Item
1.01. Entry into a Material Definitive Agreement.
On
March 16, 2022, Life Clips, Inc. (the “Company,” “we,” “us” or “our”) entered
into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “Registration
Rights Agreement”) with Mastiff Group, LLC (“Mastiff”). Pursuant to the Purchase Agreement, the Company has the right
to sell to Mastiff up to $50,000,000 worth of of newly issued shares (the “Shares”) of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), from time to time during the term of the Purchase Agreement.
Sales of Common Stock pursuant to the Purchase Agreement, and the timing of any sales, are solely at the option of the Company and the
Company is under no obligation to sell securities pursuant to this arrangement. Shares of Common Stock may be sold by the Company pursuant
to this arrangement over a period of up to 24 months after Commencement (as defined below).
Upon
the satisfaction of the conditions in the Purchase Agreement, including that a registration statement that we agreed to file with the
Securities and Exchange Commission (the “SEC”) pursuant to the Registration Rights Agreement is declared effective by the
SEC and a final prospectus in connection therewith is filed with the SEC (such event, the “Commencement”), we will have the
right, but not the obligation, from time to time at our sole discretion over the 24-month period from and after the Commencement, to
direct Mastiff to purchase up to a fixed maximum amount of shares of Common Stock as set forth in the Purchase Agreement on any business
day on which the closing price of the Common Stock exceeds $.009 (subject to adjustment as provided in the Purchase Agreement for any
reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring after the date of the Purchase
Agreement); provided, that Mastiff’s maximum commitment under any single fixed purchase will not exceed the product of (i) twenty
percent (20%) of the average trading volume of the common stock on the principal trading market for the five (5) Trading Days immediately
preceding the date of delivery of a Fixed Purchase Notice (a “Purchase Notice Date”) multiplied by (ii) the volume weighted
average price for the Common Stock during regular trading hours during a Trading Day on the Trading Market on the Fixed Purchase Date..
The
purchase price per share of the Common Stock that may be sold to Mastiff under the Purchase Agreement in such fixed purchases equals
seventy-five percent (75%) of the arithmetic average of the closing sale prices for the Common Stock during the five (5) consecutive
trading-day period ending on the purchase date for the fixed purchase if the Common Stock is listed on The Nasdaq Capital Market or any
nationally recognized successor thereto (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction that occurs on or after the date of this Purchase Agreement). There is no upper limit on the price
per share that Mastiff could be obligated to pay for the Common Stock under the Purchase Agreement.
From
and after Commencement, the Company will control the timing and amount of any sales of Common Stock to Mastiff. Actual sales of shares
of our Common Stock to Mastiff under the Purchase Agreement will depend on a variety of factors to be determined by the Company from
time to time, including, among other things, market conditions, the trading price of the Common Stock and determinations by the Company
as to the appropriate sources of funding for the Company and its operations.
In
all instances, we may not sell shares of our Common Stock to Mastiff under the Purchase Agreement if it would result in Mastiff beneficially
owning more than 4.99% of the Common Stock.
The
net proceeds from sales, if any, under the Purchase Agreement, will depend on the frequency and prices at which the Company sells shares
of Common Stock to Mastiff. To the extent the Company sells shares under the Purchase Agreement, the Company currently plans to use any
proceeds therefrom for strategic opportunities, increasing the staff and capabilities of the Company, working capital and other general
corporate purposes.
There
are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase
Agreement or Registration Rights Agreement other than a prohibition on entering (with certain limited exceptions) into a “Variable
Rate Transaction,” as defined in the Purchase Agreement. Mastiff has agreed not to cause, or engage in any manner whatsoever, any
direct or indirect short selling or hedging of the Common Stock during certain periods.
As
consideration for Mastiff’s irrevocable commitment to purchase shares of Common Stock upon the terms of and subject to satisfaction
of the conditions set forth in the Purchase Agreement, concurrently with the execution and delivery of the Purchase Agreement, the Company
issued to Mastiff the greater of (i) 250,000,000 shares of Common Stock, and 4.99% of the issued and outstanding shares of
the Company’s common stock on such date (the “Commitment Shares”).
Pursuant
to the terms of the Registration Rights Agreement, we have agreed to file with the SEC one or more registration statements on Form S-1
to register for resale under the Securities Act the shares of our Common Stock that may be issued to Mastiff under the Purchase Agreement,
including the Commitment Shares. The Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties,
conditions and indemnification obligations of the parties. The representations, warranties and covenants contained in such agreements
were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements
and may be subject to limitations agreed upon by the contracting parties.
The
Company has the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon five (5) trading
days’ prior written notice to Mastiff. Neither the Company nor Mastiff may assign or transfer its rights and obligations under
the Purchase Agreement or the Registration Rights Agreement, and no provision of the Purchase Agreement or the Registration Rights Agreement
may be modified or waived by the parties.
The
foregoing description of the Purchase Agreement and the Registration Rights Agreement do not purport to be complete and is qualified
in its entirety by reference to complete text of the Purchase Agreement and the Registration Rights Agreement, copies of which are filed
as Exhibit 10.1 and Exhibit 10.2 to this Current Report on Form 8-K, respectively, and incorporated by reference into this Item 1.01.