Document:

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                                                                   EXHIBIT 10.44

                     AMENDED AND RESTATED PURCHASE AGREEMENT

        THIS AMENDED AND RESTATED PURCHASE AGREEMENT ("AGREEMENT") is made as of
February 23, 2000, between WESTERN DIGITAL CORPORATION, a Delaware corporation
("SELLER"), and MAYO FOUNDATION, a Minnesota nonprofit Corporation ("BUYER").

                                    RECITALS:

FIRST: Seller is the owner of real property located in the City of Rochester,
Olmsted County, Minnesota legally described on the attached Exhibit A ("LAND",
and the respective Lots described therein "LOT 1", "LOT 2" and "LOT 3"),
together with (1) all buildings and improvements constructed or located on the
Land ("BUILDING") and (2) all easements and rights benefiting or appurtenant to
the Land (collectively the "REAL PROPERTY"); and

SECOND: Seller is the owner of other items of property situated in or pertaining
to the Real Property as described in Section 1 hereafter (collectively the
"PERSONAL PROPERTY"); and

THIRD: Seller and Buyer entered into a Purchase Agreement (the "OLD PURCHASE
AGREEMENT") dated as of January 18, 2000 with respect to a portion of the Real
Property, but have now agreed to make certain changes to the terms of such
Purchase Agreement.

        In consideration of the mutual promises of the parties set forth in this
Agreement, Seller and Buyer agree that the Old Purchase Agreement is hereby
amended and restated to read as follows:

1. SALE OF PROPERTY. Seller agrees to sell to Buyer, and Buyer agrees to buy
   from Seller, the following property (collectively, "PROPERTY"):

        1.1  REAL PROPERTY. The Real Property, subject to the "Permitted
             Encumbrances" described on Exhibit B.

        1.2  PERSONAL PROPERTY. All of the personal property situated in or
             about the Real Property owned by Seller including any attached
             property or systems, such as the generator, or any components
             thereof which might be technically labeled as personal property
             except the items described in Exhibit ("PERSONAL PROPERTY").

        1.3  LEASES. Seller's interest as lessor in any lease affecting the Real
             Property ("LEASES").

        1.4  CONTRACTS, PERMITS, WARRANTIES, RECORDS, MISCELLANEOUS. Seller's
             interests in the following items all of which relate to the
             Property, to the extent transferable without the consent of any
             other party thereto (or to the extent that the necessary consents
             are obtained), and to the extent such items survive the Closing:
             all

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             service and maintenance contracts, equipment leases, parking area
             leases, design, construction and other contracts, land surveys
             related to the Property ("CONTRACTS"); all permits and licenses
             related to the Property ("PERMITS"); all warranties and guaranties
             relating to the Property ("WARRANTIES"); and the right to inspect
             and receive copies, from time to time, both before and after
             Closing, of all records, including management, leasing, real estate
             taxes, assessments, insurance, rents, construction, maintenance,
             repairs, blue prints, surveys, soil test results, and capital
             improvements and services related to the Property ("RECORDS").
             Seller agrees to use commercially reasonable efforts to obtain any
             consents required to allow transfer of these interests.

2. PURCHASE PRICE AND MANNER OF PAYMENT. The total purchase price ("PURCHASE
   PRICE") to be paid for the Property shall be Thirty Million Four Hundred
   Eight Thousand Nine Hundred Seventeen and 67/100 Dollars ($30,408,917.67).
   The Purchase Price shall be payable as follows:

        2.1  Seven Hundred Fifty Thousand Dollars ($750,000.00) as earnest money
             ("EARNEST MONEY") which Earnest Money shall be held by Rochester
             Title and Escrow Company ("ESCROW AGENT

        2.2  The balance of the Purchase Price in cash or by wire transfer of
             funds on the Closing Date.

3. CONTINGENCIES.

        3.1  BUYER'S CONTINGENCIES. The obligations of Buyer under this
             Agreement are contingent upon each of the following:

             3.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
                   warranties of Seller contained in this Agreement must be true
                   now and on the Closing Date as if made on the Closing Date.

             3.1.2 TITLE. Title shall have been found acceptable, or been made
                   acceptable, in accordance with the requirements and terms of
                   Section 6 below.

             3.1.3 ACCESS AND INSPECTION. Seller shall have allowed Buyer, and
                   Buyer's agents, access to the Real Property without charge
                   and at all reasonable times for the purpose of Buyer's
                   investigation, surveying, and testing the same. Seller shall
                   make available to Buyer and Buyer's Agents without charge all
                   Records related to the Property. Buyer shall have the right
                   to interview employees of Seller who may have knowledge of
                   such matters. Buyer shall pay all costs and expenses of such
                   investigation and testing, shall restore the Real Property,
                   and shall hold Seller and the Real Property harmless from all
                   costs and liabilities relating to the Buyer's activities
                   pursuant to Section 3.3. Buyer shall have been satisfied with
                   the results of all tests and investigations of Lot 3
                   performed by it or on its behalf as of the Contingency Date.

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             3.1.4 ESTOPPEL CERTIFICATES. On or before the Contingency Date,
                   Buyer shall have received from all tenants under Leases or
                   from Seller, estoppel certificates (the "ESTOPPELS"), which
                   are reasonably acceptable to Buyer or a certificate from
                   Seller certifying to the status of each Lease.

             3.1.5 DOCUMENT REVIEW. Buyer shall have determined, on or before
                   the Contingency Date, that it is satisfied with its review
                   and analysis of the Leases, Contracts, Permits, Warranties
                   and Records.

             3.1.6 SELLER'S GOVERNMENTAL APPROVALS. Seller shall demonstrate to
                   Buyer's satisfaction that Seller has obtained, at its sole
                   cost and expense on or before the Contingency Date, all final
                   governmental approvals or reimbursement of any governmental
                   assistance that may be due as a result of this sale of the
                   Property to Buyer, including, but not limited to, any
                   approval or payment resulting from any tax increment
                   financing agreements that affect the Property (collectively,
                   the "Governmental Approvals").

        3.2  SELLER'S CONTINGENCIES. The obligations of Seller under this
             Agreement are contingent upon each of the following:

             3.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
                   warranties of Buyer contained in this Agreement must be true
                   now and on the Closing Date as if made on the Closing Date.

             3.2.2 SELLER'S GOVERNMENTAL APPROVALS. Seller shall have obtained
                   the Governmental Approvals upon terms and conditions
                   acceptable to Seller. Seller agrees to use commercially
                   reasonable efforts to obtain the Governmental Approvals.

   All the Buyer's contingencies are specifically for the benefit of the Buyer
   and all Seller's contingencies are specifically for the benefit of the
   Seller. Each party shall have the right to waive any contingency for its
   benefit. The "Contingency Date" shall be February 28, 2000. If any
   contingency has not been satisfied or waived on or before the Contingency
   Date, then this Agreement may be terminated by notice from the party
   benefited by the contingency to the other party, which notice shall be given
   on or before the Contingency Date. In the event a party fails to so terminate
   this Agreement on or before the Contingency Date, all contingencies shall be
   deemed to be satisfied or waived by such party. Upon termination, the Earnest
   Money, and any interest accrued thereon, shall be released to Buyer and upon
   return, neither party will have any further rights or obligations regarding
   this Agreement or the Property. Notwithstanding other provisions of this
   Section, the contingencies in Section 3.1.1 and 3.2.1 shall continue until
   the Closing Date.

