<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934C
FOR THE QUARTERLY PERIOD ENDED JUNE 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER 0-17191
WEITEK CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 94-2709963
---------------------------------- ----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
2801 ORCHARD PARKWAY, SAN JOSE, CALIFORNIA, 95134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 526-0300
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
8,654,156 shares of common stock at August 1, 1996
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WEITEK CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 29, 1996
PART I
FINANCIAL INFORMATION AND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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WEITEK CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 29, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash $3,912 $6,028
Short-term investments -- --
-------- --------
Total cash and short-term investments 3,912 6,028
Accounts receivable, net of allowances
of $888 and $716 318 1,606
Inventories -- 1,730
Prepaid expenses and other 182 272
-------- --------
Total current assets 4,412 9,636
Equipment and leasehold improvements, net 1,281 1,598
Other assets 34 34
-------- --------
$5,727 $11,268
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,636 $3,637
Accrued compensation and employee benefits 1,211 1,481
Other current liabilities 2,401 557
-------- --------
Total current liabilities 6,248 5,675
-------- --------
Commitments
Shareholders' equity:
Preferred stock, 1,000,000 shares authorized, no par
value, no shares outstanding -- --
Common stock, 50,000,000 shares authorized, no par
value, 8,654,156 and 8,632,156 shares outstanding 23,141 23,095
Retained earnings (deficit) (23,662) (17,502)
-------- --------
Total shareholders' equity (521) 5,593
-------- --------
$5,727 $11,268
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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WEITEK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 29, 1996 July 1, 1995 June 29, 1996 July 1, 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net revenue $3,240 $5,100 $4,200 $11,000
Cost of revenue 2,095 3,095 6,130 6,930
------ ------ ------ -------
Gross margin 1,145 2,005 (1,930) 4,070
Research and development 437 1,988 2,317 3,991
Sales and marketing 224 701 784 1,424
General and administrative 344 356 844 720
Severance costs -- -- 410 --
----- ------ ------ ------
Operating income (loss) 140 (1,040) (6,285) (2,065)
Other income 65 125 125 225
------ ------ ------ ------
Income (loss) before income taxes 205 (915) (6,160) (1,840)
Provision for income taxes -- -- -- --
------ ------ ------ ------
Net income (loss) $205 $(915) $(6,160) $(1,840)
====== ====== ======= =======
Income (loss) per share $.02 $(.11) $(.71) $(.22)
====== ====== ====== ======
Weighted average common
shares and equivalents 8,675 8,403 8,648 8,362
====== ====== ====== ======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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WEITEK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 29, 1996 July 1, 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(6,160) $(1,840)
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization 679 659
Changes in assets and liabilities:
Accounts receivable 1,288 1,752
Inventories 1,730 1,553
Prepaid expenses and other 90 (80)
Accounts payable (1,001) (1,787)
Accrued compensation and employee benefits (270) (633)
Other liabilities 1,844 (120)
------- ------
Net cash used by operating activities (1,800) (496)
------- ------
Cash flows from investing activities:
Equipment and leasehold improvements ( 362) (424)
Decrease in short-term investments -- 2,334
------- ------
Net cash provided (used) by investing activities ( 362) 1,910
------- ------
Cash flows from financing activities:
Issuance of capital stock 46 479
------ ------
Net cash provided by financing activities 46 479
------ ------
Net increase (decrease) in cash (2,116) 1,893
Cash, beginning of period 6,028 1,532
------ -----
Cash, end of period $3,912 $3,425
======= ======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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WEITEK CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Interim Statements:
The accompanying unaudited consolidated condensed financial statements have
been prepared on the same basis as the audited consolidated financial
statements and, in the opinion of management, contain all adjustments necessary
to fairly present the financial information included therein. While the
Company believes that the disclosures are adequate to make the information not
misleading, it is suggested that this financial data be read in conjunction
with the audited consolidated financial statements and notes thereto for the
year ended December 31, 1995 included in the Company's 1995 Annual Report to
the Securities and Exchange Commission on Form 10-K. Results for the interim
period presented are not necessarily indicative of results for the entire year.
Note 2 - Consolidated Condensed Balance Sheet Detail:
<TABLE>
<CAPTION>
(In thousands)
June 29, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Inventories:
Raw materials $- $-
Work-in-process - 630
Finished goods - 1,100
------- --------
$- $1,730
======= ========
Equipment and leasehold improvements:
Machinery and equipment $7,653 $13,043
Furniture and fixtures 795 1,086
Leasehold improvements 384 373
------- --------
8,832 14,502
Less accumulated depreciation and amortization (7,551) (12,904)
------- --------
$1,281 $1,598
======= ========
Other accrued liabilities:
Accrued purchase commitments $876 $-
Deferred revenue 900 -
Other 625 557
------- --------
$2,401 $557
======= ========
</TABLE>
Note 3 - Earnings (Loss) per Share:
Earnings (loss) per share is computed using the weighted average number of
common shares and, where dilutive, common share equivalents outstanding during
the period.
Note 4 - Technology License
During the second quarter, the Company entered into a non-exclusive $4.8
million technology license and joint development agreement with a large
semiconductor manufacturer. The Company is accounting for this contract using
the percentage of completion method. During the second quarter, the Company
received cash payments of $3.0 million, and recorded revenue of $2.1 million or
65% of total revenue under this agreement. The remaining $1.8 million of
payments
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are anticipated to occur later in 1996 depending on the Company's achievement of
certain development milestones. There can be no assurance that the Company will
be able to achieve all such milestones. Revenue from this agreement is
anticipated to represent a substantial portion of revenue in the third quarter
of 1996; however, total revenue is expected to be below the second quarter
level. Revenue levels beyond the third quarter will depend on the Company's
ability to license technology and find a strategic partner to help commercialize
the Company's technology and products.
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WEITEK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
When used in the following report, the words "projects", "expects",
"anticipates" and similar expressions are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Actual results could
differ materially from those projected in the forward-looking statements as a
result of the risk factors set forth below and elsewhere in this Form 10-Q. A
number of factors may impact the outcome of actual results, but in particular,
whether the Company is successful in licensing its technology and identifying a
strategic partner to help bring its technology to the market.
OVERVIEW
During 1995, the Company focused its R&D efforts on the development of a new
product line of unified memory architecture (UMA) chip sets targeted at the
mid-range segment of the user interface market. The Company's UMA technology
combines the features of an accelerated graphics controller with those of
motherboard system logic, integrating most of the circuitry for a personal
computer (except the processor and memory) into a single product.
On March 1, 1996, the Company announced that its revenues had continued to
decline significantly due to recent changes in the personal computer
marketplace which have caused customers to delay purchases of its initial UMA
product, the W464. As a result, the Company recorded reserves to reflect a
revaluation of W464 chip set inventory and a company-wide cost reduction
program. In addition, a decline in memory prices and increased competition for
chip sets made it unlikely that the Company could successfully commercialize
its next generation W564 UMA chip set. As a result of these factors, the
Company announced that it no longer has sufficient resources to independently
pursue a business strategy of manufacturing UMA chip sets and would instead
focus on licensing its technology. The Company is attempting to form strategic
relationships with companies that can successfully develop products based on
its UMA technology. No such relationships have been formalized to date. There
can be no assurance that the Company will be successful in these efforts.
NET REVENUE
Net revenue in the second quarter and first six months of 1996 decreased 36%
and 62% from the same periods in 1995. Revenue in 1996 has been derived
primarily from technology licensing. Overall, revenue declined due to a drop
in sales of mature products. Although the Company has had some success in
licensing technology, revenue from this activity has not offset the decline in
product sales.
Net revenue in the second quarter of 1996 was $3.2 million compared to $1.0
million in the first quarter of 1996. During the second quarter, the Company
entered into a non-exclusive $4.8 million technology license and joint
development agreement with a large semiconductor manufacturer. The Company is
accounting for this contract using the percentage of completion method. During
the second quarter, the Company received cash payments of $3.0 million, and
recorded revenue of $2.1 million or 65% of total revenue under this agreement.
