Exhibit 10.2

FORM OF
PROMISSORY NOTE

  THIS PROMISSORY NOTE AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD, DISTRIBUTED, OFFERED FOR SALE,
ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS: (A) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAW COVERING ANY SUCH TRANSACTION INVOLVING THESE SECURITIES; (B) THE COMPANY
(DEFINED BELOW) RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE
SECURITIES STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION AND SUCH
OPINION IS IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY; OR (C)
PURSUANT TO RULE 144 UNDER SUCH ACT.

VENDINGDATA CORPORATION
10% SENIOR SECURED CONVERTIBLE NOTE DUE MARCH, 2008

$    __________________________
March __, 2005

                FOR VALUE RECEIVED, the undersigned VendingData Corporation, a
Nevada corporation (“Obligor” or the “Company”), hereby promises to pay to the
order of  or (his/her/its) registered assigns (“Holder”) on March __, 2008 (the
“Payment Date”), the principal sum of  Dollars ($ ) and to pay interest on the
unpaid principal balance hereof from the date hereof at a rate of 10% per annum
(the “Interest Rate”), payable semi-annually, in arrears, on August 1 and
February 1 (commencing on August 1, 2005), until this note (this “Note”) is paid
off and satisfied in full. Interest shall be calculated on the basis of a
365/366-day year and actual days elapsed. Accrued but unpaid interest shall not
be compounded.

                1.               Payment. The outstanding principal balance
under this Note and all accrued and unpaid interest shall be due and payable in
a single balloon payment on the Payment Date. At its discretion, Obligor may, at
any time, redeem the Note prior to the Payment Date (“Pre-Payment”), where such
Pre-Payment must be in an amount no less than fifty percent (50%) of the then
outstanding principal amount under this Note. If a Pre-Payment occurs on or
prior to March __, 2006, the unpaid principal balance will be multiplied by one
hundred and five percent (105%). If a Pre-Payment occurs after March __, 2006
and prior to March __, 2007, the unpaid principal balance will be multiplied by
one hundred and three percent (103%). If a Pre-Payment occurs on or after March
__, 2007, or if the Pre-Payment occurs pursuant to the provisions of Section 4.2
of the Subscription Agreement dated as of the date hereof by and between Obligor
and Holder (the “Subscription Agreement”), the unpaid principal shall remain at
par. If Obligor intends to exercise its right of Pre-Payment, Obligor shall
provide Holder with thirty (30) days prior written notice during which time
Holder may elect to convert this Note in accordance with Section 4 of this Note.
Time is of the essence with respect to all of the terms and provisions of this
Note.

                2.                Description of Notes. This Note is issued as
part of a private placement of up to Two Million Dollars ($2,000,000) in senior
convertible notes (the “Private Placement”). This Note shall be pari passu to
all of the Notes issued as part of the Private Placement and the 10% senior
convertible notes due February 15, 2008 (the “February Notes”), issued by the
Company in February of 2005 (the “February Private Placement”). This Note is
being issued in increments of Fifty Thousand Dollars ($50,000).

                3.               Security. This Note is secured pursuant to the
terms of that certain Amended and Restated Security Agreement of even date
herewith (the “Security Agreement”). Holder agrees that all notices, demands,
consents and other rights of Holder are to be exercised pursuant to that certain
Security Agreement of even date herewith.

--------------------------------------------------------------------------------

                4.               Conversion. As long as the there remains
principal outstanding pursuant to this Note (the “Conversion Period”), Holder
may exercise a one-time right to convert up to fifty percent (50%) of the then
outstanding principal into shares of Obligor’s common stock, $.001 par value
(“Common Stock”) at a rate of one share of Common Stock per each One and
65/10ths Dollars ($1.65) (the “Conversion Price”) of outstanding principal,
where the resulting shares of Common Stock shall be referred to as the
“Conversion Shares.” 

