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Related Party Transactions
12 Months Ended
Dec. 31, 2013
Related Party Transaction, Due from (to) Related Party [Abstract]  
Related Party Transactions
Related Party Transactions

In August 2008, the Company signed a membership interest purchase agreement to acquire ViSalus, a network marketing company that sells weight management products, nutritional supplements, functional foods and energy drinks, through a series of investments as discussed in further detail in Note 3. Through December 2012, the Company made investments that increased its ownership in ViSalus to approximately 80.9%. In connection with the December 2012 closing, ViSalus issued shares of its redeemable convertible preferred stock to the holders of the 19.1% of ViSalus that was not owned by the Company. The Company and ViSalus have agreed to redeem all of the shares of preferred stock on December 31, 2017, which date can be extended with the consent of holders of a majority of the voting power of the preferred stock, for $143.2 million, unless prior to such date ViSalus has made an initial public offering of its common stock at a price that indicates a valuation of ViSalus of $800 million or more, in which event the preferred stock will automatically convert into common stock of ViSalus on a one-to-one basis. The threshold valuation in the preceding sentence is an aspirational goal and should not be considered the valuation of ViSalus at the date hereof or to predict ViSalus’s valuation at any time in the future. The Company has guaranteed the performance by ViSalus of its redemption obligation. In the event that ViSalus does not redeem the preferred shares, each of the preferred shares will become convertible into 100 shares of common stock of ViSalus.

At the time of the first closing in October 2008, ViSalus was owned in part by Ropart Asset Management Fund, LLC and related entities (collectively, “RAM”), which owned a significant non-controlling interest in ViSalus. In September 2012, RAM distributed its interest in ViSalus to its members, including Robert B. Goergen, Robert B. Goergen, Jr. and Todd A. Goergen. Robert B. Goergen beneficially owns approximately 35.9% of the Company’s outstanding common stock (according to Amendment No. 5 to Schedule 13D filed by Mr. Goergen with the Securities and Exchange Commission on December 12, 2013), and together with members of his family, owns substantially all of RAM.
 
As of December 31, 2013, Robert B. Goergen, Robert B. Goergen, Jr. and Todd A. Goergen (the son of Robert B. and Pamela M. Goergen and the brother of Robert B. Goergen, Jr.) own 1.8%, 0.1% and 0.6%, respectively, of the outstanding capital stock of ViSalus. In addition, Ryan J. Blair owns 4.6% of the outstanding capital stock of ViSalus. Of the $143.2 million aggregate redemption amount that will be paid upon redemption of the preferred stock in December 2017, $13.2 million will paid to Robert B. Goergen, $0.5 million will be paid to Robert B. Goergen, Jr., $4.5 million will be paid to Todd A. Goergen (and trusts affiliated with him) and $34.3 million will be paid to Ryan J. Blair.

Dividends. In 2013, ViSalus paid cash dividends to its shareholders, including $1.5 million to Ryan Blair, $0.6 million to Robert B. Goergen, $0.2 million to Todd A. Goergen (and trusts affiliated with him) and $23.0 thousand to Robert B. Goergen, Jr. ViSalus has adopted a dividend policy and has declared and paid dividends out of available cash reserves. Ryan Blair received 4.6%, Robert B. Goergen received 1.8%, Todd A. Goergen (and trusts affiliated with him) received 0.6% and Robert B. Goergen, Jr. received 0.1%, consistent with their ownership interests.

FragMob. ViSalus entered into an agreement with FragMob LLC in October 2011 under which FragMob agreed to provide ViSalus with software development and hosting services for a mobile phone application that allows ViSalus's promoters to access their ViNet promoter account information on their smart phones. In March 2012, ViSalus added a second application, a credit card swiper for mobile phones, to the services provided by FragMob pursuant to the agreement. In September 2012, ViSalus and FragMob entered into a new revised agreement that extended the terms to December 31, 2014 and revised certain terms of the agreement. Ryan Blair directly and indirectly owns a total of 11.8% of FragMob, RAM directly and indirectly owns a total of 7.1% of FragMob and Todd A. Goergen indirectly owns 5.3% of FragMob. Fees paid to FragMob for the year ended December 31, 2013 and 2012 for both services were $1.8 million and $2.6 million, respectively. ViSalus also purchased approximately $1.2 million of mobile credit card swiper devices from FragMob in 2012.

Software Services. ViSalus’s promoters may use a direct-selling software, which provides the promoters with an array of promoter and corporate web modules. ViSalus licenses this software pursuant to a software and hosting services agreement that expires in June 2014 and has annual renewal terms. ViSalus currently owns approximately 2.6% of this software provider. In addition, Ryan J. Blair owns directly and indirectly a total of 2.2%, RAM directly and indirectly owns a total of 4.8% and Todd A. Goergen indirectly owns 0.8% of the software provider. Fees paid to the company for software licensing and other services for the years ended December 31, 2013 and 2012 were $1.7 million, respectively.

Employment Agreement with Todd A. Goergen. In February 2014, Todd A. Goergen became the Chief Operating Officer of ViSalus. Mr. Goergen's base salary is $500,000 and he has an annual target bonus opportunity equal to 100% of his base salary (with a maximum annual bonus opportunity equal to 200% of his base salary). In May 2013, Todd A. Goergen was issued 507,375 RSUs and 620,125 nonqualified stock options under the ViSalus Plan. Todd A. Goergen is also a member of the Board of Directors of ViSalus.

Management Services with ViSalus. On July 25, 2012, ViSalus and the Company entered into a management services agreement whereby the Company will provide certain administrative support services to ViSalus for what is believed to be an arm's length price for such services. The basis for determining the price for the services is on a cost recovery basis and requires ViSalus to pay for such services within 30 days of receipt of the invoice. The agreement terminates on December 31, 2015 but can be amended by either party. The estimated cost of services to be provided in 2014 is $1.1 million.

RAM Sublease. For the years ended December 31, 2013 and 2012 RAM paid the Company $0.2 million to sublet office space, which the Company believes approximates the fair market rental for the rental period.