SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
|Date of Report (Date of earliest event reported)||August 24, 2017|
|(Exact name of registrant as specified in its charter)|
(State or other jurisdiction
|215 Gordon’s Corner Road, Suite 1A Manalapan, NJ 07726|
(Address of principal executive offices)
|Registrant’s telephone number, including area code||732-845-0906|
|(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 (see General Instruction A.2. below):
|[ ]||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))|
Section 1 - Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
Acquisition of Sun Pacific Power Corp. and Sale of EXO:EXO, Inc. and Pizza Fusion Holdings, Inc.
On August 24, 2017, EXOlifestyle, Inc. (the “Company”) closed the Acquisition Agreement entered into with Sun Pacific Power Corp. (“SPPC”) whereby SPPC became a wholly owned subsidiary of the Company (the “Agreement”). As a result of the transaction, Mr. Randy Romano and Mr. Vaughan Dugah resigned and a new board of directors was appointed in accordance with Item 5.02 below. In addition, the Company issued exactly 284,248,605 shares of common stock of the Company to the common shareholders of SPPC. The Series 1-A Preferred Stock shareholders of SPPC were issued 976,351 shares the newly designated Series B Preferred Stock of the Company. In addition, Mr. Randy Romano and Mr. Vaughan Dugan agreed to exchange all outstanding warrants to purchase common stock of the Company for 11,685 and 11,964 shares of the Series B Preferred Stock, respectively. Following completion of this transaction, there were a total of 1,000,000 shares of the Company’s Series B Preferred Stock issued and outstanding. The Series B Preferred automatically converts into the Company’s common stock at a rate of 30.8565 shares of Common Stock for each share of Series B Preferred upon the effective date of a proposed reverse stock split of the Company’s common stock at a rate of 50:1 (the “Reverse Split”). Following the proposed Reverse Split, the Series B Preferred will convert into 30,856,553 shares of the Company’s Common Stock. The Company also issued newly designated Series C Preferred Stock to the holders of SPPC Series B Preferred Stock at a 1:1 ratio. Also in connection with the Agreement, Messrs. Romano and Dugan agreed to forgive an aggregate of $885,156 in debts the Company owed them.
The Closing of the Agreement was conditioned upon a) the entry into a Spinoff Agreement with Mr. Randy Romano and Mr. Vaughan Dugan whereby the Company agreed to sell a 100% interest in the subsidiary holdings of the Company, EXO:EXO, Inc. and Pizza Fusion Holdings, Inc. in exchange for Messrs. Romano and Dugan’s cancellation of 12,000,000 shares of the Company’s Series A Preferred Stock of the Company they own and hold.
Amendments to Convertible Notes
On August 24, 2017 (the “Effective Date”), the Company entered into amendments (the “Note Amendments”) with the five owners and holders of the Company convertible promissory notes in the aggregate principal amount of $786,271 plus aggregate accrued interest of $47,516 for a total amount of $833,787 (the “Convertible Notes”). Accrued interest after March 31, 2017 through the Effective Date was waived by the holders of the Convertible Notes.
The Note Amendments extend the maturity date for each of the Convertible Notes to 60 days from the Effective Date. The Amendments also provide that the principal balance and interest accrued as of March 31, 2017 will automatically convert into an aggregate of 17,052,925 shares of the Company’s Common Stock after giving effect to the Reverse Split immediately following the effective date of the Reverse Split. In the event the Reverse Split does not occur by September 30, 2017, the Convertible Notes shall be deemed to be in default.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The information provided in Item 1.01 is incorporated by reference in this Item 2.01.
Section 5 – Corporate Governance and Management
Item 5.01 Changes in Control of Registrant.
As a result of the Agreement described in Item 1.01 above, Mr. Nicholas Campanella will be the controlling shareholder of the Company.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
As a result of the Agreement described and pursuant to the letters of resignation received from Mr. Randy Romano and Mr. Vaughan Dugan, Mr. Romano and Mr. Dugan have resigned from all executive and directorial positions with the Company. We have provided Mr. Romano and Mr. Dugan with a copy of this disclosure statement. There are no disputes or contentions raised by Mr. Romano or Mr. Dugan. As their final act as the Board of Directors, Mr. Romano and Mr. Dugan appointed the following persons as directors and executives of the Company.
|Nicholas Campanella||Director, CEO, President|
Nicholas Campanella, Director, CEO, and President is the founder of Sun Pacific Power Corp. and has been its President and a Director since its inception in 2009. He has served in many roles of community service as environmental commissioner and chairman of economic development committee as well as Grand Knight for the Knights of Columbus. Mr. Campanella has been a business owner since 1996 in various manufacturing and sales divisions. Mr. Campanella attended New York Institute of Technology in 1984, where he majored in Business Management.
Gregory Rodman – Director, has been a director Sun Pacific Power Corp. since July 2012. Mr. Rodman founded Rodman Electric, LLC, in 2005, a full service electrical contracting company that specializes in all phases of electrical contracting work for commercial and residential projects. Mr. Rodman is the sole owner and officer of Rodman Electric. Mr. Rodman started his electrical career in Local Union #3 as an apprentice from 1987-1990. He then became an electrician from 1990-1995 before becoming foreman from 1995-2001 at the World Trade Center. Since 2002, Mr. Rodman has been the Shop Stewart at Rockefeller Plaza, where he is responsible for electrical maintenance at the facility. Mr. Rodman is a certified electrician in the state of New York and a negotiating committee member for Local #3. Mr. Rodman also holds a master electricians license in the state of New Jersey and has completed the Local #3 apprenticeship program. Mr. Rodman’s experience in electrical contracting is vital to our electrical business.
Vincent Randazzo – Director, was recently appointed to the Board of Directors of Sun Pacific Power Corp. because of his management experience with manufacturing operations and financial reporting. Mr. Randazzo received his Bachelor of Science in Business Administration from Saint Francis College. Mr. Randazzo started his career as an accounting clerk for Agip, USA. Thereafter, he quickly became an Manager of General Accounting for Time Warner Corporation making his eventually to Plant Manager in his 10 years with the company. In 1998, Mr. Randazzo joined I.L Walker, Inc., a folding carton manufacturing operation, as Vice President/General Manager. I.L. Walker, Inc. at the time had annual sales of $23,000,000. Mr. Randazzo was responsible for 155 employees, initiated new manufacturing and quality standards. Based on his experience with I.L. Walker, Inc., in 2001, Mr. Randazzo started his own firm, Zapp Packaging, Inc. driving sales from $1,500,000 the first year of operations to $15,000,000 in 2005 when he sold the company. In 2006, Mr. Randazzo joined MyPrint and division of e-Tools Corporation as VP of Operations until he was appointed CEO in 2007, where he remains today. Mr. Randazzo’s experience brings true expertise in building and growing the business of the Company.
Sumair Mitroo - Director, was appointed to the Board of Directors in April 2017. Mr. Mitroo brings an impressive range of education, research, and proven business experience to the Company. He graduated with a degree in Chemistry from Case Western Reserve University (CWRU). As part of a Biochemistry research team at CWRU he assisted in the publication of an article in the NY Academy of Science in November 1989. Thereafter, Mr. Mitroo decided to embark on a career in business and subsequently established a successful sales career with many companies. From 1993 to 1995, Mr. Mitroo started in sales in the medical supplies industry with International Medical Supply, Inc. and rose to the rank of V.P. Between 1993 and 1997, Mr. Mitroo spearheaded several joint venture and international license technology collaborations between companies in USA and India as V.P. of Macro International, Inc. From 1998 to 2002, he worked for Geac Computer Corporation (NASDAQ: GEAC; TSE: GAC), and WorldCom/MCI. In 2003, Mr. Mitroo started Mitroo Networks And Communications, Inc., a telecom sales agency involved in providing voice and data solutions for companies worldwide, and in 2004, he started Ashoretree Services, Inc., to help organizations with outsourcing, subcontracting, or in-sourcing their marketing and BPO (Business Process Outsourcing). After starting as in investor in Larasan Pharmaceutical Corp. in 2003, Mr. Mitroo became CEO of Larasan in 2012. For Larasan, Mr. Mitroo has spearheaded new product development; strategic partner development; business plan and other documentation; and also helped with procurement of investments. He is still currently involved in this role. Mr. Mitroo has been a consultant for business development for several firms. His experience and creativity in utilizing technology and people to provide goal driven solutions has been instrumental for many companies. Mr. Mitroo has a wide range of contacts that he can readily engage to assist the Company in improving its product offering and its marketing.
