**Exhibit 10.12**

**SRS LABS, INC.2006 STOCK INCENTIVE PLAN**

**SAR Award Agreement**

You (the “Participant”)are hereby awarded Share Appreciation Rights subject to the terms andconditions set forth in this agreement (the “Award Agreement” or “Award”)and in the SRS Labs, Inc. 2006 Stock Incentive Plan (“Plan”).  A copy of the Plan is attached as ExhibitA.  You should carefully review thesedocuments, and consult with your personal financial advisor, before exercisingthis Award.  This Award is conditioned onyour execution of this Award Agreement.

By executing this AwardAgreement, you agree to be bound by all of the Plan’s terms and conditions asif they had been set out verbatim below. In addition, you recognize and agree that all determinations,interpretations, or other actions respecting the Plan and this Award Agreementwill be made by the Board of Directors (the “Board”) of SRS Labs, Inc.(the “Company”) or any Committee appointed by the Board to administerthe Plan, and shall (in the absence of manifest bad faith or fraud) be final,conclusive and binding on all parties, including you and your successors ininterest.  Capitalized terms are definedin the Plan or in this Award Agreement.

1.             **Specific Terms.**  This portion of your Award is being grantedpursuant to Section 7 of the Plan, and shall have the following terms:
| Name of Participant                              |       |                                                                                                                                           |       |                                         |
|--------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------|
|                                             |       |                                                                                                                                           |       |                                         |
| Date of Award                                    |       |                                                                                                                                           |       |                                         |
|                                             |       |                                                                                                                                           |       |                                         |
| Number of Shares measuring the value of this SAR |       |                     Shares (“SAR Shares”). |       |                                         |
|                                             |       |                                                                                                                                           |       |                                         |
| Base Price for SARs                              |       | $      .        per Share.                                                         |       |                                         |
|                                             |       |                                                                                                                                           |       |                                         |
| **Vesting**                                      | ** ** | **Vesting Date**                                                                                                                               | ** ** | **Amount of Shares  Vested on Vesting Date** |
|                                             |       |                                                                                                                                           |       |                                         |
|                                             |       |                                                                                                                                           |       |                                         |
|                                             |       |                                                                                                                                           |       |                                         |
|                                             |       |                                                                                                                                           |       |                                         |

 
| Lifetime Transfers |   | o  Allowed in accordance with Section 12(b) of the Plan.o Not allowed. |
|--------------------|--------|------------------------------------------------------------------------|

2.             **Accelerated Vesting; Change in Corporate Control.**  To the extent you have not previously vestedin your rights with respect to this Award, your Award will become –

(a)                                          %vested if your Continuous Service ends due to your death or “disability” withinthe meaning of Section 409A of the Code;

(b)                                         %vested if your Continuous Service ends due to your retirement at or after youhave attained the age of          andcompleted at least          full yearsof Continuous Service;

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(c)                                          %if your Continuous Service ends due to an Involuntary Termination that occurswithin the twelve months following a Change in Control.

3.             **Vesting and Exercise of Your Award.** No Shares will be issued and no cash will bepaid to you before your Award vests in accordance with Section 1 or 2 above andis exercised.  To the extent you havevested in this Award, you may exercise it at any time and from time to time inaccordance with the Plan, using the exercise form attached hereto as ExhibitB.  The amount you receive uponexercise will equal the product of –

(a)                                  thenumber of SAR Shares that you designate for exercise, and

(b)                                 theexcess of 100% of the Fair Market Value of a Share on the date of exercise overthe Base Price stated in Section 1 above.

4.             **Form of Payments to You**.  The Company will make any payment to youunder this Award in the form of Shares, with cash paid in lieu of fractionalShares.  Any Shares that you receive willbe free from vesting restrictions (but subject to such legends as the Companydetermines to be appropriate). Notwithstanding the foregoing, the Company will not issue Sharecertificates to you unless you have made arrangements satisfactory to theCompensation Committee to satisfy any applicable tax withholding obligations.

5.             **Failure of Vesting Restrictions**  By executing this Award, you acknowledge andagree that if your Continuous Service terminates under circumstances that donot result in accelerated vesting pursuant to Section 2 above, you willirrevocably forfeit any and all unvested rights under this Award, and thisAward will immediately become null, void, and unenforceable.

6.             **Investment Purposes.**  By executing this Award, you represent andwarrant to the Company that any Shares issued to you pursuant to this Awardwill be for investment for your own account and not with a view to, for resalein connection with, or with an intent of participating directly or indirectlyin, any distribution of such Shares within the meaning of the Securities Act of1933, as amended.

