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                                                                   EXHIBIT 10.23

                          EXISTING SHAREHOLDER WARRANT

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF
     OCTOBER 24, 1997, AND SUCH SECURITIES AND THE SECURITIES WHICH MAY BE
     ACQUIRED ON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
     ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
     THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
     EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
     CERTIFICATE AND THE SECURITIES WHICH MAY BE ACQUIRED ON EXERCISE HEREOF ARE
     ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER
     AGREEMENTS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 24,
     1997, AMONG DIGITAL THEATER SYSTEMS, INC (THE "COMPANY") AND CERTAIN OF ITS
     STOCKHOLDERS. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF
     AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.

No. of Shares                                              Warrant No. E-_______
of Common Stock: ________

                                     WARRANT

                           to Purchase Common Stock of

                          DIGITAL THEATER SYSTEMS, INC.

         THIS IS TO CERTIFY THAT ___________________________________, or its
registered assigns, is entitled to purchase in whole or in part from time to
time from Digital Theater Systems, Inc., a Delaware corporation (the "Issuer"),
at any time on and after the Effective Date (as hereinafter defined), but not
later than 5:00 p.m., New York time, on December 31, 2007 (the "Expiration
Date"), _____________________ shares of Common Stock (as hereinafter defined) at
a purchase price of $6.057 per share (the "Exercise Price"), subject to the
terms and conditions provided herein. The number of shares of Common Stock for
which this Warrant shall be exercisable and the Exercise Price are subject to
adjustment from time to time as provided herein.

         SECTION 1. Certain Definitions.

         As used herein, the following terms shall have the following meanings
(all terms defined in this Section 1 or in other provisions of this Warrant in
the singular to have the same meanings when used in the plural and vice versa):

         "Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, controls, is under common control with, or
is owned or controlled by, such specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, the power
to direct the management or policies of the specified Person through the
ownership of

                                       1.

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voting securities, by contract, voting agreement or otherwise, and (ii) the
terms "controlling", "control with" and "controlled by", etc. shall have
meanings correlative to the foregoing.

         "Board" shall mean the Board of Directors of the Issuer.

         "Business Day" shall mean any weekday that is not a nationally-observed
holiday.

         "By-laws" shall mean the by-laws of the Issuer, as in effect at the
time in question.

         "Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Issuer as in effect at the time in question.

         "Change of Control" shall mean (i) any consolidation or merger of the
Issuer, other than any merger or consolidation resulting in the holders of the
capital stock of the Issuer entitled to vote for the election of directors
holding a majority of the capital stock of the surviving or resulting entity
entitled to vote for the election of directors, (ii) any person or entity that
is not a stockholder on the date hereof becoming the holder of a majority of the
capital stock of the Issuer entitled to vote for the election of directors, or
(iii) any sale or other disposition by the Issuer of all or substantially all of
its assets to a third party.

         "Common Stock" shall mean the Issuer's Common Stock, par value $.0001
per share.

         "Convertible Securities" shall have the meaning given to such term in
Section 4(d).

         "Current Market Price" shall mean, as to any security, the average of
the closing prices of such security's sales on all domestic securities exchanges
on which such security may at the time be listed, or, if there have been no
sales on any such exchange on any day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or, if on any day
such security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York City time, on such
day, or, if on any day such security is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization (and in each such case
(i) averaged over a period of 21 days consisting of the day immediately
preceding the day as of which "Current Market Price" is being determined and the
20 consecutive Business Days prior to such immediately preceding day and (ii)
excluding any trades that are not bona fide, arm's length transactions). If at
any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the
"Current Market Price" of such security shall be the fair market value thereof
as determined in good faith by the Board.

         "Effective Date" shall mean October 24, 1997.

         "Excluded Stock" shall mean (i) any options issued or issuable pursuant
to the Stock Option Plans and any shares of Common Stock issuable upon the
exercise of any options granted pursuant to the Stock Option Plans; provided,
that any Common Stock issuable thereunder shall not exceed 1,660,466 shares in
the aggregate, (ii) stock issued upon the conversion of Convertible Securities
issued on or before the date hereof, (iii) any shares of Common Stock or

                                       2.

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Preferred Stock issuable upon exercise of any warrants issued on or before the
date hereof, (iv) any shares of Common Stock issuable upon exercise of shares of
Series A Preferred Stock issued as of or subsequent to the date hereof.

         "Exercise Condition" shall have the meaning assigned to it in Section 2
hereof.

         "Exercise Notice" shall have the meaning assigned to such term in
Section 2 hereof.

         "Exercise Price" shall have the meaning assigned to such term in the
first paragraph of this Warrant.

         "Expiration Date" shall have the meaning assigned to such term in the
first paragraph of this Warrant.

