THIS INVESTOR NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAW. THIS INVESTOR NOTE MAY NOT BE SOLD OR OFFERED FOR SALE
UNLESS REGISTERED UNDER SUCH LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE.
INVESTOR NOTE
Dated: ______________
FOR VALUE RECEIVED, the undersigned (hereinafter called the "Maker") hereby
promises to pay to Aearo Corporation, a Delaware corporation ("Aearo" and, in
its capacity as lender, the "Lender"), or its registered assigns, at its office
at 0000 X. 00xx Xxxxxx, Xxxxxxxxxxxx, XX 00000, or at such other address in the
United States as the Lender or any subsequent holder of this Investor Note shall
stipulate in written notice to the Maker, the aggregate principal amount of all
loans (individually, a "Loan" collectively, the "Loans") made by the Lender to
the Maker evidenced hereby, all in accordance with the following terms and
provisions. This Investor Note is being issued to evidence Loans made by the
Lender to the Maker on a recourse basis (as set forth herein), the proceeds of
which will be used by the Maker to purchase shares of Aearo common stock, par
value $.01. Capitalized terms not otherwise defined herein shall have the
meanings specified in the Pledge and Security Agreement between the Maker, as
"debtor", and the Lender as "secured party", dated as of the date hereof (as
amended, modified or otherwise supplemented from time to time, the "Pledge
Agreement"), in the Stockholders' Agreement, dated as of July 11, 1995, and in
the Executive Security Purchase Agreement, dated as of the date hereof.
SECTION l. Payment of Principal. --------------------
1.1 Acceleration of Note. Upon the sale or disposition of any Collateral,
the Maker shall be required to apply the Net Proceeds (as defined in the Pledge
and Security Agreement) realized from such sale or disposition to the repayment
of the Loans, and the Loans evidenced by this Investor Note shall become due and
payable in an amount equal to such Net Proceeds. The Loans shall in any event
become due and payable on the date on which payment thereof is accelerated
pursuant to Section 7 of the Pledge Agreement. All payments hereunder shall be
made in lawful money of the United Stales of America.
1.2 Right to prepay. The Maker shall have the right to prepay this Investor
Note at any time, in whole or in part, without the consent of the Lender and
without penalty or premium.
1.3 Principal Amount. The principal amount of the loan evidenced by this
Investor Note is the amount set forth on ---------------- Schedule 1 hereto
under "Principal Amount"
1.4 Scheduled Payment Term. The Maker shall be required to repay the entire
principal amount hereof by making payment to the Lender in installments in
accordance with the schedule described on Schedule 1 hereto under "Installments"
and by repaying the entire remaining principal amount hereof outstanding, if
any, on the date set forth on Schedule 1 hereto under "Final Maturity".
SECTION 2. Interest. Interest will accrue on the outstanding principal
amount of this Investor Note at the rate per annum set forth on Schedule 1
hereto under "Interest Rate", and shall be payable as set forth on Schedule 1
hereto under "Interest Payments" and at such other times as the principal of
this Note becomes due and payable in accordance with the terms hereof.
SECTION 3. Mandatory Prepayment. ---------------------
3.1 Termination of Employment. Upon and after Termination of
------------------------- Employment of the Maker with Aearo or any of its
subsidiaries, the Maker shall be required, upon the demand of the Lender, to
prepay the entire outstanding principal or, if the Lender has demanded any
lesser amount, then such lesser amount demanded by the Lender. Upon the Maker's
Termination of Employment with Aearo or any of its subsidiaries in circumstances
where severance obligations are payable by the Lender, whether payable pursuant
to an employment agreement or a severance benefit policy of Aearo or any of its
subsidiaries (but excluding any pension or retirement benefit), the Lender shall
have the right, without prior notice to the Maker (any such notice being
expressly waived by the Maker to the extent permitted by applicable law), to
set-off and appropriate and apply against the aggregate amount of such severance
obligations any and all amounts (whether then due and payable or not) held or
owing to the Lender and evidenced by this Investor Note, and the Maker agrees
that the amount of such severance obligations may, under such circumstances, at
the option of Aearo or the Lender, be reduced by such amounts.
SECTION 4. Security. The Loans are and shall be secured pursuant to the
terms of the Pledge Agreement. The holder of this Investor Note is entitled to
the benefits of the Pledge Agreement and the security referred to therein, to
which reference is hereby made for a description of the properties and rights
included in such security, the nature of such security and the rights of the
parties with respect to such security. The Lender may enforce the agreements of
the Maker contained therein and exercise the remedies provided for thereby or
otherwise available in respect thereof, all in accordance with the terms
thereof.