William Singer – Director, was appointed to the Board of Directors in April 2017. In 1991, Mr. Singer started Bill’s Bus, LLC, a bus transportation service providing routes between Isla Vista, California and Santa Barbara, California. Starting with a single bus, Mr. Singer grew the Bill’s Bus, LLC adding 8 additional buses and was generating $325,000 net revenues in 2007. He also began utilizing advertising to increase revenues by nearly 15%. Mr. Singer sold the business in 2007. After selling Bill’s Bus, LLC, Mr. Singer joined Navellier Select, LLC a Fund of Funds operation as business development personnel raising over $25,000,000 over a 1 year period. Navellier was sold in 2009 to Genesis. In 2010, Mr. Singer joined TruConnect, LLC, a prepaid mobile broadband business as President. The product was sold in Wal-Mart, Radioshack, Target, Best Buy, AAFES and hhgregg. As President, Mr. Singer was responsible for driving revenues from $1,800,000 to $11,000,000 before the company was sold to a private equity firm. Since 2013, Mr. Singer has created Pride Wireless, Inc., a phone service for the LGBTQ community in conjunction with T-Mobile. He currently sits as President for Montecito Investments, LLC, a private investment and sales consulting firm and Summerland Advisors, LLC a wealth management firm. Mr. Singer also sits as Vice President of Life Clips, Inc. (LCLP:OTCQB), a publicly traded company selling Mobeego, a onetime use emergency battery for cell phones. Mr. Singer brings a great resourced in mergers and acquisitions, and raising capital. As the Company looks to have their stock traded on a national exchange, Mr. Singer will be instrumental in managing the public company aspects of our Company.
During the past ten years, none of the appointees have been the subject of the following events:
1. A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2. Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;
i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii) Engaging in any type of business practice; or
iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
4. The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
5. Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i) Any Federal or State securities or commodities law or regulation; or
ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Material Plans, Contracts or Other Arrangements
There are currently no material plans, contracts or other arrangements with the new appointees. However, pursuant to the Agreement described in Item 1.01 above, Mr. Nicholas Campanella will enter into a profit sharing agreement as settlement for certain debts owed by Sun Pacific Power Corp., which will be assumed by the Company.
Item 8.01 Other Events.
On August 21, 2017, upon the recommendation of the Board of Directors, shareholders representing 94.19% of the voting rights of the Company consented to change the name of the Company from “EXOlifestyle, Inc.” to “Sun Pacific Holding Corp.” The Company will file a Preliminary Schedule 14C that will describe the corporate actions in more detail.
Upon the effectiveness of the reverse stock split, the Company will have approximately 56,843,084 shares of common capital stock issued and outstanding, 0 shares of Series A Preferred Stock, 0 shares of Series B Preferred Stock and 275,000 shares of Series C Preferred Stock.
Section 9 - Financial Statements and Exhibits
SUN PACIFIC POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2016 and 2015
Your Vision Our Focus
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Sun Pacific Power Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Sun Pacific Power Corporation and its subsidiaries (the “Company”) as of -December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sun Pacific Power Corporation and its subsidiaries as of December 31, 2016 and 2015, and the results of their consolidated operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations since inception and has a significant working capital deficiency both of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|/s/ Turner, Stone & Company, LLC|
|August 21, 2017|
SUN PACIFIC POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|December 31, 2016||December 31, 2015|
|Cash and cash equivalents||$||90,077||$||18,796|
|Accounts receivable, net of allowance for uncollectable accounts of $229,012 and $145,200, respectively.||143,423||186,146|
|Total current assets||233,500||204,942|
|Property and equipment, at cost:|
|Furniture and equipment||265,700||208,918|
|Less: accumulated depreciation||(179,948||)||(97,760||)|
|Net property and equipment||391,043||408,019|
|LIABILITIES AND STOCKHOLDERS’ DEFICIT|
|Accounts payable, related party||75,000||-|
|Accrued compensation to officer||378,475||195,340|
|Accrued expenses, related party||450,000||-|
|Dividends payable, related party||3,288||-|
|Advances from related party||281,390||19,087|
|Vehicle installment notes payable, current portion||25,975||25,039|
|Convertible notes payable, related party, current portion||322,474||332,474|
|Total current liabilities||2,145,623||909,224|
|Long term liabilities|
|Vehicle installment notes payable, net of current portion||96,880||122,808|
|Convertible notes payable||173,334||-|
|Convertible notes payable, related party, net of current portion||75,000||-|
|Total long term liabilities||345,214||122,808|
|Commitments and contingencies (see Note 8)||-||-|
$0.00001 par value, 10 million shares authorized,
Series A-1: 1,040,000 and 1,040,000 shares issued and outstanding, respectively Series B: 275,000 and zero shares issued and outstanding, respectively
$0.00001 par value, 750,000,000 shares authorized, 25,631,235 and 25,631,235 shares issued and outstanding, respectively
|Additional paid in capital||792,606||748,609|
|Total stockholders’ deficit||(1,866,294||)||(419,071||)|
|Total liabilities and stockholders’ equity||$||624,543||$||612,961|
See notes to consolidated financial statements
SUN PACIFIC POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|FOR THE YEARS ENDED DECEMBER 31,|
|Cost of revenues||1,244,771||593,825|
|Marketing and sales||1,005,684||231,818|
|General and administrative||2,395,828||1,695,939|
|Total operating expenses||3,401,512||1,927,757|
|Loss from operations||(1,443,375||)||(219,712||)|
|Other expense Interest expense||(35,793||)||(4,070||)|
|Total other expense||(47,848||)||(4,070||)|
|Net loss per common share|
|Basic loss per common share||$||(0.06||)||$||(0.01||)|
|Weighted average number of common shares outstanding||25,631,235||25,631,235|
See notes to consolidated financial statements
SUN PACIFIC POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the years ended December 31, 2016 and 2015
|Series A-1||Series B||Common Stock||paid in||Accumulated||stockholders’|
|Balances at December 31, 2014||1,040,000||$||10||-||$||-||25,631,235||$||256||$||748,609||$||(944,164||)||$||(195,289||)|
|Net loss for the year ended December 31, 2015||(223,782||)||(223,782||)|
|Balances at December 31, 2015||1,040,000||$||10||-||$||-||25,631,235||$||256||$||748,609||$||(1,167,946||)||$||(419,071||)|
|Net loss for the year ended December 31, 2016||(1,491,223||)||(1,491,223||)|
|Issuance of Series B Preferred Stock||275,000||3||43,997||44,000|
|Balances at December 31, 2016||1,040,000||$||10||275,000||$||3||25,631,235||$||256||$||792,606||$||(2,659,169||)||$||(1,866,294||)|
SUN PACIFIC POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|For the years ended December 31,|
|Cash flows from operating activities:|
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities:|
|Amortization of debt discount||7,334||-|
|Allowance for uncollectable accounts||86,676||150,309|
|Proceeds from noncash additions to convertible notes used in operations||42,000||-|
|Changes in operating assets and liabilities:|
|Accounts payable, related party||75,000||-|
|Accrued compensation to officer||183,135||171,231|
|Accrued expenses, related party||450,000||-|
|Dividends payable, related party||3,288||-|
|Net cash provided by (used in) operating activities||(333,818||)||16,117|
|Cash flows from investing activities:|
|Purchases of property and equipment||(65,212||)||(123,038||)|
|Net cash used in investing activities||(65,212||)||(123,038||)|
|Cash flows from financing activities:|
|Proceeds from advances from related parties||545,554||90,000|
|Repayment of advances from related parties||(208,251||)||-|
|Proceeds from convertible notes payable||158,000||-|
|Repayment of vehicle installment notes payable||(24,992||)||(13,146||)|
|Net cash provided by financing activities||470,311||76,854|
|Net increase (decrease) in cash||71,281||(30,067||)|
|Cash at beginning of year||18,796||48,863|
|Cash at end of year||$||90,077||$||18,796|
|Supplemental Disclosure of Cash Flow Information|
|Supplemental Disclosure of Non-Cash Investing and Financing Activities|
|Advances from related party settled through issuance of convertible notes payable, related party||$||75,000||$||332,474|
|Debt discount on convertible notes payable||$||32,000||$||-|
|Debt discount on convertible notes payable, related party||$||12,000||$||-|
|Property and equipment financed by vehicle installment notes payable||$||-||$||110,265|
|Accounts payable settled through advances from related party||$||-||$||6,000|
See notes to consolidated financial statements
SUN PACIFIC POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Description of the business
We were incorporated under the laws of the State of New Jersey on July 28, 2009, as Sun Pacific Power Corporation and together with its subsidiaries, are referred to as the “Company”. Our principal executive offices are located at 215 Gordons Corner Road, Manalapan, New Jersey, 07726.
Description of business
Sun Pacific Power Corp, (“Sun Pacific”) currently generates revenues through its general commercial and residential contracting business. The Company has focused is activities in five areas, as a General Commercial Contractor, installers of Solar Powered Bus Shelters, Electrical Contracting, Plumbing and Securities Systems.
Currently, the Company has 4 subsidiary holdings. Bella Electric, LLC that in conjunction with the Company operates our electrical contracting work. Bella Electric, LLC is a Pennsylvania limited liability company. We have also created Sun Pacific Security Corp., a New Jersey corporation. Currently we have not begun operations in the security sector, but our goal will be to provide residential and commercial security solutions, including installation and monitoring. We recently have created National Mechanical Group Corp, a New Jersey corporation focused on plumbing operations in the New Jersey Pennsylvania areas. Lastly, we have created Street Smart Outdoor Corp, a Wyoming corporation, that acts as a holding company for our state specific operations in unique advertising through solar bus stops, solar trashcans and “street kiosks”. Currently, we only operate a single subsidiary of Street Smart Outdoor Corp, Sun Pacific Coast Corp. our Florida advertising operations.
