Exhibit
4.1
FORM
OF CONVERTIBLE PROMISSORY NOTE
THIS
CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933 (“THE ACT”), NOR UNDER
APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND STATE LAWS, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF
BORROWER.
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ISSUE
DATE
:_______________________
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2019
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LENDER
:
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PRINCIPAL SUM
: $
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LENDER ADDRESS
:
___________________________
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_________________________________
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___________________________
______
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FIRST CLOSE DATE:
______________________
,
2019
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YOUNGEVITY
INTERNATIONAL, INC.
6.0%
SECURED CONVERTIBLE PROMISSORY NOTE
This 6.0% Secured Convertible Promissory Note
is one of a series of notes issued to accredited investors in an
offering by YOUNGEVITY INTERNATIONAL, INC.(the
“Borrower”) to raise up to a maximum of $10,000,000
(such amount to be in the sole discretion of the Borrower)with a
minimum investment per investor of $100,000 (collectively the
“Youngevity $10m Offering 2019 Notes”). Each of the
Youngevity $10m Offering 2019 Notes will be treated
in pari
passu
with each of the other
Youngevity $10m Offering 2019 Notes based on the amount of this
Note as a percentage of the total amount of all of the Youngevity
$10m Offering 2019 Notes.
1.1
Promise to Pay
. FOR
VALUE RECEIVED, Youngevity International, Inc., a Delaware
corporation with a principal place of business at 2400 Boswell
Road, Chula Vista, CA 91914 (the “Borrower”), promises
to pay to the order of Lender (named above or “Holder”)
the Principal Sum with interest at the rate of 6.0% per annum on
the Principal Sum. Borrower shall pay the Principal Sum and accrued
interest outstanding to the Lender in lawful money of the United
States of America at the address of the Lender set out above or
such other address as the Lender designates by written notice to
Borrower prior to the payment being made. This Note is part of a
series of notes being offered by Borrower (the
“Notes”). The holders of all of the Notes shall be
referred to collectively as the “Lenders.”
1.2
Payments;
Commencement Date.
(a)
Payments
of accrued interest shall be paid in quarterly installments
commencing on the last day of each quarter (March 31, June 30,
September 30, December 31) after the First Close Date, set forth
above (being the date on which the Borrower has raised at least the
minimum offering amount of $100,000 and has conducted its first
closing under the offering) and continuing on the same day of each
quarter thereafter.
(b)
To the extent that payments are made to holders of
the
Youngevity $10m Offering 2019
Notes
, payments will be made
proportionally to the holders of all
Youngevity $10m Offering 2019
Notes
based on the then
outstanding principal balance of each note as a percentage of the
total outstanding principal balance of all outstanding
Youngevity $10m
Offering 2019 Notes
.
(c)
Unless
otherwise agreed or required by applicable law, payments will be
applied first to any accrued unpaid interest; then to principal; To
the extent that any interest is unpaid in any quarter, it will
continue to accrue without being added to the principal
amount.
1.3
Maturity.
If this
Note has not been paid in full or otherwise extended by the
Lenders, then on the date that is twenty four months after the date
of issuance of the Note (the “Maturity Date”) the
entire outstanding Principal Amount and all unpaid accrued interest
hereunder shall be due and payable.
1.4
Prepayment.
This
Note may be pre-paid in whole at any time prior to the Maturity
Date by the Borrower, provided however, the Borrower shall pay all
accrued and unpaid interest plus an amount equal to 110% of the
principal amount then outstanding under this Note.
1.5
Security
. The
payment of the obligations owed under this Note is secured by a
security interest in certain assets of the Borrower as set forth in
that certain Security Agreement dated as of the date of issuance of
this Note by and among the Borrower and the Lenders.
2.
HOLDER’S CONVERSION RIGHTS
2.1
Voluntary Conversion
Rights
. From and after 180 anniversary of the of the
issuance of the Note and for so long as this Note remains
outstanding and not fully paid, the Holder shall have the right,
but not the obligation, to convert all or any portion of the then
aggregate outstanding Principal Amount of this Note, together with
any accrued and unpaid interest thereon, into shares of Common
Stock of the Borrower or its successor in interest (the
“Conversion Shares”) any time after 180 days of the
Closing, at a conversion price equal to $10.00 per share, subject
to adjustment upon any stock split, stock dividend or
reclassification of the Common Stock (the “Voluntary
Conversion Price”). The Holder may exercise such right by
delivery to the Borrower of a written Notice of Conversion pursuant
to Section 2.2.
2.2.
Mechanics of
Holder’s Conversion
.
(a)
In
the event that the Holder elects to voluntarily convert any amounts
outstanding under this Note into Common Stock any time after 180
days from the Closing, Noteholder shall give notice of such
election by delivering an executed and completed notice of
conversion (a “Notice of Conversion” Exhibit B-1)
together with the Holder’s original Note to the Company,
which Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, and accrued interest.
(b)
No
fractional Conversion Shares shall be issued upon conversion of
this Note. Instead of any fractional shares that would otherwise be
issuable upon conversion of this Note, the Company shall round up
or round down in the Company’s sole discretion, respect of
such fractional shares.
3.1
Event of Default.
It shall be
an Event of Default (each event being called an “Event
of
Default”)
hereunder if:
(a)
the
Borrower fails to make any interest payment when due hereunder or
on the Maturity Date and such nonpayment continues for ten (10)
business days;
(b)
the
Borrower defaults in the performance or observance of any other
material covenant or condition of this Note, or any exhibits
thereto, and the default continues for thirty (30) days after
written notice of the default to the Borrower by the
Investor.
(c)
the
Borrower shall fail to comply with the reporting requirements of
the Exchange Act (including but not limited to becoming delinquent
in its filings it being agreed that any filing under Rule 12b-25 of
the Exchange Act shall not be a failure to comply if the filing is
made within the time period allowed by Rule 12b-25), and/or the
Borrower shall cease to be subject to the reporting requirements of
the Exchange Act.
(d)
an
order is made for the winding-up of the Borrower; a petition is
filed by or against the Borrower; an assignment for the benefit of
creditors is made by the Borrower; a receiver or agent is appointed
in respect of the Borrower under any bankruptcy or insolvency
legislation, or by or on behalf of a secured creditor of the
Borrower; or an application is made under the United States
Bankruptcy Code or any successor or similar
legislation;
(e)
the
Borrower ceases to carry on its business or disposes of
substantially all of its assets other than in the ordinary course
of its business; or
(f)
the
Borrower commences any corporate proceedings for its dissolution or
liquidation.
This Note and the
repayment hereof is secured by certain assets of the Borrower as
listed in the Security Agreement.
