**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 thefollowing loan proposal to Favrille, Inc. for laboratory and other internal useassets, 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, a Delaware 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 Expansion:            |   | $1,550,000. $1,000,000  of soft costs to fund no later than June 30, 2005.                                                                                                  |
|                             |   |                                                                                                                                                                        |
| Funding Dates:                   |   | June 2005 through  December 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:              |   | 3.1855% of the Loan  Amount per month for 36 months                                                                                                                         |
|                             |   | 2.7935% of the Loan  Amount per month for 42 months                                                                                                                         |
|                             |   |                                                                                                                                                                        |
| Payment Rate Implicit  Interest: |   | 9.67%                                                                                                                                                                       |
|                             |   |                                                                                                                                                                        |
| Periodicity:                     |   | Monthly, in advance.                                                                                                                                                        |
|                             |   |                                                                                                                                                                        |
| 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 22314,703-519-4900

 

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|                   |   | H.15 (519) on June 13,  2005.                                                                                                                                                                                                                                                                                                                                                                     |
|------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| Payment Commencements: |   | First day of the month  following a Schedule funding.                                                                                                                                                                                                                                                                                                                                             |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| Stock Warrants:        |   | None                                                                                                                                                                                                                                                                                                                                                                                              |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 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.                                                                                                                                                                                                                 |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| Documentation:         |   | Loan documentation  provided by Lender containing terms generally accepted in the industry and  mutually agreeable to both Lender and Borrower.                                                                                                                                                                                                                                                   |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| Facility Fee:          |   | No additional fee.                                                                                                                                                                                                                                                                                                                                                                                |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 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.                                                                                                         |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 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, andany terms and conditions of the loan or warrant agreements, are subject tofinal review and approval by Oxford Finance Corporation and its ExecutiveCredit Team, and is not a commitment to provide financing.

 

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Oxford Finance Corporation welcomes the opportunity tobe of service to Favrille, Inc.  We lookforward 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: June 27, 2005             |                        |
|                                 |                             |  |  |  |

 

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**ATTACHMENT A**

 

**Estimated Categories of Equipment:**

 
| **Category**                                                   | ** ** | **Amount** | ** ** | **Percentage** | ** ** |
|----------------------------------------------------------------|------------|------------|------------|----------------|------------|
|                                                           |       |       |       |           |       |
| Lab equipment, furniture, manufacturing and computer  hardware |       | $          | 550,000    |           | 36         | % |
|                                                           |       |       |       |           |       |
| All other softcosts                                            |       | $          | 1,000,000  |           | 64         | % |
|                                                           |       |       |       |           |       |
| Total                                                          |       | $          | 1,550,000  |           | 100        | % |

 

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