Exhibit 10.16
PROMISSORY NOTE
May 11, 1999 $300,000
Xxxx X. Xxx (the "Employee"), for value received, hereby promises to pay to
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Integrated Circuit Systems, Inc., a Pennsylvania corporation (the "Company"),
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the principal amount of Three Hundred Thousand dollars ($100,000) on May 11,
2006 (the "Maturity Date").
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Reference is hereby made to the Executive Stock Purchase Agreement, dated
as of the date hereof ("Executive Stock Agreement"), pursuant to which Employee
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has purchased from the Company 15,000 shares of Class L Common Stock and 135,000
shares of Class A Common Stock (such shares of Class L Common Stock and Class A
Common Stock, the "Purchased Shares"), for an aggregate purchase price of
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$300,000 (the "Purchase Price"). The Company has loaned 100% of the Purchase
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Price to Employee and Employee has issued this Recourse Promissory Note (this
"Note") to the Company.
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The amounts due under this Note are secured by a pledge of the Employee
Shares, and the payment of the principal amount and accrued interest under this
Note is subject to certain offset rights under the Executive Stock Agreement.
1. Definitions. For purposes of this Note, the following capitalized
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terms have the following meaning.
"Class A Common Stock" means the Company's Class A Common Stock, par value
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$.01 per share.
"Class L Common Stock" means the Company's Class L Common Stock, par value
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$.01 per share.
"Employee Shares" means (i) all Purchased Shares, (ii) all other shares of
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Class A Common Stock and Class L Common Stock owned from time to time by
Employee, and (iii) all shares of common stock referred to in clauses (i) and
(ii) above by way of a stock dividend or stock split or in connection with any
combination, exchange, conversion, merger, consolidation, recapitalization, or
other reorganization affecting the Class A Common Stock or Class L Common Stock.
2. Payment of Principal.
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(a) Scheduled Payment. The Employee will pay the entire unpaid principal
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amount of this Note on the Maturity Date.
(b) Optional Prepayment. Subject to Section 3 hereof, the Employee may
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prepay the principal amount of this Note, in whole or in any $1,000 increment,
at any time and from time to time.
(c) Mandatory Prepayments.
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(i) If the Employee receives any bonus from the Company or any of
the Company's subsidiaries, then, on the date of the payment of such bonus
to the Employee, the Employee shall be obligated, to the extent the
Employee has obligations to the Company under this Note, to pay to the
Company an amount equal to 50% of the amount of such bonus (net of the
amount of any customary withholding taxes) and such amount paid to the
Company shall first reduce accrued interest on this Note pursuant to
Section 3 hereof and any remaining amount paid to the Company shall reduce
the principal amount of this Note.
(ii) If the Employee sells or otherwise transfers any of the
Employee Shares, then, on the date of the consummation of such sale or
transfer, the Employee shall be obligated, to the extent the Employee has
obligations to the Company under this Note, to pay to the Company an amount
equal to the net after-tax proceeds received by the Employee for the
Employee Shares sold or otherwise transferred and such amount paid to the
Company shall first reduce accrued interest on this Note pursuant to
Section 3 hereof and any remaining amount paid to the Company shall reduce
the principal amount of this Note.
(iii) If the Employee receives any cash dividends or other
distributions with respect to any of the Employee Shares, then, on the date
of the payment of such cash dividends or other distributions, as the case
may be, to the Employee, the Employee shall be obligated, to the extent the
Employee has obligations to the Company under this Note, to pay to the
Company an amount equal to the amount of such cash dividends or other
distributions (net of any tax liability in connection therewith), as the
case may be, and such amount paid to the Company shall first reduce accrued
interest on this Note pursuant to Section 3 hereof and any remaining amount
paid to the Company shall reduce the principal amount of this Note.
3. Interest. Interest will accrue at the rate of eight percent (8%) per
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annum (computed on the basis of a 360-day year, as appropriate, and the actual
number of days elapsed in any year) on the unpaid principal amount of this Note
outstanding from time to time, or (if less) at the highest rate then permitted
under applicable law. Interest accruing hereunder, will be payable to the
Company in cash, in arrears, on the Maturity Date or in connection with any
optional prepayment with respect to the principal being repaid. Interest will
accrue on any amount of principal until such time as payment therefor is
actually delivered to the Company.
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4. Events of Default.
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(a) Definition. An "Event of Default" will be deemed to have occurred if:
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(i) the Employee fails to pay any amount of the principal of or
interest on this Note as and when required pursuant to the terms hereof; or
(ii) the Employee makes an assignment for the benefit of creditors or
admits in writing his or her inability to pay his or her debts generally as
they become due; or an order, judgment or decree is entered adjudicating
the Employee bankrupt or insolvent; or any order for relief with respect to
the Employee is entered under the Federal Bankruptcy Code; or the Employee
commences any proceeding relating to the Employee under any bankruptcy
reorganization, arrangement, insolvency, or readjustment of debt law of any
jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against the Employee and either (A) the Employee
by any act indicates its approval thereof, consent thereto or acquiescence
therein or (B) such petition, application or proceeding is not dismissed
within 30 days.
The foregoing will constitute Events of Default whatever the reason or cause for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
(b) Consequences of Events of Default.
