EXHIBIT 10.1


 


February 18,
2010


 


Fred
Kitson


5336
Via Quinto


Newbury
Park, CA 91320


 


Re:          Employment Agreement


 


Dear
Fred:


 


DTS, Inc.
(“DTS” or the “Company”) is pleased to extend to you the following employment
Agreement.  Unless otherwise set forth in
this Agreement, you acknowledge that your employment with DTS is “at-will”.


 


Title:                                                          Executive Vice
President and Chief Technology Officer


 


Duties:                                                You agree to
serve the Company as its Executive Vice President and Chief Technology
Officer.  Your duties are as defined in
Company’s job description for the position or as otherwise specified by the
Chairman and Chief Executive Officer of the Company.  During the Term of this Agreement, you will
devote full time to, and use your best efforts to advance, the business and
welfare of the Company.


 


Status:                                                 Salary Exempt.


 


Effective
Date:   February 26,
2010.


 


Base
Salary:                  $320,000 per
year payable biweekly and subject to payroll deductions as may be necessary or
customary in respect of the Company’s salaried employees in general.


 


Bonus:                                                 Participation
in the bonus plan will be on a level commensurate with other executives, and
subject to completion of individual and company milestone achievements per
mutual agreement on targets.


 


Stock
Options:      All Stock options granted to
you are conditioned on Board of Directors approval and shall vest over four
consecutive 12-month periods as per your Stock Option Agreement
with the Company and administered under the respective Company’s Stock Option Plan.


 


Vacation:                                    You shall be
provided with One Hundred Sixty (160) hours of vacation, which shall be
automatically replenished upon use. 
However, vacation hours will not be replenished during any period where
you are not actively working for the Company, until you have resumed actively
working for at least one full workweek.


 


Holidays:                                     Per Company’s
annual published schedule (commonly 12 days per year); plan is subject to
change.  The salary includes holiday pay
and you are not entitled to any additional salary or compensation for work on a
holiday.


 


Severance:                            Upon the
termination of this Agreement by the Company for other than good cause,
including constructive termination: (A) the Company shall for a period of
twelve (12) months; (I) pay to Employee in monthly installments, as
severance pay, Employee’s full Salary, and (II) provide Employee the same
level of benefits Employee was receiving as of the time of termination of this
Agreement, unless otherwise required by law, (B) all options, restricted
stock, or other Company issued equity incentives granted to you (incentive and
nonstatutory) shall (I) immediately vest and (II) where applicable,
be exercisable for five (5) years from such termination (but not in excess
of the specified maximum term of such option). 
Constructive Termination shall mean any material failure by the Company
to fulfill its obligations under this Agreement which is not cured within
thirty (30) days after receipt of written notice from you specifying the nature
of the failure, including, but not limited to, (a) your removal, other
than removal as a result of a termination for cause or your voluntary
termination, as Executive Vice President and Chief Technology Officer of the
Company, (b) any material change by the Company in your functions, duties
or responsibilities from those in which you were engaged under this Agreement
without your consent, or (c) a material, non-voluntary reduction in your
base salary and eligibility for bonus amounts.


 


Benefits:                                      The following
are the Company supplied Benefits as of the date of this Agreement.  Benefit coverage is subject to change at
company election that may result in elimination of benefits or increased
co-pay.  Unless otherwise set forth
below, eligibility begins the first day of the month after hire date.  Please see the applicable plan documents for
additional information.  In the event of
any conflict between this description and the plan document, the plan document
will prevail.


 


	
  Insurance:

  	
   

  
	
  Health

  	
  Long
  Term Disability

  
	
  Dental

  	
  Long
  Term Care

  
	
  Vision

  	
  Section 125:

  	
  Available
  for dependent and health care.

  
	
  Life:
        $50,000 coverage

  	
  401k
  Plan:

  	
  Enrollment
  dates 1/1 4/1, 7/1 & 10/1.

