Exhibit 10.32

Separation Agreement

This Separation Agreement (“Agreement”) is entered into by Skullcandy (the
“Company”) and Kyle Wescoat (“Employee.”)

1.    Termination of Employment. Employee acknowledges Employee’s employment
with the Company was terminated effective October 4, 2013 (“Separation Date”),
after which date Employee performed no further duties, functions or services for
the Company. Employee’s termination shall be considered a voluntary resignation
following Employee’s decision to return to California.

2.    Payment of Moneys Owed. Employee acknowledges the Company has paid all
compensation owed to Employee as a result of Employee’s employment with the
Company, including but not limited to Employee’s salary/wages through the
Separation Date, all accrued but unused vacation/flex time through that date,
all commissions and/or bonuses owed to Employee, and all business expenses, if
any, incurred by Employee as a result of Employee’s employment with the Company.
Employee further agrees that he has no present claim for wages or benefits, and
that he is not and would not be entitled to any future wages or benefits
pursuant to any claims, other than the severance pay and benefits under this
Agreement.

3.    Additional Payment. Within fourteen (14) days after the execution of this
Agreement, the Company shall pay Employee a lump sum in the gross amount equal
to twelve (12) months of Employee’s current base salary minus the pro-rated
salary paid to Employee from June 18, 2013, through the Separation Date
$197,185.74, less appropriate income tax withholding and payroll deductions. The
payment of this additional amount, nor the provision of an email address
following the Separation Date, does not constitute continued employment or
contractor status with the Company.

4.    Medical Insurance Continuation. If Employee elects to continue coverage
for himself and his family under the Company’s group medical plan pursuant to
COBRA, the Company shall pay the premiums to continue such coverage from the
Separation Date through June 2014, including continued coverage for Employee’s
family during that period in the event Employee dies before June 30, 2014.
Thereafter, Employee shall be solely responsible for any COBRA payments or
continued coverage under the Company’s medical plan (under the terms of COBRA).

5.    Acknowledgment of Full Payment. Employee acknowledges the payments and
arrangements described in paragraphs 2 through 4 above shall constitute full and
complete satisfaction of any and all amounts due and owing to Employee as a
result of Employee’s employment with the Company and/or the termination of
employment, and that in the absence of this Agreement, Employee would not be
entitled to, among other things, the payments specified in paragraph 3 above and
the continued medical insurance coverage specified in the first sentence of
paragraph 4 above.

6.    Options. In accordance with IRS guidelines, Employee has 90-days from the
Separation Date to exercise his vested stock options (if any), after which time
any unexercised options will be cancelled and forfeited. Employee acknowledges
that he is not entitled to, and the Company will not provide, any acceleration
of unvested stock options, including any unvested Performance Share Units
pursuant to the Long Term Incentive Plan.

7.    Unemployment Benefits. The Company will not contest Employee’s application
for unemployment insurance benefits, if any, as a result of this Agreement. If
requested by the appropriate agency, the Company will respond that the
Employee’s employment ended due to a reorganization. The Company does not admit
or deny, by so doing, that Employee had a right to receive unemployment
insurance benefits.

8.    Non-Disclosure of Confidential Information. Employee acknowledges and
agrees that Employee has not revealed and will not reveal in the future, nor use
for Employee’s own purposes, any trade secret, proprietary information or any
confidential information about the Company, its products, its service, its
customers, or its methods of doing business. Employee further acknowledges his
obligations under the Company’s Employment, Confidential Information, Invention
Assignment, Noncompetition and Arbitration Agreements, entered into as a
condition of his employment, including, without limitation, his duties related
to confidential Company information, non-solicitation of Company employees, and
inventions made during his tenure at the Company.

9.    Return of Company Property. No later than the Separation Date, Employee
shall return all property issued by the Company, including without limitation,
all keys, access cards, credit cards, calling cards, computer hardware and
software, cellular phones, pdas, blackberries and other mobile communications
devices, and any and all confidential or proprietary

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Documents. For purposes of this Agreement, the term “Documents” means any
written records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, forms, or any other written
material, whether in physical or digital form.

