Exhibit 10.1

 

SEVERANCE AGREEMENT

 

Jeffrey G. Grody (“Employee”) and Colt’s Manufacturing Company LLC, its
successors and assigns (“Colt”) hereby agree as follows:

 

1.                                      Resignation/Last Day of Employment. 
Colt acknowledges its receipt and acceptance of Employee’s letter of resignation
dated July 3, 2014.  Employee’s last day of active employment with Colt will be
July 3, 2014, but will be maintained on Colt’s payroll through the pay period
ending July 4, 2014.

 

2.                                      Consideration.

 

(a)                                 In consideration for Employee’s agreement to
be bound by the terms of this Severance Agreement, and Employee’s compliance
with the promises made herein, Colt agrees to pay Employee a combination of
salary and severance pay in lieu of salary at the rate of Employee’s current
base salary (“Severance”) through July 3, 2015.  At the request of Colt, through
December 31, 2014 (the “Wind Down Period”), Employee will be reasonably
available to provide assistance in the transition of his responsibilities to
Colt’s new General Counsel and as otherwise requested; provided that the
scheduling of such assistance will be mutually agreed upon; and provided,
further, that Employee will not be required to provide in excess of ten hours of
assistance per week during the Wind Down Period.  For the avoidance of doubt,
severance compensation will commence from July 5, 2014, regardless of the last
day of employment set forth in Paragraph 1 above.  Following the Wind Down
Period, Employee will continue to be paid Severance through July 4, 2015. 
During the time following the Wind Down Period, Employee will make himself
reasonably available to provide assistance to Colt as described in Paragraph 9
below. Severance will be paid, less required withholdings, in accordance with
Colt’s usual schedule for the payment of its employees’ salaries.  The payment
of Severance is contingent upon, and will not begin until, Colt receives:
(a) this Severance Agreement, dated and signed by Employee; and (b) the document
attached hereto as Exhibit A, properly completed and signed by Employee.  
Employee’s right to be paid during the Wind Down Period and thereafter as
provided in this Paragraph 2, is dependent on Employee’s material compliance
with the obligations set forth in this Severance Agreement, including, without
limitation, his obligations to provide reasonable assistance to Colt in the
transition of his responsibilities to Colt’s new General Counsel, as set forth
above, and the obligations to cooperate as set forth in Paragraph 9 below.

 

(b)                                 COBRA Premium Contributions:  Employee’s
current coverage under Colt’s Group medical and dental insurance plans shall
continue through July 31, 2014. Thereafter, if the Employee elects to continue
his participation and/or that of his eligible dependents in the Company’s
medical and dental insurance plans pursuant to the federal Consolidated Omnibus
Reconciliation Act of 1985 (“COBRA”), then Colt shall pay or reimburse Employee
a monthly amount equal to the cost of such continuation coverage, less whatever
an active employee would pay for the same coverage under Colt’s group plans
until December 31,

 

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2014, or the date on which Employee becomes eligible for coverage under another
employer’s group medical plan, whichever is earlier.  In the event Employee
and/or any of his dependents becomes ineligible for COBRA continuation coverage,
nothing in this Agreement will require such coverage to continue, or require
Colt otherwise to reimburse Employee for the cost of that or any other coverage.

 

(c)                                  Other Benefits:  Employee’s participation
in all other benefit plans of Colt shall terminate as of July 31, 2014, unless a
benefit plan provides for a particular termination date that may be later than
said date, in which event Colt will notify Employee of the date of termination
of participation. The foregoing notwithstanding, nothing herein shall be deemed
to waive, abridge, or diminish any independent rights that Employee may have to
convert group coverage to individual coverage as may be provided under the terms
of pertinent plan documents.

 

(d)                                 Expense Reimbursement: Colt agrees to
promptly reimburse Employee for ordinary and reasonable business expenses
incurred by Employee up until the last day of active employment on July 3, 2014;
provided that Employee submits receipts and/or similarly documentation to Colt
in timely fashion.

 

3.                                      No Severance Payment Absent Execution of
this Severance Agreement.  Employee understands and agrees that he would not
receive the consideration specified in Paragraph 2, above, except for his
execution of this Severance Agreement and the fulfillment of the promises
contained herein.

 

4.                                      Time for Consideration and Advice to
Seek Counsel.  Employee was first provided with this Severance Agreement on or
before June 23, 2014.  Employee has up to 21 days to consider its terms. 
Employee is specifically advised to consult with an attorney of Employee’s
choice before signing this Severance Agreement.

