Exhibit 10.1


    

    
      

    

    Letter
      of Intent for a Joint Venture Agreement

    Between
      Teliphone Inc. and Intelco Communication, Inc.

    


    


    Dated
      July 14, 2006

    


    


    By
      and
      between:

    


    


    Teliphone
      Inc. “Teliphone”
      a
      Canadian Corporation having offices located at 1080 Beaver Hall, Suite 1555,
      Montreal, Quebec, Canada H2Z 1S8, hereby represented by George Metrakos, its
      President & CEO, duly authorized as he so declares,

    


    


    And

    


    


    Intelco
      Communications, “Intelco”,
      a
      Canadian corporation having offices located at 4150 Ste-Catherine St West,
      suite
      200, Montreal, Quebec, Canada, H3Z 2Y5, hereby represented by Serge Farman,
      its
      Executive Vice-President, duly authorized as he so declares,

    


    


    And

    


    3901823
      Canada Inc., “3901823”,
      a
      Canadian corporation (and majority shareholder of Intelco) having offices
      located at 4150 Ste-Catherine St West, suite 200, Montreal, Quebec, Canada,
      H3Z
      2Y5, hereby represented by Serge Farman, its Executive Vice-President, duly
      authorized as he so declares,

    


    


    Collectively
      known as “the
      Parties”

    


    


    And

    


    


    Benoit
      Laliberté,
      businessman, domiciled at 220 de la coulée, Mont-St-Hilaire, Qc, Canada. (Benoit
      Laliberté signature required for investment as described in section 5 and
      personal guarantee in item 2.7).

    


    Whereas
      the parties wish to set forth the guidelines in this Letter of Intent (LOI)
      and
      subsequent Agreement in order to merge their operations and for Teliphone to
      provide to Intelco a white-label version of its VoIP platform.

    


    
      	1.  	
              Intent
                & Objective:

            


    

    


    
      	1.1.  	
              To
                leverage Intelco’s global distribution channel of pre-paid calling cards
                and telecommunications services by introducing Teliphone’s VoIP services
                to their existing and future client
                base.

            


    

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

      
        

      

       

    

    
      	1.2.  	
              To
                leverage Teliphone’s technology and experience with its initial clients in
                order to provide Intelco with a proven VoIP product to sell to the
                global
                market.

            


    

    


    
      	1.3.  	
              To
                immediately (within 3-6 months) turn Teliphone’s current operations to
                cash flow positive by merging operations with Intelco and thereby
                reducing
                Teliphone’s required cash outflows over the next 12
                months.

            


    

    


    
      	2.  	
              White-Label
                Version of Teliphone`s VoIP platform for
                Intelco

            


    

    


    Actual
      costs and in-kind contributions made for this white-label platform are presented
      in tabular form in Appendix A.

    


    
      	2.1.  	
              Teliphone
                will provide to Intelco a white label version of its VoIP platform
                for use
                by Intelco for promotion of its line of VoIP products without commercial
                restriction to the global
                marketplace.

            


    

    


    
      	2.2.  	
              Intelco
                will pay Teliphone 1$ per month per active subscriber as a software
                license fee. The minimum amount paid will be based on a ramp-up period
                as
                described in item 2.6 below and the maximum will be $12,000 per month.
                These amounts will remain as an advance from Teliphone for 12 months
                from
                the signing of this LOI and will be converted as described in section
                6.

            


    

    


    
      	2.3.  	
              Above
                and beyond the twelve thousandth customer, Teliphone will receive
                $0.15
                per Intelco subscriber per month. In return, Teliphone will ensure
                that
                all of the necessary resources within Teliphone’s team and technology is
                in place in order to meet Intelco’s requirements for modifications of
                their white label platform.

            


    

    


    
      	2.4.  	
              Intelco’s
                customers’ traffic will be passed entirely on Intelco’s network (ie.
                Intelco assumes DID costs, call origination and call termination
                costs).

            


    

    


    
      	2.5.  	
              Teliphone
                will invoice any actual variable costs that may be incurred by Teliphone
                in order to supply service to these customers (ie. E9-1-1 PSAP call
                services).

