Group Vice President and President --World Wide Pro Audio Employment Agreement - Mathias S Von Heydekampf

EMPLOYMENT AGREEMENT


This Employment Agreement (the "Agreement"), dated as of January 5, 2003, is entered into by and between TELEX COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and MATHIAS STIELER VON HEYDEKAMPF ("Executive").


INTRODUCTION


The Company is engaged in the business of the design, manufacture and marketing of sophisticated audio, wireless, multimedia, aircraft, broadcast and communications equipment. The Company desires to employ Executive, and Executive desires to accept such employment, under the terms and conditions set forth herein.


NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I


EMPLOYMENT; TERM; DUTIES


1.1 Employment. Upon the terms and conditions hereinafter set forth, the Company agrees to employ Executive, and Executive agrees to accept employment as an executive officer of the Company, effective as of April 1, 2003 (the "Effective Date"). The Executive's title shall be Group Vice President and President --World Wide Pro Audio. Executive's office shall be at the Company's headquarters in Burnsville, Minnesota, U.S.A., and Executive agrees to relocate to the United States to perform services hereunder.


1.2 Other Agreements. Except for (i) the Secondment Agreement by and among EVI, the Company and Executive dated as of the date hereof, (ii) Executive's Service Agreement with EVI Audio GmbH ("EVI"), dated February 27, 1997, as amended by the Amendment dated January 5, 2003 ("EVI Service Agreement"), (iii) Executive's private Pension Plan, dated January 4, 2000 with EVI ("German Pension Plan"), as such agreement may be amended from time to time, and (iv) Executive's arrangement with EVI concerning the payment by EVI of certain private health plan premiums for the benefit of Executive and his family, as such agreements may be amended as of the Effective Date, and may be amended from time to time after the Effective Date, this Agreement shall supersede and replace any and all other agreements concerning Executive's employment with the Company or any of its subsidiaries, and such other agreements are deemed terminated as of the Effective Date, with no liability for such termination under any such agreement or agreements by the Company or its subsidiaries to Executive. The parties agree that on the Effective Date, the EVI Service Agreement shall become and remain "dormant" according to the terms of the Secondment Agreement during Executive's employment hereunder. Thereafter, the EVI Service Agreement shall become effective again only in the


event that the Company and Executive agree that Executive shall return
to active employment status with EVI.


1.3 Term. Executive's employment hereunder shall commence on the Effective Date and shall continue on an "at-will" basis for no specific term, terminable at the will of either party upon thirty (30) days written notice, but subject to the terms of this Agreement, including Article IV below. Notwithstanding the foregoing, Executive shall not relocate to the United States until Executive shall have received the appropriate work visa to enter the United States. If such visa has not been obtained on or before March 31, 2003, the Company and Executive shall continue to cooperate to obtain such appropriate visa. However, if such visa cannot be obtained by April 30, 2003, the Company shall cause EVI to reinstate the EVI Service Agreement, as such agreement was in effect immediately prior to the Effective Date and shall cause EVI to enter into a written confirmation of such reinstatement.


1.4 Duties. During the term of this Agreement, Executive shall perform such executive duties for the Company, consistent with his position hereunder and otherwise with his skills and experience, as may be assigned to him from time to time by the Chief Executive Officer of the Company. Executive shall devote his entire productive business time, attention and energies to the performance of his duties hereunder. Executive shall use his best efforts to advance the interests and business of the Company. Executive shall abide by all rules, regulations and policies of the Company, as may be in effect from time to time. Notwithstanding the foregoing, Executive may act for his own account in passive-type investments, or as a member of boards of directors of other companies or of charitable organizations, where the time allocated for those activities does not materially interfere with or create a conflict of interest with the discharge of his duties for the Company.


1.5 Reporting. Executive shall report directly to the Company's Chief Executive Officer.


1.6 Exclusive Agreement. Except for the EVI Agreement, Executive represents and warrants to the Company that there are no agreements or arrangements, whether written or oral, in effect which would prevent Executive from rendering his exclusive services to the Company during the term of this Agreement.


