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Exhibit 10.42

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BUSINESS LOAN AGREEMENT

        This Business Loan Agreement (this "Agreement") is entered into by and
between Comerica Bank, a Michigan banking corporation ("Bank") and Digital
Theater Systems, Inc., a Delaware corporation ("Borrower"), as of the 30th day
of June 2004, at Bank's headquarters office at 333 West Santa Clara Street, San
Jose, California 95113.

        In consideration of the mutual covenants contained herein, Bank and
Borrower hereby agree as follows:

        1.    Loans To Borrower.    Any loans which Bank in its sole discretion
has made or may now or hereafter make to Borrower (sometimes hereinafter
collectively referred to as the "Loan") shall be subject to the terms and
conditions of this Agreement unless otherwise agreed to in writing by Bank and
Borrower. If there are contradictions between the provisions of this Agreement
and any other written agreement with the Bank, then the provisions of this
Agreement shall prevail. The Loan shall be subject to the terms and conditions
of this Agreement, promissory note(s) executed in connection herewith and/or
previously or subsequently executed, and all amendments, renewals and extensions
thereof (singularly or collectively, the "Note"), and all those certain security
agreements and/or such other security or other documents as Bank has required or
may now or hereafter require in connection with the Loan (collectively, the
"Loan Documents").

        2.    Legal Effect.    This Agreement supplements the terms and
conditions of the Loan Documents. Except as otherwise specified herein, all
terms used in this Agreement shall have the same meaning as given in the Note
and/or Loan Documents which are incorporated herein by this reference. Any and
all terms used in this Agreement, the Note and/or the Loan Documents shall be
construed and defined in accordance with the meaning and definition of such term
under and pursuant to the California Uniform Commercial Code, as amended. Except
as specifically modified hereby, all of the terms and conditions of the Note
and/or the Loan Documents shall remain in full force and effect.

        3.    Interest Rate; Payment Terms; Loan Fees.    The principal and
interest on the Loan shall be payable on the terms set forth in the Note and/or
the Loan Documents. A loan fee in the sum of ten thousand Dollars ($10,000)
shall be paid concurrently with the execution of this Agreement and the note
evidencing Bank's $10,000,000 revolving loan to Borrower.

        4.    Security.    Bank's $10,000,000 revolving loan to Borrower is
unsecured. Bank shall release any liens that it currently has on the Borrower's
personal property that would otherwise secure repayment of that loan. Without
limiting the generality of the foregoing, the Bank shall file termination
statements and, at Borrower's expense, take such other actions to evidence that
release as may be reasonably requested by Borrower.

        5.    Representations and Warranties of Borrower.    Borrower represents
and warrants to Bank that as of the date of acceptance of this Agreement, the
Note and/or the Loan Documents, as of the date of borrowing hereunder and at all
times the Loan or any other Indebtedness are outstanding hereunder:

        (a)   Borrower is duly organized, validly existing and in good standing
under the laws of the state of its incorporation;

        (b)   Borrower has the legal power and authority, to own its properties
and assets and to carry out its business as now being conducted; it is qualified
to do business in every jurisdiction wherein such qualification is necessary; it
has the legal power and authority to execute and perform this Agreement, the
Note and/or the Loan Documents to borrow money in accordance with its terms, to
execute and deliver this Agreement, the Note and the Loan Documents, and to do
any and all

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other things required of it hereunder; and this Agreement, the Note and all the
Loan Documents, when executed on behalf of Borrower by its duly authorized
officers, shall be its valid and binding obligations legally enforceable in
accordance with their terms;

        (c)   The execution, delivery, and performance of this Agreement, the
Note and/or the Loan Documents and the borrowings hereunder and thereunder
(i) have been duly authorized by all requisite corporate, partnership or company
action; (ii) do not require governmental approval; (iii) will not result (with
or without notice and/or the passage of time) in any conflict with or breach or
violation of or default under, any provision of law, the articles of
incorporation of Borrower, any provision of any indenture, agreement or other
instrument to which Borrower is a party, or by which it or any of its properties
or assets are bound; and (iv) will not result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of Borrower;

        (d)   The balance sheet of Borrower as provided to Bank in connection
herewith and the related statement of income of Borrower provided to Bank for
the period ended September 30, 2003, fairly present the financial condition of
Borrower in accordance with generally accepted accounting principles ("GAAP")
consistently applied; and from the date thereof to the date hereof, there has
been no material adverse change in such condition or operations; and

        (e)   There is not pending nor, to the best of Borrower's knowledge,
threatened, any litigation, proceeding or governmental investigation which could
materially and adversely affect its business or its ability to perform its
obligations, pay the Indebtedness and/or comply with the covenants set forth
herein and/or in the Note and/or the other Loan Documents.

        6.    Affirmative Covenants.    Until the Indebtedness is paid in full,
Borrower covenants and agrees to do the following:

        (a)   Furnish to Bank within sixty (60) days after the end of each
quarter, an unaudited balance sheet and statement of income covering Borrower's
operations. Within one hundred twenty (120) days of the end of each of
Borrower's fiscal years, furnish to Bank statements of the financial condition
of Borrower for each such fiscal year, including but not limited to, a balance
sheet, profit and loss statement, and statement of cash flow. Said annual
statements shall be prepared by an independent certified public accountant
selected by Borrower and reasonably acceptable to Bank;

        (b)   Promptly inform Bank of the occurrence of any Default or Event of
Default as defined in the Note and/or the Loan Documents (hereinafter referred
to as a "Default") or of any event which could have a Material Adverse Effect on
Borrower;

        (c)   Furnish such other information as Bank may reasonably request;

        (d)   Keep in full force and effect its own corporate existence in good
standing; continue to conduct and operate its business substantially as
presently conducted and operated and maintain and protect all franchises and
trade names and preserve all the remainder of its property used or useful in the
conduct of its business and keep the same in good repair and condition;

        (e)   Comply with the financial covenants set forth in Addendum A,
attached hereto and made a part hereof;

        (f)    Maintain a standard and modern system of accounting in accordance
with GAAP consistently applied;

        (g)   Maintain Borrower's same place of business or chief executive
office or residence as indicated below, and not relocate said address without
giving Bank 30 days prior written notice;

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        (h)   Maintain insurance with such insurers in such amounts and of a
type and covering such risks as are usually carried by companies engaged in
similar businesses and owning similar property in the same general area as the
area in which such property is located;

        (i)    On a continuing basis from the date of this Agreement until the
Indebtedness is paid in full and Borrower has performed all of its other
obligations hereunder, Borrower represents and agrees that:

        (1)   There are not and will not be Hazardous Materials (as later
defined) on, in or under any real or personal property ("Property") now or at
any time owned, occupied or operated by the Borrower which in any manner violate
any Environmental Law (as later defined).

