FIFTH AMENDMENT TO EMPLOYMENT AND
NON-COMPETITION AGREEMENT
This Fifth Amendment is made this 16th day of July 2003, by and between
XXXXXX X. XXXXXX, XX. ("Xxxxxx"), and USA TECHNOLOGIES, INC., a Pennsylvania
corporation ("USA").
Background
USA and Xxxxxx entered into an Employment And Non-Competition Agreement
dated November 20, 1997, a First Amendment thereto dated June 17, 1999, a Second
Amendment thereto dated February 22, 2000, a Third Amendment thereto dated
January 16, 2002, and a Fourth Amendment thereto dated April 15, 2002
(collectively, the "Agreement"). As more fully set forth herein, the parties
desire to amend the Agreement in certain respects.
Agreement
NOW, THEREFORE, in consideration of the covenants set forth herein, and
intending to be legally bound hereby, the parties agree as follows:
1. Amendments.
A. Subparagraph (a) of Section 1. Employment of the Agreement is hereby
deleted and the following new subparagraph (a) is hereby substituted in its
place:
(a) USA shall employ Xxxxxx as Chairman and Chief Executive
Officer commencing on the date hereof and continuing through
June 30, 2005 (the "Employment Period") and Xxxxxx hereby
accepts such employment. Unless terminated by either party
hereto upon at least 60-days notice prior to end of the
original Employment Period ending June 30, 2005, or prior to
the end of any one year extension of the Employment Period,
the Employment Period shall not be terminated and shall
automatically continue in full force and effect for
consecutive one year periods.
B. Subparagraph (d) of Section 2. Compensation and Benefits of the
Agreement is hereby deleted and the following new subparagraph (d) is hereby
substituted in its place:
(d) As a further incentive to Xxxxxx, USA believes it is in the best
interest of USA to issue to Xxxxxx shares of Common Stock of USA
("Common Stock") in the event there is a USA Transaction (as defined
below), all as more fully described in Section 4 hereof.
C. The following new subparagraph (e) is hereby added to Section 2.
Compensation and Benefits of the Agreement:
(e) On the date of the execution and delivery of the Fifth Amendment,
USA shall issue to Xxxxxx 10,500,000 shares of fully vested Common
Stock. Xxxxxx acknowledges that the Common Stock has not been and will
not be registered under the Act or under any state securities law, and
the Common Stock can not be sold or transferred unless such Common
Stock has been registered under the Act or such state securities laws,
or unless USA has received an opinion of its counsel that such
registration is not required. Xxxxxx acknowledges that the issuance of
the shares to him represents taxable income to him and that he (and not
USA) shall be responsible for the payment of any and all income taxes
attributable to the issuance of the shares to him. 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 the Company or its transfer agent. In connection
with the issuance of the shares of Common Stock to him, Xxxxxx has
executed and delivered to USA a Lock-up Agreement.
D. The title of Section 4. Seven Percent Rights. of the Agreement is
hereby deleted and the following new title of Section 4 is hereby substituted in
its place:
SECTION 4. Common Stock Rights.
E. The first sentence of subparagraph A. of Section
4. Common Stock Rights of the Agreement is hereby deleted and the following new
first sentence of subparagraph A. is hereby substituted in its place:
A. If at any time after the date hereof there shall be a USA
Transaction, USA shall issue to Xxxxxx an aggregate of 14,000,000 shares of
Common Stock (the "Rights") subject to adjustment as provided in subparagraph B
of this Section 4.
F. The first sentence of subparagraph B. of Section 4. Common Stock
Rights. of the Agreement is hereby deleted and the following
substituted in its place:
The number of shares of Common Stock to be issued to Xxxxxx upon the
occurrence of a USA Transaction 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 number of
shares shall be proportionately increased 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; or (ii) if USA
shall at any time subdivide its outstanding Common Stock by
recapitalization, reclassification or split-up thereof, the number of
shares shall be proportionately increased, and, if USA shall at any
time combine the outstanding shares of Common Stock by
recapitalization, reclassification, or combination thereof, the number
of shares shall be proportionately decreased. Any such adjustment to
the number of shares shall become effective at the close of business on
the record date for such subdivision or combination.
G. The following new sentence is hereby added to the end of
subparagraph F. of Section 4. Common Stock Rights. of the Agreement:
The Rights shall be transferable under and pursuant to the last will
and testament of Xxxxxx in accordance with this subparagraph F., and
the death of Xxxxxx shall not affect the Rights, and in such event the
Rights shall continue in full force and effect in accordance with this
Section 4.
2. Modification. Except as otherwise specifically set forth in
Paragraph 1, the Agreement shall not be amended or modified in any respect
whatsoever and shall continue in full force and effect.
3. Capitalized Terms. Except as specifically provided otherwise herein,
all capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
4. Effective Time. The amendments to the Agreement made in Paragraph 1
hereof shall be effective from and after the date of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment on the day and year first above written.
/s/ Xxxxxx X. Xxxxxx, Xx.
------------------------
XXXXXX X. XXXXXX, XX.
USA TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx,
President
