Document:

EXHIBIT
      10.3

    
       

      FORM
        OF
        WARRANT

      

      NEITHER
        THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
        WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
        OR
        ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
        MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
        PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS
        OR
        AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
        OPINION OF COUNSEL FOR THE COMPANY, IS AVAILABLE.

      

      Void
        after 5:00 P.M. Pacific Time on the last day of the Exercise
        Period,

      as
        defined in the Warrant

      

      COMMON
        STOCK PURCHASE WARRANT

      OF

      VENDINGDATA
        CORPORATION

      

      This
        is
        to certify that, FOR VALUE RECEIVED, _____________________ (the "Holder"),
        is
        entitled to purchase, subject to the provisions of this Warrant, from
        VendingData Corporation, a Nevada corporation (the "Company"),
        at an
        exercise price per share of $1.25 per share (the "Warrant
        Exercise Price"),
        ______________K:\53251\99999\DD__A20M8
        shares
        of common stock, par value $0.001 per share (the "Common Stock"), less any
        modifications resulting from the application of the provisions of Section
        7 of
        the Credit Agreement. The shares of Common Stock deliverable upon such exercise,
        and as adjusted from time to time, are hereinafter sometimes referred to
        as the
        "Warrant
        Shares."
        

      

      1.    ISSUANCE
        OF WARRANT.
        This
        Warrant is being issued pursuant to that certain Credit Agreement dated as
        of
        October 5, 2005, between the Company and the Holder (the "Credit Agreement").
        Capitalized terms used but not otherwise defined herein shall have the meanings
        ascribed thereto in the Credit Agreement. In addition, the following terms
        shall
        have the meanings set forth below: 

      

      "Closing
        Price"
        means,
        as of any date, the last trading price for the Common Stock as reported on
        the
        American Stock Exchange, or other principal exchange or electronic trading
        system on which the shares of Common Stock are quoted or traded.

      

      "Convertible
        Securities"
        shall
        mean evidences of indebtedness, shares of stock or other securities, which
        are
        convertible into or exchangeable, with or without payment of additional
        consideration in cash and/or property, for shares of Common Stock, either
        immediately or upon the occurrence of a specified date or a specified
        event.

      

      "Common
        Stock Purchase Price,"
        shall
        mean the Warrant Exercise Price multiplied by the number of Shares of Common
        Stock the Holder wishes to exercise (the maximum number being 1,500,000,
        less
        any modifications resulting from the application of the provisions of Section
        7
        of the Credit Agreement.

       

      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

      

      "Exercise
        Period"
        shall
        mean the period commencing on October 6, 2005, at 5:00 p.m., Pacific Time,
        and
        ending at 5:00 p.m., Pacific Time, on October 1, 2011. 

      

      "Loans"
        means
        loans to the Company under the Credit Agreement of up to
        $5,000,000.

      

      "Securities
        Act"
        means
        the Securities Act of 1933, as amended, and all rules and regulations
        promulgated thereunder.

      

      2.    EXERCISE
        OF WARRANT.
        This
        Warrant may be exercised in whole or in part at any time or from time to
        time
        during the Exercise Period by presentation and surrender of this Warrant
        to the
        Company at its principal office, or at the office of its stock transfer agent,
        if any, with the Purchase Form annexed hereto duly executed and accompanied
        by
        payment of the Warrant Exercise Price for the number of shares of Common
        Stock
        specified in such form, less any modifications resulting from the application
        of
        the provisions of Section 7 of the Credit Agreement. If this Warrant should
        be
        exercised in part only, the Company shall, upon surrender of this Warrant
        for
        cancellation, execute and deliver a new Warrant evidencing the rights of
        the
        Holder to purchase the balance of the shares of Common Stock purchasable
        hereunder. Upon receipt by the Company of this Warrant at its office, or
        by the
        stock transfer agent of the Company at its office, in proper form for exercise,
        the Holder shall be deemed to be the holder of record of the shares of Common
        Stock issuable upon such exercise, notwithstanding that the stock transfer
        books
        of the Company shall then be closed or that certificates representing such
        shares of Common Stock shall not then actually be delivered to the Holder.
        As
        soon as practicable after each exercise of this Warrant, in whole or in part,
        and in any event within seven (7) days thereafter, the Company at its expense
        (including the payment by it of any applicable issue taxes) will cause to
        be
        issued in the name of and delivered to the Holder hereof or, as the Holder
        (upon
        payment by the Holder of any applicable transfer taxes) may direct, a
        certificate or certificates for the number of duly authorized, validly issued,
        fully paid and non-assessable shares of Common Stock to which the Holder
        shall
        be entitled upon exercise. All issuances of Common Stock pursuant to the
        exercise of this Warrant shall be rounded (up or down as the case may be)
        to the
        nearest whole share.

      

      3.    RESERVATION
        OF SHARES/FRACTIONAL SHARES.
        The
        Company hereby agrees that at all times there shall be reserved for issuance
        and/or delivery upon exercise of this Warrant such number of shares of Common
        Stock as shall be required for issuance and delivery upon exercise of this
        Warrant. No fractional shares or script representing fractional shares shall
        be
        issued upon the exercise of this Warrant. Instead, the Company will round
        up to
        the nearest whole share.

      

      4.    EXCHANGE,
        TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
        This
        Warrant is exchangeable, without expense, at the option of the Holder, upon
        presentation and surrender of this Warrant to the Company for other Warrants
        of
        different denominations entitling the Holder thereof to purchase in the
        aggregate the same number of shares of Common Stock purchasable hereunder.
        Upon
        surrender of this Warrant to the Company or at the office of its stock transfer
        agent, if any, with the Assignment Form annexed hereto duly executed and
        funds
        sufficient to pay any applicable transfer tax, the Company shall, without
        charge, execute and deliver a new Warrant in the name of the assignee named
        in
        such instrument of assignment and this Warrant shall promptly be canceled.
        This
        Warrant may be divided or combined with other Warrants which carry the same
        rights upon presentation of this Warrant at the office of the Company or
        at the
        office of its stock transfer agent, if any, together with a written notice
        specifying the names and denominations in which new Warrants are to be issued
        and signed by the Holder hereof. The term "Warrant" as used herein includes
        any
        Warrants into which this Warrant may be divided or for which it may be
        exchanged. Upon receipt by the Company of evidence satisfactory to it of
        the
        loss, theft, destruction or mutilation of this Warrant, (and, in the case
        of
        loss, theft or destruction, of reasonably satisfactory indemnification),
        and
        upon surrender and cancellation of this Warrant, the Company will execute
        and
        deliver a new Warrant of like tenor. Any such new Warrant executed and delivered
        shall constitute an additional contractual obligation on the part of the
        Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated
        shall be at any time enforceable by anyone.

       

      
        
           

        

        
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      5.    REGISTRATION
        RIGHTS.
        Pursuant to the time schedule set forth in this Section 5, the Company shall
        prepare and file a registration statement (the "Registration Statement")
        on Form
        S-3 or any similar short-form registration statement, with respect to the
        registration under the Securities Act of 1933, as amended, and the rules
        and
        regulations promulgated thereunder (collectively, the "Securities Act") of
        all
        Warrant Shares for resale, which Registration Statement shall also cover
        such
        indeterminate number of additional shares of Common Stock as may become issuable
        upon exercise of this Warrant as a result of adjustments from stock splits,
        stock dividends or similar transactions.

       

      5.1.    Registration
        Process.
        The
        Company shall file the Registration Statement as soon as practicable but
        in any
        event within 30 days after the date of this Warrant (the earlier of such
        dates
        being herein called the "Filing Date"), and shall use commercially reasonable
        efforts to have such Registration Statement promptly declared effective by
        the
        Securities and Exchange Commission ("SEC") whether or not all Warrant Shares
        requested to be registered can be included; provided, however, that if the
        Company shall furnish to the Holder a certificate signed by the President
        of the
        Company stating that in the good-faith judgment of the Company board of
        directors it would be seriously detrimental to the Company and its stockholders
        for such Registration Statement to be filed by the applicable Filing Date
        and it
        is therefore essential to defer the filing of such Registration Statement,
        the
        Company shall have an additional period of not more than ninety (90) days
        after
        the expiration of the initial Filing Date within which to file such Registration
        Statement; provided, that during such time the Company may not file a
        Registration Statement for securities to be issued and sold for its own
        account.

