EXHIBIT 10.1


 


SRS LABS, INC.


 










 


AMENDED AND RESTATED

CHANGE IN CONTROL PROTECTION PLAN

(also functioning as a Summary Plan Description)


 










 


As Amended and Restated
on August 3, 2009


 


 

















 


SRS LABS, INC.


 


AMENDED AND RESTATED

CHANGE IN CONTROL PROTECTION PLAN

(also functioning as a Summary Plan Description)


 










 


Table of Contents


 






 


	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  BENEFITS PAYABLE UNDER
  THE PLAN

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)           Change in Control
  Severance Benefit

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)           Paid Leave in Lieu of
  Notice

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           Definition of Change
  in Control

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  PLAN ELIGIBILITY

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  VESTING AND ELIGIBILITY
  RULES FOR BENEFITS

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)           Covered Terminations

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)           Definitions

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           Agreements Precedent
  to Collecting Benefits; Recapture of Benefits

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  ADDITIONAL BENEFITS

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  TAXES, AND
  AUTHORIZATIONS FOR TAX LAW COMPLIANCE

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  RELATION TO OTHER PLANS
  AND AGREEMENTS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  CLAIMS PROCEDURES

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)           Claims Normally Not
  Required

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)           Disputes

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           Time for Filing
  Claims

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)           Procedures

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  PLAN ADMINISTRATION

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)           Discretion

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)           Finality of
  Determinations

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           Drafting Errors

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)           Scope

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  COSTS, INDEMNIFICATION,
  AND REIMBURSEMENT FOR LITIGATION EXPENSES

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  PLAN AMENDMENT
  AND TERMINATION; LIMITATION ON EMPLOYEE RIGHTS; CONDITIONS OF RECEIPT OF
  BENEFITS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)           Sponsor
  May Amend or Terminate the Plan

  	
   

  	
  12

  



 


i

















 


	
   

  	
  (b)           Application of
  Amendment or Termination of the Plan

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           No Right to Continued
  Employment

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  PLAN FUNDING

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  GOVERNING LAW

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  MISCELLANEOUS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  OTHER INFORMATION

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)           Type of Plan

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)           Addresses, etc.

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           Agent for Service of
  Legal Process

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)           Funding

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)           Plan Amendment or
  Termination

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)            Statement of ERISA
  Rights

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)           Whom to Call for
  Additional Information

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Participation Agreement – Version 1 (Persons with Employment/Severance
  Agreements) and Version 2 (Persons without Employment/Severance Agreements)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit B

  	
  Grantor Trust Agreement

  	
   

  	
   

  
					



 


ii

















 


SRS LABS, INC.


 


AMENDED AND RESTATED

CHANGE IN CONTROL PROTECTION PLAN


 










 


Plan Document and Summary
Plan Description


 






 


SRS Labs, Inc. (the “Company”) recognizes that a corporate
change in control may adversely affect certain employees.  To treat these employees in a fair and
compassionate manner, the Company has adopted this Amended and Restated Change
in Control Protection Plan (the “Plan”).


 


This document is the Plan’s plan document, and also
functions as its summary plan description. 
This Plan will control in case of conflict with any other document.  Throughout this Plan, the term “Sponsor” is used when the Company
is acting in its non-fiduciary capacity as Plan sponsor and settlor.  The term “Plan
Administrator” is used when the Company is acting in the limited
capacity of interpreting the Plan and determining eligibility for benefits (see
Section 8 below for detailed information).


 


The Plan became effective on April 27, 2005 and
was amended and restated on August 3, 2009.   Even if the Plan expires or is terminated,
the Sponsor will thereafter honor any vested but unpaid benefits under the Plan
(subject to Section 10 below). 
References to Sponsor, the Company, and their affiliates also refer to
any successor to their interests.


 


1.             Benefits Payable Under the Plan


 


(a)           Change in Control Severance
Benefit


 


You will become entitled to severance
benefits pursuant to this Plan if, while this Plan is in effect and while you
are eligible under Section 2 for Plan participation, your employment
terminates under the circumstances described in Section 3(a).  The severance benefits (“Change in Control Benefits”) to be paid
to you after your termination date shall be determined pursuant to an
agreement, substantially in the form attached as Exhibit A (the “Participation Agreement”), that you
sign pursuant to Section 2 as a condition for becoming a Plan participant.
The Sponsor will make all decisions relating to who is offered a Participation
Agreement and the terms, conditions, and benefits promised under the
Participation Agreement.


 


(b)           Paid Leave in Lieu of Notice


 


To the extent that the Federal Worker
Adjustment and Retraining Notification Act applies to you, if you become
entitled to Change in Control Benefits under the Plan, to the extent you have
been given less than sixty (60) days’ advance written notice of the date
your active services actually terminate, you will be given a Paid Leave in Lieu
of Notice for the balance of that 60-day period, as follows:


 

















 


(i)            During
your Paid Leave in Lieu of Notice, you will be an inactive employee but you
will be entitled to the same employee benefits and participation rights to
which you would have been entitled under our company-wide employee benefit
plans had your active employment continued.


 


(ii)           If you
resign or die during a paid leave, your paid leave will end and the Change in
Control Benefits that you would have received during the balance of the paid
leave will be paid to you (or, if you have died, to your estate) in a lump
sum.  All other paid leave benefits will
stop on the day you resigned or died, except for any group insurance
coverage that by its terms continues until the end of the calendar month in
which you terminate.


 


(iii)          This
Paid Leave in Lieu of Notice runs concurrently with the Change in Control
Benefits provided for in Section 1(a) hereof and is not in addition
to Change in Control Benefits provided for in this Plan.


 


(c)           Definition of Change in
Control


 


The term “Change in Control” shall mean the occurrence of any of the
following events, subject to the Plan Administrator’s absolute discretion to
interpret this definition in a manner that conforms with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”)
and associated regulations:


 


(i)            The
Company is merged, consolidated or reorganized into or with another corporation
or other legal person and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting power of the then
outstanding securities of such corporation or person immediately after such transaction
are held in the aggregate by the holders of Voting Stock (as that term is
defined in subsection (iii) hereof) of the Company immediately prior to
such transaction;


 


(ii)           The
Company sells all or substantially all of its assets to any other corporation
or other legal person, less than a majority of the combined voting power of the
then-outstanding voting securities of which are held directly or indirectly in
the aggregate by the holders of Voting Stock of the Company immediately prior
to such sale;


 


(iii)          Any
person (as the term “person” is
used in Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), has become the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of
securities representing more than 50%  of
the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of directors of the Company (“Voting Stock”); or


 


2

















 


(iv)          The
Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in, or in response to, Form 8-K
or Schedule 14A (or any successor schedule, form or report or item therein)
that a  Change in Control of the Company
has occurred.


 


Notwithstanding the foregoing provisions of (a) subsections (iii) or
(iv) hereof, a “Change in Control” shall not be deemed to have occurred
for purposes of this Agreement solely because the Company, an entity in which
the Company directly or indirectly beneficially owns 50% or more of the voting
securities of such entity (an “Affiliate”),
any Company-sponsored employee stock ownership plan or any other employee
benefit plan of the Company either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K
or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of
voting securities of the Company, whether in excess of 50% or otherwise, or
because the Company reports that a Change in Control of the Company has or may
have occurred or will or may occur in the future by reason of such beneficial
ownership; or (b) Subsection (iii) hereof, a “Change in Control”
shall not be deemed to have occurred for purposes of this Agreement solely
because a person who is a holder of five percent (5%) or more of the Voting
Stock and who also is an officer and director of the Company on the date of
this Agreement acquires more than 50% of the Voting Stock.


