-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FxLN8X88VWYiZiIeh3k9igbeIsTL360oMDwgwAX+FuzXv0c6c5YVVWlPG8fneGFn 6zFzK9qsWZN40nI59HGcXw== 0000929624-99-001979.txt : 19991117 0000929624-99-001979.hdr.sgml : 19991117 ACCESSION NUMBER: 0000929624-99-001979 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991002 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRESTOLITE ELECTRIC HOLDING INC CENTRAL INDEX KEY: 0001057053 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 943142033 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49429-01 FILM NUMBER: 99755810 BUSINESS ADDRESS: STREET 1: 2100 COMMONWEALTH BLVD CITY: ANN ARBOR STATE: MI ZIP: 48105 BUSINESS PHONE: 3139136600 MAIL ADDRESS: STREET 1: 2100 COMMONWEALTH BLVD CITY: ANN ARBOR STATE: MI ZIP: 48105 FORMER COMPANY: FORMER CONFORMED NAME: PEI HOLDINGS INC DATE OF NAME CHANGE: 19980304 10-Q 1 PRESTOLITE ELECTRIC HOLDING, INC. - FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark one) / X / Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended October 2, 1999. / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From ______________to_________________. Commission file Number 333-49429-01 Prestolite Electric Holding, Inc. --------------------------------- (Exact name of registrant as specified in its charter) Delaware 94-3142033 ----------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2100 Commonwealth Blvd., Ste 300, Ann Arbor, Michigan 48105 ----------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (734) 913 - 6600 ---------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, address, and former fiscal year, if changed since last report) Indicate whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ____X_____ No ____________ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Number of common shares outstanding Class: as of November 1, 1999 Common Stock 1,993,000 Page 1 FORM 10-Q TABLE OF CONTENTS Part I: Financial Information Item 1: Condensed Consolidated Balance Sheets 3 at October 2, 1999 (unaudited) and December 31, 1998 Condensed Consolidated Statement of Operations 4 Three and nine months ended October 2, 1999 (unaudited) and October 3, 1998 (unaudited) Condensed Consolidated Statements of Cash Flows 5 Nine months ended October 2, 1999 (unaudited) and October 3, 1998 (unaudited) Notes to Condensed Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Financial 12 Condition and Results of Operations Part II: Other Information 19 Signatures 20
Page 2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Condensed Consolidated Balance Sheet (in thousands, except share amounts)
October 2, December 31, 1999 1998 -------------- --------------- Assets Current Assets: Cash $ 832 $ 896 Accounts receivable, net of allowances 51,605 51,352 Inventories, net 55,556 52,082 Deferred tax asset 2,898 2,134 Prepaid and other current assets 2,203 2,286 -------------- --------------- Total current assets 113,094 108,750 Property, plant and equipment, net 55,981 56,064 Deferred tax asset 1,002 1,002 Investments 4,770 4,996 Intangible assets 10,923 11,528 Long-term receivables, pension assets and assets of discontinued operations 5,747 5,807 -------------- --------------- Total assets $ 191,517 $ 188,147 ============== =============== Liabilities Current Liabilities: Revolving credit $ 5,660 $ 4,935 Current portion of long-term debt 3,060 2,401 Accounts payable 25,223 26,088 Accrued liabilities 19,108 27,135 -------------- --------------- Total current liabilities 53,051 60,559 Long-term debt 147,169 133,416 Other non-current liabilities 1,958 3,090 -------------- --------------- Total liabilities 202,178 197,065 Stockholders' equity Common stock, par value $.01, 5,000,000 shares 2 2 authorized, 1,993,000 shares issued and outstanding at October 2, 1999 and December 31, 1998, respectively Paid-in capital 16,623 16,623 Retained earnings (accumulated deficit) (2,024) (404) Notes receivable, employees' stock purchase, 7.74% due 2002 (513) (559) Foreign currency translation adjustment (300) (131) Treasury stock, 1,310,000 shares on October 2, 1999 and December 31, 1998, respectively (24,449) (24,449) -------------- --------------- Total stockholders' equity (10,661) (8,918) -------------- --------------- Total liabilities and stockholders' equity $ 191,517 $ 188,147 ============== ===============
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 3 Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Condensed Consolidated Unaudited Statements of Operations (in thousands except share amounts)
For the three months ended For the nine months ended -------------------------------- -------------------------------- October 2, October 3, October 2, October 3, 1999 1998 1999 1998 ------------- ------------- -------------- -------------- Net Sales $ 65,433 $ 70,450 $ 195,952 $ 217,823 Cost of goods sold 52,580 56,198 156,878 174,117 ------------- ------------- -------------- -------------- Gross profit 12,853 14,252 39,074 43,706 Selling, general and administrative 9,472 9,732 28,786 29,370 Costs associated with option repurchase - - - 2,101 Restructuring charge - - - 980 ------------- ------------- -------------- -------------- Operating income 3,381 4,520 10,288 11,255 Interest expense 4,029 3,425 11,915 9,951 Other expense (income) (201) 47 (1,249) (475) ------------- ------------- -------------- -------------- Income (loss) from continuing operations before extraordinary loss and income taxes (447) 1,048 (378) 1,779 Loss (benefit) from unconsolidated subsidiaries 44 - 160 - Provision for income taxes 312 369 1,082 632 ------------- ------------- -------------- -------------- Income (loss) from continuing operations (803) 679 (1,620) 1,147 Extraordinary loss, net of taxes of $716 - - - 1,275 for the nine months ended October 3, 1998 ------------- ------------- -------------- -------------- Net income (loss) $ (803) $ 679 $ (1,620) $ (128) ============= ============= ============== ============== Other comprehensive income (expense): Foreign currency translation adjustment $ 1,899 $ 865 $ (169) $ (62) ------------- ------------- -------------- -------------- Comprehensive income (loss) $ 1,096 $ 1,544 $ (1,789) $ (190) ============= ============= ============== ============== Basic earnings per common share Income (loss) from continuing operations $ (0.40) $ 0.34 $ (0.81) $ 0.54 Extraordinary item $ - $ - $ - $ (0.61) ------------- ------------- -------------- -------------- Net income (loss) $ (0.40) $ 0.34 $ (0.81) $ (0.07) ============= ============= ============== ============== Diluted earnings per common share Income (loss) from continuing operations $ (0.40) $ 0.32 $ (0.81) $ 0.54 Extraordinary item $ - $ - $ - $ (0.61) ------------- ------------- -------------- -------------- Net income (loss) $ (0.40) $ 0.32 $ (0.81) $ (0.07) ============= ============= ============== ============== Basic shares outstanding 1,993,000 1,993,000 1,993,000 2,105,052 Dilutive shares outstanding 2,125,886 2,103,860 2,126,219 2,224,501
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 4 Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Condensed Consolidated Unaudited Statement of Cash Flows (in thousands)
1999 1998 -------------- -------------- Cash Flows from Operating Activities: Net income (loss) $ (1,620) $ (128) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Loss on debt refinancing - 1,991 Option repurchase - 2,101 Cash provided by discontinued operations 170 1,603 Depreciation 8,117 8,215 Amortization 1,410 800 Gain on sale of property, plant, and equipment (128) (236) Loss from unconsolidated subsidiaries 160 - Deferred taxes (764) (1,431) Changes in working capital items (13,576) (4,239) -------------- -------------- Net cash provided by (used in) operating activities (6,231) 8,676 Cash Flows from Investing Activities: Capital expenditures (6,782) (7,806) Proceeds from disposal of fixed assets 239 18 Acquisition of: Lucas businesses - (49,943) Roberts Remanufacturing (2,958) - Investment in affiliates 66 (2,640) -------------- -------------- Net cash used in investing activities (9,435) (60,371) Cash Flows from Financing Activities: Net increase in revolving line of credit 14,471 2,990 Payments on long-term debt - (32,146) Proceeds from borrowings 659 125,000 Costs related to new borrowings, including loss on refinancing - (5,785) Purchase of treasury stock, options and warrants, employee stock receivable 46 (29,895) Borrowings (payments) on capital leases 26 (173) Other financing costs, net (19) (6,773) -------------- -------------- Net cash provided by financing activities 15,183 53,218 Effect of exchange rate changes on cash 419 141 -------------- -------------- Net increase (decrease) in cash (64) 1,664 Cash - beginning of period 896 455 -------------- -------------- Cash - end of period $ 832 $ 2,119 ============== ==============
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 5 Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Notes to Unaudited Condensed Consolidated Financial Statements Note 1: General Information Prestolite Electric Holding, Inc. conducts all of its operations through its wholly-owned principal subsidiary, Prestolite Electric Incorporated. There are no material differences between the financial statements of Prestolite Electric Holding, Inc. and Prestolite Electric Incorporated (collectively, "Prestolite," "us," "we" or the "Company"). These unaudited condensed consolidated financial statements have been prepared by us in accordance with Rule 10-01 of Regulation S-X and have been prepared on a basis consistent with our audited financial statements for the year ended December 31, 1998. These statements reflect all adjustments, consisting only of items of a normal recurring nature, which are, in the opinion of management, necessary for the fair statement of the consolidated financial condition and consolidated results of operations for the interim period presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements and the related notes should be read in conjunction with our audited financial statements, the notes to those statements and the other material included in our Annual Report on Form 10-K for the year ended December 31, 1998. The year-end 1998 condensed balance sheet data was derived from our audited financial statements, but does not include all information and footnotes required by generally accepted accounting principles for complete financial statements. The results of operations for the three- and nine-month periods ended October 2, 1999 are not necessarily indicative of the operating results that may be expected for the full year or any other interim period. Genstar Capital Corporation and Company management own all of the equity securities of Prestolite Electric Holding, Inc. Note 2: Acquisitions On January 15, 1999, we acquired a remanufacturing business unit from Roberts Generator for $2.9 million. This business unit operates as Roberts Remanufacturing and rebuilds alternators and starter motors for specialty applications. We financed this purchase with funds borrowed under our United States revolving line of credit. On January 22, 1998 Prestolite acquired the heavy duty products division of Lucas Industries, plc. (a U. K. corporation), Lucas South Africa and Lucas Indiel Argentina S. A., collectively referred to as "the Lucas Acquisition," for approximately $44.3 million in cash, net of cash acquired and including the assumption of approximately $3.2 million in debt, inventory purchases of approximately $1.4 million during 1998, and up to $4.1 million for certain accounts receivable as they are collected ($1,074,000 paid during 1998, and $0.1 million paid to date in 1999). In addition, Prestolite has agreed to pay Lucas up to an additional $6.6 million if certain operating targets are achieved in Argentina in 1999 and 2000 and up to $ 4.9 million if certain fully reserved receivables are collected. No liability for this $11.5 million is accrued, as management does not consider payment probable. Any future payments will be recorded as an Page 6 adjustment to the purchase price. In addition, on January 22, 1998, Prestolite Electric Incorporated completed the offering of $125 million of 9.625% Senior Notes due 2008 (the "Notes"). The proceeds of the Notes funded the Lucas Acquisition and repaid approximately $42 million of our outstanding indebtedness. Approximately $29.7 million of the proceeds were also used for the repurchase of common stock, warrants and options to purchase common stock. These transactions are more fully described in our Annual Report on Form 10-K for the year ended December 31, 1998. In conjunction with these transactions, during the first quarter of 1998 the Company charged operations for $2.1 million for the repurchase of options and recorded an extraordinary charge of $1.275 million, net of tax benefit, related to the debt refinancing. The Company also recorded a $0.98 million restructuring charge in the first quarter of 1998 related to costs anticipated to be incurred at the Company's existing facilities as a result of the Lucas Acquisition. Note 3: Inventories Inventories are summarized as follows (in thousands of U.S. dollars):
