SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): April 12, 2019
GLOBAL TECH INDUSTRIES GROUP, INC.
(Exact name of registrant as specified in its charter)
|Nevada||000 - 10210||83 - 0250943|
or other jurisdiction
|511 Sixth Avenue, Suite 800|
|New York, New York||10011|
|(Address of principal executive offices)||(Zip Code)|
(Registrant’s telephone number, including area code)
[Not applicable / Former Name or Address]
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|[ ]||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|[ ]||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|[ ]||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|[ ]||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Item 1.01 Entry Into a Material Definitive Agreement
Effective on April 12, 2019, Global Tech Industries Group, Inc., a Nevada corporation (“GTII”), First Capital Master Advisor, LLC, a Delaware limited liability company (“FCMA”) and GCA Equity Partners (“GCA” and collectively referred to herein with FCMA as the “Seller”), entered into an agreement (the “Agreement) under which GTII will acquire ownership of a portfolio of residential master-plan development real estate properties (collectively, the “Assets”). The Assets are expected to be comprised of residential real estate development assets including land development sites in growth markets, single family homes (“SFR”), mixed-use master projects including SFR, high density Multi-Family and commercial and other improved and unimproved assets located primarily in Texas and California. Approximately $300 Million of the Assets are currently identified in Exhibit B of the Agreement, a copy of which is attached to this Report on Form 8-K as Exhibit 10.1, and the balance of which will be added to the schedule of Assets prior to the closing. Prior to the execution of Definitive Agreements, the Seller has the right to add and substitute different real properties to the Assets being sold to GTII in this transaction (the “Transaction”), provided they have an aggregate enterprise value of approximately $450 million. Appropriate adjustment may be made to the purchase price payable by GTII for the Assets if at the closing the estimated aggregate enterprise value of such Assets is materially different than $450 Million.
In preparation for the closing of the Transaction under the Agreement, GTII has agreed to (1) amend its Articles of Incorporation to increase its authorized common stock from 350 Million shares to a number sufficient to pay a specified portion (i.e., approximately 40%) of the consideration to the Seller for the Assets, as provided in the Agreement, (2) authorize and designate 1,000 shares of new Series B Convertible Preferred Stock to be issued to the Seller by GTII at the closing as additional consideration for the Assets (i.e., the other 60% of the consideration for the Assets), and (3) authorize and designate 12,500 shares of new Series C Convertible Preferred Stock for issuance prior to the closing to such parties as determined by GTII management in its sole discretion, to facilitate settlement and repayment of outstanding indebtedness of GTII by the closing, or for any other purposes deemed appropriate by GTII’s current management. Prior to the closing, GTII may also issue up to the remaining authorized but unissued shares of GTII common stock, up to the current limit of 350 Million total outstanding shares of such common stock, to any parties and for any purpose deemed appropriate by GTII management, including without limitation settlement of outstanding indebtedness of GTII.
In consideration for the conveyance of the Assets to GTII by the Seller at the closing, GTII will issue to the Seller or its designees at the closing (a) 1.8 Billion shares of the common stock of GTII, and (b) 1,000 shares of new Series B Convertible Preferred Stock. Each share of Series B Convertible Preferred Stock is convertible, at the option of the holder exercisable at any time after the closing of the Transaction and before automatic conversion, into the number of shares of GTII common stock then having a market value of $270,000 (or an aggregate market value of $270,000,000), calculated and derived using a price per share equal to the 10-day volume-weighted average price of GTII common stock, as quoted by the Bloomberg Service (the “VWAP Price”) for the 10 trading days immediately preceding the effective date of the conversion. The outstanding Series B Convertible Preferred Stock will automatically convert into post-closing GTII common stock upon any reverse stock split of the issued and outstanding common stock after the closing, or upon an outside date to be determined. For the purposes of making potential adjustments to the purchase price of the contributed Assets prior to the closing, the Seller will be credited with a deemed enterprise value of $465 Million if it has designated for contribution at closing approximately $450 Million of aggregate Asset value. GTII is obligated to assume up to $65 Million in debt secured by the Assets contributed by the Seller. The Seller may not contribute the Assets at closing with encumbrances and related debt exceeding an aggregate of $65 Million. The Series B Convertible Preferred Stock and the shares of GTII common stock into which it is convertible has full voting rights.
After the closing, the Seller is expected to distribute the GTII common stock and Series B Preferred Stock received by it in the Transaction among its security holders, for which it may register them with the Securities and Exchange Commission for free trading or distribute them with Rule 144 restricted stock transfer legends on them. The pro forma company shall grant to GTII and any of its shareholders or designees piggyback registration rights on a pro rata basis with Seller shareholders. After the closing, the new management of GTII is expected to cause GTII to apply to uplist its common stock onto a national exchange.
On or before the closing of the Transaction, GTII and its subsidiaries will convey all of their existing assets (i.e., as reflected in its latest consolidated financial statements publicly filed with the Securities and Exchange Commission) to one of more designees chosen in their sole discretion, provided, that GTII will retain its name and trading symbol after the closing.
GTII currently has approximately $5.5 Million of outstanding debt and miscellaneous liabilities (“GTII Debt”). GTII has agreed to have all GTII Debt assigned to and assumed by an unaffiliated agent which will be retained by GTII and capitalized with outstanding shares of Series C Convertible Preferred Stock or other outstanding GTII Securities to enable it to attempt to resolve and settle the GTII Debt. The agent will endeavor to resolve all of the GTII Debt by the closing date (such that GTII is released from that debt by the debt holders, or the debt is paid in full), or by a date thereafter if mutually agreed by Seller and the agent. If by such date the agent is unable to fully resolve the GTII Debt, GTII will remain liable for the remaining GTII Debt, and the agent will return to GTII for cancellation a number of shares of its Series C Convertible Preferred Stock equal in value to the value of the unresolved GTII Debt.
