EXHIBIT 2.4 
  ASSET PURCHASE AGREEMENT   among:   NEURAL AUDIO CORPORATION, a Washington corporation;  ROBERT W. REAMS, an individual;  PAUL T. HUBERT, an individual;  ROBERT D. GOLDEN, an individual; and  ROBERT A. KOESTER, an individual;  DTS WASHINGTON LLC, a Delaware limited liability company;  DTS (BVI) LIMITED,a company incorporated under the laws of the British
Virgin Islands; and  DTS, Inc., a Delaware corporation.  
  Dated as of December 31, 2008


ASSET PURCHASE AGREEMENT  This Asset
Purchase Agreement, dated December 31, 2008 (this Agreement),
is by and among:  Neural Audio
Corporation, a Washington corporation (Seller); Robert W. Reams, an individual
(Reams); Paul T. Hubert, an
individual (Hubert), Robert D.
Golden; an individual (Golden);
Robert A. Koester, an individual (Koester
and together with Reams, Hubert and Golden, the Shareholders);
DTS Washington LLC, a Delaware limited liability company (DTS
Washington); DTS (BVI) Limited, a company incorporated under
the laws of the British Virgin Islands (BVI) and
DTS, Inc., a Delaware corporation (DTS, and
together with DTS Washington and BVI, Buyers). 
Unless otherwise defined herein, capitalized terms shall have the
meanings ascribed to them in Exhibit A.  RECITALS  A.Seller
is engaged in the business of (i) developing, licensing and/or selling (a) audio
signal processing hardware, related software and maintenance services and (b) audio
transmission software, related hardware and maintenance services; and (ii) developing
surround-sound microphones  (the Business).  B.Each
of the Shareholders owns a tenancy-in-common interest in those patents and
patent applications set forth on Schedule 1.2 to this Agreement
(collectively, the Shareholder Patents), each
of which are licensed to Seller and used in the Business;  C.Prior
to the Closing (as defined below), each of the Shareholders desires to sell to
Seller their entire right, title and interest in and to the Shareholder
Patents;  D.Seller
desires to sell, and Buyers desire to buy, certain of Sellers assets (which
shall include the Shareholder Patents) on the terms and subject to the
conditions set forth in this Agreement.  In
consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:  ARTICLE I  PURCHASE AND SALE OF ASSETS  1.1Purchase
of Assets from Seller.  Upon the
terms and subject to the conditions contained in this Agreement, at the
Closing, Seller shall sell, assign, transfer and convey to DTS Washington and
BVI, and DTS Washington and BVI shall purchase, acquire and accept from Seller,
as more specifically set forth on Schedule 1.1, all of Sellers assets
of every kind and description (other than the Excluded Assets) that are used or
useful in the Business wherever located and whether or not such assets and
properties are reflected on the books and records of Seller or the Business
(the Purchased Assets), free and
clear of all Encumbrances, other than Permitted Encumbrances.  The Purchased Assets include without
limitation:  2


(a)all of Sellers
rights under all licenses, permits, authorizations, orders, registrations,
certificates, approvals, consents and franchises, or any pending applications
for any of the foregoing;  (b)all of the rights and interests of Seller
and the Shareholders in the Seller IP Rights;  (c)any contract,
instrument, agreement, commitment or other understanding or arrangement
including leases (whether for personal property or real property) (1) to
which Seller is a party or which is attributable to or related to the Business,
including all of Sellers rights under said contracts, (2) pursuant to
which any of the Purchased Assets are bound or subject, or (3) involving the
Purchased Assets including without limitation those contracts set forth on Schedule 2.10
or any insurance policies pursuant to which Seller is a beneficiary or any of
the Purchased Assets are insured (together, the Purchased
Contracts);  (d)all of Sellers
claims, customer deposits, prepayments, prepaid expenses, refunds, causes of
action, rights of recovery, rights of setoff and rights of recoupment existing
as of the Closing Date and whether or not recorded in the books and records of
Seller;  (e)all of the
accounts receivable of the Business existing as of the Closing Date (the Accounts Receivable);  (f)all (i) of
Sellers advertiser and customer and supplier lists and all other sales,
marketing and supplier information, (ii) of Sellers know-how, technology,
drawings, engineering specifications, bills of materials, (iii) of Sellers
software, database and related programs used or useful in the conduct of the
Business, and (iv) other intangible assets of Seller;  (g)all books and
records which relate to the operations and finance of Seller, including,
without limitation, books, records, ledgers, files, documents, correspondence,
computer discs, computer files, diagrams, construction data, blueprints, instruction
manuals, maintenance manuals, reports and similar documents used or useful in
connection with the Business;  (h)Sellers
corporate name and any trade names (current and any former, if applicable) and
any and all goodwill associated therewith;  (i)all inventory,
including all merchandise, raw materials, work in progress, finished products
and other tangible personal property held for sale or otherwise used in the
operation of the Business (the Inventory);  (j)all machinery,
apparatus, furniture and fixtures, materials, supplies, motor vehicles, vessels
and other equipment or property of every type whether now owned, leased, used
or held for use or hereafter owned, leased, used or held for use by Seller in
connection with operation of the Business;  (k)all of the
rights and interests of Seller in any unemployment compensation, workers
compensation and other credits, reserves or deposits with applicable
Governmental Authorities;  3


(l)all of the rights
and interests of the Business in, to and under any third party manufacturers
warranties, to the extent such warranties are assignable;  (m)all cash
accounts of Seller; and  (n)all other
assets of Seller of every kind and description, tangible or intangible, to the
extent used or useful in the conduct of the Business not provided for above.  1.2[Reserved].  1.3Excluded Assets.  Notwithstanding the foregoing, Seller is not
selling, assigning, transferring or conveying to Buyers hereunder and Buyers
are not purchasing hereunder the assets of Seller set forth on Schedule 1.3
hereto (collectively, the Excluded Assets).  1.4Assumed
Liabilities.  In
connection with the purchase and sale of the Purchased Assets and Shareholder
Patents, Buyers shall only assume the following obligations and liabilities of
Seller (the Assumed Liabilities), provided,
however, that the Assumed Liabilities do not and shall not include those
obligations and liabilities of Seller and the Shareholders set forth in Section 1.5
(the Excluded Liabilities):  (a)all liabilities
and obligations of Seller arising on and after the Closing Date under the
executory portion of the Purchased Contracts; provided, however,
that the Assumed Liabilities shall not include any liabilities or obligations
arising out of any breach by Seller or the Shareholders on or prior to the
Closing of any provision of any such Purchased Contract, including but not
limited to, liabilities or obligations arising out of Sellers or the
Shareholders failure to perform under any such Purchased Contract in
accordance with its terms prior to the Closing; and  (b)the accounts
payable of Seller specifically included in Working Capital listed on Schedule 1.4(b).  1.5Excluded
Liabilities. 
Notwithstanding anything in this Agreement to the contrary, any
disclosure contained herein or made pursuant hereto, anything otherwise known
to Buyers, Buyers do not assume and will not become responsible for any
liability or obligation (whether known or unknown, whether or not accrued,
absolute, contingent, unliquidated or otherwise, whether due or to become due
and regardless of when asserted) of Seller or Shareholders except the Assumed
Liabilities.  Without limiting the
generality of the foregoing, the following are included among the liabilities
of Seller and Shareholders which Buyers do not expressly or impliedly assume:  (a)all liabilities
of Seller and the Shareholders that exist or may arise under that certain
Software License, Co-Branding and Distribution Agreement dated August 10,
2006 between Seller and THX, Ltd., a Delaware corporation, and any amendments
thereto (the THX Agreement);  (b)all
Indebtedness of Seller;  4


(c)all liabilities
of Seller and Shareholders with respect to any expenses relating to the
transactions contemplated by this Agreement;  (d)all liabilities
of Seller under any Environmental Law existing on the Closing Date, including
without limitation all liabilities which are attributable to non-compliance
with federal, state, and local statutes or regulations governing water
discharges, air emissions, and to the disposal, release, generation, treatment,
transport, recycling or storage of any Hazardous Substance at or from any
property or facility owned, leased, used or occupied at any time by Seller or
any predecessor, including any predecessor in ownership, or arising out of or
attributable to arrangements for any of the foregoing by Seller or any
predecessor, including any predecessor in ownership, and any environmental
condition or violation of Environmental Law with respect to the Leased Real
Property which existed on or prior to the Closing Date;  (e)all liabilities
of Seller with respect to all Taxes for all periods prior to the Closing Date;  (f)all liabilities
of Seller with respect to any pending, threatened or unasserted litigation,
claim, demand, investigation or proceeding including, without limitation,
liabilities relating to the Excluded Assets or to the Leased Real Property and
liabilities relating to any Tax owed, alleged to be owed, or that may become
owed to any Governmental Authority with respect to matters which occurred prior
to the Closing Date;  (g)all product
liability or product warranty obligations of Seller with respect to sales made
prior to the Closing Date which are not reserved for on the Closing Balance
Sheet;  (h)any obligation
or liability of Seller incurred in connection with the execution, delivery or
performance of this Agreement;  (i)all liabilities
of Seller which are attributable to non-compliance with applicable Laws;  (j)all liabilities associated with any
Employee Benefit Plans;  (k)any liabilities
of the Shareholders; and  (l)any liabilities
of the Seller to the Shareholders.  1.6Purchase Price.  (a)The aggregate
consideration payable for the Purchased Assets and Shareholder Patents is Seven
Million Five Hundred Thousand Dollars ($7,500,000), plus assumption by Buyers
of the Assumed Liabilities (the Closing Purchase Price).  (b)The Closing Purchase Price shall be
payable as follows:  At the Closing, Buyers
shall deliver to Seller by wire transfer of immediately available fundsto an account
designated by Sellera
portion of the Closing Purchase Price equal to Six Million Dollars ($6,000,000)
in cash, which shall be allocated in accordance with Section 1.10.  5


Following delivery by Buyers to Seller of such portion
of the Closing Purchase Price, Seller shall in all events be solely responsible
for any and all further distribution of proceeds to the Shareholders in
accordance with the allocation as set forth in Section 1.10 and Buyers
shall in no way be liable or responsible for distribution of any portion of the
Closing Purchase Price directly to the Shareholders.  At the
Closing, One Million Five Hundred Thousand Dollars ($1,500,000) of the Closing
Purchase Price (the Escrowed Funds)
shall be paid in cash by Buyers and placed in escrow with Wells Fargo Bank,
N.A., a national banking association (the Escrow Agent),
pursuant to an Escrow Agreement in the form of Exhibit B hereto,
with such changes as may be reasonably required by the Escrow Agent (the Escrow Agreement).  The Escrowed Funds shall consist of Two
Hundred Fifty Thousand Dollars ($250,000) to be placed in escrow to cover any
shortfalls to the Working Capital Requirement as more fully described in Section 1.8,
and which shall be released to the Seller and the Shareholders and allocated as
set forth in Section 1.10 in accordance with the Escrow Agreement upon
determination of the Final Adjustment, and One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) to be placed in escrow for a period of
twenty-four (24) months following the Closing Date to secure Sellers and the
Shareholders indemnification obligations under Article 7, subject to the
terms and conditions set forth in the Escrow Agreement.  Interest on the Escrowed Funds shall be
payable to the party who ultimately receives such Escrowed Funds.  1.7Earnout.  (a)Earnout
Consideration.  In addition
to the Closing Purchase Price, if the earnout performance milestones (each an Earnout Milestone and collectively
the Earnout Milestones) set forth below
in Section 1.7(b) are achieved, Seller shall receive, subject to the
terms of this Agreement, additional consideration (the Earnout
Consideration) as set forth below in Section 1.7(b).  Notwithstanding anything to the contrary in
this Agreement, Buyers shall have a right to offset against the Earnout
Consideration in order to secure Sellers and Shareholders indemnification
obligations under Article 7.  (b)Earnout
Milestones.  If the Earnout
Milestones described below are achieved, then Seller and the Shareholders will
receive additional consideration at such times and on the terms set forth
below.  Subject to
Sections 1.7(c) and (d), payments related to the successful
achievement of an Earnout Milestone (each, an Earnout
Payment) will be paid by DTS to Seller in immediately available
funds by wire transfer to an account designated by Seller within five business (5) days
after it has been determined that the applicable Earnout Milestone has been
successfully achieved, which shall be allocated in accordance with Section 1.10.  Following delivery by Buyers to Seller of an
Earnout Payment, Seller shall in all events be solely responsible for any and
all further distribution of such Earnout Payment to the Shareholders and Buyers
shall in no way be liable or responsible for distribution, or lack thereof, of
any portion of any Earnout Payment directly to the Shareholders.  The Earnout Milestones shall be as follows:  6


With respect
to Year 1, $1,500,000 if gross revenues as determined in accordance with GAAP
generated from the Sirius/XM License for Year 1 exceed  $  
***   ;  With respect
to Year 2, $1,500,000 if gross revenues as determined in accordance with GAAP
generated from the Sirius/XM License for Year 2 exceed $   ***  
;  With respect
to Year 3, $1,500,000 if gross revenues as determined in accordance with GAAP
generated from the Sirius/XM License for Year 3 exceed $  ***   ;  With respect
to Year 4, $1,500,000 if gross revenues as determined in accordance with GAAP
generated from the Sirius/XM License for Year 4 exceed $   ***  
;  With respect
to Year 5, $1,500,000 if gross revenues as determined in accordance with GAAP
generated from the Sirius/XM License for Year 5 exceed $   ***  
;  (c)Milestone
Notice.  As soon as reasonably
practicable, but in no event later than the later of (i) forty five (45)
days after the end of the applicable Year, or (ii) 20 days after DTS shall
have received all required information and reports from Sirius/XM, DTS will
give notice (in each case, a Milestone Notice)
to Seller informing Seller as to whether or not the Earnout Milestone was
achieved.  The Milestone
Notice Date, in any case, will mean the date on which the
Milestone Notice was communicated by DTS to Seller.  If a dispute arises between DTS and Seller as
to whether an Earnout Milestone has been achieved, such dispute will be
resolved pursuant to Section 1.7(d) below, and notwithstanding
anything herein to the contrary, the applicable Milestone Notice Date will be
deemed to be the date of resolution of such dispute.  (d)Milestone
Dispute Resolution.  If Seller
disagrees as to whether or not an Earnout Milestone has been achieved, Seller
will give written notice (a Dispute Notice)
to DTS with a reasonable description of the basis for such disagreement within
fifteen (15) days of Sellers receipt of the Milestone Notice regarding the
Earnout Milestone.  For a period of
fifteen (15) days following DTSs receipt of the Dispute Notice, DTS and Seller
will negotiate in good faith to attempt to agree whether or not the Earnout
Milestone has been achieved.  If DTS and
Seller cannot resolve the dispute within that fifteen (15) day period, then the
parties shall submit the dispute to a mutually acceptable international
independent registered public accounting firm, provided that such
accounting firm shall not have performed accounting or audit services for DTS
or Seller in the past year (the Determining Accountants),
for final determination whether or not gross revenues as determined in
accordance with GAAP generated from the Sirius/XM License for the year in
question exceeded $  ***    . 
The determination of the Determining Accountants shall be final, binding
and conclusive on the parties hereto. 
The Determining Accountants shall consider only the items in dispute and
shall be instructed to act within 30 days (or such longer period as the parties
may agree) to resolve the dispute.  The
fees and expenses of the Determining Accountants shall be paid by the
non-prevailing party in the dispute.  (e)Management of
the Business.  The parties
hereto acknowledge and agree that, subject only to this Section 1.7(e) Buyers
shall have the complete power and right to control all aspects of the Business
and operations of Seller after the Closing, provided, that Buyers agree  
 ***  Portions of this page have
been omitted pursuant to a request for Confidential Treatment filed separately
with the Commission.  7


