Exhibit 10.1

THIRD AMENDMENT

TO CREDIT AGREEMENT

This Third Amendment to Credit Agreement (this “Amendment”) is entered into as
of December 7, 2012, by and among the Lenders identified on the signature pages
hereof (such Lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), BMO Harris Bank N.A., formerly known as Harris
N.A., as administrative agent for the Lenders (in such capacity, “Agent”), and
Cobra Electronics Corporation, a Delaware corporation (“Borrower”).

WHEREAS, Borrower, Agent, and the Lenders are parties to that certain Credit
Agreement dated as of July 16, 2010 (as amended, modified or supplemented from
time to time, the “Credit Agreement”); and

WHEREAS, Borrower has requested that Agent and the Lenders agree to amend and
modify the Credit Agreement as provided herein, subject to the terms and
conditions contained herein.

NOW THEREFORE, in consideration of the premises and mutual agreements herein
contained, the parties hereto agree as follows:

1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement.

2. Amendments to Credit Agreement. Subject to the satisfaction of the conditions
set forth in Section 5 below and in reliance upon the representations and
warranties of Borrower set forth in Section 6 below, the Credit Agreement is
amended as follows:

(a) Section 2.1(a) of the Credit Agreement is hereby amended by deleting the
reference to “0.50% per annum” contained therein and inserting “0.25% per annum”
in lieu thereof.

(b) The fourth sentence of Section 8.6 of the Credit Agreement is hereby amended
and restated in its entirety as follows:

“The reasonable costs and expenses incurred in obtaining any such inspections
and/or appraisals shall in each case be borne by the Borrower (whether obtained
by the Administrative Agent or the Borrower); provided that, unless a Default or
Event of Default is then in existence, the Borrower shall not be obligated to
incur the charges, costs and expenses of more than one Inventory appraisal
during each twelve month period and more than two complete audits and
inspections during each twelve month period.”

(c) Annex I of the Credit Agreement is hereby amended to add the following
defined term in appropriate alphabetical order as follows:

““Third Amendment Effective Date” means December 7, 2012.”

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(d) The defined term “Applicable Margin” set forth in Annex I of the Credit
Agreement is hereby amended and restated in its entirety as follows:

““Applicable Margin” means with respect to Loans, Reimbursement Obligations and
letter of credit fees payable under Section 2.1 hereof with respect to Standby
Letters of Credit and Commercial Letters of Credit, in each case until the first
Pricing Date, the rates per annum shown opposite Level II below, and thereafter
from one Pricing Date to the next, the Applicable Margin means the rates per
annum determined in accordance with the following schedule:

 

Level

  

Fixed Charge Coverage Ratio

   Applicable
Margin for Base
Rate Loans and
Reimbursement
Obligations   Applicable
Margin for
Eurodollar Loans   Applicable
Margin for letter
of credit fees
with respect to
Standby Letters
of Credit   Applicable
Margin for letter
of credit fees
with respect to
Commercial
Letters of Credit

III

   Less than 1.20 to 1.0    0.75%   2.25%   2.25%   1.125%

II

  

Greater than or equal to 1.20 to 1.0

but less than or equal to 1.75 to 1.0

   0.50%   2.00%   2.00%   1.000%

I

   Greater than 1.75 to 1.0    0.25%   1.75%   1.75%   0.875%

For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of
the Borrower ending on or after December 31, 2010, the date on which the
Administrative Agent is in receipt of the Borrower’s most recent financial
statements (and, in the case of the year-end financial statements, audit report)
for the fiscal quarter then ended, pursuant to Section 8.5 hereof. The
Applicable Margin shall be established based on the Fixed Charge Coverage Ratio
measured as of the last day of each fiscal quarter, commencing with the fiscal
quarter ending December 31, 2010. The Applicable Margin established on a Pricing
Date shall remain in effect until the next Pricing Date. If the Borrower has not
delivered its financial statements by the date such financial statements (and,
in the case of the year-end financial statements, audit report) are required to
be delivered under Section 8.5 hereof, until such financial statements and audit
report are delivered, the Applicable Margin shall be the highest Applicable
Margin (i.e. Level III pricing shall apply). If the Borrower subsequently
delivers such financial statements before the next Pricing Date, the Applicable
Margin established by such late delivered financial statements shall take effect
from the date of delivery until the next Pricing Date. In all other
circumstances, the Applicable Margin established by such financial statements
shall be in effect from the Pricing Date that occurs immediately after the end
of the fiscal quarter covered by such financial statements until the next
Pricing Date. Each determination of the Applicable Margin made by the
Administrative Agent in accordance with the foregoing shall be conclusive and
binding on the Borrower and the Lenders, subject to adjustment for manifest
error.”