  
	
   

  	
  ESPP:

  	
  Enrollment
  — May and November

  



 

















 


Death or Disability of Employee.  If you die or become disabled
prior to the termination of this Agreement, your employment under this
Agreement will automatically terminate upon your death or the determination
that you are disabled.  “Disability”
means any physical or mental illness that renders you unable to perform your
agreed-upon services under this Agreement for ninety (90) consecutive days or
an aggregate of one-hundred twenty (120) days, whether or not consecutive,
during any consecutive twelve (12)-month period.  Disability shall be determined by a licensed
physician selected by the Company that is not affiliated with you or the
Company.  In the event of your death or
disability, the amounts due you pursuant to this Agreement through the date of
your death or disability will be paid to you or your beneficiaries.


 


Termination for Cause.  Your employment under this Agreement may be
terminated immediately by the Company for “good cause”.  Upon such termination you will be provided
notice specifying the reasons for the termination.  You shall have ten (10) business days
from the date such termination to cure such cause, if curable.  Absent such cure within the cure period, your
employment shall be deemed terminated for good cause on the date of your
termination.  The term “good cause” is
defined as any one or more of the following occurrences:


 


(I)                        Negligence or a material violation by you of any duty or any other
material or repetitive misconduct or failure on your part;


(II)                    Your conviction by, or entry
of a plea of guilty or nolo contendere in, a court of competent and final
jurisdiction for any crime punishable by imprisonment in the jurisdiction
involved; or


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


(IV)                Failure to execute and
deliver to the Company any document(s) required
by all employees of the Company, or employees of a similar position, at the
location you are employed.


 


Nothing in this section or the availability of
termination for good cause is intended to alter the at-will status of
employment with the Company.  Either you
or the company may terminate the employment relationship at any time, with or
without cause.


 


Employee’s Consideration for Severance.  As consideration for receiving severance pay
and benefits provided hereunder, during the period that Employee is receiving
severance pay or benefits hereunder, Employee shall:


 


(I)                        Consulting.  Be reasonably available, by telephone, as a
consultant to the Company on projects or task you have previously been involved
in.  It is agreed that eight (8) hours
per week of consultation, by phone, shall be reasonable.


(II)                    Non-Compete.  You agree that for the period commencing on
the date of this Agreement and ending upon the date of the last severance
payment hereunder, Employee shall not, directly or indirectly, as employee,
agent, consultant, stockholder, director, partner or in any other individual or
representative capacity, own, operate, manage, control, engage in, invest in or
participate in any manner in, act as a consultant or advisor to, render
services for (alone or in association with any person, firm, corporation or
entity), or otherwise assist, for compensation or otherwise, any person or
entity that engages in or owns, invests in, operates, manages or controls any
venture or enterprise that is a direct competitor of DTS; provided, however,
that nothing contained in this Agreement shall be construed to prevent you from
investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but only if: (1) you
are not involved in the business of said corporation, and (2) if you and
your affiliates collectively do not own more than an aggregate of 5% of the
stock of such corporation, and (3) such investment does not violate the
Company’s Insider Trading Policy.


(III)                Non-Solicitation.  You agree that you will not interfere with or
disrupt or attempt to disrupt the Company’s business relationship with its
customers or suppliers or solicit any of the employees of the Company to leave
the employment of the Company.


(IV)                Severance Agreement.  You shall enter into a severance agreement
and general release with the company in the form designated by the Company
which shall become effective in accordance with its terms no later than sixty
(60) days following your termination.


 


Section 409A
Compliance.  This
Agreement is intended to comply with, or otherwise be exempt from, Section 409A
of the Internal Revenue Code (“Section 409A”).  The Company and the Employee agree that they
will execute any and all amendments to this Agreement as they mutually agree in
good faith may be necessary to ensure compliance with the provisions of Section 409A.  The preceding provisions, however, shall not
be construed as a guarantee by the Company of any particular tax effect to the
Employee under this Agreement.