ARTICLE II


COMPENSATION


2.1 Compensation. For all services rendered by Executive hereunder and all covenants and conditions undertaken by him pursuant to this Agreement, the Company shall pay, and Executive shall accept, as full compensation, the amounts set forth in this Article II.


2.2 Base Salary. The base salary shall be an annual salary of $270,000.00 (the "Base Salary"), payable by the Company in accordance with the Company's normal payroll practices applicable to senior executives, but no less frequently than monthly. The Base Salary shall be reviewed no less frequently than annually during the term of this Agreement for increase in the discretion of the Board of Directors. The Base Salary shall not be decreased at any time, or for any purpose, during the term of this Agreement without Executive's prior written consent.


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2.3 Bonus. In addition to the Base Salary, Executive shall be eligible to participate in the Company's Management Incentive Compensation ("MIC") Plan under such terms as are established by the Company's Board of Directors from time to time, and to receive bonus payments thereunder upon the achievement by the Company of certain specified performance objectives, which objectives are established in the discretion of the Board of Directors. Executive's " Threshold," "Target" and "Maximum" bonuses payable under such MIC Plan shall be 40%, 70% and 140%, respectively, of his then current Base Salary. Any bonus under the Company's MIC Plan shall be earned based on the Company's receipt of audited financial results and as and when approved for payment by the Company's Board of Directors. Nothing in this Section 2.3 shall be construed to guarantee the payment of the Threshold bonus, nor to limit the amount of Executive's bonus to the Target Bonus.


2.4 Deductions. The Company shall deduct from the compensation described in Sections 2.2 and 2.3 any federal, state or local withholding taxes, U.S. or German social security contributions and any other amounts which may be required to be deducted or withheld by the Company pursuant to any federal, state or local laws, rules or regulations or this Agreement.


2.5 Relocation Expenses.


(a) The Company shall pay the actual, reasonable expenses incurred by Executive in connection with shipping his belongings and relocating himself and his family from Germany to the United States. The Company shall pay for up to six (6) months of temporary housing for Executive and his family, in the form of a furnished apartment, including all utilities.


(b) In addition, the Company shall pay to the Executive a $100,000 relocation allowance to be applied towards the purchase of a home, car and other miscellaneous expenses, such amount to be paid to Executive within 15 days of the date of this Agreement.


(c) In the event the termination of Executive's employment with the Company occurs within five (5) years of the date hereof, the Company shall pay the reasonable and actual expenses incurred by Executive in connection with shipping his belongings and relocating himself and his family from the United States to Germany, or to whatever other location the Executive chooses. The Company shall pay this return relocation expense regardless of the circumstances under which Executive's employment is terminated, provided, however, that such return relocation expenses shall not be paid to Executive by the Company if his employment is terminated by the Company with cause (as provided in Section 4.1 hereof) or by Executive for any reason other than good reason (as provided in Section 4.3 hereof).


2.6 Reimbursement and Payment of Tax Preparation Expenses. During the term of this Agreement the Company shall pay, or cause EVI to pay, the actual reasonable expenses incurred by Executive in connection with preparing and filing his tax documents in either or both of the United States and Germany, as such filings are required to be made by the laws of each country.


2.7 Additional Income Tax Liability. "Additional Income Tax Liability" shall mean the amount of taxes that the Executive is required to pay, by U.S. and any foreign tax authorities, in connection with compensation received pursuant to Sections 2.5 (a) and (c), 2.6, 3.1(b) and


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(c), and 6.8 hereof. Upon the occurrence of a payment made to Executive which causes Additional Income Tax Liability, the Company shall pay to Executive the Gross-Up Amount as calculated in accordance with the formula set forth on Exhibit "A" attached hereto and incorporated herein by this reference. Notwithstanding the foregoing, the Gross-Up Amount shall be reduced by the aggregate amount of any tax saving (if any) actually realized by the Executive, and Executive shall reimburse such excess to the Company.


