Document:

Campbell Promissory Note

         THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED
         UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED,  OR ANY STATE
         SECURITIES LAWS  (COLLECTIVELY,  THE "ACTS"),  AND MAY NOT BE
         OFFERED,   SOLD  OR   OTHERWISE   TRANSFERRED,   PLEDGED   OR
         HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER ALL APPLICABLE
         ACTS OR UNLESS AN  OPINION OF  COUNSEL  IS  DELIVERED  TO THE
         ISSUER IN FORM AND  SUBSTANCE  SATISFACTORY  TO THE ISSUER TO
         THE EFFECT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                   SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

U.S. $100,000.                                                    August 6, 2004

         FOR VALUE RECEIVED, Earthworks Entertainment, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order of William H.
Campbell, a natural person (the "Lender"), or his successors or assigns, subject
to this Note's conversion pursuant to Section 1, on the earlier to occur of (i)
(a) August 6 , 2005 or (b) the "Maturity Date") or (b) an Event of Acceleration
(as hereinafter defined), the principal amount of $100,000 (the "Principal
Amount"), together with any accrued and unpaid interest on the Principal Amount
under this convertible promissory note (this "Note") at the per annum rate of
10% (calculated on the basis of a 365 day year), compounded daily and payable
within five (5) days of the end of each calendar quarter, for the period
beginning on the date hereof and continuing until the Principal Amount shall
have become due and payable, and thereafter at a per annum rate equal to 15%
until such Principal Amount is paid.

         Except as otherwise expressly provided in Section 3 hereof, all
payments of principal and interest on this Note shall be in cash, in such coin
or currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts. Payments of principal and
interest are to be made by wire transfer to the account designated in writing by
the Lender and provided to the Company not less than three business day prior to
the date payment is due or at such other place as the Lender shall have notified
the Company in writing at least one business day before such payment is due. All
payments under this Note shall be paid by the Company without withholding or
deduction of any tax or other charge. For purposes of this Note, a business day
shall be any day other than a Saturday, Sunday or any day in which the banking
and commercial lending institutions are generally closed to the public.

1.       Conversion.
         ----------

         1.1.     Optional Conversion.
                  --------------------

<PAGE>

         (a)    The outstanding Principal Amount under this Note, plus any
accrued but unpaid interest thereon shall be convertible from time to time, at
Lender's sole option, into shares of the Company's Common Stock, par value
$0.0015 per share (the "Common Stock"), at a conversion price equal to $0.08 per
share (the "Common Stock Conversion Price"), subject to adjustment in accordance
with Section 4 hereof.

         (b)    The Company covenants and agrees that so long as this Note is
outstanding, the Company shall have authorized and reserved a sufficient number
of shares of Common Stock to enable the Lender to convert this Note into Common
Stock. The Company agrees that its issuance of this Note shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares upon the
conversion of this Note.

         (c)    If the Lender effects the conversion of all or part of this
Note, the Common Stock into which this Note or such part of this Note converts
shall have certain registration rights as set forth in the registration rights
agreement attached as Exhibit B hereto. *

         1.2.     Procedure.
                  ----------

         Subject to the terms hereof, the Lender may effect the conversion of
this Note, in whole or in part, at any time, or from time to time, by the
surrender of this Note, together with an executed notice of conversion (the
"Notice of Conversion") in the form attached hereto as Exhibit A, to the Company
at the address set forth in Section 8. The person in whose name any certificate
representing shares or securities shall be issuable upon conversion of this Note
shall be deemed to have become the holder of record of, and shall be treated for
all purposes as the record holder of, the shares or securities issuable
hereunder (and such shares or securities shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which such
surrender is made. In the event only a portion of this Note is converted, the
Company shall at its sole expense and as promptly as practicable, issue a
replacement Note in identical form but in a Principal Amount equal to the
portion of the Principal Amount not so converted and deliver such replacement
Note as directed by the Lender. As used in this Note, the term "person" means
any individual or any corporation, partnership, trust, limited liability company
or other entity or organization of any kind.

2.       Prepayment.
         ----------

         2.1.     Optional Prepayment.
                  --------------------

         The Company shall have the right to prepay the Principal Amount and any
accrued interest thereon in whole or in part without penalty or premium at any
time. Prior to making an optional prepayment, the Company shall give Lender
sixty days' prior written notice of its intention to make a prepayment. Upon any
notice of prepayment, Lender shall have the option to convert all but not less
than all of the Principal Amount then outstanding under this Note, plus any
accrued but unpaid interest thereon, into Common Stock pursuant to Section
1.1(a). Any prepayment amount shall be applied first to any accrued but unpaid
interest on the outstanding Principal Amount and then to the Principal Amount.

