Document:

Exhibit 10.4

 

THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY APPLICABLE STATE SECURITITES LAWS (COLLECTIVELY, THE “ACTS”) AND
MAY NOT BE OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR QUALIFICATION UNDER THE ACTS OR AN OPINION OF COUNSEL ACCEPTABLE
TO ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

 

SUBORDINATED
PROMISSORY NOTE NO. 10

 

	
  $30,000,000.00

  	
   

  	
  December 1, 2001

  

 

VIEWSONIC CORPORATION, a Delaware
corporation (“Issuer”), hereby absolutely and unconditionally promises to pay
to KEYPOINT INVESTMENTS, L.P., a
California limited partnership, or order (“Holder”), the sum of Thirty Million
Dollars ($30,000,000) under the following terms and conditions:

 

1.             Payments of Interest.  Issuer shall pay interest on the unpaid
principal balance of this Note (i) from April 12, 1999 until November 30, 2001
computed for the actual number of days elapsed on the basis of a 365/366 day
year, at a rate per annum equal to six and twenty-five hundredths percent
(6.25%) and (ii) from December 1, 2001 until fully paid computed for the actual
number of days elapsed on the basis of a 365/366 day year, at a rate per annum
equal to three and ninety-seven hundredths percent (3.97%). Accrued interest from
the date hereof shall be due and payable quarterly on the last day of each
calendar quarter until the Note is paid in full, or on such earlier date that
this Note is paid in full.

 

2.             Payments of Principal.  Issuer shall pay the principal amount of this Note, and all
accrued and unpaid interest on, this Note on April 12, 2008 (the “Due Date”).
In addition, Issuer may prepay all or any portion of the principal balance of
this Note, and accrued and unpaid interest thereon, at any time or from time to
time, without penalty. Any such repayment shall be first applied to the payment
of any accrued and unpaid interest and then to the unpaid balance of the
principal amount.

 

3.             Acceleration. 
The whole sum of the outstanding balance of the Note shall become immediately
due and payable at the option of Holder, without notice upon the occurrence of
any of the following events:

 

(a)           Issuer fails to
make any payment required under the terms of this Note within ten days after
Issuer receives notice of such failure;

 

(b)           Issuer fails to
perform or observe any term, covenant, condition, agreement or prohibition
contained in this Note, other than those described in subsection 3(a)
hereof, within 30 days after written notice of such failure; provided, however,
that Issuer shall not be in default of any such obligation if:  (i) such default is curable but cannot
reasonably be cured within said 30-day period; and (ii) within said 30-day
period Issuer promptly and in good

 

 

faith undertakes to cure such default and thereafter
diligently and continuously prosecutes such cure to completion; or

 

(c)           (i) Issuer makes
any general arrangement or assignment for the benefit of creditors; or (ii)
Issuer becomes a “debtor” as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Issuer, the
same is dismissed within 90 days); or (iii) a trustee or receiver is appointed
to take possession of Issuer’s right, title and interest in substantially all
of Issuer assets, where possession is not restored to Issuer within
90 days, regardless of whether or not such appointment is applied for or
consented to by Issuer; or (iv) substantially all of Issuer’s assets are
subject to attachment, sequestration, execution or other judicial seizure;
provided, however, that if any provision of this subsection 3(c) is contrary to
any applicable law, then such provision shall be of no force or effect.

 

The failure of
Holder to accelerate this Note shall not constitute a waiver of any of Holder’s
rights under this Note as long as Issuer’s default under this Note continues.

 

4.             Manner of Payment.  Payments of principal and interest shall be paid by check payable
in lawful money of the United States of America and shall be made at such place
as Holder shall have designated to Issuer. Any payments due hereunder which are
due on a day which is not a business day shall be payable on the first
succeeding business day and such extension of time shall be included in the
computation of interest due hereunder.

 

5.             Subordination. 
This Note is subordinated to that certain Second Amended and Restated
Business Loan Agreement (Receivables and Inventory), as amended from time to
time, dated December 15, 1998, by and between the Bank of America National
Trust and Savings Association (the “Bank”) and Issuer, pursuant to a
Subordination Agreement entered into by and among the Bank, Holder and Issuer.
A copy of the Subordination Agreement is on file at the principal office of
Issuer.

 

6.             Waiver. 
In consideration for the reduction of the interest rate described in
Section 1, Issuer hereby waives any offsets or defenses against the payment of
this Note or claims against Holder in connection with this Note existing as of
the date hereof.

 

7.             Notices. 
Notices of this Note shall be in writing and delivered in person or sent
by certified mail, return receipt requested, by overnight express service, or
by telecopier addressed to the Issuer at 381 Brea Canyon Road, Walnut,
California 91789 and to Holder at 381 Brea Canyon Road, Walnut, California
91789. Addresses for the giving of notices may be changed in the same manner.
Notice given by mailing shall be deemed effective five days after posting.
Notice given by overnight express services shall be deemed effective on the
first business day after delivery to the overnight express service during
normal business hours. Notice given by telecopier shall be deemed effective on
the day of transmittal if transmitted during the recipient’s normal business
hours; otherwise, it shall be deemed effective on the first business day after
transmittal.

