Document:

Exhibit 10.2

 

THIS CONVERTIBLE TERM NOTE IS
SUBJECT TO THE SUBORDINATION PROVISIONS SET FORTH IN THE CERTAIN SUBORDINATION
AND INTERCREDITOR AGREEMENT DATED DECEMBER     , 2003,
AMONG EACH OF EQUINOX BUSINESS CREDIT CORPORATION (“DEBTOR”), EQUIFIN,
INC., WELLS FARGO FOOTHILL, INC. AND LAURUS MASTER FUND, LTD., A COPY OF WHICH
IS ON FILE AT THE OFFICE OF DEBTOR AND IS AVAILABLE FOR INSPECTION AT SUCH
OFFICE.

 

THIS NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE AND THE COMMON SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO EQUIFIN, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

CONVERTIBLE TERM NOTE

 

FOR VALUE
RECEIVED, each of EQUIFIN, INC., a Delaware corporation and EQUINOX BUSINESS
CREDIT CORP., a New Jersey corporation (each collectively referred to herein as
the “Borrower”), hereby jointly
and severally promise to pay to LAURUS MASTER FUND, LTD., c/o Ironshore
Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877 (the “Holder”) or its registered assigns or
successors in interest, on order, the sum of ONE MILLION ONE HUNDRED THOUSAND
UNITED STATES DOLLARS (US$1,100,000), together with any accrued and unpaid
interest hereon, on December    , 2006 (the “Maturity Date”) if not sooner paid.

 

Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in that certain Securities Purchase Agreement dated as of the date hereof
between the Borrower and the Holder (the “Purchase
Agreement”).

 

The following terms shall apply
to this Note:

 

ARTICLE I

INTEREST & AMORTIZATION

 

1.1           Interest Rate and Payment.  Subject to Sections 4.10 and 5.6 hereof,
interest payable on this Note shall accrue at a rate of seven percent (7%) per
annum (the “Contract Rate”), subject to

 

1

 

adjustment. On the last business day of each month
hereafter (each a “Determination Date”),
the Contract Rate shall be determined as follows: if (i) the Company shall have
registered the shares of the Company’s common stock underlying the conversion
of the Note and that certain warrant issued to Laurus on a registration
statement declared effective by the SEC, and (ii) the average closing sales
price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market for the 10 trading days immediately preceding a Determination
Date exceeds the then applicable Fixed Conversion Price in such percentages as
outlined in the table below, the
Contract Rate for the succeeding calendar month shall automatically be adjusted
as follows: 

 

	
  100% or less
  of applicable Fixed Conversion Price

  	
   

  	
  Contract
  Rate

  
	
  125% of the
  applicable Fixed Conversion Price

  	
   

  	
  Contract
  Rate minus 0.50%

  
	
  150% of the
  applicable Fixed Conversion Price

  	
   

  	
  Contract
  Rate minus 1.00%

  
	
  175% of the
  applicable Fixed Conversion Price

  	
   

  	
  Contract
  Rate minus 1.50%

  

 

Interest shall
be payable monthly in arrears commencing on January 1, 2004 and on the first
day of each consecutive calendar month thereafter (each, a “Repayment
Date”), and on the Maturity Date, whether by acceleration or
otherwise.

 

1.2           Monthly
Principal Payments. Amortizing payments of the aggregate principal amount
outstanding under this Note at any time (the “Principal Amount”) shall begin on
April 1, 2004 and shall recur on the first calendar day of each succeeding
month thereafter until the Maturity Date (each, an “Amortization Date”).  Subject to Section 2.1 below, beginning on
the first Amortization Date, the Borrower shall make monthly payments to the
Holder on each Repayment Date, each in the amount of (a) from April 1, 2004 to
December 1, 2004, $15,000 per month; 
(b) and thereafter, the greater of (X) $16,666 per month; (Y) on each
subsequent Amortization Date an amount that would be required to make the
aggregate amount outstanding under the Note equal eleven and one half percent
(11.5%) of the Borrowing Base (the “Laurus Funding Obligation”) and (Z) an
amount required to make the aggregate amount outstanding under this Note and
the Foothill Note be less than 35% of the value (as determined by the Company
in good faith and reported to Foothill), of the collateral for the “Eligible
Notes Receivable” (as such term is defined in the Foothill Agreement, such
amounts, together with any accrued and unpaid interest to date on such portion
of the Principal Amount plus any and all other amounts which are then owing
under this Note but have not been paid (collectively, the “Monthly Amount”).

 

2

 

ARTICLE II

BORROWER PAYMENT OPTIONS

 

2.1           (a) Payment of Monthly Amount in
Cash or Common Stock.  Subject to
the terms hereof, the Borrower shall have the sole option to determine whether
to satisfy payment of the Monthly Amount on each Repayment Date and
Amortization Date either in cash or in shares of Common Stock (as defined in
the Purchase Agreement), or a combination of both. On or before the tenth (10th)
day of each month, the Borrower shall deliver to the Holder a written
irrevocable notice in the form of Exhibit B attached hereto electing to pay the
Monthly Amount payable on the next Repayment Date in either cash or Common
Stock, or a combination of both (each, a “Repayment
Election Notice”) (the date by which such notice is required to be
given being hereinafter referred to as the “Notice
Date”).  If a Repayment
Election Notice is not delivered to the Holder by the applicable Notice Date
for such Repayment Date, then the Monthly Amount due on such Repayment Date
shall be paid in cash.  The portion of
the Monthly Amount paid in cash on a Repayment Date, shall be paid to the
Holder and shall be equal to (x) 100% of the principal part of such portion of
the Monthly Amount plus (y) any accrued and unpaid interest thereon.  If the Borrower repays all or a portion of
the Monthly Amount in shares of Common Stock, the number of such shares to be
issued for such Repayment Date shall be the number determined by dividing (x)
the portion of the Monthly Amount to be paid in shares of Common Stock, by (y)
the Fixed Conversion Price. For purposes hereof, the “Fixed Conversion Price” means $0.62 (which
has been determined on the date of this Note as an amount equal to 100% of the
volume weighted average closing price for the five (5)  trading days immediately prior to the date
of this Note), as adjusted from time to time in accordance with Section 3.4.

