EXHIBIT 10.1

 

STRATEGIC ALLIANCE AGREEMENT

 

THIS STRATEGIC ALLIANCE AGREEMENT (the “Agreement”) is made and entered into
effective as of September 23, 2004 (the “Effective Date”), by and between Coming
Home Studios, LLC, a California limited liability company (“CHS”), and SRS Labs,
Inc., a Delaware corporation (“SRS”).

 

RECITALS:

 

A.                                 CHS is a live concert DVD and television
production company focusing on working with artists to obtain exclusive rights
to film and record live concert performances, produce a finished audiovisual
entertainment product and distribute the show for DVD/home video and broadcast.

 

B.                                     SRS develops and licenses audio
enhancement technologies including a technology commonly known as Circle
Surround and Circle Surround II.

 

C.                                   The parties desire that CHS use SRS
technologies, and particularly the Circle Surround technologies, in the
recording and production of its music DVD productions. The parties further
desire to create new opportunities to promote their respective brands and
products.

 

D.                                  Concurrently with this Agreement, the
parties have also entered into an Operating Agreement for the CHS/SRS LLC, a
California Limited Liability Company in which the parties are the only members,
pursuant to which SRS is providing financing for certain, selected music DVD
productions and CHS is contributing its rights with respect thereto.  CHS is the
sole manager of that LLC.

 

AGREEMENT

 

Now, therefore, in consideration of the above recitals and the mutual covenants
set forth below, the parties agree as follows:

 

1.                                      Co-promotional Activities. The parties
will use their reasonable, good faith, best efforts to identify and implement
opportunities to use and promote SRS technologies, promote CHS productions and
to promote their respective brands.  Set forth below is several ways the parties
will work together to achieve these strategic goals.  The list below is not
exclusive, and the parties may identify and implement other opportunities, or
discontinue any of the below identified opportunities, by mutual consent. The
parties recognize that many of these opportunities may be subject to the consent
of the artists or other third parties, and each will use their reasonable, good
faith best efforts to obtain such consent.

 

Trade shows.  CHS and SRS will attend numerous industry-related trade shows to
promote their brands.  Some of the trade shows being discussed are: POPKOM,

 

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MIDEM, NAMM, Surround Conference and CES.  The parties will cooperate to develop
a strategy and presentation appropriate for such shows.

 

Movie Theatres.  Both parties desire to promote their brands via movie
theatres.  CHS has a working relationship  with AEG TV and Regal Cinemas.  CHS
is attempting to influence Regal to improve its Digital Network.  CHS will work
closely with SRS to assist  SRS in placing SRS Circle Surround in the Regal
Cinemas Theatres.  CHS will use its reasonable best efforts to ensure that as
digital capabilities are added to the 7000 theater network of Regal that Regal
agrees to include SRS equipment and that future showings of CHS’ products at
Regal are shown in SRS Circle Surround.

 

Video Streaming.  A goal for CHS is to begin promoting its shows through video
streaming methods. CHS and SRS will work together to approach Microsoft, Apple
and other video streaming companies with whom SRS has a relationship to promote
CHS and SRS products and brands.

 

Demo Reels.  CHS and SRS will create two demo reels to showcase CHS productions
and SRS technologies and promote the parties’ brands; one reel targeting
industry related companies and vendors and the other targeting consumers.

 

Concert DVDs.  CHS’ primary business is production of premium quality live
concert DVDs.  CHS will encode all DVD products with SRS Circle Surround as part
of its technology program.  CHS will assist SRS in the production (at SRS
expense) of an SRS animated logo with SRS Audio. The SRS animated logo will be
included in the opening credits of each DVD adjacent to the CHS animated logo,
and every DVD will have the CHS and SRS logos prominently displayed for maximum
awareness.  CHS will not include logo credit or otherwise promote or advertise
the use of competing surround sound technologies in connection with its DVDs. 
CHS and SRS ad slicks or ad cards will be included inside the DVD media case
subject to approval of artist and distributor if required (each party will
absorb the cost of printing its ad slick or ad card).  The parties will work
cooperatively to assure that consumers are aware that the reason the productions
look and sound the way they do is because of the technology and companies behind
them – CHS and SRS.

 

Press Releases.  CHS and SRS will issue press releases upon each new release or
sales plateau on each of its joint products to bring awareness to the success
of  the parties’ alliance and brands.  These press releases will be geared
towards consumers, industry people and the investment banking community. The
content of all press releases using the name of either company, or both, shall
be subject to the approval of such named company prior to release.

