Document:

Exhibit 10.2

    
      

    

    Exhibit
      10.2

    EXERCISE
      AND CONVERSION AGREEMENT

    

    THIS
      EXERCISE AND CONVERSION AGREEMENT is made and entered into as of this
      12th
      day of
      January, 2006 (the “Agreement”) by and among Sentinel Technologies, Inc., a
      Delaware corporation (“STI”); Sentinel Operating, L.P., a Texas limited
      partnership and an affiliate of STI (“Sentinel”); Tidel Technologies, Inc., a
      Delaware corporation (the “Company”); and Laurus Master Fund, Ltd., a Cayman
      Island company (the “Security Holder”). Capitalized terms used but not defined
      herein shall have the meanings ascribed to such terms in the Purchase Agreement
      (defined below).

    

    RECITALS

    

    A.     Prior
      to
      or contemporaneously with the execution and delivery of this Agreement,
      Sentinel, the Company and Tidel Engineering, L.P., a Delaware limited
      partnership and an affiliate of the Company (“Engineering”), are entering into
      an Asset Purchase Agreement, dated as of dated the date hereof (the “Purchase
      Agreement”), which provides that, upon the terms and subject to the conditions
      set forth therein, Sentinel will purchase the assets of Division from the
      Company and Engineering (the “Transaction”).

    

    B.     In
      connection with the Transaction, and subject to the terms and conditions of
      this
      Agreement, Security Holder has agreed to convert on or prior to the record
      date
      (the “Record Date”) $5,400,000 (the “Conversion Amount”) of the outstanding
      principal amount of the Note (as hereafter defined) into fully paid and
      nonassessable shares of the Company’s common stock (the “Common Stock”) in
      accordance with the terms of the Note. For purposes hereof, the term “Note”
means the Convertible Term Note in the initial principal amount of $6,450,000,
      dated November 25, 2003 together with an additional $292,987 principal amount
      added thereto on November 26, 2004, made by the Company in favor of the
      Seller. For the avoidance of doubt, the parties hereto hereby acknowledge that
      the Security Holder is not hereby agreeing to exercise any warrants issued
      by
      the Company in favor of the Security Holder nor to convert into Common Stock
      any
      amounts owing by the Company to the Security Holder under the Convertible Term
      Note in the initial principal amount of $600,000 dated November 26, 2004 made
      by
      the Company in favor of the Security Holder.

    

    C.     As
      a
      condition to their willingness to enter into the Purchase Agreement, Sentinel
      has requested that the Security Holder enter into this Agreement.

    

    D.    In
      order
      to induce Sentinel to enter into the Purchase Agreement, the Security Holder
      is
      willing to enter into this Agreement. 

    

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual covenants and
      agreements herein contained, and intending to be legally bound hereby, the
      parties hereto hereby agree as follows:

    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    ARTICLE
      I

    

    EXERCISE,
      CONVERSION AND VOTING AGREEMENT

    

    
      	 	
              1.1.

            	
              Exercise
                and Conversion Agreement.
                

            

    

    

    Subject
      to the satisfaction of the conditions in Section 1.2 of this Agreement, no
      more
      than three business days prior to the Record Date, but in any event no later
      than the Record Date, the Security Holder shall convert into Common Stock an
      aggregate principal amount of the Note at least equal to the Conversion Amount
      (pursuant to the terms thereof). The Company agrees that, as of a time
      immediately prior to the date the Security Holder converts the Conversion Amount
      of the Note, it shall and does waive, if any, any provision of any agreement,
      contract, arrangement or document entered into by the Company and any of its
      affiliates and the Security Holder pursuant to which the Security Holder and
      any
      of its affiliates is restricted from converting the Conversion Amount of the
      Note, but only to the extent required for the Security Holder to convert the
      Conversion Amount of the Note. Subject to the terms of this Agreement, Company
      shall give effect to the conversion of the Note in accordance with the terms
      of
      the Note. The Company hereby waives any requirement for notice of conversion,
      if
      any, set forth in any provision of any agreement, contract, arrangement or
      document entered into by the Company and any of its affiliates and the Security
      Holder.