The Seller has agreed to cause GTII to file a notice of corporate action with FINRA after the closing to change its name and trading symbol, and to effect a reverse stock split of its common stock with the goal of achieving an approximate post-split share price of $10 per share. The closing date of the Transaction is May 15, 2019, or such other date as is mutually agreed upon in writing by the parties to this Agreement.
The Agreement provides for an “exclusivity period” ending on the later of April 30, 2019 or the closing date of the pending Transaction. During this period, neither GTII nor the Seller nor any of their affiliates may solicit from any third party any offers that are competitive with this Agreement, and will suspend any such current discussions with third parties.
This Agreement is a legally binding contract. Either party may, however, terminate the Agreement upon 30 days prior written notice to the other party, if the parties mutually agree to terminate, or if one party has materially breached this Agreement and been notified by the other party in writing of its awareness of the breach and its intention to terminate the Agreement because of such breach by the other party (“Termination for Cause”). If a party terminates this Agreement in bad faith and not as “Termination for Cause”, then that party must pay a break-up fee to the other party equal to $2 Million in cash or securities unless the bad faith party rescinds the bad faith termination within five (5) business days of the termination. During the exclusivity period, the parties agree to use their good faith efforts to finalize and execute the Definitive Agreements for the proposed Transaction whereby the Seller proposes to contribute to GTII the Assets described in Exhibit B of the Agreement in consideration for the issuance of GTII common stock and Series B Convertible Preferred Stock to the Seller.
Upon the closing, all current officers and directors of GTII and its subsidiaries shall resign except in the event that David Reichman is the GTII designee pursuant to (i) below. In any event, on or before the closing all the outstanding Serie A preferred stock of GTII will either be transferred to a designee of seller or redeemed and cancelled. At closing, the board of directors of the pro forma company shall consist of three members; (i) one named by the board of directors prior to the closing and (ii) two named by seller and appointed by the GTII board of directors prior to the closing subject to the consummation of the transaction. Such designation of directors shall not be an ongoing nomination right. And: (1) the board of directors of the pro forma company shall also be comprised of at least two (2) independent members to be selected by the BOD of the pro forma company. An external advisor ( “external advisor”), which will be owned 100% by FCMA , is to be formed to provide asset investment advisory, asset management, property management, acquistions, dispositions, land development, entitlement work, and construction services to the pro forma company and its internal management, and GTII’s CEO will enter into a management agreement with the pro forma company to be agreed upon prior to the closing of the transaction.
The Seller and GTII agree to indemnify each other and their respective stockholders, lenders and affiliates from any third party claims or liability incurred by them as a direct or indirect result of any breach of the Agreement committed by either such party that is not cured within ten (10) business days of receipt of notice of such breach.
In the Agreement, the current pre-closing management of GTII covenants to deliver approximately 70% of the pre-closing GTII shareholder vote necessary to approve the acquisition of the Assets to be contributed by Seller to GTII in the Transaction, if shareholder consent to the Transaction is required, the amendment to the Articles of Incorporation of GTII increasing the authorized common stock of GTII, and the disposition of the existing pre-closing assets currently owned by GTII. The Seller and GTII agree to indemnify each other and their respective stockholders, lenders and affiliates from any third party claims or liability incurred by them as a direct or indirect result of any breach of the Agreement committed by either such party that is not cured within ten (10) business days of receipt of notice of such breach.
The closing of the Transaction is subject to the satisfaction of a number of conditions including the following:
|(a)||Completion by each party and its advisors (to each party’s satisfaction) of all business, tax, accounting, legal and other due diligence review (including GTII’s financial statements after December 31, 2018 that have been publicly filed, and Seller’s audits and financial statements) of the other party in parallel with the preparation and drafting of the Definitive Agreements;|
|(b)||GTII or Seller have not incurred any material obligations (other than in the normal course of business and/or in connection with the Transaction) following the execution of the Agreement that will survive the closing;|
|(c)||Preparation by Seller’s counsel of all non-SEC corporate and governance documents that may be reasonably required by Seller to support the Transaction, including a revised charter, bylaw changes or other amendments that may be necessary;|
|(d)||The negotiation and execution of the Definitive Agreements memorializing the terms of this Agreement;|
|(e)||There is no material adverse change in GTII’s or Seller’s business or financial condition and no material adverse change to the Assets (other than that which has been previously disclosed in GTII’s or Seller’s filings with the SEC);|
|(f)||The representations and warranties of both parties being true and correct at signing as of the closing date;|
|(g)||Receipt of all governmental, regulatory and third-party requisite approvals and consents, including the completion of any required SEC process, and the required approval of each party’s stockholders as necessary, in a form satisfactory to the other party (consideration to be given to a joint proxy statement if Seller stockholder approval is required);|
|(h)||The terms and conditions of the Transaction must be acceptable to both GTII and Seller and approved by each of their respective Board of Directors;|
|(i)||Seller has procured and delivered to GTII appropriate valuations of the Assets through any of the following: Fairness Opinion, Third Party Appraisals or Due Diligence Feasibility and Analysis Write Up prepared by an experienced industry veteran;|
|(j)||Delivery by the Seller of PCAOB audited financial statements suitable for inclusion in any SEC filings in connection with the Transaction in accordance with applicable SEC rules and regulations; and|
|(k)||Such additional terms as are consistent with the above as agreed between the parties.|
All expenses incurred for the Transaction by GTII or Seller separately, inclusive of the drafting of the Definitive Agreements, prior to the closing will be borne and paid by GTII and Seller separately, however, any and all fees, expenses and costs incurred after the closing shall be assumed and paid by post closing GTII.
