Agreement For The Manufacturing & Supply of Vlu5 Products

Exhibit 10.1 ** CONFIDENTIAL PORTIONS HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION (THE " COMMISSION" )

AGREEMENT FOR THE MANUFACTURING & SUPPLY OF VLU5 PRODUCTS 1. PARTIES & EFFECTIVE DATE

AGREEMENT (this " Agreement" ), effective 1 January 2008 (" Effective Date" ) is made between: Plextek Limited, a company registered in England (No. 2305889) and having its registered office at London Road, Great Chesterford, Essex, CB10 1NY, UK (" Plextek" ), LoJack Equipment Ireland Limited whose registered office is at 25-28 North Wall Quay, Dublin 1 (" LEI" ) and LoJack Operating Company, L.P, a Delaware Limited Partnership having its principal place of business at Meditech Executive Center, 200 Lowder Brook Drive, Suite 1000, Westwood, MA 02090 (" LOC" and, collectively with LEI, " Customer" ). 2. PURPOSE

Plextek and Customer desire to enter into a contract on the terms stated herein for Plextek to continue to manufacture and supply to Customer VLU5 stolen vehicle recovery products (including all variants thereof) (" Products" ) in accordance with the terms and conditions set forth in this Agreement. This Agreement supersedes the Design, Manufacturing and Supply Agreement of December 29, 2003, as amended, and all other agreements and understandings with respect to the manufacture and supply of VLU products, except the Technology Escrow Agreement of January 1, 2006, and the Agreement of June 20, 2006 among Plextek, Customer and Clarion (Malaysia) Sdn Bhd.

3. SCOPE OF AGREEMENT

This Agreement governs supporting Customer' s previous Product designs including any engineering and design required for manufacturing, maintaining or commencing volume production, all coordination with the approved contract manufacturer, preparation of the manufacturing line for volume production, and the supply of such Products by Plextek to Customer during the term.

4. PRODUCT AND SERVICES SUPPLY


4.1

Notwithstanding anything herein to the contrary, Customer shall not be restricted from having 3 rd parties manufacture and supply products other than VLU5 Products without remuneration to Plextek. 4.2

Customer agrees to purchase from Plextek, and Plextek agrees to sell to Customer not less than ** VLU5 Products (the " Minimum Volume Commitment" ) from ** to ** subject to the terms and conditions of this Agreement. At Customers option, the number of units which Customer


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shall Purchase and Plextek shall supply may be increased by up to ** additional units, and the production period but not the period within which the Minimum Volume Commitment must be purchased may be extended by up to ** .

4.3 Plextek shall continue to use the current contract manufacturer for the Products to be produced pursuant to this Agreement. 4.4 Plextek shall share with Customer all information relating to the production, development, and supply of the Products. Without limiting the foregoing, Plextek shall provide Customer on a timely basis the complete bill of materials, schematics, gerber files, source code, object code, and manufacturing test code for each Product, together with all updates and revisions thereto, and complete cost information for all goods and services, whether provided directly by Plextek or by subcontract or purchase.

4.5 Plextek shall use commercially reasonable efforts to continuously reduce the cost of the Products, while maintaining or exceeding Customer' s quality standards and specification requirements.

4.6 The parties shall continue to use the already established Executive Steering Committee whose processes are to communicate high level issues related to services and products provided by Plextek as defined in this agreement. The Executive Steering Committee shall maintain its current structure and shall continue to meet twice per year. The Operating Team will continue to meet on a weekly basis to address ongoing operational issues.

4.7 Without Customer' s prior written consent, (i) Plextek shall not produce for, or sell to, any third party any LoJack System products, services or components, and (ii) Plextek shall cause the contract manufacturer for the Products not to produce for, or sell to, any third party any LoJack System products, services or components, except for Permitted Products. " Permitted Products" shall mean products not in excess of ** units per annum which (i) incorporate a circuit design or circuit board designed for the VLU5 product, (ii) are sold to a governmental agency for national security or military purposes, (iii) are not for tracking, location and recovery of vehicles, goods in transit, people and valuable or important mobile objects, and (iv) do not incorporate Customer proprietary information other than that created by NRE under a contract between Customer and Plextek in connection with the circuit or circuit board design. The foregoing is not intended to preclude the use of a VLU5 radio circuit for communications in a device which determines location by GPS or other technology without use of Customer proprietary information. In the event that Plextek has a market for Permitted Products in excess of ** units per annum, the parties will negotiate in good faith for an equitable remuneration to Customer on a per unit basis. Such remuneration shall not exceed the lesser of $ ** /unit or ** % of the VLU5 derived element of Plextek' s margin on such units. Plextek shall not restrict the contract manufacturer for the Products (or any supplier) from contracting with, manufacturing for, or selling to, Customer.

