Exhibit 10.1


 


CONFIDENTIAL TREATMENT
REQUESTED


 


SETTLEMENT AGREEMENT

BETWEEN

TDK SEMICONDUCTOR CORPORATION AND SILICON LABORATORIES INC.


 


                Whereas, TDK
Semiconductor Corporation, a California corporation having its principal place
of business at 2642 Michelle Drive, Tustin, California 92780 (“TDK”), has
brought an action against Silicon Laboratories Inc., a Delaware corporation
having its principal place of business at 4635 Boston Lane, Austin, TX 78735
(“SiLabs”), styled TDK Semiconductor Corp. v. Silicon Laboratories Inc.,
Civil Case No. SACV-01-01737 GLT in the United States District Court for the
Central District of California (the “Action”);


 


                Whereas, in the
aforementioned action, TDK has alleged that SiLabs has infringed, and continues
to infringe, United States Patent No. 5,654,984 entitled “Signal Modulation
Across Capacitors”;


 


                Whereas, SiLabs
has denied infringing United States Patent No. 5,654,984;


 


                Whereas, TDK and
SiLabs desire to settle the aforementioned action;


 


                NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and conditions as set
forth herein, TDK and SiLabs agree as follows:


 


1.     Effective Date: 
The effective date of this Settlement Agreement shall be the date of
execution, but in no case later than April 1, 2003 (“Effective Date”).


 


2.     Definitions:


A.           “Party” shall mean, as applicable, either TDK or
SiLabs.


 


B.             “Entity” shall mean any corporation, firm,
partnership, proprietorship, or other form of business organization.


 


C.             “TDK Corporate Family” shall mean:


(i).          any Entity that in whatever country organized or
resident, directly or indirectly through or one or more intermediaries, is
controlled by, is under common control with, or controls TDK; or


(ii).       any Entity in which TDK, or any Entity in which any
individual or Entity recited in the preceding sub-paragraph, directly or
indirectly through one or more intermediaries, has at least a fifty percent
(50%) ownership or voting rights interest (whether through stock ownership,
stock power, voting proxy, or otherwise), or has the maximum ownership interest
it is permitted to have in the country where such Entity exists; or


(iii).    any Entity that directly or indirectly owns or
controls through one or more intermediaries at least a fifty percent (50%)
ownership or voting rights interest (whether through stock ownership, stock
power, voting 


 


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proxy, or otherwise), or
has the maximum ownership interest it is permitted to have in the country where
such Entity exists, of TDK, or of any individual or Entity of sub-paragraph
(i).


 


D.            “TDK Affiliates” shall mean:


(i).          any Entity that in whatever country organized or
resident, directly or indirectly through or one or more intermediaries, is
controlled by TDK; or


(ii).       any Entity in which TDK, or any Entity in which any
individual or Entity recited in the preceding sub-paragraph, directly or
indirectly through one or more intermediaries, has at least a fifty percent
(50%) ownership or voting rights interest (whether through stock ownership,
stock power, voting proxy, or otherwise), or has the maximum ownership interest
it is permitted to have in the country where such Entity exists.


 


E.              “SiLabs Affiliates” shall mean:


(i).          any Entity that in whatever country organized or resident,
directly or indirectly through or one or more intermediaries, whose financial
reporting is or may be consolidated with the financial reporting for SiLabs.


 


F.              “Capacitive DAA” means
direct access arrangement circuitry or designs, or other circuitry or designs
that performs direct access arrangement functionality; that are utilized to
provide access to communication lines, including without limitation, telephone
lines and that uses,
or is designed or intended to be used with a capacitive isolation barrier.


 


G.             “Licensed Patents” mean


(i).          United States Patents


(a).       Signal Modulation Across Capacitors,” U.S. Patent No.
5,654,984;


(b).      “Telephone Hybrid Circuit,” U.S. Patent No. 5,602,912;


(c).       “Low Frequency Common Mode Rejection In A Clock
Circuit,” U.S. Patent No. 5,533,053;


(d).      “Telephone Line Interface With AC and DC
Transconductance Loops,” U.S. Patent No. 5,500,894


(ii).       any other patents or patent application, filed now or
in the future, in the United States or abroad, claiming priority in whole or in
part from any one of the four aforementioned patents, including, but not
limited to, Japanese patent application No. 329230/94 having Publication No.
7307708A2 and Japanese patent application No. 329231/94 having Publication No.
7-273839.


