Exhibit 10.1
 
SERIES D CONVERTIBLE PREFERRED
 
STOCK PURCHASE AGREEMENT

 
THIS SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement")
is made and entered into effective April 15, 2010 by and between CarePayment
Technologies, Inc. ("Seller"), and Aequitas CarePayment Founders Fund, LLC
("Purchaser").
 
RECITALS
 
A.           Seller has 1,200,000 shares of Series D Convertible Preferred Stock
(the "Preferred Shares") authorized, of which 1,000,000 shares are issued and
outstanding.
 
B.           Purchaser wishes to buy, and Seller is willing to sell, 200,000
shares of the Preferred Shares pursuant to the terms of this Agreement.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties, covenants and agreements herein and for other good
and valuable consideration, the receipt and adequacy of which the parties hereby
acknowledge, the parties to this Agreement, intending to be legally bound
hereby, agree as follows:
 
Section 1.
Purchase and Sale.

 
 
1.1
Purchase and Sale of Preferred Stock; Warrants.

 
Subject to the terms and conditions of this Agreement, at the Closing (as
hereinafter defined) Purchaser agrees to purchase and Seller agrees to sell
200,000 Preferred Shares (the "Purchased Shares"), for a purchase price of
$10.00 per share resulting in an aggregate price of $2,000,000 (the "Purchase
Price").  In addition to the Purchased Shares, and for no additional
consideration other than the Purchase Price, Seller will also issue to Purchaser
a warrant (the "Warrant") to purchase up to 1,200,000 shares of the Company's
Class A Common Stock for an exercise price of $0.001 per share.  The Warrant
will expire five years from the date of issuance.
 
 
1.2
Payment of Purchase Price.

 
The Purchase Price shall be paid pursuant to the terms of a promissory note in
the form attached hereto as Exhibit A which provides for interest to accrue at
the rate of 5.0% per annum and payment in full on or before April 15, 2011 (the
“Note”).
 
 
 

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1.3
The Closing.

 
(a)           The closing of the purchase and sale of the Purchased Shares (the
"Closing") will take place on April 15, 2010 at the offices of Seller, unless
another date or place is agreed to by the parties.
 
(b)           At the Closing, Seller will deliver to Purchaser a certificate in
Purchaser's name representing the Purchased Shares, together with the fully
executed Warrant, against delivery to Seller of the Note executed by Purchaser.
 
Section 2.
Security.

 
 
2.1
Grant of Security Interest.

 
To secure the payment of the Purchase Price, Purchaser agrees to grant a
security interest in the Purchased Shares to Seller pursuant to a security
agreement in form and substance satisfactory to Seller.
 
 
2.2
Pledge of Stock.

 
Purchaser agrees to pledge all of the Purchased Shares in the following manner:
 
(a)           Purchaser will deliver one or more stock certificates evidencing
the Preferred Shares (the “Pledged Stock”) to an escrow agent designated by
Seller (the “Escrow Agent”), together with an assignment separate from the
certificate which shall be executed by Purchaser assigning and transferring the
Pledged Stock to Seller.  The Escrow Agent shall hold the Pledged Stock and the
assignment separate from the certificate as a pledge for the benefit of
Seller.  Upon full payment of the Purchase Price and complete performance by
Purchaser under this Agreement and the Note, the Escrow Agent shall deliver the
stock certificate(s) and assignment separate from the certificate to Purchaser.
 
(b)           During the term of the pledge and so long as Purchaser is not in
default in the performance of this Agreement or any of the terms or conditions
provided for in this Agreement, Purchaser will be entitled to exercise all
ownership rights with respect to the Pledged Stock.
 
(c)           Purchaser agrees that it will take no action during the term of
this Agreement that would result in the imposition of a lien or security
interest in the Pledged Stock (other than the lien of a pledge in favor of
Seller), even if such lien or security interest is junior to the lien of Seller.
 
(d)           In the event of a default by Purchaser as provided in the Note,
Seller will give written notice to the Escrow Agent and to Purchaser of the
default, and if the default is not cured within ten (10) days after notice of
default, the Escrow Agent will deliver the stock certificate and assignment
separate from the certificate to Seller.  Upon default, Seller will have all the
rights of a secured party under the Oregon Uniform Commercial Code, including
the right to sell the Pledged Stock either at a private or public sale.  At any
such sale, Seller shall be free to purchase all or any part of the Pledged
Stock.  If the sale of the Pledged Stock, including expenses of sale, is not
sufficient to pay all amounts due from Purchaser to Seller, Purchaser shall pay
Seller any deficiency remaining.
 