         "Fundamental Documents" shall mean the documents by which any Person
(other than an individual) establishes its legal existence or which govern its
internal affairs. The Fundamental Documents of the Issuer are the Certificate of
Incorporation and By-laws.

         "Holder" shall mean the initial holder of this Warrant, or any
transferees of this Warrant.

         "include" and "including" shall be construed as if followed by the
phrase ", without being limited to,".

         "Issuer" shall have the meaning assigned to such term in the first
paragraph of this Warrant.

         "NASDAQ System" shall mean the National Association of Securities
Dealers Automated Quotation System.

         "Options" shall have the meaning given to such term in Section 4(d).

         "Person" shall be construed in its broadest possible sense and shall
include any individual, corporation, general or limited partnership, joint
venture, association, limited liability company, joint stock company, trust,
business trust, bank, trust company, estate (including any beneficiaries
thereof), unincorporated organization, cooperative, association or governmental
branch, authority, agency or political subdivision thereof.

         "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

         "Series A Preferred Stock" shall mean the Issuer's Series A Convertible
Preferred Stock, par value $.0001 per share.

         "Stock Option Plans" shall mean any stock option plans adopted by the
Issuer and any other grants of stock options made by the Issuer, in each case
granted to employees, directors and independent contractors of the Issuer or its
subsidiaries.

                                       3.

<PAGE>

         "Warrant" shall mean this Warrant and all other warrants issued upon
transfer, division, or combination of, or in substitution for, this Warrant or
any such other warrant.

         "Warrant Stock" shall mean (a) all shares of Common Stock issued or
issuable from time to time upon exercise of this Warrant, (b) all other
securities or other property issued or issuable upon any such exercise and (c)
any securities distributed with respect to the securities referred to in the
preceding clauses (a) and (b); provided, however, that the term "Warrant Stock"
shall not include shares of Common Stock or other securities following the time
such shares or other securities have been sold in a public offering registered
under the Securities Act or sold under Rule 144 promulgated thereunder. As used
in this Warrant, the phrase "Warrant Stock then held" shall mean Warrant Stock
held at the time of determination by the Holder, and shall include Warrant Stock
issuable upon exercise of any Warrants held at the time of determination by such
Holder.

         SECTION 2. Exercise of Warrant.

         (a)      On and after the Effective Date and until 5:00 p.m., New York
City time, on the Expiration Date, the Holder may exercise this Warrant, on one
or more occasions, on any Business Day, in whole or in part, by delivering to
the Issuer, at its office maintained for such purpose pursuant to Section 5
hereof, (i) a written notice of the Holder's election to exercise this Warrant,
which notice shall be substantially in the form of Annex A attached hereto and
shall be properly completed (the "Exercise Notice"), (ii) payment of the
Exercise Price (payable as set forth in Section 2(b) below) for the Warrant
Stock as to which this Warrant is being exercised, and (iii) this Warrant.
Except to the extent necessary to cause the number of shares of Common Stock
deliverable as provided in Section 2(b) to be a whole number of shares, this
Warrant shall be exercisable in part only for a whole number of shares.

         (b)      At the option of the Holder, the Exercise Price shall be
payable (i) in cash or by certified or official bank check payable to the order
of the Issuer or (ii) by exchange of this Warrant in accordance with the further
provisions of this Section 2(b). In exchange for the portion of this Warrant
that is being exercised at such time, the Holder shall receive the number of
shares of Common Stock determined by multiplying (A) the number of shares of
Common Stock for which this Warrant is being exercised at such time by (B) a
fraction, (1) the numerator of which shall be the difference between (x) Current
Market Price per share of Common Stock at such time and (y) the Exercise Price
per share of Common Stock, and (2) the denominator of which shall be the Current
Market Price per share of Common Stock at such time. The Issuer shall issue a
new Warrant for the portion, if any, of this Warrant not being exercised as
provided in Section 2(f).

         (c)      Subject to the provisions of Section 2(d), upon receipt of an
Exercise Notice, the aggregate Exercise Price payable and this Warrant, the
Issuer shall, as promptly as practicable and in any event within five (5)
Business Days thereafter, issue to the Holder one or more stock certificates
representing the aggregate number of shares of Common Stock to which the Holder
is entitled and transfer to the Holder of this Warrant appropriate evidence of
ownership of other securities or property (including any cash) to which the
Holder is entitled, in such denominations, and registered or otherwise placed
in, or payable to the order of, such name or names, as may be directed in
writing by the Holder, and shall deliver such stock certificates,

                                       4.

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evidence of ownership and any other securities or property (including any cash)
to the Person or Persons entitled to receive the same, together with an amount
in cash in lieu of any fraction of a share (or fractional interest in any other
security), as hereinafter provided. The Issuer shall pay all expenses in
connection with, and any and all documentary, stamp or similar issue or transfer
taxes of the United States or any state thereof payable in respect of, the issue
or delivery of the Warrant Stock upon exercise of this Warrant. However, the
Issuer shall not be required to pay any tax or other charge imposed in
connection with any assignment or transfer involved in the issue of any
certificate or other evidence of ownership of Warrant Stock.

