Document:

Exhibit 10.4

    
      

    

    Exhibit
      10.4

     

    STOCK
      REDEMPTION AGREEMENT

    

    By
      and Between

    

    Tidel
      Technologies, Inc.

    

    and

    

    Laurus
      Master Fund, Ltd.

     

    
      
        

      

    

    
       

      Dated
        as of January 12, 2006

       

        
          

        

      

    

     

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    STOCK
      REDEMPTION AGREEMENT

    

    This
      Stock Redemption Agreement (this “Agreement”) is made and entered into as of the
      12th day of January, 2006 between Tidel Technologies, Inc., a Delaware
      corporation (the “Company”), and Laurus Master Fund, Ltd., a Cayman Islands
      company (the “Seller”).

    

    W
      I T N E
      S S E T H:

    

    WHEREAS,
      the Seller is the owner of such
      number of
      shares
      (the “Current Shares”) of
      issued
      and outstanding common stock of the Company, $.01 par value per share (the
      “Common Stock”), as set forth on Schedule A hereto prior to giving effect to the
      Exercise and Conversion Agreement by and among Sentinel Technologies, Inc,
      Sentinel Operating, L.P., the Company and the Seller, dated as of the date
      hereof (the “Exercise Agreement”);

    

    WHEREAS,
      the Seller holds certain indebtedness of the Company and Tidel Engineering,
      L.P.
      (“Engineering”), convertible in accordance with the
      terms
of
      such
      indebtedness into
      shares of Common Stock of the Company, evidenced by that certain Convertible
      Term Note in the initial principal amount of $6,450,000, dated November 25,
      2003
      (the “2003 Note”) together with an additional $292,987 principal amount added
      thereto on November 26, 2004, made by the Company in favor of the
      Seller;
      

    

    WHEREAS,
      the Company has granted the Seller the following warrants: (i) the Common Stock
      Purchase Warrant, issued November 25, 2003 (the “2003 Warrant”), whereby the
Seller
      has the
      right to purchase 4,250,000 shares of the Company’s
      Common
      Stock, subject to adjustment, at an exercise price of $0.30 per share; and
      (ii)
      the Common Stock Purchase Warrant, issued November 26, 2004 (the “2004 Warrant”
and together with the 2003 Warrant, the “Warrants”), whereby the Seller
      has the
      right to purchase 500,000 shares of the Company’s
      Common
      Stock, subject to adjustment, at an exercise price of $0.30 per
      share;

    

    WHEREAS,
      the Company and Engineering have sold substantially all of the assets of the
      Company’s automated teller machine business to NCR EasyPoint LLC (the “ATM
      Sale”) pursuant to the Asset Purchase Agreement, dated as of February 19, 2005,
      as amended;

    

    WHEREAS,
      the Company and Engineering are negotiating to sell the Company’s cash security
      business (the “TACC Sale”); 

    

    WHEREAS,
      the proposed TACC Sale requires the approval of a majority of the holders of
      the
      Common Stock;

    

    WHEREAS,
      pursuant to the terms of the Exercise Agreement, the Seller intends to convert
      a
      certain
      portion of the
      2003
      Note for shares of Common Stock (the “New Shares” and together with the Current
      Shares, the “Shares”) at the prices and in the amounts set forth on Schedule A
      hereto; and

    

    WHEREAS,
      the Seller and the Company each have agreed, that effective on the Closing
      Date,
      the then unexercised portion of the Warrants shall be cancelled;
      and

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    WHEREAS,
      the Seller wishes to sell, and the Company wishes to purchase, the Shares
      immediately following the consummation of the TACC Sale on the terms and subject
      to the conditions contained herein.

    

    NOW,
      THEREFORE, in consideration of the foregoing premises and other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto hereby agree as follows:

    
      

      
        	 	
                Section
                  1.

              	Purchase and Sale of Shares; Termination of
                Warrants. 

      

       

    

    (a)          
      On
      the
      terms and subject to the conditions of this Agreement, on
      the
      Closing
      Date (as
      defined below):
      (x) the
      Company shall purchase from the Seller, and the Seller shall sell, transfer,
      assign, convey and deliver to the Company, all of the Shares as set forth on
      Schedule A hereto for an amount equal to the Purchase Price (as defined below);
      and (y) the unexercised portion of the Warrants, without further action or
      deed,
      shall thereupon be cancelled and of no further force and effect. The Seller
      shall, promptly following the Closing Date, deliver to the Company, for
      cancellation, any Warrants cancelled pursuant to clause (y) above.

    

    (b)         
      The
      Purchase Price shall be payable by wire transfer of immediately available funds
      (to a bank account designated by the Seller to the Company at least one business
      day prior to the Closing) on the Closing Date.

    
      

      
        	 	
                Section
                  2.

              	Purchase
                Price.

      

    

    

    (a)         
       The
      purchase price for the Shares (the “Purchase Price”) shall consist of the Per
      Share Price (as defined below) multiplied by the number of Shares.

