maturity of, or the acceleration of the performance of any obligation of RSD
and/or affect any of the obligations hereunder, or result in the creation or
imposition of any Lien upon any properties, assets or business of RSD under, any
Contract or any order, judgment or decree to which RSD is a party or by which it
or any of its assets or
properties is bound or encumbered except, in the case of clauses (ii) and (iii),
for such violations, breaches, conflicts, defaults or other occurrences which,
individually or in the aggregate, would not have a material adverse effect on
its obligation to perform its covenants under this Agreement.
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Section
3.5 Required Filings and Consents.
The
execution and delivery of this Agreement by RSD does not, and the performance of
this Agreement by RSD will not, require any consent, approval, authorization or
permit of, or filing with or notification to, Governmental Authority with
respect to RSD except: (i) compliance with applicable requirements of the
Securities Act, the Exchange Act and state securities laws ("Blue Sky Laws");
and (ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on RSD,
or would not prevent or materially delay consummation of the Exchange or
otherwise prevent the parties hereto from performing their respective
obligations under this Agreement.
Section
3.6 Capitalization.
The
authorized capital stock of RSD consists of 100,000,000 shares of Common Stock,
par value $.001 per share, of which 92,735,800 shares are issued and
outstanding, and 10,000,000 shares of Preferred Stock, par value $.001 per
share, of which no shares are outstanding. Except for the transactions
contemplated by this Agreement, there are no other share capital, pre-emptive
rights, convertible securities, outstanding warrants, options or other rights to
subscribe for, purchase or acquire from RSD any shares of capital stock of RSD
and there are no contracts or commitments providing for the issuance of, or the
granting of rights to acquire, any shares of capital stock of RSD or under which
RSD is, or may become, obligated to issue any of its securities. All shares of
capital stock of RSD outstanding as of the date of this Agreement have been duly
authorized and validly issued, are fully paid and nonassessable, and are
free of pre-emptive rights. As of the Closing Date (as defined herein), there
will be no more than 92,735,800 shares of Common Stock issued or outstanding
prior to the Exchange.
Section
3.7 Status of Common Stock.
The
Common Stock, when issued and allotted at the Closing in exchange for FREGAT
Interests, will be duly authorized, validly issued, fully paid, non-assessable,
and free of any pre-emptive rights, will be issued in compliance with all
applicable laws concerning the issuance of securities, and will have the rights,
preferences, privileges, and restrictions set forth in RSD's charter and bylaws,
and will be free and clear of any Liens of any kind and duly registered in the
name of the FREGAT Owners, in RSD's stockholders ledger.
Section
3.8 Litigation.
There is
no Action pending or threatened against RSD that, individually or in the
aggregate, directly or indirectly, would be reasonably likely to have a Material
Adverse Effect, nor is there any outstanding judgment, decree or injunction, in
each case against RSD, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
Section
3.9 Books and Records.
The books
and records, financial and others, of RSD are in all material respects complete
and correct and have been maintained in accordance with good business accounting
practices.
Section
3.10 Insurance.
RSD has
no insurable properties and RSD does not maintain any insurance covering its
assets, business, equipment, properties, operations, employees, officers, or
directors. To RSD's knowledge since inception there has not been any damage,
destruction or loss, which could have been deemed as an "Insurance
Event".
Section
3.11 Compliance.
RSD is in
compliance with all foreign, federal, state and local laws and regulations of
any Governmental Authority, except to the extent that failure to comply would
not, individually or in the aggregate, have a Material Adverse Effect. RSD has
not received any notice asserting a failure, or possible failure, to comply with
any such law or regulation, the subject of which notice has not been resolved as
required thereby or otherwise to the satisfaction of the party sending the
notice, except for such failure as would not, individually or in the aggregate,
have a Material Adverse Effect. RSD does not, and is not require to, hold any
permits, licenses or franchises from Governmental Authorities.
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Section
3.12 Absence of Certain Changes.
Since
December 1, 2009, except as expressly permitted or required by this Agreement or
with the consent of FREGAT, RSD has not:
(a) sold
or otherwise issued any shares of capital stock;
(b)
acquired any assets or incurred any Liabilities;
(c)
amended its certificate of incorporation or bylaws;
(d)
waived any rights of value which in the aggregate are extraordinary or material
considering the business of RSD;
(e) made
any material change in its method of management, operation or
accounting;
(f) 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;
(g)
granted or agreed to grant any options, warrants or other rights for its stocks,
bonds or other corporate securities calling for the issuance thereof, which
option, warrant or other right has not been cancelled as of the Closing
Date;
(h)
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;
(i)
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 RSD or become subject to any change or development in, or
effect on, RSD that has or could reasonably be expected to have a Material
Adverse Effect; or
(j)
entered into any agreement to take any action described in clauses (a) through
(i) above
Section
3.13 Previous Sales of Securities.
Since
inception, RSD has sold Common Stock to investors only in reliance upon
applicable exemptions from the registration requirements under any applicable
law including the laws of the United States and any applicable states and all
such sales were made in accordance with the laws of said
jurisdictions.
Section
3.14 Principals of RSD.
During
the past five years, no officer or director of RSD has been:
(a) the
subject of any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
(b) the
subject of any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(c) the
subject of any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; or
(d) found
by a court of competent jurisdiction (in a civil action), the Commission or the
Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed,
suspended, or vacated.
Section
3.15 Brokers and Finders.
Neither
RSD, nor any of its respective officers, directors, employees or managers, has
employed any broker, finder, advisor or consultant, or incurred any liability
for any investment banking fees, brokerage fees, commissions or finders' fees,
advisory fees or consulting fees in connection with the Exchange for which RSD
has or could have any liability.
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Section
3.16 Disclosure.
As of the
Closing Date, there is no known material fact or information relating to the
business, condition (financial or otherwise), affairs, operations or assets of
RSD and/or its subsidiaries that has not been disclosed in writing to FREGAT
and/or the FREGAT Owners by RSD. No representation or warranty of RSD in this
Agreement or any statement or document delivered in connection herewith or
therewith, contained or will contain any untrue statement of a material fact or
fail to state any material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not
misleading.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF FREGAT
FREGAT
hereby makes the following representations and warranties to RSD:
Section
4.1 Organization and Qualification.
FREGAT is
duly organized and validly existing under the laws of the Country of Russia,
with the corporate power and authority to own and operate its business as
presently conducted, except where the failure to be or have any of the foregoing
would not have a Material Adverse Effect. FREGAT is duly qualified as a foreign
corporation to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except for such failures to be so qualified as would
not have a Material Adverse Effect.
