Document:

THESE
      OPTIONS 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 OPTIONS 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 OPTIONS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF, OR AN
      OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    
      	
              OPTION
                CERTIFICATE 

            	
              18,000
                COMMON STOCK OPTIONS

            
	
              NO.
                202

            	 

    

    

    USA
      TECHNOLOGIES, INC.

    

    COMMON
      STOCK OPTIONS

    

    (These
      Options will be void if not exercised

    by
      the
      Termination Times specified below.)

    

    1.  Options.
      Subject
      to the terms and conditions hereof, this certifies that STEPHEN P. HERBERT
      (“HERBERT”), or the registered holder hereof, is the owner of 18,000 Options
      (the "Options") of USA Technologies, Inc. (the "Company"), a Pennsylvania
      corporation. Each Option, when vested in accordance with Section 3 hereof,
      entitles the holder hereof to purchase from the Company at any time prior to
      5:00 p.m. on the fifth annual anniversary of the vesting of such Option (the
      "Termination Time"), 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 8 hereof.

     

    2.  Option
      Price.
      The
      Options, when vested, shall be exercised by delivery to the Company (prior
      to
      the Termination Time for such Options) of the option price for each share of
      Common Stock being purchased hereunder (the "Option Price"), this Certificate,
      and the completed Election to Purchase Form which is attached hereto. The Option
      Price shall be $7.50 per share of Common Stock to be purchased pursuant to
      each
      Option issued pursuant hereto. The Option Price shall be subject to adjustment
      as provided in Section 8 hereof. The Option Price is payable either in cash
      or
      by certified check or bank draft payable to the order of the
      Company.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    3.  Vesting
      of Options.
      

     

    a.  Notwithstanding
      anything contained herein to the contrary, and subject to Section 8(d)(iii),
      the
      Options represented by this Certificate shall only become vested and exercisable
      by HERBERT, or the registered holder hereof, in accordance with the terms and
      conditions set forth in this Section 3. If HERBERT is employed by the Company
      as
      of the date set forth in Column "A" below, the number of Options set forth
      in
      Column "B" below shall on such date become irrevocably and absolutely vested
      and
      exercisable.

     

    
      	
              Column
                "A"

            	 	
              Column
                "B"

            	 
	
              Vesting
                Date

            	 	
              Options
                Vested

            	 
	
              May
                11, 2006

            	 	 	
              6,000

            	 
	
              June
                30, 2007

            	 	 	
              6,000

            	 
	
              June
                30, 2008

            	 	 	
              6,000

            	 
	
              TOTAL

            	 	 	
              18,000

            	 

    

     

    b.  The
      Amended and Restated Employment and Non-Competition Agreement dated May 11,
      2006
      between HERBERT and the Company, including any and all supplements, amendments,
      restatements, or modifications thereto made from time to time in the future
      (the
      "Employment Agreement"), are hereby incorporated herein by reference. The terms
      and conditions thereof shall be used to determine whether HERBERT is employed
      by
      the Company on any particular vesting date. Therefore, and as set forth in
      the
      Employment Agreement (as existing on the date hereof), HERBERT’s employment
      would be considered terminated upon his death or disability under Section 4
      thereof, or upon notice given to HERBERT by the Company under Section 3 thereof,
      or upon notice given by the Company or HERBERT under Section 1(a)
      thereof.

     

    c.  If
      pursuant hereto HERBERT shall not become vested in any particular Option or
      Options, he shall only forfeit the Option or Options not so vested. Any Option
      or Options previously vested pursuant hereto shall nevertheless remain fully
      vested and exercisable all in accordance with the terms hereof.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    4.  Exercise.
      Upon
      the surrender of this Certificate and payment of the Option 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 Option 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 Option. 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 the Company of this Certificate and payment of the Option Price
      as
      aforesaid. If, however, at the date of surrender of this Certificate and payment
      of such Option Price, the transfer books for the Common Stock purchasable upon
      the exercise of any Option shall be closed, the certificates for the Common
      Stock in respect to which any such Option 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.

     

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

     

    6.  Termination
      Time.
      All of
      the Options must be exercised in accordance with the terms hereof prior to
      the
      Termination Time relating to any such Option. At and after the Termination
      Time
      relating to any such Option any and all unexercised rights hereunder relating
      to
      such Option shall become null and void and such Option shall without any action
      on behalf of the Company become null and void.

     

    7.  Lost,
      Mutilated Certificate.
      In case
      this Common Stock Option 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.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    8.  Adjustments.
      Subject
      and pursuant to the provisions of this Section, the Option Price and number
      of
      shares of Common Stock subject to the Options 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
      Option 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 Option 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 Option Price immediately prior to such combination shall be
      proportionately increased. Any such adjustment to the Option Price shall become
      effective at the close of business on the record date for such subdivision
      or
      combination. The Option Price shall be proportionately increased or decreased,
      as the case may be, in proportion to such increase or decrease, as the case
      may
      be, of outstanding shares of Common Stock.