The following is a brief summary of the real estate Assets currently scheduled for conveyance to GTII by the Seller in the proposed Transaction:
|Project:||Coastal Palms Senior Living Resort Community|
|Jurisdiction:||Longs, SC (Greater Myrtle Beach Area)|
|Parcel Numbers:||102-00-03-076(A), 102-00-03-078(B), 102-00-03-079(C), 102-00-03-087(D) and 102-00-03-088(E)|
Description: The Coastal Palms Senior Living Resort Community is a premier new senior continuing care retirement community and retreat (or “CCRC”) situated on an expansive forested site located in Longs, South Carolina (in the greater Myrtle Beach area). This upscale for-rent project is being developed in two separate phases and combines a new state-of-the art 90-bed Assisted Living/Memory Care Facility along with 126 upscale Independent Living Apartment units, 36 Active Adult Hybrid Homes and eight detached Cottages, a 56-bed Skilled/Acute Care Nursing Facility, and a 25,000 square foot commercial complex made up of professional and medical offices along with some retail space. There is also a flexible expansion area which could be used to add up to 36 more Hybrid Homes or 48 units of traditional Seniors Apartments. The site has been master-planned and mass graded and is permit and construction ready.
|Jurisdiction:||Southern boundary of the City of Woodland, CA|
Description: Rancho Rosada is planned to provide 396 single family residential homes designed to appeal to a wide segment of California residents and featuring comfortable, sustainable and energy-efficient attributes. 360 units of multi-family housing, with a 5% allocation for affordable housing, will include an enclosed garden hosting native California plants and a solar panel covered parking lot. A ten-acre park site will add picnic areas, walking/bike paths, a dog park, an outdoor community amphitheater and neighborhood meeting club house. The location is part of the Spring Lake master plan in Woodland. Tentative mapping is scheduled to take 11 months to complete, then seven additional months for a final map. Build-out will require an additional 18 months. A preliminary site plan is underway.
|Project Name:||Massey Oaks|
|Jurisdiction:||City of Pearland, Texas|
|Project Type:||Master Plan Single Family Residential|
|Brazoria County ID Numbers:||176518, 179399, 179400, 179401, 179402, 179403, 505271|
Description: Massey Oaks is planned as Pearland’s premier master planned community. Approvals include a vested Planned Development Handbook, which sets forth a density of 950 units, a Development Agreement with the City of Pearland, and the legislatively created Brazoria County Municipal Utility District No. 69. Phase One of the project is currently being designed and developed to include 353 finished lots, master amenities, and off-site infrastructure to support the remainder of the subdivision. Numerous Letters of Intent have been issued by public and private builders for the acquisition of the 353 Phase One lots.
|Project Name:||Williams Riviera Ranch Estates|
|Total Acreage:||98.3 Acres|
|Jurisdiction:||San Diego County, California|
|Project Type:||Mixed Use Residential and Commercial|
|Parcel Numbers:||188-230-46; 188-230-06; 188-230-48; 188-231-38; 188-231-39; 188-231-40|
Description: Williams Riviera Ranch Estates is a 98.3 acre mixed-use development located in north San Diego County, California. The project proposed entitlement includes 214 Multi-Family Units, 376 single family homes and approximately 108,000 net rentable square feet of commercial space. Entitlements are currently being processed in San Diego County. The entity that owns the project was purchased in a pending Chapter 11 Bankruptcy in the United States Bankruptcy Court, Central District of California San Fernando Valley Division, Case No. 1:18-bk-11786-MB.
|Project:||The Villas at Turtles First (Resort Rental Villas)|
|Location:||Playa Grande, Costa Rica (near the town of Tamarindo)|
|Parcel Numbers:||Book 2018, Entry 257856-01—0002-001|
Description: The Villas at Turtles First is a unique five-star vacation destination where guests can actively engage in helping to save dozens of rare and amazing species from extinction, while experiencing how naturally-regenerative luxury can improve one’s own health and the planet. The site is located adjacent to the main nesting beach of the rare Leatherback Turtle in beautiful Playa Grande, Costa Rica, and near an estuary hosting birds, monkeys, and crocodiles. The beach and much of the forest surrounding the estuary are nationally protected parks. Turtles First will consist of 18 villas, each featuring 6 luxury suites (108 bedrooms total) and an open-plan living area around a central courtyard with a private plunge pool. The units will be rented as a single, branded destination and marketed through hotel and villa rental channels. The project has been master-planned and is expected to be ready for construction start shortly.
|Project:||ICF Green Luxury Home Portfolio (Four Homes)|
|Jurisdictions:||St Helena CA (“Charter Oak #1 & #2”)|
|Kentfield, CA (“Black Log”)|
|Caspar CA (“Caspar Island”)|
|Parcel Numbers:||Charter Oak #1 & #2:Parcel ID # 009-112-006-000|
|Black Log: Parcel ID # 027-122-26 and 027-122-27|
|Caspar Island: Parcel ID # 118-380-04-00|
Description: The ICF Green portfolio consists of four new construction single-family luxury home projects. The first property (Charter Oak #1) is a 4200 square foot, four-bedroom, three-bath Farm House Modern style home with a 400 square foot guesthouse. This home is approximately 50% finished. The second property (Charter Oak #2) is a similar size and is ready to be built. Both of the Charter Oak properties are located in St. Helena (Napa County), CA. The Black Log property is a to-be-built 6100 sq. luxury home with 5 Bedrooms and 5½ bathrooms on 4.98 view acres in Kentfield, (Marin County) CA. The property known as Caspar Island is an existing new construction single-family home on a two-acre private island situated immediately off the Pacific coast in Mendocino County. Access to the island is by way of a private bridge. The home will upgraded with additional living space, installation of two 18-foot ocean view patio doors, high-end finishes inside and outside, and extensive tree planting and landscaping to make this a jewel box hide-away property with 270 degree ocean views.
