Document:

Exhibit 4.1

    
      

    

    ENDOVASC,
      INC.

    2005
      Executive Compensation Plan

    

    SECTION
      1.  PURPOSE OF THE PLAN.  The
      purpose of the 2005 Executive Compensation Plan (the “Plan”) is to maintain the
      ability of Endovasc, Inc., a Nevada corporation (the “Company”), and its
      subsidiaries to attract and retain highly qualified and experienced officers,
      employees and consultants and to give such officers, employees and consultants
      a
      continued proprietary interest in the success of the Company and its
      subsidiaries. In addition, the Plan is intended to encourage ownership of common
      stock, $.001 par value (the “Common Stock”), of the Company by the officers,
      employees and consultants of the Company, and to provide increased incentive
      for
      such persons to render services and to exert maximum effort for the success
      of
      the Company’s business. 

    

    SECTION
      2.  ADMINISTRATION OF THE PLAN.

    

    (a)
      Committee.  The
      Plan
      shall be administered by the Board of Directors of the Company (the “Board”) or
      a committee thereof designated by the Board with the specific authority to
      administer the Plan. As used in this Plan, the term “Committee” refers to the
      committee designated by the Board or, if no such committee has been designated,
      to the Board. 

    

    (b)
      Committee
      Action.  The
      Committee shall hold its meetings at such times and places as it may determine.
      A majority of its members shall constitute a quorum, and all determinations
      of
      the Committee shall be made by not less than a majority of its members. Any
      decision or determination reduced to writing and signed by a majority of the
      members shall be fully as effective as if it had been made by a majority vote
      of
      its members at a meeting duly called and held. The Committee may designate
      the
      Secretary of the Company or other Company employees to assist the Committee
      in
      the administration of the Plan, and may grant authority to such persons to
      execute award agreements or other documents on behalf of the Committee and
      the
      Company. 

    

    (c)
      Committee
      Expenses.  All
      expenses and liabilities incurred by the Committee in the administration of
      the
      Plan shall he borne by the Company. The Committee may employ attorneys,
      consultants, accountants or other professionals. Subject to the express
      provisions of the Plan, the Committee shall have discretionary authority to
      prescribe, amend and rescind rules and regulations relating to the Plan, to
      interpret the Plan, to prescribe and amend the terms of the option agreements
      (which need not be identical) and to make all other determinations deemed
      necessary or advisable for the administration of the Plan.

    

    SECTION
      3.  STOCK RESERVED FOR THE PLAN. 

    

    (a)
      Number
      of Shares.  Subject
      to adjustment as provided in Section 7 hereof the aggregate number of shares
      of
      Common Stock that may be subject to options granted under the Plan is the number
      of shares that is equal to 15% of the number of shares of Common Stock issued
      and outstanding at any time and from time to time. No amendment to the Plan
      shall be required to increase the number of shares of Common Stock subject
      to
      the Plan as a result of the number of shares of Common Stock from time to time
      issued and outstanding. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
      Shares
      Subject to Plan.  The
      shares subject to the Plan shall consist of authorized but unissued or treasury
      shares of Common Stock and such number of shares shall be and is hereby reserved
      for sale for such purpose. Any of such shares which may remain unsold and which
      are not subject to issuance upon exercise of outstanding options at the
      termination of the Plan shall cease to be reserved for the purpose of the Plan,
      but until termination of the Plan or the termination of the last of the options
      granted under the Plan, whichever last occurs, the Company shall at all times
      reserve a sufficient number of shares to meet the requirements of the Plan.
      Should any option expire or be cancelled prior to its exercise in full, the
      shares theretofore subject to such option may again be made subject to an option
      under the Plan.

    

    SECTION
      4.  ELIGIBILITY.  The
      Participants shall include officers and employees of the Company and its
      divisions and subsidiaries, and consultants and attorneys who provide bona
      fide
      services to the Company. A Participant who has been granted an option hereunder
      may be granted additional options if the Committee shall so
      determine.

    

    SECTION
      5.  OPTIONS.

    

    (a)
      Committee
      Discretion.  The
      Committee shall have sole and absolute discretionary authority to determine,
      authorize, and designate those persons pursuant to this Plan who are to receive
      options under the Plan and the number of shares of Common Stock to be covered
      by
      such grant and the terms thereof. The Committee shall thereupon grant options
      in
      accordance with such determinations as evidenced by a written option agreement.
      

