Securities Law & Instruments

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Application for an order that the issuer is not a reporting issuer under applicable securities laws -- issuer is the wholly-owned subsidiary of an acquirer -- issuer has outstanding warrants and debentures exercisable into securities of acquirer -- warrant and debenture holders no longer require public disclosure in respect of the issuer -- relief granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s.1(10)(a)(ii).

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the JURISDICTION) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF ENTHUSIAST GAMING PROPERTIES INC. (the FILER)

ORDER

Background

The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application (the Principal Regulator), and

(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia and Alberta.

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and Multilateral Instrument 11-102 -- Passport System have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

1. The Filer was incorporated under the Business Corporations Act (Ontario) (the OBCA) on February 27, 2017 as Tova Ventures II Inc. The name of the Filer was changed to "Enthusiast Gaming Holdings Inc." pursuant to articles of amendment dated September 21, 2018.

2. The Filer's registered and head office is at 90 Eglinton Avenue East, Suite 805, Toronto, Ontario M4P 2Y3.

3. On August 30, 2019 (the Effective Date), J55 Capital Corp. (the Purchaser) acquired all of the issued and outstanding common shares of the Filer, pursuant to a plan of arrangement under section 182 of the OBCA (the Arrangement).

4. The Purchaser is a corporation existing under the Business Corporations Act (British Columbia). The common shares of the Purchaser (the J55 Shares) are listed on the TSX Venture Exchange (the TSXV) under the symbol "FIVE.P". The Purchaser is a reporting issuer in British Columbia, Alberta and Ontario.

5. Immediately prior to the Effective Date, the Filer had the following outstanding securities: (i) 52,335,716 common shares (the Filer Shares); (ii) 4,470,798 options to purchase Filer Shares (the Filer Options); (iii) 14,180,359 warrants to purchase Filer Shares (the Filer Warrants), (iv) 9,000 unsecured convertible debentures convertible into Filer Shares (the Filer Debentures) and (v) 540 broker warrants convertible into Filer Debentures and Filer Warrants (the Filer Broker Warrants). The Filer Shares were listed on the TSXV under the symbol "EGLX" and the OTCQB Venture Market (the OTCQB) under the symbol "EGHIF".

6. Notice of the annual and special meeting of holders of Filer Shares to consider the Arrangement was delivered to the holders of Filer Shares. Notice was not delivered to holders of Filer Options, Filer Warrants, Filer Debentures and Filer Broker Warrants. These holders do not have the right to receive notice of meetings pursuant to the governing documents in respect of the Filer Options, Filer Warrants, Filer Debentures and Filer Broker Warrants. The Filer issued a news release on May 31, 2019 publicly announcing the Arrangement.

7. Pursuant to the Arrangement and the applicable plan of arrangement (the Plan of Arrangement), among other things, the following occurred:

a. The Purchaser acquired all of the Filer Shares and the Filer became a wholly-owned subsidiary of the Purchaser, changing its name from "Enthusiast Gaming Holdings Inc." to "Enthusiast Gaming Properties Inc.";

b. Each Filer Option (vested and unvested) was exchanged for a replacement J55 option to acquire such number of J55 Shares as set out in the Plan of Arrangement;

c. Each holder of a Filer Warrant became entitled to receive upon the exercise of such holder's Filer Warrant the number of J55 Shares which the holder would have been entitled to receive as a result of the transactions contemplated by the Arrangement if, immediately prior to the Effective Date, such holder had been the registered holder of the number of Filer Shares to which such holder would have been entitled if such holder had exercised such holder's Filer Warrants immediately prior to the Effective Date; and

d. Each holder of a Filer Debenture became entitled to receive upon the conversion of such holder's Filer Debenture the number of J55 Shares which the holder would have been entitled to receive as a result of the transactions contemplated by the Arrangement if, immediately prior to the Effective Date, such holder had been the registered holder of the number of Filer Shares to which such holder would have been entitled if such holder had converted such holder's Filer Debentures immediately prior to the Effective Date.