    

    
      	 	
              1.2.

            	
              Conditions
                to Exercise of Warrants and Conversion of
                Notes.

            

    

    

    Security
      Holder shall have no obligation to convert the Conversion Amount of the Note
      unless:

    

    (a)     the
      Record Date has been set as no later than January 13, 2006;

    

    (b)     the
      Security Holder has been notified in writing of the Record Date at least five
      business days prior to such Record Date;

    

    (c)     the
      disinterested members of the Board of Directors of the Company shall have
      approved the convening of a special meeting of the stockholders of the Company
      for the purpose of approving the Purchase Agreement and the transactions
      contemplated thereby (the “Meeting”) and authorized its directors to deliver a
      proxy statement (the “Parent Proxy Statement”) relating to the Meeting in
      accordance with Section 14 of the Securities and Exchange Act of 1934, as
      amended (the “Exchange Act”), to its security holders;

    

    (d) 
   the
      Security Holder shall have received a fully executed copy of the Purchase
      Agreement in form and substance as attached hereto as Exhibit
      A;
      

    

    (e)    the
      Security Holder shall have received a fully executed copy of the Voting
      Agreement, dated as of the date hereof, by and among the Company, STI, Sentinel;
      Mark K. Levenick; Jerrell G. Clay; Raymond P. Landry; Stephen P. Griggs; Robert
      D. Peltier; M. Flynt Moreland; and Troy D. Richard (the “Management Voting
      Agreement”);

    

    (f)     the
      Security Holder shall have received a copy of the fairness opinion to be issued
      in connection with the transactions contemplated by the Purchase Agreement
      in
      form and substance reasonably satisfactory to the Security Holder, which
      fairness opinion Security Holder shall be entitled to rely
      upon;

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (g)     the
      Security Holder shall have received a fully executed copy of the Stock
      Redemption Agreement, dated as of the date hereof, between the Company and
      the
      Security Holder (the “Stock Redemption Agreement”); and

    

    (h)    the
      Security Holder shall have received a fully executed copy of the Reaffirmation,
      Ratification and Confirmation Agreement, dated as of the date hereof, from
      the
      Company and addressed to the Security Holder acknowledging, ratifying and
      confirming the matters set forth therein (the “Reaffirmation
      Agreement”).

    

    ARTICLE
      II

    REPRESENTATIONS
      OF THE SECURITY HOLDER

    

    The
      Security Holder hereby represents to STI and Sentinel as follows:

    

    
      	 	
              2.1.

            	
              Due
                Authorization, Etc. 

            

    

    

    This
      Agreement has been duly authorized, executed and delivered by the Security
      Holder and constitutes the legal, valid and binding obligations of the Security
      Holder, 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 and(ii)
      as such obligations are subject to general principles of equity. Security Holder
      hereby acknowledges that it is the holder of the Note and has not assigned
      the
      Note to any other party.

    

    ARTICLE
      III 

    REPRESENTATIONS
      OF THE COMPANY, ENGINEERING, SENTINEL AND STI

    

    Each
      of
      the Company, Engineering, STI and Sentinel (collectively, the “Undersigned”)
      hereby represents to the Security Holder as to itself,
      individually:

    

    
      	 	
              3.1.

            	
              Due
                Authorization, Etc.

            

    

    

    This
      Agreement has been duly authorized, executed and delivered by such Undersigned
      and constitutes a legal, valid and binding obligation of such Undersigned,
      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 and (ii)
      as such obligations are subject to general principles of equity.

    

    ARTICLE
      IV

    COVENANTS

    

    
      	 	
              4.1.

            	
              Covenants
                of the Company.

