EXHIBIT 4.25
SAMPLE
12% CONVERTIBLE SENIOR NOTE
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No.2002-A-___
$________ DATED:_________ __, 2002
FOR VALUE RECEIVED, the undersigned, USA TECHNOLOGIES, INC., a
Pennsylvania corporation ("USA"), hereby promises to pay to the order of
______________("Lender"), at _______________, or at such other place as the
Lender may designate in writing, the principal sum of ___________________Dollars
($_________), together with interest (computed on the basis of a 360-day year of
twelve 30-day months) from the date hereof on the outstanding principal balance
hereof, to be fixed at a rate equal to 12% per annum, in accordance with the
following terms:
1. PRINCIPAL AMOUNT. The principal amount of this 12% Convertible
Senior Note("Convertible Senior Note") shall be due and payable on December 31,
2005 at which time all unpaid interest which has accrued on the Convertible
Senior Note shall also be due and payable ("Maturity Date"). USA shall not be
required to pay to the holder hereof any principal amount of this Convertible
Senior Note which has been converted into shares of Common Stock of USA ("Common
Stock") pursuant to Section 7 hereof.
2. INTEREST. Interest on the outstanding principal balance of this
Convertible Senior Note shall accrue at the rate of 12% per annum and shall be
payable quarterly in arrears on September 30, March 31, December 31, and June 30
of each year until the Maturity Date, commencing on the date hereof. From and
after the date of any conversion of the principal amount of this Convertible
Senior Note pursuant to Section 7 hereof, no interest shall accrue on the amount
of principal which has been so converted. USA shall pay any unpaid and accrued
interest on any principal amount of this Convertible Senior Note which has been
converted into Common Stock pursuant to Section 7 hereof through the date of
such conversion, payable by USA to the holder hereof on the quarterly payment
date immediately following the date of conversion.
3. RESTRICTIVE LEGEND. Neither this Convertible Senior Note nor the
Common Stock into which this Convertible Senior Note may be converted may be
offered for sale or sold, or otherwise transferred in any transaction which
would constitute a sale thereof within the meaning of the Securities Act of
1933, as amended (the "Act"), unless: (i) such security has been registered for
sale under the Act and registered or qualified under applicable state securities
laws relating to the offer and sale of securities; or (ii) exemptions from the
registration requirements of the Act and the registration or qualification
requirements of all such state securities laws are available and USA shall have
received an opinion of counsel reasonably satisfactory to USA that the proposed
sale or other disposition of such securities may be effected without
registration under the Act and would not result in any violation of any
applicable securities laws relating to the registration or qualification of
securities for sale.
4. SUBORDINATION.
A. SUBORDINATION TO SENIOR DEBT. The indebtedness (including
unpaid principal of and interest on this Convertible Senior Note) as well as all
other obligations and liabilities of USA to Lender hereunder evidenced in this
Convertible Senior Note is subordinated to the prior payment when due of the
principal of, premium, if any, interest on, and all other amounts due in
connection with or under all "Senior Debt" (as defined below) as follows: Upon
any distribution of its assets in a liquidation or dissolution of USA, or in
bankruptcy, reorganization, insolvency, receivership or similar proceedings
relating to USA, the Lender shall not be entitled to receive payment until the
holders of Senior Debt are paid in full. Until a payment default occurs with
respect to any Senior Debt, all payments of principal and interest due to Lender
under this Convertible Senior Note shall be made in accordance with this
Convertible Senior Note. Upon the occurrence of any payment default with respect
to any Senior Debt then, upon written notice thereof to USA and Lender by any
holder of such Senior Debt or its representative, no payments of principal or
interest on the Convertible Senior Note shall be made by USA until such payment
default has been cured to the satisfaction of the holder of such Senior Debt or
waived by such holder, provided, however, that if during the 180 day period
following such default, the holder of Senior Debt has not accelerated its loan,
commenced foreclosure proceedings or otherwise undertaken to act on such default
then USA shall be required to continue making payments under the Convertible
Senior Note, including any which had not been paid during such 180 day period.