 


H.            “SiLabs Product” means any product, part, device,
apparatus, circuitry, design, method, process, system, machine, or thing,
provided, made, have 


 


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made, used, sold, offered
for sale, leased, offered for lease, distributed, offered to distribute,
imported, offered to import, exported, offered to export, and/or otherwise
disposed of by or for SiLabs or SiLabs Affiliates.


 


I.                 [****]


 


J.                “Existing Products” means SiLabs Products existing on
or before the Effective Date.


 


3.     Payment:  SiLabs will pay TDK the sum of Seventeen
Million Dollars ($17,000,000.00) in a single, one-time payment made within
three (3) business days with the execution by all Parties of this Agreement.


 


4.     Dismissal of Entire Action:  Concurrently with the execution of this agreement, the parties
will jointly dismiss all Claims and Counterclaims in Civil Case No.
SACV-01-01737 GLT with prejudice.  In
implementation of the provisions of this Section, SiLabs and TDK shall cause
their respective counsel to execute and file with the United States District
Court for the Central District of California a Joint Stipulated Order of
Dismissal in substantially the form attached hereto as Exhibit A before the close of the District Court on
the Effective Date.


 


5.     No Admission.  Nothing in this Settlement Agreement shall
be deemed or construed as an admission by SiLabs or SiLabs Affiliates of
infringement, enforceability, or validity of any of the Licensed Patents set
forth below or as a concession of liability or fault of any kind by either
Party or their respective Affiliates.


 


6.     License.


A.           Subject to any rights that [****]
received pursuant to the [****] Agreement entered into on [****] by [****] and
TDK (the “[****] Agreement”), TDK hereby grants SiLabs a perpetual,
irrevocable, exclusive, worldwide, fully paid-up, royalty-free license to the
Licensed Patents to make, have made, use, sell, offer to sell, lease, offer to
lease, distribute, offer to distribute, import, offer to import, export and
offer to export any product, part, device, apparatus, method, system, machine,
circuit, design, or thing that directly, indirectly, contributorily, or by
inducement infringes, induces infringement of, or contributes to infringement
of the claims of the Licensed Patents.  TDK
agrees that any license executed with [****] in the future pursuant to the
[****] Agreement referenced herein shall be no broader than [****], except if ordered to do so by a Court of
competent jurisdiction.  The license grant of Section 6 also includes the right for any
manufacturers, distributors, customers, importers, or end users (ultimate or in
privity or otherwise) of SiLabs or SiLabs Affiliates, to use, sell, offer to
sell, lease, offer to lease, distribute, offer to distribute, import, offer to import,
export, offer to export, and/or otherwise dispose of SiLabs Products that,
directly, indirectly, contributorily, or by 


 


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


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inducement, infringes, induces infringement of, or
contributes to infringement of the claims of the Licensed Patents.


B.             The aforementioned license grant is
without the right of sublicense, except for the right for SiLabs to grant
sublicenses, either directly or through one or more intermediaries, to SiLabs
Affiliates.


 


7.     [****]


 


8.     Retention of Rights. 
TDK and Affiliates retain the rights under the Licensed Patents to
make, have made, use, sell, offer to sell, lease, offer to lease, distributed,
offer to distribute, import, offer to import, export, offer to export, and/or
otherwise dispose of products.  The make and sell rights that
are retained in this section shall be limited to products (1) designed by or
for TDK, TDK Affiliates, or its contractors, (2) made for the use and benefit
of TDK, and (3) sold by TDK or TDK Affiliates as TDK-branded products under the
sole trademarks of TDK.  This Settlement
Agreement shall not be construed as granting to or reserving for TDK the right
to act as a foundry to make products for sale by a third party.  Without limitation, TDK shall not make products
for a third party pursuant to specifications provided by a third party or make
products for a third party under the trademarks, trade names or other
commercial indicia of such third party. 
Subject to paragraph 42 (Assignment), this right is personal to TDK and
TDK Affiliates and shall not be assigned, sublicensed, or otherwise transferred.  However, TDK shall be free to transfer or
sell the License Patents at its sole discretion subject to the obligations and
covenants of this Agreement.


