Document:

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EXHIBIT 4.23

THESE WARRANTS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAW.  THESE WARRANTS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF 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 THESE WARRANTS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.

WARRANT CERTIFICATE                         9,000,000 COMMON STOCK WARRANTS
NO. 196
                             USA TECHNOLOGIES, INC.
                             ----------------------
                              COMMON STOCK WARRANTS
                              ---------------------

                  (These Warrants will be void if not exercised
                    by the Termination Date specified below.)

     1. Warrants.  Subject to the terms and conditions hereof, this certifies
        --------
that LA JOLLA COVE INVESTORS, INC., or any subsequent holder hereof, is the
owner of 9,000,000 Warrants (the "Warrants") of USA Technologies, Inc., a
Pennsylvania corporation (the "Company").  Each Warrant entitles the holder
hereof to purchase from the Company at any time prior to 5:00 p.m. on the
"Termination Date"(as defined in Section 4), one fully paid and non-assessable
share of the Company`s Common Stock, without par value (the "Common Stock"),
subject to adjustment as provided in Section 7 hereof.

     2. Warrant Price.  The Warrants shall be exercised by delivery to the
        -------------
Company (prior to the Termination Date) of the Warrant price for each share of
Common Stock being purchased hereunder (the "Warrant Price"), this Certificate,
and the completed Election To Purchase Form which is attached hereto.  The
Warrant Price shall be $.10 per share of Common Stock.  The Warrant Price shall
be subject to adjustment as provided in Section 7 hereof.  The Warrant Price is
payable either in cash or by certified check or bank draft payable to the order
of the Company.

     3. Exercise.  Upon the surrender of this Certificate and payment of the
        --------
Warrant Price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch to or upon the written order of the registered
holder of this Warrant and in such name or names as the registered holder may
designate, a certificate or certificates for the number of full shares of Common
Stock so purchased upon the exercise of any Warrant.  Such certificate or

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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 the Company of this
Certificate and payment of the Warrant Price as aforesaid.  If, however, at the
date of surrender of this Certificate and payment of such Warrant Price, the
transfer books for the Common Stock purchasable upon the exercise of any Warrant
shall be closed, the certificates for the Common Stock in respect to which any
such Warrant 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 the Company shall
be under no duty to deliver any certificate for such Common Stock.

     Notwithstanding anything else set forth herein, unless the Company shall
consent thereto in writing, the holder shall not be permitted to exercise this
Warrant (in whole or in part) on any date on which the closing bid price of the
Common Stock (on that date) shall be less than $.40 per share. If the date of
exercise of this Warrant shall not be on a trading date, then the closing bid
price for Common Stock on the last trading date immediately preceding the
exercise date shall be used. The closing bid price shall be subject to
adjustment as set forth in Section 7 in a manner similar to the Warrant Price.

     4. Termination Date.  Each Warrant must be exercised in accordance with the
        ----------------
terms hereof prior to the Termination Date relating to such Warrant, all as set
forth below ("Termination Date").

Number
of Warrants          Termination Date
-----------          ----------------
3,000,000        No later than 3 months following the
                 effective date of the Registration
                 Statement (as defined in Section 12)

3,000,000        No later than 6 months following the
                 effective date of the Registration   Statement (as
                 defined in Section 12)

3,000,000        No later than 9 months following the
                 effective date of the Registration
                 Statement (as defined in Section 12)

On the Termination Date relating to any such Warrant any and all unexercised
rights hereunder relating to such Warrant shall become null and void and such
unexercised Warrant shall without any action on behalf of the Company become
null and void.

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     5. Partial Exercise.  The rights of purchase represented by the Warrants
        ----------------
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 Common Stock specified
herein and, in the event that the Warrants are exercised with respect to less
than all of the Common Stock specified herein at any time prior to the
Termination Date, a new Certificate will be issued to such registered holder for
the remaining number of Warrants not so exercised.

     6. Lost, Mutilated Certificate.  In case this Common Stock Warrant
        ---------------------------
Certificate shall become mutilated, lost, stolen or destroyed, the Company 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 Company
of such loss, theft or destruction of such certificate and indemnity, if
requested, also satisfactory to the Company.