In the event that any Bank Or Other Financial Institution at any time so
requires, the Lender shall execute, upon request of USA, any intercreditor or
subordination agreement(s) with and/or in favor of any such Bank Or Other
Financial Institution on terms not materially more adverse to the Lender then
the subordination terms contained in this Convertible Senior Note.
B. DEFINITIONS. For all purposes of this Section 4:
"SENIOR DEBT" means (a) any and all Indebtedness (whether
outstanding on the date hereof or thereafter created) created, Guaranteed,
incurred or assumed by USA with respect to any Bank Or Other Financial
Institution, or (b) any and all Indebtedness created, Guaranteed, incurred, or
assumed, by USA to the extent secured by a lien on any assets of USA. Senior
Debt as described in the prior sentence shall be deemed to exist whether such
Indebtedness is or is not specifically designated by the Company as being
"Senior Debt" in its defining instruments.
Notwithstanding anything herein to the contrary, Senior Debt
does not include (i) unsecured accounts payable to trade creditors of USA
incurred in the ordinary course of business, (ii) any debt owed by USA to any
officer, director or stockholder of USA (not including any Convertible Senior
Notes held by any of them), (iii) any obligation of USA issued or contracted for
as payment in consideration of the purchase by USA of the capital stock or
substantially all of the assets of another person or in consideration for the
merger or consolidation with respect to which USA was a party, (iv) any
operating lease obligations of USA, (v) any other indebtedness which by its
terms is subordinated to the Convertible Senior Notes, or (vi) any "other
indebtedness" which is subordinated to all indebtedness to which this
Convertible Senior Note is subordinated in substantially like terms as this
Convertible Senior Note which such "other indebtedness" shall be treated as
equal with the indebtedness evidenced by this Convertible Senior Note (including
but not limited to USA`s previously issued senior notes).
"BANK OR OTHER FINANCIAL INSTITUTION" means a bank as defined
in Section 3(a)(2) of the Act whether acting in its individual or fiduciary
capacity; an insurance company as defined in Section 2(a)13 of the Act; an
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act; a Small
Business Investment Company licensed by the Small Business Administration; or an
employee benefit plan, including an individual retirement account, which is
subject to the provisions of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, insurance company, or
registered investment adviser.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"INDEBTEDNESS" means, with respect to any Person any indebtedness of
such Person, whether or not contingent, direct, or indirect, in respect of
borrowed money or evidenced by bonds, notes, Senior Notes or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
representing the balance deferred and unpaid of the purchase price of any
property (including capital lease obligations).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including the
Company, or any subsidiary of the Company.
5. EVENT OF DEFAULT. An "Event of Default" under this Convertible
Senior Note means the occurrence of any of the following events (whether the
reason for such Event of Default shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body): (i) nonpayment of any principal or interest installment when and as due
hereunder which is not cured by USA within thirty (30) days after the due date;
(ii) any other breach of the terms hereof which is not cured by USA within
thirty (30) days after notice from Lender; (iii) the institution of any
proceedings by or against USA under any law relating to bankruptcy, insolvency,
reorganization or other form of debtor relief or USA`s making an assignment for
the benefit of creditors, or the appointment of a receiver, trustee, conservator
or other judicial representative for USA or any of its respective properties, or
the admission in writing by USA of its inability to pay its debts generally as
they become due; or (iv) any default by USA under any agreement for borrowed
money which default continues after expiration of the applicable notice and
grace period, if any, provided in the agreement and which permits the holder
thereof to accelerate the indebtedness due thereunder. Upon the occurrence of an
Event of Default, the entire principal and any accrued interest due hereunder
shall accelerate and become immediately due and payable without presentation,
demand, protest or further demand or notice of any kind, all of which are
expressly waived by USA, and Xxxxxx shall thereupon have all rights and remedies
provided hereunder or otherwise available at law or in equity. The period of
time commencing from the date of the occurrence of an Event of Default until the
date such default is cured shall be referred to as the "Default Period". During
any Default Period, any late interest or principal payments will accrue interest
at a rate of 1% per month, cumulative and compounding until all accrued and
unpaid principal and interest is paid in full.
