Enablence Technologies Inc. — Capital/Financing Update 2021

Sep 16, 2021

FIFTH AMENDMENT TO LOAN AGREEMENT

THIS FIFTH AMENDMENT AGREEMENT is made as of this 3rd day of September, 2021.

B E T W E N:

ENABLENCE TECHNOLOGIES INC. , as borrower (the “ Borrower ”)

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VORTEX ENA LP , as lender (“ Vortex LP ”)

Recitals:

1. The Borrower and Export Development Canada (“ EDC ”), as lender, entered into a loan agreement dated as of February 29, 2016, as amended by a first amending letter dated August 11, 2016, a second amending and waiver letter dated October 30, 2017, a third amending letter dated March 9, 2018 and a fourth amending agreement to loan agreement and waiver letter dated April 23, 2020 (collectively, the “ Original Loan Agreement” );

2. Pursuant to an assignment of debt and security dated August 20, 2021 (the “ EDC Assignment Agreement ”), EDC assigned all rights, benefits, covenants, liabilities and obligations arising under or pursuant to the Original Loan Agreement including, without limitation, the right to enforce the guarantees and security delivered in respect of the Original Loan Agreement (as listed in the EDC Assignment Agreement) to Paradigm Capital Partners Limited (“ PCPL ”).

3. PCPL executed and delivered the EDC Assignment Agreement and effected the assignment contemplated thereby as agent for and on behalf of Vortex LP pursuant to an agency agreement dated August 20, 2021 (the “ Agency Agreement ”), which Agency Agreement has been terminated pursuant to a termination of agency dated on or about the date hereof.

4. The Borrower and Vortex LP wish to amend the Original Loan Agreement all as more particularly provided for in this fifth amendment agreement (the Original Loan Agreement, as so amended, is hereinafter referred to as the “ Loan Agreement ”);

NOW THEREFORE in consideration of the covenants and agreements contained in this fifth amendment agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Borrower and Vortex LP, each of the Borrower and Vortex LP agrees as follows:

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1. Interpretation

• 1.1 The recitals to this fifth amendment agreement are true and correct and form an integral part hereof.

• 1.2 In this fifth amendment agreement (including the attached confirmations), unless otherwise defined herein, or unless the context otherwise requires, all capitalized terms shall have the meanings given to them in the Original Loan Agreement.

• 1.3 All references herein to Sections of or Schedules to an agreement other than this second amendment agreement are to Sections of and Schedules to the Original Loan Agreement, unless otherwise expressly stated.

• 1.4 Clause headings are for reference only.

2. Amendments to Original Loan Agreement

• 2.1 Subject to the terms and conditions contained in this fifth amendment agreement, the Original Loan Agreement is amended to the extent necessary to give effect to the provisions of this fifth amendment agreement and to incorporate the provisions of this fifth amendment agreement into the Original Loan Agreement.

• 2.2 As a result of the assignment to PCPL, as agent for Vortex LP, pursuant to the EDC Assignment Agreement, the Borrower acknowledges, confirms and agrees that Vortex LP is the lender and secured party for all purposes of the Transaction Documents and all references in any of those documents to “Export Development Canada” and “EDC” are hereby replaced by “Vortex ENA LP” and “Vortex LP”, respectively.

• 2.3 Section 1 of Schedule A to the Original Loan Agreement is hereby amended by adding the following definitions:

" "Fifth Amendment Agreement" means the fifth amendment to loan agreement dated September 3, 2021 between the Borrower and Vortex LP.

"Maturity Date" means the date which is the fourth anniversary of the Effective Date (as such term is defined in the Fifth Amendment Agreement), as such date may be extended pursuant to Section 24 of this Agreement.

"Obligations" has the meaning given to such term in the Fifth Amendment Agreement.

"PIK Interest" means interest paid in-kind by adding all such accrued and unpaid interest to the unpaid principal amount owing hereunder) on each Interest Payment Date in which PIK Interest is applicable.

