Exhibit 10.26

 

Promissory Note

Collateral Schedule 001

 

 

PROMISSORY NOTE

TO MASTER SECURITY AGREEMENT DATED AS OF

December 30, 2005

(Date)

 

 

FOR VALUE RECEIVED, Favrille, Inc., a Delaware corporation, located at the
address stated below (“Maker”) promises, jointly and severally if more than one,
to pay to the order of General Electric Capital Corporation or any subsequent
holder hereof (each, a “Payee”) at its office located at 83 Wooster Heights
Road, Fifth Floor, Danbury, CT  06810 or at such other place as Payee or the
holder hereof may designate, the principal sum of One Million Four Hundred
Ninety Eight Thousand Six Hundred Seventy Seven Dollars and Twenty Six Cents
($1,498,677.26), with interest on the unpaid principal balance, from the date
hereof through and including the dates of payment, at a fixed interest rate of
ten and eighty-nine hundredths percent (10.89%) per annum, in twenty-four (24)
consecutive monthly installments of principal and interest as follows:

 

Periodic
Installment

 

Amount

 

1-24

 

$

69,773.59

 

 

each (“Periodic Installment”) and a final installment which shall be in the
amount of the total outstanding principal and interest.  The first Periodic
Installment shall be due and payable on or before February 1, 2006 and the
following Periodic Installments shall be due and payable on the first day of
each succeeding month (each, a “Payment Date”) beginning March 1, 2006.  Such
installments have been calculated on the basis of a 360-day year of twelve
30-day months.  Each payment may, at the option of the Payee, be calculated and
applied on an assumption that such payment would be made on its due date. Maker
agrees to pay any initial partial month interest payment from the date of this
Note to the first day of the following month (“Interim Interest”).

 

The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

 

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

 

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a “Security
Agreement” and any Security Agreement, this Note and any other document
evidencing or securing this loan is hereinafter called a “Debt Document”).

 

Time is of the essence hereof.  If any installment or any other sum due under
this Note or any Security Agreement is not received within 7 days of when due,
the Maker agrees to pay, in addition to the amount of each such installment or
other sum, a late payment charge of five percent (5%) of the amount of said
installment or other sum, but not exceeding any lawful maximum.  If (i) Maker
fails to make payment of any amount due hereunder within 7 days after the same
becomes due and payable; or  (ii) Maker is in default under, or fails to perform
under any term or condition contained in any Security Agreement and such default
or failure to perform is not cured within the applicable cure period, if any,
then the entire principal sum remaining unpaid, together with all accrued
interest thereon and any other sum payable under this Note or any Security
Agreement, at the election of Payee, shall immediately become due and payable,
with interest thereon at the lesser of eighteen percent (18%) per annum or the
highest rate not prohibited by applicable law from the date of such accelerated
maturity until paid (both before and after any judgment).

 

Maker may prepay in full any indebtedness hereunder upon five (5) days’ notice
to the Payee. The prepayment shall be accompanied by payment of (i) all accrued
and unpaid interest on the outstanding principal balance of this Note on the
date of prepayment and (ii) a premium of 6% of the principal prepaid if such
prepayment shall occur in Year 1, a premium of 4% of the principal prepaid if
such prepayment shall occur in Year 2 and a premium of 2% of the principal
prepaid if such prepayment shall occur in Year 3 and thereafter. Year 1 will
mean the period consisting of the 1st through the 12th installments under this
Note and subsequent years will refer to the subsequent twelve monthly payment
periods.

 

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an “Obligor”) who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note.  The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor,

 

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and all other notices in connection herewith, as well as filing of suit (if
permitted by law) and diligence in collecting this Note or enforcing any of the
security hereof, and agrees to pay (if and to the extent permitted by law) all
expenses incurred in collection, including Payee’s reasonable attorneys’ fees.

 

