UNITED STATES  

SECURITIES AND EXCHANGE COMMISSION  

Washington, D.C. 20549

 

FORM 8-K  

CURRENT REPORT

 

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): May 8, 2019 (May 2, 2019)

 

FC Global Realty Incorporated
(Exact name of registrant as specified in its charter)
 
Nevada     000-11635   59-2058100
(State or other jurisdiction
of incorporation) 		  (Commission File Number)   (IRS Employer
Identification No.)
2300 Computer Drive, Building G, Willow Grove, PA   19090
(Address of principal executive offices)   (Zip Code)
     
215-830-1430
(Registrant’s telephone number, including area code)
 
(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:

 

☐ 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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

☐

 

Securities registered pursuant to Section 12(b) of the Act: None

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

As previously reported, on March 13, 2019, FC Global Realty Incorporated, a Nevada corporation (the “ Company ”), entered into a Stock Purchase Agreement (the “ Purchase Agreement ”) with Gadsden Growth Properties, Inc., a Maryland corporation (“ Gadsden ”), pursuant to which Gadsden agreed to transfer and assign to the Company all of its general partnership interests and Class A limited partnership interests in Gadsden Growth Properties, L.P., a Delaware limited partnership (“ OPCO ”), the operating partnership of Gadsden that holds all of its assets and liabilities, in exchange for shares of the Company’s common stock (the “ Common Stock ”), 7% Series A Cumulative Convertible Perpetual Preferred Stock (the “ Series A Preferred Stock ”), Series B Non-Voting Convertible Preferred Stock (the “ Series B Preferred Stock ”) and 10% Series C Cumulative Convertible Preferred Stock (the “ Series C Preferred Stock ”).

 

Also as previously reported, on April 5, 2019, the Company and Gadsden entered into Amendment No. 1 to Stock Purchase Agreement to amend certain provisions of the Purchase Agreement and closing of the transactions contemplated by the Purchase Agreement was completed thereafter on April 5, 2019.

 

At closing, the Company issued to Gadsden 430,306,645 shares of Common Stock, 889,075 shares of Series A Preferred Stock, 11,696,944 shares of Series B Preferred Stock and 2,498,682 shares of Series C Preferred Stock on April 5, 2019. An additional 278,178,750 shares of Common Stock (the “ Holdback Shares ”) were to be issued to Gadsden upon filing of an amendment to the Company’s Amended and Restated Articles of Incorporation (the “ Charter Amendment Date ”). The Holdback Shares are subject to forfeiture based on the reconciliation and adjustment of the net asset value of Gadsden’s assets and Gadsden’s proposed real estate investments as previously disclosed.

 

On May 2, 2019, the Company and Gadsden entered into Amendment No. 2 to Stock Purchase Agreement (the “ Amendment ”) to (i) decrease the number of shares of Common Stock and Holdback Shares issued to Gadsden, and increase the number of shares of Series B Preferred Stock issued, as the result of an error in the original calculation of the shares to be issued; (ii) provide for the issuance of the Holdback Shares on the closing date, rather than the Charter Amendment Date; and (iii) provide for the issuance of certain of the shares of the Series B Preferred Stock and Series C Preferred Stock to FHDC Group, LLC (“ FHDC ”), a stockholder of Gadsden, in exchange for the equivalent number of shares of Gadsden held by it.

 

Specifically, the Amendment provided that the Company issue the following securities as consideration under the Purchase Agreement:

 

· to Gadsden, 229,101,205 shares of Common Stock, of which 110,477,220 shares are designed as Holdback Shares and will be held by Gadsden in a segregated account (the “ Gadsden Specified Account ”), which shall be subject to release in accordance with the terms of the Purchase Agreement, and 118,623,985 shares will not be subject to the Gadsden Specified Account;

 

· to Gadsden, 889,075 shares of Series A Preferred Stock;

 

· to Gadsden, 6,264,993 shares of Series B Preferred Stock;

 

· to Gadsden, 498,682 shares of Series C Preferred Stock;

 

· to FHDC, 5,432,000 shares of Series B Preferred Stock, subject to entry into the Exchange Agreement (as defined below); and

 

· to FHDC, 2,000,000 shares of Series C Preferred Stock (together with the 5,432,000 shares of Series B Preferred Stock referred to above, the “ FHDC Shares ”), subject to entry into the Exchange Agreement.

 

In connection with the Amendment, on May 2, 2019, the Company entered into a Cancellation and Exchange Agreement (the “ Exchange Agreement ”) with Gadsden and FHDC, pursuant to which FHDC agreed to cancel (i) 5,432,000 shares of its Series B Non-Voting Convertible Preferred Stock and (ii) 2,000,000 shares of its 10% Series C Cumulative Convertible Preferred Stock of Gadsden held by it in exchange for the FHDC Shares.

 

In order to effect the forgoing, on May 2, 2019, the Company cancelled 201,205,440 shares of Common Stock issued to Gadsden and Gadsden placed a number of its remaining shares equal to the Holdback Shares into the Gadsden Specified Account. In addition, in accordance with the terms of the Exchange Agreement, the Company cancelled 5,432,000 shares of Series B Preferred Stock and 2,000,000 shares of Series C Preferred Stock issued to Gadsden and issued such shares to FHDC. Following filing of the Designation Amendment (as defined below) on May 6, 2019, the Company also issued an additional 49 shares of Series B Preferred Stock to Gadsden (the “ Additional Series B Shares ”).

