UNITED STATES
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): January 15,
2019
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.
On
January 15, 2019, Youngevity International, Inc. (the
“Company”) entered into the CLR Siles Mill Construction
Agreement (the “Mill Construction Agreement”) with
Hernandez Hernandez Export & Compania Limitada, an entity
created under the laws of Nicaragua (“H&H”),
H&H Coffee Group Export, Corp, a Florida corporation
(“H&H Export”), Alain Piedra Hernandez
(‘Hernandez”) and Marisol Del Carmen Siles Orozco
(“Siles”, and together with H&H, H&H Export,
Hernandez, the “Nicaraguan Partner”), pursuant to which
the Nicaraguan Partner agreed to transfer a 45 acre tract of land
in Matagalpa, Nicaragua (the “Property”) to a business
entity to be owned 50% by the Nicaraguan Partner and 50% by the
Company and the Company issued to H & H Export in consideration
thereof 153,846 shares of its common stock. In addition, the
Nicaraguan Partner and the Company each agreed to contribute
$4,700,000 toward construction of a processing plant, office, and
storage facilities (“Mill”) on the Property for
processing coffee in Nicaragua, with $650,000 being paid on January
15, 2019 and February 15, 2019, and $500,000 being paid on each of
March 15, 2019, April 15, 2019, May 15, 2019, June 15, 2019 and
July 15, 2019.
The
Company’s coffee segment, CLR Roasters, LLC
(“CLR
”
),
is associated with H&H and H&H
Export through sourcing arrangements to procure Nicaraguan green
coffee beans and in March 2014 as part of the Siles Plantation
Family Group acquisition, CLR engaged Hernandez and Siles, the
owners of H&H as employees to manage Sile
s.
In
addition, CLR and H&H, Hernandez and Siles have agreed to
restructure their profit sharing agreement in regard to profits
from green coffee sales and processing that increases the
Company’s profit participation by an additional 25%. Under
the new terms of the agreement with respect to profit generated
from green coffee sales and processing from La Pita, a leased mill,
or the new mill, now will provide for a split of profits of 75% to
the Company and 25% to the Nicaraguan Partners, after certain
conditions are met. The Company has agreed to issue 295,910 shares
of its common stock to H&H Export to pay for certain working
capital, construction and other payables. In addition, H&H
Export has also agreed to sell to CLR its espresso brand Café
Cachita in consideration of the issuance of 100,000 shares of the
Company’s common stock. Hernandez and Siles are each
employees of CLR. The shares of common stock issued were valued at
$7.80 per share.
The
foregoing description of the terms of the Mill Construction
Agreement does not purport to be complete and is subject to and are
qualified in their entirety by reference to the provisions of such
agreement, the form of which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and is incorporated herein by
reference.
Item
2.03.
Creation
of a Direct Financial obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The
disclosure set forth in Item 1.01 of this Current Report on Form
8-K is incorporated into this Item 2.03 by reference.
Item
3.02
Unregistered Sales of Equity
Securities.
The
information regarding the securities of the Company set forth under
Item 1.01 of this Current Report on Form 8-K is incorporated by
reference in this Item 3.02. The Company issued the shares of the
Company’s common stock in reliance on the exemption from
registration provided for under Section 4(a)(2) of the Securities
Act. The Company relied on this exemption from registration for
private placements based in part on the representations made H
&H Export with respect to its status as an accredited investor,
as such term is defined in Rule 501(a) of the Securities
Act.
Item
9.01.
Financial
Statements and Exhibits.
(d)
Exhibits
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Exhibit No.
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Name of Exhibit
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CLR
Siles Mill Construction Agreement date January 15,
2019
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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:
January 18, 2019
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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 10.1
CLR SILES
MILL CONSTRUCTION
AGREEMENT
This
CLR
SILES
MILL
CONSTRUCTION
AGREEMENT
(hereinafter referred to as
the “
CLR SILES
Mill
Agreement”) is entered into this 15
th
day of January
2019, by and between CLR Roasters, LLC, a Florida Limited Liability
Company with an address of 2131 NW. 72
nd
Avenue, Miami,
Florida 33122, which is a wholly owned subsidiary of Youngevity
International, Inc., (YGYI) a Delaware corporation, (hereinafter
referred to as “CLR”), also referred to as the
“American Partner” and Hernandez Hernandez Export &
Compañia Limitada, a business entity created under the laws of
Nicaragua (hereinafter referred to as “H&H”),
H &
H Coffee Group Export, Corp., a Florida corporation with an address
of 970 West 23 Street, Hialeah, Florida 33015, (hereinafter
referred to as “H&H Export”), Alain Piedra
Hernandez, (hereinafter referred to as “Hernandez”) a
United States citizen living in Nicaragua and Marisol Del Carmen
Siles Orozco, (hereinafter referred to as “Orozco”) a
national of Nicaragua and citizen of the United States,
collectively or singularly referred to as the “Nicaraguan
Partner”. CLR, H&H, H&H Export, Hernandez, and Orozco
are sometimes referred to herein collectively as the "Parties".
