Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is entered into as of January 3,
2005, by and between DTS Digital Images, Inc. (the “Company”), an indirect
wholly owned subsidiary of Digital Theater Systems, Inc., a Delaware corporation
(“DTS”), and Ian Godin (“you” or “Employee”) with reference to the following
facts:

 

WHEREAS, concurrently with the execution and delivery of this Agreement, DTS is
acquiring from the Employee all of Employee’s shares of common stock of Lowry
Digital Images, Inc. pursuant to the terms of an Agreement and Plan of Merger
made as of the date hereof (the “Merger Agreement”).  The Merger Agreement
requires that this Agreement be executed and delivered by each of the Company
and Employee as a condition to the consummation of the transactions contemplated
thereby.

 

NOW, THEREFORE, in consideration of the various, covenants and agreements
hereinafter set forth, and other good and valuable consideration, the parties
hereto agree as follows:

 

1.                                       TERM OF EMPLOYMENT.  THE COMPANY HEREBY
AGREES TO EMPLOY EMPLOYEE, AND EMPLOYEE ACCEPTS SUCH EMPLOYMENT, SUBJECT TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT.  THE INITIAL TERM OF THIS AGREEMENT
SHALL COMMENCE AS OF THE DATE HEREOF AND SHALL RUN FOR A PERIOD OF 36 MONTHS,
UNLESS SOONER TERMINATED, AND SHALL AUTOMATICALLY RENEW THEREAFTER FOR ONE
ADDITIONAL 12-MONTH PERIOD, WITHOUT FURTHER ACTION OF ANY KIND BY THE PARTIES,
UNLESS NOTICE OF NON-RENEWAL IS GIVEN BY EITHER PARTY WITHIN 30 DAYS OF THE END
OF THE INITIAL 36-MONTH TERM, OR UNLESS THIS AGREEMENT IS OTHERWISE TERMINATED
IN ACCORDANCE WITH ITS TERMS (THE “TERM”).  THE PHRASE “TERM OF EMPLOYEE’S
EMPLOYMENT HEREUNDER” SHALL MEAN THE PERIOD OF THIRTY-SIX (36) MONTHS EXTENDING
FROM THE DATE OF THIS AGREEMENT OR THE 12-MONTH PERIOD EXTENDING FROM THE DATE
OF THE RENEWAL PERIOD, AS APPLICABLE, UNLESS YOU ARE TERMINATED FOR “CAUSE”, AS
DEFINED HEREIN, WHEREUPON THE “TERM OF EMPLOYEE’S EMPLOYMENT HEREUNDER” SHALL BE
FROM THE DATE OF THIS AGREEMENT UNTIL THE DATE OF TERMINATION FOR CAUSE.

 

2.                                       DUTIES.  YOU AGREE TO SERVE THE COMPANY
AS A SOFTWARE ENGINEER OR IN SUCH OTHER CAPACITY AS THE COMPANY MAY FROM TIME TO
TIME REQUIRE.  YOUR DUTIES WILL INCLUDE SUCH DUTIES AS ARE CUSTOMARILY PERFORMED
BY SOFTWARE ENGINEERS FOR COMPANIES SIMILAR TO THE COMPANY, AND SUCH OTHER
DUTIES AS ARE SPECIFIED BY THE CHIEF EXECUTIVE OFFICER OF THE COMPANY (THE
“CEO”).  DURING THE TERM OF THIS AGREEMENT, YOU WILL DEVOTE SUBSTANTIALLY FULL
TIME TO, AND USE YOUR BEST EFFORTS TO ADVANCE, THE BUSINESS AND WELFARE OF THE
COMPANY.  YOU SHALL REPORT DIRECTLY TO JOHN LOWRY OR TO SUCH OTHER INDIVIDUAL AS
MAY BE DESIGNATED BY THE CEO.

 

3.                                       SALARY AND BENEFITS.

 

(A)                                  SALARY.  FOR THE TERM OF YOUR EMPLOYMENT
HEREUNDER, THE COMPANY SHALL PAY YOU A SALARY AT THE RATE OF $100,000 PER YEAR,
PAYABLE BIWEEKLY AND SUBJECT TO PAYROLL DEDUCTIONS AS MAY BE NECESSARY OR
CUSTOMARY IN RESPECT OF THE COMPANY’S SALARIED EMPLOYEES IN GENERAL (“BASE
SALARY”).

 

--------------------------------------------------------------------------------

 

(B)                                 VACATIONS.  YOU SHALL BE ENTITLED TO THREE
WEEKS PAID VACATION DURING EACH 12-MONTH PERIOD THAT YOU ARE EMPLOYED BY THE
COMPANY PURSUANT TO THE TERMS OF THIS AGREEMENT.  VACATION SHALL ACCRUE BIWEEKLY
ON A PRO-RATA BASIS.  ANY UNUSED PRO-RATA PORTION (NOT TO EXCEED 120 HOURS OF
ACCUMULATION) OF YOUR ANNUAL PAID VACATION SHALL BE PAID TO YOU UPON TERMINATION
OF THIS AGREEMENT FOR ANY REASON.

