EXHIBIT 4.17
STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement is made this 26th day of October 2002, by and
between USA TECHNOLOGIES, INC., a Pennsylvania corporation ("USA" or "Company"),
and KAZI MANAGEMENT VI, INC., a U. S. Virgin Islands corporation ("KAZI").
Background
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As more fully set forth herein, KAZI has purchased from the Company
3,571,429 shares of Common Stock of USA (the "Shares") for $.07 per share,
for an aggregate of $250,000, and will also receive from USA (a) warrants
to purchase up to 7,142,858 shares of Common Stock of the Company at $.07
per share at any time through October 26, 2007, as evidenced by the
certificate attached hereto as Exhibit "A"("Warrants"), and (b) warrants to
purchase (i) up to 7,142,858 additional shares of Common Stock of the
Company at $.07 per share, and (ii) up to 5,000,000 additional shares of
common stock of the Company at $.10 per share as evidenced by the
certificates attached hereto as Exhibit "B" and "C", respectively
("Additional Warrants"). The Warrants and Additional Warrants shall be
hereinafter referred to as the "Warrants" and the shares of Common Stock
underlying the Warrants shall be referred to as the "Warrant Shares". The
Additional Warrants, Warrants, and Shares shall be referred to hereinafter
collectively as the "Securities".
Agreement
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NOW THEREFORE, intending to be legally bound hereby, the parties
hereto agree as follows:
1. Subscription.
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KAZI hereby purchases the Securities from the Company and the Company
hereby sells and issues the Securities to KAZI. In full payment for the
Securities, KAZI has delivered to USA immediately available funds in the
amount of $250,000 payable to USA. In exchange therefore, USA has executed
and delivered to KAZI the certificates representing the Warrants and the
Additional Warrants and shall deliver to KAZI within 5 days after the date
hereof a certificate representing 2,500,000 shares of USA Common Stock
registered in the name of KAZI.
At the time of the execution and delivery of this Stock Purchase
Agreement, KAZI and USA have also executed and delivered the Registration
Rights Agreement attached hereto as Exhibit "C" ("Registration Rights
Agreement").
2. Verification of Status as "Accredited Investor".
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KAZI hereby represents to USA that it qualifies as an "accredited
investor" as such term is defined in Rule 501 promulgated under the Act
because either (a) KAZI was not formed for the specific purpose of
investing in the Securities and has total assets in excess of $5,000,000,
or (b) each of the equity owners of KAZI has a net worth in excess of
$1,000,000.
3. Representations And Warranties of the Company.
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The Company hereby makes the following representations and warranties
to KAZI:
(a) Issuance of Securities. The issuance of the Shares, Warrants, and
Warrant Shares has been duly authorized by USA, and when issued will be
validly issued. The Shares and Warrant Shares when issued will be fully
paid and non-assessable.
(b) Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, with all requisite power, authority and
licensing to own, operate and lease its properties and carry on its
business as now being conducted.
(c) Authority. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby has been duly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to carry out the transactions contemplated hereby.
(d) Warrant Shares. There has been reserved, and the Company shall at
all times keep reserved out of the authorized and unissued shares of Common
Stock, a number of shares of Common Stock sufficient to provide for the
exercise of the right of purchase represented by the Warrants. All shares
of Common Stock issued upon exercise of the Warrants shall be, at the time
of delivery of the certificates for such Common Stock, validly issued and
outstanding, fully paid and non-assessable.
4. Representations by KAZI.
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KAZI represents and warrants to the Company as follows:
(a) KAZI has received, read and understands the provisions of
each of the following: (i) the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 2001; (ii) the Company's Quarterly
Report on Form 10-QSB for the quarter ended September 30, 2001; (iii)
the Company's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 2001; (iii) the Company's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 2002; (iv) the Company's Registration
Statement on Form SB-2 (File No. 333-86064) filed on April 11, 2002
with the Securities and Exchange Commission and the final prospectus
thereto filed on June 13, 2002; (v) the Risk Factors section
incorporated by reference herein in Section 3(f) hereof; and (vi) the
Report on Form 8-K filed July 29, 2002. KAZI understands that all of
the foregoing together with this Subscription Agreement shall be
referred to herein as "Offering Materials".
