Document:

EXHIBIT 10.4

 

[FORM OF
SPECIFIED EXECUTIVE OFFICER AGREEMENT]

 

AMENDED &
RESTATED

CHANGE OF
CONTROL SEVERANCE AGREEMENT

 

This Change of Control Severance Agreement
(the “Agreement”) is entered into
this          day of
                           ,
2008 (the “Effective Date”) between
                                    
(“Executive”) and Agilent Technologies, Inc., a Delaware corporation (the “Company”). 
This Agreement supersedes and replaces all prior agreements and
understandings on the matters set forth herein, including but not limited to
the Change of Control Severance Agreement dated
                     ,
200       (as further amended on
                              ,
200       and on
                      ,
200      ) between Executive and the Company.  This Agreement is intended to provide
Executive with the compensation and benefits described herein upon the
occurrence of specific events following a change of control of the ownership of
the Company (defined as “Change of Control”).

 

RECITALS

 

A.            As is the
case with most, if not all, publicly-traded businesses, it is expected that the
Company from time to time may consider or may be presented with the need to
consider the possibility of an acquisition by another company or other change
in control of the ownership of the Company. 
The Board of Directors of the Company (the “Board”) recognizes that such
considerations can be a distraction to Executive and can cause the Executive to
consider alternative employment opportunities or to be influenced by the impact
of a possible change in control of the ownership of the Company on Executive’s
personal circumstances in evaluating such possibilities.  The Board has determined that it is in the
best interests of the Company and its shareholders to assure that the Company
will have the continued dedication and objectivity of Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control of
the Company.

 

B.            The Board believes that it is in the
best interests of the Company and its shareholders to provide Executive with an
incentive to continue his or her employment and to motivate Executive to
maximize the value of the Company upon a Change of Control for the benefit of
its shareholders.

 

C.            The Board believes that it is
important to provide Executive with certain benefits upon Executive’s
termination of employment in certain instances upon or following a Change of
Control that provide Executive with enhanced financial security and incentive
and encouragement to Executive to remain with the Company notwithstanding the
possibility of a Change of Control.

 

D.            At the same
time, the Board expects the Company to receive certain benefits in exchange for
providing Executive with this measure of financial security and incentive under
the Agreement.  Therefore, the Board
believes that the Executive should provide various specific commitments which
are intended to assure the Company that Executive will not direct 

 

1

 

Executive’s
skills, experience and knowledge to the detriment of the Company for a period
not to exceed the period during which payments are being made to Executive
under this Agreement.

 

E.             Certain
capitalized terms used in this Agreement are defined in Article VII.

 

The Company and Executive
hereby agree as follows:

 

ARTICLE I.

 

EMPLOYMENT
BY THE COMPANY

 

1.1          Executive is currently employed as an Executive II level employee of the
Company.

 

1.2          Executive shall be entitled to the
rights and benefits of this Agreement and this Agreement may not be terminated,
except as otherwise provided in Section 4.5, if Executive is an Executive
II level employee of the Company on the date of the occurrence of any event set
forth in Section 2.1(a) or Section 2.2(a) hereof (the “Section 1.2
Date.”) The rights and obligations of the parties hereto contained in Articles
III through VIII shall survive any termination for the longer of (i) twenty-four
(24) months following a Termination Event (as hereinafter defined) (the “Term”)
or (ii) such longer period provided for in this Agreement.

 

1.3          The Company and Executive each
agree and acknowledge that Executive is employed by the Company as an “at-will”
employee and that either Executive or the Company has the right at any time to
terminate or to change Executive’s employment with the Company, including a
change to a position that is no longer an Executive II level employee, with or
without cause or advance notice, for any reason or for no reason.  The Company and Executive wish to set forth
the compensation and benefits which Executive shall be entitled to receive in
the event that Executive’s employment with the Company terminates under the
circumstances described in Article II of this Agreement.

 

1.4          The duties and obligations of the
Company to Executive under this Agreement shall be in consideration for
Executive’s past services to the Company, Executive’s continued employment with
the Company, Executive’s compliance with the obligations described in Section 4.2,
and Executive’s execution of the general waiver and release described in Section 4.3.   The Company and Executive agree that
Executive’s compliance with the obligations described in Section 4.2 and
Executive’s execution of the general waiver and release described in Section 4.3
are preconditions to Executive’s entitlement to the receipt of benefits under
this Agreement and that these benefits shall not be earned unless all such
conditions have been satisfied through the scheduled date of payment.  The Company hereby declares that it has
relied upon Executive’s commitments under this Agreement to comply with the
requirements of Article IV, and would not have been induced to enter into
this Agreement or to execute this Agreement in the absence of such commitments.

 

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ARTICLE II.

 

TERMINATION
EVENTS

 

2.1          Involuntary
Termination Upon or Following Change of Control.

 

(a)           In the event
Executive’s employment with the Company and its subsidiaries is involuntarily
terminated at any time by the Company without Cause either (i) at the time
of or within twenty-four (24) months following the occurrence of a Change of
Control, (ii) within three (3) months prior to a Change of Control,
whether or not such termination is at the request of an “Acquiror”, or (iii) at
any time prior to a Change of Control, if such termination is at the request of
an Acquiror, then, upon such Change of Control, such termination of employment
will be a Termination Event and the Company shall pay Executive the
compensation and benefits described in and at the times provided under Article III.   For all purposes of this Agreement the term “Acquiror”
is either a person or a member of a group of related persons representing such
group that in either case obtains effective control of the Company in the transaction
or a group of related transactions constituting the Change of Control.

 

(b)           In the event
Executive’s employment with the Company and its subsidiaries is either
involuntarily terminated by the Company with Cause at any time, or is
involuntarily terminated by the Company without Cause at any time other than
under the circumstances described in Section 2.1(a), then such termination
of employment will not be a
Termination Event, Executive will not be
entitled to receive any payments or benefits under the provisions of this
Agreement, and the Company will cease paying compensation or providing benefits
to Executive as of Executive’s termination date.

 

2.2          Voluntary
Termination Upon or Following Change of Control.

 

(a)           Executive may
voluntarily terminate his employment with the Company and its subsidiaries at
any time.  In the event Executive
voluntarily terminates his employment within three (3) months of the
occurrence of an event constituting Good Reason and on account of an event
constituting Good Reason, which event occurs either (i) at the time of or
within twenty-four (24) months following the occurrence of a Change of Control,
(ii) within three (3) months prior to a Change of Control, whether or
not such termination is at the request of an Acquiror, or (iii) at any
time prior to a Change of Control, if such triggering event or Executive’s
termination is at the request of an Acquiror, then, upon such Change of
Control, such termination of employment will be a Termination Event and the
Company shall pay Executive the compensation and benefits described in and at
the times provided under Article III.

 

(b)           In the event (i) Executive
voluntarily terminates his employment for any reason other than on account of
an event constituting Good Reason under the circumstances described in Section 2.2(a),
or (ii) Executive’s employment terminates on account of either death or
physical or mental disability, then such termination of employment will not be a Termination Event, Executive will
not be entitled to receive any
payments or benefits under the provisions of this Agreement, and the Company
will cease paying compensation or providing benefits to Executive as of the
Executive’s termination date.

 

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ARTICLE III.

COMPENSATION AND BENEFITS PAYABLE

 

3.1          Right to Benefits. 
If a Termination Event occurs, Executive shall be entitled to receive
the benefits described in this Agreement so long as Executive complies with the
restrictions and limitations set forth in Article IV; provided, further,
that the Executive must execute the employee Release (as defined in Section 4.3);
and the time period for revocation of such Release must have elapsed (an “Effective
Release”), within sixty (60) days of the Termination Event which Release shall
remain in effect at the time that the benefits of this Article III are
paid.  If a Termination Event does not
occur, Executive shall not be entitled to receive any benefits described in
this Agreement, except as otherwise specifically set forth herein.

 

3.2          Salary
Continuation.  Upon the occurrence of a Termination Event,
Executive shall receive one times the sum of Executive’s Base Salary plus
Target Bonus, less any applicable withholding of federal, state or local taxes
Amounts to be paid under this section shall be paid in a lump sum no later than
the later of thirty (30) days after the date of the Termination Event or the
date of an Effective Release.

 

3.3          Health Insurance
Coverage.

 

Upon the occurrence of a Termination Event,
Executive shall be entitled to receive a equal to Forty-Thousand U.S. Dollars
($40,000) (the “Health Expense Benefit”). The purpose of the Health Expense
Benefit is to assist Executive with health­care expenses, including additional
health plan premium payments that may result from the occurrence of a Termination Event.  Amounts
to be paid under this section shall be paid in a lump sum no later than the
later of thirty (30) days after the date of the Termination Event or the date
of an Effective Release.

 

This Section 3.3 provides only for the
Company’s payment of the Health Expense Benefit. 
This Section 3.3 does not affect the rights of Executive or
Executive’s covered dependents under any applicable law with respect to health
insurance continuation coverage.

 

3.4          Stock Award
Acceleration.  Executive’s stock options which are
outstanding as of the date of the Termination Event (the “Stock Options”) shall
become fully vested upon the occurrence of the Termination Event and
exercisable so long as Executive complies with the restrictions and limitations
set forth in Article IV.  The
maximum period of time during which the Stock Options shall remain exercisable,
and all other terms and conditions of the Stock Options, shall be as specified
in the relevant Stock Option agreements and relevant stock plans under which
the Stock Option were granted.  The term “Stock
Options” shall not include any rights of the Executive under the Company’s
employee stock purchase plan.

 

Executive’s restricted stock awards that are outstanding as of the date
of the Termination Event (“Restricted Stock”) and that are not subject to
performance-based vesting shall become fully vested and free from any
contractual rights of the Company to repurchase or otherwise reacquire the
Restricted Stock as a result of Executive’s termination of employment.  All shares of Restricted Stock which have not
yet been delivered to Executive or his designee 

 

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(whether because subject
to joint escrow instructions or otherwise) shall be delivered to Executive or
his designee as soon as administratively feasible after the occurrence of a
Termination Event.  Executive’s
restricted stock awards that are subject to performance-based vesting shall be
covered by the terms of the applicable award agreement.

 

The treatment of Executive’s
other awards, if any, outstanding under the 1999 Stock Plan of the Company, or
any successor plan thereto (together the “Stock Plan”), at the time of the
Termination Event shall be governed by the respective award agreement.
 This includes but is not limited to restricted stock units, awards under
the long-term performance program, and includes awards made pursuant to the
Stock Plan which may be settled in cash.

 

3.5          Bonus. 
If a Termination Event occurs, Executive shall receive a pro-rated bonus
under any bonus plan applicable to Executive, which is in place at the time of
the Termination Event for the performance period in which the Termination Event
occurs.  The amount of the bonus shall be
calculated under the terms of such bonus program as established by the Company,
including whether or not, or to what degree, any performance-based conditions
have been met, and shall be equal to the amount of the bonus the Executive
would have been paid under the terms of such bonus program had the Executive
continued his employment with the Company until the end of such performance
period multiplied by a fraction in which (i) the numerator is the number
of days from and including the first day of the performance period until and
including the date of the Termination Event, and (ii) the denominator is
the number of days in the performance period. 
Such bonus shall be paid on the date Executive would have received the
bonus if the Termination Event had not occurred during such performance period;
provided, however, that in any event such bonus will be paid no later than two
and one-half (2 1⁄2) months after the end of the calendar year in which the
Termination Event occurs.    Executive’s
rights to the payment provided in this Section 3.5 shall not be terminated
by the application of Section 4.2 of this Agreement.  This Section 3.5  shall not apply to awards pursuant to the
Stock Plan.

 

3.6          Mitigation. 
Except as otherwise specifically provided herein, Executive shall not be
required to mitigate damages or the amount of any payment provided under this
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment provided for under this Agreement be reduced by any compensation earned
by Executive as a result of employment by another employer or by retirement
benefits after the date of the Termination Event, or otherwise.

 

3.7          Compliance with Section 409A.  In the event that (i) one or more
payments of compensation or benefits received or to be received by Executive
pursuant to this Agreement (“Agreement Payment”) would constitute deferred
compensation subject to Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) and (ii)  Executive is deemed at the time of such
termination of employment to be a “specified employee” under Section 409A(a)(2)(B)(i) of
the Code, then such Payment shall not be made or commence until the earlier of (i) the
expiration of the six (6)-month period measured from the date of Executive’s “separation
from service” (as such term is at the time defined in Treasury Regulations
under Section 409A of the Code) with the Company or (ii) such earlier
time permitted under Section 409A of the Code and the regulations or other
authority promulgated thereunder; provided, however, that such deferral shall
only be effected to the extent required to avoid adverse tax treatment to
Executive under Section 409A of the Code, including (without limitation)
the additional twenty percent (20%) tax for which Executive would otherwise be
liable under 

 

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Section 409A(a)(1)(B) of the Code in the absence of such
deferral.  During any period in which an
Agreement Payment to Executive is deferred pursuant to the foregoing, Executive
shall be entitled to interest on the deferred Agreement Payment at a per annum
rate equal to the highest rate of interest applicable to six (6)-month
non-callable certificates of deposit with daily compounding offered by the
following institutions:  Citibank N.A.,
Wells Fargo Bank, N.A. or Bank of America, on the date of such separation from
service. Upon the expiration of the applicable deferral period, any Agreement
Payment which would have otherwise been made during that period (whether in a
single sum or in installments) in the absence of this paragraph shall be paid
to Executive or his beneficiary in one lump sum, including all accrued
interest.

 

ARTICLE IV.