 


Notwithstanding the foregoing provisions of subsections (i) and (ii) hereof,
a “Change in Control” shall not be deemed to have occurred for purposes of this
Agreement solely because the Company engages in an internal reorganization,
which may include a transfer of assets to one or more Affiliates, provided
that such transaction has been approved by at least two-thirds of the
Directors of the Company and as a result of such transaction or transactions,
at least 80% of the combined voting power of the then-outstanding securities of
the Company or its successor are held in the aggregate by the holders of Voting
Stock immediately prior to such transactions.


 


2.             Plan
Eligibility


 


You are eligible for this Plan only if the Sponsor
has provided you with a Participation Agreement signed by a duly authorized
officer of the Company confirming your eligibility for the Plan.  If you execute the Participation Agreement
and return it to the Company within thirty (30) days after receiving it,
you will be a “Participant”.  If your Participation Agreement expires for
any reason before you become vested in the right to collect Change in Control
Benefits, you will immediately cease to be a Participant.


 


3.             Vesting
and Eligibility Rules for Benefits


 


(a)           Covered
Terminations


 


If you are a
Participant, incur a Covered Termination (as defined below), and satisfy the
conditions set forth in Section 3(c) below, you will become vested in
your right to receive the Change in Control Benefits set forth in your
Participation Agreement.  If you
terminate employment for any other reason, you will not be eligible for any benefits
under this Plan.  For example, you will
not be eligible for Change in Control Benefits under the


 


3

















 


Plan
if the Plan Administrator determines, in its sole discretion, that your
Employment (as defined below) has either (i) terminated before a Change in
Control occurs, or (ii) terminated on or after a Change in Control by
reason of —


 


(i)            your
resignation without Good Reason (as defined below);


 


(ii)           your
death; or


 


(iii)          your
discharge for Cause (as defined below), as determined by the Sponsor in its
sole discretion.


 


(b)           Definitions


 


(i)            For
purposes of this Plan, a “Covered
Termination” shall mean that, at a time on or two (2) years
after a Change in Control either (I) you have resigned from
Employment for Good Reason (as defined below), or (II) your Employment is
involuntarily terminated by the Company without Cause (as defined below).  A Covered Termination shall not include a
transfer of your Employment to the parent of the Company, if any, or an
affiliate of the parent, or an affiliate of the Company, or any successor to
the Company’s obligations under this Plan, whether through a merger,
acquisition of the Company or any related entity or their assets, or a
contractual assumption of the Plan or its liabilities in anticipation of or
after a Change in Control, in which case you shall continue to be a Participant
under the Plan and any reference herein to “Company” shall refer to the entity
that is your employer.


 


(ii)           For  purposes of this Plan, “Employment”
shall mean your employment (I) with the Company, (II) the parent of
the Company, if any, or an affiliate of the parent, or an affiliate of the
Company, or (III) any successor to the Company’s obligations under this
Plan, whether through a merger, an acquisition of the Company or any related
entity, or a contractual assumption of the Plan or its liabilities.


 


(iii)          For
purposes of this Plan, “Cause”
shall mean (I) your engagement in fraud, misappropriation or a material
breach of the Company’s code of ethics; (II) your engagement in
intentional conduct which is materially injurious, monetarily or otherwise, to
the Company or its affiliates, (III) your commission of an act of
deliberate and material dishonesty; (IV) your failure to follow a lawful
and material directive related to your job responsibilities or otherwise
related to your position at the Company; (V) your commission of a crime or
causing the Company to commit a crime; or (VI) your conviction, guilty
plea or plea of nolo contendere either to any felony, or to any misdemeanor
involving dishonesty or moral turpitude, provided however, in case of (II) and
(IV), such events shall not constitute “Cause” until after you have been given
written notice of such and have failed to cure such within thirty (30)
days following such notice.


 


4

















 


(iv)          For
purposes of this Plan, and unless otherwise stated in a Participant’s
Participation Agreement, “Good
Reason” shall mean (I) any material reduction by the
Company in your base salary below the amount in effect immediately prior to the
Change in Control; (II) the
requirement that you change your principal location of work to any location
that is in excess of forty (40) miles from your location of work as of the
effective time of the Change in Control; (III) the substantial curtailment
of your rights, duties and responsibilities as an Employee as compared to those
you were performing before the Change in Control.  In addition, Good Reason shall mean the
liquidation, dissolution, merger, consolidation or reorganization of the
Company, or the transfer of all or substantially all of the Company’s assets,
unless the successor (by liquidation, dissolution, merger, consolidation,
reorganization, transfer or otherwise) to which all or substantially all of its
assets have been transferred (directly or by operation of law) assumes the
duties and obligations of the Company under this Plan.  Notwithstanding the foregoing, “Good Reason”
shall only be found to exist if prior to your resignation for Good Reason, you
have provided written notice to the Company within ninety (90) days following
the existence of such Good Reason event indicating and describing the event
resulting in such Good Reason, and the Company does not cure such event within thirty
(30) days following the receipt of such notice. 
In the event the Company fails to timely cure, you must resign within
ninety (90) days following the expiration of the cure period in order for the
resignation to constitute Good Reason.


 


(c)           Conditions
Precedent to Collecting Benefits; Recapture of Benefits


 


As a condition precedent to your vesting
in the right to collect any benefits pursuant to this Plan, the Sponsor may in
its discretion require that you execute any one or more of the following agreements
in a form satisfactory to the Sponsor (provided such agreements if required
must be executed and delivered to the Company within 21 days following your
receipt of such agreements) and comply with the following obligations:


 


(i)            A
general release of any and all past, present, or future claims (whether or not
such claims relate to the Plan) that you may have against the Company, its
subsidiaries and affiliates, and their officers, directors, employees and
agents, and a covenant not to bring any action in respect of any claim so
released.


 


(ii)           An
agreement not to make disparaging comments (whether orally or in writing)
regarding the Company or its subsidiaries and affiliates, its officers and
employees, its products and services, or any other aspect of the Company’s
business either during or following termination of your employment with the
Company.


 


(iii)          An
agreement that you will not, without the prior written consent of the Company,
disclose to any entity or person any information which is treated as
confidential by the Company (“Confidential Information”),
and is not generally known or available to the public, provided, that you may
make disclosures of such Confidential Information to the extent required by law
or legal process.  The term “Confidential
Information” shall include:


 


5
















 


(A)                              information regarding the business
methods, business policies, procedures, techniques, business or strategic
plans, trade secrets, pricing policies, or other processes of or developed by
the Company;


 


(B)                                any names and addresses of customers or
clients, and any data on or relating to past, present or prospective customers
or clients;


 


(C)                                formulae, inventions, research or
development projects or results, or other knowledge developed by the Company;
and


 


(D)                               any other confidential information
relating to or dealing with the business operations or activities of the
Company; made known to you or learned or acquired by you while in the employ of
the Company, which is not generally known to others outside the Company,
whether written or otherwise, regarding earnings, plans, strategies,
prospective and executed contracts and other business arrangements.


 


(iv)                              Upon termination of your employment, you
must return all property of the Company and reimburse the Company for any
personal telephone calls, credit card charges and other expenses, and pay all
amounts due to the Company.


 


Notwithstanding any other provision of the Plan, you
will not be treated as having satisfied the requirements of this Section 3(c) unless
(I) you execute any one or more of the above agreements that the Sponsor
may for any reason require, (II) you deliver such agreements to the
person, and within the time period above and prescribed in such agreement, and (III) you
do not make a legally valid revocation of such agreement.  In the event the Sponsor determines that you
have breached any of the conditions set forth in this Subsection 3(c) or
any agreement referenced hereunder, the Company shall (in addition to any other
remedies it may have) not be required to provide any of Change in Control Benefits
pursuant to the Plan, and you shall be obligated to return to the Company, upon
demand, an amount (plus simple interest) equal to all of the Change in Control
Benefits that you have received under this Plan.


