Exhibit 10.1


 


EMPLOYMENT
AGREEMENT


 


This
Employment Agreement (this “Agreement”), executed as of 23rd day of March 2009, effective January 1,
2009 (the “Effective Date”) is by and between DTS, Inc., a Delaware
corporation (the “Company”), and Daniel E. Slusser (“you” or “Executive”) with
reference to the following facts:


 


A.   You are currently serving as Chairman of the
Company.


 


B.   The Company has requested that you enter into
an agreement to continue to serve on the terms and conditions set forth in this
Agreement as the Company’s Chairman of the Board of Directors, and you are
willing to serve in such capacity on the terms and conditions set forth in this
Agreement.


 


In consideration of the mutual agreements contained
in this Agreement, you and the Company agree as follows:


 


1.     Term.  The term of your employment under this
Agreement shall commence on the Effective Date and shall expire on May 30,
2010.  The term of your employment under
this Agreement may be sooner terminated as provided in other provisions of this
Agreement.


 


2.     Duties.  You agree to serve the Company as its
Chairman of the Board of Directors.  Your
duties will be those of similar officers for a company similar to the Company.  During the term of this Agreement, 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 be permitted to serve as a
director of or consultant to one or more other companies, provided that such
companies do not compete in any manner with the business of the Company as now
or hereafter conducted.


 


3.     Salary and Benefits.


 


(a)   Salary.  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.


 


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


 


(c)   Annual
Bonus, Inventive, Savings and Retirement Plans.  You shall be entitled to bonuses as deemed
appropriate by the Board of Directors of the Company.  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 other employees of the
Company of a similar class (as determined by the Board of Directors) (“Similar
Employees”).


 


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(1)   Stock Options.  You shall be granted stock options to be
vested over four consecutive 12-month periods as per your Stock Option Agreement with the Company and
administered under the Company’s Stock Option
Plan.  Additional stock options may be granted to
you during the period of this agreement to the extent granted to other
employees of the company of a similar class and as determined by the Board of
Directors.  If you retire past the age
of 60 while employed by the Company or an Affiliate, any stock options,
restricted stock or company issued equity (to the extent then exercisable) may
be exercised, in whole or in part, by you at any time prior to the earlier of
the Expiration Date (as defined in your Stock Option, Restricted Stock or other
Equity Agreement) and a Corporate Transaction (as defined in your Stock Option
Plan or equity incentive plan) which terminates such stock options or other Company
issued equity.  Further, upon such
retirement, any and all stock options, restricted stock or other Company issued
equity, shall continue to vest in accordance with its terms as if you remained
employed by the Company.


 


(2)   Incentive Plan.  You shall be entitled to participate in
Company Incentive Plans as applicable generally to other employees of the
Company of a similar class and as determined by the Board of Directors.  You shall be entitled to bonuses as deemed
appropriate by the board of Directors 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 other employees of the company of
a similar class and as determined by the plan and the Board of Directors.


 


(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 other employees of the company of a similar class and
as determined by the Board of Directors.


 


(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 of the Company, including but not limited to directors’ and
officers’ liability insurance.


 


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


 


(f)    Insurance and Indemnity. 
The Company shall, upon your request, execute a separate indemnification
agreement providing maximum indemnification to you under Delaware law, and may,
in the sole discretion of its Board of Directors, acquire directors and
officers insurance.  Any directors and
officers insurance acquired by the Company shall extend to you to the same
extent it extends to any other director or officer of the Company.


 


(g)   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 those extended to
the Chairman and other similar employees of the Company.


 


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4.     Death
or Disability of Employee.  If you
die or become disabled prior to the 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 six consecutive months or an aggregate of 270 days, whether or
not consecutive, during any consecutive 12-month period.  Disability shall be determined by a licensed
physician not affiliated with you or the Company.  However, you shall have the right to have
your physician present or consulted.  In
the event of your death or disability, the amounts pursuant to this Agreement
through the date of your death or disability will be paid to you or your
beneficiaries.  Such benefits shall
include your Stock Option Benefits.


