Document:

syna-ex1030_525.htm

 

Exhibit 10.30

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Agreement”) is made by and between Kathleen Bayless (“Employee”) and Synaptics Incorporated (the “Company”) (jointly referred to as the “Parties”):

WHEREAS, Employee was employed by the Company pursuant to an employment arrangement entered as of March 2, 2009 (the “Service Arrangement”), and Employee’s employment terminated on June 5, 2015 (the “Termination Date”);

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Employee may have against the Company, including, but not limited to, any and all claims arising or in any way related to Employee’s employment with or separation from the Company; and

WHEREAS, this Agreement will become effective on the eighth day after it is signed by Employee (such date being the “Effective Date”), provided that Employee has not revoked this Agreement by written notice to the General Counsel of the Company prior to the Effective Date. 

NOW THEREFORE, in consideration of the promises made herein, the Parties hereby agree as follows:

1.Termination of Service Arrangement; Transition Obligation.  Employee’s employment with the Company will cease as of the Termination Date.  Employee agrees to resign as a director or officer of any Company subsidiaries or affiliates upon the request of the Company and effective no later than the Termination Date.  Employee will affirm the terms of this Agreement on December 4, 2014, and then execute this Agreement on the Termination Date.  During the period from December 4, 2014, to the Termination Date, Employee shall undertake such duties as are requested by the Chief Executive Officer of the Company. 

2.Consideration.  As consideration for the release of claims and all other covenants made herein, the Parties agree that the Employee shall receive aggregate consideration of (i) one hundred seventy-seven thousand five hundred dollars ($177,500), which is equal to six (6) months of Employee’s base salary; (ii) six months of COBRA continuation coverage under the Company’s health insurance benefit plan at a benefit level no less than what Employee and Employee’s dependents receive as of December 4, 2014, with such premiums either paid directly by the Company or, if paid by Employee, promptly reimbursed to Employee; and (iii) a time-based pro rata amount of Employee’s fiscal year 2015 target cash bonus of two hundred thirty thousand seven hundred fifty dollars ($230,750), which is sixty-five percent (65%) of Employee’s base salary, provided, however, that such payment shall be no less than one hundred fifteen thousand three hundred seven-five dollars ($115,375). Company shall pay all such consideration within five (5) business days of the Effective Date of this release, provided that Employee has not revoked this Agreement before that time.  All such consideration is subject to all normally required tax and other withholdings. 

3.Benefits.  Employee’s health insurance benefits shall cease on the Termination Date, subject to Employee’s right to continue Employee’s health insurance under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.  Employee’s participation in, and accrual of, all other benefits and incidents of employment, including but not limited to incentives, vacation time, and paid time off, shall cease on the Termination Date.

4.Outplacement Services. The Company will provide six (6) months of outplacement services through a third party vendor selected by the Company.

 

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5.Equity Incentives.  Pursuant to the terms of the Synaptics Incorporated Amended and Restated 2001 Incentive Compensation Plan and the Synaptics Incorporated Amended and Restated 2010 Incentive Compensation Plan (the “Plans”) and the equity incentive agreements effective by and between Employee and the Company, under which the Company granted to Employee deferred stock units (“DSUs”), market stock units (“MSUs”), and options to purchase common units of the Company (“Options,” and collectively, the “Equity Incentives”), as of the Termination Date:  (i) Employee’s DSUs and Options cease vesting; (ii) Employee has and shall have no right to exercise any unvested portion of the Options or receive any unvested portion of the DSUs; (iii) Employee does not have and shall not have any rights under the unvested portion of the Options or DSUs, and does not have other any rights or entitlements to purchase units or shares of the Company or any subsidiary or affiliate of the Company; and (iv) Employee’s MSUs cease vesting, are voided and Employee shall have no right to any compensation under the MSUs.  Employee has until the date that is one hundred eighty (180) days after the Termination Date to exercise the vested portion of Employee’s Options or the Employee will lose all rights to the vested portion of the Options.  The exercise price for the Options cannot be offset against any amounts payable to the Employee by the Company or any subsidiary or affiliate thereof.  

6.Payment of Salary, Accrued Vacation and Expense Reimbursements.  Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, annual incentives, accrued vacation and paid time off, commissions, expense reimbursements, severance and separation benefits, and any and all other benefits due to Employee as of the Termination Date. Employee represents and warrants that Employee never suffered an on-the-job or occupational injury or incurred any wage, overtime or leave claims while working at the Company.

7.Confidential Information.  

