SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
USA TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[GRAPHIC OMITTED]
June __, 2003
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of USA Technologies, Inc. to be held at 10:00 a.m., June 30, 2003, at Deerfield
Corporate Center, 100 Deerfield Lane, Suite 140, Malvern, Pennsylvania 19355.
In connection with the Special Meeting, enclosed herewith is the Proxy
Statement and Proxy. We are requesting your approval of a proposal which is very
important to the Company`s future success. Therefore, whether or not you expect
to attend the meeting in person, it is imperative that your shares be voted at
the meeting. At your earliest convenience, please complete, date and sign the
Proxy and return it in the enclosed, postage-paid envelope furnished for that
purpose.
Following the consideration of the proposals by the shareholders,
management will present a current report on the activities of the Company. At
the meeting, we will welcome your comments on or inquiries about the business of
the Company that would be of interest to shareholders generally.
I look forward to seeing you at the Special Meeting. In the meantime,
please feel free to contact me with any questions you may have.
Sincerely,
/s/ George R. Jensen, Jr.
George R. Jensen, Jr.
Chairman and Chief Executive
Officer
USA TECHNOLOGIES, INC.
_________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 2003
_________________________
To Our Shareholders:
A Special Meeting of Shareholders of USA Technologies, Inc., a
Pennsylvania corporation (the "Company"), will be held at 10:00 a.m., June 30,
2003, at Deerfield Corporate Center, 100 Deerfield Lane, Suite 140, Malvern,
Pennsylvania 19355 for the following purposes:
1. To act upon an amendment to increase the number of authorized
shares of Common Stock to 400,000,000; and
2. To transact such other business as may properly come before the
Speical Meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on May 30, 2003
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Special Meeting and any and all adjournments thereof.
You are cordially invited to attend the meeting in person. Whether or
not you expect to attend the meeting in person, please promptly mark, sign and
date the enclosed proxy and return it in the envelope provided for that purpose.
By Order of the Board of Directors,
/s/ George R. Jensen, Jr.
GEORGE R. JENSEN, JR.
Chairman and Chief Executive Officer
USA TECHNOLOGIES, INC.
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PROXY STATEMENT
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SOLICITATION OF PROXY, REVOCABILITY AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of USA
Technologies, Inc., a Pennsylvania corporation (the "Company"), for use at the
Special Meeting of Shareholders (the "Special Meeting"), to be held at 10:00
a.m., on June 30, 2003, at Deerfield Corporate Center, 100 Deerfield Lane, Suite
140, Malvern, Pennsylvania 19355.
Only holders of Common Stock or Series A Convertible Preferred Stock of
record at the close of business on May 30, 2003 will be entitled to notice
of and to vote at the Special Meeting. Each share of Common Stock and Series A
Preferred Stock is entitled to one vote on all matters to come before the
Special Meeting. On May 30, 2003, the record date for the Special Meeting, the
Company had issued and outstanding 186,131,590 shares of Common Stock, no par
value ("Common Stock"), and 530,927 shares of Series A Convertible Preferred
Stock, no par value ("Series A Preferred Stock").
The Company`s principal executive offices are located at 200 Plant Avenue,
Wayne, Pennsylvania 19087. The approximate date on which this Proxy Statement
and the accompanying proxy are first being sent to shareholders is June __,
2003.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the shareholders entitled to vote generally at the
Special Meeting is necessary to constitute a quorum. Abstentions on the proposal
to be considered at the Special Meeting will be counted in determining whether a
quorum has been reached, but the failure to execute and return a proxy will
result in a shareholder not being considered present at the meeting. The holders
of the Common Stock and Series A Preferred Stock vote together, and not as a
separate class, on all matters to be submitted to shareholders at the Special
Meeting. If a quorum is not present at the Special Meeting, we expect that the
Special Meeting will be adjourned or postponed to solicit additional proxies.