 

(b)           Monthly Amount Common Stock
Payment Guidelines.  Subject to
Sections 2.1 and 2.2 hereof, if the Borrower has elected to pay all or a
portion of the Monthly Amount due on such Repayment Date in shares of Common
Stock and the volume weighted average price of the Common Stock as reported by
Bloomberg, L.P. on the Principal Market (as defined in Section 4.7 hereof) over
the ten (10) trading days preceding a Repayment Date was less than 115% of the
Fixed Conversion Price, then the Borrower shall pay in cash instead. Any part
of the Monthly Amount due on such Repayment Date that the Borrower did not
elect to pay in shares of Common Stock shall be paid by the Borrower in cash on
such Repayment Date. Any part of the Monthly Amount due on such Repayment Date
which the Borrower elected to pay in shares of Common Stock but which must be
paid in cash (because the volume weighted average price of the Common Stock
over the ten (10) trading days preceding the applicable Repayment Date was less
than 115% of the Fixed Conversion Price) shall be paid within three (3)
business days of the applicable Repayment Date.

 

2.2           No Effective Registration.  Notwithstanding anything to the contrary
herein, the

 

3

 

Borrower shall not repay any
part of its obligations to the Holder hereunder if (i) there fails to exist an
effective current Registration Statement (as defined in the Registration Rights
Agreement) covering the shares of Common Stock to be issued in connection with
such payment, or (ii)  an Event of
Default hereunder exists and is continuing, unless such Event of Default is
cured within any applicable cure period or is otherwise waived in writing by
the Holder in whole or in part at the Holder’s option.

 

2.3           Optional Prepayments in Common
Stock.  Subject to Section 2.2
hereof, if the average closing price of the Common Stock on the Principal
Market is greater than 115% of the Fixed Conversion Price for a period of at
least five (5) consecutive trading days, then the Borrower may, at its sole
option, provide the Holder written notice (a “Prepayment
Call
Notice”) requiring the conversion at the then applicable Fixed
Conversion Price of all or a portion of the outstanding principal, interest and
fees outstanding under this Note (subject to compliance with Section 2.3 and
3.2), together with accrued and unpaid interest on the amount being prepaid, as
of the date set forth in such Prepayment Call Notice (the “Prepayment Call Date”). The Prepayment
Call Date shall be at least ten (10) trading days following the date of the
Prepayment Call Notice.  On the
Prepayment Call Date, the Borrower shall deliver to the Holder certificates
evidencing the shares of Common Stock issued in satisfaction of the principal
and interest being prepaid. Notwithstanding the foregoing, the Borrower’s right
to issue shares of Common Stock in satisfaction of its obligations under this
Note shall be subject to the limitation that the number of shares of Common
Stock issued in connection with any Prepayment Call Notice shall not exceed 25%
of the aggregate dollar trading volume of the Common Stock for the ten (10) trading
days immediately preceding the Prepayment Call Date (as such volume is reported
by Bloomberg L.P.).  If the closing
sales price of the Common Stock on the Principal Market falls below 115% of the
then applicable Fixed Conversion Price during the ten (10) trading day period
immediately preceding the Prepayment Call Date, then the Holder will then be
required to convert only such amount of the Note as shall equal twenty five
percent (25%) of the aggregate dollar trading volume (as such volume is
reported by Bloomberg L.P.) for each day that the closing price of the Common
Stock has exceeded 115% of the then applicable Fixed Conversion Price.

 

The Borrower shall not be permitted to give the
Holder more than one Prepayment Call Notice under this Note during any 22-day period.

 

Any principal amount of this Note which is
prepaid pursuant to this Section 2.4 shall be deemed to
constitute payments of outstanding principal applying to Monthly Amounts for
the remaining Repayment Dates in chronological order.

 

2.4           Optional Redemption in Cash.  The Borrower will have the option of
prepaying all or

 

4

 

a portion of amounts
outstanding under this Note in full (“Optional
Redemption”) by paying to the Holder a sum of money equal to the
following:  (a) if such prepayment is
made prior to December    , 2005, one hundred five percent
(105%) of the principal amount of this Note to be prepaid, and if such
prepayment made after December    , 2005, one hundred three
percent (103%) of such principal amount of this Note to be prepaid,  together with (b) accrued but unpaid
interest thereon and (c) any payment required under Section 1.2(Y) and
1.2(Z)  (d) any and all other sums due,
accrued or payable to the Holder arising under this Note or the Purchase
Agreement or any Related Document (as defined in the Purchase Agreement) (the “Redemption Amount”) outstanding on the day
written notice of redemption (the “Notice of
Redemption”) is given to the Holder, which Notice of Redemption
shall specify the date for such Optional Redemption and the principal amount of
this Note to be prepaid (the “Redemption
Payment Date”).  A Notice of
Redemption shall not be effective with respect to any portion of this Note for
which the Holder has a pending election to convert pursuant to Section 3.1 and
the Redemption Amount shall be determined as if such election to convert had
been completed immediately prior to the date of the Notice of Redemption.  The Redemption Payment Date shall be not
earlier than the day after the date of the Notice of Redemption and not later
than seven (7) days after the date of the Notice of Redemption.  On the Redemption Payment Date, the
Redemption Amount must be paid in good funds to the Holder.  In the event the Borrower fails to pay the
Redemption Amount by the Redemption Payment Date, then such Redemption Notice
will be null and void.

