Document:

<PAGE>
                                                                 Exhibit 10.38

                    PURCHASE AND SYSTEM DEVELOPMENT AGREEMENT

        This Agreement Is made on the 8th day of March 2002 by and between Mars
Electronics International, Inc. Delaware Corporation with principal offices all
1301 Wilson Drive, West Chester, Pennsylvania 19380 ("MEI") and USA
Technologies, Inc. a Pennsylvania Corporation with principal offices at 200
Plant Avenue, Wayne, Pennsylvania 19087 ("USA Tech"), MEI and USA may sometimes
be referred to herein as the "Party" or "Parties."

        WHEREAS, MEI is a is a leading manufacturer of electronics utilized in
the vending, retail, kiosk and telecom industries, and

        WHEREAS, USA Tech is a leading manufacturer of credit card and other
transaction devices for use in the office and vending equipment industries, and

        WHEREAS, MEI and USA Tech desire to further the usage of credit card
transactions in the above stated industries in the US and Canadian market,

        NOW! THEREFORE, in consideration of the mutual covenants and promises
contained herein, MEI end USA Tech agree as follows:

        1. PURPOSE. The purpose of this Agreement is to progress the usage of
credit cards specifically within the vending industry and, If warranted, other
industries including, but not limited to the retail, kiosk and telecom
industries. MEI and USA Tech will accomplish this with (1) the joint development
of an interface specification or the implementation of the USA Tech interface
specification as the "open interface specification" for connecting card readers
to vending machine controllers and telemeters, (2) a USA Tech developed credit
card reader solution to connect to the MEI Telemeter using the interface
specification described above in (1), that does not consume the bill acceptor
mounting position in a vending machine (the USA Tech developed credit card
reader solution that connects to the MEI Telemeter that is specifically referred
to in Subsection 2 is hereinafter referred to as "Product" per Appendix A), all
known as the Development Phase see Section 3A). A Market Phase (see Section 3B),
will commence immediately upon the successful completion of the Development
Phase per the Time Table of Deliverables in Appendix B, provided the product
meets all agreed specifications and therefore deemed ready for Product launch.

        2. TERM OF AGREEMENT. This Agreement shall have a two (2) year term and
shall expire on the second annual anniversary date of execution of the Agreement
unless earlier terminated pursuant to Sections 14, 15, 16, 17, and 22 below. By
mutual consent or in the event this Agreement expires prior to one (1) full year
of Production sales, this Agreement will be extended for a one (1) year
additional term or for the additional time frame needed for Product to have one
(1) full year of sales, by an amendment hereto duly executed by both Parties'
authorized representatives.

        3A. DEVELOPMENT PHASE. During the Development Phase as outlined per
Appendix B, both Parties agree to work together to lay the ground work for the
sales of the Product in the market place according to the points of the
Agreement detailed heretofore. This work includes:

<PAGE>

        A. Both Parties will refrain from working with the identified
competition of the other during the Development Phase for the promotion or
development of credit card acceptance equipment or the promotion of credit card
clearing services. For MEI, his includes other providers of cash payment
systems, limited to Coinco, ConLux (or Dixie Narco as it relates to their
distribution of Conlux payment systems to other parties) Global Payment
Technologies (GPT) and Japan Cash Machines. For USA Tech, this is limited to US
Wireless, Stich Network or IBM.

        B. Both Parties will work together to address any major account concerns
that may prevent the Product from USA Tech from being accepted as a viable
product offering in the market by those parties. This is limited to Pepsico,
the Coca Cola Company and their affiliated bottling operations.

        C. Both Parties will have the right to pursue activities will other
parties, including the direct competition of either Party if explicitly directed
to do so during the Development Phase by identified major accounts. or MEI, this
is limited to PepsiCo, The Coca-Cola Company and their affiliated bottling
operations. For USA Tech, this is limited to ZiLOG. The Coca Cola Company or
their affiliated bottling enterprises. IBM or Marconi.

        D. In the event the Product does not meet the targeted cost, completion
schedule or specification as outlined in Appendix A at the end of the
Development Phase. both Parties will agree either to terminate or to
re-negotiate the terms of this Agreement.

        3B. MARKET PHASE. The Market Phase will be entered immediately upon the
completion of a market ready product within the timeframe identified during the
Development Phase per Appendix B. During the Market Phase both parties have the
right to operate in the market to sell the Product with the provisio that
exclusivity will be maintained with respect to each others competitors as
identified in 3A subsection A for the development and sale of credit clearing
equipment and financial services for use in the US Vending Market.

        At the start of the Market Phase, an "opt out" on exclusivity is
available for either Party for customers identified explicitly in Section 3A,
Subsection C and under the following conditions: if potential credit card
equipment. Clearing services or other business is at risk due to exclusivity,
either Party may exclude those customers from the exclusivity of the Market
Phase.

        "Opt Out" will be executed in writing to the other Party, stating the
reason for the inability to agree to exclusivity for each customer excluded from
the Market Phase.

        Both Parties will continue to work together for acceptance of the
Product by customers excluded during the Market Phase.

        4. PROPRIETARY AND CONFIDENTIAL INFORMATION. MEI and USA Tech agree not
to disclose or utilize any proprietary information supplied by the Parties to
each other during the term of this Agreement except where disclosure or
utilization of said information is required to perform the services contemplated
herein. Any proprietary or confidential information previously exchanged between
the Parties shall be subject to the requirements of this Agreement as fully as
if this Agreement had been in affect on the date such information was provided.
Any disclosure to proprietary and/or confidential information will be limited to
those employees or agents who need to know such information for the purpose of
performing services contemplated herein, it being understood that a such persons
will be informed of its confidential

<PAGE>

nature and be directed to treat it confidentially. Promptly, upon request, each
Party will return confidential or proprietary information to the other without
retaining copies.

        5. NONSOLICITAT1ON. During the term of this Agreement and for a period
of one year after the termination of this Agreement hereunder for whatever
reason, each Party agrees that it will refrain from and will not without the
prior written consent of the other Party, directly or indirectly solicit any of
the employees of the other Party to terminate their employment with the other
Party for their own employ.

        6. DELIVERY. All delivery of Product to MEI by USA Tech wills F.O.B.
Wayne, PA. The Parties agree that the delivery time for the Product is two (2)
to four (4) weeks from the date of receipt of purchase order from MEI.

        7. PRODUCT PRICE/PAYMENT

        a) USA Tech shall sell the Product to MEI at the prices set forth on the
attached Appendix A, plus applicable sales taxes, shipping charges and all costs
attendant to delivery of the Product to MEI. The prices set forth in Appendix A
shall be fixed for one year following the first production run of the Product at
the prices set forth on the attached Appendix A, plus applicable sales taxes,
shipping charges and all costs attendant to delivery of the Product to MEI. The
prices set forth in Appendix A shall be fixed for one year following the first
production runs of the Product.

        b) Payment Terms. Payment to USA Tech is due and payable thirty (30)
days after receipt of the Product and invoice by MEI.

        8. WARRANTY. USA Tech shall provide the same warranty period to MEI as
MEI provides to its customers. For a standard twelve (12) month warranty period,
USA shall repair and maintain the Product at no parts and labor charges to MEI,
one repair and/or replacement basis, except for shipping costs, which are the
responsibility of MEI. In the event MEI offers a warranty in excess of twelve
(12) months to its customers, MEI and USA Tech will determine a Warranty Program
specific to each customer, in connection with the standard or extended
warranties. USA Tech's entire liability and MEI's entire and exclusive remedy
shall be limited to repairing and/or replacing the Product. USA Tech's warranty
shall not apply if the Product has been damaged by improper or unreasonable use,
negligence, accident or any other causes unrelated to defective materials and
workmanship. THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES OF USA
TECH- EXPRESSED OR IMPLIED, ORAL OR WRITTEN. INCLUDING BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OR MERCHANT ABILITY AND FITNESS FOR A PARTICULAR PURPOSE
WHICH ARE EXPRESSLY DISCLAIMED.

        9. DUTIES OF USA TECH. USA Tech's duties shall include the following:

        a) To independently develop the Product within the timelines outlined
     per Appendix B, that mounts in vending machines independent of the existing
     bill acceptor opening (specifically, can/bottle and full line machines).

        b) To provide MEI and MEI customers the financial services associated
     with the Product of a monthly fee not to exceed $10.00 per Product.

        c) To ensure financial service rates do not exceed 6% per transaction.

<PAGE>

        d) To support MEI in the establishment of public domain standard
     credit card interface (not MDB) for the vending industry and specifically
     to inte5rface with MEI Telemeter (part of the Product design in Appendix
     C).

        e) To provide Installation (raining arid warranty for Product cold by
     USA Tech at USA Tech's cost.

        f) To provide MEI with residual income from the network and financial
     services.

        g) To pass through any communications fees, which will be incremental
     to USA Tech's financial fees, to the end customer as part of the customer's
     monthly fee. These communications fees will be subsequently reimbursed to
     MEI by USA Tech.

        10. DUTIES OF MEI. MEI's duties shall include the following:

        a) To provide the sales force to sell the Product and adhere to the
     schedule in good faith (See Appendix B). at no cost to USA Tech, via
     internal and external Sales Associates. {External Sales Associates are
     organized by Full Line and Bottling industries then by region and/or
     specific customer,)

        b) To develop an open standard device capable of WAN communication
     that will enable transaction in the vending machine when connected to the
     Product.

        c) To provide distribution channels for the Product via MEI's active
     distributors nationwide and via direct sales in OEMs.

        d) To develop and provide advertising and promotional materials for
     sales and distribution purposes.

        e) To develop and provide a training program for the Product for Sales
     Associates and distributors.

        f) To provide Engineering and Marketing support in development of the
     generic reader interface at the rate of approximately 32 man-hours per
     month by qualified MEI Associates. Additional requested support will be
     negotiated on a case-by-case basis.

        g) To provide installation and warranty for Product sold by MEI at
     MEI's cost.

        h) To provide USA Tech Product forecasts for each calendar year
     quarter, sixty (60) days prior to the first of each respective calendar
     quarter.

        i) To provide remuneration to USA Tech in the event Product sales of
     10,000 units are `not achieved either by the expiration of this Agreement
     or after on a (1) full year of Product sales whichever occurs last. Such
     remuneration will be paid on the basis of $4.00 per unit for the difference
     between 10,000 units and actual units sold. Payment shall be made within
     sixty (60) days form the expiration or termination of this Agreement. The
     final calculation shall be made on the basis of $4.00 per unit (e.g., 8,000
     units unsold equates to a remuneration of $32,000.00).

        j) To sell he MEI Telemeter to USA Tech for use with the Product.

        k) For MEI to take in to consideration the manufacturing of the
     Product by MEI for USA Tech.

<PAGE>

        l) Upon the execution of this Agreement. MEI will use its best efforts
     to develop new sales of USA Tech's credit card accepting equipment.
     financial service products and E-Port product based upon MEI's acceptance
     of USA Tech's Reseller Agreement.

        m) To provide a working communication link between the vending machine
     and USA Tech's financial services.

        11. ASSIGNMENT. Neither Party may subcontract or assign this Agreement,
or any purchase order issued pursuant to it, to any third party without the
prior written consent of the other Party, except that MEI may assign its rights
end obligations under this Agreement in whole or in pan to any division,
subsidiary, or corporate affiliate of MEI without the consent of USA Tech.

        12. GOVERNING LAW. This Agreement shell be governed by the laws of the
State of Pennsylvania and any and all actions brought to enforce or interpret
this Agreement shall be brought in the State Courts of the State of Pennsylvania
and the Parties hereby consent and grant to the State Courts of Pennsylvania
jurisdiction over any and all causes of action arising pursuant to this
Agreement and/or any related agreements between Parties.

        13. INTERVENING LAW. If the Federal, State, Local and/or any other
governmental authority forbids the doing of business by and between the Parties
hereto, then this Agreement shall be deemed null and void and of no effect.

        14. MEI'S RIGHT TO TERMINATE AGREEMENT. MEI may immediately terminate
this Agreement by written notice if;

        a) Any relevant Federal, State or Local authority fails to approve this
Agreement or otherwise objects to the performance by USA Tech or MEI of any
obligation imposed on them under this Agreement.

        b) MEI forms the view that the performance by it or USA Tech of any
obligation imposed under this Agreement may reasonably be expected to result in
breach of any applicable Federal, State or Local law.

        c) USA Tech fails to perform Duties as specified in Section 9.

        l5. USA'S RIGHT TO TERMINATE AGREEMENT. USA Tech may immediately
terminate Agreement by written notice if:

        a) Any relevant Federal, State or Local authority fails to approve this
Agreement or otherwise objects to the performance by USA Tech or MEI of any
obligation imposed on them under this Agreement.

        b) USA Tech forms the view that the performance by it or MEI of any
obligation imposed under this Agreement may reasonably be expected to result in
breach of any applicable Federal, State or Local law.

        c) MEI fails to perform Duties as specified in Section 10.