        (2)   Borrower shall promptly conduct all investigations, testing and
other actions necessary to clean up and remove all Hazardous Materials on or
affecting the Property in accordance with every Environmental Law.

        (3)   Borrower shall defend, indemnify and hold harmless Bank, its
employees, agents, officers, shareholders and directors from and against any and
all claims, damages, fines, expenses, liabilities or causes of action of
whatever kind, including without limit consultant fees, legal expenses and
reasonable attorneys' fees, suffered by any of them as a direct or indirect
result of any actual or asserted violation of any Environmental Law.

        (4)   Upon ten days notice to Borrower (except in an emergency), Bank
may (but is not obligated to) enter on the Property or take such other actions
as it deems appropriate to inspect, test for, clean up, remove or minimize the
impact of any Hazardous Materials upon Bank's receipt of any notice from any
source asserting the existence of any Hazardous Materials in violation of any
Environmental Law. All costs and expenses so incurred by Bank, including without
limit consultant fees, legal expenses and reasonable attorneys' fees, shall be
payable by Borrower upon demand.

        (5)   The provisions of this section shall survive the repayment of the
Indebtedness and the satisfaction of all other obligations of Borrower to the
Bank.

        (6)   "Hazardous Materials" mean all of the following: any asbestos,
petroleum, petroleum by-products, flammable explosives, or radioactive materials
or any hazardous or toxic materials as defined in the Comprehensive
Environmental Response. Compensation and Liability Act of 1980, as amended (42
U.S.C. Sections 9601 et seq.) or in any other Environmental Law.

        (7)   "Environmental Law" means any federal, state, local or other law,
ordinance, statute, directive, rule, order or regulation on object of which is
to regulate or improve health, safety or the environment.

        7.    Negative Covenants.    Borrower shall not, without Bank's prior
written consent, do any of the following:

        (a)   Grant a security interest in or permit a lien, claim or
encumbrance upon any of its personal property to any person, association, firm,
corporation, entity, governmental agency or instrumentality, except for:

        (1)   Liens for taxes not yet payable or statutory Liens for taxes in an
amount not to exceed $l,000,000, provided that the payment of such taxes which
are due and payable is being contested in good faith and by proper proceedings
diligently pursued, and that reserves or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor and that a stay of
enforcement of any such Lien is in effect;

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        (2)   Liens upon equipment granted in connection with the acquisition of
such equipment by Borrower provided each such lien attaches only to the
equipment acquired with the Debt secured thereby;

        (3)   Deposits under worker's compensation, unemployment insurance,
social security and other similar laws, or to secure the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of borrowed money) or
to secure statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;

        (4)   Liens which arise by operation of law under Article 2 of the
Uniform Commercial Code in favor of unpaid sellers of goods or prepaying buyers
of goods, or liens in items of any accompanying documents or proceeds of either
arising by operation of law under Article 4 of the Uniform Commercial Code in
favor of a collecting bank; and

        (5)   Liens, not material in amount, securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like.

        (b)   Permit any levy, attachment or restraint to be made affecting any
material portion of Borrower's assets this is not released, discharged, or
bonded against within ten (10) business days after such levy, attachment or
restraint;

        (c)   Permit any judicial officer or assignee to be appointed or to take
possession of any material portion or all of Borrower's assets;

        (d)   Sell, lease or otherwise dispose of, move, or transfer, whether by
sale or otherwise, a material portion of Borrower's assets;

        (e)   Change its business structure, corporate identity or structure;
liquidate, merge or consolidate with or into any other business organization if
any such action has a Material Adverse Effect on Borrower;

        (f)    Acquire any other business organization if that acquisition hag a
Material Adverse Effect on Borrower;

        (g)   Make any change in Borrower's financial structure or in any of its
business operations which would have a Material Adverse Effect on Borrower;

        (h)   Incur any material debt outside the ordinary course of Borrower's
business;

        (i)    Make any advance or loan that has a Material Adverse Effect on
Borrower; or

        (j)    Guaranty or otherwise, directly or indirectly, in any way be or
become responsible for obligations of any other person any which would have a
Material Adverse Effect on Borrower, whether by agreement to purchase the
indebtedness of any other person, agreement for the furnishing of funds to any
other person through the furnishing of goods, supplies or services, by way of
stock purchase, capital contribution, advance or loan, for the purpose of paying
and discharging (or causing the payment or discharge of) the indebtedness of any
other person, or otherwise,

        8.    Default.    The terms "Default" or "Event of Default," as used
herein, shall have the meaning given in the Note and/or the Loan Documents. In
addition, any one or more of the following events shall constitute a default by
Borrower under this Agreement, the Note and/or the Loan Documents:

        (a)   If Borrower materially fails or neglects to perform, keep or
observe any term, provision, condition, covenant, agreement, warranty or
representation contained in this Agreement, the Note, the Loan Documents or any
other present or future agreement between Borrower and Bank;

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        (b)   If any material representation, statement, report or certificate
made or delivered by Borrower, or any of its officers, employees or agents to
Bank is not true and correct;

        (c)   If Borrower fails to pay when due and payable or declared due and
payable in accordance with the terms hereof, all or any portion of the
Indebtedness (whether or principal, interest, taxes, reimbursement of Bank
expenses, or otherwise);

        (d)   If there is a material impairment of the prospect of repayment of
all or any material portion of Borrower's obligations, including without
limitation the Indebtedness;

        (e)   If all or any material portion of Borrower's assets become subject
to a writ or distress warrant, or are levied upon, or come into the possession
of any judicial officer or assignee and the same are not released, discharged or
bonded against within ten (10) days thereafter;

        (f)    If any insolvency proceeding is filed or commenced by or against
Borrower without being dismissed within ten (10) days thereafter;

        (g)   If any bankruptcy or other proceeding is filed or commenced by or
against Borrower for its reorganization, dissolution or liquidation without
being dismissed within ten (10) days of its commencement;

        (h)   If Borrower is enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs if that injunction or restraint has a Material Adverse Effect on
Borrower;

        (i)    If a notice of lien, levy or assessment is filed of record with
respect to any material portion or all of Borrower's assets by the United States
Government, or any department, agency or instrumentality thereof, or by any
state, county, municipal or other government agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a lien,
whether inchoate or otherwise, upon any or all of Borrower's assets and the same
is not paid on the payment date thereof if that lien, levy, assessment or lien
has a Material Adverse Effect on Borrower;

