Exhibit 10.1


    
      

    

    Exhibit
      10.1

     

     

    
      	
               

               

              ASSET
                PURCHASE AGREEMENT

              


              BY
                AND AMONG

              


              SENTINEL
                OPERATING, L.P.

              


              TIDEL
                TECHNOLOGIES, INC.

              


              AND

              


              TIDEL
                ENGINEERING, L.P.

              


              DATED
                AS OF JANUARY 12, 2006

               

               

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              §1.
                Definitions.

            	
              4

            
	 	 
	
              §2.
                Basic Transaction.

            	
              12

            
	
              (a)
                Purchase and Sale of Assets.

            	
              12

            
	
              (b)
                Assumption of Liabilities.

            	
              12

            
	
              (c)
                Purchase Price.

            	
              12

            
	
              (d)
                Closing.

            	
              12

            
	
              (e)
                Deliveries at Closing.

            	
              12

            
	
              (f)
                Preparation of Final December Balance Sheet.

            	
              12

            
	
              (g)
                Pre-Closing Cash Adjustment.

            	
              13

            
	
              (h)
                Post-Closing Cash Adjustment.

            	
              14

            
	
              (i)
                Purchase Price Allocation.

            	
              15

            
	 	 
	
              §3.
                Sellers’ Representations and Warranties.

            	
              16

            
	
              (a)
                Organization.

            	
              16

            
	
              (b)
                Authorization of Transaction.

            	
              16

            
	
              (c)
                Non-contravention.

            	
              17

            
	
              (d)
                Brokers’ Fees and Fairness Opinion.

            	
              17

            
	
              (e)
                Title to Assets.

            	
              17

            
	
              (f)
                Subsidiaries.

            	
              17

            
	
              (g)
                SEC Filings and Financial Statements.

            	
              18

            
	
              (h)
                Events Subsequent to Most Recent Balance Sheet.

            	
              19

            
	
              (i)
                Undisclosed Liabilities.

            	
              20

            
	
              (j)
                Legal Compliance.

            	
              21

            
	
              (k)
                Tax Matters.

            	
              21

            
	
              (l)
                Real Property.

            	
              22

            
	
              (m)
                Intellectual Property.

            	
              24

            
	
              (n)
                Tangible Assets.

            	
              26

            
	
              (o)
                Inventory.

            	
              26

            
	
              (p)
                Contracts.

            	
              26

            
	
              (q)
                Notes and Accounts Receivable.

            	
              27

            
	
              (r)
                Powers of Attorney.

            	
              28

            
	
              (s)
                Insurance.

            	
              28

            
	
              (t)
                Litigation.

            	
              28

            
	
              (u)
                Product Warranty.

            	
              28

            
	
              (v)
                Product Liability.

            	
              28

            
	
              (w)
                Employees.

            	
              29

            
	
              (x)
                Employee Benefit Plans.

            	
              29

            
	
              (y)
                Guaranties.

            	
              31

            
	
              (z)
                Environmental, Health, and Safety Matters.

            	
              31

            
	
              (aa)
                Certain Business Relationships.

            	
              32

            
	
              (bb)
                Customers and Suppliers.

            	
              32

            
	 	 
	
              §4.
                Buyer’s Representations and Warranties.

            	
              32

            
	
              (a)
                Organization of Buyer.

            	
              32

            
	
              (b)
                Authorization of Transaction.

            	
              33

            
	
              (c)
                Non-contravention.

            	
              33

            
	
              (d)
                Brokers’ Fees.

            	
              33

            
	 	 
	
              §5.
                Pre-Closing Covenants.

            	
              33

            
	
              (a)
                General.

            	
              33

            
	
              (b)
                Notices and Consents.

            	
              33

            
	
              (c)
                Operation of Business.

            	
              34

            
	
              (d)
                Preservation of Business.

            	
              34

            
	
              (e)
                Full Access.

            	
              34

            
	
              (f)
                Notice of Developments.

            	
              34

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (g)
                Exclusivity.

            	
              34

            
	
              (h)
                Maintenance of Acquired Assets.

            	
              35

            
	
              (i)
                Parent Stockholders Meeting

            	
              36

            
	
              (j)
                Name Change.

            	
              36

            
	
              (k)
                Perfection of Ownership of Intellectual Property.

            	
              37

            
	
              (l)
                Maintenance of Leased Real Property.

            	
              37

            
	
              (m)
                Leases.

            	
              37

            
	
              (n)
                Claim.

            	
              37

            
	 	 
	
              §6.
                Post-Closing Covenants.

            	
              37

            
	
              (a)
                General.

            	
              37

            
	
              (b)
                Litigation Support.

            	
              37

            
	
              (c)
                Transition.

            	
              38

            
	
              (d)
                Confidentiality.

            	
              38

            
	
              (e)
                Covenant Not to Compete or Solicit.

            	
              38

            
	
              (f)
                Defense of CSS Claim.

            	
              39

            
	
              (g)
                Indemnification.

            	
              39

            
	
              (h)
                Directors’ and Officers’ Insurance.

            	
              40

            
	
              (i)
                Employee Non-competition and Confidentiality Agreements.

            	
              40

            
	 	 
	
              §7.
                Conditions to Obligation to Close.

            	
              40

            
	
              (a)
                Conditions to Buyer’s Obligation.

            	
              40

            
	
              (b)
                Conditions to Sellers’ Obligation.

            	
              42

            
	 	 
	
              §8.
                Survival and Termination. 

            	
              43

            
	
              (a)
                Survival of Representations and Warranties.

            	
              43

            
	
              (b)
                Termination of Agreement.

            	
              43

            
	
              (c)
                Effect of Termination.

            	
              44

            
	 	 
	
              §9.
                Miscellaneous.

            	
              44

            
	
              (a)
                Press Releases and Public Announcements.

            	
              44

            
	
              (b)
                No Third-Party Beneficiaries.

            	
              44

            
	
              (c)
                Entire Agreement.

            	
              44

            
	
              (d)
                Succession and Assignment.

            	
              44

            
	
              (e)
                Counterparts.

            	
              45

            
	
              (f)
                Headings.

            	
              45

            
	
              (g)
                Notices.

            	
              45

            
	
              (h)
                Governing Law.

            	
              46

            
	
              (i)
                Amendments and Waivers.

            	
              46

            
	
              (j)
                Severability.

            	
              46

            
	
              (k)
                Expenses.

            	
              46

            
	
              (l)
                Construction.

            	
              47

            
	
              (m)
                Incorporation of Exhibits and Schedules.

            	
              47

            
	
              (n)
                Specific Performance.

            	
              47

            
	
              (o)
                Submission to Jurisdiction.

            	
              48

            
	
              (p)
                Tax Matters.

            	
              48

            
	
              (q)
                Tax Disclosure Authorization.

            	
              48

            


    

    
 

    Exhibit
      A—Forms of Assignments

    Exhibit
      B—Form of Opinion of Sellers’ Counsel

    


    Disclosure
      Schedule—Exceptions to Sellers’ Representations and Warranties


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    ASSET
      PURCHASE AGREEMENT

    


    This
      Asset Purchase Agreement (this “Agreement”)
      is
      entered into as of January 12, 2006, by and among Sentinel Operating, L.P.,
      a
      Texas limited partnership (“Buyer”),
      Tidel
      Technologies, Inc., a Delaware corporation (“Parent”),
      and
      Tidel Engineering, L.P., a Delaware limited partnership (“Target”,
      and
      collectively with Parent, “Sellers”,
      and
      individually, a “Seller”).
      Buyer, Parent and Target are referred to collectively herein as the
“Parties”
and
      individually as a “Party”.

    


    This
      Agreement contemplates a transaction in which Buyer will purchase all of the
      Acquired Assets (and assume only the Assumed Liabilities) of Division in
      consideration for the Purchase Price. 

    


    Now,
      therefore, in consideration of the premises and the mutual promises herein
      made,
      and in consideration of the representations, warranties, and covenants herein
      contained, the Parties agree as follows:

    


    
      	
              §1.

            	
              Definitions.  

            


    

    


     “Acquired
      Assets”
means
      all right, title, and interest in and to all of the assets constituting
      Division, including
      all of
      the assets of Target and Division’s (a) tangible personal property including,
      but not limited to, computers, servers, office equipment, machinery, equipment,
      inventories of raw materials and supplies, manufactured and purchased parts,
      goods in process and finished goods, furniture, automobiles, trucks, tractors,
      trailers, tools, jigs, and dies, (b) Intellectual Property (including all rights
      of Sellers to the names “Tidel” and “Sentinel”), goodwill associated therewith,
      trademarks, service marks and all other marks (whether registered or
      unregistered), licenses and sublicenses granted and obtained with respect
      thereto, and rights thereunder, remedies against infringements thereof, and
      rights to protection of interests therein under the laws of all jurisdictions,
      (c) leases, subleases, and rights thereunder, (d) agreements, contracts,
      indentures, mortgages, instruments, Liens, guaranties, other similar
      arrangements, and rights thereunder, (e) accounts, notes, and other receivables,
      (f) securities, (g) claims, deposits, prepayments, refunds, causes of action,
      choses in action, rights of recovery, rights of set-off, and rights of
      recoupment (including any such item relating to the payment of Taxes), (h)
      franchises, approvals, permits, licenses, orders, registrations, certificates,
      variances, and similar rights obtained from governments and governmental
      agencies, (i) books, records, ledgers, files, documents, correspondence, lists,
      plats, architectural plans, drawings, and specifications, creative materials,
      advertising and promotional materials, studies, reports, and other printed
      or
      written materials, and (j) the Key Man Policy; provided,
      however,
      that
      the Acquired Assets shall not include (i) the Excluded Assets, (ii) the
      organizational documents and charters, qualifications to conduct business as
      a
      foreign entity, arrangements with registered agents relating to foreign
      qualifications, taxpayer and other identification numbers, seals, minute books,
      stock transfer books, blank stock certificates, and other documents relating
      to
      the organization, maintenance, and existence of Sellers’ legal entities, (iii)
      any of the rights of Sellers under this Agreement (or under any side agreement
      between Sellers and Buyer entered into on or after the date of this Agreement),
      or (iv) commercial liability insurance contracts and policies. 

    


    “Acquisition
      Proposal”
means,
      other than the transactions contemplated by this Agreement or the NCR Purchase
      Agreement or the exercise of warrants or conversion of debt by Laurus Master
      Fund, Ltd. and its Affiliates pursuant to the Voting Agreements, any offer,
      proposal or inquiry relating to, or any third party indication of interest
      in,
      (a) any acquisition or purchase, direct or indirect, of any assets of Target
      or
      Division or over five percent (5%) of any class of equity or voting securities
      of Parent or any equity or voting securities of any Subsidiaries of Parent
      other
      than AnyCard International, Inc., (b) any tender offer (including a self-tender
      offer) or exchange offer that, if consummated, would result in such third
      party’s beneficially owning five percent (5%) or more of any class of equity or
      voting securities of Parent or any equity or voting securities of any
      Subsidiaries of Parent other than AnyCard International, Inc., (c) a merger,
      consolidation, share exchange, business combination, sale of substantially
      all
      the assets, reorganization, recapitalization, liquidation, dissolution or other
      similar transaction involving Sellers or any Subsidiaries of Parent other than
      AnyCard International, Inc., or (d) any other transaction the consummation
      of
      which could reasonably be expected to impede, interfere with, prevent or
      materially delay the transaction contemplated hereby or that could reasonably
      be
      expected to dilute materially the benefits to Buyer of the transactions
      contemplated hereby.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    “Actual
      Cash”
has
      the
      meaning set forth in §2(g)(v)(A) below 

    


    “Actual
      Cash Value”
has
      the
      meaning set forth in §2(g)(iii)(C) below.

    


    "Adverse
      Consequences"
      means
      all damages, penalties, fines, costs, reasonable amounts paid in settlement,
      losses, expenses, and fees, including court costs and reasonable attorneys'
      fees
      and expenses.

    


    “Actual
      Value”
has
      the
      meaning set forth in §2(f)(iii)(C) below.

    


    “Affiliate”
has
      the
      meaning set forth in Rule 12b-2 of the regulations promulgated under the
      Securities Exchange Act.

    


    “Affiliated
      Group”
means
      any affiliated group within the meaning of Code §1504(a) or any similar group
      defined under a similar provision of state, local, or foreign law.

    


    “Agreement”
has
      the
      meaning set forth in the preface above.

    


    “Amendment”
has
      the
      meaning set forth in §5(i)(i) below.

    


    “Asbestos
      Liabilities”
means
      any Liabilities arising from, relating to, or based on the presence or alleged
      presence of asbestos or asbestos-containing materials in any product or item
      designed, manufactured, sold, marketed, installed, stored, transported, handled,
      or distributed at any time, or otherwise based on the presence or alleged
      presence of asbestos or asbestos-containing materials at any property or
      facility or in any structure, including without limitation, any Liabilities
      arising from, relating to or based on any personal or bodily injury or
      illness.

    


    “Assumed
      Liabilities”
means
      any Liabilities set forth in §1of the Disclosure Schedule under the heading of
“Assumed Liabilities”; provided,
      however,
      that
      the Assumed Liabilities shall not include (a) any Liability of Sellers for
      Taxes
      (with respect to Division or otherwise), (b) any Liability of Sellers for
      income, transfer, sales, use, and other Taxes arising in connection with the
      consummation of the transactions contemplated hereby (including any income
      Taxes
      arising because of Sellers transferring the Acquired Assets and Seller’s
      obligations under §9(k) below with respect to Taxes), (c) any Liability of
      Sellers for the unpaid Taxes of any Person under Treasury Regulation §1.1502-6
      (or any similar provision of state, local, or foreign law), as a transferee
      or
      successor, by contract or otherwise, (d) any obligation of Sellers to indemnify
      any Person (including any of partners of Target or stockholders of Parent)
      by
      reason of the fact that such Person was a director, officer, employee, manager,
      partner or agent of Sellers or any of their respective Subsidiaries or was
      serving at the request of any such entity as a partner, trustee, director,
      officer, employee, or agent of another entity (whether such indemnification
      is
      for judgments, damages, penalties, fines, costs, amounts paid in settlement,
      losses, expenses, or otherwise and whether such indemnification is pursuant
      to
      any statute, charter document, bylaw, agreement, or otherwise), (e) any
      Liability of Sellers for costs and expenses incurred in connection with this
      Agreement and the transactions contemplated hereby, (f) any Liability or
      obligation of Sellers under this Agreement (or under any side agreement between
      Sellers and Buyer entered into on or after the date of this Agreement), (g)
      any
      Liabilities for Leases, other than Liabilities for Leases specifically
      identified in §1of the Disclosure Schedule, (h) other than the Termination
      Payments, any Liabilities for payroll, withholdings tax, severance or any other
      payments or compensation owed to employees of Sellers or any Subsidiaries of
      Parent including any payments that are not deductible under Code §280G, and (i)
      any Liabilities arising out of Employee Benefit Plans, Employee Pension Plans
      or
      Employee Welfare Benefit Plans.


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    “Basis”
means
      any past or present fact, situation, circumstance, status, condition, activity,
      practice, plan, occurrence, event, incident, action, failure to act, or
      transaction that forms or could form the basis for any specified
      consequence.

    


    “Buyer”
has
      the
      meaning set forth in the preface above. 

    


    “Cash
      Adjustment”
has
      the
      meaning set forth in §2(g)(v) below 

    


    “Cash
      Threshold”
means
      the December Balance Sheet Cash plus $352,000.

    


    “Closing”
has
      the
      meaning set forth in §2(d) below.

    


    “Closing
      Date”
has
      the
      meaning set forth in §2(d) below.

    


    “COBRA”
means
      the requirements of Part 6 of Subtitle B of Title I of ERISA and Code §4980B and
      of any similar state law.

    


    “Code”
means
      the Internal Revenue Code of 1986, as amended.

    


    “Confidential
      Information”
means
      any information concerning the business and affairs of Division that is not
      already generally available to the public.

    


    “CSS
      Claim”
has
      the
      meaning set forth in §3(m)(ii) below.

    


    “December
      Balance Sheet Cash” means
      the
      amount of cash and cash equivalents set forth on the Final December Balance
      Sheet.

    


    “Disclosure
      Schedule”
has
      the
      meaning set forth in §3 below.

    


    “Division”
means
      Sellers’ electronic cash security systems business, consisting of (a) timed
      access cash controllers (b) the Sentinel products, (c) the servicing,
      maintenance and repair of the timed access cash controllers or Sentinel products
      and (d) all other assets and business operations associated with the
      foregoing.

    


    “Division
      Subsidiary”
has
      the
      meaning set forth in §3(f) below.

    


    “Draft
      Allocation”
has
      the
      meaning set forth in §2(i)(i) below.

    


    “Draft
      Closing Balance Sheet”
has
      the
      meaning set forth in §2(h)(i) below.

    


    “Draft
      December Balance Sheet”
has
      the
      meaning set forth in §2(f)(i) below.

    


    “Employee
      Benefit Plan”
means
      any “employee benefit plan” (as such term is defined in ERISA §3(3)) and any
      other employee benefit plan, program or arrangement of any kind.

    


    “Employee
      Pension Benefit Plan”
has
      the
      meaning set forth in ERISA §3(2).

    


    “Employee
      Welfare Benefit Plan”
has
      the
      meaning set forth in ERISA §3(1).


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    “Employment
      Agreements”
means
      (a) the Employment Agreement by and between Target and Mark Levenick dated
      January 1, 2000, (b) the Employment Agreement by and between Target and M.
      Flynt
      Moreland dated January 1, 2000, (c) the Employment Agreement by and between
      Target and Troy D. Richard dated June 26, 2002, and (d) the Employment Agreement
      by and between Target and Robert M. Gutierrez dated January 1,
      2000.

    


    “Environmental,
      Health, and Safety Requirements”
shall
      mean, as amended and as now and hereafter in effect, all federal, state, local,
      and foreign statutes, regulations, ordinances, and other provisions having
      the
      force or effect of law, all judicial and administrative orders and
      determinations, all contractual obligations, and all common law concerning
      public health and safety, worker health and safety, pollution, or protection
      of
      the environment, including, without limitation, all those relating to the
      presence, use, production, generation, handling, transportation, treatment,
      storage, disposal, distribution, labeling, testing, processing, discharge,
      release, threatened release, control, or cleanup of any hazardous materials,
      substances, or wastes, chemical substances or mixtures, pesticides, pollutants,
      contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
      polychlorinated biphenyls, noise, or radiation. 

    


    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended.

    


    “ERISA
      Affiliate”
means
      each entity that is treated as a single employer with Sellers for purposes
      of
      Code §414. 

    


    “Estimated
      Actual Cash”
has
      the
      meaning set forth in §2(g)(ii) below.

    


    “Estimated
      Cash Adjustment”
has
      the
      meaning set forth in §2(g)(ii) below 

    


    “Estimated
      February Balance Sheet”
has
      the
      meaning set forth in §2(g)(i) below.

