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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 requir
