SEVERANCE AND RESTRICTIVE
COVENANT AGREEMENT
THIS SEVERANCE AND
RESTRICTIVE COVENANT AGREEMENT (this “ Agreement
”) is dated as of May 7, 2009 (the “ Effective
Date ”), between COLEMAN CABLE, INC., a Delaware
corporation (the “ Company ”) and Kenneth A.
McAllister (“ Executive ”).
Section 1. TERM OF AGREEMENT
The term of this
Agreement shall commence on and as of the Effective Date and
continue until Executive’s employment has terminated and the
obligations of the parties hereunder have terminated or expired or
have been satisfied in accordance with their terms.
For purposes of
this Agreement, the following terms have the meanings set forth in
this Section:
2.1. “
Board ” means the Board of Directors of the
Company.
(a) Executive’s
gross neglect or willful failure to perform his duties and
responsibilities with the Company in all material respects or to
substantially comply with a specific and lawful directive of the
Company’s Chief Executive Officer or any other officer of the
Company to whom Executive directly reports or the Board, in each
case after a written demand for substantial performance or
substantial compliance is delivered to Executive by or on behalf of
the Company’s Chief Executive Officer or the Board, which
demand specifically identifies the manner in which the
Company’s Board of Directors believes that Executive has not
so performed his duties and which demand is not met within thirty
(30) days of its delivery to Executive;
(b) any
act of fraud or embezzlement by Executive in connection with the
Company or its affiliates;
(c) a
willful and material breach of this Agreement by Executive which
Executive fails to cure within thirty (30) days of
Executive’s receipt of written notice of such breach;
or
(d) Executive’s
conviction or entering into a plea of nolo contendere to
(A) a crime involving moral turpitude or (B) any other
crime materially impairing or materially hindering
Executive’s ability to perform his duties for the
Company.
2.3. “
Change in Control ” means any of the following
events:
(a) any
person or other entity (other than any of the Company’s
subsidiaries or any employee benefit plan sponsored by the Company
or any of its subsidiaries) including any person as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), becomes the beneficial
owner, as defined in Rule 13d-3 under
the Exchange
Act, directly or indirectly, of more than fifty percent (50%) of
the total combined voting power of all classes of capital stock of
the Company normally entitled to vote for the election of directors
of the Company (the “Voting Stock”);
(b) the
stockholders of the Company approve the sale of all or
substantially all of the property or assets of the Company and such
sale occurs;
(c) the
stockholders of the Company approve a consolidation or merger of
the Company with another corporation (other than with any of the
Company’s subsidiaries), the consummation of which would
result in the shareholders of the Company immediately before the
occurrence of the consolidation or merger owning, in the aggregate,
less than 60% of the Voting Stock of the surviving entity, and such
consolidation or merger occurs;
(d) a
change in the Company’s Board of Directors occurs with the
result that the members of the Board immediately prior to such
change no longer constitute a majority of such Board of Directors;
or
(e) any
other change of ownership or effective control (as defined in
Section 280G(b)(2) of the Internal Revenue Code (the
“Code”)).
2.4. “
Code ” means the Internal Revenue Code of 1986, as
amended.
2.5. “
Date of Termination ” means: (i) if
Executive’s employment terminates by virtue of
Executive’s death, the date of death and (ii) in all
other cases, the date as of which a termination of
Executive’s employment becomes effective in accordance with
the provisions of Section 3.1(d).
