Exhibit 10.3


 


PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS, WHICH ARE MARKED BY ASTERISKS (“***”).


 


FIFTEENTH AMENDMENT 

TO

LOAN AND SECURITY AGREEMENT 


 


This Fifteenth Amendment
to Loan and Security Agreement is entered into as of January 15, 2016 (the “Amendment”), by and between AVIDBANK CORPORATE
FINANCE, a division of AVIDBANK (“Bank”), and USA TECHNOLOGIES, INC. (“Borrower”).


 


RECITALS


 


A.           Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of June 21, 2012 and that certain First Amendment to
Loan and Security Agreement dated as of January 1, 2013, that certain Second Amendment to Loan & Security Agreement dated as
of April 2, 2013, that certain Third Amendment to Loan and Security Agreement dated as of April 11, 2013, that certain Fourth Amendment
to Loan and Security Agreement dated as of April 29, 2013, that certain Fifth Amendment to Loan and Security Agreement dated as
of September 26, 2013, that certain Sixth Amendment to Loan and Security Agreement dated as of May 15, 2014, that certain Seventh
Amendment to Loan and Security Agreement dated as of June 17, 2014, that certain Eighth Amendment to Loan and Security Agreement
dated as of June 30, 2014, that certain Ninth Amendment to Loan and Security Agreement dated as of September 30, 2014, that certain
Tenth Amendment to Loan and Security Agreement dated as of April 17, 2015, that certain Eleventh Amendment to Loan and Security
Agreement dated as of May 19, 2015, that certain Twelfth Amendment to Loan and Security Agreement dated as of June 18, 2015, certain
Thirteenth Amendment to Loan and Security Agreement dated as of July 31, 2015 and certain Fourteenth Amendment to Loan and Security
Agreement dated as of August 14, 2015 (collectively, the “Agreement”). Borrower and Bank desire to amend the Agreement
in accordance with the terms set forth herein.


 


B.           Borrower
has also informed Bank that it intends to acquire substantially all of the assets of Vendscreen, Inc. (“Seller”) on
substantially similar terms and conditions set forth in the Asset Purchase Agreement between Borrower, Seller and the other parties
named therein attached hereto as Exhibit A (the “Proposed Transaction”). Borrowers have requested that Bank
consent to the Proposed Transaction, and Bank has agreed to provide its consent with respect to the Proposed Transaction, in accordance
with the terms set forth herein.


 




     


     


    

  


AGREEMENT


 


NOW, THEREFORE, the
parties agree as follows:


 


1.            Notwithstanding
the prohibition set forth in Section 7.7 of the Loan Agreement and subject to and upon the terms and conditions hereof, Bank consents
to the Proposed Transaction. Borrower (i) represents and warrants that the assets being acquired from Seller (the “Assets”)
shall be free and clear of any Liens and Borrower shall provide evidence to Bank that the Lien on the Assets in favor of 3X5 Special
Opportunity Fund, L.P. has been terminated as of the closing of the Proposed Transaction; (ii) acknowledges and agrees upon consummation
of the Proposed Transaction, the Assets shall automatically constitute Collateral under the Loan Agreement; (iii) authorizes Bank
to file any financing statements in such jurisdictions and offices as the Bank deems necessary in connection with the perfection
of a security interest in such Collateral. 


 


2.            The
foregoing consent from Bank is conditioned upon the following: Borrower shall (x) within one (1) Business Day of execution, deliver
to Bank the fully executed copy of the Asset Purchase Agreement with respect to the Proposed Transaction, together with all schedules,
exhibits and ancillary documents entered into in connection therewith, which shall be in form and substance substantially similar
to Exhibit A attached hereto, without any material deviation, (y) within thirty (30) days following the closing of the Proposed
Transaction, deliver to Bank its annual operating projections (including income statements, balance sheets and cash flow statements
presented in a monthly format) for 2016, in form and substance reasonably satisfactory to Bank; and (z) promptly (within one (1)
Business Day) of the consummation of the Proposed Transaction, execute and deliver to Bank a short form intellectual property security
agreement with respect to the intellectual property (including all patents, trademarks and copyrights) acquired from Seller. Failure
to timely comply with any of the foregoing shall constitute an immediate Event of Default to which no cure period applies.


