AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT

                    (ii)     If Jensen voluntarily terminates Jensen’s employment hereunder with Good Reason at any time during the Employment Period, Jensen will be entitled to receive the following compensation and benefits:

 

                              (a) Following the termination of Jensen’s employment, USA shall continue to pay to Jensen his annual base salary in such installments and at such times as USA pays the annual base salaries of its other executive officers. Such annual base salary shall continue to be paid to Jensen by USA for a period of time equal to the greater of (a) two years from the termination date, or (b) the period of time remaining in the Employment Period as of the date of termination;

 

                              (b) all bonuses earned or vested on or before the date of termination;

 

                              (c) any benefits or compensation provided under the terms of any benefit plan or other provisions of this Agreement; and

 

                              (d) During the two year period following the date of termination, USA shall arrange at its cost to provide Jensen with health insurance benefits substantially similar to those which Jensen is receiving immediately prior to the date of termination. Benefits otherwise receivable by Jensen pursuant to this subsection shall be reduced to the extent comparable benefits are actually received by or made available to Jensen without cost during such period following Jensen’s termination of employment (and any such benefits actually received by Jensen shall be reported to USA by Jensen).

 

                    (iii)     For purposes of this Agreement, “Good Reason” means any of the following conditions, which remain uncured after the expiration of 30 days following the delivery of written notice of such condition to USA by Jensen, with respect to which Jensen terminates employment within 120 days after the initial existence of the condition: (A) a material breach of the terms of this Agreement by USA; (B) the assignment by USA to Jensen of duties materially inconsistent with Jensen’s authorities, duties, responsibilities, and status as the Chief Executive Officer of USA, or a material reduction or alteration in the nature or status of Jensen’s authority, duties, or responsibilities; provided, however, that a material reduction or alteration referred to in this subsection (B) shall not include any change or reduction in Jensen’s authorities, duties or responsibilities resulting solely from USA becoming a private company or a subsidiary or division of a public company; (C) USA materially reduces Jensen’s rate of annual base salary below the level in effect immediately before such reduction; (D) a material reduction by USA in the kind or level of employee benefits to which Jensen is entitled immediately prior to such reduction with the result that Jensen’s overall benefit package is significantly reduced unless such failure to continue a plan, policy, practice or arrangement pertains to all plan participants generally; or (E) requiring Jensen to be based at a location in excess of 75 miles from Jensen’s current residence.

 

                    (iv)     As a condition to Jensen receiving or continuing to receive any of the payments or benefits provided under this subsection B, Jensen shall have executed and delivered to USA (and not revoked) a release of any and all claims, suits, or causes of action against USA and its affiliates in form reasonably acceptable to USA.

 

          C.       Termination Without Cause.

 

                    (i) USA, in its sole discretion, may terminate Jensen’s employment hereunder without Cause (as defined below), at any time by giving Jensen at least 30 days’ (and not more than 90 days’) prior written notice of USA’s intent to terminate Jensen’s employment as of a specified date; provided, during all or any part of the remaining Employment Period, USA, in its sole discretion, may modify, reduce or eliminate Jensen’s duties hereunder.

 

                    (ii) If USA terminates Jensen’s employment hereunder without Cause at any time during the Employment Period, Jensen will be entitled to receive the following compensation and benefits:

 

                              (a) Following the termination of Jensen’s employment, USA shall continue to pay to Jensen his annual base salary in such installments and at such times as USA pays the annual base salaries of its other executive officers. Such annual base salary shall continue to be paid to Jensen by USA for a period of time equal to the greater of (a) two years from the termination date, or (b) the period of time remaining in the Employment Period as of the date of termination;

 

                              (b) all bonuses earned or vested on or before the date of termination;

 

                              (c) any other benefit or compensation provided under the terms of any benefit plan or other provisions of this Agreement; and

 

                              (d) During the two year period following the date of termination, USA shall arrange at its cost to provide Jensen with health insurance benefits substantially similar to those which Jensen is receiving immediately prior to the date of termination. Benefits otherwise receivable by Jensen pursuant to this subsection shall be reduced to the extent comparable benefits are actually received by or made available to Jensen without cost during such period following Jensen’s termination of employment (and any such benefits actually received by Jensen shall be reported to USA by Jensen).

