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``This investment marks the first time we have taken a direct equity stake as part of a strategic relationship,'' said Ed Schummer, Senior Vice President and General Manager, Consumer Division, Dolby Laboratories. ``The investment links two innovators whose focus is on audio excellence.''

Dolby Laboratories' President, Bill Jasper, said, ``Our investment in Lake indicates our strong confidence in the company's technology, management team, and business model. We know Lake, its vision, and its products very well, and we believe this is a compelling business opportunity.''

Dolby will initially acquire US$1 million of Lake's equity at AUD$0.30 per share, and subscribe to a US$2 million loan note convertible into Lake's equity at a later date. Mr. Jasper will take a seat on Lake's board of directors with Mr. Schummer serving as an alternate.

``Dolby's investment is the best validation I can imagine for our business strategy,'' said Chris Gilbey, CEO of Lake Technology. ``The investment from Dolby enables Lake to accelerate the development and/or acquisition of new technologies, and fast-track to market existing licensable technologies for which we already have patents or patents pending.''

Dolby began its relationship with Lake in 1998 when the two companies entered into an agreement to license the intellectual property (IP) that has become the underlying technology of Dolby Headphone.

According to Chris Gilbey, ``This capital injection positions Lake as a more powerful path to market for audio IP. It cements a strong alliance with Dolby Laboratories, and reinforces Lake's position as a key player in the world of digital signal processing.''

All aspects relating to the closing of this transaction are subject to approval by Lake's shareholders at a special general meeting to be held in Sydney, Australia, in January 2002. Bandwidth Capital, a San Francisco-based specialist financial advisory firm, advised Lake on this transaction. Lake has retained Bandwidth Capital as financial advisor on an ongoing basis.

About Dolby Headphone

Dolby Headphone is a unique signal processing system that enables conventional stereo headphones to realistically portray the sound of a five-speaker playback system. Dolby Headphone's room modeling algorithm is performed by a digital signal processing system developed by Lake Technology. This makes the technology easy to incorporate into virtually any type of audio or video product that features a headphone output.

About Lake Technology

Lake Technology is a world-leading digital signal processing based licensing business. The company operates internationally and listed on the Australian Stock Exchange in 1999 (code: LAK). Customers include Dolby Laboratories, Sanyo Sharp, and Clair Brothers. Lake has its headquarters in Sydney Australia. For more information visit www.lake.com

About Dolby Laboratories

Dolby Laboratories is the developer of signal processing systems used worldwide in applications that include motion picture sound, consumer entertainment products and media, broadcasting, and music recording. Based in San Francisco with European headquarters in England, the privately held company also has offices in New York, Los Angeles, Shanghai, Beijing, and Tokyo. For more information about Dolby Laboratories or Dolby technologies, please visit www.dolby.com.

Contact:

     Dolby Laboratories
     Jim Arnold, 415/645-5116
     jja@dolby.com
         or
     Lake Technology
     RAMcKinnon, 415/637-4518 (US)
     LJ Loch, (0413) 732 498