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EXHIBIT 10.18
TERMINATION AGREEMENT
AGREEMENT (this "Agreement"), dated as of November 24, 2003, by
and
between Tidel Technologies, Inc., a Delaware corporation (the
"Company") and
Montrose Investments Ltd., a Cayman Island exempt company
("Montrose").
WHEREAS, as of September 8, 2000, (a) the Company and Montrose
entered
into that certain Convertible Debenture Purchase Agreement,
among the Company
and the investors signatory thereto (the "Purchase Agreement"),
whereby Montrose
purchased 6% Convertible Debentures, issued by the Company in
the aggregate
principal amount of $15,000,000 (the "Debentures"); (b) the
Company issued to
Montrose that certain Warrant to purchase from the Company up to
a total of
315,789 shares of the Company's common stock, $.01 par value per
share (the
"Common Stock", and such warrant, the "Warrant"); (c) the
Company and Montrose
entered into that certain Registration Rights Agreement, among
the Company and
the investors signatory thereto, as amended (the "Registration
Rights
Agreement"); and (d) the Company, Montrose and certain other
third parties
entered into certain other related agreements in connection with
the
transactions contemplated by the Purchase Agreement (such
agreements, together
with the Purchase Agreement, the Debenture, the Warrant and the
Registration
Rights Agreement, the "Montrose Agreements");
WHEREAS on August 9, 2002, Montrose commenced an action against
the
Company in the Supreme Court of the State of New York for the
County of New York
with the Index Number 02/602947 (the "Montrose Litigation");
WHEREAS the Company and Montrose are now desirous of resolving
the
Montrose Litigation without further litigation;
WHEREAS, the Company is negotiating to enter into a financing
arrangement,
pursuant to which it will be obtaining certain loans and
advances from one or
more investors, and a condition to such investment(s) is that
the Debentures be
repaid, the Warrant be cancelled, the other Montrose Agreements
be terminated
and the Montrose Litigation be dismissed with prejudice;
WHEREAS, the Company desires to pay to Montrose five million
($5,000,000)
dollars in full and complete payment of the Debentures,
including all principal,
accrued and unpaid interest, fees, charges, penalties, costs and
expenses, and
Montrose desires to accept such amount as full and complete
payment, and the
parties desire to dismiss the Montrose Litigation with prejudice
and terminate
the Warrant and all of the other Montrose Agreements;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein,
and other good and valuable consideration, the receipt and
sufficiency of which
is hereby acknowledged, and intending to be legally bound, the
parties hereto
hereby agree as follows:
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1. PAYMENT OF INDEBTEDNESS AND OBLIGATIONS. As a condition to
the
obligations of Montrose and the Company contained herein, the
Company hereby
agrees to pay to Montrose as provided herein the amount of five
million
($5,000,000) dollars (the "Payment") as full and complete
payment and
satisfaction of the Debentures, including without limitation all
principal,
accrued and unpaid interest, fees, charges, penalties, costs and
expenses.
The Payment shall be made, no later than five business days
following the
execution of this agreement by Montrose and the Company, by wire
transfer of
immediately available funds in accordance with the instructions
listed on
Exhibit A. The Payment shall be free of any claim of
subordination and shall be
accompanied or preceded by delivery of the Subordination Release
(as defined
below). All of Montrose's agreements and obligations hereunder
are expressly
conditioned on receiving the Payment and the Subordination
Release within such
five business day period, as to which time is of the essence.
If, for any
reason, the Payment is not made or the Subordination Release is
not delivered
within such five business day period as required hereunder (and
in addition to
any other rights or remedies available to Montrose with respect
to such breach),
the Company shall promptly take all actions necessary to consent
to a 90-day
extension of Montrose's time to perfect its appeal in the
Montrose Litigation,
including by signing a stipulation to such effect in a
reasonable form prepared
by Montrose.
2. TERMINATION OF AGREEMENTS. Upon and subject to receipt by
Montrose of
the Payment, (i) any and all commitments, rights, obligations
and other
agreements of either Montrose or the Company set forth under the
Montrose
Agreements shall be terminated; (ii) all amounts due and payable
by the Company
under the Debentures and the Montrose Agreements shall be deemed
to be paid in
full and complete satisfaction of all outstanding obligations;
(iii) Montrose
shall deliver to the Company the Debentures marked "Paid in
Full," and the
Warrant shall be cancelled and delivered to the Company for
cancellation; and
(iv) each of the Montrose Agreements shall terminate and shall
have no further
force or effect.
3. TERMINATION OF MONTROSE LITIGATION. Within three business
days
following the receipt by Montrose of the Payment, Montrose shall
sign and
deliver to the Company a stipulation in the form attached as
Exhibit B agreeing
to dismiss the Montrose Litigation with prejudice.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby
represents, warrants and agrees that (i) it has full legal
right, power and
authority to execute, deliver and perform this Agreement, and
consummate the
transactions contemplated hereby, (ii) the execution and
delivery of this
Agreement, and the consummation by the Company of the
transactions contemplated
hereby have been duly authorized by all necessary corporate
action, and (iii)
this Agreement constitutes valid, legal and binding obligations
of the Company,
enforceable against it in accordance with its terms, except as
such enforcement
may be subject to bankruptcy, insolvency, reorganization,
moratorium (whether
general or specific) or other laws now or hereafter in effect.
The performance
of the terms of this Agreement does not conflict with,
constitute a violation
of, or require any notice or consent under, the
organizational
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documents of the Company or any agreement or instrument to which
the Company is
a party or by which the Company is bound, and shall not require
any consent,
approval or notice under any provision of any judgment, order,
decree, statute,
rule or regulation applicable to the Company. Without limiting
the generality of
the foregoing, the Company hereby represents and warrants that
the execution,
delivery and performance of this Agreement, including without
limitation the
Payment to Montrose hereunder, do not and will not violate the
terms of the
Subordination Agreement, dated as of September 8, 2000, among
Montrose, Tidel
Engineering, L.P., the Company and The Chase Manhattan Bank, as
amended (the
"Subordination Agreement") or require any payment by Montrose to
the Lender (as
defined thereunder). No later than five business days following
the execution of
this Agreement by Montrose and the Company, the Company shall
deliver to
Montrose an acknowledgement, signed by the Lender, consenting to
the Payment or
stating that the Subordination Agreement has been terminated, in
the form
attached hereto as Exhibit C (the "Subordination Release").
5. REPRESENTATIONS AND WARRANTIES OF MONTROSE. Montrose
represents,
warrants and agrees that:
(a) (i) it has full legal right, power and authority to
execute,
deliver and perform this Agreement, and consummate the
transactions contemplated
hereby, (ii) the execution and delivery of this Agreement, and
the consummation
by Montrose of the transactions contemplated hereby have been
duly authorized by
all necessary corporate action, and (iii) this Agreement
constitutes valid,
legal and binding obligations of Montrose, enforceable against
it in accordance
with its terms, except as such enforcement may be subject to
bankruptcy,
insolvency, reorganization, moratorium (whether general or
specific) or other
laws now or hereafter in effect. The performance of the terms of
this Agreement
shall not conflict with, constitute a violation of, or require
any notice or
consent under, the organizational documents of Montrose or any
agreement or
instrument to which Montrose is a party or by which Montrose is
bound, and shall
not require a
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