Sep. 22, 2009 (PR Newswire) --

WESTWOOD, Mass., Sept. 22 /PRNewswire/ -- LoJack Corporation (Nasdaq GS: LOJN) reported today that it has entered into a comprehensive agreement to settle all pending disputes with Kington Holdings Limited, its former licensee in China. The settlement agreement provides that all cases relating to the November 2007 termination of the license agreement between the parties will be dismissed. In addition, the settlement provides for broad based releases by all parties and their affiliates of all claims relating to the business in China with Kington Holdings Limited, including all claims in the arbitration proceeding and the ongoing litigation in Massachusetts and Hong Kong. The settlement also prohibits any other action by the parties to this agreement related to the litigation. Additionally, the settlement agreement includes a provision providing that, for a period of three years, Kington Holdings Limited and their affiliates are precluded from acquiring any equity interest in LoJack Corporation.

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In return, the settlement agreement provides that LoJack Corporation and LoJack Equipment Ireland Limited will pay the former licensee approximately $18.3 million by September 25, 2009 upon satisfaction of the conditions specified in the settlement agreement. On an after tax basis, the settlement will have a net impact of approximately $13.6 million in the third quarter of this year.

As a result of the settlement payment, LoJack Corporation entered into a Waiver Agreement with the company's lending institutions, waiving its non-compliance with financial covenants due to the settlement payment. The Waiver Agreement provides the company with a limited waiver through December 30, 2009. As part of the waiver, the lenders will not make new loans or issue new letters of credit under the credit agreement. The company is currently negotiating to amend or replace its credit facility and expects the process to be completed by December 30, 2009.

Ronald V. Waters, President and Chief Executive Officer said, "We concluded that it was in the best interest of the company and shareholders to eliminate the risk related to any potential judgment and limit the financial exposure related to the cases. Additionally, our decision avoids further significant legal expenditures to litigate these cases.

"We are committed to maintaining LoJack's solid financial position and expect to deliver significant operating cash flow for the year, before settlement payments. We have maintained a strong balance sheet and believe that we have sufficient liquidity to effectively manage our day to day business.