 

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(e) Clause (c) of the defined term “Borrowing Base” set forth in Annex I of the
Credit Agreement is hereby amended and restated in its entirety as follows:

“(c) the least of (i) the sum of 65% of the value, computed at the lower of cost
or market using the first-in first-out method of Inventory valuation applied by
the Borrower in accordance with GAAP, of Eligible In-Transit Inventory and
(ii) the sum of 85% of the Net Orderly Liquidation Value, based on the most
recent appraisal, of Eligible In-Transit Inventory and (iii) $12,000,000; plus”

(f) Clause (d) of the defined term “Borrowing Base” set forth in Annex I of the
Credit Agreement is hereby amended and restated in its entirety as follows:

“(d) with respect to Letters of Credit issued for the purpose of purchasing
Eligible In-Transit Inventory, the lesser of (i) the sum of 65% of the value,
computed at the lower of cost or market using the first-in first-out method of
Inventory valuation applied by the Borrower in accordance with GAAP, of such
underlying Eligible In-Transit Inventory and (ii) the sum of 85% of the Net
Orderly Liquidation Value, based on the most recent appraisal, of such
underlying Eligible In-Transit Inventory (provided, that in no event shall the
aggregate sum of clauses (c) and (d) of this definition exceed $12,000,000);
plus”

(g) Clause (f) of the defined term “Eligible Receivables” set forth in Annex I
of the Credit Agreement is hereby amended by deleting the reference to
“$12,000,000” contained therein and inserting “$18,000,000” in lieu thereof.

(h) Clause (q) of the defined term “Eligible Receivables” set forth in Annex I
of the Credit Agreement is hereby amended by deleting the reference to “26%, or
such other limit as the Administrative Agent may agree to in its sole
discretion; provided that such limit shall not exceed 30% without the consent of
the Required Lenders” contained therein and inserting “35%” in lieu thereof.

(i) The defined term “Insurance Overadvance” set forth in Annex I of the Credit
Agreement is hereby amended and restated in its entirety as follows:

““Insurance Overadvance” means any time the portion of the unpaid principal
balance of the Revolving Loans predicated on the Insurance Availability that
exceeds the sum of 75% of the aggregate cash surrender value of the Life
Policies subject to Life Insurance Assignments.”

(j) The defined term “Life Policies” set forth in Annex I of the Credit
Agreement is hereby amended and restated in its entirety as follows:

““Life Policies” means collectively (a) the Borrower’s life insurance policies
maintained on the life of each of James Bode, Dennis Burke, Michael Smith, James
Flaherty, Dan Schiff, Bruce Legris, John Pohl, Lucy Vallicelli, Bill Chamberlain
and Sally Washlow, (b) any other life insurance policy of the

 

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Borrower maintained on the life of an officer of the Borrower and (c) and any
life insurance policy maintained on the life of an officer of the Borrower held
in trust acceptable to the Administrative Agent in its sole discretion and
subject to collateral assignment documentation in form and substance
satisfactory to the Administrative Agent in its sole discretion.”

(k) The last sentence of the defined term “Revolving Credit Commitment” set
forth in Annex I of the Credit Agreement is hereby amended and restated in its
entirety as follows:

“Borrower and the Lenders acknowledge and agree that the Revolving Credit
Commitments of the Lenders aggregate $35,000,000 on the Third Amendment
Effective Date.”

(l) The defined term “Termination Date” set forth in Annex I of the Credit
Agreement is hereby amended by deleting the reference to “July 16, 2013”
contained therein and inserting “July 16, 2016” in lieu thereof.

(m) Schedule 1 to the Credit Agreement is hereby amended and restated in its
entirety as set forth on Exhibit A hereto.

3. Continuing Effect. Except as expressly set forth in Section 2 of this
Amendment, nothing in this Amendment shall constitute a modification or
alteration of the terms, conditions or covenants of the Credit Agreement or any
other Loan Document or a waiver of any other terms or provisions thereof, and
the Credit Agreement and the other Loan Documents shall remain unchanged and
shall continue in full force and effect, in each case as amended hereby.

4. Reaffirmation and Confirmation. Borrower hereby ratifies, affirms,
acknowledges and agrees that the Credit Agreement and the other Loan Documents,
in each case as amended hereby, represent the valid, enforceable and collectible
obligations of Borrower, and further acknowledges that there are no existing
claims, defenses, personal or otherwise, or rights of setoff whatsoever with
respect to the Credit Agreement or any other Loan Document. Borrower hereby
agrees that this Amendment in no way acts as a release or relinquishment of the
Liens and rights securing payments of its Obligations. The Liens and rights
securing payment of its Obligations are hereby ratified and confirmed by
Borrower in all respects.