Upon the occurrence of any Event of Default, which
has not been cured by the applicable cure period set forth above
after the occurrence of such Event of Default, the Holder, may, by
written notice to the Company, declare all or any portion of the
unpaid Principal Amount due to Holder, together with all accrued
interest thereon, immediately due and payable (without advanced
notice as may otherwise by required hereunder); provided that upon
the occurrence of an Event of Default all or any portion of the
unpaid Principal Amount due to Holder, together with all accrued
interest thereon, shall immediately become due and payable without
any such notice. Holder shall also have all other remedies
available under law and equity. In the event that an Event of
Default. Additionally, if the Holder at its sole discretion elects
to allow the Company to continue with repayment of the principal
and interest on this Note after an Event of Default, the interest
rate on the unpaid principal of this Note will change to 18% or the
highest interest rate currently allowable under Delaware law for
loans of this amount (the “Default Interest Rate”). As
of the date of Default or any Event of Default, assuming the Holder
allows reinstatement or continuation of this Note, the Default
Interest Rate shall become the new rate of interest on this
Note.
4.1
Ownership of Note.
Borrower may not transfer or assign this Note except in accordance
with all applicable laws and regulations, and with notice to and
the consent of the Borrower, which consent may not be unreasonably
withheld.
4.2
Notice and Other
Instruments.
All notices, reports or other documents and
communications that are required or permitted to be given to the
Parties under this Agreement shall be sufficient if given in
writing and delivered in person, by email, by overnight courier, or
by registered or certified mail, postage prepaid, return receipt
requested, to the receiving Party at the address listed on the
first page of this Note or to such other address as such Party may
have given to the other by written notice pursuant to this Section.
Notice shall be deemed given on the date of delivery, in the case
of personal delivery or confirmed receipt email, or on the delivery
or refusal date, as specified on the return receipt, in the case of
overnight courier or registered or certified mail.
4.3
Governing Law.
This
Note and the rights, remedies, powers, covenants, duties and
obligations of the parties herein will be construed in accordance
with and governed by the laws of the State of Florida and the
federal laws of the United States.
4.4
Severability
.
Should any one or more of the provisions hereof be determined to be
illegal or unenforceable, all other provisions hereof shall be
given effect separately therefrom and shall not be affected
thereby. To the extent that a court determines that any provision
herein is unreasonable in light of the circumstances, the court
shall revise such provision in a manner that the court determines
to be reasonable and to most clearly implement the intention of
this Note and the Agreement.
4.5
Binding on
Successors
. This Note will inure to the benefit of and be
binding upon each of the parties and their respective heirs,
executors, successors, and permitted assigns.
4.6
Amendment and
Waiver.
This Note may not be amended, waived, discharged or
terminated except by a document executed by the party against whom
enforcement of the amendment, waiver, discharge or termination is
sought.
4.7
Maximum Interest.
In no event
shall the amount of interest due or payable hereunder exceed the
maximum rate of interest allowed by applicable law, and in the
event any such payment is inadvertently paid by Borrower or
inadvertently received by the Lender or other holder hereof, then
such excess sum shall be credited as a payment of principal. It is
the express intent hereof that Borrower not pay and the Lender or
other holder not receive, directly or indirectly, in any manner
whatsoever, interest in excess of that which may be lawfully paid
by Borrower under applicable law.
4.8
Execution and
Authority.
The undersigned executing this Note on behalf of
the Borrower and delivering it to the Lender hereby represents and
warrants that he does so with all corporate authority of the
Borrower, and in reliance upon the Lender’s execution of the
subscription agreement relating to the offer and sale of this Note
and the other
Youngevity $10m
Offering 2019 Notes
, and the accuracy and completeness of
the representations, warranties, and agreements of the Lender
contained therein.
BORROWER
AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A
COMPLETED COPY OF THIS SECURED, CONVERTIBLE PROMISSORY
NOTE.
BORROWER:
Youngevity
International, Inc.
By:
___________________________
Dave
Briskie, President & CFO
Exhibit
B-1
NOTICE
OF CONVERSION
(To be
executed by the Registered Holder in order to convert the
Note)
The
undersigned hereby elects to convert $____________ of the principal
and $____________ of the interest due on the Note issued by
Youngevity International, Inc., a Delaware corporation (the
“Company”) into shares of Common Stock of the Company
according to the conditions set forth in such Note for the
Voluntary Conversion Rights, as of the date written
below.
Date of
Conversion/Exchange:_________________________________________________________
Conversion
Price:___________________________________________________________________
Shares
To Be
Delivered:______________________________________________________________
Signature:_________________________________________________________________________
Print
Name:_______________________________________________________________________
Address:__________________________________________________________________________
_________________________________________________________________________________
Exhibit
10.1
YOUNGEVITY INTERNATIONAL, INC.
CONFIDENTIAL
SUBSCRIPTION AGREEMENT
THE
SECURITIES BEING OFFERED BY YOUNGEVITY INTERNATIONAL, INC.
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “1933 ACT”) OR APPLICABLE STATE BLUE SKY OR
SECURITIES LAWS AND ARE OFFERED UNDER AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF SUCH LAWS. THESE SECURITIES CANNOT BE
SOLD, TRANSFERRED, ASSIGNED, OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THIS
SUBSCRIPTION AGREEMENT AND APPLICABLE FEDERAL AND STATE SECURITIES
LAWS.
ALL
INVESTORS WILL BE REQUIRED TO REPRESENT IN WRITING TO THE COMPANY
THAT THEY ARE AN ACCREDITED INVESTOR AS THAT TERM IS DEFINED IN
SECTION 2(a) (15) OF THE 1933 ACT AND IN RULE 501(a) OF REGULATION
D UNDER THE 1933 ACT. SUBSCRIPTIONS WILL BE ACCEPTED ONLY FROM
PERSONS DEEMED ELIGIBLE UNDER THE CRITERIA SET FORTH IN THIS
DOCUMENT. THIS DOCUMENT CONSTITUTES AN OFFER ONLY TO THE PERSON TO
WHOM IT IS DELIVERED BY THE COMPANY OR ITS PLACEMENT AGENT. THE
COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION FOR ANY
REASON OR FOR NO REASON, WHETHER OR NOT FUNDS HAVE BEEN RECEIVED BY
THE COMPANY.