 

5.                                      Revocation.  In the event Employee signs
this Severance Agreement, he may revoke the Severance Agreement within seven
days of signing it, and it will not become effective or enforceable until the
seven-day period has expired.  If the last day of the revocation period is a
Saturday, Sunday, or legal holiday in Connecticut, then the revocation period
shall not expire until the next following day which is not a Saturday, Sunday,
or legal holiday.  This Severance Agreement shall not become effective or
enforceable until the revocation period has expired, and Colt has received a
document in the form attached hereto as Exhibit A, properly completed and signed
by Employee.

 

6.                                      Mutual Release of Claims.  Employee
knowingly and voluntarily releases and forever discharges Colt, and all of its
present and former subsidiaries and affiliates (hereinafter referred to as the
“Released Entities”), and the Released Entities’ current and former
shareholders, members, directors, officers, employees, consultants, accountants,
insurers, agents and attorneys, of and from any and all claims, known and
unknown, which Employee has or may have as of the date of execution of this
Severance Agreement, except (i) to enforce the terms and

 

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conditions of this Severance Agreement, and (ii) Employee’s claims, if any, and
rights as a holder of Common Units of Colt Defense LLC, which claims and rights
are not affected by this Agreement.  Listed below are examples of the statutes
under which Employee will not bring any claim.  If the law prohibits a waiver of
claims under any such statute, Employee hereby acknowledges that he has no valid
claim under those statutes.  Subject to the exceptions stated in this Paragraph
6, the claims released or acknowledged not to exist include, but are not limited
to, any alleged violation of:

 

·                  Title VII of the Civil Rights Act of 1964;

·                  The Age Discrimination in Employment Act of 1967;

·                  Sections 1981 through 1988 of Title 42 of the United States
Code;

·                  The Employee Retirement Income Security Act of 1974 (“ERISA”)
(except for any vested benefits under any tax qualified benefit plan);

·                  The Immigration Reform and Control Act;

·                  The Americans with Disabilities Act of 1990;

·                  The Worker Adjustment and Retraining Notification Act;

·                  The Fair Credit Reporting Act;

·                  The Family and Medical Leave Act;

·                  The Equal Pay Act;

·                  The Dodd-Frank Act;

·                  The Connecticut Human Rights and Opportunities Act — Conn.
Gen. Stat. §§ 46a-51, et seq.;

·                  The Connecticut Statutory Provision Regarding
Retaliation/Discrimination for Filing a Workers Compensation Claim — Conn. Gen.
Stat. § 31-290a;

·                  The Connecticut Equal Pay Law — Conn. Gen Stat. §§ 31-58(e),
et seq.; §§ 31-75 and 31-76;

·                  The Connecticut Family and Medical Leave Law — Conn. Gen.
Stat. §§ 31-51kk, et seq.;

·                  The Connecticut Drug Testing Law — Conn. Gen. Stat. §§
31-51t, et seq.;

·                  The Connecticut Whistleblower — Conn. Gen. Stat. §§
31-51m(a), et seq.;

·                  The Connecticut AIDS Testing and Confidentiality Law — Conn.
Gen. Stat. §§ 19a-581, et seq.;

·                  The Connecticut Age Discrimination and Employee Benefits Law
— Conn. Gen. Stat. § 38a-543;

·                  The Connecticut Reproductive Hazards Law — Conn. Gen. Stat.
§§ 31-40g, et seq.;

·                  The Connecticut Smoking Outside the Workplace Law — Conn.
Gen. Stat. § 31-40s;

·                  The Connecticut Electronic Monitoring of Employees Law —
Conn. Gen. Stat. § 31-48b, d;

·                  The Connecticut Wage Hour and Wage Payment Laws;

·                  Connecticut OSHA;

·                  Any other federal, state or local law, rule, regulation, or
ordinance;

·                  Any public policy, contract, tort, or common law obligation,
including, without limitation, any claims under the August 30, 2005 contract
between Colt and Employee; or

 

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·                  Any obligation to pay costs, fees, or other expenses,
including attorneys’ fees.

 

Nothing herein shall be deemed to diminish, impair, abridge or otherwise affect
any benefit in which Employee is vested under any qualified or unqualified
retirement, deferred compensation, and/or any other employee welfare benefit
plan or program.

 

Colt releases and forever discharges Employee from any and all claims about
which it has or reasonably should have knowledge as of the date of the execution
of this Agreement.  Colt represents that it currently has no knowledge of any
conduct or failure by Employee that would give Colt a viable cause of action
against Employee.