that they shall not act in bad
faith for the sole purpose of circumventing payment of the Earnout Consideration.  1.8Working Capital
Adjustment.  (a)Closing Balance
Sheet.  As promptly as practicable,
but in any event no later than thirty (30) days after the Closing Date, Seller
shall, at Sellers expense, prepare and deliver to DTS, (i) a consolidated
balance sheet of the Business as of the close of business on the Closing Date,
immediately prior to giving effect to the Closing, prepared in accordance with
GAAP and (ii) a consolidated statement of the Working Capital of the
Business as of the close of business on the Closing Date, immediately prior to
giving effect to the Closing, prepared in accordance with GAAP (together with
the balance sheet referred to in (i) above, the Closing
Balance Sheet).  (b)Disputes.  Unless disputed by DTS in accordance with
this Section 1.8(b), the Closing Balance Sheet shall be deemed to be and
shall be final, binding and conclusive on Buyers and Seller.  DTS may dispute the amounts initially
reflected on the Closing Balance Sheet for a period of fifteen (15) days after
the later of (i) delivery of the Closing Balance Sheet, or (ii) such
time as all royalty reports from Sellers customers have been received and
reviewed by Buyers.  In the event of such
a dispute, Seller and DTS shall attempt to reconcile their differences, and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive on the parties hereto.  If
Seller and DTS are unable to reach a resolution within fifteen (15) days after
the receipt by Seller of DTSs notice of dispute, the parties shall submit the
dispute to a mutually acceptable international independent registered public
accounting firm, provided that such accounting firm shall not have
performed accounting or audit services for DTS or Seller in the past year.  The determination of such accounting firm
shall be final, binding and conclusive on the parties hereto.  The fees and expenses of the accounting firm
shall be paid by the non-prevailing party in the dispute.  (c)Working Capital
Requirement.  At Closing,
Seller shall have Working Capital equal to One Million Two Hundred Thousand
Dollars ($1,200,000) (the Working Capital
Requirement).  (d)Working Capital
Adjustment.  Upon the
determination, in accordance with Sections 1.8(a) and 1.8(b) above,
of the Closing Balance Sheet and the Closing Date Working Capital, the Closing
Purchase Price shall be recalculated as follows (the Final
Adjustment):  In the
event that the Working Capital reflected on the Closing Balance Sheet is less
than the Working Capital Requirement, then Buyers shall be entitled to recover
such shortfall out of the Escrowed Funds in accordance with the terms of the
Escrow Agreement; provided, however, that if the shortfall is
greater than Two Hundred and Fifty Thousand Dollars ($250,000), then Buyers
shall recover $250,000 out of the Escrowed Funds in accordance with the terms
of the Escrow Agreement and Seller shall pay the remainder of such shortfall to
DTS in cash or by wire transfer in immediately available funds within five (5) business
days of the Closing Balance Sheet being deemed final.  In no event shall Seller or the Shareholders
be entitled to any additional amounts in the event that the Working Capital
reflected on the Closing Balance Sheet is greater than the Working Capital
Requirement.  To the extent any portion
of such amount is not paid when due, interest shall accrue on the unpaid
portion thereof from and after such non-payment at the rate  8


per annum equal to the rate
announced by Bank of America, N.A., as its Base Rate plus two percent
(2%).  1.9Sales, Use and
Transfer Taxes.  Seller and
the Shareholders shall be responsible for paying, shall promptly discharge when
due, and shall reimburse, indemnify and hold harmless Buyers from, any sales or
use, transfer, value added, real property gains, excise, stamp, stamp duty,
stamp duty reserve tax, or other Taxes imposed by reason of the transfer of the
Purchased Assets and the Shareholder Patents provided hereunder (Transfer Taxes), and any deficiency,
interest or penalty asserted with respect thereto; provided, however,
that Buyers shall bear responsibility for any sales tax imposed by reason of
the transfer of the Purchased Assets provided hereunder.  Seller shall collect any such sales tax from Buyers
at the Closing.  Seller and the
Shareholders shall bear sole responsibility for any Tax in the nature of an
income, franchise or occupation tax imposed on Seller or the Shareholders (as
the case may be) as a result of the transfer of the Purchased Assets or the
Shareholder Patents to the Buyers as provided herein.  1.10Allocation.Within thirty (30) days following the Closing Date,
the parties shall agree on the allocation of 
the consideration exchanged by the parties, including without limitation
the allocation of the Purchased Assets, the Closing Purchase Price, the Earnout
Payments and the Assumed Liabilities. 
The consideration shall be allocated in accordance with Section 1060
of the Code and all financial reports and income tax returns and reports,
including IRS Form 8594, as applicable, and any corresponding state or
foreign tax forms, will be prepared and filed in a manner consistent with such
allocation, and no party hereto will take any position inconsistent with such
allocation in any subsequent income tax returns, reports, or proceedings.  1.11Closing.Subject to the
satisfaction or waiver of the conditions set forth in this Agreement, the
closing of the transactions contemplated by this Agreement, including without
limitation the purchase and sale of the Purchased Assets, (the Closing) shall take
place at the offices of Cairncross & Hempelmann, P.S. in Seattle,
Washington on: (a) December 31, 2008, or (b) such date, time and
place as the parties may agree (the Closing Date).  Notwithstanding the foregoing, the parties
agree that the Closing shall be deemed effective as of 12:01 a.m. on the
Closing Date.  ARTICLE II  REPRESENTATIONS
AND WARRANTIES OF SELLER  As of the Closing Date
Seller and the Shareholders, jointly and severally, represent and warrant to
Buyers as follows:  2.1Organization.  Seller is a corporation, duly incorporated,
validly existing and in good standing under the laws of the State of
Washington.  Seller has all requisite
power and authority to own and lease its assets and to operate the Business as
the same are now being owned, leased and operated.  Seller is duly qualified or licensed to do
business as a foreign corporation or foreign entity in, and is in good
corporate standing in, each jurisdiction in which the nature of the Business or
its ownership of its properties requires it to be so qualified or
licensed.  Schedule 2.1 sets
forth a true and complete list of (a) all jurisdictions in which Seller is  9


qualified or licensed to do
business as a foreign corporation or foreign entity, and (b) all powers of
attorney granted by Seller to any third party that are currently in
effect.  All necessary corporate action
on the part of Seller with respect to the consummation of the transactions
contemplated hereby has been taken. 
Seller has provided Buyer with a true, complete and correct copy of its
articles or certificate of incorporation and the bylaws of the corporation, as
applicable, each as currently in effect and reflecting any and all amendments
thereto, for Seller (the Organizational Documents).  Each of the Organizational Documents of
Seller is in full force and effect, and Seller is not in violation of any
provision thereof.  2.2Authorization.  The execution and delivery of this Agreement
and each agreement, instrument, certificate and document being or to be
executed and delivered pursuant to this Agreement (each a Transaction
Agreement) by Seller and the Shareholders and the performance
of all obligations hereunder and thereunder by Seller and the Shareholders have
been duly authorized and no other action or approval is necessary for the
execution, delivery or performance of this Agreement and each Transaction
Agreement by Seller or the Shareholders. 
Each of Seller and the Shareholders has the requisite power and
authority to execute and deliver this Agreement and each Transaction Agreement,
and consummate the transactions contemplated herein and therein.  This Agreement and each Transaction Agreement
to which Seller and/or the Shareholders are a party has been duly executed and
delivered by Seller and the Shareholders and is a valid and binding obligation
of Seller and the Shareholders, as applicable, enforceable against Seller and
the Shareholders, as applicable, in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect,
relating to or limiting creditors rights generally and (b) general
principles of equity (whether considered in an action in equity or at law).  2.3No Conflict.  Neither the execution and delivery of this
Agreement or any Transaction Agreement by Seller or the Shareholders, as
applicable, nor the consummation of the transactions contemplated hereunder or
thereunder, will:  (a)result in the
creation or imposition of any Encumbrance upon the Purchased Assets or the
Shareholder Patents;  (b)except as set
forth on Schedule 2.3(b), (i) require the consent, approval or
authorization of, or declaration, filing or registration with any Governmental
Entity or other Person to be made or obtained by Seller or the Shareholders, or
(ii) conflict with, constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or obligation of
Seller or the Shareholders, as applicable, under any Material Contract; or  (c)result in a
violation or default under any provision of Sellers Organizational Documents
or any provision of applicable law relating to the Business or the Purchased
Assetsor result in
the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization or approval applicable to the business,
operations or any of the assets or properties of Seller.  2.4Judgments;
Litigation.  Except as
set forth on Schedule 2.4, there are no, and since January 1,
2006, there have been no (a) outstanding judgments, orders, decrees,
awards, stipulations or injunctions of any kind against Seller or the Shareholders
affecting the Purchased  10


Assets, the Shareholder Patents or the Business or (b) actions,
suits, arbitrations, hearings, inquiries, proceedings, complaint, charges or
investigations of any kind, whether civil, criminal or administrative, at law
or in equity, or any appeal from any of the foregoing pending or, to the
Knowledge of Seller and the Shareholders, threatened against Seller or the
Shareholders (with respect to the Shareholder Patents) or affecting the
Purchased Assets, the Shareholders Patents or the Business (collectively, the Judgments and Litigation).  2.5Intellectual
Property and Proprietary Rights.  (a)Schedule 2.5(a)contains an accurate and complete
list (by name, owner, and, where applicable, registration number and
jurisdiction of registration, application, certification or filing) of all
Intellectual Property Rights owned by Seller or the Shareholders and, in the
case of the Shareholders, used or useful in connection with the operation of
the Business (collectively, the  Owned Business IP Rights,
with all such registered Owned Business IP Rights being referred to herein as 
Registered Business IP Rights).  Except as set forth in Schedule 2.5(a),
Seller owns the entire right, title and interest to all Owned Business IP
Rights free and clear of Encumbrances other than Permitted Encumbrances.  (b)Schedule 2.5(b)contains an accurate and complete
list of all licenses, sublicenses and other agreements pursuant to which a
third party authorizes Seller or the Shareholders to use, modify, distribute,
or practice any rights under, grant sublicenses with respect to or incorporate
in Purchased Assets or the Shareholder Patents, any Intellectual Property
Rights owned by a third party (In-Bound Licenses),
other than In-Bound Licenses that consist solely of shrink-wrap and similar
commercially available end-user licenses, and, with respect to each such
In-Bound License, (i) lists each Intellectual Property Right to which the
Seller or any of the Shareholders are licensed, sublicensed, or otherwise
provided rights thereunder, (ii) states whether such In-Bound License is
exclusive or non-exclusive, and (iii) sets forth the fees due under each
such license, sublicense or other agreement (if any).  Except as set forth in Schedule 2.5(b),
each In-Bound License is valid and binding, and there are no restrictions on
the direct or indirect (i) change of control of the Seller or
Shareholders, or (ii) transfer of any such In-Bound License, or any
interest therein, held by the Seller or any of the Shareholders, in respect of
such Intellectual Property Rights. 
Neither the Seller nor any of the Shareholders have received any notice
that it is in default (or with the giving of notice or lapse of time or both,
would be in default) under any license with respect to any Intellectual Property
Right listed in Schedule 2.5(b). 
Except for the fees identified in Schedule 2.5(b) for the
licenses, sublicenses and other agreements set forth therein, no license fees,
royalties or payments are due or payable by the Seller or any of the
Shareholders in connection with any Seller IP Right, other than maintenance
fees payable to United States or foreign Governmental Entities.  Schedule 2.5(b) contains an
accurate and complete list of all maintenance fees that will be due within 180
days following the Closing Date.  (c)Schedule 2.5(c)contains an accurate and complete
list of all licenses, sublicenses and other agreements pursuant to which Seller
or the Shareholders authorizes a third party to use, modify, distribute, or
practice any rights under or grant sublicenses with respect to, any Seller IP
Rights or pursuant to which Seller or the Shareholders grants rights to use or
practice any rights under any Intellectual Property Rights owned by a third
party (Out-Bound Licenses), other
than Out-Bound Licenses that consist solely of shrink-wrap and similar  11


commercially available end-user
licenses, and, with respect to each such Out-Bound License, states whether such
Out-Bound License is exclusive or non-exclusive.  (d)The Seller IP Rights constitute all the
Intellectual Property Rights necessary for the Business as currently conducted
and as currently contemplated to be conducted. 
There is no Seller IP Right that does not constitute Owned Business IP
Rights or that is not validly granted to the Seller under an In-Bound
License.  Seller has in its possession or
control correct and complete, fully-executed copies of all In-Bound Licenses,
Out-Bound Licenses, and all documents relating to each Owned Business IP Right,
and has provided copies of all such licenses and documents to Buyers.  Seller is not subject to any license
obligation, including but not limited to open source software license
obligations or any third-party software licenses obligations, which would
require publication of confidential information, inhibit distribution of
software, or frustrate the commercial purpose of any software of Seller.  (e)All Registered Business IP Rights are in
good standing, are in compliance with applicable legal requirements and are not
subject to any unpaid maintenance fees or taxes or actions, except for
maintenance fees not yet due and payable. 
To Sellers and Shareholders Knowledge, there are no proceedings,
challenges or claims before any court, tribunal (including the U.S. Patent
and Trademark Office or equivalent authority anywhere in the world) related to
any such Registered Business IP Rights, other than normal patent and trademark
prosecution proceedings.  (f)The business, operations and activities
of the Business as presently conducted do not infringe or violate, or
constitute a misappropriation of, any Intellectual Property Rights of any other
Person.  Except as set forth on Schedule
2.5(f), neither Seller nor any of the Shareholders has received, any
complaint, claim or notice alleging any such infringement, violation or
misappropriation relating to the Business, the Purchased Assets, or the
Shareholder Patents, and no claim or notice remains outstanding or unresolved.  Seller and the Shareholders have not taken
any action or failed to take any action that would reasonably be expected to
result in the abandonment, cancellation, forfeiture, relinquishment,
invalidation, waiver or unenforceability of any Seller IP Right.  No Person has misappropriated or is
misappropriating any Seller IP Right or, to Sellers and Shareholders
Knowledge, has infringed or is infringing any Seller IP Right.  (g)The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not constitute a breach of any instrument or agreement governing any
Seller IP Right, will not cause the forfeiture or termination or give rise to a
right of forfeiture or termination of any Seller IP Right or impair the rights
of Buyers to use, sell or license any Seller IP Right or portion thereof.  Except as set forth on Schedule 2.5(g),
no approval or consent of any person is needed so that the interest of Buyers
in the Seller IP Rights shall continue to be in full force and effect following
the transactions contemplated by this Agreement, and the Sellers and
Shareholders are not subject to any restriction, agreement, judgment or order
that would be violated or breached by the consummation of the transactions
contemplated in this Agreement.  (h)Seller and Shareholders have taken
reasonable steps to protect and preserve the secrecy, confidentiality and value
of all trade secrets and Seller IP Rights not  12


otherwise disclosed in
published patents, patent applications, registered copyrights or public
publications (Business Confidential Information)
in accordance with protection procedures customarily used in the industry to
protect rights of like importance.  Use
by and disclosure to employees or others of Business Confidential Information
has been pursuant to the terms of valid and binding written confidentiality and
nonuse/restricted-use agreements or agreements that contain similar
obligations.  (i)Schedule 2.5(i)contains an accurate and complete
list of all (i) computer programs, (ii) computer databases, including
but not limited to databases used in conjunction with such computer programs,
and (iii) documentation, specifications, manuals and materials associated
therewith, owned, licensed or used in the Business, excluding generally
available off-the-shelf microcomputer and work station software (collectively,
the Software Rights).  The computer software included in the
Software Rights (the Software)
performs in accordance with the documentation and other written materials
related to the Software, and is free from material defects in programming and
operations, is in machine-readable form, contains all current revisions of such
Software, and includes all computer programs, materials, tapes, know-how,
object code and source code, other written materials and processes related to
the Software.  Seller has delivered to
Buyers complete and correct copies of the Software in its current form and all
user and technical documentation related thereto.  Except as set forth in Schedule 2.5(i),
all right, title and interest in and to the Software is owned by Seller free
and clear of all Liens and Encumbrances, are fully transferable to Buyers, and
no party other than Seller has any interest in the Software.  Seller has kept secret and has not disclosed
the source code for the Software to any Person other than certain employees of
Seller who are subject to the terms of a binding confidentiality agreement with
respect thereto.  Seller has taken all appropriate
measures to protect the confidentiality and proprietary nature of the Software.  (j)Except as set forth on Schedule 2.5(j),
each current and former employee and independent contractor of Seller who is or
was involved in, or who has contributed to, the creation or development of any
Seller IP Right has executed and delivered (and, to Sellers and Shareholders
Knowledge, is in compliance with) (i) an agreement which provides a valid
written assignment to Seller of all title and rights to all such Seller IP
Rights, and (ii) an agreement under which such employee or independent
contractor has agreed to keep such Seller IP Rights confidential and not to use
such Seller IP Rights for any purpose unrelated to his work for Seller.  No former or current employee or independent
contractor has filed, asserted in writing or, to the Knowledge of the Sellers
and the Shareholders, threatened any claim against the Seller or any of the
Shareholders in connection with his involvement in Seller IP Rights.  To the Knowledge of Sellers and the
Shareholders, no employee or independent contractor has any patents issued or
applications pending for any invention of any kind now used or needed for use
in the Business which patents or applications have not been assigned to Seller.  (k)In no event will either Seller or the
Shareholders owe to the other any royalty payments on account of the Seller IP
Rights after the Closing Date.  Neither
Seller nor any of the Shareholders has any obligation to compensate any Person
for the development, use, sale, or other exploitation of any Seller IP Right.  13