 

ARTICLE III

CONVERSION RIGHTS

 

3.1.          Holder’s
Conversion Rights. The Holder shall have the right, but not the obligation,
to convert all or any portion of the then aggregate outstanding principal
amount of this Note, together with accrued and unpaid interest and fees due
hereon, into shares of Common Stock subject to the terms and conditions set
forth in this Article III.  The Holder
may exercise such right by delivery to the Borrower of a written notice of
conversion not less than one (1) day prior to the date upon which such
conversion shall occur.  The date upon
which such conversion shall occur is (the “Conversion
Date”).

 

3.2           Conversion Limitation. Notwithstanding anything
contained herein to the contrary, the Holder shall not be entitled to convert
pursuant to the terms of this Note an amount that would be convertible into
that number of Conversion Shares which would exceed the difference between the
number of shares of Common Stock beneficially owned by such Holder or issuable
upon exercise of warrants held by such Holder and 4.99% of the outstanding
shares of Common Stock of the

 

5

 

Borrower.  For the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder.  The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.

 

3.3           Mechanics of Holder’s Conversion. (a) In the event
that the Holder elects to convert this Note into Common Stock, the Holder shall
give notice of such election by delivering an executed and completed notice of
conversion (“Notice of Conversion”) to the Borrower and such Notice of
Conversion shall provide a breakdown in reasonable detail of the Principal
Amount and accrued and unpaid interest and fees due being converted.  On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the Principal Amount, accrued and unpaid interest
and fees due as entered in its records and shall make a notation thereof on the
front of this Note, and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date.  Upon each date on which a Notice of
Conversion is delivered or telecopied to the Borrower in accordance with the
provisions hereof shall be deemed a Conversion Date (the “Conversion Date”). A form of
Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit
A.

 

(b) Pursuant to the terms of
the Notice of Conversion and Section 2.2 hereof, , the Borrower will issue
instructions to the transfer agent accompanied by an opinion of counsel within
one (1) business day of the date of the delivery to Borrower of the Notice of
Conversion and shall use best efforts to cause the transfer agent to transmit
the certificates representing the Conversion Shares to the Holder by crediting
the account of the Holder’s designated broker with the Depository Trust
Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”)
system within three (3) business days after receipt by the Borrower of the
Notice of Conversion (the “Delivery Date”).  In the case of the exercise of the
conversion rights set forth herein the conversion privilege shall be deemed to
have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of such Common Stock, unless the Holder provides the Borrower
written instructions to the contrary.

 

3.4           Conversion Mechanics.

 

(a)           The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing
that portion of the principal and interest and fees to be converted, if any, by
the Fixed Conversion Price.  In the
event of any conversions of outstanding

 

6

 

principal amount under this
Note in part pursuant to this Article III or Section 2.3, such conversions
shall be deemed to constitute conversions of outstanding principal amount
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order.  By way of example, if the
original principal amount of this Note is $1,000,000 and the Holder converted
$25,000 of such original principal amount prior to the first Repayment Date,
then subject to Section 1.2 hereof, (1) the principal amount of the Monthly
Amount due on the first Repayment Date would equal $0, (2) the principal amount
of the Monthly Amount due on the second Repayment Date would equal $10,000 and
(3) the principal amount of the Monthly Amount due on the third Repayment Dates
would be $15,000.

 

(b)           The Fixed Conversion Price and number
and kind of shares or other securities to be issued upon conversion is subject
to adjustment from time to time upon the occurrence of certain events, as
follows:

 

A.            Stock Splits, Combinations and
Dividends.  If the shares of Common
Stock are subdivided or combined into a greater or smaller number of shares of
Common Stock, or if a dividend is paid on the Common Stock in shares of Common
Stock, the Fixed Conversion Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event bears
to the total number of shares of Common Stock outstanding immediately prior to
such event.

 

B.            During the period the conversion
right exists, the Borrower will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Common Stock
upon the full conversion of this Note. 
The Borrower represents that upon issuance, such shares will be duly and
validly issued, fully paid and non-assessable. 
The Borrower agrees that its issuance of this Note shall constitute full
authority to its officers, agents, and transfer agents who are charged with the
duty of executing and issuing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the conversion of this
Note.

 

C.            Share Issuances.  Subject to the provisions of this Section
3.4, if the Borrower shall at any time prior to the conversion or repayment in
full of the Principal Amount issue any shares of Common Stock to a person other
than the Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant
to options, warrants, or other obligations to issue shares outstanding on the
date hereof as disclosed to Holder in writing (including, without limitation,
as reflected in its Exchange Act Filings that have been made on or prior to the
original issuance of this Note) or (iii) pursuant to options that may now or
hereafter be issued under any employee incentive stock option and/or any
qualified or non-qualified stock option plan adopted by the Borrower
(including, without limitation,

 

7

 

options issued to employees
under any separate employment agreement or arrangement, options issued to
directors and officers of, and consultants to, the Company)) for a
consideration per share (the “Offer Price”) less than the Fixed Conversion
Price in effect at the time of such issuance, then the Fixed Conversion Price
shall be immediately thereafter reset pursuant to the formula below.