THIS
CONFIDENTIAL SUBSCRIPTION AGREEMENT HAS BEEN PREPARED FOR
DISTRIBUTION TO A LIMITED NUMBER OF PERSONS (EACH AN
“INVESTOR”) WHO ARE ACCREDITED INVESTORS AS DEFINED IN
REGULATION D UNDER THE 1933 ACT TO ASSIST THEM IN EVALUATING A
PROPOSED INVESTMENT IN THE SECURITIES. THE COMPANY HAS NOT
AUTHORIZED USE OF THE INFORMATION CONTAINED IN THIS CONFIDENTIAL
SUBSCRIPTION AGREEMENT FOR ANY OTHER PURPOSE. BY ACCEPTING THIS
SUBSCRIPTION AGREEMENT, YOU ARE ACKNOWLEDGING THE CONFIDENTIAL AND
PROPRIETARY NATURE OF THIS INFORMATION, AND YOU AGREE TO MAINTAIN
CONFIDENTIALITY OF SUCH INFORMATION. YOU MAY NOT COPY OR REPRODUCE
THIS SUBSCRIPTION AGREEMENT, IN WHOLE OR IN PART. NOR MAY YOU
DISCLOSE THE CONTENTS OF THIS SUBSCRIPTION AGREEMENT TO ANY PERSON
OTHER THAN YOUR LEGAL, ACCOUNTING, AND FINANCIAL ADVISORS WHO MAY
ASSIST YOU. EACH ADVISOR WHO BECOMES AWARE OF THE INFORMATION
CONTAINED IN THIS SUBSCRIPTION AGREEMENT SHALL BE SUBJECT TO THE
SAME RESTRICTIONS ON USE OF THE INFORMATION CONTAINED
HEREIN.
THE
SECURITIES OFFERED BY THE COMPANY INVOLVE A VERY HIGH DEGREE OF
RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE
LOSS OF THEIR ENTIRE INVESTMENT.
THIS
OFFERING HAS NOT BEEN REVIEWED BY, AND THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY, ANY FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE
NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SUBSCRIPTION
This
Subscription Agreement is offered (the “Offering”) for
the purpose of you considering the purchase of the Securities
(being a 6% convertible promissory notes and shares of Youngevity
International, Inc. common stock) described in the Youngevity
International, Inc. (the “Company’)- Principal Terms
(the "Term Sheet") to which this Subscription Agreement is
attached. All terms not defined herein are defined in the Term
Sheet. If after reviewing this Subscription Agreement and other
relevant documents with your legal, financial, tax, and investment
advisers as you deem appropriate you elect to subscribe to the
Offering, please complete and execute the following
documents:
1. This
Subscription on Page 6.
2. The
Accredited Investor Chart on Page 7.
And
deliver the entire
subscription amount by wire transfer or check payable to
"Wilmington Trust", trustee for Youngevity International, Inc. with
reference to “2019 Youngevity Note Offering",
to:
Wilmington Trust,
Inc.
166
Mercer St., Suite 2R
New
York, NY 10012R
Credit
to:
“Youngevity VI
Escrow"
ABA Routing Number:
031100092
Account Number:
133785-000
By
executing this Subscription Agreement and returning it to the
Company, you further agree that your investment is being made
entirely on the terms and conditions stated herein and in the
documents attached hereto. You understand that this Subscription
Agreement is not binding until Company accepts it in writing. The
Company in its sole discretion may accept or decline your
subscription.
FURTHER
AGREEMENTS
In
connection with the subscription contemplated by this Subscription
Agreement, the parties agree as follows:
1. You
understand that this Subscription Agreement is a part of an
offering to raise proceeds of a minimum of $100,000 and a maximum
of $10,000,000 by the offer and sale of secured 6% convertible
promissory notes and common stock (the “Securities”),
including the Securities you may purchase pursuant to this
Subscription Agreement.
2. In
addition to the other representations and warranties contained
herein, you understand that an investment in the Securities is one
of significant risk, and there can be no assurance that the
Securities will ever be valuable. You acknowledge that you may lose
your entire investment in the Securities. You hereby represent that
an investment in the Securities is a suitable investment for you,
taking into consideration the restrictions on transferability and
the other considerations affecting the Securities and the Company
as described herein and in the documents included with this
subscription agreement, and in the investigation that you have
made.
3. You
are acquiring the Securities for your own account and not on behalf
of any other person or entity. You are acquiring the Securities for
investment purposes and not for resale or
distribution.
4. You
are not aware of the payment of any commission or other
remuneration to any person in connection with the execution of this
transaction or the purchase of the Securities, except for the fees
to be paid to, and the shares of common stock to be issued to, our
Placement Agent, Corinthian Partners, LLC.
5. You
have reviewed the Company’s filings with the Securities and
Exchange Commission which contains disclosure of the material risks
of an investment in our Securities, as well as our existing and
proposed business, assets, management, financial condition,
capitalization and share ownership, and plan of operations. We
believe that the information set forth in such filings is accurate
and complete in all material respects. We have given you the
opportunity to ask questions of and to receive answers from us
about the terms and conditions of this Offering, and we have also
given you the opportunity to obtain any additional information
regarding the Company which we possess or can acquire without
unreasonable effort or expense.
6. You
acknowledge and understand, however, that we have not authorized
any person to make any statements on our behalf that would in any
way contradict any of the information that we have provided to you
in writing, including the information set forth in this
Subscription Agreement. You further represent to the Company that
you have not relied upon any such representations regarding the
Company, its business or financial condition, or this transaction
in making any decision to acquire the Securities. If you become
aware of conflicting information, you will discuss this with us.
You will not be acquiring the Securities with a view toward
distribution.
7. Your
present financial condition is such that it is unlikely that it
would be necessary for you to dispose of the Securities in the
foreseeable future. You further understand and agree
that:
a. The
Securities have not been registered under the 1933 Act or any state
or foreign securities laws, and consequently are and will continue
to be restricted securities within the meaning of Rule 144
promulgated under the 1933 Act and applicable state
statutes.
b. You
cannot resell the Securities unless they are registered under the
1933 Act and any applicable state securities laws or unless an
exemption from the registration requirements is
available.
c. As a
result, you must bear the economic risks of the investment in the
Securities for an indefinite period of time.
d. The
Company is the only person that may register the Securities under
the 1933 Act and state securities statutes, and we have not made
any representations to you regarding any possible future
registration of the Securities or compliance with some exemption
under the 1933 Act.
e. You will
not sell or attempt to sell the Securities without registration
under the 1933 Act and any applicable state securities laws, unless
exemptions from such registration requirements are available and
the undersigned has satisfied the Company that an exemption is
available for such sale.
f. The
Company has the right to issue instructions to its transfer agent
to bar the transfer of any of the certificates representing the
Securities except in accordance with the 1933 Act.
g. You
consent to the placement of an appropriate restrictive legend or
legends on any certificates evidencing the Securities and any
certificates issued in replacement or exchange
therefor.
8. You represent to us that no part
of the funds used by you for this investment was directly or
indirectly derived from, or related to, any activity that may
contravene federal, state, or international laws and regulations,
including anti-money laundering laws and regulations. Your purchase
of the Securities shall not cause the Company or its affiliates to
violate any applicable anti-money laundering laws and regulations
including the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (USA Patriot Act) and regulations of the U.S. Department of
the Treasury’s Office of Foreign Assets Control (OFAC). You
further represent that you and your affiliates are not acting
directly or indirectly for or on behalf of any person, group,
entity, or nation named by any Executive Order of the U.S. as a
terrorist, Specially Designated National and Blocked Person (SDN)
or other banned or blocked person, entity, nation, or transaction
pursuant to any law, order, rule, or regulation that is enforced or
administered by OFAC. You further represent that you and your
affiliates also are not engaged in this transaction, directly or
indirectly on behalf of, or instigating or facilitating this
transaction, directly or indirectly on behalf of any
SDN.