2.6Employees and
Independent Contractors.  (a)Schedule 2.6(a)contains a true and complete list,
as of November 30, 2008, of all employees employed in the Business (the Business Employees), including each
such employees (i) name, (ii) title, (iii) principal location
of employment, (iv) current salary and other compensation arrangement
(i.e. commission rate); and (v) whether the employee is actively working
or on a leave of absence.  (b)(i) all Business Employees and other
employees who have previously been employed in connection with the Business
have executed Sellers form proprietary information and inventions agreement, a
copy of which has been provided to DTS; (ii) to the Knowledge of Seller
and the Shareholders, no Business Employee is a party to or is bound by any
employment contract, patent disclosure agreement, non-competition agreement or
other restrictive covenant or other contract with any third party that would be
reasonably expected to affect (A) the performance by such Business
Employee of any of his or her duties or responsibilities as an employee of the
Business, or (B) the Business; and (iii) to the Knowledge of Seller
and the Shareholders, no Business Employee is in violation of any term of any
employment contract, patent disclosure agreement, non-competition agreement, or
any other restrictive covenant with any third party relating to the right of
any such Business Employee to be employed by Seller.  (c)Seller has terminated the employment of
all Transferred Employees effective upon the consummation of the transactions
contemplated by this Agreement.  Except
as set forth on Schedule 2.6(c), Seller has paid or otherwise
satisfied all obligations due to the Transferred Employees in respect of their
employment with Seller upon the termination of their employment with Seller,
including if applicable, any wages, salaries, bonuses (including any bonuses
that arise out of the completion of the transactions contemplated hereby),
accrued vacation pay, and severance pay, and all payroll taxes payable with
respect to such employees.  Buyers shall
have no obligations or liabilities to any Transferred Employeewhatsoever,
including but not limited to any wages, salaries, bonuses (including any
bonuses that arise out of the completion of the transactions contemplated
hereby or any Earnout Consideration, if any), accrued vacationpay and severance pay, if any, owing to
a Transferred Employee as a result of such employees employment with Seller
prior to the Closing Date.  (d)Schedule 2.6(d)contains a true and complete list,
as of November 30, 2008, of all consultants and other independent
contractors who are providing services to the Business (the Independent Contractors), including
(i) each such Independent Contractors name, (ii) type of services
being provided by each Independent Contractor, and (iii) principal
location where services are provided.  (e)Seller has complied in all respects with
all legal requirements relating to employment practices, terms and conditions
of employment, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining requirements, the payment of
social security and similar Taxes and occupational safety and health.  Seller is not liable for the payment of any
Taxes, fines, penalties, or other amounts, however designated, for failure to
comply with any of the foregoing legal requirements.  14


(f)Except as set forth in Schedule 2.6(f),
there are no pending or, to Sellers or Shareholders Knowledge, threatened
controversies, grievances, administrative charges, lawsuits or claims by any
employee or former employee of Seller or the Business with respect to his or
her employment, termination of employment or compensation and benefits.  Except as set forth in Schedule 2.6(f),
there has not been, since January 1, 2006, any controversies, grievances,
administrative charges, lawsuits or claims by any employee or former employee
of the Business with respect to his or her employment, termination of
employment or any compensation and benefits. 
Since January 1, 2004, Seller has not been a party to, or bound by,
any collective bargaining agreement with any labor organization.  Since January 1, 2004, Seller has not
experienced any strike, work stoppage, lock-up, slow-down or other material
labor dispute or any attempt by organized labor or employees to cause Seller to
comply with or conform to demands of organized labor relating to its employees
or recognize any union or collective bargaining units.  No labor strike or stoppage is pending
or, to Sellers and Shareholders Knowledge, threatened against Seller.  Seller is in material compliance with all
laws relating to the employment of labor, including all such laws relating to
wages, hours, the WARN Act, collective bargaining, discrimination, civil
rights, safety and health, workers compensation and the collection and payment
of withholding or social security Taxes and any similar Tax.  There has been no mass layoff or plant
closing as defined by the WARN Act with respect to Seller.  Except for terminations in connection with
closing of this Agreement, Seller has terminated and laid off one (1) employee
within the four months prior to the Closing Date.  There are no pending or, to Sellers
Knowledge, threatened governmental audits or investigative proceedings with
respect to Sellers employees, including but not limited to audits or
investigations by the Department of Labor, the Occupational Safety and Health
Administration, the Equal Employment Opportunity Commission or any state
counterpart.  To the Sellers Knowledge,
all of the Transferred Employees are legally eligible to work in the United
States and Seller and Transferred Employees have properly completed Form I-9s
with respect to each Transferred Employee.  2.7Employee
Benefit Plans.  (a)Except for the arrangements set forth on Schedule 2.7(a),
Seller does not maintain or contribute to, and has not in the current or
preceding six (6) calendar years maintained or contributed to, any
pension, profit-sharing, deferred compensation, bonus, stock option, share
appreciation right, severance, group or individual health, dental, medical,
life insurance, survivor benefit, or similar plan, policy or arrangement,
whether formal or informal, for the benefit of any director, officer,
consultant or employee, whether active or terminated, of Seller.  Each of the arrangements set forth on Schedule 2.7(a) is
hereinafter referred to as an Employee Benefit Plan.  (b)Seller has heretofore provided to Buyers
true, correct and complete copies of each Employee Benefit Plan, and with
respect to each such Plan (i) any associated trust, custodial, insurance
or service agreements, (ii) any Form 5500 annual report, actuarial
report, or disclosure materials (including specifically any summary plan
descriptions) submitted to any governmental agency or distributed to
participants or beneficiaries thereunder in the current or any of the three (3) preceding
calendar years and (iii) the most recently received IRS determination or
opinion letters and any governmental advisory opinions or rulings.  15


(c)Each Employee Benefit Plan is and has
heretofore been maintained and operated in all material respects in compliance
with the terms of such Plan and with the requirements prescribed (whether as a
matter of substantive law or as necessary to secure favorable tax treatment) by
any and all statutes, governmental or court orders, or governmental rules or
regulations in effect from time to time, including but not limited to the
Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Code and applicable
to such Plan.  Each Employee Benefit Plan
that is intended to be qualified under Code Section 401(a) has
obtained a favorable determination letter issued by the IRS as to its
tax-qualified status and nothing has occurred since the issuance of such
favorable determination letter, whether by action or failure to act, which
would cause the loss of such qualification.  (d)There is no pending or, to the Knowledge
of Seller and the Shareholders, threatened legal action, proceeding or
investigation, other than routine claims for benefits, concerning any Employee
Benefit Plan or any fiduciary or service provider thereof and, to the Knowledge
of Seller and the Shareholders, there is no basis for any such legal action or
proceeding.  (e)Neither the Seller nor any ERISA
Affiliate has ever maintained, sponsored or been required to contribute to any (i) defined
benefit plan (as defined in Section 3(35) of ERISA), (ii) employee
pension benefit plan (as defined in Section 3(2) of ERISA) that is
subject to Title IV of ERISA or Section 412 of the Code, or (iii) multiemployer
plan (as defined in Section 3(37) of ERISA).  For purposes of this Agreement, ERISA Affiliate means any entity,
trade or business (whether or not incorporated) that is treated as a single
employer with the Seller under Section 4001(b) of ERISA or Code
Sections 414(b), (c), (m) or (o).  (f)No Employee Benefit Plan nor any party in
interest with respect thereof, has engaged in a prohibited transaction which
could subject Seller or any ERISA Affiliate directly or indirectly to liability
under Section 409 or 502(i) of ERISA or Section 4975 of the
Code.  (g)The Seller and any ERISA Affiliate have
at all times complied with the applicable continuation coverage requirements
for their group health plans under Section 4980B(f) of the Code and Part 6
of Title I of ERISA (COBRA).  Except for the continuation coverage
requirements of COBRA, the Seller has no obligations or potential liability for
continuation of medical, dental, life or disability coverage to employees,
former employees or their respective dependents following termination of
employment or retirement.  2.8Financial
Statements.  Schedule 2.8
sets forth true and complete copies of the (a) unaudited consolidated
balance sheets of Seller as of December 31, 2006,  and December 31, 2007, and the related
unaudited statement of operations for the twelve-month period ended December 31,
2007, and (b) the unaudited consolidated balance sheet of Seller as of November 30,
2008, and the related unaudited statement of operations for the eleven-month
period then ended (collectively, the Financial Statements),
in each case prepared in a manner consistent with Sellers historical basis and
accounting methods.  The Financial
Statements present fairly, in all material respects, the assets, liabilities
and consolidated financial position of Seller as of the dates indicated and the
results of operations for the periods then ended, except, with respect to the
interim financial statements attached to Schedule 2.8, (i) normal
year-end  16


adjustments or adjustments
which are not material, individually or in the aggregate, and (ii) the
absence of disclosures normally made in footnotes.  The Financial Statements are true, correct,
and complete in all material respects, and are consistent with the books and
records of Seller (which books and records are true, correct and
complete).  Sellers balance sheet, dated
as of November 30, 2008, is herein referred to as the Acquisition Balance Sheet.  Seller does not have any debt, liabilities or
obligations whatsoever (whether or not accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
asserted) arising out of transactions entered into prior to the Closing Date,
any action or inaction on the part of Seller prior to the Closing Date, or any
state of facts existing prior to the Closing Date other than those:  (a) specifically reflected on and fully
reserved against in the Acquisition Balance Sheet; or (b) incurred in the
ordinary course of business since the date thereof and immaterial in amount.  2.9Changes.  Except as described in Schedule 2.9,
since December 31, 2007, Seller has conducted the Business only in the
ordinary course and in a manner consistent with past practice and, since such
date there has not been a Material Adverse Effect.  Specifically, except as described in Schedule 2.9,
since December 31, 2007, Seller has not: 
(i) incurred any material debts, obligations or liabilities
(absolute, accrued, contingent or otherwise) (including without limitation,
liabilities as guarantor or otherwise with respect to the obligations of
others) of the Business, other than in the ordinary course of business; (ii) subjected
to or permitted an Encumbrance upon or otherwise encumbered any of the
Purchased Assets; (iii) sold, transferred, licensed or leased any of the
Purchased Assets except in the ordinary course of business; (iv) suffered
any physical damage, destruction or loss (whether or not covered by insurance)
to the Purchased Assets causing a Material Adverse Effect; (v) made or
suffered any material amendment of any Material Contract; (vi) experienced
any material change in the assets, liabilities, sales, income or business of
Seller or in its relationships with suppliers, customers or lessors, other than
changes which were both in the ordinary course of business and have not, either
in any case or in the aggregate, had a Material Adverse Effect; (vii) acquired
or disposed of any material asset or property other than in the ordinary course
of business; (viii) made any declaration, setting aside or payment of any
distributions in respect of Sellers securities; (ix) made any increase in
the compensation, pension or other benefits payable or to become payable by
Seller to any of its officers, directors, shareholders, or employees, or any
bonus payments or arrangements made to or with any of them (other than pursuant
to the terms of any existing written agreement or plan of which Buyers have
been supplied complete and correct copies or in the ordinary course of
business); (x) forgiven or cancelled any debt or claim or waived any right
of material value other than compromises of accounts receivable in the ordinary
course of business; (xi) entered into any transaction other than in the
ordinary course of business; (xii) discharged or satisfied any lien or
encumbrance or made any payment of any obligation or liability (fixed or
contingent) other than (A) current liabilities included in the Acquisition
Balance Sheet and (B) current liabilities incurred since the date of the
Acquisition Balance Sheet in the ordinary course of business; or
(xiii) entered into any agreement or otherwise obligated itself to do any
of the foregoing.  2.10Material
Contracts.  (a)Schedule 2.10sets forth a
complete and accurate list of all contracts to which any of the Shareholders
(with respect to the Shareholder Patents) is a party, or by which  17


any of the Shareholders (with
respect to the Shareholder Patents) is bound or to which any of the
Shareholders (with respect to the Shareholder Patents) or any of the
Shareholder Patents is subject.  Schedule 2.10
sets forth a complete and accurate list of all contracts to which Seller is a
party, or by which Seller is bound or to which Seller or any of the Purchased
Assets is subject, except (a) contracts terminable by Seller upon sixty
(60) days notice or less without the payment of any termination fee or
penalty, (b) contracts for the purchase or sale of assets or the provision
of services pursuant to which Seller is required to expend or is entitled to
receive Twenty Five Thousand Dollars ($25,000) or less in aggregate amount per
contract in any one (1) year, and (c) contracts listed in other Schedules
hereto (collectively with all the agreements identified in this Section 2.10(a),
the Material Contracts).  As used in this Section 2.10,
the word contract means and includes every agreement or understanding of any
kind, written or oral, which is legally enforceable by or against Seller and/or
the Shareholders (with respect to the Shareholder Patents), and specifically
includes:  any lease of
real property and any lease of personal property;  any contract
for the purchase of materials, supplies, goods, services, equipment or other
assets;  any sales,
distribution or other similar agreement providing for the sale by Seller of
materials, supplies, goods, services, equipment or other assets;  any contract
relating to outstanding Indebtedness or the deferred purchase price of property
(whether incurred, assumed, guaranteed or secured by any asset);  any
employment, severance or consulting agreement with respect to any Business
Employee or Independent Contractor and any other agreements with any current or
former officer, director, employee, consultant or member or any partnership,
corporation, joint venture or any other entity in which any such Person has an
interest;  agreements
with any labor union or association representing any employee;  contracts and
other agreements for the provision of services by Seller or any of the
Shareholders (with respect to the Shareholder Patents);  bonds or other
security agreements provided by any party in connection with the Business;  contracts and
other agreements for the sale of any of the Purchased Assets other than in the
ordinary course of business, or for the grant to any person of any preferential
rights to purchase any of the Purchased Assets;  contracts and
other agreements for the sale of any Shareholder Patents, or for the grant to
any person of any rights with respect to any Shareholder Patents;  joint venture
agreements relating to the Shareholder Patents or any of the other Purchased
Assets or by or to which the Shareholder Patents or any of the other Purchased
Assets are bound or subject;  18


