Unassociated Document


     

    
       

      AMENDED
        AND RESTATED

      EMPLOYMENT
        AND NON-COMPETITION AGREEMENT

      


      Agreement
        made this 11th
        day of
        May, 2006, by and between STEPHEN P. HERBERT, an individual ("Herbert"),
        and USA
        TECHNOLOGIES, INC., a Pennsylvania corporation ("USA").

       

      BACKGROUND

      


      Herbert
        is the President and Chief Operating Officer of USA. Herbert and USA have
        entered into an Employment And Non-Competition Agreement dated April 4, 1996,
        a
        first amendment thereto dated as of February 22, 2000, a second amendment
        thereto dated as of April 15, 2002, a third amendment thereto dated as of
        July
        25, 2003, a fourth amendment thereto dated February 4, 2004,and a fifth
        amendment thereto dated February 28, 2005. As more fully set forth herein,
        the
        parties desire to amend, completely restate, and replace the foregoing
        agreements.

       

      AGREEMENT

       

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

       

      SECTION
        1. Employment.

       

      (a) USA
        shall
        employ Herbert as President and Chief Operating Officer, for a period commencing
        on the date hereof and continuing through June 30, 2009 (the "Employment
        Period"), and Herbert hereby accepts such employment. Unless terminated by
        either party hereto upon at least 60-days notice prior to the end of the
        original Employment Period ending June 30, 2009, 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, Herbert shall devote his full time, energy, skills,
        and
        attention to the business of USA, and shall not be engaged or employed in
        any
        other business activity whatsoever, whether or not such activity is pursued
        for
        gain, profit or other pecuniary advantage. During the Employment Period,
        Herbert
        shall perform and discharge well and faithfully such executive management
        duties
        for USA as shall be necessary and as otherwise may be directed by the Chairman
        or Board of Directors of USA.

      


      Nothing
        contained in the prior paragraph shall prohibit Herbert from investing his
        personal assets in businesses which do not compete with USA, where the form
        or
        manner of such investments will not require more than minimal services on
        the
        part of Herbert in the operation of the affairs of the business in which
        such
        investments are made, or in which his participation is solely that of a passive
        investor; or from serving as a member of boards of directors, boards of
        trustees, or other governing bodies of any organization, provided that USA
        approves such activities in advance; or from 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. It is understood and agreed that any such permitted activities which
        shall occur during business hours shall be limited to no greater than forty
        hours per year.

       

      
        
          
          

        

        
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      (c)  If
        during
        the Employment Period, Herbert shall be required to take a role which is
        substantively different than that contemplated by this Agreement, or 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 Herbert
        may
        upon thirty days prior notice to USA, terminate the Employment Period. Upon
        such
        termination by Herbert, neither party shall have any further duties or
        obligations hereunder, provided, however, that Herbert’ obligations under
        Sections 5 and 6 hereof shall survive any such termination. 

       

      SECTION
        2. Compensation
        and Benefits

       

      (a) In
        consideration of his services rendered, commencing on the date hereof, USA
        shall
        pay to Herbert a base salary of $285,000 per year during the Employment Period,
        subject to any withholding required by law. Herbert’ base salary may be
        increased from time to time in the discretion of the Board of
        Directors.

       

      
        
          
          

        

        
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      For
        each
        of the fiscal years ending June 30, 2007, June 30, 2008, and June 30, 2009,
        Herbert 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 Herbert to USA. For purposes of
        determining the number of shares to be issued to Herbert, 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 Herbert.
        If
        any such election is made, the shares issuable to Herbert for the fiscal
        year
        would vest ratably on a quarterly basis. Herbert 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. Herbert shall make appropriate cash payments
        to USA to pay for any withholding tax liability of USA in connection with
        the
        shares. Herbert 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. Herbert
        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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      (b) In
        addition to the base salary provided for in subparagraph (a), Herbert shall
        be
        eligible to receive such bonus or bonuses as the Board of Directors of USA
        may,
        in their discretion, pay to Herbert from time to time based
        upon his performance and/or the performance of USA. All awards in this regard
        may be made in cash or in Common Stock. 

       

      (c) Herbert
        shall be entitled to be reimbursed by USA for all reasonable expenses reasonably
        incurred by Herbert in connection with his employment duties hereunder. Such
        expenses shall include but not be limited to all reasonable business travel
        expenses such as tolls, gasoline and mileage. Herbert shall reasonably document
        all requests for expense reimbursements.

       

      (d)
         At
        the
        time of the signing of this Agreement by each of USA and Herbert, USA shall
        issue to Herbert options to acquire up to 18,000 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 Herbert of this
        Agreement).
        The
        options shall vest as
        follows: 6,000 on the date hereof; 6,000 on June 30, 2007; and 6,000 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".

       

      
        
          
          

        

        
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      Herbert
        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 Herbert at
        the
        time of the exercise of any such options.

