JOHNSON | FLORA ruc LAWYERS Donovan Flora Mark Jonnson Sims Weymuller December 22, 2009 Brian Buckley, Esq Fenwick & West LLP 1191 Second Avenue, Tenth Floor Seattle, Washington 98101 Re: MOD/Phillips Transition Agreement Dear Brian: First ofall, 1 would like to wish happy holidays to you and your family. From overhearing your conversation with Mr. de Bakker during our meeting last week, apparently you both have young children so these should be the best of times for you To the business - I have been practicing law for 31 years and [ have never seen a case in ‘which the parties are so totally convinced that the other side is not just wrong but dishonest, 1 have never seen the word fraud used so often. In your pleading, you did nothing to tw down the beat (1 am not sure what a “gross” misrepresentation is) so I responded in kind, Given how contentious things are, I do not think that mediation will be helpful. I also think Mark will win. I believe that MOD faces incredible hurdles in proving the allegations that it did not know everything about the IP, insofar as MOD’s Board was required to perform due diligence, it did, it was advised by counsel and it entered into the transaction. Best case for MOD - itis a statement to NCR and Toshiba that the MOD Board and its counsel were incompetent. Worst case - the judge or jury finds that the MOD Board knew that the IP was already owned by it or was worthless (2s MOD now contends) and it went through with the transaction to induce NCR and Toshiba to invest. The latter, of course, would essentially constitute a finding that the MOD board committed a crime. With regard to your December 21, 2009, letter pertaining to arbitration of a payment plan for the 1.2 million dollars, based on my advice, Mark does not intend to pay a penny of the money until such time as independent and un-conflicted individuals assess the propriety of the expenses, I do not believe that the arbitration provision is valid because MOD breached the Agreement and Judge Erlick found that Cane and Bay had conflicts. I am, however, considering that the letter is a demand for arbitration and we are therefore declining that demand. In regard 2505 Second Avenue, Suile 500 | Seatile, WA 98121 | www.johnsonflora.com | (t} 206.286.5566 | (1) 206.682.0675Brian Buckley, Esq December 22, 2009 Page 2 to the money claimed to be owed, if single expense is found to have been properly attributed to Anthony Bay and since he was on the DRC and aware of what was being charged to Mark he will in fact, have committed fraud. In addition every expense alleged to have been improper occurred before the Series A and every expense was on the books - that's not embezzlement. Based! on what I know, he should be very concerned, am not particularly a fan of arbitrations or private trials but given that time is clearly of the essence I believe we should discuss that option, If we agree to that, we should, no later than the end of January, agree to a judge and then fast track the matter through lay down discovery and limiting the length of depositions and try to get this tried by May or June. ‘Thank you for your kind consideration in this matter: Mark Johnson MASK}