Document:

THE COMMON STOCK ISSUABLE PURSUANT TO THIS AGREEMENT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THE
COMMON STOCK ISSUABLE PURSUANT TO THIS AGREEMENT MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT UNDER SUCH ACT AND SUCH LAWS WITH RESPECT TO THE COMMON STOCK ISSUABLE
PURSUANT TO THIS AGREEMENT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.

                             USA TECHNOLOGIES, INC.
                      2005 COMMON STOCK PURCHASE AGREEMENT

      This 2005 COMMON STOCK PURCHASE AGREEMENT is made this 4th day of April
2005 by and between USA TECHNOLOGIES, INC., a Pennsylvania corporation ("USA" or
the "Company"), and STEVE ILLES ("ILLES" or "Investor").

                                   Background

      As more fully set forth herein, ILLES has agreed to purchase from the
Company shares of Common Stock of the Company ("Common Stock") for a purchase
price not to exceed Ten Million Dollars ($10,000,000)(the "Commitment Amount").

                                    Agreement

      NOW THEREFORE, intending to be legally bound hereby, the parties agree as
follows:

      1.Commitment. Subject to the terms and conditions hereof, ILLES agrees to
purchase from USA shares of Common Stock with an aggregate purchase price not to
exceed the Commitment Amount. The aggregate number of shares of Common Stock to
be purchased by ILLES under this Agreement shall be as provided in subsection C.
of this Section 1.

      During the Put Commitment Period (as defined below), ILLES shall be
required to purchase Common Stock from USA from time to time pursuant to the
election of USA as described in subsection A. below.

<PAGE>

      A. During the period of time from and after the effectiveness of the
Initial Registration Statement (as defined in Section 7 hereof) and through
August 11, 2007 ("Put Commitment Period"), USA shall have the right at any time
and from time to time to require ILLES to purchase Common Stock from the Company
at the lower of the following price: (i) Thirty Cents ($.30) per share (the
"Base Per Share Price"); or (ii) 90% of the closing bid price per share on the
date prior to the date of the delivery by USA to ILLES of the Commitment To
Purchase Form described below. For example, if the closing bid price of the
shares on the applicable date was $.50, then the exercise price would be the
Base Per Share Price (i.e., $.30), and if the closing bid price of the shares on
the applicable date was $.20, then the exercise price would be $.18. USA shall
require ILLES to purchase Common Stock from USA hereunder by delivery to ILLES
(prior to expiration of the Put Commitment Period) of the completed Commitment
To Purchase Form that is attached hereto setting forth the purchase price of the
Common Stock to be purchased by ILLES from USA ("Commitment Purchase Price") and
the aggregate number of shares to be purchased by ILLES. The Commitment Purchase
Price shall be delivered to the Company by ILLES within two business days after
delivery to ILLES of the Commitment To Purchase Form and shall be paid by ILLES
either in cash or by certified check or bank draft payable to the order of the
Company. ILLES shall not be required by USA to purchase any Common Stock from
USA pursuant to this Section 1.A unless the Common Stock being purchased by
ILLES from USA hereunder has been registered for resale by ILLES under the Act
pursuant to an effective registration statement, all in accordance with Section
7.

      B. Notwithstanding anything else set forth herein during any calendar
month during the Put Commitment Period, ILLES shall not be required by USA to
purchase under this Agreement Common Stock with an aggregate purchase price of
more than Eight Hundred Thousand Dollars ($800,000).

      C. The initial number of shares of Common Stock subject to this Agreement
shall be 20,000,000. In order to ensure that ILLES shall purchase Common Stock
under this Agreement with a purchase price of up to the Commitment Amount, at
any time and from time to time during the Put Commitment Period, and subject to
the other terms and conditions of this Agreement, USA shall have the right to
increase the number of shares of Common Stock covered by this Agreement by
notice to ILLES.

<PAGE>

      D. At the time of ILLES' signing of this Agreement, USA shall pay to ILLES
a due diligence/commitment fee consisting of 500,000 shares of restricted Common
Stock ("Due Diligence Shares").

      2. Share Issuance. Upon the payment of the Commitment Purchase Price as
aforesaid, the Company shall issue and cause to be delivered with all reasonable
dispatch to ILLES and in the name of ILLES, a certificate or certificates for
the number of shares of Common Stock so purchased. Such certificate or
certificates shall be deemed to have been issued and ILLES shall be deemed to
have become a holder of record of such Common Stock on and as of the date of the
delivery to the Company of and payment of the Commitment Purchase Price as
aforesaid. If, however, at the date of payment of such Commitment Purchase
Price, the transfer books for the Common Stock shall be closed, the certificates
for the Common Stock shall be issued and ILLES shall become a record owner of
such Common Stock on and as of the next date on which such books shall be
opened, and until such date the Company shall be under no duty to deliver any
certificate for such Common Stock.

