{"id":38946,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employment-agreement-audiovox-corp.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-audiovox-corp","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-audiovox-corp.html","title":{"rendered":"Employment Agreement – Audiovox Corp."},"content":{"rendered":"

EMPLOYMENT AGREEMENT<\/strong><\/p>\n

\n

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of
\nFebruary 3, 2011, by and between KLIPSCH GROUP, INC., an Indiana corporation,
\nand T. PAUL JACOBS, an individual (the “Executive”).<\/p>\n<\/p>\n

Recitals<\/u><\/strong><\/p>\n

\n

WHEREAS, Audiovox Corporation (“Audiovox”) intends to purchase all of the
\nissued and outstanding shares of Klipsch Group, Inc. (referred to herein as
\n“KGI” or “Employer”) pursuant to a Share Purchase Agreement and;<\/p>\n<\/p>\n

WHEREAS, Executive has an existing employment agreement with the Employer
\ndated February 11, 2005, and wishes to continue uninterrupted service and to
\ncontinue employment by the Employer following the closing of the share purchase
\nby Soundtech LLC, the subsidiary of Audiovox on the terms and conditions set out
\nherein and;<\/p>\n<\/p>\n

WHEREAS, in addition to the consideration set forth in this agreement,
\nAudiovox, through its subsidiary, will also be purchasing Executives shares in
\nKGI for a considerable sum and;<\/p>\n<\/p>\n

WHEREAS, Audiovox would not purchase all the shares of KGI and in particular
\nthe shares owned by Executive unless Executive enters this agreement and thereby
\nagrees to abide with its terms.<\/p>\n<\/p>\n

Statement of Agreement<\/u><\/strong><\/p>\n

\n

This Agreement is conditioned on the successful completion of the share
\npurchase by Audiovox through its subsidiary of all of the issued and outstanding
\nshares by KGI. In the event the share acquisition is not accomplished, this
\nAgreement shall for all purposes be null and void. This Agreement shall not
\ncommence until the signing of this Agreement and the successful completion of
\nthe share purchase by Audiovox through its subsidiary.<\/p>\n<\/p>\n

Subject to the foregoing paragraph, the parties, intending to be legally
\nbound, agree as follows:<\/p>\n<\/p>\n

\u00a7 1.<\/strong> Definitions.<\/em><\/strong><\/p>\n<\/p>\n

For the purposes of this Agreement, the following terms have the meanings
\nspecified or referred to in this \u00a7 1.<\/p>\n<\/p>\n

“Affiliate” <\/em>means a corporation or other entity controlling,
\ncontrolled by or under common control with the Employer.<\/p>\n<\/p>\n

“Agreement” <\/em>has the meaning set forth in the preamble.<\/p>\n<\/p>\n

“Audiovox”<\/em> the sole owner of Soundtech LLC, which is the sole
\nshareholder of the Employer.<\/p>\n<\/p>\n

“Base Compensation” <\/em>has the meaning set forth in \u00a7 3(a).<\/p>\n<\/p>\n

“Benefits” <\/em>has the meaning set forth in \u00a7 3(c).<\/p>\n<\/p>\n

“Board of Directors” <\/em>means the Board of Directors of the Employer.\n<\/p>\n<\/p>\n

“Business” <\/em>means the (i) the speaker and sound business, and (ii)
\nany other consumer electronics business as engaged in from time to time by the
\nEmployer and its Affiliates.<\/p>\n<\/p>\n

“Cause” <\/em>means: (i) the Executive’s continued willful failure to
\nperform in a material respect (other than any such failure resulting from
\nincapacity due to Disability) the explicitly stated duties to be performed by
\nthe Executive under this Agreement for a period of 10 days following delivery of
\nwritten notice to the Executive from the Chief Executive Officer of Audiovox
\nspecifying in reasonable detail key elements of such failure; (ii) the
\nappropriation (or attempted appropriation) of a material business opportunity of
\nthe Employer or Audiovox or their Affiliates, including attempting to secure or
\nsecuring any personal profit in connection with any transaction entered into on
\nbehalf of the Employer or Audiovox or any Affiliate; (iii) the willful
\ndisclosure by the Executive of Confidential Information of the Employer or
\nAudiovox or any of their Affiliates, other than in the ordinary course of
\nbusiness in connection with the performance of the Executive’s duties in
\naccordance with this Agreement; (iv) the misappropriation (or attempted
\nmisappropriation) of any of the Employer’s or Audiovox’s or any of their
\nAffiliates funds or property; or (v) the conviction of, or the entering of a
\nguilty plea or plea of no contest with respect to, any offense that is a felony.\n<\/p>\n<\/p>\n

“Confidential Information” <\/em>means any and all information concerning
\nthe business and affairs of the Employer<\/p>\n<\/p>\n<\/p>\n

1<\/p>\n

\n

\n<\/p>\n

and Audiovox and their Affiliates including, but not limited to, customer
\nlists, supplier lists, Inventions, Works, Proprietary Items, trade secrets,
\nfinancial statements, business and financial projections and budgets, historical
\nand projected sales, capital spending budgets and plans, business and marketing
\nplans, strategic plans, product plans, the names and backgrounds of key
\npersonnel, personnel training and techniques and materials, however documented
\nand all notes, analysis, compilations, studies, summaries and other material
\nprepared by or for the Employer and Audiovox or their Affiliates containing or
\nbased, in whole or in part, on any information included in the foregoing.<\/p>\n<\/p>\n

“Disability” <\/em>means a condition where for physical or mental reasons
\nthe Executive is unable to perform the Executive’s duties (as determined in
\naccordance with the procedures set forth in the next sentence) and such
\ncondition in the reasonable judgment of the Employer, as substantiated by a
\nmedical doctor in the manner provided below, is expected to continue for such
\nperiod of time as to require replacement of the Executive in order to carry out
\nthe business of the Employer. The determination that the physical or mental
\nstate of the Executive constitutes a Disability shall be made by a medical
\ndoctor who is not an employee of the Employer and who is reasonably selected by
\nthe Employer and reasonably acceptable to the Executive (unless the Employer and
\nthe Executive reach mutual agreement regarding the existence of a Disability)
\nand such determination shall be binding on both parties. The Executive must
\nsubmit to a reasonable number of examinations by the designated medical doctor
\nand the Executive hereby authorizes the disclosure and release to the Employer
\nof such determination and all supporting medical records. Any and all out of
\npocket expenses incurred by the Executive in connection with the determination
\nby the designated medical doctor of a Disability shall be paid for or reimbursed
\nby the Employer. Action on behalf of the Executive may be taken by the
\nExecutive’s guardian or duly authorized attorney-in-fact for purposes of
\nsubmitting the Executive to medical examinations and approving authorization of
\ndisclosure. The Executive shall be deemed to have a Disability if the Executive
\nfor any reason is unable to perform the Executive’s duties for 120 consecutive
\ndays or for 180 days during any 12-month period.<\/p>\n<\/p>\n