        (j)    If a judgment or other claim becomes a lien or encumbrance upon
any material portion or all of Borrower's assets and the same is not satisfied,
dismissed or bonded against within ten (10) days thereafter if that lien or
encumbrance has a Material Adverse Effect on Borrower;

        (k)   If Borrower permits a default in any material agreement to which
Borrower is a party with third parties so as to result in an acceleration of the
maturity of Borrower's indebtedness to others, whether under any indenture,
agreement or otherwise if that default has a Material Adverse Effect on
Borrower;

        (l)    If Borrower makes any payment on account of indebtedness which
has been subordinated to Borrower's obligations to Bank, including without
limitation the Indebtedness if that payment has a Material Adverse Effect on
Borrower;

        (m)  If any material misrepresentation exists now or thereafter in any
warranty or representation made to Bank by any officer or director of Borrower,
or if any such warranty or representation is withdrawn by any officer or
director; or

        (n)   If any party subordinating its claims to that of Bank's or any
guarantor of Borrower's obligations terminates its subordination or guaranty,
becomes insolvent or an insolvency proceeding is commenced by or against any
such subordinating party or guarantor if that claim or insolvency or insolvency
proceeding has a Material Adverse Effect on Borrower.

        Bank shall not be obligated to make advances to Borrower during any cure
period provided for in Sections 8(e), 8(f), 8(g), and 8(j) above.

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        "Material Adverse Effect" means, wherever used herein, an event or
condition that has a material adverse effect on (a) the ability of Borrower, to
perform its obligations under the Loan Documents or of Bank to enforce the
Obligations, or (b) the validity or enforceability of this Agreement, the other
Loan Documents, or the rights and remedies of Bank hereunder or thereunder.

        9.    Rights and Remedies.    Bank shall have the following rights and
remedies upon Default or Event of Default:

        (a)   Bank shall have all rights and remedies available hereunder and
under the Note and the Loan Documents and under applicable law;

        (b)   Bank may at its option without notice, accelerate the Indebtedness
and declare all Indebtedness to be due, owing and payable in full;

        (c)   Bank may at its option without notice, cease advancing money or
extending credit to or for the benefit of Borrower under this Agreement or any
other agreement between Borrower and Bank.

        (d)   No Default (as defined in this Agreement, the Note and/or the Loan
Documents) shall be waived by Bank except in writing and a waiver of any Default
shall not be a waiver of any other default or of the same default on a future
occasion;

        (e)   No single or partial exercise of any right, power or privilege
hereunder, or any delay in the exercise hereof, shall preclude other or further
exercise of the rights of the parties under this Agreement, the Note and/or the
Loan Documents; and

        (f)    No forbearance on the part of Bank in enforcing any of its rights
under this Agreement, the Note and/or the Loan Documents nor any renewal,
extension or rearrangement of any payment or covenant to be made or performed by
Borrower hereunder shall constitute a waiver of any of the terms of this
Agreement, the Note, and/or the Loan Documents, or of any such right.

        10.    Cross-Default.    A Default under this Agreement shall also be a
Default under the Note and the Loan Documents, and vice versa. A Default under
this Agreement, the Note and/or the Loan Documents shall also be a Default under
every other note and other agreement between Bank and Borrower, and vice versa.

        11.    Survival of Covenants, Agreements, Representations and
Warranties.    All covenants, agreements, representations and warranties
(a) previously made (except as specifically subsequently modified); (b) made in
connection herewith or with the Note and/or the Loan Documents and/or any
document contemplated hereby; or (c) executed hereafter (unless such document
expressly states that this Agreement does not apply thereto) shall survive the
borrowing hereunder and thereunder and the repayment in full of the Note and/or
the Loan Documents and any amendments, renewals or extensions thereof and shall
be deemed to have been relied upon by Bank. All statements contained in any
certificate or other document delivered to Bank at any time by or on behalf of
Borrower shall constitute representations and warranties by Borrower.

        12.    Miscellaneous.    

        (a)   This Agreement, the Note and the Loan Documents shall be governed
by California law, without regard for the effect of conflict of laws;

        (b)   Borrower will pay all reasonable out of pocket costs of Bank and
expenses (including, without limitation, Bank's outside attorneys' fees and
costs and/or fees, transfer charges) in connection with the preparation of this
Agreement, the Note, and/or the Loan Documents and/or the documents contemplated
hereby and the closing of the Loan;

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        (c)   This Agreement, the Note and/or the Loan Documents shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
successors and assigns; provided, however, that Borrower shall not assign or
transfer its right or obligations under this Agreement, the Note and/or the Loan
Documents without the prior written consent of Bank;

        (d)   Bank may provide information regarding Borrower and the Loan to
Bank's parent, subsidiaries, and affiliates and service providers, and

        (e)   This Agreement is an integrated agreement and supersedes all prior
negotiations and agreements regarding the subject matter hereof. Any amendments
hereto shall be in writing and be signed by all parties hereto.

        14.    JURY WAIVER.    THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL
ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED
TO, THIS AGREEMENT OR THE INDEBTEDNESS.

        15.    Reference Provision.    If and only if the jury trial waiver set
forth in Section 14 of this Agreement is invalidated for any reason by a court
of law, statute or otherwise, the reference provisions set forth below shall be
substituted in place of the jury trial waiver. So long as the jury trial waiver
remains valid, the reference provisions set forth in this Section shall be
inapplicable.