         (d)      The Holder's election to exercise this Warrant may, in the
sole discretion of the Holder, be conditioned upon, and in such event, the
exercise shall be subject in all respects to a Change of Control, the
consummation of a sale of the Issuer, any public offering of the Issuer's Common
Stock registered under the Securities Act or other similar transaction involving
the Issuer (collectively referred to herein as the "Exercise Conditions"), as
specified in the Exercise Notice. If any exercise of this Warrant is so
conditioned, then, subject to delivery of the items required by Section 2(b),
the Issuer shall deliver the certificates and other evidence of ownership of
other securities or other property in such manner as the Holder shall direct as
required in connection with the consummation of the transaction upon which the
exercise is conditioned. At any time that the Issuer shall give notice to the
Holder that such transaction has been abandoned or the Issuer has withdrawn from
participation in such transaction, the Issuer shall return the items delivered
pursuant to Section 2(c) and the Holder's election to exercise this Warrant
shall be deemed rescinded.

         (e)      The stock certificate or certificates or other evidence of
ownership of Warrant Stock to be delivered pursuant to Section 2(c) hereof shall
be deemed to have been issued, and the Holder or any other Person so designated
to be named therein shall, to the extent permitted by law, be deemed to have
become a holder of record of the Warrant Stock represented thereby, including
having the right to vote any voting securities included therein or to consent or
to receive notice as a shareholder, as of the date on which the last of the
Exercise Notice, payment of the Exercise Price and this Warrant is received by
the Issuer as aforesaid (subject, in the case of an exercise to which Section
2(d) applies, to the transaction upon which such exercise is conditioned),
notwithstanding that the transfer books of the Issuer shall then be closed or
that such certificates or other evidence of ownership shall not then actually
have been delivered to the Holder.

         (f)      If this Warrant shall have been exercised only in part, the
Issuer shall, at the time of delivery of the certificate or certificates or
other evidence of ownership of Warrant Stock, execute and deliver to the Holder,
without charge, a new Warrant evidencing the rights of the Holder to purchase
the unpurchased Warrant Stock called for by this Warrant, which new Warrant
shall in all other respects be identical to this Warrant, or, at the request of
the Holder, appropriate notation may be made on this Warrant and the same
returned to the Holder.

         (g)      The Issuer shall not be required to issue any fractional share
of Common Stock (or fractional interest in any other security) upon exercise of
this Warrant. As to any fraction of a share (or fractional interest in any other
security) that the Holder would otherwise be entitled to receive upon such
exercise, the Issuer shall pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the Current Market Price per share of
Common Stock

                                       5.

<PAGE>

(and/or other security) on the date of exercise; provided, however, that in the
event that the Issuer undertakes a reduction in the number of shares of Common
Stock or other securities outstanding, it shall be required to issue fractional
shares or fractional interests in such other securities to the Holder if the
Holder exercises all or any part of this Warrant, unless the Holder shall have
consented in writing to such reduction and provided the Issuer with a written
waiver of its right to receive fractional shares or interests in accordance with
this paragraph. If the Holder shall exercise more than one Warrant in the same
transaction, any payment in respect of fractional shares (or other fractional
interests) shall be based on the final fraction resulting from aggregating all
such exercises.

         (h)      The Issuer hereby agrees at all times to keep reserved for
issuance and delivery upon exercise of this Warrant such number of its
authorized but unissued shares (or treasury shares) of Common Stock or other
securities of the Issuer from time to time issuable upon exercise of this
Warrant as will be sufficient to permit the exercise in full of this Warrant.
All such shares and other securities shall be duly authorized and, when issued
upon such exercise, shall be validly issued, fully paid and non-assessable, free
and clear of all liens, security interests, charges and other encumbrances or
restrictions on sale (except to the extent of any applicable provisions set
forth in the Issuer's Fundamental Documents) and free and clear of all
preemptive or similar rights.

         (i)      If the issuance of any shares of Common Stock or other
securities required to be reserved for purposes of the exercise of this Warrant
requires the registration with, or approval of, any governmental authority or
requires listing on any national securities exchange or national market system
before such shares or other securities may be so issued, the Issuer shall at its
expense use its best efforts to cause such shares to be duly registered,
approved or listed, as the case may be, so that such shares or other securities
may be issued in accordance with the terms hereof; provided, however, that this
provision shall not obligate the Issuer to register such shares or other
securities under the Securities Act or qualify them under state securities or
blue sky laws.

         SECTION 3. Transfer, Division and Combination.

