Exhibit 10.1

 

SEVERANCE AGREEMENT

 

In exchange for the promises and covenants contained herein, MathStar, Inc., a
Delaware corporation (the “Company”), and Douglas Pihl (“Employee”) hereby agree
as follows:

 

1.                                       DEFINITIONS.  WE INTEND ALL WORDS USED
IN THIS SEVERANCE AGREEMENT (“AGREEMENT”) TO HAVE THEIR PLAIN MEANINGS IN
ORDINARY ENGLISH.  SPECIFIC TERMS WE USE IN THIS AGREEMENT HAVE THE FOLLOWING
MEANINGS:

 

A.                                   EMPLOYEE, AS USED HEREIN, SHALL INCLUDE THE
UNDERSIGNED EMPLOYEE AND ANYONE WHO HAS OBTAINED ANY LEGAL RIGHTS OR CLAIMS
THROUGH THE UNDERSIGNED EMPLOYEE.

 

B.                                     COMPANY, AS USED HEREIN, SHALL AT ALL
TIMES MEAN MATHSTAR, INC., ITS PARENT COMPANY, ITS SUBSIDIARIES, SUCCESSORS AND
ASSIGNS, ITS AFFILIATED AND PREDECESSOR COMPANIES, THEIR SUCCESSORS AND ASSIGNS,
THEIR AFFILIATED AND PREDECESSOR COMPANIES, AND THE PRESENT OR FORMER DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, AND AGENTS (INCLUDING, WITHOUT LIMITATION,
ITS ACCOUNTANTS AND ATTORNEYS) OF ANY OF THEM, WHETHER IN THEIR INDIVIDUAL OR
OFFICIAL CAPACITIES, AND THE CURRENT AND FORMER TRUSTEES OR ADMINISTRATORS OF
ANY PENSION OR OTHER BENEFIT PLAN APPLICABLE TO EMPLOYEES OR FORMER EMPLOYEES OF
THE COMPANY, IN THEIR OFFICIAL OR INDIVIDUAL CAPACITIES.

 

C.                                     EMPLOYEE’S CLAIMS, AS USED HEREIN, MEANS
ALL OF THE RIGHTS EMPLOYEE HAS NOW TO ANY RELIEF OF ANY KIND FROM THE COMPANY,
WHETHER OR NOT EMPLOYEE NOW KNOWS ABOUT THOSE RIGHTS, ARISING OUT OF HIS
EMPLOYMENT WITH THE COMPANY AND HIS SEPARATION FROM EMPLOYMENT WITH THE COMPANY,
INCLUDING, WITHOUT LIMITATION, CLAIMS ARISING UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT, AS AMENDED BY THE OLDER WORKER BENEFIT PROTECTION ACT; THE
OREGON CIVIL RIGHTS LAWS CODIFIED IN OREGON REVISED STATUTE SECTIONS 659A.100,
ET SEQ.; THE AMERICANS WITH DISABILITIES ACT; TITLE VII OF THE CIVIL RIGHTS ACT
OF 1964, AS AMENDED; OR OTHER FEDERAL, STATE OR LOCAL CIVIL RIGHTS LAWS; ALL
CLAIMS FOR ALLEGED BREACH OF FIDUCIARY DUTY UNDER SECTION 409 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT ALLEGEDLY IMPAIRING THE VALUE OF EMPLOYEE’S
ACCOUNTS UNDER ANY QUALIFIED RETIREMENT PLAN SPONSORED BY MATHSTAR, INC.; CLAIMS
FOR BREACH OF CONTRACT; FRAUD OR MISREPRESENTATION; DEFAMATION, INTENTIONAL OR
NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS; BREACH OF COVENANT OF GOOD FAITH AND
FAIR DEALING; PROMISSORY ESTOPPEL; NEGLIGENCE; WRONGFUL TERMINATION OF
EMPLOYMENT; AND ANY OTHER CLAIMS FOR UNLAWFUL EMPLOYMENT PRACTICES.

 

2.                                       SEPARATION DATE.  EMPLOYEE’S LAST DAY
OF WORK FOR COMPANY SHALL BE ON A DATE TO BE DETERMINED BY THE COMPANY
(“SEPARATION DATE”).

