ENGINEERING SERVICES AGREEMENT
THIS ENGINEERING SERVICES AGREEMENT (this "Agreement") is made and entered into as of December 11, 1996, with an effective date of November 30, 1996 (the "Effective Date"), by and between WEITEK CORPORATION, a California corporation ("Weitek"), and Rockwell Semiconductor Systems, Inc., a Delaware corporation ("RSS").
WHEREAS, RSS and Weitek have entered into an Asset Purchase Agreement dated December 11, 1996 (the "Asset Purchase Agreement"), pursuant to which RSS will purchase substantially all of the assets of Weitek for the purchase price set forth therein;
WHEREAS, Weitek and RSS intend to enter into a License Agreement pursuant to which Weitek will license to RSS the rights to certain intellectual property owned by Weitek;
WHEREAS, RSS desires to obtain engineering services from Weitek and Weitek is willing to furnish or make such services available to RSS, for a limited period of time;
WHEREAS, at the termination of this Agreement the parties contemplate that a majority of Weitek's employees will become employed by RSS, and that Weitek and RSS will enter into further agreements to continue to allow RSS to utilize the facilities and equipment of Weitek; and
WHEREAS, the parties contemplate that Weitek will file a Voluntary Petition for relief pursuant to Chapter 11 with the Bankruptcy Court of the Northern District of California, San Jose Division (the "Court") and that additional agreements between the parties, including a Facilities and Equipment Agreement, will be submitted to the Court for approval.
NOW, THEREFORE, in consideration of the above and the mutual promises contained herein, the parties agree as follows:
1. SERVICES. In consideration of the payments to be made pursuant to Section 2, Weitek shall provide to RSS the engineering and support services including, but not limited to, those set forth on Schedule A hereto (the "Services"). RSS may, at any time and from time to time, by written notice to Weitek, issue additional instructions, require additional services (to the extent that such instructions and services are within the general scope of this Agreement and appropriate to the number of engineers performing services hereunder) or require the termination of specific Services covered by this Agreement, without the alteration of the compensation due to Weitek hereunder.
2. CONSIDERATION. As consideration for the Services (as they may be modified in accordance with Section 1 hereof), RSS agrees to pay to Weitek an amount equal to $15,000 per month for each 2 engineer or managing engineer (each, an "Engineer") which performs any Services hereunder on or after the Effective Date hereof. In addition, in the event that RSS requests in writing, in connection with the performance of any Services hereunder, that any Engineer travel to a site outside of San Jose, California and its environs, RSS will reimburse Weitek for the reasonable travel costs incurred by such Engineer. On the first business day of the first month after the execution of this Agreement, Weitek shall provide an invoice to RSS setting forth the number of Engineers who have performed Services hereunder since the Effective Date of this Agreement, as well as any travel costs for which RSS is obligated to reimburse Weitek at that time and the total amount due. Thereafter, on the first business day of each month during the term hereof, Weitek shall provide an invoice to RSS setting forth the anticipated number of Engineers to perform Services hereunder during such month (or portion thereof), as well as any travel costs for which RSS is obligated to reimburse Weitek for the previous month and the total amount due. Within fifteen (15) days after receipt of such invoice, RSS shall pay all undisputed amounts set forth therein and shall set forth any dispute to the invoice in writing. In the event that this Agreement (a) is executed and becomes effective or (b) is terminated, before the end of a month, the charge provided for in this Section 2 will be pro-rated for the days of the month that such charge is applicable and, if applicable, Weitek shall apply any overage amount to reduce the next monthly invoice or shall refund to RSS any amount of overage previously paid by RSS, as requested by RSS. RSS's only payment obligation under this Agreement is to make the payments set forth in this Section 2, and RSS shall have no responsibility for any other payments (including to any Engineers) during the term hereof or at any time following the termination hereof on account of the Services provided hereunder. Weitek agrees, as an independent contractor hereunder, to pay to each Engineer all salary, bonuses and benefits to which such Engineer is entitled under his or her employment arrangements with Weitek.
3. NUMBER OF EMPLOYEES. At all times during the term of this Agreement, Weitek shall provide at least fifteen (15) and no more than twenty-one (21) Engineers to perform Services hereunder. The parties hereto agree that the initial number of Engineers performing the Services hereunder is twenty-one (21). Weitek shall give RSS notice of the dismissal by Weitek of any Engineer performing Services hereunder for any reason. In the event that the number of Engineers is at any time less than fifteen (15), RSS may terminate this Agreement upon five (5) days' written notice to Weitek and thereafter shall have no further payment obligation to Weitek hereunder with the exception of payments due and owing as of the date of termination. RSS shall have the right, in its sole discretion, to demand that one or more Engineers not perform Services hereunder in the event that RSS determines, in its sole judgment, that any such Engineer is not qualified to perform Services hereunder or that such Engineer is involved in improper conduct.
(a) Use of Properties. Weitek will provide to personnel of RSS access to and use of the Weitek facilities and equipment located at 2801 Orchard Parkway, San Jose, California as necessary to support or oversee the Services. Weitek will remain in sole management, possession and control of the premises during the term of this Agreement subject to the terms of the Weitek lease of the facilities (the "Lease"). The parties agree that, at the request and expense of RSS, Weitek will paint and otherwise redecorate the Facilities provided that the occupancy of SGS-Thomson shall not be disturbed and that
-2- 3 such actions are allowed under the Lease. In the event that any consent of the landlord is required for such redecoration Weitek will make a commercially reasonable effort to obtain such consent in a timely fashion.
(b) Concurrent Use. Use of the Facilities is subject to concurrent use of a portion of the premises by no more than ten (10) employees of SGS-Thomson as previously agreed to by Weitek and RSS. Weitek agrees to establish, subject to the reasonable approval of RSS, procedures to isolate any employee of SGS-Thomson from any work produced by or performed by Weitek or the employees of RSS hereunder and to isolate any employee of RSS from any work produced by or performed by Weitek or SGS-Thomson pursuant to the agreements between Weitek and SGS-Thomson. Weitek and RSS agree to adhere to such procedures at all times, to cause their respective employees to adhere to such procedures, and Weitek agrees to cause employees of SGS-Thomson to adhere to such procedures, during the term of this Agreement.
(c) Equipment and Software. RSS may, in its sole discretion, provide any equipment or software to Weitek to assist Weitek in performing the Services hereunder, which equipment shall at all times remain the sole exclusive property of RSS. In the event that the Facilities and Equipment Agreement submitted by Weitek to the Court does not become effective or the closing under the Asset Purchase Agreement does not occur at the completion of the term hereof, RSS shall be free to remove any such equipment and software on or prior to the last day of the term hereof. Any actions pursuant to this Section 4(c) shall be taken in full compliance with the Lease.
5. TERM OF AGREEMENT.
(a) Term. This Agreement shall commence on the date hereof and shall continue until the first to occur of (i) January 31, 1997 (unless otherwise extended by the mutual agreement of the parties