 

(C)                                  ANNUAL BONUS, INCENTIVE, SAVINGS AND
RETIREMENT PLANS.  YOU SHALL BE ENTITLED TO BONUSES AS DEEMED APPROPRIATE BY THE
CEO.  YOU SHALL ALSO BE ENTITLED TO PARTICIPATE IN ALL ANNUAL BONUS, INCENTIVE,
STOCK OPTION, SAVINGS AND RETIREMENT PLANS, PRACTICES, POLICIES AND PROGRAMS
APPLICABLE GENERALLY TO EMPLOYEES OF DTS OF A SENIOR STAFF LEVEL (“SIMILAR
EMPLOYEES”).

 

(1)                                  STOCK OPTIONS.  AS OF THE DATE HEREOF, YOU
SHALL BE GRANTED OPTIONS (“OPTIONS”) TO PURCHASE UP TO 15,000 SHARES OF DTS
COMMON STOCK PURSUANT TO THE DTS 2003 EQUITY INCENTIVE PLAN.  THE TERMS OF SUCH
OPTIONS SHALL BE SET FORTH IN A STOCK OPTION AGREEMENT, THE FORM OF WHICH IS
ATTACHED HERETO.

 

(2)                                  INCENTIVE PLAN.  YOU SHALL BE ENTITLED TO
PARTICIPATE IN COMPANY INCENTIVE PLANS AS APPLICABLE GENERALLY TO SIMILAR
EMPLOYEES AND AS DETERMINED BY THE CEO.  YOU SHALL BE ENTITLED TO BONUSES AS
DEEMED APPROPRIATE BY THE CEO WITH RESPECT TO THE REALIZATION OF THE COMPANY’S
INCENTIVE PLAN OBJECTIVES.

 

(3)                                  ANNUAL BONUS.  YOU SHALL BE ENTITLED TO
PARTICIPATE IN THE ANNUAL BONUS PLAN AS APPLICABLE GENERALLY TO SIMILAR
EMPLOYEES AND AS DETERMINED BY THE PLAN AND THE CEO.  ALTHOUGH YOUR TARGETED
BONUS EACH YEAR SHALL EQUAL 10% OF YOUR BASE SALARY, YOUR RIGHT TO RECEIVE ANY
BONUS SHALL BE IN THE SOLE DISCRETION OF THE COMPANY.

 

(4)                                  SAVINGS AND RETIREMENT PLANS.  YOU SHALL BE
ENTITLED TO PARTICIPATE IN SAVINGS AND RETIREMENT PLANS AND ANY OTHER PRACTICES,
POLICIES AND PROGRAMS APPLICABLE GENERALLY TO SIMILAR EMPLOYEES AND AS
DETERMINED BY THE CEO.

 

(D)                                 WELFARE BENEFIT PLANS.  YOU SHALL BE
ELIGIBLE FOR PARTICIPATION IN AND SHALL RECEIVE ALL BENEFITS UNDER WELFARE
BENEFIT PLANS, PRACTICES, POLICIES AND PROGRAMS PROVIDED BY THE COMPANY TO THE
EXTENT APPLICABLE GENERALLY TO SIMILAR EMPLOYEES.  BENEFIT COVERAGE IS SUBJECT
TO CHANGE AT THE COMPANY’S ELECTION, INCLUDING BUT NOT LIMITED TO CHANGES THAT
RESULT IN ELIMINATION OF BENEFITS OR INCREASED CO-PAY REQUIREMENTS.

 

(E)                                  EXPENSES.  THE COMPANY SHALL PROMPTLY
REIMBURSE EMPLOYEE FOR REASONABLE OUT-OF-POCKET EXPENSES INCURRED IN CONNECTION
WITH THE COMPANY’S BUSINESS AND THE PERFORMANCE OF EMPLOYEE’S DUTIES HEREUNDER,
SUBJECT TO (I) SUCH POLICIES AS THE COMPANY MAY FROM TIME TO TIME ESTABLISH FOR
SENIOR EXECUTIVES OF THE COMPANY, AND (II) EMPLOYEE FURNISHING THE COMPANY WITH
EVIDENCE IN THE FORM OF RECEIPTS SATISFACTORY TO THE COMPANY SUBSTANTIATING THE
CLAIMED EXPENDITURES.

 

(F)                                    OTHER BENEFITS.  YOU SHALL BE ENTITLED TO
OTHER BENEFITS IN ACCORDANCE WITH THE PLANS, PRACTICES, PROGRAMS AND POLICIES AS
IN EFFECT GENERALLY WITH RESPECT TO SIMILAR EMPLOYEES.

