Document:

Exhibit  10.3 

FORM OF
SECURITY AGREEMENT 

 
        THIS
SECURITY AGREEMENT (this “Agreement”) is made and entered into as of the date
set forth on the signature page hereto, by and between VENDINGDATA CORPORATION, a Nevada
corporation (“Debtor”), and the parties listed on the signature pages hereto
(each a “Secured Party” and together the “Secured Parties”). 

WITNESSETH: 

 
        WHEREAS,
Debtor is conducting a private placement (the “Private Placement”) of units
exempt from the registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”), where said units shall consist of a 10% senior convertible
promissory notes in increments of Fifty Thousand Dollars ($50,000) (the
“Units”); 

 
        WHEREAS,
Debtor proposes to sell through the Private Placement a minimum of Six Million Two Hundred
Fifty Thousand Dollars ($6,250,000) and a maximum of Ten Million Dollars ($10,000,000) in
Units; 

 
        WHEREAS,
pursuant to the Private Placement, Debtor proposes to borrow money from Secured Parties in
the original principal amount of up to Ten Million Dollars ($10,000,000) pursuant to the
promissory notes issued as part of the Private Placement (the “Notes”); 

 
        WHEREAS,
Debtor has agreed to secure its obligations arising under the Notes, including all debts,
obligations, liabilities, interest, fees, charges and expenses arising under the Notes
(the “Obligations”), by entering into this Agreement with Secured Parties; 

 
        WHEREAS,
this Agreement replaces in its entirety that certain Security Agreement entered into with
respect to the Company’s 9% Senior Secured Notes that closed on September 17, 2004; 

 
        NOW,
THEREFORE, for and in consideration of the promises and mutual covenants, agreements,
understandings, undertakings, representations, warranties and promises, and subject to the
conditions hereinafter set forth, and intending to be legally bound thereby, the parties
do hereby covenant and agree that the recitals set forth above are true and accurate and
are hereby incorporated in and made a part of this Agreement, and further covenant and
agree as follows: 

	1.  	 SECURITY
INTEREST 

 
        Subject
to the terms and conditions of this Agreement, Debtor hereby grants to Secured Parties, as
a group, a first priority security interest in all of Debtor’s right, title and
interest in all property and interests of Debtor, tangible or intangible, whether now or
hereafter existing, wherever located (collectively, the “Collateral”), including
all: 

 
        1.1.
Accounts, including but not limited to, all accounts, all rights of Debtor to payment for
goods sold or leased or for services rendered, all accounts receivable of Debtor; all
obligations owing to Debtor evidenced by an instrument or chattel paper; all obligations
owing to Debtor of any kind or nature, including all writings, if any, evidencing the
same, including all instruments, drafts, acceptances and chattel paper; any and all
proceeds of any of the foregoing. Further included within the term “Accounts” are
all right, title and interest of Debtor in and any security and liens with respect to
any Account, and all Accounts, Documents and Contract Rights of Debtor as defined in the
Uniform Commercial Code as enacted in the State of Nevada (the “Uniform Commercial
Code”); and  

 
        1.2.
Investment Property, including all of Debtor’s investment property (as defined in
the  Uniform Commercial Code) and all of Debtor’s other securities (whether
certificated  or uncertificated), security entitlements, financial assets, securities
accounts,  commodity contracts, and commodity accounts (as each such term is defined in
the Uniform  Commercial Code), including all substitutions and additions thereto, all
dividends,  distributions and sums distributable or payable from, upon or in respect of
such property,  and all rights and privileges incident to such property; and  

 
        1.3.
Instruments and Chattel Paper, including all instruments and chattel paper as defined in
the Uniform Commercial Code and all proceeds thereof; and  

 
        1.4.
General Intangibles, including but not limited to, all general intangibles as defined in
the Uniform Commercial Code and all proceeds thereof, including without limitation, any
and all rights of Debtor to any refund of any tax assessed against Debtor or paid by
Debtor, loss carry-back tax refunds, insurance premium rebates, unearned premiums,
insurance proceeds, chooses in action, names, trade names, goodwill, trade secrets,
computer programs, computer records, data, computer software, customer lists, patents,
patent rights, patent applications, patents pending, patent licenses or assignments,
development ideas and concepts, licenses, permits, franchises, literary rights, rights to
performance, trademarks, trademark applications, trademark rights, logos, intellectual
property, copyrights, proprietary or other processes, drawings, designs, diagrams, plans,
reports, charts, catalogs, manuals, research, literature, proposals and other
reproductions on paper or otherwise, of any and all concepts or ideas, whether or not
related to the business or operations of Debtor; and  

 
        1.5.
Equipment as defined in the Uniform Commercial Code, including but not limited to, all
equipment, vehicles, machinery, tools, furniture, fixtures, trade fixtures, parts, all
tangible personal property utilized in the conduct of Debtor’s business and all
additions, accessions, substitutions, components, and replacements thereto, therefor and
thereof and all proceeds thereof; and  

 
        1.6.
Inventory as defined in the Uniform Commercial Code, including without limitation, all
raw  materials and other materials and supplies, work-in-progress and finished goods and
any  products made or processed therefrom and all substances, if any, commingled
therewith or  added thereto; and  

 
        1.7.
All products and proceeds of the above, including insurance proceeds.  

	2.  	 OBLIGATIONS
SECURED 

 
        2.1.
Obligations Secured. The security interest granted hereby secures payment and
performance of the Obligations under the Notes on a pari passu basis.  

 
        2.2.
Seniority. The payment of the Notes is senior to all other obligations of Debtor
whether now existing or hereinafter incurred except for: (1) existing asset-based
borrowings and lines of credit from commercial or financial institutions, including
Madison Leasing or Central Leasing in the aggregate amount of $2,834,689 as of December
31, 2004; and (2) indebtedness approved by the prior written consent from each Secured
Party.  

