ACUSON CORPORATION EXHIBIT 10.1
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NON-NEGOTIABLE SECURED PROMISORY NOTE
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$400,000 Mountain View, California
April 24, 1998
For value received, Xxxxxx X. Xxxxxxx ("Xxxxxxx") and Xxxxx X. Xxxxxxx,
husband and wife (collectively "Borrower"), promise to pay to the order of
Acuson Corporation, a Delaware corporation ("Lender"), in lawful money of the
United States, the principal amount of FOUR HUNDRED THOUSAND DOLLARS ($400,000).
This Note shall not bear interest, except as otherwise provided herein. All
sums payable hereunder shall be payable to Lender at its office, 0000 Xxxxxxxxxx
Xxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000-0000, or at such other place or places as
may from time to time be designated by Lender.
All amounts payable under this Note are payable in lawful money of the
United States, without notice, demand, offset or deduction. Checks will
constitute payment only when collected. All payments made hereunder (including
any prepayments) shall be credited first to any accrued and unpaid interest and
the remainder to principal. Borrower shall have the right to pay, without
penalty, all or any portion of principal and any interest owing under this Note
at any time.
This Note is secured by a deed of trust ("Deed of Trust") of even date
herewith executed by Borrower, as trustor, and Lender, as Beneficiary, on the
real property described therein (the "Subject Property")
Subject to the terms hereof, Lender shall automatically and without any
action by any person or entity forgive on a daily basis the principal amount
outstanding under this Note at a rate of $156.43 per day commencing on September
2, 1997 and ending on September 2, 2004. Lender will provide Borrower upon
request a statement of the principal amount then outstanding under this Note.
Upon termination of Cornell's employment by Lender or by any of Lender's
subsidiaries (collectively, "Employer"), whether by Cornell voluntarily or by
Employer with "Cause" (as defined below), but not including termination by
reason of Cornell's death, then Lender shall cease any further daily forgiveness
under this Note and the entire principal amount hereof then outstanding (i.e.,
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amounts not forgiven or prepaid) shall be due and payable at the earliest of (a)
the second anniversary of the date of the termination of employment, (b) the
date of "Sale" (as defined below) of all or any part of the Subject Property,
and (c) the date the Subject Property is no longer used as Borrower's "Primary
Residence" (as defined below). If the Subject Property was at one time
Borrower's Primary Residence, but then is no longer used as Borrower's Primary
Residence pending sale or other transfer thereof, then subparagraph (c) above
shall not be applicable, but the other subparagraphs above shall be unaffected.
Upon (w) Cornell's death, (x) termination of Cornell's employment by Employer
without Cause, (y) reduction of Cornell's target compensation (with a base
salary of not less than $176,000 per year) from Employer to an amount less than
$200,000 per year, or (z) a "Change in Control" (as defined below) of Lender,
the entire principal amount of this Note then outstanding shall automatically
and without any action by any person or entity be immediately forgiven.
Lender agrees to indemnify Borrower on an after-tax basis for the federal
and California
income tax consequences of this Note and the forgiveness of the principal amount
hereof. Borrower agrees (i) to take all such actions as Lender may reasonably
request to minimize the liability of Lender pursuant to this indemnity and (ii)
to repay to Lender any tax savings to Borrower resulting from any repayment of
this Note.
As used herein, the following terms shall have the definitions indicated:
"Cause" shall mean (i) gross malfeasance by Cornell, (ii) Cornell's conviction
of a felony involving moral turpitude or (iii) Cornell's refusal to perform
reasonable duties (consistent with his position as a Vice President of Lender)
for Employer for a period of 30 days even though he is mentally and physically
able to perform such duties; "Change in Control" shall mean the occurrence of
any of the following: (i) any "person" (including a group of persons), as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") (other than Employer or any employee benefit plan of
Employer, including any Trustee of such plan acting as Trustee, or any member of
the Board of Directors of Lender on the date hereof) is or becomes the
"beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Lender representing 30% or more
of the combined voting power of Lender's then outstanding securities, or (ii)
any merger, reorganization or other transaction pursuant to which the holders,
as a group, of all of the shares of Lender outstanding prior to the transaction
hold, as a group, less than 70% of the shares of Lender after the transaction,
or (iii) any other event which the Board of Directors of Lender determines, in
its discretion, would materially alter the ownership and management of Lender;
"Primary Residence" shall mean use of the Subject Property by either Cornell or
Xxxxx Xxxxxxx as an established, fixed, permanent, or ordinary dwelling place;
provided that if Cornell ceases to use the Subject Property as his established,
fixed, permanent, or ordinary dwelling place, the Subject Property shall be
deemed a Primary Residence for purposes of this Note only for so long as Cornell
remains personally liable for all indebtedness secured by the Subject Property
and Cornell provides Lender adequate security for this Note; and "Sale" shall
mean the sale, hypothecation, encumbrance or other transfer, whether voluntary,
involuntary, or by operation of law, of all or any part of the Subject Property.
