LOAN AMENDMENT AND CONSENT AGREEMENT
Exhibit 10.1
Execution Version
THIS LOAN AMENDMENT AND CONSENT AGREEMENT (the “Agreement”) dated as of
July 8, 2024 (the “Effective Date”) is entered into among (a) VENUS CONCEPT USA INC., a Delaware corporation (the “Borrower”), (b) VENUS CONCEPT INC., a Delaware corporation (the “Venus Concept”),
(c) VENUS CONCEPT CANADA CORP., a corporation incorporated under the laws of the Province of Ontario (the “Venus Canada”), (d) VENUS CONCEPT LTD., a company formed under the
Companies Law of Israel “Venus Israel” and, together with Venus Concept and Venus Canada, the “Guarantors”;
the Borrower and the Guarantors shall be referred to herein, collectively, as the “Loan Parties”),
and (e) each of (i) MADRYN HEALTH PARTNERS, LP, a Delaware limited partnership (“Madryn Health”) and (ii) MADRYN HEALTH PARTNERS (CAYMAN MASTER), LP, a Cayman Islands
limited partnership (“Xxxxxx Xxxxxx” and, together with Madryn Health, the “Lenders”; together
the Lender and the Loan Parties are hereinafter referred to as the “Parties”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them
in the Loan Agreement (as defined below).
RECITALS
WHEREAS, CITY NATIONAL BANK OF FLORIDA (“CNB”) and the Borrower were
parties to that certain Loan and Security Agreement (Main Street Priority Loan), dated as of December 8, 2020 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Loan Agreement”), between CNB, as lender, and Borrower, pursuant to which CNB provided Borrower a term loan in the principal amount of Fifty
Million Dollars ($50,000,000.00) (the “Loan”) issued pursuant to the Main Street Priority Loan Facility, all upon certain terms and conditions set forth in the Loan
Agreement and in the other Loan Documents (as defined in the Loan Agreement);
WHEREAS, to evidence Xxxxxxxx’s repayment obligations under the Loan Agreement, Xxxxxxxx executed a Promissory Note in favor of CNB dated December 8,
2020 (as amended, amended and restated, supplemented, waived, exchanged or otherwise modified from time to time, the “Original Note”), in the original principal amount of $50,000,000.00;
WHEREAS, in connection with the Loan, the Venus Concept and Venus Canada previously issued a Guaranty of Payment and Performance, originally dated as
of December 8, 2020, in favor of the Lender (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Main Street
Guaranty”);
WHEREAS, pursuant to that certain Main Street Loan – Venus Concept – Sale and Assignment Agreement, dated as of April 23, 2024, between CNB and the
Lenders, CNB assigned, transferred, and conveyed all of its rights, title, and interest in and to the Loan, Original Note, the Loan Agreement, the Main Street Guaranty, all other Loan Documents and any related documents to the Lenders;
WHEREAS, pursuant to that certain Exchange Agreement, dated as of May 24, 2024, between the Borrower, Venus Concept and the Lenders, the Lenders
exchanged the Original Note for (a) two new promissory notes issued by the Borrower to each of Madryn Health and Xxxxxx Xxxxxx (collectively, the “Notes” and each a “Note”) and (b) shares of preferred stock of Venus Concept;
WHEREAS, the Borrower has requested relief from the obligation to comply with the requirements of Section 7(a) of the Loan Agreement (“Liquidity”) in
respect of the Borrower’s minimum liquidity amounts (“Requested Minimum Liquidity Consent”);
WHEREAS, the Borrower has requested that the Loan Agreement be amended to provide for certain modifications thereto; and
WHEREAS, the Lenders are willing to consent to the Requested Minimum Liquidity Consent and amend the Loan Agreement, subject to the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Consents.
(a) Requested Minimum Liquidity Consent. The Lenders, as of the date hereof, hereby approve the Requested Minimum Liquidity Consent and agree that until August 2, 2024, the failure of any of the Loan
Parties to comply with the obligations of Section 7(a) of the Loan Agreement shall not constitute an Event of Default under the Loan Agreement or the Notes. The above consent shall not otherwise modify or affect the Borrower’s and the other Loan
Parties’ obligations to comply fully with the terms of the Loan Agreement, the Notes or any other Loan Document in the future and is limited solely to the matters set forth in this Section 1. Nothing contained in this Agreement shall be deemed to
constitute a waiver of any duty, term, condition or covenant contained in the Loan Agreement, the Notes or any other Loan Document in the future, or any other rights or remedies any Lender may have under the Loan Agreement, the Notes or any other
Loan Documents or under applicable law.
2. Amendment to Loan Agreement. Section 7(j) of the Loan Agreement is hereby amended by deleting the stricken text (indicated textually in the same manner as the following example: stricken text) as follows:
(j) The Borrower shall ensure that its operating loss (if any) for the trailing 12-month period ending on the dates set
forth in the table below does not exceed the amount set forth next to such date. The Borrower shall, concurrently with the delivery of the financial statements required to be delivered to the Lenders pursuant to Section 7(c) hereof, deliver a
compliance certificate certifying compliance with the requirements set forth in this Section 7(j) and including reasonably detailed calculations of its operating loss (if any) for such period:
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Testing Date
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Maximum Operating Loss Amount
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September 30, 2024
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$15,472,820
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3. Conditions Precedent. This Agreement shall be effective upon the date on which the Lenders shall have received counterparts of this Agreement duly executed by the Borrower, the Guarantors, and the Lenders.