 


9.     Nonrefundable payment:  Subject to paragraph 16, the aforementioned
Seventeen Million Dollars ($17,000,000.00) payment is non-refundable, even if
one or more of the patents referenced herein is, or was to be found to be,
invalid and/or unenforceable for any reason whatsoever.  However, this provision does not limit a
cause of action to recover any damages for breach of this Settlement Agreement
by either Party.


 


10.   [****]


 


11.   No Implied Licenses:  Except as
expressly set forth herein, each Party agrees that this Settlement Agreement
grants no express or implied licenses by implication, estoppel, exhaustion, or
otherwise in any TDK and TDK Affiliates or SiLabs and SiLabs Affiliates patent
other than the Licensed Patents.  Nothing
in this Agreement shall prevent or preclude, under any theory including without
limitation any theory of exhaustion, estoppel, or license, the assertion by
SiLabs or SiLabs Affiliates against TDK or TDK Affiliates or others of any
other SiLabs or SiLabs Affiliates intellectual property rights, including
without limitation patents.  


 


12.   Personal to Parties:  This Settlement Agreement, and the rights,
obligations and covenants contained herein, is and are personal to and shall
inure solely to the benefit of 


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


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the Parties hereto
and their permitted successors and assigns. 
Any assignment by TDK or TDK Affiliates of any patents, patent
applications or inventions shall respect the rights granted SiLabs and SiLabs
Affiliates herein.  In particular, but
not by way of limitation, the covenant not to sue shall be made a condition of
any assignment of any patents, patent applications or inventions by TDK or TDK
Affiliates.  Any future acquirer of any
patents rights from TDK or TDK Affiliates is obligated to the covenants not to
sue provided herein as said covenants are intended to burden and run with the
TDK or TDK Affiliates patent rights and are not be limited to the Parties
hereto.


 


13.   Release:  Each Party hereto, on behalf of itself and its respective Affiliates,
subsidiaries, successors and assigns, hereby releases, acquits and forever
discharges the other Party, and its agents, officers, directors, employees,
predecessors, respective Affiliates, subsidiaries, successors, assigns,
manufacturers, distributors, suppliers and customers (but only as to products,
designs, methods, or circuits provided by or for, purchased by or from, or made
by or for SiLabs prior to the Effective Date) from any and all claims, demands,
causes of action, liabilities and damages whatsoever, of every name and nature,
both in law and equity, arising out of or relating to


A.           the allegations made in the Complaint, Answer, First
Amended Answer with Counterclaims, Second Amended Answer with Counterclaims,
and Third Amended Answer with Counterclaims; or


B.             Existing Products.


 


14.   [****]. 
TDK and TDK Affiliates releases, acquits and forever discharges SiLabs,
SiLabs Affiliates, and any third party and each of their agents, officers,
directors, employees, predecessors, subsidiaries, successors, assigns,
manufacturers, distributors, suppliers and customers from any and all claims,
demands, causes of action, controversies, liabilities and damages whatsoever,
of every name and nature, known or unknown, accrued or not accrued, both in law
and equity, arising out of or relating to:


A.           the allegations made in the Complaint, Answer, First
Amended Answer with Counterclaims, Second Amended Answer with Counterclaims,
and Third Amended Answer with Counterclaims; or


B.             Existing Products, but only to the extent such claim,
demand, cause of action, or infringement, whether direct, indirect,
contributory, or by inducement, results from or is caused by a SiLabs Product [****].


 


15.    Covenant Not To Sue.


A.           TDK on behalf of itself, and its Affiliates, predecessors,
successors and assigns and on behalf of any successors or assigns to any TDK or
TDK Affiliates intellectual property rights agrees such parties will not sue or
bring any other proceeding against SiLabs or SiLabs Affiliates for any claim, demand, or cause of action
of any name or nature, both in law and equity, anywhere in the world for a period of
twenty (20) years from the Effective Date arising out of or relating to:


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


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  i.

  	
  Infringement by Existing
  Products, whether direct, indirect, contributory, or by inducement, of any
  past, present or future patent applications, patents, or trade secrets or
  know-how disclosed or covered by such patents or patent applications;

  
	
  ii.

  	
  Infringement of any patent applications, patents, or trade
  secrets or know-how disclosed or covered by such patents or patent
  applications,
  conceived, reduced to practice, or having any priority date, in whole or in
  part, on or before the Effective Date;

  
	
  iii.