 

7.                                      Affirmations.  Employee confirms that he
has not filed or caused to be filed and is not a party to any claim, charge,
complaint, or action against Colt or any of the other Released Entities, or any
of their current and former shareholders, unit holders, directors, officers,
employees, accountants, insurers, agents and attorneys, in any forum or form. 
Employee further confirms he has no known workplace injuries or occupational
diseases.  Employee further confirms he has received all leave (paid or unpaid),
compensation, wages, bonuses, commissions, and/or benefits to which Employee may
be entitled and that no other leave (paid or unpaid), compensation, wages,
bonuses, commissions and/or benefits are due to Employee, except as provided in
this Severance Agreement.  The preceding sentence does not address any
obligations that Colt Defense LLC may owe to Employee as a holder of Common
Units. Employee specifically confirms that he has been paid all monies owed and
granted any leave requested under the Family and Medical Leave Act.

 

Employee further affirms that he has not been retaliated against for reporting
any allegations of wrongdoing by Colt or its officers, including any allegations
of corporate fraud.  Both parties acknowledge that this Severance Agreement does
not limit either party’s right, where applicable, to file or participate in an
investigative proceeding of any federal, state or local governmental agency.  To
the extent permitted by law, Employee agrees that if such an administrative
claim is made, he shall not seek or accept any individual monetary relief or
other individual remedies.

 

8.                                      Resignation from Positions.  Effective
as of July 3, 2014, Employee resigns from all offices, directorships,
trusteeships, committee memberships and fiduciary capacities held with, or on
behalf of, Colt or any parent, subsidiary or benefit plan of Colt.  These
resignations will become irrevocable as set forth in Paragraph 5, above. 
Employee will promptly sign and return to Colt any documents requested to
confirm such resignations.

 

9.                                      Cooperation. In the event that Colt
seeks any lawful assistance from Employee regarding any business or legal matter
concerning Colt following the Wind Down Period described in Paragraph 2 above
through July 3, 2015, Employee will provide such assistance, not to exceed 10
hours in any week, except by mutual agreement, or 100 hours from the end of the
Wind Down Period through July 3, 2015, for no additional compensation from
Colt.  Such assistance will take place telephonically, via email or in person at
Colt’s headquarters in West Hartford, Connecticut.  If Colt asks Employee to
provide assistance elsewhere because the nature

 

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of the assistance requires travel, Colt will reimburse Employee for the
reasonable expenses incurred in travel to and from the location where the
assistance is provided, consistent with Colt’s policy for employee expense
reimbursement.  Scheduling of all assistance by Employee pursuant to this
Paragraph 9 shall be as mutually agreed; provided that if Colt faces a deadline,
Employee will make reasonable efforts to accommodate Colt’s deadline in a manner
consistent with Employee’s conduct while an employee of Colt.

 

10.                               Return of Property.  Employee represents that
he has returned, or will by July 7, 2014 return, to Colt all property belonging
to Colt in his possession, custody or control that he obtained from Colt or any
actual or potential vendor or investor of or in Colt, including, without
limitation, electronic equipment, credit cards, keys, files and all documents,
whether in paper or electronic form, but excluding incidental items, such as
pins, tee shirts, caps, SHOT Show shirt and gifts of nominal value from third
parties that Employee kept in his office and similar items of nominal value.  In
the event Employee later discovers any additional such property, he will return
it within three business days of its discovery.  Employer further acknowledges
that this obligation to return property extends to everything he received from
any party identified in this paragraph during and as a result of his employment
with Colt.  Employee affirms, that he is in possession of all of his property
that he had at Colt’s premises and that Colt is not in possession of any of his
property.

 

11.                               Confidential Business Information.  Employee
agrees that while employed by Colt, he was given access to Colt’s trade secrets
and other confidential information and became aware of actual and potential
investors in funds managed by Colt’s equity sponsor.  Employee further agrees
not to use or disclose any of Colt’s trade secrets or other confidential
business information, for so long as the pertinent information or documentation
remains confidential.

 

12.                               Post-Employment Restrictions.  During the
one-year period immediately following Employee’s last day of employment with
Colt, Employee will not, directly or indirectly:

 

A.            Solicit, hire, contract with or otherwise engage any Colt
employee, contractor, vendor or third party factory to work for, or provide
goods or services to, any other employer or organization.  For the purpose of
this provision, “Colt employee, contractor, vendor or third party factory” means
any individual who was employed or retained by, or any individual or entity who
or that provided goods or services to, Colt within the last twelve months of
Employee’s employment by Colt.

 

B.            Participate in, work for, or provide services to any person or
entity that is, or is actively planning to be, a “Competitive Business.”  The
term “Competitive Business” shall mean any business (however organized or
conducted) that competes with a business in which Colt is engaged.  This
restriction does not limit Employee’s ability to practice law for any person or
entity, in any industry or geographic location.  Instead, it limits Employee’s
ability to serve as an executive, or provide comparable

 

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business management services in any other capacity, for any Competitive
Business.