contracts or
other agreements under which Seller or any of the Shareholders (with respect to
the Shareholder Patents) agrees to indemnify any party, to pay liquidated
damages, to share tax liability of any party, or to refrain from competing with
any party;  any other
contract or other agreement, whether or not made in the ordinary course of
business; and  any contract
or other document that limits the freedom of Seller to compete in any line of
business or with any Person or in any area.  (b)Each Material
Contract that is currently in effect constitutes a legal, valid and binding
agreement of Seller and to Sellers and Shareholders Knowledge of each other
party thereto, and is enforceable in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating
to or limiting creditors rights generally, and (b) general principles of
equity (whether considered in an action in equity or at law).  Neither Seller nor, to Sellers or any
Shareholders Knowledge, any other party to such Material Contracts, is in
violation or breach of or default under any such Material Contract (or with
notice or lapse of time or both, would be in violation or breach of or default
under such Material Contract) which would result, individually or in the
aggregate, in a Material Adverse Effect. 
Seller has provided to Buyers true, correct and complete copies of all
such Material Contracts together with all modifications and supplements
thereto.  Seller and the Shareholders
have in all material respects performed all obligations required to be
performed by any of them to date under each such Material Contract.  2.11Compliance with
Laws.  Seller and the Shareholders
(with respect to the Shareholder Patents) are not  in violation of or in default in any material
respect under any foreign or domestic (federal, state or local) law, statute,
treaty, rule, regulation, ordinance, franchise, permit, concession, license,
order, decree, consent decree or similar instrument or determination or award
applicable to it by which any of the Purchased Assets, the Shareholder Patents
or the Business is bound or affected (including, without limitation, any labor,
environmental, occupational health, zoning or other law, regulation or
ordinance), except for such violations or defaults as would not, individually
or in the aggregate, result in a Material Adverse Effect.  Except as set forth on Schedule 2.11
hereto, neither Seller nor the Shareholders have committed, been charged with,
or, to the Knowledge of Seller and the Shareholders, been under investigation
with respect to, nor does there exist, any material violation of any provision
of any federal, state or local law or administrative regulation in respect of
any of Seller or the Shareholders or any of the Purchased Assets or the
Shareholder Patents.  2.12Permits,
Licenses, Etc.  Seller
possesses all franchises, licenses, permits, certificates, authorizations,
rights and other approvals of Governmental Entities (Permits)
necessary to conduct the Business as currently conducted or in connection with
the ownership or use of the Purchased Assets and the Shareholder Patents,
except for such failure as would not individually or in the aggregate, have a
Material Adverse Effect.  Schedule 2.12
contains a true and complete list of all material Permits.  Each Permit was lawfully and validly issued,
and no proceeding is pending or, to Sellers Knowledge, threatened regarding
the revocation, suspension or limitation of any Permit.  The consummation of the transactions
contemplated by this Agreement or the execution and delivery by Seller or the
Shareholders of the Transaction  19


Documents to which they are a
party will not result in the revocation, suspension or limitation of any
Permit, and except as set forth on Schedule 2.12, no Permit will
require the consent of its issuing authority to or as a result of the
consummation of the transactions contemplated hereby.  Except as expressly designated on Schedule 2.12,
all of the Permits are transferable to Buyers, and true and complete copies of
such Permits have previously been provided to Buyers.  2.13Taxes.  (a)All Tax Returns
required to be filed by or on behalf of Seller, on or before the date hereof
were true, correct and complete as of the date filed, or if amended on or
before the date hereof, were true, correct and complete after giving effect to
such amendment.  All such Tax Returns
that were required to be filed were duly and timely filed (taking into account
any extension of time to file granted or obtained) and all Taxes (including,
Taxes withheld from employees salaries and all other withholding Taxes and
obligations and deposits required to be made by or with respect to Seller) due
have been timely paid, or to the extent not due and payable as of the date hereof,
adequate provision for the payment thereof has been made on the Interim Balance
Sheet.  (b)The Tax Returns
of Seller have never been examined by or settled with any tax authority during
the last 7 years.  During the last 7
years, no deficiency, delinquency or default for any Taxes relating to Seller
or its receipts, income, sales, transactions or other business activities has
been claimed, proposed or assessed against Seller nor has Seller received
notice of any such deficiency, delinquency or default; and there is no audit,
examination, investigation, claim, assessment, action, suit, or proceeding,
pending or proposed by any tax authority, with respect to any Tax or with
respect to any Tax Return of Seller.  (c)There are no
Encumbrances on the Purchased Assets relating to or attributable to Taxes,
other than for Taxes not yet due and payable. 
No Governmental Entity has asserted any claim relating to or
attributable to Taxes, which, if adversely determined, would result in any
Encumbrance on the Purchased Assets.  (d)No extension or
waiver of any statute of limitations has been requested of or granted by Seller
with respect to any Tax for any period. 
No extension or waiver of time within which to file any Tax Return has
been requested by or granted to Seller with respect to any Tax Return that has
not been filed.  No power of attorney
with respect to Taxes has been executed by Seller or filed with any tax
authority with respect to Seller during the last three years.  (e)No claim has
ever been made by an authority in a jurisdiction where Seller does not file Tax
Returns that Seller is or may be subject to taxation by that jurisdiction.  (f)Seller is not a
party to, bound by, or obligated under any tax sharing or allocation
agreements, tax indemnification agreement or similar contract or arrangement,
whether written or unwritten.  (g)Except as set
forth in the Acquisition Balance Sheet, Seller has not, in the past 10 years
acquired assets from another corporation in a transaction in which Sellers U.S. federal
income tax basis for the acquired assets was determined, in whole or in part,
by  20


reference to the tax basis of
the acquired assets (or any other property) in the hands of the transferor.  (h)There is no tax
ruling, request for ruling or settlement, compromise, closing or Tax collection
agreement in effect or pending which does or could reasonably be expected to
affect the liability of Seller for Taxes for any period after the Closing Date.  (i)Seller is not
required to document a transfer pricing methodology in compliance with IRC Section 482
and any related provisions, the Treasury Regulations thereunder, and any
comparable provisions of state, local or foreign Tax law.  Seller has not agreed to, and is not required
to include in income, any adjustment pursuant to Section 482 of the Code
(or similar provision of other law or regulations), nor has any Tax authority
proposed, or is any Tax authority considering, such adjustment.  (j)Seller has
never been a member of any affiliated group filing a consolidated federal Tax
Return, or incurred any liability for the Taxes of any person under Treasury
Regulation Section 1.15026 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise.  (k)Seller is not
and has never been required to make a basis reduction pursuant to Treasury
Regulation Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b).  (l)At no time
during the five-year period ending on the date hereof was Seller a distributing
corporation or controlled corporation within the meaning of Section 355(a)(1)(A) of
the Code in any distribution intended to qualify under Section 355 of the
Code.  (m)Seller has no
interest in and is not subject to any joint venture, partnership, or other
arrangement or contract which is treated as a partnership for U.S. federal
Tax purposes.  (n)Seller is not
successor to any other Person by way of merger, reorganization or similar
transaction.  (o)Seller has not
made any payments, is not obligated to make any payment(s), and is not a party
to any agreement that could obligate Seller to make any payment(s) that
would not be deductible under either Section 280G or Section 162(m) of
the Code.  (p)No property
owned by Seller is treated as tax-exempt use property within the meaning of Section 168(h) of
the Code.  (q)Seller has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within
the meaning of Section 6662 of the Code.  21


(r)            Seller has not been a party to a transaction that
constitutes a reportable transaction within the meaning of Treasury
Regulation Section 1.6011-4(b) (or a similar provision of state law).  (s)           Seller does not have and has never had any obligation to
register a tax shelter under Section 6111 of the Code or to file any
disclosure or maintain any list pursuant to Section 6112 of the Code and
regulations promulgated thereunder.  (t)            Seller has previously provided Buyers with the following
information with respect to Seller as of the most recent practicable date: each
state, county, local municipal, domestic or foreign jurisdiction in which
Seller (A) files, or is or has been required to file, a Tax Return
relating to Taxes of any kind, (B) is required to register for Tax
purposes, (C) is or has been liable for any Taxes on a nexus basis at
any time, (D) is qualified to do business, (E) owns or regularly uses
property, (F) has any employee or in which any employee of Seller is
regularly present, or (G) has any agent, representative or distributor.  (u)           There are no Encumbrances on the Shareholder Patents
relating to or attributable to Taxes, other than for Taxes not yet due and
payable.  No Governmental Entity has
asserted any claim relating to or attributable to Taxes, which, if adversely
determined, would result in any Encumbrance on the Shareholder Patents.  2.14         Brokers. 
Except for Pharus Advisors, LLC, whose fees, commissions and expenses
are the sole responsibility of Seller, all negotiations relative to this
Agreement and the transactions contemplated hereby have been carried out by
Seller and/or the Shareholders, as applicable, directly with Buyers without the
intervention of any Person on behalf of Seller in such manner as to give rise
to any claim by any Person against Buyers for a finders fee, brokerage
commission or similar payment.  2.15Purchased Assets/Shareholder Patents.  (a)           The
Purchased Assets represent all of the assets currently used in the conduct of
the Business in the ordinary course.  (b)           The
Purchased Assets and the assets presently owned, leased, or licensed by Seller
are sufficient in all material respects for the conduct of the Business as
presently conducted.  Seller and the
Shareholders do not own any assets which are used in or have been used in the
Business that are not included in the Purchased Assets.  (c)           Seller
has good title to, a valid leasehold interest in, or valid rights to use, all
the Purchased Assets (including without limitation the Shareholder Patents)
free and clear of all Encumbrances other than Permitted Encumbrances.  (d)           As of immediately prior to the sale by the Shareholders to
the Seller of the Shareholder Patents, the Shareholders had good and exclusive
title to, a valid exclusive leasehold interest in, or valid exclusive rights to
use the Shareholder Patents Assets free and clear of all Encumbrances other
than Permitted Encumbrances.  22


(e)           The
Purchased Assets taken as a whole are sufficient in all material respects for
the purposes for which they are used by Seller in the ordinary course of the
Business.  (f)            As
of immediately prior to the sale by the Shareholders to the Seller of the
Shareholder Patents, each of the Shareholders had the full right to contribute,
convey, transfer, assign and deliver the Shareholder Patents owned or held by
him, without the need to obtain the consent or approval of any third party.  (g)           Seller
has the full right to contribute, convey, transfer, assign and deliver the Purchased
Assets (including without limitation the Shareholder Patents), without the need
to obtain the consent or approval of any third party.  (h)           At
and as of the Closing, Seller will convey the Purchased Assets (including
without limitation the Shareholder Patents) to Buyers in the manner set forth
on Schedule 1.1, by bills of sale, certificates of title and other
instruments of assignment and transfer effective in each case to vest in
Buyers, and Buyers will have, good and valid record and marketable title to all
of the Purchased Assets (including without limitation the Shareholder Patents),
free and clear of all Encumbrances other than Permitted Encumbrances.  2.16         Customers and Suppliers.  The Seller has no material suppliers.   Schedule 2.16 hereto sets forth
the top ten (10)  customers of Seller, based upon dollar volume as of the
date hereof, listed in order of the dollar amount of purchases or sales, as the
case may be, for the 2007 fiscal year and for the first eleven (11) months of
the 2008 fiscal year.To the Knowledge of Seller and the
Shareholders, the relationships of Seller with such customers are good
commercial working relationships.Except as set forth on Schedule 2.16,
no customer listed on Schedule 2.16 has cancelled or otherwise terminated,
or, to the Knowledge of Seller and the Shareholders, threatened to cancel or
otherwise to terminate, its relationship with Seller or has during the last
twelve (12) months decreased materially, or, to the Knowledge of Seller and the
Shareholders, threatened to decrease or limit materially, its usage or purchase
of the services or products of Seller except for normal cyclical changes
related to customers businesses.  To the
Knowledge of Seller and the Shareholders, no such customer intends to cancel or
otherwise substantially modify its relationship with Seller or to decrease
materially or limit its usage or purchase of Sellers services or products.  2.17Real Property
and Environmental Matters.  (a)Seller
owns no real property.  Schedule 2.17(a) hereto
sets forth complete and accurate legal descriptions of all real property leased
by Seller (collectively, the Real Property).  The buildings, plants, improvements and
fixtures included as part of the Real Property are in good condition and repair
for their present use in the Business. 
There are no material defects in any Real Property, as to title or
condition, not described on Schedule 2.17(a).  Neither Seller nor the Shareholders have
received any notice that either the whole or any portion of the Real Property
is to be condemned, requisitioned or otherwise taken by public authority.  Neither Seller nor the Shareholders have any
knowledge of any public improvements which may result in special assessments
against or otherwise affect the Real Property.  23


(b)           Schedule 2.17(b) sets forth a complete
and correct description of all of Sellers title to, interest in and rights
under any real estate leases (the Real Estate Leases)
to which Seller is a party.  Seller is in
lawful possession of and has good and valid leasehold estate in and to the Real
Estate Leases to which it is a party. 
Complete and correct copies of all such Real Estate Leases have been
provided to Buyers.  Each such Real
Estate Lease is valid and subsisting and no event or condition exists which
constitutes, or after notice or lapse of time or both would constitute, a
default thereunder.  The leasehold
interests of Seller are subject to no lien or other encumbrance and Seller is
in quiet possession of the properties covered by such leases.  (c)           Except as set forth on Schedule 2.17(c):  neither Seller nor any operator of any real property
presently or formerly owned, leased or operated by Seller is in material
violation or alleged material violation of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation those arising under the Resource Conservation and Recovery
Act (RCRA), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended (CERCLA), the Superfund Amendments
and Reauthorization Act of 1986 (SARA), the
National Environmental Policy Act of 1969 (NEPA),
the National Historic Preservation Act of 1966, the Federal Water Pollution
Control Act, the Solid Waste Disposal Act, as amended, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state
or local statute, regulation, ordinance, order or decree relating to health,
safety or the environment (hereinafter Environmental Laws);  Neither Seller nor the Shareholders have received
notice from any third party, including without limitation any federal, state or
local governmental authority, (A) that Seller or any predecessor in
interest has been identified by the United States Environmental Protection
Agency (EPA) as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (B) that
any hazardous waste, as defined by 42 U.S.C. § 6903(5), any hazardous
substance as defined by 42 U.S.C. § 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. § 9601(33) or any toxic
substance, oil or hazardous material or other chemical or substance (including,
without limitation, asbestos in any form, urea formaldehyde, polychlorinated
biphenyls, petroleum products or any fraction of petroleum) regulated by any
Environmental Laws (Hazardous Substances)
which Seller or any predecessor in interest has generated, transported or
disposed of has been found at any site at which a federal, state or local
agency or other third party has conducted or has ordered that Seller or any
predecessor in interest conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (C) that Seller or
any predecessor in interest is or shall be a named party to any claim, action,
cause of action, complaint, (contingent or otherwise) legal or administrative
proceeding arising out of any third partys incurrence of costs, expenses,
losses or damages of any kind whatsoever in connection with the release of
Hazardous Substances;  (A) no portion of any real property presently or
formerly owned, leased or operated by Seller has been used for the handling, manufacturing,
processing, storage or disposal of Hazardous Substances except in accordance
with applicable Environmental Laws; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on such
properties; (B) in the course of any activities conducted by Seller or any
operator of any real property  24


