Business Development Agreement

BUSINESS DEVELOPMENT AGREEMENT





This BUSINESS DEVELOPMENT AGREEMENT (the "Agreement") is made and entered into as of the 30th day of November, 2003, (the "Effective Date") by and between MathStar, Inc., a Minnesota corporation, with offices at 5900 Green Oak Drive, Minneapolis, MN 55343 ("MathStar"), and Summit Design, Inc., a Delaware corporation, with offices at 35 Corporate Drive, Burlington, MA 01803 ("Summit" ).



WHEREAS, MathStar intends to offer the electronic product design market a programmable logic device that streamlines the implementation of complex system logic designs and lowers the unit production cost of the end products.



WHEREAS, Summit is working to develop the electronic system level design market by offering software that facilitates design definition and functional verification at multiple abstraction levels, provides advanced performance analysis for complex systems and facilitates the simultaneous development of software with electronic hardware.



WHEREAS, because MathStar devices are constructed from objects more complex than traditional logic gates, Summit92s software design environment is expected to be well suited to help designers create logic designs in MathStar devices; and because MathStar devices provide inherent uniqueness and are focused at complex electronic product applications, they are expected to be successful with customers who would also be good prospective customers for Summit software.



WHEREAS, MathStar and Summit desire to collaborate to develop a product that provides an effective solution to the challenge of rendering logic designs in MathStar Field Progammable Object Arrays ("FPOAs") and to further collaborate on the marketing and sale of such product.



NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows:



1. DEFINITIONS. Capitalized terms used in this Agreement are defined herein and throughout the Agreement. Terms not defined herein shall be given their plain English meaning; provided, however, that those terms, acronyms and phrases known in the computer software industry which are not defined shall be interpreted in accordance with their generally accepted industry meaning. As used herein, the following terms shall have the meanings set forth below:



1.1 "Product" shall mean software used to define, refine, simulate and analyze the functional logic design intended for rendering in a MathStar FPOA and used to generate OHDL code for output to the MathStar COAST software. Such product shall consist of the Summit Software, the MathStar-Specific Software and the MathStar Library.



1.2 "Summit Software" shall mean Summit92s Visual Elite ESL software.



1.3 "MathStar Library" shall mean MathStar92s library of SystemC models and their associated graphic symbols.



1.4 "MathStar-Specific Software" shall mean features of the Summit Software specific to the MathStar FPOA design application and which are not specific to any other manufacturer of any other programmable logic devices.



1.5 "External MathStar-Specific Software" shall mean any portion of the MathStar-Specific Software that is located outside a publicly exposed application programming interface within the Product.



1.6 "End Users" shall mean users of the Product who have executed Summit92s end user license agreement, the current version of which is attached hereto as Exhibit A.



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2. INTENT AND PURPOSE; STATEMENTS OF WORK.



2.1 INTENT AND PURPOSE. This Agreement contemplates certain joint development activities between MathStar and Summit to develop the Product and the marketing, sales and support activities for the Product (the "Activities").



2.2 STATEMENTS OF WORK. It is understood and agreed that the parties have attempted to define their respective roles and responsibilities with respect to the Product; however, the parties agree and acknowledge that an exhaustive definition of each party92s roles and responsibilities at this time is not feasible and therefore the parties may determine that it is appropriate to execute and deliver a separate plan for some Activities undertaken (each, a " Statement of Work"). If and when executed, each Statement of Work will be attached to and incorporated by reference into this Agreement, and the terms and conditions of the Statement of Work shall control to the extent inconsistent with the terms contained herein. The parties agree that each Statement of Work may set forth, among other things as the parties shall deem appropriate, the following:



95 a detailed description of the Activity;

95 any design documents or specifications (unless the Activity contemplates creation or development of the same);

95 deliverables, if any, that either or both parties will be responsible for creating and developing;

95 tasks, responsibilities, covenants and agreements of each party relating to the Activity;

95 deadlines, interim milestones, and other matters relating to timing and delivery or performance under the Activity;

95 intellectual property rights or licenses to the extent different from the terms of this Agreement;

95 exclusivity rights or other restrictions on use with or marketing of competing technologies, if any;

95 obligations of the parties to market or sell the Product; and

95 any other terms or conditions that vary from the terms and conditions set forth in this Agreement.