(a)Employee acknowledges that Employee has signed a Proprietary Information and Invention Agreement dated as of March 2, 2009 (the “Confidential Information Agreement”).  Employee reaffirms Employee’s obligation to comply with the terms and conditions of the Confidential Information Agreement.  Employee will hold in strictest confidence and will not disclose, use, lecture upon, or publish any of the Company’s Proprietary Information.  Employee hereby assigns to the Company any rights that Employee may have or acquire in Proprietary Information and recognizes that all Proprietary Information shall be the sole property of the Company and its assigns.  For purposes of this Agreement, the term “Proprietary Information” shall mean any and all confidential and/or proprietary knowledge, data or information of the Company.  By way of illustration but not limitation, “Proprietary Information” includes (i) trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs and techniques; (ii) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (iii) information regarding the skills and compensation of other employees of the Company

(b)Employee shall return all of the Company’s property and Proprietary Information in Employee’s possession to the Company as required by the terms of the Confidential Information Agreement.  By signing this Agreement, Employee represents and declares under penalty of perjury under the laws of the State of California that Employee has returned all Company property and Proprietary Information in Employee’s possession to the Company.

(c) Employee understands, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes.  Employee will hold Third Party Information in the strictest confidence and will not disclose to anyone other than Company personnel who need to know such information in connection with their work for the Company.  

 

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8.Release of Claims.  Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company, any subsidiaries or affiliates thereof and all officers, managers, members, supervisors, members of their board of directors, agents and employees thereof.  Employee, on Employee’s own behalf, and on behalf of Employee’s respective heirs, family members, executors, agents, and assigns, hereby fully and forever releases the Company, its affiliates and subsidiaries, and all officers, members of their board of directors, employees, agents, investors, shareholders, members, administrators, affiliates, divisions, predecessor and successor corporations, and assigns of the Company or any subsidiary or affiliate thereof (“the Releasees”), from, and agrees not to sue concerning, any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess arising from any omissions, acts or facts that have occurred up until and including the Termination Date including, without limitation:

(a)any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship; 

(b)any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of, equity of the Company or any subsidiary or affiliate thereof, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law; 

(c)any and all claims under the law of any jurisdiction including, but not limited to, wrongful discharge of employment, constructive discharge from employment, termination in violation of public policy, discrimination, harassment, retaliation, breach of contract, both express and implied, breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment, and conversion;

(d)any and all claims for violation of any national, federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the Older Workers Benefit Protection Act; the Family and Medical Leave Act; the California Family Rights Act; the California Fair Employment and Housing Act, and the California Labor Code, including, but not limited to Labor Code sections 1400-1408;

(e)any and all claims for violation of the federal, or any state, constitution; 

(f)any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

(g)any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement; and

(h)any and all claims for attorneys’ fees and costs.

The Company and Employee agree that the release set forth in this Section shall be and remain in effect in all respects as a complete general release as to the matters released.  This release does not extend to any obligations incurred under this Agreement nor to any claims that, by statute, may not be waived.

 

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9.Acknowledgement of Waiver of Claims Under ADEA.  Employee acknowledges that Employee is waiving and releasing any rights Employee may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary.  Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under ADEA after the Effective Date of this Agreement.  Employee acknowledges that the consideration given for this waiver and release Agreement is in addition to anything of value to which Employee was already entitled.  Employee further acknowledges that Employee has been advised by this writing that: 

(a)Employee should consult with an attorney prior to executing this Agreement;

(b)Employee has up to twenty one (21) days within which to consider this Agreement;

(c)Employee has seven (7) days following Employee’s execution of this Agreement to revoke the Agreement; 

(d)this Agreement shall not be effective until the revocation period has expired; and

(e)nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law.

10.Civil Code Section 1542.  Employee represents that Employee is not aware of any claim by Employee other than the claims that are released by this Agreement.  Employee acknowledges that Employee has had the opportunity to be advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN EMPLOYEE’S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY EMPLOYEE MUST HAVE MATERIALLY AFFECTED EMPLOYEE’S SETTLEMENT WITH THE DEBTOR.

Employee, being aware of said code section, agrees to expressly waive any rights Employee may have thereunder, as well as under any other statute or common law principles of similar effect.

11.No Pending or Future Lawsuits.  Employee represents that Employee has no lawsuits, claims, or actions pending in Employee’s name, or on behalf of any other person or entity, against the Company or any other Releasee.  Employee also represents that Employee does not intend to bring any claims on Employee’s own behalf or on behalf of any other person or entity against the Company or any other Releasee.

12.Application for Employment.  While Company may offer to re-hire Employee, Employee understands and agrees that, as a condition of this Agreement, Employee shall not be entitled to any employment with the Company, and Employee hereby waives any right, or alleged right, of employment or re-employment with the Company.  Employee further agrees that Employee will not apply for employment with the Company.

13.Confidentiality.  Employee will not have communication with any Company employees, partners, customers, unitholders, or any other third party regarding Employee’s separation from the Company without prior consent of Company’s General Counsel or Director of Human Resources.

