ECN Capital Corp. — Capital/Financing Update 2021

Dec 15, 2021

DECEMBER 15, 2021

ECN CAPITAL CORP.

TREASURY OFFERING OF LISTED SENIOR UNSECURED DEBENTURES

TERM SHEET

A final base shelf prospectus dated October 12, 2021 (the “final base shelf prospectus”) containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces of Canada. A copy of the final base shelf prospectus, any amendment to the final base shelf prospectus and any applicable shelf prospectus supplement that has been filed, is required to be delivered with this document.

This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the final base shelf prospectus, any amendment and any applicable shelf prospectus supplement for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.

The Debentures (as defined below) have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or under the securities laws of any state of the United States (as defined in Regulation S under the U.S. Securities Act (the “United States”)). Accordingly, the Debentures may not be offered, sold or delivered, directly or indirectly, within the United States, except pursuant to an exemption from the registration requirements of the U.S. Securities Act and in compliance with any applicable state securities laws. This term sheet does not constitute an offer to sell, or a solicitation of an offer to buy, any of these securities within the United States.

(All amounts are stated in Canadian dollars unless otherwise noted).

**ISSUER: **	ECN Capital Corp. (“ECN Capital” or the “Company”).
OFFERING:	Treasury offering of Listed Senior Unsecured Debentures (the “Debentures”).
**ISSUEPRICE: **	$1,000 per Debenture.
**ISSUESIZE: **	$60 million of Debentures (up to $69 million of Debentures if the Over-
	Allotment Option is exercised in full).
**OVER-ALLOTMENTOPTION: **	The underwriters will have an option to purchase up to an additional $9 million
	of Debentures at the Issue Price, exercisable, in whole or in part, at any time
	until the date that is 30 days following the Closing, for market stabilization
	purposes and to cover overallotments, if any.
**USE OFPROCEEDS: **	The Company intends to use the net proceeds of the offering to fund growth
	initiatives and for general corporate purposes.
**COUPON: **	6.25% per annum from the Closing Date, payable semi-annually in arrears on
	the last day of June and December of each year commencing on June 30,
	2022 until the maturity date of the Debentures; the first payment will include
	accrued and unpaid interest for the period from Closing Date to, but excluding,
	June 30, 2022. Subject to the Share Interest Payment Option referred to below.
**MATURITYDATE: **	December 31, 2027.
RANK:	The Debentures will be direct senior unsecured obligations of the Company
	and will rank (i) subordinate to all existing and future Senior Secured
	Indebtedness (as defined below) of the Company, (ii) subordinate to all existing
	and future secured indebtedness that is not Senior Secured Indebtedness, but
	only to the extent of the value of the assets securing such other secured
	indebtedness, (iii)_pari passu_with each debenture issued under the indenture
	under which the Debentures will be issued (the “Indenture”) and with all other

present and future unsubordinated indebtedness of the Company, including the listed senior unsecured debentures issued by the Company on September 4, 2020 and October 28, 2021 (including the listed senior unsecured debentures issued on November 5, 2021 pursuant to the exercise of the over-allotment option), that is not Senior Secured Indebtedness, including trade creditors, (iv) senior in right of payment to indebtedness of the Company that by its terms is subordinated in right of payment to the Debentures, and (v) structurally subordinated to all existing and future obligations, including indebtedness and trade payables, of the Company’s subsidiaries. The payment of principal and premium, if any, of, and interest on, the Debentures will be subordinated in right of payment to all Senior Secured Indebtedness of the Company, as will be set forth in the Indenture. The Indenture will not restrict the Company or its subsidiaries from incurring additional indebtedness or from mortgaging, pledging or charging its properties to secure any indebtedness or liabilities. None of the Company’s subsidiaries will guarantee the Debentures.

"Senior Secured Indebtedness" means any indebtedness (including without limitation, under guarantees, indemnities and similar instruments) of the Company (including, without limitation, principal, interest, fees, premiums, make whole amounts and any other amounts owing in respect of such indebtedness) that is secured by a first lien on a material portion of the assets of the Company, which for certainty shall include all indebtedness under the Company's third amended and restated credit agreement (as such credit agreement may be further amended, restated or otherwise modified from time to time) (the “Senior Credit Facility”) with its bank lenders and derivative, swap, hedging and cash management arrangements with any lender or affiliate of any lender under the Senior Credit Facility.