Section
4.2 Authorization; Validity and Effect of Agreement.
FREGAT
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the Exchange. This
Agreement has been duly and validly executed and delivered by FREGAT and,
assuming that it has been duly authorized, executed and delivered by the other
parties hereto, constitutes a legal, valid and binding obligation of FREGAT, in
accordance with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally.
Section
4.3 No Conflict.
Neither
the execution and delivery of this Agreement by FREGAT nor the performance by
FREGAT of its obligations hereunder, nor the consummation of the Exchange, will:
(i) conflict with FREGAT 's organization or governing documents; (ii) violate
any statute, law, ordinance, rule or regulation, applicable to FREGAT or any of
its properties or assets; or (iii) violate, breach, be in conflict with or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or permit the termination of any provision
of, or result in the termination of, the acceleration of the maturity of, or the
acceleration of the performance of any obligation of FREGAT, or result in the
creation or imposition of any Lien upon any properties, assets or business of
FREGAT under, any Material Contract or any order, judgment or decree to which
FREGAT is a party or by which it or any of its assets or Properties is bound or
encumbered except, in the case of clauses (ii) or (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or in the
aggregate, would not have a Material Adverse Effect on its obligation to perform
its covenants under this Agreement.
Section
4.4 Required Filings and Consents.
The
execution and delivery of this Agreement by FREGAT do not, and the performance
of this Agreement by FREGAT will not require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, with respect to FREGAT, except: (i) compliance with applicable
requirements of the Securities Act, the Exchange Act, and Blue Sky Laws; and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
FREGAT, or materially delay consummation of the Exchange or otherwise prevent
the parties hereto from performing their obligations under this
Agreement.
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Section
4.5 Capitalization.
All
FREGAT Interests outstanding as of the date of this Agreement have been duly
authorized and validly issued, are fully paid and non-assessable, and are free
of pre-emptive rights.
Section
4.6 Financial Statements.
FREGAT
has previously furnished to RSD true and complete copies of its balance sheets
as of September 30, 2009 and December 31, 2008, and its related statements of
operations for the periods ended September 30, 2009, and December 31, 2008 (all
of such financial statements of FREGAT collectively, the “FREGAT Financial
Statements"). The FREGAT Financial Statements (including the notes thereto)
present fairly in all material respects the financial position and results of
operations and cash flows of FREGAT at the date or for the period set forth
therein, in each case in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as otherwise indicated therein). The
FREGAT Financial Statements have been prepared from and in accordance with the
books and records of FREGAT and its subsidiaries, as applicable.
Section
4.7 No Undisclosed Liabilities.
Except as
disclosed in the FREGAT Financial Statements, FREGAT has no material
liabilities, indebtedness or obligations, except those that have been incurred
in the ordinary course of business, whether absolute, accrued, contingent or
otherwise, and whether due or to become due, and to the Knowledge of FREGAT,
there is no existing condition, situation or set of circumstances that could
reasonably be expected to result in such a liability, indebtedness or
obligation.
Section
4.8 Properties and Assets.
FREGAT
has good and marketable title to, valid leasehold interests in, or the legal
right to use, all of the assets, properties and leasehold interests reflected in
the most recent FREGAT Financial Statements, except for those sold or otherwise
disposed of since the date of such FREGAT Financial Statements in the ordinary
course of business consistent with past practice.
Section
4.9 Litigation.
There is
no Action pending or threatened against FREGAT that, individually or in the
aggregate, directly or indirectly, would be reasonably likely to have a Material
Adverse Effect, nor is there any outstanding judgment, decree or injunction, in
each case against FREGAT, that, individually or in the aggregate, has or would
be reasonably likely to have a Material Adverse Effect.
Section
4.10 Taxes.
FREGAT
has timely filed (or has had timely filed on its behalf) with the appropriate
tax authorities all tax returns required to be filed by it or on behalf of it,
and each such tax return was complete and accurate in all material respects, and
FREGAT has timely paid (or has had paid on its behalf) all material Taxes due
and owing by it, regardless of whether required to be shown or reported on a tax
return, including Taxes required to be withheld by it. No deficiency for a
material Tax has been asserted in writing or otherwise, to FREGAT 's Knowledge,
against FREGAT or with respect to any of its assets, except for asserted
deficiencies that either (i) have been resolved and paid in full or (ii) are
being contested in good faith. There are no material Liens for Taxes upon FREGAT
's assets.
Section
4.11 Compliance.
To FREGAT
's Knowledge, FREGAT is in compliance with all federal, state and local laws and
regulations of any Governmental Authority applicable to its operations or with
respect to which compliance is a condition of engaging in the business thereof,
except to the extent that failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect. FREGAT has not received any notice
asserting a failure, or possible failure, to comply with any such law or
regulation, the subject of which notice has not been resolved as required
thereby or otherwise to the satisfaction of the party sending the notice, except
for such failure as would not, individually or in the aggregate, have a Material
Adverse Effect. To FREGAT 's Knowledge, FREGAT holds all permits, licenses and
franchises from Governmental Authorities required to conduct its business as it
is now being conducted, except for such failures to have such permits, licenses
and franchises that would not, individually or in the aggregate, have a Material
Adverse Effect.
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Section
4.12 Absence of Certain Changes.
Since the
date of the most recent FREGAT Financial Statements,
(a) there
has been no change or development in, or effect on, FREGAT that has or could
reasonably be expected to have a Material Adverse Effect,
(b) FREGAT
has not sold, transferred, disposed of, or agreed to sell, transfer or dispose
of, any material amount of its assets other than in the ordinary course of
business,
(c) FREGAT
has not paid any dividends or distributed any of its assets to any of its
Owners,
(d)
FREGAT has not acquired any material amount
of assets except in the ordinary course of business, nor acquired or merged with
any other business,
(e) FREGAT
has not waived or amended any of its respective material contractual rights
except in the ordinary course of business, and
(f) FREGAT
has not entered into any agreement to take any action described in clauses (a)
through (e) above.