     

    c.  Upon
      any
      adjustment of the Option Price as hereinabove provided, the number of shares
      of
      Common Stock issuable upon exercise of the Options remaining unexercised
      immediately prior to any such adjustment, shall be changed to the number of
      shares determined by dividing (i) the appropriate Option Price payable for
      the
      purchase of all shares of Common Stock issuable upon exercise of all of the
      Options remaining unexercised immediately prior to such adjustment by (ii)
      the
      Option 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 Options remaining unexercised immediately prior to such
      adjustment shall remain constant.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    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 Options shall have
      the right thereafter and until the Termination Time to exercise such Options
      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
      Options 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.

     

    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 Options remaining unexercised prior to any such
      reorganization, reclassification, consolidation, merger or sale. If the holder
      of this Option shall not exercise all or any part of the Options remaining
      unexercised prior to such event, such unexercised Options 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 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.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    iii.  Notwithstanding
      anything else contained herein, including Section 3 hereof, immediately prior
      to
      any such reorganization, reclassification, consolidation, merger or sale, which
      constitutes a Change In Control, and provided that HERBERT is then employed
      by
      the Company, any Options which have not become vested pursuant to Section 3
      hereof, shall become fully vested and exercisable immediately prior to any
      such
      event, and shall be subject to subsection (i) or (ii) hereof, as the case may
      be. 

     

    For
      purposes hereof, the term "Change In Control" shall mean a sale, transfer,
      assignment, or other disposition (including by reorganization, merger or
      consolidation), of a controlling interest (i.e., at least 51% of the voting
      power) of the then outstanding stock of the Company, or of all or substantially
      all of the assets of the Company, or a liquidation or dissolution of the
      Company. Other than in connection with a liquidation or dissolution, any such
      transaction shall not, however, constitute a Change In Control if following
      such
      transaction, the beneficial owners of the voting stock of the Company
      immediately prior to such transaction beneficially own, directly or indirectly,
      more than 51% of the combined voting power of the then outstanding voting
      securities entitled to vote generally in the election of Directors of the entity
      or entities resulting from such transaction (including without limitation,
      an
      entity which as a result of such transaction owns the Company, or all or
      substantially all of the Company’s assets, either directly or through one or
      more subsidiaries). 

     

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

     

    f.  This
      form
      of Certificate need not be changed because of any adjustment which is required
      pursuant to this Section. 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.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    9.  Reservation.
      There
      has been reserved, and the Company shall at all times keep reserved out of
      the
      authorized and un-issued 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 Options. The Company agrees that all shares of Common Stock
      issued upon exercise of the Options shall be, at the time of delivery of the
      Certificates for such Common Stock, validly issued and outstanding, fully paid
      and non-assessable.

     

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

     

    11.  No
      Right.
      The
      holder of any Options 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 Option.

     

    12.  Securities
      Laws.
      As a
      condition to the issuance of any Common Stock pursuant to the Options, 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 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.

     

    13.  Transferability.
      Subject
      to compliance with applicable securities laws, all Options that have vested
      in
      accordance with Section 3(a) or Section 8(d)(iii) hereof and represented by
      this
      Certificate shall inure to the benefit of, and be exercisable by, any holder’s
      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
      Options 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.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, USA TECHNOLOGIES, INC., has executed and delivered this
      Certificate and caused its corporate seal to be affixed hereto.

    
      	 	 	 
	 	
              USA
                TECHNOLOGIES, INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              GEORGE R. JENSEN, JR.
	 	
              

              George
                R. Jensen, Jr.,

              Chief
                Executive Officer

            
	 	
            

      	 	 	 
	 	Attest:   /s/
              STEPHEN P. HERBERT
	 	
              
                
Stephen
                P. Herbert, Secretary

            
	
              Dated:
                May 11, 2006 

            	
            

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    USA
      TECHNOLOGIES, INC.

    100
      Deerfield Lane, Suite 140

    Malvern,
      Pennsylvania 19355

    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 Option Certificate No. ___________
      of the
      Company. The undersigned desires to purchase ____________
      shares
      of Common Stock provided for therein and tenders herewith full payment of the
      Option 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 following
      address:______________________________________. If
      said
      number of shares of Common Stock shall not be all the shares purchasable under
      the Certificate, then a new Common Stock Option 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 above.

    

    
      	 	 	 	 
	Dated: _____________,
              200_	 	Signature: 	
            
	
            	 	 	
              

            
	
            	 	 	
            

    

     

     

    
      
         

      

      
        9THESE
      OPTIONS 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 OPTIONS 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 OPTIONS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF, OR AN
      OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
      REQUIRED.

