123-092-0075 Loan Agreement for an Oregon Angel Loan (1) If the Department approves a loan, commitments are good for 12 months and conditioned upon the borrower raising between 1 to 10X of the amount of the Oregon Angel Loan Fund Award (e.g., $250,000 Angel Loan Award at 4X would require no less than $1,000,000 of new closed private equity/debt financing). The Department and the borrower may enter into a loan contract that, among other matters, shall set forth a plan for repayment by the borrower to the Oregon Royalty Fund moneys borrowed from the Fund through the Oregon Angel Loan Program and shall include terms that include: (a) Total Repayment means repayment of all outstanding principal, interest and the Exit Fee. (A) The Exit Fee will be held in perpetuity and is due upon a merger, acquisition, buyout, additional outside debt financing or any type of change in management control or ownership. If there is not an arms-length merger, acquisition or buyout determining the value of the business, the Exit Fee will be based upon an independent valuation of the business. The Department, at its sole discretion may make demand for payment in full for the Exit Fee at maturity. Any terms and conditions extended to repay the Exit Fee through periodic payment of principal and interest are made at the sole discretion of the Department and may require, but shall not be limited to, personal guarantees, pledges of business and/or personal assets or any other collateral and security the Department deems prudent to adequately secure the outstanding obligation. (B) Amount of the Exit Fee is based on the due diligence performed on the company and project. Due diligence will include factors including, but not limited to, the current recurring sales, proformas and assumptions, amount of equity commitments, qualifications of the management team, term of the loan, value of collateral available and pledged as security, current and anticipated future valuation of the company, and the availability and strength of personal guarantees. A typical Exit Fee is between 5-10% of the business valuation at the time of the Exit. (C) The pledge to achieve Total Repayment, security and guarantees for the Oregon Angel Loan will remain in effect until the loan is paid in full. (D) Total Repayment will be required a t a Liquidity Event. (b) Repayment will be interest only for up to five (5) years. Interest only payments are based on the Federal Applicable Finance Rate (AFR) on the outstanding principal balance. (c) At maturity, a balloon payment of any outstanding principal and interest is due. (d) Based on loan pricing and total repayment costs: (A) OAL financing for the project does not directly compete with traditional commercial lending sources, (B) is commensurate with the level of risk taken when making the loan, and (C) are anticipated to cover operational expenses and losses incurred by the Fund. (e) Shall set forth a schedule of or conditions triggering payments and the period of the loan, which shall not exceed 61 months from the date of the loan contract. (f) Shall provide that the liability of the State under the contract is contingent upon the availability of moneys in the Fund for use in the business development project. (g) Shall require that the borrower is responsible for payment of, separate and above any other amounts owed on the loan: (A) Insurance premiums as needed to maintain in full force life insurance and other types of insurance in an amount and coverage that is acceptable to the Department. (B) Out-of-pocket costs associated with the loan closing which may include but are not limited to filing fees, recording fees, title insurance, appraisals, and attorney fees. (h) That the borrower will provide to the Department on a periodic basis, such financial statements as the Department may require. (i) Shall provide that the applicant, borrower, guarantors, and principal owners are in compliance with and agrees to abide by all federal, state, and local laws and regulations. (j) Shall specify any additional payment from the borrower as the Department may require for other circumstances, such as if the borrower elects to repay the loan before the originally approved term, if the borrower is acquired or experiences a significant change in ownership, or to achieve a specified repayment amount or rate of return. (2) The Department, at its sole discretion, may require the execution of a Commitment Letter and receipt of a non-refundable Commitment Fee to secure resources necessary to fund the loan. The Commitment Fee will be applied at closing to the Loan Fee. If the loan does not close, the Commitment Fee will not be refunded. Statutory/Other Authority: ORS 285B.092 & ORS 285B.130 & ORS 285B.133 Statutes/Other Implemented: ORS 285B.092 & ORS 285B.130 & ORS 285B.133 History: OBDD 25-2023, adopt filed 10/04/2023, effective 10/04/2023 OBDD 6-2023, temporary adopt filed 04/12/2023, effective 04/12/2023 through 10/08/2023