 
 

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(e)           In the event of a stock split or stock dividend by Seller, or in
the event that Purchaser exercises any warrant to acquire stock of Seller,
Purchaser agrees to deposit any stock so received with the Escrow Agent to be
held under this pledge.
 
(f)           Purchaser acknowledges that the sale of the Pledged Stock by
Seller may be subject to certain securities laws, and Purchaser agrees that
Seller may take any action necessary in order to comply with such laws,
including any and all restrictions with respect to the time, place, manner and
conditions of sale.  Purchaser further acknowledges that one of the expenses of
sale shall consist of any fees incurred in connection with compliance with such
laws.
 
(g)           The cost of any charges by the Escrow Agent for serving as the
escrow agent under this Agreement shall be borne by Purchaser.
 
(h)           In the event that a disagreement arises with respect to payment
for and transfer of the Pledged Stock, or for any other reason, the Escrow Agent
shall be entitled to resign as escrow agent under this Agreement, and Seller may
designate another person to serve as escrow agent while the matter is being
resolved, either through negotiation or litigation.  Should a new escrow agent
be appointed, the parties agree to share the cost of the same equally.
 
(i)           The parties agree to hold the Escrow Agent harmless from any and
all acts and any and all expenses not associated by its own negligence or bad
faith.  Should any dispute arise under this Agreement with respect to the duties
and obligations of the Escrow Agent, the Escrow Agent may be entitled to
commence appropriate proceedings for relief in the Circuit Court of Multnomah
County of the State of Oregon, and the parties agree to pay all legal and
related expenses incurred by the Escrow Agent in that event.
 
Section 3.
Representations and Warranties of Seller.

 
Seller hereby represents and warrants to Purchaser that, on the Closing of the
purchase of the Purchased Shares hereunder:
 
3.1                 Organization and Corporate Power.
 
Seller is a corporation duly organized and validly existing under the laws of
the State of Oregon.  Seller has all required corporate power and authority to
own its property, to carry on its business as presently conducted or
contemplated to be conducted and to carry out the transactions contemplated
hereby.
 
3.2                 Authorization.  This Agreement, the Warrant Agreement dated
as of the date hereof initially covering 1,200,000 shares of the Class A Common
Stock, no par value of Seller, (together, the "Transaction Documents") have been
or will prior to Closing be duly executed and delivered by Seller and are or
will prior to Closing be the legal, valid and binding obligations of Seller,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of
general application affecting enforcement of creditors' rights generally.  The
execution, delivery and performance of each of the Transaction Documents has
been or prior to Closing will be duly authorized by all necessary corporate
action of Seller.
 
 
 

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3.3                 Capitalization.
 
The authorized capital stock of Seller as of the date hereof consists of (i)
75,000,000 shares of Common Stock, no par value, of which 65,000,000 shares are
designated as Class A Common Stock, of which 1,390,616 are issued and
outstanding, and 10,000,000 shares are designated as Class B Common Stock, of
which 6,510,092 are issued and outstanding; and (ii) 10,000,000 shares of
Preferred Stock, no par value, of which 1,200,000 shares have been designated
Series C Preferred Stock, 1,000,000 of which are issued and outstanding prior to
the Closing.  All outstanding capital stock is duly authorized, validly issued,
fully paid and non-assessable.    When issued in accordance with the terms of
this Agreement, the Purchased Shares will be duly authorized, validly issued and
outstanding, fully paid and nonassessable.
 
3.4                 Subsidiaries.
 
Except for CP Technologies, LLC, an Oregon limited liability company 99% owned
by Seller, and except for Moore Electronics, Inc., an Oregon corporation wholly
owned by Seller, Seller has no subsidiaries and does not own or control any
interest in any other corporation, association or business organization.
 
3.5                 Intellectual Property.
 
To Seller's Knowledge, Seller or its subsidiaries own a valid right, title,
interest or license in and to the intellectual property necessary for the
operation of its business, which includes, but is not limited to, all
copyrights, common law copyrights, trade names, trademarks, service marks, trade
secrets, technology, know-how, processes, or any other intangible property
rights ("Intellectual Property") of Seller or its subsidiaries.  There are no
claims pending or, to Seller's Knowledge, threatened against Seller regarding
any claim or infringement of any Intellectual Property belonging to any other
person, firm or corporation and Seller has not received any written notice or
other indication of any claim of any such infringement.  "Seller's Knowledge"
means the actual knowledge, after reasonable investigation, of Seller's
executive officers.
 
