Exhibit
      10.2

    


    SECURITIES
      PUT AGREEMENT

     

    This
      Securities Put Agreement (this “Agreement”)
      is
      dated as of March 29, 2006, among VendingData Corporation, a Nevada corporation
      (the “Company”),
      and
      Bricoleur Partners, L.P., Bricoleur Enhanced, L.P., BRIC 6, L.P. and Bricoleur
      Offshore Ltd. (each, including its successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    RECITALS

     

    A.  WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”)
      and
      Rule 506 promulgated thereunder, the Company desires to issue and sell to each
      Purchaser, and each Purchaser, severally and not jointly, desires to purchase
      from the Company, up to $5,000,000 shares of Common Stock (as defined below),
      as
      more fully described in this Agreement.

     

    B.  WHEREAS,
      concurrent with close of the purchase and sale of securities under this
      Agreement, the Company will sell to the Purchasers $7 million of 7% Senior
      Secured Notes (“Notes”) pursuant to that certain Note Purchase Agreement
      (“Note
      Purchase Agreement”)
      of the
      same date herewith and, in addition, the Company will sell 2,400,000 shares
      of
      Common Stock, at a price of $2.50 per share, pursuant to a certain Securities
      Purchase Agreement (“Securities
      Purchase Agreement”)
      between the Company and the accredited investors named therein (“Share
      Purchasers”).
      

     

    AGREEMENT

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and each Purchaser agree as
      follows:

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1   Definitions.
       In addition to the terms defined elsewhere in this Agreement, for all
      purposes of this Agreement, the following terms have the meanings indicated
      in
      this Section 1.1:

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person as such
      terms are used in and construed under Rule 144 under the Securities Act. With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.

     

    
      “Business
        Day”
means
        any day except Saturday, Sunday and any day which shall be a federal legal
        holiday in the United States.

    

     

    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

     

    “Change
      in Control”
shall
      mean the occurrence of any of the following events: (i) a sale of all or
      substantially all of the assets of the Company; (ii) a liquidation or
      dissolution of the Company; (iii) a merger or consolidation in which the
      Company is not the surviving corporation,
      unless
the
      stockholders of the Company immediately prior to such consolidation, merger
      or
      reorganization, own more than 50% of the Company’s voting power immediately
      after such;
      (iv) a reverse merger in which the Company is the surviving corporation but
      the shares of Common Stock and securities convertible into Common Stock
      outstanding immediately preceding the merger are converted by virtue of the
      merger into other property, whether in the form of securities, cash or
      otherwise; (v) any consolidation or merger of the Company, or any other
      corporate reorganization, in which the stockholders of the Company immediately
      prior to such consolidation, merger or reorganization, own less than 50% of
      the
      Company’s voting power immediately after such consolidation, merger or
      reorganization; or (vi) any Person other than James Crabbe becomes the
      owner, directly or indirectly, of securities of the Company representing more
      than 50% of the combined voting power of the Company’s then outstanding
      securities; provided,
      however,
      that a
“Change in Control” shall not include any transaction the sole purpose of which
      is to change the state of the Company’s incorporation

     

    “Closing”
means
      each Closing of the purchase and sale of the Subscription Shares pursuant to
      Section 2.1.

     

    “Closing
      Date”
means,
      as to each Closing, the date, which shall be a Business Day, designated in
      the
      relevant Subscription Notice for the Closing of the purchase and sale of the
      Subscription Shares set forth in such notice. 

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any other
      class
      of securities into which such securities may hereafter be reclassified or
      changed into. 

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including, without limitation,
      any
      debt, preferred stock, rights, options, warrants or other instrument that is
      at
      any time convertible into or exercisable or exchangeable for, or otherwise
      entitles the holder thereof to receive, Common Stock.

     

    “Company
      Counsel”
means
      Preston Gates & Ellis LLP.

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules of the Company delivered in connection with each
      Closing. 

     

    
      
        
          
          

        

        
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    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    


    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).

     

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction.

     

    “Material
      Adverse Effect”
shall
      have the meaning assigned to such term in Section 3.1(b).

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated the date hereof, among the Company,
      and
      the Purchasers, in the form of Exhibit
      A
      attached
      hereto.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the Subscription
      Shares. 

     

    “Required
      Approvals”
shall
      have the meaning ascribed to such term in Section 3.1(e).

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule. 

     

    “SEC
      Reports”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    
      
        
          
          

        

        
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    “Short
      Sales”
shall
      include all “short sales” as defined in Rule 200 of Regulation SHO under the
      Exchange Act (but
      shall not be deemed to include the location and/or reservation of borrowable
      shares of Common Stock). 

     

    “Subscription
      Amount”
means,
      as to each Closing, the aggregate dollar amount to be paid for the Subscription
      Shares at the Closing as specified in the Subscription Notice.

     

    “Subscription
      Commitment Amount”
means,
      as to each Purchaser, the total amount committed by the Purchasers for the
      Purchase of Subscription Shares, from time to time, as specified below such
      Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Commitment Amount”, in United States Dollars and in immediately
      available funds.

     

    “Subscription
      Shares”
means,
      as to each Closing, the aggregate number of shares of Common Stock to be
      purchased by the Purchasers. 

     

    “Subscription
      Notice”
shall
      mean a written notice to the Purchasers, delivered via facsimile, setting forth
      the Subscription Amount that the Company requests from the Purchasers, including
      the Subscription Price and the Closing Date. The Company shall be entitled
      to
      send a Subscription Notice only during the fifteen Business Day period
      immediately following the Company’s filing with the Commission of an Annual
      Report on Form 10-K or 10-KSB or Quarterly Report on Form 10-Q or 10-QSB. The
      Company shall only send a Subscription Notice between 6:30 A.M. and 1:30 P.M.
      (Pacific time) on a Trading Day; provided, however, the Company shall not be
      entitled to send a Subscription Notice after 1:00 P.M. if it subsequently issues
      a press release on that same Trading Day. Unless otherwise mutually agreed
      by
      the Purchasers and the Company in writing, the Closing Date shall be no sooner
      than five (5) Business Days and no later than fifteen (15) Business Days after
      the date on which the Subscription Notice is received by the Purchasers.


     

    “Subscription
      Price”
means,
      as to each Subscription Share purchased in a Closing, eighty percent (80%)
      of
      the VWAP on the same Trading Day on which the Company delivers the Subscription
      Notice; provided that in no event shall the Subscription Price exceed $3.50
      per
      Subscription Share (subject to adjustment for any stock split, reverse stock
      split or other similar event affecting the Common Stock after the date hereof).
      

