General Semiconductor, Inc.
Exhibit 10.14
PROMISSORY NOTE
$500,000.00 Dated as of September 1, 2000
FOR VALUE RECEIVED, W. John Nelson ("Employee") and Paola Nelson (the
"Employee" and Paola Nelson are sometimes collectively referred to herein
as "Borrower"), husband and wife, whose address for the purposes of this
Promissory Note shall be 3655 Country Club Terrace, Blackhawk, California
94506, hereby unconditionally and irrevocably promise to pay to the order
of General Semiconductor, Inc., a Delaware corporation (which, together
with any subsequent holder of this Note, is referred to herein as
"Lender"), at its offices located at 10 Melville Park Road, Melville, New
York 11747, or such other place as Lender may designate from time to time,
the principal sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00), plus all subsequent advances made and extensions of credit
given to Borrower, together with interest accrued on the unpaid principal
hereof from the date hereof at a rate of 6.23% per annum, compounded
semi-annually, until paid in full. Interest on this Promissory Note
("Note") shall be computed on the basis of a year of 365 days for the
actual number of days elapsed unless such computation shall result in an
interest rate higher than the highest rate allowable under applicable law
(the "Maximum Rate"), in which event the interest rate hereunder shall be
the Maximum Rate.
1. Payment Provisions.
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1.1 Payment. The outstanding principal amount of this Note and all
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unpaid interest accrued thereon shall be due and payable in full on the
seventh (7th) anniversary of the date of this Note (to wit, September 1,
2007) (the "Maturity Date") or in such amounts and on such earlier date(s)
as otherwise provided herein. Whenever any amount is paid under this Note,
such amount shall be applied first to interest and then to principal. To
the extent allowed under applicable law, the holder of this Note shall have
full recourse against Borrower.
1.2 Voluntary Prepayment. Borrower reserves the right to prepay the
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outstanding principal amount of this Note and any unpaid interest accrued
thereon in full or in part at any time during the term of this Note without
notice and without premium or penalty.
1.3 Mandatory Prepayment.
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(a) If at any time, or from time to time, Employee shall be eligible
to receive a cash annual incentive bonus payment from Lender, Borrower
agrees that Lender, in its sole and absolute discretion, shall be entitled
to prepay such portion of the outstanding principal amount of this Note and
any unpaid interest accrued thereon (the "Outstanding Amount") equal to the
lesser of (i) fifty percent (50%) of the gross cash annual incentive bonus
payment, and (ii) the Outstanding Amount, by deducting, in accordance with
the regular payroll practices of Lender for its executives, such amount
from Employee's cash annual incentive bonus.
(b) In the event of the termination of Employee's employment with
Lender by Lender without "Cause" (as such term is defined in the Amended
and Restated Severance Protection Agreement entered into by and between
Lender and Employee, dated as of October 29, 1998, as amended October 19,
1999 (the "Severance Protection Agreement")), by Employee with "Good
Reason" (as such term is defined in the Severance Protection Agreement) or
by reason of Employee's death or "Disability" (as such term is defined in
the Severance Protection Agreement), the Outstanding Amount, irrespective
of the Maturity Date, and without demand or notice by Lender (except as
otherwise required herein) shall become due and payable on the first (1st)
anniversary of such termination of employment.
(c) In the event of the termination of Employee's employment with
Lender by Employee without Good Reason, or by Lender with Cause, the
Outstanding Amount, irrespective of the Maturity Date, and without demand
or notice by Lender (except as otherwise required herein) shall become due
and payable on the date that is sixty (60) days following such termination
of employment.
(d) Notwithstanding the foregoing, in the event that the Property (as
defined below) or any portion thereof, or any interest therein is assigned,
encumbered, transferred, sold, conveyed, or alienated by Borrower, or by
operation of law or otherwise, Lender shall have the right, at its option,
without notice to Borrower, to declare all sums under this Note immediately
due and payable; provided, however, in the case of a transfer, sale or
conveyance of the Property by Borrower (collectively, a "Sale"): (i)
Borrower agrees to pay to Lender the proceeds received by Borrower upon the
consummation of such Sale in an amount sufficient to repay the Outstanding
Amount; and (ii) if such proceeds are insufficient to repay in full the
Outstanding Amount, the balance of the Outstanding Amount remaining after
application of the Sale proceeds, irrespective of the Maturity Date, and
without demand or notice by Lender (except as otherwise required herein)
shall become due and payable on the date that is sixty (60) days following
such Sale.
1.4 Use of Proceeds. Borrower represents, warrants and covenants that
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the proceeds of this Note shall be used only to purchase that certain
property known as 3655 Country Club Terrace, Blackhawk, California 94506
(the "Property"), as more particularly described on Exhibit "A" attached to
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the Second Deed of Trust (defined below). No part of the proceeds of this
Note shall be used for any other purpose whatsoever.
1.5 Payment Terms. All payments shall be made in lawful money of the
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United States of America in immediately available funds.
