Document:

Exhibit 4.6

 

COMMON STOCK WARRANT

 

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144
UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION.

 

WARRANT TO PURCHASE SHARES OF COMMON STOCK

 

	
  Dated:

  	
    December 30,
  2005

  

 

THIS CERTIFIES THAT, for
value received, General Electric Capital Corporation, (“Holder”) is entitled to
subscribe for and purchase that number of shares as set forth in Section 1
of the fully paid and nonassessable Common Stock (the “Shares” or the “Common
Stock”) of FAVRILLE INC., a Delaware corporation (the “Company”), at the
Warrant Price (as hereinafter defined), subject to the provisions and upon the
terms and conditions hereinafter set forth. As used herein, the term “Common
Stock” shall mean the Company’s presently authorized Common Stock.

 

1.             Warrant
Price and Number of Shares.  The
Warrant Price per share shall initially be deemed to be the average of the
closing bid and asked prices of the Common Stock over the twenty (20) trading
days immediately prior to the Closing Date, subject to adjustment as provided
in Section 7 below. The Closing Date shall be deemed to be the actual “as
of date” of the December 2005 Amendment between Holder and the Company. The
Number of Shares shall equal Two Hundred Thousand Dollars ($200,000) divided by
the Warrant Price per share.

 

2.             Conditions
to Exercise.  The purchase right
represented by this Warrant may be exercised at any time, or from time to
time, in whole or in part during the term commencing on the date hereof
and ending on 5:00 P.M. Eastern Standard time on the fifth (5th)
annual anniversary of this Warrant.

 

3.             Method
of Exercise; Payment; Issuance of Shares; Issuance of New Warrant.

 

(a)           Cash
Exercise. Subject to Section 2 hereof, the purchase right represented
by this Warrant may be exercised by the Holder hereof, in whole or in
part, by the surrender of this Warrant (with a duly executed Notice of Exercise
in the form attached hereto) at the principal office of the Company (as
set forth in Section 19 below) and by payment to the Company, by check, of
an amount equal to the then applicable Warrant Price per share multiplied by
the number of shares then being purchased. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be in the name of, and delivered to, the Holder hereof, or as
such Holder may direct (subject to the terms of transfer contained herein
and upon payment by such Holder hereof of any applicable transfer taxes). Such
delivery shall be made within 10 days after exercise of the Warrant and at the
Company’s expense and, unless this Warrant has been fully exercised or expired,
a new Warrant having terms and conditions substantially identical to this
Warrant and representing the portion of the Shares, if any, with respect to
which this Warrant shall not have been exercised, shall also be issued to the
Holder hereof within 10 days after exercise of the Warrant.

 

(b)           Net
Issue Exercise. In lieu of exercising this Warrant pursuant to Section 3(a),
Holder may elect to receive shares equal to the value of this Warrant (or
of any portion thereof remaining unexercised) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to Holder the number of shares of the
Company’s Common Stock computed using the following formula:

 

X = Y (A-B)

A

 

1

 

Where X = the number of shares of Common Stock to be
issued to Holder.

 

Y = the number of shares of Common Stock purchasable
under this Warrant (at the date of such calculation).

 

A = the Fair Market Value of one share of the Company’s
Common Stock (at the date of such calculation).

 

B = Warrant Price per share (as adjusted to the date
of such calculation).

 

(c)           Fair
Market Value. For purposes of this Section 3, Fair Market Value of one
share of the Company’s Common Stock shall mean:

 

(i)            If
the Common Stock is traded on Nasdaq or Over-The-Counter or on an exchange, the
per share Fair Market Value for the Common Stock will be the average of the
closing bid and asked prices of the Common Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Western Edition
of The Wall Street Journal for the ten (10) trading days prior to the date
of determination of Fair Market Value; or

 

(ii)           In
any other instance, the per share Fair Market Value for the Common Stock shall
be as determined in good faith by the Company’s Board of Directors unless
Holder elects to have such fair market value determined by an appraiser, which
election must be made by Holder within ten (10) business days of the date
the Company notifies Holder of the fair market value as determined by its Board
of Directors. In the event of such an appraisal, the cost thereof shall be
borne by the Holder unless such appraisal results in a fair market value in
excess of 115% of that determined by the Company’s Board of Directors, in which
event the Company shall bear the cost of such appraisal.