            

    

    

    The
      Company shall:

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (a)     set
      a
      Record Date that is no later than January 13, 2006;

    

    (b)     notify
      the Security Holder in writing of the Record Date at least five business days
      prior to such Record Date;

    

    (c)     have
      taken, or shall have caused to be taken, all appropriate action on the part
      of
      each of the Company, Engineering, STI and Sentinel to effectuate the Transaction
      and evidence of such actions shall be provided to the reasonable satisfaction
      of
      Security Holder; 

    

    (d)     the
      Company shall give effect to the conversion of the Note in accordance with
      the
      terms thereof and promptly deliver to the Security Holder stock certificate(s)
      representing shares of Common Stock in an amount equal to conversion of the
      Note
      up to the Conversion Amount (collectively, the “Shares”); 

    

    (e)     cause
      its
      Board of Directors to call the Meeting and authorize its directors to deliver
      the Parent Proxy Statement relating to the Meeting to its security
      holders;

    

    (f)    file
      a
      preliminary Parent Proxy Statement with
      the
      Securities and Exchange Commission in accordance with Section 14 of the Exchange
      Act;

    

    (g)    mail
      the
      definitive Parent Proxy Statement to the
      stockholders of the Company holding as of the Record Date on or prior to
      February 28, 2006 (the “Mailing Date”); and

    

    (h)    provide
      the Security Holder with an affidavit of mailing from the person mailing such
      definitive Parent Proxy Statement to the stockholders of the Company within
      two
      business days of mailing the definitive Parent Proxy Statement.

    

    ARTICLE
      V

    REDEMPTION
      UPON TERMINATION DATE

    

    
      	 	
              5.1.

            	
              Redemption
                Upon Termination Date.

            

    

    

    The
      Company hereby acknowledges that Security Holder is converting the Note in
      reliance upon the covenants of the Company in Article IV hereof, and therefore
      agrees that if the Transaction has not been consummated by March 31, 2006 (the
      “Termination Date”), the Company shall immediately redeem the Shares issued upon
      conversion of the Note for cash in an amount equal to the sum of the Conversion
      Amount (the “Redemption Amount”). At any time, on or after March 31, 2006, the
      Security Holder is hereby authorized to apply the Collateral Deposit (as defined
      in the Cash Collateral Agreement) to the payment of the Redemption Amount due
      and owing to Security Holder pursuant to the terms hereof. The Company and
      Engineering further agree that the Redemption Amount and all other obligations
      hereunder shall be secured by the collateral granted under each security
      agreement entered into between the Security Holder and/or the Company,
      Engineering and any of their affiliates including, without limitation, the
      Cash
      Collateral Agreement. The obligations and agreements of any party under this
      Section 5.1 shall survive the termination of this Agreement.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    ARTICLE
      VI

    INDEMNIFICATION

    

    
      	 	
              6.1.

            	
              Indemnification.

            

    

    

    Each
      of
      the parties hereby indemnifies and holds each other party and its directors,
      officers, employees, agents and stockholders (collectively, the “Indemnitees”)
      harmless against and in respect of any and all Damages (as defined herein)
      that
      any Indemnitee actually suffers or incurs as a result of a breach by such party
      of any of the representations set forth herein. As used in this Agreement,
      the
      term “Damages” shall include, as to any Indemnitee, any loss, damage, injury,
      liability, charge, cost or expense of any nature actually incurred (including
      reasonable attorneys’ and accountants’ fees), paid, suffered or borne by such
      Indemnitee as a result of a breach by such party of any of the representations
      set forth herein.

    

    ARTICLE
      VII

    MISCELLANEOUS

    

    
      	 	
              7.1.

            	
              Termination.
                

            

    

    

    Subject
      to Section 5.1 hereof, this Agreement shall terminate automatically and without
      any action of any of the parties hereto and be of no further force and effect
      upon the earlier to occur of: (i) the Termination Date; (ii) the written mutual
      consent of the parties hereto, (iii) the failure of any party to comply with
      the
      conditions set forth in Section 1.2 which such failure shall have not been
      satisfied or waived by the Security Holder on or prior to the Record Date,
      or
      (iv) the Expiration Date (as defined below). No such termination of this
      Agreement shall relieve any party hereto from any liability for any breach
      of
      this Agreement prior to termination or from any obligation pursuant to a notice
      delivered on or before the date of such termination. As used herein, the
“Expiration Date” shall mean the earlier to occur of (a) the occurrence of the
      closing of the transactions contemplated by the Purchase Agreement or (b) the
      termination of the Purchase Agreement according to its terms.