                  4.1.    Covenants.  Obligor hereby covenants and agrees
that: (1) all Conversion Shares shall, upon issuance in accordance with the
terms of this Note and subject to clause (2) of this Section 4.1, be duly
authorized, validly issued, fully paid, and non-assessable; (2) Obligor will
amend and restate its articles of incorporation to provide for a sufficient
number of authorized shares to be reserved for the purpose of issuance upon
conversion of this Note, sufficient number of shares of Common Stock to provide
for the conversion of this Note; and (3) the conversion rights of Holder shall
be binding upon any entity succeeding to Obligor by merger, consolidation, or
acquisition of all or substantially all of Obligor’s assets.    
                4.2.    Adjustment Provisions. During the Conversion Period, the
Conversion Price and the number of Conversion Shares shall be subject to
adjustment from time to time as provided in this Section 4.2. If Obligor shall,
prior to the payment of the Note in full, (1) declare a dividend or make a
distribution of Common Stock payable in shares of Common Stock, (2) subdivide
its outstanding shares of Common Stock, into a greater number of shares of
Common Stock, (3) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (4) issue any shares of capital stock of
Obligor by reclassification or capital reorganization of its shares of Common
Stock, then the number of Conversion Shares and the Conversion Price in effect
immediately prior to such action shall be adjusted so that Holder shall be
entitled to receive the number and kind of shares of Common Stock or other
capital stock which Holder would have owned or have been entitled to receive
immediately after such action had Holder converted this Note immediately prior
to the record date in the case of (1), or the effective date in the case of (2),
(3) or (4). In the event that any adjustment of the Conversion Price as required
herein results in a fraction of a cent, such Conversion Price shall be rounded
up to the nearest cent.                     4.3.    Weighted Average Conversion
Price Adjustment Provisions. Until the conversion of this Note pursuant to this
Section 4, in the event that the Company issues Common Stock in consideration
for cash, cash equivalents, promissory notes or other consideration (other than
pursuant to stock options issued pursuant to the Company’s stock option plans)
at a price per share or issues debt or equity securities or reprices outstanding
debt or equity securities with an exercise and/or conversion price (in either
case, the “New Price”) less than the Conversion Price, as adjusted in accordance
with Section 4.2 hereof, the Company shall agree to calculate the adjusted
Conversion Price (the “Adjusted Conversion Price”) based upon a weighted average
of the Conversion Shares issuable based on the Conversion Price and the New
Price pursuant to the following formula:  

Adjusted
Conversion
Price =   Conversion Price x   ( Shares Outstanding + Conversion Shares Based )
  Prior to Issuance on Conversion Price

--------------------------------------------------------------------------------

  ( Shares Outstanding + Conversion Shares Based )   Prior to Issuance on New
Price

      where, based on the 17,199,558 shares outstanding as of December 31, 2004
and the maximum conversion of the Notes, if the Company were to issue shares of
Common Stock at $1.00 per share, the Adjusted Conversion Price would be
calculated as follows:

–2–

--------------------------------------------------------------------------------

Adjusted
Conversion
Price

=

$1.65

x

(

17,199,558

+

606,061

)

=

$1.61

--------------------------------------------------------------------------------

(

17,199,558

+

1,000,000

)

                      4.4.    Manner of Conversion. Subject to the provisions
hereof, the relevant portion of this Note may be converted by the Holder by the
surrender of this Note, together with a conversion agreement in the form
attached hereto (the “Conversion Agreement”), duly completed and executed by
Holder, to Obligor during normal business hours on any business day at Obligor’s
principal executive offices (or such other location as Obligor may designate by
notice to Holder).                     4.5.    Issuance of Conversion Shares.
Subject to the amendment and restatement of the Obligor’s articles of
incorporation as contemplated by Section 4.1(2), the Conversion Shares shall be
deemed to be issued to Holder, as the record owner of such Conversion Shares, as
of the close of business on the date on which this Note shall have been
surrendered and the completed Conversion Agreement shall have been delivered.
Certificates for the Conversion Shares, representing the aggregate number of
shares specified in the Conversion Agreement, shall be delivered to Holder as
soon as reasonably practicable, not exceeding three (3) business days after the
relevant portion of this Note shall has been so converted. The certificates so
delivered shall be in such denominations as may be reasonably requested by
Holder and shall be registered in the name of Holder. Obligor shall, at its
expense, at the time of delivery of such certificates, deliver to Holder a new
promissory note substantially identical to this Note other than with respect to
this conversion herewith representing the balance of the outstanding principal
under this Note that had not been converted.                     4.6.    No
Rights or Liabilities as a Stockholder. This Note shall not entitle Holder to
any voting rights or other rights as a stockholder of Obligor. No provision of
this Note, in the absence of affirmative action by Holder to convert any
relevant portion of this Note, and no mere enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of such Holder for
the Conversion Price or as a stockholder of Obligor, whether such liability is
asserted by Obligor or by creditors of Obligor.