 


4.                                      Additional
Benefits


 


(a)                                 If you become entitled to Change in
Control Benefits under this Plan, you will also be reimbursed for COBRA
continuation premiums you pay for yourself, your spouse, and your dependents
for the period, if any, set forth in your Participation Agreement.  For COBRA purposes, however, the date on
which you terminate employment will commence the period for which you are
entitled to continuation coverage under COBRA (meaning that the Company’s
payment of COBRA premiums may not extend the duration of your COBRA
eligibility).  The regular COBRA
procedures and rules will apply.


 


(b)                                 Upon the death
of a Participant receiving Change in Control Benefits, the beneficiary(ies) of
the Participant (whom he or she designated for purposes of group life insurance
benefits) shall be entitled to receive such Change in Control Benefits on
the same terms that would have applied if the Participant had survived to
collect all benefits.


 


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5.                                      Taxes, and
Authorizations for Tax Law Compliance


 


Taxes will be withheld from your Change in Control
Benefits to the extent the Plan Administrator, it its sole discretion,
determines that this is appropriate or is required by law.  You are solely responsible and liable for the
satisfaction of all taxes and penalties, including any taxes arising under Section 409A
of the Code  that may arise in connection with your Plan
participation or your receipt of Change in Control Benefits.  Accordingly, neither the Sponsor, the Plan
Administrator, nor any person associated with them has any obligation or
authority to provide you with tax planning advice, or to take actions that
minimize or eliminate any or all of the taxes or penalties which you incur or
may incur pursuant to the Plan.  The Plan
Administrator shall nevertheless have the discretion to unilaterally modify
your rights under this Plan (including your rights under any Participation
Agreement) in a manner that —


 


(a) voids
or modifies any terms of the Plan or your Participation Agreement to the extent
it would violate Section 409A of the Code, and


 


(b) for
any payment that would otherwise violate Section 409A of the Code, to
provide Change in Control Benefits only in connection with a distribution event
that is allowable under Section 409A of the Code.  For example, the Plan Administrator may delay
paying your Change in Control Benefits for up to six months and one day if the
Plan Administrator reasonably determines that an earlier payment will violate Section 409A(a)(2)(B)(i) of
the Code.


 


The
Plan Administrator has the sole discretion to interpret the requirements of the
Code, including Section 409A, for purposes of determining your rights
under the Plan and your Participation Agreement.


 


6.                                      Relation to
Other Plans and Agreements; 280G Limitations


 


By signing your Participation Agreement, you
recognize and agree that any prior severance or similar plan of the Company
(including a prior version of this Plan or a related Participation Agreement)
that might apply to you is hereby revoked and ineffective as to you;
provided that, unless specifically provided in your Participation Agreement,
neither this Plan nor your Participation Agreement will affect any outstanding
employment, equity award,  or other
written agreement between you and the Company.  No Change in Control Benefits that you
receive will be taken into account for purposes of determining benefits under
other benefit plans, retirement or pension plans, 401(k) plans, or similar
retirement arrangements.  All such
retirement-related plans or similar arrangements, to the extent inconsistent
with this Plan, are hereby so amended.


 


The
amount of any cash payment to be received by Participant  pursuant to this Plan shall be reduced (but
not below zero) to the extent required so that no portion of any payment or benefit
in the nature of compensation received or to be received by Participant
(whether payable pursuant to the terms of this Plan or pursuant to any other
plan, contract, agreement or arrangement with the Employer or any other person)
(such payments or benefits are referred to collectively as the “Total Payments”) shall be treated
as an “excess parachute payment” within the meaning of section 280G(b)(1) of
the Code. Only amounts


 


7

















 


payable under this Plan, and no other payments or
benefits included in the Total Payments, shall be reduced pursuant to this Section 6.  Notwithstanding the foregoing, Participant
may elect in writing to reduce other benefits payable by the Company to
Participant outside of the Plan (in lieu of reducing all or some of the
benefits payable hereunder) in order to avoid having any such “excess payments;”
provided that the written notice of such election must be received by the
Company’s Chief Executive Officer prior to the date on which any payments are
required to be made under the Plan.


 


The
determination of whether any reduction in payments is required pursuant to  Section 6 of this Plan shall be made in
writing by the Company’s independent public accountants, or such other
independent accounting firm or tax advisors selected by the Plan Administrator
in its sole discretion (the “Accountants”),
whose determination shall be conclusive and binding upon Participant and the
Company for all purposes under this Plan. 
For the purposes of making the calculations required by this Section 6,
the Accountants may make reasonable assumptions and approximations regarding
applicable taxes and applicable tax rates and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code, applicable regulations and other authority.  The Plan Administrator and the Participant
shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section.  The Accountants shall provide
detailed supporting calculations, in writing, to both the Plan Administrator
and the Participant of determinations made pursuant to this Section 6.  The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.


 


In the
event of any uncertainty as to whether a reduction in payments to a Participant
is required pursuant to Section 6 of this Plan, the Company shall
initially make the payment to Participant, and Participant shall be required to
refund to the Company any amounts ultimately determined not to have been
payable under the terms of this Plan.


 


The
Company and the Participant shall promptly deliver to each other copies of any
written communications, and summaries of any verbal communications, with any
taxing authority regarding the applicability of Section 280G or 4999 of
the Code to any portion of the Total Payments. 
In the event of any controversy with the Internal Revenue Service or
other taxing authority with regard to the applicability of Section 280G or
4999 of the Code to any portion of the Total Payments, the Company shall have
the right, exercisable in its sole discretion, to control the resolution of
such controversy at its own expense. 
Participant and the Company shall in good faith cooperate in the
resolution of such controversy.


 


7.                                      Claims
Procedures


 


(a)                                 Claims
Normally Not Required


 


Normally, you
do not need to present a formal claim to receive the Change in Control Benefits
payable under this Plan.


 


8

















 


(b)                                 Disputes


 


If any person
(claimant) believes that benefits are being denied improperly, that the Plan is
not being operated properly, that fiduciaries of the Plan have breached their
duties, or that the claimant’s legal rights are being violated with respect to
the Plan, the claimant must file a formal claim with the Plan Administrator within the time period set forth in Section 7(c).  The Plan Administrator will handle all such
claims in accordance with the procedures set forth in Section 7(d). 
This requirement applies to all claims that any claimant has with
respect to the Plan, including claims against fiduciaries and former
fiduciaries, except to the extent the Plan Administrator determines, in its
sole discretion, that it does not have the power to grant all relief reasonably
being sought by the claimant.  See
Section 14(f) for information about your rights in the event the
Administrator denies your claim.


 


(c)                                  Time
for Filing Claims


 


A formal claim
must be filed within ninety (90) days after the date the claimant first
knew or should have known of the facts on which the claim is based (or, if earlier, the date that is 120 days
after your employment terminates for any reason), unless the Sponsor in writing consents
otherwise.  The Plan Administrator will
provide a claimant, on request, with a copy of the claims procedures
established under subsection 7(d). If a claimant files an
untimely claim, no benefits of any kind shall be payable under the Plan.