Either may be referred to in the singular as Party or collectively
as Parties.
WHEREAS
, each of H&H, H&H
Export, Hernandez and Orozco have independently and collectively
developed, owned and will continue to own close personal and
ongoing business relationships, trade secrets and knowledge in
connection with the coffee growing, harvesting and processing
business in Nicaragua through the personal ability, personality,
reputation, skill and integrity of each; and
WHEREAS
, CLR is in the business of
buying green coffee, roasting and blending coffee for sale under
its own label and the label(s) of its buyers; and
WHEREAS
, CLR, H&H, H&H Export,
Hernandez and Orozco are desirous of jointly owning and operating a
mill for the processing of coffee in Nicaragua
which shall be known as the CLR SILES Mill
(hereinafter referred to as the “CLR SILES
Mill”)
; and
WHEREAS
, the parties to this
CLR SILES Mill
Agreement
acknowledge and certify that they have the authority to act for
their respective entities and/or personally, and that each possess
the authority to bind said Party(ies) to the terms of this
CLR SILES
Mill Agreement and by
executing this
CLR SILES Mill
Agreement do bind said respective Party(ies) to said
terms.
NOW THEREFORE
, in consideration of the
mutual covenants and promises contained herein and for other good
and valuable consideration the Parties agree as
follows:
1.
PLEDGE
/TRANSFER
OF REAL
PROPERTY
1.1.
The Nicaraguan Partner owns a 45-acre tract of land in
Matagalpa, Nicaragua
(hereinafter
referred to as the “Property”) more particularly
described as follows:
1.2.
H&H, H&H Export, Hernandez and Orozco, each either in its
corporate capacity or personally, hereby represent and certify that
the Property is owned free and clear of any encumbrances, liens,
mortgages, pledges, rights of way, easements, or any other
instrument and/or conveyance that may create an interest in the
Property by a third party and shall provide a legal Letter of
Opinion in favor of CLR indicating same and defending and holding
CLR harmless.
1.3.
H&H, H&H Export, Hernandez and Orozco, each either in its
corporate capacity or personally, hereby represent and certify that
the Property is ideal for the construction of a mill and processing
plant.
1.4.
CLR shall, as consideration for its percentage ownership of the
Property, as described in Paragraph 1.5. hereinafter, transfer to
the Nicaraguan Partner the amount of 153,846 shares of YGYI
stcock.
1.5.
Upon the execution of this CLR SILES Mill Agreement, the Nicaraguan
Partner shall immediately transfer the Property into a business
entity which shall be owned equally (50%-50%) by the Parties. The
Nicaraguan Partner shall execute any and all documents necessary in
order to effectuate and record the change in ownership of the
Property.
2.1.
H&H, H&H Export, Hernandez and Orozco, each in either its
corporate capacity or personally, hereby represent and certify that
all plans and permitting for the construction of a mill and
processing plant on the Property have been approved by any and all
governmental agencies necessary and that said plans and approvals
are still in full force and effect.
2.2.
H&H, H&H Export, Hernandez and Orozco, each in either its
corporate capacity or personally hereby represent and certify that
partial infrastructure improvements for the mill have commenced on
the Property and that they are all in compliance with, including
but not limited to any and all applicable rules, regulations,
ordinances, and/or requirements set forth by any and all
governmental or other agencies having jurisdiction over the
Property.
2.3.
The Nicaraguan Partner shall
contribute the amount of $4,700,000.00
(hereinafter the “Contribution Amount”) towards the
construction of the mill.
2.4.
The American Partner shall
contribute
the amount of $4,700,000.00 (hereinafter the “Contribution
Amount”) towards the construction of the
mill.
2.5.
In the event either, or both of the
Parties shall not be able to procure, either partially or wholly,
its Contribution Amount as provided for hereinabove, that Party
shall notify the other Party immediately. Thereafter, within thirty
(30) days of said notice the Parties shall have a meeting in order
to agree on an alternate way to procure the balance of the
Contribution Amount and shall reduce same into writing as an
amendment to this CLR SILES Mill Agreement
2.6.
The Parties agree that as of the date this CLR SILES Mill Agreement
has been executed, each has contributed $900,000.00 of its
perspective Contribution Amount towards the construction of the
Mill. Furthermore, the Parties agree that the remaining balance
will be allocated by each Party according to the following
schedule, unless modified pursuant to the terms of paragraph 2.5.
hereinabove:
2.7.
