**Exhibit10.5**

 

**THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISEOF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.  THIS WARRANT OR SUCH SHARES MAY NOT BE SOLD, DISTRIBUTED, PLEDGED,OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS: (A)THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLESTATE SECURITIES LAW COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES;(B) THE COMPANY (DEFINED BELOW) RECIEVES AN OPINION OF LEGAL COUNSEL FOR THEHOLDER OF THIS WARRANT STATING THAT SUCH TRANSACTION IS EXEMPT FROMREGISTRATION AND SUCH OPINION IS IN FORM AND SUBSTANCE REASONABLY SATISFACTORYTO THE COMPANY; OR (C) PURSUANT TO RULE 144 UNDER SUCH ACT.**

 

**WARRANTTO PURCHASE**

**SHARESOF COMMON STOCK**

 

 

**VENDINGDATACORPORATION**

 

THIS IS TO CERTIFYTHAT, for value received, Philiadelphia Brokerage Corporation (the “Holder”) isentitled, during a specified period of time as set forth in Section 3 herein(the “Exercise Period”), to purchase from VendingData Corporation, a Nevadacorporation (the “Company”), up to Twenty-Five Thousand (25,000), fully paidand nonassessable shares of the Company’s common stock, par value $0.001 pershare (the “Common Stock”), at an exercise price per share as set forth inSection 1 herein (the “Exercise Price”). The Warrant Shares shall be vested as of the date of this Warrant.  The term “Warrant,” as used herein, refersto this Warrant to Purchase Shares of Common Stock, the term “Warrant Shares,”as used herein, refers to the shares of Common Stock purchasable hereunder, andthe term “Parties,” as used herein, refers collectively to the Holder and theCompany.

 

**TERMSAND CONDITIONS**

 

This Warrant is subjectto the following terms, provisions, and conditions:

 

1**.            **Exercise Price.  The Exercise Price shall be $2.25 per share.

 

2.             Manner of Exercise; Issuance of Certificates; Paymentfor Shares.  Subject to theprovisions hereof, this Warrant may be exercised by the Holder, in whole or inpart (but in not less than 1,000 share increments), by the surrender of thisWarrant, together with an exercise agreement in the form attached hereto (the“Exercise Agreement”), duly completed and executed by the Holder, to theCompany during normal business hours on any business day at the Company’sprincipal executive offices (or such other location as the Company maydesignate by notice to the Holder); and upon (a) the payment to the Company incash, by certified or official bank check or by wire transfer for the accountof the Company in the amount of the Exercise Price multiplied by the number ofWarrant Shares for which the Warrant is being exercised.

 

In addition to the method of payment set forth aboveand in lieu of any cash payment required thereunder, the Holder(s) of theWarrants shall have the right at any time and from time to time

 

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to exercise the Warrants in whole or in part by surrendering theWarrant in the manner specified above in exchange for that number of shares ofCommon Stock equal to the product of (x) the number of shares as to which suchWarrants are being exercised multiplied by (y) a fraction, the numerator ofwhich is the market price of the Common Stock less the Exercise Price and thedenominator of which is such market price. Solely for the purposes of this paragraph, market price shall becalculated either (i) on the date on which notice of the Holder’s election toexercise is given pursuant to the paragraph above; or (ii) as the average ofthe market prices for each of the five trading days preceding such notice date,whichever results in a higher market price. If at any time the Common Stock is not listed on the New York StockExchange, the American Stock Exchange, any domestic security exchange, orquoted on the Nasdaq Stock Market, the “market price” shall be the fair valuethereof determined jointly by the Company and the Holder; provided, that ifsuch parties are unable to reach agreement within a reasonable period of time,such “market price” shall be determined by an appraiser jointly selected by theCompany and the Holder.  Thedetermination of such appraiser shall be final and binding on the Company andthe Holder, and the fees and expenses of such appraiser shall be paid by theCompany.  Any fractional share resultingfrom such cashless exercise shall be eliminated.

 

The Warrant Shares so purchased shall be deemed to beissued to the Holder as the record owner of such Warrant Shares, as of theclose of business on the date on which this Warrant shall have beensurrendered, the completed Exercise Agreement shall have been delivered, andpayment shall have been made for such Warrant Shares as set forth above.Certificates for the Warrant Shares so purchased, representing the aggregatenumber of shares specified in the Exercise Agreement, shall be delivered to theHolder within a reasonable time after this Warrant shall have been soexercised. The certificates so delivered shall be in such denominations as maybe reasonably requested by the Holder and shall be registered in the name ofthe Holder or such other name as shall be designated by the Holder. If thisWarrant shall have been exercised only in part, then, unless this Warrant hasexpired, the Company shall, at its expense, at the time of delivery of suchcertificates, deliver to the Holder a new warrant representing the number ofWarrant Shares with respect to which this Warrant shall not then have beenexercised.