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4. CLOSING. The closing of the purchase and sale contemplated by this Agreement
   (the "CLOSING") shall occur February 28, 2000 (the "CLOSING DATE"). The
   Closing shall take place at 11:00 a.m. local time at the office of Dorsey &
   Whitney LLP in Rochester, Minnesota. Seller agrees to deliver possession of
   the Property to Buyer on the Closing Date.

        4.1  SELLER'S CLOSING DOCUMENTS. On the Closing Date, Seller shall
             execute and deliver to Buyer the following (collectively, "SELLER'S
             CLOSING DOCUMENTS"), all in form and content reasonably
             satisfactory to Buyer:

             4.1.1 DEED. A Warranty Deed in recordable form conveying good and
                   marketable title to the Real Property to Buyer, free and
                   clear of all encumbrances, except as permitted in Section 6
                   below.

             4.1.2 SELLER'S AFFIDAVIT. A standard Seller's Affidavit acceptable
                   in form to Escrow Agent and to Buyer.

             4.1.3 BILL OF SALE. A Warranty Bill of Sale in the form attached to
                   the Old Purchase Agreement as Attachment A conveying any
                   Personal Property to Buyer, free and clear of all
                   encumbrances.

             4.1.4 ASSIGNMENT OF LEASES. An Assignment of Leases in the form
                   attached to the Old Purchase Agreement as Attachment B
                   assigning the Leases and any security deposits, prepaid rents
                   or collections and guarantees regarding the Leases to Buyer,
                   free and clear of all encumbrances.

             4.1.5 ASSIGNMENT OF CONTRACTS, PERMITS, AND WARRANTIES. An
                   Assignment of Contracts, Permits, Warranties and
                   Miscellaneous Documents in the form attached to the Old
                   Purchase Agreement as Attachment C conveying Seller's
                   interest to Buyer together with the consent of all parties
                   having a right to consent to such Assignment.

             4.1.6 SECURITY DEPOSITS AND PREPAID RENTS. Any security deposits
                   and prepaid rents under the Leases, including valid transfers
                   of any noncash securities or documents held for such
                   purposes, together with notices to tenants and third parties
                   of such transfers.

             4.1.7 ORIGINAL DOCUMENTS. Copies (original copies, if available) of
                   the Leases, Contracts, Permits, and Warranties, plus, to the
                   extent available, all plans and specifications for the
                   Property in Seller's possession and to the extent requested
                   copies of those Records requested by Buyer. Copies of all
                   records required to be kept concerning the presence, location
                   and quantity of asbestos containing materials and presumed
                   asbestos containing materials in the Property.

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             4.1.8 FIRPTA AFFIDAVIT. A non-foreign affidavit in the form
                   attached to the Old Purchase Agreement as Attachment D,
                   properly executed, containing such information as is required
                   by Internal Revenue Code Section 1445(b)(2) and its
                   regulations.

             4.1.9 IRS FORM. A Designation Agreement designating the "reporting
                   person" for purposes of completing Internal Revenue Form 1099
                   and, if applicable, Internal Revenue Form 8594.

             4.1.10 WELL CERTIFICATE. A Certificate signed by Seller warranting
                   that there are no "Wells" on the Property within the meaning
                   of Minn. Stat. Section 103I or if there are "Wells", a Well
                   Certificate in the form required by law.

             4.1.11 STORAGE TANKS. If the Property contains or contained a
                   storage tank, an affidavit with respect thereto, if required
                   by Minn. Stat. Section 116.48.

             4.1.12 OTHER DOCUMENTS. All other documents reasonably determined
                   by Buyer or Title to be necessary to transfer the Property to
                   Buyer free and clear of all encumbrances other than the
                   Permitted Encumbrances.

        4.2  BUYER'S CLOSING DOCUMENTS. On the Closing Date, Buyer will execute
             and deliver to Seller the following (collectively, "BUYER'S CLOSING
             DOCUMENTS"):

             4.2.1 PURCHASE PRICE. Funds representing the Purchase Price by wire
                   transfer of U.S. Federal funds.

             4.2.2 IRS FORM. A Designation Agreement designating the "reporting
                   person" for purposes of completing Internal Revenue Form 1099
                   and, if applicable, Internal Revenue Form 8594.

             4.2.3 ASSIGNMENT OF LEASES. An Assignment of Leases in the form
                   attached to the Old Purchase Agreement as Attachment B by
                   which Buyer accepts assignment of the Leases and assumes
                   Seller's obligations thereunder.

             4.2.4 ASSIGNMENT OF CONTRACTS, PERMITS, AND WARRANTIES. An
                   Assignment of Contracts, Permits, Warranties and
                   Miscellaneous Documents in the form attached to the Old
                   Purchase Agreement as Attachment C by which Buyer accepts
                   assignment of the Contracts, Permits, Warranties and
                   Miscellaneous Documents and assumes Seller's obligations
                   under those items which have been identified and provided to
                   Buyer pursuant to Section 8.3.

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5. PRORATIONS. Seller and Buyer agree to the following pro-rations (made as of
   the Closing Date unless otherwise stated) and allocation of costs regarding
   this Agreement:

        5.1  TITLE INSURANCE AND CLOSING FEE. Seller will pay all costs of the
             Title Evidence (as defined below) and one-half of any closing fee
             or charge imposed by Title. Buyer will pay the Title Policy
             premiums and one-half of any closing fee or charge imposed by
             Title.

        5.2  DEED TAX. Seller shall pay all State Deed Tax payable in connection
             with this transaction.

        5.3  REAL ESTATE TAXES AND SPECIAL ASSESSMENTS. . Real estate taxes
             payable in 2000 shall be prorated as of the Closing Date. Seller
             shall pay all Real Estate Taxes payable in 1999 and all prior
             years. Buyer will assume all Real Estate Taxes due and payable in
             2001 and thereafter. Seller shall pay all special assessments
             levied, pending or certified as of the Closing, including all
             future special assessments proposed with respect to public
             improvements which have been constructed or are being constructed
             as of the Closing Date and any portions of such assessments which
             have been certified to the 2000 payable taxes.

        5.4  RENTS. All rents and other charges under the Leases will be
             pro-rated as of the Closing Date. If at -------------- the Closing
             Date a tenant under any of the Leases is delinquent, then if Buyer
             received from such tenant amounts in excess of the payments due
             Buyer, Buyer will remit such excess amounts to Seller. Buyer will
             have no obligation to collect any payments and will only be
             obligated to make payment to Seller after Buyer is fully paid for
             all amounts due it. Seller shall deliver to Buyer all records
             regarding operating expenses and cash in the amount of any prepaid
             deposits. At the request of either Seller or Buyer within thirty
             (30) days after the amount of operating expenses and reimbursement
             from tenants is determined and verified the parties shall
             re-prorate those items based upon the facts as finally determined.

        5.5  OTHER COSTS. All other operating costs of the Property shall be
             allocated between Seller and Buyer as of 12:01 a.m. on the Closing
             Date.

