Document:

Exhibit 10.3

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES. 

    

    COMMON
      STOCK PURCHASE WARRANT

    

    THEATER
      XTREME ENTERTAINMENT GROUP, INC.

    

    
      	
              Warrant
                Shares: 560,000 

            	
              Initial
                Exercise Date: December 22, 2006

            

    

    

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
      received, Kinzer Technology, LLC, a Virginia limited liability company (the
      “Holder”), is entitled, upon the terms and subject to the limitations on
      exercise and the conditions hereinafter set forth, at any time on or after
      the
      date hereof (the “Initial Exercise Date”) and on or prior to the close of
      business on the fifth anniversary of the Initial Exercise Date (the “Termination
      Date”) but not thereafter, to subscribe for and purchase from Theater Xtreme
      Entertainment Group, Inc., a Florida corporation (the “Company”), up to 560,000
      shares (the “Warrant Shares”) of common stock, par value $0.001 per share, of
      the Company (the “Common Stock”). The purchase price of one share of Common
      Stock under this Warrant shall be equal to the Exercise Price, as defined in
      Section 2(b).

    

    Section
      1.  Definitions.
      Capitalized terms used and not otherwise defined herein shall have the
      respective meanings set forth in that certain Securities Purchase Agreement
      (the
“Purchase Agreement”), dated the date hereof, by and between the Company and
      Holder.

     

    Section
      2.  Exercise.

     

    (a)  Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivery to the Company of a duly executed
      facsimile copy of the Notice of Exercise Form annexed hereto (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of Holder appearing on the books of the
      Company); and, within three (3) Trading Days of the date said Notice of Exercise
      is delivered to the Company, the Company shall have received payment of the
      aggregate Exercise Price of the shares thereby purchased by wire transfer or
      cashier’s check drawn on a United States bank. Notwithstanding anything herein
      to the contrary, the Holder shall not be required to physically surrender this
      Warrant to the Company until the Holder has purchased all of the Warrant Shares
      available hereunder and the Warrant has been exercised in full, in which case,
      the Holder shall surrender this Warrant to the Company for cancellation within
      three (3) Trading Days of the date the final Notice of Exercise is delivered
      to
      the Company. Partial exercises of this Warrant resulting in purchases of a
      portion of the total number of Warrant Shares available hereunder shall have
      the
      effect of lowering the outstanding number of Warrant Shares 

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    purchasable
      hereunder in an amount equal to the applicable number of Warrant Shares
      purchased. The Holder and the Company shall maintain records showing the number
      of Warrant Shares purchased and the date of such purchases. The Company shall
      deliver any objection to any Notice of Exercise Form within one (1) Business
      Day
      of receipt of such notice. “Business Day” means any day except Saturday, Sunday,
      any day which shall be a federal legal holiday in the United States or any
      day
      on which banking institutions in the State of New York are authorized or
      required by law or other governmental action to close. The Holder and any
      assignee, by acceptance of this Warrant, acknowledge and agree that, by reason
      of the provisions of this paragraph, following the purchase of a portion of
      the
      Warrant Shares hereunder, the number of Warrant Shares available for purchase
      hereunder at any given time may be less than the amount stated on the face
      hereof.

     

    (b)  Exercise
      Price.
      The
      exercise price per share of the Common Stock under this Warrant shall be One
      Dollar and Ten Cents ($1.10), subject to adjustment hereunder (the “Exercise
      Price”).

     

    (c)  Exercise
      Limitations.
      The
      Company shall not effect any exercise of this Warrant, and Holder shall not
      have
      the right to exercise any portion of this Warrant to the extent that after
      giving effect to such issuance after exercise as set forth on the applicable
      Notice of Exercise, Holder (together with Holder’s Affiliates, and any other
      person or entity acting as a group together with Holder or any of Holder’s
      Affiliates), as set forth on the applicable Notice of Exercise, would
      beneficially own in excess of the Beneficial Ownership Limitation (as defined
      below). For purposes of the foregoing sentence, the number of shares of Common
      Stock beneficially owned by Holder and its Affiliates shall include the number
      of shares of Common Stock issuable upon exercise of this Warrant with respect
      to
      which such determination is being made, but shall exclude the number of shares
      of Common Stock which would be issuable upon (A) exercise of the remaining,
      nonexercised portion of this Warrant beneficially owned by Holder or any of
      its
      Affiliates and (B) exercise or conversion of the unexercised or nonconverted
      portion of any other securities of the Company (including, without limitation,
      any other Debentures or Warrants) subject to a limitation on conversion or
      exercise analogous to the limitation contained herein beneficially owned by
      Holder or any of its Affiliates. Except as set forth in the preceding sentence,
      for purposes of this Section 2(c), beneficial ownership shall be calculated
      in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder, it being acknowledged by Holder that the Company is
      not
      representing to Holder that such calculation is in compliance with Section
      13(d)
      of the Exchange Act and Holder is solely responsible for any schedules required
      to be filed in accordance therewith. To the extent that the limitation contained
      in this Section 2(c) applies, the determination of whether this 

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Warrant
      is exercisable (in relation to other securities owned by Holder together with
      any Affiliates) and of which a portion of this Warrant is exercisable shall
      be
      in the sole discretion of Holder, and the submission of a Notice of Exercise
      shall be deemed to be Holder’s determination of whether this Warrant is
      exercisable (in relation to other securities owned by Holder together with
      any
      Affiliates) and of which portion of this Warrant is exercisable, in each case
      subject to such aggregate percentage limitation, and the Company shall have
      no
      obligation to verify or confirm the accuracy of such determination. In addition,
      a determination as to any group status as contemplated above shall be determined
      in accordance with Section 13(d) of the Exchange Act and the rules and
      regulations promulgated thereunder. For purposes of this Section 2(c), in
      determining the number of outstanding shares of Common Stock, Holder may rely
      on
      the number of outstanding shares of Common Stock as reflected in (x) the
      Company’s most recent quarterly or annual period report filed under the Exchange
      Act, as the case may be, (y) a more recent public announcement by the Company
      or
      (z) any other notice by the Company or the Company’s Transfer Agent setting
      forth the number of shares of Common Stock outstanding. Upon the written or
      oral
      request of Holder, the Company shall within two (2) Trading Days confirm orally
      and in writing to Holder the number of shares of Common Stock then outstanding.
      In any case, the number of outstanding shares of Common Stock shall be
      determined after giving effect to the conversion or exercise of securities
      of
      the Company, including this Warrant, by Holder or its Affiliates since the
      date
      as of which such number of outstanding shares of Common Stock was reported.
      The
“Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the
      Common Stock outstanding immediately after giving effect to the issuance of
      shares of Common Stock issuable upon exercise of this Warrant. The Beneficial
      Ownership Limitation provisions of this Section 2(c) may be waived by Holder,
      at
      the election of Holder, upon not less than sixty-one (61) days’ prior notice to
      the Company to change the Beneficial Ownership Limitation to 9.99% of the number
      of shares of the Common Stock outstanding immediately after giving effect to
      the
      issuance of shares of Common Stock upon exercise of this Warrant, and the
      provisions of this Section 2(c) shall continue to apply. Upon such a change
      by
      Holder of the Beneficial Ownership Limitation from such 4.99% limitation to
      such
      9.99% limitation, the Beneficial Ownership Limitation may be further waived
      by
      Holder to exceed 9.99% in its sole discretion. The provisions of this paragraph
      shall be construed and implemented in a manner otherwise than in strict
      conformity with the terms of this Section 2(c) to correct this paragraph (or
      any
      portion hereof) which may be defective or inconsistent with the intended
      Beneficial Ownership Limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such limitation.
      The limitations contained in this paragraph shall apply to a successor holder
      of
      this Warrant.