      

      5.2.    Registration
        Default.
        In the
        event that: (a) the Registration Statement is not filed by the Company by
        the
        Filing Date, or declared effective by the SEC within ninety (90) days after
        the
        Filing Date, or (b) the Common Stock is no longer listed on the American
        Stock
        Exchange or another national securities exchange or quotation medium (including
        the Nasdaq National Market and the Nasdaq SmallCap Market) or has been suspended
        from trading thereon for three (3) consecutive business days the interest
        rate
        on the Notes shall increase by one and one-half percent (1.5%) per annum
        for
        each 30-day period for which the Company remains in default pursuant to this
        Section 5.2, provided
        that the
        interest rate as so increased shall not exceed 15% per annum; provided, however,
        with respect to a default under subsection (b), the Company shall have one
        hundred twenty (120) days to cure such registration default during which
        time
        the interest rate on the Notes shall not increase, provided
        that the
        failure of the Company to cure during said 120-day period shall cause the
        retroactive application of the aforesaid increase in such interest rate to
        the
        date of default. Once the Registration Statement has been declared effective
        by
        the SEC, if the Registration Statement is no longer effective, other than
        as
        provided in Section 5.3(f), for a period of thirty (30) days in the aggregate
        (which days need not be consecutive), on the day after such thirtieth (30th)
        day
        the interest rate on the Notes shall increase by one and one-half percent
        (1.5%)
        per annum for each 30-day period for which the Company remains in default
        pursuant to this Section 5.2, provided
        that the
        interest rate as so increased shall not exceed 13% per annum. When the
        Registration Statement regains its effectiveness or the Common Stock is
        relisted, the interest rate on the Notes shall return to 9% per
        annum.

       

      
        
           

        

        
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      5.3.    Obligations
        of the Company.
        In
        connection with the registration of the Warrant Shares, the Company shall
        have
        the following obligations:

      

      a.    The
        Company shall keep such Registration Statement effective pursuant to Rule
        415 at
        all times until such date as is the earlier of (i) the date on which all
        of the
        Warrant Shares have been sold and (ii) the date on which all of the Warrant
        Shares may be immediately sold to the public without registration or restriction
        pursuant to Rule 144(k) under the Securities Act or any successor provision
        (the
        "Registration Period"), which Registration Statement (including any amendments
        or supplements thereto and prospectuses contained therein and all documents
        incorporated by reference therein) (i) shall comply in all material respects
        with the requirements of the Securities Act and the rules and regulations
        of the
        SEC promulgated thereunder and (ii) shall not contain any untrue statement
        of a
        material fact or omit to state a material fact required to be stated therein,
        or
        necessary to make the statements therein not misleading. The financial
        statements of the Company included in the Registration Statement or incorporated
        by reference therein will comply as to form in all material respects with
        the
        applicable accounting requirements and the published rules and regulations
        of
        the SEC applicable with respect thereto. Such financial statements will be
        prepared in accordance with U.S. generally accepted accounting principles,
        consistently applied, during the periods involved (except (i) as may be
        otherwise indicated in such financial statements or the notes thereto, or
        (ii)
        in the case of unaudited interim statements, to the extent they may not include
        footnotes or may be condensed on summary statements and fairly present in
        all
        material respects the consolidated financial position of the Company and
        its
        consolidated subsidiaries as of the dates thereof and the consolidated results
        of their operations and cash flows for the periods then ended (subject, in
        the
        case of unaudited statements, to immaterial year-end adjustments)).

       

      b.    The
        Company shall prepare and file with the SEC such amendments (including
        post-effective amendments) and supplements to the Registration Statement
        and the
        prospectus used in connection with the Registration Statement as may be
        necessary to keep the Registration Statement effective at all times during
        the
        Registration Period, and, during such period, comply with the provisions
        of the
        Securities Act with respect to the disposition of all Warrant Shares of the
        Company covered by the Registration Statement until the end of the Registration
        Period.

      

      c.    The
        Company shall furnish to special counsel for the Holders whose Warrant Shares
        are included in the Registration Statement (i) promptly after the same is
        prepared and publicly distributed, filed with the SEC, or received by the
        Company, one copy of the Registration Statement and any amendment thereto,
        each
        preliminary prospectus and prospectus and each amendment or supplement thereto,
        and each letter written by or on behalf of the Company to the SEC or the
        staff
        of the SEC (including, without limitation, any request to accelerate the
        effectiveness of the Registration Statement or amendment thereto), and each
        item
        of correspondence from the SEC or the staff of the SEC, in each case relating
        to
        the Registration Statement (other than any portion, if any, thereof which
        contains information for which the Company has sought confidential treatment),
        (ii) on the date of effectiveness of the Registration Statement or any amendment
        thereto, a notice stating that the Registration Statement or amendment has
        been
        declared effective, and (iii) such number of copies of a prospectus, including
        a
        preliminary prospectus, if applicable, and all amendments and supplements
        thereto and such other documents as such Holder may reasonably request in
        order
        to facilitate the disposition of the Conversion Shares owned by such
        Holder.

       

      
        
           

        

        
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      d.    The
        Company shall use its best efforts to (i) register and qualify the Warrant
        Shares covered by the Registration Statement under such other securities
        or
        "blue sky" laws of such jurisdictions in the United States as each Holder
        who
        holds Warrant Shares being offered reasonably requests, (ii) prepare and
        file in
        those jurisdictions such amendments (including post effective amendments)
        and
        supplements to such registrations and qualifications as may be necessary
        to
        maintain the effectiveness thereof during the Registration Period, (iii)
        take
        such other actions as may be necessary to maintain such registrations and
        qualifications in effect at all times during the Registration Period, and
        (iv)
        take all other actions reasonably necessary or advisable to qualify the
        Conversion Shares for sale in such jurisdictions; provided, however, that
        the
        Company shall not be required in connection therewith or as a condition thereto
        to (A) qualify to do business in any jurisdiction where it would not otherwise
        be required to qualify but for this Section 5.3.d, (B) subject itself to
        general
        taxation in any such jurisdiction, (C) file a general consent to service
        of
        process in any such jurisdiction, (D) provide any undertakings that cause
        the
        Company undue expense or burden, or (E) make any change in its charter or
        bylaws, which in each case the Board of Directors of the Company determines
        to
        be contrary to the best interests of the Company and its
        stockholders.

      

      e.    If
        (i)
        there is material non-public information regarding the Company that the
        Company's Board of Directors (the "Board") reasonably determines not to be
        in
        the Company's best interests to disclose and that the Company is not otherwise
        required to disclose, or (ii) there is a significant business opportunity
        (including, but not limited to, the acquisition or disposition of assets
        (other
        than in ordinary course of business) or merger, consolidation, tender offer
        or
        other similar transaction) available to the Company that the Board reasonably
        determines not to be in the Company's best interests to disclose and that
        the
        Company would be required to disclose under the Registration Statement, then
        the
        Company may suspend effectiveness of a Registration Statement filed pursuant
        to
        this Warrant and suspend the sale of Conversion Shares under such Registration
        Statement for a period not to exceed twenty (20) consecutive calendar days,
        provided that the Company may not suspend its obligation pursuant to this
        Section 5.3.e for more than forty (40) calendar days in the aggregate during
        any
        twelve (12) month period (each, a "Blackout Period"); provided, however,
        that no
        such suspension shall be permitted for more than one twenty (20) calendar
        day
        period, arising out of the same set of facts, circumstances or
        transactions.

      

      f.    As
        promptly as practicable, but in no event later than five (5) business days,
        after becoming aware of such event, the Company shall notify each Holder
        of the
        occurrence of any event (where filing and delivery of a Form 8-K shall
        constitute compliance) of which the Company has knowledge, as a result of
        which
        the prospectus included in the Registration Statement, as then in effect,
        includes an untrue statement of a material fact or omission to state a material
        fact required to be stated therein or necessary to make the statements therein
        not misleading, and, use its commercially reasonable efforts promptly to
        prepare
        a supplement or amendment to the Registration Statement to correct such untrue
        statement or omission, and deliver such number of copies of such supplement
        or
        amendment to each Holder as such Holder may reasonably request.

       

      
        
           

        

        
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      g.    The
        Company shall use its commercially reasonable efforts (i) to prevent the
        issuance of any stop order or other suspension of effectiveness of a
        Registration Statement, and, if such an order is issued, to obtain the
        withdrawal of such order at the earliest practicable moment (including in
        each
        case by amending or supplementing such Registration Statement) and (ii) to
        notify each Holder who holds Warrant Shares being sold (or, in the event
        of an
        underwritten offering, the managing underwriters) of the issuance of such
        order
        and the resolution thereof (and if such Registration Statement is supplemented
        or amended, deliver such number of copies of such supplement or amendment
        to
        each Holder as such Holder may reasonably request).

      

      h.    The
        Company shall permit a single firm of counsel designated by the Holders of
        the
        Warrants holding a majority in interest of the Warrant Shares to review the
        Registration Statement and all amendments and supplements thereto a reasonable
        period of time prior to its filing with the SEC, and not file any document
        in a
        form to which such counsel reasonably objects.

      

      i.    The
        Company shall make generally available to its security holders as soon as
        practical, but not later than ninety (90) days after the close of the period
        covered thereby, an earnings statement (in form complying with the provisions
        of
        Rule 158 under the Securities Act) covering a twelve-month period beginning
        not
        later than the first day of the Company's fiscal quarter next following the
        effective date of the Registration Statement.