14.No Cooperation.  Employee agrees Employee will not act in any manner that might damage the business of the Company.  Employee agrees that Employee will not encourage, counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or 

 

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complaints by any third party against any of the Releasees, unless under a subpoena or other court order to do so.  Employee shall inform the Company in writing within three (3) days of receiving any such subpoena or other court order.

15.Non-Disparagement.  Employee agrees to refrain from any defamation, libel, or slander of the Releasees, and any tortious interference with the contracts, relationships and prospective economic advantage of the Releasees.  Employee agrees that Employee shall direct all inquiries by potential future employers to the Company’s General Counsel.

16.Non-Solicitation.  Employee agrees that for a period of twelve (12) months immediately following the Termination Date, Employee shall not either directly or indirectly solicit, induce, recruit, or encourage any of the Company’s employees or consultants to leave their employment, or attempt to do so, either for Employee or any other person or entity. 

17.Reserved.  

18.Breach.  Employee acknowledges and agrees that any breach of any provision of this Agreement shall constitute a material breach of this Agreement and shall entitle the Company immediately to recover and/or cease the consideration payments provided to Employee under this Agreement.  

19.No Knowledge of Wrongdoing.  Employee represents that Employee has no knowledge of any wrongdoing involving improper or false claims against a national, federal, or state governmental agency, or any other wrongdoing that involves Employee or other present or former Company employees.

20.No Admission of Liability.  The Parties understand and acknowledge that this Agreement constitutes a compromise and settlement of actual or potential disputed claims.  No action taken by the Parties hereto, or either of them, either previously or in connection with this Agreement shall be deemed or construed to be:

(a)an admission of the truth or falsity of any claims made or any potential claims; or 

(b)an acknowledgment or admission by either Party of any fault or liability whatsoever to the other Party or to any third party.

21.Indemnification.  Employee agrees to indemnify and hold harmless the Company from and against any and all loss, costs, damages or expenses, including, without limitation, attorneys’ fees or expenses incurred by the Company arising out of the breach of this Agreement by Employee, or from any false representation made herein by Employee, or from any action or proceeding which may be commenced, prosecuted or threatened by Employee or for Employee’s benefit, upon Employee’s initiative, or with Employee’s aid or approval, contrary to the provisions of this Agreement.  Employee further agrees that in any such action or proceeding, this Agreement may be pled by the Company as a complete defense, or may be asserted by way of counterclaim or cross-claim. In the event that Employee incurs an indemnification obligation under this Agreement, Employee acknowledges and agrees that Company may in its discretion pursue remedies available to the Company at equity and at law.

22.Reasonable Assistance.  Employee acknowledges the continuation of Employee’s obligations to assist Company pursuant to Section 8 of the Confidential Information Agreement.  In addition, Employee acknowledges that Employee’s assistance may be required regarding certain ongoing dispute resolution and corporate matters of Company.  To that end, Employee will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request.  Employee’s obligation to assist the Company under this Section shall continue beyond the Termination Date, provided that Company shall compensate Employee at a reasonable rate after the Termination Date for the time actually spent by Employee at 

 

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the Company’s request on such assistance, and provided, further, that Employee is not entitled to any additional compensation for such assistance performed during the Transition Period.

23.Costs.  The Parties shall each bear their own costs, expert fees, attorneys’ fees, and other fees incurred in connection with this Agreement, except as provided herein.

24.Tax Consequences.  The Company makes no representations or warranties with respect to the tax consequences of the payment of any sums to Employee under the terms of this Agreement.  Employee agrees and understands that Employee is responsible for payment, if any, of local, state and/or federal taxes on the sums paid hereunder by the Company and any penalties or assessments thereon; provided, however, that the Company shall withhold from the consideration and other benefits due hereunder any taxes, charges, or other assessments of any kind required under law to be withheld by the Company.  Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of Employee’s failure to pay federal or state taxes or damages sustained by the Company by reason of any such claims, including reasonable attorneys’ fees.

25.Arbitration.  The Parties agree that any and all disputes arising out of the terms of this Agreement, their interpretation, and any of the matters herein released, shall be subject to binding arbitration before the American Arbitration Association under its Employment Arbitration Rules and Mediation Procedures (the “Rules”).  The Parties agree that the prevailing Party in any arbitration shall be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award.  The Parties agree that the prevailing Party in any arbitration shall be awarded its reasonable attorneys’ fees and costs, unless contrary to applicable law or the Rules.  The Parties hereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury.  This Section will not prevent either Party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over the Parties and the subject matter of their dispute upon such grounds permitted by the applicable law without waiving the right to compel arbitration, such as the circumstances set forth in California Code of Civil Procedure Section 1281.8.