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a).

     

    “Shareholder
      Approval”
means
      such approval as may be required by the applicable rules and regulations of
      the
      American Stock Exchange (or any successor entity) from the shareholders of
      the
      Company in accordance with Section 14 of the Exchange Act with respect to the
      transactions contemplated by the Transaction Documents.

     

    
      
        
          
          

        

        
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    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the Nasdaq Capital Market, the American
      Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
      the
      OTC Bulletin Board.

     

    “Transaction
      Documents”
means
      this Agreement and the Registration Rights Agreement and any other documents
      or
      agreements executed in connection with the transactions contemplated
      hereunder.

     

    ARTICLE
      II.  

     

    PURCHASE
      AND SALE

     

    2.1  Closing.
      Upon
      the terms and subject to the conditions set forth herein, the Company agrees
      to
      sell, and each Purchaser agrees to purchase, severally and not jointly, the
      Purchaser’s pro rata share of the Subscription Shares to be purchased by the
      Purchasers at each Closing. Each Closing shall be for a minimum of at least
      one
      million dollars ($1,000,000) of Subscription Shares. Each Purchaser’s pro rata
      share of the Subscription Shares shall be determined by multiplying the
      Subscription Shares by a fraction the numerator of which is the Purchaser’s
      Subscription Commitment Amount and the denominator of which is $5,000,000.
      The
      Purchasers shall purchase the Subscription Shares at each Closing at a purchase
      price equal to the Subscription Price. At each Closing, each Purchaser shall
      deliver to the Company, via wire transfer or a certified check, immediately
      available funds equal to their portion of the Subscription Amount, and the
      Company shall deliver to each Purchaser their respective Subscription Shares
      to
      be issued at the Closing. Upon satisfaction of the conditions set forth in
      Sections 2.2 and 2.3, Closing shall occur at the offices of the Company, or
      such
      other location as the parties shall mutually agree, on the Closing Date
      (“Closing Date”) set forth in the Subscription Notice. Unless otherwise mutually
      agreed by the Purchasers and the Company in writing, the Closing Date shall
      be
      no sooner than five (5) Business Days and no later than fifteen (15) Business
      Days after the date on which the Subscription Notice is received by the
      Purchasers. The Purchasers shall have no obligation to purchase Subscription
      Shares after five (5) years from the date of this Agreement, or if sooner,
      at
      any time after the Purchasers have purchased an aggregate of five million
      dollars ($5,000,000) of Subscriptions Shares. In addition, the Purchasers shall
      have no obligation to purchase Subscription Shares at any time after a Change
      of
      Control. If mutually agreed by two or more Purchasers, such Purchasers may
      agree
      to adjust the relative amounts of their Subscription Commitment Amounts,
      Subscription Amounts or the amount of Subscription Shares to be purchased by
      them at any Closing, provided that the sum of such amounts is not thereby
      reduced. 

     

    2.2  Deliveries.

     

     
      (a)  On
      or
      prior to each Closing, the Company shall deliver or cause to be delivered to
      each Purchaser the following:

     

    
      
        
          
          

        

        
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    (i)  as
      to the
      initial Closing only, this Agreement duly executed by the Company;

     

    (ii)  as
      to the
      initial Closing only, the Registration Rights Agreement duly executed by the
      Company;

     

    (iii)  as
      to the
      initial Closing only, a legal opinion of Company Counsel, in the form acceptable
      to the Purchasers in their reasonable discretion; 

     

    (iv)  as
      to the
      initial Closing only, the Securities Purchase Agreement duly executed by the
      Share Purchasers and the Company, and evidence that the full $6,000,000 purchase
      price for the common shares sold thereby has been received by the
      Company;

     

    (v)  as
      to the
      initial Closing only, the Note Purchase Agreement duly executed by the
      Purchasers and the Company, and evidence that the full $7,000,000 purchase
      price
      for the Notes sold thereby has been received by the Company;

     

    (vi)  a
      Subscription Notice prepared and delivered in accordance herewith; 

     

    (vii)  a
      copy of
      the irrevocable instructions to the Company’s transfer agent instructing the
      transfer agent to deliver, on an expedited basis, certificates evidencing the
      Subscription Shares purchased by each Purchaser hereunder registered in the
      name
      of each Purchaser; 

     

    (viii)  the
      Disclosure Schedules, as updated as necessary; and 

     

    (ix)  an
      Officer’s Certificate in the form acceptable to the Purchasers in their
      reasonable discretion. 

     

    (b)  On
      or
      prior to each Closing, each Purchaser shall deliver or cause to be delivered
      to
      the Company the following:

     

    (i)  as
      to the
      initial Closing only, this Agreement duly executed by such
      Purchaser;

     

    (ii)  as
      to the
      initial Closing only, the Registration Rights Agreement duly executed by the
      Purchaser; and

     

    (iii)  such
      Purchaser’s pro rata Subscription Amount by wire transfer or cashier’s check to
      the account as specified by the Company. 

     

    
      
        
          
          

        

        
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    2.3  Closing
      Conditions. 

     

     
      (a) The
      obligations of the Company hereunder in connection with each Closing are subject
      to the following conditions being met:

     

    (i)  the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Purchasers contained herein; 

     

    (ii)  all
      obligations, covenants and agreements of the Purchasers required to be performed
      at or prior to the Closing Date shall have been performed; 

     

    (iii)  the
      delivery by the Purchasers of the items set forth in Section 2.2(b) of this
      Agreement; and 

     

    (iv)  the
      Company shall have obtained Shareholder Approval.

     

    (b)  The
      respective obligations of the Purchasers hereunder in connection with each
      Closing are subject to the following conditions being met:

     

    (i)  the
      accuracy of the representations and warranties of the Company contained herein
      as of the date of this Agreement;

     

    (ii)  the
      accuracy of the representations and warranties of the Company contained herein,
      as modified by the Disclosure Schedule delivered at such Closing, provided
      that
      any additional or different disclosure included in such Disclosure
      Schedule
      (considered collectively) do not constitute, and could not reasonably be
      expected to have or result in, a Material Adverse Effect.

     

    (iii)  all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date shall have been performed; and

     

    (iv)  the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement; 

     

    (v)  the
      Company shall have obtained Shareholder Approval; and

     

    (vi)  the
      Company is not in breach or default of any obligation, covenant or agreement
      under the Note Purchase Agreement, Registration Rights Agreement, the Notes,
      the
      Warrants or the Security Agreement (as the terms Notes, Warrants and Security
      Agreement are defined in the Note Purchase Agreement).

