AGREEMENT FOR THE DESIGN & SUPPLY OF VLU5 PRODUCTS

1

PARTIES & EFFECTIVE DATE

2

PURPOSE

3

SCOPE OF AGREEMENT

4

PRODUCT DEVELOPMENT PHASE

4.1

Specifications . The specification entitled “Wideband LoJack Vehicle Location Unit,” Version 1.4 dated December 12, 2003, is the specification for the version of the Product intended to operate in countries with 25 kHz channel spacing (the “ Wideband VLU5 ” or “ VLU5 US ”). The specification entitled “Narrowband LoJack Vehicle Location Unit,” Version 1.30 dated December 5, 2003, is the specification for the version of the Product intended to operate in countries with 12.5 kHz channel spacing (the “ Narrowband VLU5 ” or “ VLU5 EU ”). Each of the Wideband VLU5, the Narrowband VLU5, and any subsequent version of the product set forth in accordance herewith, is sometimes referred to in this Agreement as a “ Model ” or collectively as “ Models ”. The Wideband VLU5 and the Narrowband VLU5 are sometimes referred to herein collectively as the “ Initial Models ”. Plextek will create and produce, at no additional cost to Customer, two variations of the Narrowband VLU5, one of which will operate at a frequency of ** MHz, and the other of which will operate at a frequency of ** MHz. Plextek will create and produce one variation of the Wideband VLU5, which will operate at a frequency of 173.075; provided , however , that Customer shall have the right to elect to have Plextek create a second variation of the Wideband VLU5, which will operate at multiple frequencies (the “ Multi-frequency Wideband Variant ”). If Customer makes such election, Plextek will bear the development costs associated with the creation of the Multi-frequency Wideband Variant.

4.2

Schedule and Development Expenses . Attached, as Exhibit B is the schedule for completion of Product Development for the Initial Models, and the agreed schedule of payments to be made by Customer to Plextek in respect of all services and activities associated with Product Development for the Initial Models. Plextek’s Product Development responsibilities shall include, without limitation, completion of the Initial Models in accordance with the Specifications within the agreed development schedule, all coordination with the approved contract manufacturer and preparation of the manufacturing line for volume production. All payments hereunder shall be denominated and paid in US Dollars.

4.3

Future Models . From time to time, the parties may desire to create additional Models, in which case the parties shall agree in a writing referencing this Agreement upon specifications and schedules for completion of Product Development for each new Model.

4.4

Specification Finalization. Customer shall determine within ninety (90) days of the Effective Date whether to include or exclude the following items from the specifications for the Models, and in the event any of such items are included, then the Maximum Price shall be increased by not more than the amount specified below for each such item, assuming an aggregate twelve-month unit volume for all Models of ** units:

5

PRODUCTION PHASE

5.1

After completion of Product Development for each Model, Plextek will manage the ongoing manufacture and supply of the Models for the Exclusive Supply Period (as defined below). The “ Exclusive Supply Period ” shall commence on the date of initial commercial production of the first Model (“ Production Inception ”) and shall expire on the ** anniversary of Production Inception; provided , however , that if Customer agrees to commence production of a new variant of one of the Models that delivers material cost savings to Customer and/or material improvements in functionality utilizing design improvements developed by Plextek (an “ Agreed Improved Design”), then the Exclusive Supply Period solely with respect to such Agreed Improved Design shall be ** years from the date production commences of such Agreed Improved Design.

5.2

Notwithstanding anything herein to the contrary, Customer shall not be restricted from having 3 ^rd parties manufacture and supply other Products without remuneration to Plextek, provided that, during the Exclusive Supply Period, such other Products are not derivatives of any Models designed by Plextek that are then subject to the restrictions of Section 5.1.

5.3

Customer agrees to purchase from Plextek, and Plextek agrees to sell to Customer, assembled Models in the quantities and at the prices herein set forth, subject to the terms of this Agreement. Customer agrees to purchase at least ** units (the “ Minimum Volume Commitment ”) in the aggregate of the Models within the first three years following Production Inception, subject to the terms and conditions of this Agreement.

