Background

                       SECOND AMENDMENT TO EMPLOYMENT AND
                            NON-COMPETITION AGREEMENT

         This Second Amendment is made as of the 22nd day of February 2000, by
and between XXXXXX X. XXXXXXX ("Xxxxxxx"), and USA TECHNOLOGIES, INC., a
Pennsylvania corporation ("USA").

                                   Background

         USA and Xxxxxxx entered into an Employment And Non-Competition
Agreement dated February 24, 1997, and a First Amendment thereto dated as of
February 24, 1998 (collectively, 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 Xxxxxxx as Chief Financial Officer, Senior Vice
            President and Treasurer commencing on the date hereof and continuing
            through June 30, 2001 (the "Employment Period") and Xxxxxxx 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, 2001, 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. 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 Xxxxxxx a base salary of $108,000 per year
            during the Employment Period, subject to any withholding required by
            law. Xxxxxxx'x base salary may be increased from time to time in the
            discretion of the Board of Directors.

         C. 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:

            (b) (i) In addition to the base salary provided for in subparagraph
            (a), Xxxxxxx 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 Xxxxxxx 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 Second Amendment, USA shall issue to
            Xxxxxxx 12,500 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) Xxxxxxx shall also be eligible to to receive, at the
            discretion of the Compensation Committee of the Board of Directors,
            an additional bonus for calendar year 2000 in an amount of up to 65%
            of his base salary. Such additional bonus shall be payable

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            in either cash or Common Stock in the discretion of the Compensation
            Committee. The amount of the bonus to be awarded to Xx. Xxxxxxx
            shall be based upon the performance of the Company and/or Xx.
            Xxxxxxx during calendar year 2000. The Company shall deliver to Xx.
            Xxxxxxx any such bonus during January 2001. Any shares of Common
            Stock payable as part of any such bonus shall be registered under
            the Act pursuant to a Form S-8, at the Company's cost and expense.

         D. 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
            Xxxxxxx on behalf of USA or at its direction or for USA's use, or
            otherwise devised, developed, created, or invented in connection
            with Xxxxxxx'x employment with USA or Xxxxxxx'x 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 Xxxxxxx has
            and shall have no right or interest whatsoever thereto. Xxxxxxx
            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 Xxxxxxx. 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.
            Xxxxxxx hereby assigns, transfers, and conveys to USA all of
            Xxxxxxx'x 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


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            intellectual property rights to confirm or evidence such assignment,
            transfer and conveyance. At USA's direction and request, Xxxxxxx
            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 Second
Amendment as of the day and year first above written.

                                                     USA TECHNOLOGIES, INC.



                                                   By: /s/ Xxxxxx X. Xxxxxx, Xx.
                                                       -------------------------
                                                       Xxxxxx X. Xxxxxx, Xx.,
                                                       Chief Executive Officer

                                                       /s/ Xxxxxx X. Xxxxxxx
                                                       -------------------------
                                                       XXXXXX X. XXXXXXX

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