Exhibit 10.3

 

 

EMPLOYMENT, NON-INTERFERENCE, NON-SOLICITATION, NON-COMPETITION AND INVENTION
ASSIGNMENT AGREEMENT

 

Agreement made 9th this day of November, 2017, by and between MANDEEP ARORA
("Arora"), and USA TECHNOLOGIES, INC., a Pennsylvania corporation ("USAT").

 

BACKGROUND

 

Arora was a founder, Chief Executive Officer, and stockholder of Cantaloupe
Systems, Inc., a Delaware corporation (the “Company”).

 

Pursuant to an Agreement and Plan of Merger dated of even date herewith by and
between USAT, the Company, and certain other parties (the “Merger Agreement”),
the Company has been acquired by USAT as of the date hereof through a merger,
and the Company has become a wholly owned subsidiary of USAT.

 

USAT desires to employ Arora as an executive officer because of, among other
matters, the valuable knowledge of the business of the Company by Arora, and the
decreased value of the business of USAT and the Company that would result if
Arora would divulge certain confidential information and compete in the business
conducted by Company.

 

As more fully set forth herein, Arora has become an executive officer of USAT,
and Arora has agreed that he will be subject to certain covenants and
restrictions following the date hereof.

 

1

--------------------------------------------------------------------------------

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the covenants set forth herein, and
intending to be legally bound hereby, the parties agree as follows:

 

1.  Employment.

 

(a)       USAT shall employ Arora as Chief Product Officer commencing on
November 9, 2017 and continuing through November 8, 2018 (the “Employment
Period”), and Arora accepts such employment. Unless terminated by either party
hereto upon at least 90-days’ notice prior to the end of the original Employment
Period ending November 8, 2018, or prior to the end of any one-year extension of
the Employment Period, the Employment Period shall not be terminated, and shall
automatically continue in full force and effect for consecutive one-year
periods.

 

(b)       During the Employment Period, Arora shall devote his full time,
energy, skills, and attention to the business of USAT, and shall not be engaged
or employed in any other activity whatsoever that competes with USAT’s or the
Company’s business, nor take any action on behalf of or otherwise assist USAT’s
or the Company’s competitors. Arora shall disclose to USAT Arora’s membership on
the board of directors of any entity as of the date of this Agreement, and shall
obtain prior approval from USAT before serving as a board member for any other
entity during the Employment Period.

 

2

--------------------------------------------------------------------------------

 

(c)       During the Employment Period, Arora shall perform and discharge well
and faithfully such duties for USAT as shall be necessary or as otherwise may be
directed by USAT or by the Chief Executive Officer of USAT, and shall comply
with the written terms, conditions, policies, and procedures made available to
employees of USAT.

 

(d)       Nothing contained in this Agreement shall prohibit Arora from (i)
participating in the “Permitted Activities,” described below as long as the
Permitted Activities do not involve activities or conduct which are in violation
of Arora’s duties under Sections 5 and 6 of this Agreement; (ii) investing his
personal assets in businesses which do not compete with USAT or the Company, in
which his participation is solely that of a passive investor; (iii) serving as a
member of boards of directors, boards of trustees, or other governing bodies of
any organization, provided that USAT approves such board or governing body
membership in advance; or (iv) participating in trade associations, charitable,
civic and any similar activities of a not-for-profit, philanthropic or
eleemosynary nature; or from attending educational events or classes.

 

(e)       “Permitted Activities” shall mean: (i) acting as an advisor and/or
investor with Geegah, LLC, which is owned by Dr. Amit Lal, or its affiliates;
(ii) developing and working with companies in the field of ultrasonic MEMs based
biometric sensor

 

3

--------------------------------------------------------------------------------

 

(finger print sensor) that may be incorporated into cashless payments, credit
cards, debit cards, smartphones, laptops, tablets, automobiles, IOT devices, and
other consumer applications; (iii) licensing or manufacturing such biometric
sensor technology; (iv) advising or participating as an advisor, manager, member
or trustee of Passion Fruit Holdings LLC (a family holding company) or its
affiliates; (v) acting as a director of Reuzel Inc.; or (vi) acting as an
advisor or director of Accel Robotics Corporation. For avoidance of doubt,
Permitted Activities shall not include or refer to any activities that are in
competition with any business activity conducted by USAT or the Company at any
time from the date of this Agreement up until the date of Arora’s separation
from USAT’s employment, including but not limited to, delivering services or
products to unattended retail locations, and including any production,
promotion, marketing, or sales activities relating thereto. Any participation by
Arora in such Permitted Activities shall not interfere in any manner whatsoever
with the performance of his duties as Chief Product Officer of USAT.  Permitted
activities are not considered to be performed in connection with Arora’s
employment with USAT.

