Document:

Exhibit 10.14

 

Tatum
CFO Partners, LLP

Full-Time
Permanent Engagement Resources Agreement

 

June 30, 2005

 

Mr. Douglas M. Pihl

President and Chief Executive Officer

MathStar, Inc.

5900 Green Oak Drive

Minneapolis, MN 55343

 

Dear Mr. Pihl:

 

Tatum CFO Partners, LLP (“Tatum”) understands that MathStar, Inc. (the “Company”)
desires to hire James W. Cruckshank,
one of our partners, as an at-will employee of the Company (the “Employee”) as
set forth in that certain Offer Letter between Company and Employee dated June
20, 2005.  The Company acknowledges that
the Employee is and will remain a partner in our firm so that he or she will
have access to our firm’s resources for use in his or her employment with the
Company.  This Full-Time Permanent
Engagement Resources Agreement (the “Resources Agreement”) sets forth the
rights of the Company, through the Employee, to use such resources for the
benefit of the Company and for the payment for such services.

 

Since the Employee will be under the control and direct management of
the Company, and not Tatum, Tatum’s obligations to the Company are exclusively
those set forth in this Resources Agreement. 
This document will serve as the entire agreement between the Company and
Tatum.

 

Compensation

 

To the extent Employee continues to be employed by Company, the Company
will pay directly to Tatum, as partial compensation for the resources provided,
an amount equal to (i) 20% of Salary of the Employee during the first and
second 12 months of the term of the Resources Agreement, (ii) 12% of Salary
during the third 12 months, and (iii) $1,000 per month during the remainder of
the term of this Resources Agreement.

 

In addition, the Company will pay directly to Tatum 15% of any Cash
Bonus otherwise payable to the Employee during the term of this Resources
Agreement.  For example, if Company pays
Employee a total Cash Bonus of $10,000, Company will pay Employee $8,500 of the
Cash Bonus, less payroll taxes and applicable withholdings.  Company will pay Tatum $1,500 of the Cash
Bonus which will not be subject to payroll taxes or withholdings.

 

For purposes hereof, (i) “Cash Bonus” means any contingent cash
consideration (i.e., not yet realized in cash) that is paid, and (ii) “Salary”
means all compensation, including severance, paid 

 

 

to Employee, except bonuses and benefits (including medical benefits
subsidy paid to Employee).  All
compensation payable or deliverable to Tatum is referred to herein as the “Resource
Fee.”

 

Tatum will issue invoices to the Company, and the Company agrees to pay
such invoices no later than ten (10) days after receipt of invoices.

 

Termination

 

This Resources Agreement will terminate immediately upon the effective
date of termination or expiration of the Employee’s employment with the Company
or upon the Employee ceasing to be a partner of Tatum.

 

In the event that either party commits a breach of this Resources
Agreement and fails to cure the same within seven (7) days following delivery
by the non-breaching party of written notice specifying the nature of the breach,
the non-breaching party will have the right to terminate this Resources
Agreement immediately effective upon written notice of such termination.

 

Hiring Employee Outside of Resources Agreement

 

During the twelve (12)-month period following termination or expiration
of this Resources Agreement, other than in connection with another Tatum
agreement, the Company will not employ the Employee, or engage the Employee as
an independent contractor, to render services of substantially the same nature
as those for which Tatum is making the Employee available pursuant to this
Resources Agreement.  The parties
recognize and agree that a breach by the Company of this provision would result
in the loss to Tatum of the Employee’s valuable expertise and revenue potential
and that such injury will be impossible or very difficult to ascertain.  Therefore, in the event this provision is
breached, Tatum will be entitled to receive as liquidated damages an amount
equal to twenty-five percent (25%) of the Employee’s Annualized Compensation
(as defined below), which amount the parties agree is reasonably proportionate
to the probable loss to Tatum and is not intended as a penalty.  If, however, a court or arbitrator, as
applicable, determines that liquidated damages are not appropriate for such
breach, Tatum will have the right to seek actual damages.  The amount will be due and payable to Tatum
upon written demand to the Company.  For
this purpose, “Annualized Compensation” will mean the Employee’s most recent
annual Salary and the maximum amount of any bonus for which the Employee was
eligible with respect to the then current bonus year.

