Exhibit 10.2

 

April 14, 2009

 

Brian Towne

29743 Quail Run Dr.

Agoura Hills, CA 91301

 

Re:          Employment Agreement

 

Dear Brian:

 

DTS, Inc. (“DTS” or the “Company”) is pleased to extend to you the following
employment Agreement.  Unless otherwise set forth in this Agreement, you
acknowledge that your employment with DTS is “at-will”.

 

Title:                                                            Executive Vice
President, General Manager

 

Duties:                                                  You agree to serve the
Company as its Executive Vice President, General Manager.  Your duties are as
defined in Company’s job description for the position or as otherwise specified
by the President and Chief Executive Officer of the Company.  During the Term of
this Agreement, you will devote full time to, and use your best efforts to
advance, the business and welfare of the Company.

 

Status:                                                   Salary Exempt.

 

Effective Date: April 14, 2009.

 

Base Salary:                    $280,000 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.

 

Bonus:                                                   Participation in the
bonus plan will be on a level commensurate with other executives, and subject to
completion of individual and company milestone achievements per mutual agreement
on targets.

 

Stock Options:        All Stock options granted to you are conditioned on Board
of Directors approval and shall vest over four consecutive 12-month periods as
per your Stock Option Agreement with the Company and administered under the
respective Company’s Stock Option Plan.

 

Vacation:                                      You shall be provided with One
Hundred Sixty (160) hours of vacation, which shall be automatically replenished
upon use.  However, vacation hours will not be replenished during any period
where you are not actively working for the Company, until you have resumed
actively working for at least one full workweek.

 

Holidays:                                       Per Company’s annual published
schedule (commonly 12 days per year); plan is subject to change.  The salary
includes holiday pay and you are not entitled to any additional salary or
compensation for work on a holiday.

 

Severance:                              Upon the termination of this Agreement
by the Company for other than good cause, including constructive termination:
(A) the Company shall for a period of twelve (12) months; (I) pay to Employee in
monthly installments, as severance pay, Employee’s full Salary, and (II) provide
Employee the same level of benefits Employee was receiving as of the time of
termination of this Agreement, unless otherwise required by law, (B) all
options, restricted stock, or other Company issued equity incentives granted to
you (incentive and nonstatutory) shall (I) immediately vest and (II) where
applicable, be exercisable for five (5) years from such termination (but not in
excess of the specified maximum term of such option).  Constructive Termination
shall mean any material failure by the Company to fulfill its obligations under
this Agreement which is not cured within thirty (30) days after receipt of
written notice from you specifying the nature of the failure, including, but not
limited to, (a) your removal, other than removal as a result of a termination
for cause or your voluntary termination, as Executive Vice President, General
manager of the Company, (b) any material change by the Company in your
functions, duties or responsibilities from those in which you were engaged under
this Agreement without your consent, or (c) a material, non-voluntary reduction
in your base salary and eligibility for bonus amounts.

 

Benefits:                                        The following are the Company
supplied Benefits as of the date of this Agreement.  Benefit coverage is subject
to change at company election that may result in elimination of benefits or
increased co-pay.  Unless otherwise set forth below, eligibility begins the
first day of the month after hire date.  Please see the applicable plan
documents for additional information.  In the event of any conflict between this
description and the plan document, the plan document will prevail.

 

Insurance:

 

Health

Long Term Disability

Dental

Long Term Care

Vision

Section 125:    Available for dependent and health care.

Life: $50,000 coverage

401k Plan:       Enrollment dates 1/1 4/1, 7/1 & 10/1.

 

ESPP: Enrollment — May and November

 

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Death or Disability of Employee.  If you die or become disabled prior to the
termination of this Agreement, your employment under this Agreement will
automatically terminate upon your death or the determination that you are
disabled.  “Disability” means any physical or mental illness that renders you
unable to perform your agreed-upon services under this Agreement for ninety (90)
consecutive days or an aggregate of one-hundred twenty (120) days, whether or
not consecutive, during any consecutive twelve (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.

 

Termination for Cause.  Your employment under this Agreement may be terminated
immediately by the Company for “good cause”.  Upon such termination you will be
provided notice specifying the reasons for the termination.  You shall have ten
(10) business days from the date such termination to cure such cause, if
curable.  Absent such cure within the cure period, your employment shall be
deemed terminated for good cause on the date of your termination.  The term
“good cause” is defined as any one or more of the following occurrences:

 

(I)                        Negligence or a material violation by you of any duty
or any other material or repetitive misconduct or failure on your part;

(II)                    Your conviction by, or entry of a plea of guilty or nolo
contendere in, a court of competent and final jurisdiction for any crime
punishable by imprisonment in the jurisdiction involved; or

(III)                Your commission of an act of fraud, prior to or subsequent
to the date of this Agreement, upon the Company.