 

 

 

 

The foregoing description the Amendment and the Exchange Agreement is qualified in its entirety by reference to the full text of such documents, copies of which are attached hereto as Exhibits 10.3 and 10.4, respectively, and is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information set forth under Item 1.01 regarding the issuance of the FHDC Shares and the Additional Series B Shares under the Purchase Agreement and the Amendment is incorporated by reference into this Item 3.02. The issuance of these securities is being made in reliance upon an exemption from the registration requirements of Section 5 of the Securities Act.

 

Item 3.03 Material Modification to Rights of Security Holders.

 

As previously disclosed, on April 5, 2019, the Company filed a certificate of designation (the “ Certificate of Designation ”) with the Nevada Secretary of State, pursuant to which the Company designated 11,696,944 shares of its preferred stock as Series B Preferred Stock. On May 6, 2019, the Company filed an Amendment to Certificate of Designation (the “ Designation Amendment ”) to amend and restate the Certificate of Designation to (i) increase the number of shares of Series B Preferred Stock to 11,696,993 shares and (ii) add the following provision providing for the optional conversion of the Series B Preferred Stock:

 

· Optional Conversion . Holders of Series B Preferred Stock may, at their option, at any time and from time to time, convert some or all of their outstanding shares of Series B Preferred Stock into Common Stock at the then applicable Series B Conversion Rate. The “ Series B Conversion Rate ” means 24.4233:1 so that each share of Series B Preferred Stock will be converted into 24.4233 shares of Common Stock, subject to adjustment for any stock splits, stock combinations, recapitalizations or similar transactions, or as provided in the Amended Designation. Notwithstanding the foregoing, no such conversion shall be permitted to the extent that the Company does not have sufficient authorized shares of Common Stock. The Company agreed to use its commercially reasonable efforts to file an amendment to its Amended and Restated Articles of Incorporation as promptly as possible to increase its authorized shares of Common Stock.

 

The foregoing description the Designation Amendment is qualified in its entirety by reference to the full text of such document, a copy of which is attached hereto as Exhibit 3.2 and is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.   Description of Exhibit
3.1   Certificate of Designation of Series B Non-Voting Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on April 11, 2019)
3.2   Amended and Restated Certificate of Designation of Series B Non-Voting Convertible Preferred Stock
10.1   Stock Purchase Agreement, dated March 13, 2019, among FC Global Realty Incorporated and Gadsden Growth Properties, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 15, 2019)
10.2   Amendment No. 1 to Stock Purchase Agreement, dated April 1, 2019, among FC Global Realty Incorporated and Gadsden Growth Properties, Inc. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on April 11, 2019)
10.3   Amendment No. 2 to Stock Purchase Agreement, dated May 2, 2019, among FC Global Realty Incorporated and Gadsden Growth Properties, Inc.
10.4   Cancellation and Exchange Agreement, dated May 2, 2019, among Gadsden Growth Properties, Inc., FC Global Realty Incorporated and FHDC Group, LLC

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, FC Global Realty Incorporated has duly caused this current report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: May 8, 2019 FC GLOBAL REALTY INCORPORATED
     
  By: /s/ John Hartman
    John Hartman
    Chief Executive Officer

 

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Exhibit 3.2

 

 

 

 

 

 

EXHIBIT A

 

FC GLOBAL REALTY INCORPORATED

 


AMENDED AND RESTATED

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS
OF

SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK

 

PURSUANT TO SECTION 78.1955 OF THE
NEVADA REVISED STATUTES

 

 FC Global Realty Incorporated, a Nevada corporation (the “ Corporation ”), does hereby certify that, pursuant to the authority contained in its Articles of Incorporation, as amended, and in accordance with the provisions of Section 78.1955 of the Nevada Revised Statutes, the board of directors of the Corporation (the “ Board of Directors ”) has adopted the following resolution creating the following series of the Corporation’s Series B Non-Voting Convertible Preferred Stock and determined the voting powers, designations, powers, preferences and relative, participating, optional, or other special rights, and the qualifications, limitations, and restrictions thereof, of such series: 

 

RESOLVED, that the Board of Directors does hereby provide for the issuance of the following series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:

 

Section 1. Definitions . For the purposes hereof, the following terms shall have the following meanings:

 

“ Business Day ” means any day except any Saturday, any Sunday, and any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“ Common Stock ” means the Corporation’s common stock, par value $0.01 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.

 

“ Deemed Liquidation Event ” means:

 

(i)        the acquisition by any Person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of the Corporation entitling that person to exercise more than 50% of the total voting power of all shares of the Corporation entitled to vote generally in elections of directors (except that such Person will be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); provided, that the initial Holder of the Series B Preferred Stock and its limited partners, members or other investors and their respective affiliates shall be excluded including from the determination of any syndicate or group from this condition.

 

 

 

 

(ii)       any consolidation or merger of the Corporation in which the Corporation is not the surviving entity, to the extent that (x) in connection therewith, the holders of Common Stock receive as consideration, whether in whole or in part, for such Common Stock (1) cash, (2) notes, debentures or other evidences of indebtedness or obligations to pay cash or (3) preferred stock of the surviving entity (whether or not the surviving entity is the Corporation) which ranks on a parity with or senior to the preferred stock received by Holders of the Series B Preferred Stock with respect to liquidation or dividends or (y) the Holders of the Series B Preferred Stock do not receive preferred stock of the surviving entity with rights, powers and preferences equal to (or more favorable to the Holders than) the rights, powers and preferences of the Series B Preferred Stock; or

 

(iii)       the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, except where such sale, lease, transfer or other disposition is to a wholly-owned subsidiary of the Corporation.

 

“ Holder ” means a holder of shares of Series B Preferred Stock.

