PUBLIC VERSION

UNITED STATES INTERNATIONAL TRADE COMMISSION 1 Washington, D.C. 3 .

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In the Matter of

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAINING SAME

Inv. No. 337-TA-603

Order No. 17: INITIAL DETERMINATION Terminating Tonic Respondents

By publication of a notice in the Federd Register on May 8,2007, pursuant to subsection

(b) of section 337 of the Tariff Act of 1930, as amended, the Commission instituted this

investigation to determine:

[Wlhether there is a violation of subsection (a)(l)(B) of section 337 in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain DVD players and recorders and certain products containing same by reason of infringement of one or more of claims 6 and 7 of U.S. Patent No. 5,587,991; claims 16 and 31 0fU.S. PatentNo. 5,870,523; and claim 4 0fU.S. Patent No. 5,956,306; and whether an industry in the United States exists as required by subsection (a)(2) of section 337.

72 Fed. Reg. 26152 (2007).

The complainants are: Toshiba Corporation of Tokyo, Japan; and Toshiba Corporation of

Wayne, New Jersey (collectively “Toshiba”). Id.

Numerous respondents were named in the notice of investigation (see Id.), which may be

grouped as follows:

(1) “Daewoo,” i. e., Daewoo Electronics America, Inc. of Lyndhurst, New Jersey;

(2) “GVG respondents,” i. e., Dongguan GVG Digital Technology Ltd. of Guangdong Province, China; and GVG Digital Technology Holdings Ltd. of New Territories, Hong Kong;

(3) “jWin,” i.e., jWIN Electronics Corporation of Port Washington, New York;

(4) “Memcorp,” i.e., Memcorp Inc. of Weston, Florida;

(5) “Tonic respondents,” i. e., Dongguan Tonic Electronics Co., Ltd. of Guangdong Province, China; Dongguan Xin Lian Digital Technology Co. Ltd. of Guangdong Province, China; Tonic Digital Products Limited of Kowloon, Hong Kong; Tonic DVB Marketing Ltd. of Guangdong Province, China; Tonic Electronics Limited of Kowloon, Hong Kong; Tonic Industries Holdings Limited of Kowloon, Hong Kong; Tonic Technology (HK) Limited of Kowloon, Hong Kong; Tonic Technology (Shenzhen) Ltd. of Guangdong Province, China; and Tonic Trading Development Ltd. of Kowloon, Hong Kong; and

(6) “Starlight respondents,” i.e., Star Light Electronics Co. Ltd. of Wanchai, Hong Kong; Starlight International Holdings Limited of Wanchai, Hong Kong; and Starlight Marketing (HK) Ltd. of Wanchai, Hong Kong.

The Commission Investigative Staff (“Staff ’) of the Office of Unfair Import

Investigations is also a party in this investigation. Id.

Daewoo, the GVG respondents, j Win and Memcorp are no longer litigants in this

investigation.’ Thus, only Tonic and Starlight2 remain as non-defaulting respondents.

See Notice of Comm’n Decision Not to Review an Initial Determination Terminating the Investigation As to Respondent Daewoo Based on a License Agreement (Aug. 3,2007); Notice of Comm’n Decision Not to Review an Initial Determination Finding the GVG Respondents in Default (Aug. 22,2007); Notice of Comm’n Decision Not to Review an Initial Determination Terminating the Investigation As to Respondent j Win on the Basis of a Consent Order (Aug. 22,2007); Notice of C o m ’ n Decision Not to Review an Initial Determination

(continued ...)

2

Pursuant to 19 C.F.R. $0 210.21(a)(2) and 210.21(b), Toshiba and Tonic filed a joint

motion for termination of the investigation as to Tonic on the basis of a license agreement.3

(Motion Dkt. No. 603-17.) The Staff supports the motion.

The license agreement (with its attached side agreements) appears to resolve the dispute

between Toshiba and Tonic. In satisfaction of 19 C.F.R. $210.21(b)(l), movants state that there

are no other agreements, written or oral, express or implied, between them concerning the subject

matter of this investigation. See Joint Mot. at 2.

The Commission’s Rules provide that in the case of a proposed termination by settlement

agreement, consent order, or arbitration agreement, the parties may file statements regarding the

impact of the proposed termination on the public interest, and the Administrative Law Judge may

hear argument, although no discovery may be compelled, with respect to issues relating solely to

the public interest. The Administrative Law Judge is directed to consider and make appropriate

findings regarding the effect of the proposed settlement on the public health and welfare,

competitive conditions in the United States, and United States consumers. See 19 C.F.R. $

210.50(b)(2).

‘(...continued) Terminating the Investigation As to Respondent Memcorp on the Basis of a Consent Order (Aug. 3 1,2007).

Order No. 16 (Initial Determination) terminating the Starlight respondents from this investigation issued on this date.

In satisfaction of the Commission’s Rules of Practice and Procedure, movants provided public and confidential versions of their license agreement and related side agreements. See 19 C.F.R. $ 2 10.2 1 (b)( l), (c)( l)(ii) (public versions required for certain filings). Copies of those documents are attached to the respective public and confidential versions of this initial determination. See 19 C.F.R. $ 2 10.21 (b)(2), (c)( l)(ii) (certain documents must be certified with an initial determination terminating an investigation in whole or in part).

3

Movants argue that Commission policy and the public interest generally favor settlement

to conserve public and private resources. Joint Mem at 2-3. The Staff is not aware of any

evidence that termination on the basis proposed in the joint motion would be contrary to the

public health and welfare, competitive conditions in the domestic economy, the production of

like or directly competitive articles in the United States or United States consumers. Staff Resp.

at 4. Indeed, there is no evidence that termination of this investigation as requested in the joint

motion will prejudice the public interest. Furthermore, termination of litigation under these

circumstances as an alternative method of dispute resolution is generally in the public interest.

Accordingly, Motion No. 603-17 is GRANTED. This investigation is terminated as to

the Tonic respondents. This investigation is terminated in its entirety.

Pursuant to 19 C.F.R. 3 210.420, this initial determination shall become the

determination of the Commission unless a party files a petition for review of the initial

determination pursuant to 19 C.F.R. $210.43(a), or the Commission, pursuant to 19 C.F.R.

0 2 10.44, orders on its own motion a review of the initial determination or certain issues

contained herein.

SO ORDERED.

Carl C. Charneski Administrative Law Judge

Issued: November 15,2007

4

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAINING SAME

Inv. No. 337-TA-603

CERTIFICATE OF SERVICE

I, Marilyn R. Abbott, hereby certifjr that the attached ORDER was served upon Everrette V. Snotherly, Esq. and upon the following parties via first class mail, or air mail where necessary, on November 16, 2007.

bLu&l.JRMF karilyn R/Abbott, Secretary* U.S. International Trade Commission 500 E. Street, SW Washington, D.C. 20436

FOR COMPLAINANTS TOSHIBA CORPORATION AND TOSHIBA AMERICA CONSUMER PRODUCTS, LLC

G. Brian Busey, Esq. Cynthia Lopez Beverage, Esq. John L. Kolakowski, Esq. MORRISON & FOERSTER LLP 2000 Pennsylvania Ave., N.W. Suite 5500 Washington, D.C. 20006

FOR RESPONDENTS DONGGUAN TONIC ELECTRONICS CO., LTD., DONGGUAN XIN LIAN DIGITAL TECHNOLOGY CO., LTD., JWIN ELECTRONICS CORPORATION, MEMCORP INC., STAR LIGHT ELECTRONICS CO., LTD., STARLIGHT INTERNATIONAL HOLDINGS LIMITED, STARLIGHT MARKETING (HK) LTD., TONIC DIGITAL PRODUCTS LIMITED, TONIC DVB MARKETING LTD., TONIC ELECTRONICS LIMITED, TONIC INDUSTRIES HOLDINGS LIMITED, TONIC TECHNOLOGY (I-IK) LIMITED, TONIC TECHNOLOGY (SHENZHEN) LTD., AND TONIC TRADING DEVELOPMENT LTD.

Anton N. Handal, Esq. Gabriel Hedrick, Esq. Pamela C. Chalk, Esq. HANDAL & ASSOCIATES 1200 Third Avenue Suite 1321 San Diego, CA 92 10 1

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAINING SAME

FOR RESPONDENT DAEWOO ELECTRONICS AMERICA, INC.

Arthur Wineburg, Esq. Jeffrey K. Shenvood, Esq. Daniel E. Yonan, Esq. AKIN GUMP STRAUS HAUER & FELD LLP 1333 New Hampshire Avenue, NW Washington, D.C. 20036-1564

FOR DONGGUAN GVG DIGITAL TECHNOLOGY LTD.

Dongguan GVG Digital Technology Ltd. Da Ping Precinct Tang Xia Town, Dongguan Guangdong Province, China 523722

FOR GVG DIGITAL TECHNOLOGY HOLDINGS LTD.

GVG Digital Technology Holdings Ltd. Rm 1822, Grandtech Centre 8 On Ping St Siu Lek Yuen Shatin, New Territories, Hong Kong

PUBLIC MAILING LIST

Sherry Robinson

8891 Gander Creek Drive Miamisburg, OH 45342

LEXIS-NEXIS

Inv. No. 337-TA-603

Ronnita Green West Group 901 Fifteenth Street NW, Suite 230 Washington, D.C. 20005

UNITED STATES INTERNATIONAL TRADE COMMISSION WASHINGTON, D.C.

Before the Honorable Carl C. Charneski Administrative Law Judge

In the Matter of

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAINING SAME

Investigation No. 337-TA-603

JOINT MOTION FOR PARTIAL TERMINATION OF THE INVESTIGATION BASED ON A LICENSE AGREEMENT OF RESPONDENT

TONIC ENTITIES

Pursuant to Rules 2 10.2 1 (a)(2) and 2 10.2 1 (b) of the U.S. International Trade

Commission, 19 C.F.R. $6 210.21(a)(2) and 210.21(b), Toshiba Corporation, Toshiba

America Consumer Products, L.L.C. (collectively, “Toshiba”) and Dongguan Tonic

Electronics Co. Ltd.; Dongguan Xin Lian Digital Technology Co., Ltd.; Tonic Digital

Products Limited; Tonic DVB Marketing Ltd.; Tonic Electronics (HK) Ltd.; Tonic

Industries Holdings Ltd.; Tonic Technology Limited; Tonic Technology (Shenzhen)

Limited; and Tonic Trading Development Ltd. (collectively, the “Tonic Respondents”)

jointly move for issuance of an initial determination partially terminating this

investigation as to the Tonic Respondents. The Tonic Respondents have agreed to

license the patents-at-issue in the investigation and to pay past royalties due on prior

importation of DVD products. A copy of the license agreement is attached as Exhibit A

to the accompanying memorandum in support of this motion, and additional side

agreements are attached as Exhibits B, C, D and E to the accompanying memorandum.

dc-505242

In accordance with Commission Rule 210.21@)(1), a separate non-confidential version of

one of these additional side agreements (Exhibit B) is also being attached to the

accompanying memorandum in support of the motion. The parties state that there are no

other agreements, written or oral, express or implied, between them concerning the

subject matter of this investigation.

Counsel for Toshiba contacted the Commission Investigative Attorney (“ITC

Staff’) regarding their position on this motion. The ITC Staff indicated that they will

reserve their position on the joint motion until they have reviewed the moving papers.

For the foregoing reasons, Toshiba and the Tonic Respondents respectfully

request that the Administrative Law Judge terminate this investigation with respect to the

Tonic Respondents on the basis of the attached license agreement and additional side

agreements .

dc-505242 2

Dated: October 5,2007

Respectfully submitted,

n

John L. Kolakowski U Michael E. Anderson Momson & Foerster U P 2000 Pennsylvania Ave., NW Suite 5500 Washington, DC 20006 Tel: (202) 887-1500 Facsimile: (202) 887-0763

Taro Isshiki Jun Tsutsumi Morrison & Foerster LLP AIG Building, 11 th Floor 1 - 1-3 Marunouchi Chi yoda-ku Tokyo 100-0005 Japan

Counsel for Complainants Toshiba Colporation and Toshiba America Consumer Products, L. L. C.

Gabriel Hedrick, Esq. Pamela C. Chalk, Esq. Handal & Associates 1200 3rd Avenue Suite 1321 San Diego, CA 92101

Attorneys for Respondents Dongguan Tonic Electronics Co. Ltd.; Dongguan Xin Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic DVB Marketing Ltd.; Tonic Electronics (HK) Ltd.; Tonic Industries Holdings Ltd.; Tonic Technology Limited; Tonic Technology (Shenzhen) Limited; and Tonic Trading Development Ltd.

dc-505242 3

UNITED STATES INTERNATIONAL TRADE COMMISSION WASHINGTON, D.C.