As of As of October 2, December 31, 1999 1998 ----------- ---------- Raw Material $16,953 $15,014 Work in Progress 16,619 16,171 Finished Goods 21,984 20,897 ----------- ---------- $55,556 $52,082 =========== ==========
Note 4: Property, Plant and Equipment Property, Plant and Equipment consists of the following (in thousands of U.S. dollars):
As of As of October 2, December 31, 1999 1998 ---------- ----------- Land & Buildings $ 29,725 $ 29,433 Machinery & Equipment 60,515 54,863 Construction in Progress 3,927 2,699 ---------- ----------- Total, at Cost 94,167 86,995 Accumulated Depreciation (38,186) (30,931) ---------- ----------- Net $ 55,981 $ 56,064 ========== ===========
Page 7 Note 5: Investments Investments consist of the following (in thousands of U.S. dollars):
As of As of October 2, December 31, 1999 1998 ----------- ------------ DAX Industries, Inc. (35% interest) $1,671 $1,869 Ecoair Corp. (7% interest, at cost) 2,000 2,000 Prestolite Asia Ltd. (50% interest) 576 530 Auto Ignition, Ltd. (4% interest, at cost) 523 597 ----------- ------------ $4,770 $4,996 =========== ============
Note 6: Debt In 1998 we issued $125 million of 9.625% (interest payable semiannually) unsecured senior notes. The senior notes mature on February 1, 2008 but may be redeemed earlier at our option under conditions specified in the indenture pursuant to which the senior notes were issued. The senior notes are senior unsecured obligations of Prestolite Electric Incorporated and are fully and unconditionally guaranteed on a senior unsecured basis by Prestolite Electric Holding, Inc. The senior notes are subordinated to our secured credit facilities, to the extent of the value of the assets securing such indebtedness, including the secured facilities described below. The senior notes are also subordinated to the indebtedness of any subsidiary of Prestolite Electric Incorporated, including the indebtedness of its United Kingdom subsidiary. The proceeds were used to refinance existing debt, fund the acquisition of the Lucas businesses and to repurchase certain Prestolite Electric Holding, Inc. securities. The senior notes are more fully described in our Prospectus dated June 26, 1998. In connection with the issuance of the Notes, we entered into new credit agreements in the U. S. and the U. K. The U. S. agreement consists of a $23.0 million revolving credit facility ($23.0 million available at October 2, 1999) which is advanced according to a formula based on eligible accounts receivable and inventory levels. The borrowings are collateralized by all U. S. accounts receivable and inventories and mature on July 31, 2000. Interest is payable at the bank's prime rate (8.25 percent at October 2, 1999) or at the "London Late Eurodollar" rate plus 2.75 percent at our option. In certain situations these rates may be increased by 0.125 percent. On November 2, 1999, the Company revised its United Kingdom borrowing arrangements. The revised agreement makes available an overdraft facility of (Pounds)4.0 million with interest at 1.25% above the bank's base rate (5.25% at November 1, 1999), a (Pounds)2.0 million floating rate term loan with interest at 1.35% above the bank's base rate and principal payable over 60 months, and a (Pounds)2.0 million fixed rate term loan with an interest rate to be established upon the drawing of the loan. The Company intends to draw the full amount of the floating rate term loan and a portion of the overdraft facility in November, 1999. The receivables and facilities of the Company in the United Kingdom secure these loans. In Argentina and South Africa, we have arrangements with several banks which allow our subsidiaries in these countries to discount or borrow against accounts receivable, generally at the prime rates of the banks involved. Those rates ranged from 16.9 percent to 18.0 percent at Page 8 October 2, 1999. Total available credit in Argentina and South Africa at October 2, 1999 was approximately $5.1 million. Debt consists of the following (in thousands of U.S. dollars):
As of As of October 2, December 31, 1999 1998 ------------ ------------- U.S. Bank Debt $ 20,628 $ 3,366 U.S. Unpresented Checks 1,299 385 U.K. Bank Debt 4,327 8,132 Argentina Bank Debt 2,729 2,120 South Africa Bank Debt 571 269 Senior Notes 125,000 125,000 Capital Lease Obligations 1,222 1,196 Other Debt 113 284 ------------ ------------- Total Debt 155,889 140,752 Current Maturities 8,720 7,336 ------------ ------------- Long Term Debt $147,169 $133,416 ============ ============= Cash 832 896 ------------ ------------- Total Debt net of Cash $155,057 $139,856 ============ =============
The current maturities shown above represent $660,000 of required principal payments on the United Kingdom term loan, all Argentina bank debt, and management's estimate of the maximum amounts to be paid down in the next year on revolver and overdraft facilities for which no principal repayment is specified. The Company was in violation of the fixed charge covenant of its United States bank agreement at October 2, 1999. On October 28, 1999, the bank waived the violation and the covenant was amended to reduce the fixed charge coverage requirements through December 30, 2000. The Company presently anticipates that it will be able to comply with the amended covenant. Note 7: Segment Reporting In 1998, the Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. Prior quarter information is restated to conform with the provisions of SFAS No. 131. Prestolite operates in four principal geographic regions. Sales in South Africa and Argentina consist largely of products for the automotive market while sales of products in the United States and United Kingdom consist largely of products for non-automotive applications. Sales between geographic segments and between operating segments are priced at cost plus a standard markup. Sales to external customers, based on country of origin, is as follows (in thousands of U.S. dollars): Page 9
North United South America Kingdom Argentina Africa Total ----------- ----------- ----------- ----------- ----------- For quarter ended October 2, 1999 $ 37,205 $18,940 $ 5,250 $ 4,038 $ 65,433 For quarter ended October 3, 1998 36,543 16,712 14,236 2,959 70,450 For nine months ended October 2, 1999 $108,193 $48,365 $28,407 $10,987 $195,952 For nine months ended October 3, 1998 106,822 54,367 46,780 9,854 217,823
During 1998, the Company began to manage itself on the basis of three business units (Heavy Duty Systems, Electric Vehicle Systems, and Automotive Systems) and to evaluate the performance of its segments based on earnings before interest expense, taxes, depreciation and amortization and excluding restructuring and option repurchase charges ("EBITDA"). Corporate overhead and certain other charges are not allocated to the divisions. Segment assets are not currently broken out in the normal course of managing segment operations; accordingly, such information is not available for disclosure. In accordance with SFAS No. 131, the operating results for the quarters ended October 2, 1999 and October 3, 1998 are summarized by operating segment (in thousands of U.S. dollars) below:
Heavy Electric Duty Vehicle Automotive Systems Systems Systems Unallocated Division Division Divison Costs Total ----------- ----------- ----------- --------------- -------------- Sales to external customers: For quarter ended October 2, 1999 $ 36,041 $20,104 $ 9,288 $ - $ 65,433 For quarter ended October 3, 1998 32,758 20,497 17,195 - 70,450 EBITDA: For quarter ended October 2, 1999 5,766 1,967 264 $(1,031) 6,966 For quarter ended October 3, 1998 4,371 2,558 2,415 (1,733) 7,611 Sales to external customers: For nine months ended October 2, 1999 100,593 55,965 39,394 - 195,952 For nine months ended October 3, 1998 100,778 60,409 56,636 - 217,823 EBITDA: For nine months ended October 2, 1999 15,898 6,122 2,915 (3,871) 21,064 For nine months ended October 3, 1998 14,012 8,653 5,785 (4,624) 23,826
Page 10 A reconciliation of EBITDA to income from continuing operations before income taxes follows (in thousands of U.S. dollars):
For the three months ended October 2, October 3, 1999 1998 ------------ ------------ EBITDA for reporting segments $ 6,966 $ 7,611 Depreciation and amortization 3,384 3,138 Loss in unconsolidated subsidiaries 44 - Interest expense 4,029 3,425 ------------ ------------ Income (loss) from continuing operations before income taxes $ (403) $ 1,048 ============ ============ For the nine months ended October 2, October 3, 1999 1998 ------------ ----------- EBITDA for reporting segments $ 21,064 $ 23,826 Depreciation and amortization 9,527 9,015 Loss in unconsolidated subsidiaries 160 - Option repurchase - 2,101 Restructuring - 980 Interest expense 11,915 9,951 ------------ ----------- Income (loss) from continuing operations before income taxes $ (218) $ 1,779 ============ ===========
Page 11 ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operation. Overview We manufacture alternators, starter motors, direct current motors, battery chargers, and switching devices. These are supplied under the "Prestolite," "Leece-Neville," "Hobart," "Lucas," and "Indiel" brand names for original equipment and aftermarket application on a variety of vehicles and industrial equipment. "Hobart" is used under license from a subsidiary of Illinois Tool Works, Inc. "Lucas" is used under license from a subsidiary of LucasVarity plc. Most of our products are component parts used on diesel engines, automobiles and electric vehicles, sold to both aftermarket customers and original equipment manufacturers. We sell our products to a variety of markets, in terms of both end-use and geography. In January 1998, we acquired three businesses from a subsidiary of LucasVarity plc. These businesses operate in England, South Africa, and Argentina. We purchased these businesses for approximately $44.3 million in cash, net of cash acquired and including the assumption of $3.2 million in debt, plus certain future obligations, as described in Note 2 to the financial statements. The Lucas acquisition was financed from the sale of $125.0 million of 9.625% senior notes due 2008 issued under Rule 144A of the Securities Act of 1933, as amended. Proceeds from the offering of our senior notes were also used to repay existing debt in the United States and United Kingdom, to repurchase all the warrants issued to holders of the Company's subordinated debt, to repurchase 40% of the common stock held by Genstar Capital Corporation, to repurchase 8.5% of the common stock held by management and to repurchase 40% of the options held by management. The total cost associated with the repurchase of these securities was approximately $29.7 million. In January 1999, we acquired a remanufacturing business that continues to operate in Saddlebrook, NJ. We purchased this business for $2.9 million, financed through our U.S. revolving line of credit. During 1998, we organized our business into three divisions. While the three divisions bear the names of their principal markets, no division sells exclusively into its target market. Further, each division has some sales into the target markets of the other divisions. The Heavy Duty Systems Division produces alternators, starter motors, inline pumps, control boxes and other products, primarily for installation on diesel engines used in the heavy duty, defense, marine and