Section
4.13 Principals of FREGAT.
During
the past five years, no officer or director of FREGAT has been:
(a) the
subject of any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
(b) the
subject of any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
(c) the
subject of any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
(d) found
by a court of competent jurisdiction (in a civil action) to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF FREGAT OWNERS
Each
FREGAT Owner, severally and not jointly, hereby make the following
representations and warranties to FREGAT and RSD:
Section
5.1 Authority and Validity.
Each
FREGAT Owner has all requisite power to execute and deliver, to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement.
Section
5.2 Validity.
Upon the
execution and delivery of each other document to which each FREGAT Owner is a
party (assuming due execution and delivery by each other party thereto) each
such other document will be the legal, valid and binding obligations of such
FREGAT Owner, enforceable against such FREGAT Owner in accordance with their
respective terms except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally.
Section
5.3 No Breach or Violation.
The
execution, delivery and performance by each FREGAT Owner of this Agreement and
each other document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms and
conditions hereof and thereof, do not and will not conflict with (i) the
certificate of incorporation or bylaws of such FREGAT Owner, if applicable, or
(ii) any agreement to which such FREGAT Owner is a party, or by which such
FREGAT Owner or such FREGAT Owner's Assets are bound or affected.
Section
5.4 Consents and Approvals.
No
consent, approval, authorization or order of, registration or filing with, or
notice to, any Government Authority or any other Person is necessary to be
obtained, made or given by each FREGAT Owner in connection with the execution,
delivery and performance by such FREGAT Owner of this Agreement or any other
document to which it is a party or for the consummation by such FREGAT Owner of
the transactions contemplated hereby or thereby.
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Section
5.5 Title.
FREGAT
Interests to be delivered by each FREGAT Owner in connection with the
transactions contemplated herein are, and at the Closing will be owned, of
record and beneficially, solely by such FREGAT Owner, free and clear of any Lien
and represent such FREGAT Owner's entire ownership interest in
FREGAT
Section
5.6 Investor Status.
No FREGAT
Owner is a U.S. Person and nor is acquiring the RSD Common Stock for the account
of any U.S. Person, (ii) if a corporation, it is not organized or incorporated
under the laws of the United States; (iii) if a corporation, no director or
executive officer is a national or citizen of the United States; and (iv) it is
not otherwise deemed to be a "U.S. Person" within the meaning of Regulation S.
If a resident of the United States, the FREGAT Owner represents that he or she
is an “accredited investor” as defined in Rule 501 promulgated under the
Securities Act. Each FREGAT Owner represents and warrants that he or
she has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of his or her investment in
RSD. Each FREGAT Owner has the financial ability to bear the economic
risks of his or her entire investment in RSD for an indefinite period, would be
able to sustain a complete loss of his or her investment, and has no need for
liquidity with respect to his or her investment in RSD.
Section
5.7 Investment Intent.
The
shares of Common Stock are being acquired by each FREGAT Owner for each FREGAT
Owner's own account for investment purposes only, not as a nominee or agent and
not with a view to the resale or distribution of any part thereof, and each
FREGAT Owner has no present intention of selling, granting any participation in
or otherwise distributing the same. Each FREGAT Owner further represents that
the FREGAT Owner does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person or third person with respect to any of FREGAT Interests.
Section
5.8 Restrictions on Transfer.
Each
FREGAT Owner understands that the shares of Common Stock have not been
registered under the Securities Act or registered or qualified under any foreign
or state securities law, and may not be, directly or indirectly, sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act and registration or qualification
under applicable state securities laws or the availability of an exemption
therefrom. In any case where such an exemption is relied upon by each FREGAT
Owner from the registration requirements of the Securities Act and the
registration or qualification requirements of such state securities laws, each
FREGAT Owner shall furnish RSD with an opinion of counsel stating that the
proposed sale or other disposition of such securities may be effected without
registration under the Securities Act and will not result in any violation of
any applicable state securities laws relating to the registration or
qualification of securities for sale, such counsel and opinion to be
satisfactory to RSD. Each FREGAT Owner acknowledges that it is able to bear the
economic risks of an investment in the Common Stock for an indefinite period of
time, and that its overall commitment to investments that are not readily
marketable is not disproportionate to its net worth.
Section
5.9 Informed Investment.
Each
FREGAT Owner has made such investigations in connection herewith as it deemed
necessary or desirable so as to make an informed investment decision without
relying upon FREGAT for legal or tax advice related to this investment. In
making its decision to acquire the Common Stock, each FREGAT Owner has not
relied upon any information other than information contained in this Agreement
and in the other Offering Documents.
Section
5.10 Access to Information.
Each
FREGAT Owner acknowledges that it has had access to and has reviewed all
documents and records relating to RSD, including, but not limited to, the RSD
SEC Documents, that it has deemed necessary in order to make an informed
investment decision with respect to an investment in RSD; that it has had the
opportunity to ask representatives of RSD certain questions and request certain
additional information regarding the terms and conditions of such investment and
the finances, operations, business and prospects of RSD and has had any and all
such questions and requests answered to its satisfaction; and that based on the
foregoing it understands the risks and other considerations relating to an
investment in RSD.
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Section
5.11 Reliance on Representations.
Each
FREGAT Owner understands that the shares of Common Stock are being offered and
sold to it in reliance on specific exemptions from the registration and/or
public offering requirements of the U.S. federal and state securities laws and
that RSD and FREGAT is relying in part upon the truth and accuracy of, and such
FREGAT Owner's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such FREGAT Owner set forth herein in
order to determine the availability of such exemptions and the eligibility of
such FREGAT Owner to acquire the Common Stock. Each FREGAT Owner represents and
warrants to RSD and FREGAT that any information the FREGAT Owner has heretofore
furnished or furnishes herewith to RSD and FREGAT is complete and accurate, and
further represents and warrants that it will notify and supply corrective
information to RSD and FREGAT immediately upon the occurrence of any change
therein occurring prior to FREGAT 's issuance of the Common Stock. Within five
(5) days after receipt of a request from FREGAT, each FREGAT Owner will provide
such information and such documents as may reasonably be necessary to comply
with any and all laws and regulations to which FREGAT is subject.