"Recapitalization Transaction" means the recapitalization plan of the Borrower comprised of (i) amendments to the terms and provisions of the Borrower’s secured indebtedness, (ii) a shares-for-debt settlement with certain unsecured creditors pursuant to which the Borrower’s indebtedness to such creditors will be settled in exchange for the issuance to such creditors of either common shares or units (comprised of common shares and common share purchase warrants) of the Borrower, (iii) a shares-forservices settlement between the Borrower and a service provider engaged to assist with

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the restructuring of the Borrower’s balance sheet whereby the service provider’s fee shall be payable in common shares of the Borrower and (iv) a private placement of subscription receipts that automatically convert upon completion of the Recapitalization Transaction into common shares and common share purchase warrants of the Borrower for aggregate gross proceeds of up to CDN$11,000,000.

"Recapitalization Transaction Closing Date” means the date on which (i) all necessary regulatory, shareholder and other approvals required to complete the Recapitalization Transaction have been obtained, (ii) all definitive transaction documents required to effect the Recapitalization Transaction have been executed and delivered, (iii) all conditions precedent to closing of the Recapitalization Transaction have been satisfied or waived, (iv) all proceeds payable to the Borrower in respect of the Recapitalization Transaction have been received by the Borrower and (v) all conditions to the release of the escrow for the conversion of the subscription receipts shall have been satisfied or waived and all necessary steps taken by the Borrower for the issuance of the applicable common shares and common share purchase warrants upon conversion of such subscription receipts upon completion of the Recapitalization Transaction."

• 2.4 Section 11(a) of the Original Loan Agreement is hereby deleted in its entirety and replaced with the following:

  • “(a) Immediately upon the Effective Date (as such term is defined in the Fifth Amendment Agreement), interest on the outstanding principal amount will be calculated and payable in arrears by the Borrower to Vortex LP on each Interest Payment Date at the rate of interest equal to the sum of 7.5% per annum. With respect to any amount of interest which accrues and is payable on any of the 24 Interest Payment Dates immediately following the Effective Date, interest shall be payable as PIK Interest unless the Borrower elects to pay any such amount in cash upon notice to Vortex LP. For certainty, any amount of interest which accrues after such 24 Interest Payment Dates shall be paid by the Borrower in cash.”.

• 2.5 Each of Section 17(b) and Section 17(e) of the Original Loan Agreement are hereby deleted.

• 2.6 The Original Loan Agreement is hereby amended by adding the following as Section 24:

  • ““24. Maturity Date:

    • ”Subject to the acceleration of payment of the Obligations upon the occurrence of an Event of Default, all of the Obligations shall become due and payable on the Maturity Date. The Borrower has the right to extend the Maturity Date for a period of up to six (6) month provided that (a) it provides written notice of such extension to Vortex LP no later than thirty (30) days prior to the Maturity Date and (b) no Event of Default has occurred and is continuing. For certainty, the foregoing right to extend the Maturity Date may only be exercised once by the Borrower.”

• 2.7 Section 10 of the Original Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

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• “10. Principal:

Subject to the acceleration of payment of the Obligations upon the occurrence of an Event of Default, the Borrower shall pay the entire outstanding principal amount owing pursuant to this Agreement in one lump sum payment on the Maturity Date.”

• 2.8 The contact information set out in clause (i) of the notice provision in Section 5 of Schedule A to the Original Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

  • “i) Vortex ENA LP, at 95 Wellington Street West, Suite 2101, Toronto, Ontario

Attention: Michael Roland Fax: [Redacted - Personal Information] Email: [Redacted - Personal Information]

3. Representations And Warranties

• 3.1 The Borrower represents and warrants to Vortex LP as follows, which representations and warranties shall survive the execution and delivery hereof:

  • (a) it has the corporate power and authority to enter into and perform its obligations under this fifth amendment agreement;

  • (b) the entering into and performance by it of this fifth amendment agreement has been (i) duly authorized by all necessary corporate action and (ii) does not and will not violate or conflict with (X) its articles and by-laws, (Y) any law, statute, regulation, ordinance or decree applicable to it, or (Z) any resolutions passed by its board of directors (or any committee thereof) or shareholders as applicable; and

  • (c) this fifth amendment agreement is a valid and legally binding obligation, enforceable against it in accordance with their respective terms, subject only to any limitation under applicable laws relating to: (i) bankruptcy, insolvency, reorganization, moratorium or creditors’ rights generally; and (ii) the discretion that a court may exercise in the granting of equitable remedies.

