Document:

Exhibit 10.19

 

THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH
LAWS COVERING SUCH SECURITIES OR MATHSTAR, INC. (THE “COMPANY”) RECEIVES AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

 

	
                         ,
  2005

  	
   

  	
  No. BR-       

  

 

WARRANT

 

TO PURCHASE              
SHARES OF COMMON STOCK

OF

MATHSTAR, INC.

 

THIS CERTIFIES
THAT, for good and valuable consideration,                                              ,
or                    
registered assigns (the “Holder”), is entitled to subscribe for and purchase
from MathStar, Inc., a Minnesota corporation (the “Company”), on or before
5:00 p.m. Minneapolis, Minnesota time on                    ,
200     (the “Expiration Date”),                             
(               )
fully paid and nonassessable shares of the Common Stock of the Company at an
exercise price per share equal to eighty percent (80%) of the Price to Public
in the initial public offering of the Company’s Common Stock (the “IPO”) which
is effective on or before the maturity date (as such maturity date may be
extended) of the first promissory notes (the “Notes”) issued in the offering
(the “Offering”) described in the Company’s Confidential Private Placement
Memorandum dated March 4, 2005 of which the sale of this Warrant is a
part.  If the IPO is not effective before
such maturity date, the exercise price shall be $1.60 per share (the “Warrant
Exercise Price”), subject to adjustment as provided in this Warrant.  This Warrant shall become exercisable upon
the earlier of the effective date of the IPO or upon the maturity date of the
first Notes issued in the Offering (including any extension of their
term).  The number of shares of Common
Stock which may be acquired upon exercise of this Warrant, as they may be
adjusted from time to time, are referred to herein as the “Warrant Shares.”  As used herein, the term “Common Stock” means
and includes the Company’s presently authorized common stock, $0.01 par value
per share, and shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends or in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution, or winding up of the Company. 
This Warrant is one of the series of Warrants substantially identical in
form which may be issued by the Company from time to time to purchase shares of
Common Stock designated as “No. BR -                ,”
and the term “Warrants” as used herein means all of such Warrants (including
this Warrant).

 

 

This Warrant
is subject to the following provisions, terms and conditions:

 

1.                                       Exercise:  Transferability.

 

(a)                                  Subject
to the provisions of Section 3 hereof, the rights represented by this
Warrant may be exercised by the Holder hereof, in whole or in part (but not as
to a fractional share of Common Stock), by written notice of exercise (in the
form attached hereto) delivered to the Company at the principal office of the
Company before the Expiration Date and accompanied or preceded by the surrender
of this Warrant along with cash, wire transfer, or a certified or bank check in
payment of the Warrant Exercise Price for the total number of Warrant Shares
then being purchased.  In the sole
discretion of the Company, the total Warrant Exercise Price may be paid by
personal check.

 

2.                                       Exchange
and Replacement.  Subject to Sections
1 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the
Holder to the Company at its office for new Warrants of like tenor and date
representing in the aggregate the right to purchase the number of Warrant
Shares purchasable hereunder, each of such new Warrants to represent the right
to purchase such number of Warrant Shares (not to exceed the aggregate total
number purchasable hereunder) as shall be designated by the Holder at the time
of such surrender.  Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly canceled by
the Company upon the surrender hereof in connection with any exchange or
replacement.  The Company shall pay any
and all expenses, taxes (other than stock transfer taxes), and other charges
payable in connection with the preparation, execution, and delivery of Warrants
pursuant to this Section 2.

 

3.                                       Issuance
of the Warrant Shares.

 

(a)                                  The
Company agrees that the Warrant Shares purchased hereunder shall be and are
deemed to be issued to the Holder as of the close of business on the date on
which this Warrant shall have been surrendered and the payment made for such
Warrant Shares as aforesaid.  Subject to
the provisions of Section 3(b), stock certificates for the Warrant Shares
so purchased shall be delivered to the Holder within a reasonable time, not
exceeding fifteen (15) days after the date on which the rights represented by
this Warrant shall have been so exercised if the Warrant Exercise Price has
been paid with cash, wire transfer or a certified or bank check, or twenty (20)
days after such date if the Warrant Exercise Price has been paid with a
personal check.  Unless this Warrant has
expired, a new Warrant representing the right to purchase the number of Warrant
Shares, if any, with respect to which this Warrant shall not then have been exercised
shall also be delivered to the Holder within such times.