industrial markets. The division's major facilities are in Arcade, NY; Florence, KY; Acton, England; and Leyland, England, with a smaller remanufacturing facility in Garfield, NJ (previously located in Saddlebrook, NJ and reported with the Automotive Systems Division). The Electric Vehicle Systems Division produces motors (including starter motors, material handling motors, and pump and winch motors), controls (including contactors, solenoids, relays, distributors, and control boxes), battery chargers and other products. The division's major facilities are in Decatur, AL; Wagoner, OK; Florence, KY; Troy, OH; and Leyland, England, with a smaller remanufacturing facility in Dearborn, MI (previously reported with the Automotive Systems Division). We sell these products into many of the same markets as the Page 12 products of our Heavy Duty Systems Division. In addition, the products of our Electric Vehicles Systems Division are sold into the material handling market for installation on or use with lift trucks and other electric vehicles; the truck accessory market for use in winches, snow plow lifts and other applications; and the telecommunications market where contactors are used in battery backup systems. The Automotive Systems Division manufactures automotive components, primarily alternators and starter motors. The division's facilities are in South Africa and Argentina. The Argentina operation also manufactures steering columns and distributors. Some of the products of this division are sold into the heavy duty and material handling markets. In both South Africa and Argentina more than half of our sales are to the automotive aftermarket, and about half of those aftermarket sales are products purchased for resale. Results of Operations Three Months Ended October 2, 1999 Compared to Three Months Ended October 3, 1998 Sales for the three months ended October 2, 1999 were $65.4 million, a decrease of $5.0 million, or 7.1%, from $70.5 million in the third quarter of 1998. The decrease in sales dollars is mainly attributable to the Automotive Systems Division. Automotive Systems sales declined $7.9 million or 45.9%. An Argentina sales decline of $9.0 million was partially offset by a $1.1 million increase in sales in South Africa. Heavy Duty Systems sales increased $3.3 million or 10.0%. Heavy Duty Systems sales in the United Kingdom declined $0.4 million but were offset by a $3.7 million increase in Heavy Duty Systems sales in the United States, including $1.1 million in Roberts Remanufacturing sales. While Heavy Duty Systems defense sales in the United States declined $2,000, or 0.2%, other U.S. sales, not including the Roberts Remanufacturing sales, increased by $2.6 million, or 13.9%. Electric Vehicle Systems sales declined $0.4 million or 1.9%. Contributing to this were declines in defense sales of $0.4 million, or 21.7%, material handling sales of $0.4 million, or 17.1%, Beech Remanufacturing sales of $74,000, or 13.2%, and other U.S. sales of $0.2 million. These declines were offset by an Electric Vehicle sales increase in the United Kingdom of $0.7 million, or 26.3%. Gross profit was $12.9 million in the third quarter of 1999, or 19.6% of sales. This compares to gross profit of $14.3 million, or 20.2% of sales, in the third quarter of 1998. Lower sales volume, higher material costs, and a shift to sales of lower margin products contributed to this decline. Selling, general, and administrative expense was $9.5 million, or 14.5% of sales, for the third quarter of 1999, a decrease of $0.3 million, or 2.9%, from $9.7 million, or 13.8% of sales, in the third quarter of 1998. Reduction in selling, general, and administrative expense in our international locations continues to reflect the cost control benefits of the integration of the businesses acquired in the Lucas acquisition. This reduction is offset in part by the increased selling, general, and administrative expense in the U.S. Heavy Duty Systems due to the Roberts acquisition. Operating income in the third quarter of 1999 was $3.4 million, or 5.2% of sales, a decrease of $1.1 million, or 25.2%, from the $4.5 million, or 6.4% of sales, in the third quarter of 1998. This was due to the factors discussed above. Other income was $201,000 in the third quarter of 1999 versus other expenses of $47,000 in the third quarter of 1998. This consists of the net effect of interest income, pension expense for Page 13 inactive defined benefit pension plans associated with United States facilities that have been closed, foreign currency exchange losses, royalty expenses, South Africa export rebate income and South Africa trademark expense. Interest expense was $4.0 million in the third quarter of 1999, an increase of $0.6 million, or 17.6%, compared to $3.4 million in the third quarter of 1998. This increase is due to increases in bank debt in the United States and the United Kingdom. The provision for income taxes was $312,000, 69.8% of the loss from continuing operations before taxes, for the third quarter of 1999 as compared to the $369,000 provision for income taxes for the third quarter of 1998, 35.2% of income from continuing operations before taxes and the extraordinary item. The change in the tax rate is due to losses in Argentina for which no tax benefit has been recorded. Nine Months Ended October 2, 1999 Compared to Nine Months Ended October 3, 1998 Sales for the nine months ended October 2, 1999 were $196.0 million, a decrease of $21.9 million, or 10.0%, from $217.8 million in the first nine months of 1998. The decrease in sales dollars is mainly attributable to the Automotive Systems Division. Automotive Systems sales declined $17.2 million or 30.4%. An Argentina sales decline of $18.3 million was partially offset by a $1.1 million increase in sales in South Africa. Heavy Duty Systems sales declined $185,000 or 0.2%. Heavy Duty Systems sales in the United Kingdom declined $6.3 million but were offset by a $6.1 million increase in Heavy Duty Systems sales in the United States, including an increase of $3.7 million in Roberts Remanufacturing sales for the period. While Heavy Duty Systems defense sales in the United States declined $0.5 million, or 14.2%, other heavy Duty systems sales in the United States increased by $2.9 million, or 5.7%, not including the $3.7 million increase in Roberts Remanufacturing sales. Electric Vehicle Systems sales declined $4.4 million or 7.4%. Contributing to this were declines in defense sales of $3.2 million, or 44.7%, in material handling sales of $1.6 million, or 21.9%, Beech Remanufacturing sales of $208,000, or 11.5%, and other U.S. sales of $0.3 million. Electric Vehicle Systems sales in the United Kingdom increased $878,000, or 10.3%, partially offsetting the declines in other areas. Gross profit was $39.1 million in the first nine months of 1999, or 19.9% of sales. This compares to gross profit of $43.7 million, or 20.1% of sales, for the first nine months of 1998. The decrease in gross profit as a percent of sales results from several factors. Ongoing cost cutting measures in the United Kingdom and Argentina have reduced overhead costs. The benefit of these reductions is offset by declining volume, higher material costs, and a shift in sales to lower margin products at some locations. The Roberts Remanufacturing business, acquired in January 1999, has higher margins than the company average, mitigating some of the decline. Selling, general, and administrative expense was $28.8 million, or 14.7% of sales, for the first nine months of 1999, a decrease of $0.6 million, or 2.0%, from $29.4 million, or 13.5% of sales, in the first nine months of 1998. Reduction in selling, general, and administrative expense in our international locations continues to reflect the cost control benefits of the integration of the businesses acquired in the Lucas acquisition. This reduction is offset in part by the increased selling, general, and administrative expense in U.S. Heavy Duty Systems due to the Roberts acquisition. Page 14 We recorded a $2.1 million charge in January of 1998 to reflect our repurchase from management of 40% of then-outstanding options to purchase our common stock. We also recorded a first quarter charge in 1998 of $1.0 million to cover severance payments related to restructuring activities at our facilities in Leyland, England and Decatur, Alabama. Of this total, $0.5 million was spent in 1998 and $0.2 million was spent in the first nine months of 1999. The remainder is expected to be spent during the fourth quarter of 1999. Operating income in the first nine months of 1999 was $10.3 million, or 5.3% of sales, a decrease of $967,000, or 8.6%, from the $11.3 million, or 5.2% of sales, in the first nine months of 1998. This was due to the factors discussed above. Other income was $1.2 million in the first nine months of 1999 versus $475,000 in the first nine months of 1998. This consists of South Africa export rebate income, the elimination of a lawsuit-related reserve in Argentina in 1999, proceeds on the sales of fixed assets, interest income, and miscellaneous income. These were partially offset by pension expense for inactive defined benefit pension plans associated with United States facilities that have been closed, foreign currency exchange losses, royalty expenses, and South Africa trademark expense. Interest expense was $11.9 million in the first nine months of 1999, an increase of $2.0 million, or 19.7%, compared to $9.9 million in the first nine months of 1998. This increase is due to increases in bank debt in the United States, United Kingdom and South Africa, as well as increases in capital leases, as compared to levels of debt in the first nine months of 1998. The provision for income taxes was $1.1 million on the $378,000 loss from continuing operations before taxes for the first nine months of 1999. This compares to a provision for income taxes of $632,000 for the first nine months of 1998, 35.5% of income from continuing operations before taxes and the extraordinary item. The higher 1999 tax rate is due to losses in Argentina for which tax benefits have not been recorded. In conjunction with the incurrence of additional debt, the refinancing of our existing debt and repurchase of warrants, we recorded an extraordinary item of $1.3 million net-of-tax in 1998. On a pretax basis this charge covered $728,000 in debt prepayment fees, $335,000 for the write-off of unamortized financing costs, $733,000 to write off the unamortized discount on subordinated debt and $195,000 related to the repurchase of warrants. Liquidity and Capital Resources Cash used by operating activities in the first nine months of 1999 was $6.2 million. Capital spending for the first nine months of 1999 was $6.8 million, a $1.0 million reduction from the $7.8 million of capital spending in the first nine months of 1998. Capital spending for the first nine months of 1999 in the Unites States was $3.7 million as compared to capital spending in 1998 of $4.9 million. Capital spending for the first nine months of 1999 in the United Kingdom of $1.4 million, in Argentina of $1.4 million, and in South Africa of $0.3 million, compares to the first nine months of 1998 levels in the United Kingdom of $1.6 million, in Argentina of $0.7 million, and in South Africa of $0.6 million. Planned capital expenditures consist primarily of expenditures to reduce costs through automation, replace existing equipment and enable us to manufacture new products. Page 15 We spent $4.9 million in 1998 and $1.4 million in the first nine months of 1999 on redundancy costs. We expect to spend approximately $1.4 million in the fourth quarter of 1999 on redundancy costs. These amounts have been or will be charged to the reserves established in connection with the Lucas acquisition in 1998 or as a result of the 1998 restructuring charge discussed above. In connection with the acquisition of our Argentina operations from Lucas in 1998, we agreed to certain future obligations to Lucas. Remaining obligations include post-closing payments to Lucas of up to $3.0 million upon the collection of certain receivables expected to be collected in 1999, 2000, and 2001, up to $4.9 million contingent upon the collection of certain fully-reserved receivables and up to $6.6 million