Upon the Subject Property no longer being used as Borrower's Primary
Residence, or upon the Sale of all or any part of the Subject Property or any
interest therein, Lender shall cease any further daily forgiveness under this
Note and the entire principal amount then owing under this Note shall be
immediately due and payable (the "Sale Acceleration"); Provided, however, that
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if (a) Cornell is then employed by Employer, (b) Borrower immediately upon such
Sale or cessation of use either owns or purchases a new primary residence within
40 miles of Lender's principal executive offices in Mountain View, California,
and (c) in connection with such purchase Borrower executes and properly records
a deed of trust, in substantially the form of the Deed of Trust, securing this
Note (which shall thereafter be applied by treating such new primary residence
as the Subject Property for all purposes of this Note), then (x) any Sale
Acceleration shall apply only to the extent that one-half of the cost of such
new primary residence is less than $400,000, and (y) the daily forgiveness of
this Note shall be adjusted to an amount determined by dividing the principal
amount outstanding hereunder immediately prior to the Sale Acceleration minus
the amount of the Sale Acceleration by the number of days from the date of the
Sale Acceleration to and including September 2, 2004, and (z) the principal
amount of this Note shall be reduced to an amount equal to the principal amount
outstanding hereunder immediately prior to the Sale Acceleration minus the
amount of the Sale Acceleration.
If Borrower defaults in the payment of principal or interest hereunder or
otherwise fails in any material respect to comply with any of the provisions of
this Note or defaults in any material respect in the performance of any
covenant, condition, provision, or term in the Deed of Trust or any
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other instrument securing this Note and such default or failure continues
uncured for a period of 30 days after written notice thereof, the entire
principal of this Note then outstanding, and any accrued but unpaid interest, at
the option of Lender, shall be and become immediately due and payable without
demand or notice. In the event of such default or failure, the principal balance
of this Note then outstanding shall bear interest at the lesser of eighteen
percent (18%) per annum or the maximum rate permitted by law from the date of
such default or failure until principal and interest hereunder are paid in full.
A default under this Note shall constitute a default under the Deed of Trust.
Borrower hereby certifies to Lender that Borrower reasonably expects to be
entitled to, and will, itemize deductions for federal and California income tax
purposes for each year that this Note is outstanding.
In the event any action or proceeding is commenced to enforce any rights
under this Note, the prevailing party shall be entitled to recover from the
other party its costs and reasonable attorneys' fees.
No exercise of any right or remedy by Lender hereunder shall constitute a
waiver of any other right or remedy contained herein or in the Deed of Trust or
provided by law. The acceptance of any sum less than the amount then due shall
not be construed as a waiver of the default in the payment of the full amount
then due.
If any provision of this Note is held invalid by a court of competent
jurisdiction, the remainder of this Note shall not be affected thereby and shall
remain in full force and effect.
This Note shall be governed by the laws of the State of California, both in
interpretation and performance. This Note is not negotiable and may not be
assigned by any party hereto, except that this Note may be assigned by Lender to
a wholly owned subsidiary of Lender or in connection with a merger,
consolidation, sale of all or substantially all of Lender's assets or a
reorganization of Lender.
If Borrower consists of more than one person or entity, their obligations
under this Note shall be joint and several.
Borrower for themselves, their heirs, legal representatives, successors and
assigns, jointly and severally waive presentment, demand, protest, and notice of
dishonor and waive any right to be released by reason of any extension of time
or change in terms of payment or any change, alteration, or release of any
security given for the payment hereof.
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THIS NOTE IS SUBJECT TO SECTION 2966 OF THE CIVIL CODE, WHICH PROVIDES THAT
THE HOLDER OF THIS NOTE SHALL GIVE WRITTEN NOTICE TO THE PAYOR, OR HIS SUCCESSOR
IN INTEREST, OF PRESCRIBED INFORMATION AT LEAST NINETY (90) BUT NOT MORE THAN
ONE HUNDRED FIFTY (150) DAYS BEFORE ANY BALLOON PAYMENT IS DUE.
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
ACUSON CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
Chief Operating Officer
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