Exhibit 10.4

 

CANCELLATION AND EXCHANGE AGREEMENT

 

THIS CANCELLATION AND EXCHANGE AGREEMENT (this “Agreement”), is entered into
effective as of May 15, 2019, among Gadsden Growth Properties, Inc., a Maryland
corporation (“Gadsden”), FC Global Realty Incorporated, a Nevada corporation
(“FC Global”), and the stockholders of Gadsden identified on Schedule A to this
Agreement (each a “Stockholder” and, collectively the “Stockholders”).

 

RECITALS

 

A.           Gadsden previously issued to the Stockholders the type, series and
number of shares of Gadsden capital stock identified on Schedule A (“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 the capital stock of FC Global (the “FC Global Shares”).

 

D.           At the request of Gadsden, FC Global desires to issue to each of
the Stockholders the number of shares of FC Global Common Stock (the “New FC
Global Shares”) set forth opposite such Stockholder’s name on Schedule A in
consideration for (i) the cancellation by each such Stockholder of the Gadsden
Shares identified as being cancelled by each such Stockholder on Schedule A and
(ii) the cancellation by Gadsden of the type, series and number of FC Global
Shares identified as being cancelled by Gadsden on Schedule A.

 

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. Each Stockholder hereby agrees to
surrender the Gadsden Shares set forth opposite such Stockholder’s name on
Schedule A 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 each such
Stockholder or any of its assignees (collectively, “Claims”) for cancellation
concurrently with, and against delivery of, the issuance of the number of New FC
Global Shares set forth opposite each such Stockholders name on Schedule A (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 New FC Global Shares by each Stockholder or
its assignees, each Stockholder acknowledges and agrees that all such Gadsden
Shares shall no longer be outstanding, and no Stockholder shall have any 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, each 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.             Cancellation of FC Global Shares. Gadsden hereby agrees to
surrender the type, series and number of FC Global Shares set forth opposite
Gadsden’s name on Schedule A to FC Global 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 each such Stockholder or any of its assignees (collectively, “Claims”) for
cancellation concurrently with, and against delivery of, the issuance of the New
FC Global Shares to the Stockholders as provided for in Section 1 of this
Agreement (it being acknowledged that any rights of FC Global to or with respect
to any of the FC Global Shares other than under this Agreement, shall not be a
“Claim”). After such cancellation and receipt by the Stockholders of the New FC
Global Shares as provided for in Section 1 of this Agreement, Gadsden
acknowledges and agrees that all such FC Global Shares identified on Schedule A
as being cancelled shall no longer be outstanding, and Gadsden shall not have
any further rights with respect such FC Global Shares or the equity ownership in
FC Global represented thereby. At the request of FC Global and without further
consideration, Gadsden 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 FC Global Shares
identified on Schedule A as being cancelled to Gadsden for cancellation.

 

 

 

 

3.             Issuance of New FC Global Shares. As soon as practicable
following the date hereof, FC Global shall issue to the Stockholders the number
of New FC Global Shares set forth opposite each Stockholder’s name on Schedule
A. Each Stockholder acknowledges that the New 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 Stockholders that, upon issuance
of the New FC Global Shares in accordance with this Agreement, the New FC Global
Shares will be duly issued, fully paid and nonassessable.

 

4.            Representations and Warranties of each of the Stockholders. Each
of the Stockholders represents and warrants to Gadsden and FC Global as follows.

 

(a)       Such Stockholder is a limited liability company, limited partnership
or corporation, as applicable, that is validly existing and in good standing
under the laws of its jurisdiction of organization. Such 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 such Stockholder of
this Agreement and the consummation by such Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of such Stockholder and no other action is necessary on the part of such
Stockholder to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by such
Stockholder and, assuming the due authorization, execution and delivery by
Gadsden and FC Global, constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such 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)       Such Stockholder owns the type, series and number of Gadsden Shares
set forth opposite such Stockholder’s name on Schedule A 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. Such Stockholder has
never transferred or agreed to transfer its Gadsden Shares, other than pursuant
to this Agreement. There is no restriction affecting the ability of such
Stockholder to transfer the legal and beneficial title and ownership of such
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 such Stockholder is a party or by which it is bound
or to which any of its assets is subject.

