RESCISSION AGREEMENT
THIS
RESCISSION AND SETTLEMENT AGREEMENT (the
"Agreement"),
dated
and
effective as of November 9, 2006 (the "Effective Date"), by and among Xxxxxxx
XxXxxx ("Xxxxxxx"),
Xxxxx Xxxxx ("Xxxxx"), and Xxxxxx Xxxxx ("Xxxxxx" and, collectively with Xxxxxxx
and Xxxxx, the "Sellers"); Continental Home Loans, Inc. ("CHL"), a corporation
organized
and existing under the laws of the State of New York; and Shearson Financial
Network,
Inc. ("SFN" or the "Company"), a corporation organized and existing under the
laws of
the
State of Nevada. The Sellers, CHL and the Company are sometimes, individually
referred to herein as a "Party" and collectively referred to herein as the
"Parties".
RECITALS
On
or
about June 7, 2006, the Parties entered into a Stock Purchase Agreement (the
"Stock
Purchase Agreement"), and each of the respective Sellers entered into Employment
Agreements
with the Company (the "Shearson Employment Agreements").
Certain
variances concerning the strategic direction of CHL have arisen between CHL,
the
Company and Sellers, and the Parties have reached an agreement that it is in
their respective best interests to rescind the Stock Purchase Agreement and
the
Employment Agreements, each of which
shall be deemed void ab
initio.
NOW,
THEREFORE, in
consideration of the foregoing recitals and the representations, warranties,
covenants and agreements set forth herein, and for other good and valuable
consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree
as
follows:
1.
Rescission.
1.1 Certificate.
Simultaneously
with the execution of this Agreement, each of the Sellers
will execute a certificate that represents that he disclaims any interest in
the
SFN shares due
as
part of the Stock Purchase Agreement, and SFN shall execute a certificate that
it disclaims any
interest in CHL shares due as part of the Stock Purchase Agreement.
1.2 Non-disparagement.
From
the
date of this Agreement, the Parties shall not make any
public disparaging statements concerning the other company's officers,
directors, employees, attorneys,
agents, or contracting parties, or its business or operations. This
non-disparagement agreement
shall not in any way prevent the Parties from disclosing any information to
their attorneys
or in response to a lawful subpoena or court order requiring disclosure of
information.
1.3 Rescission.
Effective
upon the Closing, the Stock Purchase Agreement and the Employment
Agreements shall be deemed to be void ab
initio, and
neither party thereto shall have
any
right or obligation of whatsoever nature or kind there under or with respect
thereto.
1.4 Closing.
Subject
to the terms and conditions of this Agreement, the closing of the transactions
contemplated herein (the "Closing") shall take place on or about November 9,
2006 or
on
such other date as the Parties shall agree (the "Closing Date"). Such Closing
shall take place
through an exchange of originally executed documents using overnight courier
service orby
facsimile followed by an exchange of such originally executed documents. At
the
Closing, the
Sellers, SFN and CHL shall deliver to each other executed copies of this
Agreement and the certificates
described in Sections 1.1 and 6 of
this
Agreement. Additionally, each of the Parties shall deliver such other documents
as may be required pursuant to the terms hereof.
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2.
Representations
and Warranties of SFN. SFN
hereby represents and warrants to CHL and
each
of the Sellers as follows:
2.1 Authority.
SFN
has
the full and unrestricted right, power, capacity and authority to enter into,
execute and deliver this Agreement;
2.2 Compliance.
SFN's
compliance with the respective obligations hereunder will not violate, conflict
with or constitute a breach of any agreement, arrangement, commitment or
understanding
to which SFN is a party.
2.3 No
Consent. Except
for a Form 8-K to be filed by SFN with the Securities and Exchange
Commission ("SEC") promptly after the Closing, no consent, approval or
authorization
of, or designation, declaration or filing with, any governmental authority
or
agency is
required on the part of SFN in connection with the valid execution and delivery
of this Agreement. In addition to disclosing the termination and rescission
of
the Stock Purchase Agreement
and the Employment Agreements, SFN agrees that SFN shall correct in its Form
8-K
to
be
filed with the SEC any errors that were included in prior SEC filings regarding
the completion
of the acquisition of CHL by SFN.
