Exhibit 10.7
 
EXHIBIT A
 
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE “RESTRICTED SECURITIES”
AS THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT. SUCH SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE
SATISFACTION OF COUNSEL TO THE ISSUER.
 
$__________________, 2006
 
CONVERTIBLE SECURED PROMISSORY NOTE
 
1.  Obligation. For value received, VENDINGDATA CORPORATION, a Nevada
corporation (“Maker”), promises to pay to __________________ ("Holder"), the
Principal Amount and Interest (both as defined below) in the manner and upon the
terms and conditions set forth herein.
 
2.  Principal Amount and Interest. The principal amount (“Principal Amount”) of
this Note is [RATABLE PORTION OF $1,500,000] __________ Dollars ($_______). This
Note shall bear interest on the unpaid Principal Amount at the rate of eight
percent (8%) per annum (“Interest”). The accrued and unpaid Interest shall be
paid in semi-annual installments, commencing on June 1, 2006 and continuing
thereafter on each June 1st and December 1st until all amounts owing under this
Note are converted as described in Section 3 below. Payments of the Interest
shall be made in lawful money of the United States of America, at
_______________________ or at such other place as Holder may designate in
writing.
 
3.  Conversion of Principal Amount. On the earlier of (i) the date that Maker
receives approval from its stockholders for such conversion, or (ii) August 31,
2006 (the first such to occur being the “Conversion Date”), the Principal Amount
shall be converted into a total of _______________ shares of the Maker’s common
stock, par value $0.001 per share (“Common Stock”), valued at $_________ per
share. Conversion will occur immediately on the Conversion Date without any need
for further action on the part of Holder. Certificates representing the shares
of Common Stock issued pursuant to this Section 3 will be subject to the terms
and conditions set forth in that certain Amended and Restated Put Agreement
dated of even date herewith by and between Maker and Holder (the “Put
Agreement”), except that the six month lock-up period on such shares shall start
on May 2, 2006 and not on the date of issuance.
 
4.  Security Agreement. This Note is being delivered pursuant to that certain
Letter Agreement dated May 2, 2006 between Maker and Holder. Maker’s obligations
under this Note are subject to a security interest in the assets of Maker,
pursuant to that certain Security Agreement (“Security Agreement”) dated May 1,
2006 entered into between Maker and Holder.

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5.  Events of Default. The following shall each constitute an “Event of Default”
under this Note: (i) default in the payment when due of any amount required
hereunder, (ii) default in Maker’s performance of any other obligation hereunder
or under the Security Agreement, the Put Agreement, or the Registration Rights
Agreement that remains uncured ten days after receipt of written notice of
default, or (iii) any of the following events of bankruptcy or insolvency: (A)
the Maker shall file a voluntary bankruptcy or reorganization petition under the
provisions of the Federal Bankruptcy Act, any other bankruptcy or insolvency law
or any other similar statute applicable to the Maker (“Bankruptcy Laws”), (B)
the Maker shall consent to the filing of any bankruptcy or reorganization
petition against it under any Bankruptcy Law, (C) the Maker shall make an
assignment for the benefit of his creditors, (D) the Maker shall admit in
writing its inability to pay its debts generally as they become due, (E) the
Maker shall consent to the appointment of a receiver, trustee, or by the order
of a court of competent jurisdiction, a receiver, liquidator or trustee of the
Maker or of any substantial part of its property shall not have been discharged
within a period of sixty (60) days, (F) by decree of such a court, the Maker
shall be adjudicated bankrupt or insolvent or any substantial part of the
property of the Maker shall have been sequestered and such degree shall have
continued undischarged and unstayed for a period of sixty (60) days after the
entry thereof, or (G) an involuntary bankruptcy reorganization petition pursuant
to any Bankruptcy Law shall be filed against the Maker (and, in the case of any
such petition filed pursuant to any provision of a statute which requires the
approval of such petition by a court, shall be approved by such a court) and
shall not be dismissed within sixty (60) days after such filing.
 
6.  Acceleration Upon Event of Default or Change of Control. Upon the occurrence
of an Event of Default specified in Section 5 above or a Change in Control (as
defined below), the entire Principal Amount and all Interest shall, at the
option of Holder evidenced by a written notice to Maker, become immediately due
and payable, without further presentment, notice or demand for payment. For
purposes of this Note, a “Change in Control” shall mean the occurrence of any of
the following events: (i) a sale of all or substantially all of the assets of
the Maker; (ii) a liquidation or dissolution of the Maker; (iii) a merger or
consolidation in which the Maker is not the surviving corporation, unless the
stockholders of the Maker immediately prior to such consolidation, merger or
reorganization, own more than 50% of the Maker’s voting power immediately after
such; (iv) a reverse merger in which the Maker is the surviving corporation but
the shares of Common Stock and securities convertible into Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; (v) any consolidation or merger of the Maker, or any other corporate
reorganization, in which the stockholders of the Maker immediately prior to such
consolidation, merger or reorganization, own less than 50% of the Maker’s voting
power immediately after such consolidation, merger or reorganization; or
(vi) any Person other than James Crabbe becomes the owner, directly or
indirectly, of securities of the Maker representing more than 50% of the
combined voting power of the Maker’s then outstanding securities; provided,
however, that a “Change in Control” shall not include any transaction the sole
purpose of which is to change the state of the Maker’s incorporation. 
 
7.  Expenses of Enforcement. Maker agrees to pay all reasonable costs and
expenses, including, without limitation, reasonable attorneys’ fees, as a court
of competent jurisdiction shall award, which Holder shall incur in connection
with any legal action or legal proceeding commenced for the collection of this
Note or the exercise, preservation or enforcement of Holder’s rights and
remedies thereunder.

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8.  Cumulative Rights and Remedies. All rights and remedies of Holder under this
Note shall be cumulative and not alternative and shall be in addition to all
rights and remedies available to Holder under applicable law.
 
9.  Governing Law. This Note shall be governed by and interpreted and construed
in accordance with the laws of the State of Nevada.
 
10.  Notices and Demands. Any notice or demand which by any provision of this
Note is required or provided to be given shall be in writing and shall be deemed
to have been given or served sufficiently for all purposes if sent as provided
in the Put Agreement or through a nationally-recognized overnight courier and
simultaneously transmitted by facsimile to the following respective addresses
and facsimile telephone numbers:

                
Maker:
VendingData Corporation.
 
6830 Spencer Street
 
Las Vegas, NV 89119
 
Attention: Mark R. Newburg,
 
President and Chief Executive Officer
 
Facsimile: (702) 733-7197

 
or at any other address designated by Maker to Holder in writing.
 
Holder:
 
 
 
 
 
Attention:
 
Facsimile:

 
or at any other address designated by Holder to Maker in writing, and if to an
assignee of Holder, to its address as designated to Maker in writing.
 
IN WITNESS WHEREOF, Maker has caused this Note to be executed and delivered at
Las Vegas, Nevada effective as of the day and year first above written.
 
VENDINGDATA CORPORATION

By:    ____________________________     
Mark R. Newburg,
President and Chief Executive Officer

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