China High-definition DVD Industry Association Charter
Effective as of February 25th, 2008

Chapter 1 General
Article 1. This association’s Chinese name is: “中国高清光盘产业联盟”. Its English name is China High-definition DVD Industry Association. Its abbreviation is CHDA.
Article 2. China High-definition DVD Industry Association (hereinafter refereed to as “Association”) is a cooperative organization voluntarily combined and established by the related organizations and manufacturing enterprises engaged in the development, manufacture, service and/or promotion of high-definition video / audio technology.
Article 3. The Association, with the purpose to be a high efficient organization with the principle of practicality and high efficiency, shall serve all the members and protect their legal right, support the government to enhance the development and manufacturing level of the whole industry so as to promote the development of a complete ecosystem and a mature and healthy market in China.
Article 4. This Association shall abide by the Constitution, laws, regulations, policies and social integrity, accept the guidance and supervision by the government.
Article 5. The Association shall be managed based on democratic principle.
Article 6. The Association is under the charge of China Video Industry Association and its head office (namely the Association Office) is located in Beijing, China.

Chapter 2 Service Scope
Article 7. The service scope of the Association includes the following aspects:
(1) In the field of advanced and mature high-definition products, it shall organize related working groups to establish industrial, state or international standards so that such standards and techniques will be widely promoted and accepted in this industry or other industries.
(2) Enhance the technical cooperation among members and between this industry and other industries, coordinate relationships among members, so as to form an integrated industrial chain.
(3) Organize inspection and study activities in order to handle co-existent problems concerning technical, economic and enterprise management of the industry by taking advantage of the Association.
(4) Survey, collect, analyze and study basic data of this industry and report industry developing status and problems, members’ suggestion or requirements and developing schedule to the related government authority and the Steering Committee (hereafter referred to as “SC”)
(5) Organize some consultation service and related talent training.

Chapter 3 Membership
Article 8. Membership in the Association is open to any organization or manufacturer with independent legal personality which is, or will be, engaged in the development, manufacture, service and/or promotion of high-definition technology and the related products, and acknowledges the Association Charter. After applying for the membership and getting approval from the Steering Committee, one entity will receive its membership, undertake the member obligations and enjoy the member rights.
Article 9. The Association has two classes of membership. One is general membership, the other one is Steering Committee membership (hereinafter referred to as “SC membership”).
The general members shall meet the following requirements:
(1) Accept this Charter.
(2) Entities which are, or will be, engaged in the development, manufacture, service and/or promotion of high-definition technology.
The SC members shall meet the following requirements:
(1) Accept this Charter.
(2) Be a general member and elected to be SC members.
(3) The SC members shall be the entities which are playing significant roles in HD DVD industry and thought to be leaders and excellent examples in the development, manufacture, service and/or promotion of high-definition technology.
Article 10. The procedures of joining in the association are showed as follows:
(1) Submit written application.
(2) The above-mentioned written material shall be reviewed and confirmed by the Association Office and submitted to the SC for discussion.
(3) After the grant of membership qualification, the entities shall pay the membership fee. Then the Association Office will issue the membership entrance notice.
Article 11. The procedures of withdrawal from the Association are showed as follows:
(1) Submit written withdrawal notice to SC.
(2) Members may withdraw from the Association thirty days after they submit the written notice. The membership fee paid by a withdrawing member for the present year shall be non-refundable.
Article 12. The membership shall terminate if one of the following occurs and no correction is made within sixty days after receiving a written notice thereof by the SC:
(1) Fail to pay the membership fee within 6 months after the prescribed deadline for payment of the membership fee.
(2) Materially breached the terms and conditions of this Charter, or done something against the Association.
After a member is dismissed, the membership fee for the present year will not be refunded. It can apply for joining the association again at least after two years.
Article 13. Members’ rights:
The general members have two classes: one is the principal member while the other is associated member.
As to the principal members:
(1) The right for attending the General Meetings and election, being elected, and voting;
(2) The right for participating in the activities of working groups organized by the Association;
(3) The right for getting the information concerning related technical documents provided by the Association;
(4) The right for making comments and suggestions to SC;
(5) The right for applying for SC membership;
(6) The right for withdrawing from the Association on a voluntary basis.
As to the associated members:
(1) The right for attending the General Meetings, but no right for electing, being elected and voting;
(2) The right for taking part in the activities of working groups organized by the Association;
(3) The right for getting some information concerning the related technical documents provided by the Association;
(4) The right for withdrawing from the Association on a voluntary basis.
Article 14. The SC member has the following rights:
(1) The rights which the principal members have;
(2) The right for participating in the SC meetings, electing, being elected and voting;
(3) The right for submitting proposals, comments and suggestions to the SC;
(4) The right for withdrawing from SC on a voluntary basis.
Article 15. The members have the following obligations:
(1) Abide by the Charter, related non-disclosure agreement (if existent) and the regulations of the Association and execute resolutions of the Association;
(2) Actively assist in accomplishment of tasks assigned by the Association and take part in activities organized by the Association;
(3) Preserve the interests and the legal rights of the Association;