 

For purposes
hereof:

 

(1)                                                          Except
with respect to the issuance of options described in clause (iii) immediately
above of this Section 3.4(b)C, the issuance of any security of the Borrower
convertible into or exercisable or exchangeable for Common Stock (such
securities being referred to as “Convertible Securities”) shall result in an
adjustment to the Fixed Conversion Price at the time of issuance of such
securities.

 

(2)                                                          In
case of the issuance or sale of additional shares of Common Stock or
Convertible Securities for cash, the consideration received by the Company
therefor shall be deemed to be the amount of cash received by the Company for such
shares, before deducting therefrom any commissions, compensation or other
expenses paid or incurred by the Company for any underwriting of, or otherwise
in connection with, the issuance or sale of such shares.

 

(3)                                                          In
the case of the issuance of shares of Common Stock or Convertible Securities
for a consideration in whole or in part, other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
reasonably determined in good faith by the Board of Directors of the Company
(irrespective of accounting treatment thereof); provided, however, that if such
consideration consists of the cancellation of debt issued by the Company, the
consideration shall be deemed to be the amount the Company received upon
issuance of such debt (gross proceeds) plus accrued interest and, in the case
of original issue discount or zero coupon indebtedness, accreted value to the
date of such cancellation, but not including any premium or discount at which
the debt may then be trading or which might otherwise be appropriate for such
class of debt.

 

(4)                                                          In
case of the issuance of additional shares of Common Stock upon the conversion
or exchange of any obligations (other than Convertible Securities), the amount
of the consideration received by the Company for such Common Stock shall be
deemed to be the consideration received by the Company for such

 

8

 

obligation or shares so converted or
exchanged, before deducting from such consideration so received by the Company
any expenses or commissions or compensations incurred or paid by the Company
for any underwriting of, or otherwise in connection with, the issuance or sale
of such obligations or shares, plus any consideration received by the Company in
adjustment of interest and dividends and fees, if any.  If obligations or shares of the same class
or series of a class as the obligations or shares so converted or exchanged
have been originally issued for different amounts of consideration, then the
amount of consideration received by the Company upon the original issuance of
each of the obligations or shares so converted or exchanged shall be deemed to
be the average amount of the consideration received by the Company upon the
original issuance of all such obligations or shares.  The amount of consideration received by the Company upon the
original issuance of the obligations or shares so converted or exchanged and
the amount of the consideration, if any, other than such obligations or shares
received by the Company upon such conversion or exchange shall be determined in
the same manner as provided in Clauses (1) through (3) above with respect to
the consideration received by the Company in case of the issuance of additional
shares of Common Stock or Convertible Securities.

 

(5)                                                          For
purposes of the adjustments provided for in this Section 3.4(b) , if at any
time, the Company shall issue any Convertible Securities, the Company shall be
deemed to have issued at the same time as the issuance of such Convertible
Securities the maximum number of shares of Common Stock issuable upon
conversion of the total amount of Convertible Securities.

 

(6)                                                    Anything
in this Section 3.4C to the contrary notwithstanding, no adjustment in the
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such Conversion Price; provided,
however, that any adjustments which by reason of this clause 6 are not required
to be made shall be carried forward and taken into account in making subsequent
adjustments.  All calculations under
this Section shall be made to the nearest cent or to the nearest tenth of a
share, as the case may be.

 

Except as
otherwise provided in Section 3.4(b)C, if the Corporation issues any additional
shares described in this Section 3.4(b)C above, then, and thereafter
successively upon each such issue, the Fixed Conversion Price shall be adjusted
by multiplying the then applicable Fixed Conversion Price by the following
fraction:

 

9

 

	
   

  	
  A + B

  	
   

  
	
   

  	
  (A + B) + [((C – D) x B) / C]

  	
   

  

 

A = Actual
shares outstanding prior to such offering

 

B =  Actual shares sold in the offering

 

C = Fixed
Conversion Price

 

D = Offering
price

 

3.5           Issuance of New Note.  Upon any partial conversion of this Note,
and subject to the surrender of this Note to the Borrower, a new Note
containing the same date and provisions of this Note shall, at the request of
the Holder, be issued by the Borrower to the Holder for the principal balance
of this Note and interest which shall not have been converted or paid. The
Borrower will pay no costs, fees or any other consideration to the Holder for
the production and issuance of a new Note.

 

ARTICLE IV

EVENTS OF DEFAULT

 

If an Event of
Default (as defined below) occurs and is continuing, the Borrower’s rights
under Sections 2.1, 2.3 and 2.4 shall immediately cease and be of no further
effect until such time as the Event of Default has been cured, or has been
waived by the Holder.  Upon the
occurrence and continuance of an Event of Default beyond any applicable grace
period, the Holder may make all sums of principal, interest and other fees then
remaining unpaid hereon and all other amounts payable hereunder due and payable
within five (5) days after written notice from Holder to Borrower (each
occurrence being a “Default Notice Period”).
In the event of such acceleration, the amount due and owing to the Holder shall
be 125% of the outstanding principal amount of the Note (plus accrued and
unpaid interest and fees, if any). If, with respect to any Event of Default
other than a payment default described in Section 4.1 below, within the Default
Notice Period the Borrower cures the Event of Default, the Event of Default
will be deemed to no longer exist and any rights and remedies of Holder
pertaining to such Event of Default will be of no further force or effect.

