GLOBAL TECH INDUSTRIES GROUP, INC.

LETTER OF INTENT

 

April 12, 2019

 

Mr. Suneet Singal

First Capital Master Advisor LLC

90 Broad Street, 2nd Floor

New York, NY 10004

 

Via email: s@firstcapitalre.com

 

Dear Suneet:

 

This Letter of Intent (“Letter of Intent”) is made by and between Global Tech
Industries Group, Inc. (“GTII”), a publicly traded Nevada corporation and First
Capital Master Advisor, LLC (“FCMA”), a Delaware limited liability company, and
is to describe, confirm and bind the parties hereto to the principle terms and
conditions under which GCA Equity Partners and/or its affiliates which may
include one or more special purpose vehicle entities holding various real estate
assets , (collectively, “Seller”), shall contribute and/or sell certain real
estate assets to GTII (or one of its wholly owned subsidiaries), as set forth in
the terms and conditions detailed in Exhibits A & B hereto (the “Transaction”).
The Transaction is subject and conditioned upon the terms and conditions of this
Letter of Intent, including the execution of mutually acceptable definitive
agreements governing the Transaction (the “Definitive Agreements”),in
substantially the same form as the Master Agreement Regarding the Contribution
of the Real Property Interests dated April 7, 2019, receipt of which is hereby
acknowledged by GTII and FCMA and subject to such other customary documentation
as may be required for the Transaction contemplated herein.

 

The parties intend this Letter of Intent to be binding and enforceable, and that
it will inure to the benefit of the parties and their respective successors and
assigns. It represents a legally binding commitment on the part of the parties
with respect to the Transaction, except in the event that certain conditions of
the Transaction are not timely performed or there is a breach of this Letter of
Intent by any of the parties hereto, or at the election of a party hereto as
more fully described in Exhibit A (the “Termination Provisions”). Until such
time as it is either replaced by the Definitive Agreements or a Termination
Provision is asserted and exercised, this Letter of Intent shall be in full
force and effect.

 

This Letter of Intent may be executed in any number of counterparts and any
party hereto may execute any such counterpart, each of which when executed and
delivered will be deemed to be an original and all of which counterparts taken
together will constitute but one and the same instrument.

 

Any disputes arising from or related to the Letter of Intent or the Termination
Provisions will be governed by and construed under and in accordance with the
laws of the State of New York and submitted to binding arbitration with the
American Arbitration Association, Metro New York following good faith efforts to
mediate any such disputes.

 

1

 

 

EXHIBIT A

 

SUMMARY OF THE TERMS OF THE TRANSACTION:

 

Surviving Company: GTII

Place of Incorporation: Nevada

Stock Exchange: OTC Pink Fully Reporting

Primary Shares Outstanding: Approximately 215,000,000 shares of Common Stock
issued at par value $0.001 per share, and outstanding as of the date hereof

Authorized Common Stock: 350,000,000 shares authorized

Authorized Preferred Stock: Preferred Stock, par value $.001, 50,000 authorized,
1,000 issued

Stock Options: None

Warrants: None

ESOP Deferred: None

 

TRANSACTION:

 

Subject to legal, tax and accounting structuring to be determined in good faith
and in the respective parties mutual best interests, Seller will contribute
and/or sell certain real estate assets listed on Exhibit B, or the outstanding
equity of special purpose vehicles that own the assets (collectively, the
“Assets”), to GTII or a wholly owned seasoned subsidiary of GTII. The
Transaction will result in a reverse merger and a change of control of GTII. The
name and ticker symbol of GTII may be changed at the election of Seller upon the
signing of the Definitive Agreements and the closing (the “Closing”) of the
Transaction, to a name and symbol to-be-determined by Seller. Post Transaction
GTII, following the Closing, is referred to herein as the “Pro Forma Company”.
At the election of Seller, as of or following the Closing, the Pro Forma Company
intends to remain incorporated under the laws of the state of Nevada.