Section
5.12 No General Solicitation.
Each
FREGAT Owner is unaware of, and in deciding to participate in the transactions
contemplated hereby is in no way relying upon, and did not become aware of the
transactions contemplated hereby through or as a result of, any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media, or broadcast over television or radio or the
internet, in connection with the transactions contemplated hereby.
Section
5.13 Representation by Counsel.
Each
FREGAT Owner represents that it is represented by their own counsel in this
transaction and that such counsel has carefully reviewed with it the terms and
legal consequences of the Exchange and, in particular, the Tax consequences of
the Exchange to such FREGAT Owner. FREGAT and each FREGAT Owner acknowledges and
understands that Xxxxxxx Xxxxx PLLC, Counsel to Xxxxxxx & Xxxxxxxx, P.C.,
Washington, D.C., acts as counsel to RSD. FREGAT and each FREGAT Owner also
acknowledges and understands that, in connection with the Exchange contemplated
by this Agreement and subsequent advice to and legal services performed for RSD,
Xxxxxxx Xxxxx PLLC and Xxxxxxx & Xxxxxxxx, P.C. and will not be representing
FREGAT or the FREGAT Owners, but will be representing RSD.
ARTICLE
VI
CERTAIN
COVENANTS
Section
6.1 Conduct of Businesses by Parties.
RSD and
FREGAT agree that, between the date of this Agreement and the Closing Date,
except as contemplated by any other provision of this Agreement, or unless the
other party shall otherwise consent in writing:
(a) the
businesses of RSD and FREGAT shall be conducted only in, and such parties shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and
(b) RSD and
FREGAT shall use their reasonable best efforts to preserve substantially intact
their respective business organizations, to keep available the services of their
current officers, employees and consultants and to preserve the current
relationships of RSD and FREGAT with customers, suppliers and other persons with
which RSD or FREGAT, as the case may be, has significant business
relations.
Section
6.2 Access to Information.
At all
times prior to the Closing or the earlier termination of this Agreement in
accordance with the provisions of Article IX, and in each case subject to
Section 6.3 below, each party hereto shall provide to the other party (and the
other party's authorized representatives) reasonable access during normal
business hours and upon reasonable prior notice to the premises, properties,
books, records, assets, liabilities, operations, contracts, personnel, financial
information and other data and information of or relating to such party
(including without limitation all written proprietary and trade secret
information and documents, and other written information and documents relating
to intellectual property rights and matters), and will cooperate with the other
party in conducting its due diligence investigation of such party, provided that
the party granted such access shall not interfere unreasonably with the
operation of the business conducted by the party granting access, and provided
that no such access need be granted to privileged information or any agreements
or documents subject to confidentiality agreements.
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Section
6.3 Confidentiality.
Each
party shall hold, and shall cause its respective Affiliates and representatives
to hold, all Confidential Information made available to it in connection with
the Exchange in strict confidence, shall not use such information except for the
sole purpose of evaluating the Exchange and shall not disseminate or disclose
any of such information other than to its directors, officers, managers,
employees, shareholders, interest holders, Affiliates, agents and
representatives, as applicable, who need to know such information for the sole
purpose of evaluating the Exchange (each of whom shall be informed in writing by
the disclosing party of the confidential nature of such information and directed
by such party in writing to treat such information confidentially). The above
limitations on use, dissemination and disclosure shall not apply to Confidential
Information that (i) is learned by the disclosing party from a third party
entitled to disclose it; (ii) becomes known publicly other than through the
disclosing party or any third party who received the same from the disclosing
party, provided that the disclosing party had no Knowledge that the disclosing
party was subject to an obligation of confidentiality; (iii) is required by law
or court order to be disclosed by the parties; or (iv) is disclosed with the
express prior written consent thereto of the other party. The parties shall
undertake all necessary steps to ensure that the secrecy and confidentiality of
such information will be maintained. In the event a party is required by court
order or subpoena to disclose information which is otherwise deemed to be
confidential or subject to the confidentiality obligations hereunder, prior to
such disclosure, the disclosing party shall: (i) promptly notify the
non-disclosing party and, if having received a court order or subpoena, deliver
a copy of the same to the non-disclosing party; (ii) cooperate with the
non-disclosing party, at the expense of the non-disclosing party, in obtaining a
protective or similar order with respect to such information; and (iii) provide
only that amount of information as the disclosing party is advised by its
counsel is necessary to strictly comply with such court order or
subpoena.
Section
6.4 Further Assurances.
Each of
the parties hereto agrees to use its best efforts before and after the Closing
Date to take or cause to be taken all action, to do or cause to be done, and to
assist and cooperate with the other party hereto in doing, all things necessary,
proper or advisable under applicable laws to consummate and make effective, in
the most expeditious manner practicable, the Exchange, including, but not
limited to: (i) satisfying the conditions precedent to the obligations of any of
the parties hereto; (ii) obtaining all waivers, consents and approvals from
other parties necessary for the consummation of the Exchange, (iii) making all
filings with, and obtain all consents, approvals and authorizations that are
required to be obtained from, Governmental Authorities, (iv) defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the performance of the obligations hereunder; and
(v) executing and delivering such instruments, and taking such other actions, as
the other party hereto may reasonably require in order to carry out the intent
of this Agreement.
Section
6.5 Public Announcements.
RSD, the
FREGAT Owners and FREGAT shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the Exchange
or this Agreement, and shall not issue any other press release or make any other
public statement without prior consent of the other parties, except as may be
required by law or, with respect to RSD, by obligations pursuant to rule or
regulation of the Exchange Act, the Securities Act, any rule or regulation
promulgated thereunder or any rule or regulation of the National Association of
Securities Dealers.
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Section
6.6 Notification of Certain Matters.
Each
party hereto shall promptly notify the other party in writing of any events,
facts or occurrences that would result in any breach of any representation or
warranty or breach of any covenant by such party contained in this
Agreement.