 

8.             Governing Law. 
In all respects, including all matters of construction, validity and
performance, this Note and the rights and obligations arising hereunder shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware applicable to

 

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contracts made and performed in such state, without
regard to principles thereof regarding conflicts of laws that would require the
application of the laws of a jurisdiction other than such state.

 

9.             General Conditions.

 

(a)           The terms of this
Note apply to, inure to the benefit of and bind all parties hereto, their
respective heirs, legatees, devisees, administrators, executors, successors and
assigns.

 

(b)           Time is of the
essence of each obligation of Issuer hereunder.

 

(c)           Notwithstanding any
provision hereof, the total liability for payments in the nature of interest
shall not exceed the applicable limits now imposed by any applicable state or
federal interest rate laws. If any payments in the nature of interest and other
charges made hereunder are held to be in excess of the applicable limits
imposed by any applicable state or federal interest rate laws, it is agreed
that any such amount held to be in excess shall be considered payments of
principal hereunder and the indebtedness evidenced hereby shall be reduced by
such amount in the inverse order of maturity so that the total liability for
payments in the nature of interest and other charges shall not exceed the
applicable limits imposed by any applicable state or federal interest rate laws
in compliance with the desires of Holder and Issuer.

 

(d)           The captions or
headings at the beginning of each section or subsection hereof are for the
convenience of the parties only and are not to be construed as defining,
limiting or expanding, in any way, the scope or intent of the provisions
hereof.

 

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IN WITNESS WHEREOF,
Issuer has caused this Note to be executed and delivered by its duly authorized
representative on the date first above written.

 

	
   

  	
  VIEWSONIC
  CORPORATION,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James A.
  Morlan

  
	
   

  	
   

  	
  James Morlan,
  Chief Financial OfficerExhibit
10.5

 

[ViewSonic Letterhead]

 

October 10, 2003

 

Mr. Joseph Marc McConnaughey

14274 Walnut Creek Drive

Chino Hills, CA  91709

 

Dear Marc,

 

This letter sets forth the severance package
and terms of separation being offered to you in connection with your departure
from ViewSonic.  Your last day of
employment (“Termination Date”) will be Thursday, October 9, 2003.  As of the Termination Date, the company will
pay you all accrued salary and all accrued and unused PTO, subject to state and
federal deductions.  In exchange for
your signature and acceptance of the attached Resignation and Release Agreement
(which incorporates the terms of this letter), the Company will provide you
with certain benefits as defined in this letter.

 

Separation Pay.  The Company will continue your bi-weekly
salary of $9038.46 for a period of nine (9) months (“Separation Period”)
following your Termination Date, payable in accordance with the Company’s
normal payroll practices (“Separation Pay”). 
All payments shall be less appropriate state and federal
deductions.  You will be eligible for
incentive compensation earned through the third quarter of 2003.

 

Benefits.  During the Separation Period,
the Company will continue to pay its share of your health, dental, and vision
benefits for you and your elected dependents under COBRA. Your portion of the
premiums will continue to be deducted from each paycheck.  The Company will also continue your
eligibility in the Employee Assistance Program for the duration of the
Separation Period. However, your participation in other employee benefit plans,
such as basic life insurance, disability insurance, accrual of PTO and the
401(k) plan, will cease as of the Termination Date.  Vesting in the 401(k) will also end on your Termination Date, as
will vesting in the stock option plan.

 

Stock Options.  With regard to your stock options, to date
you have been granted 1,908,200 non-qualified stock options. Your stock options
will cease vesting as of your Termination Date.  You shall have through December 31, 2004 to exercise any or all
of your vested options (“Exercise Period”). Each Non-Qualified Option Agreement
between you and the Company now in effect is hereby amended to give effect to
the foregoing post-termination exercise provisions.

 

Cooperation.   For a one (1) year
period following the Termination Date, you agree to cooperate with the
Company’s reasonable requests to provide assistance in any area of your
experience or expertise including, but not limited to, the prosecution of any
of the Company’s patent applications with which you were connected or involved
and the defense and/or prosecution of litigation involving the Company.

 

Nondisparagement.  You agree not to
disparage the Company, and its officers, directors, employees, shareholders and
agents, in any manner likely to be harmful to it or them, or to its or their
business, business reputation or personal reputation; provided that you shall
respond accurately and fully to any question, inquiry or request for
information when required by legal process.