2.6. “
Disability ” means any physical or mental illness or
infirmity of Executive (expressly excluding habitual use of alcohol
or drugs) that causes Executive to be substantially unable to
perform Executive’s duties with the Company (i) for any
period of one hundred twenty (120) consecutive days,
(ii) for two hundred seventy (270) days, whether or not
consecutive, in any period of three hundred sixty five
(365) days, despite provision by the Company of reasonable
accommodations as required by law, or (iii) at such earlier
time as Executive submits or the Company receives satisfactory
medical evidence that Executive has a physical or mental disability
or infirmity which will likely prevent him from returning to the
performance of Executive’s work duties for four
(4) months or longer. In the event of any dispute regarding
the determination of the Employee’s disability, such
determination shall be made by a physician selected by the Company,
at the Company’s sole expense, in consultation with the
Employee’s primary treating physician; provided, however,
that the Employee’s Disability shall be conclusively presumed
if such determination is made by an insurer providing disability
insurance coverage to the Employee or the Company in respect of the
Employee.
2.7. “
Good Reason ” means the occurrence, without
Executive’s express prior written consent, of any of the
following:
(a) a
material diminution in Executive’s authority, duties, or
responsibilities, other than a reduction attributable to
Executive’s continued failure to
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substantially
perform Executive’s duties with the Company or to accommodate
Executive’s physical or mental illness or
infirmity;
(b) a
material diminution in Executive’s base salary, except with
respect to across-the-board salary reductions generally implemented
for certain levels of management employees of the Company;
or
(c) a
change in location of Executive’s office within the two-year
period on and after a Change in Control, that is fifty
(50) miles or more from the office where Executive was located
as of the Effective Date;
but only if
(i) Executive delivers a written notice to the Company within
thirty (30) days of the initial existence of such occurrence,
which notice specifically identifies the occurrence and demands
that it be remedied and (ii) if such occurrence is capable of
being remedied, the Company fails to remedy the same within thirty
(30) days after receiving such written notice or, if the same
is not capable of being remedied within such period of time, the
Company fails to commence diligently to seek to remedy the same
within such period and thereafter to continue to seek to remedy
such failure until remedied.
For the
avoidance of doubt, any prospective action that would, if actually
taken or implemented, constitute Good Reason through the
application of (a) through (c) above (after the
expiration without cure of the applicable notice and cure period
provided for above) shall not in any event be deemed to have
occurred unless and until such action is actually taken or
implemented.
2.8. “
Separation from Service ” means a termination of
Executive’s employment that constitutes a separation from
service under Section 409A of the Code.
Section 3. TERMINATION AND COMPENSATION UPON
TERMINATION
(a)
Termination by Company . The Company (acting through the
Chief Executive Officer or the Board) may at any time elect to
terminate Executive’s employment by delivery of a notice of
termination to Executive for any reason (including on account of
Disability) or no reason, with or without Cause.
(b)
Termination by Executive . Executive may elect to terminate
Executive’s employment by delivery of a notice of termination
(i) with Good Reason, in accordance with the provisions of
Section 2.7, or (ii) for any other reason (including on
account of Disability) or no reason, at any time.
(c)
Notice of Termination . Any termination of Executive’s
employment, whether by the Company or by Executive, shall be
communicated by written notice of termination to the other party in
accordance with the terms of Section 5.5. The notice of
termination shall state the specific termination provision in this
Agreement relied upon and set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and
shall state an effective date of termination that complies with the
requirements of subsection (d).
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(d)
Effective Date of Termination . Unless otherwise agreed upon
in writing by the Company and Executive:
(i) the
effective date of termination of Executive’s employment in
the case of a termination of Executive’s employment by the
Company for any or no reason shall not be more than ninety (90)
days after the date the notice of termination is given by the
Company;
(ii) the
effective date of termination in the case of a termination of
Executive’s employment by Executive for any reason shall not
be less than thirty (30) nor more than thirty-five
(35) days after the date the notice of termination is given by
Executive.
(e) All
payments made to or in respect of Executive pursuant to this
Section 3 shall be made in a cash lump sum within thirty
(30) days following the Date of Termination, except where this
Agreement (or the plan pursuant to which such payment is to be
made) provides otherwise. No amounts that are “deferred
compensation” within the meaning of Section 409A of the
Code and that are payable under this Agreement as a result of
Executive’s termination of employment shall be payable to
Executive unless Executive’s termination of employment also
constitutes a Separation from Service.