    

    (b)         
       The
      “Per
      Share
      Price”
      shall
equal
      the
      quotient
      obtained
      by dividing (1)
      the
      value on the Closing Date of
      (A)
      the sum of the value of all assets
      of
      the Company that would be valued by the Company in connection with a liquidation
      of the Company following
      the closing of
      the TACC
      Sale (after giving effect to such closing),
      including, but not limited to:
      (i) all
      cash and cash equivalents held by the Company, (ii) all marketable securities
      held by the Company, and (iii) all other remaining tangible and intangible
      assets held directly or indirectly by the Company, valued at fair market value,
      minus
      (B) the
      sum of (i) all fees and expenses of the Company and its subsidiaries in
      connection with the ATM Sale and the TACC Sale
      incurred
      through the Closing Date,
      (ii)
      all payments and obligations due to, or on behalf of, present and former
      employees of the Company and its subsidiaries
      incurred
      through the Closing Date,
      (iii)
      all amounts paid or payable to Seller pursuant to the Agreement Regarding NCR
      Transaction and Other Assets Sales dated as of November 26, 2004 by and between
      the Company and Seller, (iv) all other liabilities of the Company and its
      subsidiaries,
      (v)
      payments due to independent directors of the Company in an aggregate amount
      not
      to exceed $400,000, and (vi) a good faith estimate of the costs and expenses
      which would be incurred in connection with the liquidation of the Company
      including, without limitation, legal fees, directors and officers insurance,
      all
      fees and expenses relating to SEC and governmental filings and related expenses,
      by
      (2)
      the
      total number of shares of Common Stock outstanding on the Closing Date.
      Notwithstanding the foregoing, the Per Share Price shall not be less than $.20
      per share nor greater than $.34 per share. 

    

    
      
        
          
          

        

        
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    (c)         
       At
      least
      fifteen business days prior to the Closing Date the Company shall send a written
      notice to Seller with the Per Share Price, including (i) a certificate of an
      officer of the Company certifying that such Per Share Price was prepared in
      good
      faith and (ii) a statement setting forth the assets of the Company as of the
      date of determining the Per Share Price and their value, the number of shares
      used to calculate the Per Share Price and the Per Share Price; provided, that
      the Per Share Price shall comply with Section 2(b). The Seller shall notify
      the
      Company within five business days following giving of such notice whether it
      has
      any questions regarding the Per Share Price or the calculation. If the Seller
      does not notify the Company within such five business day period, the Seller
      shall be deemed to have no objection to the Per Share Price. If the Seller
      has
      any questions regarding the Per Share Price, the Seller shall notify the Company
      and may request such additional information regarding the calculation that
      it
      reasonably requires. The parties shall engage in good faith discussions
      regarding the Per Share Price. If the parties cannot reach an agreement on
      or
      prior to the Closing Date as to the Per Share Price, then subject to Section
      2(b), the Per Share Price shall be as determined by the Company, calculated
      in
      good faith.

    

    Section
      3. 
      Closing.
      The
      Closing (the “Closing”) of the purchase and sale of the Shares shall take place
      at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park
      Avenue Tower, 65 East 55 Street, New York, New York 10022 on such date (the
      “Closing Date”) that
      is
      the TACC
      Sale closing
      date.
      The
      Company shall give the Seller two (2) business days advance written notice
      of
      the Closing Date.

    

    Section
      4. 
Delivery
      and Transfer of the Shares.
      The
      transfer and sale of the Shares contemplated by this Agreement upon
      the
      Closing shall (A) in the case of Shares held of record and beneficially, be
      effectuated by the Seller delivering to the Company a certificate or
      certificates representing such Shares, duly endorsed for transfer or accompanied
      by appropriate stock powers duly executed, and any other documents necessary
      to
      transfer the Shares to the Company, and (B) in the case of Shares not
      represented by physical stock certificates, be
      effectuated by Seller delivering a
      letter
      of instruction (the "Instruction Letter") addressed to Seller's brokerage firm
      instructing such brokerage firm to cause the electronic delivery of the Shares
      held in street name through the Depository Trust Company (“DTC”) (or another
      established cleaing corporation performing similar functions) to an account
      designated in writing by the Company.
      The
      Seller agrees not to exercise the Warrants before the earlier of (x)
      March 31, 2006 and (y) the  date
      on
      which the Purchase Agreement (as defined in the Exercise Agreement) shall be
      terminated or deemed terminated .

    

    
      	 	
              Section
                5.

            	
              Conditions
                to Closing.

            

    

    

    (a)          
      Mutual
      Conditions.
      The
      obligations of the Seller and the Company to consummate the transactions
      contemplated by this Agreement are subject to the fulfillment or waiver on
      or
      before the Closing Date
      of
      the
      following conditions:

    

    (i)    
       No
      temporary restraining order, preliminary injunction or permanent injunction
      or
      other order or decree which prevents the consummation of the transactions
      contemplated by this Agreement shall have been issued and remain in effect,
      and
      no statute, rule or regulation shall have been enacted by any governmental
      entity which would prevent the consummation of the transactions contemplated
      by
      this Agreement.

    

    
      
        
          
          

        

        
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    (ii)      Any
      governmental or other approvals, reviews or consents of this Agreement and
      the
      transactions contemplated by this Agreement required including, but not limited
      to, under any applicable laws, statutes, regulations, orders, rules, policies
      or
      guidelines promulgated thereunder shall have been received or
      waived.

    

    (b)         
       Conditions
      to Obligations of the Company.
      The
      obligations of the Company to consummate the transactions contemplated by this
      Agreement are subject to the fulfillment or waiver on or before the Closing
      Date
      of
      the
      following conditions:

    

    (i)      The
      representations and warranties of the Seller contained in Section 6 hereof
      shall
      be true and correct in
      all
      material respects on
      the
      Closing
      Date
      with the
      same force and effect as though such representations and warranties had been
      made on and as of the Closing
      Date.

