Exhibit 10.1
SRS Labs, Inc.
Profit Sharing and Bonus Plan
(Adopted by the SRS Labs, Inc. Board of
Directors on December 12, 2006)
This profit sharing and bonus plan
shall be known as the SRS Labs, Inc. Profit Sharing and Bonus Plan
(the “Plan”). The Plan is intended to qualify as
a compensation or bonus plan that is exempt from the application of
the Employee Retirement Income Security Act of 1974, as amended, by
reason of Section 3 of such Act.
1.
Applicability Period
The Plan applies to the fiscal year
of SRS labs, Inc. (the “Company”) ending December 31,
2007 and to future fiscal years until the Plan is terminated
pursuant to Section 11 below.
2.
Components of the Plan
The Plan has two components: Profit
Sharing and Bonus.
3.
Eligibility
All full-time, regular employees of
the Company and its subsidiaries are eligible to participate in the
Plan. Consultants, part-time employees, temporary employees
and non-employee directors are not eligible to participate in any
part of the Plan. A full time regular employee is defined as
one who regularly works an average of 32 hours weekly.
4.
Profit-Sharing
Awards
4.1
Eligibility for Profit-Sharing
Awards. All eligible
employees who were employed by the Company or its subsidiaries from
the first day of any fiscal quarter in which the Company reports
net income through the date the Company files its Quarterly Report
on Form 10-Q with the Securities and Exchange Commission (the
“SEC”) for that quarter or, with respect to the fourth
quarter, the date the Company files with the SEC its Annual Report
on Form 10-K for the fiscal year, will be entitled to a
profit-sharing payment determined in accordance with Sections 4.2
and 4.3 of the Plan.
4.2
Aggregate Profit-Sharing
Awards. For each
fiscal quarter, the Company shall allocate 5% of the
Company’s net income for the quarter for profit sharing
payments (subject to the discretion of the Board of Directors to
change this percentage, at any time and from time to time, for
future fiscal years through a resolution adopted either before the
next fiscal year begins or within the first three months
thereafter). Net income as defined throughout this Plan shall
include FAS 123 charges.
4.3
Allocation and Distribution of
Profit-Sharing Awards. The profit sharing payments for a given fiscal
quarter shall be allocated to the eligible employees entitled
thereto under Section 4.1 pro rata in proportion to their
respective base salaries.
5.
Quarterly Bonus Awards
5.1
Eligibility for Quarterly
Bonuses. All
eligible employees who were employed by the Company from the first
day of a fiscal quarter (other than the fourth fiscal quarter) for
which the Company achieved at least 80% of the Company’s net
income target for the quarter established by the Company’s
Board of Directors through the date the Company files its Quarterly
Report on Form 10-Q with the SEC for that quarter will be entitled
to a quarterly bonus payment.
5.2
Aggregate Bonus
Pool. For each of
the first three fiscal quarters, the aggregate bonus pool shall be
determined as follows: using the table below, take the
applicable “% of Net Income Achieved” (actual net
income for the applicable quarter divided by target net income for
such quarter, rounded down to the nearest whole percentage) then
calculate the product of the corresponding “Award %”
multiplied by an amount equal to 8% of the Company’s net
income for the applicable quarter (subject to the discretion of the
Board of Directors to change this percentage at any time and from
time to time, effective for future fiscal years through a
resolution adopted either before the next fiscal year begins or
within the first three months thereafter).
|
% of Net Income Achieved
|
|
Award %
|
|
|
<80%
|
|
0
|
%
|
|
80%
|
|
25
|
%
|
|
90%
|
|
50
|
%
|
|
91%
|
|
55
|
%
|
|
92%
|
|
60
|
%
|
|
93%
|
|
65
|
%
|
|
94%
|
|
70
|
%
|
|
95%
|
|
75
|
%
|
|
96%
|
|
80
|
%
|
|
97%
|
|
85
|
%
|
|
98%
|
|
90
|
%
|
|
99%
|
|
95
|
%
|
|
100%
|
|
100
|
%
|
5.3
Allocation and Distribution of
Quarterly Bonuses. The aggregate quarterly bonus payments
determined in accordance with Section 5.2 will be allocated and
distributed to eligible employees in accordance with Section 7 of
the Plan.
6.
Annual Bonus
Awards
6.1
Eligibility for Annual
Bonuses. All eligible
employees who were employed by the Company from the first day of
the fourth fiscal quarter through the date the Company files its
Annual Report on Form 10-K with the SEC for the fiscal year will be
entitled to an annual bonus payment if the Company achieved at
least 80% of the Company’s net income target for the fiscal
year established by the Company’s Board of
Directors.
6.2
Aggregate Bonus
Pool. The aggregate
bonus pool for annual bonuses shall be determined as follows:
using the table below, take the applicable “% of Net Income
Achieved” (actual net income for the fiscal year divided by
target net income for the fiscal year, rounded down to the nearest
whole percentage) then calculate the product of the corresponding
“Award %” multiplied by an amount equal to the sum of
(a) 10% of the Company’s net income for the fourth quarter
plus (b) 2% of the Company’s net income for each of the first
three fiscal quarters (subject to the discretion of the Board of
Directors to change these percentages, at any time and from time to
time, for future fiscal years through a resolution adopted either
before the next fiscal year begins or within the first three months
thereafter).
|
% of Net Income Achieved
|
|
Award %
|
|
|
<80%
|
|
0
|
%
|
|
80%
|
|
25
|
%
|
|
90%
|
|
50
|
%
|
|
91%
|
|
55
|
%
|
|
92%
|
|
60
|
%
|
|
93%
|
|
65
|
%
|
|
94%
|
|
70
|
%
|
|
95%
|
|
75
|
%
|
|
96%
|
|
80
|
%
|
|
97%
|
|
85
|
%
|
|
98%
|
|
90
|
%
|
|
99%
|
|
95
|
%
|
|
100%
|
|
100
|
%
|
|
110%
|
|
120
|
%
|
|
125%
|
|
150
|
%
|
6.3
Allocation and Distribution of
Annual Bonuses. The
aggregate annual bonus payments determined in accordance with
Section 6.2 will be allocated and distributed to eligible employees
in accordance with Section 7 of the Plan; provided ,
however , that (a) the annual bonus paid to any eligible
employee who was not a full-time, regular employee of the Company
or one of its subsidiaries for the entire fiscal year as determined
by Section 7.2 shall be reduced pro rata based upon the number of
calendar days that the employee was a full-time, regular employee
of the Company or one of its subsidiaries during the fiscal year;
and (b) any portion of the annual bonus pool not distributed to
eligible employees pursuant to clause (a) shall be re-allocated to
all eligible employees (whether employed for the entire fiscal year
or a portion thereof) as follows: each eligible employee shall be
entitled to a percentage of the total amount to be re-allocated
determined by dividing (1) the number of days the eligible employee
was employed as a full-time regular employee during the fiscal year
multiplied by the eligible employee’s base salary by (2) the
total base salaries for all eligible employees multiplied by
365.
7.
Bonus
Distribution
7.1
Allocation to Bonus Pools.
After the total
amount of quarterly or annual bonuses payable for a quarter or the
fiscal year has been determined in accordance with Paragraphs 5 or
6, the total amou
