EXHIBIT 10.10
SUBSCRIPTION AGREEMENT
(Canadian Dollar)
TO: NEWGIOCO GROUP, INC.
RE: PURCHASE OF UNITS OF NEWGIOCO GROUP, INC.
Subject to the terms and conditions contained in this subscription agreement,
including the terms and conditions set forth in Schedule "A" hereto, the
undersigned (the "Purchaser"), hereby irrevocably subscribes for and agrees to
purchase the number of units (the "Units" or the "Purchased Securities") of
NEWGIOCO GROUP, INC. (the "Corporation") as set forth below at a purchase price
of CDN$1,000 per Unit (the "Purchase Price").
_____________________________________
(Name of Purchaser - please print)
By: __________________________________
(Authorized Signature)
_____________________________________
(Please print name of individual whose
signature appears above if different than
the name of the Purchaser printed above.)
______________________________________
(Subscriber's Address)
______________________________________
(Telephone Number)
______________________________________
(Fax Number)
______________________________________
(Email Address)
Number of Units: __________________________
Aggregate Purchase Price: CDN$__________________________
If the Purchaser is signing as finder for a
principal and the Purchaser is not a trust
company or a portfolio manager, in either
case, purchasing as trustee or finder for
accounts fully managed by it, complete the following:
___________________________________
(Name of Principal)
___________________________________
(Principal's Address)
Register the Purchased Securities as set forth below:
____________________________________
(Name)
____________________________________
(Account reference, if applicable)
____________________________________
(Address)
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Deliver the Purchased Securities as set forth below:
____________________________________
(Name)
____________________________________
(Account reference, if applicable)
____________________________________
(Contact Name)
____________________________________
(Address)
____________________________________
(Telephone Number)
The Purchased Securities form part of a larger offering of 6,750 Units by the
Corporation (the "Offering") to close on or about March 15, 2017 or such other
date mutually agreed between the Purchaser and the Corporation (the "Closing
Date"). The maximum Offering will result in gross proceeds to the Corporation of
CDN $6,750,000. The Corporation may, at its discretion, elect to complete the
Offering for proceeds of less than CDN $6,750,000 or less than 6,750 Units and
in one or more tranches.
Each Unit is comprised of a debenture of the Corporation in a principal amount
of CDN $1,000 with a term of two (2) years from the date of issuance (the
"Maturity Date") and bearing interest at the rate of ten (10%) percent per annum
(the "Debenture") and 100 common share purchase warrants of the Corporation (the
"Warrants"). The whole or any part of the principal amount of the Debenture plus
any accrued and unpaid interest may be convertible at the option of the
debentureholder into common shares of the Corporation at a price of US$1.50
(U.S. One Dollar and Fifty Cents) per share at any time up to the Maturity Date.
Each Warrant will entitle the holder to acquire one (1) common share of the
Corporation within twenty-four (24) months from the Closing Date and each
Warrant will have an exercise price of US$1.00 (one United States Dollar). The
form of the Debenture is attached hereto as Schedule "B" and the form of Warrant
is attached hereto as Schedule "C". All dollar amounts referred to in this
agreement are in Canadian dollars unless otherwise noted.
ACCEPTANCE: The Corporation hereby (i) accepts the above subscription subject to
the terms and conditions contained in this subscription agreement; and (ii)
agrees that the Purchaser shall be entitled to rely on such representations and
warranties of the Corporation contained in the subscription agreement.
NEWGIOCO GROUP, INC.
Date: March ____, 2017 Per:____________________________________
Xxxxxxx Xxxxxxxxxx, Chief Executive Officer
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SCHEDULE "A"
TERMS AND CONDITIONS OF
SUBSCRIPTION FOR UNITS
NEWGIOCO GROUP, INC.
1. Description of Debentures
The debenture forming part of the Purchased Securities (the "Debenture") shall
be governed by provisions of the Debenture of the Corporation, the form of which
is appended hereto as Schedule "B". The Debentures yield interest at the rate of
10% per annum payable on maturity of the Debentures. The Debentures mature two
(2) years from the date of issue provided that the Corporation may prepay all or
any part of the Debenture prior to maturity without notice or penalty, except
that the Purchaser shall receive a minimum of five (5) months of interest. The
Debentures are unsecured obligations of the Company and shall rank pari passu
with each other. The principal amount and plus any accrued and unpaid interest
shall be convertible at the option of the holder at a price of US$1.50 (U.S. One
Dollar and Fifty Cents) at any time up to the Maturity Date.
2. Description of Warrants
The warrants forming part of the Purchased Securities (the "Warrants") shall be
governed by the provisions of warrant certificates (the "Warrant Certificates")
of the Corporation, the form of which is appended hereto as Schedule "C".
Subject to the anti-dilution and other adjustment provisions contained in the
Warrant Certificates, each Warrant shall entitle the holder thereof to acquire
one common share of the Corporation at any time on or before 5:00 (Toronto time)
on the date that is twenty-four (24) months from the Closing Date (the "Warrant
Shares"). Each Warrant will have an exercise price of US$1.00 (one United States
dollar) as more specifically set out in the Warrant Certificate.
3. Acknowledgments re: Hold Periods and Resale Restrictions
The Purchaser on its own behalf and (if applicable) on behalf of others for whom
it is contracting hereunder, understands and acknowledges the following:
(a) The Purchased Securities are subject to statutory hold periods or
resale restrictions and the Warrants forming part of the Purchased
Securities and the Warrant Shares (Warrants and Warrant Shares being
collectively referred to herein as the "Underlying Securities") will be
subject to statutory hold periods or resale restrictions;
(b) The Purchaser, and (if applicable) others on whose behalf the Purchaser
is contracting hereunder, have been advised to consult their own legal
advisers in connection with any applicable statutory hold periods and
resale restrictions relating to the Purchased Securities and the
Underlying Securities and no representation has been made respecting
applicable statutory hold periods or resale restrictions relating to
such securities;
(c) The Certificates representing the Purchased Securities and the
Underlying Securities may be endorsed with a legend setting out resale
restrictions under applicable securities legislation;
(d) The Purchaser, and (if applicable) others on whose behalf the Purchaser
is contracting hereunder, are solely responsible (and the Corporation
is not in any way responsible) for compliance with applicable hold
periods and resale restrictions, including without limitation the
filing of any documentation and, if applicable, the payment of any fees
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with any applicable securities regulatory authority, and the Purchaser,
and (if applicable) others on whose behalf the Purchaser is contracting
hereunder, are aware that the Purchaser, and (if applicable) such
others, may not be able to resell the Purchased Securities or the
Underlying Securities, except in accordance with limited exceptions
under applicable securities legislation and regulatory policies and the
Purchaser and, if applicable, others on whose behalf the Purchaser is
contracting hereunder, will not sell, resell or otherwise transfer the
Purchased Securities or the Underlying Securities, except in compliance
with applicable laws; and
(e) No market currently exists for the Warrants and no liquid market may
exist for the Underlying Securities.
4. Delivery and Payment
Unless other arrangements are agreed by the Corporation, the following must be
delivered to Xxxxxxxx Inc. at Xxxxx 000, 000 Xxxxxxxx Xxxxxx Xxxx, Xxxxxxx,
Xxxxxxx, X0X 0X0, not later than 5:00 p.m. (Toronto time) on the day immediately
preceding the Closing Date:
(a) One signed copy of this subscription agreement with the relevant
"accredited investor" certification completed in Schedule "D", as
applicable;
(b) The aggregate Purchase Price payable for the Purchased Securities by
way of a certified cheque or bank draft payable to "Xxxxxxxx Inc." or
wire transfer of immediately available funds and delivered or
transmitted to Xxxxxxxx Inc.; and
(c) Such other documents as may be required pursuant to terms of this
subscription agreement.
5. Closing
This subscription is subject to acceptance by the Corporation, as described
below. A Debenture and a Warrant Certificate endorsed by the Corporation
representing the Purchased Securities will be available for delivery to the
Purchaser in Toronto, Ontario, on the Closing Date against payment of the
aggregate Purchase Price for the Purchased Securities.
6. Acceptance Subscription
This subscription may be accepted in whole only and the right is reserved to the
Corporation to refuse to accept any subscription. Confirmation of acceptance or
rejection of this subscription will be forwarded to the Purchaser promptly after
the acceptance or rejection of this subscription by the Corporation. If this
subscription is rejected, the Purchaser understands that any certified cheque,
bank draft, wire transfer or other method of payment delivered by the Purchaser
to Xxxxxxxx Inc. representing the Purchase Price will be promptly returned to
the Purchaser without interest or deduction.
7. Acknowledgments re: Prospectus Exemptions, etc.
The Purchaser acknowledges and agrees, on its own behalf and (if applicable) on
behalf of others for whom the Purchaser is contracting hereunder, that the sale
of the Purchased Securities to the Purchaser, or (if applicable) to such others,
is conditional upon, among other things, such sale being exempt from the
requirement to file a prospectus or deliver an offering memorandum in respect of
such sale or upon the issuance of such rulings, orders, consents or approvals as
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may be required to permit such sale without complying with the requirement to
file a prospectus or deliver an offering memorandum.
The Purchaser also acknowledges and agrees, on its own behalf and (if
applicable) on behalf of others for whom it is contracting hereunder, that: (i)
the Purchaser, and (if applicable) such others have not received, requested or
been provided with, nor have any need to receive, a prospectus, offering
memorandum, sales or advertising literature or similar disclosure document
relating to the Offering and/or the business and affairs of the Corporation and
that the decision to enter into this subscription agreement and purchase the
Purchased Securities has not been based upon any verbal or written
representation as to fact or otherwise made by or on behalf of the Corporation
or any officer, director, employee or agent of the Corporation and that such
decision is based entirely upon the form of Debenture attached as Schedule "B"
and the form of Warrant Certificate attached as Schedule "C" to this
subscription agreement and information set out in this subscription agreement,
(ii) there has not been any advertisement of the Purchased Securities in printed
public media, radio, television or telecommunications, including electronic
display such as the Internet; and (iii) Xxxxx Winter LLP is acting as counsel to
the Corporation and is not acting as counsel to the Purchasers of Purchased
Securities.
The Purchaser acknowledges that the Corporation may be required by law to
provide applicable securities regulatory authorities with a list setting forth
the identities of the beneficial purchasers of the Purchased Securities and the
Purchaser agrees to use its best efforts to comply with such laws, if required.
The Purchaser, on its own behalf and (if applicable on behalf of others for whom
the Purchaser is contracting hereunder, understands and acknowledges that: (i)
the Purchased Securities have not been nor will be registered under the United
States Securities Act of 1933, as amended (the "US Securities Act") nor any
applicable state securities laws and may not be offered or sold or re-offered or
resold, directly or indirectly, in the United States or to any United States
person (as defined in Regulation S under the U.S. Securities Act, a "U.S.
Person"), unless such securities have been registered under the U.S. Securities
Act, and any applicable state securities laws, or are otherwise exempt from such
registration; and (ii) certificates representing the Purchased Securities may
bear a legend to such effect.
8. Conditions to Closing
The Purchaser acknowledges and agrees that as the Offering will not be qualified
by a prospectus, the Offering is subject to the condition that the Purchaser, or
(if applicable) others for whom the Purchaser is contracting hereunder, execute
and return to the Corporation, as applicable, all relevant documentation
required by applicable securities legislation, regulations, rules and policies.