6. PREPAYMENT. USA shall have the right to prepay this Convertible
Senior Note in whole or in part, at any time and from time to time prior to the
Maturity Date, and in its sole and absolute discretion, without incurring any
penalties or additional obligations of any kind. If USA elects to prepay this
Convertible Senior Note at any time in an amount less than the then entire
remaining outstanding principal amount hereof, the holders of the Convertible
Senior Notes to be prepaid shall be selected by USA on a random basis. If USA
elects to prepay this Convertible Senior Note in whole or in part any time prior
to the Maturity Date, the holder hereof shall have the right to convert all of
(but not less than all of) the principal amount to be prepaid by USA into shares
of Common Stock pursuant to the terms and conditions of Section 7 hereof. Such
right to convert must be exercised within thirty (30) days following receipt by
the holder hereof from USA of notice of prepayment pursuant to this Section 6.
7. CONVERSION RIGHTS.
A. CONVERSION. Subject to the terms and conditions hereof, the
holder hereof may convert all or any portion of the principal amount hereof at
any time or from time to time prior to the Maturity Date, into fully paid and
non-assessable shares of Common Stock, subject to adjustment as provided in
Section 7.F. hereof ("Conversion Rights"). The number of shares of Common Stock
to be issued upon any such conversion shall be determined by dividing the
principal amount of this Convertible Senior Note to be converted by the
Conversion Price (as defined herein).
B. CONVERSION PRICE. The Conversion Rights shall be exercised
by delivery to USA (prior to the Maturity Date) of this Certificate and the
completed Election To Convert Form which is attached hereto. The Conversion
Price shall be $.20 per share of Common Stock, subject to adjustment as provided
in Section 7.F. hereof ("Conversion Price").
C. EXERCISE. Upon the surrender of this Certificate and the
completed Election To Convert Form as aforesaid, USA shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of this Convertible Senior Note, a certificate or certificates
for the number of full shares of Common Stock so purchased upon the exercise of
the Conversion Rights. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such Common Stock on and as of the date of the
delivery to USA of this Certificate and the completed Election To Convert Form
as aforesaid. If, however, at the date of surrender of this Certificate and the
completed Election To Convert Form, the transfer books for the Common Stock
issuable upon the exercise of the Conversion Rights shall be closed, the
certificates for the Common Stock in respect to which any such Conversion Rights
are then exercised shall be issued and the owner of such Common Stock shall
become a record owner of such Common Stock on and as of the next date on which
such books shall be opened, and until such date USA shall be under no duty to
deliver any certificate for such Common Stock.
D. PARTIAL CONVERSION. The Conversion Rights represented by
the Convertible Senior Note shall be exercisable, at the election of the
registered holder hereof, either as an entirety, or from time to time for any
part of the outstanding principal amount of this Convertible Senior Note, and in
the event that the Conversion Rights are exercised with respect to less than the
entire then outstanding principal amount of this Convertible Senior Note, at any
time prior to the Maturity Date, a new certificate will be issued to such
registered holder in the remaining principal amount of this Convertible Senior
Note.
E. MATURITY DATE. All of the Conversion Rights must be
exercised in accordance with the terms hereof prior to the Maturity Date. At and
after the Maturity Date any and all unexercised rights hereunder shall expire
and all such unexercised Conversion Rights shall without any action on behalf of
USA become null and void. USA shall not be required to provide notice to the
holder hereof of the expiration of the Conversion Rights hereunder, and the
Conversion Rights shall automatically expire without any required prior notice
from USA.
