Exhibit 7
VOTING AGREEMENT
THIS VOTING AGREEMENT is made and entered into as of this 12th day of
January, 2006 (the "Agreement") by and among Sentinel Technologies, Inc., a
Delaware corporation ("STI"); Sentinel Operating, L.P., a Texas limited
partnership and an affiliate of LLG ("Sentinel"); Tidel Technologies, Inc., a
Delaware corporation (the "Company"); and Laurus Master Fund, Ltd., a Cayman
Island company (the "Stockholder"). Capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Purchase Agreement
(defined below).
RECITALS
A. Prior to or contemporaneously with the execution and delivery of this
Voting Agreement, Sentinel, the Company and Tidel Engineering, L.P., a Delaware
limited partnership and an affiliate of the Company ("Engineering"), are
entering into an Asset Purchase Agreement, dated as of dated the date hereof
(the "Purchase Agreement"), which provides that, upon the terms and subject to
the conditions set forth therein, Sentinel will purchase the assets of the
company's cash security TACC business from the Company and Engineering (the
"Transaction").
B. As of the date hereof, Stockholder and its affiliates who are
controlled by or under common control with Stockholder other than investors or
affiliates of such investors who do not exercise managerial control of
Stockholder (collectively, "Stockholder Affiliates") hold (i) the number of
shares of common stock, par value $.01 per share, of the Company ("Common
Stock") and (ii) securities exercisable for, or convertible into, the number of
shares of Common stock, set forth on Schedule I hereto (all such shares so owned
and which may hereafter be acquired by the Stockholder or Stockholder Affiliates
prior to the termination of this Voting Agreement, whether upon the exercise of
options or warrants, conversion of debt, or by any other means of purchase,
acquisitions, dividend, distribution or otherwise, being referred to herein as
the "Shares").
C. Pursuant to the Exercise and Conversion Agreement by and among the
parties hereto, dated as of the date hereof (the "Exercise Agreement"), the
Stockholder has agreed to, subject to the terms and conditions contained
therein, convert, on or prior to the record date (the "Record Date") an
aggregate of $5,400,000 of convertible indebtedness (the "Conversion Amount")
evidenced by the Convertible Term Note in the initial principal amount of
$6,450,000, dated November 25, 2003 (the "Note") together with an additional
$292,987 principal amount added thereto on November 26, 2004, made by the
Company in favor of the Seller into 18,000,000 shares of Common Stock. For
avoidance of doubt, no warrants are being exercised and no other portion of any
note is being converted pursuant to the Exercise Agreement.
D. In connection with the Transaction, Stockholder has agreed to vote the
Shares in favor of the approval and adoption of (i) the Purchase Agreement, as
the same may be amended from time to time, and the transactions contemplated
thereby, (ii) the amendment to the Company's certificate of incorporation such
that it does not contain the terms "Tidel" or Sentinel" or any derivation
thereof (the "Amendment"), and (iii) any motion for adjournment or postponement
of the Meeting (as hereafter defined) to another time or place to permit, among
other things, further solicitation of proxies if necessary to establish a quorum
or to obtain additional votes in favor of the Purchase Agreement and the
transactions contemplated thereby and the Amendment (the "Motion") (each of
items (i), (ii) and (iii) above are collectively referred to as the "Transaction
Matters").
E. As a condition to their willingness to enter into the Purchase
Agreement, Sentinel has requested that the Stockholder enter into this Voting
Agreement.
