Document:

QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Exhibit 10.4    
    

FAVRILLE, INC.  

 2005 EMPLOYEE STOCK PURCHASE PLAN  

 ADOPTED BY THE BOARD OF DIRECTORS DECEMBER 31, 2004

APPROVED BY STOCKHOLDERS JANUARY 6, 2005

EFFECTIVE DATE:                  , 2005  

1.     PURPOSE.  

        (a)   The purpose of the Plan is to provide a means by which Employees of the Company and certain designated Related
Corporations may be given an opportunity to purchase shares of the Common Stock of the Company. 

        (b)   The Company, by means of the Plan, seeks to secure and retain the services of current and new Employees and to provide
incentives for such persons to exert maximum efforts for the success of the Company and its Related Corporations. 

        (c)   The Company intends that the Purchase Rights be considered options issued under an Employee Stock Purchase Plan. 

2.     DEFINITIONS.  

        As used in the Plan and any Offering, unless otherwise specified, the following terms have the meanings set forth below: 

        (a)   "Board" means the Board of Directors of the Company. 

        (b)   "Code" means the Internal Revenue Code of 1986, as
amended.

        (c)   "Committee" means a committee appointed by the Board in accordance with
Section 3(c) of the Plan. 

        (d)   "Common Stock" means the common stock of the Company. 

        (e)   "Company" means Favrille, Inc., a Delaware corporation. 

        (f)    "Contributions" means the payroll deductions and other additional
payments that a Participant contributes to fund the exercise of a Purchase Right. A Participant may make payments not through payroll deductions only if specifically provided for in the Offering, and
then only if the Participant has not already had the maximum permitted amount withheld through payroll deductions during the Offering. 

        (g)   "Corporate Transaction" means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following events: 

        (i)    a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company; 

        (ii)   a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company; 

        (iii)  a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or 

        (iv)  a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares
of Common Stock outstanding immediately preceding the 

1

 

merger,
consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or
otherwise. 

        (h)   "Director" means a member of the Board. 

        (i)    "Eligible Employee" means an Employee who meets the requirements set
forth in the Offering for eligibility to participate in the Offering, provided that such Employee also meets the requirements for eligibility to participate set forth in the Plan. 

        (j)    "Employee" means any person, including Officers and Directors, who is
employed for purposes of Section 423(b)(4) of the Code by the Company or a Related Corporation. Neither service as a Director nor payment of a director's fee shall be sufficient to make an
individual an Employee of the Company or a Related Corporation. 

        (k)   "Employee Stock Purchase Plan" means a plan that grants Purchase Rights
intended to be options issued under an "employee stock purchase plan," as that term is defined in Section 423(b) of the Code. 

        (l)    "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (m)  "Fair Market Value" means the value of a security, as determined in good
faith by the Board. If the security is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of the security, unless
otherwise determined by the Board, shall be the closing sales price (rounded up where necessary to the nearest whole cent) for such security (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume of trading in the relevant security of the Company) on the Trading Day prior to the relevant determination date, as
reported in The Wall Street Journal or such other source as the Board deems reliable. 

        (n)   "IPO Date" means the closing date of the initial public offering of the
Common Stock. 

        (o)   "Offering" means the grant of Purchase Rights to purchase shares of
Common Stock under the Plan to Eligible Employees. 

        (p)   "Offering Date" means a date selected by the Board for an Offering to
commence. 

        (q)   "Officer" means a person
who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 

        (r)   "Participant" means an Eligible Employee who holds an outstanding
Purchase Right granted pursuant to the Plan. 

        (s)   "Plan" means this Favrille, Inc. 2005 Employee Stock Purchase
Plan. 

        (t)    "Purchase Date" means one or more dates during an Offering established by
the Board on which Purchase Rights shall be exercised and as of which purchases of shares of Common Stock shall be carried out in accordance with such Offering. 

        (u)   "Purchase Period" means a period of time specified within an Offering
beginning on the Offering Date or on the next day following a Purchase Date within an Offering and ending on a Purchase Date. An Offering may consist of one or more Purchase Periods. 

        (v)   "Purchase Right" means an option to purchase shares of Common Stock
granted pursuant to the Plan. 

        (w)  "Related Corporation" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. 

2

 

        (x)   "Securities Act" means the Securities Act of 1933, as amended. 

        (y)   "Trading Day" means any
day on which the exchange(s) or market(s) on which shares of Common Stock are listed, whether it be an established stock exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or otherwise,
is open for trading. 

3.     ADMINISTRATION.  

        (a)   The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in
Section 3(c). Whether or not the Board has delegated administration, the Board shall have the final power to determine all questions of policy and expediency that may arise in the
administration of the Plan. 

        (b)   The Board (or the Committee) shall have the power, subject to, and within the limitations of, the express provisions of
the Plan: 

        (i)    To determine when and how Purchase Rights to purchase shares of Common Stock shall be granted and the provisions of each
Offering of such Purchase Rights (which need not be identical). 

        (ii)   To designate from time to time which Related Corporations of the Company shall be eligible to participate in the Plan. 

        (iii)  To construe and interpret the Plan and Purchase Rights, and to establish, amend and revoke rules and regulations for
the administration of the Plan. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. 

        (iv)  To amend the Plan as provided in Section 15. 

        (v)   Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best
interests of the Company and its Related Corporations and to carry out the intent that the Plan be treated as an Employee Stock Purchase Plan. 

        (vi)  To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan
by Employees who are foreign nationals or employed outside the United States. 

        (c)   The Board may delegate administration of the Plan to a Committee of the Board composed of one (1) or more members
of the Board. If administration of the Plan is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in
the Board some or all of the powers previously delegated. If administration is delegated to a Committee, references to the Board in this Plan and in the Offering document shall thereafter be deemed to
be to the Board or the Committee, as the case may be. 

        (d)   All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons. 

4.     SHARES OF COMMON STOCK SUBJECT TO THE PLAN.  

        Subject to the provisions of Section 14(a) relating to adjustments upon changes in Common Stock, the stock that may be sold pursuant to Purchase Rights
granted under the Plan shall not exceed in the aggregate three hundred thousand (300,000) shares of Common Stock, plus an annual increase to be added on the first day of each Company fiscal year,
beginning in 2006 and ending in (and including) 2014, equal to the least of the following amounts: (i) two percent (2%) of the Company's outstanding 

3

 

shares
of Common Stock on the day preceding the first day of such fiscal year (rounded to the nearest whole share), (ii) fifty thousand (50,000) shares of Common Stock, or (iii) an
amount determined by the Board. 

5.     GRANT OF PURCHASE RIGHTS; OFFERING.  

        (a)   The Board may from time to time grant or provide for the grant of Purchase Rights to purchase shares of Common Stock
under the Plan to Eligible Employees in an Offering (consisting of one or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board. Each Offering shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate, which shall comply with the requirement of Section 423(b)(5) of the Code that all Employees granted Purchase Rights
shall have the same rights and privileges. The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate
Offerings need not be identical, but each Offering shall include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering or otherwise) the period
during which the Offering shall be effective, which period shall not exceed twenty-seven (27) months beginning with the Offering Date, and the substance of the provisions contained in Sections
6 through 9, inclusive. 