 

NEW CLASSES OF GTII PREFERRED STOCK, REAUTHORIZATION OF SHARES:

 

Within ten (10) business days of execution of this Letter of Intent, or as soon
thereafter as may be practicable, GTII shall create and designate two (2) new
classes of Preferred Stock:

 

(1) Series B: GTII shall authorize the issuance of a series of Preferred Stock
consisting of One Thousand (1,000) shares, without par value, to be designated
Series B Convertible Preferred Stock (“Series B”). GTII may not issue more than
or increase the authorized shares of Series B beyond 1,000 shares. Each share of
Series B shall be convertible by its holder into a specific number of GTII
Common Stock shares (“New GTII Common”) equal to a market value of $270,000
calculated under the VWAP formula as more fully described herein. The Series B
will automatically convert into New GTII Common of the Pro Forma Company upon
the anticipated reverse split of GTII Common Stock (“Stock Split”), as more
fully described herein, being declared effective by FINRA (“Effective Date”). In
the event of any unforeseen instance whereby the Stock Split does not occur the
parties may determine another conversion trigger consistent with the terms of
this binding Letter of Intent. The Series B and the New GTII Common into which
it is converted shall have full voting rights.

 

(2) Series C: GTII shall authorize the issuance of a series of Preferred Stock
consisting of Twelve Thousand Five Hundred (12,500) shares, without par value,
to be designated Series C Convertible Preferred Stock (“Series C”). GTII may not
issue more than or increase the number of authorized shares of Series C beyond
12,500 shares. Each share of Series C shall be convertible by its holder into a
specific number of New GTII Common equal to a market value of $1,000 calculated
under the VWAP formula as more fully described herein. The Series C is
convertible into New GTII Common of the Pro Forma Company at the election of any
holder after issuance up to an outside date of six (6) months after the Closing
of the Transaction after which it automatically will convert into New GTII
Common. The Series C shall not have any voting rights, but the GTII New Common
into which it is converted shall have voting rights.

 

2

 

 

Prior to Closing GTII shall amend its Articles of Incorporation to increase its
authorized stock to a number of shares sufficient to pay the Consideration of
the Transaction contemplated herein.

 

CONSIDERATION AND PRO FORMA:

 

Sellers Equity:

 

The Seller’s Assets are described on Exhibit B attached hereto and made part of
this Letter of Intent, or will be identified in writing for inclusion in the
Assets prior to the Closing of the Transaction. The Assets being contributed to
GTII have or will have at the Closing of the Transaction an aggregate residual
value of approximately $450 million. As consideration for the Assets, GTII shall
issue to Seller or its designees One Billion Eight Hundred Million
(1,800,000,000) shares of GTII pre Stock Split pre Closing Common Stock (“Seller
GTII Common Stock”). In addition to the Seller GTII Common Stock, Seller shall
receive all of the Series B stock. The aggregate Transaction is valued at
approximately $465 million based on the equity value of the Assets (the “FC
Asset Value”) and Seller will, at Closing, assign approximately $65 million of
debt encumbering the Assets to the Pro Forma Company (see Exhibit B for
corresponding estimated values related to those Assets that are identified for
the Transaction to date). Seller shall reserve the right to add or subtract
particular Assets to be contributed to GTII prior to the execution of the
Definitive Agreements, and the FC Asset Value, the resulting equity and the
percentage splits will be adjusted accordingly based on the recognized equity
value of the final contributed Assets. As a result, Seller will receive a number
of shares of GTII Common stock and Series B shares convertible into new GTII
Common Stock equal to the FC Asset Value which should be approximately 91% of
the post-Closing issued and outstanding GTII Common Stock (“Pro Forma GTII
Common Stock”) on a fully-diluted basis, with the number of shares of Seller’s
Series B conversions being calculated and derived from a price equal to the
10-day volume-weighted average price of the GTII Common Stock (as per Bloomberg)
(the “VWAP Price”) for the 10 trading days immediately preceding the Effective
Date of the conversion (“Seller’s Equity”).

