Subordinated Secured Non-Recourse Promissory Note - Synaptics Inc. and National Semiconductor Corp.
$1,500,000.00 August 12, 1997
San Jose, California
SYNAPTICS INCORPORATED
SUBORDINATED SECURED NON-RECOURSE PROMISSORY NOTE
For good and valuable consideration, the receipt of which is hereby
acknowledge, SYNAPTICS INCORPORATED, a California corporation (the "Company"),
promises to pay to the order of National Semiconductor Corporation (the
"Holder"), the principal sum of One Million Five Hundred Thousand Dollars
($1,500,000.00), plus interest thereon, as set forth below, on the earliest to
occur of (i) the tenth anniversary date of this Note, (ii) when declared due and
payable by the Holder upon the occurrence of an Event of Default (as defined
below), or (iii) upon the sale or liquidation by the Company of any shares of
the capital stock of Foveonics, Inc. held by the Company to the extent of, but
not exceeding, the amount of cash proceeds received by the Company upon each
such sale or liquidation of Foveonics, Inc. capital stock.
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject:
1. Definitions. As used in this Note, the following temps, unless the
context otherwise requires, have the following meanings:
1.1 "Company" shall mean Synaptics Incorporated, a California
corporation, and shall include any corporation which shall succeed to or assume
the obligations of the Company under this Note.
1.2 "Noteholder," "Holder," or similar terms, when the context
refers to a holder of a note shall mean any person who shall at the time be the
holder of this Note.
2. Interest. Interest shall accrue from the date of this Note on the
unpaid principal amount at the rote of six percent (6%) per annum until paid,
compounded annually.
3. Prepayment. The Company may prepay the principal of or interest on
this Note at any time without premium or penalty.
4. Events of Default. If any of the events specified in this Section 4
shall occur (herein individually referred to as an "Event of Default"), the
Holder of the Note may, so long as such condition exists, declare the entire
principal and unpaid accrued interest hereon immediately due and payable, by
notice in writing to the Company:
(i) Payment of principal or interest on this Note shall be
delinquent for a period of 10 days or more and such delinquency has not been
cured by the Company within five days after the Holder has given the Company
written notice of such default; or
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(ii) If the Company shall fail materially to observe any covenant
or other provision contained in this Note (other than with respect to payment)
and such failure of observance shall be continuing for 10 days after the Holder
has given written notice thereof; or
(iii) The institution by the Company of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to institution of
bankruptcy or insolvency proceedings against it or the filing by it of a
petition or answer or consent seeking reorganization or release under the
federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the
Company, or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the taking of corporate action by
the Company in furtherance of any such action; or
(iv) If, within 60 days after the commencement of an action against
the Company (and service of process in connection therewith on the Company)
seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar relief under any present or future statute, law or regulation, such
action shall not have been resolved in favor of the Company or all orders or
proceedings thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if, within 60 days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated; or
(v) Any declared default of the Company under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness, and such Senior Indebtedness is in fact
accelerated by the holder.
5. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
5.1 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on (i)
indebtedness of the Company or with respect to which the Company is a guarantor
to banks, insurance companies, lease financing institutions or other financial
institutions regularly engaged in the business of lending money, which is for
money borrowed (or purchase or lease of equipment in the case of lease
financing) by the Company (whether or not secured) in the ordinary course of
business, and (ii) any such indebtedness or any debentures, notes or other
evidence of indebtedness issued in exchange for such Senior Indebtedness, or any
indebtedness arising from the satisfaction of such Senior Indebtedness by a
guarantor.