|Project:||Central Garden Apartments|
|Parcel Numbers:||Parcel ID#29-00-08-1-006-002.000, Parcel ID#29-00-08-2-033-004.000, Parcel ID#29-00-08-2-036-001.000, Parcel ID#29-00-08-2-037.001.000|
Description: Central Garden Apartments is an existing 190-unit, multi-family apartment complex located in Birmingham Alabama, close to the new Junior Olympics sports facility and other new and upgraded facilities (shopping, hotels, library) that are part of the city’s re-gentrification efforts. The property was initially constructed in 1948 and 1964. It contains 40-buildings and is a one and two story “garden” style complex. The unit mix is typical to this market and includes 42 one-bedroom, and 148 two-bedroom units comprised of 2-unit and 4-unit buildings, each with its own lawn area making it ideal for families. The units are currently vacant, and will be renovated and leased-up.
|Parcel Numbers:||Parcel ID #900-030-035-4 (New APN: 900-030-036)|
Description: This property consists of 29.45 acres of commercial property with 10 acres designated for retail and the remaining for residential multi-family, and is located in Murrieta, CA. The plan is to develop the land and build/sell 350 multi-family apartment units and 68,500 SF of retail. This property is currently zoned low density residential. Rezoning to “Community Commercial” and “Retail” should take nine months to complete, then six months for land improvement, then 18 months for build out.
Please be advised that there is no assurance that the Assets to be acquired by GTII in the Transaction will have or realize the values assigned to them in the Agreement or in the Definitive Agreements, if made, or in any professional analytical report made about them, or that the Transaction will close. The values assigned will be estimates only, based on management’s analysis and the professional business appraiser’s evaluation and opinion. The value reports regarding the Assets may make assumptions about the development and performance of those Assets which prove to be too optimistic or are erroneous in other respects. There is no assurance that the Assets will be profitable for GTII, that they will generate net cash flow earnings, that GTII will be able to pay or otherwise settle its current outstanding indebtedness, or that GTII’s public trading common stock will appreciate in price or value.
This Report on Form 8-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes”, “belief”, “expects”, “intends”, “anticipates”, “projects” “will”, or “plans” to be uncertain and forward looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the company’s reports and registration statements filed with the Securities and Exchange Commission.
Item 9.01 Exhibits
|10.1||Letter of Intent Agreement, dated April 12, 2019, by and between Global Tech Industries Group, Inc., First Capital Master Advisor, LLC, and GCA Equity Partners, executed on or before April 12, 2019.|
|99.1||Press Release, due for release April 22, 2019.|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date: April 18, 2019|
|GLOBAL TECH INDUSTRIES GROUP, INC.|
|By:||/s/ David Reichman|
|Chairman & CEO|
|10.1||Letter of Intent Agreement, dated April 12, 2019, by and between Global Tech Industries Group, Inc., First Capital Master Advisor, LLC, and GCA Equity Partners, executed on or before April 12, 2019.|
|99.1||Press Release, due for release April 22, 2019.|
GLOBAL TECH INDUSTRIES GROUP, INC.
LETTER OF INTENT
April 12, 2019
Mr. Suneet Singal
First Capital Master Advisor LLC
90 Broad Street, 2 nd Floor
New York, NY 10004
Via email: email@example.com
This Letter of Intent (“Letter of Intent”) is made by and between Global Tech Industries Group, Inc. (“GTII”), a publicly traded Nevada corporation and First Capital Master Advisor, LLC (“FCMA”), a Delaware limited liability company, and is to describe, confirm and bind the parties hereto to the principle terms and conditions under which GCA Equity Partners and/or its affiliates which may include one or more special purpose vehicle entities holding various real estate assets , (collectively, “Seller”), shall contribute and/or sell certain real estate assets to GTII (or one of its wholly owned subsidiaries), as set forth in the terms and conditions detailed in Exhibits A & B hereto (the “Transaction”). The Transaction is subject and conditioned upon the terms and conditions of this Letter of Intent, including the execution of mutually acceptable definitive agreements governing the Transaction (the “Definitive Agreements”),in substantially the same form as the Master Agreement Regarding the Contribution of the Real Property Interests dated April 7, 2019, receipt of which is hereby acknowledged by GTII and FCMA and subject to such other customary documentation as may be required for the Transaction contemplated herein.
The parties intend this Letter of Intent to be binding and enforceable, and that it will inure to the benefit of the parties and their respective successors and assigns. It represents a legally binding commitment on the part of the parties with respect to the Transaction, except in the event that certain conditions of the Transaction are not timely performed or there is a breach of this Letter of Intent by any of the parties hereto, or at the election of a party hereto as more fully described in Exhibit A (the “Termination Provisions”). Until such time as it is either replaced by the Definitive Agreements or a Termination Provision is asserted and exercised, this Letter of Intent shall be in full force and effect.
This Letter of Intent may be executed in any number of counterparts and any party hereto may execute any such counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts taken together will constitute but one and the same instrument.
Any disputes arising from or related to the Letter of Intent or the Termination Provisions will be governed by and construed under and in accordance with the laws of the State of New York and submitted to binding arbitration with the American Arbitration Association, Metro New York following good faith efforts to mediate any such disputes.
SUMMARY OF THE TERMS OF THE TRANSACTION:
Surviving Company: GTII
Place of Incorporation: Nevada
Stock Exchange: OTC Pink Fully Reporting
Primary Shares Outstanding: Approximately 215,000,000 shares of Common Stock issued at par value $0.001 per share, and outstanding as of the date hereof
Authorized Common Stock: 350,000,000 shares authorized
Authorized Preferred Stock: Preferred Stock, par value $.001, 50,000 authorized, 1,000 issued
Stock Options: None
ESOP Deferred: None
Subject to legal, tax and accounting structuring to be determined in good faith and in the respective parties mutual best interests, Seller will contribute and/or sell certain real estate assets listed on Exhibit B, or the outstanding equity of special purpose vehicles that own the assets (collectively, the “Assets”), to GTII or a wholly owned seasoned subsidiary of GTII. The Transaction will result in a reverse merger and a change of control of GTII. The name and ticker symbol of GTII may be changed at the election of Seller upon the signing of the Definitive Agreements and the closing (the “Closing”) of the Transaction, to a name and symbol to-be-determined by Seller. Post Transaction GTII, following the Closing, is referred to herein as the “Pro Forma Company”. At the election of Seller, as of or following the Closing, the Pro Forma Company intends to remain incorporated under the laws of the state of Nevada.
