**Exhibit 10.1**

 

July 28,2010

 

Ms. SallyWashlow

1214N. Oak Park AvenueOak Park, Illinois  60302

 

DearSally:

 

Thisletter is to confirm the terms of your employment with Cobra ElectronicsCorporation (the “Company”).

 

1.             During the term of your employment by the Company pursuant to thisagreement, you shall be employed as Senior Vice President, Marketing and Salesof the Company and shall have the normal duties, responsibilities and attendantauthorities of that position, including, but not limited to, primary authorityand supervisory responsibility for all marketing and sales functions and allother tasks as may be assigned from time to time by the Chief Executive Officerof the Company.  You shall report to theChief Executive Officer of the Company.

 

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

 

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

 

4.             In addition to your regular annual salary, you shall also be eligible toreceive for each Annual Period commencing with the 2011 Annual Period, a bonusof up to 35% of your regular annual salary. Your bonus for each Annual Period shall be based on such criteria asshall be determined by the Compensation Committee of the Company’s Board ofDirectors for each Annual Period, which may include Company performance,individual performance and/or such other criteria as the Compensation Committeeof 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 IncentivePlan, as amended.  Except as providedelsewhere herein, you shall only be entitled to receive a bonus with respect toan Annual Period if you are employed by the Company through, and on the lastday of, the Annual Period.

 

Anybonus payable to you pursuant to this Section 4 for an Annual Period shallbe paid to you by the Company on or before March 15th of the calendar yearimmediately 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 forperquisites of your choice, payable in monthly payments of $833.33, while youare employed by the Company, in lieu of any other allowances.  Each monthly payment shall be paid to you bythe Company during the month to which the payment pertains.

 

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

 

Forthe purpose of this agreement, a Change of Control shall be deemed to haveoccurred if:  (i) any person,including a group within the meaning of Section 13(d)(3) of theSecurities Exchange Act of 1934, as amended, acquires the beneficial ownershipof, and the right to vote, shares having at least 50 percent of the aggregatevoting power of the class or classes of capital stock of the Company having theordinary and sufficient voting power (not depending upon the happening of acontingency) to elect at least a majority of the directors of the board ofdirectors of the Company, or (ii) as the result of any tender or exchangeoffer, substantial purchase of the Company’s equity securities, merger,consolidation, sale of assets or contested election, or any combination of theforegoing transactions, the persons who were directors of the Companyimmediately prior to such transaction or transactions shall not constitute amajority of the board of directors (or the board of directors of any successorto or assign of the Company) immediately after the next meeting of stockholdersof the Company (or such successor or assign) following such transaction, or (iii) thereis consummated a reorganization, merger or consolidation of the Company or saleor other disposition of all or substantially all of the assets of the Company(a “Corporate Transaction”), excluding any Corporate Transaction pursuant towhich (A) all or substantially all of the individuals or entities who arethe beneficial owners, respectively, of the outstanding voting securities immediatelyprior to such Corporate Transaction will beneficially own, directly orindirectly, more than 50% of the combined voting power of the outstandingsecurities entitled to vote generally in the election of directors of thecorporation resulting from such Corporate Transaction (including, withoutlimitation, a corporation which as a result of such transaction owns theCompany or all or substantially all of the Company’s assets either directly orindirectly) in substantially the same proportions relative to each other astheir ownership, immediately prior to such Corporate Transaction, of theoutstanding voting securities, (B) no person (other than the Company, anyemployee benefit plan (or related trust) sponsored or maintained by the Companyor any corporation controlled by the Company) will beneficially own, directlyor indirectly, 50% or more of the combined voting power of the outstandingsecurities of the corporation resulting from such Corporate Transactionentitled to vote generally in the election of directors, and (C) thepersons who were directors of the Company immediately prior to such CorporateTransaction will constitute at least a majority of the board of directors ofthe corporation resulting from such Corporate Transaction.

 

7.             During your employment hereunder, you shall be entitled to participate insuch employee benefits including, but not limited to, life, short and long termdisability and health insurance and other medical benefits as the Company makesavailable to individuals employed by the Company at the Senior Vice Presidentlevel.