LIMITATIONS AND CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT

 

4.1          Reduction in
Payments and Benefits; Withholding Taxes.  The benefits provided
under this Agreement are in lieu of any benefit provided under any other
severance plan, program or arrangement of the Company in effect at the time of
a Termination Event.  The Company shall
withhold appropriate federal, state or local income, employment and other
applicable taxes from any payments hereunder.

 

4.2          Obligations of the
Executive.

 

(a)           For two years
following the Termination Event, Executive agrees not to personally solicit any
of the employees either of the Company or of any entity in which the Company
directly or indirectly possesses the ability to determine the voting of 50% or
more of the voting securities of such entity (including two-party joint
ventures in which each party possesses 50% of the total voting power of the
entity) to become employed elsewhere or provide the names of such employees to
any other company which Executive has reason to believe will solicit such
employees.

 

(b)           Following the
occurrence of a Termination Event, Executive agrees to continue to satisfy his
obligations under the terms of the Company’s standard form of Proprietary
Information and Non-Disclosure Agreement previously executed by Executive (or
any comparable agreement subsequently executed by Executive in substitution or
supplement thereto).  Executive’s
obligations under this Section 4.2(b) shall not be limited to the
Term.

 

(c)           It is expressly
understood and agreed that although Executive and the Company consider the
restrictions contained in this Section 4 to be reasonable, if a final
judicial determination is made by a court of competent jurisdiction that the
time or territory or any other restriction contained in this Agreement is an
unenforceable restriction against Executive, the provisions of this Agreement shall
not be rendered void, but shall be deemed amended to apply as to such maximum
time or territory and to such maximum extent as such court may judicially
determine or indicate to be enforceable. 
Alternatively, if any court of competent jurisdiction finds that any
restriction contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not affect
the enforceability of any of the other restrictions contained herein.

 

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(d)           Executive
acknowledges and agrees that the Company’s remedies at law for a breach or
threatened breach of any of the provisions of Section 4.2(a) or Section 4.2(b) would
be inadequate and, in recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall, with respect to a breach or
threatened breach of Section 4.2(a) or Section 4.2(b) only,
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction, or any other equitable
remedy which may then be available.

 

4.3          Employee Release
Prior to Receipt of Benefits.  Upon the occurrence of a
Termination Event, and prior to the receipt of any benefits under this
Agreement on account of the occurrence of a Termination Event, Executive shall,
as of the date of a Termination Event, execute an employee release
substantially in the form attached hereto as Exhibit A (“Release”) as
shall be determined by the Company.  Such
employee Release shall specifically relate to all of Executive’s rights and
claims in existence at the time of such execution relating to Executive’s
employment with the Company, but shall not include (i) Executive’s rights
under this Agreement; (ii) Executive’s rights under any employee benefit
plan sponsored by the Company; or (iii) Executive’s rights to
indemnification under the Company’s bylaws or other governing instruments or
under any agreement addressing such subject matter between Executive and the
Company or under any merger or acquisition agreement addressing such subject
matter; (iv) Executive’s rights of insurance under any liability policy
covering the Company’s officers or (v) claims which Executive may not
release as a matter of law, including, but not limited to, indemnification
claims under applicable law.  It is
understood that Executive has twenty-one (21) days after receipt of the form of
Release from the Company  to consider whether to execute such employee
Release and Executive may revoke such employee Release within seven (7) days
after execution of such employee in the event that the Executive has not
received a form of Release from the Company by the tenth (10th) day following
the Termination Event, the Executive may execute the form of Release attached
hereto as Exhibit A and that shall be deemed acceptable to the Company. 
In the event Executive does not execute such employee Release within the
twenty-one (21) day period, or if Executive revokes such employee Release
within the seven (7) day period, no benefits shall be payable under this
Agreement and this Agreement shall be null and void.  Nothing in this Agreement shall limit the
scope or time of applicability of such employee Release once it is executed and
not timely revoked.

 

4.4          Golden Parachute
Payments.

 

(a)           In the event that
any payment received or to be received by Executive pursuant to this Agreement
or otherwise but determined without regard to any additional payments required
under this Section 4.4 (“Payment”) would (i) constitute a “parachute
payment” within the meaning of Section 280G of the Code and (ii) but
for this subsection (a), be subject to the excise tax imposed by Section 4999
of the Code, or any comparable federal, state, local or foreign excise tax
(such excise tax, together with any interest and penalties, is hereinafter
collectively referred to as the “Excise Tax”), then, subject to the provisions
of subsection (c) hereof, Executive shall be entitled to receive an
additional payment from the Company (the “Gross-Up Payment”) in such an amount
that after the payment of all taxes (including without limitation, any interest
and penalties on such taxes and the Excise Tax) on the Payment and on the Gross-Up
Payment, Executive shall retain an amount equal to the Payment minus all
applicable taxes on the Payment (excluding the Excise Tax).  Notwithstanding the foregoing, 

 

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Executive shall not be
entitled to receive a Gross-Up Payment if (1) the Payments may be reduced
by an amount sufficient to result in no portion of the Payment retained by
Executive being subject to the Excise Tax (“Reduced Amount”), taking into
account all applicable federal, state, local and foreign income, employment and
other taxes and (2) after reducing the Payment by such Reduced Amount,
Executive would receive, on a pre-tax basis, an amount not less than ninety
percent (90%) of the value of the unreduced Payment on a pre-tax basis (the “Threshold
Payment Level”).  The intent of the
parties is that if Executive is entitled to a Gross-Up Payment pursuant to this
Section 4.4, the Company shall be solely responsible for, and shall pay,
any Excise Tax on the Payment and the Gross-Up Payment and any income,
employment and other taxes (including, without limitation, penalties and
interest) imposed on any Gross-Up Payment. The Company shall be responsible for
any loss of tax deduction that the Company has to forego caused by the Payment
or the Gross-Up Payment.   Any Gross-up Payments pursuant to this Section 4.4
shall be paid not later than the end of the taxable year following the taxable
year in which the determination under this Section 4.4 was made.

 

(b)           Unless the Company
and the Executive otherwise agree in writing, any determination required under
this Section 4.4, and the assumptions to be utilized in arriving at such
determinations, shall be made in writing in good faith by independent tax
counsel designated by the Company and reasonably acceptable to Executive (“Independent
Tax Counsel”).  For purposes of making
the calculations required under this Section 4.4, Independent Tax Counsel
may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code.  The Company and Executive shall furnish to
Independent Tax Counsel such information and documents as Independent Tax
Counsel may reasonably request in order to make a determination under this Section 4.4.  The Company shall bear all costs that
Independent Tax Counsel may reasonably incur in connection with any
calculations contemplated by this Section 4.4.

 

(c)           In the event that
Executive is not entitled to the Gross-Up Payment pursuant to subsection (a) hereof
and instead shall be entitled to receive the Payment reduced by the Reduced
Amount (“Net Payment”), then based on the information provided to Executive and
the Company by Independent Tax Counsel, Executive may, in the Executive’s sole
discretion and within 30 days of the date on which Executive is provided with
the information prepared by Independent Tax Counsel, determine the composition
of the Net Payment (as long as after such determination the value (as
calculated by Independent Tax Counsel in accordance with the provisions of
Sections 280G and 4999 of the Code) of the amounts selected by Executive
hereunder equals the Net Payment).  If
the Internal Revenue Service (the “IRS”) determines the Net Payment is subject
to the Excise Tax, then subsection (d) hereof shall apply, and the
enforcement of subsection (d) shall be the exclusive remedy to the
Company.

 

(d)           If, notwithstanding
any reduction described in subsection (a) hereof, the IRS determines that
Executive is liable for the Excise Tax as a result of the receipt of the Net
Payment, then Executive shall be obligated to pay back to the Company, within
30 days after a final IRS determination, an amount equal to the “Repayment
Amount.”  The “Repayment Amount” shall be
the smallest such amount of the Net Payment, if any, as shall be required to be
paid to the Company so that none of the value retained by Executive from the
Net Payment shall be subject to the Excise Tax. 
Notwithstanding the preceding sentences of this subsection (d), if
reduction of the Net Payment by the Repayment Amount would result in the
receipt by the 

 

8

 

Executive, on a pre-tax
basis, of a portion of the Payment which is less than the Threshold Payment
Level, then Executive shall not be obligated to pay any of the Repayment
Amount, and instead Executive shall be entitled to receive from the Company the
Reduced Amount as well as the full Gross-Up Payment, with the value of that portion
of the Reduced Amount that would have originally been paid in the form of the
equity securities of the Company now payable by delivery of marketable equity
securities that are immediately saleable by Executive in the public securities
market in which such securities are traded.

 

 (e) The elements of the Executive’s
Payments hereunder that constitute the “Reduced Amount” shall be chosen as
follows, but only if necessary to avoid the application of Section  409A
of the Code:  any reduction will first be
made by reducing any cash payments due hereunder subject to Section  409A
of the Code; second by any cash payments due hereunder not subject to Section 409A
of the Code; third by any equity vesting or payments due hereunder subject to Section 
409A of the Code; and lastly by any equity vesting or payments due hereunder
not subject to Section  409A of the Code.

 

4.5          Amendment or
Termination of This Agreement.  The Company may make amendments to this Agreement without the consent of
the Executive which are non-material and which are not adverse to
the Executive to the extent necessary or advisable to comply with laws.  Any other changes to or, terminations of this Agreement may be made only upon the
mutual written consent of the Company and Executive; provided, however, that
only prior to the Section 1.2 Date, the Company may unilaterally terminate
this Agreement following eighteen (18) months’ prior written notice to
Executive, and on or following the Section 1.2 Date this Agreement may not
be terminated.   If the Company makes any changes to this
Agreement pursuant to the first sentence of this Section 4.5 it shall
provide prompt written notice and a copy of such change to the Executive.

 

ARTICLE V.

OTHER RIGHTS AND BENEFITS NOT AFFECTED

 

5.1          Nonexclusivity. 
Nothing in the Agreement shall prevent or limit Executive’s continuing
or future participation in any benefit, bonus, incentive or other plans,
programs, policies or practices provided by the Company and for which Executive
may otherwise qualify, nor shall anything herein limit or otherwise affect such
rights as Executive may have under any stock option or other agreements with
the Company; provided, however, that in accordance with Section 4.1,
any benefits provided hereunder shall be in lieu of any other severance
benefits to which Executive may otherwise be entitled, including without
limitation, under any employment contract or severance plan.  Except as otherwise expressly provided
herein, amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan, policy, practice or program of the Company
at or subsequent to the date of a Termination Event shall be payable in
accordance with such plan, policy, practice or program.

 

5.2          Employment Status. 
This Agreement does not constitute a contract of employment or impose on
Executive any obligation to remain as an employee, or impose on the Company any
obligation (i) to retain Executive as an employee, (ii) to change the
status of 

 

9

 

Executive as an at-will
employee, or (iii) to change the Company’s policies regarding termination
or alteration of employment.

 

ARTICLE VI.

NON-ALIENATION OF BENEFITS

 

No benefit hereunder shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to do so shall be void.

 

ARTICLE VII.

DEFINITIONS

 

For purposes of the Agreement, the following
terms shall have the meanings set forth below:

 

7.1          “Agreement”
means this Change of Control Severance Agreement.

 

7.2          “Base
Salary” means Executive’s annual salary (excluding bonus, any other
incentive or other payments and stock option exercises) from the Company at the
time of the occurrence of the Change of Control or a Termination Event,
whichever is greater.

 

7.3          “Cause”
means misconduct, including but not limited to: (i) conviction of any
felony or any crime involving moral turpitude or dishonesty which has a
material adverse effect on the Company’s business or reputation; (ii) repeated
unexplained or unjustified absences from the Company; (iii) refusal or
willful failure to act in accordance with any specific lawful direction or
order of the Company or stated written policy of the Company which has a
material adverse effect on the Company’s business or reputation; (iv) a
material and willful violation of any state or federal law which if made public
would materially injure the business or reputation of the Company as reasonably
determined by the Board; (v) participation in a fraud or act of dishonesty
against the Company which has a material adverse effect on the Company’s
business or reputation; (vi) conduct by Executive which the Board
determines demonstrates gross unfitness to serve; or (vii) intentional,
material violation by Executive of any contract between Executive and the
Company or any statutory duty of Executive to the Company that is not corrected
within thirty (30) days after written notice to Executive thereof.   Whether or not the actions or omissions of
Executive constitute “Cause” within the meaning of this Section 7.3 shall
be decided by the Board based upon a reasonable good faith investigation and
determination.  Physical or mental
disability shall not constitute “Cause.”

 

7.4          “Change
of Control” means the occurrence of any of the following events:

 

(i)    The
sale, exchange, lease or other disposition or transfer of all or substantially
all of the consolidated assets of the Company to a person or group (as such
terms are defined or described in Sections 3(a)(9) and 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) which
will continue the business of the Company in the future; or

 

(ii)   A
merger or consolidation involving the Company in which the shareholders of the
Company immediately prior to such merger or consolidation are not the
beneficial owners

 

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(within the meaning of Rules 13d-3 and 13d-5 promulgated under the
Exchange Act) of more than 75% of the total voting power of the outstanding
voting securities of the corporation resulting from such transaction in
substantially the same proportion as their ownership of the total voting power
of the outstanding voting securities of the Company immediately prior to such
merger or consolidation; or

 

(iii)          The acquisition of beneficial
ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated under
the Exchange Act) of at least 25% of the total voting power of the outstanding
voting securities of the Company by a person or group (as such terms are defined
or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act).

