SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): August 16,
2018
YOUNGEVITY INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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000-54900
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90-0890517
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(State
or other jurisdiction of incorporation)
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(Commission
File No.)
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(IRS
Employer Identification No.)
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2400 Boswell Road, Chula Vista, CA 91914
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (619) 934-3980
N/A
(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:
☐
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))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth
company
☑
If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Item 1.01. Entry into a Material Definitive
Agreement.
Offering
On
August 17, 2018, Youngevity International, Inc. (the
“Company”) closed the first tranche of its best efforts
offering (the “Offering”) of Series C convertible
preferred stock, par value $0.001 per share (the “Series C
Preferred Stock”), and entered into a Securities Purchase
Agreement (the “Purchase Agreement”) with six
accredited investors pursuant to which the Company sold 68,420
shares of Series C Preferred Stock, initially convertible into
136,840 shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), at an offering
price of $9.50 per share.
Pursuant to the
Purchase Agreement, the Company has agreed to issue
a
two-year warrant to purchase shares of Common Stock at an exercise
price of $4.75 (the “Warrant”) to each investor that
voluntarily converts their Series C Preferred Stock to Common
Stock. The Warrant contains certain anti-dilution provisions that
apply in connection with any stock split, stock dividend, stock
combination, recapitalization of the Company.
The
Company entered into a Placement Agent Agreement, dated July 31,
2018 pursuant to which the Company agreed to pay the placement
agent, subject to certain exclusions, a fee of 5.0% of the gross
proceeds of the Offering and a non-accountable expense allowance of
2.0% of the gross proceeds. In addition, the Company agreed to
issue to the placement agent, or its permitted assigns, warrants of
the Company equal to ten percent (10%) of any warrants issued to
investors pursuant to the Offering, if and when any such warrants
are issued to the investors.
The
proceeds to the Company from the first closing of the Offering were
$649,990. No commissions or offering expenses were paid to the
placement agent.
Pursuant to the
terms of a Registration Rights Agreement, the Company has agreed to
file a registration statement with the Securities and Exchange
Commission to register the shares of Common Stock issuable upon
conversion of the Series C Preferred and the shares of Common Stock
issuable upon exercise thereof.
The
foregoing description of the terms of the Warrant, Placement Agent
Agreement, Purchase Agreement and Registration Rights Agreement do
not purport to be complete and is subject to, and are qualified in
their entirety by reference to the provisions of such agreements,
the forms of which are filed as Exhibits 4.1, 10.1. 10.2, and 10.3,
respectively, to this Current Report on Form 8-K and are
incorporated herein by reference. The provisions of the Placement
Agent Agreement and Purchase Agreement, including the
representations and warranties contained therein, are not for the
benefit of any party other than the parties to such agreement and
are not intended as a document for investors and the public to
obtain factual information about the current state of affairs of
the parties to that document. Rather, investors and the public
should look to other disclosures contained in the Company’s
filings with the Securities and Exchange Commission.
Item 5.03. Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.
On
August 16, 2018, the Company filed a Certificate of Designation of
Powers, Preferences and Rights of Series C Convertible Preferred
Stock with the Secretary of State of the State of Delaware (the
“Certificate of Designation”).
Pursuant to the
Certificate of Designation, the Company has designated 315,790
shares of preferred stock as Series C Convertible Stock and has
agreed to pay cumulative dividends on the Series C Preferred Stock
from the date of original issue at a rate of 6.0% per annum payable
quarterly in arrears on or about the last day of March, June,
September and December of each year, beginning September 30, 2018.
The Series C Preferred Stock ranks senior to the Company’s
outstanding Series A Convertible Preferred Stock and the Common
Stock with respect to dividend rights and rights upon liquidation,
dissolution or winding up, and pari passu with the Company’s
outstanding Series B Convertible Preferred Stock. Each share of
Series C Preferred Stock is initially convertible at any time, in
whole or in part, at the option of the holders, at an initial
conversion price of $4.75 per share, into two (2) shares of Common
Stock and automatically converts initially into two (2) shares of
Common Stock in the event the average of the daily volume-weighted
average price of the Common Stock for the 30 days preceding the
two-year anniversary date of issuance is $6.00 or higher. In
addition, each share of Series C Preferred Stock is redeemable at a
price equal to its original purchase price plus all accrued but
unpaid dividends in the event the average of the daily volume
weighted average price of the Common Stock for the 30 days
preceding the two year anniversary date of issuance is less than
$6.00. The Series C Preferred Stock has no voting
rights.
The
foregoing description of the Certificate of Designation does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Certificate of Designation, which
is included as Exhibit 3.1 to this Current Report on Form 8-K and
is incorporated herein by reference.
Item 9.01 Financial Statements and
Exhibits.
(d)
Exhibits.
The
following exhibits are filed with this Current Report on Form
8-K:
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Exhibit Number
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Description
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Certificate of Designation of Powers, Preferences and Rights of
Series C Convertible Preferred Stock
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Form of
Warrant
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Placement
Agent Agreement, dated July 31, 2018, between Youngevity
International, Inc. and Corinthian Partners, LLC
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Form of
Securities Purchase Agreement by and between Youngevity
International, Inc and the purchasers named therein
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Form of
Registration Rights Agreement by and between Youngevity
International, Inc and the purchasers named therein
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SIGNATURES
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.
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YOUNGEVITY
INTERNATIONAL, INC.
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Date:
August 21, 2018
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By: /s/
David Briskie
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Name:
David Briskie
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Title:
President and Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Number
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Description
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Certificate of Designation of Powers, Preferences and Rights of
Series C Convertible Preferred Stock
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Form of
Warrant
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Placement
Agent Agreement, dated July 31, 2018, between Youngevity
International, Inc. and Corinthian Partners, LLC
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Form of
Securities Purchase Agreement by and between Youngevity
International, Inc and the purchasers named therein
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Form of
Registration Rights Agreement by and between Youngevity
International, Inc and the purchasers named therein
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Exhibit 3.1
CERTIFICATE OF DESIGNATION OF POWERS,
PREFERENCES AND RIGHTS OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
YOUNGEVITY INTERNATIONAL, INC.
a Delaware corporation
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
Youngevity International, Inc., a Delaware
corporation (the “
Corporation
”),
pursuant to Section 151 of the General Corporation Law of the State
of Delaware, certifies that the directors of the Corporation have
unanimously adopted the resolutions attached hereto as
Appendix
I
providing for the issuance of
315,790 shares of Series C Convertible Preferred
Stock.
The
undersigned certifies that he is the duly elected President of the
Corporation.
IN WITNESS
WHEREOF
, the Corporation has
caused this Certificate to be executed by David Briskie, its
President, this 16th day of August, 2018.
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YOUNGEVITY
INTERNATIONAL, INC.
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By: /s/
David Briskie
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David
Briskie
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President
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APPENDIX I
The undersigned, being all of the members of the
Board of Directors of Youngevity International, Inc. (the
“
Corporation
”),
do hereby consent to the following actions and adopt the following
preamble and resolutions by written consent pursuant to Section
141(f) of the Delaware General Corporation Law:
WHEREAS
, the Certificate of Incorporation (the
“
Certificate
”)
of the Corporation provides for a class of stock designated as
preferred stock, par value $.001 per share (the
“
Preferred
Stock”
), comprising
5,000,000 shares, issuable from time to time and in one or more
series and authorizes the Board of Directors (the
“
Board
”)
of the Corporation to fix or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Stock and the number of shares
constituting any such series and the designations thereof;
and
WHEREAS
, the Certificate also provides for a class of
stock designated as common stock, $.001 par value per share,
comprising 50,000,000 shares (the “
Common
Stock
”). The term
“Common Stock” when used in this resolution with
reference to the Common Stock into which a share of Preferred Stock
is convertible, shall mean only Common Stock of the Corporation,
$.001 par value per share, and any stock into which the Common
Stock may hereafter be changed; and
WHEREAS
, it is the desire of the Board to authorize the
issuance of a series of Preferred Stock and to determine the
rights, preferences, privileges, restrictions and other matters
relating to the series of Preferred Stock.
NOW, THEREFORE, IT IS
RESOLVED
that the Corporation
does hereby provide for the issuance of a series of convertible
Preferred Stock of the Corporation, consisting of 315,790 shares
which shall be designated as “
Series C Convertible
Preferred Stock
”, and
does hereby fix and determine the powers, preferences and rights
relating to said Series C Convertible Preferred
Stock:
SERIES C CONVERTIBLE PREFERRED STOCK
1.
Designation of Shares; Rank
.
(a)
This series of preferred stock shall be designated
and known as Series C Convertible Preferred Stock (the
“
Series C Preferred
Stock
”). The number of
shares constituting the Series C Preferred Stock shall be 315,790
shares, par value $.001 per share.
(b)
Except as otherwise provided herein, so long as
any Series C Preferred Stock is outstanding, with respect to
redemption rights, rights on Liquidation (as hereinafter defined),
winding up, corporate reorganization and dissolution, the Series C
Preferred Stock shall rank senior to the Common Stock, the Series A
Convertible Preferred Stock (the “
Series A Preferred
Stock
”), the Series B
Convertible Preferred Stock (the “
Series B Preferred
Stock
”) and any other
class or series of stock ranking junior to the Series C Preferred
Stock, and
with
respect to dividends
pari
passu
with the Series B
Preferred Stock.
2.
Conversion
.
The holders of shares of Series C Preferred Stock shall have the
following conversion rights:
(a)
Right to
Convert
. Subject to the terms
and conditions of this paragraph 2(a), each holder of any shares of
the Series C Preferred Stock shall have the right, at his, her or
its option, at any time and from time to time and without the
payment of additional consideration by the holder thereof, to
convert each share of Series C Preferred Stock held by such holder
into such number of shares of Common Stock as is determined by
dividing $9.50 by the Conversion Price (as defined below). Such
right of conversion shall be exercised by the holder hereof by
giving written notice that the holder elects to convert a stated
number of shares of Series C Preferred Stock into Common Stock and
by surrender of a certificate or certificates for the shares to be
converted to the Corporation at its principal office (or such other
office or agency of the Corporation as the Corporation may
designate in writing to the holders of Series C Preferred Stock) in
which the certificate or certificates for shares of Common Stock
shall be issued. If required by the Corporation, any certificate
for shares surrendered for conversion shall be accompanied by
instruments of transfer, in a form reasonably satisfactory to the
Corporation, duly executed by the holder of such Series C Preferred
Stock or his, her or its duly authorized
representative.
(b)
Automatic
Conversion
. In the event the
average of the daily volume weighted average price of the Common
Stock as reported by Bloomberg L.P. for the thirty (30) Trading Day
period preceding the two year anniversary of the original issuance
date of the Series C Preferred Stock is $6.00 or higher (as
adjusted for any stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions occurring after the
original issuance date of the Series C Preferred Stock),
e
ach outstanding shar
e of
Series C Preferred Stock, shall automatically convert into such
number of shares of Common Stock as is determined by dividing $9.50
by the Conversion Price..
For
the purposes hereof, “Trading Day” means: (a) any day
on which the Common Stock is listed or quoted and traded on its
primary Trading Market or (b) if the Common Stock is not then
listed or quoted and traded on any Trading Market, then a day on
which trading occurs on the NYSE AMERICAN LLC (or any successor.
For the purposes hereof, “Trading
Market”
means the following market(s) or exchange(s) on which the Common
Stock is listed or quoted for trading on the date in question (as
applicable): the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange or the
NYSE American LLC.
(c)
Mechanics of
Conversion
. All shares of
Series C Preferred Stock which shall have been surrendered for
conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall
immediately cease and terminate on the Conversion Date at the time
of conversion, except only the right of the holders thereof to
receive shares of Common Stock in exchange therefor, to receive
payment in lieu of any fraction of a share otherwise issuable upon
such conversion and payment of any dividends declared but unpaid on
the Series C Preferred Stock. Any shares of Series C Preferred
Stock so converted shall be retired and canceled and return to the
status of and constitute authorized but unissued shares of
Preferred Stock, without classification as to series until such
shares are once more classified as a particular series by the Board
of Directors pursuant to the provisions of the Certificate of
Incorporation.
(d)
Issuance of
Certificates; Time Conversion Effected
. Promptly after the conversion of Series C
Preferred Stock and surrender to the Corporation of the certificate
or certificates for the share or shares of Series C Preferred Stock
to be converted, the Corporation shall issue and deliver, or cause
to be issued and delivered, to the holder, registered in such name
or names as such holder may direct, a certificate or certificates
for the number of whole shares of Common Stock issuable upon the
conversion of such share or shares of Series C Preferred Stock. To
the extent permitted by law, such conversion shall be deemed to
have been effected as of the close of business on the later of the
date on which such written notice shall have been received by the
Corporation and the certificate or certificates for such share or
shares shall have been surrendered as aforesaid, and at such time
the rights of the holder of such share or shares of Series C
Preferred Stock shall cease, and the person or persons in whose
name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Common
Stock represented thereby.
(e)
No Fractional Shares;
Dividends, Partial Conversion
.
No fractional shares shall be issued upon conversion of Series C
Preferred Stock into Common Stock and no payment or adjustment
shall be made upon any conversion on account of any cash dividends
on the Common Stock issued upon such conversion. At the time of
each conversion pursuant to subparagraph 2(a) or 2(b), the
Corporation shall pay, to the extent permitted by law, in cash an
amount equal to all accrued and unpaid dividends on the shares of
Series C Preferred Stock surrendered for conversion to the date
upon which such conversion is deemed to take place as provided in
subparagraph 2(c). In case the number of shares of Series C
Preferred Stock represented by the certificate or certificates
surrendered exceeds the number of shares converted, the Corporation
shall, upon such conversion, execute and deliver to the holder, at
the expense of the Corporation, a new certificate or certificates
for the number of shares of Series C Preferred Stock represented by
the certificate or certificates surrendered which are not to be
converted. If any fractional share of Common Stock would, except
for the provisions of the first sentence of this subparagraph 2(e),
be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay, to the extent
permitted by law, to the holder surrendering the Series C Preferred
Stock for conversion an amount in cash equal to the current fair
market value of such fractional share as determined in good faith
by the Board.
(f)
Conversion
Price
. The initial Conversion
Price is $4.75.
(g)
Adjustment to
Conversion Price by Reason of Stock Split, Stock Dividend,
Recapitalization, Merger, etc.
In the event of any change in the outstanding
shares of Series C Preferred Stock or Common Stock of the
Corporation by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, combination or exchange of
shares or other similar change in the capital structure of the
Corporation, the Board shall make such equitable adjustments to the
Conversion Price as it determines, in its sole discretion, are
necessary and appropriate in order to preserve the intrinsic value
of the Series C Preferred Stock. Any such adjustments shall be set
forth in a written notice to the holders of Series C Preferred
Stock and shall be conclusive and binding on each
holder.
