2005-D PRIVATE PLACEMENT OFFERING
SUBSCRIPTION AGREEMENT
USA TECHNOLOGIES, INC.
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Xx.,
Chief Executive Officer
Dear Xx. Xxxxxx:
I understand that the Company is offering for sale (the "Offering") up to
23,333,334 shares of restricted Common Stock of the Company ("Common Stock") at
$.15 per share of Common Stock. For each share of Common Stock purchased, the
subscriber shall also receive a warrant to purchase one share of Common Stock at
$.15 per share at any time through December 31, 2005. As more fully described
below, $750,000 of the Offering has already been subscribed for by each of
Ashford Capital Partners, L.P., and Anvil Investment Associates, L.P., for an
aggregate investment of $1,500,000.
The Offering will terminate on April 15, 2005, unless extended by the
Company for up to thirty additional days. There is no minimum offering amount,
and all subscription proceeds would be placed directly into the accounts of the
Company as subscription funds are received. If all of the Common Stock offered
in the private placement is sold, the Company would receive gross proceeds of
$3,500,000, and the Company would have issued warrants to purchase up to
23,333,334 shares of Common Stock. If all of these warrants would be exercised,
the Company would receive an additional $3,500,000. The net proceeds from the
sale by the Company of the Common Stock pursuant to the Offering will be used by
the Company for general working capital and may also be used to prepay
outstanding convertible senior notes previously issued by the Company.
Promptly following the termination of the Offering, and no later than May
30, 2005, the Company shall file and thereafter use its best efforts to have
declared effective, an appropriate registration statement with the Securities
and Exchange Commission ("Commission") registering all of the shares of Common
Stock sold in the Offering as well as all of the shares of Common Stock
underlying the warrants for resale under the Securities Act of 1933, as amended
(the "Act"). Thereafter, the Company shall use its best efforts to keep the
registration statement current and effective through December 31, 2006.
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Ashford Capital Partners, L.P., and Anvil Investment Associates, L.P.
(collectively, "Prior Investors"), have already invested an aggregate of
$1,500,000 in the Offering. As a condition of their investment and as set forth
in their subscription agreements, the Prior Investors have the right through
December 31, 2006 to maintain their percentage ownership interest in the
securities of the Company pursuant to a right to participate in future
securities offerings of the Company. In addition, if this Offering has not been
fully subscribed for by April 7, 2005, the Prior Investors have the option to
elect one of the following: (i) if the closing bid price of the Common Stock on
such date is equal to or greater than $.15 per share, to purchase the balance of
the Offering upon the terms and conditions set forth herein; or (ii) if the
closing bid price of the Common Stock on such date is less than $.15 per share,
to purchase shares of Common Stock (but no warrants) at such closing bid price
minus 10% in an aggregate dollar amount equal to the difference between
$3,500,000 and the dollar amount of subscriptions actually received by the
Company through such date. None of the foregoing rights are being granted to any
investor in this Offering other than the Prior Investors.
1. Subscription. The undersigned hereby subscribes to purchase the number
of shares of Common Stock and warrants indicated below in accordance with the
terms and conditions of the Offering Materials (as defined below). I understand
that this subscription may be rejected at the discretion of the Company, and
that I must qualify as an "accredited investor" under Regulation D, as
promulgated by the Commission under the Act.
2. Verification of Suitability and Status as "Accredited Investor" under
Regulation D. I understand that in order to subscribe for the Common Stock and
warrants in the Offering, I must be an "accredited investor" as defined in Rule
501 of Regulation D under the Act and hereby represent and warrant to the
Company that I am an "accredited investor." In this regard, the undersigned is
an "accredited investor" by virtue of qualifying under one of the following
categories (check appropriate item):
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___the undersigned is a natural person whose individual net worth
with that person's spouse (if married), at the time of purchase
exceeds $1,000,000; or
___the undersigned is a natural person who had an individual income
in excess of $200,000 during each of the last two calendar years, or
joint income with that person's spouse (if married) in excess of
$300,000 in each of those years, and has a reasonable expectation of
reaching the same income level during the current calendar year; or
___the undersigned is a corporation, limited liability corporation,
or partnership not formed for the purpose of investing in the
Company with total assets in excess of $5,000,000; or
___the undersigned is an entity in which all the equity owners are
accredited investors.
3. Representations by Undersigned. The undersigned represents and warrants
to the Company as follows:
(a) I have received, read and understand the provisions of the
following:(i) the Company"s Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2004; (ii) the Company"s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004; (iii) the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 2004; (iv) the
Company's Definitive Proxy Statement on Schedule 14-A filed with the
Commission on February 15, 2005; (v) the Company"s Registration Statement
on Form S-1 filed with the Commission on February 18, 2005 (File No.
333-122899); (vi) the risk factors incorporated by reference herein in
Section 3(i) hereof; and (vii) the Form 8-K Reports filed by the Company
with the Commission on March 3, March 17, and March 22, 2005. I understand
that all of the foregoing together with this Subscription Agreement shall
be referred to herein as "Offering Materials".