9. Representations, Warranties and Covenants of the Purchaser
The Purchaser, on its own behalf and (if applicable) on behalf of others for
whom the Purchaser is contracting hereunder, represent, warrant and covenant to
and with the Corporation (and acknowledges that the Corporation, and its counsel
are relying thereon) as follows:
(a) Jurisdiction of Residence - the Purchaser, or (if applicable) any
beneficial purchaser for whom the Purchaser is contracting hereunder,
is resident in the jurisdiction set forth on the first page of this
agreement and the purchase by and sale to the Purchaser, or any such
beneficial purchaser, of the Purchased Securities is being made in
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accordance with the applicable securities legislation of such
jurisdiction;
(b) Prospectus Exempt Purchase - Canadian Purchaser - if the Purchaser or
(if applicable) any beneficial purchaser for whom the Purchaser is
contracting hereunder, is resident in a province of Canada or is
otherwise subject to the securities laws of a province of Canada, the
Purchaser, on its own behalf and (if applicable) on behalf of any such
beneficial purchaser makes the representations, warranties and
covenants set out in Schedule "D", to this subscription agreement, as
applicable, with the Corporation and the Purchaser, and (if applicable)
any such beneficial purchaser, may avail itself of one or more of the
categories of prospectus exempt purchasers listed in Schedule "D";
(c) Agent Purchasing for Principal(s) - if the Purchaser is acting as agent
for one or more beneficial purchasers: (i) each such beneficial
purchaser is purchasing as principal for its own account and not for
the benefit of any other person; and (ii) each such principal can, and
does, make the representations, warranties and covenants set out herein
and in Schedule "D" to this subscription agreement as are applicable to
such principal by virtue of its jurisdiction of residence or by virtue
of it being subject to the applicable securities legislation of such
jurisdiction, and (if applicable) any beneficial purchaser for whom the
Purchaser is contracting hereunder, acknowledges that such schedule
forms part of and is incorporated into this subscription agreement;
(d) Capacity - (i) if the Purchaser, or (if applicable) any beneficial
purchaser for whom the Purchaser is contracting hereunder, is an
individual, the Purchaser, or such beneficial purchaser, as the case
may be, has attained the age of majority and is legally competent to
execute this subscription agreement and to perform all actions required
pursuant hereto; (ii) if the Purchaser, or any beneficial purchaser for
whom the Purchaser is acting, is a corporation, partnership,
unincorporated association or other entity, the Purchaser, or such
beneficial purchaser, as the case may be, has the legal capacity and
competence to enter into and be bound by this subscription agreement
and to take all actions required pursuant thereto and the Purchaser
further certifies that all necessary approvals of directors,
shareholders or otherwise have been given and obtained;
(e) Authority - (i) if the Purchaser is acting as agent for one or more
beneficial purchasers, the Purchaser is duly authorized to execute and
deliver this subscription agreement and all other necessary
documentation in connection with such subscription on behalf each such
principal and this subscription agreement has been duly authorized,
executed and delivered by the Purchaser on behalf of each such
principal; and (ii) the entering into of this subscription agreement
and the completion of the transactions contemplated herein will not
result in the violation of any of the terms and provisions of any law
applicable to, or the constating documents of, the Purchaser or of any
beneficial purchaser for whom the Purchaser is acting or of any
agreement, written or oral, to which the Purchaser or any beneficial
purchaser for whom the Purchaser is acting is a party or by which the
Purchaser or such beneficial purchaser is bound;
(f) Enforceability - this subscription agreement has been duly and validly
authorized, executed and delivered by the Purchaser (on its own behalf
and, if applicable, on behalf of any beneficial purchaser) and, upon
acceptance by the Corporation this subscription agreement will
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constitute a legal, valid and binding contract of the Purchaser, or (if
applicable) any beneficial purchaser for whom the Purchaser is acting,
enforceable against the Purchaser, or (if applicable) any such
beneficial purchasers, in accordance with its terms;
(g) Purpose - If the purchaser is not an individual, the Purchaser has not
been created solely or primarily to use exemptions from the
registration and prospectus exemptions under applicable securities
legislation and has a pre-existing purpose other than to use such
exemptions;
(h) No Representation re: Resale, Refund, Future Price or Listing - no
person has made any written or oral representation to us:
(i) That any person will resell or repurchase the Purchased
Securities;
(ii) That any person will refund the Purchaser Price other than as
may be provided in this subscription agreement; or
(iii) Relating to the future price or value of the Purchased
Securities;
(i) Investment Experience - the Purchaser, or (if applicable) any beneficial
purchaser for whom the Purchaser is contracting hereunder, has
knowledge and experience with respect to investments of this type and
the Purchaser, or (if applicable) any such beneficial purchaser, is
capable of evaluating the merits and risks thereof and obtaining
competent independent business, legal and tax advice regarding this
investment;
(j) Proceeds of Crime - The funds representing the subscription amount which
will be advanced by the Purchaser, or (if applicable) any beneficial
purchaser for whom the Purchaser is contracting hereunder, to the
Corporation hereunder will not represent proceeds of crime for the
purposes of the Proceeds of Crime (Money Laundering) Act (Canada) (the
"PCMLA") and the Purchaser, or (if applicable) any beneficial purchaser
for whom the Purchaser is contracting hereunder, acknowledges that the
Corporation may in the future be required by law to disclose the
Purchaser's, or (if applicable) any beneficial purchaser for whom the
Purchaser is contracting hereunder, name and other information relating
to this Subscription Agreement and the Purchaser's, or (if applicable)
any beneficial purchaser for whom the Purchaser is contracting
hereunder, subscription hereunder, on a confidential basis, pursuant to
the PCMLA. To the best of its knowledge (a) no portion of the
subscription amount to be provided by the Purchaser, or (if applicable)
any beneficial purchaser for whom the Purchaser is contracting
hereunder, (i) has been or will be derived from or related to any
activity that is deemed criminal under the law of Canada, the United
States, or any other jurisdiction, or (ii) is tendered on behalf of a
person or entity who has not been identified to the Purchaser, or (if
applicable) any beneficial purchaser for whom the Purchaser is
contracting hereunder. The Purchaser, or (if applicable) any beneficial
purchaser for whom the Purchaser is contracting hereunder, shall
promptly notify the Corporation if the Purchaser, or (if applicable)
any beneficial purchaser for whom the Purchaser is contracting
hereunder, discovers that any of such representations ceases to be
true, and to provide the Corporation with appropriate information in
connection therewith; and
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(k) Additional Filings - The Purchaser, or (if applicable) any beneficial
purchaser for whom the Purchaser is contracting hereunder, shall
execute, deliver, file and otherwise assist the Corporation with filing
all documentation required by the applicable securities laws and any
other applicable securities legislation to which the Purchaser, or (if
applicable) any beneficial purchaser for whom the Purchaser is
contracting hereunder, may be subject, within the time limits
prescribed to permit the subscription for and issuance of, the Units
and thereafter for any subsequent exchange thereof.
The Purchaser acknowledges that the representations, warranties and covenants
made by the Purchaser in this Subscription Agreement are made by the Purchaser
with the intent that they may be relied upon by the Corporation and its counsel
to, among other things, determine the eligibility of the Purchaser, or (if
applicable) the eligibility of others on whose behalf the Purchaser is
contracting hereunder, to purchase the Purchased Securities under relevant
securities legislation including, without limitation, the availability of
exemptions from the registration and prospectus requirements of applicable
securities legislation in connection with the issuance of the Purchased
Securities to the Purchaser. The Purchaser further agrees that by accepting the
Purchased Securities on the Closing Date the Purchaser shall be representing and
warranting that such representations, warranties and covenants are true as at
the Closing Date, with the same force and effect as if they had been made by the
Purchaser on such date. The Purchaser undertakes to immediately notify the
Corporation of any change in any statement or other information relating to the
Purchaser or others on whose behalf the Purchaser is contracting set forth
herein that takes place prior to Closing.
10. Representations, Warranties and Covenants of the Corporation
The Corporation hereby represents, warrants and covenants to the Purchaser
(and/or to any others on whose behalf the Purchaser is contracting hereunder),
that as of the date of this Subscription Agreement and as of the Closing Date:
(a) The Corporation is a valid and subsisting corporation duly incorporated
and in good standing under the laws of its jurisdiction of
incorporation;
(b) The Corporation will reserve and set aside a sufficient number of
authorized and unissued Common Shares of the Corporation to issue to
the Purchaser the Common Shares issuable in connection with the
exercise of the Warrants and such Common Shares will, when issued and
delivered upon such exercise, be duly and validly issued as fully paid
and non-assessable shares of the Corporation;
(c) This Subscription Agreement and the Offering have been duly authorized
by all necessary corporate action on the part of the Corporation and
constitute valid obligations of the Corporation legally binding upon it
and enforceable in accordance with its terms;
(d) The Corporation has all requisite corporate power and authority to carry
on its business as now and proposed to be carried on and to own, lease
and operate its material properties, business and assets, or the
interests therein;
(e) The Corporation is not a party to any actions, suits or proceedings
which could have a material adverse effect on the assets, liabilities,
financial condition, business, capital or prospects of the Corporation
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and, to the best of the Corporation's knowledge, no such actions, suits
or proceedings are pending or threatened.
11. Acknowledgment and Waiver
The Purchaser, on its own behalf and/or on behalf of others for whom the
Purchaser is contracting hereunder, has acknowledged that the decision to
purchase the Purchased Securities was made solely on the basis of publicly
available information. Accordingly, the decision to acquire the Purchased
Securities has also been made on the basis of currently available public
information.
12. Survival
This Subscription Agreement, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the Corporation and the undersigned for a
period of two (2) years from the Closing Date notwithstanding the completion of
the purchase of the Purchased Securities.
13. Governing Law
This Subscription Agreement shall be governed by and construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein. The Purchaser, on its own behalf and (if applicable) on behalf of
others for whom the Purchaser is contracting hereunder, hereby irrevocably
attorn to the jurisdiction of the courts of the Province of Ontario with respect
to any matters arising out of this agreement.
14. Costs
All costs and expenses incurred by the Purchaser (including any fees and
disbursements of any counsel retained by the Purchaser) relating to its purchase
of the Purchased Securities shall be borne by the Purchaser.
15. Assignment
This Subscription Agreement is not transferable or assignable, in whole or in
part, by the Purchaser or (if applicable) by others on whose behalf the
Purchaser is contracting hereunder.
16. Entire Agreement and Headings
This Subscription Agreement (including the schedules hereto) contains the entire
agreement of the parties hereto relating to the subject matter hereof and there
are no representations, covenants or other agreements relating to the subject
matter hereof except as stated or referred to herein. This agreement may only be
amended or modified in any respect by written instrument only. The headings
contained herein are for convenience only and shall not effect the meanings or
interpretation hereof.
17. Language
The parties hereto confirm their express wish that this agreement and all
documents and agreements directly or indirectly relating thereto be drawn up in
the English language. Les parties reconnaissent leur volonte expresse que la
presente convention, ainsi que tous les documents et contrats qui s'y
rattachent, directement ou indirectment, soient rediges en anglais.
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18. Time of Essence
Time shall be of the essence of this Subscription Agreement.
19. Currency
All dollar amounts referred to in this Subscription Agreement are in Canadian
dollars.
20. Counterparts and Facsimile Deliveries
This Subscription Agreement may be executed in one or more counterparts, each of
which counterparts when executed shall constitute an original and all of which
counterparts so executed shall constitute one and the same instrument. The
Corporation shall be entitled to rely on delivery of a facsimile copy of this
Subscription Agreement, including the completed schedules attached hereto, and
acceptance by the Corporation of any such facsimile copy shall be legally
effective to create a valid and binding agreement between the parties hereto in
accordance with the terms hereof.
21. Consent to Collection and Use of Personal Information
The Purchaser acknowledges that this subscription agreement requires the
Purchaser to provide certain personal information to the Corporation ("Personal
Information"). Such information is being collected by the Corporation for the
purposes of completing the proposed issuance of the Units, which includes,
without limitation, determining the Purchaser's eligibility to purchase the
Units under applicable securities laws, preparing and registering certificates
representing the Underlying Securities and completing filings required by the
securities commissions, and/or other securities regulatory authorities. The
Purchaser agrees that the Purchaser's Personal Information may be disclosed by
the Corporation to: (a) securities commissions and/or other securities
regulatory authorities, (b) the Corporation's registrar and transfer agent, and
(c) any of the other parties involved in this subscription, including legal
counsel, and may be included in record books in connection with this
subscription. In the case of such information is being collected indirectly by
them for the purpose of the administration and enforcement of the applicable
securities laws and the Purchaser authorizes the indirect collection of such
information by them. The Purchaser consents to the foregoing collection, use and
disclosure of the Purchaser's Personal Information by the securities
commissions, the TSX Venture Exchange and/or other securities regulatory
authorities. The title, business address and business telephone number of the
public official in Ontario who can answer questions about the Ontario Securities
Commission's indirect collection of the information is the Administrative
Assistant to the Director of Corporate Finance, Telephone (000) 000-0000,
Ontario Securities Commission, Xxxxx 0000, Xxx 0000 Xxxxx Xxxxxx Xxxx, Xxxxxxx,
Xxxxxxx X0X 0X0.
22. Risk Factors
Purchase of Debentures pursuant to this Offering should only be made after
consulting with independent and qualified sources of investment and tax advice.
Investment in the Debentures at this time is speculative due to the stage of the
Corporation's development. An investment in Debentures is appropriate only for
Subscribers who are prepared to invest money for two (2) years and who have the
capacity to absorb a loss of some or all of their investment. Subscribers must
rely on management of the Corporation. Any investment in the Corporation at this
stage involves a high degree of risk. The following additional risk factors are
inherent in an investment in the Debentures:
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1. Redemptions: There can be no assurance that if additional funding is
required by the Corporation to redeem any or all of the Debentures on
maturity, that such financing will be available on terms satisfactory
to the Corporation, or at all. If the Corporation does not have
sufficient funds on hand to redeem any or all of the Debentures and its
assets do not mature or cannot be sold quickly enough, it will not be
able to redeem any or all of the Debentures on maturity.
2. Debentures have no security: The Debentures offered pursuant to this
Offering Memorandum are unsecured obligations and will rank pari passu
among themselves and subordinate to all secured obligations of the
Corporation.
3. Tax Consequences: The tax consequences associated with an investment in
the Debentures may be subject to changes in federal and provincial tax
laws. There can be no assurance that the tax laws will not be changed
in a manner that will adversely affect tax consequences to Subscribers
holding or disposing of the Debentures.
4. No Right to Vote: Bondholders will have no right to vote on matters
relating to the Corporation. Exclusive authority and responsibility for
managing the Corporation rests with management of the Corporation and
those persons, consultants and advisors retained by management on
behalf of the Corporation. Accordingly, Subscribers should appreciate
that they will be relying on the good faith, experience, expertise and
ability of the directors and officers of the Corporation and other
parties for the success of the business of the Corporation.
5. Systemic Risk: Credit risk may arise through a default by one of several
large institutions that are dependent on one another to meet their
liquidity or operational needs, so that a default by one institution
causes a series of defaults by the other institutions. This is
sometimes referred to as a "systemic risk" and may adversely affect
financial intermediaries, such as clearing agencies, clearing houses,
banks, securities firms and exchanges, with which the Corporation
and/or the other parties that may have impact on the Debentures
interact on a daily basis.
6. Limited History: The Corporation has limited operational history.
Accordingly, there is limited information available to a Subscriber
upon which to base an evaluation of the Corporation and its business
and prospects. The Corporation is in the early stages of its business
and therefore is subject to the risks associated with early stage
companies, including uncertainty of revenues, markets and
profitability, the need to raise additional funding, the evolving and
unpredictable nature of the Corporation's business and the ability to
identify, attract and retain qualified personnel. There can be no
assurance that the Corporation will be successful in doing what it is
required to do to overcome these risks. No assurance can be given that
the Corporation's business activities will be successful.