F. ADJUSTMENTS. Subject and pursuant to the provisions of this
subsection F, the Conversion Price shall be subject to adjustment from time to
time only as set forth hereinafter:
i. In case USA shall declare a Common Stock dividend
on the Common Stock, then the Conversion Price shall be proportionately
decreased as of the close of business on the date of record of said Common Stock
dividend in proportion to such increase of outstanding shares of Common Stock.
ii. If USA shall at any time subdivide its
outstanding Common Stock by recapitalization, reclassification or split-up
thereof, the Conversion Price immediately prior to such subdivision shall be
proportionately decreased, and, if USA shall at any time combine the outstanding
shares of Common Stock by recapitalization, reclassification, reverse stock
split, or combination thereof, the Conversion Price immediately prior to such
combination shall be proportionately increased. Any such adjustment to the
Conversion Price shall become effective at the close of business on the record
date for such subdivision or combination. The Conversion Price shall be
proportionately increased or decreased, as the case may be, in proportion to
such increase or decrease, as the case may be, of outstanding shares of Common
Stock.
iii. Whenever the Conversion Price is adjusted as
herein provided, USA shall promptly
mail to the registered holder of this Convertible Senior Note a statement signed
by an officer of USA setting forth the adjusted Conversion Price, determined as
so provided.
iv. This form of Certificate need not be changed
because of any adjustment which
is required pursuant to this Section F. However, USA may at any time in its sole
discretion (which shall be conclusive) make any change in the form of this
Certificate that USA may deem appropriate and that does not affect the substance
hereof; and any Certificate thereafter issued, whether in exchange or
substitution for this Certificate or otherwise, may be in the form as so
changed.
G. RESERVATION. There has been reserved, and USA 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
Conversion Rights represented by this Convertible Senior Note. USA agrees that
all shares of Common Stock issued upon exercise of this Convertible Senior Note
shall be, at the time of delivery of the Certificates for such Common Stock,
validly issued and outstanding, fully paid and non-assessable.
H. FRACTIONAL SHARES. USA shall not issue any fractional
shares of Common Stock pursuant to any conversion of this Convertible Senior
Note and shall pay cash to the holder of this Convertible Senior Note in lieu of
any such fractional shares.
8. NO RIGHT. The holder of this Convertible Senior Note shall not be
entitled to any of the rights of a stockholder of USA prior to the date of
issuance of the Common Stock by USA pursuant to any conversion of this
Convertible Senior Note.
9. REGISTRATION RIGHTS. As set forth above, neither this Convertible
Senior Note nor the Common Stock into which this Convertible Senior Note is
convertible shall be registered under the Act or any state securities laws, and
shall constitute restricted securities as defined under Rule 144 promulgated
under the Act. Notwithstanding the foregoing, promptly following the termination
of the private placement offering by USA of the 12% Convertible Senior Notes of
which this Convertible Senior Note is a part, USA shall, at its expense, file
and use its best efforts to have declared effective, a registration statement
under the Act covering the resale of the Common Stock underlying this
Convertible Senior Note. USA shall use its best efforts to have the resale of
the Common Stock by non-affiliates of USA exempted from the registration
requirements under applicable state securities laws.
10. SECURITIES LAWS. As a condition to the issuance of any Common Stock
pursuant to this Convertible Senior Note, the holder of such Common Stock shall
execute and deliver such representations, warranties, and covenants that may be
required by applicable federal and state securities law, or that USA determines
is reasonably necessary in connection with the issuance of such Common Stock. In
addition, the certificates representing the Common Stock shall contain such
legends, or restrictive legends, or stop transfer instructions, as shall be
required by applicable Federal or state securities laws, or as shall be
reasonably required by USA or its transfer agent.
11. CHOICE OF LAW. This Convertible Senior Note shall be construed and
enforced in accordance with and governed by the laws of the Commonwealth of
Pennsylvania without regard to its conflict of laws provisions.