26.Authority.  The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement.  Employee represents and warrants that Employee has the capacity to act on Employee’s own behalf and on behalf of all who might claim through Employee to bind them to the terms and conditions of this Agreement.  Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

27.No Representations.  Each Party represents that it has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement.  In entering into this Agreement, neither Party has relied upon any representations or statements made by the other Party hereto which are not specifically set forth in this Agreement.

28.Severability.  In the event that any provision, or any portion thereof, becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision or portion of said provision.

29.Entire Agreement.  This Agreement, together with the Confidential Information Agreement and Employee’s equity incentive agreements, represent the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s relationship with the Company, and supersedes and replaces any and all prior agreements and understandings between the Parties concerning the subject matter of this Agreement and Employee’s relationship with the Company.

 

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30.No Waiver.  The failure of the Company to insist upon the performance of any of the terms and conditions in this Agreement, or the failure to prosecute any breach of any of the terms and conditions of this Agreement, shall not be construed thereafter as a waiver of any such terms or conditions.  This entire Agreement shall remain in full force and effect as if no such forbearance or failure of performance had occurred.

31.No Oral Modification.  This Agreement may only be amended in a writing signed by Employee and the Chief Executive Officer or other duly authorized officer of the Company.

32.Governing Law.  This Agreement shall be construed, interpreted, governed, and enforced in accordance with the laws of the State of California, without regard to choice of law provisions.  Employee hereby consents to submit to personal jurisdiction of, and agrees that any action arising out of or relating to this Agreement shall be brought and maintained exclusively in, the County of Santa Clara in the State of California.

33.Counterparts.  This Agreement may be executed in counterparts and by facsimile, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

31.Binding Effect.  This Agreement shall be binding upon and inure to the benefit of Employee and Employee’s heirs, executors, personal representatives, assigns, administrators, and legal representatives.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.

34.Voluntary Execution of Agreement.  This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties, with the full intent of releasing all claims.  Employee acknowledges that Employee:

(a)has read this Agreement;

(b)has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of Employee’s own choice or that Employee has voluntarily declined to seek such counsel;

(c)understands the terms and consequences of this Agreement and of the releases it contains; and

(d)is fully aware of the legal and binding effect of this Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

 

	
 
	
 
	
COMPANY:

	
 
	
 
	
 

	
 
	
 
	
Synaptics Incorporated

	
 
	
 
	
 

	
Dated: June 5, 2015
	
By:
	
/s/ Rick Bergman

	
 
	
 
	
Name: 
	
Rick Bergman

	
 
	
 
	
Title: 
	
CEO

	
 
	
 
	
 
	
 

	
 
	
 
	
EMPLOYEE:

	
 
	
 
	
 

	
Dated: June 5, 2015
	
 
	
/s/ Kathleen Bayless

	
 
	
 
	
Kathleen Bayless

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to SEPARATION AGREEMENT and Release]

 

8Exhibit 10.1

 

PROMISSORY NOTE

 

		1.	DEFINED TERMS. As used in this Promissory Note, the following terms shall
have the following meanings:

 

		1.1	Borrower: AR I Borrower, LLC, a Delaware limited liability company, its successors
and assigns.

 

		1.2	Lender: Sun Life Assurance Company of Canada, a Canadian corporation, together with other
holders from time to time of this Note.

 

		1.3.	Guarantor(s): Robert G. Meyer, Mark Mechlowitz, Jorge Sardinas, Robert Fishel, Harold Katz

 

		1.4	Principal Sum: $31,900,000.00

 

		1.5	Interest Only Monthly Payment: $124,144.17.

 

		1.6	Monthly Payment: $164,870.74

 

		1.7	Date of Disbursement: November22, 2013

 

		1.8	Interest Rate: 4.67% per annum.

 

		1.9	Default Rate: the Interest Rate plus five percent (5%) per annum.

 

		1.10	Maturity Date: December 1, 2025

 

		1.11	Amortization Period: three (3) years not amortizing with payments of interest only, followed
by an amortization period of thirty (30) years.

 

		1.12	Interim Interest Only Payment Date: December 1, 2013.

 

		1.13	Initial Interest Only Payment Date: January 1, 2014.

 

		1.14	First Interest and Principal Payment Date: January 1, 2017

 

		1.15	Monthly Payment Date: January 1, 2014, and the first day of every month thereafter until
the Maturity Date.

 

	 	1.16	Lender's Payment Address:	c/o Sun Life Assurance Company of Canada
	 	 	 	One Sun Life Executive Park
	 	 	 	Wellesley Hills, Massachusetts 02481
	 	 	 	Attention: Mortgage Investments Group

 

		1.17	Permitted Prepayment Period: the period commencing on the Date of Disbursement and ending
on the Maturity Date, subject to and in accordance with the provisions of Paragraphs 9 and 10 of this Note.