 

The Pro Forma GTII Common Stock shall be duly authorized, validly issued,
non-assessable, and free from all liens, taxes and charges. The Pro Forma
Company shall have a sufficient number of authorized shares both pre and post
Stock Split reserved to fulfill the issuances contemplated by the Transaction.
The Pro Forma GTII Common Stock issued to Seller shall be issued with its
transferability subject to Rule 144 of the Securities Act of 1933, as amended,
and subject to customary restrictions. The Pro Forma Company may elect to
register all or some of the Pro Forma GTII Common Stock or Series B or Series C
Stock and the new GTII Common Stock into which they are convertible (i.e.,
registered with the SEC on Form S-4, and/or registered with the SEC on Form
S-3), and/or enable their re-sale as Rule 144 SEC eligible shares through a
public resale of restricted or control securities so as to facilitate the
distribution of such equity to Seller and Seller affiliates. Pro Forma Company
shall grant to GTII and any of its shareholders or designees piggyback
registration rights on a pro rata basis with Seller shareholders.

 

GTII Shareholders and Affiliates Equity:

 

At the Closing Date of the Transaction, as more fully described herein, GTII
will have issued up to a maximum of 350,000,000 pre-split Common Stock, to
affiliates, advisors, shareholders, officers, board members, consultants and
other designees at its sole discretion. In addition, GTII shall issue, at the
Closing, all of the Series C to affiliates, vendors, debt holders, advisors,
consultants, service providers and other designees convertible into new GTII
Common Stock of the Pro Forma Company. The aggregate GTII Equity (“GTII Equity”)
shall be comprised of all pre-Closing outstanding and issued GTII Common Stock,
excluding only Seller GTII Common Stock, and all Series C. Any issued Series C
and GTII Common Stock shall be restricted under Rule 144 subject to registration
more fully described herein.

 

3

 

 

As a result of the issuance of the Seller Equity, at Closing, the aggregate of
the GTII Equity and prior issuance of GTII Common Stock shall equal in the
aggregate to 9% of the Pro Forma GTII Common Stock on a fully-diluted basis,
with the number of shares of GTII’s Series C conversions being calculated and
derived from the 10-day volume-weighted average price of the GTII Common Stock
(as per Bloomberg) (the “VWAP Price”) for the 10 trading days immediately
preceding the date of the conversion. The resulting equity value to be retained
as the GTII Equity at Closing, would approximate $47.5 million of the Pro Forma
Company.

 

For the sake of clarity, fully diluted shares shall include, if any, earn-in
shares, escrowed shares, warrants, options, restricted stock units,
equity-linked and/or convertible securities in connection with the Transaction.

Notwithstanding any provision contained herein to the contrary and for the
avoidance of doubt, any transfer, assignment, sale to conveyance of the GTII
Assets shall not relieve, limit, excuse, waive, release and/or terminate the
obligations of GTII under this Letter of Intent and the Definitive Agreement(s).

 

GTII PRE-MERGER ASSETS AND LIABILITIES:

 

GTII Assets:

 

On or before the Closing Date, GTII, including its subsidiaries, shall convey
and transfer all of its assets (“GTII Assets”) to a designee of its sole
choosing. The GTII Assets shall include but not be limited to cash and
securities, intellectual property, contracts, accounts receivable, claims,
trademarks, domain names, goodwill and other tangible and intangible assets
including all those disclosed in GTII’s consolidated financial statements. GTII
Assets shall expressly exclude GTII’s name and symbol. GTII’s recipient of the
GTII Assets shall indemnify and hold harmless the Pro Forma Company from and
against any liabilities connected with the GTII Assets.

 

GTII Liabilities:

 

As of the date of this Letter of Intent first above written, GTII will have
approximately $5.5 million of debt and miscellaneous liabilities (“GTII Debt”).
A non-affiliate (“Agent”) of GTII shall be retained and capitalized with Series
C to resolve, settle and pay the GTII Debt. The Agent shall endeavor to resolve
all of the GTII Debt by the Closing Date or by another outside date mutually
agreed to by the parties (“Outside Debt Date”). In the event that the Agent is
unable to fully resolve the GTII Debt and obtain releases by the Outside Debt
Date, and the Pro Forma Company assumes any remaining GTII Debt, GTII or its
Agent shall return a number of Series C shares to the Pro Forma Company treasury
equal to the value of any remaining and unresolved GTII Debt.

