**Exhibit 10.9**

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**THIS WARRANT AND THESHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTEREDUNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATESECURITIES LAW.  THIS WARRANT OR SUCHSHARES MAY NOT BE SOLD, DISTRIBUTED, PLEDGED, OFFERED FOR SALE, ASSIGNED,TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS: (A) THERE IS AN EFFECTIVEREGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWCOVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES; (B) THE COMPANY (DEFINEDBELOW) RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THIS WARRANTSTATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION AND SUCH OPINION ISIN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY; OR (C) PURSUANTTO RULE 144 UNDER SUCH ACT.**

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**WARRANTTO PURCHASE**

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**SHARESOF COMMON STOCK**

 

 

**VENDINGDATACORPORATION**

 

 

THIS IS TO CERTIFY THAT, for value received, Mellon HBV SPV, LLC (the“Holder”) is entitled, during a specified period of time as set forth inSection 3 herein (the “Exercise Period”), to purchase from VendingDataCorporation, a Nevada corporation (the “Company”), Two Hundred Twenty-FiveThousand (225,000) fully paid and nonassessable shares of the Company’s commonstock, par value $0.001 per share (the “Common Stock”), at an exercise priceper share as set forth in Section 1 herein (the “Exercise Price”) (suchnumber of shares and the Exercise Price being subject to adjustment as providedherein).  The term “Warrant,” as usedherein, refers to this Warrant to Purchase Shares of Common Stock, the term“Warrant Shares,” as used herein, refers to the shares of Common Stockpurchasable hereunder, and the term “Parties,” as used herein, referscollectively to the Holder and the Company. This Warrant is issuable only in connection with that certain $3,000,000principal amount 10% Note due November 22, 2003, dated as of the same datehereof to Holder and the Company (as “Obligor”) (collectively hereinafter the“Note”).

 

**TERMSAND CONDITIONS**

 

This Warrant is subject to the following terms, provisions, andconditions:

 

# 1.             Exercise Price.  TheExercise Price shall be $2.25 per share.

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# 2.             Manner of Exercise; Issuance ofCertificates; Payment for Shares. Subject to the provisions hereof, this Warrant may be exercised by theHolder, in whole or in part (but in not less than 1,000 share increments):  (a) by the surrender of this Warrant,together with an exercise agreement in the form attached hereto (the “ExerciseAgreement”), duly completed and executed by the Holder, to the Company duringnormal business hours on any business day at the Company’s principal executiveoffices (or such other location as the Company may designate by notice to theHolder); and (b) upon the payment to the Company in cash, by certified orofficial bank check or by wire transfer for the account of the

 

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Company in the amount of theExercise Price multiplied by the number of Warrant Shares for which the Warrantis being exercised.

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The Warrant Shares so purchased shall be deemed to be issued to theHolder, as the record owner of such Warrant Shares, as of the close of businesson the date on which this Warrant shall have been surrendered, the completedExercise Agreement shall have been delivered, and payment shall have been madefor such Warrant Shares as set forth above. Certificates for the Warrant Sharesso purchased, representing the aggregate number of shares specified in theExercise Agreement, shall be delivered to the Holder within a reasonable time,not exceeding ten (10) business days, after this Warrant shall have been soexercised.  The certificates sodelivered shall be in such denominations as may be reasonably requested by theHolder and shall be registered in the name of the Holder or such other name asshall be designated by the Holder. If this Warrant shall have been exercisedonly in part, then, unless this Warrant has expired, the Company shall, at itsexpense, at the time of delivery of such certificates, deliver to the Holder anew warrant representing the number of Warrant Shares with respect to whichthis Warrant shall not then have been exercised.

 

# 3.             Exercise Period.  This Warrant may be exercised any timebefore 2:00 p.m., Las Vegas, Nevada time, July 24, 2008.

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# 4.             Redemption.  Notwithstanding anything else herein to thecontrary, this Warrant may be called and redeemed, if not previously exercised,after the Company gives written notice to the Holder of the Company’s electionto call and redeem (the “Redemption Notice”) the Warrant and if, within thirty(30) days of such RedemptionNotice, the Holder has not exercised the Warrant pursuant to the termshereof.  In the event of suchredemption, the Company must pay to the Holder consideration equal to the parvalue of the shares issuable pursuant to the Warrant.

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# 5.             Covenants of the Company.  TheCompany hereby covenants and agrees as follows:

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(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.

