EXCLUSIVE LICENSE AGREEMENT

Exhibit 10.69

EXECUTION VERSION

EXCLUSIVE LICENSE AGREEMENT

This EXCLUSIVE LICENSE AGREEMENT (this “Agreement” ) is made and entered into as of August 8, 2006 (the “Agreement Date” ), by and between DTS, Inc., a Delaware corporation ( “DTS” ), and Avica Technology Corporation, a California corporation ( “Avica” ).

1               DEFINITIONS

All defined or abbreviated terms in this Agreement have the meaning assigned to them in this Agreement and will apply both to their singular and plural forms, as applicable.  “H/herein,” “hereof” and “hereunder” or similar expressions refer to this Agreement.  All references to “Section” refer to sections in this Agreement, and all references to “Exhibit” are to Exhibits A, B, and C attached and incorporated hereto.  Except where expressly identified, all references to “days” are to calendar days.  DTS and Avica are individually sometimes referred to in this Agreement as a “party” and collectively as the “parties.”

1.1           “Affiliate” means, with respect to any person, any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person.

1.2           “Avica Products” means all of Avica’s product lines in existence, and any other products or technologies under development by or on behalf of Avica, as of the Closing Date, including ***.

1.3           “business day” (whether such term is capitalized or not) means any day other than Saturday, Sunday or a legal holiday that banks located in Los Angeles, California are closed for business.

1.4           “Confidential Information” means with respect to a party hereto (the “Disclosing Party” ), collectively:  (i) all technical, financial and/or business information of any kind whatsoever, including all data, compilations, blueprints, plans, audio and/or video recordings and/or devices, information on computer disks, software, source code, object code, tapes, printouts and other printed, typewritten or handwritten documents, specifications, systems, schemas, methods (including delivery, storage, receipt, transmission, presentation and manufacture of audio, video, informational or other data or content), strategies, business or marketing development plans, customer lists, research projections, processes, techniques, designs, sequences, components, programs, technology, ideas, know-how, improvements, inventions (whether or not patentable or copyrightable), information about operations and maintenance, trade secrets, formulae, models, patent disclosures, information regarding the skills and compensation of the Disclosing Party’s employees, information concerning the actual or anticipated business, research or development of the Disclosing Party or its actual or potential customers or partners, information which is or has been generated or received in confidence by or for the Disclosing Party by or from any person; (ii) any and all tangible and intangible embodiments thereof of any kind whatsoever including all compositions, machinery, apparatus, records, reports, drawings, copyright applications, patent applications, documents, samples, prototypes, models, products and the like; and (iii) any extensions or derivatives thereof of any kind whatsoever.   Notwithstanding the foregoing, Confidential Information does not include information that the Recipient proves:  (a) is or becomes generally known to the public through no fault or breach of this Agreement by the Recipient; (b) is known to the Recipient at the time of disclosure without an obligation of confidentiality; (c) is entirely independently developed by the

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Recipient without any access or reference to or use of the Disclosing Party’s Confidential Information; (d) the Recipient rightfully obtains from a third party without restriction on use or disclosure; or (e) is disclosed publicly with the prior written approval of the Disclosing Party.  Information shall not be deemed to be in the public domain solely as a result of the individual elements being separately found in the public domain.

1.5           ***

1.6           “Derivative Work” means a work that is based on or derived from the Licensed Products or Documentation, including any improvements, developments, alterations, derivatives, updates, revisions, enhancements, modifications, translations, abridgments, condensations, expansions or any other form in which a Licensed Product or the Documentation may be recast, transformed or adapted.  For purposes of this Agreement, a “Derivative Work” also includes any compilation that incorporates a Licensed Product or the Documentation.

1.7           “Documentation” means all documentation relating to the Licensed Products provided by Avica to DTS.

1.8           “Encumbrance” means any mortgage, pledge, security interest, lien, option, charge, claim, covenant, condition, restriction, encumbrance or any third-party claim of any kind or nature whatsoever.

