**Exhibit 10.1**

 

 

**CONFIDENTIAL**

August9, 2004

 

Mr. Theodore A. Franceschi 

1 Tucson 

Coto de Caza, CA 92679

 

Re:                               *Separation Agreement*

 

DearTed:

 

As you know, SRS Labs has made the decision to terminate youremployment.  This letter sets forth theseverance package that the Company is offering to assure a smooth transitionfor both you and the Company.  Oncesigned by you, this letter will confirm our agreement on the following terms:

 

1.                                       ***SeparationDate:**** *Your employment with the Company terminated on July 31, 2004, and youwere paid on that day all salary and accrued vacation earned through your dateof termination.

 

2.                                       ***Return of Company Property:**** *If you have not already done so, please gather up and return allCompany property in your possession or under your control immediately.  This includes but is not limited to all keys,credit cards, originals and copies of documents, and all office, or telephoneequipment.  You should contact PhilMaynard if you believe the Company still has any of your personal belongings.

 

3.                                       ***SeparationBenefits:**** *In consideration for your signing andfulfilling your obligations under this agreement, the Company will provide thefollowing severance pay and benefits:

 

A.                                   ***Base SeverancePay:**** *The Company will pay you a lump sum equal to six (6)**monthsof your base salary, ($100,000.00) minus appropriate withholding and payrolldeductions, payable on the date this agreement takes effect.

 

B.                                     ***ContingentSeverance Pay:**** *The Company expects that you will commence a searchfor other employment immediately.  If youhave not received an offer of other employment (or comparable consulting work)within six months after your date of termination, the Company will resumepaying you an amount equal to your base salary, through its regular payroll andminus appropriate withholding and payroll deductions, beginning six monthsafter your date of termination and ending on the earlier of (a) three monthsthereafter or (b) until you have received such an offer, provided you havecontinued to search diligently for every reasonable opportunity and kept the Companyinformed of your efforts.

 

C.                                     ***Health CoverageContinuation:**** *If you make a timely election under COBRA to continueyour current group medical coverage after your date of termination, the Companywill reimburse you for the premiums paid by you for such coverage for thenumber of months represented by the base and any contingent severance pay youreceive under this agreement or until you secure other group medical coverageelsewhere, whichever comes first.  Youmay elect to continue your coverage beyond that date at your expense asprovided under COBRA.  The enrollmentforms have been sent separately..All such coverage will be subject to the termsand conditions of the medical plan documents.  Life insurance is not a covered benefit underthe COBRA laws.

 

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D.                                    ***Stock Optionand Other Benefits:**** *Your stock options will vest and beexercisable in accordance withthe terms of the Company stock option plan(s) and your stock optionagreement(s) based on your termination date of July 31, 2004.  Your participation in all other employeebenefits offered by the Company will cease on July 31, 2004.

 

E.                                      ***UnemploymentBenefits:**** *The Company will not contest your eligibilityfor unemployment compensation.

 

F.                                      ***Laptop Computer:**** *The Company will transfer ownership of the Sony Centrino Laptop, serialnumber SO 132029608 and port replicator, you were using at the date ofyour termination, without warranty of any kind.  You will receive a Form 1099-Misc for the netbook value of said computer in the amount of $2,696.23.

 

5.                                       ***Cooperation:**** *You and the Company agree to cooperate in assuring a smooth and orderlytransition of your duties and responsibilities.  During the period represented by the base andcontingent severance pay you receive under this agreement, you will makeyourself reasonably available by phone and email to answer questions andprovide information relating to your duties and responsibilities.

 

6.                                       ***Non-Disparagement:**** *You and the management of the Company will refrain from making any disparagingcomments about the other or from interfering in any way with the other’sbusiness or future employment.  In respondingto inquiries about you from prospective employers, the Company will discloseyour dates of employment, title, final rate of pay, and the fact that you werelaid off as part of a reduction in force, provided you refer all such inquiriesto Phil Maynard in the human resources department.

 

7.                                       ***FinalSettlement:**** *Since these benefits go beyond what you areentitled to under the Company’s policies, you agree that this severanceagreement constitutes a full and final settlement of any and all claims, knownor unknown, of any kind that you or your dependents may have to date againstthe Company or any of its parent or affiliated companies and their officers,directors, shareholders, employees, insurers, agents, successors, or assigns,and you agree to dismiss and never to bring any legal or administrative actionbased on any such claim.  This includesbut is not limited to claims arising from your hiring, employment,compensation, or termination, or arising under equal employment laws such asTitle VII of the Civil Rights Act of 1964, the Age Discrimination in EmploymentAct, the Older Workers Benefit Protection Act, the Americans with DisabilitiesAct, or the California Fair Employment and Housing Act.

 

8.                                       ***Confidentiality:**** *You agree to keep this agreement, including the fact and amount of payand benefits, strictly confidential to the fullest extent allowed by law, butyou may make disclosures as necessary to your spouse, attorney, and accountant.

 

9.                                       ***Trade Secrets:**** *During your employment, you were entrusted with access to highlyconfidential trade secrets of the Company concerning its technology, know-how,customers, bids, prospects, finances, business plans, personnel, and otherareas.  The Confidentiality,Non-Competition and Compliance Agreement you signed on February 4, 2002, a copyof which is attached, shall remain in full force and effect.

 

10.                                 ***Voluntary Agreement:**** *You acknowledge that you are entering into this agreement freely and voluntarily,with a full understanding of its terms including the release of all claims. Iadvise you to consult an attorney if you so desire before signing thisagreement. 

 

11.                                 ***Complete Agreement:**** *You agree that this letter sets forth all of the terms of youragreement with the Company, but that any other agreements you have signed withthe Company concerning confidential information or assignment of inventionsshall remain in effect.

 

12.                                 ***No Admission:**** *You acknowledge that this is not an admission of wrongdoing by you orthe Company, and shall not be used as evidence of guilt.  If you elect not to sign this letter, it willbecome null and void.

 

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Inorder to assure that you are making a voluntary decision, you will havetwenty-one (21) days after you receive this agreement in which to decidewhether or not to sign it, and if you sign it you will have an additionalperiod of seven (7) days in which to revoke your acceptance by notifying theCompany.  This agreement will not takeeffect until that seven day period has ended, at which time you will receiveyour severance pay and benefits.

 

Toconfirm that you agree to these terms, please sign and date the enclosed copyof this letter, and return it to me in the enclosed envelope within thetwenty-one day period.

 

Pleasecall me if you have any questions or comments. I wish you the best in yourfuture endeavors.

 

 
| Very  truly yours,                     |
|----------------------------------------|
|                                   |
| /s/ Thomas C. K. Yuen                  |   |
| Thomas C. K.  Yuen                     |
| President  and Chief Executive Officer |

 

 

Iagree to the terms stated in this letter.

 
| /s/ Theodore A. Franceschi |   Dated: |   8/16/04 |
|----------------------------|--------------------|----------------|
| Theodore  A. Franceschi    |               |

 

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