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EMPLOYMENT AND NON-COMPETITION AGREEMENT
Agreement made this 12th day of April, 2005, by and between
DAVID M.
DeMEDIO, an individual residing at 95 Cherry Farm Lane, West
Chester,
Pennsylvania 19382 ("DeMedio"), and USA TECHNOLOGIES, INC., a
Pennsylvania
corporation ("USA"), with a place of business at 100 Deerfield
Lane, Suite 140,
Malvern, Pennsylvania 19355.
BACKGROUND
USA desires to engage DeMedio and DeMedio desires to be engaged
by USA as
Chief Financial Officer of USA. Because of, among other matters,
the decreased
value of the business of USA that will result if DeMedio would
compete with USA
or use or divulge certain confidential information, DeMedio has
further agreed
that he will be subject to certain restrictions during and after
his being an
employee of USA.
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 DeMedio as Chief Financial Officer for a
period
commencing on the date hereof and continuing through April 30,
2006 (the
"Employment Period"), and DeMedio 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 April 30, 2006, 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) During the Employment Period, DeMedio 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, DeMedio 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, President or Board of Directors
of USA.
SECTION 2. Compensation and Benefits
(a) In consideration of his services rendered, USA shall pay
to
DeMedio a base salary of $155,000 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.
(b) In addition to the base salary provided for in subparagraph
(a),
DeMedio shall be eligible to receive such bonus or bonuses as
the Board of
Directors of USA may, in their discretion, pay to DeMedio from
time to time.
(c) DeMedio shall be entitled to be reimbursed by USA for
all
reasonable expenses reasonably incurred by DeMedio 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.
DeMedio shall reasonably document all requests for expense
reimbursements.
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(d) At the commencement of the Employment Period, USA shall
issue to
DeMedio nonvested options to acquire up to 300,000 shares of
Common Stock for an
exercise price of $.30 per share. The vesting schedule of such
options as well
as all the other terms and conditions thereof are set forth in
the Option
Certificate evidencing such options which will be delivered to
DeMedio by USA at
the commencement of the Employment Period. The form of such
Option Certificate
is 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 except as provided below, 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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USA shall at its sole cost and expense use its best efforts to
register
under the Act the Common Stock underlying the options for resale
by DeMedio for
a period of two years from the date of vesting of such
option.
SECTION 3. Termination. Notwithstanding anything else contained
herein,
USA may terminate the employment of DeMedio at any time upon
notice delivered to
DeMedio in the event that (i) DeMedio commits any criminal or
fraudulent act; or
(ii) DeMedio breaches any term or condition of this Agreement;
or (iii) DeMedio
willfully abandons his duties hereunder. Upon such termination
neither party
hereto shall have any further duties or obligations hereunder
whatsoever;
provided, however, that DeMedio's obligations under Sections 5
and 6 hereof
shall survive any such termination.
SECTION 4. Death and Disability.
(a) If DeMedio shall die during the Employment Period, this
Agreement shall terminate as of the date of such death a
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