            


    

    


    
      	2.6.  	
              The
                following period will comprise the minimum amounts being charged
                per
                subscriber per month for the software license fee as described in
                item 2.2
                above:

            


    

    


    
      	2.6.1.  	
              Month
                1:0$

            


    

    
      	2.6.2.  	
              Month
                2:The
                greater of 1$/subscriber and $1,000

            


    

    
      	2.6.3.  	
              Month
                3:The
                greater of 1$/subscriber and $2,000

            


    

    
      	2.6.4.  	
              Month
                4:The
                greater of 1$/subscriber and $3,500

            


    

    
      	2.6.5.  	
              Month
                5 and onwards:The
                greater of 1$/subscriber and $5,000
                *

            


    

    


    *
      During
      this period, as described in 2.2 above, the maximum paid by Intelco will be
      $12,000. As described in 2.5, above and beyond the twelve thousandth customer,
      Intelco will pay only $0.15 per subscriber per month for the software license
      fee.

    


    
      	2.7.  	
              New
                technological developments created by Benoit Laliberté (Personal
                commitment)

            


    

    


    Benoit
      Laliberté personally commits to making available any and all new technological
      developments where he is directly or indirectly involved in creating to the
      disposal of Intelco via their Teliphone white label 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

      

    

    
      

    

     

    platform
      for a no-cost license, with no royalties on future sales for the use by Intelco
      as it sees fit to commercialize.

    


    
      	3.  	
              Usage
                of Intelco’s
                Infrastructure

            


    

    


    Actual
      costs and in-kind contributions made for these operational expenses are
      presented in tabular form in Appendix A.

    


    
      	3.1.  	
              Intelco
                will provide the following services to
                Teliphone:

            


    

    


    
      	3.1.1.  	
              Rent.
                Teliphone will move from its current offices at 1080 Beaver Hall,
                to
                Intelco’s offices located at 4150 Ste-Catherine street, Montreal. This is
                valued at $2,500 per month.

            


    

    


    
      	3.1.2.  	
              Telecom
                network fixed costs. Intelco will provide to Teliphone usage of
                origination and termination of call traffic across its entire network
                of
                PRI’s. These are valued at the current market price of $0.007 per minute.
                The amounts charged will be the greater of the actual charges and
                $7,000
                per month.

            


    

    


    
      	3.1.3.  	
              Telecom
                network variable costs. Intelco will invoice any actual variable
                costs
                that may be incurred by Teliphone across its network (ie. Monthly
                DID
                costs, any additional origination or termination costs that are incurred
                that are not part of Intelco’s fixed cost
                operations).

            


    

    


    NOTE:
      Teliphone will port over all of its Montreal and Toronto DID’s and subsequent
      origination and termination traffic to Intelco and subsequently cancel its
      5
      Montreal and 1 Toronto PRI’s with Rogers Business Solutions. Teliphone will,
      however, maintain its own PRI’s for cities which it deems necessary and that are
      not part of Intelco’s network.

    


    
      	3.1.4.  	
              Hosting
                and co-location services. Intelco will provide the following to Teliphone
                within its own in-house data center (valued at $2,500 per
                month):

            


    

    
      	3.1.4.1.  	
              4
                full cabinets for Teliphone’s existing hardware
                equipment

            


    

    
      	3.1.4.2.  	
              The
                necessary bandwidth for Teliphone’s operations (currently 2 MB per
                month)

            


    

    
      	3.1.4.3.  	
              60
                Amps continuous at 120Volts electrical power supply with back-up
                UPS.

            


    

    


    
      	3.2.  	
              New
                hardware will be acquired in September 2006 in order to house both
                Teliphone’s and Intelco’s VoIP customers. This equipment is estimated to
                require 1⁄2 cabinet of space and will be located within Intelco’s cabinets
                located at Teleglobe, along with Teliphone’s telecom
                equipment.

