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Exhibit 10.37
MODIFICATION AGREEMENT
This Modification Agreement (the "Agreement") is entered into
among Saturn Investments, Inc. a Delaware company (the "Investor"), The Tracker
Corporation, an Ontario corporation ("Tracker Canada"), The Tracker Corporation
of America, a Delaware corporation (the "Company"), I. ▇▇▇▇▇ ▇▇▇▇▇, an
individual ("▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual ("Gertzbein"), ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, an individual ("▇. ▇▇▇▇▇"), as of the 27th day of May, 1997, (▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇ referred to collectively herein as the "Controlling
Shareholders").
RECITALS
1. In March 1994, Tracker Canada received an investment of CDN
$3,350,000 from Stalia Holdings B.V. ("Stalia") for units consisting of common
shares of Tracker Canada and warrants to purchase common shares of Tracker
Canada. On March 14, 1994, Tracker Canada and the Controlling Shareholders
entered with Stalia into (I) a Stock Option Agreement (the "Option Agreement")
granting to Stalia the right to purchase an additional amount of common shares
that would provide Stalia (when combined with common shares held by Stalia at
the time of exercise) with ownership of 25% of Tracker Canada's issued and
outstanding voting equity securities and (ii) a Right of First Refusal, Co-Sale
and Voting Agreement (the "Voting Agreement") granting to Stalia certain rights
with respect to any issuance of equity securities by Tracker Canada, any sale of
shares by the Controlling Shareholders and certain shareholder voting issues.
2. Since the date of the Voting Agreement, the parties to the
Voting Agreement have changed. As a result of the reorganization of the Company
and Tracker Canada, and pursuant to that certain Agreement dated July 1994 by an
among Stalia, Tracker Canada, the Company and the Controlling Shareholders (the
"July 1994 Agreement"), the Company has assumed all of the obligations of
Tracker Canada under the Voting Agreement and the Option Agreement. Pursuant to
that certain ▇▇▇▇ of Sale dated January 31, 1996 (the "▇▇▇▇ of Sale)", Stalia
has transferred to the Investor all of Stalia's rights, title and interest In
certain assets of Stalia, including Stalia's rights under the Voting Agreement
and the Option Agreement.
3. In connection with the registration of the Company's equity
securities pursuant to the registration statement the ("Registration Statement")
that has been filed with the U.S. Securities and Exchange Commission (the "SEC")
and declared effective by the SEC on October 21, 1996 (the "Effective Date"),
the parties now desire to modify the Voting Agreement to, among other things:
(1) incorporate the information and notice obligations set forth in that certain
letter from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), on behalf of Tracker Canada, to Stalia
dated June 7, 1994 (the "June 1994 Letter"); (2) reflect the changes in the
identity of the parties from Tracker Canada to the Company and from Stalia to
the Investor; (3) clarify the nature of the "public offering" which triggers
termination of all of the provisions of the Voting Agreement
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and the Option Agreement; and (4) terminate the Option Agreement and right of
co-sale provisions of the Voting Agreement as of the Effective Date.
4. As of June 25, 1996, the Controlling Shareholders each held
the number of shares of Common Stock of the Company and Exchangeable Preference
Shares of Tracker Canada, which are exchangeable for Common Shares of the
Company (collectively, the "Common Shares"), described in the Registration
Statement.
5. Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in the Voting Agreement.
AGREEMENTS
NOW THEREFORE, on the stated premises and for and in
consideration of the mutual benefits to the parties to be derived herefrom, the
parties hereby agree as follows:
1. The Option Agreement shall be deemed terminated as of the
Effective Date and, as of such date, shall no longer have any legal force or
effect.
2. The rights of co-sale set forth in Article III of the
Voting Agreement shall be deemed terminated as of the Effective Date and, as of
such date, such Article III shall no longer have any legal force or effect.
3. The Voting Agreement shall be amended as follows:
3.1 A new definition shall be added to Article 1 of the
Voting Agreement, as follows:
"Business Day" shall mean any day on which
banks are open for business in New York, New
York, U.S.A.
3.2 The definition of "New Securities" under
Article I of the Voting Agreement shall be
amended to read as follows:
"New Securities" shall mean any capital stock
(including Common Shares or preferred shares) of the
Company, whether now authorized or not, and rights,
options or warrants to purchase capital stock, and
securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that
the term "New Securities" does not include (i)
securities issued pursuant to any stock dividend,
stock split, combination or other reclassification by
the Company of all of its capital stock; (ii)
securities covered by a registration statement which
has been declared effective under the 1933 Act; (iii)
securities issued pursuant to an employee stock
option, stock purchase, stock wage
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or other similar plan; (iv) securities issued after
the date of this Agreement if such securities are
issued pursuant to the exercise, exchange or
conversion of any options, warrants, evidences of
indebtedness, shares of stock or other securities
which are convertible, exchangeable or exercisable
for Tracker shares, either immediately or upon the
arrival of a specified date or the happening of a
specified event ("Convertible Securities") that are
outstanding as of the date of this Agreement or of
any Convertible Securities that have been authorized
to be issued by the Company's Board of Directors as
of the date of this Agreement; and (v) securities
issued to any person not a party to this Agreement
for consideration other than cash.