REDEMPTION:

SHARE PAYMENT OPTION ON REDEMPTION OR MATURITY:

The Debentures will not be redeemable before December 31, 2024 (the “First Call Date”). On and after the First Call Date and prior to December 31, 2025, the Debentures will be redeemable in whole or in part from time to time at the Company’s option at a redemption price equal to 104.6875% of the principal amount of the Debentures redeemed plus accrued and unpaid interest, if any, up to but excluding the date set for redemption. On and after December 31, 2025 and prior to December 31, 2026, the Debentures will be redeemable in whole or in part from time to time at the Company’s option at a redemption price equal to 103.125% of the principal amount of the Debentures redeemed plus accrued and unpaid interest, if any, up to but excluding the date set for redemption. On and after December 31, 2026 and prior to the Maturity Date, the Debentures will be redeemable, in whole or in part, from time to time at the Company’s option at par plus accrued and unpaid interest, if any, up to but excluding the date set for redemption. The Company shall provide not more than 60 nor less than 30 days’ prior notice of redemption of the Debentures. The terms of the Senior Credit Facility permit the Company to effect an optional redemption (as described above) by the issuance of equity interests of the Company, including the Shares, but prohibit the Company from effecting such an optional redemption in cash. Any such optional redemption would be effected subject to compliance with the Senior Credit Facility.

• Subject to any required regulatory approval and provided no Event of Default has occurred and is continuing, the Company has the option, upon not more than 60 nor less than 40 days’ prior notice, to satisfy its obligations to pay on redemption or maturity, the principal amount of and premium (if any) on the Debentures, in whole or in part, by delivering freely tradeable Common Shares (“Shares”) to Debenture holders. Any accrued and unpaid interest will be paid in cash (the “Share Payment Option”).

In such event, payment will be satisfied by delivering for each $1,000 due, that

number of freely tradeable Shares obtained by dividing $1,000 by 95% of the Current Market Price on the date fixed for redemption or maturity, as the case may be.

CURRENT MARKET PRICE:

• Current Market Price is defined as, generally, the arithmetic average of the per share volume weighted average trading price of the Shares on the TSX for the 20 consecutive trading days ending on the fifth trading day preceding the date of determination.

RESTRICTION ON SHARE PAYMENT OPTION:

• The Company shall not, directly or indirectly (through a subsidiary or otherwise) undertake or announce any rights offering, issuance of securities, subdivision of Shares, dividend or other distribution on the Shares or any other securities, capital reorganization, reclassification or any similar type of transaction in which:

• a) the number of securities to be issued;

• b) the price at which securities are to be issued, converted or exchanged; or

• c) any property or cash that is to be distributed or allocated,

is in whole or in part based upon, determined in reference to, related to or a function of, directly or indirectly, (i) the exercise or potential exercise of the Share Payment Option on redemption or maturity, or (ii) the Current Market Price determined in connection with the exercise or potential exercise of the Share Payment Option on redemption or maturity.

• SHARE INTEREST PAYMENT The Company may elect from time to time, subject to any required OPTION: regulatory approval and provided that no Event of Default (as defined below) has occurred and is continuing, to satisfy all or part of its interest payment obligations under the Debentures by issuing and delivering sufficient freely tradeable Shares to a trustee for sale, in which event holders of Debentures will be entitled to receive a cash payment equal to the interest owed, from the proceeds of the sale of the requisite number of Shares by the trustee.

CHANGE OF CONTROL:

• Upon a change of control defined generally as the acquisition of voting control or direction over more than 50% of the then issued and outstanding voting shares of the Company, by any person or group of persons acting jointly or in concert, or on a sale, transfer or other disposition, directly or indirectly, of all or substantially all of the assets and properties of the Company and its subsidiaries, taken as a whole (each a “Change of Control”), the Company will be required within 30 days of the occurrence of a Change of Control to make an offer in writing to holders of the Debentures (a “Change of Control Offer”) to purchase within the time period more specifically set out in the Indenture, all Debentures then outstanding at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest.

If holders of 90% of the aggregate outstanding principal amount of Debentures tender to the Change of Control Offer, the Company will have the right to redeem all of the remaining Debentures at the same price.

Further, upon the occurrence of a Change of Control, the Company may redeem the Debentures, at its option and for cash only, prior to the First Call

Date, at a cash redemption price equal to 104.6875% of the principal amount of the Debentures plus an aggregate amount equal to the interest that (i) has accrued and is unpaid to such date of redemption; and (ii) would have accrued and been payable up to and including the First Call Date had the Debentures not been redeemed.

The Company may not, without the consent of the holders of the Debentures, consolidate with or amalgamate or merge with or into any person (other than a directly or indirectly wholly-owned subsidiary of the Company) or sell, convey, transfer or lease (other than a sale and leaseback transaction) all or substantially all of the properties and assets of the Company to another person (other than a directly or indirectly wholly-owned subsidiary of the Company) unless the person formed by such consolidation or into which the Company is amalgamated or merged, or the person which acquires by sale, conveyance, transfer or lease all or substantially all of the properties and assets of the Company satisfies certain key terms as set out in the Indenture.

