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Avante Corp. M&A Activity 2022

Feb 17, 2022

45900_rns_2022-02-17_869d98fe-d162-4c2a-8648-7c92fe46651e.pdf

M&A Activity

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FORM 51-102F3 MATERIAL CHANGE REPORT

Item 1 Name and Address of Company Avante Logixx Inc. (the “ Company ” or “ Avante ”) 601-130 Bloor Street West Toronto, Ontario M5S 1N5 Item 2 Date of Material Change February 8, 2022 Item 3 News Release A news release with respect to the material change was disseminated by the Company through the facilities of a recognized newswire service on February 9, 2022 and subsequently filed on SEDAR. A copy of the news release (the “ News Release ”) is attached hereto as Schedule “A”.

Item 4 Summary of Material Change

On February 8, 2022, the Company announced that it had entered into a definitive arrangement agreement (the “ Arrangement Agreement ”) with SSC Security Services Corp. (“ SSC ”) pursuant to which SSC agreed to acquire all of the issued and outstanding common shares (the “ Avante Shares ”) of Avante by way of a court-approved plan of arrangement (the “ Plan of Arrangement ” or the “ Arrangement ”) under the Business Corporations Act (Ontario) (the “ Transaction ”). Under the terms of the Arrangement Agreement, shareholders of Avante (the “ Avante Shareholders ”) will receive, for each issued and outstanding common share of Avante held (each, an “ Avante Share ”), C$0.52 in cash and 0.4155 common shares of SSC (the “ SSC Shares ”).

Item 5 Full Description of Material Change 5.1 Full Description of Material Change Arrangement Agreement:

On February 8, 2022, Avante entered into the Arrangement Agreement setting out, among other matters, the terms pursuant to which SSC agreed to acquire all of the Avante Shares. The Transaction will be implemented pursuant to a court-approved statutory plan of arrangement governed by the OBCA.

Consideration

Under the terms of the Arrangement, Avante Shareholders will receive, for each Avante Share held, C$0.52 in cash and 0.4155 SSC Shares. All outstanding Avante options, will vest in accordance with the Plan of Arrangement. Holders of In-The-Money Options (as defined in the Plan of Arrangement) outstanding and not duly exercised prior to the effective time of the Arrangement Agreement, will be disposed of to the Company in consideration for a cash payment (less all applicable deductions and withholdings) equal to the product of the amount by which the consideration exceeds the exercise price per Avante Share of such In-The-Money Option and the number of Avante Shares underlying each such In-The-Money Option. Holders of Out-Of-The Money Options (as defined in the

Plan of Arrangement) shall be exchanged for Replacement Options (as defined in the Plan of Arrangement). Each Replacement Option, notwithstanding the terms of the Stock Option Plan (as defined in the Plan of Arrangement), shall be deemed to be unconditionally vested and exercisable.

Other Terms of the Arrangement Agreement

The Transaction is subject to approval of at least 66 2/3% of the votes cast by Avante Shareholders at the Company Meeting (as defined in the Arrangement Agreement). In addition to shareholder approval, the Transaction is subject to certain closing conditions customary in transactions of this nature, including TSX Venture Exchange approval. The closing of the Transaction is not subject to the receipt of financing by SSC. The Transaction is expected to close in the second calendar quarter of 2022.

Each of Avante and SSC has made customary representations, warranties and covenants in the Arrangement Agreement and has agreed to customary covenants regarding the operation of their respective businesses during the period from the date of the Arrangement Agreement until the earlier of the effective time of the Arrangement and the time that the Arrangement Agreement is terminated in accordance with its terms.

Avante is also subject to restrictions on its ability to solicit proposals from third parties with respect to transactions involving the sale of Avante (an “ Acquisition Proposal ”), to provide confidential information to, or to participate or engage in discussions or negotiations with third parties or take certain other actions regarding any such Acquisition Proposal, with customary exceptions for unsolicited Acquisition Proposals that the Avante board of directors (the “ Avante Board ”) determines in good faith are, or could reasonably be expected to lead to, a transaction that is more favourable from a financial point of view to Avante Shareholders (after taking into account certain terms and conditions of such Acquisition Proposal) (a “ Superior Proposal ”). The Arrangement Agreement provides that SSC has the right to match any Superior Proposal for a period of five (5) business days from the date on which Avante provides notice of its intention to enter into a definitive agreement with respect to such Superior Proposal.

