SUBSCRIPTION AGREEMENT

(United States 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 US$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)

 

 

Number of Units:_________________________

 

 

Aggregate Purchase Price: US$_____________

 

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)

 

 

 

 

______________________________________

(Telephone Number)

 

 

______________________________________

(Fax Number)

 

 

 

______________________________________

(Email Address)

 

 

 

 

 

 

 

 

 

 

___________________________________

(Principal’s Address)

 

 

 

 

 

 

 

 

 

 

 

 

 

Register the Purchased Securities as set forth below:

 

 

 

____________________________________

(Name)

 

 

____________________________________

(Account reference, if applicable)

 

 

 

____________________________________

(Address)

 

 

 

 

____________________________________

 

 

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 up to 7,500 Units by
the Corporation (the “Offering”) to close on or about May 25, 2018 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
up to US$7,500,000. The Corporation may, at its discretion, elect to complete
the Offering for proceeds of less than US$7,500,000 or less than 7,500 Units and
in one or more tranches.

 

Each Unit is comprised of (i) a debenture of the Corporation in a principal
amount of US$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”), (ii) 1,082.25 common share purchase warrants of the
Corporation (the “Warrants”) and (iii) 208 shares of restricted common stock
issued pursuant to an exemption under Rule 144 of the US Securities and Exchange
Act (the “Subscription Shares”).

 

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 (the “Conversion Price”) equal to
US$0.40 (U.S. Forty Cents) per share at any time up to the Maturity Date
provided that the Corporation may accelerate this right of conversion on at
least ten (10) business days prior written notice to the Holder if there is an
effective Registration Statement registering, or a current prospectus available
for, the resale of the common shares issuable on the conversion and (i) the
closing price of the Corporation’s common shares exceeds two hundred (200%) per
cent of the Conversion Price for a period of twenty (20) trading days in a
thirty (30) day period or (ii) the Corporation wishes to redeem or pre-pay the
Debentures prior 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 equal to US$0.50 (U.S. Fifty Cents) (the
“Exercise Price”) and each Warrant may be exercised either by a cash payment of
the Exercise Price or by a cashless exercise on the terms set out in the Warrant
Certificate. The Corporation may accelerate the right to exercise the Warrant on
at least ten (10) business days prior written notice to the Holder if there is
an effective Registration Statement registering, or a current prospectus
available for, the resale of the common shares issuable on exercise of the
Warrant and the closing price of the Corporation’s common shares exceeds two
hundred (200%) per cent of the Exercise Price for a period of twenty (20)
trading days in a thirty (30) day period.

 

 

 

The Terms and Conditions of Subscription for Units is attached hereto as
Schedule “A”, the form of the Debenture is attached hereto as Schedule “B”, the
form of Warrant is attached hereto as Schedule “C” and the Accredited Investor
Certificate is attached hereto as Schedule “D”. All dollar amounts referred to
in this agreement are in United States 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:  May ____, 2018 Per:________________________________   Michele Ciavarella,
Chief Executive Officer

 

 

 

SCHEDULE “A”

 

TERMS AND CONDITIONS OF

SUBSCRIPTION FOR UNITS OF

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 compounded annually and payable on maturity of the Debentures. The
Debentures mature two (2) years from the date of issue provided that the
Corporation may, on ten (10) business days prior written notice to the holder
redeem or 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 of the Debenture
plus any accrued and unpaid interest shall be convertible in whole or in part at
the option of the holder at a price equal to US$0.40 (U.S. Forty Cents) (the
“Conversion Price”) per share at any time up to the Maturity Date as more
specifically set out in the Debenture provide that the Corporation may
accelerate this right of conversion on at least ten (10) business days prior
written notice to the holder if there is an effective Registration Statement
registering, or a current prospectus available for, the resale of the common
shares issuable on the conversion and (i) the closing price of the Corporation’s
common stock exceeds two hundred (200% ) per cent of the Conversion Price for a
period of twenty (20) trading days in a thirty (30) day period or (ii) the
Corporation wishes to redeem or pre-pay the Debentures prior 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 p.m. (New York
time) on the date that is twenty-four (24) months from the Closing Date (the
“Warrant Shares”). Each Warrant will have an exercise price equal to US$0.50
(U.S. Fifty Cents) (the “Exercise Price”) and each Warrant may be exercised
either by a cash payment of the Exercise Price or by a cashless exercise on the
terms set out in the Warrant Certificate if and only if there is no effective
Registration Statement after six months from the Closing Date. The Warrant
exercise may be accelerated by the Corporation if the closing price of the
Corporation’s common stock exceeds 200% of the Exercise Price for a period of 20
trading days in a 30 day period at any time up to the expiration date as more
specifically set out in the Warrant Certificate and there is an effective
Registration Statement registering, or a current prospectus available for, the
resale of the Warrant Shares.