 

In the event of 3(c)(ii) above, the Company’s
Board of Directors shall prepare a certificate, to be signed by an authorized
Officer of the Company, setting forth in reasonable detail the basis for and
method of determination of the per share Fair Market Value of the Common Stock.
The Board will also certify to the Holder that this per share Fair Market Value
will be applicable to all holders of the Company’s Common Stock that require a
fair market value determination as of the same date as Holder.

 

(d)           Automatic
Exercise. To the extent this Warrant is not previously exercised, it shall
be automatically exercised in accordance with Sections 3(b) and 3(c) hereof
(even if not surrendered) immediately before its expiration.

 

4.             Representations
and Warranties of Holder and Restrictions on Transfer Imposed by the Securities
Act of 1933.

 

(a)           Representations
and Warranties by Holder. The Holder represents and warrants to the Company
with respect to this purchase as follows:

 

(i)            The
Holder has substantial experience in evaluating and investing in private
placement transactions of securities of companies similar to the Company so
that the Holder is capable of evaluating the merits and risks of its investment
in the Company and has the capacity to protect its interests. The Holder is an “accredited
investor” as that term is defined in Rule 501 promulgated under the
Securities Act of 1933, as amended (the “Act”).

 

2

 

(ii)           The Holder
is acquiring the Warrant and the Shares of Common Stock issuable upon exercise
of the Warrant (collectively the “Securities”) for investment for its own
account and not with a view to, or for resale in connection with, any
distribution thereof. The Holder understands that the Securities have not been
registered under the Act by reason of a specific exemption from the
registration provisions of the Act, which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein. In this
connection, the Holder understands that, in the view of the Securities and
Exchange Commission (the “SEC”), the statutory basis for such exemption may be
unavailable if this representation was predicated solely upon a present
intention to hold the Securities for the minimum capital gains period specified
under tax statutes, for a deferred sale, for or until an increase or decrease
in the market price of the Securities or for a period of one year or any other
fixed period in the future.

 

(iii)          The
Holder acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration is
available. The Holder is aware of the provisions of Rule 144 promulgated
under the Act (“Rule 144”) which permits limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions, including, in case the securities have been held for more than one
but less than two years, the existence of a public market for the shares, the
availability of certain public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through a “broker’s transaction” or in a
transaction directly with a “market maker” (as provided by Rule 144(f))
and the number of shares or other securities being sold during any three-month
period not exceeding specified limitations.

 

(iv)          The Holder
further understands that at the time the Holder wishes to sell the Securities
there may be no public market upon which such a sale may be effected,
and that even if such a public market exists, the Company may not be
satisfying the current public information requirements of Rule 144, and
that in such event, the Holder may be precluded from selling the
Securities under Rule 144 unless a) a one-year minimum holding period has
been satisfied and b) the Holder was not at the time of the sale nor at any
time during the three-month period prior to such sale an affiliate of the
Company.

 

(v)           The Holder
has had an opportunity to discuss the Company’s business, management and financial
affairs with its management and an opportunity to review the Company’s
facilities. The Holder understands that such discussions, as well as the
written information issued by the Company, were intended to describe the
aspects of the Company’s business and prospects which it believes to be
material but were not necessarily a thorough or exhaustive description.

 

(vi)          This
Warrant and the Shares issuable upon exercise of this Warrant (and the
securities issuable, directly or indirectly, upon conversion of the Shares, if
any) may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor
and the transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, as reasonably requested by the Company) and the transferee agrees to
be bound by all of the terms and conditions of this Warrant. The Company shall
not require Holder to provide an opinion of counsel if the transfer is to any
other affiliate of Holder. Additionally, the Company shall also not require an
opinion of counsel if there is no material question as to the availability of Rule 144,
including without limitation, the availability of current information as
referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and
(e) in reasonable detail, the selling broker represents that it has
complied with Rule 144(f), and the Company is provided with a copy of
Holder’s notice of proposed sale.

 

3

 

(b)           Legends.
Each certificate representing the Securities shall be endorsed with the
following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A “NO ACTION”
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE
SECURITIES AND EXCHANGE COMMISSION, OR (IF REASONABLY REQUIRED BY THE COMPANY)
AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH
TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

The Company need not enter into its stock register a
transfer of Securities unless the conditions specified in the foregoing legend
are satisfied. The Company may also instruct its transfer agent not to
register the transfer of any of the Shares unless the conditions specified in
the foregoing legend are satisfied.