SECTION 5. Consideration. In order to induce the Lender to accept this
Investor ------------- Note and with full knowledge that the Lender will rely on
the representations and agreements contained herein, the Maker hereby
represents, warrants and agrees that this Investor Note is a valid and binding
obligation of the undersigned, enforceable against the undersigned in accordance
with its terms and the Maker agrees that he will make indefeasible payment in
full of all amounts due under this Investor Note as and when due hereunder in
accordance with the terms of this Investor Note without claiming or asserting
any set-off. The obligations represented by this Investor Note shall be absolute
irrespective of any set-off, claim, counterclaim, defense or other right which
the Maker may have against anyone for any reason whatsoever,
SECTION 6. Events of Default. In case an Event of Default (as defined in
the Pledge Agreement) shall occur and be continuing, the entire unpaid principal
balance of the Loans may become or may be declared to be due and payable in the
manner and with the effect provided in the Pledge Agreement.
SECTION 7. Miscellaneous. --------------
7.1 Waiver of Presentment and Jury Trial. The Maker and any endorser of
this Investor Note hereby expressly waive presentment for payment, demand,
notice of nonpayment and dishonor, protest, notice of protest and notice of any
other kind and waive trial by jury in any action or proceeding arising on, out
of, under or by reason of this Investor Note.
7.2 Information. The Maker hereby acknowledges that neither Aearo nor any
of its affiliates has made any representations or recommendations whatsoever to
the Maker concerning Aearo (including, without limitation, the financial
condition, prospects or any other matters relating to Aearo) or the Maker's
purchase of any shares of the Common Stock of, or other equity interest in,
Aearo. The Maker assumes all responsibility of keeping himself or herself
informed of the affairs and business of Xxxxx and its subsidiaries. The Maker
acknowledges and agrees that Xxxxxx does not have any obligation to inform the
Maker of any matter relating to Aearo and its subsidiaries or their business and
affairs.
7.3 Successors and Assigns. This Investor Note shall be binding upon and
enforceable against the Maker and his heirs, successors and assigns. The Maker
shall not have the right to assign all or any part of its rights or obligations
under this Investor Note without the consent of the Lender, which consent may be
withheld in the sole discretion of the Lender. The Lender may assign its rights
and obligations under this Investor Note without having to obtain the consent of
the Maker.
7.4 Obligations Independent. The obligations of the Maker hereunder and
under the Pledge Agreement shall not be contingent upon or affected by any
similar undertaking of any other employee of Aearo or its subsidiaries. The
Maker agrees that the Lender may proceed to enforce this Investor Note and the
Pledge Agreement without also proceeding to enforce any comparable note or
pledge agreement executed by any other such employee or employees.
7.5 Governing Law. The rights and liabilities of the parties hereto shall
be determined in accordance with the laws of the Commonwealth of Massachusetts,
without regard to conflict of law principles. The Maker hereby waives and agrees
not to assert in any such proceeding a claim that the Maker is not personally
subject to the jurisdiction of the court referred to above, that the suit or
action was brought in an inconvenient forum or that the venue of the suit or
action is improper. 7.6 No Waiver, Remedies. No failure to exercise and no delay
in exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
7.7 Severability. If any provision of this Investor Note is invalid or
unenforceable under any applicable law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such applicable law. Any provision hereof which may be
held invalid or unenforceable under any applicable law shall not affect the
validity or enforceability of any other provision thereof, and to this extent
the provisions hereof shall be severable.
7.8 Amendment. Except as expressly provided herein, this Investor Note may
not be amended or otherwise modified except by a written instrument signed by
the Maker and the Lender.
7.9 Waiver of Jury Trial. The Maker and the Lender hereby irrevocably and
unconditionally waive trial by jury in any legal action or proceeding relating
to this Investor Note or the Pledge Agreement and for any counterclaim therein.
7.10 Notices. All notices and other communications hereunder shall be in
writing and delivered, telecopied, or mailed (certified mail, return receipt
requested, postage prepaid) to the addresses set forth in the Pledge Agreement.
7.11 Recourse. The obligations of the Maker under this Investor Note and
the Pledge Agreement are personal obligations of the Maker, and the Lender shall
have recourse to the Maker or his property for payment, satisfaction, or
discharge of this Investor Note or the Pledge Agreement.
IN WITNESS WHEREOF, the Maker has caused this Investor Note to be executed
as of the date hereof.
-------------------------
Schedule 1
------------------ ------------------ ------------ -----------------------
Principal Amount Interest Rate and Installments Final Payment Date
Payment Schedule
------------------ ------------------ ------------ -----------------------
$ 7% per annum 20% of initial September 30, ____
payable on principal amount
September 30 setforth in the
of each year first column,
payable on
September 30
of each of 19__,
19__, 20__, 20__
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