GABY entered into a settlement agreement with Miramar Professional Services, the former shareholders of Miramar and the representative of the Vendors, pursuant to which, among other things, GABY has agreed to settle certain outstanding indemnity claims against the Vendors in exchange for the Vendors entering into an amended and restated promissory note, which A&R Promissory Note amends and restates the promissory note issued to the Vendors by GABY pursuant to the share purchase agreement between GABY, Miramar, the Vendors and the Vendors’ Representative, dated February 15, 2021. The terms of the Original Promissory Note that were amended by the A&R Promissory Note include, but not are not limited to, a reduction in the principal amount of the Original Promissory Note and a reduction in the interest rate accruing on the principal amount of the A&R Promissory Note for the next two years. The principal repayment obligations under the Original Promissory Note are also extended pursuant to the A&R Promissory Note for one year with the final repayment of the principal amount of the A&R Promissory Note becoming due on April 30, 2029. In turn, the Vendors have agreed to settle certain outstanding indemnity claims against GABY under the Share Purchase Agreement in exchange for, among other things, GABY providing certain operational and financial covenants in the A&R Promissory Note, all as more particularly set out in the Settlement Agreement. The A&R Promissory Note, among other amendments, reduces the aggregate outstanding principal amount the Original Promissory Note by $3,000,000. Pursuant to the terms of the A&R Promissory Note, GABY is obligated to repay the principal amount as follows: $2,000,000.00 is due and payable on April 30, 2024; $5,000,000.00 is due and payable on April 30, 2026; $5,000,000.00 is due and payable on April 30, 2028; and $10,500,000.00 is due and payable on April 30, 2029. Notwithstanding the foregoing, a more detailed payment schedule which provides for blended interest payments together with principal repayments is included as Schedule C to the A&R Promissory Note. Interest on the principal amount of the A&R Promissory Note is equal to: 5% per annum until September 30, 2023; 7.5% per annum for the period beginning on October 1, 2023 and ending on September 30, 2024; and 10.0% per annum for the period beginning on October 2, 2024 and ending on the Final Maturity Date. As previously announced at the annual and special meeting held on March 25, 2021, holders of GABY shares passed a special resolution approving the consolidation of GABY shares on the basis of 20 pre-consolidation GABY shares for 1 post consolidation GABY share. Pursuant to the Settlement Agreement, GABY has agreed, subject to applicable securities laws, the rules and policies of the Canadian Securities Exchange and the receipt of any required regulatory approvals, including but not limited to the approvals of the CSE, to issue to the Vendors, on a pro rata basis, common share purchase warrants of GABY, which shall be exercisable to purchase common shares in the capital of GABY, on a post-GABY Share Consolidation basis, as follows 500,000 Warrants at an exercise price of CAD$0.20 for a period of 36 months; 500,000 Warrants at an exercise price of CAD $0.60 for a period of 36 months; and 500,000 Warrants at an exercise price of CAD $1.00 for a period of 36 months.
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