            


    

    


    
      	3.3.  	
              Any
                amounts forwarded to Teliphone by Intelco will remain as an advance
                from
                Intelco for 12 months from the signing of this LOI and will be converted
                as described in section 6.

            


    

    


    
      	4.  	
              Establishment
                of a Line of Credit

            


    

    


    
      	4.1.  	
              3901823
                will provide Teliphone a $75,000 a line of credit with the following
                disbursements:

            


    

    


    
      	4.1.1.  	
              $25,000
                at the signing of this LOI

            


    

    
      	4.1.2.  	
              $25,000
                at the installation of Teliphone’s equipment within Intelco’s data center
                and a notarized and executed lean on the assets as described in
                4.3.

            


    

    
      	4.1.3.  	
              $25,000
                when Teliphone’s equipment is able to handle the activation of new
                Intelco’s clients.

            


    

     

    
      
        
        

      

      
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      	4.2.  	
              The
                totality of the line of credit must be repaid by Teliphone by December
                21,
                2006. If any amounts are outstanding at this time, then Teliphone
                will be
                considered in default, at which time Teliphone will have 10 days
                to remit
                all outstanding amounts back to
                3901823.

            


    

    


    
      	4.3.  	
              In
                the event that Teliphone does not reimburse the full outstanding
                amount to
                3901823 by December 31, 2006, Intelco will receive ownership of
                Teliphone’s current assets (cash, pre-paid deposits and accounts
                receivable), capital assets (property, plant and equipment) and
                intellectual property in order for Intelco’s VoIP program to continue
                under 3901823’s ownership. A first level lien on the assets will be
                notarized and signed after signing of this
                LOI.

            


    

    


    
      	4.4.  	
              Teliphone
                agrees to sign over the $56,000 of receivables pertaining to its
                2004 and
                2005 research and development tax credits which it estimates to receive
                by
                October 1, 2006 to 3901823 in order to guarantee a major part of
                these
                disbursements. Teliphone will forward any cash received from this
                funding
                directly to 3901823 upon receipt.

            


    

    


    
      	5.  	
              Investment
                in Teliphone by Benoit
                Laliberté.

            


    

    


    
      	5.1.  	
              Benoit
                Laliberté agrees to provide to Teliphone an additional $30,000 for use by
                Teliphone in order to cover any additional cash flow requirements
                by
                Teliphone as required during the transition phase. The following
                disbursements will be taken on Benoit Laliberté’s credit
                card:

            


    

    


    
      	5.1.1.  	
              $15,000
                in July 2006

            


    

    
      	5.1.2.  	
              $15,000
                in August 2006

            


    

    


    
      	6.  	
              Conversion
                of Amounts Owing after 12 Months of Merged
                Operations

            


    

    


    
      	6.1.  	
              Based
                on the values of in-kind contributions that will be made over the
                next 12
                months, Teliphone will have an outstanding advance from Intelco when
                both
                advances are netted.

            


    

    


    
      	6.1.1.  	
              The
                netted $ value will be converted to options exercisable into Class
                A
                voting shares of the common stock of Teliphone. The valuation that
                will be
                used is $1,000,000, which means that each $10,000 of netted investment
                in
                Teliphone will be equal to 1%. It is estimated that the net advance
                will
                be $75,000, or options on 7.5%. These shares will be in the name
                of
                Intelco.

            


    

    


    
      	6.2.  	
              Subsequent
                to this conversion, both Teliphone and Intelco will commence to invoice
                each other for their respective services being offered, with payments
                due
                within 30 days upon receipt of
                invoice.

            


    

    


    
      	7.  	
              3901823
                Acquisition of Voting, Class A Common Shares of
                Teliphone

            


    

    


    
      	7.1.  	
              OSK
                currently holds 104 class A common voting shares, representing all
                of the
                outstanding shares of Teliphone.

            


    

    


    
      	7.2.  	
              Teliphone
                will issue from treasury an additional 35 class A voting shares to
                3901823. The resulting ownership will be OSK 74.8% and 3901823,
                25.2%.