1.9           “Engineering Tools” means all product and sub-system architectural designs, electrical schematics, printed circuit board designs, mechanical design drawings, fabrication drawings, binary images and source files for all programmable parts, software tools, including those for compiling programmable part source files, test jigs (including electrical, mechanical and software design files used to create the test jigs), test procedures, test software (including source files, build scripts, tools for building the test software), product software in the form of disk image files, Source Code, build scripts, all software tools invoked by the build scripts, Source Code and build scripts for any software or hardware tools that were developed by or on behalf of Avica that directly or indirectly relate to the Avica Products.

1.10         “Errors” means any reproducible error, omission or defect in a Licensed Product that creates a material adverse affect to the Licensed Product and/or the ability to use the Licensed Product as intended.

1.11         “Field” means any fields of use other than military applications.

1.12         “GAAP” means United States generally accepted accounting principles consistently applied.

1.13         “Intellectual Property Rights” or “ IP” means any and all patents (and reissues, divisionals, continuations, continuations-in part, and extensions thereof), patent rights (including patent applications, renewals and disclosures), business processes, manufacturing or development plans, trademarks, trade names, service marks, service names, goodwill, trade secrets, know-how, designs, mask works, copyrights, moral rights, database rights, and any other form of proprietary protection, or any applications for the foregoing, which arise or are enforceable under the laws of the U.S. or any other jurisdiction or any bi-lateral or multi-lateral treaty regime.

1.14         “Licensed IP” means the Owned IP and Third Party IP.

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1.15         “Licensed Products” means one or more products, the development, improvement, manufacture, license, sale or any other use of which by DTS or its sublicensees, or the intended use of which incorporate or use Licensed IP or which are covered in whole or in part by a valid claim under the patents and patent applications included in the Licensed IP.  For purposes of this Agreement, “Licensed Products” includes the Avica Products and the Engineering Tools, including any or all portions or components thereof.

1.16         “Licensed Services” means the development or performance of one or more services by DTS or a sublicensee for or on behalf of DTS or a third party, which development or performance incorporates or uses Licensed IP or which is covered in whole or in part by a valid claim under the patents and patent applications included in the Licensed IP.

1.17         “Object Code” means software assembled or compiled in magnetic or electronic binary form on software media, which are readable and usable by machines, but not generally readable by humans without reverse assembly, reverse compiling or reverse engineering.

1.18         “Operative” means substantially conforming to the Specifications and otherwise performing substantially in accordance with the applicable performance standards and functioning without Errors.

1.19         “Option Agreement” means that certain Option Agreement, entered into by the parties as of the date hereof.

1.20         “Owned IP” means all Intellectual Property Rights owned by Avica, as set forth on Exhibit A .

1.21         “Publicly Available Software” means each of (a) any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as open source software (e.g., Linux) or through similar licensing or distribution models; and (b) any software that requires as a condition of use, modification and/or distribution of such software that such software or other software incorporated into, derived from or distributed with such software (i) be disclosed or distributed in source code form; (ii) be licensed for the purpose of making derivative works; or (iii) be redistributable at no charge.  Publicly Available Software includes software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following, including: (A) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL), (B) The Artistic License (e.g., PERL), (C) the Mozilla Public License, (D) the Netscape Public License, (E) the Sun Community Source License (SCSL), (F) the Sun Industry Source License (SISL), and (G) the Apache Server license.

1.22         “Related Agreements” means the Option Agreement, the Voting Agreement, the Escrow Agreement and all other agreements entered into in connection therewith.

1.23         “Source Code” means software written in programming languages, including all comments and procedural code, such as job control language statements, in a form intelligible to trained programmers and capable of being translated into Object Code for operation on computer equipment through assembly or compiling, and, to the extent available, accompanied by documentation, including flow charts, schematics, statements of principles of operations, and architecture standards, describing the data flows, data structures, and control logic of the software in sufficient detail to enable a trained programmer through study of such documentation to maintain and/or modify the software without undue experimentation.

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1.24         “Specifications” means the descriptions, functionality requirements, features, performance criteria, attributes, technical characteristics and components of the Licensed Products.

1.25         “Avica Stockholders” means the holders of the shares of Avica’s Common Stock.

1.26         “Thirty Party IP” means all Intellectual Property Rights licensed to Avica or any of its subsidiaries by a third party pursuant to a Third Party License or Third Party Licenses that are currently used in the conduct of Avica’s business (as conducted or as such business is presently contemplated to be conducted) or are relevant to the Field, as set forth on Exhibit A .  For purposes of this Agreement, “Third Party IP” includes the Publicly Available Software identified on Exhibit A .