 

3.                                       COMPANY’S OBLIGATIONS AND SEVERANCE
AGREEMENTS.  IN CONSIDERATION FOR EMPLOYEE’S PROMISES CONTAINED HEREIN,
SPECIFICALLY INCLUDING, BUT NOT LIMITED TO, THE RELEASE OF ALL CLAIMS BY
EMPLOYEE AND EMPLOYEE’S PROMISES TO REFRAIN FROM DISCLOSING CONFIDENTIAL
INFORMATION OF THE COMPANY, THE COMPANY AGREES AS FOLLOWS:

 

A.                                   SEVERANCE PAYMENT.  THE COMPANY AGREES TO
PAY TO EMPLOYEE A SEVERANCE PAYMENT OF $216,285.60 (“SEVERANCE PAYMENT”), WHICH
IS EQUAL TO TWELVE (12) MONTHS OF EMPLOYEE’S BASE SALARY CALCULATED AT
EMPLOYEE’S REGULAR RATE OF PAY AS OF THE DATE OF THIS

 

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AGREEMENT.  THIS SEVERANCE PAYMENT WILL BE PAYABLE IN ONE LUMP SUM AFTER THE
EXPIRATION OF THE RESCISSION PERIOD, AS HEREINAFTER DEFINED.  THE SEVERANCE
PAYMENT SHALL BE SUBJECT TO ALL FEDERAL AND STATE WITHHOLDING TAXES AND FICA. 
THIS PAYMENT WILL BE MADE NO LATER THAN JULY 31, 2008.

 

B.                                     Medical Insurance Benefits.  The Company,
pursuant to federal and state law, will provide, for a period of eighteen (18)
months following the effective date of Employee’s termination (“COBRA Period”),
a continuation of the group medical insurance coverage previously provided to
Employee by the Company, entirely at Employee’s expense.

 

C.                                     Salary.  Effective August 1, 2008, the
Employee will retain current salary plan, all current benefit plans, and will
remain the Chief Executive Officer and Corporate Officer until further notice by
the Board of Directors.

 

4.                                       EMPLOYEE OBLIGATIONS.  AS MATERIAL
INDUCEMENT TO COMPANY IN ENTERING INTO THIS AGREEMENT AND PROVIDING THE
CONSIDERATION DESCRIBED IN SECTION 3, EMPLOYEE HEREBY AGREES AS FOLLOWS:

 

A.                                   RELEASE.  EMPLOYEE AGREES TO RELEASE ALL
EMPLOYEE’S CLAIMS.  EMPLOYEE ACKNOWLEDGES THAT THE MONEY AND PROMISES RECEIVED
AND TO BE RECEIVED BY EMPLOYEE ARE IN EXCHANGE FOR THE RELEASE OF EMPLOYEE’S
CLAIMS.

 

B.                                     COVENANT NOT TO SUE.  EMPLOYEE AGREES
THAT HE WILL NOT INITIATE ANY LITIGATION TO PURSUE CLAIMS WHICH EMPLOYEE
RELEASED IN SECTION 4.A.  THIS COVENANT DOES NOT APPLY TO LITIGATION CHALLENGING
THE VALIDITY OF SECTION 4.A.  EXCLUDED FROM THIS COVENANT ARE ANY CLAIMS WHICH
CANNOT BE WAIVED BY LAW, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO FILE A
CHARGE WITH OR PARTICIPATE IN ANY INVESTIGATION CONDUCTED BY THE EQUAL
EMPLOYMENT OPPORTUNITY COMMISSION (“EEOC”) OR ANY STATE OR LOCAL AGENCY. 
EMPLOYEE AGREES TO WAIVE, HOWEVER, HIS RIGHT TO ANY MONETARY RECOVERY SHOULD THE
EEOC OR ANY STATE OR LOCAL AGENCY PURSUE ANY CLAIMS ON EMPLOYEE’S BEHALF. 
FURTHER, EMPLOYEE AGREES TO PAY COMPANY’S ATTORNEYS FEES IF EMPLOYEE BREACHES
THE COVENANT NOT TO SUE CONTAINED IN THIS SECTION 4.B.