 

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

 

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made, the expense must beincurred while you are employed by the Company, and you must complete andsubmit such standard forms for reimbursement in accordance with any proceduresestablished by the Company.  In no eventwill the Company make any such reimbursement later than the last day of thecalendar year following the calendar year in which you incur the expense.  Your right to reimbursement is not subject toliquidation or exchange for any other benefit, and the amount of expenseseligible for reimbursement in a calendar year will not affect the amount ofexpenses eligible for reimbursement, or in-kind benefits to be provided, in anysubsequent calendar year.

 

9.             You shall be entitled to a benefit from the Company pursuant and subjectto the terms and conditions of (including but not limited to the vestingprovisions of) the COBRA Electronics Corporation 2002 Deferred CompensationPlan for Select Executives, as amended from time to time, or any similar planwhich the Company adopts for this purpose; provided, however, that for purposesof any such plan, your years of service shall be the number of your completedyears of employment during the period commencing on May 14, 2007 andending 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 withthe Company is involuntarily terminated by the Company for reasons other thanfor “Cause” (as defined below), the Company shall continue to make biweeklypayments to you after your termination of employment on the same dates on whichyour regular biweekly salary would have continued to be paid to you if youremployment had not terminated in an amount equal to your regular biweeklysalary (described in Section 3) (“Continued Salary Payments”) until theCompany has made 26 such payments to you. Such payments shall commence on the first regular payday immediatelyafter the day of your termination of employment.

 

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

 

Inthe event that paragraph (a)(1) of this Section 10 applies, allvested stock options granted to you by the Company which are not incentivestock options shall, subject to the terms hereof and the agreements evidencingsuch grants, (i) continue to become exercisable pursuant to the termsthereof and (ii) remain exercisable until the last day in the finalbiweekly period for which the Company is making Continued Salary Payments as ifyou had remained employed by the 

 

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Companyuntil such date, provided, however, that no option may be exercised beyond theearlier of the latest date upon which the option could have been exercisedunder its original terms or the tenth anniversary of the original date of grantof the option.

 

Exceptas otherwise provided herein, all of your remaining benefits shall immediatelyend upon your termination of employment.

 

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

 

Forpurposes of this agreement, “Cause” shall mean embezzlement, misappropriation,theft or other criminal conduct, of which you are convicted, related to theproperty or assets of the Company or your willful refusal to perform orsubstantial disregard of your duties assigned to you by the Chief ExecutiveOfficer of the Company, unless you have reasonable and just cause for suchrefusal to perform or disregard of your duties or unless you commence immediatecorrective actions within 15 days after the Chief Executive Officer gives youwritten notice of his objection to your refusal to perform or disregard of yourduties.

 

(c)  Termination forGood Reason.  (1)  Separationpay.  In the event you terminate youremployment with the Company due to a “Material Negative Change” (as definedbelow), the Company shall continue to make Continued Salary Payments until theCompany has made 26 such payments to you. Such payments shall commence on the first regular payday immediatelyafter the day of your termination of employment.

 

(2)           Other benefits.  In the event that paragraph (c)(1) ofthis Section 10 applies, the Company shall also (i) pay the cost ofany properly elected COBRA coverage, (ii) pay to you a pro-rata portion ofany bonus described in Section 4 of this agreement for the Annual Periodduring which your termination of employment occurs that is based on Companyperformance (determined based on the number of days during such Annual Periodduring which you are employed by the Company plus the number of days in thebiweekly periods during such Annual Period for which the Company is makingContinued 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 executiveoutplacement program (including a maximum fee of 15% of your total compensationand monthly reports from the outplacement firm of your active job search);provided, that only reasonable outplacement services incurred by you anddirectly related to the termination of your employment with the Company shallbe reimbursed and, provided further, that such expenses must be incurred nolater than the end of the first calendar year following the calendar year ofyour termination of employment.

 

Inthe event that paragraph (c)(1) of this Section 10 applies, allvested stock options granted to you by the Company which are not incentivestock options shall, subject to the terms hereof and the agreements evidencingsuch grants, (i) continue to become exercisable pursuant to the termsthereof and (ii) remain exercisable until the last day in the finalbiweekly period for which the Company is making Continued Salary Payments as ifyou had remained employed by the Company until such date, provided, however,that no option may be exercised beyond the earlier of the latest date uponwhich the option could have been exercised under its original terms or thetenth anniversary of the original date of grant of the option.

