Document:

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                                                                     EXHIBIT 4.1

               THE L.S. STARRETT COMPANY 401(k) STOCK SAVINGS PLAN
                               (2001 RESTATEMENT)

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<TABLE>
                                TABLE OF CONTENTS

<S>                                                                                                        <C>
ARTICLE 1.   INTRODUCTION..................................................................................1
    1.1.     In General....................................................................................1
    1.2.     Defined Terms.................................................................................1
ARTICLE 2.   ELIGIBILITY AND PARTICIPATION.................................................................1
    2.1.     Who Is Eligible To Participate?  Only Eligible Employees may be Active Participants...........1
    2.2.     Enrollment....................................................................................1
ARTICLE 3.   CONTRIBUTIONS.................................................................................1
    3.1.     Elective Contribution.........................................................................1
    3.2.     Matching Contributions........................................................................2
    3.3.     QNEC Contributions............................................................................2
    3.4.     Rollover Contributions........................................................................2
    3.5.     Making, Allocating and Posting Contributions..................................................3
    3.6.     Certain Limits Apply..........................................................................3
    3.7.     Return of Contributions.......................................................................3
ARTICLE 4.   PARTICIPANT ACCOUNTS..........................................................................4
    4.1.     Accounts......................................................................................4
    4.2.     Adjustment of Accounts........................................................................4
    4.3.     Investment of Accounts........................................................................4
ARTICLE 5.   VESTING OF ACCOUNTS...........................................................................5
    5.1.     Vesting of Accounts...........................................................................5
    5.2.     Distribution of Less Than Entire Vested Percentage; Other Forfeiture Events...................6
    5.3.     Changes in Vesting Schedule...................................................................6
ARTICLE 6.   WITHDRAWALS PRIOR TO SEVERANCE FROM EMPLOYMENT................................................7
    6.1.     Hardship Withdrawals..........................................................................7
    6.2.     Required Distributions After Age 70 1/2.......................................................8
    6.3.     Withdrawals After Age 59 1/2..................................................................8
    6.4.     Restrictions on Certain Withdrawals...........................................................8
    6.5.     Distributions Required by a QDRO..............................................................9
ARTICLE 7.   LOANS TO PARTICIPANTS.........................................................................9
    7.1.     In General....................................................................................9
    7.2.     Rules and Procedures..........................................................................9
    7.3.     Maximum Amount of Loan........................................................................9
    7.4.     Minimum Amount of Loan; Fees..................................................................9
    7.5.     Note; Security Interest.......................................................................9
    7.6.     Repayment.....................................................................................9
    7.7.     Repayment Upon Distribution..................................................................10
    7.8.     Default......................................................................................10
    7.9.     Note as Trust Asset..........................................................................10
    7.10.    Nondiscrimination............................................................................10
    7.11.    Affected Investments.........................................................................10
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<TABLE>
<S>                                                                                                       <C>
ARTICLE 8.   BENEFITS UPON DEATH OR SEVERANCE FROM EMPLOYMENT.............................................11
    8.1.     Severance From Employment for Reasons Other Than Death.......................................11
    8.2.     Time of Distributions........................................................................11
    8.3.     Distributions After a Participant's Death....................................................11
    8.4.     Designation of Beneficiary...................................................................12
    8.5.     Direct Rollovers of Eligible Distributions...................................................12
ARTICLE 9.   ADMINISTRATION...............................................................................13
    9.1.     In General...................................................................................13
    9.2.     Savings Plan Committee.......................................................................14
    9.3.     Powers of the Administrator..................................................................14
    9.4.     Effect of interpretation or determination....................................................15
    9.5.     Examination of records.......................................................................15
    9.6.     Reliance on tables, etc......................................................................15
    9.7.     Expenses of Plan.............................................................................15
    9.8.     Withholding of tax...........................................................................15
    9.9.     Indemnification of Administrator.............................................................15
    9.10.    Claims and review procedures.................................................................15
ARTICLE 10.  AMENDMENT AND TERMINATION....................................................................15
    10.1.    Amendment....................................................................................15
    10.2.    Termination..................................................................................16
    10.3.    Distributions upon Termination of the Plan...................................................16
    10.4.    Merger or Consolidation of Plan; Transfer of Plan Assets.....................................16
ARTICLE 11.  LIMITS ON CONTRIBUTIONS......................................................................16
    11.1.    Code section 404 Limits......................................................................16
    11.2.    Code section 415 Limits......................................................................16
    11.3.    Code section 402(g) Limits...................................................................17
    11.4.    Code section 401(k)(3) Limits................................................................17
    11.5.    Code section 401(m) Limits...................................................................18
ARTICLE 12.  SPECIAL TOP-HEAVY PROVISIONS.................................................................19
    12.1.    Provisions to apply..........................................................................19
    12.2.    Minimum Contribution.........................................................................19
    12.3.    Special Vesting Schedule.....................................................................20
    12.4.    Definitions..................................................................................20
ARTICLE 13.  MISCELLANEOUS................................................................................22
    13.1.    Exclusive Benefit Rule.......................................................................22
    13.2.    Uniformed Services Employment and Reemployment Rights Act of 1994............................23
    13.3.    Limitation of Rights.........................................................................23
    13.4.    Nonalienability of Benefits..................................................................23
    13.5.    Voting of Common Stock.......................................................................23
    13.6.    Governing law................................................................................24
    13.7.    Additional Contributions In the Case of Participants Age 50 or Older.........................24
ARTICLE 14.  DEFINITIONS..................................................................................24
    14.1.    "Account"....................................................................................24
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<TABLE>
    <S>                                                                                                   <C>
    14.2.    "Active Participant".........................................................................24
    14.3.    "Additional Elective Contribution"...........................................................24
    14.4.    "Administrator"..............................................................................24
    14.5.    "Affiliated Employer"........................................................................24
    14.6.    "Basic Elective Contribution"................................................................25
    14.7.    "Basic Matching Contribution"................................................................25
    14.8.    "Beneficiary"................................................................................25
    14.9.    "Board"......................................................................................25
    14.10.   "Code".......................................................................................25
    14.11.   "Committee"  or "Savings Plan Committee".....................................................25
    14.12.   "Common Stock"...............................................................................25
    14.13.   "Common Stock Fund"..........................................................................25
    14.14.   "Company"....................................................................................25
    14.15.   "Elective Contribution"......................................................................25
    14.16.   "Eligible Borrower"..........................................................................25
    14.17.   "Eligible Employee"..........................................................................26
    14.18.   "Employee"...................................................................................26
    14.19.   "Employer"...................................................................................26
    14.20.   "Entry Date".................................................................................26
    14.21.   "ERISA"......................................................................................26
    14.22.   "Fund".......................................................................................26
    14.23.   "HCE"........................................................................................26
    14.24.   "Match-Eligible Elective Contribution".......................................................26
    14.25.   "Match-Eligible Elective Contribution Account"...............................................26
    14.26.   "Matching Contribution"......................................................................27
    14.27.   "Matching Contribution Account"..............................................................27
    14.28.   "NHCE".......................................................................................27
    14.29.   "Other Elective Contribution"................................................................27
    14.30.   "Other Elective Contribution Account"........................................................27
    14.31.   "Participant"................................................................................27
    14.32.   "Participating Employer".....................................................................27
    14.33.   "Pay"........................................................................................27
    14.34.   "Pay Reduction Agreement"....................................................................28
    14.35.   "Period of Severance"........................................................................28
    14.36.   "Plan".......................................................................................28
    14.37.   "Plan Year"..................................................................................28
    14.38.   "Prior Plan".................................................................................28
    14.39.   "QDRO".......................................................................................28
    14.40.   "QNEC Contribution"..........................................................................28
    14.41.   "QNEC Contribution Account"..................................................................28
    14.42.   "Rollover Contribution"......................................................................28
    14.43.   "Rollover Contribution Account"..............................................................28
    14.44.   "Service"....................................................................................28
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<TABLE>
    <S>                                                                                                   <C>
    14.45.   "Substantial Period of Severance"............................................................29
    14.46.   "Supplemental Matching Contribution".........................................................29
    14.47.   "Transfer Account"...........................................................................29
    14.48.   "Trust"......................................................................................29
    14.49.   "Trustee"....................................................................................29
    14.50.   "Valuation Date".............................................................................29
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ARTICLE 1.     INTRODUCTION.

     1.1.      In General. The Plan as set forth herein contains the amendment
and restatement of the Plan accomplished in 1998 (which was effective generally
as of January 1, 1999, but with certain provisions effective as of an earlier
date,/1/ further modified to reflect subsequent changes in the law and
regulations as well as design-based changes. The Plan as set forth herein is
intended to qualify as a "profit-sharing" plan under Code section 401(a),
subject to Code section 401(a)(27)(A) and Section 4.3(c) below, and the cash or
deferred arrangement forming part of the Plan is intended to qualify under Code
section 401(k). The provisions of the Plan are to be construed and applied
accordingly. Without limiting the foregoing, references in the Plan to
"severance from employment" shall be construed to mean "separation from service"
for all periods prior to January 1, 2002.

     1.2.      Defined Terms. Defined terms are indicated by initial
capitalization and have the meanings set forth in Article 14.

ARTICLE 2.     ELIGIBILITY AND PARTICIPATION.

     2.1.      Who Is Eligible To Participate? Only Eligible Employees may be
Active Participants. An individual, once an Active Participant, remains a
Participant until his or her Accounts have been completely distributed or
forfeited.

     2.2.      Enrollment. An Eligible Employee who is eighteen years or older
may become an Active Participant as of any Entry Date coinciding with or
following the completion of six months of Service by completing the enrollment
forms prescribed by the Administrator. The Administrator may require that the
prescribed forms be filed a reasonable period of time before activation of any
Pay reduction specified by the Eligible Employee. In the case of an Eligible
Employee who was participating in the Prior Plan on December 31, 1998, the
Administrator may modify the forms, if any, required for continued participation
in the Plan by taking into account and treating as effective for purposes of the
Plan any forms and elections, or portions thereof, filed under the Prior Plan.

ARTICLE 3.     CONTRIBUTIONS.

     3.1.      Elective Contribution. Each Participating Employer will
contribute to the Trust as an Elective Contribution, for each pay period for
which an Active Participant employed by the Participating Employer has a Pay
Reduction Agreement in effect, the amount of Pay reduction specified in that
Agreement. In general, an Active Participant may specify any Pay reduction

----------
     /1/ The prior restatement was generally effective January 1, 1999, but (i)
Sections 6.4 and 8.2 were effective January 1, 1998, (ii) Sections 6.2, 11.2,
11.4, 11.5 and 14.33 were effective as of January 1, 1997, and Section 13.2 was
effective as of October 13, 1996.

                                       -1-

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percentage from zero to 15% (whole percentages only). However, the Administrator
may fix a maximum reduction percentage that is higher or lower than 15%. By
specifying a level of Pay reduction in a Pay Reduction Agreement, an Active
Participant agrees to a reduction in future Pay in the amount specified. Any Pay
Reduction Agreement that specifies a level of Pay reduction in excess of 1% of
Pay per pay period must also specify whether the related Additional Elective
Contributions will be Match-Eligible Elective Contributions or Other Elective
Contributions. If contributions under this Section are made in shares of Common
Stock rather than in cash, the number of shares contributed shall be determined
by assuming that the contributions were made in cash and applied toward the
purchase of Common Stock in accordance with Section 4.3(a).

     3.2.      Matching Contributions. For each calendar month each
Participating Employer will also contribute Matching Contributions to the Trust
for the benefit of each Active Participant who is employed by such Participating
Employer during that month, as follows:

               (a) The Participating Employer will contribute 33 1/3 cents in
     Matching Contributions (or such other amount as the Company may determine)
     with respect to each dollar of Basic Elective Contributions made for the
     benefit of the eligible Active Participant for the month.

               (b) For each dollar of Additional Elective Contributions made for
     the benefit of the eligible Active Participant for the month that is a
     Match-Eligible Elective Contribution, the Participating Employer will
     contribute such level or amount of Supplemental Matching Contributions, if
     any, as the Company determines.

For purposes of this section, an Elective Contribution will be deemed to have
been made for a calendar month only if it relates to a pay period that ends with
or within such month. If Matching Contributions under this Section are made in
shares of Common Stock rather than in cash, the number of shares contributed
shall be determined by assuming that the contributions were made in cash and
applied toward the purchase of Common Stock in accordance with Section 4.3(a).