        (b)   If a Participant has more than one Purchase Right outstanding under the Plan, unless he or she otherwise indicates in
agreements or notices delivered hereunder: (i) each agreement or notice delivered by that Participant shall be deemed to apply to all of his or her Purchase Rights under the Plan, and
(ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase Right, if different Purchase Rights have identical exercise prices) shall be exercised to the fullest possible
extent before a Purchase Right with a higher exercise price (or a later-granted Purchase Right if different Purchase Rights have identical exercise prices) shall be exercised. 

6.     ELIGIBILITY.  

        (a)   Purchase Rights may be granted only to Employees of the Company or, as the Board may designate as provided in
Section 3(b), to Employees of a Related Corporation. Except as provided in Section 6(b), an Employee shall not be eligible to be granted Purchase Rights under the Plan unless, on the
Offering Date, such Employee has been in the employ of the Company or the Related Corporation, as the case may be, for such continuous period preceding such Offering Date as the Board may require, but
in no event shall the required period of continuous employment be greater than two (2) years. In addition, the Board may provide that no Employee shall be eligible to be granted Purchase Rights
under the Plan unless, on the Offering Date, such Employee's customary employment with the Company or the Related Corporation is more than twenty (20) hours per week and/or more than five
(5) months per calendar year. 

        (b)   The Board may provide that each person who, during the course of an Offering, first becomes an Eligible Employee shall,
on a date or dates specified in the Offering which coincides with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive a Purchase Right under that Offering,
which Purchase Right shall thereafter be deemed to be a part of that Offering. Such Purchase Right shall have the same characteristics as any Purchase Rights originally granted under that Offering, as
described herein, except that: 

        (i)    the date on which such Purchase Right is granted shall be the "Offering Date" of such Purchase Right for all purposes,
including determination of the exercise price of such Purchase Right; 

        (ii)   the period of the Offering with respect to such Purchase Right shall begin on its Offering Date and end coincident with
the end of such Offering; and 

4

 

        (iii)  the Board may provide that if such person first becomes an Eligible Employee within a specified period of time before
the end of the Offering, he or she shall not receive any Purchase Right under that Offering. 

        (c)   No Employee shall be eligible for the grant of any Purchase Rights under the Plan if, immediately after any such Purchase
Rights are granted, such Employee owns stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Related Corporation. For
purposes of this Section 6(c), the rules of Section 424(d) of the Code shall apply in determining the stock ownership of any Employee, and stock which such Employee may purchase under
all outstanding Purchase Rights and options shall be treated as stock owned by such Employee. 

        (d)   As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights under the Plan
only if such Purchase Rights, together with any other rights granted under all Employee Stock Purchase Plans of the Company and any Related Corporations, do not permit such Eligible Employee's rights
to purchase stock of the Company or any Related Corporation to accrue at a rate which exceeds twenty five thousand dollars ($25,000) of Fair Market Value of such stock (determined at the time such
rights are granted, and which, with respect to the Plan, shall be determined as of their respective Offering Dates) for each calendar year in which such rights are outstanding at any time. 

        (e)   Officers of the Company and any designated Related Corporation, if they are otherwise Eligible Employees, shall be
eligible to participate in Offerings under the Plan. Notwithstanding the foregoing, the Board may provide in an Offering that Employees who are highly compensated Employees within the meaning of
Section 423(b)(4)(D) of the Code shall not be eligible to participate. 

7.     PURCHASE RIGHTS; PURCHASE PRICE.  

        (a)   On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, shall be granted a Purchase
Right to purchase up to that number of shares of Common Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the Board, but in either case not exceeding fifteen
percent (15%), of such Employee's Earnings (as defined by the Board in each Offering) during the period that begins on the Offering Date (or such later date as the Board determines for a particular
Offering) and ends on the date stated in the Offering, which date shall be no later than the end of the Offering. 

        (b)   The Board shall establish one (1) or more Purchase Dates during an Offering as of which Purchase Rights granted
pursuant to that Offering shall be exercised and purchases of shares of Common Stock shall be carried out in accordance with such Offering. 

        (c)   In connection with each Offering made under the Plan, the Board may specify a maximum number of shares of Common Stock
that may be purchased by any Participant on any Purchase Date during such Offering. In connection with each Offering made under the Plan, the Board may specify a maximum aggregate number of shares of
Common Stock that may be purchased by all Participants pursuant to such Offering. In addition, in connection with each Offering that contains more than one Purchase Date, the Board may specify a
maximum aggregate number of shares of Common Stock that may be purchased by all Participants on any Purchase Date under the Offering. If the aggregate purchase of shares of Common Stock issuable upon
exercise of Purchase Rights granted under the Offering would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro rata allocation of the shares of Common
Stock available shall be made in as nearly a uniform manner as shall be practicable and equitable. 

5

 

        (d)   The purchase price of shares of Common Stock acquired pursuant to Purchase Rights shall be not less than the lesser of: 

        (i)    an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of Common Stock on the
Offering Date; or 

        (ii)   an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of Common Stock on the
applicable Purchase Date. 

8.     PARTICIPATION; WITHDRAWAL; TERMINATION.  

        (a)   A Participant may elect to authorize payroll deductions pursuant to an Offering under the Plan by completing and
delivering to the Company, within the time specified in the Offering, an enrollment form (in such form as the Company may provide). Each such enrollment form shall authorize an amount of Contributions
expressed as a percentage of the submitting Participant's Earnings (as defined in each Offering) during the Offering (not to exceed the maximum percentage specified by the Board). Each Participant's
Contributions shall remain the property of the Participant at all times prior to the purchase of Common Stock, but such Contributions may be commingled with the assets of the Company and used for
general corporate purposes except where applicable law requires that Contributions be deposited with an independent third party. To the extent provided in the Offering, a Participant may begin making
Contributions after the beginning of the Offering. To the extent provided in the Offering, a Participant may thereafter reduce (including to zero) or increase his or her Contributions. To the extent
specifically provided in the Offering, in addition to making Contributions by payroll deductions, a Participant may make Contributions through the payment by cash or check prior to each Purchase Date
of the Offering. 

        (b)   During an Offering, a Participant may cease making Contributions and withdraw from the Offering by delivering to the
Company a notice of withdrawal in such form as the Company may provide. Such withdrawal may be elected at any time prior to the end of the Offering, except as provided otherwise in the Offering. Upon
such withdrawal from the Offering by a Participant, the Company shall distribute to such Participant all of his or her accumulated Contributions (reduced to the extent, if any, such Contributions have
been used to acquire shares of Common Stock for the Participant) under the Offering, and such Participant's Purchase Right in that Offering shall thereupon terminate. A Participant's withdrawal from
an Offering shall have no effect upon such Participant's eligibility to participate in any other Offerings under the Plan, but such Participant shall be required to deliver a new enrollment form in
order to participate in subsequent Offerings. 

        (c)   Purchase Rights granted pursuant to any Offering under the Plan shall terminate immediately upon a Participant ceasing to
be an Employee for any reason or for no reason (subject to any post-employment participation period required by law) or other lack of eligibility. The Company shall distribute to such
terminated or otherwise ineligible Employee all of his or her accumulated Contributions (reduced to the extent, if any, such Contributions have been used to acquire shares of Common Stock for the
terminated or otherwise ineligible Employee) under the Offering. 

        (d)   Purchase Rights shall not be transferable by a Participant otherwise than by will, the laws of descent and distribution,
or a beneficiary designation as provided in Section 13. During a Participant's lifetime, Purchase Rights shall be exercisable only by such Participant. 

