**Exhibit 10.67**

 

# **EMPLOYMENT AGREEMENT**

 

ThisEmployment Agreement (this “Agreement”), executed February 3, 2006 and effectiveJanuary 2, 2006 (the “Effective Date”) is by and between DTS, Inc., a Delawarecorporation (the “Company”), and Daniel E. Slusser  (“you” or “Executive”) with reference to thefollowing facts:

 

A.    You are currently serving as Chairman of theCompany.

 

B.    The Company has requested that you enter intoan agreement to continue to serve on the terms and conditions set forth in thisAgreement as the Company’s Chairman of the Board of Directors, and you arewilling to serve in such capacity on the terms and conditions set forth in thisAgreement.

 

Inconsideration of the mutual agreements contained in this Agreement, you and theCompany agree as follows:

 

1.     Term.  The term of your employmentunder this Agreement shall commence on the Effective Date and shall expire onMay 31, 2007.  The term of youremployment under this Agreement may be sooner terminated as provided in otherprovisions of this Agreement.

 

2.     Duties.  You agree to serve the Companyas its Chairman of the Board of Directors. Your duties will be those of similar officers for a company similar tothe Company.  During the term of thisAgreement, you agree that you will use your best efforts, on a part time basis,to advance, the business and welfare of the Company.  Notwithstanding the foregoing, you shall bepermitted to serve as a director of or consultant to one or more othercompanies, provided that such companies do not compete in any manner with thebusiness of the Company as now or hereafter conducted.

 

3.     Salary and Benefits.

 

(a)  Salary.  The Company shall pay you a salary at therate of $100,000 per year payable biweekly and subject to payroll deductions asmay be necessary or customary in respect of the Company’s salaried employees ingeneral.

 

(b)  Vacations.  You shall be entitled to 4 weeks paidvacation per calendar year during the term of this Agreement.  Any unused pro-rata portion (not to exceed180 hours of accumulation) of your annual paid vacation shall be paid to youupon termination of your employment for any reason.

 

(c)  Annual Bonus, Inventive, Savings andRetirement Plans.  You shall beentitled to bonuses as deemed appropriate by the Board of Directors of theCompany.  You shall also be entitled toparticipate in all annual bonus, incentive, stock option, savings andretirement plans, practices, policies and programs applicable generally toother employees of the Company of a similar class (as determined by the Boardof Directors) (“Similar Employees”).

 

(1)   Stock Options.  You shall be granted stock options to bevested over four consecutive 12-month periods as per your **Stock Option Agreement** with the Company andadministered under the Company’s **Stock Option****Plan**.  Additional stock options may be granted toyou during the period of this agreement to the extent granted to otheremployees of the company of a similar class and as determined by the Board ofDirectors.

 

(2)   Incentive Plan.  You shall be entitled to participate inCompany Incentive Plans as applicable generally to other employees of theCompany of a similar class and as determined by the

 

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Board of Directors.  You shall be entitled to bonuses as deemedappropriate by the board of Directors with respect to the realization of theCompany’s **Incentive Plan**objectives.

 

(3)   Annual Bonus.  You shall be entitled to participate in theannual bonus plan as applicable generally to other employees of the company ofa similar class and as determined by the plan and the Board of Directors.

 

(4)   Savings and Retirement Plans.  You shall be entitled toparticipate in savings and retirement plans and any other practices, policiesand programs applicable generally to other employees of the company of asimilar class and as determined by the Board of Directors.

 

(d)   Welfare Benefit Plans.  You shall be eligible for participation inand shall receive all benefits under welfare benefit plans, practices, policiesand programs provided by the Company to the extent applicable generally tosimilar employees of the Company, including but not limited to directors’ andofficers’ liability insurance.

 

(e)   Expenses.  You shall be entitled toreceive prompt reimbursement for all reasonable employment expenses incurred byyou in accordance with the policies, practices and procedures as in effectgenerally with respect to Similar Employees of the Company.  You shall be authorized to fly first class onall flights over 2 hours in duration. You shall receive $1,000 per month as an automobile allowance.

 

(f)    Insurance and Indemnity.  TheCompany shall, upon your request, execute a separate indemnification agreementproviding maximum indemnification to you under Delaware law, and may, in thesole discretion of its Board of Directors, acquire directors and officersinsurance.  Any directors and officersinsurance acquired by the Company shall extend to you to the same extent itextends to any other director or officer of the Company.

 

(g)   Other Benefits.  Youshall be entitled to other benefits in accordance with the plans, practices,programs and policies as in effect generally with respect to those extended tothe Chairman and other similar employees of the Company.

 

4.     Death or Disability of Employee.  Ifyou die or become disabled prior to the expiration of this Agreement, youremployment under this Agreement will automatically terminate.  “Disability” means any physical or mentalillness that renders you unable to perform your agreed-upon services under thisAgreement for six consecutive months or an aggregate of 270 days, whether ornot consecutive, during any consecutive 12-month period.  Disability shall be determined by a licensedphysician not affiliated with you or the Company.  However, you shall have the right to haveyour physician present or consulted.  Inthe event of your death or disability, the amounts pursuant to this Agreementthrough the date of your death or disability will be paid to you or yourbeneficiaries.  Such benefits shallinclude your Stock Option Benefits.