    


    “Excluded
      Assets”
means
      any of Sellers’ (a) cash and cash equivalents on hand or on deposit in banks,
      (including, without limitation, certificates of deposit, commercial paper,
      treasury bills, and money market accounts), marketable securities, or
      inter-company or inter-affiliate accounts, and any similar accounts, (b) life
      insurance contracts or policies (other than the Key Man Policy) and any
      insurance proceeds or insurance claims made by Sellers relating to Acquired
      Assets that are repaired, replaced or restored to substantially the same or
      an
      improved condition as compared to their respective conditions prior to the
      casualty by Sellers prior to the Closing and conveyed to Buyer hereunder; (c)
      promissory notes, amounts due from employees, bonds, letters of credit,
      certificates of deposit, other similar items, and any cash surrender value
      in
      regard thereto; (d) any Employee Benefit Plan, Employee Pension Benefit Plan
      and
      any Employee Welfare Benefit Plan; (e) all tax returns and supporting materials,
      all original financial statements and supporting materials, all books and
      records that Sellers are required by law to retain, and all records relating
      to
      the sale of the Acquired Assets; (f) any interest in and to any refunds or
      overpayments of federal, or local franchise, income, or other taxes for periods
      prior to the Closing Date; (g) all claims, rights and interest in and to any
      refunds of federal, state or local franchise, income or other taxes or fees
      for
      any period prior to the Closing Date; (h) any contract, lease, or agreement
      other than the agreements set forth on §1 of the Disclosure Schedule (excluding
      the Employment Agreements, which are Excluded Assets); (i) duplicate copies
      of
      the books and records necessary to enable Sellers to file their tax returns
      and
      reports; and (j) assets to be sold pursuant to the NCR Purchase
      Agreement.

    


    “Expenses”
has
      the
      meaning set forth in §9(k)(ii) below.

    


    “Fiduciary”
has
      the
      meaning set forth in ERISA §3(21).

    


    “Final
      Allocation”
has
      the
      meaning set forth in §2(i)(ii) below.


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    “Final
      December Balance Sheet”
has
      the
      meaning set forth in §2(f)(ii) below.

    


    “Final
      Closing Balance Sheet”
has
      the
      meaning set forth in §2(h)(ii) below.

    


    “Financial
      Statements”
has
      the
      meaning set forth in §3(g)(ii)(A) below.

    


    “GAAP”
means
      United States generally accepted accounting principles as in effect from time
      to
      time, consistently applied.

    


    “High
      Cash Value”
has
      the
      meaning set forth in §2(g)(iii)(B) below.

    


    “High
      Value”
has
      the
      meaning set forth in §2(f)(iii)(B) below.

    


    “Improvements”
has
      the
      meaning set forth in §3(l)(iv) below.

    


    “Indemnity
      Period”
has
      the
      meaning set forth in §6(g)(i) below.

    


    “Intellectual
      Property”
means
      all of the following used by, or relating to, Division in any jurisdiction
      throughout the world: (a) all inventions (whether patentable or unpatentable
      and
      whether or not reduced to practice), all improvements thereto, and all patents,
      patent applications, and patent disclosures, together with all reissuances,
      continuations, continuations-in-part, revisions, extensions, and reexaminations
      thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
      names, corporate names, Internet domain names and subdomains (including
“tidel.com”), and rights in telephone numbers, together with all translations,
      adaptations, derivations, and combinations thereof and including all goodwill
      associated therewith, and all applications, registrations, and renewals in
      connection therewith, (c) all copyrightable works, all copyrights, and all
      applications, registrations, and renewals in connection therewith, (d) all
      mask
      works and all applications, registrations, and renewals in connection therewith,
      (e) all trade secrets and confidential business information (including ideas,
      research and development, know-how, formulas, compositions, manufacturing and
      production processes and techniques, technical data, designs, drawings,
      specifications, customer and supplier lists, pricing and cost information,
      and
      business and marketing plans and proposals), (f) all computer software, firmware
      and applications (including source code, executable code, data, databases,
      and
      related documentation), (g) all advertising and promotional materials, (h)
      all
      other proprietary rights, and (i) all copies and tangible embodiments thereof
      (in whatever form or medium).

    


    “Intercompany
      Transfers”
means,
      for purposes of calculating cash and cash equivalents, distributions of cash
      and
      cash equivalents to or from Target which are to or from Target’s Affiliates
      during the period from January 1, 2006 through February 28, 2006.

    


    “Key
      Man Policy”
means
      Sellers’ key man life insurance policy insuring the life of Mark K.
      Levenick.

    


    “Knowledge”
means
      actual knowledge after reasonable investigation. 

    


    “Leased
      Real Property”
means
      all leasehold or subleasehold estates and other rights to use or occupy any
      land, buildings, structures, improvements, fixtures, or other interest in real
      property held by Division.

    


    “Leases”
means
      all leases, subleases, licenses, concessions and other agreements (written
      or
      oral), including all amendments, extensions, renewals, guaranties, and other
      agreements with respect thereto, pursuant to which Division holds any Leased
      Real Property, including the right to all security deposits and other amounts
      and instruments deposited by or on behalf of Sellers
      thereunder.


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    “Liability”
means
      any liability (whether known or unknown, whether asserted or unasserted, whether
      absolute or contingent, whether accrued or unaccrued, whether liquidated or
      unliquidated, and whether due or to become due), including any liability for
      Taxes.

    


    “Lien”
means
      any mortgage, pledge, lien, charge, conditional sales contract, interests of
      third parties, attachment, hypothecation, liability, judgment, easement, other
      security interest or any encumbrance of any kind.

    


    “Low
      Cash Value”
has
      the
      meaning set forth in §2(g)(iii)(A) below.

    


    “Low
      Value”
has
      the
      meaning set forth in §2(f)(iii)(A) below.

    


    “Material
      Adverse Effect”
or
      “Material
      Adverse Change”
means
      any effect or change that would be (or could be reasonably expected to be)
      materially adverse to the business, assets, condition (financial or otherwise),
      operating results, operations, or business prospects of Sellers or Division
      (regardless of whether or not such adverse effect or change can be or has been
      cured at any time or whether Buyer has knowledge of such effect or change on
      the
      date hereof).

    


    “Most
      Recent Balance Sheet”
means
      the balance sheet contained in the quarterly report filed by Parent on Form
      10-Q
      for the quarter ended June 30, 2005.

    


    “Motion”
has
      the
      meaning set forth in §5(i)(i) below.

    


    “Net
      Working Capital”
means
      (i) the current assets of Division, excluding cash and cash equivalents, as
      set
      forth on the Final December Balance Sheet, minus (ii) the current liabilities
      of
      Division, excluding accrued liabilities for Termination Payments, as set forth
      on the Final December Balance Sheet, minus (iii) the aggregate amount of the
      Termination Payments.

    


    “NCR
      Purchase Agreement”
means
      the Asset Purchase Agreement entered into on February 19, 2005 by and among
      NCR
      EasyPoint LLC (f/k/a NCR Texas LLC), NCR Corporation, Parent and Target, as
      amended.

    


    “Non-Affiliated
      Directors”
means
      directors of Parent who are not Affiliates of Buyer.

    


    “Ordinary
      Course of Business”
means
      the ordinary course of business of Sellers and Division consistent with past
      custom and practice (including with respect to quantity and
      frequency).

    


    “Owned
      Real Property”
means
      all land, together with all buildings, structures, improvements and fixtures
      located thereon, including all electrical, mechanical, plumbing and other
      building systems, fire protection, security and surveillance systems,
      telecommunications, computer wiring, and cable installations, utility
      installations, water distribution systems, and landscaping, together with all
      easements and other rights and interests appurtenant thereto (including air,
      oil, gas, mineral, and water rights), owned by Division or Sellers.

    


    “Parent”
has
      the
      meaning set forth in the preface above.

    


    “Parent
      Indemnified Parties”
has
      the
      meaning set forth in §6(g)(i) below.

    


    “Parent
      Payment Event”
means
      (a) the termination of this Agreement pursuant to §8(b)(iv) or §8(b)(v), or (b)
      Sellers consummate, publicly announce, or execute documentation providing for
      any Acquisition Proposal; provided
      that
      such consummation, announcement or execution occurs prior to the 18 month
      anniversary of the date of the termination of this Agreement pursuant to
§8(b)(ii) or §8(b)(iii)(B).


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    “Parent
      Proxy Statement”
has
      the
      meaning set forth in §3(g)(i)(C) below.

    


    “Parent
      Stockholders Meeting”
has
      the
      meaning set forth in §5(i)(i) below.

    


    “Party”
has
      the
      meaning set forth in the preface above.

    


    “Patent
      Agencies”
has
      the
      meaning set forth in §5(k) below.

    


    “Person”
means
      an individual, a partnership, a corporation, a limited liability company, an
      association, a joint stock company, a trust, a joint venture, an unincorporated
      organization, any other business entity, or a governmental entity (or any
      department, agency, or political subdivision thereof).

    


    “Prohibited
      Transaction”
has
      the
      meaning set forth in ERISA §406 and Code §4975.

    


    “Purchase
      Price”
has
      the
      meaning set forth in §2(f)(i) below.

    


    “Real
      Property Laws”
has
      the
      meaning set forth in §3(l)(vi) below.

    


    “Real
      Property Permits”
has
      the
      meaning set forth in §3(l)(vii) below.

    


    “Reimbursement
      Amount”
has
      the
      meaning set forth in §9(k)(ii) below.

    


    “Representatives”
has
      the
      meaning set forth in §5(g)(i) below

    


    “SEC”
means
      the United States Securities and Exchange Commission. 

    


    “SEC
      Documents”
has
      the
      meaning set forth in §3(g)(i)(A) below.

    


    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

    


    “Securities
      Exchange Act”
means
      the Securities Exchange Act of 1934, as amended.

    


    “Stockholder
      Approval”
has
      the
      meaning set forth in §7(a)(xvii) below.

    


    “Subsidiary”
means,
      with respect to any Person, any corporation, limited liability company,
      partnership, association, or business entity of which (a) if a corporation,
      a
      majority of the total voting power of shares of stock entitled (without regard
      to the occurrence of any contingency) to vote in the election of directors,
      managers, or trustees thereof is at the time owned or controlled, directly
      or
      indirectly, by that Person or one or more of the other Subsidiaries of that
      Person or a combination thereof or (b) if a limited liability company,
      partnership, association, or other business entity (other than a corporation),
      a
      majority of the partnership or other similar ownership interests thereof is
      at
      the time owned or controlled, directly or indirectly, by that Person or one
      or
      more Subsidiaries of that Person or a combination thereof and for this purpose,
      a Person or Persons own a majority ownership interest in such a business entity
      (other than a corporation) if such Person or Persons shall be allocated a
      majority of such business entity’s gains or losses or shall be or control any
      managing director or general partner of such business entity (other than a
      corporation). The term “Subsidiary”
shall
      include all Subsidiaries of such Subsidiary.


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    “Superior
      Proposal”
means
      any bona fide, unsolicited written Acquisition Proposal on terms that a majority
      of the Non-Affiliated Directors determine in good faith, after considering
      the
      written advice of the financial advisor and outside legal counsel to Parent’s
      board of directors, and taking into account all of the terms and conditions
      of
      the Acquisition Proposal, including any break-up fees, expense reimbursement
      provisions and conditions to consummation, are more favorable and provide
      greater value to all of the Parent’s stockholders than as provided under this
      Agreement and which is reasonably likely to be consummated on such terms and
      for
      which financing, to the extent required, is then fully committed.

    


    “Target”
has
      the
      meaning set forth in the preface above.

    


    “Tax”
or
      “Taxes”
means
      any federal, state, local, or foreign income, gross receipts, license, payroll,
      employment, excise, severance, stamp, occupation, premium, windfall profits,
      environmental (including taxes under Code §59A), customs duties, capital stock,
      franchise, profits, withholding, social security (or similar), unemployment,
      disability, real property, personal property, sales, use, transfer,
      registration, value added, alternative or add-on minimum, estimated, or other
      tax of any kind whatsoever, whether computed on a separate or consolidated,
      unitary or combined basis or in any other manner, including any interest,
      penalty, or addition thereto, whether disputed or not and including any
      obligation to indemnify or otherwise assume or succeed to the Tax liability
      of
      any other Person.

    


    “Tax
      Return”
means
      any return, declaration, report, claim for refund, or information return or
      statement relating to Taxes, including any schedule or attachment thereto,
      and
      including any amendment thereof.

    


    “Termination
      Payments”
means
      the payments to be made by Buyer at Closing on behalf of and as directed by
      Sellers as set forth by Sellers on §1 of the Disclosure Schedule under the
      heading of “Termination Payments” to be paid as consideration on behalf of and
      as directed by Sellers for termination of the Employment Agreements, but shall
      include only the obligation to make such payments and shall not include any
      other liabilities or obligations in connection therewith, including without
      limitation tax or withholding liabilities or obligations.

    


    “Third
      Party”
means
      any Person as defined in §13(d) of the Securities Exchange Act, other than
      Parent, Target and their respective Subsidiaries and Affiliates.

    


    “Transaction
      Agreements”
has
      the
      meaning set forth in §3(b) below.

    


    “Treasury
      Regulations”
means
      the Treasury Regulations promulgated under the Code.

    


    “Voting
      Agreements”
means
      that certain Exercise and Conversion Agreement dated as of the date of this
      Agreement by and among Buyer, Sentinel Technologies, Inc., a Delaware
      corporation (“Sentinel
      Technologies”),
      Parent, and Laurus Master Fund, Ltd, a Cayman Islands company (“Laurus”);
      that
      certain Voting Agreement dated as of the date of this Agreement by and among
      Buyer, Sentinel Technologies, Parent, and Laurus; and that certain Voting
      Agreement dated as of the date of this Agreement by and among Buyer, Sentinel
      Technologies, Parent and the officers and directors of Parent.


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
      


      
        	
                §2.

              	
                Basic
                  Transaction. 

              


      

       

    

    
      	 	
              (a)

            	
              Purchase
                and Sale of Assets.  

            


    

    


    On
      and
      subject to the terms and conditions of this Agreement, Buyer agrees to purchase
      from Sellers, and Sellers agree to sell, transfer, convey, and deliver to Buyer,
      all of the Acquired Assets, free and clear of all Liens, at the Closing for
      the
      consideration specified below in this §2.

    


    
      	 	
              (b)

            	
              Assumption
                of Liabilities. 

            


    

    


    On
      and
      subject to the terms and conditions of this Agreement, Buyer agrees to assume
      and become responsible for only the Assumed Liabilities at the Closing. Buyer
      will not assume or have any responsibility, however, with respect to any
      Liability of Sellers or any Subsidiaries of Parent not included within the
      definition of Assumed Liabilities.

    


    
      	 	
              (c)

            	
              Purchase
                Price. 

            


    

    


    At
      the
      Closing, Buyer agrees to pay to Sellers a purchase price for the Acquired Assets
      calculated as set forth below in this §2, payable in cash by wire transfer or
      delivery of other immediately available funds (the “Purchase
      Price”).
      The
      Purchase Price shall be an amount equal to $17,500,000 (i) minus $100,000 as
      consideration for Buyer’s potential liability in connection with the CSS Claim
      if the CSS Claim has not been dismissed pursuant to a final non-appealable
      court
      order prior to the Closing, and (ii) plus or minus, as the case may be, Net
      Working Capital. In addition, the Estimated Cash Adjustment shall be paid by
      Buyer or Sellers, as the case may be, to Buyer or Sellers, as the case may
      be,
      at the Closing as set forth in Section 2(g)(ii) below. 

    


    
      	 	
              (d)

            	
              Closing. 

            


    

    


    The
      closing of the transactions contemplated by this Agreement (the “Closing”)
      shall
      take place at the offices of Hensley Kim & Edgington, LLC, 1660 Lincoln
      Street, Suite 3050, Denver, Colorado 80264, commencing at 9:00 a.m. local time
      on the business day following the satisfaction or waiver of all conditions
      to
      the obligations of the Parties to consummate the transactions contemplated
      hereby (other than conditions with respect to actions the respective Parties
      will take at the Closing itself) and the determination of the Purchase Price
      pursuant to this §2 or such other date as the Parties may mutually determine
      (the “Closing
      Date”).

    


    
      	 	
              (e)

            	
              Deliveries
                at Closing. 

            


    

    


    At
      the
      Closing, (i) Sellers will deliver to Buyer the various certificates,
      instruments, and documents referred to in §7(a) below; (ii) Buyer will deliver
      to Sellers the various certificates, instruments, and documents referred to
      in
§7(b) below; (iii) Sellers will execute, acknowledge (if appropriate), and
      deliver to Buyer (A) assignments (including Intellectual Property transfer
      documents) in the forms attached hereto as Exhibit A and (B) such other
      instruments of sale, transfer, conveyance, and assignment as Buyer and its
      counsel may reasonably request; (iv) Buyer will deliver to Sellers the Purchase
      Price; and (v) Buyer will make the Termination Payments.

    


    
      	 	
              (f)

            	
              Preparation
                of Final December Balance Sheet. 

            


    

    


    (i)
       On or before February 14, 2006, Sellers will prepare, in accordance with
      GAAP, and deliver to Buyer a written draft balance sheet of Division as of
      the
      close of business on December 31, 2005 (“Draft
      December Balance Sheet”).
      


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    (ii)
       If Buyer has any objections to the Draft December Balance Sheet, Buyer
      shall deliver a written detailed statement describing its objections to Parent
      within seven (7) days after receiving the Draft December Balance Sheet. Buyer
      and Parent shall use reasonable efforts to resolve any such objections
      themselves. If the Parties do not obtain a final resolution within seven (7)
      days after Parent has received the statement of objections, however, Buyer
      and
      Parent shall select an accounting firm mutually acceptable to the Parties to
      resolve any remaining objections. If Buyer and Parent are unable to agree on
      the
      choice of an accounting firm, they will select a nationally-recognized
      accounting firm by lot (after excluding their respective regular outside
      accounting firms). The determination of any accounting firm so selected shall
      be
      set forth in writing and shall be conclusive and binding upon the Parties.
      Sellers shall revise the Draft December Balance Sheet in writing as appropriate
      to reflect the resolution of any objections thereto pursuant to this §2(f)(ii).
      The “Final
      December Balance Sheet”
shall
      mean the written Draft December Balance Sheet together with any revisions
      thereto pursuant to this §2(f)(ii).

    


    (iii)
       In the event the Parties submit any unresolved objections to an accounting
      firm for resolution as provided in §2(f)(ii) above, Buyer and Sellers shall
      share responsibility for the fees and expenses of the accounting firm as
      follows: 

    


    (A)
       if the accounting firm resolves all of the remaining objections in favor
      of Buyer (the working capital as determined on the Final December Balance Sheet
      is referred to herein as the “Low
      Value”),
      Sellers shall be responsible for all of the fees and expenses of the accounting
      firm;

    


    (B)
       if the accounting firm resolves all of the remaining objections in favor
      of Parent (the working capital as so determined on the Final December Balance
      Sheet is referred to herein as the “High
      Value”),
      Buyer
      shall be responsible for all of the fees and expenses of the accounting firm;
      and

    


    (C)
       if the accounting firm resolves some of the remaining objections in favor
      of Buyer and some objections in favor of Parent (the working capital as so
      determined on the Final December Balance Sheet is referred to herein as the
      “Actual
      Value”),
      Sellers shall be responsible for that fraction of the fees and expenses of
      the
      accounting firm equal to (x) the difference between the High Value and the
      Actual Value over (y) the difference between the High Value and the Low Value,
      and Buyer shall be responsible for the remainder of the fees and
      expenses.