    

    
      	OPTION CERTIFICATE
              
              NO.
                203

            	
              7,000
                COMMON STOCK
                OPTIONS

            

    

     

    USA
      TECHNOLOGIES, INC.

    

    COMMON
      STOCK OPTIONS

    

    (These
      Options will be void if not exercised

    by
      the
      Termination Times specified below.)

    

    1.  Options.
      Subject
      to the terms and conditions hereof, this certifies that DAVID M. DEMEDIO
      (“DEMEDIO”), or the registered holder hereof, is the owner of 7,000 Options (the
      "Options") of USA Technologies, Inc. (the "Company"), a Pennsylvania
      corporation. Each Option, when vested in accordance with Section 3 hereof,
      entitles the holder hereof to purchase from the Company at any time prior to
      5:00 p.m. on the fifth annual anniversary of the vesting of such Option (the
      "Termination Time"), 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 8 hereof.

     

    2.  Option
      Price.
      The
      Options, when vested, shall be exercised by delivery to the Company (prior
      to
      the Termination Time for such Options) of the option price for each share of
      Common Stock being purchased hereunder (the "Option Price"), this Certificate,
      and the completed Election to Purchase Form which is attached hereto. The Option
      Price shall be $7.50 per share of Common Stock to be purchased pursuant to
      each
      Option issued pursuant hereto. The Option Price shall be subject to adjustment
      as provided in Section 8 hereof. The Option Price is payable either in cash
      or
      by certified check or bank draft payable to the order of the
      Company.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    3.  Vesting
      of Options.
      

     

    a.  Notwithstanding
      anything contained herein to the contrary, and subject to Section 8(d)(iii),
      the
      Options represented by this Certificate shall only become vested and exercisable
      by DEMEDIO, or the registered holder hereof, in accordance with the terms and
      conditions set forth in this Section 3. If DEMEDIO is employed by the Company
      as
      of the date set forth in Column "A" below, the number of Options set forth
      in
      Column "B" below shall on such date become irrevocably and absolutely vested
      and
      exercisable.

     

    
      	
              Column
                "A"

            	 	 	
              Column
                "B"

            	 
	
              Vesting
                Date

            	 	 	
              Options
                Vested

            	 
	 	 	 	 	 
	
              May
                11, 2006

            	 	 	
              2,334

            	 
	 	 	 	 	 
	
              June
                30, 2007

            	 	 	
              2,333

            	 
	 	 	 	 	 
	
              June
                30, 2008

            	 	 	
              2,333

            	 
	 	 	 	 	 
	
              TOTAL

            	 	 	
              7,000

            	 

    

     

    b.  The
      Employment and Non-Competition Agreement dated April 12, 2005 between DEMEDIO
      and the Company, as modified by the First Amendment to the Employment and
      Non-Competition Agreement dated May 11, 2006, including any and all supplements,
      amendments, restatements, or modifications thereto made from time to time in
      the
      future (the "Employment Agreement"), are hereby incorporated herein by
      reference. The terms and conditions thereof shall be used to determine whether
      DEMEDIO is employed by the Company on any particular vesting date. Therefore,
      and as set forth in the Employment Agreement (as existing on the date hereof),
      DEMEDIO’s employment would be considered terminated upon his death or disability
      under Section 4 thereof, or upon notice given to DEMEDIO by the Company under
      Section 3 thereof, or upon notice given by the Company or DEMEDIO under Section
      1(a) thereof.

     

    c.  If
      pursuant hereto DEMEDIO shall not become vested in any particular Option or
      Options, he shall only forfeit the Option or Options not so vested. Any Option
      or Options previously vested pursuant hereto shall nevertheless remain fully
      vested and exercisable all in accordance with the terms hereof.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    4.  Exercise.
      Upon
      the surrender of this Certificate and payment of the Option 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 Option 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 Option. 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 the Company of this Certificate and payment of the Option Price
      as
      aforesaid. If, however, at the date of surrender of this Certificate and payment
      of such Option Price, the transfer books for the Common Stock purchasable upon
      the exercise of any Option shall be closed, the certificates for the Common
      Stock in respect to which any such Option 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.

     

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

     

    6.  Termination
      Time.
      All of
      the Options must be exercised in accordance with the terms hereof prior to
      the
      Termination Time relating to any such Option. At and after the Termination
      Time
      relating to any such Option any and all unexercised rights hereunder relating
      to
      such Option shall become null and void and such Option shall without any action
      on behalf of the Company become null and void.

     

    7.  Lost,
      Mutilated Certificate.
      In case
      this Common Stock Option 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.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    8.  Adjustments.
      Subject
      and pursuant to the provisions of this Section, the Option Price and number
      of
      shares of Common Stock subject to the Options 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
      Option 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 Option 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 Option Price immediately prior to such combination shall be
      proportionately increased. Any such adjustment to the Option Price shall become
      effective at the close of business on the record date for such subdivision
      or
      combination. The Option Price shall be proportionately increased or decreased,
      as the case may be, in proportion to such increase or decrease, as the case
      may
      be, of outstanding shares of Common Stock.

