8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): March 14, 2005

VendingData Corporation
(Exact name of registrant as specified in its charter)

Nevada	00-32161	91-1696010
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

6830 Spencer Street, Las Vegas, Nevada	89119
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (702) 733-7195

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1 of 7

SECTION 2 — FINANCIAL INFORMATION

Item 2.03     Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

          On March 14, 2005, VendingData Corporation (the “Company”) received the remaining commitments under its previously announced $10 million private placement of 10% senior secured convertible notes due February 2008 (the “February Senior Notes”) and completed an additional $2 million private placement of 10% senior secured convertible notes due March 2008 (the “March Senior Notes” and, together with the February Senior Notes, the “Senior Notes”). For additional information with respect to the terms and conditions of the February Senior Notes, please see the Company’s Current Report on Form 8-K dated February 9, 2005 and filed with the Securities and Exchange Commission on February 15, 2005.

          The March Senior Notes will be issued on a pari passu basis with the February Senior Notes and, as a result, are secured by a first priority security interest in the Company’s assets. The March Senior Notes require semi-annual payments of interest only on September 1 and March 1 of each year, with the principal and any unpaid interest due at maturity of the March Senior Notes. Any prepayments of the March Senior Notes made prior to March 2007 require the payments of premiums that decline each year, and notice of prepayment requires a thirty (30) day advance notice to the holders of the March Senior Notes. Holders of the March Senior Notes have a one-time right to convert up to 50% of the then outstanding principal of the March Senior Notes into shares of the Company’s common stock, $.001 par value, at a conversion price of $1.65 per share.

          Through the private placement of the March Senior Notes, the Company issued an aggregate of $2,000,000 in March Senior Notes, in return for gross cash proceeds of $2,000,000. Subject to the reasonable discretion of the Company’s management, the proceeds from the private placement of the March Senior Notes are to be used to fund the Company’s inventory, operating losses and general corporate purposes as follows:

PROPOSED USE	AMOUNT	%
Fund inventory	500,000	25.0%
Fund operating losses	500,000	25.0%
Placement fees	80,000	4.0%
Other general corporate purposes	920,000	46.0%
	$2,000,000	100.0%

          The portion of the net proceeds of the private placement of the March Senior Notes designated as “other general corporate purposes” excludes the acquisition of companies or products, the repurchase of the Company’s common stock, the issuance of the dividends or other matters not specifically set forth above.

          Release of Proceeds. As with a portion of the net proceeds from the private placement of the February Senior Notes, the Company’s access to the net proceeds from the private placement of the March Senior Notes is subject to the satisfaction of three conditions. As a result of these conditions, the net proceeds from the private placement of the March Senior Notes are to be released as follows:

• One-third (1/3) of the total proceeds held in escrow shall be released to the Company upon the execution of a distributor agreement with TCS John Huxley or an affiliate thereof and the sale and service outside the United States of one hundred (100) units of the Company’s RandomPlus™ shuffler and PokerOne™ shuffler, where such events must occur no later than June 30, 2005;

2 of 7

• One-third (1/3) of the total proceeds held in escrow shall be released to the Company upon the hiring by the Company of a North American manager of operations or Chief Operating Officer, where such person shall be hired no later than June 30, 2005; and

• One-third (1/3) of the total proceeds held in escrow shall be released to the Company upon the approval of the Company’s RandomPlus™ shuffler by Gaming Laboratories International and the Nevada State Gaming Control Board and the placement of one hundred (100) units of the Company’s RandomPlus™ shuffler in North America, where such approvals and shuffler placement must occur no later than June 30, 2005.

          As a result of these conditions, and in light of the issuance of $3,250,000 in February Senior Notes in exchange for previously issued notes and the Company’s immediate access to $2,000,000 from the prior placement of the February Senior Notes, the Company held in escrow $6,750,000 from the proceeds from the remaining February Senior Notes and the placement of the March Senior Notes. Through the appointment of Mark Newburg to the Company’s board of directors as executive director on March 11, 2005, the Company has satisfied the second condition listed above. Accordingly, the Company has access to an additional $2,250,000 with two conditions that remain to be satisfied as of the date of this Report on Form 8-K.

          In the event that the Company fails to meet any of the three conditions, the Company will return the relevant portion of the escrowed proceeds, without interest, within thirty (30) days. The return of any proceeds would reduce the amount available for general corporate purposes.

          Exemption from Registration. The March Senior Notes and the underlying shares of common stock issuable upon conversion of the March Senior Notes have not been registered under the Securities Act of 1933 (the “Securities Act”) or any state securities laws and may not be offered or sold in the Untied States absent registration or an applicable exemption from such registration requirements. The March Senior Notes were issued pursuant to the private placement exemption under Section 4(2) of the Securities Act and pursuant to Rule 506 of Regulation D. The Company was able to rely on Rule 506 of Regulation D because the Company only offered the March Senior Notes to accredited investors as that term is defined by Rule 501 of Regulation D

          Registration Rights. Notwithstanding the foregoing, the Company is obligated to file a registration statement within thirty (30) days of the closing date of the March Senior Notes with the Securities and Exchange Commission on Form S-3 to register the shares into which the March Senior Notes are convertible, to cause the same to be declared effective within one hundred twenty (120) days of the date of the March Senior Notes and to maintain the effectiveness of the registration statement. Any breach of the foregoing obligations will result in a one-half percent (0.5%) increase in the applicable interest rate under the March Senior Notes for each thirty (30) day period of non-compliance, up to a maximum fourteen percent (14%) increase.

          Security; Default. In order to issue the March Senior Notes on a pari passu basis with the February Senior Notes, the Company and the holders of the Senior Notes entered into an Intercreditor Agreement, an Amended and Restated Security Agreement and an Amended and Restated Collateral Agent Agreement. In order to provide for the orderly administration of the rights of the holders of the Senior Notes, the holders of the Senior Notes appointed Premier Trust, Inc. to act as their collateral agent and, among other things, exercise any remedies given to the collateral agent that the collateral agent deems necessary or proper for the administration of the collateral pursuant to the Amended and Restated Security Agreement.

3 of 7

          Pursuant to the terms of the Amended and Restated Security Agreement, the Company is in default if: (1) the Company does not pay a payment under the Senior Notes when due and does not cure the payment within two (2) business days; (2) the Company breaches a representation, warranty, covenant or agreement set forth in the transaction documents that is not cured within fifteen (15) days; (3) the collateral of the Senior Notes is impaired in certain respects; (4) there is a default under the Senior Notes; (5) the Company files for bankruptcy or is subject to involuntary bankruptcy or receivership; (6) the Company does not pay an obligation in excess of One Hundred Thousand Dollars ($100,000) when due when failure to pay is not cured within any applicable grace period or waived; (7) the Company does not return the proceeds of the Senior Notes to note holders as described in “Release of Proceeds” above; or (8) the Company incurs indebtedness in excess of Fifteen Million Dollars ($15,000,000).

          This Report on Form 8-K is not an offer to sell these securities and it is not a solicitation of an offer to buy these securities in any state where the offer or sale is not permitted. A copy of the press release reporting the private placement of the March Senior Notes is attached to this Report on Form 8-K as Exhibit 99.1. The press release may also be found in the “Investors” heading under the “Press Releases” section of the Company’s web site at www.vendingdata.com.

SECTION 3 — SECURITIES AND TRADING MARKETS

Item 3.02      Unregistered Sales of Equity Securities

          Information from Item 2.03 of this Report on Form 8-K is hereby incorporated by reference. In addition to the information contained therein, the following information is provided with respect to the private placement of the March Senior Notes with respect to the equity securities that are potentially issuable upon conversion of the March Senior Notes:

• Up to fifty percent (50%) of the unpaid principal amount of the March Senior Notes is convertible at $1.65 per share into shares of the Company’s common stock, par value $0.001 per share.

• A placement agent fee of up to four percent (4%) of the cash proceeds of the Private Placement is payable to Philadelphia Brokerage Corporation, as placement agent, but no separate fee is payable with respect to the shares of common stock.

• The March Senior Notes and the underlying shares of the Company’s common stock were issued under the private placement exemption under Section 4(2) of the Securities Act of 1933 and pursuant to Rule 506 of Regulation D. The Company was able to rely on Rule 506 of Regulation D because the Company only offered the March Senior Notes to accredited investors as that term is defined by Rule 501 of Regulation D.

4 of 7

SECTION 9 — FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01     Financial Statements and Exhibits

(a) Financial statements of businesses acquired.

Not applicable.

(b) Pro forma financial information.

Not applicable.

(c) Exhibits.

Exhibit 10.1 Form of Subscription Agreement for 10% Senior Secured Notes due March 2008.

Exhibit 10.2 Form of Promissory Note for 10% Senior Secured Notes due March 2008.

Exhibit 10.3 Form of Intercreditor Agreement.

Exhibit 10.4 Form of Amended and Restated Security Agreement.

Exhibit 10.5 Form of Amended and Restated Collateral Agent Agreement.

Exhibit 99.1 Press Release dated March 15, 2005 and entitled “VendingData™ Corporation Completes $12 Million Private Placements.”

5 of 7

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

VENDINGDATA CORPORATION
     (Registrant)

Date: March 15, 2005 By: /s/ Douglas H. Caszatt  

Its: Douglas H. Caszatt
Acting Chief Financial Officer and Secretary

6 of 7

EXHIBIT INDEX

Exhibit No. Description

10.1 Form of Subscription Agreement for 10% Senior Secured Notes due March 2008.

10.2 Form of Promissory Note for 10% Senior Secured Notes due March 2008.

10.3 Form of Intercreditor Agreement.

10.4 Form of Amended and Restated Security Agreement.

10.5 Form of Amended and Restated Collateral Agent Agreement.

99.1 Press Release dated March 15, 2005 and entitled “VendingData™ Corporation Completes $12 Million Private Placements.”

7 of 7

EX-10.1

Exhibit 10.1

FORM OF
SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (this “Agreement”) is made and entered into as of the date set forth on the signature page hereto, by and between VendingData Corporation, a Nevada corporation (the “Company”), and the purchaser listed on the signature page hereto (“Purchaser”).

WHEREAS, in February 2005, the Company completed a private placement (the “February Private Placement”) of up to Ten Million Dollars ($10,000,000) of 10% senior convertible notes due February 2008 (the “February Notes”);

WHEREAS, up through March 15, 2005, the Company is proposing to conduct a private placement (the “Private Placement”) of senior convertible notes (the “Notes”) exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), where said Notes shall be issued in increments of Fifty Thousand Dollars ($50,000) (each a “Unit”);

WHEREAS, the Notes shall be issued on a pari passu basis to the February Notes, requiring the consent of holders of the February Notes (the “February Note Holders”), where said consent shall be accomplished via the execution of an Intercreditor Agreement by and among the Company, Premier Trust, Inc., a Nevada corporation (the “Collateral Agent”), the February Note Holders and the purchasers of the Notes in the form attached hereto as Exhibit A (the “Intercreditor Agreement”);

WHEREAS, the Company proposes to sell through the Private Placement up to Two Million Dollars ($2,000,000) (the “Offering Amount”) in Notes;

WHEREAS, pursuant to an Amended and Restated Collateral Agent Agreement (the “Collateral Agent Agreement”), the Collateral Agent shall act on behalf of the purchasers of the Notes and the February Note Holders with respect to their rights under the Security Agreement (as defined herein) and the Collateral Agent Agreement; and

WHEREAS, the Company wishes to sell to Purchaser, and Purchaser wishes to purchase from the Company, on the terms and in the manner set forth in this Agreement, the number of Units as indicated on the signature page hereto.

NOW, THEREFORE, for and in consideration of the promises and mutual covenants, agreements, understandings, undertakings, representations, warranties and promises, and subject to the conditions hereinafter set forth, and intending to be legally bound thereby, the parties do hereby covenant and agree that the recitals set forth above are true and accurate and are hereby incorporated in and made a part of this Agreement, and further covenant and agree as follows:

1.DESCRIPTION OF THE NOTES

This Agreement sets forth the terms and conditions under which Purchaser will purchase a certain number of Units, where each Unit shall consist of a 10% senior convertible note due 2008 in the form attached hereto as Exhibit B in increments of Fifty Thousand Dollars ($50,000), of which Note up to fifty percent (50%) of the outstanding principal shall be convertible into shares (the “Conversion Shares”) of the Company’s common stock, $.001 par value (“Common Stock”), at a rate of One and 65/10ths Dollars ($1.65) per share. The Note shall be secured by that certain Amended and Restated Security Agreement in the form attached hereto as Exhibit C (the “Security Agreement”). The Notes, the Security Agreement, the Collateral Agent Agreement and the Intercreditor Agreement shall be referred to as the “Transaction Documents.”

2.OFFER

2.1. Purchase of Units. Subject to the terms and conditions of this Agreement, Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to sell to Purchaser, that number of Units for that subscription amount as indicated on the signature page hereto (the “Investment Amount”).

2.2. Subscription. After executing this Agreement and providing the information requested herein, please return the executed Agreement and a completed Form W-8/W-9 by personal delivery or overnight delivery to Philadelphia Brokerage Corporation, 992 Old Eagle School Road, Suite 915, Wayne, Pennsylvania 19087, Attention: Bernadette Pucillo, Operations Manager. The Investment Amount shall be payable by wire transfer using the following information: 

Name:	VendingData Corporation
Account No.:	3121447316
ABA Routing No:	321270742
Bank:	Wells Fargo Bank Nevada, N.A.
Bank Address:	4425 W. Spring Mountain Road
	Las Vegas, Nevada  89102

2.3. Acceptance. The Company shall have the right, at its sole and absolute discretion, to reject this subscription offer or to accept such offer. Subject to Section 4.2 of this Agreement, if the Company accepts Purchaser’s offer, the Company shall execute this Agreement and return a copy of the Agreement and issue the Note in the Investment Amount to Purchaser. If the Company rejects Purchaser’s offer, the Company shall return to Purchaser this Agreement, together with any payment made by Purchaser to the Company, without interest or deduction.

3.RECEIPT OF DOCUMENTS

Purchaser hereby acknowledges receipt of copies of the following documents (collectively, the “Documents”):

	3.1.	This Agreement, including the form of Note, the form of Security Agreement and the form of
Intercreditor Agreement;
	3.2.	Annual Report on Form 10-KSB for the year ended December 31, 2003;
	3.3.	Quarterly Report on Form 10-QSB for the quarter ended March 31, 2004;
	3.4	Current Report on Form 8-K dated May 3, 2004;
	3.5.	Current Report on Form 8-K dated May 13, 2004;
	3.6.	Current Report on Form 8-K dated May 26, 2004;
	3.7.	Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004.
	3.8.	Current Report on Form 8-K dated August 9, 2004;
	3.9.	Current Report on Form 8-K dated September 21, 2004;
	3.10.	Current Report on Form 8-K dated September 24, 2004;

– 2 –

3.11.	Current Report on Form 8-K dated October 21, 2004;
3.12.	Current Report on Form 8-K dated October 25, 2004;
3.13.	Quarterly Report on Form 10-QSB for the quarter ended September 30, 2004;
3.14.	Current Report on Form 8-K dated November 15, 2004;
3.15.	Current Report on Form 8-K dated November 29, 2004;
3.16.	Current Report on Form 8-K dated December 3, 2004;
3.17.	Current Report on Form 8-K dated December 8, 2004;
3.18.	Current Report on Form 8-K dated December 17, 2004;
3.19.	Current Report on Form 8-K dated January 6, 2005;
3.20.	Current Report on Form 8-K dated February 15, 2005; and
3.21.	Current Report on Form 8-K dated March 4, 2005.

4.ESCROW

4.1. Use of Proceeds. Subject to the reasonable discretion of the Company’s management, assuming the entire Offering Amount is raised, the Company proposes to apply the proceeds from the Private Placement as follows:

		AMOUNT
PROPOSED USE		AMOUNT	%
Fund inventory		500,000	25	%
Fund operating losses		500,000	25	%
Placement fees		80,000	4	%
Other general corporate purposes		920,000	46	%
	$	2,000,000	100.00	%

The portion of the net proceeds of the Private Placement being designated as “other general corporate purposes” excludes the acquisition of companies or products, the repurchase of Common Stock, the issuance of the dividends or other matters not specifically set forth in this Section 4.

4.2. Release of Proceeds. The gross proceeds may be released to the Company and applied as follows:

(a) One-third (1/3) of the gross proceeds shall be released to the Company upon the hiring by the Company of a North American manager of operations or Chief Operating Officer, where such person shall be hired no later than June 30, 2005;

– 3 –

(b) One-third (1/3) of the remaining gross proceeds shall be released to the Company upon the execution of a distributor agreement with TCSJohnHuxley or an affiliate thereof that provides for the sale and service outside the United States of one hundred (100) units of the Company’s RandomPlus™ shuffler and PokerOne™ shuffler, where such agreement must be executed no later than June 30, 2005; and

(c) One-third (1/3) of the remaining gross proceeds shall be released to the Company upon the approval of the Company’s RandomPlus™ shuffler by Gaming Laboratories International and the Nevada State Gaming Control Board and the placement of one hundred (100) units each of the Company’s RandomPlus™ shuffler in North America, where such approvals and shuffler placement must occur no later than June 30, 2005.

In the event that the Company fails to meet the conditions provided for in Section 4.2.a, Section 4.2.b and/or Section 4.2.c, respectively, the Company will return the relevant portion of the escrowed gross proceeds, without interest, within thirty (30) days.