  	
  Infringement by any Capacitive DAAs, Capacitive DAA
  chipsets, or capacitive isolation barriers, whether direct,
  indirect, contributory, or by inducement, of any past, present or future
  patents, or trade secrets or know-how disclosed or covered by such patents; or

  
	
  iv.

  	
  Any other claim, demand, or cause of action known or
  unknown, which could have been made in or in connection with the Action.

  



 


B.             TDK on behalf of itself, and its Affiliates,
predecessors, successors and assigns and on behalf of any successors or assigns
to any TDK or TDK Affiliates intellectual property rights agrees such parties
will not sue or bring any other proceeding against:


	
  i.

  	
  SiLabs, SiLabs Affiliates,
  any manufacturers,
  distributors, customers, importers, or end users (ultimate or in privity or
  otherwise) of SiLabs or SiLabs Affiliates; or

  
	
  ii.

  	
  [****];

  



for any claim, demand, or cause of action of any name
or nature, both in law and equity, anywhere in the world for a period of
twenty (20) years from the Effective Date arising out of or relating to:


	
  i.

  	
  Infringement by Existing
  Products, whether direct, indirect, contributory, or by inducement, of any
  past, present or future patent applications, patents, or trade secrets or
  know-how disclosed or covered by such patents or patent applications;

  
	
  ii.

  	
  Infringement of any patent applications, patents, or trade
  secrets or know-how disclosed or covered by such patents or patent
  applications,
  conceived, reduced to practice, or having any priority date, in whole or in
  part, on or before the Effective Date, but only to the extent such claim,
  demand, cause of action, or infringement, whether direct, indirect,
  contributory, or by inducement, results from or is caused by a SiLabs Product or
  the integration of a SiLabs Product;

  
	
  iii.

  	
  Infringement by any Capacitive DAA, Capacitive DAA chipsets,
  or capacitive isolation barriers provided, manufactured, made, used,

  



 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


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  offered for sale, sold, imported or otherwise
  disposed of, in the past or in the future, by or for SiLabs or SiLabs
  Affiliates, whether direct, indirect, contributory, or by
  inducement, of any past, present or future patents, or trade secrets or
  know-how disclosed or covered by such patents;

  
	
  iv.

  	
  Any DAA chipsets including at least one line side or
  system side Capacitive DAA provided, manufactured, made, used, offered for
  sale, sold, imported or otherwise disposed of, in the past or in the future,
  by or for SiLabs or SiLabs Affiliates; but only to the extent such claim,
  demand, cause of action or infringement, whether direct, indirect,
  contributory, or by inducement, results from or is caused by a SiLabs Product or
  the integration of a SiLabs Product;

  
	
  v.

  	
  Any other claim, demand, or cause of action known or
  unknown, which could have been made in or in connection with the Action; or

  
	
  vi.

  	
  Licensing by SiLabs or SiLabs Affiliates of a
  Capacitive DAA or an Existing Product.

  



 


16.   TDK Corporate Family.  If an Entity of the TDK Corporate Family
sues or brings any other proceeding for any claim, demand, or cause of action
that TDK would have been precluded from bringing under this Agreement, then,
without affecting or limiting any other rights or obligations under this
Agreement, and if the suit is not dismissed within thirty (30) days, TDK will
immediately make a payment to SiLabs for the amount specified in paragraph 3
prorated with respect to the date such claim, demand, or cause of action is
brought with respect to the Effective Date and the duration of the covenant not
to sue specified in paragraph 15.


 


17.   California Civil Code:  Each Party to this Settlement Agreement
represents that it has read, understood, and waives the provisions of
California Civil Code § 1542 which states:


 


(i).          “A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”


 


18.   Authority:  Each Party warrants and represents that it has the full power and
authority to enter into this Settlement Agreement; that there are no other
persons whose consent to this Settlement Agreement or whose joinder herein is
necessary to make fully effective the provisions of this Settlement Agreement;
that this Settlement Agreement does not, and will not, interfere with any other
agreement to which it is a party; and 


 


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that it will not enter into any agreement the
execution and/or performance of which would violate or interfere with this
Settlement Agreement.