presently or
formerly owned, leased or operated by Seller, no Hazardous Substances have been
generated or are being used on such properties except in accordance with
applicable Environmental Laws; (C) all real properties presently or
formerly owned, leased or operated by Seller are free from contamination of
every kind, including without limitation, groundwater, surface water, soil,
sediment and air contamination, and such properties do not contain any
Hazardous Substances, except in each case to the extent that the presence of
Hazardous Substances on such properties does not violate any applicable
Environmental Laws; (D) there have been no Releases (which term, as used
herein, shall mean any past or present releasing, spilling, breaching, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened Releases of Hazardous Substances on, upon,
into or from any real property presently or formerly owned, leased or operated
by Seller except in accordance with applicable Environmental Laws; (E) there
have been no Releases of Hazardous Substances on, upon, from or into any real
property in the vicinity of any real property presently or formerly owned,
leased or operated by Seller which, through soil or groundwater contamination,
may have come to be located on such real property except for Hazardous
Substances whose presence on such real property does not violate any applicable
Environmental Laws; and (F) in addition, any Hazardous Substances that
have been generated on any real property presently or formerly owned, leased or
operated by Seller have been transported offsite only by carriers having
identification numbers issued by the EPA and have been treated or disposed of
only by treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities have been
and are, to the best of Seller and the Shareholders Knowledge, operating in
compliance with such permits and applicable Environmental Laws; and no real
property presently or formerly owned, leased or operated by Seller is or shall
be subject to any applicable environmental cleanup responsibility law or
environmental restrictive transfer law or regulation, by virtue of the
transactions set forth herein and contemplated hereby.  (d)           Attached
as part of Schedule 2.17(d) is a list of all documents,
reports, site assessments, data, communications or other materials, in Sellers
or the Shareholders possession or prepared on behalf of any of Seller or the
Shareholders, which contain any material information with respect to potential
environmental liabilities associated with any real property presently or
formerly owned, leased or operated by Seller and relating to compliance with
Environmental Laws or the environmental condition of such properties and
adjacent properties.  Seller and the
Shareholders have furnished to Buyers complete and accurate copies of all of
the documents, reports, site assessments, data, communications and other
materials listed on Schedule 2.17.(d) hereto.  2.18         Product Returns and Warranty Liability.  Copies of the Businesss forms of standard
product warranties are attached as Schedule 2.18 hereto.  Except for variations from such standard
policies as would not, individually or in the aggregate, have a Material
Adverse Effect, the Business has not provided product warranties more favorable
than provided for in the standard form. 
Except as set forth on Schedule 2.18:  (a) there have been no product or
service warranty claims made by customers of the Business in the past three (3) years;
and (b) there have been no product recalls by the Business in the past
three (3) years.  No claims alleging
bodily injury or property damage as a result of any defect in the design or
manufacture of any product manufactured, designed or sold by the Business or
the breach of any duty to warn, test, inspect or instruct of dangers therein
(each a Product Liability Claim),
have been made or threatened  25


against Seller and, to the Knowledge of Seller and Shareholders, no
facts or circumstances exist that could give rise to a Product Liability
Claim.  Except as set forth on Schedule 2.18,
all third party manufacturers warranties relevant to the conduct of the
Business are assignable, without requiring the consent of any third party.  2.19         Equipment.  Schedule 2.19
hereto sets forth a complete and accurate list of any and all leasehold
improvements, fixtures, machinery, installations, equipment, furniture, tools,
spare parts, supplies, materials, molds, dies and other personal property owned
by Seller (the Equipment) other than items
having a book value individually of less than One Thousand Dollars
($1,000).  All of Sellers title to,
interest in and rights under the leases of personal property, including the
capital leases, described on Schedule 2.19 hereto (the Personal Property Leases) include
all leases by Seller of any item of personal property used in the
Business.  The Equipment, and all
personal property held by Seller under the Personal Property Leases, are
utilized by Seller in the ordinary course of business and are in good condition
and repair for their present use in the Business.  2.20         Inventory.  The
Inventory consists solely of, and the Inventory to be purchased by Buyers
hereunder will consist solely of, material and goods of a quality and quantity
which are usable or saleable in the normal course of the businesses carried on
by Seller, or to be carried on by Buyers. 
The Inventory is adequate for the present needs of the Business, is
fairly reflected on the books of account of Seller, stating items of Inventory
at cost, with no excessive or obsolete inventories.  2.21         Insurance.  Schedule 2.21
hereto lists all policies of fire, liability, workers compensation, life,
property and casualty and other insurance owned or held by Seller.  All such policies (a) are in full force
and effect, (b) are sufficient for compliance by Seller with all
requirements of law and all agreements to which Seller is a party, and (c) provide
that they will remain in full force and effect through December 31,
2008.  Seller is not in default with
respect to its obligations under any of such insurance policies nor has Seller
received any notification of cancellation of any such insurance policies.  No insurance carrier has denied coverage for
any claim asserted by Seller since January 1, 2005, nor has any insurance
carrier declined to provide any coverage to Seller since January 1, 2005.  2.22         Accounts Receivable. 
All Accounts Receivable represent sales made in the ordinary course of
business, are valid obligations owing to Seller and have been collected or are
collectible in the aggregate recorded amounts thereof in accordance with their
terms, net of the reserve for uncollected amounts to be set forth on the
Closing Balance Sheet.  2.23         No Undisclosed Liabilities.  Except for performance obligations with
respect to Sellers contracts that would not be required to be reflected or
reserved against on a balance sheet prepared in accordance with GAAP, and to
the extent (a) reflected or reserved against in the Acquisition Balance
Sheet, (b) incurred in the ordinary course of business after the date of
the Acquisition Balance Sheet and reflected or reserved against on the Closing
Balance Sheet or (c) described on any Schedule hereto, Seller has no
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise (including without limitation as guarantor or otherwise with
respect to obligations of others).  26


2.24         Potential Conflicts of Interest.  Except as set forth on Schedule 2.24,
no officer, director, shareholder (or affiliate thereof), as the case may be,
of Seller (a) owns, directly or indirectly, any interest in (excepting not
more than 1% stock holdings for investment purposes in securities of publicly
held and traded companies) or is an officer, director, employee or consultant
of any Person which is a competitor, lessor, lessee, customer or supplier of
Seller; (b) owns, directly or indirectly, in whole or in part, any
tangible or intangible property which Seller is using or the use of which is
necessary for the Business as currently conducted or currently proposed to be
conducted; or (c) has any cause of action or other claim whatsoever
against, or owes any amount to, Seller, except for claims in the ordinary
course of business, such as for accrued vacation pay, accrued benefits under
Employee Benefit Plans and similar matters and agreements.  2.25         Indebtedness. 
Except for Indebtedness described on Schedule 2.25hereto, Seller has no Indebtedness outstanding at the date hereof.  Except as disclosed on Schedule 2.25
hereto, Seller is not in default with respect to any outstanding Indebtedness
or any instrument relating thereto and no such Indebtedness or any instrument
or agreement relating thereto purports to limit the issuance of any securities
by Seller or the operation of the Business. 
Seller has furnished to Buyers complete and correct copies of all
instruments (including all amendments, supplements, waivers and consents)
relating to (a) any Indebtedness of Seller, (b) any conditional sale
or other title retention agreement with respect to any assets used in the
Business, (c) any purchase money mortgage or other agreement securing all
or part of the purchase price of property used in the Business, and (d) any
capital leases of any assets used in the Business or in respect of which Seller
is liable as lessee.  2.26         Rights to Closing Purchase Price, Escrowed Funds and
Earnout Consideration.  Seller and
the Shareholders represent and warrant that Schedule 2.26
accurately and completely lists those Persons entitled to any portion of the
Closing Purchase Price, the Escrowed Funds and the Earnout Consideration (the Total Consideration) as well as the
amount of such Total Consideration payable to each such Person.  Except as listed on Schedule 2.26,
there are no other Persons who now or hereafter have any claim to any portion
of the Total Consideration.  2.27         THX Agreement. 
All liabilities and obligations under, or relating to, the THX Agreement
have been fully discharged by Seller and the Shareholders.  Seller has paid and satisfied in full all
amounts due or payable under the THX Agreement. 
The THX Agreement has been terminated prior to the Closing and THX has
no claims whatsoever under or relating to the termination of the THX Agreement
against Seller, any of the Shareholders or Buyers.  2.28Ownership
of Shareholder Patents.  Schedule 1.2
contains an accurate and complete list of all patents held by Seller.  Except as set forth on Schedule 2.28,
there are no Out-Bound Licenses with respect to the Shareholder Patents.  As of immediately prior to the sale by the
Shareholders to the Seller of the Shareholder Patents, collectively, the
Shareholders owned the entire right, title and interest to the Shareholder
Patents free and clear of any Encumbrances. 
There are no proceedings, challenges or claims before any court,
tribunal (including the U.S. Patent and Trademark Office or equivalent
authority anywhere in the world) related to the Shareholder Patents, other than
normal patent and trademark prosecution proceedings.  27


2.29         Subsidiaries. 
Seller neither has any Subsidiaries nor owns or holds of record and/or
beneficially any shares of any class in the capital of any corporation.  Seller owns no legal and/or beneficial
interests in any limited liability companies, partnerships, business trusts or
joint ventures or in any other unincorporated trade or business enterprises.  2.30         Disclosure.No representation or warranty by Seller
or any Shareholders in this Agreement or in any exhibit, schedule, written
statement, certificate or other document 
delivered or to be delivered to Buyers pursuant hereto or in connection
with the consummation of the transactions contemplated hereby contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact required to be stated therein or necessary to make the
statements contained therein not misleading or necessary in order to provide
Buyers with proper and complete information as to Seller and the Shareholders
and the identity, value and usability of the Purchased Assets and the
Shareholder Patents.  There is no fact
relating to the Purchased Assets or the Shareholder Patents, Seller or the
Shareholders which may materially adversely affect the same and which has not
been disclosed to Buyers in writing.  ARTICLE III  REPRESENTATIONS AND WARRANTIES OF BUYERS  As
of the Closing Date, each of DTS, DTS Washington and BVI represents and
warrants to Seller and to Shareholders as follows:  3.1           Organization and Qualification.  DTS is an entity duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the power and authority to perform its obligations under this Agreement.  DTS Washington is an entity duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the power and authority to perform its obligations under this
Agreement.  DTS is the sole member of DTS
Washington.  BVI is an entity duly
organized, validly existing and in good standing under the laws of British
Virgin Islands and has the power and authority to perform its obligations under
this Agreement.  DTS is the sole owner of
BVI.  3.2           Authorization. 
The execution and delivery of this Agreement and each Transaction
Agreement by each of DTS, DTS Washington and BVI and the performance by each of
DTS, DTS Washington and BVI of its obligations hereunder have been duly
authorized by and no other action or approval is necessary for the execution,
delivery or performance of this Agreement and each Transaction Agreement.  Each of DTS, DTS Washington and BVI has full
right, power, authority and capacity to execute and deliver this Agreement and
each Transaction Agreement to which it is a party, as applicable.  This Agreement and each Transaction Agreement
to which each of DTS, DTS Washington and BVI are a party has been or will be
duly executed and delivered by each of DTS, DTS Washington and  BVI, as applicable, and is or will be a valid
and binding obligation of each of DTS, DTS Washington and BVI, as applicable,
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
limiting creditors rights generally, and (b) general principles of equity
(whether considered in an action in equity or at law).  28


3.3           No Conflict. 
Neither the execution and delivery of this Agreement by DTS, DTS
Washington or BVI nor the consummation of the transactions contemplated
hereunder will:  (a)           conflict with or result in a breach by either DTS, DTS
Washington or BVI of, or constitute a default by DTS, DTS Washington or BVI
under, or create an event that, with the giving of notice or the lapse of time,
or both, would be a default under or material breach of, any of the terms,
conditions or provisions of (i) any material indenture, mortgage,
lease, deed of trust, pledge, loan or credit agreement, license agreement or
any other material contract, arrangement or agreement to which DTS, DTS
Washington or BVI is a party or to which a material portion of the assets of DTS,
DTS Washington or BVI are subject, (ii) the certificate or articles of
incorporation, bylaws or other organizational documents of DTS, DTS Washington
or BVI, as applicable, or (iii) any judgment, order, writ, injunction,
decree or demand of any Governmental Entity which materially affects the  ability of DTS, DTS Washington or BVI to
perform its obligations under this Agreement;  (b)           result in the creation or imposition of any Encumbrance
upon any material portion of the assets of DTS, DTS Washington or BVI, or which
materially affects the ability to conduct the business of DTS, DTS Washington
or BVI as conducted prior to the date of this Agreement or perform its
obligations under this Agreement; or  (c)           require the consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Entity or other
Person to be made or obtained by DTS, DTS Washington or BVI in connection with
the execution, delivery and performance by DTS, DTS Washington or BVI of this
Agreement and the consummation of the transactions contemplated hereby.  3.4           Legal Proceedings. 
There is no action, claim suit or proceeding pending or, to the
Knowledge of Buyers, threatened, by or against or DTS, DTS Washington or BVI
that challenges, or may have the effect of preventing, delaying, making illegal
or otherwise interfering with the execution and delivery by DTS, DTS Washington
or BVI of this Agreement or any of the Transaction Agreements to which it is a
party or the performance of DTS, DTS Washington or BVI, as applicable,
hereunder or thereunder.  3.5           Brokers.  All
negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Buyers directly with Seller and/or the
Shareholders without the intervention of any Person on behalf of Buyers in such
manner as to give rise to any valid claim by any Person against any of Seller,
Reams, Hubert, Golden or Koester for a finders fee, brokerage commission or
similar payment.  3.6           Financial Statements.  The audited consolidated financial statements
and unaudited interim consolidated financial statements of DTS (including, in
each case, the notes, if any, thereto) included in the Form 10-K filed by
DTS with the Securities and Exchange Commission (SEC)
on March 3, 2008 and the subsequent Form 10-Qs filed by DTS with the
SEC on May 12, 2008, August 8, 2008 and November 10, 2008,
fairly present, in all material respects, the assets, liabilities and
consolidated financial position of DTS as of the dates indicated and the
results of operations for the periods then ended, except, with respect to the
interim consolidated financial statements filed on Form 10-Q on the above
dates, (i) normal year-  29