5.REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to the Company as follows:

5.1. Investor Status. Purchaser understands that the Units are being offered and sold only to “accredited investors” (as that term is defined under Rule 501(a) of Regulation D of the Securities Act (“Regulation D”)) or to “qualified institutional buyers” (as that term is defined under Rule 144A(a)(1) of the Securities Act). Purchaser represents and warrants that Purchaser meets one of the following two investor categories (PLEASE INITIAL ONE AND COMPLETE AS REQUIRED):

¨ Category One: Accredited Investor. Purchaser represents and warrants that Purchaser is an “accredited investor” within the meaning of Rule 501(a) of Regulation D, where such representation and warranty is based upon one of the following categories ( PLEASE INITIAL ALL THAT APPLY):

¨ Private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940;

¨ Organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of Five Million Dollars ($5,000,000);

¨ Manager or executive officer of the Company;

¨ Natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds One Million Dollars ($1,000,000);

¨ Natural person who has an individual income in excess of Two Hundred Thousand Dollars ($200,000) in each of the two (2) most recent years and has a reasonable expectation of reaching the same income level in the current year;

¨ Natural person who has a joint income with that person’s spouse in excess of Three Hundred Thousand Dollars ($300,000) in each of the two (2) most recent years and has a reasonable expectation of reaching the same income level in the current year;

¨ Trust, with total assets in excess of Five Million Dollars ($5,000,000), not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as defined by Rule 506(b)(2)(ii) of the Securities Act; or

– 4 –

¨ Entity in which all of the equity owners are accredited investors.

¨ Category Two: Qualified Institutional Buyer. Purchaser represents and warrants that Purchaser is a “qualified institutional buyer” within the meaning of Rule 144A(a)(1) of the Securities Act, where such representation and warranty is based upon one of the following categories ( PLEASE INITIAL ALL THAT APPLY):

¨ Any of the following entities, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the Company:

¨ Any insurance company as defined in section 2(13) of the Securities Act;

¨ Any investment company registered under the Investment Company Act or any business development company as defined in Section 2(a)(48) of that act;

¨ Any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;

¨ Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees;

¨ Any employee benefit plan within the meaning of title I of the Employee Retirement Income Security Act of 1974;

¨ Any trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the types identified in the preceding two bullet points, except trust funds that include as participants individual retirement accounts or H.R. 10 plans.

¨ Any business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

¨ Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation (other than a bank as defined in Section 3(a)(2) of the Securities Act or a savings and loan association or other institution referenced in Section 3(a)(5)(A) of the Securities Act or a foreign bank or savings and loan association or equivalent institution), partnership, or Massachusetts or similar business trust; and

¨ Any investment adviser registered under the Investment Advisers Act.

– 5 –

¨ Any dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (the “Exchange Act”), acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $10 million of securities of issuers that are not affiliated with the dealer, provided, that securities constituting the whole or a part of an unsold allotment to or subscription by a dealer as a participant in a public offering shall not be deemed to be owned by such dealer;

¨ Any dealer registered pursuant to Section 15 of the Exchange Act acting in a riskless principal transaction on behalf of a qualified institutional buyer;

¨ Any investment company registered under the Investment Company Act, acting for its own account or for the accounts of other qualified institutional buyers, that is part of a family of investment companies which own in the aggregate at least $100 million in securities of issuers, other than issuers that are affiliated with the investment company or are part of such family of investment companies. Family of investment companies means any two or more investment companies registered under the Investment Company Act, except for a unit investment trust whose assets consist solely of shares of one or more registered investment companies, that have the same investment adviser (or, in the case of unit investment trusts, the same depositor), provided that, for purposes of this section:

¨ Each series of a series company (as defined in Rule 18f-2 under the Investment Company Act [17 CFR 270.18f-2]) shall be deemed to be a separate investment company; and

¨ Investment companies shall be deemed to have the same adviser (or depositor) if their advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one investment company’s adviser (or depositor) is a majority-owned subsidiary of the other investment company’s adviser (or depositor);

¨ Any entity, all of the equity owners of which are qualified institutional buyers, acting for its own account or the accounts of other qualified institutional buyers; and

¨ Any bank as defined in Section 3(a)(2) of the Securities Act, any savings and loan association or other institution as referenced in Section 3(a)(5)(A) of the Securities Act, or any foreign bank or savings and loan association or equivalent institution, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with it and that has an audited net worth of at least $25 million as demonstrated in its latest annual financial statements, as of a date not more than 16 months preceding the date of sale under the Rule in the case of a U.S. bank or savings and loan association, and not more than 18 months preceding such date of sale for a foreign bank or savings and loan association or equivalent institution.

Purchaser, either alone or through Purchaser’s purchaser representative (as that term is defined under Rule 501(h) of Regulation D (“Purchaser’s Representative”), if any, understands that this Agreement may not comply with the information requirements of Regulation D for offers and sales to non-accredited investors (see Regulation D, Rule 502(b)), and, consequently, Purchaser understands the significance of its representation to the Company that it is either an accredited investor or a qualified institutional buyer.

– 6 –

5.2. Authorization. The Transaction Documents shall constitute the valid and legally binding obligations of Purchaser, enforceable in accordance with the terms herein, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally, the enforcement of creditor’s rights and remedies or by other equitable principles of general application. Purchaser has full power and authority to enter into the Transaction Documents. To the extent that Purchaser is a trust, the undersigned trustee of Purchaser is the duly authorized trustee and Purchaser has all necessary powers and authority to enter into the Transaction Documents under the laws of the state of its domicile and under the terms of the trust agreement, as amended, under which it was created. To the extent that Purchaser is a corporation, limited-liability company or partnership, the undersigned officer, manager or general partner of Purchaser is the duly authorized officer, manager or general partner and Purchaser has all necessary powers and authority to enter into the Transaction Documents under the laws of the state of its organization, the terms of the appropriate agreement, as amended, under which it was created, and the terms of the appropriate agreement, as amended, under which it is governed. If Purchaser is an entity, Purchaser shall execute and deliver the appropriate certification provided herewith as, Exhibit D, Exhibit E, Exhibit F or Exhibit G.

5.3. Due Diligence. Purchaser has received and reviewed the Transaction Documents, has had an opportunity to ask questions of and receive answers from duly designated representatives of the Company concerning the terms and conditions of the Transaction Documents and has been afforded an opportunity to examine such documents and other information which Purchaser has requested for the purpose of answering any question Purchaser may have concerning the business and affairs of the Company. In making this investment decision to purchase the Notes, Purchaser is not relying on any oral or written representations or assurances from the Company or its agents other than as set forth in the Transaction Documents.

5.4. Independent Advice. Purchaser represents and warrants that Purchaser has had the opportunity to review this Agreement and the Documents and the transactions contemplated by the Transaction Documents with Purchaser’s own business, tax and/or legal advisors. Purchaser is relying solely on such business, tax and/or legal advisors, if any, and not on any oral or written statements or representations of the Company of any of its agents for advice with respect to this investment or the transactions contemplated by the Transaction Documents.

5.5. Risk of Loss. Purchaser: (1) is able to bear the loss of its entire investment without any material adverse effect on its economic stability; (2) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment to be made by Purchaser pursuant to the Transaction Documents; and (3) understands that an investment in the Company involves substantial risks, including, without limitation, the risk factors described in the Documents.

5.6. Investment Intent. The Unit(s) is (are) being purchased for investment purposes only for such Purchaser’s own account and not with the view to, or for resale in connection with, any distribution or public offering thereof. Purchaser understands that the Units have not been registered under the Securities Act or any state securities laws by reason of their contemplated issuance in transactions exempt from the registration requirements of the Securities Act and applicable state securities laws, and that the reliance of the Company and others upon these exemptions is predicated in part upon the representations by Purchaser.

5.7. No Solicitation. Purchaser was not solicited to purchase the Notes by any means of general solicitation, including but not limited to the following: (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio; or (ii) any meeting where attendees were invited by any general solicitation or general advertising.

– 7 –

5.8. Restricted Securities. Purchaser is aware that the shares of Common Stock issuable upon conversion of the Notes are and will be, when issued, “restricted securities”, as that term is defined in Rule 144 of the rules and regulations promulgated under the Securities Act. Purchaser is fully aware of the applicable limitations on the resale of the resulting shares. Rule 144 only permits sales of “restricted securities” held for not less than one year upon compliance with the requirements of such Rule. If Rule 144 is available to Purchaser, Purchaser may make only routine sales of the resulting shares in limited amounts in accordance with the terms and conditions of Rule 144. Purchaser is fully aware that in any event, there is not likely to be any market for the resulting shares and that finding a purchaser for the resulting shares could be extremely difficult. In light of the foregoing, Purchaser understands that any and all certificates representing the resulting shares of Common Stock through the conversion of the Notes shall bear a legend substantially as follows, which legend Purchaser has read and understands:

The Shares represented by this Certificate have not been registered under the Securities Act of 1933 (the “Act”) or the securities laws of any state and are “restricted securities” as that term is defined in Rule 144 under the Securities Act. Such Shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Securities Act and the applicable state securities laws or pursuant to an exemption from registration thereunder, the availability of which is to be established to the satisfaction of counsel to the issuer.

5.9. Need for Additional Financing. Purchaser acknowledges and understands that the Company will need to raise additional financing, either through private or public offerings of the Company’s equity securities; provided, further, the Company may issue convertible debt securities to sources outside of this Private Placement or otherwise incur indebtedness through loans, lines of credit and other forms of indebtedness (the “Additional Indebtedness”). The issuance of additional equity securities or Additional Indebtedness may require the grant of certain rights, preferences or privileges superior to those of Purchaser; provided, however, the issuance of any Additional Indebtedness senior to or pari passu with the Notes shall require the consent of the Purchasers holding a majority of the then outstanding principal of all of the Notes then issued and outstanding. In the event the Company is required to raise additional funds, Purchaser acknowledges and understands that there is no assurance that the Company will be able to obtain the additional funds necessary on terms favorable to the Company, or at all.

5.10. Past Performance Information. Purchaser acknowledges and understands that any statements of the past performance of the Company’s management are not to be viewed or interpreted as an indication, either anticipated or definitive, of the Company’s future performance. In making such acknowledgement, Purchaser understands that: (1) the circumstances regarding the past performance of the Company’s management are inherently different from the circumstances regarding the Company’s proposed business operations; (2) the economic conditions at or around the time of the past performance of the Company’s management are inherently different from the economic conditions in which the Company will operate; and (3) the actual results of the Company’s performance or an investment in a Project cannot be estimated with any certainty at this time.

5.11. Independent Investment. No Purchaser has agreed to act with any other Purchaser for the purpose of acquiring, holding, voting or disposing of the Units purchased hereunder for purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting independently with respect to its investment in the Units.

– 8 –

6.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser as follows:

6.1. Organization and Qualification.  The Company and each of its subsidiaries is a corporation duly organized and existing in good standing under the laws of the jurisdiction in which it is incorporated, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company and each of its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary and where the failure so to qualify would have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on (i) the Notes, (ii) the ability of the Company to perform its obligations hereunder or under the Transaction Documents, (iii) the business, operations, properties, prospects or financial condition of the Company and its subsidiaries, taken as a whole.

6.2. Authorization; Enforcement.  (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents to issue and sell the Notes in accordance with the terms hereof, and to issue the Conversion Shares upon conversion of or otherwise pursuant to the Notes in accordance with the terms of the Notes, (ii) the execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the issuance of the Conversion Shares) have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, any or committee of the Board of Directors is required, and (iii)the Transaction Documents, upon execution and delivery, will constitute, valid and binding obligations of the Company enforceable against the Company in accordance with their terms.

6.3. Stockholder Authorization.  Neither the execution, delivery or performance by the Company of the Transaction Documents, nor the consummation by it of the transactions contemplated hereby or thereby requires any consent or authorization of the Company’s stockholders, including but not limited to consent under Section 705 of the Amex Company Guide or any similar rule; provided, however, the Company will be required to amend its Articles of Incorporation (as defined herein) to increase the number of authorized shares in an amount sufficient to account for the Conversion Shares.

6.4. Capitalization.  The capitalization of the Company as of the date hereof, including the authorized capital stock, the number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company’s stock option plans, the number of shares issuable and reserved for issuance pursuant to securities (other than the Notes) exercisable or exchangeable for, or convertible into, any shares of capital stock is set forth on Schedule 6.4. All of such outstanding shares of capital stock have been, or upon issuance in accordance with the terms of any such warrants, options, preferred stock or other securities will be, validly issued, fully paid and non-assessable. No shares of capital stock of the Company (including the Conversion Shares) are subject to preemptive rights or any other similar rights of the stockholders of the Company or any liens or encumbrances. Except for the Notes and as set forth on Schedule 6.4, as of the date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company or any of its subsidiaries, or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries, nor are any such issuances or arrangements contemplated, and (ii) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of its or their securities under the Securities Act (except the Notes). Schedule 6.4 sets forth all of the Company issued securities or instruments containing antidilution or similar provisions that will be triggered by, and all of the resulting adjustments that will be made to such securities and instruments as a result of, the issuance of the Notes in accordance with the terms of this Agreement. The Company has furnished to the Purchasers true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s By-laws as in effect on the date hereof (the “By-laws”), and all other instruments and agreements governing securities convertible into or exercisable or exchangeable for capital stock of the Company.

– 9 –

6.5. Issuance of Securities.  The Notes, upon issuance in accordance with the terms of this Agreement, will be validly issued and free from all taxes, liens, claims and encumbrances and will not be subject to preemptive rights, rights of first refusal or other similar rights of stockholders of the Company and will not impose personal liability on the holders thereof. The Conversion Shares are duly authorized and, as applicable, reserved for issuance, and, upon issuance pursuant to the conversion of the Notes in accordance with the terms thereof, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances and will not be subject to preemptive rights, rights of first refusal or other similar rights of stockholders of the Company and will not impose personal liability upon the holder thereof. Upon the amendment and restatement of the Company’s Articles of Incorporation, the Company will upon reserve for issuance pursuant to the Notes an aggregate of Six Hundred Six Thousand and Sixty-One (606,061) shares of Common Stock, representing the maximum number of shares of Common Stock initially issuable upon the conversion in full of the Notes and the February Notes (the “Reserved Amount”).

6.6. No Conflicts.  Unless otherwise noted in this Agreement, the execution, delivery and performance of the Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation or By-laws or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment (including, without limitation, the triggering of any anti-dilution provisions), acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and rules or regulations of any self-regulatory organizations to which either the Company or its securities are subject) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations that would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation, By-laws or other organizational documents and neither the Company nor any of its subsidiaries is in default (and no event has occurred which, with notice or lapse of time or both, would put the Company or any of its subsidiaries in default) under, nor has there occurred any event giving others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, except for actual or possible violations, defaults or rights that would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its subsidiaries are not being conducted, and shall not be conducted so long as a Purchaser owns any of the Notes, in violation of any law, ordinance or regulation of any governmental entity, except for possible violations the sanctions for which either singly or in the aggregate would not have a Material Adverse Effect. Except as specifically contemplated by this Agreement and the Notes, the Company is not required to obtain any consent, approval, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self regulatory agency in order for it to execute, deliver or perform any of its obligations under the Transaction Documents, in each case in accordance with the terms hereof or thereof. The Company is not in violation of the listing requirements of the American Stock Exchange (“Market/Exchange”) and does not reasonably anticipate that the Common Stock will be delisted by the Market/Exchange for the foreseeable future.

– 10 –

6.7. SEC Documents, Financial Statements.  Since December 31, 2003, the Company has timely filed (within applicable extension periods) all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act all of which are listed in Section 3 hereof (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). The Company has delivered to each Purchaser true and complete copies of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings made prior to the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC applicable with respect thereto. Such financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to immaterial year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents filed prior to the date hereof, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to the date of such financial statements and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under GAAP to be reflected in such financial statements, which liabilities and obligations referred to in clauses (i) and (ii), individually or in the aggregate, are not material to the financial condition or operating results of the Company.

6.8. Absence of Certain Changes.  Since December 31, 2003, there has been no material adverse change and no material adverse development in the business, properties, operations, prospects, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, except as disclosed in the SEC Documents filed prior to the date hereof.

6.9. Absence of Litigation.  Except as disclosed in the SEC Documents filed prior to the date hereof, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body, including, without limitation, the SEC or the Market/Exchange, pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company, any of its subsidiaries, or any of their respective directors or officers in their capacities as such. There are no facts which, if known by a potential claimant or governmental authority, could give rise to a claim or proceeding which, if asserted or conducted with results unfavorable to the Company or any of its subsidiaries, could reasonably be expected to have a Material Adverse Effect.

– 11 –

6.10. Intellectual Property.  Each of the Company and its subsidiaries owns or is licensed to use all patents, patent applications, trademarks, trademark applications, trade names, service marks, copyrights, copyright applications, licenses, permits, inventions, discoveries, processes, scientific, technical, engineering and marketing data, object and source codes, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other similar rights and proprietary knowledge (collectively, “Intangibles”) necessary for the conduct of its business as now being conducted. To the best knowledge of the Company, neither the Company nor any subsidiary of the Company infringes or is in conflict with any right of any other person with respect to any Intangibles. Except as disclosed in the SEC Documents filed prior to the date hereof, neither the Company nor any of its subsidiaries has received written notice of any pending conflict with or infringement upon such third party Intangibles. The termination of the Company’s ownership of, or right to use, any single Intangible would not result in a Material Adverse Effect on the Company. Neither the Company nor any of its subsidiaries has entered into any consent agreement, indemnification agreement, forbearance to sue or settlement agreement with respect to the validity of the Company’s or its subsidiaries’ ownership or right to use its Intangibles and, to the best knowledge of the Company, there is no reasonable basis for any such claim to be successful. The Intangibles are valid and enforceable and no registration relating thereto has lapsed, expired or been abandoned or canceled or is the subject of cancellation or other adversarial proceedings, and all applications therefor are pending and in good standing. The Company and its subsidiaries have complied, in all material respects, with their respective contractual obligations relating to the protection of the Intangibles used pursuant to licenses. To the best knowledge of the Company, no person is infringing on or violating the Intangibles owned or used by the Company or its subsidiaries.