 

     

     

    

 

		1.18	Mortgage: a Deed of Trust and Security
Agreement of even date with this Note from Borrower to, or for the benefit of, Lender, which secures Borrower's obligations hereunder,
and which covers property located at 10320 Grobie Way, Charlotte, Mecklenburg County, North Carolina, known as Ashton Reserve
at Northlake, and all modifications or amendments thereto or extensions
thereof.

 

		1.19	Loan Documents, Insurance Proceeds, Laws, Taking Proceeds, Secured Debt, Property, and Event
of Default: shall have the same meanings as in the Mortgage.

 

		2.	DEBT. For value received, Borrower promises to pay to the order of Lender, the Principal
Sum with interest on unpaid principal from the Date of Disbursement at the Interest Rate. Interest shall be calculated on a 360-day
year of twelve 30-day months.

 

		3.	PAYMENTS. Commencing on the Initial Interest Only Payment Date and continuing
on each Monthly Payment Date until the First Interest and Principal Payment Date, Borrower shall pay the Interest Only Monthly
Payment to Lender. Commencing on the First Principal Payment Date and continuing on each Monthly Payment Date until the Maturity
Date, Borrower shall pay the Monthly Payment to Lender. If a payment date is a non-business day, the Monthly Payment shall be due
on the next business day. On the Interim Interest Only Payment Date, Borrower shall pay the interest then due and accrued from
the Date of Disbursement.

 

On the Maturity Date, Borrower
shall pay to Lender the remaining unpaid balance of principal, interest, and any other sums due. Lender shall have no obligation,
express or implied, to refinance the "balloon payment" then due.

 

All payments shall be made in
lawful money of the United States of America, in immediately available funds, at Lender's Payment Address, or at such other place
as Lender may from time to time designate in writing.

 

		4.	LATE CHARGE AND ADDITIONAL INTEREST. Borrower recognizes that if it does not
make the Monthly Payments when due, Lender will incur additional administrative expenses in servicing the loan, will lose the use
of the money due and will be frustrated in meeting its other financial and loan commitments. Lender and Borrower acknowledge that
different methods could be used to calculate Lender's actual damages if the Monthly Payment is not made when due. To avoid disputes
over which method shall apply, Borrower agrees that a late charge equal to four percent (4%) of each Monthly Payment which is not
made within fifteen (15) days following the date when due is a reasonable method for calculating said damages. Borrower shall pay
such late charge to Lender immediately after the fifteen (15) day grace period for each Monthly Payment which is not made within
fifteen (15) days when due. The payment of such late charge shall not affect Lender's other rights and remedies under this Note
and the other Loan Documents.

 

The following shall accrue interest
at the Default Rate: ((i) Lender expenditures made pursuant to Loan Document provisions unless Lender has been immediately reimbursed
by Borrower upon demand; (ii) all amounts remaining due and unpaid after the Maturity Date; and (iii) all amounts outstanding under
the Note after an Event of Default (including the outstanding principal balance and late charges) until the Event of Default is
cured. Default Rate interest shall be applicable in addition to the late charge described above.

 

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		5.	APPLICATION OF PAYMENTS.  Unless Lender elects otherwise, all sums received
by Lender in payment hereunder shall be applied first to late charges, costs of collection or enforcement, all expenditures made
by Lender pursuant to the Loan Documents, and any other similar amounts due, if any, under this Note and the other Loan Documents,
then to amounts due pursuant to Paragraph 10 of this Note, then to interest due and payable under this Note, and the remainder
to principal due and payable under this Note. If an Event of Default has occurred and is continuing, such payments may be applied
to sums due under this Note or under the other Loan Documents in any order and combination that Lender may, in its sole discretion,
determine.

 

		6.	WAIVERS. Borrower waives presentment for payment, demand, notice of nonpayment,
notice of intention to accelerate the maturity of this Note, diligence in collection, commencement of suit against any obligor,
notice of protest, and protest of this Note and all other notices in connection with the delivery, acceptance, performance, default
or enforcement of the payment of this Note, before or after maturity of this Note, with or without notice to Borrower, and agrees
that Borrower's liability shall not be in any manner affected by any indulgence, extension of time, renewal, waiver or modification
granted or consented to by Lender. Borrower consents to any and all extensions of time, renewals, waivers or modifications that
may be granted by Lender with respect to the payment or other provisions of this Note, and to any substitution, exchange or release
of the collateral for this Note, or any part thereof, with or without substitution of said collateral, and agrees to the addition
or release of any guarantor, all whether primarily or secondarily liable, before or after maturity of this Note, with or without
notice to Borrower, and without affecting Borrower's liability under this Note.