         (a)      This Warrant, all rights hereunder and any Warrant Stock
issued or issuable upon exercise hereof are assignable and transferable, at any
time in whole or in part, to any Person or Persons. Any such transfer shall not
require the consent of any security holder of the Issuer.

         (b)      Upon a transfer permitted by Section 3(a), this Warrant shall
be transferable upon surrender of this Warrant to the Issuer, together with a
written assignment of this Warrant substantially in the form of Annex B attached
hereto, duly executed by the Holder hereof or such Holder's agent or attorney.
Upon such surrender, the Issuer shall, without charge, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees (and, if the
Holder's entire interest is not being assigned, in the name of the Holder), and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled.

         (c)      This Warrant may be exchanged for, or combined with, other
Warrants upon presentation of this Warrant and any other Warrants with which
this Warrant is to be combined to the Issuer, together with a written notice
specifying the denominations in which a new

                                       6.

<PAGE>

Warrant or Warrants are to be issued, signed by the Holder. The Issuer shall
execute and deliver a new Warrant or Warrants to the Holder in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.

         (d)      The Issuer shall maintain books for the registration and
transfer of the Warrants, and shall allow each Warrant Holder to inspect such
books at such reasonable times as such holder shall request.

         SECTION 4. Adjustments.

         (a)      Dividends and Distributions. If at any time on or after the
Effective Date the Issuer shall pay any dividend or make any other distribution
to holders of its Common Stock of any cash, evidence of indebtedness or other
property (including any rights or warrants to purchase any securities of the
Issuer) of any nature whatsoever (other than as contemplated by subsections (b),
(c)(i)(A) and (d)(i)(A) of this Section 4), the Issuer shall at the same time
pay or distribute to the Holder (whether or not the Holder exercises this
Warrant) the cash, evidence of indebtedness or other property the Holder would
have been entitled to receive if such Holder had exercised this Warrant
immediately prior to the record date for such dividend or distribution.

         (b)      Subdivisions and Combinations. If at any time the Issuer shall

                  (i)      take a record of the holders of its Common Stock for
         the purpose of entitling them to receive a dividend or other
         distribution of Common Stock;

                  (ii)     subdivide, split or reclassify its outstanding shares
         of Common Stock into a larger number of shares of Common Stock; or

                  (iii)    combine its outstanding shares of Common Stock into a
         smaller number of shares of Common Stock;

then immediately after the occurrence of any such event (A) the number of shares
of Common Stock issuable upon exercise of this Warrant shall be adjusted so as
to equal the number of shares of Common Stock such holder would have held
immediately after the occurrence of such event (in the case of an event referred
to in clause (i), after giving effect to such dividend or distribution) if such
holder had exercised this Warrant immediately prior to the occurrence of such
event and (B) the Exercise Price shall be adjusted to be equal to (x) the
Exercise Price immediately prior to the occurrence of such event multiplied by
(y) a fraction (1) the numerator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to the adjustment
in clause (A) and (2) the denominator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately after the adjustment in
clause (A).

         (c)      Issuance of Common Stock. If at any time the Issuer (i) shall
(A) take a record of the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase shares of any class or series of
Common Stock or (B) otherwise sell or issue any shares of any class or series of
Common Stock (other than Excluded Stock) and (ii) the consideration per share of
Common Stock paid or to be paid upon such subscription, purchase, sale or
issuance is less than the Current Market Price per share of Common Stock
immediately before such record date

                                       7.

<PAGE>

or immediately before the date of such sale or issuance, as the case may be,
then the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted to be that number determined by multiplying (x) the number of
shares of Common Stock issuable upon exercise of this Warrant immediately prior
to such record date or sale or issuance date, as the case may be, by (y) a
fraction (not to be less than one) (i) the numerator of which shall be equal to
the product of (A) the number of shares of Common Stock outstanding (determined
on a fully-diluted basis) after giving effect to such subscription, purchase,
sale or issuance (and assuming all such subscription or purchase offers are
exercised) and (B) the Current Market Price per share of Common Stock determined
immediately before such record date or sale or issuance date, as the case may
be, and (ii) the denominator of which shall be equal to the sum of (A) the
product of (1) the number of shares of Common Stock outstanding (determined on a
fully-diluted basis) immediately before such record date or sale or issuance
date, as the case may be, and (2) the Current Market Price per share of Common
Stock determined immediately before such record date or sale or issuance date,
as the case may be, and (B) the aggregate consideration received or to be
received by the Issuer for the total number of shares of Common Stock to be
subscribed for or purchased, sold or issued. Simultaneously with the adjustment
in the preceding sentence, the Exercise Price shall be adjusted to be equal to
(x) the Exercise Price immediately prior to the occurrence of such event
multiplied by (y) a fraction (1) the numerator of which is the number of shares
of Common Stock issuable upon exercise of this Warrant immediately prior to the
adjustment in the preceding sentence and (2) the denominator of which is the
number of shares of Common Stock issuable upon exercise of this Warrant
immediately after the adjustment in the preceding sentence.