2.4 Disclosure.
No
representations or warranties by the SFN in this Agreement and no
statement contained in any document (including, without limitation, financial
statements, filings
with the Securities and Exchange Commission, or any certificate, or other
writing furnished
or to be furnished by SFN to CHL pursuant to the provisions hereof or in
connection with
the
transactions contemplated hereby and by the Stock Purchase Agreement) contained,
contain
or will contain any untrue statement of material fact or omitted, omit or will
omit to state any
material fact necessary in order to make the statements herein or therein,
in
light of the circumstances
under which they were made, not misleading.
2.5 Absence
of Agreements. The
officers and directors of SFN have not caused, in their
capacity as officers or directors of SFN, the execution of any agreements
binding CHL or the
Sellers to obligations which inure to the detriment of CHL or the Sellers prior
to or subsequent
to the date of this Agreement.
2.6 No
Violation. Neither
the execution and delivery of this Agreement nor its performance
and the consummation of the transactions contemplated hereby will (a) violate
any provision
of the Articles of Incorporation or Bylaws of SFN, (b) violate, or be in
conflict with, or constitute
a default (or an event which, with or without due notice or lapse of time,
or
both, would constitute a default) under, or result in the modification or
termination of, or cause or permit
the acceleration of the maturity of any debt, obligation, contract, commitment
or other agreement
to which the SFN is a party or by which it or its property may be bound, (c)
result in the
creation or imposition of any mortgage, pledge, lien, security interest,
encumbrance, restriction,
charge or limitation of any kind, upon any property or assets of the SFN, or
(d)
violate any statute or law or any judgment, decree, order, regulation or rule
of
any court orgovernmental
authority.
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2.7 Cease
Representation. Subsequent
to the date of this Agreement, the SFN officers and
directors shall not represent or hold themselves out as representing CHL's
management, CHL's
Board of Directors or as currently connected to CHL in any way or manner that
could convey
that the rescission contemplated by this Agreement has not
occurred.
3.
Representations
and Warranties of CHL. CHL
represents and warrants to the Company
that:
3.1 Authority.
CHL
has
the full and unrestricted right, power, capacity and authority to
enter
into, execute and deliver this Agreement;
3.2 Compliance.
CHL's
compliance with the respective obligations hereunder will not violate,
conflict with or constitute a breach of any agreement, arrangement, commitment
or understanding
to which CHL is a party.
3.3 No
Consent. No
consent, approval or authorization of, or designation, declaration or
filing
with, any governmental authority or agency is required on the part of CHL in
connection
with the valid execution and delivery of this Agreement, or the delivery of
the
certificate
required by Sections 1.1 and 6 hereof.
3.4 Disclosure.
No
representations or warranties by CHL in this Agreement and no statement
contained in any document (including, without limitation, financial statements
or other writing
furnished or to be furnished by CHL to SFN pursuant to the provisions hereof
or
in connection
with the transactions contemplated hereby) contained, contain or will contain
any untrue
statement of material fact or omitted, omit or will omit to state any material
fact necessary in
order
to make the statements herein or therein, in light of the circumstances under
which they were
made, not misleading.
3.5 Absence
of Agreements. CHL
has
not caused to be executed any agreements binding
SFN to obligations which inure to the detriment of SFN prior to or subsequent
to
the date
of
this agreement.
3.6 No
Violation. Neither
the execution and delivery of this Agreement nor its performance
and the consummation of the transactions contemplated hereby will (a) violate
any provision
of the Articles of Incorporation or Bylaws of CHL, (b) violate, or be in
conflict with, or
constitute a default (or an event which, with or without due notice or lapse
of
time, or both, would
constitute a default) under, or result in the modification or termination of,
or
cause or permit
the acceleration of the maturity of any debt, obligation, contract, commitment
or other agreement
to which CHL is a party or by which it or its property may be bound, (c) result
in the creation or imposition of any mortgage, pledge, lien, security interest,
encumbrance, restriction, charge
or
limitation of any kind, upon any property or assets of CHL, or (d) violate
any
statute or law
or
any judgment, decree, order, regulation or rule of any court or governmental
authority.
3.7 Cease
Representation. Subsequent
to the date of this agreement, CHL shall not represent or hold itself out as
representing SFN or as currently connected to SFN in any way or manner
that could convey that the rescission contemplated by this Agreement has not
occurred.
