PRINCIPAL SHAREHOLDERS VOTING
AGREEMENT
MEMORANDUM
OF AGREEMENT made as of the 16 th day of August,
2004
BETWEEN:
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LOJACK
CORPORATION,
a corporation existing under the laws of The Commonwealth of
Massachusetts
(hereinafter referred to as “ LoJack
”)
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— and —
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4254724
CANADA INC, 1
a company existing under the laws of Canada
(hereinafter referred to as the “ LoJack Exchangeco
”)
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— and —
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AUTOMOBILITY
INC.,
a corporation existing under the laws of Canada
(hereinafter referred to as the “ Automobility
”)
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— and —
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ANDRÉ BOULAY,
businessman residing and domiciled at 327 Laurier, Ile-Bizard,
Québec, H9C 3A5
(hereinafter referred to as the “ Boulay
”)
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— and —
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PETER
LASHCHUK,
businessman residing and domiciled at 73 Cr. Fernlea, Mont-Royal,
Québec, H3P 1T7
(hereinafter referred to as the “ Lashchuk
”)
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— and —
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ROBERT
NELSON,
businessman residing and domiciled at 207 Croissant Eton, Hamstead,
Québec, H3X 3K4
(hereinafter referred to as the “ Nelson
”)
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(Automobility,
Boulay, Lashchuk and Nelson are hereinafter sometimes collectively
referred to as the “ Principal Vendors ” and
individually referred to as a “Principal Vendor
”)
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1 Due to a scrivener's error this Agreement
purports to be in the name of 4254724 Canada Inc. The correct name
of this party, however, is 4246624 Canada Inc. It is anticipated
that this error will be corrected by a technical
amendment.
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WHEREAS
concurrently herewith, LoJack, Boomerang Tracking Inc. (“
Boomerang ”) and LoJack Exchangeco have entered into a
combination agreement of even date herewith (as such agreement may
hereafter be amended or modified from time to time, the “
Combination Agreement ”), pursuant to which LoJack,
Boomerang and LoJack Exchangeco have agreed, subject to certain
conditions, to enter into a plan of arrangement (as such plan may
hereafter be amended or modified from time to time, the “
Plan of Arrangement ”), under which the Class A shares
of Boomerang (the “ Boomerang Common Shares ”)
will be exchanged, at the option of the holders of Boomerang Common
Shares, for a cash consideration or a consideration comprised of
cash and exchangeable shares of LoJack Exchangeco (the “
Exchangeable Shares ”) or shares of common stock of
LoJack (the “ LoJack Shares ”);
WHEREAS
each Principal Vendor beneficially owns or holds the number of
Boomerang Common Shares, and options to acquire such shares, if
any, set forth on Schedule A of this Agreement;
WHEREAS
LoJack has required, as an inducement and a condition to entering
into the Combination Agreement, that the Principal Vendors
concurrently therewith enter into this Agreement with respect to
(i) all shares of any class of Boomerang and all options to
purchase shares of any class of Boomerang that are beneficially
owned or held by the Principal Vendors, (ii) any and all other
shares or securities of Boomerang issued or issuable to the
Principal Vendors in respect thereof on or after the date hereof,
and (iii) any or all other Boomerang Common Shares or options
and rights to acquire Boomerang Common Shares otherwise acquired by
the Principal Vendors on or after the date hereof (collectively,
the “ Subject Securities ”); and
WHEREAS
this Agreement sets out the terms and conditions of the agreement
of the Principal Vendors to support the Arrangement contemplated in
the Combination Agreement and to vote the Subject Securities in
favour of the Arrangement.
WHEREAS
capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Combination Agreement.