“Effective Date” <\/em>means the date first written above in this
\nAgreement.<\/p>\n<\/p>\n

“Employer” <\/em>means Klipsch Group Inc.<\/p>\n<\/p>\n

“Employment Period” <\/em>means the term of the Executive’s employment
\nunder this Agreement.<\/p>\n<\/p>\n

“Executive” <\/em>has the meaning set forth in the preamble.<\/p>\n<\/p>\n

“Good Reason” <\/em>means (a) a material reduction in the Executive’s Base
\nCompensation opportunity below the amount specified in Section 3 of this
\nAgreement (other than a reduction applicable to all other similarly situated
\nparticipants), (b) a requirement to move more than 35 miles from Indianapolis,
\n(c) a material reduction in the Executive’s level of responsibility, or (d) an
\nassignment of duties inconsistent with the Executive’s position as a key
\nexecutive.<\/p>\n<\/p>\n

“Inventions” <\/em>has the meaning set forth in \u00a7 6(d).<\/p>\n<\/p>\n

“Market Jurisdictions” <\/em>means the jurisdictions set forth in
\nExhibit A,<\/u> the United States of America and any other country where the
\nEmployer sells speakers and sound products or otherwise engages in the Business.\n<\/p>\n<\/p>\n

“Non-Compete Period” <\/em>has the meaning set forth in \u00a7 7(b)(i).<\/p>\n<\/p>\n

“Notice of Termination” <\/em>has the meaning set forth in \u00a7 5(b).<\/p>\n<\/p>\n

“Person” <\/em>means any individual, corporation (including any non-profit
\ncorporation), general or limited partnership, limited liability company, joint
\nventure, estate, trust, association, organization or governmental body.<\/p>\n<\/p>\n

“Proprietary Items” <\/em>has the meaning set forth in \u00a7 6(b)(iv).<\/p>\n<\/p>\n

“Stock Purchase Non-Competition Period”<\/em> means the 30 month period
\nfollowing the Closing of the Stock Purchase Agreement among the Employer, the
\nExecutive and others, dated as of February 3, 2011.<\/p>\n<\/p>\n

“Termination Date” <\/em>has the meaning set forth in \u00a7 2(b).<\/p>\n<\/p>\n

“Works” <\/em>has the meaning set forth in \u00a7 6(e).<\/p>\n<\/p>\n

\u00a7 2.<\/em><\/strong> Employment Terms and
\nDuties.<\/em><\/strong><\/p>\n<\/p>\n

(a)<\/strong>Employment.<\/u><\/em><\/strong> The Employer
\nhereby employs the Executive, and the Executive hereby accepts employment by the
\nEmployer, upon the terms and conditions set forth in this Agreement.<\/p>\n<\/p>\n

(b)<\/strong>Term<\/u><\/em><\/strong>.
\n<\/em><\/strong>The Executive’s employment under this Agreement shall begin on the
\nEffective Date and shall<\/p>\n<\/p>\n<\/p>\n

2<\/p>\n

\n

\n<\/p>\n

continue thereafter until terminated pursuant to \u00a7 5 below (the “Termination
\nDate”).<\/p>\n<\/p>\n

(c)<\/strong>Rights and Powers;
\nDuties<\/u><\/em><\/strong>.<\/em><\/strong> The Executive shall
\ninitially serve as the President and Chief Operating Officer of the Employer.
\nThe Executive shall provide executive, administrative, and managerial services
\nto the Employer and shall have such duties and powers as are prescribed by the
\nChief Executive Officer of Audiovox. The Executive shall devote full time and
\nattention, skill and energy exclusively to the business of the Employer, shall
\nuse best efforts to promote the success of the Employer’s and its Affiliate’s
\nbusiness and shall cooperate fully with the Board of Directors in the
\nadvancement of the best interests of the Employer and its Affiliates. Nothing in
\nthis \u00a7 2(c), however, shall prevent the Executive from engaging in additional
\nactivities in connection with personal investments and community affairs, from
\nserving on boards of directors of businesses, as long as such activities are not
\nin competition with the Employer or its Affiliates and\/or do not create a
\nconflict of interest and as long as such additional activities or services are
\nnot inconsistent with or intrusive on the Executive’s duties under this
\nAgreement.<\/p>\n<\/p>\n

(d)<\/strong>Key Man
\nInsurance<\/u><\/em><\/strong>.<\/em><\/strong> If requested by the
\nEmployer, the Executive shall cooperate with the Employer in establishing and
\nmaintaining “key man” insurance with respect to the Executive’s services,
\nincluding submitting to any medical examinations reasonably necessary or
\nadvisable to establish. or maintain such insurance. The “key man” insurance to
\nbe established and maintained under this \u00a7 2(d) shall be paid for by the
\nEmployer.<\/p>\n<\/p>\n

\u00a7 3.<\/em><\/strong> Compensation.<\/em><\/strong><\/p>\n<\/p>\n

(a)<\/strong>Base
\nCompensation<\/u><\/em><\/strong>.<\/em><\/strong> The Executive shall,
\nduring the Employment Period, be paid by the Employer and\/or its Affiliates base
\nsalary at an annual rate of $425,000.00 (the “Base Compensation”), subject to
\nreview and potential upward adjustment annually thereafter, which will be
\npayable according to the Employer’s customary payroll practices.<\/p>\n<\/p>\n

\n(b)<\/strong>Bonuses<\/u><\/em><\/strong>.<\/em><\/strong>
\nExecutive will receive a bonus equal to a maximum of 50% of his base salary
\nbased on achievement of EBITDA goals and other goals established at the
\nbeginning of each year that will promote the growth of the Employer. Goals will
\nbe established by the Chief Executive Officer of Audiovox and discussed with
\nManagement at the beginning of each new fiscal year. The Executive’s bonus
\ncriteria for fiscal year 2011 are set forth on Exhibit B.<\/p>\n<\/p>\n

\n(c)<\/strong>Benefits<\/u><\/em><\/strong>.<\/em><\/strong>
\nThe Executive shall, during the Employment Period, be permitted to participate
\nin such Code Section 401(k), pension; profit sharing, bonus, life insurance,
\ndisability insurance, hospitalization, dental, major medical and other employee
\nbenefit plans of the Employer that may be in effect from time to time, to the
\nextent the Executive is eligible under the terms of those plans, but not less
\nfavorable to the Executive than currently in effect (collectively, the
\n“Benefits”).<\/p>\n<\/p>\n

\n(d)<\/strong>Vacation<\/u><\/em><\/strong>.<\/em><\/strong>
\nThe Executive shall, during the Employment Period, be entitled to the number of
\nweeks of paid vacation per full calendar year as set forth in the Employer’s
\nthen current vacation policy. Vacation time may not be carried over.<\/p>\n<\/p>\n