               5.              Demand Registration Rights. As soon as
practicable after the issuance of this Note, Obligor shall prepare and file a
registration statement (the “Registration Statement”) on Form S-3 or any similar
short-form registration statement, with respect to the registration under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Securities Act”) of all Conversion Shares for
resale, which Registration Statement shall also cover such shares convertible
under the February Notes, which Registration Statement shall also cover such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Notes as a result of adjustments from stock splits, stock
dividends or similar transactions.

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

–3–

--------------------------------------------------------------------------------

                  5.2.    Registration Default. In the event that: (a) the
Registration Statement is not filed by the Company within thirty (30) days after
the issuance of this Note, or declared effective by the SEC within one hundred
twenty (120) days after the date of the issuance of this Note, on the 120th day
after the issuance of this Note, or (b) the Common Stock is no longer listed on
the American Stock Exchange or another national securities exchange or quotation
medium (including the Nasdaq National Market and the Nasdaq SmallCap Market) or
has been suspended from trading thereon for three (3) consecutive business days,
the Interest Rate shall increase by one-half percent (0.5%) per annum for each
30-day period for which Obligor remains in default pursuant to this Section 5.2,
where the Interest Rate shall not increase to more than fourteen percent (14%)
per annum; provided, however, with respect to a registration default under
subsection (b), Obligor shall have one hundred twenty (120) days to cure such
registration default during which time the Interest Rate shall not increase,
where the failure of Obligor to cure during said 120-day period shall cause the
retroactive application of the one-half percent (0.5%) per annum increase to the
date of the registration default. Once the Registration Statement has been
declared effective by the SEC, if the Registration Statement is no longer
effective, other than as provided in Section 5.3(f), for a period of thirty (30)
days in the aggregate (which days need not be consecutive), on the day after
such thirtieth (30th) day the then applicable Interest Rate shall increase by
one-half percent (0.5%) per annum and shall be subject to additional increases
of one-half percent (0.5%) per annum for every such subsequent aggregate 30-day
period that the Registration Statement is no longer effective. Upon the
re-listing of the Common Stock or when the Registration Statement regains its
effectiveness, the Interest Rate shall return to ten percent (10%) per annum.  
                   5.3.    Obligations of the Company. In connection with the
registration of the Conversion Shares, the Company shall have the following
obligations:  

