EXHIBIT 4.16
SUBSCRIPTION AGREEMENT
This Subscription Agreement is made this 25 day of October 2002, 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 $165,000. As more fully set forth herein, Xxxxxx has agreed to
subscribe for 400,000 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
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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.
Promptly following 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.
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, 2002; (ii) the Company's draft Registration Statement on Form
SB-2 covering the Shares to be filed promptly after the date hereof 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.
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 promptly after the date hereof, all of which are
incorporated herein by reference.
(g) Subject to the registration rights set forth 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 to 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.
(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
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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
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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
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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
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accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of law rules.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Subscription Agreement the date first above written.
XXXXXX & XXXXXXX, P.C.
/s/ Xxxx Xxxxxxx
By:___________________________
Xxxx Xxxxxxx, President
Address:
One Westlakes
Berwyn, Suite 301
X.X. Xxx 000
Xxxxxx Xxxxx, XX 00000-0000
XXX TECHNOLOGIES, INC.
/s/Xxxxxx X. Xxxxxx, Xx.
By: __________________________
Xxxxxx X. Xxxxxx, Xx.,
Chief Executive Officer