 

		7.	NO USURY.  Lender and Borrower intend to comply at all times with applicable
usury laws. If, at any time, such laws would render usurious any amounts called for under this Note or the other Loan Documents,
it is Borrower's and Lender's express intention that Borrower shall never be required to pay interest on this Note at a rate in
excess of the maximum lawful rate then allowed. The provisions of this Paragraph 7 shall control over all other provisions of this
Note and the other Loan Documents which may be in apparent conflict hereunder. Any excess amount shall be immediately credited
on the principal balance of this Note (or, if this Note has been fully paid, refunded by Lender to Borrower), and the provisions
hereof shall be immediately reformed, and the amounts thereafter collectible under this Note shall be reduced, without the necessity
of the execution of any further documents, so as to comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for under this Note. Any such crediting or refund shall not cure or waive any default by Borrower
under this Note or the other Loan Documents. Borrower agrees that in determining whether or not any interest payable under this
Note or the other Loan Documents exceeds the highest rate not prohibited by law, any non-principal payment (except payments specifically
stated in this Note or in the other Loan Documents to be "interest"), including, without limitation, prepayment indemnification
and late charges, shall, to the maximum extent not prohibited by law, be an expense, fee, or indemnification amount rather than
interest. The term "applicable law" as used in this Note shall mean the laws of the state in which the Property is located
or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or
amended or come into effect in the future.

 

		8.	INTENTIONALLY OMITTED.

 

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		9.	PREPAYMENT. Borrower shall have no right to prepay, and Lender shall have
no obligation to accept tendered payments of, any portion of the unpaid Principal Sum outstanding under this Note prior to the
beginning of the Permitted Prepayment Period. Borrower may prepay the entire unpaid Principal Sum (but not any lesser amount) (the
"Amount Prepaid"), with accrued interest thereon to the date of prepayment, on any date on which a Monthly Payment is
due after the beginning of the Permitted Prepayment Period, upon thirty (30) days' prior written notice to Lender of its intention
to prepay, provided that Borrower pays, at the time of prepayment and in addition thereto, the amounts required to be paid pursuant
to Paragraph 10 of this Note and all other sums due under this Note and the other Loan Documents. The date fixed for prepayment
in such notice shall become the Maturity Date, except that for the purpose of calculating the amounts payable pursuant to Paragraph
10 of this Note, the Maturity Date shall mean the date set forth in Paragraph 1.10 of this Note.

 

		10.	PREPAYMENT INDEMNIFICATION. Borrower shall indemnify Lender against any loss, damage
and expense Lender incurs if the unpaid Principal Sum is paid prior to the Maturity Date for any reason except (i) a payment of
the entire unpaid Principal Sum, with accrued and unpaid interest, made within ninety (90) days of the Maturity Date or (ii) any
application by Lender of Insurance Proceeds or Taking Proceeds to reduction of the Secured Debt pursuant to the other Loan Documents.
Lender and Borrower acknowledge that different methods could be used to calculate Lender's actual damages if the unpaid Principal
Sum is paid prior to the Maturity Date. To avoid disputes over which method shall apply, Borrower agrees that the following is
a reasonable method to calculate damages in such case, and Borrower shall pay to Lender a prepayment premium in an amount equal
to the greater of:

 

		(a)	one percent (1%) of the then unpaid Principal Sum; or

 

		(b)	the Discounted Yield Maintenance Prepayment Fee, as hereinafter defined. For purposes of this Paragraph
10, the term "Treasury Security" shall mean the non-callable U.S. Treasury bill, note or bond having a maturity date
most closely equivalent to the Maturity Date. If more than one such non-callable bill, note or bond matures in the same month as
the Maturity Date, the bill, note or bond with a coupon interest rate closest to the Interest Rate shall be the Treasury Security.
For purposes of this Paragraph 10 the term "Treasury Yield" shall mean the per annum yield to maturity of the Treasury
Security, as published in the Wall Street Journal on the fifth (5th) business day prior to the date of prepayment.

 

If the Interest
Rate is greater than the Treasury Yield, the difference between the Interest Rate and the Treasury Yield shall be divided by twelve
(12) and multiplied by the then unpaid Principal Sum to determine the monthly payment differential. The present value of the series
of monthly payment differentials for the number of whole and partial months from the date of prepayment to the Maturity Date shall
be calculated using the Treasury Yield as the discount rate, compounded monthly. The resulting sum of all the discounted monthly
payment differentials shall be the Discounted Yield Maintenance Prepayment Fee.

 

If the Interest
Rate is equal to or less than the Treasury Yield, the prepayment premium shall be one percent (1%) of the then unpaid Principal
Sum. 

 

    	 	4	 

     

    

 

		11.	ACCELERATION INDEMNIFICATION. If the Maturity
Date is accelerated by Lender because of the occurrence of an Event of Default, Lender will sustain damages due to the loss of
its investment. Borrower therefore agrees to pay, at the time of acceleration, in addition to all other sums due under this Note
and the other Loan Documents, as liquidated damages, an acceleration premium in an amount equal to the greater of:

 

		(a)	three percent (3%) of the then unpaid Principal Sum; or

 

		(b)	the Discounted Yield Maintenance Prepayment Fee, as defined in Paragraph 10 of this Note.