Before the Honorable Carl C. Charneski Administrative Law Judge

In the Matter of

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAMING S A M E

Investigation No. 337-TA-603

MEMORANDUM IN SUPPORT OF JOINT MOTION FOR PARTIAL TERMINATION OF THE INVESTIGATION BASED ON A

LICENSE AGREEMENT OF RESPONDENT TONIC ENTITIES

Complainants Toshiba Corporation and Toshiba America Consumer Products,

L.L.C. (collectively, “Toshiba”) and Respondents Dongguan Tonic Electronics Co. Ltd.;

Dongguan Xin Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic

DVB Marketing Ltd,; Tonic Electronics (HK) Ltd.; Tonic Industries Holdings Ltd.; Tonic

Technology Limited; Tonic Technology (Shenzhen) Limited; and Tonic Trading

Development Ltd. (collectively, the “Tonic Respondents”) hereby submit this

memorandum in support of their joint motion for partial termination of the above-

captioned investigation based on a license agreement of the Tonic Respondents.

On or about October 1,2007, the Tonic Respondents gained a license to the

patents-in-suit via a license to the essential DVD patents of the DVD6C Group. Toshiba

Corporation is a member of the DVD6C Group and the DVD6C license includes Toshiba

Corporation’s essential DVD patents, including the patents-in-suit, as well as those of the

dc-505244

other DVD6C members.' The license agreement and additional side agreements now are

fully effective and have been duly executed by authorized representatives of DVD6C and

the Tonic Respondents. Pursuant to Rule 210.21(b), 19 C.F.R. 3 210.21(b), a true and

accurate copy of the license agreement is attached hereto at Exhibit A. The additional

side agreements are attached at Exhibits B, C, D and E.2 One of these additional side

agreements (Exhibit B) contains Confidential Business Information subject to the

Protective Order in this investigation. Therefore, in compliance with Rule 210.21@), a

redacted non-confidential version of that side agreement is also attached. Additionally, in

support of this motion, the parties state that there are no other agreements, written or oral,

express or implied, between Complainants and the Tonic Respondents concerning the

subject matter of this investigation.

In view of the attached license agreement and additional side agreements covering

the patents-in-suit and additional essential DVD patents, there no longer exists a basis

upon which to continue this investigation with respect to the Tonic Respondents.

Furthermore, the termination of this investigation on the basis of the attached agreements

poses no threat to the public interest.

In these circumstances, Commission Rule 210.21 authorizes the Administrative

Law Judge to terminate an investigation. It is in the interest of the public and

In addition to Toshiba Corporation, the current DVD6C group includes: Hitachi Ltd.; Matsushita Electric Industrial Co., Ltd.; Mitsubishi Electric Corporation; Samsung Electronics Co., Ltd.; Sanyo Electric Co., Ltd.; Sharp Corporation; Victor Company of Japan, Ltd.; and Warner Home Entertainment, Inc.

Exhibit C is a letter agreement between Toshiba and the Tonic Respondents which addressed certain procedures that would be employed to seek termination of this investigation with respect to the Tonic Respondents. Under the terms of that letter agreement, if certain settlement payments had not been made, the parties agreed that they would have sought termination based on a consent order. Therefore, a draft motion to that effect was attached to the letter agreement. The settlement payments have been made, however, and the settlement is now effective, so no consent order termination is being requested here. The parties provide this information to hopefully resolve any confusion that might arise by the necessary inclusion of the draft consent order motion within the exhibits here.

2

dc-505244 2

administrative economy to grant this motion. Commission policy and the public interest

generally favor settlements, which preserve resources for both the Commission and the

private parties, and termination based on a settlement agreement is routinely granted.

See, e.g., Certain Safety Eyewear and Components Thereof, Inv. No. 337-TA-433, Order

No. 37 at 2 (November 3,2000); Certain Synchronous Dynamic Random Access Memory

Devices, Microprocessors, and Products Containing Same, Inv. No. 337-TA-43 1, Order

No. 11 at 2 (July 13,2000); Certain Zntegrated Circuit Chipsets and Products Containing

Same, Inv. No. 337-TA-428, Order No. 16 at 5 (August 22,2000); Certain Telephonic

Digital Added Mainline Systems Components ThereoJ and Products Containing Same,

No. 337-TA-400,1998 ITC LEXIS 31 (Feb. 12,1998); Certain Screen Printing

Machines, Vision Alignment Devices Used Therein, and Component Parts ThereoJ No.

337-TA-394, 1997 JTC LEXIS 280 (Oct. 6, 1997). Accordingly, the parties urge that the

joint motion for partial termination of this investigation based on a license agreement of

the Tonic Respondents be granted.

dc-505244 3

Dated: October 5.2007

Respectfully submitted,

W John L. Kolakowski Michael E. Anderson Morrison & Foerster LLP 2000 Pennsylvania Ave., NW Suite 5500 Washington, DC 20006 Tel: (202) 887-1500 Facsimile: (202) 887-0763

Taro Isshiki Jun Tsutsumi Morrison & Foerster LLP AIG Building, 1 1 th moor 1 - 1-3 Marunouchi Chi yoda-ku Tokyo 100-0005 Japan

Counsel for Complainants Toshiba Corporation and Toshiba America Consumer Products, L. L. C.

AntodN. Hhndal, Esq. Gabriel Hedrick, Esq. Pamela C. Chalk, Esq. Handal & Associates 1200 3d Avenue Suite 1321 San Diego, CA 92101

Attorneys for Respondents Dongguan Tonic Electronics Co. Ltd.; Dongguan Xin Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic DVB Marketing Ltd.; Tonic Electronics (HK) Ud.; Tonic Industries Holdings Ltd.; Tonic Technology Limited; Tonic Technology (Shenzhen) Limited; and Tonic Trading Development Ltd.

dc-505244 4

CERTIFICATE OF SERVICE

The Honorable Carl C. Charneski Administrative Law Judge U.S. International Trade Commission 500 E Street, S.W., Room 317 Washington, DC 20436

I hereby certify that copies of the following documents:

13 Via First Class Mail 13 Via Hand Delivery El Via Overnight Delivery

Via facsimile

1. Joint Motion For Partial Termination Of The Investigation Based On A License Agreement Of Respondent Starlight Entities;

2. Memorandum In Support Of Joint Motion For Partial Termination Of The Investigation Based On A License Agreement Of Respondent Starlight Entities;

3. Joint Motion For Partial Termination Of The Investigation Based On A License Agreement Of Respondent Tonic Entities; and

4. Memorandum In Support Of Joint Motion For Partial Termination Of The Investigation Based On A License Agreement Of Respondent Tonic Entities

Arthur Wineburg Jeffirey K. Shenvood Daniel E. Yonan Jin-Suk Park Akin Gump Strauss Hauer & Feld LLP 1333 New Hampshire Avenue, N.W. Washington, DC 20036-1564 Attorneys for Daewoo Electronics America, Inc.

were served on October 9,2007 as indicated, on the following:

El Via First Class Mail Via Hand Delivery

13 Via Overnight Delivery Via facsimile

El Via Electronic Mail

Via Electronic Mail 2 copies Rhett Snotherly, Esq. Office of Unfair Import Investigations U.S. International Trade Commission 500 E. Street, S.W. Room 401-F Washington, DC 20436

Via First Class Mail Via Hand Delivery

El Via Overnight Delivery Via facsimile

I I El Via Electronic Mail

dc-505914

Dongguan GVG Digital Technology Ltd. Da Ping Precinct Tang Xia Town, Dongguan Guangdong Province, China 523722

GVG Digital Technology Holdings Ltd. Rm. 1822 Grandtech Center 8 On Ping St., Siu Lek Yuen Shatin, Hong Kong

Anton N. Handal, Esq. Gabriel Hedrick, Esq. Pamela C. Chalk, Esq. Handal& Associates 1200 3rd Avenue Suite 1321 San Diego, CA 92101

Attorneys for Memcorp Inc., Dongguan Tonic Electronics Co., Ltd., Dongguan Xin Lian Digital Technology Co. Ltd., Star Light Electronics Co. Ltd., Starlight International Holdings Limited, Starlight Marketing (HK) Ltd., Tonic DVB Marketing Limited, Tonic Digital Products Limited, Tonic Electronics Limited (HK), Tonic Industries Holdings Limited, Tonic Technology Limited, Tonic Technology (Shenzhen) Ltd., Tonic Trading Development Limited and j KW Electronics Corporation

E l Via Hand Delivery Via Overnight Delivery Via facsimile Via Electronic Mail

El Via First Class Mail - Public Only o Via Hand Delivery

Via Overnight Delivery Via facsimile Via Electronic Mail

El Via First Class Mail Via Hand Delivery

o Via Overnight Delivery Via facsimile

El Via Electronic Mail

Via First Class Mail - Public Only

dc-505914 2

EXHIBIT A

Tonic - 6C.License (Non-Confidential)

c

DVD PATENT LICENSE AGREEMENT

This DVD PATENT LICENSE AGREEMENT Is made between Toshlba Corporati on (“Licensor“), a Japanese corporatlon having its principal place of business at 1-1, Shibaura l-chome, Minato-ku, Tokyo 105-8001, Japan, under authorizatiin of the members of the DVD Patent Licensing Group (or ‘Group”, as listed in Exhibit 1 hereto, as may be amended from time to time by Licensor), and Tonic Digital Products Limited (“Licensee’), a Hong Kong corporation having its principal place of business at Unit B, 10/F Summit Building, 30 Man Yue Street, Hung Hom, Kowloon, Hong Kong and is effective as of January I , 2007 (the ‘Effective Date?.

WHEREAS, members of the Group have been engaged in the research and development of systems in which data encoded in digital form and stored on a disc are read, recorded, rewritten or rerecorded and outputted (whether as data or slgnals) by means of devlcee using an optical read-out beam (such systems, the ‘DVD Systems’); and

WHEREAS, members of the Group and others have defined standards for the DVD Systems, including standards for the productlon and use of DVD products constituting the DVD Systems and providing for the interoperability of such DVD products: and

WHEREAS, members of the Group own valuable patents (and patent appiicatlons) that are Essential (as deflned In Exhlblt 2 hereto) to make, use and, sell DVD Products (as defined in Exhibit 2 hereto) (such patents, the ’DVD Patents,’ as more specifically defined in Exhibit 2 hereto): and

WHEREAS, members of the Group believe that a non-exclusive joint licensing program, under which licensees can obtain access to as many Essential patents as possible in one transaction, is an efficient method for licensing DVD Patents for the benefit of licensees and the public, and have granted Licensor the right to grant such licenses with respect to the DVD Patents on their behalf to licensees that wish to make, use or sell DVD Products; and

WHEREAS, Licensee wishes to obtain a license under the DVD Patents to make, use and sell the DVD Products:

NOW, THEREFORE, the parties agree as follows:

2

Artlcle 1 Additlonal Terms

1.1 indude as terms the DVD Patent License Conditions (the 'Conditions"), as set forth in Exhibit 2 hereto. Terms not defined herein shall have the meaning ascribed to them in the Conditions, and vice versa.

1.2 Royaltiis payable by Licensee hereunder are specified in the Conditions.

In addition to the terms set fotth herein, this Agreement shall -

brtlcle 2 DVD Patent Ucense and Release

2.1 Subject to all of !he conditions set forth in this Article 2.1, Licensor hereby grants to Licensee and its Affiliates a non-exciusive, non-transferable license to make, have made, use, import, offer for sale, sell, end otherwise dispose of DVD Products under the DVD Patents or any of their claims pursuant to the Conditions of Exhibit 2. The foregoing license grant is subject to all of the following conditlons:

No license is conferred pursuant to this Article 2.1 on any DVD Product unless Licensee has complied fully with the terms and condUlons of this Agreement, including but not limited to reporting of said DVD Product pursuant to Article 2.13 of Exhibit 2, and Ordinary Course Payment (as specified in Article 1.14 of Exhlbit 2) of the full ap'plicabte royalty for said DVD Product;

The llcense conferred pursuant to this Article 2.1 extends only to the structure, features and functions of a DVD Product used to practice those DVD Standard Specifications applicable to that DVD Product, and for which the DVD Patents are Essential, and said license does not extend to any structure, features or functions of a DVD Product not used to practice those DVD Standard Specifications.

The license conferred pursuant to this M c l e 2.1 covers only the DVD Products selected in Exhibit 3 herein, and does not cover any other DVD Products.

DVD Players, DVD Decoders, DVD Encoden and DVD Recorders (as defined in Article 1 of Exhibit 2) on which applicable royalties are paid pursuant to Artides 2.4, 2.5 and 2.11 of Exhibit 2 are licensed for use only with DVD Read-only

2;l.l

2 1.2

2.1.3

2.2

3

Discs or DVD Recordable Discs for which royaltles have been pald pursuant to Articles 2.3 and 2.6 of Exhibit 2. DVD Read-only Discs or DVD Recordable Discs on which applicable royalties are paid pursuant to Articles 2.3 and 2.6 of Exhibit 2 are licensed for use only with DVD Players, DVD Decoders, DVD Encoders and DVD Recorders for which royalties have been pald pursuant to Articles 2.4.2.5 and 2.1 1 of Exhlblt 2.