        a.     Each controversy, dispute or claim (each, a "Claim") between the
parties arising out of or relating to this Agreement, any security agreement
executed by Borrower in favor of Bank, any note executed by Borrower in favor of
Bank or any other document, instrument or agreement executed by Borrower with or
in favor of Bank (collectively in this Section, the "Loan Documents"), other
than (i) all matters in connection with nonjudicial foreclosure of security
interests in real or personal property; or (ii) the appointment of a receiver or
the exercise of other provisional remedies (any of which may be initiated
pursuant to applicable law) that are not settled in writing within fifteen
(15) days after the date on which a party subject to the Loan Documents gives
written notice to all other parties that a Claim exists (the "Claim Date") shall
be resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil Procedure, or
their successor sections ("CCP"), which shall constitute the exclusive remedy
for the resolution of any Claim concerning the Loan Documents, including whether
such Claim is subject to the reference proceeding. Except as set forth in this
section, the parties waive the right to initiate legal proceedings against each
other concerning each such Claim. Venue for these proceedings shall be in the
Superior Court in the County where the real property, if any, is located or in a
County where venue is otherwise appropriate under state law (the "Court"). By
mutual agreement, the parties shall select a retired Judge of the Court to serve
as referee, and if they cannot so agree within fifteen (15) days after the Claim
Date, the Presiding Judge of the Court (or his or her representative) shall
promptly select the referee. A request for appointment of a referee may be heard
on an ex parte or expedited basis. The referee shall be appointed to sit as a
temporary judge, with all the powers for a temporary judge, as authorized by
law, and upon selection should take and subscribe to the oath of office as
provided for in Rule 244 of the California Rules of Court (or any subsequently
enacted Rule). Each party shall have one peremptory challenge pursuant to CCP
§170.6. Upon being selected, the referee shall (a) be requested to set the
matter for a status and trial-setting conference within fifteen (15) days after
the date of selection and (b) if practicable, try any and all issues of law or
fact and report a statement of decision upon them within ninety (90) days of the
date of selection. The referee will have power to expand or limit the amount of
discovery a party may employ. Any decision rendered

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by the referee will be final, binding and conclusive, and judgment shall be
entered pursuant to CCP §644 in any court in the Stats of California having
jurisdiction. The parties shall complete all discovery no later than fifteen
(15) days before the first trial date established by the referee. The referee
may extend such period in the event of a party's refusal to provide requested
discovery for any reason whatsoever, including, without limitation, legal
objections raised to such discovery or unavailability of a witness due to
absence or illness. No party shall be entitled to "priority" in conducting
discovery. Either party may take depositions upon seven (7) days written notice,
and shall respond to requests for production or inspection of documents within
ten (10) days after service. All disputes relating to discovery which cannot be
resolved by the parties shall be submitted to the referee whose decision shall
be final and binding upon the parties. Pending appointment of the referee as
provided herein, the Superior Court is empowered to issue temporary and/or
provisional remedies, as appropriate.

        b.     Except as expressly set forth herein, the referee shall determine
the manner in which the reference proceeding is conducted including the time and
place of all hearings, the order of presentation of evidence, and all other
questions that arise with respect to the course of the reference proceeding.
Except for trial, all proceedings and hearings conducted before the referee
shall be conducted without a court reporter unless a party requests a court
reporter. The party making such a request shall have the obligation to arrange
for and pay for the court reporter. Subject to the referee's power to award
costs to the prevailing party, the parties shall equally bear the costs of the
court reporter at the trial and the referee's expenses.

        c.     The referee shall determine all issues in accordance with
existing California case and statutory law. California rules of evidence
applicable to proceedings at law will apply to the reference proceeding. The
referee shall be empowered to enter equitable as well as legal relief, to
provide all temporary and/or provisional remedies and to enter equitable orders
that shall be binding upon the parties. At the close of the reference
proceeding, the referee shall issue a single judgment at disposing of all the
claims of the parties that are the subject of the reference. The parties reserve
the right (i) to contest or appeal from the final judgment or any appealable
order or appealable judgment entered by the referee and (ii) to obtain findings
of fact, conclusions of laws, a written statement of decision, and (iii) to move
for a new trial or a different judgment, which new trial, if granted, shall be a
reference proceeding under this provision.

        d.     If the enabling legislation which provides for appointment of a
referee is repealed (and no successor statute is enacted), any dispute between
the parties that would otherwise be determined by the reference procedure herein
described will be resolved and determined by arbitration conducted by a retired
judge of the Court, in accordance with the California Arbitration Act §1280
through §1294.2 of the CCP as amended from time to time. The limitations with
respect to discovery as set forth in this Section shall apply to any such
arbitration proceeding.

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        IN WITNESS WHEREOF, the parties have executed this Business Loan
Agreement as of the date first set forth above.

Address of Borrower:
5171 Clareton Drive
Agoura Hills, California 91301   "BORROWER"     Digital Theater Systems, Inc.
 
 
By:
/s/  JON KIRCHNER      

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Title:
President & Chief Executive Officer

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By:
/s/  MEL FLANIGAN      

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    Title: Chief Financial Officer

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"BANK"
COMERICA BANK
 
 
By:
/s/  JONATHAN HEINE      

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    Title: Jonathan Heine
Corporate Banking Officer

ADDENDUM A TO BUSINESS LOAN AGREEMENT
(FINANCIAL COVENANTS)

        1.    Definitions Relating to Finanacial Covenants.    Debt shall mean,
as of any applicable date of determination, all items of indebtedness,
obligation or liability of a person, whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several, that
should be classified as liabilities in accordance with GAAP excepting such
liabilities as shall be Subordinated Debt (as defined below).

        GAAP shall mean, as of any applicable period, generally accepted
accounting principals in effect during such period.

        Persons or person shall mean and includes any individual, corporation,
partnership, joint venture, firm, association, trust, incorporated association,
joint stock company, government, municipality, political subdivision or agency
or other entity.

        Subordinated Debt shall mean indebtedness of the Borrower (or third
parties which has been subordinated to the Indebtedness pursuant to a
subordination agreement in form and content satisfactory to Bank.

        Tangible Effective Net Worth shall mean, with respect to any Person and
as of any applicable date of determination, Tangible Net Worth plus Subordinated
Debt.

        Tangible Net Worth as used in this Agreement means, as of any applicable
date of determination, the excess of:

        (a)   the net book value of all assets of Borrower and its subsidiaries
(excluding affiliate receivables, patents, patent rights, trademarks, trade
names, franchises, copyrights, licenses, goodwill, and other intangible assets
of such Persons) after all appropriate deductions in accordance with GAAP
(including, without limitation, reserves for doubtful receivables, obsolescence,
depreciation, and amortization), minus

        (b)   all Debt of such Person at such time.

9

--------------------------------------------------------------------------------

        2.    Financial Covenants.    Borrower shall maintain the following
financial ratios and covenants on a consolidated and non-consolidated basis,
which shall be monitored on a quarterly basis, except as noted below.

        (a)   Tangible Effective Net Worth in an amount not less than
$60,000,000, increasing by 50% of net income on an annual basis; and

        (b)   Maintain a minimum of $2,000,000 in cash or securities to be held
by/at Bank.

        All financial covenants shall be computed in accordance with GAAP
consistently applied except as otherwise specifically set forth in this
Agreement. All money due from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower's assets for all purposes
hereunder.