 


19.   Ownership of Licensed Patents.  Subject only to the license rights
previously granted in the [****] Agreement, TDK represents and warrants that it
owns all right, title and interest in and to each of the Licensed Patents, and
that it has not granted, and is under no obligation to grant, to any third
party any assignments of or licenses to any rights under any of the Licensed
Patents, nor a covenant not to sue any third party under any of the Licensed
Patents.


 


20.   Validity of Licensed Patents.  TDK represents and warrants that, to the best of its knowledge and belief,
the Licensed Patents are valid and enforceable.


 


21.   All Relevant Patents.  TDK and TDK Affiliates represent and warrant that the definition of
Licensed Patents above sets forth all patents and applications for patent that
are owned by, controlled by, or licensed to TDK or TDK Affiliates as of the
Effective Date and having claims covering Capacitive DAAs.


 


22.   Choice of Law:  This Settlement Agreement shall be construed
with and governed by the laws of the State of New York.


 


23.   Dispute Resolution:  Any dispute relating to or arising out of
this agreement shall be resolved in the court of competent jurisdiction in New
York City, State of New York.  The
prevailing Party in any such dispute shall be entitled to recover its
reasonable attorneys fees and costs.


 


24.   Entire Agreement:  The Parties agree that this Settlement
Agreement constitutes the entire agreement between the parties and supersedes
all prior agreements, whether oral or written.


 


25.   Modifications:  No modification or amendment to this
Settlement Agreement will be valid or binding unless reduced to writing and
duly executed by authorized representatives of both parties.


 


26.   No Waiver:  A failure by a Party hereto to object or to take affirmative
action with respect to a breach of this agreement by the other Party shall not
be construed as a waiver of any future breach or other wrongful conduct.


 


27.   Agreement Execution:  This Settlement Agreement may be signed in
counterparts, each of which shall be deemed on original hereof, but all of
which together shall constitute one and the same instrument.  Fax signatures are acceptable.


 


28.   Binding Agreement:  This Settlement Agreement shall not become
binding until executed by both parties.


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


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29.   Fees and Costs.  Each side will bear its own fees and costs.


 


30.   Joint Drafting.  Each Party acknowledges that this Settlement
Agreement has been jointly drafted and will be interpreted in accordance with
its terms, without favor to either Party.


 


31.   Contract Invalidity.  If one or more provisions of this Settlement
Agreement are found to be wholly, or partially, invalid or unenforceable by a
Court of competent jurisdiction, then the validity or unenforceability of all of
the other provisions of this Settlement Agreement will be unaffected.


 


32.   Review By Counsel.  Each Party acknowledges that it has had the
opportunity to have this agreement reviewed by counsel of its choice prior to
execution hereof.


 


33.   Non-Reliance.  Each Party acknowledges that, except as
expressly set forth herein, it is not relying on any representation by the
other Party in entering into this Settlement Agreement.


 


34.   Enforcement:               [****]


 


35.   Confidentiality.  The Parties will take all necessary actions
to preserve the confidentiality of the terms of, the negotiations, and/or
considerations leading to, this Settlement Agreement and of any confidential
materials of the other Party produced or discovered in the Action.  The terms of this Settlement Agreement shall
remain confidential, except that either Party may disclose whatever terms are
necessary so as to comply with the law or accounting requirements.  Further, neither Party will be deemed to be
in breach of this provision for disclosing information that has already been
made public through no fault of that Party. 
All confidential materials provided in any form by any party in the
Action shall be returned to the disclosing party or certified to have been
destroyed in accordance with the terms of the protective order entered by the
Parties in the Action, including but not limited to confidential materials in
the possession of any retained consultants or experts.  [****]


 


36.   Press Release.  The provisions of paragraph 35
notwithstanding, the Parties further agree as follows:


A.           The Parties have agreed to issue the joint press
release that is attached hereto as Exhibit C.  Unless mutually agreed upon, the Parties
shall issue no other press release or hold any press conference regarding the
Action, the terms of, the negotiations, and/or considerations leading to, this
Settlement Agreement.