 

5.     Termination for Cause.  Bymajority vote of the Board (with you abstaining) and with ten days’ priorwritten notice, your employment under this Agreement may be terminated by theCompany for “good cause.”  If the Companyalleges there are grounds for a Termination for Cause, they will specify inwriting the reasons and you shall have ten (10) business days in which to curesame.  The term “good cause” is definedas any one or more of the following occurrences:

 

(a)  Gross negligence, material violation by youof any duty, or any other material misconduct on your part;

 

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(b)   Your conviction by, or entry of a plea ofguilty or nolo contendere in, a court of competent and final jurisdiction forany crime punishable by imprisonment in the jurisdiction involved; or

 

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

 

In the event of terminationfor “good cause,” your salary, benefits, and unexercised stock options willterminate as of the last day of the month in which proper notice of yourtermination was given to you.

 

6.     Other Termination.  Ifyou are terminated for any reason other than good cause, or are subject to “ConstructiveTermination” (as defined below), you shall be entitled to severance pay equalto the remaining salary due under the term of this Agreement.  You shall be entitled to a lump sum severancepayment without a duty to mitigate. Subject to approval by the Administrator, as defined in the Company’sStock Option Plan, which approval shall be sought at the time of theconsideration by the Board of Directors of this Agreement, all options grantedto you (incentive and non-statutory) shall provide that, in the event of yourtermination of employment (including constructive termination) for other than “goodcause,” as defined herein, that each such option (a) shall immediately vest and(b) shall be exercisable for the period set forth in the option agreement (butnot in excess of the specified maximum term of such option).  You shall also be entitled to continue toreceive such benefits as you are receiving at the time of termination, e.g.health plans, etc., until the end of the term of this Agreement.

 

“Constructive Termination” means a termination of this Agreementresulting from any material failure by the Company to fulfill its obligationsunder this Agreement which is not cured within thirty (30) days after receiptof written notice by the Company from Executive specifying the nature of thefailure, which failure shall include, but shall not be limited to (a) removalof the Executive, other than removal as a result of a termination for cause orvoluntary termination, as Chairman of the board of Directors of the Company orany material change by the Company in the functions, duties or responsibilitiesof Executive from those in which Executive was engaged under this Agreementwithout the consent of Executive, (b) a material, non-voluntary reduction inExecutive’s base salary and eligibility for bonus amounts, or (c) an occurrenceof a Change in Control (as defined).

 

“Change of Control” means that time at which any person or group ofpersons (other than the shareholders of the Company on the closing date of theReorganization) becomes the beneficial owner of a percentage of the Company’svoting stock equal to at least 51% or (ii) all or substantially all of theCompany’s assets are sold as an entirety or substantially as an entirety to anyperson.

 

7.  Confidential Information.  You shall hold in a fiduciary capacity forthe benefit of the Company all secret or confidential information, knowledge ordata relating to the Company or any of its affiliated companies, and theirrespective businesses, which you shall have obtained during your employment bythe Company or any of its affiliated companies (including the Partnership andDigital Theater Systems Corp.) and which shall not be or become publicknowledge (other than by acts by you or your representatives in violation ofthis Agreement).  After termination ofyour employment with the Company, you shall not, without the prior writtenconsent of the Company, or as may otherwise be required by law or legalprocess, communicate or divulge any such information, knowledge or data toanyone other than the Company and those designated by it in writing.  You acknowledge that such action could causeirreparable harm to the Company and that the Company may obtain an injunctionor other equitable relief to enforce this provision.  Furthermore, upon termination of thisAgreement, you will promptly deliver to the Company all books, memoranda,records and written data in original form of

 

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every kind relating to thebusiness and affairs of the Company that may then be in your possession,custody or control.

 

8.     Non-Compete.  You agree that for the periodcommencing on the date of this Agreement and ending upon the termination orexpiration of your employment with the Company (the “Restricted Period”),except on behalf of the company and its affiliates in accordance with thisAgreement, you shall not, directly or indirectly, as employee, agent,consultant, stockholder, director, partner or in any other individual orrepresentative capacity, own, operate, manage, control, engage in, invest in orparticipate in any manner in, act as a consultant or advisor to, renderservices for (alone or in association with any person, firm, corporation orentity), or otherwise assist, for compensation or otherwise, any person orentity that engages in or owns, invests in, operated, manages or controls anyventure or enterprise that engages in any activity, involving the research,development, licensing or sale of multi-channel (surround sound) digital audioencoding technology for consumer applications, or involving the research,development, licensing, manufacture or sale of multi-channel (surround sound)digital audio coding equipment for theatrical application, digital imagerestoration or digital content distribution or services related thereto, (the “Business”);provided, however, that nothing contained in this Agreement shall be construedto prevent you from investing in the stock of any competing corporation listedon a national securities exchange or traded in the over-the-counter market, butonly if you are not involved in the business of said corporation and if you andyour affiliates collectively do not own more that an aggregate of 5% of thestock of such corporation.