 

(c)           Removal
of Legend and Transfer Restrictions. The legend relating to the Act
endorsed on a certificate pursuant to paragraph 4(b) of this Warrant and
the stop transfer instructions with respect to the Securities represented by
such certificate shall be removed and the Company shall issue a certificate
without such legend to the Holder of the Securities if (i) the Securities
are registered under the Act and a prospectus meeting the requirements of Section 10
of the Act is available or (ii) the Holder provides to the Company an
opinion of counsel for the Holder reasonably satisfactory to the Company, or a
no-action letter or interpretive opinion of the staff of the SEC reasonably
satisfactory to the Company, to the effect that public sale, transfer or
assignment of the Securities may be made without registration and without
compliance with any restriction such as Rule 144.

 

5.             Condition
of Transfer or Exercise of Warrant. It shall be a condition to any transfer
or exercise of this Warrant that at the time of such transfer or exercise, the
Holder shall provide the Company with a representation in writing that the
Holder or transferee is acquiring this Warrant and the shares of Common Stock
to be issued upon exercise, for investment purposes only and not with a view to
any sale or distribution, or will provide the Company with a statement of
pertinent facts covering any proposed distribution. As a further condition to
any transfer of this Warrant or any or all of the shares of Common Stock
issuable upon exercise of this Warrant, other than a transfer registered under
the Act, the Company must have received a legal opinion, in form and
substance satisfactory to the Company and its counsel, reciting the pertinent
circumstances surrounding the proposed transfer and stating that such transfer
is exempt from the registration and prospectus delivery requirements of the Act.
Each certificate evidencing the shares issued upon exercise of the Warrant or
upon any transfer of the shares (other than a transfer registered under the Act
or any subsequent transfer of shares so registered) shall, at the Company’s
option, contain a legend in form and substance satisfactory to the Company
and its counsel, restricting the transfer of the shares to sales or other
dispositions exempt from the requirements of the Act.

 

As
further condition to each transfer, the Holder shall surrender this Warrant to
the Company and the transferee shall receive and accept a Warrant, of like
tenor and date, executed by the Company.

 

6.             Stock
Fully Paid; Reservation of Shares.  All Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for issuance upon exercise of the purchase
rights evidenced by this Warrant, a sufficient number of shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.

 

7.             Adjustment
for Certain Events.  In the event of
changes in the outstanding Common Stock by reason of stock dividends,
split-ups, recapitalizations, reclassifications, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations,
liquidations, or the like, the number and class of shares available under
the

 

4

 

Warrant in the aggregate
and the Warrant Price shall be correspondingly adjusted, as appropriate, by the
Board of Directors of the Company. The adjustment shall be such as will give
the Holder of this Warrant upon exercise for the same aggregate Warrant Price
the total number, class and kind of shares as it would have owned had the
Warrant been exercised prior to the event and had it continued to hold such
shares until after the event requiring adjustment.

 

8.             Notice
of Adjustments.  Whenever any Warrant
Price shall be adjusted pursuant to Section 7 hereof, the Company shall
prepare a certificate signed by its chief financial officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Warrant
Price and number of shares issuable upon exercise of the Warrant after giving
effect to such adjustment, and shall cause copies of such certificate to be
mailed (by certified or registered mail, return receipt required, postage
prepaid) within thirty (30) days of such adjustment to the Holder of this
Warrant as set forth in Section 19 hereof.

 

9.             Intentionally
omitted.

 

10.           Transferability
of Warrant. This Warrant is transferable on the books of the Company at its
principal office by the registered Holder hereof upon surrender of this Warrant
properly endorsed, subject to compliance with Section 5 and applicable
federal and state securities laws. The Company shall issue and deliver to the
transferee a new Warrant representing the Warrant so transferred. Upon any
partial transfer, the Company will issue and deliver to Holder a new Warrant
with respect to the Warrant not so transferred.

 

11.           Intentionally
omitted.

 

12.           No
Fractional Shares.  No fractional
share of Common Stock will be issued in connection with any exercise hereunder,
but in lieu of such fractional share the Company shall make a cash payment
therefor upon the basis of the Warrant Price then in effect.

 

13.           Charges,
Taxes and Expenses. Issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder
for any United States or state of the United States documentary stamp tax or
other incidental expense with respect to the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder.