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

–4–

--------------------------------------------------------------------------------

                  b.              The Company shall prepare and file with the
SEC such amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Conversion Shares of the Company covered by the Registration Statement
until the end of the Registration Period.                     c.              
The Company shall furnish to special counsel for the Holders whose Conversion
Shares are included in the Registration Statement (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of the Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or supplement thereto,
and each letter written by or on behalf of the Company to the SEC or the staff
of the SEC (including, without limitation, any request to accelerate the
effectiveness of the Registration Statement or amendment thereto), and each item
of correspondence from the SEC or the staff of the SEC, in each case relating to
the Registration Statement (other than any portion, if any, thereof which
contains information for which the Company has sought confidential treatment),
(ii) on the date of effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Registration Statement or amendment has been
declared effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, if applicable, and all amendments and supplements
thereto and such other documents as such Holder may reasonably request in order
to facilitate the disposition of the Conversion Shares owned by such Holder.    
                d.              The Company shall use its best efforts to (i)
register and qualify the Conversion Shares covered by the Registration Statement
under such other securities or “blue sky” laws of such jurisdictions in the
United States as each Holder who holds Conversion Shares being offered
reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Conversion Shares for
sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (A) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 5.3.d, (B) subject itself to general taxation in any such
jurisdiction, (C) file a general consent to service of process in any such
jurisdiction, (D) provide any undertakings that cause the Company undue expense
or burden, or (E) make any change in its charter or bylaws, which in each case
the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.    
                e.               If (i) there is material non-public information
regarding the Company that the Company’s Board of Directors (the “Board”)
reasonably determines not to be in the Company’s best interests to disclose and
that the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in ordinary course of business) or merger,
consolidation, tender offer or other similar transaction) available to the
Company that the Board reasonably determines not to be in the Company’s best
interests to disclose and that the Company would be required to disclose under
the Registration Statement, then the Company may suspend effectiveness of a
Registration Statement filed pursuant to this Note and suspend the sale of
Conversion Shares under such Registration Statement for a period not to exceed
twenty (20) consecutive calendar days, provided that the Company may not suspend
its obligation pursuant to this Section 5.3.e for more than forty (40) calendar
days in the aggregate during any twelve (12) month period (each, a “Blackout
Period”); provided, however, that no such suspension shall be permitted for more
than one twenty (20) calendar day period, arising out of the same set of facts,
circumstances or transactions.

–5–

--------------------------------------------------------------------------------

                  f.                As promptly as practicable, but in no event
later than five (5) business days, after becoming aware of such event, the
Company shall notify each Holder of the occurrence of any event (where filing
and delivery of a Form 8-K shall constitute compliance) of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and, use its commercially reasonable
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Holder as such Holder may
reasonably request.                     g.              The Company shall use
its commercially reasonable efforts (i) to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement, and, if
such an order is issued, to obtain the withdrawal of such order at the earliest
practicable moment (including in each case by amending or supplementing such
Registration Statement) and (ii) to notify each Holder who holds Conversion
Shares being sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof (and if
such Registration Statement is supplemented or amended, deliver such number of
copies of such supplement or amendment to each Holder as such Holder may
reasonably request).                     h.              The Company shall
permit a single firm of counsel designated by the Holders of the Notes and the
February Notes holding a majority in interest of the Conversion Shares and the
shares of Common Stock issued pursuant to the February Notes to review the
Registration Statement and all amendments and supplements thereto a reasonable
period of time prior to its filing with the SEC, and not file any document in a
form to which such counsel reasonably objects.    
                i.                The Company shall make generally available to
its security holders as soon as practical, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the effective date of the Registration Statement.
                    j.                At the request of any Holder in the case
of an underwritten public offering, the Company shall furnish, on the date of
effectiveness of the Registration Statement (i) an opinion, dated as of such
date, from counsel representing the Company addressed to the Holders and in
form, scope and substance as is customarily given in an underwritten public
offering and (ii) a letter, dated such date, from the Company’s independent
certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters and the Holders.

–6–

--------------------------------------------------------------------------------

                  k.               To the extent permitted by law, the Company
shall make available for inspection by (i) any Holder, (ii) any underwriter
participating in any disposition pursuant to the Registration Statement filed
pursuant to Section 5, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Holders, and (iv) one firm of attorneys retained
by all such underwriters (collectively, the “Inspectors”), all reasonably
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably
deemed necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company’s officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Holder) of
any Record or other information which the Company provides in accordance with
this Section 5.3(k), unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (b)
the release of such Records is ordered pursuant to a subpoena or other order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Note or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector and its respective
Holder shall have entered into confidentiality agreements (in form and substance
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 5.3(k). Each Holder agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein shall be deemed to limit
the Holders’ ability to sell Conversion Shares in a manner which is otherwise
consistent with applicable laws and regulations.    
                l.                The Company shall hold in confidence and not
make any disclosure of information concerning an Holder provided to the Company
unless (i) disclosure of such information is necessary to comply with federal or
state securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) such Holder
consents to the form and content of any such disclosure. The Company agrees that
it shall, upon learning that disclosure of such information concerning an Holder
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Holder prior to making such
disclosure, and allow the Holder, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.                     m.              The Company shall use its
commercially reasonable efforts to promptly either (i) cause all of the
Conversion Shares covered by the Registration Statement to be listed on the
American Stock Exchange or another national securities exchange and on each
additional national securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Conversion Shares is then permitted under the rules of such exchange, or (ii)
secure the designation and quotation of all of the Conversion Shares covered by
the Registration Statement on the Nasdaq National Market or Nasdaq SmallCap
Market.                     n.              The Company shall provide a transfer
agent and registrar, which may be a single entity, for the Conversion Shares not
later than the effective date of the Registration Statement.

