Exhibit 10.5   

 
SECURITY AGREEMENT
 
 
THIS SECURITY AGREEMENT (this “Agreement”) is made as of December 13, 2018 by
Stephan Wallach and Michelle Wallach (individually, a “Pledgor” and collectively
the “Pledgors”), in favor of Carl Grover (the “Secured Party”) pursuant to the
terms of that certain Credit Agreement, dated December 13, 2018 (the “Credit
Agreement”) between the Secured Party and CLR Roasters, LLC, a Florida limited
liability company (the “Company” or as sometimes referred to herein, as the
“Borrower”).
 
 
RECITALS
 
A. The Secured Party and Borrower entered into the Credit Agreement.
 
B. On the Funding Date, the Secured Party has purchased a Credit Note (as
defined in the Credit Agreement) and may purchase additional Credit Notes (the
“Credit Notes”) in an amount of up to $5,000,000 from the Company (the “Loan”).
 
C.           As collateral to secure payment and performance of the Obligations
set forth in the Credit Agreement, and the Credit Note, the Pledgors have
entered into this Agreement and granted to the Secured Party a Lien and security
interest in and to all of the Collateral (as defined below).
 
D.           Unless otherwise expressly defined in this Agreement, all
capitalized terms when used herein, shall have the same meanings defined in the
Credit Agreement.
 
E.           The Recitals shall be deemed to be an integral part of this
Agreement as though more fully set forth at length in the body of this
Agreement.
 
 
 
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 full and timely performance of all
of Borrower’s Obligations and liabilities to the Secured Party pursuant to
Credit Agreement and Credit Note, Pledgors hereby unconditionally and
irrevocably pledge, grant and hypothecate to the Secured Party a continuing Lien
and security interest (the “Security Interest”) in and to 1,500,000 shares of
common stock, par value $.001 per share, of Youngevity International, Inc. held
by them (the “Collateral”). The Secured Party and Pledgors each acknowledge and
agree that upon the occurrence and continuation of an Event of Default under the
Credit Agreement, the Credit Notes or any of the Loan Documents or hereunder,
the Secured Party may exercise any of its rights and remedies with respect to
the Collateral owned by Pledgors or the Security Interest granted by Pledgor
hereunder, all as provided in this Agreement.
 
 
 
 
 
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2. Representations and Covenants.
 
(a) Other Liens. Pledgors own all rights, title and interest in the Collateral
and will not permit its Collateral to be subject to any adverse lien, security
interest or encumbrance. Pledgors will defend its Collateral against the claims
and demands of all persons at any time claiming the same or any interest
therein. Pledgors acknowledge and agree that a stop order has been placed by
Pacific Stock Transfer Company against 1,500,000 shares of Youngevity
International, Inc. common stock representing the Collateral, with instructions
not to lift the stop order until the Loan has been repaid.
 
(b) Valid Security Interest. The Pledgors hereby, jointly and severally,
represent and warrant that: (i) this Agreement creates in favor of the Secured
Party a valid security interest in the Collateral securing the payment and
performance of the Obligations, (ii) 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: (A) the execution,
delivery and performance of this Agreement; (B) the creation or perfection of
the Security Interests in the United States created hereunder in the Collateral;
or (C) the enforcement of the rights of the Secured Party hereunder.
 
(c) Indemnification. Pledgors agree to defend, indemnify and hold harmless
Secured Party 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 Party.
 
(d) Authority. Pledgors have all requisite power and authority to execute this
Agreement and to perform all of their obligations hereunder, and this Agreement
has been duly executed and delivered by Pledgors and constitutes the legal,
valid and binding obligation of Pledgors, enforceable in accordance with its
terms. The execution, delivery and performance by Pledgors 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 Pledgors; 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 Pledgors are a party.
 
3. Secured Party’s Appointment as Attorney-in-Fact.
 
(a) Powers. Pledgors and Secured Party hereby appoint the officers or agents of
Secured Party (each an “Agent”) to act on behalf of Secured Party, with full
power of substitution, as its attorney-in-fact with full irrevocable power and
authority in the place of Pledgors and in the name of Pledgors 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 Party, in its discretion, will have the right, without notice to, or the
consent of Pledgors, to do any of the following on behalf of Pledgors:
 
(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;
 
 
 
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(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 Party or as Secured Party 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 Pledgors 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 Party 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 Party 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 Party’s option
and Pledgors’ expense, any actions which Secured Party deem necessary to
protect, preserve or realize upon the Collateral and Secured Party’s liens on
the Collateral and to carry out the intent of this Agreement, in each case to
the same extent as if Secured Party 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 Pledgors 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 Party, 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 Pledgors or any of its direct or indirect
subsidiaries;
 
(x) 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 Pledgors 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 Party, 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; and
 
 
 
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(xi) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Collateral.
 
