EXHIBIT 10hh.
AMENDMENT TO LOAN AGREEMENT
This AGREEMENT (the "Amendment"), effective November 30, 2002, amends a
certain Loan Agreement (the "Loan Agreement") executed September 5, 2002 (and
stated to take effect as of October 4, 2001) entered into by and among Car
Security S.A., an Argentina corporation (the "Borrower"), LoJack Recovery
Systems Business Trust ("Lender"), a Massachusetts business trust and a
subsidiary of LoJack Corporation, LoJack Corporation, a Massachusetts
corporation, Xx. Xxxxxx Xxxxxxxxx and Xx. Xxxxxxx Xxxxxxx Rey (together, the
"Parties"). Defined terms used herein and not specifically defined shall have
the meaning set forth in the Loan Agreement.
WHEREAS, the Parties have agreed to change certain provisions of the Loan
Agreement and related agreements;
NOW, THEREFORE, in consideration of the undertakings herein, the Parties hereby
agree as follows:
1. Balance Due.
(a) On the date of this Amendment, the Amount Due from Borrower to
Lender is US$ l,749,248.
2. Division of the Amount Due.
(a) The Amount Due hereunder shall be divided into two parts, with
differing payment terms. Each such obligation shall be
represented by a new demand promissory note, designated as the
Dollar Note and the Peso Calculated Note and in the forms
annexed hereto as Exhibit A and Exhibit B, respectively. The
original Note shall be cancelled and delivered to the Borrower
upon the execution and delivery of this Amendment, the Dollar
Note and the Peso Calculated Note.
(b) The Dollar Note shall be in the amount of US$ 716,512 and shall
be due December 31, 2009. This amount reflects a deferral of a
portion of the purchase price of 13,147 LoJack Units (the
"Subject SVRUs") purchased by Borrower from Lender.
(c) The remaining amount of US$ 1,032,736 shall be represented by a
note (the "Peso Calculated Note") due December 31, 2009. The
Peso Calculated Note shall be paid and adjusted as provided
herein.
3. Interest.
(a) Interest shall accrue on the outstanding and unpaid principal
amount of each of the Dollar Note and the Peso Calculated Note
(collectively, the "Notes") at the rate of one percent (1%)
above the Prime Rate (as published, from time to time, by
Citizens Bank), compounded monthly, as provided in the Notes,
with interest on Default (as herein defined) accruing at the
rate set forth in the Notes. All payments, including payments in
accordance with Section 4, shall be applied first to accrued
interest and then to principal.
(b) The provisions of this Section 3 supersede the provisions of
Section 3 of the Loan Agreement
4. Payments, and Mandatory Pre-payment.
(a) Borrower shall repay to Lender the principal amount of the
Dollar Note and shall pay all interest accrued thereon and all
other amounts payable to Lender pursuant to the terms of the
Loan Agreement, as amended, or the Dollar Note on or before
December 31, 2009 (the "Dollar Repayment Date"), subject to
acceleration as provided in Section 4(f).
(b) Borrower shall pay to Lender in US$ in Westwood Massachusetts,
USA, monthly, for application against the Dollar Note, within
twenty-five (25) days of the end of each month, an amount
determined as follows: a sum equal to the lesser of (i) five
percent (5%) of Borrower's total monthly gross revenue for such
month (less only VAT), or (ii) seventeen and one-half percent
(17.5%) of its average per unit recurring or recovery fees for
such month, multiplied by 13,147 (representing the number of
Subject SVRUs). Such amount shall be paid in US$, converted at
the market rate as determined by Citizens Bank on the date of
payment, subject to the provisions of Section 7. The actual US$
payments, when received by Lender, shall be credited against the
amount due on the Dollar Note. In order to share business risks
and benefits, Borrower shall continue to make such payments
through December 31, 2009 even if prior payments have resulted
in the Dollar Note having been paid in full, and, provided that
the Borrower makes all such payments through December 31, 2009,
Lender then shall cancel the Dollar Note, even if it has not by
then been paid in full. The parties recognize that the effect of
the exchange rate limitations of Section 7 may be that Borrowers
actual cost in P$ may exceed the five percent (5%) and seventeen
and one-half percent (17.5%) limitations set forth above.
