Montfort Capital Closes Brightpath Capital Acquisition

~Montfort acquires one of Canada's leading private providers of residential mortgages focused on Ontario and British Columbia~

Montfort Capital Corporation ("Montfort" or the "Company") (TSXV: MONT) (OTCQB: MONTF), a leading innovator of technology in private credit, is pleased to announce that it has entered into a definitive share purchase agreement (the " Acquisition Agreement ") with Kenneth Thomson The Kenneth Thomson Business Trust (2020), Universal Financial Corp., Blake Albright The Albright (2020) Family Trust, GreatBlake Holdings Inc., Sabrina Kyle The Sabrina Prudham (2020) Family Trust, 2753655 Ontario Inc. and Reap Equity Corp. (collectively, the " Vendors ") in connection with its previously announced acquisition of Brightpath Capital Corporation (" Brightpath Capita l"), Brightpath Servicing Corporation (" Brightpath Servicing "), and Brightpath Residential Mortgage LP I (" Brightpath Mortgage LP ", together with Brightpath Capital and Brightpath Servicing, " Brightpath "), as well as certain holding corporations owned by the Vendors (the " Transaction "). Immediately following the execution of the Acquisition Agreement, the parties successfully completed the Transaction and Montfort has acquired Brightpath. Pursuant to the Transaction, Montfort has acquired all the outstanding common shares of Brightpath Capital Corporation and Brightpath Servicing, and all of the outstanding limited partnership units of Brightpath Residential Mortgage LP I.

Brightpath is one of Canada's leading private providers of residential mortgages focused on Ontario and British Columbia . Brightpath has grown significantly over the past 10 years by offering private credit to individuals who are self-employed, experiencing credit issues, or looking at real estate renovation or development projects and expects to accelerate its growth through the combination with Montfort . The Brightpath management team will continue to operate the mortgage lending company after the completion of the Transaction.

"Brightpath significantly increases our size and profitability and opens our private credit business model to the lucrative real-estate mortgage markets in Canada ," said Mike Walkinshaw , CEO of Montfort "Montfort began as a specialist in SaaS revenue based lending but has quickly grown to offering a broad spectrum of specialized private credit opportunities to Canadian investors. Our technology driven loan origination and underwriting platform allows us to offer scalability and transparency to other vertical segments of the private credit industry, opening up a traditionally restricted asset class to a broader range of investors."

The purchase price of the acquisition was $30.5 million comprised of a combination of 31,250,000 common shares (at a deemed price of $0.40 per common share) and 18,000,000 series A preferred shares (at a deemed value of $1.00 per preferred share).  The Acquisition Agreement provides that the consideration securities issued to the Vendors are subject to restrictions on transfer and resale in accordance with the following schedule: 10% on the date that is four months from the closing date; 20% on the date that is six months from the closing date; 30% on the date that is nine months from the closing date; and the remaining 40% on the date that is 12 months from the closing date.

In addition, in connection with the Transaction, the Company has entered into voting agreements with Kenneth Thomson (" Thomson "), The Kenneth Thomson Business Trust (2020) (" Thomson Trust "), Universal Financial Corp. (" Universal ", together with Thomson and Thomson Trust, the " Thomson Vendors "), Blake Albright (" Albright "), GreatBlake Holdings Inc. (" GreatBlake "), The Albright (2020) Family Trust (" Albright Trust ", together with Albright and GreatBlake, the " Albright Vendors "), Sabrina Kyle (" Kyle "), The Sabrina Prudham (2020) Family Trust (" Prudham Trust "), 2753665 Ontario Inc. (" 275 ", together with Kyle and Prudham Trust, the " Prudham Vendors "), and Fiona Elder , where, among other things, these parties agree to vote the Common Shares held by them in favour of matters proposed by the management of the Company for a period of 24 months, subject to certain standard exceptions.  In addition, the Vendors have agreed not to exercise or convert any convertible securities held by them where such exercise or conversion would result in them owning or exercising control or direction over 20% of the common shares of the Company, unless applicable shareholder and TSXV approval is obtained.

The Company is also pleased to announce that Blake Albright has been appointed as a director and Chief Capital Officer of the Company and has entered into an executive employment agreement with the Company.

"Bringing Montfort and Brightpath together is a logical next step that creates substantial value for our customers and investors alike," said Blake Albright , the new Chief Capital Officer of the Company. "Our combined resources make us stronger financially, allowing us to position ourselves as a leader in the rapidly growing private lending space. I am very excited to be working at the forefront of this fantastic opportunity."