F. In order to induce Sentinel to enter into the Purchase Agreement, the
Stockholder is willing to enter into this Voting Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
VOTING AGREEMENT
1.1. VOTING AGREEMENT.
Upon satisfaction or waiver of the conditions set forth in Section 1.2
below and until March 31, 2006 (the "Termination Date"):
(a) The Stockholder shall vote the Shares at a meeting of the stockholders
of the Company however called for the purpose of approving the Transaction
Matters (the "Meeting"), and in any action by written consent of the
stockholders of the Company:
(i) in favor of the approval and adoption of the Transaction
Matters;
(ii) against any other Acquisition Proposal or any negotiations or
discussions with respect to an Acquisition Proposal and against any
proposal for action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement
of the Company under the Purchase Agreement or any amendment to the
Company's Certificate of Incorporation or Bylaws, which in the case of
each of the matters referred to in this clause that could reasonably be
expected to impede, interfere with, delay, postpone or materially
adversely affect the transactions contemplated by the Purchase Agreement
or the likelihood of such transactions being consummated; and
(iii) in favor of any other matter reasonably necessary for
consummation of the transactions contemplated by the Purchase Agreement
and related agreements which is considered at any such meeting of
stockholders or in such consent, and in connection therewith to execute
any documents which are reasonably necessary in order to effectuate the
foregoing.
1.2. CONDITIONS PRECEDENT TO EFFECTIVENESS OF VOTING AGREEMENT.
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The obligations of the Shareholder under this Voting Agreement are subject
to the fulfillment of each of the following conditions:
(a) The Company shall have delivered (i) the unanimous written consent of
the Board of Directors of the Company (the "Board"), or (ii) minutes of a duly
called meeting of the Board certified by the Secretary of the Company,
evidencing that the disinterested members of the Board had duly approved the
Purchase Agreement and the transactions contemplated thereby and shall have
established the Record Date, which shall be no later than January 13, 2006; and
(b) The Company shall have delivered a fully executed copy of each of the
documents required to be delivered pursuant to Section 1.2 of the Exercise
Agreement to the Shareholder; and
(c) The Company shall have prepared and mailed a proxy statement relating
to the approval of the Transaction Matters to the holders of the shares of
Common Stock of the Company on the Record Date in accordance with Section 14 of
the Securities Exchange Act of 1934, as amended, and shall have provided the
Shareholder with an affidavit of mailing from the person mailing such proxy
statement to the stockholders of the Company; and
(d) Each of the Exercise Agreement, the Stock Redemption Agreement,
Management Voting Agreement and the Reaffirmation Agreement (as each such
capitalized term is defined in the Exercise Agreement) shall have become
effective and shall not have been terminated or otherwise rendered ineffective
or inoperative; and
(e) The Stockholder shall have received original stock certificate(s)
representing the number of shares of Common Stock issued pursuant to the
conversion of the Note (up to the Conversion Amount) in the name of the
Stockholder sufficient to give full effect to the conversion of the Note (up to
the Conversion Amount) in accordance with the terms of the Note and the Exercise
Agreement.
1.3. NO PROXIES FOR OR TRANSFERS OF SHARES.
The Stockholder hereby revokes, any and all prior proxies or powers of
attorney given by the Stockholder or Stockholder Affiliates with respect to the
Shares. From the date hereof until the Termination Date, the Stockholder hereby
agrees that it shall not, directly or indirectly, sell, assign, transfer,
encumber, pledge or otherwise dispose of, or enter into any contract, option or
other agreement, arrangement or understanding with respect to the direct or
indirect sale, assignment, transfer, encumbrance, pledge or other disposition
of, any of the Shares; provided, however, that the Stockholder may sell or
otherwise assign, with or without consideration, an unlimited amount of the
Shares to any affiliate, member or limited or general partner of the Stockholder
or such affiliate if each such transferee or assignee, prior to the completion
of the sale, transfer or assignment shall have executed and delivered to STI
documents assuming the obligations of the Stockholder under this Voting
Agreement with respect to the transferred securities, such documents to be
satisfactory to STI in its reasonable discretion. From the date hereof until the
Termination Date, the Stockholder hereby agrees that it shall not, and shall
cause its Stockholder Affiliates to not, directly or indirectly, grant any
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proxies or enter into any voting trust or other agreement, arrangement or
understanding with respect to the voting of any of the Shares; provided,
however, that the Stockholder may grant a proxy or enter into a voting trust or
other agreement, arrangement or understanding with respect to the voting of the
Shares to or with a third party, if such third party, prior to the grant of such
proxy or entry into such voting trust or agreement, arrangement or
understanding, shall have executed and delivered to STI documents assuming the
obligations of the Stockholder under this Voting Agreement with respect to such
Shares, such documents to be satisfactory to STI in its reasonable discretion.