(c) Borrower shall repay to Lender the principal amount of the Peso
Calculated Note and shall pay all interest accrued thereon and
all other amounts payable to Lender pursuant to the terms of the
Loan Agreement, as amended, or the Peso Calculated Note on or
before December 31, 2009 (the "Peso Repayment Date"), subject to
acceleration as provided in Section 4(g).
(d) Borrower shall pay to Lender in US$ in Westwood Massachusetts,
USA, monthly, for application against the Peso Calculated Note,
within twenty-five (25) days of the end of each month, an amount
determined as follows: a sum equal to five percent (5%) of its
total monthly gross revenue for such month (less only VAT)
reduced, but not below zero, by the P$ amount which was the
starting point for the calculation of any payment made pursuant
to Section 4(b) for such month. The amount so determined, in P$,
shall be applied against the Peso Calculated Note when payment
in US$ is received by the Lender, until the balance remaining
due on the Peso Calculated Note is reduced to zero as explained
below, at which time Lender shall cancel the Peso Calculated
Note. The starting point for calculation of the remaining
balance of the Peso Calculated Note shall be the nominal sum of
P$ 3,717,850, determined by applying an agreed rate of P$ 3.60
per US$ to the balance described in Section 2 (c). Payment shall
be made to Lender in the United States in US$, converted at the
market rate, as determined by Citizens Bank on the date of
payment, subject to the provisions of Section 7. Lender shall
cancel the Peso Calculated Note once the amounts applied have
reduced to zero the balance of principal and interest due from
the starting point sum of P$ 3,717,850, provided, however, that
any P$ needed by the Borrower to purchase US$ at a rate higher
than the corresponding rate indicated in Exhibit C hereof shall
not be credited against the remaining balance of principal and
interest on the original sum of P$ 3,717,850. By way of example,
if the determined amount of P$ pursuant to this Section 4(d) in
January of 2003 is P$50,000, and the market rate is 5, the
Borrower shall require P$51,759.83 to meet its payment
obligation under the Peso Calculated Note for such month, but
only P$50,000 shall be credited against the remaining balance of
principal and interest on the original starting point of
P$3,717,850. The parties recognize that the effect of the
exchange rate limitations of Section 7 may be that Borrower's
actual cost in P$ may exceed the five percent (5%) limitation
set forth above and that the final amount of P$ needed to cancel
the Peso Calculated Note may exceed P$3,717,850.
(e) Nothing contained in Section 4(d) shall be construed as
relieving Borrower's obligations as set forth in Section 4(c).
(f) Upon the occurrence of a Default (as defined in Section 5), the
Notes shall become due and payable immediately without
presentment, demand, protest or notice, all of which are hereby
waived by Borrower, (1) automatically in the case of Section
5(f) or 5(g); and (2) at the election of Lender by notice to
Borrower in the case of Sections 5(a) through 5(e).
(g) The Peso Calculated Note may be prepaid at any time, without
premium or penalty, upon three (3) business days notice, which
notice of prepayment shall be irrevocable.
(h) The provisions of this Section 4 supersede the provisions of
Section 5 of the Loan Agreement.