 

14.           No
Shareholder Rights Until Exercise. This Warrant does not entitle the Holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.

 

15.           Registry of Warrant.
The Company shall maintain a registry showing the name and address of the
registered Holder of this Warrant. This Warrant may be surrendered for
exchange or exercise, in accordance with its terms, at such office or agency of
the Company, and the Company and Holder shall be entitled to rely in all
respects, prior to written notice to the contrary, upon such registry.

 

16.           Loss,
Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft, or destruction, of
indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new
Warrant, having terms and conditions substantially identical to this Warrant,
in lieu hereof.

 

17.           Miscellaneous.

 

(a)           Issue
Date.  The provisions of this Warrant
shall be construed and shall be given effect in all respect as if it had been
issued and delivered by the Company on the date hereof.

 

(b)           Successors.
 This Warrant shall be binding upon any
successors or assigns of the Company.

 

(c)           Governing
Law.  This Warrant shall be governed
by and construed in accordance with the laws of the State of Connecticut.

 

5

 

(d)           Headings.
 The headings used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.

 

(e)           Saturdays,
Sundays, Holidays.  If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday or a Sunday or shall be a legal
holiday in the State of California, then such action may be taken or such
right may be exercised on the next succeeding day not a legal holiday.

 

18.           No
Impairment. The Company shall not by any action including, without
limitation, amending its articles or certificate of incorporation or by-laws,
any reorganization, transfer of assets, consolidation, merger, share exchange
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of the
Warrant or impair the ability of the Holder(s) to realize upon the intended
economic value hereof, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate to protect the rights of the Holder(s) hereof against
impairment.

 

19.           Addresses.
Any notice required or permitted hereunder shall be in writing and shall be
mailed by overnight courier, registered or certified mail, return receipt
required, and postage pre-paid, or otherwise delivered by hand or by messenger,
addressed as set forth below, or at such other address as the Company or the
Holder hereof shall have furnished to the other party.

 

	
  If to the
  Company:

  	
   

  	
  Favrille, Inc.

  
	
   

  	
   

  	
  10421
  Pacific Center Court

  
	
   

  	
   

  	
  San Diego, CA
  92121

  
	
   

  	
   

  	
  Attn: Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
  If to the
  Holder:

  	
   

  	
  General Electric
  Capital Corporation

  
	
   

  	
   

  	
  83 Wooster
  Heights Road, 5th Floor

  
	
   

  	
   

  	
  Danbury, CT
  06810

  
	
   

  	
   

  	
  Attn: Senior
  Risk Officer

  

 

20.           Modification
and Waiver. The Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder of the Warrant.

 

6

 

IN WITNESS WHEREOF, FAVRILLE INC., has caused this Warrant to be
executed by an officer thereunto duly authorized.

 

Dated as of December 30,
2005.

 

	
  FAVRILLE INC.

  
	
   

  
	
  By:

  	
    /s/
  Tamara A. Seymour

  
	
   

  	
   

  
	
  Name:

  	
    Tamara
  A. Seymour

  
	
   

  	
   

  
	
  Title:

  	
    CFO

  

 

7

 

NOTICE OF EXERCISE

 

	
  TO:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

1.             The
undersigned Warrantholder (“Holder”) elects to acquire shares of the Common
Stock (the “Common Stock”) of      , (the “Company”),
pursuant to the terms of the Stock Purchase Warrant dated December 30,
2005 (the “Warrant”).

 

2.             The
Holder exercises its rights under the Warrant as set forth below:

 

o            The
Holder elects to purchase        shares of Common
Stock as provided in Section 3(a), (c) and tenders herewith a check
in the amount of $      as payment of the
purchase price.

 

o            The
Holder elects to convert the purchase rights into shares of Common Stock as
provided in Section 3(b), (c) of the Warrant.

 

3.             The
Holder surrenders the Warrant with this Notice of Exercise.

 

4.             The
Holder represents that it is acquiring the aforesaid shares of Common Stock for
investment and not with a view to, or for resale in connection with,
distribution and that the Holder has no present intention of distributing or
reselling the shares unless in compliance with all applicable federal and state
securities laws.

 

5.             Please
issue a certificate representing the shares of the Common Stock in the name of
the Holder or in such other name as is specified below:

 

 

	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Taxpayer I.D.:

  	
   

  	
   

  

 

 

	
   

  	
  General Electric
  Capital Corporation

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

8Exhibit 4.7

 

COMMON STOCK WARRANT

 

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144
UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION.