2. Security. At Lender's option (to be exercised in its sole and
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absolute discretion) and upon Lender's recordation of the Second Deed of
Trust (defined below) against the Property in the Official Records of
Contra Costa County, California, this Note shall become secured by the lien
of that certain Short Form Deed of Trust and Assignment of Rents (the
"Second Deed of Trust") to be executed by Borrower concurrent herewith and
delivered by Borrower, as trustor, to Old Republic Title Company, as
trustee, naming Lender, as beneficiary, and encumbering the Property as
more particularly defined in the Second Deed of Trust. Borrower represents
and warrants that it holds good and marketable title to the Property, and
that the only lien, claim or encumbrance on the Property as of the date
hereof is that certain Deed of Trust and Assignment of Rents (the "First
Deed of Trust") to be executed and delivered by the undersigned, as
trustor, and dated on or about September 1, 2000, and encumbering the
Property as more particularly defined in the First Deed of Trust. Borrower
represents and warrants that the Promissory Note secured by the First Deed
of Trust and this Note do not or will not, in the aggregate, exceed the
purchase price paid by Borrower for the Property. Borrower covenants and
agrees that it will not subject the Property to any additional liens,
claims or encumbrances of any kind whatever, except pursuant hereto.
3. Governing Law. The terms of this Note shall be construed in
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accordance with the laws of the State of California. This Note has been
delivered to Lender and accepted by Lender in the State of California. Each
of Borrower and Lender hereby irrevocably and unconditionally consents to
submit to the jurisdiction and venue of any federal or state court located
in the State of California for any litigation arising out of or relating to
this Note and agrees not to commence any litigation relating thereto except
in such courts.
4. Amendments/Waivers. Any term of this Note may be amended or waived
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only upon the written consent of Borrower and Lender.
5. Default. Upon the occurrence of an Event of Default (as defined
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below), at the option of Lender, the entire outstanding principal amount of
this Note and any unpaid interest accrued thereon shall immediately become
due and payable without notice of default or other notices or demands of
any kind whatsoever, all of which are hereby expressly waived by Borrower.
If an Event of Default occurs and is continuing, Lender may pursue any
available remedy by proceeding at law or in equity to collect the payment
of principal of, or interest on, this Note or to enforce the performance of
any provisions of this Note. A delay or omission by Lender in exercising
any right or remedy arising upon an Event of Default shall not impair the
right or remedy or constitute a waiver of, or acquiescence in, the Event of
Default. No remedy is exclusive of any other remedy. All available remedies
are cumulative. Upon and during any Event of Default under this Note, the
Deed of Trust or any other agreement securing this Note, the interest rate
under this Note will, at the option of Lender, increase to a rate two
percent (2%) above the interest rate otherwise payable under this Note.
Borrower recognizes that: (i) any default in making any installment or
other payment due hereunder will result in Lender incurring additional
expenses due to Lender's loss of the use of the money due hereunder and the
interest thereon; (ii) Lender will be entitled to damages for the detriment
caused thereby; and (iii) it is extremely difficult and impractical to
ascertain the extent of such damages. Therefore, Borrower acknowledges and
agrees that the default interest provided for hereunder shall be payable
not as a penalty but as a reasonable estimate of Lender's damages. The
default rate shall accrue on the entire outstanding balance hereof
including without limitation, delinquent interest and any and all costs and
expenses incurred by Lender in connection therewith. For purposes of this
Note, the term "Event of Default" shall mean, the occurrence of any of the
following:
(a) Borrower fails to make any payment of principal or interest
hereunder as and when the same becomes due and payable in accordance with
the terms hereof; or
(b) Borrower fails fully and timely to perform or observe any other
obligation or term of this Note; or
(c) Employee or Paola Nelson is the subject of an order for relief by
a bankruptcy court, or is unable or admits in writing its inability to pay
its debts as they mature, or makes an assignment for the benefit of
creditors; or Employee or Paola Nelson applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator, or similar officer for Employee or Paola Nelson or for all
or any part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of Employee or Paola Nelson, and the
appointment continues undischarged or unstayed for sixty (60) calendar
days; or Employee or Paola Nelson institutes or consents to any bankruptcy,
insolvency or similar proceeding relating to Employee or Paola Nelson or to
all or any part of its property under the laws of any jurisdiction; or any
similar proceedings is instituted without the consent of Employee or Paola
Nelson and continues undismissed or unstayed for sixty (60) calendar days;
or any judgment, warrant, writ of attachment of execution, or similar
process is issued or levied against all or any part of the property of
Employee or Paola Nelson and is not released, vacated or fully bonded
within sixty (60) calendar days after its issue or levy; or
(d) All or a substantial portion of the Property is condemned, seized
or appropriated by a governmental body or agency.
6. Exercise of Power of Lender. No single or partial exercise of any
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power hereunder shall preclude other or further exercises thereof or the
exercise of any other power. Any delay or omission on the part of Lender in
exercising any right hereunder shall not operate as a waiver of such right,
or of any other right under this Note.