3.3 The definitions of "OBCA" and "Warrants" under
Article 1 of the Voting Agreement shall be deleted.
3.4 Section 2.1 under Article II of the Voting
Agreement shall be amended to read as follows:
GRANT OF RIGHTS. The Company hereby grants
to the Investor the right of first to purchase, pro rata, all
New Securities which the Company may, from time to time
propose to sell and issue. The Investor's pro rata share, for
purposes of this right of first refusal, shall be equal to a
fraction (A) the numerator of which is the number of Common
Shares held by the Investor on the date of the Company's
written notice pursuant to Section 2.2 below (the "Notice
Date"); and (B) the denominator of which is the number of
Common Shares outstanding on the Notice Date; and (B) the
denominator of which is the number of Common Shares
outstanding on the Notice Date.
3.5 Section 2.2 under Article II of the Voting
Agreement shall be amended to read as follows:
REQUIRED NOTICES. In the event the Company proposes
to undertake an issuance of New Securities, it shall give the
Investor written notice of its intention, describing the type
of New Securities, the price and the general terms upon which
the Company proposes to issue the same. The Investor shall
have seven (7) Business Days from the date of receipt of any
such notice to agree to purchase any amount of New Securities
up to the Investor's pro rata share of such New Securities for
the price and upon the general terms specified in the notice
by giving written notice to the Company and stating therein
the quantity of New Securities to be purchased.
3.6 Section 2.3 under Article II of the Voting
Agreement shall be amended as follows:
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COMPANY'S RIGHT TO SELL In the event the Investor
fails to exercise the right of first refusal as to all New
Securities offered within said seven (7) Business Day period,
the Company shall have sixty (60) days thereafter to sell or
enter into an agreement (pursuant to which the sale of New
Securities covered thereby shall be closed, if at all, within
one hundred twenty (120) days from the date of said agreement)
to sell all such New Securities respecting which the
Investor's option was not exercised, at a price and upon
general terms no more favorable in any material respect to the
purchasers thereof than specified in the Company's notice. In
the event the Company has not sold within said sixty (60) day
period or entered into an agreement to sell all such New
Securities within said sixty (60) day period (or sold and
issued all such New Securities in accordance with the
foregoing within one hundred twenty (120) days from the date
of said agreement), the Company shall not thereafter issue or
sell any New Securities, without first offering such
securities to the Investor in the manner provided above.
3.7 Section 2.4 under Article II of the Voting
Agreement shall be amended as follows:
3.8 Section 4.2 under Article IV of the Voting
Agreement shall be amended to read as follows:
PROTECTIVE PROVISIONS In light of the Investor's
financial investment in the Company, without first obtaining
the written consent of the Investor, the Controlling
Shareholders, subject to their fiduciary duties under Delaware
law, shall not vote for, and shall exercise their best efforts
as significant shareholders of the Company to ensure that the
Board does not approve:
(a) the liquidation or dissolution of the
Company;
(b) the declaration or payment of any
dividends or the making of any distribution of any
distribution out of the ordinary course of the Company's
business, whether in cash or any other property, to the
shareholders of the Common Stock of the Company. This Section
4.2 shall not apply to dividends declared or paid in
connection with any class of the Company's Preferred Stock;
and
(c) any material alteration in the rights,
preferences, privileges and restrictions of the Common Shares.
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3.9 Section 4.4 under Article IV of the Voting
Agreement shall be amended to read as follows:
4.4 Each of the Company and Tracker Canada hereby
acknowledge and agree to (a) provide a designee of the
Investor in the U.S. or Canada with copies of all
communications made to its directors, including notice of any
directors' meetings; (b) allow such designee of the investor
to attend all Board meetings; (c) provide monthly updates on
their business and affairs, including updated cash-flow
reports; and (d) provide the Investor's counsel with all
documentation it may reasonably request relating to issues
which may affect the Investor.
3.10 Section 6.2 under Article IV of the Voting
Agreement shall be amended to read as follows:
NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be
deemed given (a) upon receipt if delivered personally, or sent
by facsimile to the numbers indicated below or (b) ten
calendar days after being mailed by airmail, certified or
registered mail, postage prepaid, return receipt requested,
address as follows:
If to the Investor: Saturn Investments Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Kingdom of Saudi Arabia
Attention: ▇▇▇▇▇ Abudawood
Facsimile: ▇▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇/▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: 44 171 926 2465
If to the Company: The Tracker Corporation of America
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
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Suite #1502
Toronto, Ontario
Canada M5G 1Z8
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: ▇ (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ #▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Controlling to the address or facsimile numbers
shareholders: set forth beside their signatures
below:
Any party may change the address and/or
facsimile number at which it is to receive notices by
notifying the other party to this Agreement as provided in
this Agreement as provided in this Section 6.2.