    

    
      	 	
              7.2.

            	
              Further
                Assurance. 

            

    

    

    From
      time
      to time, at the request of another party hereto and without consideration,
      each
      party hereto shall execute and deliver such additional documents and take all
      such further action as may be necessary or desirable to consummate and make
      effective, in the most expeditious manner practicable, the transactions
      contemplated by this Agreement.

    

    
      	 	
              7.3.

            	
              Certain
                Events; Successors. 

            

    

    

    Each
      party agrees that this Agreement and each party’s obligations hereunder shall be
      binding upon any person or entity which legally succeeds any party hereto or
      to
      which legal or beneficial ownership of the Shares shall pass, whether by
      operation of law or otherwise, including, without limitation, any party’s
      successors or assigns. 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      	 	
              7.4.

            	
              No
                Waiver. 

            

    

    

    The
      failure of any party hereto to exercise any right, power, or remedy provided
      under this Agreement or otherwise available in respect hereof at law or in
      equity, or to insist upon compliance by any other party hereto with its
      obligations hereunder, or any custom or practice of the parties at variance
      with
      the terms hereof, shall not constitute a waiver by such party of its right
      to
      exercise any such or other right, power or remedy or to demand such
      compliance.

    

    
      	 	
              7.5.

            	
              Notice.
                

            

    

    

    All
      notices and other communications hereunder shall be in writing and shall be
      deemed given if delivered personally, the day of transmission if a business
      day
      or, if not, the next business day thereafter, if delivered by telecopier (with
      confirmation of receipt), the next business day if delivered by an
      internationally recognized overnight courier service, such as Federal Express,
      or the third business day if mailed by registered or certified mail (return
      receipt requested) to the parties at the following addresses (or at such other
      address for a party as shall be specified by like notice):

    

    If
      to STI
      or Sentinel, to:

    

    Sentinel
      Technologies, Inc. or Sentinel Operating, L.P.

    c/o
      LLG,
      LLC

    9423
      Desert Willow Road

    Highlands
      Ranch, Colorado 80129

    Attention:  
Jeffrey
      Galgano, Chief Financial Officer

    Facsimile:   (303)
      734-4733

    

    with
      a
      copy to:

    

    Hensley
      Kim & Edgington, LLC

    1660
      Lincoln Street

    Suite
      3050

    Denver,
      Colorado 80264

    Attention:    Darren
      R.
      Hensley, Esq.

           John
      P.J. Kim, Esq.

    Fax:
      (720) 377-0777

    

    If
      to the
      Company:

    

    Tidel
      Technologies, Inc.

    2310
      McDaniel Drive

    Carrollton,
      Texas 75006

    Attn:
      Chairman

    Fax:
      (972) 241-6229

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    With
      a
      copy to :

    

    Adam
      W.
      Finerman

    Olshan
      Grundman Frome Rosenzweig & Wolosky LLP

    Park
      Avenue Tower

    65
      East
      55th Street

    New
      York,
      New York 10022

    (212)
      451-2289 phone

    (212)
      451-2222 fax

    afinerman@olshanlaw.com

    

    If
      to the
      Security Holder:

    

    Laurus
      Master Fund, Ltd.

    c/o
      M&C Corporate Services Limited

    P.O.
      Box
      309 GT

    Ugland
      House 

    George
      Town

    South
      Church Street

    Grand
      Cayman, Cayman Islands

    Facsimile:   345-949-8080

    

    with
      a
      copy to:

    Laurus
      Capital Management, LLC

    825
      Third
      Avenue, 14th
      Floor

    New
      York,
      New York 10022

    Facsimile:
      212-541-4434

    Attn:
      John Tucker, Esq.

    

    
      	 	
              7.6.

            	
              Effect
                of Headings. 

            

    

    

    The
      Article and Section headings contained in this Agreement are for convenience
      only and shall not affect the construction or interpretation of this
      Agreement.

    

    
      	 	
              7.7.

            	
              Severability.
                