     

    
      
        
          
          

        

        
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    ARTICLE
      III.  

     

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1  Representations
      and Warranties of the Company.
      Except
      as
      set forth under the corresponding section of the disclosure schedules delivered
      to the Purchasers concurrently herewith or at any Closing (the “Disclosure
      Schedules”) which Disclosure Schedules shall be deemed a part hereof, the
      Company hereby makes the representations and warranties set forth below to
      each
      Purchaser as of the date hereof and as of each Closing:

     

    (a)  Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth on
Schedule
      3.1(a).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all the issued
      and
      outstanding shares of capital stock of each Subsidiary are validly issued and
      are fully paid, non-assessable and free of preemptive and similar rights to
      subscribe for or purchase securities. 

     

    (b)  Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the Company and the Subsidiaries, taken as a whole,
      or (iii) a material adverse effect on the Company’s ability to perform in any
      material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    (c)  Authorization;
      Enforcement.
      Subject
      to Shareholder Approval, the Company has the requisite corporate power and
      authority to enter into and to consummate the transactions contemplated by
      each
      of the Transaction Documents and otherwise to carry out its obligations
      hereunder and thereunder. The execution and delivery of each of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby have been duly authorized by all necessary
      action on the part of the Company and no further action is required by the
      Company, its board of directors or its stockholders in connection therewith
      other than in connection with the Required Approvals. Each Transaction Document
      has been (or upon delivery will have been) duly executed by the Company and,
      when delivered in accordance with the terms hereof and thereof, will constitute
      the valid and binding obligation of the Company enforceable against the Company
      in accordance with its terms except (i) as limited by general equitable
      principles and applicable bankruptcy, insolvency, reorganization, moratorium
      and
      other laws of general application affecting enforcement of creditors’ rights
      generally, (ii) as limited by laws relating to the availability of specific
      performance, injunctive relief or other equitable remedies and (iii) insofar
      as
      indemnification and contribution provisions may be limited by applicable
      law.

     

    
      
        
          
          

        

        
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    (d)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      the issuance and sale of the Subscription Shares and the consummation by the
      Company of the other transactions contemplated hereby and thereby do not and
      will not (i) conflict with or violate any provision of the Company’s or any
      Subsidiary’s certificate or articles of incorporation, bylaws or other
      organizational or charter documents, 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, result in the creation of any Lien upon any of the properties
      or
      assets of the Company or any Subsidiary, or give to others any rights of
      termination, amendment, acceleration or cancellation (with or without notice,
      lapse of time or both) of, any agreement, credit facility, debt or other
      instrument (evidencing a Company or Subsidiary debt or otherwise) or other
      understanding to which the Company or any Subsidiary is a party or by which
      any
      property or asset of the Company or any Subsidiary is bound or affected, or
      (iii) subject to the Required Approvals, conflict with or result in a violation
      of any law, rule, regulation, order, judgment, injunction, decree or other
      restriction of any court or governmental authority to which the Company or
      a
      Subsidiary is subject (including federal and state securities laws and
      regulations), or by which any property or asset of the Company or a Subsidiary
      is bound or affected.

     

    (e)  Filings,
      Consents and Approvals.
      Except
      as set forth on Schedule 3.1(e),
      the
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4
      of this Agreement, (ii) the filing with the Commission of the Registration
      Statement, (iii) application(s) to each applicable Trading Market for the
      listing of the Subscription Shares for trading thereon in the time and manner
      required thereby, (iv) the filing of Form D with the Commission and such filings
      as are required to be made under applicable state securities laws, and (vi)
      the
      Company shall have obtained Shareholder Approval
      (collectively, the “Required
      Approvals”).

     

    (f)  Issuance
      of the Subscription Shares.
      The
      Subscription Shares are duly authorized and, when issued and paid for in
      accordance with the applicable Transaction Documents and subject to Shareholder
      Approval, will be duly and validly issued, fully paid and nonassessable, free
      and clear of all Liens imposed by the Company other than restrictions on
      transfer provided for in the Transaction Documents. The Company has reserved
      from its duly authorized capital stock the Subscription Shares issuable pursuant
      to this Agreement.

     

    
      
        
          
          

        

        
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    (g)  Capitalization.
      The
      capitalization of the Company is as set forth on Schedule
      3.1(g).
      No
      Person has any right of first refusal, preemptive right, right of participation,
      or any similar right to participate in the transactions contemplated by the
      Transaction Documents. Except as a result of the purchase and sale of the
      Subscription Shares or as set forth on Schedule
      3.1(g),
      there
      are no outstanding options, warrants, script rights to subscribe to, calls
      or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exercisable or exchangeable for, or giving
      any
      Person any right to subscribe for or acquire, any shares of Common Stock, or
      contracts, commitments, understandings or arrangements by which the Company
      or
      any Subsidiary is or may become bound to issue additional shares of Common
      Stock
      or Common Stock Equivalents. The issuance and sale of the Subscription Shares
      will not obligate the Company to issue shares of Common Stock or other
      securities to any Person (other than the Purchasers) and will not result in
      a
      right of any holder of Company securities to adjust the exercise, conversion,
      exchange or reset price under any of such securities. All of the outstanding
      shares of capital stock of the Company are validly issued, fully paid and
      nonassessable, have been issued in compliance with all federal and state
      securities laws, and none of such outstanding shares was issued in violation
      of
      any preemptive rights or similar rights to subscribe for or purchase securities.
      Other than Shareholder Approval, there are no further approval or authorization
      of any stockholder, the Board of Directors of the Company or others is required
      for the issuance and sale of the Subscription Shares. Except as set forth on
      Schedule
      3.1(g),
      there
      are no stockholders agreements, voting agreements or other similar agreements
      with respect to the Company’s capital stock to which the Company is a party or,
      to the knowledge of the Company, between or among any of the Company’s
      stockholders.