Upon full payment of agreed upon back royalties for each DVD Product, Licensor hereby releases Licensee and its Affiliates and their customers from any and all claims of infringement of the DVD Patents arising from Licensee’s or Its Affiliates’ manufacture, use, sale, or disposal by other means of DVD Products for the period prior to the Effective Date of this Agreement pursuant to the Conditlons of Exhibit 2 provlded, that Licensor does not release, and shall not be deemed to have released, Licensee from any claims of infrlngement to the extent that any royalties or other amounts remain due pursuant to any license agreement between Licensee and any member of the Group relating to DVD Patents.

Instead of dealing with Licensor to obtain Icenses for DVD Patents of the members of the Group, Licensee acknowledges that it has been provided end has the option to negotiate and take a license under any DVD Patents and other related patents owned by each member of the Group pumuant to separate negotiations with each of the members on fair, reasonable and non-discrlmlnatoiy terms, whether or not Licensee intends to manufacture and/or sell DVD Products In conformity with the DVD Standard Specifications.

2.5 IT IS EXPRESSLY UNDERSTOOD THAT THE RIGHTS AND LICENSES GRANTED PURSUANT TO THIS AGREEMENT DO NOT EXTEND TO ANY PRESENT OR FUTURE RIGHTS WHATSOEVER TO USE THE DVD FORMAT BOOKS OR DVD LOGOS.

2.3

2.4

fitticle 3 License Back

Llcensee hereby agrees to grant to each member of the Gpup and its Affiliates and each of the other licensees of Licensor under the DVD Patents, a non-excluslve license to and release from any and all claims of infringement of any patents that are or become Essential to make, have made, use, import, offer for sale, sell or otherwise dispose of DVD Products and with respect to which Lbnsee has or may in the future obtain rights to grant such a license. Any such licenses and releases shall be granted upon fair, reasonable, and nondlscrimlnatory terms,

Each member of the Group shall have the right to terminate the license granted herein under any of the DVD Patents owned by such member of the Group in the event that Licensee has brought a &Im(s) in a lawsuit w other proceeding against such member of the Group that (a) alleges that any DVD Product made, imported, used, offered for sale, sold or otheNvise disposed of by any member of the

.. 3.1

3.2

4

Group infringes any patent@) that are Essential to make, use, or sell DVD Products, and Licensee has refused to grant such member of the Group a Icense on fair and reasonable terms and conditions under such patents upon whlch the lawsuit or other proceeding is based for the manufacture, use or sale of DVD Products, or (b) challenges, on any grounds, the validity or essential nature of an Essentlal DVD Patent or the enforceability of the license granted herein, or (0) challenges, on any grounds, the valMity or legality of the DVD 6C pool. In the event that any dispute arises between Licensee and Ucensor or any other member of the Group as to determination of the fair and reasonable terms and conditions for licensing patents as provided in (a) above and such dispute cannot be settled between the parties, the dispute shal be submitted to and determined by an expert jointly appolnted and paid by Licensee and Licensor or the other member of the Group.

Article 4 WarrantvandDkclaimer

4.1 THE GROUP, LICENSOR AND THE MEMBERS OF THE GROUP MAKE NO REPRESENTATION OR WARRANTY AS TO THE VALUE OR UTILITY OF THE DVD PATENTS, OR THE ABILITY OF LICENSEE TO MAKE USE THEREOF OR TO SECURE INTERCHANGEABILITY WITH OTHER DVD PRODUCTS. THE GROUP, LICENSOR AND THE MEMBERS OF THE GROUP MAKE NO WARRANTY WITH RESPECT TO THE VALIDITY OF THE DVD PATENTS, NOR DO THEY WARRANT THAT LICENSEE'S MANUFACTURE, USE, SALE, LEASE OR OTHER DISPOSITION OF DVD PRODUCTS WILL NOT CAUSE INFRINGEMENT OF ANY PROPERTY RIGHT OWNED OR CONTROLLED BY ANY PERSON, EXCEPT THAT LICENSOR WARRANTS THAT IT HAS BEEN AUTHORIZED BY THE MEMBERS OF THE GROUP TO GRANT SUCH RIGHTS WITH RESPECT TO THE DVD PATENTS AS ARE SPECIFICALLY SET FORTH HEREIN. THE GROUP, LICENSOR AND MEMBERS MAKE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THOSE OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. IS."

THE LICENSES GRANTED HEREIN ARE PROVIDED "AS

4.2 Licensee covenants that, at Licensor's request, it shall place approprlate patent markings on an exposed surface of the DVD Products made, used, sold andlor otherwise disposed of hereunder. The contenl, form, location and language used in such markings shal be in accordance with the laws and practlces of the country where such markiigs are used.

ilr&u Term and TennlnatloQ

Thls Agreement shall become effectlve as of the Effective Date and shall continue In force until December 31, 2007, unless earfief terminated pursuant to the terms hereof, and shall be automatically renewed for additional fne (5) year terms

5.1

!

8

5

unless Licensee notifles Licensor in writing of its intent to terminate this Agreement at least sixty (60) days prior to the date specified above or the expiration date of such renewed periods, as the caw may be.

Notwithstanding the provlsions of Article 5.1, this Agreement shall expire upon the expiration of the last to expire DVD Patent, If such expiration would occur before the expiration date othennrise provided for In Artkie 5.1.

Either party may terminate this Agreement at any time on Wrty (30) days written notice to the other party in the event that the latter shall materially breach or fall to perform any material obligatkn under this Agreement and such default is not remedied wlthh thirty (30) days after notice is given specifying the nature of the default. Such right of termination shall not be exclusive of any other remedies or means of redress to which the nowdefaulting party may be lawfully entitled, and all such remedies shall be cumulative. In the event that thls Agreement Is terminated as a result of a material breach by Licensee, and Ucensor elects to reissue another DVD Patent License Agreement, then Ucensor shall have the right to require, and Licensee shall provide, whatever reasonable security Licensor deems to be necessary to ensure future compliance for anticipated royalties for the reporting period subsequent to said failwe to timely report or pay royalties, and the three reporting periods thereafter, including but not limited to a letter of credit andlor advance payment of estimated royalties.

In the event that any Event of Banknrptcy occurs, then Licensor may give notice to Licensee termlnatlng this Agreement and this Agreement shall be terminated in accordance with the notice. An ‘Event of Bankruptcy“ occurs if; (1) a decree or order by a court having jurisdiction In the premises has been entered adjudging Licensee a bankrupt or insolvent, or approving as properly filed a petition seeking reorganlzatlon, readjustment, arrangement, composition, winding up or similar relief for Licensee under any applicable statute, or a decree or order of a court having jurisdiction in the premises for the appointment of a liquidator, receiver, administrator, trustee or assignee in bankruptcy or insolvency or other similar person or official of Licensee or of a substantial part of the property, or for the winding up or liquidation of the affairs of Licensee has been entered and remains unstayed; or If any substantial part of the property of Licensee has been sequestered or attached and has not been returned to the possession of Ucensee or released from such attachment within fourteen (14) days thereafter; whether any such act or event occurs in Japan, or any foreign country, subdvialon thereof, or any other jurisdiction; or (n) Licensee inswtes proceedings to be adjudicated aivoluntary bankrupt or insolvent, consents to the filing of a bankruptcy or insolvency proceeding against it, files a petition or answer or consent seeking reorganizatlon, readjustment, arrangement, composition, wlndlng up, administration, recehrership, or similar relief under any applicable statute or consents to the tiling of any such petition or the entry of any such order, makes an assignment for the benefit of credltors, is determined to be unable to pay Its debts or admits in writing its inability to pay its debts generally as they became due, or voluntarily suspends transactions of a substantial portion of Its usual business; whether any such act or

5.2

5.3

5.4

,

6

event occurs in Japan, or any foreign country, subdivision thereof, or any other jurisdiction.

Article 6

6.1 Except as provided in Article 0.1.1 of this Agreement, in the event that Licensor grants a D W Patent llcense to another party With royalty rates more favorable than those set forth in Artides 2.3,2.4, 252.6 and 2.11 of the DVD Patent License Conditions attached hereto as Exhibit 2, whether or not such more favorable royalty rates are on terms and conditlons that are different from those set forth herein, Licensor shall send written notice to Licensee specifying the more favorable royalty rates and any terms and conditions that are different from those set forth herein within thirty (30) days of the granting of DVD Patent License providing for such more favorable royalty rates. Licensee shall be entitled to an amendment of this Agreement to the extent of providing for royalty rates as favorable as those available to such other party within thirty (30) days of receipt of such written notice from Licensor by sending written n o w to Licensor requesting such amendment; provided, however, Ucensee ako agrees to be bound by any terms and conditions under which such more favorable royalty rates are made available to such other party, indudhg any additional beneflts to Licensor that may be Included among the terms and conditions corresponding to such royalty rates. Any amendment made pursuant to this Article 6.1 shall be effective as of the date it Is made, and such more favorable royalty rates shall not be retroactively applicable in favor of Licensee, -and shall not be a bask for claiming any refund of royalties paid prior to such effective date.

6.1.1 Article 6.1 shall not apply to:

6.1 .1.1 Settlement of litigation:

6.1.1.2 Determination by Licensor of back royalties owed

6.1.1.3 Compromise or settlement of royally payments

6.1.1.4 lndfvidual patent licenses or sublicenses granted by

6.1.1.5 An order of a court or an admlnistratlve body.

by a Licensee:

owed by a Licensee in financial distress:

an individual member of the Group to any other party: and

62 This Agreement and the rights granted hereunder shall be personal to Licensee and shall not be assignable, except to an Affiliate, the survivor of a merger with Licensee, or the acqulrer of all M substantially all of Ucensee's assets. Licensee's right to sublicense any rights granted hereunder shall be limited solely to the

7

right to have a third party manufacture, for Licensee, DVD Products. Ucensea shall, in all such cases, ensure that the third party undertakes to be bound by all of the terms of this Agreement. Licensee shall be solely responsible for ensuring such th*d party's compliance with the terms hereof.

6.3 This Agreement shall be governed and construed according to the laws of New York, as if this Agreement were wholly executed and wholly performed within New Yo&, and without reference to the conflicts of laws principles thereof.

All claims between Licensor and Licensee to enforce the terms of this Agreement shall be submitted to, and finally setlled by, arbitration administered by the American Arbitration Association under the International ArbitratJon Rules of the International Centre for Dispute Resolution (the "Rules=) and shall be governed by New York law. Unless othennrlse agreed to by the patties, the arbitration shall be conducted in English in New Yo&, New York before a single arbltrator who shall be a member of the New York bar to be selected from potential arbiters listed by the Center for Public Resources' Panel of Distinguished Neutrals. The individual members of the Group other than Licensor shall not be considered parties to any arbltraffon conducted under the terms of this Agreement, unless they have lndividualty agreed in writing to be Joined as a party to the arbitration following its commencement. This Article 6.4 shall not limit the right of any individual member of the Group to separately pursue enforcement of its patents agalnst Licensee or any other entity.

8.4

6.4.1 Pre-hearing discovery shall be limited to the identification and exchange of documentary and tangible evidence together with the identification of wltnesses and the subject matter of their testimony as set forth In Article 19 of the Rules. DeposiUons shall not be required or mandated. The arbitration hearing shall be held beginning no later than ninety (90) days affer the arbitrator is selected, with the arbitrator providing advance notice of the date, time and place of the hearing as set forth in the Rules. Unless otherwise agreed to by the parties, the arbitration hearing shall be completed within sixty (60) days of its Initiation. The arbiitor shall render a written dedslon no later than thirty (30) days affer the conclusion of the arbitration hearlng. In addition to renderfng a monetary award, the arbitrator shall have the authority to order specific performance of any past, current or future obligation under this Agreement, induding through the issuance of interim measures of protection. Such an order may include the impodtion of appropriate compensation to the party entitled to performance payable in the case of delayed or failed compliance with a performance order,

6.4.2 The losing party of such arbitration shall also pay all reasonable attorneys' fees and costs of the prevailing party, with the prevailing party's request for such fees and costs submitted to the arbitrator within thirty (30) days of the Issuance of the arbitrator's written decision. The arbitrator shall issue a fmai written award to the prevaillng party within thiw (30) days of the submission of the fee and cost request, and the losing party shall pay the award, and ail fees

I

8

and costs awarded, within thirty (30) days of the arbitrator's decision. The parties agree that a judgment of any court having jurisdiction may be entered upon the award, including, without limitation, a court located in New Yo&, New York or the jurisdiction where either party conducts business or can othetwlse be found.

Ail disputes between the parties hereto that are not covered by Article 6.4 shall be finally settled by the competent courts of federal or state courts located in the county of New York In the state of New Yo&, and each of the parties to thls Agreement hereby submits ta the jurisdiction of such courts for the resolution of such disputes and waives any ol?jection that It may now or hereafter have to the venue of any such adlon or proceedlng in such courts or to the convenience or inconvenience of conducting or pursuing any action or proceeding in any such court.

This Agreement shall inure to the benefrt of the partles hereto and each of their respective Mliates and permitted a'ssigns, provided that (9 such Afflllates shall comply with the terms of thls Agreement, (ii) nothing herein shall relieve any party of any of its obllgatlons under the terms of this Agreement; and (iii) a party shall be responsible for the acts and ornitdons of its Affiliates as If such acts and omissions had been the acts and omissions of such party.