3.11 Section 6.13 under Article IV of the Voting
Agreement shall be amended to read as follows:
TERMINATION. This Agreement shall terminate upon the
earlier of (a) the date on which a registration statement of
the Company registering any equity securities of the Company
for sale to the general public in a primary offering under the
1933 Act is declared effective; or (b) March 14, 1999. The
Company shall give the Investor at least thirty (30) days
advance notice of the filing of any registration statement
described in (a) above.
4. AMENDMENT OF THE OPTION AGREEMENT. Section 9 of
the Option Agreement shall be amended to read as follows:
TERMINATION. This Agreement shall terminate
upon the earlier of (a) the date on which a registration
statement of the Company registering any equity securities of
the Company for sale to the general public in a primary
offering under the 1933 Act is declared effective; (b) March
14, 1999; (c) recission by the Investor pursuant to Section
4(c) hereof; or (d) immediately upon consummation of a sale
pursuant to Section 4(b) hereof. The Company shall give
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the Investor at least thirty (30) days advance notice of the
filing of any registration statement described in (a) above.
5. COMPLETE AGREEMENT. This Agreement, including the
Recitals contains the entire agreement between the parties with respect to the
transaction contemplated herein and shall supersede all previous oral and
written and all contemporaneous oral negotiations, commitments and
understandings, including but not limited to the July 1994 Agreement and the
June 1994 Letter. Notwithstanding the foregoing provisions, ▇▇▇▇▇▇▇ and Spire
Consulting Group, Inc. ("Spire") are not parties to this Agreement and their
rights and obligations and the rights and obligations of each of the parities to
this Agreement as they relate to ▇▇▇▇▇▇▇ and Spire, shall continue to be
governed by the Voting Agreement, prior to amendment herein, and the July 1994
Agreement.
6. WAIVER. Pursuant to Section 6.1 of the Voting
Agreement, each of the Investor, the Company and the Controlling Shareholders
hereby; (a) waives observance by each of the other parties to the Voting
Agreement of all terms of the Voting Agreement with respect to transactions of
which each such party had actual or constructive (e.g. through the Registration
Statement) knowledge as of the date of this Amendment; and (b) releases each of
the parties to the Voting Agreement from any and all claims that arise out of or
relate in any way to the Voting Agreement, but only if and to the extent that
such releasing party had actual or constructive (e.g., through the Registration
Statement) knowledge of the facts giving rise to any such claim as of the date
of this Amendment.
7. MODIFICATIONS AND AMENDMENTS. The terms of this
Agreement may be amended or modified only upon the written agreement of all of
the parties hereto. Notwithstanding the provisions of Section 6.7 of the Voting
Agreement, the parties to this Agreement hereby consent to the amendments made
herein to the Voting Agreement by this Agreement notwithstanding the fact that
▇▇▇▇▇▇▇ and Spire are not parties to this Agreement.
8. FURTHER ACKNOWLEDGMENTS. Tracker Canada and the
Controlling Shareholders hereby acknowledge that (a) the Voting Agreement (as
amended herein) shall continue in full force and effect notwithstanding
declaration by the SEC of the effectiveness of the Registration Statement until
such time as the Company publicly offers its securities for cash pursuant to a
registration statement in connection with a primary offering in accordance with
the Voting Agreement or expiration thereof, and (b) nothing contained herein
shall obligate the Investor to provide any further waivers or consent with
respect to its rights under the Option Agreement or the Voting Agreement. The
Company, Tracker Canada and the Controlling Shareholders hereby agree to execute
and deliver (or to cause any party under their control to execute and deliver)
such further documents and instruments and take such other actions (or cause the
same) as the Investor may reasonably request from time to time in order to
protect its
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rights hereunder.
9. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute but one agreement.
(SIGNATURES APPEAR ON FOLLOWING PAGES)
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IN WITNESS WHEREOF, the Parties have caused
this Agreement to be duly executed and delivered by their duly authorized
representatives as of the day and year first above written.
SATURN INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇ ▇. Abudawood
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▇▇▇▇▇ ▇. Abudawood
Director
THE TRACKER CORPORATION OF AMERICA
By: /s/ I. ▇▇▇▇▇ ▇▇▇▇▇
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I. ▇▇▇▇▇ ▇▇▇▇▇
Chairman & CEO
THE TRACKER CORPORATION
By: /s/ I. ▇▇▇▇▇ ▇▇▇▇▇
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I. ▇▇▇▇▇ ▇▇▇▇▇
Chairman & CEO
By: /s/ I. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
I. ▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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