 
        2.3.
Collateral Agent. No later than February 10, 2005, Debtor shall identify a financial
institution to serve as the authorized representative for the Secured Parties (the  “Collateral
Agent”) and establish the rights and obligations of the Collateral  Agent. Debtor
shall provide written notice of the proposed Collateral Agent and the  proposed agreement
governing the rights and obligations of the Collateral Agent to all  Secured Parties (the
“Collateral Agent Agreement”). Upon the approval of the  Collateral Agent and
the terms and conditions of the Collateral Agent Agreement by the  holders of a majority
of the then outstanding and unpaid principal on the Notes issued  under the Private
Placement, Debtor shall enter into the Collateral Agent Agreement, at  which time the
Collateral Agent Agreement shall be binding upon all Secured Parties. Each  Secured Party
agrees to not unreasonably withhold its consent to the Collateral Agent  Agreement.
Debtor shall pay for all costs and expenses related to the identification of  the
Collateral Agent, the preparation of the Collateral Agent Agreement and the retention  of
the Collateral Agent.  

-2- 

	 	 
        2.3.1.
In the event that Debtor fails to identify a prospective Collateral Agent by February 10,
2005, the interest rate on the Notes shall be increased by two percent (2%) to twelve
percent (12%) per annum until such time that Debtor has cured such failure.  

	3.  	 DEBTOR’S
REPRESENTATIONS AND WARRANTIES 

 
        Debtor
represents and warrants that: 

 
        3.1.
Authorization. The execution, delivery and performance of this Agreement and the
Notes  are within Debtor’s corporate powers, and are not in contravention of law nor
of the  terms of Debtor’s Articles of Incorporation or Bylaws, as amended, nor of
any  indenture, agreement or undertaking to which Debtor is a party or by which it is
bound.  

 
        3.2.
Place of Business. Debtor’s principal place of business is located at the
address  provided on the signature page of this Agreement, and Debtor keeps its records
concerning  inventory, accounts, contract rights and other property at that location.  

 
        3.3.
Title to Collateral. With the exception of liens created hereunder and liens related
to certain existing asset-based borrowings and lines of credit from Madison Leasing or
Central Leasing, Debtor owns all of its personal property and has good, clear and
marketable title thereto, free and clear of all liens and encumbrances.  

 
        3.4.
Collateral and Perfection. Neither Debtor nor, to the best of Debtor’s
knowledge,  any affiliate (as such term is used in Rule 405 under the Securities Act of
1933, as  amended (“Affiliates”)) have performed any acts which might prevent
the  Collateral Agent from enforcing any of the terms of this Agreement or which would
limit  the Collateral Agent in any such enforcement. No collateral is in the possession
of any  person (other than Debtor) asserting any claim thereto or security interest
therein. The  security interests created hereunder constitute valid first priority
security interests  under the Uniform Commercial Code securing the Obligations to the
extent that a security  interest may be created in the Collateral.  

	4.  	 GENERAL
OBLIGATIONS OF DEBTOR 

 
        4.1.
Financing Statements. Debtor agrees to execute one or more financing statements, to
pay the cost of filing the same in all public offices wherever filing is required by
applicable law to perfect a security interest or is deemed by Secured Parties to be
necessary or desirable and to execute such other documents as Secured Parties shall
reasonably request.  

 
        4.2.
Insurance. Debtor agrees to keep or cause to be kept all the Collateral insured with
coverages in amounts not less than usually carried by one engaged in a like business.  

 
        4.3.
Inspection. Debtor will keep accurate and complete records of the Collateral and
provide Secured Parties or any of their agents with the right to: (1) inspect the
Collateral wherever located; (2) visit Debtor’s place or places of business; and (3)
audit, check and make extracts from any copies of books, records, journals, orders,
receipts and correspondence that relate to the Collateral or to the general financial
condition of Debtor or any Affiliate. The rights granted to Secured Parties shall be
subject to prior written notice of five (5) business days, shall be at reasonable
intervals and shall not adversely affect, disrupt or hinder Debtor’s operations.  

-3- 

 
        4.4.
Negative Pledge. Debtor will not assign any accounts or other Collateral to any
person  other than Secured Parties, nor create or permit to be created any lien,
encumbrance or  security interest of any kind on any of its accounts, contract rights or
inventory other  than for the benefit of Secured Parties, nor grant or permit to be
granted any corporate  guaranty other than for the benefit of Secured Parties, except (a)
indebtedness for  borrowed money which is expressly subordinated to the Obligations in
all respects, on such  terms and conditions as have been approved by the holders of Notes
representing majority  of the then outstanding and unpaid principal on all of the then
issued and outstanding  Notes and (b) purchase price liens.  

 
        4.5.
Existence; Perfection. Debtor will maintain its corporate existence in good standing
and comply with all laws and regulations of the United States or any state or political
subdivision thereof, or of any governmental authority which may have jurisdiction over it
or its business. Debtor will not change its name, identity or corporate structure in any
manner unless it shall have given Secured Parties prior written notice thereof and
delivered an opinion of counsel satisfactory to Secured Parties with respect thereto.
Debtor will not establish or change the location of its chief executive office or its
chief place of business or except in the ordinary course of business, the locations where
it keeps or holds any Collateral or records relating thereto or in any event change the
location of any Collateral if such change would cause the security interests hereunder to
lapse or cease to be perfected.  

 
        4.6.
Taxes. Debtor will pay all real and personal property taxes, assessments and charges
as well as all franchise, income, unemployment, old age benefit, withholding, sales and
other taxes assessed against it, or payable by it at such times and in such manner as to
prevent any penalty from accruing or any lien or charge from attaching to its property,
and will furnish Secured Parties upon request, receipts or other evidence that deposits
or  payments have been made.  

 
        4.7.
Sales. Debtor will not sell or dispose of any of its assets, including the
Collateral,  except in the ordinary and usual course of its business.  