B.             The Parties have each designated four authorized Party
representatives, who are listed in Exhibit D,
all of whom shall be employees of the Parties. 
The Parties will instruct all of their counsel, agents, officers,
directors, employees, 


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


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predecessors,
respective Affiliates, subsidiaries, successors, assigns, that if inquiry is
made by the press, media or any third party regarding the terms of, the
negotiations and/or considerations leading to this Settlement Agreement, or
regarding the merits of the Action, to direct all inquiries only to such
designated representatives.   Such representatives
will direct all general inquiries to the language of the joint press release
and may respond by saying: “We settled the case because it was an appropriate
business decision.  Beyond that, we have
no further comment” or similar language to that effect.


C.             The Parties will take all necessary actions and
instruct and order their counsel:


	
  (i).

  	
  not to participate in a press conference or any
  other public forum, contact the press, issue any form of press release,  grant an interview, or initiate or respond
  to any other form of contact with the media to discuss this action, the terms
  of, the negotiations, and/or considerations leading to, the settlement
  agreement;

  
	
  (ii).

  	
  not to discuss or characterize, either orally or in
  writing, this action, the terms of, the negotiations, and/or considerations
  leading to, the settlement agreement;

  
	
  (iii).

  	
  not to reveal or discuss any discussions that lead
  to the settlement;

  
	
  (iv).

  	
  not to publicly disparage any party to the action,
  their employees, counsel, or agents;

  
	
  (v).

  	
  not to reveal any information that is subject to the
  protective order issued in the action;

  
	
  (vi).

  	
  not to use this action, the terms of, the
  negotiations, and/or considerations leading to, the settlement agreement in
  any form of advertising, including, without limitation, internet published
  materials; and

  
	
  (vii).

  	
  if asked about the settlement, its terms,
  negotiations, or the settlement agreement, to state that the parties settled
  on the terms set forth in the joint press release issued by the parties
  because it was in their mutual best interests and make no further comment.

  



D.            Nothing in section 36(C) shall act as a restraint of
trade in violation of applicable professional lawyer’s ethical rules or
prohibit or inhibit a lawyer from representing a client according to the
applicable lawyer’s professional ethical rules, except as otherwise prohibited
by court order or by law.


 


37.   Maintenance.  TDK agrees to pay all the maintenance fees for the Licensed
Patents.  TDK further agrees to
prosecute to completion all pending United States and Foreign patent
applications that claim priority from any one of the four aforementioned
Licensed Patents.


 


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38.   No Admissions.  SiLabs and TDK agree that neither this
Settlement Agreement nor any act under it constitutes or shall be construed as
constituting an admission or concession of liability or fault of any kind by
any Party hereto.


 


39.   Bankruptcy.  In the event TDK seeks or is involuntarily placed under the
protection of the bankruptcy laws, Title XI, U.S. Code, and the trustee in
bankruptcy rejects this Settlement Agreement and/or the licenses granted
hereby, SiLabs elects, pursuant to Section 365(n), to retain all rights granted
to it under this Settlement Agreement to the extent permitted by law.


 


40.   No Notice.   TDK represents and warrants that its officers, legal counsel, and
senior managers have not received any written notice from a third party that
the Licensed Patents are or may be invalid or unenforceable.


 


41.   Further Acts.  SiLabs and SiLabs Affiliates and TDK and TDK
Affiliates agree that they will each execute such further documents and take
such further acts as may be necessary to carry out the intent of this
Settlement Agreement.


 


42.   Assignment.  A Party may assign this Settlement Agreement without need for the
other Party’s approval to an Affiliate or to a successor in ownership of all or
substantially all of its assets or stock. 
Other than as expressly allowed herein, this Agreement shall not be assignable
by either Party other than with the prior written consent of both Parties.


 


43.   Succession.  This Agreement and the rights and
obligations granted and undertaken thereunder shall be binding upon and inure
to the benefit of the Parties hereto, and their successors, trustee(s) or
receiver(s), including those in bankruptcy, and permitted assignees.


 


44.   No Thwarting of Agreement.   TDK and TDK Affiliates represent and warrant that they have not
transferred, assigned, or granted, in whole or in part, any rights to bring up
an action for, any patents or patent applications to a third party from the
date of the filing of the Action through the Effective Date.  TDK and TDK Affiliates represent and warrant, to the best of their
knowledge and belief, that there are no patents or patent applications which
have been for examined for infringement by SiLabs by another Entity in the TDK
Corporate Family having claims covering Capacitive DAAs or that are infringed,
directly, indirectly, contributorily, or by inducement, by SiLabs Existing
Products.   TDK and TDK
Affiliates further represent and warrant
that they have not taken and, other than a suit for breach of contract, will
not take any action to undermine the rights granted to SiLabs under this
Agreement.