    

    (ii)      The
      TACC
      Sale shall have been consummated.

    

    (c)          
      Conditions
      to Obligations of the Seller.
      The
      obligations of the Seller to consummate the transactions contemplated by this
      Agreement are subject to the fulfillment or waiver on or before the Closing
      Date
      of
      the
      following conditions:

    

    (i)      The
      representations and warranties of the Company contained in Section 7 hereof
      shall be true and correct on the
      Closing
      Date
      with the
      same force and effect as though such representations and warranties had been
      made on and as of the Closing
      Date.

    

    (ii)     
      The
      TACC
      Sale shall have been consummated.

    

    Section
      6. 
Representations
      and Warranties of the Seller. The Seller represents and warrants to the
      Company as follows:

    

    (a)         
       Good
      Title.
      As of
      the Closing, Seller shall have good title to, the right to possession of and
      the
      right to sell the total number of Shares set forth on Schedule A hereto, free
      and clear of any pledges, liens, charges, encumbrances, proxies, options, rights
      to purchase or other restrictions or potentially adverse claims of any kind
      or
      nature (collectively, “Adverse Claims”), and concurrent with the Closing of this
      Agreement, the Seller will transfer such Shares to the Company free and clear
      of
      any Adverse Claims. 

    

    (b)         
       Corporate
      Organization; Requisite Authority to Conduct Business.
      Seller
      is a company
      duly
      organized, validly existing and in good standing under the laws of the
Cayman
      Islands.
      Seller
      has full corporate power and authority to enter into this Agreement, to perform
      its obligations hereunder and to consummate the transactions contemplated
      hereby; and no
      further action on the part of Seller is necessary to authorize the execution
      and
      delivery by it of, and the performance of its obligations under, this Agreement.
      There are no corporate, contractual, statutory or other restrictions of any
      kind
      upon the power and authority of Seller to execute and deliver this Agreement
      and
      to consummate the transactions contemplated hereunder and the
      Seller is not aware of any
      action,
      waiver or consent by any governmental
      entity that
      is
      necessary to make this Agreement a valid instrument binding upon Seller in
      accordance with its terms.

    

    
      
        
          
          

        

        
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    (c)         
       Execution
      and Delivery.
      This
      Agreement has been duly executed and delivered by the Seller and constitutes
      the
      legal, valid and binding obligations of the Seller, enforceable in accordance
      with its terms, except (i) as such enforceability may be limited by or subject
      to any bankruptcy, reorganization, moratorium or other similar laws affecting
      creditors’ rights generally, (ii) as such obligations are subject to general
      principles of equity, and (ii) as rights to indemnity may be limited by US
      federal or state securities laws or by public policy. 

    

    (d)         
       No
      Violation; Absence of Defaults.
      Neither
      the execution and delivery by the Seller of this Agreement, nor the consummation
      of the transactions contemplated hereby, will violate the Seller’s
      certificate of incorporation or by-laws or any
      judgment, award or decree or any indenture, agreement or other instrument to
      which the Seller is a party, or by which the Shares are bound or affected,
      or
      result in a breach of or constitute (with due notice or lapse of time or both)
      a
      default under any such indenture, agreement or other instrument, or result
      in
      the creation or imposition of any lien, charge or encumbrance of any nature
      whatsoever upon the Shares.

    

    (e)         
       Brokers’
      or Finders’ Fees.
      No
      broker, finder or investment banker is entitled to any brokerage or finder’s fee
      or other commission in connection with the transactions contemplated hereby
      based on the arrangements made by or on behalf of the Seller.

    

    (f)         
       Access
      to Information.
      The
      Seller acknowledges that it has had an opportunity to evaluate all information
      regarding the Company as it has deemed necessary or desirable in connection
      with
      the transactions contemplated by this Agreement, has independently evaluated
      the
      transactions contemplated by this Agreement and has reached its own decision
      to
      enter into this Agreement.

    

    Section
      7. 
Representations
      and Warranties of the Company. The Company hereby represents and warrants to
      the Seller as follows:

    

    (a)         
       Corporate
      Organization; Requisite Authority to Conduct Business.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware. The Company has full corporate power
      and authority to enter into this Agreement, to perform its obligations hereunder
      and to consummate the transactions contemplated hereby; and this Agreement
      has
      been duly authorized and approved by its Board of Directors and no further
      action on the part of the Company is necessary to authorize the execution and
      delivery by it of, and the performance of its obligations under, this Agreement.
      There are no corporate, contractual, statutory or other restrictions of any
      kind
      upon the power and authority of the Company to execute and deliver this
      Agreement and to consummate the transactions contemplated hereunder and no
      action, waiver or consent by any governmental entity
      is
      necessary to make this Agreement a valid instrument binding upon the Company
      in
      accordance with its terms.

    

    (b)         
       Execution
      and Delivery.
      This
      Agreement has been duly executed and delivered by the Company and constitutes
      a
      legal, valid and binding obligation of the Company, enforceable in accordance
      with its terms, except (i) as such enforceability may be limited by or subject
      to any bankruptcy, insolvency, reorganization, moratorium or other similar
      laws
      affecting creditors’ rights generally, (ii) as such obligations are subject to
      general principles of equity, and (iii) as rights to indemnity may be limited
      by
      US federal or state securities laws or by public policy.

