Exhibit 10.1


 


AMENDMENT NO. 2 TO


STRATEGIC PARTNERSHIP AGREEMENT


 


THIS AMENDMENT NO. 2 TO STRATEGIC PARTNERSHIP AGREEMENT is entered into
and effective as of the 5th of December, 2005 by and among MathStar, Inc.,
a Delaware corporation (“MathStar”); Valley Technologies, Inc., a
Pennsylvania corporation (“VTI”); and, for purposes of only the amendment to Section 3.1.2
below, Gerald Petrole, the President and Chief Executive Officer of VTI (“Petrole”).


 


RECITALS


 


WHEREAS, MathStar, VTI and Petrole entered into a Strategic Partnership
Agreement dated as of October 8, 2004 (the “Original Agreement”) for the
purpose of having VTI develop and support products, algorithms and applications
for MathStar’s FPOAs;


 


WHEREAS, effective on June 10, 2005, MathStar’s board of directors
and shareholders approved a three-for-one reverse stock split of the MathStar
Common Stock (the “Stock Split”);


 


WHEREAS, MathStar and VTI amended Section 3.1.1 of the Original
Agreement pursuant to Amendment No. 1 to Strategic Partnership Agreement
dated August 11, 2005 (“Amendment No. 1”) (the Original Agreement, as
amended by Amendment No. 1, is hereinafter referred to as the “Agreement”);


 


WHEREAS, as provided in Section 3.1.2 of the Agreement, upon
execution of the Original Agreement, MathStar granted to Petrole warrants to
purchase a total of eighty-three thousand three hundred thirty-four (83,334)
shares of MathStar Common Stock at an exercise price of $6.00 per share, as
such number of shares and exercise price have been adjusted for the Stock
Split; and


 


WHEREAS, the Parties and Petrole want to amend the Agreement to change
the circumstances under which the Petrole Warrants will vest and the method by
which Royalty payable by VTI to MathStar is determined.


 


NOW, THEREFORE, in consideration of the foregoing, the mutual promises
contained in the Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, MathStar and VTI
hereby agree as follows:


 


1.             Section 1.9
of the Agreement is hereby amended to read in its entirety as follows:


 


1.9.                  “Design
Wins” means the acceptance by a customer of the FPOAs for use in or with
respect to such customer’s or prospective customer’s products, as determined by
the mutual agreement of the Parties, provided that the projected annual unit
volume for any Design Win to be considered a Design Win under this Agreement
must be greater than 500 units per year or annual revenue of greater than
$250,000 per year as mutually determined by both Parties.


 





















 


2.             The
following Section 1.25 is hereby added to the Agreement, and Sections 1.25
and 1.26 of the Agreement are hereby renumbered as Sections 1.26 and 1.27,
respectively:


 


1.25                 “VTI
FPOA Algorithm Port” means the acceptance by a customer or prospective customer
of VTI’s services to port the customer’s algorithm onto the MathStar FPOA that
generates non-recurring engineering revenue to VTI of at least $50,000 and for
which VTI has received a contract or purchase order.


 


3.             The
last two sentences of Section 3.1.2 of the Agreement are hereby deleted
and replaced with the following sentences, it being understood that the number
of shares of MathStar Common Stock and the exercise price set forth therein
reflect the Stock Split:


 


The Petrole Warrants shall have a term of five (5) years
from the Effective Date and shall have an initial exercise price of $6.00 per
share.  The Petrole Warrants shall vest
as to 16,667 shares of MathStar Common Stock upon the achievement of each
Design Win and as to 8,334 shares of MathStar Common Stock upon receipt by VTI
and the delivery by VTI to MathStar of each contract or purchase order for each
VTI FPOA Algorithm Port.  In addition,
MathStar agrees that any portion of the Petrole Warrants that is not vested
will become 100% vested upon confirmation satisfactory to MathStar of the
acquisition of the funding required (internal or external funding) for the
radiation hardening of the FPOA by Honeywell International Inc.  The Petrole Warrants shall terminate and be
of no further force or effect with respect to any portion thereof that has not
vested on or before the second anniversary date of the Effective Date.


 


MathStar and Petrole hereby agree to enter into an
amendment to the Petrole Warrant, effective on the date of this Amendment No. 2
to Strategic Partnership Agreement, to reflect the foregoing amendment to Section 3.1.2.


 


4.             The
lead-in sentence to Section 3.9 of the Agreement is hereby amended to read
in its entirety as follows, it being understood that Sections 3.9.1, 3.9.2 and
3.9.3 of the Agreement shall remain unchanged and in full force and effect:


 


During the Term, VTI shall pay to MathStar a royalty
(the “Royalty”) equal to the greater of ten percent (10%) of the sales price or
$500.00 for each Hardware Product sold or licensed by VTI and, in connection
therewith, the Parties agree to the following provisions:


 


5.             Except
as amended by this Amendment No. 2 to Strategic Partnership Agreement, the
Agreement shall remain in full force and effect.


 


6.             All
capitalized terms used and not otherwise defined in this Amendment No. 2
to Strategic Partnership Agreement shall have the respective meanings ascribed
to them in the Agreement.


 


2





















 


IN WITNESS WHEREOF, this Amendment No. 2 to Strategic Partnership
Agreement is executed by the duly authorized representatives of the Parties as
of the date first set forth above.


 


	
  MathStar, Inc.

  	
   

  	
  Valley Technologies, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel J. Sweeney

  	
   

  	
  By:

  	
  /s/ Gerald Petrole Sr.

  
	
  Signature

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Daniel J. Sweeney

  	
   

  	
  Gerald Petrole Sr.

  
	
  Name Typed or Printed

  	
   

  	
  Name Typed or Printed

  
	
   

  	
   

  	
   

  
	
  Chief Operating Officer

  	
   

  	
  President and CEO

  
	
  Title Typed or Printed

  	
   

  	
  Title Typed or Printed

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gerald Petrole Sr.

  	
   

  	
   

  
	
  Gerald Petrole, as to only the amendment to

  	
   

  	
   

  
	
  Section 3.1.2

  	
   

  	
   

  
					



 


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