    


    (iv)
       Sellers will make the work papers and back-up materials used in preparing
      the Draft December Balance Sheet available to Buyer and its accountants and
      other representatives at reasonable times and upon reasonable notice at any
      time
      during (A) the preparation by Sellers of the Draft December Balance Sheet,
      (B)
      the review by Buyer of the Draft December Balance Sheet, and (C) the resolution
      by the Parties of any objections thereto. 

    


    
      	 	
              (g)

            	
              Pre-Closing
                Cash Adjustment. 

            


    

    


    (i)
       On or before February 28, 2006, Sellers will prepare in good faith, in
      accordance with GAAP, and deliver to Buyer a written estimated balance sheet
      of
      Division as of the close of business on February 28, 2006, which estimated
      balance sheet shall not take into account Intercompany Transfers but shall
      take
      into account issued and outstanding checks of Sellers related to Division which
      have yet to clear Sellers’ bank accounts (“Estimated
      February Balance Sheet”).
      Solely by way of example of the calculation of the Estimated February Balance
      Sheet, if $1,000,000 in cash and cash equivalents is held by Target on February
      28, 2006, but subsequent to December 31, 2005 and prior to March 1, 2006 (i)
      Tidel shall have transferred $300,000 in cash or cash equivalents to Target,
      the
      cash and cash equivalents balance on the Estimated February Balance Sheet shall
      be adjusted to $700,000, or (ii) Target shall have transferred $300,000 in
      cash
      or cash equivalents from Target to Tidel, the cash and cash equivalent balance
      on the Estimated February Balance Sheet shall be adjusted to $1,300,000. Buyer
      and Sellers shall in good faith mutually agree to the amount of cash and cash
      equivalents set forth on the Estimated February Balance Sheet. 


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    (ii)
       Once the Estimated February Balance Sheet has been mutually agreed upon in
      good faith by Buyer and Sellers, (A) if the amount of cash and cash equivalents
      set forth on the Estimated February Balance Sheet (the “Estimated
      Actual Cash”)
      is
      greater than the Cash Threshold, Sellers shall pay to Buyer at the Closing
      the
      difference between the Estimated Actual Cash and the Cash Threshold, or (B)
      if
      the Estimated Actual Cash is less than the Cash Threshold, Buyer shall pay
      to
      Sellers the difference between the Cash Threshold and the Estimated Actual
      Cash
      (the “Estimated
      Cash Adjustment”).
      

    


    
      	 	
              (h)

            	
              Post-Closing
                Cash Adjustment. 

            


    

    


    (i)
       Within thirty (30) days following the Closing Date, Sellers will prepare,
      in accordance with GAAP, and deliver to Buyer a written draft balance sheet
      of
      Division as of the close of business on the Closing Date, which draft balance
      sheet shall not take into account Intercompany Transfers but shall take into
      account issued and outstanding checks of Sellers related to Division which
      have
      yet to clear Sellers’ bank accounts (“Draft
      Closing Balance Sheet”).
      

    


    (ii)
       If Buyer has any objections to the amount of cash and cash equivalents set
      forth on the Draft Closing Balance Sheet, Buyer shall deliver a written detailed
      statement describing its objections to Parent within fifteen (15) days after
      receiving the Draft Closing Balance Sheet. Buyer and Parent shall use reasonable
      efforts to resolve any such objections themselves. If the Parties do not obtain
      a final resolution within fifteen (15) days after Parent has received the
      statement of objections, however, Buyer and Parent shall select an accounting
      firm mutually acceptable to the Parties to resolve any remaining objections.
      If
      Buyer and Parent are unable to agree on the choice of an accounting firm, they
      will select a nationally-recognized accounting firm by lot (after excluding
      their respective regular outside accounting firms). The determination of any
      accounting firm so selected shall be set forth in writing and shall be
      conclusive and binding upon the Parties. Sellers shall revise the Draft Closing
      Balance Sheet in writing as appropriate to reflect the resolution of any
      objections thereto pursuant to this §2(h)(ii). The “Final
      Closing Balance Sheet”
shall
      mean the written Draft Closing Balance Sheet together with any revisions thereto
      pursuant to this §2(h)(ii).

    


    (iii)
       In the event the Parties submit any unresolved objections to an accounting
      firm for resolution as provided in §2(h)(ii) above, Buyer and Sellers shall
      share responsibility for the fees and expenses of the accounting firm as
      follows: 

    


    (A)
       if the accounting firm resolves all of the remaining objections in favor
      of Parent (the cash and cash equivalents as determined on the Final Closing
      Balance Sheet is referred to herein as the “Low
      Cash Value”),
      Buyer
      shall be responsible for all of the fees and expenses of the accounting
      firm;

    


    (B)
       if the accounting firm resolves all of the remaining objections in favor
      of Buyer (the cash and cash equivalents as so determined on the Final Closing
      Balance Sheet is referred to herein as the “High
      Cash Value”),
      Sellers shall be responsible for all of the fees and expenses of the accounting
      firm; and


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    (C)
       if the accounting firm resolves some of the remaining objections in favor
      of Buyer and some objections in favor of Parent (the cash and cash equivalents
      as so determined on the Final Closing Balance Sheet is referred to herein as
      the
“Actual
      Cash Value”),
      Buyer
      shall be responsible for that fraction of the fees and expenses of the
      accounting firm equal to (x) the difference between the High Cash Value and
      the
      Actual Cash Value over (y) the difference between the High Cash Value and the
      Low Cash Value, and Sellers shall be responsible for the remainder of the fees
      and expenses.

    


    (iv)
       Sellers will make the work papers and back-up materials used in preparing
      the Draft Closing Balance Sheet available to Buyer and its accountants and
      other
      representatives at reasonable times and upon reasonable notice at any time
      during (A) the preparation by Sellers of the Draft Closing Balance Sheet, (B)
      the review by Buyer of the Draft Closing Balance Sheet, and (C) the resolution
      by the Parties of any objections thereto.   

    


    (v)
       Once the Final Closing Balance Sheet has been determined, (A) if the
      amount of cash and cash equivalents set forth on the Final Closing Balance
      Sheet
      (the “Actual
      Cash”)
      is
      greater than the Estimated Actual Cash, Sellers shall promptly (but in any
      event
      within three (3) business days) pay to Buyer the difference between the Actual
      Cash and the Estimated Actual Cash, or (B) if the Actual Cash is less than
      the
      Estimated Actual Cash, Buyer shall promptly (but in any event within three
      (3)
      business days) pay to Sellers the difference between the Estimated Actual Cash
      and the Actual Cash.

    


    
      	 	
              (i)

            	
              Purchase
                Price Allocation. 

            


    

    


    (i)
       Within 60 days after the date of determination of the Final Closing
      Balance Sheet, Buyer will prepare an allocation of the Purchase Price (and
      all
      other capitalized costs) among the Acquired Assets in accordance with Code
§1060
      and the Treasury Regulations thereunder (and any similar provision of state,
      local or foreign law, as appropriate), and deliver to Parent a written draft
      of
      the allocation (the “Draft
      Allocation”).
      Sellers shall timely and properly prepare, execute, file and deliver all such
      documents, forms and other information as Buyer may reasonably request to
      prepare the Draft Allocation. 

    


    (ii)
       If Parent has any objections to the Draft Allocation, Parent shall deliver
      a written detailed statement describing its objections to Buyer within 15 days
      after receiving the Draft Allocation. Buyer and Parent shall use reasonable
      efforts to resolve any such objections themselves. If the Parties do not obtain
      a final resolution within 30 days after Buyer has received the statement of
      objections, however, Buyer and Parent shall select an accounting firm mutually
      acceptable to the Parties to resolve any remaining objections. If Buyer and
      Parent are unable to agree on the choice of an accounting firm, they will select
      a nationally-recognized accounting firm by lot (after excluding their respective
      regular outside accounting firms). The determination of any accounting firm
      so
      selected shall be set forth in writing and shall be conclusive and binding
      upon
      the Parties. Buyer shall revise the Draft Allocation in writing as appropriate
      to reflect the resolution of any objections thereto pursuant to this §2(i)(ii).
      The “Final
      Allocation”
shall
      mean the written Draft Allocation together with any revisions thereto pursuant
      to this §2(i)(ii).

    


    (iii)
       In the event the Parties submit any unresolved objections to an accounting
      firm for resolution as provided in §2(i)(ii) above, Buyer and Sellers shall
      equally share responsibility for the fees and expenses of the accounting
      firm.


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    (iv)
       Buyer and Sellers and their Affiliates shall report, act, and file Tax
      Returns (including, but not limited to Internal Revenue Service Form 8594)
      in
      all respects and for all purposes consistent with the Final Allocation. Neither
      Buyer nor Sellers shall take any position (whether in audits, tax returns or
      otherwise) that is inconsistent with the Final Allocation unless required to
      do
      so by applicable law. 

    
      


      
        	
                §3.

              	
                Sellers’
                  Representations and Warranties.  

              


      

       

    

    Each
      of
      Sellers jointly and severally represents and warrants to Buyer that the
      statements contained in this §3 are correct and complete as of the date of this
      Agreement and will be correct and complete as of the Closing Date (as though
      made then and as though the Closing Date were substituted for the date of this
      Agreement throughout this §3), except as set forth in the disclosure schedule
      accompanying this Agreement (the “Disclosure
      Schedule”).
      The
      Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
      and numbered paragraphs contained in this §3.

    


    
      	 	
              (a)

            	
              Organization. 

            


    

    


    Other
      than Target, each of Parent and Parent’s Subsidiaries is a corporation duly
      organized, validly existing and in good standing under the laws of the State
      of
      Delaware. Target is a limited partnership duly organized, validly existing,
      and
      in good standing under the laws of the State of Delaware. Sellers are duly
      authorized to conduct business and are in good standing under the laws of each
      jurisdiction where such qualification is required except to the extent that
      any
      failure to be so qualified would not result in a Material Adverse Effect.
      Sellers have full power and authority and all licenses, permits, consents,
      approvals and authorizations necessary to carry on the businesses in which
      they
      are engaged and in which they presently propose to engage and to own and use
      the
      properties owned and used by them, except for those licenses, authorizations,
      permits, consents and approvals the absence of which would not reasonably be
      expected to have, individually or in the aggregate, a Material Adverse Effect
      on
      Sellers. §3(a) of the Disclosure Schedule lists the directors and officers each
      of Sellers. Sellers have delivered or made available to Buyer correct and
      complete copies of the certificate of incorporation and bylaws of Parent and
      the
      certificate of limited partnership and limited partnership agreement of Target
      (each as amended to date). The minute books (containing the records of meetings
      or actions of the stockholders, partners, board of directors, and any
      committees), the stock certificate books, the stock record books and other
      records detailing the actions of each of Sellers, as applicable, are correct
      and
      complete. Parent is not in violation of any provision of its certificate of
      incorporation or bylaws. Target is not in violation of any provision of its
      certificate of limited partnership or limited partnership
      agreement.

    


    
      	 	
              (b)

            	
              Authorization
                of Transaction. 

            


    

    


    Parent
      has full power and authority (including full corporate power and authority)
      to
      execute and deliver this Agreement, the Voting Agreements and all other
      agreements contemplated hereunder (collectively, the “Transaction
      Agreements”)
      and to
      perform its obligations thereunder. Other than the Voting Agreements, Target
      has
      full power and authority (including full limited partnership power and
      authority) to execute and deliver the Transaction Agreements and to perform
      its
      obligations thereunder. Other than compliance with any applicable requirements
      of the Securities Act or the Securities Exchange Act and as set forth on §3(b)
      of the Disclosure Schedule, Sellers need not give any notice to, make any filing
      with, or obtain any authorization, consent, or approval of any government,
      governmental agency or any third party in order to enter into the Transaction
      Agreements or to consummate the transactions contemplated thereunder. Tidel
      Cash
      Systems, Inc. and Tidel Services, Inc. have full power and authority as the
      partners of Target to approve and adopt this Agreement and the transactions
      contemplated hereby. The execution, delivery and performance of the Transaction
      Agreements and the consummation of the transactions contemplated thereby have
      been duly authorized by all necessary action on the part of Sellers and
      Subsidiaries of Parent (including, without limitation, approval of Parent’s
      board of directors and the approval Tidel Cash Systems, Inc. and Tidel Services,
      Inc. as the partners of Target), subject only to the approval and adoption
      of
      this Agreement and the transactions contemplated hereby at the Parent
      Stockholders Meeting. Each of the Transaction Agreements have been, or will
      be,
      duly executed and delivered by each of Sellers and constitute, or will
      constitute when executed and delivered, the legal, valid and binding obligation
      of each of Sellers, enforceable against each of Sellers in accordance with
      their
      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. The board of
      directors of Parent has (A) declared this Agreement and the transactions
      contemplated hereby advisable and fair to and in the best interest of Sellers
      and stockholders of Parent, (B) approved this Agreement and the other
      Transaction Agreements in accordance with the law of the State of Delaware,
      (C) resolved to recommend the approval of this Agreement by stockholders of
      Parent and (D) directed that this Agreement be submitted to the
      stockholders of Parent for approval at the Parent Stockholders
      Meeting.


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    
      	 	
              (c)

            	
              Non-contravention. 

            


    

    


    Neither
      the execution and the delivery of this Agreement, nor the consummation of the
      transactions contemplated hereby (including the assignments and assumptions
      referred to in §2 above), will (i) violate any constitution, statute,
      regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
      restriction of any government, governmental agency, or court to which Sellers
      are subject or any provision of the certificate of incorporation or bylaws
      of
      Parent or the certificate of limited partnership or the limited partnership
      agreement of Target or (ii) conflict with, result in a breach of, constitute
      a
      default under, result in the acceleration of, create in any party the right
      to
      accelerate, terminate, modify, or cancel, or require any notice under any
      material agreement, contract, lease, license, instrument, or other arrangement
      to which either of Sellers is party or by which either of Sellers is bound
      or to
      which any of their respective assets is subject (or result in the imposition
      of
      any Lien upon any of its assets). 

    


    
      	 	
              (d)

            	
              Brokers’
                Fees and Fairness Opinion.

            


    

    


    Except
      for Capitalink, L.C., a copy of whose engagement agreement has been provided
      to
      Buyer, there is no investment banker, broker, finder or other intermediary
      that
      has been retained by or is authorized to act on behalf of Sellers who might
      be
      entitled to any fee or commission from Sellers or any of their Affiliates in
      connection with the transactions contemplated by this Agreement. Parent has
      received the opinion of Capitalink, L.C., financial advisor to Sellers, to
      the
      effect that, as of the date of this Agreement, the transactions contemplated
      by
      this Agreement are fair to the stockholders of Parent from a financial point
      of
      view.

    


    
      	 	
              (e)

            	
              Title
                to Assets. 

            


    

    


    Subject
      to the approval of this Agreement and the transactions contemplated hereby
      by
      the stockholders of Parent and except as set forth on §3(e) of the Disclosure
      Schedule, Sellers have good and marketable title to all of the Acquired Assets,
      free and clear of any Liens or restrictions on transfer. The Acquired Assets
      constitute all material assets required to operate, and currently used in the
      operation of Division.

    


    
      	 	
              (f)

            	
              Subsidiaries. 

            


    

    


    Other
      than Target, each of Parent’s direct or indirect Subsidiaries other than AnyCard
      International, Inc. (each a “Division
      Subsidiary”)
      is a
      corporation or limited partnership duly organized, validly existing, and in
      good
      standing under the laws of the jurisdiction of its organization. Each Division
      Subsidiary is duly authorized to conduct business and is in good standing under
      the laws of each jurisdiction where such qualification is required except to
      the
      extent that the failure to be so qualified would not constitute a Material
      Adverse Effect. Each Division Subsidiary has full corporate or limited
      partnership power and authority and all licenses, permits, and authorizations
      necessary to carry on the business in which it is engaged and in which it
      presently proposes to engage and to own and use the properties owned and used
      by
      it. Sellers have delivered to Buyer correct and complete copies of the charter,
      bylaws, certificate of limited partnership and limited partnership agreement
      of
      each Division Subsidiary (as amended to date). Target has no Subsidiaries.
      Other
      than Target, none of the Acquired Assets are owned or held by any Subsidiaries
      of Parent. Other than administrative functions, the business and operations
      of
      Division have been solely conducted through Target.


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    
      	 	
              (g)

            	
              SEC
                Filings and Financial Statements. 

            


    

    


    
      	 	
              (i)

            	
              SEC
                Filings. 

            


    

    


    (A)
       Parent has delivered or made available to Buyer true and complete copies
      of Parent’s (i) combined annual report on Form 10-K for its fiscal years ended
      September 30, 2004 and 2003, (ii) quarterly reports on Form 10-Q for its fiscal
      quarters ended June 30, 2005, March 31, 2005 and December 31, 2004, (iii) its
      proxy or information statements relating to meetings of, or actions taken
      without a meeting by, the stockholders of Parent held since June 30, 2002,
      and
      (iv) all of its other reports, statements, schedules and registration statements
      (and all exhibits, attachments, schedules and appendixes filed with the
      foregoing) filed with the SEC since September 30, 2004 (collectively, the
“SEC
      Documents”).
      

    


    (B)
       As of its filing date (or, if amended or superseded by a filing prior to
      the date hereof, on the date of such filing), each SEC Document filed pursuant
      to the Securities Exchange Act did not, and each such SEC Document filed
      subsequent to the date hereof will not, contain any untrue statement of a
      material fact or omit to state any material fact necessary in order to make
      the
      statements made therein, in the light of the circumstances under which they
      were
      made, not misleading.

    


    (C)
       The proxy statement of Parent to be filed with the SEC in connection with
      the Parent Stockholders Meeting (the “Parent
      Proxy Statement”)
      and
      any amendments or supplements thereto will, when filed, comply as to form in
      all
      material respects with the applicable requirements of the Securities Exchange
      Act. At the time the Parent Proxy Statement or any amendment or supplement
      thereto is first mailed to stockholders of Parent, and at the time such
      stockholders vote on the approval and adoption of this Agreement and the
      transactions contemplated hereby, the Amendment and the Motion, and at the
      Closing, the Parent Proxy Statement, as supplemented or amended, if applicable,
      will not contain any untrue statement of a material fact or omit to state any
      material fact necessary in order to make the statements made therein, in the
      light of the circumstances under which they were made, not misleading. The
      representations and warranties contained in this subsection will not apply
      to
      statements or omissions included in the Parent Proxy Statement based upon
      information furnished to Parent in writing by Buyer specifically for use
      therein.