 

(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.             Adjustment Provisions.During the Exercise Period, the Exercise Price and the number of Warrant Sharesshall be subject to adjustment from time to time as provided in thisSection 6.  If the Company shall,prior to the payment of the Note in full, (a) declare a dividend or make adistribution of Common Stock payable inshares of Common Stock, (b) subdivide its outstanding shares of CommonStock, into a greater number of shares of Common Stock, (c) combineits outstanding shares of Common Stock into a smaller number of shares ofCommon Stock, or (d) issue any shares of capital stock of the Company byreclassification or capital reorganization of its shares of Common Stock, thenthe number of Warrant Shares and the Exercise Price in effect immediately priorto such action shall be adjusted so that the Holder shall be entitled toreceive the number and kind of shares of Common Stock or other Capital Stockwhich the Holder would have owned or have been entitled to receive immediatelyafter such action had the Holder exercised the Warrant immediately prior to therecord date in the case of (a), or the effective date in the case of (b), (c)or (d). In the event that any adjustment of the Exercise Price as requiredherein results in a fraction of a cent, such Exercise Price shall be rounded upto the nearest cent.

 

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# 7.             Payment of Expenses.  The Company and the Holder shall each beresponsible for their own costs and expenses payable in connection with:  (a) the negotiation, preparation,execution and delivery of this Warrant and the other agreements to be executedin connection herewith; and (b) the issuance of certificates for Warrant Sharesupon the exercise of this Warrant.  TheCompany shall pay any issuance tax in connection with the issuance of certificatesfor Warrant Shares; provided, however, that the Holder shall be responsible forany income or other taxes in connection with such issuance.

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# 8.             No Rights or Liabilities as aStockholder.  This Warrant shall notentitle the Holder to any voting rights or other rights as a stockholder of theCompany. No provision of this Warrant, in the absence of affirmative action bythe Holder to purchase Warrant Shares, and no mere enumeration herein of therights or privileges of the Holder, shall give rise to any liability of suchHolder for the Exercise Price or as a stockholder of the Company, whether suchliability is asserted by the Company or by creditors of the Company.

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# 9.             Transfer, Exchange, andReplacement of Warrant.  ThisWarrant, nor any interest in this Warrant, may be sold, distributed, assigned,offered, pledged or otherwise transferred without the express written consentof the Company.

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(a)           Exchange of Warrants; Replacementsof Warrants.  This Warrant isexchangeable upon the surrender hereof by the Holder to the Company at itsoffice for a new Warrant of like tenor and date representing in the aggregatethe right to purchase the number of shares of Common Stock purchasablehereunder, each of such new Warrants to represent the right to purchase suchnumber of shares of Common Stock (not to exceed the aggregate total numberpurchasable hereunder) as shall be reasonably designated by the Holder at thetime of such surrender.  Upon receipt bythe Company of evidence reasonably satisfactory to it of the loss, theft,destruction, or mutilation of this Warrant, and, in case of loss, theft ordestruction, of indemnity, or security reasonably satisfactory to it, and uponsurrender and cancellation of this Warrant, if mutilated, the Company will makeand deliver a new Warrant of like 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 9, 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****Section 9.  The Holder shall be responsible for any taxwhich may be payable in connection with any transfer of a certificate forWarrant 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.

 

# 10.           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.

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# 11.           Governing Law. This Warrantshall be governed by and construed and enforced in accordance with the internallaws of the State of Nevada without regard to the body of law controllingconflicts of law. The parties hereto hereby submit to the exclusivejurisdiction of the courts located in Clark County, Nevada, with respect to anydispute arising under this Warrant and the transactions contemplated hereby.

 

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# 12.           Registration Rights.

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(a)           PiggybackRegistration Rights.  Whenever theCompany proposes to register any of its equity securities under the SecuritiesAct (other than a registration on Form S-4 or Form S-8 or any successor orsimilar forms) and the registration form to be used may be used for theregistration of the Warrant Shares, whether or not for sale for its ownaccount, the Company will give prompt written notice to Holder of its intentionto effect such a registration and will include in such registration all of theWarrant Shares with respect to which the Company has received written requestfor inclusion therein within twenty (20) days after the receipt of the Company’snotice; provided, however, such “piggyback” registration (a “PiggybackRegistration”) shall be subject to the terms and conditions of an underwritingagreement among the Company, Holder and the managing underwriter, ifapplicable, the customary underwriter cut back provisions and the execution ofa customary standstill of not less than one hundred and eighty (180) days.  In addition, the Company and the managingunderwriters, if applicable, shall have the right to terminate or withdraw anyregistration initiated by the Company or to reduce the number of sharesproposed to be registered in view of market conditions.

 

(b)           Registration Procedure.  Upon the request by Holder to initiateeither a Piggyback Registration or a Demand Registration, the Company will useits best efforts to effect the registration of the relevant Warrant Shares inaccordance with the intended method of disposition thereof.

 

(c)           Restrictions.  The registration rights granted under thisSection 12 are expressly subject to the following terms andconditions:  (a) Holder, along with other investors in theOffering, as a group, shall each be entitled to initiate only two (2)****PiggybackRegistrations; and (b) Holder may not assign any of its rights granted underthis Section 12.

 

(d)           Fees.  The Company shall pay all RegistrationExpenses relating to any registration of the Warrant Shares hereunder.  “Registration Expenses” shall mean allreasonable fees and expenses incident to the Company’s performance of orcompliance with this Section 12. Notwithstanding the foregoing, Holdershall pay any and all underwriting discounts, commissions and transfer taxesattributable to the Warrant Shares and the fees of Holder’s own counsel inconnection with the sale of the Warrant Shares.

 

(e)           Cooperation; Indemnification byHolder.  In connection with anyregistration statement in which Holder is participating, Holder will furnish tothe Company in writing such information and documents as the Company reasonablyrequests for use in connection with any such registration statement orprospectus and, to the extent permitted by law, will indemnify and holdharmless the Company, its affiliates and their respective officers, directors,employees and affiliates against any losses, claims, damages, liabilities, jointor several, to which such parties may become subject under the Securities Actor otherwise, insofar as such losses, claims, damages or liabilities (oractions or proceedings, whether commenced or threatened, in respect thereof)arise out of or are based upon:  (a) anyuntrue or alleged untrue statement of a material fact contained in theregistration statement, prospectus or preliminary prospectus or any amendmentthereof or supplement thereto or in any application; or (b) any omission oralleged omission of a material fact required to be stated therein or necessaryto make the statements therein not misleading, but only to the extent that suchuntrue statement or omission is made in such registration statement, any suchprospectus or preliminary prospectus or any amendment or supplement thereto, orin any application, in reliance upon and in conformity with written informationprepared and furnished to the Company by such holder expressly for use therein,and such holder will reimburse the Company, its affiliates and their respectiveofficers, directors, employees and affiliates for any legal or any otherexpenses incurred by them in connection with investigating or defending anysuch loss, claim, liability, action or proceeding; provided, however, that the obligation to indemnify will beindividual to Holder and will be limited to the net amount of proceeds receivedby Holder from the sale of the Warrant Shares pursuant to such registrationstatement.

 

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(f)            Termination.  The ability of Holder to initiate aPiggyback Registration shall terminate upon the earlier to occur of:  (a) three (3) years after the date of thisWarrant; (b) the date Holder no longer holds the Warrant Shares; (c) theexercise by Holder of the two (2) Piggyback Registrations granted bySection 12; or (d) the ability of Holder to sell its Warrant Shares thenowned immediately pursuant to Rule 144 of the Securities Act.

 

# 13. 13.               Expiration Date.  This Warrant shall expire and become null andvoid and of no further force or effect at 5:00 p.m. Las Vegas, Nevada time nolater than July 24, 2008.

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IN WITNESS WHEREOF, the Company hascaused this Warrant to be signed by its duly authorized officer.

 

 
|   | VENDINGDATA CORPORATIONa Nevada corporation |
|--------|---------------------------------------------|
|   |                                        |   |
|   |                                        |   |
|   | By:                                         | /s/Stacie L. Brown, Attorney-in-Fact for |
|   |                                        | Steven J. Blad |
|   |                                        | President and Chief Executive Officer |
|   | Date:                                       | August  13 , 2003 |

 

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**EXERCISEAGREEMENT**

 

 

TO:                            VENDINGDATACORPORATION (THE “COMPANY”)

 

The undersigned, pursuant to the provisions set forth in the attachedWarrant to Purchase Shares of Common Stock (the “Warrant”) hereby irrevocablyelects 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:     |                                                                                     |
|   |       |                                                                                     |
|   | ADDRESS:   |                                                                                     |
|   |       |                                                                                     |
|   |       |                                                                                     |
|   |       |                                                                                     |
|   | NOTE:      | The above signature should correspond exactly with the  name on the face of the Warrant. |

 

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