Unassociated Document


    


     

    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”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              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 	 
	 	 	 	 


      



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXIBIT
A

     

    PROMISSORY
NOTE

     

    Attached.

     

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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.