MUTUAL RESCISSION AGREEMENT AND GENERAL RELEASE
Exhibit 10.1
This Mutual Rescission Agreement and General Release (“Rescission Agreement”) is entered into
as of November 29, 2010 (“Effective Date”) by and between WellTek Incorporated, a Nevada
corporation (“WellTek”), Xxxxx Xxxxxx (“Xxxxxx”), and WellCity, Inc., a Tennessee corporation
(“WellCity”). The parties to this Rescission Agreement are sometimes individually referred to
herein as a “Party” or collectively, as the “Parties.”
RECITALS
| A. | On May 1, 2010, the Parties effected a Stock Purchase Agreement (the “SPA”)
whereby WellTek purchased 51% of outstanding common stock of WellCity (the “WellCity
Shares”) from Xxxxxx by WellTek exchanging 14,500.000 WellTek common shares (the
“WellTek Shares”) for the WellCity Shares (the “Transaction”); |
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| B. | At the time of the closing of the Transaction, WellCity was controlled by
Xxxxxx; |
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| C. | The Parties desire to rescind the Transaction and return the ownership of
WellCity to the state it was in immediately prior to the Transaction as if the
Transaction never closed (the “Rescission”); |
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| D. | The Parties desire to settle and resolve all potential claims, legal actions,
judgments, disputes, claims, causes of action, and appeals against each other, known or
unknown, by entering into this Rescission Agreement; and |
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| E. | The Parties desire that this Rescission Agreement lawfully: (i) rescinds the
various business relationships between the Parties created by the SPA; (ii) rescinds
all agreements presently linking the Parties together as of the Effective Date; (iii)
provide for an orderly and amicable separation of the Parties; and (iv) compromise and
settle all disputes, if any, between the Parties. |
RESCISSION AGREEMENT
NOW THEREFORE, in consideration of the foregoing recitals and the mutual covenants and
representations contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Recitals. The foregoing recitals are true and correct in all material respects and are
hereby incorporated herein as a material part of this Agreement.
2. Rescission of Transaction. The Parties hereby rescind all agreements entered into
in connection with the Transaction and the SPA. This rescission and termination includes, but is
not limited to, the following agreements and related documents (collectively the “Transaction
Documents”):
2.1 The SPA;
2.2 That certain Employment Agreement (the “Employment Agreement”) by and between WellCity and
Xxxxxx, dated May 1, 2010; and
3. Effectuation of the Rescission. The Rescission is effectuated through the
following:
3.1 Exchange of Stock. All WellTek Shares owned by Xxxxxx which are outstanding
immediately prior to the Effective Date shall at the Effective Date, by virtue of this Rescission
Agreement, and without any action on the part of Xxxxxx, be exchanged into only the right to
receive the WellCity Shares delivered to WellTek pursuant to the SPA. All WellCity Shares owned by
WellTek which are outstanding immediately prior to the Effective Date shall at the Effective Date,
by virtue of this Rescission Agreement, and without any action on the part of WellTek, be exchanged
into only the right to receive the WellTek Shares delivered to Xxxxxx pursuant to the SPA. The
WellCity Shares and the WellTek Shares are hereinafter collectively referred to as the
“Shares.” As of the Effective Date, regardless of how long it takes to exchange the Shares,
Xxxxxx shall have no ownership interest whatsoever in the WellTek Shares and WellTek shall have no
ownership interest whatsoever in the WellCity Shares other than the rights provided herein.
3.2 Options and Warrants. All options, warrants and other securities (the
“Derivatives”) owned by Xxxxxx or his affiliates that might otherwise be converted for a capital or
other interest in WellTek which are outstanding at the Effective Date shall, by virtue of this
Rescission Agreement and without any further action on the part of Xxxxxx or the holder of any such
Derivative is as of the Effective Date terminated and shall become null and void, ab initio.
3.3 Delivery of Shares.
(a) On or as soon as practicable after the Effective Date, Xxxxxx xxxx surrender for
cancellation the certificate(s) together with an executed stock power representing the WellTek
Shares, against delivery of certificates representing the WellCity Shares. Until surrendered and
exchanged as herein provided, each outstanding certificate owned by Xxxxxx or its affiliates which,
prior to the Effective Date, represented a WellTek ownership certificate shall be deemed for all
corporate purposes to evidence ownership of the WellCity Shares.