contingent upon the achievement by our Argentina subsidiary of certain earnings targets in 1999 and 2000. Aggregate payments for receivables collected totaled $1.1 million in 1998 and $0.1 million in the first nine months of 1999. We expect to pay any of these contingencies from the collection of receivables or from such earnings. Debt, net of cash, increased from $139.9 million at December 31, 1998 to $155.1 million at October 2, 1999. The increase was due, in part, to the acquisition of the Roberts Remanufacturing business in January 1999. We had revolving credit facilities with banks in the United States and United Kingdom under which additional borrowings of $1.9 million and $5.4 million were available based on the October 2, 1999 levels of receivables (United States and United Kingdom) and inventory (United States only) which are pledged to support that debt. In addition, during July 1999, we modified our U.S. bank agreement to allow borrowings above the amount supported by receivables and inventory. The additional amount is $3.0 million effective July 30, 1999 declining in steps to zero at December 1, 1999. In Argentina and South Africa, we have arrangements with several banks permitting discounting or borrowing against receivables. Total net additional credit available in Argentina and South Africa as of October 2, 1999 was approximately $1.9 million. In November 1999, we increased the amounts which can be borrowed in the United Kingdom, as described in Note 6 to the financial statements. We expect our liquidity needs to consist primarily of working capital needs and scheduled payments of principal and interest on our indebtedness. We expect our short-term liquidity needs to be provided by operating cash flows and borrowings under our revolving credit facilities. We expect to fund our long-term liquidity needs from our operating cash flows, the issuance of debt and/or equity securities and bank borrowings. We believe that cash flows from operations, our existing cash balances and amounts available under these revolving credit facilities will provide adequate funds for on going operation, planned capital expenditures, investments, and debt service for at least the next twelve months. Estimates as to working capital needs and other expenditures may be materially affected if the foregoing sources are not available or do not otherwise provide sufficient funds to meet our obligations. Year 2000 Currently, many automated systems and software products are coded to accept only two digit entries in the date code field. These date code fields will need to accept four digit entries or otherwise be modified to distinguish 21st century dates from 20th century dates. As a result, many companies' information systems and software need to be upgraded or replaced in order to function correctly after December 31, 1999. We have completed our Year 2000 assessments of our information technology and embedded systems, and are continuing efforts to prepare our systems and applications for the Year 2000 as Page 16 part of a larger, general program to enhance all of our computer systems. The Year 2000 element of these efforts consists primarily of installing or upgrading enterprise resource planning systems to be Year 2000 compliant at our United States, United Kingdom and Argentina facilities, and ensuring compliance by an outside service bureau utilized by our South African facility. All software remediation efforts are complete as of October 2, 1999. Because the majority of our operations outside of the United States were acquired in early 1998 and these operations were not Year 2000 compliant, our efforts to deal with the Year 2000 issue outside the United States required a larger investment than our domestic programs. In Argentina, a new Year 2000 compliant system has been installed. In the United Kingdom, a system used in two locations was replaced with Year 2000 compliant systems, while the system in use at a third location was upgraded for Year 2000 compliance. In addition, we have reviewed our product base and believe that our products will not be affected by Year 2000 issues. In connection with the overall computer enhancement program, including Year 2000 compliance, we expect to incur aggregate internal and third party costs of approximately $3.0 million, of which approximately $2.6 million had been incurred by the third quarter of 1999. The $3.0 million total includes approximately $0.5 million related to in-house efforts to enhance the performance of our United States warehousing systems, approximately $1.0 million for each of the United Kingdom and Argentina software conversions and approximately $0.5 million related to ancillary Year 2000 efforts. We rely on third party vendors and service providers for certain products and services, including certain data processing capabilities. We are communicating with our principal vendors and service providers to assess the Year 2000 readiness of their products and services. Responses indicate that our significant providers currently have compliant versions available or are well into renovation and testing phases with completion scheduled prior to December 31, 1999. However, we can give no guarantee that the systems of these vendors and service providers in which we rely will be timely Year 2000 compliant. Our contingency planning for Year 2000 issues related primarily to securing backup vendors (which have been identified for key purchased products) and the possibility of stockpiling raw materials. Contingency planning will continue throughout 1999 and our plans will be modified based upon the progress of our remediation efforts, system updates and installations and based upon our communications with selected suppliers. While we believe that the estimated cost of becoming Year 2000 compliant will not be significant to our results of operations, failure to complete all the work in a timely manner could have a material adverse effect on our results of operations. While we expect all planned work to be completed, we cannot guarantee that all systems will be in compliance by the Year 2000, that the systems of suppliers and other companies and government agencies on which we rely will be converted in a timely manner or that our contingency planning will be able to fully address all potential interruptions. Therefore, date-related issues could cause delays in our ability to produce or ship our products, process transactions or otherwise conduct business in any of our markets. Forward-Looking Statements This form 10-Q contains, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included herein may contain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as Page 17 "may", "will", "expect", "intend", "estimate", "anticipate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. Such forward-looking statements are based upon information currently available in which our management shares its knowledge and judgement about factors that they believe may materially affect our performance. We make the forward-looking statements in good faith and believe them to have a reasonable basis. However, such statements are speculative, speak only as of the date made and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could vary materially from those anticipated, estimated or expected. Factors that might cause actual results to differ materially from those in such forward-looking statements include, but are not limited to, those discussed in the "Management's Discussion and Analysis of Financial Condition and Results of Operations." All subsequent written and oral statements that we make are qualified in their entirety by these factors. Page 18 PART II. OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. None Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 10.1 Amendment Number 1 to U.S. Credit Facility 10.2 Amendment Number 2 to U.S. Credit Facility 10.3 Amendments to U.K. Credit Facility 27.1 Financial Data Schedule (b) Reports on Form 8-K We have not filed any reports on Form 8-K during the quarterly period ended October 2, 1999. Page 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 15, 1999 By: /s/ Kenneth C. Cornelius ------------------------ Kenneth C. Cornelius Senior Vice President and Chief Financial Officer (principal financial and accounting officer) Page 20 EX-10.1 2 AMENDMENT NO. 1 TO U.S. CREDIT FACILITY Exhibit 10.1 AMENDMENT NO. 1 TO CREDIT AGREEMENT THIS AMENDMENT, dated as of July 30, 1999, by and between Prestolite Electric Incorporated, a Delaware corporation, of Ann Arbor, Michigan (herein called "Company"), and Comerica Bank, a Michigan banking corporation, of Detroit, Michigan (herein called "Bank"). W I T N E S S E T H: WHEREAS, said parties desire to amend that certain Second Amended and Restated Credit Agreement dated as of December 31, 1998, entered into by and between Company and Bank (herein called "Agreement"), to extend the maturity date of the line of credit, to revise the borrowing base, to change the Applicable Margins, and to make other revisions; NOW, THEREFORE, IT IS AGREED that the Agreement is amended as follows: 1. The definition of "Applicable Eurodollar Margin" in Section 1 is amended to read in its entirety as follows: "Applicable Eurodollar Margin" shall mean, as of any date of determination thereof, the following Margins:
---------------------------------------------------------------------------------- The Applicable Eurodollar Margin is: -------------------------------------------------------- If Funded Debt Margin Reduction Non-Margin Ratio ("x") is: Period Reduction Period ---------------------------------------------------------------------------------- x more than 5.5 3.25% 3.375% ---------------------------------------------------------------------------------- 5 less than x less than or equal to 5.5 3% 3.125% ---------------------------------------------------------------------------------- 4 less than x less than or equal to 5 2.75% 2.875% ---------------------------------------------------------------------------------- 3.5 less than x less than or equal to 4 2.5% 2.625% ---------------------------------------------------------------------------------- 3 less than x less than or equal to 3.5 2.25% 2.25% ---------------------------------------------------------------------------------- x less than or equal to 3 2% 2.0% ----------------------------------------------------------------------------------
2. The definition of "Applicable Prime-based Margin" in Section 1 is amended to read in its entirety as follows: "Applicable Prime-based Margin" shall mean as of any date of determination thereof, the following margins: Page 21
The Applicable Prime-based Margin is: --------------------------------------------------- If Funded Debt Margin Reduction Non-Margin Ratio ("x") is: Period Reduction Period ------------------------------------------------------------------------------ x more than 5.5 .50% .625% ------------------------------------------------------------------------------ 5 less than x less than or equal to 5.5 .25% .375% ------------------------------------------------------------------------------ 4 less than x less than or equal to 5 0 .125% ------------------------------------------------------------------------------ 3.5 less than x less than or equal to 4 0 0 ------------------------------------------------------------------------------ 3 less than x less than or equal to 3.5 0 0 ------------------------------------------------------------------------------ x less than or equal to 3 0 0 ------------------------------------------------------------------------------
