**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 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                                                                                                                                                 |
|                             |   |                                                                                                                                                                        |
| 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

 

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| 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.                                                                                                                                                                                                                                                                     |

 

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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.

 

 

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:                           | 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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