    

    (b)
      Terms
      and Conditions.  Each
      option granted under the Plan shall be evidenced by an agreement, in a form
      approved by the Committee, which shall be subject to the following express
      terms
      and conditions and to such other terms and conditions as the Committee may
      deem
      appropriate:

    

    (i)
      Option
      Period.  The
      Committee shall promptly notify the Participant of the option grant and a
      written agreement shall promptly be executed and delivered by and on behalf
      of
      the Company and the Participant, provided that the option grant shall expire
      if
      a written agreement is not signed by said Participant (or his agent or attorney)
      and returned to the Company within 60 days from date of receipt by the
      Participant of such agreement. The date of grant shall be the date the option
      is
      actually granted by the Committee, even though the written agreement may be
      executed and delivered by the Company and the Participant after that date.
      Each
      option agreement shall specify the period for which the option thereunder is
      granted (which in no event shall exceed ten years from the date of grant) and
      shall provide that the option shall expire at the end of such period. If the
      original term of an option is less than ten years from the date of grant, the
      option may be amended prior to its expiration, with the approval of the
      Committee and the Participant, to extend the term so that the term as amended
      is
      not more than ten years from the date of grant. 

    
      
        
        

      

      
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    (ii)
      Option
      Price.  The
      purchase price of each share of Common Stock subject to each option granted
      pursuant to the Plan shall be determined by the Committee at the time the option
      is granted and shall not be less than 100% of the fair market value of a share
      of Common Stock on the date the option is granted, as determined by the
      Committee. 

    

    (iii)
      Payment.  The
      option price shall be payable by (A) cash, (B) forgiveness of indebtedness
      or
      obligations, (C) delivery of shares of Common Stock having a fair market value
      on the date of exercise equal to the exercise price of the shares subject to
      the
      options exercised, (D) reduction in the total number of shares issued as a
      result of the exercise by the number of the shares having a fair market value
      on
      the date of exercise equal to the exercise price of the shares subject to the
      options exercised, or (E) any combination of the foregoing. The manner of the
      payment of the exercise price shall be specified in the option exercise
      notice.

    

    (iv)
      Exercise
      Period.  The
      Committee may provide in the option agreement that an option may be exercised
      in
      whole, immediately, or is to be exercisable in increments. In addition, the
      Committee may provide that the exercise of all or part of an option is subject
      to specified performance by the Participant.

    

    (v)
      Procedure
      for Exercise.  Options
      shall be exercised in the manner specified in the option agreement. The notice
      of exercise shall specify the address to which the certificates for such shares
      are to be mailed. A Participant shall be deemed to be a stockholder with respect
      to shares covered by an option on the date the Company receives an option
      exercise notice. As promptly as practicable, the Company shall deliver to the
      Participant certificates for the number of shares with respect to which such
      option has been so exercised, issued in the holder’s name or such other name as
      holder directs; provided, however, that such delivery shall be deemed effected
      for all purposes when a stock transfer agent of the Company shall have deposited
      such certificates with a carrier for overnight delivery, addressed to the holder
      at the address specified pursuant to this Section 5(b)(v).

    

    (vi)
      Termination
      of Employment.  If
      an
      officer or employee to whom an option is granted ceases to be employed by the
      Company for any reason other than death or disability, any option which is
      exercisable on the date of such termination of employment may be exercised
      during a period beginning on such date and ending at the time set forth in
      the
      option agreement; provided, however, that if a Participant’s employment is
      terminated because of the Participant’s theft or embezzlement from the Company,
      disclosure of trade secrets of the Company or the commission of a willful,
      felonious act while in the employment of the Company (such reasons shall
      hereinafter be collectively referred to as “for cause”), then any option or
      unexercised portion thereof granted to said Participant shall expire upon such
      termination of employment. 

    
      
        
        

      

      
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    (vii)
      Disability
      or Death of Participant.  In
      the
      event of the determination of disability or death of a Participant under the
      Plan while he or she is employed by the Company, the options previously granted
      to him may be exercised (to the extent he or she would have been entitled to
      do
      so at the date of the determination of disability or death) at any time and
      from
      time to time, within a period beginning on the date of such determination of
      disability or death and ending at the time set forth in the option agreement,
      by
      the former employee, the guardian of his estate, the executor or administrator
      of his estate or by the person or persons to whom his rights under the option
      shall pass by will or the laws of descent and distribution, but in no event
      may
      the option be exercised after its expiration under the terms of the option
      agreement. A Participant shall be deemed to be disabled if, in the opinion
      of a
      physician selected by the Committee, he or she is incapable of performing
      services for the Company of the kind he or she was performing at the time the
      disability occurred by reason of any medically determinable physical or mental
      impairment which can be expected to result in death or to be of long, continued
      and indefinite duration. The date of determination of disability for purposes
      hereof shall be the date of such determination by such physician.