Section
6.7 Prohibition on Trading in RSD Securities.
All
parties acknowledge that information concerning the matters that are the subject
matter of this Agreement may constitute material non-public information under
United States federal securities
laws, and
that United States federal securities laws prohibit any person who has received
material non-public information relating to RSD from purchasing or selling
securities of RSD, or from communicating such information to any person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell securities of RSD. Accordingly, until such time as any such
non-public information has been adequately disseminated to the public, the
parties to this Agreement shall not purchase or sell any securities of
RSD.
Section
6.8 Capital for RSD.
Immediately
following the Closing Date, in conjunction with the Exchange, the FREGAT Owners
shall cause FREGAT to contribute the sum of US$________________ to the capital
of RSD.
Section
6.9 FREGAT Owners Right to Require “Spin-Off” by RSD of Formerly Owned
Companies.
Following
the Closing, Xxxxxx Vilchenkov shall each have the right, on or before the third
anniversary of the Closing Date, to require RSD to take the following actions:
on thirty (30) days notice to the Board of Directors of RSD by such former RSD
Shareholder, RSD shall initiate the regulatory filing process for clearance by
the SEC of the spin-off ("Spin-Off") to its shareholders of the shares its
FREGAT subsidiary as specified by one or more of such former FREGAT Owners, such
distribution to be made being pro-rata as a dividend to the shareholders of
RSD. Upon SEC clearance, RSD shall proceed promptly with the
Spin-Off, and from the date of the Spin-Off distribution, the business of the
subsidiary or subsidiaries so spun off shall be operated as a separate reporting
company under the Exchange Act by its management. The management and
former owners of FREGAT shall provide full cooperation to RSD in the SEC
clearance process. All expenses of the Spin-Off shall be borne
equally by RSD and the subsidiary or subsidiaries to be spun off.
Section
6.10 FREGAT Owners Right to Repurchase Ownership of Formerly Owned
Company.
Following
the Closing Date, Xxxxxx Vilchenkov shall have the right to
repurchase ownership of the particular company each such FREGAT Owner
sold to FREGAT, i.e., FREGAT as follows: the Interests of FREGAT held by RSD may
be repurchased by the FREGAT Owner that is the former owner of that subsidiary
at any time in the first year following the Closing Date, at the option of such
FREGAT Owner and on ninety (90) days notice to RSD, by the FREGAT Owner paying
to RSD the value of that subsidiary, as such value is determined by the Board of
Directors of RSD (RSD Common Stock may be retransfered to RSD by the FREGAT
Owners as part of the consideration to repurchase the subsidiary, and any shares
of Common Stock so retransferred shall be valued at market at the time of the
repurchase).
ARTICLE
VII
CONDITIONS
TO CONSUMMATION OF THE EXCHANGE
Section
7.1 Conditions to Obligations of FREGAT and FREGAT Owners.
The
obligations of FREGAT and FREGAT Owners to consummate the Exchange shall be
subject to the fulfillment, or written waiver by FREGAT, at or prior to the
Closing, of each of the following conditions:
(a) RSD
shall have delivered to FREGAT each of the documents required by Section 2.2(a)
of this Agreement;
(b) The
representations and warranties of RSD set out in this Agreement shall be true
and correct in all material respects at and as of the time of the Closing as
though such representations and warranties were made at and as of such
time;
(c) RSD
shall have performed and complied in all material respects with all covenants,
conditions, obligations and agreements required by this Agreement to be
performed or complied with by such parties on or prior to the Closing
Date;
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(d) All
consents, approvals, permits, authorizations and orders required to be obtained
from, and all registrations, filings and notices required to be made with or
given to, any Governmental Authority or Person as provided herein shall have
been obtained;
(e)
FREGAT shall have completed a due diligence review of the business, operations,
financial condition and prospects of RSD and shall have been satisfied with the
results of its due diligence review in its sole and absolute
discretion;
(f) There
has been no Material Adverse Effect on the business, condition or prospects of
RSD until the Closing Date;
(g) RSD
shall file if applicable with the SEC a Schedule 14(f)-l with respect to any
change of control transactions described in this Agreement, and shall have
caused the Schedule 14(f)01 to be mailed to each registered holder of its Common
Stock;
(h)
Holders of all of the FREGAT Interests shall have become party to the Exchange;
and
(i) The
outstanding shares of Common Stock of RSD prior to the Closing shall not exceed
92,735,800 shares.
Section
7.2 Conditions to Obligations of RSD.
The
obligations of RSD to consummate the Exchange shall be subject to the
fulfillment, or written waiver by RSD, at or prior to the Closing of each of the
following conditions:
(a)
FREGAT shall have delivered to RSD each of the documents required by Section
2.2(b) of this Agreement;
(b) The
FREGAT Owners shall have delivered to RSD the documents required by Section
2.2(c) of this Agreement;
(c) The
representations and warranties of FREGAT and the FREGAT Owners set out in this
Agreement shall be true and correct in all material respects at and as of the
time of the Closing as though such representations and warranties were made at
and as of such time;
(d)
FREGAT shall have performed and complied in all material respects with all
covenants, conditions, obligations and agreements required by this Agreement to
be performed or complied with by FREGAT on or prior to the Closing
Date;
(e) All
consents, approvals, permits, authorizations and orders required to be obtained
from, and all registrations, filings and notices required to be made with or
given to, any Governmental Authority or Person as provided herein shall have
been obtained;
(f) RSD
shall have completed a due diligence review of the business, operations,
financial condition and prospects of FREGAT and shall have been satisfied with
the results of its due diligence review in its sole and absolute
discretion;
(g) There
has been no Material Adverse Effect on the business, condition or prospects of
FREGAT until the Closing Date;
(h)
FREGAT shall have paid all of the costs and expenses of FREGAT associated with
the transactions contemplated herein;
(i)
Holders of at least 100% of FREGAT Interests shall have become party to the
Exchange; and
(j) RSD,
at its option, shall have received such opinions from FREGAT’s attorneys and
auditors as may be reasonably required by RSD and its counsel.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1 Indemnification by RSD.