5. Default; Consequences of Default.
Each of the following events shall constitute an immediate default (a
"Default") under the Loan Agreement, as amended, and the Notes, unless
waived by Lender:
(a) Borrower shall fail to pay any amount as and when the same shall
become due pursuant to the terms of the Notes and the Loan
Agreement, as amended, and such amount shall remain unpaid for a
period of five (5) days;
(b) any representation or warranty of Borrower contained in the Loan
Agreement shall have been incorrect in any material respect as
of the date made;
(c) Borrower shall fail to provide Lender with immediate notice of
its failure or inability to comply with any provision of Section
7 of the Loan Agreement;
(d) Borrower shall materially default in the observance or
performance of any other material agreement or covenant
contained in the Loan Agreement, as amended, the Notes, the
License Agreement or any other agreement with Lender or an
affiliate of Lender, and such default shall not have been cured
or waived within thirty (30) days of the occurrence of such
default;
(e) Borrower shall materially deviate from the approved budget, or
shall materially fail to achieve the approved projected cash
flow for two consecutive quarters (in each case, as defined in
the Loan Agreement);
(f) the entry of any decree or order by a court having jurisdiction
adjudging Borrower a debtor or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of Borrower under
Argentina Bankruptcy law Nbr. 24,522, as amended (the
"Bankruptcy Law") or any other applicable federal or state law,
the appointment of a receiver, liquidator, assignee, trustee,
sequestrator or other similar official of Borrower, or of any
substantial part of the property of Borrower, and the
continuance of any such decree or order unstayed, undischarged,
or undismissed and in effect for more than sixty (60)
consecutive days; or
(g) institution by Borrower of proceedings, under the Bankruptcy Law
or any other applicable federal or state law, seeking an order
for relief, or the consent of Borrower to the institution of
bankruptcy or insolvency proceedings against Borrower, or the
consent by Borrower to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator or other similar official of or for Borrower or any
substantial part of the property of Borrower, or the making by
Borrower of any assignment for the benefit of creditors, or the
admission by Borrower of Borrower's inability to pay its debts
generally as they become due, or the taking of any action by
Borrower in furtherance of any such action.
(h) Lender shall not make demand for payment of the Dollar Note or
of the Peso Calculated Note except in the event of Default
hereunder. In no event shall Lender make demand for more than
the amount due pursuant to the provisions of this Agreement.
(i) The provisions of this Section 5 supersede the provisions of
Section 6 of the Loan Agreement.
6. Renewal of the License Agreement.
Upon expiration of the term of the License Agreement and provided that
Borrower is not in default under the Loan Agreement, as amended, or
under the License Agreement, Lender agrees to consent to renewal for a
period ending on the earlier of December 31, 2009 or the date of any
default under the Loan Agreement, as amended. Except for such agreement,
all provisions and conditions of the License Agreement shall remain in
effect including, but not limited to, conditions relating to the
Borrowers financial and technical ability, as licensee, to perform its
obligations thereunder and rights of termination as set forth in the
License Agreement. The terms of and such renewal agreement offered to
Borrower by Lender may differ from the terms of the License Agreement,
provided, however, that such terms shall not be materially less
favorable to Borrower than the terms of agreements offered to other
licensees or prospective licensees similarly situated at the time.
7. Exchange Rate Protection.
The provisions of Sections 4 (b) and 4 (d), above, for the conversion of
Argentine Pesos to United States Dollars shall be subject to the
limitation that the conversion rate used shall not be higher that the
rate set forth on Exhibit C for such month, nor lower than three (3) P$
per US$.
8. Amendment to Stock Purchase Agreement.
The parties agree that the date set forth in Section 11.1 (a) of that
certain Stock Purchase Agreement of September 5, 2002, by and among
LoJack Corporation, Xx. Xxxxxx Xxxxxxxxx and Xx. Xxxxxxx Xxxxxxx Rey is
changed from August 31, 2003 to December 31, 2009.
9. Continued effect of Guaranty and Pledges.
The parties agree that the obligations set forth in a Guaranty of
September 5, 2002 by Xx. Xxxxxx Xxxxxxxxx and the obligations set forth
in two Pledge and Security Agreements of September 5, 2002 each in favor
of Lender and executed by Xx. Xxxxxx Xxxxxxxxx and Xx. Xxxxxxx Xxxxxxx
Rey, respectively, remain in full force and effect with respect to the
obligations set forth in the Loan Agreement as amended by this
Amendment.