Should either Party decide that it wants to sell the Property and
improvements prior to the loans being paid in full, it shall
present to the other a bona fide offer of purchase and said Party
may, in its sole discretion, decide to sell its percentage of the
Property or to buy the other Parties percentage interest in the
Property on similar terms.
3.
FINANCING AND BUDGETING
3.1.
The Parties hereby acknowledge and agree that they shall have an
Operating Budget, which will include, but not be limited to
forecasts of expected expenses for construction of the mill, actual
and expected capital contributions and/or capital expenditures, by
31 December 2018. The initial Operating Budget will be at least
through the end of calendar year 2019. Thereafter, the Parties
shall have an Operating Budget in place by 1 January for that
calendar year.
3.2.
The Parties agree that the American Partner shall have the sole and
exclusive right to use the Property as collateral or any other
purpose it sees fit in its sole discretion.
The Nicaraguan Partner shall execute any and all
documents necessary for the American Partner to obtain financing
using the Property as collateral, which shall include but not be
limited to notes, mortgages, pledges or any other document so
required by a lender(s) in order to effectuate the loan(s) and
cause a lien to be placed on the Property.
3.3.
Once the Milling Operations commence, the Parties will divide any
profits therefrom in the following percentage: Nicaraguan
Partner—25% and American Partner—75%,
pursuant to the Operating and Profit Sharing
Agreement and the First Amendment to the Operating and Profit
Sharing Agreement.
4.1.
The Parties recognize that any information that the other has
obtained through the
negotiation of this
CLR SILES
Mill Agreement as
well as any information that the one Party had in its possession
prior to said negotiations as to the assets, operations, finances,
business, the Property or any other matter shall be considered as
confidential and shall hereinafter be referred to as the
“Confidential Information”.
4.2.
The Parties understand and agree that each agree to hold and
maintain all
confidential
information exchanged between them, whether oral or written, in
confidence and not disclose it to others, unless permitted in
writing by the disclosing party or except as permitted hereinbelow.
Confidential Information (as defined below) shall not include
information that at the time of disclosure is in the public domain
or becomes a part of the public domain through no fault of the
receiving party or information received from a third party without
a breach of such third party’s obligation of confidentiality.
The restriction shall not apply to information requested by a
governmental agency or legally required to be
disclosed.
4.3.
Each of the parties shall, and shall cause its
representatives to, hold all of the
Confidential
Information in strict confidence, and unless expressly set forth
herein will not disclose or reveal such Confidential Information to
any third person(s) other than its advisors, employees and
representatives who need to receive such Confidential Information
for the sole purpose of actively and directly participating in the
evaluation of the Acquisition.
4.4.
Each of the parties shall, and shall cause its advisors,
employees and representatives
to: (i) to sign an
agreement with similar provisions to this Section 3 or agree to use
the Confidential Information only in connection with the evaluation
of the Acquisition; (ii) disclose the Confidential Information only
to their advisors, employees and representatives who need to know
the Confidential Information to accomplish the potential
Acquisition and inform such advisors, employees and representatives
of, and cause those advisors, employees and representatives to
observe, the terms hereof; and (iii) safeguard the Confidential
Information with the same degree of care to avoid unauthorized
disclosure as each party uses to protect its own Confidential
Information of a similar nature; but in no case less than
reasonable care. In the event that either party determines that it
does not wish to proceed with the potential Acquisition, the
parties shall promptly advise the other party of that determination
in a written notice of termination. In that case and in the event
that either party so requests at any time, each party shall return
to the other party all of the Confidential Information, including
all analyses and all copies thereof, in its possession or in the
possession of any of its representatives; provided, that each party
may destroy and certify to the other party the destruction of all
copies of any analyses which contain Confidential Information and
provided, that each party may retain one archival copy of the
Confidential Information to be used solely for evidentiary
purposes.
4.5.
The provisions of this Section 4 shall survive termination of
this Agreement for one
(1)
year.
5.1.
ASSIGNMENT: BINDING EFFECT. This Agreement and the rights of CLR
hereunder may be assigned by CLR. This Agreement and the rights of
THE Nicaraguan Partner may not be assigned. This Agreement shall be
binding upon and shall inure to the benefit of the Parties hereto,
their respective successors, assigns (in the case of CLR only),
heirs, beneficiaries and legal representatives.
5.2.
EXECUTION. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same
instrument. Execution and delivery of this Agreement by delivery of
a facsimile copy bearing the facsimile signature of a party shall
constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute
enforceable original documents.