6.7 Any notice or request with reference to this Agreement shall be made by letter or facsimile, and shall be directed by one party to the other at its respeciive address as follows:

6.5

- ___- 6.6

in the case of Licensor to:

General Manager, License Management Toshiba DVD License Services, Inc. 5th Floor, Sumitomo-Hamamatsucho Bldg. 18-16, Hamamatsucho 1-chome. Minato-ku Tokyo 105-0013, Japan Phone: +81-36777-3286 Fax +81-3-5401-2503

"b

9

In the case of Licensee to:

Mr. Gary Uu CEO and Director Tonic Digiti1 Products Limited Unit 6, lOF, Summit Bulding 30 Man Yue Street, Hung Horn Kowloon, Hong Kong Phone: +852-2170-0829 Fax: +852-2303-0471 Emall: gary_liu@)tonic.com.hk

or to such other address(es) as either party may from time to t h e designate as its address by notice in writing to the other. All notices so addressed are effective when received.

6.8 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and supersedes and merges any and all prlor agreements, negotiations, correspondence, understandings and discussions between the parties with respect to the subject matter hereof, whether oral or in m‘tlng. Without limiting the generality of the foregoing, thls Agreement supersedes any prior DVD Patent License Agreement between the Licensor, under authorization of the Group, and the Licensee and any such agreement is hereby terminated; provided, however, that any obligations Licensee owes to Licensor pursuant to any prlor DVD Patent License Agreement prior to the termination of such Agreement@) shall continue to be owed to Uwnsor and Licensor may enforce the obligatlon to pay such royalties pursuant to the provisions of Article 6.4, as if such obligation had arisen pursuant to this Agreement. Nelther of the pattles shall be band by any conditlons, definitlons, warranties, waivers, releases or, representations (elther expressed or implied) with respect to the subject matter of this Agreement, other than expressly provided for herein (including the exhibits hereto), or as duly set forth on or subsequent to the date hereof in writing signed by a duly authorized representatlve of the party to be bound thereby.

The provisions of this Agreement are severable, and in the event that any one or more provisions, or any portlon thereof, are deemed unlawful, invalid or unenforceable in whole or in part, the remaining provisions or portions thereof, as the case may be, shall remain in full force and effect unless the deletion of such provision or portion thereof shall cause this Agreement to become materially adverse to either pa*, in which event the partles shall use commercially reasonable efforts to arrive at an accommodation that presenres for the parties the benefits’ and obligations of the offending provision or portion thereof. Any provision hereof that is held to be unlawful, lnvald or unenforceable in any jurisdiction shall be unlawful, invalid or unenforceable in

6.9

10

that jurisdiction without affecting any other provision hereof in that jurisdiction or the legality, validity or enforceability of the provision in any other jurisdiction.

6.10 Under no circumstances shall the Group, Licensor or members of the Group be liable to Ucensee for any special, incidental, punlthre or indirect damages or for any economic consequential damages (including lost prof&, revenues and savings), even if advised in advance of the possibility of such damages. In addition, in no event shall the Group, Licensor, or members of the Group be liable for any third party claim against Licensee.

IN WTNESS WHEREOF, the parties have executed thls Agreement by their duly authorized representatives as of the Effective Date.

TOSHiBA CORPORATION

Licensor

Akira Takei

Tonic Digital Products Limited

Gary Uu Name (Print)

General Manager Strategic L i i d n g 81 Alliance Division Digital Media Network Company

Name (Print)

CEO and Director

Date

Exhiblt 1

DVD Patent Licensing Group members include all those owners of Essentlal DVD Patents that are licensed by this Agreement, presently including:

Hitachi, Ltd. Matsushb Electric IndusWal Co., Ltd. Milsubishi Electrlc Corporation Samsung Electronics Co., Ltd. SANYO Electric Co., Ltd. Sharp Corporation Toshiba Corporatiin Victor Company of Japan, Ltd. Warner Bros. Home Entertalnrnent Inc.

Exhibit 2

DVD PATENT LICENSE CONDITIONS

Adele 1 Definltlong

1.1 %greemenP shall mean the DVD Patent License

1.2

Agreement to which these Conditions are Exhibit 2.

specMcations of the DVD Systems as specffied In the following documents and their respective revisions or successive modified, amended or extended versions thereof, as may be issued from time to time for DVD Products:

"DVD Standard Specifications" shall mean the

DVD Specifications for Read-only Dim, including DVD-ROM v. 1.03, DVD-Video v. 1.1, and DVD-Audio v. 1.z DVD Specifications for Recordable Disc, including DVD-R (3.96) v. 1.0, DW'-R for General v. 2.0, and DVD-R for Authoring v. 2.0;

DVD Specifications for Rewritable Discs, including DVD-RAM (2.66) v. 1.0, and DVD-RAM (4.76) v. 2.1;

DVD Specifications for Re-recordable Discs v. 1.1; and

DVD Specifications for RewritabldRe-recordable Discs, including DVD Video Recording v. 1 .l . "DVD Patents" shall mean all Patents owned by

members of the Group, now, or hereafter during the term of this Agreemeni, that are Essential to make, use or sell DVD Products. Such DVD Patents shall not include MPEG-2 data kmpression patents that may be applicable to DVD Products, or "CSS" (Content Scramble System) patents, "CPPM" (Copyright Protection for Prerecorded Media) patents, or "CPRM" (Copyright Protection for Recordable Media) patents which are designed to provide reasonable protection for the contents of DVD discs.

"EBsentIal" with respect to the definition of DVD Patents shall mean necessarily infringed when Implementing the DVD Standard Specifications or claiming technologies for which there is no realistic alternative in implementing the DVD Standard Speclfl cations.

"DVD-Video Disc, DVD-ROM Disc and DVD-Audio Disc" are collectively, "DVD Read-only D&cs." The term DVD Read-only Disc shall mean any replicated disc comprising any kind of information such

1.4

1.5

2

as, but not limited to, audio, video, text and data-related information, encoded in digital form, that is optically readable by a DVD Player, that conforms to the DVD Standard Specifications and that practices a DVD Patent or with respect to which use or manufacture thereof practices a DVD Patent. A DVD-We0 Disc is a DVD Read-only Disc that conforms to the DVD Specifications for Read-Only Discs, DVD-Video v. 1.1 or successive modified, amended or extended versions thereof. A DVD-Audio Disc is a DVD Read-only Disc that conforms to the DVD Specifications for Read-only Discs, DVD-Audio v. 1.2 or successive modified, amended or extended versions thereof. All DVD Read-only Discs, other than DVD-Video or DVD-AudiO Discs, are DVD-ROM Discs.

1.6 llDVD-VWeo Player, DVD-ROM Drive and DVD-Audlo Player" (collectively, "DVD Players") shall mean a playback device conforming to the DVD Standard Specifications that is specifically designed and manufactored for the reproduction of information stored on a DVD Read-only Disc andlor DVD Recordable Disc and conversion of such Information Into electrical signals, which electrical signals are directly capable and intended to be used for audio, video, text and/or data-related Information, and that practices a DVD Patent or with respect to whlch use or manufacture thereof practices a DVD Patent.

1.7 UDVD Decoder" shall mean a decoder implemented in hardware or software capable of receiving and decoding transmissions from a DVD-ROM Drive, DVD-RAM Drive, DVD-RW Drive, DVD Video Recorder or DVD-R Drive that conforms to the DVD Standard Specifications and practices a D W Patent or with respect to which use or manufacture thereof practices a DVD Patent.

1.8 "DVD Product" shall mean a DVD Decoder, DVD Encoder, DVD Player, DVD Read-only Disc, DVD Recordable Disc, Case, or DVD Recorder.

1.9 "DVPRAIVI Dkc, DVD-RW Disc, and DVD-R DISC" (collecthrely, 'DVD Recordable Disc") shall mean any disc that is optically readable, recordable, rewritable and/or re-recordable of any kind of Information such as, but not limited to, audio, video, text, andlor data-related information, encoded In digital form by a DVb Player or DVD Recorder, that conforms to the DVD Standard Specincatlons and that practices a DVD Patent or with respect to which use or manufacture thereof practices a DVD Patent.

1.10 "DVD-RAM Drive, DVD-RW Drive, DVD-R Drive, and DVD Vldeo Recorder" (collectively, "DVD Recorder") shall mean a playback and recording device conforming to the DVD Standard Specifications that is specifically designed and manufactured for the recordation and reproduction of Information onto a DVD Recordable Disc and conversion of such information into electrical signals, which electrical signals are directly capable

3

and intended to be used for audio, video, text and/or data-related information, and that practices a DVD Patent or with respect b which use or manufacture thereof practices a DVD Patent.

1.11 "DVD Encoder" shaU mean an encoder implemented in .hardware or soRware capable of encoding audio, video, text andlor data-related information for recording on a DVD-Recordable Disc and that conforms to the DVD Standard Specifications and practices a DVD Patent or with respect to whlch use or manufacture thereof practices a DVD Patent.

1.12 %ase" shall mean the housing for a DVD Recordable Disc that protects the disc and faciiiites disc interchange, as defined in the DVD Standard Specifications and practices a DVD Patent or with respect to which use or manufacture thereof practices a DVD Patent.

1.1 3 llAffiliate'l shall mean, with respect to either party hereto, any corporation, firm, partnership, proprietorship, or other form of business entity, in whatever country organired or resident, directly or indirectly controlled by such party. For the purpose of this definition, "control" shall mean the power to dired or cause the direction of the management or policies of such entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

1.14 '@Ordinary Course Payment" of royalties shall mean Licensee's payment of royaltfes under the Agreement as specified in Article 2 of this Exhibit 2, received by Licensor prior to either termination of this Agreement or the filing of proceedings to seek equitable relief, to recover payment and/or seek damages for infringement of one or more DVD Patents, or filing of proceedings by one or more members of the Group.

Article 2 Pavment

2.1 [For new licensees only.] In consideration of the releases granted under Artkle 2.3 of this Agreement, Ucensee shaU pay to Licensor, within sixty (60) days after the Effective Date of this Agreement, an amount calculated based on the number of DVD Products sold by Licensee and its Affiliates prior to the Effective Date of this Agreement. The foregoing shall not apply to any licensee that has entered into a prior DVD Patent License Agreement with Licensor.

5

2.2 Licensee shall be obligated to pay royalties to Licensor on all DVD Products it and its Affiliates sell or otherwise transfer.

4

Royalties shall accrue and be payable as follows:

2.3 With respect to DVD Read-only Discs, the royally payable shall be US $0.075 per disc made, sold or otherwise transferred, as may be applicable.

With respect to DVD-Video DISC and DVPROM Disc, the royalty payable shall be reduced to US$0.065 per disc sold or othewise transferred on or after January 1, 2002, to US$O.OS per DVD disc sold or othew'se transferred on or after January 1, 2004. With respect to DVD-Audio Disc, the royalty shall be USS0.05 per disc sold or othemrlse transferred on or after January I, 2004. The royalty accrued for DVD Read-only Discs sold or otherwise transferred on or after the Effective Date shall be US$0.045 per DVD disc. .

With respect to DVD Players, the royalty payable shall be 4% of the Net Selling Price (hereinafter defined) of the DVD Player, or USW.00 per D W Player, whichever is greater. with respect to DVD Decoders (without an encoding function), the royalty payable shall be 4% of the Net Selling Price of the DVD Decoder, or US$l.OO per DVD Decoder, whichever is greater. The minimum royalty accrued for DVD Players sold or otherwise transferred on or after the Effective Date shall be US$3.00 per DVD Player. The maximum royatty accrued for DVD Players sold or othetwise transferred on or alter January 1,2003 shall be US$8.00 per DVD Player.

With respect to DVD Recorders induding DVD-RAM Drive, DVD-RW Drive, DVD-R Drive and DVD Video Recorder, the royalty shall be 4% of the Net Selling Price of the D W Recorder, or U.S. $6.00 per DVD Recorder, whichever Is greater. With respect to DVD Encoders, including DVD Encoders with decoding function, the royalty shall be 4% of the Net Selling Price of the DVD Encoder, or US. $1.50 per DVD Encoder, whichever is greater.

2.4

2.5

2.6 With respect to DVD Recordable Disc and Case, the royalty shall be as follows:

2.6.1

2.6.2

For a DVD Recordable Disc (without a Case), the greater of (a) 4% per disc based on Net Selling Price, or (b) US$0.075 per DVD Recordable Disc. The minimum royalty accnred for DVD-RW Discs and DVD-RAM Discs sold or otherwise transferred on or after the Effective Date shall be US$0.065 per disc. The minimum royalty accrued for DVD-R Discs sold or otherwise transferred on or after January 1,2006 shall be US$0,045 per disc.

For a Case sold separately from any DVD Recordable Disc, the greater of (a) 4% per Case

5

based on Net Selling Price, or (b) USS0.005 per Case.