7.             **Designation of Beneficiary**.  Notwithstanding anything to the contrarycontained herein or in the Plan, following the execution of this AwardAgreement, you may expressly designate a beneficiary (the “Beneficiary”)to your interest in the SAR awarded hereby. You shall designate the Beneficiary by completing and executing adesignation of beneficiary agreement substantially in the form attached heretoas Exhibit C (the “Designation of Beneficiary”) and delivering anexecuted copy of the Designation of Beneficiary to the Company.

8.             **Restriction of Transfer**. If lifetime transfers are allowedunder Section 1, your rights under this Award Agreement may not be sold,pledged, or otherwise transferred without the prior written consent of theCompensation Committee. Notwithstanding the foregoing, you may transfer thisAward (i) by instrument to an inter vivos or testamentary trust (or otherentity) in which each beneficiary is a permissible gift recipient, as such isset forth in subsection (ii) of this Section, or (ii) by gift to charitableinstitutions or by gift or transfer for consideration to any of the followingrelatives of yours (or to an inter vivos trust, testamentary trust or otherentity primarily for the benefit of any of the following relatives of yours):any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,former spouse, domestic partner, sibling, niece, nephew, mother-in-law,

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father-in-law, son-in-law, daughter-in-law,brother-in-law, or sister-in-law, and shall include adoptiverelationships.  Any transferee of your rights shall succeed and be subjectto all of the terms of this Award Agreement and the Plan.

9.             **Taxes.** By signing this Award Agreement, you acknowledge that you shall besolely responsible for the satisfaction of any taxes that may arise (includingtaxes arising under Sections 409A or 4999 of the Code), and that neither theCompany nor the Administrator shall have any obligation whatsoever to pay suchtaxes.

10.           **Notices.**  Any notice or communication required orpermitted by any provision of this Award Agreement to be given to you shall bein writing and shall be delivered electronically, personally, or sent bycertified mail, return receipt requested, addressed to you at the last addressthat the Company had for you on its records. Each party may, from time to time, by notice to the other party hereto,specify a new address for delivery of notices relating to this AwardAgreement.  Any such notice shall bedeemed to be given as of the date such notice is personally delivered or properlymailed.

11.           **Binding Effect.**  Except as otherwise provided in this AwardAgreement or in the Plan, every covenant, term, and provision of this AwardAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective heirs, legatees, legal representatives, successors,transferees, and assigns.

12.           **Modifications**.  This Award Agreement may be modified oramended at any time, in accordance with Section 15 of the Plan and providedthat you must consent in writing to any modification that adversely affects anyrights or obligations under this Award Agreement (with such an effect beingpresumed to arise from a modification that would trigger a Section 409Aviolation of the Code).

13.           **Headings.**  Section and other headings contained in thisAward Agreement are for reference purposes only and are not intended todescribe, interpret, define or limit the scope or intent of this AwardAgreement or any provision hereof.

14.           **Severability.**  Every provision of this Award Agreement andof the Plan is intended to be severable. If any term hereof is illegal or invalid for any reason, such illegalityor invalidity shall not affect the validity or legality of the remaining termsof this Award Agreement.

15.           **Counterparts. **This Award Agreement may be executed bythe parties hereto in separate counterparts, each of which when so executed anddelivered shall be an original, but all such counterparts shall togetherconstitute one and the same instrument.

16.           **Plan Governs. **By signing this Award Agreement, youacknowledge that you have received a copy of the Plan and that your AwardAgreement is subject to all the provisions contained in the Plan, theprovisions of which are made a part of this Award Agreement and your Award issubject to all interpretations, amendments, rules and regulations which fromtime to time may be promulgated and adopted pursuant to the Plan.  In the event of a conflict between theprovisions of this Award Agreement and those of the Plan, the provisions of thePlan shall control.

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17.           **Not a Contract of Employment**.  By executing this Award Agreement youacknowledge and agree that (i) any person who is terminated before full vestingof an award, such as the one granted to you by this Award, could claim that youwere terminated to preclude vesting; (ii) you promise never to make such aclaim; (iii) nothing in this Award Agreement or the Plan confers on you anyright to continue an employment, service or consulting relationship with theCompany, nor shall it affect in any way your right or the Company’s right toterminate your employment, service, or consulting relationship at any time,with or without Cause; and (iv) the Company would not have granted this Awardto you but for these acknowledgements and agreements.