(e)<\/strong>Life
\nInsurance<\/u><\/em><\/strong>.<\/em><\/strong> The Executive shall,
\nduring the Employment Period, be provided a term life policy in the amount of
\n$250,000 paid for by the Employer with the beneficiary selected by the
\nExecutive.<\/p>\n<\/p>\n

(f)<\/strong>Executive Put
\nOption<\/u><\/em><\/strong>.<\/em><\/strong> Exhibit “C” annexed.<\/p>\n<\/p>\n

\u00a7 4.<\/em><\/strong> Expenses. <\/em><\/strong>The
\nEmployer shall reimburse the Executive for all reasonable and necessary
\nout-of-pocket expenses incurred by the Executive in connection with the
\nperformance of services under this Agreement, subject to any recordkeeping,
\nreporting or similar requirements imposed pursuant to policies and procedures of
\nthe Employer in effect from time to time.<\/p>\n<\/p>\n

\u00a7 5. Termination.<\/em><\/strong><\/p>\n<\/p>\n

(a)<\/em><\/strong> Events of
\nTermination<\/u><\/em><\/strong>.<\/em><\/strong> The Employment Period
\nand the Executive’s rights under this Agreement or otherwise as an employee of
\nthe Employer shall terminate (except as otherwise provided in this \u00a7 5):<\/p>\n<\/p>\n

(i)automatically upon the death of the Executive;<\/p>\n<\/p>\n

(ii)upon the Disability of the Executive immediately upon written notice from
\neither party to the other party;<\/p>\n<\/p>\n

(iii)if for Cause, immediately upon delivery of a Notice of Termination from
\nthe Chief Executive Officer of Audiovox to the Executive, or at such later time
\nas such notice may specify;<\/p>\n<\/p>\n

(iv)if without Cause, upon 30 days prior written notice from the Chief
\nExecutive Officer of<\/p>\n<\/p>\n<\/p>\n

3<\/p>\n

\n

\n<\/p>\n

Audiovox to the Executive, or at such later time as such notice may specify;\n<\/p>\n<\/p>\n

(v)if by the Executive other than for Good Reason, upon the Executive’s
\nresignation 30 days following written notice from the Executive to the Board of
\nDirectors; or<\/p>\n<\/p>\n

(vi)if by the Executive for Good Reason, upon and in accordance with the
\nfollowing conditions. In order to terminate for Good Reason, the Executive must
\ngive the Board of Directors a Notice of Termination at least 60 calendar days in
\nadvance of the Executive’s intent to terminate employment for Good Reason
\nsetting forth the specific actions by the Employer which triggered the notice
\nand the Notice of Termination must be received by the Chief Executive Officer of
\nAudiovox no more than ninety (90) calendar days after the
\ncomplained-of-action(s) occurred which constitute the basis for Good Reason.
\nUpon receipt of the Notice of Termination and for a period of fifteen (15)
\ncalendar days thereafter, the Board of Directors shall consider the
\ncomplained-of-action(s) set forth therein and if such complained-of-action(s)
\nconstitute Good Reason shall cure or remedy the actions set forth therein. If
\nthe Employer adequately remedies or cures the actions giving rise to the Notice
\nof Termination within such 15-day period, then the resignation by the Executive
\nshall not be for Good Reason.<\/p>\n<\/p>\n

(b)<\/strong>Notice of
\nTermination<\/u><\/em><\/strong>.<\/em><\/strong> Any termination by the
\nEmployer for Cause or by the Executive for Good Reason shall be communicated by
\na Notice of Termination to the Executive or the Board of Directors, as
\napplicable. For purposes of this Agreement, a “Notice of Termination” means a
\nwritten notice which (1) indicates the specific termination provision in this
\nAgreement relied upon, (ii) to the extent applicable, sets forth in reasonable
\ndetail the facts and circumstances claimed to provide a basis for termination of
\nthe Executive’s employment under the provision so indicated, and (iii) the date
\nof termination. The failure by the Executive or the Employer to set forth in the
\nNotice of Termination any fact or circumstance which contributes to a showing of
\nCause or Good Reason shall not waive any right of the Executive or the Employer,
\nrespectively, hereunder or preclude the Executive or the Employer, respectively,
\nfrom asserting any fact or circumstance in enforcing the Executive’s or the
\nEmployer’s rights hereunder.<\/p>\n<\/p>\n

(c)<\/strong>Termination
\nPay<\/u><\/em><\/strong>.<\/em><\/strong> Subject to the terms of \u00a7 \u00a7 7
\nand 8 below, effective upon termination of employment of the Executive for any
\nreason, except as required under applicable law, the Employer shall be obligated
\nto pay to the Executive (or, in the event of the Executive’s death, the
\nExecutive’s designated beneficiary) only such compensation as is specified in
\nthis \u00a7 5(c). The Executive’s designated beneficiary will be such individual or
\ntrust, located at such address, as the Executive may designate by notice in
\nwriting to the Employer from time to time or, if the Executive fails to give
\nnotice to the Employer of such a beneficiary, the Executive’s estate.
\nNotwithstanding the preceding sentence, the Employer shall have no duty under
\nany circumstances to determine whether any Person holding herself, himself or
\nitself out as the beneficiary is in fact entitled to any termination payment but
\nmay rely upon the representations of such Person.<\/p>\n<\/p>\n

(i)Termination by the Employer Without Cause or by the Executive
\nfor Good Reason<\/u><\/strong>.<\/strong> Subject to Subparagraph 5(c)(ii),
\nif the Executive’s employment is terminated by the Employer without Cause or by
\nthe Executive for Good Reason, the Employer shall pay to the Executive in
\naccordance with the Employer’s then current payroll practices: (A) Base
\nCompensation, at the annual rate in effect immediately prior to termination,
\nplus an amount equal to the average annual bonus paid to the Executive in the
\npreceding two (2) fiscal years, payable in equal monthly installments over a
\nperiod of 12 months; plus (B) any earned and unpaid Base Compensation and bonus
\nfor the period ending on termination. In addition, the Employer shall (A) pay
\nfor and continue disability insurance and health insurance benefits provided to
\nthe Executive and the Executive’s dependents immediately prior to the
\ntermination of the Executive’s employment for a period of 12 months, and (B) in
\naccordance with past practice, reimburse the Executive for expenses incurred in
\naccordance with \u00a7 4. The Executive’s entitlement to the compensation and
\nbenefits described in this subsection (i) is specifically subject to the
\nexecution and delivery by the Executive of a release agreement in form and
\nsubstance reasonably acceptable to the Employer.<\/p>\n<\/p>\n