      3. Representations by ILLES. ILLES represents and warrants to the Company
as follows:

      (a)   ILLES has received, read and understands the provisions of each of
            the following: (i) the Company's Annual Report on Form 10-KSB for
            the fiscal year ended June 30, 2004; (ii) the Company's Quarterly
            Report on Form 10-Q for the quarter ended September 30, 2004; (iii)
            the Company's Quarterly Report on Form 10-Q for the quarter ended
            December 31, 2004; (iv) the Company's Definitive Proxy Statement on
            Schedule 14-A filed with the Commission on February 15, 2005; (v)
            the Company's Registration Statement on Form S-1 filed with the
            Commission on February 18, 2005 (File No. 333-122899); (vi) the risk
            factors incorporated by reference herein in Section 3(i) hereof; and
            (vii) the Form 8-K Reports filed by the Company with the Commission
            on March 3, March 17, and March 22, 2005. All of the foregoing
            together with this Agreement shall be referred to herein as
            "Offering Materials".

<PAGE>

      (b)   ILLES has relied only upon the information presented and contained
            in the Offering Materials. ILLES has had the opportunity to ask of
            the person or persons acting on behalf of the Company any and all
            relevant questions in connection with any aspect of the Company
            including, but not limited to, the Common Stock offered by the
            Offering Materials and has received answers which ILLES considers to
            be reasonably responsive to such questions. ILLES has had the
            opportunity to verify the accuracy of the information contained in
            the Offering Materials.

      (c)   ILLES understands that ILLES is subscribing for the Common Stock
            without being furnished any literature or prospectus in connection
            with the Offering other than the Offering Materials, and that the
            Offering of the Common Stock presented in the Offering Materials
            will not have been scrutinized by the securities administrator or
            similar bureau, agency, or department of the state of my residence.

      (d)   ILLES understands (i) that neither the Common Stock nor the Due
            Diligence Shares has been registered under the Securities Act of
            1933, as amended (the "Act"), or registered or qualified under the
            securities laws of the state of my residence, (ii) except as
            provided in Section 7 hereof, ILLES has no right to require such
            registration or qualification, and (iii) that therefore ILLES must
            bear the economic risk of the investment for an indefinite period of
            time because neither the Common Stock nor the Due Diligence Shares
            may be sold unless so registered or qualified or unless an exemption
            from such registration and qualification is available.

            Although the Company has agreed to use its best efforts to register
            for resale the Common Stock and the Due Diligence Shares with the
            SEC, and to use its best efforts to keep such registration statement
            current and effective, there can be no assurance that such efforts
            will be successful. In any such event, neither the Common Stock nor
            the Due Diligence Shares would be registered for resale under the
            Act, and could only be sold in reliance upon exemptions from
            registration under the Act.

      (e)   The Common Stock is being purchased for ILLES' own account for
            investment purposes only and not for the interest of any other
            person and is not being purchased with a view to or for the resale,
            distribution, subdivision or fractionalization thereof. Although the
            Common Stock is currently traded on the OTC Bulletin Board under the
            symbol USTT, ILLES also understands that there may not be any
            established public trading market for the sale of such securities.

<PAGE>

      (f)   ILLES is able to bear the economic risks related to purchase of the
            Common Stock for an indefinite period of time (i.e., ILLES is able
            to afford a complete loss of the Common Stock ILLES is subscribing
            to purchase). ILLES' net worth and assets are sufficient to enable
            him to purchase shares of Common Stock from USA in the amount of the
            Commitment Amount pursuant to this Agreement.

      (g)   ILLES' overall commitment to investments which are not readily
            marketable is not disproportionate to ILLES' net worth and my
            investment in the Company will not cause such overall commitment to
            become excessive.

      (h)   ILLES has adequate means of providing for ILLES' current needs and
            possible personal contingencies. ILLES has no need for liquidity of
            the Common Stock subscribed to be purchased hereby and has no reason
            to anticipate any change in ILLES' personal circumstances, financial
            or otherwise, which might cause or require any sale or distribution
            of such Common Stock subscribed to be purchased.

      (i)   ILLES recognizes that the purchase of the Common Stock involves a
            high degree of risk including those special risks set forth under
            the caption "Risk Factors" and "Forward Looking Statements" in
            Amendment No. 1 to the Form SB-2 Registration Statement of the
            Company filed with the Commission on February 18, 2005 (No.
            333-122899) all of which are incorporated herein by reference.

      (j)   ILLES understand that ILLES' right to transfer the Common Stock and
            the Due Diligence Shares will be restricted as set forth on the
            certificate evidencing the Common Stock and the Due Diligence
            Shares. Such restrictions include provisions against transfer unless
            such transfer is not in violation of the Act, or applicable state
            securities laws (including investor suitability standards). ILLES is
            familiar with Regulation M promulgated under the Act and agrees to
            comply with his obligations thereunder including those relating to
            his status as an underwriter of the Common Stock and the Due
            Diligence Shares.

<PAGE>

      (k)   All information which ILLES has provided to the Company including,
            but not limited to, financial position, and status as an accredited
            investor, and knowledge of financial and business matters is true,
            correct and complete as of the date of execution of this Agreement.
            ILLES understands that the Company will rely in a material degree
            upon the representations contained herein.

