VOTING AGREEMENT
Exhibit
10.7
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 dated 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
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.
2
1.2. Conditions
Precedent to Effectiveness of Voting Agreement.
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 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.
3
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:
4
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.
5
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.
6
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):
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If
to STI or Sentinel, to:
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Sentinel
Technologies, Inc. or Sentinel Operating, L.P.
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c/o
LLG, LLC
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0000
Xxxxxx Xxxxxx Xxxx
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Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000
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Attention:
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Xxxxxxx
Xxxxxxx, Chief Financial Officer
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Facsimile:
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(000)
000-0000
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with
a copy to:
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Xxxxxxx
Xxx & Xxxxxxxxx, LLC
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0000
Xxxxxxx Xxxxxx
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Xxxxx
0000
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Xxxxxx,
Xxxxxxxx 00000
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Attention:
Xxxxxx X. Xxxxxxx, Esq.
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Xxxx
X.X. Xxx, Esq.
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Fax:
(000) 000-0000
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If
to the Company:
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Tidel
Technologies, Inc.
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0000
XxXxxxxx Xxxxx
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Xxxxxxxxxx,
Xxxxx 00000
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Attn:
Chairman
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Fax:
(000) 000-0000
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7
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With
a copy to :
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Xxxx
X. Xxxxxxxx
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Xxxxxx
Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
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Park
Avenue Tower
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00
Xxxx 00xx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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(000)
000-0000 phone
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(000)
000-0000 fax
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xxxxxxxxx@xxxxxxxxx.xxx
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If
to the Stockholder:
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Laurus
Master Fund, Ltd.
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c/o
M&C Corporate Services Limited
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X.X.
Xxx 000 XX
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Xxxxxx
Xxxxx
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Xxxxxx
Xxxx
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South
Church Street
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Grand
Cayman, Cayman Islands
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Facsimile:
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000-000-0000
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with
a copy to:
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Laurus
Capital Management, LLC
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000
Xxxxx Xxxxxx, 00xx Xxxxx
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Xxx
Xxxx, XX 00000
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Facsimile:
000-000-0000
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Attn:
Xxxx Xxxxxx, Esq.
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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.
8
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 requirement for
the
security or posting of any bond in connection with such enforcement.
9
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.
*
* * *
*
10
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.
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SENTINEL
TECHNOLOGIES, INC.
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/s/
Xxxxxxx X. Xxxxxx
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By:
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Xxxxxxx
X. Xxxxxx
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Title:
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Chief
Executive Officer
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SENTINEL
OPERATING, L.P.
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By:
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Sentinel
Cash Systems, L.L.C.,
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its
general partner
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/s/
Xxxxxxx X. Xxxxxx
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By:
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Xxxxxxx
X. Xxxxxx
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Title:
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President
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TIDEL
TECHNOLOGIES, INC.
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/s/
Xxxxxx X. Xxxx
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By:
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Xxxxxxx
X. Xxxx
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Title:
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Director
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LAURUS
MASTER FUND, LTD.
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/s/
Xxxxxx Grin
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By:
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Xxxxxx
Grin
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Title:
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Director
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