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

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