3.6                 Licenses and Permits.
 
Seller possesses all material licenses and permits necessary for the present
conduct of its business.  Each of such licenses and permits is in full force and
effect, and there are no pending or, to Seller's Knowledge, threatened claims or
proceedings challenging the validity of, or seeking to revoke or discontinue,
any license or permit of Seller.
 
3.7                 Compliance with Laws.
 
The business of Seller has been conducted in material compliance with all
applicable laws, statutes, ordinances, rules, regulations, orders and other
requirements of all national governmental authorities, and of all territories,
states, municipalities and other political subdivisions and agencies thereof,
having jurisdiction over it, except for violations that individually, or in the
aggregate, would have no material adverse effect on the consolidated business,
operations or financial condition of Seller.
 
 
 

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3.8                 Reservation of Underlying Shares.
 
The shares of Class A Common Stock issuable on conversion of the Purchased
Shares have been, or will be prior to Closing, duly and validly reserved for
issuance and, upon conversion of the Purchased Shares into shares of Class A
Common Stock in accordance with the Amendment, will be duly and validly issued,
fully paid and nonassessable.  When issued in accordance with the Warrant
Agreement, the shares of Class A Common Stock issuable upon exercise of the
Warrant Agreement will be duly authorized validly issued and outstanding, fully
paid and nonassessable.
 
3.9                 Litigation.
 
There is no claim, action, lawsuit, proceeding, complaint, charge or
investigation pending or, to Seller's Knowledge, threatened against Seller which
questions the validity of any of the Transaction Documents or the right of
Seller to enter into them or to consummate the transactions contemplated hereby
or thereby, or which might result, either individually or in the aggregate, in
any material adverse change in the consolidated business, assets, conditions,
operations or affairs of Seller, financial or otherwise, or any change in the
current equity ownership of Seller, nor to Seller's Knowledge is there any basis
for the foregoing.
 
Section 4.
Representations and Warranties of Purchaser.

 
Purchaser hereby represents and warrants to Seller that, on the Closing of the
purchase of the Purchased Shares hereunder:
 
 
4.1
Authorization.

 
All acts and conditions required by law on the part of Purchaser to authorize
the execution and delivery of this Agreement by Purchaser and the transactions
contemplated herein and the performance of all obligations of Purchaser
hereunder have been duly performed and obtained, and this Agreement constitutes
a valid and legally binding obligation of Purchaser, enforceable in accordance
with its terms, subject, as to the enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and to general equitable principles.
 
 
4.2
Investment Representations.

 
This Agreement is made with Purchaser upon the understanding, as a specific
representation to Seller by Purchaser, that:
 
(a)           None of the Purchased Shares, the Warrant, the shares of Class A
Common Stock issuable upon conversion of the Purchased Shares or the shares of
Class A Common Stock issuable upon exercise of the Warrant (collectively, the
"Securities") have been registered under the Act or applicable state securities
laws and cannot be sold, transferred or otherwise disposed of by Purchaser
unless they are subsequently registered under the Act and applicable state
securities laws or an exemption from such registration is available at the time
of the desired sale.  Therefore, Purchaser must bear the economic risk of an
investment in the Securities for an indefinite period. Purchaser will under no
circumstances attempt to assign or otherwise transfer all or any portion of the
Securities, except in accordance with federal and state securities laws and
except as would not bring the sale hereunder within the provisions of Section 5
of the Act.
 
 
 

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(b)           No state or federal agency or instrumentality has approved or
disapproved, reviewed any information with respect to, or made any finding or
determination as to the fairness of, the terms of this offering or the
investment in the Securities, nor has any state or federal agency or
instrumentality made any recommendation with respect to the purchase of or
investment in the Securities.
 
(c)           There is no present market for the Securities and Seller has no
obligation to register the Securities or to file the reports or make public the
information required under the Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or any other securities law, or any rules or
regulations promulgated thereunder, and accordingly, it will not be possible for
Purchaser to readily liquidate the investment in the Securities.
 
(d)           The Securitieswill be acquired for investment and not with a view
to the distribution of any part thereof, and Purchaser has no present intention
of selling, granting any participation in, or otherwise distributing the same in
a manner contrary to the Act or applicable state securities laws.
 
(e)           Purchaser has substantial knowledge and experience in financial
and business matters in general, and in investments in particular, and Purchaser
is capable of reading and understanding information about Seller and evaluating
the merits and risks of an investment in Seller and the merits and risks of the
acquisition of the Securities.
 