 

7.5           “Company”
means Agilent Technologies, Inc., a Delaware corporation, and any
successor thereto.

 

7.6          “Good
Reason” means (i) a more than $10,000 reduction of Executive’s
rate of compensation as in effect immediately prior to the Effective Date of
this Agreement or in effect immediately prior to the occurrence of a Change of
Control, whichever is greater, other than reductions in Base Salary that apply
broadly to employees of the Company or reductions due to varying metrics and
achievement of performance goals for different periods under variable pay
programs; (ii) either (A) failure to provide a package of benefits
which, taken as a whole, provides substantially similar benefits to those in
which the Executive is entitled to participate immediately prior to the
occurrence of the Change of Control (except that employee contributions may be
raised to the extent of any cost increases imposed by third parties) or (B) any
action by the Company which would significantly and adversely affect Executive’s
participation or reduce Executive’s benefits under any of such plans in
existence the day prior to the Change of Control, other than changes that apply
broadly to employees of the Company; (iii) change in Executive’s duties,
responsibilities, authority, job title, or reporting relationships resulting in
a significant diminution of position, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith which is remedied
by the Company within thirty (30) days after notice thereof is given by
Executive; (iv) request that Executive relocate to a worksite that is more
than 35 miles from his prior worksite, unless Executive accepts such relocation
opportunity; (v) failure or refusal of a successor to the Company to
assume the Company’s obligations under this Agreement, as provided in Section 8.7;
or (vi) material breach by the Company or any successor to the Company of
any of the material provisions of this Agreement.  For purposes of clause (iii) of the
immediately preceding sentence, Executive’s duties, responsibilities,
authority, job title or reporting relationships shall not be considered to be
significantly diminished (and therefore shall not constitute “Good Reason”) so
long as Executive continues to perform substantially the same functional role
for the Company as Executive performed immediately prior to the occurrence of
the Change of Control, even if the Company becomes a subsidiary or division of
another entity.

 

7.7          “Target Bonus”
means that amount (expressed as a percentage of Executive’s Base Salary) equal
to Executive’s “target bonus” as defined under the Company’s Performance-Based
Compensation Plan for Covered Employees (or the comparable term or standard
under the Company’s cash incentive plan in effect at the time of Executive’s
Termination Event if the Performance-Based Compensation Plan for Covered
Employees is no longer in effect at such time) as set for the Executive by the
Compensation Committee of the Board of Directors or other

 

11

 

authorized body, covering
the twelve-month period ending at the end of the performance period during
which the Executive’s Termination Event occurs.

 

7.8            “Termination
Event” means an involuntary termination of employment described in Section 2.1(a) or
a voluntary termination of employment described in Section 2.2(a).

 

7.9          Termination of
employment  for purposed of this
Agreement means a separation from service within the meaning of Treasury
Regulation § 1.409A-1(h).  The Executive
shall not be deemed to have separated from service if the Executive continues
to provide services to the Company at an annual rate that is fifty percent or
more of the services rendered, on average, during the immediately preceding
three full years of employment with the Company (or if employed by the Company
less than three years, such lesser period); provided, however, that a
separation from service will be deemed to have occurred if the Executive
service with the Company is reduced to an annual rate that is less than twenty
percent of the services rendered, on average, during the immediately preceding
three full years of employment with the Company (or if employed by the Company
less than three years, such lesser period). For purposes of this Section 7.9
only and for determining whether a Executive has experienced a separation from
service, the “Company” shall mean the Company and its affiliates that are
treated as a single employer under section 414(b) or (c) of the Code.

 

ARTICLE VIII.

GENERAL PROVISIONS

 

8.1          Notices. 
Any notices provided hereunder must be in writing and such notices or
any other written communication shall be deemed effective upon the earlier of
personal delivery (including personal delivery by telex or facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive’s address as listed in the
Company’s payroll records.  Any payments
made by the Company to Executive under the terms of this Agreement shall be
delivered to Executive either in person or at such address as listed in the
Company’s payroll records.

 

8.2          Severability. 
It is the intent of the parties to this Agreement that whenever possible,
each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provisions had
never been contained herein.

 

8.3          Waiver. 
If either party should waive any breach of any provisions of this
Agreement, that party shall not thereby be deemed to have waived any preceding
or succeeding breach of the same or any other provision of this Agreement.

 

8.4          Complete Agreement. 
This Agreement, including Exhibit A, constitutes the entire
agreement between Executive and the Company and it is the complete, final, and
exclusive

 

12

 

embodiment of their
agreement with regard to this subject matter. 
It is entered into without reliance on any promise or representation
other than those expressly contained herein.

 

8.5          Counterparts. 
This Agreement may be executed in separate counterparts, any one of
which need not contain signatures of more than one party, but all of which
taken together will constitute one and the same Agreement.

 

8.6          Headings. 
The headings of the Articles and Sections hereof are inserted for
convenience only and shall neither be deemed to constitute a part hereof nor to
affect the meaning thereof.

 

8.7          Successors and
Assigns.  This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except
that Executive may not delegate any of Executive’s duties hereunder and may not
assign any of Executive’s rights hereunder without the written consent of the
Company, which consent shall not be withheld unreasonably.  Any successor to the Company (whether direct
or indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement in the same manner
and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. 
For all purposes under this Agreement, the term “Company” shall include
any successor to the Company’s business and/or assets, whether or not such
successor executes and delivers an assumption agreement referred to in the
preceding sentence or becomes bound by the terms of this Agreement by operation
of law or otherwise.

 

8.8          Attorney Fees. 
If either party hereto brings any action to enforce such party’s rights
hereunder, the prevailing party in any such action shall be entitled to recover
such party’s reasonable attorneys’ fees and costs incurred in connection with
such action.

 

8.9          Arbitration. 
In order to ensure rapid and economical resolution of any dispute which
may arise under this Agreement, Executive and the Company agree that any and
all disputes or controversies, arising from or regarding the interpretation,
performance, enforcement or termination of this Agreement shall submitted to
JAMS for non-binding mediation.  If
complete agreement cannot be reached within 60 days after the date of
submission to mediation, any remaining issues will be submitted to JAMS to be
resolved by final and binding arbitration under the JAMS Arbitration Rules and
Procedures for Employment Disputes.  The
reference to JAMS shall refer to any successor to JAMS, if applicable.  BY ENTERING
INTO THIS AGREEMENT, THE COMPANY AND EXECUTIVE ACKNOWLEDGE THAT THEY ARE
WAIVING THEIR RIGHT TO JURY TRIAL OF ANY DISPUTE COVERED BY THIS AGREEMENT.

 

8.10        Choice of Law. 
All questions concerning the construction, validity and interpretation
of this Agreement will be governed by the law of the State of California.

 

8.11        Construction of
Agreement.  In the event of a conflict between the text
of the Agreement and any summary, description or other information regarding
the Agreement, the text of the Agreement shall control.

 

13

 

IN WITNESS WHEREOF,
the parties have executed this Agreement effective on the day and year written
above.

 

 

	
  Agilent Technologies, Inc.,
 a Delaware corporation

  	
   

  	
    EXECUTIVE

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Signature

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
										

 

 

Exhibit A: Employee General Release

 

14

 

CONFIDENTIAL

 

Exhibit A

 

GENERAL
RELEASE AND AGREEMENT

 

This General Release and Agreement (the “Agreement”)
is made and entered into by

                                                                           (“Executive”).  The Agreement is part of an agreement between
Executive and Agilent Technologies, Inc. (“Agilent’) to terminate
Executive’s employment with Agilent on terms that are satisfactory both to
Agilent and to Executive.  Therefore,
Executive agrees as follows:

 

1.                                       Executive agrees to attend a Functional Exit Interview on
                                ,
20       at which time all company property and
identification will be turned in and the appropriate personnel documents will
be executed.  Thereafter, Executive
agrees to do such other acts as may be reasonably requested by Agilent in order
to effectuate the terms of this agreement. 
Executive agrees to remove all personal effects from his current office
within seven days of signing this agreement and in any event not later than
                          ,
20      .

 

2.                                       Executive agrees not to make any public statement or statements to
the press concerning Agilent, its business objectives, its management
practices, or other sensitive information without first receiving Agilent’s
written approval.  Executive further
agrees to take no action which would cause Agilent or its employees or agents
any embarrassment or humiliation or otherwise cause or contribute to Agilent’s
or any such person’s being held in disrepute by the general public or Agilent’s
employees, clients, or customers.

 

3.                                     Executive, on behalf of Executive’s heirs, estate, executors,
administrators, successors and assigns does fully release, discharge, and agree
to hold harmless Agilent, its officers, agents, employees, attorneys,
subsidiaries, affiliated companies, successors and assigns from all actions,
causes of action, claims, judgments, obligations, damages, liabilities, costs,
or expense of whatsoever kind and character which he may have, including but not limited to;

 

a.                                       any claims relating to employment discrimination on account of
race, sex, age, national origin, creed, disability, or other basis, whether or
not arising under the Federal Civil Rights Acts, the Age Discrimination in
Employment Act, California Fair Employment and Housing Act, the Rehabilitation
Act of 1973, the Americans With Disabilities Act, any amendments to the
foregoing laws, or any other federal, state, county, municipal, or other law,
statute, regulation or order relating to employment discrimination;

 

b.                                      any claims relating to pay or leave of absence arising under the
Fair Labor Standards Act, the Family Medical Leave Act, and any similar laws
enacted in California;

 

c.                                       any claims for reemployment, salary, wages, bonuses, vacation pay,
stock options, acquired rights, appreciation from stock options, stock
appreciation rights, benefits or other compensation of any kind; 

 

1

 

d.                                      any claims relating to, arising out of, or connected with
Executive’s employment with Agilent, whether or not the same be based upon any
alleged violation of public policy; compliance (or lack thereof) with any
internal Agilent policy, procedure, practice or guideline; or any oral,
written. express, and/or implied employment contract or agreement, or the
breach of any terms thereof, including but not limited to, any implied covenant
of good faith and fair dealing; or any federal, state, county or municipal law,
statute, regulation, or order whether or not relating to labor or employment; and

 

e.                                 any claims relating to, arising out of, or connected with any
other matter or event occurring prior to the execution of this Agreement
whether or not brought before any judicial, administrative, or other tribunal.

 

The foregoing release shall not apply to (i) Executive’s
rights under the Amended and Restated Change of Control Severance Agreement
between Executive and the Company; (ii) Executive’s rights under any
employee benefit plan sponsored by the Company; (iii) Executive’s rights
to indemnification under the Company’s bylaws or other governing instruments or
under any agreement addressing such subject matter between Executive and the
Company or under any merger or acquisition agreement addressing such subject
matter; (iv) Executive’s rights of insurance under any liability policy
covering the Company’s officers or (v) claims which Executive may not
release as a matter of law, including, but not limited to, indemnification
claims under applicable law.

 

4.                                     Executive represents and warrants that Executive has not assigned
any such claim or authorized any other person or entity to assert such claim on
Executive’s behalf.  Further, Executive
agrees that under this Agreement Executive waives any claim for damages
incurred at any time in the future because of alleged continuing effects of
past wrongful conduct involving any such claims and any right to sue for
injunctive relief against the alleged continuing effects of past wrongful
conduct involving such claims.

 

5.                                     In entering into this Agreement, the parties have intended that
this Agreement be a full and final settlement of all matters, whether or not
presently disputed, that could have arisen between them.

 

6.                                     Executive understands and expressly agrees that
this Agreement extends to all claims of every nature and kind whatsoever, known
or unknown, suspected or unsuspected, past or present and all rights under Section 1542
of the California Civil Code and/or any similar statute or law or any other
jurisdiction are hereby expressly waived. 
Such section reads as follows:

 

“Section 1542.  A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him must have materially affected
his settlement with the debtor.”

 

2

 

7.                                       It is expressly agreed that the claims released pursuant to this
Agreement include all claims against individual employees of Agilent, whether
or not such employees were acting within the course and scope of their
employment.

 

8.                                       Executive understands and agrees that, as a condition of this
Agreement, Executive shall not be entitled to any employment (including
employment as an independent contractor or otherwise) with Agilent, its subsidiaries
or related companies, or any successor, and Executive hereby waives any right,
or alleged right, of employment or re-employment with Agilent.  Executive further agrees not to apply for
employment with Agilent in the future and not to institute or join any action,
lawsuit or proceeding against Agilent, its subsidiaries, related companies or
successors for any failure to employ Executive. 
In the event Executive should secure such employment, it is agreed that
such employment is voidable without cause in the sole discretion of
Agilent.  After terminating Executive’s
employment, should Executive become employed by another company which Agilent
merges with or acquires after the date of this Agreement, Executive may
continue such employment only if Agilent makes offers of employment to all
employees of the acquired or merged company.

 

9.                                       Executive agrees that the terms, amount and fact of settlement
shall be confidential until Agilent Technologies needs to make any required
disclosure of any agreements between Agilent and Executive.  Therefore, except as may be necessary to
enforce the rights contained herein in an appropriate legal proceeding or as
may be necessary to receive professional services from, an attorney,
accountant, or other professional adviser in order for such adviser to render
professional services, Executive agrees not to disclose any information
concerning these arrangements to anyone, including, but not limited to, past,
present and future employees of Agilent, until such time of the public filings.

 

10.           At
Agilent’s request, Executive shall cooperate fully in connection with any legal
matter, proceeding or action relating to Agilent.