10.    Release and Discharge of Claims. Except as to such rights or claims as
may be created by this Agreement, Employee hereby irrevocably and
unconditionally remises, releases, and forever discharges the Company and any
predecessor, successor, parent, subsidiary or affiliated corporation, and all
present or former directors, officers, agents, employees, insurers,
representatives, and attorneys, (and directors, officers, agents, employees,
insurers, representatives, and attorneys of any parent, subsidiary, or
affiliated corporations), and all persons acting by, through, under or in
concert with any of them (collectively the “Releasees”), or any of them, from
any and all actions, causes of action, suits, debts, charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages,
and expenses (including attorney’s fees and costs actually incurred), of any
nature whatsoever, in law or equity, known or unknown, suspected or unsuspected,
fixed or contingent, which any of them ever had or now has against the
Releasees, from the beginning of time to the date of this Agreement, including
but without limitation on the foregoing general terms, any claims arising from
or relating to Employee’s employment relationship with the Company or the
termination thereof, including any claims arising from any alleged breach of
contract, covenant of good faith and fair dealing, wrongful termination, tort or
any violation of any federal, state or local statutes, ordinances or common law,
including but not limited to: (1) the Civil Rights Act of 1964, as amended; (2)
42 U.S.C. § 1981; (3) Section 503 of the Rehabilitation Act of 1973; (4) the
Americans with Disabilities Act; (5) the Fair Labor Standards Act (including the
Equal Pay Act); (6) the California and Federal Family and Medical Leave Act; (7)
the Employee Retirement Income Security Act, as amended; (8) the Age
Discrimination in Employment Act of 1967 (“ADEA”); (9) the Older Workers Benefit
Protection Act (“OWBPA”); (10) the Federal Worker Adjustment and Retraining
Notification Act; (11) the California Fair Employment and Housing Act; (12) the
California Labor Code; (13) the Utah Antidiscrimination Act; and (14) the Utah
Code, including the Utah Labor Code which Employee now has, owns or holds, or
claims to have, own or hold, or which Employee at any time heretofore had, owned
or held, or claimed to have, own or hold against any of the Releasees relating
to any conduct occurring prior to and including the date of execution of this
Agreement.

In addition, in return for the consideration identified in Paragraphs 3 and 4
above, Employee specifically represents that Employee is knowingly and
voluntarily waiving and releasing any rights Employee may have for age
discrimination under the ADEA or OWBPA.

11.    Knowing and Voluntary Waiver. Section 1542 of the Civil Code of the State
of California provides, generally, that a release does not extend to unknown
claims. Specifically, Section 1542 of the Civil Code of the State of California
states as follows:
“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

For the purposes of implementing a full and complete release and discharge of
Releasees, Employee expressly waives and relinquishes all rights and benefits
afforded by Section 1542 of the Civil Code of the State of California and
acknowledges that this Agreement is intended to include and discharge all claims
which Employee does not know or suspect to exist at the time of execution of
this Agreement related to Employee’s employment with the Company and/or the
termination of that employment.

12.    Consideration Period. In accordance with the ADEA and OWBPA, Employee
acknowledges that: (1) Employee has been advised by the Company that he is
entitled to a period of forty-five (45) days from the Separation Date within
which to consider this Agreement before signing it; (2) he is free to sign this
Agreement at any time prior to the expiration of this forty-five (45) day period
if he so wishes; (3) he expressly acknowledges that he has taken sufficient time
to consider this Agreement before signing it; and (4) this Agreement is written
in a manner that he can understand, and he has fully considered the terms and
conditions of this Agreement.
13.    Revocation Period. Employee acknowledges that Employee is knowingly and
voluntarily waiving and releasing any rights Employee may have under the ADEA
and OWBPA. Employee also acknowledges that the consideration given for the
waiver and release set forth in paragraphs 3 and 4 of this Agreement is in
addition to anything of value to which Employee was already entitled. Employee
further acknowledges that Employee has been advised by this writing, as required
by the OWBPA Act, that: (1) Employee’s waiver and release does not apply to any
rights or claims that may arise after the effective date of this Agreement, or
that are otherwise prohibited from release by law; (2) Employee should consult
with an attorney prior to executing this Agreement; (3) Employee has up to
forty-five (45) days from the Separation Date to consider this Agreement
(although Employee may execute this Agreement earlier at the Employee’s
discretion); (4) Employee has seven (7) days following execution of this
Agreement to revoke the Agreement; and (5) this Agreement shall not be effective
until the date upon which the revocation