 

The occurrence
of any of the following events is an “Event
of Default”:

 

10

 

4.1           Failure to Pay Principal, Interest
or other Fees.  The Borrower fails
to pay when due any installment of principal, interest or other fees hereon in
accordance herewith, and such default shall not be cured within three (3)  business days, or the Borrower fails to pay
when due any amount in excess of $250,000 due under any other promissory note
issued by Borrower and such default has continued beyond any applicable grace
period with respect thereto and has not been waived by the holder thereof.

 

4.2           Breach of Covenant.  The Borrower breaches any material covenant
or other term or condition of this Note or the Purchase Agreement in any
material respect and such breach, if subject to cure, continues for a period of
thirty (30) days after the occurrence thereof.

 

4.3           Breach of Representations and
Warranties.  Any material
representation or warranty of the Borrower made herein, in the Purchase
Agreement, or in any Related Document (as defined in the Purchase Agreement)
shall be materially false or misleading and shall not be cured for a period of
thirty (30) days after the occurrence thereof .

 

4.4           Receiver or Trustee.  The Borrower shall make an assignment for
the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or such a receiver or trustee shall otherwise be appointed and shall
remain in effect and unstayed for a period of ninety (90) days.

 

4.5           Judgments.  Any money judgment, writ or similar final
process shall be entered or filed against the Borrower or any of its property
or other assets for more than $250,000, and shall remain unvacated, unbonded or
unstayed for a period of ninety (90) days.

 

4.6           Bankruptcy.  Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower and not dismissed within sixty (60) days.

 

4.7           Stop Trade.  An SEC stop trade order or Principal Market
trading suspension of the Common Stock shall be in effect for 5 consecutive
trading days or 5 days during a period of 10 consecutive days, excluding in all
cases a suspension of all trading on a Principal Market, provided that
the Borrower shall not have been able to cure such trading suspension within 30
days of the notice thereof or list or resume trading of the Common Stock on
another Principal Market within 90 days of such notice.  For purposes of this Agreement, a “Principal
Market” for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ
SmallCap Market, NASDAQ National Market System, American Stock Exchange, or the
New York Stock Exchange.

 

4.8           Failure to Deliver Common Stock or
Replacement Note.  The Borrower’s
failure to

 

11

 

timely deliver Common Stock to
the Holder pursuant to and in the form required by this Note, and Section 9 of
the Securities Purchase Agreement, or if required, a replacement Note if such
failure to timely deliver Common Stock shall not be cured within two (2) days
or such failure to deliver a replacement Note is not cured within seven (7)
Business Days after notice thereof.

 

4.9           Default under Related Agreements.  If any “Event of Default” shall have
occurred and be continuing under any Related Agreement, and such Event of
Default shall not be cured within three (3) business days.

 

DEFAULT RELATED PROVISIONS

 

4.10         Payment Grace Period.  Notwithstanding that the Borrower shall have
a ten (10) business day grace period to pay any monetary amounts due under this
Note or the Purchase Agreement or any Related Document, a default interest rate
of five percent (5%) per annum above the then applicable Contract Rate shall
apply to the monetary amounts due which such additional interest shall accrue from
the actual date such payments were due and payable.

 

4.11         Conversion Privileges.  The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof and until this Note is paid in full.

 

ARTICLE V

MISCELLANEOUS

 

5.1           Failure or Indulgence Not Waiver.  No failure or delay on the part of the
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. 
All rights and remedies existing hereunder are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

 

5.2           Notices.  Any notice herein required or permitted to
be given shall be in writing and shall be deemed effectively given:  (a) upon personal delivery to the party
notified, (b) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (c)
five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit with a
internationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. 
All communications shall be sent to the Borrower at the address provided
in the Purchase Agreement executed in connection herewith, with a copy to Lee
A. Albanese, Esq., St.John & Wayne, L.L.C. Two Penn Plaza East, Newark, New
Jersey 07105-2249, facsimile number (973) 491-3408; and to the Holder at the
address provided in the Purchase Agreement for such Holder, with a copy to John
E. Tucker, Esq., 825 Third

 

12

 

Avenue, 14th Floor,
New York, New York 10022, facsimile number (212) 541-4434, or at such other
address as the Borrower or the Holder may designate by ten days advance written
notice to the other parties hereto.  A
Notice of Conversion shall be deemed given when made to the Borrower pursuant
to the Purchase Agreement.

 

5.3           Amendment Provision.  The term “Note” and all reference thereto,
as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.3
hereof, as it may be amended or supplemented.

 

5.4           Assignability.  This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder
and its successors and assigns, and may be assigned by the Holder in accordance
with the requirements of the Purchase Agreement.

 

5.5           Governing Law.  This Note shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.  Any
action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York.  Both parties and the individual signing this
Note on behalf of the Borrower agree to submit to the jurisdiction of such
courts.  The prevailing party shall be
entitled to recover from the other party its reasonable attorney’s fees and
costs.  In the event that any provision
of this Note is invalid or unenforceable under any applicable statute or rule
of law, then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with such
statute or rule of law.  Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or unenforceability of any other provision of this Note.

 

5.6           Maximum Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the rate of interest required to be paid or
other charges hereunder exceed the maximum permitted by such law, any payments
in excess of such maximum shall be credited against amounts owed by the
Borrower to the Holder and thus refunded to the Borrower.

 

5.7           Security Interest.  The holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in a
Security Agreement dated December    , 2003.

 

5.8           Construction.  Each party acknowledges that its legal
counsel participated in the preparation of this Note and, therefore, stipulates
that the rule of construction that ambiguities are to

 

13

 

be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other.