7. Illiquid Investment: An investment in the Bond of the Corporation is an
illiquid investment. There is currently no public market through which
the Bond of the Corporation may be resold.
8. No Deposit Insurance: The Debentures are not insured against loss
through the Canada Deposit Insurance Corporation or any other insurance
company or program.
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9. No Independent Counsel: No independent counsel has been retained on
behalf of the Subscribers; and no independent counsel has conducted any
due diligence and reviewed the structure and the documentation of the
Offering on their behalf to assess potential issues and risks for
Debentureholders.
10. Competitive Industry: The regulated gaming industry in Italy in which
the Corporation operates is, and will continue to be, very competitive.
There is no assurance that the Corporation will be able to continue to
compete successfully or that the level of competition and pressure on
pricing will not affect its margins.
11. General Market Risk: The Corporation and its affiliates may be
adversely affected by a general deterioration in economic conditions or
a deterioration affecting specific industries, products or geographies:
A recession or downturn in the economy or the deterioration in the
economic conditions affecting specific industries, geographic locations
and/or products could make it difficult for the Corporation and its
affiliates to originate new business and maintain existing business.
12. Liquidity Risk: If the Corporation requires new capital, it may need to
raise additional funds. If it is unable to raise such capital, it would
need to curtail its growth and its business, and its ability to service
or redeem Debentures could be adversely impacted.
In addition, a Subscriber should refer to the section entitled "Risk Factors" in
the most recent Form 10-K filing of the Corporation and any amendments thereto
which are available at xxx.xxx.xxx/xxxxxxxx/xxxxx/xxxx.
12
SCHEDULE "B"
DEBENTURE
No. D-_______
NEWGIOCO GROUP, INC.
Convertible Debenture due March ____, 2019
Convertible into Common Shares
of Newgioco Group, Inc.
Holder: ______________________________
Amount: ______________________________
Commencement Date: March ____, 2017
13
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION 17
Section 1.1 Definitions 17
Section 1.2 Interpretation not Affected by Headings, etc. 18
Section 1.3 Deemed Notice of Debenture 18
Section 1.4 Applicable Law 18
Section 1.5 Accounting Terms 18
Section 1.6 Day not a Business Day 18
Section 1.7 Currency 18
ARTICLE 2 - THE DEBENTURE 19
Section 2.1 Terms, Form and Denomination of Debenture 19
Section 2.2 Certification by Company 19
Section 2.3 Replacement of Debenture 19
Section 2.4 Payment of Principal and Interest 19
Section 2.5 Ownership of Debenture 20
Section 2.6 Redmption of Debenture 20
Section 2.7 Redemption Price 20
Section 2.8 Places of Payment 20
Section 2.9 Notice of Redemption 20
Section 2.10 Cancellation of Retired Debentures 20
ARTICLE 3 - NO SECURITY 20
Section 3.1 No Security 20
ARTICLE 4 - DEFAULT AND ENFORCEMENT 20
Section 4.1 Events of Default 20
Section 4.2 Acceleration of Default 21
Section 4.3 Enforcement of Security 21
Section 4.4 Holder not Obliged to Institute Proceedings 22
Section 4.5 Application of Proceeds of Realization 23
Section 4.6 Rights and Remedies Cumulative 23
ARTICLE 5 - CONVERSION OF DEBENTURES INTO COMMON SHARES 23
Section 5.1 Conversion into Common Shares 23
Section 5.2 Manner of Exercise of Right to Convert
into Common Shares 24
Section 5.3 Partial Conversion 24
Section 5.4 Adjustment of Conversion Basis 25
Section 5.5 No Requirement to Issue Fractional Shares 28
Section 5.6 Certificate as to Adjustment 28
Section 5.7 Notice of Special Matters 28
Section 5.8 Company to Reserve Shares 28
Section 5.9 Cancellation of Converted Debentures 28
Section 5.10 Conversion of Legended Debentures 28
ARTICLE 6 - PARTICULAR COVENANTS OF THE COMPANY 28
Section 6.1 Payment of Principal and Interest 28
Section 6.2 To Carry On Business 29
ARTICLE 7 - SATISFACTION AND DISCHARGE 29
Section 7.1 Cancellation and Destruction 29
Section 7.2 Payment Set Aside in Trust 29
Section 7.3 Release from Covenants 29
14
ARTICLE 8 - SUCCESSOR COMPANIES 29
Section 8.1 Certain Requirements 29
Section 8.2 Vesting of Powers in Successor 30
ARTICLE 9 - MISCELLANEOUS 30
Section 9.1 Notice to the Holder and to the Company 30
15
This Debenture has not been and will not be qualified under the Securities Act
(Ontario) or under applicable securities laws in any other province or territory
of Canada, and may not be offered or sold in Canada or to, or for the account or
benefit of, a resident of Canada except in certain transactions exempt from the
prospectus and registration requirements of applicable securities laws therein.
This Debenture has not been registered under the U.S. Securities Act of 1933 or
the securities laws of any state of the United States and cannot be offered,
sold, pledged or otherwise transferred or assigned in the United States or to a
resident of the United States unless an exemption from such registration
requirements is available. This Debenture has not been and will not be qualified
for sale or registered under the laws of any other jurisdiction and any
transferee should refer to the securities laws of any jurisdiction applicable to
them.
NEWGIOCO GROUP, INC.
(incorporated under the laws of the State of Delaware)
No. D-__________ $__________________
Debenture due March ____, 2019
NEWGIOCO GROUP, INC. (hereinafter referred to as the "Company"), FOR VALUE
RECEIVED, hereby promises to pay to ________________________ (the "Holder"),
subject to the provisions hereof (the provisions hereof are hereinafter
collectively referred to as the "Debenture"), on March ____, 2019, or on such
other date as the principal amount hereof may become due in accordance with the
provisions of the Debenture, on presentation and surrender of this Debenture,
the sum of _________________________ (CDN$____________) Canadian Dollars and,
subject to the provisions of this Debenture, to pay interest monthly on the
principal amount hereof at the rate of ten (10%) per cent per annum payable on
the Maturity Date (as hereinafter defined), which interest shall be payable
before as well as after maturity and both before and after default and judgment,
with interest on amounts in default at the same rate, and with no compounding of
interest all in accordance with the terms and conditions hereof.
16
ARTICLE 1 - INTERPRETATION
Section 1.1 Definitions. In this Debenture, unless there is something in
the subject matter or context inconsistent therewith:
"Applicable Laws" means the laws applicable to the Company at any relevant time;
"Business Day" means a day on which banks are open for business in Toronto,
Ontario other than a Saturday, Sunday or civic or statutory holiday in Toronto,
Ontario;
"Commencement Date" means the effective date of original issue of this
Debenture, being March ____, 2017;
"Common Shares" means the shares in the capital stock of the Company designated
as common shares in the Company Articles with the voting rights attached thereto
of one (1) vote for each issued and outstanding common share, as such shares
exist at the commencement of business on the Commencement Date; provided that in
the event of a subdivision, redivision, reduction, combination, consolidation,
reclassification or other changes thereof, or successive such subdivisions,
redivisions, reductions, combinations, consolidations, reclassifications or
other changes, then, subject to adjustments, if any, having been made in
accordance with the provisions of Article 5 hereof, "Common Shares" shall
thereafter mean the shares resulting from such subdivision, redivision,
reduction, combination, consolidation, reclassification or other change;
"Company" means Newgioco Group, Inc. and every Successor Corporation which shall
have complied with the provisions of Article 8;
"Company Articles" means the Certificate of Incorporation of the Company and any
amendments thereof;
"Conversion Basis" means, at any relevant time, the number of Common Shares
which may be obtained upon the conversion of this Debenture pursuant to Section
5.1, as adjusted up to that time in accordance with Section 5.4;
"Conversion Price" means, at any relevant time, the price per Common Share at
which the Holder may obtain Common Shares upon the conversion of this Debenture
pursuant to Section 5.1, being US$1.50;
"Conversion Ratio" means the number of Common Shares received on the conversion
of the whole or part of this Debenture pursuant to the Conversion Price;
"Corporate Reorganization" means, in respect of a corporation, any transaction
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person whether by way of arrangement,
reorganization, consolidation, amalgamation, merger, transfer, sale, continuance
into any other jurisdiction of incorporation or otherwise;
"Date of Conversion" has the meaning attributed thereto in subsection 5.2(2);
"Debenture" means this Debenture due March ____, 2019 of the Company;
"Director" means a director of the Company for the time being and "Directors"
means the board of directors of the Company or, if duly constituted and whenever
duly empowered, the executive committee of the board of directors of the Company
for the time being, and reference to action by the directors means action by the
directors of the Company as a board or action by the said executive committee as
such committee;
17
"Event of Default" has the meaning attributed thereto in Section 4.1;
"Maturity Date" means March ____, 2019;
"Offering" means the offering of 6,750 Units by the Company to close on or about
March 15, 2017 which may result in gross proceeds to the Company of
CDN$6,750,000 with each such Unit being comprised of (i) a debenture in a
principal amount of CDN$1,000 in the form of this Debenture and (ii) 100 common
share purchase warrants with each warrant entitling the holder to acquire one
(1) Common Share within twenty-four (24) months with an exercise price of
US$1.00;
"Person" means any individual, partnership, limited partnership, joint venture,
syndicate, sole proprietorship, company or corporation with or without share
capital, unincorporated association, trust, trustee, estate trustee, or other
legal personal representative or other entity howsoever designated or construed;
"Redemption Price" has the meaning attributed thereto in Section 2.7;
"Specified Number of Common Shares" means the number of Common Shares that
results on the conversion of the whole or any part of the Debenture into Common
Shares pursuant to the Conversion Price;
"Successor Corporation" means any corporation continuing from and which acquires
all or substantially all of the undertaking, property and assets of the Company
pursuant to any Corporate Reorganization;
"Transfer Agent" means the law firm of Xxxxx Winter LLP with its office situate
at 000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, or such other transfer
agent as the Company may, from time to time, appoint with respect to the
Debenture by giving written notice to the Holder, as herein provided.
Section 1.2 Interpretation not Affected by Headings, etc. The division of
this Debenture into Articles, sections, subsections and clauses, and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation hereof.
Section 1.3 Deemed Notice of Debenture. The Holder of this Debenture, and
all Persons claiming through or under such Holder, shall be deemed to have
notice of, and shall be bound by, the provisions of this Debenture.
Section 1.4 Applicable Law. This Debenture shall be governed by and
construed in accordance with the laws of the Province of Ontario and the laws of
Canada applicable therein without reference to any conflicts of law provisions
and shall be treated in all respects as an Ontario contract.
Section 1.5 Accounting Terms. All accounting terms which are not
specifically defined herein shall be construed in accordance with Canadian
generally accepted accounting principles consistently applied.
Section 1.6 Day not a Business Day. If any day on or before which any
action is required or permitted to be taken hereunder is not a Business Day,
then such action shall be required or permitted to be taken on or before the
requisite time on the next succeeding day that is a Business Day.
Section 1.7 Currency. Except where otherwise stated, all references to
currency herein are expressed in Canadian Dollars.
18
ARTICLE 2 - THE DEBENTURE
Section 2.1 Terms, Form and Denomination of Debenture.
(a) This Debenture shall be designated as a "Debenture due
March ____, 2019".
(b) The outstanding principal amount of this Debenture shall bear interest
from and including the Commencement Date to but excluding the Maturity
Date, as applicable, at the rate of ten (10%) per cent per annum with
no compounding of interest payable on the Maturity Date, provided that
the Company may prepay at anytime the whole or any part of this
Debenture in accordance with section 2.4(c).
Section 2.2 Certification by Company. This Debenture shall not be
obligatory or entitle the Holder to the benefit hereof until it has been
executed by or on behalf of the Company and certified by the Transfer Agent, and
certification by the Transfer Agent of any Debenture shall be conclusive
evidence as against the Company that this Debenture so certified has been duly
issued and is a valid obligation of the Company and that the Holder is entitled
to the benefit hereof.
Section 2.3 Replacement of Debenture.
(a) In case this Debenture shall be mutilated, defaced, lost, destroyed or
stolen, the Company, subject to Applicable Laws, shall issue and the
Transfer Agent shall certify and deliver a new Debenture of like date
and tenor as the one mutilated, defaced, lost, destroyed or stolen in
exchange for and in place of and upon cancellation of such Debenture
and in lieu of and in substitution for such mutilated, defaced, lost,
destroyed or stolen Debenture, and the new Debenture shall be entitled
to the benefit hereof and rank equally in accordance with its terms
with all other Debenture.
(b) Upon the application for the issue of a new Debenture pursuant to this
Section 2.3, the Holder shall bear the costs of the issue thereof and
in case of loss, destruction or theft shall, as a condition precedent
to the issue thereof, provide to the Transfer Agent such evidence of
ownership and of the loss, destruction or theft of the Debenture so
lost, destroyed or stolen as shall be satisfactory to the Transfer
Agent and the Company in their discretion and the Holder may also be
required to provide an indemnity in amount and form satisfactory to the
Transfer Agent and the Company in their discretion.
Section 2.4 Payment of Principal and Interest.
(a) The principal and interest of this Debenture will be payable when due in
Canadian Dollars by cheque to the Holder or, at the Holder's option,
will be payable by wire transfer to such account and at such location
as may be specified by written notice from the Holder to the Company
given not less than ten (10) Business Days prior to the date of
payment. For greater certainty, any such payment by wire transfer in
accordance with the Holder's specifications shall satisfy and fully
discharge the Company's obligations in respect thereof.