 

C.                                     COMPANY PROPERTY.  EMPLOYEE WILL RETURN
ALL PROPERTY BELONGING TO COMPANY TO COMPANY IMMEDIATELY UPON THE EXECUTION OF
THIS AGREEMENT, WHETHER SUCH PROPERTY IS CURRENTLY ON OR OFF THE PREMISES OF
COMPANY, INCLUDING, WITHOUT LIMITATION, ANY AND ALL COMPUTER HARDWARE OR
COMPUTER SOFTWARE.

 

D.                                    CONFIDENTIALITY.  FOR ALL TIME HEREAFTER
FOREVER, EMPLOYEE WILL NOT USE OR MAKE AVAILABLE OR DIVULGE TO ANY PERSON, FIRM,
CORPORATION OR OTHER ENTITY ANY INFORMATION OF OR REGARDING COMPANY INCLUDING,
WITHOUT LIMITATION, TRADE SECRETS, CUSTOMER LISTS, BUSINESS POLICIES, FINANCIAL
INFORMATION, TECHNICAL INFORMATION, METHODS OF OPERATION, MARKETING PROGRAMS,
CUSTOMER PRICE LISTS OR ANY OTHER CONFIDENTIAL OR SECRET INFORMATION CONCERNING
THE BUSINESS AND AFFAIRS OF COMPANY OR ANY OF ITS AFFILIATES.

 

E.                                      CONFIDENTIALITY OF AGREEMENT.  EMPLOYEE
AGREES THAT HE WILL KEEP THE TERMS AND CONDITIONS OF THIS AGREEMENT STRICTLY
CONFIDENTIAL EXCEPT THAT EMPLOYEE MAY DISCLOSE THE TERMS AND CONDITIONS OF THIS
AGREEMENT TO HIS SPOUSE, IF ANY, ATTORNEY, TAX PREPARER,

 

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GOVERNMENT AGENCIES, OR AS REQUIRED BY LAW.  EMPLOYEE AGREES THAT IN THE EVENT
THAT EMPLOYEE DISCLOSES ANY OF THE TERMS OF THIS AGREEMENT, INCLUDING THE FACT
OF PAYMENT OTHER THAN AS SET FORTH ABOVE, HE SHALL BE LIABLE TO COMPANY AS SET
FORTH IN SECTION 4.G. OF THIS AGREEMENT AND FOR ANY AND ALL INJURIES OR DAMAGES
SUSTAINED BY COMPANY INCLUDING COSTS, DISBURSEMENTS AND ATTORNEYS’ FEES INCURRED
BY COMPANY AS A DIRECT RESULT OF EMPLOYEE’S DISCLOSURE.

 

F.                                      Non-Disparagement.  Employee agrees that
he shall not disparage or defame Company in any respect.

 

G.                                     REMEDIES.  EMPLOYEE ACKNOWLEDGES THAT ANY
BREACH OF ANY OF THE PROMISES SET FORTH IN SECTIONS 4.C, 4.D., 4.E., AND 4.F.
WILL CAUSE COMPANY IRREPARABLE HARM FOR WHICH THERE IS NO ADEQUATE REMEDY AT LAW
AND EMPLOYEE THEREFORE CONSENTS TO THE ISSUANCE OF ANY INJUNCTION IN FAVOR OF
COMPANY ENJOINING THE BREACH OF ANY OF THOSE PROMISES BY ANY COURT OF COMPETENT
JURISDICTION.  IF ANY PROMISE MADE BY EMPLOYEE IN THIS SECTION 3 SHOULD BE HELD
TO BE UNENFORCEABLE BECAUSE OF ITS SCOPE OR DURATION, OR THE AREA OR SUBJECT
MATTER COVERED THEREBY, EMPLOYEE AGREES THAT THE COURT MAKING SUCH DETERMINATION
SHALL HAVE THE POWER TO REDUCE OR MODIFY THE SCOPE, DURATION, SUBJECT MATTER OR
AREA OF THAT PROMISE TO THE EXTENT THAT ALLOWS THE MAXIMUM SCOPE, DURATION,
SUBJECT MATTER OR AREA PERMITTED BY APPLICABLE LAW.  EMPLOYEE FURTHER AGREES
THAT THE REMEDIES PROVIDED FOR HEREIN ARE IN ADDITION TO, AND ARE NOT TO BE
CONSTRUED AS REPLACEMENTS FOR, OR A LIMITATION OF, RIGHTS AND REMEDIES OTHERWISE
AVAILABLE TO COMPANY.