 

11.           The
terms of this Agreement are intended by the parties as a final expression of
their agreement with respect to such terms as are included in this Agreement
and may not be contradicted by evidence of any prior or contemporaneous
agreement.  The parties further intend
that this Agreement constitutes the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial or other proceeding, if any, involving this Agreement.  No modification of this Agreement shall be
effective unless in writing and signed by both parties hereto.

 

12.           It
is further expressly agreed and understood that Executive has not relied upon
any advice from Agilent Technologies, Inc. and/or its attorneys whatsoever
as to the taxability, whether pursuant to federal, state, or local income tax
statutes or regulations or otherwise, of the payments made hereunder and that
Executive will be solely liable for all tax obligations, if any, arising from
payment of the sums specified herein and shall hold Agilent Technologies, Inc.
harmless from any tax obligations arising from said payment.

 

13.           If
there is any dispute arising out of or related to this Agreement, which cannot
be settled by good faith negotiation between the parties, such dispute will be
submitted to JAMS for non-binding mediation. 
If complete agreement cannot be reached within 60 days of 

 

3

 

submission to mediation, any remaining
issues will be submitted to JAMS for final and binding arbitration pursuant to
JAMS Arbitration Rules and Procedures for Employment Disputes.  The reference to JAMS shall refer to any
successor to JAMS, if applicable.  BY ENTERING INTO THIS AGREEMENT, EXECUTIVE
ACKNOWLEDGES THAT EXECUTIVE IS WAIVING EXECUTIVE’S RIGHT TO JURY TRIAL OF ANY
DISPUTE COVERED BY THIS AGREEMENT.

 

4

 

14.          The following notice is provided in accordance with
the provisions of Federal Law:

 

You have up to twenty-one days (21) days
from the date this General Release and Agreement is given to you in which to
accept its terms, although you may accept it any time within those twenty-one
(21) days.  You are advised to consult
with an attorney regarding this Agreement. 
You have the right to revoke your acceptance of this Agreement at any
time within seven (7) days from the date you sign it, and this Agreement
will not become effective and enforceable until this seven (7) day
revocation period has expired.  To revoke
your acceptance, you must send a written notice of revocation to Agilent
Technologies, Inc., Attention: Senior Vice President and General Counsel
located at 5301 Stevens Creek Boulevard, MS 1A-11, Santa Clara, CA            by
5:00 p.m. on or before the seventh day after you sign this Agreement.

 

EXECUTIVE
FURTHER STATES THAT EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT WITH THE
ATTORNEY OF EXECUTIVE’S CHOICE, THAT EXECUTIVE HAS CAREFULLY READ THIS
AGREEMENT, THAT EXECUTIVE HAS HAD AMPLE TIME TO REFLECT UPON AND CONSIDER ITS
CONSEQUENCES, THAT EXECUTIVE FULLY UNDERSTANDS ITS FINAL AND BINDING EFFECT,
THAT THE ONLY PROMISES MADE TO EXECUTIVE TO SIGN THIS AGREEMENT ARE THOSE
STATED ABOVE OR IN THAT CHANGE OF CONTROL SEVERANCE AGREEMENT BETWEEN AGILENT
AND EXECUTIVE, AND THAT EXECUTIVE IS SIGNING THIS AGREEMENT VOLUNTARILY.

 

IN WITNESS WHEREOF, this Agreement has
been executed in duplicate originals on the dates indicated below, and shall
become effective as indicated above.

 

 

EXECUTIVE

 

	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
					

 

5Exhibit 10.75

 

EXECUTION COPY

 

STOCK PURCHASE AGREEMENT

 

by and among 

 

DTS, INC., 

as Seller,

 

DTS DIGITAL IMAGES, INC.,

as the Company

 

and 

 

RELIANCE BIG ENTERTAINMENT PRIVATE LIMITED 

as Buyer

 

Dated as of

 

April 4, 2008

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  	
   

  
	
  ARTICLE
  I PURCHASE AND SALE OF THE SHARES

  	
  1

  	
   

  
	
  1.1

  	
  Purchase
  and Sale of the Shares

  	
  1

  	
   

  
	
  1.2

  	
  The
  Purchase Price

  	
  1

  	
   

  
	
  1.3

  	
  Closing

  	
  2

  	
   

  
	
  1.4

  	
  Additional
  Deliverables by Seller

  	
  2

  	
   

  
	
  1.5

  	
  Additional
  Deliveries by Buyer

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  II REPRESENTATIONS AND WARRANTIES OF SELLER

  	
  2

  	
   

  
	
  2.1

  	
  Organization;
  Good Standing; Qualification; Subsidiaries

  	
  3

  	
   

  
	
  2.2

  	
  Authorization

  	
  3

  	
   

  
	
  2.3

  	
  No
  Conflict

  	
  3

  	
   

  
	
  2.4

  	
  Ownership
  and Possession of the Shares

  	
  4

  	
   

  
	
  2.5

  	
  Capitalization

  	
  4

  	
   

  
	
  2.6

  	
  Judgments;
  Litigation

  	
  4

  	
   

  
	
  2.7

  	
  Intellectual
  Property and Proprietary Rights

  	
  4

  	
   

  
	
  2.8

  	
  Employees
  and Independent Contractors

  	
  6

  	
   

  
	
  2.9

  	
  Financial
  Statements

  	
  6

  	
   

  
	
  2.10

  	
  Changes

  	
  7

  	
   

  
	
  2.11

  	
  Material
  Contracts

  	
  8

  	
   

  
	
  2.12

  	
  Compliance
  with Laws and Permits

  	
  9

  	
   

  
	
  2.13

  	
  Taxes

  	
  9

  	
   

  
	
  2.14

  	
  Brokers

  	
  11

  	
   

  
	
  2.15

  	
  Sufficiency
  of Assets

  	
  11

  	
   

  
	
  2.16

  	
  Customers

  	
  12

  	
   

  
	
  2.17

  	
  Environmental
  Matters

  	
  12

  	
   

  
	
  2.18

  	
  Disclosure
  of Confidential Information

  	
  12

  	
   

  
	
  2.19

  	
  No Other
  Representations or Warranties

  	
  12

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  III REPRESENTATIONS AND WARRANTIES OF BUYER

  	
  12

  	
   

  
	
  3.1

  	
  Organization
  and Qualification

  	
  12

  	
   

  
	
  3.2

  	
  Authorization

  	
  12

  	
   

  
	
  3.3

  	
  No
  Conflict

  	
  13

  	
   

  
	
  3.4

  	
  Legal
  Proceedings

  	
  13

  	
   

  
	
  3.5

  	
  Funding

  	
  13

  	
   

  
	
  3.6

  	
  Investment
  Intent

  	
  13

  	
   

  
	
  3.7

  	
  Brokers

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV COVENANTS

  	
  14

  	
   

  
	
  4.1

  	
  Employee
  Matters

  	
  14

  	
   

  
	
  4.2

  	
  Tax
  Matters; Cooperation

  	
  15

  	
   

  
	
  4.3

  	
  Confidentiality

  	
  15

  	
   

  
	
  4.4

  	
  Use of
  DTS Name and Marks

  	
  15

  	
   

  
	
   

  	
   

  	
   

  	
   

  

i

 

	
  ARTICLE
  V SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES

  	
  16

  	
   

  
	
  5.1

  	
  Survival

  	
  16

  	
   

  
	
  5.2

  	
  Indemnification

  	
  16

  	
   

  
	
  5.3

  	
  Indemnification
  Procedures

  	
  16

  	
   

  
	
  5.4

  	
  Limitations

  	
  17

  	
   

  
	
  5.5

  	
  Indemnification
  is Sole and Exclusive Remedy

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI MISCELLANEOUS

  	
  18

  	
   

  
	
  6.1

  	
  Rules of
  Construction

  	
  18

  	
   

  
	
  6.2

  	
  Further
  Actions

  	
  18

  	
   

  
	
  6.3

  	
  Expenses

  	
  18

  	
   

  
	
  6.4

  	
  Entire
  Agreement

  	
  18

  	
   

  
	
  6.5

  	
  Descriptive
  Headings; Definitions

  	
  18

  	
   

  
	
  6.6

  	
  Notices

  	
  18

  	
   

  
	
  6.7

  	
  Governing
  Law

  	
  19

  	
   

  
	
  6.8

  	
  Assignment

  	
  19

  	
   

  
	
  6.9

  	
  Waivers
  and Amendments

  	
  19

  	
   

  
	
  6.10

  	
  Third
  Party Rights

  	
  19

  	
   

  
	
  6.11

  	
  Severability

  	
  20

  	
   

  
	
  6.12

  	
  Counterparts

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  

Exhibits

 

	
  Exhibit A

  	
   

  	
  Definition
  of Certain Terms

  
	
  Exhibit B

  	
   

  	
  Consents

  
	
  Exhibit C

  	
   

  	
  Transition
  Services Agreement

  
	
  Exhibit D

  	
   

  	
  Financial
  Statements

  

 

ii

 

Schedules

 

	
  Schedule
  2.1

  	
   

  	
  Qualification

  
	
  Schedule
  2.3(b)

  	
   

  	
  Consents

  
	
  Schedule
  2.7(a)

  	
   

  	
  Owned
  IP Rights

  
	
  Schedule
  2.7(b)

  	
   

  	
  In-Bound
  Licenses

  
	
  Schedule
  2.7(c)

  	
   

  	
  Out-Bound
  Licenses

  
	
  Schedule
  2.7(h)

  	
   

  	
  Assignment
  of Intellectual Property Rights Exceptions

  
	
  Schedule
  2.8(a)

  	
   

  	
  Company
  Employees

  
	
  Schedule
  2.8(c)

  	
   

  	
  Company
  Employees – Severance Obligations

  
	
  Schedule
  2.8(d)

  	
   

  	
  Independent
  Contractors

  
	
  Schedule
  2.10

  	
   

  	
  Changes

  
	
  Schedule
  2.11(a)

  	
   

  	
  Material
  Contracts

  
	
  Schedule
  2.16

  	
   

  	
  Customers

  
	
  Schedule
  2.17

  	
   

  	
  Environmental
  Matters

  
	
  Schedule
  3.3

  	
   

  	
  No
  Conflict

  
	
  Schedule
  A-1

  	
   

  	
  Other
  Permitted Encumbrances

  

 

iii

 

STOCK PURCHASE AGREEMENT

 

THIS
STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as
of April 4, 2008, by and among DTS, Inc., a Delaware corporation (“Seller”),
DTS Digital Images, Inc., a California corporation (the “Company”),
Reliance Big Entertainment Private Limited (“Buyer).  Each of Seller, the Company and Buyer may
hereafter be referred to herein as a “party” or collectively as the “parties.”

 

RECITALS

 

A.                                   Seller owns all
of the issued and outstanding shares of capital stock of the Company as more
particularly set out on in Section 2.5 hereof (the “Shares”) of the
Company.

 

B.                                     The Company is
engaged in the business of enhancing and restoring film, video and broadcast
television content for studios and other commercial content owners (the “Business”).  The term “Business” specifically
excludes activities conducted by the Company’s Affiliates, including activities
incident to Seller’s consumer licensing business and Cinema Business.

 

C.                                     The Board of
Directors of Seller has determined that it is advisable and in the best
interests of the Seller’s stockholders to sell to Buyer, and Buyer desires to
purchase from Seller, the Shares, subject to the terms and conditions set forth
in this Agreement and, in furtherance thereof, the Boards of Directors of each
of Buyer and Seller has approved this Agreement and the transactions
contemplated hereby.

 

D.                                    Unless
otherwise defined herein, for purposes of this Agreement capitalized terms shall
have the meanings ascribed to them in Exhibit A.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the mutual benefits to be derived and the
representations and warranties, conditions and promises contained herein, and
intending to be legally bound hereby, the parties hereby agree as follows:

 

ARTICLE I

PURCHASE AND SALE OF THE SHARES

 

1.1                                 Purchase and
Sale of the Shares.  Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall sell, convey, assign, transfer and
deliver the Shares to Buyer, and Buyer shall purchase and acquire all right,
title and interest of Seller in and to the Shares.

 

1.2                                 The Purchase
Price.  The purchase price for the Shares shall be an
amount of cash equal to U.S.$7,500,000 (the “Purchase Price”) and shall
be paid to Seller at the Closing in accordance with Section 1.3.

 

 

1.3                                 Closing.  The
purchase and sale of the Shares (the “Closing”) will take place at the
offices of DTS, Inc., 5171 Clareton Drive, Agoura Hills, CA  91301, at 10:00 a.m. (Pacific time) on April 4,
2008 (the “Closing Date”).  At the
Closing, Buyer will pay the Purchase Price to Seller by wire transfer of
immediately available funds to such account as Seller shall designate in
writing to Buyer in exchange for delivery of the Shares.

 

1.4                                 Additional
Deliverables by Seller.  At the Closing, Seller shall deliver to
Buyer:

 

(a)                                  A duly executed
counterpart signature page to this Agreement;

 

(b)                                 A
certificate or certificates representing the Shares, together with a duly
executed stock power to transfer title thereto to Buyer;

 

(c)                                  Duly executed
consents to the assignment of the contracts indicated on Exhibit B
hereto;

 

(d)                                 The financial
statement referred to in Section 2.9 hereof;

 

(e)                                  Forms from the
banking institution at which the Company has its bank account which may be used
by Buyer to change the authorized signatories thereon;

 

(f)                                    A duly executed
counterpart signature page to the Transition Services Agreement in the
form of Exhibit C hereto (the “Transition Services Agreement”);
and

 

(g)                                 Resignations
from the current directors of the Company, which shall be effective as of the
Closing.

