Karam Minerals and Alpha North Esports & Entertainment Inc. Enter into Letter of Intent for Proposed Reverse Takeover Transaction
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Karam Minerals and Alpha North Esports & Entertainment Inc. Enter into Letter of Intent for Proposed
Reverse Takeover Transaction
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES
VANCOUVER, CANADA – (May 25, 2020) – Karam Minerals Inc. (the “Company” or “KMI”) (CSE:KMI) and
Alpha North Esports & Entertainment Inc. (“ Alpha North”) are pleased to announce that they have
entered into a letter of intent (the “LOI”) to complete a business combination by way of a reverse takeover
(the “ RTO Transaction ”) of KMI by the shareholders of Alpha North. Upon completion of the RTO
Transaction, the combined entity (the “Resulting Issuer”) will continue to carry on the business of Alpha
North. The RTO Transaction will constitute a change of business of KMI under the rules of the Canadian
Securities Exchange (the “Exchange”). The closing of the RTO Transaction (the “Closing”) is subject to the
receipt of all necessary approvals, including without limitation Exchange approval for the listing of the
common shares of the Resulting Issuer (the “ Resulting Issuer Shares ”) on the Exchange. The LOI was
negotiated at arm’s length and is effective May 22, 2020.
Description of Alpha North
Alpha North is a multi- fold, vertically integrated esports company with competitive social gaming at its
core. Alpha North’s ecosystem conducts operations in several sub -sectors to satisfy the emerging needs
of the esports industry in the short and long term. These include real e state assets, IP creation with an
online tournaments platform, production & broadcasting, charity fundraising, celebrity and industry
influencer agreements and publishing.
A summary of financial information for Alpha North will be included in a subsequent news release.
Terms of the RTO Transaction
The RTO Transaction is expected to be completed by way of a share exchange agreement between KMI
and Alpha North or an amalgamation between Alpha North and a subsidiary of KMI, following which the
Resulting Issuer will continue the business of Alpha North. The final legal structure for the RTO Transaction
will be determined after the parties have considered all applicable tax, secu rities law, and accounting
efficiencies. The parties anticipate entering into a definitive agreement in respect of the RTO Transaction
(the “ Definitive Agreement ”) by the end of July 2020, following the completion of satisfactory due
diligence.
As of the date hereof, and not including securities to be issued under the Offering (defined below), KMI
has 17,351,000 common shares (“ KMI Shares ”) outstanding, as well as an aggregate of 1,240,000
incentive stock options to acquire KMI Shares.
Immediately prior to the Closing, Alpha North will have 36,740,328 Class A voting common shares (“Alpha
North Voting Shares”) outstanding. Upon completion of the RTO Transaction, the holders of Alpha North
Voting Shares will receive one Resulting Issuer Share for every Alpha North Voting Share held.
Any convertible securities of Alpha North outstanding at Closing will be exchanged for equivalent
securities of the Resulting Issuer.
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Subject to the receipt of applicable regulatory approvals, KMI will pay a finder's fee of 3,000,000 KMI
Shares to certain third parties in connection with the RTO Transaction.
Management and Directors of the Resulting Issuer
When the RTO Transaction is completed, it is anticipated that the board of directors of the Resulting Issuer
will be reconstituted to consist of the CEO of Alpha North and two additional directors appointed by each
of KMI and Alpha North. The officers of KMI will resign and be replaced with officers appointed by the
new board of directors. Further details will be provided in subsequent news releases.
Conditions to the RTO Transaction
The RTO Transaction is subject to the satisfaction of customary closing condition for similar transactions,
including the following:
• execution of the Definitive Agreement;
• satisfactory completion of due diligence by each of the parties prior to signing the Definitive
Agreement;
• closing of the Offering (as defined below);
• no material adverse change having occurred in the business, results of operations, assets,
liabilities, financial condition, or affairs of each of the parties, between the date of the LOI and
the date of Closing;
• no material breach of the obligations of the parties as contained in the Definitive Agreement;
• the representations and warranties of each of the parties in the Definitive Agreement being true
and correct in all material respects as of the date of Closing; and
• receipt of all required regulatory, corporate, shareholder, and third -party approvals including
Exchange approval, and compliance with all applicable regulatory requirements and conditions
necessary to complete the Transaction.
Private Placement of KMI Units
In connection with the RTO Transact ion, KMI intends to complete a private placement of units of its
securities (the “Units”) at $0.15 per Unit to raise aggregate gross proceeds of not less than C$1,500,000
(the “Offering”). Each Unit will be comprised of one KMI Share and one whole share pu rchase warrant
(each a “Warrant”) to acquire one KMI Share (or Resulting Issuer Share) at a price of $0.50 per share for
a period of two years from the date of issuance. The Warrants will be subject to accelerated expiry where
the price of the KMI Shares ( or Resulting Issuer Shares) trades above a specified price for a specified
period.
The final terms of the Offering remain subject to final negotiation between KMI and the private placement
investors. Net proceeds of the Offering will be used to continue development of Alpha North’s proprietary
gaming platforms, expansion of Alpha North’s product offerings and realization of its core business
functions, and for general working capital purposes.
The securities being offered have not been, nor will they be registered under the United States Securities
Act of 1933, as amended, or state securities laws and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons absent U.S. federal and state registration or an
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applicable exemption from the U.S. registration requirements. This release does not constitute an offer
for sale of securities in the United States.
Forward-looking Information
This news release contains forward -looking information and forward -looking state ments (collectively,
“forward-looking statements”) within the meaning of applicable Canadian and U.S. securities legislation,
including the United States Private Securities Litigation Reform Act of 1995. All statements in this
presentation that are not pur ely historical are forward -looking statements and include statements
regarding beliefs, plans, expectations, and orientations regarding the future, including without limitation
statements related the Company’s prospect of success in executing its proposed plans, including its plans
to complete the RTO Transaction and the Offering and carry on the business of the Resulting Issuer.
Forward-looking statements can often be identified by words such as “will”, “plans”, “expects”, “may”,
“intends”, “anticipates”, “believes”, proposes” or variations of such words including negative variations
thereof and phrases that refer to certain actions, events or results that may, could, would, might or will
occur or be taken or achieved. Forward -looking statements are based on certain assumptions by
management regarding the Company and the Resulting Issuer, including, without limitation, investor
interest in the Offering, and the Company’s ability to complete the RTO transaction and obtain required
Exchange and shareholder and other regulatory approvals, and the timing for all of these events. Actual
results could differ from those projected in any forward-looking statements because of any of numerous
factors including, risks and uncertainties relating to the inability of the Company, to, among other things,
obtain any required governmental, regulatory or stock exchange approvals, permits, consents or
authorizations required to execute its proposed business plans, and obtain the financing required to carry
out its planned futur e activities. Other factors such as general economic, market or business conditions
or changes in laws, regulations and policies affecting the Company’s operations may also adversely affect
the future results or performance of the Company. The Company can provide no guarantee that it will be
successful in completing the RTO Transaction or the Offering. Investors are cautioned that forward looking
statements are not guarantees of future performance or events and, accordingly investors should not put
undue reliance on forward-looking statements because of the inherent uncertainty of such statements.
The forward-looking statements included in this news release are made as of the date hereof and the
Company does not intend to update or revise any forward -looking statements, except as expressly
required by law.
For further information please contact:
Michael Sadhra
Chief Executive Officer
Phone: 604-218-6281
Email: [email protected]
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.