7. Successors and Assigns. This Note shall inure to the benefit of
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Lender and its successors and assigns. As such, Lender may transfer this
Note and deliver to the transferee(s) all or any part of the property then
held by it as security hereunder, and the transferee(s) shall thereupon
become vested with all the powers and rights herein given to Lender with
respect thereto; and Lender shall thereafter be forever relieved and fully
discharged from any liability or responsibility in the matter, but Lender
shall retain all rights and powers hereby given with respect to property
not so transferred. The obligations of Borrower hereunder shall not be
assignable.
8.Liability for Costs and Expenses. Upon the occurrence of an Event of
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Default under this Note, Borrower will be liable for all costs and expenses
of collection, including reasonable attorney's fees, incurred in collecting
the money due hereunder, whether such items are incurred in or out of
litigation, in or out of a bankruptcy case or proceeding, or otherwise.
9. Waiver. Borrower and all sureties and endorsers, jointly and
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severally, waive diligence, grace, demand, presentment for payment,
exhibition of this Note and also notice of protest, demand, dishonor and
nonpayment of this Note and all exemption rights against the indebtedness
evidenced by this Note. No extension of time for the payment of this Note
shall affect the original liability under this Note of Borrower. The
pleading of any statute of limitations as a defense to any demand against
Borrower is expressly waived by Borrower to the full extent permitted by
law.
10. Setoff. The obligation to pay Lender shall be absolute and
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unconditional and the rights of Lender shall not be subject to any defense,
setoff, counterclaim or recoupment or by reason of any indebtedness or
liability at any time owing by Lender to Borrower.
11. Payment Notice. This Note is subject to Section 2966 of the
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California Civil Code, which provides that Lender shall give written notice
to Borrower, or its successor in interest, of prescribed information at
least ninety (90) days and not more than one hundred fifty (150) days
before any balloon payment is due.
12. Notices. All notices, requests, claims, demands and other
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communications hereunder to any party shall be deemed sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to
such party at the address set forth below or such other address for a party
as shall be specified in a notice given in accordance with this Section 12.
If to Borrower, at 3655 Country Club Terrace, Blackhawk, California 94506,
and if to Lender, at 10 Melville Park Road, Melville, New York 11747
(Attention: Chief Financial Officer).
13. Effect of Note.
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13.1 It is the intention of Lender and Borrower that this Note shall
remain in full force and effect and shall continue to be secured by the
Deed of Trust until all obligations of Borrower to Lender under this Note
have been fully satisfied.
13.2 BORROWER ACKNOWLEDGES AND AGREES THAT THE PROVISIONS OF THIS NOTE
SHALL NOT CREATE A PARTNERSHIP, JOINT VENTURE OR ANY OTHER RELATIONSHIP
BETWEEN THE PARTIES EXCEPT THE RELATIONSHIP OF BORROWER AND LENDER.
ACCORDINGLY, NOTHING CONTAINED IN THIS NOTE OR IN THE DEED OF TRUST SHALL
OBLIGATE OR BE DEEMED TO OBLIGATE LENDER TO PAY ANY COSTS, FEES OR EXPENSES
OF THE REAL PROPERTY, OR TO REIMBURSE BORROWER FOR ANY SUCH COSTS OR
OTHERWISE. IN ADDITION, NOTHING IN THIS NOTE OR IN ANY OF THE OTHER LOAN
DOCUMENTS SHALL BE DEEMED TO IMPLY THAT LENDER IS AN OWNER OR OPERATOR OF
THE REAL PROPERTY OR ANY OTHER BUSINESS OR BUSINESSES LOCATED THEREON OR IN
CONNECTION THEREWITH AND LENDER SHALL NOT BE DEEMED TO CONTROL OR REVIEW
BORROWER'S OWNERSHIP OR OPERATION OF THE REAL PROPERTY OR ANY OTHER
BUSINESS OR BUSINESSES LOCATED THEREON OR IN CONNECTION THEREWITH.
14. Miscellaneous
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14.1 Separability. Any provision of this Note which shall be held by a
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court to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provision or term hereof, and such other provisions or
terms shall remain in full force and effect.
14.2 Joint and Several Liability. Each of the parties constituting
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Borrower under this Note shall be jointly and severally liable for all the
obligations of all parties constituting Borrower under this Note.
14.3 Time of the Essence. Time is of the essence with respect to each
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and every provision hereof.
14.4 Loss of Note. In the event of the loss, theft, mutilation or
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destruction of this Note, upon Borrower's receipt of notice from Lender
that such Note has been lost, stolen, mutilated or destroyed, Borrower
shall execute and deliver to such party or Lender, as the case may be, a
new promissory note in form and content identical to this Note in lieu of
the loss, stolen, destroyed or mutilated Note.
IN WITNESS WHEREOF, this Note is executed and delivered as of the date first
set forth above.
BORROWER:
/s/ W. John Nelson
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W. John Nelson
/s/ Paola Nelson
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Paola Nelson