        (e)   Unless otherwise specified in an Offering, the Company shall have no obligation to pay interest on Contributions. 

9.     EXERCISE.  

        (a)   On each Purchase Date during an Offering, each Participant's accumulated Contributions shall be applied to the purchase
of shares of Common Stock up to the maximum number of shares of 

6

 

Common
Stock permitted pursuant to the terms of the Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional shares shall be issued upon the exercise of
Purchase Rights unless specifically provided for in the Offering. 

        (b)   If any amount of accumulated Contributions remains in a Participant's account after the purchase of shares of Common
Stock and such remaining amount is less than the amount required to purchase one share of Common Stock on the final Purchase Date of an Offering, then such remaining amount shall be held in such
Participant's account for the purchase of shares of Common Stock under the next Offering under the Plan, unless such Participant withdraws from such next Offering, as provided in Section 8(b),
or is not eligible to participate in such Offering, as provided in Section 6, in which case such amount shall be distributed to such Participant after the final Purchase Date, without interest.
If the amount of Contributions remaining in a Participant's account after the purchase of shares of Common Stock is at least equal to the amount required to purchase one (1) whole share of
Common Stock on the final Purchase Date of the Offering, then such remaining amount shall be distributed in full to such Participant at the end of the Offering. 

        (c)   No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued upon such exercise under
the Plan are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all laws applicable to the Plan. If on a Purchase Date during any
Offering hereunder the shares of Common Stock are not so registered or the Plan is not in such compliance, no Purchase Rights or any Offering shall be exercised on such Purchase Date, and the Purchase
Date shall be delayed until the shares of Common Stock are subject to such an effective registration statement and the Plan is in such compliance, except that the Purchase Date shall not be delayed
more than twelve (12) months and the Purchase Date shall in no event be more than twenty-seven (27) months from the Offering Date. If, on the Purchase Date under any Offering hereunder,
as delayed to the maximum extent permissible, the shares of Common Stock are not registered and the Plan is not in such compliance, no Purchase Rights or any Offering shall be exercised and all
Contributions accumulated during the Offering (reduced to the extent, if any, such Contributions have been used to acquire shares of Common Stock) shall be distributed to the Participants. 

10.   COVENANTS OF THE COMPANY.  

        The Company shall seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as
may be required to issue and sell shares of Common Stock upon exercise of the Purchase Rights. If, after commercially reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of shares of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell shares of Common Stock upon exercise of such Purchase Rights unless and until such authority is obtained. 

11.   USE OF PROCEEDS FROM SHARES OF COMMON STOCK.  

        Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights shall constitute general funds of the Company. 

12.   RIGHTS AS A STOCKHOLDER.  

        A Participant shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of Common Stock subject to Purchase Rights
unless and until the Participant's shares of Common Stock acquired upon exercise of Purchase Rights are recorded in the books of the Company (or its transfer agent). 

7

   13.   DESIGNATION OF BENEFICIARY.  

        (a)   A Participant may file a written designation of a beneficiary who is to receive any shares of Common Stock and/or
cash, if any, from the Participant's account under the Plan in the event of such Participant's death subsequent to the end of an Offering but prior to delivery to the Participant of such shares of
Common Stock or cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant's account under the Plan in the event of such
Participant's death during an Offering. Any such designation shall be on a form provided by or otherwise acceptable to the Company. 

        (b)   The Participant may change such designation of beneficiary at any time by written notice to the Company. In the event of
the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant's death, the Company shall deliver such shares of Common
Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its
sole discretion, may deliver such shares of Common Stock and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate. 

14.   ADJUSTMENTS UPON CHANGES IN SECURITIES; CORPORATE TRANSACTIONS.  

        (a)   If any change is made in the shares of Common Stock, subject to the Plan, or subject to any Purchase Right, without the
receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan shall be
appropriately adjusted in the type(s), class(es) and maximum number of shares of Common Stock subject to the Plan pursuant to Section 4, and the outstanding Purchase Rights shall be
appropriately adjusted in the type(s), class(es), number of shares and purchase limits of such outstanding Purchase Rights. The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by
the Company.") 

        (b)   In the event of a Corporate Transaction, then: (i) any surviving or acquiring corporation may continue or assume
Purchase Rights outstanding under the Plan or may substitute similar rights (including a right to acquire the same consideration paid to stockholders in the Corporate Transaction) for those
outstanding under the Plan, or (ii) if any surviving or acquiring corporation does not continue or assume such Purchase Rights or does not substitute similar rights for Purchase Rights
outstanding under the Plan, then, the Participants' accumulated Contributions shall be used to purchase shares of Common Stock within ten (10) business days prior to the Corporate Transaction
under the ongoing Offering, and the Participants' Purchase Rights under the ongoing Offering shall terminate immediately after such purchase. 

15.   AMENDMENT OF THE PLAN.  

        (a)   The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 14
relating to adjustments upon changes in securities and except as to amendments solely to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain
favorable tax, exchange control or regulatory treatment for Participants or the Company or any Related Corporation, no amendment shall be effective unless approved by the stockholders of the 

8

 

Company
to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Section 423 of the Code or other applicable laws or regulations. 

        (b)   It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to
provide Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Employee Stock Purchase Plans or to bring
the Plan and/or Purchase Rights into compliance therewith. 

        (c)   The rights and obligations under any Purchase Rights granted before amendment of the Plan shall not be impaired by any
amendment of the Plan except: (i) with the consent of the person to whom such Purchase Rights were granted, or (ii) as necessary to comply with any laws or governmental regulations
(including, without limitation, the provisions of the Code and the regulations promulgated thereunder relating to Employee Stock Purchase Plans). 

16.   TERMINATION OR SUSPENSION OF THE PLAN.  

        (a)   The Board in its discretion may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate at the time that all of the shares of Common Stock reserved for issuance under the Plan, as increased and/or adjusted from time to time, have been issued under the terms of the Plan. No
Purchase Rights may be granted under the Plan while the Plan is suspended or after it is terminated. 

        (b)   Any benefits, privileges, entitlements and obligations under any Purchase Rights while the Plan is in effect shall not be
impaired by suspension or termination of the Plan except (i) as expressly provided in the Plan or with the consent of the person to whom such Purchase Rights were granted, (ii) as
necessary to comply with any laws, regulations, or listing requirements, or (iii) as necessary to ensure that the Plan and/or Purchase Rights comply with the requirements of Section 423
of the Code. 

17.   EFFECTIVE DATE OF PLAN.  

        The Plan shall become effective on the IPO Date, but no Purchase Rights shall be exercised unless and until the Plan has been approved by the stockholders of the
Company within twelve (12) months before or after the date the Plan is adopted by the Board. 

18.   MISCELLANEOUS PROVISIONS.  

        (a)   The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in the Offering shall in any way
alter the at will nature of a Participant's employment or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue in the employ of the Company or a Related
Corporation, or on the part of the Company or a Related Corporation to continue the employment of a Participant. 

        (b)   The provisions of the Plan shall be governed by the law of the State of California without resort to that state's
conflicts of laws rules. 

9

 
FAVRILLE, INC.  