     

    c.  Upon
      any
      adjustment of the Option Price as hereinabove provided, the number of shares
      of
      Common Stock issuable upon exercise of the Options remaining unexercised
      immediately prior to any such adjustment, shall be changed to the number of
      shares determined by dividing (i) the appropriate Option Price payable for
      the
      purchase of all shares of Common Stock issuable upon exercise of all of the
      Options remaining unexercised immediately prior to such adjustment by (ii)
      the
      Option 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 Options remaining unexercised immediately prior to such
      adjustment shall remain constant.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    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 Options shall have
      the right thereafter and until the Termination Time to exercise such Options
      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
      Options 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.

     

    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 Options remaining unexercised prior to any such
      reorganization, reclassification, consolidation, merger or sale. If the holder
      of this Option shall not exercise all or any part of the Options remaining
      unexercised prior to such event, such unexercised Options 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 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.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    iii.  Notwithstanding
      anything else contained herein, including Section 3 hereof, immediately prior
      to
      any such reorganization, reclassification, consolidation, merger or sale, which
      constitutes a Change In Control, and provided that DEMEDIO is then employed
      by
      the Company, any Options which have not become vested pursuant to Section 3
      hereof, shall become fully vested and exercisable immediately prior to any
      such
      event, and shall be subject to subsection (i) or (ii) hereof, as the case may
      be. 

     

    For
      purposes hereof, the term "Change In Control" shall mean a sale, transfer,
      assignment, or other disposition (including by reorganization, merger or
      consolidation), of a controlling interest (i.e., at least 51% of the voting
      power) of the then outstanding stock of the Company, or of all or substantially
      all of the assets of the Company, or a liquidation or dissolution of the
      Company. Other than in connection with a liquidation or dissolution, any such
      transaction shall not, however, constitute a Change In Control if following
      such
      transaction, the beneficial owners of the voting stock of the Company
      immediately prior to such transaction beneficially own, directly or indirectly,
      more than 51% of the combined voting power of the then outstanding voting
      securities entitled to vote generally in the election of Directors of the entity
      or entities resulting from such transaction (including without limitation,
      an
      entity which as a result of such transaction owns the Company, or all or
      substantially all of the Company’s assets, either directly or through one or
      more subsidiaries). 

     

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

     

    f.  This
      form
      of Certificate need not be changed because of any adjustment which is required
      pursuant to this Section. 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.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    9.  Reservation.
      There
      has been reserved, and the Company shall at all times keep reserved out of
      the
      authorized and un-issued 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 Options. The Company agrees that all shares of Common Stock
      issued upon exercise of the Options shall be, at the time of delivery of the
      Certificates for such Common Stock, validly issued and outstanding, fully paid
      and non-assessable.

     

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

     

    11.  No
      Right.
      The
      holder of any Options 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 Option.

     

    12.  Securities
      Laws.
      As a
      condition to the issuance of any Common Stock pursuant to the Options, 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 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.

     

    13.  Transferability.
      Subject
      to compliance with applicable securities laws, all Options that have vested
      in
      accordance with Section 3(a) or Section 8(d)(iii) hereof and represented by
      this
      Certificate shall inure to the benefit of, and be exercisable by, any holder’s
      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.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    14.  Applicable
      Law.
      The
      Options 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
      Certificate and caused its corporate seal to be affixed hereto.

     

    
      	 	 	 
	 	USA
              TECHNOLOGIES,
              INC.
	 
 	 
 	 
 
	 	By:      
              	/s/
              GEORGE R. JENSEN, JR.
	 	
              

              George
                R. Jensen, Jr.,

              Chief
                Executive Officer

            

    

    
      
        	 	 	 
	 	 	 
	 	Attest:  	/s/
                STEPHEN P. HERBERT
	 	
                

                Stephen
                  P. Herbert, Secretary

              
	 	 
	
                Dated:
                  May 11, 2006

              	 

      

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    USA
      TECHNOLOGIES, INC.

    100
      Deerfield Lane, Suite 140

    Malvern,
      Pennsylvania 19355

    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 Option Certificate No. ______ of
      the Company. The undersigned desires to purchase ___________ shares
      of Common Stock provided for therein and tenders herewith full payment of the
      Option 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 following
      address:______________________________________.  
      If said
      number of shares of Common Stock shall not be all the shares purchasable under
      the Certificate, then a new Common Stock Option 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 above.

    

    
      	Dated: _________________,
              200__	
              Signature:
                ______________________ 

            

    

    

    
      
         

      

      
        9

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