(a)
Notwithstanding any other indemnification provision hereunder, RSD (the
"Indemnifying Party") shall indemnify and hold harmless FREGAT and its officers,
directors and employees and each of the FREGAT Owners (each an "Indemnified
Party"), from and against any and all demands, claims, actions or causes of
action, judgments, assessments, losses, liabilities, damages or penalties and
reasonable attorneys' fees and related disbursements (collectively, "Claims")
suffered by such Indemnified Party resulting from or arising out of (i) any
inaccuracy in or breach of any of the representations or warranties made by the
Indemnifying Party at the time they were made, and, except for representations
and warranties that speak as of a specific date or time (which need only be true
and correct as of such date or time), on and as of the Closing Date, (ii) any
breach or nonfulfillment of any covenants or agreements made by the Indemnifying
Party, (iii) any misrepresentation made by the Indemnifying Party, in each case
as made herein or in the Schedules or Exhibits annexed hereto or in any closing
certificate, schedule or any ancillary certificates or other documents or
instruments furnished by the Indemnifying Party pursuant hereto or in connection
with the Exchange, and (v) the operations and liabilities of RSD and/or any of
its subsidiaries, whether known or unknown, arising out of any action, omission
and/or period of time preceding the Closing Date, including but not limited to
any taxes levied with respect to same.
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Section
8.2 Indemnification by FREGAT.
(a)
Notwithstanding any other indemnification provision hereunder,
FREGAT and the FREGAT Owners (each, the "Indemnifying
Party") shall, severally and jointly, indemnify and hold harmless RSD, its
officers, directors, attorneys, accountants and employees (each an "Indemnified
Party"), from and against any and all demands, claims, actions or causes of
action, judgments, assessments, losses, liabilities, damages or penalties and
reasonable attorneys' fees and related disbursements (collectively, "Claims")
suffered by such Indemnified Party resulting from or arising out of (i) any
inaccuracy in or breach of any of the representations or warranties made by the
Indemnifying Party at the time they were made, and, except for representations
and warranties that speak as of a specific date or time (which need only be true
and correct as of such date or time), on and as of the Closing Date, (ii) any
breach or nonfulfillment of any covenants or agreements made by the Indemnifying
Party, or (iii) any misrepresentation made by the Indemnifying Party, in each
case as made herein or in the Schedules or Exhibits annexed hereto or in any
closing certificate, schedule or any ancillary certificates or other documents
or instruments furnished by the Indemnifying Party pursuant hereto or in
connection with the Exchange.
Section
8.3 Indemnification Procedures.
(a) Upon
obtaining knowledge of any Claim by a third party which has given rise to, or is
expected to give rise to, a claim for indemnification hereunder, the Indemnified
Party shall give written notice ("Notice of Claim") of such claim or demand to
the Indemnifying Party, specifying in reasonable detail such information as the
Indemnified Party may have with respect to such indemnification claim (including
copies of any summons, complaint or other pleading which may have been served on
it and any written claim, demand, invoice, billing or other document evidencing
or asserting the same). No failure or delay by the Indemnified Party in the
performance of the foregoing shall reduce or otherwise affect the obligation of
the Indemnifying Party to indemnify and hold the Indemnified Party harmless,
except to the extent that such failure or delay shall have actually adversely
affected the Indemnifying Party's ability to defend against, settle or satisfy
any Claims for which the Indemnified Party entitled to indemnification
hereunder.
(b) If
the claim or demand set forth in the Notice of Claim given by an Indemnified
Party pursuant to Section 8.1 hereof is a claim or demand asserted by a third
party, the Indemnifying Party shall have fifteen (15) days after the date on
which Notice of Claim is given to notify Indemnified Party in writing of their
election to defend such third party claim or demand on behalf of the Indemnified
Party. If the Indemnifying Party elects to defend such third party claim or
demand, Indemnified Party shall make available to the Indemnifying Party and its
agents and representatives all records and other materials that are reasonably
required in the defense of such third party claim or demand and shall otherwise
cooperate with, and assist the Indemnifying Party in the defense of, such third
party claim or demand. So long as the Indemnifying Party is defending such third
party claim in good faith, the Indemnified Party shall not pay, settle or
compromise such third party claim or demand. If the Indemnifying Party elects to
defend such third party claim or demand, the Indemnified Party shall have the
right to participate in the defense of such third party claim or demand, at such
Indemnified Party's own expense. In the event, however, that such Indemnified
Party reasonably determines that representation by counsel to the Indemnifying
Party of both the Indemnifying Party and such Indemnified Party could reasonably
be expected to present counsel with a conflict of interest, then the Indemnified
Party may employ separate counsel to represent or defend it in any such action
or proceeding and the Indemnifying Party will pay the fees and expenses of such
counsel. If the Indemnifying Party does not elect to defend such third party
claim or demand or does not defend such third party claim or demand in good
faith, the Indemnified Party shall have the right, in addition to any other
right or remedy it may have hereunder, at the Indemnifying Party's expense, to
defend such third party claim or demand; provided, however, that (i) such
Indemnified Party shall not have any obligation to participate in the defense
of, or defend, any such third party claim or demand; (ii) such Indemnified
Party's defense of or its participation in the defense of any such third party
claim or demand shall not in any way diminish or lessen the obligations of the
Indemnifying Party under the agreements of indemnification set forth in this
Article VIII; and (iii) such Indemnified Party may not settle any claim without
the consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed.
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(c) The
Indemnifying Party and the other Indemnified Parties, if any, shall cooperate
fully in all aspects of any investigation, defense, pre-trial in respect of
which indemnity is sought pursuant to this Article VIII, including, but not
limited to, by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.
(d)
Except for third party claims being defended in good faith, the Indemnifying
Party shall satisfy its obligations under this Article VIII in respect of a
valid claim for indemnification hereunder that is not contested by FREGAT in
good faith in cash within thirty (30) days after the date on which Notice of
Claim is given.