     

    (d)  Mechanics
      of Exercise.

     

    (i)  Authorization
      of Warrant Shares.
      The
      Company covenants that all Warrant Shares which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise of the
      purchase rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges created
      by the Company in respect of the issue thereof (other than taxes in respect
      of
      any transfer occurring contemporaneously with such issue).

     

    (ii)  Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the transfer
      agent of the Company to the Holder by crediting the account of the Holder’s
      prime broker with the Depository Trust Company through its Deposit Withdrawal
      Agent Commission (“DWAC”) system if the Company is a participant in such system,
      and otherwise by physical delivery to the address specified by the Holder in
      the
      Notice of Exercise within three (3) Trading Days from the delivery to the
      Company of the Notice of Exercise Form, surrender of this Warrant (if required)
      and payment of the aggregate Exercise Price as set forth above (“Warrant Share
      Delivery Date”). This Warrant shall be deemed to have been exercised on the date
      the Exercise Price is received by the Company. The Warrant Shares shall be
      deemed to have been issued, and Holder or any other person so designated to
      be
      named therein shall be deemed to have become a holder of record of such shares
      for all purposes, as of the date the Warrant has been exercised by payment
      to
      the Company of the Exercise Price and all taxes required to be paid by the
      Holder, if any, pursuant to Section 2(d)(vii) prior to the issuance of such
      shares, have been paid.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (iii)  Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the request
      of
      Holder and upon surrender of this Warrant certificate, at the time of delivery
      of the certificate or certificates representing Warrant Shares, deliver to
      Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
      Warrant Shares called for by this Warrant, which new Warrant shall in all other
      respects be identical with this Warrant.

     

    (iv)  Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to Holder a certificate
      or
      certificates representing the Warrant Shares pursuant to this Section 2(d)(iv)
      by the second Trading Day following the Warrant Share Delivery Date, then Holder
      will have the right to rescind such exercise.

     

    (v)  Compensation
      for Buy−In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Shares pursuant to an exercise on or before the third
      Trading Day following the Warrant Share Delivery Date, and if after such date
      the Holder is required by its broker to purchase (in an open market transaction
      or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of
      Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
      Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
      then the Company shall (1) pay in cash to the Holder the amount by which (x)
      the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue by (B) the price
      at which the sell order giving rise to such purchase obligation was executed,
      and (2) at the option of the Holder, either reinstate the portion of the Warrant
      and equivalent number of Warrant Shares for which such exercise was not honored
      or deliver to the Holder the number of shares of Common Stock that would have
      been issued had the Company timely complied with its exercise and delivery
      obligations hereunder. For example, if the Holder purchases Common Stock having
      a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
      exercise of shares of Common Stock with an aggregate sale price giving rise
      to
      such purchase obligation of $10,000, under clause (1) of the immediately
      preceding sentence the Company shall be required to pay the Holder $1,000.
      The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In and, upon request of the Company,
      evidence of the amount of such loss. Nothing herein shall limit a Holder’s right
      to pursue any other remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company’s failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (vi)  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall at
      its
      election, either pay a cash adjustment in respect of such final fraction in
      an
      amount equal to such fraction multiplied by the Exercise Price or round up
      to
      the next whole share.

     

    (vii)  Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided, however,
      that in the event certificates for Warrant Shares are to be issued in a name
      other than the name of the Holder, this Warrant when surrendered for exercise
      shall be accompanied by the Assignment Form attached hereto duly executed by
      the
      Holder; and the Company may require, as a condition thereto, the payment of
      a
      sum sufficient to reimburse it for any transfer tax incidental
      thereto.

     

    (viii)  Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    Section
      3.  Certain
      Adjustments.

     

    (a)  Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise makes a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company upon exercise of this Warrant),
      (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event and the number of shares issuable upon exercise
      of
      this Warrant shall be proportionately adjusted. Any adjustment made pursuant
      to
      this Section 3(a) shall become effective immediately after the record date
      for
      the determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective date in
      the case of a subdivision, combination or re-classification.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (b)  Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall sell or grant any option to purchase, or sell or grant
      any
      right to reprice its securities, or otherwise dispose of or issue (or announce
      any offer, sale, grant or any option to purchase or other disposition) any
      Common Stock or Common Stock Equivalents entitling any Person other than the
      Holder to acquire shares of Common Stock, at an effective price per share less
      than the then Exercise Price (such lower price, the “Base Share Price” and such
      issuances collectively, a “Dilutive Issuance”) (if the holder of the Common
      Stock or Common Stock Equivalents so issued shall at any time, whether by
      operation of purchase price adjustments, reset provisions, floating conversion,
      exercise or exchange prices or otherwise, or due to warrants, options or rights
      per share which are issued in connection with such issuance, be entitled to
      receive shares of Common Stock at an effective price per share which is less
      than the Exercise Price, such issuance shall be deemed to have occurred for
      less
      than the Exercise Price on such date of the Dilutive Issuance), then the
      Exercise Price shall be reduced and only reduced to equal the Base Share Price
      and the number of Warrant Shares issuable hereunder shall be increased such
      that
      the aggregate Exercise Price payable hereunder, after taking into account the
      decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
      prior to such adjustment. Such adjustment shall be made whenever such Common
      Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing,
      no
      adjustments shall be made, paid or issued under this Section 3(b) in respect
      of
      an Exempt Issuance. The Company shall notify the Holder in writing, no later
      than the Trading Day following the issuance of any Common Stock or Common Stock
      Equivalents subject to this Section 3(b), indicating therein the applicable
      issuance price, or applicable reset price, exchange price, conversion price
      and
      other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes
      of clarification, whether or not the Company provides a Dilutive Issuance Notice
      pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance,
      after the date of such Dilutive Issuance the Holder is entitled to receive
      a
      number of Warrant Shares based upon the Base Share Price regardless of whether
      the Holder accurately refers to the Base Share Price in the Notice of Exercise.
      “Exempt Issuance” shall means the issuance of (i) shares of Common Stock or
      options to employees, officers or directors of the Company pursuant to any
      stock
      or option plan duly adopted for such purpose by a majority of the non-employee
      members of the Board of Directors of the Company or a majority of the members
      of
      a committee of non-employee directors established, (ii) securities issued upon
      the exercise or exchange of or conversion of any Securities issued under the
      Purchase Agreement or of other securities exercisable or exchangeable for or
      convertible into shares of Common Stock issued and outstanding on the date
      of
      the Purchase Agreement, provided that such securities have not been amended
      since the date of the Purchase Agreement to increase the number of such
      securities or to decrease the exercise, exchange or conversion price of such
      securities, and (iii) securities issued pursuant to acquisitions or strategic
      transactions approved by a majority of the disinterested directors of the
      Company, provided any such issuance shall only be to a Person which is, itself
      or through its subsidiaries, an operating company in a business synergistic
      with
      the business of the Company and in which the Company receives benefits in
      addition to the investment of funds, but shall not include a transaction in
      which the Company is issuing securities primarily for the purpose of raising
      capital or to an entity whose primary business is investing in
      securities.