 

2

--------------------------------------------------------------------------------

 

4.                                       DEATH OR DISABILITY OF EMPLOYEE.  IF
YOU DIE OR BECOME DISABLED PRIOR TO THE TERMINATION OR OTHER EXPIRATION OF THIS
AGREEMENT, YOUR EMPLOYMENT UNDER THIS AGREEMENT WILL AUTOMATICALLY TERMINATE. 
“DISABILITY” MEANS ANY PHYSICAL OR MENTAL ILLNESS THAT RENDERS YOU UNABLE TO
PERFORM YOUR AGREED-UPON SERVICES UNDER THIS AGREEMENT FOR 90 CONSECUTIVE DAYS
OR AN AGGREGATE OF 120 DAYS, WHETHER OR NOT CONSECUTIVE, DURING ANY CONSECUTIVE
12-MONTH PERIOD.  DISABILITY SHALL BE DETERMINED BY A LICENSED PHYSICIAN
SELECTED BY THE COMPANY THAT IS NOT AFFILIATED WITH YOU OR THE COMPANY.  IN THE
EVENT OF YOUR DEATH OR DISABILITY, THE AMOUNTS DUE YOU PURSUANT TO THIS
AGREEMENT THROUGH THE DATE OF YOUR DEATH OR DISABILITY WILL BE PAID TO YOU OR
YOUR BENEFICIARIES.

 

5.                                       TERMINATION FOR CAUSE.  YOUR EMPLOYMENT
UNDER THIS AGREEMENT MAY BE TERMINATED IMMEDIATELY BY THE COMPANY FOR “CAUSE”
(AS SUCH TERM IS DEFINED BELOW).  IF THE COMPANY ALLEGES CAUSE, IT WILL SPECIFY
IN WRITING THE REASONS AND YOU SHALL HAVE TEN (10) BUSINESS DAYS FROM THE DATE
SUCH NOTICE IS GIVEN IN WHICH TO CURE SUCH CAUSE.  ABSENT SUCH CURE WITHIN THE
CURE PERIOD, YOUR EMPLOYMENT SHALL BE DEEMED TERMINATED FOR CAUSE ON THE DATE
SUCH NOTICE WAS GIVEN.  CAUSE SHALL INCLUDE, BUT NOT BE LIMITED TO, THE
FOLLOWING:

 

(A)                                  GROSS NEGLIGENCE OR A MATERIAL VIOLATION BY
YOU OF ANY DUTY OR ANY OTHER MATERIAL OR REPETITIVE MISCONDUCT OR FAILURE ON
YOUR PART;

 

(B)                                 YOUR CONVICTION BY OR ENTRY OF A PLEA OF
GUILTY OR NO CONTEST IN A COURT OF COMPETENT AND FINAL JURISDICTION FOR ANY
CRIME THAT IS PUNISHED BY IMPRISONMENT; OR

 

(C)                                  YOUR COMMISSION OF AN ACT OF FRAUD, WHETHER
PRIOR TO OR SUBSEQUENT TO THE DATE OF THIS AGREEMENT, UPON THE COMPANY OR ANY OF
ITS AFFILIATES.

 

In the event of termination for “cause,” this Agreement will terminate, and your
salary and unexercised stock options will terminate as of the date of
termination for cause, beyond which point in time the Company shall have no
further obligations to you whatsoever, unless otherwise required by law.

 

6.                                       OTHER TERMINATION.

 

(A)                                  SEVERANCE PAY.  THE COMPANY MAY TERMINATE
THIS AGREEMENT AT ANY TIME AND WITHOUT CAUSE AT THE COMPANY’S SOLE DISCRETION,
EFFECTIVE FIVE (5) DAYS AFTER NOTICE TO YOU.  UPON THE TERMINATION OF THIS
AGREEMENT FOR OTHER THAN “CAUSE”, OR UPON A TERMINATION OF THIS AGREEMENT BY
EMPLOYEE FOR GOOD REASON (AS DEFINED BELOW), THE COMPANY SHALL CONTINUE DURING
THE TERM OF YOUR EMPLOYMENT HEREUNDER TO PAY TO YOU IN MONTHLY INSTALLMENTS, AS
SEVERANCE PAY, YOUR FULL BASE SALARY IN EFFECT AT THE TIME OF SUCH TERMINATION. 
YOUR RIGHT TO SEVERANCE PAY SHALL TERMINATE IN THE EVENT YOU BREACH ANY OF THE
TERMS OF SECTIONS 7, 8 OR 9 OF THIS AGREEMENT.