(b) Subject to the other provisions herein, the outstanding principal amount
of this Debenture and all accrued interest shall be repaid by cheque or
wire transfer on the Maturity Date against presentation and surrender
hereof at the offices of the Transfer Agent in the City of Toronto,
19
Ontario, or as otherwise agreed in writing between the Company and the
Holder.
(c) The outstanding principal and accrued interest under this Debenture may
be prepaid in whole or in part at any time or times by the Corporation
without notice, bonus or penalty, provided that the Holder shall
receive a minimum payment on account of interest that is equal to five
(5) months interest.
Section 2.5 Ownership of Debenture. The Person in whose name this Debenture
is registered shall for all the purposes of this Debenture be and be deemed to
be the owner thereof and payment of or on account of the principal or the
interest thereon shall be made, subject to any express provisions hereof to the
contrary, only to or upon the order in writing of such Person.
Section 2.6 Redemption of Debentures. This Debenture shall be redeemable by
the Company at any time or times prior to the Maturity Date.
Section 2.7 Redemption Price. The price payable by the Company on the
redemption of the Debentures shall be equal to the principal amount of the
Debentures to be redeemed, together with accrued and unpaid interest in the form
of cash on the principal amount of the Debentures to be redeemed, to but
excluding the Maturity Date (the applicable price, including accrued and unpaid
interest in the form of cash, at which Debentures may be redeemed being referred
to as the "Redemption Price").
Section 2.8 Places of Payment. The Redemption Price of this Debenture shall
be payable in cash upon presentation and surrender of this Debenture at the
principal office of the Transfer Agent in Xxxxxxx, Xxxxxxx, and/or at such other
places (if any) as may be specified by the Company in the notice of redemption
or as otherwise agreed in writing only between the Company and the Holder.
Section 2.9 Notice of Redemption. The Company shall provide the Holders
with at least ten (10) Business Days of a notice of redemption if such
redemption is occurring prior to the Maturity Date. No notice of redemption of
this Debenture need be given by the Company to the Holders for the redemption of
this Debenture on the Maturity Date.
Section 2.10 Cancellation of Retired Debentures. All Debentures redeemed by
the Company under the provisions of this Article 2 shall be forthwith cancelled
and shall not be reissued.
ARTICLE 3 - NO SECURITY
Section 3.1 No Security. This Debenture is an unsecured obligation of the
Company and shall rank pari passu with each of the other debentures issued by
the Company as part of the Offering irrespective of the date of issue of such
debentures.
ARTICLE 4 - DEFAULT AND ENFORCEMENT
Section 4.1 Events of Default. Each of the following events is herein
sometimes referred to as an "Event of Default":
(i) default in the payment of any principal or interest on this
Debenture as and when the same shall become due and payable, and
continuance of such default for a period of five (5) Business Days
20
after the date on which written notice of such failure, requiring
the Company to remedy the same, shall have been given by the Holder;
(ii) the institution of bankruptcy or insolvency proceedings against the
Company, or the institution of proceedings seeking reorganization or
winding-up of the Company under the Bankruptcy and Insolvency Act
(Canada) or any other bankruptcy, insolvency or analogous laws, or
the issuing of sequestration or process of execution against the
Company or any substantial part of its property, or the appointment
of a receiver or manager of the Company or of any substantial part
of its property, and, in each case, the continuance of any such
proceedings unstayed, undischarged and in effect for a period of
fifteen (15) days from the date thereof; or
(iii) the institution by the Company of proceedings to be adjudicated
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by
it, or the passing of a resolution authorizing the filing by it, of
a petition or answer or consent seeking reorganization or relief
under the Bankruptcy and Insolvency Act (Canada) or any other
bankruptcy, insolvency or analogous laws, or the consent by it to
the filing of any such petition or to the appointment of a receiver
of the Company or of any substantial part of its property, or the
making by it of a general assignment for the benefit of creditors,
or the Company's admitting in writing its inability to pay its
debts generally as they become due or taking corporate action in
furtherance of any of the aforesaid purposes.
Section 4.2 Acceleration of Default. In case any Event of Default has
occurred and is continuing, the Holder may in his, her or its discretion,
declare the principal of and interest on this Debenture and other moneys payable
hereunder to be due and payable and, the same shall forthwith become immediately
due and payable to the Holder and the Company shall forthwith pay to the Holder
the principal of and accrued and unpaid interest on this Debenture with such
interest to be paid in cash not Common Shares and all other moneys payable
hereunder together with subsequent interest thereon, at the rate borne by this
Debenture, from the date of the said declaration until payment is received by
the Holder, such subsequent interest to be payable in cash not Common Shares at
the times and places in and according to the tenor of the Debenture.
Section 4.3 Enforcement of Security. In case any Event of Default has
occurred and the Holder has declared the principal of and interest on this
Debenture and other moneys payable hereunder to be due and payable pursuant to
Section 4.2, the Holder may (to the extent permitted by law):
(i) Appoint a Receiver - by instrument in writing appoint any person
qualified under applicable legislation, whether an officer or
employee of the Holder or not, to be a receiver (which term shall
include a receiver and manager) of the Company; and, subject to the
provisions of the instrument appointing such receiver, any such
receiver so appointed shall have power (to the extent permitted by
law):
(A) to carry on (or to concur in the carrying on of) all or any part of
the business of the Company,
(B) to make any arrangement or compromise which the receiver shall
consider expedient,
21
(C) to borrow money on the security of the assets of the Company for the
purpose of the maintenance, preservation or protection of the
business of the Company or for carrying on all or any part of the
business of the Company,
(D) to sell, lease or otherwise dispose of the whole or any part of the
assets of the Company (or to concur therein) at public auction, by
public tender or by private sale, with or without advertisement,
for cash or upon credit or partly for cash and partly for credit,
at such time and upon such terms and conditions as the receiver
shall determine with or without notice and with or without
advertising and without any formality all of which are hereby
waived by the Company, with power to vary or rescind any contract
or sale or other contract, buy at any such auction, resell with or
under any of the powers conferred hereunder without being
answerable for any loss and adjourn any sale from time to time; and
the receiver may execute and deliver to any purchaser of the assets
of the Company or any part thereof good and sufficient deeds and
documents for the same, the receiver being irrevocably constituted
the attorney of the Company for the purpose of making any such sale
and executing such deeds and documents, provided that such receiver
shall be deemed the agent of the Company and not that of the Holder
and the Holder shall not be in any way responsible for any
misconduct, negligence or non-feasance of any such receiver, his
servants, agents or employees. To facilitate the foregoing powers,
any such receiver may, to the exclusion of all others, including
the Company, enter upon, use and occupy all premises owned or
occupied by the Company wherein the assets of the Company may be
situate, maintain the assets of the Company upon such premises,
borrow money and use assets of the Company directly in carrying on
the Company's business or as security for loans or advances to
enable him to carry on the Company's business or otherwise, as such
receiver shall, in his discretion, determine;
(ii) Further Rights - exercise any of the other rights to which the
Holder is entitled as holder of this Debenture, including the right
to take proceedings in any court of competent jurisdiction for the
appointment of a receiver or manager, for the sale of the assets of
the Company or any part thereof or for foreclosure;
(iii) Power of Attorney - act as attorney for the Company (and the Company
grants to the Holder its irrevocable power of attorney, which power
shall be binding upon the Company and all third parties) to execute
and deliver on behalf of the Company all documents and instruments
as may be necessary to effect the transfers, assignments and
enforcement procedures contemplated in this Section 4.3; and
(iv) Holder May Purchase Company's Assets - the Holder may become (and
any subsidiary, agent or representative of the Holder may become) a
purchaser at any sale of the assets of the Company, whether made
under the powers of sale contained in this Debenture or pursuant to
judicial proceedings.
Section 4.4 Holder not Obliged to Institute Proceedings. The Holder shall
not be liable or accountable for any failure to enforce the rights and remedies
of the Holder herein and shall not be bound to institute proceedings for the
purpose of collecting, enforcing or realizing the same for the purpose of
preserving any right of the Holder, the other Holders, the Company or any other
Person in respect of the same.
22
Section 4.5 Application of Proceeds of Realization. Upon enforcement of the
rights and remedies of the Holder herein, any net profits of carrying on the
business of the Company and the net proceeds of realization of any assets of the
Company shall be applied by the Holder or the receiver, interim receiver or
receiver-manager, if any, subject to claims ranking in priority to this
Debenture:
(i) firstly, in payment of all costs, charges and expenses of and
incidental to the appointment of the receiver, interim receiver or
receiver-manager, and the exercise by such person of all or any of
the powers aforesaid, including his reasonable remuneration and all
outgoings properly paid by him;
(ii) secondly, in payment of all costs, charges and expenses of the
Holder incidental to the enforcement of this Debenture and the
exercise by the Holder of all or any of the powers aforesaid,
including all outgoings properly paid by such Holder;
(iii) thirdly, in payment of all outstanding indebtedness then due and
payable pursuant to this Debenture; and
(iv) fourthly, in payment of all claims ranking subordinate to this
Debenture, by remitting any surplus to the Company.
Section 4.6 Rights and Remedies Cumulative. All rights and remedies of the
Holder set out in this Debenture shall be cumulative and no right or remedy
contained herein is intended to be exclusive but each shall be in addition to
every other right and remedy contained herein or in any existing or future
security document or now or hereafter existing at law or in equity or by
statute. The taking of a judgment or judgments with respect to any of the
obligations hereby secured shall not operate as a merger of any of the covenants
contained in this Debenture.
ARTICLE 5 - CONVERSION OF DEBENTURES INTO COMMON SHARES
Section 5.1 Conversion into Common Shares.
(1) Upon and subject to the provisions, conditions and adjustments of this
Article 5, the Holder of this Debenture shall have the right, at his,
her or its option, at any time prior to the Close of Business on the
last Business Day immediately preceding the Maturity Date, to obtain,
in respect of each one thousand ($1,000) dollars principal amount of
this Debenture converted, the Specified Number of Common Shares, to be
issued as fully paid and non-assessable shares from treasury, the
subscription price for such Common Shares to be paid and satisfied by
the surrender by the Holder to the Transfer Agent of all or any
integral multiple of one thousand ($1,000) dollars of this Debenture
provided, for greater certainty, that (i) the Holder's right to
exercise his, her or its conversion rights under Section 5.1 shall not
exist in the event of any prior notice of redemption has been given by
the Company and (ii) if any Debenture shall fail to be redeemed on the
Maturity Date when such redemption was required to be made, the right
to convert into Common Shares under this Section 5.1 shall again apply.
(2) The right of conversion pursuant to this Article 5 shall extend only to
the maximum number of whole Common Shares into which the aggregate
principal amount of this Debenture surrendered in exercise of the
conversion rights at any one time that may be obtained in accordance
23
with the provisions of subsection 5.1(1). Fractional interests in
Common Shares shall be adjusted for in the manner provided in Section
5.5.
Section 5.2 Manner of Exercise of Right to Convert into Common Shares.
(1) The Holder of a Debenture desiring to exercise his, her, its rights
under Section 5.1 in whole or in part to convert into Common Shares
shall surrender such Debenture to the Transfer Agent at its office in
the City of Xxxxxxx, Xxxxxxx, together with the conversion form
prescribed in Schedule "B" hereto or any other written notice in a form
satisfactory to the Transfer Agent acting in its sole discretion, in
either case duly executed by the Holder or his, her or its estate
trustees, legal representatives, or attorney duly appointed by an
instrument in writing in the form of Schedule "B" attached to this
Debenture and executed in a manner satisfactory to the Transfer Agent,
exercising his, her or its right to convert into Common Shares in
accordance with the provisions of this Article 5. Thereupon, the
Holder, subject to compliance with all reasonable requirements of the
Transfer Agent, shall be entitled to be entered in the books of the
Company as at the Date of Conversion (or such later date as is
specified in subsection 5.2(2)), as the holder of the number of Common
Shares specified in subsection 5.2(1) and, as soon as practicable
thereafter, the Company shall deliver or cause to be delivered to the
Holder or, subject as aforesaid, his, her or its nominee or assignee,
(a) a certificate or certificates for such Common Shares; (b)
certificates for Common Shares with respect to the interest payment
pursuant to Section 2.4; and, (c) if applicable, a cheque for any
amount payable under Section 5.5. The Debenture or the portion hereof
that is surrendered to the Company in payment for Common Shares shall
be cancelled.
(2) For the purposes of this Article 5, a Debenture shall be deemed to be
surrendered in exercise of conversion rights under Section 5.1 on the
date (the "Date of Conversion") on which it is so surrendered in
accordance with the provisions of this Article 5 and, in the case of a
Debenture so surrendered by post or other means of transmission, on the
date on which it is received by the Transfer Agent at its office
designated in subsection 5.2(1). If a Debenture is surrendered upon
conversion into Common Shares in accordance with the provisions of this
Article 5 on any day on which the Transfer Agent is closed, the Person
entitled to receive Common Shares upon the exercise of conversion
rights hereunder shall become the shareholder of record of such Common
Shares as at the date on which the Transfer Agent is next open.
Section 5.3 Partial Conversion.
(1) The conversion rights under Section 5.1 may be exercised with respect to
any part of this Debenture, provided such part is an integral multiple
of one thousand ($1,000) dollars and all accrued and unpaid interest
thereon, and all references in this Debenture to exercise of conversion
rights and surrender of this Debenture in payment of the subscription
price of Common Shares shall be deemed to include exercise of
conversion rights with respect to any such part.