 

(b)                                 Notwithstanding
the foregoing, the Company shall not be required to deliver any stock
certificate for Warrant Shares upon exercise of this Warrant except in
accordance with exemptions from the applicable securities registration
requirements or registrations under

 

2

 

applicable securities
laws.  Upon any proposed transfer or
other disposition of this Warrant or the Warrant Shares, the  Holder thereof shall provide the Company with
written representations from the Holder and the proposed transferee in form and
substance satisfactory to the Company regarding the transfer or, at the
election of the Company, an opinion of counsel reasonably satisfactory to the
Company to the effect that the proposed transfer or disposition of this Warrant
or the Warrant Shares may be effected without registration or qualification
(under any federal or applicable state or other applicable securities laws) of
this Warrant or the Warrant Shares.  Upon
receipt by the Company of such written notice and either such representations
or opinion, such Holder shall be entitled to transfer this Warrant, or to
exercise this Warrant in accordance with its terms, or to dispose of the
Warrant Shares, all in accordance with the terms of the notice delivered by
such Holder to the Company, provided that an appropriate legend, if any,
respecting the aforesaid restrictions on transfer and disposition may be
endorsed on this Warrant or the stock certificates for the Warrant Shares.  The Holder agrees to execute such documents
and make such representations, warranties, and agreements as may be required to
comply with the exemption relied upon by the Company, or the registration made,
for the exercise of this Warrant or issuance or transfer of the Warrant or the
Warrant Shares.

 

4.                                       Covenants
of the Company.  The Company
covenants and agrees that upon the proper exercise of this Warrant by the
Holder, all Warrant Shares will, upon issuance, be duly authorized and issued,
fully paid, nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof except for any taxes, liens and charges imposed on
or with respect to the property of the Holder. 
The Company further covenants and agrees that during the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized and reserved for the purpose of issue or transfer
upon exercise of the rights evidenced by this Warrant a sufficient number of
shares of Common Stock to provide for the exercise of the rights represented by
this Warrant.

 

5.                                       Adjustments.  The provisions of this Warrant are subject to
adjustment as provided in this Section 5.

 

(a)                                  The
Warrant Exercise Price shall be adjusted from time to time such that if the
Company shall hereafter:

 

(i)                                     pay
any dividends on the Common Stock payable in Common Stock or securities
convertible into Common Stock;

 

(ii)                                  subdivide
its then outstanding shares of Common Stock into a greater number of shares; or

 

(iii)                               combine
outstanding shares of Common Stock by reverse stock split, reclassification or
otherwise;

 

then, in any such event, the
Warrant Exercise Price in effect immediately before such event shall (until
adjusted again pursuant hereto) be adjusted immediately after such event to a
price (calculated to the nearest full cent) determined by dividing (i) the
number of shares of Common Stock outstanding immediately before such event,
multiplied by the then existing Warrant

 

3

 

Exercise Price, by (ii) the
total number of shares of Common Stock outstanding immediately after such
event, and the resulting quotient shall be the adjusted per share Warrant
Exercise Price.  An adjustment made
pursuant to this Section 5(a) shall become effective immediately
after the record date in the case of a dividend or distribution and immediately
after the effective date in the case of a subdivision, combination or
reclassification.  If, as a result of an
adjustment made pursuant to this Section 5(a), the Holder of any Warrant
thereafter surrendered for exercise shall become entitled to receive shares of
two or more classes of capital stock or shares of Common Stock and other
capital stock of the Company, the Company’s board of directors (whose
determination shall be conclusive) shall determine the allocation of the
adjusted Warrant Exercise Price between or among shares of such classes of
capital stock or shares of Common Stock and other capital stock.  If, as a result of an adjustment made
pursuant to this Section 5(a), the Holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive any shares of the
Company other than shares of Common Stock, thereafter the Warrant Exercise
Price of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in this Section 5.