Note 2 - Summary of significant accounting policies
Use of estimates in the preparation of financial statements
Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.
The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Cash and cash equivalents
For purposes of the consolidated statements of cash flows, cash includes demand deposits and short-term liquid investments with original maturities of three months or less when purchased. As of December 31, 2016, the Federal Deposit Insurance Corporation (FDIC) provided insurance coverage of up to $250,000, per depositor, per institution. At December 31, 2016, none of the Company’s cash was in excess of federally insured limits.
In the normal course of business, we decide to extend credit to certain customers without requiring collateral or other security interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. Periodically we estimate this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change, and can have an impact on collections and our estimation process. The Company incurred bad debt expenses of $86,676 and $150,309 during the years ended December 31, 2016 and 2015, respectively.
PACIFIC POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Certain conditions may exist as of the date financial statements are issued, which may result in a loss but which will only be resolved when one or more future events occur or do not occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to pending legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed.
Fair value of financial instruments
In accordance with the reporting requirements of ASC Topic 825, Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to its consolidated financial statements when the fair value is different than the carrying value of those financial instruments. The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at the consolidated balance sheet dates, nor gains or losses reported in the consolidated statements of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at December 31, 2016 and 2015.
Fair value measurements
ASC Topic 820, Fair Value Measurement, defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, the fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.
Property and equipment
Property and equipment is stated at cost. Additions and improvements that significantly add to the productive capacity or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over three to five years for vehicles and five to ten years for equipment. Leasehold improvements are amortized over the lesser of the estimated remaining useful life of the asset or the remaining lease term.
Impairment of long-lived assets
The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. At December 31, 2016 and 2015, the Company has not identified any such impairment losses.
Under ASC Topic 740, “Income Taxes”, the Company is required to account for its income taxes through the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carry forwards. Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year.
PACIFIC POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences and operating losses, and tax credit carry forwards. A valuation allowance is established to reduce that deferred tax asset if it is “more likely than not” that the related tax benefits will not be realized.
Research and development expense
Research and development costs are expensed as incurred.
The Company recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable.
The Company has evaluated subsequent events from December 31, 2016 and through August 21, 2017, to assess the need for potential recognition or disclosure in this report. Based upon this evaluation, management determined that all subsequent events that require recognition in the financial statements have been included. (See Note 10)
Recent accounting pronouncements
During the year ended December 31, 2016 and through August 21, 2017, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial statements.
Note 3 - Going concern
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the years ended December 31, 2016 and 2015, the Company incurred losses from operations of $1,491,223 and $223,782, respectively. At December 31, 2016 and 2015, the Company had a stockholders’ deficit of $1,866,294 and $419,071, respectively, and a working capital deficit of $1,563,674 and $346,769, respectively. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise the additional capital to meet short and long-term operating requirements. Management is continuing to pursue external financing alternatives to improve the Company’s working capital position however additional financing may not be available upon acceptable terms, or at all. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.
Note 4 - Net loss per share
Under ASC 260, “Earnings Per Share” (“EPS”), the Company provides for the calculation of basic and diluted earnings per share. Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity. For the years ended December 31, 2016 and 2015, basic and diluted loss per share are the same as the calculation of diluted per share amounts would result in an anti-dilutive calculation.
Note 5 - Borrowings
Vehicle installment notes payable
The Company’s vehicle installment notes payable consist of several installment notes for various vehicles used in the Company’s operations. At December 31, 2016 and 2015, the notes have annual interest rates between 3.49% and 4.07% and require monthly minimum payments of principal and interest ranging from $380 to $434. The Company’s installment notes are collateralized by the vehicles purchased with the respective installment notes.
PACIFIC POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Convertible notes payable
On August 24, 2016, the Company issued two two-year unsecured convertible notes payable totaling
$200,000 pursuant to a private placement memorandum. The notes mature on August 24, 2018, have an annual interest rate of 12.5% and are due at maturity. At the election of the holder, the notes can be converted into common stock of the Company at a conversion price per share equal to 50% of the average bid price for the 30 consecutive business days prior to conversion. The conversion feature is contingent upon i) the successful filing of a registration statement to become publicly traded, and ii) the company stock has become publicly quoted on the OTC Markets and iii) the conversion price is above $0.10. In connection with the notes, the Company issued a total of 200,000 shares of Series B preferred stock, as further described in Note 6. As of December 31, 2016, the balances of the notes totaled $200,000.
Convertible notes payable, related party
On October 23, 2015, a total of $332,474 in advances from a related party was converted into two one-year unsecured convertible notes payable to Nicholas Campanella, Chief Executive Officer of the Company.
The notes have an annual interest rate of 6% and are currently past due. At the election of the holder, the notes can be converted into common stock of the Company at a conversion price per share equal to 20% of the average bid price for the three consecutive business days prior to conversion. As of December 31, 2016 and 2015, the balances of the notes totaled $332,474.
On August 24, 2016, a total of $75,000 in advances from a related party was converted into a two-year unsecured convertible note payable to Nicholas Campanella, Chief Executive Officer of the Company, pursuant to a private placement memorandum. The note matures on August 24, 2018, has an annual interest rate of 12.5% and is due at maturity. At the election of the holder, the note can be converted into common stock of the Company at a conversion price per share equal to 50% of the average bid price for the 30 consecutive business days prior to conversion. The conversion feature is contingent upon i) the successful filing of a registration statement to become publicly traded, and ii) the company stock has become publicly quoted on the OTC Markets and iii) the conversion price is above $0.10. In connection with this note, the Company issued 75,000 shares of Series B preferred stock, as further described in Note
6. As of December 31, 2016, the balance of the notes was $75,000.
Line of credit, related party
On October 23, 2015, the Company entered a line of credit agreement with Nicholas Campanella, Chief Executive Office of the Company, for a total value of $250,000. The line of credit has a stated annual interest rate of 6.00%. During the years ended December 31, 2016 and 2015, the Company did not draw on the line of credit.
The Company’s estimated future maturities of its borrowings, as of December 31, 2016, are as follows:
PACIFIC POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Preferred stock and common stock
Our board of directors has the authority to designate and issue up to 10,000,000 shares of $0.00001 par value preferred stock in one or more series, and to fix and determine the relative economic rights and preferences of preferred shares any or all of which may be greater than the rights of our common stock, as well as the authority to issue such shares without further stockholder approval. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult. Preferred stock is designated 1,040,000 shares to Series A-1 at December 31, 2016 and 2015, respectively, and 500,000 to Series B.
Series A-1 Preferred Stock
As of December 31, 2016 and 2015, we have 1,040,000 and 1,040,000 shares of Series A-1 preferred stock issued and outstanding, respectively. Each share of the Series A-1 Preferred Stock has voting preferences of 350 votes on all matters presented to be voted on by the holders of common stock. Each holder of shares of Series A-1 Preferred Stock may, at any time, and from time to time, convert each of its shares of Series A-1 Preferred Stock into a number of fully paid and non-assessable shares of Common Stock at a 100 to one conversion.
Series B preferred stock
As of December 31, 2016 and 2015, we have 275,000 and zero shares of Series B preferred stock issued and outstanding, respectively. Each share of Series B is entitled to a simple dividend of 12.5% per annum. Series B Preferred Stock is automatically redeemed at zero cost by the Company and returned to the Company for cancellation, as unissued, non-designated, preferred shares in August of 2018. Series B Preferred Stock has no conversion rights and no voting rights on any matters presented to be voted on by the holders of common stock.
On August 24, 2016, the Company issued a total of 275,000 shares of Series B preferred stock in connection with three convertible notes payable totaling $275,000 (Note 5) pursuant to a private placement memorandum.
The Company recorded a discount on the associated debt based on the relative fair value of the Series B preferred shares of $44,000 in accordance with ASC 470-20, Debt with Conversion and Other Options. The Company calculated the value of the Series B preferred shares by calculating the present value of the annual 12.5% dividends with the following assumptions: annual dividend expense of $34,375; term of 2 years; and cost of debt of 8.25% and accounted for them as a debt discount, which will be amortized over the term of the convertible notes payable. During the year ended December 31, 2016, the Company amortized $7,334 of the debt discount as interest expense .
We are authorized to issue up to 750 million shares of $0.00001 par value common stock. Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the holders of our common stock. Subject to the rights of the holders of any class of our capital stock having any preference or priority over our common stock, the holders of shares of our common stock are entitled to receive dividends that are declared by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to share ratably in our net assets remaining after payment of liabilities, subject to prior rights of preferred stock, if any, then outstanding. Our common stock has no preemptive rights, conversion rights, redemption rights, or sinking fund provisions, and there are no dividends in arrears or in default. All shares of our common stock have equal distribution, liquidation and voting rights and have no preferences or exchange rights.
PACIFIC POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Common stock purchase warrants
No common stock purchase warrants were issued in during the years ended December 31, 2016 or 2015. All remaining outstanding common stock purchase warrants expired during the year ended December 31, 2016.