6. TITLE EXAMINATION. Title Examination will be conducted as follows:

        6.1  SELLER'S TITLE EVIDENCE. Seller has furnished the following
             (collectively, "TITLE EVIDENCE") to Buyer: (a) an Abstract of Title
             to the Real Property certified to a current date to include all
             appropriate judgment and bankruptcy searches; (b) a commitment
             ("TITLE COMMITMENT") for an ALTA Owner's Policy of Title Insurance
             insuring title to the Real Property, in the amount of the Purchase
             Price, issued by Chicago Title Insurance Company ("TITLE"); (c)
             legible copies of all documents affecting the Real Property which
             are referred to in the Title Commitment; (d) a copy of all existing
             land surveys in Seller's possession related to the Property; (e)
             the Estoppels, and (f) a UCC search showing no UCC filings

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             regarding any of the Property. Buyer may also obtain such title
             endorsements and other evidence of title as it may elect, such as a
             survey, reports of liens for unpaid sales or withholding taxes on
             file against Seller or its predecessors in title (or against any
             trade name or business name used by Seller or its predecessors in
             title) which are on file in the office of the Minnesota Secretary
             of State or any applicable County Recorder, all of which shall be
             part of the Title Evidence. Buyer understands and agrees that
             Seller may elect to keep certain retainages under its construction
             contract and Buyer consent thereto so long as Title will insure
             Buyer against mechanics liens.

        6.2  OBJECTIONS TO TITLE. Buyer has accepted the Title Evidence.

7. OPERATION PRIOR TO CLOSING. During the period from the date of this Agreement
   to the Closing Date (the "EXECUTORY PERIOD"), Seller shall operate and
   maintain the Property in the ordinary course of business in accordance with
   prudent, reasonable business standards, including the maintenance of adequate
   liability insurance and insurance against loss by fire, windstorm and other
   hazards, casualties and contingencies, including vandalism and malicious
   mischief. Seller shall execute no contracts, leases or other agreements
   regarding the Property during the Executory Period that are not terminable on
   or before the Closing Date, without the prior written consent to Buyer, which
   consent may be withheld by Buyer at its sole discretion.

8. REPRESENTATIONS AND WARRANTIES BY SELLER. Seller represents and warrants to
   Buyer as follows:

        8.1  LEASES. Seller has delivered to Buyer a correct and complete copy
             of each Lease and all its amendments. The Leases are in full force
             and neither Seller, nor any tenant, is in default under the Leases.
             There are no other leases or possessory rights of others regarding
             the Real Property except for the Permitted Encumbrances.

        8.2  TITLE TO REAL PROPERTY. Seller owns the Real Property, free and
             clear of all encumbrances except the Permitted Encumbrances
             identified on Exhibit B attached hereto (the "Permitted
             Encumbrances").

        8.3  CONTRACTS. Seller has delivered to Buyer a correct and complete
             copy of each Contract, Lease, Permit, Warranty and any amendments
             which will survive the closing of the transaction contemplated in
             this Agreement.

        8.4  OPERATIONS. Seller has received no notice of actual or threatened
             cancellation or suspension of any utility services or certificate
             of occupancy for any portion of the Real Property. Seller has
             received no written notice of actual or threatened special
             assessments or reassessments of the Real Property. To Seller's best
             knowledge, during the period of Seller's ownership of the Property,
             Seller has used the Property in compliance with all governmental
             permits, statutes, and ordinances. All necessary permits have been
             obtained and are in full force and effect and no default exists
             thereunder.

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        8.5  ENVIRONMENTAL LAWS. To the best of Seller's knowledge, and except
             as identified in that certain Phase I Environmental Report
             ("Seller's Phase I") dated December 10, 1997, by Braun/Intertec,
             Project Number CMXX-97-0912, no toxic or hazardous substances or
             wastes, pollutants or contaminants (including, without limitation,
             asbestos, urea formaldehyde, the group of organic compounds known
             as polychlorinated biphenyls, petroleum products including
             gasoline, fuel oil, crude oil and various constituents of such
             products), and any hazardous substance as defined in any
             Environmental Law (as that term is defined below) (collectively,
             "Hazardous Substances") have been generated, treated, stored,
             transferred from, released or disposed of, or otherwise placed,
             deposited in or located on the Property in violation of any such
             Environmental Law, nor has any activity been undertaken on the
             Property that would cause or contribute to the Property becoming a
             treatment, storage or disposal facility within the meaning of any
             Environmental Law. The term "Environmental Law" shall mean any and
             all federal, state and local laws, statutes, codes, ordinances,
             regulations, rules, policies, consent decrees, judicial orders,
             administrative orders or other requirements relating to the
             environment or to human health or safety associated with the
             environment, all as amended or modified from time to time. To the
             best of Seller's knowledge, and except as identified in the
             Seller's Phase I, there has been no discharge, release or
             threatened release of Hazardous Substances or conditions in or on
             the Property that may support a claim or cause of action under any
             Environmental Law. The Property is not now, and to the best of the
             Seller's knowledge never has been, listed on any list of sites
             contaminated with Hazardous Substances, nor used as landfill, dump,
             disposal or storage site for Hazardous Substances. The phrase "to
             the best of Seller's knowledge" shall mean to the knowledge of
             Michael Zell and John Porcelli, Jr., the officers and employees of
             Seller primarily responsible for the acquisition and development of
             the Property

        8.6  SELLER'S DEFAULTS. Seller is not in default concerning any of its
             obligations or liabilities which are binding upon the Property or
             which would have a material adverse effect on the Buyer's use,
             occupancy or enjoyment of the Property after Closing.

        8.7  FIRPTA. Seller is not a "foreign person", "foreign partnership",
             "foreign trust" or "foreign estate", as those terms are defined in
             Section 1445 of the Internal Revenue Code.

        8.8  PROCEEDINGS. There is no action, litigation, investigation,
             condemnation or proceeding of any kind pending or to the best
             knowledge of Seller threatened against any portion of the Property
             or against Seller with respect to the Property.

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        8.9  CONDITION. The buildings, structures and improvements included
             within the Property are entirely within the boundary line of the
             Property. All heating and air conditioning, wiring and plumbing
             shall be in proper working order as of the Closing Date. Attached
             to the Old Purchase Agreement as Exhibit E is a copy of the "punch
             list" of uncompleted work on the Building. Seller will diligently
             pursue completion of those items not so excluded through the
             Closing Date. To the extent there remain any such items that are
             not completed on the Closing Date, Seller's representatives will
             work with Buyer's representatives in good faith to keep Buyer's
             representatives updated on the status of any such items, so that
             Buyer's representatives are in a position to follow-up with the
             contractors and to enforce contracts/warranties to cause completion
             after closing without additional expense to Buyer. Seller will keep
             and not assign to Buyer any and all retainages under its
             construction contract and shall hold Buyer harmless against any
             mechanics liens which may arise out of work on the Property ordered
             by Seller.

        8.10 WELLS. Except as disclosed on Exhibit D, the Seller certifies and
             warrants that the Seller does not know of any "Wells" on the
             described Property within the meaning of Minn. Stat. Section 103I.
             This representation is intended to satisfy the requirements of that
             statute.