 
        4.8.
Repair. Debtor will maintain its equipment and property in good repair and working
order.  

 
        4.9.
Observation Rights. Debtor shall provide to a representative of the holders of more
than fifty-one percent (51%) of the outstanding principal on the Notes, where such
representation shall be in writing, the right to receive written notice of each regularly
scheduled meeting of Debtor’s Board of Directors (including any meetings of
committees thereof) as far in advance as such notice is required to be delivered to the
Directors and the right to attend as observers of all meetings of the Board of Directors
(including any meetings of committees thereof); provided, further, in the case of
telephonic meetings conducted in accordance with Debtor’s bylaws and applicable law,
the representatives will be given notice and the opportunity to listen to such telephonic
meetings. The notice and observation rights provided for in this Section 4.9 are subject
to the execution by the representative of a non-disclosure agreement in the form
requested  by Debtor and shall terminate when less than fifteen percent (15%) of the
original  outstanding principal on the Notes issued under the Private Placement remains
outstanding.  

 
        4.10.
Continuing Representations. The warranties and representations made by Debtor in this
Agreement are continuing. In the event that any obligation, representation or warranty is
no longer true or correct, Debtor will immediately notify Secured Parties in writing.  

-4- 

	5.  	 DEFAULT 

 
        Debtor
shall be in default under this Agreement and under any other agreement with Secured
Parties upon the happening of any of the following events or conditions: 

 
        5.1.
Failure of Debtor to pay when due any Obligation, whether by maturity, acceleration or
otherwise, where such failure shall have remained uncured for a period of two (2)
business  days following the due date of such payment;  

 
        5.2.
A breach by Debtor of any representation, warranty, covenant or agreement set forth in
this Agreement, the Notes or the Subscription Agreements (“Subscription  Agreements”)
by and between the Company and any Secured Party with respect to the  issuance of the
Notes in the Private Placement, where such breach shall have remained  uncured for a
period of fifteen (15) days following the receipt of written notice of such  breach;  

 
        5.3.
Material loss or theft, substantial damage or destruction or unauthorized sale or
encumbrance of any material portion of the Collateral in excess of reasonably expected
recoveries under insurance policies, or the making of any levy on, or seizure or
attachment of a material portion of the Collateral;  

 
        5.4.
The occurrence of a default under any of the Notes;  

 
        5.5.
The  bankruptcy of Debtor or any subsidiary of Debtor, which means: (1) the filing
of any  petition or answer by Debtor seeking to adjudicate Debtor as bankrupt or
insolvent, or  seeking for Debtor any liquidation, winding up, reorganization,
arrangement, adjustment,  protection, relief, or composition of Debtor or Debtor’s
debts under any law relating  to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting  to, or acquiescing in the entry of an order for relief
or the appointment of a receiver,  trustee, custodian or other similar official for
Debtor or for any substantial part of  Debtor’s property; or (2) corporate
action taken by Debtor to authorize any of  the actions set forth above;  

 
        5.6.
The involuntary bankruptcy of Debtor or any subsidiary of Debtor, which means, without
the  consent or acquiescence of Debtor, the entering of an order for relief or approving
a  petition for relief or reorganization or any other petition seeking any
reorganization,  arrangement, composition, readjustment, liquidation, dissolution or
other similar relief  under any present or future bankruptcy, insolvency or similar
statute, law or regulation,  or the filing of any such petition against such person,
which petition shall not be  dismissed within ninety (90) days, or without the consent or
acquiescence of Debtor, the  entering of an order appointing a trustee, custodian,
receiver or liquidator of Debtor or  of all or any substantial part of the property of
Debtor, which order shall not be  dismissed within ninety (90) days;  

 
        5.7.
The appointment of a receiver, trustee, custodian or other similar official for any
substantial part of Debtor’s property;  

 
        5.8.
Failure of Debtor to pay when due any obligation, whether by maturity, acceleration or
otherwise, in an amount in excess of One Hundred Thousand Dollars ($100,000), where such
failure is not cured within any applicable grace period or waived;  

 
        5.9.
Failure to return proceeds to Secured Parties pursuant to Section 4.2 of the Subscription
Agreements; or  

 
        5.10.
The incurrence of indebtedness through loans, lines of credit and other forms of
indebtedness (which for purposes of this Section 5.10 shall include lease financing
arrangements for equipment) in an amount is excess of Fifteen Million Dollars
($15,000,000).  

-5- 

	6.  	 RIGHTS
of SECURED PARTIES UPON DEFAULT 

 
        Through
the Collateral Agent, as appointed pursuant to this Agreement, Secured Parties shall upon
the occurrence of a default hereunder and at any time thereafter, without presentment,
demand, notice, protest or advertisement of any kind have the following rights in addition
to all other rights hereunder: 

 
        6.1.
Acceleration. Subject to the terms of the Notes, the Collateral Agent may make all
Obligations under this or any other agreement with Debtor immediately due and payable
without presentment, demand, protest, hearing or notice of any kind and may exercise the
rights of a secured party under law or under the terms of this or any other agreement
with  Debtor.  

 
        6.2.
Possession. On behalf of all Secured Parties, the Collateral Agent may: (1) enter and
take possession of all Equipment, Inventory and other Collateral and the premises on
which  they are located; (2) operate and use Debtor’s equipment, whether or not
Collateral  hereunder; (3) complete work in process; (4) apply as Debtor’s
attorney-in-fact for  domestic or foreign patents or other intellectual property rights
with respect to  inventions; (5) seek registration or assignment, foreign and domestic,
of any trademarks,  trade names, styles, logos or copyrights; and (6) sell, lease or
license the Collateral to  third persons or associations without being liable to Debtor
on account of any losses,  damage or depreciation that may occur as a result thereof so
long as the Collateral Agent  shall act reasonably and in good faith. The Collateral
Agent shall give Debtor and all  Secured Parties at least thirty (30) days’ notice
by hand delivery at or by United  States certified mail, postage prepaid (in which event
notice shall be deemed to have been  given when so delivered), to the address specified
herein, of the time and place of any  public or private sale or other disposition unless
the Collateral is perishable, threatens  to decline speedily in value, or is the type
customarily sold in a recognized market. Upon  such sale, a Secured Party may become the
purchaser of the whole or any part of the  Collateral, discharged from all claims and
free from any right of redemption. In case of  any such sale by the Collateral Agent of
all or any of said Collateral on credit or for  future delivery, property so sold may be
retained by the Collateral Agent until the  selling price is paid by the purchaser. The
Collateral Agent shall incur no liability in  case of the failure of the purchaser to
take up and pay for the property so sold. In case  of any such failure, the said property
may again be sold.  

