EXHIBIT 10.16
FULL RECOURSE, UNSECURED PROMISSORY NOTE
Santa Clara, California
$ 250,000 April 10, 2001
This Secured Promissory Note (the "NOTE") is being tendered by XXXXX
XXXXXXX ("BORROWER") to Transmeta Corporation, a Delaware corporation (the
"Company").
1. OBLIGATION. In exchange for the loan made as of the date first set
forth above by the Company to Borrower of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000) (the "PRINCIPAL'), receipt of which is hereby acknowledged by
Xxxxxxxx, Borrower hereby promises to pay to the order of the Company on or
before the earlier to occur of (i) January 1, 2003 or (ii) 30 days following the
date that Xxxxxxxx's employment with the Company (or its successor or an
affiliate of the Company) is terminated, at the Company's principal place of
business located at 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000, or at
such other place as the Company may direct, all of the Principal which then
remains outstanding, together with interest compounded annually on the unpaid
portion of the Principal at the rate of six percent (6.0%), which rate is not
less than the minimum rate established pursuant to Section 1274(d) of the
Internal Revenue Code of 1986, as amended, on the date hereof, and does not
exceed the highest rate permitted by applicable law. All payments hereunder
shall be made in lawful tender of the United States. Borrower's obligations
hereunder are not, and shall continue not to be, subordinated to any other debt
obligation that Borrower is currently, or in the future may be, subject to.
2. FORGIVENESS.
a. Notwithstanding the foregoing, however, if Xxxxxxxx
continuously remains an employee of the Company (or its successor or an
affiliate of the Company) from the date hereof until and through December 31,
2001, then effective December 31, 2001, an amount of Principal equal to one-half
of the original Principal and all then accrued and unpaid interest on this
portion of the principal only shall be forgiven.
b. Further, notwithstanding the foregoing, if Xxxxxxxx
continuously remains an employee of the Company (or its successor or an
affiliate of the Company) from the date hereof until and through December 31,
2002, then, effective December 31, 2002, all then accrued and unpaid interest
hereunder and all then unpaid Principal shall be forgiven and no longer payable
hereunder.
c. Further, notwithstanding the foregoing, upon the death of
Xxxxxxxx, if Xxxxxxxx had prior to such occurrence continuously remained an
employee of the Company (or its successor or an affiliate of the Company) since
the date hereof, all then accrued and unpaid interest hereunder and all then
unpaid Principal shall be forgiven and no longer payable hereunder.
d. Further, notwithstanding the foregoing, if the Company (or its
successor or an affiliate of the Company) shall terminate the employment of
Borrower without Borrower's consent, and the date of such termination occurs
before December 31, 2001, all then accrued and unpaid interest hereunder and an
amount of Principal equal to (A) the fraction derived by dividing (i)the number
of full calendar months elapsed between January 1, 2001 and the date of such
termination by (ii) 12, multiplied by (B) one-half of the original Principal
hereunder, shall be forgiven and no longer payable hereunder.
e. Further, notwithstanding the foregoing, if Xxxxxxxx
continuously remains an employee of the Company (or its successor or an
affiliate of the Company) from the date hereof until and through December 31,
2001 and if the Company (or its successor or an affiliate of the Company) shall
thereafter terminate the employment of Borrower without Xxxxxxxx's consent, and
the date of such termination occurs before December 31, 2002, all then accrued
and unpaid interest hereunder and an amount of Principal equal to (A) the
fraction derived by dividing (i) the number of full calendar months elapsed
between January 1, 2002 and the date of such termination by (ii) 12, multiplied
by (B) all then unpaid Principal hereunder, shall be forgiven and no longer
payable hereunder.
f. In the event of each, if any, such forgiveness of debt the
Company shall thereafter pay to Borrower amounts equal to the amounts by which
the U.S. federal and state income taxes payable by Borrower related to such
forgiveness, and the gross-up payment(s) for such forgiveness, exceed the U.S.
federal and state income taxes which would have been payable by Borrower had
such debt not been forgiven and such gross-up payments(s) not been made;
provided, however, that the Company shall have no such obligation to make any
such payment until after the Company has received evidence reasonably
satisfactory to the Company of such greater amount of income taxes.
g. Xxxxxxxx acknowledges that there may be adverse tax
consequences upon entering this Note and that Xxxxxxxx should consult his own
tax adviser. Nothing in the Note shall confer on Borrower any right to continue
in the employ of, or other relationship with, the Company (or its successor or
an affiliate of the Company), or limit in any way the right of the Company (or
its successor or an affiliate of the Company) to terminate Xxxxxxxx's employment
or other relationship at any time, with or without cause.