(2) The Holder of any Debenture of which part only is transferred to the
Company in payment of the subscription price of Common Shares shall,
upon the exercise of his, her or its right to convert into Common
Shares or the right of the Company to require such conversion surrender
24
such Debenture to the Transfer Agent and the Transfer Agent shall
cancel the same and shall, without expense to the Holder, forthwith
certify, and deliver to the Holder a new Debenture or Debentures
identical in all material respects to this Debenture, but in an
aggregate principal amount of the Debenture so surrendered with respect
to which the Holder has not exercised, his, her or its conversion
rights.
Section 5.4 Adjustment of Conversion Basis.
(1) If and whenever the Company shall (i) subdivide or redivide the
outstanding Common Shares into a greater number of shares (ii) reduce,
combine or consolidate the outstanding Common Shares into a smaller
number of shares; or (iii) issue any Common Shares (or securities
convertible into or exchangeable for Common Shares) to the holders of
all or substantially all of the outstanding Common Shares or any other
class of shares of the Company by way of a stock dividend (other than
the issuance of Common Shares as interest payments on the Debentures),
the number of Common Shares which may be obtained pursuant to Section
5.1 for each one thousand ($1,000) dollars principal amount of this
Debenture as of the effective date of such subdivision, redivision,
reduction, combination or consolidation or on the record date for such
issue of Common Shares (or securities convertible into or exchangeable
for Common Shares) by way of a stock dividend, as the case may be,
shall be increased, in the case of the events referred to in (i) and
(iii) above, in the proportion which the number of Common Shares
outstanding after such subdivision, redivision or dividend bears to the
number of Common Shares outstanding before such subdivision, redivision
or dividend, or shall be decreased, in the case of the events referred
to in (ii) above, in the proportion which the number of Common Shares
outstanding after such reduction, combination or consolidation bears to
the number of Common Shares outstanding before such reduction,
combination or consolidation. Any such issue of Common Shares by way of
a stock dividend shall be deemed to have been made on the record date
fixed for such stock dividend for the purpose of calculating the number
of outstanding Common Shares under this subsection 5.4(1) or subsection
5.4(2), (3) or (4) and, in the case where securities convertible into
or exchangeable for Common Shares are distributed, shall include the
number of Common Shares that would have been outstanding had such
securities been converted into Common Shares on such record date.
(2) If at any time prior to the first anniversary date of the Commencement
Date the Company shall fix a record date for the issuance of rights,
options or warrants to all or substantially all of the holders of its
outstanding Common Shares or any other class of shares of the Company,
entitling them to subscribe for or purchase Common Shares (or
securities exchangeable for or convertible into Common Shares or a
combination of Common Shares and such exchangeable or convertible
securities) at a price per share (or having a conversion or exchange
price per share) less than one (US$1.50) United States dollar and fifty
cents, the number of Common Shares which may be obtained pursuant to
Section 5.1 for each one thousand ($1,000) dollars principal amount of
this Debenture shall be adjusted immediately after such record date by
multiplying the Conversion Basis in effect on such record date by a
fraction, (i) the numerator of which shall be the total number of
Common Shares outstanding on such record date plus the total number of
Common Shares offered for subscription or purchase (or into which the
convertible or exchangeable securities so offered are convertible or
exchangeable), and (ii) the denominator of which shall be the total
25
number of Common Shares outstanding on such record date plus a number
of Common Shares equal to the number arrived at by dividing the
aggregate price of the total number of additional Common Shares offered
for subscription or purchase (or the aggregate conversion or exchange
price of the convertible securities so offered) by one (US$1.50) United
States dollar and fifty cents; to the extent that any such rights,
options or warrants are not so issued or any such rights, options or
warrants are not exercised prior to the expiration thereof, the number
of Common Shares which may be obtained pursuant to Section 5.1 for each
one thousand ($1,000) dollars principal amount of this Debenture shall
be re-adjusted to that which would then be in effect based upon the
number of Common Shares (or securities convertible into or exchangeable
for Common Shares) actually issued upon the exercise of such rights,
options or warrants, as the case may be.
(3) If and whenever the Company shall fix a record date for the making of a
distribution (other than any distributions constituting dividends paid
in the ordinary course) to all or substantially all the holders of its
outstanding Common Shares or any other class of shares of the Company
of (i) shares of the Company of any class other than Common Shares, or
(ii) rights, options or warrants or other securities of the Company
which are convertible into or exchangeable for Common Shares (excluding
those referred to in subsection 5.4(2); or (iii) evidences of its
indebtedness (excluding those referred to in subsection 5.4(2); or (iv)
property or other assets of the Company or any Subsidiary of the
Company, then, in each such case, the number of Common Shares which may
be obtained pursuant to Section 5.1 for each one thousand ($1,000)
dollars principal amount of the Debenture shall be adjusted immediately
after such record date by multiplying the Conversion Basis in effect on
such record date by a fraction (v) the numerator of which shall be the
total number of Common Shares outstanding on such record date
multiplied by one (US$1.50) United States dollar and fifty cents per
Common Share, and (vi) the denominator of which shall be the total
number of Common Shares outstanding on such record date multiplied by
one (US$1.50) United States dollar and fifty cents, less the fair
market value (as determined by the Directors, subject to the approval
of any regulatory body having jurisdiction over the Company, which
determination, absent manifest error, shall be conclusive) of such
shares or rights, options or warrants or evidences or indebtedness or
assets so distributed; any Common Shares owned by or held for the
account of the Company or any Subsidiary of the Company shall be deemed
not to be outstanding for the purpose of any such computation to the
extent that such distribution is not so made, the number of Common
Shares which may be obtained pursuant to Section 5.1 for each one
thousand ($1,000) dollars principal amount of this Debenture shall be
re-adjusted to that which would then be in effect if such record date
had not been fixed or to that which would then be in effect if such
record date had not been fixed or to that which would then be in effect
based upon such share or rights, options or warrants or other
securities or evidences of indebtedness or property or other assets
actually distributed, as the case may be.
(4) In case of the reclassification of the Common Shares at any time
outstanding (other than any subdivision, redivision, reduction,
combination of consolidation of Common Shares into a greater or lesser
number of Common Shares) or change of the Common Shares into other
shares, or in case of a Corporate Reorganization of the Company, (other
than a Corporate Reorganization which does not result in a
reclassification of the outstanding shares), the Holder of the
26
Debenture if he, she or it shall thereafter exercise his, her or its
rights to obtain Common Shares under Section 5.1, in whole or in part,
shall be entitled to receive, and shall accept, in lieu of the number
of Common Shares to which he, she or it was therefore entitled upon
exercise of such conversion rights, the kind and amount of shares and
other securities or property which such Holder would have been entitled
to receive as a result of such reclassification, change or Corporate
Reorganization, as the case may be, if on the effective date thereof,
he, she or it had been the registered holder of the number of Common
Shares to which he, she or it was theretofore entitled upon exercise of
such Holder's rights to obtain Common Shares under Section 5.1. If
necessary, appropriate adjustments shall be made in the application of
the provisions set forth in this Article 5 with respect to the rights
and interests thereafter of the Holder to the end that the provisions
set forth in this Article 5 shall thereafter correspondingly be made
applicable as nearly as may be possible in relation to any shares or
other securities or property thereafter deliverable upon the exercise
its rights to obtain Common Shares under Section 5.1. Any such
adjustments shall be approved by the Directors, subject to the approval
of any regulatory body having jurisdiction over the Company, and shall
be set forth in a notice given to the Holder in accordance with Article
9 hereof and, absent manifest error, shall for all purposes be
conclusively deemed to be an appropriate adjustment.
(5) In any case in which this Section 5.4 shall require that an adjustment
shall become effective immediately after a record date for an event
referred to herein, the Company may defer, until the occurrence of such
event, issuing to the Holder the additional Common Shares issuable by
reason of the adjustment upon a conversion pursuant to Section 5.1 made
after such record date and before the occurrence of such event. The
Company shall deliver or cause to be delivered to the Holder in any
such case an appropriate instrument evidencing the Holder's right to
receive such adjustment and the right to receive any distributions made
on such additional Common Shares declared in favour of holders of
record of Common Shares on and after the Date of Conversion or such
later date as such holder would, but for the provisions of this
subsection 5.4(5), have become the holder of record of such additional
Common Shares pursuant to subsection 5.2(2).
(6) The adjustments provided for in this Section 5.4 are cumulative, shall
in the case of the resulting adjustments to the Conversion Price be
computed to the nearest one-tenth (1/10th) of one (1) cent and shall
apply to successive subdivisions, redivisions, reductions,
combinations, consolidations, distributions, issues or other events
resulting in any adjustment under the provisions of this Section 5.4.
Notwithstanding any other provision of this Section 5.4, no adjustment
of the Conversion Basis and Conversion Price shall be required in
respect of any such event unless such adjustment would require an
increase or decrease of at least one (1%) per cent in the Conversion
Basis then in effect. Any adjustments which by reason of the preceding
sentence of this subsection 5.4(6) are not required to be made shall be
carried forward and taken into account on any subsequent adjustment.
(7) If any questions arise with respect to the adjustments provided in this
Section 5.4 and except with respect to matters where a decision of the
Directors is expressly stated herein to be conclusive, such questions
shall be determined by the Company's Auditors, subject to the consent
of any regulatory body having jurisdiction over the Company and such
determination, absent manifest error, shall be binding upon the Company
and the Holder.
27
Section 5.5 No Requirement to Issue Fractional Shares. The Company shall
not be required to issue fractional Common Shares upon the conversion rights
pursuant to this Article 5. If any fractional interest in a Common Share would,
except for the provisions of this Section 5.5, be deliverable upon the
conversion of any principal amount of Debentures, the Company shall, in lieu of
delivering any certificate of such fractional interest, satisfy such fractional
interest by paying to the Holder of such surrendered Debentures an amount of
lawful money of Canada equal (computed to the nearest whole cent, and one-half
of a cent being rounded up) to the appropriate fraction of the deemed value of a
Common Share.
Section 5.6 Certificate as to Adjustment. The Company shall from time to
time immediately after the occurrence of an event which requires an adjustment
or readjustment as provided in Section 5.4, deliver a certificate of the
President of the Company to the Holder, and the Transfer Agent specifying the
event requiring such adjustment or re-adjustment and the results thereof,
including detailed calculations and, upon giving such certificate, such
adjustment or readjustment shall be conclusive and binding on all parties in
interest. No such notice need be given under this Section 5.6 if the Company has
given notice under Section 5.7 covering all the relevant facts in respect of
such event.
Section 5.7 Notice of Special Matters. The Company agrees that so long as
any Debenture remains outstanding, it will give notice to the Holder, in the
manner provided in Article 9, and the Transfer Agent of its intention to fix a
record date for any event mentioned in Section 5.4 which may give rise to an
adjustment in the Conversion Basis, and, in each case, such notice shall specify
the particulars of such event and the record date and the effective date for
such event. Such notice shall be given not less than fourteen (14) days prior to
such applicable record date.
Section 5.8 Company to Reserve Shares. The Company agrees that it will
reserve and keep available out of its authorized Common Shares and solely for
the purpose of issue upon exercise of conversion rights under the Debentures as
provided in this Article 5, the maximum number of Common Shares as shall then be
issuable upon the exercise of the conversion rights under Section 5.1 inclusive
of the obligations of the Company to pay interest on the Debentures in the form
of Units.
Section 5.9 Cancellation of Converted Debentures. Subject to subsection
5.3(2), all Debentures with respect to which the conversion rights under the
provisions of this Article 5 are exercised shall be immediately cancelled.
Section 5.10 Conversion of Legended Debentures. Upon the exercise of
conversion rights under Debentures bearing a legend, the certificates
representing the Common Shares issued upon exercise of the conversion rights
under such Debentures and all certificates issued in exchange therefor or in
substitution thereof, shall bear such legend as is determined to be required for
compliance with Applicable Laws, or the requirements of a securities regulatory
authority, if any.
ARTICLE 6 - PARTICULAR COVENANTS OF THE COMPANY
Section 6.1 Payment of Principal and Interest. The Company will duly and
punctually pay or cause to be paid to the Holder, the principal of and interest
on the Debentures of which he, she or it is the Holder, on the dates, at the
places and in the manner provided for in this Debenture.
28
Section 6.2 To Carry On Business. Subject to the express provisions hereof,
the Company will carry on and conduct its business in a proper and efficient
manner (which shall include, without limitation, the maintenance of books of
account in accordance with International Financial Reporting Standards
consistently applied) and, subject to the express provisions hereof, it will do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
ARTICLE 7 - SATISFACTION AND DISCHARGE
Section 7.1 Cancellation and Destruction. All matured Debentures,
forthwith after payment thereof, shall be cancelled by the Transfer Agent and
delivered to or to the order of the Company. All Debentures cancelled or
required to be cancelled under this or any other provision of this Debenture may
be destroyed by the Company.
Section 7.2 Payment Set Aside in Trust.
(1) The Company shall be entitled to set aside in trust any moneys to be
applied to the payment of the principal of the Debentures with the Bank
to be paid to the Holder of this Debenture upon due presentment and
surrender thereof in accordance with the provisions of this Debenture.
(2) Upon the Company, pursuant to this Section 7.2, setting aside in trust
any moneys to be applied to the payment of the principal of the
Debentures, the principal represented by each Debentures in respect of
which such moneys have been so set aside shall be deemed to have been
paid and the Holder thereof shall thereafter have no right in respect
thereof except that of receiving payment in accordance with subsection
7.2(1) of the moneys so set aside by the Company (without interest on
such monies), upon due presentment and surrender hereof, subject always
to the provisions of Section 7.3.
