TERM SHEET TO THE ASSET PURCHASE AGREEMENTmade and entered in the city of Montreal, on March 31 2011,
By and between:
Teliphone Corp., a Corporation incorporated under the laws of the state of Nevada, having its head office at 424 rue St-François-XavierMontreal, Quebec H2Y 2S9 CANADA, hereby represented by Lawry Trevor-Deutsch, its President, duly authorized as he so declares,
(hereby referred to as “TELIPHONE”)
And
Orion Communications Inc. a Corporation incorporated under the laws of Ontario, having its head office at 500 Boul. St-Martin, suite 550, Laval, Quebec H7M 3Y2 CANADA, hereby represented by Gilles Poliquin, its President, duly authorized as he so declares,
And
9191-4200 Quebec Inc., a Corporation incorporated under the laws of Quebec, having its head office at 500 Boul. St-Martin, suite 550, Laval, Quebec H7M 3Y2 CANADA, hereby represented by Gilles Poliquin, its President, duly authorized as he so declares
(hereby collectively referred to as “VENDOR”
PREAMBLE
WHEREASVENDOR is desirous in selling its full and unencumbered rights to the clients of Orion Communications Inc., hereby referred to as the“CLIENTS”.
WHEREAStheCLIENTS have recently become free and clear of all security title previously owned by Bank of Montreal based on the Litigation Agreement and Minutes of Settlement, Ontario Superior Court of Justice effective March 30, 2011.
WHEREAS bothTELIPHONE andVENDOR acknowledge their original intention of sharing the profits generated by theCLIENTS on a 50%-50% basis
WHEREASVENDORis aware of the significant investments thatTELIPHONE has undertaken in order to unencumber theCLIENTS
WHEREAS TELIPHONE is aware of the significant investments thatVENDOR has undertaken in order to acquire theCLIENTS from their former owners and thatVENDOR is currently embroiled in litigation with the former owners of theCLIENTS over rescission and counterclaims.
WHEREAS VENDOR recognizes that regardless of the outcome of its litigation with the former owners ofCLIENTS, it will have no claim whatsoever on theCLIENTS or any future value derived from their business withTELIPHONEother than the amounts paid herewith.
CLIENT VALUATION
BothTELIPHONE andVENDOR wish to value theCLIENTS as at the date of this transaction and have agreed to utilize an Earnings Before Interest, Taxes, Depreciation and Amortization multiple (EBITDA Multiple) method to arrive at their value.
·
That from a period of May 1, 2009 to April 30, 2010, the CLIENTS produced an EBITDA of $324,325
·
That from a period of May 1, 2010 to June 30, 2010, the CLIENTS produced an EBITDA of $109,841
·
That from a period of July 1, 2010 to September 30, 2010, the CLIENTS produced an EBITDA of $188,276
·
That from a period of October 1, 2010 to December 31, 2010, the CLIENTS produced an EBITDA of $97,271
·
That from January 1, 2011 to April 30, 2011, the CLIENTS are projected to produce an EBITDA of $542,539
·
The above results in an average yearly EBITDA from the last 24 months of operation of $631,126
·
And that bothTELIPHONE andVENDOR agree to an EBITDA multiple of three (3) * EBITDA, which is equivalent to $1,893,378
·
And that the final valuation of theCLIENTS will be 3 * EBITDA less one-time, non-recurring debt foregiveness of $414,113
Resulting in a valuation of theCLIENTS of$1,479,265
PAYMENT TERMS
VENDOR agrees to recognize the payments already made byTELIPHONE towards the acquisition of this customer base. The following table outlines the balance owing toVENDOR thatTELIPHONE must pay in order to acquire theCLIENTS fromVENDOR:
The above results in an amount owing fromTELIPHONE toVENDOR of$951,022
TELIPHONE agrees to issue, andVENDOR agrees to accept, 3,804,088 shares of the common stock ofTELIPHONE, at a unit price of $0.25 per share as payment of the balance owing.
Signed this 31st day of March, 2011, in Montreal,
TELIPHONE CORP.
_/s/ Lawry Trevor-Deutsch______
Lawry Trevor-Deutsch
President
ORION COMMUNICATIONS INC.
_/s/ Gilles Poliquin______________
Gilles Poliquin
President
9191-4200 QUEBEC INC.
_/s/ Gilles Poliquin______________
Gilles Poliquin
President
