LOCK-UP AGREEMENT
In order to induce USA Technologies, Inc., a Pennsylvania corporation
("USTT"), to issue to Xxxxxx X. Xxxxxx, Xx. ("Xxxxxx"), 10,500,000 shares of
Common Stock of USTT (hereinafter, the "USTT Common Stock") pursuant to the
Fifth Amendment to the Employment and Non-Competition Agreement dated of even
date herewith between USTT and Xxxxxx (the "Employment Agreement"), Xxxxxx
represents and agrees as follows:
1. Lock-Up Agreement
a. Lock-Up Period. The lock-up period shall begin on the date
hereof (July 16, 2003) and remain in effect so long as Xxxxxx shall own the USTT
Common Stock (the "Lock-Up Period"). During the Lock-Up Period, the USTT Common
Stock may only be transferred by Xxxxxx in accordance with this Agreement. In
this regard, during the Lock-Up Period:
(i) Xxxxxx agrees not to (x) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any USTT Common Stock or any securities convertible
into or exercisable or exchangeable for the USTT Common Stock, or (y) enter into
swap or other arrangements that transfers all or a portion of the economic
consequences associated with the ownership of any USTT Common Stock (regardless
of whether any of the transactions described in clause (x) or (y) is to be
settled by the delivery of USTT Common Stock, in cash or otherwise), provided
that Xxxxxx shall be permitted to transfer the USTT Common Stock to a Permitted
Transferee (as defined below), provided further that such transferee shall agree
in writing to be bound by the provisions hereof and that such transfer shall be
in accordance with all applicable securities laws; and
(ii) Xxxxxx authorizes USTT to cause the transfer agent to decline
transfer and/or to note stop transfer restrictions on the transfer books and
records of USTT with respect to any USTT Common Stock for which Xxxxxx is a
record holder, and, in the case of such shares or securities for which Xxxxxx is
the beneficial but not the record holder, agrees to cause the record holder to
cause the transfer agent to decline transfer and/or to note stop transfer
restrictions on the transfer books and records of USTT with respect to such
shares.
b. Expiration of Lock-Up Period. Notwithstanding the restrictions
of Section 1.a hereof, the Lock-Up Period shall expire and terminate immediately
in connection with 2,500,000 shares of the USTT Common Stock on the one year
anniversary of the date hereof (i.e.,July 16, 2004), and shall expire and
terminate immediately in connection with 8,000,000 shares of the USTT Common
Stock on the two year anniversary of the date hereof (i.e.,July 16, 2005).
c. Permitted Transferee. For the purposes hereof, the term
Permitted Transferee shall mean any of the following: a member of Xxxxxx'x
immediate family; a trust, the beneficiary of which is Xxxxxx or Xxxxxx'x
immediate family; or a person to whom the USTT Common Stock is transferred from
Xxxxxx by will or the laws of descent and distribution.
2. Legend.
Xxxxxx understands that all certificates representing USTT Common Stock
shall bear a legend substantially in the form set forth below:
"The shares represented by this certificate may be subject to
certain restrictions by the terms of a certain Lock-Up Agreement
entered into by the initial holder hereof, a copy of which agreement
may be inspected by the holder of this certificate at the principal
office of the corporation, or furnished by the corporation to the
holder of this certificate upon written request without charge."
3. Miscellaneous.
a. This Agreement shall be governed in accordance with the laws of
the Commonwealth of Pennsylvania.
b. This agreement is irrevocable and will be binding on the
undersigned and the successors, heirs, personal representatives and assigns of
the undersigned.
c. The undersigned has carefully read this Agreement and discussed
its requirements to the extent the undersigned believed necessary with the
undersigned's counsel.
d. For all purposes hereof, the term "USTT Common Stock" shall
only include and mean the shares of USTT Common Stock issued to the Xxxxxx by
USTT as a result of the Employment Agreement, and the restrictions of this
Agreement shall only apply to those 10,500,000 shares and not to any other
shares of Common Stock whatsoever held by Xxxxxx at any time (whether prior to
or after the date hereof).
Dated: July 16, 2003
/s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------
XXXXXX X. XXXXXX, XX.
