Document:

ex_156889.htm

Exhibit 4.1 —   Description of Capital Stock

 

 

 

General

 

The following is a description of the material terms of the capital stock of U.S. Global Investors, Inc. (the “Company”). This description is not complete and is qualified by reference to the Company’s Fourth Restated and Amended Articles of Incorporation (the “Articles”) and its Amended and Restated By-Laws (the “By-Laws”). The Articles and By-Laws are filed as exhibits to the Company’s Annual Report on Form 10-K and are qualified by reference to such documents. Additionally, the following description is qualified by reference to the Texas Business Organizations Code.

 

Per the Articles, the Company’s authorized capital stock consists of 28,000,000 shares of class A common stock, $0.025 par value per share; 4,500,000 shares of class B common stock, $0.025 par value per share; and 3,500,000 shares of class C common stock, $0.025 par value per share. As of June 30, 2019, there were 13,866,751 shares of class A common stock outstanding; zero shares of class B common stock outstanding; and 2,068,797 shares of class C common stock outstanding. All outstanding shares of class A and class B common stock are fully-paid and non-assessable.

 

Class A Common Stock, Class B Common Stock and Class C Common Stock

 

The three classes of common stock of the Company have the following features unless specifically noted:

 

Dividend payments. The holders of each class of common stock are entitled to receive dividends, when and as declared by the Company’s Board of Directors (the “Board”). Currently, the Board has authorized a dividend of $0.0025 per share to be paid monthly through September 30, 2019. The dividend will be reviewed by the Board each quarter thereafter.

 

Redemption. The Company may repurchase any of its shares of class A common stock, class B common stock and class C common stock in accordance with law, by either public or private transaction.

 

Liquidation. In the event of a liquidation of the Company, after payment or provision for payment of debts, the assets of the Company upon distribution shall be distributed pro rata among the holders of the shares of class A common stock, class B common stock and class C common stock. A merger, consolidation, reorganization, or asset sale of the Company, or any redemption by the Company of any of its outstanding shares, will not be considered a liquidation.

 

No preemptive rights. No holder of shares of class A common stock, class B common stock or class C common stock shall have any preemptive right to subscribe for or acquire additional shares of the Company of the same or any other class, including any shares held by the Company as treasury stock.

 

Voting rights. The holders of shares of class C common stock shall have full voting rights at any annual or special meeting of shareholders and as provided for in the Texas Business Organizations Code. Currently, the holders of shares of class A and class B common stock have no voting rights at any annual or special meeting of the Company’s shareholders, except as otherwise expressly provided for by law.

 

Conversion rights. Shares of class C common stock can be converted to shares of class A common stock on a one-for-one basis. The shares of class A and class B common stock shall not be convertible into the shares of any other class of stock of the Company.EXCHANGE AGREEMENT

 

THIS EXCHANGE
AGREEMENT (the “Agreement”) is dated September 4, 2019, by and between Newgioco Group, Inc. (the “Company”),
and Michelle Ciavarella (“Releasee”).

WHEREAS:

A. The Company is
indebted to Releasee for salary owed for services performed during prior years of $500,000 (the “Accounts Payable”).

B. The Company and
the Releasee have agreed to exchange the Accounts Payable for the issuance to the Releasee of 1,000,000 shares of the Company’s
common stock (the “Shares”).

NOW, THEREFORE,
in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

	 	1.	Exchanges.

1.1
       Exchange. Releasee and the Company, hereby exchange the Accounts Payablewhich
Accounts Payable, will be immediately cancelled by the Company for the Shares, without the payment of any additional consideration.

1.2        Delivery.
In exchange for the Accounts Payable, the Company shall deliver to Releasee the Shares. Releasee hereby acknowledges that from
and after the date hereof the Accounts Payable shall be null and void and any and all rights arising thereunder shall be extinguished.

2.        Company
Representations and Warranties.

2.1        Authorization
and Binding Obligation. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement and to issue the Shares in accordance with the terms hereof and thereof. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Shares has been duly authorized by the Company's Board of Directors. This Agreement has been duly executed
and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of applicable creditors' rights and remedies and except as rights to indemnification and to contribution may be
limited by federal or state securities laws.

2.2        No
Conflict. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares) will not: (i) result in
a violation of organizational documents of the Company; (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is a party; or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which any property
or asset of the Company is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that
could not reasonably be expected to have a material adverse effect on the Company.

2.3        Securities
Law Exemptions. Assuming the accuracy of the representations and warranties of the Releasee contained herein, the offer and
issuance by the Company of the Shares is exempt from registration under the Securities Act of 1933, as amended (the “1933
Act”).

2.4        Issuance
of Shares. The Shares when issued will be duly authorized and validly issued.

    

    

    

 

2.5        Disclosure.
The Company confirms that it has provided Releasee with all relevant material information requested by Releasee in order to make
an informed decision as to whether to enter into this Agreement and the transactions contemplated hereby.

3.        Releasee
Representations and Warranties. As a material inducement to the Company to enter into this Agreement and consummate the Exchange,
Releasee represents, warrants and covenants with and to the Company as follows:

3.1        Ownership
of the Accounts Payable. Releasee owns the Accounts Payable free and clear of any liens and the Accounts Payable has not been
pledged to any third party. Releasee has not sold, assigned, conveyed, transferred, mortgaged, hypothecated, pledged or encumbered
or otherwise permitted any lien to be incurred with respect to the Accounts Payable or any portion thereof. No person other than
Releasee has any right or interest in the Accounts Payable. The Releasee has not sold, assigned, conveyed, transferred, mortgaged,
hypothecated, pledged or encumbered or otherwise permitted any lien to be incurred with respect to the Accounts Payable or any
portion thereof.

