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EXHIBIT 10.16
NOTE PURCHASE AGREEMENT
THIS NOTE
PURCHASE AGREEMENT (this "AGREEMENT" is made and entered into
effective the 30 day of June, 2003
("EFFECTIVE DATE"), by and between JPMORGAN
CHASE BANK, formerly known as The Chase
Manhattan Bank, successor by merger to
Chase Bank of Texas, National Association,
formerly known as Texas Commerce Bank
National Association ("ASSIGNOR") and
WALLIS STATE BANK, a TEXAS STATE BANK
("ASSIGNEE") with the consent and agreement
of TIDEL ENGINEERING, L.P., a
Delaware limited partnership ("BORROWER"),
TIDEL TECHNOLOGIES, INC., TIDEL
SERVICES, INC. AND TIDEL CASH SYSTEMS,
INC., each Delaware corporations (each a
"GUARANTOR" and collectively, the
"GUARANTORS") and TIDEL TECHNOLGIES, INC.
("ULTIMATE PARENT").
RECITALS:
Assignor
is the owner of an Amended and Restated Revolving Credit Note
dated April 30, 2002 (the same, as
heretofore modified, renewed and extended, is
herein collectively referred to as the
"NOTE"), executed by Borrower in the
original principal amount of $4,680,000.00
and payable to the order of Assignor.
Assignee
has approached Assignor to purchase the Note and Assignee
desires
to purchase the Note and Assignor is
willing to sell the same to Assignee on the
terms and conditions set forth herein.
AGREEMENTS:
For and in
consideration of the mutual covenants and agreements contained
herein, Assignor and Assignee agree as
follows:
1. Purchase/Conveyance of
Note. The purchase price of the Note is equal to
the sum of
the total unpaid principal balance and accrued unpaid interest
and all
other amounts owing under the Note, including any and all costs
of
collection
thereof as of the date of purchase ("Purchase Price"). Promptly
upon
receipt of the Purchase Price, Assignor wilt deliver to Assignee
(i)
an
Assignment of Note and Lien substantially in the form of Exhibit
A
("Assignment") duly executed by Assignor; (ii) the original Note
endorsed
by
Assignor to Assignee as follows: "Pay to the order of Wallis
State
Bank,
without recourse and without representation or warranty of any
kind,
express or
implied, except as set forth in that certain Note Purchase
Agreement
dated as of June 30, 2003 between the undersigned and Wallis
State
Bank; (iii) copies of the Loan Documents (as defined in Schedule
1);
and (iv) a
letter duly executed by Assignor authorizing Assignee to file
amendments
to any financing statements of record showing Assignor as
secured
party and Borrower or any Guarantor as debtor. In contemplation
of
the
purchase of the Note, Assignee has executed and delivered to
Assignor
a
Confidentiality Agreement in the form attached hereto as Exhibit
"B"
(the
"Confidentiality Agreement"). To the extent of any conflict
between
the terms
and provisions of this Agreement and those contained in the
Assignment
or the Confidentiality Agreement, the provisions in this
Agreement
shall control. Assignor represents that Assignor (i) is the
owner of
the Note and has not endorsed, granted, assigned or transferred
the Note
to any other person; and (ii) has all
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requisite
power and authority to make the assignment and transfer of the
Note
contemplated hereby. Assignor also represents and warrants to
Assignor
that the total of the outstanding unpaid principal, accrued
unpaid
interest, other amounts owing under the Note and collection
costs
equals $
2,000,000 as of the Effective Date.
2. Assignee's
Representations and Acknowledgements. As a material inducement
to
Assignor to execute and deliver this Agreement and the
Assignment,
Assignee
represents and acknowledges to Assignor as follows:
(a)
Assignee has made its own independent investigations, inspections
and
analyses
of: (i) the Note and other Loan Documents described on Schedule
I
attached
hereto and incorporated herein by reference (the "LOAN
DOCUMENTS"); (ii) the validity and enforceability of the Note and
other
Loan
Documents; (iii) the perfection or priority of any lien and
security
interests
of the Loan Documents, if any, listed on Schedule I; (iv) the
value,
condition, quality, sufficiency of the description and amount
of
collateral
purportedly covered and affected by the Loan Documents; and (v)
the
enforceability of any documentation related to, collateral for,
nature,
terms and tenor of and the rights, remedies of any holder with
respect
to, obligations or indebtedness of Borrower or any Guarantor to
any
creditor other than Assignor ("OTHER INDEBTEDNESS"), including
without
limitation, any Other Indebtedness subordinated to the payment
and
performance of the obligations and indebtedness of Borrower or
any
Guarantor
under the Loan Documents. Assignee acknowledges that Assignor
has
attempted to provide accurate information to Assignee but that
Assignor
does not represent, warrant or insure the accuracy or
completeness of any information or its sources of information
provided to
Assignee
or in any of the Loan Documents. Assignee agrees and represents
that the
Note, the other Loan Documents and other information made
available
to Assignee were an adequate and sufficient basis on which to
determine
whether to purchase the Note. Assignee has not relied and will
not rely
on Assignor to furnish or make available to Assignee any
documents
or information regarding the credit, affairs, financial
condition
or business of Borrower or any Guarantor. Assignee has made
such
independent investigations as Assignee deems to be warranted into
the
nature,
validity, enforceability, collectability, and value of the Note
and the
other Loan Documents, any Other Indebtedness and all other
facts
Assignee
deems material to Assignee's purchase and is entering into this
transaction solely on the basis of that investigation and
Assignee's own
judgment,
and is not acting in reliance on any representation made or
information furnished by Assignor, Assignor's affiliates or its
employees,
agents,
representatives or independent contractors (other than the
representations and warranties of Assignor contained herein).