10. Further Assurances.
The Parties shall each execute and deliver such additional documents,
and take such additional actions, as may be necessary from time to time
to implement the provisions of this Agreement, provided that this
Section 10 shall not alter the obligations and rights of the Parties
hereunder.
11. Continued Effectiveness.
Except as specially amended herein, the License Agreement, the Loan
Agreement, the Guaranty, the Pledge and Security Agreements, the Stock
Purchase Agreement and all other agreements among the parties shall
remain in full force and effect.
12. Counterparts.
This Amendment may be executed by one or more of the Parties on any
number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement as of the date first above written.
BORROWER:
Car Security S.A.
By: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
LENDER:
LoJack Recovery Systems Business Trust
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: President
OTHER PARTIES:
The following are parties to the
Amendment only to the extent and for
the purposes set forth in Sections 8,
9, 10 and 11 hereof:
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxxx Xxxxxxx Rey
/s/ Xxxxxxx Xxxxxxx Rey
-----------------------
LoJack Corporation
/s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: President
Exhibit A
PROMISSORY NOTE
US$ 716,512
Buenos Aires, Argentina November 30, 2002
CAR SECURITY S.A. ("Car Security"), domiciled at Xxxxxxx xxx Xxxxxxxxxx 0000,
0000 Xxxxxx Xxxxx, Xxxxxxxxx, hereby promises to unconditionally pay, on demand
and WITHOUT PROTEST, to LoJack Recovery Systems Business Trust, a Massachusetts
business trust ("LoJack"), "NO A LA ORDEN", the amount of US$ Seven Hundred
Sixteen Thousand Five Hundred Twelve ($716,512 U.S. dollars), plus reasonable
legal, accounting and all other reasonable transaction costs directly incurred
in connection with this Note and the transactions contemplated hereby, or so
much thereof as may from time to time be advanced and remain unpaid hereunder.
Said payment shall only be made in U.S. dollars (effective payment in foreign
currency clause, section 44, third paragraph, Decree 5965/63) to the order of
LoJack at its offices located at Westwood Executive Center, 000 Xxxxxx Xxxxx
Xxxx, Xxxxx 0000, Xxxxxxxx, XX 00000.
Car Security shall also pay LoJack financing interest at an interest rate fixed
at one percent the prime rate published from time to time by Citizens Bank,
Boston, Massachusetts, compounded monthly.
In the event that, as a consequence of foreign exchange controls, restrictions
on the transfer of foreign currency from or to the Republic of Argentina or by
reason of any other action taken by a competent governmental body, we were
prevented from making the relevant payment in the currency agreed, we shall
deliver to the legitimated holder hereof, at the latter's option: a) External
Bonds of the Republic of Argentina or any other U.S. dollar-denominated
securities issued by the National Government of any series chosen by the
legitimated holder hereof, at its sole discretion, in such number and with such
nominal value as shall suffice so that upon the sale thereof in a foreign
market, at the option of the legitimated holder hereof, the proceeds in U.S.
dollars, net of all expenses, fees and/or taxes that may be payable by reason of
its transfer or sale, shall be equal to the amount in U.S. dollars payable; or
b) the amount in legal tender then in force in the Republic of Argentina as may
be required to acquire External Bonds of the Republic of Argentina or any other
U.S. dollar-denominated securities issued by the National Government of any
series chosen by the legitimated holder hereof, at its sole discretion, in such
number and with such nominal value as shall suffice so that upon the sale
thereof in a foreign market, at the option of the legitimated holder hereof, the
proceeds in U.S. dollars, net of all expenses, fees and/or taxes that may be
payable by reason of its transfer or sale, shall be equal to the amount in U.S.
dollars payable. In either case, any of the above procedures shall only be
regarded as a discharge of obligations once the legitimated holder hereof shall
have received the entire amount of U.S. dollars due hereunder.