18.           **Governing Law.**  The laws of the State of Delaware shallgovern the validity of this Award Agreement, the construction of its terms, andthe interpretation of the rights and duties of the parties hereto.

**BY YOUR SIGNATURE BELOW**,along with the signature of the Company’s representative, you and the Companyagree that this Award is being made under and governed by the terms andconditions of this Award and the Plan.

 
| ** ** |   | **SRS LABS, INC.**                                                                |
|------------|--------|-----------------------------------------------------------------------------------|
|       |   |                                                                              |
|       |   | By:                                                                               |   |   |
|       |   |                                                                              |   |   |
|       |   | Name:                                                                             |   |   |
|       |   |                                                                              |   |   |
|       |   | Title:                                                                            |   |   |
|       |   |                                                                              |   |   |
| ** ** |   | **PARTICIPANT**                                                                   |
|       |   |                                                                              |
|       |   | The undersigned Participant hereby accepts the terms  of this Award and the Plan. |
|       |   |                                                                              |
|       |   | By:                                                                               |   |   |
|       |   |                                                                              |   |   |
|       |   | Name of Participant:                                                              |   |   |
|            |        |                                                                                   |  |  |  |  |  |

 

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**EXHIBIT A**

**SRS LABS, INC.2006 STOCK INCENTIVE PLAN**

**PlanDocument**

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**EXHIBIT B**

**SRS LABS, INC.2006 STOCK INCENTIVE PLAN**

**Form ofShare Appreciation Rights Exercise**

Attention:              SRS Labs, Inc.

Dear Sir or Madam:

The undersigned elects toexercise his/her Share Appreciation Rights with respect to          shares of Common Stock of SRS Labs, Inc. (the “Company”) under and pursuant toan SAR Agreement dated as of                      .

The undersignedrecognizes and agrees that the Company will satisfy its obligations arisingfrom this exercise notice through issuing shares of its Common Stock, with thename or names to be on the stock certificate or certificates and the addressand Social Security Number of such person(s) to be as follows:
| Name:                  |                |   |
|------------------------|---------------------|--------|
|                   |                |   |
| Address:               |                |   |
|                   |                |   |
| Social Security Number |                |   |
|                   |                |   |
|                   | Very truly yours,   |   |   |
|                   |                |   |
|                   |                | By:    |   |   |
| Date                   |                |   |   |
|                   |                |   |
|                   | Name of SAR Holder: |   |   |
|                        |                     |        |  |  |  |  |  |  |  |  |

 

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**EXHIBIT C**

**SRS LABS, INC.2006 STOCK INCENTIVE PLAN**

**Designationof Beneficiary**

In connection with theAwards designated below that I have received pursuant to the Company’s 2006Stock Incentive Plan (the “Plan”), I hereby designate the personspecified below as the beneficiary upon my death of my interest in Awards asdefined in the Plan.  This designationshall remain in effect until revoked in writing by me.
|   | Name of Beneficiary: |   |   |
|--------|----------------------|--------|--------|
|   |                 |   |   |
|   | Address:             |   |   |
|   |                 |   |   |
|   |                 |   |   |
|   |                 |   |   |
|   |                 |   |   |
|   |                 |   |   |
|   | Social Security No.: |   |   |

 

This beneficiarydesignation relates to any and all of my rights under the following Award orAwards:

o                  any Award that Ihave received or ever receive under the Plan.

o                  the                          Award that I received pursuant to an award agreement dated                    ,         between myself and the Company.

I understand that thisdesignation operates to entitle the above-named beneficiary, in the eventof my death, to any and all of my rights under the Award(s) designated abovefrom the date this form is delivered to the Company until such date as thisdesignation is revoked in writing by me, including by delivery to the Companyof a written designation of beneficiary executed by me on a later date.

 
| Date:                |   |         |
|----------------------|--------|--------------|
|                 |   |         |
|                 |   |         |
| By:                  |   |         |
|                 |   | (Signature)  |
|                 |   |         |
| Name of Participant: |   |         |
|                 |   | (Print Name) |

 
| Sworn to before me this                                                                                                                                                                |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|          day  of                 ,  20     |   |   |
|                                                                                                                                                                                   |   |   |
| Notary Public                                                                                                                                                                          |   |   |
| County of                                                                                                                                                                              |   |   |   |
| State of                                                                                                                                                                               |   |   |   |

 

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