10

--------------------------------------------------------------------------------

MASTER REVOLVING NOTE

Variable Rate-Maturity Date-Obligatory Advances (Business and Commercial Loans
Only)

AMOUNT

--------------------------------------------------------------------------------

  NOTE DATE

--------------------------------------------------------------------------------

  MATURITY DATE

--------------------------------------------------------------------------------

  TAX IDENTIFICATION #

--------------------------------------------------------------------------------

$ 10,000,000.00   May 31, 2004   June 30, 2005   77-0467665

        On the Maturity Date, as stated above, for value received, the
undersigned promise(s) to pay to the order of Comerica Bank ("Bank"), at any
office of the Bank in the State of California, Ten Million and no/100 Dollars
(U.S.) (or that portion of it advanced by the Bank and not repaid as later
provided) with interest until maturity, whether by acceleration or otherwise, or
an Event of Default, as later defined, at a per annum rate equal to the Bank's
base rate from time to time in effect plus 0.000% per annum and after that at a
rate equal to the rate of interest otherwise prevailing under this Note plus 3%
per annum (but in no event in excess of the maximum rate permitted by law). The
Bank's "base rate" is that annual rate of interest so designated by the Bank and
which is changed by the Bank from time to time. Interest rate changes will be
effective for interest computation purposes as and when the Bank's base rate
changes. Interest shall be calculated on the basis of a 360-day year for the
actual number of days the principal is outstanding. Accrued Interest on this
Note shall be payable on the 30th day of each MONTH commencing June 30, 2004,
until the Maturity Date when all amounts outstanding under this Note shall be
due and payable in full. If the frequency of interest payments is not otherwise
specified, accrued interest on this Note shall be payable monthly on the first
day of each month. If any payment of principal or Interest under this Note shall
be payable on a day other than a day on which the Bank is open for business,
this payment shall be extended to the next succeeding business day and interest
shall be payable at the rate specified in this Note during this extension. A
late payment charge equal to 5% of each late payment may be charged on any
payment not received by the Bank within 10 calendar days after the payment due
date, but acceptance of payment of this charge shall not waive any Default under
this Note.

        The principal amount payable under this Note shall be the sum of all
advances made by the Bank to or at the request of the undersigned, less
principal payments actually received in cash by the Bank. The books and records
of the Bank shall be the best evidence of the principal amount and the unpaid
interest amount owing at any time under this Note and shall be conclusive absent
manifest error. No interest shall accrue under this Note until the date of the
first advance made by the Bank; after that interest on all advances shall accrue
and be computed on the principal balance outstanding from time to time under
this Note until the same is paid in full.

        This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral, rights and properties described in each and every deed of trust,
mortgage, security agreement, pledge, assignment and other security or
collateral agreement which has been, or will at any time(s) later be, executed
by any (or all) of the undersigned to or for the benefit of the Bank
(collectively "Collateral"). Notwithstanding the above, (i) to the extent that
any portion of the indebtedness is a consumer loan, that portion shall not be
secured by any deed of trust or mortgage on or other security interest in any of
the undersigned's principal dwelling or any of the undersigned's real property
which is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the undersigned
(or any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure this
Note or any other indebtedness of the undersigned (or any of them), unless
expressly provided to the contrary in another place.

--------------------------------------------------------------------------------

        If the undersigned (or any of them) or any guarantor under a guaranty of
all or part of the Indebtedness ("guarantor") (i) fail(s) to pay any of the
Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to pay
any indebtedness owing on a demand basis upon demand; or (ii) fail(s) to comply
with any of the terms or provisions of any agreement between the undersigned (or
any of them) or any such guarantor and the Bank; or (iii) become(s) insolvent or
the subject of a voluntary or involuntary proceeding in bankruptcy, or a
reorganization, arrangement or creditor composition proceeding, (if a business
entity) cease(s) doing business as a going concern, (if a natural person) die(s)
or become(s) incompetent, (if a partnership) dissolve(s) or any general partner
of it dies, becomes incompetent or becomes the subject of a bankruptcy
proceeding or (if a corporation of a limited liability company) is the subject
of a dissolution, merger of consolidation; or (a) If any warranty or
representation made by any of the undersigned or any guarantor in connection
with this Note or any of the Indebtedness shall be discovered to be untrue or
incomplete; or (b) If there is any termination, notice of termination, or breach
of any guaranty, pledge, collateral assignment or subordination agreement
relating to all or any part of the Indebtedness; or (c) If there is any failure
by any of the undersigned or any guarantor to pay when due any of its
Indebtedness (other than to the Bank) or in the observance or performance of any
term, covenant or condition in any document evidencing, securing or relating to
such Indebtedness; or (d) If the Bank deems itself insecure believing that the
prospect of payment of this Note or any of the Indebtedness is impaired or shall
fear deterioration, removal or waste of any of the Collateral; or (e) If there
is filed or issued a levy or writ of attachment or garnishment or other like
judicial process upon the undersigned (or any of them) or any guarantor or any
of the Collateral, including without limit, any accounts of the undersigned (or
any of them) or any guarantor with the Bank, then the Bank, upon the occurrence
of any of these events (each a "Default"), may at its option and without prior
notice to the undersigned (or any of them), declare any or all of the
Indebtedness to be immediately due and payable (notwithstanding any provisions
contained in the evidence of it to the contrary), cease advancing money or
extending credit to or for the benefit of the undersigned under this Note or any
other agreement between the undersigned and Bank, terminate this Note as to any
future liability or obligation of Bank, but without affecting Bank's rights and
security interests in any collateral and the Indebtedness of the undersigned to
Bank, sell or liquidate all or any portion of the Collateral, set off against
the Indebtedness any amounts owing by the Bank to the undersigned (or any of
them), charge interest at the default rate provided in the document evidencing
the relevant Indebtedness and exercise any one or more of the rights and
remedies granted to the Bank by any agreement with the undersigned (or any of
them) or given to it under applicable law. In addition, if this Note is secured
by a deed of trust or mortgage covering real property, then the trustor or
mortgagor shall not mortgage or pledge the mortgaged premises as security for
any other indebtedness or obligations. This Note, together with all other
Indebtedness secured by said deed of trust or mortgage, shall become due and
payable immediately, without notice, at the option of the Bank, (a) If said
trustor or mortgagor shall mortgage or pledge the mortgaged premises for any
other Indebtedness or obligations or shall convey, assign or transfer the
mortgaged premises by deed, installment sale contract instrument, or (b) If the
title to the mortgaged premises shall become vested in any other person or party
in any manner whatsoever, or (c) If there is any disposition (through one or
more transactions) of legal or beneficial title to a controlling interest of
said trustor or mortgagor. All payments under this Note shall be in immediately
available United States funds, without setoff or counterclaim.

