THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER
DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
Euro 5,000,000 January 30, 2003
1. Principal and Interest. ScanSoft, Inc. (the "COMPANY"), a Delaware
corporation, for value received, hereby promises to pay to the order of
KONINKLIJKE PHILIPS ELECTRONICS N.V., a limited liability company organized
under the laws of The Netherlands ("PAYEE") in lawful euro money at the
principal office of the Company, the principal amount of Euro Five Million (euro
5,000,000), together with simple interest at the rate of five per cent per
annum. Accrued interest shall be payable in cash at the time the Company pays
the principal amount of this Note. This Note is due and payable on demand, which
may be made at any time after December 31, 2003 (the "MATURITY DATE").
2. No Payment if Unlawful. Notwithstanding anything herein to the
contrary, no payment hereunder shall be required at any time that such payment
would be unlawful under any applicable law.
3. Attorneys' Fees. If the indebtedness represented by this Note or any
part thereof is collected in bankruptcy, receivership or other judicial
proceedings or if this Note is placed in the hands of attorneys for collection
after default, Company agrees to pay, in addition to the principal and interest
payable hereunder, reasonable attorneys' fees and costs incurred by Payee.
4. Prepayment. This Note may be pre-paid by the Company at any time.
5. Acceleration. This Note shall become immediately due and payable if (i)
the Company commences any proceeding in bankruptcy or for dissolution,
liquidation, winding-up, or other relief under state or federal bankruptcy laws;
(ii) such proceedings are commenced against the Company, or a receiver or
trustee is appointed for the Company or a substantial part of its property, and
such proceeding or appointment is not dismissed or discharged within 60 days
after its commencement; (iii) the Company is unable to, or admits in writing its
inability to, pay its debt when they become due; (iv) the Company makes an
assignment for the benefit of creditors, or petitions or applies to any tribunal
for the appointment of a custodian, receiver or trustee for it or a substantial
portion of its
assets or has a receiver, custodian or trustee appointed for all or a
substantial portion of its assets; or (v) the Company takes any action
effectuating, approving or consenting to any of the foregoing.
6. Waivers. Company hereby waives presentment, demand for performance,
notice of non-performance, protest, notice of protest and notice of dishonor. No
delay on the part of Payee in exercising any right hereunder shall operate as a
waiver of such right or any other right. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
No course of dealing between the Company and Payee shall operate as a waiver of
any rights by Payee. This Note is being delivered in and shall be construed in
accordance with the laws of the State of New York
, without regard to the
conflicts of laws provisions thereof.
7. Representations and Warranties.
(a) By the Payee. Payee represents and warrants to the Company as
(i) Investment Intent. Payee, by acceptance of this Note,
represents and warrants to the Company that this Note is for Payee's own account
for investment and not with view to resale or distribution of this Note. Payee
is an "accredited investor" within the meaning of Rule 501 of Regulation D under
the Securities Act of 1933, as amended (the "ACT"). Payee understands that the
Note has not been registered under the Act by reason of a specific exemption
from the registration provisions of the Act that depends upon, among other
things, the bona fide nature of the investment intent as expressed herein.
(ii) Rule 144. Payee acknowledges that the Note must be held
indefinitely unless subsequently registered under the Act, or unless an
exemption from such registration is available. Payee is aware of the provisions
of Rule 144 promulgated under the Act that permit limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions. Payee acknowledges that if such conditions are not obtained, Payee
may be required to hold the Note indefinitely.
(b) By the Company. The Company represents and warrants to Payee as
(i) Authorization. The Company has duly authorized the sale
and issuance of the Note. All corporate action on the part of the Company, its
directors and stockholders necessary for the issuance of the Note and the
performance of the Company's obligations under the Note have been duly taken.
The Note is a valid, binding and enforceable obligation of the Company, subject
to applicable bankruptcy, insolvency, organization or similar laws relating to
or affecting the enforcement of creditor's rights and to the availability of the
remedy of specific performance. The execution and delivery of the Note and the
performance by the Company of its terms do not violate, conflict with or result
in a material breach of (i) the Company's Certificate of Incorporation, as
amended through the Closing; (ii) the Company's bylaws; or (iii) any judgment,
decree, order, statute, injunction, rule or regulation of any governmental
(ii) Valid Issuance. Based in part upon the representations of
Payee above, this Note has been issued in compliance with all federal and state
securities laws (including Section 4(2) of the Act). Without limiting the
generality of the foregoing, neither the Company nor any agent on its behalf has
solicited or will solicit any offers to sell, or has offered to sell or will
offer to sell, any equity, debt or other securities of the Company to any person
or persons so as to bring the issuance or sale by the Company of this Note
within the registration provisions of the Act.
8. Notices. Any notice, other communication or payment required or
permitted hereunder shall be in writing and shall be deemed to have been given
upon delivery if personally delivered or upon deposit if deposited in the United
States mail for mailing by certified mail, postage prepaid, and addressed as
If to Payee:
KONINKLIJKE PHILIPS ELECTRONICS N.V.
Breitner Center Amstelplein 2
P.O. Box 77900
1070 MX Amsterdam
Attention: General Secretary
Telephone: +31 20 597 7232
Facsimile: +31 20 597 7230
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
, NY 10004
Telephone: (212) 558-3653
Telecopy: (212) 558-3588
Attn: Neil Anderson
If to Company:
9 Centennial Drive
Peabody, MA 01960
Attention: Chief Financial Officer
Telephone: (978) 977-2000
Facsimile: (978) 977-2436
With a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
7927 Jones Branch Drive, Suite 400
McLean, VA 22102
Attention: Robert D. Sanchez, Esq.
Telephone: (703) 734-3100
Facsimile: (703) 734-3199
Each of the above addressees may change its address for purposes of this
paragraph by giving to the other addressee notice of such new address in
conformance with this paragraph.
9. Amendment. This Note may be amended, or any provision hereof may be
waived, in a writing signed by the Company and Payee.
10. Severability. In the event that one or more of the provisions of this
Note shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Note, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
11. No Impairment. The Company shall not intentionally take any action
which would impair the rights and privileges of this Note as set forth herein or
the rights and privileges of Payee as set forth herein or as afforded under
12. Replacement Note. In the event that Payee notifies the Company that
this Note has been lost, stolen or destroyed, a replacement Note identical in
all respects to the original Note shall be issued by the Company to Payee.
13. Assignment. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or otherwise, in
whole or in part, by either party without the prior written consent of the other
14. Successors and Assigns. Subject to the restrictions on assignment
described in Section 13 above, the rights and obligations of the Company and
Payee of this Note shall be binding upon and benefit the successors, assigns,
heirs, administrators and transferees of the parties.
[SIGNATURE PAGE TO FOLLOW]
This Note has been executed as of the date first set forth above.
SCANSOFT, INC. KONINKLIJKE PHILIPS ELECTRONICS N.V.
By: /s/ Michael K. Tivnan By: /s/ E. Coutinho
Name: Michael K. Tivnan Name: E. Coutinho
Title: President & COO Title: Authorized Signatory