Exhibit 10.1


 


EMPLOYMENT
AGREEMENT


 


                This
Employment Agreement (this “Agreement”), executed as of 22 January 2008,
effective May 31, 2007 (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 January 1,
2009.  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”).


 


(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.


 


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.


 


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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).


 


“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 


 


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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.


 


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 


 


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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.


 


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 


 


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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.


 


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


 


	
  EMPLOYEE:

  	
  THE COMPANY:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DTS,
  INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  D. E. 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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