Assignee
acknowledges that Assignor has not given Assignee any investment
advice,
credit
information or opinion on whether the purchase of the Note is
prudent.
(b) The
transactions contemplated by this Agreement do not involve, nor
are they
intended in any way to constitute, the sale of a "security" or
"securities" within the meaning of any applicable securities laws,
and
none off
the representations, warranties or agreements of Assignee shall
create any
inference that the transactions involve any "security" or
"securities". Assignee acknowledges, understands and agrees that
the
acquisition of the Note involves a high degree of risk and is
suitable
only for
persons or
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entities
of substantial financial means who have no need for liquidity
and
who can
hold the Note indefinitely or bear the partial or entire loss
of
the value
of the Note and any collateral securing the Note. Assignee
represents
and warrants to Assignor that Assignee (a) is purchasing for
Assignee's
own account; (b) is not purchasing with a view to public
distribution; (c) is not in a disparate bargaining position
relative to
Assignor
with respect to this Agreement; (d) is a sophisticated entity
with
respect to the purchase of the Note; (c) is able to bear the
economic
risk
associated with the purchase of the Note; (d) has adequate
information concerning the business and financial condition of
Borrower
and each
Guarantor to make an informed decision regarding the purchase
of
the Note;
and (e) has such knowledge and experience and has made
purchases
of
instruments of a similar nature, so as to be aware of the risks
and
uncertainties inherent in the type of transaction contemplated by
this
Agreement.
(c)
Assignee acknowledges that (i) Assignor currently may have, and
later
may come
into possession of, information with respect to the Note and
the
other Loan
Documents, Borrower, any Guarantor or any other matter related
thereto
that is not known to Assignee and that may be material to a
decision
to acquire the Note ("EXCLUDED INFORMATION"), (ii) Assignee has
determined
to purchase the Note notwithstanding its
lack of
knowledge of the Excluded Information; and (iii) Assignor shall
have no
liability to Assignee, and Assignee waives and releases any
claims
that it
might have against Assignee or any Assignor Party, as defined
below,
whether under applicable law or otherwise, with respect to the
nondisclosure of the Excluded Information in connection with
the
transactions contemplated hereby; provided, however, that the
Excluded
Information shall not and does not affect the truth or accuracy
of
Assignor's
representations or warranties in this Agreement.
(d)
Assignor has not made and does hereby specifically disclaim, in
addition
to and cumulative of the disclaimers contained in the
Assignment,
any and
all representations and warranties of any kind or character,
express or
implied, in respect to: (i) the validity, enforceability of or
existence
of offsets or defenses to the Note; (ii) the validity,
perfection, enforceability or priority of the liens and security
interests
of the
Loan Documents; (iii) the proper recordation of the Loan
Documents
which are
recorded; and (iv) the value, condition or use which may be
made
of any
purported collateral for the Note, the operational potential
thereof,
the suitability for the intended purposes, or the compliance
thereof
with governmental codes, rules, regulations, orders and laws.
(e) This
Agreement and the Confidentiality Agreement are legal, valid
and
binding
obligations of Assignee enforceable in accordance with their
respective
terms, except as may be limited by bankruptcy, insolvency and
other
similar laws affecting creditors' rights generally. The
execution,
delivery
and performance of this Agreement and the Confidentiality
Agreement have
all been duly authorized by all necessary action; are
within the
power and authority of Assignee.
(f)
Assignee acknowledges that the Note is in default.
3. Assignee's Covenants.
(a) Assignee hereby covenants and agrees with
Assignor
that Assignee will keep confidential in all respects the terms
and
provisions hereof.
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(b)
Assignee agrees to immediately assume all obligations with respect
to
federal and state income tax
informational reporting for the period after
the
Effective Date including obligations with respect to Forms 1099
and
1098 and
back-up withholding. Assignee further agrees to cooperate with
Assignor
to the extent necessary to allow Assignor to fulfill its
obligations it may have with respect to such informational
reporting for
the Note
for the period prior to the date of this Agreement.
