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 CONVERTIBLE NOTE DUE FEBRUARY ____, 2008

$__________________ February ___, 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 February
___, 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 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 February ___,
2006, the unpaid principal balance will be multiplied by one hundred and five
percent (105%). If a Pre-Payment occurs after February ___, 2006 and prior to
February ___, 2007, the unpaid principal balance will be multiplied by one
hundred and three percent (103%). If a Pre-Payment occurs on or after February
___, 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 Ten Million Dollars ($10,000,000) 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. 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 Security Agreement of even date herewith. 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.

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          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, be duly authorized, validly issued, fully paid, and non-assessable; (2)
Obligor shall at all times have authorized, and 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:

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

    Adjusted                        (  17,199,558   +   3,030,303  )
   Conversion    =    $1.65    x    --------------------------------   =   $1.50
     Price                          (  17,199,558   +   5,000,000  )

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            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. 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 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.

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            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)).

            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.

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            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.

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            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 Initial Holders holding a majority in interest of the Conversion Shares to
review the Registration Statement and all amendments and supplements thereto a
reasonable period of time prior to its filing with the SEC, and not file any
document in a form to which such counsel reasonably objects.

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

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

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            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.

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            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. “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, for the Holders in connection with the sale of the Conversion
Shares. Notwithstanding the foregoing, Holder shall pay any and all underwriting
discounts, commissions and transfer taxes attributable to the Conversion Shares.

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            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.

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          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:  

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Its: Steven J. Blad
Chief Executive Officer

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CONVERSION AGREEMENT

TO: VENDINGDATA CORPORATION (THE “COMPANY”)

          The undersigned, pursuant to the provisions set forth in the attached
10% Senior Convertible Note due February ___, 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:

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  SIGNATURE:

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  DATED:

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  ADDRESS:

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  NOTE: The above signature should correspond exactly with the name on the face
of the Note.

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