 


(d)                                 Procedures


 


The Plan
Administrator will adopt procedures for considering claims, which it may amend
from time to time, as it sees fit.  If
the Plan Administrator does not offer a Participant the payment of Plan benefits
within 10 days after such benefits are due and payable, the Participant must file a claim for benefits on a form
prescribed by the Plan Administrator and within the time frame set forth in
subsection (c) above.  If the
claimant’s claim for a benefit is wholly or partially denied, the Plan
Administrator will furnish the claimant with a written notice of the
denial.  This written notice must be
provided to the claimant within a reasonable period of time (generally within
ninety (90) days, unless special circumstances require an extension of
time for processing the claim, in which case a period not to exceed one hundred
and eighty (180) days) after the receipt of the claimant’s claim by the Plan
Administrator.  (If such an extension of
time is required, written notice of the extension will be furnished to the
claimant prior to the termination of the initial 90-day period, and will
indicate the special circumstances requiring the extension.)  Written notice of denial of the claimant’s
claim must contain the following information:


 


(i)                                     the specific reason or
reasons for the denial;


 


(ii)                                  a specific reference to
those provisions of the Plan on which such denial is based;


 


9

















 


(iii)                               a description of any
additional information or material necessary to perfect the claimant’s claim,
and an explanation of why such material or information is necessary; and


 


(iv)                              a copy of the appeals
procedures under the Plan and the time limits applicable to such procedures,
including a statement of the claimant’s right to bring a civil action under Section 502(a) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) following an adverse
determination of the claimant’s claim.


 


If the
claimant’s claim has been denied, and the claimant wishes to submit his or her
request for a review of his or her claim, the claimant must follow the
following Claims Review Procedure:


 


1.                                       Upon the denial of his or her claim for
benefits, the claimant may file his or her request for review of his or her
claim, in writing, with the Plan Administrator or claims processor;


 


2.                                       The claimant must file the claim for
review not later than sixty (60) days after he or she has received written
notification of the denial of his or her claim for benefits.


 


3.                                       The claimant has the right to review and
obtain copies of all relevant documents relating to the denial of his or her
claim and to submit any issues and comments, in writing, to the Plan
Administrator;


 


4.                                       If the claimant’s claim is denied, the
Plan Administrator must provide the claimant with written notice of this denial
within sixty (60) days after the Plan Administrator’s receipt of the
claimant’s written claim for review. 
There may be times when this 60-day period may be extended.  This extension may only be made, however,
where there are special circumstances which are communicated to the claimant in
writing within the 60-day period.  If
there is an extension, a decision will be made as soon as possible, but not
later than one hundred and twenty (120) days after receipt by the Plan
Administrator of the claimant’s claim for review; and


 


5.                                       The Plan Administrator’s decision
regarding the claimant’s claim for review will be communicated to the claimant
in writing, and if the claimant’s claim for review is denied in whole or part,
the decision will include:


 


(B)                                the specific reason or reasons for the
denial;


 


(C)                                specific
references to the pertinent provisions of the Plan on which the decision was
based;


 


(D)                               a statement
that the claimant may receive, upon request and free of charge, reasonable
access to and copies of, all documents, records and other information relevant
to the claimant’s claim for benefits; and


 


10

















 


(E)                                 a statement of
the claimant’s right to bring a civil action under Section 502(a) of
ERISA.


 


8.                                      Plan
Administration


 


(a)                                 Discretion


 


The Plan
Administrator is responsible for the general administration and management of
the Plan and shall have all powers and duties that the Plan Administrator, in
its sole discretion, deems necessary to fulfill its responsibilities,
including, but not limited to, the discretion to interpret and apply the Plan
and to determine all questions relating to eligibility for benefits.  The Plan Administrator and all Plan
fiduciaries shall have the discretion to interpret or construe ambiguous,
unclear, or implied (but omitted) terms in any fashion they deem to be
appropriate in their sole and absolute discretion, and to make any findings of
fact needed in the administration of the Plan. 
The validity of any such interpretation, construction, decision, or
finding of fact shall not be given de novo review if challenged in court, by
arbitration, or in any other forum, and shall be upheld unless clearly
arbitrary or capricious.


 


(b)                                 Finality
of Determinations


 


Unless
arbitrary and capricious, all actions taken and all determinations by the Plan
Administrator or by Plan fiduciaries will be final and binding on all persons
claiming any interest in or under the Plan.  To the extent the Plan Administrator or any
Plan fiduciary has been granted discretionary authority under the Plan, the
Plan Administrator’s or Plan fiduciary’s prior exercise of such authority shall
not obligate it to exercise its authority in a like fashion thereafter.


 


(c)                                  Drafting
Errors


 


If,
due to errors in drafting, any provision of the Plan or any Participation
Agreement does not accurately reflect its intended meaning, as demonstrated by
consistent interpretations or other evidence of intent (by the Sponsor or the
Plan Administrator, as the case may be), or as determined by the Plan
Administrator in its sole and absolute discretion, the provision shall be
considered ambiguous and shall be interpreted by the Plan Administrator and all
Plan fiduciaries in a fashion consistent with its intent, as determined in the
sole and absolute discretion of the Plan Administrator (but with regard to the
intent of the Sponsor as settlor).


 


(d)                                 Scope


 


This Section may
not be invoked by any person to require the Plan to be interpreted in a manner
inconsistent with its interpretation by the Plan Administrator or other Plan
fiduciaries.


 


11

















 


9.                                      Costs, Indemnification, and Reimbursement
for Litigation Expenses


 


(a)                                 All costs of
administering the Plan and providing Plan benefits will be paid by the Company.


 


(b)                                 To the extent
permitted by applicable law and in addition to any other indemnities or
insurance provided by the Company, the Company shall indemnify and hold
harmless its (and its affiliates’) current and former officers, directors,
employees, and agents against all expenses, liabilities, and claims (including
legal fees incurred to defend against such liabilities and claims) arising out
of their discharge in good faith of their administrative and fiduciary
responsibilities with respect to the Plan. 
Expenses and liabilities arising out of willful misconduct will not be
covered under this indemnity.


 


(c)                                  In the event
that, at any time on or after the date three (3) months before a
Change in Control, a Participant substantially prevails over the Company or any
successor to its interests in any dispute that arises between the Participant
and the Company with respect to the terms or interpretation of the Plan,
whether instituted by formal legal proceeding or otherwise (including any
action that the Participant takes to enforce the terms of his or her
Participation Agreement or to defend against any action taken by the Company),
the Company shall reimburse the Participant for all costs and expenses, include
reasonable attorney’s fees, arising from such dispute, proceedings, or
actions.  Such reimbursement will however
be subject to proof of such costs.


 


10.                               Plan Amendment
and Termination; Limitation on Employee Rights; Conditions of Receipt of
Benefits


 


(a)                                 Sponsor
May Amend or Terminate the Plan


 


The Sponsor, acting through its Board of
Directors or its delegate, has the right in its sole and absolute discretion to
amend the Plan, to extend its term, or to terminate the Plan, prospectively.


 


(b)                                 Application
of Amendment or Termination of the Plan


 


Notwithstanding
the foregoing, any amendment or termination of the Plan that occurs within the
three-month period before a Change in Control, in connection with a Change in
Control, or within two years after a Change in Control shall only apply to
those Participants:


 


(i)                                     who consent
individually and in writing to the amendment or termination; or


 


(ii)                                  whose vested
Change in Control Benefits, or rights under the Plan to become entitled to the
Change in Control Benefits set forth in his or her Participation Agreement are
not adversely affected by such amendment or termination.


 


12

















 


Any decision or
interpretation that is made either after a Change in Control or pursuant to
this subparagraph (b) shall be subject to judicial review under a de novo
standard, and not under the arbitrary and capricious standard that is generally
intended to apply (and shall apply) to all other Plan determinations and
interpretations.


 


(c)                                  No
Right to Continued Employment


 


This Plan shall not give any employee the
right to be retained in the service of the Company, and shall not interfere
with or restrict the right of the Company to terminate or retire the employee for
any lawful reason.


 


11.                               Plan Funding


 


The Company shall pay any Change in Control Benefits
from its general assets.  Notwithstanding
the foregoing, in the event of a Change in Control, the Company shall establish
and fund an irrevocable grantor (a/k/a rabbi) trust from which all Change in
Control Benefits shall be paid.  The
agreement which shall be used to establish such trust is attached hereto as Exhibit B.