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4.
Mutual
Releases.
4.1 No
Claims on Certain Assets. All
Parties mutually agree and acknowledge that any
assets, production and personnel previously transferred by SFN or any other
entity to CHL, or
managed by CHL for SFN, including, but not limited to, SFN's assets located
in
Hauppauge, Brentwood,
and on the 4th
floor of
its Garden City offices (collectively, the "Former SFN Assets") shall remain
the
sole and separate property of CHL; that SFN shall make no claim on any
of
such Former SFN Assets; and that no Party has any further financial or other
obligation to the
other
Parties whatsoever in connection therewith.
4.2 Release
by the SFN. For
valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, SFN hereby fully and forever releases and discharges CHL
and its
directors, partners, members, managers, officers, shareholders, employees,
agents, heirs, attorneys,
executors, administrators, predecessors, successors and assigns (each, a "CHL
Party" and,
collectively, the "CHL Parties"), of and from any and all claims, demands,
agreements, contracts,
covenants, suits, actions, causes of action, obligations, controversies, debts,
costs, expenses, accounts, damages, judgments, losses and liabilities, of
whatever kind or nature, in law,
equity or otherwise, whether known or unknown, concealed or hidden
(collectively, "Claims"),
which SFN has had, may have had or now has, to and including the date of this
Agreement,
against any of the CHL Parties, arising out of or in connection with the Stock
Purchase
Agreement, the Employment Agreements, and/or the oral arrangement under which
CHL
managed the Former SFN Assets, in return for a management fee. SFN further
represents, warrants and agrees that, effective as of October 1, 0000, XXX
had
no further responsibility for managing
the Former SFN Assets.
4.3 Release
by
CHL. For
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CHL hereby fully and forever releases and discharges SFN
and its directors, partners, members, managers, officers, employees, agents,
heirs, attorneys, executors, administrators,
predecessors, successors and assigns (each, a "SFN Party") of and from any
and
all
Claims which any Party has had, may have had or now has, to and including the
date of this Agreement,
against any Parties, including without limitation any Claims arising out of
or
in connection
with the Stock Purchase Agreement and the Employment Agreements.
4.4 Acknowledgements.
All
Parties mutually agree and acknowledge that neither party has
any
further obligation or liability whatsoever arising out of or in connection
with
the Stock Purchase
Agreement, the Employment Agreements, and/or the oral agreement under which
CHL
managed
the Former SFN Assets in return for a management fee. All Parties intend for
their respective
releases to be effective as a bar to all actions, causes of action, suits,
claims or demands of
every
kind, nature or character whatsoever, known or unknown, suspected or
unsuspected, fixed
or
contingent, except to the extent arising out of, in connection with or resulting
from any breach
of
this Agreement. In connection with such waiver and relinquishment, the Parties
hereby acknowledge
that he, she or it is aware that he, his, she, her or it or its attorneys may
hereafter discover
claims or facts in addition to, or different from, those which they now know
or
believe to exist
with respect to the subject matter of this release, but that the Parties
nonetheless intend hereby
to
fully, finally and forever release all disputes and differences, known or
unknown, suspected
or unsuspected, which do now exist as to the released matters.
5.
Insurance.
CHL
hereby represents that during the period from June 7, 2006 and through the
Closing
Date (the "Coverage Period") CHL maintained one or more E&O, general
liability, workers'
compensation, and health insurance policies in full force and
effect.
4
6.
Closing
deliverables. Each
of
the Sellers shall deliver a certificate representing that it disclaims
any interest in SFN shares to be delivered under the Stock Purchase Agreement.
SFN shall
deliver a certificate representing that it disclaims any interest in CHL shares
to be delivered under the Stock Purchase Agreement.
7.
Indemnification.
7.1 By
CHL. CHL
shall
indemnify, defend and hold harmless SFN, and its directors, officers,
employees, agents, heirs, attorneys, executors, administrators, successors
and
assigns (each,
an
"Indemnified Party"), from and against any and all Damages (as defined in
Section 7.4 hereof)
incurred or suffered by any Indemnified Party arising out of, in connection
with
or resulting
from any breach of any representation, warranty, covenant or obligation
hereunder by CHL.
7.2 By
SFN.