    

    
      
        
          
          

        

        
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    (c)         
       No
      Violation; Absence of Defaults.
      The
      execution, delivery and performance of this Agreement by the Company and the
      consummation of the transactions contemplated hereby does not and will not
      violate (a) the Company’s certificate of incorporation or by-laws or (b) any
      agreement governing the organization, management, business or affairs of the
      Company or, in any material respect, any agreement or instrument which the
      Company may be a party or by which the Company (or any of its properties) is
      bound, or (c) any law,
      administrative regulation or rule or court order, judgment or decree applicable
      to the Company, nor will the execution and delivery of this Agreement or the
      consummation of the transactions contemplated hereby constitute a
      breach
      of, or any event of default under, any material contract or agreement to which
      the Company is bound, or by which the Company (or any of its properties) may
      be
      bound or affected. 

    

    (d)         
       Required
      Filings and Consents.
      Except
      as may be required by US federal or state securities laws, the Company is not
      required to submit any notice, report or other filing with any governmental entity
      in
      connection with the execution, delivery and performance of this Agreement.
      No
      Authorization of or from any governmental entity,
      or any
      other person, or under any statute, law, ordinance, rule, regulation or agency
      requirement of any governmental entity,
      on the
      part of the Company is required in connection with the execution and delivery
      of
      this Agreement and the performance by the Company of its obligations under
      this
      Agreement.

    

    (e)         
       Capitalization.
      The
      authorized capital stock of the Company consists of (i) 100,000,000 shares
      of
      Common Stock, of which 20,677,210 shares are outstanding on the date hereof
      and
      (ii) no shares of preferred stock. Except as set forth in Schedule
      7(e)
      hereto,
      there are no existing options, warrants, calls, preemptive (or similar) rights,
      subscriptions or other rights, agreements, arrangements or commitments of any
      character obligating the Company to issue, transfer or sell, or cause to be
      issued, transferred or sold, any shares of the capital stock of the Company
      or
      other equity interests in the Company or any securities convertible into or
      exchangeable for such shares of capital stock or other equity interests, and
      there are no outstanding contractual obligations of the Company to repurchase,
      redeem or otherwise acquire any shares of its capital stock or other equity
      interests. All of the issued and outstanding shares of the Company’s capital
      stock have been duly authorized and validly issued and are fully paid and
      nonassessable.

    

    (f)         
       Solvency
      Following Closing.
      Immediately following and after giving effect to the Closing, the fair market
      value of the Company’s assets will exceed its liabilities and the Company
      anticipates following due consideration of its financial position that its
      remaining cash will enable it to pay all of its liabilities and obligations
      which have arisen on or prior to the Closing as they become due and payable.
      The
      Company agrees to pay all of its liabilities and obligations which have arisen
      on or prior to the Closing as they become due and payable. 

    

    (g)         
       Access
      to Information.
      During
      the period from the date of this Agreement and continuing until the earlier
      of
      (i) the termination of this Agreement pursuant to the provisions of Section
      9
      and (ii) the Closing, upon reasonable notice, the Company shall give Seller
      and
      its officers, appropriate employees, accountants, and counsel full access,
      during normal business hours, to all buildings, offices, and other facilities
      and to all books and records of the Company, whether located on the premises
      of
      the Company or at another location.

    

    
      
        
          
          

        

        
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    (h)         
       Brokers’
      or Finders’ Fees.
      No
      broker, finder or investment banker is entitled to any brokerage or finder’s fee
      or other commission in connection with the transactions contemplated hereby
      based upon the arrangements made by or on behalf of the Company.

    

    
      	 	
              Section
                8.

            	
              Indemnification.

            

    

    

    (a)         
       Indemnification
      by the Company.
      Subject
      to the limits set forth in this Section 8, the
      Company
      agrees
      to indemnify, defend and hold the Seller,
      and
      its
      directors,
      officers,
      agents,
      partners, members, and their respective successors and assigns (collectively,
      the “Seller Parties”),
      harmless
      from and against any and all loss, liability, damage, costs and expenses
      (including interest, penalties and attorneys’ fees) that
      any
      of
the
      Seller Parties
      may
      incur or become subject to arising out of or due to any inaccuracy of any
      representation or the breach of any warranty or covenant of the Company
      contained in this Agreement. The Company
      will
      reimburse
      each
of
      the
      Seller Parties for any legal or other expenses reasonably incurred by them
      in
      connection with investigating or defending any such loss, claim, liability,
      action or proceeding.

    

    (b)         
       Indemnification
      by the Seller.
      Subject
      to the limits set forth in this Section 8, the Seller agrees to indemnify,
      defend and hold the Company, and its directors, officers, agents, partners,
      members, and their respective successors and assigns (collectively, the “Company
      Parties”), harmless from and against any and all loss, liability, damage, costs
      and expenses (including interest, penalties and attorneys’ fees) that any of the
      Company Parties may incur or become subject to arising out of or due to any
      inaccuracy of any representation or the breach of any warranty or covenant
      of
      the Seller contained in this Agreement. The Seller will reimburse each of the
      Company Parties for any legal or other expenses reasonably incurred by them
      in
      connection with investigating or defending any such loss, claim, liability,
      action or proceeding.

    

    (c)         
       Survival.
      The
      representations, warranties and covenants of the Seller and the Company set
      forth in this Agreement shall survive the Closing Date
      until the first anniversary of the Closing Date, except in the case of Section
      7(e), which shall survive until 180 days after the applicable statute of
      limitations.

