EXHIBIT 10.32
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of
September 30, 2002, by and between Digital Theater Systems, Inc., a Delaware
corporation (the "Company"), and Xxx Xxxxxxxx ("you" or "Employee") with
reference to the following facts:
WHEREAS, the Company desires Employee to remain in the employ of the
Company, and Employee desires to be so employed, on the terms and conditions
herein contained.
NOW, THEREFORE, in consideration of the various covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
parties hereto agree as follows:
1. Term of Employment. The Company hereby agrees to continue the
employment of Employee, and Employee accepts such continuing employment, subject
to the terms and conditions of this Agreement. The term of this Agreement shall
commence as of the date hereof and shall run for a period of eighteen (18)
months, unless sooner terminated, and shall automatically renew on a daily
basis, without further action of any kind by the parties, until terminated in
accordance with the provisions this Agreement (the "Term"). The phrase "term of
Employee's employment hereunder" shall mean the period of eighteen (18) months
extending from the date of this Agreement or the date of expiration or other
termination hereof, which ever is later, unless you are terminated for "good
cause", as defined herein, whereupon the "term of Employee's employment
hereunder" shall be from the date of this Agreement until the date of
termination for good cause.
2. Duties. You agree to serve the Company as its President and
Chief Executive Officer and member of the Board of Directors. Your duties will
be those of similar employees for a company similar to the Company and such
other duties as are specified by the Chairman of the Board of Directors. During
the Term of this Agreement, you will devote substantially full time to, and use
your best efforts to advance, the business and welfare of the Company.
3. Salary and Benefits.
(a) Salary. For the term of employees employment
hereunder, the Company shall pay you a salary at the rate of $275,000 per year
payable biweekly and subject to payroll deductions as may be necessary or
customary in respect of the Company's salaried employees in general. Your salary
may be increased as deemed appropriate by the Chairman of the Board of Directors
of the Company, with the review and approval of the Compensation Committee of
the Company.
(b) Vacations. You shall be entitled to four (4) weeks
paid vacation during the term of this Agreement and for each full year of
renewal thereof. Vacation shall accrue biweekly on a pro-rata basis. Any unused
pro-rata portion (not to exceed 180 hours of accumulation) of your annual paid
vacation shall be paid to you upon termination of the Agreement for any reason.
(c) Annual Bonus, Incentive, Savings and Retirement
Plans. You shall be entitled to bonuses as deemed appropriate by the Chairman of
the Board of Directors of the Company. You shall also be entitled to participate
in all annual bonus, incentive, stock option, savings and retirement plans,
practices, policies and programs applicable generally to other employees of the
Company of a similar class, as determined by the Chairman of the Board of
Directors of the Company.
(1) Stock Options. You may be granted stock
options under this Agreement which, if any, will vest over four consecutive
12-month periods as per your STOCK OPTION AGREEMENT with the Company and
administered under the Company's STOCK OPTION PLAN. Additional stock options may
be granted to you during the period of this Agreement to the extent granted to
other employees of the Company of a similar class and as determined by the
Chairman of the Board of Directors of the Company.
(2) Incentive Plan. You shall be entitled to
participate in Company Incentive Plans as applicable generally to other
employees of the Company of a similar class and as determined by the Chairman of
the Board of Directors of the Company. You shall be entitled to bonuses as
deemed appropriate by the Chairman of the Board of Directors with respect to the
realization of the Company's INCENTIVE PLAN objectives.
(3) Annual Bonus. You shall be entitled to
participate in the annual bonus plan as applicable generally to other employees
of the Company of a similar class and as determined by the plan and the Chairman
of the Board of Directors of the Company.
(4) Savings and Retirement Plans. You shall be
entitled to participate in savings and retirement plans and any other practices,
policies and programs applicable generally to other employees of the Company of
a similar class and as determined by the Chairman of the Board of Directors of
the Company.
(d) Welfare Benefit Plans. You shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company to the extent
applicable generally to Similar Employees of the Company.