 

		12.	NONRECOURSE DEBT. Borrower shall be liable
upon the indebtedness evidenced by this Note, for all sums to accrue or to become payable thereon and for performance of all covenants
contained in this Note or in any of the other Loan Documents, to the extent, but only to the extent, of Lender's security for
the same, including, without limitation, all properties, rights, estates and interests covered by the Mortgage and the other Loan
Documents. No attachment, execution or other writ or process shall be sought, issued or levied upon any assets, properties or
funds of Borrower other than the properties, rights, estates and interests described in the Mortgage and the other Loan Documents.
In the event of foreclosure of such liens, mortgages or security interests, by private power of sale or otherwise, no judgment
for any deficiency upon such indebtedness, sums and amounts shall be sought or obtained by Lender against Borrower. Subject to
the foregoing, nothing herein contained shall be construed to prevent Lender from exercising and enforcing any other remedy relating
to the Property allowed at law or in equity or by any statute or by the terms of any of the Loan Documents.

 

Notwithstanding the foregoing,
Borrower shall be personally liable to Lender for:

 

		(a)	any damages, losses, liabilities, costs or expenses (including, without limitation, attorneys'
fees) incurred by Lender due to any of the following: (i) any security deposits of tenants of the Property (not previously applied
to remedy tenant defaults) which have not been paid over to Lender; (ii) any rents prepaid by any tenant of the Property more than
one (1) month in advance; (iii) any insurance proceeds or condemnation awards received by Borrower and not applied according to
the terms of the Mortgage; provided, however, Borrower will not be personally liable for any failure described in this Section
12(a)(iii) if Borrower is unable to apply insurance proceeds or condemnation awards as required by Lender because of a valid, final,
unappealable order issued by a court of competent jurisdiction in a judicial proceeding; (iv) repairs to the Property resulting
from a casualty not reimbursed by insurance, to the extent insurance coverage for such repairs was required by the Loan Documents;
(v) fraud, material misrepresentation or bad faith on the part of Borrower; (vi) any event or circumstance for which Borrower is
obligated to indemnify Lender under the provisions of the Mortgage respecting Hazardous Substances, Contamination or Clean-Up;
(vii) waste of the Property by Borrower, except for ordinary wear and tear, casualty and condemnation; (viii) Borrower's failure
to pay real estate taxes or other assessments against the Property (but subject to the provisions of Section 4.1(c) of the Mortgage
regarding Lender’s failure to pay the same, in which event, Borrower shall have no liability hereunder); or (ix) Borrower's
failure to comply with the Americans with Disabilities Act of 1990, as amended, or any other Laws; and

 

    	 	5	 

     

    

 

		(b)	all rents, issues and profits from the Property collected by Borrower after an Event of Default
has occurred and is continuing or after an event or circumstance has occurred and is continuing which with the passage of time
or the giving of notice, or both, would constitute an Event of Default, unless such rents, issues and profits are applied to the
normal operating expenses of the Property or to the Secured Debt; provided, however, Borrower will not be personally liable for
any failure described in this Section 12(b) if Borrower is unable to apply rents and security deposits as required by Lender because
of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding;

 

		(c)	default of either landlord or tenant under any Master Lease (as defined elsewhere in the Loan Documents)
that may be applicable to the Property; ;

 

		(d)	the cost to repair any Casualty (as defined in the Mortgage) having a repair estimate as determined
by the Lender equal to or less Three Hundred Thousand Dollars ($300,000.00); provided, however, the Borrower’s liability
for the cost to repair any such Casualty will be released by Lender upon the Borrower’s satisfactory lien-free completion
of such repair, as determined by the Lender in the Lender’s sole discretion.

 

Additionally,
notwithstanding other provisions of this paragraph 12, the loan evidenced by this Promissory Note and the other Loan Documents
shall become fully recourse debt to Borrower and Guarantor(s) if any of the following occur:

 

		(a)	Borrower secures either junior financing secured by the Property or mezzanine financing secured
by interests in Borrower (collectively, “Junior Loan”) without written authorization from Lender; or

 

		(b)	Borrower pays any amount toward a Junior Loan at a time when there is an Event of Default under
Lender’s loan, regardless of whether the Junior Loan was authorized or unauthorized by Lender; or

 

		(c)	Borrower files a petition under Chapter 11 of the United States Bankruptcy Code or under any other
form of insolvency law, or any petition seeking any liquidation, dissolution, or similar relief under any present or future federal
or state bankruptcy, insolvency or debtor relief acts or laws (collectively “Insolvency Petition”); or

 

		(d)	any such Insolvency Petition is filed against Borrower and Borrower cooperates with or acquiesces
to such filing, fails to take commercially reasonable efforts to have the same dismissed (provided, however, commercially reasonable
efforts shall not require the members of Borrower to make any capital contributions in connection with such efforts) or otherwise
resists or opposes the lifting of the automatic stay by the bankruptcy court to permit Lender to foreclose the Mortgage.