9. You
have consulted with your legal, financial, accounting, tax, and
investment advisers regarding your personal circumstances and the
advisability of your proposed purchase of the Securities to the
extent that you have determined such consultation to be
appropriate.
10. You
acknowledge that you have completed the “accredited
investor” chart set forth following your signature and you
represent and warrant to us that you are an “accredited
investor” as indicated.
11. We
may amend or modify this Subscription Agreement only in writing
signed by both you and the Company. No evidence shall be admissible
in any court concerning any alleged oral amendment
hereof.
This
Subscription Agreement fully integrates all of our prior agreements
and understandings concerning your purchase of the
Securities.
12.
This Subscription Agreement binds and inures to the benefit of our
respective representatives, successors, and permitted
assigns.
13.
Each of us hereto agrees for ourselves and our successors and
permitted assigns to execute any and all further instruments
necessary for the fulfillment of the terms of this Subscription
Agreement.
14. You
acknowledge that the Company is relying on the accuracy of the
representations and warranties you are making in this Subscription
Agreement, and you agree to indemnify the Company, and to hold us
harmless from and against any and all liability that may result to
us (including court costs and attorney fees) as a result of any of
your representations or warranties being materially inaccurate,
incomplete, or misleading.
15.
Dispute Resolution.
a. Mediation
Followed by Binding Arbitration. The parties agree to resolve
“Disputes” (as defined below) by submitting the Dispute
to mediation in the State of Florida, and if the Dispute is not
resolved through mediation, then it shall be submitted for final
and binding arbitration under the Judicial Arbiter Group, Inc.
(
www.jaginc.com
),
the site of which arbitration shall be Chula Vista, California Any
party to this Subscription Agreement may commence mediation by
providing to the other parties a written request for mediation,
setting forth the subject of the Dispute and the relief requested.
The parties will cooperate with one another in selecting a mediator
and in scheduling the mediation proceedings promptly, not later
than 20 days after such request for mediation. The parties covenant
that they will participate in the mediation in good faith, and that
they will share equally in its costs. All offers, promises,
conduct, and statements, whether oral or written, made in the
course of the mediation by any of the parties, their agents,
employees, experts, and attorneys, and by the mediator, are
confidential, privileged, and inadmissible for any purpose,
including impeachment, in any arbitration or other proceeding
involving the parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non- discoverable as a result of its use in the mediation. Any
party may initiate arbitration with respect to the Disputes
submitted to mediation by filing a written demand for arbitration
at any time following the initial mediation session or 45 days
after the date of filing the written request for mediation,
whichever occurs first. The mediation may continue after the
commencement of arbitration if the parties so desire. Unless
otherwise agreed by the parties, any arbitration initiated under
this Clause shall be conducted by a single arbitrator. Unless
otherwise agreed by the parties, the mediator shall be disqualified
from serving as arbitrator in the case. The provisions of this
Clause may be enforced by any court of competent jurisdiction, and
the party seeking enforcement shall be entitled to an award of all
costs, fees, and expenses, including attorney fees, to be paid by
the party against whom enforcement is ordered.
b.
Definition
of “Dispute.”
For the purposes of the preceding
paragraph, the term “Dispute” means all claims,
disputes, or other controversies arising out of, or relating to,
this Subscription Agreement (and all exhibit attached hereto), the
purchase of the Securities, and any other claims, disputes, or
controversies arising out of or relating to the management or
operations of the Company or the purchase of the Securities as
described herein.
16. This
subscription agreement is made under, shall be construed in
accordance with, and shall be governed by the laws of the State of
Florida, without regard to conflicts of laws
principles.
[SIGNATURES ON
FOLLOWING PAGE]
IN
WITNESS HEREOF, subject to our acceptance, you have completed this
Subscription Agreement and tendered payment in the amount of $
to evidence your commitment to purchase the Securities
(which includes a convertible promissory note in the principal
amount of $
______________
and
__________________
shares
1
of
common stock of the Company on the terms, and with the
representations and warranties set forth herein.
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(Investor)
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Date:
______________________________________
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Investor Signature:
______________________________________
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Tax I.D. No.:
______________________________________
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Print Name:
______________________________________
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Title (if
applicable):
______________________________________
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E-Mail Address:
______________________________________
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Street Address:
_________________________
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______________________________________
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______________________________________
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Telephone No.:
_________________________________
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Exact
Name in which the Securities and instruments representing the
Securities (being the Note and the certificates of common stock to
be issued six months after the issuance of the Note) are to be
issued:
_____________________________________________________________________________
This Subscription
Agreement is hereby accepted as of the ________ day of
________________, 2019.
COMPANY
Youngevity
International, Inc.
By:_______________________
Name:
_______________________
Title:
_______________________
______________________________
1
The Investor will
receive Two Thousand (2,000) shares of common stock for every One
Hundred Thousand Dollars invested, pro rata..
ACCREDITED
INVESTOR CHART
In
order to assure that the Offering is made only to persons for whom
an investment in the Securities is suitable, the Securities will be
sold only to accredited investors
.
Please indicate by your
initials each of the following categories in which you qualify as
an accredited investor:
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An
employee benefit plan within the meaning of Title of the Employee
Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section
3(21)
of such
Employee Retirement Income Security Act, which is either a bank,
savings and loan association, insurance company or registered
investment advisor, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are otherwise
accredited investors.
|
_______
|
A trust
with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the Securities, whose purchase is
directed by a person who has such knowledge and experience in
financial and business matters that he or she is capable of
evaluating the merits and risks of an investment in the
Securities.
A bank
as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A)
of the Act, whether acting in its individual or fiduciary
capacity.
|
|
_______
|
A
private business development company as defined in Section
202(a)(22) of the Investment Advisors Act of 1940.
|
_______
|
A
broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934.
|
|
_______
|
An
organization described in Section 501(c)(3) of the Internal Revenue
Code, or a corporation, Massachusetts or similar business trust, or
a partnership (in each case not formed for the specific purpose of
acquiring the Securities) with total assets in excess of
$5,000,000.
|
_______
|
An
insurance company as defined in Section 2(13) of the
Act.
An
investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940.
|
|
_______
|
A
natural person whose net worth,
individually
or jointly with spouse, exceeds $1,000,000 at this time
(excluding the value of that person’s primary residence and
excluding any debt up to (and not exceeding) the value of the
residence, but adding back any debt incurred within
60 days of this subscription unless incurred in
connection with the purchase of the primary
residence).
|
_______
|
A Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
A plan
established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has
total assets in excess of
$5,000,000.
|
|
_______
|
A
natural person who had an individual income in excess of $200,000
in each of the two most recent calendar years or joint income with
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same level of income in the
current calendar year.