            

    

    

    If
      any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, void or unenforceable, then the remainder
      of the terms, provisions, covenants and restrictions of this Agreement shall
      remain in full force and effect and shall in no way be affected, impaired or
      invalidated.

    

    
      	 	
              7.8.

            	
              Entire
                Agreement. 

            

    

    

    This
      Agreement contains the entire understanding of the parties in respect of the
      subject matter hereof, and supersedes all prior negotiations and understandings
      between the parties with respect to such subject matter. 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      	 	
              7.9.

            	
              Assignment
                and Binding Effect. 

            

    

    

    Neither
      this Agreement nor any of the rights, interests or obligations hereunder shall
      be assigned by any party hereto (whether by operation of law or otherwise)
      without the prior written consent of the other parties, and any such assignment
      shall be void, except that STI may assign, in its sole discretion, any or all
      of
      its rights, interests and obligations hereunder to any direct or indirect
      subsidiary of STI or to a successor corporation or other successor entity in
      the
      event of a merger, acquisition, consolidation or other transfer if each such
      assignee, prior to the completion of the assignment, shall have executed and
      delivered to Security Holder documents assuming the obligations of STI under
      this Agreement, such documents to be satisfactory to Security Holder in its
      reasonable discretion and provided further that the Security Holder may assign
      any or all of its rights, interests and obligations hereunder to any affiliate,
      member or limited or general partner of the Security Holder if each such
      assignee, prior to the completion of the assignment, shall have executed and
      delivered to STI documents assuming the obligations of the Security Holder
      under
      this Agreement, such documents to be satisfactory to LLC in its reasonable
      discretion. Subject to the preceding sentence, this Agreement will be binding
      upon, inure to the benefit of, and be enforceable by the parties and their
      respective successors and assigns.

    

    
      	 	
              7.10.

            	
              Governing
                Law. 

            

    

    

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware without reference to such state’s principles of conflicts of
      laws.

    

    
      	 	
              7.11.

            	
              Amendment
                and Modification. 

            

    

    

    This
      Agreement may not be modified, amended, altered or supplemented except by the
      execution and delivery of a written agreement executed by the parties
      hereto.

    

    
      	 	
              7.12.

            	
              Specific
                Performance; Injunctive Relief.
                

            

    

    

    (a)     The
      parties hereto acknowledge that STI will be irreparably harmed and that there
      will be no adequate remedy at law for a violation of any of the covenants or
      agreements of the other parties hereto set forth herein. Therefore, it is agreed
      that, in addition to any other remedies that may be available to STI upon any
      such violation, STI shall have the right to enforce such covenants and
      agreements by specific performance, injunctive relief or by any other means
      available to STI at law or in equity and the other parties hereto hereby waive
      any requirement for the security or posting of any bond in connection with
      such
      enforcement. 

    

    (b)     The
      parties hereto acknowledge that Security Holder will be irreparably harmed
      and
      that there will be no adequate remedy at law for a violation of any of the
      covenants or agreements of the other parties hereto set forth herein. Therefore,
      it is agreed that, in addition to any other remedies that may be available
      to
      Security Holder upon any such violation, Security Holder shall have the right
      to
      enforce such covenants and agreements by specific performance, injunctive relief
      or by any other means available to Security Holder at law or in equity and
      the
      other parties hereto hereby waive any requirement for the security or posting
      of
      any bond in connection with such enforcement.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      	 	
              7.13.

            	
              Counterparts.
                

            

    

    

    This
      Agreement may be executed in two or more counterparts, and by the different
      parties hereto in separate counterparts, each of which when executed shall
      be
      deemed to be an original but all of which shall constitute one and the same
      agreement. This Agreement (or any counterpart hereof) may be delivered by a
      party by facsimile, which facsimile shall be effectual as if the original
      counterpart had been delivered.

    

    *  
      *   *   *   *

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, STI, Sentinel, the Company and the Security Holder have caused
      this Agreement to be executed as of the date first written above.

    

    
      	 	
              SENTINEL
                TECHNOLOGIES, INC.

