Item
1.01 Entry into a Material Definitive Agreement.
Stock
Purchase Agreement
On
June 22, 2017, Life Clips, Inc., a Wyoming corporation (the “Company”) entered into a Stock Purchase Agreement (together
with all exhibits and schedules thereto, the “SPA”), by and among the Corporation, Ascenda Corporation, a company
limited by shares incorporated under the laws of Independent State of Samoa (“Seller”), Hong Kong Ascenda International
Co., Limited, a company limited by shares incorporated under the laws of Hong Kong (“Company HK”), and Hong Kong Ascenda
International Co., Limited, a company limited by shares incorporated under the laws of Independent State of Samoa (“Company
Samoa”, and collectively with Company HK, the “Targets” and each a “Target”). Additional information
regarding the operations of the Targets is set forth in Item 2.01, and is incorporated herein by reference.
Ascenda
Corporation is a global trade and barter firm with an international network covering the world, providing sourcing, logistics,
quality control and factory management services. Ascenda Corporation, through the Targets, provides clients with the knowledge
and resources to make more cost-effective buying decisions and assists with streamlining the procurement process and thereby reducing
business costs.
Pursuant to the terms
of the SPA, the Company agreed to acquire all of the equity interests of the Targets, which are owned by Seller, in return for
the issuance to Seller of 10,000,000 shares of common stock, par value $0.001 per share of the Company (the “Common Stock”)
and undertake certain additional transactions as set forth in the SPA (all such transactions collectively, the “Transactions”).
The shares of Common Stock issued to Seller pursuant to the SPA constitute approximately 5.9% of the issued and outstanding
shares of Common Stock of the Company immediately prior to the closing of the Transactions and approximately 5.6% of the
issued and outstanding shares of Common Stock of the Company immediately following the closing of the Transactions.
In
the SPA, the Company agreed that, following the closing, the Company, at its cost, would utilize its commercially reasonable efforts
to, within 90 days of the closing, prepare and file with the Securities and Exchange Commission (the “SEC”) a registration
statement under the Securities Act of 1933, as amended (the “Securities Act”) registering the Common Stock issued
to the Seller, so as to permit the resale of such Common Stock without such resale being subject to the limitations applicable
to restricted securities under the Securities Act and the Securities Exchange Act of 1934, as amended (the “Securities Exchange
Act”).
The
Seller and the Targets provided customary representations and warranties to the Company in the SPA, including with respect to
the ownership of the shares of the Targets, the respective parties’ authority to enter into the SPA and the Transactions,
absence of litigation, the organization, history and capitalization of the Targets, governmental approvals required, financial
statements of the Targets, taxes and other expenditures, real property owned or leased by the Targets, title to assets, contracts,
customers, suppliers and sales representatives, warranties and product liability, permits, compliance with laws, personnel of
the Targets, export and import control laws, and other matters.
The
Company also provided customary representations and warranties to the Seller in the SPA, including with respect to the Company’s
authority to enter into the SPA and the Transactions, governmental approvals, legal proceedings, the validity of the Common Stock
to be issued to the Seller, compliance with SEC reporting requirements, and other matters.
The
SPA provides that, in the event that the Company does not make the payments as required pursuant to the Note (as defined and described
below) within 180 days following the closing date; the Company breaches the covenants set forth in the SPA or the 12 month anniversary
of the closing date, the market value of the Common Stock issued to the Seller (as determined by the market price of the Common
Stock) is not equal to $750,000 or higher and the Company does not issue to Seller additional shares of Common Stock to obtain
such valuation, then, if any such failure remains uncured for ten (10) or more business days after Seller give written notice
of the default to the Company, the parties shall effectuate unwinding of the Transactions. In such case, the Note shall be deemed
of no further force or effect, and the Seller shall return to the Company 90% of the Common Stock received by the Seller at the
closing, and the Seller may retain the remaining 10% of the Common Stock.
In
the SPA, the Seller agreed to indemnify the Company and the Targets (following the closing) and all of Buyer’s affiliates
and each of their respective directors, officers, managers, partners, employees, agents, equity holders, successors and assigns
from and against any and all losses incurred or suffered by any such parties arising out of, based upon or resulting from (i)
any breach of any representation or warranty of the Seller or the Targets in the SPA; (ii) any breach by Seller or the Targets
of, or any failure of Seller or the Targets to perform, any of the covenants, agreements or obligations in the SPA; and (iii)
all taxes (or the nonpayment thereof) of Seller or the Targets for any periods prior to the closing or arising from events occurring
prior to the closing.
In
the SPA, the Company agreed to indemnify, defend and hold harmless Seller and all of Seller’s affiliates, from and against
any and all losses incurred or suffered by Seller arising out of, based upon or resulting from (i) any breach or violation of
any of the representations or warranties of the Company contained in the SPA; and (ii) any breach or violation of any of the covenants
or agreements of the Company contained in the SPA.
The
representations and warranties in the SPA survive for a period of 12 months from the closing, and no indemnification may be made
after such time, other than the representations of the Company relating to authorization of the Transactions, the organization
of the Company, the capitalization of the Company and those relating to governmental approvals, which survive indefinitely.
The
SPA also provides that the parties will cooperate with respect to filing tax returns of the Targets following the closing. Any
disputes related to the SPA or the Transactions will be submitted for arbitration to the Hong Kong International Arbitration Center.
No parties to the SPA utilized any brokers in connection with the SPA or the Transactions.
The
SPA provides that the Transactions would close on the signing date of the SPA. The SPA was signed on June 22, 2017 and the Transactions
closed on the same date.
The
description of the SPA as set forth above is qualified in its entirety by reference to the full SPA, which is attached hereto
as Exhibit 10.1.
Promissory
Note
In
connection with the Transaction and as required by the SPA, at the closing of the Transactions the Company agreed to enter into
a promissory note with Seller, which provided for the payment of $500,000 to Seller by the Company within 180 days following the
closing date of the Transactions (the “Note”). The Note is not a part of the purchase price for the acquisition of
the equity interests of the Targets, but is instead to reimburse Seller for $500,000 in cash that is in the accounts of the Targets
as of the closing of the Transactions and which will be remain for the benefit of the Company following the closing.
The
Note bears interest at the rate of 2% per year, payable at maturity or upon acceleration, which occurs upon an Event of Default.”
Upon an Event of Default, the interest rate increases to the lower of 22% or the maximum rate permitted by law. It is an “Event
of Default” if (i) the Company fails to pay the principal or interest as and when due under the Note or (ii) if bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy
law or any law for the relief of debtors are instituted by or against the Company and are not dismissed or settled within and
10 days. The Note is payable in full 180 days after the issuance date, which is therefore December 19, 2017. The Company may prepay
the Note at any time.
Prior
to any Event of Default, the Seller may not assign the Note without the prior written consent of the Company, which may be withheld
by the Company in its sole discretion. Following any Event of Default, the Seller may freely assign the Note, upon notice to the
Company.
The
description of the Note as set forth above is qualified in its entirety by reference to the full Note, which is attached hereto
as Exhibit 10.2.
Employment
Agreement
In
connection with the Transaction and as required by the SPA, at the closing of the Transactions, the Company agreed to enter into
an executive employment agreement with Donald Su Yo Ruan, pursuant to which Mr. Ruan will be employed as President/CEO of Asia
Operations of the Company, and shall also serve as Chairman of the Board of Directors of the Company (the “Employment Agreement”),
as further described in Item 5.02.
The
information set forth in Item 5.02 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.