EXHIBIT
10.3


 


DTS, INC.


NOTICE OF GRANT OF RESTRICTED STOCK UNITS


 


The Awardee has been
granted an award of Restricted Stock Units (the “Award”) pursuant to the DTS, Inc. 2003
Equity Incentive Plan (the “Plan”),
each of which represents the right to receive on the applicable Settlement Date
one (1) Share common stock of DTS, Inc. (the “Company”), as follows:


 


	
  Awardee:

  	
   

  	
  Employee
  ID:

  	
   

  
	
  Grant
  Date:

  	
   

  	
   

  	
   

  
	
  Number
  of Restricted Stock Units:

  	
                       ,
  subject to adjustment as provided by the Restricted Stock Units Agreement.

  
	
  Settlement
  Date:

  	
  For each Restricted
  Stock Unit, except as otherwise provided by the Restricted Stock Units
  Agreement, the date on which such unit becomes a Vested Unit in accordance
  with the vesting schedule set forth below.

  
	
  Vested
  Units:

  	
  Except as provided by
  the Restricted Stock Units Agreement and provided that the Awardee’s service
  has not terminated prior to the relevant date, the number of Vested Units
  shall cumulatively increase on each respective date set forth below by the
  number of units set forth opposite such date, as follows:

  



 


	
   

  	
  Vesting Date

  	
   

  	
  Number of Units Vesting

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


By their signatures below
or by electronic acceptance or authentication in a form authorized by the
Company, the Company and the Awardee agree that the Award is governed by this
Notice and by the provisions of the Plan and the Restricted Stock Units
Agreement, both of which are made a part of this document.  The Awardee acknowledges that copies of the Plan,
Restricted Stock Units Agreement and the prospectus for the Plan are available
on the Company’s internal web site and may be viewed and printed by the Awardee
for attachment to the Awardee’s copy of this Grant Notice.  The Awardee represents that the Awardee has
read and is familiar with the provisions of the Plan and Restricted Stock Units
Agreement, and hereby accepts the Award subject to all of their terms and
conditions.


 


	
  DTS, INC.

  	
   

  	
  AWARDEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  



 


ATTACHMENTS:                                             2003 Equity Incentive Plan, as amended to
the Grant Date; Restricted Stock Units Agreement and Plan Prospectus


 

















 


DTS INC.


RESTRICTED STOCK UNITS AGREEMENT


 


DTS, Inc.  has granted to the Awardee named in the Notice of Grant of Restricted Stock Units (the “Grant Notice”) to which this Restricted Stock Units
Agreement (the “Agreement”)
is attached an Award consisting of Restricted Stock Units (the “Units”) subject to the terms
and conditions set forth in the Grant Notice and this Agreement.  The Award has been granted pursuant to and
shall in all respects be subject to the terms conditions of the DTS, Inc.
2003 Equity Incentive Plan (the “Plan”),
as amended to the Grant Date attached as Exhibit A, the provisions of
which are incorporated herein by reference. 
By signing the Grant Notice, the Awardee: (a) acknowledges receipt
of and represents that the Awardee has read and is familiar with the Grant
Notice, this Agreement, the Plan and a prospectus for the Plan prepared in
connection with the registration with the Securities and Exchange Commission of
the shares issuable pursuant to the Award (the “Plan Prospectus”), (b) accepts
the Award subject to all of the terms and conditions of the Grant Notice, this
Agreement and the Plan and (c) agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee upon any questions
arising under the Grant Notice, this Agreement or the Plan.


 


1.                                       Definitions and
Construction.


 


1.1  Definitions.  Unless
otherwise defined herein, capitalized terms shall have the meanings assigned in
the Grant Notice or the Plan.


 


1.2  Construction.  Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement.  Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall include the
singular.  Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.


 


2.                                       Administration.


 


All questions of
interpretation concerning the Grant Notice, this Agreement and the Plan shall
be determined by the Committee or its designee. 
All such determinations shall be final and binding upon all persons
having an interest in the Award as provided by the Plan.  Any Officer shall have the authority to act
on behalf of the Company with respect to any matter, right, obligation, or
election which is the responsibility of or which is allocated to the Company
herein, provided the Officer has apparent or actual authority with respect to
such matter, right, obligation, or election.


 


3.                                       The Award.


 


3.1  Grant of Units.  On the Grant Date, the Awardee shall acquire,
subject to the provisions of this Agreement, the Number of Restricted Stock
Units set forth in the Grant Notice, subject to adjustment as provided in Section 0.  Each Unit represents a right to receive on a
date determined in accordance with the Grant Notice and this Agreement one (1) Share.


