Loan Proposal Agreement between Oxford Finance Corporation and Favrille, Inc. (June 2005)
Oxford Finance Corporation proposes to lend Favrille, Inc. up to $1,550,000 for laboratory, computer, and other internal-use equipment. The loan will be disbursed between June and December 2005, with repayment terms of 36 or 42 months depending on the equipment type. Monthly payments and a fixed interest rate are specified, with no stock warrants or additional facility fees. Favrille must not exceed $15 million in total debt without Oxford's consent, unless it completes a $20 million equity financing. The proposal is subject to final approval and will expire if not accepted by June 27, 2005.
Exhibit 10.3
June 15, 2005
Ms. Tamara Seymour, CFO
Favrille, Inc.
10421 Pacific Center Court
San Diego, CA 92121
Dear Tamara:
Oxford Finance Corporation is pleased to provide the following loan proposal to Favrille, Inc. for laboratory and other internal use assets, subject to terms and conditions embodied in formal loan agreements, which shall include but not be limited to the following terms and conditions:
| Borrower: |
| Favrille, Inc. |
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| Lender: |
| Oxford Finance Corporation, a Delaware Corporation |
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| Equipment: |
| Laboratory, computers and other equipment for the internal use of Borrower as summarized in Attachment A (“Equipment”). Equipment must be acceptable to Lender. |
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| Total Loan Expansion: |
| $1,550,000. $1,000,000 of soft costs to fund no later than June 30, 2005. |
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| Funding Dates: |
| June 2005 through December 2005 |
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| Terms: |
| Each Schedule shall have a fixed term of 42 months for new laboratory equipment and a fixed term of 36 months for existing, computer and all other equipment. |
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| Loan Payment Rates: |
| 3.1855% of the Loan Amount per month for 36 months |
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| 2.7935% of the Loan Amount per month for 42 months |
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| Payment Rate Implicit Interest: |
| 9.67% |
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| Periodicity: |
| Monthly, in advance. |
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| Index Basis: |
| The three-year Treasury Bill Weekly Average rate of 3.67% as published in Federal Reserve statistical release |
133 NORTH FAIRFAX STREET, ALEXANDRIA, VIRGINIA 22314, 703 ###-###-####
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| H.15 (519) on June 13, 2005. |
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| Payment Commencements: |
| First day of the month following a Schedule funding. |
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| Stock Warrants: |
| None |
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| Additional conditions: |
| Indebtedness not to exceed $15,000,000 without prior consent of Lender. The debt cap shall be released upon completion of Borrower’s next equity financing of $20,000,000. |
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| Documentation: |
| Loan documentation provided by Lender containing terms generally accepted in the industry and mutually agreeable to both Lender and Borrower. |
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| Facility Fee: |
| No additional fee. |
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| Rate Adjustment: |
| The effective Loan Rate will remain fixed for the duration of each Term. Prior to Schedule funding, Lender may adjust the Loan Rate in order to maintain its originally anticipated rate of return if there is an increase in the yield on the U.S. Treasury Bills, as quoted in the Federal Reserve statistical release H.15 (519), from the Index Basis specified in this proposal letter. |
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| Costs: |
| Borrower shall be responsible for all costs and expenses relating to the transaction, including, without limitation, extraordinary attorneys’ and appraisal fees, lien search, inspection and filing fees relating to the preparation, execution and recording of all documents. |
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| Expiration: |
| This loan proposal will expire if a signed copy of this proposal letter is not received by Oxford on or beforeJune 27, 2005 |
This proposal letter, the collateral described, and any terms and conditions of the loan or warrant agreements, are subject to final review and approval by Oxford Finance Corporation and its Executive Credit Team, and is not a commitment to provide financing.
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Oxford Finance Corporation welcomes the opportunity to be of service to Favrille, Inc. We look forward to working with you.
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| Sincerely, | |||
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| /s/ Christopher A. Herr |
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| OXFORD FINANCE CORPORATION | |||
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| Christopher A. Herr | |||
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| ACKNOWLEDGED AND AGREED: |
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| Favrille, Inc. |
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| By: | /s/ Tamara A. Seymour |
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| Title: Chief Financial Officer |
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| Date: June 27, 2005 |
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ATTACHMENT A
Estimated Categories of Equipment:
| Category |
| Amount |
| Percentage |
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| Lab equipment, furniture, manufacturing and computer hardware |
| $ | 550,000 |
| 36 | % |
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| All other softcosts |
| $ | 1,000,000 |
| 64 | % |
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| Total |
| $ | 1,550,000 |
| 100 | % |
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