 

STOCK SPLIT AND UPLISTING:

 

The parties hereto intend to reverse split the Pro Forma Company’s issued and
outstanding (and possibly authorized, in its discretion) common stock. As soon
as appropriate following the Closing Date, but in no event later than 30 days
after the Closing Date, the Pro Forma Company shall file a corporate action with
FINRA to change its name, trading symbol and reverse split its common stock. The
ratio of the stock split shall be determined by the parties with the goal of
achieving an approximate post-split market share price of $10 per share.

 

4

 

 

As soon as appropriate after the Closing Date but in no event later than 30 days
after the Closing Date, the Pro Forma Company shall apply to be up listed on the
NYSE Exchange, NYSE American Exchange, the NASDAQ Capital Market, or the OTCQB
Market.

 

CLOSING DATE:

 

The parties shall endeavor to draft the Definitive Agreements and complete due
diligence in an expeditious fashion. The Closing Date will be on a day mutually
determined by the parties in which all of the requirements necessary for this
Transaction have been completed and the parties sign the Definitive Agreements
(“Closing Date”). In no event, however, shall the Closing Date be later than May
15, 2019 unless extended by mutual agreement of the parties, or in order to
complete necessary compliance with all applicable regulatory requirements.

 

TERMINATION PROVISIONS AND BREAK-UP FEE:

 

This Letter of Intent is intended to legally bind the parties. It may, however,
be terminated by either party upon 30 days prior written notice to the other
party, if the parties mutually agree to terminate, if either party becomes aware
that the other party has materially breached any representations or covenants in
this Agreement, or is unwilling or unable to provide or fulfill any of the
conditions to Closing, more fully described herein (“Termination for Cause”).
However, if any party terminates this Letter of Intent in bad faith, other than
as “Termination for Cause” the terminating party shall be subject to the
obligation to pay a $2,000,000 break-up fee (“Breakup Fee”) to the
non-terminating party unless the terminating party rescinds such termination
within 5 business days following written demand therefore by the non-terminating
party or within 5 business days following the effective date for the notice of
termination. Either party may pay the Breakup Fee through the issuance of its
common or preferred stock with an equivalent market value.

 

EXCLUSIVITY:

 

GTII and the Seller agree that during the period beginning on the date of mutual
execution of this Letter of Intent until the later of April 30, 2019 or the
Closing Date (with such date being subject to a mutually agreed upon execution
timetable for the Definitive Agreements (the “Exclusivity Period”), GTII and
Seller and/or their affiliates or representatives will not, directly or
indirectly, solicit from any third party any offers competitive with this Letter
of Intent. GTII may, prior to the Closing, issue shares of its Common Stock for
any valid purpose or consideration, so long as GTII and the Pro Forma Company
retain sufficient authorized shares of Common Stock to pay the Seller Equity
calculated as of the Closing. GTII will immediately notify Seller and Seller
will immediately notify GTII if either receive any solicitation or offers
competitive with this agreement. As of the date of mutual execution of this
Letter of Intent and during the Exclusivity Period, GTII and Seller will suspend
any currently existing discussion with all parties other than each other
regarding the Transaction.

 

During the Exclusivity Period, the parties shall use their good faith efforts to
finalize and execute the Definitive Agreements, prior to May 15, 2019, and
undertake all related activities geared towards the Closing of the Transaction.

 

5

 

 

MANAGEMENT OF THE PRO FORMA COMPANY:

 

Upon the Closing, all current Officers and Directors of GTII and its
subsidiaries shall resign except in the event that David Reichmann is the GTII
designee pursuant to (i) below. In any event on or before the Closing all of the
outstanding Series A Preferred stock of GTII will either be transferred to a
designee of Seller or redeemed and cancelled. At Closing, the Board of Directors
of the Pro Forma Company shall consist of 3 members:

 

(i) 1 named by the GTII Board of Directors prior to the Closing and

 

(ii) 2 named by Seller and appointed by the GTII Board of Directors prior to the
Closing subject to the consummation of the Transaction. Such designation of
directors shall not be an ongoing nomination right.