 


5.     Termination
for Cause.  By majority vote of the
Board (with you abstaining) and with ten days’ prior written notice, your
employment under this Agreement may be terminated by the Company for “good
cause.”  If the Company alleges there are
grounds for a Termination for Cause, they will specify in writing the reasons
and you shall have ten (10) business days in which to cure same.  The term “good cause” is defined as any one
or more of the following occurrences:


 


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


 


(b)   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


 


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


 


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


 


6.     Other
Termination.  If you are terminated
for any reason other than good cause, or are subject to “Constructive Termination”
(as defined below), you shall be entitled to severance pay equal to the
remaining salary due under the term of this Agreement.  You shall be entitled to a lump sum severance
payment without a duty to mitigate. 
Subject to approval by the Administrator, as defined in the Company’s
Stock Option Plan, which approval shall be sought at the time of the
consideration by the Board of Directors of this Agreement, all options granted
to you (incentive and non-statutory) shall provide that, in the event of your
termination of employment (including constructive termination) for other than “good
cause,” 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 (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, e.g. health plans, etc., until the end of the term of this
Agreement.


 


“Constructive Termination” means a termination of this Agreement
resulting from 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 by the Company from Executive specifying the nature of the
failure, which failure shall include, but shall not be limited to (a) removal
of the Executive, other than removal as a result of a termination for cause or
voluntary termination, as Chairman of the board of Directors of the Company or
any material change by the Company in the functions, duties or responsibilities
of Executive from those in which Executive was engaged under this Agreement
without the consent of Executive, (b) a material, non-voluntary reduction
in Executive’s base salary and eligibility for bonus amounts, or (c) an
occurrence of a Change in Control (as defined).


 


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


 


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, and their respective businesses, which you shall have obtained
during your employment by the Company or any of its affiliated companies
(including the Partnership and Digital Theater Systems Corp.) 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 action could cause irreparable harm to the Company and
that the Company may obtain an injunction or other equitable 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.  You agree that for the period commencing on
the date of this Agreement and ending upon the termination or expiration of
your employment with the Company (the “Restricted Period”), 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 that engages in or owns,
invests in, operated, manages or controls any venture or enterprise that
engages in any activity, involving the research, development, licensing or sale
of multi-channel (surround sound) digital audio encoding 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 image restoration or digital
content distribution or services related thereto, (the “Business”); 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 in the business of said corporation and if you and your
affiliates collectively do not own more that an aggregate of 5% of the stock 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 Company and its affiliates in accordance with
this Agreement, 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.


 


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10.   Inventions.  All processes, technology, inventions, ideas,
improvements, discoveries, trademarks or tradenames relating to the Business,
including any implementation and applications, conceived, developed, invented,
made or found by you, alone or with others, during your employment by the
Company, 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 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.


 


11.   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.  Executive’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.


 


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12.   Miscellaneous.


 


12.1 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.


 


12.2 Notices.  All notices and other communication required
or permitted under this Agreement shall be in writing, served personally on,
mailed by certified or registered United States mail or nationally recognized
express mail courier to, the party to be charged with receipt thereof.  Notices and other communications served by
mail shall be deemed given hereunder upon delivery if served in person or
delivered by express courier, or 72 hours after deposit of such notice or
communication in the United States Post Office as certified or registered mail
with postage prepaid and 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 set forth below your name on the signature page of this
Agreement.  You and the Company may
change their address for purposes of this Section by giving to the party
intended to be bound thereby, in the manner provided herein, a written notice
of such change.


 


12.3 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.


 


12.4 Construction of Agreement.  This agreement shall be construed in
accordance with, and governed by, the internal laws of the State of California.


 


12.5 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.


 


12.6 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 (including any
previous agreements relating to your employment with Digital Theater Systems, Inc.,
Digital Theater System Corp. or the Partnership).  This is an integrated document.


 


13.   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 you agree to execute any and
all amendments to this Agreement as mutually agreed in good faith that 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 you
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 you 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 


 


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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 you
first incur a “separation from service” for purposes of Section 409A.  Further, to the extent that you are a
specified employee” (as defined in Section 409A) as of the date of your
separation from service, no amount that constitutes a deferral of compensation
which is payable on account of your separation from service shall paid to you
before the date (the “Delayed Payment Date”) which is first day of the seventh
month after the date of your separation from service or, if earlier, the date
of your 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.


 


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


 


 


	
  EMPLOYEE:

  	
   

  	
  THE COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DTS
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Daniel E. Slusser

  	
   

  	
  By:

  	
  /s/
  Jon E. Kirchner

  
	
  DANIEL
  SLUSSER

  	
   

  	
   

  	
  Jon
  Kirchner

  
	
  Address:
  As provided to the

  	
   

  	
   

  	
  President &
  CEO

  
	
  Company’s
  Human Resources

  	
   

  	
   

  	
   

  
	
  Department

  	
   

  	
   

  	
   

  



 


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