                                      -2-
<PAGE>

3.       Events of Acceleration.
         ----------------------

         The entire unpaid Principal Amount and accrued interest thereon shall
become immediately due and payable upon the occurrence of one or more of the
following events (each an "Event of Acceleration"):

         (a)    the failure of the Company to pay when due the Principal Amount
or interest accrued thereon within three business days of the date on which such
payment was due;

         (b)    the occurrence of any default or event of default under any
other bond, debenture, note or other indebtedness for borrowed money of the
Company;

         (c)    the beginning of involuntary proceedings against the Company
under federal bankruptcy law or under any applicable federal or state
bankruptcy, insolvency or similar law, or the beginning of proceedings seeking
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any substantial part of
the Company's property, or the beginning of proceedings seeking an order winding
up or liquidating the affairs of the Company and the continuance of such
proceedings for a period of thirty (30) days;

         (d)    the beginning by the Company of a voluntary case under federal
bankruptcy law, or any other applicable federal or state bankruptcy, insolvency
or other similar law, or the consent by the Company to the appointment of, or
taking possession by, a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or for any substantial
part of the Company's property, or the Company making any assignment for the
benefit of creditors, or the failure of the Company generally to pay the
Company's debts as they become due, or the taking of formal action by the
Company in furtherance of any of the foregoing;

         (e)    if any judgment against the Company or any garnishment,
attachment or other levy against the property of the Company for an amount in
excess of Twenty Five Thousand Dollars ($25,000) remains unpaid, unstayed on
appeal, undischarged, unbonded, or undismissed for a period of twenty (20) days,
unless covered by insurance;

         (f)    the closing of (i) an acquisition of the Company by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation) that results in the transfer of
fifty percent (50%) or more of the outstanding voting power of the Company, (ii)
a sale of a majority of the assets of the Company by means of a single
transaction or a series of related transactions; or

         The Company shall give the Lender written notice of the occurrence of
any of the events set forth above in Sections 3(a) through 3(f) promptly (but in
no event more than one business day) after the occurrence of any of such events.

         In the event of the occurrence of any Event of Acceleration, the
Lender, at its sole option (and without limiting any other remedies available to
it), may elect that any payment of the Principal Amount and accrued interest
thereon required to be made by the Company under this Note to such Lender, be

                                      -3-
<PAGE>

made in the form of payment of shares of Common Stock having an aggregate fair
market value equal to Principal Amount and accrued interest at a conversion
price equal to the Common Stock Conversion Price, in lieu of payment in cash.
The Company shall take all action necessary such that any such shares shall be
duly authorized, fully paid and nonassessable.

4.       Certain Adjustments.
         --------------------
         The conversion price for Common Stock under Section 1.1(a) of this Note
(hereinafter, the "Conversion Price") and the number of Common Stock into which
this Note may be converted under Section 1.1(a) shall be subject to adjustment
in accordance with the following provisions:

         4.1.     Adjustments to Conversion Price.
                  --------------------------------

         (a)    Special Definitions. The following definitions shall apply to
this Section 4:

                  (i)   "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities.

                  (ii)  "Convertible Securities" shall mean any evidences of
indebtedness or other securities directly or indirectly convertible into or
exchangeable for Common Stock.

                  (iii) "Additional Common Stock" shall mean all Common Stock
issued (or, pursuant to Section 4.1(c), deemed to be issued) by the Company
after the date hereof, other than Common Stock issued as a cash dividend or cash
distribution on the outstanding Common Stock or pursuant to any event for which
adjustment is made pursuant to Section 4.2 or 4.3 hereof.

         (b)    No Adjustment of Conversion Price. No adjustment of the
Conversion Price shall be made in an amount less than one cent per share of
Common Stock, provided that any adjustments which are not required to be made by
reason of this sentence shall be carried forward and shall be taken into account
in any subsequent adjustment to the Conversion Price.

         (c)    Deemed Issue of Additional Common Stock. In the event the
Company at any time or from time to time after the date hereof shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of Common Stock (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number that would result
in an adjustment pursuant to clause (ii) below) issuable upon the exercise of
such Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such record
date, provided that in any such case in which Additional Common Stock are deemed
to be issued:

                                      -4-
<PAGE>

                  (i)   no further adjustment in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities, or upon the receipt of payment for any such conversion or exchange;

                  (ii)  if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or decrease in
the consideration payable to the Company, or increase or decrease in the number
of Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;

                  (iii) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:

                           (1)  in the case of Convertible Securities or Options
for Common Stock, the only Additional Common Stock issued were Common Stock, if
any, actually issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration received therefor
was the consideration actually received by the Company for the issue of all such
Options, whether or not exercised, plus the consideration actually received by
the Company upon such exercise, or for the issue of all such Convertible
Securities whether or not converted or exchanged, plus the additional
consideration, if any, actually received by the Company upon such conversion or
exchange, and

                           (2)  in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the Company for the Additional Common Stock deemed to
have been then issued was the consideration actually received by the Company for
the issue of all such Options, whether or not exercised, plus the consideration
deemed to have been received by the Company upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;

                  (iv)  no readjustment pursuant to clause (ii) or (iii) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (1) the Conversion Price on the original adjustment date,
or (2) the Exercise Price that would have resulted from any issuance of
Additional Common Stock between the original adjustment date and such
readjustment date.

         (d)    Adjustment of Exercise Price Upon Certain Issuances of
Additional Common Stock. In the event that after the date hereof the Company
shall issue Additional Common Stock (including Additional Common Stock deemed to

                                      -5-
<PAGE>

be issued pursuant to Section 4.1(c)) without consideration, or for a
consideration per share of Common Stock less than the Conversion Price in effect
on the date of and immediately prior to such issue, then and in such event, such
Conversion Price shall be reduced, concurrently with such issue, to a price
(subject to Section 4.1(b)), calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the number of Common Stock outstanding immediately prior to such issue plus the
number of Common Stock which the aggregate consideration received or deemed
received by the Company for the total number of Additional Common Stock so
issued or deemed issued would purchase at such Conversion Price; and the
denominator of which shall be the number of Common Stock outstanding immediately
prior to such issue plus the number of such Additional Common Stock so issued or
deemed issued; provided, however, that, for the purposes of this Section 4.1(d),
all Common Stock issuable upon conversion of outstanding Convertible Securities
or exercise of outstanding Options shall be deemed to be outstanding, and
immediately after any Additional Common Stock are deemed issued pursuant to
Section 4.1(c), such Additional Common Stock shall be deemed to be outstanding.