2.6.3 For a DVD Recordable Disc sold with a Case, the greater of (a) 4% per disclCase combination based on Net Selling Price, or (b) US$0.08 per disc/Case comblnatlon. The minimum royalty accrued for DVD-RW Discs and DVD-RAMJks with a Case sold or otherwlse transferred on or af€er the Effective Date shall be US$0.07 per dlsdCase combination. The minimum royalty accrued for D W M Discs with a Case sold or otherwise transferred on or after January 1, 2008 shall be US$O.OS per didcase combination.

The royalty shall accrue when the DVD Product is involced, or if not invoiced, when ownership or possession is transferred to another party.

With respect to DVD Products sold by Licensee or Its Affiliates to any third party in arm’s length trade, Net Selling Price shall mean gross sales price less normal discounts actually granted, insurance fees and packing and trensportation charges as invoiced to customers, and duties and sales taxes actually incurred and paid by Licensee or its Affiliates in connection with the delivery of such DVD Products.

2.8.1 WW respect to DVD Products sold by Licensee or its Affiliates to customers who do not deal at arm’s length with Licensee or Its Affiliates, Net Selling Price shall mean the average Net Selling P h e of the prior three (3) months as defined above for similar DVD Products sold at arm’s length trade with third party customers.

2.8.2 All royalties payable with respect to DVO Products shall be paid to Ucensor in U.S. dollars.

If a DVD-ROM Drive, DVD Decoder, DVD Recorder or DVD Encoder is incorporated into 8 subsequently manufactured personal computer, then a royalty shall be due on such DVD-ROM Drive, DVD Decoder, DVD Recorder or DVD Encoder only and not on the personal computer. If more than one of a DW-ROM Drive, DVD Decoder, DVD Recorder or DVD Encoder is incorporated into a subsequently manufactured personal computer, a royalty shall be due on each DVD-ROM Drive, DVD Decoder, DVD Recorder or DVD Encoder. If a DVD-ROM Drive is incorporated into a subsequently manufactured Car Navigation System that does not have any DVD-Video Player function or DW-Audio Player function, then a royalty shall be due on such DVD-ROM Drive only and not on the Car

2.7

2.8

2.9

“ h

8

Navigation System that does not have any DVD-Video Player function or DVD-Audio Player function.

2.10 Royalties are due only on (i) DVD Players (including, without Ilmitatlon, DVD-ROM Drhres), DVD Recarden (including, without limitation, DVD-RAM Drives, DVD-RW Drives, DVD-R Drives and DVD-Video Recorders), DVD Decoders, DVD Encoders, DVD Read-only Discs, or DVD Recordable Discs that are ready to be used by the consumer without any further manufacturing, (ii) DVD-ROM Drives, DVD-RAM Drives, DVDRW Drives, DVD-R Drives, DVD Video Recorders, DVD Demders and DVD Encoders that are not ready to be used by the consumer but are incorporated into personal computers by subsequent manufacturers, and (iii) DVD-ROM Drives that are not ready to be used by the consumer but are Incorporated Into Car Navigation Systems that do not have any DVD-Video Player functlon or DVD-Audio Player function by subsequent manufacturers (collectiveiy, (i), (ii) and (iii), "Ready-To-Use Products'). A first manufacturer shall pay a royalty on Ready-to-Use Products that are then sold to a second manufacturer for incorporation into a personal computer or a Car Navigation System that does not have any DVD-Video Player function or DVDAudio Player function. The second manufacturer shall be relieved from paying any royalty beyond that due from and paid by the first manufacturer on the product.

2.11 With respect to combination DVD Products, the royalty payable for a single product (a) into which a DVD Player andlor DVD Recorder is incorporated by Licensee or Licensee's Affiliates and (b) which consists of such DVD Player and/or DVD Recorder and one (1) or more non-DVD Player or non-DVD Recorder product(s) or component(s) rNon-DVD Product") (each such single product, a "Combination Product") shall be the greater of (a) US. $4.00 for a DVD Player or U.S. $6.00 for a DVD Recorder or (b) 4% of the amount calculated under sub-clause (I) or (2) below

(1) in the event that a DVD Recorder or DVD Player incorporated into a Combination Product is substantially similar to a DVD Recorder or D W Player that Licensee or Licensee's Affiliates manufacture and sell independently of the Combination Product, the Net Selling Price of such independently sold, substantially similar DVD Recorder or DVD Player; or

in the event that sub-clause (I) does not apply, the product of the following formula:

NSP x [A + C x (A / (A + B)}] I (A+B+C)

where

(2)

7

A = the material cost of a DVD Player or DVD Recorder incorporated in a Combination Product; B = the material cost of a Non-DVD Product incorporated in such Cornbination Product; C = thb material cost of the portion of such Combination Product that is common to such DVD Player or DVD Recorder and such Non-DVD Product, including, without limitation, the power supply and cabinet: and NSP = the Net Selling Price of such Combination Produd

Nolwiitanding the foregoing, the minimum royalty accrued for DVD Players sold or otherwise transferred on or after the Effective Date shall be $3.00 per DVD Player, The maximum royalty accrued for DVD Players sold or otherwise transferred on or after January 1 , 2003 shall be US $8.00 per DVD Player.

2.12 Upon termination of this Agreement, royalties shall be due and payable with respect to all DVD Products made by, or made for, Licensee but not yet sold or transferred.

2.13 Royalties will be reported in two (2) semi-annual periods ending June 30 and December 31 (each a 'Reporting Period"). Whin forty-five (45) days after June 30 and December 31 of each year durlng the period this Agreement shall be In force and effect, Licensee hereby undertakes to submit to Licensor, even if it makes no sales of DVD Products, a statement in writing setting forth with respect to the preceding semiannual period:

(1) The quantities of each model of DVD Products manufactured (or manufactured for) and sold by Licensee and its Affiliates, for each product type of DVD Products;

the trademarks or trade names used on or in connodon with the DVD Products sold, if any; and

a computation of the royalties due under this Agreement.

Licensee shall pay Licensor in the manner and to the account Licensor may indicate, and within ninety (90) days after the end of each semiannual period, the royalty due hereunder. All royalties shall be calculated and paid, exclusive of any taxes or other levies (except withholding taxes imposed by the governing body of Licensee's domicile), which shall be borne by Licensee. With respect to withholding taxes imposed by the governing body Of Licensee's domicile, Licensee shall pay such taxes and shall be entiUed to

(2)

(3)

8

deduct such taxes from royalties paid, so long as Licensee provides Licensor with a tax certificate (or equivalent document) evidencing such payment and/or obligation. Licensee covenants to pay such taxes in a timely and lawful manner.

2.14 AM payments which are not made on the due date specified in this Agreement shall accrue interest at the rate of two percent (2%) per month.

2.15 Licensee agrees to keep accurate books with respect to sales, other transfers, and royalties (including but not limited to all general and subsidiary ledgers, sales records and invoices, shipping records, export and import filings and documentation submitted to any government, and any other documents related to sales or other transfers of DVD Products), Licensee shall permit Licensor to audit those books within shtty (60) days of receipt of written notice from Licensor of Licensor‘s intent to conduct said audit. Licensee shall not be required to undergo an audit more than once during a single calendar year. Such audits may cover the three year perlod preceding the audit During said audit, Licensee shall provide the auditor with complete access to all the aforementioned books with respect to sales, other transfers, and royalties, and shall provide all reasonable assistance to the auditors. By this Article 2.15, Licensee also agrees to authorize Licensor to secure from any relevant government authority directly copies of any export, import, tax or production documents submitted by Licensee, and Licensee shall provide whatever further documentation may be required by said government authority to release said filings to Licensor. Such audits shall be conducted by an independent auditor hired by Licensor, and the costs thereof shall be borne by Licensor, except that if any such audit should reveal an underpayment of royalties due hereunder of greater than 3% for any period audited, Licensee shall bear the costs of such audit, as weU as pay the dlsCr8panCy together with any interest accrued pursuant to Article 2.14 of this Exhibit 2. Licensee’s failure to comply with the terms of this Article 2.15 of this Exhibit 2 shall constitute a material breach of this Agreement under Article 5.3 of this Agreement.

Article 3 Llrnitation on License Grant

Notwithstanding anything to the contrary in Section 2.1 of this Agreement or any other provision of this Agreement or of the Exhibits to this Agreement, no licenses are granted under this Agreement for the sale, or other disposition of either (a) DVD Products that are not Ready-to-Use Products or (b) DVD-ROM Drives, DVD Recorders, DVD Decoders or DVD Encoders that will ultimately be incorporated into DVD Products other than personal computers or (c) DVD-ROM Drives that will ultimately be

. 9

incorporated into DVD Products other than Car Navigation Sysans that do not have any DVD-Video Player function or DVD-Audio Player function. DVD-ROM Drives, DVD Recorders, DVD Decoders or DVD Encoders that will uUimately be incorporated into DVD Products other than personal computers or DVD-ROM Drives that will ultimately be incorporated into DVD Products other than Car Navigation Systems that do not have any DVBVIdeo Player function or DVD-Audio Player function &dl only be manufactured subject to licenses granted to the manufacturers of such DVD Products (including, as applicable, subject to such manufacturers' "have made" rights under such licenses); therefore, the royalty shall be due on such subsequently manufactured DVD Produd If, for any reason, a royalty is paid for such a DVD-ROM Drive, DVD Recorder, DVD Decoder or DVD Encoder, the manufacturer of such subsequently manufactured DVD Product shall be entitled to subtract a credit for any royalty already paid (and not refunded) on such DVD-ROM Drive, DVD Recorder, DVD Decoder or DVD Encoder.

Article 4 Confidentrality

Licensee and Licensee's Affiliates and Licensor agree that the royalty reports required under Article 2.13 of this Exhibit 2, including competitively sensitive Information such as sales volume and selling prices of particular models of DVD Products contained in such royally reports, shall be deemed Licensee's "Confidential Information" and shall be sent only to employees of Licensor who are involved in licensing and accounting activities and who are not involved in the business of selling or developing DVD Products. Such Confidential Information shall be kept confidential by said employees and shall not be disclosed by Licensor or its employees to members of the DVD Patent Licensing Group or to third parties to this Agreement. Notwithstanding the foregoing, Licensee agrees that members of the DVD Patent Licensing Group may have access to the informath contained in such reports regarding the names of licensees, categories and model numbers of licensed products, total quantities of sales of such products and total royalties due under this Agreement.

.

Licensee Selectloq Product Cateaory

DVD-Video Players

DVD-Audio Players

DVD-ROM Drives

DVO-ROM Discs

DVD-Video DiscS

X

10

Llcensor Acknowledaemed

Md &//rZs;24

U

U

Exhibit 3 DVD PRODUCT CATEGORIES

X

For purposes of Article 2.1.3 of this Agreement, and subject to all the other terms and conditions set forth in thls Agreement, the license set forth in Article 2.1 of thls Agreement covers only the DVD Products selected below (as indicated by a mark to the left of each product category). At any time during the effective period of this Agreement, and only upon prior written notice to Licensor, Licensee may choose to have additional product categories covered by the license set forth in Article 2.1 of this Agreement. Licensee may request that a product categoty be removed from the coverage of Article 2.1 of this Agreement, said removal to be effective only upon prior wn’tten consent of Licensor, said consent to be granted in Licensor‘s sole and absolute discretion.

,p/91hv7 DVD (video) Record= Id&

DVD (Recordable Disc) LI 1

Drives

DVD Encoders

DVD-R Discs

DVD-RW DISCS

DVD-RAM DISCS

DVD Recordable Disc Cases

DVD-Audio Discs

U

U

1

I DVD Decoders IU

NON-CONFIDENTIAL EXHIBIT B

- Tonic - 6C License Side Letter

TOSHIBA

m H I B 1 CORWRATION

July I . 2007

Tonic Digital Products Limited.

Attn: Gary Liu, CEO and Director

Rc: Side Letter to DVD Patent License Au recment

Dear Sirs:

This letter agreement (“Side Letter“) is entercd into between your company (“Licensee”) and Toshiba Corporation (“Licensor”), under authorization of the members of the DVD Patent Licensing Group (as defined in the DVD Potent License Agr~emenl). and will amend and supplement the lerms and conditions of the DVD Patent License Agreement entered into by Licensee and Licensor as of January I, 2007 (“DVD Patent License Agreement”).

Unless otherwise defined, terms used in the Side Letter have the meaning given to them in the DVD Patent License Agreement and its Exhibits.

TOSHIBA

3. The release recited in Article 2.3 of DVD Patent License Agreement shall be limited to

Licensee and its desigaled Afiliates only. The designated Atliliates that arc covered under the release clause of Article 2.3 of DVD Patent License Agreement are Donwuan Tonic Electronics Limited and Dongguan Xin Lian Disilal Technolqy Co., Ltd ...

5. Licensee and Licensor agree that this Sidc Lctter contains certain competitively senshive information, and cach party shall kccp such infonnntion confidential and slrall not divulge Ihe same to any third party except with the prior written conscnt of the other party or as otherwise required by law or regulation.