(ii)Termination During the Stock Purchase Non-Competition
\nPeriod<\/u><\/strong>. <\/strong>Notwithstanding Subparagraph 5(c)(i)
\nabove, if the Executive’s employment is terminated by the Employer with cause or
\nby the Executive for any reason whatsoever, except for a material reduction in
\nthe Executive’s Base Compensation opportunity below the amount specified in
\nSection 3 of this Agreement (other than a reduction applicable to all other
\nsimilarly situated participants) or a requirement to move more than 35 miles
\nfrom Indianapolis, during the Stock Purchase Non-Competition Period, Executive
\nwill receive no compensation or any of the Benefits provided in Subparagraph
\n5(c)(i) above from the Employer during the Stock Purchase Non-Competition
\nPeriod. If the Executive’s employment is terminated by the Employer without
\ncause or by the Executive because of a<\/p>\n<\/p>\n<\/p>\n

4<\/p>\n

\n

\n<\/p>\n

material reduction in the Executive’s Base Compensation opportunity below the
\namount specified in Section 3 of this Agreement (other than a reduction
\napplicable to all other similarly situated participants), or a requirement to
\nmove more than 35 miles from Indianapolis during the Stock Purchase
\nNon-Competition Period, the Executive will receive: (A) Base Compensation at the
\nannual rate in effect immediately prior to termination, plus an amount equal to
\nthe average annual bonus paid to the Executive in the preceding two (2) fiscal
\nyears, payable in equal monthly installments over the greater of (i) the
\nremaining period of the Stock Purchase Non-Competition Period or (ii) twelve
\n(12) months; (B) any earned unpaid Base Compensation and bonus for the period
\nending on termination; and (C) in accordance with past practice, reimburse the
\nExecutive for expenses incurred in accordance with \u00a7 4. The Executive’s
\nentitlement to the compensation and benefits described in this subsection (ii)
\nis specifically subject to the execution and delivery by the Executive of a
\nrelease agreement in form and substance reasonably acceptable to the Employer.\n<\/p>\n<\/p>\n

(iii)Termination upon Disability<\/u><\/strong>.<\/strong>
\nIf the Executive’s employment is terminated as a result of the Executive’s
\nDisability, the Employer shall (A) pay the Executive an amount equal to any
\ndisability payments provided pursuant to the benefits package available to the
\nExecutive; (B) pay to the Executive at the same time paid to other employees any
\nearned but unpaid Base Compensation and bonus for the period ending on
\ntermination; and (C) in accordance with the Employer’s past practice, reimburse
\nthe Executive for expenses incurred in accordance with \u00a7 4.<\/p>\n<\/p>\n

(iv)Termination on Death<\/u><\/strong>. If the Executive’s
\nemployment is terminated because of the Executive’s death, the Employer shall
\npay to the beneficiary of the Executive any earned but unpaid Base Compensation
\nand bonus for the period ending on the date of the Executive’s death. In
\naddition, the Employer, in accordance with the Employer’s past practice, shall
\nreimburse the Executive or the Executive’s heirs or estate for expenses incurred
\nin accordance with \u00a7 4.<\/p>\n<\/p>\n

(v)Termination by the Employer for Cause<\/u><\/strong>. If the
\nExecutive’s employment is terminated by the Employer for Cause, the Executive
\nshall be entitled only to receive the Executive’s earned but unpaid Base
\nCompensation and bonus through the date of termination. In addition, the
\nEmployer, in accordance with the Employer’s past practice, shall reimburse the
\nExecutive for expenses incurred in accordance with \u00a7 4.<\/p>\n<\/p>\n

(vi)Termination by the Executive without Good
\nReason<\/u><\/strong>. If the Executive’s employment is terminated by the
\nExecutive for any reason (other than for Good Reason), the Executive shall be
\nentitled to receive the Executive’s earned but unpaid Base Compensation and
\nbonus through the date of such termination. In addition, the Employer, in
\naccordance with the Employer’s past practice, shall reimburse the Executive for
\nexpenses incurred in accordance with \u00a7 4.<\/p>\n<\/p>\n

(vii)<\/p>\n<\/p>\n

\u00a7 6. Non-Disclosure and Intellectual Property
\nCovenant<\/em><\/strong><\/p>\n<\/p>\n

(a)<\/em><\/strong> Acknowledgments by the
\nExecutive<\/u><\/em><\/strong>.<\/em><\/strong> The Executive
\nacknowledges that (i) during the Employment Period and as a part of the
\nExecutive’s employment, the Executive will be afforded access to Confidential
\nInformation; (ii) public disclosure of such Confidential Information could have
\nan adverse effect on the Employer and Audiovox and their business; and (iii) the
\nprovisions of this \u00a7 6 are reasonable and necessary to prevent the improper use
\nor disclosure of Confidential Information.<\/p>\n<\/p>\n

(b)<\/strong> Agreements of the
\nExecutive<\/u><\/em><\/strong>.<\/em><\/strong> In consideration of the
\ncompensation and benefits to be paid or provided to the Executive by the
\nEmployer and Audiovox under this Agreement, the Executive covenants that:<\/p>\n<\/p>\n

(i)During and indefinitely following the Employment Period, except in the
\nperformance of the Executive’s duties in accordance with this Agreement in the
\nordinary course of business, the Executive shall hold in confidence the
\nConfidential Information and shall not use or disclose it to any Person except
\nwith the specific prior written consent of the Chief Executive Officer of
\nAudiovox.<\/p>\n<\/p>\n

(ii)Any trade secrets of the Employer and Audiovox and their Affiliates will
\nbe entitled to all of the protections and benefits under the Uniform Trade
\nSecrets Act as adopted by the State of Indiana, the State where the Executive is
\nlocated, if different than the State of Indiana, and any other applicable law.
\nIf any information that the Employer or Audiovox deems to be a trade secret is
\nfound by a court of competent jurisdiction not to be a trade secret for purposes
\nof this Agreement, such information will, nevertheless, be considered
\nConfidential Information for purposes of this Agreement.<\/p>\n<\/p>\n

(iii)None of the obligations and restrictions set forth in (i) or (ii),
\nabove, applies to any part of the Confidential Information that the Executive
\ndemonstrates (A) was or becomes generally available to the<\/p>\n<\/p>\n<\/p>\n

5<\/p>\n

\n

\n<\/p>\n

public other than as a result of a direct or indirect disclosure by the
\nExecutive; (B) is required to be disclosed pursuant to an enforceable court
\norder; or (C) is required to be disclosed by applicable law.<\/p>\n<\/p>\n

(iv)The Executive shall not remove from the Employer’s or Audiovox’s premises
\n(except to the extent such removal is for purposes of the performance of the
\nExecutive’s duties at home or while traveling, or except as otherwise
\nspecifically authorized by the Chief Executive Officer of Audiovox) any
\ndocument, record, notebook, plan, model, component, device or computer software
\nor code, whether embodied in a disk or in any other form (collectively, the
\n“Proprietary Items”). The Executive recognizes that, as between the Employer and
\nAudiovox and the Executive, all of the Proprietary Items, whether or not
\ndeveloped by the Executive, are the exclusive property of the Employer and
\nAudiovox. Upon termination of this Agreement by either party, or upon the
\nrequest of the Employer during the Employment Period, the Executive shall return
\nto the Employer and Audiovox all of the Proprietary Items in the Executive’s
\npossession or subject to the Executive’s control, and the Executive shall not
\nretain any copies, abstracts, sketches or other physical embodiment of any of
\nthe Proprietary Items.<\/p>\n<\/p>\n