     

    (c)  Subsequent
      Rights Offerings.
      If the
      Company, at any time while the Warrant is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to Holder) entitling
      them to subscribe for or purchase shares of Common Stock at a price per share
      less than the VWAP at the record date mentioned below, then the Exercise Price
      shall be multiplied by a fraction, of which the denominator shall be the number
      of shares of the Common Stock outstanding on the date of issuance of such rights
      or warrants plus the number of additional shares of Common Stock offered for
      subscription or purchase, and of which the numerator shall be the number of
      shares of the Common Stock outstanding on the date of issuance of such rights
      or
      warrants plus the number of shares which the aggregate offering price of the
      total number of shares so offered (assuming receipt by the Company in full
      of
      all consideration payable upon exercise of such rights, options or warrants)
      would purchase at such VWAP. Such adjustment shall be made whenever such rights
      or warrants are issued, and shall become effective immediately after the
      distribution date.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (d)  Pro
      Rata Distributions.
      If the
      Company, at any time prior to the Termination Date, shall distribute to all
      holders of Common Stock (and not to Holder of the Warrant) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security other than the Common Stock (which
      shall be subject to Section 3(b)), then in each such case the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to receive
      such distribution by a fraction of which the denominator shall be the VWAP
      determined as of the record date mentioned above, and of which the numerator
      shall be such VWAP on such record date less the then per share fair market
      value
      at such record date of the portion of such assets or evidence of indebtedness
      so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith. In either case the
      adjustments shall be described in a statement provided to the Holder of the
      portion of assets or evidences of indebtedness so distributed or such
      subscription rights applicable to one share of Common Stock. Such adjustment
      shall be made whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

     

    (e)  Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a “Fundamental Transaction”), then, upon any subsequent
      exercise of this Warrant, the Holder shall have the right to receive, for each
      Warrant Share that would have been issuable upon such exercise immediately
      prior
      to the occurrence of such Fundamental Transaction, at the option of the Holder,
      (a) upon exercise of this Warrant, the number of shares of Common Stock of
      the
      successor or acquiring corporation or of the Company, if it is the surviving
      corporation, and any additional consideration (the “Alternate Consideration”)
      receivable upon or as a result of such reorganization, reclassification, merger,
      consolidation or disposition of assets by Holder of the number of shares of
      Common Stock for which this Warrant is exercisable immediately prior to such
      event or (b) at the 10 Trading Days’ prior written election of either the
      Company or the Holder (during which period the Holder has the right to exercise
      this Warrant for shares of Common Stock), cash equal to the greater of (i)
      the
      value of this Warrant as determined in accordance with the Black-Scholes option
      pricing formula with an annualized volatility that is calculated using the
      trading history over the 4 calendar weeks immediately prior to the notice of
      exercise date and (ii) upon completion of the merger or consolidation, the
      product of (A) the difference between the merger consideration per share less
      the Exercise Price and (B) the number of Warrant Shares then issuable hereunder.
      For purposes of any such exercise, the determination of the Exercise Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any exercise of this Warrant following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new warrant consistent with the foregoing provisions
      and evidencing the Holder’s right to exercise such warrant into Alternate
      Consideration. The terms of any agreement pursuant to which a Fundamental
      Transaction is effected shall include terms requiring any such successor or
      surviving entity to comply with the provisions of this Section 3(e) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (f)  Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    (g)  Voluntary
      Adjustment By Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

     

    (h)  Notice
      to Holder.

     

    (i)  Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to any provision of this
      Section 3, the Company shall promptly mail to the Holder a notice setting forth
      the Exercise Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment. If the Company issues a variable rate
      security, the Company shall be deemed to have issued Common Stock or Common
      Stock Equivalents at the lowest possible conversion or exercise price at which
      such securities may be converted or exercised in the case of a Variable Rate
      Transaction. The term “Variable Rate Transaction” shall mean a transaction in
      which the Company issues or sells (i) any debt or equity securities that are
      convertible into, exchangeable or exercisable for, or include the right to
      receive additional shares of Common Stock either (A) at a conversion, exercise
      or exchange rate or other price that is based upon and/or varies with the
      trading prices of or quotations for the shares of Common Stock at any time
      after
      the initial issuance of such debt or equity securities, or (B) with a
      conversion, exercise or exchange price that is subject to being reset at some
      future date after the initial issuance of such debt or equity security or upon
      the occurrence of specified or contingent events directly or indirectly related
      to the business of the Company or the market for the Common Stock or (ii) enters
      into any agreement, including, but not limited to, an equity line of credit,
      whereby the Company may sell securities at a future determined
      price.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (ii)  Notice
      to Allow Exercise by Holder.
      If: (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock; (B) the Company shall declare a special nonrecurring
      cash dividend on or a redemption of the Common Stock; (C) the Company shall
      authorize the granting to all holders of the Common Stock rights or warrants
      to
      subscribe for or purchase any shares of capital stock of any class or of any
      rights; (D) the approval of any stockholders of the Company shall be required
      in
      connection with any reclassification of the Common Stock, any consolidation
      or
      merger to which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share exchange
      whereby the Common Stock is converted into other securities, cash or property;
      (E) the Company shall authorize the voluntary or involuntary dissolution,
      liquidation or winding up of the affairs of the Company; then, in each case,
      the
      Company shall cause to be mailed to the Holder at its last address as it shall
      appear upon the Warrant Register of the Company, at least 20 calendar days
      prior
      to the applicable record or effective date hereinafter specified, a notice
      stating (x) the date on which a record is to be taken for the purpose of such
      dividend, distribution, redemption, rights or warrants, or if a record is not
      to
      be taken, the date as of which the holders of the Common Stock of record to
      be
      entitled to such dividend, distributions, redemption, rights or warrants are
      to
      be determined or (y) the date on which such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of the Common Stock
      of record shall be entitled to exchange their shares of the Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange; provided that the
      failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      20−day period commencing on the date of such notice to the effective date of the
      event triggering such notice.

     

    Section
      4.  Transfer
      of Warrant.

     

    (a)  Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
      Agreement, this Warrant and all rights hereunder (including, without limitation,
      any registration rights) are transferable, in whole or in part, upon surrender
      of this Warrant at the principal office of the Company or its designated agent,
      together with a written assignment of this Warrant substantially in the form
      attached hereto duly executed by the Holder or its agent or attorney and funds
      sufficient to pay any transfer taxes payable upon the making of such transfer.
      Upon such surrender and, if required, such payment, the Company shall execute
      and deliver a new Warrant or Warrants in the name of the assignee or assignees
      and in the denomination or denominations specified in such instrument of
      assignment, and shall issue to the assignor a new Warrant evidencing the portion
      of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
      A
      Warrant, if properly assigned, may be exercised by a new holder for the purchase
      of Warrant Shares without having a new Warrant issued.

     

    (b)  New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (c)  Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant Register”), in the name of the record
      Holder hereof from time to time. The Company may deem and treat the registered
      Holder of this Warrant as the absolute owner hereof for the purpose of any
      exercise hereof or any distribution to the Holder, and for all other purposes,
      absent actual notice to the contrary.

     

    (d)  Transfer
      Restrictions.
      If, at
      the time of the surrender of this Warrant in connection with any transfer of
      this Warrant, the transfer of this Warrant shall not be registered pursuant
      to
      an effective registration statement under the Securities Act and under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer, that (i) the Holder or transferee of this
      Warrant, as the case may be, furnish to the Company a written opinion of counsel
      (which opinion shall be in form, substance and scope customary for opinions
      of
      counsel in comparable transactions) to the effect that such transfer may be
      made
      without registration under the Securities Act and under applicable state
      securities or blue sky laws, and (ii) the Holder or transferee execute and
      deliver to the Company an investment letter in form and substance acceptable
      to
      the Company, and (iii) the transferee be an “accredited investor” as defined in
      Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
      Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a)
      promulgated under the Securities Act.