(a)
Upon any liquidation, dissolution or winding up of
the Corporation, either voluntary or involuntary (a
“
Liquidation
”),
the holders of Series C Preferred Stock shall first be entitled to
receive, out of the assets of the Corporation available for
distribution to its stockholders, before any distribution or
payment is made or any asset distributed to the holders of Common
Stock, the Series A Preferred Stock, the Series B Preferred Stock
or any other class or series of stock ranking junior to the Series
C Preferred Stock, but subject to the rights of holders of any
other then outstanding shares of preferred stock, , to be paid an
amount equal to $9.50 for each and every share of Series C
Preferred Stock held by the holders of Series C Preferred Stock,
plus all accrued and unpaid dividends (the
“
Series C Liquidation
Payment
”).
(b)
If upon such Liquidation, the assets to be
distributed among the holders of Series C Preferred Stock shall be
insufficient to permit payment in full to the holders of Series C
Preferred Stock and the holders of any securities ranking
pari
passu
as to liquidation rights
with the Series C Preferred Stock, then the assets available for
payment or distribution to such holders shall be allocated among
the holders of the Series C Preferred Stock and such holders of
securities
pari
passu
with the Series C
Preferred Stock in proportion to the full respective preferential
amounts to which each are entitled.
(c)
Upon a Liquidation, immediately after the holders
of Series C Preferred Stock have received the Series C Liquidation
Payment and the holders of securities ranking
pari
passu
with the Series C
Preferred Stock shall have been paid the amounts due to them upon a
Liquidation in full, then the amount of the remaining assets of the
Corporation legally available for distribution, if any, shall be
distributed among the holders of the Series A Preferred Stock, the
Series B Preferred Stock and any other class or series of stock
ranking junior to the Series C Preferred Stock in accordance with
their respective priorities.
(d)
After
full payment of the Series C Liquidation Payment as set forth
above, such shares of Series C Preferred Stock shall no longer be
deemed to be outstanding and the holders thereof shall have no
further rights as holders of Series C Preferred Stock.
(a)
Except
as otherwise provided herein or as otherwise required by law, the
Series C Preferred Stock shall have no voting rights. However, as
long as any shares of Series C Preferred Stock are outstanding, the
Corporation shall not, without the affirmative vote of the holders
of a majority of the then outstanding shares of the Series C
Preferred Stock alter or change adversely the powers, preferences
or rights given to the Series C Preferred Stock or alter or amend
this Certificate of Designation.
(a)
Commencing
on the date of the initial issuance of the Series C Preferred
Stock, a holder of record of shares of Series C Preferred Stock
shall be entitled to receive, out of any funds at the time legally
available therefor, a cash dividend at the per annum rate of an
amount equal to the product of six percent (6%) and $9.50 per share
of the Series C Preferred Stock owned by such holder, subject to
adjustment in the event of a stock dividend stock split or other
similar event. Dividends on the Series C Preferred Stock shall be
cumulative, shall accrue and shall be payable to holders quarterly
in arrears, on or about the last day of March, June, September and
December of each year, commencing September 30, 2018, or, if such
day is not a business day, on either the immediately preceding
business day or next succeeding business day at the
Corporation’s option, except that, if such business day is in
the next succeeding year, such payment shall be made on the
immediately preceding business day, in each case with the same
force and effect as if made on such date. The term “business
day” means each day, other than a Saturday or a Sunday, which
is not a day on which banks in New York are required to
close.
(b)
Dividends on the Series C Preferred Stock are
prior and in preference to any declaration or payment of any
distribution on any outstanding shares of Common Stock, the Series
A Preferred Stock or any other class or series of stock ranking
junior to the Series C Preferred Stock and
pari
passu
to any declaration or
payment of any distribution on any outstanding shares of Series B
Preferred Stock or any other class or series of stock
ranking
pari
passu
to the Series C Preferred
Stock with respect to dividends. Such dividends shall accrue on
each share of Series C Preferred Stock whether or not earned or
declared. In the case of Series C Preferred Stock outstanding for
less than a full quarter, dividends shall be
pro
rata
based on the portion of
the quarter during which such shares are outstanding. If the cash
to be distributed among the holders of Series C Preferred Stock
shall be insufficient to permit payment in full to the holders of
Series C Preferred Stock, the holders of the Series B Preferred
Stock and the holders of any other securities ranking
pari
passu
as to dividend rights
with the Series C Preferred Stock, then the cash available for
payment or distribution to such holders shall be allocated among
the holders of the Series C Preferred Stock and such holders of
securities
pari
passu
with the Series C
Preferred Stock in proportion to the full respective preferential
amounts to which each are entitled.
(c)
So
long as any shares of Series C Preferred Stock are outstanding, the
Corporation shall not declare, pay or set apart for payment any
dividend or make any distribution on Common Stock or other class or
series of stock ranking junior as to dividends to the Series C
Preferred Stock (other than dividends or distributions payable in
additional shares of junior stock), unless at the time of such
dividend or distribution the Corporation shall have paid all
accrued and unpaid dividends on the outstanding shares of Series C
Preferred Stock.
(d)
Notwithstanding
the foregoing, if the aggregate amount of dividends then accrued
and payable to a holder is less than $10.00, the Corporation may,
at its option, retain and not make payment in respect of such
dividends until the aggregate amount of dividends then accrued and
payable to the holder is not less than $10.00.
6.
Mandatory Redemption by the Corporation.
(a)
In the event the average of the daily volume
weighted average price of the Common Stock as reported by Bloomberg
L.P. for the thirty (30) day Trading Period preceding the two year
anniversary of the original issuance date of the Series C Preferred
Stock is less than $6.00 (as adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar
transactions occurring after the original issuance date of the
Series C Preferred Stock), subject to Section 6(d), the Corporation
shall redeem each outstanding share of Series C Preferred Stock for
a redemption price of $9.50 per share plus all accrued and unpaid
dividends (the “
Redemption
Price
”).
(b)
The
Corporation shall provide notice of any redemption by the
Corporation under subparagraph 6(a), specifying the time and place
of redemption and the redemption price, by first class or
registered mail, postage prepaid, return receipt requested, to the
applicable holder of record of Series C Preferred Stock at the
address for such holder last shown on the records of the transfer
agent therefor (or the records of the Corporation, if it serves as
its own transfer agent), not less than ten (10) days prior to each
redemption date.
(c)
If the funds of the
Corporation legally available for redemption by the holder of the
Series C Preferred Stock pursuant to
Section 6(a)
on any redemption
date are insufficient to redeem all shares of the Series C
Preferred Stock being redeemed by the Corporation on such date,
those funds which are legally available will be used first to
redeem, on a
pro rata
basis from
the holders thereof based on the number of shares of Series C
Preferred Stock then held, the maximum possible number of shares of
the Series C Preferred Stock being redeemed in accordance with the
aggregate redemption proceeds payable with respect to the shares of
Series C Preferred Stock to be redeemed. At any time thereafter
when additional funds of the Corporation become legally available
for the redemption of the Series C Preferred Stock, such funds will
be used to redeem the balance of the shares of Series C Preferred
Stock which the Corporation was theretofore obligated to redeem as
provided in the immediately preceding sentence. Any shares of
Series C Preferred Stock which are not redeemed as a result of the
circumstances described in this
Section 6(c)
shall remain
outstanding until such shares shall have been redeemed and the
redemption price therefor, as applicable, shall have been paid or
set aside by the Corporation, separate and apart from its other
funds in trust for the pro rata benefit of the holders of the
shares Series C Preferred Stock to be redeemed, so as to be, and to
continue to be available
.
(d)
Upon irrevocable deposit in trust by the
Corporation for holders of the Series C Preferred Stock being
redeemed pursuant to this
Section 6(d)
of an amount in cash equal to the
redemption price for the shares of Series C Preferred Stock being
redeemed on any redemption date or payment of the Redemption Price
to such holders, each holder of Series C Preferred Stock will cease
to have any rights as a stockholder of the Corporation by reason of
the ownership of such redeemed shares of Series C Preferred Stock
(except for the right to receive the Redemption Price therefor upon
the surrender of the certificate or certificates representing the
redeemed shares if such certificate or certificates have not been
surrendered), and such redeemed shares of Series C Preferred Stock
will not from and after the date of payment in full of the
redemption price therefor be deemed to be
outstanding.
(e)
At any time after the receipt by a holder of a
notice of redemption from the Corporation pursuant to
Section
6(b)
and prior to receipt of
the Redemption Price therefor (or, if later, the time of redemption
specified in the notice delivered pursuant to
Section
6(b)
), such holder shall be
permitted to convert any or all of its Series C Preferred Stock,
including any shares subject to a redemption notice, in the manner
contemplated by
Section
2
.
(f)
Effective immediately prior to the close of
business on the redemption date for any shares of Series C
Preferred Stock redeemed pursuant to this
Section
6
, dividends shall no longer
accrue or be declared on any such shares of Series C Preferred
Stock, and such shares of Series C Preferred Stock shall cease to
be outstanding.
(g)
Shares of Series C Preferred Stock redeemed in
accordance with this
Section
6
, shall return to the status
of and constitute authorized but unissued shares of Preferred
Stock, without classification as to series until such shares are
once more classified as a particular series by the Board of
Directors pursuant to the provisions of the Certificate of
Incorporation.
RESOLVED
, that the officers of
the Corporation are authorized to file with the Secretary of State
of Delaware a Certificate of Designation providing for the issuance
of the series of stock designated in the foregoing resolution and
that each of the officers of the Corporation is individually
authorized, empowered and directed, in the name and on behalf of
the Corporation, to take all such further actions and execute and
deliver all such further documents and instruments as such officer
may approve as necessary or desirable to carry out the intent and
purpose of the foregoing resolutions, the taking of any action or
the execution and delivery of any document or instrument by that
officer to be conclusive evidence of that
approval.
Exhibit
4.1
NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY OTHER SECURITIES LAWS (THE
“ACTS”). NEITHER THIS WARRANT NOR THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER MAY BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT OR COMMON STOCK PURCHASABLE HEREUNDER,
AS APPLICABLE, UNDER THE ACTS, OR (B) AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACTS.
YOUNGEVITY
INTERNATIONAL, INC.
WARRANT
AGREEMENT
VOID
AFTER 5:00 P.M. NEW YORK TIME, _________________, 20__
Issue
Date:
1.
Basic Terms
. This Warrant
Agreement (the “Warrant”) certifies that, for value
received, the registered holder specified below or its registered
assigns (“Holder”) is the owner of a warrant of
Youngevity International, Inc., a Delaware corporation having its
principal place of business at 2400 Boswell Road, Chula Vista,
California 91914 (the “Corporation”), subject to
adjustments as provided herein, to purchase _______________________
(_________) shares of the Common Stock, $0.001 par value, of the
Corporation (the “Common Stock”) from the Corporation
at the price per share shown below (the “Exercise
Price”).
|
Holder:
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|
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Exercise Price per
share:
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$4.75
|
Except
as specifically provided otherwise, all references in this Warrant
to the Exercise Price and the number of shares of Common Stock
purchasable hereunder shall be to the Exercise Price and number of
shares after any adjustments are made thereto pursuant to this
Warrant.
2.
Corporation’s
Representations/Covenants
. The Corporation represents and
covenants that the shares of Common Stock issuable upon the
exercise of this Warrant shall at delivery be fully paid and
non-assessable and free from taxes, liens, encumbrances and charges
with respect to their purchase. The Corporation shall take any
necessary actions to assure that the par value per share of the
Common Stock is at all times equal to or less than the then current
Exercise Price per share of Common Stock issuable pursuant to this
Warrant. The Corporation shall at all times reserve and hold
available sufficient shares of Common Stock to satisfy all
conversion and purchase rights of outstanding convertible
securities, options and warrants of the Corporation, including this
Warrant.
3.
Method of Exercise; Fractional
Shares
. This Warrant is exercisable at the option of the
Holder at any time by surrendering this Warrant, on any business
day during the period (the “Exercise Period”) beginning
the business day after the issue date of this Warrant specified
above and ending at 5:00 p.m. (New York time) two (2) years after
the issue date. To exercise this Warrant, the Holder shall
surrender this Warrant at the principal office of the Corporation
or that of the duly authorized and acting transfer agent for its
Common Stock, together with the executed exercise form
(substantially in the form attached hereto) and payment in cash or
by wire transfer of immediately available funds of an amount equal
to the Exercise Price multiplied by the number of shares of the
Common Stock being purchased under this Warrant. The principal
office of the Corporation is located at the address specified in
Section 1 of this Warrant; provided, however, that the Corporation
may change its principal office upon notice to the Holder. This
Warrant is not exercisable with respect to a fraction of a share of
Common Stock. In lieu of issuing a fraction of a share remaining
after exercise of this Warrant as to all full shares covered by
this Warrant, the Corporation shall either at its option (a) pay
cash for the fractional share in an amount equal to the fraction so
issuable multiplied by the then fair market price for the shares of
Common Stock; or (b) issue scrip for the fraction in registered or
bearer form, which shall entitle the Holder to receive a
certificate for a full share of Common Stock on surrender of scrip
aggregating a full share.
4.
Protection
Against Dilution
. If the Corporation, with respect to the
Common Stock, (1) pays a dividend or makes a distribution on
shares of common stock that is paid in shares of common stock or in
securities convertible into or exchangeable for Common Stock (in
which latter event the number of shares of common stock initially
issuable upon the conversion or exchange of such securities shall
be deemed to have been distributed), (2) subdivides outstanding
shares of Common Stock, (3) combines outstanding shares of
Common Stock into a smaller number of shares, or (4) issues by
reclassification of common stock any shares of capital stock of the
Corporation, the Exercise Price in effect immediately prior thereto
shall be adjusted so that each Holder thereafter shall be entitled
to receive the number and kind of shares of Common Stock or other
capital stock of the Corporation that it would have owned or been
entitled to receive in respect of this Warrant immediately after
the happening of any of the events described above had this Warrant
been converted immediately prior to the happening of that event. An
adjustment made in accordance with this Section shall become
effective immediately after the record date, in the case of a
dividend, and shall become effective immediately after the
effective date, in the case of a subdivision, combination, or
reclassification. If, as a result of an adjustment made in
accordance with this Section 4, the Holder becomes entitled to
receive shares of two or more classes of capital stock or shares of
common stock and other capital stock of the Corporation, the board
of directors (whose determination shall be conclusive) shall
determine the allocation of the adjusted Exercise Rate between or
among shares of such classes of capital stock or shares of Common
Stock and other capital stock.