Note 7 - Income taxes
We have recorded no provision or benefit for income taxes. The difference between tax at the statutory rate and no tax is primarily due to the full valuation allowance.
The increase in the valuation allowance was $507,000, and $74,000 during the years ended December 31, 2016 and 2015, respectively. A valuation allowance has been recorded in the full amount of total deferred tax assets as it has not been determined that it is more likely than not that these deferred tax assets will be realized.
As of December 31, 2016, we have net operating loss carry forwards of approximately $1.1 million, which begin to expire in 2030 and will continue to expire through 2035 if not otherwise utilized. Our ability to use such net operating losses and tax credit carry forwards is subject to annual limitations due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code, and such limitation would be significant. Realization is dependent on generating sufficient taxable income prior to expiration.
Deferred income taxes represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes.
Significant components of our deferred tax assets and liabilities and related valuation allowances at December 31, 2016 and 2015 are as follows:
|Net operating loss carry forward||$||374,000||$||82,000|
|Total deferred tax assets||670,000||163,000|
|Deferred Tax Liability|
|Deferred Tax Assets & Liabilities, net||$||-||$||-|
|Estimated tax reconciliation||2016||2015|
|Income tax (expense) benefit at statutory federal rate of 34%||$||507,000||34||%||$||76,000||34||%|
|Increase (decrease) in valuation allowance||(507,000||)||-34||%||(74,000||)||33||%|
|Income tax expense (benefit) at Company’s effective tax rate||$||-||0||%||$||-||0||%|
PACIFIC POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Commitments and contingencies
On December 20, 2014, the Company entered into a five-year employment agreement with Nicholas Campanella, Chief Executive Officer. Under the terms of the agreement, the Company is required to pay a base compensation of $180,000 annually, subject to increases in cost of living and performance bonuses as awarded by the Board of Directors. After 5 years, the agreement is automatically renewed for an additional two years unless terminated by either party. As part of the agreement Mr. Campanella opted to defer, with no interest, the receipt of compensation under the agreement until the Company has the funds to pay its obligation. At December 31, 2016 and 2015, the Company had accrued compensation of $378,475 and $195,340, respectively, and recorded the related expenses in ‘general and administrative’ on the accompanying consolidated statements of operations.
During the year ended December 31, 2014, the Company issued 2,208,684 shares of the Company’s common stock pursuant to a one-year consulting agreement with Summit Trading Limited for consulting services. The consulting agreement expired during November 2015.
Our corporate headquarters and facilities were leased at a monthly rate of $7,500 from Triplet Square, LLC, a related party, under a five-year agreement expiring in August 2020. The Company had the option to extend the lease for an additional 5 years. Rent expense for the years ended December 31, 2016 and 2015 was $90,000 and $43,644, respectively, and was recorded in ‘general and administrative’ on the accompanying consolidated statements of operations. At December 31, 2016, the Company had a payable balance totaling $75,000 related to 2016 lease expenses under this agreement. Subsequent to December 31, 2016, the facility was sold and the Company was released from its obligations. (See Note 10)
At December 31, 2016 and 2015, and for each of the years then ended, the Company had the following customer concentrations:
|Percentage of Revenues||Percentage of Accounts Receivable|
& Sons, Inc.
* Less than 10%
Due to various contractual arrangements with certain customers, Consultative fees are paid to those customers. During the twelve months ended December 31, 2016 and 2015, respectively, Consultative fees paid to significant customers were as follows:
|C. Raymond Davis & Sons, Inc.||20,000||-|
|The Phillip Murry House||208,829||-|
|New York Terminals||-||7,000|
|Atlantic City Townhomes||-||140,796|
|Lowes Home Center||-||-|
Note 9 - Related party transactions
For purposes of these consolidated financial statements, Summit Trading Limited, Zimmerman LLC, the Campanella family, Jody Samuels, Frank Capria, and Triplet Square LLC are considered related parties due to their beneficial ownership (shareholdings or voting rights) in excess of 5%, or their affiliate status, during the years ended December 31, 2016 and 2015. All material transactions with these investors and other related parties for the years ended December 31, 2016 and 2015, not listed elsewhere, are listed below.
During the year ended December 31, 2015, the Company awarded Christopher Campanella, Danielle Campanella, and Nicholas Campanella a total of $450,000 for services provided to the Company. During January 2017, the Company issued 4,500,000 shares of the Company’s common stock at a fair value of $0.10 per share to settle the liability.
Note 10 - Subsequent events
During January 2017, the Company issued 160,000 shares of the Company’s common stock as compensation for services rendered under a private placement memorandum dated August 26, 2016.
During March 2017, the Company entered into a five-year lease agreement. Under the terms of the agreement, the Company is obligated to pay monthly rent payments starting at $3,556 and escalating over the life of the lease. Future minimum rental payments under this agreement are as follows:
Acquisition and merger
On August 17, 2017 the Company entered into an acquisition and merger agreement with EXOlifestyle, Inc. whereby 100% of Sun Pacific Power Corp. (“SPPC”) was purchased for certain shares of common and preferred shares of the EXOlifestyle, Inc. (“EXOL”). Pursuant to the Agreement the shareholders of SPPC shall exchange their shares for shares of EXOL as follows:
|●||The holders of Series 1-A Preferred shares of SPPC shall receive exactly 0.9764 share of newly designated Series B Preferred Shares (the “EXOL Series B Shares”) in exchange for each share of Series 1-A Preferred of SPPC. The EXOL Series B Preferred Shares shall automatically convert at a rate of 30.8565 of common shares for each share of EXOL Series B Preferred Share upon the effectiveness of a reverse stock split of 50:1, which the Board of Directors has recommended to the shareholders. The Series B Preferred Share have voting rights equal to the aggregate common shares upon conversion.|
|●||The holders of the Series B Preferred Shares of SPPC shall each receive 1 share of the newly designated Series C Preferred Shares of the EXOL in exchange for each share of the Series B Preferred Shares of SPPC. EXOL Series C Preferred Shares have not voting rights and shall automatically redeem 24 months from issuance.|
|●||The holders of common shares of SPPC shall each receive 8.83 shares of common stock of EXOL in exchange for each share of SPPC common stock for a total of 284,248,605 shares.|
Item 9.01 Financial Statements and Exhibits.
a) Financial Statements of Business Acquired.
The Audited Financial Statements of Sun Pacific Power Corp. as of December 31, 2016 and 2015 are filed as Exhibit 99.1 to this Form 8-K and are incorporated herein by reference.
(b) Pro Forma Financial Information .
The unaudited pro forma balance sheet as of June 30, 2017 and unaudited pro forma income statement for the period ended June 30, 2017 to give effect to the acquisition of Sun Pacific Power Corp. are filed as Exhibit 99.2 to this Form 8-K and are incorporated herein by reference.
|3.1||Designation of Series B and Series C Preferred Stock filed with the state of Nevada on August 11, 2017*|
|10.1||The Acquisition Agreement between the Company and Sun Pacific Power Corp., dated August 16, 2017*|
|10.2||The Spinoff Agreement with the Company, Randy Romano and Vaughan Dugan, dated August 24, 2017|
|10.3||Form of Amendment to Convertible Promissory Note.|
|23.1||Consent of Turner Stone & Company, LLP|
* Filed with Form 8-K on August 18, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date:||August 29, 2017|
|By:||/s/ Nicholas Campanella|
|Title:||Chief Executive Officer|
This SPIN-OFF AGREEMENT, dated as of August 24, 2017, (this “Agreement”), is entered into by and among EXOlifestyle, Inc., a Nevada corporation (the “Seller”), and Vaughan Dugan (“Dugan”) and Randy Romano (“Romano”) (Dugan and Romano are collectively referred to hereinafter as the “Buyers”).