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_______
|
Any
entity in which all the equity owners are accredited investors
(i.e., by virtue of their meeting any of the other tests for an
“accredited investor”). Any director or executive
officer of the Company.
|
Exhibit
10.2
SECURITY AGREEMENT
THIS
SECURITY AGREEMENT
(this
“
Agreement
”) is
made as of __, 2019, (the “
Funding Date
”) by and between
YOUNGEVITY INTERNATIONAL, INC., a Delaware corporation
(
“Pledgor
”) in
favor of the individuals listed on
Schedule A
annexed hereto
(herein, each a “
Secured
Creditor
” and together the “
Secured Creditors
”)
.
WHEREAS
, in order to induce the Secured
Creditors to extend the loans evidenced by certain 6% secured
promissory notes (the “
Notes
”), the Pledgor has agreed to
execute and deliver to the Secured Creditors a pledge and security
agreement providing for the pledge and grant to the Secured
Creditors of a security interest in the Pledgor’s interest in
the collateral identified and defined below.
NOW, THEREFORE
, in consideration of the
premises and the agreements herein and in order to induce the
Secured Creditors to make the loans evidenced by the Notes, the
Pledgor hereby agrees with the Secured Creditors as
follows:
AGREEMENT
NOW,
THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as
follows:
1.
Grant of Security Interest
. To
secure the prompt payment by the Pledgor, as and when due and
payable, of all amounts owing by it in respect of the Notes and the
full and timely performance of all of Pledgor’s obligations
hereunder, Pledgor hereby unconditionally and irrevocably pledges,
grants and hypothecates to the Secured Creditors a continuing Lien
and security interest (the “
Security Interest
”) in and to the
collateral identified on
Exhibit A
hereto and the
proceeds thereof (the “
Collateral
”).
2.
Priority of Security Interest
.
The Secured Creditors and Pledgor each acknowledge and agree
that:
(a)
the Security
Interest granted by Pledgor in the Collateral owned by Pledgor
pursuant to this Agreement is subject and subordinated to the
rights in the Collateral held by Crestmark Bank under its Amended
and Restated Loan and Security Agreement, dated November 16, 2017,
as amended on December 29, 2017 (the “
First Lien
”) and is
pari passu
to the rights in the
Collateral held by the holders of the 2014 Secured Notes issued by
Youngevity International, Inc.; and
(b)
upon the occurrence
and continuation of either (i) an Event of Default under the Notes
or hereunder, or (ii) an event of default in respect of the First
Lien or the 2014 Secured Notes, the Secured Creditors may exercise
any of its rights and remedies with respect to the Collateral owned
by Pledgor or the Security Interest granted by Pledgor hereunder,
all as provided in this Agreement.
3.
Representations and
Covenants
.
(a)
Other Liens
. Pledgor owns all
rights, title and interest in the respective Collateral (or has
appropriate rights to use in the case of property subject to
leases, licenses or similar arrangements in which Pledgor is the
licensee or lessee) and, except for the First Lien other Permitted
Liens as defined below, Pledgor will not permit its Collateral to
be subject to any adverse lien, security interest or encumbrance
(other than Permitted Liens), and Pledgor will defend its
Collateral against the claims and demands of all persons at any
time claiming the same or any interest therein. Except as disclosed
to the Secured Creditors, no financing statements covering any
Collateral or any proceeds thereof are on file in any public
office. Permitted Liens shall include (i) purchase money liens, and
liens incurred in the ordinary course of business, (ii) liens for
taxes not yet delinquent or which are being contested in good
faith, (iii) any lien on any real or personal property at the time
it is acquired and any lien renewing any of the foregoing, (iv)
Liens as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made
of such property by the Pledgor.
(b)
This Agreement
creates in favor of the Secured Creditors a valid security interest
in the Collateral, subject only to the First Lien and Permitted
Liens (as defined) securing the payment and performance of the
Obligations. Upon making the filings described in the immediately
following paragraph, all security interests created hereunder in
any Collateral, which may be perfected by filing Uniform Commercial
Code (“
UCC
”)
financing statements and other filings, if any, as may be required
under the laws of the United States (together with the UCC, the
“
Required
Filings
”) in order to perfect a Security Interest,
shall have been duly perfected. Without limiting the generality of
the foregoing, except for the Required Filings and subject to the
requirements of the laws of Nicaragua, no consent of any third
parties and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body is required for: (i) the execution, delivery and performance
of this Agreement; (ii) the creation or perfection of the Security
Interests in the United States created hereunder in the Collateral;
or (iii) the enforcement of the rights of the Secured Creditors
hereunder.
(c)
Filing Authorization
. Pledgor
hereby authorizes the Secured Creditors, as the agent and
attorney-in-fact for Pledgor to file one or more financing
statements under the UCC and all other Required Filings, with
respect to the Security Interests, with the proper filing and
recording agencies in any jurisdiction deemed proper by
it.
(d)
Further Documentation
. At any
time and from time to time, at the sole expense of Pledgor, Pledgor
will promptly and duly execute and deliver such further instruments
and documents and take such further action as the Secured Creditors
may reasonably request for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights and powers
herein granted. The undersigned Pledgor hereby authorizes Secured
Creditors to file with the appropriate filing office, now or
hereafter from time to time, financing statements, continuation
statements and amendments thereto, naming the undersigned as
Pledgor and covering all of the Collateral of Pledgor, including
but not limited to any specific listing, identification or type of
all or any portion of the assets of the undersigned. The
Secured Creditors shall provide Pledgor with a copy of any such
filing. The undersigned acknowledges and agrees, by evidence of its
signature below, that this authorization is sufficient to satisfy
the requirements of Revised Article 9 of the Uniform Commercial
Code and the laws of all other jurisdictions in which Required
Filings are to be made.
(e)
Indemnification
. Pledgor agrees
to defend, indemnify and hold harmless Secured Creditors against
any and all liabilities, costs and expenses (including, without
limitation, all reasonable legal fees and expenses): (i) with
respect to, or resulting from, any delay in paying any and all
excise, sales or other taxes which may be payable or are determined
to be payable with respect to any of the Collateral; (ii) with
respect to, or resulting from, any breach of any law, rule,
regulation or order of any governmental authority applicable to any
of the Collateral; or (iii) in connection with a breach of any of
the transactions contemplated by this Agreement;
provided
,
however
, that this
indemnification shall not extend to any damages caused by the gross
negligence or willful misconduct of the Secured
Creditors.
(f)
Change of Jurisdiction of
Organization; Relocation of Business or Collateral
. Pledgor
shall not change its jurisdiction of organization, relocate its
chief executive office, principal place of business or its records
or allow the relocation of any Collateral (unless such relocation
is in the ordinary course of business) without thirty (30) days
prior written notice to the Secured Creditors.