NEW CLASSES OF GTII PREFERRED STOCK, REAUTHORIZATION OF SHARES:
Within ten (10) business days of execution of this Letter of Intent, or as soon thereafter as may be practicable, GTII shall create and designate two (2) new classes of Preferred Stock:
(1) Series B: GTII shall authorize the issuance of a series of Preferred Stock consisting of One Thousand (1,000) shares, without par value, to be designated Series B Convertible Preferred Stock (“Series B”). GTII may not issue more than or increase the authorized shares of Series B beyond 1,000 shares. Each share of Series B shall be convertible by its holder into a specific number of GTII Common Stock shares (“New GTII Common”) equal to a market value of $270,000 calculated under the VWAP formula as more fully described herein. The Series B will automatically convert into New GTII Common of the Pro Forma Company upon the anticipated reverse split of GTII Common Stock (“Stock Split”), as more fully described herein, being declared effective by FINRA (“Effective Date”). In the event of any unforeseen instance whereby the Stock Split does not occur the parties may determine another conversion trigger consistent with the terms of this binding Letter of Intent. The Series B and the New GTII Common into which it is converted shall have full voting rights.
(2) Series C: GTII shall authorize the issuance of a series of Preferred Stock consisting of Twelve Thousand Five Hundred (12,500) shares, without par value, to be designated Series C Convertible Preferred Stock (“Series C”). GTII may not issue more than or increase the number of authorized shares of Series C beyond 12,500 shares. Each share of Series C shall be convertible by its holder into a specific number of New GTII Common equal to a market value of $1,000 calculated under the VWAP formula as more fully described herein. The Series C is convertible into New GTII Common of the Pro Forma Company at the election of any holder after issuance up to an outside date of six (6) months after the Closing of the Transaction after which it automatically will convert into New GTII Common. The Series C shall not have any voting rights, but the GTII New Common into which it is converted shall have voting rights.
Prior to Closing GTII shall amend its Articles of Incorporation to increase its authorized stock to a number of shares sufficient to pay the Consideration of the Transaction contemplated herein.
CONSIDERATION AND PRO FORMA:
The Seller’s Assets are described on Exhibit B attached hereto and made part of this Letter of Intent, or will be identified in writing for inclusion in the Assets prior to the Closing of the Transaction. The Assets being contributed to GTII have or will have at the Closing of the Transaction an aggregate residual value of approximately $450 million. As consideration for the Assets, GTII shall issue to Seller or its designees One Billion Eight Hundred Million (1,800,000,000) shares of GTII pre Stock Split pre Closing Common Stock (“Seller GTII Common Stock”). In addition to the Seller GTII Common Stock, Seller shall receive all of the Series B stock. The aggregate Transaction is valued at approximately $465 million based on the equity value of the Assets (the “FC Asset Value”) and Seller will, at Closing, assign approximately $65 million of debt encumbering the Assets to the Pro Forma Company (see Exhibit B for corresponding estimated values related to those Assets that are identified for the Transaction to date). Seller shall reserve the right to add or subtract particular Assets to be contributed to GTII prior to the execution of the Definitive Agreements, and the FC Asset Value, the resulting equity and the percentage splits will be adjusted accordingly based on the recognized equity value of the final contributed Assets. As a result, Seller will receive a number of shares of GTII Common stock and Series B shares convertible into new GTII Common Stock equal to the FC Asset Value which should be approximately 91% of the post-Closing issued and outstanding GTII Common Stock (“Pro Forma GTII Common Stock”) on a fully-diluted basis, with the number of shares of Seller’s Series B conversions being calculated and derived from a price equal to the 10-day volume-weighted average price of the GTII Common Stock (as per Bloomberg) (the “VWAP Price”) for the 10 trading days immediately preceding the Effective Date of the conversion (“Seller’s Equity”).
The Pro Forma GTII Common Stock shall be duly authorized, validly issued, non-assessable, and free from all liens, taxes and charges. The Pro Forma Company shall have a sufficient number of authorized shares both pre and post Stock Split reserved to fulfill the issuances contemplated by the Transaction. The Pro Forma GTII Common Stock issued to Seller shall be issued with its transferability subject to Rule 144 of the Securities Act of 1933, as amended, and subject to customary restrictions. The Pro Forma Company may elect to register all or some of the Pro Forma GTII Common Stock or Series B or Series C Stock and the new GTII Common Stock into which they are convertible (i.e., registered with the SEC on Form S-4, and/or registered with the SEC on Form S-3), and/or enable their re-sale as Rule 144 SEC eligible shares through a public resale of restricted or control securities so as to facilitate the distribution of such equity to Seller and Seller affiliates. Pro Forma Company shall grant to GTII and any of its shareholders or designees piggyback registration rights on a pro rata basis with Seller shareholders.
GTII Shareholders and Affiliates Equity:
At the Closing Date of the Transaction, as more fully described herein, GTII will have issued up to a maximum of 350,000,000 pre-split Common Stock, to affiliates, advisors, shareholders, officers, board members, consultants and other designees at its sole discretion. In addition, GTII shall issue, at the Closing, all of the Series C to affiliates, vendors, debt holders, advisors, consultants, service providers and other designees convertible into new GTII Common Stock of the Pro Forma Company. The aggregate GTII Equity (“GTII Equity”) shall be comprised of all pre-Closing outstanding and issued GTII Common Stock, excluding only Seller GTII Common Stock, and all Series C. Any issued Series C and GTII Common Stock shall be restricted under Rule 144 subject to registration more fully described herein.