 

[Balance of page intentionally
left blank; signature page follows.]

 

14

 

IN WITNESS WHEREOF,
each Borrower has caused this Convertible Term Note to be signed in its name
effective as of this     day of December, 2003.

 

	
   

  	
  EQUIFIN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EQUINOX BUSINESS CREDIT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

WITNESS:

 

	
   

  	
   

  

 

15

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

 

(To be executed by the Holder
in order to convert all or part of the Note into Common Stock

 

[Name and Address of Holder]

 

 

The Undersigned hereby elects
to convert $          of the
principal due on [specify applicable Repayment Date] under the Convertible Term
Note issued by EQUIFIN, INC. dated December   , 2003 by delivery of
Shares of Common Stock of EQUIFIN, INC. on and subject to the conditions set
forth in Article II of such Note.

 

1.             Date of Conversion

 

2.             Shares To Be Delivered:

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

16

 

EXHIBIT B

 

REPAYMENT ELECTION NOTICE

 

(To be executed by the Borrower
in order to pay all or part of a Monthly Amount with Common Stock)

 

[Name and Address of Holder]

 

 

EQUIFIN, INC. hereby elects to
pay $          of the Monthly
Amount due on [specify applicable Repayment Date] under the Convertible Term
Note issued by EQUIFIN, INC. dated December     , 2003 by
delivery of Shares of Common Stock of EQUIFIN, INC. on and subject to the
conditions set forth in Article II of such Note.

 

 

1.             Fixed Conversion Price:      $

 

2.             Amount to be paid:              $

 

3.             Shares To Be Delivered (2 divided by 1):

 

 

	
  Date:

  	
   

  	
   

  	
  EQUIFIN,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

17Exhibit 10.3

 

THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO EQUIFIN, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Right to
Purchase 532,257 Shares of Common Stock of EQUIFIN, INC. (subject to adjustment
as provided herein)

 

COMMON STOCK PURCHASE WARRANT

 

 

	
  No.
     

  	
  Issue Date:
  December     ,2003

  

 

 

EQUIFIN, INC.,
a corporation organized under the laws of the State of Delaware, hereby
certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company (as defined herein) from and
after the Issue Date of this Warrant and at any time or from time to time
before 5:00 p.m., New York time, through the close of business on December
         2008 (the “Expiration Date”), up to 532,257 fully paid
and nonassessable shares of Common Stock (as hereinafter defined), $.01 par
value per share, at the applicable Exercise Price per share (as defined
below).  The number and character of
such shares of Common Stock and the applicable Exercise Price per share are
subject to adjustment as provided herein.

 

As used herein
the following terms, unless the context otherwise requires, have the following
respective meanings:

 

(a)                                  The
term “Company” shall include
EQUIFIN, Inc. and any corporation which shall succeed, or assume the
obligations of, EQUIFIN, Inc. hereunder.

 

(b)                                 The
term “Common Stock” includes (a)
the Company’s Common Stock, par value $.01 per share, and (b) any other
securities into which or for which any of the securities described in (a) may
be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.

 

(c)                                  The
term “Other Securities” refers to
any stock (other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the holder of the Warrant at any
time shall be entitled to receive, or shall have received, on the exercise of
the

 

 

Warrant, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

 

(d)                                 The
“Exercise Price” applicable under
this Warrant shall be as follows:

 

a.                                       a
price of $0.78 per share for the first 177,419 shares acquired hereunder;

 

b.                                      a
price of $0.93 per share for the next 177,419 shares acquired hereunder; and

 

c.                                       a
price of $1.09 per share for any additional shares acquired hereunder.

 

1.                                       Exercise of Warrant.

 

1.1.                              Number
of Shares Issuable upon Exercise. 
From and after the date hereof through and including the Expiration
Date, the Holder shall be entitled to receive, upon exercise of this Warrant in
whole or in part, by delivery of an original or fax copy of an exercise notice
in the form attached hereto as Exhibit A (the “Exercise Notice”), and payment of the applicable purchase
price per share as set forth herein, shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

 

1.2.                              Fair
Market Value.  For purposes hereof,
the “Fair Market Value” of a share
of Common Stock as of a particular date (the “Determination
Date”) shall mean:

 

(a)                                  If the Company’s Common Stock is traded
on the American Stock Exchange or another national exchange or is quoted on the
National or SmallCap Market of The Nasdaq Stock Market, Inc.(“Nasdaq”), then the closing or last sale
price, respectively, reported for the last business day immediately preceding
the Determination Date.

 

(b)                                 If the Company’s Common Stock is not
traded on the American Stock Exchange or another national exchange or on the
Nasdaq but is traded on the NASD OTC Bulletin Board, then the volume weighted
average price reported for the last business day immediately preceding the
Determination Date as reported by Bloomberg L.P.

 

(c)                                  Except as provided in clause (d) below,
if the Company’s Common Stock is not publicly traded, then as the Holder and
the Company agree or in the absence of agreement by arbitration in accordance
with the rules then in effect of the American Arbitration Association, before a
single arbitrator to be chosen from a panel of persons qualified by education
and training to pass on the matter to be decided.

 

(d)                                 If the Determination Date is the date of
a liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company’s charter, then
all amounts to be payable per share to holders of the Common Stock

 

2

 

pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other amounts to
be payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of the Warrant are outstanding at the
Determination Date.

