Exhibit 10.1


 





 


May 11, 2004


 


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.

  
	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
  Oxford Finance
  Corporation

  
	
   

  	
   

  	
   

  
	
  Equipment:

  	
   

  	
  Laboratory, computers
  and other equipment for the internal use of Borrower as summarized in
  Attachment A (“Equipment”). Equipment must be acceptable to Lender.

  
	
   

  	
   

  	
   

  
	
  Total Loan Amount:

  	
   

  	
  $2,500,000

  
	
   

  	
   

  	
   

  
	
  Funding Dates:

  	
   

  	
  January 2004 through
  June 2005

  
	
   

  	
   

  	
   

  
	
  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.

  
	
   

  	
   

  	
   

  
	
  Loan Payment Rates:

  	
   

  	
  3.1545% of the Loan
  Amount per month for 36 months

  
	
   

  	
   

  	
  2.7619% of the Loan Amount
  per month for 42 months

  
	
   

  	
   

  	
   

  
	
  Payment Rate Implicit
  Interest:

  	
   

  	
  8.96%

  
	
   

  	
   

  	
   

  
	
  Periodicity:

  	
   

  	
  Monthly, in advance.

  
	
   

  	
   

  	
   

  
	
  Index Basis:

  	
   

  	
  The three-year Treasury
  Bill Weekly Average rate of 2.96% as published in Federal Reserve statistical
  release H.15 (519) on May 10, 2004.

  



 


133 NORTH FAIRFAX STREET, ALEXANDRIA, VIRGINIA 22314,
703-519-4900


 





















 


	
  Payment Commencements:

  	
   

  	
  First day of the month
  following a Schedule funding.

  
	
   

  	
   

  	
   

  
	
  Stock Warrants:

  	
   

  	
  Borrower shall issue to
  Lender warrants for the purchase of stock equal to two percent (2%) of the
  Loan Amount using a share strike price equal to the most recent preferred
  equity round.

  
	
   

  	
   

  	
   

  
	
  Documentation:

  	
   

  	
  Loan documentation
  provided by Lender containing terms generally accepted in the industry and
  mutually agreeable to both Lender and Borrower.

  
	
   

  	
   

  	
   

  
	
  Facility Fee:

  	
   

  	
  Borrower will provide a
  $15,000 Facility Fee to Lender upon execution of this proposal letter. $5,000
  will be retained by Lender after loan facility approval to cover associated
  costs. The remaining $10,000 will be applied to first payment. Should the
  Lender not issue an approval to provide funding, the Facility Fee, less any
  transaction costs, will be returned.

  
	
   

  	
   

  	
   

  
	
  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.

  
	
   

  	
   

  	
   

  
	
  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.

  
	
   

  	
   

  	
   

  
	
  Management Assistance:

  	
   

  	
  Lender will make
  available to Borrower significant managerial assistance, including equipment
  tracking and financing, cash flow and expense management, and general
  financing opportunities.

  
	
   

  	
   

  	
   

  
	
  Expiration:

  	
   

  	
  This loan proposal will
  expire if a signed copy of this proposal letter is not received by Oxford on
  or beforeMay 31, 2004.

  



 


2





















 


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.


 


 


Oxford Finance Corporation welcomes the opportunity to
be of service to Favrille, Inc.  We look
forward to working with you.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Christopher A. Herr

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OXFORD FINANCE
  CORPORATION

  
	
   

  	
  Christopher A. Herr

  
	
   

  	
   

  
	
  ACKNOWLEDGED AND
  AGREED:

  	
   

  
	
   

  	
   

  
	
  Favrille, Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Tamara A. Seymour

  	
   

  	
   

  
	
   

  	
   

  
	
  Title: Chief Financial
  Officer

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  May 28, 2004

  	
   

  	
   

  
							



 


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ATTACHMENT A


 


 


Estimated Categories of Equipment:


 


	
  Category

  	
   

  	
  Amount

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lab equipment, furniture, manufacturing and computer
  hardware

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
  60

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All other softcosts

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  2,500,000

  	
   

  	
  100

  	
  %

  



 


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