As a result of the issuance of the Seller Equity, at Closing, the aggregate of the GTII Equity and prior issuance of GTII Common Stock shall equal in the aggregate to 9% of the Pro Forma GTII Common Stock on a fully-diluted basis, with the number of shares of GTII’s Series C conversions being calculated and derived from the 10-day volume-weighted average price of the GTII Common Stock (as per Bloomberg) (the “VWAP Price”) for the 10 trading days immediately preceding the date of the conversion. The resulting equity value to be retained as the GTII Equity at Closing, would approximate $47.5 million of the Pro Forma Company.
For the sake of clarity, fully diluted shares shall include, if any, earn-in shares, escrowed shares, warrants, options, restricted stock units, equity-linked and/or convertible securities in connection with the Transaction.
Notwithstanding any provision contained herein to the contrary and for the avoidance of doubt, any transfer, assignment, sale to conveyance of the GTII Assets shall not relieve, limit, excuse, waive, release and/or terminate the obligations of GTII under this Letter of Intent and the Definitive Agreement(s).
GTII PRE-MERGER ASSETS AND LIABILITIES:
On or before the Closing Date, GTII, including its subsidiaries, shall convey and transfer all of its assets (“GTII Assets”) to a designee of its sole choosing. The GTII Assets shall include but not be limited to cash and securities, intellectual property, contracts, accounts receivable, claims, trademarks, domain names, goodwill and other tangible and intangible assets including all those disclosed in GTII’s consolidated financial statements. GTII Assets shall expressly exclude GTII’s name and symbol. GTII’s recipient of the GTII Assets shall indemnify and hold harmless the Pro Forma Company from and against any liabilities connected with the GTII Assets.
As of the date of this Letter of Intent first above written, GTII will have approximately $5.5 million of debt and miscellaneous liabilities (“GTII Debt”). A non-affiliate (“Agent”) of GTII shall be retained and capitalized with Series C to resolve, settle and pay the GTII Debt. The Agent shall endeavor to resolve all of the GTII Debt by the Closing Date or by another outside date mutually agreed to by the parties (“Outside Debt Date”). In the event that the Agent is unable to fully resolve the GTII Debt and obtain releases by the Outside Debt Date, and the Pro Forma Company assumes any remaining GTII Debt, GTII or its Agent shall return a number of Series C shares to the Pro Forma Company treasury equal to the value of any remaining and unresolved GTII Debt.
STOCK SPLIT AND UPLISTING:
The parties hereto intend to reverse split the Pro Forma Company’s issued and outstanding (and possibly authorized, in its discretion) common stock. As soon as appropriate following the Closing Date, but in no event later than 30 days after the Closing Date, the Pro Forma Company shall file a corporate action with FINRA to change its name, trading symbol and reverse split its common stock. The ratio of the stock split shall be determined by the parties with the goal of achieving an approximate post-split market share price of $10 per share.
As soon as appropriate after the Closing Date but in no event later than 30 days after the Closing Date, the Pro Forma Company shall apply to be up listed on the NYSE Exchange, NYSE American Exchange, the NASDAQ Capital Market, or the OTCQB Market.
The parties shall endeavor to draft the Definitive Agreements and complete due diligence in an expeditious fashion. The Closing Date will be on a day mutually determined by the parties in which all of the requirements necessary for this Transaction have been completed and the parties sign the Definitive Agreements (“Closing Date”). In no event, however, shall the Closing Date be later than May 15, 2019 unless extended by mutual agreement of the parties, or in order to complete necessary compliance with all applicable regulatory requirements.
TERMINATION PROVISIONS AND BREAK-UP FEE:
This Letter of Intent is intended to legally bind the parties. It may, however, be terminated by either party upon 30 days prior written notice to the other party, if the parties mutually agree to terminate, if either party becomes aware that the other party has materially breached any representations or covenants in this Agreement, or is unwilling or unable to provide or fulfill any of the conditions to Closing, more fully described herein (“Termination for Cause”). However, if any party terminates this Letter of Intent in bad faith, other than as “Termination for Cause” the terminating party shall be subject to the obligation to pay a $2,000,000 break-up fee (“Breakup Fee”) to the non-terminating party unless the terminating party rescinds such termination within 5 business days following written demand therefore by the non-terminating party or within 5 business days following the effective date for the notice of termination. Either party may pay the Breakup Fee through the issuance of its common or preferred stock with an equivalent market value.
GTII and the Seller agree that during the period beginning on the date of mutual execution of this Letter of Intent until the later of April 30, 2019 or the Closing Date (with such date being subject to a mutually agreed upon execution timetable for the Definitive Agreements (the “Exclusivity Period”), GTII and Seller and/or their affiliates or representatives will not, directly or indirectly, solicit from any third party any offers competitive with this Letter of Intent. GTII may, prior to the Closing, issue shares of its Common Stock for any valid purpose or consideration, so long as GTII and the Pro Forma Company retain sufficient authorized shares of Common Stock to pay the Seller Equity calculated as of the Closing. GTII will immediately notify Seller and Seller will immediately notify GTII if either receive any solicitation or offers competitive with this agreement. As of the date of mutual execution of this Letter of Intent and during the Exclusivity Period, GTII and Seller will suspend any currently existing discussion with all parties other than each other regarding the Transaction.
During the Exclusivity Period, the parties shall use their good faith efforts to finalize and execute the Definitive Agreements, prior to May 15, 2019, and undertake all related activities geared towards the Closing of the Transaction.
MANAGEMENT OF THE PRO FORMA COMPANY:
Upon the Closing, all current Officers and Directors of GTII and its subsidiaries shall resign except in the event that David Reichmann is the GTII designee pursuant to (i) below. In any event on or before the Closing all of the outstanding Series A Preferred stock of GTII will either be transferred to a designee of Seller or redeemed and cancelled. At Closing, the Board of Directors of the Pro Forma Company shall consist of 3 members:
(i) 1 named by the GTII Board of Directors prior to the Closing and
(ii) 2 named by Seller and appointed by the GTII Board of Directors prior to the Closing subject to the consummation of the Transaction. Such designation of directors shall not be an ongoing nomination right.