2005 EMPLOYEE STOCK PURCHASE PLAN  

 OFFERING DOCUMENT  

ADOPTED BY THE BOARD OF DIRECTORS: DECEMBER 31, 2004  

        In this document, capitalized terms not otherwise defined shall have the same definitions as set forth in Favrille, Inc., 2005 Employee Stock Purchase
Plan. 

1.     Grant; Offering Date.  

        (a)   The Board hereby authorizes a series of Offerings pursuant to the terms of this Offering document. 

        (b)   The first Offering hereunder (the "Initial Offering") shall begin on the closing date of the initial public offering of
the Company's Common Stock under a registration statement declared effective under the Securities Act (the "IPO Date") and shall end on approximately 24 months following IPO Date, unless
terminated earlier as provided below. After the Initial Offering, an additional new Offering shall begin on the day after the first Purchase Date of the immediately preceding Offering. The first day
of an Offering is that Offering's "Offering Date." Except as provided below, each Offering shall be approximately twenty-four (24) months in duration, with four (4) Purchase
Periods which, except for the first Purchase Period of the Initial Offering (which may be longer or shorter) shall be approximately six (6) months in length. Except as provided below, a
Purchase Date is the last day of a Purchase Period or of an Offering, as the case may be. The Initial Offering shall consist of four (4) Purchase Periods with the Purchase Period of the Initial
Offering ending on approximately 6 months following IPO date. 

        (c)   Notwithstanding the foregoing: (i) if any Offering Date falls on a day that is not a Trading Day, then such
Offering Date shall instead fall on the next subsequent Trading Day, and (ii) if any Purchase Date falls on a day that is not a Trading Day, then such Purchase Date shall instead fall on the
immediately preceding Trading Day. 

        (d)   Prior to the commencement of any Offering, the Board may change any or all terms of such Offering and any subsequent
Offerings. The granting of Purchase Rights pursuant to each Offering hereunder shall occur on each respective Offering Date unless prior to such date (i) the Board determines that such Offering
shall not occur, or (ii) no shares of Common Stock remain available for issuance under the Plan in connection with the Offering. 

        (e)   Notwithstanding anything in this Section 1 to the contrary, if on the first day of a Purchase Period during an
Offering the Fair Market Value of the shares of Common Stock is less than it was on the Offering Date for that Offering, that day shall become the next Offering Date, the Offering that would otherwise
have continued in effect shall immediately terminate and the Employees who were enrolled in the terminated Offering shall automatically be enrolled in the new Offering that starts such day. 

        (f)    If the Company's accountants advise the Company that the accounting treatment of purchases under the Plan will change or
has changed in a manner that the Company determines is detrimental to its best interests, then the Company may, in its discretion, take any or all of the following actions: (i) terminate each
ongoing Offering as of the next Purchase Date (after the purchase of stock on such Purchase Date) under such Offering; (ii) set a new Purchase Date for each ongoing Offering and terminate each
such Offering after the purchase of stock on such Purchase Date; (iii) amend the Plan and each ongoing Offering to reduce or eliminate an accounting treatment that is detrimental to the 

10

 

Company's
best interests and (iv) terminate each ongoing Offering and refund any money contributed to the Participants. 

2.     Eligible Employees.  

        (a)   Each Eligible Employee who, on the date that is five (5) days prior to the Offering Date of an Offering hereunder,
is (i) an employee of the Company; (ii) an employee of a Subsidiary incorporated in the United States; or (iii) an employee of a Subsidiary that is not incorporated in the United
States, provided that the Board or Committee has designated the employees of such Subsidiary as eligible to participate in the Offering, shall be granted a Purchase Right on the Offering Date of such
Offering. 

        (b)   Notwithstanding the foregoing, the following Employees shall not be Eligible Employees or be granted Purchase Rights
under an Offering: 

        (i)    part-time or seasonal Employees whose customary employment is twenty (20) hours per week or less or
five (5) months per calendar year or less; 

        (ii)   five percent (5%) stockholders (including ownership through unexercised and/or unvested stock options) as described in
Section 6(c) of the Plan; or 

        (iii)  Employees in jurisdictions outside of the United States if, as of the Offering Date of the Offering, the grant of such
Purchase Rights would not be in compliance with the applicable laws of any jurisdiction in which the Employee resides or is employed. 

        (c)   Notwithstanding the foregoing, each person who first becomes an Eligible Employee during an ongoing Offering shall not be
able to participate in such Offering. 

3.     Purchase Rights.  

        (a)   Subject to the limitations set forth herein and in the Plan, a Participant's Purchase Right shall permit the purchase of
the number of shares of Common Stock purchasable with up to fifteen percent (15%) of such Participant's Earnings paid during the period of such Offering beginning immediately after such Participant
first commences participation; provided, however, that no Participant may have more than fifteen percent (15%) of such Participant's Earnings applied to
purchase shares of Common Stock under all ongoing Offerings under the Plan and all other plans of the Company and Related Corporations that are intended to qualify as Employee Stock Purchase Plans. 

        (b)   For Offerings hereunder, "Earnings" means the base compensation paid to a Participant, including all salary, wages
(including amounts elected to be deferred by the Participant, that would otherwise have been paid, under any cash or deferred arrangement or other deferred compensation program established by the
Company or a Related Corporation), overtime pay, commissions and bonuses, but excluding all other remuneration paid directly to such Participant, profit sharing, the cost of employee benefits paid for
by the Company or a Related Corporation, education or tuition reimbursements, imputed income arising under any Company or Related Corporation group insurance or benefit program, traveling expenses,
business and moving expense reimbursements, income received in connection with stock options, contributions made by the Company or a Related Corporation under any employee benefit plan, and similar
items of compensation. 

        (c)   Notwithstanding the foregoing, the maximum number of shares of Common Stock that a Participant may purchase on any
Purchase Date in an Offering shall be such number of shares as has a Fair Market Value (determined as of the Offering Date for such Offering) equal to (x) $25,000 multiplied by the number of
calendar years in which the Purchase Right under such Offering has been outstanding at any time, minus (y) the Fair Market Value of any other shares of Common Stock (determined as of the
relevant Offering Date with respect to such shares) that, for purposes of the limitation of Section 423(b)(8) of the Code, are attributed to any of such calendar years in which the 

11

 

Purchase
Right is outstanding. The amount in clause (y) of the previous sentence shall be determined in accordance with regulations applicable under Section 423(b)(8) of the Code based
on (i) the number of shares previously purchased with respect to such calendar years pursuant to such Offering or any other Offering under the Plan, or pursuant to any other Company or Related
Corporation plans intended to qualify as Employee Stock Purchase Plans, and (ii) the number of shares subject to other Purchase Rights outstanding on the Offering Date for such Offering
pursuant to the Plan or any other such Company or Related Corporation Employee Stock Purchase Plan. 

        (d)   The maximum aggregate number of shares of Common Stock available to be purchased by all Participants under an Offering
shall be the number of shares of Common Stock remaining available under the Plan on the Offering Date. If the aggregate purchase of shares of Common Stock upon exercise of Purchase Rights granted
under the Offering would exceed the maximum aggregate number of shares available, the Board shall make a pro rata allocation of the shares available in a uniform and equitable manner. 

