Titan Announces Merger Agreement with Conavi - Seite 3

Transaction Terms

Under the terms of the Agreement, Titan will effect a consolidation of the Titan Shares based on a ratio of pre-consolidation shares to post-consolidation shares to be mutually agreed upon (the “Consolidation”).

As a condition to the completion of the Transaction, Conavi will complete a concurrent financing of subscription receipts, the terms of which will be announced at a later date (the “Concurrent Financing”), for minimum gross proceeds of US$15 million up to a maximum of US$20 million. The subscription receipts are expected to convert into Conavi Shares (“Subscription Receipts Shares”) immediately prior to completion of the Transaction.

Following the Consolidation and the Concurrent Financing, a wholly-owned subsidiary of Titan will amalgamate with Conavi, pursuant to which issued and outstanding post-Consolidation Titan Shares will be issued to holders of Conavi Shares (including the Subscription Receipts Shares) on the basis of an exchange ratio to be determined using the pre-money valuation of Conavi of US$69,840,000 (minus the amounts of certain trade payables and Conavi’s transaction expenses) and a pre-transaction valuation of Titan including an allocation of US$5,000,000 plus the amount of cash held in Titan at the closing of the Transaction less certain liabilities of Titan. However, the exchange ratio will be adjusted, if necessary, strictly to the extent required to result in the holders of Titan Shares prior to the closing of the Transaction holding at least 10% of the Combined Entity Shares following completion of the Transaction (including Combined Entity Shares underlying certain options, warrants and RSUs, Subscription Receipts Shares, and Combined Entity Shares issued in exchange for Conavi Shares issued in any bridge financing completed by Conavi prior to the completion of the Transaction).

In addition, the Combined Entity will establish a new equity incentive plan for key employees, directors and officers of the Combined Entity and will issue stock options in exchange for the outstanding Conavi outstanding stock options under the plan.

The parties to the Transaction are at arm’s length.

Transaction Timetable

Titan intends to hold a special and annual meeting of shareholders (the “Titan Shareholder Meeting”), at which, among other things, the Titan Shareholders will be asked to approve: (i) the change of name from Titan Medical Inc. to Conavi Medical Inc., or such other name as Conavi may determine and the Titan Board may approve, (ii) the Consolidation, (iii) a new equity incentive plan for the Combined Entity, and (iv) the Transaction. Copies of the management information circular of Titan (the “Titan Circular”), and certain related documents and agreements, will be filed with the Canadian securities regulators and will be available on SEDAR+ at www.sedarplus.com under Titan’s profile at least 21 days prior to the date of the Titan Shareholder Meeting.