(b) On or as soon as practicable after the Effective Date, WellTek will surrender for
cancellation the certificate(s) together with an executed stock power representing the WellCity
Shares, against delivery of certificates representing the WellTek Shares. Until surrendered and
exchanged as herein provided, each outstanding certificate owned by WellTek or its affiliates
which, prior to the Effective Date, represented a WellCity ownership certificate shall be deemed
for all corporate purposes to evidence ownership of the WellTek Shares.
3.4 Closing. The closing of this transaction (the “Closing”) shall take place
at a place and time mutually determined by the parties hereto, subject to compliance or waiver of
the terms, conditions and contingencies contained in this Agreement and all required documents have
been delivered. Each of the parties will take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Rescission as promptly. Upon Closing, Xxxxxx
xxxx issue and deliver in the manner provided in 3.3(a) above the certificates evidencing the
WellTek Shares and WellTek will issue and deliver in the manner provided in 3.3(b) above the
certificates evidencing the WellCity Shares.
3.5 Resignations. As of the Closing, Xxxxx Xxxxxxxx and Xxxx Xxxxxxx will resign from
all officer and director positions they hold in WellCity.
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4. Mutual Releases.
4.1 WellTek General Release. WellCity and Xxxxxx (the “WellCity Parties”) do hereby
globally, immediately and forever release, remise, acquit, satisfy and discharge WellTek, Xxxxxxxx,
and Szporka, and any and all of their affiliates, subsidiaries, officers, directors, attorneys,
agents, employees, personal representatives, successors, or assigns, as applicable (the
“WellTek Parties”), from any and all manner of claims, benefits, rights, sums of money, causes of
action, suits, debts, obligations, losses, expenses, liabilities, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, executions, claims and demands whatsoever, in law or in equity, of
whatever nature or kind, known or unknown, which the WellCity Parties ever had, now have, or may
have, against the WellTek Parties for, upon or by reason of any matter, cause or thing whatsoever,
including, but not limited to, any rights with respect to the Transaction Documents, from the
beginning of the world to the day of execution of this Agreement, with the exception of the rights
and obligations of the Parties under this Agreement.
4.2 WellCity Release. The WellTek Parties do hereby globally, immediately and forever
release, remise, acquit, satisfy and discharge the WellCity Parties, from any and all manner of
claims, benefits, rights, sums of money, causes of action, suits, debts, obligations, losses,
expenses, liabilities, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims
and demands whatsoever, in law or in equity, of whatever nature or kind, known or unknown, which
the WellTek Parties ever had, now have, or may have, against the WellCity Parties for, upon or by
reason of any matter, cause or thing whatsoever, including, but not limited to, any rights with
respect to the Transaction Documents, from the beginning of the world to the day of execution of
this Agreement, with the exception of the rights and obligations of the Parties under this
Agreement.
5. Representations and Warranties by the WellTek Parties. The WellTek Parties
represent, warrant and covenant to the WellCity Parties as follows:
5.1 The WellTek, Parties have the full power and authority to execute, deliver and perform
this Rescission Agreement and the documents related thereto;
5.2 This Rescission Agreement and the documents to be executed and delivered by the WellTek
Parties constitute the legal, valid and binding obligations of said parties, enforceable against
said parties, subject to bankruptcy, insolvency, moratorium, reorganization and similar laws of
general applicability affecting the rights and remedies of creditors and to general principles of
equity, regardless of whether enforcement is sought in proceedings in equity or at law;
5.3 The execution and delivery by the WellTek Parties of this Rescission Agreement and the
documents, and the fulfillment of and compliance with this respective terms by said parties does
not and will not (i) conflict with or result in a breach of the terms, conditions, or provisions
of, (ii) constitute a default or event of default under, (iii) give any third party the right to
accelerate any obligation under, (iv) result in a violation of, or (v) require any authorization,
consent, approval exemption or other action by or notice to any court or governmental authority
pursuant to, the articles of incorporation or any regulation, order or contract to which the said
parties are subject;
5.4 The WellTek Parties have not employed any broker, finder, advisor, consultant or other
intermediary in connection with this Rescission Agreement or documents, or any other transaction
contemplated hereby who is or might be entitled to any fee, commission or other compensation from
the WellCity Parties upon or as a result of the execution of this Rescission Agreement or
documents, or the consummation of the transactions contemplated hereby; and
5.5 The WellTek Parties are not aware of any pending or threatened claims which would affect
said parties ability to perform under this Rescission Agreement.