(1) The Board of Directors of the Pro Forma Company shall also be comprised of at least two (2) independent members to be selected by the BOD of the Pro Forma Company
Control Vote/Shareholder Approval:
As part of the Definitive Agreements, GTII and the holders of the GTII Equity, will enter into a shareholder voting agreement with Seller committing to deliver approximately 70% of the required number of shares to vote to approve the Transaction and submit the appropriate filings with the SEC.
External Advisor Management Agreement:
An external advisor (the “External Advisor”), which will be owned a 100% by FCMA, is to be formed to provide Asset Investment Advisory, Asset Management, Property Management, Acquisitions, Dispositions, Land Development, Entitlement Work, and Construction Services to the Pro Forma Company and its internal management, and GTII’s CEO will enter into a Management Agreement with the Pro Forma Company, to be agreed upon prior to the Closing of the Transaction.
GTII agrees to indemnify, defend and hold harmless Seller, its officers, directors, stockholders, lenders and affiliates, and, Seller agrees to indemnify, defend and hold harmless GTII, its officers, directors, stockholders, lenders and affiliates from any third party claims by or liabilities to such third parties, including any actual and reasonable legal or other expenses incurred in connection with the defense of such claims to the extent that such claims are the direct result from any breach or failure of the parties in connection with the Letter of Intent and the Transaction; provided however, that any such breach and failure shall be subject a notice and cure period of not less than ten (10) business days.
REPRESENTATIONS AND WARRANTIES:
The Definitive Agreements will contain all customary representations and warranties of the parties.
CONDITIONS OF CLOSING:
Closing the Transaction is subject to the following:
(i) Completion by each party and its advisor (to each party’s satisfaction) of all business, tax, accounting, legal and other due diligence reviews (including GTII’s financial statements after 12/31/18 that have been publicly filed, and Seller’s audits and financial statements ) of the other party (in parallel with the preparation and drafting of the Definitive Agreements);
(ii) INTENTIONALLY OMITTED
(iii) GTII or Seller shall not have incurred any material obligations (other than in the normal course of business and/or in connection with the Transaction) following the execution of this Letter of Intent that will survive the Closing that would prevent the parties from realizing the benefits of the Transaction as described in the Letter of Intent and/or the Definitive Agreement(s);
(iv) Preparation by Seller’s counsel of all non-SEC corporate and governance documents that may be reasonably required by Seller to support the Transaction, including a revised charter, bylaw changes or other amendments that may be necessary;
(v) The negotiation, preparation and execution of the Definitive Agreements memorializing the terms hereof;
(vi) There shall be no material adverse change in GTII’s or Seller’s business or financial condition and no material adverse change to the Assets (other than that which has been previously disclosed in GTII’s or Seller’s filings with the SEC) that would prevent the parties from realizing the benefits of the Transaction as described in the Definitive Agreement(s);
(vii) The representations and warranties of both parties being true and correct at signing as of the Closing Date;
(viii) Receipt of all governmental, regulatory and third-party requisite approvals and consents, including the completion of any required SEC process, and the required approval of each party’s stockholders as necessary, in a form reasonably satisfactory to the other party (consideration to be given to a joint proxy statement if Seller stockholder approval is required);
(ix) The terms and conditions of the Transaction must be approved by the Board of Directors of GTII and Seller;
(x) Both parties shall have procured appropriate valuations through any of the following: Fairness Opinion, Third Party Appraisals or Due Diligence Feasibility and Analysis Write Up prepared by experienced industry veteran or Company and PCAOB audited financial statements suitable for inclusion in any proxy statements or other SEC filings in connection with the Transaction and with respect to GTII submission of a PCAOB audit is deemed sufficient for this purpose; and
(xi) Such additional terms as are consistent with the above as agreed between the parties.
CONFIRMATORY DUE DILIGENCE:
Both parties will use their diligent best efforts to assist and cooperate fully with each other, and their auditors and advisors to support due diligence efforts and to satisfy the conditions of Closing. Both parties may conduct due diligence, including conversations with management of Seller and GTII.
Each party and its employees, officers, directors, advisors, legal counsel, accountants, agents and representatives (the “Representatives”) will extend their full cooperation to either party’s Representatives in connection with such investigation and will provide either party’s Representatives with full access during normal business hours to the other party’s books and records, facilities, accountants, management, officers, directors and key employees for the purpose of conducting such due diligence investigation.
CONFIDENTIALITY AND PUBLICITY AND EXPENSES:
The parties to this Letter of Intent acknowledge and agree that the existence and terms of this Letter of Intent and the Transaction are confidential and further agree that they and their respective Representatives, including without limitation, shareholders, directors, officers, employees or advisors, shall not disclose to the public or to any third party the existence or terms of this Letter of Intent or the Transaction other than with the express prior written consent of the other party, except as may be required by applicable law, rule or regulation, or at the request of any governmental, judicial, regulatory or supervisory authority having jurisdiction over a party or any of its representatives, control persons or affiliates (including, without limitation, the rules or regulations of the SEC or FINRA), or as may be required to defend any action brought against such party in connection with the Transaction. If a party is so required to make such a disclosure, it must first provide to the other party the content of the proposed disclosure, the reasons that the disclosure is required, and the time and place that the disclosure will be made. In such event, the parties will work together to draft a disclosure which is acceptable to both parties. The parties acknowledge and agree that the provisions of the Confidentiality Agreement dated February 15, 2019 between the parties remain in full force and effect.
All expenses incurred for the Transaction by GTII or Seller separately, inclusive of the drafting of the Definitive Agreements, prior to the Closing Date will be borne and paid by GTII and Seller separately, however, any and all fees, expenses and costs incurred after the Closing Date shall be assumed and paid by the Pro Forma Company.
All notice in connection with this Letter of Intent shall be made to the parties via email, facsimile or Express Mail at the addresses above and below.