     

    (h)  SEC
      Reports; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by it under the Securities Act and the Exchange Act,
      including pursuant to Section 13(a) or 15(d) thereof, for the period commencing
      January 1, 2005 through the date hereof and any Closing (the foregoing
      materials, including the exhibits thereto and documents incorporated by
      reference therein, being collectively referred to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. Except
      as set forth on Schedule
      3.1(h),
      as of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act and the rules and
      regulations of the Commission promulgated thereunder, as applicable, and none
      of
      the SEC Reports, when filed, 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 the light of the circumstances
      under
      which they were made, not misleading. Except as set forth on Schedule
      3.1(h),
      the
      financial statements of the Company included in the SEC Reports complied in
      all
      material respects with applicable accounting requirements and the rules and
      regulations of the Commission with respect thereto as in effect at the time
      of
      filing. Except as set forth on Schedule
      3.1(h),
      such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

    
      
        
          
          

        

        
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    (i)  Material
      Changes; Undisclosed Events, Liabilities or Developments.
      Since
      the date of the latest audited financial statements included within the SEC
      Reports, except as specifically disclosed in a subsequent SEC Report or as
      set
      forth on Schedule
      3.1(i),
      (i)
      there has been no event, occurrence or development that has had or that could
      reasonably be expected by the Company to result in a Material Adverse Effect,
      (ii) the Company has not incurred any liabilities (contingent or otherwise)
      other than (A) trade payables and accrued expenses incurred in the ordinary
      course of business consistent with past practice and (B) liabilities not
      required to be reflected in the Company’s financial statements pursuant to GAAP
      or disclosed in filings made with the Commission, (iii) the Company has not
      altered its method of accounting, (iv) the Company has not declared or made
      any
      dividend or distribution of cash or other property to its stockholders or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock and (v) the Company has not issued any equity securities
      to
      any officer, director or Affiliate, except pursuant to existing Company stock
      option plans. The Company does not have pending before the Commission any
      request for confidential treatment of information. 

     

    (j)  Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      materially adversely affects or challenges the legality, validity or
      enforceability of any of the Transaction Documents or the Subscription Shares.
      There is no Action that has not been disclosed in the SEC Reports. The
      Commission has not issued any stop order or other order suspending the
      effectiveness of any registration statement filed by the Company or any
      Subsidiary under the Exchange Act or the Securities Act. 

     

    (k)  Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could reasonably
      be
      expected to result in a Material Adverse Effect. None of the Company’s or its
      Subsidiaries’ employees is a member of a union that relates to such employee’s
      relationship with the Company, and neither the Company or any of its
      Subsidiaries is a party to a collective bargaining agreement, and the Company
      and its Subsidiaries believe that their relationships with their employees
      are
      good. No executive officer, to the knowledge of the Company, is, or is now
      expected to be, in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement or
      non-competition agreement, or any other contract or agreement or any restrictive
      covenant, and the continued employment of each such executive officer does
      not
      subject the Company or any of its Subsidiaries to any liability with respect
      to
      any of the foregoing matters. The Company and its Subsidiaries are in compliance
      with all U.S. federal, state, local and foreign laws and regulations relating
      to
      employment and employment practices, terms and conditions of employment and
      wages and hours, except where the failure to be in compliance could not,
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

     

    
      
        
          
          

        

        
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    (l)  Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      and all such laws that affect the environment.

     

    (m)  Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as described in
      the
      SEC Reports, except where the failure to possess such permits could not have
      or
      reasonably be expected to result in a Material Adverse Effect (“Material
      Permits”),
      and
      neither the Company nor any Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any Material Permit.

     

    (n)  Title
      to Assets.
      Except
      as set forth on Schedule
      3.1(n),
      the
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens 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 the
      Subsidiaries and Liens for the payment of federal, state or other taxes, the
      payment of which is neither delinquent nor subject to penalties. Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases with which the
      Company and the Subsidiaries are in compliance.

     

    (o)  Patents
      and Trademarks.
      The
      Company and the Subsidiaries have, or have rights to use, all patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      trade secrets, inventions, copyrights, licenses and other intellectual property
      rights and similar rights necessary or material for use in connection with
      their
      respective businesses as described in the SEC Reports (collectively, the
“Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a notice (written or
      otherwise) that the Intellectual Property Rights used by the Company or any
      Subsidiary violates or infringes upon the rights of any Person. To the knowledge
      of the Company, all such Intellectual Property Rights are enforceable and there
      is no existing infringement by another Person of any of the Intellectual
      Property Rights. The Company and its Subsidiaries have taken reasonable security
      measures to protect the secrecy, confidentiality and value of all of their
      intellectual properties.

     

    
      
        
          
          

        

        
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    (p)  Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage at least equal to the aggregate Subscription Amount. Neither the
      Company nor any Subsidiary has any reason to believe that it will not be able
      to
      renew its existing insurance coverage as and when such coverage expires or
      to
      obtain similar coverage from similar insurers as may be necessary to continue
      its business without a significant increase in cost.

     

    (q)  Transactions
      With Affiliates and Employees.
      Except
      as set forth in the SEC Reports, none of the officers or directors of the
      Company and, to the knowledge of the Company, none of the employees of the
      Company is presently a party to any transaction with the Company or any
      Subsidiary (other than for services as employees, officers and directors),
      including any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $60,000
      other than (i) for payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      for
      other employee benefits, including stock option agreements under any stock
      option plan of the Company.

     

    (r)  Sarbanes-Oxley;
      Internal Accounting Controls.
      The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act
      of 2002 which are applicable to it as of the Closing Date. 

     

    (s)  Certain
      Fees.
      No
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by the Transaction Documents. The Purchasers shall have no
      obligation with respect to any fees or with respect to any claims made by or
      on
      behalf of other Persons for fees of a type contemplated in this Section that
      may
      be due in connection with the transactions contemplated by the Transaction
      Documents as a result of any action taken by the Company or its
      Affiliates.

     

    (t)  Private
      Placement.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Subscription Shares by the Company to the Purchasers
      as
      contemplated hereby. Subject to receipt of Shareholder Approval, the issuance
      and sale of the Subscription Shares hereunder does not contravene the rules
      and
      regulations of the Trading Market.

     

    (u)  Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately after receipt of
      payment for the Subscription Shares, will not be or be an Affiliate of, an
      “investment company” within the meaning of the Investment Company Act of 1940,
      as amended. The Company shall conduct its business in a manner so that it will
      not become subject to the Investment Company Act.

     

    
      
        
          
          

        

        
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    (v)  Registration
      Rights.
      Other
      than each of the Purchasers, no Person has any right to cause the Company to
      effect the registration under the Securities Act of any securities of the
      Company.

     

    (w)  Listing
      and Maintenance Requirements.
      The
      Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
      Exchange Act, and the Company has taken no action designed to, or which to
      its
      knowledge is likely to have the effect of, terminating the registration of
      the
      Common Stock under the Exchange Act nor has the Company received any
      notification that the Commission is contemplating terminating such registration.
      The Company has not, in the 12 months preceding the date hereof, received notice
      from any Trading Market on which the Common Stock is or has been listed or
      quoted to the effect that the Company is not in compliance with the listing
      or
      maintenance requirements of such Trading Market. The Company is, and has no
      reason to believe that it will not in the foreseeable future continue to be,
      in
      compliance with all such listing and maintenance requirements.

