Exhibit 10.1

November 17, 2006
 
Mr. Joseph F. Abely
21 Rhodes Drive
Wrentham, MA 02093

 
Dear Joe:
 
This letter agreement (the “Agreement”) will confirm that we have agreed to the
following terms and conditions regarding your resignation from your office as
Chief Executive Officer, the orderly transition of your duties and
responsibilities and your retirement from employment with LoJack Corporation
(“LoJack” or the “Company”).
 

 
1.
Employment Status.

 
(a) You shall resign from your current office as the Company’s Chief Executive
Officer and from your position as a member of the Board of Directors of the
Company effective as of November 17, 2006 ( “Resignation Date”). From the
Resignation Date through July 31, 2007 (the “Retirement Date”) you shall
continue as an employee with the salary and benefits described below. Effective
at the close of business on the Retirement Date, you will retire from your
employment with LoJack.
 
(b) For the period beginning on the Resignation Date and continuing until July
31, 2007 (the “Post CEO Employment Period”) you shall continue as an employee of
the Company. The Company will request and you shall provide services to the
Company at an annual rate that is at least equal to 20% of the services you
rendered to the Company during the immediately preceding three calendar years of
employment. You shall assist in transition and long term strategy planning and
provide such other services consistent with your LoJack experience as LoJack
reasonably may request and which are consistent with the intent to effectuate
the transition of such duties and responsibilities. It is anticipated that
transactional activities will include travel within the United States to meet
with management employees. Notwithstanding the foregoing, during your employment
with the Company, you will have the right to be employed simultaneously by one
or more other companies and to engage freely in the other business activities
subject to (i) compliance with the provisions of Section 6 and 7 hereof and (ii)
your availability during the Post CEO Employment Period to provide services to
the Company at the 20% level referred to in the first sentence of this
paragraph. Monthly during the Post CEO Employment Period you shall provide
LoJack with reports of the services performed by you for LoJack and the time
expended, which LoJack will use as the basis for tax and other reporting.
 

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(c) All payments hereunder shall commence on Final Acceptance of this Agreement
(as defined in Paragraph 9), at which time any previously due payments shall be
made. During the Post CEO Employment Period (i) the Company shall pay you an
amount equal to $16,346.15 per bi-weekly pay period, less withholdings as
required by law or as authorized by you, which will be paid in bi-weekly
installments or otherwise in accordance with LoJack’s usual pay schedule, and
(ii) you shall be entitled to continue to vest in any outstanding stock options
and restricted stock grants. You shall continue to receive such benefits as the
Company shall make generally available from time to time to full-time executive
level employees on the same basis as at the execution of this Agreement. In the
event of your death or permanent disability during the Post CEO Retirement
Period, stock options and restricted stock shall vest as provided in paragraph 2
(b), below, as though you had retired on the date of death or disability, and
you or your estate, as applicable, will continue to receive the payments
described in this paragraph. You shall also be entitled to receive your annual
bonus for 2006, to be paid in 2007 in accordance with the terms of the bonus
plan and calculated without regard to the impact of the terms of this Agreement
on operating profit. GW and Wade financial planning services will be continued
through the Post CEO Employment Period.
 
2. Retirement Date. 
 
(a) You agree to retire from your employment with the Company as of July 31,
2007 (“Retirement Date”). The parties intend that if you continue in employment
until the Retirement Date, the Retirement Date will constitute "retirement" for
all purposes under any equity compensation, retirement, welfare or deferred
compensation plan or program maintained by the Company. The Compensation
Committee will treat retirement under this Agreement as Retirement for purposes
of the Non-Qualified Deferred Compensation Plan and the 2003 Stock Incentive
Plan.
 
(b) On December 1, 2006 the Company will pay you the sum of $50,000. On your
Retirement Date your performance based Incentive Stock shall vest in accordance
with its terms and all time vested restricted stock, non-qualified stock options
and any unvested employer contributions in your account under the Company's
Non-Qualified Deferred Compensation Plan will vest in full. At the time that the
performance of the Company against the two-year Incentive Restricted Stock
performance standard is known, the Company’s compensation committee in its good
faith discretion may, but shall not be required to, vest the balance of your
Incentive Restricted Stock.
 