 

3.                   Description of the Restricted Common Shares

 

None of the shares of common stock to which this subscription agreement relates
(the “Subscription Shares”) have been registered under the United States
Securities Act of 1933, as amended (the "US Securities Act"), or any U.S. state
securities laws, and, unless so registered, none may be offered or sold,
directly or indirectly, in the United States or to U.S. persons (as defined
herein) except in accordance with the provisions of Regulation S under the US
Securities Act, pursuant to an effective registration statement under the US
Securities Act, or pursuant to an available exemption from, or in a transaction
not subject to, the registration requirements of the US Securities Act and in
each case only in accordance with applicable state securities laws, or an
opinion of counsel satisfactory to the corporation that such registration or
qualification is not required.

 

4.                   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 Debentures, Warrants and Subscription Shares (collectively, the
“Purchased Securities”) are subject to statutory hold periods or resale
restrictions and the Warrants forming part of the Purchased Securities, the
Warrant Shares and the Subscription Shares and the shares issued on the
conversion of the Debentures (Warrants, Warrant Shares, Subscription Shares and
shares issued on conversion of the Debenture 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 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.

 

5.                   Delivery and Payment

 

Unless other arrangements are agreed by the Corporation, the following must be
delivered to your broker, not later than 5:00 p.m. (New York 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 check or bank draft payable to your broker; and

 

(c)Such other documents as may be required pursuant to terms of this
subscription agreement.

 

6.                   Closing

 

This subscription is subject to acceptance by the Corporation, as described
below. A Debenture and a Warrant Certificate endorsed by the Corporation
representing part of the Purchased Securities will be available for delivery to
the Purchaser, on the Closing Date against payment of the aggregate Purchase
Price for the Purchased Securities and a share certificate representing part of
the Purchased Securities will be available for delivery to the Purchaser
approximately ten (10) days after the Closing Date.

 

 

 

7.                   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 check,
bank draft, wire transfer or other method of payment delivered by the Purchaser
to the broker or the Corporation c/o the law firm of Beard Winter LLP
representing the Purchase Price will be promptly returned to the Purchaser
without interest or deduction.

 

8.                   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
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) Beard 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.

 

9.                   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.

 

10.               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 accordance with the
applicable securities legislation of such jurisdiction;

 

(b)Prospectus Exempt Purchase –if the Purchaser or (if applicable) any
beneficial purchaser for whom the Purchaser is contracting hereunder, is
resident in a state of the United States of America or is otherwise subject to
the securities laws of any US state, 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 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 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) or any laws relating to money laundering in the United
States or any other jurisdiction (collectively, 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

 

(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.

 

 

 

11.               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 and, to the best of
the Corporation’s knowledge, no such actions, suits or proceedings are pending
or threatened;

 

(f)In the event there is no effective registration statement, the Corporation
will have an opinion on file with the Transfer Agent at all times to cover the
resale of shares; and

 

(g)Registration Statement - The Corporation will use commercially reasonable
efforts to file a Registration Statement with respect to the Underlying
Securities within six (6) months from the date hereof.

 

12.               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.

 

13.               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.

 

14.               Governing Law

 

This Subscription Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware. 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 State of
Delaware with respect to any matters arising out of this agreement.

 

 

 

15.               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.

 

16.               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.

 

17.               Entire Agreement and Headings

 

This Subscription Agreement (including the schedules hereto), together with the
Corporation’s comfort letter regarding effecting an increase in its authorized
common shares, 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.

 

18.               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

 

19.               Time of Essence

 

Time shall be of the essence of this Subscription Agreement.

 

20.               Currency

 

Unless otherwise specified, all dollar amounts referred to in this Subscription
Agreement are in United States Dollars.

 

21.               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.

 

22.               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.