The remaining $1.8 million of payments are anticipated to occur later in 1996
depending on the Company's achievement of certain development milestones.
There can be no assurance that the Company will be able to achieve all such
milestones. During the second quarter, the Company also recorded revenue from
a separte technology license agreement totaling $0.5 million.
International net revenue was 75% and 56% of net revenue in the second quarter
and in the first six months of 1995 compared to 27% of net revenue in the
comparable periods of 1995. The increased percentage of international net
revenue for 1996 was due to an increased proportion of revenue from Europe.
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One customer represented 65% and 50% of revenue for the second quarter and first
half of 1996. One additional customer represented 15% and 12% of revenue for
the same periods. A third customer accounted for 19% and 17% of revenue in the
second quarter and first six months of 1996 compared to 17% and 21% for the same
periods a year ago. Two additional customers made up 33% and 14% of revenue in
the second quarter of 1995, and 30% and 15% of revenue in the first half of
1995. No other customer represented 10% or more of the Company's revenue during
these periods.
GROSS MARGIN
The Company's gross margin was 35% in the second quarter of 1996 compared to
39% in the same period a year ago. Gross margin for the first six months of
1996 was a negative 46% compared to a positive 37% for the first six months of
1995. Second quarter of 1996 results include approximately $0.5 million of
additional inventory reserves for the Company's W464 UMA chip set. In spite of
reduced pricing, the Company received no customer orders for this product
during the second quarter, and has now fully reserved all inventory and
committed purchases. An additional $3.3 million of inventory reserves for this
product were recorded in the first quarter of 1996.
OPERATING EXPENSES
As a percentage of net revenue, operating expenses were 31% in the second
quarter and 104% in the first six months of 1996, compared to 60% and 56% in
the same periods a year ago. In absolute dollars, total operating expenses
were $1.0 million in the second quarter and $4.4 million in the first six
months of 1996 down from $3.0 million in the second quarter and $6.1 million in
the first half of 1995. Operating expenses for the second quarter include the
effect of a transfer of $1.0 million of engineering expenses to cost of sales
pursuant to the Company's joint development agreement. In addition, operating
expenses for the first six months of 1996 include $0.4 million of severance
costs pursuant to a cost reduction program implemented in the first quarter.
Research and development expenses as a percentage of net revenue were 13% and
55% in the second quarter and first six months of 1996 compared to 39% and 36%
in the comparable periods a year ago. In absolute dollars, research and
development expenses for the second quarter of 1996 were $0.4 million compared
to $2.0 million in the second quarter of 1995. Expenses in the first six
months of 1996 decreased to $2.3 million from $4.0 million in the first half of
1995. The decrease in expenses during 1996 is primarily due to the transfer of
$1.0 million of engineering costs to cost of sales under the Company's joint
development agreement, as well as lower staffing levels. Over 60% of the
Company's employees are involved in research and development activities.
Sales and marketing expenses decreased as a percentage of net revenue to 7% and
19% in the second quarter and first six months of 1996 from 14% and 13% in the
comparable periods a year ago. In absolute dollars, sales and marketing
expenses were $0.2 million in the second quarter of 1996, down from $0.7
million in the second quarter of 1995. Expenses in the first half of the year
decreased from $1.4 million in 1995 to $0.8 million in 1996, primarily due to
lower staffing levels and decreased promotional expenditures.
General and administrative expenses as a percentage of net revenue were 11% and
20% in the second quarter and first six months of 1996 compared to 7% in the
same periods in 1995. In absolute dollars, general and administrative expenses
were $0.3 million and $0.8 million in the second quarter and first half of
1996, compared to $0.4 million and $0.7 million in the comparable periods of
1995. General and administrative expenses for 1996 include costs related to
the relocation of the Company's headquarters, offsetting reductions due to
lower staffing levels.
PROVISION FOR INCOME TAXES
The Company recorded no tax provision in the second quarter of 1996. The
Company has exhausted its ability to carry back losses against prior years'
income; however, the Company has the ability to carry forward certain tax
attributes to offset future regular federal and state income taxes payable.
Consequently, if the Company is profitable in future periods, the Company's
effective tax rate in such periods may be somewhat below the statutory rate.
NET INCOME
The Company generated net income of $0.2 million and a net loss of $6.2 million
in the second quarter and first six months of 1996, compared to a net loss of
$0.9 million and $1.8 million in the second quarter and first half of 1995.
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As a percentage of net revenue, the net loss increased from 17% in the first six
months of 1995 to 147% in the first half of 1996. Approximately $4.2 million of
the loss in the first half of 1996 was due to additional inventory reserves for
the W464 chip set and costs associated with a reduction in work force.
LIQUIDITY AND CAPITAL RESOURCES
As of June 29, 1996 the Company's principal source of liquidity was $3.9
million of cash and short-term investments. The Company also has a line of
credit, secured by accounts receivable. The Company is not currently in
compliance with its loan covenants and has no ability to utilize this line of
credit.
The Company has suffered recurring losses from operations and has an
accumulated deficit which raise substantial doubt about its ability to continue
as a going concern. The Company has been unsuccessful in selling its inventory
of W464 chip sets, which has impacted the Company's financial position and
liquidity. The Company does not believe that its cash resources are adequate
to fund its operations for the next twelve months. As a result, the Company
has announced that it has changed its business strategy to focus on licensing
its technology and is taking immediate steps to reduce costs and preserve
liquidity. The Company is actively seeking partners to help bring its
technology to market. There can be no assurance that the Company will be
successful in these efforts and serious liquidity problems could result if it
is unsuccessful.
OUTLOOK: ISSUES AND RISKS
In July of 1995, the Company announced that it had entered into a technology
exchange agreement with Samsung Electronics Company, Ltd. to co-develop a
family of advanced multimedia integrated circuits. As part of the agreement,
Samsung was to provide the Company with wafer capacity allocations as well as
funding based on the achievement of certain engineering milestones. Given the
change in its strategic direction, the Company is reviewing this agreement with
Samsung, and expects that the agreement will be terminated. The Company has not
recorded any revenue associated with the agreement during 1996.
The Company currently anticipates that third quarter revenue will be below the
second quarter level, due primarily to lower sales of mature products.
Operating expenses, before any transfers to cost of sales, are anticipated to
remain flat or decline from second quarter levels due to tight cost controls.
Revenue levels beyond the third quarter will depend on the Company's ability to
license technology and find a strategic partner to help commercialize the
Company's technology and products.
The Company's expectations regarding business opportunities and future cost
reduction measures are forward-looking statements, and actual results could
vary. The Company has very limited experience with the licensing and strategic
partnering strategy being pursued by the Company. There can be no assurance
that the Company can successfully transition its business model, or that even
if the transition is successful that the Company will be able to consistently
generate profits in the new model. Other risk factors include the Company's
ability to retain its engineering team, and schedule and technical risks that
are typical of complex engineering programs. Although the Company has recently
taken actions to reduce its expense levels, the Company may continue to
experience losses from operations that raise substantial doubt about the
Company's ability to continue as a going concern.
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WEITEK CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 29, 1996
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.8 License Agreement dated April 23, 1996*
(b) Report on Form 8-K
None
* Confidential treatment requested.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEITEK CORPORATION
Date: August 12, 1996 /s/ Richard H. Bohnet
----------------------------------------
Richard H. Bohnet
President and Chief Executive Officer
/s/ Paul K. Kidman
----------------------------------------
Paul K. Kidman
Director of Finance
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<TABLE>
<S> <C>
Exhibit Index Page Number
------------------------------------------------ -----------
10.8 License Agreement dated April 23, 1996* 14
</TABLE>
* Confidential treatment requested.
