Current through Register Vol. 63, No. 9, September 1, 2024
(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 at 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