5. UNIT PRICES

5.1 Unit pricing for all products shall be as set forth in Exhibit A hereto.

5.2 All pricing and payments hereunder shall be denominated and paid in US Dollars.


2 6. ORDER, PLANNING AND FORECAST PROCEDURE

6.1 2008 Plan . Customer will deliver to Plextek a plan with volumes through December 2008 or any applicable extended term. Projected volumes will include a break-out of volumes by frequency variations.

6.2 Rolling Forecast . Each month Customer will provide to Plextek a schedule (" Recon" ) that outlines monthly requirements by derivative and variant. Customer and Plextek will develop mutually agreeable forecasting and ordering procedures, it being understood that Customer' s and Plextek' s objective is to have such procedures be consistent with the following: 6.2.1 The first month of the succeeding quarter shall constitute a firm order for the specified quantities. The second month shall constitute a firm order, which may be adjusted for each Product up or down not more than 15% by Customer by written notice given during the first month; provided, however, that Plextek agrees to negotiate in good faith with the contract manufacturer to obtain additional flexibility with minimal impact to Customer' s total cost. The third month shall constitute a firm order, which may be adjusted up or down not more than 25% by Customer by written notice given during the first month, and not more than 15% by written notice given during the second month.

6.2.2 In the event specialized inventory is required to build inventory for Products that are designed to operate in countries where a small quantity of Products generally are sold each year, then Customer agrees to reimburse Plextek (at cost) for any excess component or material inventory purchased for such small volume variants due to bulk purchasing requirements. Inventory reconciliation shall be made every six months during the term. Notwithstanding the foregoing, Customer' s reimbursement obligation shall not accrue so long as there is an ongoing forecast of unit purchases for such small volume variants. 6.2.3 Plextek shall be required to accept and deliver orders consistent with this Section 6.2 provided that if Plextek determines in good faith that compliance with this obligation would result in Plextek being unable to continue to perform its obligations under this Agreement without jeopardizing its ability to operate as a going concern, then the parties agree to use good faith efforts to negotiate a mutually acceptable resolution, such resolution potentially including without limitation Plextek relinquishing its remaining obligations to Customer at a price (if any) to be determined based on the circumstances and in exchange for transferring to Customer all Plextek' s rights and responsibilities under this Agreement and under any associated supply agreement with the contract manufacturer.

6.3 Conference Calls . There shall be a weekly conference call to finalize weekly shipping information, and to give insight into future periods in accordance with the above schedule.

6.4 Purchase Orders . Customer will issue a blanket purchase order that shall be amended periodically to reflect orders becoming firm and changes in quantities pursuant to Section 6.2.1 and for other changes agreed by the parties. Only written or secure electronically dispatched purchase orders issued by Customer shall be valid. Verbal orders, additions or changes, shall be legally binding solely to the extent confirmed in writing by facsimile or secure electronic means by Customer and accepted by Plextek in writing (including by facsimile or secure electronic means). Plextek shall confirm purchase orders, or additions or changes thereto, within five (5) working days of receipt.


3 6.5 Inventory . Plextek shall maintain a piece part inventory to support Product mix and frequency shifts to accommodate short term shifts in demand in accordance with the discretion provided for in Section 6.2.1. Availability of materials to support production will be maintained at an agreed upon level, and reviewed monthly. The parties agree to negotiate in good faith on a case-by-case basis, any fluctuations within lead times that may become necessary.

6.6 Approved Vendor List . Plextek shall maintain an approved vendor list for all components used in the production of Products for Customer, subject to review and approval by Customer.

6.7 Production Procedures . Production of Products shall include procedures for supplying secret codes, serializing, packaging, and labeling as specified by Customer.

6.8 Disaster Recovery . Plextek will continue to execute the manufacturing of Products in two separate facilities with similar capacity levels to mitigate the loss of production and testing capacity should one of the facilities suffer an incident such as fire or explosion that would render all or part of the manufacturing capacity useless.

6.9

Contingency for 2 nd Source for Manufacturing . Plextek will develop and maintain a business relationship with at least one alternative contract manufacturer which could be used to produce Products promptly following any force majeure event involving the then current contract manufacturer, or any failure of the then current contract manufacturer to perform as agreed. 6.10 Service Level Commitments . Plextek and Customer will jointly develop appropriate service level commitments relating to such matters as delivery schedules, quality standards, process controls, invoice accuracy, and forecast accuracy.

6.11 Information Requirements . Plextek and Customer will utilize existing appropriate information reporting requirements covering such matters as advance shipping notices, production schedules, inventories, production yields, and in-transit materials.