3. The definition of "Revolving Credit Maturity Date" in Section 1 is amended by deleting the July 31, 2000 where it appears therein and replacing it with the date July 31, 2001. 4. The definition of "Borrowing Base" in Section 1 is amended to read in its entirety as follows: "Borrowing Base" shall mean as of any date of determination, (i) at all times other than during a Margin Reduction Period the sum of (a) 84% of Eligible Accounts plus (b) the lesser of 35% of Eligible ---- Inventory or $9,000,0000, plus (c) the Overformula Amount, and (ii) ---- during any Margin Reduction Period, the sum of (a) 80% of Eligible Accounts, plus (b) the lesser of 25% of Eligible Inventory or ---- $9,000,000, plus the Overformula Amount." ---- 5. Section 1 is amended by adding a new definition of "Overformula Amount" to read in its entirety as follows: "Overformula Amount" shall mean (i) $3,000,000 for the period from July 30, 1999 to September 30, 1999, (ii) $1,500,000 for the period from October 1, 1999 to November 30, 1999, and (iii) $0 at all times thereafter. 6. Section 1 is amended by adding a new definition of "Applicable Commitment Fee Percentage" to read in its entirety as follows: "Applicable Commitment Fee Percentage" shall mean as of the date of determination thereof, the following per annum rate: Page 22
The Applicable Commitment Fee If Funded Debt Ratio ("x") is: Percentage is: ------------------------------------------------------------------------------ x more than 5.5 .625% ------------------------------------------------------------------------------ 5 less than x less than or equal to 5.5 .50% ------------------------------------------------------------------------------ 4 les than x less than or equal to 5 .375% ------------------------------------------------------------------------------ 3.5 less than x less than or equal to 4 .25% ------------------------------------------------------------------------------ 3 less than x less than or equal to 3.5 .25% ------------------------------------------------------------------------------ x less than or equal to 3 .25% ------------------------------------------------------------------------------
7. Section 2.2 is amended to read in its entirety as follows: "2.2 The Revolving Credit Note shall mature on the Revolving Credit Maturity Date and each Advance from time to time outstanding thereunder shall bear interest at its Applicable Interest Rate. The amount and date of each Advance, its Applicable Interest Rate, its Interest Period, and the amount and date of any repayment shall be noted on Bank's records, which records will be conclusive evidence thereof. Effective July 30, 1999, the Applicable Margins shall be 2.875% for Eurodollar-based Advances and .125% for Prime-based Advances. Adjustments to the Applicable Margin based on the Funded Debt Ratio shall be implemented as follows: (a) Such Applicable Margin adjustments shall be given prospective effect only, effective immediately as to any Prime-based Advance, and as to any Eurodollar-based Advance, effective upon the expiration of the applicable Interest Period(s), if any, in effect on the date of delivery of the annual financial statements and compliance certificate required under Sections 10.1(a) and 10.10 hereof, as the case may be, establishing applicability of the appropriate adjustments, with no retroactivity or claw-back (provided, however, that if Company fails to timely deliver such financial statements and compliance certificate, the Applicable Margins shall be 3.25% or 3.375%, as applicable, for Eurodollar-based Advances and 0.50% or .625%, as applicable, for Prime-based Advances for the number of days such financial statements and certificate were not timely delivered, commencing on the first Business Day after the latest due date for such financial statements and certificate and continuing until the first Business Day after delivery of such financial statements and certificate; (b) An adjustment hereunder, after becoming effective, shall remain in effect only through the end of the applicable Interest Period(s) in effect on the delivery of subsequent quarterly financial certificates, as aforesaid, demonstrating any change in such Funded Debt Ratio or the occurrence of any event which under the terms hereof causes Page 23 such adjustment no longer to be applicable; and any such subsequent adjustment or no adjustment, as the case may be, shall apply (and said pricing shall thereby be adjusted up or down, as applicable), effective with the commencement of the Interest Period immediately following such change or event; (c) Such Applicable Margin adjustments under this Section 2.2 shall be made irrespective of, and in addition to, any other interest rate adjustments hereunder." 8. Section 2.6 is amended to read in its entirety as follows: "2.6 Company shall pay to Bank a non-refundable revolving credit commitment fee on the daily average amount by which $23,000,000 exceeds the aggregate amount of Advances outstanding from time to time. The revolving credit commitment fee shall be equal to the amount of such excess times the Applicable Commitment Fee percentage computed on a daily basis. The revolving credit commitment fee shall be payable quarterly in arrears on the first day of each January, April, July and October, and at the Revolving Credit Maturity Date, and shall be computed on the basis of a year of 360 days and assessed for the actual number of day elapsed. Commencing July 30, 1999, the revolving credit commitment fee shall be .375% per annum. Adjustments thereto shall be given prospective effect, effective on delivery of the annual financial statements and certificate required under Sections 10.10 and 10.1(a) establishing applicability of the appropriate adjustments, with no retroactivity or claw-back; provided, that if Company fails to timely deliver such financial certificate, the revolving credit commitment fee shall be .625% per annum for the number of days such financial statements and certificate was not timely delivered, commencing on the first day of such next fiscal quarter. For purposes of calculating the revolving credit commitment fee, the face amount of outstanding letters of credit shall be considered to be outstanding Advances. 9. Section 3.1(a) is amended by inserting the words "and the Overformula Amount is $0" after the word "continuing" in the second line thereof. 10. A new Section 8.3 is added to the Agreement, to read in its entirety as follows: "8.3 Commencing with the execution and delivery of Amendment No. 1 to this Credit Agreement, the Company will pay to the Bank, on the date of any amendment to this Agreement which extends the Revolving Credit Maturity Date, its non-refundable loan extension fee in the amount of one-eighth percent (_%) of the amount of the maximum amount of the Revolving Credit as described in Section 2.1 hereof." This Amendment shall be effective as of the date hereof and upon payment by Company to Bank of its non-refundable loan amendment fee in the amount of $7,500 and non-refundable loan extension fee in the amount of $28,750. Except as modified hereby, all of the terms and conditions of the Agreement and the Revolving Credit Note shall remain in full force and effect. Page 24 Company hereby represents and warrants that, after giving effect to the amendments contained herein, (a) the execution, delivery and performance of this Amendment and any other documents and instruments required under this Amendment or the Agreement are within Company's corporate powers, have been duly authorized, are not in contravention of law or the terms of Company's certificate of incorporation or bylaws and do not require the consent or approval of any governmental body, agency or authority, and this Amendment, and any other documents and instruments required under this Amendment or the Agreement, are valid and binding in accordance with their terms; (b) the continuing representations and warranties of Company set forth in Section 9.1 through 9.5 and 9.8 through 9.16 of the Agreement are true and correct on and as of the date hereof, and the continuing representations and warranties of Company set forth in Section 9.6 of the Agreement are true and correct as of the date hereof with respect to the most recent financial statements furnished to Bank by Company in accordance the Agreement; and (c) no Default or Event of Default has occurred and is continuing as of the date hereof. WITNESS the execution hereof as of the date and year first above written. COMERICA BANK PRESTOLITE ELECTRIC INCORPORATED By: /s/ Peggy Cummins By: /s/ Dennis Chelminski --------------------------- ----------------------------------- Its: Vice President Its: Controller --------------------------- ----------------------------------- CONSENT OF GUARANTOR -------------------- The undersigned guarantor hereby consents to the foregoing Amendment as of the date thereof and reaffirms and ratifies all of its obligations to the Bank under the guaranty of the obligations of Company previously executed and delivered by it. PRESTOLITE ELECTRIC HOLDING, INC. By: /s/ Dennis Chelminski ---------------------------------------- Its: Treasurer --------------------------------------- Page 25 EX-10.2 3 AMENDMENT NO. 2 TO U.S. CREDIT FACILITY Exhibit 10.2 AMENDMENT NO. 2 TO CREDIT AGREEMENT AND WAIVER ---------------------------------------------- THIS AMENDMENT, dated as of October 28, 1999, by and between Prestolite Electric Incorporated, a Delaware corporation, of Ann Arbor, Michigan (herein called "Company"), and Comerica Bank, a Michigan banking corporation, of Detroit, Michigan (herein called "Bank"). W I T N E S S E T H: WHEREAS, said parties desire to amend that certain Second Amended and Restated Credit Agreement dated as of December 31, 1998, entered into by and between Company and Bank, as amended by Amendment No. 1 dated as of July 30, 1999 (herein called "Agreement"), to modify the financial covenants; NOW, THEREFORE, IT IS AGREED that the Agreement is amended as follows: (ii) Section 10.13 is hereby amended to read in its entirety as follows: "10.13 Maintain, as of the last day of each fiscal quarter, a Fixed Charge Coverage Ratio of not less than the following during the periods specified below: September 30,1999 through December 30,2000.................. 2 to 1 December 31,2000 and thereafter ............................ 2.5 to 1" (ii) Bank hereby waives the Event of Default arising by reason of the breach by Company of Section 10.13 (Fixed Charge Coverage Ratio) for the quarter ending September 30, 1999. Such waiver is given in accordance with Section 14.7 of the Agreement. In particular, and with limitation, such waiver shall be strictly limited to its terms and shall not act as a waiver of or consent to any other Default or Event of Default, transaction, act or omission, whether related or unrelated to the foregoing. This Amendment shall be effective as of the date hereof and upon payment by Company of a non-refundable waiver fee in the amount of $5,000. Except as modified hereby, all of the terms and conditions of the Agreement and the Revolving Credit Note shall remain in full force and effect. Company hereby represents and warrants that, after giving effect to the amendments contained herein, (a) the execution, delivery and Page 26 performance of this Amendment and any other documents and instruments required under this Amendment or the Agreement are within Company's corporate powers, have been duly authorized, are not in contravention of law or the terms of Company's certificate of incorporation or bylaws and do not require the consent or approval of any governmental body, agency or authority, and this Amendment, and any other documents and instruments required under this Amendment or the Agreement, are valid and binding in accordance with their terms; (b) the continuing representations and warranties of Company set forth in Section 9.1 through 9.5 and 9.8 through 9.16 of the Agreement are true and correct on and as of the date hereof, and the continuing representations and warranties of Company set forth in Section 9.6 of the Agreement are true and correct as of the date hereof with respect to the most recent financial statements furnished to Bank by Company in accordance the Agreement; and (c) no Default or Event of Default has occurred and is continuing as of the date hereof. WITNESS the execution hereof as of the date and year first above written. COMERICA BANK PRESTOLITE ELECTRIC INCORPORATED By: /s/ Peggy Cummins By: /s/ Dennis Chelminski ---------------------------- ------------------------------------ Its: Vice President Its: Controller ---------------------------- ------------------------------------ CONSENT OF GUARANTOR -------------------- The undersigned guarantor hereby consents to the foregoing Amendment as of the date thereof and reaffirms and ratifies all of its obligations to the Bank under the guaranty of the