        If this Note is signed by two or more parties (whether by all as makers
or by one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.

        The undersigned waive(s) presentment, demand, protest, notice of
dishonor, notice or demand or intent to demand, notice of acceleration or intent
to accelerate, and all other notices and agree(s) that no extension or
indulgence to the undersigned (or any of them) or release, substitution or
nonenforcement of any security, or release or substitution of any of the
undersigned, any guarantor or any other party, whether with or without notice,
shall affect the obligations of any of the undersigned. The undersigned waive(s)
all defenses or right to discharge available under Section 3.605 of the

--------------------------------------------------------------------------------

California Uniform Commercial Code and waive(s) all other suretyship defenses or
right to discharge. The undersigned agree(s) that the Bank has the right to
sell, assign, or grant participations, or any interest, in any or all of the
Indebtedness, and that, in connection with this right, but without limiting its
ability to make other disclosures to the full extent allowable, the Bank may
disclose all documents and information which the Bank now or later has relating
to the undersigned or the Indebtedness. The undersigned agree(s) that the Bank
may provide information relating to the Note or to the undersigned to the Bank's
parent, affiliates, subsidiaries and service providers.

        The undersigned agree(s) to reimburse the holder or owner of this Note
for any and all costs and expenses (including without limit, court costs, legal
expenses and reasonable attorney fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted, whether at
the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or incurred in any other matter or proceeding relating to this
Note.

        The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the court expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. As used in this Note, the "undersigned" means, individually and
collectively, each maker, accommodation party, endorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

        The maximum interest rate shall not exceed the highest applicable usury
ceiling.

        THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED, EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE.
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

--------------------------------------------------------------------------------

        Libor Addendum attached hereto and made a part of this Note.

INITIAL HERE   /s/ JK/MF

--------------------------------------------------------------------------------

   

Digital Theater Systems, Inc.      
/s/  JON KIRCHNER      

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Its:
PRESIDENT & CHIEF EXECUTIVE OFFICER

--------------------------------------------------------------------------------

SIGNATURE OF JON KIRCHNER     TITLE
/s/  MEL FLANIGAN      

--------------------------------------------------------------------------------

 
Its:
CHIEF FINANCIAL OFFICER

--------------------------------------------------------------------------------

SIGNATURE OF MEL FLANIGAN     TITLE

Clareton Drive
 
Agoura Hills
 
California
 
USA
 
91301

--------------------------------------------------------------------------------

STREET ADDRESS   CITY   STATE   (COUNTRY)   ZIP CODE

 
 
For Bank Use Only
 
CCAR #
 
 
 
 
 
Officer Initial
 
Loan Group Name
 
Obligor(s) Name
 
 
 
 
  RH   Entertainment Group   Digital Theater Systems, Inc.          
Officer I.D. No.
 
Loan Group No.
 
Obligor #
 
Note #
 
 
Amount 48135   97110   2258830922       $ 10,000,000.00

--------------------------------------------------------------------------------

LIBOR
Addendum To Master Revolving Note

        This Addendum to Master Revolving Note (this "Addendum") is entered into
as of June 1, 2004, by and between Comerica Bank ("Bank") and Digital Theater
Systems, Inc. ("Borrower"). This Addendum supplements the terms of the Master
Revolving Note of even date herewith.

1.    Definitions.    

        a.    Advance.    As used herein, "Advance" means a borrowing requested
by Borrower and made by Bank under the Note, including a LIBOR Option Advance
and/or a Base Rate Option Advance.

        b.    Business Day.    As used herein, "Business Day" means any day
except a Saturday, Sunday or any other day designated as a holiday under Federal
or California statute or regulation.

        c.    LIBOR.    As used herein, "LIBOR" means the rate per annum
(rounded upward if necessary, to the nearest whole 1/8 of 1%) and determined
pursuant to the following formula:

LIBOR =   Base LIBOR

--------------------------------------------------------------------------------

100% - LIBOR Reserve Percentage    

(1)"Base LIBOR" means the rate per annum determined by Bank at which deposits
for the relevant LIBOR Period would be offered to Bank in the approximate amount
of the relevant LIBOR Option Advance in the inter-bank LIBOR market selected by
Bank, upon request of Bank at 10:00 a.m. California time, on the day that is the
first day of such LIBOR Period.

(2)"LIBOR Reserve Percentage" means the reserve percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency Liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable LIBOR Period.

        d.     LIBOR Business Day. As used herein, "LIBOR Business Day" means a
Business day on which dealings in Dollar deposits may be carried out in the
interbank LIBOR market.

        e.     LIBOR Period. As used herein, "LIBOR Period" means, with respect
to a LIBOR Option Advance:

(1)initially, the period commencing on, as the case may be, the date the Advance
is made or the date on which the Advance is converted to a LIBOR Option Advance,
and continuing for, in every case, a thirty (30), sixty (60), or ninety (90),
thereafter so long as the LIBOR Option is quoted for such period in the
applicable interbank LIBOR market, as such period is selected by Borrower in the
notice of Advance as provided in the Note or in the notice of conversion as
provided in this Addendum; and

(2)thereafter, each period commencing on the last day of the next preceding
LIBOR Period applicable to such LIBOR Option Advance and continuing for, in
every case, a thirty (30), sixty (60), or ninety (90), thereafter so long as the
LIBOR Option is quoted for such period in the applicable interbank LIBOR market,
as such period is selected by Borrower in the notice of continuation as provided
in this Addendum.

        f.    Note.    As used herein, "Note" means the Master Revolving Note of
even date herewith.

        g.    Regulation D.    As used herein, "Regulation D" means Regulation D
of the Board of Governors of the Federal Reserve System as amended or
supplemented from time to time.

1

--------------------------------------------------------------------------------

        h.    Regulatory Development.    As used herein, "Regulatory
Development" means any or all of the following: (i) any change in any law,
regulation or interpretation thereof by any public authority (whether or not
having the force of law); (ii) the application of any existing law, regulation
or the interpretation thereof by any public authority (whether or not having the
force of law); and (iii) compliance by Bank with any request or directive
(whether or not having the force of law) of any public authority.