 

1.5                                 Additional
Deliveries by Buyer.  At the Closing, Buyer shall deliver to
Seller:

 

(a)                                  A duly executed
counterpart signature page to this Agreement;

 

(b)                                 The Purchase
Price, in accordance with Section 1.3 hereof; and

 

(c)                                  A duly executed
counterpart signature page to the Transition Services Agreement.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller
represents and warrants to Buyer as follows as of the date hereof (or, in the
case of a representation or warranty made as of a specific other date, as of
such other date), subject to such exceptions as are disclosed in a disclosure
schedule delivered by Seller to Buyer contemporaneously with the execution
of this Agreement (the “Disclosure Schedule”).  The Disclosure Schedule exceptions shall
be arranged according to specific sections in this Article II and shall
provide exceptions to, or otherwise qualify, the corresponding section in
this Article II 

 

2

 

and any other section in this Article II where it
is reasonably apparent that the disclosure is relevant to such other section.

 

2.1                                 Organization;
Good Standing; Qualification; Subsidiaries.  Each of Seller and the Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of its state of incorporation.  The
Company has the corporate power and authority to conduct the Business as it is
presently being conducted.  Seller has
delivered to Buyer or its counsel complete and correct copies of the
certificate of incorporation and bylaws or other organizational documents, in
each case, as amended and in effect as of the date hereof, of the Company.  The Company is duly qualified or licensed to
do business and in good standing (to the extent the laws of such jurisdiction(s) contemplate
the concept of “good standing”) in each of the jurisdictions specified in Schedule
2.1.  The Company does not have any
subsidiaries, or own, directly or indirectly, any capital stock or other
ownership, participation or equity interest in any corporation, partnership,
limited liability company, association, joint venture or other entity.  There are no outstanding contractual
obligations or commitments of the Company to acquire or make any investment in
any shares of capital stock or other ownership, participation, or equity
interest in any corporation, partnership, limited liability company,
association, joint venture, or other entity.

 

2.2                                 Authorization.  The
execution and delivery of this Agreement and each agreement, instrument,
certificate and document being or to be executed and delivered pursuant to this
Agreement (each a “Transaction Agreement”) by Seller and the performance
of all obligations hereunder and thereunder by Seller have been duly authorized
by all requisite corporate action on the part of Seller.  Seller has the requisite corporate power and
authority to execute and deliver this Agreement and each Transaction
Agreement.  This Agreement and each
Transaction Agreement to which Seller is a party has been or will be duly
executed and delivered by Seller and is or will be a valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy,
insolvency, moratorium or other similar laws now or hereafter in effect,
relating to or limiting creditors’ rights generally and (b) general
principles of equity (whether considered in an action in equity or at law).

 

2.3                                 No Conflict.  Except for
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, neither the
execution and delivery of this Agreement or any Transaction Agreement by
Seller, nor the consummation of the transactions contemplated hereunder, will:

 

(a)                                  result in the
creation or imposition of any Encumbrance upon the assets of the Company, other
than Permitted Encumbrances;

 

(b)                                 except as set
forth on Schedule 2.3(b), (i) require the consent, approval or
authorization of, or declaration, filing or registration with any Governmental
Entity or other Person to be made or obtained by Seller or the Company, or (ii) constitute
(with the giving of notice or lapse of time, or both) a default under or give
rise to any right of termination, cancellation or acceleration of any material
right or obligation of the Company under any Material Contract, except where
the failure to obtain such consent, approval, authorization, 

 

3

 

declaration, filing or registration, or where
such default, right of termination, cancellation or acceleration, would not
result, individually or in the aggregate, in a Material Adverse Effect; or

 

(c)                                  violate in any
material respect any provision of applicable law relating to Seller or the
Company, other than such violations as would not result, individually or in the
aggregate, in a Material Adverse Effect on (i) the validity or
enforceability of this Agreement or any of the Transaction Agreements, or (ii) Seller’s
ability to convey the Shares or otherwise complete the transactions
contemplated hereunder.

 

2.4                                 Ownership and
Possession of the Shares.  Seller is the record and beneficial owner of
the Shares.  The certificates
representing the Shares are now and at all times during the term hereof shall
be held by Seller or by a nominee or custodian for the sole and exclusive
benefit of Seller, free and clear of any Encumbrance and restriction on
transfer, except for any Encumbrance or restriction on transfer created by this
Agreement or arising under the Securities Act or any applicable state
securities laws.  Except as provided by
this Agreement, no Person has any right to acquire the Shares from Seller.  At Closing, Buyer will acquire title to the
Shares, free and clear of any liens, restrictions, options, voting trusts, or
agreements, proxies, encumbrances, claims or charges incurred by the Company or
Seller.

 

2.5                                 Capitalization.  The
authorized capital stock of the Company consists of 1,000 shares of common
stock (the “Common Stock”).  As of
the date hereof, 100 shares of Common Stock are issued and outstanding and
constitute the Shares.  With the
exception of the Shares, as of the date hereof, there are no outstanding equity
securities of the Company and there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to any equity security of the Company,
or obligating the Company to issue, transfer or sell or cause to be issued,
transferred or sold any equity security of the Company.

 

2.6                                 Judgments;
Litigation.  There is no (a) outstanding judgment,
order, decree, award, stipulation or injunction of any Governmental Entity
currently pending or threatened in writing against the Company or (b) action,
suit, arbitration, hearing, inquiry, proceeding, complaint, charge or
investigation, whether civil, criminal or administrative, by or before any
Governmental Entity or arbitrator or court or mediation or any appeal from any
of the foregoing pending or, to the knowledge of Seller, threatened or
anticipated against the Company (collectively, the “Judgments and Litigation”),
except such Judgments and Litigation as would not have, individually or in the
aggregate, a Material Adverse Effect.

 

2.7                                 Intellectual
Property and Proprietary Rights.

 

(a)                                  Schedule 2.7(a) contains
an accurate and complete list (by name and, where applicable, registration
number and jurisdiction of registration, application, certification or filing)
of all the material Intellectual Property Rights owned by the Company and used
exclusively in connection with the products and services provided by the
Business as conducted as of the date hereof (collectively, the “Owned IP
Rights,” with all such registered Owned IP Rights being referred to herein
as “Registered IP Rights”). 
Except as set forth in Schedule 2.7(a), the Company owns the
entire right, title and interest to all Owned IP Rights free and clear of
Encumbrances (other than Permitted Encumbrances).

 

4

 

(b)                                 Schedule 2.7(b) contains
an accurate and complete list of all licenses, sublicenses and other agreements
material to the Company pursuant to which a third party or Seller authorizes
the Company to use, modify, distribute, or practice any rights under, grant
sublicenses with respect to or incorporate in the Company’s products or
services, any Intellectual Property Rights owned by a third party or Seller (“In-Bound
Licenses”), other than In-Bound Licenses that consist solely of “shrink-wrap”
and similar commercially available end-user licenses, and, with respect to each
such In-Bound License, states whether such In-Bound License is exclusive or
non-exclusive.

 

(c)                                  Schedule 2.7(c) contains
an accurate and complete list of all licenses, sublicenses and other agreements
material to the Company pursuant to which the Company authorizes a third party
or Seller to use, modify, distribute, or practice any rights under or grant
sublicenses with respect to, any Company IP Rights or pursuant to which the
Company grants rights to use or practice any rights under any Intellectual
Property Rights owned by a third party or Seller (“Out-Bound Licenses”),
other than Out-Bound Licenses that consist solely of “shrink-wrap” and
similar commercially available end-user licenses, and, with respect to each
such Out-Bound License, states whether such Out-Bound License is exclusive or
non-exclusive.

 

(d)                                 The Company IP
Rights constitute all the Intellectual Property Rights material to the Business
as currently conducted.

 

(e)                                  All Registered
IP Rights are in good standing, are in material compliance with applicable
legal requirements and are not subject to any unpaid maintenance fees or taxes
or actions falling due within thirty  (30) days after the Closing Date.  To Seller’s knowledge, there are no
proceedings, challenges or claims before any court, tribunal (including the
U.S. Patent and Trademark Office or equivalent authority anywhere in the world)
related to any such Registered IP Rights, other than normal patent prosecution
proceedings.

 

(f)                                    The Company has
not received notice with respect to the validity or enforceability of any
Company IP Right, and, to Seller’s knowledge, no such claim is pending or has
been made or asserted to such effect that has not been resolved.  To Seller’s knowledge, the Company has not
taken any action or failed to take any action that would reasonably be expected
to result in the abandonment, cancellation, forfeiture, relinquishment,
invalidation, waiver or unenforceability of any Company IP Right.  To Seller’s knowledge, no Person has
materially infringed or is materially infringing any Company IP Right or has
otherwise materially misappropriated or is otherwise materially
misappropriating any Company IP Right.

 

(g)                                 The Company has
taken reasonable steps to protect and preserve the confidentiality of all
Company IP Rights not otherwise disclosed in published patents, patent
applications, registered copyrights or public publications (“Company
Confidential Information”).  Use by
and disclosure to employees or others of Company Confidential Information has
been pursuant to the terms of valid and binding written confidentiality and
nonuse/restricted-use agreements or agreements that contain similar
obligations.

 

(h)                                 Except as set
forth on Schedule 2.7(h), to Seller’s knowledge, each current and
former employee and independent contractor of the Company who is or was
involved in, or who has contributed to, the creation or development of any
Owned IP Right has executed and 

 

5

 

delivered (and, to Seller’s knowledge, is in
compliance with) an agreement which provides a valid written assignment to
Seller of all title and rights to all such Owned IP Rights.

 

2.8                                 Employees and
Independent Contractors.

 

(a)                                  Schedule 2.8(a) contains
a true and complete list, as of February 29, 2008, of all employees of the
Company, (collectively, the “Company Employees”), including each such
employee’s (i) name, (ii) title, and (iii) principal location of
employment.  The Seller represents that
no Company Employee has given the Seller written notice that he or she intends
to terminate his or her employment because of the transactions contemplated
hereby or otherwise on or prior to the Closing Date.

 

(b)                                 (i) The
Company does not have a present intention to terminate the employment of any
Company Employee; (ii) all Company Employees have executed the Company’s
form Proprietary Information and Inventions Agreement, a copy of which has been
provided to Buyer; (iii) to the knowledge of Seller, no Company Employee
is a party to or is bound by any employment contract, patent disclosure
agreement, non-competition agreement or other restrictive covenant or other
contract with any third party that would be likely to affect in any material
way the performance by such Company Employee of any of his or her duties or
responsibilities as an employee of the Company; and (iv) to the knowledge
of Seller, no Company Employee is in violation of any term of any employment
contract, patent disclosure agreement, noncompetition agreement, or any other
restrictive covenant with any third party relating to the right of any such
Company Employee to be employed by the Company.

 

(c)                                  Except as
disclosed in Schedule 2.8(c), no Company Employee is entitled to any
severance pay, bonus compensation, acceleration of payment or vesting of any
equity interest, or other payment from Seller or the Company (other than accrued
salary, vacation, or other paid time off in accordance with the policies of the
Company or Seller) as a result of or in connection with the transactions
contemplated by this Agreement or as a result of any termination of employment
on or after the Closing Date.

 

(d)                                 Schedule 2.8(d) contains
a true and complete list, as of February 29, 2008, of all consultants and
other independent contractors who are providing material services to the
Company (the “Independent Contractors”), including (i) each such
Independent Contractor’s name, (ii) type of services being provided by
each Independent Contractor, and (iii) principal location where services
are provided.

 

(e)                                  (i) The
Company is not a party to any collective bargaining agreement or other labor
contract applicable to a Company Employee, (ii) to Seller’s knowledge, no
union has bargaining rights with respect to any Company Employee and there are
no threatened or apparent union organizing activities involving any Company
Employee, (iii) there are no strikes, slowdowns or work stoppages pending
or threatened between the Company and a Company Employee, and (iv) to
Seller’s knowledge, there are no unfair labor practice complaints involving a
Company Employee pending against the Company.

 

2.9                                 Financial
Statements.  Attached hereto as Exhibit D are (a) the
unaudited balance sheet of the Company at December 31, 2007, and the
related unaudited statement of income for 

 

6

 

the
twelve-month period ended December 31, 2007, and (b) the unaudited
balance sheet of the Company at March 31, 2008 (the “Most Recent
Balance Sheet”), in each case prepared in accordance GAAP (except as
indicated therein and for the absence of footnotes and subject to year-end
adjustments which would not, individually or in the aggregate, have a Material
Adverse Effect) consistent with the Company’s past practice.  Except as reflected in such financial
statements, as of the date of the Most Recent Balance Sheet, there existed no
liabilities of the Company required under GAAP to be shown in the financial
statements except such as would not, individually or in the aggregate, have a
Material Adverse Effect.  Since the date
of the Most Recent Balance Sheet, the Company has not incurred any material
liabilities other than in the ordinary course of business.