 

 

 

23.               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:

 

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 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 state 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: Debentureholders 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 Debenture of the
Corporation is an illiquid investment. There is currently no public market
through which the Debenture of the Corporation may be resold.

 

8.                   No Deposit Insurance: The Debentures are not insured
against loss through the Canada Deposit Insurance Corporation, Federal Deposit
Insurance Corporation or any other insurance company or program.

 

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 Debenture
Holders.

 

 

 

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 www.sec.gov/archives/edgar/data.

 

 

 

 

SCHEDULE “B”

 

DEBENTURE

 

No. D-_______________

 

 

 

 

 

 

NEWGIOCO GROUP, INC.

 

 

 

 

 

 

 

 

 

 

Convertible Debenture due May ____, 2020

 

 

 

 

 

 

 

 

 

 

 

Convertible into Common Shares of

Newgioco Group, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

Holder: _________________________________

 

Amount: _________________________________

 

Commencement Date: May ____, 2018

 

 

TABLE OF CONTENTS

 

ARTICLE 1 - INTERPRETATION 1           Section 1.1 Definitions 1   Section 1.2
Interpretation not Affected by Headings, etc. 2   Section 1.3 Deemed Notice of
Debenture 3   Section 1.4 Applicable Law 3   Section 1.5 Accounting Terms 3  
Section 1.6 Day not a Business Day 3   Section 1.7 Currency 3         ARTICLE 2
- THE DEBENTURE 3   Section 2.1 Terms, Form and Denomination of Debenture 3  
Section 2.2 Certification by Company 3   Section 2.3 Replacement of Debenture 3
  Section 2.4 Payment of Principal and Interest 3   Section 2.5 Ownership of
Debenture 4   Section 2.6 Redemption of Debenture 4   Section 2.7 Redemption
Price 4   Section 2.8 Places of Surrender of the Debenture 4   Section 2.9
Notice of Pre-Payment or Redemption 4   Section 2.10 Cancellation of Retired
Debentures 4         ARTICLE 3 - NO SECURITY 4           Section 3.1 No Security
4         ARTICLE 4 - DEFAULT AND ENFORCEMENT 5           Section 4.1 Events of
Default 5   Section 4.2 Acceleration of Default 5   Section 4.3 Holder not
Obliged to Institute Proceedings 5   Section 4.4 Rights and Remedies Cumulative
5         ARTICLE 5 - CONVERSION OF DEBENTURES INTO COMMON SHARES 5          
Section 5.1 Conversion into Common Shares 5   Section 5.2 Manner of Exercise of
Right to Convert into Common Shares 6   Section 5.3 Partial Conversion 6  
Section 5.4 Adjustment of Conversion Basis 7   Section 5.5 No Requirement to
Issue Fractional Shares 9   Section 5.6 Certificate as to Adjustment 9   Section
5.7 Notice of Special Matters 9   Section 5.8 Company to Reserve Shares 9  
Section 5.9 Cancellation of Converted Debentures 9   Section 5.10 Conversion of
Legended Debentures 9         ARTICLE 6 - PARTICULAR COVENANTS OF THE COMPANY 9
          Section 6.1 Payment of Principal and Interest 9   Section 6.2 To Carry
On Business 10         ARTICLE 7 - SATISFACTION AND DISCHARGE 10   Section 7.1
Cancellation and Destruction 10   Section 7.2 Payment Set Aside in Trust 10  
Section 7.3 Release from Covenants 10         ARTICLE 8 - SUCCESSOR COMPANIES 10
          Section 8.1 Certain Requirements 10   Section 8.2 Vesting of Powers in
Successor 10         ARTICLE 9 - MISCELLANEOUS 11           Section 9.1 Notice
to the Holder and to the Company 11

 

 

 

 

THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE ACT OR THE
LAWS OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE STATUTES.

 

NEWGIOCO GROUP, INC.

(incorporated under the laws of the State of Delaware)

 

No. D- __________ $ ________________

 

Debenture due May ____, 2020

 

 

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 May ____, 2020, 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
______________________________ (US$ _____________) United States Dollars and,
subject to the provisions of this Debenture, to pay interest on the principal
amount hereof at the rate of ten (10%) per cent per annum 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 interest compounding annually all
in accordance with the terms and conditions hereof.

