Document:

Exhibit
10.1

 

INDEMNIFICATION
AGREEMENT

 

THIS
INDEMNIFICATION AGREEMENT (this “Agreement”) is made this
     day of
                              ,
2003, between VendingData Corporation, a Nevada corporation (the “Company”),
and
              ,
an individual (“Indemnitee”).

 

RECITALS

 

WHEREAS, Indemnitee is
either a member of the board of directors (“Board” or “Board of Directors”), an
officer, an employee or an agent of the Company, or more than one of such
positions, or is serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and in such capacity or capacities is performing a valuable
service for the Company;

 

WHEREAS, the Company
has adopted bylaws (“Bylaws”) providing for the indemnification of the
officers, directors, employees and agents of the Company or individuals serving
at the request of the Company as directors, officers, employees or agents of
another corporation, partnership, joint venture, trust or other enterprise
(“Covered Persons”);

 

WHEREAS, the Bylaws
and Nevada Revised Statute (“NRS”) Sections 78.751 and 78.7502 (the “State
Statutes”) specifically provide that they are not exclusive, and thereby
contemplate that agreements may be entered into between the Company and a
Covered Person with respect to indemnification of such Covered Person;

 

WHEREAS, Indemnitee is
willing to serve, to continue to serve, and to take on additional service for
and on behalf of the Company on the condition that Indemnitee is indemnified as
set forth in this Agreement;

 

WHEREAS, it is
intended that Indemnitee shall be paid promptly by the Company all amounts
necessary to effectuate in full the indemnity provided in this Agreement; and

 

WHEREAS, to induce
Indemnitee to continue to serve as a director, officer, employee or agent, the
Company has determined and agreed to enter into this Agreement with Indemnitee.

 

NOW, THEREFORE, in
consideration of Indemnitee’s continued service as a director or officer of the
Company after the date hereof, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and
Indemnitee hereby agree as follows:

 

AGREEMENT

 

1.                                       Indemnification of Indemnitee.   The Company hereby agrees to hold harmless
and indemnify Indemnitee to the fullest extent authorized or permitted by the
provisions of the State Statutes, or any successor statute or amendment
thereof, or any other statutory provisions authorizing or permitting such
indemnification that are adopted after the date of this Agreement.

 

2.                                       Additional Indemnity. 
Subject only to the exclusions set forth in Section 3 of this
Agreement, the Company hereby further agrees to hold harmless, indemnify and
defend Indemnitee:

 

 

(a)                                  against any and all expenses (including
fees for attorneys, accountants, private investigators, court and transcript
costs, fees and expenses of witnesses, travel expenses and all other like
disbursements or expenses reasonably incurred by or for Indemnitee), judgments,
damages, fines, penalties and amounts paid in settlement (including all
interest assessments and other charges paid or payable in connection with or in
respect of such judgment, fines, penalties, or amounts paid in settlement)
actually and reasonably incurred by or for Indemnitee in connection with any
threatened, pending or contemplated action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company)(a “Covered Action”) to which Indemnitee is made a party
as a result of the fact that at the time of the act or omission which is the
subject matter of such Covered Action, the Indemnitee was a director, officer,
employee or agent of the Company; and

 

(b)                                 otherwise to the fullest extent as may be
provided to Indemnitee by the Company under the non-exclusivity provisions of
Article XII of the Bylaws of the Company and the State Statutes.  The provisions of this Agreement are in
addition to, and not in limitation of, the provisions of such Article XII
and the State Statutes.

 

3.                                       Limitations on
Additional Indemnity.  No indemnity pursuant to
Section 2 of this Agreement shall be paid by the Company to the extent
that:

 

(a)                                  payment therefor is actually made to
Indemnitee under a valid and collectible insurance policy or policies, except
with respect to any excess amount due to Indemnitee beyond the amount of
payment to Indemnitee under such insurance policy or policies.  Notwithstanding the availability of such
insurance policy or policies, Indemnitee also may claim indemnification from
the Company pursuant to this Agreement by assigning to the Company in writing
any claims of Indemnitee under such insurance policy or policies to the extent
of the amount Indemnitee is paid by the Company;

 

(b)                                 Indemnitee is indemnified by the Company
otherwise than pursuant to this Agreement;

 

(c)                                  final judgment is rendered against
Indemnitee for the payment of dividends or other distributions to stockholders
of the Company in violation of the provisions of Subsection 2 of NRS §
78.300, as amended;

 