e. Each holder of a Filer Broker Warrant became entitled to receive upon the conversion of such holder's Filer Broker Warrant a convertible debenture of J55 (each, a J55 Debenture) and the number of J55 common share purchase warrants (J55 Warrants) which the holder would have been entitled to receive as a result of the transactions contemplated by the Arrangement if, immediately prior to the Effective Date, such holder had been the registered holder of the number of Filer Debentures and Filer Warrants to which such holder would have been entitled if such holder had converted such holder's Filer Broker Warrants immediately prior to the Effective Date.

8. The Filer is not required to remain a reporting issuer pursuant to the terms of the warrant indentures or the debenture agreements. No consents or approvals to cease to be a reporting issuer are required from the holders of the Filer Warrants or the Filer Debentures.

9. The Filer Shares were delisted from the TSXV and the OTCQB as of the close of business on September 5, 2019.

10. The Filer is not eligible to surrender its status as a reporting issuer pursuant to the simplified procedure in NP 11-206 because the outstanding securities, including debt securities, of the Filer are not beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide.

11. The only outstanding securities of the Filer held by persons other than the Purchaser are the Filer Warrants, the Filer Debentures and Filer Broker Warrants.

12. Upon the exercise of the Filer Warrants and/or conversion of the Filer Debentures, only J55 Shares are issuable. No Filer Shares are issuable upon exercise of any Filer Warrants. No Filer Shares are issuable upon conversion of any Filer Debentures.

13. To the best of the Filer's knowledge and belief and based on the registers of holders of the Filer Warrants maintained by the Filer and the TSX Trust Company, as of August 29, 2019, there were 109 holders of Filer Warrants, 31 of which were in Ontario (representing 71.3% of the total aggregate Filer Warrants), 70 of which were in British Columbia (representing 10.3% of the total aggregate Filer Warrants), 3 of which were in Quebec (representing 0.1% of the total aggregate Filer Warrants), 1 of which was in Alberta (representing 0.3% of the total aggregate Filer Warrants), 3 of which were in the United States of America (representing 15% of the total aggregate Filer Warrants), and 1 of which was in Cyprus (representing 3% of the total aggregate Filer Warrants). The registered holders of Filer Warrants in Ontario includes those held by the Canadian Depository for Securities Limited, representing 23% of the total aggregate Filer Warrants.

14. To the best of the Filer's knowledge and belief and based on the register of holders of the Filer Debentures maintained by the Filer, as of August 29, 2019 there were 70 holders of Filer Debentures, 9 of which were in Ontario (representing 69.1% of the total aggregate amount of Filer Debentures), and 61 of which were in British Columbia (representing 30.9% of the total aggregate amount of Filer Debentures).

15. To the best of the Filer's knowledge and belief and based on the register of holders of the Filer Broker Warrants maintained by the Filer, as of August 29, 2019 there was 1 holder of Filer Broker Warrants, who was in Ontario (representing 100% of the total aggregate amount of Filer Broker Warrants).

16. Upon the granting of the requested relief, the Filer will not be a reporting issuer or the equivalent in any jurisdiction of Canada.

17. The Filer is not in default of any of its obligations under the securities legislation in any jurisdiction as a reporting issuer.

18. The Purchaser is not in default of any of its obligations under securities legislation in any jurisdiction as a reporting issuer.

19. The Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 -- Issuers Quoted in the U.S. Over-the-Counter Markets.

20. The Filer has no intention to seek public financing by way of an offering of securities.

21. No securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 -- Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

Order

The Principal Regulator is satisfied that the order meets the test set out in the Legislation for the Principal Regulator to make the order.

The decision of the Principal Regulator under the Legislation is that the Order Sought is granted.

DATED at Toronto, Ontario on this 15th day of November 2019.

"Craig Hayman"
Commissioner
Ontario Securities Commission
"Lawrence Haber"
Commissioner
Ontario Securities Commission