6. Except as modified herein, the terms of DVD Patent License Agreemeni shall remain in tirll force and effect os provided therein. In the went of any conflict between the terms of this Side Letter and the DVD Patent License Agreement, the terms of this Side Letter shall take precedence.

Please confirm your acceptance of the terms of this Side Letter by countersigning below.

Very truly yours,

Akira Takei, General Manager Strategic Licensing & Alliance Division Digital Media Nctwork Company

Agreed and Accepted:

Gary-Liu CEO and Director Tonic Digital Products Limited

EXHIBIT C

TELEPHONE aoa.887.1500 FACSIMILE aoa .887.0763 WWW.MOFO.COM

!::’

July 16,2007

M O R R I S O N 1 0 6 P S T I R LLP

NEW YOPK, LAN EPANCISCO.

I A N D I E C O . WASWINCYON, D C

DENVER, N O P T E E P N V I R G I N I A . O P A N G E COUNTY. SACPAMENTO, WALNUT CREEK, CLNTUPY CITY

TOKYO. L O N D O N , BJ!ll lNG. SRANCXAI, HONG K O N G , SJWGAPORI. BRUSSELS

LOS A N C X L P S , i*ao ALTO.

Writer’s Direct Contact 202.887.1504 GBuse y @mofo.com

SUBJECT TO FRE 408 AND OTHER APPLICABLE SETTLEMENT PRIVILEGES

via Email and UPS

Anton Handal, Esq. Hadal& Associates 1200 Third Avenue Suite 132 1 San Diego, CA 92 1 0 1

Re: Certain DVD Players and Recorders and Certain Products Containing Same, Inv. No. 337-TA-603 and Toshiba Cop. Y. Daewoo Electronics America, Inc., C-7-1949 (N.D. Cal.)

Dear Mr. Handal: I

We understand that your clients, the Tonic Respondents (collectively ‘Tonic”) have been in discussions with the agent for the DVD6C licensing group concerning a license agreement that would cover, among other patents, Toshiba Corporation’s (“Toshiba”) essential DVD patents that are the subject of the above-referenced proceedings. Further, we understand that these discussions have been completed and that Tonic Digital Products Limited has executed a license agreement and a side letter relating to the payment of back royalties covering the Toshiba patents-in-suit.

In light of Tonic Digital’s decision to take a license from the DVD6C Group covering the Toshiba patents-in-suit and the execution of the DVD6C license agreement along with the accompanying side letter agreement, Toshiba is prepared, under certain tenns and conditions described below, to move jointly with Tonic at the appropriate juncture for termination of the ITC investigation with respect to the Tonic Respondents. Toshiba is also prepared at the appropriate time to stipulate to the dismissal of the parallel district court action. If the license becomes vdid and effective upon receipt of d e second payment required by the side letter (on or before October 1,2003, Toshiba will commit to filing a joint motion with Tonic to terminate d e ITC proceeding and a stipulation of dismissal of the district court action within ten (10) business days thereafter.

dc-496011

Mi-. Anton Handal, Esq. July 16,2007 Page Two

We understand that several of the Respondent Tonic entities are ineligible to be considered licensed “Affiliates” under the terms of the 6C license as signed by Tonic Digital. These entities include Tonic DVB Marketing Ltd; Tonic Electronics (HK) Ltd.; Tonic Industries H o l m Ltd.; Tonic Technology Limited; Tonic Technology (Shemhen) Limited; and Tonic Trading Development LM. We also understand, based on your representations, that these entities are not in the business of rnanufacturhg, selling, distributing or importing DVD products to the U.S. Toshiba is willing to include these entities in the termination and dismissal requests provided that each represents in writing that it has not and will not in the fume sell, distribbte, import or otherwise mmket DVD products in the U.S. except for DVD products covered by a license to Toshiba’s patents-in-suit. If this is acceptable, please let me know and we will prepare a letter to be counter-signed by these entities acknowledging this restriction.

Upon TDLS’s and Toshiba’s confirmation that TDLS has received the 6C license and side letter fully executed by Tonic Digital and your and your clients’ agreement to the terms of this letter, we will hold in abeyance any fhther discovery or other actions relating to Tonic in either the ITC or district court action until October 1 , 2007 by which date Tonic is required to make the second payment called for under the side letter. In the event that Tonic fails to make the second payment on or before October 1,2007 and the license agreement thus does not become valid and effective, Toshiba requires you and Tonic to agree to file a joint motion to terminate the investigation based upon entry of a consent order. The consent order shall provide that Tonic agrees to cease and desist from any further importation of DVD products, including but not limited to the accused products, that infringe the asserted claims of the patents-in-suit and to cease and desist fkom distributing, marketing or selling in the U.S. any inventory of such DVD products. It is understood that Tonic agrees to sign the joint motion, consent order and consent order stipulation immediately and to join in and support the filing of this motion for termination based on a consent order within five (5 ) days after October 1,2007, if Tonic fails to make the second required payment on or before such date. The joint motion to terminate based on a consent order, the consent order and consent order stipulation are attached hereto for your and your clients’ execution and return to me.

Furthermore, in the event Tonic fails to make the second payment by October 1,2007 and for whatever reason the Administrative Law Judge or the Commission fails to enter the consent order attached hereto, you and Tonic agree that the ability of Toshiba Corporation and Toshiba America Consumer Products, L.L.C. to prepare their case for hearing will have been substantially prejudiced. Accordingly, in that event, you and Tonic agree to the following:

to provide all responses by Tonic to outstanding discovery within 7 days after the order finally denying entry of the consent order termination;

dc496011

Mr. Anton Handal, Esq. July 16,2007 Page Three

0 to provide all responsive documents to Toshiba’s counsel at our offices in Washington, D.C. by no later than 7 days after the order Einally denying entry of the consent order termination;

0 to join and support a reque& to extend the target date for completion of the investigation to allow the parties at least six months between the date of the order finally denying entry of the consent order termination and the bearing;

0 to join and support a request to extend the pretrial schedule, including but not limited to the dates for submission of expert reports, completion of discovery, and the hearing, by a corresponding period;

0 to fully cooperate in discovery; and

0 to make Tonic’s witnesses available for deposition in the U.S.

Please indicate your and your clients’ agreement to these terms by countersigning and having your clients countersign this letter (execution in counterparts is acceptable) and retuning it to me by fax or email. We then will prepare for your review a draft joint motion for partial termination with respect to the Tonic Respondents, a memorandum supporting the motion, and a stipulation of dismissal of the parallel district court action.

Sincerely,

# /” G.BrianBusey Cowxsel for Toshiba Corpo tion

and Toshiba America Consumer Products, L.L. C.

Enclosures

dc-4960 I 1

Mr. Anton Handal, Esq. July 16,2007 Page Four

WNDERSTOOD AND AGREED:

HANDAL &ASSOCIATES

Anton N. Handal, Esq.

Handal & Associates 1200 3"'Avenue Suite 1321 San Diego, CA 92101 (6 19) 544-6400

DONGGUAN D N l b EECTRONICS CO., LTD.

Dongguan Tonic Electronics Co., Ltd. Shi Tanbu Administrative Zone Tang Xia Town, Dongguan Guangdong Province, China 523717

(signature) (signature)

RARY LJbt dT'4Pf L I 1 i (printed name) (printed name)

Dongguan Xin Lian Digital Technology Co. Ltd. H u n g Jia Bo Industrial Zone Shi Pai Town, Dongguan Guangdong Province, China 523347

Tonic Digital Products Limited Unit B, 10th Floor, Summit Building 30 Man Yue Street Hung Horn, Kowloon, H a g Kong

dc-49601 I

Mr. Anton Handal, Esq. July 16,2007 Page Five

TONIC DV

(signature)

&#?/'I b U (printed name)

b? REc37or4 (position)

Tonic DVB Marketing Ltd. Suite 805, New Tech Plaza Tower A Tian'An Cyber Park Futian District, Shenzhen City Guangdong Province, China 5 18040

TONIC INDEJSTRFS HOLDINGS w LIMITED

.. . (signature)

(printed name)

a?f F d7v R (position)

Tonic Industries Holdings Limited Unit B, 10th Floor, Summit Building 30 Man Yue Street Hung Horn, Kowloon, Hong Kong

(signature) V

g4K.y L N (printed name)

e m (position)

Tonic Electronics Limited Unit B, 10th Floor, S d t Building 30 Man Yue Street Hung Hom, Kowloon, Hong Kong

TONIC TEC!HI$OLOG~ 0-K) IJMTTED

(signature)

G M Y L l L i

P /$ F f 7 w R (printed &e)

(position)

Tonic Technology (HK) Limited Unit B, 10th Floor, Summit Building 30 Man Yue Street Hung Horn, Kowloon, Hong Kong

dc-4960 I 1

Mr. Anton Handal, Esq. July 16,2007 Page Six

TONIC TECHlfOLO@Y (SHENZHEN) LTD .

. (signature)

(position)

Tonic Technology (Shenzhen) Ltd. Suite 805, New Tech Plaza Tower A Tian'An Cyber Park Futian District, Shenzhen City Guangdong Province, China 51 8040

TONIC LTD,

Tonic Trading Development Ltd. Unit 8,lOth Floor, Summit Building 30 Man Yue Streef Hung Hm, Kowloon, Wong Kong

dc-496011

CONTAINS TONIC CONFIDENTIAL BUSINESS INFOMATION SUBJECT TO PROTECTIVE ORDER

UNITED STATES INTERNATIONAL TRADE COMMISSION WASKDIGTON, D.C.

Before the Honorable Carl C. Charneski Administrative Law Judge

In the Matter of

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAINING S A M E

Investigation No. 337-TA-603

JOINT MOTION TO TERMINATE THE INVESTIGATION AS TO THE TONIC RESPONDENTS BASED ON CONSENT ORDER STIPULATION

Pursuant to Commission Rule of Practice and Procedure 2 10.2 1 (c), 19 C.F.R.

210.21(c), Complainants Toshiba Corporation and Toshiba America Consumer Products, L.L.C.

(collectively, “Toshiba”) and Respondents Dongguan Tonic Electronics Co. Ltd.; Dongguan Xin

Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic DVB Marketing Ltd.;

Tonic Electronics (€€K) Ltd.; Tonic Industries Holdings Ltd.; Tonic Technology Limited; Tonic

Technology (Shenzhen) Limited; and Tonic Trading Development Ltd. (collectively, the “Tonic

Respondents”) hereby jointly move to terminate this investigation upon the attached Consent

Order Stipulation (Exhibit 1) and proposed Consent Order (Exhibit 2).

Toshiba has alleged, inter alia, unfair acts and unlawhl methods of competition in the

importation into the United States, the sale for importation into the United States, and the sale

within the United States after importation of certain DVD players and recorders and certain

products containing same that infringe at least claims 6 and 7 of Toshiba’s US. Patent No.

5,587,991 (“the ‘991 patent”); at least claims 16 and 31 of Toshiba’s U.S. Patent No. 5,870,523

dc-49607 1

COIVlMNS TONIC CONFIDENTIAJ., BUSINESS INFORMATION SUBJECT TO PROTECI’lVE ORDER

(“the ‘523 patent”); and at least claim 4 of Toshiba’s U.S. Pate&No. 5,956,306 (“the ‘306

patent”) (collectively, the “patents-in-suit.”) by the Tonic Respondents.

The Tonic Respondents agree that upon entry of the proposed Consent Order by the

Cornmission, the Tonic Respondents will not sell for importation, import into the United States,

or sell in the United States after importation, or knowingly aid, abet, encourage, participate in, or

induce the sale or importation of the products accused in this Investigation and/or any other

infringing DVD player, recorder or product containing the same. Likewise, the Tonic

Respondents will cease and desist directly or indirectly selling for importation, importing into the

United States, or selling in the United States after importation, or knowingly aiding, abetting,

encouraging, participating in, or mducing the sale for importation, importation, or the sale hithin

the United States after importation, of the products accused in this Investigation and/or any other

infringing DVD player, recorder or product containing the same.

The Consent Order Stipulation (attached hereto as Exhibit 1) contains the admissions,

waivers, statements, and other requirements of Commission Rule 21 0.21(c). Toshiba and the

Tonic Respondents submit that entry of the proposed Consent Order (attached hereto as Exhibit

2) and termination of this investigation me in the public interest, which favors the settlement of

disputes to avoid needIess litigation and to conserve public and private resources. Entering the

Consent Order will promote administrative economy by obviating the need for a hearing with

respect to the Tonic Respondents’ activities. Moreover, entering the attached Consent Order will

not impose an undue burden on the public health and welfare, competitive conditions in the U.S.

economy, production of like or directly competitive articles in the United States, or U.S.

consumers.

dc-496071 2

CONTAINS TONIC CONFIDENTIAL. BUSINESS INFORMATION SUBJECT TO PROTECTIVE ORDER

The Commission Investigative Attorney’s position regkrding this Joint Motion is not

known at this time.

For the above reasons, Toshiba and the Tonic Respondents request that the

Administrative Law Judge issue an initial determination terminating this investigation on the

basis of the Consent Order Stipulation and the Proposed Consent Order. Toshiba and the Tonic

Respondents respectfully request that the Consent Order be entered.