The Stockholder hereby agrees that neither it nor Stockholder Affiliates shall
seek or solicit any sale, assignment, transfer, encumbrance, pledge or other
disposition of the Shares to other than its affiliates and agrees to notify STI
promptly (but in any event, within 24 hours), and it and its affiliates shall
provide all details requested by STI, if the Stockholder or Stockholder
Affiliates shall be approached or solicited, directly or indirectly, by any
person with respect to any of the foregoing.
1.4. STOP TRANSFER.
During the term of this Voting Agreement, the Stockholder and Stockholder
Affiliates shall not request that the Company register the transfer (book entry
or otherwise) of any certificate or uncertificated interest representing any of
the Shares, unless such transfer is made in compliance with this Voting
Agreement.
1.5. NOTIFICATION.
If the Stockholder or Stockholder Affiliates become aware of an
Acquisition Proposal or if an Acquisition Proposal is hereafter made or if any
request for nonpublic information relating to the Company or any of the
Stockholder Affiliates is made by any person or entity that has made an
Acquisition Proposal or has advised the Stockholder or Stockholder Affiliates
that it may be considering making an Acquisition Proposal, the Stockholder shall
within 24 hours notify STI of the material details of such Acquisition Proposal
or request (including the identity of the person or entity making such
Acquisition Proposal, the terms thereof and the information requested thereby)
and shall within 24 hours provide STI with a copy of any Acquisition Proposal or
request that is made in writing and copies of all correspondence relating
thereto. Thereafter the Stockholder shall keep STI fully apprised on a current
basis of the status of any such Acquisition Proposal and of any modifications to
the terms thereof. The Stockholder hereby agrees to immediately cease and cause
to be terminated all existing discussions or negotiations with any parties other
than STI conducted heretofore with respect to any Acquisition Proposal.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER, STI AND SENTINEL
Each of the Stockholder, STI and Sentinel (collectively, the
"Undersigned"), as applicable, hereby represents and warrants as to itself and
individually:
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2.1. DUE AUTHORIZATION, ETC.
The Undersigned has all requisite power and authority and the legal
capacity to execute, deliver and perform this Voting Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Voting Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of each of
the Undersigned party. This Voting Agreement has been duly executed and
delivered on behalf of such Undersigned party and constitutes a legal, valid and
binding obligation of such Undersigned, enforceable against such Undersigned
party in accordance with its terms, except that such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to creditors' rights generally, and is subject to general principles of
equity.
ARTICLE III
REPRESENTATIONS OF THE STOCKHOLDER
The Stockholder hereby represents:
3.1. VALID TITLE OF STOCKHOLDER.
After giving full effect to the conversion of the Note (up to the
Conversion Amount) in accordance with the terms of the Exercise Agreement, the
Stockholder shall be the lawful holder of the Shares with no restrictions on the
Stockholder's voting rights or rights of disposition pertaining thereto. None of
the Shares will be subject to any voting trust or other agreement or arrangement
with respect to the voting of the Shares. None of the Shares will be subject to
any adverse claims, options, liens, charges, encumbrances, security interests or
other restrictions on transfer.
3.2. TOTAL SHARES.
After giving full effect to the conversion of the Note (up to the
Conversion Amount) in accordance with the terms of the Exercise Agreement, the
Stockholder will be the record holder of the number of Shares set forth next to
such Stockholder's name on Schedule I hereto. After the date hereof, and except
as set forth on Schedule I hereto, neither the Stockholder, nor any Stockholder
Affiliate, own any Shares, or options or warrants to purchase, instruments
convertible into or rights to subscribe for or otherwise acquire any securities
of the Company. After giving full effect to the conversion of the Note (up to
the Conversion Amount), the Stockholder and Stockholder Affiliates will have
sole voting power and sole power to issue instructions with respect to the
matters set forth in this Voting Agreement, sole power of disposition, sole
power of conversion and sole power to agree to all of the matters set forth in
this Voting Agreement, in each case with respect to all of the Shares that will
be owned by the Stockholder and Stockholder Affiliates with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Voting Agreement.