<PAGE>

        16. ACTS OF INSOLVENCY. Either Party may terminate this Agreement
without liability by written notice to the other and may regard the other Party
in default of this Agreement if the other Party makes a general assignment for
the benefit of creditors, files a voluntary petition of bankruptcy, suffers or
permits the appointment of a receiver for its business or assets or becomes
subject to any proceeding under any bankruptcy law, whether foreign, or has
wound up or liquidated, voluntarily or otherwise. In the event that any of the
above events occur, that Party shall immediately notify in writing the other
Party of its occurrence.

        17. RIGHTS TO MANUFACTURE. Should this Agreement be terminated due to
default, the defaulting Party shell grant a two (2) year non-exclusive right to
manufacture the most current version of the Product and/or Telemeter for the
purpose of the other Party's use, manufacture or distribution. To this end, all
intellectual property rights, including without limitation, patents and the
necessary know-how to enable and ensure the manufacture and distribution of the
Product, shall be provided free of charge by the defaulting Party and is to
include all necessary production drawings, specifications as well as a list of
all suppliers. Furthermore, the defaulting Party shall offer for sale to the
other all proprietary tools required for the manufacture of the Products

        18. INDEPENDENT CONTRACTORS. Both Parties agree that MEI and USA Tech
will act as independent contractors in the performance of their respective
duties under this Agreement. Accordingly, both Parties shall be responsible for
payment of all applicable taxes including Federal, State and Local taxes arising
out of their respective activities in accordance with this Agreement, including
by way of illustration but not limitation, Federal and State income tax, Social
Security tax, Unemployment Insurance tax relating to the respective Party
performing services hereunder and any other taxes or business license fees as
required by law to be paid by such Party in connection with the services
contemplated herein. At no time shall employees of one Party be considered
employees of the other Party.

        19. FORCE MAJEURE. In the event that either Party is unable to perform
any of its obligations under this Agreement, or to enjoy any of its benefits
because of natural disaster, actions or decrees if governmental bodies or
communication line failure not the fault of the affected Party (referred to as a
"Force Majeure Event"), the Party who has been so affected shall immediately
give written notice to the other Party and shall do everything possible to
resume performance. Upon receipt of such notice, all obligations under the
Agreement shall be immediately suspended. If the period of non-performance
exceeds thirty (30) days from the receipt of notice of the Force Majeure Event,
the Party who has been so affected may, by giving written notice, terminate this
Agreement.

        20. INSURANCE

        a) Both Parties agree to carry through out the term of this Agreement at
its sole cost and expense the following insurance policies:

        (i) A Comprehensive General Liability Policy with limits of not less
     than one million dollars ($1,000,000) each occurrence and two million
     dollars ($2,000,000) aggregate and having endorsements for a personal
     injury, property damage, product liability and contractual coverage;

<PAGE>

          (ii) Worker's Compensation Insurance that shall include Employer's
     Liability Insurance in accordance with the laws of the State of
     Pennsylvania for USA Tech's employees manufacturing the equipment and/or
     working in related facilities during the installation and servicing of the
     Products.

        b) Within a reasonable time each Party will provide the other with paid
up Certificates of Insurance for the above policies. Certificates of Insurance
shall contain endorsements naming MEI/USA Tech as an additional insured and
further providing that such policies shall not be materially changed, amended
and/or canceled except after thirty (30) days advance written notice from the
insurance company to the affected Party. For claims related to and/or resulting
from the Products, USA Tech's insurance coverage will at all times be primary
regardless of any insurance maintained by MEI.

        21. INDEMNIFICATION. Each Party shall, at its own expense, defend,
indemnify and hold harmless the Party, its divisions, subsidiaries or corporate
affiliates and each of their employees, officers and directors against any and
all liability, demands, damages, expenses and losses for death, personal injury,
illness or property damage arising out of each Party's negligence, gross
negligence, recklessness or willful conduct and any breach if its
representations, warranties or performance under this Agreement.

        22. DEFAULT. Failure of either Party to comply with the terms and
conditions contained herein shall constitute a breach of the Agreement and the
non-defaulting Party may send written notice to the other Party detailing the
nature of such breach. The defaulting Party shall have thirty (30) days to cure
the breach. The defaulting Party's failure to cure the breach in thirty (30)
days will result in the immediate termination of the Agreement at the option of
the aggrieved Party. In the event of default, the non-defaulting Party shall
have the right to pursue all available remedies at law or in equity.

        23. NO PARTNERSHIP. Nothing contained herein shall be deemed as creating
a partnership, joint venture or similar business relationship between the
Parties or as authorizing either Party to bind, contract for or incur any
liability or obligation for or in the name of the other. Both Parties agree
nothing herein shall be construed to create any contract right on the part of
any third party or any duty or obligation to such third party on the part of MEI
or USA Tech whatsoever.

        24. KEY PERSONNEL. Both Parties may mutually agree as to who of USA
Tech's personnel is essential to the performance of this Agreement (See Appendix
D for "Key Personnel"). Notwithstanding anything to the contrary in this
Agreement, USA Tech shall immediately notify MEI upon any change in its Key
Personnel (specifically, any Key Personnel that leaves USA Tech's employ for any
reason) and shall make good faith effort to replace any Key Personnel within
sixty (60) days of said personnel's departure.

        25. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon an
inure to the benefit of the parties hereto, their successors and assigns.

        26. SUPERCEDING AND INCORPORATING CLAUSE. The terms and conditions of
this Agreement are deemed incorporated by reference into any and all purchase
orders, agreements or other contracts by and between the Parties without
specifically making reference to same. To the extent a conflict

<PAGE>

exists between the terms and conditions of this Agreement and any previous
agreements between the Parties, the terms of this Agreement will be controlling.

        27. PATENTS, INTELLECTUAL PROPERTY, COPYRIGHT and TRADEMARKS.

        USA Tech owns all right, title and interest in and to the USA Tech
Initial Intellectual Property, MEI owns all right, title and interest in and to
the MEI Initial Intellectual Property. Each Party shall have the sole right to
file for, obtain, maintain, register and extend patent and copyright protection
for any Patent and Copyright, and to control the prosecution of applications,
for the Initial Intellectual Property that it owns. Each Party shall have the
sole right to file for, obtain, maintain, register and extend trademark
protection for any Trademark and to control the prosecution of applications, for
the Initial Intellectual Property that it owns.

        Nothing shall prevent or limit either Party from engaging in research,
development or commercialization for third parties of the Initial Intellectual
Property that it owns or any modifications, enhancements or derivative thereof.

        All right and title to and interest in Intellectual Property Rights
resulting from this Agreement shall be owned either by MEI, USA Tech or jointly
by the Parties. In the event that the development work is completed by one
party, than that party shall own all Intellectual Property Rights. In the event
that the development work is completed jointly by both parties, then both
parties shall own the Intellectual Property Rights. "Intellectual Property
Rights" means, collectively, the Patent Rights, Information and Inventions and
Trademark Rights arising from this Agreement, but does not include 1) Copyrights
pertaining to the Activities and Information and Inventions that are able to be
copyrighted, which shall be owned by MEI to the extent they pertain to
components of transactional electronics or by USA Tech to the extent they
pertain to credit card transaction devices and 2) Patent Right or Information
and Inventions to the extent they are created or invented solely by one Party
without assistance from the other Party as evidenced by written records, in
which case such Patent Right or Information and Inventions shall be owned solely
by the inventing or creating Party.

        Under the performance of this Agreement, USA Tech and MEI shall promptly
disclose to the other in writing the development, making, conception or
reduction to practice of all Information and Inventions related to the Product,
the interface specification or the Telemeter, whether created or discovered
solely by a Party or jointly. However, in the case of any dispute whether a
Patent Right or Information and Inventions fall within 2) above, the burden of
proof shall be borne by the Party asserting that the Patent Right or Information
and Inventions were created or invented with its assistance.

        At no time shall this Agreement be construed as granting any rights to
or interests in one Party with respect to the property or equipment of the other
Party. Neither party shall acquire any interest in the name, trademarks or trade
name (whether registered or not) of the other nor use them in publicity releases
or advertising, or in any other matter, including customer lists, without
securing the prior written approval of the other. The proscription against such
unauthorized publicity shall apply also to such publicity regarding the name of
MEI, or its divisions, subsidiaries and/or corporate affiliates.

        28. SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be.

<PAGE>

        29. HEADINGS. Section headings used herein are for convenience of
reference use only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

        30. NOTICES. Except as otherwise provided herein all notices and other
communications required under the terms and provisions hereof shall be in
writing and shall become effective when delivered by hand or received by
overnight courier or registered first class mail, postage prepaid, addressed as
follows:

            a) If to MEI,

               Andrea M. Grassi, Commercial Manager: Contracts & Services

               MEI
               1301 Wilson Drive
               West Chester, PA 19380
               Phone: (610) 430-2500, Fax: (610) 430-2694

            With copy to:

               Cary M. Sagady, Marketing Manager, Business Innovation'

            b) If to USA Tech:
               Michael K. Lawlor, Senior Vice President Sales & Marketing
               USA Technologies, Inc.
               200 Plant Avenue
               Wayne, PA 19087
               Phone: (610) 989-0340, Fax: (610) 989-0344

            c) If to any of the foregoing Parties at such other address as such
Party shall from time to time designate in writing to the other Parties hereto.

        31. ENTIRE AGREEMENT. This Agreement contains the entire Agreement
between the Parties and all understandings and agreements heretofore between the
Parties are merged into this Agreement. This Agreement may be modified or
amended only in writing, signed by both Parties hereto or their duty authorized
agents.

        32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.

        IN WITNESS WHEREOF, the Parties hereto hereby execute this Agreement and
agree to be bound by its terms.

Mars Electronics International, Inc.

ATTEST:                                     BY:
        ------------------------------           -------------------------------

ATTEST:                                     BY:
        ------------------------------           -------------------------------

<PAGE>

USA Technologies, Inc.

ATTEST:                                     BY:
        ------------------------------           -------------------------------

                                  APPENDIX A -
                       Product Pricing and Financial Fees
       (To Be Determined at the end of the Development Phase, based on the
                  cost and pricing parameters specified below)

A. The target cost for the Product will not exceed $120.00 per unit. Each Party
will have the same percent profit margin on the Product. Notwithstanding, both
Parties will target a 30% margin on their product cost. The target selling price
of the Product to the customer is $200.00. The selling price shall be exclusive
of the 5% MEI sales commission and is based on a quantity of 10,000 units. In
the event Product sales exceed 10,000 units during the term of this Agreement,
both parties will mutually agree upon next tier pricing.

B. In the event that financial services associated with the Product exceed
$10.00 due to increased costs incurred by USA Tech, USA Tech will document and
notify MEI in writing of the increased costs and implement the new credit card
services fees in 30 days from the date of notification. Any monthly service fee
increase will not exceed a 10% increase on an annual basis.

C. MEI will receive a residual income from the financial services based upon USA
Tech providing the financial services to MEI and/or a MEI customer. For the
first 10,000 Product being installed, USA Tech will pay ME[ a residual of $1.00
per Product per month. USA Tech will pay MEI a $2.00 residual per month per
Product upon 10,001 Product being installed and USA Tech continues to provide
MEI and/or MEI customers with financial services.

D. Payment to be made to MEI on a quarterly basis is linked to new sales of the
Product by MEI Sales Associates and/or USA Tech Sales Associate (See Section 3).

E. USA Tech will provide MEI and ME] customers with financial services rates on
a cost + 0.25% basis. In the event that financial services rates provided by USA
Tech to MEI or to MEI customers exceed 6% due to increased costs incurred by USA
Tech from the USA Tech credit card processor, USA Tech will document and notify
MEI in writing of the increased costs and implement the new processing rates in
30 days from the date of notification. In no event shall financial service rates
increase more than 10% on an annual basis.

F. In the event that ME] and USA Tech do not extend the agreement past the
initial two (2) year term of this Agreement, USA Tech will continue to provide
financial services to MEI and/or to MEI customers for a period of two (2)
additional years from the termination date of this Agreement in accordance with
E above.

<PAGE>

APPENDIX B

Development Phase
for USA Technologies / MEI System

The new Product will be developed by USA Technologies during the course of this
Agreement. The system will partition the card reader mechanics/electronics to
invent a simple interface thereby allowing the reader to utilize the MEI
telemeter. Additionally, the amount of hardware installed in the vending machine
will be reduced.

As seen in the block diagram (Appendix C), there is increased flexibility in how
a system can be configured. The ultimate goal is to validate the card account
and enable the transaction.  With this proposed approach, USA Tech or MEI can
move the card data to an authorization bank.

The intellectual property of each company will be protected. USA Tech will
control the encryption/decryption of card data along with card authorization
while MEI will enable to vending machine with Easitrax(R) hardware.