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<PAGE> 1
CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
LICENSE AGREEMENT
This Agreement is entered into this 23rd day of April, 1996, by and
between Weitek Corporation, Inc., a California corporation with principal
offices at 2801 Orchard Parkway, San Jose California, 95134 ("Weitek") and
[CONFIDENTIAL INFORMATION REDACTED]
WHEREAS, Weitek has developed an X86 compatible chipset that combines a
core logic chipset with a graphics controller using its proprietary Unified
System/Display Controller Technology (US/DC as defined below);
WHEREAS, [CONFIDENTIAL INFORMATION REDACTED] is a broad range
semiconductor designer and manufacturer with rights to certain [CONFIDENTIAL
INFORMATION REDACTED];
WHEREAS, Weitek desires to license to [CONFIDENTIAL INFORMATION REDACTED]
the rights to manufacture and distribute its W464 and W564 X86 compatible
chipsets and the right to use its Unified System/Display Controller Technology
to develop, manufacture and distribute new products that incorporate the
technology on the terms set forth below;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:
SECTION 1.0
DEFINITIONS:
For purposes of this Agreement the following terms shall have the meaning set
forth below:
1.1 "Affiliates" means an entity controlling, controlled by or under common
control with [CONFIDENTIAL INFORMATION REDACTED] for so long as such
control exists, where "control" means the direct or indirect ownership or
control of more than fifty percent (50%) of the stock or other equity
interest entitled to vote for the election of directors or an equivalent
governing body.
1.2 "Confidential Information" shall have the meaning set forth in Section
6.1 below.
1.3 "Derivative Products" means new versions of the Weitek Products (other
than Updates) which change the form, fit, functionality or features of the
Weitek Products, including, but not limited to new versions of the Weitek
Products that contain additional functional blocks and/or [CONFIDENTIAL
INFORMATION REDACTED] Derivative Products (which shall mean Derivative
Products that have as a [CONFIDENTIAL INFORMATION REDACTED] (or portion
thereof) compatible with [CONFIDENTIAL INFORMATION REDACTED]).
1.4 "Derivative Works" means any software programs, and copies thereof, which
are developed by [CONFIDENTIAL INFORMATION REDACTED] and which are
1
<PAGE> 2
CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
based on or incorporate any part of the Software delivered by Weitek
hereunder, including without limitation any revision, modification,
translation (including compilation or recapitulation by computer),
abridgment, condensation, expansion, or any other form in which the
Software may be recast, transformed or adapted, and that, if prepared
without Weitek's authorization, would constitute a copyright or
misappropriation of trade secrets in the Software.
1.5 "Effective Date" means the date first set forth above.
1.6 "Intellectual Property Rights" means all current and future worldwide
patents and other patent rights, copyrights, mask work rights, trade
secrets, and all other intellectual property rights, including, but not
limited to all applications and registrations with respect thereto.
1.7 "Software" means Weitek's proprietary software that is part of the US/DC
Technology as more fully described on Exhibits A and B attached hereto.
1.8 "Source Code" means the computer source code for the Software supplied by
Weitek to [CONFIDENTIAL INFORMATION REDACTED] hereunder, including any
updates, improvements, or modifications hereinafter furnished to
[CONFIDENTIAL INFORMATION REDACTED] by Weitek in connection with the
Source Code.
1.9 "Technical Information" means documentation and other written materials
describing in reasonable detail the US/DC Technology listed on Exhibits A
and B attached hereto.
1.10 "Unified System/Display Controller Technology" or "US/DC Technology"
means Weitek's circuit designs, know-how, trade secrets, software and
other information pertaining to the design, development and manufacture of
the Weitek Products as identified in Exhibits A and B attached hereto.
1.11 "Updates" means modified or updated versions of the Weitek Products which
incorporate minor changes made by Weitek that do not change the form, fit,
function or features of the Weitek Products.
1.12 "Weitek Products" means the "W464 Chipset" and the "W564 Chipset" that
incorporate the US/DC Technology, both as described in Exhibit C attached
hereto, and all Updates thereto developed by Weitek during the term of
this Agreement.
SECTION 2.0
LICENSE
2.1 Weitek Products:
2
<PAGE> 3
CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
(a) Weitek hereby grants to [CONFIDENTIAL INFORMATION REDACTED] a
worldwide, nonexclusive, nontransferable license, under all of
Weitek's Intellectual Property Rights in and to the US/DC Technology,
to use the US/DC Technology to develop and make, have made, use,
offer for sale, sell, export and import products that are designed or
developed by [CONFIDENTIAL INFORMATION REDACTED] or its Affiliates
(including, but not limited to, Weitek Products) incorporating the
Technology. [CONFIDENTIAL INFORMATION REDACTED] may include the US/DC
in its design libraries provided that [CONFIDENTIAL INFORMATION
REDACTED] is the sole supplier of product to any third party which
incorporates theUS/DC Technology into a design.
(b) Subject to the terms and conditions of this Agreement, Weitek hereby
grants to [CONFIDENTIAL INFORMATION REDACTED] a worldwide,
nonexclusive, nontransferable license under its Intellectual Property
Rights, to copy and distribute to its customers and potential
customers the data sheets, catalogs and other customer marketing
materials that Weitek distributes to its customers in the ordinary
course of business which are applicable to the distribution of the
Weitek Products by [CONFIDENTIAL INFORMATION REDACTED]. The foregoing
license shall be subject to [CONFIDENTIAL INFORMATION REDACTED]
reproducing on all copies of such materials all Weitek copyright
notices, trademarks and other proprietary rights notices which appear
on the materials provided by Weitek to [CONFIDENTIAL INFORMATION
REDACTED].
(c) [CONFIDENTIAL INFORMATION REDACTED] may sublicense to Affiliates all
rights and licenses granted to [CONFIDENTIAL INFORMATION REDACTED]
pursuant to this Section 2.1. [CONFIDENTIAL INFORMATION REDACTED] may
not otherwise sublicense the foregoing rights except [CONFIDENTIAL
INFORMATION REDACTED] may sublicense to [CONFIDENTIAL INFORMATION
REDACTED] the right to make, use, offer for sale, sell, export and
import [CONFIDENTIAL INFORMATION REDACTED] Derivative Products
developed by [CONFIDENTIAL INFORMATION REDACTED] or its Affiliates.
[CONFIDENTIAL INFORMATION REDACTED] may use third party design firms
to assist in the development of Derivative Products. [CONFIDENTIAL
INFORMATION REDACTED] may not otherwise sublicense the foregoing
rights.
(d) [CONFIDENTIAL INFORMATION REDACTED] shall have no rights to any
Derivative Products developed by Weitek or alicensee of Weitek.
Weitek and its licensees shall have no rights to any Derivative
Products developed by [CONFIDENTIAL INFORMATION REDACTED].
2.2 Software:
3
<PAGE> 4
CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
(a) In connection with the licenses granted in Section 2.1 above,
Weitek hereby grants to [CONFIDENTIAL INFORMATION REDACTED] a
worldwide, nonexclusive, nontransferable license to reproduce and
distribute object code versions of the Software and Derivative
Software Works thereof prepared by [CONFIDENTIAL INFORMATION
REDACTED] pursuant to Section 2.2(b).
(b) In connection with the licences granted in 2.1 above, Weitek
hereby grants to [CONFIDENTIAL INFORMATION REDACTED] a worldwide,
nonexclusive, nontransferable license to use, reproduce, modify,
amend and prepare Derivative Works of the Source Code. [CONFIDENTIAL
INFORMATION REDACTED] shall have no right to sublicense the foregoing
rights provided that third party designers acting on behalf of
[CONFIDENTIAL INFORMATION REDACTED] and [CONFIDENTIAL INFORMATION
REDACTED] customers may assist [CONFIDENTIAL INFORMATION REDACTED] in
modifying and amending such Derivative Works. Any such third party
designers shall agree in advance in writing to be bound by the
confidentiality provisions of this Agreement as well as the right of
Weitek to directly enforce such provisions.