      (l)   ILLES understands that a legend may be placed on any stock
            certificate representing the Common Stock and the Due Diligence
            Shares substantially to the following effect:

      THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      STATUTES AND REGULATIONS. SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
      AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
      OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      STATUTES AND REGULATIONS, UNLESS, IN THE OPINION (WHICH SHALL BE IN FORM
      AND SUBSTANCE SATISFACTORY TO THE CORPORATION) OF COUNSEL SATISFACTORY TO
      THE CORPORATION, SUCH REGISTRATION IS NOT REQUIRED.

      (m)   ILLES is an "accredited investor" as defined in Rule 501 promulgated
            under the Act because ILLES' individual net worth (or ILLES joint
            net worth with his spouse)on the date hereof exceeds $1,000,000.

      4. Adjustments. Subject and pursuant to the provisions of this Section 4,
the Base Per Share Price shall be subject to adjustment from time to time only
as set forth hereinafter:

            a. In case the Company shall declare a Common Stock dividend on the
Common Stock, then the Base Per Share Price shall be proportionately decreased
as of the close of business on the date of record of said Common Stock dividend
in proportion to such increase of outstanding shares of Common Stock.

<PAGE>

            b. If the Company shall at any time subdivide its outstanding Common
Stock by recapitalization, reclassification or split-up thereof, the Base Per
Share Price immediately prior to such subdivision shall be proportionately
decreased, and, if the Company shall at any time combine the outstanding shares
of Common Stock by recapitalization, reclassification, reverse stock-split, or
combination thereof, the Base Per Share Price immediately prior to such
combination shall be proportionately increased. Any such adjustment to the Base
Per Share Price shall become effective at the close of business on the record
date for such subdivision or combination. The Base Per Share Price shall be
proportionately increased or decreased, as the case may be, in proportion to
such increase or decrease, as the case may be, of outstanding shares of Common
Stock.

            c. Whenever the Base Per Share Price is adjusted as herein provided,
the Company shall promptly mail to ILLES a statement setting forth the adjusted
Base Per Share Price determined as so provided.

      5. Reservation. There has been reserved, and the Company shall at all
times keep reserved out of the authorized and unissued shares of Common Stock, a
number of shares of Common Stock sufficient to provide for the rights of
purchase represented by this Agreement. The Company agrees that all shares of
Common Stock issued hereunder shall be, at the time of delivery of the
certificates for such Common Stock, validly issued and outstanding, fully paid
and non-assessable.

      6. Securities Laws. As a condition to the issuance of any Common Stock
pursuant this Agreement, ILLES shall execute and deliver such representations,
warranties, and covenants, that may be required by applicable federal and state
securities law, or that the Company determines is reasonably necessary in
connection with the issuance of such Common Stock. 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 the
Company or its transfer agent.

<PAGE>

      7. Registration Provisions. No later than May 30, 2005, the Company shall
prepare and file, at its sole cost and expense, and thereafter use its best
efforts to have declared effective, an appropriate registration statement with
the Securities and Exchange Commission registering the Due Diligence Shares and
all of the 20,000,000 shares of Common Stock initially covered by this Agreement
for resale by ILLES under the Act (the "Initial Registration Statement"). As
provided in Section 1.C hereof, USA has the right from time to time to increase
the number of shares of Common Stock to be covered by this Agreement. Any such
additional shares may be included in an amendment or post-effective amendment to
the Initial Registration Statement, or in a separate additional registration
statement.

      The term "registration statement" whenever and as used in this Agreement
shall mean and include for all purposes the Initial Registration Statement and
any amendment or post-effective amendment thereto as well as any additional
registration statement or amendment or post-effective amendment thereto covering
any Common Stock subject to this Agreement.

      The registration statement shall be prepared as a "shelf" registration
statement under Rule 415, and the Company shall use its best efforts to have the
registration statement maintained effective until the earlier of (i) two years
from the effective date of the Initial Registration Statement, or (ii) the date
that all of the Common Stock covered by this Agreement is resold by ILLES
pursuant to the registration statement or otherwise.

      At the Company's request, ILLES shall furnish to the Company such
information regarding ILLES, the Common Stock held by ILLES, and the intended
method of disposition of such Common Stock to the extent required to effect the
registration of the Common Stock. The Company shall include all information
provided by ILLES pursuant hereto in the registration statement, substantially
in the form supplied, except to the extent such information is not permitted by
law. ILLES understands and agrees that ILLES will be listed and disclosed in the
registration statement as an underwriter of the Common Stock and Due Diligence
Shares as such term is defined in Section 2(a)(11) of the Act and as such ILLES
will have liability, among other things, under Section 11 of the Act.

      All expenses (other than commissions and fees and expenses of counsel to
ILLES) incurred in connection with the registration statement, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, shall be
borne by the Company.

<PAGE>

      8. Binding Effect. This Agreement shall be binding upon the party's
respective heirs, personal representatives, successors and assigns; provided,
however, that this Agreement shall not be assignable by ILLES, in whole or in
part, without the prior consent of the USA.

      9. Indemnification. In the event any shares of Common Stock are included
in a registration statement under this Agreement:

            (a) To the extent permitted by law, the Company will indemnify and
hold harmless ILLES, against any losses, claims, damages, or liabilities to
which ILLES may become subject under the Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act")(or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements or omissions: (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, and
the Company will reimburse ILLES for any legal or other expenses reasonably
incurred by ILLES in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by ILLES; provided however, that the above shall not
relieve the Company from any other liabilities which it might otherwise have.

