Exhibit 9
CASH COLLATERAL DEPOSIT LETTER
As of: January 12, 2006
Laurus Master Fund, Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is hereby made to the following agreements, as each is
amended, modified or supplemented from time to time: (i) that certain Exercise
and Conversion Agreement by and among Sentinel Technologies, Inc., a Delaware
corporation ("STI"), Sentinel Operating, L.P., a Texas limited partnership
("Sentinel"), Tidel Technologies, Inc. ("Tidel") and Laurus Master Fund, Ltd.
("Laurus"), dated as of the date hereof (the "Exercise Agreement"); (ii) that
certain Stock Redemption Agreement by and between Tidel and Xxxxxx, dated as of
the date hereof (the "Redemption Agreement"); and(iii) that certain Cash
Collateral Deposit Letter, dated as of December 31, 2005 by and among Xxxxxx,
Tidel and the other Tidel Entities (as that term is defined therein) (the "ATM
Closing Cash Collateral Letter," and together with the Exercise Agreement, the
Redemption Agreement and any and all other agreements related to any of the
foregoing documents, collectively, the "Laurus Documents").
Pursuant to the ATM Closing Cash Collateral Deposit Letter, the Tidel
Entities deposited $8,200,000 with Laurus, to be subject to a true-up adjustment
(the "Adjustment") on January 3, 2006 in accordance with the terms of the ATM
Closing Cash Collateral Deposit Letter, which true-up never occurred. As of the
date hereof, the amount of Collateral Deposit (as that term is defined in the
ATM Closing Cash Collateral Deposit Letter) is $8,200,000. Following the
application by Xxxxxx of the Collateral Deposit to certain of the Obligations
(as that term is defined in the ATM Closing Cash Collateral Deposit Letter) and
the conversion of the notes pursuant to the terms of the Exercise Agreement,
Xxxxxx agrees that the following notes have been indefeasibly repaid as of the
date hereof: (a) 2003 Convertible Note, (b) $1,500,000 Note and (c) $600,000
Note (as such terms are defined in the ATM Closing Cash Collateral Deposit
Letter) and no further amounts are due on account of such notes.
As collateral security for the payment of remaining monetary amounts
and all covenants and duties regarding such amounts, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, arising under the Laurus Documents (the "Secured Obligations"), the
Tidel Entities acknowledge that $5,400,000 will be on deposit with Laurus which
is the sum of (a) $5,330,507 which represents the remaining amount under the ATM
Closing Cash Collateral Deposit Letter plus (b) $69,493 which represents the
Adjustment and shall be wired by Tidel to Laurus on January 13, 2006 (the
deposit described in clauses (a) and (b) to be hereinafter referred to as the
"TACC Closing Collateral Deposit"). The TACC Closing Collateral Deposit shall be
held pursuant to the terms of this letter. This deposit of the TACC Closing
Collateral Deposit shall not constitute a redemption of any note or other
instrument made by any Tidel Entity in favor of Xxxxxx. The TACC Closing
Collateral Deposit shall be held in an interest bearing deposit account for the
benefit of Tidel, with all interest earned by Xxxxxx thereon being added to the
principal amount of the TACC Closing Collateral Deposit.
Laurus and its successors and assigns may, without demand of
performance or advertisement or notice of any kind to or upon any Tidel Entity
(each of which demands, advertisements and/or notices are hereby expressly
waived), immediately upon a default by any Tidel Entity in any payment
obligation due and owing to Laurus under any of the Laurus Documents,
appropriate and apply all or any part of the TACC Closing Collateral Deposit to
the payment in whole or in part, in such order as Laurus may elect, of the
Secured Obligations until the Secured Obligations have been indefeasibly paid in
full. Further, Tidel may instruct Xxxxxx in writing to apply any part of the
TACC Closing Collateral Deposit to any payment obligation then due and owing to
Laurus under the Redemption Agreement or the Exercise Agreement. In the event
that any Secured Obligation remains outstanding after giving effect to any
application of the TACC Closing Collateral Deposit, Tidel shall be liable for
any deficiency.
When all of the Secured Obligations have been paid and/or are otherwise
indefeasibly paid in full and the Laurus Documents irrevocably terminated, any
sums still on deposit hereunder shall, unless Xxxxxx is instructed by a court of
competent jurisdiction to the contrary, be returned to Tidel.
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This letter agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns and shall be
governed by and construed in accordance with the laws of the State of New York.
Very truly yours,
Tidel Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Director
AGREED:
Tidel Engineering, L.P. Tidel Cash Systems, Inc.
By: Tidel Cash Systems, Inc.,
its managing general partner
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxxxx Xxxx
----------------------- -------------------------
Name: Xxxxxxx Xxxx Name: Xxxxxxx Xxxx
Title: VP & Secretary Title: VP & Secretary
Tidel Services, Inc. AnyCard International, Inc.
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxxxx Xxxx
----------------------------- -------------------------
Name: Xxxxxxx Xxxx Name: Xxxxxxx Xxxx
Title: VP & Secretary Title: VP & Secretary
ACCEPTED:
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxxx Xxxx
-----------------------------
Name: Xxxxxx Xxxx
Title: Director