    


    
      	 	
              (ii)

            	
              Financial
                Statements. 

            


    

    


    (A)
       The audited consolidated financial statements and unaudited consolidated
      interim financial statements of Parent included in the SEC Documents (the
“Financial
      Statements”)
      complied as to form in all material respects with the applicable rules and
      regulations of the SEC with respect thereto and fairly present, in conformity
      with GAAP applied on a consistent basis (except as may be indicated in the
      notes
      thereto), the consolidated financial position of Parent and its consolidated
      Subsidiaries as of the dates thereof and their consolidated results of
      operations and cash flows for the periods then ended (subject to normal year-end
      adjustments in the case of any unaudited interim financial
      statements).


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    (B)
       Except as set forth in the SEC Documents, the books and records of Parent
      (i) have been maintained in accordance with good business practices on a
      basis consistent with prior years, (ii) state in reasonable detail the
      material transactions and dispositions of the assets of Parent and Parent’s
      Subsidiaries and (iii) accurately and fairly reflect the basis for the
      consolidated financial statements of Parent filed with the SEC with each of
      Parent’s reports on Forms 10-K and 10-Q set forth in §3(g)(i) above.


    


    
      	 	
              (h)

            	
              Events
                Subsequent to Most Recent Balance Sheet. 

            


    

    


    Since
      the
      date of the Most Recent Balance Sheet, there has not been any Material Adverse
      Change. Without limiting the generality of the foregoing and solely with respect
      to the Division and except as set forth on §3(h) of the Disclosure Schedule,
      since that date: 

    


    (i)
       Sellers have not sold, leased, transferred, or assigned any of their
      assets, tangible or intangible, other than for a fair consideration in the
      Ordinary Course of Business;

    


    (ii)
       Sellers have not entered into any agreement, contract, lease, or license
      (or series of related agreements, contracts, leases, and licenses) either
      involving more than $10,000 or outside the Ordinary Course of
      Business;

    


    (iii)
       no party (including Sellers) has accelerated, terminated, modified, or
      cancelled any agreement, contract, lease, or license (or series of related
      agreements, contracts, leases, and licenses) involving more than $10,000 to
      which either of Sellers is a party or by which either of them is
      bound;

    


    (iv)
       Sellers have not imposed or permitted to exist any Lien upon any of its
      assets, tangible or intangible;

    


    (v)
       Sellers have not made any capital expenditure (or series of related
      capital expenditures) either involving more than $10,000 or outside the Ordinary
      Course of Business;

    


    (vi)
       Sellers have not made any capital investment in, any loan to, or any
      acquisition of the securities or assets of, any other Person (or series of
      related capital investments, loans, and acquisitions) either involving more
      than
      $10,000 or outside the Ordinary Course of Business;

    


    (vii)
       Sellers have not delayed or postponed the payment of accounts payable and
      other Liabilities outside the Ordinary Course of Business;

    


    (viii)
       Sellers have not cancelled, compromised, waived, or released any right or
      claim (or series of related rights and claims) either involving more than
      $10,000 or outside the Ordinary Course of Business;

    


    (ix)
       Sellers have not transferred, assigned, or granted any license or
      sublicense of any rights under or with respect to any Intellectual
      Property;


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    (x)
       there has been no change made or authorized in the certificate of
      incorporation or bylaws of Parent or the certificate of limited partnership
      or
      limited partnership agreement of Target;

    


    (xi)
       Sellers have not experienced any material damage, destruction, or loss
      (whether or not covered by insurance) to their property;

    


    (xii)
       other than the termination of the Employment Agreements, Sellers have not
      made any loan to, or entered into any other transaction with, any of the
      directors, officers, and employees of Sellers or any Subsidiaries of
      Parent;

    


    (xiii)
       other than the termination of the Employment Agreements, Sellers have not
      entered into any employment contract or collective bargaining agreement, written
      or oral, or modified the terms of any such existing contract or
      agreement;

    


    (xiv)
       other than the payment of reasonable and customary end of year holiday
      bonuses, Sellers have not granted any increase in the base compensation of
      any
      of the directors, officers, and employees of Sellers outside the Ordinary Course
      of Business;

    


    (xv)
       other than the termination of the Employment Agreements, Sellers have not
      adopted, amended, modified, or terminated any bonus, profit sharing, incentive,
      severance, or other plan, contract, or commitment for the benefit of any of
      the
      directors, officers, and employees of Sellers (or taken any such action with
      respect to any other Employee Benefit Plan);

    


    (xvi)
       other than the termination of the Employment Agreements, Sellers have not
      made any other change in employment terms for any of the directors, officers,
      and employees of Sellers outside the Ordinary Course of Business;

    


    (xvii)
       there has not been any other material occurrence, event, incident, action,
      failure to act, or transaction outside the Ordinary Course of
      Business;

    


    (xviii)
       Sellers have not discharged a material Liability or Lien outside the
      Ordinary Course of Business;

    


    (xix)
       Sellers have not disclosed any Confidential Information except pursuant to
      a valid, binding and enforceable non-disclosure agreement; 

    


    (xx)
       there has not been any change in any method of accounting or accounting
      principles or practice by Sellers, except for any such change required by reason
      of a concurrent change in GAAP or Regulation S-X under the Securities Exchange
      Act; 

    


    (xxi)
       there has not been any Tax election made or changed, any annual Tax
      accounting period changed, any method of Tax accounting adopted or changed,
      any
      amended Tax Returns or claims for Tax refunds filed, any closing agreement
      entered into, any Tax claim, audit or assessment settled, or any right to claim
      a Tax refund, offset or other reduction in Tax liability surrendered;
      and

    


    (xxii)
       Sellers have not committed to any of the foregoing.

    


    
      	 	
              (i)

            	
              Undisclosed
                Liabilities. 

            


    

    


    Except
      as
      set forth on §3(i) of the Disclosure Schedule, Sellers do not have any Liability
      (and there is no Basis for any present or future action, suit, proceeding,
      hearing, investigation, charge, complaint, claim, or demand against any of
      them
      giving rise to any Liability) relating to Division, except for (i) Liabilities
      set forth on the face of the Most Recent Balance Sheet (rather than in any
      notes
      thereto) and (ii) Liabilities that have arisen after the date of the Most Recent
      Balance Sheet in the Ordinary Course of Business (none of which results from,
      arises out of, relates to, is in the nature of, or was caused by any breach
      of
      contract, breach of warranty, tort, infringement, or violation of law).



    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    
      	 	
              (j)

            	
              Legal
                Compliance. 

            


    

    


    Each
      of
      Sellers, and their respective predecessors and Affiliates has complied in all
      material respects with all applicable laws (including rules, regulations, codes,
      plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder
      and including the Foreign Corrupt Practices Act, 15 U.S.C. §78dd-1, et seq.) of
      federal, state, local, and foreign governments (and all agencies thereof),
      and
      no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      demand, or notice has been filed or commenced against any of them alleging
      any
      failure so to comply.

    


    
      	 	
              (k)

            	
              Tax
                Matters. 

            


    

    


    (i)
       Sellers have timely filed all Tax Returns that Sellers were required to
      file. All such Tax Returns were correct and complete in all material respects.
      All Taxes owed by Sellers (whether or not shown on any Tax Return) have been
      paid unless they are currently being contested in good faith as set forth on
      §3(k)(i) of the Disclosure Schedule and a reserve therefore is set forth on
      the
      Most Recent Balance Sheet. Sellers are not beneficiaries of any extension of
      time within which to file any Tax Return. No claim has ever been made by an
      authority in a jurisdiction in which Sellers do not file Tax Returns that
      Sellers are or may be subject to taxation by that jurisdiction. There are no
      Liens on any of the assets of Division or Sellers that arose in connection
      with
      any failure (or alleged failure) to pay any Tax.

    


    (ii)
       Sellers have withheld and paid all Taxes required to have been withheld
      and paid in connection with amounts paid or owing to any employee, independent
      contractor, creditor, stockholder, or other third party and all Forms W-2 and
      1099 required with respect thereto have been properly completed and timely
      filed.

    


    (iii)
       Sellers do not, and no officer or director of Sellers or any Subsidiaries
      of Parent (or any employee responsible for Tax matters expect any authority
      to
      assess any additional Taxes with respect to Sellers for any period for which
      Tax
      Returns have been filed. There is no dispute or claim concerning any Tax
      Liability of Sellers either (A) claimed or raised by any authority in writing
      or
      (B) as to which Sellers, or any officer or director of Sellers or any
      Subsidiaries of Parent (or employees responsible for Tax matters), has Knowledge
      based upon personal contact with any agent of such authority. §3(k)(iii) of the
      Disclosure Schedule lists all federal, state, local, and foreign income Tax
      Returns filed by Sellers for taxable periods ended on or after September 30,
      2002, indicates those Tax Returns that have been audited, and indicates those
      Tax Returns that currently are the subject of audit. Sellers have delivered
      or
      made available to Buyer correct and complete copies of all income Tax Returns,
      examination reports, and statements of deficiencies assessed against or agreed
      to by Sellers since September 30, 2002.

    


    (iv)
       Sellers have not waived any statute of limitations in respect of Taxes or
      agreed to any extension of time with respect to a Tax assessment or
      deficiency.

    


    (v)
       None of the Assumed Liabilities or the Termination Payments is, or will
      become, an obligation to make a payment that is not deductible under Code §280G.



    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    
      	 	
              (l)

            	
              Real
                Property. 

            


    

    


    (i)
       Sellers have no Owned Real Property and no Owned Real Property or any
      interest therein is used by Division in operating its business as currently
      conducted or as proposed to be conducted. Division is not a party to any
      agreement or option to purchase any real property or interest
      therein.

    


    (ii)
       §3(l)(ii) of the Disclosure Schedule sets forth the address of each parcel
      of Leased Real Property, and a true and complete list of all Leases for each
      such Leased Real Property (including the date and name of the parties to such
      Lease document). Sellers have delivered to Buyer a true and complete copy of
      each such Lease document, and in the case of any oral Lease, a written summary
      of the material terms of such Lease. With respect to each of the Leases:


    


    (A)
       such Lease is legal, valid, binding, enforceable and in full force and
      effect;

    


    (B)
       the transactions contemplated by this Agreement do not require the consent
      of any other party to such Lease, will not result in a breach of or default
      under such Lease, and will not otherwise cause such Lease to cease to be legal,
      valid, binding, enforceable and in full force and effect on identical terms
      following the Closing;

    


    (C)
       Sellers’ possession and quiet enjoyment of the Leased Real Property under
      such Lease has not been disturbed and there are no disputes with respect to
      such
      Lease;

    


    (D)
       Neither Sellers, nor any other party to the Lease is in breach of or
      default under such Lease, and no event has occurred or circumstance exists
      that,
      with the delivery of notice, the passage of time or both, would constitute
      such
      a breach or default, or permit the termination, modification or acceleration
      of
      rent under such Lease;

    


    (E)
       no security deposit or portion thereof deposited with respect to such
      Lease has been applied in respect of a breach of or default under such Lease
      that has not been redeposited in full;

    


    (F)
       Sellers do not owe, and will not owe in the future, any brokerage
      commissions or finder's fees with respect to such Lease;

    


    (G) 
      the other party to such Lease is not an Affiliate of, and otherwise does not
      have any economic interest in, Sellers;

    


    (H)
       Sellers have not subleased, licensed or otherwise granted any Person the
      right to use or occupy the Leased Real Property or any portion
      thereof;

    


    (I) 
      Sellers have not collaterally assigned or granted any other Lien in such Lease
      or any interest therein; and 

    


    (J) 
      there are no Liens on the estate or interest created by such Lease.


    


    (iii)
       The Leased Real Property identified in §3(l)(iii) of the Disclosure
      Schedule comprises all of the real property used or intended to be used in
      Division's business. 

    


    (iv) 
      To Sellers’ Knowledge, all buildings, structures, fixtures, building systems and
      equipment, and all components thereof, including the roof, foundation,
      load-bearing walls and other structural elements thereof, heating, ventilation,
      air conditioning, mechanical, electrical, plumbing and other building systems,
      environmental control, remediation and abatement systems, sewer, storm and
      waste
      water systems, irrigation and other water distribution systems, parking
      facilities, fire protection, security and surveillance systems, and
      telecommunications, computer wiring, and cable installations, included in the
      Leased Real Property (the “Improvements”)
      are in
      good condition and repair and sufficient for the operation of Division's
      business. To Sellers’ Knowledge, there are no structural deficiencies or latent
      defects affecting any of the Improvements and there are no facts or conditions
      affecting any of the Improvements that would, individually or in the aggregate,
      interfere in any respect with the use or occupancy of the Improvements or any
      portion thereof in the operation of Division's business as currently conducted
      thereon.


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    (v) 
      To Sellers’ Knowledge, there is no condemnation, expropriation or other
      proceeding in eminent domain, pending or threatened, affecting any parcel of
      Leased Real Property or any portion thereof or interest therein. To Sellers’
Knowledge, there is no injunction, decree, order, writ or judgment outstanding,
      nor any claim, litigation, administrative action or similar proceeding, pending
      or threatened, relating to the ownership, lease, use or occupancy of the Leased
      Real Property or any portion thereof, or the operation of Division's business
      as
      currently conducted thereon.

    


    (vi) 
      The Leased Real Property is in material compliance with all applicable building,
      zoning, subdivision, health and safety and other land use laws, including the
      Americans with Disabilities Act of 1990, as amended, and all insurance
      requirements affecting the Leased Real Property (collectively, the “Real
      Property Laws”),
      and
      the current use and occupancy of the Leased Real Property and operation of
      Division's business thereon does not materially violate any Real Property Laws.
      Sellers have not received any notice of violation of any Real Property Law
      and,
      to Sellers’ Knowledge, there is no Basis for the issuance of any such notice or
      the taking of any action for such violation.

    


    (vii) 
      To Sellers’ Knowledge, all material water, oil, gas, electrical, steam,
      compressed air, telecommunications, sewer, storm and waste water systems and
      other utility services or systems for the Leased Real Property have been
      installed and are operational and sufficient for the operation of Division's
      business as currently conducted thereon. 

    


    (viii) 
      All material certificates of occupancy, permits, licenses, franchises, approvals
      and authorizations (collectively, the “Real
      Property Permits”)
      of all
      governmental authorities, board of fire underwriters, association or any other
      entity having jurisdiction over the Leased Real Property that are required
      or
      appropriate to use or occupy the Leased Real Property or operate Division's
      business as currently conducted thereon, have been issued and are in full force
      and effect. §3(l)(viii) of the Disclosure Schedule lists all material Real
      Property Permits held by Sellers with respect to each parcel of Leased Real
      Property. Sellers have delivered to Buyer a true and complete copy of all Real
      Property Permits. Sellers have not received any notice from any governmental
      authority or other entity having jurisdiction over the Leased Real Property
      threatening a suspension, revocation, modification or cancellation of any Real
      Property Permit and, to Sellers’ Knowledge, there is no Basis for the issuance
      of any such notice or the taking of any such action. The Real Property Permits
      are transferable to Buyer without the consent or approval of the issuing
      governmental authority or entity; no disclosure, filing or other action by
      Sellers is required in connection with such transfer, and Buyer shall not be
      required to assume any additional liabilities or obligations under the Real
      Property Permits as a result of such transfer.

    


    (ix) 
      To Sellers’ Knowledge, the classification of each parcel of Leased Real Property
      under applicable zoning laws, ordinances and regulations permits the use and
      occupancy of such parcel and the operation of Division's business as currently
      conducted thereon, and permits the Improvements located thereon as currently
      constructed, used and occupied. 


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    
      	 	
              (m)

            	
              Intellectual
                Property.

            


    

    


    (i)
       Sellers own and possess or have the right to use pursuant to a valid and
      enforceable written license, sublicense, agreement, or permission all
      Intellectual Property necessary or desirable for the operation of Division
      as
      presently conducted and as presently proposed to be conducted. Each item of
      Intellectual Property owned or used by Sellers immediately prior to the Closing
      will be owned or available for use by Buyer on identical terms and conditions
      immediately subsequent to the Closing. Sellers have taken all necessary and
      desirable action to maintain and protect each item of Intellectual Property
      that
      it owns or uses.

    


    (ii) 
      Sellers have not interfered with, infringed upon, misappropriated, or otherwise
      come into conflict with any Intellectual Property rights of third parties.
      Other
      than the complaint filed by Corporate Safe Specialists, Inc. against Sellers
      on
      June 9, 2005 (the “CSS
      Claim”),
      none
      of Sellers, any Subsidiaries of Parent or any of their officers and directors
      (and employees with responsibility for Intellectual Property matters) have
      ever
      received any charge, complaint, claim, demand, or notice alleging any such
      interference, infringement, misappropriation, or violation (including any claim
      that Sellers must license or refrain from using any Intellectual Property rights
      of any third party) that has not been resolved pursuant to a final
      non-appealable court order or binding effective settlement and release agreement
      that does not have a Material Adverse Effect. To Sellers’ Knowledge, no third
      party has interfered with, infringed upon, misappropriated, or otherwise come
      into conflict with any Intellectual Property rights of Sellers.

    


    (iii) 
      §3(m)(iii) of the Disclosure Schedule identifies each patent or registration
      which has been issued to Sellers with respect to any of their Intellectual
      Property, identifies each pending patent application or application for
      registration Sellers have made with respect to any of their Intellectual
      Property, and identifies each license, sublicense, agreement, or other
      permission that Sellers have granted to any third party with respect to any
      of
      their Intellectual Property (together with any exceptions). Sellers have
      delivered or made available to Buyer correct and complete copies of all such
      patents, registrations, applications, licenses, sublicenses, agreements, and
      permissions (as amended to date) and have made available to Buyer correct and
      complete copies of all other written documentation evidencing ownership and
      prosecution (if applicable) of each such item. §3(m)(iii) of the Disclosure
      Schedule also identifies each registered or unregistered trademark, service
      mark, trade name, corporate name or Internet domain name, computer software
      item
      (other than commercially available off-the-shelf software purchased or licensed
      for less than a total cost of $10,000 in the aggregate) and each material
      registered or unregistered copyright used by Sellers in connection with the
      business of Division. With respect to each item of Intellectual Property
      required to be identified in §3(m)(iii) of the Disclosure Schedule:


    


    (A) 
      Sellers own and possess all right, title, and interest in and to the item,
      free
      and clear of any Lien, license, or other restriction or limitation regarding
      use
      or disclosure;

    


    (B) 
      the item is not subject to any outstanding injunction, judgment, order, decree,
      ruling, or charge;

    


    (C) 
      except for the CSS Claim, no action, suit, proceeding, hearing, investigation,
      charge, complaint, claim, or demand is pending or, to Sellers’ Knowledge, is
      threatened that challenges the legality, validity, enforceability, use, or
      ownership of the item, and there are no grounds for the same;


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    (D) 
      Sellers have not agreed to indemnify any Person for or against any interference,
      infringement, misappropriation, or other conflict with respect to the item;
      and

    


    (E) 
      no loss or expiration of the item is threatened, pending, or reasonably
      foreseeable, except for patents or copyrights expiring at the end of their
      statutory terms (and not as a result of any act or omission by Sellers,
      including, without limitation, a failure by Sellers to pay any required
      maintenance fees).