 

And:

 

(1) The Board of Directors of the Pro Forma Company shall also be comprised of
at least two (2) independent members to be selected by the BOD of the Pro Forma
Company

 

Control Vote/Shareholder Approval:

 

As part of the Definitive Agreements, GTII and the holders of the GTII Equity,
will enter into a shareholder voting agreement with Seller committing to deliver
approximately 70% of the required number of shares to vote to approve the
Transaction and submit the appropriate filings with the SEC.

 

External Advisor Management Agreement:

 

An external advisor (the “External Advisor”), which will be owned a 100% by
FCMA, is to be formed to provide Asset Investment Advisory, Asset Management,
Property Management, Acquisitions, Dispositions, Land Development, Entitlement
Work, and Construction Services to the Pro Forma Company and its internal
management, and GTII’s CEO will enter into a Management Agreement with the Pro
Forma Company, to be agreed upon prior to the Closing of the Transaction.

 

INDEMNIFICATIONS:

 

GTII agrees to indemnify, defend and hold harmless Seller, its officers,
directors, stockholders, lenders and affiliates, and, Seller agrees to
indemnify, defend and hold harmless GTII, its officers, directors, stockholders,
lenders and affiliates from any third party claims by or liabilities to such
third parties, including any actual and reasonable legal or other expenses
incurred in connection with the defense of such claims to the extent that such
claims are the direct result from any breach or failure of the parties in
connection with the Letter of Intent and the Transaction; provided however, that
any such breach and failure shall be subject a notice and cure period of not
less than ten (10) business days.

 

REPRESENTATIONS AND WARRANTIES:

 

The Definitive Agreements will contain all customary representations and
warranties of the parties.

 

CONDITIONS OF CLOSING:

 

Closing the Transaction is subject to the following:

 

(i) Completion by each party and its advisor (to each party’s satisfaction) of
all business, tax, accounting, legal and other due diligence reviews (including
GTII’s financial statements after 12/31/18 that have been publicly filed, and
Seller’s audits and financial statements ) of the other party (in parallel with
the preparation and drafting of the Definitive Agreements);

 

6

 

 

(ii) INTENTIONALLY OMITTED

 

(iii) GTII or Seller shall not have incurred any material obligations (other
than in the normal course of business and/or in connection with the Transaction)
following the execution of this Letter of Intent that will survive the Closing
that would prevent the parties from realizing the benefits of the Transaction as
described in the Letter of Intent and/or the Definitive Agreement(s);

 

(iv) Preparation by Seller’s counsel of all non-SEC corporate and governance
documents that may be reasonably required by Seller to support the Transaction,
including a revised charter, bylaw changes or other amendments that may be
necessary;

 

(v) The negotiation, preparation and execution of the Definitive Agreements
memorializing the terms hereof;

 

(vi) There shall be no material adverse change in GTII’s or Seller’s business or
financial condition and no material adverse change to the Assets (other than
that which has been previously disclosed in GTII’s or Seller’s filings with the
SEC) that would prevent the parties from realizing the benefits of the
Transaction as described in the Definitive Agreement(s);

 

(vii) The representations and warranties of both parties being true and correct
at signing as of the Closing Date;

 

(viii) Receipt of all governmental, regulatory and third-party requisite
approvals and consents, including the completion of any required SEC process,
and the required approval of each party’s stockholders as necessary, in a form
reasonably satisfactory to the other party (consideration to be given to a joint
proxy statement if Seller stockholder approval is required);

 

(ix) The terms and conditions of the Transaction must be approved by the Board
of Directors of GTII and Seller;

 

(x) Both parties shall have procured appropriate valuations through any of the
following: Fairness Opinion, Third Party Appraisals or Due Diligence Feasibility
and Analysis Write Up prepared by experienced industry veteran or Company and
PCAOB audited financial statements suitable for inclusion in any proxy
statements or other SEC filings in connection with the Transaction and with
respect to GTII submission of a PCAOB audit is deemed sufficient for this
purpose; and

 

(xi) Such additional terms as are consistent with the above as agreed between
the parties.