(c)<\/strong>Disputes or
\nControversies<\/u><\/em><\/strong>.<\/em><\/strong> The Executive
\nrecognizes that should a dispute or controversy arising from or relating to this
\nAgreement be submitted for adjudication to any court, arbitration panel or other
\nthird party, the preservation of the secrecy of Confidential Information may be
\njeopardized. All pleadings, documents, testimony and records relating to any
\nsuch adjudication will be maintained in secrecy and will be available for
\ninspection by the Employer and Audiovox, the Executive and their respective
\nattorneys and experts, who will agree, in advance and in writing, to receive and
\nmaintain all such information in secrecy.<\/p>\n<\/p>\n

\n(d)<\/strong>Inventions<\/u><\/em><\/strong>.<\/em><\/strong>
\nThe Executive agrees that all discoveries, concepts, and ideas, whether
\npatentable or not relating to any activities of the Employer or Audiovox
\nincluding, but not limited to, apparatus, processes, methods, compositions of
\nmatter, techniques, and formulas, as well as related improvements or know-how
\n(“Inventions”) made or conceived by the Executive, either solely or jointly with
\nothers (i) during the Executive’s employment by the Employer or (ii) within one
\n(1) year after termination of such employment, whether or not such Inventions
\nare made or conceived during the hours of the Executive’s employment or with the
\nuse of the Employer’s facilities, materials, or personnel, shall be and shall
\nremain the property of the Employer, whether patentable or not, and the
\nExecutive will, without royalty or any other consideration: (a) inform the
\nEmployer promptly and fully of such Inventions by written reports, setting forth
\nin detail the Invention, the procedures employed, and the results achieved; (b)
\nassign to the Employer all of the Executive’s rights, title, and interests in
\nand to any Inventions, any applications for United States and foreign Letters
\nPatent covering the Inventions, any United States and foreign Letters Patent
\ngranted upon the applications, and any renewals thereof; (c) assist the Employer
\nor its nominees, at the expense of the Employer, to obtain any United States and
\nforeign Letters Patent for any Inventions as the Employer may elect; and (d)
\nexecute, acknowledge, and deliver to the Employer at its expense any written
\ndocuments and instruments, and do any other acts, such as giving testimony in
\nsupport of the Executive’s inventorship, as may be necessary in the opinion of
\nthe Employer to obtain and maintain United States and foreign Letters Patent
\nupon any Inventions and to vest the entire rights, title and interests in the
\nEmployer and to confirm the complete ownership by the Employer of any
\nInventions, patent applications, and patents.<\/p>\n<\/p>\n

\n(e)<\/strong>Works<\/u><\/em><\/strong>.<\/em><\/strong>
\nThe Executive agrees that all works of authorship fixed in a tangible medium of
\nexpression relating to any activities of the Employer or Audiovox including, but
\nnot limited to, flow charts and computer program source code and object code,
\nregardless of the medium in which it is fixed, as well as notes, drawings,
\nmemoranda, correspondence, records, notebooks, instructions, and text (“Works”)
\ncreated or conceived by the Executive, either solely or jointly with others (i)
\nduring the Executive’s employment by the Employer or (ii) within one (1) year
\nafter termination of such employment, whether or not such, Works are made or
\nconceived during the hours of the Executive’s employment or with use of the
\nEmployer’s facilities, materials, or personnel, shall be and shall remain the
\nproperty of the Employer, and the Executive will, without royalty or any other
\nconsideration, promptly disclose in writing to the Employer all Works. The
\nExecutive shall cooperate fully with the Employer and its officers and counsel,
\nat the Employer’s direction and expense, in obtaining, maintaining, and
\nenforcing worldwide copyright protection on such Works. Any such Works created
\nby the Executive is a “work made for hire” under the copyright law, and the
\nEmployer may file applications to register copyright in such Works as author and
\ncopyright owner thereof. If, for any reason, a Work created by the Executive is
\nexcluded from the definition of a “work made for hire” under the copyright law,
\nthen the Executive shall assign, and does hereby assign, to the Employer the
\nentire rights, title, and interests in and to such Work, including the copyright
\ntherein. The Executive shall take whatever steps and do whatever acts the
\nEmployer requests including, but not limited to, placement of the Employer
\nproper copyright notice on Works created<\/p>\n<\/p>\n<\/p>\n

6<\/p>\n

\n

\n<\/p>\n

by the Executive to secure or aid in securing copyright protection in such
\nWorks, and shall assist the Employer or its nominees in filing applications to
\nregister claims of copyright in such Works.<\/p>\n<\/p>\n

(f)<\/p>\n<\/p>\n

\u00a7 7. Non-Competition and Non-Interference.<\/em><\/strong><\/p>\n<\/p>\n

(a)<\/strong>Acknowledgements by the
\nExecutive<\/u><\/em><\/strong>.<\/em><\/strong> The Executive
\nacknowledges that: (i) Audiovox would not purchase stock of the Employer or from
\nExecutive unless Executive agrees to the terms of this Section 7; (ii) the
\ninformation to be disclosed to the Executive and the services to be performed by
\nthe Executive under this Agreement are of a special, unique, extraordinary and
\nintellectual character; (iii) the Employer and Audiovox competes with other
\nbusinesses that are located in the Market Jurisdictions; (iv) the restricted
\nperiod of time and the geographic limitations set forth below are reasonable in
\nview of the nature of the business in which the Employer and Audiovox are
\nengaged and the Executive’s knowledge of the Employer’s and Audiovox’s
\noperations the Executive has gained and will gain by virtue of the Executive’s
\nposition; (v) this limited restriction is not an attempt to prevent the
\nExecutive from obtaining other employment in violation of Indiana Code \u00a7
\n22-5-3-1; and (vi) the provisions of this \u00a7 7 are reasonable and necessary to
\nprotect the Employer’s and Audiovox’s business.<\/p>\n<\/p>\n

(b)<\/strong>Covenants of the
\nExecutive<\/u><\/em><\/strong>.<\/em><\/strong> In consideration of the
\nacknowledgments by the Executive, and in consideration of the payments,
\ncompensation and benefits to be paid or provided to the Executive by the
\nEmployer and Audiovox, the Executive covenants that the Executive will not,
\ndirectly or indirectly:<\/p>\n<\/p>\n