 

(b)                                 Upon
each adjustment of the Warrant Exercise Price pursuant to Section 5(a) above,
the Holder of each Warrant shall thereafter (until another such adjustment) be
entitled to purchase at the adjusted Warrant Exercise Price the number of
shares, calculated to the nearest full share, obtained by multiplying the
number of shares specified in such Warrant (as adjusted as a result of all
adjustments in the Warrant Exercise Price in effect before such adjustment) by
the Warrant Exercise Price in effect before such adjustment and dividing the
product so obtained by the adjusted Warrant Exercise Price.

 

(c)                                  Upon
any consolidation or merger to which the Company is a party, other than a
merger or consolidation in which the Company is the continuing corporation, or
upon any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, or upon any statutory
exchange of securities by the Company with another corporation (including any
exchange effected in connection with a merger of a third corporation into the
Company), there shall be no adjustment under Section 5(a), but instead the
Holder of each Warrant then outstanding shall have the right thereafter to
convert such Warrant into the kind and amount of shares of stock and other securities
and property which such Holder would have owned or have been entitled to
receive immediately after such consolidation, merger, statutory exchange, sale,
or conveyance had such Warrant been converted immediately before the effective
date of such consolidation, merger, statutory exchange, sale, or conveyance
and, in any such case, if necessary, appropriate adjustment shall be made in
the application of the provisions set forth in this Section 5 with respect
to the rights and interests thereafter of any Holders of the Warrant so that
the provisions set forth in this Section 5 shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares of stock and other securities and property thereafter deliverable
on the exercise of the Warrant.  The
provisions of this Section 5(c) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances.

 

(d)                                 Upon
any adjustment of the Warrant Exercise Price, then and in each such case, the
Company shall within ten (10) days after the date when the circumstances
giving rise to the

 

4

 

adjustment occurred give
written notice thereof, by first-class mail, postage prepaid, addressed to the
Holder as shown on the books of the Company, which notice shall state the
Warrant Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares of Common Stock purchasable at such
price upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.

 

6.                                       No
Shareholder Rights.  This Warrant
shall not entitle the Holder to any voting rights or other rights as a
shareholder of the Company, and the Holder of this Warrant shall not be deemed
to be a shareholder of the Company for any purpose whatsoever with respect to
the shares subject to this Warrant except with respect to the shares of Common
Stock for which this Warrant has been duly exercised by the Holder.

 

7.                                       Notice
of Transfer of Warrant or Resale of the Warrant Shares.

 

(a)                                  Subject
to the sale, assignment, hypothecation, or other transfer restrictions set
forth in Section 1 hereof, the Holder, by acceptance hereof, agrees to
give written notice to the Company before transferring this Warrant or
transferring any Warrant Shares of such Holder’s intention to do so, describing
briefly the manner of any proposed transfer. 
Promptly upon receiving such written notice, the Company shall present
copies thereof to the Company’s counsel. 
If, in the opinion of such counsel, the proposed transfer may be
effected without registration or qualification under any federal or state or
other applicable securities laws, the Company, as promptly as practicable,
shall notify the Holder of such opinion, whereupon the Holder shall be entitled
to transfer this Warrant or to dispose of Warrant Shares received upon the
previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by the Holder to the Company; provided that an appropriate
legend may be endorsed on this Warrant or the certificates for such Warrant
Shares respecting restrictions upon transfer thereof necessary or advisable in
the opinion of counsel to the Company and satisfactory to the Company to
prevent further transfers which would be in violation of Section 5 of the
Securities Act of 1933, as amended (the “1933 Act”), and applicable state or
other applicable securities laws; and provided further that the Holder and prospective
transferee or purchaser shall execute such documents and make such
representations, warranties, and agreements as may be required solely to comply
with the exemptions relied upon by the Company for the transfer or disposition
of the Warrant or Warrant Shares.