Work Details:
-------------

                USA TECH                                     MEI: Easitrax
                Card Reader    arrow left --- arrow right    Remote Data
                  "The                                       Port
                Product"                   ^
                                           |
                                           |
                                           |
                                           |
                                        MEI/USA
                                        Tech Joint
                                        Development
                                        of Interface

Time Table of Deliverables:
---------------------------

--------------------------------------------------------------------------------
Deliverable                     Responsibility                  Date
--------------------------------------------------------------------------------
System Specification            MEI/USA Tech                    March 2002
--------------------------------------------------------------------------------
New Card Reader Prototype       USA Tech                        July 2002
--------------------------------------------------------------------------------
MEI Remote Data Port Proto.     MEI                             May 2002
--------------------------------------------------------------------------------
Integration Testing             MEI/USA Tech                    July/August 2002
--------------------------------------------------------------------------------
Press Announcement              MEI                             March 2002
                                                                (prior to Spring
                                                                NAMA)
--------------------------------------------------------------------------------
Sales Plan                      MEI                             September 2002
--------------------------------------------------------------------------------
End of Development Phase;       MEI/USA Tech                    October 2002
Product Launch at Fall NAMA
Show or earlier if
commercially available
--------------------------------------------------------------------------------
Customer Trials                 MEI/USA Tech                    August 2002
--------------------------------------------------------------------------------
Product Release & Ship          MEI/USA Tech                    October 2002
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
Start of Market Phase
10K units sold                  MEI/USA Tech                    Per Agreement
                                                                Parameters
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

<PAGE>

                                   APPENDIX C

                                 USA/MEI System
                                 --------------

                        [PRODUCTION CHART APPEARS HERE]

<PAGE>

                                   APPENDIX D
                         USA TECHNOLOGIES KEY PERSONNEL
                               (To be Determined)

<PAGE><PAGE>
Exhibit 10.39
                          STRATEGIC ALLIANCE AGREEMENT

This Agreement ("Agreement") is effective as of October 15, 2002 ("Effective
Date") by and between ZiLOG, Inc., a Delaware corporation having a place of
business at 532 Race Street, San Jose, CA 95126 ("ZiLOG"), and USA Technologies,
Inc., a Pennsylvania corporation having a place of business at 200 Plant Ave.,
Wayne, PA 19087-3520 ("USAT") (each individually a "Party" and collectively, the
"Parties").

Whereas:

(A)  ZiLOG is a semiconductor company and has developed a web-enabled processor
     that may be used in the retail point of sale market;

(B)  USAT has developed cashless payment technology, including credit or debit
     card payment technology as well as associated financial network systems,
     including its e-PortTM credit/debit card payment technology; and

(C)  The Parties wish to establish a strategic alliance pursuant to which they
     will collaborate on certain projects including, (a) the design and
     development of a point of sale ("POS") reference design and development kit
     to be marketed by ZiLOG and (b) an eZ80 based e-port POS terminal to be
     marketed by USAT to its markets, based on a combination of ZiLOG's
     technology and expertise and USAT's technology and expertise.

NOW THEREFORE, in consideration of the premises and mutual covenants contained
herein, the sufficiency and adequacy of which are acknowledged, and intending to
be legally bound, the Parties agree as follows:

ARTICLE 1 - DEFINITIONS

     Unless defined elsewhere in this Agreement, capitalized terms shall have
     the meanings set forth in this Article 1:

     "Confidential Information" means, with respect to a Party, all proprietary
     or confidential material or information relating thereto obtained in
     connection with this Agreement. Confidential Information shall include all
     communications or data in any form including, without limitation, oral,
     written, graphic, electronic or electromagnetic form, which contain any
     information related to the disclosing Party and/or its products and/or its
     business including, without limitation, processes, patents, technology,
     know-how, techniques, improvements, inventions, business plans and
     strategies, marketing plans, product plans, trade secrets, customer lists,
     supplier lists, transaction methods and relationships between the
     disclosing Party and other entities, clients, financial records or
     information, phone numbers, addresses, security records and methods,
     formulas, development and marketing methods, designs, design practices,
     product or material sources and relationships, potential customers and
     listings, employee information (including, without limitation, employee
     identification, job titles, job duties and compensation), or contractor
     information, any information learned by the receiving Party in the process
     of examining any informa

                                       1
<PAGE>

     tion supplied by the disclosing Party, and any other information of any
     nature and in any form disclosed to the receiving Party by the disclosing
     Party or learned by the receiving Party, which relates to or is useful in
     the disclosing Party's current or anticipated future business operations.
     However, Confidential Information shall not include any information or
     material that: (a) is generally known or becomes generally known to the
     public without impropriety; (b) was independently developed by the
     receiving Party without impropriety; (c) is received from a Third Party who
     obtained such information without im propriety; or (d) whose disclosure is
     compelled by law; provided that any such disclosure shall not otherwise
     affect the confidential nature of any such information.

     "Intellectual Property" means all patents, patent applications, patented
     and unpatented inventions, design rights, copyrights (including, without
     limitation, rights in computer software), know-how and other trade secret
     rights, and all other intellectual property rights and the rights or forms
     of protection of a similar nature or having equivalent or similar effect to
     any of these rights (whether or not any of these rights is registered, and
     including, without limitation, applications for registration of, and rights
     to apply for, any such rights). In the case of patent applications and
     patents, Intellectual Property shall also include all existing and future
     provisional and utility applications, continuations, divisionals,
     continuations-in-part, reissues, reexaminations, foreign counterparts, and
     any other patent application or patent derived therefrom or claiming
     priority thereto.

     "Joint Intellectual Property" means any Intellectual Property in or
     associated with the Joint Technology, exclusive of the ZiLOG Intellectual
     Property and the USAT Intellectual Property.

     "Joint Technology" means Technology that: (a) is related to the subject
     matter of this Agreement; (b) is developed during the Term of this
     Agreement; and (c) is jointly developed by employees of ZiLOG and USAT.

     "Person" means any individual, entity, firm, corporation, partnership,
     association, limited liability company, joint-stock company, trust or
     unincorporated association.

     "POS Reference Design" means the POS reference design, as more particularly
     described in Appendix A, as amended from time to time by the Parties.

     "POS Development Kit" means the POS development kit, as more particularly
     described in Appendix A, as amended from time to time by the Parties.

     "Technology" means any tangible or intangible product, process, article of
     manufacture, work of authorship, data, information software, hardware, or
     other technological subject matter.

     "Third Party" means a Person other than USAT and ZiLOG.

     "USAT Intellectual Property" means all the Intellectual Property in or
     associated with the USAT Technology.

                                       2
<PAGE>

     "USAT Software" means any proprietary software owned or created by USAT as
     more particularly described in Appendix D as modified from time to time.

     "USAT Technology" means Technology related to the subject matter of this
     Agreement that is: (a) owned or controlled by USAT prior to the Effective
     Date; (b) developed or acquired by USAT outside of, or independently of,
     this Agreement; or (c) developed by either Party during the Term of this
     Agreement but which primarily constitutes a modification, improvement, or
     enhancement of, or is otherwise predominantly based on, a USAT Technology.
     For example and without limitation, USAT Technology shall include USAT
     Software that either predates or is developed outside or independently of
     this Agreement, as well as any Technology that is primarily a modification,
     improvement, enhancement thereof or based predominantly thereon.

     "ZILOG Intellectual Property" means all the Intellectual Property in or
     associated with the ZiLOG Technology.

     "ZiLOG Technology" means Technology related to the subject matter of this
     Agreement that is: (a) owned or controlled by ZiLOG prior to the Effective
     Date; (b) developed or acquired by ZiLOG outside of, or independently of,
     this Agreement; or (c) developed by either Party during the Term of this
     Agreement but which primarily constitutes a modification, improvement, or
     enhancement of, or is otherwise predominantly based on, a ZiLOG Technology.
     For example and without limitation, ZiLOG Technology shall include ZiLOG's
     Technology associated with the eZ80 that either predates or is developed
     outside or independently of this Agreement, as well as any Technology that
     is primarily a modification, improvement, enhancement thereof or based
     predominantly thereon.

ARTICLE 2 - RETAIL POS

     2.1  POS Reference Design and Development Kit . The Parties shall use
          commercially reasonable efforts to jointly design and develop the POS
          Reference Design and POS Development Kit.

     2.2  Resources. Each Party shall provide at least two equivalent full time
          employees whose principal focus shall be the completion of the POS
          Reference Design and the POS Development Kit. The selection of any
          such employees shall be in the sole discretion of each Party and may
          be changed at the discretion of the employ ing Party by notifying the
          other Party. The functional capabilities that will be provided by each
          Party are more particularly described on Appendix B.

     2.3  Launch Date. Each Party shall use commercially reasonable efforts to
          Complete the POS Reference Design and POS Development Kit by March 1,
          2003 (the "First Kit"). ZiLOG shall be primarily responsible for
          packaging and commercial readiness of the POS Development Kit and POS
          Reference Design. For purposes of this Section 2.3, "Complete" shall
          mean (a) the POS Reference Design and

                                       3
<PAGE>

          POS Development Kit are in form and substance satisfactory to ZiLOG,
          as more particularly described in Appendix C and (b) the Parties will
          have delivered a single complete POS Development Kit with all of the
          necessary parts and components.

     2.4  Additional Development Kits. After the production of the First Kit,
          each Party shall be responsible for the production and costs of any
          additional POS Development Kits that it needs.

     2.5  Cooperation. Each Party shall use commercially reasonable efforts to
          facilitate the other Party's efforts with respect to the completion of
          the POS Reference De sign and the POS Development Kit.

ARTICLE 3 - eZ80 BASED E-PORT POS TERMINAL

     3.1  Commencement Date. USAT shall commence development of an eZ80 based
          eport POS terminal ("eZ80 Eport") by the later of (a) ninety (90) days
          from the Effective Date and (b) thirty (30) days from the release of
          the relevant eZ80 chip necessary for the development of the eZ80 eport
          (the "Commencement Date").

     3.2  Completion. USAT shall use commercially reasonable efforts to complete
          and release the eZ80 Eport within sixty (60) days of the Commencement
          Date (the "Completion Date"). The Completion Date may be extended to
          the extent that any delay in the completion of the POS Reference
          Design materially affects the Completion Date. 3.3 Responsibilities.
          USAT shall be solely responsible for all work and expenses as sociated
          with the development and completion of the eZ80 eport except that Zi
          LOG shall provide the usual and customary support and services that it
          would or dinarily provide to customers designing products that
          incorporate ZiLOG prod ucts. 3.4 eZ80 Terms and Conditions. ZiLOG
          shall sell any eZ80 family of products to be used with respect to the
          eZ80 eportal to USAT at the best available prices based on the volume
          of purchases by USAT. All other terms and conditions for the sales of
          the eZ80 family of products shall be at ZiLOG's usual terms (as
          modified from time to time), as more specifically described on
          Appendix F.

     3.5  eZ80 eporty Ownership. The eZ80 eport shall be USAT Technology;
          provided that USAT shall not acquire any ownership or other interest
          in any ZiLOG Technol ogy used in the eZ80 eport

                                       4
<PAGE>

ARTICLE 4 - MARKETING

     4.1  POS Development Kits. ZiLOG shall have the right to sell or otherwise
          distribute POS Development Kits to its customers during or after the
          term of this Agree ment. The sale of the POS Development Kits shall
          include all licenses necessary for use in, and during, the customer's
          design process, including, any licenses in connection with the USAT
          Software. If any such customer wishes to license the USAT Software for
          its production phase, then such customer shall be required to obtain a
          license in accordance with Section 4.3.

     4.2  Licenses. Both Parties shall have the right to license the POS
          Reference Design on whatever terms each Party may determine in its
          sole discretion. The Party li censing the POS Reference Design shall
          be entitled to retain any revenue derived from such a license. The
          licensing of the POS Reference Design shall include all licenses nec
          essary for use in, and during, the customer's design process,
          including, any licenses in connection with the USAT Software. If any
          such customer wishes to license the USAT Software for its production
          phase, then such customer shall be required to obtain a license in
          accordance with Section 4.3.

     4.3  USAT Licenses. USAT shall license the USAT Software to any ZiLOG
          customer on the terms set forth on Appendix E as modified from time to
          time; provided that such terms shall at no time be less favorable than
          the terms offered by USAT to its best customers.

     4.4  Marketing Plan. ZiLOG shall offer the POS Development Kits and POS
          Refer ence Design to its customers in the retail point of sale
          markets. USAT shall mar ket the eZ80 sport to its target markets,
          including the vending market and office equipment market. Each Party
          shall prepare and share with the other Party its marketing plan in
          connection with the foregoing.

ARTICLE 5 - PROPRIETARY RIGHTS

     5.1  Ownership by USA . USAT shall solely own the USAT Technology and USAT
          Intellectual Property. To the extent necessary to achieve the
          foregoing, ZiLOG hereby quitclaims and assigns to USAT any ownership
          interest that ZiLOG may have in the USAT Technology and the USAT
          Intellectual Property, and agrees to take any steps, and perform any
          acts, necessary to perfect USAT's title thereto.