     

    (x)  Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Purchasers as a result
      of the Purchasers and the Company fulfilling their obligations or exercising
      their rights under the Transaction Documents, including without limitation
      as a
      result of the Company’s issuance of the Subscription Shares and the Purchasers’
ownership of the Subscription Shares.

     

    (y)  Disclosure.
      All
      disclosure furnished by or on behalf of the Company to the Purchasers regarding
      the Company, its business and the transactions contemplated hereby, including
      the Disclosure Schedules to this Agreement, with respect to the representations
      and warranties made herein are true and correct with respect to such
      representations and warranties and do not contain any untrue statement of a
      material fact or omit to state any material fact necessary in order to make
      the
      statements made therein, in light of the circumstances under which they were
      made, not misleading. 

     

    (z)  No
      Integrated Offering.
      Assuming
      the accuracy of the Purchasers’ representations and warranties set forth in
      Section 3.2, 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 cause this offering of the Subscription Shares to
      be
      integrated with prior offerings by the Company for purposes of the Securities
      Act or any applicable shareholder approval provisions of any Trading Market
      on
      which any of the securities of the Company are listed or
      designated.

     

    
      
        
          
          

        

        
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    (aa)  Tax
      Status.
      Except
      as set forth on Schedule
      3.1(aa),
      and for
      matters that would not, individually or in the aggregate, have or reasonably
      be
      expected to result in a Material Adverse Effect, the Company and each Subsidiary
      has filed all necessary federal, state and foreign income and franchise tax
      returns and has paid or accrued all taxes shown as due thereon, and the Company
      has no knowledge of a tax deficiency which has been asserted or threatened
      against the Company or any Subsidiary.

     

    (bb)  No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Subscription Shares by any form of general solicitation or general
      advertising. The Company has offered the Subscription Shares for sale only
      to
      the Purchasers and certain other “accredited investors” within the meaning of
      Rule 501 under the Securities Act.

     

    (cc)  Acknowledgment
      Regarding Purchasers’ Purchase of Subscription Shares.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated thereby. The Company further
      acknowledges that no Purchaser is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to the Transaction
      Documents and the transactions contemplated thereby and any advice given by
      any
      Purchaser or any of their respective representatives or agents in connection
      with the Transaction Documents and the transactions contemplated thereby is
      merely incidental to the Purchasers’ purchase of the Subscription Shares. The
      Company further represents to each Purchaser that the Company’s decision to
      enter into this Agreement and the other Transaction Documents has been based
      solely on the independent evaluation of the transactions contemplated hereby
      by
      the Company and its representatives.

     

    3.2  Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby, for itself and for no other Purchaser, represents and warrants
      as of the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a)  Organization;
      Authority.
      Such
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with full right,
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations hereunder and thereunder. The execution, delivery and
      performance by such Purchaser of the transactions contemplated by this Agreement
      have been duly authorized by all necessary corporate or similar action on the
      part of such Purchaser. Each Transaction Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in
      accordance with the terms hereof, will constitute the valid and legally binding
      obligation of such Purchaser, enforceable against it in accordance with its
      terms, except (i) as limited by general equitable principles and applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors’ rights generally, (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification and
      contribution provisions may be limited by applicable law.

     

    
      
        
          
          

        

        
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    (b)  Own
      Account.
      Such
      Purchaser understands that the Subscription Shares are “restricted securities”
and have not been registered under the Securities Act or any applicable state
      securities law and is acquiring the Subscription Shares as principal for its
      own
      account and not with a view to or for distributing or reselling such
      Subscription Shares or any part thereof in violation of the Securities Act
      or
      any applicable state securities law, has no present intention of distributing
      any of such Subscription Shares in violation of the Securities Act or any
      applicable state securities law and has no direct or indirect arrangement or
      understandings with any other persons to distribute or regarding the
      distribution of such Subscription Shares (this representation and warranty
      not
      limiting such Purchaser’s right to sell the Subscription Shares pursuant to the
      Registration Statement or otherwise in compliance with applicable federal and
      state securities laws) in violation of the Securities Act or any applicable
      state securities law. Such Purchaser is acquiring the Subscription Shares
      hereunder in the ordinary course of its business.

     

    (c)  Purchaser
      Status.
      At the
      time such Purchaser was offered the Subscription Shares, it was, and at the
      date
      hereof it is, an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
      (a)(3), (a)(7) or (a)(8) under the Securities Act. Such Purchaser is not
      required to be registered as a broker-dealer under Section 15 of the Exchange
      Act. 

     

    (d)  Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Subscription Shares, and has so evaluated the merits and risks of such
      investment. Such Purchaser is able to bear the economic risk of an investment
      in
      the Subscription Shares and, at the present time, is able to afford a complete
      loss of such investment.

     

    (e)  General
      Solicitation.
      Such
      Purchaser is not purchasing the Subscription Shares as a result of any
      advertisement, article, notice or other communication regarding the Subscription
      Shares published in any newspaper, magazine or similar media or broadcast over
      television or radio or presented at any seminar or any other general
      solicitation or general advertisement.

     

    (f)  Short
      Sales and Confidentiality Prior To The Date Hereof.
      Other
      than the transaction contemplated hereunder or under the Note Purchase
      Agreement, such Purchaser has not directly or indirectly, nor has any Person
      acting on behalf of or pursuant to any understanding with such Purchaser,
      engaged in any transaction, including Short Sales, in the securities of the
      Company since March 15, 2006 (“Discussion
      Date”).
      Notwithstanding the foregoing, in the case of a Purchaser that is a
      multi-managed investment vehicle whereby separate portfolio managers manage
      separate portions of such Purchaser's assets and the portfolio managers have
      no
      direct knowledge of the investment decisions made by the portfolio managers
      managing other portions of such Purchaser's assets, the representation set
      forth
      above shall only apply with respect to the portion of assets managed by the
      portfolio manager that made the investment decision to purchase the Subscription
      Shares covered by this Agreement. Other than to other Persons party to this
      Agreement, such Purchaser has maintained the confidentiality of all disclosures
      made to it in connection with this transaction (including the existence and
      terms of this transaction).