         (d)      Issuance of Convertible Securities or Options. If at any time
(i) the Issuer shall (A) take a record of the holders of its Common Stock for
the purpose of entitling them to subscribe for or purchase options to purchase
or rights to subscribe for Common Stock, securities directly or indirectly
convertible into or exchangeable for Common Stock ("Convertible Securities") or
options or rights with respect to Convertible Securities (options or rights with
respect to Common Stock or Convertible Securities being referred to as
"Options") or (B) otherwise issue or sell any Options or Convertible Securities
(other than Options exercisable for Excluded Stock) and (ii) the consideration
per share paid or to be paid for the Common Stock deliverable upon exercise of
such Options and/or conversion or exchange of such Convertible Securities
(determined by dividing (x) the total amount received or receivable by the
Issuer in consideration of the subscription, purchase, sale or issuance of such
Options or Convertible Securities plus any amount payable to the Issuer upon
such exercise and/or conversion or exchange, by (y) the total maximum number of
shares of Common Stock necessary to effect the exercise and/or conversion or
exchange of all such Options or Convertible Securities) shall be less than the
Current Market Price per share of Common Stock on such record date or sale or
issuance date, as the case may be, then the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted to be that number
determined by multiplying the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such date by a fraction (not to be
less than one) (i) the numerator of which shall be equal to the product of (A)
the total maximum number of shares of Common Stock outstanding (determined on a
fully diluted basis) after giving effect to the assumed exercise and/or
conversion of all such Options or Convertible Securities and (B) the Current
Market Price per share of Common Stock determined immediately before such record
date or sale or issuance date, as the case may be, and (ii) the denominator of
which shall be equal to the sum of (A) the product of (1) the number of

                                       8.

<PAGE>

shares of Common Stock outstanding (determined on a fully-diluted basis)
immediately before such record date or sale or issuance date, as the case may
be, and (2) the Current Market Price per share of the Common Stock determined
immediately before such record date or sale or issuance date, as the case may
be, and (B) the aggregate consideration for which Common Stock is deliverable
upon exercise and/or conversion or exchange for such Options or Convertible
Securities. Simultaneously with the adjustment in the preceding sentence, the
Exercise Price shall be adjusted to be equal to (x) the Exercise Price
immediately prior to the occurrence of such event multiplied by (y) a fraction
(1) the numerator of which is the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to the adjustment in the preceding
sentence and (2) the denominator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately after the adjustment in
the preceding sentence. The adjustment of the exercise price of an Option shall
not be deemed to be the issuance or sale of an Option at less than the Current
Market Price per share of Common Stock if the exercise price as adjusted is not
less than the Current Market Price per share of Common Stock on the date of such
adjustment.

         (e)      Superseding Adjustment. If, at any time after any adjustment
in the number of shares of Common Stock issuable upon exercise of this Warrant
shall have been made on the basis of the issuance of any Options or Convertible
Securities:

                  (i)      any such Options shall expire prior to exercise or
         the right to convert or exchange any such Convertible Securities shall
         terminate prior to conversion or exchange; or

                  (ii)     the consideration per share for which shares of
         Common Stock are issuable pursuant to the terms of such Options or
         Convertible Securities shall be increased or decreased;

then such previous adjustment shall be rescinded and annulled (without affecting
any other adjustments resulting from any other events). Thereupon, a
recomputation shall be made of the adjustment in the number of shares of Common
Stock issuable upon exercise of this Warrant on the basis of

                           (A)      treating the number of shares of Common
                                    Stock, if any, theretofore actually issued
                                    or issuable pursuant to the previous
                                    exercise, conversion or exchange of such
                                    Options or Convertible Securities as having
                                    been issued on the date or dates of such
                                    exercise and/or conversion or exchange and
                                    for the consideration actually received and
                                    receivable therefor, and

                           (B)      treating any such Options or Convertible
                                    Securities that then remain outstanding as
                                    having been granted or issued immediately
                                    after the time of such increase or decrease
                                    for the consideration per share for which
                                    shares of Common Stock are issuable upon
                                    exercise and/or conversion or exchange of
                                    such Options or Convertible Securities,

                                       9.

<PAGE>

which new adjustment shall supersede the previous adjustment so rescinded and
annulled. For purposes of the computation of such new adjustment, the Current
Market Price shall be deemed to be the Current Market Price used in computing
the previous adjustment.

         (f)      Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock issuable upon exercise of this Warrant:

                  (i)      The sale or other disposition of any issued shares of
         Common Stock owned or held by or for the account of the Issuer shall be
         deemed to be an issuance thereof for purposes of this Section.

                  (ii)     In computing adjustments under this Section,
         fractional interests in Common Stock shall be taken into account to the
         nearest one-thousandth of a share.