         (e)    Determination of Consideration. For purposes of this Section
4.1, the consideration received by the Company for the issue of any Additional
Common Stock shall be computed as follows:

                  (i)   Cash and Property: Except as provided in clause (ii)
below, such consideration shall:

                           (1)  insofar as it consists of cash, be computed as
the aggregate amount of cash received by the Company, before deducting any
discounts, commissions or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with the issuance and
sale thereof, and excluding amounts paid or payable for accrued interest or
accrued dividends;

                           (2)  insofar as it consists of property other than
cash, be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; provided, however, that no
value shall be attributed to any services performed by any employee, officer or
director of the Company; and

                           (3)  in the event Additional Common Stock are issued
together with other securities or other assets of the Company for consideration
which covers both, be the proportion of such consideration so received with
respect to such Additional Common Stock, computed as provided in clauses (1) and
(2) above, as determined in good faith by the Board of Directors.

                  (ii)  Options and Convertible Securities. The consideration
per share of Common Stock received by the Company for Additional Common Stock
deemed to have been issued pursuant to Section 4.1(c), relating to Options and
Convertible Securities, shall initially be determined by dividing:

                                      -6-
<PAGE>

                           (1)  the total amount, if any, received or receivable
by the Company as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Company upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by

                           (2)  the maximum number of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.

         4.2.   Adjustments for Split, Subdivision or Combination of Common
Stock.  In the event the outstanding Common Stock shall be subdivided (by equity
dividend, equity split, or otherwise), into a greater number of Common Stock,
the Conversion Price then in effect shall, concurrently with the effectiveness
of such subdivision, be proportionately decreased. In the event the outstanding
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of Common Stock, the Conversion Price then in
effect shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.

         4.3.   Adjustments for Distributions. In the event the Company at any
time or from time to time makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, any distribution (other than a
distribution described in Section 4.2), including a distribution in cash,
provision shall be made so that Lender shall receive upon conversion of the Note
under Section 1.1(a), in addition to the number of Common Stock receivable
thereupon, the amount of securities or assets of the Company which Lender would
have received had the Note been converted into Common Stock on the date of such
event under Section 1.1(a) and had Lender thereafter, during the period from the
date of such event to and including the date of conversion, retained such
securities or assets receivable by it as aforesaid during such period, subject
to all other adjustments called for during such period under this Section 4 with
respect to the rights of Lender.

         4.4.   Adjustments for Reclassification, Exchange and Substitution. If
the Common Stock issuable upon conversion of the Note under Section 1.1(a) shall
be changed into the same or a different number of Common Stock of any other
class or classes of Common Stock or other securities or property of the Company,
whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of Common Stock provided for in Section 4.2), or
merger, consolidation or other reorganization or a sale of all or substantially
all the assets of the Company, then and in each such event provision shall be
made so that Lender shall thereafter be entitled to receive, upon conversion of
the Note under Section 1.1(a), the number of Common Stock or other securities or

                                      -7-
<PAGE>

property of the Company or otherwise, receivable upon such reorganization,
reclassification or other transaction by a holder of the number of Common Stock
into which this Note could have been converted under Section 1.1(a) immediately
prior to such reorganization, reclassification or other transaction. In any such
case, appropriate adjustment shall be made in the application of the provisions
of this Section 4 with respect to the rights of Lender after the reorganization,
reclassification or other transaction to the end that the provisions of this
Section 4 (including adjustments of the Conversion Price then in effect and the
number of Common Stock purchasable upon conversion of the Note under Section
1.1(a)) shall be applicable after that event as nearly equivalent as may be
practicable.

         4.5.   No Impairment. The Company will not, 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
Company but will at all times in good faith assist in the carrying out of all
the provisions of Section 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of Lender
against impairment.

         4.6.   Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to Lender a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon the written request at any time of Lender, furnish or cause to be
furnished to Lender a like certificate setting forth (a) such adjustments and
readjustments, (b) the Conversion Price at the time in effect, and (c) the
number of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of the Note under Section 1.1(a).

5.       Notices. In the event that the Company shall propose at any time:
         -------

                  (a)   to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights; or

                  (b)   to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to voluntarily liquidate, dissolve or wind up;

then, in connection with each such event, the Company shall send to the Lender
(i) at least 10 days' prior written notice of the date on which a record shall
be taken for such distribution or subscription rights (and specifying the date
on which the holders of Common Stock shall be entitled thereto) or for
determining rights to vote, if any; and (ii) at least 10 days' prior written
notice of the date when the same shall take place, and the date, if any is to be
fixed, on which the holders of record of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
the occurrence of such event). Notwithstanding the above, the 10 days' notice
requirement may be shortened or waived upon the written consent of the Lender.

                                      -8-
<PAGE>

                  Any written notice by the Company required or permitted
hereunder shall be given by hand delivery or first class mail, postage prepaid,
addressed to the Lender at the address shown on the books of the Company for the
Lender.

6.       General.
         -------

         6.1.   Collection. If any action is instituted to collect this Note,
the Company promises to pay to Lender all reasonable costs and expenses
(including reasonable attorneys' fees) incurred in connection with such action.

