AGREEMENT FOR CORPORATE RESTRUCTURING
FOR
CORPORATE
RESTRUCTURING
THIS
AGREEMENT, made this 29th day of October, 2007 by and among CALM SEAS CAPITAL
LLC, a Nevada limited liability company with its principal office located at
0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 (hereinafter “Calm Seas”)
and the undersigned shareholders of CONTINAN, INC., a Nevada corporation with
its principal office located at 0000 Xxxxxxxxx Xxx, Xxxxx 000, Xxxxxx xxx Xxx,
Xxxxxxxxxx 00000 (hereinafter collectively “Shareholders” and individually by
their names), VOCALENVISION, INC., a California corporation with its principal
office located at 0000 Xxxxxxxxx Xxx, Xxxxx 000, Xxxxxx xxx Xxx, Xxxxxxxxxx
00000 (hereinafter “Vocalenvision”) and CONTINAN, INC., a Nevada corporation
with its principal office located at 0000 Xxxxxxxxx Xxx, Xxxxx 000, Xxxxxx
xxx
Xxx, Xxxxxxxxxx 00000 (hereinafter “CONTINAN”),
WITNESSETH
THAT:
WHEREAS,
CONTINAN [formerly “Texxon, Inc.”] acquired Vocalenvision, Inc.
(“Vocalenvision”) [formerly “TelePlus, Inc.”] in May 2006 and has operated
through such subsidiary since, CONTINAN merely being a holding company with
no
operations of its own;
WHEREAS,
Vocalenvision has operated at a loss and currently inter
alia
has (i)
debts and liabilities of over $1,500,000, (ii) negative bank account balances,
(iii) liabilities to attorneys and accountants which inhibit completion of
the
Form 10-QSB to be filed with the SEC by November 14th,
and
(iv) unpaid payroll tax liabilities to the IRS of over $60,000;
WHEREAS,
CONTINAN has been unable to attract investment funding, except from certain
specific sources, such as First Bridge Capital, all of which sources decline
to
invest further funds;
WHEREAS,
the managements of Vocalenvision and CONTINAN, as well as the Shareholders,
desire to avoid a financial deadlock situation for the company and to continue
its ongoing business activities and to avoid the risk of having to consider
the
filing of a petition for reorganization ( chapter 11) or a bankruptcy (
chapter 7 ) and are seeking the best constructive solution to the funding
problem";
WHEREAS,
CALM SEAS has proposed a restructuring of CONTINAN Vocalenvision which will
(i)
remove the burden and costs of SEC filings from the Vocalenvision operations,
(ii) permit Vocalenvision to remain as a public company, but to be non-reporting
so as to have access to alternative funding, such as Rule 504;
NOW,
THEREFORE, intending to be legally bound, and in consideration of the mutual
promises contained herein, the parties have agreed, and do hereby agree, as
follows:
1.
(a)
CALM SEAS shall, at its sole cost and expense, acquire a so-called “Pink Sheet”
shell company to be the purchaser of Vocalenvision from Continan.
(b)
Vocalenvision shall assume and agree to pay those specific debts, liabilities
and accounts payable appearing on the books of CONTINAN which are, however,
debts, liabilities and accounts payable of Vocalenvision or related to its
operations. Such items shall include unpaid salaries, wages, and consulting
fees, as well as other general and overhead expenses. The liabilities relating
to SEC compliance and filings, corporate bookkeeping, accounting and CONTINAN’s
auditors, and the IRS payroll tax liabilities shall be retained by CONTINAN.
It
is the specific assumption of CALM SEAS that there will be no other debts,
liabilities or accounts payable remaining on the books of CONTINAN; accordingly,
CONTINAN shall provide CALM SEAS, within three (3) business days of the
execution of this Agreement, time being of the essence, with a list of all
other
debts, liabilities and accounts payable which are believed to be those of
CONTINAN rather than Vocalenvision. In the event of a disagreement, the parties
will attempt to resolve the disagreement but if it is not resolved CALM SEAS
may
terminate this Agreement without liability or claim.
