EXHIBIT 10.8
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND IS BEING SOLD PURSUANT TO AN EXEMPTION FROM
REGISTRATION THEREUNDERCorinne ScallyFinancial Printing GroupTHIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND IS BEING SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER. THIS SECURITY MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
PRESTOLITE NEWCO, INC.
A$1.00 January 22, 1998
FOR VALUE RECEIVED, the undersigned PRESTOLITE NEWCO, INC., a Delaware
corporation (the "Company"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order
of ▇▇▇▇▇ INDUSTRIES PLC, an English corporation (the "Holder"), the principal
sum of ONE ARGENTINE PESO (A$1.00), or such other amount as shall be payable
from time to time under Article II hereof, on such dates and in such amounts as
are specified herein on and subject to the following terms and conditions
ARTICLE I
DEFINITIONS/TERMS OF PAYMENT, ETC.
1. Definitions
As used in this Note, the following terms shall have the following meanings,
such terms to be equally applicable to the singular and the plural forms of the
terms so defined:
"A$" means Argentine Pesos, the legal
currency of Argentina.
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"Accounting Principles" means the accounting policies and principles as set out
in schedule 5 to the Purchase Agreement
"Accounting Standards Board" means the Accounting Standards Board Limited, an
English Company
"Affiliate" of any specified person means
(i) any other person which, directly or indirectly, is
in control of, is controlled by or is under common
control with such specified person or
(ii) any other person who is a director or executive
officer
(A) of such specified person,
(B) of any Subsidiary of such specified person or
(C) of any person described in clause (i) above.
"Auditors" has the meaning assigned to such term in the Purchase
Agreement
"Business Day" means a day of the year on which banks are not
required or authorised to close in New York City,
United States of America, London, England or Buenos
Aires, Argentina.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other
equivalents of or interests in (however designated)
corporate stock, including any preferred stock.
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"consistently applied" has the meaning attributed to that phrase in the
Purchase Agreement
"Due Date" means the date five 5 Business Days following the
determination of EBITDA which is relevant in
accordance with clause 4 of the Purchase Agreement
"EBITDA" means the profit before interest and tax of the Group
but after taking account of the San ▇▇▇▇ tax benefits
and adding back depreciation prepared on a
consolidated basis as shown by and extracted from the
consolidated profit and loss account of Indiel (such
extraction and profit and loss account and calculation
of EBITDA being agreed or certified in accordance
with clause 4 of the Purchase Agreement) for the First
Year, the Second Year and the Third Year
respectively, adjusted so far as necessary to take
account of the following matters:
(a) any taxation on profits shall not be deducted but
profits shall be calculated after taking account of
the San ▇▇▇▇ tax benefits;
(b) profits and losses shall be calculated after
taking account of the San ▇▇▇▇ tax benefits but
subject thereto after exceptional items and before
extraordinary items (as defined in Financial Reporting
Standard number 3 adopted by the Accounting Standards
Board));
(c) any profit or loss on the disposal, other than
routine disposals made in the normal and ordinary
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course of business of any fixed assets (including,
without limitation, any intellectual property rights
or any interest in the Property (as defined in the
Purchase Agreement));
(d) the effects, including any increased depreciation
charges, of any revaluation of any fixed assets shall
be excluded;
(e) any management, administration or like charge
made by the Purchasers or any member of the
Purchasers' Group (as each such expression is defined
in the Purchase Agreement) shall not be deducted;
(f) the fees, remuneration and pension contributions
of any director or officer of any Group Member
nominated by either Purchaser (or ▇▇▇▇▇ ▇▇▇▇▇), not
being a full-time employee, shall not be deducted
(g) any compensation or other payment for loss of
office or employment to any director or senior
employee of any Group Member shall not be deducted;
(h) in respect of any transaction between any member
of the Purchasers Group and any Group Member which is
not at arms length, there shall be substituted terms
which are at arms length
(i) there shall be included any amounts which would
have been included but for any breach by either
Purchaser of any of the provisions of clause 4. of
the
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Purchase Agreement
(j) redundancy costs, training,
learning and double working costs
associated with transfers between
factories, asset repositioning costs and
write down costs, compensation or other
payments for loss of office or
employment to any director or senior
employee of any Group Member and plant
closing costs will be charged to the
Restructuring Reserve and not reflected
in the calculation of EBITDA
(k) any payments actually received by
either Purchaser or by any Group Member
(i) under the indemnity contained in
clause 7.2 of the Purchase Agreement;
or
(ii) under any other indemnity
contained in the Purchase Agreement
but only to the extent to which the
indemnity applies in respect of a loss
or liability which would but for the
indemnity have reduced EBITDA and then
only to the extent that EBITDA would
have been, but for the indemnity,
reduced
shall be included as earnings of the
Group in the calculation of EBITDA in
the period to which the payment received
by the recipient relates
"First Year" means the year ending on 31 December
1998.