         6.2.   Cash Distributions. The Company shall not, after the date of the
Note, make a cash dividend or other distribution in cash to any of its
stockholders or any other "affiliate" or any "associate" of the Company (as such
terms are defined in Rule 405 under the Securities Act).

         6.3.   Amendments and Waivers. The parties may, by mutual agreement,
amend this Note in any respect, and any party, as to such party, may (i) extend
the time for the performance of any of the obligations of the other party and
(ii) waive compliance by the other party with any of the agreements contained
herein and performance of any obligations by the other party. To be effective,
any such amendment or waiver must be in writing and be signed by the party
providing such waiver or extension, as the case may be. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
which any party may otherwise have at law or in equity. The waiver by any party
hereto of any breach of any provision of this Note shall not operate or be
construed as a waiver of any subsequent breach, whether or not similar.

         6.4.   Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by this Note, the terms of this Note shall prevail.

         6.5.   Severability. The unenforceability or invalidity of any
provision or provisions of this Note as to any persons or circumstances shall
not render that provision or those provisions unenforceable or invalid as to any
other provisions or circumstances, and all provisions hereof, in all other
respects, shall remain valid and enforceable.

         6.6.   Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of California applicable to
agreements made and to be performed entirely within the State of California,
without regard to the conflicts of law principles thereof. The Company and the
Lender irrevocably consent to the jurisdiction of the courts of the State of
California or the federal courts located in that state in connection with any
lawsuit, action or proceeding arising out of or relating to this Note.

         6.7.   Presentment, Etc. The Company hereby expressly waives
presentment, demand for payment, dishonor, notice of dishonor, protest, notice
of protest, and any other formality.

         6.8.   Waivers. The nonexercise by the Lender of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.

                                      -9-
<PAGE>

         6.9.   Transferability. Neither the Lender nor the Company may assign
or otherwise transfer its rights or obligations under this Note without the
prior, written consent of the other party hereto, except that, subject to
compliance with applicable federal and state securities laws, the Lender may
transfer to (i) Lender's spouse or children or grandchildren (in each case,
natural or adopted), or the spouses of such children or grandchildren, any trust
established solely for Lender's benefit or the benefit of Lender's spouse or
children or grandchildren (in each case, natural or adopted), or the spouses of
such children or grandchildren, or any corporation or partnership in which the
direct and beneficial owner of all of the equity interest is the Lender or
Lender's spouse or children or grandchildren (in each case, natural or adopted),
or the spouses of such children or grandchildren, or any trust for the benefit
of such persons; (ii) the heirs, executors, administrators, personal
representatives or distributees upon the death of Lender to whom Lender's rights
and obligations under the Note are transferred by will or the laws of descent
and distribution on account of death, or upon the incompetency or disability of
such Lender for purposes of the protection and management of Lender's assets or
(iii) any of the other lenders party to the Purchase Agreement.

7.  Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office by registered or certified mail, postage prepaid
and addressed to such party at the address set forth below, or at such other
address as such party may designate by ten (10) days advanced written notice to
the other parties.

         If to the Company:

         EARTHWORKS ENTERTAINMENT, INC.
         324 Datura Street
         West Palm Beach, FL  33314
         Attn:  Randall Henley, Esq.
         Telephone:   561-820-8100
         Facsimile:   561-820-8103

                                      -10-
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused its duly authorized
officer to execute this Note as of the date first written above.

                                   EARTHWORKS ENTERTAINMENT, INC.

                                   By /s/ William H. Campbell
                                      -----------------------------------
                                      Name:  William H. Campbell
                                      Title: Executive Vice President/COO

                                      -11-
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                              Notice of Conversion
                              --------------------

                  To:      Earthworks Entertainment, Inc.

                  Attention:  Chief Executive Officer

                  The undersigned hereby elects to convert [all or a portion of]
this Note into ______________ shares of Common Stock of Earthworks
Entertainment, Inc. pursuant to the terms of this Note.

         Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:

        ----------------------------------------------------------------
                                     (Name)

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

        ----------------------------------------------------------------
                                    (Address)

                  The undersigned hereby represents and warrants that the
aforesaid shares are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof in a manner that would violate the Securities Act.

                                     -----------------------------------------
                                     (Signature and Date)

                                      -12-Exhibit 10.1

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”),
dated as of January 3, 2005, by and between Digital Theater Systems, Inc.,
a Delaware corporation (the “Corporation”), and John Lowry, as
Stockholder Representative (the “Stockholder Representative”) of the
former stockholders (the “Holders”) of Lowry Digital Images, Inc., a
California corporation (the “Company”).

 

Reference is made to that certain Agreement and Plan
of Merger (the Merger Agreement”) dated the date hereof by and among the
Corporation, LIVE Acquisition Corp., a California corporation wholly owned by
the Corporation (“Merger Sub”), the Holders and the Stockholder
Representative.  Pursuant to Article III
of the Merger Agreement, the Holders will be entitled to receive shares of
Common Stock under certain circumstances, as additional consideration for the
transactions contemplated by the Merger Agreement.  The parties desire to set forth herein their
agreements as to the registration rights of each of the Holders with respect to
such shares of Common Stock.  The
execution and delivery of this Agreement by the Corporation with the
Stockholder Representative is a condition to closing the transactions
contemplated by the Merger Agreement. 
Capitalized terms used herein and not otherwise defined shall have the
meanings given to such terms in the Merger Agreement.