THIS
AGREEMENT WITNESSES THAT in consideration of the respective
covenants and agreements herein contained, the parties covenant and
agree as follows:
ARTICLE 1
VOTING
1.1 Voting
Each
of the Principal Vendors hereby agrees that, during the period (the
“ Term ”) from the date of this Agreement until
the Expiration Date (as defined below), at any meeting of the
shareholders or optionholders of Boomerang, or of any class of
securityholders of Boomerang, however called, and in any action by
written consent of the shareholders or optionholders of Boomerang
or of any class of securityholders of Boomerang, the Principal
Vendors shall (or shall cause the holder of record to, if a
Principal Vendor is the beneficial owner but not the holder of
record of the Subject Securities) (i) vote all of the Subject
Securities in favor of the transactions contemplated by the
Combination Agreement and the Plan of Arrangement and any
actions
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required in furtherance of the
transactions contemplated thereby, (ii) vote all of the
Subject Securities to oppose any action or agreement that would
result in a breach of any representation, warranty, agreement,
covenant or other obligation of Boomerang under the Combination
Agreement or the Plan of Arrangement, and (iii) vote all of
the Subject Securities to oppose any proposed action by Boomerang
or any other party the result of which could be reasonably inferred
to impede, interfere with, prevent or delay LoJack from completing
the transactions contemplated by the Combination Agreement or the
Plan of Arrangement, or to materially change the business,
operations, capital or affairs of Boomerang, including, but not
limited to: (A) any Acquisition Proposal; (B) any change
in the management or board of directors of Boomerang, except as
otherwise agreed to in writing by LoJack; (C) a reorganization,
recapitalization, dissolution or liquidation of Boomerang; or
(D) any change in the authorized capital of Boomerang or any
amendment of Boomerang’s articles, by-laws or other
constating documents. Each of the Principal Vendors further agrees
that, during the Term, it shall not enter into any agreement or
understanding with any person the effect of which would be
inconsistent or contrary to the provisions and agreements contained
herein.
1.2 Third Party
Proceedings
Notwithstanding
the provisions of Section 1.1, a Principal Vendor shall not be
obliged to vote the Subject Securities it owns in the manner
provided therein if at the time of such vote there shall be in
force any order or decree of a Governmental Entity restraining or
enjoining such Principal Vendor from voting such Subject
Securities, provided that such order or decree is not the result of
any breach of representation, warranty, covenant or agreement of
such Principal Vendor in this Agreement, and provided further that
such Principal Vendor has notified LoJack of such order or decree
and has promptly taken, and continues to diligently take, all
reasonable action to cause such order or decree to be revoked,
vacated or removed.
1.3 Revocation of
Proxies
Each
of the Principal Vendors hereby agrees to revoke any and all other
authorities, whether as agent, attorney-in-fact, attorney, proxy or
otherwise, previously conferred or agreed to be conferred by such
Principal Vendor at any time with respect to the Subject Securities
held by such Principal Vendor and the matters contemplated above.
No subsequent authority, whether as agent, attorney-in-fact,
attorney, proxy or otherwise, will be granted with respect to the
Subject Securities, in connection with the matters contemplated
above, by or on behalf of each of the Principal Vendors during the
Term.
ARTICLE 2
TERM
2.1 Term
This
Agreement shall become effective on the date hereof and, except for
provisions of this Agreement that are stated to survive the
termination of the Agreement or obligations that are stated to
extend beyond the Expiration Date, shall terminate at such time
(the “ Expiration Date ”) as is the earliest of:
(i) the Effective Date; or (ii) the time at which the
Combination Agreement is terminated in accordance with its terms,
unless the Combination Agreement is terminated by
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Boomerang pursuant to Section
6.3.3.4. thereof, in which case this Agreement shall remain in full
force and effect unless the consideration to be received per
Boomerang Common Share pursuant to the Superior Proposal is of at
least $3.10 in value. The termination of this Agreement shall not
prejudice the right of any party hereto in respect of any breach
hereof by the other party or parties.
2.2 Non-cash
Consideration
For
the purposes of this Section, the cash equivalent value of any
non-cash consideration of a Superior Proposal (i) in the case
of securities listed and posted for trading on one or more stock
exchanges, shall be the weighted average trading price per security
on the principal stock exchange on which such securities traded
over the 20 consecutive trading days (on which at least a
board lot traded) ending on the day next preceding the date on
which the Superior Proposal was announced, and (ii) in any
other case, shall be valued as of the close of business on the day
on which the Superior Proposal is received by the Principal
Vendors, and shall be the value determined by the Board of
Directors of Boomerang, based on a written opinion of an
independent nationally recognized financial advisor, and conveyed
in writing to LoJack together with a reasonable summary of the
basis for such determination and a copy of said advisor’s
opinion. Any such determination made in accordance with the
foregoing provisions shall be binding on the parties
hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of
the Principal Vendors
Each
of the Principal Vendors jointly (and not jointly and severally or
solidarily) represents and warrants, except as otherwise disclosed
in the Boomerang Documents (as defined below), to and in favour of
the LoJack Parties as follows and acknowledges that the LoJack
Parties are relying upon such representations and warranties in
connection with the matters contemplated by this Agreement and the
Combination Agreement:
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3.1.1
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Ownership of Shares, Authority and Violation.