 


12.                               Governing Law


 


This Plan is a welfare plan subject to ERISA, and it
shall be interpreted, administered, and enforced in accordance with that
law.  To the extent that state law is
applicable, the statutes and common law of the State of Delaware (excluding its
choice of laws principles) shall apply.


 


13.                               Miscellaneous


 


Where the context so indicates, the singular will
include the plural and vice versa. 
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.  Unless the context clearly indicates to the
contrary, a reference to a statute or document shall be construed as referring
to any subsequently enacted, adopted, or executed counterpart.


 


14.                               Other
Information


 


(a)                                 Type of
Plan


 


This is a
welfare plan.


 


(b)                                 Addresses,
etc.


 


The Company’s
address, telephone number, and employer identification number are as follows:


 


SRS Labs, Inc.


2909 Daimler Street


Santa Ana, California  92705


Attention: Chair, Compensation Committee of the
Board of Directors


Telephone: 949.442.1070


EIN: 33-0714264


 


13

















 


The Plan’s Plan Year is as follows:


 


Plan Year:                                           Calendar


 


The address for
the Plan Administrator shall be the address of the Company set forth above.


 


(c)                                  Agent
for Service of Legal Process


 


The Plan
Administrator is the Plan’s agent for service of legal process.


 


(d)                                 Funding


 


The Plan is
funded out of the Company’s general assets.


 


(e)                                  Plan
Amendment or Termination


 


The Sponsor has
reserved the right to amend and terminate the Plan as set forth in Section 10
herein.


 


(f)                                    Statement
of ERISA Rights


 


As a
participant in this Plan, you are entitled to certain rights and protections
under a federal law called the Employee Retirement Income Security Act of 1974
(as noted above, “ERISA”).  ERISA
provides that all plan participants shall be entitled to:


 


·                                          Examine, without charge, at the Plan
Administrator’s office and other specified locations, all documents governing
the Plan, including insurance contracts, and a copy of the latest annual report
(Form 5500 Series) filed by the Plan with the U.S. Department of Labor.


 


·                                          Obtain, upon written request to the Plan
Administrator, copies of documents governing the operation of the Plan,
including copies of the latest annual report (Form 5500 Series) and
updated summary plan description. The administrator may make a reasonable
charge for the copies.


 


·                                          Receive a summary of the Plan’s annual
financial report. The Plan Administrator is required by law to furnish each
participant with a copy of this summary annual report.


 


In addition to
creating rights for Plan participants ERISA imposes duties on the people who
are responsible for the operation of this Plan. The people who operate this
Plan are called “fiduciaries,” and have a duty to
operate this Plan prudently and in the interest of you and other Plan
participants and beneficiaries. No one, including your


 


14

















 


employer
or any other person, may fire you or otherwise discriminate against you in any
way to prevent you from obtaining a benefit or exercising your rights under
ERISA. If your claim for a benefit is denied in whole or in part, you must
receive a written explanation of the reason for this denial. You have the right
to have the Plan Administrator review and reconsider your claim, as described
elsewhere in this Summary Plan Description. Under ERISA, there are steps you
can take to enforce the above rights. For instance, if you request certain
materials required to be furnished by the Plan and do not receive them within
30 days, or if you have any other claim with respect to the Plan, you may file
suit in a federal court. In such a case, the court may require the Plan
Administrator to provide the materials you have requested and that you be paid
up to $110 a day until you receive them, unless the materials were not sent
because of reasons beyond the Plan Administrator’s control.  If you have a claim for benefits which is
denied or ignored, in whole or in part, you should file a claim under the Plan’s
claims procedures or you may file suit in a state or federal court. In
addition, if you disagree with the Plan’s decision or lack thereof concerning
the qualified status of a domestic relations order or a medical child support
order, you may file suit in Federal court. If it should happen that Plan
fiduciaries misuse the Plan’s money, or if you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will decide who
should pay the court costs and legal fees. If you are successful the court may
order the person you have sued to pay these costs and fees. If you lose, the
court may order you to pay these costs and fees, for example, if it finds that
you should have used the Plan’s claims procedures or that your claim is frivolous.   If you have any questions about your Plan,
you should contact the Plan Administrator. If you have any questions about this
statement or about your rights under ERISA, you should contact the nearest
office of the Pension and Welfare Benefits Administration, U.S. Department of
Labor, listed in your telephone directory or the Division of Technical
Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications
about your rights and responsibilities under ERISA by calling the publications
hotline of the Employee Benefits Security Administration or by visiting its
website (http://www.dol.gov/ebsa/).


 


(g)                                 Whom to
Call for Additional Information


 


If you have any questions, please contact
the Plan Administrator.


 


15
















 


Exhibit A/Version
1


(Persons
with Employment/


Severance
Agreements)


 


SRS LABS, INC.


 


AMENDED AND RESTATED


CHANGE IN CONTROL PROTECTION PLAN


 


Participation Agreement


 


WHEREAS,
SRS Labs, Inc. (the “Company”)
sponsors and maintains the SRS Labs, Inc. Amended and Restated Change in
Control Protection Plan (the “Plan”),
and has executed this agreement (the “Participation Agreement”)
in order to offer
                              
(the “Officer”) the
opportunity to participate in the Plan;


 


WHEREAS,
the Officer has received a copy of the Plan (which also serves as its summary
plan description); and


 


WHEREAS,
the parties acknowledge that capitalized terms not defined in this
Participation Agreement shall have the meaning assigned to them in the Plan;
and


 


WHEREAS,
the Officer understands that participation in the Plan requires that the
Participant to agree irrevocably to the terms of the Plan and the terms set
forth below; and


 


WHEREAS,
the Employee has had the opportunity to carefully evaluate this opportunity, and
desires to become a “Participant” in the Plan under the conditions set forth
herein.


 


NOW,
THEREFORE, the parties hereby AGREE as follows:


 


1.                                       If the Officer incurs a Covered
Termination while the Plan is in effect and the Officer has satisfied all other
conditions precedent to collecting benefits under the Plan, the Officer shall within
sixty (60) days thereafter (subject to Section 5 of the Plan and to Section 2
of this Participation Agreement) receive the following benefits (the “Change in Control Benefits”):


 


(i)                                     A lump sum payment in cash equal to
         times the Officer’s “base
amount.”  The term “base
amount” refers to (A) the Officer’s base salary in effect
immediately preceding the Change in Control; plus (B) the Officer’s cash
bonus and cash commissions paid by the Company (before deductions for taxes and
other withholdings) during the last completed calendar year immediately
preceding the year in which a Change in Control occurred.  The base amount shall not include
perquisites, allowances, per diem payments, stock options or other equity
compensation or fringe benefits.


 

















 


(ii)                                  In the event Officer elects COBRA
continuation coverage on a timely basis, and makes the premium payments
therefor, the Company’s shall promptly reimburse the Officer for such premiums
for the Officer’s COBRA coverage for a period of
            
(    ) months following the Officer’s Covered Termination.


 


Each of the Officer’s benefits provided under this Section shall
be subject to any reduction or withholding required or permitted under the
Plan.


 


2.                                       Notwithstanding Section 1 of this
Participation Agreement, the Officer shall not receive the Change in Control
Benefits set forth in Section 1 above if the Officer is entitled to
collect severance-related benefits (the “Contract Benefits”)
pursuant to a separate written employment agreement or severance agreement that
the Officer has entered into with the Company or any of its affiliates, unless
the Officer waives any and all Contract Benefits in writing within five business
days after the Covered Termination.  If
the Officer waives the Contract Benefits, the Officer shall become entitled to
receive the Change in Control Benefits in accordance with the terms and
conditions of the Plan and this Participation Agreement.


 


3.