(4) Pay the membership fee according to the regulations. As to oversea entities, the annual membership fee for SC members is fifty thousands CNY (\50,000) and for other members is forty thousands CNY (\40,000). As to the domestic members, the annual membership fee for SC members is thirty thousands CNY (\30,000). The membership fee for the founders other than SC members is twenty thousands CNY (\20,000) for the initial first year. (Note: Founders are the entities that participate in establishing the Association actively and willing to be founder companies voluntarily.) The annual membership fee for the domestic principal members is ten thousands CNY (\10,000) and for the associate domestic members is five thousands CNY (\5,000).
Article 16. The fiscal year shall be from January 1 to December 31 unless otherwise determined by the SC. Those Members who join the Association after June 30 of a year shall be entitled to reduction of the annual membership fee for that year to one half of the above mentioned annual membership fee for Principal Members or Associate Members, as the case may be. Research institutes, colleges, universities and associations have seventy five percent discounts respectively. At the end of each fiscal year, according to SC election results and/or other membership status changes, members shall update its information and submit next year’s membership fee.
Article 17. Subsidiaries: If the parent Member owns or controls more than 50% voting rights of its subsidiary and the subsidiary is in the same high-definition DVD business field as the parent Member, the membership for the subsidiary shall be included in the membership for the parent Member. A Subsidiary shall be represented by the parent Member at the voting at Steering Committee, General Meetings and Working Groups. Any affiliated company of a Member other than Subsidiaries shall pay its own membership fee and have one vote at the meetings separately and independently from the Member. A Subsidiary, if it wishes, can also become an independent Member separately from its parent company by paying a separate membership fee, but the voting right and Working Group membership of the Subsidiary shall be represented by the parent Member unless it is approved by the Steering Committee that such Subsidiary shall have its own voting right at Steering Committee, General Meetings and Working Group, taking into consideration its substantially independent position from its parent Member.