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3.1.1.1
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Such
Principal Vendor is the sole legal and beneficial owner of
the number of the Subject Securities set forth next to its name on
Schedule A to this Agreement, free and clear of any encumbrance,
pledge, hypothec, charge, lien or adverse claim and such Principal
Vendor has good and marketable title to and exclusive right to vote
the Boomerang Common Shares comprising such Subject Securities and,
in the case of any options for Boomerang Common Shares which
comprise a part of such Subject Securities, and such Principal
Vendor has good title and the exclusive right to vote such options
for Boomerang Common Shares to the extent that any voting rights
are conferred on such Principal Vendor in respect of such
options;
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3.1.1.2
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The only
securities of Boomerang owned, directly or indirectly, by such
Principal Vendor are the Subject Securities, as set forth next to
its name on Schedule A to this Agreement;
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3.1.1.3
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If such
Principal Vendor is a corporation or other body corporate, it has
been duly incorporated or formed under all applicable Laws, is
validly subsisting and has full corporate or legal power and
authority to own its properties and conduct its businesses as
currently owned and conducted.
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3.1.1.4
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Such Principal
Vendor has all necessary right, power and authority to execute and
deliver this Agreement and to perform its obligations hereunder
and, if such Principal Vendor is a corporation or other body
corporate, the execution and delivery of this Agreement and the
performance and observance of all of its obligations contained
herein have been duly authorized by all necessary corporate action
on its part;
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3.1.1.5
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The execution,
delivery and performance of this Agreement by such Principal Vendor
will not require, on the part of such Principal Vendor, the consent
of or any filing with any Government Entity and will not constitute
a violation of, conflict with or result in a default under (i) if
such Principal Vendor is a corporation or other body corporate, the
articles and by-laws of such Principal Vendor, (ii) any contract,
understanding or arrangement to which such Principal Vendor is a
party or by which such Principal Vendor is bound, (iii) any
judgment, decree or order applicable to such Principal Vendor, or
(iv) any law, rule or regulation of any Governmental Entity
applicable to such Principal Vendor;
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3.1.1.6
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There is no
private or governmental action, suit proceeding, claim, arbitration
or investigation pending before any Governmental Entity, or, to the
knowledge of such Principal Vendor, threatened against such
Principal Vendor or any of its properties or any of its officers or
directors, in the case of a corporate entity (in their capacities
as such) that, individually or in the aggregate, could impair such
Principal Vendor’s ability to consummate the transactions
contemplated by this Agreement. There is no judgment, decree or
order against such Principal Vendor or, to the knowledge of such
Principal Vendor, any of its directors or officers, in the case of
a corporate entity (in their capacity as such) that could prevent,
enjoin, alter or materially delay any of the transactions
contemplated by this Agreement, or that could impair such Principal
Vendor’s ability to consummate the transactions contemplated
by this Agreement.
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3.1.1.7
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This Agreement
has been duly executed and delivered by such Principal Vendor and,
assuming the due authorization, execution and delivery of this
Agreement by the LoJack Parties, constitutes a legal, valid and
binding obligation of such Principal Vendor, enforceable in
accordance with its terms subject to bankruptcy, insolvency and
other applicable laws affecting creditors’ rights generally
and general principles of equity and subject to the qualification
that the irrevocability of a proxy may not be enforceable;
and
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3.1.1.8
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None of the
Subject Securities held by such Principal Vendor are subject to any
voting trust, proxy or other agreement or arrangement with respect
to the voting or disposition of such Subject Securities with
respect to the matters referred to herein, other than this
Agreement and an agreement with another potential purchaser of
Boomerang which can be terminated upon payment of a break fee and
there are no outstanding options, warrants or rights to purchase,
acquire or convert, or agreements relating to, such Subject
Securities, other than rights and agreements contained in this
Agreement, none of which will impair or interfere with such
Principal Vendor’s ability to perform or comply with its
obligations, or the LoJack Parties’ ability to enforce its
rights, under this Agreement.