(c)
Assignee agrees not to violate any law relating to privacy or
unfair
collection
practices in connection with the Note purchased by Assignee
hereunder.
ASSIGNEE FURTHER AGREES TO INDEMNIFY ASSIGNOR AND HOLD ASSIGNOR
HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LOSSES, DAMAGES,
PENALTIES, FINES,
FORFEITURES, JUDGMENTS, LEGAL FEES AND OTHER COSTS, FEES
AND
EXPENSES AT ANY TIME INCURRED BY ASSIGNOR AS A RESULT OF (i)
ASSIGNEE'S
BREACH OF THE AFORESAID AGREEMENT OR (ii) ANY ACTS OR OMISSIONS
OF
ASSIGNEE RESULTING IN ANY CLAIM, DEMAND OR ASSERTION THAT
ASSIGNOR,
SUBSEQUENT
TO THE DATE OF THIS AGREEMENT, WAS IN ANY WAY INVOLVED IN OR
HAD IN ANY
WAY AUTHORIZED ANY UNLAWFUL COLLECTION PRACTICES IN CONNECTION
WITH THE
NOTE OR THE OTHER LOAN DOCUMENTS. Each party agrees to notify
the
other
within ten (10) days of receiving notice or knowledge of any
such
claim,
demand or assertion.
(d) From
and after the date of this Agreement, Assignee shall assume all
of
Assignor's obligations and duties with respect to servicing the
Note
purchased
hereunder and shall service the Note in accordance with
commercially reasonable standards and applicable law.
(e)
Assignee warrants, represents and agrees that Assignee will not
institute any
legal action in the name of Assignor or continue to
prosecute
or defend in the name of Assignor any pending legal action; nor
shall
Assignee intentionally or unintentionally, through
misrepresentation
or
nondisclosure, mislead any person as to, or conceal from any
person,
the
identity of Assignee of the Note purchased pursuant to this sale;
nor
shall
Assignee use or refer to the names Texas Commerce Bank National
Association, Chase Bank of Texas, National Association, The
Chase
Manhattan
Bank, JPMorgan Chase Bank or any name derived therefrom or
confusingly similar therewith to promote Assignee's marketing,
advertising, sale or transfer of the Note or any collateral
securing the
Note or
the collection or management thereof; provided, however, that
nothing
herein shall be deemed to preclude Assignee from disclosing to
potential
transferees of the Note the fact that the Note was acquired
from
Assignor.
Assignee shall immediately upon demand reimburse Assignor for
any costs
and expenses incurred by Assignor as a result of any claims,
demands,
suits, subpoenas or any costs incurred by Assignor in
cooperating
with
Assignee in connection with or related to the Note and Loan
Documents.
Assignor, agrees, to cooperate with Assignee at Assignee's
expense to
transfer of record any collateral security for the Notes or to
effect the
transfers contemplated by this Agreement, at the reasonable
request of the
Assignee. Any amounts not paid within 5 business days will
bear
interest at a per annum interest rate of 18% from the date of
demand
until
paid.
(f)
INDEMNIFICATION. TO THE FULLEST EXTENT NOT PROHIBITED BY
APPLICABLE
LAW, FROM
AND AFTER THE DATE OF THIS AGREEMENT, ASSIGNEE AGREES TO
INDEMNIFY,
DEFEND AND HOLD
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HARMLESS
ASSIGNOR, ITS SUBSIDIARIES, AFFILIATES, AND THEIR OFFICERS,
DIRECTORS,
SHAREHOLDERS, EMPLOYEES, AGENTS, REPRESENTATIVES AND ATTORNEYS
(THE
"ASSIGNOR PARTIES"), FROM AND AGAINST ANY AND ALL LOSS,
LIABILITY,
CLAIM,
JUDGMENT, DAMAGE AND EXPENSE WHATSOEVER (INCLUDING ATTORNEYS'
FEES
AND
AMOUNTS PAID IN SETTLEMENT) DIRECTLY OR INDIRECTLY ARISING OUT
OF,
BASED
UPON, RESULTING FROM OR OTHERWISE RELATING TO (i) THE SALE OF
THE
NOTE AND
THE OTHER LOAN DOCUMENTS, THE NOTE, OR ANY OF THE OTHER LOAN
DOCUMENTS,
THE ASSIGNED RIGHTS OR OTHERWISE, INCLUDING, BUT NOT LIMITED
TO, ANY
ACTION TAKEN BY ASSIGNEE OR ANY ASSIGNOR PARTY IN CONNECTION
WITH
THE NOTE,
ANY OTHER LOAN DOCUMENTS OR ANY OF THE ASSIGNED RIGHTS,