 

C.            Act in any capacity for or with any Competitive Business, or for
or with any of their agents, if in such capacity Employee would, because of the
nature of his role with the such Competitive Business and Employee’s knowledge
of Colt’s confidential business information, inevitably use and/or disclose any
of Colt’s confidential business information in his work for, or on behalf of,
the Competitive Business or its agent.

 

D.            Otherwise interfere with, disrupt or attempt to disrupt relations
between Employer and any of its employees, contractors, vendors, third party
factories or customers.

 

This Paragraph 12 does not prohibit or restrict Employee from providing the
consulting services described in, and in accordance with, Exhibit B (“Permitted
Activities”); provided that such services do not pertain to any activity that is
or is planned to be competitive to Colt.

 

13.                               Confidentiality and Non-Disparagement.

 

(a)                                 Employee agrees not to disclose any
information regarding the existence or substance of this Severance Agreement,
except to Employee’s tax advisor, Employee’s attorney with whom Employee chooses
to consult regarding Employee’s consideration of this Severance Agreement, and
any post-employment employer, partner or client to the extent reasonably
required for bona fide business purposes.  Employee agrees not to say or do
anything intended to be, or that would reasonably be viewed as being,
disparaging or demeaning Colt, any of the other Released Entities, and any
current or former shareholder, unit holder, director, officer, employee,
accountant, insurer, agent or attorney of Colt or of any of the other Released
Entities.  In the event of Employee’s material breach of any obligation in
Paragraphs 10 through13of this Severance Agreement, in addition to any remedies
Colt and the other Released Entities and any of their current or former
shareholders, unit holders, members, directors, officers, employees,
consultants, accountants, insurers, agents or attorneys may have under the law,
Colt may, without further obligation to Employee, discontinue any payment to
which Employee would otherwise be entitled under this Severance Agreement, and
Employee will pay the attorneys’ fees and other expenses incurred by Colt and/or
the other Released Entities and/or any current or former shareholder, member,
unit holder, member, director, officer, employee, accountant, consultant,
insurer, agent or attorney thereof in establishing that breach and in otherwise
enforcing the terms of this Severance Agreement.

 

(b)                                 Colt agrees not to disclose any information
regarding the existence or substance of this Severance Agreement, except to its
legal, financial and accounting advisors, its auditors, as legally required, or
as required in connection with any actual or prospective financing relationship
or transaction or sale transaction.

 

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Colt agrees that neither it nor any director or officer will say or do anything
intended to be, or that would reasonably be viewed as being, disparaging or
demeaning to Employee.  In the event of Colt’s failure to pay Severance in
accordance with this Agreement after five business days notice to remedy such
failure, in addition to any remedies Employee may have under the law,
(i) Employee may, without further obligation to Colt, discontinue the provision
of transition assistance or other services to Colt and the new General Counsel
under Paragraphs 2 and 9, and (ii) the restrictions set forth in Paragraph 12
will cease to operate.  Colt will pay the attorneys’ fees and other expenses
incurred by Employee in establishing Employer’s breach and in otherwise
enforcing the terms of this Severance Agreement.

 

14.                               Governing Law and Interpretation.  This
Severance Agreement shall be governed by, and interpreted in accordance with,
the laws of Connecticut without regard to its conflict of laws principles.  In
the event of a breach of any provision of this Severance Agreement, either party
may institute an action specifically to enforce any term or terms of this
Severance Agreement and/or seek any damages for breach.  Should any provision of
this Severance Agreement be declared illegal or unenforceable by a court of
competent jurisdiction and cannot be modified to be enforceable, excluding the
general release language, such provision shall immediately become null and void,
leaving the remainder of this Severance Agreement in full force and effect.

 

15.                               Nonadmission of Wrongdoing.  Employee and Colt
agree that neither this Severance Agreement, nor the furnishing of the
consideration hereunder, shall be deemed or construed at any time for any
purpose as an admission or evidence of any liability or misconduct of any kind
by any person or entity.

 

16.                               Amendment.  This Severance Agreement may not
be modified, altered or changed except in writing and signed by both parties
wherein specific reference is made to this Severance Agreement.

 

17.                               Indemnification of Employee.  Colt
acknowledges and agrees that this Agreement does not impair in any way
Employee’s rights to indemnification, under any applicable document or
agreement, or by operation of law, as an officer of Colt and its subsidiaries
for any matter that arose on or prior to his last day of employment and Colt
further agrees that such indemnification rights will survive the execution of
this Agreement.  Colt agrees to name Employee as an additional insured on its
directors’ and officers’ insurance until June 30, 2019.

