STAND-BY CREDIT AGREEMENT
This STAND-BY CREDIT AGREEMENT (this "Agreement") is made and entered
into effective as of February 6, 2001, by and between Josephthal & Co. Inc.
("Lender") and VendingData Corporation, a Nevada corporation ("Borrower").
RECITALS
WHEREAS, Borrower desires to have a line of credit in the amount of
Five Hundred Thousand Dollars ($500,000 U.S.) available upon the terms,
provisions and conditions hereinafter set forth;
WHEREAS, Lender desires to extend to Borrower such line of credit upon
the terms, provisions, conditions, representations and warranties hereinafter
set forth: and
WHEREAS, the parties desire to set forth their entire understanding and
agreement in writing;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises of the parties hereto, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
covenant that the foregoing Recitals are true and correct and further agree as
follows:
I. CREDIT FACILITY
A. CREDIT FACILITY. The original principal amount of the stand-by
credit facility (the "Credit Facility") shall be Five Hundred Thousand Dollars
($500,000 U.S.) (the "Maximum Amount"). Each advance pursuant to the Credit
Facility (an "Advance") shall be evidenced by a promissory note, a form of which
is attached hereto as EXHIBIT A (the "Note"). The Note shall bear an interest
rate of 10% per annum and shall be payable quarterly, or such earlier date as
provided for in this Agreement.
B. TERM OF COMMITMENT; TERM AND PRINCIPAL PAYMENT OF NOTE. The term of
the Credit Facility shall be twelve months from the date hereof (the "Term").
Upon the expiration of the Term, all outstanding Notes shall automatically
convert into thirty-day demand promissory notes.
1. Mandatory Repayment. Upon the consummation Borrower's
proposed private placement of senior convertible notes with the minimum
gross proceeds of Two Million Dollars ($2,000,000) (the "Private
Placement"), Borrower shall repay the entire amount outstanding under
the credit facility, including accrued interest, to Lender within
thirty days.
2. Secured. The Credit Facility and the Notes issued pursuant
to the Credit Facility shall be secured by the assets of Borrower
pursuant to the Security Agreement between the Borrower and Lender and
shall have priority over all other interests granted by Borrower,
except as in existence on the date hereof in connection with lines of
credit obtained by Borrower from institutional lenders acceptable to
Lender.
C. ADVANCES. Provided that Borrower is in substantial compliance with
the terms of this Credit Facility, Lender will make Advances to borrower from
time to time until the end of the Term, in an aggregate principal amount
outstanding at any one time of up to the Maximum Amount, upon the receipt by
Lender of the request for an Advance (the "Request").
1. Requirements for the Request. In the Request, Borrower
shall provide Lender with: (i) the amount of the Advance where such
amount shall be in increments of Fifty Thousand Dollars ($50,000 U.S.);
(ii) the requested date of the Advance which shall be as least ten (10)
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calendar days after the date of to Request; (iii) the instructions for
funding the proceeds of the Advance; and (iv) an executed Note in the
amount of the requested Advance.
D. PREPAYMENT. Borrower shall have the right, at any time and from time
to time, to repay the Advances, in whole or in part, including any accrued
interest, without penalty.
E. WARRANTS. In conjunction with the Credit Facility, Borrower shall
issue to Lender warrants to purchase Fifty Thousand (50,000) shares of the
Company's common stock, $0.001 par value, that are exercisable for five years
from the date hereof. The terms and conditions of the warrants are provided for
in the form of common stock purchase warrant attached hereto as EXHIBIT B. In
addition to the warrants issued above, Borrower shall also issue to Lender
warrants to purchase that number of shares of the Company's stock equal to the
amount of the Request.
II. REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, Borrower represents and
warrants the following:
A. AUTHORITY. Borrower has the full right and authority to enter into
this Agreement. The execution and delivery of this Agreement by Borrower has
been duly authorized by all necessary corporate action on the part of Borrower.
B. ORGANIZATION AND GOOD STANDING. Borrower is a duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Borrower has the corporate power and authority necessary to conduct its
business.
C. CONFLICT. The execution, delivery and performance of this Agreement
and other related documents will not violate or be in conflict with (1) any term
or provision of the articles of incorporation or bylaws of Borrower; (2) any
contract or agreement to which Borrower is a party, or (3) any law, ordinance,
rule, statute, order, judgment or decree to which Borrower is subject.
D. LITIGATION. There are no lawsuits, action suits, reviews,
proceedings, investigations or claims in any court or before any governmental
agency or authority, pending or threatened against Borrower, which has, had or
could reasonably have a material adverse effect on the financial condition or
business operations of Borrower or the consummation of this Agreement. Borrower
is not a party to, or bound by, any outstanding orders, judgments, rulings,
settlement arbitration awards or decrees (or agreement entered into or any
administrative, judicial or arbitration awards with any governmental authority),
the enforcement of which or compliance with which has, had or could reasonably
expect to have, an adverse affect on the consummation of this Agreement.
E. CONSENTS. No consent, approval, authorization of, or exemption by,
or filing with, any entity, governmental authority or regulatory body is
required to be obtained or made by Borrower in connection with the execution,
delivery and performance by Borrower of this Agreement.
F. ENFORCEABILITY OF AGREEMENT AND NOTES. The execution and delivery by
Borrower of this Agreement and the Notes, and the performance of their
obligations hereunder or thereunder, or under any other instrument executed by
or on their behalf hereunder, constitute the legal, valid and binding
obligations of Borrower, enforceable against Borrower and in accordance with
their respective terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting the
rights and remedies of creditors generally, and to the effect of general
principles of equity, whether applied by a court of law or equity.