 


3.            The
following definitions are hereby added to Section 1.1 of the Agreement:


 


“Debt Service
Coverage Ratio” means, as of the end of each quarter (the “Measurement Period”), the product of (i) Adjusted
EBITDA divided by (ii) the interest owing on the Revolving Facility and Term Loan during the Measurement Period plus the scheduled
principal payments on the Term Loan during the Measurement Period.


 


“VendScreen
Asset Purchase” means Borrower’s acquisition of the assets of Vendscreen, Inc. pursuant to that certain Asset Purchase
Agreement between Borrower and Vendscreen, Inc.


 


4.            The
following definitions in Section 1.1 of the Agreement are amended and restated in their entirety to read as follows: 


 


“Adjusted
EBITDA” means net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, rent/lease
expense pursuant to sale/leaseback equipment transaction that occurred in 2014, and change in fair value of warrant liabilities
and stock-based compensation expense, and the one-time costs and expenses incurred or accrued by Borrower in connection with the
VendScreen Asset Purchase.


 


“Credit
Extension” means each Advance, the Term Loan, or any other extension of credit by Bank for the benefit of Borrower hereunder.


 


“Revolving
Line” means, as of any measurement date, a credit extension of up to Seven Million Five Hundred Thousand Dollars ($7,500,000)
less the then outstanding principal amount of the Term Loan.


 




     


     


    

  


5.           The
following is added as a new subsection (b) following the end of Section 2.1(a) of the Agreement: 


 


(b)     
     Term Loan.


 


(i)           Subject
to and upon the terms and conditions of this Agreement, Bank agrees to make a single term loan cash advance to Borrower (the “Term
Loan”) in an aggregate principal amount of Three Million Dollars ($3,000,000). The Term Loan shall be made to Borrower on
or prior to the closing of the VendScreen Asset Purchase (the “Funding Date”), and the proceeds of the Term Loan shall
be used to repay an Advance of $3,000,000 currently outstanding under the Revolving Facility drawn in December 2015 to finance
the VendScreen Asset Purchase.


 


(ii)         Interest
shall accrue from the Funding Date at the rate specified in Section 2.3, and shall be payable monthly on the tenth day of each
month so long as the Term Loan is outstanding, beginning with the tenth day of the first month following the Funding Date. Beginning
on the tenth day of the first month following the first anniversary of the Funding Date and continuing on the tenth day of each
month thereafter for a period of twenty three (23) months, Borrower shall make equal monthly payments of principal based on a five
year (i.e. 60 month) amortization schedule. On the tenth day of the twenty forth (24th) month following the first anniversary
of the Funding Date (the “Term Loan Maturity Date”), all amounts owing with respect to the Term Loan, including all
outstanding principal, accrued interest, and Bank Expenses, shall be immediately due and payable.


 


(iii)        Borrower
shall have the option to prepay any or all of the Term Loan made by Bank under this Agreement without penalty or premium.


 


(iv)        When
Borrower desires the Term Loan to be made, Borrower will notify Bank no later than 3:00 p.m. Pacific Time, on the Business Day
that is at least one day prior to the date the Term Loan is requested to be made. Each such notification shall be made by delivering
to Bank a request form in substantially the form of Exhibit B-1 attached hereto. Bank is authorized to make Term Loan under this
Agreement, based upon instructions received from a Responsible Officer or a designee of a Responsible Officer; and Bank shall be
entitled to rely on any notice given by a person who Bank reasonably believes to be a Responsible Officer or a designee thereof,
and Borrower shall indemnify and hold Bank harmless for any damages or loss suffered by Bank as a result of such reliance.


 


6. 
          The following is added to the end of
Section 2.3(a): 


 


Except as set
forth in Section 2.3(b), the Term Loan shall bear interest, on the outstanding Daily Balance thereof, at a rate equal to 1.75%
above the Prime Rate; provided however that in no event shall the applicable interest rate be less than five percent (5.0%).