(g)
Limitations on
Modifications of Accounts, Etc
. Upon the occurrence and
during the continuation of any Event of Default (as defined in the
Credit Agreement or Credit Notes), Pledgor shall not, without the
Secured Creditors’ prior written consent, grant any extension
of the time of payment of any of the accounts, chattel paper,
instruments or amounts due under any contract or document,
compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for
the payment thereof, or allow any credit or discount whatsoever
thereon other than trade discounts and rebates or payment
extensions granted in the ordinary course of Pledgor’s
business.
(h)
Insurance
. Pledgor shall
maintain insurance policies insuring the Collateral against loss or
damage from such risks and in such amounts and forms and with such
companies as are customarily maintained by businesses of similar
type and size to Pledgor.
(i)
Authority
. Pledgor has all
requisite
corporate or other
powers and authority to execute this Agreement and to perform all
of its obligations hereunder, and this Agreement has been duly
executed and delivered by Pledgor and constitutes the legal, valid
and binding obligation of Pledgor, enforceable in accordance with
its terms. The execution, delivery and performance by Pledgor of
this Agreement have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or
approval by any governmental department, commission, board, bureau,
agency or instrumentality or domestic; (ii) violate any
provision of any law, rule or regulation or of any order, writ,
injunction or decree presently in effect, having applicability to
Pledgor or the articles of incorporation or by-laws of Pledgor; or
(iii) result in a breach of or constitute a default under any
material indenture, Loan or credit agreement or any other
agreement, lease or instrument to which Pledgor is a party or by
which it or its properties may be bound or affected.
(j)
Defense of Intellectual
Property
. Pledgor shall (i) use commercially reasonable
efforts to protect, defend and maintain the validity and
enforceability of its material copyrights, patents, trademarks and
trade secrets; (ii) use commercially reasonable efforts to
detect infringements of its copyrights, patents, trademarks and
trade secrets and promptly advise Secured Creditors in writing of
material infringements detected; and (iii) not allow any
copyrights, patents, trademarks or trade secrets material to
Pledgor’s businesses to be abandoned, forfeited or dedicated
to the public domain without the written consent of Secured
Creditors.
(k)
Maintenance of Records
. Pledgor
will keep and maintain at its own cost and expense satisfactory and
complete records of the Collateral
and
may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Creditors at least
thirty (30) days prior to such relocation (i) written notice of
such relocation and the new location thereof; and (ii) evidence
that appropriate financing statements under the UCC and other
Required Filings have been filed and recorded and other steps have
been taken to create in favor of the Secured Creditors, a valid,
perfected and continuing perfected first priority lien in the
Collateral.
(l)
Inspection Rights
. Secured
Creditors will have full access during normal business hours, and
upon reasonable prior notice, to all of the books, correspondence
and other records of Pledgor relating to the Collateral, and
Secured Creditors or their representatives may examine such records
and make photocopies or otherwise take extracts from such records,
subject to Pledgor’s reasonable confidentiality requirements.
Pledgor agrees to render to Secured Creditors, at the expense of
Pledgor, such clerical and other assistance as may be reasonably
requested with regard to the exercise of its rights pursuant to
this paragraph.
(m)
Compliance with Laws, Etc
.
Pledgor shall comply in all material respects with all laws, rules,
regulations and orders of any governmental authority applicable to
any part of the Collateral or to the operation of Pledgor’s
businesses;
provided
,
however
, that Pledgor may
contest any such law, rule, regulation or order in any reasonable
manner which does not, in the reasonable opinion of Pledgor,
adversely affect Secured Creditors’ rights or the priority of
its liens on the Collateral.
(n)
Payment of Obligations
. Pledgor
shall pay before delinquency all obligations associated with the
Collateral, including license fees, taxes, assessments and
governmental charges or levies imposed upon the Collateral or with
respect to any of its income or profits derived from the
Collateral; as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or
with respect to the Collateral, except that no such charge need be
paid if (i) the validity or amount of such charge is being
contested in good faith by appropriate proceedings; (ii) such
proceedings do not involve any material danger of the sale,
forfeiture or loss of any of the Collateral or any interest in the
Collateral; and (iii) such charge is adequately reserved
against on the books of Pledgor in accordance with generally
accepted accounting principles. The obligation of the Company to
repay the Loan evidenced by the Note, together with all interest
accrued thereon, is absolute and unconditional, and there exists no
right of set off or recoupment, counterclaim or defense of any
nature whatsoever to payment of the Loan.
(o)
Limitations on Liens on
Collateral
. Except for the First Lien and Permitted Liens,
Pledgor shall not create, incur or permit to exist, any liens on
the Collateral outside the scope of this Agreement other than
purchase money liens, liens incurred in the ordinary course of
business, liens for taxes not yet delinquent or which are being
contested in good faith , any lien on any real or personal property
at the time it is acquired, any lien renewing any of the foregoing,
and shall defend the Collateral against, and shall take such other
action as is necessary to remove, any lien or claim on or to the
Collateral, and shall defend the rights, title and interest of
Secured Creditors in and to any of the Collateral against the
claims and demands of all other persons.
(p)
Limitations on Dispositions of
Collateral
. Pledgor shall not sell, transfer, lease or
otherwise dispose of a material portion of the Collateral, or offer
or contract to do so without the written consent of a majority in
interest of the Secured Creditors;
provided
,
however
, that Pledgor will be
allowed to (i) sell its inventories in the ordinary course of
business; (ii) sell and grant non-exclusive licenses to its
products, intellectual property and related documentation in the
ordinary course of business; and (iii) dispose of obsolete or worn
out inventory.
(q)
Good
Standing
. Commencing on a date
which shall be not more than thirty (30) days from the date of this
Agreement, Pledgor shall be and at all times preserve and keep in
full force and effect its valid existence and good standing and any
rights and franchises material to its business.
(r)
Offices
.
Pledgor may not relocate its chief
executive office to a new location without providing thirty (30)
days prior written notification thereof to the Secured Creditors
and so long as, at the time of such written notification, Pledgor
provides any financing statements or fixture filings necessary to
perfect and continue the perfection of the Security Interests
granted and evidenced by this Agreement.
(s)
Certificates
.
At any time and from time to time that any
Collateral consists of instruments, certificated securities or
other items that require or permit possession by the Secured
Creditors to perfect the security interest created hereby, Pledgor
shall deliver such Collateral to the Agent.
(t)
Tangible
Chattel
.
Pledgor shall cause
all tangible chattel paper constituting Collateral to be delivered
to the Secured Creditors, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend
noting that it is subject to the security interest created by this
Agreement. To the extent that any Collateral consists of electronic
chattel paper, Pledgor shall cause the underlying chattel paper to
be “marked” within the meaning of Section 9-105 of the
UCC (or successor section thereto).
(u)
Third Party
.