 

“ Junior Securities ” means , collectively, the Common Stock and any other class of securities hereafter authorized that is specifically designated as junior to the Series B Preferred Stock.

 

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“ Requisite Holders ” means Holders of a majority of the issued and outstanding shares of Series B Preferred Stock.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Series B Original Issue Price ” means $10.00 per share.

 

Section 2. Designation, Amount and Par Value . The series of preferred stock shall be designated Series B Non-Voting Convertible Preferred Stock, par value $0.01 per share (the “ Series B Preferred Stock ”), and the number of shares so designated shall be 11,696,993. Each share of Series B Preferred Stock shall have a stated value equal to the Series B Original Issue Price.

 

Section 3. Ranking . The Series B Preferred Stock will, with respect to rights to receive dividends and to participate in distributions or payments upon liquidation, dissolution or winding up of the Corporation, rank (a) senior to the Common Stock and any Junior Securities to the extent provided in this Amended and Restated Certificate of Designation, (b) junior to the Series A Preferred Stock, and (c) on parity with any class or series of capital stock of the Corporation expressly designated as ranking on parity with the Series B Preferred Stock as to dividend rights and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, other than the capital stock referred to in clause (a) (the “ Parity Securities ”).

 

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Section 4. Liquidation . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (a “ Liquidation Event ”) or Deemed Liquidation Event, then:

 

(a)       The Holders of the Series B Preferred Stock shall be entitled to be paid a liquidation preference out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Junior Securities by reason of their ownership thereof, but pari passu with the holders of shares of Parity Securities on a pro rata basis (as provided in this Section 4 above) in an amount per share equal to $0.01;

 

(b)       All shares of the Series B Preferred Stock shall be converted into shares of Common Stock automatically and without the action or consent of any other person at the Conversion Rate then applicable, such conversion to be effected in accordance with Section 7 of this Amended and Restated Certificate of Designation; and

 

(c)       The Corporation shall provide written notice of any Liquidation Event or Deemed Liquidation event promptly to each Holder, and not less than 5 days prior to the payment date stated therein.

 

Section 5.  Voting and Dividend Rights .

 

(a)       The Series B Preferred Stock will have no voting rights other than to approve the amendment to the Articles of Incorporation that change any of the terms and provisions of the Series B Preferred Stock in a manner that is adverse to the Holders of the Series B Preferred Stock, which approval may be effected by the Requisite Holders.

 

(b)       Except with respect to a business combination provided in Section 7(g) of this Amended and Restated Certificate of Designation, the Series B Preferred Stock will participate fully with respect to all distributions and dividends made to the holders of the Common Stock and each Holder of Series B Preferred Stock shall receive the same dividend or distribution as if such shares of Series B Preferred Stock were converted to shares of Common Stock in accordance with Section 7(g) of this Amended and Restated Certificate of Designation immediately prior to the applicable record date for such Common Stock dividend or distribution, and the record date for the shares of Series B Preferred Stock for any such dividend or distribution shall be the same as the applicable record date for the Common Stock.

 

Section 6.   Redeemed or Otherwise Acquired Shares . Any shares of Series B Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the Holders of Series B Preferred Stock following redemption.

 

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Section 7.    Conversion of the Series B Preferred Stock .

 

(a)        Conversion at Holder’s Option .

 

(i)       Holders, at their option, and subject to the provisions of Section 7(c), may, at any time and from time to time, convert some or all of their outstanding shares of Series B Preferred Stock into Common Stock at the then applicable Conversion Rate (such date of conversion, the “ Conversion Date ”). “ Conversion Rate ” means 24.4233:1 so that each share of Series B Preferred Stock will be converted into 24.4233 shares of Common Stock, subject to adjustment for any stock splits, stock combinations, recapitalizations or similar transactions, or as provided in this Amended and Restated Certificate of Designation.

 

(ii)       The Corporation shall not issue fractional shares of Common Stock upon the conversion of shares of Series B Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled upon such conversion, the Corporation shall round up to the next whole share .

 

(iii)        Holders’ Conversion Procedures .

 

(1)       Holders may convert some or all of their shares by surrendering to the Corporation at its principal office or at the office of its transfer agent, as may be designated by the Board of Directors, the certificate or certificates for the shares of Series B Preferred Stock to be converted, accompanied by a written notice stating that the Holder elects to convert all or a specified whole number of those shares in accordance with the provisions described in this Section 7(a)(iii) and specifying the name or names in which the Holder wishes the certificate or certificates for the shares of Common Stock to be issued. If the notice specifies a name or names other than the name of the Holder, the notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of Common Stock in that name or names. Other than such transfer taxes, the Corporation shall pay any documentary, stamp or similar issue or transfer taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series B Preferred Stock. The date on which the Corporation has received all of the surrendered certificate or certificates the notice relating to the conversion and payment of all required transfer taxes, if any, or the demonstration to the Corporation’s satisfaction that those taxes have been paid, shall be deemed the Conversion Date with respect to a share of Series B Preferred Stock. As promptly as practicable after the Conversion Date with respect to any shares of Series B Preferred Stock, the Corporation shall deliver or cause to be delivered (A) certificates representing the number of validly issued, fully paid and non-assessable shares of Common Stock to which the holders of shares of such Series B Preferred Stock, or the transferee of the holder of such shares of Series B Preferred Stock, shall be entitled and (B) if less than the full number of shares of Series B Preferred Stock represented by the surrendered certificate or certificates is being converted, a new certificate or certificates, of like tenor, for the number of shares represented by the surrendered certificate or certificates, less the number of shares being converted. This conversion shall be deemed to have been made at the close of business on the Conversion Date so that the rights of the Holder as to the shares being converted shall cease except for the right to receive the conversion value, and, if applicable, the Person entitled to receive shares of Common Stock shall be treated for all purposes as having become the record holder of those shares of Common Stock at that time on that date.