    

    (d)         
       Third
      Party Claims.
      In
      order for a party (the “indemnified party”) to be entitled to any
      indemnification provided for under this Agreement in respect of, arising out
      of,
      or involving a claim or demand or written notice made by any third party against
      the indemnified party (a “Third Party Claim”) after the date hereof, such
      indemnified party must notify the indemnifying party (the “indemnifying party”)
      in writing of the Third Party Claim within 30 business days after receipt by
      such indemnified party of written notice of the Third Party Claim; provided
      that
      the failure of any indemnified party to give timely notice shall not affect
      his
      right of indemnification hereunder except to the extent the indemnifying party
      has actually been prejudiced or damaged thereby. If
      a
      Third Party Claim is made against an indemnified party, the indemnifying party
      shall be entitled, if it so chooses, to assume the defense thereof with counsel
      selected by the indemnifying party (which counsel shall be reasonably
      satisfactory to the indemnified party). If the indemnifying party assumes the
      defense of a Third Party Claim, the indemnified party will cooperate in all
      reasonable respects with the indemnifying party in connection with such defense,
      and shall have the right to participate in such defense with counsel selected
      by
      it; provided
      that
      the fees
      and disbursements of such counsel shall be at the expense of the indemnified
      party; and provided
      further
      that, if
      the defendants in any Third Party Claim include both the indemnified party
      and
      the indemnifying party and the indemnified party shall have reasonably concluded
      that the interests of the indemnified party reasonably may be deemed to conflict
      with the interests of the indemnifying party, the indemnified party shall have
      the right to select one separate counsel and to assume such legal defenses
      and
      otherwise to participate in the defense of such action, with the reasonable
      expenses and fees of such separate counsel and other expenses related to such
      participation to be reimbursed by the indemnifying party as
      incurred

    

    
      
        
          
          

        

        
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    Except
      as
      otherwise provided herein, the indemnified party will not, except at its own
      cost and expense, settle or compromise any Third Party Claim for which it is
      entitled to indemnification hereunder without the prior written consent of
      the
      indemnifying party, which will not be unreasonably withheld.

    

    
      	 	
              Section
                9.

            	
              Termination.

            

    

    

    (a)         
       Termination
      by the Company.
      This
      Agreement may be terminated and canceled prior to the Closing Date by the
      Company: (i) if (A) any of the representations and warranties of the Seller
      contained in this Agreement shall prove to be inaccurate in any material respect
      or any covenant, obligation or condition to be performed or observed by the
      Seller under this Agreement has not been performed or observed in any material
      respect at or prior to the time specified in this Agreement and (B) such
      inaccuracy or failure shall not have been cured or waived by the Company within
      five (5) business days after such inaccuracy or failure shall have first been
      discovered, (ii) if any permanent injunction or other order of a governmental
      entity having proper authority preventing consummation of the transactions
      contemplated by this Agreement shall have become final and non-appealable,
      or
      (iii) so long as the Company is not in material breach of any representation,
      warranty, covenant or agreement, if the Closing has not occurred by March 31,
      2006.

    

    (b)         
       Termination
      by the Seller.
      This
      Agreement may be terminated and canceled prior to the Closing Date by the
      Seller: (i) if (A) any of the representations and warranties of the Company
      contained in this Agreement shall prove to be inaccurate in any material respect
      or any covenant, obligation or condition to be performed or observed by the
      Company under this Agreement has not been performed or observed in any material
      respect at or prior to the time specified in this Agreement and (B) such
      inaccuracy or failure shall not have been cured or waived by the Seller within
      five (5) business days after such inaccuracy or failure shall have first been
      discovered, (ii) if any permanent injunction or other order of a governmental
      entity having proper authority preventing consummation of the transactions
      contemplated by this Agreement shall have become final and non-appealable,
      or
      (iii) so long as the Seller is not in material breach of any representation,
      warranty, covenant or agreement, if the Closing has not occurred by March 31,
      2006.

    
      

      
        	 	
                Section
                  10.

              	Covenants.

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

     

    (a)         
       Transfer
      of Shares.
      From the
      date hereof until the earlier of the Closing Date or the termination pursuant
      to
      Section 9 (the “Termination Date”), the Seller hereby agrees that it shall not,
      directly or indirectly, sell, assign, transfer, encumber, pledge or otherwise
      dispose of, or enter into any contract, option or other agreement, arrangement
      or understanding with respect to the direct or indirect sale, assignment,
      transfer, encumberance, pledge or other disposition of, any of the Shares;
      provided, however, that the Seller may sell or otherwise assign, with or without
      consideration, an unlimited amount of the Shares to any affiliate, member or
      limited or general partner of the Seller or such affiliate if each such
      transferee or assignee, prior to the completion of the sale, transfer or
      assignment shall have executed and delivered to the Company documents assuming
      the obligations of the Seller under this Agreement with respect to the
      transferred securities, such documents to be satisfactory to the Company in
      its
      reasonable discretion. The Seller hereby agrees it shall not seek or solicit
      any
      sale, assignment transfer, encumbrance, pledge or other disposition of the
      Shares to any other person other than its affiliates and agrees to notify the
      Company promptly (but in any event, within 24 hours), and it and its affiliates
      shall provide all details requested by the Company, if the Seller shall be
      approached or solicited, directly or indirectly, by any person with respect
      to
      any of the foregoing.