4. Acknowledgements, Confirmations and Agreements

• 4.1 The Borrower acknowledges, confirms and agrees that the outstanding amount of indebtedness owing by the Borrower to Vortex LP as of August 20, 2021 is $7,210,859.44 consisting of [Redacted - Commercially Sensitive Information] (such indebtedness together with any and all other present and future liabilities, indebtedness and obligations owing from time to time by the Borrower and the Guarantors to Vortex LP pursuant to the Transaction Documents being collectively referred to herein as the “ Obligations ”).

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• 4.2 The Borrower acknowledges, confirms and agrees that as of the date hereof it is in default of the terms of the Original Credit Agreement by reason of failing to comply to date with certain covenants contained therein including, without limitation, by failing to make payments of principal and interest when due in accordance with the terms thereof (all such failures to comply with the terms of the Original Credit Agreement to date being collectively, the “ Existing Defaults ”). Vortex LP confirms and agrees with the Borrower that it hereby temporarily waives the Existing Defaults and agrees to forbear from exercising any of its rights and remedies under the Transaction Documents as a result of the Existing Defaults provided that the Recapitalization Transaction Closing Date occurs on or before December 31, 2021. In the event that the Recapitalization Transaction Closing Date does not occur on or before December 31, 2021 for any reason, such failure shall constitute an Event of Default and Vortex LP shall automatically and without notice or any other action on its part be entitled to exercise any and all rights and remedies available to it pursuant to the Transaction Documents or otherwise as a result of such Event of Default and the Existing Defaults. For certainty, in the event that the Recapitalization Transaction Closing Date occurs on or before December 31, 2021, each of the Existing Defaults shall automatically be permanently waived.

• 4.3 Except as provided for in Section 4.2 of this Agreement, the Borrower acknowledges and confirms that Vortex LP has not made any promises, nor has it taken any action or omitted to take any action, that would constitute a waiver of its rights to enforce the Transaction Documents and pursue its remedies in respect of the obligations of the Transaction Parties to Vortex LP arising thereunder, or that would stop it from doing so.

• 4.4 The Borrower hereby ratifies and confirms that (a) except as provided for in this fifth amendment agreement all of the terms and conditions of the Transaction Documents remain in full force and effect, unamended and (b) without limiting the generality of the foregoing and notwithstanding the terms and conditions of this fifth amendment agreement, any Security Documents executed and delivered by it (i) continues to be legal, valid, binding and enforceable in accordance with the terms thereof, (ii) has not been terminated, discharged or released and (iii) stands as valid and enforceable security for the Obligations in accordance with its terms.

• 4.5 The Borrower agrees to execute and deliver from time to time, and to cause each of the other Transaction Parties to execute and deliver from time to time, all such further documents, agreements and instruments as may be reasonably required by Vortex LP in connection with the amendments contemplated by this fifth amending agreement or the matters described herein including, without limitation, confirmation of Vortex LP as lender and secured party for all purposes of the Transaction Documents.

• 4.6 Vortex LP hereby confirms and agrees with the Borrower that the amendment fee of [Redacted - Commercially Sensitive Information] payable pursuant to Section 17(i) of the Original Credit Agreement is included in the Obligations (for certainty, such fee comprises part of the amount set out in clause (iii) of Section 4.1 of this Agreement).

5. Conditions Precedent.

• 5.1 This fifth amendment agreement shall not be effective until satisfaction of the following terms, each to the satisfaction of Vortex LP (the date upon which all such conditions are satisfied being the “ Effective Date ”):

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  • (a) the Borrower shall have duly executed and delivered to Vortex LP this fifth amendment agreement, and each of the Guarantors shall have duly executed and delivered to Vortex LP counterparts to the attached confirmation;

  • (b) Vortex LP shall have duly executed and delivered to the Borrower this fifth amendment agreement; and

  • (c) such other conditions as Vortex LP may reasonably request.