–7–

--------------------------------------------------------------------------------

                  o.              The Company shall cooperate with the Holders
who hold Conversion Shares being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Conversion
Shares to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Holders may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Holders may request, and, within three (3) business
days after the Registration Statement which includes Conversion Shares is
declared effective by the SEC, the Company shall cause legal counsel selected by
the Company to deliver, to the transfer agent for the Conversion Shares (with
copies to the Holders whose Conversion Shares are included in such Registration
Statement), an opinion of such counsel in the customary form setting forth that
the Conversion Shares have been registered under the Securities Act.    
                p.              At the request of any Holder, the Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with such Registration Statement as may be reasonably necessary in
order to change the plan of distribution set forth in such Registration
Statement.                     q.              The Company shall comply with all
applicable laws related to a Registration Statement and offering and sale of
securities and all applicable rules and regulations of governmental authorities
in connection therewith (including, without limitation, the Securities Act and
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules and regulations promulgated by the SEC).    
                r.                From and after the date of this Note, the
Company shall not, and shall not agree to, allow the holders of any securities
of the Company to include any of their securities that are not Conversion Shares
in the Registration Statement or any amendment or supplement thereto without the
consent of the holders of a majority in interest of the Conversion Shares.  

                 5.4.    Restrictions. Holder may assign the registration rights
granted under this Section 5 to any assignee of this Note or any portion thereof
representing not less than $50,000 in principal amount, unless Obligor has
provided its prior written consent to such assignment and the assignment of this
Note or the Conversion Shares, as applicable.                    5.5.    Fees.
 Obligor shall pay all Registration Expenses relating to any registration of the
Conversion Shares hereunder and the shares issuable pursuant to the February
Notes. “Registration Expenses” shall mean all reasonable fees and expenses
incident to Obligor’s performance of or compliance with this Section 5,
including reasonable fees of counsel, not exceeding $25,000, in connection with
the sale of the Conversion Shares and the shares issuable pursuant to the
February Notes. Notwithstanding the foregoing, Holder shall pay any and all
underwriting discounts, commissions and transfer taxes attributable to the
Conversion Shares.

–8–

--------------------------------------------------------------------------------

                  5.6.    Cooperation; Indemnification by Holder. In connection
with any registration statement in which Holder is participating, Holder will
furnish to Obligor in writing such information and documents as Obligor
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify and hold
harmless Obligor, its affiliates and their respective officers, directors,
employees and affiliates against any losses, claims, damages, liabilities, joint
or several, to which such parties may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (1) any untrue or alleged untrue statement of a material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or in any application; or (2) any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is made in such registration statement,
prospectus, preliminary prospectus or any amendment or supplement thereto, or in
any application, in reliance upon and in conformity with written information
prepared and furnished to Obligor by such Holder expressly for use therein. The
Holder shall reimburse Obligor, its affiliates, officers, directors, employees
and affiliates for any legal or any other expenses incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, that the obligation to indemnify will
be limited to Holder in amount not to exceed the net proceeds to Holder from the
sale of such Conversion Shares and shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of Holder (which consent shall not be unreasonably
withheld).                     5.7.    Indemnification by Obligor. In connection
with any registration statement in which Holder is participating, Obligor will
indemnify and hold harmless Holder, its affiliates and their respective
officers, directors, employees and affiliates against any losses, claims,
damages, liabilities, joint or several, to which such parties may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (1) any untrue or alleged
untrue statement of a material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or in any application; or (2) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, unless such untrue statement or omission is made in such
registration statement, prospectus, preliminary prospectus or any amendment or
supplement thereto, or in any application, in reliance upon and in conformity
with written information prepared and furnished to Obligor by Holder expressly
for use therein. Obligor shall reimburse Holder, its affiliates, officers,
directors, employees and affiliates for any legal or any other expenses incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the obligation to
indemnify will be limited to Obligor and shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of Obligor (which consent shall not
be unreasonably withheld).

