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                        FIRST AMENDMENT TO EMPLOYMENT AND
                            NON-COMPETITION AGREEMENT

         This First Amendment is made as of the 22nd day of February 2000, by
and between STEPHEN P. HERBERT ("Herbert"), and USA TECHNOLOGIES, INC., a
Pennsylvania corporation ("USA").

                                   Background

         USA and Herbert entered into an Employment And Non-Competition
Agreement dated April 4, 1996 (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. Subparagraph (a) of Section 1. Employment of the Agreement is hereby
deleted and the following new subparagraph (a) is hereby substituted in its
place:

            (a) USA shall employ Herbert as President and Chief Operating
            Officer commencing on June 17, 1999 and continuing through June 30,
            2002 (the "Employment Period") and Herbert hereby accepts such
            employment. Unless terminated by either party hereto upon at least
            60-days notice prior to end of the original Employment Period ending
            June 30, 2002, 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.

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         B. Subparagraph (c) of the Section 1. Employment is hereby deleted and
the following new subparagraph (c) is hereby substituted in its place:

                  (c) Nothing contained in subparagraph 1.(b) hereof 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.

         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 March 1,
            2000, USA shall pay to Herbert a base salary of $125,000 per year
            during the Employment Period, subject to any withholding required by
            law. Herbert's base salary may be increased from time to time in the
            discretion of the Board of Directors.

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


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            (b) (i) In addition to the base salary provided for in subparagraph
            (a), Herbert shall be eligible to receive such bonus or bonuses as
            the Compensation Committee of the Board of Directors may, in their
            sole 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 of USA ("Common Stock").

            (ii) As of the date of this First Amendment, USA shall issue to
            Herbert 20,000 shares of fully vested Common Stock as a bonus on
            account of calendar year 2000. Such shares of Common Stock shall be
            registered under the Securities Act of 1933, as amended ("Act"),
            pursuant to a Form S-8, at USA's cost and expense.

            (iii) Herbert shall also be eligible to receive an additional bonus
            of up to 20,000 shares of Common Stock on account of the 2000
            calendar year. The determination of the number of shares to be
            awarded to Herbert shall be made by the Compensation Committee of
            the Board of Directors, in their sole discretion, and shall be based
            upon the performance of USA and/or the performance of Herbert during
            the 2000 calendar year. USA shall issue to Herbert any such shares
            of Common Stock during January 2001. Such shares of Common Stock
            shall be registered under the Act pursuant to a Form S-8, at USA's
            cost and expense.

            (iv) Provided that Herbert is an employee of USA at the end of the
            original Employment Period hereunder (i.e., on June 30, 2002), and
            further provided that Herbert has not materially breached any
            provision of this Agreement if he is so employed, then USA shall
            issue to Herbert 40,000 fully vested shares of Common Stock. USA
            shall issue to Herbert such shares of Common Stock during July 2002.
            All of such shares shall be registered under the Act pursuant to a
            Form S-8, at the cost and expense of USA. Herbert shall not be
            entitled to any such shares of Common Stock if for any reason


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            whatsoever he is not an employee of USA on June 30, 2002. The number
            of shares of Common Stock issuable to Herbert shall be equitably
            adjusted from time to time to reflect any stock splits, stock
            combinations, stock subdivisions, stock recapitilizations, reverse
            stock splits, stock dividends paid on, and other similar events
            involving the Company's Common Stock occurring prior to and as of
            June 30, 2002.

         E. The following new subparagraph (d) is hereby added to Section 5.
Business Secrets of the Agreement:

            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 has
            and shall have no right or interest whatsoever thereto. Herbert
            hereby renounces and disclaims 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
            Herbert's 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


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            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.

         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. Original Part. The amendments to the Agreement made in Paragraph 1
hereof shall be deemed to have been an original part of the Agreement and to
have been effective from and after the date of the Agreement.

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

                                                   USA TECHNOLOGIES, INC.



                                                   By: /s/ George R. Jensen, Jr.
                                                       -------------------------
                                                       George R. Jensen, Jr.,
                                                       Chief Executive Officer


                                                       /s/ Stephen P. Herbert
                                                       -------------------------
                                                       STEPHEN P. HERBERT


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