4.     Purchase Price.  

        The purchase price of shares of Common Stock under an Offering shall be the lesser of: (i) eighty-five percent (85%) of the Fair Market Value
of such shares of Common Stock on the applicable Offering Date, or (ii) eighty-five percent (85%) of the Fair Market Value of such shares of Common Stock on the applicable Purchase
Date, in each case rounded up to the nearest whole cent per share. For the Initial Offering, the Fair Market Value of the shares of Common Stock at the time when the Offering commences shall be the
price per share at which shares are first sold to the public in the Company's initial public offering as specified in the final prospectus for that initial public offering. 

5.     Participation.  

        (a)   An Eligible Employee may elect to participate in an Offering on the Offering Date. An Eligible Employee shall elect his
or her payroll deduction percentage on such enrollment form as the Company provides. The completed enrollment form must be delivered to the Company prior to the date participation is to be effective,
unless a later time for filing the enrollment form is set by the Company for all Eligible Employees with respect to a given Offering. Payroll deduction percentages must be expressed in whole
percentages of Earnings, with a minimum percentage of one percent (1%) and a maximum percentage of fifteen percent (15%). Except as provided in paragraph (e) below with respect to the Initial
Offering, Contributions may be made only by way of payroll deductions. 

        (b)   A Participant may increase or decrease his or her participation level once during a Purchase Period. In addition, a
Participant may decrease to zero percent (0%) his or her participation level only once during a Purchase Period. Any such increase or decrease in participation level shall be made by delivering a
notice to the Company or a designated Subsidiary in such form as the Company provides prior to the ten (10) day period (or such shorter period of time as determined by the Company and
communicated to Participants) immediately preceding the next Purchase Date of the Purchase Period for which it is to be effective. 

        (c)   A Participant may withdraw from an Offering and receive a refund of his or her Contributions (reduced to the extent, if
any, such Contributions have been used to acquire shares of Common Stock for the Participant on any prior Purchase Date) without interest, at any time prior to the end of the Offering, excluding only
each ten (10) day period immediately preceding a Purchase Date (or such shorter period of time determined by the Company and communicated to Participants), by delivering a withdrawal notice to
the Company or a designated Subsidiary in such form as the Company provides. A Participant who has withdrawn from an Offering shall not again participate in such Offering, but may 

12

 

participate
in subsequent Offerings under the Plan in accordance with the terms of the Plan and the terms of such subsequent Offerings. 

        (d)   Notwithstanding the foregoing or any other provision of this Offering document or of the Plan to the contrary, neither
the enrollment of any Eligible Employee in the Plan nor any forms relating to participation in the Plan shall be given effect until such time as a registration statement covering the registration of
the shares under the Plan that are subject to the Offering has been filed by the Company and has become effective. 

        (e)   Notwithstanding the foregoing or any other provision of this Offering document or of the Plan to the contrary, with
respect to the Initial Offering only, each Eligible Employee who is employed on the IPO Date automatically shall be enrolled in the Initial Offering, with a Purchase Right to purchase up to the number
of shares of Common Stock that are purchasable with fifteen percent (15%) of the Eligible Employee's Earnings, subject to the limitations set forth in Section 3(c) and 3(d) above. Following the
filing of an effective registration statement pursuant to a Form S-8, such Eligible Employee shall be provided a certain period of time, as determined by the Company in its sole
discretion, within which to elect to authorize payroll deductions for the purchase of shares during the Initial Offering (which may be for a percentage that is less than fifteen percent (15%) of the
Eligible Employee's Earnings). If such Eligible Employee elects not to authorize such payroll deductions, the Eligible Employee instead may purchase shares of Common Stock under the Plan by delivering
a single cash payment for the purchase of such shares to the Company or a designated Subsidiary prior to the ten (10) day period (or such shorter period of time as determined by the Company and
communicated to Participants) immediately preceding the Purchase Date under the Initial Offering. If an Eligible Employee neither elects to authorize payroll deductions nor chooses to make a cash
payment in accordance with the foregoing sentence, then the Eligible Employee shall not purchase any shares of Common Stock during the Initial Offering. After the end of the Initial Offering, in order
to participate in any subsequent Offerings, an Eligible Employee must enroll and authorize payroll deductions prior to the commencement of the Offering, in accordance with paragraph (a) above;  provided, however,
 that once an Eligible Employee enrolls in an Offering and authorizes payroll deductions (including in connection with the Initial
Offering), the Eligible Employee automatically shall be enrolled for all subsequent Offerings until he or she elects to withdraw from an Offering pursuant to paragraph (c) above or terminates
his or her participation in the Plan. 

6.     Purchases.  

        Subject to the limitations contained herein, on each Purchase Date, each Participant's Contributions (without any increase for interest) shall be applied to the
purchase of whole shares, up to the maximum number of shares permitted under the Plan and the Offering. 

7.     Notices and Agreements.  

        Any notices or agreements provided for in an Offering or the Plan shall be given in writing, in a form provided by the Company, and unless specifically provided
for in the Plan or this Offering, shall be deemed effectively given upon receipt or, in the case of notices and agreements delivered by the Company, five (5) days after deposit in the United
States mail, postage prepaid. 

8.     Exercise Contingent on Stockholder Approval.  

        The Purchase Rights granted under an Offering are subject to the approval of the Plan by the stockholders of the Company as required for the Plan to obtain
treatment as an Employee Stock Purchase Plan. 

13

 

9.     Offering Subject to Plan.  

        Each Offering is subject to all the provisions of the Plan, and the provisions of the Plan are hereby made a part of the Offering. The Offering is further subject
to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of an
Offering and those of the Plan (including interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan), the provisions of the Plan
shall control. 

14

QuickLinks

Exhibit 10.4QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.5  

 
 

EMPLOYMENT AGREEMENT    
    
    BY AND BETWEEN    
    
    FAVRILLE, INC.    
    
    AND    
    
    JOHN P. LONGENECKER, PH.D.    
    

 
TABLE OF CONTENTS  

	 
	 	 
	 	Page

	

1.	
 	

EMPLOYMENT	
 	

1
	

2.	
 	

LOYAL AND CONSCIENTIOUS PERFORMANCE; EXCLUSIVE PROPERTY	
 	

2
	

3.	
 	

COMPENSATION OF EXECUTIVE	
 	

2
	

4.	
 	

TERMINATION	
 	

3
	

5.	
 	

CONFIDENTIAL AND PROPRIETARY INFORMATION	
 	

5
	

6.	
 	

ASSIGNMENT AND BINDING EFFECT	
 	

5
	

7.	
 	

SURVIVAL	
 	

5
	

8.	
 	

NOTICES	
 	

5
	

9.	
 	

CHOICE OF LAW	
 	

6
	

10.	
 	

INTEGRATION	
 	

6
	

11.	
 	

AMENDMENT	
 	

6
	

12.	
 	

WAIVER	
 	

6
	

13.	
 	

SEVERABILITY	
 	

6
	

14.	
 	

INTERPRETATION; CONSTRUCTION	
 	

6
	

15.	
 	

REPRESENTATIONS AND WARRANTIES	
 	

6
	

16.	
 	

COUNTERPARTS	
 	

6
	

17.	
 	

REFERENCES	
 	

6
	

18.	
 	

ARBITRATION	
 	

6
	

19.	
 	

TRADE SECRETS OF OTHERS	
 	

7
	

20.	
 	