        8.11 STORAGE TANKS. Except as disclosed on Exhibit D, to the best of
             Seller's knowledge, no above ground or underground tanks are
             located in or about the Property, or have been located under, in or
             about the Property and have subsequently been removed or filled. To
             the extent storage tanks exist on or under the Real Property, such
             storage tanks have been duly registered with all appropriate
             regulatory and governmental bodies, and otherwise are in compliance
             with applicable federal, state and local statutes, regulations,
             ordinances and other regulatory requirements.

        8.12 REPORTS. Seller has delivered to Buyer copies of all environmental
             reports, surveys, and studies relating to the Property which are in
             the possession of or are reasonably available to Seller.

        8.13 INDIVIDUAL SEWAGE TREATMENT SYSTEMS. Solely for purposes of
             satisfying the requirements on Minn. Stat. Section 115.55 Seller
             represents that except as disclosed on Exhibit D there is no
             "individual sewage treatment system" (within the meaning of that
             statute) on or serving the Property.

        8.14 AUTHORITY. The individual or individuals executing this Agreement
             have authority to do so and to legally bind Seller to perform this
             Agreement. Upon request, seller shall promptly deliver to Buyer a
             Certificate of Secretary evidencing such authority.

        8.15 RIGHTS OF OTHERS IN PROPERTY. Seller has not entered into any other
             contracts for the sale of the Property nor are there any rights of
             first refusal or options to purchase the Property or any other
             rights of others that will prevent the consummation of this
             Agreement.

        8.16 LEAD PAINT. The RIDER TO PURCHASE AGREEMENT (LEAD PAINT) attached
             to the Old Purchase Agreement is hereby incorporated into this
             purchase agreement.

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    The maximum obligation of Seller to Buyer for breach of any representations
    or warranties shall be limited to the Purchase Price of the Property and
    Seller shall be liable for such breach only if (a) such breach is discovered
    within 24 months from the Closing Date and (b) any legal action on such
    breach shall have been commenced within 36 months from the Closing Date.
    Consummation of this Agreement by Buyer with knowledge of any such breach by
    Seller will not constitute a waiver or release by Buyer, its successors and
    assigns, of any claims due to such breach. Seller will indemnify Buyer, its
    successors and assigns, against and will hold Buyer, its successors and
    assigns, harmless from, any expenses or damages, including reasonable
    attorneys' fees, that Buyer, its successors and assigns, incurs because of
    the breach of any of the above representations and warranties, whether such
    breach is discovered before or after Closing, but only if (a) such breach is
    discovered within 24 months from the Closing Date and (b) any legal action
    on such breach shall have been commenced within 36 months from the Closing
    Date.

9.  CASUALTY; CONDEMNATION. If any of the Real Property or other improvements
    are partially damaged by fire or other casualty or if there is a notice of
    condemnation with respect to any such portion of the Real Property, Seller
    shall give immediate written notice thereof to Buyer. Buyer may terminate
    this Agreement upon delivery of written notice to Seller within ten (10)
    days following the receipt of such notice, in which case, Seller and Buyer
    shall have no further obligation or liabilities under this Agreement and the
    Earnest Money (and any interest thereon) shall be immediately returned to
    Buyer. In the event Buyer does not elect to so terminate this Agreement, the
    Purchase Price shall not be reduced, but the Buyer shall be entitled to all
    insurance proceeds and/or condemnation proceeds that the Seller is entitled
    to receive as a result of such destruction or condemnation and Seller shall
    not be obligated to restore the Real Property.

10. BROKER'S COMMISSION. Seller and Buyer represent to each other that they have
    dealt with no brokers, finders or the like in connection with this
    transaction, and agree to indemnify and hold each other harmless from all
    claims, damages, costs or expenses of or for any other such fees or
    commissions resulting from their respective actions or agreements regarding
    the execution or performance of this Agreement.

11. ASSIGNMENT. Either party may assign its rights under this Agreement with the
    prior written consent of the other party, before or after the Closing. Any
    such assignment will not relieve such assigning party of its obligations
    under this Agreement.

12. SURVIVAL; FURTHER ASSURANCES. All of the terms of this Agreement and
    warranties and representations herein contained shall survive and be
    enforceable after the Closing. Seller and Buyer each agree that they will,
    upon the request of the other party, take all reasonable actions in a prompt
    manner to provide reasonably necessary documents or assurances required by
    the requesting party to implement this Agreement or for assisting Buyer in
    the collection and reducing to possession of any or all of the assets or
    property which is the subject of this Agreement, at the sole cost of the
    requesting party.

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13. NOTICES. All notices and demands hereunder shall be in writing, and shall be
    deemed to have been properly given or served as of (a) the date of personal
    delivery with acknowledgment of receipt; (b) three (3) days after the same
    is deposited in the United States mail, prepaid, for delivery by registered
    or certified mail, return receipt requested; (c) the first business day
    after the date delivered to a reputable overnight courier service providing
    proof of delivery; or (d) on the day of facsimile transmission, if the
    sending machine prints out evidence of successful transmission and such
    transmission is made so that the recipient receives the facsimile prior to
    5:00 p.m. local time of the recipient on a business day (and if not prior to
    5:00 p.m. local time of the recipient on a business day, then service shall
    be deemed given on the next business day), with a copy mailed by regular
    mail no later than the next business day. The initial addresses of Landlord
    and Tenant are set forth below:

         If to Buyer:    Mayo Foundation
                         201 First Street SW
                         Rochester, MN 55905
                         Attn:  John Herrell--Vice President
                         Fax: (507) 284-5760

         With Copy to:   Mayo Foundation
                         201 First Street SW
                         Rochester, MN 55905
                         Attn: Legal Department--Jonathan J. Oviatt
                         Fax: (507) 284-0929

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         If to Seller:   Western Digital Corporation
                         8105 Irvine Center
                         Irvine, CA  92618
                         Attn:  Matt Massengill, President
                         Fax: (949) 932-7837

         With Copy to:   Western Digital Corporation
                         8105 Irvine Center
                         Irvine, CA  92618
                         Attn:  Raymond Bukaty, VP Corporate Law
                         Fax: (949) 932-5633

    Such addresses may be changed at any time or from time to time or additional
    notice parties added, by notice as above provided.

14. MISCELLANEOUS. The Section and paragraph headings or captions appearing in
    this Agreement are for convenience only, are not a part of this Agreement,
    and are not to be considered in interpreting this Agreement. This written
    Agreement constitutes the complete agreement between the parties and
    supersedes any prior or contemporaneous oral or written agreements between
    the parties regarding the Property. There are no verbal agreements that
    change this Agreement, and no waiver of any of its terms will be effective
    unless in writing executed by the parties. This Agreement binds and benefits
    the parties and their successors and assigns. This Agreement has been made
    under the laws of the State of Minnesota, and such laws will control its
    interpretation. This Agreement may be signed in one or more counterparts,
    all of which, taken together, shall be deemed one original.