     3.3.      QNEC Contributions. To the extent, if any, specified by the
Administrator for any Plan Year, each Participating Employer will also
contribute to the Trust a QNEC Contribution.

     3.4.      Rollover Contributions. Any Eligible Employee may make a Rollover
Contribution to the Plan upon demonstration to the Administrator that the
contribution (i) is eligible for transfer to the Plan pursuant to the rollover
provisions of the Code, (ii) contains no after-tax amounts, and (iii) is
attributable in its entirety to amounts distributed from a plan qualified under
section 401(a) of the Code or from an individual retirement account described in
section 408(a) of the Code the entire balance of which was attributable to a
distribution from a plan qualified under section 401(a) of the Code.

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     3.5.      Making, Allocating and Posting Contributions.

               (a) Payment to the Trust. Elective Contributions will be paid in
     cash to the Trust as soon as they can reasonably be segregated from the
     general assets of the Participating Employer, but in no event later than
     the 15th business day of the month following the month in which the Pay to
     which they relate is paid. Matching Contributions or QNEC Contributions
     will be paid to the Trust at such time(s) as the Administrator determines
     but not later than the earlier of (i) the time prescribed by law (including
     extensions) for filing the Participating Employer's federal income tax
     return for its taxable year in which or with which ends the Plan Year to
     which the contribution relates and (ii) the last day of the Plan Year
     following the Plan Year to which the contribution relates. All
     contributions to the Trust are expressly conditioned upon their
     deductibility under the Code.

               (b) Allocation. Contributions will be allocated to the Accounts
     of the Participants to whom they relate as of such date or dates as the
     Administrator determines but in no event later than the last day of the
     Plan Year to which the contribution relates. However, contributions
     (whether or not treated as having been allocated) will be invested and
     share in any investment earnings or losses only when they have been
     received by the Trustee and posted to the Account of the Participant as
     described below.

               (c) Posting. Contributions will be posted to the Accounts of
     those Participants entitled to share in the contributions, for purposes of
     sharing in investment earnings and losses thereon, as soon as practicable
     after receipt by the Trustee.

     3.6.      Certain Limits Apply. All contributions to the Plan are subject
to the applicable limits set forth in Code sections 401(k), 402(g), 401(m), 404,
and 415, as further described elsewhere in the Plan.

     3.7.      Return of Contributions. If any contribution by a Participating
Employer to the Trust is made by reason of a good faith mistake of fact or is
determined to be nondeductible under the Code, the Trustee, upon request by the
Administrator, will return to the Participating Employer the excess of the
amount contributed over the amount, if any, that would have been contributed had
there not occurred a mistake of fact or a mistake in determining the deductible
amount. Such excess will be reduced by the losses of the Trust attributable
thereto, if and to the extent such losses exceed the gains and income
attributable thereto. In no event will the return of a contribution cause any
Participant's Accounts to be reduced to less than they would have been had the
mistaken or nondeductible amount not been contributed. No return of a
contribution will be made more than one year after the mistaken payment or the
determination as to nondeductibility, as the case may be.

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ARTICLE 4.     PARTICIPANT ACCOUNTS.

     4.1.      Accounts. The Administrator will establish and maintain (or cause
the Trustee to establish and maintain) for each Participant such Accounts as are
necessary to carry out the purposes of this Plan.

     4.2.      Adjustment of Accounts. As of each Valuation Date, each Account
will be adjusted to reflect the fair market value of the assets allocated to the
Account. In so doing, each Account balance will be increased by all
contributions, income and gain allocable to the Account that have not previously
been reflected in the Account and decreased by all distributions, expenses and
losses allocable to the Account that have not previously been reflected in the
Account. Income, expense, gain or loss generated by a particular investment
within the Trust will be allocated to an Account participating in such
investment in the ratio which the portion of the Account invested therein bears
to the entire amount of Trust assets invested therein. Any loan fees or other
expenses relating to a specific Account and any commissions or sales charges
with respect to an investment in which an Account participates may be charged
solely to that Account.

     4.3.      Investment of Accounts.

               (a) Each Match-Eligible Elective Contribution Account and each
     Matching Contribution Account, including any portions thereof attributable
     to contributions under the Prior Plan and earnings thereon, will be
     invested at all times in the Common Stock Fund or, to the extent provided
     at Article 7 below, in promissory notes of Participants. Match-Eligible
     Elective Contributions and Matching Contributions made in cash to the Trust
     shall be applied by the Trustee to purchase Common Stock on or about the
     beginning of each calendar month. Such Common Stock may be purchased from
     the Company, provided that with respect to any such purchase no commission
     shall be charged and the price per share shall not exceed adequate
     consideration therefor, as determined pursuant to Section 408(e) of ERISA
     and the regulations promulgated thereunder. Notwithstanding the foregoing:

                    (i)   After a Participant attains age 59 1/2, he or she will
               have the opportunity, once each year and in accordance with
               procedures established by the Committee, to direct that all or
               any portion of his or her Match-Eligible Elective Contribution
               Account and Matching Contribution Account be invested as
               described in paragraph (b), provided that any amounts directed
               out of the Common Stock Fund shall not be reinvested therein.

                    (ii)  Prior to attainment of age 59 1/2, but on or after the
               later of January 1, 2002 or attainment of age 50, a Participant
               will have the opportunity, once each year and in accordance with
               procedures established by the Committee, to direct that up to
               fifteen percent (15%) of his or her Match-Eligible Elective
               Contribution Account and Matching Contribution Account be
               invested as described in

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               paragraph (b), provided that any amounts directed out of the
               Common Stock Fund shall not be reinvested therein.

               (b) Each other Account maintained for the benefit of a
          Participant or Beneficiary will be invested by the Trustee at the
          direction of the Participant or Beneficiary in one or more of the
          Funds (other than the Common Stock Fund) that may from time to time be
          specified by the Administrator (or, to the extent provided at Article
          7 below, in promissory notes of Participants). It is intended that the
          portion of the Plan described in this Section 4.3(b) be qualified
          under Section 404(c) of ERISA. The Savings Plan Committee will select
          the menu of Funds to be made available under the Plan for the
          investment of a Participant's Other Elective Contribution Account,
          QNEC Contribution Account, Rollover Contribution Account and Transfer
          Account, may add Funds to or eliminate Funds from that menu at any
          time, and may prescribe any forms, procedures and rules relating to
          the direction by Participants and Beneficiaries of investments in the
          Funds. The Committee is the fiduciary identified to furnish the
          information to Participants and Beneficiaries described in the ERISA
          404(c) regulations but may designate on its behalf another person or
          entity to provide such information or perform any of the obligations
          of the Administrator under this Section 4.3. Accounts described in
          this Section 4.3(b) may not be invested in the Common Stock Fund.

               (c) It is intended that the Plan qualify for the exemption
          described at Section 407(b)(2)(B)(iv) of ERISA. The Plan is to be
          construed in a manner consistent with this intent. If at any time, by
          reason of judicial interpretation, governmental ruling or otherwise,
          the Plan is determined by the Administrator, in writing, not to comply
          with such exemption, that portion of the Plan consisting of
          Match-Eligible Elective Contribution Accounts shall instead be deemed
          retroactively to have constituted, from and after the earliest date
          the Plan failed to comply with such exemption, an "employee stock
          ownership plan" within the meaning of Code section 4975(e)(7), and the
          provisions of the Plan relating thereto shall be deemed modified
          accordingly. Without limiting the foregoing, to the extent (and only
          to the extent) the Plan is deemed an "employee stock ownership plan",
          the provisions of Appendix B shall apply.

ARTICLE 5.     VESTING OF ACCOUNTS

     5.1.      Vesting of Accounts. A Participant will at all times be 100%
vested in his or her Match-Eligible Elective Contribution Account, Other
Elective Contribution Account (if any), QNEC Contribution Account (if any) and
Rollover Contribution Account (if any). A Participant will be 100% vested in the
remainder of his or her Accounts upon the earliest to occur of the following
(taking into account any special rules applicable to Transfer Accounts, if any):
(i) the Participant completes a five-year period of Service; (ii) the
Participant attains age 65 while an Employee; or (iii) the Participant is
affected by a termination or partial termination of the Plan. Except as provided
in the preceding two sentences, a Participant will have no vested interest in

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any Accounts maintained under the Plan. Effective for any Participant with
Service on or after January 1, 2002, clause (i) of the preceding sentence shall
be applied by substituting "three-year period of Service" for "five-year period
of Service."

     5.2.      Distribution of Less Than Entire Vested Percentage; Other
Forfeiture Events.

               (a) If a Participant ceases to be an Employee and receives a Plan
     distribution of the entire vested portion of his or her Accounts, any
     remaining (unvested) portion of the Participant's Accounts will be
     immediately forfeited. If an individual described in the preceding sentence
     returns to the employ of the Employer before incurring a Substantial Period
     of Severance, the previously forfeited balance of his or her Accounts, if
     any, will be restored. Any portion of such restored amounts attributable to
     Accounts described at Section 4.3(a) will be reinvested in the Common Stock
     Fund, and any remaining portion of such restored amounts will be reinvested
     in accordance with Section 4.3(b) above. A Participant will have no vested
     interest in any previously forfeited amounts that are restored as described
     in this Section 5.2 prior to the earliest of the events described in the
     second sentence of Section 5.1. The restoration of Accounts required under
     this subsection (a) will be funded as the Administrator determines either
     from amounts forfeited from other Accounts during the same Plan Year or
     from additional Participating Employer contributions, which the
     Administrator is hereby authorized to require from each Participating
     Employer.

               (b) If a Participant ceases to be an Employee prior to full
     vesting in accordance with Section 5.1 and does not receive a Plan
     distribution of the entire vested portion of his or her Accounts, the
     undistributed portion of the Participant's Accounts will remain allocated
     until the Participant incurs a Substantial Period of Severance, at which
     time such portion, to the extent unvested, will be irrevocably forfeited.

               (c) Amounts forfeited under this Section 5.2 and not applied to
     restore the Accounts of reemployed Participants as described at subsection
     (a) above will be applied to reduce the contributions that would otherwise
     have been made by the Participating Employers for the Plan Year or to pay
     expenses of the Plan or Trust pursuant to Section 9.7, as the Administrator
     determines.

     5.3.      Changes in Vesting Schedule. If the Plan is amended in any way
that directly or indirectly affects the computation of a Participant's vested
interest in his or her Accounts, each Participant who has completed 3 years of
Service may elect, within the period described below, to have his or her vested
interest determined without regard to the amendment or change. The period
referred to in the preceding sentence begins on the date the amendment of the
vesting schedule is adopted and ends 60 days thereafter, or, if later, 60 days
after the later of the date on which the amendment becomes effective and the
date on which the Administrator issues the Participant written notice of the
amendment.

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ARTICLE 6.     WITHDRAWALS PRIOR TO SEVERANCE FROM EMPLOYMENT.

     6.1.      Hardship Withdrawals.

               (a) A Participant may apply to the Administrator for a hardship
     withdrawal to pay for any of the following: expenses for medical care
     described in Code section 213(d) previously incurred by the Participant,
     his or her spouse or any of his or her dependents (as defined in Code
     section 152) or necessary for these persons to obtain such medical care;
     costs directly related to the purchase of a principal residence of the
     Participant (excluding mortgage payments); the payment of tuition, related
     educational fees and room and board expenses for the next 12 months of
     post-secondary education for the Participant, his or her spouse, children
     or dependents (as defined in Code section 152); or payments necessary to
     prevent the eviction of the Participant from his or her principal residence
     or foreclosure on the mortgage on that principal residence. The
     Administrator will authorize a hardship withdrawal only upon presentation
     by the Participant of written evidence satisfactory to the Administrator
     demonstrating the existence of one of the financial need categories
     described above and the amount of the financial need, and including such
     other information as the Administrator may require. No hardship withdrawal
     is permitted unless the Administrator also determines that the Participant
     has first obtained all loans and non-hardship withdrawals then available to
     the Participant under the Plan and all other plans maintained by the
     Employer.