"First Years Accounts" means the profit and loss account of the
Group in
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respect of the First Year prepared on a
consolidated basis in accordance with
clause 4 of the Purchase Agreement
"Group" has the meaning ascribed to it in the
Purchase Agreement
"Group Member" has the meaning ascribed to it in the
Purchase Agreement
"Indiel" means ▇▇▇▇▇ Indiel Argentina S.A., an
Argentine corporation.
"Purchase Agreement" means that certain Sale and Purchase
Agreement, dated ____________ 1998, by
and between ▇▇▇▇▇ Industries plc,
Prestolite Electric Incorporated and
Prestolite Newco, Inc. relating to the
acquisition of shares in Indiel and the
entire issued share capital of ▇▇▇▇▇
Argentine Holdings, Inc.
"Restructuring Reserve" means the provision for reorganisation
expenses anticipated to be in the region
of $7.0 million but which will not be
less than $6.0 million to be recorded by
the Purchasers and the Group as part of
their acquisition accounting in
accordance with United States GAAP
pertaining to the transaction
contemplated by the Purchase Agreement.
"Second Year" means the year ending on 31 December
1999
"Second Years Accounts" means the profit and loss account of the
Group in respect of the Second Year
prepared on a consolidated
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basis in accordance with clause 4 of the Purchase
Agreement
"Subsidiary" means any corporation, association, partnership or
other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other
interests (including partnership interests) entitled
(without regard to the occurrence of any contingency)
to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled,
directly or indirectly, by
(i) the Company,
(ii) the Company and one or more Subsidiaries or
(iii) one or more Subsidiaries.
"Third Year" means the year ending on 31 December 2000
"Third Year Accounts" means the profit and loss account of the Group in
respect of the Third Year prepared on a consolidated
basis in accordance with clause 4 of the Purchase
Agreement
2. PAYMENTS, CURRENCY AND COMPUTATIONS.
2. The Company shall make each payment hereunder not later than 2:00 P.M.
(NewYork City time) on the Due Date in United States dollars (or such
other currency as the Company and the Holder may agree) to the Holder
at its address referred to in Clause 10, in same day funds. The amount
of such payment shall be converted from the amount due hereunder in
Argentine pesos at the exchange rate
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(calculated at the average of the "bid" and "asked" exchange rate)
quoted by Reuters (or a different independent wire service providing
international spot exchange rates as agreed to by the Parties) in New
York at 1:00 p.m. on the Due Date.
2.2 Whenever a Due Date would otherwise occur on a day other than a
Business Day, the Due Date shall be changed to be the closest Business
Day.
2.3 Any failure by the Company to make a payment within five days after a
Due Date when due shall obligate the Company to pay interest to the
Holder at a rate per annum 5% above the prime rate as quoted in the
Eastern edition of the Wall Street Journal as of the Due Date and, in
the event such a rate is not quoted on such date then on the
immediately preceding date such rate is quoted, such interest due and
payable upon the payment of principal otherwise due and payable. All
computations of interest shall be made on the basis of a year of 365
or 366, as the case may be, days for the actual number of days
(including the first day but excluding the last day) occurring in the
period for which interest is payable.
ARTICLE II
INCREASE IN OBLIGATION
3. Total Obligation
3.1 The obligation of the Company to pay principal hereunder shall
automatically, and without any further action on the part of either
the Company or the Holder, from time to time be increased pursuant to
the provisions of this clause 3. The Company shall be obligated to
pay principal hereunder as aforesaid to the Holder on the Due Date in
the following amounts in the event of the occurrence of the following
events (each an "Earnout Payment"). If EBITDA :
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(a) in the First Year shall exceed A$5,800,000 the Company shall pay
to the Holder a sum equal to ninety percent (90%) of the excess up
to a maximum payment of ninety percent (90%) of A$3,900,000 on the
Due Date; and
(b) in the Second Year, shall exceed A$7,500,000 the Company shall
pay to the Holder a sum equal to ninety percent (90%) of the excess
up to a maximum further payment of ninety percent (90%) of
A$3,800,000 on the Due Date; and
(c) in the Third Year, shall exceed A$9,000,000 the Company shall
pay to the Holder a sum equal to ninety percent (90%) of the excess
up to a maximum further payment of ninety percent (90%)of
A$3,500,000 on the Due Date
3.2 If the Due Date is later than 75 days from the end of whichever is
relevant of the first Year, the Second Year or the Third Year as the
case may be the amount of principal payable pursuant to clause 3.1
shall be increased by a sum equal to interest on such principal
accruing at the rate referred to in clause 2.3 from (but excluding)
the 75th day from the end of the relevant Year to the Due Date
4. PAYMENTS OF PRINCIPAL
The Company shall pay to the Holder in full on any Due Date the aggregate
principal amount due hereunder.
5. REDUCTION OF PRINCIPAL OBLIGATION
Upon the making of each Earnout Payment under the provisions of this Note,
if applicable, the principal amount due hereunder shall automatically
reduce by an amount equal to such Earnout Payment. After all principal and
any other amounts due or which may become due hereunder have been paid in
full, this Note shall be surrendered to the Company for cancellation and
shall not be reissued.