 

Web Sales.  SRS will begin to sell CHS/SRS DVDs through its website sharing
revenues 50/50 after costs of goods, artists and publishing royalties and
fulfillment costs.  CHS will use its reasonable best efforts to link the
respective CHS and SRS websites to CHS’ various catalog artists websites for
maximum exposure.

 

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Artist Endorsements.  CHS prides itself on its close relationships with the
artists with whom it works.  CHS will approach the artists and seek their
consent, endorsement and assistance in promoting the CHS and SRS brands via
interviews, advertisements, trade show appearances, in-store appearances, quotes
for brochures, interview for the demo reels, etc.

 

Screening Room.  CHS and SRS will work together to approach manufactures
regarding creation of a screening room in the Los Angeles area at which the
parties’ productions and technologies can be demonstrated or showcased to
clients, customers, artists and manufacturers.

 

Bundling and Premium Deals.  CHS and SRS will jointly approach various
manufacturers and product representatives about bundling CHS products for sales
promotions, and similar promotional activities.

 

Preloaded Demonstration Clips. SRS will work with various product manufacturers
to promote preloading of clips from Circle Surround encoded CHS productions on
media playback devices such as the Apple Vpod or the Portable Media Center
supported by Microsoft.  These clips will carry the CHS and SRS logos and
include information on purchase of the full-length productions. This is subject
to the artist’s and label agreements and publishing licenses, if applicable.

 

Web Based Promotional Clips.  SRS and CHS will work together to produce short
clips (approx 30 seconds) for web-based promotion on SRS’ and other websites.

 

Road Shows.  The parties will formulate a joint team to travel to seminars,
trade shows, industry events and consumer events to promote the CHS and SRS
brands, and showcase the parties’ products and technologies through
demonstrations, presentations, brochures, etc.

 

2.                                      Expenses.    Implementation of
particular opportunities will involve additional direct costs payable to third
parties (“Direct Costs”). If a particular activity or project benefits one party
predominately then the Direct Costs related thereto will be paid by the
benefited party. If a particular activity or project benefits both parties then
the Direct Costs related thereto will be shared by the parties proportional to
the benefit received and if the parties cannot agree upon the proportional
benefit, then the dispute will be submitted to rapid dispute resolution as
hereinafter provided. . Each party will absorb its own, internal expenses
(including but not limited to the expense of employees, consultants, office and
administrative expenses) related to performing their respective duties under
this Agreement.

 

3.                                      Term and Termination. Subject to earlier
termination as provided below, the initial term of this Agreement expires July
9, 2006 and will automatically renew for successive one (1) year terms unless
notice of non-renewal is delivered by either party at least one (1) year prior
to expiration the then current term.

 

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Termination for Breach. If a party has materially breached this Agreement then
the other party may terminate this Agreement immediately upon delivery of
notice; provided however, if the breach is capable of cure, then the breaching
party will have thirty (30) days to cure the breach and avoid termination.

 

Termination for Assignment or Bankruptcy. This Agreement may be terminated by a
party if the other party hereunder seeks protection under any bankruptcy,
reorganization, insolvency or other debtor relief or protection law, makes any
assignment of assets for the benefit of creditors, becomes generally unable to
pay its debts when due, or has any such proceeding filed against it which is not
fully dismissed within ninety (90) days after filing.

 

4.                                    General Provisions.

 

LIABILITY LIMITATION. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF
PROFITS, WHETHER IN AN ACTION IN CONTRACT OR TORT RELATING TO OR ARISING FROM
THIS AGREEMENT.

 

Governing Law. This Agreement will be interpreted and enforced in accordance
with the laws of the State of California, USA, without regard to choice of law
principles.

 

Rapid Dispute Resolution.  All disputes, claims or controversies, of any nature,
arising out of or relating to this Agreement, that are not resolved by the
parties’ good faith attempt to negotiate a resolution shall be submitted to one
judicial referee, pursuant to the provisions of California Code of Civil
Procedure. The referee shall have substantial experience in resolving disputes
involving software and technology. The referee, without jury, is to try the
entire case, including any issues of fact and/or law, and is to report his
statement of decision in writing to the Court within twenty days after the close
of testimony.  The statement of decision shall be filed with the court and
judgment entered thereon in the same manner as if the action had been tried by
the superior court.  The referee shall also hear and determine any post-trial
motions, including, but not limited to, motions for new trial.  The parties
agree that all matters shall be subject to reference in Orange County,
California. The prevailing party in any proceeding shall be entitled to recover
its reasonable attorneys’ fees, expert witness fees and other costs of suit in
addition to any other relief to which it may be entitled.  Notwithstanding the
foregoing, actions for equitable relief for breach of confidential information
or other obligations for which equitable relief is appropriate may be brought in
any court of competent jurisdiction.