5. Conditions to Effectiveness. This Amendment shall become effective as of the
date hereof and upon the satisfaction of the following conditions precedent:

(a) Each party hereto shall have executed and delivered this Amendment to Agent;

(b) Agent shall have received from Borrower for each Lender a duly executed
Second Amended and Restated Revolving Note dated the date hereof and each in
form and substance satisfactory to Agent (the “Amended and Restated Notes”);

 

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(c) Agent shall have received a fully and manually executed Second Amendment to
Real Property Mortgage with respect to the real Property located at 6500 W.
Cortland Avenue, Chicago, Illinois 60607, in form and substance satisfactory to
Agent (the “Mortgage Amendment”);

(d) Agent shall have received from Borrower a duly executed amendment to fee
letter dated as of the date hereof in form and substance satisfactory to Agent
(the “Fee Letter Amendment”);

(e) Agent shall have received a copy of resolutions of Borrower’s board of
directors (or analogous governing board) authorizing the execution, delivery and
performance of this Amendment, the Amended and Restated Notes, the Mortgage
Amendment and the Fee Letter Amendment, in form and substance satisfactory to
Agent;

(f) Agent shall have received for each Lender the favorable written opinions of
counsel to Borrower, in form and substance satisfactory to Agent;

(g) Borrower shall have paid to Agent, for the pro rata benefit of the Lenders,
an amendment fee equal to $87,500; and

(h) No Default or Event of Default shall have occurred and be continuing on the
date hereof or as of the date of the effectiveness of this Amendment.

6. Representations and Warranties. In order to induce Agent and the Lenders to
enter into this Amendment, Borrower hereby represents and warrants to Agent and
Lenders, after giving effect to this Amendment:

(a) All representations and warranties contained in the Credit Agreement and the
other Loan Documents are true and correct on and as of the date of this
Amendment, in each case as if then made, other than representations and
warranties that expressly relate solely to an earlier date (in which case such
representations and warranties were true and correct on and as of such earlier
date);

(b) No Default or Event of Default has occurred and is continuing;

(c) This Amendment constitutes a legal, valid and binding obligation of Borrower
and is enforceable against Borrower in accordance with its respective terms.

7. Miscellaneous.

(a) Expenses. Borrower agrees to pay on demand all costs and expenses of Agent
(including the reasonable fees and expenses of outside counsel for Agent) in
connection with the preparation, negotiation, execution, delivery and
administration of this Amendment and all other instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith.
All obligations provided herein shall survive any termination of this Amendment
and the Credit Agreement as amended hereby.

 

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(b) Governing Law. This Amendment shall be a contract made under and governed by
the internal laws of the State of Illinois.

(c) Counterparts. This Amendment may be executed in any number of counterparts,
and by the parties hereto on the same or separate counterparts, and each such
counterpart, when executed and delivered, shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Amendment.

8. Release.

(a) In consideration of the agreements of Agent and Lenders contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Borrower, on behalf of itself and its successors,
assigns, and other legal representatives, hereby absolutely, unconditionally and
irrevocably releases, remises and forever discharges Agent and the Lenders, and
their successors and assigns, and their present and former shareholders,
affiliates, subsidiaries, divisions, predecessors, directors, officers,
attorneys, employees, agents and other representatives (Agent, each Lender and
all such other Persons being hereinafter referred to collectively as the
“Releasees” and individually as a “Releasee”), of and from all demands, actions,
causes of action, suits, covenants, contracts, controversies, agreements,
promises, sums of money, accounts, bills, reckonings, damages and any and all
other claims, counterclaims, defenses, rights of set-off, demands and
liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of
every name and nature, known or unknown, suspected or unsuspected, both at law
and in equity, which Borrower or any of its respective successors, assigns, or
other legal representatives may now or hereafter own, hold, have or claim to
have against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this Amendment, including, without limitation, for
or on account of, or in relation to, or in any way in connection with any of the
Credit Agreement, or any of the other Loan Documents or transactions thereunder
or related thereto, other than to the extent of those Claims which arise from
the gross negligence or willful misconduct of the applicable Releasee as
determined in a final, non-appealable judgment by a court of competent
jurisdiction.

(b) Borrower understands, acknowledges and agrees that the release set forth
above may be pleaded as a full and complete defense and may be used as a basis
for an injunction against any action, suit or other proceeding which may be
instituted, prosecuted or attempted in breach of the provisions of such release.

(c) Borrower agrees that no fact, event, circumstance, evidence or transaction
which could now be asserted or which may hereafter be discovered shall affect in
any manner the final, absolute and unconditional nature of the release set forth
above.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized and delivered as of the
date first above written.

 

COBRA ELECTRONICS CORPORATION

By:  

/s/ Robert J. Ben

Name:  

Robert J. Ben

Title:  

Senior VP and CFO

BMO HARRIS BANK N.A., formerly known as Harris N.A., in its individual capacity
as a Lender and as Agent By:  

/s/ William J. Kennedy

Name:  

William J. Kennedy

Title:  

Vice President

FIFTH THIRD BANK, in its individual capacity as a Lender By:  

/s/ Robert Tanakatsubo

Name:  

Robert Tanakatsubo

Title:  

Officer

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EXHIBIT A

SCHEDULE 1

COMMITMENTS

 

NAME OF LENDER

   REVOLVING CREDIT
COMMITMENT  

BMO Harris Bank N.A., formerly known as Harris N.A.

   $ 21,000,000   

Fifth Third Bank

   $ 14,000,000      

 

 

 

TOTAL

   $ 35,000,000