    


    (iv) 
      §3(m)(iv) of the Disclosure Schedule identifies each item of Intellectual
      Property that any third party owns and that Division uses pursuant to license,
      sublicense, agreement, or permission. Sellers have delivered or made available
      to Buyer correct and complete copies of all such licenses, sublicenses,
      agreements, and permissions (as amended to date). With respect to each item
      of
      Intellectual Property required to be identified in §3(m)(iv) of the Disclosure
      Schedule: 

    


    (A) 
      the license, sublicense, agreement, or permission covering the item is legal,
      valid, binding, enforceable, and in full force and effect;

    


    (B) 
      the license, sublicense, agreement, or permission will continue to be legal,
      valid, binding, enforceable, and in full force and effect on identical terms
      following the consummation of the transactions contemplated hereby (including
      the assignments and assumptions referred to in §2 above);

    


    (C) 
      Sellers are not and, to Sellers’ Knowledge, no other party to the license,
      sublicense, agreement, or permission is in breach or default, and no event
      has
      occurred that with notice or lapse of time would constitute a breach or default
      or permit termination, modification, or acceleration thereunder;

    


    (D) 
      no party to the license, sublicense, agreement, or permission has repudiated
      any
      provision thereof;

    


    (E) 
      with respect to each sublicense, the representations and warranties set forth
      in
      subsections (A) through (D) above are true and correct with respect to the
      underlying license;

    


    (F) 
      to Sellers’ Knowledge, the underlying item of Intellectual Property is not
      subject to any outstanding injunction, judgment, order, decree, ruling, or
      charge;

    


    (G)
       no action, suit, proceeding, hearing, investigation, charge, complaint,
      claim, or demand is pending or, to Seller’s Knowledge, is threatened that
      challenges the legality, validity, or enforceability of the underlying item
      of
      Intellectual Property, and, to Sellers’ Knowledge, there are no grounds for the
      same; and

    


    (H) 
      Sellers have not granted any sublicense or similar right with respect to the
      license, sublicense, agreement, or permission.

    


    (v)
       Except for the CSS Claim, to Sellers’ Knowledge: (A) Sellers have not in
      the past nor will interfere with, infringe upon, misappropriate, or otherwise
      come into conflict with, any Intellectual Property rights of third parties
      as a
      result of the continued operation of the business of Division as presently
      conducted and as presently proposed to be conducted; (B) there are no facts
      that
      indicate a likelihood of any of the foregoing; and (C) no notices regarding
      any
      of the foregoing (including, without limitation, any demands or offers to
      license any Intellectual Property from any third party) have been
      received.


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    (vi)
       Sellers have taken all necessary and desirable actions to maintain and
      protect all of the Intellectual Property and will continue to maintain and
      protect all of the Intellectual Property so as not to adversely affect the
      validity or enforceability thereof. To the Knowledge of Sellers, the owners
      of
      any of the Intellectual Property licensed to Sellers in connection with the
      business of Division have taken all necessary and desirable actions to maintain
      and protect the Intellectual Property covered by such license.

    


    (vii) 
      Sellers have complied with and are presently in compliance in all material
      respects with all foreign, federal, state, local, governmental (including,
      but
      not limited to, the Federal Trade Commission and State Attorneys General),
      administrative or regulatory laws, regulations, guidelines and rules applicable
      to any Intellectual Property and Sellers shall take all steps necessary to
      ensure such compliance until the Closing.

    


    
      	 	
              (n)

            	
              Tangible
                Assets. 

            


    

    


    Sellers
      own or lease all buildings, machinery, equipment, and other tangible assets
      necessary for the conduct of the business of Division as presently conducted
      and
      as presently proposed to be conducted. Each such tangible asset is free from
      all
      defects (patent and latent), has been maintained in accordance with normal
      industry practice, is in good operating condition and repair (subject to normal
      wear and tear), and is suitable for the purposes for which it presently is
      used
      and presently is proposed to be used.

    


    
      	 	
              (o)

            	
              Inventory. 

            


    

    


    The
      inventory of Division is owned by Sellers and consists of raw materials and
      supplies, manufactured and purchased parts, goods in process, and finished
      goods, all of which is merchantable and fit for the purpose for which it was
      procured or manufactured, and none of which is slow-moving, obsolete, damaged,
      or defective, subject only to the reserve for inventory writedown set forth
      on
      the face of the Most Recent Balance Sheet (rather than in any notes thereto)
      as
      adjusted for the passage of time through the Closing Date in accordance with
      the
      past custom and practice of Division.

    


    
      	 	
              (p)

            	
              Contracts. 

            


    

    


    §3(p) 
      of the Disclosure Schedule lists the following contracts and other agreements
      relating to Division: 

    


    (i) 
      any agreement (or group of related agreements) for the lease of personal
      property to or from any Person providing for lease payments in excess of $10,000
      per annum;

    


    (ii)
       any agreement (or group of related agreements) for the purchase or sale of
      raw materials, commodities, supplies, products, or other personal property,
      or
      for the furnishing or receipt of services, the performance of which will extend
      over a period of more than one year, result in a loss to Division, or involve
      consideration in excess of $10,000;

    


    (iii)
       any agreement concerning a partnership or joint venture;

    


    (iv)
       any agreement (or group of related agreements) under which it has created,
      incurred, assumed, or guaranteed any indebtedness for borrowed money, or any
      capitalized lease obligation, in excess of $10,000 or under which it has imposed
      a Lien on any of its assets, tangible or intangible;

    


    (v)
       any agreement concerning confidentiality or
      non-competition;


    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    (vi)
       any material agreement involving either Seller on the one hand and any
      Affiliate of Parent or Parent’s Subsidiaries on the other hand;

    


    (vii)
       any profit sharing, stock option, stock purchase, stock appreciation,
      deferred compensation, severance, or other plan or arrangement for the benefit
      of the current or former directors, officers, and employees of Sellers or any
      Subsidiaries of Parent;

    


    (viii)
       any collective bargaining agreement;

    


    (ix)
       any agreement for the employment of any individual on a full-time,
      part-time, consulting, or other basis providing annual compensation in excess
      of
      $50,000 or providing any severance benefits;

    


    (x) 
      any agreement under which it has advanced or loaned any amount to any of the
      directors, officers, and employees of Sellers or Subsidiaries of Parent outside
      the Ordinary Course of Business;

    


    (xi) 
      any agreement under which the consequences of a default or termination could
      have a Material Adverse Effect;

    


    (xii) 
      any settlement, conciliation or similar agreement, the performance of which
      will
      involve payment after the Closing Date of consideration in excess of
      $10,000;

    


    (xiii)
      any agreement under which Sellers have advanced or loaned any other Person
      amounts in the aggregate exceeding $10,000; or

    


    (xiv)
       any other agreement (or group of related agreements) the performance of
      which involves consideration in excess of $10,000.

    


    Sellers
      have delivered or made available to Buyer a correct and complete copy of each
      agreement (as amended to date) listed in §3(p) of the Disclosure Schedule. With
      respect to each such agreement: (A) the agreement is legal, valid, binding,
      enforceable, and in full force and effect; (B) the agreement will continue
      to be
      legal, valid, binding, enforceable, and in full force and effect on identical
      terms following the consummation of the transactions contemplated hereby
      (including the assignments and assumptions referred to in §2 above); (C) no
      party is in breach or default, and no event has occurred that with notice or
      lapse of time would constitute a breach or default, or permit termination,
      modification, or acceleration, under the agreement; and (D) no party has
      repudiated any provision of the agreement. Other than as explicitly identified
      in §3(p) of the Disclosure Schedule, all such contracts are freely assignable to
      Buyer.

    


    
      	 	
              (q)

            	
              Notes
                and Accounts Receivable. 

            


    

    


    All
      notes
      and accounts receivable of Sellers relating to Division are reflected properly
      on their books and records, are valid receivables subject to no setoffs or
      counterclaims, are current and collectible, and will be collected in accordance
      with their terms at their recorded amounts except as set forth on §3(q) of the
      Disclosure Schedule, subject only to the reserve for bad debts set forth on
      the
      face of the Most Recent Balance Sheet (rather than in any notes thereto) as
      adjusted for the passage of time through the Closing Date in accordance with
      the
      past custom and practice of Division.

    


    
      	 	
              (r)

            	
              Powers
                of Attorney. 

            


    

    


    There
      are
      no outstanding powers of attorney executed on behalf of
      Sellers.


    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    
      	 	
              (s)

            	
              Insurance. 

            


    

    


    Sellers
      have in full force and effect insurance policies insuring the properties and
      assets of Division (including the Acquired Assets). With respect to each such
      insurance policy: (A) the policy is legal, valid, binding, enforceable, and
      in
      full force and effect; (B) neither Sellers nor, to Sellers’ Knowledge, any other
      party to the policy is in breach or default (including with respect to the
      payment of premiums or the giving of notices), and no event has occurred that,
      with notice or the lapse of time, would constitute such a breach or default,
      or
      permit termination, modification, or acceleration, under the policy; and (C)
      neither Sellers nor, to Sellers’ Knowledge, any other party to the policy has
      repudiated any provision thereof. Sellers currently are covered, and have been
      covered during the past five (5) years, by insurance in scope and amount
      customary and reasonable for the business in which it has engaged during the
      aforementioned period. 

    


    
      	 	
              (t)

            	
              Litigation. 

            


    

    


    §3(t) 
      of the Disclosure Schedule sets forth each instance in which Sellers (i) are
      subject to any outstanding injunction, judgment, order, decree, ruling, or
      charge relating to Division or (ii) are a party or, to Sellers’ Knowledge, are
      threatened to be made a party to any action, suit, proceeding, hearing, or
      investigation of, in, or before any court or quasi-judicial or administrative
      agency of any federal, state, local, or foreign jurisdiction or before any
      arbitrator. None of the actions, suits, proceedings, hearings, and
      investigations set forth in §3(t) of the Disclosure Schedule would reasonably be
      expected to result in any Material Adverse Change. None of Sellers or the
      directors and officers of Sellers or any Subsidiaries of Parent (and employees
      with responsibility for litigation matters) have any reason to believe that
      any
      such action, suit, proceeding, hearing, or investigation may be brought or
      threatened against Sellers.

    


    
      	 	
              (u)

            	
              Product
                Warranty. 

            


    

    


    Each
      product manufactured, sold, leased, or delivered by Division has been in
      conformity with all applicable contractual commitments and all express and
      implied warranties, and Sellers do not have any Liability (and there is no
      Basis
      for any present or future action, suit, proceeding, hearing, investigation,
      charge, complaint, claim, or demand against any of them giving rise to any
      Liability) for replacement or repair thereof or other damages in connection
      therewith, subject only to the reserve for product warranty claims set forth
      on
      the face of the Most Recent Balance Sheet (rather than in any notes thereto)
      as
      adjusted for the passage of time through the Closing Date in accordance with
      the
      past custom and practice of Division. No product manufactured, sold, leased,
      or
      delivered by Division is subject to any guaranty, warranty, or other indemnity
      beyond the applicable standard terms and conditions of sale or lease.


    


    
      	 	
              (v)

            	
              Product
                Liability. 

            


    

    


    Sellers
      do not have any Liability (and there is no Basis for any present or future
      action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      or
      demand against any of them giving rise to any Liability) arising out of any
      injury to individuals or property as a result of the ownership, possession,
      or
      use of any product manufactured, sold, leased, or delivered by
      Division.

    


    
      	 	
              (w)

            	
              Employees. 

            


    

    


    
      	 	
              (i)

            	
              With
                respect to the business of Division:


            


    

    


    (A) 
      there is no collective bargaining agreement or relationship with any labor
      organization;


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    (B) 
      to the Knowledge of Sellers, no executive or manager of Division (1) has any
      present intention to terminate his or her employment, or (2) is a party to
      any
      confidentiality, non-competition, proprietary rights or other such agreement
      between such employee and any Person besides Sellers that would be material
      to
      the performance of such employee’s employment duties, or the ability of Sellers
      or Buyer to conduct the business of Division;

    


    (C) 
      no labor organization or group of employees has filed any representation
      petition or made any written or oral demand for recognition;

    


    (D) 
      to the Knowledge of Sellers, no union organizing or decertification efforts
      are
      underway or threatened and no other question concerning representation
      exists;

    


    (E) 
      no labor strike, work stoppage, slowdown, or other material labor dispute has
      occurred, and none is underway or, to the Knowledge of Sellers,
      threatened;

    


    (F)
       there is no workman’s compensation liability, experience or matter that
      would reasonably be expected to have a Material Adverse Effect;

    


    (G) 
      there is no employment-related charge, complaint, grievance, investigation,
      inquiry or obligation of any kind, pending or, to Sellers’ Knowledge, threatened
      in any forum, relating to an alleged violation or breach by Sellers (or their
      officers or directors) of any law, regulation or contract; and

    


    (H) 
      no employee or agent of Sellers has committed any act or omission giving rise
      to
      material liability for any violation or breach identified in subsection (G)
      above.

    


    (ii) 
      Except as set forth in §3(w)(ii) of the Disclosure Schedule, (A) there are no
      employment contracts or severance agreements with any employees of Sellers
      engaged in the operation of Division, and (B) there are no written personnel
      policies, rules or procedures applicable to employees of Sellers engaged in
      the
      operation of Division.

    


    (iii) 
      With respect to this transaction, any notice required under any law or
      collective bargaining agreement has been given, and all bargaining obligations
      with any employee representative have been, or prior to the Closing Date will
      be, satisfied. Sellers have not implemented any plant closing or layoff of
      employees that could implicate the Worker Adjustment and Retraining Notification
      Act of 1988, as amended, or any similar foreign, state, or local law, regulation
      or ordinance, and no such action will be implemented without advance
      notification to Buyer.

    


    (iv) 
      Buyer will not have as a consequence of any transaction contemplated by the
      Transaction Agreements, any liability or obligation with respect to or under
      any
      agreement between either of Sellers and any employee.

    


    
      	 	
              (x)

            	
              Employee
                Benefit Plans. 

            


    

    


    (i)
       §3(x)(i) of the Disclosure Schedule lists each Employee Benefit Plan that
      Sellers maintain, to which Sellers contribute or have any obligation to
      contribute, or with respect to which Sellers have any Liability. Sellers have
      not, nor has any Subsidiary or Affiliate of Parent, been parties to a
      multi-employer defined benefit plan within the meaning of ERISA.

    


    (A) 
      Each such Employee Benefit Plan (and each related trust, insurance contract,
      or
      fund) has been maintained, funded and administered in accordance with the terms
      of such Employee Benefit Plan and the terms of any applicable collective
      bargaining agreement and complies in form and in operation in all respects
      with
      the applicable requirements of ERISA, the Code, and other applicable
      laws.


    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    (B) 
      All required reports and descriptions (including Form 5500 annual reports,
      summary annual reports, and summary plan descriptions) have been timely filed
      and/or distributed in accordance with the applicable requirements of ERISA
      and
      the Code with respect to each such Employee Benefit Plan. The requirements
      of
      COBRA have been met with respect to each such Employee Benefit Plan and each
      Employee Benefit Plan maintained by Sellers or an ERISA Affiliate that is an
      Employee Welfare Benefit Plan subject to COBRA.

    


    (C) 
      All contributions (including all employer contributions and employee salary
      reduction contributions) that are due have been made within the time periods
      prescribed by ERISA and the Code to each such Employee Benefit Plan that is
      an
      Employee Pension Benefit Plan and all contributions for any period ending on
      or
      before the Closing Date that are not yet due have been made to each such
      Employee Pension Benefit Plan or accrued in accordance with the past custom
      and
      practice of Sellers. All premiums or other payments for all periods ending
      on or
      before the Closing Date have been paid with respect to each such Employee
      Benefit Plan that is an Employee Welfare Benefit Plan.

    


    (D) 
      Each such Employee Benefit Plan that is intended to meet the requirements of
      a
“qualified plan” under Code §401(a) has received a determination from the
      Internal Revenue Service that such Employee Benefit Plan is so qualified, and
      nothing has occurred since the date of such determination that could adversely
      affect the qualified status of any such Employee Benefit Plan. All such Employee
      Benefit Plans have been or will be timely amended for the requirements of the
      Tax legislation commonly known as “GUST” and “EGTRRA” and have been or will be
      submitted to the Internal Revenue Service for a favorable determination letter
      on the GUST requirements within the remedial amendment period prescribed by
      GUST.

    


    (E) 
      There have been no Prohibited Transactions with respect to any such Employee
      Benefit Plan or any Employee Benefit Plan maintained by Sellers or an ERISA
      Affiliate. No Fiduciary has any Liability for breach of fiduciary duty or any
      other failure to act or comply in connection with the administration or
      investment of the assets of any such Employee Benefit Plan. No action, suit,
      proceeding, hearing, or investigation with respect to the administration or
      the
      investment of the assets of any such Employee Benefit Plan (other than routine
      claims for benefits) is pending or, to Sellers’ Knowledge, threatened.


    


    (F) 
      Sellers have delivered or made available to Buyer correct and complete copies
      of
      the plan documents and summary plan descriptions, the most recent determination
      letter received from the Internal Revenue Service, the most recent annual report
      (Form 5500, with all applicable attachments), and all related trust agreements,
      insurance contracts, and other funding arrangements that implement each such
      Employee Benefit Plan.

    


    (ii) 
      Buyer will not have as a consequence of any transaction contemplated by the
      Transaction Agreements, any liability or obligation with respect to or under
      any
      Employee Benefit Plan.


    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    


    
      	 	
              (y)

            	
              Guaranties. 

            


    

    


    Neither
      of Sellers is a guarantor or otherwise is liable for any Liability (including
      indebtedness) of any other Person.

    


    
      	 	
              (z)

            	
              Environmental,
                Health, and Safety Matters. 

            


    

    


    (i) 
      Each of Sellers, and their respective predecessors and Affiliates has complied
      and is in material compliance with all Environmental, Health, and Safety
      Requirements.

    


    (ii) 
      Without limiting the generality of the foregoing, each of Sellers and their
      respective Affiliates has obtained and materially complied with, and is in
      material compliance with, all permits, licenses and other authorizations that
      are required pursuant to Environmental, Health, and Safety Requirements for
      the
      occupation of its facilities and the operation of its business; a list of all
      such permits, licenses and other authorizations is set forth in §3(z)(ii) of the
      Disclosure Schedule.

    


    (iii) 
      Neither Sellers nor their respective predecessors or Affiliates have received
      any written or oral notice, report or other information regarding any actual
      or
      alleged violation of Environmental, Health, and Safety Requirements, or any
      Liabilities, including any investigatory, remedial or corrective obligations,
      relating to any of them or their facilities arising under Environmental, Health,
      and Safety Requirements.

