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RESCISSION AGREEMENT
THIS RESCISSION AND SETTLEMENT AGREEMENT
(the "Agreement"),
dated and effective as of November 9, 2006 (the
"Effective Date"), by and among Michael McHugh ("Michael"), Bruce
Silva ("Bruce"), and Thomas Monte ("Thomas" and, collectively with
Michael and Bruce, 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 &nb
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