<PAGE>

            (b) ILLES shall indemnify and hold harmless the Company, its
directors and officers, each underwriter and each other person, if any, who
controls (within the meaning of the Act) the Company or such other indemnified
party, against any liability, joint or several, to which any such indemnified
party may become subject under the Act or any other statute or at common law,
insofar as such liability (or actions in respect thereof) arises out of or is
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which securities were registered under the Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or (ii) any omission or alleged omission by ILLES to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such registration statement, preliminary or final prospectus, amendment or
supplement thereto in reliance upon and in conformity with information furnished
in writing to the Company by ILLES specifically for use therein. ILLES shall
reimburse any indemnified party for any legal fees incurred in investigating or
defending any such liability.

            (c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume, the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses of one such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 9.

<PAGE>

            (d) In the event that the indemnity provided in paragraphs (a)
and/or (b) of this Section 9 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company and ILLES agree to contribute
to the aggregate claims, losses, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or defending
same) (collectively "Losses") to which the Company and ILLES may be subject in
such proportion as is appropriate to reflect the relative fault of the Company
and ILLES in connection with the statements or omissions which resulted in such
Losses. Relative fault shall be determined by reference to whether any alleged
untrue statement or omission relates to information provided by the Company or
by ILLES. The Company and ILLES agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation that does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person who
controls the Company within the meaning of either the Act or the Exchange Act
and each director and officer of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).

            (e) The obligations of the Company and ILLES under this Section 9
shall survive the resale, if any, of the Common Stock in a registration
statement under this Agreement, and otherwise.

      10. Applicable Law. This Agreement shall be deemed to be a contract made
under the laws of the Commonwealth of Pennsylvania and for all purposes shall be
construed in accordance with the laws thereof regardless of its choice of law
rules.

<PAGE>

      11. Brokers and Finders. USA and ILLES hereby represent to each other that
no broker or finder has been employed or engaged by either of them in connection
with the transactions contemplated in this Agreement and that all negotiations
relative to this Agreement have been carried on directly between the parties
hereto without the intervention of any other person.

      12. Survival of Representations and Warranties, and Remedies. All
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement.

      13. Entire Agreement. This Agreement constitutes the entire understanding
and agreement between the parties hereto with respect to the transactions
contemplated herein, supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there have been no warranties, representations or promises, written
or oral, made by any of the parties hereto except as herein expressly set forth
herein. The parties have previously entered into a Common Stock Purchase
Agreement dated August 6, 2004, and acknowledge and agree that USA shall not
sell to ILLES, and ILLES shall not purchase from USA, any additional shares of
Common Stock thereunder.

      14. Waiver, Modification, etc.. Any party to this Agreement may waive any
of the terms or conditions of this Agreement or agree to an amendment or
modification to this Agreement by an agreement in writing executed in the same
manner (but not necessarily by the same persons) as this Agreement. No amendment
or modification of this Agreement shall be binding unless in writing executed by
all of the parties to this Agreement. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.

      15. Notice. Any notice or other communications required or permitted
hereunder shall be sufficiently given: (i) three (3) business days after if sent
by certified mail, return receipt requested, postage prepaid, or (ii) one (1)
business day after sent by Federal Express or other overnight courier providing
delivery confirmation for next business day delivery, or (ii) when delivered by
personal delivery, telecopier, or e-mail, in any event delivered to or addressed
as follows:

<PAGE>

                If to ILLES:
                                  Mr. Steve Illes
                                  8006 Southeast 167th Hilltop Loop
                                  Villages, Florida 32162

                If to USA:

                                  USA Technologies, Inc.
                                  Suite 140
                                  100 Deerfield Lane
                                  Malvern, Pennsylvania 19355
                                  Attn: George R. Jensen, Jr., Chairman

      16. Consent to Jurisdiction. Each of USA and ILLES irrevocably consents
and agrees that any legal action or proceeding whatsoever arising out of or in
any way connected with this Agreement or the transactions contemplated hereby
may be commenced, filed, instituted or brought in the state or federal courts of
the Commonwealth of Pennsylvania, and each of the parties hereto irrevocably
submits and accepts with regard to any such legal action or proceeding to the
jurisdiction of such courts. Each of the parties irrevocably consents to service
of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the parties hereto, such service to become effective upon
mailing. Each of the parties hereto hereby irrevocably waive, to the fullest
extent permitted by law, any objection which any of them may now or hereafter
have to the laying of the venue of any suit, action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby, brought
in such Pennsylvania courts, and hereby further irrevocably waives any claim,
that any such suit, action or proceeding brought in such courts, has been
brought in an inconvenient forum.

      17. Counterparts. This Agreement may be signed in two or more counterparts
which counterparts shall constitute a single, integrated agreement binding upon
all the signatories to such counterparts. Delivery of an executed counterpart of
this Agreement by facsimile shall be equally as effective as delivery of a
manually executed counterpart of this Agreement.