                  (iii)    If the Issuer shall take a record of the holders of
         its Common Stock for the purpose of entitling them to receive a
         dividend or distribution or subscription or purchase rights and shall,
         thereafter and before the payment of such dividend or distribution or
         the granting of such subscription or purchase rights, legally abandon
         its plan to pay or deliver such dividend, distribution, subscription or
         purchase rights, then thereafter no adjustment shall be required by
         reason of the taking of such record and any such adjustment previously
         made in respect thereof shall be rescinded and annulled.

                  (iv)     Aggregate consideration for purposes of Sections 4(c)
         and 4(d) shall be determined as follows: In case any Common Stock,
         Options, or Convertible Securities shall be issued or sold, or be
         exercisable, convertible or exchangeable for cash, the consideration
         received therefor shall be deemed to be the amount payable to the
         Issuer therefor, after deduction therefrom of any expenses incurred or
         any underwriting commissions or concessions or discounts or, in the
         case of a private placement thereof, finders' fees or commissions paid
         or allowed by the Issuer in connection therewith. In case any such
         Common Stock, Options, or Convertible Securities shall be issued or
         sold, or be exercisable, convertible or exchangeable for a
         consideration other than cash payable to the Issuer, the consideration
         received therefor shall be deemed to be the fair market value of such
         consideration (as determined by the Board), after deduction therefrom
         of any expenses incurred or any underwriting commissions or concessions
         or discounts paid or allowed by the Issuer in connection therewith. In
         case any such Common Stock, or Options or Convertible Securities shall
         be issued or sold, or be exercisable, convertible or exchangeable in
         connection with any merger of another corporation into the Issuer, the
         amount of consideration therefor shall be deemed to be the fair market
         value (as determined by the Board of such portion of the assets of such
         merged corporation as the Board shall reasonably determine in good
         faith to be attributable to such options, rights or securities.

         (g)      Merger, Consolidation or Disposition of Assets. If the Issuer
shall merge, consolidate or effect a share exchange with another entity, or
shall sell, transfer or otherwise dispose of all or substantially all of its
assets to another entity and pursuant to the terms of such merger,
consolidation, share exchange or disposition of assets, cash, shares of Common
Stock or

                                      10.

<PAGE>

other securities of the successor or acquiring entity, or property of any nature
is to be received by or distributed to the holders of Common Stock of the
Issuer, then the Holder shall be entitled to receive upon the exercise of this
Warrant in accordance with its terms, in respect of the Warrant Stock issuable
upon exercise of this Warrant, and upon delivery to the Issuer or the Issuer's
successor, as applicable, of this Warrant for cancellation, the amount of cash,
shares of Common Stock, other securities or other property that it would have
been entitled to receive if such Holder had exercised this Warrant in full
immediately prior to the occurrence of such merger, consolidation, share
exchange or disposition of assets. In the case of any such merger,
consolidation, share exchange or disposition of assets, the successor or
acquiring entity (and any Affiliate thereof issuing securities) shall expressly
assume the due and punctual observance and performance of each and every
covenant and condition of this Warrant to be performed and observed by the
Issuer and all of the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board in order to provide for adjustments of the Warrant Stock issuable upon
exercise of this Warrant that shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 4. The foregoing provisions shall
similarly apply to successive mergers, consolidations, share exchanges and
dispositions of assets.

         (h)      Capital Reorganization or Capital Reclassification. If the
Issuer shall effect any capital reorganization or any reclassification of its
capital stock (other than a change in par value or from par value to no par
value or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), then in each case the Issuer
shall cause effective provision to be made so that this Warrant shall be
exercisable for the kind and number of shares of stock, other securities, cash
or other property to which a holder of the Warrant Stock deliverable upon
exercise of this Warrant would have been entitled upon such reorganization or
reclassification and any such provision shall include adjustments in respect of
such stock, securities or other property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 4 with
respect to this Warrant.

         (i)      Other Action Affecting Common Stock. If at any time or from
time to time the Issuer shall take any action affecting its Common Stock, other
than any action described in this Section 4, then, unless such action will not
have an adverse effect upon the Holder's rights, the number of shares of Warrant
Stock issuable upon exercise of this Warrant and the Exercise Price shall be
adjusted in such manner and at such time as the Board shall in good faith
determine to be equitable in the circumstances, but no such adjustment shall
decrease the number of shares of Warrant Stock issuable upon exercise of this
Warrant or increase the Exercise Price.