Pledgors hereby ratify whatever actions Secured Party 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 Party’s Part. The powers conferred on Secured Party by
this Section 4 are solely to protect Secured Party’s interest in the Collateral
and do not impose any duty upon it to exercise any such powers. Secured Party
will be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither Secured Party 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 3.
 
(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 Party’ 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 Party shall pay to Pledgor any surplus proceeds.
 
(d) No Liability for Deficiency. Upon the sale, license or other disposition of
the Collateral, if the proceeds thereof are insufficient to pay all amounts to
which the Secured Party are legally entitled, Pledgors will not be liable for
the deficiency. To the extent permitted by applicable law, Pledgors waive all
claims, damages and demands against the Secured Party 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 Party as determined by
a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
 
4. Duty To Hold In Trust. Upon the occurrence of any Event of Default and at any
time thereafter, Pledgors 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 Party and shall forthwith endorse and
transfer any such sums or instruments, or both, in accordance with the
provisions of Section 3(c) above and if any amounts are remaining to the Secured
Party, pro rata in proportion to their respective then-currently outstanding
principal amount of Note for application to the satisfaction of the Obligations.
 
5. Expenses Incurred by Secured Party. If Pledgors fail to perform or comply
with any of their agreements or covenants contained in this Agreement, and
Secured Party 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 Party incurred in connection
with such performance or compliance will be payable by Pledgor to the Secured
Parties on demand and will constitute Obligations secured by this Agreement.
 
 
 
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6. Remedies. If an Event of Default has occurred and is continuing, Secured
Party 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 Party under the Delaware
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 Pledgors or any other person (all of
which demands, defenses, advertisements and notices are hereby waived), Secured
Party 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 Party or elsewhere
upon such terms and conditions as Secured Party may deem advisable, for cash or
on credit or for future delivery without assumption of any credit risk. Secured
Party 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
Pledgors, which right or equity is hereby waived or released. Subject to the
provisions of Section 4(c), Secured Party 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 Secured Party 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 Party may elect,
and only after such application and after the payment by Secured Party of any
other amount required by any provision of law, need Secured Party account for
the surplus, if any, to Pledgors. To the extent permitted by applicable law,
Pledgors waive all claims, damage and demands it may acquire against Secured
Party arising out of the exercise by Secured Party 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.
 
7. Limitation on Duties Regarding Preservation of Collateral. The sole duty of
Secured Party 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 Party deals with similar property for its
own account. Neither Secured Party 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
Pledgors or otherwise.
 
8. 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.
 
9. No Waiver; Cumulative Remedies. Secured Party 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 Party, 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 Party 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
Party 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.
 
 
 
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10. Miscellaneous.
 
(a) Amendments and Waivers. Any term of this Agreement may only be amended by
prior written consent of Pledgors and the Secured Party. Any amendment or waiver
effected in accordance with this Section 10(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 Pledgors and Secured Party, and their respective
successors or assigns. Pledgors may not assign any of their rights or delegate
any of their 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 Party or
Pledgors hereunder shall be effected in the manner provided for in the Credit
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 Credit Agreement 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.
 
(j) Independent Legal Counsel. Ascendant Alternative Strategies, LLC (the
“Placement Agent”) has retained its own legal counsel in connection with the
transactions contemplated by this Agreement and the other Loan Documents (the
“Placement Agent’s Counsel”). The Placement Agent’s counsel has not and will not
represent the Lender in connection with the Lender’s investment in the Company
as contemplated under the terms of this Agreement and the Loan Documents. The
Lender acknowledges that (i) no attorney-client relationship exists between the
Lender and Placement Agent’s counsel, and (ii) the Lender should seek his own
advisors (including, without limitation, legal advisors) for advice and due
diligence with respect to an investment in the Company, including with respect
to a review of this Agreement and the Loan Documents and perfection of any
security interest granted in favor of Lender under the terms of this Agreement
and the Loan Documents.
 
[Signature page follows]
 
 
 
 
 
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IN WITNESS WHEREOF, Pledgors and Secured Party have caused this Agreement to be
duly executed and delivered as of the date first above written.
 
 
 
SECURED PARTY:
 
 
 
   /s/ Carl Grover                    
Carl Grover
 
 
PLEDGORS:
 
 
 
    /s Stephan Wallach         
Stephan Wallach
 
 
 
    /s/ Michelle Wallach        
Michelle Wallach
 
 
 
Pacific Stock Transfer Company hereby acknowledges that a stop order has been
placed in its books against 1,500,000 shares of Youngevity common stock
representing the Collateral subject to this Security Agreement and agrees not to
lift the stop order until it receives evidence, in form and substance
satisfactory to it, that the Loan has been repaid.
 
PACIFIC STOCK TRANSFER COMPANY
 
 
 
By:     /s/ Joslyn G. Claiborne     
Name: Joslyn G. Claiborne
Title: Director, Global Operations
 
 
 
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