15. REMEDIES FOR NON-PERFORMANCE.

        15.1 SELLER'S REMEDIES. If the Buyer defaults in performing any of the
             Buyer's Closing obligations under the terms of this Agreement on
             the Closing Date for any reason other than Seller's default,
             Seller's sole remedy shall be to terminate this Agreement and to
             receive the Earnest Money (and any interest thereon) as liquidated
             damages or to enforce specific performance of this Agreement as
             Seller's exclusive remedies

        15.2 BUYER'S REMEDIES. If the Seller defaults in performing any of the
             Seller's Closing obligations under the terms of this Agreement on
             the Closing Date for any reason other than Buyer's default, Buyer
             shall be entitled to terminate this Agreement and to receive the
             Earnest Money (and any interest thereon) or to enforce specific
             performance of this Agreement as Buyer's exclusive remedies.

                                       12

<PAGE>   13

         Seller and Buyer have executed this Agreement as of the date first
written above.

SELLER:                                  WESTERN DIGITAL CORPORATION
                                         a Delaware corporation

Date of Signature                        By
February ___, 2000                          ------------------------------------
                                         Its
                                             -----------------------------------

                                         By
                                            ------------------------------------
                                         Its
                                             -----------------------------------

                                         Tax I.D. Number: 95-2647125

BUYER:                                   MAYO FOUNDATION,
                                         a Minnesota nonprofit corporation

Date of Signature                        By
February ___, 2000                          ------------------------------------
                                         Its President

                                         And
                                         ---------------------------------------
                                         Its Assistant Secretary
                                         Tax I.D. Number: 41-1937751

                                       13

<PAGE>   14

                                    EXHIBIT A
                       LEGAL DESCRIPTION OF REAL PROPERTY

LOTS 1, 2, AND 3, BLOCK 1; WESTERN DIGITAL TECHNOLOGY PARK, ACCORDING TO THE
RECORDED PLAT THEREOF, OLMSTED COUNTY, MINNESOTA.

                                       14

<PAGE>   15

                                    EXHIBIT B
                             PERMITTED ENCUMBRANCES

(1) Building and zoning laws, ordinances, and State and Federal regulations.

(2) Reservation of any mineral or mineral rights to the State of Minnesota.

(3) Real estate taxes as provided in Section 5.2(c).

(4) Special assessments levied or pending or certified after the Closing Date.

(5) Easements covenants, conditions, restrictions, reservation, and all other
    matters of record or which is disclosed by the ALTA survey of Lots 1 and 2
    which was provided to Buyer or which would be disclosed by an ALTA survey of
    Lot 3.

(6) Interests of Alton and Louise Shefelbine in Lot 1, Block 1, Western Digital
    Technology Park under Lease dated May 1, 1998 referenced in that certain
    Memorandum of Lease dated May 1, 1998 and recorded on May 6, 1998 as
    Document No. 778665 in the Olmsted County Minnesota Recorder's office.

(7) Possible interest of tenant under any farming lease affecting Lot 3.

                                       15

<PAGE>   16

                                    EXHIBIT C
                          EXCESS AND OBSOLETE EQUIPMENT
                                       AT
                           WESTERN DIGITAL CORPORATION
                              4001 41ST STREET, NW
                               ROCHESTER, MN 55901

CLEANROOM-ASSOCIATED
Gowning racks
Gowning hooks
Ulpa Filters
Latex Gloves and wipes
Misc. Cleanroom garb and cleanroom supplies
Hangers

REMAINING GENERAL
Sensible Cooling Units (six)
Items of Equipment from Seller's other buildings
that were relocated to the Property

DATA CENTER (DC211)
2 Cisco 6500's with Modules
- 2 Cisco MSM
- 2 Supervisor Engines with Gigabyte Ports
- 4 8 Port Gigabyte cards
- 2 48 Port 10/100 cards
4 PC's w/ monitors
1 Sun Station w/monitors
1 Compaq Prolaint 6500 w/monitors
1 Compaq Prolaint 800 w/monitors
1 Cisco Probe
1 Phone
1 Laptop

TELECOMMUNICATIONS CLOSET TC 124
2 Cisco 5513 with 2 power supplies
2 Supervisor modules with Gigabyte ports
20 10/100 24 port fast Ethernet cards

MAIN CROSS-CONNECT CLOSET MC 125
2 Cisco 5513 with 2 power supplies
2 Supervisor modules with Gigabyte ports
21 10/100 24 port fast Ethernet cards
1 Cisco 4500 Router
4 T-1 CSU/DSU's
1 Lucent EPN
1 Lucent PPN

TELECOMMUNICATIONS CLOSET TC 136
3 Cisco 5513 with 2 power supplies
3 Supervisor modules with Gigabyte ports
32 10/100 24 port fast Ethernet cards

TELECOMMUNICATIONS CLOSET TC 137
3 Cisco 5513 with 2 power supplies
3 Supervisor modules with Gigabyte ports
32 10/100 24 port fast Ethernet cards

                                       16

<PAGE>   17

                                    EXHIBIT D

WELL DISCLOSURE

        To the best of Seller's knowledge there is one domestic well located on
Lot 1, Block 1, Western Digital Technology which is in use. Attached hereto is a
map showing the approximate location of the well.

        This Disclosure is not a warranty of any kind by the Seller and is not a
substitute for any inspections or warranties Buyer may wish to obtain.

        This Disclosure is given pursuant to Minn. Stat. Section 103I.235.

STORAGE TANK DISCLOSURE

        To the best of Seller's knowledge there is a 10,000 gallon diesel fuel
underground storage tank located on Lot 2, Block 1, Western Digital Technology
Park.

INDIVIDUAL WASTE TREATMENT SYSTEM DISCLOSURE

        To the best of Seller's knowledge there is private sewer system
consisting of a septic tank with drain field located on Lot 1, Block 1, Western
Digital Technology. The sewer system which is currently in use was installed in
1993. Attached hereto is a map showing the approximate location of the septic
tank.

        This Disclosure is not a warranty of any kind by the Seller and is not a
substitute for any inspections or warranties Buyer may wish to obtain.

        This Disclosure is given pursuant to Minn. Stat. Section 115.55.

                                       17

<PAGE>   18

                                    EXHIBIT E

                                       18<PAGE>   1

                                                                    EXHIBIT 10.1

                         COMMON STOCK PURCHASE AGREEMENT

         This COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
this 8th day of March, 2000 between SRS Labs, Inc., a Delaware corporation (the
"COMPANY"), its wholly owned subsidiary, SRS WOWcast.com, Inc., a Delaware
corporation ("SUB"), and Microsoft Corporation, a Washington corporation (the
"PURCHASER").

                                    RECITALS

         WHEREAS, concurrently with this Agreement the Company and the Purchaser
are entering into a License Agreement.

         WHEREAS, concurrently with this Agreement the Company and Sub are
issuing to Purchaser warrants to acquire their common stock, respectively (the
"WARRANTS"); and

         WHEREAS, in connection with the Warrants and the License Agreement,
the Company desires to sell to the Purchaser, and the Purchaser desires to
purchase from the Company, shares of the Company's common stock, $.001 par value
per share (the "COMMON STOCK"), on the terms and conditions set forth in this
Agreement;

         NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                    SECTION 1

            AGREEMENT TO PURCHASE AND SELL COMMON STOCK AND WARRANTS

         1.1 AGREEMENT TO PURCHASE AND SELL COMMON STOCK. Upon the terms and
subject to the conditions of this Agreement, the Company hereby agrees to sell
to the Purchaser at the Closing (as defined below), and the Purchaser agrees to
purchase from the Company at the Closing, shares of its Common Stock, (the
"SHARES") for an aggregate purchase price of $5,000,004 at a price per Share
equal to $17.21, or 290,529 shares.