5.4

Following termination of the Exclusive Supply Period for each Model or Agreed Improved Design, Customer shall have the right to engage the services of any party (including without limitation the contract manufacturer utilized by Plextek) to manufacture such Model or such Agreed Improved Design, as the case may be. If Customer elects to engage directly the services of the contract manufacturer then being utilized by Plextek to produce such Model or Agreed Improved Design (a “ Transitioned Model ”), then Customer shall pay Plextek a “ Transition Fee ” determined as follows:

5.5

Plextek shall select, subject to Customer’s final approval, the contract manufacturer for the Models to be produced pursuant to this Agreement.

5.6

Plextek shall share with Customer all information relating to the production, development, and supply of the Models. Without limiting the foregoing, Plextek shall provide Customer on a timely basis, during both the development phase and the production phase of the project, the complete bill of materials, schematics, gerber files, source code, object code, and manufacturing test code for each of the Models, together with all updates and revisions thereto, and complete cost information for all goods and services (comprising both the development phase and the Total Product Cost during the production phase), whether provided directly by Plextek or by subcontract or purchase.

5.7

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

5.8

The parties shall constitute an Executive Steering Committee and an Operating Committee with representatives from Plextek, Customer and the contract manufacturer with responsibility to address and resolve all issues relating to development, manufacturing and supply matters. The Operating Committee shall have telephonic conference calls on a weekly basis and in-person meetings on at least a quarterly basis. The Executive Steering Committee shall convene at least quarterly to review progress of the Product Development process and the manufacturing and supply relationship. Plextek will ensure that Customer shall have direct access to the contract manufacturer (accompanied by a Plextek representative at Plextek’s option) in order to participate in the ongoing management of the production process and supply chain.

5.9

Without Customer’s prior written consent, (i) Plextek shall not produce for, or sell to, any third party any Products, and (ii) Plextek shall cause the contract manufacturer for the Models not to produce for, or sell to, any third party any Products; provided , however , that the provisions of this sentence shall not be deemed to restrict Plextek from selling Permitted Products (as defined below) to a governmental agency for national security or military purposes. A “ Permitted Product ” shall be a Product that is not a Model or a variation thereof. Except as provided in Section 5.4, Plextek shall not restrict the contract manufacturer for the Models (or any supplier) from contracting with, manufacturing for, or selling to, Customer.

6

UNIT PRICES

6.1

Attached, as Exhibit C is the schedule of pricing for each of the Initial Models. If Customer gives Plextek or the contract manufacturer permission to produce or sell Models to any third party, the number of units sold to such third party (i) shall be deemed included in the number of units purchased by Customer for purposes of determination of unit pricing on the volume variable pricing schedule set forth in Exhibit C hereto, and (ii) shall be deducted from the number of units with respect to which the Initial Unit Premium (as defined in Exhibit C ) shall be paid.

6.2

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

7

ORDER, PLANNING AND FORECAST PROCEDURE

7.1

Annual Plan . By September 30 ^th of each year, Customer will deliver to Plextek a three year plan with annualised volumes to include: (i) projected current year volumes by Model, (ii) projected next year volumes by Model and by quarter, and (iii) projected following year volumes by Model for the total year. Projected volumes will include a break-out of volumes by frequency variations within each Model.

7.2

Rolling Forecast . At the end of each calendar quarter Customer will deliver to Plextek a forecast by month, by model, for the succeeding 15 months (adding a new quarter). Customer and Plextek will develop with the contract manufacturer for the Models 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:

7.2.1

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 Model up or down not more than 10% by Customer by written notice given during the first month; provided, however, that Plextek agrees to negotiate in good faith with prospective contract manufacturers 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 30% by Customer by written notice given during the first month, and not more than 20% by written notice given during the second month.

7.2.2

The forecast for the second quarter of each quarterly forecast may be revised up or down by not more than 50% from the forecast for that quarter set forth in the next prior quarterly forecast.

7.2.3

In each forecast, quarters 3, 4 & 5 are for planning purposes only.

7.2.4

In the event specialized inventory is required to build inventory for Model variants that are designed to operate in countries where a small quantity of Models 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.

7.2.5

Plextek shall be required to accept and deliver orders consistent with this Section 7.2; 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.

7.3

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.

7.4

Purchase Orders . Customer will issue a blanket purchase order in November of each year for the ensuing year. The blanket purchase order shall be amended periodically to reflect orders becoming firm and changes in quantities pursuant to Section 7.2, 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

7.5

Inventory . Plextek shall maintain a piece part inventory to support Model mix and frequency shifts to accommodate short term shifts in demand in accordance with the discretion provided for in Section 7.2. 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.