4. Reaffirmation. Each of the Loan Parties acknowledges and reaffirms (a) that it is bound by all of the terms of the Loan Documents to which it is a party and (b) that it is
responsible for the observance and full performance of all Obligations, including without limitation, the repayment of the Loan. Furthermore, the Loan Parties acknowledge and confirm that by entering into this Agreement, the Lenders do not, except
as expressly set forth herein, waive or release any term or condition of the Loan Agreement, the Notes or any of the other Loans Documents or any of their rights or remedies under such Loan Documents or any applicable law or any of the
obligations of the Loan Parties thereunder.
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5. Representations and Warranties. Each Loan Party represents and warrants to the Lenders as follows:
(a) As of the Effective Date, no Event of Default has occurred and is continuing.
(b) The representations and warranties
of the Borrower and each other Loan Party contained in Section 5 of the Loan Agreement, or which are contained in any document furnished at any time under or in connection therewith, are true and correct in all material respects (and in all
respects if any such representation and warranty is already qualified by materiality or reference to material adverse effect) on and as of the Effective Date, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects (and in all respects if any such representation and warranty is already qualified by materiality or reference to material adverse effect) as of such earlier date.
(c) Each Loan Party has the full power
and authority to enter into, execute and deliver this Agreement and perform its obligations hereunder, under the Loan Agreement and under each of the other Loan Documents. The execution, delivery and performance by each Loan Party of this
Agreement, and the performance by each Loan Party of the Loan Agreement and each other Loan Document to which it is a party, in each case, are within such person’s powers and have been authorized by all necessary corporate action of such person.
(d) This Agreement has been duly
executed and delivered by such person and constitutes such person’s legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
(e) No consent, approval,
authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such person of this Agreement.
(f) The execution and delivery of this
Agreement does not (i) violate, contravene or conflict with any provision of its organization documents or (ii) materially violate, contravene or conflict with any laws applicable to it or its subsidiaries.
(g) The Loan Parties’ obligations are
not reduced or modified by this Agreement except as explicitly set forth in Section 2 hereof and are not subject to any offsets, defenses or counterclaims.
6. Release. As a material part of the consideration for the Lenders entering into this Agreement (this Section 6, the “Release Provision”):
(a) Each Loan Party agrees that the
Lenders, each of their respective affiliates and each of the foregoing persons’ respective officers, managers, members, directors, advisors, sub- advisors, partners, agents and employees, and their respective successors and assigns (hereinafter all
of the above collectively referred to as the “Lender Group”), are irrevocably and unconditionally released, discharged and acquitted from any and all actions, causes of
action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or failure to act under or
otherwise arising in connection with the Loan Agreement, the Notes or the other Loan Documents on or prior to the date hereof.
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(b) Each Loan Party hereby
acknowledges, represents and warrants to the Lender Group that:
(i) it has read and understands the
effect of the Release Provision. Each Loan Party has had the assistance of independent counsel of its own choice, or has had the opportunity to retain such independent counsel, in reviewing, discussing, and considering all the terms of the Release
Provision; and if counsel was retained, counsel for such Loan Party has read and considered the Release Provision and advised such Loan Party with respect to the same. Before execution of this Agreement, each Loan Party has had adequate opportunity
to make whatever investigation or inquiry it may deem necessary or desirable in connection with the subject matter of the Release Provision.
(ii) no Loan Party is acting in
reliance on any representation, understanding, or agreement not expressly set forth herein. Each Loan Party acknowledges that the Lender Group has not made any representation with respect to the Release Provision except as expressly set forth
herein.
(iii) each Loan Party has executed this
Agreement and the Release Provision thereof as its free and voluntary act, without any duress, coercion, or undue influence exerted by or on behalf of any person.
(iv) each Loan Party is the sole owner
of its respective claims released by the Release Provision, and no Loan Party has heretofore conveyed or assigned any interest in any such claims to any other Person.
(c) The Loan Parties understand that
the Release Provision was a material consideration in the agreement of the Lenders to enter into this Agreement. The Release Provision shall be in addition to any right, privileges and immunities granted to the Lenders under the Loan Documents.
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Miscellaneous.
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(a) The Loan Agreement and the Notes,
each as may be modified hereby, and the obligations of the Loan Parties thereunder and under the other Loan Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms. This Agreement shall
constitute a Loan Document under Loan Agreement.
(b) This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by telecopy shall be effective as an
original and shall constitute a representation that an executed original shall be delivered.
(c) THIS AGREEMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
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VENUS CONCEPT USA INC., as Borrower and a Grantor
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By:
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/s/ Xxxxx Xx Xxxxx
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Name: Xxxxx Xx Xxxxx
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Title: President and Assistant Secretary
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VENUS CONCEPT INC., as a Guarantor and a Grantor
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By:
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/s/ Xxxxx Xx Xxxxx
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Name: Xxxxx Xx Xxxxx
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Title: Chief Executive Officer
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VENUS CONCEPT CANADA CORP., as a Guarantor and a Grantor
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By:
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/s/ Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
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Title: President and General Manager
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VENUS CONCEPT LTD, as a Guarantor and a Grantor
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By:
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/s/ Xxxxx Xx Xxxxx
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Name: Xxxxx Xx Xxxxx
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Title: Chief Executive Officer
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Signature Page to
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MADRYN HEALTH PARTNERS, LP, as a Lender
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By:
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MADRYN HEALTH ADVISORS, LP, its General Partner
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By:
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MADRYN HEALTH ADVISORS GP, LLC, its General Partner
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By:
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/s/ Xxxxxxx Xxxx
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Name: Xxxxxxx Xxxx
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Title: Member
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MADRYN HEALTH PARTNERS (CAYMAN MASTER), LP, as a Lender
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By:
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MADRYN HEALTH ADVISORS, LP, its General Partner
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By:
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MADRYN HEALTH ADVISORS GP, LLC, its General Partner
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By:
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/s/ Xxxxxxx Xxxx
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Name: Xxxxxxx Xxxx
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Title: Member
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Signature Page to