The Arrangement Agreement contains certain termination rights, including, among others, (a) upon the mutual agreement of both Avante and SSC, (b) if the Avante Shareholders fail to approve the Arrangement at the Company Meeting, (c) the right of either Avante or SSC if any law is in effect that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins Avante or SSC from consummating the Arrangement (d) the right of either Avante or SSC to terminate the Arrangement Agreement if the Arrangement is not completed on or prior to May 31, 2022 (the “ Outside Date ”), (e) the right of either Avante or SSC to terminate the Arrangement Agreement due to a breach by the other party of its representations, warranties or covenants contained in the Arrangement Agreement or the occurrence of a material adverse effect with respect to the other party, in each case, subject to certain conditions, (f) the right of Avante to terminate the Arrangement Agreement if it wishes to enter into an agreement providing for a Superior Proposal, provided that such termination right expires after receipt of the required Avante Shareholder approval, or (g) the right of SSC to terminate the Arrangement Agreement if the Avante Board fails to recommend or changes its recommendation in favour of the Arrangement or accepts, approves, endorses or recommends an Acquisition Proposal, subject to certain conditions, if the Avante Board enters into or authorizes Avante or any of its subsidiaries to execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal, or if Avante breaches any of its covenants regarding non-solicitation.

Avante must pay a termination fee of C$1,800,000 to SSC in the event that the Arrangement Agreement is terminated (a) by SSC because the Avante Board has changed its recommendation in favor of the Arrangement, subject to certain conditions, or due a breach by Avante of its non-solicitation covenant, (b) by Avante to enter into an

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agreement providing for a Superior Proposal, or (c) by either Avante or SSC because the approval of the Avante Shareholders is not obtained, the Arrangement is not completed by the Outside Date, or due to breach by Avante of its representations and warranties, in each case of this clause (c), if (i) prior to the Company Meeting, a bona fide Acquisition Proposal was made for Avante and is publicly announced, (ii) such Acquisition Proposal has not expired or been publicly withdrawn at least five Business Days prior to the Company Meeting, and (iii) within nine months following the date of such termination (A) an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition Proposal referred to in clause (i) above) is consummated or effected, or (B) the Company or one or more of its Subsidiaries, directly or indirectly, in one or more transactions, enters into a Contract (as defined in the Arrangement Agreement) in respect of an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition Proposal referred to in clause (i) above) and such Acquisition Proposal is later consummated or effected (whether or not within nine months after such termination.

The SSC Shares issuable under the Arrangement are expected to be listed on the TSX Venture Exchange.

The Arrangement Agreement contains an expense reimbursement fee of up to $750,000 payable by Avante to SSC if the Arrangement Agreement is terminated in certain circumstances.

Board of Directors’ and Special Committee Recommendations

The Avante Board and the special committee of the Avante Board (the “ Special Committee ”) each obtained a fairness opinion from Canaccord Genuity that, as of the date of such opinion, and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be received by Avante Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to Avante Shareholders.

The Avante Board, based on the unanimous recommendation of the Special Committee, unanimously approved the entering into by Avante of the Arrangement Agreement, determined that the Arrangement is in the best interests of Avante and is fair to Avante Shareholders and recommends that Avante Shareholders vote in favour of the Transaction.

Voting Support Agreements

On February 8, 2022, concurrently with the execution of the Arrangement Agreement, the directors and certain officers of Avante, collectively holding approximately 17% of its issued and outstanding Avante Shares, have entered into voting support agreements (the “ Voting Support Agreements ”) under which they have agreed to support and vote in favour of the Transaction.

Full details of the Transaction will be included in the Avante management information circular which is expected to be mailed to shareholders in March 2022 and made available on SEDAR under the issuer profile of Avante at www.sedar.com. The shareholder meeting is expected to be held in April 2022.

Item 6 Reliance on Section 7.1(2) of National Instrument 51-102

Not applicable.

Item 7 Omitted Information

None.

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Item 8 Executive Officer

Steve Rotz, Chief Financial Officer [email protected]

Item 9 Date of Report

February 17, 2022.

- Cautionary Statement on Forward Looking Statements

This material change report contains forward-looking statements within the meaning of applicable Canadian securities laws, including, but not limited to, the anticipated meeting date and mailing of the information circular in respect of the meeting, timing for completion of the Transaction and receiving the required regulatory and court approvals. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern Avante’s expectations, strategy, plans or intentions. Avante’s expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including but not limited to: the risk that the Transaction does not close; uncertainty as to the market value of consideration to be paid in the Transaction; the risk that required court or shareholder approvals of the Arrangement will not be obtained or that such approvals will be delayed beyond current expectations; litigation in respect of either Avante or SSC or the Transaction; and disruption from the Transaction making it more difficult to maintain customer, supplier, key personnel and other strategic relationships. The forward-looking statements contained in this material change report are also subject to other risks and uncertainties, including those more fully described under the caption “Risk Factors” in Avante’s reports filed on SEDAR, including its Annual Information Form for the year ended March 31, 2021 and financial statements and related management’s discussion and analysis for the three and nine months ended March 31, 2021. The forward-looking statements in this communication are based on information available to Avante as of the date hereof, and Avante disclaims any obligation to update any forward-looking statements, except as required by law.

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Schedule “A” News Release

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