OTTAWA, April 21 /CNW Telbec/ - In-Touch Survey Systems Ltd. ("In-Touch
or the Company" TSX-Venture: INX) is pleased to announce that it has signed a
Terms Sheet from Madison Grant Small Cap 2006 Limited Partnership ('the
Partnership'). Pursuant to the Terms Sheet the parties will enter into a
series of related agreements that will have the following effects:
a) In-Touch will create an In-Touch Survey Limited Partnership
('In-Touch LP') and In-Touch LP will acquire $5,000,000 worth of software
assets from In-Touch. The Partnership will acquire an ownership position in
the In-Touch LP for $1,000,000 cash and a $4,000,000 note payable to In-Touch.
In-Touch will be the general partner of the In-Touch LP.
b) In-Touch and the Partnership will be parties to a Marketing Agreement
with the In-Touch LP. Under the terms of the Marketing Agreement, In-Touch
will commit a minimum of $5,000,000 to marketing and promotion support of the
In-Touch LP by December 31, 2008.
c) In-Touch, the Partnership and In-Touch LP will be parties to a
Liquidity Agreement where the Partnership is entitled to sell In-Touch LP at
fair market value with the right of In-Touch to match or exceed a third party
offers to purchase. The Partnership may exercise its Liquidity Right by giving
notice to In-Touch Survey LP on June 30, 2007.
d) In-Touch and the Partnership will be parties to a Call Option
Agreement. In-Touch will have the right, but not the obligation, to purchase
the Partnership's units in the In-Touch LP at any time between January 15,
2007 and June 30, 2007. Upon exercise of the call option In-Touch will issue
common shares to the Partnership with a deemed value of $1,000,000 (the
"Price"). Following the exercise of the call option, In-Touch will be the sole
owner of the units of the In-Touch LP and would be in a position to amend or
terminate the Marketing Agreement and the Liquidity Agreement and amend or
reverse the transfer of In-Touch assets to the In-Touch LP. The Price will be
paid with In-Touch shares with a deemed value which will range between $0.23
and $0.36 per common share depending on In-Touch's revenue and earnings before
interest, taxes, depreciation and amortization ('EBITDA') in FY 2006. The
$0.36 value will be used if In-Touch's FY 06 revenue is equal to or greater
than $3.5M. The deemed share value will decline on a sliding scale if
In-Touch's FY 06 revenue is less than $3.5M, with the minimum deemed value of
$0.23 per share reached if In-Touch's revenue is less than or equal to
$3,000,000 and negative EBITDA of greater than or equal to $150,000.
Accordingly, the number of shares to be issued if In-Touch exercises the call
option will range from a maximum of 4,412,045 shares to a minimum of
2,755,251.
This transaction is subject to the completion of due diligence by both
parties, their endorsement of a definitive agreement and the approval of
regulators such as TSX Venture.
The Corporation also closed the Private Placements that were announced in
a Press Release on April 4, 2006
"This financing provides $1,000,000 cash to In-Touch and greatly improves
the balance sheet with minimal dilution as the final conversion stock price
will be between $0.23 and $0.36 compared to the current share price," said
Michael Gaffney, Chief Executive Officer.
"This transaction reflects the confidence of the Madison Grant Fund in
the future of In-Touch and is also an effective use of our historical tax
losses," said Gaffney.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the
contents of this press release.
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