2.    Interest Rate Options.    Borrower shall have the following options
regarding the interest rate to be paid by Borrower on Advances under the Note:

        a.     A rate equal to two percent (2.00%) above Bank's LIBOR, (the
"LIBOR Option"), which LIBOR Option shall be in effect during the relevant LIBOR
Period; or

        b.     A rate calculated with reference to the Base Rate (the "Base Rate
Option") (as referenced in the Note) equal to: (a) the Base Rate as quoted from
time to time by Bank, as such rate may change from time to time, minus one-half
percent for all unpaid Advances with respect to which Borrower has elected to
have interest calculated with reference to the Base Rate ("Base Rate Advances"),
not exceeding at any time the amount of cash then on deposit at the Bank; and
(b) the Base Rate as quoted from time to time by Bank, as such rate may change
from time to time, for all unpaid Base Rate Advances exceeding the amount of
cash then on deposit at the Bank.

3.    LIBOR Option Advance.    The minimum LIBOR Option Advance will not be less
than two hundred fifty thousand and 00/100 Dollars ($250,000) for any LIBOR
Option Advance. Additionally, no more than four (4) LIBOR Advances shall be
outstanding at any given time.

4.    Payment of Interest on LIBOR Option Advances.    Interest on each LIBOR
Option Advance shall be payable pursuant to the terms of the Note. Interest on
such LIBOR Option Advance shall be computed on the basis of a 360-day year and
shall be assessed for the actual number of days elapsed from the first day of
the LIBOR Period applicable thereto but not including the last day thereof.

5.    Bank's Records Re: LIBOR Option Advances.    With respect to each LIBOR
Option Advance, Bank is hereby authorized to note the date, principal amount,
interest rate and LIBOR Period applicable thereto and any payments made thereon
on Bank's books and records (either manually or by electronic entry) and/or on
any schedule attached to the Note, which notations shall be prima facie evidence
of the accuracy of the information noted.

6.    Selection/Conversion of Interest Rate Options.    At the time any Advance
is requested under the Note and/or Borrower wishes to select the LIBOR Option
for all or a portion of the outstanding principal balance of the Note, and at
the end of each LIBOR Period, Borrower shall give Bank notice specifying (a) the
interest rate option selected by Borrower; (b) the principal amount subject
thereto; and (c) if the LIBOR Option is selected, the length of the applicable
LIBOR Period. Any such notice may be given by telephone so long as, with respect
to each LIBOR Option selected by Borrower, (i) Bank receives written
confirmation from Borrower not later than three (3) LIBOR Business Days after
such telephone notice is given; and (ii) such notice is given to Bank prior to
10:00 a.m., California time, on the first day of the LIBOR Period. For each
LIBOR Option requested hereunder, Bank will quote the applicable fixed LIBOR
Rate to Borrower at approximately 10:00 a.m., California time, on the first day
of the LIBOR Period. If Borrower does not immediately accept the rate quoted by
Bank, any subsequent acceptance by Borrower shall be subject to a
redetermination of the rate by Bank; provided, however, that if Borrower fails
to accept any such quotation given, then the quoted rate shall expire and Bank
shall have no obligation to permit a LIBOR Option to be selected on such day. If
no specific designation of interest is made at the time any Advance is requested
under the Note or at the end of any LIBOR Period, Borrower shall be deemed to
have selected the Base Rate Option for such Advance or the principal amount to
which such LIBOR Period applied. At any time the LIBOR Option is in effect,
Borrower may, at the end of the applicable LIBOR Period, convert to the Base

2

--------------------------------------------------------------------------------

Rate Option. At any time the Base Rate Option is in effect, Borrower may convert
to the LIBOR OPTION, and shall designate a LIBOR Period.

7.    Default Interest Rate.    From and after the maturity date of the Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of the Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to three percent (3.00%)
above the rate of interest from time to time applicable to the Note.

8.    Prepayment.    In the event that the LIBOR Option is the applicable
interest rate for all or any part of the outstanding principal balance of the
Note, and any payment or prepayment of any such outstanding principal balance of
the Note shall occur on any day other than the last day of the applicable LIBOR
Period (whether voluntarily, by acceleration, required payment, or otherwise),
or if Borrower elects the LIBOR Option as the applicable interest rate for all
or any part of the outstanding principal balance of the Note in accordance with
the terms and conditions hereof, and, subsequent to such election, but prior to
the commencement of the applicable LIBOR Period, Borrower revokes such election
for any reason whatsoever, or if the applicable interest rate in respect of any
outstanding principal balance of the Note hereunder shall be changed, for any
reason whatsoever, from the LIBOR Option to the Base Rate Option prior to the
last day of the applicable LIBOR Period, or if Borrower shall fail to make any
payment of principal or interest hereunder at any time that the LIBOR Option is
the applicable interest rate hereunder in respect of such outstanding principal
balance of the Note, Borrower shall reimburse Bank, on demand, for any resulting
loss, cost or expense incurred by Bank as a result thereof, including, without
limitation, any such loss, cost or expense incurred in obtaining, liquidating,
employing or redeploying deposits from third parties. Such amount payable by
Borrower to Bank may include, without limitation, an amount equal to the excess,
if any, of (a) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, refunded or converted, for the period from the date
of such prepayment or of such failure to borrow, refund or convert, through the
last day of the relevant LIBOR Period, at the applicable rate of interest for
such outstanding principal balance of the Note, as provided under this Note,
over (b) the amount of interest (as reasonably determined by Bank) which would
have accrued to Bank on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank LIBOR market. Calculation
of any amounts payable to Bank under this paragraph shall be made as though Bank
shall have actually funded or committed to fund the relevant outstanding
principal balance of the Note hereunder through the purchase of an underlying
deposit in an amount equal to the amount of such outstanding principal balance
of the Note and having a maturity comparable to the relevant LIBOR Period;
provided, however, that Bank may fund the outstanding principal balance of the
Note hereunder in any manner it deems fit and the foregoing assumptions shall be
utilized only for the purpose of the calculation of amounts payable under this
paragraph. Upon the written request of Borrower, Bank shall deliver to Borrower
a certificate setting forth the basis for determining such losses, costs and
expenses, which certificate shall be conclusively presumed correct, absent
manifest error. Any prepayment hereunder shall also be accompanied by the
payment of all accrued and unpaid interest on the amount so prepaid. Any
outstanding principal balance of the Note which is bearing interest at such time
at the Base Rate Option may be prepaid without penalty or premium. Partial
prepayments hereunder shall be applied to the installments hereunder in the
inverse order of their maturities.

