**Exhibit10.6**

 

**THISPROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OFA PORTION OF THIS PROMISSORY NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.  THIS PROMISSORY NOTE OR SUCH SHARESMAY NOT BE SOLD, DISTRIBUTED, PLEDGED, OFFERED FOR SALE, ASSIGNED,TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS: (A) THERE IS AN EFFECTIVEREGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWCOVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES; (B) THE COMPANY(DEFINED BELOW) RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF SAIDSECURITIES STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION AND SUCHOPINION IS IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY; OR (C)PURSUANT TO RULE 144 UNDER SUCH ACT.**

 

**VENDINGDATA CORPORATION10% NOTE DUE SEPTEMBER 16, 2003**

 
| $1,000,000.00 | June 18, 2003 |
|---------------|--------------------|

 

FOR VALUE RECEIVED, the undersignedVendingData Corporation, a Nevada corporation (“Obligor”), hereby promises topay to the order of Triage Capital Management, LP or (his/her/its) registeredassigns (“Holder”) on September 16, 2003, the principal sum of One MillionDollars ($1,000,000) and to pay interest on the unpaid principal balance hereoffrom 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 ofa 365/366-day year and actual days elapsed. Accrued but unpaid interest shall not be compounded.  The outstanding principal balance under thisNote and all accrued and unpaid interest shall be due and payable in a singleballoon payment on September 16, 2003.  At its discretion, Obligor may,at any time, redeem the Note without penalty upon payment of the face value ofthe Note and any unpaid and accrued interest.

 

If Obligor does not redeem the note on orbefore September 16, 2003, Holdermay convert the then outstandingprincipal amount of thisNote, at the Holder’s option, and at any time after September 16, 2003 anduntil the payment of this Note,into shares of Obligor’s common stock (the “Common Stock”) at the conversionprice of $2.25 per share, (the “Conversion Price”), subject to such adjustmentor adjustments, if any, of such Conversion Price and the Common Stock issuableupon conversion.  Upon surrender of thisNote, duly endorsed or assigned to Obligor, or in blank to Obligor, with theconversion notice attached hereto, or accompanied by****a separate written notice substantially in the form of suchconversion notice, duly executed by Holder****andstating that the Holder elects to convert this Note, or if less than the entireprincipal amount hereof is to be converted (but in not less than $49,500increments), the portion hereof to be converted.  Obligor shall, as soon as practicable, deliver or cause to bedelivered a certificate for the number of full shares of Common Stock issuableupon the conversion and a new promissory note representing the remaining unpaidprincipal amount and accrued interest. No fractional shares will be issued on conversion, and instead of anyfractional interest, Obligor shall pay a cash adjustment.  The stock certificate(s) shall be registeredin the name of such Holder.  If Obligorshall, prior to the conversion or payment of this Note in full, (i) declare adividend or make a distribution of its Common Stock payable in shares of itsCommon Stock, (ii) subdivide its outstanding shares of Common

 

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Stock into a greater number of shares of Common Stock, (iii) combineits outstanding shares of Common Stock into a smaller number of shares ofCommon Stock, or (iv) issue any shares of capital stock of Obligor byreclassification or capital reorganization of its Common Stock, then theconversion privilege and the Conversion Price in effect immediately prior tosuch action shall be adjusted so that Holder shall be entitled to receive thenumber and kind of shares of Common Stock or other capital stock which Holderwould have owned or have been entitled to receive immediately after such actionhad Holder converted this Note immediately prior to the record date in the caseof (i), or the effective date in the case of (ii), (iii) or (iv).

 

This Note is being issued in connection with a Common Stock PurchaseWarrant (the “Warrant”) to purchase up to Fifty Thousand (50,000) shares ofCommon Stock.  This Note and the Warrantare not detachable unless and until this Note is satisfied and paid in full inaccordance herewith.  Exercise ofcertain rights under the Warrant are expressly subject to certain conditionscontained 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, issueother indebtedness that has a senior ranking to this Note in priority ofpayment.  In the event any action istaken to collect or enforce the indebtedness evidenced by this Note (the“Indebtedness”) or any part thereof, Obligor agrees to pay, in addition to theprincipal and interest due and payable hereon, all costs of collecting thisNote, including reasonable attorneys’ fees and expenses. These costs shallinclude any expenses incurred by Holder in any bankruptcy, reorganization, orother insolvency proceeding.

 

No delay or omission of Holder in exercising any right or rights, shalloperate as a waiver of such right or any other rights. A waiver on one occasionshall not be construed as a bar to or waiver of any right or remedy on anyfuture occasion.

 

The liability of Obligor under this Note (and the liability of anyendorsers of this Note) shall not be discharged, diminished or in any wayimpaired by (a) any waiver by Holder or failure to enforce or exercise rightsunder any of the terms, covenants or conditions of this Note, (b) the grantingof any renewal, indulgence, extension of time to Obligor, or any other obligorsof the Indebtedness, or (c) the addition or release of any person or entityprimarily or secondarily liable for the Indebtedness.

 

In no event shall the interest rate chargedor received hereunder at any time exceed the maximum interest rate permittedunder applicable law. Payments of interest received by Holder hereunder whichwould otherwise cause the interest rate hereunder to exceed such maximuminterest rate shall, to the extent of such excess, be deemed to be (and bedeemed to have been contracted as being) prepayments of principal and appliedas such.

 

This Note shall be binding upon the undersigned and its successors andassigns and shall inure to the benefit of Holder and its successors andassigns. Every person and entity at any time liable for the payment of thisNote hereby waives demand, presentment, protest, notice of protest, notice ofnonpayment due and all other requirements otherwise necessary to hold themimmediately liable for payment hereunder.

 

This Note is governed by and shall be construed and enforced inaccordance with the laws of the State of Nevada.  Any dispute arising under this Note shall be brought in any stateof federal court of competent jurisdiction sitting in Clark County, Nevada.

 

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

 
|   | VENDINGDATA CORPORATION |
|--------|-------------------------|
|   |                    |
|   |                    |
|   | By:                     |  /S/ *Stacie L. Brown* |
|   |                    | Stacie L. Brown, |
|   |                    | Attorney-in-Fact for  Steven J. Blad |
|   |                    | President and Chief Executive Officer |
|   | Date:                   | July 21, 2003 |

 

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**NOTICEOF CONVERSION**

 

**TOVENDINGDATA CORPORATION:**

 

The undersigned owner of this 10% Note due September 16, 2003(this “Note”) hereby irrevocably exercises the option to convert the currentlyoutstanding principal amount of this Note into shares of restricted commonstock of VendingData Corporation (“Common Stock”), in accordance with the termsand conditions of this Note, and directs that the shares of restricted CommonStock issuable and deliverable upon conversion be issued and delivered to theundersigned.  

 
| DATED:  |   |   |    |
|---------|--------|--------|---------|
|    |   |   |
| ATTEST: |   |   |    |
|    |   |   |
| SIGNED: |   |   | SIGNED: |   |   |
|    |   |   |    |
| BY:     |   |   | BY:     |   |   |
|    |   |   |    |
| ITS:    |   |   | ITS:    |   |   |

 

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