**Exhibit 10.7**

 

**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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**WARRANT TO PURCHASE**

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**SHARES OF COMMON STOCK**

 

**VENDINGDATA CORPORATION**

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THIS IS TO CERTIFY THAT, for value received, Triage Capital Management,LP (the “Holder”) is entitled, during a specified period of time as set forthin Section 3 herein (the “Exercise Period”), to purchase from VendingDataCorporation, a Nevada corporation (the “Company”), Fifty Thousand (50,000)fully paid and nonassessable shares of the Company’s common stock, par value$0.001 per share (the “Common Stock”), at an exercise price per share as setforth in Section 1 herein (the “Exercise Price”) (such number of sharesand the Exercise Price being subject to adjustment as provided herein).  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.  This Warrant is issuable onlyin connection with that certain $1,000,000 principal amount 10% Note dueSeptember 16, 2003, dated as of the same date hereof to Holder and theCompany (as “Obligor”) (collectively hereinafter the “Note”).

 

**TERMS AND CONDITIONS**

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This Warrant is subject to the following terms, provisions,and conditions:

 

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

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# 2.                                       Mannerof Exercise; Issuance of Certificates; Payment for Shares.  Subject to the provisions hereof, thisWarrant may be exercised by the Holder, in whole or in part (but in not lessthan 1,000 share increments): (a) by the surrender of this Warrant, together with an exerciseagreement in the form attached hereto (the “Exercise Agreement”), dulycompleted and executed by the Holder, to the Company during normal businesshours on any business day at the Company’s principal executive offices (or suchother location as the Company may designate by notice to the Holder); and(b) upon the payment to the Company in cash, by certified or official bankcheck 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 Warrant is being exercised.

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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, not exceeding ten (10) business days, afterthis Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may bereasonably requested by the Holder and shall be registered in the name of theHolder or such other name as shall be designated by the Holder. If this Warrantshall have been exercised only in part, then, unless this Warrant has expired,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.                                       ExercisePeriod.  This Warrant may beexercised any time before 2:00 p.m., Las Vegas, Nevada time, June 18,2008.

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

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(a)                                  Sharesto be Fully Paid.  All WarrantShares shall, upon issuance in accordance with the terms of this Warrant, bevalidly issued, fully paid, and non-assessable.

 

(b)                                 Reservationof Shares.  During the ExercisePeriod, the Company shall at all times have authorized, and reserved for thepurpose of issuance upon exercise of this Warrant, a sufficient number ofshares of Common Stock to provide for the exercise of this Warrant.

 

(c)                                  Successorsand Assigns.  This Warrant shall bebinding upon any entity succeeding to the Company by merger, consolidation, oracquisition of all or substantially all the Company’s assets.

 

6.                                       AdjustmentProvisions. During the Exercise Period, the Exercise Price and the numberof Warrant Shares shall be subject to adjustment from time to time as providedin this Section 6.  If the Companyshall, prior to the payment of the Note in full, (a) declare a dividend ormake a distribution of Common Stockpayable in shares of Common Stock, (b) subdivide its outstanding shares ofCommon Stock, into a greater number of shares of Common Stock,(c) combine its outstanding shares of Common Stock into a smaller numberof shares of Common Stock, or (d) issue any shares of capital stock of theCompany by reclassification or capital reorganization of its shares of CommonStock, then the number of Warrant Shares and the Exercise Price in effectimmediately prior to such action shall be adjusted so that the Holder shall beentitled to receive the number and kind of shares of Common Stock or otherCapital Stock which the Holder would have owned or have been entitled toreceive immediately after such action had the Holder exercised the Warrantimmediately prior to the record date in the case of (a), or the effective datein the case of (b), (c) or (d). In the event that any adjustment of theExercise Price as required herein results in a fraction of a cent, suchExercise Price shall be rounded up to the nearest cent.

 

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# 7.                                       Paymentof Expenses.  The Company and theHolder shall each be responsible for their own costs and expenses payable inconnection with:  (a) thenegotiation, preparation, execution and delivery of this Warrant and the otheragreements to be executed in connection herewith; and (b) the issuance ofcertificates for Warrant Shares upon the exercise of this Warrant.  The Company shall pay any issuance tax inconnection with the issuance of certificates for Warrant Shares; provided,however, that the Holder shall be responsible for any income or other taxes inconnection with such issuance.

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# 8.                                       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 such liability is asserted by the Company or bycreditors of the Company.

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# 9.                                       Transfer,Exchange, and Replacement of Warrant. 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.

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(a)                                  Exchangeof Warrants; Replacements of Warrants. This Warrant is exchangeable upon the surrender hereof by the Holder tothe Company at its office for a new Warrant of like tenor and date representingin the aggregate the right to purchase the number of shares of Common Stockpurchasable hereunder, each of such new Warrants to represent the right topurchase such number of shares of Common Stock (not to exceed the aggregatetotal number purchasable hereunder) as shall be reasonably designated by theHolder at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it ofthe loss, theft, destruction, or mutilation of this Warrant, and, in case ofloss, theft or destruction, of indemnity, or security reasonably satisfactoryto it, and upon surrender and cancellation of this Warrant, if mutilated, theCompany will make and deliver a new Warrant of like tenor, in lieu of this Warrant.

 

(b)                                 Cancellation:Payment of Expenses.  Upon thesurrender of this Warrant in connection with any transfer, exchange, orreplacement as provided in this Section 9, this Warrant shall be promptlycanceled by the Company.  The Companyand the Holder shall each be responsible for their own costs and expensespayable in connection with the preparation, execution, and delivery of newWarrants pursuant to this****Section 9.  The Holder shall be responsible for any tax which may be payablein connection 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.

 

# 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.                                 GoverningLaw. This Warrant shall be governed by and construed and enforced inaccordance with the internal laws of the State of Nevada without regard to thebody of law controlling conflicts of law. The parties hereto hereby submit tothe exclusive jurisdiction of the courts located in Clark County, Nevada, withrespect to any dispute arising under this Warrant and the transactions contemplatedhereby.

 

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# 12.                                 RegistrationRights.

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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 theCompany’s notice; provided, however, such “piggyback” registration (a“Piggyback Registration”) shall be subject to the terms and conditions of anunderwriting agreement among the Company, Holder and the managing underwriter,if applicable, the customary underwriter cut back provisions and the executionof a customary standstill of not less than one hundred and eighty (180)days.  In addition, the Company and themanaging underwriters, if applicable, shall have the right to terminate orwithdraw any registration initiated by the Company or to reduce the number ofshares proposed to be registered in view of market conditions.

 

(b)                                 RegistrationProcedure.  Upon the request byHolder to initiate either a Piggyback Registration or a Demand Registration,the Company will use its best efforts to effect the registration of therelevant Warrant Shares in accordance with the intended method of dispositionthereof.

 

(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 or compliancewith this Section 12. Notwithstanding the foregoing, Holder shall pay anyand all underwriting discounts, commissions and transfer taxes attributable tothe Warrant Shares and the fees of Holder’s own counsel in connection with thesale of the Warrant Shares.

 

(e)                                  Cooperation;Indemnification by Holder.  Inconnection with any registration statement in which Holder is participating,Holder will furnish to the Company in writing such information and documents asthe Company reasonably requests for use in connection with any such registrationstatement or prospectus and, to the extent permitted by law, will indemnify andhold harmless the Company, its affiliates and their respective officers,directors, employees and affiliates against any losses, claims, damages,liabilities, joint or several, to which such parties may become subject underthe Securities Act or otherwise, insofar as such losses, claims, damages orliabilities (or actions or proceedings, whether commenced or threatened, inrespect thereof) arise out of or are based upon:  (a) any untrue or alleged untrue statement of a material factcontained in the registration statement, prospectus or preliminary prospectusor any amendment thereof or supplement thereto or in any application; or (b)any omission or alleged omission of a material fact required to be statedtherein or necessary to make the statements therein not misleading, but only tothe extent that such untrue statement or omission is made in such registrationstatement, any such prospectus or preliminary prospectus or any amendment orsupplement thereto, or in any application, in reliance upon and in conformitywith written information prepared and furnished to the Company by such holderexpressly for use therein, and such holder will reimburse the Company, itsaffiliates and their respective officers, directors, employees and affiliatesfor any legal or any other expenses incurred by them in connection withinvestigating or defending any such loss, claim, liability, action orproceeding; provided, however,that the obligation to indemnify will be individual to Holder and will belimited to the net amount of proceeds received by Holder from the sale of theWarrant Shares pursuant to such registration statement.

 

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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 nulland void and of no further force or effect at 5:00 p.m. Las Vegas, Nevada timeno later than June 18, 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   7/21/03* |
|   |                                        | Stacie L. Brown, |
|   |                                        | Attorney-in-Fact for  Steven J. Blad |
|   |                                        | President and Chief  Executive Officer |
|   | Date:                                       | June 18, 2003 |

 

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**EXERCISE AGREEMENT**

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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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