Assuming the presence of a quorum, generally the adoption of a proposal by
the shareholders requires the affirmative vote of the holders of at least a
majority of all shares casting votes in person or by proxy at the Special
Meeting. Approval of the proposal to increase the number of authorized shares of
Common Stock will require the affirmative vote of the holders of at least a
majority of all shares casting votes in person or by proxy at the Special
Meeting. Only shares affirmatively voted for a proposal, including properly
executed proxies that do not contain voting instructions, will be counted as
favorable votes for that proposal. Brokers who hold shares of stock in street
name for customers and who indicate on a proxy that the broker does not have
discretionary authority to vote those shares as to a particular matter are
referred to as broker non-votes. Broker non-votes will have no effect in
determining whether a proposal will be adopted at the Special Meeting although
they would be counted as present for purposes of determining the existence of a
quorum. Abstentions as to a particular proposal will have the same effect as
votes against such proposal.
REVOCABILITY OF PROXIES
Shares represented by proxies, if properly signed and returned, will be
voted in accordance with the specifications made thereon by the shareholders.
Any proxy not specifying to the contrary will be voted in favor of the adoption
of all of the proposals referred to in the Notice of Special Meeting. A
shareholder who signs and returns a proxy may revoke it any time before it is
voted by the filing of an instrument revoking it or a duly executed proxy
bearing a later date with the Secretary of the Company. Your mere attendance at
the Special Meeting will not revoke your proxy.
SOLICITATION
The cost of soliciting proxies will be borne by the Company. Such
solicitation will be made by mail and may also be made on behalf of the Company
by the Company`s Directors, officers or employees in person or by telephone,
facsimile transmission or telegram.
SECURITY OWNERSHIP
COMMON STOCK
The following table sets forth, as of December 31, 2002, the beneficial
ownership of the Common Stock of each of the Company`s directors and executive
officers, and one employee, as well as by the Company`s directors and executive
officers as a group. Except as set forth below, the Company is not aware of any
beneficial owner of more than five percent of the Common Stock. Except as
otherwise indicated, the Company believes that the beneficial owners of the
Common Stock listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such shares, subject to
community property laws where applicable.
Number of Shares
Name and Address of Common Stock Percent
of Beneficial Owner Beneficially Owned(1) of Class(2)
------------------- --------------------- ------------
George R. Jensen, Jr. 759,000(3) *
517 Legion Road
West Chester, Pennsylvania 19382
Stephen P. Herbert 486,050(4) *
536 West Beach Tree Lane
Strafford, Pennsylvania 19087
Haven Brock Kolls, Jr. 104,725(5) *
1573 Potter Drive
Pottstown, PA 19464
Leland P. Maxwell 277,050 *
401 Dartmouth Road
Bryn Mawr, Pennsylvania 19010
Michael K. Lawlor 407,050(6) *
131 Lisa Drive
Paoli, PA 19301
Edwin R. Boynton 327,887(7) *
104 Leighton Drive
Bryn Mawr, Pennsylvania 19010
Douglas M. Lurio 257,213(8) *
2005 Market Street, Suite 2340
Philadelphia, Pennsylvania 19103
William W. Sellers 912,108(9) *
394 East Church Road
King of Prussia, Pennsylvania 19406
William L. Van Alen, Jr. 274,005(10) *
Cornerstone Entertainment, Inc.
P.O. Box 727
Edgemont, Pennsylvania 19028
Kenneth C. Boyle 126,188 (11) *
403 West Fourth Street North
Newton, Iowa 50208
Adele H. Hepburn
208 St. Georges Road
Ardmore, Pennsylvania 19003 2,316,983(12) 1.19%
Kazi Management VI, Inc.
30 Dronningens Gade, Suite B 30
St. Thomas, Virgin Islands 00802 22,857,145(13) 11.7%
All Directors and Executive Officers
As a Group (11 persons) 3,931,276(14) 2.02%
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*Less than one percent (1%)
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and derives from either voting or investment
power with respect to securities. Shares of Common Stock issuable upon
conversion of the Preferred Stock, or shares of Common Stock issuable upon
exercise of options currently exercisable, or exercisable within 60 days of
December 31, 2002, are deemed to be beneficially owned for purposes hereof.
