TERM SHEET TO THE ASSET PURCHASE AGREEMENT made and entered in the city of Montreal, on March 31 2011,
TERM SHEET TO THE ASSET PURCHASE AGREEMENT made 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 000 xxx Xx-Xxxxxxxx-XxxxxxXxxxxxxx, Xxxxxx X0X 0X0 XXXXXX, hereby represented by Xxxxx Xxxxxx-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 000 Xxxx. Xx-Xxxxxx, xxxxx 000, Xxxxx, Xxxxxx X0X 0X0 XXXXXX, hereby represented by Xxxxxx Xxxxxxxx, its President, duly authorized as he so declares,
And
0000-0000 Xxxxxx Inc., a Corporation incorporated under the laws of Quebec, having its head office at 000 Xxxx. Xx-Xxxxxx, xxxxx 000, Xxxxx, Xxxxxx X0X 0X0 XXXXXX, hereby represented by Xxxxxx Xxxxxxxx, its President, duly authorized as he so declares
(hereby collectively referred to as “VENDOR”
PREAMBLE
WHEREAS VENDOR is desirous in selling its full and unencumbered rights to the clients of Orion Communications Inc., hereby referred to as the “CLIENTS”.
WHEREAS the CLIENTS 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 both TELIPHONE and VENDOR acknowledge their original intention of sharing the profits generated by the CLIENTS on a 50%-50% basis
WHEREAS VENDOR is aware of the significant investments that TELIPHONE has undertaken in order to unencumber the CLIENTS
WHEREAS TELIPHONE is aware of the significant investments that VENDOR has undertaken in order to acquire the CLIENTS from their former owners and that VENDOR is currently embroiled in litigation with the former owners of the CLIENTS over rescission and counterclaims.
WHEREAS VENDOR recognizes that regardless of the outcome of its litigation with the former owners of CLIENTS, it will have no claim whatsoever on the CLIENTS or any future value derived from their business with TELIPHONE other than the amounts paid herewith.
CLIENT VALUATION
Both TELIPHONE and VENDOR wish to value the CLIENTS 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 both TELIPHONE and VENDOR agree to an EBITDA multiple of three (3) * EBITDA, which is equivalent to $1,893,378
·
And that the final valuation of the CLIENTS will be 3 * EBITDA less one-time, non-recurring debt foregiveness of $414,113
Resulting in a valuation of the CLIENTS of $1,479,265
PAYMENT TERMS
VENDOR agrees to recognize the payments already made by TELIPHONE towards the acquisition of this customer base. The following table outlines the balance owing to VENDOR that TELIPHONE must pay in order to acquire the CLIENTS from VENDOR:
Payment made | Payment amount |
Amounts paid by Teliphone to Bank of Montreal as Security settlement agreement dated March 30, 2011 | $375,000 |
Advance paid to VENDOR as part of original profit sharing deal of May 1, 2009 | $153,243 |
TOTAL PAID: | $528,243 |
The above results in an amount owing from TELIPHONE to VENDOR of $951,022
TELIPHONE agrees to issue, and VENDOR agrees to accept, 3,804,088 shares of the common stock of TELIPHONE, at a unit price of $0.25 per share as payment of the balance owing.
Signed this 31st day of March, 2011, in Montreal,
_/s/ Xxxxx Xxxxxx-Deutsch______
Xxxxx Xxxxxx-Deutsch
President
ORION COMMUNICATIONS INC.
_/s/ Gilles Poliquin______________
Xxxxxx Xxxxxxxx
President
0000-0000 XXXXXX INC.
_/s/ Gilles Poliquin______________
Xxxxxx Xxxxxxxx
President