 

NOW, THEREFORE, in consideration of the premises and
mutual covenants and obligations hereinafter set forth, the Corporation and the
Stockholder Representative hereby agree as follows:

 

SECTION I.                                                          Definitions.  As used in this Agreement, the
following terms shall have the following meanings:

 

A.                                   “Commission”
means the Securities and Exchange Commission or any other Federal agency at the
time administering the Securities Act.

 

B.                                     “Common
Stock” means the common stock, $.0001 par value per share, of the Corporation.

 

C.                                     “Exchange
Act” means the Securities Exchange Act of 1934 or any successor Federal
statute, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect from time to time.

 

D.                                    “First
Earnout Issuance Date” means the date on which shares of Common Stock are first
issued to the Holders in satisfaction of the First Earnout Payment.

 

E.                                      “First
Earnout Restricted Shares” means the shares of Common Stock, if any, issued to
the Holders in satisfaction of the First Earnout Payment.  As to any particular First Earnout Restricted
Shares, once issued, such First Earnout Restricted Shares shall cease to be
First Earnout Restricted Shares when (i) they have been registered under the
Securities Act, the registration statement in connection therewith has been
declared effective and they have been disposed of pursuant to such effective
registration statement, (ii) they are eligible to be sold or distributed
pursuant to Rule 144, or (iii) they shall have ceased to be outstanding.

 

1

 

F.                                      “Other
Shares” means at any time those shares of Common Stock which do not constitute
Primary Shares or Restricted Shares.

 

G.                                     “Primary
Shares” means at any time the authorized but unissued shares of Common Stock
and shares of Common Stock held by the Corporation in its treasury.

 

H.                                    “Restricted
Shares” means the First Earnout Restricted Shares, if any, and the Second
Earnout Restricted Shares, if any.

 

I.                                         “Rule
144” means Rule 144 promulgated under the Securities Act or any successor rule
thereto or any complementary rule thereto.

 

J.                                        “Second
Earnout Issuance Date” means the date on which shares of Common Stock are
issued to the Holders in satisfaction of the Second Earnout Payment.

 

K.                                    “Second
Earnout Restricted Shares” means the shares of Common Stock, if any, issued to
the Holders in satisfaction of the Second Earnout Payment.  As to any particular Second Earnout
Restricted Shares, once issued, such Second Earnout Restricted Shares shall
cease to be Second Earnout Restricted Shares when (i) they have been registered
under the Securities Act, the registration statement in connection therewith
has been declared effective and they have been disposed of pursuant to such
effective registration statement, (ii) they are eligible to be sold or
distributed pursuant to Rule 144, or (iii) they shall have ceased to be
outstanding.

 

L.                                      “Securities
Act” means the Securities Act of 1933 or any successor Federal statute, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.

 

SECTION II.                                                      Required Registrations.  On any
date following the First Earnout Issuance Date and on or prior to the one year
anniversary of the First Earnout Issuance Date, if the Corporation shall be
requested in writing by the Stockholder Representative to effect the
registration under the Securities Act of any of the First Earnout Restricted
Shares, the Corporation shall use commercially reasonable efforts to effect the
registration under the Securities Act of the First Earnout Restricted Shares
which the Corporation has been so requested to register.  In addition to the foregoing, on any date
following the Second Earnout Issuance Date and on or prior to the one year
anniversary of the Second Earnout Issuance Date, if the Corporation shall be
requested in writing by the Stockholder Representative to effect the registration
under the Securities Act of any of the Second Earnout Restricted Shares, the
Corporation shall use commercially reasonable efforts to effect the
registration under the Securities Act of the Second Earnout Restricted Shares
which the Corporation has been so requested to register.  Notwithstanding the foregoing, the
Corporation shall not be obligated to effect any registration under the
Securities Act except in accordance with the following provisions:

 

A.                                   (i)
the Corporation shall not be obligated to use commercially reasonable efforts
to cause to become effective a registration statement with respect to the First
Earnout Restricted Shares prior to 180 days following the First Earnout
Issuance Date and (ii) the Corporation shall not be obligated to use commercially
reasonable efforts to cause to become

 

2

 

effective a registration statement with respect to the
Second Earnout Restricted Shares prior to 180 days following the Second Earnout
Issuance Date;

 

B.                                     the
Corporation shall not be obligated to use commercially reasonable efforts to
file and cause to become effective (i) more than one registration statement
with respect to the First Earnout Restricted Shares and more than one
registration statement with respect to the Second Earnout Restricted Shares,
(ii) any registration statement during any period in which any other
registration statement (other than on Form S-8 promulgated under the Securities
Act or any successor forms thereto) pursuant to which Primary Shares are to be
or were sold has been filed and not withdrawn or has been declared effective
within the prior 90 days or (iii) any registration statement unless such
registration statement relates to Restricted Shares having a minimum aggregate
offering price of $1.0 million (based on the then-current market price or fair
value of the Common Stock);

 

C.                                     the
Corporation is eligible to use Form S-3 promulgated under the Securities Act or
any successor form thereto;

 

D.                                    each
Holder may only include on each registration statement (i) up to 50% of the
First Earnout Restricted Shares issued to such Holder and (ii) up to 50% of the
Second Earnout Restricted Shares issued to such Holder;

 