If you are in agreement with the terms of this Letter of Intent agreement, please sign in the space provided below and return a signed copy to Mark Richardson at firstname.lastname@example.org, Tom Coleman, and the undersigned at:email@example.com by the close of business on April 12 th , 2019. Upon receipt of a signed copy of this Letter of Intent, we will proceed with our plans for Closing the Transaction in a timely manner.
David Reichman, CEO
Global Tech Industries Group, Inc.
|/s/ David Reichman|
|Agreed to and Accepted for Buyer|
|/s/ Suneet Singal|
|Chief Executive Officer|
|/s/ Chuck Tralka|
|Agreed to Accepted for GCA Equity Partners|
|Member, Authorized Signer|
||Residual Value Asset Value||Debt||
|Valley Center||Single/Multi Family Residential & Commercial Lots||112,000,000||12,850,000||99,150,000|
|Massey Oaks||Single/Multi Family Residential Lots||177,870,568||177,870,568|
|Bradshaw||Single Family Residential||26,917,718||26,917,718|
|Coastal Palms||Senior Living||14,681,045||14,681,045|
|Hedge||Single Family Residential||3,403,371||3,403,371|
|ICF Green||High End Single Family Residential||1,921,098||1,921,098|
|Portofino||Single Family Residential||1,795,034||1,795,034|
|Rosenberg||Single Family Residential Lots||24,366,653||24,366,653|
|Woodland 88||Single Family Residential||50,471,613||50,471,613|
|Yanni Palms||Single Family Residential Lots||1,647,855||1,647,855|
GLOBAL TECH INDUSTRIES GROUP (GTII) ENTERS INTO AGREEMENT
WITH FIRST CAPITAL MASTER ADVISOR AND GCA EQUITY PARTNERS
FOR ACQUISITION OF Multi-MILLION DOLLAR REAL ESTATE PORTFOLIO
- Transforms company and positions it as a real estate operating company
New York, NY, April 22, 2019 (GLOBE NEWSWIRE) — Global Tech Industries Group, Inc. (OTCPK:GTII) (“GTII”), a Nevada Corporation, announced today that it has entered into a binding agreement with First Capital Master Advisor and GCA Equity Partners, LLC to acquire from them a portfolio of real estate properties represented to have at closing an estimated enterprise value of approximately $450 Million. GTII has agreed to issue shares of its common stock and newly authorized preferred stock to the Seller in consideration for the assets.
The portfolio is expected to be comprised of real estate development and construction projects including land development sites in growth markets, single family and multi-family homes, mixed-use master-plan projects including single family residential, high-density multi-family, and commercial elements, and other improved and unimproved assets located primarily in Texas and California. Details of the transaction are described in GTII’s recent 8K filing with the SEC, but essentially GTII’s new business model will be to acquire, develop, build, manage, and sell these types of real estate projects.
According to an article published by Brad Broberg on the National Association of Realtors website in December of 2018, housing demand is significantly higher than supply in the United States, particularly in the west. Specifically, the article notes that “…research by a coalition of housing developers, Up for Growth, calculated that from 2000 to 2015 the nation constructed 7.3 million fewer units of housing than it should have based on a matrix of historic demand indicators such as home prices, population and income…California was by far the biggest underachiever with a shortfall of 3.4 million units…” GTII’s real estate development efforts will focus on capitalizing on that shortfall.
Suneet Singal, Chief Executive Officer of First Capital Master Advisor stated, “We are excited by the opportunity to continue executing upon our value add investment thesis as it relates to real estate residential master plan development growth opportunities in the US Market. Given current consumer appetite, a low interest rate economic climate and the demand for solid real estate residential development assets, we believe this investment will be significantly accretive to the shareholder base of GTII.”
“We see the potential for great synergy between the types of development assets we are contributing, the current high level of consumer need, and the public capital markets,” said Tom Braegelmann, Chief Executive Officer of GCA Equity Partners, “and we very much look forward to enabling the successful transformation of GTII to a well-positioned real estate development, construction, and management company.”
David Reichman, Chief Executive Officer of GTII, stated, “Our shareholders, management team, and board members have been patiently waiting for just the right acquisition for our corporate entity. We wanted a meaningful proposition that would be both substantive and productive, and believe that this acquisition embodies all of those traits. We are very pleased to be working with First Capital Master Advisor and GCA Equity Partners, both with extensive real estate investment experience, as we transform GTII into a publically traded real estate development and construction company.”
GTII will likely file a notice of corporate action with FINRA after the closing to change its name and trading symbol, and prepare to uplist to a major stock exchange. The anticipated closing date of the asset contributions is May 15 th of this year, though that date may be amended by mutual agreement of the parties involved in the transaction.
About Global Tech Industries Group
Global Tech Industries Group, Inc. (GTII) is a publicly traded holding company, with subsidiaries and affiliates that hold intellectual properties and proprietary systems in the bioscience, clean tech, and global health industries, as well as interests in energy-related businesses, and restaurant services. For more information on Global Tech Industries Group, Inc., please call 212.204.7926, and see our website: www.GTII- US.com .
About First Capital Master Advisor
First Capital Master Advisor (FCMA) is a privately held real estate, investment and asset management company headquartered in New York and California. The firm specializes in bringing unique real estate private equity opportunities and assets into more efficient capital markets channels. For more information the firm can be reached at firstname.lastname@example.org or www.firstcapitalre.com .
About GCA Equity Partners
GCA Equity Partners, LLC is a privately held real estate investment and development company located in Campbell, California. It focuses on the development and construction of single and multi-family residential real estate along with senior living and hospitality projects. More information is available at www. GCAEquityPartners.com .
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes”, “belief”, “expects”, “intends”, “anticipates”, “projects” “will”, or “plans” to be uncertain and forward looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the company’s reports and registration statements filed with the Securities and Exchange Commission.
Mr. Mike King of Princeton Research Inc.