WHEREAS, Seller presently owns 250 shares of the issued and outstanding common stock (the “EXO Shares”) in of EXO:EXO, Inc., a Wyoming corporation (“EXO”) representing 100% of the issued and outstanding common stock of EXO. EXO is engaged in the business of developing and selling fitness and lifestyle products (the “EXO Business”);
WHEREAS, Seller presently owns 11,411,512 shares of the issued and outstanding common stock (the “Pizza Fusion Shares”) of Pizza Fusion Holdings, Inc., a Florida corporation (“Pizza Fusion”) representing 100% of the issued and outstanding common stock of Pizza Fusion. Pizza Fusion is engaged in the business of owning and managing franchises of Pizza Fusion restaurants (the “Pizza Fusion Business”);
WHEREAS, Dugan owns 6,000,000 shares of the Seller’s issued and outstanding $0.0001 par value series A preferred stock (“Dugan’s Preferred Stock”);
WHEREAS, Romano owns 6,000,000 shares of the Seller’s issued and outstanding $0.0001 par value series A preferred stock (“Romano’s Preferred Stock”);
WHEREAS, Buyers desire to purchase the EXO Shares and the Pizza Fusion Shares from Seller, and assume all responsibility for and pay all other debts, obligations and liabilities of EXO and Pizza Fusion existing prior to the Closing Date, on the terms and subject to the conditions specified in this Agreement; and
WHEREAS, Seller desires to sell and transfer the EXO Shares and Pizza Fusion Shares and the Assumed Liabilities (as defined below) related to the EXO Shares and Pizza Fusion Shares, on the terms and subject to the conditions specified in this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants, promises and agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, agree as follows:
|1.||SALE OF SHARES AND ASSUMPTION OF AND LIABILITIES.|
Subject to the terms and conditions provided below:
|1.1.||Assignment and Assumption of Liabilities . Prior to the Closing (as defined below), Seller shall transfer and assign all of the Assumed Liabilities to either EXO or Pizza Fusion depending on which entity incurred such liability.|
|1.2.||Sale and Purchase . Pursuant to the terms and conditions set forth herein, Seller hereby agrees to sell, assign, and deliver to Buyers at the Closing all right, title and interest in and to the EXO Shares and the Pizza Fusion Shares, and Buyers agree to accept the same from Seller.|
|1.3.||Assignment of Assets . Prior to the Closing, Seller shall transfer, assign, and deliver to EXO or Pizza Fusion all right, title and interest in and to the assets and rights, together with any replacements thereof and additions thereto made between the date hereof and the Closing, as hereafter described in this Section 1.3 (collectively, the “Assigned Assets”), including the following:|
|1.3.1.||All cash, property, real estate, equipment, and other assets of EXO Pizza Fusion, except any cash amounts raised in connection with the Seller on a non-consolidated basis and the operation of any other businesses unrelated to the EXO Business or the Pizza Fusion Business; and|
|1.3.2.||All goodwill and intangibles associated with the EXO Business and the Pizza Fusion Business.|
|1.4.||Assignment and Assumption of Liabilities . Prior to the Closing, Seller shall transfer, assign, and deliver to either EXO or Pizza Fusion, depending on which entity incurred such liability, all the following liabilities (the “Assumed Liabilities”):|
|1.4.1.||such liabilities, obligations and commitments of the Seller arising or accruing during the period commencing after the date hereof and Closing Date (as defined below) under any contracts of the Seller related to EXO Business of the Pizza Fusion Business;|
|1.4.2.||any product liability or similar claim for injury to persons or property, regardless of when made or asserted, which arises out of or is based upon any express or implied representation, warranty or agreement made by EXO or Pizza Fusion or their agents, or which are imposed by operation of law or otherwise, in connection with any sales or service performed by or on behalf of EXO or Pizza Fusion on or prior to the Closing Date;|
|1.4.3.||any liability or obligations to any current or former employees, agents, independent contractors or creditors of EXO or Pizza Fusion or under any plan or arrangement with respect thereto, including, without limitation, liabilities and obligations (A) under any life, health, accident, disability or any other employee benefit plan, and (B) under any pension, profit sharing, stock bonus, deferred compensation, retirement, bonus or other current or former employee compensation or pension benefit plan or post-retirement benefit plan to which EXO or Pizza Fusion is a party or under which EXO or Pizza Fusion has any obligation, or which is maintained, or to which contributions have been made, by EXO or Pizza Fusion or any predecessor, and (C) for wages, salaries, bonuses, commissions, severance, sick pay, vacation or holiday pay, overtime or other benefits related to the EXO or Pizza Fusion business;|
|1.4.4.||any liabilities for any tax, assessment or other governmental imposition of any type or description, including, without limitation, any federal income or excess profits taxes or state or federal income, sales, use, excise, ad valorem or franchise taxes, together with any interest, assessments and penalties thereon arising out of or attributable to the conduct of EXO or Pizza Fusion’s operations and the EXO Business and Pizza Fusion Business prior to the Closing Date or EXO or Pizza Fusion’s federal income or capital gain taxes or state, or local income or franchise taxes arising by virtue of the transactions contemplated by this Agreement or otherwise;|
|1.4.5.||any liability (i) which arises out of or in connection with any breach or default by EXO or Pizza Fusion occurring prior to the Closing under any of the contracts or leases, (ii) which arises out of or in connection with any violation by EXO or Pizza Fusion of any requirement of law prior to the Closing Date, (iii) which relates to the EXO Business or the Pizza Fusion Business (including those arising under any contracts) to the extent relating to periods prior to the Closing Date;|
|1.4.6.||any liability arising out of or in connection with litigation or other legal proceedings, claims or investigations related to the EXO Business or the Pizza Fusion Business and operations, regardless of when made or asserted, including, without limitation, contract, tort, intellectual property, infringement or misappropriation, crime, fraudulent conveyance, workers’ compensation, product liability or similar claim for injury to persons or property which arises out of or is based upon any express or implied warranty, representation or agreement of EXO or Pizza Fusion or their employees or agents, or which is imposed by law or otherwise; and|
|1.4.7.||any liabilities, trade payables or other costs of operating the EXO Business or the Pizza Fusion Business prior to the Closing Date (excluding the Retained Liabilities).|
|1.5.||Assignment and Assumption of Liabilities . Prior to the Closing, Seller shall transfer and assign all of the Assumed Liabilities to EXO or Pizza Fusion. The sale of the EXO Business or the Pizza Fusion Business shall be accomplished through a sale by Seller of the EXO Shares and the Pizza Fusion Shares to Buyers.|
|2.||TRANSFER OF SHARES AND WARRANTS|
|2.1.||Transfer of Shares. Subject to the terms and conditions provided below, Seller shall exchange all of the EXO Shares and all of the Pizza Fusion Shares for all of Seller’s Series A Preferred Stock on the Closing Date (as defined in Section 3.1 below) in the following amounts (the “Exchange Price”):|
|2.1.1.||125 shares of EXO shall be exchanged for 3,000,000 shares of Dugan’s Preferred Stock;|
|2.1.2.||125 shares of EXO shall be exchanged for 3,000,000 shares of Romano’s Preferred Stock;|
|2.1.3.||5,705,756 shares of Pizza Fusion shall be exchanged for 3,000,000 shares of Dugan’s Preferred Stock; and|
|2.1.4.||5,705,756 shares of Pizza Fusion shall be exchanged for 3,000,000 shares of Romano’s Preferred Stock.|
|3.1.||Closing . The closing of the transactions contemplated in this Agreement (the “Closing”) shall take place on August ___, 2017 (the “Closing Date”) or such date mutually agreed upon by the parties, subject to the satisfaction of all conditions precedent described in Sections VIII and IX hereof.|
|3.2.||Procedure at the Closing . At the Closing, the parties agree to take the following steps in the order listed below ( provided, however , that upon their completion all of these steps shall be deemed to have occurred simultaneously):|
|3.2.1.||At the Closing, Seller shall deliver to Buyers (A) appropriate stock powers and certificates, bills of sale and other assignment documentation reasonably satisfactory to Buyers transferring Seller’s right, title and interest in the EXO Shares and the Pizza Fusion Shares, and (B) such other documents as may be required under applicable law or reasonably requested by Buyers to transfer ownership of the EXO Shares and Pizza Fusion Shares to Buyers as provided for herein; and|
|3.2.2.||At the Closing, Buyers shall deliver to Seller (A) the one or more applicable stock certificates evidencing the Seller’s Common Stock and Seller’s Preferred Stock, duly endorsed in blank or accompanied by stock powers duly executed with signature guaranteed in blank, or other instruments of transfer in form and substance reasonably satisfactory to Buyers, (B) any documentary evidence of the due recordation in the Company’s share register of Buyers’ full and unrestricted title to the Seller’s Common Stock and Preferred Stock, and (C) such other documents as may be required under applicable law or reasonably requested by Seller to terminate Buyers’ ownership interest in the Seller Shares.|
|4.||BUYERS’ REPRESENTATIONS AND WARRANTIES.|
Buyers, collectively and individually, hereby represents and warrants to Seller that:
|4.1.||Capacity and Enforceability . Buyers have the legal capacity to execute and deliver this Agreement and the documents to be executed and delivered by Buyers at the Closing pursuant to the transactions contemplated hereby. This Agreement and all such documents relating to the transactions contemplated hereunder constitute valid and binding agreements of Buyers, enforceable in accordance with their respective terms.|
|4.2.||Compliance . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby by Buyers will result in the breach of any term or provision of, or constitute a default under, or violate any agreement, indenture, instrument, order, law, or regulation to which Buyers are a party, or by which Buyers are bound.|
|4.3.||Liabilities . Following the Closing, Seller will, except as to the Retained Liabilities which the parties acknowledge shall be retained by Seller and paid at Closing, have no other liability for any debts, liabilities or obligations of EXO or Pizza Fusion, the EXO Shares and the Pizza Fusion Shares or the business or activities of EXO or Pizza Fusion prior to the Closing, and there are no outstanding guaranties, performance or payment bonds, letters of credit or other contingent contractual obligations that have been undertaken by Seller directly or indirectly in relation to the business of Seller prior to the Closing, and that may survive the Closing.|