6.11. Foreign Corrupt Practices.  Neither the Company, nor any of its subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

6.12. Disclosure.  All information relating to or concerning the Company set forth in this Agreement or provided to any Purchaser pursuant to Section 5.3 hereof or otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or its subsidiaries or their respective businesses, properties, prospects, operations or financial conditions, which has not been publicly disclosed but, under applicable law, rule or regulation, would be required to be disclosed by the Company in a registration statement filed on the date hereof by the Company under the Securities Act with respect to the primary issuance of the Company’s securities.

6.13. Acknowledgment Regarding Purchasers’ Purchase of the Notes.  The Company acknowledges and agrees that none of the Purchasers is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement or the transactions contemplated hereby, the relationship between the Company and the Purchasers is “arms-length” and any statement made by any Purchaser or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Purchaser’s purchase of the Notes and has not been relied upon by the Company, its officers or directors in any way. The Company further acknowledges that the Company’s decision to enter into this Agreement has been based solely on an independent evaluation by the Company and its representatives.

6.14. Listing.  No later than five (5) days after the release of funds pursuant to Section 4.2.a of this Agreement, the Company will submit the appropriate application and supporting documents to list the Conversion Shares upon each national securities exchange or automated quotation system upon which shares of Common Stock are currently listed (subject to official notice of issuance).

– 12 –

6.15. Form S-3 Eligibility.  The Company is currently eligible to register the resale of its Common Stock on a registration statement on Form S-3 under the Securities Act. There exist no facts or circumstances that would prohibit or delay the preparation and filing of a registration statement on Form S-3 with respect to the Conversion Shares. The Company has no basis to believe that its past or present independent public auditors will withhold their consent to the inclusion, or incorporation by reference, of their audit opinion concerning the Company’s financial statements which are included in the registration statement required to be filed pursuant to the Notes.

6.16. No General Solicitation.  Neither the Company nor any distributor participating on the Company’s behalf in the transactions contemplated hereby (if any) nor any person acting for the Company, or any such distributor, has conducted any “general solicitation,” as such term is defined in Regulation D, with respect to any of the Notes being offered hereby.

6.17. No Integrated Offering.  Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration of the Notes or the Conversion Shares being offered hereby under the Securities Act or cause this offering to be integrated with any prior offering of securities of the Company for purposes of the Securities Act or any applicable stockholder approval provisions, including, without limitation, Section 705 of the Amex Company Guide or any similar rule. The Company does not have any registration statement pending before or currently under review with the SEC.

6.18. No Brokers.  The Company has taken no action which would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments by any Purchaser relating to this Agreement or the transactions contemplated hereby other then with respect to commissions to be paid to the Philadelphia Brokerage Commission.

6.19. Title.  Except for the first priority security interest granted to the February Note Holders, Company and its subsidiaries have good and marketable title in fee simple to all real property and good and merchantable title to all personal property owned by them that is material to the business of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries. Any real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries.

6.20. Tax Status.  Except as set forth in the SEC Documents, the Company and each of its subsidiaries has made or filed all foreign, U.S. federal, state and local income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to any statute of limitations relating to the assessment or collection of any federal, state or local tax. None of the Company’s tax returns is presently being audited by any taxing authority.

– 13 –

6.21. Key Employees.  Each of the Company’s directors, officers and any Key Employee (as defined below) is currently serving the Company in the capacity disclosed in the SEC Documents. No Key Employee, to the best of the knowledge of the Company and its subsidiaries, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each Key Employee does not subject the Company or any of its subsidiaries to any liability with respect to any of the foregoing matters. No Key Employee has, to the best of the knowledge of the Company and its subsidiaries, any intention to terminate or limit his employment with, or services to, the Company or any of its subsidiaries, nor is any such Key Employee subject to any constraints which would cause such employee to be unable to devote his full time and attention to such employment or services. “Key Employee” means the persons listed on Schedule 6.21 and any individual who assumes or performs any of the duties of a Key Employee.

6.22. Insurance.  The Company has in force fire, casualty, product liability and other insurance policies, with extended coverage, sufficient in amount to allow it to replace any of its material properties or assets which might be damaged or destroyed or sufficient to cover liabilities to which the Company may reasonably become subject, and such types and amounts of other insurance with respect to its business and properties, on both a per occurrence and an aggregate basis, as are customarily carried by persons engaged in the same or similar business as the Company. No default or event has occurred that could give rise to a default under any such policy.

6.23. Environmental Matters.  There is no environmental litigation or other environmental proceeding pending or threatened by any governmental regulatory authority or others with respect to the current or any former business of the Company or any partnership or joint venture currently or at any time affiliated with the Company. No state of facts exists as to environmental matters or Hazardous Substances (as defined below) that involves the reasonable likelihood of a material capital expenditure by the Company or that may otherwise have a Material Adverse Effect. No Hazardous Substances have been treated, stored or disposed of, or otherwise deposited, in or on the properties owned or leased by the Company or by any partnership or joint venture currently or at any time affiliated with the Company in violation of any applicable environmental laws. The environmental compliance programs of the Company comply in all respects with all environmental laws, whether federal, state or local, currently in effect. As used herein, “Hazardous Substances” means any substance, waste, contaminant, pollutant or material that has been determined by any governmental authority to be capable of posing a risk of injury to health, safety, property or the environment.

6.24. Inventory.  All inventory of the Company and its subsidiaries is valued on the Company’s consolidated books and records at the lower of cost, determined by the “first in, first out” method of accounting, or the fair market value thereof. Except, to the extent of the Company’s actual and potential reserves for obsolete or unmerchantable inventory reflected and discussed in the Company’s SEC Documents, all such inventory, after consideration of reserves consisting of finished goods is of merchantable quality and is saleable in the ordinary course of business consistent with past practice.

6.25. Sarbanes-Oxley Act.  The Company is in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations promulgated thereunder, that are effective as of the date hereof, and intends to comply with other applicable provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated thereunder, upon the effectiveness of such provisions.

6.26. Independent Nature of Purchasers.  The Company acknowledges that the obligations of each Purchaser under this Agreement and related transaction documents are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement. The Company acknowledges that nothing contained herein, or in any other transaction document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement.

– 14 –

6.27. Indebtedness. Schedule 6.27 hereto sets forth as of a recent date all outstanding secured and unsecured Indebtedness of the Company or any subsidiary, or for which the Company or any subsidiary has commitments. For purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business and (c) the present value of any lease payments in excess of $25,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any subsidiary is in default with respect to any Indebtedness.

7.COVENANTS.

7.1. Best Efforts.  The parties shall use their best efforts timely to satisfy each of the conditions described in Section 9 and Section 10 of this Agreement.

7.2. Form D: Blue Sky Laws.  The Company shall file with the SEC a Form D with respect to the Notes as required under Regulation D and provide a copy thereof to each Purchaser promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Notes for sale to each Purchaser pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States or obtain exemption therefrom. Within two (2) trading days after the Closing Date, the Company shall file a Form 8-K concerning this Agreement and the transactions contemplated hereby, which Form 8-K shall attach this Agreement and its Exhibits as exhibits to such Form 8-K. The Company shall prepare a press release describing the material terms of the transactions contemplated hereby, provide a copy of said press release to all Purchasers for their review and shall issue said press release no later than 9:00 am Eastern Time on the first trading day following the Closing Date.

7.3. Reporting Status.  So long as any Purchaser beneficially owns any of the Notes, the Company shall timely file (within applicable extension periods) all reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination. In addition, the Company shall take all actions necessary to meet the “registrant eligibility” requirements set forth in the general instructions to Form S-3 or any successor form thereto, to continue to be eligible to register the resale of its Common Stock on a registration statement on Form S-3 under the Securities Act.

7.4. Use of Proceeds.  The Company shall use the proceeds from the sale of the Notes as set forth in Section 4.1.

7.5. Financial Information.  The Company shall send the following reports to each Purchaser until such Purchaser transfers, assigns or sells all of its Notes: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB, its proxy statements and any Current Reports on Form 8-K; and (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its subsidiaries.

– 15 –

7.6. Listing.  The Company shall maintain, so long as any Purchaser (or any of their affiliates) owns any Notes or Conversion Shares, the listing of all Conversion Shares from time to time issuable upon conversion of or otherwise pursuant to the Notes on each national securities exchange or automated quotation system on which shares of Common Stock are currently listed. The Company will use its best efforts to continue the listing and trading of its Common Stock on the Market/Exchange and will comply in all respects with the reporting, filing and other obligations under the bylaws or rules of the NASD and such exchanges, as applicable. The Company shall promptly provide to each holder of Notes or Conversion Shares, copies of any notices it receives regarding the continued eligibility of the Common Stock for trading on the Market/Exchange or, if applicable, any securities exchange or automated quotation system on which securities of the same class or series issued by the Company are then listed or quoted, if any.

7.7. Corporate Existence.  So long as a Purchaser beneficially owns any Notes, the Company shall maintain its corporate existence, and in the event of a merger, consolidation or sale of all or substantially all of the Company’s assets, the Company shall ensure that the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the Notes, the Security Agreement, and the agreements and instruments entered into in connection herewith regardless of whether or not the Company would have had a sufficient number of shares of Common Stock authorized and available for issuance in order to effect the conversion of all Notes outstanding as of the date of such transaction and (ii) is a publicly traded corporation whose common stock is listed for trading on the Nasdaq National Market, New York Stock Exchange or American Stock Exchange. Notwithstanding the foregoing, the Company covenants and agrees that it will not engage in any merger, consolidation or sale of all or substantially all of its assets at any time prior to the effectiveness of the Registration Statement required to be filed pursuant to the Note without (A) providing each Purchaser with written notice of such transaction at least 60 days prior to the consummation of such transaction and (B) obtaining the written consent of the Purchasers holding a majority-in-interest of the then outstanding Notes on or before the 10th day after the delivery of such notice by the Company.

7.8. No Integrated Offerings.  The Company shall not make any offers or sales of any security (other than the Notes) under circumstances that would require registration of the Notes being offered or sold hereunder under the Securities Act or cause this offering to be integrated with any other offering of securities by the Company for purposes of any stockholder approval provision applicable to the Company or its securities.

7.9. Legal Compliance.  The Company shall conduct its business and the business of its subsidiaries in compliance with all laws, ordinances or regulations of governmental entities applicable to such businesses, except where the failure to do so would not have a Material Adverse Effect.

7.10. Redemptions and Dividends.  So long as any Purchaser beneficially owns any Notes, the Company shall not, without first obtaining the written approval of such Purchaser, repurchase, redeem, or declare or pay any cash dividend or distribution on, any shares of capital stock of the Company.

7.11. Disclosure of Material Information.  The Company covenants and agrees that neither it nor any other person acting on its behalf has provided or will provide any Purchaser or its agents or counsel with any information that constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company

– 16 –

8. TRANSFER AGENT INSTRUCTIONS.

8.1. The Company shall instruct its transfer agent to issue certificates, registered in the name of each Purchaser or its nominee, for the Conversion Shares in such amounts as specified from time to time by such Purchaser to the Company upon conversion of or otherwise pursuant to the Notes. To the extent and during the periods provided in Section 5.8 of this Agreement, all such certificates shall bear the restrictive legend specified in Section 5.8 of this Agreement.

8.2. The Company warrants that no instruction other than such instructions referred to in this Section 8, and stop transfer instructions to give effect to Section 5.8 hereof in the case of the transfer of the Conversion Shares or prior to registration of the Conversion Shares and under the Securities Act or without an exemption therefrom, will be given by the Company to its transfer agent and that the Notes and Conversion Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Notes. Nothing in this Section shall affect in any way each Purchaser’s obligations and agreement set forth in Section 5.8 hereof to resell the Notes and Conversion Shares pursuant to an effective registration statement or under an exemption from the registration requirements of applicable securities law.

8.3. If any Purchaser provides the Company and the transfer agent with an opinion of counsel, which opinion of counsel shall be in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that the Notes or Conversion Shares to be sold or transferred may be sold or transferred pursuant to an exemption from registration, or any Purchaser provides the Company with reasonable assurances that such Notes or Conversion Shares may be sold under Rule 144, the Company shall permit the transfer and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by such Purchaser.

8.4. Notwithstanding anything contained in this Section 8 to the contrary, the Conversion Shares shall be free of restrictive legends and trading restrictions so long as (a) a registration statement providing for the resale of the Conversion Shares is effective and (b) the Purchaser has complied with the applicable prospectus delivery requirements in connection with such resales. If requested by a Purchaser, the Company shall use its best efforts to issue and deliver the Conversion Shares to the Depository Trust Company account on the Purchaser’s behalf via the Deposit Withdrawal Agent Commission System for the number of Conversion Shares for which such Purchaser is entitled.

9.CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

The obligation of the Company hereunder to issue and sell the Notes to each Purchaser hereunder is subject to the satisfaction, at or before the Closing, of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

9.1. Each Purchaser shall have executed such Purchaser’s execution page to this Agreement and the Intercreditor Agreement and delivered the same to the Company.

9.2. Each February Note Holder shall have executed such February Note Holder’s execution page to the Intercreditor Agreement and delivered the same to the Company.

9.3. Each Purchaser shall have delivered such Purchaser’s pro rata amount of the purchase price for the Notes.

– 17 –

9.4. The representations and warranties of each Purchaser shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which representations and warranties shall be true and correct as of such date), and such Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Purchaser at or prior to the Closing Date.

9.5. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

10.CONDITIONS TO EACH PURCHASER’S OBLIGATION TO PURCHASE.

The obligation of each Purchaser hereunder to purchase the Notes to be purchased by it at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that such conditions are for such Purchaser’s sole benefit and may be waived by such Purchaser at any time in such Purchaser’s sole discretion:

10.1. The Company and the Collateral Agent shall have executed the Transaction Documents, and delivered executed original copies of the same to such Purchaser.

10.2. The Company shall have delivered to such Purchaser duly executed Notes (each in such denominations as such Purchaser shall request) representing the Notes being so purchased by such Purchaser.

10.3. Each February Note Holder shall have executed such February Note Holder’s execution page to the Intercreditor Agreement and delivered the same to the Company.

10.4. The Common Stock shall be authorized for quotation on the Market/Exchange and trading in the Common Stock (or the Market/Exchange generally) shall not have been suspended by the SEC or the Market/Exchange.

10.5. The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which representations and warranties shall be true and correct as of such date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. On or prior to the Closing Date, each Purchaser shall have received a certificate, executed by the Chief Executive Officer of the Company after reasonable investigation, dated as of the Closing Date to the foregoing effect and as to such other matters as may reasonably be requested by such Purchaser.

10.6. No statute, rule, regulation, executive order, decree, ruling, injunction, action or proceeding shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which questions the validity of, challenges or prohibits the consummation of, any of the transactions contemplated by this Agreement.

10.7. There shall have been no Material Adverse Effect and no information, of which the Purchaser is not currently aware, shall come to the attention of the Purchaser that is materially adverse to the Company.

– 18 –

10.8. On or prior to the Closing Date, each Purchaser shall have received a copy of resolutions, duly adopted by the Board of Directors of the Company, which shall be in full force and effect at the time of the Closing, authorizing the execution, delivery and performance by the Company of this Agreement, the Notes and the Security Agreement and the consummation by the Company of the transactions contemplated hereby and thereby, certified as such by the Secretary or Assistant Secretary of the Company.

10.9. No later than five (5) days after the Closing Date, the Company shall provide to the Purchasers evidence that the Company’s fire, casualty, product liability and other insurance policies and shall amend such policies to add the Collateral Agent as an additional insured to the extent that the proceeds of such policies are necessary to satisfy any and all obligations of the Company under the Transaction Documents.

11.INDEMNIFICATION

11.1. By Purchaser.  Purchaser agrees that it shall indemnify and hold harmless the Company and its officers, directors, employees, agents and professional advisors from and against any and all loss, damage, liability, or expense, including costs and reasonable attorneys’ fees, that the foregoing, or any of them, may incur by reason of, or in connection with, any misrepresentation, inaccurate statement or material omission made by Purchaser herein, any breach of any of Purchaser’s warranties, or any failure on Purchaser’s part to fulfill any of Purchaser’s covenants, agreements or obligations set forth herein.

11.2. By the Company.  The Company agrees that it shall indemnify and hold harmless the Purchaser and its officers, directors, employees, agents and professional advisors from and against any and all loss, damage, liability, or expense, including costs and reasonable attorneys’ fees, that the foregoing, or any of them, may incur by reason of, or in connection with, any misrepresentation, inaccurate statement or material omission made by the Company herein, any breach of any of the Company’s warranties, or any failure on the Company’s part to fulfill any of its covenants, agreements or obligations set forth herein.

12.AUTHORIZATION

Due to the regulated nature of gaming and gaming-related activities and due to the requests for information that may be received from regulatory agencies, Purchaser hereby authorizes the Company and its officers, employees and agents to investigate Purchaser’s personal and business background including, without limitation, communication with any employer, former employer, business associate, government agency, bank or other credit reference. Purchaser hereby authorizes any person, organization or entity that may have any knowledge or information concerning Purchaser’s personal or business background to provide such information to the Company as the Company may request.

13.NO BROKERS OR FINDERS

Other than Philadelphia Brokerage Corporation, no person, firm or corporation has or will have, as a result of any act or omission by such Purchaser, any right, interest or valid claim against Purchaser or the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by this Agreement.

14.MISCELLANEOUS

14.1. Governing Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada. The parties hereto submit to the exclusive jurisdiction of the courts located in Clark County, Nevada, with respect to any dispute arising under this Agreement and the transactions contemplated hereby.

– 19 –

14.2. Entire Agreement. The Transaction Documents contain the entire agreement between the Company and Purchaser with regard to the subject matter hereof and may not be modified or waived except in a writing signed by both the Company and Purchaser.

