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 


 

















 


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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