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To the best
knowledge of the Principal Vendors, Boomerang has filed with the
securities commissions or similar regulatory authorities in
Ontario, Alberta and British Columbia true and complete copies of
all forms, reports, schedules, statements and other documents
required to be filed by it since May 1, 2003 (such forms, reports
and other documents, including any financial statements or other
documents, including any schedules included therein, are referred
to as the “Boomerang Documents ”). The Boomerang
Documents, at the time filed, (i) did not contain any untrue
statement of material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading and
(ii) complied in all material respects with the requirements
of applicable securities Laws. Boomerang has not filed any
confidential material change report with the Autorité or any
other securities authority or regulator or any stock exchange or
other self-regulatory authority which at the date hereof remains
confidential.
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3.1.3
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Financial
Statements.
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The audited
consolidated financial statements for Boomerang as at and for each
of the 12-month periods ended April 30, 2004 and 2003 have been
prepared, and the unaudited consolidated financial statements for
any subsequent interim period will at the time of their filing have
been prepared, in accordance with Canadian generally accepted
accounting principles (subject, in the case of unaudited interim
financial statements, to the absence of footnotes required by such
principles and normal year-end adjustments), the requirements of
applicable Governmental Entities and applicable securities Laws;
such financial statements present fairly, in all material respects,
the consolidated financial condition and results of operations of
Boomerang and its subsidiaries as of the respective dates thereof
and for the respective periods covered thereby.
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There is
no material claim, action, proceeding or investigation pending or,
to the knowledge of the Principal Vendors, threatened against
Boomerang or any of its
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subsidiaries
before any Governmental Entity that, if adversely determined, would
reasonably be expected to prevent or materially delay consummation
of the transactions contemplated by the Combination Agreement or
the Arrangement or have a Material Adverse Effect on
Boomerang.
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3.1.5.1
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Boomerang
and each of its subsidiaries have duly filed with the appropriate
Governmental Entity, or caused to be filed, on a timely basis all
Tax Returns required to be filed by them (all of which Tax Returns
were and are complete in all material respects) and have duly paid
or remitted, or caused to be paid or remitted, on a timely basis,
all amounts of Taxes, including installments or prepayments of
Taxes, which are required to have been paid to the appropriate
Governmental Entity, and Boomerang’s most recently published
financial statements contain an adequate provision in accordance
with generally accepted accounting principles for all material
amounts of Taxes payable in respect of each period covered by such
financial statements and all prior periods to the extent such Taxes
have not been paid, whether or not due and whether or not shown as
being due on any Tax Returns. Boomerang and each of its
subsidiaries have made adequate provision in accordance with
generally accepted accounting principles in its books and records
for any material amounts of Taxes accruing in respect of any period
subsequent to the period covered by such financial
statements.
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3.1.5.2
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Neither
Boomerang nor any of its subsidiaries has received any written
notification that any issues involving a material amount of Taxes
have been raised (and are currently pending) by Revenue Canada, the
United States Internal Revenue Service or any other taxing
authority.
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3.1.6
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Pension and
Employee Benefits.
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Boomerang has
made available to LoJack a list of all Boomerang Plans. Other than
the Boomerang Plans set forth in Section 3.1.12 of the Boomerang
Disclosure Letter, there exist no Boomerang Plans. To the best
knowledge of the Principal Vendors, there is no material
undisclosed claim or liability with respect to any Boomerang
Plan.
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To the
knowledge of the Principal Vendors and except for any matters that,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on Boomerang, (i) all
operations of Boomerang and its subsidiaries have been conducted,
and are now, in compliance with all applicable Environmental Laws
and (ii) Boomerang and its subsidiaries are in possession of,
and in compliance with, all permits, authorizations, certificates,
registrations, approvals and consents necessary under applicable
environmental laws to own,
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lease and
operate their properties and to conduct their respective businesses
as they are now being conducted.
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3.1.8
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Subscriber-Related Information.
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Section 3.1.2.2 of the Boomerang Disclosure
Letter sets forth as at April 30, 2004 and July 31, 2004
Boomerang’s (i) Net Unit Sales, (ii) Net Active
Subscribers, (iii) active MINS billed by carrier,
(iv) MINS parked and (v) MINS.
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The entering
into of this Agreement, the Combination Agreement and the
completion of the transaction will not result in Boomerang paying
or becoming obligated to pay any amounts to third parties exceeding
$700,000.