 

1.3.                              Company Acknowledgment.
The Company will, at the time of the exercise of the Warrant, upon the request
of the holder hereof acknowledge in writing its continuing obligation to afford
to such holder any rights to which such holder shall continue to be entitled
after such exercise in accordance with the provisions of this Warrant. If the
holder shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such rights.

 

1.4.                              Trustee
for Warrant Holders. In the event that a bank or trust company shall have
been appointed as trustee for the holders of the Warrant pursuant to Subsection
3.2, such bank or trust company shall have all the powers and duties of a
warrant agent (as hereinafter described) and shall accept, in its own name for
the account of the Company or such successor person as may be entitled thereto,
all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.

 

2.                                       Procedure for Exercise.

 

2.1                                 Delivery
of Stock Certificates, etc. on Exercise.  
The Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such shares in
accordance herewith.    As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other securities
and property (including cash, where applicable) to which such Holder is
entitled upon such exercise pursuant to Section 1 or otherwise.

 

2.2                                 Exercise.  Payment may be made either (i) in cash or by
certified or official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price, (ii) by delivery of the Warrant, or
shares of Common Stock and/or Common Stock receivable upon exercise of the
Warrant in accordance with Section (b) below, or (iii) by a combination of any
of the foregoing methods, for the number of Common Shares specified in such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.  Notwithstanding any

 

3

 

provisions herein to the
contrary, if the Fair Market Value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof
being exercised) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Exercise Notice in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:

 

	
  X=Y (A-B)

  	
   

  
	
  A

  	
   

  

 

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

 

Y=                                 the
number of shares of Common Stock purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the Warrant being
exercised (at the date of such calculation) or the number of shares of Common
Stock otherwise being surrendered in connection with the exercise of the
Warrant

 

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

 

B=                                 Exercise
Price (as adjusted to the date of such calculation)

 

3.                                       Effect of Reorganization, etc.; Adjustment of Exercise Price.

 

3.1                                 Reorganization,
Consolidation, Merger, etc.  In case at any time or from time to time, the Company shall (a)
effect a reorganization, (b) consolidate with or merge into any other person,
or (c) transfer all or substantially all of its properties or assets to any
other person under any plan or arrangement contemplating the dissolution of the
Company, then, in each such case, as a condition to the consummation of such a
transaction, proper and adequate provision shall be made by the Company whereby
the Holder of this Warrant, on the exercise hereof as provided in Section 1 at
any time after the consummation of such reorganization, consolidation or merger
or the effective date of such dissolution, as the case may be, shall receive,
in lieu of the Common Stock (or Other Securities) issuable on such exercise
prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which such Holder would have been
entitled upon such consummation or in connection with such dissolution, as the
case may be, if such Holder had so exercised this Warrant, immediately prior
thereto, all subject to further adjustment thereafter as provided in Section 4.

 

3.2                                 Dissolution.  In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be delivered to the
Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrant pursuant to Section 3.1,
or, if the Holder shall so instruct the Company, to a bank or trust company
specified by the Holder and having its principal office in

 

4

 

New York, NY as trustee for the
Holder of the Warrant.

 

3.3                                 Continuation
of Terms.  Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and
other securities and property receivable on the exercise of this Warrant after
the consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may be,
and shall be binding upon the issuer of any such stock or other securities,
including, in the case of any such transfer, the person acquiring all or substantially
all of the properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as provided in Section
4.  In the event this Warrant does not
continue in full force and effect after the consummation of the transactions
described in this Section 3, then the Company’s securities and property
(including cash, where applicable) receivable by the Holders of the Warrant
will be delivered to Holder or the Trustee as contemplated by Section 3.2.

 

4.                                       Extraordinary Events Regarding Common Stock.  In the event that the Company shall (a)
issue additional shares of the Common Stock as a dividend or other distribution
on outstanding Common Stock, (b) subdivide its outstanding shares of Common
Stock, or (c) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event, and the product so obtained
shall thereafter be the Exercise Price then in effect. The Exercise Price, as
so adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4. The number of
shares of Common Stock that the holder of this Warrant shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive shall be
increased or decreased to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the
numerator is the Exercise Price that would otherwise (but for the provisions of
this Section 4) be in effect, and (b) the denominator is the Exercise Price in
effect on the date of such exercise.

 

5.                                       Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of the Warrant, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such
adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by the
Company for any additional shares of Common Stock (or Other Securities) issued
or sold or deemed to have been issued or sold, (b) the number of shares of
Common Stock (or Other Securities) outstanding or deemed to be outstanding, and
(c) the Exercise Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment
or readjustment and as adjusted or readjusted as provided in this Warrant.  The Company will forthwith mail a copy of
each such certificate to the holder of the Warrant and any Warrant agent of the
Company (appointed pursuant to Section 11 hereof).

 

5

 

6.                                       Reservation of Stock, etc. Issuable on Exercise of Warrant.  The Company will at all times
reserve and keep available, solely for issuance and delivery on the exercise of
the Warrant, shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant.

 

7.                                       Assignment;
Exchange of Warrant.  Subject to compliance with applicable securities laws, this
Warrant, and the rights evidenced hereby, may be transferred by any registered
holder hereof (a “Transferor”) in
whole or in part.  On the surrender for
exchange of this Warrant, with the Transferor’s endorsement in the form of
Exhibit B attached hereto (the “Transferor Endorsement Form”) and together with evidence reasonably satisfactory to the Company
demonstrating compliance with applicable securities laws, which shall include,
without limitation, a legal opinion from the Transferor’s counsel (which shall
be reasonably acceptable to the Company in all respects) that such transfer is
exempt from the registration requirements of applicable securities laws, the
Company at its expense but with payment by the Transferor of any applicable
transfer taxes) will issue and deliver to or on the order of the Transferor thereof
a new Warrant of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.