        BY INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT:
(A) THERE IS NO RIGHT TO PREPAY ANY LIBOR OPTION ADVANCE, IN WHOLE OR IN PART,
WITHOUT PAYING THE PREPAYMENT AMOUNT SET FORTH HEREIN ("PREPAYMENT AMOUNT").
EXCEPT AS OTHERWISE REQUIRED UNDER APPLICABLE LAW; (B) BORROWER SHALL BE LIABLE
FOR PAYMENT OF THE PREPAYMENT AMOUNT IF BANK EXERCISES ITS RIGHT TO ACCELERATE
PAYMENT OF ANY LIBOR OPTION

3

--------------------------------------------------------------------------------

ADVANCE AS PART OR ALL OF THE OBLIGATIONS OWING UNDER THE NOTE, INCLUDING
WITHOUT LIMITATION, ACCELERATION UNDER A DUE-ON-SALE PROVISION; (C) BORROWER
WAIVES ANY RIGHTS UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE OR ANY
SUCCESSOR STATUTE; AND (D) BANK HAS MADE EACH LIBOR OPTION ADVANCE PURSUANT TO
THE NOTE IN RELIANCE ON THESE AGREEMENTS.

/s/  JK/MF      

--------------------------------------------------------------------------------

BORROWER'S INITIALS      

9.    Hold Harmless and Indemnification.    Borrower agrees to indemnify Bank
and to hold Bank harmless from, and to reimburse Bank on demand for, all losses
and expenses which Bank sustains or incurs as a result of (i) any payment of a
LIBOR Option Advance prior to the last day of the applicable LIBOR Period for
any reason, including, without limitation, termination of the Note, whether
pursuant to this Addendum or the occurrence of an Event of Default; (ii) any
termination of a LIBOR Period prior to the date it would otherwise and in
accordance with this Addendum; or (iii) any failure by Borrower, for any reason,
to borrow any portion of a LIBOR Option Advance.

10.    Funding Losses.    The indemnification and hold harmless provisions set
forth in this Addendum shall include, without limitation, all losses and
expenses arising from interest and fees that Bank pays to lenders of funds it
obtains in order to fund the loans to Borrower on the basis of the LIBOR
Option(s) and all losses incurred in liquidating or re-deploying deposits from
which such funds were obtained and loss of profit for the period after
termination. A written statement by Bank to Borrower of such losses and expenses
shall be conclusive and binding, absent manifest error, for all purposes. This
obligation shall survive the termination of this Addendum and the payment of the
Note.

11.    Regulatory Developments Or Other Circumstances Relating To Illegality or
Impracticality of LIBOR.    If any Regulatory Development or other circumstances
relating to the interbank Euro-dollar markets shall, at any time, in Bank's
reasonable determination, make it unlawful or impractical for Bank to fund or
maintain, during any LIBOR Period, to determine or charge interest rates based
upon LIBOR, Bank shall give notice of such circumstances to Borrower and;

          (i)  In the case of a LIBOR Period in progress, Borrower shall, if
requested by Bank, promptly pay any interest which had accrued prior to such
request and the date of such request shall be deemed to be the last day of the
term of the LIBOR Period; and

         (ii)  No LIBOR Period may be designated thereafter until Bank
determines that such would be practical.

12.    Additional Costs.    Borrower shall pay to Bank from time to time, upon
Bank's request, such amounts as Bank determines are needed to compensate Bank
for any costs it incurred which are attributable to Bank having made or
maintained a LIBOR Option Advance or to Bank's obligation to make a LIBOR Option
Advance, or any reduction in any amount receivable by Bank hereunder with
respect to any LIBOR Option or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Developments, which (i) change the basis of
taxation of any amounts payable to Bank hereunder with respect to taxation of
any amounts payable to Bank hereunder with respect to any LIBOR Option Advance
(other than taxes imposed on the overall net income of Bank for any LIBOR Option
Advance by the jurisdiction where Bank is headquartered or the jurisdiction
where Bank extends the LIBOR Option Advance; (ii) impose or modify any reserve,
special deposit, or similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, Bank (including
any LIBOR Option Advance or any deposits referred to in the definition of
LIBOR); or (iii) impose any other condition affecting this Addendum (or any of
such extension of credit or liabilities). Bank shall notify Borrower of any
event occurring after the date hereof which entitles Bank to compensation
pursuant to this paragraph

4

--------------------------------------------------------------------------------

as promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Determinations by Bank for purposes of this
paragraph, shall be conclusive, provided that such determinations are made on a
reasonable basis.

13.    Legal Effect.    Except as specifically modified hereby, all of the terms
and conditions of the Note remain in full force and effect.

        IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the
date first set forth above.

    DIGITAL THEATER SYSTEMS, INC.
By:
 
/s/  JON KIRCHNER      

--------------------------------------------------------------------------------

 
By:
 
/s/  JONATHAN HEINE      

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Title:   PRESIDENT & CHIEF EXECUTIVE OFFICER

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  Title:   Jonathan Heine

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Corporate Banking Officer
By:
 
/s/  MEL FLANIGAN      

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  Title:   CHIEF FINANCIAL OFFICER        

5

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ADDENDUM TO MASTER REVOLVING NOTE

        This is an Addendum to a Master Revolving Note (the "Note"), dated as of
May 31, 2004, in the original principal amount of $10,000,000, issued by Digital
Theater Systems, Inc. ("DTS") as promisor, and Comerica Bank, as promisee.
Capitalized terms used, but not defined in this addendum, have the meaning
assigned to those terms in the Note.

        The Note is an unsecured obligation of DTS. Accordingly, all provisions
of the third and fourth paragraphs of the Note that reflect that the
Indebtedness is secured by Collateral or state that DTS has granted to the Bank
a security interest in any of DTS's property are hereby deleted from the Note
and are of no further force or effect. Otherwise, all provisions of the Note are
and shall remain in full force and effect.

        This Addendum is part of Note and is effective as of May 31, 2004.

        IN WITNESS WHEREOF, DTS and the Bank have entered into this Addendum as
of May 31, 2004.

"DTS"
Digital Theater Systems, INC.   "BANK"
COMERICA BANK
By:
 
/s/  JON KIRCHNER      

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Jon Kirchner,
Chief Executive Officer and President
 
By:
 
/s/  JONATHAN HEINE      

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Jonathan Heine
Assistant Vice President
By:
 
/s/  MEL FLANIGAN      

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Mel Flanigan
Chief Financial Officer
 
 
 
 

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QuickLinks

BUSINESS LOAN AGREEMENT
ADDENDUM A TO BUSINESS LOAN AGREEMENT (FINANCIAL COVENANTS)
MASTER REVOLVING NOTE
LIBOR Addendum To Master Revolving Note
ADDENDUM TO MASTER REVOLVING NOTE