 


For
purposes of Section 409A, the right to a series of installment payments
under this Agreement shall be treated as a right to a series of separate
payments.  With respect to any
reimbursement of expenses of, or any provision of in-kind benefits to, the
Employee, as specified under this Agreement, such reimbursement of expenses or
provision of in-kind benefits shall be subject to the following conditions: (1) the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in one taxable year shall not affect the expenses eligible for reimbursement or
the amount of in-kind benefits provided in any other taxable year, except for
any medical reimbursement arrangement providing for the reimbursement of
expenses referred to in Section 105(b) of the Internal Revenue Code; (2) the
reimbursement of an eligible expense shall be made no later than the end of the
year after the year in which such expense was incurred; and (3) the right
to reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit.


 


No
amount payable pursuant to this Agreement which constitutes a “deferral of
compensation” subject to Section 409A shall be paid unless and until the
Employee first incurs a “separation from service” for purposes of Section 409A.  Further, to the extent that the Employee is a
“specified employee” (as defined in Section 409A) as of the date of
Employee’s separation from service, no amount that constitutes a deferral of
compensation which is payable on account of Employee’s separation from service
shall paid to Employee before the date (the “Delayed Payment Date”) which is
first day of the seventh month after the date of Employee’s separation from
service or, if earlier, the date of Employee’s death following such separation
from service.  All such amounts that
would, but for this Section, become payable prior to the Delayed Payment Date
will be accumulated and paid on the Delayed Payment Date.


 


Arbitration.  You and the Company agree
that any dispute arising under or in connection with this Agreement, including
any dispute involving your employment or the termination of that employment
(whether based on contract, tort or statutory duty or prohibition, including
any 


 

















 


prohibition
against discrimination or harassment), shall be submitted to binding
arbitration in accordance with California Code of Civil Procedure §§ 1280 —
1294.2 before a single neutral arbitrator. 
You and the Company understand that each is waiving its rights to a jury
trial.


 


The
party demanding arbitration shall submit a written claim to the other party
setting out the basis of the claim. 
Demands shall be presented in the same manner as notices under this
Agreement.  You and the Company will
attempt to reach agreement on an arbitrator within ten (10) business days
of delivery of the arbitration demand. 
After this ten (10) business day period, either you or the Company
may request a list of seven professional arbitrators from the American
Arbitration Association or another mutually agreed service.  You and the Company will alternately strike
names until only one person remains and that person shall be designated as the
arbitrator. The party demanding arbitration shall make the first strike.


 


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


 


The
arbitrator will have the authority to entertain a motion to dismiss and/or a
motion for summary judgment by either you or the Company and shall apply the
standards governing such motions under California law, unless the standards of
another judicial forum supercede California law.  The Arbitrator shall render, within sixty
(60) days of the completion of the arbitration, an award and a written,
reasoned opinion in support of that award. 
Judgment on the award may be entered in any court having jurisdiction.


 


The Company will pay the arbitrator’s expenses and
fees, all meeting room charges and any other expenses that would not have been
incurred if the case were litigated in the judicial forum having jurisdiction
over it.  Unless otherwise ordered by the
arbitrator pursuant to law or this Agreement, each party shall pay its own
attorney fees, witness fees and other expenses incurred by the party for his or
her own benefit.  Employee’s share of any
filing, administration or similar fee shall be no more than the then current
filing or other applicable fee in California Superior Court or, if applicable,
other appropriate tribunal with jurisdiction.


 


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


 


Notices.  All notices and other communications required
or permitted under this Agreement shall be in writing, served personally on, or
mailed by nationally recognized express mail courier.  Notices and other communications served by
express mail courier shall be deemed given 72 hours after deposit with such express
mail courier duly addressed to whom such notice or communication is to be
given.  In the case of (a) the
Company, 5220 Las Virgenes Road, Calabasas, California 91302, Attention:
General Counsel, or (b) to you, at the address of record provided by you
to the Company’s Human Resources department. 
Either party may change their address for purposes of this Section by
giving written notice, in the manner stated herein.  You agree to promptly update the Company’s
Human Resources department with any changes to your contact information.


