ESW Capital, LLC

December 21, 2016 18:25 ET

ESW Capital, LLC Enters into Agreement to Acquire Preferred Shares and Warrant of Redknee Solutions Inc.

This press release is issued pursuant to Multilateral Instrument 62-104 - Take-Over Bids and Issuer Bids and National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues

TORONTO, ONTARIO--(Marketwired - Dec. 21, 2016) - ESW Capital, LLC ("ESW Capital"), and its affiliate Wave Systems Corp. (the "ESW Capital Investor"), announced today that each of ESW Capital and ESW Capital Investor entered into a subscription agreement (the "ESW Agreement") with Redknee Solutions Inc. (the "Redknee" or the "Company"). Under the ESW Agreement, the ESW Capital Investor will, subject to the fulfillment or waiver of certain terms and conditions, subscribe for 800,000 Series A Preferred Shares of the Company (the "Preferred Shares") and a common share purchase warrant (the "Warrant") for gross proceeds of US$83.2 million (the "Transaction"). The Warrant will entitle the ESW Capital investor to acquire a number of common shares ("Common Shares") of the Company (each a "Warrant Share") equal to US$60 million divided by the exercise price per Warrant Share (the "Warrant Exercise Price") for a period of ten years from the closing date. The Warrant Exercise Price will be determined on the date of closing of the Transaction (the "Closing Date") and equal to the lower of: (i) the US dollar equivalent on the Closing Date of the volume weighted average trading price of the Common Shares over the period of 10 trading days on the Toronto Stock Exchange ("TSX") ending in the second trading day prior to the Closing Date; and (ii) US$1.43; provided that the Warrant Exercise Price shall not be less than US$1.09.

Upon closing of the Transaction, ESW Capital would own and control all of the issued and outstanding Preferred Shares and, depending on the Warrant Exercise Price, certain common shares in the capital of the Company, in addition to the 14,106,300 Common Shares (representing approximately 13% of the issued and outstanding Common Shares) currently owned by ESW Capital. Prior to the date hereof the ESW Capital Investor did not own any securities of Redknee or have the right to acquire any securities of Redknee.

The ESW Agreement was entered into in accordance with the commercial and financial business objectives of ESW Capital and the ESW Capital Investor, for the purpose of which the issuer stated in a press release dated December 9, 2016 was to provide the issuer with alternative strategic financing to enhance shareholder value. Except in connection with the Transaction, ESW Capital has not made any determinations with respect to its role in the future of Redknee and its business or with respect to future acquisitions of, ownership of, or control over, any additional securities of Redknee. Subject to certain standstill provisions of a confidentiality agreement dated December 15, 2016 between ESW Capital Investor and Redknee, ESW Capital and/or the ESW Capital Investor may in the future acquire additional securities of Redknee in the market or through private or other transactions, sell all or some portion of the securities of Redknee it controls or owns, or enter into derivative or other transactions with respect to its securities of Redknee.

The issuer is located at 2560 Matheson Blvd. East Mississauga, Ontario, L4W 4Y9, Canada. ESW Capital is located at 401 Congress Avenue, Suite 2650, Austin, TX 78701, United States. A copy of the early warning report to which this news release relates can be obtained from Andrew Simon Price at +1 512 524-6149 or on the SEDAR profile of Redknee at www.sedar.com.

About ESW Capital, LLC

Based in Austin, Texas, the ESW Capital group (www.eswcapital.com) focuses on buying, strengthening, and growing mature business software companies. By taking advantage of its unique operating platform, ESW revitalizes its acquisitions for sustainable success while making customer satisfaction a top priority. ESW has been in the enterprise software space since 1988, and the group includes notable brands such as Aurea, Ignite Technologies, Trilogy, and Versata. For more information, email info@eswcapital.com.

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