Maker and Payee intend to strictly comply with all applicable federal and
Connecticut laws, including applicable usury laws (or the usury laws of any
jurisdiction whose usury laws are deemed to apply to the Note or any other Debt
Document despite the intention and desire of the parties to apply the usury laws
of the State of Connecticut).  Accordingly, the provisions of this paragraph
shall govern and control over every other provision of this Note or any other
Debt Document which conflicts or is inconsistent with this Section, even if such
provision declares that it controls.  As used in this paragraph, the term
“interest” includes the aggregate of all charges, fees, benefits or other
compensation which constitute interest under applicable law, provided that, to
the maximum extent permitted by applicable law, (a) any non-principal payment
shall be characterized as an expense or as compensation for something other than
the use, forbearance or detention of money and not as interest, and (b) all
interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, in equal parts during the full term
of the obligations.  In no event shall Maker or any other person be obligated to
pay, or Payee have any right or privilege to reserve, receive or retain, (a) any
interest in excess of the maximum amount of non-usurious interest permitted
under the laws of the State of Connecticut or the applicable laws (if any) of
the United States or of any other state, or (b) total interest in excess of the
amount which Payee could lawfully have contracted for, reserved, received,
retained or charged had the interest been calculated for the full term of the
obligations.  On each day, if any, that the interest rate (the “Stated Rate”)
called for under this Note or any other Debt Document exceeds the maximum
non-usurious rate, the rate at which interest shall accrue shall automatically
be fixed by operation of this sentence at the maximum non-usurious rate for that
day.  Thereafter, interest shall accrue at the Stated Rate unless and until the
Stated Rate again exceeds the maximum non-usurious rate, in which case, the
provisions of the immediately preceding sentence shall again automatically
operate to limit the interest accrual rate to the maximum non-usurious rate. 
The daily interest rates to be used in calculating interest at the maximum
non-usurious rate shall be determined by dividing the applicable maximum
non-usurious rate by the number of days in the calendar year for which such
calculation is being made.  None of the terms and provisions contained in this
Note or in any other Debt Document which directly or indirectly relate to
interest shall ever be construed without reference to this paragraph, or be
construed to create a contract to pay for the use, forbearance or detention of
money at an interest rate in excess of the maximum non-usurious rate.  If the
term of any obligation is shortened by reason of acceleration of maturity as a
result of any  default or by any other cause, or by reason of any required or
permitted prepayment, and if for that (or any other) reason Payee at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the maximum
non-usurious rate, then and in any such event all of any such excess interest
shall be canceled automatically as of the date of such acceleration, prepayment
or other event which produces the excess, and, if such excess interest has been
paid to Payee, it shall be credited pro tanto against the then-outstanding
principal balance of Maker’s obligations to Payee, effective as of the date or
dates when the event occurs which causes it to be excess interest, until such
excess is exhausted or all of such principal has been fully paid and satisfied,
whichever occurs first, and any remaining balance of such excess shall be
promptly refunded to its payor.

 

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE.  THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.)  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION.  IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

 

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supersedes all
prior understandings, agreements and representations, express or implied.

 

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee.  Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

 

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

 

Upon receipt of an affidavit of an officer of Payee as to the loss, theft,
destruction or mutilation of this Note or any Debt Document which is not of
public record, and, in the case of any such loss, theft, destruction or
mutilation, upon surrender and cancellation of such Note or other Debt Document,
Maker will issue, in lieu thereof, a replacement Note or other Debt Document in
the same principal amount thereof and otherwise of like tenor.

 

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It is understood and agreed that this Note and all of the Debt Documents were
negotiated and have been or will be delivered to Payee in the State of
Connecticut, which State the parties agree has a substantial relationship to the
parties and to the underlying transactions embodied by this Note and the Debt
Documents. Maker agrees to furnish to Payee at Payee’s office in Danbury, CT,
all further instruments, certifications and documents to be furnished
hereunder.    The parties also agree that if collateral is pledged to secure the
debt evidenced by this Note, that the state or states in which such collateral
is located each have a substantial relationship to the parties and to the
underlying transaction embodied by this Note and the Debt Documents.

 

MAKER AGREES THAT THE PAYEE OF THIS NOTE SHALL HAVE THE OPTION BY WHICH STATE
LAWS THIS NOTE SHALL BE GOVERNED AND CONSTRUED: (A) THE LAWS OF THE STATE OF
CONNECTICUT; OR (B) IF COLLATERAL HAS BEEN PLEDGED TO SECURE THE DEBT EVIDENCED
BY THIS NOTE, THEN BY THE LAWS OF THE STATE OR STATES WHERE THE COLLATERAL IS
LOCATED, AT PAYEE’S OPTION.  THIS CHOICE OF STATE LAWS IS EXCLUSIVE TO THE PAYEE
OF THIS NOTE.  MAKER SHALL NOT HAVE ANY OPTION TO CHOOSE THE LAWS BY WHICH THIS
NOTE SHALL BE GOVERNED.  MAKER AND GUARANTORS HEREBY CONSENT TO THE EXERCISE OF
JURISDICTION OVER IT BY ANY FEDERAL COURT SITTING IN CONNECTICUT OR ANY
CONNECTICUT COURT SELECTED BY PAYEE, FOR THE PURPOSES OF ANY AND ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTE, THE LOAN AGREEMENT AND ALL
OTHER DOCUMENTS.  MAKER AND GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURT, ANY CLAIM BASED ON
THE CONSOLIDATION OF PROCEEDINGS IN SUCH COURTS IN WHICH PROPER VENUE MAY LIE IN
DIVERGENT JURISDICTIONS, AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  MAKER AND GUARANTORS
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE, THE OTHER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

 

 

 

Favrille, Inc.

 

 

/s/ Miguel Petro

 

By:

/s/ Tamara A. Seymour

 

(Witness)

 

Miguel Petro

 

Name:

Tamara A. Seymour

 

(Print name)

 

10421 Pacific Center Court, San Diego, CA 92121

 

Title:

CFO

 

(Address)

 

 

Federal Tax ID #:

33-0892797

 

 

 

 

Address: 10421 Pacific Center Court

 

 

San Diego, CA 92121

 

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