EXHIBIT
10.1


 


NOTE PURCHASE AGREEMENT


 


 


Note Purchase Agreement
(this “Agreement”), dated as of September       ,
2003, by and between EQUIFIN, INC., a Delaware corporation (the “Company”)
located at 1011 Highway 71, Spring Lake, New Jersey 07762, and                               ,
an individual with an address at
                                             
(the “Purchaser”).


 


RECITALS


 


Subject to the terms and
conditions set forth in this Agreement, the Company desires to issue and sell
to the Purchaser and Purchaser desires to purchase from the Company that amount
of Notes and Warrants (as defined herein) a set forth on the signature page of
this Agreement.  The Company proposes to
issue: (i) $1,250,000 aggregate principal amount of 11% convertible subordinated
notes due August 31, 2008 (the “Notes”); and (ii) such number of common stock
purchase warrants (the “Warrants”) as equals the quotient of (x) $1,250,000,
divided by (y) the “Closing Price” (as such term is defined in Section 1
below), each such warrant to have an initial exercise price of $.50 per share
of the Company’s common stock, $.01 par value per share (“Common Stock”), and
to expire on August 31, 2008 as part of a private placement in which the
Purchaser will participate (the “Placement”).


 


In consideration of the
mutual covenants contained herein, the parties agree as follows:


 


1.             Sales and Purchase
of Notes.  Subject to the terms and
conditions set forth herein, the Company shall issue and sell to Purchaser, and
the Purchaser shall purchase from the Company that amount of $1,250,000
aggregate principal amount of Notes and such number of Warrants as equals the
quotient of $1,250,000 divided by the Closing Price as set forth on the
signature page hereto which are part of the Placement.  The Notes and the Warrants, shall be
substantially in the forms annexed hereto as Exhibits A and B, respectively,
and the original price that the Notes may be converted into shares of Common
Stock shall be equal to the average closing sales price, regular way, of the
Common Stock, as reported by the American Stock Exchange (“AMEX”), over the
five (5) trading days immediately preceding the “Closing Date” (as hereinafter
defined) (such average referred to as the “Closing Price”).


 


2.             The
Closing.


 


(a)           The closing of the
purchase and sale of the Notes and Warrants (the “Closing”) shall be September
12, 2003.  The date of the Closing is
hereinafter referred to as the “Closing Date.”


 


(b)           At the Closing, the
parties shall deliver, or shall cause to be delivered, the following: (i) the
Company shall deliver to the Purchaser a Note or Notes in the aggregate
principal amount subscribed for and a warrant certificate representing the
number of Warrants being purchased in accordance with the terms of this
Agreement, all registered in the name of Purchaser or in such names as
Purchaser may specify by written notice to the Company at least two full
business days prior to the Closing Date and (ii) Purchaser shall deliver to the
Company at Closing payment in United States dollars in immediately available
funds by wire transfer to an account designated in writing by the Company for
an amount equal to the amount of Notes to be issued to the Purchaser.


 


3.             Representations
and Warranties of the Company.  The
Company represents, warrants and agrees as follows:


 

















 


(a)           Organization and
Qualification.  The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted.  Each of the
Company and its subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, (i) adversely
affect the legality, validity or enforceability of this Agreement, the Notes,
the Warrants or the shares (the “Underlying Shares”) of Common Stock issuable
upon conversion or exercise thereof (the Notes, the Warrants and the Underlying
Shares are referred to collectively as the “Securities”), or (y) have or result
in a material adverse effect on the results of operations or assets of the
Company and its subsidiaries, taken as a whole.


 


(b)           Corporate Action.  The Company has the requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereunder. 
The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company.  This Agreement has been duly executed by the
Company and constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, moratorium and other laws of
general application, affecting enforcement or creditors’ rights generally, or
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.


 


(c)           Issuance of Securities.  The Notes, Warrants and the Underlying
Shares are duly authorized, and, when issued and paid for in accordance with
the terms of this Agreement and the Securities, as applicable, shall have been
validly issued, fully paid and nonassessable, free and clear of all liens,
encumbrances, and rights of first refusal of any kind (collectively,
“Liens”).  The Company has on the date
hereof and will, at the Closing Date and at all time while the Notes and
Warrants are outstanding, maintain an adequate reserve of duly reserved shares
of Common Stock, reserved for issuance to holders of Notes and Warrants, to
enable it to perform its obligations under such Securities.