 

2.10                           Changes.  Except
as described in Schedule 2.10, as contemplated by or as disclosed in
this Agreement, or undertaken in connection with the Restructuring, since the
date of the Most Recent Balance Sheet, the Company has conducted the Business
only in the ordinary course and in a manner materially consistent with past
practice and, since such date, there has not been a Material Adverse
Effect.  Without limiting the foregoing,
since the date of the Most Recent Balance Sheet none of the following have
occurred other than in the ordinary course of business, as undertaken in
connection with the Restructuring, or as would not, individually or in the
aggregate have a Material Adverse Effect:

 

(a)                                  the Company has
not entered into any transaction which was not in the ordinary course of
business;

 

(b)                                 the Company has
not changed or amended in any respect any contract by which Company or any of
its assets or properties are bound or subject, except as contemplated by this
Agreement;

 

(c)                                  there has been
no mortgage, pledge, sale, assignment or transfer of any tangible or intangible
assets of Company, except, with respect to tangible assets, in the ordinary
course of business consistent with past practices;

 

(d)                                 there has been
no damage, destruction or loss (whether or not covered by insurance) affecting
the Business, assets, properties, operations or condition (financial or
otherwise), or results of operations of Company;

 

(e)                                  there has been
no issuance of any bonds, notes or other securities of the Company or any
agreement or commitment therefor (including options, warrants or rights or
agreements or commitments to purchase such securities or grant such options,
warrants or rights);

 

(f)                                    there has been
no declaration or payment of a distribution on, or other distribution with
respect to, or any direct or indirect redemption or acquisition of, any of the
capital stock or other securities of Company or any agreement or commitment
therefor;

 

(g)                                 the Company has
not changed any compensation arrangement or agreement with any of its
employees, officers or independent contractors or changed the

 

7

 

rate
of pay and provision of employee benefits and perquisites of its employees and
independent contractors as a group, including any plan under ERISA;

 

(h)                                 there has been
no change, except in the ordinary course of business, in the contingent
obligations of Company by way of guaranty, endorsement, indemnity, or warranty;

 

(i)                                     there have been
no loans made by the Company to any of its respective officers, employees,
independent contractors or shareholders or their immediate family members, or
any agreement or commitment therefor (except for advances in the ordinary
course of business and consistent with past practice and generally applicable
Company policy);

 

(j)                                     there has been
no waiver or loss of any right of the Company, or the cancellation of any debt,
claim or contract or other agreement held by the Company;

 

(k)                                  there has not
been any satisfaction or discharge of any lien or any payment of any obligation
by Company, except in the ordinary course of business and consistent with past
practices and which is not material to the Business, assets, properties,
operations or condition (financial or otherwise), or results of operations of
Company;

 

(l)                                     there has not
been any change in the accounting methods, practices or policies followed by
the Company or any change in depreciation or amortization policies or rates
theretofore adopted;

 

(m)                               there has not
been any reduction in the form or amount of insurance coverage maintained by
the Company;

 

(n)                                 the Company has
not made any material capital expenditures other than in the ordinary course of
business and no commitments have been made by the Company for any future
capital expenditure; and

 

(o)                                 the Company has
not incurred any material Liability other than in the ordinary course of
business.

 

2.11                           Material
Contracts.

 

(a)                                  Schedule 2.11(a) sets
forth all of the following written agreements to which the Company is a party:

 

(i)                                     any lease of
real property and any lease of personal property with a future payment
obligation in excess of $100,000 per annum;

 

(ii)                                  any contract
for the purchase of materials, supplies, goods, services, equipment or other
assets providing for annual payments by the Company of, or pursuant to which in
2007 the Company paid, in the aggregate $100,000 or more;

 

8

 

(iii)                               any sales,
distribution or other similar agreement providing for the sale by the Company
of materials, supplies, goods, services, equipment or other assets that provide
for annual payments to the Company of, or pursuant to which in 2007 the Company
received, in the aggregate $100,000 or more;

 

(iv)                              any contract
relating to indebtedness for borrowed money or the deferred purchase price of
property (whether incurred, assumed, guaranteed or secured by any asset),
except contracts relating to indebtedness incurred in the ordinary course of
business in an amount not exceeding $100,000;

 

(v)                                 any employment,
severance or consulting agreement with respect to any Company Employee;

 

(vi)                              any contract or
other document that limits the freedom of the Company to compete in any line of
business or with any Person or in any area (collectively with all the
agreements identified in this Section 2.11(a), the “Material Contracts”).

 

(b)                                 To Seller’s
knowledge, each Material Contract that is currently in effect constitutes a
legal, valid and binding agreement of the Company and of each other party
thereto, and is enforceable in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or limiting creditors’ rights generally, and (b) general
principles of equity (whether considered in an action in equity or at
law).  Neither the Company nor, to Seller’s
knowledge, any other party to such Material Contracts, is in violation or
breach of or default under any such Material Contract (or with notice or lapse
of time or both, would be in violation or breach of or default under such
Material Contract) which would result, individually or in the aggregate, in a
Material Adverse Effect.

 

2.12                           Compliance with
Laws and Permits.  To Seller’s Knowledge, the Company is not in
violation of, or in any default under, and no event has occurred that (with
notice or the lapse of time or both) would constitute a violation of or default
under (a) the Company ‘s charter documents or (b) any applicable law,
rule, regulation, ordinance, order, writ, decree or judgment of any
governmental authority, except for such violations or defaults as would not
constitute a Material Adverse Effect. All material Permits held by the Company
that are necessary for the operation of the Business as currently conducted (“Company’s
Permits”) are listed on Schedule 2.12 and are in full force and
effect and good standing, and no written notices have been received relating to
termination or cancellation or withdrawal of such Permits.  The Company is in compliance with the terms
of its Company Permits, except where the failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company. Except as listed in Schedule 2.12, to Seller’s Knowledge, no
investigation or review by any governmental authority with respect to the
Company is pending which would have a Material Adverse Effect.

 

2.13                           Taxes.

 

(a)                                  The Company’s
assets are not subject to any liens for Taxes, except liens for Taxes not yet
due, and Buyer will not become directly or indirectly liable for, and no lien,
claim or encumbrance will be placed upon the Company’s assets with respect to, (i) any
Taxes 

 

9

 

attributable to the ownership or use of the
Company’s assets with respect to periods prior to and including the Closing
Date or (ii) any other Taxes attributable to the actions or activities of
the Company on or prior to the Closing Date, in each case other than Transfer
Taxes and other Taxes included on the Most Recent Balance Sheet.  None of the Company’s assets is a “United
States real property interest” within the meaning of Section 897 of the
Code.

 

(b)                                 With respect to
the Company:

 

(i)                                     All Tax Returns
of the Company required to be filed on or prior to the Closing Date have been
or will be timely filed by the Company or Seller.  All such Tax Returns were or will be correct
and complete in all material respects when filed.

 

(ii)                                  All material
Taxes required to be paid by the Company (whether or not shown on any Tax
Return) have been paid in full.  There is
(A) no claim for Taxes being asserted against the Company that has
resulted in a lien against the property of the Company other than liens for
Taxes not yet due and payable, (B) no audit or pending audit of, or Tax
controversy associated with, any Tax Return of the Company, or of any other
Person where the Company could be held liable for Taxes, being conducted by a
Tax Authority, (C) no extension of any statute of limitations on the
assessment of any Taxes granted by the Company currently in effect, and (D) no
agreement to any extension of time for filing any Tax Return which has not been
filed.

 

(iii)                               The Company has
not been a member of an affiliated group filing a consolidated federal income
Tax Return other than the group the common parent of which is Seller (the “Seller
Group”).  All consolidated income Tax
Returns, including any consolidated or combined state or foreign income Tax
Returns, that were required to be filed by the Seller Group on or prior to the
date hereof and which included the Company were timely filed.  All such Tax Returns were correct and complete
in all material respects when filed.  The
Company will not be a party to any Tax allocation, Tax sharing agreement or
other similar agreement as of the Closing Date nor will the Company have any
liability or potential liability to another party under any such agreement.

 

(iv)                              The Company has
withheld and paid all material Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.

 

(v)                                 No audit is
currently pending with respect to any Tax Return of the Company or of the
Seller Group.  Neither Seller nor the
Company has waived any statute of limitations in respect of Taxes or agreed to
any extension of time for the assessment of any Tax.  No claim is currently pending by an authority
in a jurisdiction where the Company does not file Tax Returns asserting that
the Company is or may be subject to taxation by that jurisdiction.

 

(vi)                              The Company
will not be required to include in income, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any (i) change in method of accounting for
a taxable period ending on or prior to the Closing Date; (ii) “closing
agreement” described in Section 7121 of the Code (or any corresponding or
similar provision of state, local, or foreign tax law);

 

10

 

(iii) intercompany transactions or any
excess loss account described in Treasury Regulations under Section 1502
of the Code (or any corresponding or similar provision of state, local, or
foreign tax law); (iv) installment sale or open transaction disposition
made on or prior to the Closing Date; or (v) prepaid amount received on or
prior to the Closing Date.  The Company
is not required to include any adjustment in taxable income for any taxable
period (or portion thereof) pursuant to Section 481 or 263A of the Code or
any comparable provision under state, local or foreign tax laws as a result of
transactions, events or accounting methods employed prior to the Closing Date.

 

(vii)                           The Company is
not obligated to make any payments, and is not a party to any agreement that
under certain circumstances could obligate it to make any payments that will
not be deductible under Code Section 162(m) or 280G.  The Company has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2).

 

(viii)                        The Company has
disclosed on its Tax Returns any tax reporting position taken in any Tax Return
which could result in the imposition of penalties under Section 6662 of
the Code or any comparable provisions of state, local or foreign law.  The Company has not consummated or
participated in, and is not currently participating in any transaction which was
or is a “tax shelter” transaction as defined in Section 6662, 6011, 6012
or 6111 of the Code or the Treasury Regulations promulgated thereunder or which
was or is a “Listed Transaction” or a “Reportable Transaction” as those terms
are defined in the Code and the Treasury regulations thereunder.  No transaction as defined in Section 6662
of the Code has been reported by the Company and the Company has not taken any
positions which would require a Section 6662 disclosure to avoid
penalties.

 

2.14                           Brokers.  All
negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Seller directly with Buyer without the
intervention of any Person on behalf of Seller in such manner as to give rise
to any valid claim by any Person against Buyer for a finder’s fee, brokerage
commission or similar payment.

 

2.15                           Sufficiency of
Assets.

 

(a)                                  To Seller’s
knowledge, other than commercially available software used to support the
Business, general corporate, support and shared services (including without
limitation information technology, legal, finance and accounting) provided by
Seller, credit support and similar arrangements provided by Seller, and certain
contracts for services generally available commercially that are provided pursuant
to an arrangement by third parties with an Affiliate of the Company, the assets
presently owned, leased or licensed by the Company are sufficient for the
conduct of the Business as presently conducted, consistent with past practice,
except for such assets, which the failure to own, lease or license would not,
individually or in the aggregate, have a Material Adverse Effect.

 

(b)                                 To Seller’s
knowledge, the Company has good title to, a valid leasehold interest in, or
valid rights to use, the assets presently owned, leased or licensed by it free
and clear of all Encumbrances other than Permitted Encumbrances, except for
such failures as would not, individually or in the aggregate, have a Material
Adverse Effect.

 

11

 

(c)                                  To Seller’s
knowledge, the Company’s assets taken as a whole are generally adequate for the
purposes for which they are used by the Company in the ordinary course of the
Business.

 

2.16                           Customers.  Listed in Schedule 2.16
are the names of the ten (10) most significant customers (by revenue) of
the Company for the 12-month period ended December 31, 2007.

 

2.17                           Environmental
Matters. Except as set
forth on Schedule 2.17, (a) the Company has operated in
material compliance with all applicable Environmental Laws, (b) to Seller’s
knowledge, there has been no material generation, use, transportation,
treatment, storage, release or disposal by the Company of any Hazardous
Substances in connection with or relating to the ownership, lease, occupation
or use of the Facilities by the Company in material violation of any applicable
Environmental Laws, (c) to Seller’s knowledge, there is not present in,
on, under or emanating onto or from the Facilities any Hazardous Substance in
violation of any applicable Environmental Laws, and (d) the Company has
not received any actual or threatened notice, demand, or claim that its
operations or the Facilities is in violation of or non-compliance with any
applicable Environmental Laws, except, in all cases, as would not result,
individually or in the aggregate, in a Material Adverse Effect.

 

2.18                           Disclosure of
Confidential Information.  The Company takes reasonable precautions to
safeguard its confidential information. 
To Seller’s knowledge, no material disclosure of Company’s confidential
information has been made except (i) in the ordinary and normal course of
business and (ii) incident to the sales process for the Company, and then
only pursuant to persons that executed nondisclosure or confidentiality
agreements.

 

2.19                           No Other
Representations or Warranties.  EXCEPT AS SPECIFICALLY SET FORTH IN THIS
ARTICLE II, NEITHER SELLER NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES,
AFFILIATES, AGENTS OR REPRESENTATIVES IS MAKING, AND EACH OF THEM HEREBY
EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer
hereby represents and warrants to Seller as follows:

 

3.1                                 Organization
and Qualification.  Buyer is an entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has the power and authority to perform its obligations under
this Agreement.

 

3.2                                 Authorization.  The
execution and delivery of this Agreement and each Transaction Agreement by each
Buyer and the performance by Buyer of its obligations hereunder have been duly
authorized and no other action or approval is necessary for the execution,
delivery or performance of this Agreement and each Transaction Agreement by
Buyer.  Buyer has full right, power,
authority and capacity to execute and deliver this Agreement and each
Transaction Agreement.  This Agreement
and each Transaction Agreement to which Buyer is a party has been or will be
duly executed and delivered by Buyer, and is or will be a 

 

12

 

valid
and binding obligation of each of Buyer, enforceable against Buyer in
accordance with its terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or limiting creditors’ rights generally, and (b) general
principles of equity (whether considered in an action in equity or at law).