3. THE ACTIVITIES



3.1 THE MARKET ASSESSMENT



3.1.1 ASSESSMENT. MathStar, with reasonable assistance from Summit and subject to Section 3.1.2 hereof, shall assess market requirements, gather customer feedback and transform this information into a market requirements document for the Product and any new versions thereof.



3.1.2 DEFINITION OF DETAILED PRODUCT REQUIREMENTS. The parties shall jointly define the detailed product requirements for the Product and any new versions thereof, taking into account market demands and each party92s need to maintain efficient business operations. MathStar shall define the functional enhancements and schedule objectives for the Product. Summit shall define the implementation, cost and release schedule for Product and all enhancements thereto. As provided in Section 4.4 hereof, MathStar shall pay Summit engineering fees for enhancements to the Product.



3.2 PRODUCT DEVELOPMENT. Summit shall develop and maintain the Summit Software and the MathStar-Specific Software. MathStar shall develop and maintain the MathStar Library and deliver a copy of the MathStar Library to Summit as soon as reasonably practicable for incorporation into the Product. MathStar hereby grants to Summit the right to incorporate the MathStar Library with and into the Product and to grant sublicenses of the MathStar Library to End Users. Each party will provide reasonable development support to the other party as needed.



3.2.1 PRODUCT RELEASE SCHEDULE. Summit shall control the master schedule for the development and release of the Product and new versions thereof and shall be responsible for defining which features and bug fixes will be available within the Product and each Product release.



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3.2.2 COMPUTING PLATFORM SUPPORT. Summit shall release and support the Product on the PC Windows (NT, 2000, XP), Solaris and Red Hat Linux platforms. Summit shall specify the support for specific operating system versions as a requirement for each major Product version to be released.



3.2.3 FIELD TESTING ALPHA AND BETA SOFTWARE RELEASES. MathStar staff shall assist Summit engineering in the functional testing of alpha and beta versions of new Product releases, as reasonably requested by Summit.



3.2.4 SOFTWARE QUALITY ASSURANCE. Summit shall perform software quality assurance testing for each Product release, except for patch distribution, beta releases and other releases where the Product is made available prior to full verification.



3.3 MARKET DEVELOPMENT AND DEMAND GENERATION



3.3.1 TRADE SHOW SUPPORT. Each party shall exhibit the Product or information about the Product at trade shows where the party exhibits their products. In cases where exhibition of the Product would conflict with the interests of the trade show sponsor, this obligation shall not apply. When the Product is being exhibited at trade shows, the exhibiting party may request assistance from the other party in supporting the Product exhibition or demonstrations. The parties shall mutually determine what information about the Product is to be exhibited and how it is to be exhibited.



3.3.2 TECHNICAL SEMINARS. Each party may provide technical seminars involving the Product in the context of FPOA design and each party shall provide reasonable support to the other in furtherance of such seminars. The parties shall mutually determine the contents of the seminars.



3.3.3 INTERNET PRESENCE AND WEBSITE RESOURCES. Each party shall dedicate a portion of its website to information about the Product, its primary value points and its role in the FPOA design process. The parties shall mutually determine the content of such information to be set forth on their websites. The parties shall cooperate on the development of links between their respective websites, where such links would be helpful to customers.



3.3.4 LEAD GATHERING AND DISSEMINATION. Sales leads regarding the use of the Product for FPOA design shall be shared by the parties. Shared leads shall be distributed to the other party on a regular basis. Points of contact shall be established between the parties in order to facilitate shared lead communication.



3.3.5 ADVERTISING. Advertising developed by either party that includes the Product or references the Product shall include the brand identification of both parties within the advertisement. The brand identification shall include the party92s graphic logo and, if sufficient room, the party92s tag line. Each presentation of each party92s brand image shall require the prior approval of the marketing leadership of the other party.



3.3.6 PRINTED PRODUCT LITERATURE. Product data sheets, application guides and other Product literature developed by either party that includes the Product or references to the Product shall include the brand identification of both parties within the publication. The brand identification shall include the party92s graphic logo and, if sufficient room, the party92s tag line. Each presentation of each party92s brand image shall require the prior approval of the marketing leadership of the other party.



3.4 PRODUCT LICENSE SALES



3.4.1 PRODUCT CONFIGURATION AND PRICING. Summit shall establish the suggested list price for the Product. The parties shall collaborate on development of Product configurations, promotions and discounting strategies.