14.3. Headings.  The headings of this Agreement are for convenience and reference only, and shall not limit or otherwise affect the interpretation of any term or provision hereof.

14.4. Binding Effect.  This Agreement and the rights, powers, and duties set forth herein shall, except as otherwise expressly provided herein, be binding upon and inure to the benefit of, the heirs, executors, administrators, legal representatives, successors, and assigns of the parties hereto.

14.5. No Assignment.  Purchaser may not assign any of Purchaser’s rights or interests in and under this Agreement without the prior written consent of the Company, and any attempted assignment without such consent shall be null and void and without any force or effect whatsoever.

14.6. Attorneys’ Fees.  If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled.

14.7. Notices.  Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing, shall be sent by facsimile to the party to be notified and shall be deemed effectively given upon personal delivery to the party to be notified, or four days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified. Any notice to Purchaser shall be sent to his facsimile number and address set forth on the signature page hereto, or at such other facsimile number or address as a party may designate by ten (10) days’ advance written notice to the other party. Any notice to the Company shall be sent to VendingData Corporation, Attn: Chief Executive Officer and Chief Financial Officer, 6830 Spencer Street, Las Vegas, Nevada 89119, 702-733-7197 (facsimile), with a copy to Kummer Kaempfer Bonner & Renshaw, Attn: Michael J. Bonner, 3800 Howard Hughes Parkway, Seventh Floor, Las Vegas, Nevada 89109, 702-796-7181 (facsimile).

14.8. Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. In addition, if any such provision, or any part thereof, is held to be unenforceable, the parties agree that the court, regulatory agency or other governmental body making such determination shall have the power to delete or add specific words or phrases, so that such provision shall then be enforceable to the fullest extent permitted by law.

14.9. Neutral Interpretation.  This Agreement shall be construed in accordance with its intent and without regard to any presumption or any other rule requiring construction against the party causing the same to be drafted.

– 20 –

14.10. Waiver.  No delay or omission by the Purchaser in exercising any rights shall operate as a waiver of such right or any other right. Waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. The rights and remedies of the Purchaser, whether evidenced hereby or by any other agreement, instrument or paper, shall be cumulative and may be exercised singularly or concurrently. Unless otherwise provided in this Agreement or in the Notes, any waiver or amendment of any provisions of this Agreement shall be in writing, executed and delivered by the Company and by the Purchaser or Purchasers holding Notes representing not less than a majority of the then outstanding principal of all of the Notes then issued and outstanding.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the _______ day of ________________ 2005.

NUMBER OF UNITS		PRICE PER UNIT		INVESTMENT AMOUNT		CASH
_________Units	x	$50,000	=	$_____________	=	$____________
		(NOTE: MINIMUM INVESTMENT OF ONE (1) UNIT)
Name and Address of Purchaser:

			Tax ID Number / Social Security Number	________________
___________________________________________________
(Signature)
___________________________________________________
(Insert Name and Title)
___________________________________________________			Telephone (Home)	(          )     -
(Street Address)
___________________________________________________			Telephone (Office)	(          )     -
(Street Address)
________________________ ,	____________	_____________	Facsimile	(          )     -
(City)	(State)	(Zip Code)

NAME OF JOINT PURCHASER/ASSITIONAL SIGNATORY(IF APPLICACLE):
_____________________________________________	Tax ID Number / Social Security Number	____________________
(Signature)
_____________________________________________
(Insert Name)

– 21 –

ACCEPTANCE OF SUBSCRIPTION AGREEMENT

On the __________ day of __________________, 2005, VendingData Corporation, a Nevada corporation, hereby accepts the offer of the above purchaser to purchase the number of Units, in the dollar amount, as stated on the cover page and this signature page.

VENDINGDATA CORPORATION
By:	_________________________________________
	_______________________
Its:	_______________________

EXHIBIT A

FORM OF INTERCREDITOR AGREEMENT

EXHIBIT B

FORM OF PROMISSORY NOTE

EXHIBIT C

FORM OF AMENDED AND RESTATED SECURITY AGREEMENT

EXHIBIT D

CERTIFICATE OF PARTNERSHIP INVESTOR

CERTIFICATE OF _____________________________________________ (the “Investor Partnership”)
(Name of Partnership)

The undersigned, constituting all of the partners of the Investor Partnership who must consent to the proposed investment by the Investor Partnership hereby certify as follows:

1.	That, as partners of the Investor Partnership, we have authority to determine and have determined: (a) that the investment in, and the purchase of, Units (as defined in the Subscription Agreement) from VendingData Corporation is of benefit to the Investor Partnership; and (b) to make such investment on behalf of the Investor Partnership.
2.	That ____________ is authorized to execute, on behalf of the Investor Partnership, any and all documents in connection with the Investor Partnership’s investment in Units from VendingData Corporation.

IN WITNESS WHEREOF, we have executed this certificate as partners of the Investor Partnership this ___ day of ______________ 2005, and declare that it is truthful and correct.

____________________________
(Name of Investor Partnership)
By:	_________________________________________
	____________________
Its:	Partner
By:	_________________________________________
	____________________
Its:	Partner
By:	_________________________________________
	____________________
Its:	Partner

D–1

EXHIBIT E

CERTIFICATE OF TRUST INVESTOR

CERTIFICATE OF __________________________________________________________(the “Trust”)
 (Name of Trust)

The undersigned, constituting the Trustee(s) of the Trust, hereby certify as follows:

1.	That, as Trustee(s) of the Trust, we have authority to determine and have determined: (a) that the investment in, and the purchase of, Units (as defined in the Subscription Agreement) from VendingData Corporation is of benefit to the Trust; and (b) to make such investment on behalf of the Trust.
2.	That ____________ is authorized to execute, on behalf of the Trust, any and all documents in connection with the Trust’s investment in Units from VendingData Corporation.

IN WITNESS WHEREOF, we have executed this certificate as partners of the Trust this ___ day of ______________ 2005, and declare that it is truthful and correct.

____________________________
(Name of Trust)
By:	________________________________________
	____________________
Its:	Trustee
By:	________________________________________
	____________________
Its:	Trustee
By:	________________________________________
	____________________
Its:	Trustee

E–1

EXHIBIT F

CERTIFICATE OF CORPORATE INVESTOR

CERTIFICATE OF _____________________________________________________(the “Corporation”)
 (Name of Corporation)

The undersigned, being the duly elected and acting Secretary or Assistant Secretary of the Corporation, hereby certifies as follows:

1.	That the Articles of Incorporation and By-Laws of the Corporation do not prohibit this investment.
2.	That the Board of Directors of the Corporation has determined, or appropriate officers acting under authority of the Board of Directors have determined, (a) that the investment in, and purchase of, Units (as defined in the Subscription Agreement) from VendingData Corporation is of benefit to the Corporation, and (b) to make such investment on behalf of the Corporation. Attached hereto is a true, correct and complete copy of resolutions of the Board of Directors (or an appropriate committee thereof) of the Corporation duly authorizing this investment or the authority of the acting officers, as applicable, and said resolutions have not been revoked, rescinded or modified and remain in full force and effect.
3.	That the following named individuals are duly elected officers of the Corporation, who hold the offices set opposite their respective names and who are duly authorized to execute any and all documents in connection with the Corporation’s investment in Units from VendingData Corporation and that the signatures written opposite their names and titles are their correct and genuine signatures.

Name	Title	Signature
____________________________	____________________	____________________________
____________________________	____________________	____________________________
____________________________	____________________	____________________________

IN WITNESS WHEREOF, I have executed this certificate this ___ day of ______________ 2005, and declared that it is truthful and correct.

____________________________
(Name of Corporation)
By:	________________________________________
	____________________
Its:	____________________

F–1

EXHIBIT G

CERTIFICATE OF LIMITED-LIABILITY COMPANY INVESTOR

CERTIFICATE OF _______________________________________(the “Limited Liability Company”)
(Name of Limited Liability Company)

The undersigned, being the duly elected and acting Manager or Managing Member (either, a “Manager”) of the Limited Liability Company, hereby certifies as follows:

1.

That the Managers of the Limited Liability Company having proper authority or the Members of the Limited Liability Company having proper authority have determined: (a) that the investment in, and purchase of, Units (as defined in the Subscription Agreement) from VendingData Corporation is of benefit to the Limited Liability Company; and (b) to make such investment on behalf of the Limited Liability Company. Attached hereto is a true, correct and complete copy of resolutions of the Managers or Members (or an appropriate committee thereof) of the Limited Liability Company duly authorizing this investment, and said resolutions have not been revoked, rescinded or modified and remain in full force and effect.

2.

That the following named individuals are duly elected Managers, Officers or Members of the Limited Liability Company, who hold the offices set forth opposite their respective names and who are duly authorized to execute any and all documents in connection with the Limited Liability Company’s investment in Units from VendingData Corporation and that the signatures written opposite their names and titles are their correct and genuine signatures.

Name	Title	Signature
____________________________	____________________	____________________________
____________________________	____________________	____________________________
____________________________	____________________	____________________________

IN WITNESS WHEREOF, I have executed this certificate this ___ day of __________, 2005, and declared that it is truthful and correct.

__________________________________
(Name of Limited-Liability Company )
By:	________________________________________
	____________________
Its:	____________________

G–1

SCHEDULE 6.4

CAPITALIZATION
(AS OF MARCH 1, 2005)

NAME OF SECURITY	AUTHORIZED SHARES; AUTHORIZED FOR ISSUANCE	ISSUED AND OUTSTANDING; EXERCISABLE; CONVERTIBLE
_____________________________________________	____________________	____________________
_____________________________________________	____________________	____________________

SCHEDULE 6.21

KEY EMPLOYEES

NAME	TITLE
_____________________________	___________________________________________________________

SCHEDULE 6.27

INDEBTEDNESS (AS OF MARCH 1, 2005)

DESCRIPTION	AMOUNT
_____________________________________________________________	___________________________
_____________________________________________________________	___________________________
Total

S–1

EX-10.2 3 exh_10-2.htm

Exhibit 10.2

FORM OF
PROMISSORY NOTE

THIS PROMISSORY NOTE AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD, DISTRIBUTED, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS: (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAW COVERING ANY SUCH TRANSACTION INVOLVING THESE SECURITIES; (B) THE COMPANY (DEFINED BELOW) RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION AND SUCH OPINION IS IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY; OR (C) PURSUANT TO RULE 144 UNDER SUCH ACT.

VENDINGDATA CORPORATION
10% SENIOR SECURED CONVERTIBLE NOTE DUE MARCH, 2008

$  __________________________ March __, 2005

FOR VALUE RECEIVED, the undersigned VendingData Corporation, a Nevada corporation (“Obligor” or the “Company”), hereby promises to pay to the order of  or (his/her/its) registered assigns (“Holder”) on March __, 2008 (the “Payment Date”), the principal sum of  Dollars ($ ) and to pay interest on the unpaid principal balance hereof from the date hereof at a rate of 10% per annum (the “Interest Rate”), payable semi-annually, in arrears, on August 1 and February 1 (commencing on August 1, 2005), until this note (this “Note”) is paid off and satisfied in full. Interest shall be calculated on the basis of a 365/366-day year and actual days elapsed. Accrued but unpaid interest shall not be compounded.

1. Payment. The outstanding principal balance under this Note and all accrued and unpaid interest shall be due and payable in a single balloon payment on the Payment Date. At its discretion, Obligor may, at any time, redeem the Note prior to the Payment Date (“Pre-Payment”), where such Pre-Payment must be in an amount no less than fifty percent (50%) of the then outstanding principal amount under this Note. If a Pre-Payment occurs on or prior to March __, 2006, the unpaid principal balance will be multiplied by one hundred and five percent (105%). If a Pre-Payment occurs after March __, 2006 and prior to March __, 2007, the unpaid principal balance will be multiplied by one hundred and three percent (103%). If a Pre-Payment occurs on or after March __, 2007, or if the Pre-Payment occurs pursuant to the provisions of Section 4.2 of the Subscription Agreement dated as of the date hereof by and between Obligor and Holder (the “Subscription Agreement”), the unpaid principal shall remain at par. If Obligor intends to exercise its right of Pre-Payment, Obligor shall provide Holder with thirty (30) days prior written notice during which time Holder may elect to convert this Note in accordance with Section 4 of this Note. Time is of the essence with respect to all of the terms and provisions of this Note.

2.  Description of Notes. This Note is issued as part of a private placement of up to Two Million Dollars ($2,000,000) in senior convertible notes (the “Private Placement”). This Note shall be pari passu to all of the Notes issued as part of the Private Placement and the 10% senior convertible notes due February 15, 2008 (the “February Notes”), issued by the Company in February of 2005 (the “February Private Placement”). This Note is being issued in increments of Fifty Thousand Dollars ($50,000).

3. Security. This Note is secured pursuant to the terms of that certain Amended and Restated Security Agreement of even date herewith (the “Security Agreement”). Holder agrees that all notices, demands, consents and other rights of Holder are to be exercised pursuant to that certain Security Agreement of even date herewith.

4. Conversion. As long as the there remains principal outstanding pursuant to this Note (the “Conversion Period”), Holder may exercise a one-time right to convert up to fifty percent (50%) of the then outstanding principal into shares of Obligor’s common stock, $.001 par value (“Common Stock”) at a rate of one share of Common Stock per each One and 65/10ths Dollars ($1.65) (the “Conversion Price”) of outstanding principal, where the resulting shares of Common Stock shall be referred to as the “Conversion Shares.” 

4.1. Covenants.  Obligor hereby covenants and agrees that: (1) all Conversion Shares shall, upon issuance in accordance with the terms of this Note and subject to clause (2) of this Section 4.1, be duly authorized, validly issued, fully paid, and non-assessable; (2) Obligor will amend and restate its articles of incorporation to provide for a sufficient number of authorized shares to be reserved for the purpose of issuance upon conversion of this Note, sufficient number of shares of Common Stock to provide for the conversion of this Note; and (3) the conversion rights of Holder shall be binding upon any entity succeeding to Obligor by merger, consolidation, or acquisition of all or substantially all of Obligor’s assets.

4.2. Adjustment Provisions. During the Conversion Period, the Conversion Price and the number of Conversion Shares shall be subject to adjustment from time to time as provided in this Section 4.2. If Obligor shall, prior to the payment of the Note in full, (1) declare a dividend or make a distribution of Common Stock payable in shares of Common Stock, (2) subdivide its outstanding shares of Common Stock, into a greater number of shares of Common Stock, (3) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (4) issue any shares of capital stock of Obligor by reclassification or capital reorganization of its shares of Common Stock, then the number of Conversion Shares and the Conversion Price in effect immediately prior to such action shall be adjusted so that Holder shall be entitled to receive the number and kind of shares of Common Stock or other capital stock which Holder would have owned or have been entitled to receive immediately after such action had Holder converted this Note immediately prior to the record date in the case of (1), or the effective date in the case of (2), (3) or (4). In the event that any adjustment of the Conversion Price as required herein results in a fraction of a cent, such Conversion Price shall be rounded up to the nearest cent.

4.3. Weighted Average Conversion Price Adjustment Provisions. Until the conversion of this Note pursuant to this Section 4, in the event that the Company issues Common Stock in consideration for cash, cash equivalents, promissory notes or other consideration (other than pursuant to stock options issued pursuant to the Company’s stock option plans) at a price per share or issues debt or equity securities or reprices outstanding debt or equity securities with an exercise and/or conversion price (in either case, the “New Price”) less than the Conversion Price, as adjusted in accordance with Section 4.2 hereof, the Company shall agree to calculate the adjusted Conversion Price (the “Adjusted Conversion Price”) based upon a weighted average of the Conversion Shares issuable based on the Conversion Price and the New Price pursuant to the following formula:

Adjusted Conversion Price	=	Conversion Price	x	(	Shares Outstanding	+	Conversion Shares Based	)
					Prior to Issuance		on Conversion Price
				(	Shares Outstanding	+	Conversion Shares Based	)
					Prior to Issuance		on New Price

where, based on the 17,199,558 shares outstanding as of December 31, 2004 and the maximum conversion of the Notes, if the Company were to issue shares of Common Stock at $1.00 per share, the Adjusted Conversion Price would be calculated as follows:

–2–

Adjusted Conversion Price	=	$1.65	x	(	17,199,558	+	606,061	)	=	$1.61
				(	17,199,558	+	1,000,000	)

4.4. Manner of Conversion. Subject to the provisions hereof, the relevant portion of this Note may be converted by the Holder by the surrender of this Note, together with a conversion agreement in the form attached hereto (the “Conversion Agreement”), duly completed and executed by Holder, to Obligor during normal business hours on any business day at Obligor’s principal executive offices (or such other location as Obligor may designate by notice to Holder).

4.5. Issuance of Conversion Shares. Subject to the amendment and restatement of the Obligor’s articles of incorporation as contemplated by Section 4.1(2), the Conversion Shares shall be deemed to be issued to Holder, as the record owner of such Conversion Shares, as of the close of business on the date on which this Note shall have been surrendered and the completed Conversion Agreement shall have been delivered. Certificates for the Conversion Shares, representing the aggregate number of shares specified in the Conversion Agreement, shall be delivered to Holder as soon as reasonably practicable, not exceeding three (3) business days after the relevant portion of this Note shall has been so converted. The certificates so delivered shall be in such denominations as may be reasonably requested by Holder and shall be registered in the name of Holder. Obligor shall, at its expense, at the time of delivery of such certificates, deliver to Holder a new promissory note substantially identical to this Note other than with respect to this conversion herewith representing the balance of the outstanding principal under this Note that had not been converted.

4.6. No Rights or Liabilities as a Stockholder. This Note shall not entitle Holder to any voting rights or other rights as a stockholder of Obligor. No provision of this Note, in the absence of affirmative action by Holder to convert any relevant portion of this Note, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of such Holder for the Conversion Price or as a stockholder of Obligor, whether such liability is asserted by Obligor or by creditors of Obligor.