    

    (b)         
       Company
      Actions. Except as contemplated by this Agreement, between the date of this
      Agreement and the Closing Date, the Company shall and shall cause it
      subsidiaries to conduct their business in the ordinary course and use their
      best
      efforts to preserve substantially intact its business organization and assets
      and not incur any additional liabilities (subject to and in light of its plans
      to sell its cash security business). In addition, except as otherwise expressly
      provided in this Agreement, between the date of this Agreement and the Closing
      Date and except to the extent required by the asset purchase agreement to be
      entered into in respect of the TACC Sale, the Company shall not and shall cause
      its subsidiaries not to:

    

    (i)      amend
      their articles or certificate of incorporation or by-laws, other than to change
      the name of the Company as required in connection with the TACC
      Sale;

    

    (ii)      issue,
      sell or otherwise dispose of any of their capital stock, or create or suffer
      to
      be created any Adverse Claims thereon, or reclassify, split up or otherwise
      change any of their capital stock, or grant or enter into any options, covenants
      or calls or other rights to purchase or convert any obligation into any of
      their
      capital stock;

    

    (iii)     organize
      any subsidiary or acquire any capital stock of any Person or any equity or
      ownership interest in any business (other than portfolio investments in
      marketable securities);

    

    (iv)    
      incur
      or
      guarantee any indebtedness for borrowed money other than up to $1,250,000 of
      indebtedness incurred in connection with the fulfillment of the Company's
      obligations under contracts related to the TACC business;

    

    (v)      make
      or
      grant increases in salaries, bonuses, severance or other remuneration to any
      employee;

    

    (vi)     declare
      or pay any dividend or make any other payment or distribution in respect of
      their capital stock; or

    

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    

    (vii)   make
      any
      commitment for capital expenditures or capital additions or
      improvements.

    
      

      
        	 	
                Section
                  11.

              	Miscellaneous.

      

    

    

    (a)         
       Expenses.
      Each
      party shall pay its own costs and expenses incurred in connection with this
      Agreement and the transactions contemplated hereby.

    

    (b)         
       Notices.
      All
      notices, requests, demands and other communications which are required or may
      be
      given under this Agreement shall be in writing and shall be deemed to have
      been
      duly given when delivered personally or by facsimile transmission, in either
      case with receipt acknowledged, or five days after being sent by registered
      or
      certified mail, return receipt requested, postage prepaid, or one day after
      being sent by nationally-recognized overnight carrier:

    

    
      
        	 	
                (i)

              	
                If
                  to the Company to:

              

      

      
        	 	 	 

      

      
        	 	 	Tidel
                Technologies, Inc.

      

      
        	 	 	2900
                Wilcrest Drive, Suite 205

      

      
        	 	 	Houston,
                Texas 77042

      

      
        	 	 	Attention:
                Chairman of the Board

      

      
        	 	 	
              

      

      
        	 	 	with
                a copy to:

      

      
        	 	 	
              

      

      
        	 	 	Olshan
                Grundman Frome Rosenzweig & Wolosky
                LLP

      

      
        	 	 	Park
                Avenue Tower

      

      
        	 	 	65
                East 55th Street

      

      
        	 	 	New
                York, New York 10022

      

      
        	 	 	Attention:
                Adam W. Finerman, Esq.

      

      
        	 	 	 

      

    

    
      
        	 	
                (ii)

              	
                If
                  to the Seller, to:

              

      

      
        	 	 	 

      

      
        	 	 	Laurus
                Master Fund, Ltd.

      

      
        	 	 	M
                & C Corporate Services Limited

      

      
        	 	 	P.O.
                Box 309 G.T., Ugland House

      

      
        	 	 	South
                Church Street

      

      
        	 	 	George
                Town

      

      
        	 	 	Grand
                Cayman, Cayman Islands

      

      
        	 	 	Attention:
                Authorized Person

      

      
        	 	 	 

      

      
        	 	 	with
                a copy to:

      

      
        	 	 	 

      

      
        	 	 	Lowenstein
                Sandler PC

      

      
        	 	 	1251
                Avenue of the Americas

      

      
        	 	 	New
                York, New York 10020

      

      
        	 	 	Attn:
                Steven E. Siesser, Esq.

      

    

     

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

    

    or
      to
      such other address as any party shall have specified by notice in writing to
      the
      other in compliance with this Section 10.

    

    (c)          
      Entire
      Agreement.
      This
      Agreement, including the schedules hereto, constitutes the entire agreement
      among the parties hereto with respect to the subject matter hereof and thereof
      and supersedes all prior agreements, representations and understandings among
      the parties hereto.

    

    (d)         
      Binding
      Effect, Benefits, Assignments.
      This
      Agreement shall inure to the benefit of and be binding upon the parties hereto
      and their respective successors and assigns; nothing in this Agreement,
      expressed or implied, is intended to confer on any other person, other than
      the
      parties hereto or their respective successors and assigns, any rights, remedies,
      obligations or liabilities under or by reason of this Agreement. This Agreement
      may not be assigned without the prior written consent of the other parties
      hereto.

    

    (e)         
       Applicable
      Law.
      This
      Agreement and the legal relations between the parties hereto shall be governed
      by and construed in accordance with the laws of the State of New York, without
      regard to principles of conflicts of law.

    

    (f)         
       Jurisdiction.
      Unless
      otherwise provided herein, the parties hereto agree to submit to the
      jurisdiction of any Federal or state court located in the State of New
      York,
      County
      of New York,
      for the
      purpose of resolving any action or claim arising out of the performance of
      the
      provisions of this Agreement.