|5.||SELLER’S REPRESENTATIONS AND WARRANTIES.|
Seller hereby represents and warrants to Buyers that:
|5.1.||Organization and Good Standing . Seller, EXO, and Pizza Fusion are corporations duly incorporated, validly existing, and in good standing under the respective laws of the state of their organization.|
|5.2.||Authority and Enforceability . The execution and delivery of this Agreement and the documents to be executed and delivered at the Closing pursuant to the transactions contemplated hereby, and performance in accordance with the terms hereof and thereof, have been duly authorized by Seller and all such documents constitute valid and binding agreements of Seller enforceable in accordance with their terms.|
|5.3.||Ownership . Seller is the sole record and beneficial owner of the EXO Shares and the Pizza Fusion Shares, has good and marketable title to such shares, free and clear of all Encumbrances (hereafter defined), other than applicable restrictions under applicable securities laws, and has full legal right and power to sell, transfer and deliver the EXO Shares and the Pizza Fusion Shares to each of the respective Buyers in accordance with this Agreement. “Encumbrances” means any liens, pledges, hypothecations, charges, adverse claims, options, preferential arrangements, or restrictions of any kind, including, without limitation, any restriction of the use, voting, transfer, receipt of income or other exercise of any attributes of ownership. Upon the execution and delivery of this Agreement, Buyers will receive good and marketable title to their respective EXO Shares and Pizza Fusion Shares, free and clear of all Encumbrances, other than restrictions imposed pursuant to any applicable securities laws and regulations. There are no stockholders’ agreements, voting trust, proxies, options, rights of first refusal or any other agreements or understandings with respect to the EXO Shares and the Pizza Fusion Shares.|
|5.4.||Further Assistance . The Seller agrees to execute and deliver such other documents and to perform such other acts as shall be necessary to effectuate the purposes of this Agreement.|
|6.||OBLIGATIONS OF BUYERS PENDING CLOSING.|
Buyers covenant and agree that between the date hereof and the Closing:
|6.1.||Not Impair Performance . Buyers shall not take any action that would cause the conditions upon the obligations of the parties hereto to affect the transactions contemplated hereby not to be fulfilled, including, without limitation, taking or causing to be taken, any action that would cause the representations and warranties made by any party herein not to be true, correct and accurate as of the Closing.|
|6.2.||Assist Performance . Buyers shall exercise its reasonable best efforts to cause to be fulfilled those conditions precedent to Seller’s obligations to consummate the transactions contemplated hereby which are dependent upon actions of Buyers and to make and/or obtain any necessary filings and consents in order to consummate the transactions contemplated by this Agreement.|
|7.||OBLIGATIONS OF SELLER PENDING CLOSING.|
Seller covenants and agrees that between the date hereof and the Closing:
|7.1.||Business as Usual . Seller shall operate the EXO Business and Pizza Fusion Business in accordance with past practices, and shall use best efforts to preserve its goodwill and the goodwill of its employees, customers and others having business dealings with it. Without limiting the generality of the foregoing, from the date of this Agreement until the Closing Date, Seller shall (a) make all normal and customary repairs to its equipment, assets and facilities, (b) keep in force all insurance, (c) preserve in full force and effect all material franchises, licenses, contracts and real property interests and comply in all material respects with all laws and regulations, (d) collect all accounts receivable and pay all trade creditors in the ordinary course of business at intervals historically experienced, and (e) preserve and maintain its assets in their current operating condition and repair, ordinary wear and tear excepted. From the date of this Agreement until the Closing Date, Seller shall not (i) amend, terminate, or surrender any material franchise, license, contract, or real property interest, or (ii) sell or dispose of any of its assets except in the ordinary course of business. Seller shall not take or omit to take any action that results in Buyers incurring any liability or obligation prior to or in connection with the Closing.|
|7.2.||Not Impair Performance . Seller shall not take any intentional action that would cause the conditions upon the obligations of the parties hereto to affect the transactions contemplated hereby not to be fulfilled, including taking or causing to be taken any action which would cause the representations and warranties made by any party herein not to be materially true, correct and accurate as of the Closing, or in any way impairing the ability of Buyers to satisfy his obligations as provided in Article VI.|
|7.3.||Assist Performance . Seller shall exercise its reasonable best efforts to cause to be fulfilled those conditions precedent to Buyers’ obligations to consummate the transactions contemplated hereby which are dependent upon the actions of Seller and to work with Buyers to make and/or obtain any necessary filings and consents. Seller shall comply with its obligations under this Agreement.|
|8.||SELLER’S CONDITIONS PRECEDENT TO CLOSING.|
The obligations of Seller to close the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing of each of the following conditions precedent:
|8.1.||Representations and Warranties; Performance. All representations and warranties of Buyers contained in this Agreement shall have been true and correct, in all material respects, when made and shall be true and correct, in all material respects, at and as of the Closing, with the same effect as though such representations and warranties were made at and as of the Closing. Buyers shall have performed and complied with all covenants and agreements and satisfied all conditions, in all material respects, required by this Agreement to be performed or complied with or satisfied by Buyers at or prior to the Closing.|
|8.2.||Additional Documents . Buyers shall deliver or cause to be delivered such additional documents as may be necessary in connection with the consummation of the transactions contemplated by this Agreement and the performance of their obligations hereunder.|
|8.3.||No Adverse Action . There shall not be in effect any temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition (including, any statute, rule, regulation, injunction, order or decree proposed, enacted, enforced, promulgated, issued or deemed applicable to, or any consent or approval withheld with respect to, the sale of the EXO Shares or the Pizza Fusion Shares) preventing the consummation of the sale, however, that the parties invoking this condition shall use all commercially reasonable efforts to have any such order or injunction vacated;|
|9.||BUYERS’ CONDITIONS PRECEDENT TO CLOSING.|
The obligation of Buyers to close the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Closing of each of the following conditions precedent (any and all of which may be waived by Buyers in writing):
|9.1.||Representations and Warranties; Performance . All representations and warranties of Seller contained in this Agreement shall have been true and correct, in all material respects, when made and shall be true and correct, in all material respects, at and as of the Closing with the same effect as though such representations and warranties were made at and as of the Closing. Seller shall have performed and complied with all covenants and agreements and satisfied all conditions, in all material respects, required by this Agreement to be performed or complied with or satisfied by them at or prior to the Closing.|
|9.2.||Additional Documents . The Seller shall deliver or cause to be delivered such additional documents as may be necessary in connection with the consummation of the transactions contemplated by this Agreement and the performance of its obligations hereunder.|
|10.1.||Expenses . Each party hereto shall bear its expenses separately incurred in connection with this Agreement and with the performance of its obligations hereunder.|
|10.2.||Confidentiality . Buyers shall not make any public announcements concerning this transaction without the prior written agreement of Seller, other than as may be required by applicable law or judicial process. If for any reason the transactions contemplated hereby are not consummated, then Buyer shall return any information received by Buyers from Seller, and Buyers shall cause all confidential information obtained by Buyers concerning Seller and its business to be treated as such.|
|10.3.||Brokers’ Fees . In connection with the transaction specifically contemplated by this Agreement, no party to this Agreement has employed the services of a broker and each agrees to indemnify the other against all claims of any third parties for fees and commissions of any brokers claiming a fee or commission related to the transactions contemplated hereby.|
|10.4.||Access to Information Post-Closing, Cooperation.|
|10.4.1.||Following the Closing, Buyers shall afford to Seller and its authorized accountants, counsel and other designated representatives, reasonable access (and including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to allow records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) within the possession or control of Buyers relating to the EXO Business or the Pizza Fusion Business insofar as such access is reasonably required by Seller. Information may be requested under this Section 10.4(a) for, without limitation, audit, accounting, claims, litigation, and tax purposes, as well as for purposes of fulfilling disclosure and reporting obligations and performing this Agreement and the transactions contemplated hereby. No files, books or records regarding the EXO Business or the Pizza Fusion Business existing at the Closing Date shall be destroyed by Buyers after Closing but prior to the expiration of any period during which such files, books or records are required to be maintained and preserved by applicable law without giving Seller at least 30 days’ prior written notice, during which time Seller shall have the right to examine and to remove any such files, books, and records prior to their destruction.|
|10.4.2.||Following the Closing, Seller shall afford to Buyers and its authorized accountants, counsel, and other designated representatives reasonable access (including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to Information within Seller’s possession or control relating to the EXO Business or the Pizza Fusion Business insofar as such access is reasonably required by Buyers. Information may be requested under this Section 10.4(b) for, without limitation, audit, accounting, claims, litigation, and tax purposes as well as for purposes of fulfilling disclosure and reporting obligations and for performing this Agreement and the transactions contemplated hereby. No files, books or records of the EXO Business or the Pizza Fusion Business existing at the Closing Date shall be destroyed by Seller after Closing but prior to the expiration of any period during which such files, books or records are required to be maintained and preserved by applicable law without giving Buyers at least 30 days’ prior written notice, during which time Buyers shall have the right to examine and to remove any such files, books, and records prior to their destruction.|