    


    (iv) 
      None of the following exists at any property or facility owned or operated
      by
      Sellers: (1) underground storage tanks, (2) asbestos-containing material in
      any
      form or condition, (3) materials or equipment containing polychlorinated
      biphenyls, or (4) landfills, surface impoundments, or disposal
      areas.

    


    (v) 
      Neither Sellers nor their respective predecessors or Affiliates have treated,
      stored, disposed of, arranged for or permitted the disposal of, transported,
      handled, manufactured, distributed, or released any substance, including without
      limitation any hazardous substance, or owned or operated any property or
      facility (and no such property or facility is contaminated by any such
      substance) so as to give rise to any current or future Liabilities, including
      any Liability for fines, penalties, response costs, corrective action costs,
      personal injury, property damage, natural resources damages or attorney’s fees,
      pursuant to the Comprehensive Environmental Response, Compensation and Liability
      Act of 1980, as amended, the Solid Waste Disposal Act, as amended, or any other
      Environmental, Health, and Safety Requirements.

    


    (vi) 
      Neither this Agreement nor the consummation of the transactions that are subject
      of this Agreement will result in any obligations for site investigation or
      cleanup, or notification to or consent of government agencies or third parties,
      pursuant to any of the so-called “transaction-triggered” or “responsible
      property transfer” Environmental, Health, and Safety Requirements.

    


    (vii) 
      Neither Sellers nor any of their respective predecessors or Affiliates have
      designed, manufactured, sold, marketed, installed, or distributed products
      or
      other items containing asbestos and none of such entities is or will become
      subject to any Asbestos Liabilities.

    


    (viii) 
      Neither Sellers nor any of their respective predecessors or Affiliates have
      assumed or otherwise become subject to, any Liability including without
      limitation any obligation for corrective or remedial action, of any other Person
      relating to Environmental, Health, and Safety Requirements.


    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    


    (ix)
       To Sellers’ Knowledge, no facts, events or conditions relating to the past
      or present facilities, properties or operations of Sellers or any of their
      respective predecessors or Affiliates will prevent, hinder or limit continued
      compliance with Environmental, Health, and Safety Requirements, give rise to
      any
      investigatory, remedial or corrective obligations pursuant to Environmental,
      Health, and Safety Requirements, or give rise to any other Liabilities pursuant
      to Environmental, Health, and Safety Requirements, including without limitation
      any Liability relating to on-site or off-site releases or threatened releases
      of
      hazardous materials, substances or wastes, personal injury, property damage
      or
      natural resources damage.

    


    (x) 
      Sellers have furnished or made available to Buyer all environmental audits,
      reports and other material environmental documents relating to their or their
      respective predecessors’ or Affiliates’ past or current properties, facilities,
      or operations that are in their possession or under their reasonable
      control.

    


    
      	 	
              (aa)

            	
              Certain
                Business Relationships. 

            


    

    


    Other
      than this Agreement and the limited partnership agreement of Target, none of
      Parent’s stockholders, Subsidiaries of Parent, directors and officers of Sellers
      or any Subsidiaries of Parent, or any of their Affiliates has been involved
      in
      any business arrangement or relationship with Sellers or any Subsidiary of
      Parent within the past 12 months, and other than Target, none of Parent’s
      stockholders, Subsidiaries of Parent, directors and officers of Sellers or
      any
      Subsidiaries of Parent, or any of their Affiliates own any asset, tangible
      or
      intangible, that is used in the business of Division as currently conducted
      or
      as currently proposed to be conducted.

    


    
      	 	
              (bb)

            	
              Customers
                and Suppliers. 

            


    

    


    Since
      the
      date of the Most Recent Balance Sheet, no material supplier of Division has
      indicated that it shall stop, or decrease the rate of, supplying materials,
      products or services to Division, and no customer of Division has indicated
      that
      it shall stop, or decrease the rate of, buying materials, products or services
      from Division.

    
      


      
        	
                §4.

              	
                
                  Buyer’s
                    Representations and Warranties.  

                

              


      

       

    

    Buyer
      represents and warrants to Sellers that the statements contained in this §4 are
      correct and complete as of the date of this Agreement and will be correct and
      complete as of the Closing Date (as though made then and as though the Closing
      Date were substituted for the date of this Agreement throughout this §4).


    


    
      	 	
              (a)

            	
              Organization
                of Buyer. 

            


    

    


    Buyer
      is
      a limited partnership duly organized, validly existing, and in good standing
      under the laws of the State of Delaware.

    


    
      	 	
              (b)

            	
              Authorization
                of Transaction. 

            


    

    


    Buyer
      has
      full power and authority to execute and deliver this Agreement and the other
      Transaction Agreements to which it is a party and to perform its obligations
      thereunder. Buyer
      need not give any notice to, make any filing with, or obtain any authorization,
      consent, or approval of any government, governmental agency or any third party
      in order to enter into the Transaction Agreements or to consummate the
      transactions contemplated thereunder. The execution, delivery and performance
      of
      the Transaction Agreements and the consummation of the transactions contemplated
      thereby have been duly authorized by all necessary action on the part of Buyer.
      Each of the Transaction Agreements have been, or will be, duly executed and
      delivered by Buyer and constitute, or will constitute when executed and
      delivered, the legal, valid and binding obligation of Buyer, enforceable against
      Buyer in accordance with their 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.


    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    


    
      	 	
              (c)

            	
              Non-contravention. 

            


    

    


    Neither
      the execution and delivery of this Agreement, nor the consummation of the
      transactions contemplated hereby (including the assignments and assumptions
      referred to in §2 above), will (i) violate any constitution, statute,
      regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
      restriction of any government, governmental agency, or court to which Buyer
      is
      subject or its certificate of limited partnership or its limited partnership
      agreement, or other governing documents or (ii) conflict with, result in a
      breach of, constitute a default under, result in the acceleration of, create
      in
      any party the right to accelerate, terminate, modify, or cancel, or require
      any
      notice under any agreement, contract, lease, license, instrument, or other
      arrangement to which Buyer is a party or by which it is bound or to which any
      of
      its assets are subject. Buyer does not need to give any notice to, make any
      filing with, or obtain any authorization, consent, or approval of any government
      or governmental agency in order for the Parties to consummate the transactions
      contemplated by this Agreement (including the assignments and assumptions
      referred to in §2 above). 

    


    
      	 	
              (d)

            	
              Brokers’
                Fees.

            


    

    


    There
      is
      no investment banker, broker, finder or other intermediary that has been
      retained by or is authorized to act on behalf of Buyer who might be entitled
      to
      any fee or commission from Buyer or any of its Affiliates in connection with
      the
      transactions contemplated by this Agreement. 

    
      


      
        	
                §5.

              	
                Pre-Closing
                  Covenants. 

              


      

       

    

    The
      Parties agree as follows with respect to the period between the execution of
      this Agreement and the Closing:

    


    
      	 	
              (a)

            	
              General. 

            


    

    


    Each
      of
      the Parties will use, and will cause each of their respective Subsidiaries
      to
      use, their best efforts to take all actions and to do all things necessary
      in
      order to consummate and make effective the transactions contemplated by this
      Agreement (including satisfaction, but not waiver, of the Closing conditions
      set
      forth in §7 below).

    


    
      	 	
              (b)

            	
              Notices
                and Consents. 

            


    

    


    Sellers
      shall give any notices to third-parties, and Sellers shall use their best
      efforts to obtain any third party consents that Buyer may request in connection
      with the matters referred to in §3(c) above. Each of the Parties shall give any
      notices to, make any filings with, and use their best efforts to obtain any
      authorizations, consents, and approvals of governments and governmental agencies
      in connection with the matters referred to in §3(c) and §4(c)
      above.

    


    
      	 	
              (c)

            	
              Operation
                of Business. 

            


    

    


    Other
      than the termination of the Employment Agreements, Sellers shall not engage
      in
      any practice, take any action, or enter into any transaction outside the
      Ordinary Course of Business. Without limiting the generality of the foregoing,
      Sellers shall not otherwise engage in any practice, take any action, or enter
      into any transaction of the sort described in §3(h) above. 


    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    


    
      	 	
              (d)

            	
              Preservation
                of Business. 

            


    

    


    Sellers
      shall, and shall cause Division to, keep their business and properties
      substantially intact, including their present operations, physical facilities,
      working conditions, and relationships with lessors, licensors, suppliers,
      customers, and employees. 

    


    
      	 	
              (e)

            	
              Full
                Access. 

            


    

    


    Sellers
      shall permit representatives of Buyer to have full access at all reasonable
      times upon reasonable notice, and in a manner so as not to interfere with the
      normal business operations of Sellers, to all premises, properties, personnel,
      books, records (including Tax records), contracts, and documents of
      Sellers.

    


    
      	 	
              (f)

            	
              Notice
                of Developments. 

            


    

    


    Each
      Party will give prompt written notice to the other Parties of any material
      adverse development causing a breach of any of its own representations and
      warranties in §3 and §4 above. No disclosure by any Party pursuant to this
§5(f), however, shall be deemed to amend or supplement the Disclosure Schedule
      or to prevent or cure any misrepresentation, breach of warranty, or breach
      of
      covenant. 

    


    
      	 	
              (g)

            	
              Exclusivity. 

            


    

    


    (i) 
      Neither of Sellers shall, nor shall any of their officers, directors, employees,
      partners, stockholders, Affiliates, Subsidiaries, investment bankers, attorneys,
      accountants, consultants or other agents or advisors (the “Representatives”),
      directly or indirectly, (A) solicit, initiate or take any action to facilitate
      or encourage the submission of any Acquisition Proposal, (B) enter into or
      participate in any discussions or negotiations with, furnish any information
      relating to Sellers or Division or afford access to the business, properties,
      assets, books or records of Sellers or Division or otherwise cooperate in any
      way with, or knowingly assist, participate in, facilitate or encourage any
      effort by any third party that is seeking to make, or has made, an Acquisition
      Proposal, (C) grant any waiver or release under any standstill or similar
      agreement with respect to any class of equity securities of Sellers or any
      Subsidiary of Parent or (D) enter into any agreement with respect to an
      Acquisition Proposal.

    


    (ii)
       Notwithstanding
      §5(g)(i) above and subject to §5(g)(iv) below, if Sellers and the
      Representatives have not breached or violated any provision of this §5(g), the
      board of directors of Parent, directly or indirectly through the
      Representatives, may engage in negotiations or discussions with any Third Party
      that, without prior solicitation by or negotiation with Parent, has made a
      Superior Proposal and furnish to such Third Party nonpublic information relating
      to Parent or any of its Subsidiaries pursuant to a confidentiality agreement
      (a
      copy of such confidentiality agreement being provided for informational purposes
      only to Buyer); provided
      that
      Buyer shall be furnished with such nonpublic information prior to or
      simultaneously with the furnishing thereof to such Third Party (to the extent
      such nonpublic information has not been previously furnished by Sellers to
      Buyer). Following receipt of such Superior Proposal, Parent’s board of directors
      may fail to make, withdraw or modify in a manner adverse to Buyer its
      recommendation to its stockholders referred to in §5(i)(i) below, submit such
      Superior Proposal to a vote of its stockholders, and/or take any non-appealable,
      final action that any court of competent jurisdiction orders Parent to take,
      but
      in each case referred to in the foregoing subsections (A) through (D) of
§5(g)(i) above only if a majority of the Non-Affiliated Directors determine
      in
      good faith, after considering written advice of the outside legal counsel and
      financial advisor to Parent’s board of directors that the board must take such
      action to comply with its fiduciary duties under applicable law. Nothing
      contained herein shall prevent Parent’s board of directors from complying with
      Rule 14e-2(a) or Rule 14d-9 under the Securities Exchange Act with regard to
      an
      Acquisition Proposal or from making other disclosures to Parent’s stockholders
      if required under applicable law; provided,
      however,
      that
      any such actions shall comply with the other requirements of this §5(g).



    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    


    (iii)
       Parent’s
      board of directors shall not take any of the actions referred to in subsections
      (A) through (D) of §5(g)(i) above unless Parent shall have delivered to Buyer a
      prior written notice advising Buyer that it intends to take such action, and
      Parent shall continue to keep Buyer informed, on a current basis, with respect
      to such Superior Proposal after taking such action. In addition, Parent shall
      notify Buyer promptly (but in no event later than 24 hours) after receipt by
      Parent (or any of its Representatives) of any Acquisition Proposal, any
      indication that a third party is considering making an Acquisition Proposal
      or
      of any request for information relating to Parent or any of its Subsidiaries
      or
      for access to the business, properties, assets, books or records of Parent
      or
      any of its Subsidiaries by any third party that may be considering making,
      or
      has made, an Acquisition Proposal. Parent shall provide such notice orally
      and
      within one (1) business day in writing and shall identify the third party
      making, and the terms and conditions of, any such Acquisition Proposal,
      indication or request. Parent shall provide within one (1) business day of
      receipt a copy of any documentation of the terms of any such inquiry, proposal
      or offer, and thereafter shall keep Buyer informed, on a current basis, of
      the
      status and terms of any such proposals or offers and the status of any such
      discussions or negotiations (including by delivering any further documentation
      of the type referred to above). Parent shall, and shall cause the
      Representatives to, cease immediately and cause to be terminated any and all
      existing activities, discussions or negotiations, if any, with any third party
      conducted prior to the date hereof with respect to any Acquisition Proposal
      and
      shall use all reasonable efforts to cause any such third party (or its agents
      or
      advisors) in possession of confidential information about Parent or its
      Subsidiaries to return or destroy all such information.

    


    (iv)
       In
      the
      event Parent receives a Superior Proposal, Parent and its board of directors
      shall not take any actions referred to under §5(g)(ii) above until Parent has
      negotiated in good faith with Buyer with respect to the terms of the
      transactions contemplated by this Agreement for a period of 10 business days
      from the date Buyer receives written notice of all material terms and conditions
      of the Superior Proposal (including any documents related thereto) as set forth
      in §5(g)(iii) above. In the event Parent subsequently receives any amendments or
      changes to such Superior Proposal, Parent and its board of directors shall
      not
      take any actions referred to under §5(g)(ii) above until Parent has negotiated
      in good faith with Buyer with respect to the terms of the transactions
      contemplated by this Agreement for a period of 10 business days from the date
      Buyer receives written notice of all material terms and conditions of such
      original Superior Proposal, as amended or changed (including any documents
      related thereto) as set forth in §5(g)(iii) above and such written notice shall
      specify if Parent and its board of directors intend to take any actions referred
      to under §5(g)(ii) above.

    


    
      	 	
              (h)

            	
              Maintenance
                of Acquired Assets. 

            


    

    


    Sellers
      shall maintain the Acquired Assets in substantially the same condition as
      existed on the date of this Agreement, ordinary wear and tear
      excepted.

    


    
      	 	
              (i)

            	
              Parent
                Stockholders Meeting

            


    

    


    (i)
       Parent shall cause a meeting of its stockholders (the “Parent
      Stockholders Meeting”)
      to be
      duly called and held as soon as reasonably practicable for the purpose of voting
      on the approval and adoption of (A) this Agreement and the transactions
      contemplated hereby, (B) an amendment to Parent’s certificate of incorporation
      to change Parent’s name such that it does not contain the terms “Tidel” or
“Sentinel” or any derivations thereof (the “Amendment”)
      and
      (C) any motion for adjournment or postponement of the Parent Stockholder Meeting
      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 this Agreement and the transactions contemplated hereby and the
      Amendment (the “Motion”).
      Subject to §5(g)(ii) above, the board of directors of Parent shall recommend
      approval and adoption of the items set forth in subsections (A), (B) and (C)
      of
      this §5(i)(i). The only matters on the ballot at the Parent Stockholders Meeting
      shall be the matters set forth above in subsections (A), (B) and (C) of this
      §5(i)(i). In connection with the Parent Stockholders Meeting, Parent
      shall (i)
      promptly
      prepare and file with the SEC, use its commercially reasonable best efforts
      to
      have cleared by the SEC and thereafter mail to its stockholders as promptly
      as
      practicable, the Parent Proxy Statement and all other proxy materials for such
      meeting, (ii)
      use its
      commercially reasonable best efforts to obtain the necessary approvals by its
      stockholders of this Agreement and the transactions contemplated hereby and
      the
      Amendment, (3) otherwise comply with all legal requirements applicable to such
      meeting, and (4) hire MacKenzie Partners, Inc., or another proxy solicitor
      of
      equivalent stature, to assist Parent in the solicitation of votes and proxies
      for the Parent Stockholder Meeting.


    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    


    (ii)
       Notwithstanding anything to the contrary contained in this Agreement,
      unless this Agreement shall be terminated in accordance with §8 hereof, and in
      accordance with the applicable provisions of the law of the State of Delaware,
      (A) Parent shall be obligated to call, give notice of and hold the Parent
      Stockholders Meeting regardless of the commencement, disclosure, announcement
      or
      submission to it of any Acquisition Proposal, or of any failure to make,
      withdrawal or modification by Parent’s board of directors of its recommendation
      as required by §5(i)(i) above and (B) subject to §5(g) above, Parent shall not
      submit to the vote of its stockholders any Acquisition Proposal, or propose
      to
      do so. 

    


    (iii)
       The Parent Proxy Statement and any amendments or supplements thereto will,
      when filed, comply as to form in all material respects with the applicable
      requirements of the Securities Exchange Act. At the time the Parent Proxy
      Statement or any amendment or supplement thereto is first mailed to stockholders
      of Parent, and at the time such stockholders vote on the approval and adoption
      of this Agreement and the transactions contemplated hereby, the Amendment and
      the Motion, and at the Closing, the Parent Proxy Statement, as supplemented
      or
      amended, if applicable, will not contain any untrue statement of a material
      fact
      or omit to state any material fact necessary in order to make the statements
      made therein, in the light of the circumstances under which they were made,
      not
      misleading. The covenants contained in this subsection will not apply to
      statements or omissions included in the Parent Proxy Statement based upon
      information furnished to Parent in writing by Buyer specifically for use
      therein.

    


    
      	 	
              (j)

            	
              Name
                Change. 

            


    

    


    Parent
      shall change its name and shall cause Tidel Cash Systems, Inc., Tidel Services,
      Inc. and Target to change their respective names such that their respective
      names do not contain the terms “Tidel” or “Sentinel” or any derivations thereof.
      Parent and its subsidiaries shall amend any authorization to conduct business
      as
      foreign entity in any jurisdiction and any assumed names to reflect the
      foregoing name changes. 

    


    
      	 	
              (k)

            	
              Perfection
                of Ownership of Intellectual
                Property.

            


    

    


    Sellers
      shall take all necessary and advisable actions to perfect Sellers’ chain of
      title and sole ownership of all rights, title and interests, free and clear
      of
      all interests of third parties and Liens, in all Intellectual Property,
      including (i) obtaining and recording with the United States Patent and
      Trademark Office or other similar agencies in foreign jurisdictions
      (collectively, “Patent
      Agencies”)
      any
      necessary and advisable assignments from any inventors or prior owners of any
      Intellectual Property and (ii) recording the change of ownership with any
      applicable Patent Agencies of any Intellectual Property to Target.