 
        6.3.
Power of Attorney and Notification. At Debtor’s expense and subject to the
rights  of the Secured Parties, the Collateral Agent may communicate with account debtors
in order  to verify with them to its satisfaction the existence, amount and terms of any
accounts or  contract rights and also notify account debtors that Collateral has been
assigned for the  benefit of the Secured Parties and that payments shall be made directly
to the Collateral  Agent. Upon request of the Collateral Agent, Debtor will so notify
such account debtors  and will indicate on all billings to such account debtors that
their accounts must be paid  to the Collateral Agent. Debtor does hereby appoint the
Collateral Agent and its agents as  Debtor’s attorney-in-fact: to, upon an event of
default hereunder, collect,  compromise, endorse, sell or otherwise deal with the
Collateral or proceeds thereof in its  own name or in the name of Debtor; to endorse the
name of Debtor upon any Note, checks,  drafts, money orders, or other instruments,
documents, receipts or Collateral that may  come into its possession and to apply the
same in full or part payment of any amounts  owing to Secured Parties; to sign and
endorse the name of Debtor upon any documents,  instruments, drafts against account
debtors, assignments, verifications and notices in  connection with Accounts, and any
instrument or document relating thereto or to  Debtor’s rights therein; and to give
written notice to any office and officials of  the United States Post Office to effect
such change or changes of address that all mail  addressed to Debtor may be delivered
directly to the Collateral Agent. Debtor hereby  grants to its said attorney-in-fact full
power to do any and all things necessary to be  done in and about the premises as fully
and effectually as Debtor might or could do, and  hereby ratifies all that its
attorney-in-fact shall lawfully do or cause to be done by  virtue hereof. This power of
attorney is coupled with an interest and is irrevocable for  the term of this Agreement
for all transactions hereunder and thereafter as long as Debtor  may be indebted to
Secured Parties.  

-6- 

 
        6.4.
Application of Proceeds. Any and all proceeds of any Collateral realized or obtained
by Collateral Agent upon exercise of the rights and remedies hereunder, shall be applied
as follows:  

	 	 
        6.4.1.
Toward the payment of any and all costs and expenses, fees and commission and taxes of
such sale, collection or other realization incurred by the Collateral Agent or any
Secured  Party;  

	 	 
        6.4.2.
With respect to any surplus remaining after application of proceeds as provided in
Section  6.4.1, toward the payment of the Obligations on a pro rata basis, and any costs,
fees or  expenses incurred in connection with the administration, collection or
enforcement  thereof, including, without limitation, reasonable attorney’s fees and
other  professionals’ out of pocket costs and fees, until payment and satisfaction
in full  thereof; and  

	 	 
        6.4.3.
With respect to any surplus remaining after application of proceeds as provided in
Section  6.4.2 above, shall be paid to Debtor, or its successors or assigns, or to
whomsoever may  be lawfully entitled to receive the same.  

	7.  	 DEBTOR’S
OBLIGATION TO PAY EXPENSES 

 
        In
the event the Collateral Agent is the prevailing party in any action brought to enforced
the rights of Secured Parties hereunder, Debtor shall pay to the Collateral Agent on
demand any and all reasonable expenses (including, but not limited to, a collection
charge on all accounts collected, all reasonable attorney’s fees and expenses,
and all other expenses of like or unlike nature) that may be incurred or paid by the
Collateral Agent or Secured Parties to obtain or enforce payment of any account against
the account debtor, Debtor or any guarantor or surety of or in the prosecution or defense
of any action or concerning any matter growing out of or connected with the subject matter
of this Agreement, the Obligations, such Collateral or the rights or interests of Secured
Parties therein or thereto. All such expenses may be added to the principal amount of any
indebtedness owed by Debtor to Secured Parties and shall constitute part of such
Obligations secured hereby. 

	8.  	 WAIVER;
AMENDMENT 

 
        Debtor
waives demand, presentment, protest, notice of nonpayment and all other notices. No delay
or omission by the Collateral Agent in exercising any rights shall operate as a waiver of
such right or any other right. Waiver on any one occasion shall not be construed as a bar
to or waiver of any right or remedy on any future occasion. The rights and remedies of
Secured Parties, whether evidenced hereby or by any other agreement, instrument or paper,
shall be cumulative and may be exercised singularly or concurrently. Unless otherwise
provided in this Agreement or in the Notes, any waiver or amendment of any provisions of
this Agreement shall be in writing, executed and delivered by the Company and by Secured
Party or Secured Parties holding Notes representing not less than a majority of the then
outstanding principal of all of the Notes then issued and outstanding. 

	9.  	 FURTHER
ASSURANCES 

 
        Debtor,
at its own expense, shall do, make, execute and deliver all such additional and further
acts, deeds, assurances, documents, instruments and certificates as the Collateral Agent
may reasonably require, including, without limitation: (1) executing, delivering and
filing financial statements and continuation statements under the Uniform Commercial Code
as applicable in any relevant jurisdiction; (2) obtaining governmental and other third
party consents and approvals; and (3) obtaining waivers from mortgagees and landlords. 