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5.6 The WellCity Shares to be delivered to the WellCity Parties shall be, when delivered
pursuant to this Agreement, duly authorized, validly issued, fully paid and nonassessable shares of
voting common stock of WellCity free and clear of all liens, restrictions, charges, encumbrances,
and other security interests of any kind or nature whatsoever.
6. Representations and Warranties by the WellCity Parties. The WellCity Parties
represent and warrant to WellTek as follows:
6.1 The WellCity Parties have the full power and authority to execute, deliver and perform
this Rescission Agreement and the documents related;
6.2 This Rescission Agreement and the documents to be executed and delivered by the WellCity
Parties have been duly approved by all requisite action of said parties and they have full power
and authority to execute, deliver and perform this Rescission Agreement, together with all of the
documents to be executed and delivered by them;
6.3 This Rescission Agreement and the documents to be executed and delivered by the WellCity
Parties constitutes the legal, valid and binding obligations of said parties, enforceable against
said parties, subject to bankruptcy, insolvency, moratorium, reorganization and similar laws of
general applicability affecting the rights and remedies of creditors and to general principles of
equity, regardless of whether enforcement is sought in proceedings in equity or at law;
6.4 The execution and delivery by the WellCity Parties of this Rescission Agreement and the
documents and the fulfillment of and compliance with the respective terms by said parties does not
and will not (i) conflict with or result in a breach of the terms, conditions, or provisions of,
(ii) constitute a default or event of default under, (iii) give any third party the right to
accelerate any obligation under, (iv) result in a violation of, or (v) require any authorization,
consent, approval exemption or other action by or notice to any court or governmental authority
pursuant to, any regulation, order or contract to which said parties are subject; and
6.5 The WellCity Parties have not employed any broker, finder, advisor, consultant or other
intermediary in connection with this Rescission Agreement, the documents, or the transaction
contemplated hereby who is or might be entitled to any fee, commission or other compensation from
the WellTek Parties, upon or as a result of the execution of this Rescission Agreement, the
documents, or the consummation of the transactions contemplated hereby.
6.6 The WellTek Shares to be delivered to the WellTek Parties shall be, when delivered
pursuant to this Agreement, duly authorized, validly issued, fully paid and nonassessable shares of
voting common stock of WellTek free and clear of all liens, restrictions, charges, encumbrances,
and other security interests of any kind or nature whatsoever.
7. No Admission of Liability; Covenant Not to Xxx.
7.1 The releases set forth in Section 4 above (the “General Releases”) are accepted by the
Parties hereto as compromises of disputed claims and comprise part of the transactions contemplated
herein, and shall not be construed as an admission of liability on the part of any of the Parties
thereto.
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7.2 Each of the Parties hereto agrees that none of them, nor any of their respective agents,
employees, personal or legal representatives, successors or permitted assigns will bring, commence,
institute, maintain or prosecute any action at law or proceeding in equity, or any legal
proceeding whatsoever, or any claim for relief or damages, against any of the other Parties
hereto which is based in whole or in part on any of the matters or claims released under the
General Releases. The Parties hereto agree that the releases contained in the General Releases may
be pleaded as a full and complete defense, and may be used as a basis for an injunction against,
any action or suit or other proceeding that may be commenced, instituted, prosecuted or attempted
by any of the other Parties hereto or any of their personal or legal representatives, employees,
agents, officers, directors, successors or permitted assigns, in breach of any of the provisions
set forth in this Rescission Agreement. The Parties hereto further agree that none of them will, at
any time, take any action of any nature whatsoever to (i) obtain a determination that this
Rescission Agreement, or the transactions contemplated hereby, are unlawful, illegal or against
public policy, (ii) challenge the validity or enforceability of the Rescission Agreement or the
transactions contemplated hereby, (iii) or that any of the arrangements set forth in the Rescission
Agreement, or any of the transactions contemplated hereby, are unlawful in any other manner
whatsoever.