 

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

 

(e)       Such 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 its Gadsden Shares for the New FC
Global Shares (the “Exchange”) and further acknowledges that such information is
sufficient to allow such Stockholder to reach an informed decision to complete
the Exchange. Such 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. Such
Stockholder acknowledges that neither Gadsden, FC Global, nor any of their
respective affiliates is acting as a fiduciary or financial or investment
adviser to such Stockholder for purposes of the Exchange, and has not given such
Stockholder any investment advice, opinion or other information on whether the
Exchange is prudent.

 

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

 

(g)       At no time was such 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 held bus such Stockholder have been authorized and
outstanding for at least ninety (90) days prior to the date hereof.

 

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

 

(l)        Such Stockholder is acquiring the New 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. Such Stockholder has no present intention
of selling or otherwise disposing of all or any portion of the New FC Global
Shares.

 

(m)       Such Stockholder understands that the New 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 New 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, such
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
New FC Global Shares, if any, will be imprinted with a legend which prohibits
the transfer of the New FC Global Shares unless they are registered or such
registration is not required in an opinion of counsel reasonably acceptable to
New FC Global.

 

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(n)       By reason of its business or financial experience, such 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 New FC Global Shares.

 

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

 

(p)       Such 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.

 

5.            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.

 

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6.            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.

 

7.             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 Stockholders, 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.

 

(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.

 

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(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]

 

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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
        STOCKHOLDER:      

First Capital Master Advisor LLC

  Print Name Above         /s/ Suneet Singal   Sign Above

 

  IF Holder is an Entity, specify name and title below:         Name: Suneet
Singal         Title: Managing Member 

 

 

 

 

Exhibit A

 

Name of Stockholder Type of Gadsden Shares to be Cancelled Number of Gadsden
Shares to be Cancelled Number of New FC Global Shares to be Received First
Capital Master Advisor, LLC Series B Preferred 3,166,828 77,344,391 (common)
Name Type of FC Global Shares to be Cancelled

Number of FC Global Shares to be Cancelled

 

Gadsden Growth Properties, Inc. Preferred Series B  3,168,828            

Authorized By: Suneet Singal

 

/s/ Suneet Singal   Date: May 16, 2019

 

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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
        STOCKHOLDER:        

First Capital Real Estate Operating Partnership, LP

  Print Name Above         /s/ Suneet Singal   Sign Above

 

  IF Holder is an Entity, specify name and title below:         Name: Suneet
Singal         Title: CEO 

 

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Exhibit A

 

Name of Stockholder Type of Gadsden Shares to be Cancelled Number of Gadsden
Shares to be Cancelled Number of New FC Global Shares to be Received First
Capital Real Estate Operating Partnership, LP Series B Preferred  98,166
 2,397,514 (common) Name Type of FC Global Shares to be Cancelled

Number of FC Global Shares to be Cancelled

 

Gadsden Growth Properties, Inc. Preferred Series B  98,165            

Authorized By: Suneet Singal

 

/s/ Suneet Singal   Date: May 16, 2019

 

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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
        STOCKHOLDER:        

SRS, LLC

  Print Name Above         /s/ Suneet Singal   Sign Above

 

  IF Holder is an Entity, specify name and title below:         Name: Suneet
Singal         Title: Managing Member

 

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Exhibit A

 

Name of Stockholder Type of Gadsden Shares to be Cancelled Number of Gadsden
Shares to be Cancelled Number of New FC Global Shares to be Received SRS, LLC
Common  481,004 11,747,705 (common) Name Type of FC Global Shares to be
Cancelled

Number of FC Global Shares to be Cancelled

 

Gadsden Growth Properties, Inc. Common 11,747,705            

Authorized By: Suneet Singal

 

/s/ Suneet Singal   Date: May 16, 2019

 

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