end adjustments or adjustments which are not expected to be material,
individually or in the aggregate, and (ii) the absence of disclosures
normally made in footnotes.  ARTICLE IV  [INTENTIONALLY OMITTED]  ARTICLE V  COVENANTS  5.1Employee
Matters.  (a)           Employment. 
Effective as of the Closing Date and immediately following the
termination of their employment with Seller, DTS shall enter into employment
agreements with each of the Business Employees set forth on Schedule 5.1(a)
(the Transferred Employees) in
the form substantially attached hereto as Exhibit C (each, an Employment Agreement and
collectively, the Employment Agreements).  (b)           No Rights Conferred Upon Employees.  The parties hereby acknowledge that, other
than the Transferred Employees, Buyers are under no obligation to employ any
current or future employee of Seller. 
Except as specifically set forth in an Employment Agreement between DTS
and a Transferred Employee, Buyers shall be under no obligation to (i) continue
the employment of any Transferred Employee after the Closing Date, and nothing
in this Agreement shall confer any rights or remedies under this Agreement on
any such Transferred Employee or (ii) continue any Transferred Employees
coverage under any Employee Benefit Plan.  (c)COBRA
Continuation Coverage.  On and after the Closing Date,
the Seller shall be responsible for (i) complying with all notice
requirements of COBRA, and (ii) providing COBRA continuation coverage to
all M&A qualified beneficiaries, as
that term is defined by Treasury Regulations §54.4980B-9, Q&A-4, with
respect to the transactions contemplated by this Agreement for at least the
maximum period that continuation coverage may be available to the M&A
qualified beneficiaries (including any second qualifying events experienced by
the M&A qualified beneficiaries.) under COBRA.  5.2           Assumed Liabilities.  Buyers will pay or
otherwise discharge the Assumed Liabilities and will indemnify and hold
harmless Seller in respect thereof, as more particularly set forth in Section 7.3.  5.3Filing of Tax Returns; Cooperation.  (a)           Subject
to subsection (c) below, Seller will be responsible for the
preparation and filing of all Tax Returns of Seller (including Tax Returns
required to be filed after the Closing Date) to the extent such Tax Returns
include or relate to Sellers operation of the Business or Sellers use or
ownership of the Purchased Assets or Shareholder Patents on or prior to the
Closing Date.  Sellers Tax Returns, to
the extent they relate to the Business, Purchased Assets or Shareholder
Patents, shall, in all material respects, be true, complete and  30


correct and
prepared in accordance with applicable law. 
Except as provided in Section 1.4 and Section 1.9, Seller will
be responsible for and make all payments of Taxes shown to be due on such Tax
Returns.  (b)           Subject
to subsection (c) below, each of the Shareholders will be responsible
for the preparation and filing of all Tax Returns (including Tax Returns
required to be filed after the Closing Date) to the extent such Tax Returns
include or relate to the Shareholder Patents on or prior to the Closing
Date.  Such Tax Returns, to the extent
they relate to the Shareholder Patents, shall, in all material respects, be
true, complete and correct and prepared in accordance with applicable law.  Except as provided in Section 1.4 and Section 1.9,
each of the Shareholders will be responsible for and make all payments of Taxes
shown to be due on such Tax Returns, as applicable.  (c)           Buyers
will be responsible for the preparation and filing of all Tax Returns it is
required to file with respect to (i) Buyers ownership or use of the
Purchased Assets and Shareholder Patents or (ii) the operation of the
Business attributable to taxable periods (or portions thereof) commencing after
the Closing Date.  Buyers Tax Returns,
to the extent they relate to the Purchased Assets, Shareholder Patents or the
Business, shall be true, complete and correct and prepared in accordance with
applicable law in all material respects. 
Buyers will make all payments of Taxes shown to be due on such Tax
Returns.  (d)To
the extent relevant to the Business, the Purchased Assets or the Shareholder
Patents, each party shall (i) provide the other with such assistance as
may reasonably be required in connection with the preparation of any Tax Return
and the conduct of any audit or other examination by any taxing authority or in
connection with judicial or administrative proceedings relating to any
liability for Taxes and (ii) retain and provide the other with all records
or other information that may be relevant to the preparation of any Tax Return,
or the conduct of any audit or examination, or other proceeding relating to
Taxes.  5.4Cooperation
With Intellectual Property Assignments.  Each of
Seller and the Shareholders agrees to execute and deliver at the request of DTS
or BVI, all documents, instruments and assignments reasonably requested by
Buyers, and to perform any other reasonable acts Buyers may require in order to
vest all of  right, title, and interest
in and to the Seller IP Rights and Shareholder Patents in Buyers or to provide
evidence to support any of the foregoing in the event such evidence is
reasonably deemed necessary by DTS or BVI to the extent such evidence is in the
possession or control of Seller and the Shareholders, as applicable.  DTS or BVI shall reimburse Seller and the
Shareholders, as applicable, for any out-of-pocket costs incurred pursuant to
this Section 5.4.  5.5           Confidentiality. 
Seller acknowledges and agrees to continue to abide by the terms and
conditions of that certain Mutual Nondisclosure Agreement effective as of September 25,
2008 (the Confidentiality Agreement).  Notwithstanding the foregoing or anything to
the contrary in the Confidentiality Agreement, each of Seller and the
Shareholders agrees not to divulge or disclose or use for its benefit or
purposes at any time after the Closing any information with respect to the
Purchased Assets or the Shareholder Patents, Buyers or the Business, unless such
information has already become public (without violation of this
Agreement).  The information intended to
be protected hereby shall include, but not be limited  31


to, financial information, customers, sales representatives, and
anything else having an economic or pecuniary benefit to Buyers, Seller or the
Shareholders, respectively.  5.6Covenants Not
to Compete and Not to Solicit.  (a)           Each
of Seller and the Shareholders agrees and acknowledges that it is necessary
that they undertake not to utilize their special knowledge of the Business and
their relationship with customers and suppliers to compete with the
Business.  Each of Seller and the
Shareholders further agrees and acknowledges that:  (i) upon the Closing, Buyers and their
Affiliates will be actively engaged in the Business throughout the world (the Territory); (ii) the agreements and
covenants contained in this Section 5.6 are essential to protect Buyers,
including protecting the goodwill of the Business; (iii)  Buyers would be
irreparably damaged if Seller or the Shareholders were to provide services to
any Person in violation of the provisions contained in this Section 5.6; (iv)
the consideration received by Seller and the Shareholders in connection with
the transactions contemplated by this Agreement is sufficient and Seller and
the Shareholders have the means to support such Person and such Persons
dependents other than by engaging in the Business, and the provisions of this Section 5.6
will not impair such ability; (v) the Shareholders ownership interest in
Seller has provided such Shareholder with trade secrets of, and confidential
information concerning, Seller and the Business; and (vi) the agreements and
covenants contained in this Section 5.6 are a material inducement for
Buyers to enter into this Agreement and Buyers would not have entered into this
Agreement and would not have agreed to consummate the transactions contemplated
hereby but for the agreements and covenants contained in this Section 5.6.  Accordingly, Seller and the Shareholders
covenant and agree to comply with such Persons obligations under this Section 5.6.  (b)           As
an inducement for Buyers to enter into this Agreement, Seller and each of the
Shareholders hereby agree that for the Restricted Period applicable to Seller
and the Shareholders, each such Person will not, directly or indirectly, as
agent, employee, consultant, distributor, representative, stockholder, manager,
partner or in any other capacity, own (other than through the passive ownership
of less than 1% of the publicly traded shares of any Person, or ownership of
the Shares or other equity interests in Buyers), operate, manage, control,
engage in, invest in (other than through the passive ownership of less than 1%
of the publicly traded shares of any Person) or participate in any manner in,
act as a consultant or advisor to, render services for (alone or in association
with any Person), or otherwise assist any Person that directly or indirectly
engages in or owns, invests in, operates, manages or controls any venture or
enterprise that engages or proposes to engage anywhere in the Territory in any
business that is or would be reasonably expected to compete with the Business.  (c)           Without
limiting the generality of the other provisions of this Section 5.6, each
of Seller and the Shareholders hereby agrees that during the Restricted Period
applicable to Seller and the Shareholders, such Person will not, directly or
indirectly, (i) solicit, or participate as agent, employee, consultant,
distributor, representative, stockholder, manager, partner or in any other
capacity in any business which solicits business from any Person which is or
was a customer or supplier of Buyers or any of their Subsidiaries or Seller at
any time during the one (1) year period preceding the date of such
solicitation, or from any successor in interest to any such Person, for the
purpose of securing business or contracts which might be competitive to the  32


Business, or (ii) otherwise
seek to influence or alter any such Persons relationship with Buyers or any of
their Subsidiaries as it relates to the Business.  (d)           Neither
Seller nor the Shareholders shall, during the Restricted Period applicable to
Seller and the Shareholders, without the prior written consent of Buyers,
directly or indirectly, as agent, employee, consultant, distributor,
representative, stockholder, manager, partner or in any other capacity, (i) employ
or engage, or recruit or solicit for employment or engagement, any Person who
was employed or engaged by Buyers or any of their Subsidiaries or Seller within
one (1) year preceding such contact, or (ii) otherwise seek to
influence or alter any such Persons relationship with Buyers or any of their
Subsidiaries as it relates to the Business.  (e)           For
the avoidance of doubt, the terms and provisions contained in this Section 5.6
shall be binding on any and all Affiliates of Seller and the Shareholders and
shall inure to the benefit of any and all Affiliates of Buyer.  (f)            If
any court of competent jurisdiction shall at any time deem the term of any
particular restrictive covenant contained in this Section 5.6 too lengthy
or the Territory too extensive, the other provisions of this Section 5.6
shall nevertheless stand, the Restricted Period applicable to Seller and the
Shareholders shall be deemed to be the longest period permissible by applicable
law under the circumstances and the Territory shall be deemed to comprise the
largest territory permissible by applicable law under the circumstances.  The court in each case shall reduce the
applicable Restricted Period and/or Territory to permissible duration or size.  (g)           Seller
and the Shareholders acknowledge and agree that the covenants set forth in this
Section 5.6 are reasonable and necessary for the protection of the
Business, that irreparable injury will result to Buyers in the event of any
breach any of the terms of this Section 5.6, and that in the event of any
actual or threatened breach of any of the provisions contained in this Section 5.6,
Buyers will have no adequate remedy at law. 
Seller and the Shareholders accordingly agree that in the event of any
actual or threatened breach by them or any of their Affiliates or its or their
successors and assigns of any of the provisions contained in this Section 5.6,
Buyers shall be entitled to seek such injunctive and other equitable relief
without the necessity of showing actual monetary damages, as may be deemed
necessary or appropriate by a court of competent jurisdiction.  The parties agree that the court shall set
the bond for such injunctive or other equitable relief at a nominal amount, not
to exceed $5,000.  Nothing contained
herein shall be construed as prohibiting Buyers from pursuing any other
remedies available to it for such breach or threatened breach, including the
recovery of any damages which it is able to prove.  (h)           Buyers
acknowledge that the Shareholders may also be entering into Employment
Agreements, Consulting Agreements or Non-Competition Agreements containing
non-competition and non-solicitation covenants. 
To the extent the covenants contained in this Section 5.6 extend
more broadly, or for longer periods, than those contained in such other
agreements, the restrictions contained in this Section 5.6 shall control.  5.7Use of Name.Buyers are purchasing all of Sellers rights to the
business names of Seller, and therefore Seller shall not be entitled to use the
name Neural Audio, variations thereof,or any confusingly similar
name as corporate or business names or titles anywhere in the  33


world from and after the Closing. 
Seller shall, promptly following with the Closing, undertake and
promptly pursue all necessary action to change its business and corporate names
to new names bearing no resemblance or confusing similarity to any of its
pre-Closing names, so as to permit the use of such pre-Closing names by Buyers
and their Affiliates.  5.8Payment of the
Closing Purchase Price, Escrowed Funds and Earnout Consideration.  Seller shall be solely responsible for
further distributing the Closing Purchase Price, the Escrowed Funds and the
Earnout Consideration, when and if received by Seller from Buyers, to those
Persons entitled to any portion of the Closing Purchase Price, the Escrowed
Funds and the Earnout Consideration in accordance with Schedule 2.26.  5.9Third Party
Consents.Each of Seller and the Shareholders agrees
that they shall use their best efforts to obtain those third party consents
listed on Schedule 5.9 within twenty (20) days of the Closing.  ARTICLE VI  CLOSING CONDITIONS AND DELIVERABLES  6.1Additional
Transaction Agreements. 
Concurrently with the execution of this Agreement, the parties are
entering into the following additional Transaction Agreements:  (a)           [Intentionally Omitted]  (b)           Employment Agreements.  DTS Washington and each of the Transferred
Employees and Key Employees are entering into the Employment Agreements.  (c)           Consulting Agreements.  DTS Washington and each of the Persons listed
on Schedule 6.1(c) are entering into Consulting Agreements in
the form substantially attached hereto as Exhibit D (the Consulting Agreements).  6.2Conditions
Precedent to Buyers Obligations.  The obligation of Buyers to consummate the
Closing shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions (to the extent noncompliance is not waived in
writing by Buyers):  (a)           Buyers shall have received a bill of sale (the Bill of Sale) and an assignment,
assumption, and general conveyance (the Assignment and Assumption
Agreement), duly executed by Seller in favor of DTS Washington
for transfer of the Purchased Assets in substantially the forms attached hereto
as Exhibits E and F, dated as of the Closing Date;  (b)           Buyers shall have received an assignment from Seller of
all right, title and interest of Seller in all Seller IP Rights (the Seller IP Assignment), duly executed
by Seller in favor of Buyers as described in Schedule 1.1, in
substantially the form attached hereto as Exhibit G, dated as of
the Closing Date;  34


(c)           Buyers shall have received evidence, acceptable in form
and substance to Buyer, that the entire right, title and interest in the
Shareholder Patents has been duly and properly transferred and assigned to
Seller, prior to Closing;  (d)           Buyers shall have received the Escrow Agreement duly
executed by Seller, the Shareholders and the Escrow Agent, dated as of the
Closing Date;  (e)           Buyers shall have received evidence that all cash accounts
that Seller has with Comerica Bank have been transferred to Buyers as of the
Closing Date.  (f)            Buyers shall have received the Employment Agreements duly
executed by each of the Transferred Employees, dated as of the Closing Date.  (g)           Buyers shall have received the Consulting Agreements duly
executed by those Persons listed on Schedule 6.1(c), dated as of
the Closing Date;  (h)           Seller shall prepare and deliver to Buyers a certificate
(the Certificate of Indebtedness)
certifying as to the amount of Indebtedness of Seller outstanding on the
Closing Date, and specifying the amount owed to each creditor listed
thereon.  Seller shall have caused Sellers
creditors to deliver pay-off letters and Lien discharges, each in form
satisfactory to Buyers, with respect to such Indebtedness as provided in Section 6.2(i);  (i)            Buyers shall have received the Payoff Letters, providing
for terminations of any and all security interests in, and releases of any and
all Liens and Indebtedness on the assets ofSeller, including, but not limited to, UCC termination
statements from the secured creditors of Seller.  (j)            Buyers shall have received certificates of corporate good
standing as of the most recent practicable date from Secretary of State where
Seller is incorporated or qualified to do business;  (k)           That certain Technology License Agreement by and among
each of the Shareholders and Seller dated as of September 1, 2004 shall be
terminated in a manner satisfactory to Buyers, and each party thereto shall
have specifically renounced any and all rights and obligations under such
Technology License Agreement effective as of the Closing.  (l)            Buyers shall have received from the landlords for the
Real Property and Real Estate Leases, a waiver, consent and estoppel
certificate acceptable in form and substance to Buyer;  (m)          Except as set forth on Schedule 5.9, all filings,
authorizations and approvals and consents necessary to consummate the
transactions contemplated by this Agreement shall have been made with or
obtained from all applicable governmental authorities or other Persons, as the
case may be;  (n)           Buyers shall have received properly executed certificates
of non-foreign status from each of the Shareholders in a form reasonably
acceptable to Buyers conforming to the requirements of Section 1.1445-2(b)(2) of
the Treasury Regulations;  35