Car Security expressly waives its right to invoke its inability to fulfill any
payment obligation based on acts of God or force majeure events (section 514 of
the Civil Code). Car Security further represents that, upon executing this
acknowledgement of obligations, it is fully familiar with the current economic
and financial conditions (including the exchange rate ratio among the Argentine
currency, the Euro and
the U.S. dollar set forth in law 23.928 as amended by law 25.445), having
considered all possible consequences arising from those acts and having acted
with the independent advice it has deemed convenient, for which reason it
expressly waives the right to invoke hardship ("teoria de la imprevision") as
contemplated in section 1198 of the Argentine Civil Code, the unconscionability
theory and/or any other doctrine, concept or theory already established or which
may be established in the future either by law, case law or doctrine, which may
in any way release Car Security from the full, total and timely performance of
its obligations as acknowledged hereunder.
In case of lack of payment upon presentation of this promissory note, penalty
interest shall accrue hereon at a rate equal to 1.5 times the interest rate
charged by the Banco de la Nacion Argentina (Lending Rate) for discount
transactions of 30-day negotiable instruments.
For all legal purposes arising from this Promissory Note, Car Security
establishes special domicile at Xxxxxxx xxx Xxxxxxxxxx 0000, 0000 Xxxxxx Xxxxx,
Xxxxxxxxx, where all notices served shall be deemed validly given. We expressly
accept that such domicile shall be regarded as our domicile ad litem for all
judicial purposes in the terms of section 40 and related sections of the
Argentine Code of Civil and Commercial Procedure. We submit to the jurisdiction
of the Ordinary First Instance Courts hearing Commercial Matters of the City of
Buenos Aires, expressly waiving any other venue or jurisdiction.
Pursuant to the provisions of section 36 of Executive Order 5965/63, the term
for presentation of this promissory note is extended to 9 years counted as from
the issuance date hereof.
This Promissory Note is issued under the terms of Decree 5965/63 of the Republic
of Argentina.
CAR SECURITY S.A.
_________________________________
By: _____________________________
Title: __________________________
Exhibit B
PROMISSORY NOTE
United States Dollars $1,032,736
Buenos Aires, Argentina November 30, 2002
CAR SECURITY S.A. ("Car Security"), domiciled at Xxxxxxx xxx Xxxxxxxxxx 0000,
0000 Xxxxxx Xxxxx, Xxxxxxxxx, hereby promises to unconditionally pay, on demand
and WITHOUT PROTEST, to LoJack Recovery Systems Business Trust, a Massachusetts
business trust ("LoJack"), "NO A LA ORDEN", the amount of One Million Thirty-Two
Thousand Seven Hundred Thirty-Six (1,032,736) United States Dollars, plus
reasonable legal, accounting and all other reasonable transaction costs directly
incurred in connection with this Note and the transactions contemplated hereby,
or so much thereof as may from time to time be advanced and remain unpaid
hereunder. Said payment shall only be made in U.S. dollars converted at the rate
in effect on the date of payment at Citizens Bank, Boston, Massachusetts, USA
(effective payment in foreign currency clause, section 44, third paragraph,
Decree 5965/63) to the order of LoJack at its offices located at Westwood
Executive Center, 000 Xxxxxx Xxxxx Xxxx, Xxxxx 0000, Xxxxxxxx, XX 00000.
Car Security shall also pay LoJack financing interest at an interest rate fixed
at one percent the prime rate published from time to time by Citizens Bank,
Boston, Massachusetts, compounded monthly.