|10.4.3.||At all times following the Closing, Seller and Buyers shall use their reasonable efforts to make available to the other upon written request, the current and former officers, directors, employees, and agents of Seller for any of the purposes set forth in Section 10.4(a) or (b) above or as witnesses to the extent that such persons may reasonably be required in connection with any legal, administrative, or other proceedings in which Seller or Buyers may from time to be involved.|
|10.4.4.||The party to whom any Information or witnesses are provided under this Section 10.4 shall reimburse the provider thereof for all out-of-pocket expenses actually and reasonably incurred in providing such Information or witnesses.|
|10.4.5.||Seller, Buyers and their respective employees and agents shall each hold in strict confidence all Information concerning the other party in their possession or furnished by the other or the other’s representative pursuant to this Agreement with the same degree of care as such party utilizes as to such party’s own confidential information (except to the extent that such Information is (i) in the public domain through no fault of such party or (ii) later lawfully acquired from any other source by such party), and each party shall not release or disclose such Information to any other person, except such party’s auditors, attorneys, financial advisors, bankers, other consultants and advisors or persons to whom such party has a valid obligation to disclose such Information, unless compelled to disclose such Information by judicial or administrative process or, as advised by its counsel, by other requirements of law.|
|10.5.||Seller and Buyers shall each use their best efforts to forward promptly to the other party all notices, claims, correspondence, and other materials which are received and determined to pertain to the other party.|
|11.1.||Termination . This Agreement may be terminated and the transactions contemplated hereby may be abandoned, but not later than the Closing Date:|
|11.1.1.||by mutual written agreement of the Buyers and the Seller;|
|11.1.2.||by the Buyers, in its sole discretion, if any of the representations or warranties of the Seller contained herein are not in all material respects true, accurate and complete or if the Seller materially breaches or fails to substantially comply with any covenant or agreement contained herein and the Seller fails to cure such breach within 10 days of prior written notice;|
|11.1.3.||by the Seller, in its sole discretion, if any of the representations or warranties of the Buyers contained herein are not in all material respects true, accurate and complete or if the Buyers materially breaches or fails to substantially comply with any covenant or agreement contained herein and the Buyers fails to cure within 10 days of prior written notice; or|
|11.1.4.||by either party upon written notice to the other in the event that the Closing has not occurred by August 15, 2017, for any reason other than the failure of the party seeking to terminate this Agreement to perform its obligations hereunder or a breach of a representation or warranty by such party herein.|
|11.2.||Effect of Termination . To effectuate the termination of this Agreement pursuant to Section 11.1, written notice thereof shall promptly be delivered to the other party hereto and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned without further action by the other party hereto. Notwithstanding such termination, each party shall have the right to seek damages with respect to such termination, and shall not be precluded by the exercise of such termination right from pursuing, subject to the terms of this Agreement and applicable law, any cause of action or other claim it may then or at any time thereafter have against the other party in respect of any material breach or default by the other party hereunder.|
|12.1.||Indemnification by Buyers . Buyers covenants and agrees to indemnify, defend, protect and hold harmless Seller, and its respective officers, directors, employees, stockholders, agents, representatives and Affiliates (each a “Seller Indemnified Party”, and, collectively, the “Seller Indemnified Parties”) at all times from and after the date of this Agreement, from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim and regardless of any negligence of any Seller Indemnified Party (any, a “Loss” and as to two or more, collectively, “Losses”), incurred by any Seller Indemnified Party as a result of or arising from (i) any breach of the representations and warranties of such Buyers set forth herein or in certificates delivered in connection herewith, (ii) any breach or nonfulfillment of any covenant or agreement (including any other agreement of Buyers to indemnify set forth in this Agreement) on the part of such Buyers under this Agreement, (iii) any Assigned Asset, (iv) the conduct and operations, whether before or after Closing, of the business of Seller pertaining to the EXO Shares and Pizza Fusion Shares and Assumed Liabilities, (v) claims asserted (including claims for payment of taxes), whether before or after Closing, pertaining to the EXO Shares and Pizza Fusion Shares and Assumed Liabilities or to the EXO Business or the Pizza Fusion Business prior to the Closing, or (vi) any federal or state income tax payable by Seller attributable to the transactions contemplated by this Agreement or to the business of Seller prior to the Closing. For the purposes of this Agreement, an “Affiliate” is a person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another specified person or entity. Notwithstanding anything to the contrary provided for herein, Buyers total obligation under this Section 12 shall be limited to their respective ownership interests in the EXO Shares and the Pizza Fusion Shares.|
|12.2.||Third Party Claims.|
|12.2.1.||Defense . If any claim or liability (a “Third-Party Claim”) should be assessed against any of the Seller Indemnified Parties (the “Indemnitees”) by a third party after the Closing for which Buyers has an indemnification obligation under the terms of Section 12.1 , then the Indemnitee shall notify Buyers (the “Indemnitor”) within 10 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “Claim Notice”) and give the Indemnitor a reasonable opportunity to take part in any examination of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and, in connection therewith, to conduct any proceedings or negotiations relating thereto and necessary or appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits, or settlements with respect to any Third-Party Claim shall be borne by the Indemnitor. If the indemnitor agrees to assume the defense of any Third-Party Claim in writing within 5 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the conduct of such defense, and any decision to settle such Third-Party Claim, and shall be responsible for any expenses of the Indemnitee in connection with the defense of such Third-Party Claim so long as the Indemnitor continues such defense until the final resolution of such Third-Party Claim. The Indemnitor shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has been assumed by the Indemnitor. Except as provided in subsection (b) below, both the Indemnitor and the Indemnitee must approve any settlement of a Third-Party Claim. A failure by the Indemnitee to timely give the Claim Notice shall not excuse Indemnitor from any indemnification liability except only to the extent that the Indemnitor is materially and adversely prejudiced by such failure.|
|12.2.2.||Failure to Defend . If the Indemnitor shall not agree to assume the defense of any Third-Party Claim in writing within 5 days after the Claim Notice of such Third Party Claim has been delivered, or shall fail to continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party Claim, in its sole discretion, on such terms as it may deem appropriate ; provided, always, that in such event, the Indemnitor shall (i) promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection with the defense or settlement of such Third-Party Claim, or (ii) shall pay, in advance of any settlement or proceedings and in installments as reasonably agreed to by the parties, such sums and expenses reasonably expected to be incurred in connection with the defense of the Third-Party Claim and any settlement thereof. If no settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.|
|12.3.||Non-Third-Party Claims . Upon discovery of any claim for which Buyers has an indemnification obligation under the terms of Section 12.1 which does not involve a claim by a third party against the Indemnitee, the Indemnitee shall give prompt notice to Buyers of such claim and, in any case, shall give Buyers such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Buyers shall not excuse Buyers from any indemnification liability except to the extent that Buyers are materially and adversely prejudiced by such failure.|
|12.4.||Survival . Except as otherwise provided in this Section 12.4 , all representations and warranties made by Buyers and Seller in connection with this Agreement shall survive the Closing. Anything in this Agreement to the contrary notwithstanding, the liability of all Indemnitors under this Article XII shall terminate on the first (1st) anniversary of the Closing Date, except with respect to (a) liability for any item as to which, prior to the first (1st) anniversary of the Closing Date, any Indemnitee shall have asserted a Claim in writing, which Claim shall identify its basis with reasonable specificity, in which case the liability for such Claim shall continue until it shall have been finally settled, decided or adjudicated, (b) liability of any party for Losses for which such party has an indemnification obligation, incurred as a result of such party’s material breach of any covenant or agreement to be performed by such party after the Closing, (c) liability of Buyers for Losses incurred by a Seller Indemnified Party due to material breaches of its representations and warranties in Section of this Agreement, and (d) liability of Buyers for Losses arising out of Third-Party Claims for which Buyers has an indemnification obligation, which liability shall survive until the statute of limitation applicable to any third party’s right to assert a Third-Party Claim bars assertion of such claim.|
|13.1.||Notices . All notices and communications required or permitted hereunder shall be in writing and deemed given when received by means of the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, or personal delivery, or overnight courier, as follows:|
If to Seller, addressed to:
1215 Gordon’s Corner Road
Manalapan, NJ 07726
Attn: Nicholas Campanella
If to Buyers, addressed to:
399 NW 2nd Avenue, Suite 216
Boca Raton FL 33432
Attn: Randy Romano
or to such other address as any party hereto shall specify pursuant to this Section 13.1 from time to time.