5.
Adjustment for
Reorganization, Consolidation, Merger, Etc
. In the event of
any consolidation or merger to which the Corporation is a party
other than a consolidation or merger in which the Corporation is
the continuing corporation, or the sale or conveyance to another
corporation of the property of the Corporation as an entirety or
substantially as an entirety or any statutory exchange of
securities with another corporation (including any exchange
effected in connection with a merger of a third corporation into
the Corporation) (each such transaction referred to herein as
“
Reorganization
”), the
Corporation shall give notice to the holder of this Warrant at
least five (5) days prior to the closing of such transaction (such
notice to be deemed given if publicly reported in a press release
or filing with the Securities and Exchange Commission) and the
Holder shall thereupon be entitled to receive and provision shall
be made therefor
in any
agreement relating to a Reorganization, the kind and number of
securities or property (including cash) of the Corporation
resulting from such consolidation or surviving such merger or to
which such properties and assets shall have been sold or otherwise
transferred or with whom securities have been exchanged, which the
Holder would have owned or been entitled to receive as a result of
such Reorganization had this Warrant been exercised immediately
prior to such Reorganization (and assuming the Holder failed to
make an election, if any was available, as to the kind or amount of
securities, property or cash receivable by reason of such
Reorganization; provided that if the kind or amount of securities,
property or cash receivable upon such Reorganization is not the
same for each share of common stock in respect of which such rights
of election shall not have been exercised (“non-electing
share”) then for the purpose of this Section the kind and
amount of securities, property or cash receivable upon such
Reorganization for each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the
non-electing shares). In any case, appropriate adjustment shall be
made in the application of the provisions herein set forth with
respect to the rights and interests thereafter of the Holder, to
the end that the provisions set forth herein (including the
specified changes and other adjustments to the conversion rate)
shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares, other securities or property thereafter
receivable upon exercise of this Warrant. The provisions of this
Section similarly apply to successive
Reorganizations.
6.
Notice of
Adjustment
. Upon the happening of an event requiring an
adjustment of the Exercise Price or the shares purchasable under
this Warrant, the Corporation shall, within thirty (30) days, give
written notice to the Holder stating the adjusted Exercise Price
and the adjusted number and kind of securities or other property
purchasable under this Warrant resulting from the event and setting
forth in reasonable detail the method of calculation and the facts
upon which the calculation is based.
7.
Dissolution,
Liquidation
. In case of the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation (other
than in connection with reorganization, consolidation, merger, or
other transaction covered by Section 5 above) is at any time
proposed, the Corporation shall give at least twenty (20) days
prior written notice to the Holder. Such notice shall contain: (a)
the date on which the transaction is to take place; (b) the record
date (which shall be at least twenty (20) days after the giving of
the notice) as of which holders of Common Stock will be entitled to
receive distributions as a result of the transaction; (c) a brief
description of the transaction; (d) a brief description of the
distributions to be made to holders of Common Stock as a result of
the transaction; and (e) an estimate of the fair value of the
distributions. On the date of the transaction, if it actually
occurs, this Warrant and all rights under this Warrant shall
terminate.
8.
Rights of Holder
.
This Warrant does not entitle the Holder to any voting rights or,
except for the foregoing notice provisions, any other rights as a
shareholder of the Corporation. No dividends are payable or will
accrue on this Warrant or the shares of Common Stock purchasable
under this Warrant until, and except to the extent that, this
Warrant is exercised. Upon the surrender of this Warrant and
payment of the Exercise Price as provided above, the person or
entity entitled to receive the shares of Common Stock issuable upon
such exercise shall be treated for all purposes as the record
holder of such shares as of the close of business on the date of
the surrender of this Warrant for exercise as provided above. Upon
the exercise of this Warrant, the Holder shall have all of the
rights of a shareholder in the Corporation.
9.
Exchange for Other
Denominations
. This Warrant is exchangeable, on its
surrender by the Holder to the Corporation, for a new Warrant of
like tenor and date representing in the aggregate the right to
purchase the balance of the number of shares purchasable under this
Warrant in denominations and subject to restrictions on transfer
contained herein, in the names designated by the Holder at the time
of surrender.
10.
Substitution
. Upon
receipt by the Corporation of evidence satisfactory (in the
exercise of reasonable discretion) to it of the ownership of and
the loss, theft or destruction or mutilation of this Warrant, and
(in the case or loss, theft or destruction) of indemnity
satisfactory (in the exercise of reasonable discretion) to it, and
(in the case of mutilation) upon the surrender and cancellation
thereof, the Corporation will issue and deliver, in lieu thereof, a
new Warrant of like tenor.
11.
Restrictions on
Transfer
. Neither this Warrant nor the shares of Common
Stock issuable upon exercise of this Warrant have been registered
under the Securities Act of 1933, as amended, or any other
securities laws (the “Acts”). Neither this Warrant nor
the shares of Common Stock purchasable hereunder may be sold,
transferred, pledged or hypothecated in the absence of (a) an
effective registration statement for this Warrant or the shares of
Common Stock purchasable hereunder, as applicable, under the Acts,
or (b) an opinion of counsel reasonably satisfactory to the
Corporation that registration is not required under such Acts. If
the Holder seeks an opinion from Holder’s counsel as to
transfer without registration, the Corporation shall provide such
factual information to Holder’s counsel as Holder’s
counsel reasonably requests for the purpose of rendering such
opinion. Each certificate evidencing shares of Common Stock
purchased hereunder will bear a legend describing the restrictions
on transfer contained in this paragraph unless, in the opinion of
counsel reasonably acceptable to the Corporation, the shares need
no longer to be subject to the transfer restrictions.
12.
Transfer
.
Except as otherwise provided in this Warrant, this Warrant is
transferable only on the books of the Corporation by the Holder in
person or by attorney, on surrender of this Warrant, properly
endorsed.
13.
Recognition
of Holder
. Prior to due presentment for registration of
transfer of this Warrant, the Corporation shall treat the Holder as
the person exclusively entitled to receive notices and otherwise to
exercise rights under this Warrant. All notices required or
permitted to be given to the Holder shall be in writing and shall
be given by first class mail, postage prepaid, addressed to the
Holder at the address of the Holder appearing in the records of the
Corporation.
14.
Payment
of Taxes
. The Corporation shall pay all taxes and other
governmental charges, other than applicable income taxes, that may
be imposed with respect to the issuance of shares of Common Stock
pursuant to the exercise of this Warrant.
15.
Headings
.
The headings in this Warrant are for purposes of convenience in
reference only, shall not be deemed to constitute a part of this
Warrant and shall not affect the meaning or construction of any of
the provisions of this Warrant.
16.
Miscellaneous
.
This Warrant may not be changed, waived, discharged or terminated
except by an instrument in writing signed by the Corporation and
the Holder. This Warrant shall inure to the benefit of and shall be
binding upon the successors and assigns of the Corporation. Under
no circumstances may this Warrant be assigned by the
Holder.
17.
Governing
Law
. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware without giving
effect to its principles governing conflicts of law.
YOUNGEVITY
INTERNATIONAL, INC.
By:
___________________________________
Name:
Title:
YOUNGEVITY INTERNATIONAL, INC.
Form of Transfer
(To be
executed by the Holder to transfer the Warrant)
For
value received the undersigned registered holder of the attached
Warrant hereby sells, assigns, and transfers the Warrant to the
assignee(s) named below:
|
Names
of
Assignee
|
Address
|
Taxpayer ID No.
|
Number of shares subject to
transferred Warrant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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The
undersigned registered holder further irrevocably appoints
____________________ _______________________________ attorney (with
full power of substitution) to transfer this Warrant as aforesaid
on the books of the Corporation.
Date:______________________________
___________________________________
YOUNGEVITY INTERNATIONAL, INC.
Exercise Form
(To be
executed by the Holder to purchase
Common
Stock pursuant to the Warrant)
The
undersigned holder of the attached Warrant hereby irrevocably
elects to exercise purchase rights represented by such Warrant for,
and to purchase, ___________ shares of Common Stock of Youngevity
International, Inc., a Delaware corporation. The undersigned
tenders cash payment for those shares.
The
undersigned requests that (1) a certificate for the shares be
issued in the name of the undersigned and (2) if the number of
shares with respect to which the undersigned holder has exercised
purchase rights is not all of the shares purchasable under this
Warrant, that a new Warrant of like tenor for the balance of the
remaining shares purchasable under this Warrant be
issued.
Date:______________________________
___________________________________
Exhibit
10.1
July
31, 2018
CONFIDENTIAL
Dave
Briskie
Youngevity
International, Inc.
2400
Boswell Road
Chula
Vista, CA 91914
Dear
Mr. Briskie:
This letter (the "Agreement") confirms Corinthian
Partners, LLC ("CP") engagement as an exclusive placement agent for
Youngevity International, Inc. (“Youngevity”), a
Delaware corporation, in connection with the proposed Capital Raise
(the ''Offering")
of
up to Three
Million
dollars (
$3,0
00,000), or more as agreed, of the Company's
securities (the "Securities") as outlined in the Convertible
Preferred Stock Term Sheet, Share Purchase Agreement, and
associated documents dated on or about August 1, 2018 (the "Term
Sheet"). It is anticipated that the Securities will be sold only to
"accredited investors" (the "Investors"), as such term is defined
in Rule 501(a) of Regulation D, promulgated under the United States
Securities Act of 1933, as amended, pursuant to an exemption from
registration under Rule 506 of Regulation D.
Subject
to the terms and conditions of this Agreement, the Company hereby
appoints CP to act on a best efforts basis as its exclusive
placement agent to privately place the Securities in an amount and
on terms and conditions satisfactory to the Company. CP hereby
accepts such engagement and agrees to use its best efforts to
privately place the Securities with potential Investors. The
Company shall promptly refer to CP all offers, inquiries and
proposals relating to any placement of the Securities made at any
time during the Term (as defined below).
1.
Services to
be Rendered.
In connection with
the Offering, as requested, CP will assist the Company in
structuring the proposed Offering, identifying, contacting and
evaluating potential purchasers, preparing executive summaries or
business plans, facilitating potential
purchasers
due
diligence investigations, analyzing and advising on the financial
implications of offers, preparing and making presentations to the
Company's Board of Directors, formulating negotiation strategies
and conducting negotiations, as appropriate, and in such other
matters as may be agreed upon from time to time by CP and the
Company (the ''Services").
In connection with this Agreement, the Company
agrees to keep CP up to date and apprised of all material business,
market and current legal practices and developments related to the
Company and its operations and management. CP shall devote such
time and effort, as it deems commercially reasonable under the
circumstances in rendering the Services. CP cannot guarantee
results on behalf of the Company, but shall use its best efforts to
pursue all avenues that it deems reasonable through its network of
contacts. CP will post the Offering on its web portal,
https://ignitionfunding.com/
.
2.
Compensation.
For CP's services hereunder, the
Company agrees to pay CP the fees outlined below upon closing of a
sale of any of the Securities (in each instance, a
"Closing"):
(a)
a
placement fee equal to
five
percent (
5
.0%)
of
the gross purchase price paid for the Securities,
payable in full, in cash, at a Closing for the sale of any of the
Securities, and a non-accountable expense allowance equal to two
percent (2.00%) of the gross proceeds of the
Offering.
(b)
the
Company shall issue to CP, or its permitted assigns, warrants (the
"PA Warrants") of the Company equal to ten percent (10%) of the
warrants issued to investors pursuant to the Offering, if and when
the warrants are issued to the investors. The PA Warrants shall be
transferable by CP to its permitted assigns, representatives and
agents.
(c)
Notwithstanding
anything to the contrary contained herein no placement fee or PA
Warrants shall be paid or issued to CP with respect to any
Securities sold to the Company’s officers, directors,
shareholders who not are already existing clients of CP, or any of
the individuals or entities set forth on Exhibit B hereto. An
Escrow Account (the "Escrow Account") with a third-party agent
approved by the parties hereto will be used for each closing during
the Term. All consideration due CP shall be paid to CP directly
from such escrow. Any fee charged by the escrow agent in the
performance of its duties as escrow agent shall be borne by the
Company.
In
the event there are multiple partial closings prior to the final
closing of the Transaction, the Company shall pay CP a pro-rata
portion of the cash portion of the Transaction Fee and shall issue
to CP, or its designees, a pro-rata portion of the PA Warrants as
soon as is practicable when earned.
3.
RESERVED
4.
Information.
The Company will furnish CP such
information with respect to the Company and access to such Company
personnel and representatives, including the Company's auditors and
counsel, as CP may request in order to permit CP to advise the
Company and to assist the Company in preparing offering materials
for use in connection with the Offering (including, but not limited
to: a business plan; executive summary; three (3) year historical
income statement, statement of cash flows, and balance. sheet;; use
of proceeds statement; investor presentation; valuation analysis)
(collectively, the "Offering Materials"). The Company will be
solely responsible for the contents of the Offering Materials and
other information provided to investors in connection with the
Offering. The Company represents and warrants to CP that the
Offering Materials will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The Company agrees to advise CP
promptly upon the Company becoming aware of the occurrence of any
event or change in circumstance that results or might reasonably be
expected to result in the Offering Materials containing any untrue
statement of a material fact or omitting to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Company authorizes CP to provide the Offering Materials to
investors in connection with the Offering. The Company and CP shall
have the right to approve every form of letter, circular, notice,
memorandum or other written communication from the Company or any
person acting on its behalf in connection with the
Offering.
5.
Termination
and Survival.
The term of our engagement hereunder shall be for
a period commencing on the date hereof and expiring on the earlier
of the final closing of a Transaction, unless sooner terminated or
extended pursuant to the following sentences (the "Term"). This
Agreement may be terminated prior to expiration of the Term, by CP
or Youngevity for any reason at any time upon fifteen (15) days
prior written notice. Notwithstanding the foregoing, it is
understood that the provisions of paragraphs 2 (to the extent fees
are payable prior to termination}, Paragraph 2(c) (to the extent
fees are payable after termination), 3 (to the extent expenses have
been incurred prior to termination), and sections 6 through 18
of
this Agreement shall remain operative and in full
force and effect regardless of any termination or expiration of
this Agreement. In the event of termination, CP shall be
immediately paid in full on all items of compensation and expenses
payable to CP pursuant hereto, as of the date of
termination.
7.
Confidentiality
of Advice.