3.2       Proceedings.
No proceedings relating to the Accounts Payable are pending or, to the knowledge of Releasee threatened before any court, arbitrator
or administrative or governmental body that would adversely affect Releasee’s right and ability to surrender and exchange
the Accounts Payable.

3.3        Reliance
on Exemptions. Releasee understands that the Shares are being offered and exchanged in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and Releasee’s compliance with, the representations, warranties, agreements and acknowledgments of
Releasee set forth herein in order to determine the availability of such exemptions and the eligibility of Releasee to acquire
the Shares.

3.4        No
Governmental Review. Releasee understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in
the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

3.5        Validity;
Enforcement. Releasee has the requisite power and authority to enter into and perform his obligations under this Agreement
and to exchange the Accounts Payable in accordance with the terms hereof and thereof. This Agreement has been duly and validly
authorized, executed and delivered on behalf of Releasee and shall constitute the legal, valid and binding obligation of Releasee
enforceable against Releasee in accordance with its respective terms, except as such enforceability may be limited by general principles
of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to,
or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification
and to contribution may be limited by federal or state securities laws.

 

3.6        No
Conflicts. The execution, delivery and performance by Releasee of this Agreement and the consummation by Releasee of the transactions
contemplated hereby and thereby will not (i) result in a violation of the organizational documents of Releasee; (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which Releasee
is a party; or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state
securities laws) applicable to Releasee, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights
or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the
ability of the Releasee to perform his obligations hereunder

3.7       Action.
The Releasee has taken no action that would impair its ability to exchange the Accounts Payable.

    

    

    

3.8       
No Public Sale or Distribution. The Releasee is acquiring the Shares for its own account and not with a view towards, or
for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant
to sales registered or exempted under the 1933 Act. The Releasee does not presently have any agreement or understanding, directly
or indirectly, with any person to distribute any of the Shares issuable upon conversion thereof, for its own account and not with
a view towards, or for resale in connection with, the public securities in violation of applicable securities laws.

3.9       Information.
The Releasee and its advisors, if any, have been furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which have been requested by the Releasee. The Releasee
has read the Company’s filings with the Securities and Exchange Commission. The Releasee and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. The Releasee understands that its investment in the Shares involves a
high degree of risk. The Releasee has sought such accounting, legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Shares.

3.10       
Transfer or Resale. The Releasee understands that: (i) the Shares have not been and are not being registered under the 1933
Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) the Releasee shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Releasee,
in a form reasonably acceptable to the Company, to the effect that Shares to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C) the Releasee provides the Company with reasonable assurance
that the Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (a successor
rule thereto) (collectively, “Rule 144”); (ii) any sale of the Shares made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144.

3.11 Accredited
Investor/ Bad Actor Events. Releasee is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under
the Securities Act (“Regulation D”), and has not been the subject of any bad actor events under Rule 506 of
Regulation D.

 

4.        Miscellaneous.

4.1        Legends.
Releasee acknowledges that the Shares shall conspicuously set forth on the face or back thereof a legend in substantially the following
form:

“THIS SHARES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE RULES AND REGULATIONS PROMULGATED THEREUNDER,
OR UNDER THE SECURITIES LAWS, RULES OR REGULATIONS OF ANY STATE; AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, RULES
OR REGULATIONS OR AN EXEMPTION THEREFROM DEEMED ACCEPTABLE BY COUNSEL TO THE COMPANY.”

4.2        Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict
of law provision or rule.

4.3        Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute one and the same Agreement. This Agreement, to the
extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”),
shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding
legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto, each other
party hereto shall re-execute original forms hereof and deliver them in person to all other parties. No party hereto shall raise
the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted
or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever
waives any such defense, except to the extent such defense related to lack of authenticity.

    

    

    

4.4        Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.

4.5       Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). 

4.6        Entire
Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between Releasee and the Company
with respect to the matters discussed herein, and this Agreement contains the entire understanding of the parties with respect
to the matters covered herein and, except as specifically set forth herein, none of the Company or the Releasee makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and Releasee. No provision hereof may be waived other than by an instrument in writing
signed by the party against whom enforcement is sought.

4.7        Release
and Discharge. Releasee hereby releases and forever discharges the Company  and its subsidiaries, affiliates, former and
current officers, directors, shareholders, trustees, members, employees and agents, predecessors, successors and assigns, heirs,
executors, fiduciaries, indemnitors, indemnitees, administrators and clients from any and all causes of action, suits, debts, claims
and demands whatsoever in law or in equity, which Releasee ever had, now has, may have had, or hereafter may have, or which her
heirs, executors, administrators, representatives, assigns or transferees may have arising from or relating in any way to the Accounts
Payable.

 

IN WITNESS WHEREOF,
Releasee and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first
written above.

 

 

NEWGIOCO GROUP, INC. 

 

 

By: /s/ Mark Korb

Name: Mark Korb

Title: Authorized Officer

 

 

RELEASEE 

 

 

/s/ Michelle Ciavarella 

Name: Michelle Ciavarella

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