      

      j.    At
        the
        request of any Holder in the case of an underwritten public offering, the
        Company shall furnish, on the date of effectiveness of the Registration
        Statement (i) an opinion, dated as of such date, from counsel representing
        the
        Company addressed to the Holders and in form, scope and substance as is
        customarily given in an underwritten public offering and (ii) a letter, dated
        such date, from the Company's independent certified public accountants in
        form
        and substance as is customarily given by independent certified public
        accountants to underwriters in an underwritten public offering, addressed
        to the
        underwriters and the Holders.

      

      k.    To
        the
        extent permitted by law, the Company shall make available for inspection
        by (i)
        any Holder, (ii) any underwriter participating in any disposition pursuant
        to
        the Registration Statement filed pursuant to Section 5, (iii) one firm of
        attorneys and one firm of accountants or other agents retained by the Holders,
        and '(iv) one firm of attorneys retained by all such underwriters collectively,
        the "Inspectors"), all reasonably pertinent financial and other records,
        and
        pertinent corporate documents and properties of the Company (collectively,
        the
        "Records"), as shall be reasonably deemed necessary by each Inspector to
        enable
        each Inspector to exercise its due diligence responsibility, and cause the
        Company's officers, directors and employees to supply all information which
        any
        Inspector may reasonably request for purposes of such due diligence; provided,
        however, that each Inspector shall hold in confidence and shall not make
        any
        disclosure (except to an Holder) of any Record or other information which
        the
        Company provides in accordance with this Section 5.3(k), unless (a) the
        disclosure of such Records is necessary to avoid or correct a misstatement
        or
        omission in any Registration Statement, (b) the release of such Records is
        ordered pursuant to a subpoena or other order from a court or government
        body of
        competent jurisdiction, or (c) the information in such Records has been made
        generally available to the public other than by disclosure in violation of
        this
        Note or any other agreement. The Company shall not be required to disclose
        any
        confidential information in such Records to any Inspector until and unless
        such
        Inspector and its respective Holder shall have entered into confidentiality
        agreements (in form and substance satisfactory to the Company) with the Company
        with respect thereto, substantially in the form of this Section 5.3(k). Each
        Holder agrees that it shall, upon learning that disclosure of such Records
        is
        sought in or by a court or governmental body of competent jurisdiction or
        through other means, give prompt notice to the Company and allow the Company,
        at
        its expense, to undertake appropriate action to prevent disclosure of, or
        to
        obtain a protective order for, the Records deemed confidential. Nothing herein
        shall be deemed to limit the Holders' ability to sell Conversion Shares in
        a
        manner which is otherwise consistent with applicable laws and
        regulations.

       

      
        
           

        

        
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      l.    The
        Company shall hold in confidence and not make any disclosure of information
        concerning a Holder provided to the Company unless (i) disclosure of such
        information is necessary to comply with federal or state securities laws,
        (ii)
        the disclosure of such information is necessary to avoid or correct a
        misstatement or omission in any Registration Statement, (iii) the release
        of
        such information is ordered pursuant to a subpoena or other order from a
        court
        or governmental body of competent jurisdiction, (iv) such information has
        been
        made generally available to the public other than by disclosure in violation
        of
        this or any other agreement, or (v) such Holder consents to the form and
        content
        of any such disclosure. The Company agrees that it shall, upon learning that
        disclosure of such information concerning an Holder is sought in or by a
        court
        or governmental body of competent jurisdiction or through other means, give
        prompt notice to such Holder prior to making such disclosure, and allow the
        Holder, at its expense, to undertake appropriate action to prevent disclosure
        of, or to obtain a protective order for, such information.

       

      m.    The
        Company shall use its commercially reasonable efforts to promptly either
        (i)
        cause all of the Warrant Shares covered by the Registration Statement to
        be
        listed on the American Stock Exchange or another national securities exchange
        and on each additional national securities exchange on which securities of
        the
        same class or series issued by the Company are then listed, if any, if the
        listing of such Warrant Shares is then permitted under the rules of such
        exchange, or (ii) secure the designation and quotation of all of the Warrant
        Shares covered by the Registration Statement on the Nasdaq National Market
        or
        Nasdaq SmallCap Market.

      

      n.    The
        Company shall provide a transfer agent and registrar, which may be a single
        entity, for the Warrant Shares not later than the effective date of the
        Registration Statement.

      

      o.    The
        Company shall cooperate with the Holders who hold Warrant Shares being offered
        and the managing underwriter or underwriters, if any, to facilitate the timely
        preparation and delivery of certificates (not bearing any restrictive legends)
        representing Warrant Shares to be offered pursuant to the Registration Statement
        and enable such certificates to be in such denominations or amounts, as the
        case
        may be, as the managing underwriter or underwriters, if any, or the Holders
        may
        reasonably request and registered in such names as the managing underwriter
        or
        underwriters, if any, or the Holders may request, and, within three (3) business
        days after the Registration Statement which includes Warrant Shares is declared
        effective by the SEC, the Company shall cause legal counsel selected by the
        Company to deliver, to the transfer agent for the Warrant Shares (with copies
        to
        the Holders whose Warrant Shares are included in such Registration Statement),
        an opinion of such counsel in the customary form setting forth that the Warrant
        Shares have been registered under the Securities Act.

      

      p.    At
        the
        request of any Holder, the Company shall prepare and file with the SEC such
        amendments (including post effective amendments) and supplements to a
        Registration Statement and the prospectus used in connection with such
        Registration Statement as may be reasonably necessary in order to change
        the
        plan of distribution set forth in such Registration Statement.

      

      q.    The
        Company shall comply with all applicable laws related to a Registration
        Statement and offering and sale of securities and all applicable rules and
        regulations of governmental authorities in connection therewith (including,
        without limitation, the Securities Act and the Securities Exchange Act of
        1934,
        as amended (the "Exchange Act"), and the rules and regulations promulgated
        by
        the SEC).

      

      r.    From
        and
        after the date of this Note, the Company shall not, and shall not agree to,
        allow the holders of any securities of the Company to include any of their
        securities that are not Warrant Shares in the Registration Statement or any
        amendment or supplement thereto without the consent of the holders of a majority
        in interest of the Warrant Shares.

       

      
        
           

        

        
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      5.4.    Fees.
        The
        Company shall pay all Registration Expenses relating to any registration
        of the
        Warrant Shares hereunder. "Registration Expenses" shall mean all reasonable
        fees
        and expenses incident to Obligor's performance of or compliance with this
        Section 5, including reasonable fees of counsel, not exceeding $25,000, in
        connection with the sale of the Warrant Shares. Notwithstanding the foregoing,
        the Holder shall pay any and all underwriting discounts, commissions and
        transfer taxes attributable to the Warrant Shares.

      

      5.5.    Cooperation. 
        Indemnification by the Holder. In connection with any registration statement
        in
        which the Holder is participating, the Holder will furnish to the Company
        in
        writing such information and documents as the Company reasonably requests
        for
        use in connection with any such registration statement or prospectus and,
        to the
        extent permitted by law, will indemnify and hold harmless the Company, its
        affiliates and their respective officers, directors, employees and affiliates
        against any losses, claims, damages, liabilities, joint or several, to which
        such parties may become subject under the Securities Act or otherwise, insofar
        as such losses, claims, damages or liabilities (or actions or proceedings,
        whether commenced or threatened, in respect thereof) arise out of or are
        based
        upon: (1) any untrue or alleged untrue statement of a material fact contained
        in
        the registration statement, prospectus or preliminary prospectus or any
        amendment thereof or supplement thereto or in any application; or (2) any
        omission or alleged omission of a material fact required to be stated therein
        or
        necessary to make the statements therein not misleading, but only to the
        extent
        that such untrue statement or omission is made in such registration statement,
        prospectus, preliminary prospectus or any amendment or supplement thereto,
        or in
        any application, in reliance upon and in conformity with written information
        prepared and furnished to the Company by such Holder expressly for use therein.
        The Holder shall reimburse the Company, its affiliates, officers, directors,
        employees and affiliates for any legal or any other expenses incurred by
        them in
        connection with investigating or defending any such loss, claim, liability,
        action or proceeding; provided, however, that the obligation to indemnify
        will
        be limited to the Holder in amount not to exceed the net proceeds to the
        Holder
        from the sale of such Warrant Shares and shall not apply to amounts paid
        in
        settlement of any such loss, claim, damage, liability, or action if such
        settlement is effected without the consent of the Holder (which consent shall
        not be unreasonably withheld).