3.4.2 DIRECT SALES CHANNELS. The Product shall be sold through coordinated actions of the MathStar and Summit direct sales staffs, including field sales and inside sales staff. Either party may initiate customer qualification, prospect for new sales opportunities and perform technical qualification of an opportunity. Except for cases where the Product is bundled with other MathStar products and sold as a single part number, Summit shall be



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exclusively responsible for providing price and delivering quotations to customers and selling the Product to End Users. MathStar may bundle the Product only with other MathStar products and sell the combined product under a single part number on a limited promotional basis. In such cases, MathStar shall purchase a block of one-year term licenses for the Product at a mutually agreed price from Summit and distribute such Product to End Users bundled as provided above.



3.4.3 INDIRECT RESELLERS. The Product may be sold through indirect channels, including resellers, selected by either party, which both parties must qualify as technically competent to handle the Product and which both parties must qualify as a business partner. Indirect resellers shall have entered into a reseller agreement with Summit pursuant to which such reseller has specific authorization to resell the Product, to provide quotes to customers and to take customer orders for the Product.



3.4.4 ORDER ENTRY AND FULFILLMENT. All customer purchase orders for the Product shall be placed with Summit or with indirect resellers who have entered into a reseller agreement with Summit. Summit shall process orders and ship Product licenses and software download instructions in accordance with Summit92s normal business practices.



3.4.5 PRODUCT TRAINING FOR SALES CHANNELS. The parties shall jointly provide sales training to indirect sales channels. MathStar shall provide sales training to Summit with respect to the MathStar Library and the MathStar-Specific Software and Summit shall provide sales training to MathStar with respect to the Summit Software.



3.4.6 CHANNEL CONFLICT. In order to minimize any channel conflict and to maximize the parties92 sales of the Product, the parties shall meet periodically, as mutually agreed, in order to discuss potential customer opportunities and required resources in order to close sales of the Product.



3.5 PRODUCT DISTRIBUTION.



3.5.1 PRODUCT LICENSING. The Product shall be licensed to End Users via Summit92s then current end user license agreement. The current version of such agreement is attached hereto as Exhibit A. If Summit92s form of end user license agreement changes, it shall give notice of such changes to MathStar, and Summit and MathStar shall amend this agreement by attaching the most current form of Summit92s end user license agreement to this Agreement as new Exhibit A.



3.5.2 PACKAGING OF PRODUCT RELEASES. The Product and all major versions thereof shall consist of the Summit Software, the MathStar-Specific Software and the MathStar Library, packaged together by Summit as a single part number, downloadable as a single complete file image. Summit shall provide End Users with a single installation process that places the Product in the proper locations in the End User92s environment.



3.5.3 PRODUCT DISTRIBUTION LOGISTICS. The distribution mechanism for the Product shall be FTP access via the internet. The distribution website shall be developed, hosted and maintained by Summit or its supplier with assistance and support from MathStar. The website shall provide for effective, secure upload of model library releases and patches from MathStar, as well as effective location and retrieval of software and patches by customers. Qualified resellers of the Product may provide links to the Summit website in order to act as distribution portals.



3.6 CUSTOMER SUPPORT. Summit shall provide first line support of the Product to End Users. Such support shall include, but not be limited to, initial troubleshooting assistance and involving Summit technical support in those cases where the problem appears to be located within or caused by Summit Software or the MathStar-Specific Software. Summit shall provide technical customer support via a toll-free telephone number in the United States and Canada staffed during normal, weekday business hours (excluding Summit holidays), as well as via e-mail and website. Summit will use commercially reasonable efforts to respond promptly to all reasonable service requests from End Users. If Summit determines that the problem appears to be located within or caused by the MathStar Library, MathStar, upon Summit92s request, shall provide technical customer support either to Summit or, if requested, directly to an End User. MathStar shall provide such support in accordance with the terms set forth above.



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3.6.1 BUG REPORTING AND TRACKING. Summit shall provide MathStar access to Summit92s bug tracking system for the purpose of tracking problem reports and bugs in the Product. Problems and potential bugs in the Product shall be entered into Summit92s bug tracking system by technical support staff or application engineers from either party. Each party shall identify and maintain a technical support point of contact, who shall be responsible for communicating technical problem status and customer impact priority with the other party and for insuring that customer problem reports associated with the Product are resolved in a timely manner.