<PAGE>

      18. Expenses. Except as specifically provided otherwise herein, each party
hereto shall pay its or his own expenses arising from this Agreement and the
transactions contemplated hereby, including, without limitation, all legal and
accounting fees and disbursements; provided, however, that nothing herein shall
limit or otherwise modify any right of the parties to recover such expenses
(including legal fees and costs of litigation) from the other in the event any
party hereto breaches this Agreement.

      19. Further Assurances. Each of the parties hereto shall hereafter execute
and deliver such further documents and instruments and do such further acts and
things as may be required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.

      IN WITNESS WHEREOF, the parties hereto have executed and delivered this
2005 Common Stock Purchase Agreement on the date first written above.

                                        USA TECHNOLOGIES, INC.

/S/ Steve Illes                         By: /s/ George R. Jensen, Jr.
---------------                             -------------------------
STEVE ILLES                                 George R. Jensen, Jr.,
                                            Chief Executive Officer

<PAGE>

Mr. Steve Illes
8006 Southeast 167th Hilltop Loop
Villages, Florida 32162

                             COMMITMENT TO PURCHASE

      Pursuant to the 2005 Common Stock Purchase Agreement between USA and
ILLES, USA hereby irrevocably elects to require ILLES to purchase shares of
Common Stock provided for therein at the price of ___ per share, or an aggregate
of $_________, for ____________ shares of Common Stock. Pursuant to the
Agreement, ILLES shall deliver the purchase price for the shares within two
business days. The certificate representing such shares of Common Stock shall be
issued to and registered in the name of, and delivered to, the ILLES at the
address set forth in the Agreement.

Dated:______________, 200_                 USA TECHNOLOGIES, INC.

                                           By:___________________
                                              Title:SAMPLE
                           10% CONVERTIBLE SENIOR NOTE

No. 2005-C-

$___________                                       DATED:_________, 2005

                  FOR VALUE RECEIVED, the undersigned, USA Technologies, Inc., a
Pennsylvania corporation ("USA"), hereby promises to pay to the order of
("Lender"), at , or at such other place as the Lender may designate in writing,
the principal sum of Dollars ($ ), together with interest (computed on the basis
of a 360-day year of twelve 30-day months) from the date hereof on the
outstanding principal balance hereof, to be fixed at a rate equal to 10% per
annum, in accordance with the following terms:

      1. Principal Amount. The principal amount of this 10% Convertible Senior
Note("Convertible Senior Note") shall be due and payable on December 31, 2010 at
which time all unpaid interest which has accrued on the Convertible Senior Note
shall also be due and payable ("Maturity Date"). USA shall not be required to
pay to the holder hereof any principal amount of this Convertible Senior Note
which has been converted into shares of Common Stock of USA ("Common Stock")
pursuant to Section 7 hereof.

      2. Interest. Interest on the outstanding principal balance of
this Convertible Senior Note shall accrue at the rate of 10% per annum and shall
be payable quarterly in arrears on March 31, June 30, September 30, and December
31 of each year until the Maturity Date, commencing on the date hereof. From and
after the date of any conversion of the principal amount of this Convertible
Senior Note pursuant to Section 7 hereof, no interest shall accrue on the amount
of principal which has been so converted. USA shall pay any unpaid and accrued
interest on any principal amount of this Convertible Senior Note which has been
converted into Common Stock pursuant to Section 7 hereof through the date of
such conversion, payable by USA to the holder hereof on the quarterly payment
date immediately following the date of conversion.

      3. Restrictive Legend. Neither this Convertible Senior Note nor the Common
Stock into which this Convertible Senior Note may be converted may be offered
for sale or sold, or otherwise transferred in any transaction which would
constitute a sale thereof within the meaning of the Securities Act of 1933, as
amended (the "Act"), unless: (i) such security has been registered for sale
under the Act and registered or qualified under applicable state securities laws
relating to the offer and sale of securities; or (ii) exemptions from the
registration requirements of the Act and the registration or qualification
requirements of all such state securities laws are available and USA shall have
received an opinion of counsel reasonably satisfactory to USA that the proposed
sale or other disposition of such securities may be effected without
registration under the Act and would not result in any violation of any
applicable securities laws relating to the registration or qualification of
securities for sale.

                                       1
<PAGE>

      4. Subordination.

            A. Senior Debt. The indebtedness (including unpaid principal of and
interest on this Convertible Senior Note as well as all other obligations and
liabilities of USA to Lender hereunder) evidenced in this Convertible Senior
Note is subordinated to the prior payment when due of the principal of, premium,
if any, and interest on all "Senior Indebtedness" (as defined below) of USA as
follows: Upon any distribution of its assets in a liquidation or dissolution of
USA, or in bankruptcy, reorganization, insolvency, receivership or similar
proceedings relating to USA, the Lender shall not be entitled to receive payment
until the holders of Senior Indebtedness are paid in full. Until a payment
default occurs with respect to any Senior Indebtedness, all payments of
principal and interest due to Lender under this Convertible Senior Note shall be
made in accordance with this Convertible Senior Note. Upon the occurrence of any
payment default with respect to any Senior Indebtedness then, upon written
notice thereof to USA and Lender by any holder of such Senior Indebtedness or
its representative, no payments of principal or interest on this Convertible
Senior Note shall be made by USA until such payment default has been cured to
the satisfaction of the holder of such Senior Indebtedness or waived by such
holder, provided, however, that if during the 180 day period following such
default, the holder of Senior Indebtedness has not accelerated its loan,
commenced foreclosure proceedings or otherwise undertaken to act on such default
then USA shall be required to continue making payments under this Convertible
Senior Note, including any which had not been paid during such 180 day period.
In the event that any Bank Or Other Financial Institution at any time so
requires, the Lender shall execute, upon request of USA, any intercreditor or
subordination agreement(s) with any such Bank Or Other Financial Institution on
terms not materially more adverse to the Lender then the subordination terms
contained in this Convertible Senior Note.

