NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
USA TECHNOLOGIES, INC.
W ARRANT T O P URCHASE C OMMON S TOCK
Warrant No.: SAC-001
Number of Shares of Common Stock: 833,333 Date of
Issuance: March 14, 2007 (" Issuance Date ")
USA Technologies, Inc., a
Pennsylvania corporation (the " Company "), hereby certifies
that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, S.A.C. CAPITAL
ASSOCIATES, LLC, the registered holder hereof or its permitted
assigns (the " Holder "), is entitled, subject to the terms
set forth below, to purchase from the Company, at the Exercise
Price (as defined below) then in effect, upon surrender of this
Warrant to Purchase Common Stock (including any Warrants to
Purchase Common Stock issued in exchange, transfer or replacement
hereof, the " Warrant "), at any time or times on or after
September 14, 2007 (the " Initial Exercise Date "), but not
after 11:59 p.m., New York Time, on the Expiration Date (as defined
below EIGHT HUNDRED THIRTY THREE THOUSAND THREE HUNDRED AND THIRTY
THREE (833,333) fully paid nonassessable shares of Common Stock (as
defined below) (the " Warrant Shares ") free from all liens and charges with respect
to the issuance thereof. Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth
in Section 15. This Warrant is one of the Warrants (as defined in
the Securities Purchase Agreement) to purchase Common Stock (the
" SPA Warrants " issued pursuant to Section 1 of that
certain Securities Purchase Agreement, dated as of March 14, 2007
(the " Subscription Date "),
by and among the Company and the investors (the "
Buyers ") referred to therein (the " Securities Purchase
Agreement ").
1. EXERCISE OF WARRANT .
(a) Mechanics of Exercise .
Subject to the terms and conditions hereof (including, without
limitation, the limitations set forth in Section 1(f)), this
Warrant may exercised by the Holder on any day on or after the
Initial Exercise Date, in whole or in part delivery of a written
notice, in the form attached hereto as Exhibit B (the "
Exercise Notice "), of Holder's election to exercise this
Warrant and (ii) (A) payment to the Company of an amount equal to
the applicable Exercise Price multiplied by the number of Warrant
Shares as to which Warrant is being exercised (the " Aggregate
Exercise Price ") in cash or wire transfer immediately
available funds or (B) by notifying the Company that this Warrant
is being exercised pursuant to a Cashless Exercise (as defined in
Section 1(d)). The Holder shall not be required deliver the
original Warrant in order to effect an exercise hereunder.
Execution and delivery of Exercise Notice with respect to less than
all of the Warrant Shares shall have the same effect cancellation
of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. On or
before the first (1 st ) Business Day following date on
which the Company has received each of the Exercise Notice and the
Aggregate Exercise Price (or notice of a Cashless Exercise) (the "
Exercise Delivery Documents "), the Company shall transmit
by facsimile an acknowledgment of confirmation of receipt of the
Exercise Delivery Documents to the Holder and the Company's
transfer agent (the " Transfer Agent "). On or before the
third (3 rd ) Business Day following the date on which
the Company has received all of Exercise Delivery Documents (the "
Share Delivery Date "), the Company shall (X) provided the
Transfer Agent is participating in The Depository Trust Company ("
DTC ") Fast Automated Securities Transfer Program, upon the
request of the Holder, credit such aggregate number shares of
Common Stock to which the Holder is entitled pursuant to such
exercise to the Holder's its designee's balance account with DTC
through its Deposit Withdrawal Agent Commission system, or (Y) if
the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and dispatch by overnight
courier to the address as specified in Exercise Notice, a
certificate, registered in the Company's share register in the name
of the Holder or its designee, for the number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise.
Upon delivery of the Exercise Notice and Aggregate Exercise Price
referred to clause (ii)(A) above or notification to the Company of
a Cashless Exercise referred to in Section 1(d), the Holder shall
be deemed for all corporate purposes to have become the holder of
record the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date such Warrant Shares are
credited to the Holder's DTC account or the date of delivery of
certificates evidencing such Warrant Shares, as the case may be. If
this Warrant is submitted connection with any exercise pursuant to
this Section 1(a) and the number of Warrant Shares represented by
this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then the Company
shall as soon as practicable and in no event later than three
Business Days after any exercise and at its own expense, issue a
new Warrant accordance with Section 7(d )) representing the right
to purchase the number of Warrant Shares purchasable immediately
prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No
fractional shares of Common Stock to be issued upon the exercise of
this Warrant, but rather the number of shares of Common Stock be
issued shall be rounded up to the nearest whole number. The Company
shall pay any and taxes which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this
Warrant.
(b)
Exercise Price . For purposes of this Warrant, " Exercise
Price " means $6.40, subject to adjustment as provided
herein.