 

In the event of termination of this Agreement (A) by the Company for other than
“cause” and other than upon your death or disability, or (B) by you for Good
Reason, each Option (a) shall immediately vest and (b) shall be exercisable for
two years from such termination (but not in excess of the specified maximum term
of such Option).  You shall also be entitled to continue to receive such
benefits as you are receiving at the time of termination of this

 

3

--------------------------------------------------------------------------------

 

Agreement, e.g.  health plans, etc., until the end of the term of your
employment hereunder, unless otherwise required by law.

 

(B)                                 TERMINATION BY EMPLOYEE.  YOU HAVE THE RIGHT
TO TERMINATE YOUR EMPLOYMENT UNDER THIS AGREEMENT IN THE EVENT (I) THERE IS A
REDUCTION IN, OR FAILURE TO PAY, THE BASE SALARY OR ANY OTHER PAYMENTS OR
BENEFITS DUE TO YOU HEREUNDER, AFTER RECEIPT BY THE COMPANY OF WRITTEN NOTICE
FROM YOU GIVING THE COMPANY AT LEAST 30 DAYS IN WHICH TO CURE SUCH REDUCTION OR
FAILURE; (II) THE COMPANY COMMITS A MATERIAL BREACH OF ANY OF THE TERMS OF THIS
AGREEMENT, PROVIDED THAT WITH RESPECT TO ANY BREACH CAPABLE OF BEING CURED, ONLY
IF SUCH BREACH IS NOT CURED WITHIN 30 DAYS OF RECEIPT BY THE COMPANY OF WRITTEN
NOTICE FROM YOU; OR (III) THE COMPANY HAS FILED FOR BANKRUPTCY OR IS ADJUDGED
INSOLVENT OR HAS FAILED TO MAKE PAYMENTS TO CREDITORS WHEN DUE.  ANY SUCH
TERMINATION BY YOU SHALL BE REFERRED TO AS A TERMINATION FOR “GOOD REASON.”

 

(C)                                  MITIGATION.  IN THE EVENT OF TERMINATION OF
THIS AGREEMENT BY THE COMPANY WITHOUT CAUSE OR BY YOU FOR GOOD REASON PURSUANT
TO THIS SECTION 6, YOU SHALL IN GOOD FAITH SEEK NEW EMPLOYMENT AT A LEVEL
COMMENSURATE WITH YOUR DUTIES AND BASE SALARY HEREUNDER.  EMPLOYEE SHALL REPORT
TO THE COMPANY ON OR BEFORE THE FIRST DAY OF EACH MONTH THE STATUS OF OBTAINING
SUCH SUBSEQUENT EMPLOYMENT WHILE RECEIVING PAY AND OTHER BENEFITS PURSUANT TO
SUBSECTION 6(A) ABOVE.  IF EMPLOYEE WHILE RECEIVING PAY PURSUANT TO
SUBSECTION 6(A) ABOVE, OBTAINS EMPLOYMENT WITH ANOTHER EMPLOYER OR A CONSULTING
ASSIGNMENT, THE COMPANY THEREAFTER AND FOR THE REMAINDER OF THE TERM OF
EMPLOYEE’S EMPLOYMENT HEREUNDER, MAY DEDUCT FROM PAYMENTS DUE EMPLOYEE UNDER
THIS AGREEMENT, THE AMOUNT OF SALARY AND BENEFITS OR A CONSULTING PAYMENTS
ACTUALLY RECEIVED BY EMPLOYEE AS A RESULT OF SUCH SUBSEQUENT EMPLOYMENT OR A
CONSULTING ASSIGNMENT.  IN THE EVENT EMPLOYEE OBTAINS SUBSEQUENT EMPLOYMENT OR A
CONSULTING ASSIGNMENT, EMPLOYEE SHALL REPORT ON A MONTHLY BASIS, THE AMOUNT OF
COMPENSATION PAID AND TO BE PAID TO EMPLOYEE DURING THE UNEXPIRED TERM AND THE
NATURE AND TYPE OF BENEFITS RECEIVED.

 

(D)                                 CONSULTING.  DURING THE PERIOD THAT EMPLOYEE
IS RECEIVING SEVERANCE PAY PURSUANT TO SUBSECTION 6(A) ABOVE, EMPLOYEE SHALL BE
AVAILABLE, SUBJECT TO YOUR OTHER REASONABLE COMMITMENTS OR OBLIGATIONS MADE OR
INCURRED IN MITIGATION OF THE TERMINATION OF YOUR EMPLOYMENT, BY TELEPHONE,
EMAIL OR FAX, AS A CONSULTANT TO THE COMPANY AND DTS, WITHOUT FURTHER
COMPENSATION, TO CONSULT WITH THEIR RESPECTIVE OFFICERS AND DIRECTORS REGARDING
PROJECTS AND/OR TASKS AS DEFINED BY THE CEO OR HIS DESIGNATED REPRESENTATIVE. 
IT IS AGREED THAT EIGHT (8) HOURS PER WEEK OF CONSULTATION, SHALL BE REASONABLE.