            
	 	 	 
	 	 	 
	 	 /s/
              Raymond P. Landry
	 	
              By:
                Raymond P. Landry

            
	 	
              Title:
                Chief Executive Officer

            
	 	 	 
	 	 	 
	 	
              SENTINEL
                OPERATING, L.P.

            
	 	 	 
	 	
              By:

            	
              Sentinel
                Cash Systems, L.L.C.,

            
	 	 	
              its
                general partner

            
	 	 	 
	 	 	 
	 	 /s/
              Raymond P. Landry
	 	
              By:
                Raymond P. Landry

            
	 	
              Title:
                President

            
	 	 	 
	 	
              TIDEL
                TECHNOLOGIES, INC.

            
	 	 	 
	 	 	 
	 	 /s/
              Jerrell G. Clay
	 	
              By:
                Jerrell G. Clay

            
	 	
              Title:
                Director

            
	 	 	 
	 	 	 
	 	
              LAURUS
                MASTER FUND, LTD.

            
	 	 	 
	 	 /s/
              Eugene Grin
	 	
              By: Eugene
                Grin

            
	 	
              Title: DirectorExhibit 10.3

    
      
        

      

      Exhibit
        10.3

      CASH
        COLLATERAL DEPOSIT LETTER

      

      As
        of:
        January 12, 2006

      

      Laurus
        Master Fund, Ltd.

      825
        Third
        Avenue

      New
        York,
        New York 10022

      

      Ladies
        and Gentlemen:

      

      Reference
        is hereby made to the following agreements, as each is amended, modified
        or
        supplemented from time to time: (i) that certain Exercise and Conversion
        Agreement by and among Sentinel Technologies, Inc., a Delaware corporation
        (“STI”),
        Sentinel Operating, L.P., a Texas limited partnership (“Sentinel”),
        Tidel
        Technologies, Inc. (“Tidel”)
        and
        Laurus Master Fund, Ltd. (“Laurus”),
        dated
        as of the date hereof (the “Exercise
        Agreement”);
        (ii)
        that certain Stock Redemption Agreement by and between Tidel and Laurus,
        dated
        as of the date hereof (the “Redemption
        Agreement”);
        and(iii) that certain Cash Collateral Deposit Letter, dated as of December
        31,
        2005 by and among Laurus, Tidel and the other Tidel Entities (as that term
        is
        defined therein) (the “ATM
        Closing Cash Collateral Letter,”
and
        together with the Exercise Agreement, the Redemption Agreement and any and
        all
        other agreements related to any of the foregoing documents, collectively,
        the
“Laurus
        Documents”).

      

      Pursuant
        to the ATM Closing Cash Collateral Deposit Letter, the Tidel Entities deposited
        $8,200,000 with Laurus, to be subject to a true-up adjustment (the “Adjustment”)
        on
        January 3, 2006 in accordance with the terms of the ATM Closing Cash Collateral
        Deposit Letter, which true-up never occurred. As of the date hereof, the
        amount
        of Collateral Deposit (as that term is defined in the ATM Closing Cash
        Collateral Deposit Letter) is $8,200,000. Following the application by Laurus
        of
        the Collateral Deposit to certain of the Obligations (as that term is defined
        in
        the ATM Closing Cash Collateral Deposit Letter) and the conversion of the
        notes
        pursuant to the terms of the Exercise Agreement, Laurus agrees that the
        following notes have been indefeasibly repaid as of the date hereof: (a)
        2003
        Convertible Note, (b) $1,500,000 Note and (c) $600,000 Note (as such terms
        are
        defined in the ATM Closing Cash Collateral Deposit Letter) and no further
        amounts are due on account of such notes. 