(c) Company's Failure to Timely
Deliver Securities . If the Company shall fail for any reason
or for no reason to issue to the Holder within three (3) Trading
Days of receipt of the Exercise Delivery Documents, a certificate
for the number of shares of Common Stock to which the Holder is
entitled and register such shares of Common Stock on the Company's
share register or to credit the Holder's balance account with DTC
for such number of shares of Common Stock to which the Holder is
entitled upon the Holder's exercise of this Warrant, then, in
addition to all other remedies available to the Holder, the Company
shall pay in cash to the Holder on each day after such third
Business Day that the issuance of such shares of Common Stock is
not timely effected an amount equal to .25% of the product of (A)
the sum of the number of shares of Common Stock not issued to the
Holder on a timely basis and to which the Holder is entitled and
(B) the Closing Sale Price of the shares of Common Stock on the
Trading Day immediately preceding the last possible date which the
Company could have issued such shares of Common Stock to the Holder
without violating Section 1(a). In addition to the foregoing, if
within three (3) Trading Days after the Company's receipt of the
facsimile copy of a Exercise Notice the Company shall fail to issue
and deliver a certificate to the Holder and register such shares of
Common Stock on the Company's share register or credit the Holder's
balance account with DTC for the number of shares of Common Stock
to which the Holder is entitled upon such holder's exercise
hereunder or if the Company fails to deliver to the Holder the
certificate or certificates representing the applicable Warrant
Shares (or credit the Holder's balance account at DTC with the
applicable Warrant Shares) within three (3) Trading Days after its
obligation to do so under clause (ii) below and if on or after such
Trading Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of shares of Common Stock issuable upon such
exercise that the Holder anticipated receiving from the Company (a
" Buy-In "), then the Company shall, within three Business
Days after the Holder's request and in the Holder's discretion,
either (i) pay cash to the Holder in an amount equal to the
Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the " Buy-In
Price "), at which point the Company's obligation to deliver
such certificate (and to issue such shares of Common Stock) or
credit such Holder's balance account with DTC shall terminate, or
(ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common
Stock or credit such Holder's balance account with DTC and pay cash
to the Holder in an amount equal to the excess (if any) of the
Buy-In Price over the product of (A) such number of shares of
Common Stock, times (B) the Closing Bid Price on the date of
exercise.
(d) Cashless Exercise .
Notwithstanding anything contained herein to the contrary, if a
Registration Statement (as defined in the Registration Rights
Agreement) covering the Warrant Shares that are the subject of the
Exercise Notice (the " Unavailable Warrant Shares ") is not
available for the resale of such Unavailable Warrant Shares, the
Holder may, in its sole discretion, exercise this Warrant in whole
or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive
upon such exercise the "Net Number" of shares of Common Stock
determined according to the following formula (a " Cashless
Exercise "):
Net Number = (A x B) - (A x C)
B
For purposes of the foregoing formula:
A= the total number of shares with respect to which this Warrant
is then being exercised.
B= the Weighted Average Price of the shares of Common Stock (as
reported by Bloomberg) for the five (5) consecutive Trading Days
ending on the date immediately preceding the date of the Exercise
Notice.
C= the Exercise Price then in effect for the applicable Warrant
Shares at the time of such exercise.
(e) Disputes . In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
12.
(f) Limitations on Exercises .
(i) Beneficial Ownership
. The Company shall not effect the
exercise of this Warrant, and the Holder shall not have the right
to exercise this Warrant, to the extent that after giving effect to
such exercise, such Person (together with such Person's affiliates)
would beneficially own in excess of 9.99% (the " Maximum
Percentage ") of the shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of
the foregoing sentence, the aggregate number of shares of Common
Stock beneficially owned by such Person and its affiliates shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock
which would be issuable upon (i) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such
Person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company beneficially owned by such Person and its affiliates
(including, without limitation, any convertible notes or
convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the " Exchange Act "). For purposes of
this Warrant, in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in (1) the Company's most
recent Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB, Current
Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at
any time, upon the written or oral request
of the Holder, the Company shall within one Business Day confirm
orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including
the SPA Warrants, by the Holder and its affiliates since the date
as of which such number of outstanding shares of Common Stock was
reported. By written notice to the Company, the Holder may increase
or decrease the Maximum Percentage to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) any
such increase will not be effective until the sixty-first (61
st ) day after such notice is delivered to the Company,
and (ii) any such increase or decrease will apply only to the
Holder and not to any other holder of SPA Warrants.
