DISMISSAL AND LICENSE OPTION AGREEMENT

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EXHIBIT 10.1

DISMISSAL AND LICENSE OPTION AGREEMENT

This Dismissal and License Option Agreement (this “Agreement”) is made and entered into as of this 23 day of December, 2008 (the “Effective Date”), by and between OPTi, Inc., a California corporation having its place of business at 3430 W. Bayshore Road, Suite 103, Palo Alto, California 94303 (“OPTi”) and Broadcom Corporation, a California corporation having its place of business at 5300 California Avenue, Irvine, California 92617 (“Broadcom”), acting on behalf of itself and its Subsidiaries (Broadcom Corporation and its Subsidiaries, collectively, “Broadcom”). OPTi and Broadcom are individually referred to as a “Party” and collectively as the “Parties”.

WHEREAS, OPTi has filed patent infringement claims against Broadcom, Advanced Micro Devices, Inc. (“AMD”), Standard MicroSystems Corporation (“SMSC”), and other co-defendants in the Civil Action No. 2:07-cv-00278-TJW (E.D. Tex.) (the “Lawsuit”).

WHEREAS, Broadcom denies that it does now or has ever infringed any of the patents asserted in the Lawsuit or committed any act that would entitle OPTi to any of the relief it is seeking from Broadcom in the Lawsuit; and

WHEREAS, OPTi and Broadcom desire to avoid the time and expense of litigation, and in compromise of the disputed claims, to dismiss the Lawsuit against Broadcom and grant Broadcom an option to acquire a license from OPTi as set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the undertakings and options granted herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the aforementioned Parties agree as follows:

As used herein:

a. “Asserted Patents” shall mean any and all patents asserted by OPTi in the Lawsuit, including without limitation U.S. Patent No. 5,944,807 and U.S. Patent No. 6,098,141, and any patent or patent application that claims priority directly or indirectly to, or from which priority is directly or indirectly claimed with respect to, any of the foregoing patents or any patent or application to which the foregoing patents claim priority, whether or not pending, issued, expired, abandoned or closed, including without limitation any and all reexaminations, reissues, continuations, divisions, continuations-in-part and foreign counterparts of any of the foregoing patents anywhere in the world.

b. “Dismissal Period” shall mean the period commencing on the Effective Date and ending on the later of: (i) eighteen (18) months after the Effective Date; or (ii) two (2) months after a final (but appealable) judgment is issued by the District Court in the Lawsuit addressing all remaining claims in such Lawsuit.

[***] Confidential treatment requested under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential portion omitted and filed separately with the Commission.

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c. “Subsidiary” shall mean any corporation or other entity that is directly or indirectly controlled by the specified Party. For purposes of this definition, control means (i) direct or indirect ownership of, or the exclusive right to acquire ownership of, more than fifty percent (50%) of the outstanding shares or securities entitled to vote for the election of directors or similar managing authority of an entity; or (ii) the direct or indirect right to vote or to direct the vote (by written proxy or otherwise) of more than fifty percent (50%) of the ownership interest representing the right to elect directors or similar managing authority of an entity. An entity shall be deemed to be a Subsidiary under this Agreement at any time that the requisite conditions of being a Subsidiary are met, except that entities which are co-defendants in the Lawsuit may not become Subsidiaries of Broadcom for the purposes of this Agreement.

a. The Parties hereby agree that the Lawsuit between the Parties, including all claims made by OPTi against Broadcom therein, shall be fully and promptly dismissed without prejudice. Within five (5) business days after the Effective Date, each Party shall cause its counsel to have signed and filed all necessary dismissals, stipulations, orders and other documents with respect to the Lawsuit to effect a complete dismissal without prejudice of all claims, demands and causes of action brought by OPTi against Broadcom and all claims by Broadcom against OPTi in the Lawsuit. The Parties shall proceed with any and all additional procedures necessary to dismiss such claim without prejudice.

b. In accordance with Section 2.a above, Broadcom shall pay OPTi one million U.S. dollars ($1,000,000) (the “Dismissal Payment”) within fifteen days after such dismissal.