 


(d)           Consents and
Approvals. The Company is not required to obtain the consent, waiver,
approval, authorization or order of, give any notice to, or make any filing or
registration with, any court or other Federal, state, local or other
governmental authority or other person or entity in connection with the
execution, delivery and performance by the Company of this Agreement, or the
offer, issue, sale or delivery of the Securities pursuant to this Agreement, or
the performance of any of the terms or conditions of the Securities, other than
(i) as have been made (in the case of filings and registrations) or obtained
(in the case of consents, waivers, orders, approvals or authorizations), (ii)
the filing of a registration statement with the Securities and Exchange
Commission (the “Commission”) as contemplated in Section 9, (iii) the
application(s) to the American Stock Exchange (“AMEX”) for the listing of the
Underlying Shares with the AMEX (and with any other national securities
exchange or market on which the Common Stock is then listed), (iv) the filing
of a Form D with the Commission, and (v) in all other cases where the failure
to obtain such consent, waiver, authorization or order, or to give such notice
or make such filing or registration could not have or result in, individually
or in the aggregate, a material adverse effect to the Company.


 


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(e)           No Conflicts.  The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and the performance of the Company’s obligations
under the Notes and Warrants do not and will not (i) conflict with or violate
any provision of its certificate of incorporation, bylaws or other charter
documents (each as amended through the date hereof), (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, credit facility,
indenture or instrument (evidencing a Company debt or otherwise)  to
which the Company or any of its subsidiaries is a party or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including Federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (i) and
(iii), as could not, individually or in the aggregate, have or result in a
material adverse effect on the Company. 
The business of the Company is not being conducted in violation of any
law, ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, could not have or result in
a material adverse effect on the Company.


 


(f)            No Default or
Violation.  Neither the Company nor
any of its subsidiaries received notice of a claim that it is in default under
or that it (i) is in violation of, any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party or by which it or any
of its properties is bound which default has not subsequently been waived, (ii)
is in violation of any order of any court, arbitrator or governmental body, or
(iii) is in violation of any statute, rule or regulation of any governmental
authority, except as could not individually or in the aggregate, have or result
in a material adverse effect.


 


(g)           Disclosure Documents.  In connection with the offering and sale of
the Securities, the Company has previously delivered to Purchaser those
documents listed in Schedule A (“Disclosure Documents”).  The Disclosure Documents taken as a whole do
not include any untrue statement of material fact or omit to state any material
fact necessary to make the statements therein not misleading.


 


4.             Representations
and Warranties of Purchaser.  The
Purchaser hereby represents and warrants to the Company as follows:


 


(a)           Organization;
Authority.  This Agreement has been
duly executed and delivered by the Purchaser and constitutes the valid and
legally binding obligation of the Purchaser, enforceable against him in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, moratorium and other laws of general application, affecting
enforcement or creditors’ rights generally, or (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.


 


(b)           Accredited Investor.  As of the date hereof, Purchaser is an
“accredited investor,” as that term is defined in Rule 501(a) under the
Securities Act of 1933, as amended (the “1933 Act”) by virtue of (i) having
individual income (exclusive of any income attributable to the Purchaser’s
spouse) of more than $200,000 in each of the most recent two years or joint
income with the Purchaser’s spouse in excess of $300,000 and reasonably expects
to have income of at least the same


 


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level for the current
year and/or (ii) an individual net worth, or a combined net worth, with the
Purchaser’s spouse, in excess of $1,000,000 (for purposes hereof, “individual
net worth” means the excess of total assets at fair market value, including
home and personal property, over total liabilities).


 


(c)            Non-Registration of
Securities and Restrictions on Transferability.  Purchaser is aware that (i) the Securities have not been
registered under the 1933 Act or the securities laws of any state, and this
Agreement has not been qualified under the Trust Indenture Act of 1939, as
amended (the “1939 Act”), in reliance upon exceptions contained in the 1933 Act
and the 1939 Act, nor will the Notes otherwise be issued pursuant to an
indenture; (ii) the Securities are subject to significant restrictions on
transfer, as set forth in this Agreement, the Notes and the Warrants, (iii)
there is no public trading market for the Notes or the Warrants and there is no
reason to expect that any such market will exist at any time in the future;
(iv) Purchaser will only have those rights to register the Securities as are
set forth in Section 9; (v) the Company has no obligation to qualify this
Agreement under the 1939 Act and has no present intention of doing so; and (vi)
Purchaser may therefore be precluded from selling or otherwise transferring or
disposing of the Securities for an indefinite period of time.


 


(d)           Reliance Upon
Representation and Warranties. 
Purchaser is aware that the Securities are being offered and sold in
reliance upon specific exemptions from the registration and qualification
requirements of Federal and state laws and that the Company is relying upon the
truth and accuracy of the representations and warranties of the Purchaser set
forth herein in determining the availability of such exemptions.


 


(e)           Investment Intent.  Purchaser is acquiring the Securities for
investment only, for his own account, and not with view or for sale in
connection with, any distribution of securities.  Purchaser has no present intention of making a sale or
distribution of any Securities.