E.                                      the
Corporation may delay the filing or effectiveness of any registration statement
or suspend the sale of Restricted Shares under a registration statement if (i)
the Corporation is engaged, or has fixed plans to engage within 90 days of the
time of such request, in a firm commitment underwritten public offering of
Primary Shares, or (ii) there is material non-public information regarding the
Corporation which the Corporation’s Board of Directors (the “Board”)
reasonably determines not to be in the Corporation’s best interest to disclose
and which the Corporation is not otherwise required to disclose, or (iii) there
is a significant business opportunity (including, but not limited to, the
acquisition or disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other similar
transaction) available to the Corporation which the Board reasonably determines
not to be in the Corporation’s best interest to disclose and which the
Corporation would be required to disclose under the registration statement, or
(iv) the Corporation reasonably determines that such registration and offering
would interfere with any material transaction involving the Corporation, as
approved by the Board or would impair in any manner the registration rights
granted to holders of Other Shares prior to the date of this Agreement, or (v)
the Corporation has received notice in connection with the filing of a
registration statement on behalf of the holder(s) of Other Shares (provided
that in the case of (v), the Holders shall have the right to include their First
Earnout Restricted Shares or Second Earnout Restricted Shares, as applicable,
on such a registration if and to the extent permitted by the terms governing
the registration rights held by the holders of such Other Shares);

 

F.                                      with
respect to any registration pursuant to this Agreement, the Corporation shall
give notice of such registration to the holders of all Other Shares which are
entitled to registration rights under a written agreement with the Corporation
that would permit such holders to be included in such registration, and the
Corporation may include in such registration any Primary Shares or Other
Shares, provided that, notwithstanding anything to the

 

3

 

contrary in this Agreement, as between the Corporation
and the Holders, any additional cost of including any such Primary Shares or
Other Shares shall be the responsibility of the Corporation; and provided,
further, however, that if the method of disposition selected by
the Holders is an underwritten public offering and the managing underwriter of
such offering advises the Corporation that the inclusion of all Restricted
Shares, Primary Shares and/or Other Shares proposed to be included in such
registration would interfere with the successful marketing (including pricing)
of the Restricted Shares proposed to be included in such registration, then the
number of Restricted Shares, Primary Shares and/or Other Shares proposed to be
included in such registration shall be included in the following order:

 

1.                                       first,
the Restricted Shares requested to be included in such registration (or, if
necessary, such Restricted Shares pro  rata among the holders
thereof based upon the number of Restricted Shares requested to be registered
by each such holder);

 

2.                                       second,
the Other Shares which are entitled to registration rights; and

 

3.                                       third,
the Primary Shares;

 

G.                                     if
the method of disposition requested by the Holders is an underwritten public
offering, the Company shall have the right, in its sole and exclusive discretion,
to designate the underwriters of such offering; and

 

H.                                    at
any time before the registration statement covering Restricted Shares becomes
effective, the Stockholder Representative may request the Corporation to
withdraw or not to file the registration statement.  In that event, if such request of withdrawal
shall not have been caused by, or made in response to, the material adverse
effect of an event on the business, properties, condition, financial or
otherwise, or operations of the Corporation, the Holders shall be deemed to
have used their registration rights under this Agreement with respect to their
First Earnout Restricted Shares or Second Earnout Restricted Shares, as
applicable, and the Corporation shall no longer be obligated to register such
Restricted Shares.

 

SECTION III.                                                  Intentionally Omitted.

 

SECTION IV.                                                  Preparation and Filing.  If and
whenever the Corporation is under an obligation pursuant to the provisions of
this Agreement to use commercially reasonable efforts to effect the registration
of any Restricted Shares, the Corporation shall:

 

A.                                   subject
to the provisions of Section II, use commercially reasonable efforts to
cause a registration statement that registers such Restricted Shares to become
and remain effective for a period of 30 days or until all of such Restricted
Shares have been disposed of (if earlier);

 

B.                                     furnish,
at least five business days before filing a registration statement that
registers such Restricted Shares, a prospectus relating thereto or any
amendments or supplements relating to such a registration statement or
prospectus, to one counsel selected by the Stockholder Representative, on
behalf of the Holders (the “Holders’ Counsel”), and copies of all such
documents proposed to be filed (it being understood that such five-business-day
period

 

4

 

need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are supplied to
the Holders’ Counsel in advance of the proposed filing by a period of time that
is customary and reasonable under the circumstances);

 

C.                                     prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for at least a
period of 30 days or until all of such Restricted Shares have been disposed of
(if earlier) and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of such Restricted Shares;

 

D.                                    notify
in writing the Holders’ Counsel promptly (i) of the receipt by the Corporation
of any notification with respect to any comments by the Commission with respect
to such registration statement or prospectus or any amendment or supplement
thereto or any request by the Commission for the amending or supplementing
thereof or for additional information with respect thereto, (ii) of the receipt
by the Corporation of any notification with respect to the issuance by the
Commission of any stop order suspending the effectiveness of such registration
statement or prospectus or any amendment or supplement thereto or the
initiation or threatening of any proceeding for that purpose and (iii) of the
receipt by the Corporation of any notification with respect to the suspension
of the qualification of such Restricted Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purposes;

 

E.                                      use
commercially reasonable efforts to register or qualify such Restricted Shares
under such other securities or blue sky laws of such jurisdictions as the
Stockholder Representative reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable the Holders
to consummate the disposition in such jurisdictions of the Restricted Shares
owned by the Holders; provided, however, that the Corporation
will not be required to qualify generally to do business, subject itself to
general taxation or consent to general service of process in any jurisdiction
where it would not otherwise be required to do so but for this paragraph (E) or
to provide any material undertaking or make any changes in its By-laws or
Certificate of Incorporation which the Board determines to be contrary to the
best interests of the Corporation;