ADVERTISING; WAIVER	
 	

7

i

   EMPLOYMENT AGREEMENT  

        THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into effective as of January 6, 2005 (the "Effective Date") by and between FAVRILLE, INC.,
a Delaware corporation (the "Company"), and John P. Longenecker, Ph.D. ("Executive"). The Company and
Executive are collectively referred to herein as the "Parties," and each is individually referred to
herein as a "Party."

RECITALS  

        A.    The Company desires assurance of the association and services of Executive in order to retain Executive's experience,
skills, abilities, background and knowledge, and is willing to continue to engage Executive's services on the terms and conditions set forth in this Agreement. 

        B.    Executive desires to continue in the employ of the Company on the terms and conditions set forth in this Agreement. 

AGREEMENT  

        In consideration of the foregoing recitals and the mutual promises and covenants herein contained, and for other good and valuable consideration, the Parties,
intending to be legally bound, agree as follows: 

        1.    EMPLOYMENT.    

        1.1    Term.    The Company hereby employs Executive, and Executive
hereby accepts employment by the Company, upon the terms and conditions set forth in this Agreement. The term of this Agreement shall begin on the Effective Date and shall continue until it is
terminated pursuant to Section 4 (the "Term"). On the last day of the Term, Executive shall immediately resign from all positions with the
Company.
Notwithstanding anything herein to the contrary, either Party may terminate Executive's employment under this Agreement at any time, with or without Cause (as defined in Subsection 4.6(b)), subject to
the terms and conditions of Sections 4 and 5. 

        1.2    Title.    Executive shall have the title of President and Chief
Executive Officer of the Company and shall serve in such other capacity or capacities as the Board of Directors of the Company (the "Board") may
prescribe from time to time. Executive shall report to the Board. 

        1.3    Duties.    Executive shall do and perform all services, acts or
things necessary or advisable to manage and conduct the business of the Company and that are normally associated with the positions of President and Chief Executive Officer, consistent with the bylaws
of the Company and as required by the Board. 

        1.4    Policies and Practices.    The employment relationship between
the Parties shall be governed by the policies and practices established by the Company and the Board. Executive hereby acknowledges that Executive has read the Company's Employee Handbook, which,
along with this Agreement, shall govern the terms and conditions of Executive's employment with the Company. In the event that the terms of this Agreement differ from or are in conflict with the
Company's policies or practices or the Company's Employee Handbook, the terms of this Agreement shall control. Normal working hours are from 8:00 a.m. to 5:00 p.m., Monday through
Friday. As an exempt salaried employee, you will be expected to work additional hours as required by the nature of your work assignments. 

        1.5    Location.    Unless the Parties otherwise agree in writing,
during the Term, Executive shall perform the services Executive is required to perform pursuant to this Agreement at the Company's offices located in San Diego, California, or at any other place the
Company maintains 

1

 

a
principal office; provided, however, that the Company may from time to time require Executive to travel temporarily to other locations in connection
with the Company's business. 

        2.    LOYAL AND CONSCIENTIOUS PERFORMANCE; EXCLUSIVE PROPERTY.    

        2.1    Loyalty.    During Executive's employment by the Company,
Executive shall devote Executive's full business energies, interest, abilities and productive time to the proper and efficient performance of Executive's duties under this Agreement. 

        2.2    Exclusive Property.    Executive agrees that all business
procured by Executive on behalf of the Company, and all Company-related business opportunities and plans made known to Executive, while employed by the Company are and shall remain the exclusive
property of the Company. 

        3.    COMPENSATION OF EXECUTIVE.    

        3.1    Base Salary.    The Company shall pay Executive a base salary
of $345,830 per year, less payroll deductions and all required withholdings payable in regular periodic payments in accordance with Company policy. Such base salary shall be subject to annual review
and prorated for any partial year of employment on the basis of a 365-day fiscal year. 

        3.2    Stock Options.    In the event the Company effectuates an
equity financing on or after the Effective Date on terms approved by the Board or a committee thereof, then in each such case the Company will grant Executive additional stock options (the  "Additional Stock
Options") to purchase that number of shares of the Company's common stock (the "Common
Stock") necessary to maintain Executive's equity ownership in the Company at a minimum level of three percent of the Common Stock on a fully-diluted basis (assuming the
conversion of all issued and outstanding convertible securities into Common Stock and the exercise of all issued and outstanding warrants and stock options). To the maximum extent possible, the
Additional Stock Options shall be Incentive Stock Options as such term is defined in Section 422 of the Internal Revenue Code of 1986, as amended. Each Additional Stock Option will be governed
by and granted pursuant to a separate Stock Option Agreement and the Company's Amended and Restated 2001 Equity Incentive Plan, as may be amended from time to time (the  "Plan"). The exercise
price per share of the Additional Stock Options will be equal to the fair market value of the Common Stock established on the date
of grant, subject to approval by the Board. Subject to the terms of Subsection 4.4(c), the Additional Stock Options will vest over four years so long as Executive continues to be employed with the
Company, according to the following schedule: 25% of the shares subject to the Additional Stock Options will vest on the first anniversary of the date of grant and 1/48th of the shares
subject to the Additional Stock Options will vest monthly thereafter over the next three years. Notwithstanding anything herein to the contrary, Executive's right to receive the Additional Stock
Options under this Subsection 3.2 will terminate immediately prior to the earlier to occur of: (i) the termination of Executive's continuous service as Chief Executive Officer of the Company;
(ii) the consummation of a Corporate Transaction (as defined in the Plan); (iii) the effective date of an initial public offering of the Common Stock; or (iv) Executive's breach
of Executive's Proprietary Information and Inventions Agreement or Nondisclosure Agreement with the Company, in each case as determined in good faith by the Board. 

        3.3    Employment Taxes.    All of Executive's compensation shall be
subject to customary withholding taxes and any other employment taxes as are commonly required to be collected or withheld by the Company. 

        3.4    Benefits.    Executive shall, in accordance with Company policy
and the terms of the applicable plan documents, be eligible for the following standard Company benefits: medical, dental and vision insurance, as well as participation in the Company's
Section 125 flexible spending plan and participation in the Company's 401(k) plan, subject to the terms of those plans. Executive 

2

 

also
shall, in accordance with Company policy and the terms of the applicable plan documents, be eligible to participate in benefits under any executive benefit plan or arrangement which may be in
effect from time to time and made available to the Company's executive or key management employees. The Company reserves the right to modify benefits from time to time as it deems necessary in its
sole discretion. Executive will also be eligible for paid time off in accordance with the Company's flexible "time-off" plan. Executive will accrue flexible "time-off" at a
rate of 25 days per year and will be entitled to 12 holidays per year. The Company reserves the right to modify its policies from time to time as it deems necessary in its sole discretion. 

        4.    TERMINATION.    

        4.1    Termination for Complete Disability.    Executive's employment
with the Company shall terminate effective upon the date of Executive's Complete Disability (as defined in Subsection 4.6(a)). 

        4.2    Termination by the Company.    Executive's employment with the
Company may be terminated by the Company as follows: 

        (a)    For Cause.    The Company may terminate Executive's employment
under this Agreement at any time for "Cause" (as defined in Subsection 4.6(b)) by delivery of written notice to Executive specifying the Cause or Causes
relied upon for such termination. Any notice of termination given pursuant to this Subsection 4.2(a) shall effect termination as of the date specified in such notice or, in the event no such date is
specified, two business days after written notice is given to Executive. 