 


(f)            Ability to Evaluate
Risks and Merits of Investment. 
Purchaser acknowledges receipt of the Disclosure Documents and further
acknowledges that he and his investment advisor(s), if any, have reviewed the
Disclosure Documents and have been afforded the opportunity to obtain any
information necessary to verify the accuracy of any representations or
information contained in this Agreement or in the Disclosure Documents and have
had all of its inquiries to the Company answered in full, and have been
furnished all requested material relating to the Company and the offering and
sale of the Securities.  Neither the
Purchaser nor his investment adviser(s), if any, has been furnished any
offering literature by the Company or any of its affiliates, associates, or
agents, other than this Agreement (including its Exhibits and Schedules) and
the Disclosure Documents.  The Purchaser
has evaluated the risks of investing in the Company and has substantial
experience in making investment decisions of this type or is relying upon his
professional advisers (who have such experience) in making this investment
decision.


 


(g)           Residency and
Taxpayer Identification Number.  The
address set forth on the Signature Page immediately beneath Purchaser’s
signature is Purchaser’s true and correct address.  Purchaser has no present intention of becoming a resident of any
other state or jurisdiction.  The social
security number set forth on the Signature Page beneath Purchaser’s signature,
is Purchaser’s true and correct social security number.


 


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(h)           Ability of the
Purchaser to Bear Risk of Investment. 
Purchaser understands that the purchase of the Securities to be sold to
Purchaser as contemplated hereby is highly speculative and that an investment
in the Company involves substantial risks. 
Purchaser’s personal financial situation is such that (i) he can afford
to hold the Securities for an indefinite period of time and sustain a complete
loss of the investment, and (ii) he has adequate means to provide for his
current needs and contingencies and has no need for liquidity of this
investment.


 


(i)            Original Issue
Discount.  Purchaser is aware he
will be required to recognize original issue discount on the Notes for tax
purposes.  Purchaser understands that a
portion of the purchase price for the Securities acquired by him will be attributable
to the Warrants and the remainder will be attributable to the Notes, and that
the Company will deliver its valuation for original issue discount purposes
after the closing of the Purchaser’s acquisition of securities.  Purchaser is aware that there is no
assurance that upon audit, the Internal Revenue Service will not seek to adjust
such valuation and recompute income and deductions accordingly.


 


(j)            Accuracy of
Representations.  The foregoing
representations of such Purchaser are true and accurate as of the date hereof
and shall be true and accurate as of the Closing.  If, in any respect, such representations shall not be true and
accurate prior to or upon the Closing Date, Purchaser shall give written notice
of such fact to the Company, specifying which representations are not true and
accurate and the reasons therefor.


 


5.             Conditions of
Purchaser’s Obligations at Closing Date. 
Purchaser’s obligation to purchase the Securities subscribed for by such
Purchaser is subject to the fulfillment, prior to or on the Closing Date, of
the following conditions:


 


(a)           Accuracy of
Representations and Warranties.  The
representations and warranties made by the Company herein shall be true and
correct when made, and there shall have been no changes with respect to the
Company since such representations and warranties were made that in the
aggregate materially adversely effect the business, prospects, condition,
affairs or operations of the Company.


 


(b)           Performance; No
Event of Default.  The Company shall
have performed and complied with all agreement and conditions herein required
to be performed or complied with by it prior to or at the Closing, and there
shall not exist any condition or event which would constitute an Event of
Default, or which, after notice or lapse of time or both, would constitute an Event
of Default under the Notes.


 


6.             Conditions of
Company’s Obligations at Closing Date. 
The Company’s obligations to sell the Securities subscribed for by
Purchaser is subject to the fulfillment, prior to or on the Closing Date, of
the following conditions:


 


(a)           Accuracy of
Representations and Warranties.  The
representations and warranties herein made by Purchaser shall be true and
correct when made and shall be true and correct as of the Closing Date.


 


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(b)           Performance of All
Covenants and Conditions.  Purchaser
shall have performed or complied with all agreements and conditions herein
required to be performed or complied with by it prior to or at Closing.


 


7.             Legends on
Securities.


 


(a)           Legend Required on
Notes.  The Company shall be
entitled to cause a legend in the following form to be endorsed on the face of
each Note, whether held by Purchaser or any subsequent holder:


 


“This Note and the Common
Stock issuable upon conversion hereof have not been registered under the
Securities Act of 1933, as amended (the “Act”), nor under any state securities
law and may not be pledged, sold, assigned, hypothecated or otherwise
transferred until (1) a registration statement with respect thereto is
effective under the Act and any applicable state securities law or (2) the
company receives an opinion of counsel to the Company or other counsel to the
holder of such Note, which other counsel is reasonably satisfactory to the
Company, that such note and/or Common Stock may be pledged, sold, assigned,
hypothecated or transferred without an effective registration statement under
the Act or applicable state securities laws.”