Section 7.3 Release from Covenants. Upon the principal of all the
Debentures and interest thereon and other moneys payable hereunder have
been paid or satisfied, the Holder shall, at the request and at the
expense of the Company, execute and deliver to the Company such deeds
or other instruments as shall be requisite to release the Company from
its covenants contained herein.
ARTICLE 8 - SUCCESSOR COMPANIES
Section 8.1 Certain Requirements. The Company shall not enter into any
Corporate Reorganization, unless:
(i) the Successor Company shall execute, prior to or contemporaneously
with the consummation of such Corporate Reorganization, such
instruments as are necessary or advisable to evidence the
assumption by the Successor Company of all of the obligations of
the Company, as the case may be, under this Debenture;
(ii) such Corporate Reorganization shall be upon such terms as to
preserve and not to impair any of the rights and powers of the
Holder hereunder; and
(iii) no condition or event shall exist as to the Company or the Successor
Company either at the time of or immediately after such Corporate
29
Reorganization and after giving full effect thereto or immediately
after the Successor Company complying with the provisions of
subsection 8.1(i) above which constitutes or would constitute an
Event of Default hereunder.
Section 8.2 Vesting of Powers in Successor. Whenever the conditions of
Section 9.1 have been duly observed and performed, the Successor Company shall
possess and from time to time may exercise each and every right and power of the
Company, under this Debenture in the name of the Company or otherwise and any
act or proceeding by any provision of this Debenture required to be done or
performed by the directors or any officers of the Company may be done and
performed with like force and effect by the directors or the like officer or
officers of such Successor Company.
ARTICLE 9 - MISCELLANEOUS
Section 9.1 Notice to the Holder and to the Company.
Any notice in writing required or permitted to be given hereunder shall be
sufficiently given if delivered personally or mailed by registered mail, postage
prepaid, addressed as follows:
To the Company at: 000 Xxxxxxxx Xx. X.
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention:
Xxxxxxx Xxxxxxxxxx, C.E.O.
To the Holder at: ___________________________
___________________________
___________________________
In all cases with a copy to: Xxxxx Winter LLP
Barristers and Solicitors
Xxxxx 000, 000 Xxxxxxxx Xxxxxx X.
Xxxxxxx, XX
X0X 0X0
Attention:
Xxxxxx X. Xxxxx
Any such notice given by personal delivery shall conclusively be deemed to be
received on the date of the actual delivery thereof and when given by registered
mail, shall conclusively be deemed to be received on the seventh (7th) Business
Day following the date of mailing. When any party giving ay notice knows, or
ought to know, of any disruption in the operation of the postal system which may
affect the delivery of mail in the ordinary course, any such notice shall not be
mailed but shall be given by personal delivery.
Any party may at any time give notice in writing to the other party of any
change of address of the party giving such notice, and from and after the giving
of such notice, the address therein specified shall be deemed to be the address
of such party for the giving of notices hereunder.
(SIGNATURE PAGE FOLLOWS)
30
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed by its
proper officer on its behalf as of the _____ day of March, 2017.
NEWGIOCO GROUP, INC.
by: _____________________
Name: Xxxxxxx Xxxxxxxxxx
Title: C.E.O.
Certified countersigned and
registered by the Transfer Agent:
XXXXX WINTER LLP
by: ______________________________
Name: Xxxxxx X. Xxxxx
Title: Partner
31
SCHEDULE "C"
COMMON SHARE PURCHASE WARRANT CERTIFICATE
No. ____________
Certificate for ____________ Warrants
NOT EXERCISABLE AFTER 5:00 P.M.,
EASTERN STANDARD TIME, ON MARCH ____, 2019
NEWGIOCO GROUP, INC.
COMMON SHARE PURCHASE WARRANT CERTIFICATE
THIS CERTIFICATE CERTIFIES THAT ___________________________ or its registered
assigns is the registered holder (the "Holder") of the number of Warrants set
forth above, each of which represents the right to purchase one (1) fully paid
and non-assessable common share (the "Common Share") of NEWGIOCO GROUP, INC., a
corporation organized under the laws of the State of Delaware (the "Company"),
at the Exercise Price (as hereinafter defined), by surrendering this Warrant
Certificate, with the form of Election to Purchase attached hereto duly executed
and by paying in full the Exercise Price (the Common Shares issuable upon
exercise of the Warrants being referred to herein as the "Warrant Shares") at
the principal office of the Company as set forth below. No Warrant may be
exercised after 5:00 P.M., Eastern Standard Time, on March ____, 2019 (the
"Expiration Date"). All Warrants evidenced hereby shall thereafter become void.
Prior to the Expiration Date, subject to any applicable laws, rules or
regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate, the Holder shall be
entitled to transfer this Warrant Certificate, in whole or in part, upon
surrender of this Warrant Certificate at the principal office of the Company
with the form of assignment set forth hereon duly executed. Upon any such
transfer, a new Warrant Certificate or Warrant Certificates representing the
same aggregate number of Warrant Shares will be issued in accordance with
instructions in the form of assignment.
1. Exercise of the Warrants
At any time prior to the Expiration Date, the Holder shall be entitled to
exercise some or all of the Warrants represented by this Warrant Certificate and
purchase an equal number of Common Shares upon surrender of this Certificate at
the principal office of the Company, together with:
(i) the form of Election to Purchase annexed hereto duly executed; and
(ii) a certified cheque of bank draft, payable at par, in Canadian
currency, to or to the order of the Company, in the amount of the
Exercise Price per Warrant (as hereinafter determined) multiplied
by the number of Warrants being so converted.
The exercise price per Warrant to be exercised shall be one (US$1.00) United
States dollar (the "Exercise Price"). Upon the exercise of less than all of the
Warrants to purchase the Common Shares evidenced by this Warrant Certificate,
there shall be issued to the Holder a new Warrant Certificate in respect of the
Warrants not exercised.
32
2. Fractional Shares
The Company shall not be required to issue fractional shares upon the exercise
of some or all of the Warrants represented by this Warrant Certificate.
3. Limitation
This Warrant Certificate shall not entitle the Holder to any of the rights of a
shareholder of the Company, including, without limitation, the right to vote, to
receive dividends and other distributions, or to attend or receive any notice of
meetings of stockholders or any other proceedings of the Company.
4. Registration of Warrant Certificates
The Company shall number and register the Warrant Certificates in a warrant
register maintained by the Company as they are needed. The Company may deem and
treat the registered holder(s) of the Warrant Certificates as the absolute
owner(s) thereof for all purposes. Upon request by a Holder requesting such
information for the purpose of obtaining a consent, waiver or other action of
Holders, the Company will notify that Holder as to the identity and address of
record of the other Holders.
5. Transfer of Warrant Certificate and Warrant Shares
(1) The Company shall from time to time register the transfer of any
outstanding Warrant Certificates in the warrant register upon surrender
thereof accompanied by a written instrument or instruments of transfer
in form reasonably satisfactory to the Company duly executed by the
Holder or Holders thereof or by the duly appointed legal representative
thereof or by a duly authorized attorney. Upon any such registration of
transfer, the Company shall issue as promptly as practicable in any
event within three (3) Business Days (as hereinafter defined) after
receipt of such notice of transfer of a new Warrant Certificate to the
transferee(s). As used in the Warrant Certificate, the term "Business
Day" means any day which is not a Saturday, Sunday or statutory holiday
in the City of Toronto.
(2) Warrant Certificates may be exchanged at the option of the Holder(s)
thereof when surrendered to the Company at the address set forth herein
for another Warrant Certificate or Warrant Certificates of like tenor
and representing the right to purchase in the aggregate a like number
of Warrant Shares; provided that the Company shall not be required to
issue any Warrant Certificates representing any fractional Warrant
Shares.
(3) The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of new Warrant
Certificates, including, without limitation, any transfer or stamp
taxes.
6. Lost, Stolen, Mutilated or Destroyed Warrant Certificates
If any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Company shall issue, execute and deliver, in exchange and substitution for and
upon cancellation of such mutilated Warrant Certificate, or in lieu of or in
substitution for such lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate representing an equivalent number of Warrants or Warrant
Shares. If required by the Company, the Holder of the mutilated, lost, stolen or
destroyed Warrant Certificate must provide an affidavit of loss and an indemnity
reasonably sufficient to protect the Company from any loss which it may suffer
33
if the Warrant Certificate is replaced. Any new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at
any time enforceable by any person.
7. Cancellation of Warrant Certificates
Any Warrant Certificate surrendered upon the exercise of Warrants or for
exchange or transfer, or purchased or otherwise acquired by the Company, shall
be cancelled and shall not be reissued by the Company; and, except as provided
in Section 1 with respect to the exercise of less than all of the Warrants
evidenced by a Warrant Certificate or in Section 5 with respect to an exchange
or transfer, no Warrant Certificate shall be issued hereunder in lieu of such
cancelled Warrant Certificate. Any Warrant Certificate so cancelled shall be
destroyed by the Company.
8. Issuance of Common Shares
As promptly as practicable after the date on which part or all of the Warrants
represented by this Warrant Certificate are exercised (the "Date of Exercise")
of any Warrants and in any event within three (3) Business Days after receipt of
the Election to Purchase, the Company shall issue, or cause its transfer agent
to issue, a certificate or certificates for the number of non-fractional Warrant
Shares (the "Common Share Certificate"), registered in accordance with the
instructions set forth in the Election to Purchase. All Warrant Shares issued
upon the exercise of any Warrants shall be legally and validly authorized and
issued and outstanding, fully paid, non-assessable, free of pre-emptive rights
and free from all taxes, liens, charges and security interests in respect of the
issuance thereof. Each person in whose name any such Common Share Certificate is
issued shall be deemed for all purposes to have become the holder of record of
the Common Shares represented thereby on the Date of the Exercise of the
Warrants resulting in the issuance of such shares, irrespective of the date of
issuance or delivery of such Common Share Certificate.
The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of new Common Share
Certificates, including, without limitation, any transfer or stamp taxes.
9. Reservation of Common Shares; Listing
The Company shall reserve and keep available, free from pre-emptive rights, for
issuance upon the exercise of Warrants, the maximum number of its authorized but
unissued Common Shares which may then be issuable upon the exercise in full of
all outstanding Warrants.
10. No Impairment
The Company shall not by any action, including, without limitation, amending its
articles of incorporation or through any reorganization, transfer of assets,
consolidation, amalgamation, combination, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid, or seek to avoid the
observation or performance of any of the terms of the Warrants, the Warrant
Certificates or this Certificate, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of the Holders against
impairment. Without limiting the generality of the foregoing, the Company shall
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under the Warrants. In case any securities
34
other than the Common Shares ("Other Securities") shall be issued or sold, or
shall become subject to issue upon the conversion or exchange of any stock (or
Other Securities) of the Company (or any other issuer of Other Securities) or to
subscription, purchase or other acquisition pursuant to any rights or options
granted by the Company (or such other issuer or Person), for a consideration per
share of Other Security such as to dilute the purchase rights evidenced by the
Warrants, the computations, adjustments and readjustments provided for in
Section 11 with respect to the Exercise Price and the number of Warrant Shares
shall be made as nearly as possible in the manner so provided and applied so as
to protect the Holders against the effect of such dilution.
11. Adjustment of Exercise Price
Subject to the provisions of this Section 11, the Exercise Price in effect from
time to time shall be subject to adjustment, as follows:
(1) In the event that the Company shall (i) declare a dividend or make a
distribution on the outstanding Common Shares in additional Common
Shares, (ii) subdivide or reclassify the outstanding Common Shares into
a greater number of shares, or (iii) consolidate, combine or reclassify
the outstanding Common Shares into a fewer number of shares, the
Exercise Price in effect immediately after the record date for such
dividend or distribution or the effective date of such subdivision,
consolidation, combination or reclassification, as the case may be,
shall be adjusted so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of Common Shares
outstanding immediately before such dividend, distribution,
subdivision, consolidation, combination or reclassification, and of
which the denominator shall be the number of Common Shares outstanding
immediately after such dividend, distribution, subdivision,
consolidation, combination or reclassification. Any Common Shares
issuable in payment of a dividend shall be deemed to have been issued
immediately prior to the record date or other applicable date cited in
Sections 11(2) or 11(3) for the purpose of calculating the number of
outstanding Common Shares under Sections 11(2) or 11(3). Such
adjustment shall be made successively whenever any event specified
above shall occur.
(2) In the event that the Company shall fix a record date for the issuance
of rights, options, warrants or convertible or exchangeable securities
to all or substantially all holders of its Common Shares entitling them
(for a period which, by its express terms, expires within forty-five
(45) days after such record date) to subscribe for or purchase Common
Shares at a price per share less than the Fair Market Value of a Common
Share on such record date, the Exercise Price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of Common Shares
outstanding on such record date plus the maximum number of Common
Shares which the aggregate offering price of the total number of Common
Shares so offered would purchase at the Fair Market Value per share,
and of which the denominator shall be the number of Common Shares
outstanding on such record date plus the number of additional Common
Shares offered for subscription or purchase. Such adjustment shall be
made successively whenever such a record date is fixed. To the extent
that any such rights, options, warrants or convertible or exchangeable
securities are not so issued or expire unexercised, the Exercise Price
then in effect shall be readjusted to the Exercise Price which would
35
then be in effect if such unissued or unexercised rights, options,
warrants or convertible or exchangeable securities had not been
issuable. As used in this Warrant Certificate, the term "Fair Market
Value" means the price at which a buyer and seller would transfer a
Common Share both being fully informed of all relevant information and
neither being under any compulsion to buy or sell, as the case may be
and, for the purposes of this Section 11(2), shall, at the request of a
Holder, be determined by the Company's Board of Directors in good faith
and on a reasonable basis.