      

      5.6.    Indemnification
        by
        Obligor.
        In
        connection with any registration statement in which the Holder is participating,
        the Company will indemnify and hold harmless the Holder, its affiliates and
        their respective officers, directors, employees and affiliates against any
        losses, claims, damages, liabilities, joint or several, to which such parties
        may become subject under the Securities Act or otherwise, insofar as such
        losses, claims, damages or liabilities (or actions or proceedings, whether
        commenced or threatened, in respect thereof) arise out of or are based upon:
        (1)
        any untrue or alleged untrue statement of a material fact contained in the
        registration statement, prospectus or preliminary prospectus or any amendment
        thereof or supplement thereto or in any application; or (2) any omission
        or
        alleged omission of a material fact required to be stated therein or necessary
        to make the statements therein not misleading, unless such untrue statement
        or
        omission is made in such registration statement, prospectus, preliminary
        prospectus or any amendment or supplement thereto, or in any application,
        in
        reliance upon and in conformity with written information prepared and furnished
        to the Company by Holder expressly for use therein. The Company shall reimburse
        the Holder, its affiliates, officers, directors, employees and affiliates
        for
        any legal or any other expenses incurred by them in connection with
        investigating or defending any such loss, claim, liability, action or
        proceeding; provided, however, that the obligation to indemnify will be limited
        to the Company and shall not apply to amounts paid in settlement of any such
        loss, claim, damage, liability, or action if such settlement is effected
        without
        the consent of the Company (which consent shall not be unreasonably
        withheld).

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      

      6.    RIGHTS
        AND OBLIGATIONS OF THE HOLDER.
        The
        Holder shall not, by virtue of this Warrant, be entitled to any rights of
        a
        stockholder of the Company, either at law or equity, and the rights of the
        Holder are limited to those expressed in this Warrant and are not enforceable
        against the Company except to the extent set forth herein. In addition, no
        provision hereof, in the absence of affirmative action by the Holder to purchase
        shares of Common Stock, and no enumeration herein of the rights or privileges
        of
        the Holder hereof shall give rise to any liability of such Holder for the
        purchase price of any Common Stock or as a stockholder of the Company, whether
        such liability is asserted by the Company or by creditors of the
        Company.

       

      7.    ANTI-DILUTION
        PROVISIONS.
        The
        Warrant Exercise Price in effect at any time and the number and kind of
        securities purchasable upon exercise of each Warrant, shall be subject to
        adjustment as follows. The Company shall give each Holder notice of any event
        described below which requires an adjustment pursuant to this Section 7 at
        the
        time of such event:

       

      (a)    Stock
        Dividends, Subdivisions and Combinations.
        If at
        any time the Company shall:

       

      (i)    take
        a
        record of the holders of its Common Stock for the purpose of entitling them
        to
        receive a dividend payable in, or other distribution of, shares of Common
        Stock,

      (ii)    subdivide
        or reclassify its outstanding shares of Common Stock into a larger number
        of
        shares of Common Stock, or 

      

      (iii)    combine
        or reclassify its outstanding shares of Common Stock into a smaller number
        of
        shares of Common Stock or otherwise effect a reverse stock split, then:

       

      (A)    the
        number of
        shares of Common Stock for which this Warrant is exercisable immediately
        after
        the occurrence of any such event shall be adjusted to equal the number of
        shares
        of Common Stock which a record holder of the same number of shares of Common
        Stock for which this Warrant is exercisable immediately prior to the occurrence
        of such event, or the record date therefor, whichever is earlier, would own
        or
        be entitled to receive after the happening of such event, and (B) the Warrant
        Exercise Price shall be adjusted to equal: (x) the Warrant Exercise Price
        immediately prior to such event multiplied by the number of shares of Common
        Stock for which this Warrant is exercisable immediately prior to the adjustment
        divided by (y) the number of shares for which this Warrant is exercisable
        immediately after such adjustment.

       

      (b)    Certain
        Other Distributions and Adjustments.
        

       

      (i)    If
        at any
        time the Company shall take a record of the holders of its Common Stock for
        the
        purpose of entitling them to receive any dividend or other distribution of:
        

       

      (A)    cash,

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

       

      (B)    any
        evidences
        of its indebtedness, any shares of its capital stock or any other securities
        or
        property of any nature whatsoever (other than Convertible Securities or shares
        of Common Stock), or

       

      (C)    any
        warrants
        or other rights to subscribe for or purchase any evidences of its indebtedness,
        any shares of its stock or any other securities or property of any nature
        whatsoever (other than Convertible Securities or shares of Common
        Stock),

       

      the
        Holder shall be entitled to receive such dividend or distribution as if the
        Holder had exercised this Warrant.

       

      (ii)    A
        reclassification of the Common Stock (other than a change in par value, or
        from
        par value to no par value or from no par value to par value) into shares
        of
        Common Stock and shares of any other class of stock shall be deemed a
        distribution by the Company to the holders of its Common Stock of such shares
        of
        such other class of stock and in such event the Holder shall be entitled
        to
        receive such distribution as if the Holder had exercised this Warrant and,
        if
        the outstanding shares of Common Stock shall be changed into a larger or
        smaller
        number of shares of Common Stock as a part of such reclassification, such
        change
        shall be deemed a subdivision or combination, as the case may be, of the
        outstanding shares of Common Stock within the meaning of Section
        7(a).

      

      (c)    Issuance
        of Warrants or Other Rights.
        

       

      (i)    If
        at any
        time the Company shall take a record of the holders of its Common Stock for
        the
        purpose of entitling them to receive a distribution of, or shall in any manner
        (whether directly or by assumption in a merger in which the Company is the
        surviving corporation) issue or sell, any warrants or other rights to subscribe
        for or purchase any shares of Common Stock or any Convertible Securities,
        whether or not the rights to exchange or convert thereunder are immediately
        exercisable, and the price per share for which Common Stock is issuable upon
        the
        exercise of such warrants or other rights or upon conversion or exchange
        of such
        Convertible Securities shall be less than the Common Stock Purchase Price,
        then
        the number of shares for which this Warrant is exercisable and the Warrant
        Exercise Price shall be adjusted on the basis that the maximum number of
        shares
        of Common Stock issuable pursuant to all such warrants or other rights or
        necessary to effect the conversion or exchange of all such Convertible
        Securities shall be deemed to have been issued and outstanding and the Company
        shall be deemed to have received all the consideration payable therefor,
        if any,
        as of the date of issuance of such warrants or other rights. No further
        adjustment of the Warrant Exercise Price(s) shall be made upon the actual
        issue
        of such Common Stock or of such Convertible Securities upon exercise of such
        warrants or other rights or upon the actual issuance of such Common Stock
        upon
        such conversion or exchange of such Convertible Securities.

       

      (ii)    If
        at any
        time the Company shall take a record of the holders of its Common Stock for
        the
        purpose of entitling them to receive a distribution of, or shall in any manner
        (whether directly or by assumption in a merger in which the Company is the
        surviving corporation) issue or sell, any warrants or other rights to subscribe
        for or purchase any shares of Common Stock or any Convertible Securities,
        whether or not the rights to exchange or convert thereunder are immediately
        exercisable, and the price per share for which Common Stock is issuable upon
        the
        exercise of such warrants or other rights or upon conversion or exchange
        of such
        Convertible Securities shall be equal to or more than the Common Stock Purchase
        Price, but less than the Warrant Exercise Price, then the Warrant Exercise
        Price
        shall be adjusted downward to match the exercise price of such new warrants
        or
        other rights.

       

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

       

      (d)    Superseding
        Adjustment.
        If at
        any time after any adjustment of the number of shares of Common Stock for
        which
        this Warrant is exercisable and the Warrant Exercise Price(s) shall have
        been
        made pursuant to Section 7(c) as the result of any issuance of warrants,
        rights
        or Convertible Securities, 

      

      (i)    such
        warrants or rights, or the right of conversion or exchange in such other
        Convertible Securities, shall expire, and all or a portion of such warrants
        or
        rights, or the right of conversion or exchange with respect to all or a portion
        of such other Convertible Securities, as the case may be, shall not have
        been
        exercised, or

      

      (ii)    the
        consideration per share for which shares of Common Stock are issuable pursuant
        to such warrants or rights, or the terms of such other Convertible Securities,
        shall be increased solely by virtue of provisions therein contained for an
        automatic increase in such consideration per share upon the occurrence of
        a
        specified date or event, then for each outstanding Warrant such previous
        adjustment shall be rescinded and annulled and the shares of Common Stock
        which
        were deemed to have been issued by virtue of the computation made in connection
        with the adjustment so rescinded and annulled shall no longer be deemed to
        have
        been issued by virtue of such computation made in connection with the adjustment
        so rescinded and annulled shall no longer be deemed to have been issued by
        virtue of such computation. Thereupon, a re-computation shall be made of
        the
        effect of such rights or options or other Convertible Securities on the basis
        of:

      

      (A)    treating
        the number of shares of Common Stock or other property, if any, theretofore
        actually issued or issuable pursuant to the previous exercise of any such
        warrants or rights or any such right of conversion or exchange, as having
        been
        issued on the date or dates of any such exercise and for the consideration
        actually received and receivable therefor, and

       

      (B)    treating
        any
        such warrants or rights or any such other Convertible Securities which then
        remain outstanding as having been granted or issued immediately after the
        time
        of such increase of the consideration per share for which shares of Common
        Stock
        or other property are issuable under such warrants or rights or other
        convertible Securities; whereupon a new adjustment of the number of shares
        of
        Common Stock for which this Warrant is exercisable and the Warrant Exercise
        Price(s) shall be made, which new adjustment shall supersede the previous
        adjustment so rescinded and annulled.