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6. TAXES
If the Company makes any payment hereunder in respect of which it is
required by law to make any deduction or withholding, it shall pay the full
amount to be deducted or withheld to the relevant taxation or other
authority within the time allowed for such payment under applicable law and
promptly thereafter shall furnish to the Holder an original or certified
copy of a receipt evidencing payment thereof, together with such other
information and documents as the Holder may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
7.1 The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware.
7.2 The execution, delivery and performance by the Company of this Note
are within the Company's corporate powers, have been duly authorised
by all necessary corporate action, and do not contravene (a) the
Company's charter or by-laws or (b) any law or any contractual
restriction binding on or affecting the Company.
7.3 No authorisation or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Company of this
Note
7.4 This Note is the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
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8. REPRESENTATIONS AND WARRANTIES OF THE HOLDER
The Holder represents and warrants as follows:
8.1 The Holder has been advised and understands that this Note has not
been registered under the Securities Act. The Holder, by purchasing
this Note, agrees for the benefit of the Company that this Note may
not be resold, pledged or otherwise transferred.
8.2 The Holder has the full legal right and power and all authority and
approvals required to execute and deliver, or authorise execution and
delivery of, this Note and all other instruments executed and
delivered by or on behalf of such Holder in connection with the
purchase of this Note, and to purchase this Note. The signature of
the party signing on behalf of the Holder is binding on the Holder.
ARTICLE IV
MISCELLANEOUS
9. Amendments, Etc
No amendment or waiver of any provision of this Note, nor consent to any
departure by the Company herefrom, shall in any event be effective unless
the same shall be in writing and signed by the Holder and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
10. NOTICES, ETC
10.1 All notices and other communications provided for hereunder shall be
in writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Company, to it care of Prestolite Electric
Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
President; and if to the Holder, care of ▇▇▇▇▇ Industries Plc, at
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its address at Stratford Road, Solihull, B90 4LA, England; or, as to
each party, at such other address as shall be designated by such party
in a written notice to the other party. All such notices and
communications shall, when mailed, telecopied, telegraphed, telexed or
cabled, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, except that notices to
the Holder pursuant to the provisions of Article I shall not be
effective until received by the Holder. Upon request from the Holder,
the Company will provide the Holder with the information required in
Treasury Regulation, Section 1.1275-3(b)(1)(i).
10.2 The Company waives presentment demand protest notice of dishonour,
notice of demand and notice of non-payment.
11. NO WAIVER; REMEDIES
No failure on the part of the Holder to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
12. REIMBURSEMENT OF HOLDER
The Company shall reimburse the Holder upon demand for any and all costs
and expenses (including without limitation Court costs, legal expenses and
reasonable attorney fees whether or not suit is instituted and if suit is
instituted whether at the trial court level, appellate level in a
bankruptcy probate or administrative proceeding or otherwise) incurred in
collecting this note or incurred in any other matter or proceeding relating
to this note where in such matter or proceeding the Holder is successful.
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13. BINDING EFFECT
13.1 Subject to Clause 13.2 , this Note shall be binding upon and inure to
the benefit of the Company and the Holder and their respective
successors, except that the Company shall not have the right to
assign any of its rights or obligations hereunder.
13.2 The Holder may, upon at least 20 Business Days' notice to the
Company, assign to a controlled Affiliate all of its rights and
obligations under this Note; all costs and expenses relating to such
assignment shall be borne by the parties thereto.
14. GOVERNING LAW
This Note shall be governed by, and construed in accordance with, the laws
of the internal State of New York, United States.
15. CONSENT TO JURISDICTION: VENUE
The Company irrevocably consents to the jurisdiction of any state or
federal Court located in the Borough of Manhattan, City of New York United
States; provided however that nothing contained in this note shall prohibit
the holder from bringing any action enforcing any award of judgment or
exercising any other rights against the company or against any property of
the Company within any other County, State or foreign or domestic
jurisdiction. The Company acknowledges and agrees that the venue provided
above is the most convenient forum for the Company and the holder and the
Company waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this note.
16. WAIVER OF JURY TRIAL
The Company irrevocably waives any and all rights the Company may have to a
trial by jury in any action proceeding or claim of any nature relating to
this note, any documents executed in connection with this note or any
transaction contemplated in any of such
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documents. The Company acknowledges that the foregoing waiver is knowing
and voluntary.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its
officer thereunto duly authorised, as of the date first above written.
PRESTOLITE NEWCO, INC.
By: /s/ ▇. ▇▇▇ ▇▇▇▇▇▇▇
------------------
Name: ▇. ▇▇▇ ▇▇▇▇▇▇▇
Title: President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
SIGNED by ▇▇▇▇▇ ▇▇▇▇-LEATHER ) /s/ ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇
) ----------------------
as duly authorised attorney )
for and on behalf of )
▇▇▇▇▇ INDUSTRIES PLC, as )
to Clause 10 only )
▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇ as attorney for ▇▇▇▇▇
Industries plc
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