    

    (g)         
       Headings.
      The
      headings and captions in this Agreement are included for purposes of convenience
      only and shall not affect the construction or interpretation of any of its
      provisions.

    

    (h)        
       Counterparts.
      This
      Agreement may be executed simultaneously in two or more counterparts, each
      of
      which shall be deemed an original, but all of which together shall constitute
      one and the same instrument.

    

    (i)          
       Further
      Assurances.
      At, and
      from time to time after the date hereof, at the request and expense of the
      Company
      but
      without further consideration, Seller will execute and deliver such other
      instruments of conveyance, assignment, transfer, and delivery and take such
      other action as the Company reasonably may request in order more effectively
      to
      convey, transfer, assign and deliver to the Company, and to place the Company
      in
      possession and control of the Shares.

    

    (j)           
      Limitation
      on Liability.
      Notwithstanding anything herein contained to the contrary, in no event shall
      the
      Seller or any of the Seller Parties have any liability hereunder or with respect
      to the transactions contemplated hereby in excess of the Purchase Price received
      by the Sellers hereunder.

    

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year hereinabove first set forth.

    

    
      	 	
              TIDEL
                TECHNOLOGIES, INC.

            
	 	 	 	 
	 	 	 	 
	 	
              By:

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

            	 
	 	 	
              Title:
                Director

            	 
	 	 	 	 
	 	
              LAURUS
                MASTER FUND, LTD.

            
	 	 	 	 
	 	
              By:

            	 /s/
              Eugene Grin	 
	 	 	
              Name:
                Eugene Grin

            	 
	 	 	
              Title:
                Director

            	 

    

    

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    

    Schedule
      A

    

    CURRENT
      SHARES:
      1,251,000
      shares

    

    

    NEW
      SHARES:

    
      	 	 	
              Amount
                to be converted

            	 	
              Conversion
                Price

            	 	
              Number
                of New Shares into which Note is convertible into

            	 
	
              2003
                Note. $5,917,987.50 principal amount was outstanding as of December
                31,
                2005.

            	 	
              $

            	
              5,400,000

            	 	
              $

            	
              .30

            	 	 	
              18,000,000

            	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	
              TOTAL
                NEW SHARES

            	 	 	 	 	 	 	 	 	
              18,000,000

            	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

    

    
 

    TOTAL
      SHARES:
      19,251,000

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Schedule
      7(e)

    Capitalization

     

    
      	 	
              1.

            	
              Debt
                issued by the Company in favor of the Seller and convertible in Company
                common stock pursuant to the terms
                thereof.

            

    

    
      	 	
              2.

            	
              Warrants
                for 4,750,000 shares of Company common stock issued to
                Seller.

            

    

    
      	 	
              3.

            	
              Warrants
                granted to persons other than Seller in the aggregate amount of 1,140,000
                shares of Company common stock, exercisable at various exercise
                prices.

            

    

    
      	 	
              4.

            	
              Options
                granted to employees at various exercise prices pursuant to the Company’s
                1997 Long-Term Incentive Plan in the aggregate amount of 1,100,560
                shares
                of Company common stock.

            

    

    
      	 	
              5.

            	
              Reserve
                for grants pursuant to the Company’s 1997 Long-Term Incentive Plan in the
                aggregate amount of 944,643 shares of Company common
                stock.Exhibit 10.5

    
      

    

    Exhibit
      10.5

     

    REAFFIRMATION,
      RATIFICATION AND CONFIRMATION AGREEMENT

    

    January
      12, 2006

    

    Laurus
      Master Fund, Ltd.

    c/o
      Laurus Capital Management LLC

    825
      Third
      Avenue

    New
      York,
      New York 10022

    

    Ladies
      and Gentlemen:

    

    Reference
      is made to the Agreement Regarding NCR Transaction and Other Asset Sales, dated
      as of November 26, 2004 (as amended, modified or supplemented from time to
      time,
      the “NCR Agreement”), by and between Tidel Technologies, Inc., a Delaware
      corporation (the “Company”), and Laurus Master Fund, Ltd., a Cayman Islands
      company (“Laurus”).

    

    To
      induce
      Laurus to enter into (a) the Exercise and Conversion Agreement, dated as of
      the
      date hereof, among Sentinel Technologies, Inc. (“STI”), Sentinel Operating,
      L.P., a Texas limited partnership and an affiliate of STI (“Sentinel”), the
      Company and Laurus, (b) the Voting Agreement, dated as of the date hereof,
      among
      STI, Sentinel, the Company and Laurus, and (c) the Stock Redemption Agreement,
      dated as of the date hereof, by and between the Company and Laurus, the
      undersigned hereby: 

    

    (a)     acknowledges,
      ratifies and confirms that all of the terms, conditions, representations and
      covenants contained in the NCR Agreement are in full force and effect and shall
      remain in full force and effect prior to and after the consummation and closing
      of the transactions contemplated by that certain Asset Purchase Agreement,
      dated
      as of the date hereof (the “Asset Purchase Agreement”), by and among Sentinel,
      the Company and Tidel Engineering, L.P.; 

    

    (b)     acknowledges,
      ratifies and confirms that the Reorganization Fee (as defined in the NCR
      Agreement) and all other obligations due and owing from the Company to Laurus
      under the NCR Agreement are secured by the collateral granted by the Company
      and
      its subsidiaries to Laurus under any and all security agreements and pledge
      agreements at any time entered into by the Company and/or any such subsidiaries
      in favor of Laurus; and