      

      (e)    No
        adjustment in the Warrant Exercise Price shall be required unless such
        adjustment would require an increase or decrease of at least One Cent ($0.01)
        in
        such price; provided, however, that any adjustments which by reason of this
        Section 6(f) are not required to be made shall be carried forward and taken
        into
        account in any subsequent adjustment. All calculations under this Section
        7(e)
        shall be made to the nearest cent or to the nearest one-hundredth of a share,
        as
        the case may be. 

       

      (f)    The
        Company may retain a firm of independent public accountants of recognized
        standing selected by the Board (who may be the regular accountants employed
        by
        the Company) to make any computation required by this Section 7.

      

      (g)    In
        the
        event that at any time, as a result of an adjustment made pursuant to Section
        6(a) or 6(b) of this Warrant, the Holder of any Warrant thereafter shall
        become
        entitled to receive any shares of the Company's capital stock, other than
        Common
        Stock, thereafter the number of such other shares so receivable upon exercise
        of
        this Warrant shall be subject to adjustment from time to time in a manner
        and on
        terms as nearly equivalent as practicable to the provisions with respect
        to the
        Common Stock contained in Sections 6(a) through (h), inclusive, of this
        Warrant.

       

       

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

       

      8.    OFFICER'S
        CERTIFICATE.
        Whenever the Warrant Exercise Price(s) shall be adjusted as required by the
        provisions of Section 7 of this Warrant, the Company shall forthwith file
        in the
        custody of its Secretary or an Assistant Secretary at its principal office
        and
        with its stock transfer agent, if any, an officer's certificate showing the
        adjusted Warrant Exercise Price(s) and the adjusted number of shares of Common
        Stock issuable upon exercise of this Warrant, determined as herein provided,
        setting forth in reasonable detail the facts requiring such adjustment,
        including a statement of the number of additional shares of Common Stock,
        if
        any, and such other facts as shall be necessary to show the reason for and
        the
        manner of computing such adjustment. Each such officer's certificate shall
        be
        forwarded to the Holder in the manner provided in Section 13 hereof.

       

      9.    NOTICES
        TO WARRANT HOLDERS.
        So long
        as this Warrant shall be outstanding, (a) if the Company shall pay any dividend
        or make any distribution upon Common Stock, or (b) if the Company shall offer
        to
        the holders of Common Stock for subscription or purchase by them any share
        of
        any class or any other rights, or (c) if any capital reorganization of the
        Company, reclassification of the capital stock of the Company, consolidation
        or
        merger of the Company with or into another entity, tender offer transaction
        for
        the Company's Common Stock, sale, lease or transfer of all or substantially
        all
        of the property and assets of the Company, or voluntary or involuntary
        dissolution, liquidation or winding up of the Company shall be effected,
        or (d)
        if the Company shall file a registration statement under the Securities Act,
        on
        any form other than on Form S-4 or S-8 or any successor form, then in any
        such
        case, the Company shall cause to be mailed by certified mail to the Holder,
        at
        least ten (10) days prior to the date specified in clauses (a), (b), (c)
        or (d),
        as the case may be, of this Section 9 a notice containing a brief description
        of
        the proposed action and stating the date on which (i) a record is to be taken
        for the purpose of such dividend, distribution or rights, or (ii) such
        reclassification, reorganization, consolidation, merger, tender offer
        transaction, conveyance, lease, dissolution, liquidation or winding up is
        to
        take place and the date, if any is to be fixed, as of which the holders of
        Common Stock or other securities shall receive cash or other property
        deliverable upon such reclassification, reorganization, consolidation, merger,
        conveyance, dissolution, liquidation or winding up, or (iii) such registration
        statement is to be filed with the Commission.

      

      10.    RECLASSIFICATION,
        REORGANIZATION OR MERGER.
        In case
        of any reclassification, capital reorganization or other change of outstanding
        shares of Common Stock of the Company, or in case of any consolidation or
        merger
        of the Company with or into another corporation (other than a merger with
        a
        subsidiary in which merger the Company is the continuing or surviving
        corporation and which does not result in any reclassification, capital
        reorganization or other change of outstanding shares of Common Stock of the
        class issuable upon exercise of this Warrant) or in case of any sale, lease
        or
        conveyance of all or substantially all of the assets of the Company, the
        Company
        shall, as a condition precedent to such transaction, cause effective provisions
        to be made so that (i) the Holder shall have the right thereafter by exercising
        this Warrant, to purchase the kind and amount of shares of stock and other
        securities and property receivable upon such reclassification, capital
        reorganization and other change, consolidation, merger, sale or conveyance
        by a
        holder of the number of shares of Common Stock which could have been purchased
        upon exercise of this Warrant immediately prior to such reclassification,
        change, consolidation, merger, sale or conveyance, and (ii) the successor
        or
        acquiring entity shall expressly assume the due and punctual observance and
        performance of each covenant and condition of this Warrant to be performed
        and
        observed by the Company and all obligations and liabilities hereunder. Any
        such
        provision shall include provision for adjustments which shall be as nearly
        equivalent as possible to the adjustments provided for in this Warrant. The
        foregoing provisions of this Section 10 shall similarly apply to successive
        reclassifications, capital reorganizations and changes of shares of Common
        Stock
        and to successive consolidations, mergers, sales or conveyances.

       

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

      

      11.    GOVERNING
        LAW; JURISDICTION.
        The
        corporate laws of the State of Nevada shall govern all issues concerning
        the
        relative rights of the Company and its stockholders. All issues concerning
        the
        construction, validity, enforcement and interpretation of this Warrant shall
        be
        governed by and construed in accordance with the internal laws of the State
        of
        Nevada without giving effect to the principles of conflicts of law thereof.
        The
        parties hereto agree that venue in any and all actions and proceedings related
        to the subject matter of this Warrant shall be in the state and federal courts
        in and for Clark County, Nevada, which courts shall have exclusive jurisdiction
        for such purpose, and the parties hereto irrevocably submit to the exclusive
        jurisdiction of such courts and irrevocably waive the defense of an inconvenient
        forum to the maintenance of any such action or proceeding. Service of process
        may be made in any manner recognized by such courts. This Warrant and any
        term
        hereof may be changed, waived, discharged or terminated only by an instrument
        in
        writing signed by the party against which enforcement of the change, waiver,
        discharge or termination is sought.

      

      12.    NOTICES.
        Except
        as provided in Section 9 hereof, any and all notices or other communications
        or
        deliveries required or permitted to be provided hereunder shall be in writing
        and shall be deemed given and effective on the earliest of (a) the date of
        transmission, if such notice or communication is delivered via facsimile
        at the
        facsimile telephone number specified in this Section prior to 5:00 p.m. (Pacific
        Standard Time) on a Business Day, (b) the Business Day after the date of
        transmission, if such notice or communication is delivered via facsimile
        at the
        facsimile telephone number specified in this Agreement later than 5:00 p.m.
        (Pacific Standard Time) on any date and earlier than 11:59 p.m. (Pacific
        Standard Time) on such date, (c) the Business Day following the date of mailing,
        if sent by nationally recognized overnight courier service, or (d) upon actual
        receipt by the party to whom such notice is required to be given. The address
        for such notices and communications shall be as follows:

      
        	 	 	 
	 	If to the Company:	VendingData
                Corporation
	 	 	6830
                Spencer Street
	 	 	Las Vegas, NV 89119
	 	 	Attention:
                Arnold Galassi
	 	 	Phone: 702-733-7195
	 	 	Fax:
                702-733-7197
	 	 	 
	 	If to the Holder 	To
                the Address Set Forth In the Records of the Company
	 	 	 
	 	With copies to:	Craig H. Norville, Esq.
	 	 	Jones Vargas
	 	 	3773 Howard Hughes Parkway, Third
                Floor
                South
	 	 	Las
                Vegas, Nevada 89109
	 	 	Phone:
                702-862-3300
	 	 	Fax:
                702-734-2722

      

       

       

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

       

      13.    PAYMENT
        OF TAXES.
        The
        Company will pay the cost of all applicable documentary stamp taxes, if any,
        attributable to the issuance of shares of Common Stock underlying this Warrant
        upon exercise of this Warrant; provided, however, that the Company shall
        not be
        required to pay any tax which may be payable in respect of any transfer involved
        in the registration of any certificate for shares of Common Stock underlying
        this Warrant in a name other that of the Holder. The Holder is responsible
        for
        all other tax liability that may arise as a result of holding or transferring
        this Warrant or receiving shares of Common Stock underlying this Warrant
        upon
        exercise hereof.