|13.2.||Exercise of Rights and Remedies . Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.|
|13.3.||Time . Time is of the essence with respect to this Agreement.|
|13.4.||Reformation and Severability . In case any provision of this Agreement shall be invalid, illegal, or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal, and enforceable but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement, and in either case the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.|
|13.5.||Further Acts and Assurances . From and after the Closing, Seller and Buyers agree that each will act in a manner supporting compliance, including compliance by its Affiliates, with all of its obligations under this Agreement and, from time to time, shall, at the request of another party hereto, and without further consideration, cause the execution and delivery of such other instruments of conveyance, transfer, assignment or assumption and take such other action or execute such other documents as such party may reasonably request in order more effectively to convey, transfer to and vest in Buyers, possession of, all EXO Shares and Pizza Fusion Shares and Assumed Liabilities, and to convey, transfer to and vest in Seller or otherwise terminate, all right, title and interest of Buyers in the Seller’s Shares, and, in the case of any contracts and rights regarding the EXO Business or the Pizza Fusion Business that cannot be effectively transferred without the consent or approval of another person that is unobtainable, to use its best reasonable efforts to ensure that Buyers receives the benefits thereof to the maximum extent permissible in accordance with applicable law or other applicable restrictions, and shall perform such other acts which may be reasonably necessary to effectuate the purposes of this Agreement.|
|13.6.||Entire Agreement; Amendments . This Agreement contains the entire understanding of the parties relating to the subject matter contained herein. This Agreement cannot be amended, except by a writing signed by each party, and cannot be terminated orally or by course of conduct. No provision hereof can be waived, except by a writing signed by the party against whom such waiver is to be enforced, and any such waiver shall apply only in the particular instance in which such waiver shall have been given.|
|13.7.||Assignment . No party may assign his, her or its rights or obligations hereunder, in whole or in part, without the prior written consent of the other parties, provided that Buyers may assign his rights to receive the EXO Shares and the Pizza Fusion Shares to an entity controlled by Buyers.|
|13.8.||Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to principles of conflicts or choice of laws thereof.|
|13.9.||Counterparts . This Agreement may be executed in one or more counterparts, with the same effect as if all parties had signed the same document. Each such counterpart shall be an original, but all such counterparts taken together shall constitute a single agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page was an original thereof.|
|13.10.||Section Headings and Gender . The section headings used herein are inserted for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. All personal pronouns used in this Agreement shall include the other genders, whether used in the masculine, feminine or neuter and the singular shall include the plural, and vice versa, whenever, and as often as may be appropriate.|
|13.11.||Submission to Jurisdiction; Process Agent; No Jury Trial .|
|13.11.1||Each party to the Agreement hereby submits to the jurisdiction of any state or federal court sitting in Palm Beach County, Florida, in any action arising out of or relating to this Agreement, and agrees that all claims in respect of the action may be heard and determined in any such court. Each party to the Agreement also agrees not to bring any action arising out of or relating to this Agreement in any other court. Each party to the Agreement agrees that a final judgment in any action so brought will be conclusive and may be enforced by action on the judgment or in any other manner provided at law or in equity. Each party to the Agreement waives any defense of inconvenient forum to the maintenance of any action so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.|
|13.12.||EACH PARTY TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope of this waiver is intended to be all encompassing of any and all actions that may be filed in any court and that relate to the subject matter of the transactions, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party to the Agreement hereby acknowledges that this waiver is a material inducement to enter into a business relationship and that they will continue to rely on the waiver in their related future dealings. Each party to the Agreement further represents and warrants that it has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of commencement of any action, this Agreement may be filed as a written consent to trial by a court.|
|13.13.||Construction . The patties hereto have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local or foreign law will be deemed also to refer to law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties hereto intend that each representation, warranty, and covenant contained herein will have independent significance. If any party hereto has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which that party has not breached will not detract from or mitigate the fact that such patty is in breach of the first representation, warranty, or covenant.|
|13.14.||Independent Nature of Buyers’ Obligations and Rights . The obligations of each Buyer under this Agreement are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance or non-performance of the obligations of any other Buyer under this Agreement. Nothing contained herein, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.|
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
|EXOlifestyle, Inc.||/s/ Vaughan Dugan|
|Vaughan Dugan, Personally|
|By:||/s/ Nicholas Campanella|
|Name:||Nicholas Campanella||/s/ Randy Romano|
|Title:||Chief Executive Officer||Randy Romano, Personally|
AMENDMENT TO CONVERTIBLE PROMISSORY NOTE
THIS AMENDMENT TO CONVERTIBLE PROMISSORY NOTE (the “Amendment”) is made effective as of August __, 2017 (the “Effective Date”) by and between EXOlifestyles, Inc., a Nevada corporation (the “Company”) and [__] (the “Holder”) (collectively the “Parties”).
A. The Company and Holder are the parties to that certain Convertible Promissory Note originally issued by the Company to the Holder on [__] (the “Note”)
B. The principal balance of the Note is $ [__] as of the Effective Date and the accrued and unpaid interest on the Note is $[__] as of March 31, 2017 (collectively, the “Indebtedness”); and
C. In exchange for the Holder’s waiver of an existing event of default under Section 8 of the Note relating to the Company’s failure to pay the Note in full upon Maturity (the “Triggering Event”) and such other good and valuable consideration provided for in this Amendment.
D. The Parties desire to amend the Note as set forth below and take such further action as set forth below as part of the Company’s efforts to more closely unify the rights of holders of its convertible debt and other convertible instruments.
NOW THEREFORE, in consideration of the execution and delivery of the Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
|1.||Section 4 of the Note shall be amended to include the following additional section:|
|Section 5 . Automatic Conversion .|
|a)||The Indebtedness, less any amounts converted by the Holder after the Effective Date (the “Net Indebtedness”) shall automatically convert into shares of the Common Stock at the Conversion Price (as hereinafter defined) without any action of the Holder immediately following the effective date Articles of Amendment to the Company’s Articles of Incorporation which increases the number of the Company’s authorized shares of Common Stock or upon completion of a reverse stock split so that there are a sufficient number of shares of Common Stock to permit a full conversion of the amounts due under the Note (the “Conversion Condition”). The number of shares of Common Stock shall be determined by dividing Net Indebtedness by the Conversion Price. Promptly after occurrence of the Conversion Condition, the Company shall issue to the Holder a certificate representing the number of shares of Common Stock issued pursuant to the automatic conversion provision set forth in this Section 4(e)as determined in accordance herewith.|
|b)||Conversion Price; Number of Shares . The conversion price shall be $0.0489 per share, after giving effect to an anticipated 1:50 reverse stock split (the “Reverse Split”) of the Company’s Common Stock (the “Conversion Price”), subject to further adjustment from time to time upon the happening of certain events as set forth below. Assuming the Holder does not elect to make any conversions after the Effective Date, the number of shares of Common Stock to be issued upon conversion of this Note after giving effect to the Reverse Split is anticipated to be [__] shares plus such other additional shares issued to cover the accrued but unpaid interest on the principal balance of this Note.|
|c)||In the event the Conversion Condition does not occur by September 30, 2017, this Note shall be deemed to be in default and the Holder may elect to pursue any remedies available to it under law, including, but not limited to requiring immediate payment of the principal amount due under this Note, plus accrued interest and any other amounts due hereunder without discount or reduction of any sort as may be provided for elsewhere in this Amendment.|
2. Extension of Maturity Date . The Maturity Date of the Note shall be extended for a period of sixty (60) days from the Effective Date.
4. Forbearance and Waiver . Subject to the terms and conditions herein, the Holder agrees that it will forbear from exercising any of its rights or remedies under the Note as the result of the Triggering Event. Furthermore, the Holder hereby waives any right to receive interest on the Note after March 31, 2017.
5. Governing Law and Venue .
|a.||Except in the case of the Mandatory Forum Selection provisions in Section 5(b) below, which clause shall be governed and interpreted in accordance with Florida law, this Amendment and the Note has been delivered and accepted in and shall be deemed to be a contract made under and governed by the internal laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of such State, without giving effect to the choice of law provisions of such state. This Amendment and the Note shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. All questions concerning the construction, validity, enforcement and interpretation of this Note 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.|
|b.||The Company and Holder each irrevocably agrees that any dispute arising under, relating to, or in connection with, directly or indirectly, this Note or related to any matter which is the subject of or incidental to this Note (whether or not such claim is based upon breach of contract or tort) shall be subject to the exclusive jurisdiction and venue of the state and/or federal courts located in Palm County, Florida; provided, however, Holder may, at the Holder’s sole option, elect to bring any action in any other jurisdiction. This provision is intended to be a “mandatory” forum selection clause and governed by and interpreted consistent with Florida law. The Company and Holder each hereby consents to the exclusive jurisdiction and venue of any state or federal court having its situs in said county, and each waives any objection based on forum non conveniens. The Company hereby waives personal service of any and all process and consent that all such service of process may be made by certified mail, return receipt requested, directed to the Company, as set forth herein in the manner provided by applicable statute, law, rule of court or otherwise. Except for the foregoing mandatory forum selection clause, all terms and provisions hereof and the rights and obligations of the Company and Holder hereunder shall be governed, construed and interpreted in accordance with the laws of the State of Nevada, without reference to conflict of laws principles.|
6. This Amendment shall be deemed part of, but shall take precedence over and supersede any provisions to the contrary contained in the Note and the Subscription Agreement, where applicable. All initial capitalized terms used in this Amendment shall have the same meaning as set forth in the Note unless otherwise provided. Except as specifically modified hereby, all of the provisions of the Note, which are not in conflict with the terms of this Amendment, shall remain in full force and effect.
SIGNATURE PAGE TO NOTE AMENDMENT
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.
|By:||/s/ Vaughan Dugan||By:|
|Chief Executive Officer||
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use of our report dated August 21, 2017, with respect to the consolidated balance sheets of Sun Pacific Power Corporation. as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended December 31, 2016 which report appears in the Form 8-K of EXOlifestyle, Inc. dated August 28, 2017.
|/s/ Turner, Stone & Company, L.L.P.|
|August 29, 2017|