               (b) As soon as practicable after the Administrator makes the
     necessary determinations under subsection (a) above, the Administrator will
     direct the Trustee to pay to the Participant the lesser of (i) the amount
     of the demonstrated need (including any federal, state or local income
     taxes and penalties that might reasonably be expected to be due with
     respect to the withdrawal), and (ii) the maximum amount available for
     withdrawal. The maximum amount available for a hardship withdrawal is the
     sum of the following determined without regard to any portion of an Account
     consisting of the Participant's promissory note: (A) the balance of the
     Participant's Rollover Contribution Account, if any, plus (B) the vested
     portion, if any, of the balance of the Participant's Matching Contribution
     Account, plus (C) that portion of the balance of the Participant's Other
     Elective Contribution Account, if any, which consists of Other Elective
     Contributions but not including any earnings with respect to such
     contributions, plus (D) that portion of the balance of the Participant's
     Match-Eligible Elective Contribution Account which consists of
     Match-Eligible Elective Contributions or elective contributions under the
     Prior Plan but not including any earnings with respect to such
     contributions. Hardship withdrawals will be drawn from, and applied as a
     reduction to, the Accounts described in the immediately preceding sentence
     in the order indicated, such that no reduction will be made in the
     withdrawing Participant's Matching Contribution Account until the full
     amount of his or her Rollover Contribution Account, if any, has been
     withdrawn, no reduction will be made in the withdrawing Participant's

                                       -7-

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     Other Elective Contribution Account until the full amount of his or her
     Rollover Contribution Account and the vested portion of his or her Matching
     Contribution Account have been withdrawn, and so forth.

               (c) If a Participant receives a hardship withdrawal that includes
     an amount described at clause (C) or clause (D) of subsection (b) above,
     then any Pay reduction and other deferrals of compensation or similar
     contributions with respect to the Participant under the Plan or any other
     qualified or nonqualified plan of deferred compensation maintained by the
     Employer, including stock option or stock purchase programs, will be
     suspended for the 12-month period immediately following the date of the
     hardship distribution. For the Plan Year following the withdrawal, the
     amount of Elective Contributions made for the benefit of the Participant,
     together with any elective deferrals made on his or her behalf under any
     other plan maintained by the Employer, will be limited to the excess of the
     then applicable limit under Code section 402(g) over the amount of such
     contributions made on behalf of the Participant for the Plan Year of the
     withdrawal.

     6.2.      Required Distributions After Age 70 1/2. In the case of a
Participant who is a "five percent owner" of the Employer (as defined at Code
section 416) and who remains an Employee after attaining age 70 1/2, the
Administrator will instruct the Trustee to make distributions to the Participant
of his or her Accounts not later than April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2. In the case of a
Participant not described in the preceding sentence who remains an Employee
after attaining age 70 1/2, distribution shall be made not later than April 1 of
the calendar year following the calendar year in which the Participant retires.

     6.3.      Withdrawals After Age 59 1/2. A Participant who has attained age
59 1/2 may make a withdrawal from his or her Accounts once per Plan Year upon
such notice as the Administrator may prescribe. Any such withdrawal shall be in
the amount specified by the Participant, up to the Participant's vested interest
in his or her Accounts determined as soon as practicable following the
Administrator's receipt of notice of the withdrawal. Payment to the Participant
shall be made on or as soon as practicable after the Valuation Date constituting
such determination date and shall be in shares of Common Stock with respect to
distributions from the Common Stock Fund (with cash in lieu of fractional
shares) and in cash with respect to distributions from the other Funds.

     6.4.      Restrictions on Certain Withdrawals. In the case of a Participant
whose vested Accounts have a value in excess of $5,000 (or such higher amount as
may be permitted under Code section 411(a)(11)) and who has not yet attained age
65, no withdrawal may be made by the Participant unless, between the 30th and
90th day prior to the date distribution is to be made, the Administrator
notifies the Participant that he or she may defer distribution until age 65
(such notification to include such additional information as may be required by
regulations) and the Participant thereafter consents to the distribution in
writing. Notwithstanding the foregoing, distribution may commence fewer than 30
days after provision of the required notice if the

                                       -8-

<PAGE>

Participant elects an earlier commencement after having been clearly informed of
the right to have a full 30 days to review the notice. For purposes of this
Section, a Participant's vested Accounts will be considered to have a value in
excess of $5,000 (or such higher amount as may be permitted under Code section
411(a)(11)) if the value of the Participant's vested Accounts exceeds or
exceeded the applicable limitation under Code section 411(a)(11) at the time of
the distribution in question or at the time of any prior Plan distribution to
(or withdrawal by) the Participant.

     6.5.      Distributions Required by a QDRO. To the extent required by a
QDRO, the Administrator will direct the Trustee to make distributions from a
Participant's vested Accounts to the alternate payee(s) named in the QDRO,
regardless of whether the Participant is otherwise entitled to a distribution at
such time under the Plan.

ARTICLE 7.     LOANS TO PARTICIPANTS.

     7.1.      In General. Upon the written request of an Eligible Borrower on a
form acceptable to the Administrator and subject to the conditions of this
Article, the Administrator will direct the Trustee to make a loan from the Trust
to the Eligible Borrower.

     7.2.      Rules and Procedures. The Administrator will promulgate such
rules and procedures, not inconsistent with the express provisions of this
Article, as it deems necessary to carry out the purposes of this Article. All
such rules and procedures will be deemed a part of the Plan for purposes of the
Department of Labor regulation section 2550.408b-1(d). Loans will not be made
available to Eligible Borrowers who are HCEs in an amount (determined under
Department of Labor regulation section 2550.408b-1(c)) greater than the amount
made available to other Eligible Borrowers.

     7.3.      Maximum Amount of Loan. No loan will be made to an Eligible
Borrower to the extent it would result in taxable income to the Eligible
Borrower by reason of exceeding the dollar limits described at Code section
72(p)(2)(A)(i) or (ii). No loan may exceed in amount 50% of the Eligible
Borrower's vested interest in his or her Accounts, determined as of the
Valuation Date immediately preceding the date of the loan.

     7.4.      Minimum Amount of Loan; Fees. The Administrator may establish a
minimum loan amount, not to exceed $1,000, and an administrative fee for
initiating a loan.

     7.5.      Note; Security Interest. Each loan will be evidenced by a note
signed by the Eligible Borrower and will be secured by 50% of the Eligible
Borrower's vested interest in his or her Accounts, including in such security
the note evidencing the loan. The loan will bear interest at a reasonable annual
percentage interest rate determined by the Administrator.

     7.6.      Repayment. Each loan made to an Eligible Borrower who is
receiving regular payments of compensation from a Participating Employer will be
repayable by payroll deduction. Loans made to other Eligible Borrowers (and, in
all events, where payroll deduction

                                       -9-

<PAGE>

is no longer practicable) will be repayable in such manner as the Administrator
determines. The documents evidencing a loan will provide for substantially level
amortization with payments not less frequently than quarterly over a specified
term determined by the Administrator, but not to exceed five years. However,
loan repayments will be subject to suspension to the extent permitted under Code
section 414(u)(4).

     7.7.      Repayment Upon Distribution. If, at the time benefits are to be
distributed to an Eligible Borrower with respect to a severance from employment,
there remains any unpaid balance of a Plan loan to the Eligible Borrower, the
unpaid balance will, to the maximum extent consistent with Department of Labor
regulations, become immediately due and payable in full. Such unpaid balance,
together with any accrued but unpaid interest on the loan, will be deducted from
the Eligible Borrower's Accounts, subject to the default provisions below,
before any distribution of benefits is made. Except as may be required in order
to comply (in a manner consistent with continued qualification of the Plan under
Code section 401(a)) with Department of Labor regulations, no loan will be made
or remain outstanding with respect to a Participant under this Article after the
time distributions to the Participant with respect to a severance from
employment are to be paid.

     7.8.      Default. In the event of a default in making any payment of
principal or interest when due under the note evidencing any loan under this
Article, if the default continues for more than 14 days after written notice of
the default by the Administrator or Trustee (or such longer time as the
Administrator may allow), the unpaid principal balance of the note will
immediately become due and payable in full. The unpaid principal, together with
any accrued but unpaid interest, shall thereupon be deducted from the Eligible
Borrower's Accounts, subject to the further provisions of this Section. The
amount so deducted will be treated as distributed to the Eligible Borrower and
applied by the Eligible Borrower as a payment of the unpaid interest and
principal (in that order) under the note evidencing such loan. In no event will
the Eligible Borrower's Accounts be applied to satisfy the Eligible Borrower's
repayment obligation, whether or not he or she is in default, unless the amount
so applied otherwise could be distributed in accordance with the Plan.

     7.9.      Note as Trust Asset. The note evidencing a loan to an Eligible
Borrower under this Article will be an asset of the Trust which is allocated to
the Account of the Eligible Borrower and for purposes of the Plan will be deemed
to have a value at any given time equal to the unpaid principal balance of the
note plus accrued but unpaid interest.

     7.10.     Nondiscrimination. Loans will be made available under this
Article to all Eligible Borrowers on a reasonably equivalent basis, except that
the Administrator may make reasonable distinctions based on creditworthiness.

     7.11.     Affected Investments. The funds necessary to make a loan to an
Eligible Borrower will be obtained by liquidating assets of the Eligible
Borrower's vested Accounts in the order established by the Administrator and
subject to such limitations as the Administrator may prescribe. The posting of
loan payments will be made to the Accounts from which the loan was

                                      -10-

<PAGE>

funded, in proportion to the amount of the loan drawn from each such Account.
Loan repayments will be invested in the Common Stock Fund and the other Funds
from which the loan was funded in proportion to the amount of the loan drawn
from each such investment source, subject, as necessary, to any additional rules
or procedures established by the Administrator.

ARTICLE 8.     BENEFITS UPON DEATH OR SEVERANCE FROM EMPLOYMENT

     8.1.      Severance From Employment for Reasons Other Than Death. Following
a Participant's separation from the service of the Employer for any reason other
than death, the Participant will receive the vested portion of his or her
Accounts in a single sum. That portion of the distribution withdrawn from the
Common Stock Fund will be made in shares of Common Stock (with cash in lieu of
fractional shares), and the remaining portion of the distribution will be made
in cash. The amount of each distribution will be determined as of the Valuation
Date that immediately precedes or coincides with the date distribution is to be
made, as described below.

     8.2.      Time of Distributions. Distribution with respect to a
Participant's severance from employment normally will be made as soon as
practicable after such separation. In the case of a Participant whose vested
interest in his or her Accounts has a value in excess of $5,000 (or such higher
amount as may be permitted under Code section 411(a)(11)) and who has not yet
attained age 65, however, distribution may not be made under this Section unless
the notice and consent requirements described at Section 6.4 above have first
been satisfied. Unless the Participant elects otherwise, distribution will be
made in all events no later than the 60th day after the close of the Plan Year
in which occurs the later of the Participant's severance from employment, the
tenth anniversary of the year in which the Participant commenced participation
in the Plan, or the Participant's attainment of age 65.

     8.3.      Distributions After a Participant's Death. If a Participant dies
prior to his or her severance from employment with the Employer, the
Participant's Beneficiary will receive the full amount of the Participant's
Accounts (less any outstanding indebtedness owed by the Participant to the Plan,
which shall be treated as having been distributed to the Participant's estate)
in cash in a single sum as soon as practicable following the Participant's death
but not later than December 31 of the calendar year following the year of the
Participant's death, except that any portion of the distribution withdrawn from
the Common Stock Fund will be distributed in shares of Common Stock (with cash
in lieu of fractional shares). If a Participant dies after severance from
employment but before the complete distribution of his or her vested Accounts
has been made, the Participant's Beneficiary will receive the remaining vested
portion of the Participant's Accounts (less any outstanding indebtedness owed by
the Participant to the Plan, which shall be treated as having been distributed
to the Participant's estate) in cash in a single sum, except that any portion of
the distribution withdrawn from the Common Stock Fund will be distributed in
shares of Common Stock (with cash in lieu of fractional shares), as soon as
practicable following the Participant's death but not later than December 31 of
the calendar year following the year of the Participant's death. Any
distribution to a Beneficiary under this Section will be determined

                                      -11-

<PAGE>

as of the Valuation Date immediately preceding or coinciding with the date
distribution is to be made.