Chapter 4 Organization Structure, Generation and Dismiss of the Leaders
Article 18. The head organization of the Association is the General Meeting, which is held once a year and organized by the Association Office director. The General Meeting can be held only if over half of SC members and over half of principal members attend it. Any resolution shall require the consent of the majority among the members present in the Meeting by casting a “yes” or “no” vote. Other than the period of the General Meeting, the Temporary General Meeting shall be held for some emergent and special accidents after the approval of SC or over half of the principal members.
The General Meeting shall have the following powers:
(1) Review the guideline and plan for future development of the Association proposed by the SC according to the situation of the industry.
(2) Review and approve the working report and statement of accounts (including budget and final accounts).
(3) Adopt the Charter.
(4) Vote to elect the SC members of next term.
(5) Discuss the termination and liquidation issues.
(6) Discuss other important issues that shall be determined by General Meeting.
Article 19. The Steering Committee is the execution organization of the Association and is responsible for the General Meeting. Each term of SC membership is two years. The SC members for the initial two years shall be recommended by the Association Initiators. (Association Initiators are the entities which take active part in Association’s initial activities and volunteer to become initiators.) Meanwhile, 50% of the SC members of the first term comprise of some Steering Committee members of the DVD Forum. The SC membership of the following terms shall be elected by the General Meeting. A SC Chair Company and two Vice-Chair Companies (with term of two years respectively) shall be elected in SC meetings. The SC meetings, which shall be held at least one to two times each year and arranged by the director of the Association Office, can be held only if over half of the SC members attend it. Decisions of the SC on any matter (except a matter covered by Article 32 in Charter 6) shall be made by the majority of those members of the SC casting a “yes” or “no” vote on such matter, provided that the number of “yes” votes shall be at least one-third of the SC members. Other than the period of the SC meetings, the Temporary SC meeting shall be held for some emergent and special accidents after the approval of over half of the SC members.
The responsibilities of the SC are showed as follows:
(1) Execute resolutions approved in the General Meeting and report to the General Meeting.
(2) Propose resolutions about modifying the Charter and submit them to the General Meeting for approval.
(3) Elect Chair Companies and Vice-Chair Companies of the Association and the SC.
(4) Recommend candidates of the Association Office director and make the draft resolution of dismissing the Association Office director.
(5) Review and approve issues about electing or dismissing leaders of working groups.
(6) Make annual statement of accounts including budget and final accounts.
(7) Review and approve the establishment and modification of some new organizations of the Association, and lead the Association Office and every working group to work in proper order;
(8) Approve resolutions about establishing or modifying technical standards and codes submitted by working groups after collective deliberation.
(9) Make guideline and plan for future development of the Association;
(10) Make suggestions and reports which are going to be reported to the government.
(11) Prepare for the General Meeting.
(12) Determine to affiliate or dismiss members, and pass a resolution about reward and punishment.
(13) Propose resolutions about termination or alteration of the Association and submit them to the General Meeting for discussion.
(14) Determine other important issues.
Article 20. The SC shall have an Association Office, which is responsible for arranging routine issues. An office director shall be elected responsible for Association’s routine issues. Meanwhile, the office director can act as leader of Promotion Working Group. Each term of the office director is two years and he/her can be re-elected.
The responsibilities of the Association Office are showed as follows:
(1) Execute resolutions approved by the General Meetings and SC meetings, and coordinate activities of working groups and members in the Association.
(2) Make arrangements for the General Meetings and SC meetings.
(3) Draft the annual statements of financial budget and final accounts.
(4) Draw up annual summary and report.
(5) Handle application of joining the Association and initially examine the qualification of the entities.
(6) Make suggestions about dismissing members according to related regulation, and handle application of withdrawal from the Association.
(7) Solve other problems arranged by the General Meetings and SC meetings.
Article 21. The Association shall have one Chair Company and three Vice-Chair Companies, which shall be elected from among the SC members by the majority vote of the SC members. The Chair Company of the Association shall act as the Chair of the SC. In general, the candidates of the Chair Company and Vice-Chair Companies shall involve every key joint of the industry chain. Each term for both Chair Company and Vice-Chair Company is two years.
Article 22. The Association shall have several working groups.
A group leader and vice leaders are elected in every working group. The candidates shall be approved in the SC meetings. Each term of leader is one year and the renewal of term of office shall be allowed by casting votes.
Article 23. The working groups shall execute resolutions of SC under coordination of the Association.
The group leaders are responsible for organizing group meetings.
Group meetings shall have the following responsibilities:
(1) Discuss and determine annual working guidelines and tasks;
(2) Coordinate members in one working group and enhance technical exchange and economic cooperation among the members.
(3) Elect group leader and vice leaders.
(4) Discuss and determine other related issues within the working group.
Article 24. Every member company shall appoint a representative and a contact person so as to keep in smooth touch with the Association.

Chapter 5 Asset Management and Usage
Article 25. Funding of the Association mainly comes from:
(1) Membership fee
(2) Revenue for implementing technical activities or services in the approved service scope
(3) Government subsidies or social donation
(4) Other legitimate revenues
Article 26. Strict financial management system shall be established to ensure the legality, accuracy and integrity of the accounting materials.
Article 27. Qualified accountants shall be used. The accountant and the cashier can not be the same person. The accountant must check the accounting and supervise the accounting. For their turnover or job-hopping, the accounting personnel shall go through the outgoing auditing and complete transfer procedures for new accounting staff.
Article 28. The asset management of the Association shall be executed according to the financial management system regulated by the state. It shall accept the supervision of General Meeting. The revenue, which is from government funding or donation from the society, shall be supervised by 3rd party auditing firm and report to the society in proper way.
Article 29. The assets of the Association shall be used for the development of the scoped service and can not be illegally occupied, divided or embezzled by any organization (including the member company) or individual.
Article 30. Before the Association changes Chair Company, it shall accept the financial audit organized exclusively by SC.
Article 31. The salary, insurance and welfare of the full-time staff of the Association shall be based on the state’s related regulations on public service units.

Chapter 6 Modification procedures of the Charter
Article 32. Any modification of the Charter of the Association shall be reported to the General Meeting for review after the affirmative vote of at least seventy percent of all the SC members for approval.

Chapter 7 Termination Procedure and the Assets Handling after the Termination
Article 33. When the Association needs be cancelled after it accomplishes its target or is dismissed by itself or for the reason of separation and merger, the SC shall submit proposal of termination.
Article 34. The Association termination proposal shall be approved by the General Meeting after affirmative vote of at least seventy percent of all the principal members.
Article 35. Before the Association terminates, clearing organization shall be set up under the guidance of SC to settle debits and creditors and handle any related issues. During clearing, all activities except clearing shall not be implemented.
Article 36. The Association is terminated after cancellation procedures in the related government department have been followed.
Article 37. The residual assets after the Association termination shall be used to develop the service related to the Association principles according to the related state’s regulations.

