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Related Party Transactions
12 Months Ended
Jan. 30, 2016
Related Party Transactions

Note 14 — Related Party Transactions

MIL is party to a technology license agreement with VeriSilicon Holdings Co., Ltd. (“VeriSilicon”). MIL assumed the technology license agreement between VeriSilicon and UTStarcom, Inc. after the Company’s acquisition of the semiconductor business of UTStarcom in December 2005. MIL has subsequently entered into various addenda to the agreement for additional technology beyond the scope of the original agreement. In addition, in September 2010, MIL entered into a services agreement with VeriSilicon, pursuant to which VeriSilicon has agreed to provide design support services to MIL. Under the services agreement, VeriSilicon helped on three projects for MIL during fiscal 2013. In connection with all of its transactions with VeriSilicon, MIL paid $1.8 million, $3.7 million and $2.0 million to VeriSilicon during fiscal 2016, 2015 and 2014, respectively. As of January 30, 2016, the Company had $0.3 million of liability to VeriSilicon. Weili Dai’s brother (and Dr. Sehat Sutardja’s brother-in-law) Wayne Dai, is the Chairman, President and Chief Executive Officer of VeriSilicon. Ms. Dai and Dr. Sutardja are also shareholders of VeriSilicon. Ms. Dai was the President of the Company and Dr. Sehat Sutardja was the Company’s Chief Executive Officer until their departures in April 2016 (see “Note 15 — Subsequent Events”), and continue to serve as members of the Company’s Board of Directors. Dr. Sehat Sutardja and Ms. Dai are husband and wife.

In December 2009, MIL entered into a technology license agreement with Vivante Corporation (“Vivante”) that provides for the license of graphics technology and associated services. This agreement restates, expands and succeeds previous agreements between the parties for the same technology. In December 2012, the parties renewed this technology license agreement for another three years. The total amount of the license fee was approximately $13.0 million (to be paid over three years) and ten percent for support fees (to be paid over three years). In February 2012, the parties entered into a separate services agreement, pursuant to which Vivante agreed to provide support services to MIL. In connection with all of its transactions with Vivante, MIL paid $4.0 million, $9.1 million and $6.9 million to Vivante during fiscal 2016, 2015 and 2014, respectively. As of January 30, 2016, the Company had $1.5 million of liability to Vivante. As a result of their ownership of and control of Estopia LLC and their existing shareholdings, Dr. Sutardja and Ms. Dai are now direct and indirect shareholders of VeriSilicon. In addition, as a result of the acquisition of Vivante by VeriSilicon in late 2015, Ms. Dai’s brother Weijin Dai, who was the Chief Executive Officer and member of the board of directors of Vivante is now an executive officer and board member of VeriSilicon. Dr. Sutardja, who was Chairman of the board of directors of Vivante, is not on the board of directors of VeriSilicon.

In February 2015, the Executive Compensation Committee (“Committee”) of the Company’s Board of Directors approved a cash payment of approximately $15.4 million to Dr. Sehat Sutardja. The U.S. Court of Federal Claims ruled against Dr. Sutardja in his legal challenge with the Internal Revenue Service and the California Franchise Tax Board related to the tax treatment of several stock options granted in fiscal 2004. After discussing and evaluating the alternatives to a continuing legal challenge of the court’s determination, the likelihood of success of further appeal by Dr. Sutardja and the potential negative impact on the Company of a continuation of the case regardless of the outcome, the Committee determined to provide Dr. Sutardja with relief from the financial effects of the penalty taxes. Accordingly, the Committee approved the cash payment to Dr. Sutardja equal to the amount of his penalty taxes owed under the Tax Codes, plus accrued interest owed with respect to such liabilities, all grossed-up for income taxes that will be owed by Dr. Sutardja on receipt of such cash payment. The Company recorded the payment in general and administrative expense in fiscal 2016. A payment of $8.4 million was made to Dr. Sutardja in fiscal 2016 representing reimbursement for the U.S. federal tax portion. As of January 30, 2016, the Company had a remaining $7.0 million liability to Dr. Sutardja.