 

7.                                       CONFIDENTIAL INFORMATION.  YOU SHALL
HOLD IN A FIDUCIARY CAPACITY FOR THE BENEFIT OF THE COMPANY ALL SECRET OR
CONFIDENTIAL INFORMATION, KNOWLEDGE OR DATA RELATING TO THE COMPANY OR ANY OF
ITS AFFILIATED COMPANIES (INCLUDING BUT NOT LIMITED TO DTS), AND THEIR
RESPECTIVE BUSINESSES, WHICH YOU SHALL HAVE OBTAINED DURING YOUR EMPLOYMENT BY
THE COMPANY OR ANY OF ITS AFFILIATED COMPANIES AND WHICH SHALL NOT BE OR BECOME
PUBLIC KNOWLEDGE (OTHER THAN BY ACTS BY YOU OR YOUR REPRESENTATIVES IN VIOLATION
OF THIS AGREEMENT).  AFTER TERMINATION OF YOUR EMPLOYMENT WITH THE COMPANY, YOU
SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, OR AS MAY OTHERWISE
BE REQUIRED BY LAW OR LEGAL PROCESS, COMMUNICATE OR DIVULGE ANY SUCH
INFORMATION, KNOWLEDGE OR DATA TO ANYONE OTHER THAN THE COMPANY AND THOSE
DESIGNATED BY IT IN WRITING.  YOU ACKNOWLEDGE THAT SUCH ACTIONS COULD CAUSE
IRREPARABLE HARM TO THE COMPANY AND THAT THE COMPANY, IN ADDITION TO ANY OTHER
REMEDY, MAY OBTAIN AN INJUNCTION OR OTHER EQUITABLE

 

4

--------------------------------------------------------------------------------

 

RELIEF TO ENFORCE THIS PROVISION.  FURTHERMORE, UPON TERMINATION OF THIS
AGREEMENT, YOU WILL PROMPTLY DELIVER TO THE COMPANY ALL BOOKS, MEMORANDA,
RECORDS AND WRITTEN DATA IN ORIGINAL FORM OF EVERY KIND RELATING TO THE BUSINESS
AND AFFAIRS OF THE COMPANY THAT MAY THEN BE IN YOUR POSSESSION, CUSTODY OR
CONTROL.

 

8.                                       NON-COMPETE.  AS AN INDUCEMENT FOR DTS
TO ENTER INTO THE MERGER AGREEMENT AND AS ADDITIONAL CONSIDERATION FOR THE
CONSIDERATION TO BE PAID TO EMPLOYEE UNDER THE MERGER AGREEMENT, YOU AGREE THAT
FOR THE PERIOD COMMENCING ON THE DATE OF THIS AGREEMENT AND ENDING ON THE LATER
OF (I) THE 36-MONTH ANNIVERSARY OF THE DATE HEREOF AND (II) THE DATE ON WHICH
YOU ARE NO LONGER EMPLOYED BY THE COMPANY OR ANY OF ITS AFFILIATES, EXCEPT ON
BEHALF OF THE COMPANY AND ITS AFFILIATES IN ACCORDANCE WITH THIS AGREEMENT, YOU
SHALL NOT, DIRECTLY OR INDIRECTLY, AS EMPLOYEE, AGENT, CONSULTANT, STOCKHOLDER,
DIRECTOR, PARTNER OR IN ANY OTHER INDIVIDUAL OR REPRESENTATIVE CAPACITY, OWN,
OPERATE, MANAGE, CONTROL, ENGAGE IN, INVEST IN OR PARTICIPATE IN ANY MANNER IN,
ACT AS A CONSULTANT OR ADVISOR TO, RENDER SERVICES FOR (ALONE OR IN ASSOCIATION
WITH ANY PERSON, FIRM, CORPORATION OR ENTITY), OR OTHERWISE ASSIST, FOR
COMPENSATION OR OTHERWISE, ANY PERSON OR ENTITY IN THE UNITED STATES THAT
ENGAGES IN OR OWNS, INVESTS IN, OPERATES, MANAGES OR CONTROLS ANY VENTURE OR
ENTERPRISE THAT IS A DIRECT COMPETITOR OF THE COMPANY OR DTS; PROVIDED, HOWEVER,
THAT NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED TO PREVENT YOU FROM
INVESTING IN THE STOCK OF ANY COMPETING CORPORATION LISTED ON A NATIONAL
SECURITIES EXCHANGE OR TRADED IN THE OVER-THE-COUNTER MARKET, BUT ONLY IF YOU
ARE NOT INVOLVED, DIRECTLY OR INDIRECTLY, IN THE BUSINESS OF SAID CORPORATION
AND IF YOU AND YOUR AFFILIATES COLLECTIVELY DO NOT OWN MORE THAN AN AGGREGATE OF
5% OF THE STOCK OF SUCH CORPORATION, AND SUCH INVESTMENT DOES NOT VIOLATE THE
DTS INSIDER TRADING POLICY.