2.3 Proprietary Markings:
On each Weitek Product and Derivative Product manufactured by
[CONFIDENTIAL INFORMATION REDACTED]or on associated data sheets,
technical information,
marketing materials or its packaging, [CONFIDENTIAL INFORMATION
REDACTED]shall duplicate and apply Weitek's patent, copyright and
other proprietary rights notices which Weitek shall provide
[CONFIDENTIAL INFORMATION REDACTED] from time to time. Such notices
shall be in a location mutually agreed to by the parties designed to
give Weitek the benefit of such notices under applicable law.
2.4 No Other Licenses:
No license or other right is granted, by implication, estoppel or
otherwise, to [CONFIDENTIAL INFORMATION REDACTED], under any
Intellectual Property Rights now or thereafter owned or controlled by
Weitek except for the licenses and right expressly granted in this
Agreement.
2.5 Limitation on [CONFIDENTIAL INFORMATION REDACTED]and Affiliates
Exercise of License:
(a) Each Affiliate who accepts any sublicense rights under this
Agreement shall automatically be bound by all of the applicable
provisions hereof governing such exercise, including, but not limited
to Sections 2, 3, 6 and 8. Unless otherwise agreed by Weitek,
[CONFIDENTIAL INFORMATION REDACTED] remains primarily responsible for
all obligations hereunder under
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CONFIDENTIAL INFORMATION REQUESTED FOR REDACTED INFORMATION
this Agreement as it may be amended from time to time arising in
connection with such Affiliate's actions.
(b) [CONFIDENTIAL INFORMATION REDACTED] may only exercise any
sublicense rights granted to it by [CONFIDENTIAL INFORMATION
REDACTED] under this Agreement if [CONFIDENTIAL INFORMATION REDACTED]
agrees in advance in writing to be bound by all of the applicable
provisions hereof governing such exercise, including, but not limited
to Sections 2, 3, 6 and 8 and provided that Weitek is named as a
third party beneficiary of such agreement. [CONFIDENTIAL INFORMATION
REDACTED] shall remain primarily responsible for compliance by
[CONFIDENTIAL INFORMATION REDACTED] with the provisions of
sublicense, provided that Weitek shall promptly notify [CONFIDENTIAL
INFORMATION REDACTED] in writing of any claim of breach or default,
of which Weitek has actual knowledge, with respect to such a
sublicense.
SECTION 3.0
TECHNOLOGY TRANSFER AND SUPPORT
3.1 Technology Transfer:
Weitek shall transfer to [CONFIDENTIAL INFORMATION REDACTED] the Technical
Information in accordance with the schedule contained in Exhibits A and B.
Weitek will use its reasonable commercial efforts to ensure the accuracy of
the Technical information provided but does not warrant that all such
Technical Information will be accurate in all respects. Weitek shall not be
obligated to create any documentation or other materials which do not yet
exist. Weitek warrants that, to its knowledge, the Technical Information
provided hereunder accurately describes the US/DC Technology in all
material respects. In the event that during the term of this Agreement
Weitek's development efforts result in the release of Updates, Weitek shall
promptly provide corresponding updates to the Technical Information and
such training as shall be reasonably required by [CONFIDENTIAL INFORMATION
REDACTED] to manufacture such Updates.
3.2 Training:
Weitek shall provide [CONFIDENTIAL INFORMATION REDACTED], at no charge,
training by qualified Weitek personnel at Weitek's premises over a period
of 180 days in amounts reasonably required by [CONFIDENTIAL INFORMATION
REDACTED] to understand the US/DC Technology.
3.3 Sales Support:
In addition to the foregoing, Weitek shall provide [CONFIDENTIAL
INFORMATION REDACTED] sales personnel and [CONFIDENTIAL INFORMATION
REDACTED] applications engineering personnel with such training
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<PAGE> 6
CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
at Weitek's premises as is reasonably required by such personnel for
purposes of selling the Weitek Products. During the first six (6) months of
this Agreement such support shall be at no charge up to twenty (20) sales
training days. Thereafter, such support shall be subject to the reasonable
availability of Weitek personnel and shall be charged at the rate of
[CONFIDENTIAL INFORMATION REDACTED] per sales training day (s).
3.4 Plant Visits:
Representatives and personnel of each party, during the time they are
present on the premises of the other party, shall be subject to all rules
and regulations prevailing on such premises. Except as provided herein,
each party shall be responsible for the payment of all compensation and
expense of its respective representatives and personnel. None of the
representatives or personnel of either party shall be considered, for any
reason, to be an employee of the other.
3.5 Liaison:
Each party shall nominate up to two (2) qualified individuals for purposes
of acting as liaison for delivery and receipt of the US/DC Technology,
training and support as set forth in this Section 3.
3.6 Warranty: Disclaimer:
(a) Weitek represents and warrants to[CONFIDENTIAL INFORMATION REDACTED]
as follows:
(i) Weitek has independently developed and is the sole owner of the
US/DC Technology,
(ii) To the best of Weitek's knowledge, but without having conducted
a patent search, the Weitek Products do not infringe the
intellectual property rights of any third parties, and no third
party licenses are required for [CONFIDENTIAL INFORMATION
REDACTED] to make, have made use and sell the Weitek Products
(other than for licenses to process patents in general),
(iii), there are no third party claims of infringement or
misappropriation pending or, to Weitek's knowledge, threatened
against Weitek with respect to the Weitek Products or the US/DC
Technology (including the software), and
(iv) To the best of Weitek's knowledge, the Software was
independently developed by Weitek and does not violate the
copyrights of any third party.
(b) EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 3, WEITEK MAKES AND
[CONFIDENTIAL INFORMATION REDACTED] RECEIVES NO WARRANTIES WITH
RESPECT TO THE US/DC TECHNOLOGY OR THE TECHNICAL INFORMATION, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, AND WEITEK SPECIFICALLY DISCLAIMS ANY
IMPLIED
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
SECTION 4.0
LICENSE FEES
4.1 License Fees:
In consideration for the grant of licenses and other rights of
[CONFIDENTIAL INFORMATION REDACTED] hereunder, [CONFIDENTIAL INFORMATION
REDACTED] shall pay Weitek a one time fee in the amount of [CONFIDENTIAL
INFORMATION REDACTED] payable as follows:
(a) [CONFIDENTIAL INFORMATION REDACTED] as the license fee for the license
to the "W464 Chipset"; and
(b) [CONFIDENTIAL INFORMATION REDACTED] as the license fee
for the license to the "W564 Chipset".
4.2 Payment Terms:
The foregoing license fees shall be nonrefundable. The license fee for the
"W464 Chipset" and the license fee for the "W564 Chipset" shall be due and
payable to Weitek upon delivery of the deliverables identified in Exhibit
A.
4.3 Upon payment of the license fees set forth in this Section 4, the
licenses set forth in Section 2 shall become perpetual and irrevocable,
subject to Section 9 below.
4.4 [CONFIDENTIAL INFORMATION REDACTED] shall pay all taxes (including but
not limited to sales taxes) and duties connected with the transfer or use
of the Technical Information other than taxes based on Weitek's net
income.
SECTION 5.0
SUPPORT
5.1 W564 Development
Weitek shall provide sufficient resources in the areas of physical design,
verification testing, system test and software development in support of
[CONFIDENTIAL INFORMATION REDACTED] to complete the following tasks:
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
i) Convert the W564 database to a data format
compatible with [CONFIDENTIAL INFORMATION REDACTED] process
rules [CONFIDENTIAL INFORMATION REDACTED]
ii) Complete timing and functional analysis of the
converted database ("Converted Database").
iii) design, develop and debug a W564 PC motherboard to
test functional silicon
iv) complete Bios and SW drivers for Windows 3.X and
Windows 95
v) Debug, identify, correct any functional/timing
problems with first silicon implemented on the Converted
Database.