(ii) Principal Market
Regulation . The Company shall not be obligated to issue any
shares of Common Stock upon exercise of this Warrant and no Buyer
shall be entitled to receive any shares of Common Stock if the
issuance of such shares of Common Stock would exceed that number of
shares of Common Stock which the Company may issue upon exercise of
the SPA Warrants or otherwise without breaching the Company's
obligations under any applicable rules or regulations of any
applicable Eligible Market (the " Exchange Cap "), except
that such limitation shall not apply in the event that the Company
(A) obtains the approval of its stockholders as required by the
applicable rules of the Eligible Market for issuances of shares of
Common Stock in excess of such amount or (B) obtains a written
opinion from outside counsel to the Company that such approval is
not required, which opinion shall be reasonably satisfactory to the
Required Holders. Until such approval or written opinion is
obtained, no Buyer shall be issued in the aggregate, upon exercise
of any SPA Warrants, shares of Common Stock in an amount greater
than the product of the Exchange Cap multiplied by a fraction, the
numerator of which is the total number of shares of Common Stock
underlying the SPA Warrants issued to such Buyer pursuant to the
Securities Purchase Agreement on the Issuance Date and the
denominator of which is the aggregate number of shares of Common
Stock underlying the SPA Warrants issued to the Buyers pursuant to
the Securities Purchase Agreement on the Issuance Date (with
respect to each Buyer, the " Exchange Cap Allocation "). In
the event that any Buyer shall sell or otherwise transfer any of
such Buyer's SPA Warrants, the transferee shall be allocated a pro
rata portion of such Buyer's Exchange Cap Allocation, and the
restrictions of the prior sentence shall apply to such transferee
with respect to the portion of the Exchange Cap Allocation
allocated to such transferee. In the event that any holder of SPA
Warrants shall exercise all of such holder's SPA Warrants into a
number of shares of Common Stock which, in the aggregate, is less
than such holder's Exchange Cap Allocation, then the difference
between such holder's Exchange Cap Allocation and the number of
shares of Common Stock actually issued to such holder shall be
allocated to the respective Exchange Cap Allocations of the
remaining holders of SPA Warrants on a pro rata basis in proportion
to the shares of Common Stock underlying the SPA Warrants then held
by each such holder. In the event that the Company is prohibited
from issuing any Warrant Shares for which an Exercise Notice has
been received as a result of the operation of this Section
1(f)(ii), the Company shall pay cash in exchange for cancellation
of such Warrant Shares, at a price per Warrant Share equal to the
difference between the Weighted Average Price and the Exercise
Price as of the date of the attempted exercise.
(g)
Insufficient Authorized Shares . If at any time while this Warrant remain
outstanding the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its
obligation to reserve for issuance upon exercise of this Warrant at
least a number of shares of Common Stock equal to 110% (the
" Required Reserve Amount ") of the number of shares
of Common Stock as shall from time to time be necessary to effect
the exercise of all of this Warrant then outstanding (an "
Authorized Share Failure "), then the Company shall
immediately take all action necessary to increase the Company's
authorized shares of Common Stock to an amount sufficient to allow
the Company to reserve the Required Reserve Amount for this Warrant
then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than ninety
(90) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders' approval of such increase
in authorized shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such
proposal.
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES . The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time as follows:
(a) Adjustment upon Issuance of
shares of Common Stock If and whenever on or after the
Subscription Date the Company issues or sells, or in accordance
with this Section 2 is deemed to have issued or sold, any shares of
Common Stock (including the issuance or sale of shares of Common
Stock owned or held by or for the account of the Company, but
excluding shares of Common Stock deemed to have been issued by the
Company in connection with any Excluded Securities (as defined in
the Securities Purchase Agreement) for a consideration per share
(the " New Issuance Price ") less than a price equal to the
Exercise Price in effect immediately prior to such issue or sale or
deemed issuance or sale (the " Applicable Price " and the foregoing a "Dilutive
Issuance" ), then immediately after such Dilutive Issuance, the
Exercise Price then in effect shall be reduced to an amount equal
to the New Issuance Price. Upon each such adjustment of the
Exercise Price hereunder, the number of Warrant Shares shall be
adjusted to the number of shares of Common Stock determined by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares acquirable upon exercise
of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such
adjustment. For purposes of determining the adjusted Exercise Price
under this Section 2(a), the following shall be applicable:
(i) Issuance of Options
. If the Company in any manner
grants any Options and the lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such
Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option is less than
the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such
price per share. For purposes of this Section 2(a)(i), the "lowest
price per share for which one share of Common Stock is issuable
upon exercise of such Options or
upon conversion, exercise or exchange of
such Convertible Securities issuable upon exercise of any such
Option" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the granting or sale
of the Option, upon exercise of the Option and upon conversion,
exercise or exchange of any Convertible Security issuable upon
exercise of such Option. No further adjustment of the Exercise
Price or number of Warrant Shares shall be made upon the actual
issuance of such shares of Common Stock or of such Convertible
Securities upon the exercise of such Options or upon the actual
issuance of such shares of Common Stock upon conversion, exercise
or exchange of such Convertible Securities.
(ii) Issuance of Convertible
Securities . If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or
exchange thereof is less than the Applicable Price, then such share
of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale
of such Convertible Securities for such price per share. For the
purposes of this Section 2(a)(ii), the "lowest price per share for
which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof" shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by
the Company with respect to one share of Common Stock upon the
issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security. No further
adjustment of the Exercise Price or number of Warrant Shares shall
be made upon the actual issuance of such shares of Common Stock
upon conversion, exercise or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which
adjustment of this Warrant has been or is to be made pursuant to
other provisions of this Section 2(a), no further adjustment of the
Exercise Price or number of Warrant Shares shall be made by reason
of such issue or sale.
(iii) Change in Option Price or
Rate of Conversion. If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the
issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for shares of
Common Stock increases or decreases at any time, the Exercise Price
and the number of Warrant Shares in effect at the time of such
increase or decrease shall be adjusted to the Exercise Price and
the number of Warrant Shares which would have been in effect at
such time had such Options or Convertible Securities provided for
such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section 2(a)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the date of
issuance of this Warrant are increased or decreased in the manner
described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed
issuable upon