 

3.             Exercise Period.  This Warrantmay be exercised any time before 2:00 p.m., Las Vegas, Nevada time, on June 18,2008  (the “Exercise Period”).

 

4.             ConditionsPrecedent Call and Redemption. Notwithstanding anything else herein to the contrary, this Warrant maybe called and redeemed, if not previously exercised, after the Company giveswritten notice to Holder of the Company’s election to call and redeem (the“Redemption Notice”) the Warrant and, if within thirty (30) days of such Redemption Notice, Holder hasnot exercised the Warrant pursuant to the terms hereof. In the event of suchredemption, the Company must pay to Holder consideration equal to the par valueof the shares issuable pursuant to the Warrant.

 

5.             Covenantsof the Company.          The Company hereby covenants andagrees as follows:

 

(a)           Shares to be Fully Paid.  All Warrant Shares shall, upon issuance inaccordance with the terms of this Warrant, be validly issued, fully paid, andnon-assessable.

 

(b)           Reservation of Shares.  During the Exercise Period, the Companyshall at all times have authorized, and reserved for the purpose of issuanceupon exercise of this Warrant, a sufficient number of shares of Common Stock toprovide for the exercise of this Warrant.

 

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(c)           Successors and Assigns.  This Warrant shall be binding upon anyentity succeeding to the Company by merger, consolidation, or acquisition ofall or substantially all the Company’s assets.

 

6.             Paymentof Expenses.  The Company and theHolder shall each be responsible for their own costs and expenses payable inconnection with (a) the negotiation, preparation, execution and delivery ofthis Agreement and the other agreements to be executed in connection herewith;and (b) the issuance of certificates for Warrant Shares upon the exercise ofthis Warrant.  The Company shall pay anyissuance tax in connection with the issuance of certificates for WarrantShares; provided, however, that the Holder shall be responsible for any incomeor other taxes in connection with such issuance.

 

7.             NoRights or Liabilities as a Stockholder. This Warrant shall not entitle the Holder to any voting rights or otherrights as a stockholder of the Company. No provision of this Warrant, in theabsence of affirmative action by the Holder to purchase Warrant Shares, and nomere enumeration herein of the rights or privileges of the Holder, shall giverise to any liability of such Holder for the Exercise Price or as a stockholderof the Company, whether liability is asserted by the Company or by creditors ofthe Company.

 

8.             Transfer,Exchange, and Replacement of Warrant. Neither this Warrant, nor any interest in this Warrant, may be sold,distributed, assigned, offered, pledged or otherwise transferred without theexpress written consent of the Company.

 

(a)           Exchange of Warrants; Replacementsof Warrants.  This Warrant isexchangeable upon the surrender hereof by the Holder to the Company for newwarrants of like tenor and date representing in the aggregate the right topurchase the number of shares of Common Stock purchasable hereunder, each of suchnew Warrants to represent the right to purchase such number of shares of CommonStock (not to exceed the aggregate total number purchasable hereunder) as shallbe reasonably designated by the Holder at the time of such surrender.  Upon receipt by the Company of evidencereasonably satisfactory to it of the loss, theft, destruction, or mutilation ofthis Warrant, and, in case of loss, theft or destruction, of indemnity, orsecurity reasonably satisfactory to it, and upon surrender and cancellation ofthis Warrant, if mutilated the Company will make and deliver a new warrant oflike tenor, in lieu of this Warrant.

 

(b)           Cancellation: Payment of Expenses.  Upon the surrender of this Warrant inconnection with any transfer, exchange, or replacement as provided in thisSection 8, this Warrant shall be promptly canceled by the Company.  The Company and the Holder shall each beresponsible for their own costs and expenses payable in connection with thepreparation, execution, and delivery of new warrants pursuant to this****Section8. The Holder shall be responsible for any tax which may be payable inconnection with any transfer of a certificate for Warrant Shares.

 

(c)           Registrar.  The Company shall maintain, at its principalexecutive offices (or such other location as the Company may designate bynotice to the Holder), a registrar for this Warrant, in which the Company shallrecord the name and address of the person in whose name this Warrant has beenissued, as well as the name and address of each transferee and each prior ownerof this Warrant.