 


Counterparts and Facsimile Signatures.  This instrument may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same Agreement.  The parties agree that a signature delivered
by facsimile transmission will be treated in all respects as having the same
effect as an original signature.


 


Construction of Agreement.  This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of California
and both parties irrevocably agree to the exclusive jurisdiction and venue of
the state and local courts of the County of Los Angeles, California.


 


Legal Fees.  If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of any
alleged dispute, breach, default or misrepresentation in connection with this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys’ fees and other costs it incurred in that action or proceeding,
in addition to any other relief to which it may be entitled.


 


Severability Clause.  If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.


 


Complete Agreement.  This instrument constitutes and contains the
entire agreement and understanding concerning your employment and the other
subject matters addressed in this Agreement between you and the Company, and
supersedes and replaces all prior negotiations and all agreements proposed or
otherwise, whether written or oral, concerning the subject matters hereof.  This is an integrated document.


 


Third Party Beneficiaries.  This Agreement does not create, and shall not
be construed as creating, any rights enforceable by any person not a party to
this Agreement, except as expressly contemplated herein.


 


Non-transferability of Interest.  None of the rights of Employee to
receive any form of compensation payable pursuant to this Agreement shall be
assignable or transferable except through a testamentary disposition or by the
laws of descent and distribution upon the death of Employee.  Any attempted assignment, transfer,
conveyance, or other disposition (other than as set forth herein) of any
interest in the rights of Employee to receive any form of compensation to be
made by the Company pursuant to this Agreement shall be void.


 


Other
Agreements.  A condition of employment with DTS is a
signed Confidentiality and Non-Disclosure Agreement, Employee Invention
Agreement, the DTS Worldwide Business Conduct Policy, and receiving
satisfactory confirmation of an employee background check.  Your failure to agree to these conditions and
complete these documents in a timely manner may result in your termination for
good 


 

















 


cause.  You
also understand and agree that, except as expressly provided in this Agreement,
you are subject to all of the Company’s general business and human resources
policies and procedures as they presently exist or as they may exist in the
future and failure to abide by such provisions may result in your termination
for good cause.  Provided, however, that
the at-will status of employment may only be changed as provided below.


 


At-Will.  By signing this letter, you
understand and agree that your employment with DTS is “at-will.”  Your employment with DTS is
voluntarily entered into and we recognize you are free to resign at any
time.  Similarly, it is recognized that
DTS is free to conclude an employment relationship at any time we feel is
appropriate.  While other terms of your
employment may change with or without notice, this at-will relationship can be
changed only in a written agreement signed by you and the Chairman and Chief
Executive Officer of DTS.


 


	
  Sincerely,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Jon E. Kirchner

  	
   

  	
  /s/
  Sharon K. Faltemier

  
	
  Jon
  Kirchner

  	
   

  	
  Sharon
  Faltemier

  
	
  Chairman
  and Chief Executive Officer

  	
   

  	
  Senior
  Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acceptance:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Frederick Kitson

  	
   

  	
  3-3-10

  	
   

  	
   

  
	
  Frederick
  Kitson

  	
   

  	
  Date

  	
   

  	
   

  



 

















 


AGREEMENT OF AT WILL EMPLOYMENT


 


I
understand and agree that my employment with DTS is on an at-will basis.  This means that either DTS or I or may
terminate the employment relationship at any time at their sole discretion
without cause.


 


I
further understand that while other personnel policies, procedures, and
benefits of DTS may change from time to time in DTS’s discretion, this at-will
employment relationship can only be changed by an express written employment
agreement signed by me and an officer of DTS.


 


 


Frederick
Kitson


 


 


	
  /s/
  Frederick Kitson

  	
   

  	
  3-3-10

  	
   

  
	
  Frederick
  Kitson Signature

  	
   

  	
  Date