      

      14.    INCONSISTENCIES.
        To the
        extent there are any inconsistencies between the terms and provisions of
        this
        Warrant and the terms and provisions of the Credit Agreement, the terms and
        provisions of this Warrant shall govern and be controlling.

      

      IN
        WITNESS WHEREOF,
        this
        Warrant has been duly executed as of October 6, 2005.

      

      

      VENDINGDATA
        CORPORATION,

      a
        Nevada
        corporation

       

      ______________________________

      By:
        ___________________________

      Its:
        ___________________________

      

      
        
          
          

        

          -14-EXHIBIT
      10.4

    

     

    EMPLOYMENT
      AGREEMENT

     

    This
      Employment Agreement (this
      “Agreement”), dated as of the 29th
      day of
      September, 2005, between VendingData Corporation, a Nevada corporation (together
      with its successors or assigns as permitted under this Agreement, the
“Company”), and Mark Newburg, an individual (the “Executive”).

     

    RECITALS

     

    The
      Company desires to employ the Executive and enter into this Agreement embodying
      the terms of such employment and the Executive desires to enter into this
      Agreement and to accept such employment.

     

    In
      consideration of the mutual covenants and for other good and valuable
      consideration, the Company and the Executive (individually a “Party” and
      together the “Parties”) agree as follows:

     

    Definitions

     

    (a)    “Base
      Salary”
      shall
      mean the salary provided for in Section 4
      below
      subject to such increases as may be made from time to time. 

     

    (b)    “Cause”
      shall
      mean:

     

    (i)  the
      conviction of (including any act as a result of pleading nolo contendere) or
      entry of judgment against the Executive by a civil or criminal court of
      competent jurisdiction of a felony, or any other offense or wrongdoing involving
      embezzlement, fraud, misappropriation of funds, any act of moral turpitude
      or
      dishonesty; 

     

    (ii)  the
      indictment of the Executive by a state or federal grand jury or the filing
      of a
      criminal complaint or information for a felony, or any other offense involving
      embezzlement, fraud, misappropriation of funds, any act of moral turpitude
      or
      dishonesty, unless such indictment or filing is dismissed within one hundred
      eighty (180) days from the date of such indictment or filing.  The Board
      may elect to suspend and extend the Term of Employment by such one hundred
      eighty (180) day period or the number of days actually taken by the Executive
      to
      dismiss such indictment or filing, whichever is less; provided that the
      Executive notifies the Company in writing that the Executive intends to contest
      in good faith such indictment or filing and pursues the dismissal of such
      indictment or filing with reasonable diligence.  During such period
      of
      suspension, Executive may be relieved of duties, but shall be entitled to
      receive Base Salary;     

     

    (iii)  the
      written confession by the Executive of embezzlement, fraud, misappropriation
      of
      funds, any act of moral turpitude or dishonesty or acts constituting a
      felony;

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    (iv)  the
      finding by a court of competent jurisdiction in a criminal or civil action
      or by
      the U.S. Securities and Exchange Commission or state blue sky agency in an
      administrative proceeding that the Executive has willfully violated any federal
      or state securities law; 

     

    (v)  the
      engagement by the Executive in willful and continued misconduct, or the
      Executive’s willful and continued failure
      to
      substantially
      perform
      the
      Executive’s obligations;

     

    (vi)  the
      use
      by the Executive of alcohol or any controlled substance to an extent that it
      interferes, in the sole discretion of the Board, on a continuing and material
      basis
      with the
      performance of the
      Executive’s duties under the Agreement;

     

    (vii)  the
      willful, unauthorized disclosure by the Executive of Confidential Information,
      as defined in Section 12, concerning the Company or any Subsidiary,
      unless
      such disclosure was (A) believed in good faith by the Executive to be
      appropriate in the course of properly carrying out duties under the Agreement,
      or (B) required by an 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) or any governmental or administrative
      agency; 

     

    (viii)  performance
      of services by the Executive, other than in the course of properly carrying
      out
      his or her duties under the Agreement and as otherwise provided herein, for
      any
      other corporation or person that competes with the Company while the Executive
      is employed by
      the
      Company

     

    (ix)  misconduct
      in connection with the performance of any of Executive's duties, including,
      without limitation, misappropriation of funds or property of the Company,
      securing or attempting to secure personally any profit in connection with any
      transaction entered into on behalf of the Company, misrepresentation to the
      Company, or any violation of law or regulations on Company premises or to which
      the Company is subject; 

     

    (x)  commission
      by Executive of an act involving moral turpitude, dishonesty, theft or unethical
      business conduct, or conduct which impairs or injures the reputation of, or
      harms, the Company;

     

    (xi)  disloyalty
      by Executive, including without limitation, aiding a competitor; 

     

    (xii)  any
      breach of this Agreement or Company rules; or

     

    (xiii)  any
      other
      bad act or misconduct by Executive; 

     

    (c)    “Change
      in Control”
      means,
      and shall be deemed to occur upon the happening of the acquisition, directly
      or
      indirectly, in a single transaction or a series of related transactions by
      any
      person resulting in the beneficial ownership of 50% or more of the combined
      voting power of the then outstanding voting securities of the Company entitled
      to vote;

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (d)    “Term
      of Employment”
      shall
      mean the initial two-year period specified in Section 2
      below
      and if, but only if, automatically renewed as provided in
      Section 2,
      shall
      include the period of such renewal.

     

    (e)  “Voting
      Securities”
      means
      securities of the Company, the holders of which are entitled to vote for the
      election of directors.

     

    Term
      of Employment

     

    (a)  The
      Company hereby employs the Executive, and the Executive hereby accepts
      employment with the Company, in the position and with the duties and
      responsibilities as set forth in Section 3
      below
      for the Term of Employment, subject to the terms and conditions of the
      Agreement.

     

    (b)  The
      initial Term of Employment shall commence on September 29th,
      2005
      and shall terminate on September 30, 2007, unless terminated earlier as provided
      in Section 8; provided that the Term of Employment shall automatically
      renew for successive one-year periods unless (i) it has sooner terminated
      as provided in Section 8 or (ii) either party has notified the
      other
      in writing at least thirty (30) days prior to the otherwise scheduled expiration
      of the Term of Employment that such Term of Employment shall not so
      renew.

     

    Position,
      Duties and Authorities

     

    During
      the Term of Employment, the Executive shall be employed as the President and
      Chief Executive Officer of the Company. Subject to supervision and in accordance
      with the policies and directives established by the Board of Directors, the
      Executive’s duties and responsibilities shall include those duties set forth on
      Exhibit ‘A’, attached hereto, and such other duties, responsibilities and
      authorities customarily associated with such positions. 

     

    Base
      Salary

     

    During
      the Term of Employment, the Executive shall be paid by the Company a Base Salary
      payable no less frequently than in equal monthly installments at an annualized
      rate of $250,000.00; subject to increase as may be determined by the Company
      within its sole discretion.

     

    Options

     

    Executive
      will receive options (“Options”) to purchase 750,000 shares of the Company’s
      common stock at an exercise price of $1.34 per share, which options shall be
      exercisable upon a Change in Control, and which Options vest upon a Change
      in
      Control. Except for any conflicting provisions in this Agreement, which shall
      prevail, the Options shall be issued under and governed by the terms of the
      Company’s 1999 Stock Option Plan. These Options are intended to benefit
      Executive upon a Change in Control, and are in addition to stock options already
      granted to Executive in connection with Executive’s employment.

     

    Bonus

     

    The
      Executive will be entitled to receive a performance-based bonus of up to 50%
      of
      the Executive’s annual Base Salary for the calendar year commencing January 1,
      2006 and for each calendar year during the remainder of the Term of Employment.
      The performance bonus shall be subject to the Executive’s satisfaction of
      certain performance goals determined by the Board of Directors. Prior to January
      1, 2006 and the commencement of each calendar year thereafter during the
      remainder of the Term of Employment, the Board of Directors shall determine,
      in
      its sole and absolute discretion, the performance goals for the Executive and
      deliver a written description of those goals to Executive. The written
      description shall be incorporated into and become a part of this Agreement.
      All
      payments of bonuses earned during any calendar year shall be due and payable
      no
      later than March 31st
      of the
      following year. The determination of whether the Executive has satisfied the
      performance goals shall be made by the Board of Directors in its reasonable
      discretion.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    For
      the
      calendar year 2005, Executive shall receive a signing bonus in the amount of
      $75,000.00 in lieu of a performance bonus. The one-time signing bonus shall
      be
      earned upon the execution of this Agreement and payable one-half ($37,500.00)
      upon execution and the remaining one-half ($37,500.00) on or after December
      15,
      2005, at Executive’s discretion.