Also, in connection with closing the Transaction, the Company has granted a total of 5,300,000 performance share units ("PSUs") and 900,000 stock options to certain officers and employees of the Company or its subsidiaries under its equity incentive plan dated April 27, 2022 (the " Plan "). The PSUs granted will vest depending on the extent the Common Share's five-day volume-weighted average price (" VWAP ") exceeds $1.00 on the TSXV on the 36 ^th month anniversary of the date hereof (the "Performance Period"), up to a full vesting of the PSUs in the event the Common Share's five-day VWAP is at or exceeds $5.00 at the end of the Performance Period. Each vested PSU will convert into one Common Share, or the cash equivalent thereof, at the election of the Board. The stock options granted are exercisable at $0.40 per Common Share for five years from the data of grant and will vest daily in equal installments for three years until all options have vested to the recipient. Following the award of the PSUs and stock options, there are 5,300,000 performance share units and 6,125,000 stock options outstanding under the Plan.

In connection with the closing of the Transaction, the Thomson Vendors acquired 12,500,000 common shares and 4,000,000 preferred shares. The Thomson Vendors are directly or indirectly owned or controlled by Thomson. Prior to the completion of the Transaction, Thomson owned and controlled 5,000,000 common shares and 3,500,000 preferred shares, as well as 180,000 stock options entitling Thomson to acquire an additional 180,000 common shares.

Thomson now owns and/or controls an aggregate of 17,500,000 common shares and 7,500,000 preferred shares entitling Thomson to acquire an additional 7,500,000 common shares in the event of conversion thereof, 180,000 stock options entitling Thomson to acquire an additional 180,000 common shares, and 1,200,000 PSUs entitling Thomson to acquire an additional 1,200,000 common shares upon vesting and achievement of certain performance goals, representing approximately 19.2% of the issued and outstanding common shares (or approximately 26.4% calculated on a partially diluted basis, assuming the conversion of the 7,500,000 preferred shares, 1,200,000 PSUs and 180,000 stock options.)

Pursuant to the Transaction, the Company entered into a voting agreement with the Thomson Vendors, whereby these parties agreed to vote common shares held by them in favour of matters proposed by the management of the Company for a period of 24 months, subject to certain standard exceptions. In addition, the Thomson Vendors have agreed not to exercise of convert any convertible securities held by them where such exercise or conversion would result in them owning or exercising control or direction over 20% of the common shares of the Company, unless applicable shareholder and TSXV approval is obtained.

The securities were acquired in a private transaction which did not take place through the facilities of any market for the Company's securities. This transaction was effected for investment purposes and Thomson could increase or decrease his investment in the Company at any time, or continue to maintain his current investment position, depending on market conditions or any other relevant factor. The securities were acquired for the consideration described above in this news release.

In connection with the closing of the Transaction, the Albright Vendors acquired 17,500,000 common shares and 8,000,000 preferred shares. The Albright Vendors are directly or indirectly owned or controlled by Albright. Prior to the completion of the Transaction, Albright owned and controlled no securities of the Company.

Albright now owns and/or controls an aggregate of 17,500,000 common shares and 8,000,000 preferred shares entitling Albright to acquire an additional 8,000,000 common shares in the event of conversion thereof and 1,200,000 PSUs entitling Albright to acquire an additional 1,200,000 common shares upon vesting and achievement of certain performance goals, representing approximately 19.2 % of the issued and outstanding common shares (or approximately 26.6% calculated on a partially diluted basis, assuming the conversion of the 8,000,000 preferred shares and 1,200,000 performance share units.)

Pursuant to the transaction, the Company entered into a voting agreement with the Albright Vendors, whereby these parties agreed to vote common shares held by them in favour of matters proposed by the management of the Company for a period of 24 months, subject to certain standard exceptions. In addition, the Albright Vendors have agreed not to exercise of convert any convertible securities held by them where such exercise or conversion would result in them owning or exercising control or direction over 20% of the common shares of the Company, unless applicable shareholder and TSXV approval is obtained.

The securities were acquired in a private transaction which did not take place through the facilities of any market for the Company's securities. This transaction was effected for investment purposes and Albright could increase or decrease his investment in the Company at any time, or continue to maintain his current investment position, depending on market conditions or any other relevant factor. The securities were acquired for the consideration described above in this news release.

This portion of this news release is issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which also requires an early warning report to be filed on SEDAR ( www.sedar.com ) containing additional information with respect to the foregoing matters. A copy of the related early warning report may be obtained on the Company's SEDAR profile or by contacting Thomson at 25 Price Street, Toronto, Ontario M4W 1Z1, Attention: Kenneth Thomson or Albright at : 9 King Street North, Waterloo, Ontario N2J 2W6 . The head office of Montfort is located at Suite 835 - 1100 Melville Street, Vancouver, British Columbia , V6E 4A6.