(d)                                 final judgment is rendered against
Indemnitee for an accounting of profits made from the purchase or sale by
Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
“Act”), or other similar provisions of any federal, state or local statutory
law;

 

(e)                                  Indemnitee’s conduct giving rise to the
claim for indemnification is finally adjudged by a court of competent
jurisdiction to have been a breach of fiduciary duty that involved intentional
misconduct, fraud or a knowing violation of the law; and/or

 

(f)                                    except
as otherwise provided in this Agreement, in connection with all or any part of
a suit or other proceeding which is initiated or maintained by or on behalf of
Indemnitee, or any suit or other proceeding by Indemnitee against the Company
or its directors, officers, employees or other agents, unless (i) such
indemnification is expressly required by Nevada law; (ii) the suit or other
proceeding was expressly authorized by an official act of the Board of
Directors of the

 

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Company or (iii) such indemnification is provided by the Company, in
its sole discretion, pursuant to the powers vested in the Company under Nevada
law.

 

4.                                       Continuation of
Indemnity.  All agreements and obligations of the
Company contained in this Agreement shall continue during the period Indemnitee
is a Covered Person, and shall continue thereafter for so long as Indemnitee
shall be subject to any possible claim or threatened, pending or contemplated
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee was a Covered Person.

 

5.                                       Advancement of Expenses. 
In the event Indemnitee incurs costs or expenses in connection with the
defense of any such civil, criminal, administrative or investigative action,
suit or proceeding (including any costs or expenses incurred for any appeal
therefor), the Company agrees to pay such costs or expenses as they are
incurred and in advance of the final disposition of the action, suit or
proceeding within 30 calendar days of submission of bills or vouchers for such
costs or expenses, provided that
Indemnitee delivers to Company prior to such payment a written undertaking by
or on behalf of Indemnitee to repay the amount paid by the Company if it is
ultimately determined by a court of competent jurisdiction that Indemnitee is
not entitled to be indemnified by the Company. 
By such undertaking, Indemnitee agrees to reimburse the Company for all
amounts paid by the Company in defending such civil, criminal, administrative
or investigative action, suit or proceeding against Indemnitee, including
amounts paid in settlement, in the event and only to the extent that it is
ultimately determined by a court of competent jurisdiction that Indemnitee is
not entitled to be indemnified by the Company for such expenses under the
provisions of the State Statute, Bylaws, this Agreement or otherwise.  However, in the case of an action brought
against Indemnitee by the Company pursuant to the provisions of
Section 16(b) of the Act, or other similar provisions of any federal,
state or local statutory law for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company, Indemnitee’s costs
and expenses will not be advanced unless such advancement is approved by the
Board of Directors by a majority vote of a quorum consisting of directors who
are not parties to the action, suit or proceeding, or, if such a quorum cannot
be obtained, by independent legal counsel in a written opinion that such
indemnification is proper in the circumstances.

 

6.                                       Presumptions and Effect
on Certain Proceedings.  Upon making
a request for indemnification, Indemnitee shall be presumed to be entitled to
indemnification under this Agreement. 
The termination of any action, suit or proceeding by judgment, order,
settlement, arbitration award, conviction or by a plea of nolo contendere or
its equivalent shall not affect this presumption except as may be provided in
Section 3 of this Agreement.

 

7.                                       Notification and
Defense of Claim.  Promptly after receipt by Indemnitee of
notice of the commencement of any action, suit or proceeding, if a request with
respect thereto is to be made against the Company under this Agreement,
Indemnitee shall notify the Company of the commencement thereof; but the
failure by Indemnitee to notify the Company will not relieve the Company of any
liability which it may have to Indemnitee under this Agreement or
otherwise.  With respect to any such
action, suit or proceeding as to which Indemnitee notifies the Company as
required herein:

 

(a)                                  The Company shall be entitled to
participate therein at its own expense.