     8.4.      Designation of Beneficiary. Except as otherwise provided in this
Section, a Participant's Beneficiary is the person or persons, if any,
designated in writing by the Participant in accordance with such procedures as
the Administrator may determine. The Administrator may decline to recognize any
beneficiary designation received (e.g., by mail or from the decedent's attorney)
after the Participant's death. In the absence of an effective written
Beneficiary designation, a Participant's Beneficiary will be deemed to be his or
her surviving spouse, if any, or if none, the Participant's estate. A nonspouse
beneficiary designation by a Participant who is married at the time of his or
her death will not be effective unless, (a) prior to the Participant's death,
the Participant's surviving spouse consented to and acknowledged the effect of
the Participant's designation of a specific non-spouse Beneficiary (including
any class of Beneficiaries or any contingent Beneficiaries) on a written form
approved by the Administrator; or (b) it is established to the satisfaction of
the Administrator that spousal consent may not be obtained because there is no
spouse, because the spouse has died (evidenced by a certificate of death)
because the spouse cannot be located (based on information supplied by a
government agency or independent investigator), or because of such other
circumstances as the Secretary of the Treasury may prescribe. If a spouse is
legally incompetent to give consent, the spouse's legal guardian, even if the
guardian is the Participant, may give consent on behalf of the spouse. Any
consent and acknowledgment by (or on behalf of) a spouse, or the establishment
that the consent and acknowledgment cannot be obtained, will be effective only
with respect to such spouse, but will be irrevocable once made.

     8.5.      Direct Rollovers of Eligible Distributions. Notwithstanding any
provision of the Plan to the contrary that may otherwise limit a distributee's
election under this Section, a distributee may elect, at the time and in the
manner prescribed by the Administrator, to have any portion of an eligible
rollover distribution paid in a direct rollover, including shares of Common
Stock, to an eligible retirement plan specified by the distributee. For purposes
of this Section, the following terms have the following meanings:

                                      -12-

<PAGE>

               (a) An "eligible rollover distribution" is any distribution of
     all or any portion of the balance to the credit of the distributee, except
     that an eligible rollover distribution does not include: any distribution
     that is one of a series of substantially equal periodic payments (not less
     frequently than annually) made for the life expectancy of the distributee
     or the distributee and his or her designated Beneficiary, or for a
     specified period of ten years or more; any distribution to the extent such
     distribution is required under Code section 401(a)(9); amounts distributed
     pursuant to Section 6.1 on account of hardship (provided, that prior to
     January 1, 2002 the only such hardship-distribution amounts not eligible
     for rollover shall be those that are attributable to Elective
     Contributions); and, except in the case of a distribution on or after
     January 1, 2002, the portion of any distribution that is not includible in
     gross income (determined without regard to the exclusion for net unrealized
     appreciation with respect to employer securities).

               (b) For distributions prior to January 1, 2002, the term
     "eligible retirement plan" means: (i) with respect to a distributee other
     than the Participant's surviving spouse, an individual retirement account
     described in Code section 408(a), an individual retirement annuity
     described in Code section 408(b), an annuity plan described in Code section
     403(a), or a qualified trust described in Code section 401(a), and (ii)
     with respect to a distributee who is a Participant's surviving spouse, an
     individual retirement account or an individual retirement annuity. For
     distributions on or after January 1, 2002, the term "eligible retirement
     plan" means (in the case of any distributee, including the Participant's
     surviving spouse) any plan or arrangement described in clause (i) as well
     as an annuity contract described in Code section 403(b) and an eligible
     deferred compensation plan described in Code section 457(b) which is
     maintained by an eligible employer described in Code section 457(e)(1)(A).

               (c) a "distributee" includes an employee or former employee, the
     surviving spouse of a deceased employee or former employee, and the spouse
     or former spouse (who is an alternate payee under a QDRO) of an employee or
     former employee.

               (d) a "direct rollover" is a payment by the Plan to the eligible
     retirement plan specified by the distributee.

ARTICLE 9.     ADMINISTRATION.

     9.1.      In General. The named fiduciary charged with administering the
Plan and selecting the menu of Funds for Participant- or Beneficiary-directed
investments under the Plan is the Savings Plan Committee (the "Committee"). The
Committee may delegate any or all of its duties to one or more other persons,
who may be (but need not be) Employees. The term "Administrator" as used in the
Plan refers to the Committee (including any member or members

                                      -13-

<PAGE>

thereof acting on behalf of the Committee as described at Section 9.2 below)
together with such other duly authorized person or persons.

     9.2.      Savings Plan Committee. The Committee will consist of individuals
selected by the Board. All determinations required to be made by the Committee
as a whole will be made by a vote of a majority of its eligible members voting
at a meeting of the Committee at which a majority of its eligible members are
present and voting, or by a written consent signed by a majority of the
Committee's eligible members; but if the number of individuals comprising the
eligible members of the Committee is fewer than three, any vote or consent taken
by the Committee's eligible members must be unanimous. Notwithstanding the
foregoing, the Committee may authorize one of its eligible members to act on
behalf of the Committee, with such delegation of powers as the Committee may
determine. References herein to the Committee include references to any such
member or members acting on its behalf. Each member of the Committee will be
deemed an eligible member as to all matters other than those that pertain
uniquely to himself or herself. The Committee may establish such additional
rules and procedures for its deliberations and operations as it deems advisable.

     All members of the Committee will serve without pay for the performance of
their duties hereunder. Any member of the Committee may resign at any time by
the delivery of his or her written resignation to the Committee, such
resignation to be effective on delivery or at any later date specified by the
resigning Committee member. The Board may remove a Committee member at any time
and for any reason. If at any time there is a vacancy in the membership of the
Committee, the remaining Committee members will continue to act until the
vacancy is filled by the Board.

     9.3.      Powers of the Administrator. The Administrator will have full
discretionary power to administer the Plan in all of its details, subject,
however, to the requirements of ERISA. For this purpose the Administrator's
discretionary power will include, but will not be limited to, the following
authority: to make and enforce such rules and regulations as it deems necessary
or proper for the efficient administration of the Plan; to interpret the Plan;
to decide all questions concerning the Plan and the eligibility of any person to
participate in the Plan; to compute the amount of benefits which will be payable
to any Participant or other person in accordance with the provisions of the Plan
and to determine the person or persons to whom such benefits will be paid; to
authorize the payment of benefits; to authorize the payment of reasonable
expenses of administering the Plan in accordance with Section 9.7; to keep such
records and submit such filings, elections, applications, returns or other
documents or forms as may be required under the Code and applicable regulations,
or under other federal, state or local law and regulations; to appoint such
agents, counsel, accountants, consultants and Actuaries as may be required to
assist in administering the Plan; and to allocate and delegate its fiduciary
responsibilities under the Plan, any such allocation or designation to be by
written instrument and in accordance with Section 405 of ERISA.

                                      -14-

<PAGE>

     9.4.      Effect of interpretation or determination. The Administrator's
determinations and interpretations under the Plan will be final and conclusive
on all persons in the absence of clear and convincing evidence that the
Administrator acted arbitrarily and capriciously.

     9.5.      Examination of records. The Administrator will make available to
each Participant such of its records as pertain to him or her, for examination
at reasonable times during normal business hours.

     9.6.      Reliance on tables, etc. In administering the Plan, the
Administrator will be entitled to the extent permitted by law to rely
conclusively on all tables, valuations, certificates, opinions and reports which
are furnished by an actuary, accountant, trustee, counsel or other expert who is
employed or engaged by the Administrator or the Company.

     9.7.      Expenses of Plan. The Administrator may direct the Trustee to pay
from the Trust any or all reasonable expenses of administering the Plan or
Trust. The Administrator will determine what constitutes a reasonable expense of
administering the Plan or Trust and whether such expenses shall be paid from the
Trust. Any such expenses not paid out of the Trust will be paid by the
Participating Employers in such proportions as the Administrator determines.

     9.8.      Withholding of tax. Any distribution under the Plan will be
subject to such tax and other withholdings as may be required by the Code and
applicable regulations.

     9.9.      Indemnification of Administrator. Each Participating Employer
agrees to indemnify and to defend to the fullest extent permitted by law any
member of the Committee and any employee or trustee of an Affiliated Employer
who assists the Committee in administering the Plan, including any such person
who formerly served as a member of the Committee or assisted the Committee in
administering the Plan, against all liabilities, damages, costs and expenses
(including attorneys' fees and amounts paid in settlement of any claims approved
by the Company) occasioned by any act or omission to act in connection with the
Plan, if such act or omission is in good faith.

     9.10.     Claims and review procedures. The Administrator shall establish
reasonable procedures for processing benefit claims and appeals from denials of
such claims, in accordance with Section 503 of ERISA and the regulations
thereunder.

ARTICLE 10.    AMENDMENT AND TERMINATION.

     10.1.     Amendment. The Company reserves the power at any time or times to
amend the provisions of the Plan and Trust to any extent and in any manner that
it may deem advisable by a written instrument signed by an officer of the
Company. However, no amendment will (a) cause or permit any part of the assets
of the Trust to be diverted to purposes other than for the exclusive benefit of
each Participant and his or her Beneficiary (except as permitted by the Plan
with respect to QDROs or the return of contributions upon a determination of
nondeductibility or

                                      -15-

<PAGE>

mistake of fact, or to pay the reasonable expenses of the Plan or Trust), unless
the amendment is required or permitted by law, governmental regulation or
ruling; or to (b) reduce the accrued benefit of any Participant in violation of
Code section 411(d)(6), except as otherwise permitted or required by law. If the
vesting schedule of the Plan is amended, each Participant's nonforfeitable
percentage determined as of the later of the date the amendment is adopted or
the date it becomes effective will not be less than the percentage determined
without regard to such amendment.

     10.2.     Termination. The Company has established the Plan and authorized
the establishment of the Trust with the bona fide intention and expectation that
contributions will be continued indefinitely, but the Company reserves the
absolute right to discontinue contributions under the Plan or terminate the Plan
at any time by written notice delivered to the Trustee, without liability
whatsoever for any such discontinuance or termination.

     10.3.     Distributions upon Termination of the Plan. As soon as
practicable following complete termination of the Plan by the Company, the
Trustee will distribute in a single sum to each Participant or other person
entitled to distribution the value of the Participant's Accounts, subject,
however, to the limitations of Code section 401(k)(10). The amount of the
distribution will be determined as of the Valuation Date immediately preceding
or coinciding with the date distribution is to be made. If the limitations of
Code section 401(k)(10) preclude a distribution at time of termination, the
Administrator will take appropriate steps to preserve the Accounts within a
tax-qualified plan pending final distribution.

     10.4.     Merger or Consolidation of Plan; Transfer of Plan Assets. In case
of any merger or consolidation of the Plan with, or transfer of assets and
liabilities of the Plan to, any other plan, provision must be made so that each
Participant would, if the Plan then terminated, receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit he or she would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.

ARTICLE 11.    LIMITS ON CONTRIBUTIONS.

     11.1.     Code section 404 Limits. The sum of the Plan contributions made
by each Participating Employer will not exceed the maximum amount deductible by
the Participating Employer under the applicable provisions of the Code.

     11.2.     Code section 415 Limits. Code section 415 is hereby incorporated
by reference into the Plan. The aggregate of all Elective Contributions,
Matching Contributions and QNECs made for the benefit of a Participant under the
Plan, after taking into account annual additions (for the same Plan Year) with
respect to the Participant under other plans of the Employer, may not exceed the
limitations of Code section 415 (i.e., for limitation years commencing prior to
January 1, 2002, the lesser of $30,000, as adjusted pursuant to Code section
415(d), or 25% of compensation; and for limitation years commencing on or after
January 1, 2002, the lesser of $40,000, as adjusted pursuant to Code section
415(d), or 100% of compensation). For purposes of applying these

                                      -16-

<PAGE>

limitations, the compensation taken into account for any Participant will be his
or her compensation as defined in Treasury Regulations section 1.415-2(d)(2) and
(3), but including elective deferrals as defined in Code section 402(g)(3),
amounts not includible in gross income by reason of Code section 125, and, for
limitation years commencing on or after January 1, 2001, amounts not includible
in gross income by reason of Code section 132(f)(4). Although it is intended
that compliance with the limitations of this Section be achieved, to the extent
practicable, by limiting annual additions and benefits under other defined
contribution plans and defined benefit plans, respectively, of the Employer
before reducing annual additions under the Plan, in order to satisfy the
limitations of this Section the Administrator has complete discretion to adjust
contributions under the Plan prospectively or to adjust Accounts retroactively
in accordance with Treasury Regulations section 1.415-6(b)(6)(iv) by
distributing elective deferrals (within the meaning of Code section 402(g)(3))
and distributing gains attributable to those elective deferrals to the extent
that the distribution would reduce the excess amounts in the Participant's
Accounts.