3.6.2 BUG CONFIRMATION AND RESOLUTION. Summit shall confirm and resolve bugs in the Summit Software and MathStar-Specific Software in accordance with its customary procedures for support of its products. MathStar shall confirm and resolve bugs in the MathStar Library. Each party shall provide engineering support to the other party upon request in order to expedite the resolution of bugs.



3.6.3 FIELD SALES TECHNICAL STAFF. Each party shall develop and maintain trained technical staff that will be available in the field to visit End Users and assist with technical problem solving or troubleshooting as required.



3.7 END USER TRAINING.



3.7.1 END USERS TRAINING CLASS DEVELOPMENT. MathStar and Summit shall collaborate on the development of an End User training course that may be provided by qualified staff members of either party or both parties, depending on resource availability and geographical convenience. Customer training classes shall consist of the essential training elements necessary for End Users to learn how to use the Product for the purpose of creating and verifying FPOA designs. Each party shall own the portion of the course materials such party contributes to the End User training course and hereby grants to the other party a no charge license to use and distribute such materials to End Users attending such training courses.



3.7.2 CUSTOMER TRAINING CLASS DELIVERY. Each party may deliver the jointly developed training class using their own instructors. The parties shall explore ways of sharing resources for training delivery or for contracting for training instructors from one party to deliver training to End Users of the other party pursuant to a mutually agreed agreement. Unless otherwise agreed, the party providing the training services shall be entitled to receive all fees associated with such services.



3.8 USER MANUALS.



3.8.1 USER MANUAL DEVELOPMENT. Summit shall develop a section or addendum to the Summit Software user manual that addresses the use of the MathStar-Specific Software. MathStar shall develop any user manual documentation required for the MathStar Library. Summit shall assemble the user manual for the Product, consisting of the standard Summit Software user manual, a section or addendum dedicated to the MathStar-Specific Software within the Summit Software and a section or addendum with the documentation for the MathStar Library. Each party shall own all right, title and interest in and to the portion of the user manual such party contributes to the user manual and hereby grants to the other party a no charge license to incorporate such party92s materials into the user manual for the Product and to distribute such materials to End Users as part of the user manual for the Product. Each party agrees not to remove the copyright notices on any user manual materials of the other party.



3.8.2 USER MANUAL DISTRIBUTION. User manuals shall be updated and distributed electronically with each major release of the Product only in PDF file format. Summit shall have the responsibility of aligning the user manual information with the functionality of each major release of the Product.



4. FINANCIAL CONSIDERATIONS.



4.1 REVENUE FROM PRODUCT LICENSE SALES AND MAINTENANCE



Summit shall receive all revenue from Product license sales and maintenance, except for commissions or margins provided to indirect sales organizations in accordance with valid reseller agreements between Summit and the respective reseller. MathStar shall receive all revenue from Product license sales by MathStar in accordance with section 3.4.2 hereof.



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4.2 ENGINEERING FEES FOR PRODUCT ENHANCEMENTS



MathStar shall pay Summit engineering fees only for enhancements to the Product that are requested by MathStar. The parties shall agree on the amount of the fee, sign a mutually agreed specifications document and sign a Statement of Work prior to Summit performing such services.



4.3 ENGINEERING FEES FOR PRODUCT MAINTENANCE



During the term of this Agreement, MathStar shall pay to Summit engineering fees in the amount of US$50,000 per year on the anniversary of the Effective Date of this Agreement, beginning on the first anniversary date of the Effective Date, and on each anniversary thereafter. Such fee shall be in consideration of Summit92s maintenance of the MathStar-Specific Software within the context of the constantly evolving Summit Software releases.