5. Demand Registration Rights. As soon as practicable after the issuance of this Note, Obligor shall prepare and file a registration statement (the “Registration Statement”) on Form S-3 or any similar short-form registration statement, with respect to the registration under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the “Securities Act”) of all Conversion Shares for resale, which Registration Statement shall also cover such shares convertible under the February Notes, which Registration Statement shall also cover such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Notes as a result of adjustments from stock splits, stock dividends or similar transactions.

5.1. Registration Process. Obligor shall file the Registration Statement as soon as practicable, but in any event within thirty (30) days after the issuance of this Note, and shall use commercially reasonable efforts to have such Registration Statement promptly declared effective by the Securities and Exchange Commission (“SEC”) whether or not all Conversion Shares requested to be registered can be included; provided, however, that if Obligor shall furnish to such Holder a certificate signed by the President of Obligor stating that in the good-faith judgment of the Obligor’s board of directors it would be seriously detrimental to Obligor and its stockholders for such Registration Statement to be filed within such thirty-day (30-day) period and it is therefore essential to defer the filing of such Registration Statement, Obligor shall have an additional period of not more than ninety (90) days after the expiration of the initial thirty-day (30-day) period within which to file such Registration Statement; provided, that during such time Obligor may not file a Registration Statement for securities to be issued and sold for its own account.

–3–

5.2. Registration Default. In the event that: (a) the Registration Statement is not filed by the Company within thirty (30) days after the issuance of this Note, or declared effective by the SEC within one hundred twenty (120) days after the date of the issuance of this Note, on the 120th day after the issuance of this Note, or (b) the Common Stock is no longer listed on the American Stock Exchange or another national securities exchange or quotation medium (including the Nasdaq National Market and the Nasdaq SmallCap Market) or has been suspended from trading thereon for three (3) consecutive business days, the Interest Rate shall increase by one-half percent (0.5%) per annum for each 30-day period for which Obligor remains in default pursuant to this Section 5.2, where the Interest Rate shall not increase to more than fourteen percent (14%) per annum; provided, however, with respect to a registration default under subsection (b), Obligor shall have one hundred twenty (120) days to cure such registration default during which time the Interest Rate shall not increase, where the failure of Obligor to cure during said 120-day period shall cause the retroactive application of the one-half percent (0.5%) per annum increase to the date of the registration default. Once the Registration Statement has been declared effective by the SEC, if the Registration Statement is no longer effective, other than as provided in Section 5.3(f), for a period of thirty (30) days in the aggregate (which days need not be consecutive), on the day after such thirtieth (30th) day the then applicable Interest Rate shall increase by one-half percent (0.5%) per annum and shall be subject to additional increases of one-half percent (0.5%) per annum for every such subsequent aggregate 30-day period that the Registration Statement is no longer effective. Upon the re-listing of the Common Stock or when the Registration Statement regains its effectiveness, the Interest Rate shall return to ten percent (10%) per annum.

5.3. Obligations of the Company. In connection with the registration of the Conversion Shares, the Company shall have the following obligations:

a. The Company shall keep such Registration Statement effective pursuant to Rule 415 at all times until such date as is the earlier of (i) the date on which all of the Conversion Shares have been sold and (ii) the date on which all of the Conversion Shares may be immediately sold to the public without registration or restriction pursuant to Rule 144(k) under the Securities Act or any successor provision (the “Registration Period”), which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein and all documents incorporated by reference therein) (i) shall comply in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder and (ii) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading. The financial statements of the Company included in the Registration Statement or incorporated by reference therein will comply as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC applicable with respect thereto. Such financial statements will be prepared in accordance with U.S. generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed on summary statements and fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to immaterial year-end adjustments)).

–4–

b. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Conversion Shares of the Company covered by the Registration Statement until the end of the Registration Period.

c. The Company shall furnish to special counsel for the Holders whose Conversion Shares are included in the Registration Statement (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of the Registration Statement and any amendment thereto, each preliminary prospectus and prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC (including, without limitation, any request to accelerate the effectiveness of the Registration Statement or amendment thereto), and each item of correspondence from the SEC or the staff of the SEC, in each case relating to the Registration Statement (other than any portion, if any, thereof which contains information for which the Company has sought confidential treatment), (ii) on the date of effectiveness of the Registration Statement or any amendment thereto, a notice stating that the Registration Statement or amendment has been declared effective, and (iii) such number of copies of a prospectus, including a preliminary prospectus, if applicable, and all amendments and supplements thereto and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Conversion Shares owned by such Holder.

d. The Company shall use its best efforts to (i) register and qualify the Conversion Shares covered by the Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as each Holder who holds Conversion Shares being offered reasonably requests, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Conversion Shares for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 5.3.d, (B) subject itself to general taxation in any such jurisdiction, (C) file a general consent to service of process in any such jurisdiction, (D) provide any undertakings that cause the Company undue expense or burden, or (E) make any change in its charter or bylaws, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders.

e. If (i) there is material non-public information regarding the Company that the Company’s Board of Directors (the “Board”) reasonably determines not to be in the Company’s best interests to disclose and that the Company is not otherwise required to disclose, or (ii) there is a significant business opportunity (including, but not limited to, the acquisition or disposition of assets (other than in ordinary course of business) or merger, consolidation, tender offer or other similar transaction) available to the Company that the Board reasonably determines not to be in the Company’s best interests to disclose and that the Company would be required to disclose under the Registration Statement, then the Company may suspend effectiveness of a Registration Statement filed pursuant to this Note and suspend the sale of Conversion Shares under such Registration Statement for a period not to exceed twenty (20) consecutive calendar days, provided that the Company may not suspend its obligation pursuant to this Section 5.3.e for more than forty (40) calendar days in the aggregate during any twelve (12) month period (each, a “Blackout Period”); provided, however, that no such suspension shall be permitted for more than one twenty (20) calendar day period, arising out of the same set of facts, circumstances or transactions.

–5–

f. As promptly as practicable, but in no event later than five (5) business days, after becoming aware of such event, the Company shall notify each Holder of the occurrence of any event (where filing and delivery of a Form 8-K shall constitute compliance) of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, use its commercially reasonable efforts promptly to prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to each Holder as such Holder may reasonably request.

g. The Company shall use its commercially reasonable efforts (i) to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, and, if such an order is issued, to obtain the withdrawal of such order at the earliest practicable moment (including in each case by amending or supplementing such Registration Statement) and (ii) to notify each Holder who holds Conversion Shares being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof (and if such Registration Statement is supplemented or amended, deliver such number of copies of such supplement or amendment to each Holder as such Holder may reasonably request).

h. The Company shall permit a single firm of counsel designated by the Holders of the Notes and the February Notes holding a majority in interest of the Conversion Shares and the shares of Common Stock issued pursuant to the February Notes to review the Registration Statement and all amendments and supplements thereto a reasonable period of time prior to its filing with the SEC, and not file any document in a form to which such counsel reasonably objects.

i. The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of the Registration Statement.

j. At the request of any Holder in the case of an underwritten public offering, the Company shall furnish, on the date of effectiveness of the Registration Statement (i) an opinion, dated as of such date, from counsel representing the Company addressed to the Holders and in form, scope and substance as is customarily given in an underwritten public offering and (ii) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters and the Holders.

–6–

k. To the extent permitted by law, the Company shall make available for inspection by (i) any Holder, (ii) any underwriter participating in any disposition pursuant to the Registration Statement filed pursuant to Section 5, (iii) one firm of attorneys and one firm of accountants or other agents retained by the Holders, and (iv) one firm of attorneys retained by all such underwriters (collectively, the “Inspectors”), all reasonably pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to exercise its due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence; provided, however, that each Inspector shall hold in confidence and shall not make any disclosure (except to an Holder) of any Record or other information which the Company provides in accordance with this Section 5.3(k), unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement, (b) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this Note or any other agreement. The Company shall not be required to disclose any confidential information in such Records to any Inspector until and unless such Inspector and its respective Holder shall have entered into confidentiality agreements (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially in the form of this Section 5.3(k). Each Holder agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein shall be deemed to limit the Holders’ ability to sell Conversion Shares in a manner which is otherwise consistent with applicable laws and regulations.

l. The Company shall hold in confidence and not make any disclosure of information concerning an Holder provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, (iv) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement, or (v) such Holder consents to the form and content of any such disclosure. The Company agrees that it shall, upon learning that disclosure of such information concerning an Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to such Holder prior to making such disclosure, and allow the Holder, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

m. The Company shall use its commercially reasonable efforts to promptly either (i) cause all of the Conversion Shares covered by the Registration Statement to be listed on the American Stock Exchange or another national securities exchange and on each additional national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Conversion Shares is then permitted under the rules of such exchange, or (ii) secure the designation and quotation of all of the Conversion Shares covered by the Registration Statement on the Nasdaq National Market or Nasdaq SmallCap Market.

n. The Company shall provide a transfer agent and registrar, which may be a single entity, for the Conversion Shares not later than the effective date of the Registration Statement.

–7–

o. The Company shall cooperate with the Holders who hold Conversion Shares being offered and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Conversion Shares to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or the Holders may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or the Holders may request, and, within three (3) business days after the Registration Statement which includes Conversion Shares is declared effective by the SEC, the Company shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Conversion Shares (with copies to the Holders whose Conversion Shares are included in such Registration Statement), an opinion of such counsel in the customary form setting forth that the Conversion Shares have been registered under the Securities Act.

p. At the request of any Holder, the Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement as may be reasonably necessary in order to change the plan of distribution set forth in such Registration Statement.

q. The Company shall comply with all applicable laws related to a Registration Statement and offering and sale of securities and all applicable rules and regulations of governmental authorities in connection therewith (including, without limitation, the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated by the SEC).

r. From and after the date of this Note, the Company shall not, and shall not agree to, allow the holders of any securities of the Company to include any of their securities that are not Conversion Shares in the Registration Statement or any amendment or supplement thereto without the consent of the holders of a majority in interest of the Conversion Shares.

5.4. Restrictions. Holder may assign the registration rights granted under this Section 5 to any assignee of this Note or any portion thereof representing not less than $50,000 in principal amount, unless Obligor has provided its prior written consent to such assignment and the assignment of this Note or the Conversion Shares, as applicable.

5.5. Fees.  Obligor shall pay all Registration Expenses relating to any registration of the Conversion Shares hereunder and the shares issuable pursuant to the February Notes. “Registration Expenses” shall mean all reasonable fees and expenses incident to Obligor’s performance of or compliance with this Section 5, including reasonable fees of counsel, not exceeding $25,000, in connection with the sale of the Conversion Shares and the shares issuable pursuant to the February Notes. Notwithstanding the foregoing, Holder shall pay any and all underwriting discounts, commissions and transfer taxes attributable to the Conversion Shares.

–8–

5.6. Cooperation; Indemnification by Holder. In connection with any registration statement in which Holder is participating, Holder will furnish to Obligor in writing such information and documents as Obligor reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify and hold harmless Obligor, its affiliates and their respective officers, directors, employees and affiliates against any losses, claims, damages, liabilities, joint or several, to which such parties may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (1) any untrue or alleged untrue statement of a material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application; or (2) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, prospectus, preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to Obligor by such Holder expressly for use therein. The Holder shall reimburse Obligor, its affiliates, officers, directors, employees and affiliates for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the obligation to indemnify will be limited to Holder in amount not to exceed the net proceeds to Holder from the sale of such Conversion Shares and shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of Holder (which consent shall not be unreasonably withheld).

5.7. Indemnification by Obligor. In connection with any registration statement in which Holder is participating, Obligor will indemnify and hold harmless Holder, its affiliates and their respective officers, directors, employees and affiliates against any losses, claims, damages, liabilities, joint or several, to which such parties may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (1) any untrue or alleged untrue statement of a material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application; or (2) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such untrue statement or omission is made in such registration statement, prospectus, preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to Obligor by Holder expressly for use therein. Obligor shall reimburse Holder, its affiliates, officers, directors, employees and affiliates for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the obligation to indemnify will be limited to Obligor and shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of Obligor (which consent shall not be unreasonably withheld).

6. Fees and Expenses. In the event any action is taken to collect or enforce this Note, Obligor agrees to pay, in addition to the principal and interest due and payable hereon, all reasonable costs of collecting this Note, including reasonable attorneys’ fees and expenses. These costs shall include any expenses incurred by Holder in any bankruptcy, reorganization, or other insolvency proceeding.

7. Non-Waiver. The liability of Obligor under this Note (and the liability of any endorsers of this Note) shall not be discharged, diminished or in any way impaired by: (1) any waiver by Holder or failure to enforce or exercise rights under any of the terms, covenants or conditions of this Note; (2) the granting of any renewal, indulgence, extension of time to Obligor, or any other obligors of the Indebtedness (as defined in the Subscription Agreement); or (3) the addition or release of any person or entity primarily or secondarily liable for the Indebtedness. No delay or omission of Holder in exercising any right or rights, shall operate as a waiver of such right or any other rights. A waiver on one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion.

8. Maximum Interest Rate. In no event shall the interest rate charged or received hereunder at any time exceed the maximum interest rate permitted under applicable law. Payments of interest received by Holder hereunder which would otherwise cause the interest rate hereunder to exceed such maximum interest rate shall, to the extent of such excess, be deemed to be (and be deemed to have been contracted as being) prepayments of principal and applied as such. Unless otherwise provided in this Note or in the Security Agreement between the Obligor and Holder, among others, any waiver or amendment of any provisions of this Note shall be in writing, executed and delivered by the Company and by parties holding Notes representing not less than a majority of the then outstanding principal of all of the Notes then issued and outstanding.

–9–

9. Assignment; Binding Effect. Holder may assign this Note upon providing Obligor with prior written notice, where said notice shall provide the effective date of the assignment and contact information of the assignee. This Note shall be binding upon the Obligor and its successors and assigns and shall inure to the benefit of Holder and its successors and assigns. Every person and entity at any time liable for the payment of this Note hereby waives demand, presentment, protest, notice of protest, notice of nonpayment due and all other requirements otherwise necessary to hold them immediately liable for payment hereunder.

10. Governing Law; Venue. This Note is governed by and shall be construed and enforced in accordance with the laws of the State of Nevada. Any dispute arising under this Note shall be brought in any state of federal court of competent jurisdiction sitting in Clark County, Nevada.

VendingData Corporation
By:	___________________________
	__________________
Its:	__________________

–10–

CONVERSION AGREEMENT

TO:         VENDINGDATA CORPORATION (THE “COMPANY”)

The undersigned, pursuant to the provisions set forth in the attached 10% Senior Secured Convertible Note due March, 2008 (the “Note”) hereby irrevocably elects and agrees to convert:

$________________ of the outstanding principal under the Note, representing ______ percent (______%) outstanding principal under the Note, into shares of the Company’s common stock, at a rate of $1.65 per share.

Please issue a certificate or certificates for the resulting shares of the Company’s common stock and a replacement promissory note reflecting the remaining outstanding principal under the Note in the name of:

NAME:	_________________________________
SIGNATURE:	_________________________________
DATED:	_________________________________
ADDRESS:	_________________________________
	_________________________________
NOTE:	The above signature should correspond exactly with the name on the face of the  Note

–11–

EX-10.3 4 exh_10-3.htm

Exhibit 10.3

FORM OF

INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (this “Agreement”) is made and entered into as of the _____ day of March 2005 (the “Effective Date”), by and between VendingData Corporation, a Nevada corporation (the “Company”), Premier Trust, Inc., a Nevada corporation (the “Collateral Agent”), and the persons listed on Schedule A hereto (“Note Holders”).

WHEREAS, the Company conducted a private placement of 10% Senior Secured Convertible Notes due February 2008 in the aggregate amount of up to Ten Million Dollars ($10,000,000) (the “February Notes”), exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”);

WHEREAS, the Company entered into subscription agreements (the “February Subscription Agreements”), promissory notes (the “February Promissory Notes”), exchange agreements (the “Exchange Agreements”), a security agreement (the “Security Agreement”) and a collateral agent agreement (the “Collateral Agent Agreement” and together with the February Subscription Agreements, the February Promissory Notes, the Exchange Agreements, the Security Agreements and the Collateral Agent Agreement, the “February Transaction Documents”) with the holders of the February Notes (the “February Note Holders”) through which the Company granted a first priority security interest in the Collateral (as defined in the Security Agreement) to the February Note Holders;

WHEREAS, through the Collateral Agent Agreement, the February Note Holders appointed the Collateral Agent to act as their collateral agent and to take any action as their attorney-in-fact for the purpose of carrying out the provisions of the Collateral Agent Agreement including, without limitation, taking any action on behalf of, or at the instruction of, the Majority in Interest (as defined in the Collateral Agent Agreement) at the written direction of the Majority in Interest and executing any consent authorized pursuant to the Collateral Agent Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable (and lawful) to accomplish the purposes hereof;

WHEREAS, the Company proposes to conduct a private placement of 10% Senior Secured Convertible Notes due March 2008 in the aggregate amount of up to Two Million Dollars ($2,000,000) (the “March Notes” and, together with the February Notes, the “Notes”), exempt from the registration requirements of the Securities Act and through separate subscription agreements (the “March Subscription Agreements”) and promissory notes (the “March Promissory Notes” and, together with the March Subscription Agreements, the “March Transaction Documents”);

WHEREAS, the Company proposes to issue the March Notes on a pari passu basis as the February Notes and to add the holders of the March Notes (the “March Note Holders” and, together with the February Note Holders, the “Note Holders”) as parties to the Security Agreement and the Collateral Agent Agreement;

WHEREAS, the Company, the Collateral Agent, the February Note Holders and the March Note Holders desire to enter into this Agreement for the purposes of, among other things, providing the Company with the authority to place the March Notes on a pari passu basis as the February Notes and amended and restating the Security Agreement and the Collateral Agent Agreement;

NOW, THEREFORE, for and in consideration of the promises and mutual covenants, agreements, understandings, undertakings, representations, warranties and promises, and subject to the conditions hereinafter set forth, and intending to be legally bound thereby, the parties do hereby covenant and agree that the recitals set forth above are true and accurate and are hereby incorporated in and made a part of this Agreement, and further covenant and agree as follows:

1. Consent

1.1. Consent to Issuance. As required by Section 5.9 of the February Subscription Agreement, the February Note Holders hereby consent to the issuance by the Company of the March Notes and through such consent hereby agree that:

(a) The March Notes shall be issued on a pari passu basis with the February Notes;

(b) The registration rights contained in Section 5 of the February Notes, including the rights, obligations and remedies described therein, shall be deemed to govern, include and apply to the March Note Holders and the conversion shares issuable to the March Note Holders;

(c) The Security Agreement shall be amended and restated as provided for in Section 1.2 of this Agreement; and

(d) The Collateral Agent Agreement shall be amended and restated as provided for in Section 1.3 of this Agreement.