5.2 Default on Senior Indebtedness. If there should occur any
receivership, insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization or arrangements with creditors (whether or not pursuant to
bankruptcy or other insolvency laws) sale of all or substantially all of the
assets, dissolution, liquidation or any other marshaling of the assets and
liabilities of the Company, or if this Note shall be declared due and payable
upon the occurrence
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of an event of default with respect to any Senior Indebtedness, then (i) no
amount shall be paid by the Company in respect of the principal of or interest
on this Note at the time outstanding, unless and until the principal of and
interest on the Senior Indebtedness then outstanding shall be paid in full,
except that the Holder shall have the right to proceed against and receive the
Securities pledged by the Company as security for this Note pursuant to the
Security Agreement between the Company and the Holder dated as of the same date
as this Note, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to any Senior
Indebtedness, or in the instrument under which any Senior Indebtedness is
outstanding, permitting the holder of such Senior Indebtedness to accelerate the
maturity thereof, then, unless and until such event of default shall have been
cured or waived or shall have ceased to exist, or all Senior Indebtedness shall
have been paid in full, no payment shall be made in respect of the principal of
or interest on this Note, unless within 90 days after the happening of such
event of default, the maturity of such Senior Indebtedness shall not have been
accelerated.
5.3 Effect of Subordination. Subject to the rights, if any, of the
holders of Senior Indebtedness under this Section 5 to receive cash, securities
or other properties otherwise payable or deliverable to the Holder of this Note,
nothing contained in this Section 5 shall impair, as between the Company and the
Holder, the obligation of the Company, subject to the terms and conditions
hereof, to pay to the Holder the principal hereof and interest hereon as and
when the same become due and payable, or shall prevent the Holder of this Note,
upon default hereunder, from exercising all rights, powers and remedies
otherwise provided herein or by applicable law.
5.4 Subrogation. Subject to the payment in full of all Senior
Indebtedness and until this Note shall be paid in full, the Holder shall be
subrogated to the rights of the holders of Senior Indebtedness (to the extent of
payments or distributions previously made to such holders of Senior Indebtedness
pursuant to the provisions of Section 5 above) to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness. No
such payments or distributions applicable to the Senior Indebtedness shall, as
between the Company and its creditors, other than the holders of Senior
Indebtedness and the Holder, be deemed to be a payment by the Company to or on
account of this Note; and for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness to which the Holder would be
entitled except for the provisions of this Section 5 shall, as between the
company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
5.5 Undertaking. By its acceptance of this Note, the Holder agrees
to execute and deliver such documents as may be reasonably requested from time
to time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 5.
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6. Security Agreement. The Company will additionally execute and
deliver the Security Agreement in the form attached hereto as Exhibit A (the
"Security Agreement") as security for the Company's obligation to repay the
principal amount and accrued interest on this Note.
7. Non-Recourse. If the Company fails to pay when due the principal of
or interest on this Note, or otherwise fails to comply with any of the
provisions of this Note, the Holder's sole remedy shall be to retain the
Collateral (as defined in the Security Agreement), and the Company shall have no
further obligation to the Holder under this Note or otherwise.
8. Miscellaneous.
8.1 The rights and remedies herein reserved to any party shall be
cumulative and in addition to any other or further rights and remedies available
at law or in equity. The waiver by any party hereto of any breach of any
provision of this Note shall not be deemed to be a waiver of the breach of any
other provision or any subsequent breach of the same provision.
8.2 This Note shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts entered into
and wholly to be performed in the State of California by California residents.
8.3 This Note and its terms may be changed, waived or amended by
the written consent of the Company and the Holder.
8.4 In case any provision contained herein (or part thereof) shall
for any reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or other unenforceability shall not affect any
other provision (or the remaining part of the affected provision) hereof; but
this Note shall be construed as if such invalid, illegal, or unenforceable
provision (or part thereof) had never been contained herein, but only to the
extent that such provision is invalid, illegal, or unenforceable.
8.5 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given on the date of service if served personally or by facsimile, or five days
after the date of mailing if mailed, by first class mail, registered or
certified, postage prepaid. Notices shall be addressed as follows:
To Holder at: National Semiconductor Corporation
2900 Semiconductor Drive
Santa Clara, CA 95051
Attention: General Counsel
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To Company at: Synaptics Incorporated
2698 Orchard Parkway
San Jose, CA 95134
Attention: Federico Faggin
or to such other address as a party has designated by notice in writing to the
other party in the manner provided by this Section. 8.5.
SIGNATURE PAGE FOLLOWS
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The Company has caused this Note to be duly executed and delivered by its
authorized officer as of the date first above written.
SYNAPTICS INCORPORATED
By: /s/ Federico Faggin
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Name: Federico Faggin
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Title: President
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