     5.2  Ownership by ZiLOG. ZiLOG shall solely own the ZiLOG Technology and
          ZiLOG Intellectual Property. To the extent necessary to achieve the
          foregoing, USAT hereby quitclaims and assigns to ZiLOG any ownership
          interest that USAT may have in the ZiLOG Technology and the ZiLOG
          Intellectual Property, and agrees to take any steps, and perform any
          acts, necessary to perfect ZiLOG's title thereto.

     5.3  Joint technology

                                       5
<PAGE>

          (a)  Minimal Applicability. Notwithstanding anything to the contrary,
               it is un derstood that:

               (i)  Joint Technology, ZiLOG Technology and USAT Technology are
                    all mutually exclusive; and In the event that any Technology
                    could plausibly constitute Joint Technology and either ZiLOG
                    Technology or USAT Technology, such Technology will be
                    deemed to constitute either ZiLOG Tech nology or USAT
                    Technology but not Joint Technology.

          (b)  License Grant. To the extent that making, using, selling,
               offering to sell, importing, displaying or performing the Joint
               Technology would other wise require a license under a Party's
               Intellectual Property, that Party hereby grants to the other
               Party a worldwide, perpetual, irrevocable, non exclusive,
               royalty-free license (without the right to sublicense except to
               its Customers) under the granting Party's Intellectual Property
               to make, use, sell, offer to sell, import, publicly display, or
               publicly perform the Joint Technology.

          5.4  Ownership of Joint Technology The Parties shall jointly own any
               Joint Technology (including any Joint Intellectual Property). The
               Parties recognize that joint ownership of the Joint Intellectual
               Property does not, by itself, imply any license under the
               Parties' separate Intellectual Property, which license may be
               required to use the Joint Technology.

          5.5  Third Party Intellectual Property. Neither Party shall
               intentionally and knowingly incorporate any Technology or
               Intellectual Property belonging to or controlled by any Third
               Party in the Joint Technology, or require the use of such Third
               Party's Intellectual Party in such Joint Technology, unless: (a)
               the Party seeking to in corporate such Third Party Intellectual
               Property has a license to such Third Party's Intellectual
               Property (including the right to sublicense to the other Party
               and its Customers); (b) obtains for the other Party (and its
               customers) a license thereunder; or (c) obtains the other Party's
               permission to incorporate such Third Party's Intellectual
               Property into such Joint Technology.

          5.6  Patent Applications.

               5.6.1 Notification. When either Party develops any invention that
                    might constitute, include or be included within the other
                    Party's Intellectual Property, the developing Party shall
                    provide the other Party with written notice thereof.

               5.6.2 Separate Intellectual Property Each Party shall have the
                    sole right to file, and be fully responsible for, the
                    prosecution of any patent applications relating to its own
                    Intellectual Property.

                                       6
<PAGE>

               5.6.3 Joint Intellectual Property. The Parties shall take all
                    commercially reasonable action to protect the Joint
                    Intellectual Property, including protecting all copyrights,
                    trademarks, patents, and trade secrets under applicable law.
                    In this regard, the Parties shall confer with each other and
                    decide how to pursue protection for any Joint Intellectual
                    Property and how to allocate the costs and filing
                    responsibilities between them. The Parties recognize: (1)
                    that in situations where each Party makes an inventive
                    contribution to at least one claim of a patent, the Parties
                    will by operation of law be considered joint inventors under
                    the patent, even where the Parties made unequal
                    contributions thereto; (ii) that such joint inventors will
                    by operation of law be considered joint owners of the entire
                    patent, including those claims that were "invented" solely
                    by one Party; (iii) that such joint ownership set forth in
                    (ii) would be inconsistent with the terms and conditions of
                    this Agreement because claims "invented" solely by one Party
                    should be that Party's Intellectual Property; but (iv) that
                    the inconsistency set forth in (iii) cannot be resolved by
                    partitioning ownership of the patent on a claim-by-claim or
                    field-of-use basis (because such partitioning is contrary to
                    law).

                    Therefore, in order to facilitate the intent of this
                    Agreement as expressed in this Article 5, neither Party
                    shall unilaterally file any patent application: (a)
                    containing any claim which, if it had been filed alone and
                    apart from any other claim in the application, would
                    constitute Joint Intellectual Property; or (b) claiming any
                    invention that is supported by a disclosure involving the
                    other Party's Technology or Intellectual Property; rather,
                    the Parties shall meet to allocate filing and prosecution
                    responsibilities prior to filing any such application.

                    In the event a Party violates this Section, the other Party
                    shall have the right, in addition to any other remedies
                    available to it, to seek injunctive or other equitable
                    relief to en oin such acts, it being specifically
                    acknowledged by the Parties that any other remedies may be
                    inadequate.

     5.7  Publications. Before either Party submits papers or abstracts for
          publication or otherwise publicly discloses subject matter (including
          research or development results) relating to Joint Technology, Joint
          Intellectual Property, or the other Party's Technology or Intellectual
          Property, such Party shall inform the other Party, and provide the
          other Party with a copy of the proposed submission or dis closure, at
          least one (1) month before such submission or disclosure. Upon re
          quest of the informed Party, the informing Party shall delay the
          publication or dis closure for up to three (3) months in order to
          allow the informed Party sufficient time to protect its patent rights
          or other Intellectual Property rights, both in the United States and
          abroad.

     5.8  Defense of Joint Technology

                                       7

<PAGE>

          5.8.1 Joint Defense. The Parties agree to take all actions necessary,
               including litigation, to defend any Joint Technology (including
               any Joint Intellectual Property), the Parties shall agree on a
               mutually acceptable defense strategy (a "Joint Defense"). Each
               Party shall share equally in all related third party costs and
               expenses (including legal fees) arising in connection with any
               such Joint Defense (the "Joint Defense Costs"). Subject to
               Section 4.8.2, any recovery (a "Recovery") from such a Joint
               Defense shall be shared equally by the Parties.

          5.8.2 Failure to Pay. If either Party fails to pay its share of the
               Joint Defense Costs (the "Defaulting Party"), then the
               non-defaulting Party shall have the right, but not the
               obligation, to make any necessary payments on behalf of the
               Defaulting Party. The non-defaulting Party shall be fully
               reimbursed for any such payments plus interest of 10% per annum
               on the amount of such payments (collectively, the "Payment
               Reimbursement") before the Defaulting Party shall be entitled to
               its share of any recovery; provided, that the non-defaulting
               Party shall be entitled to deduct and setoff any such Payment
               Reimbursement from any related Recovery. In addition, for so long
               as the Defaulting Party is in default of any such payment
               obligations (including any prior and outstanding Payment
               Reimbursements), the non-defaulting Party shall have the right to
               make all decisions with respect to the Joint Defense.

     5.9  Use of Other Party's Marks. Each Party shall submit to the other Party
          for its approval all promotional and advertising material that uses
          the other Party's name, trademarks, brands or logos, prior to any
          public or commercial use of such material.

ARTICLE 6 - REVENUE FROM JOINT TECHNOLOGY

     6.1  Revenue from Joint Technology. The Parties agree that any Net Revenue
          gener- ated by the licensing or sale of any Joint Technology, other
          than through the mar keting or sale of the POS Reference Design and
          the POS Development Kits, shall be shared equally. For purposes of
          this Article 5, "Net Revenue" means gross revenue less all actual
          direct costs and expenses associated with any such licens ing or sale
          of Joint Technology and specifically excludes the cost of overhead,
          the Party's sales force, sales commissions and other such indirect
          costs.

     6.2. Quarterly Payments. Any share of the Net Revenue due to the other
          Party shall be paid within 45 days after the end of each quarter and
          shall be accompanied by a full accounting of the payment, including
          the gross revenue and any direct costs and expenses deducted in
          determining the Net Revenue.

     6.3  Audit. Each Party (the "Auditing Party") shall have the right to audit
          the other Party's books and records in connection with any Net Revenue
          upon reasonable notice and at reasonable times but no more frequently
          than twice per calendar

                                       8
<PAGE>

          year. The cost of any such audit shall be borne by the Auditing Party,
          unless the audit reveals discrepancies in favor of the Auditing Party
          in excess of 10% above the amount previously paid to the Auditing
          Party. In this case, the full cost of such audit shall be borne by the
          other Party.

ARTICLE 7 - REPRESENTATIONS AND WARRANTIES; PERFORMANCE

     7.1  Representation and Warranties. NEITHER PARTY MAKES ANY REPRESENTATIONS
          OR WARRANTIES WITH REGARD TO THE PERFORMANCE OF ANY OF ITS OBLIGATIONS
          UNDER THIS AGREEMENT. EACH PARTY HEREBY DISCLAIMS ANY WARRANTIES OF
          ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT
          LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
          PURPOSE, OR ERROR-FREE PERFORMANCE (WHETHER OR NOT THE ERROR IS
          DISCOVERABLE).

     7.2  Performance. Each Party shall:

          (a)  Use commercially reasonable skill and care in the performance of
               its obligations;

          (b)  Document its activities related to the activities under this
               Agreement by maintaining a properly witnessed, hardbound
               laboratory notebook (to the extent applicable) accessible to the
               other Party upon request;

          (c)  Perform its obligations under this Agreement in conformance with
               the standards generally observed in the industry for similar
               services, at the time of such performance; and

          (d)  Perform its obligations in accordance with any due date agreed
               between the Parties or, in any event, in a timely and
               professional manner.

ARTICLE 8 - TERM AND TERMINATION

     8.1  Term. This Agreement shall commence on the Effective Date and shall
          continue in force for five years and shall automatically be renewed
          for one year periods unless notified by the other Party no less than
          60 days prior to end of the current year that it does not wish to
          renew this Agreement or earlier terminated pursuant to this Article 8
          or Section 11.2 (the "Term").

     8.2  Termination for Breach. Each Party shall have the right, without
          prejudice to its other rights or remedies, to terminate this Agreement
          immediately by written notice to the other Party if the other Party:

                                       9
<PAGE>

          (a)  Has materially breached any of its obligations under this
               agreement and either the breach is incapable of remedy or the
               other Party shall have failed to remedy that breach within thirty
               (30) days after receiving written notice requiring it to remedy
               that breach;

          (b)  Becomes bankrupt, insolvent or subject to an order for
               liquidation, ad ministration, winding-up or dissolution; or

          (c)  Makes any assignment for the benefit of creditors.

          This right of termination is in addition to any right that the
          terminating Party may have to claim damages or seek any other legal or
          equitable remedies.

     8.3  Termination for Convenience. Either Party may terminate this Agreement
          with out cause at any time upon two (2) months written notice to the
          other Party. 8.4 Survival. The following provisions shall survive
          expiration or termination of this Agreement for any reason:

          (a)  Articles 4, 5, 6, 8, 9 and 10; and

          (b)  any provision that plainly indicates that it should survive.

ARTICLE 9 - LIMITATIONS ON LIABILITY

     9.1  Generally. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
          DIRECT, INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGES, INCLUDING LOSS OF
          BUSINESS, PROFITS OR GOODWILL, WHETHER ARISING FROM NEGLIGENCE, BREACH
          OF CONTRACT OR OTHERWISE, EVEN IF SPECIFICALLY INFORMED OF OR
          OTHERWISE HAVING A REASON TO KNOW, OF THE LOSS OR DAMAGE.

     9.2  Damage to Persons or Property . Neither Party shall make any claim
          against, or be liable to, the other Party with respect to any injury,
          death, damage, or loss to per sons or property involved in operations
          undertaken pursuant to this Agreement, whether such injury, death,
          damage, or loss arises through negligence or other wise.

     9.3  Delayed Performance. Neither Party shall make any claim against the
          other Party for damages or other for any delay (including a deferral,
          suspension or postpone ment) in the performance of any of its
          obligations under this Agreement.

                                       10

<PAGE>

ARTICLE 10 - CONFIDENTIALITY

     Except as specifically authorized herein, neither Party shall disclose or
     use for any purpose outside the scope of this Agreement, any Confidential
     Information acquired or learned by such Party (including its employees,
     directors, officers, agents and/or contractors) from or about the other
     Party, except with such other Party's prior written permission. In the
     event that a Party is compelled by law to disclose Confidential Information
     of the other Party, such Party shall provide the other Party with notice of
     such compelled disclosure and a reasonable opportunity to contest it and
     shall seek a protective order. In the event a Party seeks to divulge or
     otherwise improperly use any such Confidential Information, the other Party
     shall have the right right in addition to any other remedies available to
     it, to seek injunctive or other equitable relief to enjoin such acts, it
     being specifically acknowledged by the Parties that any other remedies may
     be inadequate. Upon expiration or termination of this Agreement for any
     reason, each Party shall return any Confidential Information of the other
     Party (which may include that Party's Technology or Deliverables) to the
     other Party; provided that each Party may keep one copy of any such
     Confidential Information for compliance or litigation purposes so long as
     it is kept confidential in accordance with this Agreement. Any unauthorized
     submission or disclosure, in violation of Section 5.7, shall be considered
     a breach of this Article 10. This Article 10 shall survive any termindation
     of this Agreement.