     

    
      
        
          
          

        

        
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    (g)  Access
      to Information.
      Such
      Purchaser acknowledges that it has received and had the opportunity to review
      (i) copies of the SEC Reports, and (ii) the terms of the Note Purchase Agreement
      and Equity Put Agreement, and all exhibits thereto. Such Purchaser further
      acknowledges that it or its representatives have been afforded (iii) the
      opportunity to ask such questions as it has deemed necessary of, and to receive
      answers from, representatives of the Company concerning the terms and conditions
      of the offering of the Subscription Shares, the merits and risks of investing
      in
      the Subscription Shares, and the terms of the Note Purchase Agreement and Equity
      Put Agreement; (iv) access to information about the Company and the Company's
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment in the Subscription
      Shares; and (v) the opportunity to obtain such additional information which
      the
      Company possesses or can acquire without unreasonable effort or expense that
      is
      necessary to verify the accuracy and completeness of the information contained
      in the SEC Reports.

     

    (h)  Restrictions
      on Subscription Shares.
      Such
      Purchaser understands that the Subscription Shares have not been registered
      under the Securities Act and may not be offered, resold, pledged or otherwise
      transferred except (a) pursuant to an exemption from registration under the
      Securities Act or pursuant to an effective registration statement in compliance
      with Section 5 under the Securities Act, (b) in accordance with all applicable
      securities laws of the states of the United States and other jurisdictions
      and
      (c) the lock-up provisions of Section 4.1(b) below.

     

    ARTICLE
      IV.  

     

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1  Transfer
      Restrictions.
      

     

    (a)  The
      Subscription Shares may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Subscription Shares other
      than pursuant to an effective registration statement or Rule 144, the Company
      may require the transferor thereof to provide to the Company an opinion of
      counsel to the Company, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Subscription Shares under the
      Securities Act. 

     

    (b)  In
      addition to transfer restrictions under the Securities Act, the Purchasers
      agree
      that any Subscription Shares purchased hereunder shall be subject to a lock-up
      for a period of six months from the date of issuance and during such period
      shall not be sold, assigned or otherwise disposed of by Purchasers except to
      a
      Permitted Transferee (as defined below) in accordance with subpart (d) below.
      

     

    (c)  The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1,
      of a legend on any of the Subscription Shares in the following
      form:

     

    
      
        
          
          

        

        
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    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
      AS
      AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE “RESTRICTED SECURITIES” AS
      THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT. SUCH SECURITIES
      MAY
      NOT BE OFFERED FOR SALE, SOLD, PLEDGED 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 REASONABLE
      SATISFACTION OF COUNSEL TO THE ISSUER. IN ADDITION, THESE SECURITIES ARE SUBJECT
      TO A CONTRACTUAL LOCK-UP THE TERMS OF WHICH ARE SET FORTH IN A SECURITIES PUT
      AGREEMENT DATED MARCH 29, 2006 A COPY OF WHICH IS ON FILE WITH THE COMPANY.
      

     

    (d) Notwithstanding
      the foregoing, any holder of Subscription Shares may transfer such securities
      to
      any Permitted Transferee who consents in a writing delivered to the Company
      to
      be bound by the applicable terms of this Agreement, subject to the Company’s
      reasonable determination that such transfer does not require registration of
      such transferred securities under the Securities Act.. With respect to any
      such
      holder, a “Permitted Transferee” means the spouse or lineal descendants of such
      holder, any trust for the benefit of such holder or the benefit of the spouse
      or
      lineal descendants of such holder, any corporation or partnership in which
      such
      holder, the spouse and the lineal descendants of such holder are the direct
      and
      beneficial owners of substantially all of the equity interests (provided such
      holder, spouse and lineal descendants agree in writing to remain the direct
      and
      beneficial owners of all such equity interests), the personal representative
      of
      such holder upon such holder’s death for purposes of administration of such
      holder’s estate or upon such holder’s incompetency for purposes of the
      protection and management of the assets of such holder; or for any holder that
      is a partnership, limited liability company, corporation or other entity to
      (i)
      a partner or former partner of such partnership, a member or former member
      of
      such limited liability company or a shareholder of such corporation, (ii) the
      estate of any such partner, member or shareholder, or (iii) any other Affiliate
      of such holder; or for any Purchaser, to another Purchaser or an Affiliate
      of a
      Purchaser.

     

    4.2  Furnishing
      of Information.
      As long
      as any Purchaser owns Subscription Shares, the Company covenants to timely
      file
      (or obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. As long as any Purchaser owns Subscription Shares,
      if the Company is not required to file reports pursuant to the Exchange Act,
      it
      will prepare and furnish to the Purchasers and make publicly available in
      accordance with Rule 144(c) such information as is required for the Purchasers
      to sell the Subscription Shares under Rule 144. The Company further covenants
      that it will take such further action as any holder of Subscription Shares
      may
      reasonably request, to the extent required from time to time to enable such
      Person to sell such Subscription Shares without registration under the
      Securities Act within the requirements of the exemption provided by Rule
      144.

     

    
      
        
          
          

        

        
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    4.3  Integration.
      The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Subscription Shares
      in a manner that would require the registration under the Securities Act of
      the
      sale of the Subscription Shares to the Purchasers or that would be integrated
      with the offer or sale of the Subscription Shares for purposes of the rules
      and
      regulations of any Trading Market such that it would require shareholder
      approval prior to the closing of such other transaction unless shareholder
      approval is obtained before the closing of such subsequent
      transaction.

     

    4.4  Securities
      Laws Disclosure; Publicity.
      The
      Company shall, within one Trading Day of the Closing Date, issue a press release
      disclosing the material terms of the transactions contemplated hereby, and
      shall
      file a Current Report on Form 8-K which shall attach the Transaction Documents
      thereto by the fourth Business Day following the Closing Date. The press release
      and Form 8-K shall be acceptable to the Purchasers in their reasonable
      discretion. No Purchaser shall issue any such press release or otherwise make
      any such public statement without the prior consent of the Company. The Company
      shall not publicly disclose the name of any Purchaser, or include the name
      of
      any Purchaser in any filing with the Commission or any regulatory agency or
      Trading Market, without the prior written consent of such Purchaser, except
      (i)
      as required by federal securities law in connection with (A) any registration
      statement contemplated by the Registration Rights Agreement and (B) the filing
      of final Transaction Documents (including signature pages thereto) with the
      Commission and (ii) to the extent such disclosure is required by law or Trading
      Market regulations, in which case the Company shall provide the Purchasers
      with
      prior notice of such disclosure permitted under this subclause
      (ii).

     

    4.5  Use
      of
      Proceeds. The Company shall use the net proceeds from the sale of the
      Subscription Shares hereunder as set forth on Schedule 4.5 of the Disclosure
      Schedule. 