Dated: October 5,2007

Anton N. Handal, Esq. Hadal& Associates 1200 3d Avenue Suite 132 1 S an Diego, CA 92 1 0 1 (6 1 9) 544-6400

Counsel for Respondents Dongguan Tonic Electronics Co. Ltd.; Dongguan Xn Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic D Ell Marketing Ltd.; Tonic Electronics (HK) Ltd.; Tonic Industries Holdings Ltd.; Tonic Technology Limited: Tonic Technology (Shenzhen) Limited; and Tonic Trading Development Ltd.

Dated: October 5,2007

G. Brian Busey John L. Kolakowski Michael E. Anderson Morrison & Foerster LLP 2000 Pennsylvania Ave., NW Suite 5500 Washington, DC 20006 Tel: (202) 887-1500 Facsimile: (202) 887-0763

Taro Isshiki Jun Tsutsumi Monison & Foerster LLP AIG Building, 1 1 th Floor

Chi yoda-ku Tokyo 100-0005 Japan

1 - 1-3 Mar~no~chi

Counsel for Complainants Toshiba Corporation and Toshiba America Consumer Products, L.L. C.

3 dc-496071

CONTAINS TONIC CONFIDENTIAL BUSINESS INFORMATION SUBJECT TO PROTECTIVE ORDER

EXHIBIT 1

dc-496071

CONTAINS TONIC CONFIDENTIAL BUSINESS INFORMATION SUBJECT TO PROTECTIVE ORDER

In the Matter of

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAINING S A M E

UNITED STATES INTERNATIONAL TRADE COMMlSSION WASHINGTON, D.C.

Investigation No. 337-TA-603

Before the Honorable Carl C. Charneski Administrative Law Judge

CONSENT ORDER STIPULATION

WHEREAS, the International Trade Commission (the “Commission”) has instituted the above-captioned investigation under Section 337 of the Tariff Act of 1930 as amended (1 9 U.S.C. 0 1337), based upon the allegations in the Complaint filed by Toshiba Corporation and Toshiba America Consumer Products, L.L.C. which alleges unfair acts and unlawful methods of competition in the importation into the United States, the sale for importation into the United States, and the sale within the United States after importation, of certain DVD players and recorders and certain products containing same that inflinge at least claims 6 and 7 of Toshiba’s U.S. Patent No. 5,587,991 (“the ‘991 pateht”); at least claims 16 and 31 of Toshiba’s U.S. Patent No. 5,870,523 (“the ‘523 patent”); and at least claim 4 of Toshiba’s U.S. Patent No. 5,956,306 (“the ‘306 patent”) (collectively, the “patents4wsuit”) by, among others, Respondents Dongguan Tonic Electronics Co. Ltd.; Dongguan Xin Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic DVB Marketing Ltd.; Tonic Electronics (HK) Ltd.; Tonic Industries Holdings Ltd.; Tonic Technology Limited, Tonic Technology (Shenzhen) Limited; and Tonic Trading Development Ltd. (collectively, the “Tonic Respondents”);

WHEREAS, the Tonic Respondents are willing to accept entry of the Consent Order, submitted concui-rently herewith, by the U.S. International Trade Commission and agree to all waivers and other provisions required by 19 C.F.R. $210.21; and

WHEREAS, the Tonic Respondents agree to the terms set forth in the Consent Order.

IT IS HEREBY STIPULATED by and between Toshiba and the Tonic Respondents in. support of the Joint Motion To Terminate the Investigation as to the Tonic Respondents Based on Consent Order Stipulation as follows:

dc-496071

CONTAINS TONIC CONFIDENTIAL BUSINESS INFORMATION SUBJECT TO PROTECTNE ORDER

1.

2.

3.

4.

5.

6 .

7.

8.

9.

The Commission has in rem jurisdiction over the subject matter of this investigation and the Commission has in personam jurisdiction over Toshiba and the Tonic Respondents for purposes of this Consent Order.

Toshiba and the Tonic Respondents expressly waive all rights to seek judicial review or otherwise to challenge or to contest the validity of the Consent Order.

As a condition of terminating the investigation as to the Tonic Respondents, the parties agree not to contest the legal conclusions or findings of fact determined by the Commission in any find detemination in this investigation in an administrative or judicial proceeding to enforce the Consent Order. The foregoing legal conclusions and findings of fact, which shall be the law of the case, include, but are not limited to, any Commission determinations as to infringement.

Toshiba and the Tonic Respondents will cooperate with and will not seek to impede by litigation or other means the Commission’s efforts to gather information under Subpart I of the Commission’s Rules of Practice and Procedure, 19 C.F.R. Part 21 0.

Enforcement, modification, or revocation of the Consent order will be carried out pursuant to Subpart I of 19 C.F.R. Part 210. In determining whether the Tonic Respondents are in violation of the Consent Order, the Commission may infer facts adverse to the Tonic Respondents if they fail to provide adequate or timely information. The Commission may impose upon any person who violates this Consent Order a penalty of not more than the greater of $1 00,000 or twice the domestic value of any articles entered into or sold within the United States for each day on which the Consent Order is violated. The Commission’s assessment of any such penalty shall have the force of a judgment and liability for payment of such penalty shall accrue upon administrative assessment by the Commission.

The Consent Order shall not apply with respect to any asserted claim of the patents- in-suit that has expired or has been found or adjudicated invalid or unenforceable by the Commission or a court or agency of competent jurisdiction, provided that such finding or judgment has become final and nomeviewable.

Toshiba is the bwna of the patents-in-suit.

The Tonic Respondents will not challenge, and are precluded from making any challenges to, the validity of the patents-in-suit in any administrative or judicial proceeding to enforce the Consent Order.

The Tonic Respondents import into the United States, sell for importation into the United States and/or sell after importation into the United States infringing DVD players and recorders and products containing same, including, but not limited to, models jWIN@ JD-VD740 and JD-VD766, MemorexQ MVD-2022, MVD-2023, MVD-2040, MVD-2042 and MVD-4543A, referred to herein as the “Infiinging Tonic Products.”

z dc-496071

10.

11.

12.

13.

14.

15.

CONTAINS TONIC CONFIDENTIAL BUSINESS MFORMATION SUBJECT TO PROTECTIVE ORDER

The Infringing Tonic Products each infihge the asserted claims of the patents-in-suit.

The Tonic Respondents understand and acknowledge that with regard to the information they have provided or will provide in the course of discovery in the Investigation, including but not limited to documents, interrogatory responses, transcripts of sworn deposition testimony and sample products, Toshiba may seek to intwduce such inforhation as evidence in the Investigation after the Tonic Respondents have been terminated as Respondents. The Tonic Respondents hereby waive their right to object to, to rebut, or otherwise to address the hroduction of such evidence into the record of the Investigation.

The Tonic Respondents understand and acknowledge that, if the Commission enters this Consent Order, they will have waived their right to introduce evidence, cross- examine witnesses, and otherwise participate in the Investigation in any fashion.

The Tonic Respondents agree that they will not import into the United States, sell for importation into the United States, or sell within the United States after importation the Infringing Tonic Products and/or any unlicensed DVD players and recorders or products containing same that infringe the asserted claims of the patents-in-suit.

The Tonic Respondents agree that they will cease and desist importing, selling for importation into the United States, and selling within the United States after importation the infringing Tonic Products and/or any unlicensed DVD players and recorders or products containing same that infringe the asserted claims of the patents- in-suit.

This Consent Order Stipulation and Consent Order are in the public interest.

IT IS SO STIPULATED.

dc-496071 3

CONTAMS TONIC CONFIDENTIAL. BUSINESS INFORMATION SUBJECT TO PROTECTIVE ORDER

Dated October 5,2007

Anton N. Handal, Esq. H~I&LI& Associates 1200 3d Avenue Suite 132 I San Diego, CA 92101 (6 i 9) w1-6400

CDunsel for Respondents Dongguan Tonic Electronics Co. Ltd,; Dongguan Xn Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic D VB Marketing Ltd.; Tonic Electronics (ELK) Ltd.; Tonic Industries Holdings Ltd.; Tonic Technology Limited; Tonic Technology (Shenzhen) Limited: and Tonic Trading Development Ltd.

Dated: October 5,2007

G. Brian Busey John L. Kolakowski Michael E. Anderson Morrison & Foerster LLP 2000 Pennsylvania Ave., NW Suite 5500 Washington, DC 20006

Facsimile: (202) 887-0763 Td: (202) 887-1500

Taro Isshiki Jun Tsutsumi Morrison & Foerster LLP AIG Building, 1 1 th Floor 1-1-3 Marunouchi Chi yoda-ku Tokyo 100-0005 Japan

Counsel for Complainants Toshiba Corporation and Toshiba Anierica Consumer Products, L. L. C.

dc-496071 4

CONTAINS TONIC CONFIDENTIAL BUSINESS INFORMATION SUBJECT TO PROTECTnrE ORDER

EXHIBIT 2

dc-496071

CONTAINS TONIC CONFIDENTIAL BUSINESS INFORMATION SUBJECT TO PROTECTIVE ORDER

In the Matter of

CERTAIN DVD PLAYERS AND RECORDERS AND CERTAIN PRODUCTS CONTAINING S A M E

UNITED STATES INTERNATIONAL TRADE COMMISSION WASHINGTON, D.C.

Investigation No. 337-TA-603

Before the Honorable Carl C. Charneski Administrative Law Judge

CONSENT ORDER

The International Trade Commission (the “Commission”) has instituted. the above-captioned investigation under Section 337 of the Tariff Act of 1930 as amended (19 U.S.C. 8 1337), based upon the allegations in the Complaint filed by Toshiba Corporation and Toshiba America Consumer Products, L.L.C. which alleges urifair acts and unlawful methods of competition in the importation into the United States, the sale for importation into the United States, and the sale within the United States after importation, of certain DVD players and reGorders and certain products containing same that infiinge at least claims 6 and 7 of Toshiba’s U.S. Patent No. 5,587,991 (“the ‘991 patent”); at least claims 16 and 31 of Toshiba’s U.S. Pateht Nb. 5,870,523 (“the ‘523 patent”); and at least claim 4 of Toshiba’s U.S. Patent No. 5,956,306 (“the ‘306 patent”) (collectively, the “patents-in-suit”) by, among others, Respondents Dongguan Tonic Electronics Co. Ltd.; Dongguan Xin Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic DVB Marketing La.; Tonic Electronics (HK) Ltd.; Tonic Industries Holdings Ltd.; Tonic Technology Limited; Tonic Technology (Shenzhen) Limited; and Tonic Trading Development Ltd. (collectively, the “Tonic Respondents”).

Toshiba and the Tonic Respondents have executed a Consent Order Stipulation in which the parties agree to the entry of this Consent Order and to all waivers and other provisions as required by the Commission’s Rules of Practice and Procedure, and have filed a joint motion to Terminate this investigation with respect to the Tonic Respondents based on a Consent Order. In particular, Toshiba and the Tonic Respondents have agreed as follows:

1. The Commission has in rem jurisdiction over the subject matter of this investigation and the Commission has inpersonam jurisdiction over Toshiba and the Tonic Respondents for purposes of this Consent Order.

2. Toshiba and the Tonic Respondents expressly waive all rights to seek judicial review or otherwise to challenge or to contest the validity of the Consent Order.

dc-496071

CONTAINS TONIC CONFIDENTIAL, BUSII\SESS INFORMATION SUBJECT TO PROTECTIVE ORDER

3.

4.

5 :

6.

7.

8.

9.

10.

11 .

As a condition of terminating the investigation as to the Tonic Respondents, the parties agree not to contest the legal conclusions or findings of fact determined by the Commission in any final determination in this investigation in an administrative or judicial proceeding to enforce the Consent Order. The foregoing legal conclusions and findings of fact, which shall be the law of the case, include, but are not Iimited to, any Commission determinations as to infringement.

Toshiba and the Tonic Respondents will cooperate with and will not seek to impede by litigation or other means the Commission’s efforts to gather information under Subpart I of the Commission’s Rules of Practice and Procedure, 19 C.F.R. Part 210.

Enforcement, modification, or revocation of the Consent order will be carried out pursuant to Subpart I of 19 C.F.R. Part 21 0. In determining whether the Tonic Respondents are in violation of the Consent Order, the Commission may infer facts adverse to the Tonic Respondents if they fail to provide adequate or timely information. The Commission may impose upon any person who violates this Consent Order a penalty of not more than the greater of $1 00,000 or twice the domestic value of any articles entered into or sold within the United States for each day on which the Consent Order is VioIated. The Commission’s assessment of any such penalty shall have the force of a judgment and liability for payment of such penalty shall accrue upon administrative assessment by the Commission.

The Consent Order shall not apply with respect to any asserted claim of the patents- in-suit that has expired or has been found or adjudicated invalid or unenforceable by the Commission or a court or agency of competent jurisdiction, provided that such finding or judgment has become final and nonreviewable.

Toshiba is the owner of the patents-in-suit.