 

F.                                      furnish
to the Stockholder Representative such number of copies of a summary
prospectus, if any, or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as the Stockholder Representative may reasonably request in order to
facilitate the public sale or other disposition of such Restricted Shares;

 

G.                                     notify
the Stockholder Representative on a timely basis at any time when a prospectus
relating to such Restricted Shares is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and, at the request of
the Stockholder Representative, prepare and furnish to the Stockholder
Representative a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include an untrue

 

5

 

statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;

 

H.                                    use
commercially reasonable efforts to obtain from its counsel an opinion or
opinions in customary form;

 

I.                                         provide
a transfer agent and registrar (which may be the same entity and which may be
the Corporation) for such Restricted Shares;

 

J.                                        issue
to any underwriter to which the Holders holding such Restricted Shares may sell
shares in such offering certificates evidencing such Restricted Shares;

 

K.                                    list
such Restricted Shares on any national securities exchange on which any shares
of the Common Stock are listed or, if the Common Stock is not listed on a
national securities exchange, use commercially reasonable efforts to qualify
such Restricted Shares for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc.  (the “NASD”); and

 

L.                                      use
commercially reasonable efforts to take all other steps necessary to effect the
registration of such Restricted Shares contemplated hereby in accordance with
the provisions of Section II hereof.

 

Each holder of the Restricted Shares, upon receipt of
any notice from the Corporation of any event of the kind described in Section IV(G)
hereof, shall forthwith discontinue disposition of the Restricted Shares
pursuant to the registration statement covering such Restricted Shares until
such Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section IV(G) hereof, and, if so directed by the
Corporation, such Holder shall deliver to the Corporation all copies, other
than permanent file copies then in such Holder’s possession, of the prospectus
covering such Restricted Shares at the time of receipt of such notice.

 

SECTION V.                                                      Expenses.  All expenses incurred by the
Corporation in complying with Section IV, including, without limitation,
all registration and filing fees (including all expenses incident to filing
with the NASD), fees and expenses of complying with securities and blue sky
laws, printing expenses, fees and expenses of the Corporation’s counsel and
accountants and fees and expenses of the Holders’ Counsel (but other than
expenses that, as between the Corporation and the Holders, the Corporation is
responsible for as provided for in Section II (E) hereof), shall be paid
by the Holders selling such Restricted Shares.

 

SECTION VI.                                                  Indemnification.

 

A.                                   In
connection with any registration of any Restricted Shares under the Securities
Act pursuant to this Agreement, the Corporation shall indemnify and hold
harmless the holders of Restricted Shares, each underwriter, broker or any
other person acting on behalf of the holders of Restricted Shares and each
other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of
the foregoing persons

 

6

 

may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
allegedly untrue statement of a material fact contained in the registration
statement under which such Restricted Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Restricted Shares, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or, with respect to any
prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation by the
Corporation of the Securities Act or state securities or blue sky laws
applicable to the Corporation and relating to action or inaction required of
the Corporation in connection with such registration or qualification under
such state securities or blue sky laws; and shall reimburse the holders of
Restricted Shares, such underwriter, such broker or such other person acting on
behalf of the holders of Restricted Shares and each such controlling person for
any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Corporation shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action (including any legal or other expenses incurred) arises out
of or is based upon an untrue statement or allegedly untrue statement or
omission or alleged omission made in said registration statement preliminary
prospectus, final prospectus, amendment, supplement or document incident to
registration or qualification of any Restricted Shares in reliance upon and in
conformity with written information furnished to the Corporation through an
instrument duly executed by the holders of Restricted Shares or their counsel
or underwriter specifically for use in the preparation thereof; provided
further, however, that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any untrue statement,
allegedly untrue statement, omission or alleged omission made in any
preliminary prospectus but eliminated or remedied in the final prospectus
(filed pursuant to Rule 424 of the Securities Act), such indemnity agreement
shall not inure to the benefit of any Holder, underwriter, broker or other
person acting on behalf of holders of the Restricted Shares from whom the
person asserting any loss, claim, damage, liability or expense purchased the
Restricted Shares which are the subject thereof, if a copy of such final
prospectus had been made available to such person and such Holder, underwriter,
broker or other person acting on behalf of holders of the Restricted Shares and
such final prospectus was not delivered to such person with or prior to the
written confirmation of the sale of such Restricted Shares to such person.

 

B.                                     In
connection with any registration of Restricted Shares under the Securities Act
pursuant to this Agreement, each Holder of Restricted Shares shall severally
and not jointly indemnify and hold harmless (in the same manner and to the same
extent as set forth in the preceding paragraph of this Section VI) the
Corporation, each director of the Corporation, each officer of the Corporation
who shall sign such registration statement, each underwriter, broker or other
person acting on behalf of the holders of Restricted Shares and each person who
controls any of the foregoing persons within the meaning of the Securities Act
with respect to any statement or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Restricted Shares, if such
statement or omission was made in reliance upon and in conformity with written

 

7

 

information furnished to the Corporation or such
underwriter by or on behalf of such Holder of Restricted Shares specifically
for use in connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document; provided,
however, that the maximum amount of liability in respect of such
indemnification shall be limited, in the case of each seller of Restricted
Shares, to an amount equal to the net proceeds actually received by such seller
from the sale of Restricted Shares effected pursuant to such registration.