                                       2
<PAGE>

            B. Definitions. "Senior Indebtedness" means (a) all direct or
indirect, contingent or certain, indebtedness of any type, kind or nature
(present or future) created, incurred or assumed by USA with respect to any
present or future Bank Or Other Financial Institution, or (b) any indebtedness
created, incurred, or assumed, by USA secured by a lien on any assets of USA.
Senior Debt as described in the prior sentence shall be deemed to exist whether
such indebtedness is or is not specifically designated by USA as being "Senior
Debt" in its defining instruments.

            Notwithstanding anything herein to the contrary, Senior Indebtedness
does not include (i) unsecured accounts payable to trade creditors of USA
incurred in the ordinary course of business, (ii) any debt owed by USA to any
officer, director or stockholder of USA, (iii) any obligation of USA issued or
contracted for as payment in consideration of the purchase by USA of the capital
stock or substantially all of the assets of another person or in consideration
for the merger or consolidation with respect to which USA was a party, (iv) any
operating lease obligations of USA, (v) any other indebtedness which by its
terms is subordinated to this Senior Note, or (vi) any "other indebtedness"
which is subordinated to all indebtedness to which this Senior Note is
subordinated in substantially like terms as this Senior Note which such "other
indebtedness" shall be treated as equal with the indebtedness evidenced by this
Senior Note.

"Bank Or Other Financial Institution" means a bank as defined in Section 3(a)(2)
of the Act whether acting in its individual or fiduciary capacity; an insurance
company as defined in Section 2(a)13 of the Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; a Small Business Investment
Company licensed by the Small Business Administration; or an employee benefit
plan, including an individual retirement account, which is subject to the
provisions of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, insurance company, or registered investment
adviser.

                                       3
<PAGE>

      5. Event of Default. An "Event of Default" under this Convertible Senior
Note means the occurrence of any of the following events (whether the reason for
such Event of Default shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body): (i)
nonpayment of any principal or interest installment when and as due hereunder
which is not cured by USA within thirty (30) days after the due date; (ii) any
other breach of the terms hereof which is not cured by USA within thirty (30)
days after notice from Lender; (iii) the institution of any proceedings by or
against USA under any law relating to bankruptcy, insolvency, reorganization or
other form of debtor relief or USA"s making an assignment for the benefit of
creditors, or the appointment of a receiver, trustee, conservator or other
judicial representative for USA or any of its respective properties, or the
admission in writing by USA of its inability to pay its debts generally as they
become due; or (iv) any default by USA under any agreement for borrowed money
which default continues after expiration of the applicable notice and grace
period, if any, provided in the agreement and which permits the holder thereof
to accelerate the indebtedness due thereunder. Upon the occurrence of an Event
of Default, the entire principal and any accrued interest due hereunder shall
accelerate and become immediately due and payable without presentation, demand,
protest or further demand or notice of any kind, all of which are expressly
waived by USA, and Lender shall thereupon have all rights and remedies provided
hereunder or otherwise available at law or in equity. The period of time
commencing from the date of the occurrence of an Event of Default until the date
such default is cured shall be referred to as the "Default Period". During any
Default Period, any late interest or principal payments will accrue interest at
a rate of 1% per month, cumulative and compounding until all accrued and unpaid
principal and interest is paid in full.

      6. Prepayment. USA shall have the right to prepay this Convertible Senior
Note in whole or in part, at any time and from time to time prior to the
Maturity Date, and in its sole and absolute discretion, without incurring any
penalties or additional obligations of any kind. If USA elects to prepay this
Convertible Senior Note at any time in an amount less than the then entire
remaining outstanding principal amount hereof, the holders of the Convertible
Senior Notes to be prepaid shall be selected by USA on a random basis. If USA
elects to prepay this Convertible Senior Note in whole or in part any time prior
to the Maturity Date, the holder hereof shall have the right to convert all of
(but not less than all of) the principal amount to be prepaid by USA into shares
of Common Stock pursuant to the terms and conditions of Section 7 hereof. Such
right to convert must be exercised within thirty (30) days following receipt by
the holder hereof from USA of notice of prepayment pursuant to this Section 6.

                                       4
<PAGE>

      7. Conversion Rights.

            A. Conversion. Subject to the terms and conditions hereof, the
holder hereof may convert all or any portion of the principal amount hereof at
any time or from time to time prior to the Maturity Date, into fully paid and
non-assessable shares of USA's Common Stock, without par value (the "Common
Stock"), subject to adjustment as provided in Section 7.F. hereof ("Conversion
Rights"). The number of shares of Common Stock to be issued upon any such
conversion shall be determined by dividing the principal amount of this
Convertible Senior Note to be converted by the Conversion Price (as defined
herein).