     

    Section
      5.  Miscellaneous.

     

    (a)  No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof as set forth in Section
      2(d)(ii).

     

    (b)  Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    (c)  Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    (d)  Authorized
      Shares.

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      

    

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

    

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

    

    (e)  Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be determined in accordance with the provisions of the
      Purchase Agreement.

     

    (f)  Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    (g)  Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (h)  Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    (i)  Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    (j)  Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive and not to assert the
      defense in any action for specific performance that a remedy at law would be
      adequate. 

     

    (k)  Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares.

     

    (l)  Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    (m)  Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    (n)  Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    

    [Remainder
      of Page Intentionally Left Blank]

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized as of the date first above
      indicated.

    

    

    

    THEATER
      XTREME ENTERTAINMENT GROUP, INC.

    

    

    By: __/s/
      Scott R. Oglum_______________________________

    Name:__Scott
      R. Oglum_________________________

    Title:___Chief
      Executive Officer___________________

    

    

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    NOTICE
      OF
      EXERCISE

    

    TO:
      [_______________________

    

    

    (1)
      The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

    

    (2)
      Payment shall be in lawful money of the United States.

    

    (3)
      Please issue a certificate or certificates representing said Warrant Shares
      in
      the name of the undersigned or in such other name as is specified
      below:

    

    _______________________________

    

    The
      Warrant Shares shall be delivered to the following DWAC Account Number or by
      physical delivery of a certificate to:

    

    _______________________________

    _______________________________

    _______________________________

    

    (4)
      Accredited Investor. The undersigned is an “accredited investor” as defined in
      Regulation D promulgated under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

    

    Name
      of
      Investing Entity:
      __________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      ___________________________

    Name
      of
      Authorized Signatory:
      ______________________________________________

    Title
      of
      Authorized Signatory:
      _______________________________________________

    Date:
      ___________________________________________________________________

    

    

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information.

    Do
      not
      use this form to exercise the warrant.)

    

    FOR
      VALUE
      RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
      rights evidenced thereby are hereby assigned to ____________________________
      whose address is
      ______________________________________________________________.

    

    Dated:
      ______________, _______

    

    Holder’s
      Signature: _____________________________

    

    Holder’s
      Address: _____________________________

    _____________________________

    

    Signature
      Guaranteed: ___________________________________________

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.Exhibit 10.6

                                                                  EXECUTION COPY

                     FORBEARANCE AND DEBT PAYMENT AGREEMENT

          This  FORBEARANCE  AND DEBT PAYMENT  AGREEMENT  (this  "Agreement") is
entered  into as of the ____  day of  December,  2006,  by and  between  Eastech
Electronics (Taiwan) Inc. ("Eastech") and SOYO Group, Inc. ("Soyo)").

                                    RECITALS
                                    --------

     A.   Soyo is indebted to Eastech for goods  purchased  pursuant to purchase
          orders and related  documents  (as amended and  modified  from time to
          time prior to the date  hereof,  the  "Documents").  As of the date of
          this Agreement,  the indebtedness is in the amount of US $3,785,280.28
          (the "Indebtedness").  The Indebtedness to Eastech is unsecured and is
          not evidenced by an instrument.

     B.   The  Indebtedness was due in full prior to the date hereof and was not
          paid when due.

     C.   Soyo and  Eastech  are  parties to that  certain  Confidentiality  and
          Non-Disclosure  Agreement  dated as of August  28,  2006 (the  "NDA"),
          which is in full force and effect.

     D.   Soyo has requested that Eastech agree to accept payments on account of
          the  Indebtedness  on the terms set  forth in this  Agreement  and the
          Promissory Note, which payments Soyo would make in the ordinary course
          of its  business.  Eastech is willing to enter into such an agreement,
          on the terms and conditions set forth in this Agreement.

     E.   Soyo  desires  to  obtain  Eastech's  agreement  to  forbear  from the
          enforcement  of remedies by reason of the Existing  Defaults to enable
          Soyo to operate its business in the ordinary course until the Maturity
          Date,  and  Eastech is willing to agree to  forbear,  on the terms and
          conditions set forth in this Agreement.

          NOW, THEREFORE,  for good and valuable consideration,  the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

     1.        Definitions

                    Unless otherwise  defined herein,  capitalized terms used in
          this Agreement shall have the meanings given to them in the Promissory
          Note (as defined below).

          a.        "Additional  Expenses"  shall have the meaning given to such
                    term in section 11.d below.

          b.        "Corion"  shall mean Corion  Industrial  Corp.,  USA, or any
                    parent, subsidiary or affiliate thereof.

          c.        "Documents" shall have the meaning in Recital A above.

                                       1
<PAGE>

          d.        "Existing  Defaults"  shall mean  Soyo's  failure to pay the
                    Indebtedness when due.

          e.        "Event of  Default"  shall  have the  meaning  in  section 9
                    below.

          f.        "Forbearance   Termination   Event"   shall   mean  (i)  the
                    occurrence  of any Event of Default  under  this  Agreement,
                    (ii) Soyo  shall  make any  payment  to Corion on account of
                    Soyo's  indebtedness  to Corion  outstanding  as of the date
                    hereof in excess of Fifty  Thousand  Dollars  ($50,000)  per
                    week on account of the principal amount of such debt or make
                    any  payment to Corion on account of  interest on such debt,
                    prior to the  satisfaction  of the  Indebtedness to Eastech,
                    (iii) Nancy Chu or Ming Chok,  or any person or entity owned
                    or controlled by Nancy Chu or Ming Chok, and which person or
                    entity is an equity holder of Soyo, shall, collectively,  in
                    one or a series of related  transactions,  sell or  transfer
                    title to, or  beneficial  ownership  or control  of,  voting
                    stock of Soyo which  represents,  in the  aggregate,  twenty
                    percent  (20%) or more of the  combined  voting power of all
                    voting  stock  of  Soyo,  to any  person  or any two or more
                    persons  acting  in  concert,   (iv)  the  sale  of  all  or
                    substantially  all of the assets  constituting the operating
                    business  of Soyo,  or (v) Soyo  commences  or  proposes  to
                    commence  any  bankruptcy,  reorganization,  arrangement  or
                    adjustment   of  debt,   relief  of  debtors,   dissolution,
                    insolvency or  liquidation or similar  proceeding  under any
                    federal,  state or other law for the relief of  debtors  (an
                    "Insolvency   Proceeding"),   Soyo   fails  to  obtain   the
                    dismissal,  within  sixty (60) days  after the  commencement
                    thereof, of any Insolvency  Proceeding  instituted by one or
                    more  third  parties,  fails  actively  to  oppose  any such
                    Insolvency   Proceeding,   or,   in  any   such   Insolvency
                    Proceeding,  defaults  or  files  an  answer  admitting  the
                    material  allegations upon which such Insolvency  Proceeding
                    was based or alleges  its  willingness  to have an order for
                    relief  entered or any  receiver,  trustee or  custodian  is
                    appointed  to  take  possession  of all  or any  substantial
                    portion of the assets of Soyo.

          g.        "Indemnified  Liabilities"  shall have the meaning  given to
                    such term in section 11.e below.

          h.        "Indemnitees"  shall have the meaning  given to such term in
                    section 11.e below.

          i.        "Insolvency Proceeding" shall have the meaning given to such
                    term in section 1.f above.

          j.        "Maturity Date" means noon (Pacific Time) October 1, 2008.

          k.        "NDA" shall have the meaning given to such term in Recital C
                    above.

          l.        "Promissory  Note" shall have the meaning given to such term
                    in section 3.a(2) below.