(2) On December 31, 2002 there were 99,096,167 shares of Common Stock and
529,132 shares of Series A Preferred Stock issued and outstanding. For purposes
of computing the percentages under this table, it is assumed that all shares of
issued and outstanding Preferred Stock have been converted into shares of Common
Stock, that all of the options to acquire Common Stock which have been issued
and are fully vested as of December 31, 2002 (or within 60-days thereof) have
been converted into shares of Common Stock, that all Common Stock Purchase
Warrants have been exercised, that all of the Senior Notes have been converted
into shares of Common Stock, that all of the Convertible Debentures have been
converted and related Warrants have been exercised into shares of Common Stock,
and that all of the accrued and unpaid dividends on the Preferred Stock have
been converted into shares of Common Stock. Therefore, for purposes of computing
the percentages under this table, there are 189,767,761 shares of Common Stock
issued and outstanding.
(3) Includes 438,000 shares issuable upon conversion of Senior Notes, 86,000
shares of Common Stock beneficially owned by his spouse and 135,000 shares
issuable upon exercise of warrants. Does not include the right granted to Mr.
Jensen under his Employment Agreement to receive seven percent (7%) of the
issued and outstanding Common Stock upon the occurrence of a USA Transaction (as
defined therein). See "Executive Employment Agreements".
(4) Includes 1,000 shares of Common Stock beneficially owned by his child.
(5) Includes 16,500 shares of Common Stock owned by his spouse, 24,000 shares
issuable to his spouse upon conversion of her Senior Note, and 22,500 shares
issuable upon exercise of warrants held by his spouse.
(6) Includes 130,000 shares beneficially owned by his spouse.
(7) Includes 8,100 shares of Common Stock issuable upon conversion of shares of
Series A Preferred Stock. Includes 47,250 shares issuable upon conversion of
Senior Notes and 24,375 shares issuable upon exercise of warrants. Does not
include any shares of Common Stock issuable upon conversion of any accrued and
unpaid dividends in the Series A Preferred Stock.
(8) Includes 42,213 shares of Common Stock held jointly with Mr. Lurio`s spouse,
99,000 shares issuable upon conversion of Senior Notes and 33,750 shares
issuable upon exercise of warrants.
(9) Includes 17,846 shares of Common Stock owned by the Sellers Pension Plan of
which Mr. Sellers is a trustee, 4952 shares of Common Stock owned by Sellers
Process Equipment Company of which he is a Director, and 10,423 shares of Common
Stock owned by Mr. Seller`s wife. Includes 199,167 shares of Common Stock
issuable upon exercise of Warrants, and 119,170 shares issuable upon conversion
of his Senior Notes.
(10) Includes 4,000 shares owned by his spouse, 108,335 shares underlying his
Senior Notes, and 88,336 shares issuable upon exercise of warrants.
(11) Represents shares underlying options.
(12) Includes 52, 275 shares held by her spouse, 5,150 shares underlying Series
A Preferred Stock held by her and her spouse, 856,085 shares underlying her
Senior Notes and 68,648 shares underlying her spouse`s Senior Notes, 235,375
shares issuable upon exercise of warrants held by her and 22,274 shares issuable
upon exercise of warrants held by her spouse, and 277,000 shares underlying
options held by her and 5,000 shares underlying options held by her spouse.
(13) Includes 19,285,716 shares underlying warrants. Zubair Kazi, an individual,
is the owner and President of Kazi Management VI, Inc. and would also be deemed
the beneficial owner of all 22,857,145 shares under the applicable rules of the
Securities and Exchange Commission.
(14) Includes all shares of Common Stock described in footnotes (2) through (11)
above.
SERIES A PREFERRED STOCK
The following table sets forth, as of December 31, 2002 the beneficial
ownership of the Preferred Stock by the Company`s directors and executive
officers, and one employee, as well as by the Company`s directors and executive
officers as a group. Except as set forth below, the Company is not aware of any
beneficial owner of more than five percent of the Preferred Stock. Except as
otherwise indicated, the Company believes that the beneficial owners of the
Preferred Stock listed below, based on information furnished by such owners,
have sole investment and voting power with respect to such shares, subject to
community property laws where applicable.
