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Telehop Enters into Definitive Agreement to Acquire G3 Telecom Companies and Wireless Spectrum

Telehop Communications Inc. (“Telehop” or the “Company”) (TSX-V: HOP) is pleased to announce that, further to its news release dated December 2, 2013, it has entered into a definitive purchase agreement (the “Agreement”) to acquire shares and assets of G3 Telecom Corp., and its group of affiliated companies (collectively, “G3 Telecom”), which will launch the Company into the wireless services industry. G3 Telecom is a facilities-based reseller of telecommunication services in Canada, and is registered with the Canadian Radio-television Telecommunications Commission (“CRTC”) and the Federal Communications Commission (“FCC”) in the United States.

In accordance with the terms of the Agreement, Telehop will acquire G3 Telecom’s telecommunications businesses in the United States and the Philippines, as well as wireless telecommunications licenses for Huntsville, Ontario and Dawson Creek, British Columbia, and will operate a worldwide telecommunications and wireless business upon completion of the transaction.

The aggregate purchase price of the acquisition is $4,300,000, payable in $2,000,000 in cash on the date of closing, $1,500,000 over 24 months from the date of closing by way of a secured promissory note with interest at 5% per annum and the issuance of 8,000,000 million common shares of the Company (the “Shares”) at a deemed value of $0.10 per Share. The Agreement provides for a price reduction of $1,000,000 should Industry Canada not approve the transfer consents of two wireless spectrum licenses to Telehop’s control within 90 days from the date of closing. This reduction will be offset against the $1,500,000 outstanding over 24 months after closing. The Agreement also provides for the cancellation of 5,000,000 Shares issued to the vendors in the event that the FCC fails to approve the transfer consents of G3 Telecom’s US subsidiary to Telehop’s control within 90 days from closing. The Company does not anticipate any issues with respect to obtaining the regulatory consents and transfers.

In connection with the transaction, Telehop will complete a concurrent private placement (the “Offering”) of up to $3,000,000 of unsecured, five (5) year debentures (the “Debentures”). A portion of the gross proceeds of the Offering will be used to finance the acquisition costs, along with the closing and integration costs of G3 Telecom’s business with Telehop. The Debentures will mature five (5) years from the date of closing of the Offering (the “Maturity Date”) and will bear interest at a rate of 10% per annum payable semi-annually in cash, on June 30 and December 31 in each year, commencing on June 30, 2014 with the final payment due on the Maturity Date. Each Debenture will be priced at a 2% discount, namely at $980 per $1,000 of the principal amount thereof. The Debentures may be redeemed at the option of the Company provided that the Debentures are not redeemable before June 30, 2016. On and after June 30, 2016, and at any time prior to the Maturity Date, the Debentures are redeemable at the option of the Company at a price equal to $1,000 per Debenture plus accrued and unpaid interest thereon up to but excluding the date of redemption. The Company has engaged Jones, Gable & Company Limited (“Jones Gable”) to act as finder in connection with the Offering and will pay Jones Gable a fee equal to 6.5% of the gross proceeds raised from the sale of the Debentures. The Debentures issued pursuant to the Offering will be subject to a statutory four month and one day hold period. Completion of the Offering is subject to receipt of all required regulatory and other approvals.

Upon successful closing of the transaction, both Mr. Rajan Arora, the current CEO of G3 Telecom and Telehop CEO Rajiv Jagota, will be nominated to join the Board of Directors.

Completion of the transactions contemplated herein remains subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance, any other required regulatory and/or shareholder approval, and completion of Offering. The acquisition of G3 Telecom will constitute be “fundamental acquisition” as such term is defined in the policies of the TSX Venture Exchange. A business acquisition report in respect of the purchase of G3 Telecom will be prepared in compliance with National Instrument 51-102 – Continuous Disclosure Obligations and filed within 120 days after completion of the acquisition.

About Telehop

Telehop Communications Inc. was founded in 1993 and is headquartered in Toronto, Ontario. The Company has grown into one of the largest alternative telecommunications providers to both residential and business customers.

Telehop originally began offering residential and business two-way monthly 'flat rate' calling services in the Greater Toronto area between communities where a call would otherwise be a long distance call. In 1994, Telehop became one of Canada's few Equal Access Long Distance Providers, allowing it to offer its customers full service long distance calling globally at significantly lower rates. The CRTC has licensed Telehop as a Class “A” telecommunications carrier.

Telehop’s dedication and priority is providing residential and businesses with exceptional phone services at competitive rates without sacrificing quality service.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events. All statements other than statements of historical fact are forward-looking statements. The use of the words ‘‘may”, “expected”, “believes” and other words of a similar nature are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although Telehop believes these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Such statements include statements with respect to Telehop’s anticipated completion of the acquisition and the Offering and the timing thereof, shareholder and regulatory approval of the acquisition, and transfer of the wireless spectrum licenses and regulatory consents. Actual results could differ materially from those anticipated in these forward-looking statements as a result of prevailing economic conditions, receipt of requisite regulatory approvals, and other factors, many of which are beyond the control of Telehop. The completion of the acquisition and Offering is subject to certain conditions of closing and there is no assurance that all conditions will be met in a timely manner or at all. The forward-looking statements contained in this news release represent Telehop’s expectations as of the date hereof, and are subject to change after such date. Telehop disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable securities regulations.

http://www.telehop.com

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