Except as otherwise provided in this paragraph,
any written or other advice rendered by CP pursuant to its
engagement hereunder are solely for the use and benefit of the
Company's executive management team and Board of Directors and
shall not be publicly disclosed in whole or in part, in any manner
or summarized, excerpted from or otherwise publicly referred to or
made available to third parties, other than representatives and
agents of the Company's executive management team and Board of
Directors who also shall not disclose such information, in each
case, without CPs prior approval,. unless in the opinion of counsel
.and after consultation with CP, such disclosure is required by
law. In addition, other than in connection with discussions with
potential Investors with respect to potential sales of Securities
or as required by law, CP may not be otherwise publicly referred to
without its prior written consent. The Company acknowledges that CP
and its affiliates are in the business of providing financial
services and consulting advice to others. Nothing herein contained
shall be construed to limit or restrict CP in conducting such
business with respect to others, or in rendering such advice to
others, except as such advice may relate to matters relating to the
Company's business and properties and that might compromise
confidential information delivered by the Company to CP. CP agrees
to maintain the confidentiality of all non-public information
provided to it by the Company and not to use such information for
any purpose other than in accordance with disclosures approved by
the Company.
8.
Obligations
Limited.
CP shall have no obligation to make any
independent appraisals of assets or liabilities or any independent
verification of the accuracy or completeness of any information
provided it in the course of this engagement and shall have no
liability in regard thereto.
9.
Third Party
Beneficiaries.
This Agreement is made solely for the benefit of
the Board of Directors of the Company, CP and other Indemnified
Persons (as defined herein), and their respective successors,
assigns, heirs and personal representatives, and no other person
shall acquire or have any right under or by virtue of this
Agreement.
10.
Representations
and Warranties.
The Company
represents and warrants that this Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
legal valid and binding obligation of the
Company.
CP
represents that it is a FINRA licensed broker-dealer in good
standing with the SEC and each state securities authority in which
it offers or sells securities and has an anti-money laundering
program in place reasonably designed to comply with Section 352 of
the USA Patriot Act, NASO Rule 3011, and NYSE Rule 445. CP's
anti-money laundering program includes: (i) Anti-Money
Laundering/"Know Your Customer" policies and procedures (ii) the
designation of an Anti-Money Laundering Compliance Officer; (iii}
recording-keeping and reporting practices in accordance with
applicable law; (iv) reporting of suspicious. activity to
government authorities in accordance with applicable law; (v)
anti-money laundering training; and (vi) independent testing for
compliance. CP will provide such periodic reports or certifications
to the Company regarding this program as the Company may reasonably
request.
CP’s web
portal,
https://ignitionfunding.com/
,
complies in all respects with applicable law. Insofar as the
offering shall be made pursuant to Rule 506(c), CP shall have
verified that each investor in the Offering is an accredited
investor under Rule 506 (c) of the Securities Act of 1933, and
shall have taken the following action to satisfy the requirements
of Rule 506(c): (i) reviewed an IRS form provided by the investor
that reports such investor’s income for the two most recent
years as meeting an accredited investor status and received a
written representation from the investor that it reasonably expects
to reach the income level required to qualify as an accredited
investor in the current year; (ii) reviewed one or more documents
dated within the past three months to confirm assets as well as a
report from a national consumer reporting agency to confirm
liabilities of the investor and received a written representation
from the investor that it has disclosed all liabilities necessary
to make a net worth determination
; and (iii) obtained a
written representation from a regsitered broker-dealer, registered
investment advisor, licensed attorney or certified public
accountant that has been verified to be an independent third party
that has determined that the purchaser is an accredited
investor.
12
.
Indemnification.
In
connection with and as part of the engagement contemplated herein,
each party agrees to indemnify, defend and hold the other party
harmless in accordance with the indemnification rider attached
hereto as
Exhibit
A
.
13.
Non-Circumvention.
The Company agrees not to circumvent,
avoid, bypass, or obviate directly or indirectly, the intent of
this Agreement, including that the Company shall not permit its
subsidiaries and its other affiliated entities to sell securities
with the effect of avoiding payment of fees under this Agreement.
The Company agrees that during the term of this Agreement and for a
period of six (6) months after the termination of this Agreement
not to accept any financing upon the terms set forth in the Term
Sheet from any third party whom CP first introduces to the
Company
via
an in person, a telephonic meeting or through
CP’s
web portal,
https://ignitionfunding.com/
,
or who is a current client of CP and otherwise becomes an investor
in the Company by reason of CP’s investment advice (which
would exclude by definition, and require more than, an “email
blast” by CP to its clients), without the consent of CP,
unless for each business opportunity accepted by the Company from a
third party introduced by CP or otherwise, the Company remits a
term sheet providing for compensation to CP in accordance herewith,
or which otherwise provides for
compensation structure agreeable to CP, in its
sole discretion.
14.
Governing
Law; Jurisdiction; Jury Trial.
All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal
courts sitting in New York, New York, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in
an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT TO A JURY TRIAL, AND AGREES NOTTO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
15.
Legal Fees
and Costs.
If a legal action is initiated by any party to
this Agreement against another; arising out of or relating to the
alleged performance or non performance of any right or obligation
established hereunder, or any dispute concerning the same, any and
all fees, costs and expenses reasonably incurred by each successful
party or his, her or its legal counsel in investigating, preparing
for, prosecuting, defending against, or providing evidence and
producing documents or taking any other action in respect of such
action shall be the joint and several obligation of the
unsuccessful party(ies) and shall be paid or reimbursed by the
unsuccessful party(ies).
16.
Severability.
If
one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the
parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (a) such provision shall be
excluded from this Agreement, (b) the balance of the Agreement
shall be interpreted as if such provision were so excluded and (c)
the balance of the Agreement shall be enforceable in accordance
with its terms.
17.
Future
Advertisements.
The Company
agrees that CP has the right to place advertisements describing its
services to the Company under this Agreement in its own marketing
materials as well as financial and other newspapers and journals at
its own expense following the final closing of the
Offering.
18.
Miscellaneous.
(a)
This Agreement and the documents referred to herein constitute the
entire agreement between the parties hereto pertaining to the
subject matter hereof, and any and all other written or oral
agreements existing between the parties hereto are expressly
cancelled; (b) Only an instrument in writing executed by the
parties hereto may amend this Agreement; (c) The failure of any
party to insist upon strict performance of any of the provisions of
this Agreement shall not be construed as a waiver
of
any subsequent default of the same or similar
nature, or any other nature; (d) This Agreement may be executed in
two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall: constitute one (1)
instrument; (e) This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. The rights and obligations of the parties under
this Agreement may not be assigned or delegated without the prior
written consent of both parties, and any purported assignment
without such written consent shall be null and
void.
[The
remainder of this page is intentionally left blank.]
If the
foregoing correctly sets forth the understanding between CP and the
Company, please so indicate in the space provided below for that
purpose within five business (5) days of the date hereof or this
Agreement shall be withdrawn and become null and void. The
undersigned parties hereto have caused this Agreement to be duly
executed by their authorized representatives, pursuant to corporate
board approval and intend to be legally bound.
Corinthian Partners, LLC
Principal
Youngevity Corporation
Dave
Briskie
President
and CFO
EXHIBIT
A
INDEMNIFICATION AND
CONTRIBUTION
For
purposes of this
Exhibit
A
unless the context otherwise requires, "CP" shall include
CP, any affiliated entity, and each of their respective officers,
directors, employees, partners and controlling persons within the
meaning of the federal securities laws and the successors, assigns,
heirs and personal representatives of the foregoing persons and the
“Company shall include the Company, any affiliated entity,
and each of their respective officers, directors, employees,
partners and controlling persons within the meaning of the federal
securities laws and the successors, assigns, heirs and personal
representatives of the foregoing persons . Any capitalized terms
used and not otherwise defined in this
Exhibit A
shall have the
meanings ascribed to such capitalized terms in the agreement (the
“Agreement”) to which this
Exhibit A
is
attached.
The
Company shall indemnify, defend and hold CP harmless against any
losses, claims, damages, liabilities, costs and expenses
(including, without limitation, any legal or other expenses
incurred in connection with investigating, preparing to defend or
defending against any action, claim, suit or proceeding, whether
commenced or threatened (collectively, “Claims”) and
whether or not CP is a party thereto, or in appearing or preparing
for appearance as a witness, based upon, relating to or arising out
of or in connection with advice or services rendered or to be
rendered pursuant to the Agreement, the transaction contemplated
thereby or CP's actions or inactions in connection with any such
advice, services or transaction (including, but not limited to, any
liability arising out of (i) any misstatement or alleged
misstatement of a material fact in any offering materials and (ii)
any omission or alleged omission from any offering materials,
including, without limitation of a ,material fact necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading}, except to the extent that any such
loss, claim, damage, liability, cost or expense results solely from
the gross negligence
or
bad
faith of CP in performing the services which are the subject of the
Agreement. If for any reason the foregoing indemnification is
unavailable to CP or insufficient to hold it harmless, then the
Company shall contribute to the amount paid or payable by CP as a
result of suct1 loss, claim, damage or liability in such proportion
as is appropriate to reflect the relative benefits received by the
Company and its stockholders on the one hand and CP on the other
hand, or, if such allocation is not permitted by applicable law,
not only such relative benefits but also the relative fault of the
Company and CP, as well as any relevant equitable considerations;
provided, however, that, to the extent permitted by applicable law,
CP shall not be responsible for amounts which in the aggregate are
in excess of the amount of all fees actually received from the
Company in connection with the engagement. No person guilty of
fraudulent misrepresentation (as such term has been interpreted
under Section 11(f) of the Securities Act of 1933) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Relative benefits to CP, on the one
hand, and the Company and its stockholders, on the other hand, with
respect to the engagement shall be deemed to be in the same
proportion as (i) the total value paid or proposed to be paid or
received or proposed to be received by the Company or its
stockholders, as the case may be, pursuant to the potential
transaction., whether or not consummated, contemplated by the
engagement bears to (ii) all fees paid to CP by the Company in
connection with the engagement. CP shall not have any liability to
the Company in connection with the engagement, except to the extent
of its gross negligence or willful misconduct.
CP
shall indemnify, defend and hold the Company harmless against any
Claims and whether or not the Company is a party thereto, or in
appearing or preparing for appearance as a witness, based upon,
relating to or arising out of or in connection with a breach of the
terms of the Agreement by CP or CP’s gross negligence or
willful misconduct. If for any reason the foregoing indemnification
is unavailable to the Company or insufficient to hold it harmless,
then CP shall contribute to the amount paid or payable by the
Company as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative benefits
received by the Company and its stockholders on the one hand and CP
on the other hand, or, if such allocation is not permitted by
applicable law, not only such relative benefits but also the
relative fault of the Company and CP, as well as any relevant
equitable considerations; provided, however, that, to the extent
permitted by applicable law, the Company shall not be responsible
for amounts which in the aggregate are in excess of the amount of
all fees actually paid by the Company in connection with the
engagement. No person guilty of fraudulent misrepresentation (as
such term has been interpreted under Section 11(f) of the
Securities Act of 1933) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Relative benefits to CP, on the one hand, and the Company and its
stockholders, on the other hand, with respect to the engagement
shall be deemed to be in the same proportion as (i) the total value
paid or proposed to be paid or received or proposed to be received
by the Company or its stockholders, as the case may be, pursuant to
the potential transaction., whether or not consummated,
contemplated by the engagement bears to (ii) all fees paid to CP by
the Company in connection with the engagement. CP shall not have
any liability to the Company in connection with the engagement,
except to the extent of its gross negligence or willful
misconduct.
The
indemnifying party also agrees to promptly upon demand reimburse
the indemnified party for its reasonable legal and other expenses
reasonably incurred by it for one legal counsel in connection with
investigating, preparing to defend, or defending any lawsuits,
investigations, claims or other proceedings in connection with any
matter referred to in or otherwise contemplated by the Agreement;
provided, however, that in the event a final judicial determination
is made to the effect that the indemnified party is not entitled to
indemnification hereunder, the indemnified party will remit to the
indemnifying party any amounts that have been so
reimbursed.
No
party shall not be liable for any settlement of any action, claim,
suit or proceeding (or for any related losses, damages,
liabilities, costs or expenses) if such settlement is effectuated
without its written consent, which shall not be unreasonably
withheld. Each party further agrees that it will not settle or
compromise or consent to the entry of any judgment in any pending
or threatened action, claim, suit or proceeding in respect of which
Indemnification or contribution may be sought hereunder (whether or
not it is a party therein) unless the other party has obtained an
unconditional release of such party, from all liability arising
therefrom. The reimbursement, indemnity and contribution
obligations of the parties set forth in this Agreement shall be in
addition to a:ny liability which such party may otherwise have to
the other party.
Any
Indemnified Persons that are not signatories to this Agreement
shall be deemed to be third party beneficiaries of this
Agreement.
Exhibit 10.2
YOUNGEVITY INTERNATIONAL, INC.
SHARE PURCHASE AGREEMENT
This
Share Purchase Agreement (this “
Agaa
reement
”) is dated as
of
August
, 2018, among Youngevity International, Inc., a Delaware
corporation (the “
Company
”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “
Purchaser
” and
collectively the “
Purchasers
”).
RECITALS
A. The
Company and each Purchaser is executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act, and
Rule 506 of Regulation D (“
Regulation D
”) as
promulgated by the United States Securities and Exchange Commission
(the “
Commission
”) under the
Securities Act.
B. Each
Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in
this Agreement, that aggregate number of shares of Preferred Stock
set forth below such Purchaser’s name on the signature page
of this Agreement as provided herein.
C. Contemporaneously
with the execution and delivery of this Agreement, the parties
hereto are executing and delivering the Registration Rights
Agreement, pursuant to which, among other things, the Company will
agree to provide certain registration rights with respect to the
Shares under the Securities Act and the rules and regulations
promulgated thereunder and applicable state securities
laws.
AGREEMENT
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company
and each Purchaser agree as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions
. In addition to the
terms defined elsewhere in this Agreement, for all purposes of this
Agreement, the following terms have the meanings set forth in this
Section 1.1:
“
Affiliate
” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 144 under the Securities Act. With respect to a Purchaser, any
investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such
Purchaser.
“
Business Day
” means any
day except Saturday, Sunday, any day which shall be a federal legal
holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“
Certificate of
Designation
” means the Certificate of Designation to
be filed prior to the Closing by the Company with the Secretary of
State of Delaware in the form of
Exhibit A
attached hereto.
“
Closing
”
means the closing of the purchase and sale of the Shares pursuant
to Section
2.1.
“
Closing Date
” means the
date and time of the Closing.
“
Commission
” means the
Securities and Exchange Commission.
“
Common Stock
” means the
Common Stock of the Company, par value $0.001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed into.
“
Common Stock Equivalents
”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“
Company Counsel
” means
Gracin & Marlow, LLP, with offices located at the Chrysler
Building, 405 Lexington Avenue, New York, New York,
10174.
