Mr. Jake Bouma reports

EXRO ANNOUNCES $15 MILLION BOUGHT DEAL OFFERING OF SECURED CONVERTIBLE DEBENTURE UNITS

Exro Technologies Inc. has entered into an agreement with Eight Capital, pursuant to which Eight Capital has agreed to purchase for resale, together with a syndicate of underwriters, on a bought deal private placement basis, 15,000 units of the company at a price of $1,000 per unit, for gross proceeds of $15-million. Each unit will consist of $1,000 principal amount senior secured convertible debenture and 416 common share purchase warrants of the company, each having the terms described below.

Exro has granted the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to the closing of the placement, to purchase up to an additional 2,250 units (being 15 per cent of the number of units offered in the placement). If the underwriters exercises this option in full, the aggregate gross proceeds of the placement will be $17.25-million.

The company intends to use the net proceeds from the placement to finance the commercialization of the company's power electronic technology and for working capital and general corporate purposes.

The debentures

The debentures will mature on Dec. 31, 2027, and will accrue interest at the rate of 12.0 per cent per annum, payable semi-annually in arrears beginning on June 30, 2023. Subject to applicable regulatory approvals and provided no event of default has occurred and is continuing, at the company's option, the interest may be paid in common shares of the company at a price equal to the volume-weighted average price of the company's common shares on the Toronto Stock Exchange for the five days prior to the date such interest is due.

At the holders' option, the debentures may be converted into common shares of the company at any time and from time to time, up to the earlier of the maturity date and the date fixed for redemption of the debentures, at a conversion price of $2.40 per common share, subject to adjustment in certain circumstances.

The company will be entitled to redeem the debentures at 105 per cent of par plus accrued and unpaid interest at any time following Dec. 31, 2024.

The debentures will be secured by a first-priority floating charge over all the company's present and after-acquired personal property, an assignment of all present and after-acquired intellectual property, and a pledge of the securities of the company's material subsidiaries, provided the company shall be permitted to incur an operating line of credit of up to $10-million, secured by inventory and/or the accounts receivable of the company, which permitted indebtedness may rank equally with the debentures.

The warrants

Each warrant will be exercisable for one common share of the company for a period of five years from the date of issue, at an exercise price of $2.40 per warrant share, subject to adjustment in certain events.

If, at any time following the date that is four months and one day following the closing date, the volume-weighted average trading price of the common shares of the company on the Toronto Stock Exchange or such other stock exchange where the majority of the trading volume occurs exceeds or is equal to $4.80 per share for a period of 20 consecutive trading days, the company may, at its sole discretion, elect to accelerate the expiry date of the warrants to the date that is 30 calendar days after the company issues a press release announcing that it has exercised such acceleration right.

Additional information

The units will be offered and sold: (i) in Canada on a private placement basis to accredited investors within the meaning of National Instrument 45-106 respecting prospectus exemptions and other exempt purchasers in each province of Canada; (ii) in the United States on a private placement basis pursuant to applicable exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended; and (iii) in other jurisdictions outside of Canada and the United States, in each case in accordance with applicable securities laws provided that no prospectus, registration statement or similar document is required to be filed in such jurisdictions and the company does not thereafter become subject to continuous disclosure obligations in such jurisdictions.

The debentures, any common shares of the company issuable thereunder, the warrants and any warrant shares sold in the placement will be subject to a four-month hold period in Canada commencing on the date of closing.

The placement is expected to close on or about Dec. 22, 2022, and is subject to customary closing conditions, including listing of the conversion shares and the warrant shares on the TSX and receipt of any required approvals of the TSX and applicable securities regulatory authorities.

About Exro Technologies Inc.

Exro is a leading clean technology company that has developed new-generation power control electronics that change how the world optimizes energy by expanding the capabilities of electric motors and batteries. The company's innovative technologies serve to bridge the performance cost gap in e-mobility (coil driver) and stationary energy storage (cell driver), and act to accelerate adoption toward a circular electrified economy by delivering more with less -- minimum energy for maximum results.

We seek Safe Harbor.