 


3.2  No Monetary Payment
Required.  The Awardee is not
required to make any monetary payment (other than applicable tax withholding,
if any) as a condition to receiving the Units or Shares issued upon settlement
of the Units, the consideration for which shall be past services actually
rendered and/or future services to be rendered to the Company or an
Affiliate.  Notwithstanding the
foregoing, if required by applicable state corporate law, the Awardee shall
furnish consideration in the form of cash or past services rendered having a
value not less than the par value of the Shares issued upon settlement of the
Units.


 


4.                                       Vesting of Units.


 


Normal
Vesting.  The Units shall vest and become Vested Units
as provided in the Grant Notice.  In the
event that a Vesting Date as provided by the Grant Notice (an “Original
Settlement Date”) would occur on a date on which a sale
by the Awardee of the shares to be issued in settlement of the Units becoming
Vested Units on such Original Settlement 
Date would violate the Insider Trading Policy of the Company, the
Settlement of such Vested Units shall be deferred until the first to occur of (a) the
next business day on which a sale by the Awardee of such shares would not
violate the Insider Trading Policy or (b) the later of (i) the last
day of the calendar year in which the Original Vesting Date occurred or (ii) the
last day of the Company’s taxable year in which the Original Vesting Date
occurred.


 

















 


5.                                       Company Reacquisition
Right.


 


5.1  Grant of Company
Reacquisition Right.  Except
to the extent otherwise provided in an employment agreement between the Company
or an Affiliate and the Awardee, in the event that the Awardee’s Service
terminates for any reason or no reason, with or without cause, the Awardee
shall forfeit and the Company shall automatically reacquire all Units which are
not, as of the time of such termination, Vested Units (“Unvested
Units”), and the
Awardee shall not be entitled to any payment therefor (the “Company
Reacquisition Right”).


 


5.2  Dividends, Distributions
and Adjustments.  Upon a dividend or distribution to the
stockholders of the Company paid in shares of Stock or other property, or any
other adjustment upon a change in the capital structure of the Company as
described in Section 10.2 of the Plan, any and all new, substituted or
additional securities or other property (other than regular, periodic dividends
paid on Shares pursuant to the Company’s dividend policy) to which the Awardee
is entitled by reason of the Awardee’s ownership of Unvested Units shall be
immediately subject to the Company Reacquisition Right and included in the terms
“Units” and “Unvested Units” for all purposes of the Company Reacquisition
Right with the same force and effect as the Unvested Units immediately prior to
the dividend, distribution or adjustment, as the case may be.  For purposes of determining the number of
Vested Units following a dividend, distribution or adjustment, credited Service
shall include all service with the Company or an Affiliate at the time the
service is rendered.


 


6.                                       Settlement of the Award.


 


6.1  Issuance of Shares.  Subject
to the provisions of Section 0 below, the Company shall issue to the
Awardee on the settlement date with respect to each Vested Unit to be settled
on such date one (1) Share.  Shares
issued in settlement of Units shall not be subject to any restriction on
transfer other than any such restriction as may be required pursuant to Section 0,
Section 7 or the Company’s Insider Trading Policy.


 


6.2  Beneficial
Ownership of Shares; Certificate Registration. 
The Awardee hereby authorizes the Company, in its sole discretion, to
deposit for the benefit of the Awardee with the broker designated by the
Company with which the Awardee has an account, any or all Shares acquired by
the Awardee pursuant to the settlement of the Award.  Except as provided by the preceding sentence,
a certificate for the Shares as to which the Award is settled shall be
registered in the name of the Awardee, or, if applicable, in the names of the
heirs of the Awardee.


 


6.3  Restrictions on Grant of
the Award and Issuance of Shares.  The grant of the Award and issuance of Shares
upon settlement of the Award shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such
securities.  No Shares may be issued
hereunder if the issuance of such Shares would constitute a violation of any
applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon
which the Shares may then be listed.  The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance of any shares subject to the Award shall relieve the
Company of any liability in respect of the failure to issue such Shares as to
which such requisite authority shall not have been obtained.  As a condition to the settlement of the
Award, the Company may require the Awardee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto
as may be requested by the Company.


 


6.4  Fractional Shares.  The
Company shall not be required to issue fractional Shares upon the settlement of
the Award.


 


7.                                       Tax Withholding.


 


7.1  In General. 
At the time the Grant Notice is executed, or at any time thereafter as
requested by the Company, the Awardee hereby authorizes withholding from
payroll and any other amounts payable to the Awardee, and otherwise agrees to
make adequate provision for, any sums required to satisfy the federal, state,
local and foreign tax (including any social insurance) withholding obligations
of the Company and its Affiliates, if any, which arise in connection with the
Award, the vesting of Units or the issuance of Shares in settlement
thereof.  The Company shall have no
obligation to deliver shares of Stock until such tax withholding obligations of
the Company have been satisfied by the Awardee.