(3) In the event that the Company shall fix a record date for the making of
a distribution to all or substantially all holders of Common Shares (i)
of shares of any class other than its Common Shares or (ii) of the
evidence of its indebtedness or (iii) of assets or (iv) of rights,
options, warrants or convertible or exchangeable securities, then in
each such case the Exercise Price in effect immediately thereafter
shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, of which the numerator shall
be the total number of Common Shares outstanding on such record date
multiplied by the Fair Market Value per share on such record date, less
the aggregate fair market value as determined in good faith by the
Company's Board of Directors of said shares or evidences of
indebtedness or assets or rights, options, warrants or convertible or
exchangeable securities as distributed, and of which the denominator
shall be the total number of Common Shares outstanding on such record
date multiplied by such Fair Market Value per share. Such adjustment
shall be made successively whenever such a record date is fixed;
provided, however, that in no event shall the Exercise Price be less
than zero. In the event that such distribution is not so made, or that
such distribution, by its express terms, is intended to be made, and is
in fact made, to all holders of Warrant Shares upon exercise of their
respective Warrants, the Exercise Price then in effect shall be
readjusted to the Exercise Price which would then be in effect if such
record date had not been fixed.
12. No Adjustment to Exercise Price
No adjustment in the Exercise Price in accordance with the provisions of Section
11 need be made unless such adjustment would amount to a change of at least one
(1.0%) per cent in such Exercise Price, provided, however, that the amount by
which any adjustment is not made by reason of the provisions of this Section 12
shall be carried forward and taken into account at the time of any subsequent
adjustment in the Exercise Price.
13. Adjustment of Number of Shares
Upon each adjustment of the Exercise Price pursuant to Section 11, each Warrant
shall thereupon evidence the right to purchase that number of Warrant Shares
(calculated to the nearest hundredth of a share) obtained by multiplying the
number of Warrant Shares purchasable immediately prior to such adjustment upon
exercise of the Warrant by the Exercise Price in effect immediately prior to
such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment.
14. Reorganizations
In the event of any capital reorganization, other than in the cases referred to
in Section 11(1), or the consolidation, amalgamation, merger or other
combination of the Company with or into another corporation (other than a
36
consolidation, amalgamation, merger or other combination in which the Company is
the continuing corporation and which does not result in any reclassification of
the outstanding Common Shares or the conversion of such outstanding Common
Shares into shares of other stock or other securities or property), or the sale,
transfer or conveyance of the property of the Company as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the number of Warrant Shares theretofore
deliverable) the number of shares of stock or other securities of property to
which a holder of the number of Warrant Shares which would otherwise have been
deliverable upon the exercise of such Warrant would have been entitled upon such
Reorganization if such Warrant had been exercised in full immediately prior to
such Reorganization. In the event of any Reorganization, appropriate adjustment,
as determined in good faith by the Company's Board of Directors, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of Holders so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of Warrants. Any such
adjustment shall be made by and set forth in a supplemental agreement prepared
by the Company or any successor thereto, between the Company and any successor
thereto, and shall for all purposes hereof conclusively be deemed to be an
appropriate adjustment. The Company shall not effect any such Reorganization,
unless upon or prior to the consummation thereof the successor corporation, or
if the Company shall be the surviving corporation in any such Reorganization and
is not the issuer of the shares of stock or other securities or property to be
delivered to holders of Common Shares outstanding at the effective time thereof,
then such issuer, shall assume by written instrument the obligation to deliver
to the Holder of any Warrant Certificate such shares of stock, securities, cash
or other property as such holder shall be entitled to purchase in accordance
with the foregoing provisions.
15. Notice of Certain Actions
In the event the Company shall (a) declare any dividend payable in stock to the
holders of its Common Shares or make any other distribution in property other
than cash to the holders of its Common Shares, (b) offer to the holders of its
Common Shares rights to subscribe for or purchase any shares of any class of
stock or any other rights or options, or (c) effect any reclassification of its
Common Shares (other than a reclassification involving merely the subdivision or
combination of outstanding Common Shares) or any capital reorganization or any
consolidation, amalgamation, merger or other combination (other than a
consolidation, amalgamation, merger or other combination in which no
distribution of securities or other property is made to holders of Common
Shares) or any sale, transfer or other disposition of its property, assets and
business substantially as an entirety, or the liquidation, dissolution or
winding up of in the Company; then, in each such case, the Company shall cause
notice of such proposed action to be mailed to each Holder at least thirty (30)
days prior to such action. Such notice shall specify the date on which the books
of the Company shall close, or a record be taken, for determining holders of
Common Shares entitled to receive such stock dividend or other distribution or
such rights or options, or the date on which such reclassification,
reorganization, consolidation, amalgamation, combination, merger, sale,
transfer, other disposition, liquidation, dissolution, winding up or exchange
shall take place or commence , as the case may be, and the date as of which it
is expected that holders of record of Common Shares shall be entitled to receive
securities or other property deliverable upon such action, if any such date has
been fixed. Such notice shall be mailed in the case of any action covered by
paragraph (a) and (b) of this Section 15, at least ten (10) days prior to the
record date for determining holders of the Common Shares for purposes of
37
receiving such payment or offer, and in the case of any action covered by this
paragraph (c), at least ten (10) days prior to the record date to determine
holders of Common Shares entitled to receive such securities or other property.
16. Certificate of Adjustment
The Company shall perform any computations and determine any adjustments
required to be made under this Certificate (the "Adjustment") and shall cause an
independent nationally recognized firm of chartered accountants selected by the
Company to verify each Adjustment. As promptly as practicable after determining
any Adjustment, and upon receipt of the aforementioned verification, the Company
shall prepare a certificate executed by the President of the Company setting
forth such Adjustment and mail such certificate to each Holder (an "Adjustment
Notice"). The Adjustment Notice shall include in reasonable detail (a) the
events precipitating the Adjustment, (b) the computations relating to such
Adjustment, and (c) the Exercise Price and the number of shares or the
securities or other property purchasable upon exercise of each Warrant after
giving effect to such Adjustment. In the event that the Holders of Warrants
entitling such Holders to purchase a majority of the Warrant Shares subject to
purchase upon exercise of Warrants at the time outstanding (the "Required
Interest") shall disagree with any Adjustment, the Required Interest shall give
notice thereof (the "Dispute Notice") to the Company within fifteen (15) days
after the Adjustment Notice. Upon receipt of the Dispute Notice, the Company
shall promptly engage an independent nationally recognized firm of chartered
accountants acceptable to the Required Interest to make an independent
determination of such disputed Adjustment (the "Independent Adjustment"). The
Independent Adjustment shall be final and binding on the Company and all
Holders. If the disputed Adjustment and the Independent Adjustment differ by an
amount of three (3%) per cent or less of the value of the disputed Adjustment,
then the costs of conducting the independent determination shall be borne by the
Required Interest (pro rata, in accordance with the number of Warrants held by
each, with each subject Holder jointly and severally liable); if the disputed
Adjustment and the Independent Adjustment differ by more than three (3%) per
cent of the disputed Adjustment, then the costs of conducting the independent
determination shall be borne entirely by the Company; provided that in each case
costs separately incurred by the Company and any Holders shall be separately
borne by them.
17. Warrant Certificate Amendments
Irrespective of any adjustments pursuant to this Section 17, Warrant
Certificates theretofore or thereafter issued need not be amended or replaced,
but certificates thereafter issued shall bear an appropriate legend or other
notice of any adjustments; provided the Company may, at its option, issue new
Warrant Certificates evidencing Warrants in such form as may be approved by its
Board of Directors to reflect any adjustment in the Exercise Price and number of
Warrant shares purchasable under the Warrants.
18. Fractional Shares
The Company shall not be required upon the exercise of any Warrant to issue
fractional Warrant Shares which may result from adjustments in accordance with
this Section 18 to the Exercise Price or number of Warrant Shares purchasable
under each Warrant. If more than one Warrant is exercised at one time by the
same Holder, the number of Warrant Shares which shall be issuable upon the
exercise thereof shall be computed based on the aggregate number of Warrant
Shares purchasable upon exercise of such Warrants.
38
19. Payment of Taxes and Charges
The Company will pay all taxes (other than income taxes or other similar taxes
personal to the Holders, including without limitation, non resident withholding
taxes) and other government charges payable in connection with the issuance or
delivery or transfer of the Warrants and the initial issuance or delivery of
Warrant Shares upon the exercise of any Warrants and payment of the Exercise
Price.
20. Changes to Agreement
The Company, when authorized by its Board of Directors, with the written consent
of Holders of Warrants entitling such Holders to purchase a majority of the
Warrant Shares subject to purchase upon exercise of the Warrants outstanding at
such time, may amend or supplement this Certificate, except that no amendment
which (i) increases the Exercise Price or reduces the number of Warrant Shares
or otherwise economically impairs the value of the Warrants or (ii) amends the
provisions of Sections 11, 12, 13, 14, 15, 16, 17 and 18 shall be enforceable
against a Holder who has not consented in writing to such amendment.
21. Assignment
All the covenants and provisions of this Certificate by or for the benefit of
the Company or the Holders shall bind and inure to the benefit of their
respective successors and assigns.
22. Successor to Company
In the event that the Company consolidates, amalgamates, merges or otherwise
combines with or into any other corporation or sells, transfers or otherwise
conveys its property, assets and business substantially as an entirety to a
successor corporation or entity, the Company shall prior to such events becoming
effective, have such successor corporation or other entity assume by a written
instrument each and every undertaking covenant and condition of this Certificate
to be performed and observed by the Company, and such successor corporation or
other entity shall be deemed, upon the closing of such merger, amalgamation,
combination, consolidation, conveyance or sale, to have so assumed such
liabilities.
23. Notices
Any notice or demand required by this Certificate to be given or made by any
Holder to or on the Company shall be sufficiently given or made if such notice
is in writing and sent by first-class or registered mail, postage prepaid,
addressed as follows:
NEWGIOCO GROUP, INC.
000 Xxxxxxxx Xx. X.
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxxxxx, C.E.O.
39
With a copy to:
Xxxxx Winter LLP
000 Xxxxxxxx Xx. X.
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxx
Any notice or demand required by this Certificate to be given or made by the
Company to or on any Holder shall be sufficiently given or made if such notice
is in writing and sent by first-class or registered mail, postage prepaid,
addressed to such Holder and sent to the address set below such Holder's name on
the attached signature pages or, if a subsequent Holder, the address of such
Holder on the Company's warrant register.
Any notice or demand required by this Certificate to be given or made by the
Company to or on any Holder shall be sufficiently given or made, whether or not
such Holder receives the notice, five (5) days after mailing, if sent by
first-class or registered mail, postage prepaid, addressed to such Holder at its
last address as shown on the books of the Company. Otherwise, such notice or
demand shall be deemed given when received by the party entitled thereto.
24. Defects in Notice
Failure to file any certificate or notice or to mail any notice, or any defect
in any certificate or notice pursuant to this Certificate shall not affect in
any way the right of any Holder or the legality or validity of any adjustment
made pursuant to Section 11 hereof.
25. Governing Law
This Certificate and each Warrant Certificate issued hereunder shall be governed
by the laws of the State of Delaware applicable therein without regard to
principles of conflicts of laws thereof
26. Standing
Nothing in this Certificate expressed and nothing that may be implied from any
of the provisions hereof is intended, or shall be construed, to confer upon, or
give to, any person or corporation other than the Company and the Holders any
right, remedy or claim under or by reason of this Certificate or of any
covenant, condition, stipulation, promise or agreement contained herein; and all
covenants, conditions, stipulations, promises and agreements contained in this
Certificate shall be for the sole and exclusive benefit of the Company and its
successors and the Holders.
27. Headings
The descriptive headings of the sections of this Certificate are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
28. Counterparts
This Certificate may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
40
29. Availability of the Agreement
The Company shall keep copies of this Certificate available for inspection by
Holders during normal business hours. Copies of this Certificate may be obtained
upon written request addressed to the Company at the address set forth in
Section 23.
30. Entire Agreement
This Certificate, including Exhibits referred to herein and the other agreements
and writings specifically identified herein or contemplated hereby, is complete,
reflects the entire agreement of the parties with respect to its subject matter,
and supersedes all previous written or oral negotiations, commitments and
writings.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed.
DATED as of the _____ day of March, 2017.
NEWGIOCO GROUP, INC.
By:_________________________________
Name: Xxxxxxx Xxxxxxxxxx
Title: C.E.O.
41
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns and
transfers unto the assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the number of
Warrants to purchase Common Shares set for below:
Name of Assignee _____________________ No. of Warrants________________
Address: _____________________________
_____________________________
_____________________________
and does hereby irrevocably constitute and appoint ___________________________
true and lawful attorney, to make such transfer on the books of NEWGIOCO GROUP,
INC. maintained for that purpose, with full power of substitution in the
premises.
Date: __________________ _____________________________________
Signature
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
42
FORM OF ELECTION OF PURCHASE
The undersigned hereby irrevocably elects to exercise ____________________ of
the Warrants represented by the Warrant Certificate and to purchase the Common
Shares issuable upon the exercise of said Warrants, and requests that
certificates for such shares be issued and delivered as follows:
ISSUE TO: _________________________________________________________________
(NAME)
_____________________________________________________________________________
(ADDRESS, INCLUDING POSTAL CODE)
_____________________________________________________________________________
(S.I.N. OR OTHER IDENTIFICATION NUMBER)
DELIVER TO: _________________________________________________________________
(NAME)
at___________________________________________________________________________
(ADDRESS, INCLUDING POSTAL CODE)
In full payment of the purchase price with respect to the exercise of Warrants
to purchase Common Shares, the undersigned hereby tenders payment of
US$___________________ by certified cheque, cashier's cheque or money order
payable to the order of the Company.