(IV)                Failure to execute and deliver to the Company any
document(s) required by all employees of the Company, or employees of a similar
position, at the location you are employed.

 

Nothing in this section or the availability of termination for good cause is
intended to alter the at-will status of employment with the Company.  Either you
or the company may terminate the employment relationship at any time, with or
without cause.

 

Employee’s Consideration for Severance.  As consideration for receiving
severance pay and benefits provided hereunder, during the period that Employee
is receiving severance pay or benefits hereunder, Employee shall:

 

(I)                        Consulting.  Be reasonably available, by telephone,
as a consultant to the Company on projects or task you have previously been
involved in.  It is agreed that eight (8) hours per week of consultation, by
phone, shall be reasonable.

(II)                    Non-Compete.  You agree that for the period commencing
on the date of this Agreement and ending upon the date of the last severance
payment hereunder, Employee 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 that
engages in or owns, invests in, operates, manages or controls any venture or
enterprise that is a direct competitor of 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: (1) you are not involved
in the business of said corporation, and (2) if you and your affiliates
collectively do not own more than an aggregate of 5% of the stock of such
corporation, and (3) such investment does not violate the Company’s Insider
Trading Policy.

(III)                Non-Solicitation.  You agree that you will not interfere
with or disrupt or attempt to disrupt the Company’s business relationship with
its customers or suppliers or solicit any of the employees of the Company to
leave the employment of the Company.

(IV)                Severance Agreement.  You shall enter into a severance
agreement and general release with the company in the form designated by the
Company which shall become effective in accordance with its terms no later than
sixty (60) days following your termination.

 

Section 409A Compliance.  This Agreement is intended to comply with, or
otherwise be exempt from, Section 409A of the Internal Revenue Code
(“Section 409A”).  The Company and the Employee agree that they will execute any
and all amendments to this Agreement as they mutually agree in good faith may be
necessary to ensure compliance with the provisions of Section 409A.  The
preceding provisions, however, shall not be construed as a guarantee by the
Company of any particular tax effect to the Employee under this Agreement.

 

For purposes of Section 409A, the right to a series of installment payments
under this Agreement shall be treated as a right to a series of separate
payments.  With respect to any reimbursement of expenses of, or any provision of
in-kind benefits to, the Employee, as specified under this Agreement, such
reimbursement of expenses or provision of in-kind benefits shall be subject to
the following conditions: (1) the expenses eligible for reimbursement or the
amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Section 105(b) of the
Internal Revenue Code; (2) the reimbursement of an eligible expense shall be
made no later than the end of the year after the year in which such expense was
incurred; and (3) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit.

 

No amount payable pursuant to this Agreement which constitutes a “deferral of
compensation” subject to Section 409A shall be paid unless and until the
Employee first incurs a “separation from service” for purposes of Section 409A. 
Further, to the extent that the Employee is a “specified employee” (as defined
in Section 409A) as of the date of Employee’s separation from service, no amount
that constitutes a deferral of compensation which is payable on account of
Employee’s separation from service shall paid to Employee before the date (the
“Delayed Payment Date”) which is first day of the seventh month after the date
of Employee’s separation from service or, if earlier, the date of Employee’s
death following such separation from service.  All such amounts that would, but
for this Section, become payable prior to the Delayed Payment Date will be
accumulated and paid on the Delayed Payment Date.

 

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Arbitration.  You and the Company agree that any dispute arising under or in
connection with this Agreement, including any dispute involving your employment
or the termination of that employment (whether based on contract, tort or
statutory duty or prohibition, including any prohibition against discrimination
or harassment), shall be submitted to binding arbitration in accordance with
California Code of Civil Procedure §§ 1280 — 1294.2 before a single neutral
arbitrator.  You and the Company understand that each is waiving its rights to a
jury trial.

 

The party demanding arbitration shall submit a written claim to the other party
setting out the basis of the claim.  Demands shall be presented in the same
manner as notices under this Agreement.  You and the Company will attempt to
reach agreement on an arbitrator within ten (10) business days of delivery of
the arbitration demand.  After this ten (10) business day period, either you or
the Company may request a list of seven professional arbitrators from the
American Arbitration Association or another mutually agreed service.  You and
the Company will alternately strike names until only one person remains and that
person shall be designated as the arbitrator. The party demanding arbitration
shall make the first strike.