 

          D.     Termination With Cause.

 

                    (i)     USA may immediately terminate Jensen’s employment hereunder for Cause (as defined below) at any time during the Employment Period upon delivery of written notice to Jensen. If Jensen’s employment hereunder is terminated by USA for Cause, USA will be required to pay to Jensen only (A) Jensen’s annual base salary earned through the date of termination, (B) all bonuses earned and vested on or before the date of termination, and (C) any other benefit or compensation provided under the terms of any benefit plan or other provision of this Agreement.

 

                    (ii) For purposes of this Agreement, “Cause” means any of the following have occurred or exist: (A) Jensen’s fraud, gross malfeasance, gross negligence, or willful misconduct, with respect to USA’s business; (B) Jensen’s refusal or repeated failure to follow USA’s established reasonable and lawful policies; (C) Jensen’s material breach of this Agreement; (D) Jensen’s acknowledgement or conviction of, fraud or any crime which has or could have a material detrimental effect on USA’s reputation or business; (E) any intentional misapplication by Jensen of USA’s funds, or any material act of dishonesty committed by Jensen with respect to USA's customers, business or affiliates; or (F) Jensen’s unlawful use or possession of any controlled substance or Jensen’s abuse of alcoholic beverages.

 

                    As a condition precedent to USA’s termination of Jensen’s employment for Cause under subparagraphs (B) or (C) above, USA shall provide Jensen with 30-days prior written notice of USA’s termination of Jensen’s employment for Cause under either of said subparagraphs, and Jensen shall have failed to remedy such matter within such 30 day period.

 

          E.       Termination Due to Death or Disability.

 

                    (i) Jensen’s employment with USAwill end upon Jensen’s death. Upon Jensen’s death, his designated beneficiary shall be entitled to receive the proceeds of the life insurance policy paid for by USA that is referred to in Section 2.F, and USA will pay to Jensen’s personal representative only (A) Jensen’s annual base salary earned through the date of death, (B) all bonuses earned and vested on or before the date of death, and (C) any benefit or compensation provided under the terms of any benefit plan or other provisions of this Agreement.

 

                    (ii) If Jensen becomes disabled during the Employment Period, USA may terminate Jensen’s employment under this Agreement upon giving Jensen or Jensen’s legal representative written notice at least 30 days before the termination date. For purposes of this Agreement, and subject to any applicable waiting period, “disabled” means if Jensen is deemed disabled for purposes of the supplemental long-term disability policy obtained and paid for by USA which is referred to Section 2.G. If Jensen’s employment hereunder is terminated due to Jensen’s disability, USA will pay to Jensen or his personal representative only (A) Jensen’s annual base salary earned through the date of termination, (B) all bonuses earned and vested on or before the date of termination, and (C) any benefit or compensation provided under the terms of any benefit plan or other provisions of this Agreement.

 

          F.     In addition to any other terms or conditions that survive the termination of Jensen’s employment with USA, all of the terms and conditions of Section 6, 7 and 8 shall survive the termination of Jensen’s employment with USA.

 

          G.     Except as specifically provided otherwise herein, Jensen shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of such payment be reduced by reason of compensation or other income Jensen receives for services rendered after Jensen’s termination of employment with USA.

 

                    SECTION 6. Business Secrets.

 

                    A.     Except in connection with his duties hereunder, Jensen 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 Jensen’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 not limited to, proprietary information, trade secret, business secret, documents, process, procedures, know-how, data, marketing information, marketing method, marketing means, software information, intellectual property, special arrangement, or any other confidential information concerning the business or policies of USA, or concerning USA’s customers, clients, accounts or suppliers, that Jensen 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, 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 into the public domain, unless such information falls into the public domain by Jensen’s direct or indirect disclosure or other acts. Jensen 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 USA’s premises, whether physically or electronically, without the express written permission of USA.