1.27         “Third Party License(s)” means all written or verbal contracts, licenses and agreements to which Avica or any of its subsidiaries is a party and pursuant to which a third party has licensed or transferred any Third Party IP to Avica or any of its subsidiaries as of the Agreement Date (excluding commercial off-the-shelf or shrink wrap licenses of computer software), as set forth on Exhibit A .

1.28         “Transition Period” means the period beginning on the Agreement Date and ending on the License Closing Date.

1.29         “Territory” means worldwide.

1.30         “Voting Agreement” shall have the meaning set forth in the Option Agreement.

2                                          DELIVERABLES

2.1           Delivery .    Within five (5) days after the Agreement Date, Avica shall deliver to DTS, at a minimum, the following to the extent within Avica’s possession or reasonable control (individually and collectively, the “Deliverables” ):

2.1.1        one (1) copy of the Source Code for each Avica Product in softcopy form;

2.1.2        one (1) copy of the Object Code for each Avica Product in softcopy form;

2.1.3        one (1) copy of the Documentation in softcopy form;

2.1.4        a complete disk image of each build system needed to build each Avica Product, including the complete Source Code control database, all current commercial build tools, all custom-built software tools and complete build scripts (provided that DTS will be responsible for obtaining necessary licenses for all commercial off-the-shelf or shrink wrap computer software, which shall be identified in writing by Avica within five (5) days after the Agreement Date);

2.1.5        complete design and manufacturing documentation for all printed circuit boards used in each Avica Product, including a complete disk image of the circuit board design system, including all current versions of schematic and printed circuit board source files and current software tools for making Gerber files and drill drawings for each Avica Product;

2.1.6        complete design and manufacturing documentation for all mechanical components for each Avica Product, including a complete disk image of the mechanical design system, including all current versions mechanical drawings and current software tools, including all assembly and fabrication drawings and packaging designs;

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2.1.7        a complete disk image of the Avica Product documentation system, including complete sources for all manuals of any kind; and

2.1.8        full manufacturing records, including detailed purchasing information for every build cycle for each Avica Product, including full details for any sub-contracted manufacturing, including mechanical parts and printed circuit boards, as well as sub-system suppliers, printers and packaging suppliers.

2.2           Acceptance .   DTS shall have a period of thirty (30) days from the date of delivery of the Deliverables as provided in Section 2.1 for inspection and testing (the “Acceptance Testing” ) of such Deliverables to ascertain that such Deliverables (i) are Operative; and (ii) substantially conform to the Documentation (the “Acceptance Criteria” ).  At the conclusion of Acceptance Testing, DTS will inform Avica in writing whether the Source Code is accepted or rejected for failure to satisfy the Acceptance Criteria.  If the Source Code is properly rejected, Avica, at its own expense and at no cost to DTS, will use the remaining time during the Transition Period to satisfy the Acceptance Criteria and re-deliver the Source Code to DTS. 

2.3           Engineering Tool Updates .   During the Transition Period, Avica shall provide DTS, at its own expense and at no cost to DTS, with any updates of the Engineering Tools to the extent such updates are within Avica’s possession or reasonable control. 

3               LICENSES

3.1           Licensed Products .  Subject to the terms and conditions of this Agreement, and effective as of the License Closing, Avica hereby grants to DTS an exclusive (even as to Avica, but subject to the Permitted Encumbrances), irrevocable, fully paid-up, royalty-free, license and right during the License Term to (the “Exclusive License” ):

3.1.1        develop, produce or have produced Derivative Works, make, have made, use, sell, offer for sale, have sold, import, export, reproduce, perform, display, distribute, have distributed and otherwise exploit Licensed Products and Licensed Services within the Field in the Territory; and

3.1.2        allow others to exercise any such rights on behalf of DTS, including the right to sublicense any and all of the rights in Sections 3.1.1 to a third party; provided, however, that DTS shall not, without Avica’s prior written consent, have the right to enter into any sublicense(s) (whether in a single transaction or pursuant to a series of transactions) that would have the effect of transferring all or substantially all of DTS’ rights and obligations under the Exclusive License with respect to commercialization of the Licensed IP to one or more unaffiliated third parties.