The Tonic Respondents will not challenge, and are precluded fiom making any challenges to, the validity of the patents-in-suit in any administrative or judicial proceeding to enforce the Consent Order.

The Tonic Respondents import into the United States, sell for importation into the United States andor sell after importation into the United States infringing DVD players and recorders and products containing same, including, but not limited to, models jWIN@ JD-VD740 and JD-VD766, MemorexB MVD-2022, MVD-2023, MVD-2040, MVD-2042 and MVD-4543A, referred to herein as the “Infringing Tonic Products.”

The Infiging Tonic Products each infringe the asserted claims of the patents-in-suit.

The Tonic Respondents understand and acknowledge that with regard to the information they have provided or will provide in the course of discovery in the Investigation, including but not limited to documents, interrogatory responses, transcripts of sworn deposijion testimony and sample products, Toshiba may seek to

dc-496071 2

CONTAINS TONIC COWIDENTIAL BUSINESS INFORMATION SUBJECT TO PROTECTIVE ORDER

introduce such information as evidence in the Investigation after the Tonic Respondents have been terminated as Respondents. The Tonic Respondents hereby waive their right to object to, to rebut, or otherwise to address the introduction of such evidence into the record of the Investigation.

12. The Tonic Respondents understand and acknowledge that, if the Commission enters this Consent Order, they will have waived their right to introduce evidence, cross- examine witnesses, and otherwise participate in the Investigation in any fashion.

13. The Tonic Respondents agree that they will not import into the United States, sell for importation into the United States, or sell within the United States after importation the Infringing Tonic Products and/or any unlicensed DVD players and recorders or products containing same that infringe the asserted claims of the patents-in-suit.

14. The Tonic Respondents agree that they will cease and desist importing, selling for importation into the United States, and selling within the United State-s after importation the Infringing Tonic Products and/or any unlicensed DVD players and recorders or products containing same that infiinge the asserted claims of the patents- in-suit.

NOW, THEREFORE, the Commission issues the following Consent Order:

1. Upon the entry of this Consent Order, the Tonic Respondents will not directly or indirectly sell for importation, import into the United States, or sell in the United States after importation, or knowingly aid, abet, encourage, participate in, or induce the sale for importation, importation, or the sale within the United States after i.mportation, of the hfiinging Tonic Products and/or any other infiinging DVD player, recorder or product containing the same.

2. Upon the entry of this Consent Order, the Tonic Respondents will cease and desist directly or indirectly selling for importation, importing into the United States, or selling in the United States after importation, or knowiagly aiding, abetting, encouraging, participating in, or inducing the sale for importation, importation, or the sale within the United States after importation, of the Infiinging Tonic Products and/or any other infiinging DVD player, recorder or product containing the same.

3. This Consent Order shall be appIicable to and binding upon the Tonic Respondents, their officers, directors, agents, servants, employees, affiliates and all persons, firms, or corporations acting or claiming to act on their behalf or under their direction or authority.

4. Toshiba and the Tonic Respondents shall be precluded fiom seeking judicial review or otherwise challenging or contesting the validity of this Consent Order.

5. As a condition of terminating the investigation as to the Tonic Respondents, the parties agree not to contest the legal conclusions or findings of fact determined by the Commission in any final determination in this investigation in an administrative or

dc49607 1 3

6.

7.

8.

9.

10.

11.

CONTAINS TONIC CONFIDENTIAL BUSINESS INFORMATION SUBJECT TO PROTECTIVE ORDER

judicial proceeding to enforce the Consent Order. The foregoing legal conclusions and findings of fact, which shall be the law of the case, include, but are not limited to, any Commission determinations as to infkingement.

Toshiba and the Tonic Respondents wiU cooperate with and will not seek to impede by litigation or other means the Commission’s efforts to gather information under Subpart I of the Commission’s Rules of Practice and Procedure, 19 C.F.R. Part 210.

The Tonic Respondents will not challenge, and are precluded from making any challenges to, the validity of the patents-in-suit in any administrative or judicial proceeding to enforce the Consent Order.

This Consent Order shall become null and void on the latest of the dates of expiration of the ‘991 patent, the ‘523 patent and the ‘306 patent.

If any asserted claim of the patents-in-suit is adjudicated valid or unenforceable by the Commission or a court or agency of competent jurisdiction, in a final and non- appealable decision, this Consent Order shall become null and void as to such invalid or unenforceable claim.

The Tonic Respondents shall be excluded from any further remedial action taken by the Commission in this Investigation. Nothing in this Consent Order, however, shall be construed as precluding further remedial action by the Commissi.on in this Investigation.

This Investigation is hereby terminated with respect to the Tonic Respondents, and the Tonic Respondents are hereby dismissed as respondents in this Investigation; provided, however, that enforcement, modification, or revocation of the Consent order will be carried out pursuant to Subpart I of 19 C.F.R. Part 21 0. h determining whether the Tonic Respondents are in violation of the Consent Order, the Commission may infer facts adverse to the Tonic Respondents if they fail to provide adequate or timely information. The Commission may impose upon any person who violates this Consent Order a penalty of not more than the greater of $100,000 or twice the domestic value of any articles entered into or sold within the United States for each day on which the Consent Order is violated. The Commission’s assessment of any such penalty shall have the force of a judgment and liability for payment of such penalty shall accrue upon administrative assessment by the Commission.

Dated: BY ORDER OF THE COMMISSION

Marilyn R. Abbott Secretary

4 dc49607 1

EXHIBIT D

July 26,2007

T E L E P H O N E 202.887. I5 0 0 D E N V E R . NORTHlRN V I P G I N I A . O R A N G E COUNTY. S A C P A Y E N T O ,

202‘887‘0763 W A L N U T C R E E K , C E N T U R Y C I T Y

T O K Y O , L O N D O N , 8 1 I I I N G . S H A N G H A I . H O N G I O N G . S I N G A P O R E , B I I U S S I L S

WWW.MOPO.COM

Writer’s Direct Contact 202.887.1504 GBusey@mofo.com

SUBJECT TO Fl2E 408 AND OTHER APPLICABLE SETTLEMENT PRIVILEGES

Via Email and UPS

Anton Handal, Esq. Handal & Associates 1200 Third,Avenue Suite 1321 San Diego, CA 92101

Re: Certain DVD Players and Recorders and Certain Products Containing Same, Inv. No. 337-TA-603 and Toshiba Corp. v. Daewoo Electronics America, Inc., C-7-1949 (N.D. Cal.)

Dear Mr. Handal:

We understand that Tonic Digital Products Limited has executed a license agreement and accompanying side letter agreement that will cover, among other patents, Toshiba Corporation’s (“Toshiba”) essential DVD patents that are the subject of the above-referenced proceedings. As set forth in our July 16,2007 letter agreement, if the license becomes valid and effective upon receipt of the second payment required by the side letter (on or before October 1,2007), Toshiba will file a joint motion with Tonic to terminate the ITC proceeding and a stipulation of dismissal of the district court action within ten (1 0) business

Also as discussed in the July 16,2007 1 tter agreement, your clients Respondents Tonic DVB

days thereafter.

Marketing Ltd.; Tonic Electronics @H$ td.; Tonic Industries Holdings Ltd.; Tonic Technology Limited; Tonic Technology (Shenzhen) Limited; and Tonic Trading Development Ltd. are ineligible to be considered licensed “Affiliates” under the terms of the license. In order to satisfy Toshiba that the above-referenced litigations against these Respondents may be ended even though they are not covered by any license, your clients have agreed to countersign this letter, which shall serve as their representations that:

v

dc-497 144

Mr. Anton Handal, Esq. July 26,2007 Page Two

1. each entity is not in the business of manufacturing, selling, distributing or importing to the US. any DVD products, and

each entity has not and will not in the.future sell, distribute, import or otherwise market DVD products in the U.S. except for DVD products covered by a license to Toshiba’s patents-in-suit.

2.

I look forward to receiving your clients’ signed acknowledgement of these restrictions. After execution, please return the original of this letter agreement to me at the address above.

Sincerely,

G. Brian Busey U Counsel for Toshiba Coporation

and Toshiba America Consumer Products, L.L. C.

Attachment

UNDERSTOOD AND AGREED:

TONIC DVV LTD.

(signature) (signature)

TONIC ELEC ON1 S LIMITED

L4.L Y .L/N

h f F e 7 t Z

GAR r L/&t (printed name) (printed name)

(position) (position)

Tonic DVB Marketing Ltd. Suite 805, New Tech Plaza Tower A Tian’An Cyber Park Futian District, Shenzhen City Guangdong Province, China 51 8040

Tonic Electronics Limited Unit B, 10th Floor, Summit Building 30 Man Yue Street Hung Hom, Kowloon, Hong Kong

dc-497144

Mr. Anton Handal, Esq. July 26,2007 Page Three

LIMITED

(signature) ' k A R Y LIL(

m? FPTo[ (printed name)

(position)

Tonic Industries Holdings Limited Unit B, 10th Floor, Summit Building 30 Man Yue Street Hung Horn, Kowloon, Hong Kong

TONIC TQCHNQLOGY (SHENZHEN)

(Signature)

G.#KY c / M

DI[ w 7 0 R

(printed name)

(position)

Tonic Technology @b&) Limited Unit By 10th Floor, Summit Building 30 Man Yue Street Hung Horn, Kowloon, Hong Kong

TONIC T F h 4 E N T LTD.

(signature) '

& y R y LlLt

b / R i? L7oR

(printed name)

(position)

(signature)

ARY 11i.i (printed name)

2 / f 8 f 7 o R (position)

Tonic Technology (Shenzhen) Ltd. Suite 805, New Tech Plaza Tower A Tian'An Cyber Park Futian District, Shenzhen City Guangdong Province, China 51 8040

Tonic Trading Development Ltd. Unit B, 10th Floor, Summit Building 30 Man Yue Street Hung Hom, Kowloon, Hong Kong

dc-497144

EXHIBIT E

. . . . . .

July 25,2007

TELEPHONE aoz.887.1500 V E N V I R , N O E T H E R N V I R G I N I A . F~~~~~~~~ 2 0 2 . 8 8 7 . 0 7 6 3 O R A N G E C O U N T Y . S A C R A M E N T O .

W A L N U T C R E E K , C E N T U X Y C l T Y

WWW.MOPO.COM T O K Y O , L O N D O N . B T I I I N C , S H A N G H A I . H O N C K O N C , S I N G A P O R K . B R U S S Z L S

Writer’s Direct Contact 202.887.1504 GBusey@mofo.com

SUBJECT TO FRE 408 AND OTHER APPLICABLE SETTLEMENT PRINCIPLES

Via E-Mail and UPS

Anton Handal, Esq. Handal & Associates 1200 Third Avenue Suite 123 1 San Diego, CA 92101

Re: Certain D VD Players and Recorders and Certain Products Containing Same, Inv. No. 337-TA-603 and Toshiba Corp. v. Daewoo Electronics America, Inc., C-7-1949 (N.D. Cal.)

Dear Mr. Handal:

This letter follows up and amends my letters dated July 16,2007 which set forth the terms under which Toshiba Corporation and Toshiba America Consumer Products, L.L.C. (collectively ‘Toshiba”) will agree to move to terminate and dismiss the above-referenced proceedings with respect to Starlight’ and Tonic2.

Pursuant to your request, in the event Starlight or Tonic fails to make the required second payment under the DVD6C Side Letter on or before October 1 , 2007, on behalf of Toshiba we agree to provide notice before filing any agreed-upon joint motion to terminate the ITC investigation based upon a consent order described in and attached to the July 16 letter to which Starlight and Tonic have agreed. Further, on behalf of Toshiba we agree not to file the agreed-upon joint motion to terminate based on a consent order until five (5 ) calendar days after such notice is sent. Such notice will be delivered by email A d facsimile to:

’ “Starlight” collectively refers to the three Respondent Starlight entities: Starlight Electronics Co., Ltd; Starlight International Holdings Ltd.; and Starlight Marketing (HK) Ltd. “Tonic” collectively refers to the nine Respondent Tonic entities: Dongguan Tonic Electronics, Co. Ltd.;

Dongguan Xin Lian Digital Technology Co., Ltd.; Tonic Digital Products Limited; Tonic DVB Marketing Ltd.; Tonic Electronics (HK) Ltd.; Tonic Industries Holdings Ltd.; Tonic Technology Limited; Tonic Technology (Shenzhen) Limited; and Tonic Trading Development Ltd.

dc-496897

. .

Anton Handal, Esq. July 25,2007 Page Two

Anton Handal Handal & Associates 1200 Third Avenue Suite 132 1 San Diego, CA 92101 Facsimile: (619) 696-0323 Email: anh@handal-1aw.com

In all other respects, the terms of the July 16,2007 letter agreements, the joint motions to terminate and attached consent orders between Toshiba and the Starlight and Tonic Respondents remain unamended and in fit11 force.

Sincerely,

Counsel for Toshiba Co Toshiba America Consumer Products L.L. C.

UNDERSTOOD AND AGREED:

Anton Handal Counsel for the Starlight and Tonic Responden&

dc-496897