(e) Expenses. The Company shall promptly reimburse
Employee for reasonable out-of-pocket expenses incurred in connection with the
Company's business and the performance of Employee's duties hereunder, subject
to (i) such policies as the Company may from time to time establish for senior
executives of the Company, and (ii) Employee furnishing the Company with
evidence in the form of receipts satisfactory to the Company substantiating the
claimed expenditures. Additionally, you will receive $1,000.00 per month
automobile expense allowance.
(f) Other Benefits. You shall be entitled to other
benefits in accordance with the plans, practices, programs and policies as in
effect generally with respect to Similar Employees of the Company.
4. Death or Disability of Employee. If you die or become disabled
prior to the termination or other expiration of this Agreement, your employment
under this Agreement will automatically terminate. "Disability" means any
physical or mental illness that renders you unable to perform your agreed-upon
services under this Agreement for ninety (90) consecutive days or an aggregate
of one hundred twenty (120) days, whether or not consecutive, during any
consecutive 12-month period. Disability shall be determined by a licensed
physician not affiliated with you or the Company. In the event of your death or
disability, the amounts due you pursuant to this Agreement through the date of
your death or disability will be paid to you or your beneficiaries. Such
benefits shall include your stock option benefits.
5. Termination for Cause. Your employment under this Agreement
may be terminated immediately by the Company for "good cause." If the Company
alleges good cause, they will specify in writing the reasons and you shall have
ten (10) business days from the date such notice is given in which to
cure such cause. Absent such cure within the cure period, your employment shall
be deemed terminated for good cause on the date such notice was given ("the date
of termination for good cause"). The term "good cause" is defined as any one or
more of the following occurrences:
(a) Gross negligence, material violation by you of any
duty or any other material misconduct on your part;
(b) Your conviction by, or entry of a plea of guilty or
nolo contendere in, a court of competent and final jurisdiction for any crime
punishable by imprisonment in the jurisdiction involved; or
(c) Your commission of an act of fraud, whether prior to
or subsequent to the date of this Agreement, upon the Company.
In the event of termination for "good cause," this Agreement will
terminate, and your salary and unexercised stock options will terminate as of
the last day of the month in which proper notice of your termination was given
to you, beyond which point in time Company shall have no further obligations to
you whatsoever, unless otherwise required by law.
6. Other Termination.
(a) Severance Pay. The Company may terminate this
Agreement at any time and without cause at the Company's sole discretion,
effective five (5) days after notice to Employee, subject to the provisions of
this Agreement. Upon the termination of this Agreement for other than good
cause, the Company shall continue during the term of Employee's employment
hereunder to pay to Employee in monthly installments, as severance pay,
Employee's full Salary in effect at the time of such termination, without a duty
to mitigate.
Subject to approval by the Administrator, as defined
in the Company's Stock Option Plan, which approval shall be sought at the time
of the consideration by the Board of Directors of this Agreement, all options
granted to you (incentive and nonqualified) shall provide that, in the event of
termination of this Agreement (including constructive termination) for other
than "good cause," as defined herein, that each such option (a) shall
immediately vest and (b) shall be exercisable for the period set forth in the
option agreement (but not in excess of the specified maximum term of such
option). You shall also be entitled to continue to receive such benefits as you
are receiving at the time of termination of this Agreement, e.g. health plans,
etc., until the end of the term of Employee's employment hereunder, unless
otherwise required by law.
Constructive Termination means a termination of this
Agreement resulting from any material failure by the Company to fulfill its
obligations under this Agreement which is not cured within thirty (30) days
after receipt of written notice by the Company from you specifying the nature of
the failure, which failure shall include, but shall not be limited to, (a) your
removal, other than removal as a result of a termination for cause or voluntary
termination, as President and Chief Executive Officer of the Company and member
of the Board of Directors or any material change by the Company in your
functions, duties or responsibilities from those in which you was engaged under
this Agreement without your consent, (b) a material, non-voluntary reduction in
your base salary and eligibility for bonus amounts, or (c) an occurrence of a
Change in Control (as defined below).
(b) Consulting. For the first twelve (12) months that the
Employee is receiving severance pay pursuant to subsection 6(a) above, Employee
shall be available, in person and/or by
telephone, as a consultant to the Company to consult with its officers and
directors regarding the business of the Company as may be reasonable, taking
into account Employee's duties and efforts at Employee's subsequent employment
or business. It is agreed that eight (8) hours per week of consultation, in
person and/or by phone, shall be reasonable.