ARTICLE 11 - MISCELLANEOUS

     11.1 Relationship Between the Parties. The Parties are independent
          contractors to each other, and nothing in this Agreement shall be
          deemed to create an employment, partnership, or agency relationship.

     11.2 Force Neither Party shall be liable to the other for any delay or
          nonperformance of its obligations under this Agreement arising from
          any cause beyond its reasonable control including, without limitation,
          any of the following: act of God, governmental act, war, fire, flood,
          explosion, accident, civil commotion, labor stoppage or impossibility
          of obtaining materials. Subject to the affected Party promptly
          notifying the other Party in writing of the cause and the likely
          duration of the cause, the performance of the affected Party's
          obligations, to the extent affected by the cause, shall be suspended
          during the period that the cause persists provided that, if
          performance is not resumed within two (2) months after the date of
          that notice, the other Party may by notice in writing terminate this
          Agreement with immediate effect, notwithstanding any obligations of
          the Parties under this Agreement.

                                       11
<PAGE>

     11.3 Assignment. Except as authorized herein, neither Party shall assign,
          transfer (whether by operation of law or otherwise) or otherwise part
          with any of its rights, or delegate or subcontract any of its duties
          or obligations under this Agreement, without the prior written consent
          of the other Party, except that, upon notice to the other Party,
          either Party may assign or transfer its rights, duties, and
          obligations under this Agreement to a wholly owned subsidiary, or to a
          Third Party acquiring the whole or a majority of its stock, assets, or
          intellectual property, pertaining to the subject matter of this
          Agreement, without the consent of the other Party. This Agreement
          shall be binding on and inure to the benefit of any heirs, permitted
          assignees, permitted transferees, or permitted successors.

     11.4 Waivers. A waiver (whether express or implied) by either Party of any
          of the provisions of this Agreement or of any breach of or default by
          the other Party in performing any of those provisions shall not
          constitute a continuing waiver and that waiver shall not prevent the
          waiving Party from subsequently enforcing any of the provisions of
          this Agreement not waived or from acting on any subsequent breach of
          or default by the other Party under any of the provisions of this
          Agreement.

     11.5 Amendments. Except as authorized herein, no amendment, waiver or
          variation of this Agreement shall be binding on the Parties unless set
          out in writing, expressed to amend this Agreement and signed by or on
          behalf of each of the Parties.

     11.6 Severability. The invalidity, illegality or unenforceability of any of
          the provisions of this Agreement shall not affect the validity,
          legality and enforceability of the remaining provisions of this
          Agreement.

     11.7 Entire Agreement. This Agreement constitutes the entire agreement
          between the Parties pertaining to the subject matter hereof, and
          supersedes all previous agreements and understandings between the
          Parties. Except as authorized herein, this Agreement may not may be
          modified except via a writing signed by both Parties.

     11.8 Governing Law and Jurisdiction. This Agreement is governed by and
          shall be construed in accordance with the laws of the State of New
          York, without giving effect to its choice of laws provisions. Each
          Party submits to the jurisdiction and venue of the Federal courts
          located in New York County, New York, for all purposes relating to
          this Agreement.

     11.9 Notices. All notices, consents, requests, demands or other legal
          communications between the respective Parties shall be in writing and
          shall be effective for all purposes upon receipt, including without
          limitation, in the case of: (i) personal delivery; (ii) delivery by
          messenger, express or air courier or similar courier; (iii) delivery
          by United States first class certified or registered mail, postage
          prepaid; (iv) transmittal by telecopier or facsimile and confirmed by
          the recipient; or (v) transmittal by e-mail, if addressed as follows:

                                       12
<PAGE>

           If to USAT:                 200 Plant Avenue
                                       Wayne, PA 19087
                                       Att: H. Brock Kolls,
                                       Senior Vice President
                                       (610) 989-0340 (Voice)
                                       (610) 989-0344 (fax)
                                       E-mail: sherbert@usatech.com
           If to ZiLOG:                532 Race Street
                                       San Jose, CA 95126
                                       Att: Senior Vice President,
                                              System Development
                                       (408) 558-8500 (voice)
                                       (408) 558-8300 (fax)
                                       E-mail: nsheridan@zilog.com

          Either Party may change its address by written notice to the other in
          the manner set forth above. Receipt of communications sent under (iii)
          or (iv) of this Article will be sufficiently evidenced by return
          receipt. In the case of illegible or otherwise unreadable facsimile
          transmissions, the receiving Party shall promptly notify the
          transmitting Party of any transmission problem and the transmitting
          Party shall promptly resend any affected pages.

     10.10 Counterparts. This Agreement may be executed in multiple
          counterparts, each of which shall be deemed an original, and
          counterpart signature pages may be assembled to form a single original
          document.

     10.11 Headers. The headings in this Agreement shall not affect its
          interpretation.

In witness whereof, the Parties have executed this Agreement on the dates set
forth below.

Zilog INC.                                        USA TECHNOLOGIES, INC.

By /S/ Mike Burger                                By /S/ Stephen P. Herbert
  --------------------------                        ----------------------------

Name: Mike Burger                                 Name: Stephen P. Herbert
Title: President                                  Title: President

Date: 10/15/02                                    Date: 10/15/02

                                       13
<PAGE>

                                   Appendix A

                             POS REFERENCE DESIGN
                                       &
                               POS DEVELOPMENT KIT

                                       14
<PAGE>

                     Zilof/Usa Technology DRAFT - Appendix A
                         POS Development Kit Description

The POS Development Kit will be composed of two major components shown in Figure
1; the ereference design (A) and the POS peripheral board (B).

                               (Graphic Omitted)

Figure 1 - e-PortTm reference design and POS peripheral board

e-PortTm REFERENCE DESIGN:
--------------------------

     With respect to the e-PortTm reference design, ZiLOG and USA will focus on
developing a low cost e-PortTm reference design targeted at the economy
(low-end) POS market. The e-port reference design will initially include the
following functionality:

1)   Utilize ZiLOG eZ80Tm processor technology;

2)   An "out-of-the-box" limited use version of USAlive TM (non-web-based
     version) for testing, and prototyping as well as be capable of accessing
     the web enabled version of the USALiveTm network

     a)   Will utilize USA's turnkey banking process;

     b)   Will be networked to USA's USALiveTm network;

3)   e-Port'rm test software

POS PERIPHERAL BOARD.
---------------------

     With respect to the POS peripheral board, ZiLOG and USA will focus on
creating a peripheral board, which can showcase the features of the e-PortTm
reference design and also provide the standard peripherals and communication
interfaces required for the point-of-sale market.

                                       15
<PAGE>

The POS peripheral board will initially include the following:

1) Connector for e-PortTm reference design
2) Footprint for communication modules
3) Connector for hybrid card reader
4) Footprint for 2x16 LCD screen
5) Serial interface
6) Printer interface
7) Keypad interface
8) Power supply
9) Jtag or Zdi debug connector
10) Connector for eZ80Tm Webserver development platform

The POS Development Kit will contain the following:
---------------------------------------------------

1) e-PortTm REFERENCE DESIGN

2) POS PERIPHERAL BOARD - Items I and 2 combine to comprise the development
board

3) Test Cards - for card reader

4) Assigned Merchant ID Number

5) Development Tools
     a) Embedded Software Design tools - ZDS H

6) Example application
     a) Instruction Manual to make application work

7) Development Board Drivers

8) PC applications
     a) Software that runs on the PC to authenticate a transaction
     b) Terminal configuration software
     c) Common development tools

9) USALive network software

10) Necessary cables, connectors, and power supplies.

                                       16
<PAGE>

                                   Appendix B

                        EMPLOYEE FUNCTIONAL CAPABILITIES

                                       17
<PAGE>

The POS Development Kit will be composed of two major components shown in Figure
I of Appendix A; the ePortTm reference design (A) and the POS peripheral board
(B). Below is a list of major tasks for creating the ePor Tm reference design,
POS peripheral board, software, and kit release.

Ref. Design and Peripheral Board
Ref Design Hardware
                   Schematic Pinout        USAT Board Design
                   Verification            Engineer USAT Board Design  Engineer
                   Interface Debug         USAT Embedded  Systems  Engineer
                   Functional Testing      USAT Embedded  Systems  Engineer
                   Documentation delivery  USAT Embedded  Systems Engineer

PCB                PCB Layout              ZiLOG PCB Layout Designer
                   PCB mfg-xx Boards
                   PCB Assembly

Peripheral Board Hardware
            Schematic Pinout               ZiLOG Board Design  Engineer
            Verification                   ZiLOG Board Design  Engineer
            Interface Debug                ZiLOG Embedded  Systems  Engineer
            Functional Testing             ZiLOG Embedded  Systems  Engineer
            Documentation delivery         ZiLOG Embedded Systems Engineer

PCB
           PCB Layout                      ZiLOG PCB Layout Designer
           PCB mfg-xx Boards
           PCB Assembly

Software

   Embedded SW Design Tools (ZDS)            USAT Embedded Software Engineer
   Development Brd Drivers                   USAT Embedded Software Engineer
   Example E-Port Application                USAT Embedded Software Engineer
   E-Port Application Manual                 USAT Embedded Software Engineer
   USALive network software                  USAT Embedded Software Engineer
   PC Simulation Application                 USAT Embedded Software Engineer
   First Article Application                 USAT Embedded Software Engineer
   /integration testing
                                             USAT Embedded Systems Engineer
                                             ZiLOG Embedded Software Engineer
                                             ZiLOG Embedded Systems Engineer

POS Development Kit Creation
          Full Release Testing               ZiLOG Embedded Software Engineer
          Quick Start Guide                  ZiLOG Embedded Systems Engineer
Kit List and Build
          Create Bill of Materials           ZiLOG Board Design Engineer
          Order components, boards, etc.     ZiLOG Board Design Engineer
          Build                              ZiLOG Board Design Engineer
      Package Design                         ZiLOG Graphic Artist
   ZiLOG Part Number Creation
          Web Entry for Kit availability     ZiLOG IT

                             Position Descriptions:

                                       18
<PAGE>

Embedded Systems Engineer

Able to design, develop and troubleshoot complex hardware and software solutions
for systems that require embedded microcomputer command and control. Perform
systems modeling, simulation and analysis in designing embedded systems.
Responsibilities also include the creation of documentation for new hardware and
software designs.
Qualifications:

*    BSEE, minimum (or its equivalent) Proven experience designing
     microcontroller-based systems, including communications protocols and IP
     networking
*    Minimum of 5 years directly related experience
*    Outstanding verbal and written communication skills
*    Strong team orientation

Embedded Software Engineer

Generate detailed embedded software requirements specifications from high-level
product specifications, then drive the development of the software architecture,
design, implementation, integration and testing of software applications for a
next generation platform of embedded POS terminal. Develop and implement
embedded software/firmware for the development of new products. Design and
coding tasks will include Application Programming Interfaces (APIs), task
Queuing, communications protocol stacks, command/message parsers for commodity
and custom microprocessor based systems. Ensure software/firmware test/release
procedures are followed. Follow up on the release of new revisions or bug fixes.
Work very closely with hardware design engineers in the new product development.
Qualifications:

* BS or NIS in Computer Engineering, Software Engineering,
* Electrical Engineering, or Computer Science
* Five years experience in design and implementation of embedded systems and
software.
* Expert knowledge of C or C++ and assembly language.
* Experience with RTOS, device driver, application interface design, electrical
engineering, and digital logic design including the ability to read a schematic.
* Experience with VHDL or other FPGA tools and 8-bit microcontroller
architectures desirable.
* Software programming experience in several of the following areas: data
communication (industrial fieldbus, RS485-232, USB, TCP, UDP, SDI-12, RF, etc.),
data logging, A/D data acquisition control and intelligent sensor networks.

Board Design Engineer

Hardware design responsibility for logic design of circuit board assemblies,
schematic captures, vendor and customer interface, component selection.
Directing layout designer to complete PCB layout, circuit board prototyping, lab
bring-up, and debug. Design, debug and bring up printed circuit boards. Find
chip related bus protocol problems and work with hardware and software groups to
find resolution.
Qualifications:

o    BSEE (or its equivalent)
o    Possess strong board / digital / analog design experience using high-speed
     microprocessors and their supporting chipsets, memory technologies, bus
     technologies, system 1/0 interface, field programmable gate arrays (FPGAs)
     and ASICs.
o    Strong knowledge and expertise in schematic capture and layout CAD tools
     and library support.
o    Requires a strong understanding of AGP, PCI, SDRAM/DDR, TMDS, LVDS, USB,
     Ethernet, IB, and ASIC(s).