Weitek shall provide sufficient support for the conversion and test of the
W564 to [CONFIDENTIAL INFORMATION REDACTED] design rules.
Weitek shall maintain a support staff of twenty (20) qualified engineers
experienced in W564 functionality and design, software support and product
verification to support the conversion to [CONFIDENTIAL INFORMATION
REDACTED] design rules and standard cells. These engineers shall also be
available for support of the [CONFIDENTIAL INFORMATION REDACTED] set forth
in Section 5.2.
Weitek shall not be responsible for any cost relating to the mask
development, fabrication, packaging, testing or analysis of the W564
designed to [CONFIDENTIAL INFORMATION REDACTED] process rules.
In consideration of Weitek providing the support set forth in this
Section, [CONFIDENTIAL INFORMATION REDACTED] shall compensate Weitek with
non recurring NRE of [CONFIDENTIAL INFORMATION REDACTED] payable as
follows:
(a) [CONFIDENTIAL INFORMATION REDACTED]at first
[CONFIDENTIAL INFORMATION REDACTED] W564 silicon
(b) [CONFIDENTIAL INFORMATION REDACTED]at [CONFIDENTIAL
INFORMATION REDACTED] W564 silicon booting DOS and Windows
(c) [CONFIDENTIAL INFORMATION REDACTED] at completion
of all points i) to v) of this paragraph and completion of
delivery of all deliverables in Exhibit B.
5.2 [CONFIDENTIAL INFORMATION REDACTED] PROGRAM
Weitek shall support [CONFIDENTIAL INFORMATION REDACTED]in the
integration of Weitek US/DC Technology embodied in the W564
functionality in the areas of:
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
a) [CONFIDENTIAL INFORMATION REDACTED]
b) [CONFIDENTIAL INFORMATION REDACTED]
c) [CONFIDENTIAL INFORMATION REDACTED]
Weitek shall provide space, facilities and training on the W564 design for
up to four (4) [CONFIDENTIAL INFORMATION REDACTED] engineers, including a
[CONFIDENTIAL INFORMATION REDACTED] project manager from[CONFIDENTIAL
INFORMATION REDACTED]at Weitek's facility for the duration of the
development phase of the [CONFIDENTIAL INFORMATION REDACTED] program.
In consideration of Weitek's support as outlined in this Section
[CONFIDENTIAL INFORMATION REDACTED]shall compensate Weitek with non
recurring engineering ("NRE") fees of [CONFIDENTIAL INFORMATION REDACTED]
payable as follows:
1) [CONFIDENTIAL INFORMATION REDACTED]at completion of milestone
a) of this paragraph
2) [CONFIDENTIAL INFORMATION REDACTED]at completion of milestone
b) of this paragraph
3) [CONFIDENTIAL INFORMATION REDACTED]at completion of milestone
c) of this paragraph
5.3 Termination of Support Obligations:
In the event of a merger with or acquisition of Weitek, Weitek shall have the
option, exercisable within thirty days following the effective date of such
merger or acquisition, to discontinue its support services under this Section
5. In the event Weitek elects to discontinue such obligations, Weitek shall
inform [CONFIDENTIAL INFORMATION REDACTED] in writing of such election and
Weitek shall be entitled to retain any amounts previously received
from[CONFIDENTIAL INFORMATION REDACTED] for any deliverables provided to
[CONFIDENTIAL INFORMATION REDACTED] under this Section 5. Weitek shall promptly
deliver to [CONFIDENTIAL INFORMATION REDACTED], free of additional payment, any
work in progress in Weitek's possession that has been developed by Weitek
pursuant to the provisions of this Section 5.
SECTION 6.0
PROPRIETARY RIGHTS
6.1 Confidential Information:
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<PAGE> 10
(a) As used in this Section 6.1, the term "Confidential
Information" shall mean any information disclosed by one party to
the other pursuant to this Agreement which is in written, graphic,
machine readable or other tangible form and is marked
"Confidential", "Proprietary" or in some other manner to indicate
its confidential nature. Source Code shall be deemed Confidential
Information even if not so marked. Confidential Information may also
include oral information disclosed by one party to the other
pursuant to this agreement, provided that such information is
designated as confidential at the tie of disclosure and reduced to a
written summary by the disclosing party, within thirty (30) days
after its oral disclosure, which is marked in a manner to indicate
its confidential nature and delivered to the receiving party.
Notwithstanding any failure to so identify it, however, the US/DC
Technology shall be deemed "Confidential Information" hereunder.
(b) Each party shall treat as confidential all Confidential
Information of the other party, shall not use such Confidential
Information except as expressly set forth herein or otherwise
authorized in writing, shall implement reasonable procedures to
prohibit the disclosure, unauthorized duplication, misuse or removal
of the other party's Confidential Information and shall not disclose
such Confidential Information to any third party except as may be
necessary and required in connection with the rights and obligations
of such party under this Agreement, and subject to confidentiality
obligations at least as protective as those set forth herein for a
period of ten (10) years after termination or expiration of this
Agreement. Without limiting the foregoing, each of the parties shall
use at least the same procedures and degree of care which it uses to
prevent the disclosure of its own confidential information of like
importance to prevent the disclosure of Confidential Information
disclosed to it by the other party under this Agreement, but in no
event less than reasonable care.
(c) Notwithstanding the above, neither party shall have liability
to the other with regard to any Confidential Information of the
other which:
(i) was generally known and available in the public
domain at the time it was disclosed or becomes generally known
and available in the public domain through no fault of the
receiver;
(ii) was know to the receiver at the time of disclosure
as shown by the files of the receiver in existence at the time
of disclosure;
(iii) is disclosed with the prior written approval of
the discloser;
(iv) was independently developed by the receiver without any use of
the Confidential Information and by employees or other agents
of the receiver who have not been exposed to the Confidential
Information, provided that the receiver can demonstrate such
independent
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
development by documented evidence prepared contemporaneously
with such independent development;
(v) becomes known to the receiver from a source other
than the discloser without breach of this Agreement by the
receiver and otherwise not in violation of the discloser's
rights; or
(vi) is disclosed pursuant to the order or requirement of a court,
administrative agency, or other governmental body; provided,
that the receiver shall provide prompt, advanced notice thereof
to enable the discloser to seek a protective order or otherwise
prevent such disclosure.
(d) Each party shall obtain the execution of proprietary
non-disclosure agreementswith its employees, agents and consultants
having access to ConfidentialInformation of the other party, and
shall diligently enforce such agreements, orshall be responsible for
the actions of such employees, agents and consultants in this
respect.
6.2 Source Code Protections:
[CONFIDENTIAL INFORMATION REDACTED] shall not under any circumstances
copy, duplicate or otherwise reproduce the Source Code in any manner
except as provided herein. [CONFIDENTIAL INFORMATION REDACTED] agrees to
limit access to the Source Code strictly to those persons who require
access in order to carry out the permitted uses of such Source Code
hereunder on a password protected basis. [CONFIDENTIAL INFORMATION
REDACTED] shall keep the Source Code in a secure, locked place when not in
use. [CONFIDENTIAL INFORMATION REDACTED] shall ensure that Source Code
listings are kept in a secure, locked cabinet or file inaccessible by
persons other than authorized employees.
SECTION 7.0
INVENTIONS; INDEMNIFICATION
7.1 Ownership:
(a) All discoveries, improvements, inventions, and trade secrets
made in the performance of this Agreement solely by Weitek personnel
shall be the sole and exclusive property of Weitek and Weitek shall
retain any and all rights to file any patent applications thereon.
(b) All discoveries, improvements, inventions, and trade secrets
made in the performance of this Agreement solely by [CONFIDENTIAL
INFORMATION REDACTED] personnel shall be the sole and exclusive
property of [CONFIDENTIAL INFORMATION REDACTED] and
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
[CONFIDENTIAL INFORMATION REDACTED] shall retain any and all rights to
file any patent applications thereon.