 

9.                                       NON-SOLICITATION.  WITHOUT LIMITING THE
GENERALITY OF THE PROVISIONS OF SECTION 8 ABOVE, YOU AGREE THAT, FOR THE PERIOD
COMMENCING ON THE DATE OF THIS AGREEMENT AND ENDING ON THE LATER OF (I) THE
36-MONTH ANNIVERSARY OF THE DATE HEREOF AND (II) THE DATE ON WHICH YOU ARE NO
LONGER EMPLOYED BY THE COMPANY OR ANY OF ITS AFFILIATES, EXCEPT ON BEHALF OF THE
COMPANY AND ITS AFFILIATES IN ACCORDANCE WITH THIS AGREEMENT, YOU WILL NOT
INTERFERE WITH OR DISRUPT OR ATTEMPT TO DISRUPT THE BUSINESS RELATIONSHIP OF THE
COMPANY OR ANY OF ITS AFFILIATES WITH THEIR RESPECTIVE CUSTOMERS OR SUPPLIERS OR
SOLICIT ANY OF THE EMPLOYEES OF THE COMPANY OR ITS AFFILIATES TO LEAVE THE
EMPLOYMENT OF THE COMPANY OR ITS AFFILIATES.

 

10.                                 INVENTIONS.  ALL PROCESSES, TECHNOLOGIES AND
INVENTIONS RELATING TO THE COMPANY’S BUSINESS (COLLECTIVELY, “INVENTIONS”),
INCLUDING NEW CONTRIBUTIONS, IMPROVEMENT, IDEAS, DISCOVERIES, TRADEMARKS
COPYRIGHTS AND TRADE NAMES (“INTELLECTUAL PROPERTY”), CONCEIVED, DEVELOPED,
INVENTED, MADE OR FOUND BY YOU, ALONE OR WITH OTHERS, DURING THE TERM OF
EMPLOYEE’S EMPLOYMENT HEREUNDER, WHETHER OR NOT PATENTABLE AND WHETHER OR NOT
CONCEIVED, DEVELOPED, INVENTED, MADE, OR FOUND ON THE COMPANY’S TIME OR WITH THE
USE OF THE COMPANY’S FACILITIES OR MATERIALS, SHALL BE THE PROPERTY OF THE
COMPANY AND SHALL BE PROMPTLY AND FULLY DISCLOSED BY YOU TO THE COMPANY.  YOU
SHALL PERFORM ALL NECESSARY ACTS (INCLUDING, WITHOUT LIMITATION, EXECUTING AND
DELIVERING ANY CONFIRMATORY ASSIGNMENTS, DOCUMENTS OR INSTRUMENTS REQUESTED BY
THE COMPANY) TO VEST TITLE TO ANY SUCH INVENTIONS OR OTHER INTELLECTUAL PROPERTY
IN THE COMPANY AND TO ENABLE THE COMPANY, AT ITS EXPENSE, TO SECURE AND MAINTAIN
DOMESTIC AND/OR FOREIGN PATENTS OR ANY OTHER RIGHTS FOR SUCH INVENTIONS AN OTHER
INTELLECTUAL PROPERTY.  THE FOREGOING SHALL NOT APPLY, HOWEVER, TO AN INVENTION
THAT YOU DEVELOPED ENTIRELY ON YOUR OWN TIME WITHOUT USING THE COMPANY’S
EQUIPMENT, SUPPLIES, FACILITIES, OR TRADE SECRET INFORMATION EXCEPT FOR THOSE

 

5

--------------------------------------------------------------------------------

 

INVENTIONS THAT EITHER:  (I) RELATE AT THE TIME OF CONCEPTION OR REDUCTION TO
PRACTICE OF THE INVENTION TO THE COMPANY’S BUSINESS, OR ACTUAL OR DEMONSTRABLY
ANTICIPATED RESEARCH OR DEVELOPMENT OF THE COMPANY; OR (II) RESULT FROM ANY WORK
PERFORMED BY YOU FOR THE COMPANY. YOU AGREE TO PROMPTLY DISCLOSE IN WRITING TO
YOUR IMMEDIATE SUPERVISOR, WITH A COPY TO THE PRESIDENT OF THE COMPANY, OR TO
ANY PERSONS DESIGNATED BY THE COMPANY, ALL INVENTIONS MADE OR CONCEIVED OR
REDUCED TO PRACTICE OR DEVELOPED BY YOU, EITHER ALONE OR JOINTLY WITH OTHERS,
DURING THE TERM OF YOUR EMPLOYMENT (WHETHER PRIOR TO OR FOLLOWING THE EXECUTION
OF THIS AGREEMENT).  YOU WILL ALSO DISCLOSE TO THE PRESIDENT OF THE COMPANY ALL
THINGS THAT WOULD BE INVENTIONS IF MADE DURING THE TERM OF YOUR EMPLOYMENT,
CONCEIVED, REDUCED TO PRACTICE, OR DEVELOPED BY YOU WITHIN SIX (6) MONTHS OF THE
TERMINATION OF YOUR EMPLOYMENT WITH THE COMPANY.