       

      Herbert
        also acknowledges that neither the options nor the Common Stock underlying
        the
        options have been registered under the Securities Act of 1933, as amended
        (“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. Herbert 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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  (e) 
    On the date of the execution and delivery by each of USA and Herbert of this
    Agreement, USA shall issue to Herbert 50,000 nonvested shares of Common Stock
    as a bonus. These shares shall vest as follows: 16,667 on June 1, 2006; 16,667
    on January 1, 2007; and 16,666 on June 1, 2007. Herbert acknowledges that
    the Common Stock has not been registered under 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. Herbert 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. Herbert shall make appropriate cash payments to USA to
    pay for any withholding tax liability of USA in connection with the shares.
    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.

       

      SECTION
        3. Termination.
        Notwithstanding anything else contained herein, USA may terminate the employment
        of Herbert at any time upon notice delivered to Herbert in the event that
        (i)
        Herbert commits any criminal or fraudulent act; or (ii) Herbert breaches
        any
        term or condition of this Agreement; or (iii) Herbert willfully abandons
        his
        duties hereunder. Upon such termination neither party hereto shall have any
        further duties or obligations hereunder whatsoever; provided, however, that
        Herbert' obligations under Sections 5 and 6 hereof shall survive any such
        termination.

       

      
        
          
          

        

        
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      SECTION
        4. Death
        and Disability.

       

      (a) If
        Herbert shall die during the Employment Period, this Agreement shall terminate
        as of the date of such death and except for any base salary or bonuses accrued
        as of such date USA shall have no further duties or obligations hereunder
        whatsoever.

       

      (b) If
        USA
        determines in good faith that Herbert is incapacitated by accident, sickness
        or
        otherwise so as to render him mentally or physically incapable of performing
        the
        services required of him hereunder for an aggregate of ninety (90) consecutive
        days, upon the expiration of such period or at any time thereafter, by action
        of
        USA, Herbert’s employment hereunder may be terminated immediately, upon giving
        him 30 days written notice to that effect, and upon such termination except
        for
        any base salary or bonuses accrued as of such date neither party hereto shall
        have any further duties or obligations hereunder; provided, however, that
        Herbert’s obligations under Sections 5 and 6 hereof shall survive any such
        termination. USA shall be entitled to rely upon the advice and opinion of
        any
        physician of its choosing in making any determination with respect to any
        such
        disability. In the case of such termination, USA agrees to maintain existing
        health care and disability benefits on behalf of Herbert for a minimum of
        one
        year following the date of termination.

       

      
        
          
          

        

        
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      SECTION
        5. Business
        Secrets.

       

      (a) Except
        in
        connection with his duties hereunder, Herbert 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 Herbert’s employment has terminated for
        any reason whatsoever, make any use of, exploit, disclose, or divulge to
        any
        other person, firm or corporation, any trade or business secret, customer
        or
        supplier information, documents, know-how, data, marketing information, method
        or means, or any other confidential (i.e. not already otherwise disseminated
        to
        or available to the public) information concerning the business or policies
        of
        USA, that Herbert learned as a result of, in connection with, through his
        employment with, or through his affiliation with USA, whether or not pursuant
        to
        this Agreement.

      


      (b) From
        and
        after the date hereof, except in connection with his duties hereunder, and
        for a
        one (1) year period following the termination of the Employment Period, or
        for a
        one (1) year period following the termination of Herbert’s employment hereunder
        if earlier, Herbert shall not solicit, or divert business from, or serve,
        or
        sell to, any customer or account of USA of which Herbert is or becomes aware,
        or
        with which Herbert has had personal contact as a result of, in connection
        with,
        through his employment with, or through his affiliation with USA, whether
        or not
        pursuant to this Agreement. Notwithstanding
        the prior sentence, following the termination of Herbert's
        employment with USA, Herbert shall be permitted to sell products to customers
        or
        accounts of USA, provided such products are not competitive with, or similar
        to,
        any products of USA, whether such products are offered now or at any time
        in the
        future by USA.

       

      
        
          
          

        

        
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      (c)
        All
        documents, data, know-how, designs, inventions, names, marketing information,
        method or means, 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 Herbert
        by
        USA, or developed by Herbert on behalf of USA or at USA's direction or for
        USA's
        use, or otherwise devised, developed, created, or invented in connection
        with
        Herbert’ employment hereunder or his affiliation with USA, are and shall remain
        the sole and exclusive property of USA, and Herbert shall have no right or
        interest whatsoever thereto, including but not limited to, any copyright
        or
        patent interest whatsoever. If USA requests the return of any such items
        (including all copies) at any time whatsoever, Herbert shall immediately
        deliver
        the same to USA.