In the event that, as a consequence of foreign exchange controls, restrictions
on the transfer of foreign currency from or to the Republic of Argentina or by
reason of any other action taken by a competent governmental body, we were
prevented from making the relevant payment in the currency agreed, we shall
deliver to the legitimated holder hereof, at the latter's option: a) External
Bonds of the Republic of Argentina or any other U.S. dollar-denominated
securities issued by the National Government of any series chosen by the
legitimated holder hereof, at its sole discretion, in such number and with such
nominal value as shall suffice so that upon the sale thereof in a foreign
market, at the option of the legitimated holder hereof, the proceeds in U.S.
dollars, net of all expenses, fees and/or taxes that may be payable by reason of
its transfer or sale, shall be equal to the amount in U.S. dollars payable; or
b) the amount in legal tender then in force in the Republic of Argentina as may
be required to acquire External Bonds of the Republic of Argentina or any other
U.S. dollar-denominated securities issued by the National Government of any
series chosen by the legitimated holder hereof, at its sole discretion, in such
number and with such nominal value as shall suffice so that upon the sale
thereof in a foreign market, at the option of the legitimated holder hereof, the
proceeds in U.S. dollars, net of all expenses, fees and/or taxes that may be
payable by reason of its transfer or sale, shall be equal to the amount in U.S.
dollars payable. In either case, any of the above procedures shall only be
regarded as a discharge of obligations once the legitimated holder hereof shall
have received the entire amount of U.S. dollars due hereunder.
Car Security expressly waives its right to invoke its inability to fulfill any
payment obligation based on acts of God or force majeure events (section 514 of
the Civil Code). Car Security further represents that, upon executing this
acknowledgement of obligations, it is fully familiar with the current economic
and financial conditions (including the exchange rate ratio among the Argentine
currency, the Euro and the U.S. dollar set forth in law 23.928 as amended by law
25.445), having considered all possible consequences arising from those acts and
having acted with the independent advice it has deemed convenient, for which
reason it expressly waives the right to invoke hardship ("teoria de la
imprevision") as contemplated in section 1198 of the Argentine Civil Code, the
unconscionability theory and/or any other doctrine, concept or theory already
established or which may be established in the future either by law, case law or
doctrine, which may in any way release Car Security from the full, total and
timely performance of its obligations as acknowledged hereunder.
In case of lack of payment upon presentation of this promissory note, penalty
interest shall accrue hereon at a rate equal to 1.5 times the interest rate
charged by the Banco de la Nacion Argentina (Lending Rate) for discount
transactions of 30-day negotiable instruments.
For all legal purposes arising from this Promissory Note, Car Security
establishes special domicile at Xxxxxxx xxx Xxxxxxxxxx 0000, 0000 Xxxxxx Xxxxx,
Xxxxxxxxx, where all notices served shall be deemed validly given. We expressly
accept that such domicile shall be regarded as our domicile ad litem for all
judicial purposes in the terms of section 40 and related sections of the
Argentine Code of Civil and Commercial Procedure. We submit to the jurisdiction
of the Ordinary First Instance Courts hearing Commercial Matters of the City of
Buenos Aires, expressly waiving any other venue or jurisdiction.
Pursuant to the provisions of section 36 of Executive Order 5965/63, the term
for presentation of this promissory note is extended to 9 years counted as from
the issuance date hereof.
This Promissory Note is issued under the terms of Decree 5965/63 of the Republic
of Argentina.
CAR SECURITY S.A.
_________________________________
By: _____________________________
Title: __________________________
EXHIBIT C
MAXIMUM EXCHANGE RATES
Jan Feb March April May June July August Sept Oct Nov Dec
2003 4.83 4.92 5.00 5.08 5.17 5.25 5.33 5.42 5.50 5.58 5.67 5.75
2004 5.79 5.83 5.88 5.92 5.96 6.00 6.04 6.08 6.13 6.17 6.21 6.25
2005 6.27 6.29 6.31 6.33 6.35 6.38 6.40 6.42 6.44 6.46 6.48 6.50
2006 6.52 6.54 6.56 6.58 6.60 6.63 6.65 6.67 6.69 6.71 6.73 6.75
2007 6.77 6.79 6.81 6.83 6.85 6.88 6.90 6.92 6.94 6.96 6.98 7.00