• 5.2 The conditions set forth in Section 5.1 are inserted for the sole benefit of Vortex LP and may be waived by Vortex LP, in whole or in part.

6. General

• 6.1 This fifth amendment agreement shall be construed and interpreted in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and each of the parties hereto irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of Ontario.

• 6.2 This fifth amendment agreement shall enure to the benefit of and shall be binding upon the parties to this fifth amendment agreement and their respective heirs, administrators, executors, successors and permitted assigns.

• 6.3 If any provision of this fifth amendment agreement is inconsistent or conflicts with any provision of the Original Loan Agreement, the relevant provision of this fifth amendment agreement shall prevail and be paramount to the extent of any such inconsistency or conflict.

• 6.4 This fifth amendment agreement and the confirmations attached hereto may be executed in any number of counterparts and by facsimile or other means of electronic transmission, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this fifth amendment agreement to produce or account for more than one such counterpart.

• 6.5 This fifth amendment agreement amends and supplements the Original Loan Agreement. This fifth amendment agreement and the Original Loan Agreement shall be read together and constitute one agreement with the same effect as if the amendments made by this fifth amendment agreement had been contained in the Original Loan Agreement as of the effective date of this fifth amendment agreement. Any reference to the “Loan Agreement” in any other Transaction Document shall refer to the Loan Agreement, as amended hereby.

• 6.6 This fifth amendment agreement will not discharge or constitute novation of any debt, obligation, covenant or agreement contained in the Loan Agreement or any of the other Transaction Documents.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF the parties hereto have executed this fifth amendment agreement as of the date first set out above.

ENABLENCE TECHNOLOGIES INC.

Per:__________________________________ (signed) "Craig Mode"_ Name:

Craig Mode Title: Co-CEO & CFO

Per:___________________________________ Name:

Title:

I/We have authority to bind the Corporation.

VORTEX ENA LP, by its general partner 2820703 ONTARIO INC.

Per:__________________________________ (signed) "Michael Roland"_ Name: Michael Roland Title: President

I/We have authority to bind the Limited Partnership.

[ Signature Page to Fifth amendment ]

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CONFIRMATION OF CREDIT PARTIES

In consideration of the covenants and agreements contemplated by the foregoing fifth amendment agreement (the “ Fifth Amendment Agreement ”) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the undersigned, each of the undersigned in its capacity as a Guarantor (the “ Undersigned ”), acknowledges receipt of the foregoing fifth amendment agreement and agrees with Vortex LP to the terms and conditions of the Original Loan Agreement as amended by the Fifth Amendment Agreement.

Without limiting the generality of the foregoing, each of the Undersigned confirms to Vortex LP that notwithstanding the Fifth Amendment Agreement, each of the Security Documents to which it is a party (including, without limitation, any guarantees delivered by the Undersigned): (a) remains in full force and effect and has not been terminated, discharged or released; (b) continues to constitute legal, valid and binding obligations of the Undersigned enforceable against the Undersigned in accordance with its terms; (c) to the extent such Security Documents consist of any Guarantees, each such Guarantee continues to guarantee the due and punctual payment and performance of the Obligations in accordance with its terms; and (d) stands as valid and enforceable security for the Obligations in accordance with its terms.

IN WITNESS WHEREOF each of the Undersigned has executed this confirmation forming part of the fifth amendment agreement as of the date first set out above.

ENABLENCE CANADA INC.

ENABLENCE USA COMPONENTS INC.

" " By: (signed) Craig Mode Name: Craig Mode Title: Co-CEO & CFO By: Name: Title:

By: " " (signed) Craig Mode Name: Craig Mode Title: Co-CEO & CFO By: Name: Title:

I/We have authority to bind the Corporation.

I/We have authority to bind the Corporation.

ENABLENCE USA INC .

By: (signed) "Craig Mode" Name: Craig Mode Title: Co-CEO & CFO

By: Name: Title:

I/We have authority to bind the Corporation.

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