     

    Employee
      Benefit Programs

     

    During
      the Term of Employment, the Executive and his dependents shall be entitled
      to
      participate in, at the Company’s expense, whatever employee benefit plans the
      Company endorses to obtain, if any, such as medical, surgical, hospitalization,
      dental and visual insurance coverage. The Company will pay all expenses for
      these insurance program(s) or plan(s).

     

    Termination
      of Employment

     

    (a)    Termination
      by the Company for Cause.
      At any
      time after learning of an event constituting Cause, the Company may elect to
      give the Executive written notice of its intention to terminate for Cause,
      specifying in such notice the event forming the basis for Cause. Termination
      shall be effective immediately upon delivery of notice hereunder. In the event
      the Executive’s employment is terminated by the Company for Cause, the Executive
      shall be entitled only to:

     

    (i)    Base
      Salary, at the rate in effect at the time of termination, accrued and payable
      through the date of termination of employment;

     

    (ii)    reimbursement
      for expenses incurred but not yet reimbursed by the Company; and

     

    (iii)    any
      other
      compensation and benefits accrued and to which the Executive is entitled under
      applicable plans, programs and agreements of the Company as of the date of
      termination of employment.

     

    The
      Executive’s entitlement to the foregoing shall be without prejudice to the right
      of the Company to claim or sue for any damages or other legal or equitable
      remedy to which the Company may be entitled as a result of such Cause; provided,
      however, that offset shall not be available to the Company in any
      event.

     

    (b)    Termination
      Without Cause.
      In the
      event the Executive’s employment is terminated by the Company without Cause
      (which shall not include a termination pursuant to Section 8(a)), the
      Executive shall be entitled only to those items described in the subsections
      (i)
      through (vi) below. Termination Without Cause shall be effective immediately,
      unless a later date is stated, upon delivery of a written notice of such
      termination from the Company to the Executive.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (i)  Base
      Salary, at the rate in effect at the time of termination, accrued and payable
      through the date of termination of employment;

     

    (ii)  an
      amount
      equal to the greater of (a) the Base Salary owing over the balance of the term
      of this agreement or (b) 12 months’ Base Salary (Base Salary as used in this
      section shall be determined at the rate of compensation in effect as of the
      date
      of termination Without Cause) (the “Base Salary Termination
      Payment”);

     

    (iii)  in
      lieu
      of any bonus under Section 6, an amount equal to 50% of the Base Salary
      Termination Payment; 

     

    (iv)  reimbursement
      for expenses incurred but not yet reimbursed by the Company; 

     

    (v)  any
      amounts due to the Executive under Section 9; and

     

    (vi)  any
      other
      compensation and benefits accrued and to which the Executive is entitled under
      applicable plans, programs and agreements of the Company as of the date of
      Termination Without Cause. 

     

    (c)    Voluntary
      Termination.
      A
“Voluntary Termination” shall mean a termination of employment by the Executive
      on his own initiative other than a termination under Section 8(a)
      or
8(b).
      In
      the event of a Voluntary Termination, the Executive shall be entitled only
      to:

     

    (i)  Base
      Salary, at the rate in effect at the time of termination, accrued and payable
      through the date of termination of employment;

     

    (ii)  reimbursement
      for expenses incurred but not yet reimbursed by the Company; and

     

    (iii)  any
      other
      compensation and benefits accrued and to which the Executive is entitled under
      applicable plans, programs and agreements of the Company.

     

    A
      Voluntary Termination shall not, solely due to a Voluntary Termination, be
      deemed a breach of this Agreement and shall be effective upon the expiration
      of
      30 days after written notice is delivered to the Company, unless another period
      of time is agreed to in writing by the Parties. 

     

    (d)  No
      Mitigation; No Offset.
      In the
      event of any termination of the Executive’s employment under the Agreement
      without Cause, the Executive shall be under no obligation to seek other
      employment, and there shall be no offset against amounts due the Executive
      under
      the Agreement on account of any remuneration attributable to any subsequent
      employment that the Executive may obtain.

     

    (e)  Nature
      of Payments.
      Any
      amounts due the Executive under the Agreement in the event of any termination
      of
      employment with the Company are in the nature of severance payments, or
      liquidated damages which contemplate both direct damages and consequential
      damages that the Executive may suffer as a result of the termination of
      employment, or both, and are not in the nature of a penalty.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    Payments
      in case of change in control

     

    Upon
      a
      Change in Control, as such term is defined herein, and in addition to any other
      payments to which Executive is entitled under Section 8 or any other provision
      of this Agreement, Executive shall be entitled to: 

     

    (i)  an
      amount
      equal to 12 months’ Base Salary in effect as of the effective date of the Change
      in Control; and

     

    (ii)  an
      amount
      equal to 50% of the annual Base Salary in effect as of the effective date of
      the
      Change in Control. 

     

    Conditions
      of Entitlement to Payment

     

    THE
      CONSIDERATION DESCRIBED IN SECTION 8(B)(I) AND (II) AND SECTION 9 

    ARE
      DUE
      AND OWING IF AND ONLY IF ALL OF THE CONDITIONS SET FORTH 

    IN
      THIS
      SECTION 10 ARE SATISFIED:

     

    (a)    Executive
      must have signed and delivered to the Chairman of the Board of the Company
      upon
      the termination of employment a release in substantially the form attached
      as
      Exhibit B (the “Release”) subject to the timing and effectiveness requirements
      set forth in the Release; Executive must have substantially complied with all
      written contractual obligations owed to the Company, including without
      limitation obligations of Executive under this Agreement. This subpart (a)
      is
      applicable to payments under Section 9 only if prior to the Change in Control
      the Executive has received notice of termination without Cause to take effect
      upon the Change in Control or within 30 days thereafter. 

     

    (b)  No
      cash
      payments shall be due or owing to Executive under this Agreement if the Company
      is (i) out of compliance with any covenants imposed by its senior lenders and
      such lenders have failed to waive the non-compliance or grant a forbearance,
      or
      (ii) is insolvent, or (iii), in the good faith discretion of the Board of
      Directors of the Company, any such payment or payments, by itself or when
      combined with any other obligations of the Company, would cause the Company
      to
      be out of compliance with such covenants (and the Board of Directors in its
      sole
      judgment has determined that it is unlikely that its senior lenders will waive
      the non-compliance or grant a forbearance) or insolvent. In the event of
      application of (i), (ii) or (iii) above, the cash payment shall be become due
      and owing and shall be paid promptly after the Board of Directors in its good
      faith determines that sections (i), (ii) and (iii) cease to apply.

     

    (c)  No
      payments shall have been made previously under this Agreement with regard to
      a
      prior Change in Control.

     

    Covenant
      not to compete

     

    In
      the
      event of a termination of this Agreement prior to the scheduled expiration
      of
      the Term of Employment, the Executive shall not, for the remaining Term of
      Employment or 12 months, whichever is longer, engage in competition with the
      Company. For purposes of this Section 11, the Executive shall be engaging
      in competition with the Company if the Executive engages in the manufacture
      of
      playing card shufflers, playing card readers and/or playing card deck setters
      in
      Clark County, Nevada or any other location in which the Company is engaging
      in
      business at the time of the termination of the Executive’s employment, whether
      as an employee, executive, partner, principal, agent, representative,
      stockholder or consultant (other than as a holder of not more than a 10% equity
      interest) or in any other corporate or any capacity, so long as the Company
      is
      engaged in business in the location in question.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    Covenants
      to protect confidential information

     

    The
      Executive shall not, during the Term of Employment or anytime thereafter,
      without prior written consent of the Company, divulge, publish or otherwise
      disclose to any other person any Confidential Information regarding the Company
      except in the course of carrying out the Executive’s responsibilities on behalf
      of the Company (e.g., providing information to the Company’s attorneys,
      accountants, bankers, etc.) 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 the Company
      related to or arising out of this Agreement) or any governmental or
      administrative agency. For this purpose, Confidential Information shall include,
      but is not limited to, the Company’s financial position and results of
      operations, trades secrets and intellectual property, products and product
      development plans, marketing and promotional plans and strategies, customer
      lists and customer data bases. Confidential Information does not include
      information that is generally available to the public other than through a
      breach of the Agreement on the part of the Executive.