     11.3.     Code section 402(g) Limits. The maximum amount of Elective
Contributions made on behalf of any Participant for any Plan Year, when added to
the amount of elective deferrals (as defined in Code section 402(g)(3)) under
all other plans, contracts and arrangements of the Employer with respect to the
Participant for the same year), shall not exceed the maximum applicable limit in
effect for the year under Treasury Regulations section 1.402(g)-1(d); provided,
that for calendar years commencing on or after January 1, 2002, the limit shall
be the amount described in section 402(g)(1)(B) of the Code, subject to
adjustment pursuant to section 402(g)(4). A Participant will be considered to
have had "excess deferrals" for a Plan Year to the extent that the Participant's
elective deferrals (as so defined) for the year exceed the applicable limit. In
the event that an amount is included in a Participant's gross income for a
taxable year as a result of an excess deferral and the Participant notifies the
Administrator on or before March 1 of the following year that all or a specified
part of an Elective Contribution made for his or her benefit represents an
excess deferral, the Administrator will make every reasonable effort to cause
the excess deferral, adjusted for allocable income, to be distributed to the
Participant no later than the April 15 following the calendar year in which such
excess deferral was made. The income allocable to excess deferrals is equal to
the allocable gain or loss for the taxable year of the individual, as determined
by the Administrator, but not the allocable gain or loss for the period between
the end of the taxable year and the date of distribution. No distribution of an
excess deferral will be made during the taxable year of a Participant in which
the excess deferral was made unless the correcting distribution is made after
the date on which the Plan received the excess deferral and both the Participant
and the Plan designates the distribution as a distribution of an excess
deferral. The amount of any excess deferrals that may be distributed to a
Participant for a taxable year will be reduced by the amount of Elective
Contributions that were excess contributions (as defined under Code section
401(k)(3)) and that were previously distributed to the Participant to comply
with the limitations of Section 11.4.

     11.4.     Code section 401(k)(3) Limits. Elective Contributions made under
the Plan are subject to the limits of Code section 401(k)(3), which are
incorporated herein by reference. Those limits will be deemed satisfied if, for
any Plan Year, the "actual deferral percentage" (as that term is defined

                                      -17-

<PAGE>

in Code section 401(k)(3)(B) and the Treasury Regulations thereunder) (the
"ADP") for the group of all HCEs who are eligible to participate in Elective
Contributions satisfies the requirements of Code section 401(k)(3)(A)(ii) when
measured against the ADP for the prior Plan Year for the group of all NHCEs who
were eligible to participate in Elective Contributions during such Year. The
Administrator may limit (in such manner as it determines) the Elective
Contributions to be made for the benefit of one or more HCEs so that the
requirements of the immediately preceding sentence are satisfied, but if as of
the end of a Plan Year such requirements are determined not to have been
satisfied, the Administrator will provide for one or a combination of the
following remedial steps:

               (a) The Administrator may direct the Trustee to refund excess
     contributions, as defined in Code section 401(k)(8)(B) and the Treasury
     Regulations thereunder, together with any allocable income, to those HCEs
     who are entitled to the refund under Code section 401(k)(8)(C) and the
     Treasury Regulations thereunder, provided such refund is accomplished not
     later than by December 31 of the Plan Year following the Plan Year with
     respect to which such excess contributions arose. In determining the amount
     of excess contributions under Code section 401(k)(8)(B), the maximum amount
     of such contributions permitted under the Plan shall be determined by
     reducing the contributions made on behalf of HCEs in the order of their
     deferral percentages starting with the highest deferral percentage until
     the limits of Code section 401(k)(3) are satisfied (i.e., leveling by
     deferral percentages). In determining who is entitled to a refund under
     Code section 401(k)(8)(C), the excess determined pursuant to the
     immediately preceding sentence shall be distributed to the HCEs on the
     basis of the amounts of the contributions on behalf of such HCEs (i.e.,
     leveling by amount of contributions). The income allocable to excess
     contributions is equal to the allocable gain or loss for the Plan Year (as
     determined by the Administrator) but does not include the allocable gain or
     loss for the period between the end of the Plan Year and the date of
     distribution. The amount of excess contributions distributed with respect
     to an HCE for a Plan Year will be reduced by the amount of excess deferrals
     previously distributed to the HCE for the same year under Section 11.3
     above. If Matching Contributions have been made with respect to Elective
     Contributions that are refunded under this subsection (a), the Matching
     Contributions will be distributed to the Participant at the same time as
     the related Elective Contributions.

               (b) The Administrator may instruct the Participating Employers to
     make a QNEC Contribution for the Plan Year for the benefit of those NHCEs
     who are designated by the Administrator.

All references herein to Treasury Regulations will be deemed to include related
supplemental guidance issued by the Internal Revenue Service.

     11.5.     Code section 401(m) Limits. Matching Contributions made under the
Plan are subject to the limits of Code section 401(m)(2), which are incorporated
herein by reference. Those limits will be deemed satisfied if, for any Plan
Year, the "contribution percentage" (as that term is defined

                                      -18-

<PAGE>

in Code section 401(m)(3) and the Treasury Regulations thereunder) (the
"Contribution Percentage") for the group of all HCEs who are eligible for
Matching Contributions satisfies the requirements of Code section 401(m)(2)(A)
and the Treasury Regulations thereunder (and, for Plan Years commencing prior to
January 1, 2002, the "multiple use" limits set forth in Treasury Regulations
section 1.401(m)-2) when measured against the Contribution Percentage for the
prior Plan Year for the group of all NHCEs who were eligible for Matching
Contributions during such Year. The Administrator may limit (in such manner as
it determines) the Matching Contributions to be made for the benefit of one or
more HCEs so that the requirements of the immediately preceding sentence are
satisfied, but if as of the end of a Plan Year such requirements are determined
not to have been satisfied, the Administrator will direct the Trustee to refund
excess aggregate contributions, as defined in Code section 401(m)(6)(B) and the
Treasury Regulations thereunder, together with any allocable income, to those
HCEs who are entitled to the refund under Code section 401(m)(6)(C) and the
Treasury Regulations thereunder, provided such refund is accomplished not later
than by December 31 of the Plan Year following the Plan Year with respect to
which such excess contributions arose. In determining the amount of excess
contributions under Code section 401(m)(6)(B), the maximum amount of Matching
Contributions permitted under the Plan shall be determined by reducing the
Matching Contributions made on behalf of HCEs in the order of their contribution
percentages starting with the highest contribution percentage until the limits
of Code section 401(m)(2) are satisfied (i.e., leveling by contribution
percentages). In determining who is entitled to a refund under Code section
401(m)(6)(C), the excess determined pursuant to the immediately preceding
sentence shall be distributed to the HCEs on the basis of the amounts of the
Matching Contributions on behalf of such HCEs (i.e., leveling by amount of
contributions). The income allocable to excess aggregate contributions is equal
to the allocable gain or loss for the Plan Year (as determined by the
Administrator) but does not include the allocable gain or loss for the period
between the end of the Plan Year and the date of distribution. The amount of
excess contributions distributed with respect to an HCE for a Plan Year will be
reduced by the amount of excess deferrals previously distributed to the HCE for
the same year under Section 11.3 above. All references herein to Treasury
Regulations will be deemed to include related supplemental guidance issued by
the Internal Revenue Service.

ARTICLE 12.    SPECIAL TOP-HEAVY PROVISIONS.

     12.1.     Provisions to apply. The provisions of this Article will apply
for any top-heavy Plan Year notwithstanding anything to the contrary in the
Plan. This Article is intended to comply with Code section 416 and the Treasury
Regulations thereunder, which are incorporated by reference.

     12.2.     Minimum Contribution. For any Plan Year which is a top-heavy plan
year, the Participating Employers will contribute to the Trust a minimum
contribution on behalf of each Eligible Employee who is not a key employee, who
has not separated from service with the Employer by the end of the Plan Year,
and who has satisfied the age and Service requirements for participation under
Article 3 (regardless of whether or not the Participant has elected to have

                                      -19-

<PAGE>

Elective Contributions made for his or her benefit for the Year). The minimum
contribution will equal 3% of the Participant's compensation except as
hereinafter provided. If the largest Plan contribution for the benefit of each
key employee for the Plan Year, taking into account all contributions other than
Rollover Contributions, is less than 3% of compensation, the highest such
percentage will be used in lieu of 3%. Also, no minimum contribution will be
required with respect to an individual who is also covered by another top-heavy
defined contribution plan of an Affiliated Employer which meets the vesting
requirements of Code section 416(b) and under which the Participant receives the
top-heavy minimum contribution. If an individual entitled to a top-heavy
contribution under this Section is also covered by a top-heavy defined benefit
plan of an Affiliated Employer, "5%" will be substituted for "3%" above in
determining the minimum contribution. If contributions are required under this
Section, the Administrator will establish (or cause the Trustee to establish) a
special Account to which such contributions will be allocated.

     12.3.     Special Vesting Schedule. Each Employee who is an Eligible
Employee described in the first sentence of Section 12.2 above at any time
during a top-heavy plan year will be vested in not less than the percentage of
each of his or her Accounts as set forth in the following vesting schedule (or
the Plan's general vesting schedule, if faster), based on the Participant's
years of Service:

                  Years of Service      Vested Percentage
                  ------------------    -----------------
                  fewer than 2          0%
                  2 but fewer than 3    20%
                  3 but fewer than 4    40%
                  4 but fewer than 5    60%
                  5 but fewer than 6    80%
                  6 or more             100%

Further, no decrease in a Participant's nonforfeitable percentage may occur in
the event the Plan's status as top-heavy changes for any Plan Year. If the
vesting schedule under the Plan shifts in or out of the above schedule for any
Plan Year because of the Plan's top-heavy status, the shift shall be considered
to be an amendment to the vesting schedule for all purposes of the Plan.

     12.4.     Definitions. For purposes of these top-heavy provisions, the
following terms have the following meanings:

               (a) "key employee" means a key employee described in Code section
     416(i)(l), and "non-key employee" means any employee who is not a key
     employee (including employees who are former key employees);

               (b) "top-heavy plan year" means a Plan Year if any of the
     following conditions exist: (i) the top-heavy ratio for the Plan exceeds 60
     percent and the Plan is not part of

                                      -20-

<PAGE>

     any required aggregation group or permissive aggregation group of plans;
     (ii) this Plan is a part of a required aggregation group of plans but not
     part of a permissive aggregation group and the top-heavy ratio for the
     group of plans exceeds 60 percent; or (iii) the Plan is part of a required
     aggregation group and part of a permissive aggregation group of plans and
     the top-heavy ratio for the permissive aggregation group exceeds 60
     percent.

               (c) "top-heavy ratio": (i) if the employer maintains one or more
     defined contribution plans (including any simplified employee pension plan)
     and the employer has not maintained any defined benefit plan which during
     the 5-year period ending on the determination date(s) has or has had
     accrued benefits, the top-heavy ratio for the Plan alone or for the
     required or permissive aggregation group as appropriate is a fraction, the
     numerator of which is the sum of the account balances of all key employees
     on the determination date(s) (including any part of any account balance
     distributed in the 5-year period ending on the determination date(s), but
     disregarding rollover contributions and similar transfers and the earnings
     thereon), and the denominator of which is the sum of all account balances
     (including any part of an account balance distributed in the 5-year period
     ending on the determination date(s), but disregarding rollover
     contributions and similar transfers and the earnings thereon), both
     computed in accordance with Code section 416. Both the numerator and the
     denominator of the top-heavy ratio are increased to reflect any
     contribution not actually made as of the determination date, but which is
     required to be taken into account on that date under Code section 416. (ii)
     If the employer maintains one or more defined contribution plans (including
     any Simplified Employee Pension Plan) and the employer maintains or has
     maintained one or more defined benefit plans which during the 5-year period
     ending on the determination date(s) has or has had any accrued benefits,
     the top-heavy ratio for any required or permissive aggregation group as
     appropriate is a fraction, the numerator of which is the sum of the account
     balances under the aggregated defined contribution plan or plans for all
     key employees, determined in accordance with (i) above, and the present
     value of accrued benefits under the aggregated defined benefit plan or
     plans for all key employees as of the determination date(s), and the
     denominator of which is the sum of the account balances under the
     aggregated defined contribution plan or plans for all participants,
     determined in accordance with (i) above, and the present value of all
     accrued benefits under the defined benefit plan or plans for all
     participants as of the determination date(s), all determined in accordance
     with Code section 416. The accrued benefits under a defined benefit plan in
     both the numerator and denominator of the top-heavy ratio are increased for
     any distribution of an accrued benefit made in the 5-year period ending on
     the determination date. For purposes of (i) and (ii) above the value of
     account balances and the present value of accrued benefits will be
     determined as of the most recent valuation date that falls within or ends
     with the 12-month period ending on the determination date, except as
     provided in Code section 416 for the first and second plan years of a
     defined benefit plan. The account balances and accrued benefits of a
     participant who is not a key employee but who was a key employee in a prior
     year, or who has not been credited with at least one hour of service with
     any employer maintaining the plan at any time during the 5-year period

                                      -21-

<PAGE>

     ending on the determination date, will be disregarded. The calculation of
     the top-heavy ratio, and the extent to which distributions, rollovers, and
     transfers are taken into account will be made in accordance with Code
     section 416. Deductible employee contributions will not be taken into
     account for purposes of computing the top-heavy ratio. When aggregating
     plans the value of account balances and accrued benefits will be calculated
     with reference to the determination dates that fall within the same
     calendar year. The accrued benefit of a participant other than a key
     employee shall be determined under the method, if any, that uniformly
     applies for accrual purposes under all defined benefit plans maintained by
     the employer, or if there is no such method, as if such benefit accrued not
     more rapidly than the slowest accrual rate permitted under the fractional
     rule of Code section 411(b)(1)(C). For Plan Years commencing on or after
     January 1, 2002, the provisions of this subsection (c) shall be applied by
     replacing the words "5-year period" with "1-year period" except for
     in-service distributions and distributions upon termination of a plan.