Section
8.4 Indemnification Procedures for Non-Third Party Claims.
In the
event any Indemnified Party should have an indemnification claim against the
Indemnifying Party under this Agreement that does not involve a claim by a third
party, the Indemnified Party shall promptly deliver notice of such claim to the
Indemnifying Party in
writing
and in reasonable detail. The failure by any Indemnified Party to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have to such Indemnified Party, except to the extent that the
Indemnifying Party has been actually prejudiced by such failure. If the
Indemnifying Party does not notify the Indemnified Party within
fifteen
(15) Business Days following its receipt of such notice that the Indemnifying
Party disputes such claim, such claim specified by the Indemnifying Party in
such notice shall be conclusively deemed a liability of the Indemnifying Party
under this Article VIII and the Indemnifying Party shall pay the amount of such
liability to the Indemnified Party on demand, or in the case of any notice in
which the amount of the claim is estimated, on such later date when the amount
of such claim is finally determined. If the Indemnifying Party disputes its
liability with respect to such claim in a timely manner, FREGAT and the
Indemnified Party shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall be
resolved pursuant to Section 10.11.
Section
8.5 Limitations on Indemnification.
No claim
for indemnification under this Article VIII shall be asserted by, and no
liability for such indemnify shall be enforced against, the Indemnifying Party
to the extent the Indemnified Party has theretofore received indemnification or
otherwise been compensated for such Claim. In the event that an Indemnified
Party shall later collect any such amounts recovered under insurance policies
with respect to any Claim for which it has previously received payments under
this Article VIII from the Indemnifying Party, such Indemnified Party shall
promptly repay to the Indemnifying Party such amount recovered.
ARTICLE
IX
TERMINATION
Section
9.1 Termination.
This
Agreement may be terminated at any time prior to the Closing:
(a) by
mutual consent of RSD and FREGAT;
(b) by
FREGAT, if the Closing shall not have occurred on or before December 31, 2009,
or if any of the conditions to the Closing set forth in Section 10.1 shall have
become incapable of fulfillment by December 31, 2009 and shall not have been
waived in writing by FREGAT; provided, however, that the right to terminate this
Agreement under this Section 9.1(b) shall not be available to
FREGAT if its action or failure to act has been a principal cause of
or resulted in the failure of the Exchange to occur on or before such date and
such action or failure to act constitutes a breach of this
Agreement;
(c) by
RSD, if the Closing shall not have occurred on or before December 31, 2009 or if
any of the conditions to the Closing set forth in Section 7.2 shall have become
incapable of fulfillment by December 31, 2009 and shall not have been waived in
writing by RSD; provided, however, that the right to terminate this Agreement
under this Section 9.1(c) shall not be available to RSD if its action or failure
to act has been a principal cause of or resulted in the failure of the Exchange
to occur on or before such date and such action or failure to act constitutes a
breach of this Agreement;
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(d) by
RSD or FREGAT if any Governmental or judicial Authority shall have
issued an injunction, order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting any material portion of the
Exchange and such injunction, order, decree, ruling or other action shall have
become final and nonappealable;
Section
9.2 Procedure and Effect of Termination.
In the
event of termination of this Agreement pursuant to Section 9.1 hereof, written
notice thereof shall forthwith be given by the terminating party to the other
party, and, except as set forth below, this Agreement shall terminate and be
void and have no effect and the Exchange shall be abandoned without any further
action by the parties hereto; provided that, if such termination shall result
from the failure of or agreement in this of any representation a party to
perform a covenant, obligation Agreement or from the breach by RSD, or
FREGAT or warranty contained herein, such party shall be fully liable
for any and all damages incurred or suffered by the other party as a result of
such failure or breach. The provisions of Section 9.3, Section 9.5, Section 9.2,
and Article 8 hereof and Article X shall survive the termination of this
Agreement for any reason whatsoever.
ARTICLE
X
MISCELLANEOUS
Section
10.1 Entire Agreement.
This
Agreement and the Schedules and Exhibits hereto contain the entire agreement
between the parties and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
Section
10.2 Amendment and Modifications.
This
Agreement may not be amended, modified or supplemented except by an instrument
or instruments in writing signed by the party against whom enforcement of any
such amendment, modification or supplement is sought.
Section
10.3 Extensions and Waivers.
At any
time prior to the Closing, the parties hereto entitled to the benefits of a term
or provision may (a) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document,
certificate or writing delivered pursuant hereto, or (c) waive compliance with
any obligation, covenant, agreement or condition contained herein. Any agreement
on the part of a party to any such extension or waiver shall be valid only if
set forth in an instrument or instruments in writing signed by the party against
whom enforcement of any such extension or waiver is sought. No failure or delay
on the part of any party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty, covenant or agreement.
Section
10.4 Successors and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided, however, that no party
hereto may assign its rights or delegate its obligations under this Agreement
without the express prior written consent of the other party hereto. Except as
provided in Article VIII, nothing in this Agreement is intended to confer upon
any person not a party hereto (and their successors and assigns) any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
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Section
10.5 Survival of Representations, Warranties and Covenants.
The
representations and warranties contained herein shall survive the Closing and
shall thereupon terminate June 30, 2010. All covenants and agreements contained
herein which by their terms contemplate actions following the Closing shall
survive the Closing and remain in full force and effect in accordance with their
terms.
Section
10.6 Headings; Definitions.
The
Section and Article headings contained in this Agreement are inserted for
convenience of reference only and will not affect the meaning or interpretation
of this Agreement. All references to Sections or Articles contained herein mean
Sections or Articles of this Agreement unless otherwise stated. All capitalized
terms defined herein are equally applicable to both the singular and plural
forms of such terms.
Section
10.7 Severability.
If any
provision of this Agreement or the application thereof to any Person or
circumstance is held to be invalid or unenforceable to any extent, the remainder
of this Agreement shall remain in full force and effect and shall be reformed to
render the Agreement valid and enforceable while reflecting to the greatest
extent permissible the intent of the parties.
Section
10.8 Specific Performance.
The
parties hereto agree that in the event that any party fails to consummate the
Exchange in accordance with the terms of this Agreement, irreparable damage
would occur, no adequate remedy at law would exist and damages would be
difficult to determine. It is accordingly agreed that the parties shall be
entitled to specific performance in such event, without the necessity of proving
the inadequacy of money damages as a remedy, in addition to any other remedy at
law or in equity.