      

      As
        collateral security for the payment of remaining monetary amounts and all
        covenants and duties regarding such amounts, of any kind or nature, present
        or
        future, whether or not evidenced by any note, agreement or other instrument,
        arising under the Laurus Documents (the “Secured
        Obligations”),
        the
        Tidel Entities acknowledge that $5,400,000 will be on deposit with Laurus
        which
        is the sum of (a) $5,330,507 which represents the remaining amount under
        the ATM
        Closing Cash Collateral Deposit Letter plus
        (b)
        $69,493 which represents the Adjustment and shall be wired by Tidel to Laurus
        on
        January 13, 2006 (the deposit described in clauses (a) and (b) to be hereinafter
        referred to as the “TACC
        Closing Collateral Deposit”).
        The
        TACC Closing Collateral Deposit shall be held pursuant to the terms of this
        letter. This deposit of the TACC Closing Collateral Deposit shall not constitute
        a redemption of any note or other instrument made by any Tidel Entity in
        favor
        of Laurus. The TACC Closing Collateral Deposit shall be held in an interest
        bearing deposit account for the benefit of Tidel, with all interest earned
        by
        Laurus thereon being added to the principal amount of the TACC Closing
        Collateral Deposit.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Laurus
        and its successors and assigns may, without demand of performance or
        advertisement or notice of any kind to or upon any Tidel Entity (each of
        which
        demands, advertisements and/or notices are hereby expressly waived), immediately
        upon a default by any Tidel Entity in any payment obligation due and owing
        to
        Laurus under any of the Laurus Documents, appropriate and apply all or any
        part
        of the TACC Closing Collateral Deposit to the payment in whole or in part,
        in
        such order as Laurus may elect, of the Secured Obligations until the Secured
        Obligations have been indefeasibly paid in full. Further, Tidel may instruct
        Laurus in writing to apply any part of the TACC Closing Collateral Deposit
        to
        any payment obligation then due and owing to Laurus under the Redemption
        Agreement or the Exercise Agreement. In the event that any Secured Obligation
        remains outstanding after giving effect to any application of the TACC Closing
        Collateral Deposit, Tidel shall be liable for any deficiency.

      

      When
        all
        of the Secured Obligations have been paid and/or are otherwise indefeasibly
        paid
        in full and the Laurus Documents irrevocably terminated, any sums still on
        deposit hereunder shall, unless Laurus is instructed by a court of competent
        jurisdiction to the contrary, be returned to Tidel.

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      This
        letter agreement shall be binding upon and inure to the benefit of the parties
        hereto and their respective successors and assigns and shall be governed
        by and
        construed in accordance with the laws of the State of New York.

      

      
        	
                Very
                  truly yours,

              
	 	 	 
	
                Tidel
                  Technologies, Inc.

              
	 	 	 
	
                By:

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

              	 
	 	
                Title:
                  Director

              	 

      

       

       

      AGREED:

      
        
          
            
              

                
                  	
                          Tidel
                            Engineering, L.P.

                        	 	
                          Tidel
                            Cash Systems, Inc.

                        
	 	
                          By:

                        	
                          Tidel
                            Cash Systems, Inc.,

                        	 	
                          By:

                        	 /s/
                          Leonard Carr
	 	 	
                          its
                            managing general partner

                        	 	 	
                          Name:
                            Leonard Carr

                        
	 	 	 	 	 	
                          Title:
                            Vice President & Secretary

                        
	 	 	
                          By:

                        	/s/
                          Leonard Carr	 	 	 
	 	 	
                          Name:
                            Leonard Carr

                        	 	 	 
	 	 	
                          Title:
                            Vice President & Secretary

                        	 	 	 
	 	 	 	 	 	 
	
                          Tidel
                            Services, Inc.

                        	 	
                          AnyCard
                            International, Inc.

                        
	 	 	 
	
                          By:

                        	 /s/
                          Leonard Carr	 	
                          By:

                        	 /s/
                          Leonard Carr
	 	
                          Name:
                            Leonard Carr

                        	 	 	
                          Name: Leonard
                            Carr

                        
	 	
                          Title:
                            Vice President & Secretary

                        	 	 	
                          Title:
                            Vice President & Secretary

                        
	 	 	 	 	 
	 	 	 	 	 

                

                

                
                  	
                          ACCEPTED:

                        
	
                          LAURUS
                            MASTER FUND, LTD.

                        
	 
	 	 	 
	
                          By:

                        	 /s/
                          Eugene Grin	 
	 	
                          Name:
                            Eugene Grin

                        	 
	 	
                          Title:
                            Director

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"}]]