1.2. Amendment and Restatement of Security Agreement. The Company and the February Note Holders hereby consent and agree to the amendment and restatement of the Security Agreement to provide for: (1) the grant to the March Note Holders a first priority security interest in the Collateral (as defined in the Security Agreement) on a pari passu basis with the February Note Holders; and (2) the grant to the Collateral Agent the power of attorney to execute an Amended and Restated Security Agreement on their behalf.

1.3. Amendment and Restatement of Collateral Agreement. As part of the Amended and Restated Security Agreement, the Company and the February Note Holders hereby consent and agree to the amendment and restatement of the Collateral Agreement to provide for: (1) the ability of the Collateral Agent to act on behalf of both the February Note Holders and the March Note Holders as a group and to take actions on behalf of the holders holding a majority of the outstanding principal on the Notes; and (2) the grant to the Collateral Agent the power of attorney to execute an Amended and Restated Collateral Agreement on their behalf.

1.4. Power of Attorney. Each undersigned Note Holder hereby irrevocably constitutes and appoints the Collateral Agent as its true and lawful attorney-in-fact, with full power and authority for the undersigned, and in the undersigned’s name, place and stead, to:

(a) Execute, acknowledge, verify and deliver the Amended and Restated Security Agreement on behalf of the undersigned Note Holder;

(b) Execute, acknowledge, verify and deliver the Amended and Restated Collateral Agreement on behalf of the undersigned Note Holder; and

(c) Take any other action of any type whatsoever in connection with the foregoing which, in the opinion of the Collateral Agent, may be of benefit to, in the best interest of, or legally required by, the undersigned in connection with the execution, acknowledgment, verification and delivery of the Amended and Restated Security Agreement and the Amended and Restated Collateral Agreement.

–2–

2. REPRESENTATIONS, WARRANTIES AND CONVENANTS

The Company and the Note Holders represent and warrant to each other as follows as of the date hereof:

2.1. Authorization. Each party has full power and authority to enter into this Agreement. This Agreement constitutes valid and legally binding obligations of each party to this Agreement, enforceable in accordance with the terms herein, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally, the enforcement of creditor’s rights and remedies or by other equitable principles of general application.

2.2. Compliance. The Company and the Note Holders have complied with and are in good standing under the relevant February Transaction Documents and the March Transaction Documents.

2.3. Best Efforts. Each party hereby acknowledges that it will use its best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement.

2.4. Indemnification. Each party agrees that it shall indemnify and hold harmless the other parties to this Agreement and their respective officers, directors, employees, agents and professional advisors from and against any and all loss, damage, liability, or expense, including costs and reasonable attorneys’ fees, that the foregoing, or any of them, may incur by reason of, or in connection with, any misrepresentation, inaccurate statement or material omission made by the party herein, any breach of any of the party’s warranties, or any failure on the party’s part to fulfill any of the party’s covenants, agreements or obligations set forth herein.

3. MISCELLANEOUS

3.1. Governing Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada. The parties hereto submit to the exclusive jurisdiction of the courts located in Clark County, Nevada, with respect to any dispute arising under this Agreement and the transactions contemplated hereby.

3.2. Entire Agreement. This Agreement, the February Transaction Documents, the March Subscription Agreements, the March Notes, the Amended and Restated Security Agreement and the Amended and Restated Collateral Agreement contain the entire agreement between the Company and Note Holders with regard to the subject matter hereof and may not be modified or waived except in a writing signed by the Company and Note Holders.

3.3. Headings. The headings of this Agreement are for convenience and reference only, and shall not limit or otherwise affect the interpretation of any term or provision hereof.

3.4. Binding Effect. This Agreement and the rights, powers, and duties set forth herein shall, except as otherwise expressly provided herein, be binding upon and inure to the benefit of, the heirs, executors, administrators, legal representatives, successors, and assigns of the parties hereto.

3.5. No Assignment. The parties to this Agreement may not assign any of their rights or interests in and under this Agreement without the prior written consent of the other parties, and any attempted assignment without such consent shall be null and void and without any force or effect whatsoever.

–3–

3.6. Attorneys’ Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled.

3.7. Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing, shall be sent by facsimile to the party to be notified and shall be deemed effectively given upon personal delivery to the party to be notified, or four days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified to the address or facsimile number set forth on the signature pages hereto, or at such other facsimile number or address as a party may designate by ten (10) days’ advance written notice to the other parties. A copy of any notice to the Company shall be sent to Kummer Kaempfer Bonner & Renshaw, Attn: Michael J. Bonner, 3800 Howard Hughes Parkway, Seventh Floor, Las Vegas, Nevada 89109, 702-796-7181 (facsimile).

3.8. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. In addition, if any such provision, or any part thereof, is held to be unenforceable, the parties agree that the court, regulatory agency or other governmental body making such determination shall have the power to delete or add specific words or phrases, so that such provision shall then be enforceable to the fullest extent permitted by law.

3.9. Neutral Interpretation. This Agreement shall be construed in accordance with its intent and without regard to any presumption or any other rule requiring construction against the party causing the same to be drafted.

–4–

3.10. Waiver. No delay or omission by a party in exercising any rights shall operate as a waiver of such right or any other right. Waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. The rights and remedies of a party, whether evidenced hereby or by any other agreement, instrument or paper, shall be cumulative and may be exercised singularly or concurrently. Unless otherwise provided in this Agreement, any waiver or amendment of any provisions of this Agreement shall be in writing, executed and delivered by the Company and by the Note Holders holding Notes representing not less than a majority of the then outstanding principal of all of the Notes then issued and outstanding.

IN WITNESS WHEREOF, the undersigned have executed this Intercreditor Agreement as of the Effective Date.

“COMPANY”
VENDINGDATA CORPORATION,		ADDRESS
a Nevada corporation
		Attn: Chief Executive Officer
		Attn: Chief Financial Officer
		6830 Spencer Street
By:	__________________________________________	Las Vegas , Nevada 89119
	Douglas H. Caszatt
Title:	Acting Chief Financial Officer and Secretary	Telephone:	702-733-7195
		Facsimile:	702-733-7197
“COLLATERL AGENT”
PREMIER TRUST, INK.,		ADDRESS
a Nevada corporation
		2700 West Sahara , Suite 300
By:	__________________________________________	Las Vegas , Nevada 89102
	Mark Dreschler
Title:	President	Telephone:	702-_______
		Facsimile:	702-507-0755

ACKNOWLEDGEMENT AND CONSENT

As of the Effective Date, the undersigned hereby acknowledges and consents to the foregoing Intercreditor Agreement by and among VendingData Corporation, a Nevada corporation, Premier Trust, Inc., a Nevada corporation, and the persons listed on the Schedule A hereto, and agrees to be bound by the terms and conditions thereof.

“NOTE HOLDER”		ADDRESS		NOTE AMOUNT
______________________________		_________________________		$_________
		_________________________
By:	__________________________	_________________________
	________________
Title:	________________	Telephone:	(____) _________
		Facsimile:	(____) _________

–5–

SCHEDULE A

NOTE HOLDERS

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
1.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
2.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
3.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
4.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
5.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
6.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
7.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
8.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________

–6–

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
9.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
10.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
11.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
12.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
13.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
14.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
15.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
16.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
17.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________

–7–

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
18.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
19.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
20.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
21.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
22.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
23.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
24.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
25.	_____________________	____________________	$ ____________
		____________________
		Telephone: ______________
		Facsimile: _______________
		TOTAL	$ ____________

–8–

	MARCH NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
26.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
27.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
28.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
29.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
30.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
		TOTAL	$ ____________

–9–

EX-10.4 5 exh_10-4.htm

Exhibit 10.4

FORM OF
AMENDED AND RESTATED SECURITY AGREEMENT

THIS AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”) is made and entered into as of the _____ day of March 2005 (the “Effective Date”), by and among VENDINGDATA CORPORATION, a Nevada corporation (“Debtor”), and PREMIER TRUST, INC., a Nevada corporation (the “Collateral Agent”) in its capacity as collateral agent and on behalf of the persons listed on Schedule A to this Agreement (the “Secured Parties”).

WITNESSETH:

WHEREAS, Debtor conducted a private placement of 10% senior secured convertible notes due February 2008 (the “February Notes”), in the aggregate amount of up to Ten Million Dollars ($10,000,000) (the “February Private Placement”), exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”);

WHEREAS, Debtor proposes to conduct an additional private placement of 10% senior secured convertible notes due March 2008 (the “March Notes” and, together with the February Notes, the “Notes”), in the aggregate amount of up to Two Million Dollars ($2,000,000) (the “March Private Placement” and, together with the February Private Placement, the “Private Placements”), exempt from the registration requirements of the Securities Act;

WHEREAS, the Debtor proposes to issue the March Notes on a pari passu basis as the February Notes and to grant to the holders of the February Notes (the “February Note Holders”) and the holders of the March Notes (the “March Note Holders” and, together with the February Note Holders, the “Secured Parties”) a first priority security interest in the Collateral (as defined herein); and

WHEREAS, pursuant to that certain Intercreditor Agreement by and among Debtor, the Collateral Agent and the Secured Parties, Debtor has agreed to secure its obligations arising under the Notes, including all debts, obligations, liabilities, interest, fees, charges and expenses arising under the Notes (the “Obligations”), by amending and restating the Security Agreement dated as of February 15, 2005.

NOW, THEREFORE, for and in consideration of the promises and mutual covenants, agreements, understandings, undertakings, representations, warranties and promises, and subject to the conditions hereinafter set forth, and intending to be legally bound thereby, the parties do hereby covenant and agree that the recitals set forth above are true and accurate and are hereby incorporated in and made a part of this Agreement, and further covenant and agree as follows:

1.SECURITY INTEREST

Subject to the terms and conditions of this Agreement, Debtor hereby grants to Secured Parties, as a group, a first priority security interest in all of Debtor’s right, title and interest in all property and interests of Debtor, tangible or intangible, whether now or hereafter existing, wherever located (collectively, the “Collateral”), including all:

1.1. Accounts, including but not limited to, all accounts, all rights of Debtor to payment for goods sold or leased or for services rendered, all accounts receivable of Debtor; all obligations owing to Debtor evidenced by an instrument or chattel paper; all obligations owing to Debtor of any kind or nature, including all writings, if any, evidencing the same, including all instruments, drafts, acceptances and chattel paper; any and all proceeds of any of the foregoing. Further included within the term “Accounts” are all right, title and interest of Debtor in and any security and liens with respect to any Account, and all Accounts, Documents and Contract Rights of Debtor as defined in the Uniform Commercial Code as enacted in the State of Nevada (the “Uniform Commercial Code”); and

1.2. Investment Property, including all of Debtor’s investment property (as defined in the Uniform Commercial Code) and all of Debtor’s other securities (whether certificated or uncertificated), security entitlements, financial assets, securities accounts, commodity contracts, and commodity accounts (as each such term is defined in the Uniform Commercial Code), including all substitutions and additions thereto, all dividends, distributions and sums distributable or payable from, upon or in respect of such property, and all rights and privileges incident to such property; and

1.3. Instruments and Chattel Paper, including all instruments and chattel paper as defined in the Uniform Commercial Code and all proceeds thereof; and

1.4. General Intangibles, including but not limited to, all general intangibles as defined in the Uniform Commercial Code and all proceeds thereof, including without limitation, any and all rights of Debtor to any refund of any tax assessed against Debtor or paid by Debtor, loss carry-back tax refunds, insurance premium rebates, unearned premiums, insurance proceeds, choses in action, names, trade names, goodwill, trade secrets, computer programs, computer records, data, computer software, customer lists, patents, patent rights, patent applications, patents pending, patent licenses or assignments, development ideas and concepts, licenses, permits, franchises, literary rights, rights to performance, trademarks, trademark applications, trademark rights, logos, intellectual property, copyrights, proprietary or other processes, drawings, designs, diagrams, plans, reports, charts, catalogs, manuals, research, literature, proposals and other reproductions on paper or otherwise, of any and all concepts or ideas, whether or not related to the business or operations of Debtor; and

1.5. Equipment as defined in the Uniform Commercial Code, including but not limited to, all equipment, vehicles, machinery, tools, furniture, fixtures, trade fixtures, parts, all tangible personal property utilized in the conduct of Debtor’s business and all additions, accessions, substitutions, components, and replacements thereto, therefor and thereof and all proceeds thereof; and

1.6. Inventory as defined in the Uniform Commercial Code, including without limitation, all raw materials and other materials and supplies, work-in-progress and finished goods and any products made or processed therefrom and all substances, if any, commingled therewith or added thereto; and

1.7. All products and proceeds of the above, including insurance proceeds.

2.OBLIGATIONS SECURED

2.1. Obligations Secured. The security interest granted hereby secures payment and performance of the Obligations under the Notes on a pari passu basis.

2.2. Seniority. The payment of the Notes is senior to all other obligations of Debtor whether now existing or hereinafter incurred except for: (1) existing asset-based borrowings and lines of credit from commercial or financial institutions, including Madison Leasing or Central Leasing in the aggregate amount of $2,834,689 as of December 31, 2004; (2) indebtedness approved by the prior written consent from each Secured Party; and (3) the February Notes.

2.3. Collateral Agent. Debtor and the Secured Parties have identified the Collateral Agent to serve as the authorized representative for the Secured Parties pursuant to the terms of that certain Amended and Restated Collateral Agent Agreement that will replace the Collateral Agent Agreement dated as of February 15, 2005.

–2–

3.DEBTOR’S REPRESENTATIONS AND WARRANTIES

Debtor represents and warrants that:

3.1. Authorization. The execution, delivery and performance of this Agreement and the Notes are within Debtor’s corporate powers, and are not in contravention of law nor of the terms of Debtor’s Articles of Incorporation or Bylaws, as amended, nor of any indenture, agreement or undertaking to which Debtor is a party or by which it is bound.

3.2. Place of Business. Debtor’s principal place of business is located at the address provided on the signature page of this Agreement, and Debtor keeps its records concerning inventory, accounts, contract rights and other property at that location.

3.3. Title to Collateral. With the exception of liens created hereunder pursuant to the Private Placements and liens related to certain existing asset-based borrowings and lines of credit from Madison Leasing or Central Leasing, Debtor owns all of its personal property and has good, clear and marketable title thereto, free and clear of all liens and encumbrances.

3.4. Collateral and Perfection. Neither Debtor nor, to the best of Debtor’s knowledge, any affiliate (as such term is used in Rule 405 under the Securities Act (“Affiliates”)) have performed any acts which might prevent the Collateral Agent from enforcing any of the terms of this Agreement or which would limit the Collateral Agent in any such enforcement. No collateral is in the possession of any person (other than Debtor) asserting any claim thereto or security interest therein. The security interests created hereunder constitute valid first priority security interests under the Uniform Commercial Code securing the Obligations to the extent that a security interest may be created in the Collateral.

4.GENERAL OBLIGATIONS OF DEBTOR

4.1. Financing Statements. Debtor agrees to execute one or more financing statements, to pay the cost of filing the same in all public offices wherever filing is required by applicable law to perfect a security interest or is deemed by Secured Parties to be necessary or desirable and to execute such other documents as Secured Parties shall reasonably request.

4.2. Insurance. Debtor agrees to keep or cause to be kept all the Collateral insured with coverages in amounts not less than usually carried by one engaged in a like business.

4.3. Inspection. Debtor will keep accurate and complete records of the Collateral and provide Secured Parties or any of their agents with the right to: (1) inspect the Collateral wherever located; (2) visit Debtor’s place or places of business; and (3) audit, check and make extracts from any copies of books, records, journals, orders, receipts and correspondence that relate to the Collateral or to the general financial condition of Debtor or any Affiliate. The rights granted to Secured Parties shall be subject to prior written notice of five (5) business days, shall be at reasonable intervals and shall not adversely affect, disrupt or hinder Debtor’s operations.

4.4. Negative Pledge. Debtor will not assign any accounts or other Collateral to any person other than Secured Parties, nor create or permit to be created any lien, encumbrance or security interest of any kind on any of its accounts, contract rights or inventory other than for the benefit of Secured Parties, nor grant or permit to be granted any corporate guaranty other than for the benefit of Secured Parties, except (a) indebtedness for borrowed money which is expressly subordinated to the Obligations in all respects, on such terms and conditions as have been approved by the holders of Notes representing a majority of the then outstanding and unpaid principal on all of the then issued and outstanding Notes and (b) purchase price liens.

–3–

4.5. Existence; Perfection. Debtor will maintain its corporate existence in good standing and comply with all laws and regulations of the United States or any state or political subdivision thereof, or of any governmental authority which may have jurisdiction over it or its business. Debtor will not change its name, identity or corporate structure in any manner unless it shall have given Secured Parties prior written notice thereof and delivered an opinion of counsel satisfactory to Secured Parties with respect thereto. Debtor will not establish or change the location of its chief executive office or its chief place of business or except in the ordinary course of business, the locations where it keeps or holds any Collateral or records relating thereto or in any event change the location of any Collateral if such change would cause the security interests hereunder to lapse or cease to be perfected.