3.2           Documentation .  Subject to the terms and conditions of this Agreement, Avica hereby grants to DTS an exclusive (even as to Avica, but subject to the Permitted Encumbrances), irrevocable, fully paid-up, royalty-free, license and right during the License Term to:

3.2.1        use and reproduce the Documentation to support the license rights granted in Section 3.1 ;

3.2.2        modify the Documentation to produce or have produced Derivative Works thereof; and

3.2.3        distribute the Documentation and any Derivative Works thereof directly or through DTS’ channels of distribution to end users in conjunction with the marketing, sale, support and maintenance of the Licensed Products, Licensed Services and/or DTS’ products and services.

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3.3           Exclusivity .   For the avoidance of doubt, except as otherwise specifically stated herein, Avica acknowledges and agrees that during the License Term, notwithstanding anything to the contrary expressed or implied herein, Avica shall not, without DTS’ prior written consent, directly or indirectly create, develop, grant further licenses, distribute, market, make, use, sell, import, export or otherwise commercialize or make available any products in, for, or provide any services to any third party in the Field.

3.4           End User License Agreements .  The end users’ use of the Licensed Products will be governed by and subject to an end user license agreement, which will be reasonably similar to the end user license agreements DTS generally uses for its own products or services.

4                                          OWNERSHIP

4.1           Reservation of Rights .

4.1.1        Subject only to the licenses and rights specifically granted herein to DTS, as between the parties, Avica and its licensors shall retain ownership of all rights, title and interest in and to the Licensed IP, the Avica Products and the Documentation, and all copies thereof.

4.1.2        Each party reserves all rights not expressly granted in this Agreement, and no licenses are granted by either party to the other under this Agreement, whether by implication, estoppel or otherwise, except as expressly set forth herein.

4.2           Ownership of Derivative Works .

4.2.1        Subject to the provisions in Section 4.1 and 16.7 , DTS shall have sole and exclusive ownership of all right, title and interest in and to the Derivative Works of the Licensed Products or Documentation created or developed by or on behalf of DTS, all copies thereof, and all modifications and enhancements thereto (including ownership of all Intellectual Property Rights pertaining thereto, but excluding ownership of any underlying Intellectual Property Rights owned by Avica prior to the Agreement Date).  Upon DTS’ request, Avica shall assist DTS in every reasonable way, including by executing appropriate documents, at DTS’ expense and request, to secure for DTS’ benefit all Intellectual Property Rights in and to the Derivative Works (other than any underlying Intellectual Property Rights owned by Avica prior to the Agreement Date).  If Avica is unable to fulfill its obligations under this Section 4.2.1 , Avica hereby constitutes and appoints DTS the true and lawful attorney of Avica, with full power of substitution, in the name of Avica, for the benefit of DTS to execute and deliver all such assignments, assurances or other documents, and to take and do all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in or to the Derivative Works.

4.2.2        Notwithstanding anything herein to the contrary, DTS may choose to develop or not to develop such Derivative Works at its sole option, and DTS is not obligated to develop such Derivative Works.

4.3           Joint Intellectual Property Rights .

4.3.1        DTS and Avica do not anticipate that any jointly created or developed Intellectual Property Rights will arise as a result of the relationship between the parties.  Nevertheless, as the possibility of jointly created or developed Intellectual Property Rights cannot be entirely ruled out, and in order to avoid the formidable legal and business complications associated with joint intellectual property ownership, the parties hereby allocate ownership of all jointly created

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or developed Intellectual Property Rights (the “Joint IPRs” ) solely to DTS.  Upon DTS’ request, Avica shall assist DTS in every reasonable way, including by executing appropriate documents, at DTS’ expense and request, to secure for DTS’ benefit all Intellectual Property Rights in and to the Joint IPRs.  If Avica is unable to fulfill its obligations under this Section 4.3.1 , Avica hereby constitutes and appoints DTS the true and lawful attorney of Avica, with full power of substitution, in the name of Avica, for the benefit of DTS to execute and deliver all such assignments, assurances or other documents, and to take and do all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in or to the Joint IPRs.

4.3.2        For the avoidance of doubt, DTS does not license to Avica, and Avica has, and shall have, no rights with respect to, any of DTS’ Intellectual Property Rights, including Joint IPRs, under this Agreement.