 

2.  Compensation and Benefits.

 

(a)       In consideration of his services rendered, USAT shall pay to Arora,
effective as of November 9, 2017, an “Annual Base Salary” of $280,000 per year
during the Employment Period,

 

4

--------------------------------------------------------------------------------

 

subject to any withholding required by law. Arora’s Annual Base Salary may be
increased (and not decreased) from time to time in the discretion of the Board
of Directors of USAT.

 

(b)       In addition to the Annual Base Salary, Arora shall be eligible to
receive such bonus or bonuses as the Board of Directors of USAT may, in their
discretion, pay or award to Arora from time to time based upon his performance
and/or the performance of USAT. All such bonuses in this regard may be made in
cash, common stock or other equity of USAT.

 

(c)       Arora shall also participate in and shall be eligible for compensation
under the Short-Term Cash Incentive Plan (the “STI Plan”) and in the Long-Term
Stock Incentive Plan (the “LTI Stock Plan”) established by the Board of
Directors for fiscal year 2018 and each fiscal year during the Employment Period
for the executive officers of USAT. The target bonuses and awards for Arora
under the STI Plan and the LTI Stock Plan shall be approved by the Board of
Directors and shall be based upon his Annual Base Salary.

 

(d)       For fiscal year 2018, Arora’s STI Plan and LTI Stock Plan awards would
be pro-rated from November 9, 2017 through June 30, 2018. If the year-over-year
percentage target goals would be achieved under the LTI Stock Plan for the 2018
fiscal year, Arora would earn an award of shares under the LTI Stock Plan with a
value equal to 100% of his Annual Base Salary (subject to proration). If

 

5

--------------------------------------------------------------------------------

 

the target goals under the STI Plan would be achieved for the 2018 fiscal year,
Arora would earn a cash bonus equal to 40% of his Annual Base Salary (subject to
proration).

 

(e)       Retention Bonus.  In addition to the compensation described above,
Arora shall be eligible to receive a cash bonus in the aggregate amount of up to
$420,000 (the “Retention Bonus”). The Retention Bonus shall only be earned by
Arora as follows: one-half thereof ($210,000) if he remains employed with USAT
on the first annual anniversary of the date of this Agreement; and one-half
thereof ($210,000) if he remains employed with USAT on the second annual
anniversary of this Agreement. There are to be no partial payments of the two
Retention Bonus payments referred to in the preceding sentence. The portion of
the Retention Bonus that may be earned by Arora shall be paid to Arora by USAT
at the time of the first employee payroll of USAT occurring after the applicable
date on which the Retention Bonus has been earned by Arora. Notwithstanding the
prior sentence, (i) if Arora is terminated by USAT without Cause, as defined
below, (ii) if Arora terminates for Good Reason, as defined below, or (iii) if
this Agreement is not renewed by USAT under Section 1(a); all of the then
unearned Retention Bonus, if any, shall be deemed to have been earned by Arora,
and shall be paid by USAT to Arora within ten (10) days following the date of
such termination. It is

 

6

--------------------------------------------------------------------------------

 

understood and agreed that the Retention Bonus shall be subject to and reduced
by any withholding required under applicable laws.

 

(f)       Arora shall be entitled to be reimbursed by USAT for all necessary
expenses reasonably incurred by Arora in connection with the discharge of his
employment duties hereunder, consistent with California Labor Code Section 2802.
Arora shall reasonably document all requests for expense reimbursements.

 

(g)       During the Employment Period, Arora shall be entitled to participate
in and be covered by all standard fringe and employee benefits made available to
other employees of USAT.  During the Employment Period, Arora shall be entitled
to 20 days paid time off (“PTO”) each full calendar year consistent with other
employees of USAT. Arora is not entitled to any accrued or unused vacation pay
from his employment with the Company prior to the date of this Agreement. Any
PTO shall be taken at the reasonable and mutual convenience of USAT and Arora.
Holidays shall be provided in accordance with USAT policy, as in effect from
time to time.

 

(h)       Arora acknowledges that the above compensation and the purchase of his
stock of the Company pursuant to the Merger Agreement are sufficient
consideration for his entering into this Agreement.

7

--------------------------------------------------------------------------------

 

3.  Termination.

 

(a)       Arora’s employment hereunder may be terminated by USAT or Arora, as
applicable, only under the following circumstances:

 

(i)       Arora’s employment hereunder shall terminate upon Arora’s death.