4.6. Taxes. Debtor will pay all real and personal property taxes, assessments and charges as well as all franchise, income, unemployment, old age benefit, withholding, sales and other taxes assessed against it, or payable by it at such times and in such manner as to prevent any penalty from accruing or any lien or charge from attaching to its property, and will furnish Secured Parties upon request, receipts or other evidence that deposits or payments have been made.

4.7. Sales. Debtor will not sell or dispose of any of its assets, including the Collateral, except in the ordinary and usual course of its business.

4.8. Repair. Debtor will maintain its equipment and property in good repair and working order.

4.9. Observation Rights. Debtor shall provide to a representative of the holders of more than fifty-one percent (51%) of the outstanding principal on the Notes, where such representation shall be in writing, the right to receive written notice of each regularly scheduled meeting of Debtor’s Board of Directors (including any meetings of committees thereof) as far in advance as such notice is required to be delivered to the Directors and the right to attend as observers of all meetings of the Board of Directors (including any meetings of committees thereof); provided, further, in the case of telephonic meetings conducted in accordance with Debtor’s bylaws and applicable law, the representatives will be given notice and the opportunity to listen to such telephonic meetings. The notice and observation rights provided for in this Section 4.9 are subject to the execution by the representative of a non-disclosure agreement in the form requested by Debtor and shall terminate when less than fifteen percent (15%) of the original outstanding principal on the Notes issued under the Private Placement remains outstanding.

4.10. Continuing Representations. The warranties and representations made by Debtor in this Agreement are continuing. In the event that any obligation, representation or warranty is no longer true or correct, Debtor will immediately notify Secured Parties in writing.

5.DEFAULT

Debtor shall be in default under this Agreement and under any other agreement with Secured Parties upon the happening of any of the following events or conditions:

5.1. Failure of Debtor to pay when due any Obligation, whether by maturity, acceleration or otherwise, where such failure shall have remained uncured for a period of two (2) business days following the due date of such payment;

5.2.A breach by Debtor of any representation, warranty, covenant or agreement set forth in this Agreement, the Notes or the Subscription Agreements (“Subscription Agreements”) by and between the Company and any Secured Party with respect to the issuance of the Notes in the Private Placement, where such breach shall have remained uncured for a period of fifteen (15) days following the receipt of written notice of such breach;

–4–

5.3. Material loss or theft, substantial damage or destruction or unauthorized sale or encumbrance of any material portion of the Collateral in excess of reasonably expected recoveries under insurance policies, or the making of any levy on, or seizure or attachment of a material portion of the Collateral;

5.4. The occurrence of a default under any of the Notes;

5.5. The bankruptcy of Debtor or any subsidiary of Debtor, which means: (1) the filing of any petition or answer by Debtor seeking to adjudicate Debtor as bankrupt or insolvent, or seeking for Debtor any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of Debtor or Debtor’s debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking, consenting to, or acquiescing in the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for Debtor or for any substantial part of Debtor’s property; or (2) corporate action taken by Debtor to authorize any of the actions set forth above;

5.6. The involuntary bankruptcy of Debtor or any subsidiary of Debtor, which means, without the consent or acquiescence of Debtor, the entering of an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation, or the filing of any such petition against such person, which petition shall not be dismissed within ninety (90) days, or without the consent or acquiescence of Debtor, the entering of an order appointing a trustee, custodian, receiver or liquidator of Debtor or of all or any substantial part of the property of Debtor, which order shall not be dismissed within ninety (90) days;

5.7. The appointment of a receiver, trustee, custodian or other similar official for any substantial part of Debtor’s property;

5.8. Failure of Debtor to pay when due any obligation, whether by maturity, acceleration or otherwise, in an amount in excess of One Hundred Thousand Dollars ($100,000), where such failure is not cured within any applicable grace period or waived;

5.9. Failure to return proceeds to Secured Parties pursuant to Section 4.2 of the Subscription Agreements; or

5.10. The incurrence of indebtedness through loans, lines of credit and other forms of indebtedness (which for purposes of this Section 5.10 shall include lease financing arrangements for equipment) in an amount is excess of Fifteen Million Dollars ($15,000,000).

6.RIGHTS OF SECURED PARTIES UPON DEFAULT

Through the Collateral Agent, as appointed pursuant to this Agreement, Secured Parties shall upon the occurrence of a default hereunder and at any time thereafter, without presentment, demand, notice, protest or advertisement of any kind have the following rights in addition to all other rights hereunder:

6.1. Acceleration. Subject to the terms of the Notes, the Collateral Agent may make all Obligations under this or any other agreement with Debtor immediately due and payable without presentment, demand, protest, hearing or notice of any kind and may exercise the rights of a secured party under law or under the terms of this or any other agreement with Debtor.

–5–

6.2. Possession. On behalf of all Secured Parties, the Collateral Agent may: (1) enter and take possession of all Equipment, Inventory and other Collateral and the premises on which they are located; (2) operate and use Debtor’s equipment, whether or not Collateral hereunder; (3) complete work in process; (4) apply as Debtor’s attorney-in-fact for domestic or foreign patents or other intellectual property rights with respect to inventions; (5) seek registration or assignment, foreign and domestic, of any trademarks, trade names, styles, logos or copyrights; and (6) sell, lease or license the Collateral to third persons or associations without being liable to Debtor on account of any losses, damage or depreciation that may occur as a result thereof so long as the Collateral Agent shall act reasonably and in good faith. The Collateral Agent shall give Debtor and all Secured Parties at least thirty (30) days’ notice by hand delivery at or by United States certified mail, postage prepaid (in which event notice shall be deemed to have been given when so delivered), to the address specified herein, of the time and place of any public or private sale or other disposition unless the Collateral is perishable, threatens to decline speedily in value, or is the type customarily sold in a recognized market. Upon such sale, a Secured Party may become the purchaser of the whole or any part of the Collateral, discharged from all claims and free from any right of redemption. In case of any such sale by the Collateral Agent of all or any of said Collateral on credit or for future delivery, property so sold may be retained by the Collateral Agent until the selling price is paid by the purchaser. The Collateral Agent shall incur no liability in case of the failure of the purchaser to take up and pay for the property so sold. In case of any such failure, the said property may again be sold.

6.3. Power of Attorney and Notification. At Debtor’s expense and subject to the rights of the Secured Parties, the Collateral Agent may communicate with account debtors in order to verify with them to its satisfaction the existence, amount and terms of any accounts or contract rights and also notify account debtors that Collateral has been assigned for the benefit of the Secured Parties and that payments shall be made directly to the Collateral Agent. Upon request of the Collateral Agent, Debtor will so notify such account debtors and will indicate on all billings to such account debtors that their accounts must be paid to the Collateral Agent. Debtor does hereby appoint the Collateral Agent and its agents as Debtor’s attorney-in-fact: to, upon an event of default hereunder, collect, compromise, endorse, sell or otherwise deal with the Collateral or proceeds thereof in its own name or in the name of Debtor; to endorse the name of Debtor upon any Note, checks, drafts, money orders, or other instruments, documents, receipts or Collateral that may come into its possession and to apply the same in full or part payment of any amounts owing to Secured Parties; to sign and endorse the name of Debtor upon any documents, instruments, drafts against account debtors, assignments, verifications and notices in connection with Accounts, and any instrument or document relating thereto or to Debtor’s rights therein; and to give written notice to any office and officials of the United States Post Office to effect such change or changes of address that all mail addressed to Debtor may be delivered directly to the Collateral Agent. Debtor hereby grants to its said attorney-in-fact full power to do any and all things necessary to be done in and about the premises as fully and effectually as Debtor might or could do, and hereby ratifies all that its attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and is irrevocable for the term of this Agreement for all transactions hereunder and thereafter as long as Debtor may be indebted to Secured Parties.

6.4. Application of Proceeds. Any and all proceeds of any Collateral realized or obtained by Collateral Agent upon exercise of the rights and remedies hereunder, shall be applied as follows:

6.4.1. Toward the payment of any and all costs and expenses, fees and commission and taxes of such sale, collection or other realization incurred by the Collateral Agent or any Secured Party;

6.4.2. With respect to any surplus remaining after application of proceeds as provided in Section 6.4.1, toward the payment of the Obligations on a pro rata basis, and any costs, fees or expenses incurred in connection with the administration, collection or enforcement thereof, including, without limitation, reasonable attorney’s fees and other professionals’ out of pocket costs and fees, until payment and satisfaction in full thereof; and

–6–

6.4.3. With respect to any surplus remaining after application of proceeds as provided in Section 6.4.2 above, shall be paid to Debtor, or its successors or assigns, or to whomsoever may be lawfully entitled to receive the same.

7.DEBTOR’S OBLIGATION TO PAY EXPENSES

In the event the Collateral Agent is the prevailing party in any action brought to enforce the rights of Secured Parties hereunder, Debtor shall pay to the Collateral Agent on demand any and all reasonable expenses (including, but not limited to, a collection charge on all accounts collected, all reasonable attorney’s fees and expenses, and all other expenses of like or unlike nature) that may be incurred or paid by the Collateral Agent or Secured Parties to obtain or enforce payment of any account against the account debtor, Debtor or any guarantor or surety of or in the prosecution or defense of any action or concerning any matter growing out of or connected with the subject matter of this Agreement, the Obligations, such Collateral or the rights or interests of Secured Parties therein or thereto. All such expenses may be added to the principal amount of any indebtedness owed by Debtor to Secured Parties and shall constitute part of such Obligations secured hereby.

8.WAIVER; AMENDMENT

Debtor waives demand, presentment, protest, notice of nonpayment and all other notices. No delay or omission by the Collateral Agent in exercising any rights shall operate as a waiver of such right or any other right. Waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. The rights and remedies of Secured Parties, whether evidenced hereby or by any other agreement, instrument or paper, shall be cumulative and may be exercised singularly or concurrently. Unless otherwise provided in this Agreement or in the Notes, any waiver or amendment of any provisions of this Agreement shall be in writing, executed and delivered by the Company and by Secured Party or Secured Parties holding Notes representing not less than a majority of the then outstanding principal of all of the Notes then issued and outstanding.

9.FURTHER ASSURANCES

Debtor, at its own expense, shall do, make, execute and deliver all such additional and further acts, deeds, assurances, documents, instruments and certificates as the Collateral Agent may reasonably require, including, without limitation: (1) executing, delivering and filing financial statements and continuation statements under the Uniform Commercial Code as applicable in any relevant jurisdiction; (2) obtaining governmental and other third party consents and approvals; and (3) obtaining waivers from mortgagees and landlords.

10.COUNTERPART EXECUTION

This Agreement may be executed in any number of counterparts with the same effect as if Debtor and all of the Secured Parties had signed the same document. All counterparts shall be construed together and shall constitute one agreement.

11.CHOICE OF LAW

THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEVADA. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS LOCATED IN CLARK COUNTY, NEVADA WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

–7–

12.WAIVER OF JURY TRIAL

DEBTOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WTTH THIS AGREEMENT OR THE NOTES OR THE RELATIONSHIP ESTABLISHED HEREUNDER, THEREUNDER.

 [Signature page follows]

–8–

IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Security Agreement as of the Effective Date.

“DEBTOR”		ADDRESS
VENDINGDATA CORPORATION,               a Nevada corporation		6830 Spencer Street
		Las Vegas , Nevada 89119
By:	______________________________________
	_____________________	TELEPHONE:	702-733-7195
Its:	_____________________	FACSIMILE:	702-733-7197
“COLLATERAL AGENT”
PREMIER TRUST, INC.,               a Nevada corporation		ADDRESS
		2700 West Sahara , Suite 300
By:	______________________________________	Las Vegas , Nevada 89102
	Mark Dreschler
Its:	President	TELEPHONE:	702-_______
		FACSIMILE:	702-507-0755
“SECURED PARTIES”
PREMIER TRUST, INC.,               as attorney-in-fact for the persons listed               on Schedule A attached hereto		ADDRESS
		2700 West Sahara , Suite 300
By:	______________________________________	Las Vegas , Nevada 89102
	Mark Dreschler
Its:	President	TELEPHONE:	702-_______
		FACSIMILE:	702-507-0755

–9–

SCHEDULE A
SECURED PARTIES

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
1.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
2.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
3.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
4.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
5.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
6.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
7.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
8.	__________________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________

–10–

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
9.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
10.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
11.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
12.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
13.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
14.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
15.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
16.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
17.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________

–11–

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
18.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
19.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
20.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
21.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
22.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
23.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
24.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
25.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
		TOTAL	$ ____________

–12–

	MARCH NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
26.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
27.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
28.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
29.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
30.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
		TOTAL	$ ____________

–13–

EX-10.5 6 exh_10-5.htm

Exhibit 10.5

FORM OF
AMENDED AND RESTATED COLLATERAL AGENT AGREEMENT

THIS AMENDED AND RESTATED COLLATERAL AGENT AGREEMENT (this “Agreement”) is made and entered into as of the _____ day of March 2005 (the “Effective Date”), by and among VENDINGDATA CORPORATION, a Nevada corporation (“Debtor”), and PREMIER TRUST, INC., a Nevada corporation (the “Collateral Agent”) in its capacity as collateral agent and on behalf of the persons listed on Schedule A to this Agreement (the “Lenders”).

WITNESSETH:

WHEREAS, Debtor issued the February Notes as part of a private placement of 10% senior secured convertible notes due February 2008, in the aggregate amount of up to Ten Million Dollars ($10,000,000) (the “February Private Placement”), exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”);

WHEREAS, Debtor proposes to issue the March Notes as part of an additional private placement of 10% senior secured convertible notes due March 2008 (the March Notes together with the February Notes, the “Notes”), in the aggregate amount of up to Two Million Dollars ($2,000,000) (the “March Private Placement” and, together with the February Private Placement, the “Private Placements”), exempt from the registration requirements of the Securities Act;

WHEREAS, the Debtor proposes to issue the March Notes on a pari passu basis as the February Notes and to grant to the holders of the February Notes (the “February Note Holders”) and the holders of the March Notes (the “March Note Holders” and, together with the February Note Holders, the “Lenders”) a first priority security interest in the Collateral (as defined below);

WHEREAS, it is desirable to provide for the orderly administration of such Collateral by requiring each Lender to appoint the Collateral Agent, and the Collateral Agent has agreed to accept such appointment and to receive, hold and deliver such Collateral, all upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, it is desirable to allocate the enforcement of certain rights of the Lenders under the Notes for the orderly administration thereof; and

WHEREAS, pursuant to that certain Intercreditor Agreement by and among Debtor, the Collateral Agent and the Secured Parties, Debtor has agreed to secure its obligations arising under the Notes, including all debts, obligations, liabilities, interest, fees, charges and expenses arising under the Notes (the “Obligations”), by amending and restating the Security Agreement dated as of February 15, 2005 and the Collateral Agent Agreement dated February 7, 2005.

NOW, THEREFORE, for and in consideration of the promises and mutual covenants, agreements, understandings, undertakings, representations, warranties and promises, and subject to the conditions hereinafter set forth, and intending to be legally bound thereby, the parties do hereby covenant and agree that the recitals set forth above are true and accurate and are hereby incorporated in and made a part of this Agreement, and further covenant and agree as follows:

–1–

1.COLLATERAL.

1.1. Security Agreement. Contemporaneously with the execution and delivery of this Agreement by the Collateral Agent and the Lenders: (1) the Collateral Agent has or will have executed an acknowledgement of the terms and conditions of that certain Amended and Restated Security Agreement of even date herewith by and among the Company, the Collateral Agent and the Lenders (the “Security Agreement”), regarding the grant of a security interest in and lien on the Collateral (as defined in the Security Agreement) to the Collateral Agent, for the benefit of the Lenders; and (2) the Company has or will have issued the Notes to the Lenders. For purposes solely of perfection of the security interests granted to the Collateral Agent, as agent on behalf of the Lenders, and on its own behalf under the Security Agreement, the Collateral Agent hereby acknowledges that any Collateral held by the Collateral Agent is held for the benefit of the Lenders in accordance with this Agreement and the Security Agreement. No reference to the Security Agreement or any other instrument or document shall be deemed to incorporate any term or provision thereof into this Agreement unless expressly so provided.

1.2. Powers of the Collateral Agent. The Lenders hereby appoint the Collateral Agent (and the Collateral Agent hereby accepts such appointment) to take any action upon the occurrence of a default (as defined in the Notes or the Security Agreement) (an “Event of Default”) that is not cured, including, without limitation, the application of any cash collateral received by the Collateral Agent to the payment of the Obligations and the exercise of any remedies given to the Collateral Agent pursuant to the Security Agreement that the Collateral Agent deems necessary or proper for the administration of the Collateral pursuant to the Security Agreement. Upon disposition of the Collateral in accordance with the Security Agreement, the Collateral Agent shall promptly distribute any cash or Collateral in accordance with Section 6.4 of the Security Agreement.

1.3. Distribution of Proceeds. The Collateral Agent is to distribute in accordance with the Security Agreement any proceeds received from the Collateral which are distributable to the Lenders in proportion to their respective interests in the Obligations (as defined in the Security Agreement).

2.FEES AND EXPENSES; APPOINTMENT OF THE COLLATERAL AGENT.

2.1. Fees. The Company shall pay the Collateral Agent an initial fee of Two Thousand Dollars ($2,000) and a recurring annual fee of One Thousand Dollars ($1,000) payable within thirty (30) days after such fees are due. Upon the occurrence of an Event of Default, the Collateral Agent will charge an hourly rate for performing extraordinary services in addition to the services covered by its administration fee.