(c)
Xxxxxx Xxxxxxx, TeleNova, Inc., Xxxxxx Xxxxxxxx and Humax West, Inc., together
with the other Shareholders who were either (i) originally with Vocalenvision
when it was acquired as TelePlus or (ii) subsequently received shares for
services rendered to Vocalenvision, shall contribute their shares of CONTINAN
to
the Pink Sheet shell company pursuant to Section 351 and shall receive in
exchange therefore, pro
rata,
shares
of voting Preferred Stock which taken together shall represent a controlling
interest in such shell company. The rights, preferences and limitations,
together with the other designations of such Preferred Stock shall be agreed
upon between Shareholders (including Xxxxxx Xxxxxxx, TeleNova, Inc., Xxxxxx
Xxxxxxxx and Humax West, Inc.) and CALM SEAS on or before November 5, 2007.
In
the event of a disagreement, the parties will attempt to resolve the
disagreement but if it is not resolved Shareholders may terminate this
Agreement. CALM SEAS, using its counsel, shall bear the legal fees and costs
for
the preparation of the Section 351 Agreement and the Certificate of Designation,
as well as the costs of the filing thereof.
(d)
CONTINAN shall enter into a Plan and Agreement of Reorganization under Section
368(a)(1)(B) of the Internal Revenue Code with the shell company, whereby the
shell company shall acquire Vocalenvision solely in exchange for common stock
at
a value to be negotiated. Such transaction shall not close until after the
required waiting period after the mailing of an Information Statement. CALM
SEAS, using its counsel, shall bear the legal fees and costs of the preparation
of the Plan and Agreement, the Information Statement, and the share exchange
closing, as well as the costs of printing the Information Statement and mailing
it.
(e)
Upon
both (i) the execution by Xxxxxx Xxxxxxx, TeleNova, Inc., Xxxxxx Xxxxxxxx and
Humax West, Inc. together with such others who were either (A) originally with
Vocalenvision when it was acquired as TelePlus or (B) subsequently received
shares for services rendered to Vocalenvision, who elect to participate in
such
contribution, of the Section 351 Agreement and (ii) the delivery to CALM SEAS’
counsel of their share certificates for Continan’s Common Stock and all stock
options and/or warrants held by them, properly assigned for transfer to the
shell company, CALM SEAS shall pay, directly to the attorneys and accountants
to
whom amounts are due, all amounts past due for SEC filings and the accounting
required therefor. In addition, CALM SEAS shall pay all amounts necessary to
cause the preparation and filing of Form 10-QSB for the quarter ended September
30, 2007.
(f)
The
shares of CONTINAN’s Common Stock and the stock options and/or warrants
contributed by the Shareholders to the shell company shall be paid over to
CALM
SEAS in consideration of the payment by CALM SEAS of the various debts,
liabilities and accounts payable.
(g)
The
shares of Common Stock of the shell company issued to acquire Vocalenvision
shall be placed by CONTINAN into a Partial Liquidating Trust to be distributed
to the CONTINAN shareholders as of the date of the closing of the Plan and
Agreement of Reorganization between the shell company and the Shareholders
(i.e., twenty plus days after the mailing of the Information
Statement).
(h)
Shareholders and CALM SEAS acknowledge that various persons and entities have
been issued stock options and/or warrants. Shareholders (especially Xxxxxx
Xxxxxxx and XXXXXX XXXXXXXX) (i) shall assist CALM SEAS in securing the
agreement of all such persons to the cancellation of such upon the issuance
to
them of replacement stock options and warrants by the shell company and (ii)
shall cause the shell company to issue such replacement stock options and
warrants in a timely manner. CALM SEAS, using its counsel, shall bear the legal
fees and costs of the preparation of the replacement stock options and warrants
and the cancellation agreements.
2
(i)
It is
the specific intent of CALM SEAS to have CONTINAN become a “clean” shell company
as of the date of the closing of the Plan and Agreement of Reorganization
between the shell company and the Shareholders (i.e., twenty plus days after
the
mailing of the Information Statement). Shareholders shall cooperate in good
faith, with all due speed, to accomplish that, including causing either or
both
the shell company and Vocalenvision to execute, acknowledge and deliver to
CONTINAN such documents and instruments as may be necessary or reasonable to
formalize the “assumption and agreement to pay” of the debts, liabilities and
accounts payable as provided in subparagraph (b) above in order to accomplish
that. It shall be solely the responsibility of CALM SEAS, however, to settle
and
pay those liabilities that remain on the books of CONTINAN in order to cause
CONTINAN to be “clean”. Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx and the other
potentially responsible officers and directors of CONTINAN acknowledge that
the
payment by CALM SEAS of the IRS payroll tax liability shall relieve them of
any
potential personal responsibility for the “trust fund” portion thereof.