(c) On your Retirement Date, LoJack shall pay you all accrued but unused
vacation, and you shall be enrolled in the Company’s early retiree medical and
dental benefit programs, which currently provide the same coverage as the
employee medical and dental plans, and the Company will pay 100% of all premiums
to each such plan through July 31, 2012 and 50% of all premiums to each such
plan through July 31, 2017.
 
(d) On February 1, 2008 the Company will pay you the sum of $175,000, and
commencing with that date through and continuing until July 31, 2012, and in
consideration of the obligations set forth herein, particularly the obligations
set forth in Section 7, below, the Company shall pay you an amount equal to
$29,166.67 per month on the first day of each month for the period beginning
February, 2008 and ending July , 2010 and $8333.34 per month for the
 

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period beginning August , 2010 and ending July , 2012 (the “Covenant Payments”)
in equal monthly installments, minus withholdings as required by law or as
authorized by you.  If you die during the Restricted Period, your beneficiary
and/or your estate shall be entitled to receive such Covenant Payments as remain
unpaid as of the date of your death.
 
(e)  In the event of a Change of Control of the Company, as defined in your
current change of control agreement, all unpaid Covenant Payments shall be
accelerated and shall be paid to you within 30 days of the consummation of such
Change of Control. You shall continue to be subject to the obligations of this
Agreement.
 
3. Termination of Payments. In addition to other remedies, the Covenant Payments
will be terminated in the event of (i) your engaging in conduct which is
demonstrably and materially injurious to the Company or that materially harms
the reputation or financial position of the Company; (ii) your conviction of, or
plea of guilty or nolo contendere to, a felony or any other crime involving
dishonesty, fraud or moral turpitude; (iii) your being found liable in any SEC
or other civil or criminal securities law action relating to the Company, or the
entry of any cease and desist order with respect to such action (regardless of
whether or not you admit or deny liability); (iv) your breach of your fiduciary
duties to the Company which may reasonably be expected to have a material
adverse effect on the Company; (v) your obstructing or impeding, or failing to
materially cooperate with, any investigation authorized by the Board or any
governmental or self-regulatory entity; (vi) your violation of any
nondisclosure, nonsolicitation, non-hire, or noncompete agreement or policy that
is applicable to you, including but not limited to the provisions of Sections 6
and 7 below; or (vii) your violation of any policy of the Company that is
generally applicable to all former employees or officers of the Company
including, but not limited to, policies concerning insider trading, that you
know or reasonably should know could reasonably be expected to result in a
material adverse effect on the Company or its reputation. For purposes of this,
no act, or failure to act, on your part shall be considered “willful” unless
done, or omitted to be done, by you without reasonable belief that your action
or omission was in, or not opposed to, the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by you in good faith
and in the best interests of the Company.
 
4. Indemnification. The Company shall continue to provide you with
indemnification as provided in the Company’s By-Laws and Articles of
Organization.
 
5. Releases.
 
(a) First General Release of Claims. In exchange for the promises set forth
herein, you, on behalf of yourself and your heirs, executors, administrators and
assigns, hereby release and forever discharge LoJack Corporation, its affiliates
and each of their respective directors, officers, employees, agents, successors
and assigns, in their individual and official capacities, from any and all
suits, claims, demands, debts, sums of money, damages, interest, attorneys’
fees, expenses, actions, causes of action, judgments, accounts, promises,
contracts, agreements, and any and all claims of law or in equity, whether now
known or unknown, which you now have or ever have had against them, or any of
them, including, but not limited to, any claims under Title VII of the Civil
Rights Act of 1964, the Americans With Disabilities Act, the Age
 

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Discrimination in Employment Act, the Older Workers Benefit Protection Act,
Massachusetts General Laws Chapters 149 and 151B and any other federal, state or
local statute, regulation, ordinance or common law creating employment-related
causes of action, and all claims related to or arising out of your employment or
the termination of your employment with LoJack. You also hereby waive any claim
for reinstatement, attorney’s fees, or costs. Nothing in this General Release
shall prevent you from seeking to enforce your rights under this Agreement or
any vested right which you have under any plans and grants referred to herein or
any Company employee retirement or welfare benefit plan. You hereby represent
that you have not previously filed or joined in any complaints, charges or
lawsuits against LoJack pending before any governmental agency or court of law
relating to your employment and/or the cessation thereof.
 