 

(ii)      Disability.  Arora’s employment hereunder shall terminate if Arora is
no longer able to competently and effectively perform his job duties due to
disability (consistent with any and all applicable federal and state disability
and leave laws). If Arora incurs a Disability, USAT may give Arora written
notice of its intention to terminate Arora’s employment.  In that event, Arora’s
employment with USAT shall terminate, effective on the later of the thirtieth
(30th) day after receipt of such notice by Arora or the date specified in such
notice; provided that within the thirty (30) day period following receipt of
such notice, Arora shall not have returned to full-time performance of Arora’s
duties hereunder. “Disability” shall mean Arora’s inability to engage in his job
duties existing pursuant to this Agreement by reason of a medically determinable
physical or mental impairment that can be expected to result in death or that
can be expected to last for a continuous period of not less than six (6) months.

 

(iii)      Termination for Cause.  USAT may terminate Arora’s employment for
“Cause,” as defined below.

 

8

--------------------------------------------------------------------------------

 

 

(iv)      Termination without Cause.  USAT may terminate Arora’s employment
without Cause.

 

(v)       Arora may resign from Arora’s employment for “Good Reason,” as defined
below.

 

(vi)      Arora may resign from Arora’s employment without Good Reason.

 

(b)       Notice of Termination.  Any termination of Arora’s employment by USAT
or by Arora under this Section 3 (other than a termination pursuant to Section
3(a)(i) or (ii) above) shall be communicated by a written notice to the other
party hereto (a “Notice of Termination”): (i) indicating the specific
termination provision in this Agreement relied upon, and (ii) except with
respect to a termination pursuant to Sections 3(a)(iv) or (vi), setting forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Arora’s employment under the provision so indicated, and (iii)
specifying a Date of Termination which, if submitted by Arora, shall be at least
thirty (30) days following the date of such notice; provided, however, that a
Notice of Termination delivered by USAT pursuant to Section 3(a)(ii) shall not
be required to specify a Date of Termination, in which case the Date of
Termination shall be determined pursuant to Section 3(a)(ii); and provided,
further, that in the event that Arora delivers a Notice of Termination to USAT,
USAT may, in its sole discretion, accelerate the Date of Termination to any date

 

9

--------------------------------------------------------------------------------

 

that occurs following the date of USAT’s receipt of such Notice of Termination
(even if such date is prior to the date specified in such Notice of
Termination).  A Notice of Termination submitted by USAT (other than a Notice of
Termination under Section 3(a)(ii) above) may provide for a Date of Termination
on the date Arora receives the Notice of Termination, or any date thereafter
elected by USAT in its sole discretion.  The failure by USAT or Arora to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Cause or Good Reason shall not waive any right of USAT or Arora
hereunder or preclude USAT or Arora from asserting such fact or circumstance in
enforcing USAT’s or Arora’s rights hereunder.

 

(c)       USAT shall have “Cause” to terminate Arora’s employment hereunder
upon: (i) Arora’s conviction or Arora’s entry of a guilty plea or plea of no
contest to any felony or to any other crime involving moral turpitude; or (ii)
Arora materially breaches any term, condition, representation, or warranty of
this Agreement; or (iii) Arora willfully abandons his duties hereunder, unless
arising from Arora’s Disability; or (iv) Arora’s fraud, gross malfeasance or
willful misconduct with respect to USAT’s business; or (v) any willful violation
by Arora of any law, rule or regulation, which violation results or could
reasonably be expected to result in material harm to the business or reputation
of USAT; or (vi) any intentional misapplication by Arora of USAT’s

 

10

--------------------------------------------------------------------------------

 

funds; or (vii) any willful failure by Arora to obey the reasonable and lawful
instructions from USAT’s Chief Executive Officer or the Board made within the
scope of the Chief Executive Officer’s or Board’s respective authority in a
manner that is both material in nature and detrimental to USAT; and which, in
the case of clauses (ii) and (vii), continues beyond thirty (30) days after USAT
has provided Arora written notice of such failure or breach.  Upon such
termination, neither party hereto shall have any further duties or obligations
except as provided in this Section; however, that Arora's obligations under
Sections 5 and 6 hereof shall survive any such termination.

 

(d)       Arora shall have “Good Reason” to terminate Arora’s employment
hereunder within ninety (90) days after the initial occurrence of one or more of
the following conditions: (i) a material diminution in Arora’s authority,
duties, or responsibilities, as described herein; (ii) a material diminution in
Arora’s Annual Base Salary or if USAT maintains a LTI and STI plan and Arora’s
performance level bonus is decreased and the percentage of decrease is
materially higher than the decrease for other USAT C-level executives (other
than the Chief Executive Officer and the Chief Financial Officer); (iii) any
other action or inaction that constitutes a material breach of this Agreement by
USAT; (iv) a relocation of Arora’s principal office and place of business to a
location more than thirty (30) miles from Arora’s

 

11

--------------------------------------------------------------------------------

 

current residence in San Francisco, California and which, in the case of any of
the foregoing, continues beyond thirty (30) days after Arora has provided USAT
written notice that Arora believes in good faith that such condition giving rise
to such claim of Good Reason has occurred, so long as such notice is provided
within ninety (90) days after the initial existence of such condition.