6.12 Quality and Reliability Standards . Plextek shall build, and shall cause its contract manufacture to build, all Products utilizing professional workmanship and quality standards consistent with the standards maintained by experienced high quality electronics manufacturers of similar products.

7. PAYMENT

7.1

Unless agreed otherwise, payment of all valid invoices rendered under this Agreement for goods sold to Customer shall be made in US Dollars within 30 days from the later of (i) receipt of invoice at Customer' s accounts payable department. Invoices not paid by the Receipt Date plus 45 days will accrue interest from the date due until paid at the rate of one percent (1%) per month (12% per annum). All invoices shall include detail regarding amounts payable to the contract manufacturer and amounts payable to Plextek. Customer shall pay Plextek and the contract manufacture for the respective amounts payable to each of them set forth on such invoices. Plextek shall have the option at any time to have all amounts be payable directly to Plextek (and for Plextek, in turn, to pay the contract manufacturer), such option to be


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exercisable by Plextek delivering written notice to Customer, which notice shall become effective on the later of the next invoice date or 45 days after receipt by Customer of such notice.

7.2 Plextek may terminate this Agreement if Customer fails to make timely payment of sums due to Plextek, and such condition has not been cured within sixty days of written notice thereof by Plextek; provided, however, that, Plextek may not suspend performance or terminate this Agreement for reason of non-payment by Customer of any amounts disputed in good faith. In the event of the alleged failure of Customer to pay any dollar amount or portion thereof when such amount is due, if the obligation is disputed in good faith by Customer, this Agreement shall continue in effect and Plextek shall continue to provide goods and services hereunder until the earlier of its expiration pursuant to its terms or the failure of Customer to pay such dollar amount or portion within twenty (20) days of a resolution of the disputed amount in favor of Plextek. 8. DELIVERY

8.1 Products will be made available " Ex Works" (Incoterm 2000) at the factory of the contract manufacturer. Customer will arrange for collection of goods, arrange for shipment of US-bound product and notify licensees of availability of their product for shipment arrangements.

8.2 Any liability of Plextek for non-receipt of goods by Customer shall be limited to replacing the goods within a reasonable time or issuing a credit note against any invoice raised for such goods.

8.3 All Products shall be delivered with all regulatory and other governmental approvals necessary for the sale and marketing in such jurisdictions as Customer shall specify from time to time; provided, however, that Customer shall bear the cost (without mark-up) of obtaining regulatory approvals necessary for the sale and marketing of Products in jurisdictions which do not follow the regulatory requirements of the United States of America or European Union.

9. DELAYS

9.1 Plextek shall be responsible for deliverables of each contract manufacturer and supplier selected by Plextek, notwithstanding any final approval of such selection by Customer.

9.2 Notwithstanding the above, in the event of any delays caused by Customer Deliverables, Plextek shall make all commercially reasonable efforts to ensure that any resulting delay to Plextek Deliverables is minimised.

10. ACCEPTANCE OF PRODUCTS

10.1 The provisions of this Section 10 shall apply only with respect to Products that have been produced for commercial sale. 10.2 Customer shall be entitled to reject Products (" Rejected Products" ) that are found: (a) to have been materially damaged prior to Delivery, or

(b) not to comply with any specification for the Products agreed in writing between Plextek and Customer.


5 10.3 The Customer shall notify Plextek in writing of Rejected Products within ten business days of Delivery and will return Rejected Products at Plextek' s expense and risk to Plextek' s designated repair site. Before returning any Rejected Products, Customer will discuss with Plextek via telephone Customer' s reason for such rejection. Notwithstanding any such discussions, Customer shall be entitled to return such Rejected Products after ten business days of commencing any such discussions with Plextek.

10.4 Upon return of the Rejected Products Plextek will as soon as reasonably practical (at its own option) either repair, replace or credit Customer for Rejected Products. The cost associated with any such repair, replacement or credit will be the responsibility of Plextek. In the case of replacement or credit, title to the Rejected Products shall pass to Plextek on delivery to Plextek. 10.5 In the absence of earlier notification of rejection, Customer will be deemed to have accepted Products ten business days after Delivery. Customer approval of any sample or acceptance of any goods shall not relieve Plextek from responsibility to deliver goods and perform services conforming to specifications, drawings, and descriptions or waive any warranty rights of Customer. 11. ENGINEERING CHANGE CONTROL

11.1 Either party may at any time propose changes to the specifications of Products by a written Engineering Change Order (" ECO" ) to the other party.

11.2 The recipient of an ECO will use all commercially reasonable efforts to provide a detailed response within ten business days of receipt. 11.3 Plextek will advise Customer of the likely impact of an ECO (including but not limited to delivery scheduling and Prices) on any current or future Orders.

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