3. EVENTS OF DEFAULT. Borrower will be deemed to be in default under this
Note upon the occurrence of any of the following events (each, an "EVENT OF
DEFAULT"): (i) Borrower's failure to make any payment when due under this Note;
(ii) the failure of Borrower to perform any obligation under this Note or any
other breach by the Borrower of this Note; (iii) the filing regarding Borrower
of any voluntary or involuntary petition for relief under the United States
Bankruptcy Code or the initiation of any proceeding under federal law or law of
any other jurisdiction for the general relief of debtors, provided, however,
with respect to an involuntary petition for relief, such petition has not been
dismissed within thirty days after the filing of such petition; or (iv) the
execution by Xxxxxxxx of an assignment for the benefit of creditors or the
appointment of a receiver, custodian, trustee or similar party to take
possession of Borrower's assets or property.
4. ACCELERATION; REMEDIES ON DEFAULT; FULL RECOURSE; NO SECURITY. Upon
the occurrence of any Event of Default, all Principal and interest owed under
this Note shall become immediately due and payable without notice or demand on
the part of the Company, and the Company will be entitled to exercise any or all
of its rights and remedies under this Note. Performance of Xxxxxxxx's
obligations under this Note is not secured. However, upon any Event of Default,
the Company will have, in addition to its rights and remedies under this Note,
full recourse against any real, personal, tangible or intangible assets of
Borrower, and may pursue any legal or equitable remedies that are available to
the Company.
5. PREPAYMENT. Prepayment of Principal and/or any other amounts owed
under this Note may be made at any time without penalty. Unless otherwise agreed
in writing by the Company, each payment will be applied to the extent of
available funds from such payment in the following order: (i) first to the
accrued and unpaid costs and expenses under this Note; (ii) then to accrued but
unpaid interest, and (iii) lastly to the Principal.
6. CONFIDENTIALITY OF NOTE. Xxxxxxxx hereby agrees not to disclose the
existence and terms of this Note, or the fact that the loan evidenced by this
Note was made, except to (i) the spouse and any tax accountant of the Borrower
so long as any such spouse or tax accountant also agrees not to disclose the
existence or terms of this Note or the fact that the loan evidenced by this Note
was made or (ii) governmental tax authorities.
7. GOVERNING LAW; WAIVER, JURISDICTION. The validity. construction and
performance of this Note will be governed by the internal laws of the State of
California, excluding that body of law pertaining to conflicts of law. No course
of dealing between Borrower and the Company will operate as a waiver or
modification of any party's rights or obligations under this Note. No delay or
failure on the part of either party in exercising any right or remedy under this
Note will operate as a waiver of such right or any other right. A waiver given
on one occasion will not be construed as a bar to, or as a waiver of, any right
or remedy on any future occasion. This Note may be amended only by a writing
executed by Xxxxxxxx and the Company. Borrower hereby waives presentment, notice
of non-payment, notice of dishonor, protest, demand and diligence. Xxxxxxxx, by
his execution of this Note, hereby irrevocably submits to the in personam
jurisdiction of the state courts of the State of California and of the United
States District Court for the Northern District of California that are located
in Santa Xxxxx County, California, for the purpose of any suit, action or other
proceeding arising out of or based upon this Note.
8. ATTORNEYS' FEES. If suit is brought for collection of this Note,
Xxxxxxxx agrees to pay all reasonable expenses, including attorneys' fees,
incurred by the holder or Company in connection therewith whether or not such
suit is prosecuted to judgment.
9. ASSIGNMENT. This Note is freely transferable and assignable by the
Company or its transferees. Any reference to the Company herein will be deemed
to refer to any subsequent transferee of this Note at such time as such
transferee holds this Note. This Note may not be assigned or delegated by
Xxxxxxxx, whether by voluntary assignment or transfer, operation of law or
otherwise.
IN WITNESS WHEREOF, Xxxxxxxx has executed this Note as of the date and
year first above written.
Xxxxx Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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Borrower's Name Xxxxxxxx's Signature
TRANSMETA CORPORATION
By: /s/ Xxxxx X. XxXxxxxxx
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Xxxxx X. XxXxxxxxx
Chief Financial Officer