 

                    B.     From and after the date hereof, except in connection with his duties hereunder, and for a two (2) year period following the termination of the Employment Period, or for a two (2) year period following the termination of Jensen’s employment hereunder if earlier, Jensen shall not solicit, or divert business from, or serve, or sell to, any customer or account of USA of which Jensen is or becomes aware, or with which Jensen 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 and whether prior to or after the date hereof.

 

                    C.      All documents, data, know-how, designs, inventions, names, marketing information, marketing method, marketing 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 Jensen by USA, or by USA’s customers, clients, accounts, or suppliers, or developed by Jensen on behalf of USA or at USA’s direction or for USA’s use, or otherwise devised, developed, created, or invented in connection with Jensen’s employment hereunder or his affiliation with USA (whether or not during normal working hours), are and shall remain the sole and exclusive property of USA, and Jensen 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, Jensen shall immediately deliver the same to USA.

 

                    D.     All documents, data, know-how, designs, products, ideas, equipment, inventions, names, devices, marketing information, marketing method, marketing means, materials, software programs, hardware, configurations, information, or any other materials or data of any kind developed by Jensen on behalf of USA or at its direction or for USA’s use, or otherwise devised, developed, created, or invented in connection with Jensen’s employment with USA or Jensen’s affiliation with USA (whether or not during normal working hours), and whether before or after the date of this Agreement, are and shall remain the sole and exclusive property of USA, and Jensen agrees to apprise USA of the existence of such, and Jensen does not and shall not have any right, title, or interest whatsoever thereto. Jensen hereby acknowledges that all such rights to intellectual property shall belong exclusively to USA and not to Jensen. 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. Jensen hereby assigns, transfers, and conveys to USA all of Jensen’s right, title and interest in and to any and all such inventions, discoveries, improvements, modifications and 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.

 

                    E.     At any and all times from and after the date hereof, and for a two (2) year period following the termination of Jensen’s employment with USA for any reason whatsoever, Jensen shall not (a) directly or indirectly, attempt to hire, or hire, any person employed by USA; or (b) directly or indirectly, interfere with USA’s relations with any person employed by it.

 

          SECTION 7. Restrictive Covenant. From and after the date hereof, and for a two (2) year period following the termination of the Employment Period, or for a two (2) year period following the termination of Jensen’s employment hereunder if earlier, Jensen shall be prohibited from competing in all fifty states of the United States, and in each foreign country, possession, or territory in which USA is engaged in or actively pursuing business as of the termination or at any time during the preceding twelve month period, with the business of USA as presently or as hereinafter conducted, including but not limited to, the ownership or licensing or development of a cashless system which controls, monitors, and/or networks devices, including beverage vending machines. 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.

 

          SECTION 8. Remedies. Jensen acknowledges that any breach by him of the obligations set forth in Sections 6 or 7 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, Jensen agrees that in the event of any breach or any threatened breach by Jensen of any of the provisions of Sections 6 or 7 hereof, USA shall be entitled in addition to monetary damages or other remedies, to equitable relief, including injunctive relief, and to the payment by Jensen 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 9. Waiver of Breach. The waiver by USA of a breach of any provision of this Agreement by Jensen shall not operate or be construed as a waiver of any other or subsequent breach by Jensen of such or any other provision.

 

          SECTION 10. 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:

	To USA:
		USA Technologies, Inc.
		100 Deerfield Lane, Suite 140
		Malvern, Pennsylvania 19355
		Attn: Stephen P. Herbert, President
	To Jensen:
		Mr. George R. Jensen, Jr.
		517 Legion Drive
		West Chester, Pennsylvania 19380

 

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 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. 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 12. 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.