-7- 

	10.  	COUNTERPART
EXECUTION 

 
        This
Agreement may be executed in any number of counterparts with the same effect as if Debtor
and all of the Secured Parties had signed the same document. All counterparts shall be
construed together and shall constitute one agreement. 

	11.  	 CHOICE
OF LAW 

 
        THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEVADA. THE PARTIES HERETO HEREBY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS LOCATED IN CLARK COUNTY, NEVADA WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY. 

	12.  	 WAIVER
OF JURY TRIAL 

 
        DEBTOR
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WTTH THIS AGREEMENT OR THE NOTES OR THE RELATIONSHIP ESTABLISHED
HEREUNDER, THEREUNDER. 

[Signature page
follows] 

-8- 

 
        IN
WITNESS WHEREOF, the parties hereto have signed this Agreement as of the _______ day of
________________ 2005. 

	“DEBTOR”	ADDRESS 

	VENDINGDATA CORPORATION,

        a Nevada corporation	6830 Spencer Street
Las Vegas, Nevada 89119

	By:  ___________________________________________

        Steven J. Blad

Its:  President and Chief Executive Officer	TELEPHONE:   702-733-7195

FACSIMILE:     702-733-7197

	“SECURED PARTIES”	ADDRESS 

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

-9- 

	“SECURED PARTIES”	ADDRESS 

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

	_____________________________________

(Insert Name)	______________________________________________

______________________________________________

	By:  ___________________________________________

        ___________________________________________

Its:  ___________________________________________	TELEPHONE:   ____-____-____

FACSIMILE:     ____-____-____

-10-Exhibit  10.4 

FORM OF
COLLATERAL AGENT
AGREEMENT 

 
        THIS
COLLATERAL AGENT AGREEMENT (this “Agreement”) is made and entered into as of the
7th day of February 2005 by and among PREMIER TRUST, INC., a Nevada corporation (the
“Collateral Agent”), VENDINGDATA CORPORATION, a Nevada corporation
(“Debtor”), and the parties identified on Schedule A hereto
(the “Lenders”) who hold or have subscribed for Debtor’s 10% Senior Secured
Notes due January 31, 2005 (the “Notes”). 

WITNESSETH: 

 
        WHEREAS,
Debtor is conducting a private placement (the “Private Placement”) of the
Notes exempt from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”), where said Notes shall consist be issued in increments
of Fifty Thousand Dollars ($50,000); 

 
        WHEREAS,
Debtor proposes to sell through the Private Placement a minimum of Six Million Two Hundred
Fifty Thousand Dollars ($6,250,000) and a maximum of Ten Million Dollars ($10,000,000) in
Notes; 

 
        WHEREAS,
the Lenders are making loans to the Company to be secured by certain Collateral (as
defined below); and 

 
        WHEREAS,
it is desirable to provide for the orderly administration of such Collateral by requiring
each Lender to appoint the Collateral Agent, and the Collateral Agent has agreed to accept
such appointment and to receive, hold and deliver such Collateral, all upon the terms and
subject to the conditions hereinafter set forth; and 

 
        WHEREAS,
it is desirable to allocate the enforcement of certain rights of the Lenders under the
Notes for the orderly administration thereof. 

 
        NOW,
THEREFORE, for and in consideration of the promises and mutual covenants, agreements,
understandings, undertakings, representations, warranties and promises, and subject to the
conditions hereinafter set forth, and intending to be legally bound thereby, the parties
do hereby covenant and agree that the recitals set forth above are true and accurate and
are hereby incorporated in and made a part of this Agreement, and further covenant and
agree as follows: 

	1. 	COLLATERAL 

 
        1.1.
Security Agreement. Contemporaneously with the execution and delivery of this
Agreement by the Collateral Agent and the Lenders: (1) the Collateral Agent has or will
have executed an acknowledgement of the terms and conditions of the that certain Security
Agreement between the Company and the Lenders (the “Security Agreement”),
regarding the grant of a security interest in and lien on assets owned by the Company
(such assets are referred to herein as the “Collateral”) to the Collateral
Agent, for the benefit of the Lenders; and (2) the Company has or will have issued the
Notes to the Lenders. For purposes solely of perfection of the security interests granted
to the Collateral Agent, as agent on behalf of the Lenders, and on its own behalf under
the Security Agreement, the Collateral Agent hereby acknowledges that any Collateral held
by the Collateral Agent is held for the benefit of the Lenders in accordance with this
Agreement and the Security Agreement. No reference to the Security Agreement or any other
instrument or document shall be deemed to incorporate any term or provision thereof into
this Agreement unless expressly so provided.  

 
        1.2.
Powers of the Collateral Agent. The Lenders hereby appoint the Collateral Agent (and
the Collateral Agent hereby accepts such appointment) to take any action upon the
occurrence of a default (as defined in the Notes or the Security Agreement) (an  “Event
of Default”) that is not cured, including, without limitation, the  application of
any cash collateral received by the Collateral Agent to the payment of the  Obligations
and the exercise of any remedies given to the Collateral Agent pursuant to the  Security
Agreement that the Collateral Agent deems necessary or proper for the  administration of
the Collateral pursuant to the Security Agreement. Upon disposition of  the Collateral in
accordance with the Security Agreement, the Collateral Agent shall  promptly distribute
any cash or Collateral in accordance with Section 6.4 of the Security  Agreement.  

 
        1.3.
Distribution of Proceeds. The Collateral Agent is to distribute in accordance with
the  Security Agreement any proceeds received from the Collateral which are distributable
to  the Lenders in proportion to their respective interests in the Obligations (as
defined in  the Security Agreement).  

	2. 	FEES
AND EXPENSES; APPOINTMENT OF THE COLLATERAL AGENT. 

 
        2.1.
Fees. The Company shall pay the Collateral Agent an initial fee of Two Thousand
Dollars ($2,000) and a recurring annual fee of One Thousand Dollars ($1,000) payable
within thirty (30) days after such fees are due. Upon the occurrence of an Event of
Default, the Collateral Agent will charge an hourly rate for performing extraordinary
services in addition to the services covered by its administration fee.  