 


(a)  In
consideration of becoming eligible to receive the benefits provided under the
terms and conditions of the Plan, the Officer hereby waives any and all rights,
benefits, and privileges (other than the Contract Benefits defined in Section 2
above) to which the Officer is or would otherwise be entitled to receive under
any plan, program, or arrangement under which the Company or any of its
affiliates provides severance benefits (excluding any retirement plan, stock
option or other equity-based plan or agreement, or other plan that is not a “welfare
plan” within the meaning of ERISA).


 


(b)  Subject to Section 2
of this Participation Agreement, the Officer’s collection of the Change in
Control Benefits pursuant to this Participation Agreement shall be absolutely
contingent on the Officer’s agreement in the Release (i) to waive any and
all rights (including, but not limited to, any Contract Benefits) under any
employment agreement or severance agreement that the Officer has entered into
with the Company or any of its affiliates, and (ii) that all such
agreements shall be terminated and become null and void upon the Officer’s
collection of any portion of the Change in Control Benefits.  The terms of the Release will be open for
acceptance for a period of 21 days, during which time you may consider whether
or not to accept the Release.


 


4.                                       The Officer understands that the waiver
set forth in Section 3(a) above is irrevocable for so long as this
Participation Agreement is in effect. 
The Officer further understands that this Participation Agreement and
the Plan set forth the entire agreement between the parties with respect to any
subject matter covered herein.


 


5.                                       This Participation Agreement shall
terminate, and the Officer’s status as a “Participant” in the Plan shall end,
on the first to occur of (i) if before a Change in Control occurs, the
Officer’s termination of employment with the Company and its affiliates, (ii) if


 


2

















 


after a Change in Control occurs, the Officer’s
termination of employment for a reason other than a “Covered Termination” as
defined in Section 3(b)(i) of the Plan, (iii) the date two years
after a Change in Control, and (iv) if before a Change in Control occurs,
the date twelve (12) months after the Company provides the Officer with written
notice that this Participation Agreement is being terminated by the Company in
its discretion as employer and Sponsor.


 


6.                                       The Officer agrees that this
Participation Agreement shall supersede in its entirety any prior Participation
Agreement executed by the Officer under the Plan.  The Officer hereby consents to the amendment
and restatement of the Plan in August 2009, and agrees to be bound by all
of the terms and conditions of the Plan, as amended and restated.


 


7.                                       The Officer recognizes and agrees that
execution of this Participation Agreement results in enrollment and
participation in the Plan, agrees to be bound by the terms and conditions of
the Plan and this Participation Agreement, and understands that this
Participation Agreement may not be amended or modified except pursuant to Section 10
of the Plan.  The Officer further agrees
that to the extent there is any conflict or ambiguity between the Plan and the
Participation Agreement, the Plan prevails.


 


 


ACCEPTED
AND AGREED TO this
                
day of
                            ,
20      .


 


 


	
  The “Officer”:

  	
   

  	
  The “Company”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  A Duly Authorized
  Officer

  



 


3

















 


Exhibit A/Version
2


(Persons
without severance 


Agreements)


 


SRS LABS, INC.


AMENDED AND RESTATED


CHANGE IN CONTROL PROTECTION PLAN


 


Participation Agreement


 


WHEREAS, SRS Labs, Inc. (the “Company”) sponsors and maintains the
SRS Labs, Inc. Amended and Restated Change in Control Protection Plan (the
“Plan”), and has executed
this agreement (the “Participation Agreement”)
in order to offer
                              
(the “Employee”) the
opportunity to participate in the Plan;


 


WHEREAS, the Employee has received a copy of the Plan
(which also serves as its summary plan description); and


 


WHEREAS, the parties acknowledge that capitalized
terms not defined in this Participation Agreement shall have the meaning
assigned to them in the Plan; and


 


WHEREAS, the Employee understands that participation
in the Plan requires that the Employee agree irrevocably to the terms of the
Plan and the terms set forth below; and


 


WHEREAS, the Employee has had the opportunity to
carefully evaluate this opportunity, and desires to become a “Participant” in
the Plan under the conditions set forth herein.


 


NOW, THEREFORE, the parties hereby AGREE as follows:


 


1.                                       If the Employee incurs a Covered
Termination while the Plan is in effect, the Employee shall within
sixty (60) days thereafter (but subject to Section 5 of the Plan) receive
a lump sum payment in cash (the “Change in Control Benefits”) equal to
         times the Employee’s “base
amount” as determined by the Administrator, subject to any reduction or
withholding required or permitted under the Plan.  The term “base
amount” refers to (A) the Employee’s base salary in effect
immediately preceding the Change in Control; plus (B) the Employee’s cash
bonus and cash commissions paid by the Company (before deductions for taxes and
other withholdings) during the last completed calendar year immediately
preceding the year in which a Change in Control occurred.  The base amount shall not include
perquisites, allowances, per diem payments, stock options or other equity
compensation or fringe benefits.  In
addition, in the event Employee elects COBRA continuation coverage on a timely
basis, and makes the premium payments therefor, the Company shall reimburse
Employee’s premiums payable for such COBRA coverage for a period of
              
(    ) months following the Employee’s Covered
Termination.  All of the Employee’s
benefits provided under this Section shall be subject to any reduction or
withholding that is required or permitted under the Plan.


 

















 


2.                                       In consideration of becoming eligible to
receive the benefits provided under the terms and conditions of the Plan, the
Employee hereby waives any and all rights, benefits, and privileges to which
the Employee is or would otherwise be entitled to receive under —


 


(a)                                  any employment agreement or severance
agreement that the Employee has entered into with the Company or any of its
affiliates; and


 


(b)                                 any plan, program, or arrangement under
which the Company or any of its affiliates provides severance benefits
(excluding any retirement plan, stock option or other equity-based plan or
agreement, or other plan that is not a “welfare plan” within the meaning of
ERISA).


 


3.                                       The Employee understands that the waiver
set forth in Section 2 above is irrevocable for so long as this
Participation Agreement is in effect, and that this Participation Agreement and
the Plan set forth the entire agreement between the parties with respect to any
subject matter covered herein.


 


4.                                       This Participation Agreement shall
terminate, and the Employee’s status as a “Participant” in the Plan shall end,
on the first to occur of (i) if before a Change in Control occurs, the
Employee’s termination of employment with the Company and its affiliates, (ii) if
after a Change in Control occurs, the Employee’s termination of employment for
a reason other than a “Covered Termination” as defined in Section 3(b)(i) of
the Plan, (iii) the date two years after a Change in Control, and (iv) if
before a Change in Control occurs, the date twelve (12) months after the
Company provides the Employee with written notice that this Participation
Agreement is being terminated by the Company in its discretion as employer and
Sponsor.


 


5.                                       The Employee agrees that this
Participation Agreement shall supersede in its entirety any prior Participation
Agreement executed by Employee under the Plan. 
The Employee hereby consents to the amendment and restatement of the
Plan in August 2009, and agrees to be bound by all of the terms and
conditions of the Plan, as amended and restated.


 


6.                                       The Employee recognizes and agrees that
execution of this Participation Agreement results in enrollment and
participation in the Plan, agrees to be bound by the terms and conditions of
the Plan and this Participation Agreement, and understands that this
Participation Agreement may not be amended or modified except pursuant to Section 10
of the Plan.  The Employee
further agrees that to the extent there is any conflict or ambiguity between
the Plan and the Participation Agreement, the Plan prevails.


 


2

















 


ACCEPTED AND AGREED TO
this
                
day of
                            ,
20      .


 


	
  The “Employee”:

  	
   

  	
  The “Company”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  A Duly Authorized
  Officer

  



 


3
















 


Exhibit B


 


SRS LABS, INC.


GRANTOR TRUST AGREEMENT


 


PREAMBLE. 
This Grantor Trust Agreement (the “Trust Agreement”) made this
           day of
                      ,
20       
(the “Effective Date”), by and
between SRS Labs, Inc. and any successor to its interest (the “Company”) as
creator and grantor, and
                                    
as trust (the “Trustee”).


