FIRST
      AMENDMENT TO EMPLOYMENT AND

    NON-COMPETITION
      AGREEMENT

    


    This
      First Amendment is made on the 11th
      day of
      May 2006, by and between DAVID M. DeMEDIO ("DeMedio"), and USA TECHNOLOGIES,
      INC., a Pennsylvania corporation ("USA").

     

    Background

     

    USA
      and
      DeMedio entered into an Employment And Non-Competition Agreement dated April
      12,
      2005 (the "Agreement"). As more fully set forth herein, the parties desire
      to
      amend the Agreement in certain respects.

     

    Agreement

     

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

     

    
      	
            	1.	
              Amendments.

            


    

    


    A.
       The
      date
“April 30, 2006” appearing in the first and second sentences of subparagraph (a)
      of Section 1. Employment
      of the
      Agreement is hereby deleted and the date “June 30, 2008” is hereby substituted
      in its place.

     

    B.
      The
      following new subparagraph (c) shall be added to Section 1. Employment
      of the
      Agreement:

     

    (c)
      If
      during the Employment Period a USA Transaction (as such term is defined in
      the
      Employment Agreement of George R. Jensen, Jr.) shall occur, then DeMedio may
      upon thirty days prior notice to USA, terminate the Employment Period. Upon
      such
      termination by DeMedio, neither party shall have any further duties or
      obligations hereunder, provided, however, that DeMedio’s obligations under
      Sections 5 and 6 hereof shall survive any such termination. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    C.
      Subparagraph
      (a) of Section 2. Compensation
      and Benefits
      of the
      Agreement is hereby deleted and the following new subparagraph (a) is hereby
      substituted in its place:

     

    (a)
      In
      consideration of his services rendered, commencing on the date hereof, USA
      shall
      pay to DeMedio a base salary of $165,000 per year during the Employment Period,
      subject to any withholding required by law. DeMedio's
      base
      salary may be increased from time to time in the discretion of the Board of
      Directors. 

     

    For
      each
      of the fiscal years ending June 30, 2007, and June 30, 2008, DeMedio shall
      have
      the option to elect to have fifty percent (50%) of his base salary paid in
      Common Stock of USA (“Common Stock”) rather than cash. Any such election must be
      made not later than 60-days following the commencement of each such fiscal
      year
      by appropriate notice by DeMedio to USA. For the purposes of calculating the
      number of shares to be issued to DeMedio, the shares shall be valued at the
      average closing bid price for the Common Stock during the 30 trading days
      immediately preceding the date of any such election by DeMedio. If any such
      election is made, the shares issuable to DeMedio for the fiscal year would
      vest
      ratably on a quarterly basis. DeMedio acknowledges that the issuance of the
      shares to him represents taxable income to him and that he (and not USA) shall
      be responsible for the payment of any and all income taxes attributable to
      the
      issuance of the shares to him. DeMedio shall make appropriate cash payments
      to
      USA to pay for any withholding tax liability of USA in connection with the
      shares. DeMedio acknowledges that the Common Stock has not been registered
      under
      the Securities Act of 1933, as amended (the “Act”), or under any state
      securities law, and the Common Stock can not be sold or transferred unless
      such
      Common Stock has been registered under the Act or such state securities laws,
      or
      unless USA has received an opinion of its counsel that such registration is
      not
      required.
      DeMedio
      understands that USA has not agreed to register the Common Stock under the
      Act
      or any state securities laws. In
      addition, the certificates representing the Common Stock shall contain such
      legends, or restrictive legends, or stop transfer instructions, as shall be
      required by applicable Federal or state securities laws, or as shall be
      reasonably required by USA or its transfer agent.

     

    
      
         

      

      
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    D. The
      following new subsection (e) shall be added to Section 2. Compensation
      and Benefits
      of the
      Agreement:

    


    (e)
      At
      the time of the signing of this First Amendment by each of USA and DeMedio,
      USA
      shall issue to DeMedio options to acquire up to 7,000 shares of USA Common
      Stock
      for an exercise price of $7.50 per share (which is equal to the average
      closing bid price for the Common Stock during the 30 trading days immediately
      preceding the execution and delivery by USA and DeMedio of this First
      Amendment).
      The
      options shall vest as
      follows: 2,334 on the date hereof; 2,333 on June 30, 2007; and 2,333 on June
      30,
      2008.
      The
      options shall be exercisable at any time within five years of vesting. All
      of
      the terms and conditions of the options are set forth in the Option Certificate
      attached hereto as Exhibit "A".

    


    DeMedio
      acknowledges that such options are not incentive stock options as such term
      is
      defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
      part
      of an employee stock purchase plan as defined in Section 423 thereunder. As
      a
      result, among other things, taxable income will be realized by DeMedio at the
      time of the exercise of any such options.

    


    DeMedio
      also acknowledges that neither the options nor the Common Stock underlying
      the
      options have been registered under the Act or under any state securities laws,
      and neither the options nor the Common Stock underlying the options can be
      sold
      or transferred unless such options or Common Stock have been registered under
      the Act or such state securities laws, or unless USA has received an opinion
      of
      counsel that such registration is not required. DeMedio understands that USA
      has
      not agreed to register the options or the underlying Common Stock under the
      Act
      or any state securities laws.

     

    
      
         

      

      
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    2.
      Modification.
      Except
      as otherwise specifically set forth in Paragraph 1, the Agreement shall not
      be
      amended or modified in any respect whatsoever and shall continue in full force
      and effect.

     

    3.
      Capitalized
      Terms.
      Except
      as specifically provided otherwise herein, all capitalized terms used herein
      shall have the meanings ascribed to them in the Agreement.

     

    4.
      Effective
      Time.
      The
      amendments to the Agreement made in Paragraph 1 hereof shall be effective from
      and after the date hereof.

     

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

     

     

    
      	 	 	
              

              DAVID M. DeMEDIO
	 	 	 
	 	 	USA TECHNOLOGIES, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Stephen
              P. Herbert,
	 	President



     

    
      
         

      

      
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