                                       2
<PAGE>

          m.        "Releasees"  shall  have the  meaning  given to such term in
                    section 9 hereof.

          n.        "Releasors"  shall  have the  meaning  given to such term in
                    section 9 hereof.

          o.        "Representatives"  shall have the meaning given to such term
                    in section 7.d hereof.

          p.        "Soyo's  Claims"  has the  meaning  given  to  such  term in
                    section 9 hereof.

          q.        "Soyo's Obligations" means all obligations of Soyo under the
                    Documents or related to the sale of goods, or this Agreement
                    or the Promissory Note, other than the obligation to pay the
                    Indebtedness.

          r.        "Termination  Date"  means the  earlier  to occur of (i) the
                    occurrence of a Forbearance  Termination Event, and (ii) the
                    Maturity Date.

     2.        Agreement to Forbear

          a.        Eastech  agrees  to  forbear  from  exercising  any right or
                    remedy available to it with respect to the collection of the
                    Indebtedness   solely  by  reason  of  the   existence   and
                    continuation of the Existing  Defaults until the Termination
                    Date.  Effective  as  of  the  Termination  Date,  Eastech's
                    agreement to forbear from  exercising any rights or remedies
                    by  reason  of the  Existing  Defaults  shall  automatically
                    expire and be of no further force or effect.

          b.        Nothing in this  section 2 shall be construed to be a waiver
                    of  the  Existing  Defaults.  The  Existing  Defaults  shall
                    continue in existence  subject only to Eastech's  agreement,
                    as set forth in this  Agreement,  not to  enforce  rights or
                    remedies  based  upon such  Existing  Defaults  prior to the
                    Termination Date.

          c.        Eastech  expressly  reserves  all of its rights and remedies
                    with  respect  to   collection  of  the   Indebtedness   and
                    applicable law, except as expressly limited herein.  Nothing
                    in this Agreement shall prejudice or limit Eastech's  rights
                    and  remedies  in the event any  default or Event of Default
                    occurs under the Promissory Note or this Agreement.

          d.        From  and  after  the  Termination  Date,  Eastech  shall be
                    entitled  to enforce  the  Indebtedness,  and all rights and
                    remedies with respect to such Indebtedness, by reason of the
                    occurrence  of any defaults or Events of Default,  including
                    the Existing Defaults.

     3.        Conditions to Effectiveness of Agreement

          a.        The  effectiveness of this Agreement shall be subject to the
                    satisfaction  of the following  conditions,  all in form and

                                       3
<PAGE>

                    substance reasonably  satisfactory to Eastech, or the waiver
                    of such conditions by Eastech in its sole discretion.

                    (1)       This  Agreement   shall  have  been  executed  and
                              delivered by Soyo and Eastech.

                    (2)       Soyo shall have  executed and delivered to Eastech
                              a  promissory  note  in  the  form  of  Exhibit  A
                              attached  hereto,  with  all  blanks  filled  (the
                              "Promissory Note").

                    (3)       After   giving   effect   to   the    transactions
                              contemplated  by  this  Agreement,   no  Event  of
                              Default shall exist with respect to the payment of
                              the  Indebtedness  or under the Documents,  and no
                              event shall have occurred  which,  with the giving
                              of notice or lapse of time, or both,  would become
                              an  Event  of  Default,  except  for the  Existing
                              Defaults.

                    (4)       Soyo  shall have  delivered  to Eastech a complete
                              copy of the debt  payment  agreement  between Soyo
                              and Corion, pursuant to which Corion has agreed to
                              accept  installment  payments  on  account  of the
                              indebtedness  Soyo  owes  to  Corion  without  the
                              payment of  interest on a current  basis,  and the
                              terms  of  such  agreement   shall  be  reasonably
                              satisfactory to Eastech.

                    (5)       Soyo shall have obtained a  termination  statement
                              with  respect  to  all  Uniform   Commercial  Code
                              financing  statements  or other notices of lien in
                              favor  of  Corion  filed  in  the  office  of  the
                              California  Secretary  of State,  and  shall  have
                              filed  all  such  statements  and  notices  in the
                              office  of the  California  Secretary  of State to
                              terminate such filings.

                    (6)       Soyo shall have  delivered  to Eastech  such other
                              documents,  instruments,  and  approvals and taken
                              such other actions  consistent with this Agreement
                              as  Eastech  may  reasonably  request  in order to
                              fulfill  the   obligations   of  Soyo  under  this
                              Agreement.

     4.        Conditions to Effectiveness of Agreement

          a.        The  effectiveness of this Agreement shall be subject to the
                    satisfaction  of  the  following  condition,   in  form  and
                    substance reasonably  satisfactory to Soyo, or the waiver of
                    such condition by Soyo in its sole discretion.

                    (1)       Eastech  shall   provide   evidence  that  Eastech
                              maintains not less than US $20 million of products
                              liability  insurance  and  shall  name  Soyo  as a
                              Certificate Holder.

                    (2)       Eastech shall have granted to Soyo a credit in the
                              amount of  $330,000,  which credit is reflected in
                              the Indebtedness.

                                       4
<PAGE>

     5.        Soyo's Representations and Warranties

                    As a  material  inducement  to  Eastech  to  enter  into the
          transactions  contemplated  hereby,  Soyo  represents  and warrants to
          Eastech that:

          a.        Due  Authority  This  Agreement  has been  duly  authorized,
                    executed  and  delivered  by Soyo,  is a  legally  valid and
                    binding  agreement  and  is  enforceable   against  Soyo  in
                    accordance  with its terms,  except to the extent  that such
                    enforcement   may  be  limited  by  applicable   bankruptcy,
                    insolvency and other similar laws affecting creditors rights
                    generally.

          b.        Acknowledgment   of   Indebtedness   The   amount   of   its
                    indebtedness  to Eastech  under the Documents as of the date
                    hereof is the Indebtedness.

          c.        No  Defenses  Soyo  does  not  have or  assert  any  claims,
                    counterclaims,  defenses or rights of setoff whatsoever with
                    respect to the Indebtedness or to any of Soyo's Obligations,
                    and no event has  occurred  and no  condition  exists  which
                    would  constitute  an Event of  Default  hereunder  with the
                    giving  of  notice  or  lapse of time or  both,  except  the
                    Existing Defaults.

          d.        Complete  Representations No representation or warranty made
                    by Soyo herein or in any other document delivered to Eastech
                    in  furtherance  of this  Agreement  on or  before  the date
                    hereof contains any materially untrue statement or omits any
                    material  fact  necessary  to make  such  representation  or
                    warranty not misleading.

          e.        Discussions with Counsel Soyo has thoroughly  discussed with
                    its attorneys, to the full extent that it deems it necessary
                    to do so,  all  aspects  of this  Agreement,  including  the
                    Release granted pursuant to section 8 hereof, has been fully
                    advised by its attorneys as to its rights,  understands that
                    it may be waiving significant legal rights or Soyo's Claims,
                    and  enters  into  the  Release  with  a full  and  complete
                    understanding of its terms.

          f.        No Transfer of Soyo's  Claims  Soyo has not  transferred  or
                    assigned any  interest in any Soyo's  Claims which it has or
                    may  hereafter  have had  against the  Releasees,  or any of
                    them.