c. During the Dismissal Period, OPTi will not bring any claim or suit alleging infringement of or to otherwise assert any of the Asserted Patents: (i) against Broadcom or any Subsidiary of Broadcom; or (ii) against any direct or indirect Broadcom customer, distributor, OEM, dealer, reseller, user, vendor, manufacturing or assembly facility, assembly or testing facility or other third party with respect to any Broadcom product or service (alone or in combination with other components) manufactured, used, sold, offered for sale, imported or otherwise exploited by such entity. (The “Standstill Obligation.”) The Standstill Obligation shall run with the title of the Asserted Patents, and shall be binding on OPTi’s successors, assigns, licensees, and any other person or entity who obtains from OPTi a direct or indirect ownership or other interest (including any enforcement right) in or to the Asserted Patents. The Standstill Obligation shall not constitute and shall not be deemed to constitute a release of or license to Broadcom or any of its customers, and any injunctive or monetary relief that OPTi may be entitled to recover against Broadcom or its customers shall continue accrue during the Dismissal Period and shall not be limited, diminished or abated by OPTi’s compliance with the Standstill Obligation. Neither shall OPTi’s compliance with the Standstill Obligation be deemed to constitute a waiver or estoppel of or laches as to any monetary or equitable right of recovery that OPTi may have against Broadcom or its customers.

d. During the Standstill Period, Broadcom shall refrain from bringing suit seeking a declaration as to the noninfringement, invalidity, or unenforceability of the Asserted Patents, or seeking reexamination or reissuance of the Asserted Patents or similar relief.

[***] Confidential treatment requested under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential portion omitted and filed separately with the Commission.

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a. In the event that a final (but appealable) judgment is issued by the District Court in the Lawsuit addressing all remaining claims in such Lawsuit, OPTi shall notify Broadcom of such judgment in writing within ten (10) business days thereafter (the “Trial Completion Notice”).

b. In the event that a final judgment is issued after all appeals have completed or been waived in the Lawsuit addressing all remaining claims in such Lawsuit, OPTi shall notify Broadcom of such judgment in writing within ten (10) business days thereafter (the “Appeal Completion Notice”).

c. In the event that OPTi settles and dismisses with prejudice all remaining claims against all of Broadcom’s co-defendants in the Lawsuit, OPTi shall notify Broadcom of such settlement in writing within ten (10) business days thereafter (the “Settlement Completion Notice”), and such notice shall include a summary of all material terms of the settlements with each co-defendant, including the fees paid or to be paid to OPTi by AMD and SMSC.

a. Broadcom shall have the right and option, in its sole discretion and without any obligation to exercise such option, to acquire the license to the Asserted Patents described below upon payment of the License Fee defined below and execution by Broadcom and delivery to OPTi of the exercise notice attached as Exhibit A hereto (the “License Option Exercise Notice”). This option shall run with the title of the Asserted Patents, and shall be binding on OPTi’s successors, assigns, licensees, and any other person or entity who obtains from OPTi a direct or indirect ownership or other interest (including any enforcement right) in or to the Asserted Patents.

b. For purposes of this Agreement, the “License Fee” shall mean:

(i) [***];

(ii) [***]; or

(iii) [***].

c. Upon payment of the Licensee Fee and execution by Broadcom and delivery to OPTi of the License Option Exercise Notice, OPTi automatically and without the need for any further action or documentation grants to Broadcom, and Broadcom automatically and without the need for any further action or documentation receives a non-exclusive, worldwide, perpetual, irrevocable, paid up and royalty-free license, without the right to sublicense, under the Asserted Patents (and any related patents/filings) to make, have made, use, offer for sale, import and sell (directly and indirectly through multiple tiers of distribution) any products or services. For the avoidance of doubt, the restriction on sublicensing set forth herein shall not be interpreted to restrict Broadcom’s right to engage with third parties in connection with the design, development, manufacturing, packaging, assembly, testing, sale, distribution and other similar activities with respect to Broadcom’s products and services.

[***] Confidential treatment requested under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential portion omitted and filed separately with the Commission.

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d. Upon Broadcom’s payment of the License Fee and exercise of the license option as set forth in Section 4.c:

(i) OPTi releases, acquits and discharges Broadcom and all of its officers, directors, employees and agents from and against any and all claims, demands,