obligations of Company previously executed and delivered by it. PRESTOLITE ELECTRIC HOLDING, INC. By: /s/ Dennis Chelminski ------------------------------------ Its: Treasurer ------------------------------------ Page 27 EX-10.3 4 AMENDMENTS TO U.K. CREDIT FACILITY Exhibit 10.3 Advice of Borrowing Terms Relationship Office: Cotswolds & Kennet Corporate Date: 18 October 1999 Business Centre Gloucestershire Office Borrower(s) Registered Number: Prestolite Electric Limited 1189048 We intend that the facilities listed in Part 1 of the attached Facility Schedule (the "on-demand facilities") should remain available to the borrower(s) until 7th October 2000 and all facilities should be reviewed on or before that date. The facilities are, however, subject to the following:- . the terms and conditions below, . the specific conditions applicable to an individual facility as detailed in the Facility Schedule, . the Security detailed in the attached Security Schedule, and . the attached General Terms. All amounts outstanding are repayable on demand which may be made by us at our discretion at any time and the facilities may be withdrawn, reduced, made subject to further conditions or otherwise varied by us giving notice in writing. Preconditions: -------------- Preconditions which must be satisfied before facilities can be utilised: . A signed copy of this Advice of Borrowing Terms to be returned to us. . Receipt of a certified copy of a resolution of your board of directors confirming:- . certification by the chairman of the meeting that a valid quorum was present and the meeting was duly convened . agreement to give security (if applicable) . acceptance of the terms and conditions of the facility/facilities . authorisation of a person or persons to sign the Form of Acceptance in this Advice of Borrowing Terms and to take such other action as may be necessary for the purpose of the facility/facilities Page 28 . Professional valuation of the Larden Road site, Acton, London, confirming an Open Market Value of not less than (Pounds)5,000,000. . Execution of the stated `new' security, as outlined in `Security Schedule `below. . Written confirmation from Prestolite Electric Inc. that it will not seek any repayment under its inter-group loan ( after the (Pounds)6m reduction now to be effected by facilities provided by National Westminster Bank Plc ), until such time as no further amounts remain outstanding under the facilities minuted herein. Conditions: ----------- The following conditions must be satisfied at all times while the facilities are outstanding, but this will not affect our right to demand repayment at any time: . Monthly management accounts including profit and loss, balance sheet, schedule of aged debtors, funds flow statement and commentary on working capital movements to be provided to us within 30 days of the end of the month to which they relate. This information should also incorporate quarterly rolling budgets and cash flow forecast. . From the above management information, the Bank will monitor a lending formula of the Group Overdraft being covered 200% by UK debtors of less than 90 days. . Audited accounts to be provided to us within 180 days of the financial year end to which they relate. Interest Set Off: ----------------- Debit and cleared credit balances in the same currency on non-interest bearing current and loan accounts repayable on demand (the "Interest Set Off Accounts") will be used to calculate, on a daily basis, the net debit balance of the Interest Set Off Accounts. The Interest Set Off accounts, which we have agreed are to be set off for interest calculation purposes, are detailed in the attached Facility Schedule which also specifies the frequency at which interest will be payable and the rate or rates at which it will be charged on the net debit balance Debit balances which are set off on a daily basis by cleared credit balances on the Interest Set Off Accounts will incur interest at the Set Off Rate specified in the attached Facility Schedule. Jon Hayes Senior Corporate Manager For and on behalf of National Westminster Bank Plc Acceptance: To signify your agreement to the terms and conditions outlined above please sign and return the enclosed copy of this Advice of Borrowing Terms within 28 days. Form of Acceptance ------------------ Page 29 I accept the facility/facilities on the above terms and conditions and confirm that I have been authorised by the Board(s) of Directors of the Borrower(s) to sign this Form of Acceptance on behalf of the Borrower(s). By (name and title): /s/ John Wilkinson Date 2nd November, 1999 ------------------- ------------------ For and on behalf of: Prestolite Electric Limited Page 30 Facility Schedule Part 1 - Facilities Repayable on Demand:
--------------------------- Group Overdraft Facility --------------------------- ========================================================================================================================= Accounts Included Name: Account Number: ------------------------------------------ --------------------------------------------------- in the Group Prestolite Electric Limited 4233204, 24475637 and Facility 24475645 Arrangement: - ------------------------------------------------------------------------------------------------------------------------- Limit: Gross (Pounds)4,000,000 Inclusive of any Sub limits detailed below for individual Accounts - -------------------------------------------------- Limit: Net (Pounds)4,000,000 - ------------------------------------------------------------------------------------------------------------------------- Purpose: To finance working capital/repay element of Parental loan - ------------------------------------------------------------------------------------------------------------------------- Repayment: Fully fluctuating but (Pounds)2,000,000 parental loan element to be repaid by 30 November 2000. - ------------------------------------------------------------------------------------------------------------------------- 1/st/ Debit Interest Rate: 1.25% above the Bank's Base rate (payable on any net overdrafts) - ------------------------------------------------------------------------------------------------------------------------- Interest Payable: Quarterly - ------------------------------------------------------------------------------------------------------------------------- Excess Fees: We will be entitled to charge an excess fee at the Bank's published rate for each day any agreed limit is exceeded (see our "Services & Charges for Business Customers" brochure for details). - ------------------------------------------------------------------------------------------------------------------------- Arrangement Fee: (Pounds)60,000 to be taken at (Pounds)5,000 per month from account no: 04233204 commencing 20.10.99 and monthly thereafter. This fee also covers the new Loan Facilities minuted below under `Facilities Subject To Separate Documentation'. - -------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------- Interest Set-Off Arrangement - Sterling --------------------------------------------------------------- ======================================================================================================== The Interest Set-Off Name: Account Number: -------------------------------------- ----------------------------------- Accounts: Prestolite Electric Limited 4233204, 24475637 and 24475645 - -------------------------------------------------------------------------------------------------------- 1/st/ Debit Interest 1.25% above the Bank's Base rate (payable on any net Rate: overdrafts) - -------------------------------------------------------------------------------------------------------- Set Off Rate: 0% per annum - -------------------------------------------------------------------------------------------------------- Interest/Set Off Quarterly Payable: - ------------------------------------------------------------------------------------------------------- Account to be 04233204 debited: - -------------------------------------------------------------------------------------------------------
Page 31
----------------------------- Terminable Indemnities - ------------------------------------------------------------------------------------------------- Name of Borrower: Prestolite Electric Limited - ------------------------------------------------------------------------------------------------- Limit: (Pounds)300,000 - ------------------------------------------------------------------------------------------------- Type and Purpose: 2 months duty deferment bond at (Pounds)150,000 per month - ------------------------------------------------------------------------------------------------- Indemnity Fee: 1% p.a. payable quarterly in advance, to be debited to account number 04233204. - ------------------------------------------------------------------------------------------------- ----------------------------- Documentary Credits - ------------------------------------------------------------------------------------------------- Name of Borrower: Prestolite Electric Limited - ------------------------------------------------------------------------------------------------- Limit: (Pounds)300,000 - ------------------------------------------------------------------------------------------------- Purpose: Importation of stock - ------------------------------------------------------------------------------------------------- Documents required: Full Set Clean On-Board Marine Bills of Lading to order & blank endorsed - ------------------------------------------------------------------------------------------------- Fees: Subject to separate tariff which will have been agreed with you in advance. - ------------------------------------------------------------------------------------------------- ----------------------------- Settlement Risk - ------------------------------------------------------------------------------------------------- Name of Borrower: Prestolite Electric Limited - ------------------------------------------------------------------------------------------------- Limit/Frequency: (Pounds)1,500,000 per day - ------------------------------------------------------------------------------------------------- Type and Purpose: BACS facility to facilitate salary & supplier payments. - ------------------------------------------------------------------------------------------------- ----------------------------- Settlement Risk - ------------------------------------------------------------------------------------------------- Name of Borrower: Prestolite Electric Limited - ------------------------------------------------------------------------------------------------- Limit/Frequency: (Pounds)20,000 any one time - ------------------------------------------------------------------------------------------------- Type and Purpose: Documents released in trust. - -------------------------------------------------------------------------------------------------
Page 32 Part 2 - Facilities Subject to Separate Documentation: The following facilities are made available on the terms of the separate documentation between us.
- ------------------------------------------------------------------------------------------------------- Name of Borrower Facility and Purpose Amount Date (Pounds) Agreement Signed - ------------------------------------------------------------------------------------------------------- Prestolite Electric Limited Commercial Fixed Rate Loan - 2,000,000 To Be Signed to repay element of Parental Loan - ------------------------------------------------------------------------------------------------------- Prestolite Electric Limited Commercial Variable Rate Loan 2,000,000 To be Signed - to repay element of Parental Loan - -------------------------------------------------------------------------------------------------------
Security Schedule We rely on the security detailed below (and require additional security where specified) to repay, on demand, all your current and future liabilities (both actual and contingent) to us. These liabilities include, without limitation, those incurred by you under the facility(ies) specified in the Facility Schedule.