(i) during (A) the Employment Period and for 12 months thereafter (the
\n“Non-Compete Period”); (B) the Stock Purchase Non-Competition Period and (C) the
\nperiod Executive may be receiving payments under Section 5(c)(ii), except in the
\ncourse of the Executive’s employment hereunder, directly or indirectly, in a
\ncompetitive capacity, engage or invest in, own, manage, operate, finance,
\ncontrol or participate in the ownership, management, operation, financing or
\ncontrol of, be employed by, associated with or in any manner connected with,
\nlend the Executive’s name or any similar name to, lend Executive’s credit to or
\nrender services or advice to, or plan or prepare to do any of the foregoing with
\nany business whose products or activities compete in whole or in part with the
\nBusiness in any Market Jurisdiction; provided<\/u>, however<\/u>, that the
\nExecutive may purchase or otherwise acquire up to (but not more than) two
\npercent (2%) of any class of securities of any entity (but without otherwise
\nparticipating in the activities of such entity) if such securities are listed on
\nany national or regional securities exchange or have been registered under \u00a7
\n12(g) of the Securities Exchange Act of 1934, as amended. For purposes of this
\nSection 7(b)(i), the word “Subsidiaries” is substituted for the word
\n“Affiliates” in the definition of “Business” in Section 1.<\/p>\n<\/p>\n

(ii)whether for the Executive’s own account or the account of any other
\nPerson: (A) at any time during the Employment Period and for 2 years thereafter
\nand during the Stock Purchase Non-Competition Period, directly or indirectly,
\ninterfere with, solicit, employ or otherwise engage, as an employee, independent
\ncontractor or otherwise, any Person who is or was an employee of the Employer or
\nits Affiliate at any time during the last 2 years of the Employment Period or in
\nany manner induce or attempt to induce any employee of the Employer or its
\nAffiliate to terminate his or her employment with the Employer or its Affiliate;
\nor (B) at any time during the Employment Period and in a competitive capacity
\nfor 12 months thereafter and during the Stock Purchase Non-Competition Period,
\ninterfere with the Employer’s or its Affiliate’s relationship with any Person,
\nincluding, but not limited to, any Person who at any time during the Employment
\nPeriod was a customer, contractor or supplier of the Employer or its Affiliate;
\nor<\/p>\n<\/p>\n

(iii)at any time during or after the Employment Period, disparage the
\nEmployer or Audiovox or its Affiliates or their respective shareholders, board
\nof directors, members, managers, officers, employees or agents.<\/p>\n<\/p>\n

If any term, provision or covenant in this \u00a7 7(b) is held to be unreasonable,
\narbitrary or against public policy, a court may limit the application of such
\nterm, provision or covenant or modify such term, provision or covenant and
\nproceed to enforce this \u00a7 7(b) as so limited or modified, which limited or
\nmodified term, provision or covenant will be effective, binding and enforceable
\nagainst the Executive.<\/p>\n<\/p>\n

The period of time applicable to any covenant in this \u00a7 7(b) shall be
\nextended by the duration of any actual or threatened violation by the Executive
\nof such covenant.<\/p>\n<\/p>\n

The Executive shall, while the covenant under this \u00a7 7(b) is in effect, give
\nnotice to the Employer and Audiovox, within ten (10) days after accepting any
\nother employment, of the identity of the Executive’s new employer. The<\/p>\n<\/p>\n<\/p>\n

7<\/p>\n

\n

\n<\/p>\n

Employer and Audiovox may notify such employer that the Executive is bound by
\nthis Agreement and, at the Employer’s or Audiovox’s election, furnish such
\nemployer with a copy of this Agreement or relevant portions thereof.<\/p>\n<\/p>\n

\u00a7 8.<\/em><\/strong> General Provisions.<\/em><\/strong>\n<\/p>\n<\/p>\n

(a)<\/em><\/strong> Injunctive Relief and Additional
\nRemedy<\/u><\/em><\/strong>.<\/em><\/strong> The Executive acknowledges
\nthat the injury that would be suffered by the Employer and Audiovox as a result
\nof a breach of the provisions of this Agreement (including any provision of \u00a7 \u00a7 6
\nand 7) would be irreparable and that an award of monetary damages to the
\nEmployer or Audiovox for such a breach would be an inadequate remedy.
\nConsequently, the Employer or Audiovox will have the right, in addition to any
\nother rights, at law or in equity, it may have to obtain injunctive relief to
\nrestrain any breach or threatened breach or otherwise to specifically enforce
\nany provision of this Agreement, and the Employer or Audiovox will not be
\nobligated to post bond or other security in seeking such relief. Without
\nlimiting the Employer’s or Audiovox’s rights under this \u00a7 8(a) or any other
\nremedies of the Employer or Audiovox, if the Executive has breached or violated
\nor threatens to breach of violate any of the provisions of \u00a7 \u00a7 6 or 7 the
\nEmployer or Audiovox will have the right to cease making any payments otherwise
\ndue to the Executive under this Agreement and recover payments previously made
\nto the Executive under this Agreement. Further, if any term, provision or
\ncovenant in \u00a7 \u00a7 6 or 7 is held to be unreasonable, arbitrary, against public
\npolicy, or otherwise unenforceable, Executive acknowledges and agrees that the
\npayments required to be made to the Executive shall be waived and that the
\nExecutive relinquishes any rights to such payment or any other forms of payment
\npost-dating the Executive’s separation from the Employer.<\/p>\n<\/p>\n

(b)<\/strong> Covenants of
\n<\/u><\/em><\/strong> \u00a7 \u00a7 6 and 7 Are Essential and Independent
\nCovenants<\/em><\/u><\/strong>.<\/em><\/strong> The covenants by the
\nExecutive in \u00a7 \u00a7 6 and 7 are essential elements of this Agreement, and without
\nthe Executive’s agreement to comply with such covenants, Audiovox would not have
\npurchased any shares in Employer and the Employer would not have entered into
\nthis Agreement or employed or continued the employment of the Executive. The
\nEmployer, Audiovox and the Executive have been advised in all respects
\nconcerning the reasonableness and propriety of such covenants, with specific
\nregard to the nature of the business conducted by the Employer and Audiovox. The
\nExecutive’s covenants in \u00a7 \u00a7 6 and 7 are independent covenants and the existence
\nof any claim by the Executive against the Employer or Audiovox under this
\nAgreement or otherwise will not excuse the Executive’s breach of any covenant in
\n \u00a7 \u00a7 6 or 7. If the Executive’s employment hereunder expires or is terminated,
\nthis Agreement will continue in full force and effect as is necessary or
\nappropriate to enforce the covenants and agreements of the Executive in \u00a7 \u00a7 6 and
\n7 in accordance with their terms and conditions.<\/p>\n<\/p>\n

(e)<\/em><\/strong> Representations and Warranties
\nby the Executive<\/u><\/em><\/strong>.<\/em><\/strong> The Executive
\nrepresents and warrants to the Employer and Audiovox that the execution and
\ndelivery by the Executive of this Agreement do not, and the performance by the
\nExecutive of the Executive’s obligations hereunder will not, with or without the
\ngiving of notice or the passage of time, or both: (i) violate any judgment,
\nwrit, injunction or order of any court, arbitrator or governmental agency
\napplicable to the Executive; or (ii) conflict with, result in the breach of any
\nprovisions of or the termination of or constitute a default under any agreement
\nto which the Executive is a party or by which the Executive is or may be bound.
\nThe Executive acknowledges that the Executive has had a full and complete
\nopportunity to consult with counsel of the Executive’s choosing concerning this
\nAgreement and that the Employer has not made any representations or warranties
\nto the Executive concerning this Agreement other than those specifically stated
\nin this Agreement, if any.<\/p>\n<\/p>\n