SFN
shall indemnify, defend and hold harmless CHL and its directors, officers,
employees, agents, attorneys, successors and assigns (each, an "Indemnified
Party"), from
and
against any and all Damages incurred or suffered by any Indemnified Party
arising out of,
in
connection with or resulting from any breach of any representation, warranty,
covenant or obligation
hereunder by SFN.
7.3 Indemnification
Procedure. If
there
is asserted any claim or allegation that in the judgment
of an Indemnified Party may give rise to any Damages, or if an Indemnified
Party
determines
the existence of a potential claim or allegation whether or not the same shall
have been
asserted, such Indemnified Party shall notify the Indemnifying Party within
fifteen (15) business
days of receipt or determination of such actual or potential claim or
allegation; provided,
however, that failure of the Indemnified Party to provide such timely notice
to
the Indemnifying
Party shall not relieve the Indemnifying Party of its obligations hereunder,
except to
the
extent the Indemnifying Party is actually prejudiced by such
failure.
7.4 Definition
of Damages. The
term
"Damages" as used in this Section 7 means all demands,
claims, actions or causes of action, assessments, losses, damages, costs,
expenses, liabilities,
judgments, awards, fines, sanctions, penalties, charges, and amounts agreed
by
the Indemnifying
Party to be paid in settlement, including, without limitation, costs, fees
and
expenses
of investigating and/or defending any claim or allegation, attorneys, experts,
accountants,
appraisers, consultants, witnesses, investigators and any other agents. The
Indemnifying
Party shall have the right to assume the sole defense of any claim or allegation
as to
which
the Indemnified Party is to be indemnified hereunder.
8.
Miscellaneous.
Notices.
All
notices required or permitted hereunder, and under any instrument delivered
pursuant hereto, shall be given in writing, and shall be deemed to have been
given and received
upon the earlier to occur of: (a) the actual receipt of any such notice by
the
intended recipient;
and (b) the third business day following deposit of any such notice enclosed
in
a wrapper
with postage prepaid, properly addressed to the intended recipient at its
address set forth below, as a certified item, return receipt requested, in
an
official depository of and under the care and
custody of the United States Postal Service. The parties' address for notice
shall be as follows:
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If
to CHL:
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000
Xxxxxxxxxxx Xxxx
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Xxxxx
000
|
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Xxxxxxxx,
XX 00000
|
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Attn:
Xxxxxxx XxXxxx
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If
to SFN:
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0000
Xx. Xxxx Xxxxxxx, Xxxxx 000
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Xxxxxxxxx,
Xxxxxx 00000
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Attn:
Xxxxxxx Xxxxxx
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8.1 Successors
and Assigns. The
terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties.
8.2 Governing
Law. This
Agreement shall be governed by and construed under the laws
of
the State of Nevada without regard to its rules regarding choice of
law.
8.3 Severability.
If
one or
more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement
and
the
balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be
enforced in accordance with its terms.
8.4 Survival.
Except
for the provision in Section 6 hereof,
all of the provisions of this Agreement
shall survive the Closing.
8.5 Entire
Agreement. This
Agreement reflects the entire agreement among the parties with
respect to the matters set forth herein and supersedes any prior agreements,
commitments, discussions
and understandings, oral or written, with respect thereto.
8.6 Attorneys'
Fees.
In the
event of any action arising out of this Agreement, the prevailing
party shall be entitled to reimbursement for its costs and expenses, including
reasonable
attorneys' fees, in connection therewith.
8.7 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and
the same instrument.
8.8 Amendment.
This
Agreement may not be amended orally and may only be amended
by a writing signed by each of the parties hereto.
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IN
WITNESS WHEREOF, the parties have executed or caused their duly authorized
representatives
to execute this Rescission and Settlement Agreement as of the date first written
above.
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SHEARSON
FINANCIAL NETWORK, INC
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By:
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/s/
Xxxxxxx X. Xxxxxx
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Title:
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CEO
and President
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CONTINENTAL
HOME LOANS, INC.
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By:
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/s/
Xxxxxx Xxxxx
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Title:
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Seller
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By:
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/s/
Xxxxx Xxxxx
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Title:
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Seller
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By:
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/s/
Xxxxxxx XxXxxx
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Title:
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President
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