 

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(2)       In lieu of the foregoing procedures, if the Series B Preferred Stock is held in global certificate form, the Holder must comply with the procedures of the Depository Trust Corporation to convert its beneficial interest in respect of the Series B Preferred Stock represented by a global stock certificate of the Series B Preferred Stock.

 

(3)       If more than one share of Series B Preferred Stock is surrendered for conversion by the same holder at the same time, the number of whole shares of Common Stock issuable upon conversion of those shares of Series B Preferred Stock shall be computed on the basis of the total number of shares of Series B Preferred Stock so surrendered.

 

(b)       Automatic Conversion Event and Conversion .

 

(i)       All of the issued and outstanding shares of the Series B Preferred Stock shall be converted to shares of Common Stock at the Conversion Rate on October 2, 2019 or such earlier date as permitted by the Corporation is in its sole and absolute discretion; provided that no such conversion shall be permitted prior to the date that the Corporation files an amendment to its Amended and Restated Articles of Incorporation to increase its authorized shares of Common Stock (the “ Automatic Conversion Date ”).

 

(ii)       From and after the Automatic Conversion Date, the only rights of a Holder with respect to the Series B Preferred Stock shall be the right to receive the Common Stock as provided in this Amended and Restated Certificate of Designation, provided, that to the extent Section 7(b)(ii) of this Amended and Restated Certificate of Designation is applicable, then such Holder shall continue to have the rights to the Series B Preferred Stock to such extent.

 

(iii)      The Corporation shall not issue fractional shares of Common Stock upon the conversion of shares of Series B Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled upon such conversion, the Corporation shall round up to the next whole share .

 

(iv)       Holders’ Conversion Procedures .

 

(1)       The Corporation shall provide a notice of the Automatic Conversion Date promptly after such date.

 

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(2)       The conversion by a Holder of the shares of the Series B Preferred Stock to shares of Common Stock shall be effected by such Holder surrendering to the Corporation at its principal office or at the office of its transfer agent, as may be designated by the Board of Directors, the certificate or certificates for the shares of Series B Preferred Stock to be converted, accompanied by a duly signed stock power (together with such guarantees as may be required by the Corporation or its transfer agent) and specifying the name or names in which the Holder wishes the certificate or certificates for the shares of Common Stock to be issued. If the notice specifies a name or names other than the name of the Holder, the notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of Common Stock in that name or names. Other than such transfer taxes, the Corporation shall pay any documentary, stamp or similar issue or transfer taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series B Preferred Stock. As promptly as practicable after the receipt of such certificates and documents from a Holder of shares of the Series B Preferred Stock, the Corporation shall deliver or cause to be delivered certificates representing the number of validly issued, fully paid and non-assessable shares of Common Stock to which such Holder of shares of such Series B Preferred Stock, or the transferee of such Holder of such shares of Series B Preferred Stock, shall be entitled. This conversion shall be deemed to have been made at the close of business on the Automatic Conversion Date so that the rights of the Holder as to the shares being converted shall cease except for the right to receive the conversion value, and, if applicable, the person entitled to receive shares of Common Stock shall be treated for all purposes as having become the record holder of those shares of Common Stock at that time on that date.

 

(3)       In lieu of the foregoing procedures, if the Series B Preferred Stock is held in global certificate form, the Holder must comply with the procedures of the Depository Trust Corporation to convert its beneficial interest in respect of the Series B Preferred Stock represented by a global stock certificate of the Series B Preferred Stock.

 

(c)        Conversion Limitations . The Corporation shall not effect a conversion pursuant to Section 7(a) or Section 7(b) to the extent that the Corporation does not have sufficient authorized shares of Common Stock. The Corporation shall use its commercially reasonable efforts to file an amendment to its Amended and Restated Articles of Incorporation as promptly as possible to increase its authorized shares of Common Stock to reserve a sufficient number of shares in accordance with Section 7(a) and Section 7(d).

 

(d)        Reservation of Shares . Subject to the filing of an amendment to the Corporation’s Amended and Restated Articles of Incorporation in accordance with Section 7(c), the Corporation shall at all times reserve and keep available, free from preemptive rights out of the Corporation’s authorized but unissued shares of capital stock, for issuance upon the conversion of shares of Series B Preferred Stock, a number of the Corporation’s authorized but unissued shares of Common Stock that shall from time to time be sufficient to permit the conversion of all outstanding shares of Series B Preferred Stock.

 

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(e)        Compliance with Laws; Validity, etc., of Common Stock . Before the delivery of any securities upon conversion of shares of Series B Preferred Stock, the Corporation shall comply with all applicable federal and state laws and regulations. All shares of Common Stock delivered upon conversion of shares of Series B Preferred Stock shall, upon delivery, be duly and validly issued, fully paid and non-assessable, free of all liens and charges, not subject to any preemptive rights and without restriction (whether under Rule 144 or otherwise).

 

(f)         Payment of Dividends Upon Conversion .

 

(i)       If a Holder exercises its conversion rights, upon delivery of the shares of Series B Preferred Stock for conversion, those shares of Series B Preferred Stock shall cease to cumulate dividends as of the end of the Conversion Date or Automatic Conversion Date, and the Holder shall not receive any cash payment in an amount equal to accrued and unpaid dividends on the shares of Series B Preferred Stock, except in those limited circumstances discussed below in this Section 7(f). Except as provided below in this Section 7(f), the Corporation shall make no payment for accrued and unpaid dividends, whether or not in arrears, on shares of Series B Preferred Stock converted at the election of holders of such shares.