    

    (c)     acknowledges,
      ratifies and confirms that the Company shall be obligated to pay to Laurus
      (the
“Payment”) simultaneously with the consummation and closing of the transactions
      contemplated by the Asset Purchase Agreement (the “Closing”), the amounts
      payable pursuant to Section 4 of the NCR Agreement based upon the calculation
      set forth therein. The calculation, based on estimates known on the date hereof,
      is set forth on Exhibit A hereto. For avoidance of doubt, the amount of the
      actual payment shall be re-calculated based upon the actual closing numbers.
      In
      no event shall such payment be less than $5,000,000 or greater than
      $11,000,000.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      agreement may be executed by facsimile signatures and in any number of
      counterparts, each of which shall be an original, but all of which together
      shall constitute one agreement.

     

    [The
      remainder of this page intentionally left blank.]

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    This
      agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York.

    

    

    
      	 	
              Very
                truly yours,

            
	 	 
	 	
              TIDEL
                TECHNOLOGIES, INC.

            
	 	 	 
	 	
              By:

            	 /s/
              Jerrell G. Clay
	 	
              Name:

            	 Jerrell
              G. Clay
	 	
              Title:

            	 Director
	 	Address: 	
              2900
                Wilcrest Drive, Suite 205 

            
	 	 	
              Houston,
                Texas 77042 

            

    

    

    

    
      	
              ACCEPTED
                AND AGREED TO:

            	 
	 	 
	
              LAURUS
                MASTER FUND, LTD.

            	 
	 	 
	
              By:

            	 /s/
              Eugene Grin	 
	
              Name:

            	 Eugene
              Grin	 
	
              Title:

            	 Director	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      EXHIBIT
        A

    

    

      
        	
                NCR
                  sales price

              	 	 	 	 	
                $

              	
                10,175,000

              	 
	
                Add:
                  adjustment for 2 key employees

              	 	 	 	 	
                $

              	
                260,000

              	 
	
                Plus:
                  net asset adjustment

              	 	 	 	 	 	 	 
	
                NET
                  ASSETS

              	 	 	
                6,400,000
                  

              	 	 
	
                 
                  

              	 
	
                EXCESS
                  OF 6.825 OR LESS OF 6.175

              	 	 	
                (6,825,000

              	
                )

              	
                $

              	
                -

              	 
	 	 	 	 	 	 
	
                 
                  

              	 
	
                Total
                  Sale Price

              	 	 	 	 	
                $

              	
                10,435,000

              	 
	
                Less:

              	 	 	 	 	 	 	 
	
                Purchase
                  Price Holdback

              	 	 	 	 	 	
                (500,000

              	
                )

              
	
                Hudson
                  bonus

              	 	 	 	 	 	
                (175,000

              	
                )

              
	
                Moving
                  allowance for TACC

              	 	 	 	 	 	
                (250,000

              	
                )

              
	
                Adjustment
                  for key employees

              	 	 	 	 	 	
                (260,000

              	
                )

              
	
                Fairness
                  opinion

              	 	 	 	 	 	
                (150,000

              	
                )

              
	
                Legal
                  fees

              	 	 	 	 	 	
                (250,000

              	
                )

              
	
                Total
                  NCR Net Proceeds

              	 	 	 	 	 	
                8,850,000
                  

              	 
	 	 	 	 	 	 	 	 
	
                TACC
                  sales price

              	 	 	 	 	
                $

              	
                17,500,000

              	 
	
                Plus:
                  working capital est 12-31 BS

              	 	 	 	 	 	 	 
	
                CURRENT
                  ASSETS

              	 	 	
                3,890,801
                  

              	 	 	 	 
	
                LIABILITIES

              	 	 	
                (4,298,113

              	
                )

              	 	 	 
	 	 	 	 	 	 	
                (407,312

              	
                )

              
	
                Less:

              	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
                Legal
                  allowance - patent lawsuit

              	 	 	 	 	 	
                (100,000

              	
                )

              
	
                Taxes

              	 	 	 	 	 	
                (75,000

              	
                )

              
	
                Fairness
                  opinion

              	 	 	 	 	 	
                (75,000

              	
                )

              
	
                Legal
                  fees

              	 	 	 	 	 	
                (250,000

              	
                )

              
	
                Banking
                  fees

              	 	 	 	 	 	 	 
	
                Consulting
                  fees /other

              	 	 	 	 	 	
                (220,000

              	
                )

              
	
                Stay
                  bonuses

              	 	 	 	 	 	 	 
	
                Employee
                  contract payouts/settlements

              	 	 	 	 	 	
                (750,000

              	
                )

              
	
                Total
                  TACC Net Proceeds

              	 	 	 	 	 	
                15,622,688
                  

              	 
	 	 	 	 	 	 	 	 
	
                Total
                  Net Proceeds

              	 	 	 	 	
                $

              	
                24,472,688

              	 
	 	 	 	 	 	 	 	 
	
                Payment
                  To Laurus due to NCR Purchase Price Holdback 

              	
                $

              	
                283,500

              	 
	
                Payment
                  to Laurus

              	 	 	 	 	
                $

              	
                9,755,065

              	 
	
                TOTAL

              	 	 	 	 	
                $

              	
                10,038,565

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]