7. Termination Upon Sale and/or Change in Control of the Company.
Notwithstanding any of the provisions in this Agreement to the contrary, in the
event of a Sale of the Company and/or Change in Control (as defined herein), you
shall have the option (exercisable within ninety (90) days after the Sale of the
Company and/or Change in Control) to terminate this Agreement and to receive a
lump sum payment (payable within thirty (30) days of the date on which you
notify the Company of your intention to terminate this Agreement) equal to 18
months salary at your then current rate or to continue as an employee in
accordance with the terms and conditions outlined in this Agreement. In
addition, you shall be entitle to a one-time lump sum payment of $250,000.00 (a
"Sale of the Company Amount"). The Sale of the Company Amount shall be in
addition to any other amounts you may be entitled to under this Agreement. In
the event you terminate this Agreement in accordance with this provision, the
Company shall have no further obligations to you with respect to salary,
benefits or severance pay other than those that you have earned as to the date
of your termination. The provisions of this Section 7 shall terminate upon, and
shall not be applicable with respect to, the consummation by the Company of an
initial public offering of its securities. The term "Sale of the Company" or
"Change of Control" means (i) the time at which any person or group of persons
(other than the shareholders of the Company as of the effective date of this
Agreement) become the beneficial owner of a percentage of the Company's voting
stock equal to at least 51% or (ii) all or substantially all of the Company's
assets are sold as an entirety, or substantially as an entirety, to any legal
entity.
8. Confidential Information. You shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which you shall have obtained during your
employment by the Company or any of its affiliated companies (including the
Partnership and Digital Theater Systems Corp.) and which shall not be or become
public knowledge (other than by acts by you or your representatives in violation
of this Agreement). After termination of your employment with the Company, you
shall not, without the prior written consent of the Company, or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it in writing. You acknowledge that such actions could cause
irreparable harm to the Company and that the Company may obtain an injunction or
other equitable relief to enforce this provision. Furthermore, upon termination
of this Agreement, you will promptly deliver to the Company all books,
memoranda, records and written data in original form of every kind relating to
the business and affairs of the Company that may then be in your possession,
custody or control.
9. Non-Compete. You agree that for the period commencing on the
date of this Agreement and ending upon the completion of the term of Employee's
employment hereunder or other termination or expiration hereof, except on behalf
of the Company and its affiliates in accordance with this Agreement, you shall
not, directly or indirectly, as employee, agent, consultant, stockholder,
director, partner or in any other individual or representative capacity, own,
operate, manage, control, engage in, invest in or participate in any manner in,
act as a consultant or advisor to, render services for (alone or in association
with any person, firm, corporation or entity), or otherwise assist, for
compensation or otherwise, any person or entity that engages in or owns, invests
in, operates, manages or controls any venture or enterprise that engages in any
activity, involving the research, development, licensing or sale of
multi-channel (surround sound) digital audio encoding technology for consumer
applications, or involving the research, development, licensing, manufacture or
sale of multi-channel (surround sound) digital audio coding equipment for
theatrical
applications, (the "Business"); provided, however, that nothing contained in
this Agreement shall be construed to prevent you from investing in the stock of
any competing corporation listed on a national securities exchange or traded in
the over-the-counter market, but only if you are not involved in the business of
said corporation and if you and your affiliates collectively do not own more
than an aggregate of 5% of the stock of such corporation.
10. Non-Solicitation. During the Term of this Agreement, and
without limiting the generality of the provisions of Section 8 above, you agree
that, except on behalf of the Company and its affiliates in accordance with this
Agreement, you will not interfere with or disrupt or attempt to disrupt the
Company's business relationship with its customers or suppliers or solicit any
of the employees of the Company to leave the employment of the Company.