 

WARRANT TO PURCHASE SHARES OF COMMON STOCK

 

	
  Dated:

  	
    December 30,
  2005

  

 

THIS CERTIFIES THAT, for
value received, Oxford Finance Corporation, (“Holder”) is entitled to subscribe
for and purchase that number of shares as set forth in Section 1 of the
fully paid and nonassessable Common Stock (the “Shares” or the “Common Stock”)
of FAVRILLE INC., a Delaware corporation (the “Company”), at the Warrant Price
(as hereinafter defined), subject to the provisions and upon the terms and
conditions hereinafter set forth. As used herein, the term “Common Stock” shall
mean the Company’s presently authorized Common Stock.

 

1.             Warrant
Price and Number of Shares.  The
Warrant Price per share shall initially be deemed to be the average of the closing
bid and asked prices of the Common Stock over the twenty (20) trading days
immediately prior to the Closing Date, subject to adjustment as provided in Section 7
below. The Closing Date shall be deemed to be the actual “as of date” of the December 2005
Amendment between Holder and the Company. The Number of Shares shall equal Two
Hundred Thousand Dollars ($200,000) divided by the Warrant Price per share.

 

2.             Conditions
to Exercise.  The purchase right
represented by this Warrant may be exercised at any time, or from time to
time, in whole or in part during the term commencing on the date hereof
and ending on 5:00 P.M. Eastern Standard time on the fifth (5th)
annual anniversary of this Warrant.

 

3.             Method
of Exercise; Payment; Issuance of Shares; Issuance of New Warrant.

 

(a)           Cash
Exercise. Subject to Section 2 hereof, the purchase right represented
by this Warrant may be exercised by the Holder hereof, in whole or in
part, by the surrender of this Warrant (with a duly executed Notice of Exercise
in the form attached hereto) at the principal office of the Company (as
set forth in Section 19 below) and by payment to the Company, by check, of
an amount equal to the then applicable Warrant Price per share multiplied by
the number of shares then being purchased. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be in the name of, and delivered to, the Holder hereof, or as
such Holder may direct (subject to the terms of transfer contained herein
and upon payment by such Holder hereof of any applicable transfer taxes). Such
delivery shall be made within 10 days after exercise of the Warrant and at the
Company’s expense and, unless this Warrant has been fully exercised or expired,
a new Warrant having terms and conditions substantially identical to this
Warrant and representing the portion of the Shares, if any, with respect to
which this Warrant shall not have been exercised, shall also be issued to the
Holder hereof within 10 days after exercise of the Warrant.

 

(b)           Net
Issue Exercise. In lieu of exercising this Warrant pursuant to Section 3(a),
Holder may elect to receive shares equal to the value of this Warrant (or
of any portion thereof remaining unexercised) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to Holder the number of shares of the
Company’s Common Stock computed using the following formula:

 

X = Y
(A-B)

A

 

1

 

Where
X = the number of shares of Common Stock to be issued to Holder.

 

Y =
the number of shares of Common Stock purchasable under this Warrant (at the
date of such calculation).

 

A =
the Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation).

 

B =
Warrant Price per share (as adjusted to the date of such calculation).

 

(c)           Fair
Market Value. For purposes of this Section 3, Fair Market Value of one
share of the Company’s Common Stock shall mean:

 

(i)            If
the Common Stock is traded on Nasdaq or Over-The-Counter or on an exchange, the
per share Fair Market Value for the Common Stock will be the average of the
closing bid and asked prices of the Common Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Western Edition
of The Wall Street Journal for the ten (10) trading days prior to the date
of determination of Fair Market Value; or

 

(ii)           In
any other instance, the per share Fair Market Value for the Common Stock shall
be as determined in good faith by the Company’s Board of Directors unless
Holder elects to have such fair market value determined by an appraiser, which
election must be made by Holder within ten (10) business days of the date
the Company notifies Holder of the fair market value as determined by its Board
of Directors. In the event of such an appraisal, the cost thereof shall be
borne by the Holder unless such appraisal results in a fair market value in
excess of 115% of that determined by the Company’s Board of Directors, in which
event the Company shall bear the cost of such appraisal.