            


    

    


    
      	7.3.  	
              In
                consideration of this new minor position, Intelco will be awarded
                one seat
                on Teliphone’s Board of Directors. The newly appointed board member will
                be provided full access to Teliphone’s financial reporting information as
                required.

            


    

     

    
      
        
        

      

      
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      	8.  	
              Additional
                considerations of this
                LOI

            


    

    


    
      	8.1.  	
              Intelco
                will gain a ‘first right of refusal’ in the event that an offer to
                purchase Teliphone is made in the future or on the issuance of any
                new
                shares.

            


    

    


    
      	8.2.  	
              Teliphone
                will assign its Telecommunications Services Agreement Kore Wireless
                Canada
                Inc. to Intelco pending assignment and re-negotiation of terms by
                Kore
                Wireless Canada Inc.

            


    

    


    
      	8.3.  	
              Teliphone
                will immediately enter into discussions with its long term debt holders
                to
                restructure its long term debt and advances (particularly from its
                Parent
                Company OSK Capital II Corp and affiliated company 3894517 Canada
                Inc. /
                United American Corporation).

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

      

    

    
      
        

      



    
      
        	
                Agreed and signed in Montreal, Quebec,
                  Canada,

                 

                 

              	 
	
                /s/
                  Bassim Kano

                Basso Kano

                Executive Vice President

                Intelco
                  Communication    

              	
                /s/ George Metrakos

                George Metrakos 

                President & CEO

                Teliphone Inc.

              
	
                 

                 

                /s/
                  Serge Farman

                Serge
                  Farman

                Executive
                  Vice President

                3901823
                  Canada Inc.

              	 
	
                 

                 

                /s/
                  Benoit Laliberte'

                Benoit
                  Laliberté

                For
                  personal guarantee as outlined in item 2.7 and section 5.

              	 


      

    

     

    
      
        
        

      

      
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    Appendix
      A. - Summary of In-kind and Cash disbursements

    


    
      	
              Disbursement

            	
              Estimated
                $ Value

            	
              Payment
                consideration

            
	 	 	 
	
              Teliphone

            	 	 
	
              Software
                license

            	
              $1.00
                / subscriber / month

            	
              Advance
                from Teliphone

            
	
              Network
                (variable) (1)

            	
              At
                cost

            	
              Net
                30 days upon presentation of invoice

            
	
              Network
                (fixed) (2)

            	
              At
                cost

            	
              Advance
                from Teliphone

            
	 	 	 
	
              Intelco

            	 	 
	
              Rent

            	
              $2,500
                per month

            	
              Advance
                from Intelco

            
	
              Network
                (variable) (3)

            	
              At
                cost

            	
              Net
                30 days upon presentation of invoice

            
	
              Network
                (fixed) (4)

            	
              At
                cost

            	
              Advance
                from Intelco

            
	
              Co-location
                services

            	
              $2,500
                per month

            	
              Advance
                from Intelco

            


    

    


    
      	(1)  	
              These
                represent any incremental costs that Teliphone must incur in order
                to
                house Intelco’s clients, such as E9-1-1 PSAP services or DID’s on any of
                Teliphone’s PRI’s that Intelco does not have, such as Gatineau, Hull,
                Pont-Viau, Chomedy, Granby or
                St-Hyacinthe.

            


    

    


    
      	(2)  	
              These
                represent any costs incurred by Teliphone for passing traffic on
                Teliphone’s PRI’s for Intelco, such as per minute origination and
                termination costs (current price of $0.007 per minute). PRI’s include
                Granby, St-Hyacinthe, Chomedy/Pont-Viau or
                Gatineau/Hull.

            


    

    


    
      	(3)  	
              These
                represent DID costs incurred by Intelco for Teliphone’s customers over
                Intelco’s Montreal, Toronto, Quebec City or any other of their US or
                Canadian PRI’s.

            


    

    


    
      	(4)  	
              These
                represent any costs incurred by Intelco for passing Teliphone traffic
                on
                Intelco’s PRI’s including Montreal, Toronto, Quebec City or any other of
                their US or Canadian PRI’s (current price of $0.007 per
                minute).