Exhibit
10.20


 


THIS
PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF
A PORTION OF THIS PROMISSORY NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.  THIS PROMISSORY NOTE OR SUCH SHARES MAY NOT
BE SOLD, DISTRIBUTED, PLEDGED, 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 SAID SECURITIES; (B) THE COMPANY (DEFINED BELOW) RECEIVES AN OPINION
OF LEGAL COUNSEL FOR THE HOLDER OF SAID 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% NOTE DUE NOVEMBER 20, 2003


 


 


	
  $1,000,000

  	
  September 15, 2003

  



 


For Value Received, the undersigned VendingData Corporation, a
Nevada corporation (“Obligor”), hereby promises to pay to the order of Triage
Capital Management, LP or its registered assigns (“Holder”) on November 20,
2003, the principal sum of One Million Dollars ($1,000,000) and to pay interest
on the unpaid principal balance hereof from the date hereof at a rate of 10%
per annum, payable 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.  The
outstanding principal balance under this Note and all accrued and unpaid
interest shall be due and payable in a single balloon payment on November 20,
2003.  At its discretion, Obligor may,
at any time, redeem the Note without penalty upon payment of the face value of
the Note and any unpaid and accrued interest.


Holder
may convert up to 15% of the then outstanding principal amount of this Note, at
the Holder’s option, and at any time until this Note is paid-in-full, into
shares of Obligor’s common stock (“Common Stock”) at the conversion price of
$2.25 per share, (the “Conversion Price”), subject to such adjustment or adjustments, if any, of
such Conversion Price and the Common Stock issuable upon conversion.  Upon surrender of this Note, duly endorsed
or assigned to Obligor, or in blank to Obligor, with the conversion notice
attached hereto, or accompanied by  a
separate written notice substantially in the form of such conversion notice,
duly executed by Holder  and
stating that the Holder elects to convert up to 15% of the outstanding
principal amount of this Note, Obligor shall, as soon as practicable, deliver
or cause to be delivered a certificate for the number of full shares of Common
Stock issuable upon the conversion and a new promissory note representing the
remaining unpaid principal amount and accrued interest.  No fractional shares will be issued on
conversion, and instead of any fractional interest, Obligor shall pay a cash
adjustment.  The stock certificate(s)
shall be registered in the name of such Holder.  If Obligor shall, prior to the conversion or payment of this Note
in full, (i) declare a dividend or make a distribution of its Common Stock
payable in shares of its Common Stock, (ii) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iv) issue any shares of 


 

















 


capital stock of
Obligor by reclassification or capital reorganization of its Common Stock, then
the conversion privilege 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 (i), or the effective date in the case of (ii), (iii) or (iv).


This Note is being issued
in connection with a Common Stock Purchase Warrant (the “Warrant”) to purchase
up to Fify Thousand (50,000) shares of Common Stock.  If Obligor does not redeem this Note on or before November 20,
2003, Obligor shall issue to Holder an additional 50,000 warrants with an
exercise price of $2.25 per share for each $1 million in principal that remains
outstanding for each thirty (30) day period beyond November 20, 2003, subject
to the adjustments described in the immediately preceding paragraph.  Exercise of certain rights under the Warrant
are expressly subject to certain conditions contained therein and herein.


This Note shall be pari passu with the Obligor’s outstanding
10% partially convertible notes.


Obligor may not, without
the prior written consent of Holder, issue other indebtedness that has a senior
ranking to this Note in priority of payment. 
In the event any action is taken to collect or enforce the indebtedness
evidenced by this Note (the “Indebtedness”) or any part thereof, Obligor agrees
to pay, in addition to the principal and interest due and payable hereon, all
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.


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.


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 (a) any waiver by Holder or
failure to enforce or exercise rights under any of the terms, covenants or
conditions of this Note, (b) the granting of any renewal, indulgence, extension
of time to Obligor, or any other obligors of the Indebtedness, or (c) the
addition or release of any person or entity primarily or secondarily liable for
the Indebtedness.


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.


This Note shall be
binding upon the undersigned 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.


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.


 


2

















 


Time is of the
essence with respect to all of the terms and provisions of this Note.


	
   

  	
  VendingData Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J. Blad

  
	
   

  	
   

  	
  Steven J. Blad

  President and Chief Executive Officer

  
	
   

  	
  Date:

  	
  September 16, 2003

  



 


 


3

















NOTICE OF
CONVERSION


To VendingData Corporation:


The undersigned owner of
this 10% Note due November 20, 2003 (this “Note”) hereby irrevocably exercises
the option to convert up to 15% of the currently outstanding principal amount
of this Note into shares of restricted common stock of VendingData Corporation
(“Common Stock”), in accordance with the terms and conditions of this Note, and
directs that the shares of restricted Common Stock issuable and deliverable
upon conversion be issued and delivered to the undersigned.  


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  
	
  Signed:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  
						



 


 


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