         (j)      Notice of Adjustments. Whenever the number of shares of
Warrant Stock issuable upon exercise of this Warrant shall be adjusted pursuant
to this Agreement, the Issuer shall forthwith obtain a certificate signed by a
firm of independent accountants of recognized national standing selected by the
Issuer setting forth, in reasonable detail, the event requiring the adjustment,
the method by which such adjustment was calculated and specifying the number of
shares of Warrant Stock issuable upon exercise of this Warrant after giving
effect to such adjustment (except in the case of adjustments pursuant to Section
4(i) in which event a certificate shall be obtained on December 31 and June 30).
The Issuer shall keep at its office copies of all such certificates and cause
the same to be available for inspection at said office during normal

                                      11.

<PAGE>

business hours by the Holder or any prospective purchaser of a Warrant
designated by the registered Holder hereof.

         (k)      Notice of Certain Corporate Action. If the Issuer shall
propose (i) to pay any dividend to the holders of its Common Stock or to make
any other distribution to the holders of its Common Stock; (ii) to offer to the
holders of its Common Stock rights to subscribe for or to purchase any
additional shares of Common Stock or any Options or Convertible Securities;
(iii) to effect any reorganization or reclassification of its Common Stock; (iv)
to otherwise issue any Common Stock, Options, or Convertible Securities; (v) to
effect any other capital reorganization; (vi) to effect any consolidation,
merger or share exchange or any sale, transfer or other disposition of all or
substantially all of its assets; or (vii) to effect the liquidation, dissolution
or winding up of the Issuer, then, in each such case, the Issuer shall give to
the Holder a notice of such proposed action, which shall specify the date on
which a record is to be taken for the purposes of such dividend, distribution or
rights offer, or the date on which such reclassification, issuance,
reorganization, consolidation, merger, share exchange, sale, transfer,
disposition, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of Common Stock, if any such date
is to be fixed, and shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action on the
Common Stock, and the number of shares of Warrant Stock that are issuable upon
exercise of this Warrant after giving effect to any adjustment that will be
required as a result of such action. Such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Common Stock for purposes of such
action, and in the case of any other such action, at least 10 days prior to the
date of the taking of such proposed action.

         (l)      No Impairment. The Issuer will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Issuer, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against
impairment.

         (m)      Miscellaneous. The computations of all amounts under this
Section 4 shall be made assuming all other anti-dilution or similar adjustments
to be made to the terms of all other securities resulting from the transaction
causing an adjustment pursuant to this Section 4 have previously been made so as
to maintain the relative economic interest of this Warrant vis-a-vis all other
securities issued by the Issuer.

         SECTION 5. Miscellaneous.

         (a)      Office of Issuer. So long as this Warrant remains outstanding,
the Issuer shall maintain an office in the continental United States where the
Warrants may be presented for exercise, transfer, division or combination as
provided in this Warrant. Such office shall be at its principal executive
offices unless and until the Issuer shall designate and maintain some other
office for such purposes and give notice thereof to the Holder.

                                      12.

<PAGE>

         (b)      Notices Generally. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, telecopied, sent by nationally
recognized overnight courier or mailed by registered or certified mail (return
receipt requested), postage prepaid, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):

         If to the Issuer, to:

                  Digital Theater Systems, Inc.
                  31336 Via Colinas, #101
                  Westlake Village, California 91362
                  Telephone: (818) 706-3525
                  Telecopy: (818) 706-1868
                  Attention: Jon E. Kirchner, CFO

         With a copy to:

                  Troy & Gould Professional Corporation
                  1801 Century Park East, 16th Floor
                  Los Angeles, California 90067
                  Telephone: (310) 553-4441
                  Telecopy: (310) 201-4746
                  Attention: Lawrence P. Schnapp, Esq.

         If to Holder, to the address of such Holder as set forth in the books
         and records of the Issuer.

         All such notices and communications shall be deemed to have been given
and received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery, (iii) in
the case of delivery by nationally recognized overnight courier, on the third
business day following dispatch and (iv) in the case of mailing, on the seventh
business day following such mailing.

         (c)      Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of California without regard to its
conflicts of laws rules. The Issuer agrees that it may be served with process in
the State of California and any action for breach of this Warrant may be
prosecuted against it in the courts of such State or any Federal court located
in such State.

         (d)      Limitation of Liability. Except as otherwise provided herein,
this Warrant does not entitle the Holder to any voting rights or other rights of
a shareholder of the Issuer, as a shareholder. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no mere enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the Exercise Price or as a
shareholder of the Issuer, whether such liability is asserted by the Issuer, by
any creditor of the Issuer or any other Person.

                                      13.

<PAGE>

         (e)      Loss or Destruction of Warrant. Upon receipt by the Issuer of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the loss, theft, destruction or mutilation of this Warrant and (in the case of
loss, theft or destruction), if requested by the Issuer, of reasonably
satisfactory indemnification (if the Holder is a nationally-chartered financial
institution or an Affiliate thereof, its own agreement being satisfactory), or
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Issuer shall, without charge, execute and deliver a new Warrant exercisable for
the same amount of Warrant Stock; provided, however, that (in the case of loss,
theft or destruction) no indemnity bond shall be required unless the Issuer has
a class of securities registered pursuant to the Securities Exchange Act of
1934, as amended, and the Issuer's transfer agent requires such indemnity bond
as a condition to the issuance of a new Warrant.