 

(ii)      If the Conversion Date or Automatic Conversion Date is before the close of business on a dividend record date, the Holder shall not be entitled to receive any portion of the dividend payable on such shares of converted stock on the corresponding dividend payment date.

 

(iii)     If the Conversion Date or Automatic Conversion Date is after the dividend record date but prior to the corresponding dividend payment date, the Holder on the dividend record date will receive on that dividend payment date accrued dividends on those shares of Series B Preferred Stock, notwithstanding the conversion of those shares of Series B Preferred Stock prior to that dividend payment date.

 

(g)        Effect of Business Combinations . In the case of the following events (each a “ business combination ”):

 

(i)       any recapitalization, reclassification or change of Common Stock (other than changes resulting from a subdivision or combination);

 

(ii)      a consolidation, merger or combination involving the Corporation;

 

(iii)     a sale, conveyance or lease to another corporation of all or substantially all of the Corporation’s property and assets (other than to one or more of the Corporation’s subsidiaries); or

 

(iv)     a statutory share exchange,

 

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in each case, as a result of which holders of Common Stock are entitled to receive stock, other securities, other property or assets (including cash or any combination thereof) with respect to or in exchange for Common Stock, the Conversion Rate shall on record date for the Common Stock with respect to such business combination (or if no record date, then on the closing date of such business combination) be adjusted so that a Holder shall be entitled thereafter to convert such shares of Series B Preferred Stock into the kind and amount of stock, other securities or other property or assets (including cash or any combination thereof) which the Holder would have owned or been entitled to receive upon such business combination as if such Holder held a number of shares of Common Stock equal to the Conversion Rate in effect on the effective date for such business combination, multiplied by the number of shares of Series B Preferred Stock held by such Holder. In the event that holders of Common Stock have the opportunity to elect the form of consideration to be received in such business combination, the Corporation shall make adequate provision whereby the Holders shall have a reasonable opportunity to determine the form of consideration into which all of the shares of Series B Preferred Stock, treated as a single class, shall be convertible from and after the effective date of such business combination. Such determination shall be based on the weighted average of elections made by the Holders who participate in such determination, shall be subject to any limitations to which all holders of Common Stock are subject, such as pro rata reductions applicable to any portion of the consideration payable in such business combination, and shall be conducted in such a manner as to be completed by the date which is the earliest of (1) the deadline for elections to be made by holders of Common Stock and (2) two business days prior to the anticipated effective date of the business combination.

 

The Corporation shall provide notice of the opportunity to determine the form of such consideration, as well as notice of the determination made by the Holders (and the weighted average of elections), by posting such notice with the Depository Trust Corporation and providing a copy of such notice to the Corporation’s transfer agent. If the effective date of a business combination is delayed beyond the initially anticipated effective date, the Holders shall be given the opportunity to make subsequent similar determinations in regard to such delayed effective date. The Corporation may not become a party to any such transaction unless its terms are consistent with the preceding. None of the foregoing provisions shall affect the right of a Holder to convert such Holder’s shares of Series B Preferred Stock into shares of Common Stock prior to the effective date of such business combination.

 

Section 8. Miscellaneous .

 

(a)        Notices . Any and all notices or other communications or deliveries to be provided by the Holders hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service or delivered by electronic mail, addressed to the Corporation, at the principal address of the Corporation or such other facsimile number, e-mail address or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 8. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service or delivered by electronic mail addressed to each Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address appears on the books of the Corporation, at the principal place of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (iii) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

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(b)        Absolute Obligation . Except as expressly provided herein, no provision of this Amended and Restated Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages and accrued dividends, as applicable, on the shares of Series B Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

 

(c)        Lost or Mutilated Series B Preferred Stock Certificate . If a Holder’s Series B Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series B Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

 

(d)        Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Amended and Restated Certificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflict of laws thereof.

 

(e)        Amendments; Waiver . This Amended and Restated Certificate of Designation may be amended or any provision of this Amended and Restated Certificate of Designation may be waived by the Corporation solely with the affirmative vote at a duly held meeting or written consent of the Requisite Holders; provided that any amendment that is not adverse to the rights of the Series B Preferred Stock may be amended with the approval of the Board of Directors of the Corporation unless such other approval is required under applicable law. Any waiver by the Corporation or a Holder of a breach of any provision of this Amended and Restated Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Amended and Restated Certificate of Designation or a waiver by any other Holders, except that a waiver by the Requisite Holders will constitute a waiver of all Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Amended and Restated Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Amended and Restated Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.

 

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(f)        Severability . If any provision of this Amended and Restated Certificate of Designation is invalid, illegal or unenforceable, the balance of this Amended and Restated Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

 

(g)        Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

(h)        Headings . The headings contained herein are for convenience only, do not constitute a part of this Amended and Restated Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.

 

(i)        Status of Converted or Redeemed Series B Preferred Stock . If any shares of Series B Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series B Preferred Stock.

 

10  

 

Exhibit 10.3

 

AMENDMENT NO. 2

TO STOCK PURCHASE AGREEMENT

 

This AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT (this “ Amendment ”) is made and entered into as of May 2, 2019, by and between FC Global Realty Incorporated, a Nevada corporation (“ Parent ”) and Gadsden Growth Properties, Inc., a Maryland corporation (“ Gadsden ”). FC Global and Gadsden are each, individually, referred to as a “ Party ” and, collectively, as the “ Parties .” Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to them in the Purchase Agreement (as defined below).