     7. Adjustments.  Subject and pursuant to the provisions of this Section 7,
        -----------
the Warrant Price and number of shares of Common Stock subject to the Warrants
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 Warrant 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 Warrant 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, or combination thereof, the Warrant Price
immediately prior to such combination shall be proportionately increased.  Any
such adjustment to the Warrant Price shall become effective at the close of
business on the record date for such subdivision or combination.  The Warrant
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.

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     c. Upon any adjustment of the Warrant Price as hereinabove provided, the
number of shares of Common Stock issuable upon exercise of the Warrants
remaining unexercised immediately prior to any such adjustment, shall be changed
to the number of shares determined by dividing (i) the appropriate Warrant Price
payable for the purchase of all shares of Common Stock issuable upon exercise of
all of the Warrants remaining unexercised immediately prior to such adjustment
by (ii) the Warrant Price per share of Common Stock in effect immediately after
such adjustment.  Pursuant to this formula, the total sum payable to the Company
upon the exercise of the Warrants remaining unexercised immediately prior to
such adjustment shall remain constant.

     d.     (i)     If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, person, or entity, or the sale of all or substantially all
of its assets to another corporation, person, or entity, shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash, property, or assets with respect to or in exchange for Common
Stock, and provided no election is made by the Company pursuant to subsection
(ii) hereof, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the Company or such successor or purchasing
corporation, person, or entity, as the case may be, shall agree that the
registered holder of the Warrants shall have the right thereafter and until the
Termination Date to exercise such Warrants for the kind and amount of stock,
securities, cash, property, or assets receivable upon such reorganization,
reclassification, consolidation, merger, or sale by a holder of the number of
shares of Common Stock for the purchase of which such Warrants might have been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger or sale, subject to such subsequent adjustments which
shall be equivalent or nearly equivalent as may be practicable to the
adjustments provided for in this Section 7.

               (ii)      Notwithstanding subsection (i) hereof and in lieu
thereof, the Company may elect by written notice to the registered holder
hereof, to require such registered holder to exercise all of the Warrants
remaining unexercised prior to any such reorganization, reclassification,
consolidation, merger or sale.  If the holder of this Warrant shall not exercise
all or any part of the Warrants remaining unexercised prior to such event, such
unexercised Warrants shall automatically become null and void upon the
occurrence of any such event, and of no further force and effect.  The Common
Stock issued pursuant to any such exercise shall be deemed to be issued and
outstanding immediately prior to any such event, and shall be entitled to be
treated as any other issued and outstanding share of Common Stock in connection

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with such event.  If an election is not made by the Company pursuant to this
subsection (ii) in connection with any such event, then the provisions of
subsection (i) hereof shall apply to such event.

     e.     Whenever the Warrant Price and number of shares of Common Stock
subject to this Warrant is adjusted as herein provided, the Company shall
promptly mail to the registered holder of this Warrant a statement signed by an
officer of the Company setting forth the adjusted Warrant Price and the number
of shares of Common Stock subject to this Warrant, determined as so provided.

     f.     This form of Certificate need not be changed because of any
adjustment which is required pursuant to this Section 7. However, the Company
may at any time in its sole discretion (which shall be conclusive) make any
change in the form of this Certificate that the Company 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.

     8. 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 exercise of the
right of purchase represented by the Warrants.  The Company agrees that all
shares of Common Stock issued upon exercise of the Warrants shall be, at the
time of delivery of the Certificates for such Common Stock, validly issued and
outstanding, fully paid and non-assessable.

     9. Fractional Shares.  The Company shall not issue any fractional shares of
        -----------------
Common Stock pursuant to any exercise of any Warrant and shall pay cash to the
holder of any Warrant in lieu of any such fractional shares.

     10. No Right.  The holder of any Warrants shall not be entitled to any of
         --------
the rights of a shareholder of the Company prior to the date of issuance of the
Common Stock by the Company pursuant to an exercise of any Warrant.

     11. Securities Laws.  As a condition to the issuance of any Common Stock
         ---------------
pursuant to the Warrants, the holder of such Common Stock shall execute and
deliver such representations, warranties, and covenants, that may be required by

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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.