If the number of Warrants to purchase the Common Shares hereby exercised is less
than all the Warrants represented by this Warrant Certificate, the undersigned
requests that a new Warrant Certificate representing the number of such full
Warrants not exercised be issued and delivered as follows:
ISSUE TO: _________________________________________________________________
(NAME)
_____________________________________________________________________________
(ADDRESS, INCLUDING POSTAL CODE)
_____________________________________________________________________________
(S.I.N. OR OTHER IDENTIFICATION NUMBER)
DELIVER TO: _________________________________________________________________
(NAME)
_____________________________________________________________________________
(ADDRESS, INCLUDING POSTAL CODE)
Date: __________________ _____________________________________
Signature
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
PLEASE INSERT S.I.N. OR TAX I.D. NUMBER OF HOLDER __________________________
43
SCHEDULE "D"
TO BE COMPLETED BY SUBSCRIBERS UNDER ACCREDITED INVESTOR EXEMPTION
ACCREDITED INVESTOR CERTIFICATE
In connection with the purchase of Debentures of the Corporation by the
undersigned subscriber or, if applicable, the principal on whose behalf the
undersigned is purchasing as agent (the "Subscriber" for the purposes of this
Schedule D), the Subscriber hereby represents, warrants, covenants and certifies
to the Corporation that:
1. The Subscriber is resident in the jurisdiction as set forth on the face
page of this Subscription Agreement or is subject to the securities
laws of such jurisdiction;
2. The Subscriber is purchasing the Debentures as principal for its own
account or a fully managed account;
3. The Subscriber is an "accredited investor" within the meaning of
National Instrument 45 106 entitled "Prospectus Exemptions", section
73.3(2) of the Securities Act (Ontario) and the regulations promulgated
thereunder, by virtue of satisfying the indicated criterion as set out
in Appendix A to this Accredited Investor Certificate;
4. The Subscriber was not created or used solely to purchase or hold
securities as an "accredited investor" as described in paragraph (m) of
the attached Appendix A of this Schedule A;
5. Upon execution of this Schedule A by the Subscriber, this Schedule A
shall be incorporated into and form a part of the Subscription
Agreement; and
6. The Subscriber acknowledges that he has requested and is satisfied that
this Subscription Agreement and all documentation related thereto be
drawn up in the English language. Le soussigne reconnait qu'il a exige
que cette contrat d'abonnement ainsi que toutes les autres documents
qui s'y rattachent soit redige et execute en anglais et s'en declare
satisfait.
The foregoing representations and warranties are true an accurate as of the date
of this certificate and will be true and accurate as of Closing Date. If any
such representations and warranties shall not be true and accurate prior to
Closing Date, the Subscriber shall give immediate written notice of such fact to
the Corporation.
Dated: _________________________________________, 2017.
______________________________
Print name of Subscriber
By: __________________________
Signature
______________________________
Print name of Signatory (if different from Subscriber)
______________________________
Title
IMPORTANT: PLEASE XXXX THE CATEGORY OR CATEGORIES
IN APPENDIX A ON THE NEXT PAGE THAT DESCRIBES YOU.
44
APPENDIX A
CONFIRMATION OF APPLICABLE PORTION OF ACCREDITED INVESTOR DEFINITION
NOTE: THE INVESTOR MUST INITIAL BESIDE THE APPLICABLE PORTION OF THE DEFINITION
BELOW.
Accredited Investor - (defined in section 1.1of the National Instrument 45 106,
in the Province of Ontario in section 73.3(1) of the Securities Act (Ontario)
and regulations promulgated thereunder, means:
____ (a) a Canadian financial institution, or an authorized foreign bank
named in Schedule III of the Bank Act (Canada) (and, in Ontario, a
Schedule I, II or III bank); or
____ (b) the Business Development Bank of Canada incorporated under the
Business Development Bank of Canada Act (Canada); or
____ (c) a subsidiary of any person referred to in paragraphs (a) or (b), if
the person owns all of the voting securities of the subsidiary,
except the voting securities required by law to be owned by
Directors of that subsidiary; or
____ (d) a person registered under the securities legislation of a
jurisdiction of Canada, as an adviser or dealer; or
____ (e) an individual registered under the securities legislation of a
jurisdiction of Canada as a representative of a person referred to
in paragraph (d); or
____ (e.1) an individual formerly registered under the securities
legislation of a province, territory or other permissible
jurisdiction of Canada, other than an individual formerly
registered solely as a representative of a limited market dealer
under one or both of the Securities Act (Ontario) or the Securities
Act (Newfoundland and Labrador); or
____ (f) the Government of Canada or a jurisdiction of Canada, or any crown
corporation, agency or wholly owned entity of the Government of
Canada or a jurisdiction of Canada; or
____ (g) a municipality, public board or commission in Canada and a
metropolitan community, school board, the Comite de gestion de la
taxe scolaire de l'ile de Montreal or an intermunicipal management
board in Quebec; or
____ (h) any national, federal, state, provincial, territorial or municipal
government of or in any foreign jurisdiction, or any agency of that
government; or
____ (i) a pension fund that is regulated by either the Office of the
Superintendent of Financial Institutions (Canada) or a pension
commission or similar regulatory authority of a jurisdiction of
Canada; or
____ (j) an individual who, either alone or with a spouse, beneficially owns,
directly or indirectly, financial assets having an aggregate
realizable value that before taxes, but net of any related
liabilities, exceeds $1,000,000; or
45
(Note: if an individual qualifies as an accredited investor under
this category (j), such individual must complete, sign and deliver
a Risk Acknowledgement Form set out in Appendix B.)
____ (j.1) an individual who beneficially owns financial assets having an
aggregate realizable value that, before taxes but net of any
related liabilities, exceeds $5,000,000; or
____ (k) an individual whose net income before taxes exceeded $200,000 in
each of the two most recent calendar years or whose net income
before taxes combined with that of a spouse exceeded $300,000 in
each of the two most recent calendar years and who, in either case,
reasonably expects to exceed that net income level in the current
calendar year; or
(Note: if an individual qualifies as an accredited investor under
this category (k), such individual must complete, sign and deliver
a Risk Acknowledgement Form set out in Appendix B.)
(Note: if individual accredited investors wish to purchase through
wholly-owned holding companies or similar entities, such purchasing
entities must qualify under paragraph (t) below, which must be
initialled.)
____ (l) an individual who, either alone or with a spouse, has net assets of
at least $5,000,000; or
(Note: if an individual qualifies as an accredited investor under
this category (l), such individual must complete, sign and deliver
a Risk Acknowledgement Form set out in Appendix B.)
____ (m) a person, other than an individual or investment fund, that has net
assets of at least $5,000,000 as shown on its most recently
prepared financial statements; or
____ (n) an investment fund that distributes or has distributed its
securities only to
(a) a person that is or was an accredited investor at the time of
the distribution, or
(b) a person that acquires or acquired securities in the
circumstances referred to in sections 2.10 and 2.19 of National
Instrument 45-106 or of Quebec Regulation 45-106, as
applicable, or
(c) a person described in paragraph (a) or (b) that acquires or
acquired securities under section 2.18 of National Instrument
45-106 or of Quebec Regulation 45-106, as applicable, or
____ (o) an investment fund that distributes or has distributed securities
under a prospectus in a jurisdiction of Canada for which the
regulator or, in Quebec, the securities regulatory authority, has
issued a receipt; or
____ (p) a trust company or trust corporation registered or authorized to
carry on business under the Trust and Loan Companies Act (Canada)
or under comparable legislation in a jurisdiction of Canada or a
46
foreign jurisdiction, acting on behalf of a fully managed account
managed by the trust company or trust corporation, as the case may
be; or
____ (q) a person acting on behalf of a fully managed account managed by that
person, if that person is registered or authorized to carry on
business as an adviser or the equivalent under the securities
legislation of a jurisdiction of Canada or a foreign jurisdiction,
or
____ (r) a registered charity under the Income Tax Act (Canada) that, in
regard to the trade, has obtained advice from an eligibility
adviser or an adviser registered under the securities legislation
of the jurisdiction of the registered charity to give advice on the
securities being traded; or
____ (s) an entity organized in a foreign jurisdiction that is analogous to
any of the entities referred to in paragraphs (a) to (d) or
paragraph (i) in form and function; or
____ (t) a person in respect of which all of the owners of interests, direct,
indirect or beneficial, except the voting securities required by
law to be owned by directors, are persons that are accredited
investors; or
(Note: if you are purchasing as an individual, accredited investors
paragraph (k) above must be initialed rather than paragraph (t))
____ (u) an investment fund that is advised by a person registered as an
adviser or a person that is exempt from registration as an adviser;
or
____ (v) a person that is recognized or designated by the securities
regulatory authority or, except in Ontario and Quebec, the regulator
as
(a) an accredited investor, or
(b) an exempt purchaser in Alberta or British Columbia after
September 14, 2005; or
____ (w) a trust established by an accredited investor for the benefit of the
accredited investor's family members of which a majority of the
trustees are accredited investors and all of the beneficiaries are
the accredited investor's spouse, a former spouse of the accredited
investor or a parent, grandparent, brother, sister, child or
grandchild of that accredited investor, of that accredited
investor's spouse or of that accredited investor's former spouse.
[The remainder of this page has been left blank intentionally.]
00
XXXXXXXX X
FORM 45-106F9
FORM FOR INDIVIDUAL ACCREDITED INVESTORS
SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
1. About your investment
Type of securities: [Instruction: Include a short description, e.g., common
shares]
10% Convertible Debentures with Warrants
Issuer: NEWGIOCO GROUP, INC.
Purchased from: [Instruction: Indicate whether securities are purchased
form the issuer or a selling security holder.]
NEWGIOCO GROUP, INC.
SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
2. Risk acknowledgement
This investment is risky. Initial that you understand that: Your initials
Risk of loss - You could lose your entire investment of
$____________________. _____
[Instruction: Insert the total dollar amount of the investment.]
Liquidity risk - You may not be able to sell your investment
quickly - or at all. _____
Lack of information - You may receive little or no information about
your investment _____
Lack of advice - You will not receive advice from the salesperson
about whether this investment is suitable for you unless the sales
person is registered. The salesperson is the person who meets with,
or provides information to, you about making this investment. To
check whether the salesperson is registered, go to
xxx.xxxxxxxxxxxxxxxxxx.xx. _____
3. Accredited investor status Your initials
You must meet at least one of the following criteria to be able to
make this investment. Initial the statement that applies to you.
(You may initial more than one statement.) The person identified in
section 6 is responsible for ensuring that you meet the definition
of accredited investor. That person, or the sales person identified
in section 5, can help you if you have questions about whether you
meet these criteria.
* Your net income before taxes was more than $200,000 in each of the
2 most recent calendar years, and you expect it to be more than
$200,000 in the current calendar year. (You can find your net income
before taxes on your personal income tax return.) _____
48
* Your net income before taxes combined with your spouse's was more
than $300,000 in each of the 2 most recent calendar years, and you
expect your combined net income before taxes to be more than
$300,000 in the current calendar year. _____
* Either alone or with your spouse, you own more than $1 million in
cash and securities, after subtracting any debt related to the cash
and securities. _____
* Either alone or with your spouse, you have net assets worth more
than $5 million. (Your net assets are your total assets (including
real estate) minus your total debt.) _____
4. Your name and signature
By signing this form, you confirm that you have read this form and you
understand the risks of making this investment as identified in this form.
First and last name (please print): ___________________________________________
Signature: _____________________________________ Date: ______________________
SECTION 5 TO BE COMPLETED BY THE SALESPERSON
5. Salesperson information
[Instruction: The sales person is the person who meets with, or provides
information to, the purchaser with respect to making this investment. That could
include a representative of the issuer or selling security holder, a registrant
or a person who is exempt from the registration requirement.]
First and last name of salesperson (please print):
___________________________________________
Telephone: ________________________ Email: _________________________________
Name of firm (if registered): __________________________________________________
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
6. For more information about this investment
For investment in a non-investment fund
[Insert name of issuer/selling security holder] NEWGIOCO GROUP, INC.
[Insert address of issuer/
selling security holder] Xxxxx 000, 000 Xxxxxxxx Xx. X.,
Xxxxxxx, Xxxxxxx X0X 0X0
[Insert contact person name, if applicable] Xxxx Xxxxxxxxxx
[Insert telephone number] *******
[Insert email address] xxx@xxxxxxxxxxxxx.xxx
[Insert website address, if applicable]
49
For investment in an investment fund
[Insert name of investment fund]
[Insert name of investment fund manager]
[Insert address of investment fund manager]
[Insert telephone number of investment fund manager]
[Insert email address of investment fund manager]
[If investment is purchased from a selling security holder, also
insert the name, address, telephone number and email address of selling security
holder here]
For more information about prospectus exemptions, contact your local securities
regulator. You can find contact information at xxx.xxxxxxxxxx-xxxxxxxxxxxxxx.xx.
Form instructions:
1. This form does not mandate the use of a specific font size or style but the
font must be legible.
2. The information in sections 1, 5 and 6 must be completed before the
purchaser completes and signs the form.
3. The purchaser must sign this form. Each of the purchaser and the issuer or
selling security holder must receive a copy of this form signed by the
purchaser. The issuer or selling security holder is required to keep a copy
of this form for 8 years after the distribution.