Date Security: Given/to be given by: Executed/New: - ------------------------------------------------------------------------------------------------------ 22 January 1987 Mortgage debenture Prestolite Electric Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Prestolite Wales Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee HB Switchgear (Contractors) Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Butec Electrics Limited - ------------------------------------------------------------------------------------------------------ 26 October 1995 Legal mortgage Over Life policy Prestolite Electrical Limited (TO BE RELEASED) (Pounds)500,000 on the life of Dr M Lee (policy expiry 6/2000) - ------------------------------------------------------------------------------------------------------ New First legal mortgage over Larden Road site, Prestolite Electric Limited Acton, London. - ------------------------------------------------------------------------------------------------------ Butec Electrics Ltd - ------------------------------------------------------------------------------------------------------ 22 January 1988 Mortgage Debenture Butec Electrics Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Legal Mortgage over land off Cleveland Butec Electrics Limited Road, Leyland, Preston. - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Prestolite Electric Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee HB Switchgear (Contractors) Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Prestolite Wales Limited - ------------------------------------------------------------------------------------------------------ HB Switchgear (Contractors) Limited - ------------------------------------------------------------------------------------------------------
Page 33 - --------------------------------------------------------------------------------------------------------------- 29 January 1987 Mortgage Debenture HB Switchgear (Contractors) Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Prestolite Wales Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Prestolite Electric Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Butec Electrics Limited - ------------------------------------------------------------------------------------------------------ Prestolite Wales Limited - ------------------------------------------------------------------------------------------------------ 29 January 1987 Mortgage Debenture Prestolite Wales Limited - ------------------------------------------------------------------------------------------------------ 4 April 1986 Lien 700 HB Switchgear (Contractors) (TO BE RELEASED) Limited (Pounds)1 fully paid shares - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Prestolite Electric Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee HB Switchgear (Contractors) Limited - ------------------------------------------------------------------------------------------------------ 22 January 1988 Unlimited Guarantee Butec Electrics Limited - ------------------------------------------------------------------------------------------------------ 13 February 1987 Legal Mortgage land over Ipswich Road, Prestolite Wales Limited Cardiff, South Glamorgan (known as Royal Works) - ------------------------------------------------------------------------------------------------------
Page 34 Commercial Fixed Rate Loan Agreement We, National Westminster Bank Plc and any person to whom we transfer our rights or duties under this agreement agree to offer you a loan under the terms and conditions set out below and on the attached appendix. The first part of the appendix explains some of the words and phrases used in this agreement. (ii) Date of offer: 18/th/ October 1999 (ii) Your name: Prestolite Electric Limited (Registered No. 1189048) Cleveland Road, Leyland, Preston, Lancs. (ii) Lending Branch: Cheltenham (ii) Amount: (Pounds)2,000,000 (two million pounds). (ii) Purpose of the Loan: To repay an element of the Parental loan (ii) Period of the Loan: 5 years (ii) Interest rate: A fixed rate of interest for the whole period of the Loan. (Please see: . paragraph 4 of the appendix for how we work out the interest; and . paragraph 5 of the appendix for how we fix the rate of interest). (ii) Fee: (Pounds)60,000 to include availability of the overdraft facility per the concurrent Advice of Borrowing Terms. (ii) Drawing the Loan: You must draw the Loan in full in one amount. (ii) Repayment: You must have repaid the Loan in full on the last day of the period shown in term 6 of this agreement. Subject always to our rights under paragraph 13 of the appendix, You will repay the Loan by 60 instalments of principal and interest payable every month. We will tell you the amounts you need to pay to repay the Loan in full by the last day of the period shown in term 6 of this agreement together with interest which will be calculated in the manner referred to in paragraph 4. Such instalments will commence one month after the date you draw the Loan. From time to time we will tell you the instalments you must pay. (ii) Security: First legal mortgage over Larden Road premises, Acton, London. First legal mortgage over site at Cleveland Road, Leyland, Preston, Lancs. First legal mortgage over land off Ipswich Road, Cardiff, South Glamorgan (known as Royal Works). Cross Guarantees and Mortgage Debentures from:- Prestolite Electric Limited, Prestolite Wales Limited, Page 35 H B Switchgear (Contractors) Limited, Butec Electrics Limited. (ii) Value of Security: The first legal mortgages shown in term 11 of this agreement together with any security provided pursuant to paragraph 5 of the appendix must be worth (calculated on an Open Market Value basis) at least 125% of the total amount which you owe at any time on this Loan and the Commercial Variable Rate Loan Agreement of even date. (ii) Financial agreements: You agree to the following for so long as any amounts remain outstanding under this loan:- Please see paragraph 2 of the appendix for an explanation of the words and phrases used below. (ii) You will not allow Total Borrowing to be more than 125% of Tangible Net Worth in 1999, 100% of Tangible Net Worth in 2000, and 75% of Tangible Net Worth thereafter. (ii) You will not allow Cash Generated to be less than 100% of Debt Service Costs. (ii) You will not allow Profit to be less than 250 % of Borrowing Costs. (ii) Management information to be provided monthly within 30 days of the month end to which the information relates. To include Profit & Loss and Balance Sheet statements, aged debtor analysis, funds flow statement and specific commentary on working capital movements. E No preference shares or redeemable ordinary shares to be withdrawn/repaid during the term of this loan. F Acquisitions of more than (Pounds)500,000 not to be made without the Bank's prior agreement. G You will not, without the prior approval of the Bank, make any repayments of principal to Prestolite Electric Inc. under the intra-group loan of (Pounds)6m or equivalent (this amount is after the (Pounds)6m reduction from the total of (Pounds)8m of banking facilities being put in place of even date by National Westminster Bank Plc). (ii) You will not and you (and your Parent (if specified in term 2(b)) will procure that none of your (or if your Parent is specified in term 2(b) its) subsidiary undertakings as defined by S. 258 of the Companies Act 1985 ("Subsidiary Undertakings") will, without our prior written consent either create, extend or increase any security interest on the whole or any part of your or the Group's undertaking, property or assets (including uncalled capital) whether present or future in aggregate above (Pounds)250,000. Security interest includes (without limitation) liens, pledges, charges, mortgages or other encumbrances. (ii) You will provide us with such financial and other information relating to you or to the Group as we may reasonably require including (without limitation) copies of the consolidated audited accounts of the Group not later than 6 months after the end of the accounting period to which they relate. In order to verify whether you are complying with these covenants, we will refer to your management accounts on a quarterly basis and audited accounts on an annual basis, for the Consolidated Accounts of Prestolite Electric Limited. In respect of the Cash Generated covenant, this will be tested quarterly on a rolling 12 month basis as follows: 3 months ended 31/3/2000 6 months ended 30/6/2000 9 months ended 30/9/2000 12 months ended 31/12/2000 12 months ended 31/3/2001 and each rolling 12 month period thereafter (ii) Overdue payments: Page 36 If you do not make any payment under this agreement on the date it is due, then, without prejudice to our other rights, we will charge interest on the overdue amount from the date it was due to the date upon which we receive payment (as well after as before judgement). This will be calculated (and compounded in accordance with our normal practice) on the basis of a year of 365 days and the actual number of days elapsed. You will pay interest to us at a rate which is equal to the sum of:- 5% per year; and our base rate from time to time Any late payments may be debited to a separate account. (ii) Early Repayment: Paragraph 8 of the appendix gives details of how you may ask to repay the Loan before the specified repayment dates. In connection with paragraph 8 of the appendix, the prepayment fee is 0.5% of the amount which you prepay. (ii) Environmental Liabilities: Paragraph 20 of the appendix will apply. Page 37 Appendix (ii) Agreement --------- This appendix forms part of the agreement between us. If we refer to a paragraph, this will mean a paragraph of this appendix. If we refer to a term this will mean a term of the agreement. (ii) Meanings of words and phrases used in this agreement: ---------------------------------------------------- the `Agreement Date' means the date on which our offer is accepted in the way set out in paragraph 3 of the appendix. `Business Day' shall mean a day on which banks in general are open in the City of London for the transaction of business of the nature set out in this agreement. `Event of Default' shall mean any event specified in paragraph 13 of the appendix. `the Group' means you and your (or where your Parent is specified in term 2(b), your Parent and its) subsidiary undertakings (as defined by Section 258 of the Companies Act 1985) taken as a whole (and, save where the context does not admit, any of them individually); if there are no subsidiary undertakings for the time being, references to the Group shall be taken to be references to you and the word "consolidated" in relation to any accounts or other financial matters shall be ignored. The `Loan' means the loan facility which we have agreed to provide under the terms and subject to the conditions of this agreement and, where necessary, it will mean all amounts owed under this agreement. `the Offer Date' is the date shown in term 1 of the agreement. This is the date on which we make the written offer of the Loan. `Option' means either of the interest rate options shown in term 7 of the agreement `Quotation' means a statement from us in response to a request under paragraph 5 of the appendix giving details of a period and an interest rate and any other terms under which we are willing to provide the Loan. `the Quotation Date' is the date on which we make a Quotation. `Security' means the security shown in term 11 of the agreement and any other security which you provide under paragraph 6 of the appendix. `Subsidiary Undertaking' shall mean a subsidiary undertaking (as defined by S.258 of the Companies Act 1985). The following definitions apply to the financial agreements in term 13 of the agreement. `Borrowing Costs' means, in respect of any financial period, all continuing, regular or periodic costs, charges and expenses (including but not limited to, interest and any capitalised interest) incurred by the Group in effecting, servicing or maintaining Total Borrowing. `Capital Expenditure' means, in respect of any financial period, the aggregate expenditure of the Group on the purchase of fixed assets (as determined in accordance with generally accepted United Kingdom accounting principles (consistently applied)). Page 38 `Cash Generated' means, in respect of any financial period, the sum of:- (ii) Profit; plus (ii) an amount equal to the depreciation charged on fixed assets of the Group during such period and any other non-cash movements; plus (iii) an amount equal to any decrease in net working capital (being, in respect of any period, the net surplus (or deficit) of the aggregate stock in trade of the Group and the amount owed to members of the Group by debtors less the amount owed by them to creditors at the end of such period); plus (iv) the proceeds of new ordinary or other redeemable shares issued by you during such period. LESS the sum of:- (ii) an amount equal to the tax paid by the Group during such period; plus (ii) an amount equal to any increase in net working capital (as defined above) during such period; plus (iii) an amount equal to the Capital Expenditure (including investments) by the Group during such period less an amount equal to the net proceeds of disposal of fixed assets during such period; plus (iv) an amount equal to the aggregate amount of dividends on ordinary shares paid by you during such period; plus (v) any receipts of the Group by way of extraordinary items during such period. `Current Assets' means all assets of the Group which would be classified, in accordance with generally accepted United Kingdom accounting principles (consistently applied) as current assets. `Current Liabilities' means all liabilities of the Group which would be classified, in accordance with generally accepted United Kingdom accounting principles (consistently applied) as current liabilities. `Debt Service Costs' means, in respect of any financial period:- (ii) all interest, commission, periodic fees and other financial charges payable by any member of the Group during such period (including the interest element payable under finance leases); plus (ii) the aggregate amount of all dividend payments on redeemable