 

C.                                     Promptly
after receipt by an indemnified party of notice of the commencement of any
action involving a claim referred to in the preceding paragraphs of this Section VI,
such indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action.  In case any such action is
brought against an indemnified party, the indemnifying party will be entitled
to participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be responsible for
any legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if
any indemnified party shall have reasonably concluded, based upon the advice of
counsel, that there may be one or more legal or equitable defenses available to
such indemnified party which are additional to or conflict with those available
to the indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement
provided in this Section VI, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
person controlling such indemnified party for that portion of the fees and
expenses of any one counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement provided
in this Section VI.

 

D.                                    If
the indemnification provided for in this Section VI is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage, liability or action in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions which resulted in such loss, claim, damage, liability
or action as well as any other relevant equitable considerations.  The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

 

SECTION VII.                                  Information by Holder.  The
Stockholder Representative shall furnish to the Corporation such written
information regarding the Holders and the distribution proposed by the Holders
as the Corporation may reasonably request in writing and as shall be reasonably

 

8

 

required
in connection with any registration, qualification or compliance referred to in
this Agreement.

 

SECTION VIII.                                          Termination.  This Agreement shall terminate
and be of no further force or effect on the earlier of (i) when there shall no
longer be any Restricted Shares outstanding or (ii) such time as all of such
remaining Restricted Shares may be sold in accordance with Rule 144.

 

SECTION IX.                                                 Successors and Assigns.  Subject
to the provisions of Section XI, this Agreement shall bind and inure to
the benefit of the Corporation and the Holders and the respective successors
and assigns of the Corporation and the Holders.

 

SECTION X.                                                     Assignment.  The rights granted hereunder may
not be assigned by any Holder.

 

SECTION XI.                                                 Entire Agreement.  This Agreement and the other
writings referred to herein or therein or delivered pursuant hereto or thereto,
contain the entire agreement among the Corporation and the Holders with respect
to the subject matter hereof and supersede all prior and contemporaneous
arrangements or understandings with respect thereto.

 

SECTION XII.                                             Notices.  All notices, requests, consents
and other communications hereunder to any party shall be deemed to be
sufficient if contained in a written instrument delivered in person or sent by
facsimile, nationally-recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to such
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties:

 

	
  (i)

  	
  if to the
  Corporation to::

  
	
   

  	
   

  
	
   

  	
  Digital Theater
  Systems, Inc.

  
	
   

  	
  5171 Clareton
  Drive

  
	
   

  	
  Agoura Hills, CA
  91301

  
	
   

  	
  Facsimile:

  	
  (818) 706-8355

  
	
   

  	
  Attention:

  	
  Blake Welcher,
  General Counsel

  
	
   

  	
   

  
	
   

  	
  with a copy to
  (which shall not constitute notice):

  
	
   

  	
   

  
	
   

  	
  Troy & Gould, Professional
  Corporation

  
	
   

  	
  1801 Century Park East,
  16th Floor

  
	
   

  	
  Los Angeles, CA

  
	
   

  	
  Facsimile:

  	
  (310) 201-4746

  
	
   

  	
  Attention:

  	
  Lawrence Schnapp, Esq.

  

 

9

 

	
  (ii)

  	
  if to the
  Stockholder Representative, to

  
	
   

  	
   

  
	
   

  	
  John Lowry

  
	
   

  	
  24206 English Rose
  Place

  
	
   

  	
  Valencia, California
  91354

  
	
   

  	
  Telephone:

  	
  (661) 295-6665

  
	
   

  	
  Telecopy:

  	
  (661) 295-3225

  
	
   

  	
   

  
	
   

  	
  with a copy to
  (which shall not constitute notice):

  
	
   

  	
   

  
	
   

  	
  Wolf, Rifkin, Shapiro
  & Schulman, LLP

  
	
   

  	
  11400 W. Olympic Blvd.,
  Ninth Floor

  
	
   

  	
  Los Angeles, CA 90004

  
	
   

  	
  Attention:

  	
  Richard Grant

  

 

All such notices,
requests, consents and other communications shall be deemed to have been
delivered (a) in the case of personal delivery or delivery by telecopy, on the
date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following
such dispatch and (c) in the case of mailing, on the third business day
after the posting thereof.

 

SECTION XIII.                                         Modifications; Amendments, Waivers.  The terms
and provisions of this Agreement may not be modified or amended, nor may any
provision be waived, except pursuant to a writing signed by the Corporation and
the Stockholder Representative.

 

SECTION XIV.                                         Counterparts; Facsimile Signatures. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.  Facsimile counterpart signatures
to this Agreement shall be acceptable at the Closing if the originally executed
counterpart is delivered within a reasonable period thereafter.

 

SECTION XV.                                             Severability.  Whenever possible, each provision
of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to
be prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

 

SECTION XVI.                                         Headings.  The headings of the various
sections of this Agreement have been inserted for convenience of reference only
and shall not be deemed to be a part of this Agreement.

 

SECTION XVII.                                     Governing Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of California
applicable to contracts made and to be performed wholly therein.

 

10

 

IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be duly executed on its behalf, by its officer(s)
thereunto duly authorized or for himself, as of the day and year first set
forth above.

 

 

	
   

  	
  CORPORATION:

  
	
   

  	
   

  
	
   

  	
  DIGITAL THEATER
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jon E.
  Kirchner

  	
   

  
	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STOCKHOLDER
  REPRESENTATIVE

  
	
   

  	
   

  
	
   

  	
  /s/ John Lowry

  	
   

  
	
   

  	
  John Lowry

  

 

11

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