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III. CONDITIONS OF ADVANCES UNDER THE CREDIT FACILITY
The obligation of Lender to make the Advances under the Credit Facility
is subject to the following conditions precedent:
A. NO DEFAULT. On the effective date of this Agreement and at the date
of each Advance after giving effect to the Advance hereunder, Borrower shall
have observed and performed all the terms, conditions, agreements and provisions
set forth in this Agreement, the warranties of Borrower contained herein or in
any instrument or certificate executed by Borrower and delivered in connection
herewith shall be true and correct in all material respects, and no default or
Event of Default, as defined in Section 6, shall have occurred and be
continuing.
B. LITIGATION. There shall be no order, injunction, decree, judgment or
verdict prohibiting or restraining Lender from executing this Agreement, or
Borrower from performing its obligations under this Agreement.
C. REQUEST FOR ADVANCE. At the time of each Advance hereunder, Borrower
shall have delivered to Lender a request for advance in form and substance
acceptable to Lender.
IV. MISCELLANEOUS
A. SURVIVAL OF REPRESENTATIONS. All covenants, agreements,
representations and warranties made herein or delivered or in this Agreement or
documents to be delivered pursuant hereto shall survive the performance by
Lender of the terms under this Agreement and shall continue in full force and
effect (as of the date when made, in the case of representations and warranties)
so long as any portion of any principal of any Note is outstanding or this
Agreement has not been terminated, subject to reinstatement in the event of any
recovery of payments under the Bankruptcy Code or other similar laws providing
for similar recoveries.
B. TERMINATION OF AGREEMENT. This Agreement may not be terminated by
Borrower until payment of the Notes in full Upon payment in full of all sums due
and owing to Lender under the provisions of the Notes, this Agreement, and all
other documents and upon termination of any commitment by Lender hereunder,
Lender agrees that within a reasonable time thereafter it will send Borrower
written notice signed by Lender that this Agreement is terminated.
C. APPLICABLE LAW. The terms and performance of this Agreement and the
terms and payment of the Note and the other documents executed hereunder shall
be construed in accordance with and controlled and governed by the laws of the
State of New York.
D. MODIFICATION OF AGREEMENT. Unless otherwise specifically provided
for in this Agreement, no consent, modification, amendment or waiver of any
provision of this Agreement, the Note, the other Loan Documents, nor any consent
of Lender to Borrower's departing or varying therefrom, shall in any event be
effective unless the same shall be in writing and signed by Lender.
E. SEVERABILITY. In case one or more of the provisions contained in
this Agreement, the Note, or any other instrument executed by Borrower should be
invalid, illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions contained herein or therein or both
shall not in any way be affected or impaired thereby.
F. SUCCESSORS AND ASSIGNS; JOINT AND SEVERAL. This Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the parties hereto, subject to the consent of
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Lender, which determination shall be in the Lender's sole discretion. The
obligations of the Borrower hereunder shall be joint and several.
G. NOTICES. All notices and other communication under this Agreement to
any party shall be in writing and shall be deemed given when delivered
personally to that party, transmitted via facsimile (with electronic
confirmation) to that party at the facsimile number set forth below, mailed by
certified mail (postage prepaid return receipt requested) to that party at the
address set forth below, or delivered by Federal Express or any similar
nationally recognized express delivery service for delivery to that party at
that address:
If to Lender. Josephthal Investment Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxxxx
With copy to: Josephthal & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: General Counsel
If to Borrower: Xxxxxx X. Xxxx
President & Chief Executive Officer
VendingData Corporation 0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000 Telephone:
000-000-0000 Facsimile: 000-000-0000
With copy to: Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
The foregoing addresses may be changed by either party by giving notice
to the other party in accordance with the above.
H. EVEN CONSTRUCTION. This Agreement shall not be construed more
strictly against either party by virtue of the preparation of this Agreement.
I. INDEMNITY.
1. INDEMNIFICATION OF THE LENDER. Borrower agrees to
indemnify, defend and hold the Lender and its assigns harmless
from and against any and all claims, actions, damages,
liability, costs and expenses (including reasonable attorneys'
fees) arising from or out of: (i) any occurrence caused by the
act or omission of Borrower, its employees or agents; (ii) any
willful violation of any law, regulation or ordinance
applicable to
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Borrower or (iii) any breach or violation of the terms of this
Agreement by Borrower. Borrower shall not incur any defense
costs for the Lender's account without the Lender's prior
written consent unless Borrower fails to assert a defense or
otherwise fails to take appropriate action required to protect
the Lender under this provision.
2. INDEMNIFICATION OF BORROWER. The Lender agrees to
indemnify, defend and hold Borrower, and its respective
officers, employees, directors and stockholders, harmless from
and against any and all claims, actions, damages, liability,
costs and expenses (including reasonable attorneys' fees)
arising from or out of: (i) the willful violation of law,
regulation or ordinance applicable to the Lender pursuant to
this Agreement; of (ii) any breach or violation of the terms
of this Agreement by the Lender. The Lender shall not incur
any defense costs for Borrower's account without Borrower's
prior written consent unless Borrower fails to assert a
defense or otherwise fails to take appropriate action required
to protect the Lender under this provision.
J. HEADINGS, The headings of the various sections of this Agreement are
not a part of the context of the Agreement, and are merely labels to assist in
locating such sections. and shall be ignored in construing this Agreement.
K. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have this Agreement to be executed as
of the date hereof.
JOSEPHTHAL & CO. INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------
Xxxxx Xxxxxxx
Its: Managing Director
VENDINGDATA CORPORATION,
a Nevada corporation
By: /s/ Xxxxxx X. Xxxx
---------------------------
Xxxxxx X. Xxxx
Its: President and Chief Executive Officer
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