 

RECITALS

 

A.       On March 13, 2019, the Parties entered into a Stock Purchase Agreement, pursuant to which Parent agreed to acquire all of the Class A limited partnership interests of OPCO and all of the general partnership interests of OPCO in consideration for the issuance to Gadsden of the Parent Securities.

 

B.       On April 5, 2019, the Parties entered into Amendment No 1. to Stock Purchase Agreement to amend certain terms as stated therein (as amended, the “ Purchase Agreement ”).

 

C.       Pursuant to the Purchase Agreement, on April 5, 2019, Parent issued to Gadsden 430,306,645 shares of Parent Common Stock, 889,075 shares of Parent Series A Stock, 11,696,944 shares of Parent Series B Stock and 2,498,682 shares of Parent Series C Stock. Parent also agreed to issue 278,178,750 Holdback Shares to Gadsden on the Parent Charter Amendment Date.

 

D.       The Parties desire to amend the Purchase Agreement to (i) decrease the number of shares of Parent Common Stock issued at Closing to 118,623,985 shares and decrease the number of Holdback Shares to 110,477,220 shares, as the result of an error in the original calculation of shares of Parent Common Stock to be issued to Gadsden; (ii) provide for the issuance of the Holdback Shares on the Closing Date, rather than the Parent Charter Amendment Date; and (iii) provide for the issuance of certain of the shares of Parent Series B Stock and Parent Series C Stock to FHDC Group, LLC, a stockholder of Gadsden, in exchange for the equivalent number of shares of Gadsden held by it.

 

E.       Section 7.4 of the Purchase Agreement provides that the Purchase Agreement may be amended by a written instrument executed by the Parties. In accordance with Section 7.4, this Amendment amends the Purchase Agreement as hereinafter set forth.

 

AGREEMENT

 

In consideration of the foregoing recitals and the respective covenants, agreements, representations and warranties contained herein and in the Purchase Agreement, the Parties, intending to be legally bound, agree to amend and supplement the Agreement as follows:

 

1.             Amendment to Section 1.1 . Section 1.1 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:

 

 

 

 

(a)            Securities Issued . Upon the terms and subject to the conditions of this Agreement, at the Closing on the Closing Date or such other date as provided in this this Section 1.1(a), Parent shall issue the following securities (collectively, the “ Parent Securities ”):

 

(i)       to Gadsden, 229,101,205 shares of the common stock, par value 0.01 per share (“ Parent Common Stock ”), of which 110,477,220 shares of Parent Common Stock (the “ Holdback Shares ”) will be held by Gadsden in a segregated account (the “ Gadsden Specified Account ”), which shall be subject to release in accordance with Section 5.10, and 118,623,985 shares of Parent Common Stock will not be subject to such Gadsden Specified Account;

 

(ii)       to Gadsden, 889,075 shares Parent Series A Stock;

 

(iii)      to Gadsden, 6,264,993 shares of Parent Series B Stock;

 

(iv)      to Gadsden, 498,682 shares of Series C Stock;

 

(v)       to FHDC Group, LLC (“ FHDC ”), 5,432,000 shares of Parent Series B Stock, subject to the requirements of Section 1.1(c); and

 

(vi)      to FHDC, 2,000,000 shares of Parent Series C Stock (together with the 5,432,000 shares of Parent Series B Stock referred to above, the “ FHDC Shares ”), subject to the requirements of Section 1.1(c).

 

(b)           Status of Securities . When issued, each of the Parent Securities shall be delivered to Gadsden and duly authorized, validly issued, fully paid and nonassessable

 

(c)           Exchange of FHDC Shares . The issuance of the FHDC Shares is subject to (i) FHDC’s entry into a cancellation and exchange agreement with Parent and Gadsden (the “ Exchange Agreement ”), pursuant to which FHDC shall agree to cancel its equivalent number of Gadsden Series B Preferred Shares and Gadsden Series C Preferred Shares (the “ FHDC Gadsden Shares ”) in exchange for the FHDC Shares and (ii) the surrender of all certificates representing the FHDC Gadsden Shares to Gadsden for cancellation.

 

2.             Cancellation of Shares . In order to effect the foregoing amendments, Parent and Gadsden shall cooperate to, as soon as practicable, cancel 201,205,440 shares of Parent Common Stock issued to Gadsden and, upon execution of the Exchange Agreement and surrender of the FHDC Gadsden Shares to Gadsden, cancel 5,432,000 shares of Parent Series B Stock and 2,000,000 shares of Parent Series C Stock issued to Gadsden and issue such shares to FHDC.

 

3.             Effect of Amendment . Except as amended by this Amendment, the Purchase Agreement shall remain in full force and effect. In addition, if there are any inconsistencies between the Purchase Agreement and this Amendment, the terms of this Amendment shall prevail and control for all purposes.

 

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4.             Governing Law . This Amendment shall be construed in accordance with and governed by the Laws of the State of Maryland without giving effect to the principles of conflict of laws.

 

5.             Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original regardless of the date of its execution and delivery. All such counterparts together shall constitute one and the same instrument.

 

[ Signatures Follow ]

 

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

 

  FC GLOBAL REALTY INCORPORATED  
       
  By: /s/ John Hartman  
  Name: John Hartman  
  Title: Chief Executive Officer  
       
  GADSDEN GROWTH PROPERTIES, INC.  
       
  By: /s/ John Hartman  
  Name: John Hartman  
  Title: Chief Executive Officer  

 

 

 

Exhibit 10.4  

 

CANCELLATION AND EXCHANGE AGREEMENT

 

THIS CANCELLATION AND EXCHANGE AGREEMENT (this “ Agreement ”), is entered into effective as of May 2, 2019, among Gadsden Growth Properties, Inc., a Maryland corporation (“ Gadsden ”), FC Global Realty Incorporated, a Nevada corporation (“ FC Global ”), and FHDC Group, LLC (the “ Stockholder ”).