 


7.2  Assignment of Sale
Proceeds; Payment of Tax Withholding by Check.  Subject to compliance with applicable law and
the Company’s Insider Trading Policy, the Company may permit the Awardee to
satisfy the tax withholding obligations in accordance with procedures
established by the Company providing for either (i) delivery by the
Awardee to the Company or a broker approved by the Company of properly executed
instructions, in a form approved by the Company, providing for the assignment
to the Company of the proceeds of a sale with respect to some or all of the
Shares being acquired upon settlement of Units, or (ii) payment by check.


 

















 


7.3  Withholding in Shares.  The Company may require the Awardee to
satisfy all or any portion of the Company’s or Affiliate’s tax withholding
obligations by deducting from the Shares otherwise deliverable to the Awardee
in settlement of the Award a number of whole Shares having a fair market value,
as determined by the Company as of the date on which the tax withholding
obligations arise, not in excess of the amount of such tax withholding
obligations determined by the applicable minimum statutory withholding rates.


 


7.4  Default Withholding
Provision.  Except as
otherwise provided by the Company, if the Awardee does not deliver to the
Company at least five (5) days prior to a Settlement Date a written notice
of Awardee’s election to satisfy by cash, check, or other manner agreeable to
the Company, all federal, state, local or foreign tax withholding obligations
related to such Shares, Awardee and the Company agree that the Company shall
retain that number of the Shares, based on the fair market value of the Company’s
common stock on such Settlement Date, with an aggregate value equal to the
amount of all federal, state, local or foreign tax withholding obligations that
Awardee, the Company, or an Affiliate would incur as a result of the Settlement
of such Shares.


 


8.                                       Effect of Fundamental
Transaction on Award.


 


In the event of a
Fundamental Transaction, except to the extent that the Committee determines to
cash out the Award, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case may be (the
“Acquiror”), may, without the consent
of the Awardee, assume or continue the Company’s rights and obligations with
respect to all or any portion of the outstanding Units or substitute for all or
any portion of the outstanding Units substantially equivalent rights with
respect to the Acquiror’s stock.  For
purposes of this Section, a Unit shall be deemed assumed if, following the
Fundamental Transaction, the Unit confers the right to receive, subject to the
terms and conditions of the Plan and this Agreement, the consideration (whether
stock, cash, other securities or property or a combination thereof) to which a
holder of a Share on the effective date of the Change in Control was entitled;
provided, however, that if such consideration is not solely common stock of the
Acquiror, the Committee may, with the consent of the Acquiror, provide for the
consideration to be received upon settlement of the Unit to consist solely of
common stock of the Acquiror equal in Fair Market Value to the per share
consideration received by holders of Share pursuant to the Fundamental
Transaction.


 


9.                                       Adjustments for Changes in
Capital Structure.


 


Subject to any required
action by the stockholders of the Company and the requirements of Section 409A
of the Code to the extent applicable, in the event of any change in the Shares
effected without receipt of consideration by the Company, whether through
merger, consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar
change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other
than Shares (excepting normal cash dividends) that has a material effect on the
Fair Market Value of Shares, appropriate and proportionate adjustments shall be
made in the number of Units subject to the Award and/or the number and kind of
shares to be issued in settlement of the Award, in order to prevent dilution or
enlargement of the Awardee’s rights under the Award.  For purposes of the foregoing, conversion of
any convertible securities of the Company shall not be treated as “effected
without receipt of consideration by the Company.”  Any fractional Share resulting from an
adjustment pursuant to this Section shall be rounded down to the nearest
whole number.  Such adjustments shall be
determined by the Committee, and its determination shall be final, binding and
conclusive.


 


10.                                 Rights as a Stockholder or
Employee.


 


The Awardee shall have no
rights as a stockholder with respect to any Shares which may be issued in
settlement of this Award until the date of the issuance of a certificate for
such Shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date
such certificate is issued, except as provided in Section 0.  If the Awardee is an Employee, the Awardee
understands and acknowledges that, except as otherwise provided in a separate,
written employment agreement between the Company or an Affiliate and the
Awardee, the Awardee’s employment is “at will” and is for no specified
term.  Nothing in this Agreement shall
confer upon the Awardee any right to continue in the service of the Company or
an Affiliate or interfere in any way with any right to terminate the Awardee’s
service at any time.