 

(e)       “Date of Termination” shall mean (i) if Arora’s employment is
terminated due to Arora’s death, the date of Arora’s death; (ii) if Arora’s
employment is terminated due to Arora’s Disability, the date determined pursuant
to Section 3(a)(ii); or (iii) if Arora’s employment is terminated pursuant to
Section 3(a)(iii)-(vi) either the date indicated in the Notice of Termination or
the date specified by USAT pursuant to Section 3(b), whichever is earlier.

 

4.  USAT Obligations Upon Termination of Employment

 

(a)       In General.  Upon a termination of Arora’s employment for any reason,
Arora (or Arora’s estate) shall be entitled to receive: (i) any portion of
Arora’s Annual Base Salary through the Date of Termination not theretofore paid,
(ii) any expenses owed to Arora under Section 2(f), (iii) any accrued but unused
PTO pay owed to Arora pursuant to Section 2(g), and (iv) any amount arising from
Arora’s participation in, or benefits under, any employee benefit plans,
programs or arrangements under Section 2(g), which amounts shall be payable or
vested in

 

12

--------------------------------------------------------------------------------

 

accordance with the terms and conditions of such employee benefit plans,
programs or arrangements.

 

(b)       In the event of Arora’s termination of employment by USAT without
Cause pursuant to Section 3(a)(iv) or by Arora’s resignation for Good Reason
pursuant to Section 3(a)(v), USAT shall pay Arora any STI or LTI award that was
earned prior to Termination, and any portion of any STI or LTI award for the
year in which Termination occurs with the award and targets adjusted pro rata
for the partial year. For the purposes of this Subsection 4(b), the term earned
shall mean the pro rata target for the STI or LTI as of the date of Arora’s
termination without Cause, regardless whether Arora is employed for USAT’s full
fiscal year. Except as otherwise set forth in Section 4(c) below, the payments
and benefits described in Section 4(a) and this Section 4(b) shall be the only
payments and benefits payable in the event of Arora’s termination of employment
for any reason.

 

(c)       Severance Payments.  In the event of (1) Arora’s termination of
employment by USAT without Cause pursuant to Section 3(a)(iv), (2) by Arora’s
resignation for Good Reason pursuant to Section 3(a)(v), or (3) nonrenewal of
this Agreement under Section 1(a) by USAT; in addition to the payments and
benefits described in Sections 4(a) and 4(b) above, USAT shall, subject to
Section 15 and Section 4(d) and subject to Arora’s execution of a release of any
and all claims, suits, or causes of action (except for any

 

13

--------------------------------------------------------------------------------

 

USAT post termination obligations under this Agreement) against USAT and its
affiliates in form reasonably acceptable to USAT:

 

(i)       Continue to pay to Arora Annual Base Salary (as it exists on the Date
of Termination), during the period beginning on the Date of Termination and
ending on the first anniversary of the Date of Termination (the “Severance
Period”) in accordance with USAT’s regular payroll practice as of the Date of
Termination; and

 

(ii)      Continue during the Severance Period coverage for Arora and any
eligible dependents under all USAT group health benefit plans in which Arora and
any dependents were entitled to participate immediately prior to the Date of
Termination, to the extent permitted (“Continued Coverage”); provided that if
such Continued Coverage would result in penalties under Section 4980D of the
Code, then USAT may in its sole discretion provide that (i) Arora shall pay to
USAT, on an after-tax basis, a monthly amount equal to the full premium cost of
the Continued Coverage (determined in accordance with the methodology under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,) for such
month and (ii) within 30 days of such premium payment, USAT shall reimburse
Arora in cash (less required withholding) an amount equal to the sum of (A) the
full premium cost of the Continued Coverage for such month and (B) an additional
tax “gross up” payment to cover all estimated applicable local,

 

14

--------------------------------------------------------------------------------

 

state and federal income and payroll taxes imposed on Arora with respect to the
Continued Coverage.

 

(d)       Notwithstanding any other provision of this Agreement, no payment
shall be made or benefit provided pursuant to Sections 4(b) or 4(c) if Arora has
violated any of the restrictive covenants set forth in Sections 5 and 6.  The
provisions of this Section 4 shall supersede in their entirety any severance
payment provisions in any severance plan, policy, program or other arrangement
maintained by USAT.