Section
10.9 Notices.
All
notices hereunder shall be sufficiently given for all purposes hereunder if in
writing and delivered personally, sent by documented overnight delivery service
or, to the extent receipt is confirmed, telecopy, telefax, email or other
electronic transmission service to the appropriate address or number as set
forth below (or any other address duly notified by a party hereto pursuant to
the provisions of this Section 10.9).
If to
RSD:
Royal
Style Design, Inc.
0000
Xxxxxxxx Xxxx, Xxxx X
Xxxxxxx,
XX 00000
Attn:
Chief Executive Officer
Facsimile:
000 000 0000
If to
FREGAT:
Fregat
Ltd.
00
Xxxxxxxxx Xxxxxxxx, xxx.00
000000,
Republic of Tatarstan, Novo-Savinovskiy, Saransk,
Attn:
Chief Executive Officer
Fax: 0
000 0000000
Section
10.10 Governing Law.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Florida, without regard to the conflicts of laws
principles.
Section
10.11 Consent to Jurisdiction.
The
parties shall in good faith attempt to resolve all disputes arising under this
Agreement or by reason of the Exchange by discussion or mediation resulting in
mutual agreement as to the manner of resolution of the particular dispute.
Failing such resolution, the Federal courts of competent jurisdiction in the
State of Florida shall have sole jurisdiction to resolve any disputes arising
under this Agreement or by reason of the Exchange. Any action, suit
or other legal proceeding which is commenced to resolve any matter arising under
or relating to any provision of this Agreement shall be commenced only in a
federal court of competent jurisdiction the State of Florida and the parties
hereto each consents to the jurisdiction of such a court.
Page
17
Section
10.12 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same agreement.
Section
10.13 Certain Definitions. As used herein:
(a)
"Affiliate" shall have the meanings ascribed to such term in Rule 12b-2 of the
Exchange Act;
(b)
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which federally chartered financial institutions are not open for
business.
(c)
"Confidential Information" shall mean the existence and contents of this
Agreement and the Schedules and Exhibits hereto, and all proprietary technical,
economic, environmental, operational, financial and/or business information or
material of one party which, prior to or following the Closing Date, has been
disclosed by FREGAT, on the one hand, or RSD, on the other hand, in written,
oral (including by recording), electronic, or visual form to, or otherwise has
come into the possession of, the other;
(d)
"Contract" shall mean any oral, written or implied contracts, agreements,
licenses, instruments, indentures leases, powers of attorney, guaranties, surety
arrangements or other commitments of any kind;
(e)
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder;
(f)
"GAAP" shall mean generally accepted accounting principles in the United States
as in effect on the date or for the period with respect to which such principles
are applied;
(g)
"Governmental Authority" shall mean any nation or government, any state,
municipality or other political subdivision thereof and any entity, body,
agency, commission or court, whether
domestic,
foreign or multinational, exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
executive official thereof;
(h)
"Knowledge" shall mean (i) with respect to an individual, knowledge of a
particular fact or other matter, if such individual is aware of such fact or
other matter, and (ii) with respect to a Person that is not an individual,
knowledge of a particular fact or other matter if any individual who is serving,
or who has at any time served, as a director, officer, partner, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
knowledge of such fact or other matter;
(i)
"Lien" shall mean any security or other property interest or right, claim, lien,
pledge, option, charge, security interest, contingent or conditional sale, or
proxy, pre-emptive rights, first refusal rights, participation rights, or other
title claim or retention agreement, interest or other right or claim of third
parties, whether perfected or not perfected, voluntarily incurred or arising by
operation of law, and including any agreement (other than this Agreement) to
grant or submit to any of the foregoing in the future;
(j)
"Material Adverse Effect" shall mean any adverse effect on the business,
condition (financial or otherwise) or results of operation of the applicable
entity;
(k)
"Material Contract" shall mean any Contract, other than automotive loans and
equipment and furniture leases entered into in the ordinary course of business,
the liabilities or commitments associated therewith exceed, in the case of
FREGAT, $50,000 individually or $100,000 in the aggregate;
(1)
"Person" shall mean any individual, corporation, partnership, association, trust
or other entity or organization, including a governmental or political
subdivision or any agency or institution thereof;
(m) “RSD
SEC Documents” shall mean all reports filed by RSD with the SEC under the
Exchange Act.
(n) "SEC"
shall mean the Securities and Exchange Commission;
(o)
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder; and
Page
18
(p)
“FREGAT Acquisition Subsidiary” shall mean a 100% owned subsidiary corporation
of RSD formed for the purpose of holding the FREGAT Interests.
(q)
"Taxes" shall mean all taxes (whether U.S. federal, state, local or other
non-U.S.) based upon or measured by income or gains from the sale
of property and any other tax whatsoever, including, without
limitation, gross receipts, profits, sales, levies, imposts, deductions,
charges, rates, duties, use, occupation, value added, ad valorem, transfer,
franchise, withholding, payroll and social security, employment, excise, stamp
duty or property taxes, together with any interest, penalties, charges or fees
imposed with respect thereto.
(BALANCE
OF PAGE LEFT INTENTIONALLY BLANK]
Page
19
IN
WITNESS WHEREOF, each of the parties have caused this Agreement to be signed by
their respective officers hereunto duly authorized, all as of the date first
written above.
ROYAL
STYLE DESIGN, INC.
|
By:/s/
Xxxxxxx Xxxxx
|
||
|
Name:
Xxxxxxx Xxxxx
|
||
|
Title:
CEO
|
FREGAT,
LTD.
|
By:/s/
Xxxxxx Vilchenkov
|
||
|
Name:
Xxxxxx Vilchenkov
|
||
|
Title:
|
FREGAT
OWNERS' COUNTERPART SIGNATURE PAGE [Signature page must be executed by each
FREGAT OWNER]
|
/s/
Xxxxxx Vilchenkov
|
||
|
Name:
Xxxxxx Vilchenkov
|
||
|
|
SCHEDULE
I
| Name of Owner |
No. of Interests of
FREGAT
to
be Exchanged
|
No.
of Shares of RSD
to be Received in Exchange
|
||
|
Xxxxxx
Vilchenkov
|
100%
|
203,698
|
||