 
        2.2.
Expenses. The Company shall pay any and all costs and expenses incurred by the
Collateral Agent in connection with the transactions contemplated hereby, including,
without limitation, any and all costs and expenses arising from or in connection with:
(1)  the preparation of this Agreement and all waivers, releases, discharges,
satisfactions,  modifications and amendments of this Agreement; (2) the administration
and holding of the  Collateral; (3) insurance expenses; and (4) the enforcement,
protection and adjudication  of the parties’ rights hereunder by the Collateral
Agent, including, without  limitation, the reasonable disbursements, expenses and fees of
the attorneys the  Collateral Agent may retain, if any.  

	3. 	ACTION
BY THE MAJORITY IN INTEREST. 

 
        3.1.
Certain Actions. Each of the Lenders covenants and agrees that only a Majority in
Interest shall have the right, but not the obligation, to undertake the following actions
(it being expressly understood that less than a Majority in Interest hereby expressly
waive the following rights that they may otherwise have under the Notes, but only insofar
as such waiver affects their right to receive proceeds from the Collateral):  

	 	 
        3.1.1.
Acceleration. If an Event of Default occurs, after the expiration of any applicable grace
and/or cure period, a Majority in Interest may, on behalf of all the Lenders, instruct
the  Collateral Agent to provide to the Company notice to cure such default and/or
declare the  unpaid principal amount of the Notes to be due and payable, together with
any and all  accrued interest thereon and all costs payable pursuant to such Notes;  

	 	 
        3.1.2.
Enforcement. Upon the occurrence of any Event of Default after the expiration of any
applicable grace and/or cure period during which such period the Company fails to cure
such Event of Default, a Majority in Interest may instruct the Collateral Agent to
proceed  to protect, exercise and enforce against the Company, on behalf of all the
Lenders, their  rights and remedies under the Notes, and such other rights and remedies
as are provided by  law or equity;  

	 	 
        3.1.3.
Waiver of Past Defaults. A Majority in Interest may instruct the Collateral Agent to
waive  any Event of Default by written notice to the Company, and the other Lenders; and  

	 	 
        3.1.4.
Amendment. A Majority in Interest may instruct the Collateral Agent to waive, amend,
supplement or modify any term, condition or other provision in the Notes or Security
Agreement in accordance with the terms of the Notes or Security Agreement so long as such
waiver, amendment, supplement or modification is made with respect to all of the Notes
and  with the same force and effect with respect to each of the Notes.  

 
        3.2.
Further Actions. A Majority in Interest may instruct the Collateral Agent to take any
action that it may take under this Agreement by instructing the Collateral Agent in
writing to take such action on behalf of all the Lenders.  

 
        3.3.
Majority in Interest. For so long as any obligations remain outstanding on the Notes,
Majority in Interest shall mean Lenders who hold not less than fifty percent (50%) of the
principal amount outstanding under the Notes.  

 
        3.4.
Limitation. Notwithstanding the foregoing, a Majority in Interest cannot agree to
amend the Notes to change the interest rate, maturity date or priority of the security
interest without the consent of each of the Lenders.  

	4. 	 POWER
OF ATTORNEY. 

 
        4.1.
Appointment. To effectuate the terms and provisions hereof, the Lenders hereby
appoint  the Collateral Agent as their attorney-in-fact (and the Collateral Agent hereby
accepts  such appointment) for the purpose of carrying out the provisions of this
Agreement  including, without limitation, taking any action on behalf of, or at the
instruction of,  the Majority in Interest at the written direction of the Majority in
Interest and  executing any consent authorized pursuant to this Agreement and taking any
action and  executing any instrument that the Collateral Agent may deem necessary or
advisable (and  lawful) to accomplish the purposes hereof.  

 
        4.2.
No Liability. All acts done under the foregoing authorization are hereby ratified and
approved and neither the Collateral Agent nor any designee nor agent thereof shall be
liable for any acts of commission or omission, for any error of judgment, for any mistake
of fact or law except for acts of gross negligence or willful misconduct as determined by
a court of competent jurisdiction.  

 
        4.3.
Irrevocable. This power of attorney, being coupled with an interest, is irrevocable
while this Agreement remains in effect.  

	5. 	 RELIANCE
ON DOCUMENTS AND EXPERTS. 

 
        The
Collateral Agent shall be entitled to rely upon any notice, consent, certificate,
affidavit, statement, paper, document, writing or communication (which may be by telegram,
cable, telex, telecopier, or telephone) reasonably believed by it to be genuine and to
have been signed, sent or made by the proper person or persons, and upon opinions and
advice of its own legal counsel, independent public accountants and other experts selected
by the Collateral Agent. 

	6. 	 DUTIES
OF THE COLLATERAL AGENT; STANDARD OF CARE. 

 
        6.1.
Duties. The Collateral Agent’s duties are only those expressly set forth in this
Agreement, and the Collateral Agent hereby is authorized to perform those duties in
accordance with commercially reasonable practices. The Collateral Agent shall have no
duty  or responsibility to: (1) determine whether the Collateral is sufficient to secure
the  Company’s liabilities under the Notes, or (2) inquire as to the provisions of
any  other agreement or instrument. The Collateral Agent may be liable only for its own
gross  negligence or willful misconduct, when a court of competent jurisdiction
determines that  the Collateral Agent has acted in such manner. The Collateral Agent may
exercise or  otherwise enforce any of its rights, powers, privileges, remedies and
interests under this  Agreement and applicable law or perform any of its duties under
this Agreement by or  through its officers, employees, attorneys, or agents.  

 
        6.2.
Standard of Care. The Collateral Agent shall act in good faith and with that degree
of  care that an ordinarily prudent person in a like position would use under similar
circumstances. Any funds held by the Collateral Agent hereunder need not be segregated
from other funds except to the extent required by law. The Collateral Agent shall be
under  no liability for interest on any funds received by it hereunder.  