 

5.  Business Secrets, Disclosure of Inventions, and Invention Assignment.

 

(a)       The term “Invention” includes all inventions, improvements,
modifications and enhancements, whether or not patentable and whether or not
reduced to practice, together with each work of such owner, whether or not
copyrightable, as well as ideas, concepts, designs, and processes, whether or
not patentable.

 

(b)       Except in connection with Arora’s duties hereunder and as set forth in
Section 7 below, Arora shall not, directly or indirectly, at any time from and
after the date hereof, and whether or not the Employment Period has terminated,
or whether or not Arora's employment has terminated for any reason whatsoever,
make any use of, exploit, disclose, or divulge to any other person, firm or
corporation, any confidential information including, but 

15

--------------------------------------------------------------------------------

 

not limited to, proprietary information, trade secret, business secret,
document, practice, process procedure, know-how, data, sales information,
marketing information, marketing method, marketing means, software information,
intellectual property, special arrangement, internal organization, employment
list, customer list, or any other confidential information concerning the
business or policies of the Company or USAT or concerning the Company or USAT's
customers, clients, accounts, or suppliers, that Arora learned as a result of,
in connection with, through his employment with, or through his affiliation
with, the Company or USAT, whether or not pursuant to this Agreement, and
whether prior to or after the date hereof, but not information that can be shown
through documentary evidence to be in the public domain, or information that
falls in to the public domain, unless such information falls into the public
domain by Arora's direct or indirect disclosure or other improper acts. Arora
agrees to use his best endeavors to prevent the unauthorized disclosure or
publication of confidential information and not to copy nor remove confidential
information from the Company or USAT's premises, whether physically or
electronically, unless it is maintained on USAT issued equipment, without the
express written permission of USAT management.

 

(c)       All documents, data, know-how, designs, Inventions, names, marketing
information, marketing method, marketing means,

 

16

--------------------------------------------------------------------------------

 

materials, software programs, hardware, configurations, information, data
processing reports, lists and sales analyses, price lists or information, or any
other materials or data of any kind furnished to Arora by the Company or USAT,
or by the Company or USAT's customers, clients, accounts, and suppliers, or
developed by Arora on behalf of the Company or USAT or at the Company or USAT's
direction or for the Company or USAT's use, or otherwise devised, developed,
created, or invented in connection with Arora's employment hereunder or his
affiliation with the Company or USAT(whether or not during normal working
hours), are, and shall remain, the sole and exclusive property of the Company or
USAT, and Arora shall have no right or interest whatsoever thereto, including
but not limited to, any copyright or patent interest whatsoever. If USAT
requests the return of any such items (including all copies) at any time
whatsoever, Arora shall immediately deliver the same to USAT.

 

(d)       Arora shall promptly disclose in writing to USAT’s Chief Executive
Officer all Inventions made by Arora during the term of Arora’s employment with
either the Company or USAT, including all Inventions made prior to the date of
this Agreement, or subsequent to the date of this Agreement, whether made solely
or jointly with others, and regardless of whether Arora contends the Invention
is Arora’s own Invention including the inventions listed on Exhibit A attached
hereto and incorporated by

 

17

--------------------------------------------------------------------------------

 

reference(“Excluded Invention”), or the Company or USAT’s Invention (“Subject
Invention”).  Arora shall promptly disclose to USAT a general description of the
Invention made or conceived by Arora during the term of Arora’s employment with
either the Company or USAT, so that USAT can determine whether the Invention is
properly classified as a Subject Invention or Excluded Invention.

 

(e)       Arora hereby assigns to USAT, without additional consideration to
Arora, the entire right, title and interest in and to all Subject Inventions
(including Subject Inventions made prior to the execution hereof) and all
confidential information writings, apparatus, and other matter related to the
Subject Inventions and in and to all proprietary rights therein or based
thereon. Arora understands and agrees that all material included in any Subject
Invention which is eligible for protection under the United States, or any other
country’s or jurisdiction’s copyright laws shall be deemed created in the
ordinary course and scope of Arora’s employment by the Company and shall be
“Works for Hire” under the copyright laws of the United States. Arora and USAT
acknowledge the terms of California Labor Code Section 2870 and Arora is hereby
notified that the obligation to assign or offer to assign any of Arora’s rights
in any Invention to USAT do not apply to any Invention which qualifies as an
Excluded Invention and which complies fully with the provisions of California
Labor Code Section 2870(a).