 


(b)           Legend Required on
Warrants.  The Company shall be
entitled to cause a legend in the following form to be endorsed on the face of
each Warrant, whether held by Purchaser or any subsequent holder:


 


“Neither this Warrant nor
the shares or Common Stock issuable upon exercise of this Warrant have been
registered under the Securities Act of 1933, as amended (the “Act”) and neither
this Warrant nor the shares of Common Stock issuable upon exercise of this
Warrant may be sold, transferred, pledged, hypothecated or otherwise disposed
of in whole or in part in the absence of an effective registration statement
under such Act or an opinion of counsel reasonably satisfactory to the Company,
in form and substance reasonably satisfactory to the Company, that an exemption
from registration under such Act exists with respect to the proposed sale,
transfer, pledge, hypothecation or other disposition.”


 


(c)           Legend Required on
Common Stock.  The Company shall be
entitled to cause a legend in the following form to be endorsed on the face of
any stock certificate representing any shares of Common Stock issuable upon
conversion of Notes or exercise of the Warrants, whether held by Purchaser or
any subsequent holder:


 


“The shares of stock
represented by this certificate have not been registered under the Securities
Act of 1933 (the “Act”), as amended, or state securities laws and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of in whole or
in part in the absence of an effective registration statement under such Act or
an opinion of counsel reasonably satisfactory to the Company, in form and substance
reasonably satisfactory to the Company, that an exemption from registration
under such Act exists with respect to the proposed sale, transfer, pledge,
hypothecation or other disposition.”


 


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8.             Registration
Rights.  Effective as of the
Closing, Purchaser shall have the registration rights as set forth on
Exhibit C.


 


9.             Notices, etc.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and delivered via facsimile at the facsimile
telephone number specified in this Section 10 prior to 5:00 p.m. (of the time
zone of the recipient) on a business day, (ii) the business day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section 10 later than 5:00
p.m. (of the time zone of the recipient) on such date, (iii) the business day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice
is required to be given.  The address
for such notices and communications shall be as follows:


 


	
  If to the Company:

  	
   

  	
  EquiFin, Inc.

  
	
   

  	
   

  	
  1011 Highway 71

  
	
   

  	
   

  	
  Spring Lake, New Jersey
  07762

  
	
   

  	
   

  	
  Facsimile No.:  (732)282-1411

  
	
   

  	
   

  	
  Attn:  Walter M. Craig, Jr.

  
	
   

  	
   

  	
   

  
	
  If to the Purchaser:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to a “Holder” (as
  defined in Exhibit C):

  	
   

  	
  at the address of such
  Holder maintained on the books of the Company,

  



 


or such other address as
may be designated in writing hereafter, in the same manner, by such person.


 


10.           Amendments and
Waivers. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally or in writing, except with the written consent
of the Company and the Purchaser.


 


11.           Fees and Expenses.  Each party shall pay the fees and expenses
of its own advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.  The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Securities
pursuant hereto.


 


12.           Publicity.  The Company contemplates the issuance of a
press release announcing the completion of this transaction and will advise the
Purchaser of the proposed language of the release for Purchaser’s review and
comment 24 hours before such release.


 


13.           Miscellaneous.  This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of New
Jersey, without giving effect to conflict of laws principles.  All the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, whether so expressed or not, and
in particular shall inure to the benefit of and be enforceable by any holder or
holders at any time of the Securities to whom said


 


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Securities are
transferred or sold in accordance with the terms and provision of this
Agreement and said Securities.  This
Agreement, together with the Exhibits and Schedules hereto, contains the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into thereto.  The headings in
this Agreement are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. 
When the context in which words are used in this Agreement indicates
that such is the intent, singular words shall include the plural and vice versa
and masculine words shall include the feminine and the neuter genders and vice
versa.  This Agreement may be executed
in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party,
it being understood that both parties need not sign the same counterpart.  All representations, warranties, covenants
and agreements contained herein shall survive the Closing and the delivery of
the Securities.  This Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person or entity.  In case any one or more of the provisions of this Agreement shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision which shall be a reasonable substitute therefor, and
upon so agreeing, shall incorporate such substitute provision in this
Agreement.  Any reference to “this
Agreement” shall include all Exhibits hereto.


 


IN WITNESS WHEREOF, the
parties hereto have caused this Note Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated above.


 


	
   

  	
  EQUIFIN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


Proposed Principal Amount
of Notes to be Purchased by Purchaser, together with Warrants as provided
herein.


$                  .


 


 


	
   

  	
   

  	
   

  
	
   

  	
                          ,
  Purchaser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Social Security Number

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  



 


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