 

 

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 New York, New
York other than a Saturday, Sunday or civic or statutory holiday in New York,
New York;

 

“Commencement Date” means the effective date of original issue of this
Debenture, being May ____, 2018;

 

“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 at a price equal to US$0.40 (U.S. Forty Cents)
per share at any time up to the Maturity Date, which may be accelerated by the
Corporation if the closing price of the Corporation’s common stock exceeds 200%
of the Conversion Price for a period of 20 trading days in a 30 day period at
any time up to the Maturity Date and if there is an effective Registration
Statement registering, or a current prospectus available for, the resale of the
common shares issuable on the conversion as more specifically set out in the
Section 5.1(2);

 

“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 May ____, 2020 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;

 

“Event of Default” has the meaning attributed thereto in Section 4.1;

 

“Maturity Date” means May ____, 2020;

 

“Offering” means the offering of up to 7,500 Units by the Company, the initial
tranche to close on or about May 25, 2018 which may result in gross proceeds to
the Company of up to US$7,500,000 with each such Unit being comprised of (i) a
debenture of the Corporation in a principal amount of US$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”), (ii)
1,082.25 common share purchase warrants of the Corporation (the “Warrants”) and
(iii) 208 shares of restricted common stock issued pursuant to an exemption
under Rule 144 of the US Securities and Exchange Act (the “Common Shares”).

 

“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 Signature Stock Transfer, Inc. with its office situate at
14673 Midway Road, Suite #220, Addison, Texas 75001, 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 State of Delaware applicable therein without
reference to any conflicts of law provisions and shall be treated in all
respects as a Delaware contract.

 

Section 1.5 Accounting Terms. All accounting terms which are not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles of the United States 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 and Conversion. Except where otherwise stated, all
references to currency herein are expressed in United States Dollars.

 

 

ARTICLE 2 - THE DEBENTURE

 

Section 2.1 Terms, Form and Denomination of Debenture.

 

(a)This Debenture shall be designated as a “Debenture due May _____, 2020”.

 

(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 compounded annually and
payable on the Maturity Date, provided that the Company may prepay at any time
the whole or any part of this Debenture in accordance with Section 2.4(d).

 

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
United States Dollars by check payable 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)The interest on this Debenture shall be due and payable on the Maturity Date
and is compounded annually on the anniversary date of its issuance.

 

(c)Subject to the other provisions herein, the outstanding principal amount of
this Debenture and all accrued interest shall be repaid by check or wire
transfer on the Maturity Date against presentation and surrender hereof at the
offices of the Transfer Agent in the Town of Addison, Texas, or as otherwise
agreed in writing between the Company and the Holder.

 

(d)Provided that the Common Shares issuable to the Holder on conversion of this
Debenture in whole or in part would be free trading without resale restrictions
or statutory hold periods if the Holder elected to exercise the right of
conversion in Article 5 the outstanding principal and accrued interest under
this Debenture may be prepaid in whole or in part at any time or times by giving
not less than ten (10) Business Days prior written notice from the Company to
the Holder as set forth in Section 2.9 of the proposed date of pre-payment (the
“Pre-Payment Date”), without bonus or penalty, provided (i) that the Holder
shall receive a minimum payment on account of interest that is equal to five (5)
months interest, and (ii) the Holder shall have the right to convert the whole
or any part of the principal and the accrued and unpaid interest into Common
Shares of the Company in accordance with Article 5 prior to the Pre-Payment
Date.

 

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. Provided that the Common Shares issuable
to the Holder on conversion of this Debenture in whole or in part would be free
trading without resale restrictions or statutory hold periods if the Holder
elected to exercise the right of conversion in Article 5, this Debenture shall
be redeemable by the Company at any time or times prior to the Maturity Date on
not less than ten (10) Business Days prior written notice from the Company to
the Holder as set forth in Section 2.9 of the proposed date of redemption (the
“Redemption Date”), without bonus or penalty, provided, however, that prior to
the Redemption Date, the Holder shall have the right to convert the whole or any
part of the principal and accrued and unpaid interest of this Debenture into
Common Shares of the Company in accordance with Article 5.