7.6

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

7.7

Production Procedures . Production of Models shall include procedures for supplying secret codes, serializing, packaging, and labelling as specified by Customer.

7.8

Disaster Recovery . Prior to Production Inception, Plextek will develop a disaster recovery program to allow recovery (at its or the contract manufacturer’s expense) of 30% of production beginning on the 31 ^st day following the occurrence of the disaster, and 100% of production beginning on the 71 ^st day following the occurrence of the disaster, which program will be approved by Customer, such approval not to be unreasonably withheld or delayed. In order for Plextek to meet the required recovery standard of 30% of production within 30 days, Customer may be required to maintain an inventory of long lead-time components with the contract manufacturer. The parties anticipate that the aggregate dollar value of such long lead-time components will be in the range of ** to ** .

7.9

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 Models 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.

7.10

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.

7.11

Information Requirements . Prior to Initial Production, Plextek, Customer and the then current contract manufacturer will develop appropriate information reporting requirements covering such matters as advance shipping notices, production schedules, inventories, production yields, and in-transit materials.

7.12

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

8

PAYMENT

8.1

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, and (ii) receipt of goods at the destination designated by Customer (the later of such dates being referred to as the “ Receipt Date ”). 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

8.2

Payments of the development expenses set forth in Exhibit B shall be made in US Dollars and in accordance with the provisions of Exhibit B .

8.3

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.

9

DELIVERY

9.1

Models will be Delivered Duty Paid (“ DDP (Incoterms 2000)”) to such destinations as are specified by Customer (“ Delivery ”); provided, however, that if any such destination is outside the United States of America or European Union and delivery will result in the payment of an import duty, then Customer shall bear the cost of such import duty.

9.2

Ownership of the goods shall pass to Customer upon delivery at Customer’s designated location.

9.3

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.

9.4

All Models 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 Models in jurisdictions which do not follow the regulatory requirements of the United States of America or European Union.

10

DELAYS

10.1

In the event that any Plextek deliverable, output, or milestone (“ Plextek Deliverable(s)” ) is subject to a delay caused, not by any act or omission of Plextek, but by a delay or material change to any Customer deliverable, output, or milestone (“ Customer Deliverable(s) ”), then Plextek shall inform Customer of such delay and obtain Customer’s consent (such consent not to be unreasonably withheld) to postpone the delivery date accordingly of any Plextek Deliverable which is dependent, directly or indirectly, upon the delayed or changed Customer Deliverable. Except as provided in Section 10.2, the deliverables of third parties that are outside the reasonable control of Plextek shall be treated as Customer Deliverables for the purpose of this Section 10.1.

10.2

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

10.3

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.

10.4

The provisions of this Section 10 shall apply to determinations of timely completion of Product Development, and the associated penalty amounts set forth in Exhibit B hereto.

11

ACCEPTANCE OF MODELS

11.1

The provisions of this Section 11 shall apply only with respect to Models that have been produced for commercial sale, and shall not be deemed to apply to the acceptance procedures applicable to the development portion of the project as set forth in Exhibit B hereto.

11.2

Customer shall be entitled to reject Models (“ Rejected Models ”) that are found:

(a)

to have been materially damaged prior to Delivery, or

(b)

not to comply with any specification for the Models agreed in writing between Plextek and Customer.

11.3

The Customer shall notify Plextek in writing of Rejected Models within ten business days of Delivery and will return Rejected Models at Plextek’s expense and risk to Plextek’s designated repair site. Before returning any Rejected Models, 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 Models after ten business days of commencing any such discussions with Plextek.

11.4

Upon return of the Rejected Models Plextek will as soon as reasonably practical (at its own option) either repair, replace or credit Customer for Rejected Models. 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 Models shall pass to Plextek on delivery to Plextek.

11.5

In the absence of earlier notification of rejection, Customer will be deemed to have accepted Models 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.

12

CHANGE CONTROL

12.1

Either party may at any time propose changes to the specifications of Models by a written Engineering Change Order (“ ECO ”) to the other party.

12.2

The recipient of an ECO will use all commercially reasonable efforts to provide a detailed response within ten business days of receipt.