4.4 ENGINEERING DEVELOPMENT CREDIT



During the term of this Agreement, within twenty (20) days after each anniversary of the Effective Date of this Agreement, beginning on the first anniversary date of the Effective Date, Summit shall provide MathStar with an engineering development credit in the amount of ten percent (10%) of the revenue from Product license sales and maintenance recognized by Summit during the prior term (initial or renewal) of the Agreement (the "Summit Revenue"). Within twenty (20) days after each anniversary date of the Effective Date of this Agreement, Summit shall deliver to MathStar a report showing, in reasonable detail, the amount of Summit Revenue recognized by Summit in such prior term. Upon thirty (30) days prior written notice, at MathStar92s sole cost and expense, MathStar shall have the right to appoint an independent accounting firm or other qualified agent or employee to examine such financial books, records and accounts during Summit92s normal business hours at Summit92s offices to verify the information contained in any of the reports provided by Summit pursuant to this Section, subject to the execution of Summit92s standard confidentiality agreement by the accounting firm or other qualified agent or employee; provided, however, that execution of such agreement shall not preclude such firm or other qualified agent or employee from reporting its results to MathStar. MathStar may apply this engineering development credit toward the purchase of Product enhancements or Product maintenance during the current term of the Agreement. The fee for such Product enhancements or Product maintenance set forth in Sections 4.2 and 4.3 hereof shall be offset against the credit upon written notice by MathStar to Summit that MathStar is electing use the credit in such manner; provided, however in no event shall the credit exceed one hundred percent of the fee for such Product enhancements or maintenance. Any credit that is unused during such one year period shall expire upon the end of such period and is not available for use during any future renewal term of this Agreement. No engineering development credit shall apply to orders from MathStar for Product enhancements during the initial term of the Agreement.



4.5 SUMMIT SOFTWARE FOR MATHSTAR INTERNAL USE



Summit hereby grants to MathStar a no-charge, worldwide right and license to use Summit Visual Elite ESL, System Architect and Virtual Prototype products for MathStar92s internal use for an unlimited number of users and for the development of design application examples. MathStar92s use of such products shall in all events be subject to the terms and conditions of Summit92s end user license agreement attached hereto as Exhibit A. Such license shall be in effect for the initial term of the Agreement and each subsequent renewal term of the Agreement during which Summit has recognized at least US$100,000 in revenue from Product license sales and maintenance during the prior term (initial or renewal) of the Agreement. If Summit notifies MathStar that Summit failed to recognize at least US$100,000 in revenue from Product license sales and maintenance during the prior term (initial or renewal) of the Agreement, MathStar may within ten (10) business days of the date of such notice pay to Summit the difference between US$100,000 and the actual amount recognized by Summit during such term. If Summit notifies MathStar that Summit failed to recognize at least US$100,000 in revenue from Product license sales and maintenance during the prior term (initial or renewal) of the Agreement and MathStar fails to exercise its pay-down option as provided in the foregoing sentence, then MathStar shall immediately return to Summit the Visual Elite ESL, System Architect and Virtual Prototype products and shall provide an officer92s certificate to Summit that such products have been removed from all computer systems of MathStar. MathStar shall be entitled to the same audit rights as described in Section 4.4, and the time periods described in this Section 4.5 shall be tolled during the conduct and completion of any such audit, provided such audit is completed within a thirty (30) day period.





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5. ADDITIONAL AGREEMENTS OF THE PARTIES



5.1 LOGO USAGE. MathStar hereby grants Summit the right to use MathStar92s logo, subject to logo usage guidelines to be provided by MathStar to Summit, as such guidelines may be amended by MathStar from time to time. Summit hereby grants MathStar the right to use Summit92s logo, subject to logo usage guidelines to be provided by Summit to MathStar, as such guidelines may be amended by Summit from time to time.



5.2 PUBLICITY; PRESS RELEASES. The parties may by mutual consent agree to issue a joint press release describing the collaboration of the parties. The parties shall also consult regularly during the term of the Agreement and issue, as and when appropriate, such further press releases and/or other publicity materials as may be appropriate. The contents of any press releases issued by the parties shall be subject to the approval of each party, which approval shall not be unreasonably withheld or delayed.

5.3 USE OF NAME IN PROMOTIONAL MATERIALS. Each party shall, with prior approval of the other party (which will not be unreasonably withheld or delayed), be permitted to identify the other party as a development partner, to use the other party92s name in connection with proposals to prospective customers, and to refer to the other party in print or electronic form for marketing or reference purposes.



5.4 FREEDOM OF ACTION. Except as specifically provided herein or in any Statement of Work, either party may market and offer its own or third party products or services (through any means) which are the same as or similar to and which are competitive with the other party92s products and services. Neither party makes any assurances or representations to the other in connection with any financial gain or other benefit that may result from the activities contemplated in this Ag ...