    

    (viii)
      Assignability.  An
      option
      shall not be assignable or otherwise transferable, in whole or in part, by
      a
      Participant except that an option may be transferable by gift to a member of
      the
      Participant’s immediate family or to a trust in which the Participant and
      members of his immediate family are the only beneficiaries or by will or
      intestate succession.

    

    (ix)
      No
      Rights as Stockholder.  No
      Participant shall have any rights as a stockholder with respect to shares
      covered by an option until the exercise thereof. 

    

    (x)
      Subject
      to Shareholder Approval.  Notwithstanding
      any grant of an option under this Plan by the Committee, no option shall be
      effective until it has been submitted to a vote of the shareholders of the
      Company and received the affirmative vote of at least a majority of the
      shareholders attending the meeting at which such vote is taken in person or
      by
      proxy.

    

    SECTION
      6.  EXTRAORDINARY CORPORATE EVENTS.

    

    (a)
      No
      Effect on Restructure Rights.  The
      existence of outstanding options shall not affect in any way the right or power
      of the Company or its stockholders to make or authorize any or all adjustments,
      recapitalizations, reorganizations, exchanges, or other changes in the Company’s
      capital structure or its business, or any merger or consolidation of the
      Company, or any issuance of Common Stock or other securities or subscription
      rights thereto, or any issuance of bonds, debentures, preferred or prior
      preference stock ahead of or affecting the Common Stock or the rights thereof,
      or the dissolution or liquidation of the Company, or any sale or transfer of
      all
      or any part of its assets or business, or any other corporate act or proceeding,
      whether of a similar character or otherwise. 

    
      
        
        

      

      
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    (b)
      Fundamental
      Change.  If
      the
      Company recapitalizes or otherwise changes its capital structure, or merges,
      consolidates, (b) sells all of its assets or dissolves (each of the foregoing
      a
“Fundamental Change”), then thereafter upon any exercise of an option
      theretofore granted the Participant shall be entitled to purchase under such
      option, in lieu of the number of shares of Common Stock as to which option
      shall
      then be exercisable, the number and class of shares of stock and securities
      to
      which the Participant would have been entitled pursuant to the terms of the
      Fundamental Change if, immediately prior to such Fundamental Change, the
      Participant had been the holder of record of the number of shares of Common
      Stock subject to options issued under the Plan. If (i) the Company shall not
      be
      the surviving entity in any merger or consolidation (or survives only as a
      subsidiary of another entity), (ii) the Company sells all or substantially
      all
      of its assets to any other person or entity (other than a wholly owned
      subsidiary), (iii) any person or entity (including a “group” as contemplated by
      Section 13(d)(3) of the Exchange Act) acquires or gains ownership or control
      of
      (including, without limitation, power to vote) more than 50% of the outstanding
      shares of Common Stock, (iv) the Company is to be dissolved and liquidated,
      or
      (v) as a result of or in connection with a contested election of directors,
      the
      persons who were directors of the Company before such election shall cease
      to
      constitute a majority of the Board (each such event in clauses (i) through
      (v)
      above is referred to herein as a “Corporate Change”), the Committee, in its sole
      discretion, may accelerate the time at which all or a portion of a Participant’s
      option may be exercised for a limited period of time before or after a specified
      date.

    

    (c)
      Changes
      in Company’s Capital Structure.  If
      the
      outstanding shares of Common Stock or other securities of the Company, or both,
      for which the option is then exercisable at any time be changed or exchanged
      by
      declaration of a stock dividend, stock split, combination of shares,
      recapitalization, or reorganization, the number and kind of shares of Common
      Stock or other securities which are subject to the Plan or subject to any
      options theretofore granted, and the option prices, shall be proportionately
      adjusted

    

    (d)
      Acceleration
      of Options.  Except
      as
      hereinbefore expressly provided (i) the issuance by the Company of shares of
      stock or any class of securities convertible into shares of stock of any class,
      for cash, property, labor or services, upon direct sale, upon the exercise
      of
      rights to subscribe therefor, or upon conversion of shares or obligations of
      the
      Company convertible into such shares or other securities, (ii) the payment
      of a
      dividend in property other than Common Stock or (iii) the occurrence of any
      similar transaction, and in any case whether or not for fair value, shall not
      affect, and no adjustment by reason thereof shall be made with respect to,
      the
      number of shares of Common Stock subject to options theretofore granted or
      the
      purchase price per share, unless the Committee shall determine, in its sole
      discretion, that an adjustment is necessary to provide equitable treatment
      to
      Participant. Notwithstanding anything to the contrary contained in this Plan,
      the Committee may, in its sole discretion, accelerate the time at which any
      option may be exercised, including, but not limited to, upon the occurrence
      of
      the events specified in this Section 6.