 

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Exceptas otherwise provided herein, all of your remaining benefits shall immediatelyend upon your termination of employment.

 

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

 

(A)          There is amaterial diminution in your authority, duties or responsibilities as an officerof the Company.

 

(B)          There is amaterial change in the geographic location at which you must perform yourservices to the Company.

 

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

 

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

 

(d) Voluntary termination.  If youterminate your employment with the Company for any reason other than due to aMaterial Negative Change, you shall be entitled to salary through and includingthe effective date of your termination of employment, and all other benefitsprovided for hereunder shall immediately cease. All of your remaining benefits shall immediately end upon yourtermination of employment; provided, however, that with respect to anyoutstanding Company stock options previously granted to you, such Company stockoptions shall continue to be governed by the terms of the agreements evidencingthe 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 dieor are determined in good faith by the Board of Directors of the Company to bedisabled, the Company may immediately terminate this agreement and youremployment.  Any termination of youremployment due to your death or disability will be with the same consequencesas if it were for Cause; provided, however, that with respect to anyoutstanding Company stock options previously granted to you, such Company stockoptions shall continue to be governed by the terms of the agreements evidencingthe grant of any Company stock options. For the purpose of this agreement, you shall be deemed to be disabled ifyou are physically or mentally unable to perform your duties for a period of180 consecutive days.

 

(f) Miscellaneous.  After the paymentof any applicable amounts described in Section 10 and under the CobraElectronics Corporation 2002 Deferred Compensation Plan for Select Executives(subject to the terms and conditions thereof), you shall have no further rightsto any payments or benefits from the Company. Amounts payable to you pursuant to Section 10 are in lieu of, andnot in addition to, benefits provided to eligible participants under the CobraElectronics Corporation Severance Pay Plan. For the avoidance of doubt, no amounts shall be payable to you undersuch plan.

 

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

 

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the benefit of yourself or anybusiness or other entity solicit, directly or indirectly, any of the Company’semployees, or solicit, directly or indirectly, any of the customers of theCompany for products which are currently marketed or which have been announcedby the Company.  In addition, at no timefollowing any termination of your employment for any reason shall you discloseor in any way use the confidential and proprietary information obtained duringthe course of your employment with the Company, including, but not limited to,the Company’s financial and product information and information relating to theCompany’s customer and supplier relations.

 

12.          If, at any time of enforcement of any provisions of Section 11 ofthis agreement, a court holds that the restrictions stated therein areunreasonable under the circumstances then existing, you agree that the maximumperiod, scope, or geographical area reasonable under such circumstances will besubstituted for the stated period, scope or area.

 

13.          You acknowledge that the services to be rendered by you hereunder areunique and personal.  Accordingly, youmay not assign any of your rights or delegate any of your duties or obligationsunder this agreement.  The Company mayassign its rights, duties or obligations under this agreement to a purchaser ortransferee 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 anyprovision of this agreement shall not be valid unless in a writing signed bythe non-breaching party, and any valid waiver shall not operate or be construedas a waiver of any subsequent breach.

 

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

 

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

 

17.          IRC §409A.

 

(a)           Notwithstandingany provision of this agreement to the contrary, this Agreement is intended tocomply with the provision of IRC §409A and shall be interpreted and construedaccordingly.  All payments made underthis agreement are intended to be exempt from IRC §409A to the maximum extentpossible, under either the separation pay exemption pursuant to Treasury regulation§1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasuryregulation §1.409A-1(b)(4) , and for this purpose, each payment shall bedeemed 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 timeof your termination of employment, no amount that is subject to IRC §409A andthat becomes payable by reason of such termination of employment shall be paidto you before the earlier of (i) the expiration of the six-month periodmeasured from the date of your termination of employment, and (ii) thedate of your death.

 

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

 

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

 

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

 

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Ifyou are in agreement with the foregoing, please sign this agreement in theappropriate 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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