 

 

          A.     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 Jensen; provided, however, that the Rights described in Section 3 hereof may be assigned in whole or in part, and from time to time, by Jensen or his assignees all as permitted in Section 3. F. hereof.

 

          B.     At the time of the consummation of a USA Transaction, and as a condition thereof, USA shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of USA expressly to assume and agree to perform this Agreement to the same extent that USA would be required to perform it if no such USA Transaction had taken place. Failure of USA to obtain an assumption of this Agreement at or prior to the consummation of the USA Transaction shall result in the termination of Jensen’s employment on the date of the USA Transaction. In the event of the termination of Jensen’s employment, Jensen shall receive from USA all of the compensation and benefits described in subparagraphs (a), (b), (c), and (d) of Section 5.C (ii) as if Jensen’s employment had been terminated by USA without Cause on the date of the consummation of the USA Transaction. In addition to any other terms or conditions that survive the termination of Jensen’s employment with USA, all of the terms and conditions of Section 6, 7 and 8 shall survive the termination of Jensen’s employment with USA. Except as specifically provided otherwise herein, Jensen shall not be required to mitigate the amount of any payment provided for in this Section 13.B by seeking other employment or otherwise, nor shall the amount of such payment be reduced by reason of compensation or other income Jensen receives for services rendered after Jensen’s termination of employment with USA. As used in this Agreement, USA shall mean USA and any successor to its business or assets as aforesaid which assumes and agrees to perform this Agreement, or by operation of law, or otherwise.

 

          SECTION 14. Special Tax Provisions.

 

          A.     Deferred Payment Date. Notwithstanding any provision to the contrary in this Agreement, no payments or benefits to which Jensen may become entitled under Section 5 or 13.B of this Agreement shall be made or provided to him prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of his “separation from service” with the Company (as determined in accordance with the provisions of Code Section 409A and the Treasury Regulations thereunder) or (ii) the date of his death, if Jensen is deemed at the time of such separation from service to be a “key employee” within the meaning of that term under Code Section 416(i) and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of the applicable Code Section 409A(a)(2) deferral period, all payments and benefits deferred pursuant to this Section 14.A (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be paid or reimbursed to Jensen in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

          B.     Excess Parachute Payment Tax Gross Up. Notwithstanding any other provision of this Agreement, if (i) there is a change in the ownership or effective control of USA or in the ownership of a substantial portion of the assets of USA (within the meaning of Code Section 280G(b)(2)(A)), and (ii) the payments and benefits otherwise to be made or provided pursuant to Section 13.B and any other payments or benefits otherwise to be paid or provided to Jensen in the nature of compensation to be received by or for the benefit of Jensen and contingent upon such event (the “Termination Payments”) create an excess parachute payment (within the meaning of Code Section 280G) that results in an excise tax payable by Jensen pursuant to the terms of Code Sections 280G and 4999 (the “Excise Tax”), then USA will reimburse Jensen, in cash, the full amount of the Excise Tax and all of Jensen’s additional state and federal income, excise and employment taxes that arise on, and are payable in respect of, this additional payment (cumulatively, the “Full Gross-Up Payment”), such that Jensen is in the same after-tax position as if he had not been subject to the Excise Tax. The Full Gross-Up Payment will be made as soon as practicable after Jensen pays the Excise Tax, but in no event later than the last day of Jensen’s taxable year that immediately follows Jensen’s taxable year in which he pays the Excise Tax.

 

          SECTION 15. Entire Agreement. This Agreement constitutes the entire agreement with respect to the subject matter hereof between the parties hereto and there are no other agreements between the parties relating to the subject matter hereof. This Agreement completely replaces and supersedes the prior employment agreements entered into between Jensen and USA. This Agreement shall become effective on October 1, 2009. This Agreement may only be modified by an agreement in writing executed by both USA and Jensen.

 

          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, President
		/s/ George R. Jensen, Jr.
		GEORGE R. JENSEN, JR.