 


WHEREAS,
the Company has adopted the SRS Labs, Inc. Amended and Restated Change in
Control Protection Plan attached as Exhibit A  (the “Plan”) under
which the Company has current or potential liability to individuals (the “Beneficiaries”)
who are either Participants in the Plan or are the designated beneficiary for
any benefits payable under the Plan in the event of the death of an individual
who is a participant in the Plan;


 


WHEREAS,
it is the intention of the Company to establish, upon a Change in Control as
defined in Section 1(c) of the Plan (a “Change in
Control”), this trust (the “Trust”) and to contribute assets to
the Trust that shall be held therein, subject to the claims of the Company’s
general creditors in the event of the Company’s Insolvency, as defined in Section 3(a) hereof,
until paid to Beneficiaries of this Trust in such manner and at such times as
specified in the Plan;


 


WHEREAS,
it is the intention of the parties hereto that this Trust shall constitute an
unfunded arrangement and shall not affect the status of the Plan as being
unfunded for purposes of Title I of the Employee Retirement Income Security Act
of 1974; and


 


WHEREAS,
it is the intention of the Company to make contributions to the Trust following
a Change in Control to enable the Trust to fully fund its liabilities under the
Plan.


 


NOW,
THEREFORE, the parties do hereby establish this Trust and agree that the Trust
shall be established and administered as set forth herein:


 


15.                               Establishment of Trust


 


(a)                                 Upon a Change in Control, the Company
shall, as soon as possible but in no event later than ten business days after
the Change in Control, make an irrevocable contribution to this Trust in an
amount that is projected to provide the Trust with sufficient liquid
assets (meaning assets readily convertible into cash) to pay (i) each Beneficiary the
benefits to which he or she is entitled pursuant to the Plan as in effect on
the date of the Change in Control, and (ii) all fees associated with
maintaining the Trust for the maximum period over which Beneficiaries are
reasonably expected to be receiving payments from the Trust.  Any amendment to the Plan’s definition of
Change in Control shall be deemed to apply with equal force, effect, and timing
to the definition of Change in Control for purposes of this Trust, except that
a modification that does or may adversely affect a Beneficiary shall be
ineffectual as to the Beneficiary unless he or she consents in writing to be
bound by the modification.


 

















 


(b)                                 Within 75 days following each December 31st
after a Change in Control occurs, the Company shall, if the Trustee deems
necessary, be required to irrevocably deposit additional cash or other liquid
assets to the Trust in an amount sufficient to pay each Beneficiary the
benefits to which he or she is entitled pursuant to the Plan.  The Trustee shall have the right to monitor,
enforce and/or collect any amounts due and owing from the Company or to give
notice of any default in the payment of benefits to Participants.


 


(c)                                  The Trust hereby established shall be
irrevocable.


 


(d)                                 The Trust is intended to be a grantor
trust, of which the Company is the grantor, within the meaning of subpart E,
part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of
1986, as amended (the “Code”), and shall be construed accordingly.


 


(e)                                  The principal of the Trust, and any
earnings thereon, shall be held separate and apart from other funds of the
Company, and shall be used exclusively for the uses and purposes of
Beneficiaries and general creditors as herein set forth.  Beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any Trust assets.  Any rights created under the Plan and this
Trust Agreement shall be unsecured contractual rights of the Beneficiaries, as
provided for in this Trust Agreement. 
Any assets held by the Trust will be subject to the claims of the
Company’s general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.


 


16.                               Payments to Beneficiaries


 


(a)                                 Upon a Change in Control, the Company
shall, as soon as possible but in no event later than ten business days after
the Change in Control, deliver to the Trustee a schedule (the “Payment Schedule”) which reflects
the benefits payable with respect to each Beneficiary on account of the Change
in Control.  Except as otherwise provided
herein, the Trustee shall make payments to Beneficiaries in accordance with
such Payment Schedule.  The Trustee shall
make provisions for the reporting and withholding of any federal, state or
local taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plan and shall pay amounts withheld to
the appropriate taxing authorities or determine that such amounts have been
reported, withheld, and paid by the Company.


 


(b)                                 The entitlement of a Beneficiary to
benefits under the Plan shall be determined by the Company or such party as may
be designated under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set forth in the Plan.


 


(c)                                  The Company may make payment of benefits
directly to Beneficiaries as such benefits become due under the terms of the
Plan.  The Company shall notify the
Trustee of its decision to make such payment of benefits prior to the time
benefits are payable to Beneficiaries. 
In addition, if the principal of the Trust, and any earnings thereon,
are not sufficient to make payments of benefits in accordance with the terms of
the Plan, the Company shall make the balance of each such payment as due.  The Trustee shall notify the Company when
existing principal and earnings are insufficient under the Payment Schedule.


 


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(d)                                 The Trustee shall make distributions from
the Trust in a manner reasonably intended to provide each Beneficiary with all
of his or her benefits payable under the Plan.


 


17.                               Trustee Responsibility Regarding Payments
to Trust Beneficiary When the Company Is Insolvent


 


(a)                                 The Trustee shall cease payment of
benefits to Beneficiaries if the Company is Insolvent.  The Company shall be considered “Insolvent” for purposes of this
Trust Agreement if (i) the Company is unable to pay its debts when the
same become due, or (ii) the Company files a voluntary petition under
Chapter 11 of the Federal Bankruptcy Code, or (iii) an involuntary
petition under Chapter 11 of the Federal Bankruptcy Code is filed with respect
to the Company.


 


(b)                                 At all times during the existence of this
Trust, as provided in Section 1(d) hereof, the principal and income
of the Trust shall be subject to claims of general creditors of the Company
under federal and state law as set forth below.


 


(c)                                  The Board of Directors and the Chief
Executive Officer of the Company shall have the duty to inform the Trustee in
writing of the Company’s Insolvency.  If
a person claiming to be a creditor of the Company alleges in writing to the
Trustee that the Company has become Insolvent, the Trustee shall determine
whether the Company is Insolvent and, pending such determination, the Trustee
shall discontinue payment of benefits to Beneficiaries.


 


(i)                                     Unless the Trustee has actual knowledge
of the Company’s Insolvency, or has received notice from the Company or a
person claiming to be a creditor alleging that the Company is Insolvent, the
Trustee shall have no duty to inquire whether the Company is Insolvent.  The Trustee may in all events rely on such
evidence concerning the Company’s solvency as may be furnished to the Trustee
and that provides the Trustee with a reasonable basis for making a
determination concerning the Company’s solvency.


 


(ii)                                  If at any time the Trustee has determined
that the Company is Insolvent, the Trustee shall discontinue payments to
Beneficiaries, shall liquidate the Trust’s investment, if any, in common stock
(“Common Stock”) of the Company, and shall hold the assets of the Trust for the
benefit of the Company’s general creditors. 
Nothing in this Trust Agreement shall in any way diminish any rights of
Beneficiaries as general creditors of the Company with respect to benefits due
under the Plan or otherwise.


 


(iii)                               The Trustee shall resume the payment of
benefits to Beneficiaries in accordance with Section 2 of this Trust
Agreement only after the Trustee has determined that the Company is not
Insolvent or is no longer Insolvent.


 


(d)                                 If the Trustee discontinues the payment
of benefits from the Trust pursuant to Section 3(a) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Beneficiaries under the terms of the Plan for the period of such
discontinuance, provided that there are sufficient assets to make such
payments.  The aggregate amount of any
payments to Beneficiaries by the Company, in lieu of the payments provided for
hereunder during any such period of discontinuance, shall be deducted from any
payments made by the Trustee hereunder.