    
      
        
        

      

      
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    SECTION
      7.  AMENDMENTS OR TERMINATION.  The
      Board
      may amend, alter or discontinue the Plan, but no amendment or alteration shall
      be made which would impair the rights of any Participant, without his consent,
      under any option theretofore granted.

    

    SECTION
      8.  COMPLIANCE WITH OTHER LAWS AND
      REGULATIONS.  The
      Plan,
      the grant and exercise of options thereunder, and the obligation of the Company
      to sell and deliver shares under such options or warrants, shall be subject
      to
      all applicable federal and state laws, rules and regulations and to such
      approvals by any governmental or regulatory agency as may be required. The
      Company shall not be required to issue or deliver any certificates for shares
      of
      Common Stock prior to the completion of any registration or qualification of
      such shares under any federal or state law or issuance of any ruling or
      regulation of any government body which the Company shall, in its sole
      discretion, determine to be necessary or advisable. 

    

    SECTION
      9.  PURCHASE FOR INVESTMENT.  Unless
      the options and shares of Common Stock covered by this Plan have been registered
      under the Securities Act of 1933, as amended, or the Company has determined
      that
      such registration is unnecessary, each person acquiring or exercising an option
      under this Plan may be required by the Company to give a representation in
      writing that he or she is acquiring such option or such shares for his own
      account for investment and not with a view to, or for sale in connection with,
      the distribution of any part thereof.

    

    SECTION
      10.  TAXES.

    

    (a)
      The
      Company may make such provisions as it may deem appropriate for the withholding
      of any taxes which it determines is required in connection with any options
      granted under this Plan.

    

    (b)
      Notwithstanding the terms of Paragraph 10(a), any Participant may pay all or
      any
      portion of the taxes required to be withheld by the Company or paid by him
      or
      her in connection with the exercise of a option by electing to have the Company
      withhold shares of Common Stock, or by delivering previously owned shares of
      Common Stock, having a fair market value, equal to the amount required to be
      withheld or paid. A Participant must make the foregoing election on or before
      the date that the amount of tax to be withheld is determined (“Tax Date”). All
      such elections are irrevocable and subject to disapproval by the Committee.
      Elections by Covered Participants are subject to the following additional
      restrictions: (i) such election may not be made within six months of the grant
      of an option, provided that this limitation shall not apply in the event of
      death or disability, and (ii) such election must be made either six months
      or
      more prior to the Tax Date. Where the Tax Date in respect of an option is
      deferred until six months after exercise and the Participant elects share
      withholding, the full amount of shares of Common Stock will be issued or
      transferred to him upon exercise of the option, but he or she shall be
      unconditionally obligated to tender back to the Company the number of shares
      necessary to discharge the Company’s withholding obligation or his estimated tax
      obligation on the Tax Date.

    
      
        
        

      

      
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    SECTION
      11.  REPLACEMENT OF OPTIONS.  The
      Committee from time to time may permit a Participant under the Plan to surrender
      for cancellation any unexercised outstanding option and receive from the Company
      in exchange an option for such number of shares of Common Stock as may be
      designated by the Committee. The Committee may, with the consent of the holder
      of any outstanding option, amend such option, including reducing the exercise
      price of any option to not less than the fair market value of the Common Stock
      at the time of the amendment and extending the exercise term of any
      option.

    

    SECTION
      12.  NO RIGHT TO COMPANY EMPLOYMENT.  Nothing
      in this Plan or as a result of any option granted pursuant to this Plan shall
      confer on any individual any right to continue in the employ of the Company
      or
      interfere in any way with the right of the Company to terminate an individual’s
      employment at any time. The option agreements may contain such provisions as
      the
      Committee may approve with reference to the effect of approved leaves of
      absence.

