**Exhibit 10.9**

 

**SRS LABS, INC.**

**2006STOCK INCENTIVE PLAN**

**StockOption Award Agreement**

You are herebyawarded the following stock option (the “Option”) to purchase Shares ofSRS Labs, Inc. (the “Company”), subject to the terms and conditions setforth in this Stock Option Award Agreement (the “Award Agreement”) andin the SRS Labs, Inc. 2006 Stock Incentive Plan (the “Plan”), which isattached hereto as ***Exhibit A***. You should carefully review these documents, and consult with yourpersonal financial advisor, before exercising this Option.

By executing thisAward Agreement, you agree to be bound by all of the Plan’s terms andconditions as if they had been set out verbatim below.  In addition, you recognize and agree that alldeterminations, interpretations, or other actions respecting the Plan and thisAward Agreement will be made by the Company’s Board of Directors or anyCommittee appointed by the Board to administer the Plan, and shall (in theabsence of material and manifest bad faith or fraud) be final, conclusive andbinding on all parties, including you and your successors in interest.  Terms that begin with initial capital lettershave the special meanings set forth in the Plan or in this Award Agreement(unless the context indicates otherwise).

1.**                     SpecificTerms**.** **This Option shall have, and beinterpreted according to, the following terms, subject to the provisions of thePlan in all instances:
| 1.1    |   | Your Name:                          |   |   |                         |
|--------|--------|-------------------------------------|--------|--------|------------------------------|
|   |   |                                |   |   |                         |
| 1.2    |   | Type of Stock Option:               |   | o      | Incentive Stock Option (ISO) |
|   |   |                                |   |   |                         |
|   |   |                                |   | o      | Non-Incentive Stock Option   |
| 1.3    |   | Number of Shares subject to Option: |   |   |                         |
|   |   |                                |   |   |                         |
| 1.4    |   | Option Exercise Price per Share:    |   |   |                         |
|   |   |                                |   |   |                         |
| 1.5    |   | Grant Date:                         |   |   |                         |

 

1.6                                     VestingSchedule:  *(Establishes your rights to exercise this Option with respect to theNumber of Shares stated above, subject to your Continuous Service after theGrant Date and subject to acceleration per Section 2 below and to anyshareholder approval requirement set forth in the Plan.)*
| Vesting Date | ** ** | **Amount of Shares  Vested on Vesting Date** |
|--------------|------------|----------------------------------------------|
|         |       |                                         |
|         |       |                                         |
|         |       |                                         |
|         |       |                                         |

 

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| 1.7    |   | Reverse Vesting    |   | o      | Allowed in accordance with Section 6 of the Plan                          |
|--------|--------|--------------------|--------|--------|---------------------------------------------------------------------------|
|   |   |               |   |   |                                                                      |
|   |   |               |   | o      | Not allowed                                                               |
|   |   |               |   |   |                                                                      |
| 1.8    |   | Lifetime Transfer: |   | o      | Allowed pursuant to Section 8 below only for  Non-Incentive Stock Options |
|   |   |               |   |   |                                                                      |
| 1.9    |   | Expiration Date:   |   | o      |         years  after Grant Date; or    |
|   |   |               |   |   |                                                                      |
|   |   |               |   | o      | 10 years after Grant Date                                                 |

 

2.                   **Accelerated****Vesting; Change in Corporate Control**.  To the extent you have notpreviously vested in your rights with respect to this Award, your Award willbecome –

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

 ̈                               %vested if your Continuous Service ends due to your retirement at or after youhave attained the age of        and completed atleast         full years of ContinuousService;

 ̈                                %vested if your Continuous Service ends due to an Involuntary Termination thatoccurs within the one-year period following a Change in Control.

3.             **Term of Option**.  The term of the Option will expire at 5:00p.m. (P.D.T. or P.S.T., as applicable) on the Expiration Date.