(f)           Purchaser is familiar with the nature of and risk attending
investments having the special characteristics of an equity investment in Seller
and has determined on the basis of its own familiarity and knowledge of Seller
and of such investments that the purchase of the the Securities is consistent
with its investment objectives and income prospects and is making such an
investment based on its own independent investigation.  Purchaser understands
that much of the customer, market and competition information contained in
information supplied by Seller is based upon Seller's knowledge and belief, and
may be based on limited independent investigation.  Purchaser further
understands that the future operating financial information provided by Seller
is for illustrative purposes only, and based upon certain hypothetical
assumptions and events over which Seller has only partial or no control.  In
addition, the assumptions made by Seller and used in its forecasts are
inherently arbitrary.  The selection of assumptions requires the exercise of
judgment and is subject to uncertainty due to the effects that operational,
economic, legislative or other changes may have on future events.  Seller
considers it highly unlikely that each of these events will occur in the manner
and at the time anticipated in its financial forecasts.  To the extent that the
occurrence or timing of actual events do not match Seller's assumptions,
Seller's actual operating and financial results will likely vary substantially
from its current financial projections.  PURCHASER UNDERSTANDS THE RISKS AND
SPECIAL CONSIDERATIONS RELATING TO AN INVESTMENT IN SELLER, INCLUDING, WITHOUT
LIMITATION, THOSE IDENTIFIED ON THE ATTACHED EXHIBIT B.
 
 
 

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(g)           Purchase of the Securities involves a degree of risk of loss by
Purchaser of the entire investment and there is no assurance, and Purchaser has
received no assurance, of any income from the investment in the Securities.
 
(h)           Purchaser has received all information regarding Seller which
Purchaser has requested, and has had the opportunity to examine and has examined
all sources of information which Purchaser has deemed necessary or appropriate
to reach an informed investment decision concerning the purchase of the
Securities, including, without limitation, the physical facilities, financial
statements, books, records and files of Seller, and has questioned the
directors, shareholders and officers of Seller to the extent that Purchaser has
deemed necessary or appropriate so as to receive answers and to verify the
accuracy of the information obtained in the above examination.
 
(i)           Purchaser has the capability to determine what documents and
information are necessary for Purchaser to adequately evaluate Seller and this
investment and Purchaser also has the capability to request, review and evaluate
the necessary information.
 
(j)           Purchaser is an "accredited investor" as defined in Rule 501 of
Regulation D promulgated under the Act as an entity in which all of the equity
owners are accredited investors as defined in Rule 501(a) of Regulation D.
 
(k)           Each certificate representing the Securities shall be endorsed
with the following legends together with any other legends required by law:
 
"The shares represented by this certificate have not been registered under the
Securities Act of 1933.  The shares may not be sold or offered for sale in the
absence of (a) an effective registration statement for the shares under such
Act, or (b) satisfactory assurances to the Company that registration under such
Act is not required with respect to such sale or offer."
 
Section 5.
Default and Remedies.

 
 
5.1
Events of Default.

 
Purchaser shall be in default upon the occurrence of an Event of Default as set
forth in the Note.
 
 
5.2
Remedies.

 
 
Upon a default by Purchaser, Seller shall have the following cumulative
remedies:

 
(a)           To declare the unpaid balance of principal and interest due under
this Agreement and the Note to be immediately due and payable.
 
(b)           To exercise all rights and remedies granted to Seller by the
Uniform Commercial Code of Oregon.
 
 
 

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(c)           To exercise any other remedy available in law or equity.
 
 
5.3
Specific Performance.

 
Seller and Purchaser shall have the right to require specific performance by the
other of the covenants agreed to in this Agreement, and shall be entitled to a
decree to such effect from any court having jurisdiction.
 
Section 6.
Use of Proceeds.

 
Proceeds from the sale of the Shares to the Investor in this Offering will be
used by Seller for general working capital.
 
Section 7.
Miscellaneous.

 
 
7.1
Incorporation by Reference.

 
All exhibits appended to this Agreement are incorporated by reference and made a
part of this Agreement.
 
 
7.2
Survival.

 
The warranties, representations and covenants of Seller and Purchaser contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing.
 
 
7.3
Successors and Assigns.

 
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective permitted successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
 
 
7.4
Governing Law.

 
This Agreement shall be governed by and construed under the laws of the State of
Oregon as applied to agreements entered into and to be performed entirely within
Oregon by persons domiciled in Oregon.
 
 
7.5
Assignment.

 
No party hereto may assign this Agreement in whole or in part.
 
 
7.6
Severability.

 
Any provision of this Agreement that is deemed invalid or unenforceable shall be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the remaining provisions of this
Agreement.  Furthermore, in lieu of each such invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may
be possible and be valid and enforceable.
 
 
 

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7.7
Notices.

