Exhibit 10.1

 

July 28, 2010

 

Ms. Sally Washlow

1214 N. Oak Park Avenue
Oak Park, Illinois  60302

 

Dear Sally:

 

This letter is to confirm the terms of your employment with Cobra Electronics
Corporation (the “Company”).

 

1.             During the term of your employment by the Company pursuant to
this agreement, you shall be employed as Senior Vice President, Marketing and
Sales of the Company and shall have the normal duties, responsibilities and
attendant authorities of that position, including, but not limited to, primary
authority and supervisory responsibility for all marketing and sales functions
and all other tasks as may be assigned from time to time by the Chief Executive
Officer of the Company.  You shall report to the Chief Executive Officer of the
Company.

 

2.             The term of your employment by the Company pursuant to this
agreement shall begin on August 1, 2010.  Such employment shall be on an at-will
basis which you or the Company can terminate at any time by delivery of written
notice to the other party.

 

3.             During your employment by the Company pursuant to this agreement,
you shall receive a regular salary at the rate per period hereinafter set forth,
payable every two weeks.  Your regular annual salary shall be $220,000, subject
to annual review and adjustment by the Compensation Committee of the Company’s
Board of Directors for each calendar year (an “Annual Period”), including such
review and any such adjustment for the Annual Period beginning January 1, 2011
(the “2011 Annual Period”), but in no event shall your annual salary for any
subsequent Annual Period be less than your annual salary for the prior Annual
Period.

 

4.             In addition to your regular annual salary, you shall also be
eligible to receive for each Annual Period commencing with the 2011 Annual
Period, a bonus of up to 35% of your regular annual salary.  Your bonus for each
Annual Period shall be based on such criteria as shall be determined by the
Compensation Committee of the Company’s Board of Directors for each Annual
Period, which may include Company performance, individual performance and/or
such other criteria as the Compensation Committee of the Company’s Board of
Directors shall determine.  Your bonus for the Annual Period ending December 31,
2010 shall be determined pursuant to the Company’s 2010 Executive Incentive
Plan, as amended.  Except as provided elsewhere herein, you shall only be
entitled to receive a bonus with respect to an Annual Period if you are employed
by the Company through, and on the last day of, the Annual Period.

 

Any bonus payable to you pursuant to this Section 4 for an Annual Period shall
be paid to you by the Company on or before March 15th of the calendar year
immediately following the end of the applicable Annual Period.

 

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5.             You also shall receive $10,000 each Annual Period to be used for
perquisites of your choice, payable in monthly payments of $833.33, while you
are employed by the Company, in lieu of any other allowances.  Each monthly
payment shall be paid to you by the Company during the month to which the
payment pertains.

 

6.             In the event a Change of Control (as defined below) occurs, any
stock option previously issued to you that is not then, or to the extent not
then, exercisable, shall immediately become exercisable in full.

 

For the purpose of this agreement, a Change of Control shall be deemed to have
occurred if:  (i) any person, including a group within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires
the beneficial ownership of, and the right to vote, shares having at least 50
percent of the aggregate voting power of the class or classes of capital stock
of the Company having the ordinary and sufficient voting power (not depending
upon the happening of a contingency) to elect at least a majority of the
directors of the board of directors of the Company, or (ii) as the result of any
tender or exchange offer, substantial purchase of the Company’s equity
securities, merger, consolidation, sale of assets or contested election, or any
combination of the foregoing transactions, the persons who were directors of the
Company immediately prior to such transaction or transactions shall not
constitute a majority of the board of directors (or the board of directors of
any successor to or assign of the Company) immediately after the next meeting of
stockholders of the Company (or such successor or assign) following such
transaction, or (iii) there is consummated a reorganization, merger or
consolidation of the Company or sale or other disposition of all or
substantially all of the assets of the Company (a “Corporate Transaction”),
excluding any Corporate Transaction pursuant to which (A) all or substantially
all of the individuals or entities who are the beneficial owners, respectively,
of the outstanding voting securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 50% of the
combined voting power of the outstanding securities entitled to vote generally
in the election of directors of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company’s
assets either directly or indirectly) in substantially the same proportions
relative to each other as their ownership, immediately prior to such Corporate
Transaction, of the outstanding voting securities, (B) no person (other than the
Company, any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company) will beneficially own,
directly or indirectly, 50% or more of the combined voting power of the
outstanding securities of the corporation resulting from such Corporate
Transaction entitled to vote generally in the election of directors, and (C) the
persons who were directors of the Company immediately prior to such Corporate
Transaction will constitute at least a majority of the board of directors of the
corporation resulting from such Corporate Transaction.