4.4           Trademarks .

4.4.1        During the License Term, Avica hereby grants to DTS an exclusive (even as to Avica, but subject to the Permitted Encumbrances), worldwide, royalty-free and limited license and right to use the name, logos, trademarks and service marks of Avica set forth on Exhibit B ( “Marks” ) solely in the Field in connection with DTS’ rights and obligations under this Agreement.  DTS’ use of the Marks shall comply with Avica’s trademark guidelines, as provided by Avica to DTS in writing from time to time.  Subject only to the licenses and rights specifically granted herein to DTS, DTS acknowledges that Avica owns all Intellectual Property Rights in the Marks.

4.4.2        DTS agrees to use its commercially reasonable efforts to maintain trademark registrations for the Marks in the jurisdictions identified on Exhibit B (the “ Key Marks ”) for a period beginning on the Agreement Date and ending on the third anniversary of the Agreement Date; provided, however, that such obligation shall apply solely to the extent that, in DTS’ reasonable judgment, such Key Marks do not infringe upon the rights of any third party.  In the event that DTS, in its sole discretion, determines not to maintain the trademark registrations for the Key Marks in any of the jurisdictions identified on Exhibit B following expiration of such three-year period, during the remainder of the License Term following expiration of such three-year period, (i) DTS shall provide written notification to Avica of such decision, and (ii) Avica shall have the right to take any reasonable actions to maintain such registrations that DTS does not maintain.

4.4.3        Avica, at DTS’ request and expense, shall during the License Term: (i) execute all applications for trademark registrations, assignments or other applicable documents and (ii) perform any other act reasonably necessary for DTS to secure or maintain any and all of the Mark rights in any country in which DTS is marketing a product or service in association with a Mark.

4.4.4        Subject to the other provisions of this Section 4.4 , the parties acknowledge and agree that DTS, in its sole discretion, is entitled to reproduce, market, distribute, sell and sublicense the Licensed Products and Licensed Services under DTS’ own name, trademarks or other designations of origin.

5                                          DTS OBLIGATIONS

DTS agrees to provide training and support to its sales and marketing personnel and representatives to enable them to market and distribute the Licensed Products and Licensed Services in the Field during the License Term.

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6               AVICA OBLIGATIONS

6.1           Knowledge Transfer .  During the Transition Period, Avica shall begin the knowledge transfer process relating to the Licensed IP, Avica Products and Documentation and shall otherwise work cooperatively with DTS to prepare DTS to exploit the licenses and rights granted herein.

6.2           Referrals .   During the License Term, Avica shall refer to DTS all inquiries and prospects that would be reasonably likely to be relevant to a transaction involving a Licensed Product or Licensed Service in the Field.

6.3           Insurance .   During the License Term, Avica shall obtain and maintain the following insurance policies (to the extent applicable):  (i) workers’ compensation; and (ii) fire, liability and other forms of insurance as required under Third Party Licenses or other agreements relating to the Licensed IP.  Avica shall be given 30 days to cure any breach of this Section 6.3 , as long as such breach is not a violation of Avica’s obligations to comply with applicable laws.

7                                          CONSIDERATION

7.1           Fees .  Subject to the terms and conditions of this Agreement, as consideration for the Exclusive License, at the License Closing, DTS shall:

7.1.1        pay $500,000 in cash to Avica; and

7.1.2        deposit $4,500,000 into an escrow account (the “Liability Escrow” ) to be established with a third party escrow agent selected by DTS (the “Escrow Agent” ), subject to the terms and conditions set forth in an escrow agreement to be entered into by DTS, Avica and the Escrow Agent (the “Escrow Agreement” ).

7.2           Liability Escrow .

7.2.1        Avica shall identify all of its liabilities on a schedule (the “Schedule of Liabilities” ) in the Escrow Agreement, and Avica shall represent and warrant to DTS that the liabilities listed on the Schedule of Liabilities represent all liabilities of Avica as of the License Closing.  The Schedule of Liabilities may be amended from time to time by mutual written consent of the parties.  Upon execution of this Agreement, Avica shall deliver to DTS a schedule of all of Avica’s liabilities as of the date hereof, including the identi