 

18.                               Form 8-K/Public Statements.  Colt will cause
its parent company to file a Form 8-K in the form annexed as Exhibit C, with
respect to Employee’s resignation.

 

19.                               Counsel Fees.  Colt will pay the fees of
Employee’s counsel, William Madsen, Esq, for his services in connection with
this Agreement, not to exceed $1,500.

 

20.                               Entire Agreement.  This Severance Agreement
sets forth the entire agreement between the parties hereto with respect to the
subject matter hereof, and fully supersedes any

 

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prior agreements or understandings between the parties with respect to the
subject matter hereof, except that Employee shall continue to be bound by the
applicable provisions of Colt’s business conduct, confidentiality and related
agreements to the extent that by their terms they survive the termination of
Employee’s employment.  Employee acknowledges that he has not relied on any
representations, promises, or agreements of any kind made to Employee in
connection with his decision to accept this Severance Agreement, except for
those set forth in this Severance Agreement.

 

EMPLOYEE CONFIRMS THAT HE HAS BEEN GIVEN TWENTY-ONE CALENDAR DAYS TO CONSIDER
THIS SEVERANCE AGREEMENT AND BEEN INFORMED THAT EMPLOYEE SHOULD CONSULT WITH AN
ATTORNEY BEFORE EXECUTING THIS SEVERANCE AGREEMENT.

 

EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS
SEVERANCE AGREEMENT DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL
CONSIDERATION PERIOD.

 

HAVING ELECTED TO EXECUTE THIS SEVERANCE AGREEMENT, TO FULFILL THE PROMISES SET
FORTH HEREIN, AND TO RECEIVE THEREBY THE CONSIDERATION SET FORTH IN PARAGRAPH 2
ABOVE, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO
THIS SEVERANCE AGREEMENT INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS
EMPLOYEE HAS OR MIGHT HAVE AGAINST COLT, ANY OF THE OTHER RELEASED ENTITIES, AND
ANY CURRENT OR FORMER SHAREHOLDER, MEMBER, DIRECTOR, OFFICER, EMPLOYEE,
CONSULTANT, ACCOUNTANT, INSURER, AGENT OR ATTORNEY THEREOF.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
Severance Agreement as of the date set forth below:

 

 

 

JEFFREY G. GRODY

 

 

 

Date:

 

 

 

 

 

 

 

COLT’S MANUFACTURING COMPANY LLC

 

 

 

 

 

By:

 

 

 

Dennis Veilleux, Chief Executive Officer

 

 

 

Date:

 

 

 

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EXHIBIT A TO SEVERANCE AGREEMENT

 

Mr. Dennis Veilleux

Chief Executive Officer

Colt’s Manufacturing Company LLC

547 New Park Ave.

West Hartford, CT  06110

 

Re:                             Severance Agreement

 

Dear Dennis:

 

I received a Severance Agreement from Colt’s Manufacturing Company LLC on 
June 23, 2014.  The Severance Agreement provided that I had at least twenty-one
days to consider its terms.  I signed the Severance Agreement on
                        .

 

The Severance Agreement also provided me with a seven-day period during which I
could revoke my acceptance of the Severance Agreement.  More than seven days
have passed since I executed the Severance Agreement.  I have at no time revoked
my acceptance or execution of that Severance Agreement, and I hereby reaffirm my
acceptance of that Severance Agreement.

 

 

Sincerely,

 

 

 

 

 

Jeffrey G. Grody

 

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EXHIBIT B TO SEVERANCE AGREEMENT

 

Structuring teaming, joint-venture, consulting and other collaborative
relationships from and after 180 days from the date of this Severance Agreement.

 

Structuring business and legal relationships with third party agents, customers,
distributors and other collaborators from and after 180 days from the date of
this Severance Agreement.

 

Export compliance advice, including DDTC agreements (TAAs, MLAs, etc.).

 

Protection of trade secrets, other confidential information, patentable
inventions.

 

Confidentiality agreement and manuals/training for their use and compliance.

 

Creation and maintenance of a legal and contractual compliance environment.

 

Project management for transactional due diligence (e.g., financing, M&A,
investment, etc.).

 

Dispute avoidance, management, mitigation.

 

Business and financial stress management—e.g., financially distressed or
difficult vendors, customers, partners.

 

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EXHIBIT C TO SEVERANCE AGREEMENT

 

[Insert form of 8-K]

 

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