 

(b)                                 If,
in the opinion of counsel to the Company, the proposed transfer or disposition
of this Warrant or such Warrant Shares described in the written notice given
pursuant to this Section 7 may not be effected without registration or
qualification of this Warrant or such Warrant Shares, the Company shall
promptly give written notice thereof to the Holder, and the Holder will limit
its activities in respect to such as, in the opinion of such counsel, are
permitted by law.

 

8.                                       Fractional
Shares.

 

(a)                                  Fractional
shares shall not be issued upon the exercise of this Warrant, but in any case
where the Holder would, except for the provisions of this Section, be entitled
under the terms hereof to receive a fractional share, the Company shall, upon
the exercise of this Warrant

 

5

 

for the largest number of whole
shares then called for, pay a sum in cash equal to the sum of (i) the
excess, if any, of the Fair Market Value (as defined in Section 8(b)) of
such fractional share over the proportional part of the Warrant Exercise Price
represented by such fractional share, plus (ii) the proportional part of
the Warrant Exercise Price represented by such fractional share.

 

(b)                                 Fair
Market Value of a share of Common Stock as of a particular date (the “Determination
Date”) shall mean:

 

(i)                                     If
the Company’s Common Stock is traded on an exchange or is quoted on The NASDAQ
National Market, then the average closing or last sale prices, respectively,
reported for the ten (10) consecutive trading days immediately preceding
the Determination Date;

 

(ii)                                  If
the Company’s Common Stock is not traded on an exchange or on The NASDAQ
National Market but is traded on The NASDAQ SmallCap Market or other
over-the-counter market, then the average closing bid and asked prices reported
for the ten (10) consecutive trading days immediately preceding the
Determination Date; and

 

(iii)                               If
the Company’s Common Stock is not traded on an exchange or on The NASDAQ
National Market or The NASDAQ SmallCap Market or other over-the-counter market,
then the price established in good faith by the Company’s Board of Directors.

 

9.                                       Miscellaneous.

 

(a)                                  Whenever
reference is made herein to the issue or sale of shares of Common Stock, the
term “Common Stock” shall include any stock of any class of the Company other
than preferred stock with a fixed limit on dividends and a fixed amount payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company.

 

(b)                                 The
Company will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Company, but will, at all times in good faith,
assist, insofar as it is able, in the carrying out of all provisions hereof and
in the taking of all other action which may be necessary in order to protect
the rights of the Holder hereof against dilution.  The Company’s amendment of its Articles of
Incorporation solely to effect a reverse stock split shall not be deemed an
amendment, act or deed described in the foregoing sentence.

 

(c)                                  Upon
written request of the Holder of this Warrant, the Company will promptly
provide such holder with a then current written list of the names and addresses
of all Holders of warrants originally issued under the terms of, and concurrent
with, this Warrant.

 

(d)                                 The
representations, warranties and agreements herein contained shall survive the
exercise of this Warrant.  References to
the “holder of” include the immediate holder of shares

 

6

 

purchased on the exercise of
this Warrant, and the word “holder” shall include the plural thereof.  This Common Stock Purchase Warrant shall be
interpreted under the laws of the State of Minnesota, without regard to its
conflict of law provisions.

 

(e)                                  All
shares of Common Stock or other securities issued upon the exercise of the
Warrant shall be validly issued, fully paid and non-assessable.

 

(f)                                    Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the Company
and the Holder.

 

IN WITNESS
WHEREOF, MathStar, Inc. has caused this Warrant to be signed by its duly
authorized officer and this Warrant to be dated                         ,
2005.

 

	
   

  	
  MATHSTAR,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name Typed or Printed

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
	
   

  	
  Title Typed or Printed

  
					

 

7

 

TO:                            MATHSTAR,
INC.