     6.        Eastech's Representations and Warranties

                    As  a  material   inducement  to  Soyo  to  enter  into  the
          transactions  contemplated hereby,  Eastech represents and warrants to
          Soyo that:

          a.        Due  Authority  This  Agreement  has been  duly  authorized,
                    executed and  delivered by Eastech,  is a legally  valid and
                    binding  agreement  and is  enforceable  against  Eastech in
                    accordance  with its terms,  except to the extent  that such
                    enforcement   may  be  limited  by  applicable   bankruptcy,

                                       5
<PAGE>

                    insolvency and other similar laws affecting creditors rights
                    generally.

     7.        Covenants by Soyo

                    Soyo  covenants  and  agrees  that,  so  long  as any of the
          Indebtedness remains unpaid:

          a.        Confirmation of Obligations  Soyo shall pay the Indebtedness
                    as provided  herein and in the Promissory  Note, and perform
                    each and all of Soyo's Obligations pursuant to the Documents
                    and this Agreement.

          b.        Payment of Indebtedness On or before the Maturity Date, Soyo
                    shall pay to Eastech the unpaid balance of the  Indebtedness
                    in  accordance  with  the  terms of this  Agreement  and the
                    Promissory Note.

          c.        Financial  Reporting  Soyo  shall  furnish,  or  cause to be
                    furnished, the following financial information to Eastech:

                    (1)       After   the  end  of  each   calendar   month  and
                              concurrently  with delivery of such information to
                              the senior lender to Soyo, a copy of all financial
                              information  which Soyo is  required to deliver to
                              its senior lender  pursuant to its agreements with
                              such lender.

                    (2)       As  soon  as  practicable  after  the  end of each
                              calendar  quarter  and not later  than  sixty (60)
                              days after the end of each quarter,  to the extent
                              the following  information  has not been disclosed
                              by Soyo in public  filings,  copies of which  Soyo
                              shall  send to  Eastech:  (i) a  schedule  of aged
                              accounts  payable  by  Soyo,  a  schedule  of aged
                              accounts  receivable  of Soyo and a listing of all
                              payments  made by Soyo in the past 90  days,  or a
                              bring-down of payments made by Soyo since the last
                              such  schedule  delivered  by Soyo to  Eastech  or
                              included  in  public  filings,  and  (ii),  to the
                              extent not included in monthly  reports  delivered
                              by Soyo to Eastech  pursuant  to  section  7.c (1)
                              hereof or in public filings, a consolidated income
                              statement,  a statement of source and  application
                              of funds, a statement of  shareholder's  equity of
                              Soyo for the period from the beginning of the then
                              current  fiscal year to the end of such  quarterly
                              period,  and a consolidated  balance sheet of Soyo
                              and its consolidated subsidiaries as at the end of
                              such   quarterly   period,   subject   to  changes
                              resulting  from  year-end   adjustments,   all  in
                              reasonable   detail,   satisfactory  in  scope  to
                              Eastech.

                                       6
<PAGE>

          d.        Access  and  Cooperation  Soyo  shall,  and shall  cause its
                    officers  and  advisors  to,   cooperate   with  Eastech  in
                    furnishing  information as and when reasonably  requested by
                    Eastech  regarding  Soyo's  financial   affairs,   finances,
                    financial condition, business and operations for the purpose
                    of  confirming  Soyo's  compliance  with  the  terms of this
                    Agreement.  In furtherance  thereof,  Soyo hereby agrees to,
                    upon not less  than  five (5)  business  days  notice,  give
                    Eastech and its  Representatives  reasonable  access  during
                    normal business hours to the offices,  properties, books and
                    records of Soyo,  and to the officers and other  appropriate
                    representatives  of  Soyo  as may be  necessary,  in  Soyo's
                    reasonable  opinion,  to confirm Soyo's compliance with this
                    Agreement,  provided  that  at any  time  that an  Event  of
                    Default exists under section 10 of this  Agreement,  Eastech
                    shall only be  required to give Soyo two (2)  business  days
                    notice of any required  access and  cooperation  hereunder..
                    Eastech shall, in the exercise of this right, use reasonable
                    efforts  to  avoid  any   disruption  in  the  business  and
                    operations of Soyo. For purposes of this Agreement, the term
                    "Representatives"    shall   mean   affiliates,    officers,
                    employees,   accountants,    auditors,   agents,   advisors,
                    consultants and financing sources  (including any investment
                    banker, financial advisor, accountant, legal counsel, agent,
                    representative  or  expert  retained  by or acting on behalf
                    Eastech).  Eastech  shall,  and  shall  cause  each  of  its
                    employees,   accountants,   auditors,   counsel   and  other
                    Representatives to, comply in all respects with the NDA.

          e.        No liens  Soyo will not grant or suffer  any lien,  claim or
                    encumbrance on any of its assets,  or the legal or equitable
                    interest  therein,  whether  such  property  is now owned or
                    hereafter  acquired,  or any  income,  profits  or  proceeds
                    thereof,  while any of the Indebtedness  remains outstanding
                    other than (i) the existing  lien securing  indebtedness  in
                    favor of Accord  Financial,  Inc. or any refinancing of such
                    indebtedness, (ii) liens granted to any lender to secure the
                    repayment of  indebtedness  for funds borrowed by Soyo after
                    the date hereof in the ordinary  course of business,  to the
                    extent such new  indebtedness  is not a  refinancing  of the
                    Accord  Financial,  Inc. debt, (iii) purchase money security
                    interests;   (iv)  liens  for  taxes  or   assessments   not
                    delinquent  or being  diligently  contested in good faith by
                    appropriate  proceedings,  (v) liens imposed by law, such as
                    carriers'  or  mechanic's  liens,  incurred in the  ordinary
                    course of business  for sums not yet due or being  contested
                    in  good   faith   by   appropriate   proceedings   or  (vi)
                    non-purchase  money liens in favor of Corion  provided  that
                    Eastech  receives  pari passu  liens on the same  collateral
                    pursuant  to the same  grant  of  liens as any lien  give to
                    Corion and the liens  given to Corion and  Eastech  have the
                    same perfection and priority.

                                       7
<PAGE>

          f.        Payments to Corion Soyo will not make any payments to Corion
                    in excess of Fifty Thousand  Dollars  ($50,000) per calendar
                    week on account of Soyo's indebtedness to Corion outstanding
                    as of the date  hereof;  Soyo may agree to pay  interest  to
                    Corion on account of any indebtedness owed by Soyo to Corion
                    as of the  date  hereof  at a  rate  not  in  excess  of the
                    interest rate accruing on the  Indebtedness and may agree to
                    other   non-financial   terms  for  the  repayment  of  such
                    indebtedness owed to Corion, provided such terms are no more
                    favorable to Corion than the terms of this  Agreement are to
                    Eastech.