 

(b)                                 Except as otherwise provided below, to
the extent that it may wish, the Company, jointly with any other indemnifying
party similarly notified, shall be entitled to assume the

 

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defense of Indemnitee
with counsel reasonably satisfactory to Indemnitee.  After notice from the Company to Indemnitee of its election to
assume the defense of Indemnitee in the action, suit or proceeding, the Company
will not be liable to Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by Indemnitee in connection with the defense
thereof, other than reasonable costs of investigation or as otherwise provided
below.  Indemnitee shall have the right
to employ his/her own counsel in such action, suit or proceeding, but the fees
and expenses of such counsel incurred after notice from the Company of its
assumption of the defense shall be at the sole expense of Indemnitee unless (i)
the employment of counsel by Indemnitee at the Company’s expense has been
authorized in writing by the Company; (ii) Indemnitee shall have reasonably
concluded, upon advice of counsel experienced in such matters, that there may
be a conflict of interest between the Company and Indemnitee in the conduct of
the defense of such action; or (iii) the Company shall not in fact have
employed counsel to assume the defense of such action, suit or proceeding.  In each such instance set forth in (i)
through (iii) of this paragraph (b), the 
reasonable cost of Indemnitee’s counsel shall be borne by the
Company.  Notwithstanding the foregoing,
the Company shall not be entitled to assume the defense of any action, suit or
proceeding brought against Indemnitee by or on behalf of the Company or as to
which Indemnitee shall have reasonably made the conclusion provided in (ii)
above.

 

(c)                                  The Company shall not be liable to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any action or claim effected without the Company’s prior written consent.  The Company shall not settle any action or
claim in any manner that would impose any penalty or limitation on Indemnitee
without Indemnitee’s prior written consent. 
Neither the Company nor Indemnitee will unreasonably withhold consent to
any proposed settlement.

 

8.                                       Enforcement.

 

(a)                                  The Company expressly confirms and agrees
that it has entered into this Agreement and assumed the obligations imposed on
the Company hereby in order to induce Indemnitee to continue as a Covered
Person, and acknowledges that Indemnitee is relying on this Agreement in
continuing in such capacity.

 

(b)                                 In the event Indemnitee is required to
bring any action to enforce his or her rights or to collect monies due under
this Agreement, the Company shall advance Indemnitee all of Indemnitee’s reasonable
fees and expenses in bringing and pursuing such action.  Indemnitee shall be responsible for
reimbursement to the Company of such advance in the event that Indemnitee is
not successful in such action.

 

 

9.                                       No Employment Rights. 
Nothing in this Agreement is intended to confer on Indemnitee any right
to continue in the employ of the Company for any period of time or to interfere
with or otherwise restrict in any way the rights of the Company or of
Indemnitee, which rights are hereby expressly reserved by each, to terminate
Indemnitee’s service at any time and for any reason, with or without cause,
except as may be provided otherwise in an agreement, if any, between the
Company and Indemnitee.

 

10.                                 Severability. 
Each of the provisions of this Agreement are separate and distinct and
independent of one another, so that if any provision of this Agreement shall be
held by a court of competent jurisdiction to be invalid or unenforceable for
any reason, such invalidity or unenforceability shall not effect the validity
or enforceability of the other provisions of this Agreement.    If any provision of this Agreement is so
held to be invalid or unenforceable, the parties

 

4

 

agree that the court making such determination shall
have the power to amend such provision or to delete specific words or phrases
so that such provision shall then be enforceable to the fullest extent
permitted by law unless such change is contrary to the intent of the parties
hereto.

 

11.                                 Subrogation. 
In the event of payment to Indemnitee under this Agreement, the Company
shall be subrogated to the extent of the amount of such payment to all rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary or reasonable to secure such rights,
including, without limitation, the execution of such documents necessary or
reasonable to enable the Company to effectively bring suit to enforce such
rights.

 

12.                                 Governing Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Nevada without resort to conflict of laws principles.

 

13.                                 Binding Effect;
Amendment.  This Agreement shall be binding on the
parties, their heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Indemnitee, his or her heirs, personal
representatives and assigns, and to the benefit of the Company, its successors
and assigns.  No amendment,
modification, termination or cancellation of this Agreement shall be effective
unless in a writing signed by both parties.

 

14.                                 Notices. 
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given (i) when delivered by
hand and receipted for by the party to whom said communication shall have been
directed or (ii) if mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which said communication
is so mailed and addressed to the appropriate party at the following address:

 

	
  If to
  Indemnitee:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  If to
  the Company:

  	
  VendingData Corporation

  
	
   

  	
  6830 Spencer Street

  
	
   

  	
  Las Vegas, Nevada 
  89119

  
	
   

  	
  Attention: Corporate Counsel

  
	
   

  	
   

  
	
  With
  a copy to:

  	
  Michael J. Bonner

  
	
   

  	
  Kummer Kaempfer Bonner & Renshaw

  
	
   

  	
  3800 Howard Hughes Parkway

  
	
   

  	
  Seventh Floor

  
	
   

  	
  Las Vegas, Nevada 
  89109

  

 

A party may change its address by delivering notice of
such change in the manner set forth in this Section 14.

