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Overview:
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Wallachs
and Youngevity anticipate that the structure of the transaction
will be for the Wallachs to acquire AL Global Corporation
(“AL Global”), in exchange for the Wallachs’
shares of capital stock in Youngevity (the
“Transaction”). This anticipated structure is subject
to due diligence to confirm that AL Global holds all of the assets
of Youngevity related to the Direct Selling Business
Unit.
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Consideration:
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The
consideration for the acquisition of AL Global by the Wallachs
shall be a combination of (i) the redemption of all shares of
Youngevity’s capital stock held by the Wallachs; (ii) the
termination of all options held by the Wallachs to purchase
Youngevity capital stock and (iii) the forgiveness of approximately
$80,000,000 of intercompany debt owed by Youngevity or its
remaining subsidiaries to the Direct Selling Business Unit (the
“Consideration”).
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Pre-Closing Operating Covenants:
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Youngevity
agrees that it will conduct its direct-selling business solely in
the ordinary course, consistent with past practice from the date of
this term sheet through the closing of the Transaction (the
“Closing”), or until either party gives notice to the
other that it is terminating negotiations under this term
sheet.
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Pre-Closing Employee Matters:
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All
employees of Youngevity primarily working in the Direct Selling
Business Unit but not already employed by AL Global or one of its
subsidiaries will be transitioned to become an employee of AL
Global or one of its subsidiaries on or prior to Closing. All
employees of Youngevity not primarily working in the Direct Selling
Business Unit and already employed by AL Global or one of its
subsidiaries will be transitioned to become an employee of
Youngevity or one of its subsidiaries on or prior to
Closing.
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Pre-Closing Asset Transfers
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To the
extent that any assets of Youngevity which are primarily used in
the Direct Selling Business Unit are not already owned directly by
AL Global, Youngevity shall transfer such assets to AL Global on or
prior to Closing. This includes Youngevity’s Chula Vista
office and warehouse space, which shall be included in the
Transaction. AL Global shall assume the mortgage loan for the
building. To the extent that any assets of AL Global which are not
primarily used in the Direct Selling Business Unit are already
owned directly by AL Global, AL Global shall transfer such assets
to Youngevity on or prior to Closing.
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Transition Services Agreement
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AL
Global and Youngevity shall enter into a transition services
agreement at Closing pursuant to which Youngevity shall continue to
provide certain services to AL Global and its subsidiaries for a
period of six months following the Closing to ensure smooth
transition of the business.
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Representations, Warranties and Covenants:
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The
definitive agreement for the Transaction will include
representations, warranties, covenants and indemnities relating to
the parties customary for transactions of this nature, including
without limitation those concerning Youngevity’s Direct
Selling Business Unit, intellectual property rights, contracts,
authority, enforceability, capitalization, litigation and financial
statements.
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Definitive Documents
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Counsel
to Youngevity to provide initial draft of the definitive agreement,
transition services agreement and other definitive
documents.
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Expenses and Fees:
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Each
party will be responsible for and pay the expenses of its legal,
financial, accounting and other advisors incurred in connection
with the Transaction and other transactions contemplated thereby;
provided, however, that Youngevity shall pay the reasonable
expenses of the Wallachs not to exceed $25,000.
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Closing Conditions:
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The
obligations of each party to close the Transaction will be
conditioned upon:
● each party having
obtained all material required consents, rulings, approvals,
licenses and permits, or exemptions therefrom, from all
governmental or non-governmental administrative or regulatory
agencies having jurisdiction over the parties hereto, and the
transactions contemplated thereby;
● each party having
complied with all requisite corporate procedures
● no material adverse
change shall have occurred with respect to the Direct Selling
Business Unit;
● Youngevity having
received a fairness opinion with respect to the transaction from
the investment banking firm engaged by its Special Committee of the
Board of Directors;
● AL Global having
adequate working capital at levels to be established by the
parties; and
● such other closing
conditions as are usual and customary in transactions of this
nature.
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Post-Closing Matters:
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Youngevity
will change its corporate name following the Closing to a name
which does not resemble the trademark
“Youngevity”.
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Governing Law:
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This
term sheet shall be governed by Delaware law without regard to that
state’s choice of law provisions.
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Wallachs
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Youngevity
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Stephan and
Michelle Wallach
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YOUNGEVITY
INTERNATIONAL, INC.
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/s/ Stephan
Wallach
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By: /s/ Dave
Briskie
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Stephan
Wallach
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| /s/ Michelle
Wallach |
Title:
President
and CFO
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Michelle
Wallach
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Date:
3/11/2020
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Date:
3/11/2020
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