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period has expired. Employee shall provide a fully executed copy of this
Agreement to the Company, attention Leslie McMahon, the date of execution of
which by Employee shall begin the seven-day revocation period. Employee may
revoke this Release only by giving Ms. McMahon, formal, written notice of the
revocation of this Agreement, which should be addressed to Skullcandy, Attn:
Leslie McMahon, 1441 Ute Boulevard, Suite 250, Park City, UT 84098, and which
should be received by Ms. McMahon, by the close of business on the seventh (7th)
day following Employee’s execution of this Agreement.
14.    No Filings or Assignment. Employee represents that Employee has not
initiated any suit or action before any federal, state or local judicial or
administrative forum with respect to any matter arising out of or connected with
Employee’s employment by the Company and/or the termination of that employment.
Employee also represents that he has not previously transferred, assigned or
conveyed any right or claim released in this Agreement. Employee further
represents that he has not suffered any work-related injury during his
employment with the Company that he has not reported to the Company.

15.    Confidentiality. Employee represents and agrees that Employee will keep
the terms, amount and fact of this Agreement confidential, and that Employee
will not disclose any information concerning this Agreement to any third person,
other than Employee’s legal and financial advisors or members of Employee’s
family, who shall also be advised of its confidentiality and who shall agree to
be bound by this confidentiality agreement. Without limiting the generality of
the foregoing, Employee specifically agrees that Employee shall not disclose
information regarding this Agreement to any current or former employee of the
Company. Employee agrees that a prohibited disclosure by Employee, Employee’s
family, attorneys, agents, advisors or representatives, whether individually or
jointly, of any of the terms and conditions in violation of the foregoing shall
constitute and be treated as a material breach of this Agreement.

16.    Mutual Non-disparagement. The Parties agree that, for a period of one
year following the Separation Date, they shall not, in any communications with
the press or other media or to any customer, client or supplier of the Company,
or any affiliate of the Company, criticize, ridicule or make any statement which
disparages or is derogatory of each other or its affiliates or any of their
respective directors or senior officers, employees or contractors. In responding
to inquiries about Employee from prospective employers or other third parties,
the Company shall confirm only Employee’s dates of employment, titles, and final
rate of pay.

17.    No Representations. Employee represents and acknowledges that in
executing this Agreement Employee does not rely and has not relied on any
representation or statement by any of the Releasees or by any of the Releasees’
agents, representatives or attorneys with regard to the subject matter, basis or
effect of this Agreement.

18.    Binding Agreement/Governing Law. This Agreement shall be binding upon
Employee and Employee’s heirs, administrators, representatives, executors,
successors and assigns, and shall inure to the benefit of Releasees and each of
them, and to their heirs, administrators, representatives, executors,
successors, and assigns. This Agreement is made and entered into in the State of
California, and shall in all respects be interpreted, enforced and governed
under the laws of the State of California. The language of all parts of this
Agreement shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against any of the parties.

19.    Severability. Should any provision of this Agreement be determined by any
court to be illegal or invalid, the validity of the remaining parts, terms, or
provisions shall not be affected, and said illegal or invalid part, term, or
provision shall be deemed not to be part of this Agreement.

20.    Encouragement to Consult With Attorney. Employee is encouraged to consult
with an attorney before signing this Agreement, but is free to sign the
Agreement at the Employee’s discretion.
21.    Voluntary Agreement. Employee acknowledges that Employee has carefully
read and fully understands this entire Agreement, and that Employee is
voluntarily entering into this Agreement.
22.    Entire Agreement. This Agreement sets forth the entire agreement between
the parties, and fully supersedes any and all prior agreements or understandings
between the parties pertaining to the subject matter of the Agreement and/or
Employee’s employment with the Company.

PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.

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Sincerely,

_______________________
Leslie McMahon
Director, Talent Crew

I expressly acknowledge that I enter this Agreement knowingly and voluntarily,
without any coercion or duress, and that I have had an adequate opportunity to
review this letter and to consult my attorney regarding it to the extent I wish
to do so. I understand the contents of this letter, and I agree to all of its
terms and conditions.

Date: ______________________     ______________________________
Kyle Wescoat