    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    


    
      	 	
              (l)

            	
              Maintenance
                of Leased Real Property. 

            


    

    


    Sellers
      will maintain the Leased Real Property, including all of the Improvements,
      in
      substantially the same condition as existed on the date of this Agreement,
      ordinary wear and tear excepted, and shall not demolish or remove any of the
      existing Improvements, or erect new improvements on the Leased Real Property
      or
      any portion thereof, without the prior written consent of Buyer.

    


    
      	 	
              (m)

            	
              Leases. 

            


    

    


    Sellers
      will not amend, modify, extend, renew or terminate any Lease or enter into
      any
      new lease, sublease, license or other agreement for the use or occupancy of
      any
      real property without the prior written consent of Buyer. 

    


    
      	 	
              (n)

            	
              Claim. 

            


    

    


    Sellers
      shall take all actions that a reasonably prudent person would undertake with
      respect to the CSS Claim and shall diligently defend the CSS Claim; provided,
      however,
      that
      any material actions with respect to the CSS Claim shall require the prior
      written consent of Buyer, which consent shall not be unreasonably withheld.
      

    
      


      
        	
                §6.

              	Post-Closing
                Covenants.


      

       

    

    The
      Parties agree as follows with respect to the period following the
      Closing:

    


    
      	 	
              (a)

            	
              General. 

            


    

    


    In
      case
      at any time after the Closing any further actions are necessary or desirable
      to
      carry out the purposes of the Transaction Agreements, each of the Parties will
      take such further actions (including the execution and delivery of such further
      instruments and documents) as another Party may reasonably request, all at
      the
      sole cost and expense of the requesting Party. Sellers shall not, and Parent
      shall cause its Subsidiaries not to, use the term“Tidel”
or
      “Sentinel” or any derivations thereof as part of their respective names. Sellers
      acknowledge and agree that from and after the Closing, Buyer will be entitled
      to
      possession of all documents, books, records (including Tax records), agreements,
      and financial data of any sort relating to Division.

    


    
      	 	
              (b)

            	
              Litigation
                Support. 

            


    

    


    In
      the
      event and for so long as any Party is actively contesting or defending against
      any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      or demand in connection with (i) the transactions contemplated under the
      Transaction Agreements, (ii) the CSS Claim, or (iii) any fact, situation,
      circumstance, status, condition, activity, practice, plan, occurrence, event,
      incident, action, failure to act, or transaction on or prior to the Closing
      Date
      involving Sellers, the other Party will cooperate with the contesting or
      defending Party and its counsel in the contest or defense, make available its
      personnel, and provide such testimony and access to its books and records as
      shall be necessary in connection with the contest or defense, all at the sole
      cost and expense of the contesting or defending Party.


    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    


    
      	 	
              (c)

            	
              Transition. 

            


    

    


    Sellers
      shall not, nor shall any of Parent’s Subsidiaries or any of their officers and
      directors, take any action that is designed or intended to have the effect
      of
      discouraging any lessor, licensor, customer, supplier, vendor or other business
      associate of Division from maintaining the same business relationships with
      Buyer after the Closing as it maintained with Division prior to the Closing.
      Sellers shall refer all customer inquiries relating to Division to Buyer from
      and after the Closing. After the Closing, Sellers shall direct any inquiries
      regarding payment of any accounts receivable that were included in the Acquired
      Assets to Buyer and shall immediately remit any amounts received by Sellers
      in
      payment of such accounts receivable to Buyers by in cash by wire transfer or
      other immediately available funds.

    


    
      	 	
              (d)

            	
              Confidentiality. 

            


    

    


    Sellers
      shall treat and hold as such all of the Confidential Information, refrain from
      using any of the Confidential Information except in connection with this
      Agreement, and deliver promptly to Buyer or destroy, at the request and option
      of Buyer, all tangible embodiments (and all copies) of the Confidential
      Information that are in its possession. In the event either of Sellers is
      requested or required (by oral question or request for information or documents
      in any legal proceeding, interrogatory, subpoena, civil investigative demand,
      or
      similar process) to disclose any Confidential Information, Sellers will notify
      Buyer promptly of the request or requirement so that Buyer may seek an
      appropriate protective order or waive compliance with the provisions of this
      §6(d). If, in the absence of a protective order or the receipt of a waiver
      hereunder, Sellers are, on the advice of counsel, compelled to disclose any
      Confidential Information to any tribunal or else stand liable for contempt,
      Sellers may disclose the Confidential Information to the tribunal; provided,
      however,
      that
      Sellers shall use their best efforts to obtain, at the reasonable request of
      Buyer, an order or other assurance that confidential treatment will be accorded
      to such portion of the Confidential Information required to be disclosed as
      Buyer shall designate.

    


    
      	 	
              (e)

            	
              Covenant
                Not to Compete or Solicit. 

            


    

    


    For
      a
      period of five years from and after the Closing Date, Sellers shall not, nor
      allow any of their Subsidiaries to, engage directly or indirectly in any
      business that Division conducts as of the Closing Date; provided,
      however,
      that no
      owner of less than one percent (1%) of the outstanding stock of any publicly
      traded corporation shall be deemed to engage solely by reason thereof in its
      business. For a period of five years from and after the Closing Date, Sellers
      shall not, nor allow any of their Subsidiaries, to solicit any employee of
      Buyer
      to leave the employment of Buyer or solicit any customer or potential customer
      of Buyer to cease or reduce its business with Buyer; provided,
      however,
      that no
      owner of less than one percent (1%) of the outstanding stock of any publicly
      traded corporation shall be deemed to be soliciting any employees, customers
      or
      potential customers of Buyer solely by reason thereof. If the final judgment
      of
      a court of competent jurisdiction declares that any term or provision of this
      §6(e) is invalid or unenforceable, the Parties agree that the court making the
      determination of invalidity or unenforceability shall have the power to reduce
      the scope, duration, or area of the term or provision, to delete specific words
      or phrases, or to replace any invalid or unenforceable term or provision with
      a
      term or provision that is valid and enforceable and that comes closest to
      expressing the intention of the invalid or unenforceable term or provision,
      and
      this Agreement shall be enforceable as so modified after the expiration of
      the
      time within which the judgment may be appealed.

    


    
      	 	
              (f)

            	
              Defense
                of CSS Claim. 

            


    

    


    (i)
       Buyer shall undertake, and shall have the sole right to direct on behalf
      of itself and Sellers, the defense of the CSS Claim for Sellers with counsel
      of
      its choice.

    


    (ii)
       Sellers shall not take any action, consent to the entry of any judgment or
      enter into any settlement with respect to the CSS Claim without the prior
      written consent of Buyer. 


    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    


    (iii)
       In
      the
      event Sellers shall incur any Adverse Consequences in connection with the CSS
      Claim subsequent to the Closing Date, then Buyer shall indemnify Sellers from
      and against the entirety of any such Adverse Consequences;
      provided,
      however,
      that
      Buyer shall not be obligated to indemnify Seller for any Adverse Consequences
      incurred as a result of the breach of this Agreement or the negligent action
      or
      inaction of Sellers.

    


    
      	 	
              (g)

            	
              Indemnification. 

            


    

    


    (i)
       Parent agrees that all rights to indemnification or exculpation now
      existing in favor of the employees, agents, directors or officers of Parent
      and
      its Subsidiaries (the “Parent
      Indemnified Parties”)
      as
      provided in their respective charter documents, bylaws, certificate of limited
      partnership or limited partnership agreement as in effect on the date of this
      Agreement shall continue in full force and effect for a period of six (6) years
      from and after the Closing Date (the “Indemnity
      Period”);
      provided,
      however,
      that,
      in the event any claim or claims are asserted or made within the Indemnity
      Period, all rights to indemnification in respect of any such claim or claims
      shall continue to final and non-appealable disposition of any and all such
      claims. Any determination required to be made with respect to whether the Parent
      Indemnified Party’s conduct complies with the standards set forth in such
      charter documents, bylaws , certificate of limited partnership or limited
      partnership agreement or otherwise shall be made by independent counsel selected
      by the Parent Indemnified Parties, which counsel shall be reasonably
      satisfactory to Parent (whose fees and expenses shall be paid by Parent), which
      such determination shall be final and binding on the parties thereto.


    


    (ii)
       During the Indemnity Period, Parent shall indemnify and hold harmless the
      Parent Indemnified Parties in respect of acts or omissions occurring at or
      prior
      to the Closing to the fullest extent permitted by Delaware law or any other
      applicable laws or provided under Parent’s and its Subsidiaries’ charter,
      bylaws, certificate of limited partnership or limited partnership agreement
      in
      effect on the date of this Agreement; provided
      that
      such indemnification shall be subject to any limitation imposed from time to
      time under applicable law.

    


    (iii)
       If Parent or any of its successors or assigns (A) consolidates with or
      merges into any other Person and shall not be the continuing or surviving
      corporation or entity of such consolidation or merger, or (B) transfers or
      conveys all or substantially all of its properties and assets to any Person,
      then, and in each such case, to the extent necessary, proper provision shall
      be
      made so that the successors and assigns of Parent shall assume the obligations
      set forth in this §6(g).

    


    (iv)
       The rights of each Parent Indemnified Party under this §6(g) shall be in
      addition to any rights such Person may have under the charter, bylaws,
      certificate of limited partnership or limited partnership agreement of Parent
      or
      any of its Subsidiaries, or under Delaware law or any other applicable laws
      or
      under any agreement of any Parent Indemnified Party with Parent or any of its
      Subsidiaries. These rights shall survive consummation of the transactions
      contemplated by this Agreement and are intended to benefit, and shall be
      enforceable by, each Parent Indemnified Party.

    


    
      	 	
              (h)

            	
              Directors’
                and Officers’ Insurance. 

            


    

    


    During
      the Indemnity Period, Parent shall maintain in effect directors’ and officers’
and fiduciaries’ liability insurance covering the officers and directors of
      Parent and its Subsidiaries as of the date of this Agreement on comparable
      terms
      and conditions and with comparable insurance coverage as is then in effect
      for
      the current officers and directors of Parent and its Subsidiaries. Parent agrees
      that if Parent is dissolved or ceases to exist for any reason prior to the
      termination of the Indemnity Period, prior to such dissolution or cessation
      Parent shall extend Parent’s then in effect directors’ and officers’ and
      fiduciaries’ liability insurance policy on commercially reasonable terms and
      conditions and with insurance coverage as comparable as possible with the
      insurance policy then in effect for the current officers and directors of Parent
      and Subsidiaries, and such extension shall provide such insurance coverage
      to
      all directors and officers of Parent as of the date of this Agreement. Parent
      shall prepay all premiums in connection with such extension. These rights shall
      survive consummation of the transactions contemplated by this Agreement and
      are
      intended to benefit, and shall be enforceable by, each Parent Indemnified Party.
      


    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    


    
      	 	
              (i)

            	
              Employee
                Non-competition and Confidentiality Agreements. 

            


    

    


    Sellers
      agree that any and all non-competition and confidentiality agreements between
      Sellers and their Affiliates on the one hand and employees of Sellers and their
      Affiliates on the other hand shall be null and void and of no further force
      and
      effect with respect to such employees who become employees of Buyer and its
      Affiliates.

    
      


      
        	
                §7

              	Conditions to Obligation to
                Close.


      

       

    

    
      	 	
              (a)

            	
              Conditions
                to Buyer’s Obligation. 

            


    

    


    Buyer’s
      obligation to consummate the transactions to be performed by it in connection
      with the Closing is subject to satisfaction of the following conditions:


    


    (i)
       the representations and warranties set forth in §3 above shall be true and
      correct in all material respects at and as of the Closing Date, except to the
      extent that such representations and warranties are qualified by the term
“material,” or contain terms such as “Material Adverse Effect” or “Material
      Adverse Change,” in which case such representations and warranties (as so
      written, including the term “material” or “Material”) shall be true and correct
      in all respects at and as of the Closing Date; 

    


    (ii)
       Sellers shall have performed and complied with all of the covenants
      hereunder in all material respects through the Closing, except to the extent
      that such covenants are qualified by the term “material,” or contain terms such
      as “Material Adverse Effect” or “Material Adverse Change,” in which case Sellers
      shall have performed and complied with all of such covenants (as so written,
      including the term “material” or “Material”) in all respects through the
      Closing; 

    


    (iii)
       Sellers and Division shall have procured all of the third-party consents
      specified in §5(b) above; 

    


    (iv)
       no action, suit, or proceeding shall be pending or threatened before any
      court or quasi-judicial or administrative agency of any federal, state, local,
      or foreign jurisdiction or before any arbitrator wherein an unfavorable
      injunction, judgment, order, decree, ruling, or charge would (A) prevent
      consummation of any of the transactions contemplated by this Agreement, (B)
      cause any of the transactions contemplated by this Agreement to be rescinded
      following consummation, (C) adversely affect the right of Buyer to own the
      Acquired Assets and to operate the former business of Division, or (D) have
      a
      Material Adverse Effect; 

    


    (v)
       there shall not have been, or the occurrence of any events which could
      reasonably be expect to have, a Material Adverse Effect;


    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    


    (vi)
       there shall not have been, or the occurrence of any events which could
      reasonably be expected to have, an adverse change or impact with respect to
      Sellers or Buyer in connection with the CSS Claim;

    


    (vii)
       this Agreement and the transactions contemplated hereby and the Amendment
      shall have been approved and adopted by the stockholders of Parent in accordance
      with the laws of the State of Delaware (the “Stockholder
      Approval”);

    


    (viii)
       Sellers shall have delivered to Buyer a certificate to the effect that
      each of the conditions specified above in §7(a)(i)-(vii) is satisfied in all
      respects;

    


    (vix)
       Sellers shall have executed and delivered the Assignments in substantially
      the forms attached hereto as Exhibit A to Buyer; 

    


    (x)
       Buyer shall have received from counsel to Sellers an opinion in form and
      substance as set forth in Exhibit B attached hereto, addressed to Buyer and
      on
      which Buyer’s lenders shall be entitled to rely, and dated as of the Closing
      Date;

    


    (xi)
       Sellers shall have provided to Buyer evidence of the release of the
      following Liens, such evidence to be satisfactory to Buyer in its sole
      discretion: (A) Lien of Laurus Master Fund Ltd. on all of the assets of Sellers,
      Tidel Cash Systems, Inc. and Tidel Services, Inc. filed with the Secretary
      of
      State of the State of Delaware; (B) state tax Lien on Parent filed with the
      Clerk of Harris County, Texas; (C) Lien of Wallis State Bank on all accounts,
      inventory, equipment, intangibles, cash, cash equivalents and other property
      of
      Sellers and Tidel Cash Systems, Inc. filed with the Secretary of State of the
      State of Delaware; (D) Lien of JP Morgan Chase Bank on all accounts, inventory,
      equipment, intangibles, cash, cash equivalents and other property of Sellers
      filed with the Clerk of Harris County, Texas; and (E) Lien of Chase Bank of
      Texas on all accounts, inventory, equipment, intangibles, cash and other
      property of Tidel Cash Systems, Inc. filed with the Clerk of Dallas County,
      Texas;

    


    (xii)
       Sellers shall have provided to Buyer evidence of the release, such
      evidence to be satisfactory to Buyer in its sole discretion, of all liens
      recorded at the United States Patent and Trademark Office on any Intellectual
      Property, including, but not limited to the liens held by Saudi International
      Bank, Al-Bank Al-Saudi Al-Alami Limited; Wallis State Bank; The Frost National
      Bank d/b/a Creekwood Capital Group; and Creekwood Capital
      Corporation;

    


    (xiii)
       Sellers shall have provided to Buyer evidence of assignments perfecting
      Sellers’ sole ownership of all rights, title and interests, free and clear of
      all interests of third parties and Liens, in all Intellectual Property, such
      evidence to be satisfactory to Buyer in its sole discretion, including (A)
      evidence of recordation with Patent Agencies of any necessary and advisable
      assignments from any inventors or prior owners of any Intellectual Property
      (including without limitation all patent applications included in the
      Intellectual Property) and (B) evidence of the recordation with any applicable
      Patent Agencies of the change of ownership of any Intellectual Property to
      Target;

    


    (xiv)
       Parent, Target, Tidel Cash Systems, Inc. and Tidel Services, Inc. shall
      have changed their respective names such that they do not contain the terms
      “Tidel” or “Sentinel” or any derivations thereof and shall have provided to
      Buyer evidence thereof reasonably satisfactory to Buyer; and further shall
      have
      amended any authorizations to conduct business as foreign entity in any
      jurisdiction and any assumed names to reflect the foregoing and provided to
      Buyer evidence thereof reasonably satisfactory to Buyer;


    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    


    (xv)
       Sellers shall have terminated the Employment Agreements on terms
      reasonably satisfactory to Buyer;

    


    (xvi)
       all actions to be taken by Sellers in connection with consummation of the
      transactions contemplated hereby and all certificates, opinions, instruments,
      and other documents required to effect the transactions contemplated hereby
      shall be reasonably satisfactory in form and substance to Buyer;

    


    (xvii)
       Sellers shall deliver to Buyer a non-foreign affidavit dated as of the
      Closing Date, sworn under penalty of perjury and in form and substance required
      under the Treasury Regulations issued pursuant to Code §1445 stating that
      neither of Sellers are a “foreign person” as defined in Code §1445;
      and

    


    (xviii)
       Sellers shall have delivered to Buyer a certificate of the secretary or an
      assistant secretary of each of Sellers, dated the Closing Date, in form and
      substance reasonably satisfactory to Buyer, as to: (A) no amendments to the
      certificate of incorporation and bylaws of Parent or the certificate of limited
      partnership and limited partnership agreement of Target since the date of this
      Agreement; (B) the resolutions of the board of directors (or other authorizing
      body) (or a duly authorized committee thereof) of Sellers authorizing the
      execution, delivery, and performance of this Agreement and the transactions
      contemplated hereby; (C) incumbency and signatures of the officers of Sellers
      executing this Agreement or any other agreement contemplated by this Agreement;
      and (D) the requisite number of votes of the Parent’s stockholders approved and
      adopted this Agreement, the transactions contemplated by this Agreement and
      the
      Amendment at the Parent Stockholders Meeting.

    


    Buyer
      may
      waive any condition specified in this §7(a) if it executes a writing so stating
      at or prior to the Closing.

    


    
      	 	
              (b)

            	
              Conditions
                to Sellers’ Obligation. 