 

5

 

 

IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.

 

	
  “Indemnitee”

  	
  “Company”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  [                                        ]

  	
   

  	
    Steven J. Blad

  
	
   

  	
  Its:

  	
    Chief Executive Officer

  
					

 

6Exhibit
10.2

 

VENDINGDATA
CORPORATION

AMENDED AND RESTATED 1999 STOCK OPTION PLAN

AS APPROVED BY THE BOARD OF DIRECTORS ON APRIL 22, 2003,

AS APPROVED BY THE STOCKHOLDERS ON MAY 29, 2003,

AND AS ORIGINALLY APPROVED ON JANUARY 5, 1999

 

1.                                      PURPOSE

 

The purpose of the VendingData Corporation 1999 Stock
Option Plan is to further the interests of VendingData Corporation, a Nevada
corporation (the “Company”), by encouraging and enabling selected officers,
directors, employees, consultants, advisers, independent contractors and
agents, upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire and retain a
proprietary interest in the Company by ownership of its stock through the
exercise of stock options to be granted hereunder.  Options granted hereunder are either options intended to qualify
as “incentive stock options” within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, or non-qualified stock options.

 

2.                                      DEFINITIONS

 

Whenever used herein the following terms shall have
the following meanings, respectively:

 

(a)                                  “Board”
shall mean the Board of Directors of the Company.

 

(b)                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

(c)                                  “Committee”
shall mean the Stock Option or Compensation Committee appointed by the Board,
or if no committee has been appointed, a reference to “Committee” shall be
deemed to refer to the Board.

 

(d)                                 “Common
Stock” shall mean the Company’s Common Stock, $.001 par value.

 

(e)                                  “Company”
shall mean VendingData Corporation, a Nevada corporation.

 

(f)                                    “Employee”
shall mean, in connection with Incentive Options, only employees of the
Company.

 

(g)                                 “Fair
Market Value Per Share” of the Common Stock on any date shall mean, if the
Common Stock is publicly traded, the mean between the highest and lowest quoted
selling prices of the Common Stock on such date or, if not available, the mean
between the bona fide bid and asked prices of the Common Stock on such date.  In any situation not covered above or if
there were no sales on the date in question, the Fair Market Value Per Share
shall be determined by the Committee in accordance with Section 20.2031-2
of the Federal Estate Tax Regulations.

 

(h)                                 “Incentive
Option” shall mean an Option granted under the Plan, which is designated as and
qualified as an incentive stock option within the meaning of Section 422
of the Code.

 

(i)                                     “Non-Employee
Director” shall have the meaning set forth in Rule 16b-3 promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, or any successor rule.

 

 

(j)                                     “Non-Qualified
Option” shall mean an Option granted under the Plan which is designated as a
non-qualified stock option and which does not qualify as an incentive stock
option within the meaning of Section 422 of the Code.

 

(k)                                  “Option”
shall mean an Incentive Option or a Non-Qualified Option.

 

(l)                                     “Optionee”
shall mean any person who has been granted an Option under the Plan.

 

(m)                               “Outside
Director” shall have the meaning set forth in Section 162(m) of the Code.

 

(n)                                 “Permanent
Disability” shall mean termination of a Relationship with the Company with the
consent of the Company by reason of permanent and total disability within the
meaning of Section 22(e)(3) of the Code.

 

(o)                                 “Plan”
shall mean the VendingData Corporation 1999 Stock Option Plan, as amended.

 

(p)                                 “Relationship”
shall mean that the Optionee is or has agreed to become an officer, director,
employee, consultant, adviser, independent contractor or agent of the Company
or any subsidiary of the Company.

 

(q)                                 “Termination
for Cause” means the termination of any employee’s employment with the Company,
whether voluntary or involuntary, that is determined by the Committee to have
resulted from the discovery by the Company of the employee’s dishonesty,
commission of a felony (regardless of whether or not prosecuted) or fraud.

 

3.                                      ADMINISTRATION

 

(a)                                  The
Plan shall be administered by a Committee of at least two directors of the
Company appointed by the Board, all members of which are both Non-Employee
Directors and Outside Directors.  The
Board may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies.  In the event the Board fails to designate a
Committee to administer the Plan, the Plan shall be administered by the
Board.  To the extent not inconsistent
with applicable law, the Board or Committee may from time to time delegate to
one or more officers of the Company any or all of its authorities granted
hereunder except with respect to awards to persons subject to Section 16
of the Securities Exchange Act of 1934, as amended.