 

The arbitration shall take place in or within five miles of Agoura Hills,
California, at a time and place determined by the arbitrator.  Each party shall
be entitled to discovery of essential documents and witnesses and to deposition
discovery, as determined by the arbitrator, taking into account the mutual
desire to have a fast, cost-effective, dispute-resolution mechanism.  You and
company will attempt to cooperate in the discovery process before seeking the
determination of the arbitrator.  Except as otherwise determined by the
arbitrator, you and the Company will each be limited to no more than three
(3) depositions.  The arbitrator shall have the powers provided in California
Code of Civil Procedure §§ 1282.2 — 1284.2 and may provide all appropriate
remedies at law or equity.

 

The arbitrator will have the authority to entertain a motion to dismiss and/or a
motion for summary judgment by either you or the Company and shall apply the
standards governing such motions under California law, unless the standards of
another judicial forum supercede California law.  The Arbitrator shall render,
within sixty (60) days of the completion of the arbitration, an award and a
written, reasoned opinion in support of that award.  Judgment on the award may
be entered in any court having jurisdiction.

 

The Company will pay the arbitrator’s expenses and fees, all meeting room
charges and any other expenses that would not have been incurred if the case
were litigated in the judicial forum having jurisdiction over it.  Unless
otherwise ordered by the arbitrator pursuant to law or this Agreement, each
party shall pay its own attorney fees, witness fees and other expenses incurred
by the party for his or her own benefit.  Employee’s share of any filing,
administration or similar fee shall be no more than the then current filing or
other applicable fee in California Superior Court or, if applicable, other
appropriate tribunal with jurisdiction.

 

Modification and Waiver of Breach.  No waiver or modification of this Agreement
shall be binding unless it is in 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.

 

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 72 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, at the address of
record provided by you to the Company’s Human Resources department.  Either
party may change their address for purposes of this Section by giving written
notice, in the manner stated herein.  You agree to promptly update the Company’s
Human Resources department with any changes to your contact information.

 

Counterparts and Facsimile Signatures.  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.

 

Construction of Agreement.  This Agreement shall be construed in accordance
with, and governed by, the internal laws of the State of California and both
parties irrevocably agree to the exclusive jurisdiction and venue of the state
and local courts of the County of Los Angeles, California.

 

Legal Fees.  If any legal action, arbitration or other proceeding is brought for
the enforcement of this Agreement, or because of any alleged dispute, breach,
default or misrepresentation in connection with this Agreement, the successful
or prevailing party shall be entitled to recover reasonable attorneys’ fees and
other costs it incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.

 

Severability Clause.  If any provision of this Agreement or the application
thereof is held invalid, the invalidity shall not affect other provisions or
applications of the Agreement which can be given effect without the invalid
provisions or applications and to this end the provisions of this Agreement are
declared to be severable.

 

Complete Agreement.  This instrument 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.

 

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.

 

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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.

 

Other Agreements.  A condition of employment with DTS is a signed
Confidentiality and Non-Disclosure Agreement, Employee Invention Agreement, the
DTS Worldwide Business Conduct Policy, and receiving satisfactory confirmation
of an employee background check.  Your failure to agree to these conditions and
complete these documents in a timely manner may result in your termination for
good cause.  You also understand and agree that, except as expressly provided in
this Agreement, you are subject to all of the Company’s general business and
human resources polices and procedures as they presently exist or as they may
exist in the future and failure to abide by such provisions may result in your
termination for good cause.  Provided, however, that the at-will status of
employment may only be changed as provided below.

 

At-Will.  By signing this letter, you understand and agree that your employment
with DTS is “at-will.”  Your employment with DTS is voluntarily entered into and
we recognize you are free to resign at any time.  Similarly, it is recognized
that DTS is free to conclude an employment relationship at any time we feel is
appropriate.  While other terms of your employment may change with or without
notice, this at-will relationship can be changed only in a written agreement
signed by you and the President & Chief Executive Officer of DTS.

 

Sincerely,

 

 

/s/ Jon E. Kirchner

 

/s/ Sharon K. Faltemier

Jon Kirchner

 

Sharon Faltemier

President and Chief Executive Officer

 

Senior Vice President, Human Resources

 

 

Acceptance:

 

/s/ Brian D. Towne

 

May 8, 2009

 

 

Brian Towne

 

Date

 

 

 

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AGREEMENT OF AT WILL EMPLOYMENT

 

I understand and agree that my employment with DTS is on an at-will basis.  This
means that either DTS or I or may terminate the employment relationship at any
time at their sole discretion without cause.

 

I further understand that while other personnel policies, procedures, and
benefits of DTS may change from time to time in DTS’s discretion, this at-will
employment relationship can only be changed by an express written employment
agreement signed by me and an officer of DTS.

 

 

Brian D. Towne

 

 

Employee Name (PRINT)

 

 

 

 

/s/ Brian D. Towne

 

May 8, 2009

 

 

Employee Signature

 

Date

 

 

 

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