         1.2 AGREEMENT TO GRANT A COMPANY WARRANT AND A SUB WARRANT.

                  1.2.1 AGREEMENT TO GRANT THE COMPANY WARRANT. Upon the terms
and conditions of this Agreement and the Warrant Agreement by and between the
Company and the Purchaser, the Company agrees to grant to the Purchaser and the
Purchaser agrees to accept, a Warrant in the form attached hereto as Exhibit A
(the "COMPANY WARRANT").

                  1.2.2 AGREEMENT TO GRANT THE SUB WARRANT. Upon the terms and
conditions of this Agreement and the Warrant Agreement by and between Sub and
the Purchaser, Sub agrees to grant to the Purchaser and the Purchaser agrees to
accept, a Warrant in the form attached hereto as Exhibit B (the "SUB WARRANT").

<PAGE>   2

                                    SECTION 2

                             CLOSING DATE; DELIVERY

         2.1 CLOSING DATE. The Closing of the purchase and sale of the Shares
hereunder (the "CLOSING") shall be held at the offices of Paul, Hastings,
Janofsky & Walker, LLP in Costa Mesa, California one (1) business day after the
execution of this Agreement or at such time as the Company and the Purchaser
mutually agree (the date of the Closing being hereinafter referred to as the
"CLOSING DATE").

         2.2 DELIVERY. At the Closing, the Company will deliver to the Purchaser
a certificate or certificates representing the Shares against payment of the
aggregate purchase price of $5,000,004 by wire transfer of immediately available
funds to an account designated by the Company. The certificate or certificates
representing the Shares shall be subject to a legend restricting transfer under
the Securities Act of 1933, as amended (the "SECURITIES ACT") and applicable
state securities laws and referring to restrictions on transfer herein, such
legend to be substantially as follows:

         THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
         ANY STATE SECURITIES LAW. NO TRANSFER OF THE SHARES REPRESENTED BY THIS
         CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS
         MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
         SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
         LAWS, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF
         COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT
         SUCH PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
         THE SECURITIES ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.

         The Company agrees to remove the legend set forth in the preceding
paragraph upon receipt of an opinion of counsel in form and substance reasonably
satisfactory to the Company that the Shares are eligible for transfer without
registration or qualification under the Securities Act and under any applicable
state securities laws.

                                    SECTION 3

              REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SUB

         The Company and Sub hereby represent and warrant to the Purchaser as
follows:

         3.1 ORGANIZATION. The Company and Sub are corporations duly organized
and validly existing under the laws of the State of Delaware and each is in good
standing under such laws. The Company and Sub have the requisite corporate power
to own and operate their properties and assets, and to carry on their business
as presently conducted and as proposed to be conducted.

                                      -2-
<PAGE>   3

         3.2 AUTHORIZATION. All corporate action on the part of the Company
necessary for the authorization, execution, delivery and performance of this
Agreement, the LicenseAgreement and the Warrant issued by the Company, the
authorization, sale, issuance and delivery of the Shares hereunder, and the
performance of the Company's obligations hereunder and under said agreements has
been taken. This Agreement, the License Agreement and the Warrant issued by the
Company constitute legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies. Upon their issuance and delivery pursuant to this Agreement,
the Shares will be validly issued, fully paid and nonassessable. The issuance
and sale of the Shares will not give rise to any preemptive rights or rights of
first refusal on behalf of any person in existence on the date hereof. All
corporate action on the part of Sub necessary for the authorization, execution,
delivery and performance of this Agreement and the Warrant issued by Sub, the
authorization, sale, issuance and delivery of the shares of Sub issuable upon
exercise of the Warrant issued thereby, and the performance of Sub's obligations
hereunder and under said Warrant has been taken. This Agreement and the Warrant
issued by Sub constitute legal, valid and binding obligations of Sub enforceable
in accordance with their respective terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies. Upon their issuance and delivery pursuant to the Warrant
issued by Sub, the shares of common stock of Sub issuable under such Warrant
will be validly issued, fully paid and nonassessable. The issuance and sale of
the shares of Sub issuable under its Warrant will not give rise to any
preemptive rights or rights of first refusal on behalf of any person in
existence on the date hereof.

         3.3 NO CONFLICT. The execution and delivery of this Agreement, the
License Agreement and the Warrants do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under any provision of the
Certificate of Incorporation or Bylaws of the Company or Sub or any mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or Sub, their properties or assets, the
effect of which could have a material effect on the Company or Sub or their
subsidiaries, taken as a whole, or materially impair or restrict the Company's
or Sub's power to perform its obligations as contemplated under said agreement.

         3.4 SEC DOCUMENTS. The Company has filed all required reports,
schedules, forms, statements and other documents with the Securities and
Exchange Commission (the "SEC") since August 8, 1996 (the "SEC DOCUMENTS"). As
of their respective dates, the SEC Documents complied in all material respects
with requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), as the case may be and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and none of the SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except to the extent that information
contained in any SEC Document has been revised or superseded by a later Filed
SEC Document (as

                                      -3-
<PAGE>   4

defined below), none of the SEC Documents contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. The
financial statements of the Company included in the SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with U.S. generally accepted accounting principles
("GAAP") (except, in the case of unaudited statements as permitted by Form 10Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operation and cashflows for
the periods then ending in accordance with GAAP (subject, in the case of the
unaudited statements, to normal year end audit adjustments). Except as set forth
in the Filed SEC Documents (as defined below), neither the Company nor any of
its subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
a consolidated balance sheet of the Company and its consolidated subsidiaries or
in the notes thereto and which can reasonably be expected to have a material
adverse effect on the Company and its subsidiaries taken as a whole.

         3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this Agreement
(the "FILED SEC DOCUMENTS"), since the date of the most recent audited financial
statements included in the Filed SEC Documents, Company has conducted its
business only in the ordinary course, and there has not been (i) any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to any of the Company's capital stock,
(ii) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, (iii)
any damage, destruction or loss, whether or not covered by insurance, that has
or is likely to have a material adverse effect on the Company and its
subsidiaries taken as a whole, or (iv) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities, or business, except insofar as may have been required by a change
in GAAP.

         3.6 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company or Sub is required in connection with the valid execution
and delivery of this Agreement, or the offer, sale or issuance of the Shares or
the shares of Sub issuable under its Warrant, or the consummation of any other
transaction contemplated hereby, except such filings as may be required to be
made with the SEC, the National Association of Securities Dealers, Inc. and
applicable state securities laws.