 

In the event of 3(c)(ii) above, the Company’s
Board of Directors shall prepare a certificate, to be signed by an authorized
Officer of the Company, setting forth in reasonable detail the basis for and
method of determination of the per share Fair Market Value of the Common Stock.
The Board will also certify to the Holder that this per share Fair Market Value
will be applicable to all holders of the Company’s Common Stock that require a
fair market value determination as of the same date as Holder.

 

(d)           Automatic
Exercise. To the extent this Warrant is not previously exercised, it shall
be automatically exercised in accordance with Sections 3(b) and 3(c) hereof
(even if not surrendered) immediately before its expiration.

 

4.             Representations
and Warranties of Holder and Restrictions on Transfer Imposed by the Securities
Act of 1933.

 

(a)           Representations
and Warranties by Holder. The Holder represents and warrants to the Company
with respect to this purchase as follows:

 

(i)            The
Holder has substantial experience in evaluating and investing in private
placement transactions of securities of companies similar to the Company so
that the Holder is capable of evaluating the merits and risks of its investment
in the Company and has the capacity to protect its interests. The Holder is an “accredited
investor” as that term is defined in Rule 501 promulgated under the
Securities Act of 1933, as amended (the “Act”).

 

2

 

(ii)           The
Holder is acquiring the Warrant and the Shares of Common Stock issuable upon
exercise of the Warrant (collectively the “Securities”) for investment for its
own account and not with a view to, or for resale in connection with, any
distribution thereof. The Holder understands that the Securities have not been
registered under the Act by reason of a specific exemption from the registration
provisions of the Act, which depends upon, among other things, the bona fide
nature of the investment intent as expressed herein. In this connection, the
Holder understands that, in the view of the Securities and Exchange Commission
(the “SEC”), the statutory basis for such exemption may be unavailable if
this representation was predicated solely upon a present intention to hold the
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price
of the Securities or for a period of one year or any other fixed period in the
future.

 

(iii)          The
Holder acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration is
available. The Holder is aware of the provisions of Rule 144 promulgated
under the Act (“Rule 144”) which permits limited resale of securities
purchased in a private placement subject to the satisfaction of certain conditions,
including, in case the securities have been held for more than one but less
than two years, the existence of a public market for the shares, the
availability of certain public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through a “broker’s transaction” or in a
transaction directly with a “market maker” (as provided by Rule 144(f))
and the number of shares or other securities being sold during any three-month
period not exceeding specified limitations.

 

(iv)          The
Holder further understands that at the time the Holder wishes to sell the
Securities there may be no public market upon which such a sale may be
effected, and that even if such a public market exists, the Company may not
be satisfying the current public information requirements of Rule 144, and
that in such event, the Holder may be precluded from selling the
Securities under Rule 144 unless a) a one-year minimum holding period has
been satisfied and b) the Holder was not at the time of the sale nor at any
time during the three-month period prior to such sale an affiliate of the
Company.

 

(v)           The
Holder has had an opportunity to discuss the Company’s business, management and
financial affairs with its management and an opportunity to review the Company’s
facilities. The Holder understands that such discussions, as well as the
written information issued by the Company, were intended to describe the
aspects of the Company’s business and prospects which it believes to be
material but were not necessarily a thorough or exhaustive description.

 

(vi)          This
Warrant and the Shares issuable upon exercise of this Warrant (and the
securities issuable, directly or indirectly, upon conversion of the Shares, if
any) may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor
and the transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, as reasonably requested by the Company) and the transferee agrees to
be bound by all of the terms and conditions of this Warrant. The Company shall
not require Holder to provide an opinion of counsel if the transfer is to any
other affiliate of Holder. Additionally, the Company shall also not require an
opinion of counsel if there is no material question as to the availability of Rule 144,
including without limitation, the availability of current information as
referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and
(e) in reasonable detail, the selling broker represents that it has
complied with Rule 144(f), and the Company is provided with a copy of
Holder’s notice of proposed sale.

 

3

 

(b)           Legends.
Each certificate representing the Securities shall be endorsed with the
following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A “NO ACTION”
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES
AND EXCHANGE COMMISSION, OR (IF REASONABLY REQUIRED BY THE COMPANY) AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS
EXEMPT FROM SUCH REGISTRATION.

 

The Company need not enter into its stock register a
transfer of Securities unless the conditions specified in the foregoing legend
are satisfied. The Company may also instruct its transfer agent not to
register the transfer of any of the Shares unless the conditions specified in
the foregoing legend are satisfied.