 

8.                                       Replacement of
Warrant.  On receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.

 

9.                                       Registration
Rights.  The Holder
of this Warrant has been granted certain registration rights by the Company.
These registration rights are set forth in a Registration Rights Agreement
entered into by the Company and Purchaser dated as of December
    , 2003.

 

10.                                 Maximum
Exercise.  The Holder
shall not be entitled to exercise this Warrant on an exercise date, in
connection with that number of shares of Common Stock which would be in excess
of the sum of (i) the number of shares of Common Stock beneficially owned by
the Holder and its affiliates on an exercise date, and (ii) the number of
shares of Common Stock issuable upon the exercise of this Warrant or the
conversion of any other convertible securities entitling the Holder to acquire
shares of Common Stock, , which would result in beneficial ownership by the
Holder and its affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Company on such date. For the purposes of the proviso to
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. Notwithstanding the foregoing, the
restriction described in this paragraph may be revoked upon 75 days prior
notice from the Holder to the Company and is automatically null and void upon
an Event of Default under the Note.

 

11.                                 Warrant Agent.  The Company may, by written
notice to the each Holder of the Warrant, appoint an agent for the purpose of
issuing Common Stock (or Other Securities) on the exercise of this Warrant
pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and

 

6

 

replacing this Warrant pursuant
to Section 8, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, shall be made at such office by
such agent.

 

12.                                 Transfer on the
Company’s Books.  Until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder hereof as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary.

 

13.                                 Notices, etc.  All notices and other
communications from the Company to the Holder of this Warrant shall be mailed
by first class registered or certified mail, postage prepaid, at such address
as may have been furnished to the Company in writing by such Holder or, until
any such Holder furnishes to the Company an address, then to, and at the
address of, the last Holder of this Warrant who has so furnished an address to
the Company.

 

14.                                 Voluntary
Adjustment by the Company.  The Company may at any time during the term
of this Warrant reduce the then current Exercise Price to any amount and for
any period of time deemed appropriate by the Board of Directors of the Company.

 

15.                                 Miscellaneous.  This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant shall be governed by and construed in accordance with the laws of State
of New York without regard to principles of conflicts of laws. Any action
brought concerning the transactions contemplated by this Warrant shall be
brought only in the state courts of New York or in the federal courts located
in the state of New York; provided, however, that the Holder may choose to
waive this provision and bring an action outside the state of New York. The
individuals executing this Warrant on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury.  The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Warrant.  The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.  The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision. The Company acknowledges
that legal counsel participated in the preparation of this Warrant and,
therefore, stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the interpretation of
this Warrant to favor any party against the other party.

 

7

 

 

IN WITNESS WHEREOF, the Company has executed
this Warrant as of the date first written above.

 

	
   

  	
  EQUIFIN,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Witness:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

8

 

Exhibit A

 

FORM OF SUBSCRIPTION

 

(To be signed only on exercise of Warrant)

 

TO:                            EQUIFIN,
Inc.

1101 Highway 71

Spring Lake, New Jersey 07762

Attention:  Chief Financial Officer

 

The undersigned, pursuant to
the provisions set forth in the attached Warrant (No.    ),
hereby irrevocably elects to purchase (check applicable box):

 

               shares
of the Common Stock covered by such Warrant; or

 

      the
maximum number of shares of Common Stock covered by such Warrant pursuant to
the cashless exercise procedure set forth in Section 2.

 

The undersigned herewith makes
payment of the full Exercise Price for such shares at the price per share
provided for in such Warrant, which is $              Such payment takes the form of (check
applicable box or boxes):

 

     $            in
lawful money of the United States; and/or

 

     the
cancellation of such portion of the attached Warrant as is exercisable for a
total of         shares of Common Stock
(using a Fair Market Value of
$            per share
for purposes of this calculation); and/or

 

                                    the
cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2.2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchaseable
pursuant to the cashless exercise procedure set forth in Section 2.

 

The undersigned requests that
the certificates for such shares be issued in the name of, and delivered to
                        whose
address
is                                                                                                                                                                                                  .

 

The undersigned represents and
warrants that all offers and sales by the undersigned of the securities
issuable upon exercise of the within Warrant shall be made pursuant to
registration of the Common Stock under the Securities Act of 1933, as amended
(the “Securities Act”) or pursuant to an exemption from registration under the
Securities Act.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature
  must conform to name of holder as specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)

  

 

9

 

Exhibit B

 

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

 

                For value received, the undersigned hereby
sells, assigns, and transfers unto the person(s) named below under the heading
“Transferees” the right represented by the within Warrant to purchase the
percentage and number of shares of Common Stock of EQUIFIN, Inc. into which the
within Warrant relates specified under the headings “Percentage Transferred”
and “Number Transferred,” respectively, opposite the name(s) of such person(s)
and appoints each such person Attorney to transfer its respective right on the
books of EQUIFIN, Inc. with full power of substitution in the premises.

 

	
  Transferees

  	
   

  	
  Address

  	
   

  	
  Percentage
  Transferred

  	
   

  	
  Number
  Transferrred

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature
  must conform to name of holder as specified on the face of the Warrant)

  

 

 

Signed in the presence of:

 

	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND
  AGREED:

  	
   

  	
   

  
	
  [TRANSFEREE]

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]