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$VRTHF Veritas Pharma <u> LOI Transaction Details:</u>

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TPX   Thursday, 03/08/18 07:52:27 AM
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Post # of 192060 
$VRTHF Veritas Pharma LOI Transaction Details:


$150,000 US upon the signing of the LOI
$150,000 US upon the signing of a Definitive Agreement
1,500,000 shares of Veritas Pharma Inc. subject to escrow policies as dictated by the CSE.
Above Consideration is in exchange for a 50% equity interest in Carbon
The remaining 50% equity interest can be acquired by Veritas based a value to be decided by qualified independent business valuator will be jointly engaged by VRT and 3 Carbon (the cost of which will be paid by VRT) to prepare a valuation report (the “3 Carbon Valuation Report”) to determine, as at the third anniversary of the date of the Definitive Agreement, the total value of 3 Carbon (the “3 Carbon Value”). If the 3 Carbon Valuation Report does not state the 3 Carbon Value as a specific amount but instead expresses a range of value, the parties agree that the mid-point of the stated range shall be deemed to be the 3 Carbon Value.

Each shareholder of 3 Carbon other than VRT (a “Selling Shareholder”) shall have the right, for a period of 60 days following that shareholder’s receipt of the 3 Carbon Valuation Report, to give notice to VRT (the “Notice”) that it requires VRT to purchase the 3 Carbon Shares held by that shareholder (the “Seller’s 3 Carbon Shares”), the purchase price for which shall be paid in cash or in fully paid and non-assessable common shares of VRT (the “VRT Shares”) if the VRT Shares are listed or quoted for trading on a stock exchange (the “Stock Exchange”), or in a combination thereof, as may be determined by VRT in its discretion. The purchase price for the Seller’s 3 Carbon Shares (the “Buy-out Price”) will be determined as follows:

Buy-out Price = 3 Carbon Value x Y

where Y is the percentage of 3 Carbon Extractions Inc.’s issued and outstanding common share capital that the Seller’s 3 Carbon Shares represent as at the third anniversary of the date of the Definitive Agreement. The number of VRT Shares to be issued in payment of the Buy-out Price (if applicable) will be determined by dividing the Buy-out Price by the Discounted Market Price (hereinafter defined). The, “Discounted Market Price” means the average closing price on the stock exchange on which the VRT Shares primarily trade for the period comprising the 30 trading days immediately prior to the third anniversary of the date of the Definitive Agreement, less the maximum discount allowed by the policies of such stock exchange.

VRT shall, within 45 days of VRT’s receipt of the Notice, deliver the Buy-out Price to the Selling Shareholder in exchange for the share certificate representing the Seller’s 3 Carbon Shares endorsed for transfer.
The LOI was negotiated at arm's length and is effective as of March 7, 2018. The parties will use reasonable commercial efforts to enter into the Definitive Agreement within 30 days of VRT's acceptance of this LOI, or such later date as may be mutually agreed to, in writing, by the parties, which Definitive Agreement will, upon execution replace and supersede this LOI. The parties acknowledge that the Definitive Agreement will contain the covenants and conditions set out herein and additional representations, warranties and terms that are included in transactions similar to the Transaction. VRT will pay $150,000 USD upon the signing of the LOI. The transaction will be subject to requisite regulatory approvals including the approval of the Canadian Securities Exchange (the “CSE”) and other closing conditions.

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