 

(c)           Removal
of Legend and Transfer Restrictions. The legend relating to the Act
endorsed on a certificate pursuant to paragraph 4(b) of this Warrant and
the stop transfer instructions with respect to the Securities represented by
such certificate shall be removed and the Company shall issue a certificate
without such legend to the Holder of the Securities if (i) the Securities
are registered under the Act and a prospectus meeting the requirements of Section 10
of the Act is available or (ii) the Holder provides to the Company an
opinion of counsel for the Holder reasonably satisfactory to the Company, or a
no-action letter or interpretive opinion of the staff of the SEC reasonably
satisfactory to the Company, to the effect that public sale, transfer or assignment
of the Securities may be made without registration and without compliance
with any restriction such as Rule 144.

 

5.             Condition
of Transfer or Exercise of Warrant. It shall be a condition to any transfer
or exercise of this Warrant that at the time of such transfer or exercise, the
Holder shall provide the Company with a representation in writing that the
Holder or transferee is acquiring this Warrant and the shares of Common Stock
to be issued upon exercise, for investment purposes only and not with a view to
any sale or distribution, or will provide the Company with a statement of
pertinent facts covering any proposed distribution. As a further condition to
any transfer of this Warrant or any or all of the shares of Common Stock
issuable upon exercise of this Warrant, other than a transfer registered under
the Act, the Company must have received a legal opinion, in form and
substance satisfactory to the Company and its counsel, reciting the pertinent
circumstances surrounding the proposed transfer and stating that such transfer
is exempt from the registration and prospectus delivery requirements of the Act.
Each certificate evidencing the shares issued upon exercise of the Warrant or
upon any transfer of the shares (other than a transfer registered under the Act
or any subsequent transfer of shares so registered) shall, at the Company’s
option, contain a legend in form and substance satisfactory to the Company
and its counsel, restricting the transfer of the shares to sales or other
dispositions exempt from the requirements of the Act.

 

As
further condition to each transfer, the Holder shall surrender this Warrant to
the Company and the transferee shall receive and accept a Warrant, of like
tenor and date, executed by the Company.

 

6.             Stock
Fully Paid; Reservation of Shares.  All Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for issuance upon exercise of the purchase
rights evidenced by this Warrant, a sufficient number of shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.

 

7.             Adjustment
for Certain Events.  In the event of
changes in the outstanding Common Stock by reason of stock dividends,
split-ups, recapitalizations, reclassifications, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations,
liquidations, or the like, the number and class of shares available under
the Warrant in the aggregate and the Warrant Price shall be correspondingly
adjusted, as appropriate, by the Board of

 

4

 

Directors of the Company.
The adjustment shall be such as will give the Holder of this Warrant upon
exercise for the same aggregate Warrant Price the total number, class and
kind of shares as it would have owned had the Warrant been exercised prior to
the event and had it continued to hold such shares until after the event
requiring adjustment.

 

8.             Notice
of Adjustments.  Whenever any Warrant
Price shall be adjusted pursuant to Section 7 hereof, the Company shall
prepare a certificate signed by its chief financial officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Warrant
Price and number of shares issuable upon exercise of the Warrant after giving
effect to such adjustment, and shall cause copies of such certificate to be
mailed (by certified or registered mail, return receipt required, postage
prepaid) within thirty (30) days of such adjustment to the Holder of this
Warrant as set forth in Section 19 hereof.

 

9.             Intentionally
omitted.

 

10.           Transferability
of Warrant. This Warrant is transferable on the books of the Company at its
principal office by the registered Holder hereof upon surrender of this Warrant
properly endorsed, subject to compliance with Section 5 and applicable
federal and state securities laws. The Company shall issue and deliver to the
transferee a new Warrant representing the Warrant so transferred. Upon any
partial transfer, the Company will issue and deliver to Holder a new Warrant
with respect to the Warrant not so transferred.

 

11.           Intentionally
omitted.

 

12.           No
Fractional Shares.  No fractional
share of Common Stock will be issued in connection with any exercise hereunder,
but in lieu of such fractional share the Company shall make a cash payment
therefor upon the basis of the Warrant Price then in effect.