 

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9.             Amendments.  No amendment or modification of this****Warrantshall be deemed effective unless and until such amendment or modification is anexpress writing executed by both the Parties.

 

10.           Governing Law.This Warrant shall be governed by and construed and enforced in accordance withthe internal laws of the State of Nevada without regard to the body of lawcontrolling conflicts of law. The parties hereto hereby submit to the exclusivejurisdiction of the courts located in Las Vegas, Nevada, with respect to anydispute arising under this Warrant and the transactions contemplated hereby.

 

11.           RegistrationRights.

 

(a)           Piggyback Registration.  If the Company proposes to register any ofits Securities under the Securities Act (other than pursuant to Form S-4 orForm S-8) for itself or on behalf of any security holder, the Company will givewritten notice thereof to Holder.  IfHolder notifies the Company within twenty (20) days after receipt of any suchnotice of his desire to include any such Registrable Securities in suchproposed registration statement, the Company shall afford Holder theopportunity to have any such Shares registered under such registrationstatement.  For purposes of thisAgreement, the term “Registrable Securities” means the Warrant Shares issued orissuable and any shares of capital stock issued or issuable as a dividend on orin exchange for or otherwise with respect to any of the foregoing.

 

(b)           Obligations of the Holder.  It shall be a condition precedent to theobligations of the Company to complete the registration pursuant to thisWarrant with respect to the Registrable Securities of the Holder that suchHolder shall furnish to the Company such information regarding itself, theRegistrable Securities held by it, and the intended method of disposition ofthe Registrable Securities held by it as shall be reasonably required to effectthe registration of such Registrable Securities and shall execute suchdocuments and otherwise cooperate with the Company as reasonably requested bythe Company in connection with the preparation and filing of the registrationstatement. At least three (3) business days prior to the first anticipatedfiling date of the Registration Statement, the Company shall notify the Holderof the information the Company requires from each such Holder.

 

(c)           Expense of the Registration.  All reasonable expenses, other thanunderwriting discounts and commissions, incurred by the Company in connectionwith registrations, filings or qualifications pursuant to this Section 11,including without limitation, all registration, listing and qualification fees,printers and accounting fees, and the fees and disbursements of counsel for theCompany, shall be borne by the Company.

 

(d)           Termination or Withdrawal ofRegistration.  The Company shallhave the right to terminate or withdraw any registration made pursuant to thissubparagraph (i) prior to the effectiveness of such registration whether or notany Holder has elected to include such Holder’s Shares in such registration.

 

12.           ExpirationDate.  This Warrant shall expire andbecome null and void and of no further force or effect at 5:00 p.m. Las Vegas,Nevada time on June 18, 2008.

 

IN WITNESS WHEREOF, the Company has caused thisWarrant to be signed by its duly authorized officer.

 

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|   | VENDINGDATA CORPORATION |
|--------|-------------------------|
|   | a Nevada corporation    |
|   |                    |
|   | BY:           | /S/  *Stacie L.  Brown,      7/21/03* |   |
|   |                    | Stacie L. Brown, Attorney-in-Fact  for |
|   |                    | Steven J. Blad,  President and  Chief Executive Officer |
|   |                    |   |
|   |                    | Effective  Date:    June 18, 2003 |

 

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EXERCISE AGREEMENT

 

TO:         VENDINGDATA CORPORATION(THE “COMPANY”)

 

The undersigned, pursuant to the provisions set forthin the attached Warrant to Purchase Shares of Common Stock (the “Warrant”)hereby irrevocably elects and agrees to purchase                         shares (the “Exercised Shares”) of the Company’s common stock (“Common Stock”)covered by the Warrant and makes payment herewith in full therefore at theprice per share provided by the Warrant in cash or by certified or officialbank check in the amount of$                                .  If said number of shares of Common Stockshall not be all the shares purchasable under the Warrant, a new warrant is tobe issued in the name of said undersigned covering the balance of the sharespurchasable thereunder less any fraction of a share paid in cash.  Please issue a certificate or certificatesfor the Exercised Shares in the name of and pay any cash for any fractionalshare to:

 
|   | NAME:            |                                                                                     |   |
|--------|------------------|------------------------------------------------------------------------------------------|--------|
|   |             |                                                                                     |
|   | SIGNATURE:  |                                                                                     |   |
|   |             |                                                                                     |
|   | DATED:           |                                                                                     |   |
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|   | ADDRESS:         |                                                                                     |   |
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|   |             |                                                                                     |
|   | NOTE:            | The above signature  should correspond exactly with the name on the face of the Warrant. |

 

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