12. CHOICE OF FORUM. Lender irrevocably consents and agrees that any
legal action or proceeding against USA or brought by Xxxxxx, under, arising out
of, or in any manner relating to, this Convertible Senior Note, shall be brought
solely and exclusively in the Court of Common Pleas of the Commonwealth of
Pennsylvania located in the County of Philadelphia, Pennsylvania, or in the
United States District Court for the Eastern District of Pennsylvania, located
in Philadelphia, Pennsylvania. Lender expressly and irrevocably consents to the
personal jurisdiction of such Courts in any such action or proceeding and waives
any claim or defense in any such action or proceeding based upon any alleged
lack of personal jurisdiction, improper venue, or forum non conveniens.
13. WAIVER. No failure or delay on the part of the Lender to insist on
strict performance of USA`s obligations hereunder or to exercise any remedy
shall constitute a waiver of the Lender`s rights in that or any other instance.
No waiver of any of the Lender`s rights shall be effective unless in writing,
and any waiver of any default of any instance of non-compliance shall be limited
to its express terms and shall not extend to any other default or instance of
non-compliance.
14. LOST, MUTILATED CERTIFICATE. In case this Convertible Senior Note
certificate shall become mutilated, lost, stolen or destroyed, USA shall issue
in exchange and substitution for and upon cancellation of the mutilated
certificate, or in lieu of and in substitution for the Certificate lost, stolen,
or destroyed, a new Certificate of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence satisfactory to the USA of
such loss, theft or destruction of such certificate and indemnity, if requested,
also satisfactory to USA.
15. ILLEGALITY. Any provision hereof found to be illegal, invalid or
unenforceable for any reason whatsoever shall not affect the validity, legality
or enforceability of the remainder hereof.
16. USURY. If the effective interest rate on this Convertible Senior
Note would otherwise violate any applicable usury law, then the interest rate
shall be reduced to the maximum permissible rate and any payment received by the
Lender in excess of the maximum permissible rate shall be treated as a
prepayment of the principal of this Convertible Senior Note.
17. EXPENSES. USA agrees to reimburse Lender for all costs and
expenses, including reasonable attorneys` fees, incurred by the Lender, relating
to the enforcement of this Convertible Senior Note.
18. SUBSCRIPTION AGREEMENT. This Convertible Senior Note has been
issued by USA pursuant to the terms of the Subscription Agreement between USA
and Lender dated of even date herewith the terms of which are incorporated
herein by reference.
19. ASSIGNS, ETC..This Convertible Senior Note shall be binding upon
USA`s successors and assigns and subject to Section 3 hereof, shall inure to the
benefit of each holder of this Convertible Senior Note and such holder`s
successors, endorsees and assigns.
Intending to be legally bound, USA has caused this Convertible Senior
Note to be executed in its corporate name, by its duly authorized
representatives as of the date and year first above written.
USA TECHNOLOGIES, INC.
By:
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Xxxxxx X. Xxxxxx, Xx.,
Chief Executive Officer
By:
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Xxxxxx X. Xxxxxxx,
Secretary
USA TECHNOLOGIES, INC.
000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.,
Chief Executive Officer
ELECTION TO CONVERT FORM
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The undersigned hereby irrevocably elects to exercise the
rights of conversion represented by the attached Convertible Senior Note
Certificate No. of USA. The undersigned desires to convert $ of the principal
amount of the attached Certificate into shares of Common Stock all as provided
for therein and tenders herewith the original Convertible Senior Note, all in
accordance with the Certificate. The undersigned requests that a Certificate
representing such shares of Common Stock shall be issued to and registered in
the name of the undersigned and delivered to the undersigned at the address set
forth below. If less than the entire principal amount of the Convertible Senior
Note represented by the attached certificate has been converted, then a new
Convertible Senior Note Certificate in the remaining principal amount of the
Convertible Senior Note shall be issued to and registered in the name of the
undersigned and delivered to the undersigned at the address set forth below.
Dated: , 20 Signature:
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Print Name:
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Print Address:
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