            B. Conversion Price. The Conversion Rights shall be exercised by
delivery to USA (prior to the Maturity Date) of this Certificate and the
completed Election To Convert Form which is attached hereto. The Conversion
Price shall be $.10 per share of Common Stock, subject to adjustment as provided
in Section 7.F. hereof ("Conversion Price").

            C. Exercise. Upon the surrender of this Certificate and the
completed Election To Convert Form as aforesaid, USA shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of this Convertible Senior Note, a certificate or certificates
for the number of full shares of Common Stock so purchased upon the exercise of
the Conversion Rights. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such Common Stock on and as of the date of the
delivery to USA of this Certificate and the completed Election To Convert Form
as aforesaid. If, however, at the date of surrender of this Certificate and the
completed Election To Convert Form, the transfer books for the Common Stock
issuable upon the exercise of the Conversion Rights shall be closed, the
certificates for the Common Stock in respect to which any such Conversion Rights
are then exercised shall be issued and the owner of such Common Stock shall
become a record owner of such Common Stock on and as of the next date on which
such books shall be opened, and until such date USA shall be under no duty to
deliver any certificate for such Common Stock.

                                       5
<PAGE>

            D. Partial Conversion. The Conversion Rights represented by the
Convertible Senior Note shall be exercisable, at the election of the registered
holder hereof, either as an entirety, or from time to time for any part of the
outstanding principal amount of this Convertible Senior Note, and in the event
that the Conversion Rights are exercised with respect to less than the entire
then outstanding principal amount of this Convertible Senior Note, at any time
prior to the Maturity Date, a new certificate will be issued to such registered
holder in the remaining principal amount of this Convertible Senior Note.

            E. Maturity Date. All of the Conversion Rights must be exercised in
accordance with the terms hereof prior to the Maturity Date. At and after the
Maturity Date any and all unexercised rights hereunder shall expire and all such
unexercised Conversion Rights shall without any action on behalf of USA become
null and void. USA shall not be required to provide notice to the holder hereof
of the expiration of the Conversion Rights hereunder, and the Conversion Rights
shall automatically expire without any required prior notice from USA.

            F. Adjustments. Subject and pursuant to the provisions of this
subsection F, the Conversion Price shall be subject to adjustment from time to
time only as set forth hereinafter:

                  i. In case USA shall declare a Common Stock dividend on the
Common Stock, then the Conversion Price shall be proportionately decreased as of
the close of business on the date of record of said Common Stock dividend in
proportion to such increase of outstanding shares of Common Stock.

                  ii. If USA shall at any time subdivide its outstanding Common
Stock by recapitalization, reclassification or split-up thereof, the Conversion
Price immediately prior to such subdivision shall be proportionately decreased,
and, if USA shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification, reverse stock split, or combination thereof,
the Conversion Price immediately prior to such combination shall be
proportionately increased. Any such adjustment to the Conversion Price shall
become effective at the close of business on the record date for such
subdivision or combination. The Conversion Price shall be proportionately
increased or decreased, as the case may be, in proportion to such increase or
decrease, as the case may be, of outstanding shares of Common Stock.

                                       6
<PAGE>

                  iii. Whenever the Conversion Price is adjusted as herein
provided, USA shall promptly mail to the registered holder of this Convertible
Senior Note a statement signed by an officer of USA setting forth the adjusted
Conversion Price, determined as so provided.

                  iv. This form of Certificate need not be changed because of
any adjustment which is required pursuant to this Section F. However, USA may at
any time in its sole discretion (which shall be conclusive) make any change in
the form of this Certificate that USA may deem appropriate and that does not
affect the substance hereof; and any Certificate thereafter issued, whether in
exchange or substitution for this Certificate or otherwise, may be in the form
as so changed.

            G. Reservation. There has been reserved, and USA shall at all times
keep reserved out of the authorized and unissued shares of Common Stock, a
number of shares of Common Stock sufficient to provide for the exercise of the
Conversion Rights represented by this Convertible Senior Note. USA agrees that
all shares of Common Stock issued upon exercise of this Convertible Senior Note
shall be, at the time of delivery of the Certificates for such Common Stock,
validly issued and outstanding, fully paid and non-assessable.

            H. Fractional Shares. USA shall not issue any fractional shares of
Common Stock pursuant to any conversion of this Convertible Senior Note and
shall pay cash to the holder of this Convertible Senior Note in lieu of any such
fractional shares.

      8. No Right. The holder of this Convertible Senior Note shall not be
entitled to any of the rights of a shareholder of USA prior to the date of
issuance of the Common Stock by USA pursuant to any conversion of this
Convertible Senior Note or any exercise of the Purchase Rights.

                                       7
<PAGE>

      9. Registration Rights. As set forth above, neither this Convertible
Senior Note nor the Common Stock into which this Convertible Senior Note is
convertible shall be registered under the Act or any state securities laws, and
shall constitute restricted securities as defined under Rule 144 promulgated
under the Act. Notwithstanding the foregoing, following the issuance of this
Convertible Senior Note, and not later than May 30, 2005, USA shall, at its
expense, file and thereafter use its best efforts to have declared effective, a
registration statement under the Act covering the resale of the Common Stock
underlying this Convertible Senior Note. Thereafter, USA shall use its best
efforts to keep the registration statement current and effective through April
30, 2006.