8. Mutual Representation and Warranties by the Parties.
8.1 All of the representations, warranties, covenants, and agreements contained in this
Rescission Agreement are material and have been relied upon by each of the Parties hereto and shall
survive the closing of the Rescission for their applicable statute of limitations. The
representations and warranties contained herein shall not be affected by any investigation,
verification or examination by any Party hereto or by anyone on behalf of such Party;
8.2 Each Party hereto acknowledges that he or it has had a full and fair opportunity to review
this Rescission Agreement, understands all of its terms and provisions, and has consulted with an
attorney of his or its choice before executing this Rescission Agreement. Each Party also
acknowledges that no promises or inducements have been offered or given to him or it to persuade
him or it to execute this Rescission Agreement, other than that consideration herein recited; that
such Party is not relying on any representations or statements by any other Party in connection
with this Rescission Agreement, other than representations and statements contained herein or
instruments executed or delivered pursuant to this Rescission Agreement; and that this Rescission
Agreement, together with instruments executed or delivered pursuant to this Rescission Agreement,
is intended as a full accord and satisfaction of bona fide dispute concerning the relationship
between the Parties; and
8.3 Each Party and his or its attorneys have made various statements and representations to
the other Parties and his or its attorneys during negotiations leading to this Rescission
Agreement. Nevertheless, each Party specifically does not rely upon any statement, representation,
legal opinion, or promise of any other Party or his or its counsel in executing this Rescission
Agreement or in making the settlement provided for herein, except as expressly stated in this
Rescission Agreement. The representations and releases contained in this Rescission Agreement will
survive the consummation of the transactions contemplated by this Rescission Agreement.
9. Confidentiality. No Party will disclose or use the terms of this Rescission
Agreement or the documents, other than the fact of settlement, to anyone other than such Party’s
attorneys, members, managers, shareholders, lenders, or accountants, in connection with
arbitration/ litigation to enforce this Rescission Agreement, or as otherwise required by law or as
deemed appropriate by the WellTek’s legal counsel in connection with securities and other laws.
Further, the Parties agree that if any breach of this Section occurs, irreparable harm not fully
compensable by damages will occur. For that reason, in the event of any breach of this Section, the
nonbreaching Party will be entitled to injunctive relief; as well as damages. Notwithstanding the
arbitration provision of this Rescission Agreement, either Party may seek injunctive relief in any
court having jurisdiction to enforce this Section.
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10. Nondisparagement. From and after the date of this Rescission Agreement, each Party
will refrain from making any disparaging statements, communications or comments about another Party
to this Rescission Agreement, and from in any way interfering with their existing or prospective
business relationships.
11. Press Releases and Public Announcements. No Party shall issue any press release or
make any public announcement relating to the subject matter of this Agreement without obtaining the
prior approval of the other Parties, unless otherwise required by law.
12. General Provisions.
12.1 Notices. All notices, requests, demands, claims, and other communications under
this Rescission Agreement must be in writing. Any notice, request, demand, claim, or other
communication under this Rescission Agreement will be deemed duly given only if it is sent by
registered, certified, or express mail, return receipt requested, postage prepaid, and must be
addressed to the intended recipient as follows:
If to the WellTek Parties at:
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0000 Xxxxx Xxxxxx Xxxxxx Xxxxx 000 Xxxxxxx, Xxxxxxx 00000 Attention: Xxxx Xxxxxxx |
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If to the WellCity Parties, at:
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0000 Xxxxxxxx Xxxxxx Xxxxxxxxx, XX 00000 |
Notices will be deemed given and received upon confirmation of receipt if sent by facsimile, the
one day after pick-up if sent by reputable overnight courier, next day delivery service, or three
(3) days after mailing if sent by certified or registered mail, or when delivered by express mail.