(o)           Buyers shall have received all required consents from
Seller related to Buyers use of Sellers name on the Closing Date and
thereafter, in the state of its incorporation and all other states wherein it
is qualified to do business as a foreign corporation or has business nexus;  (p)           Seller and Shareholders shall have terminated the THX
Agreement to the satisfaction of Buyers in their sole discretion and shall have
received a release of claims from THX releasing Seller and any of Sellers
successors-in-interest in form and substance satisfactory to Buyers;  (q)           Buyers shall have received evidence to Buyers
satisfaction that all third party inventor assignments with respect to the
Seller IP Rights have been properly executed in favor of Seller;  (r)Buyers
shall have received a certificate duly executed by Seller and the Shareholders,
in form and substance satisfactory to Buyers, certifying that Seller and each
of the Shareholders has secured all necessary corporate and other approvals
authorizing the execution, delivery and performance by Seller and the
Shareholders of this Agreement and the transactions contemplated hereby; and  (s)           Seller and the Shareholders shall have entered into a
settlement with Sue Barbis with respect to any amounts payable to Ms. Barbis
to the satisfaction of Buyers.  Such
settlement will make clear that Ms. Barbis will be entitled to no amounts
from Buyers prior to, on, or after the Closing and that Buyers will have no
obligations whatsoever to Ms. Barbis.  Any
agreement or document to be delivered to Buyer pursuant to this Section 6.2,
the form of which is not attached to this Agreement as an exhibit, shall be in
form and substance reasonably satisfactory to Buyers.  6.3Conditions
Precedent to Sellers and Shareholders Obligations.  The obligation of Sellers and the
Shareholders to consummate the Closing shall be subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by Seller or the Shareholders, as
applicable):  (a)           Seller and the Shareholders shall have received the Escrow
Agreement duly executed by Buyers and the Escrow Agent, dated as of the Closing
Date;  (b)           Seller and the Shareholders shall have received the
Employment Agreements duly executed by DTS Washington, dated as of the Closing
Date.  (c)           Seller and the Shareholders shall have received the
Consulting Agreements duly executed by DTS Washington, dated as of the Closing
Date;  (d)           Seller and the Shareholders shall have received the Assignment
and Assumption Agreements duly executed by DTS Washington, dated as of the
Closing Date;  (e)           Seller and the Shareholders shall have received the Seller
IP Assignment duly executed by DTS and BVI, dated as of the Closing Date;  36


(f)Seller
and the Shareholders shall have received a certificate duly executed by DTS, in
form and substance satisfactory to Seller and the Shareholders, certifying that
each Buyer has secured all necessary corporate and other approvals authorizing
the execution, delivery and performance by Buyers of this Agreement and the
transactions contemplated hereby; and  (g)           Buyers shall have (i) delivered to Seller that
portion of the Closing Purchase Price set forth in Section 1.6(b)(i) in
accordance with Section 1.6(b)(i); and (ii) deposited the
Escrowed Funds with the Escrow Agent pursuant to Section 1.6(b)(ii) hereof.  Any
agreement or document to be delivered to Seller pursuant to this Section 6.3,
the form of which is not attached to this Agreement as an exhibit, shall be in
form and substance reasonably satisfactory to Seller.  ARTICLE VII  INDEMNIFICATION  7.1Survival of
Representations and Warranties and Covenants.  (a)           The representations and warranties contained in this Agreement
shall survive the execution and delivery of this Agreement and the closing and
the consummation of the transactions contemplated hereby (and any examination
or investigation by or on behalf of any party hereto) until the date that is
twenty four (24) months from the Closing Date (the Cut-Off
Date).  Notwithstanding
the foregoing, (i) any obligation in respect of a claim for indemnity as a
result of a breach of any representation or warranty of any party that is
asserted in writing with reasonable specificity as to the nature and, if then
determinable, amount of the claim prior to the Cut-Off Date, the IP Claim Date
or the applicable Statute of Limitations Date, in each case as applicable,
shall survive past such date until finally resolved or settled, (ii) any
obligation in respect of a claim by a party for indemnity as a result of a
breach of a representation or warranty arising or resulting from a breach of Section 2.5
(the IP Claim) shall survive for
a period of 48 months from the Closing Date (the IP
Claim Date); (iii) any obligation in respect of a claim by
a party for indemnity as a result of a breach of a representation or warranty
arising or resulting from a breach of Sections 2.7, 2.13 or 2.17(c) shall
survive until the expiration of the applicable statute of limitations
(collectively, the Statute of Limitation Claims
and each such date, the applicable Statute of Limitations
Date); and (iv) any obligation in respect of a claim by a
party for indemnity as a result of a breach of Sections 2.15, 2.26, 2.27,
or 2.28, a breach of a covenant contained in Article 5, a claim arising or
resulting from actual fraud or willful misrepresentation on the part of the
other party, or a claim with respect to the Excluded Assets or Excluded
Liabilities shall survive indefinitely (collectively, the Indefinite
Claims).  (b)           No Action may be commenced with respect to any
representation or warranty, or covenant hereunder, or in any writing delivered
pursuant hereto, unless written notice, setting forth in reasonable detail the
claimed breach thereof, shall be delivered pursuant to Section 8.7 to the
party or parties against whom liability for the claimed breach is charged on or
before the termination of the survival period specified in Section 7.1(a) for
such representation,  37


warranty, covenant or agreement; provided, that the foregoing
shall not apply to an Action solely related to the Excluded Assets or Excluded
Liabilities.  7.2Indemnification
by Seller and the Shareholders.  Subject to the provisions of this Article VII,
each of Seller and the Shareholders, jointly and severally, covenants and
agrees to defend, indemnify and hold harmless Buyers and each of their
respective directors, officers, Affiliates, successors, assigns and agents from
and against and with respect to any Damages directly or indirectly, relating
to, resulting from or arising out of (i) any breach of or inaccuracy in
any representation or warranty in Article II of this Agreement, (ii) any
breach, default or non-fulfillment of any covenant, agreement or other
obligation of Seller and/or the Shareholders under this Agreement, or (iii) any
Excluded Assets or Excluded Liabilities.  7.3Indemnification
by Buyers.  Buyers,
jointly and severally, covenant and agree to defend, indemnify and hold
harmless Seller and the Shareholders and its or his directors, officers,
affiliates, successors, assigns and agents, as applicable, from and against any
and all Damages arising out of or resulting from (i) any inaccuracy in or
breach of any representation or warranty in Article III in this Agreement,
(ii) the failure of Buyers to perform or observe any covenant, agreement
or provision to be performed or observed pursuant to this Agreement, including
but not limited to the Assumed Liabilities, (iii) the operation or
business of DTS Washington or BVI or the operation of the Business after the
Closing Date for periods after the Closing Date or any claims, actions or
litigation concerning the same.  7.4Claims.  (a)           If any party entitled to be indemnified pursuant to this Article VII
(an Indemnified Party) receives notice
of the assertion by any third party of any claim or of the commencement by any
such third party of any Action (any such claim or Action, a Third Party Claim) or otherwise is
entitled to assert a claim for indemnification thereunder (any such claim or
Third Party Claim being referred to herein as an Indemnifiable
Claim) with respect to which another party hereto (an Indemnifying Party) is or may be
obligated to provide indemnification, the Indemnified Party shall promptly
notify the Indemnifying Party in writing (the Claim
Notice) of the Indemnifiable Claim; provided, however,
that the failure to provide such notice shall not relieve or otherwise affect
the obligation of the Indemnifying Party to provide indemnification hereunder,
except to the extent that such failure or delay materially prejudices the
defense thereof.  (b)           The Indemnifying Party shall be entitled to participate in
the defense of such Third Party Claim after receipt of notice of such claim
from the Indemnified Party.  Within
thirty (30) days after receipt of notice of a particular matter from the
Indemnified Party, the Indemnifying Party may assume the defense of such Third
Party Claim, in which case the Indemnifying Party shall have the authority to
negotiate, compromise and settle such Third Party Claim, if and only if the
following conditions are satisfied:  the Indemnifying Party shall
have confirmed in writing that it is obligated hereunder to indemnify the
Indemnified Party with respect to such Third Party Claim;  38


the Indemnified Party shall
not have given the Indemnifying Party written notice that it has determined, in
the exercise of its reasonable discretion and in good faith, that matters of
corporate or management policy or a conflict of interest make separate
representation by the Indemnified Partys own counsel advisable; and  such Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief.  The Indemnified Party shall
retain the right to employ its own counsel and to participate in the defense of
any Third Party Claim, the defense of which has been assumed by the Indemnifying
Party pursuant hereto, but the Indemnified Party shall bear and shall be solely
responsible for its own costs and expenses in connection with such
participation.  (c)           Subject to the foregoing provisions of this Section 7.4,
for a period of twenty (20) days after delivery of a Claim Notice, the
Indemnifying Party shall have the right to object in a written statement (an Objection) to the claim made in the
Claim Notice, and such statement shall have been delivered to the Indemnified
Party prior to the expiration of such twenty (20) day period.  If an Objection has been made, the
Indemnifying Party shall attempt to resolve the dispute with the Indemnified
Party in accordance with this Section 7.4(c).  Once an Objection has been made, the Indemnifying
Party and Indemnified Party shall attempt in good faith to agree upon the
rights of the respective parties with respect to the claim or claims relating
to the Claim Notice.  Any such agreement
shall be set forth in a written memorandum signed by both parties.  If the parties cannot come to such agreement
within fifteen (15) days after receipt by the Indemnified Party of the
Objection, then, at the request of either party, the parties will submit the
dispute to a mutually acceptable arbitrator in San Francisco County, California
designated by the American Arbitration Association, under its rules for
Commercial Arbitration, for binding and final resolution. The fees and expenses of the
arbitration shall be paid jointly, one-half by Buyers, on the one hand, and
one-half by Seller and the Shareholders, on the other hand.  7.5Limitations on
Indemnity.  Buyers,
Seller and Shareholders are not entitled to recover under this Article 7 (a) except
to the extent that the aggregate amount of indemnifiable Damages incurred by
the respective party, in the aggregate, exceeds Seventy Five Thousand Dollars
($75,000) (the Threshold Amount), in which
case the party seeking indemnification may
bring a claim for the entire amount of such Damages, or (b) for any
Damages in excess of Four Million Five Hundred Thousand Dollars ($4,500,000),
plus any amounts that become payable pursuant to the earnout provision
described in Section 1.7 (the Maximum Liability).  The parties agree that they will not submit
any claim for indemnification pursuant to this Article 7 unless and to the
extent that the aggregate amount of all Damages for which indemnity is claimed
exceeds the Threshold Amount or for any Damages in excess of the Maximum
Liability; provided, however, that the limitations set forth in
this Section 7.5 shall not apply in respect of Statute of Limitation
Claims or Indefinite Claims; and; provided, further, that Damages
from such Statute of Limitation Claims or Indefinite Claims shall not be
included as Damages for purposes to determining whether Damages exceed the
Maximum Liability.  Buyers agree that the
amount claimed in respect of each claim asserted for indemnity hereunder shall
be asserted in good faith and shall bear a reasonable relationship to the
estimated Damages incurred  39


or to be incurred by DTS or BVI in respect of such claim, to the extent
that such amount is then determinable.  7.6Exclusive
Remedy.  This Article VII sets forth the sole and exclusive
remedies of Buyers, Seller and the Shareholders, and their respective
successors and assigns for any Action any of them may assert or attempt to
assert against the other to the extent the Action in any way relates to this
Agreement or its negotiation, execution, delivery or performance, any alleged
breach of or default under this Agreement, or the transactions contemplated
hereby, regardless of whether such Action is based in tort (for example,
intentional or negligent misrepresentation) or contract, or arises at law or in
equity; provided, however, the foregoing limitation shall not
apply to a claim arising or resulting from actual fraud or willful
misrepresentation on the part of the other party.  ARTICLE VIII  MISCELLANEOUS  8.1Rules of
Construction.  This Agreement
has been negotiated by the parties and is to be interpreted according to its
fair meaning as if the parties had prepared it together and not strictly for or
against any party.  All references in
this Agreement to sections, schedules and exhibits are to sections, schedules
and exhibits of or to this Agreement unless expressly otherwise indicated.  At each place in this Agreement where the
context so requires, the masculine, feminine or neuter gender includes others.  Including means including without
limitation.  Or is used in the
inclusive sense of and/or.  Currency
amounts referenced herein, unless otherwise specified, are in
U.S. Dollars.  8.2Further Actions.  From time to time, as and when requested by
any party hereto, each other party shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as the requesting party may
reasonably deem necessary or desirable to carry out the intent and purposes of
this Agreement, to transfer, assign and deliver the Purchased Assets and
Shareholder Patents to Buyers and their respective successors and assigns
effective as of the Closing Date (or to evidence the foregoing) and to
consummate and give effect to the other transactions, covenants and agreements
contemplated hereby.  8.3Expenses.  Except as expressly set forth herein, the
parties shall bear their own legal fees and other costs and expenses with
respect to the negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder.  8.4Entire
Agreement.  This
Agreement, which includes the all schedules and exhibits hereto and the other
documents, agreements and instruments executed and delivered pursuant to this
Agreement, contains the entire agreement between the parties hereto with
respect to the transactions contemplated by this Agreement and supersedes all
prior arrangements, understandings, proposals, prospectuses, projections and
related materials with respect thereto, other than the Mutual Nondisclosure
Agreement effective as of September 26, 2008 between DTS and Seller, which
shall survive in accordance with its terms.  40


8.5Descriptive
Headings.  The
descriptive headings of this Agreement are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.  8.6Notices.  All notices or other communications which are
required or permitted hereunder shall be in writing and shall be sufficiently
given if (a) delivered personally or (b) sent by registered or
certified mail, postage prepaid, or (c) sent by overnight courier with a
nationally recognized courier, or (d) sent via facsimile confirmed in
writing in any of the foregoing manners, as follows:  If to Seller or 
  Shareholders:
  
  Robert A. Koester 
  10425 NE 53rd Street  (P.O. Box 698) 
  Kirkland, WA 98033-0698With a copy to:
  
  Cairncross &
  Hempelmann, P.S. 
  524 Second Avenue, Suite 500 
  Seattle, WA 98112 
  Attention: Robert Seidel 
  Fax: 206.254.4505 
  Email: rseidel@cairncross.comandFoster Pepper PLLC 
  1111 Third Avenue 
  Seattle, Washington 98101-3299 
  Attn:   Kenneth L. MyerIf to Buyers:
  
  DTS, Inc. 
  5171 Clareton Drive 
  Agoura Hills, CA 91301 
  Attention: General Counsel 
  Fax: 818.827.2470With a copy to:
  
  Sheppard Mullin
  Richter & Hampton, LLP 
  12275 El Camino Real, Suite 200 
  San Diego, CA 92130-2006 
  Attention: Kirt Shuldberg 
  Fax: 858.523.6712 
  Email: kshuldberg@sheppardmullin.com  If
sent by mail, notice shall be considered delivered five (5) business days
after the date of mailing, and if sent by any other means set forth above,
notice shall be considered delivered upon receipt thereof.  Any party may by notice to the other parties
change the address or facsimile number to which notice or other communications
to it are to be delivered or mailed.  41


8.7           Publicity. 
Buyers shall have sole control over any press release, public
announcement, statement or acknowledgment (collectively, Public
Statements) with respect to this Agreement and the consummation
of the transactions contemplated herein, provided, however, that
prior to the release of any Public Statements, Seller shall be afforded the
right to review and comment on the Public Statements, which comments Buyers can
accept or reject in their sole discretion.  8.8           Governing Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Washington without regard to the choice of law principles
thereof.  8.9           Assignment. 
This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective successors and permitted assigns.  This Agreement shall not be assignable
(whether voluntarily or involuntarily, directly or indirectly or by operation
of law) by Seller or the Shareholders without the written consent of Buyers and
any such purported assignment by Seller or the Shareholders without such
consent shall be void.  8.10         Waivers and Amendments.  Any amendment or supplementation of this
Agreement shall be effective only if in writing signed by each of the parties
hereto.  Any waiver of any term or
condition of this Agreement shall be effective only if in writing signed by the
party giving the waiver.  A waiver of any
breach or failure to enforce any of the terms or conditions of this Agreement
shall not in any way affect, limit or waive a partys rights hereunder at any
time to enforce strict compliance thereafter with every term or condition of
this Agreement, except to the extent such future rights are specifically
included within the scope of such written waiver.  8.11         Third Party Rights. 
This Agreement shall not create benefits on behalf of any other Person
(including without limitation any Business Employee, broker or finder),
and this Agreement shall be effective only as between the parties hereto,
their successors and permitted assigns.  8.12         Severability. 
If any term or provision of this Agreement or the application thereof to
any circumstance shall, in any jurisdiction, be invalid or unenforceable, such
term or provision shall be ineffective as to such jurisdiction to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable such term or provision in any other jurisdiction, the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
enforceable.  8.13         Counterparts. 
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.  Facsimile and PDF signatures shall be treated
as if they were originals.  [SIGNATURE PAGE FOLLOWS]  42


IN
WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto
have caused this Asset Purchase Agreement to be duly executed and delivered as
a sealed instrument as of the date and year first above written.   BUYERS
  
  SELLERDTS Washington LLC,
  
  Neural Audio Corporation,a Delaware limited
  liability company
  
  a Washington corporationBy:
  /s/
  Jon E. Kirchner
  
  By:
  /s/ Geir R. SkaadenName:
  
  Jon E. Kirchner
  
  Name:
  Geir R. SkaadenTitle:
  
  Title:  CEODTS (BVI) Limited,
  
  SHAREHOLDERSa company incorporated
  under the laws of the British Virgin IslandsBy:
  /s/ Robert W. ReamsBy:
  /s/
  Jon E. Kirchner
  
  Name:
  Robert W. ReamsName:
  
  Jon E. KirchnerTitle:By:
  /s/ Paul T. HubertDTS, Inc., a Delaware
  corporation.
  