         (f)      Amendments and Waivers. Any provision of this Warrant may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Issuer and the Holder and, in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

                                      * * *

                                      14.

<PAGE>

         IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.

Dated: October 24, 1997

                                              DIGITAL THEATER SYSTEMS, INC.

                                              By: ______________________________
                                                  Name: Jon Kirchner
                                                  Title: Chief Financial Officer

                                      15.

<PAGE>

                                                                         ANNEX A

                             FORM OF EXERCISE NOTICE

                (To be executed by the registered holder hereof)

         The undersigned registered owner of this Warrant exercises this Warrant
for the purchase of __________ shares of Common Stock of Digital Theater
Systems, Inc., a Delaware corporation, and herewith makes payment therefor of
$__________ (such payment being made [check one] (x) [ ] in cash or by certified
or official bank check or (y) [ ] by acceptance of a reduced number of shares of
Common Stock upon cancellation of this Warrant as provided in Section 2(b) of
this Warrant, all on the terms and conditions specified in this Warrant, and
requests that (i) certificates and/or other instruments covering such shares of
Common Stock be issued in accordance with the instructions given below and (ii)
if such shares of Common Stock shall not include all of the shares of Common
Stock to which the Holder is entitled under this Warrant, that a new Warrant for
the unpurchased balance of the shares of Common Stock issuable hereunder be
delivered to the undersigned. References in this Exercise Notice to "Common
Stock" shall include other securities or other property to the extent included
in Warrant Stock.

         [This Exercise Notice is being delivered contingent upon the
consummation of [describe transaction] as contemplated by Section 2(d) of this
Warrant].*

Dated: __________________

                                               _________________________________
                                              (Signature of Registered Holder)**

Instructions for issuance and registration
of shares of Common Stock

_____________________________                  Social Security or Other
Name of Registered Holder                      Identifying Number:______________

(Please Print)

Please deliver certificate to the following address:

_____________________________
Street

_____________________________
City, State and Zip Code

*        Include if applicable.

**       The signature must correspond with the name as written upon the face of
         the attached Warrant in every particular, without alteration.

                                      16.

<PAGE>

                                                                         ANNEX B

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder hereof)

         FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of shares of
Common Stock covered thereby set forth below to:

                                                                      Number of
                                                                      Shares of
Name of Assignee                Address                             Common Stock

References in this Exercise Notice to "Common Stock" shall include other
securities or other property to the extent included in Warrant Stock.

Dated: __________________

                                               _________________________________
                                               (Signature of Registered Holder)*

                                               _________________________________
                                               Name of Registered Holder
                                               (Please Print)

Witness:

_____________________________

_____________________________

*        The signature must correspond with the name as written upon the face of
         the attached Warrant in every particular, without alteration.

                                      17.

<PAGE>

                           SCHEDULE OF WARRANT HOLDERS

         Dr. Stephen M. Smyth
         Mr. Paul W. Smith
         Mr. Neil D. Robinson
         Mr. Brian H. Spears
         Patrick Beard
         Terry Beard
         Ron Booth
         Joe Dellaria
         Salah Hassanein
         James Ketcham
         Jon Kirchner
         Robert Knudson
         Julie Koppel
         Richard Koppel
         Nancy Montgomery
         Andrea Nee
         William Neighbors
         Karen Sullivan
         Forth Investments, LLC
         Universal City Studios, Inc.
         Dr. Mike H. Smyth
         Dr. Ming Yan
         AT Communications K.K.
         Mr. Patrick J. Watson
         Mr. Hing Tong Cheung

<PAGE>

                      SCHEDULE IDENTIFYING FORM DIFFERENCES

1.       Existing Shareholder Warrant to Purchase Common Stock Between the
         Registrant and Dr. Stephen M. Smyth

2.       Existing Shareholder Warrant to Purchase Common Stock Between the
         Registrant and Mr. Paul W. Smith

3.       Existing Shareholder Warrant to Purchase Common Stock Between the
         Registrant and Mr. Neil D. Robinson

4.       Existing Shareholder Warrant to Purchase Common Stock Between the
         Registrant and Mr. Brain H. Spears

The above listed Warrants differ from the Form of Existing Shareholder Warrant
to Purchase Common Stock set forth in this exhibit only as to the first
paragraph on page 1. The above listed Warrants contain the following first
paragraph on page 1:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES WHICH
         MAY BE ACQUIRED ON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
         LAWS, AND ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR
         OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR
         QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES
         LAWS OR APPLICABLE EXEMPTIONS THEREFROM.