 

RECITALS

 

A.           On January 31, 2019, Gadsden issued to the Stockholder (i) 5,432,000 shares of its Series B Non-Voting Convertible Preferred Stock (the “ Series B Shares ”) and (ii) 2,000,000 shares of its 10% Series C Cumulative Convertible Preferred Stock (the “ Series C Shares ” and together with the Series B Shares, the “ Gadsden Shares ”).

 

B.            On March 13, 2019, FC Global entered into a Stock Purchase Agreement with Gadsden, pursuant to which Gadsden agreed to transfer and assign to FC Global all of its general partnership interests and Class A limited partnership interests in Gadsden Growth Properties, L.P. in exchange for shares of FC Global’s common stock, 7% Series A Cumulative Convertible Perpetual Preferred Stock, Series B Non-Voting Convertible Preferred Stock (the “ FC Global Series B Stock ”) and 10% Series C Cumulative Convertible Preferred Stock (the “ FC Global Series C Stock ”). The parties amended the Stock Purchase Agreement on April 5, 2019 and closing occurred on such date.

 

C.            On May 2, 2019, the parties entered into Amendment No. 2 to Stock Purchase Agreement (as amended, the “ Purchase Agreement ”) to, among other things, provide that 5,432,000 shares of FC Global Series B Stock and 2,000,000 shares of FC Global Series C Stock (collectively, the “ FC Global Shares ”) shall be issued the Stockholder instead of Gadsden, subject to the Stockholder entering into this Agreement.

 

D.            The Stockholder has agreed to cancel the Gadsden Shares concurrently with and subject to FC Global issuing the FC Global Shares to the Stockholder.

 

AGREEMENT

 

NOW THEREFORE , in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned do hereby agree as follows:

 

1.              Cancellation of Gadsden Shares . The Stockholder hereby agrees to surrender the Gadsden Shares to Gadsden free and clear of all claims, charges, liens, contracts, rights, options, security interests, mortgages, encumbrances and restrictions of every kind and nature, in each case, to the extent incurred by the Stockholder or any of its assignees (collectively, “ Claims ”) for cancellation concurrently with, and against delivery of, the issuance of the FC Global Shares pursuant to Section 2 hereof (it being acknowledged that any rights of Gadsden to or with respect to any of the Gadsden Shares other than under this Agreement, shall not be a “Claim”). After such cancellation and receipt of the FC Global Shares by the Stockholder or its assignees, the Stockholder acknowledges and agrees that all such Gadsden Shares shall no longer be outstanding, and the Stockholder shall have no further rights with respect to the Gadsden Shares or the equity ownership in Gadsden represented thereby. At the request of Gadsden and without further consideration, the Stockholder will execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as may be reasonably requested in order to effectively transfer, convey and assign the Gadsden Shares to Gadsden for cancellation.

 

 

 

 

2.              Issuance of FC Global Shares . On the date hereof, FC Global issue the FC Global Shares to the Stockholder. The Stockholder acknowledges that the FC Global Shares constitute restricted shares and will contain a customary legend referring to transfer restrictions under the Securities Act of 1933, as amended (the “ Securities Act ”). FC Global represents and warrants to the Stockholder that, upon issuance of the FC Global Shares in accordance with this Agreement, the FC Global Shares will be duly issued, fully paid and nonassessable.

 

3.             Representations and Warranties of the Stockholder . The Stockholder represents and warrants to Gadsden and FC Global as follows.

 

(a)              The Stockholder is a limited liability company that is validly existing and in good standing under the laws of its jurisdiction of organization. The Stockholder has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by the Stockholder of this Agreement and the consummation by the Stockholder of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Stockholder and no other action is necessary on the part of the Stockholder to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Stockholder and, assuming the due authorization, execution and delivery by Gadsden and FC Global, constitutes a legal, valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms, except as limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws relating to creditors’ rights generally and (ii) general principles of equity, whether such enforceability is considered in a proceeding in equity or at law.

 

(b)             The Stockholder owns the Gadsden Shares beneficially and of record, free and clear of all Claims other than Claims in favor of Gadsden or any assignee of Gadsden under this Agreement or otherwise. The Stockholder has never transferred or agreed to transfer the Gadsden Shares, other than pursuant to this Agreement. There is no restriction affecting the ability of the Stockholder to transfer the legal and beneficial title and ownership of the Gadsden Shares to Gadsden for cancellation other than restrictions, if any, in favor of Gadsden or any assignee of Gadsden.

 

(c)             Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which the Stockholder is a party or by which it is bound or to which any of its assets is subject.

 

(d)             The execution and delivery of this Agreement by the Stockholder does not, and the performance of this Agreement by the Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity.

 

(e)               The Stockholder acknowledges that it is a sophisticated individual familiar with transactions similar to those contemplated by this Agreement and is aware of FC Global’s business, affairs and financial condition and has received all the information that it considers material, necessary or appropriate in determining whether to exchange the Gadsden Shares for the FC Global Shares (the “ Exchange ”) and further acknowledges that such information is sufficient to allow the Stockholder to reach an informed decision to complete the Exchange. The Stockholder hereby represents that it has had an opportunity to ask questions and receive answers from FC Global and its employees regarding the business, properties, prospects and financial condition of FC Global, including, without limitation, any strategic transaction, public securities offering, private financing transaction (whether equity or debt), merger, consolidation, recapitalization, reclassification, reorganization, change of control transaction, sale of assets or securities, liquidation or similar transaction which have been, are being or may be contemplated by FC Global. The Stockholder acknowledges that neither Gadsden, FC Global, nor any of their respective affiliates is acting as a fiduciary or financial or investment adviser to the Stockholder for purposes of the Exchange, and has not given the Stockholder any investment advice, opinion or other information on whether the Exchange is prudent.