 

5.                                       EMPLOYEE’S UNDERSTANDINGS.  EMPLOYEE
ACKNOWLEDGES AND REPRESENTS THAT:

 

A.                                   EMPLOYEE UNDERSTANDS THAT HE HAS THE RIGHT
TO CONSULT WITH AN ATTORNEY REGARDING THE MEANING AND EFFECT OF THIS AGREEMENT.

 

B.                                     EMPLOYEE ALSO UNDERSTANDS THAT HE HAS A
PERIOD OF AT LEAST FORTY-FIVE (45) CALENDAR DAYS FROM THE DATE ON WHICH HE
RECEIVES AN UNSIGNED COPY OF THIS AGREEMENT IN WHICH TO CONSIDER WHETHER OR NOT
TO SIGN THIS AGREEMENT AND THAT, HAVING BEEN ADVISED OF THAT ENTITLEMENT, HE MAY
ELECT TO SIGN THIS AGREEMENT AT ANY TIME PRIOR TO THE EXPIRATION OF THAT TIME
PERIOD.  EMPLOYEE UNDERSTANDS THAT ANY REVISIONS TO THIS THAT ARE NOT MATERIAL
WILL NOT RESTART THE FORTY-FIVE DAY PERIOD.  HOWEVER, EMPLOYEE UNDERSTANDS THAT
HE SHALL NOT EXECUTE THIS AGREEMENT AT ANY TIME BEFORE THE SEPARATION DATE.

 

C.                                     EMPLOYEE UNDERSTANDS THAT HE MAY RESCIND
(THAT IS, CANCEL) WITHIN SEVEN (7) CALENDAR DAYS OF SIGNING THE AGREEMENT THE
PROVISIONS OF SECTION 4.A. OF THIS AGREEMENT WITH RESPECT TO CLAIMS ARISING
UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT (THE “RESCISSION PERIOD”).  TO BE
EFFECTIVE, RESCISSION MUST BE IN WRITING, DELIVERED TO COMPANY AT 19075 NW
TANASBOURNE DRIVE, SUITE 200, HILLSBORO, OREGON, 97124, ATTN: PATTI LUSK, WITHIN
THE RESCISSION PERIOD, OR SENT TO COMPANY, AT SUCH ADDRESS, BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, POSTMARKED WITHIN THE APPLICABLE RESCISSION PERIOD.

 

6.                                       CANCELLATION OF AGREEMENT BY COMPANY. 
IF EMPLOYEE EXERCISES HIS RIGHT OF RESCISSION UNDER SECTION 5.C. OF THIS
AGREEMENT, COMPANY WILL HAVE THE RIGHT, EXERCISABLE BY WRITTEN NOTICE DELIVERED
TO EMPLOYEE, TO TERMINATE THIS AGREEMENT IN ITS ENTIRETY, IN WHICH EVENT COMPANY
WILL

 

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HAVE NO OBLIGATION WHATSOEVER TO EMPLOYEE HEREUNDER.  IF EMPLOYEE EXERCISES HIS
RIGHT OF RESCISSION UNDER SECTION 5.C. OF THIS AGREEMENT, AND COMPANY DOES NOT
EXERCISE ITS RIGHT TO TERMINATE THIS AGREEMENT HEREUNDER, THE REMAINING
PROVISIONS OF THIS AGREEMENT (INCLUDING SPECIFICALLY THE REMAINING PROVISIONS OF
SECTION 4 OF THIS AGREEMENT) SHALL REMAIN VALID AND CONTINUE IN FULL FORCE AND
EFFECT.

 

7.                                       PERFORMANCE BY EMPLOYEE.  NOTHING
CONTAINED HEREIN SHALL OPERATE AS A WAIVER OR AN ELECTION OF REMEDIES BY COMPANY
SHOULD EMPLOYEE FAIL TO PERFORM ANY DUTY OR OBLIGATION IMPOSED UPON HIM
HEREUNDER.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THIS
AGREEMENT AND THE DUTIES AND OBLIGATIONS OF EMPLOYEE HEREUNDER SHALL CONTINUE IN
FULL FORCE AND EFFECT IRRESPECTIVE OF ANY VIOLATION OF ANY TERM OR PROVISION OF
THIS AGREEMENT BY EMPLOYEE.