 

(b)                                 Any
action of the Committee with respect to the administration of the Plan shall be
taken by majority vote or by written consent of a majority of its members, and
all actions of the Committee are subject to approval by the Board.

 

(c)                                  Subject
to the provisions of the Plan, the Committee shall have the authority to
construe and interpret the Plan, to define the terms used therein, to determine
the time or times an Option may be exercised and the number of shares which may
be exercised at any one time, to prescribe, amend and rescind rules and
regulations relating to the Plan, to approve and determine the duration of
leaves of absence which may be granted to participants without constituting a
termination of their employment for purposes of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan.

 

(d)                                 The
Company shall indemnify and hold harmless the members of the Board and the
Committee from and against any and all liabilities, costs and expenses incurred
by such persons as a result of any act, or omission to act, in connection with
the performance of such persons’ duties, responsibilities

 

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and obligations under the Plan, other than such
liabilities, costs and expenses as may result from the negligence, bad faith,
willful misconduct or criminal acts of such persons.

 

(e)                                  The
Company will provide financial information to the Optionees on the same basis
as the Company provides such information to its stockholders.

 

(f)                                    The
Committee’s interpretation and construction of any provisions of this Plan or
any Option granted under this Plan shall be final, conclusive and binding upon
all Optionees, their guardians, legal representatives and beneficiaries, the
Company and all other interested parties.

 

4.                                      NUMBER OF SHARES SUBJECT TO PLAN

 

The aggregate number of shares of Common Stock subject
to Options, which may be granted under the Plan, shall not exceed 2,000,000
shares.  The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares purchased by the Company
on the open market.  If any Option
granted hereunder shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for the purposes of the Plan.

 

5.                                      ELIGIBILITY AND PARTICIPATION

 

(a)                                  Non-Qualified
Options may be granted to any person who has a Relationship with the Company or
any of its subsidiaries.  Incentive
Options may be granted to any Employee. 
The Committee shall determine the persons to whom Options shall be
granted, the time or times at which such Options shall be granted and the
number of shares to be subject to each Option. 
An Optionee may, if he is otherwise eligible, be granted an additional
Option or Options if the Committee shall so determine.  An Employee may be granted Incentive Options
or Non-Qualified Options or both under the Plan; provided, however, that the
grant of Incentive Options and Non-Qualified Options to an Employee shall be
the grant of separate Options, and each Incentive Option and each Non-Qualified
Option shall be specifically designated as such.

 

(b)                                 In
no event shall the aggregate fair market value (determined as of the time the
Option is granted) of the shares with respect to which Incentive Options
(granted under the Plan or any other plans of the Company or any subsidiary or
parent corporation of the Company) are exercisable for the first time by an
Optionee in any calendar year exceed $100,000.

 

(c)                                  In
no event shall the aggregate number of shares of Common Stock with respect to
which Options may be granted to a single Optionee during the term of the Plan
exceed 20 percent of the aggregate number of shares of Common Stock subject to
Options which may granted to all Optionees under the Plan.

 

6.                                      PURCHASE PRICE

 

The purchase price of each share covered by each
Incentive Option shall not be less than 100% of the Fair Market Value Per Share
of the Common Stock on the date the Incentive Option is granted; provided,
however, that if at the time an Incentive Option is granted the Optionee owns
or would be considered to own by reasons of Section 424(d) of the Code
more that 10% of the total combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation of the Company, the purchase
price of the shares covered by such Incentive Option shall not be less than
110% of the Fair Market Value Per Share of the Common Stock on the date the
Incentive Option is granted.

 

3

 

7.                                      DURATION OF OPTIONS

 

The expiration date of the Option and all rights
thereunder shall be determined by the Committee.   In the event the Committee does not specify the expiration date
of the Option, the expiration date shall be 10 years from the date on which the
Option was granted, and shall be subject to earlier termination as provided
herein; provided, however, that if at any time an Incentive Option is granted
the Optionee owns or would be considered to own by reason of
Section 424(d) of the Code more that 10% of the total combined voting
power of all classes of stock of the Company, such Incentive Option shall
expire five years from the date the Incentive Option is granted unless the
Committee selects an earlier date.