 


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18.                               Payments to the Company


 


After
the Trust has become irrevocable, the Company shall have no right or power to
direct the Trustee to return to the Company or to divert to others any of the Trust
assets before all payment of benefits have been made to Beneficiaries pursuant
to the terms of the Plan, except as provided for in Section 3 hereof.


 


19.                               Investment Authority


 


(a)                                 The Trustee shall have the sole
discretion as to the investment of Trust assets, provided that the Trustee
shall invest Trust assets in a manner reasonably anticipated to provide the
Trust with assets sufficient to fund the Company’s obligations under the Plan.


 


(b)                                 All rights associated with assets of the
Trust shall be exercised by the Trustee or the person designated by the
Trustee, and shall in no event be exercisable by or through Beneficiaries.  The Company shall have the continuing
obligation to substitute liquid assets of equal fair market value for any
illiquid assets held by the Trust, and the Trustee
shall have full authority to convert any illiquid assets into liquid assets.


 


20.                               Disposition of Income


 


During
the term of this Trust, all income received by the Trust, net of expenses and
taxes, shall be reinvested.


 


21.                               Accounting by Trustee


 


The
Trustee shall keep accurate and detailed records of all investments, receipts,
disbursements of all transactions, including such specific records as shall be
agreed upon in writing between the Company and the Trustee.  Within 75 days following each December 31
after the execution of this Agreement, and within 20 days after the removal or
resignation of the Trustee, the Trustee shall deliver to the Company a written
account of its administration of the Trust during such year or during the
period from the close of the last preceding year to the date of such removal or
resignation, reflecting all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable recorded separately), and
reflecting all cash, securities and other property held in the Trust at the end
of such year or as of the date of such removal or resignation, as applicable.


 


22.                               Responsibility of Trustee


 


(a)                                 The Trustee shall act with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like objectives,


 


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provided, however,
that the Trustee shall incur no liability to any person for any action taken
pursuant to a direction, request or approval given by the Company which is
contemplated by, and in conformity with, the terms of the Plan or this Trust
Agreement and is given in writing by the Company.  In the event of a dispute between the Company
and a party, the Trustee may apply to a court of competent jurisdiction to
resolve the dispute.


 


(b)                                 If the Trustee undertakes or defends any
litigation arising in connection with this Trust, the Company agrees to
indemnify the Trustee against Trustee’s costs, expense and liabilities
(including, without limitation, attorneys’ fees and expenses) relating thereto
and to be primarily liable for such payments, except in those cases where the
Trustee shall have been found by a court of competent jurisdiction to have
acted with negligence or willful misconduct. 
If the Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, the Trustee may obtain payment from the Trust.


 


(c)                                  The Trustee may consult with legal
counsel with respect to any of its duties or obligations hereunder.


 


(d)                                 The Trustee may hire agents, accountants,
actuaries, investment advisors, financial consultants or other professionals to
assist it in performing any of its duties or obligations hereunder.


 


(e)                                  The Trustee shall have, without exclusion,
all powers conferred on trustees by applicable law, unless expressly provided
otherwise herein, provided, however, that if an insurance policy is held as an
asset of the Trust, the Trustee shall have no power to name a beneficiary of
the policy other than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a successor
Trustee, or to loan to any person the proceeds of any borrowing against such
policy.


 


(f)                                    Notwithstanding any powers granted to the
Trustee pursuant to this Trust Agreement or to applicable law, the Trustee
shall not have any power that may accord the Trust the authority to engage in a
business and to receive the gains therefrom, within the meaning of section
301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant
to the Code.


 


23.                               Compensation and Expenses of Trustee


 


The
Company shall pay all administrative expenses and the Trustee’s fees and
expenses relating to the Plan and this Trust. 
If not so paid, the fees and expenses shall be paid from the Trust.


 


24.                               Resignation and Removal of Trustee


 


The
Trustee may resign at any time by written notice to the Company, which
resignation shall be effective 30 days after the Company receives such notice
(unless the Company and the Trustee agree otherwise).  The Trustee may be removed by the Company on
30 days notice, or upon shorter notice accepted by the Trustee; provided that
if such removal occurs on or after a Change in Control, or within 90 days
beforehand, the removal will be ineffective unless it is done with the written
consent of Beneficiaries who are entitled to at least 75% of the Trust’s
assets.


 


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If the
Trustee resigns or is removed, a successor shall be appointed, in accordance
with Section 11 hereof, by the effective date or resignation or removal
under this section.  If no such
appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions.  All expenses of the Trustee in connection
with the proceeding shall be allowed as administrative expenses of the
Trust.  Upon resignation or removal of
the Trustee and appointment of a Successor Trustee, all assets shall
subsequently be transferred to the Successor Trustee.  The transfer shall be completed within 60
days after receipt of a notice of resignation, removal or transfer, unless the
Company extends the time for such transfer.


 


25.                               Appointment of Successor


 


If the
Trustee resigns or is removed in accordance with Section 10 hereof, the
Company may appoint any other party as a successor to replace the Trustee upon
such resignation or removal.  The
appointment shall be effective when accepted in writing by the new trustee, who
shall have all of the rights and powers of the former trustee, including
ownership rights in the Trust assets. 
The former trustee shall execute any instrument necessary or reasonably
requested by the Company or the Successor Trustee to evidence the
transfer.  Notwithstanding the foregoing,
if the Trustee resigns or is removed in connection with or following a Change
in Control, the Trustee that has resigned or is being removed shall appoint as
its successor a third party financial institution that has trust powers, is
independent of and unrelated to the Company, its affiliates, or their
successors, and is agreed to in writing by Beneficiaries who are entitled to at
least 75% of the Trust’s assets.


 


A
Successor Trustee need not examine the records and acts of any prior trustee
and may retain or dispose of existing Trust assets, subject to Sections 7 and 8
hereof.  The Successor Trustee shall not
be responsible for, and the Company shall indemnify and defend the Successor
Trustee from, any claim or liability resulting from any action or inaction of
any prior trustee or from any other past event, or any condition existing at
the time it becomes Successor Trustee.


 


26.                               Amendment or Termination


 


(a)                                 This Trust Agreement may be amended by a
written instrument executed by the Trustee and the Company, provided that no
such amendment shall either conflict with the terms of the Plan.


 


(b)                                 Notwithstanding subsection (a) hereof,
the provisions of this Trust Agreement and the Trust created thereby may not be
amended, within six months before or at any time on or after a Change in
Control occurs, without the written consent of Beneficiaries who are entitled
to at least 75% of the Trust’s assets.


 


(c)                                  The Trust shall not terminate until the
date on which no Beneficiary is entitled to benefits pursuant to the terms
hereof or of the Plan.  Upon termination
of the Trust, the Trustee shall return any assets remaining in the Trust to the
Company.


 


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(d)                                 The Company may terminate this Trust prior
to the payment of all benefits under the Plan only upon written approval of all
Beneficiaries entitled to payment of such benefits.


 


27.                               Miscellaneous


 


(a)                                 Any provision of this Trust Agreement
prohibited by law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.


 


(b)                                 Benefits payable to Beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process, except
pursuant to the terms of the Plan and this Trust Agreement.


 


(c)                                  This Trust Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
reference to the principles of conflicts of laws.


 


(d)                                 The Trustee agrees to be bound by the
terms of the Plan, as in effect from time to time.


 


28.                               Effective Date


 


The
Effective Date of this Trust Agreement shall be the date referenced in the
Preamble.


 


IN WITNESS WHEREOF, the Company, by its duly
authorized officer, has caused this Trust Agreement to be executed, and its
corporate seal affixed, and the Trustee has executed this Trust Agreement, on
the date referenced in the Preamble.


 


 


	
  Witnessed by:

  	
   

  	
  SRS LABS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witnessed by:

  	
   

  	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


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