FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
Exhibit 10.19
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT, dated as of October 21, 2008 (this “Amendment”), to the Loan and Security Agreement referred to below by and between FVA VENTURES, INC., a California corporation (“Borrower”). VISALUS HOLDINGS, LLC, a Delaware limited liability company (“Holdings” and, together with Borrower, collectively, the “Credit Parties”), and BLYTH VSH ACQUISITION CORPORATION, a Delaware corporation (“Lender”).
W I T N E S S E T H
WHEREAS, the Credit Parties and Lender entered into that certain Loan and Security Agreement, dated as of July 30, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”); and
WHEREAS, the Credit Parties and Lender have agreed to amend certain provisions of the Loan Agreement, in the manner, and on the terms and conditions, provided for herein.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Credit Parties and Lender hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement or Schedule A thereto.
2. Amendment to Definition of “Adjusted Consolidated Net Worth”. The definition of “Adjusted Consolidated Net Worth” is hereby amended as of the First Amendment Effective Date (as hereinafter defined) by deleting clause (ii) thereof in its entirety and inserting in lieu thereof, the following:
“(ii) an amount equal to the cumulative reduction in Consolidated Net Worth as a result of any Specified Non-Cash Charges occurring after October 31, 2008.”
3. Amendment to Definition of “Consolidated Net Income”. The definition of “Consolidated Net Income” is hereby amended as of the First Amendment Effective Date by deleting such definition in its entirety and inserting in lieu thereof, the following:
““Consolidated Net Income” for any period means the consolidated net income of Holdings and its consolidated Subsidiaries other than PathConnect determined on a consolidated basis for such period, excluding the effect of any Specified Non-Cash Charges occurring after October 31, 2008; provided, that, in determining Consolidated Net Income, any increase or decrease to such consolidated net income of Holdings and its consolidated Subsidiaries due to any change in the investment value, or earnings or losses, of Solution X Global, LLC, shall be disregarded in such determination.”
4. Amendment to Definition of “Leverage Ratio”. The definition of “Leverage Ratio” is hereby amended as of the First Amendment Effective Date (as hereinafter defined) by deleting clause (b) thereof in its entirety and inserting in lieu thereof, the following:
“(b) EBITDA for the twelve months ending on that date of determination.”
5. Amendment to Schedule D of the Loan Agreement. Schedule D of the Loan Agreement is hereby amended as of the First Amendment Effective Date by deleting paragraph 1 thereof in its entirety and inserting in lieu thereof, the following:
“1. Minimum Adjusted Consolidated Net Worth. On the last day of each Fiscal Quarter, commencing with the first Fiscal Quarter ended after the earlier of (a) November 1, 2008 and (b) the Initial Closing Date (as defined in the Purchase Agreement), Holding’s Adjusted Consolidated Net Worth will not be less than 85% of Holding’s Consolidated Net Worth as of October 31, 2008 plus 75% of Cumulative Positive Net Income plus 75% of Cumulative Equity Proceeds. For purposes of this Section, “Cumulative Positive Net Income” means, as of any date, the sum of Consolidated Net Income for each Fiscal Year ending after December 31, 2007 (provided, that for the Fiscal Year ended December 31, 2008, Consolidated Net Income for such Fiscal Year for purposes of this covenant, shall only be calculated for the period from November 1, 2008 to and including December 31, 2008) and on or prior to such date for which such Consolidated Net Income is a positive amount, disregarding any Fiscal Year for which Net Income is a negative amount and “Cumulative Equity Proceeds” means, as of any date, the aggregate amount by which Consolidated Net Worth shall have been increased by reason of the issuance of capital stock of Holdings/Borrower subsequent to November 1, 2008 and on or prior to such date.”
