Document:

Unassociated Document

EXHIBIT 4.1

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF OR IN ACCORDANCE WITH APPLICABLE LAW.

 

WARRANT TO PURCHASE STOCK

 

	
Corporation:

	
USA TECHNOLOGIES, INC.

	
Number of Shares:

	
45,000, subject to Section 2.5

	
Class of Stock:

	
Common

	
Exercise Price:

	
$2.10 per share

	
Issue Date:

	
January 1, 2013

	
Expiration Date:

	
December 31, 2017

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration,  the receipt of which is hereby acknowledged, Avidbank Holdings, Inc. or registered assignee (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares (the “Shares”) of Common Stock of  USA Technologies, Inc. (the “Company”), in the number, at the price, and for the term specified above, subject to the provisions and upon the terms and conditions set forth in this warrant.

 

	
ARTICLE 1.

	
EXERCISE

 

1.1           Method of Exercise.  Holder may exercise this Warrant at any time prior to the Expiration Date for up to the number of Shares set forth above by delivering this Warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company.  Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate price for the Shares being purchased (the “Warrant Price”).

 

1.2           Conversion Right.  In lieu of exercising this Warrant as specified in Section 1.1, Holder may from time to time prior to the Expiration Date convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share.  The fair market value of the Shares shall be determined pursuant to Section 1.3.

 

1.3           Fair Market Value.  If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the average closing bid price of the Shares (or the average closing bid price of the Company’s stock into which the Shares are convertible)  during the thirty (30) trading  days immediately before the date Holder delivers its Notice of Exercise to the Company.  If the Shares are not regularly traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment.  The foregoing notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then the Company and Holder shall promptly agree upon a reputable investment banking firm to undertake such valuation.  If the valuation of such investment banking firm is greater than that determined by the Board of Directors, then all fees and expenses of such investment banking firm shall be paid by the Company.  In all other circumstances, such fees and expenses shall be paid by Holder.

 

1.4           Delivery of Certificate and New Warrant.  Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired.

 

1.5           Replacement of Warrants.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

 

  

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ARTICLE 2.

	
ADJUSTMENTS TO THE SHARES.

 

2.1           Stock Dividends, Splits, Etc.  If prior to Expiration Date the Company declares or pays a dividend on its common stock payable in common stock, or other securities, subdivides the outstanding common stock into a greater amount of common stock, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred.

 

2.2           Reclassification, Exchange or Substitution.  Upon any reclassification, exchange, substitution, or other event prior to the Expiration Date that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event.  Upon the closing of any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction, the successor entity shall assume the obligations of this Warrant, and this Warrant thereafter shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing.  The Exercise Price shall be adjusted accordingly, as applicable.  The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property.  The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Exercise Price and to the number of securities or property issuable upon exercise of the new Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

 

2.3           Adjustments for Combinations, Etc.  If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Exercise Price shall be proportionately increased.

 

2.4           No Impairment.  The Company shall not, by amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder’s rights under this Article against impairment.  If the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder’s rights under this Warrant, the Exercise Price shall be appropriately adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be appropriately adjusted upward in such a manner that the aggregate Warrant Price of this Warrant is unchanged.

 

2.5           Certificate as to Adjustments.  Upon each adjustment of the Exercise Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based.  The Company shall, upon written request, furnish Holder a certificate setting forth the Exercise Price in effect upon the date thereof and the series of adjustments leading to such Exercise Price.

 

	
ARTICLE 3.

	
REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1           Representations and Warranties.  The Company hereby represents and warrants to the Holder  that all Shares that may be issued upon the exercise of the purchase right represented by this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.

 

  

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3.2           Notice of Certain Events.  If the Company proposes at any time prior to the Expiration Date (a) to declare any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) to effect any reclassification or recapitalization of common stock; or (d) to merge or consolidate with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets, or to liquidate, dissolve or wind up, then, in connection with each such event, the Company shall give Holder (1) at least 10 days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; and (2) in the case of the matters referred to in (c) and (d) above at least 10 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such event).