        (b)    Without Cause.    The Company may terminate Executive's
employment under this Agreement at any time and for any reason by delivery of written notice of such termination to Executive. Any notice of termination given pursuant to this Subsection 4.2(b) shall
effect termination as of the date specified in such notice or, in the event no such date is specified, two weeks after written notice is given to Executive. 

        4.3    Termination by Executive.    Executive may terminate
Executive's employment with the Company at any time. 

        4.4    Compensation upon Termination.    

        (a)    Death or Complete Disability.    If Executive's employment by
the Company is terminated by Executive's death or Complete Disability, the Company shall pay to Executive's heirs or Executive, as applicable, Executive's base salary and accrued and unused vacation
benefits earned through the date of termination at the rate in effect at the time of such termination, less standard deductions and withholdings, and the Company shall thereafter have no further
obligations to Executive and/or Executive's heirs under this Agreement. 

        (b)    With Cause.    If Executive's employment is terminated by the
Company for Cause, the Company shall pay Executive's base salary and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of such termination,
less standard deductions and withholdings, and the Company shall thereafter have no further obligations to Executive under this Agreement. 

        (c)    Without Cause.    If the Company terminates Executive's
employment without Cause, the Company shall pay Executive's base salary and accrued and unused vacation earned through the date of termination at the rate in effect at the time of such termination,
less standard deductions and withholdings. In addition, subject to the limitations set forth in Subsection 4.5(d) and upon Executive's furnishing to the Company an effective release and 

3

 

waiver
of claims, in substantially the form attached hereto as EXHIBIT A (the "Release and
Waiver"), Executive also shall be entitled to: 

            i.  The equivalent of Executive's annual base salary in effect at the time of termination for a period of 12 months
(the "Severance Period"), less standard deductions and withholdings, to be paid over a period of 12 months after the date of termination pursuant
to the Company's standard payroll practices; 

           ii.  In the event Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), the Company shall reimburse Executive for the same portion of Executive's COBRA health insurance premium that it paid during
Executive's employment up until the earlier of either (i) the last day of the Severance Period or (ii) the date on which Executive begins full-time employment with another
company, organization or business entity; and 

         iii.  The accelerated vesting of the portion of any outstanding option to purchase Common Stock held by Executive on the date
of termination that would have otherwise vested during the Severance Period, so
that each such portion is vested and exercisable as of the date of termination to the extent such portion would otherwise become vested and exercisable as of the end of the Severance Period. 

        (d)    Termination of Obligations.    Notwithstanding any provisions
in this Agreement to the contrary, including any provisions contained in this Subsection 4.5, the Company's obligations, and Executive's rights, pursuant to Subsection 4.5(c) shall cease and be
rendered a nullity immediately should Executive violate any provision of Section 2 or Section 5, or should Executive violate the terms and conditions of either Executive's Proprietary
Information and Inventions Agreement or Nondisclosure Agreement with the Company. 

        4.5    Definitions.    For purposes of this Agreement, the following
terms shall have the following meanings: 

        (a)    Complete Disability.    "Complete
Disability" shall mean the inability of Executive to perform Executive's duties under this Agreement because Executive has become permanently disabled within the meaning of any
policy of disability income insurance covering employees of the Company then in force. In the event the Company has no policy of disability income insurance covering employees of the Company in force
when Executive becomes disabled, the term "Complete Disability" shall mean the inability of Executive to perform Executive's duties under this Agreement
by reason of any incapacity, physical or mental, that the Board, based upon medical advice or an opinion provided by a licensed physician acceptable to the Board, determines to have incapacitated
Executive from satisfactorily performing all of Executive's usual services for the Company for a period of at least 120 days during any 12-month period (whether or not consecutive).
Based upon such medical advice or opinion, the determination of the Board shall be final and binding and the date such determination is made shall be the date of such Complete Disability for purposes
of this Agreement. 

        (b)    For
Cause.    "Cause" for the Company to terminate Executive's employment hereunder shall mean the occurrence of any of
the following events: 

          (i)  Executive's conviction of any felony or any crime involving fraud or dishonesty; 

         (ii)  Executive's participation (whether by affirmative act or omission) in a fraud, act of dishonesty or other act of
misconduct against the Company and/or an Affiliate; 

       (iii)  Conduct by Executive which, based upon a good faith and reasonable factual investigation by the Board, demonstrates
Executive's gross unfitness to serve; 

4

 

        (iv)  Executive's violation of any fiduciary duty or duty of loyalty owed to the Company and/or an Affiliate; 

         (v)  Executive's breach of any material term of any material contract between Executive and the Company and/or an Affiliate; 

        (vi)  Executive's violation of any material Company policy; and 

       (vii)  Executive's violation of state or federal law in connection with the performance of Executive's job. 

        The
determination that a termination is for Cause shall be made by the Board in its sole and exclusive judgment and discretion. 

        5.    CONFIDENTIAL AND PROPRIETARY INFORMATION.    Executive
recognizes that Executive's employment with the Company will involve contact with information of substantial value to the Company that is not generally known in the trade and that gives the Company an
advantage over its competitors who do not know or use it, including but not limited to, techniques, designs, drawings, processes, inventions know how, strategies, marketing, and/or advertising plans
or arrangements, developments, equipment, prototypes, sales, supplier, service provider, vendor, distributor and customer information, and business and financial information relating to the business,
products, services, practices and techniques of the Company (hereinafter referred to as "Confidential and Proprietary Information"). Executive will at
all times regard and preserve as confidential such Confidential and Proprietary Information obtained by Executive from whatever source and will not, either during Executive's employment with the
Company or thereafter, publish or disclose any part of such Confidential and Proprietary Information in any manner at any time, or use the same except on behalf of the Company, without the prior
written consent of the Company. 

        6.    ASSIGNMENT AND BINDING EFFECT.    Neither this Agreement nor any
rights or obligations hereunder shall be assignable by Executive. This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives. 

        7.    SURVIVAL.    Subsections 4.4(c) and 4.4(d) and Sections 5, 6, 7,
8, 9, 18 and 19 shall survive the termination of this Agreement. 

        8.    NOTICES.    All notices or demands of any kind required or
permitted to be given by the Company or Executive under this Agreement shall be given in writing and shall be personally delivered (and
receipted for) or faxed during normal business hours or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: 

If
to the Company: 

Favrille, Inc.

10421 Pacific Center Court

San Diego, CA 92121

Phone: (858) 526-8000

Fax: (858) 597-7040

Attn: Chief Financial Officer 

If
to Executive: 

12818
Stebick Court

San Diego, CA 92130 

Any
such written notice shall be deemed given on the earlier of the date on which such notice is personally delivered or three days after its deposit in the United States mail as specified above.
Either 

5

 

Party
may change its address for notices by giving notice to the other Party in the manner specified in this Section 8. 

        9.    CHOICE OF LAW.    This Agreement is made in San Diego,
California. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of California, excluding its conflicts of laws principles. 

        10.    INTEGRATION.    Except as provided in Executive's Proprietary
Information and Inventions Agreement and Nondisclosure Agreement with the Company, the Plan and the related Plan documents, this Agreement, including  EXHIBIT A hereto, contains the complete, final
and exclusive agreement of the Parties relating to the terms and conditions of Executive's
employment with the Company and the termination of Executive's employment, and supersedes all prior and contemporaneous oral and written employment agreements or arrangements between the Parties,
including, without limitation, that certain Employment Letter Agreement, dated February 1, 2002, between the Company and Executive. To the extent this Agreement conflicts with the Proprietary
Information and Inventions Agreement or the
Nondisclosure Agreement, the terms of such Proprietary Information and Inventions Agreement or Nondisclosure Agreement, respectively, shall control. 