To the extent that any Collateral is in the
possession of any third party, Pledgor shall join with the Secured
Creditors in notifying such third party of the Secured
Creditors’ security interest in such Collateral and shall use
its best efforts to obtain an acknowledgement and agreement from
such third party with respect to the Collateral, in form and
substance reasonably satisfactory to the Secured
Creditors.
(v)
Further Identification of
Collateral
. Pledgor have full rights, title and interest in
and to all identified Collateral. Pledgor shall furnish to Secured
Creditors from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Secured Creditors may
reasonably request, all in reasonable detail.
4.
Secured Creditors’ Appointment
as Attorney-in-Fact
.
(a)
Powers
. Pledgor and Secured
Creditors hereby appoint the officers or agents of ___________
(each an “
Agent
”) to act on behalf of
Secured Creditors, with full power of substitution, as its
attorney-in-fact with full irrevocable power and authority in the
place of Pledgor and in the name of Pledgor or in its own name, so
long as an Event of Default has occurred and is continuing, for the
purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any instrument which may
be necessary or desirable to accomplish the purposes of this
Agreement. Without limiting the foregoing, so long as an Event of
Default has occurred and is continuing, Secured Creditors, in their
discretion, will have the right, without notice to, or the consent
of Pledgor, to do any of the following on behalf of
Pledgor:
(i)
to
pay or discharge any obligations in connection with the Collateral,
including license fees and taxes or liens levied or placed on or
threatened against the Collateral;
(ii)
to
direct any party liable for any payment under any of the Collateral
to make payment of any and all amounts due or to become due
thereunder directly to Secured Creditors or as Secured Creditors
directs;
(iii)
to
ask for or demand, collect and receive payment of and receipt for
any payments due or to become due at any time in respect of or
arising out of any Collateral;
(iv)
to
commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to enforce any
right in respect of any Collateral;
(v)
to
defend any suit, action or proceeding brought against any Pledgor
with respect to any Collateral;
(vi)
to
settle, compromise or adjust any suit, action or proceeding
described in subsection (v) above and, to give such discharges or
releases in connection therewith as Secured Creditors may deem
appropriate;
(vii)
to
assign any license or patent right included in the Collateral of a
Pledgor (along with the goodwill of the business to which any such
license or patent right pertains), throughout the world for such
term or terms, on such conditions and in such manner as Secured
Creditors in their sole discretion determine;
(viii)
to
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral and to take, at Secured
Creditors’ option and Pledgor’s expense, any actions
which Secured Creditors deem necessary to protect, preserve or
realize upon the Collateral and Secured Creditors’ liens on
the Collateral and to carry out the intent of this Agreement, in
each case to the same extent as if Secured Creditors were the
absolute owners of the Collateral for all purposes;
(ix)
to
exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of Pledgor to
receive the dividends and interests which it would otherwise be
authorized to receive and retain, shall cease. Upon such notice,
Agent shall have the right to receive, for the benefit of the
Secured Creditors, any interest, cash dividends or other payments
on the Collateral and, at the option of Agent, to exercise in such
Agent’s discretion all voting rights pertaining thereto.
Without limiting the generality of the foregoing, Agent shall have
the right (but not the obligation) to exercise all rights with
respect to the Collateral as it were the sole and absolute owner
thereof, including, without limitation, to vote and/or to exchange,
at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral of
Pledgor or any of its direct or indirect subsidiaries;
(x)
to
operate the Business of Pledgor using the Collateral, and shall
have the right to assign, sell, lease or otherwise dispose of and
deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such
parcel or parcels and at such time or times and at such place or
places, and upon such terms and conditions as the Agent may deem
commercially reasonable, all without (except as shall be required
by applicable statute and cannot be waived) advertisement or demand
upon or notice to Pledgor or right of redemption of a Pledgor,
which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Creditors,
may, unless prohibited by applicable law which cannot be waived,
purchase all or any part of the Collateral being sold, free from
and discharged of all trusts, claims, right of redemption and
equities of any Pledgor, which are hereby waived and
released;
(xi)
to
sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the
Collateral; and
(xii)
to
notify Pledgor and any obligors under instruments or accounts to
make payments directly to the Agent, on behalf of the Secured
Creditors, and to enforce Pledgor’s rights against such
account Pledgor and obligors.
Pledgor
hereby ratifies whatever actions the Secured Creditors lawfully
does or causes to be done in accordance with this Section 3. This
power of attorney will be a power coupled with an interest and will
be irrevocable.
(b)
No Duty on Secured Creditors’
Part
. The powers conferred on Secured Creditors by this
Section 4 are solely to protect Secured Creditors’
interest in the Collateral and do not impose any duty upon it to
exercise any such powers. Secured Creditors will be accountable
only for amounts that it actually receives as a result of the
exercise of such powers, and neither Secured Creditors nor any of
their officers, directors, employees or agents will, in the absence
of willful misconduct or gross negligence, be responsible to
Pledgor for any act or failure to act pursuant to this Section
4.
(c)
Application
of Proceeds
. The proceeds of
any sale, lease or other disposition of the Collateral hereunder or
from payments made on account of any insurance policy insuring any
portion of the Collateral shall be applied: (i) first, to the
expenses of retaking, holding, storing, processing and preparing
for sale, selling, and the like (including, without limitation, any
taxes, fees and other costs incurred in connection therewith) of
the Collateral, to the reasonable attorneys’ fees and
expenses incurred by the Agent in enforcing the Secured
Creditors’ rights hereunder and in connection with
collecting, storing and disposing of the Collateral; and (ii) then
to satisfaction of the Obligations, and to the payment of any other
amounts required by applicable law, after which the Secured
Creditors shall pay to Pledgor any surplus
proceeds.
(d)
Liability
for Deficiency
. Upon the sale, license or other disposition
of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Creditors are legally entitled,
Pledgor will be liable for the deficiency, together with interest
thereon, at the Default Rate set forth in the Credit Notes or the
lesser amount permitted by applicable law (the “
Default Rate
”), and the reasonable
fees of any attorneys employed by the Secured Creditors to collect
such deficiency. To the extent permitted by applicable law, Pledgor
waives all claims, damages and demands against the Secured
Creditors arising out of the repossession, removal, retention or
sale of the Collateral, unless due solely to the gross negligence
or willful misconduct of the Secured Creditors as determined by a
final judgment (not subject to further appeal) of a court of
competent jurisdiction.
5.
Duty To Hold In Trust
.
Upon the occurrence of any Event of
Default and at any time thereafter, Pledgor shall, upon receipt of
any revenue, income
, dividend,
interest
or other sums subject to the Security
Interests, whether payable pursuant to the Notes or otherwise, or
of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in
trust for the Secured Creditors and shall forthwith endorse and
transfer any such sums or instruments, or both, in accordance with
the provisions of Section 4(c) above and if any amounts are
remaining to the Secured Creditors,
pro rata
in proportion to their respective then-currently
outstanding principal amount of Note for application to the
satisfaction of the Obligations.
6.