 

Insurance

 

The Company will provide Tatum or the Employee with written evidence
that the Company maintains directors’ and officers’ insurance in an amount
reasonably acceptable to the Employee at no additional cost to the Employee,
and the Company will maintain such insurance at all times while this agreement
remains in effect.  Furthermore, the
Company will maintain such insurance coverage with respect to occurrences
arising during the term of this agreement for at least three years following
the termination or expiration of this agreement or will purchase a directors’
and officers’ extended reporting period, or “tail,” policy to cover the Employee.

 

2

 

Disclaimers, Limitations of Liability & Indemnity

 

It is understood that Tatum does not have a contractual obligation to
the Company other than to make its resources available to the Employee (by
virtue of the Employee being a partner in Tatum) for the benefit of the Company
under the terms and conditions of this Resources Agreement.  The Resource Fee will be for the resources
provided.  Tatum assumes no
responsibility or liability under this Resources Agreement other than to render
the services called for hereunder and will not be responsible for any action
taken by the Company in following or declining to follow any of Tatum’s advice
or recommendations.

 

Tatum represents to the Company that Tatum has conducted its standard
screening and investigation procedures with respect to the Employee becoming a
partner in Tatum, and the results of the same were satisfactory to Tatum.  Tatum disclaims all other warranties, either
express or implied.  Without limiting the
foregoing, Tatum makes no representation or warranty as to the accuracy or
reliability of reports, projections, forecasts, or any other information
derived from use of Tatum’s resources, and Tatum will not be liable for any
claims of reliance on such reports, projections, forecasts, or
information.  Tatum will not be liable
for any non-compliance of reports, projections, forecasts, or information or
services with federal, state, or local laws or regulations.  Such reports, projections, forecasts, or
information or services are for the sole benefit of the Company and not any
unnamed third parties.

 

In the event that any partner of Tatum (including without limitation
the Employee to the extent not otherwise entitled in his or her capacity as an
officer of the Company) is subpoenaed or otherwise required to appear as a
witness or Tatum or such partner is required to provide evidence, in either
case in connection with any action, suit, or other proceeding initiated by a
third party or by the Company against a third party, then the Company shall
reimburse Tatum for the costs and expenses (including reasonable attorneys’
fees) actually incurred by Tatum or such partner and provide Tatum with
compensation at Tatum’s customary rate for the time incurred.

 

The Company agrees that, with respect to any claims the Company may
assert against Tatum in connection with this Resources Agreement or the
relationship arising hereunder, Tatum’s total liability will not exceed two (2)
months of the then current monthly Resource Fee.

 

As a condition for recovery of any liability, the Company must assert
any claim against Tatum within three (3) months after discovery or sixty (60)
days after the termination or expiration of this Resources Agreement, whichever
is earlier.

 

Tatum will not be liable in any event for incidental, consequential,
punitive, or special damages, including without limitation, any interruption of
business or loss of business, profit, or goodwill.

 

Arbitration

 

If the parties are unable to resolve any dispute arising out of or in
connection with this Resources Agreement, either party may refer the dispute to
arbitration by a single arbitrator selected by the parties according to the
rules of the American Arbitration Association (“AAA”), and the decision 

 

3

 

of the arbitrator will be final and binding on both parties.  Such arbitration will be conducted by the
Atlanta, Georgia office of the AAA.  In
the event that the parties fail to agree on the selection of the arbitrator
within thirty (30) days after either party’s request for arbitration under this
paragraph, the arbitrator will be chosen by AAA.  The arbitrator may in his discretion order
documentary discovery but shall not allow depositions without a showing of
compelling need.  The arbitrator will
render his decision within ninety (90) days after the call for
arbitration.  The arbitrator will have no
authority to award punitive damages. 
Judgment on the award of the arbitrator may be entered in and enforced
by any court of competent jurisdiction. 
The arbitrator will have no authority to award damages in excess or in
contravention of this Resources Agreement and may not amend or disregard any
provision herein.  Notwithstanding the
foregoing, no issue related to the ownership of intellectual property will be
subject to arbitration but will instead be subject to determination by a court
of competent jurisdiction, and either party may seek injunctive relief in any
court of competent jurisdiction.