     8.        Covenants by Eastech

          a.        Honoring of Parts  Warranty  Eastech  shall sell spare parts
                    and  replacement   parts,   including  remote  controls  and
                    motherboards,  to Soyo, provided Soyo shall pay the standard
                    amounts  Eastech  charges  for such parts and such  payments
                    shall be made by Soyo according to normal payment terms.

          b.        Repair of  Motherboards  at Eastech  Eastech will repair the
                    motherboards  Soyo  returned to Eastech prior to the date of
                    this Agreement and shall ship such  motherboards  to Soyo in
                    the ordinary  course of Eastech's  business,  provided  Soyo
                    shall pay the  standard  amounts  Eastech  charges  for such
                    repair  services  and  such  payments  shall be made by Soyo
                    according to normal payment terms.

          c.        Satisfaction  of Soyo's  Obligations In the event Soyo makes
                    all payments when due under the Promissory  Note and without
                    default, including,  without limitation, the payment in full
                    of the principal  amount of the  Indebtedness on or prior to
                    the  Maturity  Date,  then  Eastech  shall  (i)  accept  the
                    payments due under this Agreement and the Promissory Note in
                    full  satisfaction  of  the  Indebtedness,  (ii)  waive  and
                    release Soyo of the  obligation  to pay the  interest  which
                    accrues on the Indebtedness  under the Promissory Note after
                    the date  hereof to the extent  provided  in the  Promissory
                    Note,  and (iii) return the  Promissory  Note to Soyo marked
                    "satisfied".

          d.        Limitation  on  Petitioning  for  Bankruptcy As long as Soyo
                    does not  commit an Event of Default  under this  Agreement,
                    Eastech   agrees  not  to  be  a  petitioning   creditor  in
                    connection   with  any  organized   effort  to  commence  an
                    involuntary bankruptcy case against Soyo.

     9.        Release by Soyo

          a.        Soyo on behalf of itself,  and its agents,  representatives,
                    officers,  directors,  advisors,  employees,   subsidiaries,
                    affiliates,  successors and assigns, and any and all persons
                    and/or  entities  who may purport to claim by,  through,  or
                    for,  it or them,  (collectively,  the  "Releasors")  hereby
                    releases  and  discharges  Eastech and all of its  officers,
                    directors,  agents, employees,  shareholders,  predecessors,
                    successors, assigns, attorneys and legal representatives (in
                    their capacity as such)  (collectively  the "Releasees") and

                                       8
<PAGE>

                    each of them,  from any and all  claims,  demands,  actions,
                    causes of action, liabilities, costs, crossclaims, rights of
                    setoff  or  recoupment,  expenses  and  damages  of any kind
                    whatsoever, in law or in equity, past, present or future, ("
                    Soyo's  Claims")  and  whether  such  Claims  are  known  or
                    unknown,  suspected or  unsuspected,  from the  beginning of
                    time to the date hereof,  including  without  limitation any
                    Soyo's  Claims based upon,  related to or arising out of the
                    sale of  goods by  Eastech  or any  Releasee  to Soyo or any
                    Releasor,  or actions or  omissions in  connection  with any
                    such sale,  or the  relationship  between  Soyo and  Eastech
                    prior to the date hereof,  provided that this provision does
                    not release or discharge  any claim which Soyo may hereafter
                    have  against  Eastech (i) pursuant to the terms of the NDA,
                    (ii) under the express terms of this Agreement,  or (iii) as
                    a result of a class action commenced against Soyo or a claim
                    asserted by a  governmental  agency,  in either case,  based
                    upon,  related  to or  arising  out of the  sale of goods by
                    Eastech or any Releasee to Soyo or any Releasor,  or actions
                    or omissions in connection with any such sale.

          b.        TO THE EXTENT THAT SECTION 1542 OF THE CALIFORNIA CIVIL CODE
                    OR SIMILAR PROVISIONS OF OTHER APPLICABLE LAW APPLIES TO THE
                    FOREGOING  RELEASE,  IT IS THE  INTENTION  OF SOYO  THAT THE
                    FOREGOING RELEASE SHALL BE EFFECTIVE AS A BAR TO ANY AND ALL
                    ACTIONS, DAMAGES, LOSSES, CLAIMS, LIABILITIES AND DEMANDS OF
                    WHATSOEVER  CHARACTER,  NATURE AND KIND,  KNOWN OR  UNKNOWN,
                    SUSPECTED  OR  UNSUSPECTED,   HEREINABOVE  SPECIFIED  TO  BE
                    BARRED.  IN  FURTHERANCE OF THIS  INTENTION,  SOYO EXPRESSLY
                    WAIVES ANY AND ALL RIGHTS AND BENEFITS  CONFERRED ON SOYO BY
                    THE PROVISIONS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE,
                    WHICH PROVIDES AS FOLLOWS:

                    "A  GENERAL  RELEASE  DOES NOT  EXTEND TO  CLAIMS  WHICH THE
                    CREDITOR  DOES  NOT KNOW OR  SUSPECT  TO EXIST IN HIS OR HER
                    FAVOR AT THE TIME OF EXECUTING  THE RELEASE,  WHICH IF KNOWN
                    BY HIM OR  HER  MUST  HAVE  MATERIALLY  AFFECTED  HIS OR HER
                    SETTLEMENT WITH THE DEBTOR."

     10.       Defaults and Remedies

          The  occurrence of any of the  following  (each an "Event of Default")
shall constitute an immediate Event of Default under this Agreement:

          a.        Any event or  condition,  other than any  Existing  Default,
                    shall have occurred or exist which  constitutes a default by
                    Soyo  under  any of the  Documents,  this  Agreement  or the
                    Promissory  Note or a breach of any of  Soyo's  Obligations,
                    including that any required notice shall have been given and
                    any cure period for the avoidance of such default shall have
                    expired.  The cure period for any default by Soyo shall,  in
                    the absence of a specified  period or a  specification  that
                    there shall be no cure period, be ten (10) calendar days.

                                       9
<PAGE>

          b.        Any material representation made or reaffirmed by Soyo under
                    this  Agreement  shall  prove  to  have  been  false  in any
                    material respect at the time such representation was made or
                    reaffirmed.

          c.        Soyo  commences  or  proposes  to  commence  any  Insolvency
                    Proceeding, Soyo fails to obtain the dismissal, within sixty
                    (60) days after the commencement  thereof, of any Insolvency
                    Proceeding  instituted by one or more third  parties,  fails
                    actively to oppose any such  Insolvency  Proceeding,  or, in
                    any such Insolvency Proceeding,  defaults or files an answer
                    admitting   the   material   allegations   upon  which  such
                    Insolvency  Proceeding was based or alleges its  willingness
                    to have an order for relief entered or any receiver, trustee
                    or custodian is appointed to take  possession  of all or any
                    substantial portion of the assets of Soyo.

          Upon the occurrence of an Event of Default hereunder, (i) Eastech may,
at its option, without notice to or demand upon Soyo or any other party, declare
immediately  due and payable the entire  balance of the  Indebtedness,  together
with all accrued and unpaid interest thereon,  plus Additional  Expenses and any
other amounts then owing pursuant to this Agreement, whereupon the same shall be
immediately  due and payable;  provided that upon the  occurrence of an Event of
Default under clause (c) above,  the unpaid amounts of the  Indebtedness and all
other  indebtedness of Soyo to Eastech shall become  immediately due and payable
without presentment,  demand,  protest or notice of any kind, and (ii) Eastech's
agreement to forbear from  enforcing  remedies with respect to the  Indebtedness
pursuant  to section 2 hereof  shall  immediately  terminate  without  notice or
demand of any kind.