Chapter 8 Miscellaneous Articles
Article 38. Confidentiality: Any information discussed in or by the Association, including as part of any General Meetings, Steering Committee meetings or Working Group meetings shall be non-confidential and treated as such by the Members unless otherwise covered by written non-disclosure agreements as to technical information between the disclosing party and receiving parties, or unless incorporated into high-definition format(s) established in the Association which information shall be treated as confidential. Any Member shall enter into a non-disclosure agreement with other Principal Members in a form satisfactory to the parties when it joins any Working Group or becomes a Principal Member.
Article 39. Antitrust Compliance: The Association and its members shall conduct all of their activities in strict compliance with all applicable laws. Particularly, the members acknowledge that they may compete with one another in various lines of business and that it is therefore imperative that they and their representatives act in a manner which does not violate any applicable antitrust laws and regulations. Each member of the Association acknowledges that the members are committed to fostering competition in the development of new products and services and the high definition format(s) is (are) intended to promote such competition. Without limiting the generality of the foregoing, the Association members acknowledge that they shall not discuss issues relating to product costs, product pricing, methods or channels of product distribution, any division of markets, or allocation of customers or any other topic which should not be discussed among competitors. Accordingly, each Association member hereby assumes responsibility to provide appropriate legal counsel to its representatives involved in the Association activities regarding the importance of limiting their discussions to subjects that relate to the purposes of the Association, whether or not such discussions take place during formal meetings, informal gatherings, or otherwise. Each Association member further acknowledges that it is free to develop competing technologies and standards and to license its patent rights to third parties, including without limitation, to enable competing technologies and standards, subject to any limitation or restriction expressly provided for in the Association’s Charter.
Article 40. Intellectual Property:
By participating in the Association, no Member shall grant or be deemed to have granted to the Association or any other Member, expressly or by implication, any license or right under any patent, copyright, trademark, trade secret or other intellectual property rights owned or controlled by that Member, except as explicitly provided in this Charter.
No Member shall use the name of another Member or Members in any form of publicity without the express written permission of such other Member or Members whose name is so used, provided, however, that any Member may disclose and publicize its own membership in the Association and the Association may disclose and publicize the membership of any Member in the Association unless such Member expressly requests in writing that the Association not disclose or publicize its membership in the Association.
(1) Those Members of the categories as specified below shall be requested to execute a written instrument, in which such Member agrees to grant, under fair, reasonable and non-discriminatory terms and conditions, to any Members or third parties, a license of patents, both granted and pending, which are necessarily infringed when implementing high-definition format(s) to be established in the Association, to manufacture, sell and/or use high-definition products complying with format(s)established in the Association (the "License"), provided further that a party obtaining a License from such Member agrees to grant to such Member a license, under terms and conditions comparable to those contained in the License, of their patents, which are necessarily infringed when implementing high-definition format(s) to be established in the Association, to manufacture, sell and/or use high-definition products complying with format(s) established in the Association.
(a) Members who participate in Working Group activities for creation and/or improvement of high-definition formats established in the Association; and
(b) Members who created a certain format outside the Association and propose such format to the Association to be agreed upon as a new format.
(2) The Member of the categories who participates in any Working Group hereby grants to the Association a perpetual, irrevocable and royalty-free license (which may be sublicensed to an entity to be determined by the Steering Committee of the Association), under any interest that such the Member may have in the copyrights in, and technical information, trade secrets and know-how contained in, the format(s) established in the Association that it participates in developing in such Working Group, to issue such format(s) and sublicense to interested third parties and the Association members the right to use such format(s) solely in connection with the sub-licensee’s development, manufacture, sale, and/or use high-definition products complying with format(s) established in the Association.
(3) The provisions of Section (1) and (2) above shall survive the termination of CHDA membership of the member, provided, however, that the provisions of Sections 1) and (2) above shall apply only to the version of the specifications of the format(s) established in the Association while such member was a member of the Association. This Section (3) shall in no way obligate the member to grant any right or license under any of its intellectual property rights (including, without limitation, patents and copyrights) for the format(s) (or any successive derivative versions thereof) newly established in the Association after the termination of its membership in the Association.
Article 41. Disclaimer of liability: This Charter is not intended, and shall not be construed, to create a corporation, partnership, joint venture, agency relationship or other legally recognized entity by or among the Members. No Member shall have any power to enter into any agreement or obligation on behalf of other Members or the Association without the express written authorization of such other Members or the Association, as the case may be. A Member shall have no liability, loss or damages whatsoever resulting from any unauthorized acts of another Member or the Association.
Article 42. This Charter takes effect after adoption by the General Meeting.
Article 43. The official language of the Association is Chinese. The Chinese version of this Charter shall be binding, even though a translation into some other language may be prepared.

Article 44. The right for explanation to this Charter belongs to the SC.