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ARTICLE IV
INDEMNIFICATION
4.1. INDEMNIFICATION.
Each party agrees to indemnify and hold the each other party and their
respective directors, officers, employees, agents and stockholders
(collectively, the "Indemnitees") harmless against and in respect of any and all
Damages (as defined herein) that any Indemnitee actually suffers or incurs as a
result of a breach by such party of any of the representations set forth herein.
As used in this Voting Agreement, the term "Damages" shall include, as to any
Indemnitee, any loss, damage, injury, liability, charge, cost or expense of any
nature actually incurred (including reasonable attorneys' and accountants'
fees), paid, suffered or borne by such Indemnitee as a result of a breach by
such party of any of the representations set forth herein.
ARTICLE V
MISCELLANEOUS
5.1. TERMINATION.
This Agreement shall terminate automatically and without any action of any
of the parties hereto and be of no further force and effect upon the earlier to
occur of: (i) the Termination Date, (ii) the written mutual consent of the
parties hereto or (iii) the Expiration Date (as defined below). No such
termination of this Voting Agreement shall relieve any party hereto from any
liability for any breach of this Voting Agreement prior to termination or from
any obligation pursuant to a notice delivered on or before the date of such
termination. As used herein, the "Expiration Date" shall mean the earlier to
occur of (a) the occurrence of the Closing (as defined in the Purchase
Agreement), or (b) the termination of the Purchase Agreement according to its
terms.
5.2. FURTHER ASSURANCE.
From time to time, at the request of another party hereto and without
consideration, each party hereto shall execute and deliver such additional
documents and take all such further action as may be necessary or desirable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Voting Agreement.
5.3. CERTAIN EVENTS; SUCCESSORS.
The Stockholder agrees that this Voting Agreement and the Stockholder's
obligations hereunder shall attach to the Shares and shall be binding upon any
person or entity to which legal or beneficial ownership of the Shares shall
pass, whether by operation of law or otherwise, including, without limitation,
the Stockholder's or Stockholder Affiliates' successors or assigns.
Notwithstanding any transfer of the Shares, the transferor shall remain liable
for the performance of all its obligations under this Voting Agreement.
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5.4. NO WAIVER.
The failure of any party hereto to exercise any right, power, or remedy
provided under this Voting Agreement or otherwise available in respect hereof at
law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, or any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
5.5. NOTICE.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, the day of transmission if a
business day or, if not, the next business day thereafter, if delivered by
telecopier (with confirmation of receipt), the next business day if delivered by
an internationally recognized overnight courier service, such as Federal
Express, or the third business day if mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
If to STI or Sentinel, to:
Sentinel Technologies, Inc. or Sentinel Operating, L.P.
c/o LLG, LLC
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxx & Xxxxxxxxx, LLC
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxx X.X. Xxx, Esq.
Fax: (000) 000-0000
If to the Company:
Tidel Technologies, Inc.
0000 XxXxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: Chairman
Fax: (000) 000-0000
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With a copy to :
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 phone
(000) 000-0000 fax
xxxxxxxxx@xxxxxxxxx.xxx
If to the Stockholder:
Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx Xxxxx
Xxxxxx Xxxx
South Church Street
Grand Cayman, Cayman Islands
Facsimile: 000-000-0000
with a copy to:
Laurus Capital Management, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxx Xxxxxx, Esq.
5.6. EFFECT OF HEADINGS.
The Article and Section headings contained in this Voting Agreement are
for convenience only and shall not affect the construction or interpretation of
this Voting Agreement.