 




     


     


    

  


7.            The
first two sentences in Section 2.3(c) are amended and restated in their entirety to read as follows:


 


Accrued interest with respect to
the Revolving Facility shall be due and payable in arrears on the first business day of each month during the term hereof. The
minimum interest payable with respect to the Revolving Facility for each six month period, measured beginning with the period ending
six months from the Closing Date, and for each successive six month period thereafter, shall be Twenty Thousand Dollars ($20,000).


 


8.            The
following is added as a new Section 6.14 to the end of Section 6 of the Agreement:


 


6.14         Minimum
Debt Service Coverage Ratio. Borrower shall achieve a minimum Debt Service Coverage Ratio of at least ***, measured on a quarterly
basis.


 


9.           The
Exhibit B-1 attached hereto is incorporated in its entirety as Exhibit B-1 to the Agreement. 


 


8.           Exhibits
C and D to the Agreement is replaced in its entirety with Exhibits C and D attached hereto.


 


9.           Unless
otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended
hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed
in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate
as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date
hereof. Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.


 


10.         Borrower
represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date
of this Amendment, and that no Event of Default has occurred and is continuing.


 


11.         This
Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one instrument. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf”
format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original hereof.
Notwithstanding the foregoing, Borrower shall deliver all original signed documents no later than ten (10) Business Days following
the date of execution.


 


12.         As
a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:


 




     


     


    

  


(a)          this
Amendment, duly executed by Borrower;


 


(b)          corporate
resolution and incumbency certificate;


 


(c)          affirmation
of guarantees; and


 


(d)          payment
of a facility fee in the amount of $30,000 with respect to the Term Loan, plus a prorated facility fee with respect to the Revolving
Facility in the amount of $1,667, plus all Bank Expenses incurred by Bank through the date hereof.


 


[remainder
of this page intentionally left blank]


 




     


     


    

  


IN WITNESS WHEREOF,
the undersigned have executed this Amendment as of the first date above written.


  


	 	USA TECHNOLOGIES, INC.
	 	 	 
	 	By:	/s/ Stephen P. Herbert
	 	 	 
	 	Name:	Stephen P. Herbert
	 	 	 
	 	Title:	Chief Executive Officer
	 	 	 
	 	AVIDBANK CORPORATE FINANCE, 
	 	a division of AVIDBANK
	 	 	 
	 	By:	/s/ Jeffrey Javier
	 	 	 
	 	Name:	Jeffrey Javier
	 	 	 
	 	Title:	SVP, Head of Business Development


 




     


     


    

  


EXHIBIT
A


 


ASSET PURCHASE
AGREEMENT


 




     


     


    

  


EXHIBIT
B-1

TERM LOAN REQUEST FORM


 


Date: _____________


	Borrower:	USA TECHNOLOGIES, INC.
	 	 
	Client ID:	____________


 


The undersigned hereby request a Term Loan in the amount of
$3,000,000 in accordance with the terms set forth in the Loan and Security Agreement between the Borrower and Bank.


 


The undersigned also requests that the proceeds of the Term
Loan are to be applied to repay outstanding Advances under the Revolving Facility.


 


The undersigned represents and warrants, on behalf of Borrower
that the foregoing is true, complete and correct in all material respects, and that the information reflected in this certificate
complies with the representations and warranties set forth in the Loan and Security Agreement between the Borrower and Bank.


 


BORROWER:


 


USA Technologies, Inc.


 


	By:	 	 
	 	Authorized Signor	 


 


	Print Name:	 	 
	 	 	 
	Title:	 	 


 


	Bank Use Only	 	 
	 	 	 	 
	Received by:

                                                                 
	 	Date:

                                    
	 
	 	AUTHORIZED SIGNER	 	 
	 	 	 	 
	Approved by:

                                                                 
	 	Date:	 
	 	AUTHORIZED SIGNER	 	 


 




     


     


    

  


EXHIBIT
C

BORROWING BASE CERTIFICATE


 


 


	Borrower:  USA TECHNOLOGIES, INC.	Lender:  Avidbank Corporate Finance,
	 	a division of Avidbank
	Commitment Amount:  $7,500,000	 


 


REVENUES FROM NON-INVOICED ACCOUNTS RECEIVABLES


 