 

18

--------------------------------------------------------------------------------

 

(f)       Except for Excluded Inventions, all documents, data, know-how,
designs, products, ideas, equipment, Inventions, names, devices, marketing
information, marketing methods, marketing means, materials, software programs,
hardware, configurations, information, or any other materials or data of any
kind developed by Arora on behalf of the Company or USAT or at their direction
or for the Company or USAT's use, or otherwise devised, developed, created, or
invented in connection with Arora's employment with the Company or USAT or
Arora's affiliation with the Company or USAT (whether or not during normal
working hours), whether before or after the date of this Agreement, are and
shall remain the sole and exclusive property of USAT, and Arora agrees to
apprise USAT of the existence of such, and Arora does not and shall not have any
right, title or interest whatsoever thereto. Arora hereby acknowledges that all
such rights to such intellectual property shall belong exclusively to USAT and
not to Arora. Any and all rights of ownership in connection with any of the
foregoing shall belong solely to USAT, and all copyright, patent, trademark, or
similar rights or interests shall be the sole and exclusive property of USAT.
Arora hereby assigns, transfers, and conveys to USAT all of his right, title and
interest in and to any and all such Inventions, discoveries, improvements,
modifications, and other intellectual property rights, and agrees to take all
such actions as may be required by USAT at any time

 

19

--------------------------------------------------------------------------------

 

and with respect to any such Invention, discovery, improvement, modification, or
other intellectual property rights to effectuate, confirm, or evidence such
assignment, transfer, and conveyance, including, but not limited to, executing
and delivering any and all applicable forms, documents, or applications required
under any applicable copyright, patent, trademark, or other law, rule, or
regulation.

 

(g)       Arora may respond to a lawful and valid subpoena or other legal
process but shall give USAT the earliest possible notice thereof, and shall, as
much in advance of the return date as possible, make available to USAT and its
counsel the documents and other information sought, and shall assist such
counsel in resisting or otherwise responding to such process.

 

6.  Non-Compete, Non-Solicitation and Non-Interference.

 

(a)       Non-Compete. For a three (3) year period following the date of this
Agreement, Arora shall be prohibited from competing within any geographic area
in which the Company’s business was conducted as of the date this Agreement,
with the business of USAT or the Company, as presently or as hereinafter
conducted as of the termination of the Employment Period; including but not
limited to, delivering services or products to unattended retail locations, and
including any production, promotion, marketing, or sales activities relating
thereto. For the purposes hereof, the term "competing" shall mean acting,
directly or

 

20

--------------------------------------------------------------------------------

 

indirectly, as a partner, principal, stockholder, joint venturer, associate,
independent contractor, creditor of, consultant, trustee, lessor to, sub-lessor
to, employee or agent of, or to have any other involvement with, any person,
firm, corporation, or other business organization which is engaged in the
businesses described in this Section.

 

(b)       Non-Interference with Employees. For a three (3) year period following
the date of this Agreement, or one year following the termination of the
Employment Period, whichever is later (the “Non-Interference Period”), Arora
shall not (a) directly or indirectly, solicit for hire for any business entity
other than USAT or the Company, any person employed by the Company as of the
date of termination of this Agreement or at any time through the duration of the
Non-Interference Period; or (b) directly or indirectly interfere with USAT's
relations with any person employed by the Company as of the date of termination
of this Agreement or at any time through the duration of the Non-Interference
Period. Such restriction shall not limit any employee or candidate responding to
a general job posting.

 

(c)       Non-Solicitation of Customers. For a three (3) year period following
the date of this Agreement, or one year following the termination of the
Employment Period, whichever is later, Arora shall be prohibited from soliciting
any customer of the Company in connection with Arora’s engaging in a business
competing with or

 

21

--------------------------------------------------------------------------------

 

similar to that of the Company as conducted as of the date this Agreement,
including but not limited to, delivering services or products to unattended
retail locations, and including any production, promotion, marketing, or sales
activities relating thereto, and including any production, promotion, marketing,
or sales activities relating thereto.

 

(d)        Exempt Businesses. Notwithstanding such restrictions or any other
USAT policy or provision in this Agreement; Arora shall not be prohibited after
the Employment Period from investing in, or advising Permitted Activities.

 

(e)       If any of the provisions contained in this Section shall, for any
reason, be held by a court of competent jurisdiction to be excessively broad as
to duration, scope, activity, or subject, those provisions shall be construed by
limiting and reducing them so as to be valid and enforceable to the extent
compatible with the applicable law.

 

7.  Government Agencies and Legal Proceedings Brought By Others;  No
disparagement.

 

(a)       Nothing in this Agreement prohibits or prevents Arora from filing a
charge with or participating, testifying, or assisting in any investigation,
hearing, or other proceeding before any federal, state, or local government
agency. Arora further understands that this Agreement does not limit his ability
to make any disclosures that are protected under the whistleblower

 

22

--------------------------------------------------------------------------------

 

provisions of federal law or regulation. This Agreement does not limit Arora’s
right to receive an award for information provided to any Government Agencies.