“
Exchange
Act
” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
“
GAAP
” shall have the
meaning ascribed to such term in Section 3.1(e).
“
Incentive Warrants
” shall
have the meaning ascribed to such term in Section 4.6.
“
Intellectual Property
”
shall have the meaning ascribed to such term in Section
3.1(o).
“
Liens
”
means a lien, charge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.
“
Material Adverse Effect
”
shall have the meaning assigned to such term in Section
3.1(a).
“
Per Share Purchase Price
”
equals $9.50.
“
Person
” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“
Preferred Stock
” means
the shares of Company Series C Convertible Preferred Stock to be
issued to the Purchasers.
“
Proceeding
” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
“
Purchaser Party
” shall
have the meaning ascribed to such term in Section 4.5.
“
Registration Rights
Agreement
” means the Registration Rights Agreement,
dated the date hereof, among the Company and the Purchasers, in the
form of
Exhibit B
attached hereto.
“
Registration Statement
”
means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale by the
Purchasers of the Underlying Shares.
“
Rule 144
” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.
“
SEC Documents
” shall have
the meaning ascribed to such term in Section 3.1(e).
“
Securities Act
” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Shares
” means the shares
of Preferred Stock issued or issuable to each Purchaser pursuant to
this Agreement.
“
Subscription Amount
”
means, as to each Purchaser, the aggregate amount to be paid for
the Shares purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and
next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.
“
Subsidiary
”
means any subsidiary of the Company as set forth in the SEC
Documents.
“
Trading Day
” means a day
on which the Common Stock is traded on a Trading
Market.
“
Trading Market
” means the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the NYSE American
LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board.
“
Transaction Documents
”
means this Agreement, the Registration Rights Agreement and any
other documents or agreements executed in connection with the
transactions contemplated hereunder.
“
Transfer Agent
” means
Pacific Stock Transfer, and any successor transfer agent of the
Company.
“
Underlying Shares
” means
the shares of Common Stock issued and issuable upon conversion of
the Preferred Stock.
ARTICLE II
PURCHASE AND SALE
2.1
Closing
.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company
agrees to sell, and each Purchaser agrees to purchase, the number
of Shares of Preferred Stock set forth on the signature page hereto
executed by such Purchaser. The aggregate number of Shares of
Preferred Stock sold hereunder shall be no more than 315,790
Shares. Each Purchaser shall deliver to the Company, via wire
transfer immediately available funds equal to the Subscription
Amount as set forth on the signature page hereto executed by such
Purchaser and the Company shall deliver to such Purchaser the
number of Shares of Preferred Stock set forth on the signature page
hereto executed by such Purchaser, and the Company and such
Purchaser shall deliver the other items set forth in Section 2.2.
Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of
Company Counsel or such other location as the parties shall
mutually agree.
2.2
Deliveries
.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to
be delivered to each Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) an
irrevocable letter of instruction to the transfer agent to either
issue a certificate evidencing a number of Shares of Preferred
Stock equal to such Purchaser’s Shares of Preferred Stock as
set forth on the signature page hereto executed by such Purchaser
and registered in the name of such Purchaser or provide evidence of
book entry of the number of Shares of Preferred Stock equal to such
Purchaser’s Shares of Preferred Stock as set forth on the
signature page hereto executed by such Purchaser and evidence of
the filing and acceptance of the Certificate of Designation from
the Secretary of State of Delaware; and
(iii) the
Registration Rights Agreement duly executed by the
Company.
(b) On
or prior to the Closing Date, each Purchaser shall deliver or cause
to be delivered to the Company the following:
(i) this
Agreement duly executed by such Purchaser;
(ii) the
Subscription Amount as set forth on the signature page hereto
executed by such Purchaser by wire transfer to the account
specified by the Company; and
(iii) the
Registration Rights Agreement duly executed by such
Purchaser.
(a) The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being met or waived by the
Company:
(i)
the accuracy in all
material respects when made and on the Closing Date of the
representations and warranties of the Purchasers contained herein
(except with respect to representations and warranties which relate
to a specific date, in which case such representations and
warranties shall continue to be materially accurate as of such
date);
(ii)
all
obligations, covenants and agreements of the Purchasers required to
be performed at or prior to the Closing Date shall have been
performed;
(iii)
the
delivery by the Purchasers of the items set forth in Section 2.2(b)
of this Agreement;
(iv)
no
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction Documents;
and
(v)
the Company shall
have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary for consummation of
the purchase and sale of the Shares, all of which shall be and
remain so long as necessary in full force and effect.
(b)
The respective
obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met or waived
by each Purchaser as to itself:
(i)
the accuracy in all
material respects on the Closing Date of the representations and
warranties of the Company contained herein (except with respect to
representations and warranties which relate to a specific date, in
which case such representations and warranties shall continue to be
materially accurate as of such date);
(ii)
all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;
(iii)
the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement and a certificate, dated as of the Closing Date and
signed by its Chief Executive Officer or its Chief Financial
Officer, certifying to the fulfillment of the conditions specified
in Sections 2.3(b)(i) and (ii);
(iv)
on
the Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal
Trading Market (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be
terminated prior to the Closing Date), and, at any time prior to
the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States
or New York State authorities;
(v)
no statute, rule,
regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the
Transaction Documents; and
(vi)
the
Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Shares, all of
which shall be and remain so long as necessary in full force and
effect.
ARTICLE
III
REPRESENTATIONS AND WARRANTIES
3.1
Representations
and Warranties of the Company
. Except as set forth in the
SEC Documents which qualify any representation or otherwise made
herein to the extent of the disclosure contained in the SEC
Documents, the Company hereby makes the following representations
and warranties to each Purchaser as of the Closing
Date:
(a)
Organization, Good
Standing and Power
. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power to
own, lease and operate its properties and assets and to conduct its
business as it is now being conducted and as described in the
reports filed by the Company with the Commission pursuant to the
reporting requirements of the Exchange Act, since the end of its
most recently completed fiscal year through the date hereof,
including, without limitation, its most recent report on Form 10-Q.
The Company does not have any material subsidiaries other than
those set forth on Exhibit 21 to the Annual Report on Form 10-K for
the year ended December 31, 2017. The Company is qualified to do
business as a foreign corporation and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except for
any jurisdiction(s) (alone or in the aggregate) in which the
failure to be so qualified will not have a Material Adverse Effect.
For the purposes of this Agreement, “
Material Adverse Effect
” means any
effect on the business, operations, properties or financial
condition of the Company that is material and adverse to the
Company, taken as a whole, and any condition, circumstance or
situation that would prohibit the Company from entering into and
performing any of its obligations hereunder.
(b)
Authorization; Enforcement
. The
Company has the requisite corporate power and authority to enter
into and perform the Transaction Documents and to issue the Shares
in accordance with the terms hereof. The execution, delivery and
performance of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action,
and no further consent or authorization of the Company, its board
of directors or stockholders is required. When executed and
delivered by the Company, the Transaction Documents shall
constitute a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and
remedies or by other equitable principles of general
application.
(c)
Issuance of Shares
. The Shares
to be issued and sold hereunder have been duly authorized by all
necessary corporate action and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable.
In addition, the Shares will be free and clear of all liens,
claims, charges, security interests or agreements, pledges,
assignments, covenants, restrictions or other encumbrances created
by, or imposed by, the Company (collectively, “
Encumbrances
”) and rights
of refusal of any kind imposed by the Company (other than
restrictions on transfer under applicable securities laws) and the
holder of such Shares shall be entitled to all rights accorded to a
holder of Common Stock.
(d)
No Conflicts; Governmental
Approvals
. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby do not and will
not: (i) violate any provision of the Company’s Certificate
of Incorporation or Bylaws, each as amended to date; (ii) conflict
with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to
which the Company is a party or by which the Company’s
properties or assets are bound; or (iii) result in a violation of
any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any
property or asset of the Company is bound or affected, except for
such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. Except for approval of
the NASDAQ Capital Market of the issuance of the Underlying Shares,
which such approval has been obtained by the Company on or before
the date hereof, the Company is not required under federal, state,
foreign or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or
issue and sell the Shares in accordance with the terms hereof
(other than any filings, consents and approvals which may be
required to be made by the Company under applicable state and
federal securities laws, rules or regulations prior to or
subsequent to the Closing).
(e)
SEC Documents, Financial
Statements
. The Common Stock of the Company is registered
pursuant to Section 12(b) of the Exchange Act. During the year
preceding this Agreement, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act (the foregoing materials,
including the exhibits thereto and documents incorporated by
reference therein being collectively referred to as the
“
SEC
Documents
”). At the times of their respective filing,
all such reports, schedules, forms, statements and other documents
complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
promulgated thereunder. At the times of their respective filings,
such reports, schedules, forms, statements and other documents did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of
the Commission or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting
principles applied on a consistent basis (“
GAAP
”) during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly
present in all material respects the consolidated financial
position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments).
(f)
Accountants.
Mayer Hoffman McCann P.C.
whose report on
the financial statements of the Company is filed with the
Commission in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2017, were, at the time such report was
issued, independent registered public accountants as required by
the Securities Act.
(g)
Internal Controls
. The Company
has established and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles in the
United States and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with
respect to any differences.
(h)
Disclosure Controls
. The
Company has established and maintains disclosure controls and
procedures (as such term is defined in Rules 13a-15 and 15d-15
under the Exchange Act). Since the date of the most recent
evaluation of such disclosure controls and procedures, there have
been no significant changes in internal controls or in other
factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses. The Company is in compliance
in all material respects with all provisions currently in effect
and applicable to the Company of the Sarbanes-Oxley Act of 2002,
and all rules and regulations promulgated thereunder or
implementing the provisions thereof.
(i)
No Material Adverse Change
.
Except as disclosed in the SEC Documents, since March 31, 2018, the
Company has not (i) experienced or suffered any Material Adverse
Effect; (ii) incurred any material liabilities, obligations, claims
or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company’s
business; or (iii) declared, made or paid any dividend or
distribution of any kind on its capital stock.
(j)
No Undisclosed Events or
Circumstances
. Except as disclosed in the SEC Documents, and
except for the consummation of the transactions contemplated
herein, since
March
31, 2018, to the Company’s knowledge, no event or
circumstance has occurred or exists with respect to the Company or
its businesses, properties, prospects, operations or financial
condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
(k)
Litigation
. No action, suit,
proceeding or investigation is currently pending or, to the
knowledge of the Company, has been threatened in writing against
the Company that: (i) concerns or questions the validity of this
Agreement; (ii) concerns or questions the right of the Company to
enter into this Agreement; or (iii) is reasonably likely to have a
Material Adverse Effect. The Company is neither a party to nor
subject to the provisions of any material order, writ, injunction,
judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or that the Company
intends to initiate that would have a Material Adverse
Effect.
(l)
Compliance
. Except for defaults
or violations which are not reasonably likely to have a Material
Adverse Effect, the Company is not (i) in default under or in
violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company under), nor has the Company received notice
of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has
been waived); (ii) is in violation of any order of any court,
arbitrator or governmental body; or (iii) is or has been in
violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state
and local laws, applicable to its business.
(m)
Intellectual
Property
.
(i)
To the best of its
knowledge, the Company has entered into agreements with each of its
current and former officers, employees and consultants involved in
research and development work, including development of the
Company’s products and technology providing the Company, to
the extent permitted by law, with title and ownership to patents,
patent applications, trade secrets and inventions conceived,
developed, reduced to practice by such person, solely or jointly
with other of such persons, during the period of employment by the
Company except where the failure to have entered into such an
agreement would not have a Material Adverse Effect. The Company is
not aware that any of its employees or consultants is in material
violation thereof.
(ii)
To
the Company’s knowledge, the Company owns or possesses
adequate rights to use all trademarks, service marks, trade names,
domain names, copyrights, patents, patent applications, inventions,
know how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), and other intellectual property rights
(“
Intellectual
Property
”) as are necessary for the conduct of its
business as described in the SEC Documents. Except as described in
the SEC Documents: (1) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any
such Intellectual Property; (2) there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding by
others against the Company challenging the Company’s rights
in or to any such Intellectual Property and the Company has not
received any written notice of a claim by others against the
Company challenging the Company’s rights in or to any such
Intellectual Property; (3) the Intellectual Property owned by the
Company and, to the knowledge of the Company, the Intellectual
Property licensed to the Company has not been adjudged invalid or
unenforceable by a court of competent jurisdiction or applicable
government agency, in whole or in part, and there is no pending or,
to the knowledge of the Company, threatened action, suit,
proceeding by others challenging the validity or scope of any such
Intellectual Property and Company has not received any written
notice of a claim by others challenging the validity or scope of
any such Intellectual Property; (4) there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or
claim by others against the Company that the Company infringes,
misappropriates or otherwise violates any Intellectual Property or
other proprietary rights of others, and the Company has not
received any written notice of such claim; and (5) to the
Company’s knowledge, no employee of the Company is the
subject of any claim or proceeding involving a violation of any
term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis
of such violation relates to such employee’s employment with
the Company or actions undertaken by the employee while employed
with the Company, in each of (1) through (5), for any instances
which would not, individually or in the aggregate, result in a
Material Adverse Effect.
(n)
Listing and Maintenance
Requirements
. The Company is in compliance with the
requirements of the Trading Market for continued trading of the
Common Stock pursuant thereto. The issuance and sale of the Shares
hereunder does not contravene the rules and regulations of the
Trading Market.
(o)
Private Placement.
Neither the
Company nor its Affiliates, nor any Person acting on its or their
behalf: (i) has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of the Shares
hereunder, (ii) has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security,
under any circumstances that would require registration of the sale
and issuance by the Company of the Shares under the Securities Act;
or (iii) has issued any shares of Common Stock or shares of any
series of preferred stock or other securities or instruments
convertible into, exchangeable for or otherwise entitling the
holder thereof to acquire shares of Common Stock which would be
integrated with the sale of the Shares to Purchasers for purposes
of the Securities Act or of any applicable stockholder approval
provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated, nor
will the Company or any of its subsidiaries or affiliates take any
action or steps that would require registration of any of the
Shares under the Securities Act or cause the offering of the Shares
to be integrated with other offerings. Assuming the accuracy of the
representations and warranties of Purchasers, the offer and
issuance of the Shares by the Company to Purchasers pursuant to
this Agreement will be exempt from the registration requirements of
the Securities Act.
3.2
Representations
and Warranties of the Purchasers
. Each Purchaser, for itself
and for no other Purchaser, hereby represents and warrants to the
Company as follows (as of the Closing Date, unless otherwise noted
below):
(a)
Authority
.
The execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part
of such Purchaser. Each Transaction Document to which it is a party
has been duly executed by such Purchaser, and when delivered by
such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights
generally; (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable
remedies; and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(b)
Own
Account
. Such Purchaser understands that the Shares are
“restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and
is acquiring the Shares as principal for its own account and not
with a view to or for distributing or reselling such Shares or any
part thereof in violation of the Securities Act or any applicable
state securities law, has no present intention of distributing any
of such Shares in violation of the Securities Act or any applicable
state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding
the distribution of such Shares (this representation and warranty
not limiting such Purchaser’s right to sell the Shares
pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws) in violation of
the Securities Act or any applicable state securities law. Such
Purchaser is acquiring the Shares hereunder in the ordinary course
of its business. Such Purchaser understands that it may not be able
to sell any of the Shares without prior registration under the
Securities Act or the existence of an exemption from such
registration requirement.
(c)
No Conflicts
. The execution,
delivery and performance by such Purchaser of the Transaction
Documents and the consummation by such Purchaser of the
transactions contemplated hereby and thereby will not (i) result in
a violation of the organizational documents of such Purchaser; (ii)
conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which
such Purchaser is a party; or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to such Purchaser, except in
the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse
effect on the ability of such Purchaser to perform its obligations
hereunder.
(d)
Purchaser Status
. At the time
such Purchaser was offered the Shares, it was, and at the date
hereof is, an “accredited investor” as defined in Rule
501 under the Securities Act. Investor is not a registered broker
dealer registered under Section 15(a) of the Exchange Act, or a
member of the Financial Industry Regulatory Authority Inc.
(“
FINRA
”), or an entity
engaged in the business of being a broker-dealer. The Purchaser is
not subject to a bad actor disqualification under Rule 506(d) of
the Securities Act.
(e)
Experience of Such Purchaser
.
Such Purchaser, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the Shares
and, at the present time, is able to afford a complete loss of such
investment. Such Purchaser acknowledges that it has not received
any legal or tax advice from the Company or any of its
representatives with respect the transactions contemplated
hereby.
(f)
Access to Information
. Such
Purchaser acknowledges that it has had the opportunity to review
any Company information and business updates requested by Purchaser
and has been afforded (i) the opportunity to ask such questions as
it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions
of the offering of the Shares and the merits and risks of investing
in the Shares and; (ii) access to information about the Company and
its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Such
Purchaser has sought such accounting, legal and tax advice as it
has considered necessary to make an informed decision with respect
to its acquisition of the Shares.
(g)
Brokers and Finders
. Except for
Corinthian L.L.C., no Person will have, as a result of the
transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or any Purchaser for
any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on
behalf of the Purchaser.
(h)
Independent Investment
Decision
. Such Purchaser has independently evaluated the
merits of its decision to purchase Shares pursuant to the
Transaction Documents, and such Purchaser confirms that it has not
relied on the advice of any other Purchaser’s business and/or
legal counsel in making such decision. Such Purchaser understands
that nothing in this Agreement or any other materials presented by
or on behalf of the Company to the Purchaser in connection with the
purchase of the Shares constitutes legal, tax or investment advice.
Such Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the
Shares.
(i)
No Governmental Review
. Such
Purchaser understands that no United States federal or state agency
or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Shares or the
fairness or suitability of the investment in the Shares nor have
such authorities passed upon or endorsed the merits of the offering
of the Shares.
(j)
Residency
. Such
Purchaser’s residence (if an individual) or office in which
its investment decision with respect to the Shares was made (if an
entity) are located at the address immediately below such
Purchaser’s name on its signature page hereto.
(k)
Acknowledgment
. Each Purchaser
acknowledges and agrees that such Purchaser has reviewed and
considered prior to entering this Agreement the more detailed
information about the Company and the risk factors that may affect
the realization of forward-looking statements set forth in the
Company’s filings with the SEC, including its Annual Report
on Form 10-K and its Quarterly Reports on Form 10-Q filed with the
Commission.
The
Company and each of the Purchasers acknowledge and agree that no
party to this Agreement has made or makes any representations or
warranties with respect to the transactions contemplated hereby
other than those specifically set forth in this Article III and the
Transaction Documents.
ARTICLE
IV
OTHER AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions
.
(a)
The Shares may only
be disposed of in compliance with state and federal securities
laws, including the requirement not to trade in the Shares while in
possession of material non-public information. In connection with
any transfer of Shares other than pursuant to an effective
registration statement, to the Company or to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in Section
4.1(c), the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. As a condition of
transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights of a
Purchaser under this Agreement and the Registration Rights
Agreement.
(b)
The Purchasers
agree to the imprinting, so long as is required by this Section
4.1, of a legend on any of the Shares in the following
form:
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “
SECURITIES ACT
”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
(c)
The Company
acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the
Shares to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act
and who agrees to be bound by the provisions of this Agreement and
the Registration Rights Agreement and, if required under the terms
of such arrangement, such Purchaser may transfer pledged or secured
Shares to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Shares may reasonably request in connection with a pledge or
transfer of the Shares, including, if the Underlying Shares are
subject to registration pursuant to the Registration Rights
Agreement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder.
(d)
Certificates
evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)), (i) while a
registration statement (including the Registration Statement)
covering the resale of such Underlying Shares is effective under
the Securities Act, or (ii) following any sale of such Underlying
Shares pursuant to Rule 144, or (iii) if such Underlying Shares are
eligible for sale under Rule 144, without the requirement for the
Company to be in compliance with the current public information
required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as
to such securities and without volume or manner of sale
restrictions, or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent promptly after the effective date of
the Registration Statement if required by the Transfer Agent to
effect the removal of the legend hereunder. Certificates for
Underlying Shares subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Purchasers by crediting
the account of the Purchaser’s prime broker with the
Depository Trust Company System, if the Transfer Agent is a
participant in the DWAC system, and otherwise by physical delivery
of certificates as directed by the Purchaser.
(e)
Each Purchaser,
severally and not jointly with the other Purchasers, agrees that
the removal of the restrictive legend from certificates
representing Shares as set forth in this Section 4.1 is predicated
upon the Company’s reliance that the Purchaser will sell any
Shares pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Shares are
sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth
therein.
4.1
Furnishing of Information
. For
a period of one year after the date of this Agreement, the Company
covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required
to be filed by the Company after the date hereof pursuant to the
Exchange Act. During this one-year period, if the Company is not
required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Purchasers and make publicly available
in accordance with Rule 144 such information as is required for the
Purchasers to sell the Shares under Rule 144. The Company further
covenants that it will take such further action as any holder of
Shares may reasonably request, to the extent required from time to
time to enable such Person to sell such Shares without registration
under the Securities Act within the requirements of the exemption
provided by Rule 144.
4.2
Integration
. The Company shall
not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that could reasonably be expected to be
integrated with the offer or sale of the Shares in a manner that
would require the registration under the Securities Act of the sale
of the Shares to the Purchasers or that would be integrated with
the offer or sale of the Shares for purposes of the rules and
regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such
subsequent transaction.
4.3
Indemnification of
Purchasers
.
(a)
In addition to the
indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold each Purchaser and its directors,
officers, stockholders, members, partners, employees and agents
(and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or
any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with
a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such
controlling person (each, a “
Purchaser Party
”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such
Purchaser Party may suffer or incur (i) as a result of any breach
of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction
Documents or (ii) arising out of, in connection with, or as a
result of the execution or delivery of this Agreement, any other
Transaction Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation
of the transactions contemplated hereby or thereby. The Company
will not be liable to any Purchaser Party under this Agreement to
the extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements
made by such Purchaser Party in this Agreement or in the other
Transaction Documents.
(b)
Promptly after
receipt by any Person (the “
Indemnified Person
”) of
notice of any demand, claim or circumstances which would or might
give rise to a claim or the commencement of any action, proceeding
or investigation in respect of which indemnity may be sought
pursuant to Section 4.5(a), such Indemnified Person shall promptly
notify the Company in writing and the Company shall assume the
defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the
payment of all fees and expenses; provided, however, that the
failure of any Indemnified Person so to notify the Company shall
not relieve the Company of its obligations hereunder except to the
extent that the Company is actually and materially and adversely
prejudiced by such failure to notify. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of
such counsel; (ii) the Company shall have failed promptly to assume
the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Person in such proceeding; or
(iii) in the reasonable judgment of counsel to such Indemnified
Person, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The Company shall not be liable for any settlement of
any proceeding effected without its written consent, which consent
shall not be unreasonably withheld, delayed or conditioned. Without
the prior written consent of the Indemnified Person, which consent
shall not be unreasonably withheld, delayed or conditioned, the
Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Person from
all liability arising out of such proceeding, does not admit
liability on the part of or attribute fault to any Indemnified
Person and contains a provision requiring confidentiality with
respect to the facts and circumstances of the dispute and of the
existence and amount of the settlement.
4.5
Reservation of Preferred Stock
.
As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, a
sufficient number of shares of Preferred Stock for the purpose of
enabling the Company to issue Shares pursuant to this
Agreement.
4.6
Issuance of Incentive Warrants
.
The Company covenants and agrees that upon a Purchaser’s
voluntary conversion of the Preferred Stock in accordance with its
terms, which is effected prior to the two-year anniversary of its
respective original issuance date, it will issue to the holder of
such Shares a two-year warrant (herein, the “
Incentive Warrants
”),
exercisable at $4.75 per share, to purchase a number of shares the
Company’s Common Stock as is equal to the number of
Underlying Shares issued upon the conversion.
4.7
Listing or Quotation of Common
Stock
. The Company’s common stock is currently quoted
on the NASDAQ Capital Market and is not currently eligible for
listing or quotation on any other Trading Market. The Company
hereby agrees to use best efforts to maintain the listing or
quotation of the Common Stock on a Trading Market, and prior to the
Closing to list all of the Underlying Shares on such Trading
Market, as may be applicable. The Company further agrees, if the
Company applies to have the Common Stock traded on any other
Trading Market, it will include in such application all of the
Underlying Shares, and will take such other action as is necessary
to cause all of the Underlying Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all
action reasonably necessary to continue the listing and trading of
its Common Stock on a Trading Market and will comply in all
respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading
Market.
4.8
Equal Treatment of Purchasers
.
No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately
by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or
otherwise.
4.9
Confidentiality After The Date
Hereof
. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement and such other material
non-public information related to the Company in possession of the
Purchaser are publicly disclosed by the Company as described in
Section 4.4, such Purchaser will maintain the confidentiality of
all non-public information disclosed to it in connection with the
transactions contemplated hereby (including the existence and terms
of such transactions).
4.10
Delivery
of Shares After Closing
. The Company shall deliver, or cause
to be delivered, the respective Shares purchased by each Purchaser
to such Purchaser within three Trading Days of the Closing Date
(unless such Purchaser has specified to the Company at the time of
execution of this Agreement that it shall settle “delivery
versus payment” in which case such Shares shall be delivered
on or prior to the Closing Date).
4.11
Form
D; Blue Sky Filings
. The Company agrees to timely file a
Form D with respect to the Shares as required under Regulation D
and to provide a copy thereof, promptly upon request of any
Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption
for, or to qualify the Shares for, sale to the Purchasers at the
Closing under applicable securities or “
Blue Sky
” laws of the
states of the United States, and shall provide evidence of such
actions promptly upon request of any Purchaser.
4.11
Use of Proceeds
.
The Company intends to use the net proceeds of this offering after
payment of the expenses of the offering for general corporate
purposes and shall not use such proceeds for the satisfaction of
any portion of the Company’s debt (other than trade payables
in the ordinary course of the Company’s business and prior
practices), or to redeem any Common Stock or Common Stock
Equivalents.
4.12
Termination
.
Notwithstanding anything herein to the contrary, this Agreement may
be terminated at any time by any Purchaser (with respect to the
obligations of such Purchaser) or the Company, upon written notice
to the other party, if the Closing shall not have occurred on or
before [August 1, 2018] (the “
Outside Date
”); provided,
however, that the right to terminate this Agreement under this
Section 4.13 shall not be available to any party whose (i) breach
of any provision of this Agreement, (ii) failure to comply with
their obligations under this Agreement or (iii) actions not taken
in good faith, shall have been the cause of, or shall have resulted
in, the failure of the Closing to occur on or prior to the Outside
Date or the failure of a condition in Section 2.3 to be satisfied
at such time.
ARTICLE V
MISCELLANEOUS
5.1
Fees and Expenses
. Except as
expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees, stamp taxes and
other taxes and duties levied in connection with the delivery of
the Shares to the Purchasers.
5.2
Entire Agreement
. The
Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules. At or after the Closing,
and without further consideration, the Company and the Purchasers
will execute and deliver to the other such further documents as may
be reasonably requested in order to give practical effect to the
intention of the parties under the Transaction
Documents.
5.3
Notices
. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via email to the e-mail
address set forth on the signature pages attached hereto prior to
5:30 p.m. (New York City time) on a Trading Day; (b) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via email to the e-mail address set
forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day; (c) the 2nd Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service; or
(d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and
communications shall be as set forth on the signature pages
attached hereto.
5.4
Amendments; Waivers
. No
provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the
Company and each Purchaser. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair
the exercise of any such right.
5.5
Headings and Construction
. The
headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party. This Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
5.6
Successors and Assigns
. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by
merger). Any Purchaser may assign any or all of its rights under
this Agreement to any Person to whom such Purchaser assigns or
transfers any Shares, provided such transferee agrees in writing to
be bound, with respect to the transferred Shares, by the provisions
of the Transaction Documents that apply to the “
Purchasers
.”
5.7
No Third-Party Beneficiaries
.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person.
5.8
Governing
Law
. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts
sitting in the City of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is improper or is an
inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by law.
5.9
Survival
. The representations
and warranties contained herein shall survive the Closing and the
delivery of the Shares.
5.10
Execution
.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or
“.pdf” signature page were an original
thereof.
5.11
Severability
.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.12
Rescission
and Withdrawal Right
. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction
Document and the Company does not timely and materially perform its
related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its
future actions and rights.
5.13
Replacement
of Shares
. If any certificate or instrument evidencing any
Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor,
a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company and the Transfer Agent of
such loss, theft or destruction and the execution by the holder
thereof of a customary lost certificate affidavit of that fact and
an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if
required by the Transfer Agent, a bond in such form and amount as
is required by the Transfer Agent. The applicants for a new
certificate or instrument under such circumstances shall also pay
any reasonable third-party costs associated with the issuance of
such replacement Shares. If a replacement certificate or instrument
evidencing any Shares is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or
instrument as a condition precedent to any issuance of a
replacement.