         3.7 LITIGATION. Except as is disclosed in the Filed SEC Documents,
there is no suit, action or proceeding pending or affecting the Company or any
of its subsidiaries that, individually or in the aggregate, could (i) have a
material adverse effect on the Company and its subsidiaries taken as a whole or
Sub, (ii) impair the ability of the Company or Sub to perform its obligations
under this Agreement, the License Agreement and the Warrants, or (iii) prevent
the consummation of any of the transactions contemplated by said agreements, nor
is there any judgment, decree, injunction, rule or order of any governmental
entity or arbitrator outstanding against the Company or any of its subsidiaries
or Sub having, or which, insofar as reasonably can be foreseen in the future
have, any such effect.

                                      -4-
<PAGE>   5

                                    SECTION 4

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

         The Purchaser hereby represents and warrants to the Company as follows:

         4.1 ORGANIZATION. The Purchaser is a corporation duly organized and
validly existing and in good standing under the laws of the State of Washington,
with all requisite corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted.

         4.2 AUTHORITY. All corporate action on the part of the Purchaser
necessary for the authorization, execution, delivery and performance of this
Agreement and the License Agreement, and the performance of the Purchaser's
obligations hereunder and under the License Agreement, by the Purchaser has been
taken. This Agreement and the License Agreement have been duly executed and
delivered by the Purchaser and constitute legal, valid and binding obligations
of the Purchaser, enforceable in accordance with their respective terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies. The execution and delivery of said Agreements do not,
and the consummation of the transactions contemplated hereby and thereby will
not, conflict with or result in any violation of any obligation under any
provision of the Articles of Incorporation or Bylaws of the Purchaser or any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Purchaser.

         4.3 INVESTMENT. The Purchaser is acquiring the Shares, the Company
Warrant and the Sub Warrant, and, upon exercise of the Company Warrant, will
acquire the shares of Common Stock issuable upon exercise of the Company
Warrant, and, upon exercise of the Sub Warrant, will acquire the shares of
common stock of Sub, for investment for its own account, not as a nominee or
agent, and not with a view to, or for resale in connection with, any
distribution thereof. The Purchaser understands that the Shares, the Company
Warrant, the Sub Warrant, the share of Common Stock issuable upon exercise of
the Company Warrant and the shares of common stock of Sub issuable on exercise
of the Sub Warrant, have not been registered under the Securities Act or
registered or qualified under any applicable securities laws, by reason of a
specific exemption from the registration provisions of the Securities Act or
applicable state securities law which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of the Purchaser's
representations and warranties contained herein.

         4.4 DISCLOSURE OF INFORMATION. The Purchaser has had full access to all
information it considers necessary or appropriate to make an informed investment
decision with respect to the Shares, the Company Warrant, the Sub Warrant, the
shares of Common Stock issuable upon the exercise of the Company Warrant and the
shares of common stock of Sub issuable upon exercise of the Sub Warrant to be
purchased or acquired by the Purchaser under this Agreement. The Purchaser
further has had an opportunity to ask questions and receive answers from the
Company and Sub regarding the terms and conditions of the offering of the Shares
and the shares of common stock of Sub and to obtain additional information
necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access.

                                      -5-
<PAGE>   6

         4.5 INVESTMENT EXPERIENCE. The Purchaser understands that the purchase
of the Shares involves substantial risk. The Purchaser has experience as an
investor in securities of companies and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Shares and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of this investment in the Shares and protecting
its own interests in connection with this investment.

         4.6 ACCREDITED INVESTOR STATUS. The Purchaser is an "ACCREDITED
INVESTOR" within the meaning of Regulation D promulgated under the Securities
Act.

         4.7 RESTRICTED SECURITIES. The Purchaser understands that (i) the
Shares to be purchased by the Purchaser hereunder and the shares of Common Stock
purchased pursuant to the exercise of the Company Warrant, (ii) the shares of
common stock of Sub to be purchased pursuant to the exercise of the Sub Warrant
and (iii) the Company Warrant and the Sub Warrant are characterized as
"RESTRICTED SECURITIES" under the Securities Act inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under the Securities Act and applicable regulations thereunder such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. The Purchaser is familiar with Rule 144 of the
SEC, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act. The Purchaser understands that the Company
and Sub each is under no obligation to register or qualify under Federal or
state securities law any of such securities.

                                    SECTION 5

                    CONDITIONS TO OBLIGATION OF THE PURCHASER

         The Purchaser's obligation to purchase the Shares at the Closing is, at
the option of the Purchaser, which may waive any such conditions, subject to the
fulfillment on or prior to the Closing Date of the following conditions:

         5.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company contained in Section 3 will be true and correct on and
as of the date hereof and on and as of the Closing Date with the same effect as
though such representations and warranties had been made as of the Closing Date.
The Purchaser shall have received a certificate signed by a duly authorized
officer of Company to such effect on the Closing Date.

         5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects. The
Purchaser shall have received a certificate signed by a duly authorized officer
of Company to such effect on the Closing Date.

         5.3 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.

         5.4 NO LAW PROHIBITING OR RESTRICTING SALE OF THE SHARES. There shall
not be in effect any law, rule or regulation prohibiting or restricting the sale
of the Shares, or requiring any consent

                                      -6-
<PAGE>   7

or approval of any Person which shall not have been obtained to issue the Shares
with full benefits afforded the Common Stock.

         5.5 DUE DILIGENCE. Purchaser shall have complete its due diligence
inquiry regarding the Company and Sub to its reasonable satisfaction.

         5.6 LICENSE AGREEMENT, WARRANTS. The Company shall have executed and
delivered the License Agreement and the Company Warrant and Sub shall have
executed and delivered the Sub Warrant.

         5.7 CONSENTS. All third-party consents, approvals, assignments,
waivers, authorizations or other certificates required for the execution of the
Agreement and the transactions contemplated hereby or reasonably deemed
necessary by Purchaser's legal counsel in form and substance reasonably
satisfactory to the Purchaser shall have been obtained.

                                    SECTION 6

                 CONDITIONS TO OBLIGATION OF THE COMPANY AND SUB

         The Company's obligation to sell and issue the Shares and issue the
Company Warrant and Sub's obligation to issue its Warrant at the Closing are, at
the option of the Company, which may waive any such conditions, subject to the
fulfillment on or prior to the Closing Date of the following conditions:

         6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchaser contained in Section 4 will be true and correct on and as of
the date hereof and on and as of the Closing Date with the same effect as though
such representations and warranties had been made as of the Closing Date. The
Company shall have received a certificate signed by a duly authorized officer of
the Purchaser to such effect on the Closing Date.

         6.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchaser on or prior to the Closing Date
shall have been performed or complied with in all material respects. The Company
shall have received a certificate signed by a duly authorized officer of the
Purchaser to such effect on the Closing Date.

         6.3 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.

         6.4 NO LAW PROHIBITING OR RESTRICTING THE SALE OF THE SHARES. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the sale of the Shares, or requiring any consent or approval of any person which
shall not have been obtained to (i) issue the Shares with full benefits afforded
the Common Stock, (ii) issue the shares of common stock of Sub pursuant to the
Sub Warrant with full benefits afforded the shares of common stock of Sub or
(iii) grant the Company Warrant or the Sub Warrant (except as otherwise provided
in this Agreement).

                                      -7-
<PAGE>   8

         6.5 LICENSE AGREEMENT. The Purchaser shall have executed and delivered
the License Agreement.

         6.8 CONSENTS. All third-party consents, approvals, assignments,
waivers, authorizations or other certificates required for the execution of the
Agreement and the transactions contemplated hereby shall have been obtained.

