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Aug. 13, 2021, 2:23 p.m. EDT

DGTL Holdings and Engagement Labs Enter into Arrangement Agreement

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Toronto, Ontario, Aug 13, 2021 (Newsfile Corp via COMTEX) -- Toronto, Ontario--(Newsfile Corp. - August 13, 2021) - DGTL Holdings Inc. /zigman2/quotes/213891130/delayed CA:DGTL -1.59% (otcqb:DGTHF) (wkn:A2QB0L) /zigman2/quotes/221435805/delayed DE:D0G +0.96% (" DGTL " or the " Purchaser ") and Engagement Labs Inc. /zigman2/quotes/206499028/delayed CA:EL 0.00% (" EL " or the " Company ") are pleased to announce that they have entered into a definitive arrangement agreement dated August 11, 2021 providing for the merger of DGTL and EL () Agreement ").

Summary of the Arrangement

Pursuant to the Agreement, DGTL has agreed to acquire all of the issued and outstanding common shares of EL (collectively, the " Company Shares ") by way of a statutory plan of arrangement under the Canada Business Corporations Act (the " Arrangement "). Pursuant to the terms of the Arrangement, shareholders of EL () Company Shareholders ") will receive common shares of DGTL () Purchaser Shares ") on the basis of an exchange ratio () Exchange Ratio ") that results in the current holders of Company Shares receiving an aggregate of 5,320,000 Purchaser Shares. The basis of the negotiations were centered on a relative share exchange ratio between the two companies and in this connection the stock price of DGTL was approximately twice it's current stock price when the pricing terms were agreed to months ago. Each Company Shareholder is expected to receive 0.1136 of a Purchaser Share in exchange for each Company Share held, on the basis of a 10-day volume-weighted average trading price per Purchaser Share of $0.322.

It is expected that holders of EL options receive, upon exercise, the same consideration they would have received as if they were Company Shareholders at the closing of the Arrangement, and that holders of EL restricted stock awards will receive Company Shares in accordance with their terms immediately prior to closing of the Arrangement, which will be subsequently exchanged for Purchaser Shares on the basis of the Exchange Ratio.

DGTL will use its reasonable commercial efforts to conduct a financing (the " Concurrent Financing ") of subscription receipts () Subscription Receipts ") to be priced within the context of the market for gross proceeds of a minimum of US$2,000,000 on or before October 1, 2021. Immediately prior to the completion of the Arrangement, pursuant to the terms and conditions of the Subscription Receipts, each Subscription Receipt will be exchanged, without any further action on the part of the holder and for no additional consideration, for one (1) Purchaser Share.

Completion of the Arrangement is subject to a number of conditions being satisfied or waived by either or both of DGTL and EL at or prior to closing of the Arrangement, including: approval of Company Shareholders, together with any requisite minority approvals if applicable, the completion of the Concurrent Financing, receipt of all necessary regulatory and court approvals, and the satisfaction of certain other closing conditions customary for a transaction of this nature.

Management and Directors

The Purchaser shall take all necessary actions to ensure that, upon the completion of the Arrangement, Bruce Lev or another representative of Loeb Holding Corp. will be appointed as an observer to the board of directors of the Purchaser (the " Observer "), who shall have the right to attend all meetings of the Purchaser board in a non-voting observer capacity.

On closing, the Purchaser will issue 280,000 Purchaser Shares and 13,750 Purchaser compensation warrants (each, a " Compensation Warrant ") to Oberon Securities, LLC, which assisted the Company as its Financial Advisor. Each Compensation Warrant is exercisable at a price per share equal to a 35% premium to the issue price in the Concurrent Financing for the purchase of one (1) Purchaser Share for a period of five years following the closing date of the Arrangement.

Boards of Directors' Recommendations

The board of directors of DGTL, and the board of directors of EL have both unanimously approved the proposed Arrangement.

Directors, management and certain key Company Shareholders have signed lockup agreements to vote their respective Company Shares in favour of the Arrangement, and have agreed not to trade the Purchaser Shares that they receive pursuant to the Arrangement for a period of one year following closing.

Further Details

The Agreement contains representations and warranties for the benefit of each of DGTL and EL, conditions relating to shareholder, court and regulatory approvals, material adverse changes and compliance with the Agreement as are in each case customary in comparable transactions of this nature.

The Agreement includes deal protection provisions that are customary in Canadian board-supported transactions on the part of both EL and DGTL (subject to customary fiduciary out provisions). There is a termination fee commensurate with a transaction of this size being $250,000 payable by either DGTL or EL depending on the termination event as set out in the Agreement.

Details of the Arrangement, including a summary of the terms and conditions of the Agreement, will be disclosed in a management information circular of EL, which will be mailed to the Company Shareholders and will also be available on SEDAR at www.sedar.com . The Agreement will also be filed on the SEDAR profiles of each of DGTL and EL.

It is expected that the special meeting of the Company Shareholders (the " Meeting ") to approve the proposed Arrangement will be held and, if approved at the Meeting, it is expected that the Arrangement would close in the fourth quarter of 2021.

Based upon the number of issued and outstanding shares in each of the Company and the Purchaser on the date hereof, upon completion of the transaction, and exclusive of the Concurrent Financing, it is expected that the Purchaser will have approximately 43,558,125 Purchaser Shares issued and outstanding on a non-diluted basis, as compared to 37,958,125 Purchasers Shares outstanding as at the date hereof.

The transaction is an arm's length transaction pursuant to applicable regulatory policies.

This announcement is for informational purposes only and does not constitute an offer to purchase, a solicitation of an offer to sell any shares or a solicitation of a proxy.

Financial and Legal Advisors

/zigman2/quotes/213891130/delayed
CA : Canada: TSX Venture
$ 0.31
-0.0050 -1.59%
Volume: 69,719
Oct. 20, 2021 5:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$11.67 million
Rev. per Employee
N/A
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/zigman2/quotes/221435805/delayed
DE : Germany: Frankfurt
0.21
+0.0020 +0.96%
Volume: 0.00
Oct. 20, 2021 8:15a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
N/A
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/zigman2/quotes/206499028/delayed
CA : Canada: TSX Venture
$ 0.04
0.00 0.00%
Volume: 141,000
Oct. 20, 2021 5:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.87 million
Rev. per Employee
N/A
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