 

CONFIRMATORY DUE DILIGENCE:

 

Both parties will use their diligent best efforts to assist and cooperate fully
with each other, and their auditors and advisors to support due diligence
efforts and to satisfy the conditions of Closing. Both parties may conduct due
diligence, including conversations with management of Seller and GTII.

 

Each party and its employees, officers, directors, advisors, legal counsel,
accountants, agents and representatives (the “Representatives”) will extend
their full cooperation to either party’s Representatives in connection with such
investigation and will provide either party’s Representatives with full access
during normal business hours to the other party’s books and records, facilities,
accountants, management, officers, directors and key employees for the purpose
of conducting such due diligence investigation.

 

CONFIDENTIALITY AND PUBLICITY AND EXPENSES:

 

The parties to this Letter of Intent acknowledge and agree that the existence
and terms of this Letter of Intent and the Transaction are confidential and
further agree that they and their respective Representatives, including without
limitation, shareholders, directors, officers, employees or advisors, shall not
disclose to the public or to any third party the existence or terms of this
Letter of Intent or the Transaction other than with the express prior written
consent of the other party, except as may be required by applicable law, rule or
regulation, or at the request of any governmental, judicial, regulatory or
supervisory authority having jurisdiction over a party or any of its
representatives, control persons or affiliates (including, without limitation,
the rules or regulations of the SEC or FINRA), or as may be required to defend
any action brought against such party in connection with the Transaction. If a
party is so required to make such a disclosure, it must first provide to the
other party the content of the proposed disclosure, the reasons that the
disclosure is required, and the time and place that the disclosure will be made.
In such event, the parties will work together to draft a disclosure which is
acceptable to both parties. The parties acknowledge and agree that the
provisions of the Confidentiality Agreement dated February 15, 2019 between the
parties remain in full force and effect.

 

7

 

 

EXPENSES:

 

All expenses incurred for the Transaction by GTII or Seller separately,
inclusive of the drafting of the Definitive Agreements, prior to the Closing
Date will be borne and paid by GTII and Seller separately, however, any and all
fees, expenses and costs incurred after the Closing Date shall be assumed and
paid by the Pro Forma Company.

 

NOTICES:

 

All notice in connection with this Letter of Intent shall be made to the parties
via email, facsimile or Express Mail at the addresses above and below.

 

If you are in agreement with the terms of this Letter of Intent agreement,
please sign in the space provided below and return a signed copy to Mark
Richardson at markr@richardson-law.com, Tom Coleman, and the undersigned
at:david@gtii-us.com by the close of business on April 12th, 2019. Upon receipt
of a signed copy of this Letter of Intent, we will proceed with our plans for
Closing the Transaction in a timely manner.

 

Sincerely,

David Reichman, CEO

Global Tech Industries Group, Inc.

 

  /s/ David Reichman     Agreed to and Accepted for Buyer           /s/ Suneet
Singal   By: Suneet Singal,     Chief Executive Officer           /s/ Chuck
Tralka     Agreed to Accepted for GCA Equity Partners   By: Chuck Tralka    
Member, Authorized Signer  

 

8

 

 

EXHIBIT B

 

SELLER ASSETS

 

Asset Name  Asset Type Residual Value Asset Value   Debt   Equity  Valley
Center  Single/Multi Family Residential & Commercial Lots   112,000,000  
 12,850,000    99,150,000  Massey Oaks  Single/Multi Family Residential Lots 
 177,870,568         177,870,568  Bradshaw  Single Family Residential 
 26,917,718         26,917,718  Coastal Palms  Senior Living   14,681,045       
 14,681,045  Hedge  Single Family Residential   3,403,371         3,403,371  ICF
Green  High End Single Family Residential   1,921,098         1,921,098  Loki
Court  Condos   17,156,921         17,156,921  Portofino  Single Family
Residential   1,795,034         1,795,034  Rosenberg  Single Family Residential
Lots   24,366,653         24,366,653  Woodland 88  Single Family Residential 
 50,471,613         50,471,613  Yanni Palms  Single Family Residential Lots 
 1,647,855         1,647,855 

 

9