               (d) The "permissive aggregation group" is the required
     aggregation group of plans plus any other plan or plan of the employer
     which, when considered as a group with the required aggregation group,
     would continue to satisfy the requirements of Code sections 401(a)(4)
     and 410.

               (e) The "required aggregation group" is (i) each qualified plan
     of the Employer in which at least one key employee participates or
     participated at any time during the determination period (regardless of
     whether the plan has terminated), and (ii) any other qualified plan of the
     Employer which enables a plan described in (i) to meet the requirements of
     Code sections 401(a)(4) and 410(b).

               (f) For purposes of computing the top-heavy ratio, the valuation
     date will be the last day of the applicable plan year.

               (g) The term "determination date" means, with respect to the
     initial plan year of a plan, the last day of such plan year and, with
     respect to any other plan year of a plan, the last day of the preceding
     plan year of such plan. The term "applicable determination date" means,
     with respect to the Plan, the determination date for the Plan Year of
     reference and, with respect to any other plan, the determination date for
     any plan year of such plan which falls within the same calendar year as the
     applicable determination date of the Plan.

               (h) The term "compensation" has the same meaning as under Code
     section 415.

ARTICLE 13.    MISCELLANEOUS.

     13.1.     Exclusive Benefit Rule. No part of the corpus or income of the
Trust forming part of the Plan will be used for or diverted to purposes other
than for the exclusive benefit of each

                                      -22-

<PAGE>

Participant and Beneficiary. The preceding sentence will not be construed to
limit payments under a QDRO, payments by the Plan of reasonable expenses of
administering the Plan or Trust, the return of contributions upon a
determination of nondeductibility or mistake of fact, or a legal assignment (for
example, pursuant to Code section 401(a)(13(C)).

     13.2.     Uniformed Services Employment and Reemployment Rights Act of
1994. Notwithstanding any provision of the Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code. Loan
repayments will be suspended under the Plan as permitted under Code section
414(u)(4).

     13.3.     Limitation of Rights. Neither the establishment of the Plan or
the Trust, nor any amendment thereof, nor the creation of any fund or account,
nor the payment of any benefits, will be construed as giving to any Participant
or other person any legal or equitable right against any Participating Employer
or any person serving as Administrator (including, without limitation, any
member of the Savings Plan Committee) or as Trustee, and in no event will the
terms of employment or service of any Employee be modified or in any way be
affected hereby. It is a condition of the Plan, and each Participant expressly
agrees by his or her participation herein, that each Participant will look
solely to the assets held in the Trust for the payment of any benefit to which
he or she may be entitled under the Plan.

     13.4.     Nonalienability of Benefits. The benefits provided hereunder will
not be subject to the voluntary or involuntary alienation, assignment,
garnishment, attachment, execution or levy of any kind, and any attempt to cause
such benefits to be so subjected will not be recognized, except to such extent
as may be required by law, except that if the Administrator receives any QDRO
that requires the payment of benefits hereunder or the segregation of any
Account, such benefits will be paid, and such Account segregated, in accordance
with the applicable requirements of such Order. In addition, the vested portion
of an Account balance may be pledged as security for a loan from the Plan in
accordance with the Plan's loan procedures.

     13.5.     Voting of Common Stock. The Trustee will vote Common Stock
allocated to the Accounts of the Participants or Beneficiaries ("allocated
shares") in accordance with the directions of the Participants or Beneficiaries
to whose Accounts such Common Stock has been allocated, or in the case of a
tender or similar rights in respect of such Common Stock will respond to such
offer in accordance with the directions of such Participants or Beneficiaries.
The Trustee will utilize its best efforts to deliver on a timely basis (or cause
to be delivered) to each Participant or Beneficiary such information as will be
distributed to stockholders of the Company in connection with any vote, tender
or similar right with respect to Common Stock allocated to such Participant's or
Beneficiary's Accounts. The Trustee will vote allocated shares for which no
directions are timely received in proportion to the ways in which the Trustee
votes those allocated shares for which timely directions are received.
Unallocated shares of Common Stock, if any, will be voted by the Trustee in the
Trustee's discretion.

                                      -23-

<PAGE>

     13.6.     Governing law. The Plan and Trust will be construed, administered
and enforced according to the laws of Massachusetts to the extent such laws are
not preempted by ERISA.

     13.7.     Additional Contributions In the Case of Participants Age 50 or
Older. Notwithstanding any provision of the Plan, any Participant who is
eligible to have Elective Contributions made for his or her benefit and who has
attained age 50 prior to the end of a Plan Year beginning on or after January 1,
2002 may elect to have additional Elective Contributions ("catch-up
contributions") made for such year in accordance with, and subject to the
limitations of, Code Section 414(v). Such catch-up contributions shall not be
taken into account for purposes of the provisions of the Plan implementing the
required limitations of Code sections 402(g) and 415. The Plan shall not
be treated as failing to satisfy the provisions of the Plan implementing the
requirements of Code section 401(k)(3), 401(k)(11), 401(k)(12), 410(b) or 416,
as applicable, by reason of the making of such catch-up contributions.

ARTICLE 14.    DEFINITIONS.

     Wherever used in the Plan, the following terms have the following meanings
unless the context clearly indicates otherwise:

     14.1.     "Account" means any of the following: Match-Eligible Elective
Contribution Account, Other Elective Contribution Account, Matching Contribution
Account, QNEC Contribution Account, Rollover Contribution Account, or Transfer
Account, each as adjusted pursuant to Article 4.

     14.2.     "Active Participant" means an Eligible Employee who has satisfied
the requirements for participation set forth in Article 2 and is deferring Pay
under the Plan.

     14.3.     "Additional Elective Contribution" means an Elective Contribution
that is not a Basic Elective Contribution. Each Pay Reduction Agreement will
specify whether Additional Elective Contributions in respect of Pay reductions
under that Agreement are to be treated as Match-Eligible Elective Contributions
or Other Elective Contributions.

     14.4.     "Administrator" has the meaning set forth in Section 9.1.

     14.5.     "Affiliated Employer" means (a) the Company, (b) any corporation
that is a member of a controlled group of corporations (as defined in Code
section 414(b)) of which the Company is also a member, (c) any trade or
business, whether or not incorporated, that is under common control (as defined
in Code section 414(c)) with the Company, (d) any trade or business that is a
member of an affiliated service group (as defined in Code section 414(m)) of
which the Company is also a member, or (e) to the extent required by Regulations
issued under Code section 414(o), any other organization; provided, that the
term "Affiliated Employer" shall not include any corporation or unincorporated
trade or business prior to the date on which such corporation, trade

                                      -24-

<PAGE>

or business satisfies the affiliation or control tests of (b), (c) (d) or (e)
above, except as the Board expressly determines.

     14.6.     "Basic Elective Contribution" means any Elective Contribution for
the benefit of a Participant to the extent that it does not exceed one percent
(1%) of the Participant's Pay for the Pay period to which it relates. All Basic
Elective Contributions are Match-Eligible Elective Contributions.

     14.7.     "Basic Matching Contribution" means a Matching Contribution that
is made with respect to a Basic Elective Contribution pursuant to Section
3.2(a).

     14.8.     "Beneficiary" means the person or persons (including a trust or
other entity) entitled to receive benefits under the Plan upon the death of a
Participant.

     14.9.     "Board" means the Board of Directors of the Company.

     14.10.    "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section or subsection of the Code includes
reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection, and also includes
reference to any Regulation issued pursuant to or with respect to such section
or subsection.

     14.11.    "Committee" or "Savings Plan Committee" means the Savings Plan
Committee appointed by the Board to administer the Plan in accordance with
Article 9.

     14.12.    "Common Stock" means either or both of the Class A Common Stock
and the Class B Common Stock of the Company.

     14.13.    "Common Stock Fund" means the investment Fund maintained within
the Trust, consisting of shares of Common Stock and cash awaiting distribution
or reinvestment in Common Stock, in which, except as provided in Section 4.3(a),
Match-Eligible Elective Contribution Accounts and Matching Contribution Accounts
will be invested.

     14.14.    "Company" means The L.S. Starrett Company, a Massachusetts
corporation, and any successor by law or contract. The Company is the "plan
administrator" for purposes of ERISA.

     14.15.    "Elective Contribution" means a contribution to the Trust
described in Section 3.1. The term "Elective Contribution" includes Basic
Elective Contributions and Additional Elective Contributions.

     14.16.    "Eligible Borrower" means a Participant who is an Employee or is
otherwise a "party in interest" within the meaning of ERISA section 3(14) or a
deceased Participant's

                                      -25-

<PAGE>

Beneficiary who has not yet received the entire vested portion of the
Participant's Accounts and who is a "party in interest" as described above.

     14.17.    "Eligible Employee" means any employee who is employed by a
Participating Employer other than the following: (a) individuals covered by a
collective bargaining agreement where retirement benefits were the subject of
good faith bargaining, unless such agreement specifically provides for
participation in the Plan; (b) "leased employees" within the meaning of Code
section 414(n); (c) individuals who are at the time classified by an Affiliated
Employer or by the Administrator as an independent contractor, regardless of any
later reclassification; and (d) nonresident aliens.

     14.18.    "Employee" means any individual employed by an Affiliated
Employer.

     14.19.    "Employer" means the Affiliated Employers or any of them, as the
context requires.

     14.20.    "Entry Date" means the first day of any payroll period.

     14.21.    "ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended, and any successor statute or statutes of
similar import.

     14.22.    "Fund" means one or more of the investment funds, including the
Common Stock Fund, from time to time designated by the Administrator as
available for investment of a Participant's Other Elective Contribution Account
(if any), QNEC Contribution Account (if any), Rollover Contribution Account (if
any), and Transfer Account (if any).

     14.23.    "HCE" means an Employee who (a) for the Plan Year immediately
preceding the Plan Year of reference had compensation (as that term is defined
in Code section 415) from the Employer in excess of $80,000 (or such higher
dollar amount as is in effect under Code section 414(q)), or (b) for the Plan
Year of reference or the immediately preceding Plan Year is (or was) a
"5-percent owner" as defined in Code section 416(i).

     14.24.    "Match-Eligible Elective Contribution" means an Elective
Contribution that is either (a) a Basic Elective Contribution, or (b) an
Additional Elective Contribution which is designated in the Pay Reduction
Agreement as a Match-Eligible Elective Contribution.

     14.25.    "Match-Eligible Elective Contribution Account" means the Account
maintained to reflect Match-Eligible Elective Contributions and the earnings
thereon. For each Participant who was a participant in the Prior Plan (and whose
accounts under the Prior Plan have not been completely distributed or
forfeited), the "Match-Eligible Elective Contribution Account" will also include
matching contributions made for the benefit of the Participant under the Prior
Plan and the earnings thereon, as adjusted. The Administrator will maintain or
cause the Trustee to maintain such sub-accounting, if any, as is necessary to
demonstrate what portion of a Participant's Match-Eligible Elective Contribution
Account is attributable to elective

                                      -26-

<PAGE>

contributions under the Prior Plan (and the earnings thereon), Basic Elective
Contributions (and the earnings thereon), and Additional Elective Contributions
designated as Match-Eligible Elective Contributions (and the earnings thereon).