(b) KAZI has relied only upon the information presented and
contained in the Offering Materials. KAZI has had the opportunity to
ask of the person or persons acting on behalf of the Company any and
all relevant questions in connection with any aspect of the Company
including, but not limited to, the Securities offered by the Offering
Materials and has received answers which it considers to be reasonably
responsive to such questions. KAZI has had the opportunity to verify
the accuracy of the information contained in the Offering Materials.
KAZI understands that the proceeds from the sale of the Shares will be
used for working capital purposes, primarily to make payment of
obligations and debts of the Company (or its subsidiary).
(c) KAZI understands that it is subscribing for the Securities
withoutbeing furnished any literature or prospectus in connection with
the offering of the Securities other than the Offering Materials, and
that the offering of the Securities presented in the Offering Materials
will not have been scrutinized by the securities administrator or
similar bureau, agency, or department of the state of its domicile.
(d) KAZI understands (i) that neither the Shares, Warrants nor
the Warrant Stock has been registered under the Act or registered or
qualified under the securities laws of the state of domicile of KAZI;
(ii) that except as otherwise provided in the Registration Rights
Agreement, KAZI has no right to require such registration or
qualification; and (iii) that therefore KAZI must bear the economic
risk of the investment for an indefinite period of time because neither
the Shares, Warrants nor Warrant Stock may be sold unless so registered
or qualified or unless an exemption from such registration and
qualification is available.
(e) Subject to being resold pursuant to an effective
registration statement, the Securities are being purchased for KAZI's
own account for investment purposes only and not for the interest of
any other person and are not being purchased with a view to or for the
resale, distribution, subdivision or fractionalization thereof.
Although the Common Stock of USA is currently traded on the OTC
Bulletin Board under the symbol USTT, KAZI also understands that there
may not be any established public trading market for the sale of the
Shares.
(f) KAZI recognizes that the purchase of the Securities
involves a high degree of risk including those special risks set forth
under the caption "Risk Factors" and "Forward Looking Statements" in
the Form SB-2 Registration Statement of the Company (File No.
333-86064) filed with the Securities and Exchange Commission on April
11, 2002 and the Form 10-QSB for the quarter ended March 31, 2002, all
of which are incorporated herein by reference.
(g) Subject to the registration rights set forth above, KAZI
understands that its right to transfer the Shares, Warrants and Warrant
Stock will be restricted as set forth on the stock certificates. Such
restrictions include provisions against transfer unless such transfer
is not in violation of the Act, or applicable state securities laws
(including investor suitability standards).
(h) All information which KAZI has provided to the Company
including, but not limited to, its tax identification number, its
financial position, and status as an accredited investor, and its
knowledge of financial and business matters is true, correct and
complete as of the date of execution of this Stock Purchase Agreement.
KAZI understands that USA will rely in a material degree upon the
representations contained herein.
(i) KAZI maintains its principal place of business at the
address shown on the signature page of this Stock Purchase Agreement,
at which address KAZI has subscribed for the Securities.
(j) KAZI understands that legends may be placed on any
certificate representing the Shares, Warrants, and Warrant Shares
substantially to the following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES STATUTES AND
REGULATIONS. SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES STATUTES AND REGULATIONS, UNLESS, IN THE OPINION
(WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION) OF
COUNSEL SATISFACTORY TO THE CORPORATION, SUCH REGISTRATION IS NOT REQUIRED.
(k) The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby has been duly
authorized by KAZI.