 

7.             During your employment hereunder, you shall be entitled to
participate in such employee benefits including, but not limited to, life, short
and long term disability and health insurance and other medical benefits as the
Company makes available to individuals employed by the Company at the Senior
Vice President level.

 

8.             You shall be reimbursed for all of your reasonable and necessary
business expenses incurred in performing your duties for the Company.  In order
for any such reimbursement to be

 

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made, the expense must be incurred while you are employed by the Company, and
you must complete and submit such standard forms for reimbursement in accordance
with any procedures established by the Company.  In no event will the Company
make any such reimbursement later than the last day of the calendar year
following the calendar year in which you incur the expense.  Your right to
reimbursement is not subject to liquidation or exchange for any other benefit,
and the amount of expenses eligible for reimbursement in a calendar year will
not affect the amount of expenses eligible for reimbursement, or in-kind
benefits to be provided, in any subsequent calendar year.

 

9.             You shall be entitled to a benefit from the Company pursuant and
subject to the terms and conditions of (including but not limited to the vesting
provisions of) the COBRA Electronics Corporation 2002 Deferred Compensation Plan
for Select Executives, as amended from time to time, or any similar plan which
the Company adopts for this purpose; provided, however, that for purposes of any
such plan, your years of service shall be the number of your completed years of
employment during the period commencing on May 14, 2007 and ending on the date
your employment with the Company terminates.

 

10.          (a)  Involuntary Termination other than for Cause.  (1)  Separation
pay.  In the event your employment hereunder with the Company is involuntarily
terminated by the Company for reasons other than for “Cause” (as defined below),
the Company shall continue to make biweekly payments to you after your
termination of employment on the same dates on which your regular biweekly
salary would have continued to be paid to you if your employment had not
terminated in an amount equal to your regular biweekly salary (described in
Section 3) (“Continued Salary Payments”) until the Company has made 26 such
payments to you.  Such payments shall commence on the first regular payday
immediately after the day of your termination of employment.

 

(2)           Other benefits.  In the event that paragraph (a)(1) of this
Section 10 applies, the Company shall also (i) pay the cost of any continued
health and dental coverage properly elected by you under the Company’s group
health and dental plans pursuant to the Consolidated Budget Reconciliation Act
of 1984 (“COBRA coverage”) for the period during which the Company is making
Continued Salary Payments, (ii) pay to you a pro-rata portion of any bonus
described in Section 4 of this agreement for the Annual Period during which your
termination of employment occurs that is based on Company performance
(determined based on the number of days during such Annual Period during which
you are employed by the Company plus the number of days in the biweekly periods
during such Annual Period for which the Company is making Continued Salary
Payments) in accordance with the payment timing provisions of Section 4, and
(iii) pay for an executive outplacement program of your choice, subject to
similar terms and conditions as the Company’s other executive outplacement
program (including a maximum fee of 15% of your total compensation and monthly
reports from the outplacement firm of your active job search); provided, that
only reasonable outplacement services incurred by you and directly related to
the termination of your employment with the Company shall be reimbursed and,
provided further, that such expenses must be incurred no later than the end of
the first calendar year following the calendar year of your termination of
employment.

 

In the event that paragraph (a)(1) of this Section 10 applies, all vested stock
options granted to you by the Company which are not incentive stock options
shall, subject to the terms hereof and the agreements evidencing such grants,
(i) continue to become exercisable pursuant to the terms thereof and (ii) remain
exercisable until the last day in the final biweekly period for which the
Company is making Continued Salary Payments as if you had remained employed by
the

 

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Company until such date, provided, however, that no option may be exercised
beyond the earlier of the latest date upon which the option could have been
exercised under its original terms or the tenth anniversary of the original date
of grant of the option.

 

Except as otherwise provided herein, all of your remaining benefits shall
immediately end upon your termination of employment.

 

(b)  Involuntary termination for Cause.  In the event your employment hereunder
with the Company is terminated by the Company for Cause, you shall be entitled
to salary through and including the effective date of your termination of
employment and all other benefits provided for hereunder shall immediately
cease.  All of your remaining benefits, including the continued vesting and
exercisability of stock options, shall immediately end upon your termination of
employment.