(d)<\/strong>
\nWaiver<\/u><\/em><\/strong>.<\/em><\/strong> The rights
\nand remedies of the parties to this Agreement are cumulative and not
\nalternative. Neither the failure nor any delay by either party in exercising any
\nright, power or privilege under this Agreement will operate as a waiver of such
\nright, power or privilege, and no single or partial exercise of any such right,
\npower or privilege will preclude any other or further exercise of such right,
\npower or privilege or the exercise of any other right, power or privilege. To
\nthe maximum extent permitted by applicable law, (i) no claim or right arising
\nout of this Agreement can be discharged by one party, in whole or in part, by a
\nwaiver or renunciation of the claim or right unless in writing signed by the
\nother party (ii) no waiver that may be given by a party will be applicable
\nexcept in the specific instance for which it is given and (iii) no notice to or
\ndemand on one party will be deemed to be a waiver of any obligation of such
\nparty or of the right of the party giving such notice or demand to take further
\naction without notice or demand as provided in this Agreement.<\/p>\n<\/p>\n

(e)<\/strong>Binding
\nEffect<\/u><\/em><\/strong>.<\/em><\/strong> This Agreement shall inure
\nto the benefit of, and shall be binding upon, the parties hereto and their
\nrespective successors, assigns, heirs and legal representatives.<\/p>\n<\/p>\n

\n(f)<\/strong>Notices<\/u><\/em><\/strong>.<\/em><\/strong>
\nAll notices, consents, waivers and other communications under this Agreement
\nmust be in writing and will be deemed to have been duly given when (i) delivered
\nby hand (with written confirmation of receipt),<\/p>\n<\/p>\n<\/p>\n

8<\/p>\n

\n

\n<\/p>\n

or (ii) when received by the addressee, if sent by a nationally recognized
\novernight delivery service (receipt requested), in each case to the appropriate
\naddresses set forth below (or to such other addresses as a party may designate
\nby notice to the other party):<\/p>\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
\n

If to Employer:<\/em><\/p>\n<\/td>\n

\n

Klipsch Group, Inc.<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

3502 Woodview Trace<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

Suite 200<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

Indianapolis, IN 46268<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

Attn: Chairman of the Board of Directors<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n\n

Copy to:<\/p>\n<\/td>\n

\n

Audiovox Corporation<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n\n

150 Marcus Blvd.<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n\n

Hauppauge, NY 11788<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n\n

Attn: Chief Operating Officer<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n\n

Robert S. Levy<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n\n

Levy, Stopol & Camelo, LLP<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n\n

1425 RXR Plaza<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n\n

Uniondale, NY 11556<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
\n

If to the Executive:<\/em><\/p>\n<\/td>\n

\n

T. Paul Jacobs<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

6528 Woodworth Court<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

Indianapolis, IN 46237<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(g)<\/strong>Entire Agreement:
\nAmendments<\/u><\/em><\/strong>.<\/em> This Agreement contains the entire
\nagreement between the parties with respect to the subject matter hereof and
\nsupersede all prior agreements and understandings, oral or written, between the
\nparties hereto with respect to the subject matter hereof, including, without
\nlimitation, that certain Employment Agreement dated February 11, 2005, and that
\nAmended and Restated Confidentiality and Limited Non-Competition Agreement dated
\nas of December 8, 1997, between the Executive and Klipsch, LLC. This Agreement
\nmay not be amended orally, but only by an agreement in writing signed by the
\nparties hereto.<\/p>\n<\/p>\n

(h)<\/strong>Governing Law and
\nForum<\/u><\/em><\/strong>.<\/em><\/strong> This Agreement will be
\ngoverned by the laws of the State of New York without regard to conflicts of
\nlaws principles. Any controversy, dispute or claim arising out of or in
\nconnection with this agreement or the breach hereof shall be resolved by
\narbitration in the City and State of New York in accordance with the rules of
\nthe American Arbitration Association. Judgment upon the award reached by the
\nArbitrator(s) may be enforced in any court having jurisdiction thereof.<\/p>\n<\/p>\n

(i)<\/strong>Section Headings,
\nConstruction<\/u><\/em><\/strong>.<\/em> The headings of Sections in this
\nAgreement are provided for convenience only and will not affect its construction
\nor interpretation. All references to ” \u00a7” refer to sections in this Agreement.
\nAll words used in this Agreement will be construed to be of such gender or
\nnumber as the circumstances require. Unless otherwise expressly provided, the
\nword “including” does not limit the preceding words or terms.<\/p>\n<\/p>\n

(j)<\/strong>
\nSeverability<\/u><\/em><\/strong>.<\/em><\/strong> If any
\nprovision of this Agreement is held invalid or unenforceable by any court of
\ncompetent jurisdiction, the other provisions of this Agreement will remain in
\nfull force and effect. Any provision of this Agreement held invalid or
\nunenforceable only in part or degree will remain in full force and effect to the
\nextent not held invalid or unenforceable.<\/p>\n<\/p>\n

(k)<\/em><\/strong>
\nCounterparts<\/u><\/em><\/strong>.<\/em> This Agreement may be
\nexecuted in counterparts, which when taken together shall constitute one and the
\nsame Agreement.<\/p>\n<\/p>\n

(1)<\/em><\/strong> Attorneys’
\nFees<\/u><\/em><\/strong>.<\/strong> In the event any dispute or controversy
\narising from or relating to this Agreement is submitted to any court,
\narbitration panel or other party, the prevailing party in such dispute or
\ncontroversy shall be entitled to reimbursement from the non-prevailing party for
\nthe actual fees and expenses incurred by the prevailing<\/p>\n<\/p>\n<\/p>\n

9<\/p>\n

\n

\n<\/p>\n

party in connection with such dispute or controversy (including, but not
\nlimited to, reasonable attorney’s fees, costs and disbursements).<\/p>\n<\/p>\n

[signature page immediately following]<\/strong><\/p>\n

\n<\/p>\n

10<\/p>\n

\n

\n<\/p>\n

IN WITNESS WHEREOF, the parties have executed and delivered this Employment
\nAgreement as of the date first written above.<\/p>\n<\/p>\n