3.2. Death,
Disability, Termination for Cause, or Resignation without Good
Reason . Executive’s employment shall be terminated
automatically on the date of Executive’s death or Disability.
Upon such a termination of employment, or upon a termination of
employment by the Company for Cause, or upon a termination of
employment by Executive without Good Reason, the Company shall pay
to Executive (or, in the event of Executive’s death, to
Executive’s beneficiary or estate), when the same would
otherwise have been due, the base salary and any bonus then payable
through the Date of Termination and shall have no further
obligations under this Agreement.
3.3.
Termination Without Cause or With Good Reason . If
Executive’s employment is terminated by the Company without
Cause or by Executive for Good Reason, the Company shall pay to
Executive:
(a) when
the same would otherwise have become due and payable, the base
salary and any bonus then payable through the Date of Termination
(without regard to any reduction therein constituting Good Reason
within the meaning of Section 2.7(b)), plus
(b) an
amount of severance pay equal to one and one-half (1.50) times the
amount of Executive’s annual base salary as in effect on the
Date of Termination (without regard to any reduction therein
constituting Good Reason within the meaning of
Section 2.7(b)), which amount shall be paid in twenty-four
(24) consecutive equal semi-monthly installments, commencing
not later than the first day of second calendar month following the
Date of Termination and continuing thereafter until paid in full.
In the event that any payments due under this subsection (b)
constitute “deferred compensation” within the meaning
of Section 409A of the Code, Executive’s right to
receive a series of installment payments shall be treated as a
right to a series of separate payments.
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In addition, if
Executive’s employment is terminated by the Company without
Cause or by Executive for Good Reason all of Executive’s
options and restricted stock that vest based on the passage of time
shall vest immediately (to the extent not previously vested)
without regard to whether or not any of the conditions specified
therein have been achieved.
3.4. Cost of
COBRA Continuation Coverage . If and to the extent that
Executive, following a termination of Executive’s employment
described in Section 3.3, properly and timely elects (on
behalf of Executive and Executive’s qualified beneficiaries)
continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“ COBRA
”) with respect to the Company’s group health plan,
Executive shall pay the then-current portion of the cost of such
coverage that would be payable by the Company’s similarly
situated active employees and the Company shall pay the balance of
such then-current costs as long as and for the period during which
the Company remains obligated for continuing payments under
Section 3.3(b) (without regard to any acceleration by the
Company of such payments). The Company shall be authorized to
deduct from the installments to be paid under Section 3.3
Executive’s then-current share of the cost of such coverage.
The Company’s subsidy of such group health plan coverage
shall terminate upon the earlier of (1) the date of
termination of COBRA continuation coverage and (2) the payment
in full by the Company of its obligations under Section 3.3(b)
(without regard to any acceleration by the Company of such
payments), whereupon Executive shall be fully responsible for the
cost of continuing coverage and benefits, if any.
3.5. General
Release Agreement . The obligations of the Company to make
the payments and provide the benefits described in
Sections 3.3 and 3.4 are expressly conditioned upon
Executive’s signing and delivering to the Company, not later
than thirty (30) days after the Date of Termination (or such
longer period, to the extent required by law), and thereafter not
revoking, a valid general release agreement in substantially the
form attached hereto as Attachment A . Any breach of
Executive’s nondisclosure, nonsolicitation, or noncompetition
obligations to the Company that has or is reasonably likely to have
a material and adverse effect on the Company shall, in addition to
all other remedies available to Company, result in the immediate
release of the Company from any obligation it would otherwise have
to make further payments or provide further benefits under this
Agreement. Executive expressly acknowledges that the Company is
prepared to vigorously enforce these promises and that violation of
Executive’s obligations could result in an award of damages
or other legal remedies against Executive and Executive’s
subsequent employers.
(a) Notwithstanding
the foregoing:
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