5.7. SEVERABILITY.
If any term, provision, covenant or restriction of this Voting Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Voting Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
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5.8. ENTIRE AGREEMENT.
This Voting Agreement contains the entire understanding of the parties in
respect of the subject matter hereof, and supersedes all prior negotiations and
understandings between the parties with respect to such subject matter.
5.9. ASSIGNMENT AND BINDING EFFECT.
Neither this Voting Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, and any such assignment shall be void, except that STI may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to any direct or indirect subsidiary of STI or to a successor
corporation or other successor entity in the event of a merger, acquisition,
consolidation or other transfer if each such assignee, prior to the completion
of the assignment, shall have executed and delivered to Stockholder documents
assuming the obligations of STI under this Voting Agreement Subject to the
preceding sentence, this Voting Agreement will be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective successors
and assigns.
5.10. GOVERNING LAW.
This Voting Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without reference to such state's
principles of conflicts of laws.
5.11. AMENDMENT AND MODIFICATION.
This Voting Agreement may not be modified, amended, altered or
supplemented except by the execution and delivery of a written agreement
executed by the parties hereto.
5.12. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF.
(a) The parties hereto acknowledge that STI will be irreparably harmed and
that there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the other parties hereto set forth herein. Therefore,
it is agreed that, in addition to any other remedies that may be available to
STI upon any such violation, STI shall have the right to enforce such covenants
and agreements by specific performance, injunctive relief or by any other means
available to STI at law or in equity and the other parties hereto hereby waive
any and all defenses which could exist in their favor in connection with such
enforcement and waives any requirement for the security or posting of any bond
in connection with such enforcement.
(b) The parties hereto acknowledge that Stockholder will be irreparably
harmed and that there will be no adequate remedy at law for a violation of any
of the covenants or agreements of the other parties hereto set forth herein.
Therefore, it is agreed that, in addition to any other remedies that may be
available to Stockholder upon any such violation, Stockholder shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Stockholder at law or in
equity and the other parties hereto hereby waives any and all defenses which
could exist in their favor in connection with such enforcement and waives any
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requirement for the security or posting of any bond in connection with such
enforcement.
5.13. COUNTERPARTS.
This Voting Agreement may be executed in two or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which shall constitute one
and the same agreement. This Voting Agreement (or any counterpart hereof) may be
delivered by a party by facsimile, which facsimile shall be effectual as if the
original counterpart had been delivered.
* * * * *
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IN WITNESS WHEREOF, STI, Sentinel, the Company, and the Stockholder have
caused this Voting Agreement to be executed as of the date first written above.
SENTINEL TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
By: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
SENTINEL OPERATING, L.P.
By: Sentinel Cash Systems, L.L.C.,
its general partner
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
By: Xxxxxxx X. Xxxxxx
Title: President
TIDEL TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxx
-----------------------------------------
By: Xxxxxxx X. Xxxx
Title: Director
LAURUS MASTER FUND, LTD.
/s/ Xxxxxx Grin
-----------------------------------------
By: Xxxxxx Grin
---------------------------------------
Title: Director
-----------------------------------
SCHEDULE I
SHARES OF TIDEL TECHNOLOGIES, INC OWNED BY STOCKHOLDER
Number of
Shares of
Common Stock Number of
Underlying Shares of Percentage
Number Company Common Stock of Ownership
of Shares Convertible Notes Number of Underlying (on
of Held and being Shares of Warrants outstanding
Common converted Common Stock Held but not shares as of
Stock pursuant to the Underlying being January 13,
Stockholder Name Held Exercise Agreement Options Held exercised 2006) Address
LAURUS MASTER FUND, 1,251,000 18,000,000 0 4,750,000 49.77% c/o M&C Corporate
LTD. Services Limited,
X.X. Xxx 000 GT.,
Xxxxxx House, South
Xxxxxx Xxxxxx, Xxxxxx
Xxxx, Xxxxx Xxxxxx,
Xxxxxx Xxxxxxx