12.3

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.

12.4

Neither party will unreasonably withhold or delay agreement to an ECO and the parties will endeavour to agree and implement at the earliest opportunity ECOs relating to personal and product safety.

12.5

Until an ECO and any associated impact has been agreed in writing, the parties shall be entitled to perform their obligations without taking account of that ECO, and neither party shall be obliged to implement any changes not covered by an ECO.

12.6

Plextek and the contract manufacturer will not deviate from the approved bill of materials and manufacturing process without first gaining approval of the proposed change from the Customer’s engineering department via an approved ECO.

13

INTELLECTUAL PROPERTY

13.1

Plextek agrees that all intellectual property relating to any Model or otherwise resulting from work performed pursuant to this Agreement will be a “work for hire” (the “ Work ”) and the Work and all such materials shall be owned and controlled exclusively by Customer; provided, however, that the Work shall exclude any intellectual property created by Plextek solely in connection with the development of a future Model (other than the Initial Models) if Customer elects not to have Plextek develop such future Model (the “ Excluded IP ”). Ownership of all intellectual property in the Work shall vest irrevocably in Customer upon creation, subject to Customer’s obligation to pay development phase milestone payments that Customer becomes obligated to pay in accordance with the terms of this Agreement; provided that Customer’s ownership of all intellectual property in the Work shall vest entirely in such portion that has been created prior to the making of each milestone payment. To the extent that for any reason any part of the Work shall be determined not to be a “work for hire,” Plextek hereby assigns to Customer without additional compensation all of Plextek’s right, title and interest in and to such Work, free and clear of all liens and encumbrances. Customer hereby grants to Plextek a limited, nonexclusive, perpetual, royalty-free license to use the intellectual property in the Work (the “ Licensed IP ”) in other products created by Plextek; provided , however , that in no event shall any of the Licensed IP be used in any product or service that is offered for sale, marketed, or otherwise made available for the purpose of tracking, locating or recovering assets or people; and provided further however that in no event shall Licensed IP include any of LoJack’s Background IP. Plextek agrees to use its good faith efforts to obtain reductions in the Unit Price based upon economies of scale derived from production of other products that contain Licensed IP.

13.2

To the extent that Plextek has, in the course of Plextek’s work or assignments for Customer, utilized or adapted intellectual property that Plextek has previously created or with respect to which Plextek is the owner of any intellectual property rights (including without limitation any manufacturing techniques used in the production of Models), Plextek hereby grants to Customer a nonexclusive, perpetual, transferable, royalty-free license to all such rights now existing or hereafter arising or created in law or equity in such intellectual property (other than the Excluded IP) for use in connection with any product or service now known or hereafter developed, including without limitation, the right to sublicense such rights to others.

13.3

Plextek agrees to waive, hereby waives, and agrees to cause each person or entity actually providing services pursuant to this Agreement to waive all moral rights now known or hereafter developed, in all jurisdictions in the United States, including but not limited to all States and the Federal Government, and in all jurisdictions outside the United States. Moral rights include but are not limited to the statutory or other rights of inventors and authors, and the moral rights or similar laws of other jurisdictions both within and outside the United States. Plextek agrees to execute, and to cause each person actually providing services pursuant to this Agreement to execute, any and all written instruments requested by Customer to waive moral rights with respect to specific works that have been created by Plextek, or such person, for Customer after execution of this Agreement.

13.4

Plextek agrees to disclose all discoveries, improvements and inventions conceived, made or developed in the performance of the Work (hereinafter “ Inventions ”) promptly and fully to Customer and to execute any and all documents deemed necessary by Customer to secure fully title to the Work and all Inventions, including patent assignments, and to cooperate with Customer, at Customer’s expense, in any subsequent actions deemed necessary by Customer to perfect its interest in the Work and all Inventions.

13.5

Plextek agrees that it will not create or permit any security interest, lien or other encumbrance upon any part of the Work or any materials furnished by Customer to Plextek hereunder.

13.6

Plextek agrees to perform, during and after the term of this Agreement, all acts deemed necessary or desirable by Customer to permit and assist it in evidencing, perfecting, obtaining, maintaining, defending and enforcing Customer’s ownership rights in and to the Work and Plextek’s assignment with respect thereto in