EVENTS OF DEFAULT:

The Indenture will provide that an event of default (an “Event of Default”) in respect of the Debentures will occur if any one or more of the following described events has occurred and is continuing with respect of the Debentures:

• a) failure for 15 days to pay interest on the Debentures when due;

• b) failure to pay principal or premium, if any, on the Debentures when due whether at maturity, upon redemption, by declaration or otherwise;

• c) default in the observance of the covenant of the Company relating to maintaining listing of the Shares and Debentures on the TSX, and to maintaining the Company’s status as a “reporting issuer”, which defaults continue for 10 business days;

• d) a default in performing or observing any of the covenants, agreements or obligations of the Company described in the Indenture and the continuance of such default for 30 days after written notice to the Company by the trustee under the Indenture (the “Trustee”) or by the holders of not less than 25% in principal amount of outstanding Debentures requiring the same to be remedied;

• e) the failure of the Company to (i) make a Change of Control Offer within 30 days of the occurrence of a Change of Control, or (ii) take up and pay for, within the time period set out in the Indenture, any Debentures then outstanding and tendered by any Debenture holders in acceptance of the Change of Control Offer;

• f) if a decree or order of a Court having jurisdiction is entered adjudging the Company bankrupt or insolvent under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or issuing sequestration or process of execution against, or against any substantial part of, the property of the Company, or appointing a receiver of, or of any substantial part of, the property of the Company or ordering the winding-up or liquidation of its affairs, and any such decree or order continues unstayed and in effect for a period of 60 days;

• g) if the Company institutes proceedings to be adjudicated bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or consents to the filing of any such petition or to the appointment of a receiver of, or of any substantial part of, the property of the Company or makes a general assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due;

• h) any substantial part of the property of the Company shall be sequestered or attached and shall not be returned to the possession of the Company or released from such attachment, as the case may be, whether by filing of a bond, or stay or otherwise, within 60 consecutive days thereafter;

• i) if a resolution is passed for the winding-up or liquidation of the Company except in the course of carrying out or pursuant to a transaction in respect of which the conditions set out in the terms of the Debentures are duly observed and performed;

• j) if, after the Closing Date of this Offering, any proceedings with respect to the Company are taken with respect to a compromise or arrangement, with respect to creditors of the Company generally, under the applicable legislation of any jurisdiction;

• k) default in the delivery, when due, of any Shares, which default continues for 15 days; and

• l) cross acceleration to indebtedness of the Company (other than nonrecourse debt) subordinated or pari passu to the Debentures, subject to a C$25 million (or the equivalent amount in any other currency) threshold.

NON-FINANCIAL COVENANTS:

PURCHASE FOR CANCELLATION:

RATINGS:

LISTING:

Non-financial covenants shall include: (a) to pay principal, premium (if any) and interest; (b) to pay the Trustee’s remuneration; (c) to give notice of default; (d) preservation of existence; (e) keeping of books; (f) annual certificate of compliance; (g) performance of covenants by the Trustee; (h) no dividends on Shares if Event of Default; (i) withholding tax matters; and (j) maintain reporting issuer status and listing of the Debentures and the Shares.

The Company will have the right at any time to purchase the Debentures in the market, by tender, by private contract or otherwise, subject to regulatory requirements and compliance with the Senior Credit Facility.

The Debentures are unrated. The Company does not intend to apply for any credit ratings in respect of itself or the Debentures.

The Company shall apply to list the Debentures distributed under the prospectus supplement on the TSX. The Offering is conditional on the Company obtaining approval to list the Debentures on the TSX and listing will be subject to the Company fulfilling all of the listing requirements of the TSX.

FORM OF OFFERING: Public offering, eligible for sale in all provinces of Canada, by way of a prospectus supplement to the short form base shelf prospectus of the Company dated October 12, 2021 (the “Shelf Prospectus”) and into the United States in reliance on Rule 144A under the U.S. Securities Act of 1933 or in such other manner as to not require registration under the U.S. Securities Act of 1933.

A copy of the Shelf Prospectus is, and a copy of the prospectus supplement and any amendments will be, available on the Company’s profile at www.sedar.com.

**FORM OFUNDERWRITING: **	Bought deal, subject to the entering into an underwriting agreement
	including “Disaster Out”, “Regulatory Out”, and “Material Adverse Change
	Out” clauses running until the Closing Date, and other industry standard
	provisions.
**ELIGIBILITY: **	Eligible for investment under RRSPs, RRIFs, RESPs, RDSPs, DPSPs and
	TFSAs.
JOINTBOOKRUNNERS:	CIBC Capital Markets, BMO Capital Markets, National Bank Financial and
	RBC Capital Markets.
**UNDERWRITINGFEE: **	4.00%.
**CLOSINGDATE: **	On or about December 23, 2021.