    

    SECTION
      13.  EFFECTIVENESS AND EXPIRATION OF
      PLAN.  The
      Plan
      shall be effective on the date the Board adopts the Plan and the Plan and all
      options granted prior thereto have been approved by a majority of the
      outstanding shares of Common Stock. The Plan shall expire ten years after the
      date it becomes effective and thereafter no option shall be granted pursuant
      to
      the Plan.

    

    SECTION
      14.  GOVERNING LAW.  This
      Plan
      and any agreements hereunder shall be interpreted, enforced, and construed
      in
      accordance with the substantive laws of the state of incorporation of the
      Company, excluding any of its conflicts laws or choice of law principles, and
      applicable federal law.

     

    7THE 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.
                      2006 COMMON STOCK PURCHASE AGREEMENT

      This  2006  COMMON  STOCK  PURCHASE  AGREEMENT  is made  this  17th day of
February 2006 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  Fifteen  Million  Dollars  ($15,000,000)(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.

      A.  During  the  period of time from and  after the  effectiveness  of the
Initial Registration Statement (as defined in Section 7 hereof) and through June
30,  2009 ("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  Dollars  ($30.00) 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 $50.00,  then the exercise price would be the
Base Per Share Price (i.e.,  $30.00), and if the closing bid price of the shares
on the applicable date was $20.00,  then the exercise price would be $18.00. 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.

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      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 1,000,000.  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.

      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.

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<PAGE>

      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-K for the fiscal
      year ended June 30, 2005; (ii) the Company's Quarterly Report on Form 10-Q
      for the quarter ended  September 30, 2005;  (iii) the Company's  Quarterly
      Report on Form 10-Q for the quarter  ended  December  31,  2005;  (iv) the
      Company's  Definitive  Proxy  Statement  on  Schedule  14-A filed with the
      Commission  on January  4,  2006;  (v) the  Company's  Amendment  No. 2 to
      Registration  Statement on Form S-1 filed with the  Commission on February
      13, 2006 (File No.  333-130992);  (vi) the risk  factors  incorporated  by
      reference herein in Section 3(i) hereof;  and (vii) the Company's Form 8-K
      filed  with the  Commission  on  February  7, 2006.  All of the  foregoing
      together  with this  Agreement  shall be referred  to herein as  "Offering
      Materials".

      (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.

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<PAGE>

      (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 ILLES' residence.

      (d) ILLES  understands  (i) that the Common Stock has not been  registered
      under the Securities Act of 1933, as amended (the "Act"), or registered or
      qualified under the securities laws of the state of ILLES' 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 the Common Stock may not 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 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,  the
      Common Stock would not 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 USAT,  ILLES
      also  understands  that there may not be any  established  public  trading
      market for the sale of such securities.

      (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 ILLES to
      purchase  shares of Common Stock from USA in the amount of the  Commitment
      Amount pursuant to this Agreement.

                                       4
<PAGE>

      (g)  ILLES'  overall  commitment  to  investments  which  are not  readily
      marketable  is  not  disproportionate  to  ILLES'  net  worth  and  ILLES'
      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. 2 to the
      Form S-1  Registration  Statement of the Company filed with the Commission
      on February 13, 2006 (No. 333-130992) all of which are incorporated herein
      by reference.

      (j) ILLES  understand  that ILLES' right to transfer the Common Stock will
      be restricted as set forth on the certificate evidencing the Common Stock.
      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.  ILLES  is  aware  of the SEC  staff's
      position on short sales set forth in CF Tel. Interp. A.65.

      (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.

                                       5
<PAGE>

      (l) ILLES understands that a legend may be placed on any stock certificate
      representing the Common Stock 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.

            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.

                                       6
<PAGE>

            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.

      7. Registration  Provisions.  The Company shall promptly 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 all of the 1,000,000 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.

                                       7
<PAGE>

      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 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.

      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:

                                       8
<PAGE>

            (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.

            (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.

                                       9
<PAGE>

            (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.

            (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).

                                       10
<PAGE>

            (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.

      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 April 4, 2005, and USA  acknowledges  and agrees that except for
the 360,000 shares currently  covered by the Registration  Statement on Form S-1
(File No.  333-130992),  USA shall not require  ILLES to purchase  from USA, and
ILLES  shall  not  purchase  from USA,  any  additional  shares of Common  Stock
thereunder.

                                       11
<PAGE>

      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:

                     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., Chief
                                Executive Officer

                                       12
<PAGE>

      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.

      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.

                                       13
<PAGE>

      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 2006 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

                                       14
<PAGE>

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

                             COMMITMENT TO PURCHASE

      Pursuant  to the 2006  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:

                                       15

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