(c) Each party shall retain all Intellectual Property Rights in
and to proprietary technology that it has previously developed or
hereafter develops independently of any joint development
arrangement hereunder. All Intellectual Property Rights in and to
Derivatives developed jointly and technology that arises in the
course of any joint development programs conducted pursuant to this
agreement shall be jointly owned by the parties and each party shall
have the right to grant non-exclusive licenses to such jointly owned
technology to third parties on such terms and conditions as may
determine. [CONFIDENTIAL INFORMATION REDACTED] shall be responsible
for filing any patent or maskwork registrations with respect to
jointly developed technology (in the name of [CONFIDENTIAL
INFORMATION REDACTED] and Weitek jointly), and Weitek shall
reimburse [CONFIDENTIAL INFORMATION REDACTED]for one half of any out
of pocket fees and expenses associated with filing for and
maintaining the appropriate patent or maskwork protection.
[CONFIDENTIAL INFORMATION REDACTED] will keep Weitek informed on a
timely basis as to the status of any patent or mask work right
applications and registrations.
7.2 Weitek Indemnification:
Except as otherwise provided in this Section 7, Weitek shall defend (or at
its option settle) [CONFIDENTIAL INFORMATION REDACTED] from and against any
and all claims, demands, suits or proceedings made or brought against
[CONFIDENTIAL INFORMATION REDACTED], and shall reimburse[CONFIDENTIAL
INFORMATION REDACTED] for any and all liabilities, judgments, damages,
costs or expenses payable by [CONFIDENTIAL INFORMATION REDACTED] to the
partY bringing such action together with reasonable attorney's fees
relating thereto, as a result of any infringement of any third party United
States patent, copyright or maskwork right by the Technical Information,
US/DC Technology or Confidential Information licensed and provided to
[CONFIDENTIAL INFORMATION REDACTED] hereunder (collectively, the
"Indemnified Technology"). [CONFIDENTIAL INFORMATION REDACTED] agrees that
Weitek shall be relieved of its obligations under this Section 7.2 unless
[CONFIDENTIAL INFORMATION REDACTED] notifies Weitek promptly in writing of
and gives Weitek the exclusive authority to defend or settle such claim,
demand, suit or proceeding, and gives Weitek proper and full information
and assistance to settle or defend any such claim, demand, suit or
proceeding. If the Indemnified Technology, or any part thereof, are, or in
the opinion of Weitek become, the subject of any claim, demand, suit or
proceeding for infringement of any third party United States patent,
copyright or mask work right, or if it is adjudicatively determined that
the Indemnified Technology, or any part thereof, infringes any third party
United States patent, copyright or mask work right then Weitek may, at its
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
option and expense either (i) procure for [CONFIDENTIAL INFORMATION
REDACTED] the right under such third party United States patent, copyright
or mask work right to sell or use, as appropriate, the Indemnified
Technology, (ii) replace or modify the Indemnified Technology or parts
thereof, with other suitable and reasonably equivalent technology or parts
so that the Indemnified Technology becomes non-infringing, or (iii) in the
event of a claim of infringement that Weitek in good faith believes cannot
be resolved pursuant to (i) or (ii) on commercially reasonable terms,
Weitek may elect to terminate this agreement prospectively, such
termination to be effective upon payment by Weitek to [CONFIDENTIAL
INFORMATION REDACTED] of the Licensee Fees paid by [CONFIDENTIAL
INFORMATION REDACTED] hereunder less any amounts expended by Weitek
pursuant to this Section 7.2 prior to the time of termination.
7.3 Limitation:
Notwithstanding the provisions of Section 7.2 hereof, Weitek assumes
no liability for (i) any claim arising from the use of the Indemnified
Technology in combination with other equipment, software or technology not
provided by Weitek, (ii) any claim arising from the use of any
[CONFIDENTIAL INFORMATION REDACTED] process or other technology if the
claim would not have occurred but for such combination or process or other
technology, or (iii) any claim based on any modification of the
Indemnified Technology not made by Weitek. In addition, in no event shall
Weitek's liability to [CONFIDENTIAL INFORMATION REDACTED] under this
Section 7 exceed the fees paid by [CONFIDENTIAL INFORMATION REDACTED] to
Weitek pursuant to this Agreement.
7.4 Entire Liabilitv:
The foregoing provisions of this Section 7 state the entire liability and
obligations of Weitek to [CONFIDENTIAL INFORMATION REDACTED], and the
exclusive remedy of [CONFIDENTIAL INFORMATION REDACTED], with respect to
any alleged infringement of patents, copyrights, mask works, trade
secrets, trademarks or other intellectual property rights by any designs,
software or other technology or products licensed or otherwise provided to
[CONFIDENTIAL INFORMATION REDACTED] by Weitek pursuant to this Agreement
or any part thereof.
SECTION 8.0
LIMITATION OF LIABILITY
EXCEPT FOR LIABILITY TO [CONFIDENTIAL INFORMATION REDACTED] FOR DAMAGES
PAYABLE TO THIRD PARTIES AS SPECIFIED IN SECTIONS 7 HEREOF, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, OR INCIDENTAL
DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING IN ANY WAY
OUT OF THIS AGREEMENT OR THE DESIGNS OR OTHER TECHNOLOGY OR PRODUCTS LICENSED
OR OTHERWISE PROVIDED PURSUANT TO THIS AGREEMENT. WEITEK'S LIABILITY AND
[CONFIDENTIAL INFORMATION REDACTED] REMEDIES UNDER, ARISING OUT OF OR RELATED
TO THIS AGREEMENT, SHALL NOT EXCEED [CONFIDENTIAL INFORMATION REDACTED].
SECTION 9.0
TERM AND TERMINATION
9.1 Term:
The term of this Agreement shall commence as of the Effective Date and,
unless and until terminated hereunder, shall continue until one (1) year
after the Effective Date.
9.2 Termination:
(a) If either party defaults in the performance of any "Material
Obligation" hereunder and if any such default is not corrected within
forty-five (45) days after the defaulting party receives written
notice thereof from the non-defaulting party, then the non-defaulting
party, at its option, may, in addition to any other remedies it may
have, terminate this Agreement. With respect to [CONFIDENTIAL
INFORMATION REDACTED] default in the performance of a Material
Obligation hereunder shall mean those obligations set forth in
Sections 2.1, 2.2, 2.4 and 2.5 hereunder.
(b) Either party may terminate this Agreement effective upon
written notice to the other party in the event that the other party
becomes the subject of a voluntary or involuntary petition in
bankruptcy or any proceeding relating to insolvency, or composition
for the benefit of creditors, if that petition or proceeding is not
dismissed within sixty (60) days after filing.
9.3 Survival:
(a) Except for termination of this Agreement for breach of a
Material Obligation by [CONFIDENTIAL INFORMATION REDACTED], or a
termination pursuant to Section 7.2, all rights and licenses granted
to [CONFIDENTIAL INFORMATION REDACTED] hereunder shall survive
expiration of this Agreement. All amounts due prior to the date of
termination shall remain due and payable and, if already paid,
nonrefundable.
(b) In the event this agreement is terminated by Weitek pursuant
to Sections 7.2 or 9.2 due to a breach of a Material Obligation by
[CONFIDENTIAL INFORMATION REDACTED], all licenses granted to
[CONFIDENTIAL
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
INFORMATION REDACTED] shall be prospectively terminated, and Weitek
shall have no obligation to provide any continuing support.
(c) In the event this Agreement is terminated by Weitek for other
than a Material Breach, all rights and licenses granted to
[CONFIDENTIAL INFORMATION REDACTED] hereunder shall survive
termination of this Agreement, but Weitek shall have no obligation
to provide any continuing support. In either case all amounts due
prior to the date of termination shall remain due and payable and,
if already paid, shall be non-refundable. [CONFIDENTIAL INFORMATION
REDACTED] shall not be obligated to pay Weitek for any unperformed
services.