      10. Securities Laws. As a condition to the issuance of any Common Stock
pursuant to this Convertible Senior Note, the holder of such Common Stock shall
execute and deliver such representations, warranties, and covenants, that may be
required by applicable federal and state securities law, or that USA determines
is reasonably necessary in connection with the issuance of such Common Stock. 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.

      11. Choice of Law. This Convertible Senior Note shall be construed and
enforced in accordance with and governed by the laws of the Commonwealth of
Pennsylvania without regard to Pennsylvania"s conflict of laws provisions.

      12. Choice of Forum. Lender irrevocably consents and agrees that any legal
action or proceeding against USA or brought by Lender, under, arising out of, or
in any manner relating to, this Convertible Senior Note, shall be brought solely
and exclusively in the Court of Common Pleas of the Commonwealth of Pennsylvania
located in the County of Philadelphia, Pennsylvania, or in the United States
District Court for the Eastern District of Pennsylvania, located in
Philadelphia, Pennsylvania. Lender expressly and irrevocably consents to the
personal jurisdiction of such Courts in any such action or proceeding and waives
any claim or defense in any such action or proceeding based upon any alleged
lack of personal jurisdiction, improper venue, or forum non conveniens.

                                       8
<PAGE>

      13. Waiver. No failure or delay on the part of the Lender to insist on
strict performance of USA"s obligations hereunder or to exercise any remedy
shall constitute a waiver of the Lender"s rights in that or any other instance.
No waiver of any of the Lender"s rights shall be effective unless in writing,
and any waiver of any default of any instance of non-compliance shall be limited
to its express terms and shall not extend to any other default or instance of
non-compliance.

      14. Lost, Mutilated Certificate. In case this Convertible Senior Note
certificate shall become mutilated, lost, stolen or destroyed, USA shall issue
in exchange and substitution for and upon cancellation of the mutilated
certificate, or in lieu of and in substitution for the Certificate lost, stolen,
or destroyed, a new Certificate of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence satisfactory to the USA of
such loss, theft or destruction of such certificate and indemnity, if requested,
also satisfactory to USA.

      15. Illegality. Any provision hereof found to be illegal, invalid or
unenforceable for any reason whatsoever shall not affect the validity, legality
or enforceability of the remainder hereof.

      16. Usury. If the effective interest rate on this Convertible Senior Note
would otherwise violate any applicable usury law, then the interest rate shall
be reduced to the maximum permissible rate and any payment received by the
Lender in excess of the maximum permissible rate shall be treated as a
prepayment of the principal of this Convertible Senior Note.

      17. Expenses. USA agrees to reimburse Lender for all costs and expenses,
including reasonable attorneys' fees, incurred by the Lender, relating to the
enforcement of this Convertible Senior Note.

                                       9
<PAGE>

      18. Subscription Agreement. This Convertible Senior Note has been issued
by USA pursuant to the terms of the Subscription Agreement between USA and
Lender dated of even date herewith, the terms of which are incorporated herein
by reference.

      19. Assigns, Etc..This Convertible Senior Note shall be binding upon USA"s
successors and assigns and subject to Section 3 hereof, shall inure to the
benefit of each holder of this Convertible Senior Note and such holder"s
successors, endorsees and assigns.

      Intending to be legally bound, USA has caused this Convertible Senior Note
to be executed in its corporate name, by its duly authorized representatives and
to be dated as of the date and year first above written.

                                                    USA TECHNOLOGIES, INC.

                                                 By:_____________________
                                                    George R. Jensen, Jr.,
                                                    Chief Executive Officer

                                                 By:______________________
                                                    Stephen P. Herbert,
                                                    Secretary

                                       10
<PAGE>

USA TECHNOLOGIES, INC.
100 Deerfield Lane
Suite 140
Malvern, Pennsylvania  19355
Attn:  George R. Jensen, Jr.,
       Chief Executive Officer

                            ELECTION TO CONVERT FORM

            The undersigned hereby irrevocably elects to exercise the rights of
conversion represented by the attached Convertible Senior Note Certificate No.
of USA. The undersigned desires to convert $ of the principal amount of the
attached Certificate into shares of Common Stock all as provided for therein and
tenders herewith the original Convertible Senior Note, all in accordance with
the Certificate. The undersigned requests that a Certificate representing such
shares of Common Stock shall be issued to and registered in the name of the
undersigned and delivered to the undersigned at the address set forth below. If
less than the entire principal amount of the Convertible Senior Note represented
by the attached certificate has been converted, then a new Convertible Senior
Note Certificate in the remaining principal amount of the Convertible Senior
Note shall be issued to and registered in the name of the undersigned and
delivered to the undersigned at the address set forth below.

Dated:____________, 20__                 Signature:____________________

                                         Print Name:___________________

                                         Print Address:________________

                                         ______________________________

                                         ______________________________

                                       11

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