6. Remedies. This Amendment shall constitute a Loan Document.
7. Representations and Warranties. To induce Lender to enter into this Amendment, the Credit Parties make the following representations and warranties to Lender:
| (a) | The execution, delivery and performance of this Amendment and the performance of the Loan Agreement as amended by this Amendment (the “Amended Loan Agreement”), by the Credit Parties: (i) are within the Credit Parties’ organizational power; (ii) have been duly authorized by all necessary or proper organizational, member and shareholder action; (iii) do not violate any Requirement of Law or Contractual Obligation of any Credit Party; (iv) do not result in the creation or imposition of any Lien upon any of the Collateral other than those in favor of Lender pursuant to the Loan Documents; and (v) do not require the consent or approval of any Governmental Authority or any other Person. |
| (b) | This Amendment has been duly executed and delivered by or on behalf of Borrower and Holdings. |
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| (c) | Each of this Amendment and the Amended Loan Agreement constitutes a legal, valid and binding obligation of the Credit Parties, enforceable against the Credit Parties in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). |
| (d) | No Default or Event of Default has occurred and is continuing after giving effect to this Amendment. |
| (e) | No action, claim or proceeding is now pending or, to the knowledge of the Credit Parties, threatened against any Credit Party, at law, in equity or otherwise, before any court, board, commission, agency or instrumentality of any federal, state, or local government or of any agency or subdivision thereof, or before any arbitrator or panel of arbitrators, which (i) challenges any Credit Party’s right, power, or competence to enter into this Amendment or perform any of its obligations under this Amendment, the Amended Loan Agreement or any other Loan Document, or the validity or enforceability of this Amendment, the Amended Loan Agreement or any other Loan Document or any action taken under this Amendment, the Amended Loan Agreement or any other Loan Document or (ii) if determined adversely, is reasonably likely to have or result in a Material Adverse Effect. To the knowledge of the Credit Parties, there does not exist a state of facts which is reasonably likely to give rise to such proceedings. |
| (f) | After giving effect to this Amendment, the representations and warranties of the Credit Parties contained in the Amended Loan Agreement and each other Loan Document are true and correct in all material respects on and as of the First Amendment Effective Date with the same effect as if such representations and warranties had been made on and as of such date, except that (i) any such representation or warranty which is expressly made only as of a specified date need be true only as of such date and (ii) any such representation or warranty (including the representations and warranties referred to in clause (i)) which is already qualified by materiality must be true and correct in all respects. |
8. No Other Amendments. Except as expressly provided herein, the Loan Agreement and the other Loan Documents shall be unmodified and shall continue to be in full force and effect in accordance with their terms. In addition, except as expressly provided herein, this Amendment shall not be deemed a waiver of any term or condition of any Loan Document and shall not be deemed to prejudice any right or rights which Lender may now have or may have in the future under or in connection with any Loan Document or any of the instruments or agreements referred to therein, as the same may be amended from time to time.
9. Expenses. Borrower hereby reconfirms its obligation pursuant to Section 9.2 of the Loan Agreement to pay and reimburse Lender for all reasonable costs and expenses (including, without limitation, reasonable fees of counsel) incurred in connection with the negotiation, preparation, execution and delivery of this Amendment and all other documents and instruments delivered in connection herewith.
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10. Affirmation of Existing Loan Documents. After giving effect to this Amendment, each Credit Party (a) confirms and agrees that its obligations under each of the Loan Documents to which it is a party shall continue without any diminution thereof and shall remain in full force and effect on and after the date hereof, and (b) confirms and agrees that the Liens granted pursuant to the Loan Documents to which it is a party shall continue without any diminution thereof and shall remain in full force and effect on and after the date hereof.
11. Effectiveness. This Amendment shall become effective only upon satisfaction in full in the judgment of Lender of each of the following conditions on or prior to the date first written above (the “First Amendment Effective Date”):
| (a) | Amendment. Lender shall have received a copy of this amendment duly executed and delivered by Lender and the Credit Parties, with two (2) originals of such party to follow promptly thereafter. |
| (b) | Representations and Warranties. The representations and warranties of the Credit Parties in this Amendment shall be true and correct in all material respects on and as of the First Amendment Effective Date except that (i) any such representation or warranty which is expressly made only as of a specified date need be true only as of such date and (ii) any such representation or warranty (including the representations and warranties referred to in clause (i)) which is already qualified by materiality must be true and correct in all respects. |
| (c) | Payment of Expenses. To the extent invoiced, the Borrower shall have paid Lender all costs, fees and expenses owing in connection with this Amendment and the other Loan Documents and due to Lender (including, without limitation, reasonable legal fees and expenses). |
12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD FOR ITS CHOICE OF LAW RULES REQUIRING THE APPLICATION OF LAWS OF JURISDICTIONS OTHER THAN THE STATE OF NEW YORK.
13. Counterparts. This Amendment may be executed by the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.
| FVA VENTURES, INC., as Borrower | ||
| By: | /s/ John Tolmie | |
| Name: | John Tolmie | |
| Title: | Secretary and Vice President – Finance and Administration | |
| VISALUS HOLDINGS, LLC, as a Guarantor | ||
| By: | /s/ John Tolmie | |
| Name: | John Tolmie | |
| Title: | Secretary and Vice President – Finance and Administration | |
| BLYTH VSH ACQUISITION CORPORATION, as Lender | ||
| By: | /s/ Michael S. Novins | |
| Name: | Michael S. Novins | |
| Title: | Vice President and General Counsel | |
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