4.             **Manner of Exercise**.  The Option shall be exercised in the mannerset forth in the Plan, using the exercise form attached hereto as ***Exhibit B*** or another form approved by the Company.  The amount of Shares for which the Option maybe exercised is cumulative; that is, if you fail to exercise the Option for allof the Shares vested under the Option during any period set forth above, thenany Shares subject to the Option that are not exercised during such period maybe exercised during any subsequent period, until the expiration or terminationof the Option pursuant to Sections 2 and 6 of this Award Agreement and theterms of the Plan.  Fractional Shares maynot be purchased.

5.             **Special ISOProvisions**.  Ifdesignated as an ISO, this Option shall be treated as an ISO to the extentallowable under Section 422 of the Code, and shall otherwise be treated as aNon-ISO.  If you sell or otherwisedispose of Shares acquired upon the exercise of an ISO within 1 year from thedate such Shares were acquired or 2 years from the Grant Date, you agree todeliver a written report to the Company within 10 days following the sale orother disposition of such Shares detailing the net proceeds of such sale ordisposition.

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6.             **Termination of Continuous Service**.  If your Continuous Service with the Companyis terminated for any reason, this Option shall terminate on the date on whichyou cease to have any right to exercise the Option pursuant to the terms andconditions set forth in Section 6 of the Plan.

7.             **Designation ofBeneficiary**. Notwithstanding anything to the contrary contained herein or in thePlan, following the execution of this Award Agreement, you may expresslydesignate a beneficiary (the “Beneficiary”) to your interest in theOption awarded hereby.  You shalldesignate the Beneficiary by completing and executing a designation ofbeneficiary agreement substantially in the form attached hereto as ***Exhibit C*** (the “Designationof Beneficiary”) and delivering an executed copy of the Designation ofBeneficiary to the Company.

8.             **Restrictions on Transfer of Awards**.This Award Agreement may not be sold, pledged, or otherwise transferred withoutthe prior written consent of the Committee.  Notwithstanding theforegoing, you may transfer this Option (if allowed under Section 1 for aNon-Incentive Stock Option):

(i)            by instrument to an inter vivos ortestamentary trust (or other entity) in which each beneficiary is a permissiblegift recipient, as such is set forth in subsection (ii) of this Section, or

(ii)           by gift to charitable institutions orby gift or transfer for consideration to any of the following relatives ofyours (or to an inter vivos trust, testamentary trust or other entity primarilyfor the benefit of the following relatives of yours): any child, stepchild,grandchild, parent, stepparent, grandparent, spouse, former spouse, domesticpartner, sibling, niece, nephew, mother-in-law, 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 besubject to all of the terms of this Award Agreement and the Plan.

9.             **Conditions onIssuance of Shares; Transfer Restrictions.**  Notwithstanding any other provision of thePlan or of this Award Agreement: (i) the Committee may condition your receiptof Shares on your execution of a shareholder agreement imposing terms  generally applicable to othersimilarly-situated employee-shareholders; and (ii) any Shares issued pursuantto this Award Agreement shall be non-transferable except in accordance with Section 8above,  until the first day of theseventh month following the termination of your Continuous Service.

10.           **Taxes.**  By signing this Award Agreement, youacknowledge that you shall be solely responsible for the satisfaction of anytaxes that may arise (including taxes arising under Sections 409A or 4999 ofthe Code), and that neither the Company nor the Administrator shall have anyobligation whatsoever to pay such taxes.

11.           **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 by certifiedmail, return receipt requested, addressed to you at the last address that theCompany had for you on its records.  Eachparty may, from time to time, by notice to the other party hereto, specify anew e-mail or home 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 orproperly mailed.

12.           **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

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of the parties hereto and their respective heirs,legatees, legal representatives, successors, transferees, and assigns.

13.           **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 andmaterially affects your rights or obligations under this Award Agreement (withsuch an effect being presumed to arise from a modification that would trigger aviolation of Section 409A of the Code).

14.           **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.

15.           **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.

16.           **Counterparts. **This Award Agreement may beexecuted by the parties hereto in separate counterparts, each of which when soexecuted and delivered shall be an original, but all such counterparts shalltogether constitute one and the same instrument.

