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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,
INCLUD
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