 


 


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                IN WITNESS
WHEREOF, TDK and SiLabs execute this Settlement Agreement by their duly
authorized representatives as follows:


 


	
   

  	
  SILICON LABORATORIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Navdeep Sooch

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/1/03

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TDK SEMICONDUCTOR CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tsutae (Den) Suzuki

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  3/31/03

  



 


 


12

















 


EXHIBITS


 


Exhibit A — Joint Settlement Agreement


Exhibit B — [****]


Exhibit C — Joint Press Release


Exhibit D — Authorized Representatives


[****]


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


13

















 


EXHIBIT A


 


Gary A. Hecker (CSB No. 099008)

James M. Slominski (CSB No. 166357)

THE HECKER LAW GROUP

1925 Century Park East, Suite 2300

Los Angeles, CA  90067

Tel:  (310) 286-0377

Fax:  (310) 286-0488


 


Attorneys for Plaintif

TDK Semiconductor Corporation


 


Craig N. Hentschel (CSB No. 66178)

John R. Danos (CSB No. 210964)

ARNOLD & PORTER

777 South Figueroa Street, 44th Floor

Los Angeles, CA  90017-5844

Tel:  (213) 243-4000

Fax:  (213) 243-4199


 


Laurence S. Rogers

Marta E. Gross

FISH & NEAVE

1251 Avenue of the Americas

New York, NY 10020

Tel.:  (212) 596-9000

Fax:  (212) 596-9090


 


Attorneys for Defendant
and Counter-

Claimant Silicon Laboratories Inc.


 


IN THE UNITED STATES DISTRICT COURT


 


FOR THE CENTRAL DISTRICT OF CALIFORNIA


 


	
   

  	
  )

  	
   

  
	
  TDK
  SEMICONDUCTOR CORPORATION,

  	
  )

  	
  Civil Action
  No.: SACV 01737 GLT (MLGx)

  
	
   

  	
  )

  	
   

  
	
   

  	
  Plaintiff,

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  v.

  	
  )

  	
   

  
	
   

  	
  )

  	
  STIPULATED
  ORDER OF DISMISSAL

  
	
  SILICON
  LABORATORIES INC.,

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  Defendant.

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  AND RELATED
  COUNTERCLAIM 

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  



 


 


14

















 


 


                                Pursuant to Rule 41(a)(1)(ii) and
(c), Fed. R. Civ. P., the parties TDK Semiconductor Corporation and Silicon
Laboratories Inc., by and through their respective counsel of record, do hereby
stipulate, subject to the approval of the Court, as follows:


                l.              All
claims and counterclaims asserted in this action shall be and hereby are
dismissed with
prejudice.


                2.             Each party shall bear its own costs and attorneys’ fees
with respect to the matters dismissed hereby.


 


	
   

  	
   

  	
   

  	
  THE HECKER LAW GROUP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  April         ,
  2003

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Attorneys For Plaintiff

  
	
   

  	
   

  	
   

  	
   

  	
  TDK Semiconductor
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  FISH & NEAVE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  April         ,
  2003

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Attorneys For Defendant

  
	
   

  	
   

  	
   

  	
   

  	
  Silicon Laboratories, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IT IS
  SO ORDERED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
                  , 2003

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   UNITED
  STATES DISTRICT JUDGE

  



 


15

















 


EXHIBIT
B

[****]


 


 


 


 


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


16

















 


EXHIBIT
C


PRESS
RELEASE


 


For more information, please contact:

Shannon Pleasant

Corporate Communications

Silicon Laboratories Inc.

(512) 464-9254

shannon.pleasant@silabs.com


 


Silicon Laboratories and
TDK Semiconductor Reach Settlement in Patent Infringement Litigation


 


AUSTIN, Texas, April XX, 2003 — Silicon
Laboratories Inc. (Nasdaq: SLAB) and TDK Semiconductor Corporation jointly
announced today that the companies have reached an amicable settlement of the
patent infringement lawsuit brought by TDK covering one of their patents
related to signal modulation technology for digital access arrangements (DAA).