17.           **Plan Governs. **By signing this Award Agreement,you acknowledge 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.

18.           **Investment Purposes.** By executingthis Award Agreement, you represent and warrant that any Shares issued to youpursuant to your Options will be held for investment purposes only for your ownaccount, and not with a view to, for resale in connection with, or with anintent in participating directly or indirectly in, any distribution of suchShares within the meaning of the Securities Act of 1933, as amended.

19.           **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 Agreement, couldclaim that he or she was terminated to preclude vesting; (ii) you promise neverto make such a claim; (iii) nothing in this Award Agreement or the Plan conferson you any right to continue an employment, service or consulting relationshipwith the Company, nor shall it affect in any way your right or the Company’sright to terminate your employment, service, or consulting relationship at anytime, with or without Cause; and (iv) the Company would not have granted thisAward to you but for these acknowledgements and agreements.

20.           **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.

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BY YOUR SIGNATURE BELOW, along with the signature ofthe Company’s representative, you and the Company agree that the Option isawarded under and governed by the terms and conditions of this Award Agreementand the Plan.

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

 

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**EXHIBIT A**

**SRS LABS, INC.**

**2006STOCK INCENTIVE PLAN**

**PlanDocument**

 

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**EXHIBIT B**

**SRS LABS, INC.**

**2006STOCK INCENTIVE PLAN**

**Form ofExercise of Incentive Stock Option**
| To:        |   | SRS Labs, Inc. |
|------------|--------|----------------|
| Attention: |   | Secretary      |

 

Dear Sir or Madam:

Theundersigned elects to exercise his/her Incentive Stock Option to purchase              shares of Common Stock of SRS Labs, Inc. (the “Company”) under and pursuant toa Stock Option Award Agreement dated as of                             .

1.    oDelivered herewith is a certified or bank cashier’s or teller’s check and/orshares of Common Stock held by the undersigned for at least six months*, valuedat the closing sale price of the stock on the business day prior to the date ofexercise, as follows:

$                        incash or check

$                        inthe form of          shares of CommonStock, valued at $                      per share

$                     **Total**

2.    oDelivered herewith are irrevocable instructions to a broker approved by theCompany to deliver promptly to the Company the amount of sale or loan proceedsto pay the exercise price.**

Ifmethod 1 is chosen, the name or names to be on the stock certificate or certificatesand the address and Social Security Number of such person(s) is as follows:
| Name:                  |              |
|------------------------|-------------------|
|                   |              |   |
| Address:               |              |
|                   |              |   |
| Social Security Number |              |
|                   |              |   |
|                   | Very truly yours, |
|                   |              |   |   |
|                   |              | By: |   |
| Date                   |              |   |   |
|                   | Name of Optionee: |   |
|                        |                   |  |  |  |  |  |  |  |

 

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* The Committee may waive the six months’ requirementin its discretion.

**The Committeemust approve this method in writing before your election.

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**EXHIBIT C**

**SRS LABS, INC.**

**2006 STOCK INCENTIVE PLAN**

**Designationof Beneficiary**

Inconnection with the Awards designated below that I have received pursuant tothe Company’s 2006 Stock Incentive Plan (the “Plan”), I hereby designatethe person specified below as the beneficiary upon my death of my interest inAwards as defined in the Plan.  Thisdesignation shall remain in effect until revoked in writing by me.

| Name of Beneficiary:  |   |   |
|-----------------------|--------|--------|
|                  |   |   |
| Address:              |   |   |
|                  |   |   |
|                  |   |   |
|                  |   |   |
| Social Security  No.: |   |   |

 

Thisbeneficiary designation relates to any and all of my rights under the followingAward or Awards:

o                  any Award that I have received orever receive under the Plan.

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

Iunderstand that this designation operates to entitle the above-namedbeneficiary, in the event of my death, to any and all of my rights under theAward(s) designated above from the date this form is delivered to the Companyuntil such date as this designation is revoked in writing by me, including bydelivery to the Company of a written designation of beneficiary executed by meon 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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