 

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 Surrender of the Debenture. 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 Addison, Texas,
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 Pre-Payment or Redemption. The Company shall provide the
Holders with at least ten (10) Business Days of a notice of pre-payment or a
notice of redemption if such pre-payment or redemption is

 

 

occurring prior to the Maturity Date in compliance with Sections 2.4 (d) and
2.6. 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 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 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 bankruptcy laws 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 4.4 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.

 

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 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.
Provided, however, the Corporation may accelerate this right of conversion on at
least ten (10) Business Days prior written notice to the Holder (“Notice of
Acceleration”) if (i) the Common Shares of the Corporation issuable on such
conversion are free-trading and not subject to resale restrictions or statutory
hold periods and (ii) the closing price of the Corporation’s Common Shares
exceeds two hundred (200%) per cent of the Conversion Price for a period of
twenty (20) trading days in a thirty (30) day period. In the event of the
issuance of a Notice of Acceleration, the Holder shall have the right to convert
the whole or any part of the principal and the accrued and unpaid interest of
this Debenture into Common Shares of the Corporation in accordance with Article
5 prior to the date specified in the Notice of Acceleration.

 

(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 and accrued interest of this Debenture surrendered in
exercise of the conversion rights at any one time that may be obtained in
accordance 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.

 

(3)                Except as otherwise permitted under Section 4(a)(1) under the
1933 Act, as a result of the application of Rule 144 promulgated thereunder,
shares of common stock issued upon the conversion of this Debenture shall be
issued with the following, or a comparable, legend:

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

Section 5.2 Manner of Conversion 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 Town of
Addison, Texas, together with the provided conversion form attached 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 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, within
3 Business Days, 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 or electronic delivery
through the DTC-DWAC system; (b) certificates for Common Shares with respect to
the interest payment pursuant to Section 2.4; and, (c) if applicable, a check
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 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 while the debentures are outstanding 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 the Conversion Price, 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 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 the Conversion Price; 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 the
Conversion Price, and (vi) the denominator of which shall be the total number of
Common Shares outstanding on such record date multiplied by the Conversion Price
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 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.

 

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
United States 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.

 

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 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: 130 Adelaide St. W.

Suite 701

Toronto, Ontario

M5H 2K4

 

Attention: Michele Ciavarella, C.E.O.

 

 

To the Holder at: ___________________________

 

___________________________

 

___________________________

 

In all cases with a copy to: Signature Stock Transfer, Inc.

14673 Midway Road, Suite #220,

Addison, Texas 75001

 

Attention: Jason M. Bogutski, President

 

 

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.

 

 

______________________________________________________

 

 

 

 

IN WITNESS WHEREOF, the Company has caused this Debenture to be signed by its
proper officer on its behalf as of the ____ day of May, 2018.

 

NEWGIOCO GROUP, INC.

 

 

by: ______________________

Name: Michele Ciavarella

Title: C.E.O.

 

Certified countersigned and

registered by the Transfer Agent:

 

 

SIGNATURE STOCK TRANSFER, INC.

 

 

by: ______________________

Name: Jason M. Bogutski

Title: President

 

 

 

 

FORM OF ELECTION OF CONVERT

The undersigned hereby irrevocably elects to convert $____________________ [must
be a multiple of $1,000] of the principal represented by the attached Debenture
and accrued and unpaid interest thereon into Common Shares of the Company
issuable upon the said conversion, and requests that certificates for such
shares be issued and delivered as follows:

ISSUE TO:____________________________________________________________________

(NAME)

 

______________________________________________________________________________

(ADDRESS, INCLUDING ZIP CODE)

 

______________________________________________________________________________

( SSN/TIN/EIN OR OTHER IDENTIFICATION NUMBER)

 

 

DELIVER TO:_________________________________________________________________

(NAME)

 

at____________________________________________________________________________

(ADDRESS, INCLUDING ZIP CODE)

 

 

If the amount of the principal of the Debenture being converted is less than the
total principal of the Debenture, the undersigned requests that a new Debenture
representing the principal not converted be issued and delivered as follows:

 

ISSUE TO:____________________________________________________________________

(NAME)

 

______________________________________________________________________________

(ADDRESS, INCLUDING ZIP CODE)

 

______________________________________________________________________________

( SSN/TIN/EIN OR OTHER IDENTIFICATION NUMBER)

 

 

DELIVER TO:_________________________________________________________________

(NAME)

 

______________________________________________________________________________

(ADDRESS, INCLUDING ZIP CODE)

 

Date: __________________ _____________________________________

Signature

 

(Signature must conform in all respects to name of holder as specified on the
face of the Debenture.)