	1.          Prior three-months networking service fees/transaction processing revenues	 	$___________
	2.          Adjustments to Revenues, if any	 	$___________
	3.          Total Processing Revenues (#1 minus #2)	 	$___________
	4.          Loan Value of Processing Revenues (80% of #3)	 	$___________


 


BALANCES


 


 


	5.          Maximum Loan Amount	 	$7,500,000
	6.          Total Funds Available [Lesser of #4 or (#5)]	 	$___________
	7.          Present balance owing on Revolving Line	 	$___________
	8.          Present balance owing on Term Loan	 	$___________
	9.          AVAILABLE BORROWING / RESERVE POSITION (#6 minus #7 minus #8)	 	$___________
	 	 	 


The undersigned represents and warrants that the foregoing
is true, complete and correct, and that the information reflected in this Borrowing Base Certificate complies with the representations
and warranties set forth in the Loan and Security Agreement between the undersigned and Avidbank Corporate Finance, a division
of Avidbank.


  


	USA TECHNOLOGIES, INC.	 	 
	 	 	 
	By:	 	 	 
	Authorized Signer	 	 


 




     


     


    

 


EXHIBIT
D

COMPLIANCE CERTIFICATE


 


	TO:	AVIDBANK CORPORATE FINANCE, A DIVISION OF AVIDBANK
	FROM:	USA TECHNOLOGIES, INC.


 


The undersigned authorized officer of USA
TECHNOLOGIES, INC. hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending _______________ with
all required covenants except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are
true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The officer
further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently
applied from one period to the next except as explained in an accompanying letter or footnotes.


 


Please indicate compliance status by
circling Yes/No under “Complies” column.


  


	Reporting Covenant	 	Required	 	Complies
	Schedule of Revenue Proceeds	 	Weekly	 	Yes	 	No
	Transaction Report of Cash Disbursements &  Collections	 	Weekly	 	Yes	 	No
	Trailing 3 months revenue report	 	Monthly within 20 days	 	Yes	 	No
	A/R & A/P Agings	 	Monthly within 20 days	 	Yes	 	No
	Borrowing Base Certificate and Compliance Certificate	 	Monthly within 20 days	 	Yes	 	No
	Monthly statements from JPMorgan Chase	 	Monthly within 5 days of receipt	 	Yes	 	No
	Monthly bank statements from Univest Bank and Trust Co.	 	Monthly within 20 days of receipt	 	Yes	 	No
	Monthly financial statements	 	Monthly within 20 days	 	Yes	 	No
	Annual Projections	 	Within 30 days of fiscal year beginning	 	Yes	 	No
	Quarterly financial statements (Form 10Q)	 	Quarterly within 45 days	 	Yes	 	No
	Annual financial statements (CPA Audited; Form 10K)	 	FYE within 120 days	 	Yes	 	No
	A/R Audit	 	Semi-Annual	 	Yes	 	No
	IP Notices	 	As required under Section 6.11	 	Yes	 	No


  


	Financial Covenant	 	Required	 	Actual	 	Complies
	RML for month ended _______________	 	 	 	$__________	 	Yes	 	No
	When RML is negative, Minimum Liquidity of at least:	 	6 months RML	 	$__________	 	Yes	 	No
	When RML is positive, ratio of Current Assets to Current Liabilities of at least:	 	1.00 to 1.00	 	________ : 1.00	 	Yes	 	No
	Minimum Adjusted EBITDA for quarters ending:	 	 	 	 	 	 	 	 
	December 31, 2015	 	$***	 	$__________	 	Yes	 	No
	March 31, 2016:	 	$***	 	$__________	 	Yes	 	No
	June 30, 2016:	 	$***	 	$__________	 	Yes	 	No
	Minimum Quarterly Debt Service Coverage Ratio:	 	***	 	________ : ***	 	Yes	 	No


  




     


     


    

  


	Comments Regarding Exceptions:  See Attached.	BANK USE ONLY
	 	 
	 	Received by: 	 
	Sincerely,	AUTHORIZED SIGNER
	 	 
	 	Date: 	 
	 	 
	 	Verified: 	 
	SIGNATURE	AUTHORIZED SIGNER
	 	 
	 	 
	 	Date: 	 
	TITLE	 
	 	Compliance Status	Yes	No
	 	 
	DATE