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(b) I have relied only upon the information presented and contained
in the Offering Materials. I have 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 Common Stock and warrants offered by the Offering Materials and
have received answers which I consider to be reasonably responsive to such
questions. I have had the opportunity to verify the accuracy of the
information contained in the Offering Materials.
(c) I understand that I am subscribing for the Common Stock and
warrants without being furnished any literature or prospectus in
connection with the Offering other than the Offering Materials, and that
the Offering of the Common Stock and warrants presented in the Offering
Materials will not have been scrutinized by the securities administrator
or similar bureau, agency, or department of the state of my residence.
(d) I understand (i) that the neither the Common Stock nor the
Common Stock underlying the warrants have been registered under the Act or
registered or qualified under the securities laws of the state of my
residence, (ii) that except as provided above, I have no right to require
such registration or qualification, and (iii) that therefore I must bear
the economic risk of the investment for an indefinite period of time
because neither the Common Stock, the warrants, nor the Common Stock
underlying the warrants may be sold unless so registered or qualified or
unless an exemption from such registration and qualification is available.
(e) The Common Stock and warrants are being purchased for my 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 is currently traded on the OTC Bulletin Board under the
symbol USTT, I also understand that there may not be any established
public trading market for the sale of such securities.
(f) I am able to bear the economic risks related to purchase of the
Common Stock and warrants for an indefinite period of time (i.e., I am
able to afford a complete loss of the Common Stock and warrants I am
subscribing to purchase).
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(g) My overall commitment to investments which are not readily
marketable is not disproportionate to my net worth and my investment in
the Company will not cause such overall commitment to become excessive.
(h) I have adequate means of providing for my current needs and
possible personal contingencies. I have no need for liquidity of the
Common Stock and warrants subscribed to be purchased hereby and have no
reason to anticipate any change in my personal circumstances, financial or
otherwise, which might cause or require any sale or distribution of such
Common Stock and warrants subscribed to be purchased.
(i) I recognize that the purchase of the Common Stock and warrants
involves a high degree of risk including those special risks set forth
under the caption "Risk Factors" and "Forward Looking Statements" in the
Form S-1 Registration Statement of the Company filed with the Commission
on February 18, 2005 (No. 333-122899) all of which are incorporated herein
by reference.
(j) I understand that my right to transfer the Common Stock,
warrants, and Common Stock underlying the warrants will be restricted as
set forth on the certificate evidencing the Common Stock and warrants.
Such restrictions include provisions against transfer unless such transfer
is not in violation of the Act, or applicable state securities laws.
(k) All information which I have provided to the Company including,
but not limited to, my Social Security or tax identification number, my
financial position, and status as an accredited investor, and my knowledge
of financial and business matters is true, correct and complete as of the
date of execution of this Subscription Agreement. I undertake to provide
promptly to the Company written notice of any material changes in my
financial position or otherwise and such information will be true, correct
and complete as of the date given. I understand that the Company will rely
in a material degree upon the representations contained herein.
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(l) The undersigned maintains a domicile or business at the address
shown on the signature page of this Subscription Agreement, at which
address the undersigned has subscribed for the Common Stock and warrants.
(m) I understand that legends may be placed on any certificate
representing the Common Stock, warrants, and the Common Stock underlying
the warrants 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.
(n) I understand that the Company may require me to meet additional
suitability standards if it deems it necessary or advisable to comply with
any applicable state securities or other laws.
4. Transferability of Subscription. The undersigned agrees not to transfer
or assign this Subscription Agreement, or any of the undersigned's interest
herein.
5. Revocation. The undersigned agrees that the undersigned shall not
cancel, terminate or revoke this Subscription Agreement or any agreement of the
undersigned made hereunder and that this Subscription Agreement shall survive
the death or disability of the undersigned.
6. Common Stock and Warrants Subscribed For. The undersigned hereby
subscribes for _______________ shares of Common Stock and warrants to purchase a
like number of shares of Common Stock, and agrees to pay _____________ Dollars
in full payment therefore by check delivered herewith made payable to "USA
Technologies, Inc.".
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7. Miscellaneous.
The certificates representing the Common Stock and warrants registered in
the name of the undersigned shall be mailed to me at the address indicated
below.
This Subscription Agreement, upon acceptance by the Company shall be
binding upon the heirs, executors, administrators and successors of the
undersigned.
The undersigned hereby represents that the undersigned has read this
entire Subscription Agreement and Offering Materials.
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IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this _____ day of _____ , 2005.
#2 #1
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Signature Signature
#2 #1
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Witness Witness
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Investor #2 Print or Type Name Investor #1 Print or Type Name
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Occupation Telephone No. Occupation Telephone No.
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Telephone No. (Residence) Telephone No. (Residence)
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Social Security or Tax I.D. No. Social Security or Tax I.D. No.
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Street Address Street Address
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City State Zip City State Zip
ACCEPTED:
USA TECHNOLOGIES, INC.
Dated: By:
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