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 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.
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 LUCAS INDUSTRIES PLC, an English corporation (the "Holder"), the principal
sum of ONE ARGENTINE PESO (A$1.00), or such other amount as shall be payable
from time to time under Clause 2 hereof, subject to the following terms and
conditions, on the Due Date (as defined below). DEFINITIONS
As used in this Note, the following terms shall have the following meanings,
such terms to be equally applicable to the singular and the plural forms of the
terms so defined:
"A$" means Argentine Pesos, the legal currency of
"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
(A) of such specified person,
(B) of any Subsidiary of such specified person or
(C) of any person described in clause (i) above.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City,
United States, London, England or Buenos Aires,
"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
"Date of Utilization" means :-
(i) where the Settlement Consideration is cash,
the date of receipt of such cash; or
(ii) where the Settlement Consideration is a
freely transferable bond, the date of transfer by
Indiel of such bond either to the Holder or a
third party, or if such bond is not transferred,
the date such bond is utilized to reduce or
eliminate any liability of Indiel or any Affiliate
of Indiel to make an actual payment of taxation;
(iii) where the Settlement Consideration
is a credit or relief against taxation (other than
a freely transferable bond) the date that the
payment of taxation would be due against which
such Settlement Consideration is utilized to
reduce or eliminate said liability of Indiel or
any Affiliate of Indiel to make such payment of
"Due Date" means the earlier of 5 years from the date of this
note and the date falling twenty (20) Business
Days following the Date of Utilisation.
"Indiel" means Lucas Indiel Argentina S.A., an Argentine
"Settlement means any consideration credit, relief or bond
Consideration" received by Indiel or any Affiliate of Indiel in
satisfaction or partial satisfaction of the Tax
"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.
"Tax Receivable" means the long term receivable deferred tax
recorded as an asset on the balance sheet of
Indiel in its audited accounts for the year ended
31 January 1997 which arises from the suspended
tax benefits available under the VAT Promotional
"Tax Payment" means:
(i) where the Settlement Consideration is cash the
amount of such cash; or
(ii) where the Settlement Consideration is a
freely transferable bond, either (a) the face
value of such bond if transferred to the Holder,
(b) the amount received by Indiel or any Affiliate
on the transfer of such bond if transferred to a
third party, or (c) the amount of taxation saved
by Indiel or any Affiliate by utilising such bond
together, in each case, with any interest received
on such bonds less any tax paid on such interest;
(iii) where the Settlement Consideration is a
credit or relief against taxation (other than a
freely transferable bond) the amount of taxation
actually saved by Indiel or any Affiliate by
utilising such credit or relief.
"VAT Promotional Scheme" means the regime set forth by Laws 21,608 and
and its implementing regulations, including
Decress 435/90, 1033/91 and 2054/92 and DGI RG
3838 and 3905.
1. PAYMENTS, CURRENCY AND COMPUTATIONS.
1.1 The Company shall make each payment hereunder not later than 2:00 P.M.
(New York 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 (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.
1.2 Whenever a Due Date would otherwise occur on a day other than a
Business Day, the last day of such Due Date shall be extended to occur
on the next succeeding Business Day.
1.3 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.
2. TOTAL OBLIGATION
2.1 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 on each Date
of Utilisation to an amount equal to the aggregate amount of all Tax
Payments received by Indiel at and prior to such
time less any principal payments made by the Company to the Holder at
and prior to such time.
2.2 In the event of a dispute between the Company and the Holder
concerning the amount of any Tax Payment or any Date of Utilisation,
an independent auditor and location for audit (chosen by the Holder
and the Company (and in the absence of agreement as to the auditor,
the audit shall be by Coopers & Lybrand in New York City, New York)
and acting as an expert and not as an arbitrator) shall determine the
issue in dispute; such decision to be final and binding on the Parties
in the absence of manifest error. The Company and Indiel shall allow
such auditor reasonable access to Indiel and its books and records.
The costs of such auditor shall be borne equally by the Company and
2.3 If Indiel is no longer entitled to receive any Tax Payments as a
consequence of any action or omission of Indiel or any Affiliate of
Indiel which reduces the obligation of the Argentine Government to
make a Tax Payment, then Clause 2.1 shall apply as if a Tax Payment
had been received by Indiel equal to the amount of Tax Receivable less
the aggregate amount of all principal payments made by the Company to
the Holder prior to such time.
3. PAYMENTS OF PRINCIPAL
3.1 The Company shall pay to the Holder in full on any Due Date the
aggregate principal amount due hereunder.
3.2 Where the Settlement Consideration is a freely transferable bond, the
Company shall notify the Holder of the receipt and procure that Indiel
or any Affiliate takes such action to either transfer such bond or
utilize it to reduce or eliminate any tax liability as the Holder may
3.3 Where the Settlement Consideration is a relief or credit from taxation
(other than a freely transferable bond) the Company shall notify the
holder of the receipt and
procure that Indiel or any Affiliate takes such action as is necessary
to utilize such relief or credit as soon as possible.
3.4 If Indiel has the opportunity of recovering part or all of the Tax
Receivable in advance of the scheduled date (under DGI RG 4182) the
Company will notify the Holder and (at the cost of the Holder) procure
that Indiel takes any reasonable steps to apply for and obtain such
recovery PROVIDED THAT Indiel shall not be required to take any steps
which put it in default under any other agreement. Any amounts
received by virtue of such action will be treated as Settlement
Consideration received in cash.
3.5 Following a notification referred to in clause 3.2 or 3.3, the Company
shall procure that Indiel gives the Holder reasonable access at all
reasonable times to its financial and tax books, records, computations
and accounts for the purpose of confirmation of such Settlement
Consideration or its Date of Utilisation.
4. REDUCTION OF PRINCIPAL OBLIGATION
After all Settlement Consideration has been received and has resulted in
all Tax Payments in respect of all Tax Receivable and all principal and any
other amounts due hereunder have been paid in full, this Note shall be
surrendered to the Company for cancellation and shall not be released.
Notwithstanding any other provision contained herein, if the Tax Receivable
shall be reduced to zero pursuant to a termination of the VAT
Promotional Scheme by the Argentine Government related to such Tax
Receivable, then upon payment of all Tax Payments received prior to
such time, or in respect of Settlement Consideration then in
existence, this note shall be deemed paid in full and surrendered for
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.
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 authorization 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
7.4 This Note is the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
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 authorize 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.
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, 2100 Commonwealth Blvd., Ann Arbor, MI 48105, Attention:
President; and if to the Holder, care of Lucas Industries plc, at its
address at Stratford Road, Solihull, B90 4LA; 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 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.
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 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/ P. Kim Packard
Name: P. Kim Packard
By: /s/ Kenneth C. Cornelius
Name: Kenneth C. Cornelius
Title: Vice President
SIGNED by CHRIS LONG-LEATHER ) /s/ Chris Long-Leather
as duly authorised attorney )
for and on behalf of )
LUCAS INDUSTRIES PLC, as )
to Clause 10 only )
Chris Long-Leather as attorney for Lucas