EXHIBIT
10.2
WAIVER
AGREEMENT
THIS WAIVER
AGREEMENT (this “ Waiver ” or this “
First Amendment to Credit Agreement ”) is made as of
the 22 nd
day of
September, 2009 by and among LOJACK CORPORATION
(“LoJack”), the Canadian Borrowers and Foreign
Borrowers listed on Schedule 1 to the Credit Agreement
referred to below (collectively with LoJack, the “
Borrowers ”), the U.S. Guarantors and Canadian
Guarantors listed on the signature pages hereof (collectively, the
“ Guarantors ”), the Revolving Credit Lenders,
the Term Loan Lenders and the Canadian Lenders listed on the
signature pages hereof (each, a Lender, and
collectively, the “ RequiredLenders ”), RBS
CITIZENS, NATIONAL ASSOCIATION (successor by merger
to Citizens Bank of Massachusetts), as Administrative Agent and
Issuing Bank for itself and each of the other Lenders (the “
Agent ”), and ROYAL BANK OF CANADA, as the Canadian
Lender. Capitalized terms used herein without definition
shall have the respective meaning assigned to such terms in the
Credit Agreement
RECITALS
WHEREAS,
Borrowers, Guarantors, the Lenders and Agent are party to that
certain Multicurrency Revolving Credit and Term Loan Agreement,
dated as of July 20, 2007 (as the same may be amended and in effect
from time to time, the “ Credit Agreement ”),
pursuant to which the Lenders have extended credit to Borrowers on
the terms set forth therein;
WHEREAS, the
Borrowers and Guarantors are entering into a settlement agreement
(the “ Settlement Agreement ”) on or about the
date hereof to settle the Kington Proceedings as defined on
Exhibit A hereto;
WHEREAS, the
Borrower and Guarantors have requested that the Agent and the
Required Lenders waive certain specified defaults or Events of
Default that may arise under the Credit Agreement by reason of the
Settlement Agreement; and the Agent and the Required Lenders are
willing to agree to such a waiver, conditioned on the agreements
and covenants contained in this Waiver Agreement.
NOW,
THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1.
Definitions . Capitalized terms used herein are
defined on Exhibit A hereto or, if not defined thereon, shall have
the definitions given in the Credit Agreement.
2. Waiver. Subject
to and conditioned upon the other terms, conditions and covenants
contained herein, the Required Lenders hereby agree to waive any
Specified Defaults that now exist or may hereafter arise solely on
account of the payment or proposed payment by the Borrowers of the
Settlement Amount. For the avoidance of doubt, a breach
of a financial covenant due to the payment by the Borrowers of the
Settlement Amount shall be deemed a Specified Default only if the
Borrowers otherwise would have been in compliance with the
financial covenant absent the payment or proposed payment of the
Settlement Amount.
3.
Conditions Precedent . The Agent’s and the
Lenders’ agreements contained herein are conditioned upon the
following conditions precedent and conditions
subsequent. Upon the Required Lenders’ reasonable
determination that a breach of any of the conditions set forth
below has occurred, the waivers contained in Section 2 shall
automatically terminate (the earliest such event to occur, the
“ Termination Date ”).
(a) Borrowers
shall either (i) enter into a restructured Credit Agreement with
certain of the Lenders that is acceptable to all Lenders or (ii)
obtain refinancing of the Credit Agreement from third party
institutions, in either case on or before December 30, 2009; and
provided, however, that for the avoidance of doubt, regardless of
any determination by the Required Lenders, the conditions specified
in this clause (a) will not be deemed to be satisfied except upon
the agreement of all Lenders;
(b) Borrowers
shall provide and maintain the Cash Collateral described below,
which shall be held by the Agent in a blocked account pursuant to
this Agreement and the Pledge Agreement;
(c) Borrowers
executing and delivering (i) this Waiver Agreement, and (ii) a
Pledge Agreement (the “ Pledge Agreement ”), and
Borrowers delivering the Cash Collateral to the Agent, which the
Agent acknowledges having received;
(d) Borrowers
shall pay (i) the Waiver Fee described below, (ii) the
Agent’s legal expenses previously incurred for the period
from March 1, 2009 through September 17, 2009 (as reflected in
invoices from the Agent’s counsel dated May 20, 2009 and
September 18, 2009), and (iii) all other reasonable costs and
expenses of the Agent;
(e) The
form of the Settlement Agreement executed by the Borrowers shall
not differ from the form previously reviewed by the
Agent;
(f) The
cash amount payable pursuant to the Settlement Agreement will not
exceed $22,250,000, which shall include (i) a cash settlement
payment of not more than $18,250,000, which shall be in full
satisfaction of all liabilities or other obligations of the
Borrowers and the Guarantors arising out of or related to the
disputes relating to the Kington Proceedings, and (ii) not more
than $4,000,000 of associated costs and expenses of the Borrowers
and the Guarantors, including legal fees related to the Kington
Proceedings;
(g) The
Borrowers shall have paid the full amount required by the
Settlement Agreement.
(h) No
Default or Event of Default (other than the Specified Defaults
waived herein) shall occur; and
(i) This
Waiver Agreement shall be executed by Lenders constituting the
Required Lenders.
4.
Cash Collateral . Borrowers shall provide to the
Lenders cash collateral in an amount equal to the Dollar Equivalent
of the Outstanding Amount of the Loans, L/C Obligations and
Bankers’ Acceptances, and will provide additional cash
collateral from time to time as necessary to meet the requirements
of this section (the foregoing, the “ Cash Collateral
”). Within two Business Days’ written notice
by the Agent, the Borrowers will deposit additional Cash Collateral
from time to time to the extent necessary to cover currency
fluctuations between the
U.S. Dollar
and the Canadian Dollar so that the amount of the Cash Collateral
will be sufficient to cover those Loans, L/C Obligations and
Bankers’ Acceptances that are denominated in Canadian
Dollars. The Cash Collateral will be wired by the
Borrowers to the Agent to be held in a blocked account for the
benefit of the Lenders. The Termination Date will
constitute an “Event of Default” under the Pledge
Agreement, and the Agent shall thereupon apply the Cash Collateral
to the payment of the Obligations for the benefit of the Lenders
without any further action by the Required Lenders or the Borrowers
or notice to the Borrowers. Upon occurrence of the
Termination Date, the Commitments and the Credit Agreement shall
automatically terminate, except that nothing herein shall terminate
or otherwise impair those expense reimbursement, indemnification or
other provisions of the Credit Agreement and the other Loan
Documents which by their express terms survive the repayment of the
Loans and termination of the Commitments.
5.
Waiver Fee . As a condition to the waiver
contained herein, the Borrowers will pay to the Agent for the
account of the consenting Lenders a waiver fee equal to 25 basis
points on the amount of the Outstanding Amount of all Loans, L/C
Obligations, the face amount of all Bankers’ Acceptances, and
all other Obligations outstanding under the Credit
Agreement.
6.
Covenants . The Borrowers and the Guarantors,
jointly and severally, covenant as follows:
(a)
Principal and Interest Payments . Prior to the
Termination Date, the Borrowers will continue to make regularly
scheduled payments of principal and interest as and when required
by the Credit Agreement.
(b)
No Loans or Advances. Prior to the Termination
Date, the Lenders will not make any further Loans or other advances
under the Credit Agreement, issue any new Letters of Credit, or
renew existing Letters of Credit, provided, however, that the
Lenders will