 

(b)       Arora and USAT agree not to disparage each other, any of USAT’s
products or practices, or any of its directors, officers, agents,
representatives, equity holders or affiliates, either orally or in writing, at
any time; provided that the parties may confer in confidence with their legal
representatives and make truthful statements as required by law, rule or
regulation.

 

8.  Remedies.

 

Arora acknowledges that any breach by Arora of the obligations set forth in
Sections 5 or 6 hereof would substantially and materially impair and irreparably
harm USAT's business and goodwill; that such impairment and harm would be
difficult to measure; and, therefore, total compensation in solely monetary
terms would be inadequate. Consequently, Arora agrees that in the event of any
breach or any threatened breach by Arora of any of the provisions of Section 5
or 6 hereof, USAT shall be entitled, in addition to monetary damages or other
remedies, and without posting bond, to equitable relief, including injunctive
relief, and to the payment by Arora of all costs and expenses incurred by USAT
in enforcing the provisions thereof, including attorneys' fees. The remedies
granted to USAT in this Agreement are cumulative

 

23

--------------------------------------------------------------------------------

 

and are in addition to remedies otherwise available to USAT at law or in equity.

 

9.  Non-Waiver.

 

The waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other or
subsequent breach by such party of such or any other provision.

 

10. Notices.

 

All notices required or permitted hereunder shall be in writing and shall be
sent by overnight delivery service, as follows:

 

To USAT:

 

USA Technologies, Inc.

100 Deerfield Lane, Suite 300

Malvern, Pennsylvania 19355

Attn: Stephen P. Herbert, Chief Executive Officer

 

To Arora:

 

Mandeep Arora

1839 15th Street, Unit #357

San Francisco, CA 94103

 

 

 

or to such other address as either of them may designate in a written notice
served upon the other party in the manner provided herein. All notices required
or permitted hereunder shall be deemed duly given and received on the first day
next succeeding the date of mailing.

24

--------------------------------------------------------------------------------

 

11. Severability.

 

If any term or provision of this Agreement or the application thereof to any
person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement or the application of any such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.

 

12. Binding Effect and Assignability.

 

The rights and obligations of both parties under this Agreement shall inure to
the benefit of, and shall be binding upon, their personal representatives,
heirs, successors and assigns. This Agreement, or any part hereof, may be
assigned by USAT without the consent of Arora. This Agreement, or any part
thereof, may not be assigned by Arora.

 

13. Entire Agreement and Prior Agreements.

 

As of the date of this Agreement; Arora’s Employment Agreement with the Company
dated April 1, 2010, and signed by Arora on March 11, 2011 (“April 1, 2010
Agreement”), is superseded and replaced by this Agreement, except for Arora’s
duties and obligations set forth in Sections 6 and 7(a) of the April 1, 2010
Agreement.  Arora shall have no right to any of the Cash and Incentive
Compensation provided for in the April 1, 2010 Agreement. Arora’s duties and
obligations set forth in the Employee Nondisclosure, Non-Compete,

 

25

--------------------------------------------------------------------------------

 

Non-Solicitation and Invention Assignment Agreement as of 2004 (“2004 NDA
Agreement”) shall remain in full force and effect, and are not abrogated by this
Agreement. To the extent Sections 6 and 7(a) of the April 1, 2010 Agreement and
the provisions of the 2004 NDA Agreement conflict with the terms of this
Agreement, the terms of this Agreement shall govern. Except as set forth above
in this Section, this Agreement constitutes the entire agreement with respect to
the subject matter hereof between the parties hereto and, except as provided
herein, there are no other agreements between the parties relating to the
subject matter hereof. This Agreement may only be modified by an agreement in
writing executed by both USAT and Arora.  USAT hereby agrees that all actions
taken by Arora consistent with the terms of this Agreement shall not be a
violation of the April 1, 2010 Agreement or 2004 NDA Agreement.

 

14. Understanding of Agreement.

 

Arora hereby represents and warrants each of the following: (i) he has carefully
read all of the terms and conditions of this Agreement; (ii) he fully
understands the meaning and effect of this Agreement; (iii) the entry into, and
execution of, this Agreement by him is his own free and voluntary act and deed;
and (iv) he has received (or had the opportunity to receive) the advice of his
own attorney, accountant, or other advisors, concerning this Agreement and its
meaning and legal effect, and has fully and completely discussed and reviewed
(or has had the opportunity to

 

26

--------------------------------------------------------------------------------

 

fully and completely discuss and review) the Agreement and its meaning and legal
effect, with his own attorney, accountant or other advisors.