 

Confidentiality.  I also wish
to remind you that during your employment, you signed a written Employee
Confidentiality and Invention Assignment Agreement (attached hereto as Exhibit
A) concerning confidential information and trade secrets.  Notwithstanding your termination, and as a
further covenant of this agreement, you are required to honor the terms of that
agreement and not use or disclose any Confidential Information or confidential
materials or trade secrets to which you gained access during your employment
with the Company to any prospective employers or third parties.  In addition, the provisions of this
Agreement will be held in strictest confidence by you and the Company and will
not be publicized or disclosed in any manner whatsoever; provided, however,
that:  (a) you may disclose this
Agreement to your immediate family; (b) the parties may disclose this Agreement
in confidence to their respective attorneys, accountants, auditors, tax
preparers, and financial advisors; (c) the Company may disclose this Agreement
as necessary to fulfill standard or legally required corporate reporting or
disclosure requirements; and (d) the parties may disclose this Agreement
insofar as such disclosure may be necessary to enforce its terms or as otherwise
required by law.  In particular, and
without limitation, you

 

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agree not
to disclose the terms of this Agreement to any current or former Company
employee.

 

Company Property.  You will be required to return all Company
property, including all documents or media containing Confidential Information.
However, you will be allowed to keep your company provided mobile phone and
also the Tablet PC, laptop and PDA once they have been processed by the IS
department to remove Confidential Information and reformatted.  The Company will also be giving you the flat
panel display currently in use in your office. 
We will provide you with a voice mailbox with a forwarding number until
December 31, 2003.

 

Employment Assistance. In order to assist you in your transition to
other employment, we will arrange for an outplacement package with Chessman
Career Movers.  They will be in touch
with you shortly.

 

We wish you every success in your search for
employment and future endeavors.

 

Sincerely,

 

	
  /s/ James Chu

  	
   

  
	
   

  
	
  James Chu

  
	
  Chairman & CEO

  

 

[The
remainder of this page intentionally left blank.]

 

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Resignation and Release Agreement

 

1.                                      Release.
It is understood that the Separation Pay, continuation of certain benefits,
services and/or provision of property (collectively “Severance Benefits”) set
forth in the preceding letter from James Chu, the terms of which are
incorporated herein, are not required by any Company policy.  As an inducement to entering into this
agreement and as a condition of receiving the Severance Benefits, you generally
and completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent or
subsidiary entities, insurers, affiliates and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are
in any way related to events, acts, conduct, or omissions prior to or on the
date you sign this Agreement.  This
general release includes, but is not limited to: (1) all claims arising out of
or in any way related to your employment with the Company or the termination of
that employment; (2) all claims related to your compensation or benefits from
the Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options or any
other ownership interests in the Company; (3) all claims for breach of
contract, wrongful termination or breach of the implied covenant of good faith
and fair dealing; (4) all tort claims, including claims for fraud, defamation,
emotional distress and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (the “ADEA”), or the California Fair
Employment and Housing Act (as amended).

 

2.                                      ADEA
Waiver.  You hereby acknowledge that
you are knowingly and voluntarily waiving and releasing any rights you may have
under the ADEA, and that the consideration given for the foregoing waiver is in
addition to anything of value to which you were already entitled.  You have been advised by this writing, as
required by the ADEA that: (a) your waiver and release do not apply to any
claims that may arise after your signing of this Agreement; (b) you should
consult with an attorney prior to executing this release; (c) you have
twenty-one (21) days within which to consider this release (although you may
choose to voluntarily execute this release earlier); (d) you have seven (7)
days following the execution of this release to revoke the Agreement; and (e)
this Agreement will not be effective until the eighth day after this Agreement
has been signed both by you and by the Company (“Effective Date”).

 

3.                                      Section
1542 Waiver.  In granting the
release herein, which includes claims which may be unknown to me at present,
you acknowledge that you have read and understand Section 1542 of the
California Civil Code:  “A general
release does not extend to claims which the creditor does not know or suspect
to exist in his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the debtor.”  You hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to your release of any unknown or unsuspected
claims herein.

 

4.                                      Miscellaneous.  This foregoing letter from James Chu and the
terms of this resignation and release agreement, including Exhibit A,
constitutes the complete, final and exclusive embodiment of the entire
agreement between you and the Company with regard to this subject matter.  It is entered into without reliance on any
promise or representation, written or oral, other than those expressly
contained herein, and it supersedes any other such promises, warranties or
representations.  This Agreement may not
be modified or amended except in a writing signed by both you and a duly
authorized officer of the Company.  This
Agreement will bind the heirs, personal representatives, successors and assigns
of both you and the Company, and inure to the benefit of both you and the
Company, their heirs, successors and assigns. 
If any provision of this Agreement is determined to be invalid or unenforceable,
in whole or in part, this determination will not affect any other provision of
this Agreement and the provision in question will be modified by the court so
as to be rendered enforceable.  This
Agreement will be deemed to have been entered into and will be construed and
enforced in accordance with the laws of the State of California as applied to
contracts made and to be performed entirely within California.

 

	
  AGREED AND ACCEPTED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ J. Marc McConnaughey

  	
   

  	
  10-10-03

  	
   

  	
  /s/ Joanne Thielen

  
	
  J. Marc McConnaughey

  	
  Date

  	
   

  	
  Witness:

  
					

 

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