 

PLEASE INSERT SSN/TIN OR EIN OF HOLDER __________________________

 

 

 

SCHEDULE “C”

 

COMMON SHARE PURCHASE WARRANT CERTIFICATE

 

No. ____________

 

Certificate for ______________ Warrants

 

 

 

 

NOT EXERCISABLE AFTER 5:00 P.M.,

EASTERN STANDARD TIME, ON MAY ____, 2020

 

 

 

 

NEWGIOCO GROUP, INC.

 

 

COMMON SHARE PURCHASE WARRANT CERTIFICATE

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

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, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after November ___, 2018 (the “Initial Exercise Date”) 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 Exercise 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 May ____, 2020 (the
“Expiration Date”). All Warrants evidenced hereby shall thereafter become void.

 

At any time or times on or after the Initial Exercise Date and on or 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

 

(a)                Cash Exercise. Subject to Section 1. (d), at any time or
times on or after the Initial Exercise Date and on or 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 check, bank draft or wire transfer of funds, payable at
par, in United States 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 at a price equal to
US$0.50 (U.S. Fifty Cents) (the “Exercise Price”).

 

(b)               Cashless Exercise. Subject to Section 1. (d), if and only if
at any time after the Initial Exercise Date, there is no effective Registration
Statement registering, or no current prospectus available for, the resale of the
Warrant Shares by the Holder, then this Warrant may also be exercised, in whole
or in part, at such time by means of a “cashless exercise” in which the Holder
shall be entitled to receive a number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the last VWAP immediately preceding the time of delivery of the Form of
Election of Purchase giving rise to the applicable “cashless exercise”, as set
forth in the applicable Form of Election of Purchase (for the avoidance of
doubt, the “last VWAP” will be the VWAP as calculated over the preceding five
(5) Trading Days such that, in the event that this Warrant is exercised at a
time that the Trading Market is open, the VWAP over the prior five (5) Trading
Days shall be used in this calculation);

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares being exercised under this Warrant in
accordance with the terms of this Warrant if such exercise were by means of a
cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties
acknowledge and agree that in accordance with Section 3(a)(9) of the Securities
Act, the Warrant Shares shall take on the characteristics of the Warrants being
exercised, and the holding period of the Warrants being exercised may be tacked
on to the holding period of the Warrant Shares. The Company agrees not to take
any position contrary to this Section 1(b).

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Shares are then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Shares for
such date (or the nearest preceding date) on the Trading Market on which the
Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on
a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Shares for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Shares are
then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent

 

 

bid price per share of the Common Shares so reported, or (d) in all other cases,
the fair market value of a share of Common Shares as determined by an
independent appraiser selected in good faith by the stockholders of a majority
in interest of the securities of the Company then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

 

“Trading Market” means the stock exchange or market in the United States on
which the Common Shares are listed or quoted.

 

“Trading Days” means a date on which a Trading Market is open for the conduct of
trading.

 

(c)                Partial Exercise. 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.

 

(d)               Acceleration. If at any time after the Initial Exercise Date,
there is an effective Registration Statement registering, or a current
prospectus available for, the resale of the Warrant Shares by the Holder and the
closing price of the Company’s Common Shares exceeds two hundred (200%) per cent
of the Exercise Price for a period of twenty (20) trading days in a thirty (30)
day period, the Corporation may accelerate the time in which to exercise the
Warrants by giving at least ten (10) business days prior written notice to the
Holder of such acceleration and the Holder may exercise the Warrants prior to
the date specified in such notice of acceleration.

 

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 New York.

 

 

 

(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
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 Exercise, 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”) or to transfer by electronic delivery of
Warrant Shares through the DTC-DWAC system, registered in accordance with the
instructions set forth in the Election to Exercise. 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
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 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
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
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.

 

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:

 

To the Company: NEWGIOCO GROUP, INC.

c/o 130 Adelaide St. W., Suite 701

Toronto, Ontario M5H 2K4

 

Attention: Michele Ciavarella, C.E.O.

 

 

To the Holder at: ___________________________

 

___________________________

 

___________________________

 

In all cases with a copy to: Signature Stock Transfer, Inc.