5. Right of First Refusal.
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For any private capital raising transactions of Equity Securities (as
defined below) which close after the date hereof and on or prior to the
date that is one year after the date of this Agreement, not including any
Warrants issued in conjunction with this Agreement, the Company agrees to
deliver to KAZI, at least three (3) days prior to the closing of such
transaction, written notice describing the proposed transaction, including
the terms and conditions thereof, and providing KAZI an option (the "Right
of First Refusal") during the three (3) day period following delivery of
such notice to purchase the securities being offered in such transaction on
the same terms as contemplated by such transaction. For purposes hereof,
the following shall be collectively referred to herein as, the "Equity
Securities": (i) private placements of Common Stock at prices equal to or
less than the price that KAZI has purchased the Shares; or (ii) private
placements of any debt or equity securities which are convertible into,
exercisable or exchangeable for, or carry the right to receive additional
shares of Common Stock or other equity securities at prices equal to or
less than the price that KAZI purchased the Shares.
Notwithstanding the above, the Rights of First Refusal shall not apply
to any transaction involving issuances of securities in connection with a
merger, consolidation, acquisition or sale of assets, or in connection with
any strategic partnership or joint venture (the primary purpose of which is
not to raise equity capital), or in connection with the disposition or
acquisition of a business, product or license by the Company or exercise of
options by employees, consultants or directors, or a primary underwritten
offering of the Company's Common Stock. The Rights of First Refusal also
shall not apply to (a) the issuance of securities upon exercise or
conversion of the Company's options, warrants or other convertible
securities outstanding as of the date hereof, (b) the grant of additional
options or warrants, or the issuance of additional securities, under any
Company stock option or stock plan for the benefit of the Company's
employees, directors or consultants or under any Employee Benefit Plan (as
defined in Rule 405 of the Act), (c) the issuance of debt securities, with
no equity feature, incurred solely for working capital purposes, or (d)
private placements of Equity Securities headed by nationally recognized
investment banking firms, such as Xxxxxxx Xxxxx Xxxxxx.
6. Delay of Registration.
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Notwithstanding anything contained herein to the contrary, if the
Registration Statement (as such term is defined in the Registration Rights
Agreement) has not been (1) filed with the Securities and Exchange
Commission within 30 days following the date hereof, or (2) declared
effective under the Act by the Securities and Exchange Commission within 90
days following the date hereof, then in either such event, the Company
shall issue to KAZI an additional three percent (3%) of the aggregate
number of Shares, Warrants, and Additional Warrants issued to KAZI by the
Company hereunder on the date hereof, on a pro rata basis for partial
months, for each full month that the Registration Statement is not so filed
or declared effective. In lieu of receiving additional Shares, KAZI may
elect to receive the cash equivalent of the additional Shares (based upon
the then closing price of the Common Stock). The additional Shares, if any,
and the additional shares of Common Stock underlying the new warrants shall
be covered by the Registration Rights Agreement.
7. Survival of Representations, Warranties, Covenants, Agreements and
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Remedies.
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Except as specifically provided otherwise herein, all representations,
warranties, covenants, agreements and remedies of the parties hereto, shall
survive the date hereof.
8. Entire Agreement.
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This Agreement constitutes the entire understanding and agreement
between the parties hereto with respect to the transactions contemplated
herein, supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of
the parties, and there have been no warranties, representations or
promises, written or oral, made by any of the parties hereto except as
herein expressly set forth herein.
9. Binding Agreement.
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This Agreement shall be binding upon and inure to the benefit of the
parties hereto, as well as their respective heirs, personal
representatives, successors and assigns but no party may assign its
obligations hereunder.
10. Pennsylvania Law Controls.
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This Agreement shall be construed in accordance with and shall be
governed by the laws of the Commonwealth of Pennsylvania without regard to
its conflicts of law rules.
11. Expenses.
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The Company shall pay for and prepare all documentation and filings
related to this transaction and shall pay a non-accountable legal and due
diligence fee to KAZI or its legal counsel in the amount of $5,000.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Stock Purchase Agreement the date first above written.
KAZI MANAGEMENT VI, INC.
/s/ /s/
Witness:_________________ By:__________________________
Address:
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USA TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.,
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Chief Executive Officer