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(i) If an Event of Default has occurred and is continuing, then the
aggregate principal amount of this Note (together with all accrued interest
thereon and all other amounts due and payable with respect thereto) will
become immediately due and payable without any action on the part of the
Company.
(ii) If any Event of Default has occurred and is continuing, the
interest rate on this Note will increase immediately by an increment of 6
percentage points (i.e., 600 basis points), to the extent permitted by
applicable law. Any such increase of the interest rate resulting from the
operation of this Section 4(b)(ii) will terminate as of the close of
business on the next date on which no Event of Default exists (subject to
subsequent increases pursuant to this Section).
(iii) The Company will also have any other rights which the Company
may have been afforded under any contract or agreement at any time and any
other rights which the Company may have pursuant to applicable law, subject
to the limitation set forth in Section 14 of this Note. The Employee hereby
waives diligence, presentment, protest and demand and notice of protest and
demand, dishonor and nonpayment of this Note, and expressly agrees that
this Note, or any payment thereunder, may be extended from time to time and
that the Company may accept security for this Note or release security for
this Note, all without
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in any way affecting the liability of the Employee thereunder. If the
Employee fails to pay any amounts due hereunder when due, then the Employee
shall pay to the Company, in addition to the amounts due, all costs of
collection, including reasonable attorneys fees.
5. Amendment and Waiver. None of the terms or provisions of this Note may
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be altered, modified or amended except by an instrument in writing, duly
executed by the Company (with approval of its board of directors) and the
Employee. The Company shall not by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder, and no waiver
shall be valid unless in writing, signed by the Company (with the approval of
its board of directors), and then only to the extent therein set forth. A waiver
by the Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
6. Cancellation. After all principal and accrued interest at any time
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owed on this Note have been paid in full, this Note will be surrendered to the
Employee for cancellation.
7. Payments. All cash payments to be made to the Company will be made in
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the lawful money of the United States of America in immediately available funds.
Payments of principal and interest in respect of this Note will be delivered to
the Company at the Company's chief executive office.
8. Descriptive Headings; Governing Law. The descriptive headings of the
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several Sections of this Note are inserted for convenience only and do not
constitute a part of this Note. This Note shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to any rules, principles or provisions of choice of law or conflict of
laws.
9. Business Days. If any payment is due, or any time period for giving
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notice or taking action expires, on a day which is a Saturday, Sunday or legal
holiday in the State of Pennsylvania, then the payment will be due and payable
on, and the time period will automatically be extended to, the next business day
immediately following such Saturday, Sunday or legal holiday, and interest will
continue to accrue at the required rate under this Note until any such payment
is made.
10. Usury Laws. It is the intention of the Employee and the Company to
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conform strictly to all applicable usury laws now or hereafter in force, and any
interest payable under this Note will be subject to reduction to the amount not
in excess of the maximum legal amount allowed under the applicable usury laws as
now or hereafter construed by the courts having jurisdiction over such matters.
If the maturity of this Note is accelerated by reason of an Event of Default,
voluntary prepayment by the Employee or otherwise, then earned interest may
never include more than the maximum amount permitted by law, computed from the
date hereof until payment, and any interest
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in excess of the maximum amount permitted by law will be canceled automatically
and, if theretofore paid, will at the option of the Company either be rebated to
the Employee or credited on the principal amount of this Note, or if this Note
has been paid, then the excess will be rebated to the Employee. The aggregate of
all interest (whether designated as interest, service charges, points or
otherwise) contracted for, chargeable, or receivable under this Note will under
no circumstances exceed the maximum legal rate upon the unpaid principal balance
of this Note remaining unpaid from time to time. If such interest does exceed
the maximum legal rate, it will be deemed a mistake and such excess will be
canceled automatically and, if theretofore paid, rebated to the Employee or
credited on the principal amount of this Note, or if this Note has been repaid,
then such excess will be rebated to the Employee.
11. Severability. If any provision of this Note is held by any court of
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competent jurisdiction to be illegal, void or unenforceable, such provision will
be of no force and effect, but such holding shall have no effect upon the
enforceability of any other provision.
12. General. This Note:
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(a) constitutes the entire agreement among the parties with respect to the
subject matter hereof;
(b) supersedes any and all prior understandings relating to such subject
matter; and
(c) will be binding upon and inure to the benefit of the parties and their
respective heirs, executors, administrators, successors and assigns.
13. Waiver of Jury Trial. THE EMPLOYEE (AND, BY ITS ACCEPTANCE OF THIS
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NOTE, THE COMPANY) HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
WITH, OR ARISING OUT OF THIS NOTE OR THE VALIDITY, PROTECTION, INTERPRETATION,
COLLECTION OR ENFORCEMENT THEREOF.
14. Partial-Recourse Note. If for any reason Executive fails to pay the
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full amount due under this Note, Executive's maximum personal liability shall be
an amount equal to 50% multiplied by the principal amount of this Note and the
Company's sole recourse for any remaining amounts due and payable hereunder
shall be against the Employee Shares pursuant to the Pledge Agreement and by
application of Section 3(c) hereof.
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IN WITNESS WHEREOF, the Employee has executed and delivered this Promissory
Note as of the date specified above.
/s/ Xxxx X. Xxx
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Xxxx X. Xxx
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