       

      
        
          
          

        

        
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      (d) All
        documents, data, know-how, designs, products, ideas, equipment, inventions,
        names, devices, marketing information, method or means, materials, software
        programs, hardware, configurations, information, or any other materials or
        data
        of any kind developed by Herbert on behalf of USA or at its direction or
        for
        USA's use, or otherwise devised, developed, created, or invented in connection
        with Herbert’s employment with USA or Herbert’s affiliation with USA, and
        whether before or after the date of this Agreement, are and shall remain
        the
        sole and exclusive property of USA, and Herbert does not and shall not have
        any
        right, title or interest whatsoever thereto. Herbert hereby affirms and agrees
        to the work-for-hire doctrine and acknowledges that all such rights to
        intellectual property shall belong exclusively to USA and not to Herbert.
        Any
        and all rights of ownership in connection with any of the foregoing shall
        belong
        solely to USA, and all copyright, patent, trademark, or similar rights or
        interests shall be the sole and exclusive property of USA. Herbert hereby
        assigns, transfers, and conveys to USA 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 USA at any time and with respect to any such invention, discovery,
        improvement, modification or other intellectual property rights to confirm
        or
        evidence such assignment, transfer and conveyance. At USA's direction and
        request, Herbert shall execute and deliver any and all forms, documents,
        or
        applications required under any applicable copyright, patent, trademark,
        or
        other law, rule or regulation. 

       

      
        
          
          

        

        
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      SECTION
        6. Restrictive
        Covenant.
        From and
        after the date hereof, and for a one (1) year period following the termination
        of the Employment Period, or for a one (1) year period following the termination
        of Herbert’ employment hereunder if earlier, Herbert shall be prohibited from
        competing in the United States with the business of USA as presently or as
        hereinafter conducted, including but not limited to, the ownership and licensing
        of credit card activated control systems in the vending, copying, debit card,
        or
        personal computer industries. For the purposes hereof, the term "competing"
        shall mean acting, directly or indirectly, as a partner, principal, stockholder,
        joint venturer, associate, independent contractor, creditor of, consultant,
        trustee, lessor to, sublessor 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.

       

      
        
          
          

        

        
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      SECTION
        7. Remedies.
        Herbert
        acknowledges that any breach by him of the obligations set forth in Sections
        5
        or 6 hereof would substantially and materially impair and irreparably harm
        USA'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, Herbert agrees that in the event of any breach
        or any
        threatened breach by Herbert of any of the provisions of Section 5 or 6 hereof,
        USA shall be entitled in addition to monetary damages or other remedies,
        to
        equitable relief, including injunctive relief, and to the payment by Herbert
        of
        all costs and expenses incurred by USA in enforcing the provisions thereof,
        including attorneys' fees. The remedies granted to USA in this Agreement
        are
        cumulative and are in addition to remedies otherwise available to USA at
        law or
        in equity.

       

      SECTION
        8. Waiver
        of Breach.
        The
        waiver by USA of a breach of any provision of this Agreement by Herbert shall
        not operate or be construed as a waiver of any other or subsequent breach
        by
        Herbert of such or any other provision.

       

      SECTION
        9. Notices.
        All
        notices required or permitted hereunder shall be in writing and shall be
        sent by
        certified or registered mail, return receipt requested, postage prepaid,
        as
        follows:

       

      
        
          
          

        

        
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      To
        USA:

      


      USA
        Technologies, Inc.

      100
        Deerfield Lane, Suite 140

      Malvern,
        Pennsylvania 19355

      Attn:
        George R. Jensen, Jr., 

      Chief
        Executive Officer

      


      


      To
        Herbert:

      


      Mr.
        Stephen P. Herbert

      28
        Briar
        Road

      Strafford,
        Pennsylvania 19087

       

      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 second
        day
        next succeeding the date of mailing.

       

      SECTION
        10. 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. If
        any of
        the provisions contained in this Agreement shall for any reason be held to
        be
        excessively broad as to duration, scope, activity or subject, it shall be
        construed by limiting and reducing it, so as to be valid and enforceable
        to the
        extent compatible with the applicable law.

       

      SECTION
        11. Governing
        Law.
        The
        implementation and interpretation of this Agreement shall be governed by
        and
        enforced in accordance with the laws of the Commonwealth of Pennsylvania
        without
        regard to its conflict of laws rules.

       

      
        
          
          

        

        
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      SECTION
        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 thereof, may not be assigned
        by Herbert.

       

      SECTION
        13. Entire
        Agreement.
        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
        USA
        and Herbert. This Agreement shall supercede and completely replace the prior
        employment agreements entered into between Herbert and USA. 

       

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

    

    
       

      
        	 	 	 
	 	USA
                TECHNOLOGIES,
                INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                George
                  R. Jensen, Jr., 

                Chief
                  Executive Officer

              
	 	 
	 	 
	 	
                
STEPHEN
                P. HERBERT




      
        
          
          

        

        
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