Expenses Incurred by Secured
Creditors
. If Pledgor fail to perform or comply with any of
its agreements or covenants contained in this Agreement, and
Secured Creditors performs or complies, or otherwise causes
performance or compliance, with such agreement or covenant in
accordance with the terms of this Agreement, then the reasonable
expenses of Secured Creditors incurred in connection with such
performance or compliance will be payable by Pledgor to the Secured
Creditors on demand and will constitute Obligations secured by this
Agreement.
7.
Remedies
. If an Event of
Default has occurred and is continuing, Secured Creditors may
exercise, in addition to all other rights and remedies granted to
it in this Agreement and in any other instrument or agreement
relating to the Obligations, all rights and remedies of a Secured
Creditors under the New York Uniform Commercial Code, as amended
from time to time (the
“Code”
). Without limiting
the foregoing, in such circumstances, without demand of performance
or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law) to or upon Pledgor or
any other person (all of which demands, defenses, advertisements
and notices are hereby waived), Secured Creditors may collect,
receive, appropriate and realize upon any or all of the Collateral
and/or may sell, lease, assign, give an option or options to
purchase or otherwise dispose of and deliver any or all of the
Collateral (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange,
broker’s board or office of Secured Creditors or elsewhere
upon such terms and conditions as Secured Creditors may deem
advisable, for cash or on credit or for future delivery without
assumption of any credit risk. Secured Creditors will have the
right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase
all or any part of the Collateral so sold, free of any right or
equity of redemption in Pledgor, which right or equity is hereby
waived or released. Subject to the provisions of Section 4(c),
Secured Creditors will apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable expenses incurred therein or in
connection with the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of a Secured
Creditors under this Agreement (including, without limitation,
reasonable attorneys’ fees and expenses) to the payment in
whole or in part of the Obligations, in such order as Secured
Creditors may elect, and only after such application and after the
payment by Secured Creditors of any other amount required by any
provision of law, need Secured Creditors account for the surplus,
if any, to Pledgor. To the extent permitted by applicable law,
Pledgor waives all claims, damage and demands it may acquire
against Secured Creditors arising out of the exercise by Secured
Creditors of any of its rights hereunder. If any notice of a
proposed sale or other disposition of Collateral is required by
law, such notice will be deemed reasonable and proper if given at
least ten (10) days before such sale or other disposition. Pledgor
will remain liable for any deficiency of Pledgor if the proceeds of
any sale or other disposition of the Collateral are insufficient to
pay the Obligations and the reasonable fees and disbursements of
any attorneys employed by Secured Creditors to collect such
deficiency.
8.
Limitation on Duties Regarding
Preservation of Collateral
. The sole duty of Secured
Creditors with respect to the custody, safekeeping and preservation
of the Collateral, under the appropriate Code section or otherwise,
will be to deal with it in the same manner as Secured Creditors
deals with similar property for its own account. Neither Secured
Creditors nor any of its employees, affiliates or agents will be
liable for failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or will be
under any obligation to sell or otherwise dispose of any Collateral
upon the request of Pledgor or otherwise.
9.
Powers Coupled with an
Interest
. All authorizations and agencies contained in this
Agreement with respect the Collateral are irrevocable and powers
coupled with an interest.
10.
No Waiver; Cumulative Remedies
.
Secured Creditors will not by any act (except by a written
instrument pursuant to Section 11(a) hereof) of delay,
indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Event of
Default under the Note or in any breach of any of the terms and
conditions of this Agreement. No failure to exercise, nor any delay
in exercising, on the part of Secured Creditors, any right, power
or privilege hereunder will operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder will
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by Secured Creditors
of any right or remedy under this Agreement on any one occasion
will not be construed as a bar to any right or remedy that Secured
Creditors would otherwise have on any subsequent occasion. The
rights and remedies provided in this Agreement are cumulative, may
be exercised singly or concurrently and are not exclusive of any
rights or remedies provided by law.
11.
Miscellaneous
.
(a)
Amendments and Waivers
. Any
term of this Agreement may only be amended by prior written consent
of Pledgor and a majority in interest of the Secured Creditors. Any
amendment or waiver effected in accordance with this Section 11(a)
will be binding upon all of the parties hereto and their respective
successors and assigns.
(b)
Transfer; Successors and
Assigns
. This Agreement will be binding upon and inure to
the benefit of Pledgor and Secured Creditors, and their respective
successors or assigns. Pledgor may not assign any of its/his rights
or delegate any of its/his duties under this
Agreement.
(c)
Governing Law
. This Agreement
will be governed by and construed in accordance with the laws of
the State of Delaware without regard to the laws that might be
applicable under conflicts of laws principles. Any action or
proceeding seeking to enforce any provision of, or based on any
right arising out of, any of this Agreement must be brought against
any of the parties in the courts of the State of Delaware, Kent
County, or, if it has or can acquire jurisdiction, in the United
States District Court for the District of Delaware, and each of the
parties consents to the jurisdiction of those courts (and of the
appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Nothing in this Section
11(c), however, affects the right of any party to serve legal
process in any other manner permitted by law.
(d)
Counterparts
. This Agreement
may be executed in any number of counterparts (including by
facsimile), each of which will be an original, but all of which
together will constitute one instrument.
(e)
Titles and Subtitles
. The
titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
(f)
Notices
. All notices, requests
and demands to or upon the Secured Creditors or Pledgor hereunder
shall be effected in the manner provided for in the Purchase
Agreement.
(g)
Term
.
This Agreement shall terminate on the date on
which all payments under the Notes have been indefeasibly satisfied
in full and all other Obligations have been satisfied in full or
discharged (through cash payment or conversion);
provided
,
however
,
that all indemnities of the Notes contained in this Agreement shall
survive and remain operative and in full force and effect
regardless of the termination of this
Agreement.
(h)
Severability
. In the event that
any one or more of the provisions contained in this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in
any respect, such provision(s) shall be ineffective only to the
extent of such invalidity, illegality or unenforceability without
invalidating the remainder of such provision or the remaining
provisions of this Agreement and such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement, which shall remain in full force and
effect.
(i)
Entire Agreement
. This
Agreement and the other documents evidencing, securing, or relating
to the Notes constitute the entire understanding and agreement
between the parties with regard to the subjects hereof and thereof
and supersede all prior agreements, representations and
undertakings of the parties, whether oral or written, with respect
to such subject matter.
[
Signature
pages follows
]
IN WITNESS WHEREOF
, Pledgor and Secured
Creditors have caused this Agreement to be duly executed and
delivered as of the date first above written.
SECURED
CREDITORS:
YOUNGEVITY
INTERNATIONAL, INC.
By:
___________________
Name:
Title:
SCHEDULE A
Secured Creditors
EXHIBIT A
Pledged Collateral
All of
the equity in Khrysos Industries, Inc., which is a wholly owned
subsidiary of Youngevity International, Inc.