SECTION 10.0
GOVERNING LAW
10.1 Governing Law
This Agreement shall be governed by and interpreted in accordance with the
laws of [CONFIDENTIAL INFORMATION REDACTED].
SECTION 11.0
MISCELLANEOUS
11.1 Assignment:
Neither party may assign or delegate this Agreement or any of its
licenses, rights or duties under this Agreement without the prior written
consent of the other; provided, however, that consent to assign shall not be
required in connection with a merger with Weitek or an acquisition of all or
substantially all of the stock or assets of Weitek if the merging or acquiring
company agrees to be bound by the terms and conditions of this Agreement.
11.2 Authority:
Each party represents that all corporate action necessary for the
authorization, execution and delivery of this Agreement by such party and the
performance of its obligations hereunder has been taken.
11.3 Notices:
All notices and other communications required or permitted hereunder shall
be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand, by messenger or by telecommunication,
addressed to the addresses first set forth above or at such other address
furnished with a notice in the manner set forth herein. In the case of Weitek
such notices shall be sent to Weitek Corporation Inc., 2801 Orchard
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
Parkway, San Jose California, 95134, Attention: Paul Kidman and in the case of
[CONFIDENTIAL INFORMATION REDACTED] any such notices shall be sent to
[CONFIDENTIAL INFORMATION REDACTED] Attention: General Counsel, or such other
names provided by one party to the other. Such notices shall bedeemed to have
been served when delivered or, if delivery is not accomplished by reason of some
fault of the addressee, when tendered.
11.4 Export Controls:
[CONFIDENTIAL INFORMATION REDACTED] and Weitek both agree not to export,
or re-export, or cause to be exported or re-exported, any technical data
(including any US/DC Technology, Technical Information, or Confidential
Information) received hereunder, or the direct product of such technical data,
to any country to which, under the laws of the United States, both parties are
or may be prohibited from exporting its technology or the direct product
thereof.
11.5 Partial Invalidity:
If any paragraph, provision, or clause thereof in this Agreement shall be
found or be held to be invalid or unenforceable in any jurisdiction in which
this Agreement is being performed, the remainder of this Agreement shall be
valid and enforceable and the parties shall negotiate, in good fail, a
substitute, valid and enforceable provision which most nearly effects the
parties' intent in entering into this Agreement.
11.6 Counterparts:
This Agreement may be executed in two (2) or more counterparts, all of
which, taken together, shall be regarded as one and the same instrument.
11.7 Relationship of Parties:
The parties hereto are independent contractors. Nothing contained herein
or done in pursuance of this Agreement shall constitute either party the agent
of the other party for any purpose or in any sense whatsoever, or constitute
the parties as partners or joint ventures.
11.8 Modification:
No alteration, amendment, waiver, cancellation or any other change in any
term or condition of this Agreement shall be valid or binding on either party
unless the same shall have been mutually assented to in writing by both
parties.
11.9 Waiver:
The failure of either party to enforce at any time the provisions of this
Agreement, or the failure to require at any time performance by the other party
of any of the provisions of
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CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED INFORMATION
this Agreement, shall in no way be constituted to be a present or future waiver
of such provisions, nor in any way affect the validity of either party to
enforce each and every such provision thereafter. The express waiver by either
party of any provision, condition or requirement of this Agreement shall not
constitute a waiver of any future obligation to comply with such provision,
condition or requirement.
11.10 Section Headings:
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
11.11 Injunctive Relief:
In the event of breach of this Agreement, the non-breaching party may
apply to any court of competent jurisdiction for injunctive relief.
11.12 Entire Agreement:
The terms and conditions herein contained constitute the entire agreement
between the parties and supersede all previous agreements and understanding,
whether oral or written, between the parties hereto with respect to the subject
matter hereof and no agreement or understanding varying or extending the same
shall be binding upon either party hereto unless in a written document signed
by the party to be bound thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by duly authorized of officers or representatives as of the date first
above written.
WEITEK Corporation, Inc.
[CONFIDENTIAL INFORMATION REDACTED]
EXHIBIT A
US.DC TECHNOLOGY AND SCHEDULE FOR TRANSFER
DELIVERY: IMMEDIATE
W564
LOGIC DESIGN:
- - Verilog RTL (zeus)
- - Standard Cell and Datapath Libraries
- - Synthesis Library: (wtlmeth/synlib/ibm45 nldm/ibm45 nldm.db)
- - Circuit files (Synopsys output gates) for ADPC and CPC (bhaskar/zeus/
[adpc,cpc] /gates)
DESIGN ENVIRONMENT:
- - Simulation execution tools and scripts source code
- - PLI source code (including: toggle coverage, pixel dumper, master
synchronization. memory preloading, argument parsing, frame buffer write
checking, vector generation, etc.)
- - ZTRANS test language translator and frame buffer access predictor
- - Directed tests and tools to run tests (including regression lists)
- - Pseudo-Random Test environment
- - Micro-Pseudo-Random Test for BLT Engine Address and Data Datapaths
- - Peripheral models (delivery for Synopsys models contingent upon Synopsys
licensing, in-house deliverable immediately)
- - Design timing files and related in-house synthesis and timing verification
tools/scripts
- - (including files not in code-control and critical path analyses)
- - DM source code control scripts
DOCUMENTATION:
- - Target Specification
- - User documents for design environment and tools
- - Test plans
SOFTWARE:
- - Windows drivers source code for W464 (Windows 3.1, Windows 95)
- - Software development environment (specific libraries, organization of the
development tools, specific tools etc ..)
EXHIBIT B
US.DC TECHNOLOGY AND SCHEDULE FOR TRANSFER
DELIVERY: AFTER TAPE OUT
W564
LOGIC DESIGN:
- - Verilog RTL (zeus)
- - Standard Cell and Datapath Libraries
- - Synthesis Library: (wtlmeth/synlib/ibm45 nldm/ibm45 nldm.db)
- - Circuit files (Synopsys output gates) for ADPC and CPC (bhaskar/zeus/
[adpc,cpc] /gates)
- - GDS-II Stream file for ADPC and for CPC
W564 DESIGN ENVIRONMENT:
- - Simulation execution tools and scripts source code
- - PLI source code (including: toggle coverage, pixel dumper, master
synchronization, memory preloading, argument parsing, frame buffer write
checking, vector generation, etc.)
- - ZTRANS test language translator and frame buffer access predictor
- - Directed tests and tools to run tests (including regression lists)
- - Pseudo-Random Test environment
- - Micro-Pseudo-Random Test for BLT Engine Address and Data Datapaths
- - Peripheral models (delivery for Synopsys model's contingent upon Synopsys
licensing, in-house deliverable immediately)
- - Design timing files and related in-house synthesis and timing verification
tools/scripts (including files not in code-control and critical path analyses)
- - DM source code control scripts
- - Test Vectors for IC Tester (deliverable with silicon arrival)
DOCUMENTATION:
- - Target Specification
- - User documents for design environment and tools
- - Test plans
SYSTEM DESIGN:
- - W564 Motherboard schematics and layout files
SOFTWARE:
- - Weitek specific BIOS modifications for system BIOS
- - Windows drivers source code for W564 (Windows 3.1, Windows 95)
- - Software development environment (specific libraries, organization of the
development tools, specific tools etc ..)