PCB Layout Designer

Support product development efforts by successfully translating engineering
schematics to physical models. In volves working with design engineers to design
printed circuit boards and modifying existing circuit boards to fa cilitate
engineering changes.
Qualifications:

o    Associates Degree

o    Recent (moderate to extended) direct experience in the design of

o    analog/digital board schematic capture and layout through production.

o    Must have proficiency in all facets of design; experience with mixed signal
     layouts

                                       19
<PAGE>

containing both digital devices and sensitive analog signal circuits.

                                       20
<PAGE>

                                   Appendix C

                         ZILOG REQUIREMENTS FOR RELEASE
                                       OF
                               POS DEVELOPMENT KIT

                                       21
<PAGE>

1.   PURPOSE

     1.1. This document provides definitions for the severity of bugs and
          guidelines for releasing the POS reference design kit.

2.   SCOPE

     2.1. These guidelines apply to the POS reference design kit developed
          jointly by Zilog and USAT.

3.   BUG DEFINITIONS

     3.1. Catastrophic Bug (Level 1): A major bug that causes the operating
          system to crash and/or destroys data. No workaround exists and the
          customer cannot proceed until this item is fixed.

     Examples:

     o    A write memory to disk command overwrites the entire disk space
     o    Invoking a command locks up the system and only a reset recovers.

     3.2. Major Bug (Level 2): A major malfunction bug that renders the product
          useless to the customer. No work-around exists. The customer can do
          almost no more useful work.

     Example:

     o    The STOP command of the debugger fails to return control of the MCU to
          the user.

     3.3. Severe Bug (Level 3): A significant error that prevents customer usage
          and is in a critical function so as significantly reduce the
          usefulness of the product. A workaround does not exist or is so
          difficult or time consuming to use as to render it useless. The
          customer can still do useful work bug at a slower rate or in other
          areas of their project. The customer's project deadline is usually
          adversely affected.

     Example:
     o    The memory change command does not work. Using the memory set command
          is a work-around.

     3.4. Routine Bug: (Level 4): An error that impedes customer usage but is
          not in a critical system function. A work-around does not exist or is
          hard to use. The customer can still proceed with useful work and
          complete their project.

     Example:
     o    Memory Search command fails with a range over 32K.

                                       22
<PAGE>

     3.5. Minor Bug (Level 5): A minor error that does not prevent customer
          usage from completing their design. A work-around always exists and is
          easy to use.

     Examples:

     o    Typo in User's Manual or Help file.
     o    Garbage character displayed along with all required data.

     3.6. Enhancement Request (Level 6): A request to enhance the product
          functionality in hardware, software or documentation.

     Examples:

     o    Add an option to the memory search command to report all non-matches.
     o    Add a troubleshooting section to the user's manual.

4.   RELEASE GUIDELINES

     4.1. Never ship with Level 1 or 2 bugs.

     4.2. Shipping with Level 3 bugs is discouraged and requires Support
          Products Director or Manager approval.

     4.3. Excessive amounts (over 5) of Level 4 bugs will prevent product
          release/shipment.

                                       23

<PAGE>

                                   Appendix D

                                 USAT SOFTWARE

                                       24
<PAGE>

<TABLE>
<CAPTION>
---------------------------------- --------------------------------- --------------------------------
Software                           Type                              Description
---------------------------------- --------------------------------- --------------------------------
<S>                                <C>                               <C>
e-PortTMtest software              PC based - Visual Basic ver-      PC-development board
                                   sion                              interface software
---------------------------------- --------------------------------- --------------------------------
e-PortTm reference design          Assembly/C/C++/object             Reference design board
firmware                                                             eZ80 based firmware
---------------------------------- --------------------------------- --------------------------------
Reference Design Configu-          PC based -Visual Basic ver-       Terminal configuration
ration Software                    sion                              software, settings, opera-
                                                                     tional parameters
---------------------------------- --------------------------------- --------------------------------
USALive Network Soft-              PC based - Visual Basic ver-      Development board call in
ware                               sion                              software, loads/runs on a
                                                                     single PC
---------------------------------- --------------------------------- --------------------------------
</TABLE>

                                       25
<PAGE>

                                   Appendix E

                               USAT LICENSE TERMS

                                       26
<PAGE>

                           SOFTWARE LICENSE AGREEMENT

Licensor:

USA Technologies, Inc.
200 Plant Avenue
Wayne, PA 19087

End User:
---------

-----------------------------------

-----------------------------------

-----------------------------------

-----------------------------------

Effective
Date:
    -------------------------------

     INTENDING TO BE LEGALLY BOUND, and in consideration of the mutual
agreements stated below, Licensor and End User agree as follows:

SECTION I.: DEFINED TERMS
-------------------------

          1. "Affiliated Party" means, with respect to a given Person, any
Person which, directly or indirectly, controls, is controlled by, or is under
common control with, the given Person.

         2. "Documentation" means all user, operating, programming and training
manuals, technical information, and other documentation and materials provided
by or on behalf of Licensor to End User in connection with the Software.

         3. "Licensing Fee" means the license fees and payment terms applicable
to this License Agreement, as defined and described on Schedule 1.3.

         4. "Licensor Materials" means the Software, the Documentation, all
confidential information, materials and trade secrets relating to Licensor or
any Affiliated Party of Licensor.

         5. "Liability" means any suit, action, proceeding at law or in equity,
claim (groundless or otherwise), liability, loss, damage, payment, deficiency,

                                       27
<PAGE>

settlement, penalty, fine, cost and legal and other expense (including
reasonable attorney fees and disbursements and court costs).

         6. "Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, association, firm, trust, estate, governmental agency,
regulatory authority, or any other legal entity.

         7. "Software" means the e-Port software and all modifications and
updates provided by or on behalf of Licensor to End User.

          8. "System" means the Software and the Documentation.

SECTION II.: GRANT OF LICENSE

          1 . Non-Exclusive Grant. In exchange for the Licensing Fees, Licensor
hereby grants to End User a nonexclusive license to use the Software and the
Documentation in the manner set forth in this Agreement. Licensor expressly
reserves the night to reproduce, publish, sell, license and distribute the
Software and Documentation to any Persons.

         2. Non-transferrable. The license granted hereby is non-transferable.
End User may not sell, assign or otherwise transfer any portion of the System to
any Person, sublicense any Person to use any portion of the System or permit any
Person to use the System, except as expressly provided in this Agreement.

         3. Permitted Uses. In connection with the License granted by this
Agreement, End User may do the following:

                  A. Have the Software installed in accordance with Licensor's
instructions.

                  B. Use and execute the Software only on the microprocessor
specified by type and identification number set forth in Schedule 2.3.

                  C. Use the System solely for the purposes of a "single
contract relationship". Without limiting the generality of the foregoing, End
User may not use any portion of the System in connection with any other service
or supply relationship.

         4. Restrictions. End User may only use the Software, Documentation and
the Licensor Materials as specifically authorized in this Agreement. Without
limiting the generality of the foregoing, End User is subject to the following
restrictions:

                                       28

<PAGE>

Strategic Alliance Agreement                     Final Draft - October 14, 2002

          A. End User may not use, copy, modify, alter, transfer or distribute
the Software or Documentation (electronically or otherwise), or any copy,
adaptation, transcription, or merged portion thereof, except as expressly
authorized in this Agreement, or otherwise in a writing signed by Licensor.

          B. End User may not reverse assemble, reverse compile, or otherwise
translate the Software.

          C. End User may not install the Software in any system or use it at
any location, other than as set forth in Section 2.3, without Licensor's prior
written consent. If End User uses, copies, or modifies the Software or if End
User transfers possession of any copy, adaptation, transcription, or merged
portion of the Software to any other party in any way not expressly authorized
by Licensor, End User's license hereunder will automatically terminate.

          D. End User may not demonstrate the Software before, or use the
Software in the presence of, any third parties, without Licensor's prior written
consent after first disclosing to Licensor who such third parties are and the
purpose therefor. Licensor may withhold such consent for any reason.

          E. End User shall act in accordance with the rules of the industry
segment in which the End User operates, including various applicable merchant
agreements.

SECTION III: WARRANTIES AND LIMITATIONS
---------------------------------------

     1. Software Conforms to Documentation. Licensor warrants, for End User's
benefit alone, that the Software conforms in all material respects to the
Documentation for the current version of the Software. This warranty is
expressly conditioned on End User's observance of the operating instructions set
forth in the Documentation. Licensor is not responsible for obsolescence of the
Software that may result from changes in End User's requirements. The foregoing
warranty shall apply only to the most current version of the Software issued by
Licensor from time to time. Licensor assumes no responsibility for the use of
superseded, outdated, or uncorrected versions of the Software.

     2. End User's Exclusive Reme . As End User's exclusive remedy for any
material defect in the Software for which Licensor is responsible, Licensor
shall attempt through reasonable effort to correct or cure any reproducible
defect by issuing corrected instructions, a restriction, or a bypass. In the
event Licensor does not correct or cure such nonconformity or defect after it
has had a reasonable opportunity to do so, End User's exclusive remedy shall be
to terminate this Agreement. Licensor shall not be obligated to correct, cure,
or otherwise remedy any nonconformity or defect in the Software if End User has
made any changes whatsoever to the Software, if the Software has been misused or
damaged in any respect, or if End User has not reported to

                                       29

<PAGE>

Strategic Alliance Agreement                  Final Draft - October 14, 2002

Licensor the existence and nature of such nonconformity or defect promptly upon
discovery thereof.

     3. Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR
DISCLAIMS ANY AND ALL PROMISES, REPRESENTATIONS, AND WARRANTIES WITH RESPECT TO
THE SOFTWARE AND THE DOCUMENTATION INCLUDING ITS CONDITION, ITS CONFORMITY TO
ANY REPRESENTATION OR DESCRIPTION, THE EXISTENCE OF ANY LATENT OR PATENT
DEFECTS, ANY NEGLIGENCE, AND ITS MERCHANTABILITY OR FITNESS FOR A PARTICULAR
USE.

     4. Limitations on Liability . Neither Licensor, nor any Affiliated Party of
Licensor, shall have or suffer any liability for loss of data or documentation,
it being understood that End User is responsible for reasonable backup
precautions. In no event shall Licensor or any Affiliated Party of Licensor be
liable for any loss of profits; any incidental, special, exemplary, or
consequential damages; any claims or demands brought against End User, or any
other Liability whatsoever, even if Licensor has been advised of the possibility
of such claims or demands. This limitation upon damages and claims is intended
to apply without regard to whether other provisions of this Agreement have been
breached or have proven ineffective.

SECTION IV.: SUPPORT SERVICES
-----------------------------

     Licensor shall support the System in the manner specified in Schedule 4.
However, Licensor offers support only for the most current version of the
Software issued by licensor from time to time, so End User is responsible for
prompt substitution and/or incorporation of all new releases or fixes issued by
Licensor pursuant to its warranty and support programs.

SECTION VI: END USER'S RESPONSIBILITIES
---------------------------------------

     Hardware. Licensor assumes no responsibility under this Agreement for
obtaining or providing the hardware. End User is also responsible for ensuring a
proper environment and proper utilities for the computer system on which the
Software will operate, including an uninterrupted power supply.

SECTION V1I: OWNERSHIP AND CONFIDENTIALITY
------------------------------------------

     1. Ownership. Licensor shall have sole and exclusive ownership of all
right, title, and interest in and to the Licensor Materials, the System and all
modifications and enhancements of the System (including ownership of all trade
secrets and copyrights pertaining thereto), subject only to the rights and
privileges expressly granted to End User herein by Licensor. This Agreement does
not provide End User with title or ownership of the Software or Documentation,
but only a right of limited

                                       30

<PAGE>

Strategic Alliance Agreement                     Final Draft - October 14, 2002

use. End User must keep the Software free and clear of all claims, liens, and
encumbrances.

     2. Not Impair Licensor's Rights. During the term of this Agreement and at
all times thereafter, End User will not contest or impair, directly or
indirectly, licensor's ownership of the Software, Documentation or any of the
Licensor Materials.

3. Confidentiality.

          A. The Licensor Materials, including the ideas and expressions thereof
which are contained therein, are acknowledged by End User to be confidential,
proprietary information of Licensor, and trade secrets of great value to
Licensor.

          B. The Licensor Materials are provided to End User for the exclusive
use of End User strictly in accordance with the provisions of this Agreement,
and shall be held in confidence by End User. End User shall not in any manner or
form disclose, provide, or otherwise make available, in whole or in part, the
Licensor Materials or any other confidential proprietary information of Licensor
to any Person (other than End User's employees in the scope of their
employment). End User shall take all appropriate action, whether by instruction,
agreement or otherwise with its employees and others to ensure the protection,
confidentiality and security of the Licensor Materials. End User agrees to use
at least the same degree of care in maintaining the confidentiality of such
information and materials that End User exercises in maintaining the
confidentiality of its own trade secrets and confidential information and
materials.

