SUBSCRIPTION AGREEMENT
This Subscription Agreement is made this 26th day of October 2001, by
and between USA TECHNOLOGIES, INC., a Pennsylvania corporation ("USA" or
"Company"), and XXXXXX & XXXXXXX, P.C., a Pennsylvania professional corporation
("Xxxxxx").
Background
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As of the date hereof, USA owes Xxxxxx unpaid professional fees of
approximately $215,000. As more fully set forth herein, Xxxxxx has agreed to
subscribe for 200,000 shares of Common Stock of USA (the "Shares") and to apply
the sales proceeds thereof towards the professional fees due or to become due in
the future.
Agreement
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NOW THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. Subscription. Xxxxxx hereby subscribes for the Shares. Xxxxxx and
USA agree that the proceeds from the sale of the Shares (net of applicable
brokerage commissions and all other costs of Xxxxxx relating to this Agreement
and the sale of the Shares) shall be applied towards the unpaid balance of the
professional fees due and to become due in the future to Xxxxxx by USA. USA
shall deliver to Xxxxxx a certificate representing the Shares registered in the
name of Xxxxxx within 15 days of the date hereof. Xxxxxx agrees that all sales
of the Shares shall satisfy the manner of sale requirements set forth in
subsections (f) and (g) of Rule 144 promulgated under the Securities Act of
1933, as amended ("Act"). The foregoing sentence shall not apply (i) unless at
the applicable time of sale there is an effective registration statement in
effect covering the Shares, or (ii) to block sales by Xxxxxx consisting of at
least 50,000 of the Shares. Xxxxxx shall notify the Company of all such sales
within 48 hours thereof and comply with the prospectus delivery requirements of
the Act.
On the date hereof, USA shall at its cost and expense file and use its
best efforts to have declared effective, an appropriate Registration Statement
with the Securities and Exchange Commission registering all of the Shares for
resale by Xxxxxx under the Act. USA shall use its best efforts to keep the
Registration Statement effective and current for a 12 month period.
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2. Verification of Suitability and Status as "Accredited Investor".
Xxxxxx hereby represents to USA that it qualifies as an "accredited investor" as
such term is defined in Rule 501 promulgated under the Act because it is a
corporation not formed for the purpose of investing in the Company with total
assets in excess of $5,000,000.
3. Representations by Xxxxxx. Xxxxxx represents and warrants to the
Company as follows:
(a) Xxxxxx has received, read and understands the provisions
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 draft
Registration Statement on Form SB-2 covering the Shares to be filed
today with the Securities and Exchange Commission; and (iii) the Risk
Factors section incorporated by reference herein in Section 3(f)
hereof. Xxxxxx understands that all of the foregoing together with this
Subscription Agreement shall be referred to herein as "Offering
Materials". Xxxxxx agrees to keep the information set forth in the
draft Registration Statement in confidence until the Registration
Statement has been filed with the Securities and Exchange Commission
for at least 24 hours.
(b) Xxxxxx has relied only upon the information presented and
contained in the Offering Materials. Xxxxxx 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 Shares offered by the Offering
Materials and has received answers which it considers to be reasonably
responsive to such questions. Xxxxxx has had the opportunity to verify
the accuracy of the information contained in the Offering Materials.
(c) Xxxxxx understands that it is subscribing for the Shares
without being furnished any literature or prospectus in connection with
the offering of the Shares other than the Offering Materials, and that
the offering of the Shares 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 incorporation.
(d) Xxxxxx understands (i) that the Shares have not been
registered under the Act or registered or qualified under the
securities laws of the state of incorporation of Xxxxxx (i.e.,
Pennsylvania); (ii) that except as otherwise provided herein, Xxxxxx
has no right to require such registration or qualification; and (iii)
that therefore Xxxxxx must bear the economic risk of the investment for
an indefinite period of time because the Shares may not be sold unless
so registered or qualified or unless an exemption from such
registration and qualification is available.
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Although the Company has agreed to use its best efforts to register for
resale the Shares with the Securities and Exchange Commission, and to
use its best efforts to keep such registration statement current and
effective, there can be no assurance that such efforts will be
successful. In any such event, the Shares would not be registered for
resale under the Act, and could only be sold by the holder in reliance
upon exemptions from registration under the Act.
(e) Subject to being resold pursuant to an effective
registration statement, the Shares are being purchased for Xxxxxx'x 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, Xxxxxx also understands that there may not be
any established public trading market for the sale of the Shares.
(f) Xxxxxx recognizes that the purchase of the Shares involves
a high degree of risk including those special risks set forth under the
caption "Risk Factors" and "Forward Looking Statements" in the draft of
the Form SB-2 Registration Statement of the Company to be filed with
the Securities and Exchange Commission on the date hereof, all of which
are incorporated herein by reference.
(g) Subject to the registration rights set fort above, Xxxxxx
understands that its right to transfer the Shares 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 Xxxxxx has provided t the Company
including, but not limited to, its Social Security or 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 Subscription Agreement. Xxxxxx understands that USA will rely in a
material degree upon the representations contained herein.
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(i) Xxxxxx maintains a business at the address shown on the
signature page of this Subscription Agreement, at which address Xxxxxx
has subscribed for the Shares.
(j) Xxxxxx understands that legends may be placed on any stock
certificate representing the 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 Xxxxxx.
4. Survival of Representations, Warranties, Covenants, Agreements and
Remedies. Except as specifically provided otherwise herein, all representations,
warranties, covenants, agreements and remedies of the parties hereto, shall
survive the date hereof.
5. Entire Agreement. 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.
6. Binding Agreement. 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.
7. Pennsylvania Law Controls. 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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Subscription Agreement the date first above written.
XXXXXX & XXXXXXX, P.C.
By: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, President
Address:
One Westlakes
Berwyn, Suite 301
X.X. Xxx 000
Xxxxxx Xxxxx, XX 00000-0000
XXX TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.,
Chief Executive Officer
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