                                    SECTION 7

                                 MISCELLANEOUS

         7.1 BEST EFFORTS. Each of the Company, the Purchaser and Sub shall use
its best efforts to take all actions required under any law, rule or regulation
adopted subsequent to the date hereto to ensure that the conditions to the
Closing set forth herein are satisfied on or before the Closing Date.

         7.2 LAW GOVERNING. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware (not
including the choice of law rules thereof) regardless of the jurisdiction of
creation or domicile of the Company or its successors or of the holder at any
time hereof. The exclusive jurisdiction for all actions and proceedings arising
out of or relating to this Agreement which are not subject to arbitration
pursuant to Section 7.12 shall be in any Delaware state or federal court
thereof.

         7.3 SURVIVAL. The representations and warranties in Sections 3 and 4 of
this Agreement shall survive the Closing.

         7.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.

         7.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered or contemplated by this Agreement constitute the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among the parties relating to the subject matter hereof. Neither this Agreement
nor any term of such other documents delivered or contemplated by this Agreement
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.

         7.6 NOTICES. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is (a) deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, or (b) sent by a
nationally recognized overnight express courier, or (iii) by facsimile upon
written confirmation (other than the automatic confirmation that is received

                                      -8-
<PAGE>   9

from the recipient's facsimile machine) of receipt by the recipient of such
notice:

                  (a)      if to the Company or Sub, to them at:

                           SRS Labs, Inc.
                           2909 Daimler Street
                           Santa Ana, California  92705
                           Facsimile Number  (949) 852-1099
                           Attention:  Chief Operating Officer

                  with a copy to:
                           John F. Della Grotta, Esq.
                           Paul, Hastings, Janofsky & Walker LLP
                           Seventeenth Floor
                           695 Town Center Drive
                           Costa Mesa, California  92626-1924
                           Facsimile Number:  (714) 979-1921

                  (b)      if to the Purchaser, to it at:

                           Microsoft Corporation
                           One Microsoft Way
                           Building 8
                           North Office 2211
                           Redmond, WA  98052
                           Facsimile Number:  (425) 936-7329
                           Attention:  Chief Financial Officer

                  with a copy addressed as set forth above but to the attention
                  of General Counsel, Finance and Operations, and with an
                  additional copy to:

                           Richard B. Dodd, Esq.
                           Preston Gates & Ellis LLP
                           5000 Columbia Center
                           701 Fifth Avenue
                           Seattle, WA 98104-7078
                           Facsimile Number (206) 623-7022

         7.7 BROKERS.

               (a) Neither the Company nor Sub has engaged, consented to or
authorized any broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. The Company and Sub hereby agree to
indemnify and hold harmless the Purchaser from and against all fees,

                                      -9-
<PAGE>   10

commissions or other payments owing to any party acting on behalf of the Company
or Sub hereunder.

               (b) The Purchaser has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Purchaser hereby agrees to indemnify and
hold harmless the Company and Sub from and against all fees, commissions or
other payments owing to any party acting on behalf of the Purchaser hereunder.

         7.8 FEES, COSTS AND EXPENSES. All fees, costs and expenses (including
attorneys' fees and expenses) incurred by either party hereto in connection with
the preparation, negotiation and execution of this Agreement, the License
Agreement, the Company Warrant and the Sub Warrant and the consummation of the
transactions contemplated hereby and thereby, shall be the sole and exclusive
responsibility of such party.

         7.9 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement, the License Agreement, the Company Warrant or the Sub Warrant
(or any such agreement in it entirety) is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restriction of this Agreement (or such other
agreements) shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.

         7.10 FURTHER ASSURANCES. The parties will from time to time subsequent
to the Closing, at the respective parties' request and without further
consideration, execute and deliver such other documents and instruments, as such
requesting party may reasonably request in order to more fully carry out the
intentions of the parties under this Agreement and under the documents
contemplated by this Agreement (including, without limitation, the License
Agreement, the Company Warrant and the Sub Warrant).

         7.11 INITIAL PUBLIC ANNOUNCEMENT. The Company and the Purchaser shall
agree on the form and content of the initial public announcement which shall be
made concerning this Agreement, the License Agreement, the Company Warrants and
the Sub Warrant and the transactions contemplated hereby and thereby, and
neither the Company nor the Purchaser shall make such public announcement
without the consent of the other, except as required by law. It is contemplated
that no announcement will be made prior to the execution of this Agreement.

         7.12 ARBITRATION.

               In the event a dispute occurs with respect to any claim, dispute
or other matter arising out of or relating to this Agreement, the parties hereto
will promptly attempt to settle such dispute through consultation and
negotiation in good faith and in a spirit of mutual cooperation. If agreement is
reached concerning the resolution of such dispute, then such agreement shall be
final, conclusive and binding on the parties hereto. If, on or before the tenth
day after written notice of such dispute is given by one party to the other
parties, such dispute has not been resolved by the agreement of all the parties,
such dispute shall be settled by an expedited arbitration proceeding conducted
in accordance with the then-current CPR Non-Administered Arbitration Rules and
the Federal Rules of Evidence in Wilmington, Delaware by a panel of three
arbitrators who shall have experience relating to the dispute or matter to be

                                      -10-
<PAGE>   11

resolved. Each of the Company and the holder shall select an arbitrator, and
those two arbitrators shall select a third arbitrator. The parties hereto shall
provide such arbitrators with such information as may be reasonably requested in
connection with the arbitration of such dispute and shall otherwise cooperate
with each other and such arbitrators in good faith and with the goal of
resolving such dispute as promptly as reasonably practicable. The arbitrators'
decision and award with respect to the dispute referred to shall be final and
binding on the parties hereto and may be entered in any court with jurisdiction,
and the parties hereto shall abide by such decision and award. The cost of the
arbitration proceeding and any proceeding in court to confirm or to vacate any
arbitration award, as applicable (including, without limitation, attorneys' fees
and costs), shall be borne by the unsuccessful party (if any) and shall be
awarded as part of the arbitrators' award; provided however, that if the
arbitrators do not find one party to be unsuccessful then the cost of the
arbitral proceeding shall be paid equally by the parties hereto.

           [the remainder of this page has been intentionally omitted]

                                      -11-
<PAGE>   12

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date set forth above.

                                       SRS LABS, INC., a Delaware corporation

                                       By: /s/ THOMAS C. K. YUEN
                                           ------------------------------------
                                       Name: Thomas C. K. Yuen
                                       Title: Chairman of the Board and Chief
                                       Executive Officer

                                       SRS WOWCAST, INC., a Delaware corporation

                                       By: /s/ THOMAS C. K. YUEN
                                           ------------------------------------
                                       Name: Thomas C. K. Yuen
                                       Title: Chairman of the Board and Chief
                                       Executive Officer

                                       MICROSOFT CORPORATION, a Washington
                                       corporation

                                       By: /s/ AMAR NEHRU
                                           ------------------------------------
                                       Name: Amar Nehru
                                       Title: Corporate Development
                                              Vice President

                                      -12-

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