 

3.3                                 No Conflict.  Except as
described on Schedule 3.3, neither the execution and delivery of
this Agreement by Buyer nor the consummation of the transactions contemplated
hereunder will:

 

(a)                                  conflict with
or result in a breach by Buyer of, or constitute a default by Buyer under, or
create an event that, with the giving of notice or the lapse of time, or both,
would be a default under or material breach of, any of the terms, conditions or
provisions of (i) any material indenture, mortgage, lease, deed of
trust, pledge, loan or credit agreement, license agreement or any other
material contract, arrangement or agreement to which Buyer is a party or to
which a material portion of Buyer’s assets is subject, (ii) its
certificate of incorporation or bylaws or other organizational documents, or (iii) any
judgment, order, writ, injunction, decree or demand of any Governmental Entity
which materially affects Buyer’s ability to perform its obligations under this
Agreement;

 

(b)                                 result in the
creation or imposition of any Encumbrance upon any material portion of the
assets of Buyer, or which materially affects Buyer’s ability to conduct its
business as conducted prior to the date of this Agreement or perform its
obligations under this Agreement; or

 

(c)                                  require the
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Entity or other Person to be made or obtained by Buyer
in connection with the execution, delivery and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby.

 

3.4                                 Legal
Proceedings.  There is no action, claim, suit or proceeding
pending or, to Buyer’s knowledge, threatened, by or against or affecting Buyer
or Buyer’s Affiliates that challenges, or may have the effect of preventing,
delaying, making illegal or otherwise interfering with the execution and
delivery by Buyer of this Agreement or any of the Transaction Agreements or the
performance of Buyer hereunder or thereunder.

 

3.5                                 Funding.  Buyer
has, and will at the Closing have, sufficient funds to deliver the entire
Purchase Price in cash at the Closing.

 

3.6                                 Investment
Intent.

 

(a)                                  Buyer is
acquiring the Shares for its own account for investment purposes and not with a
view to, or for sale in connection with, any distribution or resale to others
within the meaning of Section 2(11) or Rule 502(d) promulgated
under the Securities Act.  The sale of
the Shares is intended to be exempt from registration under the Securities Act.

 

(b)                                 Buyer hereby
confirms that Seller has made available to Buyer or its representatives all
documents and information that Buyer has requested relating to the Company 

 

13

 

and the Business.  Buyer has not relied on Seller or any of its
Affiliates or representatives for any tax or legal advice in connection with
the purchase of the Shares.

 

(c)                                  Buyer has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Shares.  Buyer has the capacity to protect its own
concerns in connection with the purchase of the Shares.  Buyer is an “accredited investor” as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

3.7                                 Brokers.  All
negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Buyer directly with Seller without the
intervention of any Person on behalf of Buyer in such manner as to give rise to
any valid claim by any Person against Seller or the Company for a finder’s fee,
brokerage commission or similar payment.

 

ARTICLE
IV

COVENANTS

 

4.1                                 Employee
Matters.

 

(a)                                  Employment.

 

(i)                                     If any Company
Employee is discharged or terminated as of or after the Closing, Buyer shall be
responsible for any and all costs for such employee arising from or relating to
such termination.  Buyer shall be
responsible for all liability for all notices or payments due to any employee
as of the Closing Date, and all notices, payments, fines or assessments due to
any governmental entity, pursuant to any applicable foreign, federal, state or
local law, common law, statute, rule or regulation with respect to the
employment, discharge or layoff of employees on or after the Closing, including
the WARN Act and any rules or regulations as have been issued in connection
with the foregoing.

 

(ii)                                  From and after
the Closing, Buyer shall be responsible for, and shall indemnify and hold
harmless Seller and its Affiliates and their officers, directors, employees,
Affiliates and agents and the fiduciaries (including plan administrators) of
the Employee Plans, from and against any and all claims, losses, damages, costs
and expenses (including attorneys’ fees and expenses) and other liabilities and
obligations relating to or arising out of (i) all salaries, wages,
commissions, employee incentive or other compensation, severance, holiday,
vacation, health, dental or retirement benefits accrued but unpaid as of the
Closing and bonuses (including payments due pursuant to any retention bonus
program) due to any employee, (ii) the liabilities for which Buyer or the
Company is responsible under this Section 4.1 or any failure by Buyer or
the Company to comply with the provisions of this Section 4.1, and (iii) any
claims of, or damages or penalties sought by, any employee, or any governmental
entity on behalf of or concerning any employee, with respect to any act or
failure to act by Buyer or the Company to the extent arising from the
employment, discharge, layoff or termination of any employee.

 

14

 

4.2                                 Tax Matters;
Cooperation.

 

(a)                                  Subject to
subsection (b) below, Seller will be responsible for the preparation and
filing of all Tax Returns of the Company required by applicable law to be filed
by the Company with respect to taxable periods that end on or prior to the
Closing Date, provided that Seller shall have the sole responsibility for the
preparation of any combined, consolidated or unitary returns for the periods
ending on or prior to the Closing.

 

(b)                                 Buyer will be
responsible for the preparation and filing of all Tax Returns of the Company
not filed by the Company prior to the Closing, including returns with respect
to periods commencing before and ending after the Closing (a “Straddle
Period Tax”) and with respect to periods that begin after the Closing
Date.  Such Tax Returns shall be true,
complete and correct and prepared in accordance with past practice (in the case
of any Tax Return for a period ending prior to the Closing or any Straddle
Period Tax Return) and applicable law in all material respects.  Buyer will make all payments of Taxes shown
to be due on such Tax Returns.  Buyer
shall not cause the Company to take any position on any Tax Return inconsistent
with past practices of the Company if the effect of such position will or could
result in the Company having any Tax liability for any period ending prior to
or including the Closing Date.

 

(c)                                  Buyer shall be
responsible for paying, shall promptly discharge when due, and shall reimburse,
indemnify and hold harmless Seller from, any sale or use, transfer, value
added, real property gains, excise, stamp, stamp duty, stamp duty reserve tax
(SDRT), or other Taxes imposed by reason of the transfer of the transactions
contemplated hereby (“Transfer Taxes”) and any deficiency, interest or
penalty asserted with respect thereto.

 

(d)                                 Each party
shall (i) provide the other with such assistance as may reasonably be
required in connection with the preparation of any Tax Return and the conduct
of any audit or other examination by any taxing authority or in connection with
judicial or administrative proceedings relating to any liability for Taxes and (ii) retain
and provide the other with all records or other information that may be
relevant to the preparation of any Tax Return, or the conduct of any audit or
examination, or other proceeding relating to Taxes.

 

4.3                                 Confidentiality.  The parties
acknowledge and agree to continue to abide by the terms and conditions of that
certain Confidentiality Agreement dated as of February 21, 2008.

 

4.4                                 Use of DTS Name
and Marks.  From and after the Closing, neither the
Company, Buyer, nor any of its affiliates shall use the name “DTS” or any logo
or trademark incorporating the name “DTS” or any DTS logo (collectively, the “Names
and Marks”) shall cease. The Buyer will, as soon as reasonably practicable
following the Closing, cause the Company to change the name of the Company so
that it does not contain “DTS” or anything confusingly similar and remove or
obliterate all the Names and Marks from its signs, purchase orders, invoices,
sales orders, labels, letterheads, web sites, mail addresses, domain name
services, datalinks, advertisements, shipping documents, and other items and
materials.

 

15

 

ARTICLE V

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES

 

5.1                                 Survival.

 

(a)                                  Except as set forth in Section 5.1(b),
the representations and warranties made in this Agreement shall survive the
Closing until the 547th day after the Closing Date (the “Survival
Date”), after which time such representations and warranties shall
terminate and shall be of no further force or effect.

 

(b)                                 The representations and
warranties set forth in Section 2.13 of this Agreement shall survive until
the third anniversary of the Closing Date (the “Tax Survival Date”),
after which time such representations and warranties shall terminate and shall
be of no further force or effect.

 

5.2                                 Indemnification.

 

(a)                                  Subject to Section 5.4
below, Seller shall defend, indemnify and hold harmless Buyer and its officers
and directors and their successors and permitted assigns, from and against any
and all claims, losses, liabilities, taxes, interest, fines, penalties, suits,
actions, proceedings, demands, actual damages, costs and expenses (including
reasonable attorneys’, accountants’ and experts’ fees and court costs) actually
suffered or incurred by them (collectively, “Losses”) arising out of or
resulting from any breach by Seller, of any representation, warranty or
covenant made by it in this Agreement or any Transaction Agreement.

 

(b)                                 Buyer shall defend,
indemnify and hold harmless Seller and its officers and  directors and their successors and permitted
assigns, from and against any and all Losses actually suffered or incurred by
them arising out of or resulting from any breach by Buyer, of any
representation, warranty or covenant made by it in this Agreement or any
Transaction Agreement

 

5.3                                 Indemnification
Procedures.

 

(a)                                  Third Party Claims.  A party (an “Indemnified Party”)
seeking indemnification shall give prompt notice (a “Notice of Claim”)
to the other party (the “Indemnifying Party”) of any Loss or claim for
indemnification arising under this Article V arising from a third party
claim.  The Notice of Claim shall include
the amount of such claim and a reasonably detailed statement as to the basis
for the assertion of the claim.  Upon
receipt of such notice the Indemnifying Party shall have the right to assume
and to control the defense of any such claim with counsel reasonably acceptable
to such Indemnified Party, at the Indemnifying Party’s own cost and expense,
including the cost and expense of attorneys’ fees and disbursements in
connection with such defense, in which event the Indemnifying Party shall not
be obligated to pay the fees and disbursements of separate counsel for such in
such action.  In the event, however, that
such Indemnified Party’s legal counsel shall advise in writing that defenses
are be available to such Indemnified Party that are different from or in
addition to those available to the Indemnifying Party, in that there could
reasonably be expected to be a conflict of

 

16

 

interest if such Indemnifying Party and the Indemnified Party have
common counsel in any such proceeding, or if the Indemnified Party has not
assumed the defense of the action or proceedings, then such Indemnifying Party
may employ separate counsel to represent or defend such Indemnified Party, and
the Indemnifying Party shall pay the reasonable fees and disbursements of
counsel for such Indemnified Party.  No
settlement of any such claim or payment in connection with any such settlement
shall be made without the prior consent of the Indemnifying Party which consent
shall not be unreasonably withheld.

 

(b)                                 Establishment
and Contesting of Indemnification Liability.  To be effective,  a Notice of Claim must be given promptly to
the Indemnifying Party in accordance with the provisions of Section 6.6
hereof.  Furthermore, the Notice of Claim
must be received by the Indemnifying Part by no later than the Survival
Date or Tax Survival Date, as applicable. 
If the Indemnifying Party contests the claim, the parties shall attempt
in good faith to resolve their differences for a period of at least ten business
days by mutual agreement.  If the parties
are unable to resolve their differences, the Indemnified Party may institute
proceedings as contemplated by Section 6.7.

 

5.4                                 Limitations.

 

(a)                                  Notwithstanding anything
herein to the contrary, Seller shall not be responsible for any Losses until
the cumulative aggregate amount of such Losses exceed $75,000 (the “Damages Deductible”),
and then shall only be liable for Losses in excess of the Damages Deductible,
except for Losses incurred due to the breach of the representations and
warranties in Section 2.13 or Section 2.17 hereof, in which case the
Indemnifying Parties shall be liable back to the first dollar of such Losses.

 

(b)                                 Notwithstanding anything
herein to the contrary, the aggregate amount of Losses for which Seller shall
be liable is $1,000,000; provided, that, such limitation shall
not apply to Losses incurred as a result of breach of the representations and
warranties in Section 2.13 or Section 2.17 hereof.

 

(c)                                  Notwithstanding anything
herein to the contrary, the amount of Losses suffered by an Indemnified Party
shall be reduced by any insurance proceeds realized by and paid to the
Indemnified Party in respect of such claim and shall be reduced by an amount
equal to any Tax benefits attributable to such claim.  An Indemnified Party shall submit all
eligible claims and diligently pursue recovery under all insurance policies
under which any Losses may be insured.

 

(d)                                 Notwithstanding
anything herein to the contrary, no Indemnifying Party shall be liable to or
otherwise responsible for consequential damages, punitive damages or for
diminution in value or lost profits.

 

(e)                                  Notwithstanding
anything herein to the contrary , an Indemnified Party
shall not be entitled to indemnification for any Losses resulting from a breach
of representation or warranty if the Indemnified Party had knowledge of such
breach on or prior to the Closing.

 

5.5                                 Indemnification
is Sole and Exclusive Remedy.  Following the
Closing, the sole and exclusive remedy with respect to any and all claims
relating to a breach of this Agreement 

 

17

 

shall be pursuant to the indemnification provisions set
forth in this Article V.  In furtherance of the foregoing, each of the
parties hereby waives, to the fullest extent permitted under applicable law,
any and all rights, claims and causes of action it may have against the other
parties hereto, arising under or based upon any federal, state, or local or
foreign law.  Notwithstanding anything to
the contrary in this Purchase Agreement, this Section 5.6 shall not limit
a party’s right to specific performance or injunctive relief in connection with
the other party’s breach of its covenants in this Agreement.

 

ARTICLE VI

MISCELLANEOUS

 

6.1                                 Rules of
Construction.  This Agreement has been negotiated by the
parties and is to be interpreted according to its fair meaning as if the
parties had prepared it together and not strictly for or against any party.  All references in this Agreement to sections,
schedules and exhibits are to sections, schedules and exhibits of or to this
Agreement unless expressly otherwise indicated. 
At each place in this Agreement where the context so requires, the
masculine, feminine or neuter gender includes others.  “Including” means “including
without limitation.”  “Or” is
used in the inclusive sense of “and/or.” 
Currency amounts referenced herein, unless otherwise specified, are in
U.S. Dollars.