 

9.     Non-Solicitation. Without limiting the generality of the provisions of Section 8 above,you agree that during the Restricted Period, except on behalf of the Companyand its affiliates in accordance with this Agreement, you will not interferewith or disrupt or attempt to disrupt the Company’s business relationship withits customers or suppliers or solicit any of the employees of the Company toleave the employment of the Company.

 

10.   Inventions.  All processes, technology,inventions, ideas, improvements, discoveries, trademarks or tradenames relatingto the Business, including any implementation and applications, conceived,developed, invented, made or found by you, alone or with others, during youremployment by the Company, whether or not patentable and whether or notconceived, developed, invented, made or found on the Company’s time or with theuse of the Company’s facilities or materials, shall be the property of theCompany 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 confirmatoryassignments, documents or instruments requested by the Company) to vest titleto any such Inventions in the Company and to enable the Company, at itsexpense, to secure and maintain domestic and/or foreign patents or any otherrights for such Inventions.

 

11.   Arbitration.** **You and the Company agree that any disputearising under or in connection with this Agreement, including any disputeinvolving your employment or the termination of that employment (whether basedon contract, tort or statutory duty or prohibition, including any prohibitionagainst discrimination or harassment), shall be submitted to bindingarbitration 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 jurytrial.

 

The party demanding arbitration shall submit a written claim to theother party setting out the basis of the claim. Demands shall be presented in the same manner as notices under thisAgreement.  You and the Company willattempt to reach agreement on an arbitrator within ten (10) business days ofdelivery of the arbitration demand. After this ten (10) business day period, either you or the Company mayrequest a list of seven professional arbitrators from the American ArbitrationAssociation or another mutually agreed 

 

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service.  You and the Company willalternately strike names until only one person remains and that person shall bedesignated as the arbitrator. The party demanding arbitration shall make thefirst strike.

 

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

 

The arbitrator will have the authority to entertain a motion to dismissand/or a motion for summary judgment by either you or the Company and shallapply the standards governing such motions under California law, unless thestandards 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.

# **TheCompany will pay the arbitrator’s expenses and fees, all meeting room chargesand any other expenses that would not have been incurred if the case werelitigated in the judicial forum having jurisdiction over it.  Unless otherwise ordered by the arbitratorpursuant 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 ownbenefit.  Executive’s share of anyfiling, administration or similar fee shall be no more than the then currentfiling or other applicable fee in California Superior Court or, if applicable,other appropriate tribunal with jurisdiction.**

 

12.   Miscellaneous.

 

12.1         Modification and Waiver of Breach.  Nowaiver or modification of this Agreement shall be binding unless it is inwriting signed by you and the Company. No waiver of a breach of this Agreement shall be deemed to constitute awaiver of a future breach, whether of a similar or dissimilar nature.

 

12.2         Notices.  All notices and othercommunication required or permitted under this Agreement shall be in writing,served personally on, mailed by certified or registered United States mail ornationally recognized express mail courier to, the party to be charged withreceipt thereof.  Notices and othercommunications served by mail shall be deemed given hereunder upon delivery ifserved in person or delivered by express courier, or 72 hours after deposit ofsuch notice or communication in the United States Post Office as certified orregistered mail with postage prepaid and duly addressed to whom such notice orcommunication is to be given in the case of (a) the Company, 5171 ClaretonDrive, Agoura Hills, California 91301, Attention: General Counsel, or (b) toyou, to the address set forth below your name on the signature page of thisAgreement.  You and the Company maychange their address for purposes of this Section by giving to the partyintended to be bound thereby, in the manner provided herein, a written noticeof such change.

 

12.3**        **Counterparts.  Thisinstrument may be executed in one or more counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the sameAgreement.

 

12.4         Construction of Agreement.  Thisagreement shall be construed in accordance with, and governed by, the internallaws of the State of California.

 

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12.5         Severability Clause.  Ifany provision of this Agreement or the application thereof is held invalid, theinvalidity shall not affect other provisions or applications of the Agreementwhich can be given effect without the invalid provisions or applications and tothis end the provisions of this Agreement are declared to be severable.

 

12.6         Complete Agreement.  This instrument constitutes and contains theentire agreement and understanding concerning your employment and the othersubject matters addressed in this Agreement between you and the Company, andsupersedes and replaces all prior negotiations and all agreements proposed orotherwise, whether written or oral, concerning the subject matters hereof(including any previous agreements relating to your employment with DigitalTheater Systems, Inc., Digital Theater System Corp. or the Partnership).  This is an integrated document.

 

INWITNESS WHEREOF, the undersigned have executed this Agreement on the day andyear first above written.

 

 
| EMPLOYEE:                       | THE COMPANY: |
|---------------------------------|--------------|
|                            |         |
|                            | DTS  INC.    |
|                            |         |
|                            |         |
| /s/  Daniel Slusser             |         | By: | /s/  Jon Kirchner |   |
| DANIEL  SLUSSER                 |         | Jon  Kirchner |
| Address:  As provided to the    |         | President  & CEO |
| Company’s  Human Resources |         |   |
| Department                      |         |   |
|                                 |              |  |  |  |

 

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