Number of Shares
Name and Address of of Preferred Stock Percent
Beneficial Owner Beneficially Owned of Class(l)
- ------------------- ------------------ -----------
Edwin R. Boynton
104 Leighton Avenue
Bryn Mawr, Pennsylvania 19010 8,100 1.5%
Adele H. Hepburn
208 St. Georges Road
Ardmore, Pennsylvania 19003 5,150(2) *
All Directors and Executive
Officers As a Group (11 persons) 8,100 1.5%
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* Less than one percent (1%)
(1) There were 529,132 shares of Preferred Stock issued and outstanding as of
December 31, 2002.
(2) Includes 2,000 shares held by her spouse.
ITEM 1
APPROVAL OF AN AMENDMENT TO THE COMPANY`S
ARTICLES OF INCORPORATION INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
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(Item 1 on Proxy Card)
The Company`s Articles of Incorporation presently authorizes the issuance
of up to 300,000,000 shares of Common Stock. The Board of Directors has
approved a resolution which if approved by the shareholders would increase the
number of authorized shares of Common Stock to 400,000,000.
As of May 30, 2003, the number of issued and outstanding shares of
Common Stock on a fully converted basis is 283,246,837 which is slightly less
than the number of shares of Common Stock which are currently authorized
(300,000,000) by the Articles of Incorporation. These shares consist of the
following:
186,131,590 shares of Common Stock actually issued and outstanding;
530,927 shares issuable upon conversion of the currently issued
and outstanding Series A Preferred Stock;
594,119 shares issuable upon conversion of the accrued and unpaid
dividends on the Series A Preferred Stock;
3,317,485 shares issuable upon exercise of outstanding options (of which
all were vested as of such date);
38,572,716 shares issuable upon exercise of outstanding warrants and
54,100,000 shares reserved for issuance upon the conversion of the
outstanding 12% Convertible Senior Notes.
Based upon the foregoing outstanding and reserved shares, the Company
currently has 16,753,163 shares of Common Stock remaining available for other
purposes. The purpose of the proposed amendment is to authorize a sufficient
number of additional shares of Common Stock to provide the Company with the
flexibility to issue Common Stock for a variety of corporate purposes, such as
to make acquisitions through the use of shares, to raise equity capital, to
issue additional warrants or options, or to issue shares in lieu of quarterly
cash interest payments due on the Convertible Senior Notes. At this time, the
Company has no such plans, proposals or arrangements, written or otherwise. As
of May 30, 2003, and assuming approval of this proposal, there would be
116,753,163 shares of Common Stock eligible for future issuance. The Board of
Directors will have the authority to issue these authorized shares of Common
Stock from time to time for proper corporate purposes without further
shareholder approval unless required by applicable law. Shareholders do not have
preemptive rights with respect to the Common Stock. The issuance of Common Stock
or securities convertible into Common Stock, on other than a pro-rata basis,
would result in the dilution of a present shareholder`s interest in the Company.
The Company has not proposed the increase in the authorized number of
shares with the intention of using the additional shares for anti-takeover
purposes, although the Company could theoretically use the additional shares to
make it more difficult or to discourage an attempt to acquire control of the
Company. For example, in the event of an attempt to take over control of the
Company, it may be possible for the Company to endeavor to impede the attempt by
issuing shares of the Common Stock, thereby diluting the voting power of the
other outstanding shares and increasing the potential cost to acquire control of
the Company. The proposed amendment may therefore have the effect of
discouraging unsolicited takeover attempts. By potentially discouraging
initiation of any such unsolicited takeover attempt, the proposed amendment may
limit the opportunity for the Company`s shareholders to dispose of their shares
at the higher price generally available in takeover attempts. In addition,
management might use the additional shares to resist or frustrate a third-party
transaction providing an above-market premium that is favored by a majority of
the independent shareholders. The Board of Directors is not aware of any attempt
to take control of the Company and the Board of Directors has not presented this
proposal with the intent that it be utilized as a type of anti-takeover device.
At this time, the Company has no additional plans or proposals to adopt other
provisions or enter into other arrangements that may have material anti-takeover
consequences.