- - Compatibility test plans
- - Compatibility test results for the W564
- - Errata list
17
<PAGE> 18
EXHIBIT C
W564
CPU INTERFACE
- - Supports Intel Pentium, P54C, AMD K5 and Cyrix 6x86 CPU's
- - Write-back or wnte-through L1 cache operation
- - External CPU bus speed to 75MHz
- - CPU-specific power management support
LEVEL 2 CACHE CONTROLLER
- - Programmable write-back or write-through direct-mapped L2 cache
- - OKB,128KB, 256KB, 512KB,1 MB sizes
- - Synchronous-burst, synchronous and asynchronous SRAM options
- - Interleave and non-interleave operation modes
- - Cacheable memory to 128 MB
- - 16-byte line size
- - Independently programmable wait states for read and write cycles
- - Independently programmable wait states for burst cycles
- - Programmable cache support for C and F block shadowing, with selectable write
protection
PCI CONTROLLER
- - Fully PCI compliant
- - Full bus mastering between PCI and ISA
- - Supports bursting between PCI masters and system memory
- - Synchronous PCI clock at full or half CPU clock rate
EIDE CONTROLLER
- - Fully ATA, ATAPI compliant
- - PCI bus mastering with scatter-gather
- - Advanced disk DMA operation
- - 4 drive, dual channel support with independent fully programmable timing
- - Up to Mode 5 PlO amd Mode 3 DMA support
ISA CONTROLLER
- - Selectable ISA clock frequencies
- - Programmable wait state and recovery time for ISA cycles
- - Fast gate-A20 and fast reset
- - Single graphics and system BIOS ROM for C, D, E and F blocks
- - Glueless flash-ROM support
- - Supports ISA hidden refresh
GRAPHICS CONTROLLER
- - 64-bit, high-performance Windows accelerator
- - 100% IBM VGA compatible
- - Hardware acceleration for text, BitBlt, rops, patterns, and fills
- - Resolutions to: 1280 x 1024 x 256colors 1024 x 768 x 64Kcolors 800 x 600 x 16M
colors 640 x 480 x 16M colors
- - Refresh rates of 75Hz and above
- - 80MHz GUI engine clock
- - Dynamically user selectable display frame buffer size from O to 4MB in 128KB
increments
- - Integrated 135MHZ 24-bit RAMDAC
- - Hardware cursor, 64x64x2 bits
- - VESA feature interface for multimedia peripherals
- - Local-bus uses no PCI bandwidth
VIDEO ACCELERATOR
- - Full screen at full frame rates
- - Color space conversion
- - Video scaling, any size window
- - Codec support for MPEG, Indeo, Cinepak
DRAM CONTROLLER
- - Combines system and graphics memory
- - Graphics memory can be dynamically adjusted
- - 64-bit memory bus, supports 32-bit fill options
- - Supports up to 128MB system memory in 1 to 4 banks
- - Supports all single and double-sided SIMM configurations from 256KB to 32M3
- - Write FIFO for high performance
- - Read prefetch buffers for high performance
- - Supports fast-page-mode and EDO DRAM
- - Fully programmable DRAM timing parameters
- - Hidden refresh
- - Shadow memory support for C, D, E and F blocks
- - Supports memory re-mapping of unused D and E blocks for full memory
utilization
- - Provides VUMA interface for 3D and MPEG hardware acceleraors
PERIPHERAL CONTROLLER
- - Two 8237 DMA controllers (byte and word configuration)
- - Two 8259 interrupt controllers (master and slave configuration)
- - One 8254 triple-channel timer/counter
- - Coprocessor error support logic
POWER MANAGEMENT
- - Four power saving modes: On, Doze, Standby, Suspend
- - Supports Intel, AMD and Cyrix SMI, SMM modes
- - Supports STPCLK#, and slow clock modes
- - Supports APM and DPM standard
- - Independent peripheral timeout timer to monitor video, hard disk, disk, serial
port, parallel port, et.
- - Supports RTC, interrupt and DMAs wake up
- - SMM code
- - Provides port control for hardware powerdown of peripheral devices
PACKAGING, FAB, ETC.
- - One 352-pin BGA and one 208-pin EIAJ PQFP
- - Built in a TLM CHMOS technology
- - Split 3.3 and 5 Volt operation
- - ICs available for customization
PRODUCT SUPPORT
- - Multiple, third-party system BIOS sources
- - WEITEK supplied video BIOS supports VESA high resolution modes for
applications
- - Graphics acceleration drivers for Windows 3.X, Windows '95, and
OS/2
- - WEITEK video drivers
- - Disk acceleration drivers
- - WEITEK system, graphics and disk configuration utilities
- - Evaluation kits
- - Multiple manufacturing kits
- - Comprehensive technical support
W464
FEATURE SUMMARY
CPU INTERFACE
- - Supports all Intel, AMD, and Cyrix 4B6-class CPUs
- - Full support for write-back or write-through L1 cache operation
- - Supports CPU bus speeds from 25 MHz to 50 MHz
- - CPU-specific power management support
- - Write-bursting support in Cyrix M1 SC and linear write-burst CPUs
PCI CONTROLLER
- - Fully PCI-compliant
- - Supports three PCI expansion slots
- - Full bus mastering between PCI and ISA
- - Supports bursting between PCI masters and system memory Synchronous PCI clock
at either full or half CPU dock rate
GRAPHICS CONTROLLER
- - High performance 64-bit Windows accelerator
- - VGA-compatible
- - Hardware acceleration for BitBlt, text, raster-ops, patterns, and fills
- - Resolutions to 1280x1024 at 8 bits per pixel (75 Hz)
- - Resolutions to 1024x768 at 15 or 16 bits per pixel (75 Hz) True-color
resolutions to 800x600 at 75Hz
- - Color depths of 8, 16, 24 and 32 bits
- - Userselectable linear frame buffer size from 0-4 MB, in 128 KB increments
- - Integrated 135 MHz 24-bit RAMDAC
- - Hardware cursor, 64x64x2 bits
- - Uses no PCI bandwidth
LEVEL 2 CACHE CONTROLLER
- - Supports programmable write-back or write-through direct-mapped L2 cache
- - Sizes from 0 KB to 1 MB
- - Cacheable memory range to 128 MB
- - 16-byte line size
- - Interleaved and non-interleaved operation
- - Supports inexpensive asynchronous SRAMs
- - Independently programmable wait states for read and write cycles
- - Independently programmable wait states for burst cycles
- - Programmable cache support for C and F block shadowing, with selectable write
protection
DRAM CONTROLLER
- - Combines system and graphics memory
- - Graphics memory allocation can be dynamically adjusted
- - True 64-bit memory bus
- - Supports up to 128 MB system memory in four banks
- - Supports all single- and double-sided SIMM configurations from 256 KB to 32M'8
- - DRAM write FIFO for high performance
- - DRAM read prefetch buffers for high performance
- - Supports commodity fast-page-mode DRAMs
- - Programmable timing for DRAM parameters including CAS pulse width, CAS
precharge time, and RAS to CAS delay
- - Hidden refresh
- - Supports memory hole to 8 MB for PCI/ ISA devices
- - Shadow memory support for C, D, E, and F blocks
- - Supports memory remapping for unused D and E blocks to top of system memory
PERIPHERAL CONTROLLER
- - Two 8237-compatible DMA controllers
- - Two 8259-compatible interrupt controllers
- - One 8254-compatible three-channel counter/timer
- - Coprocessor error support logic
ISA CONTROLLER
- - Selectable ISA clock, from either 14.318 MHz oscillator clock or system clock
- - Programmable wait state and recovery time for ISA cycles
- - Fast-gate A20 and fast reset
- - Single graphics and system BIOS ROM for C, D, E, and F blocks
- - Glueless flash ROM support
- - Supports ISA hidden refresh
POWER MANAGEMENT
- - Four power saving modes: On, Doze, Standby, Suspend
- - Supports Intel, AMD, or Cyrix SMI/SMM modes
- - Supports APM and DPM standards
- - Supports STPCLK# and slow clock modes
- - Independent peripheral timeout timer to monitor video, hard disk, floppy disk,
senal port, and parallel port
- - Supports RTC, interrupt, and DMA wake-up
- - 128 KB of system memory can be dedicated for power management code
- - Provides port control for hardware power-down of peripheral devices
PACKAGING, FAB, ETC.
- - Both ICs packaged in standard 208-pin EIAJ plastic QFP packages
- - Both ICs built in a 0.8 micron, three-layer metal, CHMOS process
- - Five-volt operation
- - IC's available for customization
18
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