 

3.3           Information Rights.  So long as the Holder holds this Warrant , the Company shall deliver to the Holder (a) within one hundred twenty (120) days after the end of each fiscal year of the Company, Company-prepared annual financial statements of the Company, or if available, the annual audited financial statements of the Company certified by independent public accountants of recognized standing and (b) within forty-five (45) days after the end of each of the first three quarters of each fiscal year, the Company’s quarterly, unaudited financial statements, provided Company need not provide such information for any period in which Company has filed Form 10Q or Form 10K with the Securities and Exchange Commission.

 

	
ARTICLE 4.

	
MISCELLANEOUS.

 

4.1           Term.  This Warrant is exercisable, in whole or in part, at any time and from time to time on or before the Expiration Date set forth above.

 

4.2           Compliance with Securities Laws on Transfer.  This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee.

 

4.3           Transfer Procedure.  Subject to the provisions of Section 4.2, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable), provided that no such notice shall be required for a transfer to an affiliate of Holder.

 

4.4           Notices.  All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time.

 

4.5           Waiver.  This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

4.6           Attorneys’ Fees.  In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

  

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4.7           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to its principles regarding conflicts of law.

 

	  	  	
USA Technologies, Inc.

	  	  	  
	  	  	
By: /s/ David M. DeMedio

	  	  	
Name: David M. DeMedio

	  	  	
Title: Chief Financial Officer

 

  

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APPENDIX 1

 

NOTICE OF EXERCISE

 

1.             The undersigned hereby elects to purchase ______________ shares of the Common Stock of USA TECHNOLOGIES, INC. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.

 

1.             The undersigned hereby elects to convert the attached Warrant into Shares in the manner specified in the Warrant.  This conversion is exercised with respect to ______________ of the Shares covered by the Warrant.

 

[Strike paragraph that does not apply.]

 

2.             Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

 

Avidbank Holdings, Inc. or Registered Assignee

c/o Avidbank

400 Emerson Street

Palo Alto, CA 94301

 

3.             The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.

 

	
Avidbank Holdings, Inc.,  or Registered Assignee

	  	  
	  	  	  
	  	  	  
	
(Signature)

	  	  
	  	  	  
	  	  	  
	
(Date)

	  	  

 

 

1ex10_1.htm

EXHIBIT 10.1

 

FIRST AMENDMENT

 

TO

 

LOAN AND SECURITY AGREEMENT

 

This First Amendment to Loan and Security Agreement is entered into as of January 1, 2013 (the “First Amendment”), by and between AVIDBANK CORPORATE FINANCE, a division of AVIDBANK (“Bank”), and USA TECHNOLOGIES, INC. (“Borrower”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of June 21, 2012, as amended from time to time (the “Agreement”).  The parties desire to amend the Agreement in accordance with the terms of this First Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

1.         The following definition in Section 1.1 of the Agreement is hereby amended in its entirety to read as follows:

 

“Processing Revenues Sublimit” means Borrower’s Accounts relating to the Processing Revenues, which shall not exceed Two Million Dollars ($2,000,000) at any time without the Bank’s prior consent.

 

2.          As a condition of Bank entering into this First Amendment, at the time of the execution and delivery by Bank of this First Amendment, the Borrower shall issue to the Bank warrants to purchase up to 45,000 shares of common stock of the Borrower (the "Warrants"). The exercise price of the Warrants shall be $___ per share which is equal to one hundred and twenty-five percent (125%) of the average closing bid price of the Borrower’s common stock on the NASDAQ Global Market during the thirty (30) trading days immediately preceding the date of the execution and delivery by Bank of this First Amendment. The Warrants shall be exercisable at any time prior to 5:00 p.m. on December 31, 2017. The form of certificate evidencing the Warrants to be issued to the Bank by the Borrower is attached hereto as Exhibit "A”.

 

3.          The Borrower shall pay all Bank Expenses incurred by the Bank in connection with the preparation, negotiation, and execution of this First Amendment.

 

4.          Unless otherwise defined, all initially capitalized terms in this First 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 First 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.

 

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

 

  

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6.          This First 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 requested by Bank no later than ten (10) Business Days following the date of execution.

 

 

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

 

	  	
USA TECHNOLOGIES, INC.

	 	 
	  	
By:  /s/ David M. DeMedio

	 	 
	  	
Title:  Chief Financial Officer

	  	  
	 	 
	  	
AVIDBANK CORPORATE FINANCE,

a division of Avidbank

	 	 
	  	
By:  /s/ Mike Hansen

	 	 
	  	
Title:  Executive Vice President

 

 

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