5.3.
BROKERS. Each party represents and warrants that it employed no
broker or agent in connection with this transaction and agrees to
indemnify the other against all loss, cost, damage or expense
arising out of claims for fees or commissions of brokers or agents
employed or alleged to have been employed by such indemnifying
party.
5.4.
NOTICES. Any notice or communication required or permitted
hereunder shall be sufficiently given if sent by first class mail,
postage prepaid:
(a)
If to CLR, addressed to it at:
Telephone
No.
(b)
If to: Nicaraguan Partner addressed to each of them
at:
HERNANDEZ,
HERNANDEZ EXPORT Y COMPAPAÑIA LIMITADA
Telephone
No.
5.5.
APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO
SUCH STATE'S CONFLICTS OF LAWS OR CHOICE OF LAW RULES. H&H,
H&H EXPORT, HERNANDEZ AND OROZCO HEREBY WAIVE WITH FULL
KNOWLEDGE THAT IT IS DOING SO, THE RIGHT TO HAVE ANY MATTER
LITIGATED IN OR HAVE THE LAW OF NICARAGUA APPLIED IN ANY WAY TO THE
ENFORCEMENT OF THE AGREEMENT OR ANY PROVISION THEREOF. THE PARTIES
FURTHER AGREE THAT SHOULD THE NEED ARISE TO EXECUTE FURTHER
DOCUMENTS EITHER IN THE SATE OF FLORIDA OR IN NICARAGUA TO GIVE
FULL FORCE AND EFFECT TO THIS PARAGRAPH OR ANY OTHER PROVISION(S)
OF THIS AGREEMENT UNDER THE LAWS OF THE STATE OF FLORIDA THAT THEY
WILL DO SO IMMEDIATELY AND WITHOUT DELAY. VENUE SHALL BE PROPER IN
MIAMI-DADE COUNTY, FLORIDA.
5.6.
FORCE MAJURE. Neither Party hereto, shall be responsible for any
losses or damages to the other occasioned by delays in the
performance or non-performance of any of said Parties obligations
when caused by acts of God, strike, acts of war, or other such acts
which are beyond the reasonable control of said Party.
5.7.
ATTORNEY’S FEES.
In any action
between the Parties to enforce any of the terms of this Agreement
or any other matter arising from this Agreement, the prevailing
Party shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees up to and including all
negotiations, trials and appeals, whether or not litigation is
initiated.
5.8.
CONSTRUCTION. The terms of this Agreement shall not be more
strictly construed against one Party by virtue of having drafted
the Agreement as both Parties have reviewed same and have had an
opportunity to make changes thereto.
5.9.
SEVERABILITY. If any provision of this Agreement shall be held to
be invalid or unenforceable its entirety in part or in its entirety
for any reason, then the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision of this
Agreement is partially invalid or unenforceable, but that by
limiting or performing such provision it would become valid and
enforceable, then such provision shall be deemed to be rewritten,
construed and enforced as so limited or reformed.
5.10.
CAPTIONS. The captions in this Agreement are for convenience only
and shall not be considered a part hereof or affect the
construction or interpretation of any provisions of this
Agreement.
5.11.
NUMBER AND GENDER. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the Party or Parties, or their personal
representatives, successors and assigns may require.
5.12.
ENTIRE AGREEMENT. This Agreement (including the schedules and
annexes hereto) and the documents delivered pursuant hereto or in
connection herewith constitute the entire agreement and
understanding between the Parties and supersedes any prior
agreement and understanding, written or oral, relating to the
subject matter of this Agreement. H&H, H&H Export,
Hernandez and Orozco each acknowledge that they have (a) had the
opportunity to seek the advice of independent counsel, including
independent tax counsel, regarding the consequences of this
Agreement; and (b) received no representations from CLR or its
counsel regarding the legal consequences of this Agreement. This
Agreement may be modified or amended only by a written instrument
executed by the Parties.
IN WITNESS WHEREOF
, the parties have
entered into this Agreement as of the day and year first above
written.
HERNANDEZ,
HERNANDEZ EXPORT Y COMPAPAÑIA LIMITADA
/s/ Alain Piedra
Hernandez
Print
Name
H &
H COFFEE GROUP EXPORT, CORP.
/s/ Alain Piedra
Hernandez
Alain Piedra Hernandez
Print
Name
ALAIN
PIEDRA HERNANDEZ
/s/ Alain Piedra
Hernandez
MARISOL
DEL CARMEN SILES OROZCO
CLR
ROASTERS, LLC
/s/ David S.
Briskie
Company
Representative’s Signature
David S. Briskie, Managing
Director
Company
Representative’s Printed Name