 

 

 

 

(f)               The Stockholder is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act.

 

(g)              At no time was the Stockholder presented with or solicited by any publicly issued or circulated form of general advertising or solicitation in connection with the Exchange.

 

(h)              The Gadsden Shares have been authorized and outstanding for at least ninety (90) days prior to the date hereof.

 

(i)               Neither the Stockholder nor any person that has been or will be paid (directly or indirectly) remuneration or a commission for their participation in the Exchange, is subject to an event that would disqualify an issuer or other covered person under Rule 506(d)(1) of Regulation D (17 CFR 230.506(d)(1)) or is subject to a statutory disqualification under section 3(a)(39) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

 

(j)                The transactions contemplated by this Agreement are not with respect to a security that constitutes the whole or part of an unsold allotment to, or a subscription or participation by, a broker or dealer as an underwriter of the security or a redistribution.

 

(k)              Neither the Stockholder, nor any person acting on the Stockholder’s behalf, offered or sold the Gadsden Shares by any form of general solicitation or advertising.

 

(l)                The Stockholder is acquiring the FC Global Shares for its own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act in violation of securities laws. The Stockholder has no present intention of selling or otherwise disposing of all or any portion of the FC Global Shares.

 

(m)             The Stockholder understands that the FC Global Shares are characterized as “restricted securities” under the federal securities laws and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act, only in certain limited circumstances. It understands that the FC Global Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In this connection, the Stockholder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. In addition, it understands that the certificates evidencing the FC Global Shares, if any, will be imprinted with a legend which prohibits the transfer of the FC Global Shares unless they are registered or such registration is not required in an opinion of counsel reasonably acceptable to FC Global.

 

(n)              By reason of its business or financial experience, the Stockholder is capable of evaluating the merits and risks of the Exchange, has the ability to protect the Stockholder’s own interests in this transaction and is financially capable of bearing a total loss of the FC Global Shares.

 

(o)             The Stockholder acknowledges that FC Global is a public reporting company subject to Section 13 of the Exchange Act and the Stockholder has reviewed the reports and other documents filed by FC Global with the Securities and Exchange Commission.

 

 

 

 

(p)             The Stockholder acknowledges that FC Global is engaged in business, is not in the organizational stage or in bankruptcy or receivership, is not a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business, with or an acquisition of, an unidentified person.

 

4.             Representations and Warranties of FC Global . FC Global represents and warrants to the Stockholder and Gadsden and as follows.

 

(a)             FC Global is a corporation that is validly existing and in good standing under the laws of its state of Nevada. FC Global has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by FC Global of this Agreement and the consummation by FC Global of the transactions contemplated hereby have been duly authorized by all necessary action on the part of FC Global and no other action is necessary on the part of FC Global to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by FC Global and, assuming the due authorization, execution and delivery by the Stockholder and Gadsden, constitutes a legal, valid and binding obligation of FC Global, enforceable against FC Global in accordance with its terms, except as limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws relating to creditors’ rights generally and (ii) general principles of equity, whether such enforceability is considered in a proceeding in equity or at law.

 

(b)             Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which FC Global is a party or by which it is bound or to which any of its assets is subject.

 

(c)             The execution and delivery of this Agreement by FC Global does not, and the performance of this Agreement by FC Global will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity.

 

(d)             FC Global is a public reporting company subject to Section 13 of the Exchange Act.

 

5.             Representations and Warranties of Gadsden . Gadsden represents and warrants to the Stockholder and FC Global and as follows.

 

(a)             Gadsden is a corporation that is validly existing and in good standing under the laws of its state of Maryland. Gadsden has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by Gadsden of this Agreement and the consummation by Gadsden of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Gadsden and no other action is necessary on the part of Gadsden to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Gadsden and, assuming the due authorization, execution and delivery by the Stockholder and FC Global, constitutes a legal, valid and binding obligation of Gadsden, enforceable against Gadsden in accordance with its terms, except as limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws relating to creditors’ rights generally and (ii) general principles of equity, whether such enforceability is considered in a proceeding in equity or at law.

 

 

 

 

(b)             Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which Gadsden is a party or by which it is bound or to which any of its assets is subject.

 

(c)             The execution and delivery of this Agreement by Gadsden does not, and the performance of this Agreement by Gadsden will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity.

 

6.             Miscellaneous .

 

(a)             This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

(b)             No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by Gadsden, FC Global and the Stockholder, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. (c)                 

 

(d)             The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. (e)                 

 

(f)              This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

(g)             This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Maryland without regard to the principles of the conflict of laws of Maryland.

 

(h)             This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

 

 

 

(i)              If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF , the parties hereto have caused this Cancellation and Exchange Agreement to be executed as of the date first above written.

 

  GADSDEN GROWTH PROPERTIES, INC.
     
  By: /s/ John Hartman
  Name: John Hartman
  Title: Chief Executive Officer
     
  FC GLOBAL REALTY INCORPORATED
     
  By: /s/ John Hartman
  Name: John Hartman
  Title: Chief Executive Officer
     
  FHDC GROUP, LLC
     
  By: /s/ Jae Ryu
  Name:
  Title: