In this task, you're given a passage that represents a legal contract or clause between multiple parties. Your job is to write questions that ask the basic details corresponding to the legal contracts or clauses. Avoid questions that can be answered correctly without actually understanding the paragraph, and which might have multiple answers. The answer to each question should be unambiguous.

[EX Q]: Exhibit 10.1

STRATEGIC ALLIANCE AGREEMENT

THIS AGREEMENT dated for reference the 5th day of December 2008.

BETWEEN:

  GOLD RESOURCE CORPORATION, a company organized under the laws of the State of Colorado, with registered office located at 222 Milwaukee Street, Suite 301, Denver, CO 80206 (GRC or the Company)

AND:

  HOCHSCHILD MINING HOLDINGS LIMITED, a private limited company organized under the laws of England and Wales, with registered office located at 46 Albemarle Street, London, England W1S 4JL (HOC)

WHEREAS:

A. The Company is a mineral exploration and development company engaged in the acquisition and exploration, as well as development of mineral properties (the Properties) in Mexico through its Mexican subsidiaries with prospects for hosting gold, silver and base metal deposits, and through such subsidiaries holds interests in several mineral resource properties, including but not limited to (i) El Aguila, (ii) Las Margaritas, (iii) Solaga, and (iv) El Rey located in Oaxaca, Mexico (the Existing Properties);

B. HOC is an Affiliate of Hochschild Mining plc., a leading underground precious metals producer operating in the Americas with a primary focus on silver and gold;

C. The Company and HOC believe that their respective corporate strategies are compatible and, as such, wish to establish a strategic alliance on the terms and conditions set forth herein;

D. The Company and HOC are entering into this Agreement as a condition to and in furtherance of the investment in Shares (as defined below) contemplated in the Subscription Agreement dated December 5, 2008 (the Subscription Agreement) between the Company and HOC without the Company having executed and delivered this Agreement; and

E. The Board of Directors has authorized the Company to enter into this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual premises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, the parties hereby covenant and agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions. In this Agreement, unless the context otherwise requires:





  (a) Acceptance Notice has the meaning ascribed to it in Section 4.1(e);

  (b) Additional Securities has the meaning ascribed to it in Section 4.1(a);

  (c) Additional Shares has the meaning ascribed to it in Section 2.1;

  (d) Affiliate shall have the meaning ascribed thereto in the Securities Act;

  (e) Agreement means this strategic alliance agreement and any instrument amending this Agreement and hereof, hereto, hereunder and similar expressions mean and refer to this Agreement and not to a particular Article, Section, Subsection or Paragraph;

  (f) Alternative Proposal has the meaning ascribed to it in Section 9.1;

  (g) Authority and Authorities means any (i) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, securities commission (including the Securities Commissions), central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (ii) any subdivision, agent, commission, board, or authority of any of the foregoing, or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, and includes a stock exchange and any other self-regulatory authority;

  (h) Board of Directors means the board of directors of the Company;

  (i) Business Day means any day which is not a Saturday, a Sunday or a day on which banks are generally closed for business in Denver, Colorado or London, England;

  (j) Claims means all losses, damages, expenses, Liabilities, claims and demands of whatever nature or kind, including all reasonable legal fees and disbursements;

  (k) Closing Date has the meaning given to it in the Subscription Agreement;

  (l) Commencement of Production has the meaning given to it in Section 2.3;

  (m) Common Stock has the meaning given to it in Section 4.1(a);

  (n) Company has the meaning given to it in the preamble hereto;

  (o) Company Indemnitees has the meaning given to it in Section 11.2;

  (p) Convertible Securities means all warrants, rights, agreements, options, or Debt Instruments present or future, contingent or absolute, or any right or privilege capable of becoming a right, agreement or option, for the purchase, subscription or issuance of any Shares in the Company or any other security or Debt Instruments convertible or exchangeable for Shares, including options granted to officers, directors or employees, and whether issued pursuant to the Stock Option Plan;

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  (q) Debt Instrument means any loan, bond, debenture, promissory note or other instrument evidencing material indebtedness of the Company for borrowed money or other material liability;

  (r) Equity Securities means Shares, Convertible Securities and any other equity or voting securities of the Company;

  (s) Existing Properties has the meaning given to it in the preamble hereto;

  (t) Financing Election has the meaning ascribed to it in Section 2.3;

  (u) HOC Director has the meaning ascribed to it in Section 5.1;

  (v) HOC Entities means HOC and its Affiliates, and any person acting jointly or in concert with any of them, excluding, for greater certainty, the Company and any of its Subsidiaries to the extent they may be or become Affiliates at any relevant point in time;

  (w) HOC Indemnitees has the meaning ascribed to it in Section 11.1;

  (x) HOC JV Acceptance Notice has the meaning ascribed to it in Section 6.2(b);

  (y) HOC Option has the meaning ascribed to it in Section 2.1;

  (z) Joint Venture Proposal Notice has the meaning ascribed to it in Section 6.2(a);

  (aa) JV Negotiation Period has the meaning ascribed to it in Section 6.2(b);

  (bb) Laws means any and all applicable (i) laws, constitutions, treaties, statutes, codes, ordinances, orders, decrees, rules, regulations and municipal by-laws, (ii) judicial, arbitral, administrative, ministerial, departmental or regulatory judgments or orders of any Authorities, and (iii) policies, guidelines and protocols;

  (cc) Liabilities means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due;

  (dd) Lien means any mortgage, easement, encroachment, adverse claim, and assignment by way of security, security interest, servitude, pledge, charge, lien, assignment, hypothecation, conditional sale agreement, title retention, preferential right, trust arrangement, right of set-off, counterclaim or banker's lien, financing statement, privilege or priority, or other encumbrance of any kind having the effect of security, any designation of loss payees or beneficiaries or any similar arrangement under or with respect to any insurance policy or any preference of one creditor over another arising by operation of law;

  (ee) Market Purchases has the meaning ascribed to it in Section 3.1;

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  (ff) Option Exercise Notice has the meaning ascribed to it in Section 2.1;

  (gg) Option Expiration Date has the meaning ascribed to it in Section 2.1;

  (hh) Options means outstanding options to acquire Shares under the Stock Option Plan;

  (ii) Other Purchasers has the meaning ascribed to it in Section 4.1(a);

  (jj) Parties means the Company and HOC and their successors and permitted assigns; and Party means any one of them;

  (kk) Person means an individual, partnership, unincorporated association, organization, syndicate, corporation or trust or a trustee, executor, administrator or other legal or personal representative;

  (ll) Private Agreement Purchases means purchases of Equity Securities other than on any stock exchange on which the Shares are then listed or quoted provided such purchases are made in accordance with applicable Laws, including applicable Securities Laws;

  (mm) Pro Rata Interest has the meaning ascribed to it in Section 4.1(a);

  (nn) Proposed Joint Venture has the meaning ascribed to it in Section 6.1(a);

  (oo) Properties has the meaning ascribed to it in the Preamble hereto;

  (pp) Purchased Shares shall mean the shares of Common Stock to be acquired by HOC pursuant to the terms of the Subscription Agreement.

  (qq) Rights Notice has the meaning ascribed to it in Section 4.1(c);

  (rr) Securities Exchange Act means the Securities Exchange Act of 1934;

  (ss) Securities Commissions means the securities regulator in each jurisdiction whose Securities Laws are applicable to the Company;

  (tt) Securities Laws means the Laws relating to securities of the Company, and the regulations and rules made and forms prescribed thereunder together with all applicable published policy statements, blanket orders, rulings and notices adopted by the Securities Commissions of each such jurisdiction or applicable in such jurisdictions;

  (uu) Shareholders means the holders of Shares;

  (vv) Shares means common shares or any other securities into which the common shares in the capital of the Company are reorganized, exchanged or converted;

  (ww) Stock Option Plan means any stock option plan, agreement or arrangement adopted by the Company from time to time which provides for the issuance of options to acquire Shares;

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(xx) Subscription Agreement has the meaning ascribed to it in the Preamble hereto;

(yy) Subsequent Closing Date has the meaning ascribed to it in Section 2.1;

(zz) Transactions means the transactions contemplated in this Agreement.

1.2 Gender and Certain References. Whenever the context requires, the gender of all words used shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural. The terms hereof, herein or hereundershall refer to this Agreement as a whole and not to any particular Article or Section hereof. All titles and headings to Articles and Sections in this Agreement are included for convenience and ease of reference. Titles and headings shall not affect in any way the meaning or interpretation of Articles or Sections of this Agreement. Any references to specific Articles or Sections shall mean the Articles and Sections in this Agreement.

ARTICLE 2  ADDITIONAL INVESTMENTS BY HOC

2.1 HOC Option to Purchase Additional Shares. From and after the Closing Date and until 5:00 pm Denver time on the date which is eighty (80) days from the Closing Date (the Option Expiration Date), HOC shall have the option (the Option), at its sole discretion, to subscribe for all, but not less than all, of an additional 4,330,000 Shares from the Company (the Additional Shares) at a price of US$3.00 per share, or a total of US$12,990,000. If HOC wishes to exercise the Option, it shall give written notice to the Company (the Option Exercise Notice) prior to the Option Expiration Date in the manner set forth in Section 12.1 of this Agreement. If HOC fails to deliver the Option Exercise Notice on or before the Option Expiration Date, HOC shall be deemed to have waived its rights under this Section 2.1. In the event HOC exercises the Option, one or more of the HOC Entities shall subscribe and pay for and the Company shall issue to the relevant HOC Entities, free and clear of any liens or encumbrances, the Additional Shares and the Parties shall exchange representations and warranties substantially similar to those contained in the Subscription Agreement and execute such documents as may be necessary to complete the subscription and sale of the Additional Shares. Closing of the purchase and sale of the Additional Shares shall take place within ten (10) business days of the delivery of the Option Exercise Notice, such date being referred to as the Subsequent Closing Date.

2.2 Use of Proceeds. In the event HOC exercises the Option, the Company agrees to use not less than five million U.S. Dollars (US$5,000,000) of the proceeds from the subscription of the Purchased Shares and the Additional Shares to fund exploration activities (including but not limited to drilling, assaying and staking new claims) on the El Aguila project. The Company further agrees that the balance of the proceeds from the subscription of the Purchased Shares and the Additional Shares shall be used as follows: (i) ten million U.S. Dollars (US$10,000,000) to fund the development and construction of the mine and plant for the El Aguila project; and (ii) three million U.S. Dollars (US$3,000,000) for working capital of the Company and other investments in the El Aguila project.

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2.3. Additional Financing. Subject to the provisions of Section 8.2, if the Company determines to solicit additional equity financing subsequent to exercise of the Option but prior to Commencement of Production (hereinafter defined) at the El Aguila project, it shall provide written notice to that effect to HOC and HOC shall be entitled to exclusively provide such financing upon the terms and conditions hereinafter set forth. For purposes of the preceding sentence, Commencement of Production shall be defined as the production and delivery to the point of sale (refiner) by the Company (either directly or through a subsidiary) of not less than 4,000 ounces of gold within a 45 day period. HOC shall have ten (10) Business Days from delivery of such notice in which to notify the Company that it desires to provide all of such financing (the Financing Election). If HOC delivers the Financing Election, the purchase price for each share shall be equal to eighty percent (80%) of the average closing price of the Shares during the thirty (30) calendar days preceding the date HOC delivers the Financing Election. Closing of the subscription, purchase and sale shall be at such place and time as the Parties agree but not more than ten (10) days from delivery of the Financing Election. If HOC delivers the Financing Election, one or more of the HOC Entities shall pay the purchase price for, and the Company shall issue, additional Shares, free and clear of all liens and encumbrances. The Parties shall exchange representations and warranties, in form and in substance substantially similar to those provided in the Subscription Agreement and execute such documents as may be necessary to complete the subscription and sale of the Shares. In the event HOC fails to provide the Financing Election as set forth above, the Company shall be free to obtain such financing from one or more additional parties, free of any obligation to HOC.

ARTICLE 3  MARKET PURCHASES AND PRIVATE PURCHASES

3.1 Market Purchases.Subject to compliance with applicable laws, the HOC Entities shall at any time and from time to time, in their sole discretion, be entitled to make purchases of the Company's common stock in the over-the-counter market or on any stock exchange on which its common stock is then quoted or listed (the Market Purchases); provided, however, that for a period of two (2) years following the Closing Date, unless the Parties otherwise agree, the HOC Entities do not beneficially own, directly or indirectly, more than forty percent (40%) of the Company's outstanding common stock on an undiluted basis, following any Market Purchase and any Private Agreement Purchase. For purposes of this Agreement, beneficial ownership shall be determined in accordance with the provisions of Rule 13d-3 of the Securities Exchange Act.

3.2 Private Purchase.In addition to Market Purchases, as described in Section 3.1 above, HOC shall be entitled to make Private Agreement Purchases, provided that such purchases are made in accordance with all applicable laws; and provided further, that for a period of two (2) years following the Closing Date, unless the Parties otherwise agree, the HOC Entities will not beneficially own more than forty percent (40%) of the Company's outstanding common stock on an undiluted basis following any Market Purchase and/or Private Agreement Purchase. At the request of HOC, the Company shall introduce HOC to persons whom the Company believes may be interested in selling its common stock.

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ARTICLE 4  PRE-EMPTIVE RIGHT

4.1 HOC's Pre-emptive Right.

(a) Subject to the provisions of subsection (g) of this Section 4.1 and Section 8.2 hereof, if at any time after the Closing Date, the Company proposes to issue or sell Equity Securities (Additional Securities) other than (i) under any Stock Option Plan, (ii) pursuant to the exercise of options under any Stock Option Plan, (iii) upon the exercise, exchange or conversion of any Convertible Securities, or (iv) for property other than money, the HOC Entities shall have the right to subscribe for and purchase Additional Securities, at the price at which such Additional Securities are offered for sale to other purchasers (the Other Purchasers), up to its Pro Rata Interest (as defined below) prior to giving effect to the issuance or sale of such Additional Securities. Pro Rata Interest means, at any relevant time, the ownership interest of HOC, expressed as a percentage, equal to: (i) the number of outstanding shares of common stock of the Company (Common Stock) beneficially owned by the HOC Entities, including all shares of Common Stock issuable upon the conversion, exercise or exchange of all Convertible Securities beneficially owned by the HOC Entities divided by (ii) the aggregate number of outstanding shares of Common Stock, plus the number of shares of Common Stock issuable upon the conversion, exercise or exchange of all outstanding Convertible Securities;

(b) If the Company issues Equity Securities in circumstances that would not give rise to the rights of the HOC Entities pursuant to Section 4.1(a) (the Non-Participating Transaction), then in any concurrent or subsequent transaction which does give rise to the rights of the HOC Entities pursuant to Section 4.1(a) (the Participating Transaction), the Company shall allow the HOC Entities to subscribe for and purchase Additional Securities in an amount greater than HOC's Pro Rata Interest; provided that in the Participating Transaction, HOC shall not be entitled to purchase any more than its Pro Rata Interest of the securities sold collectively in the Non-Participating Transaction and the Participating Transaction.

(c) If the Company intends to authorize and/or issue equity securities that give rise to the rights of HOC pursuant to Section 4.1(a), the Company shall provide notice to HOC (the Rights Notice) no less than ten (10) business days before the date on which the Company intends to issue equity securities giving rise to the rights of HOC in Section 4.1(a).

(d) The Rights Notice shall specify sufficient information regarding the particulars of the issuance or sale of the Additional Securities to allow HOC to make a reasoned decision in respect of making the investment, including to the extent any such terms are determinable at such time: (i) the total number of equity securities outstanding as of the date thereof; (ii) the total number of Additional Securities which are being offered; (iii) the rights, privileges, restrictions, terms and conditions of such Additional Securities; (iv) the amount payable by HOC for the Additional Securities to which it is entitled pursuant to Section 4.1(a); and (v) the proposed closing date, and thereafter, to the extent it is not included in the Rights Notice, the Company shall immediately provide notice to HOC of such information as it is determined.

(e) HOC shall give notice (an Acceptance Notice) to the Company not later than 5:00 p.m. (Denver time) on the tenth business day following the deemed receipt of any Rights Notice given under paragraph 4.1(c) setting out the number of Additional Securities, if any, which any of HOC Entities intends to subscribe for and purchase and, if applicable, the name and address of HOC Entity whose name in which such securities should be registered, provided that if HOC, acting reasonably, determines that it has insufficient information to make such investment decision, HOC shall notify the Company of the information required to make such investment decision and thereafter shall have the longer of (i) the remainder of the ten (10) Business Days set out in the first sentence of this paragraph; or (ii) two (2) Business Days from the receipt of such additional information to make the investment decision and deliver or refrain from delivering the Acceptance Notice. Notwithstanding the preceding sentence, the Rights Notice shall be deemed to include sufficient information to make such investment decision if it includes the information specified in items (i) to (iv) of Section 4.1(d). If no Acceptance Notice has been provided to the Company within the required time, HOC will be deemed to have elected not to subscribe for or purchase any such Additional Securities.

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(f) Following delivery of the Acceptance Notice, if any, the HOC Entities shall pay for, and the Company shall issue to the relevant HOC Entities, free and clear of any liens, the number of Additional Securities specified in the Acceptance Notice and, except as otherwise agreed, the Company shall provide HOC with substantially the same closing documents, including opinions, if applicable, as are delivered to the other persons subscribing for Additional Securities on the closing date for such issuance.

(g) The rights granted to HOC under this Article 4 shall terminate and be of no further force or effect if HOC does not exercise Option and complete the purchase of the Additional Shares.

ARTICLE 5 BOARD REPRESENTATION

5.1 Appointment of HOC Nominee. If, but only if HOC exercises the Option and completes the acquisition of the Additional Shares, HOC shall be entitled to nominate one (1) individual to the Board of Directors (the HOC Director). Upon receipt of such nomination and its satisfaction that the individual nominated by HOC meets the qualification requirements for directors under applicable laws, the Board of Directors further agrees to expand its membership to four (4) positions and appoint the individual nominated by HOC to the newly-created vacancy. The Board of Directors further agrees that if HOC maintains a Pro Rata Interest of at least 14.5%, it shall nominate such individual to the slate of directors at each subsequent annual meeting so long as the provisions of Section 8.2 are not invoked.

5.2 Increase in Membership of the Board of Directors. If HOC acquires the Additional Shares and subsequently acquires additional Shares such that it holds a Pro Rata Interest of 40% or more, HOC shall be entitled to appoint one (1) additional individual to the Board of Directors. For greater clarity, if HOC exercises the Option and holds a Pro Rata Interest of at least 40%, HOC shall be entitled to appoint a total of two (2) individuals to the Board of Directors. Upon receipt of a nomination from HOC for the second director and its satisfaction that the individual meets the qualification requirements for directors under applicable law, the Board of Directors agrees to expand its membership to five positions and appoint the individual nominated by HOC to the newly created vacancy. The Board of Directors further agrees that so long as HOC maintains a Pro Rata Interest of at least 35%, it shall nominate such individual to the slate of directors at each subsequent annual meeting so long as the provisions of Section 8.2 are not invoked. The Company further agrees that if HOC exercises the Option and so long as the provisions of Section 8.2 are not invoked, it will not take any action to authorize and will cause the Board of Directors not to authorize any proposal to expand the Board beyond five (5) members without the advance written approval of HOC.

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5.3 Board Meetings. At all times when the provisions of Section 5.1 are satisfied, the Company shall provide HOC Director(s) not less than 7 (seven) Business Days advance written notice of the date on which any meeting of the Board of Directors shall be held. In providing such notice, the Company shall take into consideration the matters to be discussed at the meeting, the proximity to the place of the meeting and the time zone in which the HOC Director is resident.

5.4 Resignation of HOC Director(s). If (x) one or both HOC Directors do not meet the individual qualifications for a director prescribed by applicable laws, (y) the Pro Rata Interest of HOC falls below 14.5%, or (z) the provisions of Section 8.2 hereof become applicable and the Company delivers notice to HOC to that effect, all of the HOC Directors shall forthwith resign; provided, however, that in the event of (x), HOC shall then be entitled to appoint an individual to replace the resigning director(s) and such resigning director(s) shall be afforded the benefits of any indemnity and insurance as may exist for all matters occurring prior to such resignation.

5.5 Indemnification and Director's and Officer's Insurance. So long as HOC is entitled to nominate and maintain a director pursuant to this Article 5, the Company shall indemnify each current and former HOC Director and shall maintain director's and officer's liability insurance for the benefit of each such director, with the same rights and benefits as are accorded the directors of the Company generally.

ARTICLE 6  RIGHT OF FIRST OFFER

The provisions of this Article 6 shall apply if, but only if, HOC exercises the Option and acquires the Additional Shares and so long as the provisions of Section 8.2 do not apply:

6.1 Joint Venture

  (a) If the Company or any of its Subsidiaries decides to seek a joint venture partner to develop, acquire or otherwise earn an interest in any Properties including the Existing Properties, in circumstances where the Company's participation in such joint venture is not dependent on the participation of a particular third party as joint venture partner (such as in the case of an earn-in) (each a Proposed Joint Venture), the Company shall immediately provide notice to HOC (the Joint Venture Proposal Notice) specifying sufficient information regarding the particulars of the Proposed Joint Venture to allow HOC to make a reasoned decision in respect of participating in the Proposed Joint Venture, including to the extent any such terms are determinable at such time: (A) a description of the Property in respect of which the Proposed Joint Venture relates, and (B) the terms, including the purchase price, for the Proposed Joint Venture, and if applicable, a true copy of any related term sheet setting forth such terms.

Notwithstanding the foregoing, nothing in this Section 6.1 shall prevent the Company from concurrently negotiating with third parties with respect to those matters set out in this Section 6.1.

  (b) If HOC, acting reasonably, determines that the Joint Venture Proposal Notice contains insufficient information to make a reasoned decision in respect of participating in the Proposed Joint Venture, it shall notify the Company of the information required to make such decision and thereafter shall have the greater of (i) five (5) Business Days from the receipt of such information from the Company, and (ii) the days remaining in the period specified in Section 6.2 to make such decision and deliver or refrain from delivering the HOC JV Acceptance Notice in accordance with such Section 6.2. Notwithstanding the foregoing, a copy of the term sheet for the Proposed Joint Venture shall be deemed to be sufficient information to make such reasoned decision, if it includes the information specified in Section 6.1(a).

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6.2 Joint Venture Proposal

  (a) Receipt of the Joint Venture Proposal Notice by HOC shall be deemed to constitute an invitation to HOC Entities to participate in the Proposed Joint Venture.

  (b) If any of HOC Entities provides the Company an acceptance (the HOC JV Acceptance Notice) in writing in respect of the Joint Venture Proposal Notice, within fifteen (15) Business Days of receipt thereof or such shorter period as may be specified in the Joint Venture Proposal Notice of a determination in respect of the Proposed Joint Venture, the Company shall negotiate exclusively in good faith with HOC to finalize terms of the Proposed Joint Venture acceptable to each of the Parties, acting reasonably, within a period of sixty days or such additional period as the Parties may from time to time agree in writing (the JV Negotiation Period), failing which the Company shall be entitled to pursue other partners for the Proposed Joint Venture. If HOC does not provide HOC JV Acceptance Notice to the Company within fifteen (15) Business Days or such shorter period as may be specified in the Joint Venture Proposal Notice, of receiving of the Joint Venture Proposal Notice, the Company may enter into negotiations with any other person regarding the Proposed Joint Venture. If the Company truncates the period during which the HOC JV Acceptance Notice is required to be returned by HOC, it shall include in the Joint Venture Proposal Notice a statement certified by an officer of the Company that the Company has determined that it is necessary to truncate such period to avoid losing the opportunity to make such acquisition or other related transaction and that it has used commercially reasonable efforts to avoid truncating such period.

ARTICLE 7  STANDSTILL

The provisions of this Article 7 shall apply if HOC acquires the Additional Shares and for a period of two (2) years after the Subsequent Closing Date:

7.1 Standstill

  (a) HOC covenants and agrees that, except as otherwise contemplated in this Agreement, HOC will not, and will not allow any HOC Entities to, in either case, without the prior written consent of the Company, directly or indirectly:

  (i) acquire or enter into any agreement to acquire or make any proposal or offer to acquire in any manner any equity securities of the Company (whether issued or unissued) that would result in a Pro Rata Interest greater than 40% other than (A) as a result of a stock dividend or distribution made by or a recapitalization of the Company, (B) in accordance with the terms of any dividend reinvestment or share purchase plan made available from time to time by the Company to holders of equity securities; (C) pursuant to the exercise of rights issued pursuant to a rights offering made by the Company to the holders of its equity securities; or (D) pursuant to the exercise of rights issued pursuant to any shareholder rights plan of the Company and attached to equity securities;

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  (ii) assist, encourage or advise any other person to acquire or agree to acquire in any manner any equity securities;

  (iii) propose or support or engage in any discussions or negotiations with respect to, or enter into any agreement, commitment or understanding with any third party to effect, any tender offer, merger, business combination, asset or share transaction, financing transaction or corporate restructuring involving the Company;

  (iv) make or participate directly or indirectly in any solicitation of proxies from shareholders of the Company;

  (v) form, join or in any way participate in any group acting jointly or in concert with any of the foregoing; or

  (vi) make any public disclosure of any intention in connection with the foregoing;

  (each an Acquisition Proposal).

(b)Notwithstanding Section 6.1, none of the HOC Entities shall be prohibited from making an Acquisition Proposal:

  (i) in the event the Company materially breaches its obligations under Section 2.3 (Additional Financing), Article 4 (Pre-Emptive Right), Article 5 (Board Representation) or Article 6 (Right of First Offer), provided that HOC has notified the Company of any alleged breach and the Company has failed to cure such alleged breach, if curable, within thirty days of such notice;

  (ii) from the date any public announcement of or public disclosure of an intention to commence or enter into any agreement with respect to any of the following is made by any person (other than any HOC Entity) to the date of the withdrawal or cancellation of the Tender Offer Transaction or Business Combination Transaction (each as defined below):

  A) a tender offer or an intention to undertake a tender offer for equity securities of the Company by any person or group of persons (other than any HOC Entities) which if completed would result in such tender offer person or group of persons holding 20% or more on a non-diluted basis of any class of then outstanding equity securities of the Company (a Tender Offer Transaction); or

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  B) any acquisition (excluding a Tender Offer Transaction), merger, asset purchase and sale, business combination





  B) any acquisition (excluding a Tender Offer Transaction), merger, asset purchase and sale, business combination transaction or other extraordinary transaction involving or relating to the Company or any of its subsidiaries, or an intention to make an offer to the Company and/or its subsidiaries to undertake such a transaction, by any person or group of persons (other than any HOC Entities) which would, if completed, result in (I) any class of outstanding equity securities being converted into cash or securities of another person resulting in shareholders holding less than 50% of the equity and/or voting securities of the resulting entity; or (II) all or substantially all of the Company's assets being sold to any person or group of persons (other than any HOC Entities) (a Business Combination Transaction), provided that in the case of this Section 6.1(b)(ii)(B) HOC must make such Acquisition Proposal confidentially to the Board of Directors and not by way of public offer to the shareholders.

  For greater certainty, if HOC has commenced an Acquisition Proposal in reliance on this Section 6.1(b)(ii) or in respect of Section 6.1(b)(ii)(B), has agreed with the Company to an Acquisition Proposal, prior to the withdrawal or cancellation of such Tender Offer Transaction or Business Combination Transaction, HOC shall not be precluded from continuing with such Acquisition Proposal by reason only of the withdrawal or cancellation of any relevant Tender Offer Transaction or Business Combination Transaction; or

  (iii) if a person or group of persons other than any of the HOC Entities, the Company or its subsidiaries obtains proxies carrying a majority of the votes attached to all outstanding voting securities of the Company and exercises such votes to replace the Board of Directors.

7.2 Most Favored Nation. The Company shall immediately inform HOC and provide HOC with a copy of any other standstill provisions in any agreement pertaining to the matters set forth in this Article 6, entered into by the Company with another person subsequent to the date hereof, and notwithstanding delivery of such notice and a copy of any such provisions, HOC shall have the full benefit of any materially more favourable terms, in the opinion of HOC, contained in such standstill and Section 6.1 shall be deemed to be amended accordingly.

ARTICLE 8  COVENANTS

8.1 Designation of Consulting Geologists. During the time up to the Option Expiration Date, and thereafter if HOC exercises the Option and acquires the Additional Shares and the provisions of Section 8.2 do not apply, HOC shall have the right to designate one full or part time geologist to act as a consultant to the Company at any of its Existing Properties for the purpose of advising the Company with regard to ongoing exploration and development. The Company shall provide such geologist with room and board while such geologist is on-site at any of the Existing Properties. HOC, however, shall be responsible for payment of any compensation for such geologist. Other consulting services which may be required by the Company, including metallurgical, underground mining engineering or concentrate contract negotiations, may be requested from HOC, and provided that HOC agrees to deliver those services, any charges for such services shall be billed by HOC to the Company at no more than HOC's actual cost plus 1%.

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8.2 Termination of Certain HOC Rights. Notwithstanding anything in this Agreement to the contrary, in the event (i) HOC shall hold a Pro Rata Interest less than 14.5% or (ii) HOC shall have achieved a Pro Rata Interest greater than 14.5% but subsequently sells or otherwise disposes of 20% or more of its Pro Rata Interest in any one or more transactions, the benefits provided to HOC pursuant to the provisions of Section 2.3 (Additional Financing), Article 4 (Pre-Emptive Rights), Article 5 (Board Representation), Article 6 (First Offer) and Section 8.1 (Designation of Geologist) above shall immediately terminate and be of no further force or effect. Furthermore, any HOC Director nominated and appointed pursuant to the provisions of Section 5.1 or 5.2 shall immediately resign in the event that the provisions of subsection (i) or (ii) above shall be applicable.

ARTICLE 9  ADDITIONAL COVENANTS

9.1 Covenants of the Company.

  (a) Prior to the Option Expiration Date, the Company shall not and shall not permit its Affiliates, agents or other representatives (including any director, officer, investment banker, legal advisor or accountant retained by the Company or any of its Susidiaries) to:

  (i) initiate, solicit, promote or encourage, directly or indirectly, inquiries or the submission of proposals or offers from any Person with respect to any proposal or offer or action that would reasonably be expected to delay, prevent or frustrate the Transactions or any part thereof (an Alternative Proposal);

  (ii) encourage, or participate or engage in negotiations concerning, or furnish to any Person other than to HOC Entities, any non-public information with respect to, or otherwise co-operate in any way with, or participate in, or facilitate or encourage any Person to make an Alternative Proposal; or

  (iii) endorse, accept, approve or recommend a proposal of, or enter into any Contract or understanding with , any Person relating to an Alternative Proposal, or otherwise facilitate any effort or attempt to make or implement an Alternative Proposal.

  (b) Notwithstanding anything else in this Section 9.1, if the Company or any of its subsidiaries receives an unsolicited Alternative Proposal prior to the Option Exercise Date, the Board of Directors may participate in discussions with, furnish information to, or enter into an agreement with the Person that initiated the Alternative Proposal only if: (x) the Board of Directors determines in good faith, after consultation with outside counsel, that such action is necessary in order for them to act in a manner consistent with their fiduciary duty under applicable Laws; (y) the Company shall have provided to HOC notice at least five (5) Business Days prior to the date on which the agreement to effect such Alternative Proposal is to be entered into specifying the terms of the Alternative Proposal; and (z) after taking into account modifications to this Agreement proposed by HOC during such five Business Day period, such proposal would constitute a superior proposal (Superior Proposal). If HOC makes a proposal to amend this Agreement to increase the purchase price payable for the Additional Shares, such that the proposal of such other Person shall no longer be a Superior Proposal, and shall complete the purchase of the Additional Shares upon such terms, then neither the Company nor its subsidiaries shall enter into such Alternative Proposal.

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  (c) The Company shall comply with all securities regulatory filing requirements on a timely basis in connection with the issuance of any Equity Securities of the Company to any HOC Entity, including filing within the periods stipulated under Securities Laws, at the Company's expense, all private placement forms required to be filed by the Company and paying all filing fees required to be paid in connection therewith so that such issuance may lawfully occur without the necessity of filing a prospectus, registration statement or any similar document under the Securities Laws.

  (d) The Company shall, to the extent and for so long as HOC Entities hold at least 14.5% of the Shares on a non-diluted basis, upon HOC's request, permit representatives of the HOC Entities to have access to the site and any of the premises where the business and operations of the Company and its Subsidiaries are conducted and access and duplicating rights (and use commercially reasonable efforts to cause persons or firms possessing such documentation or information to give similar access and duplicating rights) to the Company and its Subsidiaries' books of account and records and such other documents, communications, items and matters, within the knowledge, possession or control of the Company, which HOC may reasonably request, at HOC's own cost (other than those it is permitted to examine and make copies of free of charge pursuant to applicable Laws) provided that, except to the extent the information can be provided in the necessary course of business of the Company, acting reasonably including to provide HOC Entities with information to assist the HOC Entities and their advisors with the preparation of the financial statements for such HOC Entities, nothing herein shall require the Company to provide HOC Entities with any information which would constitute a material fact with respect to the Company which has not been generally disclosed.

  (e) In the event the Company shall breach any representation or warranty, covenant or any other right of HOC under this Agreement in any material respect, including but not limited to, the rights afforded to HOC under Articles 2, 4, 5, 6 and 8 hereof, then at the request of HOC, the Company shall promptly prepare and file with the SEC a registration statement on Form S-l or S-3 (or, if Form S-l or S-3 is not then available, on such form of registration statement as is then available to effect a registration for resale of the Purchase Shares and the Additional Shares (Registration Statement)), covering the resale of all of the Shares owned by HOC; provided, however, that if prior to the filing of the Registration Statement, the provisions of Rule 144 of the Securities Act of 1933, as amended (the 1933 Act) allow the sale of all of the Shares in compliance with that Rule, the Company shall not be obligated to file such Registration Statement so long as the Company at its own expense, does the following: (i) complies with any necessary filing or reporting requirements (under the 1933 Act or otherwise) to permit such sale, (ii) cooperates with HOC in removing any legend on the certificates representing the Shares, including but not limited to instructing its transfer agent to remove such restrictive legend and (iii) provides HOC with an opinion of counsel confirming that such sale is permitted under Rule 144. Such Registration Statement also shall cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Shares. The Company shall pay all expenses associated with the registration, including filing and printing fees, counsel and accounting fees and expenses, and State Blue Sky fees and expenses. The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective by the SEC as soon as practicable. The Company shall notify HOC by facsimile or e-mail as promptly as practicable, and in any event, within three (3) business days, after the Registration Statement is declared effective and shall simultaneously provide HOC with copies of any related prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

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  (f) In connection with the foregoing, the Company shall indemnify and hold harmless HOC against any losses, claims, damages or liabilities to which it may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or any other public filing by the Company, so long as such statement has not been provided to the Company by HOC for inclusion in such registration statement; (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, so long as such omission or alleged omission does not relate to HOC or the manner of sale for the Shares as provided to the Company by HOC; or (iii) any violation of the 1933 Act, any rule or regulation thereunder or any other securities law, rule or regulation applicable to the Company and relating to the action or inaction required of the Company in connection therewith. The foregoing indemnification obligation shall extend to the fees and expenses of any counsel retained by HOC in connection with any such loss, claim, damage or liability.

ARTICLE 10  REPRESENTATIONS & WARRANTIES

10.1 Representations and Warranties of the Company. The Company represents, warrants and agrees with HOC as of the date of this Agreement, that:

  (a) The Company is a corporation duly incorporated under the laws of the State of Colorado, and is validly existing and in good standing under the laws of the State of Colorado and no proceedings have been instituted or are pending for the dissolution or liquidation of the Company;

  (b) The Company has all requisite legal and corporate power and authority to execute, deliver and perform its obligations under this Agreement;

  (c) This Agreement has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms; and

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  (d) The execution and delivery of this Agreement and the performance by the Company of its obligations hereunder and the consummation of the Transactions, do not and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under (whether after notice or lapse of time or both): (i) the constating documents of the Company; (ii) the resolutions of the shareholders or directors (or any committee thereof) of the Company which are in effect at the date hereof; (iii) any mortgage, note, indenture, contract, agreement, instrument, lease or other document to which the Company is a party or by which it is bound; or (iv) any judgement, writ, injunction, decree or order, of any court or of any Authority that is binding the Company or the property or assets of the Company.

10.2 Representations and Warranties of HOC. HOC represents, warrants and agrees with the Company as of the date of this Agreement, that:

  (a) HOC is a limited company incorporated under the Companies Act 1985 (England) as a limited company, registered in England and Wales, and is validly existing and in good standing under the laws of England and no proceedings have been instituted or are pending for the dissolution or liquidation of HOC;

  (b) HOC has all requisite legal and corporate power and authority to execute, deliver and perform its obligations under this Agreement;

  (c) this Agreement has been duly authorized by all necessary corporate action on the part of HOC and has been duly executed and delivered by HOC and constitutes a valid and legally binding obligation of HOC enforceable against HOC in accordance with its terms; and

  (d) the execution and delivery of this Agreement and the performance by HOC of its obligations hereunder and the consummation of the Transactions, do not and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under (whether after notice or lapse of time or both): (i) the constating documents of HOC; (ii) the resolutions of the shareholders or directors (or any committee thereof) of HOC which are in effect at the date hereof; (iii) any mortgage, note, indenture, contract, agreement, instrument, lease or other document to which HOC is a party or by which it is bound; or (iv) any judgement, writ, injunction, decree or order, of any court or of any Authority that is binding on HOC or the property or assets of HOC.

ARTICLE 11  INDEMNIFICATION

11.1 Indemnification by the Company.

  The Company will indemnify and save harmless the HOC Entities and the directors, officers, employees and agents of the HOC Entities (collectively, the HOC Indemnitees) from and against all Claims incurred by any one or more of the HOC Indemnitees directly or indirectly resulting from any breach of any covenant, representation or warranty of the Company contained in this Agreement.

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11.2 Indemnification by HOC.

  HOC will indemnify and save harmless the Company and the directors, officers, employees and agents of the Company (collectively, the Company Indemnitees) from and against all Claims incurred by any one or more of the Company Indemnitees directly or indirectly resulting from any breach of any covenant, representation or warranty of HOC contained in this Agreement.

11.3 Injunctive Relief.

  Notwithstanding any other provision of this Agreement, nothing herein is intended to or shall restrict a Party from seeking and receiving injunctive relief (whether as a temporary restraining order, preliminary injunction or otherwise) or specific performance.

ARTICLE 12  MISCELLANEOUS PROVISIONS

12.1 Notices. All notices or other communications required or permitted to be given by one party to another by the terms hereof shall be given in writing by personal delivery or facsimile delivered to such other party as follows:

  To the Company:

  Gold Resource Corporation  222 Milwaukee St., Suite 301 Denver, CO 80206  Attention: William Reid, President  Facsimile No.: (303) 320-7835

  To HOC:

  Hochschild Mining Holdings Limited  Calle La Colonia 180 Surco, Lima 33, Peru  Attention: VP & General Counsel  Facsimile No.: +511-437-5009

or at such other address or facsimile number as may be given by either of them to the other in writing from time to time and such other notices or communications shall be deemed to have been received when delivered or, if by facsimile, on the next business day after such notice or other communication has been transmitted by facsimile (with receipt confirmed).

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12.2 Further Assurances. Each of the parties hereto upon the request of each of the other parties hereto, whether before or after the date of this Agreement, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may reasonably be necessary or desirable to complete the transactions contemplated herein.

12.3 Costs and Expenses. All costs and expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with this Agreement and the transactions herein contemplated shall be paid and borne by the party incurring such costs and expenses.

12.4 Applicable Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York and the laws of the United States applicable therein. Any and all disputes arising under this Agreement, whether as to interpretation, performance or otherwise, shall be subject to the non-exclusive jurisdiction of the courts of Colorado and each of the parties hereto hereby irrevocably attorns to the jurisdiction of the courts of such province.

12.5 Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the transactions contemplated herein and cancels and supersedes any prior understandings, agreements, negotiations and discussions between the parties. There are no representations, warranties, terms, conditions, undertakings or collateral agreements or understandings, express or implied, between the parties hereto other than those expressly set forth in this Agreement or in any such agreement, certificate, affidavit, statutory declaration or other document as aforesaid.

12.6 Amendment and Waivers. No amendment of this Agreement will be effective unless made in writing and signed by the Parties. A waiver of any default, breach or non-compliance under this Agreement is not effective unless in writing and signed by the Party to be bound by the waiver. No waiver shall be inferred from or implied by any failure to act or delay in acting by a Party in respect of any default, breach or non-observance or by anything done or omitted to be done by the other Party in respect of any default, beach or non-observance or by anything done or omitted to be done by the other Party. The waiver by any Party of any default, breach or non-compliance under this Agreement shall not operate as a waiver of that Party's rights under this Agreement in respect of any continuing or subsequent default, breach or non-observance (whether of the same or any other nature).

12.7 Severability. If any one or more provisions in this Agreement, for any reason, shall be determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of any such provision in any other respect and the remaining provisions of this Agreement shall not be in anyway impaired.

12.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Agreement. Counterparts may be delivered either in original or faxed form and the parties adopt any signature received by a receiving fax machine as original signatures of the parties.

12.9 Assignment. This Agreement may not be assigned by either party except with the prior written consent of the other parties hereto.

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12.10 Enurement. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, successors (including any successor by reason of the amalgamation or merger of any party), administrators and permitted assigns.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

GOLD RESOURCE CORPORATIOn

By: ___________________________________________  Authorized Signing Officer

HOCHSCHILD MINING HOLDINGS LIMITED

By: ___________________________________________  Authorized Signing Officer

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[EX A]: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?

[EX Q]: Exhibit 10.5

DISTRIBUTOR AGREEMENT

This Agreement is entered into as of January 21, 2005 (the Effective Date) by and among VendingData Corporation, a Nevada corporation (Vendor), and Technical Casino Supplies Ltd, an English company (Distributor).

RECITALS

WHEREAS, Vendor is the owner of patents, patents pending, trademarks, and other related intellectual property involving a full range of shuffling machine products for the casino industry (collectively, the Products and, individually, the Product);

WHEREAS, Distributor is in the business of distributing products to the casino industry throughout the world and is a subsidiary of Victoria Holdings Ltd; and

WHEREAS, Vendor desires to grant to Distributor an exclusive right to market, sell, rent, lease, service and maintain the Products subject to the terms and conditions as set forth herein.

NOW, THEREFORE, in consideration of the several and mutual promises, agreements, covenants, understandings, undertakings, representations and warranties hereinafter set forth the receipt and sufficiency of which is hereby acknowledged, the parties to this Agreement agree that the aforementioned recitals are true and correct and by this reference incorporated herein as if fully set forth and the parties further covenant and agree as follows:

1. TERM

As provided for in this Section 1, the term of this Agreement shall be for a period of five (5) years, beginning on the Effective Date (the Initial Term); provided, however, the Initial Term shall be subject to automatic successive renewal terms of three (3) years each (the Renewal Terms and together with the Initial Term, the Term).

1.1. Termination. This Agreement may be terminated subject to the following clauses:

  1.1.1. By either Vendor or Distributor, upon written notice of termination of this Agreement no later than ninety (90) calendar days prior to the expiration of the relevant Term, then in effect;

  1.1.2. By Vendor and Distributor, at any time, upon the mutual written agreement of Vendor and Distributor;

  1.1.3. By either Vendor or Distributor, following a material or continuing breach of this Agreement (in the case of a breach which is capable of remedy) by the other party and the breaching party's failure to cure such breach within ninety (90) days of receiving written notice of such breach, where a breach shall be considered capable of remedy if the party in breach can comply with the provision in question in all respects other than as to the time of the performance (provided that the time of performance is not of the essence); or





  1.1.4. Subject to Section 1.6, by Vendor (or successor to Vendor), upon written notice to Distributor of a change of control of Vendor and the election by Vendor (or successor to Vendor) to terminate this Agreement, where a change of control shall mean a change in ownership of the Vendor such that an unaffiliated third party acquires a majority of the voting power of Vendor;

  1.1.5. Subject to Section 1.6, with respect to any shuffler line, by Vendor, upon written notice to Distributor of the transfer of ownership of the relevant shuffler line (i.e,, the PokerOne™ Shuffler, the Random Plus™ Shuffler, the Continuous Plus™ Shuffler and other future line of shuffler products offered by Vendor) to an unaffiliated third party and the election by the unaffiliated third party to terminate this Agreement with respect to the relevant shuffler line.

1.2. No Responsibility. Upon termination of this Agreement in accordance with the terms of this Section 1, the terminating party shall not be responsible for any costs or damages incurred by the other party resulting from the termination, subject to Section 1.6 of this Agreement.

1.3. Distributor Credit. Except when this Agreement is terminated due to the uncured breach of Distributor, Distributor shall have within one (1) month of termination of this Agreement the right to return the Products purchased by Distributor to Vendor provided that the Products are unopened upon receipt by Vendor. Distributor will receive a credit for the full price paid by Distributor for the Products. Under such circumstances, Vendor shall have the right to market and sell such returns to other customers that may be interested in acquiring the goods referred to herein.

1.4. Delivery upon Termination. In the event of termination for whatever reason, Vendor and Distributor agree to complete the delivery of each order of the Product received by Distributor and each unfulfilled order for the Product prior to the termination date.

1.5. Effect. In the event of the termination of this Agreement for any reason whatsoever, the exclusive distribution right and license granted to Distributor pursuant to this Agreement shall automatically revert to Vendor as Vendor's sole property.

1.6. Monthly Compensation. In the event that this Agreement is terminated pursuant to either Section 1.1.4 or 1.1.5 of this Agreement, this shall not of itself be deemed a breach hereof but Distributor shall have the right to receive monthly compensation from Vendor, or successor to the Vendor, representing the amount of profit to Distributor lost as a result of the termination (the Monthly Compensation).

  1.6.1. Calculation. The amount of the Monthly Compensation shall be determined by taking average gross profit related to the relevant Products for each of the monthly periods completed since the beginning of this Agreement, where gross profit shall mean the difference between the revenue generated by Distributor during the relevant period less any commissions paid by Distributor to third parties and less the Price paid by Distributor to Vendor for the relevant Products (exclusive of any taxes, charges, fees or impositions related to sales or delivery).

  1.6.2. Payment. The Monthly Compensation shall be paid for the remaining monthly periods remaining in the Term, as if the termination of this Agreement had not occurred, or twenty four (24) calendar months, which ever period is less, where payment shall be made no later than thirty (30) calendar days after the end of the relevant monthly period.

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  1.6.3. Reservation of Rights. For the avoidance of doubt, Distributor's right to compensation shall be without prejudice to its rights in respect of any breach by Vendor of this Agreement.

2. GRANT OF DISTRIBUTION RIGHTS; LICENSE

In consideration for the purchase of the Products by Distributor from Vendor, Vendor grants Distributor the exclusive right to market, sell, rent, lease, service and maintain the Products and all improvements thereon within the Territory (as defined herein) according to the terms and conditions as set forth herein. As part of the exclusive distribution right granted in this Section 2, Vendor hereby grants Distributor the non- exclusive, non-transferable right to use and display Vendor's trademarks, logos, Product photographs and images, Product advertising and promotional copy, including but not limited to the materials contained in Vendor's website, in connection with the promotion, advertising and distribution of the Products.

2.1. Definition of Territory. For the purposes of this Agreement, the Territory shall mean all countries and territories throughout the world with the exception of the United States of America, the Caribbean and cruise ships based from ports within the United States of America or the Caribbean.

2.2. Limitations. Notwithstanding any other provision of this Agreement, the Distributor specifically agrees that any and all marks, logos, images and copy related to the Products are solely the property of Vendor. Distributor agrees not to use in any manner whatsoever the marks, logos, images and copy of Vendor following the expiration or termination of this Agreement, except as may be needed to sell any Products remaining in Distributor's inventory.

2.3. Design and Specification. In its sole discretion and without any liability to Distributor, Vendor shall have final decision-making power with respect to, from time to time, alter the design or construction of any Products, add new and additional Products and discontinue any Products; provided, however, in the event of any such action on Vendor's part, Vendor shall give reasonable notice to Distributor.

2.4. Prosecution of the Patent Applications. Vendor shall retain full and complete control over the prosecution of any patent applications and any related disclaimer proceedings.

2.5. Ownership of Future Inventions and Improvements. Any and all future inventions and improvements related to the Products licensed pursuant to this Agreement shall be the property of Vendor.

2.6. Commission to Vendor For Sales Lead to Distributor. Subject to the mutual agreement of Vendor and Distributor, in the event that Vendor provides a new sales lead to Distributor that results in the sale of the Products, Distributor shall pay to Vendor a commission equal to twenty-five percent (25%) of the gross profit for the Products, where gross profit shall mean the difference between the price paid by the customer (where Distributor will determine the customer price for the Products on a case by case basis) and the price paid by Distributor for the Products. Sales leads for rental contracts provided by Vendor to Distributor will be dealt with on a case by case basis by mutual agreement between Vendor and Distributor. Any repeat orders will be dealt with on a case by case basis by mutual agreement between Vendor and Distributor.

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  2.6.1. Payment. Distributor hereby agrees to provide to Vendor payment of the commission no later than thirty (30) calendar days after the receipt of full payment from the customer.

3. OBLIGATIONS OF DISTRIBUTOR

In exchange for the exclusive distribution right and license provided in Section 2 of this Agreement, Distributor hereby agrees during the Term to use its best commercial efforts to promote, advertise and distribute the Products throughout the Territory, including, without limitation, the following:

3.1. Distributor will purchase the Products from Vendor in accordance with the parameters set forth in Sections 5 and 6 of this Agreement;

3.2. Distributor will be responsible for all marketing, selling and servicing efforts for the Products within the Territory;

3.3. Distributor shall, in the event of any actual or alleged infringement of the Products comes to the attention of Distributor, promptly notify Vendor, in writing, of the actual or alleged infringement;

3.4. Distributor shall not obtain, purchase, receive or source any other card shuffling machine from any third party or other source under any circumstance other than from Vendor with the exception of all Shuffle Master, Inc. shuffling machines which are held in stock at the Effective Date which Distributor is free to sell, rent purchase or lease until all of the said stock has been depleted.

3.5. Distributor shall not sell or otherwise transfer any of the rights granted pursuant to this Agreement to any third party without the prior written consent of Vendor; provided, however, Distributor may enter into distribution arrangements with regional distributors within the Territory in its efforts to promote, advertise and distribute the Products in accordance with this Agreement;

3.6. Distributor shall provide written updates to Vendor at the end of each calendar quarter of any distribution arrangements entered into by Distributor as permitted by Section 3.5 of this Agreement, where said notice shall contain the name and location of the regional distributor, and a brief statement on the experience and history of the regional distributor;

3.7. Distributor shall not make any modifications to the Products without prior written consent of Vendor;

3.8. Distributor shall provide to Vendor: (1) monthly sales figures no later than fifteen (15) calendar days after the end of the relevant monthly period that provides information with respect to sales for each Product; and (2) a non binding three (3) month forecast on a quarterly basis;

3.9. Distributor shall demonstrate the Products at the following international gaming exhibitions, ICE (London), G2E (Las Vegas), SAGSE (Buenos Aires), EELEX (Moscow) and AGE (Sydney), or any successors or equivalents to the aforementioned exhibitions. Distributor may also demonstrate the products at other gaming exhibitions where Distributor decides to exhibit, subject to there being a good business case to do so; and

3.10. Distributor shall be responsible for the retention, use and actions of any third parties used to distribute the Products, including any claims, liabilities or other damages associated with such third parties.

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4. OBLIGATIONS OF VENDOR

In exchange for the marketing and selling of the Products provided in Section 3, Vendor hereby agrees:

4.1. To provide Distributor with the appropriate product brochures, and two (2) fully working and fit for purpose samples of each model of shuffling machine free of charge;

4.2. To prominently display and advertise that Distributor is the sole and exclusive distributor of Vendor for the Products in the Territory;

4.3. Subject to Section 2.6 of this Agreement, not to market, distribute, sell or supply the Products covered by this Agreement to any individual or entity in the Territory directly in response to a request from that person or entity without the prior written consent of Distributor;

4.4. Subject to Section 4.5 of this Agreement, for a period of twenty-four (24) months after the Effective Date, not to develop, manufacture, market, distribute, sell or supply anywhere in the world to any individual or entity a gaming chip-sorting machine for use in a casino; and

4.5. Notwithstanding Section 4.4 of this Agreement, use its best commercial efforts to enter into a separate agreement with Distributor for the manufacture of a gaming chip-sorting machine or the manufacture of components of a gaming chip-sorting machine for use by the casino industry, where a condition of the agreement will be that Vendor will not compete with Distributor in any way in relation to the manufacture, supply, sale and distribution of gaming chip-sorting machines. It is understood that if Vendor and Distributor fail to reach an agreement then the twenty-four (24) month restriction detailed in Section 4.4 above will remain in force..

The obligation detailed under Section 4.4 above will cease immediately if Distributor fails to complete its obligations under Section 5.1 below, where such failure is not a result of any default by Vendor, or if Distributor fails to provide payment for the Products within one hundred and eighty (180) days after the delivery of the same.

5. PURCHASE; SHIPPING

5.1. Purchase. In exchange for the exclusive distribution right and license granted to Distributor pursuant to this Agreement, during the Term, Distributor hereby agrees to purchase the Products from Vendor, where such Products are fit for purpose and ready for sale in the Territory, as determined by Distributor, as follows:

  5.1.1. As of the Effective Date, one hundred (100) units of the PokerOne™ Shuffler at a price of Four Thousand Nine Hundred Dollars ($4,950.00 U.S.) per unit, where Vendor shall ship the units no later than the end of January 2005;

  5.1.2. Upon the delivery of two (2) units of the Random Plus™ Shuffler to Distributor and the expiration of a review period ending thirty (30) calendar days after the receipt of delivery by Distributor,, where such review by Distributor determines that the Random Plus™ Shuffler is fit for purpose and ready for commercial sale in the Territory, one hundred (100) units of the Random Plus™ Shuffler at a price of Four Thousand Nine Hundred Fifty Dollars ($4,950.00 U.S.) per unit, where Vendor shall ship the units no later than 30 days after the review period;

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  5.1.3. Upon the receipt of any necessary approvals or approval waivers and the expiration of a review period ending thirty (30) calendar days after the receipt of delivery by Distributor of two (2) units of the Continuous Plus™ Shuffler, where such review by Distributor determines that the Continuous Plus™ Shuffler is fit for purpose and ready for commercial sale in the Territory, one hundred (100) units of the Continuous Plus™ Shuffler at a price of Five Thousand Nine Hundred Fifty Dollars ($5,950.00 U.S.);

  5.1.4. Within thirty (30) days of the one (1) year anniversary of the Effective Date, an additional two hundred (200) units of the Products comprising any mix of the shuffler products offered by Vendor; and

  5.1.5. Any additional number of units of the Products as may be submitted by Distributor to Vendor pursuant to a Purchase Order (as defined herein).

5.2. Purchase Order. Unless otherwise provided for in this Agreement, all orders for the purchase of the Products shall be made through the submission of a purchase order (a Purchase Order), where such Purchase Order shall set forth: (1) the relevant monthly period to which the Purchase Order relates; (2) the Products to be ordered; (3) the quantity of the Products ordered; (4) the relevant price for the Products ordered; (5) the requested shipping date and destination of the Products ordered; (6) the Purchase Order number; and (7) the name and authorized signature of Distributor.

5.3. Shipping. Unless otherwise provided for in this Agreement, upon the acceptance of a Purchase Order by Vendor, Vendor shall, in the normal course of business, package, crate and insure the Products at its cost (including any applicable export duties and export taxes) and deliver the Products to Distributor F.O.B. Zhongshan City, China. Vendor will advise Distributor immediately of any delay but will use all reasonable means to dispatch the Products within four (4) weeks of an order being received. Vendor shall as soon as practicable inform Distributor of the delivery date for each quantity of Products shipped to Distributor or to an address nominated by Distributor.

5.4. Partial Shipments; Pro Rata Allocation. Vendor reserves the right to supply against a Purchase Order by making partial shipments of the Products. In the event that Vendor is forced to allocate the distribution of the Products due to limited supply, Distributor shall be treated no less favorably than any other distributor and shall receive its pro rata allocation of the Products.

5.5. Failure to Purchase. If Distributor fails to purchase or complete the purchase of the Products (or the payment thereof) in the quantities and the times specified in Section 5.1 of this Agreement, Vendor shall have the right to convert this Agreement from an exclusive grant of distribution rights to a non-exclusive grant of distribution rights by providing written notice to Distributor within fourteen (14) days of any date by which Distributor was obliged to purchase the specified quantity of Products as set in Section 5.1 of this Agreement. Upon providing notice to Distributor pursuant to this Section 5.5, Distributor shall no longer be required to purchase balance of the Products required to be purchased pursuant to Section 5.1 of this Agreement. Distributor shall not be liable for any losses or damages incurred by Vendor as a result of Distributor's failure to meet its obligations under Section 5.1 of this Agreement.

6. PRICE; PAYMENT

6.1. Price Changes. The prices stated in Section 5.1 of this Agreement are subject to change. For any price change to take effect ninety (90) days notice must be given in order for the price change to apply; provided, however, the proposed price change must also apply to the Products for sale by Vendor outside the Territory. In the event that there is a price change required by Vendor that does not fall within the ninety (90) day notice period, both parties agree to discuss the nature of the increase in order to reach a mutually acceptable understanding. All the aforementioned price changes will not exceed, on a percentage term basis, any increase in the US retail selling price.

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6.2. Payment. Distributor agrees that all payments to Vendor for the Products shall be made by wire transfer in United States Dollars (U.S.$); provided, further,

  6.2.1. For all Products to be delivered by Vendor directly to Distributor, the Price shall be paid by Distributor to Vendor within the earlier of: (1) one hundred eighty (180) calendar days from the date of delivery; or (2) thirty (30) calendar days after the sale or rental of the relevant Products by Distributor; and

  6.2.2. For all Products to be delivered by Vendor directly to a third party purchaser of Distributor (as instructed pursuant to the relevant Purchase Order), the Price shall be paid by Distributor to Vendor within forty-five (45) days of Distributor's sale of the Products to the third party purchaser.

6.3. Notice of Discount Structure and Promotions. Vendor and Distributor each agree to provide the other party with written notice of its intent to offer a discount structure, rebate program or other promotion with respect to the sale of the Products, including the relevant time frame applicable to such discount structure, rebate program or promotion.

7. MARKETING MATERIALS

7.1. Development of Marketing Materials. Vendor and Distributor hereby agree to share marketing materials that are developed by either party for the Products covered by this Agreement, including, without limitation, any information, marketing or promotional materials for the Products, where, upon request, such marketing materials shall be delivered to the other party in hard copy and digital form, if available. Upon receipt of such marketing materials, the party may, in its sole discretion, elect to reject, use or modify such marketing materials.

7.2. Prior Approval of Product Claims. Distributor hereby agrees to obtain the prior written consent of Vendor prior to the use of any product claims with respect to the Products in its marketing materials.

7.3. Cost Sharing. With respect to cost-intensive promotional materials, such as video productions, infomercials and website development and maintenance, Vendor and Distributor hereby agree to share equally in the cost and expenses related to the development and preparation of such promotional materials; provided, however, any and all expenditures related to the development and preparation of such promotional materials shall be approved in advance by Vendor and Distributor.

8. PRODUCT RETURNS

8.1. Procedure. Distributor may return Products to Vendor for credit or full reimbursement, as the case may be, only pursuant to this Section 8.

8.2 Updated Products. Distributor may return to Vendor for credit against future purchases any Products for which a new version or upgrade has been produced and offered for sale; provided, however, the new version or upgrade must be of a material nature whereby the existing Products held by Distributor are considered obsolete. All Products must be returned undamaged, and all shipping charges

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shall be paid by Distributor. This clause does not apply to any Products that have been in Distributor's inventory for more that one hundred and eighty (180) calendar days.

8.3. Damaged Products. Promptly upon the receipt of a shipment of Products, Distributor shall inspect the Products for damage or shortage. Within ten (10) calendar days of receipt of the shipment, Distributor shall notify Vendor of any damage or shortage. As soon as commercially practical after receipt of notice, Vendor shall make complete any shipment in short supply. Any Products damaged in shipment shall be returned to Vendor along with documentation of the damage within thirty (30) calendar days of receipt by Distributor, and Vendor will reimburse Distributor for the costs of freight reasonably incurred by Distributor in returning the Products to Vendor. If Vendor finds any Products returned for damage to not be damaged, Distributor shall be subject to a restocking fee equal to fifteen percent (15%) original purchase price of the non-damaged Products.

8.4. Defective Products. Distributor may, no later than one hundred and twenty (120) calendar days after a Product is sold by Distributor to a customer, return to Vendor, at Distributor's expense, any Product received by Distributor from Vendor during the 120-day period prior to such return, which Distributor or its customer believes to be defective. In the event that such Product is defective, i.e., the failure of a Product to operate in accordance with its published specifications, Vendor shall:

  8.4.1. Reimburse Distributor for the costs of freight reasonably incurred by Distributor in returning the Product to Vendor; and

  8.4.2. Issue Distributor a credit against future purchases in an amount equal to the purchase price paid by Distributor for the Product or, as requested by Distributor, full reimbursement for the defective Products.

9. PRODUCT TESTING AND RESULTS

Whereas Vendor has organized and received the results from product testing with respect to the Products, Vendor hereby agrees to make available to Distributor the results of such product testing and grants to Distributor the right to use such results in its promotional materials; provided, however, Distributor may only use such results if Distributor complies with the applicable terms of use as provided by the institution, organization or other person that organized and conducted the relevant product testing. Conversely, in the event that Distributor organizes and receives the results from product testing with respect to the Products, Distributor hereby agrees to make available to Vendor the results of such product testing and grants to Vendor the right to use such results in its promotional materials.

10. REPRESENTATIONS AND WARRANTIES OF VENDOR

Vendor represents and warrants to Distributor as follows:

10.1. Existence. Vendor is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.

10.2. Authorization; Binding Agreement. This Agreement constitutes valid and legally binding obligations of Vendor, enforceable in accordance with its terms, except, in each case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or affecting the enforcement of creditors' rights generally in effect from time to time and by general principles of equity. Vendor has full corporate power and authority to enter into this Agreement.

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10.3. Product Warranty. Vendor warrants to Distributor that the Products shall perform without manufacturing failure and are fit for purpose. Distributor, in cooperation with Vendor will remedy any defect in the Product in accordance with Section 8.

10.4. Spare Products and Parts. Vendor will provide an initial supply of spare Products and parts as Distributor may reasonably required in accordance with Sections 8 and 10.3 to permit Distributor to offer a six-month warranty on the Products to customers and to enable Distributor to provide a warranty service to customers. The initial spare Products and parts to be provided pursuant to this Section 10.4 shall be at no additional charge to the Distributor; provided, however, any additional Products and parts unrelated to this Section 10.4 shall be purchased by Distributor.

10.5. Litigation. Other than as disclosed in Vendor's filings made with the United States Securities and Exchange Commission, including without limitation the legal proceedings involving Shuffle Master, Inc., Vendor is not aware of any action, arbitration, suit, proceeding or investigation pending, or to the knowledge of Vendor, threatened against Vendor, that would have a material adverse effect on its ability to perform the terms of this Agreement.

11. REPRESENTATIONS AND WARRANTIES OF DISTRIBUTOR

Distributor represents and warrants to Vendor as follows:

11.1. Existence. Distributor is a company duly organized, validly existing and in good standing under the laws of England.

11.2. Authorization; Binding Agreement. This Agreement constitutes valid and legally binding obligations of Distributor, enforceable in accordance with its terms, except, in each case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or affecting the enforcement of creditors' rights generally in effect from time to time and by general principles of equity. Distributor has full corporate power and authority to enter into this Agreement.

11.3. Litigation. Other than the legal proceedings involving Shuffle Master Inc, Distributor is not aware of any action, arbitration, suit, proceeding or investigation pending, or to the knowledge of Distributor, threatened against Distributor that would have a material adverse effect on its ability to perform the terms of this Agreement.

12. LIMITATION OF WARRANTIES

Vendor warrants that all Products are new and that, to its knowledge, all Vendor-supplied promotional materials comply in all respects with all applicable laws, rules and regulations. Although Vendor intends to provide a six-month limited warranty to the end user, Distributor shall make no warranties or representations with respect to the Products on behalf of Vendor. Distributor shall defend, indemnify and hold Vendor harmless from any and all claims, damages, costs or expenses, including attorney fees, incurred by Vendor in relation to any violation by Distributor of the foregoing sentence.

13. INDEMNIFICATIONS

Each party shall indemnify and hold harmless the other party, its affiliated companies, and its employees, officers, directors, attorneys, and agents and each of them, against any and all claims, liabilities, damages and costs, including reasonable attorneys' fees and settlement amounts, that the foregoing, or any of them, may incur by reason of any material breach of this Agreement.

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Vendor shall indemnify and hold harmless Distributor, its affiliated companies, and its employees, officers, directors, attorneys, and agents and each of them, against any and all claims, liabilities, damages and costs, including reasonable attorneys' fees and settlement amounts, incurred by any claims of product liability, or any claims arising from any actual or alleged infringement of any patent, copyright, trademark or other intellectual property right by a Product supplied by Vendor pursuant to this Agreement.

Each party's responsibilities under this Section 13 shall survive termination of this Agreement.

14. COVENANT TO PROTECT CONFIDENTIAL INFORMATION

14.1. Definition. Confidential Information means any proprietary, non-public information relating to Vendor and the Products, including, without limitation, any and all strategic or business plans, customer lists and information relating to customers, marketing plans and strategies, unique software and databases, lists of material providers of services and products, terms and provisions of existing contracts and agreements, details of negotiations with current partners and business associates, details of business opportunities or projects, information relating to financial statements, employees, manufacturing and servicing methods, equipment, programs, strategies, analyses, profit margins, or other proprietary, non- public information used by Vendor; provided, however, that Confidential Information shall not include any information that: (1) was publicly known and made generally available after disclosure by Vendor; (2) becomes publicly known and made generally available through no wrongful action or inaction of Distributor; (3) is already in the possession of Distributor at the time of disclosure, without confidentiality restrictions, as shown by Distributor's file and records immediately prior to the time of disclosure; (4) is obtained by Distributor without breach of Distributor's obligations of confidentiality; or (5) is independently developed by Distributor without use of or reference to the Confidential Information, as shown by documents and other competent evidence in Distributor's possession.

14.2. Non-Use and Non-Disclosure. Distributor shall not, during the Term or anytime thereafter, without the express prior written consent of Vendor, use, divulge, publish or otherwise disclose to any other person any Confidential Information regarding Vendor, except as provided for in this Agreement or if required to do so pursuant to the order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof and any litigation or dispute resolution method against Vendor related to or arising out of this Agreement) or any governmental or administrative agency. In the event that Distributor or its directors, officers, employees, consultants or agents are requested or required by legal process to disclose any of the Confidential Information, Distributor shall give prompt notice so that Vendor may seek a protective order or other appropriate relief. In the event that such protective order is not obtained, Distributor shall disclose only that portion of the Confidential Information which its counsel advises that it is legally required to disclose.

14.3. Maintenance of Confidentiality. Distributor agrees that it shall take all commercially reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of the Confidential Information. Without limiting the foregoing, Distributor shall take at least those measures that it takes to protect its own most highly confidential information and shall ensure that its employees who have access to Confidential Information have signed a non-use and non-disclosure agreement in content similar to the provisions hereof, prior to any disclosure of Confidential Information to such employees. Distributor shall not make any copies of the Confidential Information unless the same is previously approved in writing by Vendor.

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14.4. Return of Materials. All documents and other tangible objects containing or representing Confidential Information which have been disclosed by Vendor to Distributor, and all copies thereof which are in the possession of Distributor, shall be and remain the property of Vendor and shall be promptly returned to Vendor upon Vendor's written request.

14.5. Non-Solicitation by Distributor. Distributor agrees that, without the prior written consent of the Vendor, for a period beginning from the date of this Agreement and ending three (3) years after the termination of this Agreement, neither Distributor nor any of its affiliates or representatives will: (1) employ or solicit to employ any of the employees of Vendor; or (2) encourage of the employees of the Vendor or its subsidiaries to leave the employment of Vendor; provided, however, this Section shall not apply to any such employee who has been terminated by or left the employment of Vendor prior to the Effective Date or, if employed by Vendor as of the Effective Date, any employee who has not been employed by Vendor for at least one (1) year after the end of such employment.

14.6. Non-Solicitation by Vendor. Vendor agrees that, without the prior written consent of the Distributor, for a period beginning from the date of this Agreement and ending three (3) years after the termination of this Agreement, neither Vendor nor any of its affiliates or representatives will: (1) employ or solicit to employ any of the employees of Distributor; or (2) encourage of the employees of the Distributor or its subsidiaries to leave the employment of Distributor; provided, however, this Section shall not apply to any such employee who has been terminated by or left the employment of Distributor prior to the Effective Date or, if employed by Distributor as of the Effective Date, any employee who has not been employed by Distributor for at least one (1) year after the end of such employment.

14.7. Remedies. Each party agrees that any violation of this Section 14 may cause irreparable injury to the other party, entitling the other party to seek injunctive relief in addition to all legal remedies. Nothing herein contained is intended to waive or diminish any rights the other party may have at law or in equity at any time to protect and defend its legitimate property interests (including its business relationship with third parties), the foregoing provisions being intended to be in addition to and not in derogation or limitation of any other rights the other party may have at law or equity.

15. OUTSIDE EVENTS

15.1. Delay or Non-Performance. No party shall be liable to the other for delay in performance, or the non-performance, of any of its obligations under this Agreement to the extent that such delay or non-performance is due to any cause beyond the party's control, provided that:

  15.1.1. the party affected shall forthwith notify the other parties thereof; and:

  15.1.2. if the circumstances in question prevail for a continuous period in excess of two (2) calendar months, the parties shall enter into bona fide discussions with a view to alleviating the effects thereof or to agreeing upon such alternative arrangements as may be fair and reasonable in all the circumstances.

15.2 Vendor Supply Limitation. Vendor shall not be responsible or liable for any loss, damage, detention or delay caused by fire, strike, civil or military authority, governmental restrictions or controls, insurrection or riot, railroad, act of terrorism, marine or air embargoes, lockout, tempest, accident, breakdown of machinery, yield problems, delay in delivery of materials by other parties, or any cause which is unavoidable or beyond its reasonable control, nor, in any event, for consequential damages.

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16. LIMITATION OF LIABILITY

Neither party shall be liable to the other for lost profits or indirect, special consequential or punitive damages of any kind arising in connection with the manufacture, sale and distribution of the products, even if such party has been advised of the possibility of such damages.

17. FURTHER ASSURANCES

The parties further covenant and agree to do, execute and deliver, or cause to be done, executed and delivered, and covenant and agree to use their best efforts to cause their successors and assigns to do, execute and deliver, or cause to be done, executed and delivered, all such further acts, transfers and assurances, for implementing the intention of the parties under this Agreement, as the parties reasonably shall request. The parties agree to execute any additional instruments or agreements necessary to affect the intent of this Agreement.

18. RELATIONSHIP OF THE PARTIES

This Agreement shall not create any joint venture or partnership between the parties. Nothing contained in this Agreement shall confer upon either party any proprietary interest in, or subject a party to any liability for or in respect of the business, assets, profits, losses or obligations of the other. Nothing herein contained shall be read or construed so as to make the parties a partnership, nor shall anything contained herein be read or construed in any way to restrict the freedom of either party to conduct any business or activity whatsoever without any accountability to the other party. Neither party shall be considered to be an agent or representative of the other party or have any authority or power to act for or undertake any obligation on behalf of the other party except as expressly authorized by the other party in writing. Any such unauthorized representation or action shall be considered a breach of this Agreement.

19. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Parties and supersedes any prior communications, representations or agreements of any kind, whether oral or written; provided, however, notwithstanding this Agreement, that certain Distribution Agreement by and between Vendor and TCS Aces Pty Limited dated September 19, 2004 shall remain in full force and effect.

20. COUNTERPARTS

This Agreement may be executed in counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

21. MODIFICATION

This Agreement may not be modified or rescinded except by express written agreement signed by both of the Parties.

22. CONFLICTS

If any term included in an invoice, purchase order, packing slip, or bill of lading contradicts or is otherwise at odds with any provision of this Agreement, the provisions of this Agreement shall prevail.

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23. JURISDICTION

Disputes under this Agreement shall be resolved through arbitration in Ontario, Canada by a single arbitrator to be appointed by agreement of the parties, or in default, by the President of the Law Society/Bar of Canada. The laws of Ontario, Canada shall govern the conduct of the arbitration and any appeal from the decision of the arbitrator.

24. WAIVER

Neither the inspection by Distributor, nor any payment for or acceptance of all or any part of the Products specified in this Agreement, nor any extension of time, nor any possession taken by Distributor or Distributor's employees, shall operate as a waiver of any provision of this Agreement, or any power in this Agreement reserved to Distributor, or any rights or damages provided for in this Agreement, nor shall any waiver of any breach in this Agreement be held to be a waiver of any other or subsequent breach.

25. ASSIGNMENT OR DELEGATION

No assignment by either Party of any rights, including rights to money due or to become due under this Agreement, or delegation of any duties under this Agreement or under any purchase orders subject to this Agreement, shall be binding on the nonassigning Party unless and until a written consent has been obtained from the nonassigning Party.

26. SEVERABILITY

Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall be ineffective only to the extent of such invalidity or unenforceability and only as to such jurisdiction without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of these terms or provisions in any other jurisdiction.

27. GOVERNING LAW

This Agreement shall be governed by, construed in accordance with the laws of Ontario, Canada.

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28. NOTICES

Any notice, request, instruction, or other document required by the terms of this Agreement, or deemed by any of the parties hereto to be desirable, to be given to any other party hereto shall be in writing and shall be given by personal delivery, overnight delivery, facsimile (with confirmation of transmission) or mailed by registered or certified mail, postage prepaid, with return receipt requested, to the addresses of the Parties as follows:

If to Distributor: Technical Casino Supplies Ltd Unit 9, Mulberry Business Centre, Quebec May, Rotherhithe, London, SE167LE Telephone: _____-_____-_____ Facsimile: _____-_____-_____ Attn: _____________   With a copy to: _________________ _________________ _________________ Telephone: _____-_____-_____ Facsimile: _____-_____-_____ Attn: ______________, Esq.   If to Vendor: VendingData Corporation 6830 Spencer Street Las Vegas, Nevada 89119 Telephone: 702.733.7195 Facsimile: 702.733.7197 Attn: Steven J. Blad, President and CEO   With a copy to: Kummer Kaempfer Bonner & Renshaw 3800 Howard Hughes Parkway, Seventh Floor Las Vegas, Nevada 89109 Telephone: 702.792.7000 Facsimile: 702.796.7181 Attn: Michael J. Bonner, Esq.

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The persons and addresses set forth above may be changed from time to time by a notice sent as aforesaid. If notice is given by personal delivery or overnight delivery in accordance with the provisions of this Section, said notice shall be conclusively deemed given at the time of such delivery provided a receipt is obtained from the recipient. If notice is given by mail in accordance with the provisions of this Section, such notice shall be conclusively deemed given upon receipt and delivery or refusal.

The Parties acknowledge that they have read this Agreement, understand it, and agree to be bound by its terms.

  VENDOR:

  VENDINGDATA CORPORATION, a Nevada corporation

  By: /s/ Steven J. Blad

  Its: Steven J. Blad CEO

  DISTRIBUTOR:

  TECHNICAL CASINO SUPPLIES LTD, an English company

  By: /s/ David K. Heap

  Its: David K. Heap Chief Executive Officer

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[EX A]: Highlight the parts (if any) of this contract related to Warranty Duration that should be reviewed by a lawyer. Details: What is the duration of any  warranty against defects or errors in technology, products, or services  provided under the contract?

[EX Q]: DISTRIBUTOR AGREEMENT

1. CERTIFICATION AND IDENTIFICATION:

COMWARE TECHNICAL SERVICES OF 17922 SKY PARK CIRCLE, SUITE E, IRVINE, CALIFORNIA 92614-6414  (COMWARE) certifies that the Products furnished under this agreement by INTERNATIONAL TEST SYSTEMS, INC. OF 4703 SHAVANO OAK, SUITE 102, SAN ANTONIO, TEXAS 78249 (ITS) will be incorporated by COMWARE as a part of COMWARE'S systems which  COMWARE  sells or leases to  unaffiliated  third  parties in the  regular course of  COMWARE'S  business  and that  COMWARE'S  own  contribution  to these systems reflect a verifiable value added.  COMWARE also represents that it is an experienced  user of  computer  equipment  and  software  sufficiently  like the Products,  as  defined  below,  and  that it needs  only  minor  support  in the incorporation of the Products into its lines of business.

2. DEFINITIONS:

    INITIAL DISTRIBUTION      PERIOD:                    April 15, 2000 through October 15,                                 2000 (6 Months from the Effective Date)

    PRODUCTS:                   The CircuiTest 2000S In-Circuit Test System

                                The CircuiTest 2100 Scanner Expansion

    EXCLUSIVE TERRITORIES:      The 48 Contiguous United States

    EFFECTIVE DATE:             The earlier of the date Comware orders and                                 pays for a minimum of $22,710 worth of                                 Products, in any combination, or April 15, 2000.

3. EXCLUSIVE RIGHTS: Upon the effective date of this agreement COMWARE shall have the exclusive right to purchase, at the DISCOUNTS described below, and resell Products to potential customers during the Initial Distribution Period, based on the following terms and conditions:

(a)    COMWARE must purchase no less than $22,710.00 worth of Products, in any        combination,  by April 15, 2000.  This initial order shall be evidenced        by valid  purchase  order from  COMWARE to be  received by ITS no later        than 5:00PM April 1, 2000,  with payment to be received by ITS no later        than April 15,  2000.  In the event  either of these dates are not met,        this Agreement will automatically and immediately terminate and neither        of the parties  hereto will have any  further  obligations,  one to the        other.

(b)    Future  Purchase  Orders  and  delivery  will  approximate  the  15 day        delivery schedule (but not the dates), although payment will be made by        COMWARE to ITS no later than thirty (30) days after  receipt of invoice        from ITS.

(c)    Provided  COMWARE  purchases  the  initial  products  as in (a)  above,        COMWARE  shall have the right to purchase  additional  Products up to a        total of $45,420.00 at the following discounts:

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     INITIAL DISCOUNTS:

         PRODUCT IDENTIFICATION     SUGGESTED RETAIL PRICE       DISCOUNT        PRICE TO COMWARE -------------------------------------------------------------------------------------------------                                                                                          CircuiTest 2000S           $5,995.00                       45%                 $3,297.25          CircuiTest 2100 Scanner    $2,995.00                       56%                 $1,317.80

        (INTERNATIONAL TEST SYSTEMS RESERVES THE RIGHT TO CHANGE THE RETAIL         PRICE AT ANY TIME, WITH NOTICE TO COMWARE.)

(d)      In the event COMWARE purchases  products in excess of $45,420.00 during          the  Initial  Distribution  Period, COMWARE  shall  have  the  right to          purchase additional Products at the following discounts:

     SUBSEQUENT DISCOUNTS:

         PRODUCT IDENTIFICATION     SUGGESTED RETAIL PRICE       DISCOUNT        PRICE TO COMWARE -------------------------------------------------------------------------------------------------                                                                                          CircuiTest 2000S           $5,995.00                       50%                 $2,997.50          CircuiTest 2100 Scanner    $2,995.00                       60%                 $1,198.00

        (INTERNATIONAL TEST SYSTEMS RESERVES THE RIGHT TO CHANGE THE RETAIL         PRICE AT ANY TIME, WITH NOTICE TO COMWARE.)

4.   RENEWAL  PERIOD:  Provided  that COMWARE  purchases a minimum of $45,420.00      worth of  Products,  in any  combination,  during the Initial  Distribution





     Period,  this Agreement will automatically renew for an additional 6 months      (the Renewal  Period).  In the event COMWARE  purchases an amount less than      $45,420.00, than this Agreement will automatically terminate.

5.   MINIMUM ORDERS TO MAINTAIN AGREEMENT: COMWARE must purchase order a minimum      of $4,200 worth of Products per month during the Renewal Period TO maintain      the terms and conditions of this  Agreement.  In the event COMWARE does not      meet these minimum purchase requirements, this Agreement will automatically      and  immediately  terminate and neither of the parties hereto will have any      further obligations, one to the other.

6. OBLIGATIONS OF COMWARE:

     o Use best efforts to market and sell the Products to customers.      o Provide marketing feedback to ITS.      o Train customers on and demonstrate ITS products.      o COMWARE reserves the right to develop and sell value-added services that        support the sales of ITS systems.      o COMWARE reserves the right to develop their own marketing materials,        brochures, and advertisements for ITS' products at no cost to ITS.      o Communicate with and respond to ITS AND ITS inquires.      o Assist ITS in customer feedback.

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7. OBLIGATIONS OF ITS:

     o    ITS will deliver working systems no later than 30 days after a hard           copy purchase order is received from COMWARE.      o    ITS will provide free technical support to customers who have           purchased ITS systems for a period of 30 days. After the 30 day free           technical support period, ITS reserves the right to charge a           reasonable fee for additional support.      o    ITS will be solely responsible for the production of brochures           describing the products, and will provide COMWARE with ample space for           placement of business card/label and provide COMWARE with as many           brochures as it may from time to time reasonably require, free of           charge.      o    In event of cancellation of a purchase order, or re-scheduling of any           item on a purchase order beyond the discount period, COMWARE may be           liable for bill back or adjustment of discounts based upon actual           quantities of items delivered within the discount period.      o    COMWARE will not be penalized for delays in delivery caused by ITS, or           any agent of ITS.      o    ITS will use its best efforts to provide a swift and complete           resolution of any product-related problems, whether or not such           problems are covered under the terms of the WARRANTY. In the event           that one of COMWARE'S customers has a problem that is beyond the scope           of COMWARE'S capabilities, ITS will address the problem without delay           in the best interest of customer service.

8.   WARRANTY:  ITS  Products  are  warranted  free from  defects of material or      workmanship  for 3 years after  shipment from the  manufacturer.  Equipment      purchased from ITS, which becomes defective within that time period will be      repaired by ITS at its  headquarters  in San  Antonio,  Texas at no cost to      COMWARE  beyond cost of shipping  the  equipment  to ITS. ITS will bear the      cost of returning the item to COMWARE by UPS,  REGULAR  DELIVERY.  priority      shipping costs will be borne by COMWARE.

     This  warranty  is  contingent  upon  proper  use and  installation  of the      Products and does not cover equipment which has been modified  without ITS'      consent or which has been  subjected  to  unusual  physical  or  electrical      stress or on which the original  identification  marks have been removed or      altered.

9.   DOCUMENTATION AND SUPPORT: ITS will supply with each of the Products      ordered one set of user and technical documentation and one set of software      in reproducible form.

     COMWARE may purchase  additional  copies of the  documentation and software disks at then prevailing prices.

     COMWARE will receive  minimal  assistance  and support from ITS  consistent with the certifications in Section 1.

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TERMINATION:  except as  specifically  described  elsewhere  in this  agreement,      either ITS or COMWARE shall have the right to terminate this Agreement with      30 days written notice from the other party, for any reason whatsoever.

11.  GOVERNMENT SALES:  COMWARE reserves the right to incorporate,  as extension      of this Agreement,  additional  terms and conditions as may be required for      sale of Products to the US Government.  These terms and conditions  will be      expressly quoted in attachments to subject  purchase  orders.  ITS reserves      the right to reject such purchase orders only under those  conditions where      these terms and  conditions are in conflict with stated policy or corporate      condition of ITS at the time the purchase orders are received.





12.  ENTIRE  AGREEMENT:  This  Agreement  supersedes  all prior  agreements  and      understandings  between the parties  relating to the subject  matter and is      intended by the parties as the  complete  and  exclusive  statement  of the      terms of the Agreement. No modification, addition to or waiver of the terms      and conditions of this Agreement  shall be effective  unless in writing and      signed by the party against whom the same is sought to be enforced.

13.  GOVERNED BY THE STATE OF TEXAS: This Agreement shall be interpreted and      governed by the laws of the State of Texas. Comware agrees to submit to the      jurisdiction of the State of Texas, Bexar County, USA.

INTERNATIONAL TEST SYSTEMS, INC.        COMWARE TECHNICAL SERVICES

BY                                      BY   -------------------------------         ---------------------------------

PRINTED                                 PRINTED        --------------------------              ----------------------------

TITLE                                   TITLE      ----------------------------            ------------------------------

DATE                                    DATE     -----------------------------           -------------------------------

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[EX A]:
Highlight the parts (if any) of this contract related to Warranty Duration that should be reviewed by a lawyer. Details: What is the duration of any  warranty against defects or errors in technology, products, or services  provided under the contract?