     12. Registration Rights. The Company shall at its sole cost and expense
         -------------------
prepare and file with the Securities and Exchange Commission and thereafter use
its best efforts to have declared effective, the Registration Statement referred
to in the next sentence registering all of the shares of Common Stock underlying
this Warrant for resale by the holder under the Securities Act of 1933, as
amended. In this regard, the Common Stock underlying this Warrant shall be
included in the pending Registration Statement of the Company on Form SB-2
previously filed with the Securities and Exchange Commission on November 6, 2002
(file no. 333-101032) (the Registration Statement).  The Company shall use its
best efforts to have the Registration Statement maintained effective until the
earlier of (i) one year from the effective date thereof, or (ii) the date that
all of the  Common Stock underlying this Warrant is resold pursuant to the
Registration Statement or otherwise.

     13. Transferability. Subject to compliance with applicable securities laws,
         ---------------
the Warrants represented by this Certificate and this Certificate shall inure to
the benefit of and be exercisable by any holders heirs, personal
representatives, successors and assigns, and shall be fully assignable and
transferable by any holder at any time and from time to time, including by will,
intestacy or otherwise.  Any such assignee or transferee shall be entitled to
all the benefits hereof and shall be the holder hereof.

     14. Applicable Law.  The Warrants and this Certificate 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.

     IN WITNESS WHEREOF, USA TECHNOLOGIES, INC., has executed and delivered this
Warrant Certificate as of the date written below.

                              USA  TECHNOLOGIES,  INC.

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

                              Attest:
                              Leland  P.  Maxwell,  Secretary

Dated: March 17, 2003

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USA TECHNOLOGIES, INC.
200 Plant Avenue
Wayne, Pennsylvania  19087
Attn:  George R. Jensen, Jr.,
       Chief Executive Officer

                              ELECTION TO PURCHASE
                              --------------------

     The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the attached Warrant Certificate No. of the Company.  The
undersigned desires to purchase shares of Common Stock provided for therein and
tenders herewith full payment of the Warrant Price for the shares of Common
Stock being purchased, 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, and delivered to, the undersigned at
the address set forth in the attached certificate.  If said number of shares of
Common Stock shall not be all the shares purchasable under the Certificate, then
a new Common Stock Warrant Certificate for the balance remaining of the shares
of Common Stock purchasable shall be issued to and registered in the name of,
and delivered to, the undersigned at the address set forth in the attached
certificate.

Dated:, 2003          Signature:

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EXHIBIT 4.24

                                     SAMPLE
                           12% CONVERTIBLE SENIOR NOTE
                          ----------------------------

No. 2001-

$                                                    DATED:              , 2001
 -----------                                                 ------------

         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 12% per
annum, in accordance with the following terms:

         1. PRINCIPAL AMOUNT. The principal amount of this 12% Convertible
Senior Note("Convertible Senior Note") shall be due and payable on December 31,
2004 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 12% 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

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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.

         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 the
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 the Convertible
Senior Note, including any which had not been paid during such 180 day period.
In the event that any bank or other financial institutional lender to USA at any
time so requires, the Lender shall execute, upon request of USA, any

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intercreditor or subordination agreement(s) with any such bank or other
financial institutional lender on terms not materially more adverse to the
Lender then the subordination terms contained in this Convertible Senior Note.

                  B. DEFINITION. "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 institutional indebtedness of USA, or
(b) any indebtedness created, incurred, or assumed, by USA secured by a lien on
any assets of USA. 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 (not including any Convertible
Senior Notes held by any of them), (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 the Convertible Senior Note, or (vi) any "other
indebtedness" which is subordinated to all indebtedness to which this
Convertible Senior Note is subordinated in substantially like terms as this
Convertible Senior Note which such "other indebtedness" shall be treated as
equal with the indebtedness evidenced by this Convertible Senior Note.

         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,

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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.

         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

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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 $.40 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.

                  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.
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                  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.

                           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.
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                  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.

         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, USA shall, at its expense, file and 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.
USA shall use its best efforts to have the resale of the Common Stock by
non-affiliates of USA exempted from the registration requirements under
applicable state securities laws.

         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

                                        7
<PAGE>

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.

         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.

         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.

                                        8
<PAGE>

         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:
                                               ---------------------------
                                               Leland P. Maxwell,
                                               Secretary

                                        9
<PAGE>

USA TECHNOLOGIES, INC.
200 Plant Avenue
Wayne, Pennsylvania  19087
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:
                                                 ------------------

                                       10
<PAGE>

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