 

For purposes of this agreement, “Cause” shall mean embezzlement,
misappropriation, theft or other criminal conduct, of which you are convicted,
related to the property or assets of the Company or your willful refusal to
perform or substantial disregard of your duties assigned to you by the Chief
Executive Officer of the Company, unless you have reasonable and just cause for
such refusal to perform or disregard of your duties or unless you commence
immediate corrective actions within 15 days after the Chief Executive Officer
gives you written notice of his objection to your refusal to perform or
disregard of your duties.

 

(c)  Termination for Good Reason.  (1)  Separation pay.  In the event you
terminate your employment with the Company due to a “Material Negative Change”
(as defined below), the Company shall continue to make Continued Salary Payments
until the Company has made 26 such payments to you.  Such payments shall
commence on the first regular payday immediately after the day of your
termination of employment.

 

(2)           Other benefits.  In the event that paragraph (c)(1) of this
Section 10 applies, the Company shall also (i) pay the cost of any properly
elected COBRA coverage, (ii) pay to you a pro-rata portion of any bonus
described in Section 4 of this agreement for the Annual Period during which your
termination of employment occurs that is based on Company performance
(determined based on the number of days during such Annual Period during which
you are employed by the Company plus the number of days in the biweekly periods
during such Annual Period for which the Company is making Continued Salary
Payments) in accordance with the payment timing provisions of Section 4, and
(iii) pay for an executive outplacement program of your choice, subject to
similar terms and conditions as the Company’s other executive outplacement
program (including a maximum fee of 15% of your total compensation and monthly
reports from the outplacement firm of your active job search); provided, that
only reasonable outplacement services incurred by you and directly related to
the termination of your employment with the Company shall be reimbursed and,
provided further, that such expenses must be incurred no later than the end of
the first calendar year following the calendar year of your termination of
employment.

 

In the event that paragraph (c)(1) of this Section 10 applies, all vested stock
options granted to you by the Company which are not incentive stock options
shall, subject to the terms hereof and the agreements evidencing such grants,
(i) continue to become exercisable pursuant to the terms thereof and (ii) remain
exercisable until the last day in the final biweekly period for which the
Company is making Continued Salary Payments as if you had remained employed by
the Company until such date, provided, however, that no option may be exercised
beyond the earlier of the latest date upon which the option could have been
exercised under its original terms or the tenth anniversary of the original date
of grant of the option.

 

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Except as otherwise provided herein, all of your remaining benefits shall
immediately end upon your termination of employment.

 

For purposes of this agreement, “Material Negative Change” shall mean the
occurrence, without your consent, of one or more of the following:

 

(A)          There is a material diminution in your authority, duties or
responsibilities as an officer of the Company.

 

(B)          There is a material change in the geographic location at which you
must perform your services to the Company.

 

(C)          There is a material breach by the Company of the terms of this
agreement or other agreement pursuant to which you provide services to the
Company.

 

Notwithstanding the foregoing, no Material Negative Change shall occur unless
(w) you provide written notice to the Company of the existence of the Material
Negative Change within 90 days of the initial existence of such change; (x) the
Company does not remedy the Material Negative Change within 30 days of the
Company’s receipt of such written notice; (y) as a result of the Material
Negative Change not being remedied, you terminate your employment with the
Company after such 30-day period and not later than twelve months after the
initial existence of one or more of the events giving rise to the Material
Negative Change; and (z) your termination is not after the occurrence of an
event constituting Cause.

 

(d)  Voluntary termination.  If you terminate your employment with the Company
for any reason other than due to a Material Negative Change, you shall be
entitled to salary through and including the effective date of your termination
of employment, and all other benefits provided for hereunder shall immediately
cease.  All of your remaining benefits shall immediately end upon your
termination of employment; provided, however, that with respect to any
outstanding Company stock options previously granted to you, such Company stock
options shall continue to be governed by the terms of the agreements evidencing
the grant of any Company stock options.

 

(e)  Termination for disability or death.  If at any time while you are employed
hereunder by the Company you die or are determined in good faith by the Board of
Directors of the Company to be disabled, the Company may immediately terminate
this agreement and your employment.  Any termination of your employment due to
your death or disability will be with the same consequences as if it were for
Cause; provided, however, that with respect to any outstanding Company stock
options previously granted to you, such Company stock options shall continue to
be governed by the terms of the agreements evidencing the grant of any Company
stock options.  For the purpose of this agreement, you shall be deemed to be
disabled if you are physically or mentally unable to perform your duties for a
period of 180 consecutive days.