     11.       Miscellaneous

          a.        Parties Benefited No persons or entities other than Soyo and
                    Eastech shall have any rights under this Agreement or any of
                    the Documents, as amended hereby.

          b.        Notices  Any  notice  or  other  communication  required  or
                    permitted  herein  shall be in  writing  or sent by  regular
                    mail, hand delivery, overnight delivery, facsimile, portable
                    document file or email,  and shall be effective upon receipt
                    in the case of hand delivery, overnight delivery, facsimile,
                    portable document file or email, and three (3) business days
                    after  placement  into  the  mails  (first  class,   postage
                    prepaid) addressed as follows:

                    Eastech          Colleen L. Hallam
                                     Vice President, Operations
                                     Eastech Electronics (Taiwan) Inc.
                                     Suite 4 - 481,
                                     1894 Highway 50 East,
                                     Carson City, NV 89701
                                     Email:  colleen.hallam@eastech.com

                    With a copy to:  Michael S. Lurey
                                     Latham & Watkins
                                     633 West Fifth Street, Suite 4000
                                     Los Angeles, CA 90071
                                     Email:  Michael.Lurey@LW.com

                                       10
<PAGE>

                    Soyo             Peter Banner
                                     SOYO Group, Inc.,
                                     1420 S. Vintage Ave.
                                     Ontario, CA 91761

                    With a copy to:  Robert E. Braun
                                     Jeffer, Mangels Butler & Marmaro LLP
                                     1900 Avenue of the Stars
                                     Seventh Floor
                                     Los Angeles, CA 90067
                                     Email: RBraun@jmbm.com

          c.        Governing Law This Agreement and the rights and  obligations
                    of the parties  hereunder  shall in all respects be governed
                    by,  and  construed  and  enforced  in  accordance  with the
                    domestic  internal laws (but not the conflict of laws rules)
                    of the State of  California,  provided  that this  Agreement
                    does not  constitute  a consent to the  jurisdiction  of any
                    court of, or located  in, the State of  California,  and, by
                    entering into this  Agreement,  Eastech is not consenting to
                    the  jurisdiction of any court of or located in the State of
                    California.

          d.        Expenses In the event of an Event of Default hereunder, Soyo
                    shall pay all costs and  expenses  incurred  by  Eastech  in
                    connection  with the collection of the  Indebtedness  or the
                    enforcement of any of Soyo's Obligations,  including without
                    limitation,  fees  and  costs  of  all  financial  or  other
                    professional  advisors and  reasonable  attorneys'  fees and
                    costs  incurred  by  Eastech  ("Additional  Expenses").  The
                    Additional Expenses shall be payable to Eastech concurrently
                    with the payment of the unpaid balance of the  Indebtedness,
                    to the extent such amounts have been  determined,  and shall
                    be paid to Eastech by Soyo  promptly  after such amounts are
                    determined  if they have not been  determined by the date of
                    the final payment of the Indebtedness.

          e.        Indemnity In addition to the payment of expenses pursuant to
                    section 11.d above,  Soyo agrees to indemnify,  pay and hold
                    Eastech  and any  holder  of the  Promissory  Note,  and the
                    officers,  directors,  employees,  agents, and affiliates of
                    Eastech   and  such   holders   (collectively   called   the
                    "Indemnitees")  harmless  from and against any and all other
                    liabilities,   obligations,   losses,  damages,   penalties,
                    actions,  judgments,  suits,  claims,  costs,  expenses  and
                    disbursements of any kind or nature  whatsoever  (including,
                    without limitation, the reasonable fees and disbursements of
                    counsel  for  such   Indemnitees  in  connection   with  any
                    investigative,   administrative   or   judicial   proceeding
                    commenced  or  threatened,  whether  or not such  Indemnitee
                    shall be designated a party  thereto),  which may be imposed
                    on, incurred by, or asserted against that Indemnitee,  based
                    upon or arising  from any claim,  demand or threat made by a
                    third party against Eastech or such Indemnitee in any manner
                    relating to or arising out of this  Agreement,  or Eastech's
                    agreement  herein to forbear from  enforcing  remedies  with
                    respect to the Indebtedness (the "Indemnified Liabilities"),

                                       11
<PAGE>

                    provided that this indemnity shall not indemnify  Eastech or
                    any Indemnitee  from or against  claims,  demands or threats
                    based upon goods sold by Eastech or any  Indemnitee.  To the
                    extent  that  the  undertaking  to  indemnify,  pay and hold
                    harmless  set  forth in this  section  may be  unenforceable
                    because it is  violative of any law or public  policy,  Soyo
                    shall  contribute the maximum  portion which it is permitted
                    to pay and satisfy under  applicable law, to the payment and
                    satisfaction of all Indemnified  Liabilities incurred by the
                    Indemnitees or any of them.

          f.        Effect of Agreement Except to the extent expressly  modified
                    by this Agreement,  the Documents shall remain in full force
                    and  effect in  accordance  with  their  original  terms and
                    conditions.

          g.        Counterparts This Agreement may be executed in any number of
                    counterparts  with the same effect as if all parties  hereto
                    had signed the same document. All such counterparts shall be
                    construed together and shall constitute one instrument,  but
                    in making proof hereof it shall only be necessary to produce
                    one such counterpart.

          h.        Amendments  and Waivers The  provisions  of this  Agreement,
                    including without  limitation,  the obligation of Eastech to
                    forbear  from   enforcing   remedies  with  respect  to  the
                    Indebtedness,  may be amended,  modified or waived only by a
                    written   instrument   executed   by  the  parties  to  this
                    Agreement.

          i.        Delay in Exercise No failure or delay on the part of Eastech
                    in exercising any power, right or remedy under the Documents
                    or this  Agreement  shall operate as a waiver  thereof,  nor
                    shall a single or partial  exercise  of any power,  right or
                    remedy  preclude any other exercise  thereof or the exercise
                    of any other power, right or remedy.

          j.        Further  Assurances  Soyo shall take further  actions as are
                    reasonably  required  and within its powers to carry out its
                    obligations  under the Documents,  except as amended hereby,
                    and this Agreement.

          k.        Time of Essence Time is of the essence of this Agreement and
                    each  provision  of  this  Agreement  of  which  time  is an
                    element,    specifically   including   the   definition   of
                    Termination Date.

          l.        Successors and Assigns The  obligations of the parties under
                    this Agreement may not be assigned without the prior written
                    consent of the other party to this Agreement. This Agreement
                    shall  inure  to the  benefit  of and be  binding  upon  any
                    permitted successors or assigns of either party hereto.

          m.        Validity  of  Recitals  The  parties  hereby  agree that the
                    representations  in the Recitals to this  Agreement are true
                    and correct and agree to be bound thereby.

                                       12
<PAGE>

          n.        Application of NDA Any Confidential  Information (as defined
                    in the NDA) received by Eastech  pursuant to this  Agreement
                    shall be subject to the terms of the NDA.

          o.        Confidentiality  The parties  agree to maintain the terms of
                    this Agreement in strict  confidence and not to disclose the
                    terms hereof to any third  parties,  except that a party may
                    disclose  the  terms  of  this   Agreement  to  any  of  its
                    Representatives,    provided    the   party    binds    such
                    Representatives to secrecy with respect to the terms hereof,
                    and except  further  that a party may  disclose the terms of
                    this  Agreement to the extent  required by public  reporting
                    requirements  by which such party is bound.  Each party will
                    take at least the same degree of care it uses to protect its
                    own  proprietary  information,  but no less than  reasonable
                    care under the circumstances.

          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be executed as of the date first written above.

Eastech Electronics (Taiwan) Inc. ("Eastech")

By: ______________________________
  Name:
  Title:

SOYO Group, Inc. ("Soyo")

By:  _____________________________
  Name:
  Title:

                                       13

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