14673 Midway Road, Suite #220,

Addison, Texas 75001

 

Attention: Jason M. Bogutski, President

 

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.Securities Law.

 

Neither the sale of this Warrant nor the issuance of any of the Warrant Shares
upon exercise of this Warrant have been registered under the Act or under the
securities laws of any state. If there is no effective Registration Statement
registering, or no current prospectus available for the resale, unless the
Holder utilises a cashless exercise the issuance of the Warrant Shares upon
exercise of this Warrant shall be subject to compliance with all applicable
Federal and state securities laws. Until the Warrant Shares have been registered
under the Act and registered and qualified under the securities laws of any
state in question, the Corporation shall cause each certificate evidencing any
Warrant Shares to bear the following legend and such other legends as may be
required by applicable law:

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

26.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.

 

27.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.

 

28.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.

 

 

29.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.

 

30.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.

 

31.Entire Agreement

 

This Certificate, including Schedules 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 May, 2018.

 

NEWGIOCO GROUP, INC.

 

 

 

 

By: _______________________________

Name: Michele Ciavarella

Title: C.E.O.

 

 

 

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 ___________________________

 

Address _____________________________________________________________________

 

No. of Warrants: __________

 

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.

 

 

 

DATED:____________________________ ____________________________________

Signature

 

 

____________________________________

(Signature must conform in all respects to

name of holder as specified on the face of

the Warrant Certificate.)

 

 

FORM OF ELECTION OF EXERCISE

(to be executed only upon exercise of Warrant)

 

To: Newgioco Group, Inc.

130 Adelaide Street, West, Suite 701

Toronto, Ontario, Canada M5H 2K4

Attn: Julian L. Doyle, LLB

 

or such other address notified by the Company to the Holder.

 

The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of Newgioco Group, Inc. a
Delaware corporation (the “Company”), evidenced by the attached Warrant to
Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

CASH BASIS

 

Exercise Price. The Holder intends that payment of the Exercise Price shall be
with respect to Warrant Shares.

 

Payment of Exercise Price. The Holder shall pay the Aggregate Exercise Price in
the sum of $ to the Company in accordance with the terms of the Warrant.

 

Payment is being made by:

_____        enclosed check

_____       wire transfer

_____       other

 

Delivery of Warrant Shares. The Company shall deliver to the holder Warrant
Shares in accordance with the terms of the Warrant.

 

CASHLESS BASIS

 

Delivery of Warrant Shares. The Company shall deliver to the holder Warrant
Shares in accordance with the terms of the Warrant based on the following
formula:

 

Y =       (A-B) x X

A

 

Where Y = the number of shares of Common Stock to be issued to the Holder

A =the last VWAP immediately preceding the time of delivery of the Form of
Election of Purchase giving rise to the applicable “cashless exercise”, as set
forth in the applicable Form of Election of Purchase (for the avoidance of
doubt, the “last VWAP” will be the VWAP as calculated over the preceding five
(5) Trading Days such that, in the event that this Warrant is exercised at a
time that the Trading Market is open, the VWAP over the prior five (5) Trading
Days shall be used in this calculation);

B =the Exercise Price of this Warrant, as adjusted hereunder; and

X =the number of Warrant Shares being exercised under this Warrant in accordance
with the terms of this Warrant if such exercise were by means of a cash exercise
rather than a cashless exercise.

 

 

 

Delivery. The shares of Warrant Shares shall be delivered to the following:

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:

 

 

 

 

Signature of Authorized Signatory of Investing Entity:

 

 

 

Name of Authorized Signatory:

 

 

Title of Authorized Signatory:

 

 

Date:

 

 

 

 

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” as such term is defined in Rule
501(a) of Regulation D promulgated by the SEC under the 1933 Act 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 D;

 

5.Upon execution of this Schedule D by the Subscriber, this Schedule D 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 soussigné reconnaît qu’il a exigé que cette contrat
d’abonnement ainsi que toutes les autres documents qui s’y rattachent soit
rédigé et exécuté en anglais et s’en déclare 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: _________________________________________, 2018.

 

 

Print name of Subscriber

 

By:

Signature

 

 

Print name of Signatory (if different from Subscriber)

 

 

Title

 

 

IMPORTANT: PLEASE MARK THE CATEGORY OR CATEGORIES

IN APPENDIX A ON THE NEXT PAGE THAt DESCRIBES YOU.