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3.2 Representations
and Warranties of LoJack Parties
Each
of the LoJack Parties represents and warrants, except as disclosed
in the LoJack Documents (as defined below), to and in favour of the
Principal Vendors as follows and acknowledge that the Principal
Vendors are relying upon such representations and warranties in
connection with the matters contemplated by this
Agreement:
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3.2.1
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Authority
and Non-Violation.
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3.2.1.1
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Each of the
LoJack Parties and their subsidiaries has been duly incorporated or
formed under all applicable Laws, is validly subsisting and has
full corporate or legal power and authority to own its properties
and conduct its businesses as currently owned and
conducted.
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3.2.1.2
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Each of the
LoJack Parties has all necessary right, power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder and the execution and delivery of this Agreement and the
performance and observance of all of its obligations contained
herein have been duly authorized by all necessary corporate action
on its part;
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3.2.1.3
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The execution,
delivery and performance of this Agreement by each of the LoJack
Parties will not require, on the part of any of the LoJack Parties,
the consent of or any filing with any Government Entity except for
such consents and fillings as are necessary in connection with the
issuance of the LoJack and Exchangeable Shares and will not
constitute a violation of, conflict with or result in a default
under (i) the articles and by-laws of any of the LoJack Parties,
(ii) any contract, understanding or arrangement to which any of the
LoJack Parties is a party or by which any of the LoJack Parties is
bound, (iii) any judgment, decree or order applicable to any of the
LoJack Parties, or (iv) any law, rule or regulation of any
Governmental Entity applicable to any of the LoJack
Parties;
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3.2.1.4
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There is no
private or governmental action, suit proceeding, claim, arbitration
or investigation pending before any Governmental Entity, or, to the
knowledge of the LoJack Parties, threatened against any of the
LoJack Parties or any of their properties or any of their officers
or directors that, individually or in the aggregate, could impair
any of the LoJack Parties’ ability to consummate the
transactions contemplated by this Agreement. There is no judgment,
decree or order against such party or, to the knowledge of the
LoJack Parties, any of its directors or officers that could
prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement, or that could impair any of the
LoJack Parties’ ability to consummate the transactions
contemplated by this Agreement; and
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3.2.1.5
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This Agreement
has been duly executed and delivered by each of the LoJack Parties
and, assuming the due authorization, execution and delivery of this
Agreement by the Principal Vendors, constitutes a legal, valid and
binding obligation of each of the LoJack Parties, enforceable in
accordance with its terms subject to bankruptcy, insolvency and
other applicable laws affecting creditors’ rights generally
and general principles of equity and subject to the qualification
that the irrevocability of a proxy may not be
enforceable.
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LoJack has
filed with the SEC true and complete copies of all forms, reports,
schedules, statements and other documents required to be filed by
it since January 1, 2004 (such forms, reports and other documents,
including any financial statements or other documents, including
any schedules included therein, are referred to as the “
LoJack Documents ”). The LoJack Documents, at the time
filed, (i) did not contain any untrue statement of material
fact or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances under which they
were made, not misleading and (ii) complied in all material
respects with the requirements of applicable securities Laws.
LoJack has not filed any confidential material change report with
the SEC or any other securities authority or regulator or any stock
exchange or other self-regulatory authority which at the date
hereof remains confidential.
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3.2.3
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Financial
Statements.
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The audited
consolidated financial statements for LoJack as at and for each of
the 12-month periods ended December 31, 2003 and 2002 and the
unaudited consolidated financial statements for each of the
three-month periods ended March 31, 2004 and June 30, 2004 have
been prepared in accordance with United States generally accepted
accounting principles (subject, in the case of unaudited interim
financial statements, to the absence of footnotes required by such
principles and normal year-end adjustments), the requirements of
applicable Governmental Entities and applicable securities Laws;
such financial statements present fairly, in
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all material
respects, the consolidated financial position and results of
operations of LoJack and its subsidiaries as of the respective
dates thereof and for the respective periods covered
thereby.
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There is no
material claim, action, proceeding or investigation pending or, to
the knowledge of the LoJack Parties, threatened against any of the
LoJack Parties or any of their subsidiaries before any court or
Governmental Entity that, if adversely determined, would reasonably
be expected to prevent or materially delay consummation of the
transactions contemplated by the Combination Agreement or the
Arrangement or that could be expected to have a Material Adverse
Effect on the LoJack Parties as a whole.
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