     

    Non-solicitation

     

    Except
      with the prior written consent of the Company, Executive shall not solicit
      customers, clients, or employees of the Company or any of its affiliates for
      a
      period of twelve (12) months after the date of the expiration or termination
      of
      this Agreement. Without limiting the generality of the foregoing, Executive
      will
      not, for a period of twelve (12) months after the date of the expiration or
      termination of this Agreement, willfully canvas or solicit any such business
      in
      competition with the business of the Company from any customers of the Company
      with whom Executive had contact during, or of which Executive had knowledge
      solely as a result of, his performance of services for the Company pursuant
      to
      this Agreement. Executive will not, for a period of twelve (12) months after
      the
      date of the expiration or termination of this Agreement, directly or indirectly
      request, induce or advise any customers of the Company with whom Executive
      had
      contact during the term of this Agreement to withdraw, curtail or cancel their
      business with the Company. Executive will not, for a period of twelve (12)
      months after the date of the expiration or termination of this Agreement, induce
      or attempt to induce any employee of the Company to terminate his/her employment
      with the Company.

     

    Remedies

     

    (a)  Executive
      acknowledges and agrees that immediate and irreparable harm, for which damages
      would be an inadequate remedy, would occur in the event any of the provisions
      of
      Sections 12, 11, 12 and 13 of this Agreement were not performed in accordance
      with their specific terms or were otherwise breached. Accordingly, Executive
      agrees that Company shall be entitled to an injunction or injunctions to prevent
      breaches of such provisions of this Agreement and to enforce specifically the
      terms and provisions thereof without the necessity of proving actual damages
      or
      securing or posting any bond or providing prior notice, in addition to any
      other
      remedy to which it may be entitled at law or equity.

     

    (b)  Nothing
      herein contained is intended to waive or diminish any rights Company 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 Company may have at law or
      equity.

     

    (c)  Executive
      shall have no rights, remedies or claims for damages, at law, in equity or
      otherwise with respect to any termination of Executive’s employment by the
      Company other than as set forth in Section 8 of this
      Agreement.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    Representation

     

    The
      Company and the Executive respectively represent and warrant to each other
      that
      each respectively is fully authorized and empowered to enter into the Agreement
      and that their entering into the Agreement and the performance of their
      respective obligations under the Agreement will not violate any agreement
      between the Company or the Executive respectively and any other person, firm
      or
      organization or any law or governmental regulation.

     

    Entire
      agreement

     

    This
      Agreement contains the entire agreement between the Parties and supersedes
      all
      prior agreements, understandings, discussions, negotiations and undertakings,
      whether written or oral, between the Parties.

     

    Amendment
      or waiver

     

    This
      Agreement cannot be changed, modified or amended without the consent in writing
      of both the Executive and the Company. No waiver by either Party at any time
      of
      any breach by the other Party of any condition or provision of the Agreement
      shall be deemed a waiver of a similar or dissimilar condition or provision
      at
      the same or at any prior or subsequent time. Any waiver must be in writing
      and
      signed by the Executive or an authorized officer of the Company, as the case
      may
      be.

     

    Severability

     

    The
      provisions of this Agreement shall be severable and the invalidity, illegality
      or unenforceability of any provision of this Agreement shall not affect, impair
      or render unenforceable this Agreement or any other provision hereof, all of
      which shall remain in full force and effect. If any provision of this Agreement
      is adjudicated by a court of competent jurisdiction as invalid, illegal or
      otherwise unenforceable, but such provision may be made enforceable by a
      limitation or reduction of its scope, the Parties agree to abide by such
      limitation or reduction as may be necessary so that said provision shall be
      enforceable to the fullest extent permitted by law. The Parties further intend
      to and hereby confer jurisdiction to enforce the covenants contained in Sections
      11, 12 and 13 (the “Restrictive Covenants”) upon the courts of any jurisdiction
      within the geographical scope of such Restrictive Covenants. If the courts
      of
      any one or more of such jurisdictions hold any Restrictive Covenant
      unenforceable by reason of the breadth of such scope or otherwise, it is the
      intention of the Company and Executive that such determination not bar or in
      any
      way affect the right of the Company to the relief provided for in this section
      in the courts of any other jurisdiction within the geographical scope of such
      Restrictive Covenant as to breaches of such Restrictive Covenant in such other
      respective jurisdictions (such Restrictive Covenant as it relates to each
      jurisdiction being, for this purpose, severable into diverse and independent
      covenants).

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    Survival

     

    The
      respective rights and obligations of the Parties shall survive any termination
      of this Agreement to the extent necessary to the intended preservation of such
      rights and obligations.

     

    Governing
      law

     

    This
      Agreement shall be governed by and construed under the law of the State of
      Nevada, disregarding any principles of conflicts of law that would otherwise
      provide for the application of the substantive law of another jurisdiction.
      The
      Parties each hereby consents to the jurisdiction and venue of the state courts
      of Clark County, Nevada and the United States district courts with jurisdiction
      in Nevada with respect to any matter arising out of or relating to this
      Agreement other than matters that are subject to the arbitration provisions
      of
      Section 21 of this Agreement.

     

    Settlement
      of disputes

     

    Except
      for equitable actions seeking to enforce the provisions of Sections 11, 12
      and
      13 of this Agreement which may be brought by a court in any competent
      jurisdiction, in the event a dispute, claim or controversy arises between the
      parties relating to the validity, interpretation, performance, termination
      or
      breach of this Agreement, (collectively, a "Dispute"), the Parties agree to
      hold
      a meeting regarding the Dispute, attended by individuals with decision-making
      authority, to attempt in good faith to negotiate a resolution of the Dispute
      prior to pursuing other available remedies. If, within thirty (30) days after
      such meeting or after good faith attempts to schedule such a meeting have
      failed, the Parties have not succeeded in negotiating a resolution of the
      Dispute, the Dispute shall be resolved through final and binding arbitration
      to
      be held in Nevada in accordance with the rules and procedures of the American
      Arbitration Association. The prevailing party in such proceeding shall be
      entitled to recover the costs of the arbitration from the other party,
      including, without limitation, reasonable attorneys’ fees.

     

    Headings

     

    The
      headings of the paragraphs contained in this Agreement are for convenience
      only
      and shall not be deemed to control or affect the meaning or construction of
      any
      provision of this Agreement.

     

    Counterparts

     

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

     

    Taxes

     

    The
      Compensation payable is stated in gross amounts and shall be subject to such
      withholding taxes and other taxes as may be required by law.

     

    Acknowledgment

     

    The
      Executive acknowledges that he/she has been given a reasonable period of time
      to
      study this Agreement before signing it and has had an opportunity to secure
      counsel of his/her own. The Executive certifies that he/she has fully read
      and
      completely understands the terms, nature, and effect of this Agreement. The
      Executive further acknowledges that he/she is executing this Agreement freely,
      knowingly, and voluntarily and that the Executive’s execution of this Agreement
      is not the result of any fraud, duress, mistake, or undue influence whatsoever.
      In executing this Agreement, the Executive does not rely on any inducements,
      promises, or representations by the Company other than that which is stated
      in
      this Agreement.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    Waiver
      of jury trial

     

    Each
      Party waives, to the fullest extent permitted by applicable law, any right
      it
      may have to a trial by jury in respect of any litigation arising out of or
      relating to this Agreement and Executive’s employment by the Company. Each Party
      (a) certifies that no representative, agent or attorney of the other Party
      has
      represented, expressly or otherwise, that such other Party would not, in the
      event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
      that it has been induced to enter into this Agreement by, among other things,
      the mutual waivers and certifications set forth in this section.

     

    In
      Witness Whereof,
      the
      undersigned have executed the Agreement as of the date first written
      above.

     

    
      	
              VENDINGDATA
                CORPORATION,

              a
                Nevada corporation

            
	 	 
	
              By:

            	   

	 	 
	
              Its:

            	 
	 
	 
	
              EXECUTIVE
                

            
	 
	  

	
              Mark
                Newburg

            

    

     

    
 

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    ADDENDUM
      TO EXECUTIVE EMPLOYMENT AGREEMENT

    

    This
      Addendum shall modify the Executive Employment Agreement dated September
      29th,
      2005
      between Mark Newburg (“Executive”) and VendingData Corporation (“Company”). All
      terms of the Executive Employment Agreement shall remain in full force and
      effect except as modified by this Addendum.

    

    The
      parties agree that section 1(b), the definition of “Cause”, shall be amended to
      include the following:

    

    (xiv)
      (1)
      a finding by any lawfully appointed gaming authority in any jurisdiction that
      Company does business (“Gaming Authority”) the Executive is “unsuitable”, or the
      equivalent, (2) the mandatory request by any Gaming Authority that the Company
      not associate with Executive, or (3) the failure by Executive to qualify for
      any
      license that any Gaming Authority requires that Executive possess.

    

    This
      Addendum shall be effective as of the effective date of the Executive Employment
      Agreement.

    

    Agreed
      to
      by the parties on October ____, 2005.

    

    
      	VENDINGDATA	 	 	EXECUTIVE
	 	 	 	 
	 	 	 	 
	/s/ 	 	 	/s/ 
	
              

            	 	 	
              

            
	
              By:

              Its:

              Date:

            	 	 	
              Mark
                Newburg

              Date:

            

    

    

    

    
      
        
        

      

        -11-

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