 

8.                                      EXERCISE OF OPTIONS

 

(a)                                  An
Option shall vest and become exercisable from time to time in installments or
otherwise in accordance with such schedule and upon such other terms and
conditions as the Committee shall in its discretion determine at the time the
Option is granted.  An Optionee may
purchase less than the total number of shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less
than 100 shares, unless the exercise is during the final year of the Option,
and shall not include any fractional shares. 
As a condition to the exercise, in whole or in part, of any Option, the
Committee may in its sole discretion require the Optionee to pay, in addition
to the purchase price of the shares covered by the Option, an amount equal to
any federal, state or local taxes that the Committee has determined are
required to be paid in connection with the exercise of such Option in order to
enable the Company to claim a deduction or otherwise.  Furthermore, if any Optionee disposes of any shares of stock
acquired by exercise of an Incentive Option prior to the expiration of either
of the holding periods specified in Section 422(a)(1) of the Code, the
Optionee shall pay to the Company, or the Company shall have the right to
withhold from any payment to be made to the Optionee, an amount equal to any
federal, state or local taxes that the Committee has determined are required to
be paid in connection with the exercise of such Option in order to enable the
Company to claim a deduction.

 

(b)                                 No
Option will be exercisable (and any attempted exercise will be deemed null and
void) if such exercise would create a right of recovery for “short-swing
profits” under Section 16(b) of the Securities Exchange Act of 1934, as
amended.  This Section 8(b) is
intended to protect persons subject to Section 16(b) against inadvertent
violations of Section 16(b) and shall not apply with respect to any
particular exercise of an Option if expressly waived in writing by the Optionee
at the time of such exercise.

 

9.                                      METHOD OF EXERCISE

 

(a)                                  To
the extent that an Option has become exercisable, the Option may be exercised
from time to time by giving written notice to the Company stating the number of
shares with respect to which the Option is being exercised, accompanied by
payment in full, by cash or by certified or cashier’s check payable to the
order of the Company or the equivalent thereof acceptable to the Company, of
the purchase price for the number of shares being purchased and, if applicable,
any federal, state or local taxes required to be paid in accordance with the
provisions of Section 8(a) hereof. 
The Company shall issue a separate certificate or certificates with
respect to each Option exercised by an Optionee.

 

(b)                                 In
the Committee’s discretion, payment of the purchase price for the shares with
respect to which the Option is being exercised may be made in whole or in part
with shares of Common Stock.  If payment
is made with shares of Common Stock, the Optionee, or other person entitled to
exercise the Option, shall deliver to the Company certificates representing the
number of shares of Common Stock in payment for the shares being purchased,
duly endorsed for transfer to the Company. 
If requested by the

 

4

 

Committee, prior to the acceptance of such
certificates in payment for such shares, the Optionee, or any other person
entitled to exercise the Option, shall supply the Committee with a
representation and warranty in writing that he has good and marketable title to
the shares represented by the certificate(s), free and clear of all liens and
encumbrances.  The value of the shares
of Common Stock tendered in payment for the shares being purchased shall be
their Fair Market Value Per Share on the date of the exercise.

 

(c)                                  Notwithstanding
the foregoing, the Company shall have the right to postpone the time of
delivery of the shares for such period as may be required for it to comply,
with reasonable diligence, with any applicable listing requirements of any
national securities exchange or any federal, state or local law.  If an Optionee or other person entitled to
exercise an Option fails to accept delivery of or fails to pay for all or any
portion of the shares requested in the notice of exercise upon tender of
delivery thereof, the Committee shall have the right to terminate his Option
with respect to such shares.

 

10.                               NON-TRANSFERABILITY OF OPTIONS

 

No Option granted under the Plan shall be assignable
or transferable by the Optionee, either voluntarily or by operation of law,
otherwise than by will or the laws of descent and distribution, and each Option
shall be exercisable during the Optionee’s lifetime only by the Optionee.

 

11.                               CONTINUANCE OF RELATIONSHIP

 

Nothing contained in the Plan or in any Option granted
under the Plan shall confer upon any Optionee any right with respect to the
continuation of his employment by or other Relationship with the Company, or
interfere in any way with the right of the Company at any time to terminate
such employment or other Relationship or to increase or decrease the
compensation of the Optionee from the rate in existence at the time of the
grant of an Option.