 

Entire Agreement. This Agreement, including the exhibits if any constitutes the
entire agreement between the parties, except for any agreements relating to the
protection of confidential information in which case this Agreement is
supplemental thereto and shall supercede such prior agreements only to the
extent inconsistent with the prior agreement.

 

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Assignment. Neither party may transfer, assign or sublicense its rights or
duties under this Agreement without the prior written approval of the other
party. A merger, sale of substantially all the assets of a party or other
business combination will not be considered an assignment for purposes of this
provision.

 

Third Party Beneficiaries. This Agreement is for the sole benefit of the parties
and their permitted successors and assigns and nothing herein express or implied
shall give or be construed to give any other person or entity any legal or
equitable rights hereunder.

 

Amendments and Waiver. No amendment of this agreement will be effective unless
it is writing and signed by a duly authorized representative of all parties. No
waiver of any provision of this Agreement will be effective unless contained in
a writing referring specifically to such provision and signed by the party
against whom the waiver is alleged. Any waiver shall be effective only in the
specific instance and for the specific purpose stated in such writing.

 

Successors and Assigns. This Agreement shall inure to the benefit of and shall
be binding upon the parties and their respective permitted successors and
assigns.

 

Severability. If any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions of this Agreement will remain in full
force.

 

Confidentiality.  Confidential Information means non-public information
concerning a party’s technology, research and development, technical
specifications and designs, trade secrets, customers, personnel, financial
information, and other information either marked as confidential or proprietary
or due to the nature of the information and the circumstances of its disclosure
would be understood by a reasonable businessperson as confidential or
proprietary.  Confidential Information does not include information that a
receiving party can demonstrate (a) was or becomes a part of the public domain
other than as a result of a disclosure by the receiving party or its directors,
officers, employees, agents, contractors or advisors (“Representatives”); (b)
was or becomes available to the receiving party on a non-confidential basis from
a source other than the disclosing party or its advisors, provided that such
source is not bound by a confidentiality obligation with disclosing party; (c)
was within the receiving party’s possession prior to it being furnished to the
receiving party by or on behalf of the disclosing party provided the source of
such information was not bound by a confidentiality obligation owed to the
disclosing party with respect thereto or (d) was developed by the receiving
party independent of any use of or reference to the Confidential Information.

 

Any and all Confidential Information received by a party hereunder (the
“Receiving Party”) that is furnished by or on behalf of the other party (the
“Disclosing Party”) in connection with this Agreement will only be used for the
purposes of exercising the rights and performing the obligations of the
Receiving Party under this Agreement or the CHS SRS LLC agreements.  All
Confidential Information will be kept confidential by the Receiving Party and
its Representatives; provided, however, Confidential Information

 

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may be disclosed (a) to the Receiving Party’s Representatives who need to know
such information in order to accomplish the business purpose for which the
Confidential Information was disclosed (collectively the “Informed Persons”);
(b) pursuant to a lawful subpoena issued by a court of competent jurisdiction
provided prior notice and opportunity to defend is given to the Disclosing Party
or as otherwise reqired by law; and (c) to any person or entity to which the
Disclosing Party consents in advance and in writing.  The Receiving Party will
take appropriate and reasonable steps to ensure the protection, confidentiality
and security of the Confidential Information including, but not limited to,
ensuring that all Informed Persons are aware of the confidential and/or
proprietary nature of the Confidential Information and have themselves signed
confidentiality agreements providing substantially the same protections for the
Disclosing Party as are provided under this Agreement.

 

IN WITNESS WHEREOF, this Agreement has been executed as of the Effective Date.

 

 

COMING HOME STUDIOS LLC

 

 

 

By:

       /S/ DANIEL E. CATULLO III

 

Name:

 Daniel E. Catullo III

 

Title:

     Manager

 

 

 

SRS LABS, INC.

 

 

 

 

 

By:

       /S/ THOMAS C.K. YUEN

 

Name:

 Thomas C.K. Yuen

 

Title:

     Chairman and Chief Executive Officer

 

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