 

6.2                                 Further Actions.  From time
to time, as and when requested by any party hereto, each other party shall
execute and deliver, or cause to be executed and delivered, such documents and
instruments and shall take, or cause to be taken, such further or other actions
as the requesting party may reasonably deem necessary or desirable to carry out
the intent and purposes of this Agreement.

 

6.3                                 Expenses.  Except as
expressly set forth herein, Seller and Buyer shall each bear their own legal
fees and other costs and expenses with respect to the negotiation, execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereunder.

 

6.4                                 Entire
Agreement.  This Agreement, which includes the schedules
and the exhibits hereto and the other documents, agreements and instruments
executed and delivered pursuant to this Agreement, contains the entire
agreement between the Parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all prior arrangements,
understandings, proposals, prospectuses, projections and related materials with
respect thereto, other than the Confidentiality Agreement dated February 21,
2008, between Buyer and Seller, which is incorporated herein by reference and
shall survive termination of this Agreement in accordance with its terms.

 

6.5                                 Descriptive
Headings; Definitions.  The descriptive headings of this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.

 

6.6                                 Notices.  All notices
or other communications which are required or permitted hereunder shall be in
writing and shall be sufficiently given if (a) delivered personally or (b) sent
by registered or certified mail, postage prepaid, or (c) sent by overnight
courier with a nationally 

 

18

 

recognized
courier, or (d) sent via facsimile confirmed in writing in any of the
foregoing manners, as follows:

 

	
  If
  to Seller:

  	
   

  	
  DTS, Inc.

  
	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
  5171
  Clareton Drive

  
	
   

  	
   

  	
  Agoura
  Hills, CA 91301

  
	
   

  	
   

  	
  Facsimile
  No.: (818) 827-2470

  

 

	
  If
  to Buyer:

  	
   

  	
  c/o
  The Law Offices of Vijayant Pawar

  
	
   

  	
   

  	
  35
  Airport Road, Suite 330

  
	
   

  	
   

  	
  Morristown,
  New Jersey 07960

  
	
   

  	
   

  	
  Facsimile
  No.: (973) 215-2882

  

 

If sent by mail, notice
shall be considered delivered five (5) business days after the date of
mailing, and if sent by any other means set forth above, notice shall be
considered delivered upon receipt thereof. 
Any party may by notice to the other parties change the address or
facsimile number to which notice or other communications to it are to be
delivered or mailed.

 

6.7                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of California without giving effect to the principles of conflicts of law
thereof.  Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any Federal or state court
located in the County of Los Angeles, California in the event any dispute
arises out of this Agreement or any of the transactions contemplated hereby, (b) agrees
that it shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that
it shall not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a Federal or state
court sitting in the County of Los Angeles, California.

 

6.8                                 Assignment.  This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.  This Agreement shall not be assignable by any
Person without the written consent of the other parties and any such purported
assignment by any party without such consent shall be void.

 

6.9                                 Waivers and
Amendments.  Any amendment or supplementation of this
Agreement shall be effective only if in writing signed by each of the parties
hereto.  Any waiver of any term or
condition of this Agreement shall be effective only if in writing signed by the
party giving the waiver.  A waiver of any
breach or failure to enforce any of the terms or conditions of this Agreement
shall not in any way affect, limit or waive a party’s rights hereunder at any
time to enforce strict compliance thereafter with every term or condition of
this Agreement, except to the extent such future rights are specifically included
within the scope of such written waiver.

 

6.10                           Third Party
Rights.  Notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any
shareholder or employee of Buyer, or any 

 

19

 

other
Person (including without limitation any Company Employee, broker or finder),
and this Agreement shall be effective only as between the parties hereto,
their successors and permitted assigns.

 

6.11                           Severability.  If any term
or provision of this Agreement or the application thereof to any circumstance
shall, in any jurisdiction, be invalid or unenforceable, such term or provision
shall be ineffective as to such jurisdiction to the extent of such invalidity
or unenforceability without invalidating or rendering unenforceable such term
or provision in any other jurisdiction, the remaining terms and provisions of
this Agreement or the application of such terms and provisions to circumstances
other than those as to which it is held invalid or enforceable.

 

6.12                           Counterparts. 
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.  Facsimile signatures shall be treated as if
they were originals.

 

[SIGNATURE PAGE FOLLOWS]

 

20

 

IN
WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as
of the date first above written.

 

	
  “SELLER”

  	
  DTS, INC.

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/   Mel Flanigan

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mel Flanigan

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
  “COMPANY”

  	
  DTS DIGITAL IMAGES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/   Mel Flanigan

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mel Flanigan

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
  “BUYER”

  	
  RELIANCE BIG ENTERTAINMENT

  
	
   

  	
  PRIVATE LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anil Arjun

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Anil Arjun

  
	
   

  	
  Title:

  	
  Member

  

 

 

[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

 

 

EXHIBIT A

 

DEFINITION
OF CERTAIN TERMS

 

The terms defined in this Exhibit A, whenever used in this
Agreement (including in any schedule to this Agreement), shall have the
respective meanings indicated below for all purposes of this Agreement, unless
otherwise indicated in this Agreement (or the applicable schedule):

 

“Affiliate”:  with respect
to any Person, any Person directly or indirectly through one or more
intermediaries, that controls, is controlled by, or is under common control
with such other Person

 

“Agreement”:  as defined
in the Preamble

 

“Business”:  as defined in
the Recitals

 

“Cinema Business”:  is
Seller’s business of designing, developing, marketing, licensing, implementing
and supporting technologies, products and services for the distribution and
presentation of content in commercial cinemas

 

“Closing”:  as defined in Section 1.3

 

“Closing Date”:  as
defined in Section 1.3

 

“Code”:  Internal Revenue
Code of 1986, as amended

 

“Company Confidential Information”:  as defined in Section 2.7(g)

 

“Company Employees”:  as
defined in Section 2.8(a)

 

“Company IP Rights”: 
collectively, the Owned IP Rights identified on Schedule 2.7(a) and
the rights of the Company under the In-Bound Licenses identified on Schedule 2.7(b)

 

“Employee Plan”:  includes
(i) all present and prior (including terminated and transferred) plans,
programs, agreements, arrangements and methods of contributions or compensation
(including all amendments to and components of the same, such as a trust with
respect to a plan) of Seller and the Company providing any remuneration or
benefits, other than current cash compensation, to any current or former
employee of the Company or to any other person who provides services to the
Company’s business, whether or not such plan or plans, programs, agreements,
arrangements and methods of contribution or compensation are subject to ERISA
and whether or not such plan or plans, programs, agreements, arrangements and
methods of contribution or compensation are qualified under the Code; (ii) pension,
retirement, profit sharing, percentage compensation, stock purchase, stock
option, bonus and non-qualified deferred compensation plans; and (iii) disability,
medical, dental, workers compensation, health insurance, life insurance or
other death benefits, incentive, severance plans, vacation benefits and fringe
benefits

 

A-1

 

“Encumbrance”:  any lien,
mortgage, pledge, security interest, charge or encumbrance of any kind, whether
voluntary or involuntary, (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest)

 

“Environmental
Laws”:  the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”),
the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”),
the National Environmental Policy Act of 1969 (“NEPA”), the National
Historic Preservation Act of 1966 and any other federal, state or local
statutes, regulations, rules, ordinances or codes of applicable Governmental
Entities, which relate to (i) the protection of human health or the
environment from the effects of Hazardous Substances, including those
pertaining to reporting, licensing, permitting, investigating and remediating
discharges, releases or threatened releases of Hazardous Substances into the
air, surface water, sediments, groundwater or land or (ii) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances

 

“ERISA”:  Employee
Retirement Income Security Act of 1974, as amended

 

“Exchange Act”:  the
Securities Exchange Act of 1934, as amended

 

“Facilities”:  the
facilities leased by Seller located at 2777 Ontario Street, Burbank, California
91504

 

“GAAP”:  generally
accepted accounting principles as in effect in the United States

 

“Governmental Entity”: 
any nation or any state, commonwealth, territory, possession or tribe
and any political subdivision, courts, departments, commissions, boards,
bureaus, agencies or other instrumentalities of any of the foregoing

 

“Hazardous
Substance”:  any hazardous or toxic
substance, pollutant, contaminant or other material which, as of the date of
this Agreement, is defined as hazardous or toxic under CERCLA, and its
implementing regulations; defined as a hazardous waste or regulated substance
under RCRA and its implementing regulations; or is regulated under any other
applicable Environmental Laws, including any substance which has been
determined by regulation, ruling or otherwise by any governmental authority to
be a hazardous or toxic substance regulated under federal or state law, and
shall include petroleum and petroleum products, asbestos and polychlorinated
biphenyls

 

“In-Bound
Licenses”:  as defined in Section 2.7(b)

 

“Independent
Contractors”:  as defined in Section 2.8(d)

 

“Intellectual Property Rights”: all right, title and interest
in, to and under (i) inventions, whether or not patentable, (ii) patents
and patent applications, (iii) trademarks, service marks, trade dress,
logos, Internet domain names and trade names, whether or not registered, and
all goodwill associated therewith, (iv) rights of publicity and other
rights to use the names and likeness of individuals, (v) copyrights,
rights in databases and related rights, whether or not registered, (vi) mask
works, (vii) trade secrets and know-how, (viii) all rights to any of
the

 

A-2

 

foregoing provided by bilateral or international treaties or
conventions, (ix) all other intellectual property or proprietary rights
and all applications, registrations, issuances and the like with respect
thereto, and (x) all rights to sue or recover and retain damages and costs
and attorneys’ fees for past, present and future infringement or
misappropriation of any of the foregoing

 

“Judgments
and Litigation”:  as defined in Section 2.6

 

“knowledge
of Seller” and “Seller’s knowledge”: 
the actual knowledge of Seller’s Chief Executive Officer, Chief
Financial Officer or General Counsel, Robin Melhuish, or Mike Inchalik of a
particular fact, circumstance, event or other matter in question

 

“Material
Adverse Effect”:  any material
adverse effect on the business, operations, results of operations, or condition
(financial or otherwise) of the Company, other than to the extent caused by or
affecting (i) the transactions contemplated and the limitations and
restrictions imposed on the Company by this Agreement, including the execution
of this Agreement and public announcement thereof or (ii) generally
applicable financial, economic, political, banking, currency, capital market or
other similar conditions.

 

“Material
Contracts”:  as defined in Section 2.11(a)

 

“Most
Recent Balance Sheet”:  as defined in
Section 2.9

 

“Owned
IP Rights”:  as defined in Section 2.7(a)

 

“Out-Bound
Licenses”:  as defined in Section 2.7(c)

 

“Permitted
Encumbrances”:  (i) Encumbrances
for Taxes not yet due and payable, (ii) Encumbrances to secure obligations
to landlords, lessors or renters under leases or rental agreements, (iii) deposits
or pledges made in connection with, or to secure payment of, workers’
compensation, unemployment insurance or similar programs mandated by applicable
law, (iv) Encumbrances in favor of carriers, warehousemen, mechanics and
materialmen, to secure claims for labor, materials or supplies and other like
liens, (v) Encumbrances listed on Schedule A-1, and (vi) Encumbrances
which, individually or in the aggregate, would not result in a Material Adverse
Effect

 

“Person”:  any natural
person, firm, partnership, association, corporation, company, trust, business
trust, Governmental Entity or other entity

 

“Purchase Price”:  as
defined in Section 1.2

 

“Registered
IP Rights”:  as defined in Section 2.7(a)

 

“Restructuring”:  all activities of Seller and its Affiliates
taken or to be taken in connection with (i) the separation of the Business
from the Retained Business, (ii) the separation of the Cinema Business
from the Business; (iii) Seller’s sale of the Business or the Cinema
Business, and (iv) Seller’s implementation of the Oracle enterprise
reporting system

 

A-3

 

“Retained
Business”:  all of Seller’s business activities, including the provision of
entertainment technology, products and services to the audio and image
entertainment markets worldwide, but excluding activities solely related to the
Business

 

“Seller
Group”:  as defined in Section 2.13(b)(iii)

 

“Straddle
Period Tax”:  as defined in Section 4.5(b)

 

“Tax”
or, collectively, “Taxes”:  (i) any
and all federal, state, local, or non-U.S. income, franchise, sales and use
taxes, real and personal property (tangible and intangible) taxes, gross
receipts taxes, documentary transfer taxes, excise taxes, employment taxes, withholding
taxes, unemployment insurance contributions, value added taxes and any other
taxes or governmental charges of any kind, however denominated, including any
interest, penalties and additions to tax in respect thereto, for which Buyer
could become liable as a result of acquiring the Company or which could result
in a lien on or charge against the assets of the Company, and (ii) any
liability for the payment of any amounts of the type described in clause (i) as
a result of any express or implied obligation to indemnify any other Person as
a result of any obligations under any agreements or arrangements with any other
Person with respect to such amounts, or as a successor or transferee, or
pursuant to the provisions of Treasury Regulation 1.1502-6 (and any comparable
provision of state, foreign or local law)

 

“Tax
Return”:  any return, declaration,
report, claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including any
amendment thereof

 

“Transaction
Agreement”:  as defined in Section 2.2

 

“Transfer
Taxes”:  as defined in Section 4.2

 

“WARN
Act”:  Workers Adjustment and
Retraining Notification Act, as amended

 

A-4

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