 
        6.3.
Reliance. In performing its duties under this Agreement, the Collateral Agent:  

	 	 
        6.3.1.
May rely upon any notice, instruction, request or other instrument, not only as to its
due  execution, validity and effectiveness, but also as to the truth and accuracy of any
information contained therein, which the Collateral Agent shall believe to be genuine and
to have been signed or presented by the person or parties purporting to sign the same,
including, without limitation, instructions given by letter, facsimile transmission,
telegram, teletype, cablegram, or electronic media, such instructions appear on their
face  to have been signed, sent or presented by the proper party or parties;  

	 	 
        6.3.2.
May confer with counsel of its own choice in relation to matters arising under this
Agreement and shall have full and complete authorization from the other parties hereunder
for any action taken or suffered by it under this Agreement or under any transaction
contemplated hereby in good faith and in accordance with opinion of such counsel;  

	 	 
        6.3.3.
May, in its sole discretion, comply with orders issued or process entered by any court
with respect to the Collateral, without determination by the Collateral Agent of such
court’s jurisdiction in the matter; and  

	 	 
        6.3.4.
Shall not incur any liability to anyone resulting from actions taken by the Collateral
Agent in reliance in good faith on such instructions.  

 
        6.4.
Limitation. Notwithstanding anything contained herein to the contrary, no provision
of  this Agreement shall require the Collateral Agent to take any action which, in the
Collateral Agent’s reasonable judgment, would result in: (1) any violation of this
Agreement or any provision of law; or (2) any potential liability to the Collateral
Agent.  The Collateral Agent shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein. In no event shall Collateral Agent be
liable for incidental, indirect, special, consequential or punitive damages (including,
but not limited to lost profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action. The Collateral
Agent shall not be obligated to take any legal action or commence any proceeding in
connection with the Collateral, any account in which Collateral is deposited, this
Agreement, the Notes or the Security Agreement, or to appear in, prosecute or defend any
such legal action or proceeding.  

 
        6.5.
Review for Own Purposes. Any review by the Collateral Agent of the Notes, the
Security  Agreement or any separate undertaking between the Company and the Lenders shall
be solely  for the Collateral Agent’s own purposes. THE COLLATERAL AGENT HAS NO
RESPONSIBILITY  RELATIVE TO THE TERMS OF ANY NOTE, SECURITY AGREEMENT, OR SEPARATE
UNDERTAKING, MAKES NO  REPRESENTATION AS TO THE EFFECT OR ADEQUACY THEREOF AND SHALL HAVE
NO OBLIGATION TO ENSURE  THAT THIS AGREEMENT OR ANY ACTION RELATIVE TO THIS AGREEMENT
CONFORMS THEREWITH.  

	7. 	 RESIGNATION. 

 
        The
Collateral Agent may resign and be discharged of its duties hereunder at any time by
giving written notice of such resignation to the other parties hereto, stating the date
such resignation is to take effect. Within 15 days of the giving of such notice, a
successor collateral agent shall be appointed by the Majority in Interest; provided,
however, that if the Lenders are unable so to agree upon a successor within such time
period, the successor collateral agent may be a person designated by the Collateral Agent,
and any and all fees of such successor collateral agent shall be the joint and several
obligation of the Lenders. The Collateral Agent shall continue to serve until the
effective date of the resignation or until its successor accepts the appointment and
receives the Collateral held by the Collateral Agent but shall not be obligated to take
any action hereunder. The Collateral Agent may deposit any Collateral with any court in
New York that accepts such Collateral. 

	8. 	 EXCULPATION. 

 
        The
Collateral Agent and its officers, employees, attorneys and agents, shall not incur any
liability whatsoever for the holding or delivery of documents or the taking of any other
action in accordance with the terms and provisions of this Agreement, for any mistake or
error in judgment, for compliance with instructions of the Majority in Interest and any
applicable law or any attachment, order or other directive of any court or other authority
(irrespective of any conflicting term or provision of this Agreement), or for any act or
omission of any other person engaged by the Collateral Agent in connection with this
Agreement, unless occasioned by the exculpated person’s gross negligence or willful
misconduct, when a court of competent jurisdiction determines that the exculpated party
has acted in such manner; and each party hereto hereby waives any and all claims and
actions whatsoever against the Collateral Agent and its officers, employees, attorneys and
agents, arising out of or related directly or indirectly to any or all of the foregoing
acts, omissions and circumstances. 

	9.  	 INDEMNIFICATION. 

 
        The
Lenders hereby agree to indemnify, reimburse and hold harmless the Collateral Agent and
its directors, officers, employees, attorneys and agents, jointly and severally, from and
against any and all claims, liabilities, losses and expenses that may be imposed upon,
incurred by, or asserted against any of them, arising out of or related directly or
indirectly to this Agreement or the Collateral, including, without limitation: (1) any
loss, liability, costs or expenses arising out of or in connection with the status of the
Collateral Agent; (2) the reasonable fees and expenses of counsel of the Collateral Agent;
and (3) any circumstance relating to any insurance, tax or other laws or regulations of
any jurisdiction pertaining to the Collateral or the other parties hereto, except such as
are occasioned by the indemnified person’s own gross negligence or willful
misconduct, as determined by a court of competent jurisdiction. The Lenders hereby
acknowledge that the foregoing indemnities shall survive the resignation or removal of the
Collateral Agent or the termination of this Agreement. 

	10.  	 MISCELLANEOUS 

 
        10.1.
Governing Law; Venue. This Agreement shall be governed by, and construed in
accordance  with, the laws of the State of Nevada. The parties hereto submit to the
exclusive  jurisdiction of the courts located in Clark County, Nevada, with respect to
any dispute  arising under this Agreement and the transactions contemplated hereby.  