(b) Second General Release of Claims. Your eligibility to receive the Covenant
Payments and benefits described in Section 2 after the Retirement Date is
conditional upon your signing and delivering a second General Release of Claims
containing substantially the same provisions of Section 5(a) with such changes
as may be necessary or deemed desirable by LoJack because of changes in
applicable law, releasing LoJack Corporation, its affiliates and each of their
directors, officers, employees, agents, successors and assigns, in their
individual and official capacities, from any and all claims that may have arisen
between the date you sign this Agreement and the Retirement Date. Nothing in
this General Release shall prevent you from seeking to enforce your rights under
this Agreement or any vested right which you have under any plans and grants
referred to herein or any Company employee retirement or welfare benefit plan.
 
6. Reaffirmation of Confidentiality Obligation; Return of LoJack Property. You
hereby acknowledge and reaffirm your continuing obligation of confidentiality
regarding LoJack’s Confidential and Proprietary Information as set forth in the
LoJack Corporation Employee Obligations and Responsibilities. After your
employment at LoJack, you will not at any time, without LoJack’s prior written
consent, reveal or disclose to any person outside of LoJack, or use for your own
benefit or for the benefit of any other person or entity, any confidential
information concerning LoJack’s business, customers, clients, or employees.
Confidential information includes, without limitation, financial information,
reports, forecasts, intellectual property, trade secrets, know-how, software,
market or sales information and plans, client lists, business plans, prospects
and opportunities. All documents, records, materials, software, equipment,
office entry cards or keys and other physical property, and all copies of the
same that have come into your possession or been produced by you in connection
with your employment, have been and remain the sole property of LoJack. You
agree that you shall return all such property to LoJack by your Retirement Date.
 
7. Non-solicitation; Non-hire; Covenant Against Competition. You agree that for
a period of five (5) years after the Retirement Date or earlier termination of
your employment (the “Restricted Period”) you will not, directly or indirectly,
on your own behalf or on behalf of any third person or entity, and whether
through your own efforts or through the efforts or employing the assistance of
any other person or entity (including without limitation any consultant or any
person employed by or associated with any entity with whom you are employed or
associated):
 
a) hire or employ any employee of LoJack, or solicit or induce any such employee
to terminate his/her employment or other relationship with LoJack.
 

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b) solicit or accept business, compensation, employment or other position from
or own any interest in (i) any former or present partners, affiliates or foreign
licensees of LoJack or with Absolute Software Inc. or SCIN Inc.; or (ii) any
person or entity engaged in any aspect of the business of stolen vehicle
tracking and recovery, the tracking, location or recovery of valuable mobile
assets including safety and security vehicle telematics applications. You
acknowledge that (i) the principal business of the Company (which expressly
includes for purposes of this Section 7 and any related enforcement provisions
hereof, its successors and assigns) is the offering of products and services
relating to stolen vehicle tracking and recovery, the tracking, location or
recovery of valuable mobile assets including safety and security vehicle
telematics applications; (ii) LoJack is one of the limited number of persons who
have developed such a business; (iii) LoJack's business is national and
international in scope; (iv) your work for LoJack has given you access to the
confidential affairs and proprietary information of the Company; (v) your
covenants and agreements contained in Section 6 and this Section 7 are essential
to the business and goodwill of LoJack; and (vi) LoJack would not have entered
into this Agreement but for the covenants and agreements set forth in Section 6
and this Section 7. Accordingly, you covenant, agree and acknowledge that (i)
you have had an opportunity to seek advice of counsel in connection with this
Agreement and (ii) the restrictive covenants are reasonable in geographical and
temporal scope and in all other respects. It is the express intent of the
parties that (a) in case any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration,
geographical scope, activity, or subject, such provision shall be construed by
limiting and reducing it as determined by a court of competent jurisdiction, so
as to be enforceable to the fullest extent compatible with applicable law; and
(b) in case any one or more of the provisions contained in this Agreement cannot
be so limited and reduced and for any reason is held to be invalid, illegal, or
unenforceable, such invalidity, illegality, or unenforceability shall not affect
the other provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal, or unenforceable provision had never been contained
herein.
 