 

8.                                       NO ADMISSION OF LIABILITY.  THE PARTIES
AGREE THAT THIS AGREEMENT SHALL NOT BE CONSIDERED AN ADMISSION OF LIABILITY BY
COMPANY.  COMPANY EXPRESSLY DENIES THAT IT IS IN ANY WAY LIABLE TO EMPLOYEE OR
THAT IT HAS ENGAGED IN ANY WRONGDOING WITH RESPECT TO EMPLOYEE.

 

9.                                       EMPLOYEE ACKNOWLEDGMENTS.  EMPLOYEE
ACKNOWLEDGES AND REPRESENTS THAT:  (A) HE HAS READ THIS AGREEMENT AND
UNDERSTANDS ITS CONSEQUENCES; (B) HE HAS RECEIVED ADEQUATE OPPORTUNITY TO READ
AND CONSIDER THIS AGREEMENT; (C) HE HAS DETERMINED TO EXECUTE THIS AGREEMENT OF
HIS OWN FREE WILL AND ACKNOWLEDGES THAT HE HAS NOT RELIED UPON ANY STATEMENTS OR
EXPLANATIONS MADE BY COMPANY REGARDING THIS AGREEMENT; AND (D) THE PROMISES OF
COMPANY MADE IN THIS AGREEMENT CONSTITUTE FAIR AND ADEQUATE CONSIDERATION FOR
THE PROMISES, RELEASES AND AGREEMENTS MADE BY EMPLOYEE IN THIS AGREEMENT.

 

10.                                 ENTIRE AGREEMENT.  THIS AGREEMENT ,
INCLUDING ANY EXHIBITS ATTACHED HERETO OR DOCUMENTS EXPRESSLY REFERRED TO
HEREIN, CONTAINS THE ENTIRE AGREEMENT BETWEEN COMPANY AND EMPLOYEE AND
SUPERSEDES AND CANCELS ANY AND ALL OTHER AGREEMENTS, WHETHER ORAL OR IN WRITING,
BETWEEN COMPANY AND EMPLOYEE WITH RESPECT TO THE MATTERS REFERRED TO HEREIN;
PROVIDED, HOWEVER, THAT THIS AGREEMENT DOES NOT SUPERSEDE, CANCEL OR OTHERWISE
VOID THAT CERTAIN EMPLOYEE CONFIDENTIALITY, NON-DISCLOSURE AND INTELLECTUAL
PROPERTY AGREEMENT, WHICH SHALL REMAIN IN FULL FORCE AND EFFECT.

 

11.                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON.

 

12.                                 EFFECTIVE DATE.  THIS AGREEMENT WAS
ORIGINALLY OFFERED TO EMPLOYEE ON OR ABOUT MAY 30, 2008.  EMPLOYEE SHALL HAVE
UNTIL THE LATTER OF THE CLOSE OF BUSINESS ON JULY 14, 2008 OR THE SEPARATION
DATE TO ACCEPT THIS AGREEMENT BUT SHALL NOT SIGN THIS AGREEMENT AT ANY TIME
BEFORE THE SEPARATION DATE.  IF EMPLOYEE DESIRES TO ACCEPT THIS AGREEMENT,
EMPLOYEE SHALL EXECUTE THE AGREEMENT AND RETURN THE SAME TO COMPANY AT THE
ADDRESS SET FORTH IN SECTION 5.C. HEREOF.  IF EMPLOYEE DOES NOT SO ACCEPT THIS
AGREEMENT, THIS AGREEMENT, AND THE OFFER CONTAINED HEREIN, SHALL BE NULL AND
VOID AS OF THE CLOSE OF BUSINESS ON JULY 14, 2008.

 

13.                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN COUNTERPARTS WITH AN EXECUTED COUNTERPART TO BE DELIVERED TO THE
OTHER PARTY.  EACH SUCH EXECUTED COUNTERPART SHALL BE DEEMED AN ORIGINAL BUT
SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

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MATHSTAR, INC.

 

 

 

Dated:

7/14/08

 

By:

/s/ John M. Jennings

 

 

Its:

Chief Accounting Officer

 

 

 

 

 

 

Dated:

7/14/08

 

/s/ Douglas M. Pihl

 

 

Douglas Pihl

 

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