     

    4.6  Listing
      of Common Stock. The
      Company hereby agrees to use best efforts to maintain the listing of the Common
      Stock on a Trading Market, and as soon as reasonably practicable following
      the
      Closing to list all of the Subscription Shares on such Trading Market. The
      Company further agrees, if the Company applies to have the Common Stock traded
      on any other Trading Market, it will include in such application all of the
      Subscription Shares, and will take such other action as is necessary to cause
      all of the Subscription Shares to be listed on such other Trading Market as
      promptly as possible. The Company will take all action reasonably necessary
      to
      continue the listing and trading of its Common Stock on a Trading Market and
      will comply in all respects with the Company’s reporting, filing and other
      obligations under the bylaws or rules of the Trading Market. The Company shall
      file a Proxy Statement on Schedule 14A under the Exchange Act with the
      Commission within 20 calendar days of the date hereof, setting forth all
      information required with respect to the transactions contemplated hereby for
      the purpose of obtaining Shareholder Approval, and shall pursue such Proxy
      Statement through any Commission review, and shall cause such Proxy Statement
      to
      be mailed to its shareholders as required by the Exchange Act within 5 calendar
      days of the completion of the Commission’s review, if any, and, to hold a
      special meeting of its shareholders as soon as possible following its mailing.
      The Company shall use all reasonable efforts to obtain such Shareholder
      Approval.

     

    
      
        
          
          

        

        
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    4.7  Short
      Sales and Confidentiality After The Date Hereof. Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      neither it nor any Affiliate acting on its behalf or pursuant to any
      understanding with it will engage in any transactions, including any Short
      Sales, in the securities of the Company during the period commencing at the
      Discussion Time and ending at the time that the transactions contemplated by
      this Agreement are first publicly announced as described
      in
      Section 4.4. Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      neither it nor any Affiliate acting on its behalf or pursuant to any
      understanding with it will engage in any Short Sales in the securities of the
      Company during the period commencing at the Discussion Time and ending on the
      Effective Date (“Black-out Termination Date”). Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      until such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company as described in Section 4.4, such Purchaser will
      maintain the confidentiality of all disclosures made to it in connection with
      this transaction (including the existence and terms of this transaction). Each
      Purchaser understands and acknowledges, severally and not jointly with any
      other
      Purchaser, that the Commission currently takes the position that coverage of
      short sales of shares of the Common Stock “against the box” prior to the
      Effective Date of the Registration Statement with the Subscription Shares is
      a
      violation of Section 5 of the Securities Act, as set forth in Item 65, Section
      A, of the Manual of Publicly Available Telephone Interpretations, dated July
      1997, compiled by the Office of Chief Counsel, Division of Corporation Finance.
      Notwithstanding
      the foregoing, no Purchaser makes any representation, warranty or covenant
      hereby that it will not engage in Short Sales in the securities of the Company
      after the Black-out Termination Date. Notwithstanding
      the foregoing, in the case of a Purchaser that is a multi-managed investment
      vehicle whereby separate portfolio managers manage separate portions of such
      Purchaser's assets and the portfolio managers have no direct knowledge of the
      investment decisions made by the portfolio managers managing other portions
      of
      such Purchaser's assets, the covenant set forth above shall only apply with
      respect to the portion of assets managed by the portfolio manager that made
      the
      investment decision to purchase the Subscription Shares covered by this
      Agreement.

     

    4.8  Delivery
      of Subscription Shares After Closing. The Company shall deliver, or cause to
      be delivered, the respective Subscription Shares purchased by each Purchaser
      to
      such Purchaser within 3 Trading Days of the Closing Date.

     

    4.9  Form
      D; Blue Sky Filings. The Company agrees to timely file a Form D with respect
      to the Subscription Shares as required under Regulation D and to provide a
      copy
      thereof, promptly upon request of any Purchaser. The Company shall take such
      action as the Company shall reasonably determine is necessary in order to obtain
      an exemption for, or to qualify the Subscription Shares for, sale to the
      Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
      states of the United States, and shall provide evidence of such actions promptly
      upon request of any Purchaser.

     

    
      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

     

    ARTICLE
      V.  

     

    MISCELLANEOUS

     

    5.1  Fees
      and Expenses.
      Except
      as expressly set forth in the Transaction Documents to the contrary, each party
      shall pay the fees and expenses of its advisers, counsel, accountants and other
      experts, if any, and all other expenses incurred by such party incident to
      the
      negotiation, preparation, execution, delivery and performance of this Agreement;
      provided that the Company shall, following each Closing, reimburse the
      reasonable legal fees and expenses of counsel for the Purchasers not to exceed
      $25,000 for all transactions contemplated by this Agreement. The Company shall
      pay all transfer agent fees, stamp taxes and other taxes and duties levied
      in
      connection with the delivery of any Subscription Shares to the
      Purchasers.

     

    5.2  Entire
      Agreement. The Transaction Documents, together with the exhibits and
      schedules thereto, contain the entire understanding of the parties with respect
      to the subject matter hereof and supersede all prior agreements and
      understandings, oral or written, with respect to such matters, which the parties
      acknowledge have been merged into such documents, exhibits and
      schedules.

     

    5.3  Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto prior to 5:30 p.m. (New York City time)
      on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      set
      forth on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
      2nd
      Trading
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as follows:

     

    


    
      
        	
                If
                  to the Company:

              	
                VendingData
                  Corporation

              
	 	
                6830
                  Spencer Street

              
	 	
                Las
                  Vegas, NV 89119

              
	 	
                Facsimile:
                  702-617-4737

              
	 	
                Attn:
                  Mark R. Newburg, President

              
	 	
                Chief
                  Executive Officer

              
	 	 
	
                If
                  to the Purchasers:

              	
                c/o
                  Bricoleur Capital Management, LLC

              
	 	
                12230
                  El Camino Real, Suite 100

              
	 	
                San
                  Diego, CA 92130

              
	 	
                Facsimile:
                  858-523-2010

              
	 	
                Attn:
                  Robert Poole

              


      

    

     

    
      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

    

    


    or
      such
      other address as either party may provide to the other in writing. 

    


    5.4  Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and the
      Purchasers representing not less than 51% of the Subscription Commitment Amount
      then remaining or, in the case of a waiver, by the party against whom
      enforcement of any such waived provision is sought. No waiver of any default
      with respect to any provision, condition or requirement of this Agreement shall
      be deemed to be a continuing waiver in the future or a waiver of any subsequent
      default or a waiver of any other provision, condition or requirement hereof,
      nor
      shall any delay or omission of any party to exercise any right hereunder in
      any
      manner impair the exercise of any such right.