 


11.                                 Legends.


 


The Company may at any
time place legends referencing any applicable federal, state or foreign
securities law restrictions on all certificates representing Shares issued
pursuant to this Agreement.  The Awardee
shall, at the request 


 

















 


of the Company, promptly
present to the Company any and all certificates representing Shares acquired
pursuant to this Award in the possession of the Awardee in order to carry out
the provisions of this Section.


 


12.                                 Miscellaneous Provisions.


 


12.1  Termination or Amendment.  The Committee may terminate or amend the Plan
or this Agreement at any time; provided, however, that except as provided in Section 8
in connection with a Fundamental Transaction, no such termination or amendment
may adversely affect the Awardee’s rights under this Agreement without the
consent of the Awardee unless such termination or amendment is necessary to
comply with applicable law or government regulation, including, but not limited
to, Section 409A.  No amendment or
addition to this Agreement shall be effective unless in writing.


 


12.2  Nontransferability
of the Award.  Prior to the issuance of Shares on the
applicable Settlement Date, neither this Award nor any Units subject to this
Award shall be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Awardee or the Awardee’s beneficiary, except transfer by will or by the
laws of descent and distribution.  All
rights with respect to the Award shall be exercisable during the Awardee’s
lifetime only by the Awardee or the Awardee’s guardian or legal representative.


 


12.3  Further
Instruments.  The parties hereto agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.


 


12.4  Binding Effect.  This Agreement shall inure to the benefit of
the successors and assigns of the Company and, subject to the restrictions on
transfer set forth herein, be binding upon the Awardee and the Awardee’s heirs,
executors, administrators, successors and assigns.


 


12.5  Delivery of Documents and
Notices.  Any document
relating to participation in the Plan or any notice required or permitted
hereunder shall be given in writing and shall be deemed effectively given
(except to the extent that this Agreement provides for effectiveness only upon
actual receipt of such notice) upon personal delivery, electronic delivery at
the e-mail address, if any, provided for the Awardee by the Company or any
Affiliate, or upon deposit in the U.S. Post Office or foreign postal service,
by registered or certified mail, or with a nationally recognized overnight
courier service, with postage and fees prepaid, addressed to the other party at
the address shown below that party’s signature to the Grant Notice or at such
other address as such party may designate in writing from time to time to the
other party.


 


(a) 
Description of Electronic Delivery.  The Plan
documents, which may include but do not necessarily include: the Plan, the
Grant Notice, this Agreement, the Plan Prospectus, and any reports of the
Company provided generally to the Company’s stockholders, may be delivered to
the Awardee electronically.  In addition,
the Awardee may deliver electronically the Grant Notice to the Company or to
such third party involved in administering the Plan as the Company may
designate from time to time.  Such means
of electronic delivery may include but do not necessarily include the delivery
of a link to a Company intranet or the Internet site of a third party involved
in administering the Plan, the delivery of the document via e-mail or such
other means of electronic delivery specified by the Company.


 


(b) 
Consent to Electronic Delivery. 
The Awardee acknowledges that the Awardee has read Section 0 of
this Agreement and consents to the electronic delivery of the Plan documents
and Grant Notice, as described in Section 0.  The Awardee acknowledges that he or she may
receive from the Company a paper copy of any documents delivered electronically
at no cost to the Awardee by contacting the Company by telephone or in writing.  The Awardee further acknowledges that the
Awardee will be provided with a paper copy of any documents if the attempted
electronic delivery of such documents fails. 
Similarly, the Awardee understands that the Awardee must provide the
Company or any designated third party administrator with a paper copy of any
documents if the attempted electronic delivery of such documents fails.  The Awardee may revoke his or her consent to
the electronic delivery of documents described in Section 0 or may change
the electronic mail address to which such documents are to be delivered (if
Awardee has provided an electronic mail address) at any time by notifying the
Company of such revoked consent or revised e-mail address by telephone, postal
service or electronic mail.  Finally, the
Awardee understands that he or she is not required to consent to electronic
delivery of documents described in Section 0.


 


12.6  Integrated Agreement.  The Grant Notice, this Agreement and the
Plan, together with any employment, service or other agreement between the
Awardee and the Company or an Affiliate referring to the Award, shall
constitute the entire understanding and agreement of the Awardee and the
Company or an Affiliate with respect to the subject matter contained herein or
therein and supersede any prior agreements, understandings, restrictions,
representations, or warranties among the Awardee and the Company or an
Affiliate with respect to such subject matter other than those as set 


 

















 


forth or provided for
herein or therein.  To the extent
contemplated herein or therein, the provisions of the Grant Notice, this
Agreement and the Plan shall survive any settlement of the Award and shall
remain in full force and effect.


 


12.7  Applicable Law.  This Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.


 


12.8  Counterparts.  The Grant Notice may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.