 

12.                               TERMINATION OF RELATIONSHIP OTHER THAN BY DEATH OR
PERMANENT DISABILITY

 

Except as the Committee may otherwise determine at any
time with respect to any particular Non-Qualified Option granted hereunder:

 

(a)                                  If
an Optionee ceases to have a Relationship for any reason other than his death
or Permanent Disability, any Options granted to him shall terminate 90 days
from the date on which such Relationship terminates unless such Optionee has
resumed or initiated a Relationship and has a Relationship on such date.  During the 90-day period, the Optionee may
exercise any Option granted to him but only to the extent such Option was exercisable
on the date of termination of his Relationship and provided that such Option
has not expired or otherwise terminated as provided herein.  A leave of absence approved in writing by
the Committee shall not be deemed a termination of Relationship for purposes of
this Section 12, but no Option may be exercised during any such leave of
absence, except during the first 90 days thereof.

 

(b)                                 For
purposes hereof, termination of an Optionee’s Relationship for reasons other
than death or Permanent Disability shall be deemed to take place upon the
earliest to occur of the following: 
(i) the date of the Optionee’s retirement from employment under the
normal retirement policies of the Company; (ii) the date of the Optionee’s
retirement from employment with the approval of the Committee because of
disability other than Permanent Disability; (iii) the date the Optionee
receives notice or advice that his employment or other Relationship is
terminated; or (iv) the date the Optionee ceases to render the

 

5

 

services which he was employed, engaged or retained to
render to the Company or any subsidiary (absences for temporary  illness, emergencies  and vacations or leaves of absence approved
in writing by the Committee excepted). 
The fact that the Optionee may receive payment from the Company after
termination for vacation pay, for services rendered prior to termination, for
salary in lieu of notice or for other benefits shall not affect the termination
date.

 

(c)                                  Notwithstanding
anything in the Plan to the contrary, no Option may be exercised or claimed
following an Optionee’s termination of Relationship as a result of Termination
for Cause, and no Option may be exercised or claimed while the Optionee is
being investigated for a Termination for Cause.

 

13.                               DEATH OR PERMANENT DISABILITY OF OPTIONEE

 

Except as the Committee may expressly determine
otherwise at any time with respect to any particular Non-Qualified Option
granted hereunder, if an Optionee shall die at a time when he is in a
Relationship or if the Optionee shall cease to have a Relationship by reason of
Permanent Disability, any Option granted to him shall terminate one year after
the date of his death or termination of Relationship due to Permanent
Disability unless by its terms it shall expire before such date or otherwise
terminate as provided herein, and shall only be exercisable to the extent that
it would have been exercisable on the date of his death or his termination of
Relationship due to Permanent Disability. 
In the case of death, the Option may be exercised by the person or
persons to whom the Optionee’s rights under the Option shall pass by will or by
the laws of descent and distribution.

 

14.                               STOCK PURCHASE NOT FOR DISTRIBUTION

 

Each Optionee shall, by accepting the grant of an
Option under the Plan, represent and agree, for himself and his transferees by
will or the laws of descent and distribution, that all shares of stock
purchased upon exercise of the Option will be received and held without a view
to distribution except as may be permitted by the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.  After each notice of exercise of any portion
of an Option, if requested by the Committee, the person entitled to exercise
the Option shall agree in writing that the shares of stock are being acquired
in good faith without a view to distribution.

 

15.                               PRIVILEGES OF STOCK OWNERSHIP

 

No person entitled to exercise any Option granted
under the Plan shall have any of the rights or privileges of a stockholder of
the Company with respect to any shares of Common Stock issuable upon exercise
of such Option until such person has become the holder of record of such
shares.  No adjustment shall be made for
dividends or distributions of rights in respect of such shares if the record
date is prior to the date on which such person becomes the holder of record,
except as provided in Section 16 hereof.

 

16.                               ADJUSTMENTS

 

(a)                                  If
the number of outstanding shares of Common Stock is increased or decreased, or
if such shares are exchanged for a different number or kind of shares or
securities of the Company through reorganization, merger, recapitalization,
reclassification, stock dividend, stock split, combination of shares or other
similar transaction, the aggregate number of shares of Common Stock subject to
the Plan as provided in Section 4 hereof, the shares of Common Stock
subject to issued and outstanding Option under the Plan and the aggregate
number of shares of Common Stock with respect to which Options may be granted
to a single Optionee as provided in Section 5(c) hereof shall be
appropriately and

 

6

 

proportionately adjusted by the Committee.  Any such adjustment in the outstanding Options
shall be made without change in the aggregate purchase price applicable to the
unexercised portion of the Option but with an appropriate adjustment in the
price for each share or other unit of any security covered by the Option.  No adjustment shall be made on account of
any transaction or event not specifically set forth in this Section 16(a),
including, without limitation, the issuance of Common Stock for consideration.