        11.    AMENDMENT.    This Agreement cannot be amended or modified
except by a written agreement signed by Executive and the Company. 

        12.    WAIVER.    No term, covenant or condition of this Agreement or
any breach thereof shall be deemed waived, except with the written consent of the Party against whom the wavier is claimed, and any waiver or any such term, covenant, condition or breach shall not be
deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach. 

        13.    SEVERABILITY.    The finding by a court of competent
jurisdiction of the unenforceability, invalidity or illegality of any provision of this Agreement shall not render any other provision of this Agreement unenforceable, invalid or illegal. Such court
shall have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision that most accurately represents the Parties' intention with
respect to the invalid or unenforceable term or provision. 

        14.    INTERPRETATION; CONSTRUCTION.    The headings set forth in this
Agreement are for convenience of reference only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing the Company, but Executive has been
encouraged to consult with, and has had the opportunity to consult with, Executive's own independent counsel and tax advisors with respect to the terms of this Agreement. The Parties acknowledge that
each Party and its counsel have reviewed and revised, or had an opportunity to review and revise, this Agreement, and the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of this Agreement. 

        15.    REPRESENTATIONS AND WARRANTIES.    Executive represents and
warrants that Executive is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that Executive's
execution and performance of this Agreement will not violate or breach any other agreements between Executive and any other person or entity. 

        16.    COUNTERPARTS.    This Agreement may be executed in two
counterparts, each of which shall be deemed an original, both of which together shall constitute one and the same instrument. 

        17.    REFERENCES.    References herein to a  "Section" or a "Subsection" shall be to a Section or a Subsection, respectively, of this Agreement.
 

        18.    ARBITRATION.    To ensure the rapid and economical resolution
of disputes that may arise in connection with Executive's employment with the Company, the Parties agree that any and all disputes, 

6

 

claims,
or causes of action, in law or equity, arising from or relating to Executive's employment, or the termination of that employment, will be resolved, to the fullest extent permitted by law, by
final, binding and confidential arbitration in San Diego, California conducted by the Judicial Arbitration and Mediation Services/Endispute, Inc.
("JAMS"), or its successors, under the then current rules of JAMS for employment disputes; provided that
the arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue
a written arbitration decision including the arbitrator's essential findings and conclusions and a statement of the award. Each Party shall be entitled to all rights and remedies that such Party would
be entitled to pursue in a court of law. The Company shall pay all arbitration fees. Nothing in this Agreement is intended to prevent either Party from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration. 

        19.    TRADE SECRETS OF OTHERS.    It is the understanding of the
Parties that Executive shall not divulge to the Company and/or an Affiliate any confidential information or trade secrets belonging to others, including Executive's former employers, nor shall the
Company and/or an Affiliate seek to elicit from Executive any such information. Consistent with the foregoing, Executive shall not provide to the Company and/or an Affiliate, and the Company and/or an
Affiliate shall not request, any documents or copies of documents containing such information. 

        20.    ADVERTISING; WAIVER.    Executive agrees to permit the Company
and/or an Affiliate, and persons or other organizations authorized by the Company and/or an Affiliate, to use, publish and distribute advertising or sales promotional literature concerning the
products and/or services of the Company and/or an Affiliate, or the machinery and equipment used in the provision thereof, in which Executive's name and/or pictures of Executive taken in the course of
Executive's provision of services to the Company and/or an Affiliate, appear. Executive hereby waives and releases any claim or right Executive may otherwise have arising out of such use, publication
or distribution. 

7

 

        IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. 

	FAVRILLE, INC.	 	 
	

By:	
 	

/s/  TAMARA SEYMOUR      
	
 	

 
	Name:	 	Tamara Seymour
	 	 
	Its:	 	CFO & VP Finance & Admin
	 	 
	

Dated:	
 	

January 6, 2005
	
 	

 
	
EXECUTIVE:	
 	

 
	

/s/  JOHN P. LONGENECKER      
John P. Longenecker, Ph.D.	
 	

 
	

Dated:	
 	

January 6, 2005
	
 	

 

8

   EXHIBIT A  

 RELEASE AND WAIVER OF CLAIMS  

        In consideration of the payments and other benefits set forth in Section 4 of the Employment Agreement dated January 6, 2005, to which this form is
attached, I, John P. Longenecker, Ph.D., hereby furnish FAVRILLE, INC., a Delaware corporation (the  "Company"), with the following release and
waiver ("Release and Waiver").
 

        In
exchange for the consideration provided to me by the Employment Agreement that I am not otherwise entitled to receive, I hereby generally and completely release the Company and its
directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, Affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Release and Waiver. This
general release includes, but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (2) all
claims related to my compensation or benefits from the Company, including, but not limited to, salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits,
stock, stock options, or any other ownership interests in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair
dealing; (4) all tort claims, including, but not limited to, claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state,
and local statutory claims, including, but not limited to, claims for discrimination, harassment, retaliation, attorneys' fees, or other claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) ("ADEA"), and the
California Fair Employment and Housing Act (as amended). 

        I
also acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: "A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the
debtor." I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to any claims I may
have against the Company. 

        I
acknowledge that, among other rights, I am waiving and releasing any rights I may have under ADEA, that this Release and Waiver is knowing and voluntary, and that the consideration
given for this Release and Waiver is in addition to anything of value to which I was already entitled as an executive of the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the release and waiver granted herein does not relate to claims under the ADEA which may arise after this Release and Waiver is executed;
(b) I have the right to consult with an attorney prior to executing this Release and Waiver (although I may choose voluntarily not to do so); and (c) I have twenty-one
(21) days from the date of termination of my employment with the Company in which to consider this Release and Waiver (although I may choose voluntarily to execute this Release and Waiver
earlier); (d) I have seven (7) days following the execution of this Release and Waiver to revoke my consent to this Release and Waiver; and (e) this Release and Waiver shall not
be effective until the seven (7) day revocation period has expired. 

        I
acknowledge my continuing obligations under my Proprietary Information and Inventions Agreement, a copy of which is attached hereto (the "Proprietary
Agreement"). Pursuant to the Proprietary Information and Inventions Agreement I understand that among other things, I must not use or disclose any confidential or proprietary
information of the Company and I must immediately return all Company property and documents (including all embodiments of proprietary information) and all copies thereof in my possession or control. I
understand and agree that my right to the 

1

 

severance
pay I am receiving in exchange for my agreement to the terms of this Release and Waiver is contingent upon my continued compliance with my Proprietary Information & Inventions
Agreement. 

        This
Release and Waiver and the Proprietary Agreement constitute the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to the
subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated herein. This Release and Waiver may only be modified by a writing signed by both me
and a duly authorized officer of the Company. 

	Date:	 	 	 	By:	 	 
	 	 	
	 	 	 	
 John P. Longenecker, Ph.D.

2

QuickLinks

EMPLOYMENT AGREEMENT BY AND BETWEEN FAVRILLE, INC. AND JOHN P. LONGENECKER, PH.D.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}]]