 

11.                                 MISCELLANEOUS.

 

11.1                           MODIFICATION AND WAIVER OF BREACH.  NO WAIVER OR
MODIFICATION OF THIS AGREEMENT SHALL BE BINDING UNLESS IT IS WRITING SIGNED BY
YOU AND THE COMPANY.  NO WAIVER OF A BREACH OF THIS AGREEMENT SHALL BE DEEMED TO
CONSTITUTE A WAIVER OF A FUTURE BREACH, WHETHER OF A SIMILAR OR DISSIMILAR
NATURE.

 

11.2                           NOTICES.  ALL NOTICES AND OTHER COMMUNICATIONS
REQUIRED OR PERMITTED UNDER THIS AGREEMENT SHALL BE IN WRITING, SERVED
PERSONALLY ON, OR MAILED BY NATIONALLY RECOGNIZED EXPRESS MAIL COURIER.  NOTICES
AND OTHER COMMUNICATIONS SERVED BY EXPRESS MAIL COURIER SHALL BE DEEMED GIVEN
120 HOURS (SUBJECT TO WEEKENDS AND STATUTORY HOLIDAYS NOT INCLUDED IN THE TOTAL
HOURS) AFTER DEPOSIT WITH SUCH EXPRESS MAIL COURIER DULY ADDRESSED TO WHOM SUCH
NOTICE OR COMMUNICATION IS TO BE GIVEN, IN THE CASE OF (A) THE COMPANY, 5171
CLARETON DRIVE, AGOURA HILLS, CALIFORNIA 91301, ATTENTION: GENERAL COUNSEL, OR
(B) TO YOU, TO THE ADDRESS OF RECORD PROVIDED BY YOU TO THE DTS HUMAN RESOURCES
DEPARTMENT.  EITHER PARTY MAY CHANGE THEIR ADDRESS FOR PURPOSE OF THIS
SECTION BY GIVING TO THE PARTY INTENDED TO BE BOUND THEREBY, IN THE MANNER
PROVIDED HEREIN, A WRITTEN NOTICE OF SUCH CHANGE.  YOU AGREE TO PROMPTLY UPDATE
THE HUMAN RESOURCES DEPARTMENT WITH ANY CHANGES TO YOUR CONTACT INFORMATION.

 

11.3                           COUNTERPARTS.  THIS INSTRUMENT MAY BE EXECUTED IN
ONE OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF
WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME AGREEMENT.  THE PARTIES AGREE
THAT A SIGNATURE DELIVERED BY FACSIMILE TRANSMISSION WILL BE TREATED IN ALL
RESPECTS AS HAVING THE SAME EFFECT AS AN ORIGINAL SIGNATURE.

 

11.4                           CONSTRUCTION OF AGREEMENT.  THIS AGREEMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA.

 

11.5                           SEVERABILITY.  IF FOR ANY REASON ANY TERM OR
PROVISION OF THIS AGREEMENT IS HELD TO BE INVALID OR UNENFORCEABLE, ALL OTHER
VALID TERMS AND PROVISIONS HEREOF SHALL REMAIN IN FULL FORCE AND EFFECT, AND ALL
OF THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE DEEMED TO BE SEVERABLE IN
NATURE.  IF FOR ANY REASON ANY TERM OR PROVISION CONTAINING A RESTRICTION SET
FORTH HEREIN IS HELD TO COVER AN AREA OR TO BE FOR A LENGTH OF TIME WHICH IS
UNREASONABLE, OR IN ANY OTHER WAY IS CONSTRUED TO BE TOO BROAD OR TO ANY EXTENT
INVALID, SUCH TERM OR PROVISION SHALL NOT BE DETERMINED TO BE NULL, VOID AND OF
NO EFFECT, BUT TO THE EXTENT THE SAME IS OR WOULD BE VALID OR ENFORCEABLE UNDER
APPLICABLE LAW, ANY COURT OF COMPETENT JURISDICTION SHALL CONSTRUE AND INTERPRET
OR REFORM THIS AGREEMENT TO PROVIDE FOR A RESTRICTION HAVING THE MAXIMUM
ENFORCEABLE AREA, TIME

 

6

--------------------------------------------------------------------------------

 

PERIOD AND OTHER PROVISIONS (NOT GREATER THAN THOSE CONTAINED HEREIN) AS SHALL
BE VALID AND ENFORCEABLE UNDER APPLICABLE LAW.