 

Miscellaneous

 

Tatum will be entitled to receive all reasonable costs and expenses
incidental to the collection of overdue amounts under this Resources Agreement,
including but not limited to attorneys’ fees actually incurred.

 

Neither the Company nor Tatum will be deemed to have waived any rights
or remedies accruing under this Resources Agreement unless such waiver is in
writing and signed by the party electing to waive the right or remedy.  This Resources Agreement binds and benefits
the successors of Tatum and the Company.

 

Neither party will be liable for any delay or failure to perform under
this Resources Agreement (other than with respect to payment obligations) to
the extent such delay or failure is a result of an act of God, war, earthquake,
civil disobedience, court order, labor dispute, or other cause beyond such
party’s reasonable control.

 

The terms of this Resources Agreement are severable and may not be
amended except in a writing signed by Tatum and the Company.  If any portion of this Resources Agreement is
found to be unenforceable, the rest of the Resources Agreement will be
enforceable except to the extent that the severed provision deprives either
party of a substantial portion of its bargain.

 

The provisions in this Resources Agreement concerning payment of
compensation and reimbursement of costs and expenses, limitation of liability,
directors’ and officers’ insurance, and arbitration will survive any
termination or expiration of this Resources Agreement.

 

This Resources Agreement will be governed by and construed in all
respects in accordance with the laws of the State of Georgia, without giving
effect to conflicts-of-laws principles.

 

Nothing in this Resources Agreement shall confer any rights upon any
person or entity other than the parties hereto and their respective successors
and permitted assigns and the Employee.

 

4

 

Each person signing below is authorized to sign on behalf of the party
indicated, and in each case such signature is the only one necessary.

 

Bank Lockbox Mailing Address for Deposit and Resource
Fee only:

 

Tatum CFO Partners, LLP

P.O. Box 403291

Atlanta, GA 30384-3291

 

Electronic Payment Instructions for Deposit and
Resource Fee:

 

	
  Bank Name:

  	
   

  	
  Bank of America

  
	
  Branch:

  	
   

  	
  Atlanta

  
	
  Routing Number:

  	
   

  	
  For ACH Payments: 061 000 052

  
	
   

  	
   

  	
  For Wires: 026 009 593

  
	
  Account Name:

  	
   

  	
  Tatum CFO Partners, LLP

  
	
  Account Number:

  	
   

  	
  003 279 247 763

  
	
  Please reference MathStar,
  Inc. in the body of the wire.

  

 

Please sign below and return a signed copy of this letter to indicate
the Company’s agreement with its terms and conditions.

 

We look forward to serving you.

 

Sincerely yours,

 

	
  TATUM CFO PARTNERS, LLP

  
	
   

  
	
  /s/ Chuck Gottschalk

  	
   

  
	
  Signature

  

 

 

Chuck Gottschalk

Area Managing Partner for TATUM CFO

PARTNERS, LLP

 

 

	
  Acknowledged and agreed by:

  
	
   

  
	
   

  	
  MathStar, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Douglas
  M. Pihl

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer & President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  June 30, 2005

  	
   

  
					

 

5Exhibit 10.15

 

 

Schedule of Executive Officer Compensation for 2005

 

Set forth below is a
description of the compensation that MathStar, Inc.
determined to pay to its executive officers (defined in Item 402(a)(3) of
Regulation S-K) in their current positions for the year ending December 31,
2005.

 

	
  Name

  	
   

  	
  2005 Base Salary

  	
   

  	
  Securities Underlying 2005 Stock Option Awards(#)(1)

  	
   

  	
  Securities Underlying 2005 Restricted Stock Awards(#)(2)

  	
   

  
	
  Douglas M. Pihl,

  President and Chief Executive Officer

  	
   

  	
  $246,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Ronald K. Bell,

  Chief Technology Officer

  	
   

  	
  $240,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Daniel J. Sweeney,

  Chief Operating Officer(3)

  	
   

  	
  $180,000

  	
   

  	
  183,334

  	
   

  	
  83,334

  	
   

  
	
  Dean J. Westman,

  Vice President, Sales(4)