     14.26.    "Matching Contribution" means a contribution described in Section
3.2. The term "Matching Contribution" includes Basic Matching Contributions and
Supplemental Matching Contributions.

     14.27.    "Matching Contribution Account" means the Account maintained to
reflect Matching Contributions made for the benefit of a Participant, and the
earnings thereon. For each Participant who was a participant in the Prior Plan
(and whose accounts under the Prior Plan have not been completely distributed or
forfeited), the "Matching Contribution Account" will also include matching
contributions made for the benefit of the Participant under the Prior Plan and
the earnings thereon, as adjusted.

     14.28.    "NHCE" means an Employee who is not an HCE.

     14.29.    "Other Elective Contribution" means an Additional Elective
Contribution that is not a Match-Eligible Elective Contribution.

     14.30.    "Other Elective Contribution Account" means the Account
maintained to reflect Other Elective Contributions and the earnings thereon.

     14.31.    "Participant" means each Employee for whom an Account is
               maintained under the Plan.

     14.32.    "Participating Employer" means the Company and each other
Affiliated Employer that adopts the Plan with the consent of the Company. A list
of Participating Employers (other than the Company) is attached as Appendix A.

     14.33.    "Pay" for any pay period means (i) amounts currently includible
in income that consist of wages, salaries, fees for professional services and
similar amounts (including commissions and bonuses) received for the pay period
in respect of personal services actually performed for a Participating Employer,
and (ii) amounts that would be described in (i) but for deferral under the Plan
or a plan of the Employer described in Code section 125 or, beginning January 1,
2001, a plan of the Employer described in Code section 132(f)(4). The term "Pay"
does not include payments or benefits under any "welfare benefit plan" (as that
term is defined in Section 3(1) of ERISA) or items of non-cash compensation such
as (but not limited to) imputed compensation from group term life insurance,
amounts received in connection with any stock-based award, reimbursements for
professional fees, and moving or other expense reimbursements, whether or not
taxable. The maximum amount of Pay that may be taken into account for any
Participant in any Plan Year is the dollar limit described in Code section
401(a)(17) as in effect for such Plan Year.

                                      -27-

<PAGE>

     14.34.    "Pay Reduction Agreement" means an agreement, in form
satisfactory to the Administrator, by which an Active Participant agrees to have
his or her Pay reduced by a specified percentage in exchange for a promise by
his or her Participating Employer to make Elective Contributions of equivalent
amount to the Trust.

     14.35.    "Period of Severance" means the period of time, expressed in
years and days, commencing with the earlier of (a) the date an individual ceases
to be an Employee by reason of quitting, being fired, retiring or dying, or (b)
the first anniversary of the Employee's absence from work for any other reason,
and ending on the date the individual again performs an "hour of service" (as
that term is defined under the definition of "Service", below).

     14.36.    "Plan" means The L.S. Starrett 401(k) Stock Savings Plan (1999
Restatement), as the same may from time to time be amended.

     14.37.    "Plan Year" means the calendar year.

     14.38.    "Prior Plan" means The L.S. Starrett Company 401(k) Stock Savings
Plan as in effect prior to January 1, 1999.

     14.39.    "QDRO" means any judgment, decree or order (including approval of
a property settlement agreement) which is determined by the Administrator to
constitute a "qualified domestic relations order" within the meaning of Code
section 414(p). A judgment, decree or order will not be considered to be other
than a QDRO merely because it requires a distribution to an alternate payee (or
the segregation of accounts pending distribution to an alternate payee) before
the Participant is otherwise entitled to a distribution under the Plan.

     14.40.    "QNEC Contribution" means a discretionary contribution by one or
more Participating Employers intended to satisfy the requirements of Code
section 401(m)(4)(C).

     14.41.    "QNEC Contribution Account" means the Account maintained to
reflect the QNEC Contributions, if any, made for the benefit of a Participant,
and the earnings thereon, as adjusted pursuant to Article 4.

     14.42.    "Rollover Contribution" means a contribution made by an Eligible
Employee which satisfies the requirements for rollover contributions set forth
in the Plan.

     14.43.    "Rollover Contribution Account" means the Account maintained to
reflect the Rollover Contributions, if any, made for the benefit of a
Participant, and the earnings thereon, as adjusted pursuant to Article 4.

     14.44.    "Service" means, with respect to any Employee, the aggregate of
all time periods commencing with the Employee's first day of employment or
reemployment and ending on the date a Period of Severance begins. The first day
of employment or reemployment is the first day the Employee performs an hour of
service, and an "hour of service" for this purpose is an hour

                                      -28-

<PAGE>

for which the Employee is paid or entitled to payment for the performance of
duties for an Affiliated Employer. An Employee will also receive Service credit
for (a) any Period of Severance that ends with reemployment of the Employee if
such reemployment occurs not later that twelve (12) months after the earlier of
(i) the date on which the Employee ceased to be an Employee by reason of having
quit, been fired, retired or died, or (ii) if the Employee had been absent from
work for any other reason prior to such quit, fire, retirement or death, the
commencement of such absence, and (b) to the extent required by Federal law, for
any absences from work attributable to periods of service in the armed forces of
the United States. Fractional periods of a year will be expressed in terms of
days.

     14.45.    "Substantial Period of Severance" means a Period of Severance of
at least five (5) years' duration, except that in the case of an individual who
is absent from work for maternity or paternity reasons, or by reason of any
qualified family or medical leave under the Family and Medical Leave Act of
1993, a Substantial Period of Severance will not be deemed to have occurred
until the Period of Severance has lasted as least six (6) years. For purposes of
this definition, an absence from work for maternity or paternity reasons means
an absence (i) by reason of the pregnancy of the individual, (ii) by reason of
the birth of a child of the individual, (iii) by reason of the placement of a
child with the individual in connection with the adoption of such child by such
individual, or (iv) for purposes of caring for such child for a period beginning
immediately following such birth or placement.

     14.46.    "Supplemental Matching Contribution" means any Matching
Contribution made pursuant to Section 3.2(b).

     14.47.    "Transfer Account" means the Account maintained to reflect any
amounts transferred to the Plan for the benefit of a Participant in a
trust-to-trust (Code section 414(l)) transfer as distinct from a direct
rollover.

     14.48.    "Trust" means trust established between the Company and the
Trustee to hold and invest the assets of the Plan.

     14.49.    "Trustee" mean the person or persons who are at any time the
acting Trustee under the Trust.

     14.50.    "Valuation Date" means the last business day of each Plan Year
and such other day or days as are specified by the Administrator. In the case of
a Valuation Date other than the last business day of a Plan Year, the
Administrator may, if appropriate under the circumstances, adjust (or direct the
Trustee to adjust) only a specified Account or Accounts.

     IN WITNESS WHEREOF, the Company has caused this instrument to be signed in
its name and on its behalf by its duly authorized officer, this 30th day of
April, 2002.

                                      -29-

<PAGE>

                                   THE L.S . STARRETT COMPANY

                                   By: /s/ Douglas A. Starrett
                                       -----------------------------------------
                                           President, Chief Executive Officer
                                           and Director

                                      -30-

<PAGE>

                                   APPENDIX A

     The following are the Participating Employers (in addition to The L.S.
Starrett Company) as of January 1, 1999:

                                       Level Industries
                                       Evans Rule

                                      -31-

<PAGE>

                                   APPENDIX B

       SPECIAL ESOP PROVISIONS (APPLICABLE ONLY TO THE EXTENT REQUIRED BY
                                 SECTION 4.3(C))

     Reference is made to Section 4.3(c) of the Plan. Should any portion of the
Plan be required to be construed as an "employee stock ownership plan" in
accordance with that subsection (the "ESOP portion"), and only in such
circumstances, the following provisions shall apply (retroactively to the extent
required) in addition to the generally applicable provisions of the Plan to the
ESOP portion:

     A.   The ESOP portion shall be invested primarily in employer securities
within the meaning of Code section 409(l).

     B.   Distributions and withdrawals in respect of the ESOP portion shall be
eligible to be received in the form of whole shares of Common Stock (with cash
in lieu of any fractional share value).

     C.   The Plan does not provide for "exempt loans" as described in the
regulations under Code section 4975. However, if for any reason the Plan were
amended to provide for such a loan, no security acquired with the proceeds of
such a loan may be subject to a put (except as provided below), call or other
option, or buy-sell or similar arrangement, while held by and when distributed
from the ESOP portion, whether or not the Plan or any portion thereof is then
still an "employee stock ownership plan". If any share of Common Stock
distributed from the ESOP portion is not readily tradeable on an established
securities market or is subject to a substantial trading limitation, the
recipient shall have the right to sell the share to the Company for fair market
value. The right described in the preceding sentence may be exercised at any
time during the fifteen month period beginning on the date of distribution. If
the Company is prohibited by federal or state law from purchasing the share, the
period for exercising the right shall be appropriately extended. The person
exercising the right must notify the Company in writing that he or she is doing
so. The Company shall pay for any shares required to be purchased under this
paragraph in cash in a single payment or, in the Company's discretion, with an
adequately secured promissory note bearing a reasonable rate of interest and
providing for payment in substantially equal payments over a period not to
exceed five years.

     D.   An individual who has participated in the ESOP portion for ten or more
years and who has attained age 55 would have the right to diversify the
investment of the ESOP portion to the extent required by Code section
401(a)(28).

The determination as to whether the Plan or any portion thereof is required to
be treated as an "employee stock ownership plan" for purposes of Section 4.3(c)
and this Appendix shall be made by the Committee in its sole discretion. The
determination of the Committee shall be binding on all persons.

                                      -32-<PAGE>

                                  EXHIBIT 10gg.

LOJACK CORPORATION
Westwood Executive Center
200 Lowder Brook Road
Suite 1000
Westwood, MA 02090

                                  July 31, 2002

Mr. Ronald J. Rossi
8 Independence Drive
Foxboro, MA 02035

Dear Ron:

        I am pleased to confirm our agreement to amend the agreement setting
forth the terms of your employment as Chief Executive Officer of LoJack
Corporation (the "Company"). The effective date of this letter agreement shall
be July 31, 2002 (the "Effective Date").

        Paragraph 2 of the Agreement hereby is amended to read as follows:

        2.      Base Salary. Your base salary will be paid at the rate of
$300,000 per year through February 28, 2003, and shall be paid at the rate of
$350,000 per year thereafter for the balance of the term of this Agreement. At
any time, the Board of Directors may review your base salary and may increase
but not decrease base salary. All payments under this paragraph or any other
paragraph of this letter agreement will be made in accordance with the regular
payroll practices of the Company, reduced by applicable withholding taxes.

        The introductory paragraph of Paragraph 6 of the Agreement hereby is
amended to read as follows:

        6.      Term of Agreement; Severance. The term of this letter agreement
shall be approximately fifty (50) months, ending December 31, 2004. However, you
will retain the right to terminate your employment at any time, and the Company
retains a similar right as provided below.

        A new Paragraph 11 hereby is added to the Agreement, as follows:

        11.     Change of Control. In order to induce you to remain in the
employ of the Company, this Section, which has been approved by the Board, sets
forth the severance benefits which the Company agrees will be provided to you in
the event your employment with the Company is terminated subsequent to a "change
in control" of the Company under the circumstances described below. This letter
agreement replaces and terminates any prior agreement or understanding between
you and the Company with respect to a change of control.

        A.      Agreement to Provide Services:
        In the event a tender offer or exchange offer is made by a Person (as
hereinafter defined) for more than 35% of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote at
elections of directors ("Outstanding Company Voting Securities"), including
shares of common stock ($.01 par value) of the Company (the "Stock"), you agree
that you will not leave the employ of the Company (other than as a result of
Disability or upon Retirement, as such terms are hereinafter defined) and will
render the services contemplated in this Agreement until such tender offer or
exchange offer has been abandoned or terminated or a change in control of the
Company, as defined in Section C hereof, has occurred or the term of this
Agreement has expired. For purposes of this Section 11, the term "Person" shall
mean and include any individual, corporation, partnership, group, association or
other "person," as such term is defined in Section 3(a)(9) and as used in
Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other
than the Company, a wholly-owned subsidiary of the Company or any employee
benefit plan(s) sponsored by the Company or a subsidiary of the Company.

        B.      Term of Agreement. The provisions of this Section 11 shall
terminate if you or the Company terminates your employment prior to a change in
control of the Company as provided in Section 6 of this Agreement.