              6.               Fees and Expenses. In the event any action is
taken to collect or enforce this Note, Obligor agrees to pay, in addition to the
principal and interest due and payable hereon, all reasonable costs of
collecting this Note, including reasonable attorneys’ fees and expenses. These
costs shall include any expenses incurred by Holder in any bankruptcy,
reorganization, or other insolvency proceeding.

              7.               Non-Waiver. The liability of Obligor under this
Note (and the liability of any endorsers of this Note) shall not be discharged,
diminished or in any way impaired by: (1) any waiver by Holder or failure to
enforce or exercise rights under any of the terms, covenants or conditions of
this Note; (2) the granting of any renewal, indulgence, extension of time to
Obligor, or any other obligors of the Indebtedness (as defined in the
Subscription Agreement); or (3) the addition or release of any person or entity
primarily or secondarily liable for the Indebtedness. No delay or omission of
Holder in exercising any right or rights, shall operate as a waiver of such
right or any other rights. A waiver on one occasion shall not be construed as a
bar to or waiver of any right or remedy on any future occasion.

              8.               Maximum Interest Rate. In no event shall the
interest rate charged or received hereunder at any time exceed the maximum
interest rate permitted under applicable law. Payments of interest received by
Holder hereunder which would otherwise cause the interest rate hereunder to
exceed such maximum interest rate shall, to the extent of such excess, be deemed
to be (and be deemed to have been contracted as being) prepayments of principal
and applied as such. Unless otherwise provided in this Note or in the Security
Agreement between the Obligor and Holder, among others, any waiver or amendment
of any provisions of this Note shall be in writing, executed and delivered by
the Company and by parties holding Notes representing not less than a majority
of the then outstanding principal of all of the Notes then issued and
outstanding.

–9–

--------------------------------------------------------------------------------

                9.               Assignment; Binding Effect. Holder may assign
this Note upon providing Obligor with prior written notice, where said notice
shall provide the effective date of the assignment and contact information of
the assignee. This Note shall be binding upon the Obligor and its successors and
assigns and shall inure to the benefit of Holder and its successors and assigns.
Every person and entity at any time liable for the payment of this Note hereby
waives demand, presentment, protest, notice of protest, notice of nonpayment due
and all other requirements otherwise necessary to hold them immediately liable
for payment hereunder.

                10.             Governing Law; Venue. This Note is governed by
and shall be construed and enforced in accordance with the laws of the State of
Nevada. Any dispute arising under this Note shall be brought in any state of
federal court of competent jurisdiction sitting in Clark County, Nevada.

  VendingData Corporation        

By:

___________________________
 

__________________  

Its:

__________________

     

–10–

--------------------------------------------------------------------------------

CONVERSION AGREEMENT

TO:         VENDINGDATA CORPORATION (THE “COMPANY”)

                The undersigned, pursuant to the provisions set forth in the
attached 10% Senior Secured Convertible Note due March, 2008 (the “Note”) hereby
irrevocably elects and agrees to convert:

  $________________ of the outstanding principal under the Note, representing
______ percent (______%) outstanding principal under the Note, into shares of
the Company’s common stock, at a rate of $1.65 per share.

                Please issue a certificate or certificates for the resulting
shares of the Company’s common stock and a replacement promissory note
reflecting the remaining outstanding principal under the Note in the name of:

  NAME:   _________________________________             SIGNATURE:  
_________________________________           DATED:  
_________________________________           ADDRESS:  
_________________________________         _________________________________    
          NOTE:   The above signature should correspond
exactly with the name on the face of the 
Note  

–11–

--------------------------------------------------------------------------------