5.14
Remedies
.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert
in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
5.15
Payment
Set Aside
. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such
payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
5.16
Independent
Nature of Purchasers’ Obligations and Rights
. The
obligations of each Purchaser under any Transaction Document are
several and not joint with the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the
performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for
such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the
Transaction Documents. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or
requested to do so by the Purchasers.
5.17
Construction
.
The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments hereto.
5.18
Exculpation
Among Purchasers
. Each Purchaser acknowledges that it is not
relying upon any person, firm or corporation (including without
limitation any other Purchaser), other than the Company and its
officers and directors (acting in their capacity as representatives
of the Company), in deciding to invest and in making its investment
in the Company. Each Purchaser agrees that no other Purchaser nor
the respective controlling persons, officers, directors, partners,
agents or employees of any other Purchaser shall be liable to such
Purchaser for any losses incurred by such Purchaser in connection
with its investment in the Company.
5.19
Exercise Limit
.
Notwithstanding anything to the contrary set forth in this
Agreement, the Company shall not be obligated to issue any shares
of Common Stock upon exercise of the Preferred Stock if the
issuance of such shares of Common Stock would exceed the aggregate
number of shares of Common Stock which the Company may issue upon
conversion of the Preferred Stock to remain in compliance with the
Company's obligations under the rules or regulations of the Trading
Market, which rules and regulations limit the amount of shares of
Common Stock that the Company may issue upon conversion of the
Preferred Stock to no more than an aggregate of 19.99% of the
number of shares outstanding on the Closing Date (the
“Exchange Cap”), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its
stockholders as required by the applicable rules of the Trading
Market for issuances of Common Stock in excess of such amount, or
(B) obtains a written opinion from outside counsel to the Company
that such approval is not required, which opinion shall be
reasonably satisfactory to majority stockholders. In the event that
the Company is not obligated, as a result of the operation of the
immediately preceding sentence, to issue any shares of Common Stock
that it would have otherwise be required to issue upon conversion
of Preferred Stock, then the Company shall issue the number of
shares of Common Stock that it is obligated issue after giving
effect to the immediately preceding sentence and, in addition, on
the date of such issuance, shall pay to the holder exercising
conversion of Preferred Stock an amount in cash equal to the
product of (a) the difference between (x) the number of shares of
Common Stock that the Company is obligated issue before giving
effect to the immediately preceding sentence, minus (y) the number
of shares of Common Stock that the Company is obligated issue after
giving effect to the immediately preceding sentence, multiplied by
(b) the closing price of the Common Stock on the Trading Market on
the Trading Day immediately preceding the date on which the notice
of conversion is delivered to the Company by such
holder.
5.20
Market-Standoff
.
Each Purchaser hereby agrees not to sell or otherwise transfer,
make any short sale of, grant any option for the purchase of, or
enter into any hedging or similar transaction with the same
economic effect as a sale, any Shares of Preferred Stock and/or
Underlying Shares held by the Purchaser during the 180-day period
following the Closing Date. The Company may impose stop-transfer
instructions and may stamp each certificate with a legend subject
to the foregoing restriction until the end of such 180-day (or
other) period.
(
Signature
Pages Follow
)
IN WITNESS WHEREOF
, the undersigned has
caused this Share Purchase Agreement to be duly executed by its
authorized signatory as of the date first indicated
above.
|
YOUNGEVITY INTERNATIONAL, INC.
By
Name:
Stephan Wallach
Title:
Chief Executive Officer
|
|
Address
for Notice:
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
IN WITNESS WHEREOF
, the undersigned has
caused this Share Purchase Agreement to be duly executed by its
authorized signatory as of the date first indicated
above.
Name of
Purchaser:
Signature of Authorized Signatory of
Purchaser
: __
___________
Name of
Authorized Signatory:
Title
of Authorized Signatory:
Email
Address of Purchaser:
Address
for Notice of Purchaser:
Address
for Delivery of Shares for Purchaser (if not same as
above):
|
Subscription
Amount:
|
|
|
|
Shares
of Preferred Stock:
|
|
|
|
|
Exhibit
A
Certificate
of Designation
Exhibit
B
Registration
Rights Agreement
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “
Agreement
”) is made and
entered into as of
August
__, 2018, between Youngevity International, Inc., a Delaware
corporation (the “
Company
”) and
each holder of the
Company's Series C Preferred Stock listed on
Schedule A
hereto
(collectively, the “
Investors
”).
This
Agreement is made pursuant to the Share Purchase Agreement, dated
as of the date hereof, between the Company and the Investors (the
“
Purchase
Agreement
”).
WHEREAS, the
Company has issued shares of Series C Preferred Stock to the
Investors and agreed, under certain conditions, to issue Incentive
Warrants to the Investors; and
WHEREAS, in
connection with the consummation of the transactions contemplated
by the Purchase Agreement, the parties desire to enter into this
Agreement in order to grant certain registration rights to the
Holders as set forth below.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and each of the Holders agree as follows:
1.
Definitions
.
Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
“
415 Cutback Shares
” has
the meaning set forth in Section 2(a).
“
Advice
” has the meaning
set forth in Section 6(c).
“
Affiliate
” means, with
respect to any person, any other person which directly or
indirectly controls, is controlled by, or is under common control
with, such person.
“
Agreement
” has the
meaning set forth in the Preamble.
“
Commission
” means the
Securities and Exchange Commission.
“
Common Stock
” means the
common stock of the Company, par value $0.001 per share, and any
securities into which such common stock may hereinafter be
reclassified.
“
Company
” has the meaning
set forth in the Preamble.
“
Conversion Shares
” shall
mean collectively the shares of Common Stock of the Company or
other Securities issuable upon conversion of the Series C Preferred
Stock.
“
Effective Date
” means
each date that the Registration Statement filed pursuant to Section
2(a) and any post-effective amendment thereto is declared effective
by the Commission.
“
Exchange Act
” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“
Holder
” or
“
Holders
” means the holder
or holders, as the case may be, from time to time of Registrable
Securities.
“
Indemnified Party
” has
the meaning set forth in Section 5(c).
“
Indemnifying Party
” has
the meaning set forth in Section 5(c).
“
Initial Registration
Statement
” means the initial Registration Statement
filed pursuant to this Agreement.
“
Losses
” has the meaning
set forth in Section 5(a).
“
Prospectus
” means the
prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference
in such Prospectus.
“
Registrable Shares
” means
(i) the Conversion Shares; (ii) the Warrant Shares; and (iii) any
other securities issued or issuable with respect to or in exchange
for the Conversion Shares, Warrants or Warrant Shares, whether by
merger, charter amendment or otherwise; provided, that, a security
shall not be a Registrable Share (A) upon sale pursuant to a
Registration Statement or Rule 144, or (B) while such security is
eligible for sale without restriction by the Holders pursuant to
Rule 144, assuming, for purposes of such determination with respect
to each Holder, the full conversion or exercise by such Holder of
all convertible securities held by such Holder (disregarding for
this purpose any and all limitations of any kind on conversion or
exercise of any convertible securities owned by such
Holder).
“
Registration Statement
”
means any one or more registration statements of the Company filed
under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement
(including, without limitation, the Initial Registration Statement,
the New Registration Statement and any Remainder Registration
Statements), including (in each case) the amendments and
supplements to such Registration Statements, including pre- and
post-effective amendments thereto, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference
in such Registration Statements.
“
Remainder Registration
Statement
” has the meaning set forth in Section
2(a).
“
Rule 144
” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.
“
Rule 415
” means Rule 415
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“
Rule 424
” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“
Selling Shareholder
Questionnaire
” has the meaning set forth in Section
2(c).
“
SEC Guidance
” means (i)
any publicly-available written or oral guidance, comments,
requirements or requests of the Staff and (ii) the Securities
Act.
“
Securities Act
” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Series C Preferred Stock
”
means the Series C Preferred Stock being sold in the
offering.
“
Staff
” means the staff of
the Commission.
“
Trading Day
” means (i) a
day on which the Common Stock is listed or quoted and traded on any
Trading Market; or (ii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported in the “pink
sheets” by OTC Markets Group(or any similar organization or
agency succeeding to its functions of reporting prices);
provided
, that in the event
that the Common Stock is not listed or quoted as set forth in (i)
and (ii) hereof, then Trading Day shall mean a Business
Day.
“
Trading Market
” means
whichever of the NYSE, the NYSE MKT, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
OTC Bulletin Board on which the Common Stock is listed or quoted
for trading on the date in question.
“
Warrant Shares
” shall
mean collectively the shares of Common Stock of the Company or
other Securities issuable upon exercise of the Incentive Warrants
issuable to Holder under the Purchase Agreement.
“
Warrants
” shall mean
collectively the Incentive Warrants issuable to Holder under the
Purchase Agreement.
2.
Required
Registration
(a) Within
one hundred and twenty (120) days of the Closing, the Company shall
prepare and file with the Commission a Registration Statement
covering the resale of all of the Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415 or,
if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of
Registrable Securities as the Holders may reasonably specify (the
“
Initial
Registration Statement
”). The Initial Registration
Statement shall be on Form S-1 (or such other form available to
register for resale the Registrable Securities as a secondary
offering). Notwithstanding the registration obligations set forth
in this
Section 2
,
in the event the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of
Rule 415 or otherwise, be registered for resale as a secondary
offering on a single registration statement, the Company agrees to
promptly (i) inform each of the Holders thereof and use its
commercially reasonable efforts to file amendments to the Initial
Registration Statement as required by the Commission and/or (ii)
withdraw the Initial Registration Statement and file a new
registration statement (a “
New Registration
Statement
”), in either case covering the maximum
number of Registrable Securities Company’s counsel deems to
be permitted to be registered by the Commission, on Form S-1 or
such other form available to register for resale the Registrable
Securities as a secondary offering. Notwithstanding any other
provision of this Agreement, if any SEC Guidance sets forth a
limitation of the number of Registrable Securities permitted to be
registered on a particular Registration Statement as a secondary
offering (and notwithstanding that the Company used commercially
reasonable efforts to advocate with the Commission for the
registration of all or a greater number of Registrable Securities),
or in the event the Staff seeks to characterize any offering
pursuant to a Registration Statement filed pursuant to this
Agreement as constituting an offering of securities by or on behalf
of the Company or takes other action such that Rule 415 is not
available to the Company to register the resale of such Registrable
Securities and as a result the Staff or the SEC does not permit
such Registration Statement to become effective and used for
resales in a manner that permits the continuous resale at the
market by the Holders participating therein (or as otherwise may be
acceptable to each Holder) without being named therein as an
“underwriter,” unless otherwise directed in writing by
a Holder as to its Registrable Securities, the number of
Registrable Securities to be registered on such Registration
Statement will be reduced on a
pro
rata
basis based on
the total number of unregistered Registrable Securities held by
such Holders (such reduced Registrable Securities, the “415
Cutback Shares”). In the event the Company amends the Initial
Registration Statement or files a New Registration Statement, as
the case may be, under clauses (i) or (ii) above, the Company will
use its commercially reasonable efforts to file with the
Commission, as promptly as allowed by Commission or SEC Guidance
provided to the Company or to registrants of securities in general,
one or more registration statements on Form S-1 or such other form
available to register for resale those Registrable Securities that
were not registered for resale on the Initial Registration
Statement, as amended, or the New Registration Statement, including
the 415 Cutback Shares (the “
Remainder Registration
Statements
”). No Holder shall be named as an
“underwriter” in any Registration Statement without
such Holder’s prior written consent.
(b) The
Company shall use its commercially reasonable efforts to cause each
Registration Statement or any post-effective amendment thereto to
be declared effective by the Commission as soon as practicable
(including, with respect to the Initial Registration Statement or
the New Registration Statement, as applicable, filing with the
Commission a request for acceleration of effectiveness in
accordance with Rule 461 promulgated under the Securities Act
within five Business Days after the date that the Company is
notified (orally or in writing, whichever is earlier) by the
Commission that such Registration Statement will not be
“reviewed,” or not be subject to further review and the
effectiveness of such Registration Statement may be accelerated),
shall use its commercially reasonable efforts to keep each
Registration Statement continuously effective under the Securities
Act until the earlier of (i) such time as all of the Registrable
Securities covered by such Registration Statement have been
publicly sold by the Holders or (ii) the date that is one year
following the date hereof (the “
Effectiveness
Period
”).
(c) Each
Holder agrees to furnish to the Company a completed Selling
Shareholder Questionnaire in the form attached to this Agreement as
Annex A
or in a
form mutually agreeable between the Parties. At least five Trading
Days prior to the first anticipated filing date of a Registration
Statement for any registration under this Agreement, the Company
will notify each Holder of the information the Company requires
from that Holder other than the information contained in the
Selling Shareholder Questionnaire, if any, which shall be completed
and delivered to the Company promptly upon request and, in any
event, within three Trading Days prior to the applicable
anticipated filing date. Each Holder further agrees that it shall
not be entitled to be named as a Selling Shareholder in the
Registration Statement or use the Prospectus for offers and resales
of Registrable Securities at any time, unless such Holder has
returned to the Company a completed and signed Selling Shareholder
Questionnaire and a response to any requests for further
information as described in the previous sentence. If a Holder of
Registrable Securities returns a Selling Shareholder Questionnaire
or a request for further information, in either case, after its
respective deadline, the Company shall use its commercially
reasonable efforts at the expense of the Holder who failed to
return the Selling Shareholder Questionnaire or to respond for
further information to take such actions as are required to name
such Holder as a selling security holder in the Registration
Statement or any pre-effective or post-effective amendment thereto
and to include (to the extent not theretofore included) in the
Registration Statement the Registrable Securities identified in
such late Selling Shareholder Questionnaire or request for further
information. Each Holder acknowledges and agrees that the
information in the Selling Shareholder Questionnaire or request for
further information as described in this Section 2(c) will be used
by the Company in the preparation of the Registration Statement and
hereby consents to the inclusion of such information in the
Registration Statement.
(d) Notwithstanding
anything to the contrary herein, at any time after any Registration
Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information
concerning the Company if the disclosure of such information at the
time is not, in the good faith judgment of the Company, in the best
interests of the Company (a “
Grace Period
”);
provided
,
however
, the
Company shall promptly (i) notify the Holders in writing (including
via facsimile or other electronic transmission) of the existence of
material non-public information giving rise to a Grace Period
(provided that the Company shall not disclose the content of such
material non-public information to the Holders) or the need to file
a supplement or post-effective amendment, as applicable, and the
date on which such Grace Period will begin, and (ii) notify the
Holders in writing (including via facsimile or other electronic
transmission) of the date on which the Grace Period ends;
provided
,
further
, that no
single Grace Period shall exceed 30 consecutive days, and during
any 365 day period, the aggregate of all Grace Periods shall not
exceed an aggregate of 60 days (each Grace Period complying with
this provision being an “
Allowable Grace Period
”).