8. Mutual Non-Disparagement. You agree not to take any action or make any
statement, written or oral, that disparages LoJack or any of LoJack’s directors,
officers, employees or agents, or that has the intended or foreseeable effect of
harming LoJack’s reputation or the personal or business reputation of any of
LoJack’s directors, officers, employees or agents. Similarly, LoJack agrees that
its directors and officers will not take any action or make any statement,
written or oral, that disparages you or that has the intended or foreseeable
effect of harming your reputation or your personal or business reputation and
will not authorize any other employee to make any statement in behalf of the
Company.
 
9. Consultation with Counsel; Time for Signing; Revocation. You acknowledge that
LoJack has advised you of your right to consult with an attorney of your own
choice prior to signing this Agreement. You have until twenty-one (21) days from
your receipt of this Agreement to decide whether to sign it. You will have seven
(7) days after signing this Agreement to revoke your signature. If you intend to
revoke your signature, you must do so in a writing addressed and delivered to me
prior to the end of the 7-day revocation period. This Agreement shall not be
effective, and neither LoJack nor you shall have any rights or obligations
hereunder, until the expiration of the 7-day revocation period (“Final
Acceptance”).
 

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10. Section 409A. In order to comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the "Code"), if you are determined to be a “specified
employee” as defined in Section 409A of the Code at the time any payment of
nonqualified deferred compensation is made, and the deferral of the commencement
of any payments or benefits otherwise payable hereunder as a result of your
retirement is necessary in order to prevent the imposition of any accelerated or
additional tax under Section 409A of the Code, the Company will defer the
commencement of the payment of any such payments or benefits hereunder (without
any reduction in such payments or benefits ultimately paid or provided to you)
until the date that is six months following your retirement with the Company and
its affiliates (or the earliest date as is permitted under Section 409A of the
Code).

Further, it is the intention of the parties that no payment or entitlement
pursuant to this Agreement will give rise to any adverse tax consequences to any
person pursuant to Section 409A of the Code. Notwithstanding any provision in
this Agreement to the contrary, this Agreement shall be interpreted, applied and
to the minimum extent necessary, amended, so that this Agreement does not fail
to meet, and is operated in accordance with, the requirements of Section 409A of
the Code. Any reference in this Agreement to Section 409A of the Code shall also
include any proposed, temporary or final regulations, or any other guidance,
promulgated with respect to such Section by the U.S. Department of the Treasury
or the Internal Revenue Service.
 
11. General Provisions.
 
a) Severability. The invalidity or unenforceability of any provision of this
Agreement shall in no way affect the validity or enforceability of any other
provisions, or any part, hereof.
 
b) Enforcement; Applicable Law; Jurisdiction. This Agreement is intended to
operate as a contract under seal and shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts. You agree that
all disputes arising under or out of this Agreement shall be brought in courts
of competent jurisdiction within the Commonwealth of Massachusetts and you
hereby consent to exclusive jurisdiction in courts located in the Commonwealth
of Massachusetts with respect to all matters arising out of or related to this
Agreement.
 
c) Entire Agreement. This Agreement constitutes the entire agreement between you
and LoJack concerning the terms and conditions of your separation from
employment with LoJack and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, between
you and LoJack, except for (i) the LoJack Corporation Employee Obligations and
Responsibilities, referenced in Section 6, and (ii) your stock option agreement
and restricted stock agreements with the Company, which shall remain in full
force and effect except as expressly modified herein. You agree that LoJack has
not made any warranties, representations, or promises to you regarding the
meaning or implication of any provision of this Agreement other than as stated
herein.
 
d) Modification and Waiver. This Agreement may be amended or modified only by a
written instrument signed by you and an authorized representative of LoJack. The
 

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failure of you or LoJack at any time to require the performance of any provision
of this Agreement shall in no manner affect the right of such party at a later
time to enforce the same provision.
 
e) Successors and Assigns. All of the terms and conditions hereof shall be for
and inure to the benefit of and shall be enforceable by the successors and
assigns of LoJack Corporation. You hereby assent to the assignment of this
Agreement by LoJack to any successor to or assignee of its business.
 
Please indicate your understanding and acceptance of this Agreement by signing
and returning one copy to me. The other copy is for your records.
 

 
Sincerely,
 

 
/s/ Richard T. Riley
Richard T. Riley, President
LoJack Corporation
 
 
Accepted and Agreed:
 
/s/ Joseph F. Abely
Dated: November 17, 2006

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