2.2. Expenses. The Company shall pay any and all costs and expenses incurred by the Collateral Agent in connection with the transactions contemplated hereby, including, without limitation, any and all costs and expenses arising from or in connection with: (1) the preparation of this Agreement and all waivers, releases, discharges, satisfactions, modifications and amendments of this Agreement; (2) the administration and holding of the Collateral; (3) insurance expenses; and (4) the enforcement, protection and adjudication of the parties’ rights hereunder by the Collateral Agent, including, without limitation, the reasonable disbursements, expenses and fees of the attorneys the Collateral Agent may retain, if any.

3.ACTION BY THE MAJORITY IN INTEREST.

3.1. Certain Actions. Each of the Lenders covenants and agrees that only the Lenders holding a majority of the outstanding principal due on the Notes (a “Majority in Interest”) shall have the right, but not the obligation, to undertake the following actions (it being expressly understood that less than a Majority in Interest hereby expressly waive the following rights that they may otherwise have under the Notes, but only insofar as such waiver affects their right to receive proceeds from the Collateral):

–2–

3.1.1. Acceleration. If an Event of Default occurs, after the expiration of any applicable grace and/or cure period, a Majority in Interest may, on behalf of all the Lenders, instruct the Collateral Agent to provide to the Company notice to cure such default and/or declare the unpaid principal amount of the Notes to be due and payable, together with any and all accrued interest thereon and all costs payable pursuant to such Notes;

3.1.2. Enforcement. Upon the occurrence of any Event of Default after the expiration of any applicable grace and/or cure period during which such period the Company fails to cure such Event of Default, a Majority in Interest may instruct the Collateral Agent to proceed to protect, exercise and enforce against the Company, on behalf of all the Lenders, their rights and remedies under the Notes, and such other rights and remedies as are provided by law or equity;

3.1.3. Waiver of Past Defaults. A Majority in Interest may instruct the Collateral Agent to waive any Event of Default by written notice to the Company, and the other Lenders; and

3.1.4. Amendment. A Majority in Interest may instruct the Collateral Agent to waive, amend, supplement or modify any term, condition or other provision in the Notes or Security Agreement in accordance with the terms of the Notes or Security Agreement so long as such waiver, amendment, supplement or modification is made with respect to all of the Notes and with the same force and effect with respect to each of the Notes.

3.2. Further Actions. A Majority in Interest may instruct the Collateral Agent to take any action that it may take under this Agreement by instructing the Collateral Agent in writing to take such action on behalf of all the Lenders.

3.3. Majority in Interest. For so long as any obligations remain outstanding on the Notes, Majority in Interest shall mean Lenders who hold not less than fifty percent (50%) of the principal amount outstanding under the Notes.

3.4. Limitation. Notwithstanding the foregoing, a Majority in Interest cannot agree to amend the Notes to change the interest rate, maturity date or priority of the security interest without the consent of each of the Lenders.

4.POWER OF ATTORNEY.

4.1. Appointment. To effectuate the terms and provisions hereof, the Lenders hereby appoint the Collateral Agent as their attorney-in-fact (and the Collateral Agent hereby accepts such appointment) for the purpose of carrying out the provisions of this Agreement including, without limitation, taking any action on behalf of, or at the instruction of, the Majority in Interest at the written direction of the Majority in Interest and executing any consent authorized pursuant to this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable (and lawful) to accomplish the purposes hereof.

4.2. No Liability. All acts done under the foregoing authorization are hereby ratified and approved and neither the Collateral Agent nor any designee nor agent thereof shall be liable for any acts of commission or omission, for any error of judgment, for any mistake of fact or law except for acts of gross negligence or willful misconduct as determined by a court of competent jurisdiction.

4.3. Irrevocable. This power of attorney, being coupled with an interest, is irrevocable while this Agreement remains in effect.

–3–

5.RELIANCE ON DOCUMENTS AND EXPERTS.

The Collateral Agent shall be entitled to rely upon any notice, consent, certificate, affidavit, statement, paper, document, writing or communication (which may be by telegram, cable, telex, telecopier, or telephone) reasonably believed by it to be genuine and to have been signed, sent or made by the proper person or persons, and upon opinions and advice of its own legal counsel, independent public accountants and other experts selected by the Collateral Agent.

6.DUTIES OF THE COLLATERAL AGENT; STANDARD OF CARE.

6.1. Duties. The Collateral Agent’s duties are only those expressly set forth in this Agreement, and the Collateral Agent hereby is authorized to perform those duties in accordance with commercially reasonable practices. The Collateral Agent shall have no duty or responsibility to: (1) determine whether the Collateral is sufficient to secure the Company’s liabilities under the Notes, or (2) inquire as to the provisions of any other agreement or instrument. The Collateral Agent may be liable only for its own gross negligence or willful misconduct, when a court of competent jurisdiction determines that the Collateral Agent has acted in such manner. The Collateral Agent may exercise or otherwise enforce any of its rights, powers, privileges, remedies and interests under this Agreement and applicable law or perform any of its duties under this Agreement by or through its officers, employees, attorneys, or agents.

6.2. Standard of Care. The Collateral Agent shall act in good faith and with that degree of care that an ordinarily prudent person in a like position would use under similar circumstances. Any funds held by the Collateral Agent hereunder need not be segregated from other funds except to the extent required by law. The Collateral Agent shall be under no liability for interest on any funds received by it hereunder.

6.3. Reliance. In performing its duties under this Agreement, the Collateral Agent:

6.3.1. May rely upon any notice, instruction, request or other instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which the Collateral Agent shall believe to be genuine and to have been signed or presented by the person or parties purporting to sign the same, including, without limitation, instructions given by letter, facsimile transmission, telegram, teletype, cablegram, or electronic media, such instructions appear on their face to have been signed, sent or presented by the proper party or parties;

6.3.2. May confer with counsel of its own choice in relation to matters arising under this Agreement and shall have full and complete authorization from the other parties hereunder for any action taken or suffered by it under this Agreement or under any transaction contemplated hereby in good faith and in accordance with opinion of such counsel;

6.3.3. May, in its sole discretion, comply with orders issued or process entered by any court with respect to the Collateral, without determination by the Collateral Agent of such court’s jurisdiction in the matter; and

6.3.4. Shall not incur any liability to anyone resulting from actions taken by the Collateral Agent in reliance in good faith on such instructions.

–4–

6.4. Limitation. Notwithstanding anything contained herein to the contrary, no provision of this Agreement shall require the Collateral Agent to take any action which, in the Collateral Agent’s reasonable judgment, would result in: (1) any violation of this Agreement or any provision of law; or (2) any potential liability to the Collateral Agent. The Collateral Agent shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. In no event shall Collateral Agent be liable for incidental, indirect, special, consequential or punitive damages (including, but not limited to lost profits), even if the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. The Collateral Agent shall not be obligated to take any legal action or commence any proceeding in connection with the Collateral, any account in which Collateral is deposited, this Agreement, the Notes or the Security Agreement, or to appear in, prosecute or defend any such legal action or proceeding.

6.5. Review for Own Purposes. Any review by the Collateral Agent of the Notes, the Security Agreement or any separate undertaking between the Company and the Lenders shall be solely for the Collateral Agent’s own purposes. THE COLLATERAL AGENT HAS NO RESPONSIBILITY RELATIVE TO THE TERMS OF ANY NOTE, SECURITY AGREEMENT, OR SEPARATE UNDERTAKING, MAKES NO REPRESENTATION AS TO THE EFFECT OR ADEQUACY THEREOF AND SHALL HAVE NO OBLIGATION TO ENSURE THAT THIS AGREEMENT OR ANY ACTION RELATIVE TO THIS AGREEMENT CONFORMS THEREWITH.

7.RESIGNATION.

The Collateral Agent may resign and be discharged of its duties hereunder at any time by giving written notice of such resignation to the other parties hereto, stating the date such resignation is to take effect. Within 15 days of the giving of such notice, a successor collateral agent shall be appointed by the Majority in Interest; provided, however, that if the Lenders are unable so to agree upon a successor within such time period, the successor collateral agent may be a person designated by the Collateral Agent, and any and all fees of such successor collateral agent shall be the joint and several obligation of the Lenders. The Collateral Agent shall continue to serve until the effective date of the resignation or until its successor accepts the appointment and receives the Collateral held by the Collateral Agent but shall not be obligated to take any action hereunder. The Collateral Agent may deposit any Collateral with any court in New York that accepts such Collateral.

8.EXCULPATION.

The Collateral Agent and its officers, employees, attorneys and agents, shall not incur any liability whatsoever for the holding or delivery of documents or the taking of any other action in accordance with the terms and provisions of this Agreement, for any mistake or error in judgment, for compliance with instructions of the Majority in Interest and any applicable law or any attachment, order or other directive of any court or other authority (irrespective of any conflicting term or provision of this Agreement), or for any act or omission of any other person engaged by the Collateral Agent in connection with this Agreement, unless occasioned by the exculpated person’s gross negligence or willful misconduct, when a court of competent jurisdiction determines that the exculpated party has acted in such manner; and each party hereto hereby waives any and all claims and actions whatsoever against the Collateral Agent and its officers, employees, attorneys and agents, arising out of or related directly or indirectly to any or all of the foregoing acts, omissions and circumstances.

–5–

9.INDEMNIFICATION.

The Lenders hereby agree to indemnify, reimburse and hold harmless the Collateral Agent and its directors, officers, employees, attorneys and agents, jointly and severally, from and against any and all claims, liabilities, losses and expenses that may be imposed upon, incurred by, or asserted against any of them, arising out of or related directly or indirectly to this Agreement or the Collateral, including, without limitation: (1) any loss, liability, costs or expenses arising out of or in connection with the status of the Collateral Agent; (2) the reasonable fees and expenses of counsel of the Collateral Agent; and (3) any circumstance relating to any insurance, tax or other laws or regulations of any jurisdiction pertaining to the Collateral or the other parties hereto, except such as are occasioned by the indemnified person’s own gross negligence or willful misconduct, as determined by a court of competent jurisdiction. The Lenders hereby acknowledge that the foregoing indemnities shall survive the resignation or removal of the Collateral Agent or the termination of this Agreement.

10.MISCELLANEOUS

10.1. Governing Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada. The parties hereto submit to the exclusive jurisdiction of the courts located in Clark County, Nevada, with respect to any dispute arising under this Agreement and the transactions contemplated hereby.

10.2. Entire Agreement. This Agreement, the Subscription Agreement, the Note, the Security Agreement and the Exchange Agreement contain the entire agreement between the Collateral Agent, the Company and the Lenders with regard to the subject matter hereof and may not be modified or waived except in a writing signed by the Collateral Agent, the Company and the Lenders.

10.3. Headings.  The headings of this Agreement are for convenience and reference only, and shall not limit or otherwise affect the interpretation of any term or provision hereof.

10.4. Binding Effect. This Agreement and the rights, powers, and duties set forth herein shall, except as otherwise expressly provided herein, be binding upon and inure to the benefit of, the heirs, executors, administrators, legal representatives, successors, and assigns of the parties hereto.

10.5. Amendments and Modification; Additional Lender. No provision hereof shall be modified, altered, waived or limited except by written instrument expressly referring to this Agreement and to such provision, and executed by the parties hereto. Any transferee of a Note who acquires a Note after the date hereof will become a party hereto by signing the signature page and sending an executed copy of this Agreement to the Collateral Agent.

10.6. Attorneys’ Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled.

10.7. Notices.  Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing, shall be sent by facsimile to the party to be notified and shall be deemed effectively given upon personal delivery to the party to be notified, or four days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified. Any notice to Purchaser shall be sent to his facsimile number and address set forth on the signature page hereto, or at such other facsimile number or address as a party may designate by ten (10) days’ advance written notice to the other party. A copy of any notice to the Company shall be sent to Kummer Kaempfer Bonner & Renshaw, Attn: Michael J. Bonner, 3800 Howard Hughes Parkway, Seventh Floor, Las Vegas, Nevada 89109, 702-796-7181 (facsimile).

–6–

10.8. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. In addition, if any such provision, or any part thereof, is held to be unenforceable, the parties agree that the court, regulatory agency or other governmental body making such determination shall have the power to delete or add specific words or phrases, so that such provision shall then be enforceable to the fullest extent permitted by law.

10.9. Neutral Interpretation. This Agreement shall be construed in accordance with its intent and without regard to any presumption or any other rule requiring construction against the party causing the same to be drafted.

10.10. Waiver. No act, omission or delay by the Collateral Agent shall constitute a waiver of the Collateral Agent’s rights and remedies hereunder or otherwise. No single or partial waiver by the Collateral Agent of any default hereunder or right or remedy that it may have shall operate as a waiver of any other default, right or remedy or of the same default, right or remedy on a future occasion.

–7–

10.11. Counterparts. This Agreement may be executed by the parties hereto individually or in any combination, in one or more counterparts, and by facsimile signature and transmission, each of which shall be an original and all of which shall together constitute one and the same agreement.

IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Collateral Agreement as of the Effective Date.

“DEBTOR”		ADDRESS
VENDINGDATA CORPORATION,
a Nevada corporation		6830 Spencer Street
		Las Vegas , Nevada 89119
By:	______________________________________________
	_____________________________	TELEPHONE:	702-733-7195
Its:	_____________________________	FACSIMILE:	702-733-7197
“COLLATERL AGENT”
PREMIER TRUST, INK.,		ADDRESS
a Nevada corporation
		2700 West Sahara , Suite 300
By:	______________________________________________	Las Vegas , Nevada 89102
	Mark Dreschler
Its:	President	TELEPHONE::	702-_______
		FACSIMILE::	702-507-0755
	“LENDERS”
PREMIER TRUST, INC.,		ADDRESS
as attorney-in-fact for the persons listed
on Schedule A attached hereto
		2700 West Sahara , Suite 300
By:	______________________________________________	Las Vegas , Nevada 89102
	Mark Dreschler
Its:	President	TELEPHONE:	702-_______
		FACSIMILE:	702-507-0755

–8–

SCHEDULE A

LENDERS

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
1.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
2.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
3.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
4.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
5.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
6.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
7.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
8.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________

–9–

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
9.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
10.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
11.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
12.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
13.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
14.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
15.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
16.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
17.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________

–10–

	FEBRUARY NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
18.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
19.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
20.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
21.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
22.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
23.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
24.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
25.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
		TOTAL	$ ____________

–11–

	MARCH NOTE HOLDERS	ADDRESS	PRINCIPAL AMOUNT
26.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
27.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
28.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
29.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
30.	_____________________	_______________________	$ ____________
		_______________________
		Telephone: ______________
		Facsimile: _______________
		TOTAL	$ ____________

–12–

EX-99.1 7 exh_99-1.htm

EXHIBIT 99.1

Contact: Jim Crabbe
Chairman
VendingData™ Corporation
702-733-7195
jcrabbe@vendingdata.com or Yvonne L. Zappulla
Managing Director
Wall Street Investor Relations Corp.
212-681-4108
Yvonne@WallStreetIR.com

VendingData™ Corporation Completes
$12 Million Private Placements

Company Completes Previously Announced $10 Million Private Placement and
Receives an Additional $2 Million from Subsequent Private Placement

LAS VEGAS, Nevada — (PR NewsWire)- March 14, 2005–VendingData™ Corporation (AMEX: VNX), today announced that it received the remaining commitments under its previously disclosed $10 million private placement of senior secured convertible notes due February 2008 and that it completed an additional $2 million private placement of senior secured convertible notes due March 2008. The senior notes accrue interest at 10% per annum, are secured by the Company’s assets, require semi-annual interest payments and provide for the payment of the principal and any unpaid interest at maturity. Up to 50% of the then outstanding principal balance of these senior notes can be converted into shares of the Company’s common stock at rate of $1.65 per share.

VendingData™ Corporation intends to use the proceeds from the private placements to fund the build out of the new RandomPlus™ shuffler inventory, operating expenses and general corporate purposes. A portion of the proceeds from the private placements may only be released upon the satisfaction of certain milestones. For additional information, please see VendingData™‘s Form 8-K filed with the United States Securities and Exchange Commission.

The private placement is exempt from registration with the Securities and Exchange Commission under Rule 506 of Regulation D of the Securities Act of 1933, as amended. The Company is obligated to file a registration statement for the registration of the underlying shares of common stock issuable upon conversion of the Notes. This announcement is neither an offer to sell nor a solicitation of an offer to buy the Notes. Philadelphia Brokerage Corporation served as the placement agent for the offering.

About VendingData™ Corporation

VendingData™ Corporation is a Las Vegas-based developer, manufacturer and marketer of products for the gaming industry including the SecureDrop® System, Deck Checker™ and Random Ejection Shuffler™ line. We are committed to the cost-effective development and manufacture of additional new products as a key component of our strategy to broaden our product offerings to the gaming industry. Our products are currently installed in casinos throughout the United States, including Caesars Palace, Circus Circus, Harrah’s Entertainment, Luxor, Oneida Bingo & Casino and the Venetian. International customers include casinos in Argentina, China, Columbia, Korea, Malaysia, Peru, United Kingdom, and Uruguay. Visit the VendingData™ Web site at http://www.vendingdata.com.

This release contains forward-looking statements. Such statements reflect and are subject to risks and uncertainties that could cause actual results to differ materially from expectations. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the Company’s inability to meet certain milestones required for the release of a portion of the private placement proceeds, the Company’s inability to register the common stock underlying the senior notes, the Company’s inability to make the semi-annual interest payments and the balloon payment of principal, the restrictions of the Company’s ability to obtain additional debt financing, the Company’s inability to comply with the terms and conditions of the senior notes and the risks and factors described from time to time in the Company’s reports filed with the Securities and Exchange Commission, including, but not limited to the Company’s Form 10-QSB for the quarter ended March 31, 2004, June 30, 2004, and September 30, 2004, and, the Company’s Annual Report on form 10-KSB for the year ended December 31, 2003.

#   #   #