 

13.           Charges,
Taxes and Expenses. Issuance of certificates for shares of Common Stock upon
the exercise of this Warrant shall be made without charge to the Holder for any
United States or state of the United States documentary stamp tax or other
incidental expense with respect to the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder.

 

14.           No
Shareholder Rights Until Exercise. This Warrant does not entitle the Holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.

 

15.           Registry of Warrant.
The Company shall maintain a registry showing the name and address of the
registered Holder of this Warrant. This Warrant may be surrendered for
exchange or exercise, in accordance with its terms, at such office or agency of
the Company, and the Company and Holder shall be entitled to rely in all
respects, prior to written notice to the contrary, upon such registry.

 

16.           Loss,
Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft, or destruction, of
indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new
Warrant, having terms and conditions substantially identical to this Warrant,
in lieu hereof.

 

17.           Miscellaneous.

 

(a)           Issue
Date.  The provisions of this Warrant
shall be construed and shall be given effect in all respect as if it had been
issued and delivered by the Company on the date hereof.

 

(b)           Successors.
 This Warrant shall be binding upon any
successors or assigns of the Company.

 

(c)           Governing
Law.  This Warrant shall be governed
by and construed in accordance with the laws of the State of California.

 

5

 

(d)           Headings.
 The headings used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.

 

(e)           Saturdays,
Sundays, Holidays.  If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday or a Sunday or shall be a legal
holiday in the State of California, then such action may be taken or such
right may be exercised on the next succeeding day not a legal holiday.

 

18.           No
Impairment. The Company shall not by any action including, without
limitation, amending its articles or certificate of incorporation or by-laws,
any reorganization, transfer of assets, consolidation, merger, share exchange
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of the
Warrant or impair the ability of the Holder(s) to realize upon the intended
economic value hereof, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate to protect the rights of the Holder(s) hereof against
impairment.

 

19.           Addresses.
Any notice required or permitted hereunder shall be in writing and shall be
mailed by overnight courier, registered or certified mail, return receipt
required, and postage pre-paid, or otherwise delivered by hand or by messenger,
addressed as set forth below, or at such other address as the Company or the
Holder hereof shall have furnished to the other party.

 

	
  If to the
  Company:

  	
   

  	
  Favrille, Inc.

  
	
   

  	
   

  	
  10421
  Pacific Center Court

  
	
   

  	
   

  	
  San Diego, CA
  92121

  
	
   

  	
   

  	
  Attn: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
  If to the
  Holder:

  	
   

  	
  Oxford Finance
  Corporation

  
	
   

  	
   

  	
  133 N. Fairfax
  Street

  
	
   

  	
   

  	
  Alexandria, VA
  22314

  
	
   

  	
   

  	
  Attn: Chief
  Financial Officer

  

 

20.           Modification
and Waiver. The Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder of the Warrant.

 

6

 

IN WITNESS WHEREOF, FAVRILLE INC., has caused this Warrant to be
executed by an officer thereunto duly authorized.

 

Dated as of December 30,
2005.

 

	
  FAVRILLE INC.

  
	
   

  
	
  By:

  	
    /s/
  Tamara A. Seymour

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
    Tamara
  A. Seymour

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
    CFO

  	
   

  

 

7

 

NOTICE OF EXERCISE

 

	
  TO:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

1.             The
undersigned Warrantholder (“Holder”) elects to acquire shares of the Common
Stock (the “Common Stock”) of     , (the “Company”),
pursuant to the terms of the Stock Purchase Warrant dated December      ,
2005 (the “Warrant”).

 

2.             The
Holder exercises its rights under the Warrant as set forth below:

 

o            The
Holder elects to purchase        shares of Common
Stock as provided in Section 3(a), (c) and tenders herewith a check
in the amount of $      as payment of the purchase
price.

 

o            The
Holder elects to convert the purchase rights into shares of Common Stock as
provided in Section 3(b), (c) of the Warrant.

 

3.             The
Holder surrenders the Warrant with this Notice of Exercise.

 

4.             The
Holder represents that it is acquiring the aforesaid shares of Common Stock for
investment and not with a view to, or for resale in connection with,
distribution and that the Holder has no present intention of distributing or
reselling the shares unless in compliance with all applicable federal and state
securities laws.

 

5.             Please
issue a certificate representing the shares of the Common Stock in the name of
the Holder or in such other name as is specified below:

 

 

	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Taxpayer I.D.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
  Oxford Finance
  Corporation

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

8

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