     

    5.5  Headings.
      The headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    5.6  Successors
      and Assigns. This Agreement shall be binding upon and inure to the benefit
      of the parties and their successors and permitted assigns. Neither the Company
      nor any Purchasers may assign this Agreement or any rights or obligations
      hereunder without the prior written consent of each the other party (other
      than
      by merger), except that any Purchaser may assign its rights and obligations
      hereunder to a Permitted Transferee in accordance with Section 4.1(d).


     

    5.7  No
      Third-Party Beneficiaries. This Agreement is intended for the benefit of the
      parties hereto and their respective successors and permitted assigns and is
      not
      for the benefit of, nor may any provision hereof be enforced by, any other
      Person.

     

    5.8  Governing
      Law. All questions concerning the construction, validity, enforcement and
      interpretation of the Transaction Documents shall be governed by and construed
      and enforced in accordance with the internal laws of the State of California,
      without regard to the principles of conflicts of law thereof. Each party agrees
      that all legal proceedings concerning the interpretations, enforcement and
      defense of the transactions contemplated by this Agreement and any other
      Transaction Documents (whether brought against a party hereto or its respective
      affiliates, directors, officers, shareholders, employees or agents) shall be
      commenced exclusively in the state and federal courts sitting in the San Diego,
      California. The parties hereby waive all rights to a trial by jury. If either
      party shall commence an action or proceeding to enforce any provisions of the
      Transaction Documents, then the prevailing party in such action or proceeding
      shall be reimbursed by the other party for its reasonable attorneys’ fees and
      other costs and expenses incurred with the investigation, preparation and
      prosecution of such action or proceeding.

     

    5.9  Survival.
      The representations and warranties contained herein shall survive the Closing
      and the delivery of the Subscription Shares.

     

    5.10  Execution.
      This Agreement may be executed in two or more counterparts, all of which when
      taken together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

     

    
      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

    

     

    5.11  Severability.
      If any term, provision, covenant or restriction of this Agreement is held by
      a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their commercially
      reasonable efforts to find and employ an alternative means to achieve the same
      or substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

     

    5.12  Rescission
      and Withdrawal Right. Notwithstanding anything to the contrary contained in
      (and without limiting any similar provisions of) any of the other Transaction
      Documents, whenever any Purchaser exercises a right, election, demand or option
      under a Transaction Document and the Company does not timely perform its related
      obligations within the periods therein provided, then such Purchaser may rescind
      or withdraw, in its sole discretion from time to time upon written notice to
      the
      Company, any relevant notice, demand or election in whole or in part without
      prejudice to its future actions and rights.

     

    5.13  Replacement
      of Subscription Shares. If any certificate or instrument evidencing any
      Subscription Shares is mutilated, lost, stolen or destroyed, the Company shall
      issue or cause to be issued in exchange and substitution for and upon
      cancellation thereof (in the case of mutilation), or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction.
      The
      applicant for a new certificate or instrument under such circumstances shall
      also pay any reasonable third-party costs (including customary indemnity)
      associated with the issuance of such replacement Subscription
      Shares.

     

    5.14  Independent
      Nature of Purchasers’ Obligations and Rights. The obligations of each
      Purchaser under any Transaction Document are several and not joint with the
      obligations of any other Purchaser, and no Purchaser shall be responsible in
      any
      way for the performance or non-performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      other Transaction Document, and no action taken by any Purchaser pursuant
      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 the
      Transaction Documents. Each Purchaser shall be entitled to independently protect
      and enforce its rights, including without limitation, the rights arising out
      of
      this Agreement or out of the other Transaction Documents, and it shall not
      be
      necessary for any other Purchaser to be joined as an additional party in any
      proceeding for such purpose. The Company has elected to provide all Purchasers
      with the same terms and Transaction Documents for the convenience of the Company
      and not because it was required or requested to do so by the
      Purchasers.

     

    5.15  Construction.
      The parties agree that each of them and/or their respective counsel has reviewed
      and had an opportunity to revise the Transaction Documents and, therefore,
      the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

    (SIGNATURE
      PAGES FOLLOW)

     

    
      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

    

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    
      	 	 	 
	 	
              VENDINGDATA
                CORPORATION

            
	 
 	 
 	 
 
	 	By:  	/s/
              Mark
              R. Newburg
	 	
              
Mark
              R. Newburg,
	 	
              President
                and Chief Executive Officer

            


    

    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASERS FOLLOWS]

    


    
      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

    

     

    
      
        	 	 	 
	 	
                
                  BRICOLEUR
                    PARTNERS, L.P.

                

              
	 
 	
                By:
                  

                 

              	 Bricoleur
                Capital Management, LLC,
 Its General Partner
	 	 	 
	 	By:  	/s/
                Robert Poole
	 	
                

                Robert
                  Poole, Member of 

              
	 	
                Management
                  Board

                 

                Subscription
                  Commitment Amount: $715,000

              


      

    

     

    
      
        
          	 	 	 
	 	
                  
                    
                      BRICOLEUR
                        ENHANCED, L.P.

                    

                  

                
	 
 	
                  By:
                    

                   

                	 Bricoleur
                  Capital Management, LLC,
 Its General Partner
	 	 	 
	 	By:  	/s/
                  Robert Poole
	 	
                  

                  Robert
                    Poole, Member of 

                
	 	
                  Management
                    Board

                   

                  Subscription
                    Commitment Amount:
                    $1,785,000

                


        

      

    

     

    
      
        
          	 	 	 
	 	
                  
                    
                      
                        BRIC
                          6, L.P.

                      

                    

                  

                
	 
 	
                  By:
                    

                   

                	 Bricoleur
                  Capital Management, LLC,
 Its General Partner
	 	 	 
	 	By:  	/s/
                  Robert Poole
	 	
                  

                  Robert
                    Poole, Member of 

                
	 	
                  Management
                    Board

                   

                  
                    Subscription
                      Commitment Amount:
                      $715,000

                  

                


        

      

    

     

    
      
        
          	 	 	 
	 	
                  
                    BRICOLEUR
                      OFFSHORE LTD.

                  

                
	 
 	
                  By:
                    

                   

                	 Bricoleur
                  Capital Management, LLC,
 Its General Partner
	 	 	 
	 	By:  	/s/
                  Robert Poole
	 	
                  

                  Robert
                    Poole, Member of 

                
	 	
                  Management
                    Board

                   

                  Subscription
                    Commitment Amount: $1,785,000

                


        

      

       

    

    
      
        
        

      

      
        25