2.8 Disability Adjustment. Any compensation otherwise payable to Executive pursuant to Sections 2.2 and 2.3 in respect of any period during which Executive is disabled (as contemplated in Section 4.4) shall be reduced by any amounts payable to Executive for loss of earnings or the like under any insurance plan or policy sponsored by the Company or EVI.


ARTICLE III


BENEFITS; EXPENSES


3.1 Benefits. (a) Group life, accident and disability insurance. During the term of this Agreement, Executive shall be entitled to participate in such group life, accident and disability insurance plans as the Company may make available to its other senior executive employees as a group, subject to the terms and conditions of any such plans. Executive's participation in all such U.S. plans shall be at a level, and on terms and conditions, as are applicable to its other senior executive employees as a group. (b) Health and Medical Insurance. Executive shall be entitled to elect to (i) continue to participate in the German private health and medical insurance plan in which he is currently enrolled, premiums for which are currently reimbursed to him or paid by EVI, or to (ii) participate in the Company's U.S. health plan according to the terms thereof. In the event Executive elects to continue to participate in the German private health and medical insurance plan, the Company shall make, or cause EVI to make, such private health insurance premium payments to the extent such payments would have been made by EVI or reimbursed to Executive pursuant to his current plan in Germany had he remained employed in Germany by EVI. In the event Executive elects to participate in the Company's U.S. health plan, he shall participate therein according to the terms and conditions applicable to the Company's U.S. employees. (c) Pension. Executive shall be entitled to elect to continue to (i) participate in Executive's German Pension Plan and the German state-sponsored pension plan, or to (ii) participate in the Company's Pension and the Company's Savings and Retirement (401(k)) Plans. In the event Executive elects to continue to participate in Executive's German Pension Plan, the Company shall make, or cause EVI to make, such private pension plan payments to such plan in Germany and to the German state-sponsored pension plan as would have been made by EVI according to the terms of such plan and based on Executive's compensation provided under this Agreement. In the event Executive elects to participate in the Company's Pension and the Company's Savings and Retirement (401(k)) plans, he shall participate therein according to the terms and conditions of such plans. Nothing herein shall preclude the Company from amending or terminating any employee benefit plan or practice, provided that such amendment or termination generally affects all employees of the Company or the group of employees of which Executive is a member. During the term of this Agreement, no perquisite or special benefit made available to Executive as a senior executive of the Company shall be materially reduced without his prior written consent. The Executive shall not be eligible to simultaneously receive benefits under the corresponding Employee Benefits Plans of both the


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Company and EVI. Executive may at any time elect to switch from any of EVI's to any of the Company's corresponding Employee Benefits Plans.


3.2 Business Class Travel. The Company shall permit Executive to and reimburse Executive for travel in "business class" for international flights.


3.3 Vacation. Executive shall accrue a total of four (4) weeks of vacation per year following the date of this Agreement. If, at any time during the term of this Agreement, Executive accumulates twelve (12) weeks of earned but unused vacation time, Executive will not earn, vest or accrue additional vacation time until he has taken the previously earned vacation. Executive will again earn, vest and accrue paid vacation time to the extent he uses the previously earned vacation. Upon termination of Executive's employment, any accrued but unused vacation time will be paid to Executive.


3.4 Long-Term Incentives. Executive shall be eligible for long-term incentives in the discretion of the Board of Directors. Such incentive awards shall be at a level, and on terms and conditions, that are commensurate with his positions and responsibilities at the Company and appropriate in light of corresponding awards to other senior executives of the Company.


3.5 Perquisites. During the term of this Agreement, and other than as expressly provided herein, Executive shall participate in all fringe benefits and perquisites available to senior executives of the Company at levels, and on terms and conditions, that are available to such other senior executives, ...