EMPLOYER<\/u>:<\/p>\n<\/p>\n

KLIPSCH GROUP, INC.<\/p>\n<\/p>\n

By: \/s\/ Fred S. Klipsch<\/u><\/em><\/p>\n<\/p>\n

Printed: Fred S. Klipsch<\/p>\n<\/p>\n

Title: Chairman of the Board of Directors<\/p>\n<\/p>\n

EXECUTIVE<\/u>:<\/p>\n<\/p>\n

\/s\/ Paul Jacobs<\/u><\/p>\n<\/p>\n

T. Paul Jacobs, individually<\/p>\n<\/p>\n<\/p>\n

11<\/p>\n

\n

\n<\/p>\n

Exhibit A <\/u><\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

Market Jurisdictions<\/u><\/p>\n<\/td>\n<\/tr>\n

\n

Alabama<\/p>\n<\/td>\n

\n

New York<\/p>\n<\/td>\n<\/tr>\n

\n

Alaska<\/p>\n<\/td>\n

\n

North Carolina<\/p>\n<\/td>\n<\/tr>\n

\n

Arizona<\/p>\n<\/td>\n

\n

North Dakota<\/p>\n<\/td>\n<\/tr>\n

\n

Arkansas<\/p>\n<\/td>\n

\n

Ohio<\/p>\n<\/td>\n<\/tr>\n

\n

California<\/p>\n<\/td>\n

\n

Oklahoma<\/p>\n<\/td>\n<\/tr>\n

\n

Colorado<\/p>\n<\/td>\n

\n

Oregon<\/p>\n<\/td>\n<\/tr>\n

\n

Connecticut<\/p>\n<\/td>\n

\n

Pennsylvania<\/p>\n<\/td>\n<\/tr>\n

\n

Delaware<\/p>\n<\/td>\n

\n

Rhode Island<\/p>\n<\/td>\n<\/tr>\n

\n

Florida<\/p>\n<\/td>\n

\n

South Carolina<\/p>\n<\/td>\n<\/tr>\n

\n

Georgia<\/p>\n<\/td>\n

\n

South Dakota<\/p>\n<\/td>\n<\/tr>\n

\n

Hawaii<\/p>\n<\/td>\n

\n

Tennessee<\/p>\n<\/td>\n<\/tr>\n

\n

Idaho<\/p>\n<\/td>\n

\n

Texas<\/p>\n<\/td>\n<\/tr>\n

\n

Illinois<\/p>\n<\/td>\n

\n

Utah<\/p>\n<\/td>\n<\/tr>\n

\n

Indiana<\/p>\n<\/td>\n

\n

Vermont<\/p>\n<\/td>\n<\/tr>\n

\n

Iowa<\/p>\n<\/td>\n

\n

Virginia<\/p>\n<\/td>\n<\/tr>\n

\n

Kansas<\/p>\n<\/td>\n

\n

Washington<\/p>\n<\/td>\n<\/tr>\n

\n

Kentucky<\/p>\n<\/td>\n

\n

West Virginia<\/p>\n<\/td>\n<\/tr>\n

\n

Louisiana<\/p>\n<\/td>\n

\n

Wisconsin<\/p>\n<\/td>\n<\/tr>\n

\n

Maine<\/p>\n<\/td>\n

\n

Wyoming<\/p>\n<\/td>\n<\/tr>\n

\n

Maryland<\/p>\n<\/td>\n

\n

District of Columbia<\/p>\n<\/td>\n<\/tr>\n

\n

Massachusetts<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Michigan<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Minnesota<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Mississippi<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Missouri<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Montana<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Nebraska<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Nevada<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

New Hampshire<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

New Jersey<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

New Mexico<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n

12<\/p>\n

\n

\n<\/p>\n

Exhibit B<\/u><\/p>\n

\n

Bonus Criteria<\/p>\n

\n\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
\n

1.<\/p>\n<\/td>\n

\n

EBITDA Goal for July 1, 2010 through June 30, 2011 is $27,143,000 (weighted
\n60%).<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
\n

2.<\/p>\n<\/td>\n

\n

Senior Management FY11 Objectives (weighted 40%)<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

a. The Company will be on target to complete by September 30, 2011 the
\nNavision 2009 ERP installation to include Europe and Asia so that the Company is
\noperating off a single global system for FY12.<\/p>\n<\/p>\n

b. Complete the installation of Shopatron to complete the upgrade of the
\nCompany’s capability to increase direct sales to consumers and implement a more
\naggressive web marketing effort.<\/p>\n<\/p>\n

c. Continue the execution of the Forte logistics study to include outsourcing
\nof domestic freight management, reduction of inventory in both America and
\nEuropean warehouses and potentially opening an additional warehouse on the U.S.
\neast coast.<\/p>\n<\/p>\n

d. Complete a three year strategic plan that specifically details the
\nfollowing:<\/p>\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
\n

i.<\/p>\n<\/td>\n

\n

A product and technology position paper identifying potential changes,
\ndirection and internal gaps if they exist.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
\n

ii.<\/p>\n<\/td>\n

\n

Updated brand, marketing and product strategy by brand and by category.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
\n

iii.<\/p>\n<\/td>\n

\n

A non U.S. growth plan by major market that ultimately transitions the
\nrevenue balance 60\/40 US vs. ROW in fiscal 2011 to 50\/50 by 2014. This growth
\nhas to come from ROW.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

e. Continue successful operation of the Company while completing the process
\nof closing with a new investor for the Company.<\/p>\n<\/p>\n<\/p>\n

13<\/p>\n

\n

\n<\/p>\n

Exhibit C<\/p>\n

\n

Executive Put Options<\/u><\/p>\n

\n

Executive shall have the following described Put Option:<\/p>\n<\/p>\n

Commencing on March 1, 2011, the cumulative after tax net profit or loss of
\nthe Employer will be calculated on a monthly basis according to GAAP and will
\nbear interest at the same per annum rate that Audiovox is receiving from its
\nlead bank.<\/p>\n<\/p>\n

Executive may at the end of any month following the 30 month anniversary of
\nthis Agreement request the Employer to pay him in one lump sum up to 80% of 1.6%
\nof the aggregate cumulative after tax net profit or loss of the Employer (the
\n“Put Price”), and the Employer will pay such amount to Executive. Such a request
\nmay not be made within 60 months of Executive’s previous request.<\/p>\n<\/p>\n

Any unpaid Put Price will be paid promptly to Executive or his heirs as the
\ncase may be if Executive’s employment is terminated for any reason.<\/p>\n<\/p>\n

Illustration (not accounting for interest):<\/p>\n<\/p>\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
\n

Commencement value<\/p>\n<\/td>\n

\n

-0-<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Net profits after 12 months<\/p>\n<\/td>\n

\n

$<\/p>\n<\/td>\n

\n

10,000,000<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Put Price (1.6%)<\/p>\n<\/td>\n

\n

$<\/p>\n<\/td>\n

\n

160,000<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Net loss in 13th month<\/p>\n<\/td>\n

\n

$<\/p>\n<\/td>\n

\n

1,000,000<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Put Price (1.6%)<\/p>\n<\/td>\n

\n

$<\/p>\n<\/td>\n

\n

144,000<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n

14<\/p>\n

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