 
        10.2.
Entire Agreement. This Agreement, the Subscription Agreement, the Note, the Security
Agreement and the Exchange Agreement contain the entire agreement between the Collateral,
the Company and the Lenders with regard to the subject matter hereof and may not be
modified or waived except in a writing signed by the Collateral, the Company and the
Lenders.  

 
        10.3.
Headings. The headings of this Agreement are for convenience and reference only, and
shall not limit or otherwise affect the interpretation of any term or provision hereof.  

 
        10.4.
Binding Effect. This Agreement and the rights, powers, and duties set forth herein
shall, except as otherwise expressly provided herein, be binding upon and inure to the
benefit of, the heirs, executors, administrators, legal representatives, successors, and
assigns of the parties hereto.  

 
        10.5.
Amendments and Modification; Additional Lender. No provision hereof shall be
modified,  altered, waived or limited except by written instrument expressly referring to
this  Agreement and to such provision, and executed by the parties hereto. Any transferee
of a  Note who acquires a Note after the date hereof will become a party hereto by
signing the  signature page and sending an executed copy of this Agreement to the
Collateral Agent.  

 
        10.6.
Attorneys’ Fees. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in that action or proceeding, in addition
to  any other relief to which it may be entitled.  

 
        10.7.
Notices. Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing, shall be sent by facsimile to the party to be
notified and shall be deemed effectively given upon personal delivery to the party to be
notified, or four days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified. Any notice to
Purchaser shall be sent to his facsimile number and address set forth on the signature
page hereto, or at such other facsimile number or address as a party may designate by ten
(10) days’ advance written notice to the other party.  

	 	To the Company:	VendingData Corporation
Attn: Chief Executive Officer and Chief Financial Officer
6830 Spencer Street
Las Vegas, Nevada 89119
Facsimile: 702-733-7197

	 	With a copy to:	Kummer Kaempfer Bonner & Renshaw
Attn: Michael J. Bonner
3800 Howard Hughes Parkway
Seventh Floor
Las Vegas, Nevada 89109
Facsimile: 702-796-7181

	 	If to Collateral Agent:	Premier Trust of Nevada
Attn: Mark Dreschler
2700 West Sahara, Suite 300
Las Vegas, Nevada 89102
Facsimile: 702-507-0755

	 	If to a Lender:	See address on Schedule A.

 
        10.8.
Severability. If one or more provisions of this Agreement are held to be
unenforceable  under applicable law, such provision shall be excluded from this Agreement
and the balance  of the Agreement shall be interpreted as if such provision were so
excluded and shall be  enforceable in accordance with its terms. In addition, if any such
provision, or any part  thereof, is held to be unenforceable, the parties agree that the
court, regulatory agency  or other governmental body making such determination shall have
the power to delete or add  specific words or phrases, so that such provision shall then
be enforceable to the fullest  extent permitted by law.  

 
        10.9.
Neutral Interpretation. This Agreement shall be construed in accordance with its
intent and without regard to any presumption or any other rule requiring construction
against the party causing the same to be drafted.  

 
        10.10.
Waiver. No act, omission or delay by the Collateral Agent shall constitute a waiver
of  the Collateral Agent’s rights and remedies hereunder or otherwise. No single or
partial waiver by the Collateral Agent of any default hereunder or right or remedy that
it  may have shall operate as a waiver of any other default, right or remedy or of the
same  default, right or remedy on a future occasion.  

 
        10.11.
Counterparts. This Agreement may be executed by the parties hereto individually or in
any combination, in one or more counterparts, and by facsimile signature and
transmission,  each of which shall be an original and all of which shall together
constitute one and the  same agreement.  

 
        IN
WITNESS WHEREOF, the parties hereto have caused this Collateral Agent Agreement to be
signed, by their respective duly authorized officers or directly, as of the date first
written above. 

“COMPANY” 

VENDINGDATA
CORPORATION,
     a Nevada corporation 

	By: 	  

	
Its:	Douglass
Caszatt
Secretary 

“COLLATERAL
AGENT” 

PREMIER TRUST, INC.,

     a Nevada corporation 

	By: 	  

	
Its:	Mark Dreschler
President

ACKNOWLEDGEMENT
AND CONSENT  

 
        THE
UNDERSIGNED hereby acknowledges the foregoing Collateral Agent Agreement by and among
PREMIER TRUST, INC., a Nevada corporation (the “Collateral Agent”), VENDINGDATA
CORPORATION, a Nevada corporation (“Debtor”), and the parties identified on
Schedule A hereto (the “Lenders”) who hold or have
subscribed for Debtor’s 10% Senior Secured Notes due February 2005 (the
“Notes”), and agrees to be bound by the terms and conditions thereof. 

“LENDER”

__________________________________________,

     a ___________________________

	By: 	  

	
Its:	_________________________
_________________________

SCHEDULE A 

LENDERS  

	NAME
	ADDRESS
	PRINCIPAL AMOUNT

	1.  ______________________________	______________________________

______________________________
______________________________

Telephone: _____________________
Facsimile: ______________________	$_________________________

	2.  ______________________________	______________________________

______________________________
______________________________

Telephone: _____________________
Facsimile: ______________________	$_________________________

	3.  ______________________________	______________________________

______________________________
______________________________

Telephone: _____________________
Facsimile: ______________________	$_________________________

	4.  ______________________________	______________________________

______________________________
______________________________

Telephone: _____________________
Facsimile: ______________________	$_________________________

	5.  ______________________________	______________________________

______________________________
______________________________

Telephone: _____________________
Facsimile: ______________________	$_________________________

	6.  ______________________________	______________________________

______________________________
______________________________

Telephone: _____________________
Facsimile: ______________________	$_________________________

	7.  ______________________________	______________________________

______________________________
______________________________

Telephone: _____________________
Facsimile: ______________________	$_________________________

	
	
	

		TOTAL

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