The resolution to be considered by the shareholders at the Special Meeting
reads as follows:
RESOLVED, that Paragraph (A) Classes of Stock of Article 4 of the
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Articles of Incorporation of the Company shall be amended and restated to
read in full as follows:
(A) Classes of Stock. The aggregate number of shares which
------------------
the corporation shall have authority to issue is 401,800,000
shares, consisting of 400,000,000 shares of Common Stock, without
par value, and 1,800,000 shares of Series Preferred Stock,
without par value.
Shareholder approval of this proposal is required under Pennsylvania law
and the Articles of Incorporation. Approval of the amendment to the Company`s
Articles of Incorporation increasing the number of authorized shares of Common
Stock requires the affirmative vote of a majority of all votes cast by the
holders of outstanding shares of Common Stock and Series A Preferred Stock
voting together (with each share of Common Stock and Series A Preferred Stock
entitled to one vote). If this proposal is adopted, it will become effective
upon filing of Articles of Amendment with the Department of State of the
Commonwealth of Pennsylvania which the Company anticipates filing immediately
following the Special Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS
AMENDMENT TO THE COMPANY`S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK.
SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") for inclusion in the
Company`s proxy materials for its 2004 Annual Meeting of Shareholders must be
received by the Secretary of the Company at the principal offices of the Company
no later than September 16, 2003.
Written notice of proposals of shareholders submitted outside the processes
of Rule 14a-8 under the Exchange Act for consideration at the 2004 Annual
Meeting must have been received by the Company on or before December 5, 2003 in
order to be considered timely for purposes of Rule 14a-4 under the Exchange Act.
The persons designated in the Company`s proxy card will be granted discretionary
authority with respect to any shareholder proposal with respect to which the
Company does not receive timely notice.
------ GENERAL INFORMATION
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Special Meeting,
but if any matters are properly presented, it is the intention of the persons
named in the enclosed form of proxy to vote on such matters in accordance with
their best judgment to the same extent as the person signing the proxy would be
entitled to vote.
Shareholders who desire to have their shares voted at the Special Meeting
are requested to mark, sign, and date the enclosed proxy and return it promptly
in the enclosed postage-paid envelope. Shareholders may revoke their proxies at
any time prior to the Special Meeting and shareholders who are present at the
Special Meeting may revoke their proxies and vote, if they so desire, in person.
By Order of the Board of Directors,
/s/ George R. Jensen, Jr.
June __, 2003 GEORGE R. JENSEN, JR.
Chairman and Chief Executive Officer
USA TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS -
SPECIAL MEETING OF SHAREHOLDERS - JUNE 30, 2003
The undersigned, revoking all prior proxies, hereby appoint(s) George R.
Jensen, Jr., and Stephen P. Herbert, or either of them, with full power of
substitution, as proxies to represent and vote, as designated below, all share
of Common Stock and Series A Preferred Stock of USA Technologies, Inc., held of
record by the undersigned at the close of business on May 30, 2003, at the
Special Meeting of Shareholders to be held on June 30, 2003, and at any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed on
the reverse side hereof by the undersigned. If no contrary direction is made,
this proxy will be voted "FOR" the proposal set forth on the reverse side
hereof, and in accordance with the proxies` best judgment upon other matters
properly coming before the Special Meeting and any adjournments thereof.
Please date and sign exactly as your name appears below. In the case of
joint holders, each should sign. If the signor is a corporation or partnership,
sign in full the corporate or partnership name by an authorized officer or
partner. When signing as attorney, executor, trustee, officer, partner, etc.,
give full title.
Dated: _____________, 2003
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Signature
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Signature
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
IF YOU SIGN THIS PROXY WITHOUT OTHERWISE MARKING THE FORM, THIS PROXY WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS ON ALL MATTERS TO BE CONSIDERED
AT THE SPECIAL MEETING.
[SEE REVERSE SIDE]
1. The proposal to increase the authorized shares of Common Stock
to 400,000,000.
___ FOR ____ AGAINST ___ ABSTAIN
2. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Special Meeting and any
adjournment thereof.