 

 

APPENDIX A

 

CONFIRMATION OF APPLICABLE PORTION OF ACCREDITED INVESTOR DEFINITION

 

NOTE: THE INVESTOR MUST INITIAL BESIDE THE APPLICABLE PORTION OF THE DEFINITION
BELOW.

 

NEWGIOCO GROUP, INC.

(The “Company”)

 

The purpose of this Statement is to obtain information relating to whether or
not you are an accredited investor as defined in Securities and Exchange
Regulation D as well as your knowledge and experience in financial and business
matters and to your ability to bear the economic risks of an investment in the
Company.

 

As used in Regulation D, the following terms shall have the meaning indicated:

 

a.       Accredited investor. Accredited investor shall mean any person who
comes within any of the following categories, or who the issuer reasonably
believes comes within any of the following categories, at the time of the sale
of the securities to that person:

 

1.       Any bank as defined in section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934; any
insurance company as defined in section 2(13) of the Act; any investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; any Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;

 

2.       Any private business development company as defined in section 202(a)22
of the Investment Advisers Act of 1940;

 

3.       Any organization described in section 501(c)3 of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets in excess of $5,000,000;

 

4.       Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;

 

5.       Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000, excluding
the value of the person’s primary residence, but including any excess liability
between the value of the residence and the amount of any obligation(s) thereon;

 

6.       Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;

 

7.       Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) and

 

8.       Any entity in which all of the equity owners are accredited investors.

1.       Name, Home Address and Telephone Number:

 

 

 

________________________________________________________________________

Name

________________________________________________________________________

Address

 

Telephone (_____) ______________________________

 

2.       Residence

 

(a)       If an individual, what is your principal place of residence?

 

__________________________________________________________________

 

__________________________________________________________________

 

(b)       If not an individual:

 

(1)       Where is your principal place of business?

 

____________________________________________________________

____________________________________________________________

 

(2)       Where are your executive headquarters?

 

____________________________________________________________

____________________________________________________________

 

(3)       If a partnership, in which states(s) does (do) each of your partners
reside?

 

____________________________________________________________

____________________________________________________________

 

(4)       If a corporation, what is your state of incorporation?

 

____________________________________________________________

____________________________________________________________

 

(5)       If a trust, in which state(s) does (do) each of the beneficiaries
reside?

 

____________________________________________________________

____________________________________________________________

 

3.       Business or occupation (including title):

 

________________________________________________________________________

 

________________________________________________________________________

 

4.       Educational background (level, degrees completed):

 

________________________________________________________________________

 

 

 

 

5.       Net Worth, Partners' Capital or Total Assets (check one):

 

_____ $5,000,000 or more

_____ $1,000,000-$5,000,000

_____ Less than $1,000,000

 

6.       For individual or married persons only - Gross income for each of the
last 2 years (check one):

 

_____ $300,000 or more

_____ $200,000 - $300,000

_____ Less than $200,000

 

Is this income amount combined with that of your spouse? Yes _____ No _____

 

Do you expect to reach the same level of income in the current year? Yes ______
No _____

 

7.       In connection with my investment activities, I utilize the services of
the following attorney, accountant or other advisor to assist me in analyzing
investment opportunities:

 

(a)       Name of advisor: ______________________________________

(b)       Position or occupation:
_________________________________________________

(c)       Business address:
_____________________________________________________

 

_____________________________________________________

 

8.       Personal data:

 

Age: _______________________

Marital Status: _______________

Number of dependents: ________

 

9.       I am an “accredited investor” as defined in Rule 501(a) of Securities
and Exchange Commission Regulation D. _______________ (Initials)

 

10.       I have adequate means of providing my current needs, and possible
personal contingencies, and have no need for liquidity in an investment in the
Company. _______________ (Initials)

 

11.       I, together with my advisors, have specific knowledge and experience
in related financial and business matters so as to be capable of evaluating the
relative economic and operational merits and risks of an investment in the
stock. _______________ (Initials)

 

12.       I hereby certify that I have answered the foregoing questions to the
best of my knowledge and that my answers hereto are complete and accurate.
_______________ (Initials)

 

 

_______________________________

Name (Please Print)

 

 

_______________________________ ____________________________

Signature Date