          4. Remedies. End User acknowledges that, in the event of End User's
breach of any of the provisions of this Agreement, licensor will not have an
adequate remedy in money or damages. licensor and/or an Affiliated Party of
licensor, as applicable, shall be entitled to obtain an injunction against such
breach issued by any court of competent jurisdiction immediately upon request.
The right of Licensor or an Affiliated Party of licensor to obtain injunctive
relief shall not limit its or their right to seek further remedies available in
law or in equity.

SECTION VII CLAIM OF INFRINGEMENT
---------------------------------

          If a third party claims that the Software infringes its patent,
copyright, or trade secret, or any similar intellectual property right, Licensor
will take commercially reasonable steps to remedy the alleged infringement,
including obtaining an appropriate license for the Software, provided that End
User promptly notifies Licensor in writing of the claim. If such a claim is made
or appears possible, End User agrees to permit Licensor to enable End User to
continue to use the Software, or to modify or replace the Software and/or
Documentation. If licensor determines that none of these alternatives is
desirable or is reasonably available, End User agrees to de-install and to
return all copies of the Software and/or Documentation on licensor's written
request and the

                                       31

<PAGE>

Strategic Alliance Agreement                     Final Draft - October 14, 2002

license provided for herein shall ten-ninate. Notwithstanding the foregoing,
Licensor has no obligation for any claim based on End User's modification of the
Software or its combination, operation, or use with any product, data, or
apparatus not specified or provided by Licensor, provided that such claim is
based on such combination, operation, or use and such claim would be avoided by
combination, operation, or use with products, data, or apparatus specified or
provided by Licensor. THIS PARAGRAPH STATES LICENSOR'S ENTIRE OBLIGATION TO END
USER WITH RESPECT TO ANY CLAIM OF INFRINGEMENT.

SECTION V111.: AUDIT RIGHTS
---------------------------

End User hereby authorizes Licensor, or an authorized agent of Licensor, to work
with End User's OEM partner who is installing the Software in order to track the
number of microprocessors in which the Software has been installed. Licensor
understands that any trade secrets or other confidential information and
materials of End User that are disclosed or discovered through such audit may be
valuable assets of End User; Licensor agrees to use at least the same degree of
care in maintaining the confidentiality of such information and materials that
Licensor exercises in maintaining the confidentiality of its own trade secrets
and confidential information and materials.

SECTION IX.: TERM; TERMINATION
------------------------------

     1. Term. This Agreement is effective as of the date hereof, and shall
continue until ten-ninated as provided herein.

     2. Termination.

          A. This Agreement shall automatically terminate upon End User ceasing
to use the Software.

          B. This Agreement shall automatically terminate immediately upon End
User's material a] breach of this Agreement, provided that End User shall have
failed to cure any such breach within 30 days notice thereof by Licensor.

          C. This Agreement may be terminated at any time by Licensor for its
convenience upon 30-days prior notice to End User, at no cost to Licensor.

     3. Effect of Termination. Upon termination of this Agreement, 0 tights
granted to End User will terminate and revert to Licensor. Promptly upon
termination of this Agreement for any reason or upon discontinuance or
abandonment of End User's possession or use of the System, End User must
de-install all portions of the Software from the hardware, and return or
destroy, as requested by Licensor, all copies of the Software and Documentation
in End User's possession (whether modified or

                                       32

<PAGE>

Strategic Alliance Agreement                     Final Draft - October 14, 2002

unmodified), and all other materials pertaining to the System (including all
copies thereof). End User agrees to certify in writing End User's compliance
with the requirements of this Section 9.3, upon Licensor's request. For a period
of 12 months after the termination of this Agreement, End user shall permit
Licensor, or an authorized agent of Licensor, to enter End User's premises and
to inspect End User's computer equipment and facilities in order to verify End
User's compliance with this Section 9.3. Licensor understands that any, trade
secrets or other confidential information and materials of End User that are
disclosed or discovered through such audit may be valuable assets of End User;
Licensor agrees to use at least the same degree of care in maintaining the
confidentiality of such information and materials that Licensor exercises in
maintaining the confidentiality of its own trade secrets and confidential
information and materials.

     4. Surviving Provisions. The following provisions of this Agreement shall
survive any termination of this Agreement: Sections 3, 6 and 9.3.

SECTION X.: GENERAL PROVISIONS
------------------------------

     1. Relationship between Parties. The relationship between Licensor and End
User is that of independent contractors, and not partners, joint ventures or
agents. Neither party has any authority to bind the other party in any manner.
Neither party will be liable for any debts or liabilities of the other party,
and, except as otherwise provided in this Agreement, each party will be
responsible for its own expenses incurred in performing its obligations under
this Agreement.

     2. Entire Understanding. This Agreement, together with the exhibits and
schedules to this Agreement, state the entire understanding between the parties
with respect to the subject matter hereof and supersede all earlier and
contemporaneous oral and written communications and agreements with respect to
the same subject matter. Except as expressly provided herein, neither this
Agreement, nor any exhibit or schedule to this Agreement, may be amended or
modified except in a written document signed by both parties.

     3. Additional Documents. Each of the parties hereto shall take or cause to
be taken all actions, or do or cause to be done all things, or execute and
deliver any and all documents, instruments and writings, necessary, convenient,
proper or advisable to consummate, make effective, and carry out the terms and
provisions of this Agreement.

     4. Parties in Interest. This Agreement will bind, benefit, and be
enforceable by End User and Licensor, and their respective successors and, to
the extent permitted hereby, assigns. Without the prior written consent of
Licensor, End User may not assign, sublicense or subcontract any of its rights
or obligations under this Agreement to any Person. Nothing herein expressed or
implied is intended or shall be construed to confer upon or to give to any
Person, other than the parties hereto, their

                                       33

<PAGE>

Strategic Alliance Agreement                    Final Draft - October 14, 2002

respective successors and permitted assigns, any rights or remedies under or by
reason of this Agreement.

     5. No Waivers. No failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by either party, and no course of
dealing between the parties, will constitute a waiver of, or will preclude any
other or further exercise of, the same or any other right, power or remedy.

     6. Severability. If any provision of this Agreement is construed to be
invalid, illegal or in unenforceable, then the remaining provisions will not he
affected thereby and will be enforceable without regard thereto.

     7. Section Headings. Section and subsection headings are for convenience of
reference only, do not constitute part of this Agreement, and will not affect
its interpretation.

     8. Inclusion. As used in this Agreement, the word "including" means
"including but not limited to."

     9. Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without reference
to choice of law principles.

     WITNESS THE DUE EXECUTION AND DELIVERY HEREOF AS OF THE DATE FIRST STATED
ABOVE.

USA TECHNOLOGIES, INC.

By:
  -------------------------------

Name
and Title:
         ------------------------

END USER:
        -------------------------

By:
   ------------------------------

Name
and Title:
         ------------------------

                                       34

<PAGE>

Strategic Alliance Agreement                    Final Draft - October 14, 2002

                                   Appendix F

                       ZILOG STANDARD TERMS AND CONDITIONS

                                       35

<PAGE>

Strategic Alliance Agreement                   Final Draft - October 14, 2002

1. GENERAL

These Standard Terms and Conditions of Sale and those noted on the front of
ZiLOG's Sales Order Acknowledgment (collectively hereinafter "Terms and
Conditions") shall govern all sales by ZiLOG to Buyer. These Terms and
Conditions shall be construed as an offer or counteroffer and shall not be
construed as an acceptance of Buyer's Purchase Order. After the last Sales Order
Acknowledgment is submitted by ZiLOG to Buyer, no modification or addition
thereto shall be binding on either party unless it is in writing and, signed by
both parties. Products ("Products") shall mean any of the Product Types listed
in Section 7(c) below.

2. TERMS OF PAYMENT

All Products sold to Buyer will be invoiced upon shipment by ZiLOG. Terms of
payment shall be net thirty (30) days from date of invoice, subject to the
approval of the ZiLOG Credit Department. ZiLOG reserves the right to require
payment in advance, C.O.D. or to otherwise modify credit terms. ZiLOG reserves
the right to charge interest from the date payment is due, at the maximum legal
rate on all delinquent accounts.

3. TAXES

Buyer shall provide to ZiLOG any applicable correctly completed tax exemption
certificate(s). Otherwise, Buyer shall pay to ZiLOG, in addition to the prices
provided for herein, any foreign or domestic duty, sales or use tax, transfer
tax, excise tax or similar charge (exclusive of taxes based on net income or net
worth) which ZiLOG may be required to pay with respect to the production,
manufacture, sale, transportation, storage, delivery or use of Products sold
hereunder.

4. SHIPMENT AND DELIVERY

(A) Unless otherwise specified, delivery will be made F.O.B. Destination for
sernicon ductor components, board level products, development systems,
microcomputer systems, and/or peripherals. All goods sold hereunder will be
delivered to a carrier who shall be se lected by ZiLOG unless Buyer requests in
writing use of another carrier. All risks of loss will pass to Buyer upon
delivery by ZiLOG to the carrier. ZiLOG shall exert good faith ef forts to make
all shipments in accordance with delivery dates noted in Buyer's copy of Zi
LOG's Sales Order Acknowledgment.

(B) Each shipment made hereunder shall be considered a separate transaction. In
the event of default by Buyer, ZiLOG may decline to make further shipments. If
ZiLOG elects to continue to make shipment, such action shall not constitute a
waiver of any default by Buyer or any provision of these Terms and Conditions.

                                       36

<PAGE>

Strategic Alliance Agreement                   Final Draft - October 14, 2002

(C) Buyer shall indemnify and defend ZiLOG against any and all claims or losses
to Zi LOG resulting from the negligent or other unlawful acts of a carrier
selected by Buyer.

5. SECURITY INTEREST

ZiLOG hereby reserves a purchase money security interest in the goods sold
hereunder and all the proceeds thereof, including, but not limited to, insurance
proceeds to secure performance of all Buyer's payment obligations under this
Agreement. Buyer's failure to pay any amount when due shall give the ZiLOG the
right to repossess and remove the goods, provided that such repossession and
removal shall not be made from any customer of Buyer's except upon ten (10) days
prior notice to Buyer. Such repossession and removal shall be without prejudice
to any of ZiLOG's other remedies at law or in equity. Buyer agrees, without
further consideration, at any time to do or cause to be done, to execute and to
deliver all such further acts and instruments as ZiLOG may reasonably request in
order to perfect ZiLOG's security interest in the goods, including without
limitation, a financing statement appropriate for filing. If Buyer, for whatever
reason, fails to sign a financing statement after ZiLOG has reasonably requested
that Buyer sign such a financing statement, Buyer agrees that ZiLOG shall have
the authority as Buyer's attorney-in-fact to sign the financing statement as
Buyer's agent.

6. INSPECTION AND ACCEPTANCE

The performance of the Product shall be in accordance with the ZiLOG Customer
Procurement Specifications referenced on the front hereof. The Buyer shall
inspect and accept the Products within two (2) weeks of the date of Buyer's
receipt or four (4) weeks from the date of ZiLOG's shipment, whichever is the
shorter period. Any claim for Products not conforming to the Customer
Procurement Specifications must be made in writing within this period. ZiLOG has
the right to examine at Buyer's premises, any products the Buyer claims are
nonconforming. ZiLOG has the right to impose a reasonable rescreening charge (of
not less than 25 cents per unit for semiconductor components) if shipments
returned to ZiLOG are found to be within the Acknowledgment Quality level.
Repairs that are ZiLOG's responsibility may be made, at ZiLOG's election, at
Buyer's premises.

LIMITED WARRANTY

(A) Hardware: ZiLOG warrants for the applicable period as set forth in
subsection (C) that Products will be free from defects in workmanship or
material under normal use and service. ZiLOG's obligation under this warranty
shall not arise until Buyer returns the de fective product, freight prepaid to
ZiLOG's facility. ZiLOG's sole obligation under this war ranty shall be, at its
option, to replace or repair, without charge, any defective Product or component
part of such Products.
(B) Software and Firmware: ZiLOG warrants for the period set forth in subsection
(C) that Software and Firmware supplied hereunder shall be free of material
defects and conform to published ZiLOG specifications. ZiLOG's sole obligation,
and Buyer's sole remedy shall be for ZiLOG to exert its best efforts to correct
such defects and to supply Buyer with a cor rected version within a reasonable
time after Buyer notifies ZiLOG in writing of any defect.

                                       37

<PAGE>

Strategic Alliance Agreement                    Final Draft - October 14, 2002

This warranty does not cover any modifications to the Software and Firmware made
by any person other than ZiLOG, or defects caused by, or otherwise related to,
such modification.

(C) Effective period of warranty:

         PRODUCT TYPE                            FROM DATE OF SHIPMENT
         Board Level Products  )
         Development Systems   )                      90 Days
         Microcomputer Systems )
         Peripherals           )
         Software/Firmware                            90 Days, unless otherwise
stated
         Semiconductor Components                  1 Year
         Semiconductor Die or Wafers                   See (E) below

Any replacement of Products, or components thereof, under this warranty shall
not extend the period of the warranty which was applicable at the initial sale
of the Product.

