Matrix Asset Management Inc.

Matrix Asset Management Inc.
Growth Works Capital Ltd.

December 30, 2013 22:29 ET

Growth Works Capital Obtains Final Tranche of $5 Million Secured Debt and Announces Change of Auditor

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 30, 2013) - Further to its announcement October 1, 2013, Matrix Asset Management Inc. (TSX:MTA) ("Matrix") announces that its subsidiary, Growth Works Capital Ltd. ("GWC"), has closed its final tranche of $1 million relating to its $5 million ("Debt") with an independent Canadian lender ("Lender"). The first Debt tranche of $4 million was advanced to GWC on October 1, 2013.

The Debt shall be repaid over 60 months from the date of the advance of each tranche. The Debt bears an interest rate of 12% annually, payable quarterly. An annual processing fee of 6.5% of the principal amount of the Debt will also be payable quarterly. An initial structuring fee of 3.5% of the principal of the Debt advanced is also payable to the Lender. The Lender will also receive approximately 7.5% of incentive payment amounts earned by GWC and related registrants from the venture capital funds they manage during the time of the Debt and three years thereafter. Any remaining portion of the Debt may be prepaid after 40% of Debt has been repaid. The Debt is secured by the assets of GWC and guaranteed by the assets of Matrix and certain of its non-registrant subsidiaries and Chief Executive Officer. The final tranche will be held in escrow for GWC's benefit to be released when certain documentation and other conditions of escrow have been satisfied or earlier upon the Lender's approval.

The five year service agreement announced on October 1, 2013 was also amended ("Services Agreement"). The Services Agreement is between Matrix, GWC and a party related to the Lender ("Consultant"). Under the Services Agreement, the Consultant will assist GWC and affiliates of GWC as managers for various venture capital funds to source, oversee, negotiate and close sales of certain underperforming fund portfolio assets. Under the Services Agreement the Consultant will be paid an average annual consulting fee of 1.8% of the greater of (i) the net asset value of those portfolio assets (valued at present at approximately $8 million) and (ii) 10% of the value of all portfolio assets under management. The Services Agreement also provides that the Consultant will also be paid a success fee of 20.0% of the gross proceeds of the sale of certain portfolio assets. Other services may be provided by the Consultant upon request that are either billed on a cost-recovery basis or for a maximum annual amount of $350,000.

The Services Agreement can be terminated by Matrix and GWC at any time subject to the repayment of the Debt owing to the Lender and subject to a payment to the Consultant of consulting fees and success fees otherwise applicable in the 12 months following termination. The applicable managed venture capital funds are not a party to the Services Agreement and will not be responsible for paying any fees to the Consultant. This Services Agreement replaces the previous services agreement entered into between the Consultant and Matrix. While the Consultant have been retained under the Services Agreement to provide for future services to encourage fund portfolio asset sales, there can be no assurance that such fund portfolio asset sales will occur.

Matrix also announces the resignation of its auditor Deloitte & Touche LLP (the "Former Auditor") effective December 2, 2013 and the appointment of Hay & Watson Chartered Accountants (the "Successor Auditor") effective December 23, 2013.

There were no reportable events (as defined in National Instrument 51-102 Continuous Disclosure Obligation) between the Company and the Former Auditor. The Former Auditor did not provide a modified opinion in their auditor's report for the financial statements of the Company for during the two most recently completed fiscal years. The Former Auditor did make, however, an Emphasis of Matter notation as of April 2, 2013 with respect to Matrix's working capital deficit as at December 31, 2012, net loss for the 2012 year and Matrix's ability as of April 2, 2013 to continue to operate as a going concern. The Notice of Change of Auditor, together with the letter from the Former Auditor and the letter from the Successor Auditor have been reviewed by the Company's board of directors and will be filed on SEDAR accordingly.

Forward-looking statements: Certain statements in this press release are forward-looking statements including the statements about the release of monies from financing escrow and services by the Consultant. Forward-looking statements are based on beliefs and assumptions at the time the statements are made, including beliefs and assumptions about the satisfaction or waiver of conditions to the financing escrow. While management considers these beliefs and assumptions to be reasonable based on information currently available to it, they are subject to numerous risks and uncertainties and no assurance can be given that such beliefs and assumptions will prove to be correct. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements due to many factors including, but not limited to, risks associated with the release of funds from financing escrow. Many of these risks are beyond the control of Matrix. Other than as specifically required by law, Matrix undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect or to reflect new information, future unanticipated events or results or other factors.

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