Any Party may change the address to which notices, requests, demands, claims and other
communications under this Rescission Agreement are to be delivered by giving the other Parties
notice in the manner set forth above;
12.2 Final Agreement. This Rescission Agreement, together with the Reorganization
Agreement and the related documents, constitute a single, integrated, written contract expressing
the entire agreement of the Parties relative to this matter. No covenants, agreements,
representations or warranties of any kind whatsoever have been made by any Party, except as
specifically set forth herein and therein. All prior discussions and negotiations have been and are
merged and integrated into and are superseded by, said documents;
12.3 Governing Law; Venue; Jurisdiction. This Rescission Agreement will be governed
and construed in accordance with the laws of the State of Florida, without giving effect to choice
of law principles. Any proceeding arising out of or relating to this Rescission Agreement must be
brought in the United States or State of Florida courts sitting in Broward County, Florida, and
each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any
such proceeding, waives any objection it may now or hereafter have to venue or to convenience of
forum, agrees that all claims in respect of the proceeding shall be heard and determined only in
any such court and agrees not to bring any proceeding arising out of or relating to this Rescission
Agreement in any other court. The Parties agree that any of them may file a copy of this paragraph
with any court as written evidence of the knowing, voluntary and bargained agreement between the
Parties irrevocably to waive any objections to venue or to convenience of forum. Process in any
proceeding referred to in the first sentence of this section may be served on any Party anywhere in
the world.
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12.4 Amendments in Writing. Any amendments to this Rescission Agreement must be in
writing and signed by or on behalf of all Parties to the Rescission Agreement;
12.5 Enforceability; Waiver. Should any provision of this Rescission Agreement be
found legally unconscionable, objectionable, or otherwise unenforceable, all other provisions of
this Rescission Agreement will remain in full force and effect. No delay or omission on the part of
any Party hereto in exercising any right hereunder shall operate as a waiver of such right or any
other right under this Rescission Agreement;
12.6 No Assignment of Any Rights or Claims. The Parties to this Rescission Agreement
warrant that they have not assigned the claims released herein, that they will not assign the
claims, and that they have the full right to execute this Rescission Agreement;
12.7 Survival. The warranties, representations, covenants and agreements contained in
this Rescission Agreement will survive the closing of the transactions described herein
indefinitely;
12.8 Section Headings. The section headings appearing in this Rescission Agreement
have been inserted for the purpose of convenience and ready reference. They do not purport to, and
should not be deemed to define, limit, or extend the scope or intent of any section;
12.9 Cooperation in Drafting. Each Party has cooperated in the drafting and
preparation of this Rescission Agreement. Hence, in any litigation concerning this Rescission
Agreement, the same will not be construed against any Party;
12.10 Expenses. All expenses in connection with the preparation of this Rescission
Agreement and documents, including, without limitation, counsel fees, accounting fees and
disbursements, shall be borne by the respective Parties incurring such expense, whether or not such
transactions are consummated;
12.11 Execution in Counterparts and by Facsimile. This Rescission Agreement,
documents, and either ancillary documents may be signed in counterparts and facsimile copies, each
of which may be delivered by telecopy or other electronic means as agreed to by the Parties, but
will not be effective until all Parties have signed at least one counterpart;
12.12 Time is of the Essence. Time is of the essence with regard to all terms and
provisions set forth in this Agreement;
12.13 No Third Party Beneficiaries. This Rescission Agreement shall not confer any
rights or remedies under or by reason of this Rescission Agreement to or for the benefit of any
person other than the Parties to this Rescission Agreement and their respective successors and
assigns (including the heirs, beneficiaries or legal representatives of the Parties), nor shall
this Rescission Agreement relieve or discharge the obligation or liability of any third persons to
any Party. This Rescission Agreement shall not give any third persons any right of subrogation or
action against any Party to this Rescission Agreement; and
12.14 Execution by Facsimile. This Rescission Agreement may be executed by facsimile,
and, upon such execution, shall have the same force and effect as an original;
[SIGNATURES APPEAR ON NEXT PAGE]
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This Rescission Agreement is hereby made effective as of the Effective Date.
| WELLTEK INCORPORATED, a Nevada corporation |
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| By: | /s/ Xxxx Xxxxxxx | |||
| Name: | Xxxx Xxxxxxx | |||
| Title: | CFO | |||
| WELLCITY, INC. a Tennessee corporation |
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| By: | /s/ Xxxxxx Xxxxxxx | |||
| Name: | Xxxxxx Xxxxxxx | |||
| Title: | COO | |||
| /s/ Xxxx Xxxxxxx | ||||
| Xxxx Xxxxxxx | ||||
| /s/ Xxxxx Xxxxxxxx | ||||
| Xxxxx Xxxxxxxx | ||||
| /s/ Xxxxx Xxxxxx | ||||
| Xxxxx Xxxxxx | ||||
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