ZiLOG shall not be liable under this warranty if (i) the Products which Buyer
alleges are defective have been repaired or altered by anyone other than ZiLOG's
designated personnel or authorized representative unless such repair or
alteration was effected pursuant to the prior written approval of ZiLOG or (ii)
testing and examination by ZiLOG reveals the alleged defect to have been caused
by Buyer's misuse, neglect, improper installation or any other cause beyond the
range of intended use of the Products or by accident, fire or other hazard.

(D)       Buyer or Buyer's customer retains sole responsibility for all
          Software, Information or
Memory Data stored on or integrated with any of the Products returned under this
warranty. In some cases, products sold pursuant to this Sales Order
Acknowledgment may have been used and refurbished by ZiLOG before sale
hereunder. ZiLOG warrants all such refur bished products perform identically to
all new products sold by ZiLOG.

(E) Semiconductor wafers or die are sensitive to handling, environmental
conditions, and performance alterations during Buyer's assembly and test of
Products. ZiLOG makes no warranty concerning these wafers or die other than that
they were manufactured and tested in accordance with ZiLOG's usual manufacturing
and test practices. Buyer is responsible for testing these wafers and die
products within two (2) weeks of the date of Buyer's receipt or four (4) weeks
from the date of ZiLOG's shipment, whichever is the shorter period. Any claim
for nonconformance must be made before this period expires or before Buyer com
mences assembly of the Product. AFTER BUYER BEGINS ASSEMBLY OR THE TIME PERIODS
SPECEFIED ABOVE EXPIRE, THE PRODUCT IN DIE OR WAFER FORM SHALL BE DEEMED SOLD TO
BUYER ON AN "AS IS" BASIS, AND ZILOG SHALL NOT WARRANTY TEE PERFORMANCE OF
THE-PRODUCT.

                                       38

<PAGE>

Strategic Alliance Agreement                     Final Draft - October 14, 2002

7. LIMITS OF LIABILITY AND INDEMNIFICATION

(A) THE WARRANTIES OF ZILOG SET FORTH ABOVE ARE IN LIEU OF, AND BUYER HEREBY
WAIVES ALL OTHER WARRANTIES OF ZILOG, EXPRESS OR
IMPLIED, ARISING OUT OF OR IN CONNECTION WITH, THE SALE OF PRODUCTS, OR THE USE,
INSTALLATION OR PERFORMANCE THEREOF, IN THE COURSE OF DEALING OR PERFORMANCE
UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

(B) ZILOG SHALL NOT BE LIABLE TO BUYER, TO BUYER'S CUSTOMERS OR TO ANY OTHER
PERSON, AND BUYER AGREES TO INDEMNIFY ZILOG WITH
RESPECT TO ANY CLAIM FOR INCIDENTAL, SPECIAL, INDIRECT, PUNITIVE, OR
CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFIT, AND LOSS OF PLANT, EQUIPMENT OR
PRODUCTION ARISING FROM THE SALE OR SUBSEQUENT USE OF PRODUCTS.

(C) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL THE
TOTAL LIABILITY OF ZiLOG ARISING OUT OF THESE TERMS AND CONDITIONS OR THE USE OR
PERFORMANCE OF THE PRODUCTS EXCEED THE SUM OF THE AMOUNTS PAID BY BUYER FOR THE
PRODUCTS.

8. PATENT INFRINGEMENT INDEMNIFICATION

(A) ZiLOG agrees, at its own expense, to defend Buyer and any customer thereof
("in denmitee") from and against any claim, suit or proceeding, and to pay all
judgements and costs finally awarded against Buyer or said customer by reason of
claim, suit or proceeding insofar as it is based upon an allegation that the
Products or any part thereof furnished by ZiLOG infringe any letter patent, if
ZiLOG is notified properly of such claim in writing and is given authority and
full and proper information and assistance (at ZiLOG's expense) for defense of
the same. In case such Products, or any part thereof, are held in such suit to
con stitute infringement and the use of Products or any part is enjoined, ZiLOG
shall at its sole discretion and at its own expense: (1) procure for the
indemnitee the right to continue using the Products or part; (2) replace or
modify the same so that it becomes noninfringing; or (3) remove such Products or
part thereof and grant indemnitee a credit for the depreciated value of the
same.

(B) The indemnitee shall have the right to employ separate counsel in any claim,
suit or proceeding set forth in paragraph (A) and to participate in the defense
thereof, but the fees and expenses of the indemnitee's counsel shall not be
borne by ZiLOG unless: (1) ZiLOG specifically so agrees; or (2) ZiLOG, after
notice and without cause does not assume such defense. ZiLOG shall not be liable
to indemnify indemnitee for any settlement-effected without ZiLOG's consent,
which consent shall not be unreasonably withheld.

(C) The indemnification set forth in subsection 9(A) shall not apply and Buyer
shall indemnify ZiLOG and hold it harmless from all liability or expense
(including costs of suit and attorney's fees) if the infringement arises from,
or is based upon ZiLOG's compliance with

                                       39

<PAGE>

Strategic Alliance Agreement                   Final Draft - October 14, 2002

particular requirements of Buyer or Buyer's customer that differ from ZiLOG's
standard specifications for the Products, or modifications or alterations of the
Products, or a combination of the Products with other items not furnished or
manufactured by ZiLOG.

(D) Buyer agrees that ZiLOG shall not be liable for any collateral, incidental,
punitive or consequential damages arising out of any patent infringement.

(E) The foregoing states the entire liability of ZiLOG for patent infringement.

9. FORCE MAJEURE

Neither party to this Agreement shall be responsible or liable to the other
party, to any third party for any damages including, without limitation,
incidental and consequential damages, arising out of, nonperformance or delay in
performance of the terms and conditions herein due to acts of God, wars, riots,
strikes, unavailability of suitable and sufficient labor, materials, die or
capacity or technical or yield failures and except as provided in section 4(C)
above, any unforeseen event-beyond its control.

If any such events occur, ZiLOG may, in its sole discretion, allocate production
and deliveries among any and all of its customers and for its own requirements
for further manufacture and other use.

10. PROPRIETARY RIGHTS

Buyer agrees that ZiLOG retains proprietary rights in and to all Product
specifications, designs and engineering details for Products, to all ZiLOG
designed Software and Firmware, to all manuals marked as proprietary, to all
discoveries, inventions, patent and other proprietary rights arising out of work
done in connection with any contract between Buyer and ZiLOG, and to all other
information or assistance of a technical nature provided to Buyer by ZiLOG that
is not so provided for reproduction or delivery to Buyer's customers. Buyer
warrant that it will not disclose in any manner to any third person information
to which ZiLOG retains proprietary rights therein.

11. CANCELLATION, RESCHEDULE AND FAILURE TO RELEASE

(A) If Buyer cancels shipment of any purchase order, or a portion of any
purchase order, or reschedules without prior agreement by ZiLOG any purchase
order, or a portion of any purchase order, the following charges may, at ZiLOG
option, be assessed and invoiced by ZiLOG.

Product                Notice Received            Cancellation/Reschedule
Type                   Prior to                                   Charges:

                       Schedule Date:
Commercial              0 - 30 days                  No cancellations allowed
                                                  15% restocking charges apply

                                       40
<PAGE>

Strategic Alliance Agreement                  Final Draft - October 14, 2002

Military                0 - 60 days                  No cancellations allowed
                                                   100% invoice charges apply

ROM                     0 - 60 days                  No cancellations allowed
                                                   Invoice for Work-in-Process
for                                                or 100% invoice charges
                                                   for finished goods.

IrDA Custom Product"    0 - 90 days                  No cancellations allowed
                                                   Invoice for Work-in-Process
                                                     or 100% invoice charges
                                                      for  finished goods.

ROM CODE VARIATIONS: Since ROM Coded Products are custom products made
specifically for Buyer, Buyer agrees that ZiLOG may ship a quantity of such ROM
Coded Products which is five percent (5%) more or less than the quantity ordered
and that such variation will be accepted as delivery in full and paid for by
Buyer.

*Notice shall be calculated from the Customer Request Date confirmed in the most
recent Sales Order Acknowledgment.

** An IrDA Custom Product constitutes any transceiver that deviates from its
standard manufacturing flow to specifically suit the requirements of one
customer. This transceiver is assigned a special part number, and can only be
used by Buyer for which it was produced.

(B) ZiLOG price quotations and acknowledgments are dependent upon quantity and
schedule. If Buyer does not release the full quantity quoted and acknowledged
within the time frame stated on the quotation, ZiLOG reserves the right, at
ZiLOG's sole discretion, to either invoice the full quantity quoted and
acknowledged within the time frame stated on the quotation or to invoice for a
higher price in accord with ZiLOG's price schedule for the lower quantity
actually released by Buyer.

12. REMEDIES AND DAMAGES

(A) If Buyer rightfully and timely rejects or justifiably revokes acceptance of
items or if Buyer has accepted nonconforming items and has timely notified ZiLOG
of a breach of war ranty, Buyer's sole and exclusive remedy will be for ZiLOG
(at ZiLOG's option) to repair, replace or credit Buyer/Buyer's-account with
respect to any nonconforming goods returned to ZiLOG during the applicable
warranty or inspection period set forth above and with re spect to any
nonconforming services on the condition that (i) ZiLOG is promptly, upon Buyer's
discovery of the nonconformity, notified in writing with a detailed explanation,
(ii) ZiLOG issues a Return Material Authorization ("RMA") number for return of
goods F.O.B. ZiLOG's designated plant and (iii) ZiLOG's examination discloses
that such items are non conforming. Such RMA shall be effective for forty-five
(45) days from issuance date.

                                       41
<PAGE>

Strategic Alliance Agreement                     Final Draft - October 14, 2002

(B) ZiLOG has the right to terminate this Agreement if in ZiLOG's sole judgment

Buyer's financial condition does not justify the terms of payment applicable
from time to time and upon demand, Buyer does not immediately comply with any
modification of payment terms required by ZiLOG in accordance with paragraph 2.

13. SOFTWARE AND FIRMWARE

Software and Firmware shall be licensed by ZiLOG upon Buyer's execution of the
applicable ZiLOG Software License Agreement which along with these Standard
Terms and Conditions of Sale, shall govern the use of ZiLOG Software and
Firmware.

14. EXPORT OR REEXPORT REQUIREMENTS

Buyer and ZiLOG shall comply with all export laws of the United States. Export
directly or indirectly of these Products, or goods containing these Products to
any other country may be prohibited unless Buyer obtains prior export or
re-export authorization from the United States Government. Buyer shall hold
ZiLOG harmless and indemnify it for any fines, penalties or other liability,
(including attorney's fees) that result from Buyer's failure to meet these
obligations.

15.  GENERAL

(A) This Agreement and the Sales Order Acknowledgement constitute the entire
agree ment between the parties and supersedes all prior agreements and
understandings between
them relating to the subject matter hereunder and no modification of this
Agreement shall be binding on either party unless it is in writing and signed by
both parties.

(B) No waiver of any provision of this Agreement shall be effective unless made
in writing.

(C) Buyer and ZiLOG agree that this Agreement is made and entered into in, and
shall be governed by the laws of , the State of California. Buyer and ZiLOG
consent to jurisdiction of any state or federal court in California to resolve
any claim or controversy arising from or in any manner related to the
transaction documented in this Agreement.

(D) Section headings are for convenience only and shall not be considered in the
inter pretation of this Agreement.

(E) The plural shall include the singular, and the singular shall include the
plural when ever used.

(F) The provisions of this Agreement are severable and if any one or more such
provi sions are judicially determined to be illegal or otherwise unenforceable,
in whole or in part, the remaining provisions or portions of this Agreement
shall nevertheless be binding on and be enforceable by and between the parties.

                                       42

<PAGE>

Strategic Alliance Agreement                  Final Draft - October 14, 2002

(G) The prevailing party in any legal action brought by one party against the
other shall be entitled, in addition to any other rights and remedies it may
have, to reimbursement for its expenses incurred thereby, including court costs
and reasonable attorney's fees.

(H) All notices required or permitted hereunder shall be in writing and shall be
person ally delivered or dispatched by, prepaid first-class airmail or by fax
and sent to the address indi cated.
This Agreement may not be terminated by Buyer without ZiLOG's prior written
consent. If ZiLOG so consents to such termination, Buyer shall be liable for
termination charges, in cluding without limitation, a price adjustment based on
the quality of products actually de livered and all costs direct and indirect,
incurred and committed for this Agreement together with reasonable allowance for
prorated expenses and anticipated profits.

(1) An action for breach of contract for sale or any other legal or equitable
cause of ac tion arising from or in any manner related to the order specified in
the Quotation or Sales Order Acknowledgment must be commenced within one (1)
year after the cause of action has occurred.

                                       43

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}]]