 
All notices, requests, consents and demands will be in writing and may be
personally delivered (effective upon receipt), mailed, postage prepaid
(effective three business days after dispatch) or sent via a reputable overnight
courier service (effective the following business day), to:
 
(a)           Seller, at:
CarePayment Technologies, Inc.
5300 Meadows Road, Suite 400
Lake Oswego, Oregon 97035
Attn:  President
 
With a copy to:
Tonkon Torp LLP
888 SW Fifth Ave.
Portland, Oregon 97204
Attn:  Kurt W. Ruttum
 
(b)           Purchaser, at:
Aequitas CarePayment Founders Fund, LLC
5300 Meadows Road, Suite 400
Lake Oswego, Oregon 97035
Attn:  Legal Department
 
(c)           Any other holder of the Purchased Shares or the Securities at such
address or facsimile number shown in Seller's records, or, until any such holder
so furnishes an address or facsimile number to Seller, then to and at the
address of the last holder of such Purchased Shares or Securities for which
Seller has contact information in its records.
 
 
7.8
Entire Agreement.

 
This Agreement constitutes the entire agreement of the parties relating to the
subject matter hereof.  There are no promises, terms, conditions, obligations,
or warranties other than those contained in this Agreement.  This Agreement
supersedes all prior communications, representations, or agreements, verbal or
written, among the parties relating to the subject matter hereof.
 
 
7.9
Additional Documents.

 
The parties agree to execute and deliver any and all instruments or documents
and to take any further action which may be or become necessary or appropriate
to give effect to the terms of this Agreement.
 
 
 

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7.10
Waiver.

 
The waiver by Seller of any breach or default of Purchaser under this Agreement
or the Note or the failure to exercise any right, power or remedy occurring to
Seller shall not operate or be construed as a waiver of any subsequent breach or
default by Purchaser.
 
 
7.11
Attorney Fees.

 
In the event arbitration, suit or action is instituted to enforce or determine
the parties’ rights or duties in connection with this Agreement, the prevailing
party shall recover from the losing party all costs and expenses, including
reasonable attorney fees, incurred in such proceedings, including any appellate
or bankruptcy proceedings.
 
 
7.12
Counterparts and Facsimiles.

 
This Agreement may be executed in two counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  Facsimile signatures or signatures delivered by electronic means
shall be considered original signatures for purposes of this Agreement.
 
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
 

 
SELLER:
 
CAREPAYMENT TECHNOLOGIES, INC.
         
 
By:
/s/ James T.  Quist       James T. Quist, President and Chief Executive Officer
                 

 
PURCHASER:
 
AEQUITAS CAREPAYMENT FOUNDERS FUND, LLC
By: Aequitas Investment Management, LLC, Manager
         
 
By:
/s/ Robert J.  Jesenik       Robert J.  Jesenik, President       Title         
 

 
 

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EXIBIT A
 
PROMISSORY NOTE
 
Attached.
 

 
 

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EXHIBIT B
Risk Factors and Special Considerations

An investment in Seller involves a high degree of risk.  In addition to the
other information contained in this Agreement, you should carefully consider the
following risks before making an investment decision.  You could lose all or
part of your investment due to our financial condition or any of these
risks.  The risks and uncertainties described below are not the only ones faced
by Seller.  Additional risks and uncertainties not presently known to Seller, or
that Seller currently thinks are immaterial, may also impair Seller's business
operations.

Risks Incorporated by Reference

The risk factors identified in Seller's Annual Report on Form 10-K for the year
ended December 31, 2009, and in all reports filed with the SEC subsequent to the
filing of such Annual Report, are hereby incorporated herein by this reference.

Offering Price and Conversion Ratio

The price per share and conversion ratio of the Series D Preferred Stock was set
by Seller.  Although set in good faith, the price and/or conversion ratio may
not bear any direct relationship to the assets, results of operations or other
objective criteria of value applicable to Seller.

Illiquid Investment
 
The Purchased Shares and the Securities have not been registered under the Act
and are being offered in reliance upon an exemption from registration under the
Act and applicable state securities laws.  The Purchased Shares and the
Securities can only be transferred or resold in a transaction under or exempt
from the Act and applicable state securities laws.  There is no public market
for the offered Series D Preferred Stock, and there is no guarantee that any
public market for these securities will develop.  For these reasons, Purchaser
may not be able to liquidate its investment in Seller in the event of an
emergency or for any other reason.  Consequently, the purchase of Series D
Preferred Stock, and the acquisition of Class A Common Stock upon the conversion
of Series D Preferred Stock and exercise of the Warrant Agreement, should be
considered only as a long-term investment.