Multilateral Instrument 61-101 - Protection of Minority Holders in Special Transactions ("MI 61- 101") was adopted by the Ontario Securities Commission, the Alberta Securities Commission and certain other securities regulatory authorities in Canada to govern transactions that raise the potential for conflicts of interest and that may affect the interests of minority securityholders.

MI 61-101 is intended to regulate insider bids, issuer bids, business combinations and related party transactions to ensure equality of treatment among securityholders, generally by requiring enhanced disclosure, minority securityholder approval, and, in certain instances, independent valuations, as well as approval and oversight of certain transactions by a special committee of independent directors.

Under MI 61-101, a "related party" of an entity includes, among others, a control person of the entity, directors and senior officers of an entity, as well as shareholders holding over 10% of the voting rights attached to the voting securities of the Company (a " Related Party ").

Thomson is a director and beneficial shareholder of both the Company and Brightpath. In addition, Thomson indirectly owned or controlled approximately 33% of Brightpath Capital, Brightpath Servicing and a material limited partnership interest in Brightpath Mortgage LP (together the " Brightpath Securities ") and the Thomson Vendors received 12,500,000 common shares and 4,000,000 preferred shares in exchange for his Brightpath Securities on closing of the Transaction.  Accordingly, Mr. Thomson is a "related party" pursuant to MI 61-101.

A "related party transaction" under MI 61-101 includes, among others, transactions where an issuer: (i) purchases or acquires an asset from a Related Party for valuable consideration; or (ii) issues a security to a Related Party. Pursuant to the Transaction, the Company acquired Brightpath Securities in consideration for the issuance of common shares and preferred shares to the Thomson Vendors, thereby making the Transaction a "related party transaction" under MI 61-101. MI 61-101 permits issuers to complete related party transactions provided that certain disclosure is made regarding the Transaction and the Related Party, including disclosure included in this news release and the information circular for the shareholder meeting approving the related party transaction. In addition, unless an exemption is available, issuers contemplating a related party transaction must obtain (1) a formal valuation with respect to the transaction, and (2) minority shareholder approval for the transaction (" Majority of Minority Shareholder Approval ").

With respect to the Transaction and the formal valuation requirement, the Company relied on the exemption available to it pursuant to section 5.5(b) of MI 61-101. The Company obtained Majority of Minority Shareholder Approval prior to closing the Transaction at its annual and special meeting of shareholders held on June 7, 2022 . An aggregate of 5,000,000 common shares and 3,500,000 preferred shares owned or controlled by Thomson were excluded from voting on the transaction at the meeting. For more information regarding the Majority of Minority Shareholder Approval, please refer to the management information circular for the meeting available on the Company's profile at www.sedar.com , as well as the Company's news releases dated May 5, 2022 , May 30, 2022 and June 7 , 2022.

Brightpath specializes in arranging mortgages for people who are self-employed, new to the country, experiencing credit issues, or looking at renovation/flip projects. Our knowledge and experience, efficient service, and common sense approach to lending are just a few of the reasons to select Brightpath Capital for financing needs. We also offer bridge financing for residential properties with flexible terms. Private mortgages at very competitive terms. Interest only payments. Fully open terms. For more information please visit: www.brightpath.ca .

Montfort manages a diversified family of specialized private credit brands that utilize focused strategies and experienced management teams combined with advanced technology to improve fee related performance. Montfort facilitates transparency for all of its investors through public company reporting. For further information, please visit www.montfortcapital.com .

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Certain information and statements in this news release contain and constitute forward-looking information or forward-looking statements as defined under applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements normally contain words like 'believe', 'expect', 'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may', 'will', 'should', 'ongoing' and similar expressions, and within this news release include any statements (express or implied) respecting the future performance of the combined companies, future value creation for shareholders, the creation of value for shareholders following completion of the Transaction, growth of the Company's investment portfolio and expectations regarding making further investments in the coming months. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances, including, without limitation, the following assumptions: that the Company and its investee companies are able to meet their respective future objectives and priorities, assumptions concerning general economic growth and the absence of unforeseen changes in the legislative and regulatory framework for the Company. Although management believes that the forward-looking statements are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Montfort's business. Material risks and uncertainties applicable to the forward-looking statements set out herein include, but are not limited to, the Company having insufficient financial resources to achieve its objectives; availability of further investments that are appropriate for the Company on terms that it finds acceptable or at all; successful completion of exits from investments on terms that constitute a gain when no such exits are currently anticipated; intense competition in all aspects of business; reliance on limited management resources; general economic risks; new laws and regulations and risk of litigation. Although Montfort has attempted to identify factors that may cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, predicted, estimated or intended. Also, many of the factors are beyond the control of Montfort . Accordingly, readers should not place undue reliance on forward-looking statements. Montfort undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements contained in this news release are qualified by this cautionary statement.

SOURCE Montfort Capital Corp.

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