 

11.6                           COMPLETE AGREEMENT.  THIS INSTRUMENT, TOGETHER
WITH THE DOCUMENTS REFERENCED IN THIS AGREEMENT, CONSTITUTES AND CONTAINS THE
ENTIRE AGREEMENT AND UNDERSTANDING CONCERNING YOUR EMPLOYMENT AND THE OTHER
SUBJECT MATTERS ADDRESSED IN THIS AGREEMENT BETWEEN YOU AND THE COMPANY, AND
SUPERSEDES AND REPLACES ALL PRIOR NEGOTIATIONS AND ALL AGREEMENTS PROPOSED OR
OTHERWISE, WHETHER WRITTEN OR ORAL, CONCERNING THE SUBJECT MATTERS HEREOF.  THIS
IS AN INTEGRATED DOCUMENT.

 

11.7                           THIRD PARTY BENEFICIARIES.  THIS AGREEMENT DOES
NOT CREATE, AND SHALL NOT BE CONSTRUED AS CREATING, ANY RIGHTS ENFORCEABLE BY
ANY PERSON NOT A PARTY TO THIS AGREEMENT, EXCEPT AS EXPRESSLY CONTEMPLATED
HEREIN.

 

11.8                           NON-TRANSFERABILITY OF INTEREST.  NONE OF THE
RIGHTS OF EMPLOYEE TO RECEIVE ANY FORM OF COMPENSATION PAYABLE PURSUANT TO THIS
AGREEMENT SHALL BE ASSIGNABLE OR TRANSFERABLE EXCEPT THROUGH A TESTAMENTARY
DISPOSITION OR BY THE LAWS OF DESCENT AND DISTRIBUTION UPON THE DEATH OF
EMPLOYEE.  ANY ATTEMPTED ASSIGNMENT, TRANSFER, CONVEYANCE, OR OTHER DISPOSITION
(OTHER THAN AS SET FORTH HEREIN) OF ANY INTEREST IN THE RIGHTS OF EMPLOYEE TO
RECEIVE ANY FORM OF COMPENSATION TO BE MADE BY THE COMPANY PURSUANT TO THIS
AGREEMENT SHALL BE VOID.

 

11.9                           OTHER AGREEMENTS.  A CONDITION OF EMPLOYMENT WITH
THE COMPANY IS YOUR EXECUTION OF A CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT,
AN EMPLOYEE INVENTION AGREEMENT, AND THE DTS WORLDWIDE BUSINESS CONDUCT POLICY. 
YOUR FAILURE TO AGREE TO THESE CONDITIONS AND COMPLETE AND EXECUTE THESE
DOCUMENTS IN A TIMELY MANNER MAY RESULT IN YOUR TERMINATION FOR CAUSE.  YOU ALSO
UNDERSTAND AND AGREE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, YOU
ARE SUBJECT TO ALL OF THE COMPANY’S AND DTS’S GENERAL BUSINESS AND HUMAN
RESOURCES POLICIES AND PROCEDURES AS THEY PRESENTLY EXIST OR AS THEY MAY EXIST
IN THE FUTURE, AND TO THE EXTENT THAT SUCH POLICIES AND PROCEDURES ARE BONA
FIDE, REASONABLE, NOT CONTRARY TO LAW AND OTHERWISE CONSISTENT WITH THE TERMS OF
THE AGREEMENT INCLUDING THE NATURE OF YOUR DUTIES AND RESPONSIBILITIES, AND
FAILURE TO ABIDE BY SUCH PROVISIONS MAY RESULT IN YOUR TERMINATION FOR CAUSE.

 

11.10                     LEGAL ADVICE.  YOU ACKNOWLEDGE AND AGREE THAT YOU HAVE
OBTAINED INDEPENDENT LEGAL ADVICE WITH RESPECT TO THIS AGREEMENT AND THAT YOU
FULLY UNDERSTAND THE NATURE AND CONSEQUENCES OF THIS AGREEMENT.

 

[Remainder of page intentionally left blank]

 

7

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day and
year first above written.

 

 

EMPLOYEE:

 

/s/ Ian Godin

 

Ian Godin

 

 

Address:

Address of Record with DTS
Human Resources Department

 

 

THE COMPANY:

 

 

 

 

 

DTS DIGITAL IMAGES, INC.

 

 

 

 

 

By:

/s/ Jon E. Kirchner

 

 

 

Name: Jon E. Kirchner

 

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

The obligations of the Company are hereby
guaranteed by DTS

 

 

 

 

 

DIGITAL THEATER SYSTEMS, INC.

 

 

 

By:

/s/ Jon E. Kirchner

 

 

 

Name: Jon E. Kirchner

 

 

 

Title: President and Chief Executive Officer

 

 

 

8

--------------------------------------------------------------------------------