11. Inventions. All processes, technologies and inventions
relating to the Business (collectively, "Inventions"), including new
contributions, improvement, ideas, discoveries, trademarks, copyrights and trade
names ("Intellectual Property"), conceived, developed, invented, made or found
by you, alone or with others, during the term of your employment hereunder,
whether or not patentable and conceived, developed, invented, made or found on
the Company's time or with the use of the Company's facilities or materials,
shall be the property of the Company and shall be promptly and fully disclosed
by you to the Company. You shall perform all necessary acts (including, without
limitation, executing and delivering any confirmatory assignments, documents or
instruments requested by the Company) to vest title to any such Inventions or
other Intellectual Property in the Company and to enable the Company, at its
expense, to secure and maintain domestic and/or foreign patents or any other
rights for such Inventions and other Intellectual Property.
12. WAIVER OF JURY. WITH RESPECT TO ANY DISPUTE ARISING UNDER OR
IN CONNECTION WITH THIS AGREEMENT, EACH OF YOU AND THE COMPANY IRREVOCABLY
WAIVES ALL RIGHTS IT MAY HAVE TO DEMAND A JURY TRIAL. YOU SHALL BE ENTITLED TO A
TRIAL BEFORE A JUDGE, OR ELECT TO PARTICIPATE IN BINDING ARBITRATION. THIS
WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE AND EACH PARTY
ACKNOWLEDGES THAT NONE OF THE OTHER PARTIES NOR ANY PERSON ACTING ON BEHALF OF
THE OTHER PARTIES HAS MADE ANY REPRESENTATION OF FACT TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE PARTIES EACH
FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY
TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT
THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. THE PARTIES
EACH FURTHER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE MEANING AND
RAMIFICATIONS OF THIS WAIVER PROVISION.
13. Miscellaneous.
13.1 Modification and Waiver of Breach. No waiver or
modification of this Agreement shall be binding unless it is in writing signed
by you and the Company. No waiver of a breach of this Agreement shall be deemed
to constitute a waiver of a future breach, whether of a similar or dissimilar
nature.
13.2 Notices. All notices and other communications
required or permitted under this Agreement shall be in writing, served
personally on, or mailed by certified or registered United States Mail
to, the party to be charged with receipt thereof. Notices and other
communications served by mail shall be deemed given hereunder 72 hours after
deposit of such notice or communication in the United States Post Office as
certified or registered mail with postage prepaid and duly addressed to whom
such notice or communication is to be given, in the case of (a) the Company,
0000 Xxxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Chairman of the
Board of Directors, or (b) to you, to the address set forth below your name on
the signature page of this Agreement. You and the Company may change their
address for purposes of this Section by giving to the party intended to be bound
thereby, in the manner provided herein, a written notice of such change.
13.3 Counterparts. This instrument may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.
13.4 Construction of Agreement. This Agreement shall be
construed in accordance with, and governed by, the internal laws of the State of
California.
13.5 Legal Fees. If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of any
alleged dispute, breach, default or misrepresentation in connection with this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs it incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
13.6 Severability Clause. If any provision of this
Agreement or the application thereof is held invalid, the invalidity shall not
affect other provisions or applications of the Agreement which can be given
effect without the invalid provisions or applications and to this end the
provisions of this Agreement are declared to be severable.
13.7 Complete Agreement. This instrument constitutes and
contains the entire agreement and understanding concerning your employment and
the other subject matters addressed in this Agreement between you and the
Company, and supersedes and replaces all prior negotiations and all agreements
proposed or otherwise, whether written or oral, concerning the subject matters
hereof (including any previous agreements relating to your employment with
Digital Theater Systems, Inc., Digital Theater System Corp. or the Partnership).
This is an integrated document.
13.8 Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement, except as expressly contemplated herein.
13.9 Non-transferability of Interest. None of the rights
of Employee to receive any form of compensation payable pursuant to this
Agreement shall be assignable or transferable except through a testamentary
disposition or by the laws of descent and distribution upon the death of
Employee. Any attempted assignment, transfer, conveyance, or other disposition
(other than as aforesaid) of any interest in the rights of Employee to receive
any form of compensation to be made by the Company pursuant to this Agreement
shall be void.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written.
EMPLOYEE: THE COMPANY:
DIGITAL THEATER SYSTEMS, INC.
/s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxx
--------------------------------- ------------------------------
XXX XXXXXXXX XXX XXXXXXX
CHAIRMAN
Address: Address of Record
with DTS Human
Resources Dept.