            


    

    


    Sellers’
      obligation to consummate the transactions to be performed by them in connection
      with the Closing is subject to satisfaction of the following conditions:


    


    (i) 
      the representations and warranties set forth in §4 above shall be true and
      correct in all material respects at and as of the Closing Date, except to the
      extent that such representations and warranties are qualified by the term
“material,” or contain terms such as “Material Adverse Effect” or “Material
      Adverse Change,” in which case such representations and warranties (as so
      written, including the term “material” or “Material”) shall be true and correct
      in all respects at and as of the Closing Date;

    


    (ii)
       Buyer shall have performed and complied with all of its covenants
      hereunder in all material respects through the Closing, except to the extent
      that such covenants are qualified by the term “material,” or contain terms such
      as “Material Adverse Effect” or “Material Adverse Change,” in which case Buyer
      shall have performed and complied with all of such covenants (as so written,
      including the term “material” or “Material”) in all respects through the
      Closing;

    


    (iii)
       no action, suit, or proceeding shall be pending or threatened before any
      court or quasi-judicial or administrative agency of any federal, state, local,
      or foreign jurisdiction or before any arbitrator wherein an unfavorable
      injunction, judgment, order, decree, ruling, or charge would (A) prevent
      consummation of any of the transactions contemplated by this Agreement or (B)
      cause any of the transactions contemplated by this Agreement to be rescinded
      following consummation; 


    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    


    (v)
       Buyer shall have delivered to Sellers a certificate to the effect that
      each of the conditions specified above in §7(b)(i)-(iii) is satisfied in all
      respects; 

    


    (vi) 
      the Stockholder Approval shall have been obtained; and

    


    (vii) 
      all actions to be taken by Buyer in connection with consummation of the
      transactions contemplated hereby and all certificates, opinions, instruments,
      and other documents required to effect the transactions contemplated hereby
      will
      be reasonably satisfactory in form and substance to Sellers.

    


    Sellers
      may waive any condition specified in this §7(b) if they execute a writing so
      stating at or prior to the Closing.

    
      


      
        	
                §8.

              	Survival and Termination.  


      

       

    

    
      	 	
              (a)

            	
              Survival
                of Representations and Warranties. 

            


    

    


    None
      of
      the representations and warranties of Buyer and Sellers contained in this
      Agreement shall survive the Closing.

    


    
      	 	
              (b)

            	
              Termination
                of Agreement. 

            


    

    


    Subject
      to §9(k) below, certain of the Parties may terminate this Agreement as provided
      below: 

    


    (i)
       Buyer and Sellers may terminate this Agreement by mutual written consent
      at any time prior to the Closing;

    


    (ii)
       Buyer may terminate this Agreement by giving written notice to Sellers at
      any time prior to the Closing (A) subject to §8(b)(iv) and §8(b)(v) below, in
      the event either of Sellers have breached any representation, warranty, or
      covenant contained in this Agreement in any material respect, Buyer has notified
      Sellers of the breach, and the breach has continued without cure for a period
      of
      30 days after the notice of breach or (B) if the Closing shall not have occurred
      on or before the date that is the eight month anniversary of the date of this
      Agreement (unless the failure results primarily from Buyer itself breaching
      any
      representation, warranty, or covenant contained in this Agreement);


    


    (iii)
       Sellers may terminate this Agreement by giving written notice to Buyer at
      any time prior to the Closing (A) in the event Buyer has breached any
      representation, warranty, or covenant contained in this Agreement in any
      material respect, Sellers have notified Buyer of the breach, and the breach
      has
      continued without cure for a period of 30 days after the notice of breach or
      (B)
      if the Closing shall not have occurred on or before the date that is the eight
      month anniversary of the date of this Agreement (unless the failure results
      primarily from Sellers breaching any representation, warranty, or covenant
      contained in this Agreement);

    


    (iv) 
      Buyer may terminate this Agreement by giving written notice to Sellers if
      Sellers breach their obligations under §5(g) or §5(i) above; or

    


    (v) 
      Buyer may terminate this Agreement by giving written notice to Sellers if a
      majority of the Non-Affiliated Directors shall have failed to make or have
      withdrawn, or modified in a manner adverse to Buyer, their approval or
      recommendation of this Agreement or the transactions contemplated hereby, or
      shall have failed to reaffirm their approval or recommendation of this Agreement
      or the transactions contemplated hereby within five (5) business days after
      a request
      by Buyer to do so, or shall have approved or recommended an alternative
      Acquisition Proposal.


    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    


    
      	 	
              (c)

            	
              Effect
                of Termination. 

            


    

    


    If
      any
      Party terminates this Agreement pursuant to §8(b) above, all rights and
      obligations of the Parties hereunder shall terminate without any Liability
      of
      any Party to the other Party (except for any Liability of any Party then in
      breach and as set forth in §9(k) below). The provisions of this §8(c), §6(g),
§6(h) and §9 shall survive any termination of this Agreement pursuant to this
§8. 

    
      


      
        	
                §9.

              	Miscellaneous. 


      

       

    

    
      	 	
              (a)

            	
              Press
                Releases and Public Announcements. 

            


    

    


    No
      Party
      shall issue any press release or make any public announcement relating to the
      subject matter of this Agreement without the prior written approval of the
      other
      Party;
      provided,
      however,
      that
      any Party may make any public disclosure it believes in good faith is required
      by applicable law or any listing or trading agreement concerning its publicly
      traded securities (in which case the disclosing Party will use its reasonable
      best efforts to advise the other Party prior to making the
      disclosure).

    


    
      	 	
              (b)

            	
              No
                Third-Party Beneficiaries. 

            


    

    


    Except
      as
      provided in §6(g) and §6(h) above, this Agreement shall not confer any rights or
      remedies upon any Person other than the Parties and their respective successors
      and permitted assigns.

    


    
      	 	
              (c)

            	
              Entire
                Agreement. 

            


    

    


    This
      Agreement (including the documents referred to herein) constitutes the entire
      agreement between the Parties and supersedes any prior understandings,
      agreements, or representations by or between the Parties, written or oral,
      to
      the extent they relate in any way to the subject matter hereof.

    


    
      	 	
              (d)

            	
              Succession
                and Assignment. 

            


    

    


    This
      Agreement shall be binding upon and inure to the benefit of the Parties named
      herein and their respective successors and permitted assigns. No Party may
      assign either this Agreement or any of its rights, interests, or obligations
      hereunder without the prior written approval of the other Party; provided
      however,
      that
      Buyer may (i) assign any or all of its rights and interests hereunder to one
      or
      more of its Affiliates, (ii) designate one or more of its Affiliates to perform
      its obligations hereunder (in any or all of which cases Buyer nonetheless shall
      remain responsible for the performance of all of its obligations hereunder),
      or
      (iii) assign its rights and benefits under this Agreement to its lender as
      collateral for such its obligations to such lender and Sellers agree to execute
      a consent and agreement to such assignment in a form reasonably satisfactory
      to
      Sellers.

    


    
      	 	
              (e)

            	
              Counterparts. 

            


    

    


    This
      Agreement may be executed in two or more counterparts (including by means of
      facsimile), each of which shall be deemed an original but all of which together
      will constitute one and the same instrument.

    


    
      	 	
              (f)

            	
              Headings. 

            


    

    


    The
      section headings contained in this Agreement are inserted for convenience only
      and shall not affect in any way the meaning or interpretation of this
      Agreement.


    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    


    
      	 	
              (g)

            	
              Notices. 

            


    

    


    All
      notices, requests, demands, claims, and other communications hereunder shall
      be
      in writing. Any notice, request, demand, claim, or other communication hereunder
      shall be deemed duly given (i) when delivered personally to the recipient,
      (ii)
      one business day after being sent to the recipient by reputable overnight
      courier service (charges prepaid), (iii) one business day after being sent
      to
      the recipient by facsimile transmission or electronic mail, or (iv) four
      business days after being mailed to the recipient by certified or registered
      mail, return receipt requested and postage prepaid, and addressed to the
      intended recipient as set forth below: 

    


    If
      to
      Sellers:

    


    Tidel
      Technologies, Inc.

    2900
      Wilcrest Drive, Suite 205

    Houston,
      Texas 77042

    Facsimile
      Number:

    Attn:
      Chief Executive Officer

    


    Copy
      to: 

    


    Olshan
      Grundman Frome Rosenzweig & Wolosky LLP

    Park
      Avenue Tower

    65
      East
      55th
      Street

    New
      York,
      New York 10022

    Facsimile
      Number: (212) 451-2222

    Attention:
      Adam Finerman, Esq.

    


    If
      to
      Buyer:

    


    Sentinel
      Operating, L.P.

    c/o
      LLG,
      LLC

    9423
      Desert Willow Road

    Highlands
      Ranch, Colorado 80129

    Attn:
      Chief Financial Officer

    


    Copy
      to: 

    


    Hensley
      Kim & Edgington, LLC

    1660
      Lincoln Street, Suite 3050

    Denver,
      Colorado 80264

    Facsimile
      Number: (720) 377-0777

    Attention:
       John P.J. Kim, Esq.

    Darren
      R.
      Hensley Esq.

    


    


    Any
      Party
      may change the address to which notices, requests, demands, claims, and other
      communications hereunder are to be delivered by giving the other Party notice
      in
      the manner herein set forth.


    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (h)

            	
              Governing
                Law. 

            


    

    


    This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of Delaware
      without
      giving effect to any choice or conflict of law provision or rule that would
      cause the application of the laws of any jurisdiction other than the State
      of
Delaware.

    


    
      	 	
              (i)

            	
              Amendments
                and Waivers. 

            


    

    


    No
      amendment of any provision of this Agreement shall be valid unless the same
      shall be in writing and signed by Buyer and Sellers. Parent may consent to
      any
      such amendment at any time prior to the Closing with the prior authorization
      of
      its board of directors; provided,
      however,
      that any
      amendment effected after Parent’s stockholders have approved this Agreement will
      be subject to the restrictions contained in the applicable provisions of the
      laws of the State of Delaware. No waiver by any Party of any default,
      misrepresentation, or breach of warranty or covenant hereunder, whether
      intentional or not, shall be valid unless the same shall be in writing and
      signed by the Party making such waiver nor shall such waiver be deemed to extend
      to any prior or subsequent default, misrepresentation, or breach of warranty
      or
      covenant hereunder or affect in any way any rights arising by virtue of any
      prior or subsequent default, misrepresentation, or breach of warranty or
      covenant.

    


    
      	 	
              (j)

            	
              Severability. 

            


    

    


    Any
      term
      or provision of this Agreement that is invalid or unenforceable in any situation
      in any jurisdiction shall not affect the validity or enforceability of the
      remaining terms and provisions hereof or the validity or enforceability of
      the
      offending term or provision in any other situation or in any other
      jurisdiction.

    


    
      	 	
              (k)

            	
              Expenses. 

            


    

    


    (i)
       Except as otherwise provided herein, each of Buyer and Sellers shall bear
      its own costs and expenses (including legal fees and expenses) incurred in
      connection with this Agreement and the transactions contemplated hereby. Without
      limiting the generality of the foregoing, all transfer, documentary, sales,
      use,
      stamp, registration and other such Taxes, and all conveyance fees, recording
      charges and other fees and charges (including any penalties and interest)
      incurred in connection with the consummation of the transactions contemplated
      by
      this Agreement shall be paid by Sellers when due, and Sellers shall, at their
      own expense, file all necessary Tax Returns and other documentation with respect
      to all such Taxes, fees and charges, and, if required by applicable law, the
      Parties will, and will cause their Affiliates to, join in the execution of
      any
      such Tax Returns and other documentation.

    


    (ii)
       If a Parent Payment Event occurs, Parent shall pay $400,000 to Buyer (by
      wire transfer of immediately available funds) no later than two (2) business
      days after the occurrence of such Parent Payment Event. Nothing contained in
      this §9(k)(ii) shall limit or preclude Buyer from pursuing any other available
      remedies it may have against Sellers.

    


    (iii)
       Sellers acknowledge that the agreement contained in §9(k)(ii) above is an
      integral part of the transactions contemplated by this Agreement and that,
      without this agreement, Buyer would not enter into this Agreement. Accordingly,
      if Sellers fail to promptly pay the amount due pursuant to §9(k)(ii) above,
      Sellers shall also pay any costs and expenses incurred by Buyer in connection
      with a legal action to enforce this Agreement that results in a judgment against
      a Seller for such amount; provided, however, that if such legal action results
      in a judgment that neither Seller owes Buyer such amount, Buyer shall pay any
      costs and expenses incurred by Seller in connection with the defense of such
      legal action. 


    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    


    
      	 	
              (l)

            	
              Construction. 

            


    

    


    The
      Parties have participated jointly in the negotiation and drafting of this
      Agreement. In the event an ambiguity or question of intent or interpretation
      arises, this Agreement shall be construed as if drafted jointly by the Parties
      and no presumption or burden of proof shall arise favoring or disfavoring any
      Party by virtue of the authorship of any of the provisions of this Agreement.
      Any reference to any federal, state, local, or foreign statute or law shall
      be
      deemed also to refer to all rules and regulations promulgated thereunder, unless
      the context requires otherwise. The word “including” shall mean including
      without limitation. Nothing in the Disclosure Schedule shall be deemed adequate
      to disclose an exception to a representation or warranty made herein unless
      the
      Disclosure Schedule identifies the exception with reasonable particularity
      and
      describes the relevant facts in reasonable detail. Without limiting the
      generality of the foregoing, the mere listing (or inclusion of a copy) of a
      document or other item shall not be deemed adequate to disclose an exception
      to
      a representation or warranty made herein (unless the representation or warranty
      has to do with the existence of the document or other item itself). The Parties
      intend that each representation, warranty, and covenant contained herein shall
      have independent significance. If any Party has breached any representation,
      warranty, or covenant contained herein in any respect, the fact that there
      exists another representation, warranty, or covenant relating to the same
      subject matter (regardless of the relative levels of specificity) that the
      Party
      has not breached shall not detract from or mitigate the fact that the Party
      is
      in breach of the first representation, warranty, or covenant. 

    


    
      	 	
              (m)

            	
              Incorporation
                of Exhibits and Schedules. 

            


    

    


    The
      Exhibits and Schedules identified in this Agreement are incorporated herein
      by
      reference and made a part hereof.

    


    
      	 	
              (n)

            	
              Specific
                Performance. 

            


    

    


    Each
      Party acknowledges and agrees that the other Party would be damaged irreparably
      in the event any provision of this Agreement is not performed in accordance
      with
      its specific terms or otherwise breached, so that a Party shall be entitled
      to
      injunctive relief to prevent breaches of the provisions of this Agreement and
      to
      enforce specifically this Agreement and the terms and provisions hereof in
      addition to any other remedy to which such Party may be entitled, at law or
      in
      equity. In particular, the Parties acknowledge that the business of Division
      is
      unique and recognize and affirm that in the event Sellers breach this Agreement,
      money damages would be inadequate and Buyer would have no adequate remedy at
      law, so that Buyer shall have the right, in addition to any other rights and
      remedies existing in its favor, to enforce its rights and the other Parties’
obligations hereunder not only by action for damages but also by action for
      specific performance, injunctive, and/or other equitable relief.

    


    
      	 	
              (o)

            	
              Submission
                to Jurisdiction. 

            


    

    


    Each
      of
      the Parties submits to the jurisdiction of any state or federal court sitting
      in
      the State of Texas in any action or proceeding arising out of or relating to
      this Agreement and agrees that all claims in respect of the action or proceeding
      may be heard and determined in any such court. Each Party also agrees not to
      bring any action or proceeding arising out of or relating to this Agreement
      in
      any other court. Each of the Parties waives any defense of inconvenient forum
      to
      the maintenance of any action or proceeding so brought and waives any bond,
      surety, or other security that might be required of any other Party with respect
      thereto. Any Party may make service on the other Party by sending or delivering
      a copy of the process to the Party to be served at the address and in the manner
      provided for the giving of notices in §9(g) above. Nothing in this §9(o),
      however, shall affect the right of any Party to serve legal process in any
      other
      manner permitted by law or in equity. Each Party agrees that a final judgment
      in
      any action or proceeding so brought shall be conclusive and may be enforced
      by
      suit on the judgment or in any other manner provided by law or in equity.



    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    


    
      	 	
              (p)

            	
              Tax
                Matters. 

            


    

    


    (i)
       Sellers shall be responsible for the preparation and filing of all Tax
      Returns for Sellers for all periods as to which Tax Returns are due after the
      Closing Date (including the consolidated, unitary, and combined Tax Returns
      for
      Sellers that include the operations of Division for any period ending on or
      before the Closing Date). Sellers shall make all payments required with respect
      to any such Tax Return.

    


    (ii)
       Buyer and Sellers agree to utilize, or cause their respective Affiliates
      to utilize, the standard procedure set forth in Rev. Proc. 2004-53 with respect
      to wage reporting.

    


    
      	 	
              (q)

            	
              Tax
                Disclosure Authorization. 

            


    

    


    Notwithstanding
      anything herein to the contrary, the Parties (and each Affiliate and Person
      acting on behalf of any Party) agree that each Party (and each employee,
      representative, and other agent of such Party) may disclose to any and all
      Persons, without limitation of any kind, the transaction’s tax treatment and tax
      structure (as such terms are used in Code §§6011 and 6112 and regulations
      thereunder) contemplated by this agreement and all materials of any kind
      (including opinions or other tax analyses) provided to such Party or such Person
      relating to such tax treatment and tax structure, except to the extent necessary
      to comply with any applicable federal or state securities laws; provided,
      however,
      that
      such disclosure may not be made until the earlier of date of (A) public
      announcement of discussions relating to the transaction, (B) public announcement
      of the transaction, or (C) execution of an agreement to enter into the
      transaction. This authorization is not intended to permit disclosure of any
      other information including (without limitation) (A) any portion of any
      materials to the extent not related to the transaction’s tax treatment or tax
      structure, (B) the identities of participants or potential participants, (C)
      the
      existence or status of any negotiations, (D) any pricing or financial
      information (except to the extent such pricing or financial information is
      related to the transaction’s tax treatment or tax structure), or (E) any other
      term or detail not relevant to the transaction’s tax treatment or the tax
      structure.

     

    *
      * * *


    


    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
      date first above written.

    


    
      	 	
              SENTINEL
                OPERATING, L.P.

            
	 	 
	 	
              By:

            	
              Sentinel
                Cash Systems, L.L.C.

            
	 	
              Its:

            	
              General
                Partner

            
	 	 	 	 	 
	 	 	
              By:

            	 /s/
              Raymond P. Landry	 
	 	 	 	
              Raymond
                P. Landry

            	 
	 	 	 	
              President

            	 


    

     

    
      
        	 	
                TIDEL
                  TECHNOLOGIES, INC.

              
	 	 
	 	
                By:
                  

              	 /s/
                Jerrell G. Clay	 
	 	 	
                Name:
                  Jerrell G. Clay

              	 
	 	 	
                Title:
                  Director

              	 


      

    

    


    
      	 	
              TIDEL
                ENGINEERING, L.P.

            
	 	 
	 	
              By:

            	
              Tidel
                Cash Systems, Inc.

            
	 	
              Its:

            	
              Managing
                General Partner

            
	 	 	 	 	 
	 	 	
              By:

            	 /s/
              Leonard Carr	 
	 	 	
              Name:

            	 Leonard
              Carr	 
	 	 	
              Title:
                

            	 Vice
              President & Secretary