 


Under the terms of the
settlement, TDK agreed to release all claims covered by the lawsuit.  In addition, TDK granted Silicon
Laboratories irrevocable, royalty free licenses for the patent covered by the
lawsuit and certain other related patents. 
In exchange, Silicon Laboratories agreed to make a one-time payment of
$17 million to TDK and released all counterclaims covered by the lawsuit.  Silicon Laboratories and TDK agree that the
amicable resolution of this litigation does not constitute an admission or
concession of liability or fault by either party. All other terms of the
settlement are confidential.


 


“The resolution of this
lawsuit, which has been pending for almost two years, will allow the management
of Silicon Laboratories to focus time and energy on the continued growth of the
company,” said Russ Brennan, chief financial officer of Silicon Laboratories.


 


“TDK Semiconductor Corporation is pleased to have resolved this
litigation matter with terms and conditions that allow both parties to move
forward with their business strategies” said Gerald Fitch, chief financial
officer of TDK Semiconductor Corporation.


 


17

















 


The majority of the settlement payment will be expensed in Silicon
Laboratories’ first quarter with a $x million charge to cost of revenues,
resulting in approximately $0.xx per diluted share reduction to earnings.  The remaining $x million of the $x million
total payment will be amortized to cost of revenues over the useful life of the
technology that was the subject of the litigation.
Silicon Laboratories exited fiscal 2002 with a debt free balance sheet and with
a cash and cash equivalents balance of $115.2 million.


 


 


About Silicon Laboratories Inc.


Silicon Laboratories
Inc. designs, manufactures and markets proprietary high-performance
mixed-signal integrated circuits (ICs) for a broad range of communications markets.
Silicon Laboratories is an ISO9001-certified manufacturer and has applied for
over 161 patents on its mixed-signal technology. The company was incorporated
in 1996 and is based in Austin, Texas. Additional information about Silicon
Labs is available at www.silabs.com or through the toll-free investor relations
line at 1-877-411-SLAB (7522).


 


About
TDK Semiconductor Corp.


TDK Semiconductor, part
of $4.8 billion TDK Corporation (NYSE: TDK), provides advanced ICs for
communications markets worldwide. The company produces analog and mixed-signal
products for applications such as digital cable and satellite set-top boxes;
local, metro and wide area networking; point of sale terminals, payphones,
meters and smart card readers. http://www.tdksemiconductor.com


 


Cautionary Language


This press release
contains forward-looking statements based on Silicon Laboratories’ current
expectations. The words “believe,” “expect,” “intend,” “plan,” “project,”
“will” and similar phrases as they relate to Silicon Laboratories are intended
to identify such forward-looking statements. These forward-looking statements
reflect the current views and assumptions of Silicon Laboratories and are
subject to various risks and uncertainties that could cause actual results to
differ materially from expectations. Among the factors that could cause actual
results 


 


18

















 


to differ materially
from those in the forward-looking statements are as follows: risks that Silicon
Laboratories may not be able to maintain its historical growth rate;
difficulties managing international sales; credit risks associated with
accounts receivable; geographic concentration of manufacturers, assemblers,
test service providers and customers in the Pacific Rim subjects Silicon
Laboratories to risks of natural disasters, war and political unrest;
dependence on a limited number of products and customers; product development
risks; intellectual property litigation risks; the competitive and cyclical
nature of the semiconductor industry and other factors that are detailed in
Silicon Laboratories’ filings with the SEC, particularly the Form 10-K filed
January 22, 2003. Unless otherwise required by law, Silicon Laboratories
expressly disclaims any obligation to release publicly any updates or revisions
to any forward-looking statements to reflect any result or change in
expectations.


#  #  #


 


Note to editors: Silicon Laboratories and the Silicon Laboratories logo
are trademarks of Silicon Laboratories Inc. All other product names noted
herein may be trademarks of their respective holders.


 


19

















 


EXHIBIT
D


AUTHORIZED
REPRESENTATIVES


For TDK:


[****]


 


 


For SiLabs:


[****]


 


 


 


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


20

















 


[****]


 


 


 


 


 












**Confidential treatment has been requested for the portions of this
agreement marked by asterisks. Omitted portions for which confidential
treatment has been requested have been filed separately with the Securities and
Exchange Commission.**


 


21