Accordingly CALM SEAS shall withhold payment of such liability until all other
matters have been resolved.
(j)
Xxxxxx Xxxxxxxx is a director of CONTINAN. As the result of a prior amendment
to
the Articles of Incorporation of CONTINAN, the Board of Directors has the
authority to declare a reverse split of the shares of CONTINAN’s Common Stock.
It is the intent of CALM SEAS to have a reverse stock split declared as a part
of the “clean-up” of CONTINAN. Xxxxxx Xxxxxxxx shall vote for such reverse stock
split at such time as the Board shall consider it, time being of the
essence.
2.
The
parties acknowledge that there is a specific timeline for the proposed
transactions. The anticipated date for the sequential/simultaneous closings
of
(i) the sale of Vocalenvision to the shell company and (ii) the acquisition
by
CONTINAN of a new business is December 14, 2007. In order to permit the
attorneys and agents of the to-be-acquired business to do due diligence on
CONTINAN before such date, it is necessary to have CONTINAN “clean” by December
10, 2007. The sale of Vocalenvision, being substantially all of the assets
of
CONTINAN, requires approval by a vote of a majority of the shareholders of
CONTINAN. While that can be accomplished by a Consent to Action by shareholders
holding a majority in the voting power, that requires the filing with the SEC
and the mailing to all of the shareholders of an “Information Statement”. The
timeline for that is to file the proposed Information Statement with the SEC
on
or before November 7, 2007 and to mail it to shareholders on or before November
19, 2007. Likewise, the reverse stock split will require ten (10) days advance
notice to the NASD/FRINRA. The reverse stock split is to be effective on or
about November 30, 2007 so notification to the NASD/FINRA must be done by
November 19, 2007 and therefore the vote of the Board of Directors to effect
the
reverse stock split shall be by such date. Time is of the essence of the
timeline and all parties shall cooperate to achieve it.
3
3.
CALM
SEAS shall assist the shell company and Xxxxxx Xxxxxxx in securing an
arrangement for a Rule 504 offering. It shall be the responsibility of Xxxxxx
Xxxxxxx to negotiate such financing and the terms thereof. The shell company
shall bear the costs and expenses of such financing.
4.
In the
event that the timeline set forth in this Agreement cannot be met, or is not
met, due to delays occasioned by, or refusals to execute, acknowledge and/or
deliver documents by, or other non-cooperative actions by, Vocalenvision and/or
Shareholders or any of them, such causing party or parties shall be responsible
to CALM SEAS for all funds paid or advanced by CALM SEAS on account of this
Agreement, including fees and costs of CALM SEAS’ counsel.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of this 29th day
of
October, 2007, intending to be legally bound thereby:
| VOCALENVISION, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxx | |
| Xxxxxx Xxxxxxx, President | ||
| By: | /s/ Xxxxxx Xxxxxxxx | |
| Xxxxxx Xxxxxxxx, Executive Vice President | ||
| CONTINAN COMMUNICATIONS, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxx | |
| Xxxxxx Xxxxxxx, President and CEO | ||
| By: | /s/ Xxxxxx Xxxxxxxx | |
| Xxxxxx Xxxxxxxx, Executive Vice President | ||
| CALM SEAS CAPITAL LLC | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxxx | |
| Xxxxxxx Xxxxxxx, Manager | ||
4
| SHAREHOLDERS: | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxx | |
| Xxxxxx Xxxxxxx | ||
| By: | /s/ Xxxxxx Xxxxxxxx | |
| Xxxxxx Xxxxxxxx | ||
| TELENOVA LTD. | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxxx | |
| Xxxx Xxxxxxx | ||
| HUMAX WEST, INC. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxxx | |
| Xxxxx Xxxxxxx | ||
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