 

15. Section 409A.

 

(a)       General.  “Section 409A” shall mean Section 409A of the Code and the
Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued after the Effective Date.

 

The parties hereto acknowledge and agree that, to the extent applicable, this
Agreement shall be interpreted in accordance with, and incorporate the terms and
conditions required by, Section 409A.  Notwithstanding any provision of this
Agreement to the contrary, in the event that USAT determines that any amounts
payable hereunder will be immediately taxable to Arora under Section 409A, USAT
reserves the right (without any obligation to do so or to indemnify Arora for
failure to do so) to (i) adopt such amendments to this Agreement and appropriate
policies and procedures, including amendments and policies with retroactive
effect, that USAT determines to be necessary or appropriate to preserve the
intended tax treatment of the benefits provided by this Agreement, to preserve
the economic benefits of this Agreement and to avoid less favorable accounting
or tax consequences for USAT and/or (ii) take such other actions as USAT
determines to be

 

27

--------------------------------------------------------------------------------

 

necessary or appropriate to exempt the amounts payable hereunder from Section
409A or to comply with the requirements of Section 409A and thereby avoid the
application of penalty taxes thereunder.  No provision of this Agreement shall
be interpreted or construed to transfer any liability for failure to comply with
the requirements of Section 409A from Arora or any other individual to USAT or
any of its Affiliates, employees or agents and in no event shall USAT or any of
its affiliates, employees or agents be responsible for reimbursing or
indemnifying Argawal for any violation of Section 409A.

 

(b)       Separation from Service under Section 409A.  Notwithstanding any
provision to the contrary in this Agreement:  (i) no amount shall be payable
pursuant to Section 4(b) unless the termination of Arora’s employment
constitutes a “separation from service” within the meaning of Section
1.409A-1(h) of the Department of Treasury Regulations; (ii) for purposes of
Section 409A, Arora’s right to receive installment payments pursuant to Section
4(b) shall be treated as a right to receive a series of separate and distinct
payments; and (iii) to the extent that any reimbursement of expenses or in-kind
benefits constitutes “deferred compensation” under Section 409A, such
reimbursement or benefit shall be provided no later than December 31 of the year
following the year in which the expense was incurred.  The amount of expenses
reimbursed in one year shall not affect the amount

 

28

--------------------------------------------------------------------------------

 

eligible for reimbursement in any subsequent year.  The amount of any in-kind
benefits provided in one year shall not affect the amount of in-kind benefits
provided in any other year. Notwithstanding any provision to the contrary in
this Agreement, if Arora is deemed at the time of his separation from service to
be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code,
to the extent delayed commencement of any portion of the termination benefits to
which Arora is entitled under this Agreement is required in order to avoid a
prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion
of Arora’s termination benefits shall not be provided to Arora prior to the
earlier of (x) the expiration of the six-month period measured from the date of
Arora’s “separation from service” with USAT (as such term is defined in the
Treasury Regulations issued under Section 409A of the Code) or (y) the date of
Arora’s death; upon the earlier of such dates, all payments deferred pursuant to
this sentence shall be paid in a lump sum to Arora, and any remaining payments
due under the Agreement shall be paid as otherwise provided herein.

 

16. Choice of Law, Venue and Arbitration.

 

This Agreement will be governed by California law, without application of that
state’s conflict of laws principles. Except for a claimed breach of Sections 5
and 6 of this Agreement, USAT and Arora agree that any dispute between the
Parties will be

 

29

--------------------------------------------------------------------------------

 

referred to final and binding arbitration, in accordance with the then-current
Employment Arbitration Rules (the “Rules”) of the American Arbitration
Association (“AAA”) with the hearing venue to be located in California.  To the
extent any dispute between the Parties is not subject to AAA arbitration, then
the Parties hereby consent to the exclusive jurisdiction of the state and
federal courts of the State of California. USAT and Arora, upon prior mutual
written agreement, may agree to have any Dispute referred to and conducted in
accordance with the rules (as same may be modified by such written mutual
agreement) of another private arbitration institution, such as by way of example
only, Judicial Arbitration & Mediations Services, Inc.

 

17. Merger Agreement Beneficiary.

 

USAT and Arora acknowledge that Arora is an intended beneficiary of Section 5.6
of the Merger Agreement, and he shall be a third party beneficiary thereof.

 

 

[Signature page follows]

 

 

30

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.

 

 

USA TECHNOLOGIES, INC.

 

 

 

 

 

By:

/s/ Stephen P. Herbert

 

 

Stephen P. Herbert,

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

/s/ Mandeep Arora

 

 

MANDEEP ARORA

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

EXCLUDED INVENTIONS AND CONCEPTS

 

 

 

NONE

 

 

--------------------------------------------------------------------------------