<PAGE>

        C.      Change in Control. For the purposes of this Section 11, a
"Change in Control" shall mean:

        The acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of
either (i) the then outstanding shares of the Stock or (ii) the combined voting
power of the Outstanding Company Voting Securities; provided, however, that the
following acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (B) any acquisition by the Company or by
any corporation controlled by the Company; (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or (D) any acquisition by any corporation
pursuant to a consolidation or merger, if, following such consolidation or
merger, the conditions described in clauses (i), (ii) and (iii) of subsection
(c) of this paragraph are satisfied; or

        Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") ceasing for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director (other
than a director designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clauses (a) or (c) of this
Section) subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote or resolution of
at least a majority of the directors then composing the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-1l of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or

        Adoption by the Board of a resolution approving an agreement of
consolidation of the Company with or merger of the Company into another
corporation or business entity in each case, unless, following such
consolidation, or merger, (i) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
consolidation or merger and/or the combined voting power of the then outstanding
voting securities of such corporation or business entity entitled to vote
generally in the election of directors (or other persons having the general
power to direct the affairs of such entity) is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Stock and Outstanding Company
Voting Securities immediately prior to such consolidation or merger in
substantially the same proportions as their ownership, immediately prior to such
consolidation or merger, of the Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any employee benefit
plan (or related trust) of the Company or such corporation or other business
entity resulting from such consolidation or merger and any Person beneficially
owning, immediately prior to such consolidation or merger, directly or
indirectly, 35% or more of the Stock or Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 35% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such consolidation or merger and/or the combined voting power of
the then outstanding voting securities of such corporation or business entity
entitled to vote generally in the election of its directors (or other persons
having the general power to direct the affairs of such entity) and (iii) at
least a majority of the members of the board of directors (or other group of
persons having the general power to direct the affairs of the corporation or
other business entity) resulting from such consolidation or merger were members
of the Incumbent Board at the time of the execution of the initial agreement
providing for such consolidation or merger; provided, that any right to receive
compensation pursuant to Section I, below, which shall vest by reason of the
action of the Board pursuant to this subsection (c) shall be divested upon (A)
the rejection of such agreement of consolidation or merger by the stockholders
of the Company or (B) its abandonment by either party thereto in accordance with
its terms; or

        Adoption by the requisite majority of the whole Board, or by the holders
of such majority of stock of the Company as is required by law or by the
Certificate of incorporation or By-Laws of the Company as then in effect, of a
resolution or consent authorizing (i) the dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the assets of the
Company, other than to a corporation or other business entity with respect to
which, following the such sale or other disposition, (A) more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and/or the combined voting power of the outstanding voting securities of such
corporation or other entity to vote generally in the election of its directors
(or other persons have the general power to direct its affairs) is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the: beneficial owners, respectively, of the
Stock and Outstanding Company Voting Securities immediately prior to such sale
or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Stock and/or
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the

<PAGE>

Company and any employee benefit plan (or related trust) of the Company or such
corporation or other business entity and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly, 35%
or more of the Stock and/or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 35% or more of, respectively,
the then outstanding shares of common stock of such corporation and/or the
combined voting power of the then outstanding voting securities of such
corporation or other business entity entitled to vote generally in the election
of directors (or other persons having the general power to direct its affairs),
and (C) at least a majority of the members of the board of directors or group of
persons having the general power to direct the affairs of such corporation or
other entity were members of the Incumbent Board at the time of the execution of
the initial agreement of action of the Board providing for such sale or other
disposition of assets of the Company; provided, that any right to receive
compensation pursuant to Section I, below, which shall vest by reason of the
action of the Board or the stockholders pursuant to this subsection shall be
divested upon the abandonment by the Company of such dissolution, or such sale
of or other disposition of assets, as the case may be.

        Notwithstanding anything in the foregoing to the contrary, no change in
control shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction which results in you, or a group of Persons which
includes you acquiring, directly or indirectly, 35% or more of the combined
voting power of the Company's Outstanding Voting Securities.

        D.      Termination Following a Change in Control. If any of the events
described in Section C, above, hereof constituting a change in control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Section I hereof upon the termination of your employment with the Company within
twenty-four (24) months after such events, unless such termination is (a)
because of your death, or (b) by reason of Disability or Retirement.

        E.      Disability. Termination by the company of your employment based
on "Disability" shall mean termination because of your absence from your duties
with the Company on a full time basis for one hundred twenty (120) consecutive
days as a result of your incapacity due to physical or mental illness, unless
within thirty (30) days after Notice of Termination (as hereinafter defined) is
given to you following such absence you shall have returned to the full time
performance of your duties.

        F.      Retirement. Termination by you or by the Company of your
employment based on "Retirement" shall mean termination on or after your normal
retirement date as defined in the Company's Pension Plan (or any successor or
substitute plan or plans of the Company put into effect prior to a change in
control) (the "Pension Plan").

        G.      Notice of Termination. Any purported termination by the Company
or by you following a change in control shall be communicated by written Notice
of Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.

        H.      Date of Termination. "Date of Termination" following a change in
control shall mean (a) if your employment is to be terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that you shall
not have returned to the performance of your duties on a full-time basis during
such thirty (30) day period), (b) if your employment is to be terminated by you
to the date specified in the Notice of Termination, or (c) if your employment is
to be terminated by the Company, the date specified in the Notice of
Termination, which in no event shall be a date earlier than ninety (90) days
after the date on which a Notice of Termination is given, unless an earlier date
has been expressly agreed to by you in writing either in advance of, or after,
receiving such Notice of Termination.

        I.      Compensation Upon Termination or During Disability; other
Agreements.

                (i)     During any period following a change in control of the
Company that you fail to perform your duties as a result of incapacity due to
physical or mental illness, you shall continue to receive your salary at the
rate then in effect and any benefits or awards under any Plans shall continue to
accrue during such period, to the extent not inconsistent with such Plans, until
your employment is terminated pursuant to and in accordance with paragraphs 4(i)
and 4 (iii) hereof. Thereafter, your benefits shall be determined in accordance
with the Plans then in effect.

                (ii)    Subject to Section L hereof, if, within twenty-four (24)
months after a change in control of the Company, as defined in Section C above,
shall have occurred, your employment by the Company

<PAGE>

shall be terminated (a) by the Company other than for Disability or Retirement,
or (b) by you for any reason, then the Company shall pay to you, no later than
the fifth day following the Date of Termination, without regard to any contrary
provisions of any Plan, the following:

        (x)     your salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given (or, if higher,
as in effect immediately prior to the change in control) and (y) any benefits or
awards (including both the cash and stock components) which pursuant to the
terms of any Plans have been earned or become payable, but which have not yet
been paid to you; and

        you shall receive an amount equal to all amounts which would have come
due to you pursuant to Sections 2, 4 and 5 of this Agreement through the
remaining term of this Agreement at a rate determined for the purposes of this
Agreement based on base salary in effect on the date of the Change of Control,
plus the highest bonus paid for any year during the term hereof. Such payment
shall be made in a lump sum as soon as practicable after the Date of
Termination, provided, however, that at any time prior to the occurrence of a
change of control you may, by written notice to the Company, elect to have the
amount due pursuant to this subparagraph (B) paid to you in equal monthly
installments over the remaining term of this Agreement commencing with the month
following the change in control. For purposes of computing payment under this
Agreement, compensation for any partial calendar year, including the year during
which a change of control occurs, shall be annualized, and any bonus shall be
considered compensation for the year to which it is attributable, if different
from the year in which it is paid.

                (iii)   if, within twenty-four (24) months after a change in
control of the Company, as defined in Section C, above, shall have occurred,
your employment by the Company shall be terminated (a) by the Company other than
for Disability or Retirement or (b) by you, then the Company shall maintain in
full force and effect, for the continued benefit of you and your dependents for
a period terminating on the expiration of this Agreement as provided in Section
C, above, all insured and self-insured employee welfare benefit Plans in which
you were entitled to participate immediately prior to the Date of Termination,
provided that your continued participation is possible under the general terms
and provisions of such Plans (and any applicable funding media) and you continue
to pay an amount equal to your regular contribution under such plans for such
participation. In the event that your participation in any such Plan is barred,
the Company, at its sole cost and expense, shall arrange to have issued for the
benefit of you and your dependents individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to those which you
otherwise would have been entitled to receive under such Plans pursuant to this
paragraph (iv) or, if such insurance is not available at a reasonable cost to
the Company, the Company shall otherwise provide you and your dependents with
equivalent benefits (on an after-tax basis). You shall not be required to pay
any premiums or other charges in an amount greater than that which you would
have paid in order to participate in such Plans. If, at the end of three years
after the Termination Date, you have not reached your normal retirement date,
you are participating in any of such Plans and you have not previously received
or are not then receiving equivalent benefits from a new employer, the Company
shall arrange, at its sole cost and expense, to enable you to convert your and
your dependents' coverage under such Plans to individual policies or programs
upon the same terms as employees of the Company may apply for such conversions.

                (iv)    Except as specifically provided in paragraph (iii)
above, the amount of any payment provided for in this Section I shall not be
reduced, offset or subject to recovery by the Company by reason of any
compensation earned by you as the result of employment by another employer after
the Date of Termination, or otherwise.

        J.      Successors; Binding Agreement.

                (i)     The Company will seek, by written request at least five
business days prior to the time a Person becomes a Successor (as hereinafter
defined), to have such Person assent to the fulfillment of the Company's
obligations under this Agreement. For purposes of this Agreement, "successor"
shall mean any Person that succeeds to, or has the practical ability to control
(either immediately or with the passage of time), the Company's business
directly, by merger or consolidation, or indirectly, by purchase of the
Company's voting securities or otherwise.

                (ii)    This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there be no such designee, to your estate.

<PAGE>

                (iii)   For purposes of this Agreement, the "Company" shall
include any corporation or other entry which is the surviving or continuing
entity in respect of any merger, consolidation or form of business combination
in which the Company ceases to exist.

        K.      Fees and Expenses; Mitigation.

        The Company shall reimburse you, on a current basis, for all reasonable
legal fees and related expenses incurred by you in connection with the Agreement
following a change in control of the Company, including, without limitation, (a)
all such fees and expenses, if any, incurred in contesting or disputing any
termination of your employment or incurred by you in seeking advice with respect
to the matters set forth in Section L hereof or (b) your seeking to obtain or
enforce any right or benefit provided by this Agreement, in each case,
regardless of whether or not your claim is upheld by a court of competent
jurisdiction; provided, however, you shall be required to repay any such amounts
to the Company to the extent that a court issues a final and non-appealable
order setting forth the determination that the position taken by you was
frivolous or advanced by you in bad faith.

        You shall not be required to mitigate the amount the Company becomes
obligated to make to you in connection with this Agreement by seeking other
employment or otherwise.

        L. Taxes.

        All payments to be made to you under this Agreement will be subject to
required withholding of federal, state and local income and employment taxes.

        Notwithstanding anything in the foregoing to the contrary, if any of the
payments provided for in this Agreement, together with any other payments which
you have the right to receive from the Company or any corporation which is a
member of an "affiliated group" (as defined in Section 1504 (a) of the Internal
Revenue Code of 1986 (the "Code") without regard to Section 1504(b) of the Code)
of which the Company is a member, would constitute a "parachute payment" (as
defined in Section 2BOG (b) (2) of the Code), the payments pursuant to this
Agreement shall be reduced (reducing first the payments under Section C (iii)
(B) ) to the largest amount as will result in no portion of such payments being
subject to the excise tax imposed by Section 4999 of the Code; provided,
however, that the determination as to whether any reduction in the payments
under this Agreement pursuant to this proviso is necessary shall be made by you
in good faith, and such determination shall be conclusive and binding on the
Company with respect to its treatment of the payment for tax reporting purposes.

        M.      Survival. The respective obligations of, and benefits afforded
to, the Company and you as provided in Sections I, J (ii), K and L of this
Agreement shall survive termination of this Agreement.

        Except as amended above, in all other respects the Agreement shall
remain in full force and effect in accordance with its terms.

        If this letter reflects your understanding, please sign and return a
copy to the undersigned, whereupon it shall become a binding agreement between
the Company and you on the terms provided herein.

                                          Very truly yours,

                                          LOJACK CORPORATION

                                          By: /s/ Lee T. Sprague
                                              ----------------------------------
                                          Lee T. Sprague, Chairman, Compensation
                                          Committee

Accepted and Agreed To:

/s/ Ronald J. Rossi
-------------------
Ronald J. Rossi

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