 

(b)                                 Notwithstanding
the provision of Section 16(a), upon the dissolution or liquidation of the
Company or upon any reorganization, merger or consolidation with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of all or substantially all of the assets of the Company to
another corporation or entity, the Committee may take such action, if any, as
it in its discretion may deem appropriate to accelerate the time within which
and the extent to which Options may be exercised, to terminate Options at or
prior to the date of any such event, or to 
provide for the assumption of Options by surviving, consolidated,
successor or transferee corporations.

 

(c)                                  Adjustments
under this Section 16 shall be made by the Committee, whose determination
as to which adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive.  No fractional
shares of stock shall be issued under the Plan or in connection with any such
adjustment.

 

17.                               CHANGE OF CONTROL

 

Notwithstanding any other section of this Plan,
in the event of a change of control, vesting on all unexercised Options will
accelerate to the change-of-control date. 
For purposes of this Plan, a “Change of Control” of the Company shall be
deemed to have occurred at such time as (a) any “person” (as that term is
defined in Section 2 of the Securities Act of 1933, as amended), other
than James E. Crabbe, or his affiliates, including the James E. Crabbe
Revocable Trust, or an employee benefit plan of the Company becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended), directly or indirectly, of securities of VendingData
representing 25.0% or more of the combined voting power of the Company’s
outstanding securities ordinarily having the right to vote at the election of
directors; or (b) individuals who constitute the Board on the date hereof
(the “Incumbent Board”) cease for any reason to constitute at least a majority
thereof; or (c) the approval by the Company’s stockholders of the merger or
consolidation of the Company with any other corporation or business
organization, the sale of all or substantially all the assets of the Company,
or the liquidation or dissolution of the Company; or (d) a  proxy statement is distributed soliciting
proxies from the stockholders of the Company seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the outstanding shares of the Company’s
securities are actually exchanged for or converted into cash or property or
securities not issued by the Company; or (e) at least a majority of the
Incumbent Board who are in office immediately prior to any action proposed to
be taken by the Company determine that such proposed action, if taken, would
constitute a change of control of the Company and such action is taken.

 

18.                               TAX WITHHOLDING

 

The Company shall have the right to deduct or withhold
from all payments or distributions amounts sufficient to cover any federal,
state or local taxes required by law to be withheld or paid with respect to
such payments of distributions.  In the
case of Non-Qualified Options, the Company may require that required
withholding taxes be paid to the Company at the time the Option is exercised.  The Company may also permit any withholding
tax obligations incurred by reason of the exercise of any Option to be
satisfied by withholding shares (that would otherwise be obtained upon such
exercise) having a fair market value equal to the aggregate amount of taxes
that are to be withheld.  In the case of
persons subject to Section 16(b), such withholding shall be on terms
consistent with Rule 16b-3.

 

7

 

19.                               AMENDMENT AND TERMINATION OF PLAN

 

(a)                                  The
Board may from time to time, with respect to any shares at the time not subject
to Options, suspend or terminate the Plan or amend or revise the terms of the
Plan; provided that any amendment to the Plan shall be approved by a majority
of the shares present and voting at either an annual or special meeting called
for such purpose, if the amendment would (i) materially increase the
benefits accruing to participants under the Plan, (ii) increase the number
of shares of Common Stock which may be issued under the Plan, except as
permitted under the provisions of Section 16 hereof, or
(iii) materially modify the requirements as to eligibility for
participation in the Plan.

 

(b)                                 No
amendment, suspension or termination of the Plan shall, without the consent of
the Optionee, alter or impair in a manner adverse to the Optionee any right or
obligation under any Option theretofore granted to such Optionee.

 

(c)                                  The
terms and conditions of any Option granted to an Optionee may be modified or
amended only by a written agreement executed by the Optionee and the Company;
provided, however, that if any amendment or modification of an Incentive Option
would constitute a “modification, extension or renewal” within the meaning of
Section 424(h) of the Code, such amendment shall be null and void unless
the amendment contains an acknowledgment by the parties substantially in the
following form:  “The parties hereto
recognize and agree that this amendment constitutes a modification, renewal or
extension within the meaning of Section 424(h) of the Code, of the option
granted on                     .”

 

20.                               TERM OF PLAN

 

No option shall be granted pursuant to the Plan after
10 years from the earlier of the date of adoption of the Plan by the Board or
the date of approval of the Plan by the Company’s stockholders.

 

8

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