 

    	 	6	 

     

    

 

Lender shall not be limited
in any way in enforcing the personal liability and obligations of Borrower under the Loan Documents against Borrower, nor shall
Lender be limited in any way in enforcing the personal liability and obligations of any guarantor and indemnitor according to the
terms of the instruments creating such liabilities and obligations. To that end, Borrower hereby expressly waives any right to
require Lender to bring any action against any other person or to require that resort be had to any security and, without limiting
the generality of the foregoing, Borrower herewith expressly waives any right Borrower otherwise might have or might have had under
the provisions of Section 26-7 of the North Carolina General Statutes, et. seq. and/or other North Carolina laws.

 

		13.	SECURITY. This Note is secured by the other Loan Documents and all amendments,
modifications, supplements, substitutions, additions, renewals, replacements and extensions thereof.

 

		14.	COLLECTION. Although the above paragraph 3 requires payment of the Secured
Debt by immediately available funds (such as wire transfer), Lender may choose to accept a check, draft, money order or other instrument.
However, payment by such instrument shall neither be applied to the Secured Debt nor diminish rights of Lender until actual cash
proceeds of the instrument are unconditionally received by Lender and applied to the Secured Debt. Acceptance by Lender of actual
cash proceeds of less than the total amount of the Secured Debt shall not constitute acceptance of such partial payment in satisfaction
of the total amount of the Secured Debt, including, without limitation, the amounts payable to Lender pursuant to Paragraph 10
of this Note.

 

			After an Event of Default under any of the Loan Documents, Lender may demand that Borrower make
all future payments (i) by wire transfer, (ii) to a lock box, or (iii) as otherwise demanded by Lender.

 

		15.	ATTORNEYS' FEES. Upon any Event of
Default, Borrower shall pay all costs incurred by Lender in the course of collection of sums due under this Note or in enforcing
any of Borrower's other obligations under the Loan Documents, including, without limitation, reasonable attorneys' fees and expenses,
at standard hourly rates, without regard to any statutory presumption, whether or not suit is filed by Lender.

 

		16.	ACCELERATION AND OTHER REMEDIES. The rights and remedies of Lender are set
forth in the other Loan Documents and include, without limitation, the right to declare the Secured Debt, including the principal
balance of this Note and accrued interest, immediately due and payable in case of an Event of Default.

 

		17.	JOINT AND SEVERAL LIABILITY.  If there is more than one Borrower and/or Guarantor,
the obligations and covenants of each Borrower and/or Guarantor shall be joint and several.

 

		18.	AMENDMENTS. This Note may not be changed or amended orally, but only by an
agreement in writing, signed by the party against whom enforcement is sought.

 

		19.	GOVERNING LAW. This Note shall be governed by and construed in accordance with the
laws of the state in which the Property is located.

 

		20.	WAIVER OF JURY TRIAL. To the fullest extent permitted by applicable law, Borrower
and Lender hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against
the other, on or in respect of any matter whatsoever arising out of, or in any way connected with, this Note or any of the other
Loan Documents, or the relationship of Borrower and Lender hereunder or thereunder.

 

    	 	7	 

     

    

 

		21.	CAPTIONS. All paragraph and subparagraph captions are for convenience of reference
only and shall not affect the construction of any provision herein.

 

		22.	REGISTRATION. This Note shall be deemed to be in registered form at Lender's sole
election. Such election may be made at any time without endorsement of this Note or any other action by Borrower. Borrower shall
recognize any such election and, upon request by Lender, shall cooperate with Lender at Lender’s expense to facilitate the
consummation of such election.

 

[The remainder of this page is intentionally
blank. Signature pages to follow.]

 

    	 	8	 

     

    

 

[Signature Page of Promissory Note]

 

IN WITNESS WHEREOF,
this Note has been executed and delivered under seal this  22nd day
of  November,
2013.

 

	WITNESS:	 	BORROWER:
	 	 	 
	 	 	AR I BORROWER, LLC
	 	 	 
	/s/ Benjamin Field	 	By:	/s/ Rob Meyer
	 	 	 	 
	Name:	Benjamin Field	 	 	Name:	Rob Meyer
	 	 	 	 	 
	 	 	 	Title:	President
	/s/ Patricia Mason	 	 	 	 
	 	 	 	 	 
	Name:	Patricia Mason

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