  Name:
  Paul T. HubertBy:
  /s/
  Jon E. KirchnerName:
  
  Jon E. KirchnerTitle:
  
  By:
  /s/ Robert D. GoldenName:
  Robert D. GoldenBy:
  /s/ Robert A. KoesterName:
  Robert A. Koester  [Signature Page to Asset Purchase Agreement]


EXHIBIT A  DEFINITIONS  The
terms defined in this Exhibit A, whenever used in this Agreement
(including in any schedule to this Agreement), shall have the respective
meanings indicated below for all purposes of this Agreement, unless otherwise
indicated in this Agreement (or the applicable schedule):  Action: any actual claim, action,
suit, arbitration, hearing, inquiry, proceeding, complaint, charge or
investigation by or before any Governmental Entity or arbitrator and any appeal
from any of the foregoing.  Affiliate:  with respect to any Person, any Person
directly or indirectly through one or more intermediaries, that controls, is
controlled by, or is under common control with such other Person.  Assumed Liabilities:  as defined in Section 1.4.  Business:  as defined in the Recitals.  Business Day means Monday through
Friday, excluding any day of the year on which banks are required or authorized
to close in the State of California.  Business Confidential Information:  as defined in Section 2.5(h).  Business Employees:  as defined in Section 2.6(a).  Closing Purchase Price:  as defined in Section 1.6.  Code:  Internal Revenue Code of 1986, as amended.  Damages shall mean any and all
losses, liabilities, obligations, costs, expenses, orders, decrees, damages or
judgments of any kind or nature whatsoever (including reasonable attorneys,
accountants and experts fees, and disbursements of counsel), but excluding in
all instances punitive and consequential damages.  Encumbrance:  any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind, whether voluntary or involuntary, (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).  Excluded Assets:  as defined in Section 1.3.  Excluded Liabilities:  as defined in Section 1.5.  GAAP:  generally accepted accounting principles as
in effect in the United States.


Governmental Entity:  any nation or any state, commonwealth,
territory, possession or tribe and any political subdivision, courts, judicial
tribunals, departments, commissions, boards, bureaus, agencies or other
instrumentalities of any of the foregoing.  In-Bound Licenses:  as defined in Section 2.5(b).  Indebtedness means, as at any date
of determination thereof (without duplication): 
(a) all obligations (other than intercompany obligations) of Seller
for borrowed money or funded indebtedness or issued in substitution for or
exchange for borrowed money or funded indebtedness (including obligations in
respect of principal, accrued interest, any applicable prepayment charges or
premiums and any unpaid fees, expenses or other monetary obligations in respect
thereof); (b) any indebtedness evidenced by any note, bond, debenture or
other debt security; (c) the lease obligations required to be listed on Schedule 2.17(a) and2.19 or required to be capitalized in accordance with GAAP; (d) all
obligations for reimbursement then required to be made of any obligor on any
bankers acceptance or similar transactions (including all letters of credit
and all obligations thereunder); (e) all obligations for the deferred
purchase price of property or conditional sale obligations of Seller under any
title retention agreement (but excluding trade accounts payable and other
accrued liability arising in the ordinary course of business); (f) any
obligations with respect to the termination of any interest rate hedging or
swap agreements; (g) all obligations of the type referred to in clauses (a) through
(f) of any Person for the payment of which Seller is responsible or
liable, directly or indirectly, as guarantor, obligor, surety or otherwise
(excluding intercompany debt); (h) obligations of the type referred to in
clauses (a) through (g) of other Persons secured by any Encumbrance
on any property or asset of Seller but only to the extent of the value of the
property or asset that is subject to such Encumbrance; and (i) any
outstanding but not cleared checks.  Independent Contractors:  as defined in Section 2.6(d).  Intellectual Property Rights: all
right, title and interest in, to and under (i) inventions, whether or not
patentable, (ii) patents and patent applications, (iii) trademarks,
service marks, trade dress, logos, Internet domain names and trade names,
whether or not registered, and all goodwill associated therewith,(iv) rights of publicity and other
rights to use the names and likeness of individuals,(v) copyrights,
rights in databases and related rights, whether or not registered, (vi) mask
works, (vii) trade secrets and know-how, (viii) all rights to any of
the foregoing provided by bilateral or international treaties or conventions, (ix) all
other intellectual property or proprietary rights and all applications,
registrations, issuances and the like with respect thereto, and (x) all
rights to sue or recover and retain damages and costs and attorneys fees for
past, present and future infringement or misappropriation of any of the
foregoing.  Judgments and Litigation:  as defined in Section 2.4.  Key Employees:  Geir Skaaden, Marc Seigle, James Johnston and
Jeff Thompson.  Knowledge of Buyers: any particular
fact, circumstance, event or other matter in question of which either the
Chief Executive Officer or Chief Financial Officer of DTS is actually aware.


Knowledge of Seller and Shareholders
and Sellers and Shareholders Knowledge:  any particular fact, circumstance, event or
other matter in question of which either Reams, Hubert, Golden, Koester,
Geir Skaaden, Marc Seigle or Jeff Thompson is actually aware.  Liabilities:  any and all debts, claims, liabilities,
obligations and expenses of any nature, whether known or unknown, absolute,
accrued, matured, unmatured, determinable, contingent or otherwise and whether
due or to become due.  Lien means any lien, charge,
mortgage, deeds of trust, pledge, easement, encumbrance or security interest.  Material Adverse Effect:  any material adverse effect on the Business,
the Purchased Assets, the Shareholder Patents, the Assumed Liabilities, operations,
prospects, or results of operations of the Business or condition (financial or
otherwise) of the Business taken as a whole.  Material Contracts:  as defined in Section 2.10(a).  Owned Business IP Rights:  as defined in Section 2.5(a).  Out-Bound Licenses:  as defined in Section 2.5(c).  Payoff Letters means the letters
provided by the lenders or other holders of Indebtedness to Seller in
connection with the repayment of the Indebtedness as contemplated hereby.  Permits:  as defined in Section 2.12.  Permitted Encumbrances:  means (i) Encumbrances for Taxes not yet
due and payable, (ii) Encumbrances to secure obligations to GreatAmerica
Leasing Corporation for leased sound equipment, which such equipment is being
assigned to Buyers pursuant to this Agreement, (iii) Encumbrances to
secure obligations to Inter-Tel Leasing Inc. for leased telephone equipment,
which such equipment is being assigned to Buyers pursuant to this Agreement.  Person:  any natural person, firm, partnership,
association, corporation, company, trust, business trust, Governmental Entity
or other entity.  Purchased Assets:  as defined in Section 1.1.  Purchased Contracts:  as defined in Section 1.1(c).  Registered Business IP Rights:  as defined in Section 2.5(a).  Restricted Period:  four (4) years from the Closing Date.  Seller IP Rights:all of the rights and interests of Seller and/or the
Shareholders in Intellectual Property Rights used in, or useful in the conduct
of the Business wherever located, remedies against infringement thereof and
rights of protection of interests therein and all related


goodwill,
including without limitation the Shareholder Patents, Software and the other
Intellectual Property Rights and related rights as set forth on Schedule 2.5;  Sirius/XM License:  that certain Amended and Restated Licensing
Agreement entered into as of July 23, 2007 (and as amended from time to
time) by and between Sirius XM Radio Inc., a Delaware corporation (formerly XM
Satellite Radio Inc., a Delaware corporation) and Seller, or each of the
parties respective successors and assigns.  Subsidiary: With respect to any
Person, any corporation a majority (by number of votes) of the outstanding
shares of any class or classes of which shall at the time be owned by such
Person or by a Subsidiary of such Person, if the holders of the shares of such
class or classes (a) are ordinarily, in the absence of contingencies,
entitled to vote for the election of a majority of the directors (or persons
performing similar functions) of the issuer thereof, even though the right so
to vote has been suspended by the happening of such a contingency, or (b) are
at the time entitled, as such holders, to vote for the election of a majority
of the directors (or persons performing similar functions) of the issuer
thereof, whether or not the right so to vote exists by reason of the happening
of a contingency.  Tax or, collectively, Taxes:  (i) any and all federal, state, local,
or non-U.S. income, franchise, sales and use taxes, real and personal
property (tangible and intangible) taxes, gross receipts taxes, documentary
transfer taxes, excise taxes, employment taxes, withholding taxes, unemployment
insurance contributions, unclaimed property, value added taxes and any other
taxes or governmental charges of any kind, however denominated, including any
interest, penalties and additions to tax in respect thereto, and (ii) any
liability for the payment of any amounts of the type described in clause (i) as
a result of any express or implied obligation to indemnify any other person as
a result of any obligations under any agreements or arrangements with any other
person with respect to such amounts, or as a successor or transferee, or
pursuant to the provisions of Treasury Regulation 1.1502-6 (and any comparable
provision of state, foreign or local law).  Tax Return:  any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.  Transaction Agreement:  as defined in Section 2.2.  Transferred Employees:  as defined in Section 5.1(a).  Transfer Taxes:  as defined in Section 1.9.  Working Capital:  accounts receivable (net of allowance for
doubtful accounts), less accounts payable, as determined in accordance with
GAAP.  Working Capital Requirement:  as defined in Section 1.8(c).  Year:  any of Year 1, Year 2, Year 3, Year 4, or
Year 5, as applicable.


Year 1:   the 12-month period commencing on January 1,
2009 and ending on December 31, 2009.  Year 2:   the 12-month period commencing at the end of
Year 1 and ending on December 31, 2010.  Year 3:   the 12-month period commencing at the end of
Year 2 and ending on December 31, 2011.  Year 4:   the 12-month period commencing at the end of
Year 3 and ending on December 31, 2012.  Year 5:   the 12-month period commencing at the end of
Year 4 and ending on December 31, 2013.


EXHIBITS  *Exhibit B  Escrow Agreement *Exhibit C  Employment Agreements *Exhibit D  Consulting Agreements *Exhibit E  Bill of Sale *Exhibit F  Assignment Assumption Agreement *Exhibit G  Seller IP Assignment  
 *   Exhibits have not been filed pursuant to
paragraph (b)(2) of Item 601 of Regulation S-K.  DTS, Inc. agrees
to furnish supplementally a copy of any omitted exhibit to the Securities and
Exchange Commission upon request.  SCHEDULES  *Schedule 1.1 
Purchased Assets *Schedule 1.2 
Shareholder Patents *Schedule 1.3 
Excluded Assets *Schedule 1.4(b) 
Accounts Payable Included in Working Capital *Schedule 2.1(a) 
Foreign Registrations *Schedule 2.1(b) 
Powers of Attorney Granted to Third Parties *Schedule 2.3(b) 
Contracts, Licenses, and Agreements Requiring Consent to Assign *Schedule 2.4 
Judgments and Litigation *Schedule 2.5(a) 
Intellectual Property Rights *Schedule 2.5(b) 
In-Bound Intellectual Property Licenses *Schedule 2.5(c) 
Out-Bound Intellectual Property Licenses *Schedule 2.5(f) 
Infringement *Schedule 2.5(g) 
Approvals Regarding Seller IP Rights *Schedule 2.5(i) 
Software *Schedule 2.5(j) 
Employee Intellectual Property Rights *Schedule 2.6(a) 
Employee List *Schedule 2.6(c) 
Unsatisfied Obligations to Transferred Employees *Schedule 2.6(d) 
List of Independent Contractors and Consultants *Schedule 2.6(f) 
Employee Grievances or Claims *Schedule 2.7 
Employee Benefit Plans *Schedule 2.8 
Financial Statements *Schedule 2.9 
Material Changes After December 31, 2007 *Schedule 2.9(i) 
Material Liabilities *Schedule 2.9(ii) 
Encumbered Assets *Schedule 2.9(iii) 
Sold, Transferred or Licensed Assets *Schedule 2.9(iv) 
Damaged or Lost Assets *Schedule 2.9(v) 
Amendments to Contracts *Schedule 2.9(vi) 
Change in Assets, Liabilities, Sales, Income, Business, or Relationships with
Vendors *Schedule 2.9(vii) 
Acquired and Disposed of Property *Schedule 2.9(viii) 
Any Distributions in Respect to Seller Securities


*Schedule 2.9(ix) 
Increase in Compensation or Other Benefits to Officers, Shareholders, or
Employees *Schedule 2.9(x) 
Forgiven or Cancelled Debt, and Waived Rights *Schedule
2.9(xi)  Transactions Outside of the Ordinary Course of Business *Schedule
2.9(xii)  Satisfaction of Liens and Encumbrances Outside the Ordinary Course
of Business *Schedule 2.10
 Material Contracts *Schedule 2.10(i) 
Leases *Schedule 2.10(ii) 
Purchase Contracts *Schedule 2.10(iii) 
Sales and Distribution Contracts *Schedule 2.10(iv) Contracts
Related to Debt/Capital Leases *Schedule 2.10(v) 
Employment Contracts *Schedule 2.10(vi) 
Non-Competition Provisions *Schedule 2.10(vii) 
Other Contracts *Schedule 2.11
 Compliance with Laws *Schedule 2.12
 Governmental Permits *Schedule 2.16
 Significant Customers *Schedule 2.17
 Real Property and Environmental Matters *Schedule 2.18
 Standard Product Warranties and Product Liability Claims *Schedule 2.19
 Owned and Leased Equipment *Schedule 2.21
 Insurance *Schedule 2.24
 Potential Conflicts of Interest *Schedule 2.25
 Indebtedness *Schedule 2.26
 Persons Entitled to Receive Total Consideration *Schedule 2.28
 Outbound Licenses of Shareholder Patents *Schedule 5.1 
Transferred Employees *Schedule 5.9 
Third Party Consents *Schedule 6.1(c) 
Persons Entering Into Consulting Agreements  
 *   Schedules have not been filed
pursuant to paragraph (b)(2) of Item 601 of Regulation S-K.  DTS, Inc.
agrees to furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.