  	
   

  	
  $175,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  James W. Cruckshank,

  Chief Financial Officer and 

  Vice President, Administration(5)

  	
   

  	
  $175,000

  	
   

  	
  145,000

  	
   

  	
  75,000

  	
   

  
	
  Sean P. Riley,

  Vice President, Marketing(6)

  	
   

  	
  $170,000

  	
   

  	
  100,000

  	
   

  	
  83,334

  	
   

  
	
  Timothy A. Teckman,

  Vice President, Engineering(7)

  	
   

  	
  $150,000

  	
   

  	
  91,667

  	
   

  	
  91,667

  	
   

  
	
  Bryon K. Bequette,

  General Counsel

  	
   

  	
  $70,000

  	
   

  	
  66,667

  	
   

  	
  —

  	
   

  

(1)          Under the MathStar,
Inc. 2004 Amended and Restated
Long-Term Incentive Plan, each
of these executive officers has been granted stock option awards for the number
of shares noted.  The stock option awards
granted to Messrs. Sweeney, Cruckshank, Riley
and Teckman vest as to 25% of the shares subject to
the option on the first, second, third and fourth anniversary dates of the date
of grant. The stock option award granted to Mr. Bequette
vested in full on the date of grant. The stock options have a term of 10 years.
The stock option award granted to Messrs. Sweeney, Riley and Teckman have a per share exercise price of $4.80. The stock
option awards granted to Messrs. Cruckshank and Bequette have a per share exercise price of $6.3. 0ur board
of directors has determined the per share exercise price to be equal to the
fair market value of our common stock on the date each option was granted.

 

 

(2)          Under the MathStar,
Inc. 2004 Amended and Restated
Long-Term Incentive Plan, each
of these executive officers has been granted restricted stock awards for the
number of shares noted.  Restricted stock awards vest upon the
effective date of an initial public offering of our equity securities,
including this offering, the sale or other transfer of all or substantially all
of our assets, our liquidation or dissolution, any person becomes the owner of
more than 50% of the combined voting power of our outstanding voting securities
who was not previously the owner of at least 50% of such securities, or a
merger if our stockholders immediately before the effective date of such merger
own immediately after the effective date of such merger securities of the
surviving company representing less than 50% of the voting power of the
surviving corporation’s securities.  In
addition, the board or the compensation committee of the board has the power to
delay the vesting of the shares of restricted stock subject to the award for up
to one year after the occurrence of any such event.

 

(3)          Pro rated from March 14,
2005.

 

(4)          Mr. Westman
is a party to a Variable Compensation Plan covering the period from March 1,
2005 through February 28, 2006, under which he receives cash bonuses based on
the number of design wins he achieves and a percentage of revenue generated
from orders he obtains.

 

(5)          Pro rated from June 20,
2005.

 

(6)          Pro rated from April 25, 2005.

 

(7)          Pro rated from April 4, 2005.

 

 

 

Schedule of Director Compensation for 2005

 

Set
forth below is a description of the compensation that MathStar,
Inc. determined to pay to its directors for the year ending December 31, 2005.

Cash Compensation

 

	
  Retainer:

  	
   

  	
  $1,500
  per quarter

  
	
  Board
  Meeting Fee:

  	
   

  	
  $750
  per meeting

  
	
  Audit
  Committee:

  	
   

  	
  $1,000
  per meeting for chairman, $750 per meeting for members

  
	
  Other
  Committees:

  	
   

  	
  $750
  per meeting for chairman, $500 per meeting for members

  

 

Equity Compensation

 

	
  Initial Option Grant: 

  	
   

  	
  25,000 share option,
  vesting over three years on the first, second and third anniversary dates of
  the date of grant if the director is then a director of MathStar.  Messrs. Benno G.
  Sand, Merrill A. McPeak and Morris Goodwin, Jr.
  will each receive an option to purchase 25,000 shares on the effective date
  of MathStar's initial public offering.

  
	
  Annual Grant: 

  	
   

  	
  5,000 share option,
  vesting 1 year after grant if the director is then a director of MathStar

  

 

The exercise prices of
the options will be equal to the fair market value of MathStar's common stock
on the date of grant.

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