 

	
  NOTICE
  OF EXERCISE OF WARRANT

  	
   

  	
  —

  	
   

  	
  To Be
  Completed and Signed by the Registered Holder to Exercise the Warrant

  

 

The undersigned hereby
irrevocably elects to exercise the attached Warrant to purchase for cash,                                
of the shares issuable upon the exercise of such Warrant, and requests that
stock certificates for such shares (together with a new Warrant to purchase the
number of shares, if any, with respect to which this Warrant is not exercised)
shall be issued in the name of

 

 

	
   

  	
   

  	
   

  
	
   

  	
  (Print Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Please
  insert social security or other identifying number of registered Holder of 

  	
   

  	
   

  
	
  certificate:

  	
   

  	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature*

  	
   

  
									

 

*The signature on the Notice of
Exercise of Warrant must correspond to the name as written upon the face of the
Warrant in every particular without alteration or any change whatsoever.  When signing on behalf of a corporation,
partnership, trust or other entity, please indicate your position(s) and
title(s) with such entity.  If the
Warrant is registered in the name of more than one Holder, all Holders must sign.

 

8

 

ASSIGNMENT
FORM

 

To be signed only upon
authorized transfer of Warrants.

 

FOR VALUE RECEIVED, the
undersigned hereby sells, assigns, and transfers unto                                                             
the right to purchase the securities of MathStar, Inc. to which the within
Warrant relates and appoints                                             ,
attorney, to transfer said right on the books of MathStar, Inc. with full
power of substitution in the premises.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:Exhibit
10.20

 

AMENDMENT
NO. 1 TO

STRATEGIC
PARTNERSHIP AGREEMENT

 

THIS AMENDMENT NO.
1 TO STRATEGIC PARTNERSHIP AGREEMENT is entered into as of the 11th
of August, 2005 by and between MathStar, Inc., a Minnesota corporation
(“MathStar”), and Valley Technologies, Inc., a Pennsylvania corporation
(“VTI”).

 

RECITALS

 

WHEREAS, MathStar,
VTI and Gerald Petrole entered into a Strategic Partnership Agreement dated as
of October 8, 2005 (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 its Common Stock (the “Stock Split”);

 

WHEREAS, as
provided in Section 3.1.1 of the Original Agreement, MathStar was to grant the
VTI Employee Warrants to purchase a total of 500,000 shares of its Common Stock
to the VTI Employees (equal to approximately 166,667 shares of Common Stock
after the Stock Split) with an exercise price of $2.00 per share (equal to
$6.00 per share after the Stock Split);

 

WHEREAS, to date,
MathStar has granted VTI Employee Warrants to the VTI Employees to purchase a
total of 86,670 shares of Common Stock, and it must grant in the future VTI Employee
Warrants to the VTI Employees to purchase a total of 79,997 shares of Common
Stock, as such numbers of shares have been adjusted for the Stock Split; and

 

WHEREAS, the
Parties want to amend the Original Agreement to change the exercise price of
the VTI Employee Warrants to be granted after the date of this Amendment No. 1
to $2.10 before the Stock Split and $6.30 after the Stock Split.

 

NOW, THEREFORE, in
consideration of the foregoing, the mutual promises contained in the Original
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 3.1.1 of the Original
Agreement is hereby amended to provide that the exercise price of the VTI Employee
Warrants to be granted by MathStar after the date of this Amendment No. 1 to
purchase a total of 79,997 shares of Common Stock after the Stock Split shall
be $6.30 per share after the Stock Split.

 

2.             Except as amended by this Amendment
No. 1 to Strategic Partnership Agreement, the Original Agreement shall remain
in full force and effect.

 

 

3.             All capitalized terms used and not
otherwise defined in this Amendment No. 1 to Strategic Partnership Agreement
shall have the respective meanings ascribed to them in the Original Agreement.

 

IN WITNESS
WHEREOF, this Amendment No. 1 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.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Douglas M. Pihl

  	
   

  	
  /s/ Gerald Petrole Sr.

  	
   

  
	
  Signature

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Douglas M. Pihl

  	
   

  	
  Gerald Petrole Sr.

  	
   

  
	
  Named Types or Printed

  	
   

  	
  Name Typed or Printed

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  President & CEO

  	
   

  	
  President/CEO

  	
   

  
	
  Title Typed or Printed

  	
   

  	
  Title Typed or Printed

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