 

(f)  Miscellaneous.  After the payment of any applicable amounts described in
Section 10 and under the Cobra Electronics Corporation 2002 Deferred
Compensation Plan for Select Executives (subject to the terms and conditions
thereof), you shall have no further rights to any payments or benefits from the
Company.  Amounts payable to you pursuant to Section 10 are in lieu of, and not
in addition to, benefits provided to eligible participants under the Cobra
Electronics Corporation Severance Pay Plan.  For the avoidance of doubt, no
amounts shall be payable to you under such plan.

 

11.          For a one-year period following your voluntary termination of
employment or your termination by the Company for Cause and during any period
during which you are receiving Continued Salary Payments from the Company
pursuant to Section 10 above, you shall not for

 

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the benefit of yourself or any business or other entity solicit, directly or
indirectly, any of the Company’s employees, or solicit, directly or indirectly,
any of the customers of the Company for products which are currently marketed or
which have been announced by the Company.  In addition, at no time following any
termination of your employment for any reason shall you disclose or in any way
use the confidential and proprietary information obtained during the course of
your employment with the Company, including, but not limited to, the Company’s
financial and product information and information relating to the Company’s
customer and supplier relations.

 

12.          If, at any time of enforcement of any provisions of Section 11 of
this agreement, a court holds that the restrictions stated therein are
unreasonable under the circumstances then existing, you agree that the maximum
period, scope, or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.

 

13.          You acknowledge that the services to be rendered by you hereunder
are unique and personal.  Accordingly, you may not assign any of your rights or
delegate any of your duties or obligations under this agreement.  The Company
may assign its rights, duties or obligations under this agreement to a purchaser
or transferee of all, or substantially all, of the assets of the Company.

 

14.          The waiver by either party of a breach by the other party of any
provision of this agreement shall not be valid unless in a writing signed by the
non-breaching party, and any valid waiver shall not operate or be construed as a
waiver of any subsequent breach.

 

15.          This agreement embodies the entire agreement and understanding of
the parties hereto with respect to the matters described herein and supersedes
any and all prior and/or contemporaneous agreements and understandings, oral or
written, between the parties.

 

16.          This agreement shall be, in all respects, construed in accordance
with and governed by the laws of the State of Illinois.

 

17.          IRC §409A.

 

(a)           Notwithstanding any provision of this agreement to the contrary,
this Agreement is intended to comply with the provision of IRC §409A and shall
be interpreted and construed accordingly.  All payments made under this
agreement are intended to be exempt from IRC §409A to the maximum extent
possible, under either the separation pay exemption pursuant to Treasury
regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury
regulation §1.409A-1(b)(4) , and for this purpose, each payment shall be deemed
a separate payment.  Notwithstanding any other provision of this agreement to
the contrary, if you are a “specified employee,” within the meaning of IRC
§409A, at the time of your termination of employment, no amount that is subject
to IRC §409A and that becomes payable by reason of such termination of
employment shall be paid to you before the earlier of (i) the expiration of the
six-month period measured from the date of your termination of employment, and
(ii) the date of your death.

 

(c)           Solely for purposes of determining the timing of any compensatory
payments that are measured by reference to your termination of employment, such
termination of employment will be deemed to occur on the date of your
“separation from service” within the meaning of IRC

 

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§409A and regulations promulgated thereunder, and for this purpose all
references to “termination, “ “termination of employment” or like terms shall
mean “separation from service.”

 

(d)           The Company shall have the sole discretion and authority to, and
may in its sole discretion, amend this agreement, unilaterally and at any time,
to satisfy any requirements thereof or guidance provided by the U.S. Treasury
Department to the extent applicable to this agreement, provided that no such
amendment shall result in the loss of benefits or reduction of any payment
amount to you under this agreement.

 

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If you are in agreement with the foregoing, please sign this agreement in the
appropriate place below and return it to me as soon as possible.

 

 

Best regards,

 

 

 

 

 

 

 

 

/s/James Bazet

 

 

James Bazet

 

 

Chairman and Chief Executive Officer

 

 

 

 

 

 

 

 

Agreed and Accepted on the 28th day of July, 2010:

 

 

 

 

 

/s/ Sally Washlow

 

 

Sally Washlow

 

 

 

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