For purposes of determining the length of a Grace Period, the Grace
Period shall be deemed to begin on and include the date the Holders
receive the notice referred to in clause (i) above and shall end on
and include the later of the date the Holders receive the notice
referred to in clause (ii) above and the date referred to in such
notice;
provided
,
however
, that no
Grace Period shall be longer than an Allowable Grace
Period.
3.
Registration
Procedures
. In connection with the Company’s
registration obligations hereunder, the Company shall:
(a) (i)
Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep
a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act
all of the Registrable Securities (except during an Allowable Grace
Period); (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be
filed pursuant to Rule 424 (except during an Allowable Grace
Period); (iii) respond as promptly as reasonably possible to any
comments received from the Commission with respect to a
Registration Statement or any amendment thereto; and (iv) comply in
all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the
applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders
thereof set forth in such Registration Statement as so amended or
in such Prospectus as so supplemented;
provided
,
however
, that each Holder shall
be responsible for the delivery of the Prospectus to the Persons to
whom such Holder sells any of the Registrable Securities (including
in accordance with Rule 172 under the Securities Act), and each
Holder agrees to dispose of Registrable Securities in compliance
with the plan of distribution described in the Registration
Statement and otherwise in compliance with applicable federal and
state securities laws.
(b) Notify
the Holders of Registrable Securities to be sold (which notice
shall, pursuant to clauses (i) through (iii) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than one
Trading Day prior to such filing) and (if requested by any such
Person) confirm such notice in writing (including via facsimile or
other electronic transmission) no later than one Trading Day
following the day (i) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities
for sale in any jurisdiction, or the initiation or threatening of
any Proceeding for such purpose; and (ii) of the occurrence of any
event or passage of time that makes the financial statements
included in a Registration Statement ineligible for inclusion
therein or any statement made in a Registration Statement or
Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that requires any revisions to a Registration Statement, Prospectus
or other documents so that, in the case of a Registration Statement
or the Prospectus, as the case may be, it will not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; and (iii) of the occurrence or existence
of any pending corporate development with respect to the Company
that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of
the Company to allow continued availability of a Registration
Statement or Prospectus, provided that any and all of such
information shall be kept confidential by each Holder until such
information otherwise becomes public, unless disclosure by a Holder
is required by law;
provided
,
further
, that notwithstanding
each Holder’s agreement to keep such information
confidential, each such Holder makes no acknowledgement that any
such information is material, non-public information.
(c) Use
its commercially reasonable efforts to avoid the issuance of, or,
if issued, obtain the withdrawal of (i) any order stopping or
suspending the effectiveness of a Registration Statement, or (ii)
any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.
(d) The
Company may require each selling Holder to furnish to the Company a
certified statement as to (i) the number of shares of Common Stock
beneficially owned by such Holder and any Affiliate thereof; (ii)
any Financial Industry Regulatory Authority, Inc.
(“FINRA”) affiliations; (iii) any natural persons who
have the power to vote or dispose of the common stock; and (iv) any
other information as may be requested by the Commission, FINRA or
any state securities commission.
(e) Subject
to the terms of this Agreement, the Company hereby consents to the
use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving of any
notice pursuant to Section 3(b).
(f) Prior
to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or
qualification (or exemption from the Registration or qualification)
of such Registrable Securities for the resale by the Holder under
the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder reasonably requests in writing, to keep
each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all
other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each
Registration Statement; provided, that the Company shall not be
required to qualify generally to do business in any jurisdiction
where it is not then so qualified, would subject the Company to any
material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
(h) If
requested by a Holder, cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to
a Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement and applicable state and
Federal laws, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered
in such names as any such Holder may request.
(i) If
the Company notifies the Holders to suspend the use of any
Prospectus until requisite changes to such Prospectus has been
made, then the Holders shall suspend use of such Prospectus. The
Company will use its commercially reasonable efforts to ensure that
the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right
under this Section 3(i) to suspend the availability of a
Registration Statement and Prospectus, for a period not to exceed
90 calendar days (which need not be consecutive days) in any
12-month period.
(j) Comply
in all material respects with all applicable rules and regulations
of the Commission.
4.
Registration
Expenses
. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold
pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without
limitation: (i) all registration and filing fees (including,
without limitation, fees and expenses of the Company’s
counsel and auditors) (A) with respect to filings made with the
Commission, (B) with respect to filings required to be made with
any Trading Market on which the Common Stock is then listed for
trading, (C) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including,
without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of
the Registrable Securities) and (D) if not previously paid by the
Company in connection with an Issuer filing, with respect to any
filing that may be required to be made by any broker through which
a Holder intends to make sales of Registrable Securities with the
FINRA pursuant to FINRA Rule 5110, so long as the broker is
receiving no more than a customary brokerage commission in
connection with such sale, (ii) printing expenses (including,
without limitation, expenses of printing certificates for
Registrable Securities), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires
such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the
Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and
the fees and expenses incurred in connection with the listing of
the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any
underwriting, broker or similar commissions of any Holder or,
except to the extent provided for in the Transaction Documents, any
legal fees or other costs of the Holders.
5.
Indemnification
.
(a)
Indemnification
by the Company
. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each
Holder, the officers, directors, members, partners, agents and
employees (and any other Persons with a functionally equivalent
role of a Person holding such titles, notwithstanding a lack of
such title or any other title) of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, members, shareholders, partners, agents and employees
(and any other Persons with a functionally equivalent role of a
Person holding such titles, notwithstanding a lack of such title or
any other title) of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses
(collectively, “
Losses
”), as incurred,
arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement,
any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement
thereto, in light of the circumstances under which they were made)
not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state
securities law, or any rule or regulation thereunder, in connection
with the performance of its obligations under this Agreement,
except to the extent, but only to the extent, that (i) such untrue
statements or omissions are in reliance upon, and in conformity
with, information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent
that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly
for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it being understood that the
Holder has approved
Annex
A
hereto for this purpose) or (ii) in the case of an
occurrence of an event of the type specified in Section
3(b)(i)-(iii), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(c).
The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the
Company is aware.
(b)
Indemnification
by Holders
. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees
of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, to the
extent arising out of or based solely upon: (x) such Holder’s
failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any
Prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not
misleading (i) to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for
inclusion in such Registration Statement or such Prospectus or (ii)
to the extent that such information relates to such Holder’s
proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly
for use in a Registration Statement (it being understood that the
Holder has approved
Annex
A
hereto for this purpose), such Prospectus or in any
amendment or supplement thereto or (iii) in the case of an
occurrence of an event of the type specified in Section
3(b)(i)-(iii), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(c).
In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c)
Conduct
of Indemnification Proceedings
. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity
hereunder (an “
Indemnified Party
”), such
Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “
Indemnifying Party
”) in
writing, and the Indemnifying Party shall have the right to assume
the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have prejudiced the
Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses; (2) the
Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and
counsel to the Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense
thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding affected without its written
consent, which consent shall not be unreasonably withheld or
delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a
party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing
to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred,
within 20 Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such
fees and expenses previously disbursed and that are applicable to
such actions for which such Indemnified Party is judicially
determined to be not entitled to indemnification
hereunder.
(d)
Contribution
.
If the indemnification under Section 5(a) or 5(b) is unavailable to
an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party,
in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with
the actions, statements or omissions that resulted in such Losses
as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any
Losses shall be deemed to include, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection
with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification
provided for in this Section was available to such party in
accordance with its terms.
The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by
pro rata
allocation or by
any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the net proceeds actually
received by such Holder from the sale of the Registrable Securities
subject to the Proceeding exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission.
The
indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
(a)
Remedies
.
Subject to the limitations set forth in this Agreement, in the
event of a breach by the Company or by a Holder of any of their
respective obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific
performance of its rights under this Agreement. The Company and
each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees
that, in the event of any action for specific performance in
respect of such breach, it shall not assert or shall waive the
defense that a remedy at law would be adequate.
(b)
Compliance
.
Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to a Registration Statement.
(c)
Discontinued
Disposition
. By its acquisition of Registrable Securities,
each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section
3(b)(i)-(iii), such Holder will forthwith discontinue disposition
of such Registrable Securities under a Registration Statement until
it is advised in writing (the “
Advice
”) by the Company
that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its
commercially reasonable efforts to ensure that the use of the
Prospectus may be resumed as promptly as is
practicable.
(d)
Amendments
and Waivers
. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of a majority of
the then outstanding Registrable Securities. If a Registration
Statement does not register all of the Registrable Securities
pursuant to a waiver or amendment done in compliance with the
previous sentence, then the number of Registrable Securities to be
registered for each Holder shall be reduced
pro rata
among all Holders and each
Holder shall have the right to designate which of its Registrable
Securities shall be omitted from such Registration Statement.
Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates
exclusively to the rights of some Holders and that does not
directly or indirectly affect the rights of other Holders may be
given by Holders of all of the Registrable Securities to which such
waiver or consent relates;
provided
,
however
, that in the event the
Company shall deliver written notice to a Holder with respect to a
requested waiver or amendment, such Holder shall be deemed to have
consented and agreed to such amendment or waiver if such Holder
does not provide written notice to the Company indicating such
Holder’s non-consent within ten calendar days of delivery by
the Company of such written notice;
provided
,
further
, that the provisions of
this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the first sentence of this
Section 6(d).
(e)
Notices
.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be delivered as set
forth in the Purchase Agreement.
(f)
Successors
and Assigns
. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. Nothing
in this Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. The Company may not assign
its rights (except by merger or in connection with another entity
acquiring all or substantially all of the Company’s assets)
or obligations hereunder without the prior written consent of all
the Holders of the then outstanding Registrable Securities. Each
Holder may assign its respective rights with respect to any or all
of its Registrable Securities, hereunder in the manner and to the
Persons as permitted under the Purchase Agreement;
provided
in each case that (i) the
Holder agrees in writing with the transferee or assignee to assign
such rights and related obligations under this Agreement, and for
the transferee or assignee to assume such obligations, and a copy
of such agreement is furnished to the Company within a reasonable
time after such assignment, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration
rights are being transferred or assigned, (iii) at or before the
time the Company received the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained
herein and (iv) the transferee is an “accredited
investor,” as that term is defined in Rule 501 of Regulation
D and completes any required documentation requested by the Company
to confirm the foregoing.
(g)
No
Inconsistent Agreements
. Except as set forth in the Purchase
Agreement, neither the Company nor any of its subsidiaries has
previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that
have not been satisfied in full.
(h)
Execution
and Counterparts
. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to
the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or other electronic
transmission of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
(i)
Governing
Law
. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be
determined in accordance with the provisions of the Purchase
Agreement.
(j)
Cumulative
Remedies
. The remedies provided herein are cumulative and
not exclusive of any other remedies provided by law.
(k)
Severability
.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
(l)
Headings
.
The headings in this Agreement are for convenience only, do not
constitute a part of the Agreement and shall not be deemed to limit
or affect any of the provisions hereof.
(m)
Independent
Nature of Holders’ Obligations and Rights
. The
obligations of each Holder hereunder are several and not joint with
the obligations of any other Holder hereunder, and no Holder shall
be responsible in any way for the performance of the obligations of
any other Holder hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action
taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that
the Holders are in any way acting in concert with respect to such
obligations or the transactions contemplated by this Agreement.
Each Holder acknowledges that no other Holder has acted as agent
for such Holder in connection with making its investment hereunder
and that no Holder will be acting as agent of such Holder in
connection with monitoring its investment in the Registrable
Securities or enforcing its rights under the Purchase Agreement or
any other agreement entered into in connection with the Purchase
Agreement. Each Holder shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any proceeding for such
purpose.
********************
[
Signature
pages follow
]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
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YOUNGEVITY INTERNATIONAL, INC.
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By:
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Name:
Stephan Wallach
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Title:
Chief Executive Officer
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INVESTORS:
ANNEX
A
YOUNGEVITY INTERNATIONAL, INC.
Purchaser Information Request
The
undersigned beneficial owner of common stock (the
“
Registrable
Securities
”) of Youngevity International, Inc., a
Delaware corporation (the “
Company
”), understands
that the Company has filed or intends to file with the Securities
and Exchange Commission (the “
Commission
”) a
registration statement (the “
Registration Statement
”)
for the registration and resale under Rule 415 of the Securities
Act of 1933, as amended (the “
Securities Act
”), of the
Registrable Securities, in accordance with the terms of the
Registration Rights Agreement (the “
Registration Rights
Agreement
”) to which this document is annexed. A copy
of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms
not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling Shareholder
in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable
Securities are advised to consult their own securities law counsel
regarding the consequences of being named or not being named as a
selling Shareholder in the Registration Statement and the related
prospectus.
The
undersigned beneficial owner (the “
Selling Shareholder
”) of
Registrable Securities hereby elects to include the Registrable
Securities owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the
Company and represents and warrants that such information is
accurate:
1.
Name.
(a)
Full Legal Name of
Selling Stockholder:
(b)
Full Legal Name of
Registered Holder (if not the same as (a) above) through which
Registrable Securities Listed in Item 3 below are
held:
(c)
Full Legal Name of
Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of
the securities covered by the questionnaire):
2.
Broker-Dealer Status:
(a)
Are you
a broker-dealer?
Yes
☐ No ☐
(b)
If
“yes” to Section 3(a), did you receive your Registrable
Securities as compensation for investment banking services to the
Company?
Yes
☐ No ☐
Note:
If no, the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration
Statement.
(c)
Are you
an affiliate of a broker-dealer?
Yes
☐ No ☐
(d)
If you
are an affiliate of a broker-dealer, do you certify that you bought
the Registrable Securities in the ordinary course of business, and
at the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable
Securities?
Yes
☐ No ☐
Note:
If no, the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration
Statement.
3.
Beneficial Ownership of Securities of the Company Owned by the
Selling Shareholder.
Except as set forth below in this Item 4, the undersigned is not
the beneficial or registered owner of any securities of the Company
other than the securities issuable pursuant to the Purchase
Agreement.
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(a)
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Type
and Amount of other securities beneficially owned by the Selling
Shareholder:
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4.
Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners
of 5% of more of the equity securities of the undersigned) has held
any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the
past three years.
State
any exceptions here:
The
undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof at any time while the
Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 5
and the inclusion of such information in the Registration Statement
and the related prospectus and any amendments or supplements
thereto. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or
amendment of the Registration Statement and the related
prospectus.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.