preference shares (and other redeemable shares) made by you during such period; plus (iii) the aggregate amount of all debt repayments made by any member of the Group or due from any member of the Group (including redemption of any redeemable preference shares and inter company and parental loans) during such period. `Net Cash Flow before Financing' means, in respect of any financial period, the sum of:- (ii) Profit; plus (ii) an amount equal to the depreciation charged on fixed assets of the Group during such period and any other non- cash movements during such period; plus Page 39 (iii) an amount equal to any decrease in net working capital (being, in respect of any period, the net surplus (or deficit) of the aggregate stock in trade of the Group and the amount owed to members of the Group by debtors less the amount owed by them to creditors at the end of such period); LESS the sum of:- (ii) an amount equal to the tax paid by the Group during such period; plus (ii) an amount equal to any increase in net working capital (as defined above) during such period; plus (iii) an amount equal to the Capital Expenditure (including investments) by the Group during such period less an amount equal to the net proceeds of disposal of fixed assets during such period; plus (iv) an amount equal to the interest paid (less interest received) by the Group for such period; plus (v) an amount equal to the aggregate amount of dividends on ordinary shares paid by you during such period; plus (vi) any receipts of the Group by way of extraordinary items during such period. `Net Working Assets' means, in respect of any period, the aggregate stock in trade of the Group and the amounts owed to members of the Group by trade debtors less the amounts owed by them to trade creditors at the end of such period. `Profit' means, in respect of any financial period, the amount of profit of the Group (excluding profit attributable to minority interests) before taxation, interest payable, and any unusual, extraordinary or exceptional items. `Tangible Net Worth' means the amount for the time being paid up or credited as paid up on your (or where your Parent is specified in term 2(b), your Parent's) issued share capital plus all reserves of the Group which would, in accordance with generally accepted United Kingdom accounting principles (consistently applied) be classified as shareholders capital plus retained earnings of the Group but deducting assets of the Group which would, in accordance with such principles, be classified as intangible assets. `Total Borrowing' means the total outstanding principal amount of all borrowings or monies otherwise raised by the Group from all sources whatever, whether by way of debenture, mortgage, unsecured loan, overdraft or in any other manner (including redeemable preference shares and inter company and parental loans) plus the aggregate face amount of all discounted acceptance credits. (ii) Availability of Loan -------------------- From the Offer Date shown in term 1 of the agreement you will have 30 days in which you can draw the Loan. However, you can only accept this offer and draw the Loan if we have received the following items from you and are satisfied with them:- a) A copy of this agreement with the acceptance form signed on your behalf (and if your Parent is specified in term 2(b) on behalf of your Parent). b) A certified copy of a resolution of your board of directors (and if your Parent is specified in term 2(b) a copy of a resolution of its board of directors) showing that you (and if applicable your Parent) . accept the terms and conditions of the Loan; Page 40 . agree to give the security set out in term 11 of the agreement; and . authorise a person or persons to take such other action on your behalf (and if applicable your Parent's behalf) as may be necessary for the purpose of the agreement. c) Your (and if your Parent is specified in term 2(b) its) Certificate of Incorporation and such other evidence as we may require that you and (if your Parent is specified in term 2(b)) your Parent are companies incorporated in England, Wales or Scotland under the Companies Act 1985 (or any predecessor Act) and that neither you nor your Parent are a charity. d) The security set out in term 11 of the Agreement together with certified copies of such board resolutions and shareholders resolutions from the giver of such security as we may require and, in the case of a corporate entity which is giving security to us which is either (I) a charity or (ii) a Non-Companies Act company, a certified copy of its Memorandum and Articles of Association rules or other equivalent constitutional documents certified by its Secretary or a Director as being up to date (including copies of all amending resolutions). A "Non-Companies Act Company" is any company other than a company incorporated in England, Wales or Scotland under the Companies Act 1985 (or any predecessor Act). e) Written confirmation from Prestolite Electric Inc. that it will not seek any repayment under its intra-group loan (after the (Pounds)6m reduction now to be effected by this and other facilities provided by National Westminster Bank Plc), until such time as no further amounts remain outstanding under this Facility. You must give us three days' notice of your intention to draw the Loan. These days must be Business Days. We will credit your current account with the amount of the Loan on the day on which you accept the Quotation. You may not draw the Loan until we are satisfied that you have accepted a Quotation. Acceptance of the offer contained in this agreement may be effected by receipt by us at the lending branch (please see term 3 of the agreement) within thirty days of the date specified in term 1 of the agreement of the items specified in this paragraph. (ii) Interest -------- We will work out interest on the balance of the Loan outstanding from day to day on the basis of the actual number of days elapsed and a 365 day year. You must pay interest to us on our usual charging days in March, June, September and December or by combined interest and principal instalments (where specified under term 10) on such dates as are specified under term 10 of the agreement. You will pay a fixed rate of interest for the entire period of the Loan as specified in your Quotation. This rate of interest will be the rate shown in the Quotation. We may charge interest to your current account or to your loan account. If you do not make any payments on the due date under this agreement, then the rate of interest specified in term 14 shall apply to any overdue amounts. (ii) Fixed Rate of Interest ---------------------- You must give us three days' notice in writing of the date on which you want to draw the Loan. All these days must be Business Days. If we have received the items listed in paragraph 3 of this appendix (within the time period set out there), you may ask for a Quotation at any time up to 4 p.m. on the required day for the Loan (which must be a Business Day). You must also tell us the interest rate option you want. Page 41 You must accept or reject our Quotation immediately. If you do not accept the Quotation immediately you shall be deemed to have rejected it. Once you have accepted the Quotation we will normally send to you written details of the terms of the Quotation. These details will include the interest rate and the period for which such rate applies repayment dates and repayment instalment amounts but if you do not receive these written details it will not affect your obligations in respect of the Quotation which you have accepted. Accepting the Quotation in any way (whether by telephone telex or in any other way) shall be binding on you and will mean that you will have to borrow the full amount of the Loan as set out in this agreement and the Quotation on the Quotation Date. If we do not receive instructions from you in relation to the Quotation which you have accepted we shall be entitled to credit the amount of the Loan to a current account in your name at the lending branch shown in term 3 of the agreement and you shall be deemed to have drawn the Loan. (ii) Security -------- You must give us the security shown in term 11 of the agreement and this will be a continuing security for the discharge on demand of all your indebtedness and your other liabilities to us from time to time. You undertake to provide any extra security which we need to maintain the value of the Security at the level specified in term 12 of the agreement within such period as we may require. The open market value of the Security shall be determined at our option from time to time by an independent professional valuation. You will have to pay for this valuation. (ii) Fees and Costs -------------- We have the right to debit your current account with the fees set out in term 8 and 15 of the agreement. (ii) Early Repayment --------------- We may (but are not obliged to) agree to let you repay the Loan early if you ask us in writing. You must give us five days notice in writing to do this. This notice shall be irrevocable and these days must be Business Days. If we allow you to repay the Loan early, the prepayment will be on such terms as we may require including (without limitation) you indemnifying us against any funding or other costs, losses, expenses or liabilities (including loss of profit) sustained or incurred by us as a result of such prepayment. An example of the method by which we shall, until further notice, calculate this amount is set out in the attached Schedule. If we allow you to repay the Loan early you will also have to pay us the prepayment fee set out in term 15 of the agreement. A certificate by one of our officers as to any of the amounts due from you under this paragraph shall, save for manifest error, be conclusive evidence (and admissible as such) against and binding on you. You cannot reborrow any amount you have prepaid. (ii) Liability --------- If you are more than one person then the expression "you" shall mean all of such persons and (save where the context does not so admit) any of them and the obligation of those persons shall be joint and several. Each such person irrevocably appoints each other person as his agent for the service of any demand or notice under this agreement. Page 42 (ii) Current Accounts ---------------- You agree to maintain a current account with us throughout the period of the Loan. (ii) Payments -------- We may transfer amounts from your current account to meet the repayments set out in term 10 of the agreement. We may use any repayment instalment (including instalments of principal and interest) or any part of any repayment instalment to: . reduce the amount of principal outstanding on the Loan. . pay interest accrued on the Loan. . discharge any other payment due under this agreement. You must make all payments under this agreement in full in pounds sterling without any deduction or withholding (whether in respect of set-off, counterclaim, duties, taxes, charges or otherwise howsoever). If you are compelled by law to make any deduction or withholding, you will promptly pay to us such additional amounts as will make the net amount received by us equal to the full amount payable by you had there been no deduction or withholding. (ii) Set-Off ------- We shall be entitled to set-off against any of your liabilities to us under this agreement (whether present, future, actual or contingent) any of your credit balances on any of your accounts with us or in your name. We do not have to give you any prior notice to do this. (ii) Default ------- If any of the following events occur, we may, by giving you written notice, cancel our outstanding commitments to you (including the availability of the Loan if you have not drawn it) and demand immediate repayment of your indebtedness to us and exercise our rights under any Security:- (ii) If you breach any term or condition (including any covenant) of this agreement. (ii) If you do not make any payment on the date it is due under this agreement and whether by way of principal, interest or otherwise. (ii) If you do not use the Loan for the purpose set out in term 5 of the agreement. (ii) If the Security or any part of the Security shall cease to be fully enforceable in accordance with its terms or with effect from the date on which the determination of the continuing nature of the Security or any part of the Security occurs, such continuing nature is determined whether such determination be by actual or constructive notice or be deemed to have occurred or any binding undertaking provided in the Security or any part of the Security shall be breached or any guarantor gives or purports to give notice to terminate its liabilities under any guarantee in respect of the Loan. (ii) If you sell or dispose of any asset listed in term 11 of the agreement or it ceases to be in your sole possession. (ii) If your current account becomes overdrawn after the debiting of any payment due from you under the Loan or it becomes overdrawn in excess of any limit agreed with us and you do not offer payment in cash to us when we inform you of this. Page 43 (ii) If any representation, warranty or statement made to us by you in connection with the Loan is breached or is false or if you fail to tell us anything which in our opinion is material to the Loan. (ii) If you or any member of the Group make any default in the performance of any other agreement for borrowed money whether with us or any other lender whereby the due date of repayment thereunder is rendered capable of acceleration; or if any of your indebtedness or the indebtedness of any member of the Group becomes or is declared by the holder or the lender thereof to be due and payable prior to its stated maturity or such indebtedness is not repaid in full at its stated maturity; or if such indebtedness (including the indebtedness of any member of the Group) is repayable on demand and is not repaid in full immediately upon demand being made or if any guarantee or indemnity given by any giver of security in connection with any of your liabilities to us or the liabilities of any member of the Group to us or any other lender is not honoured when due and called upon. (ii) If a petition is presented or a resolution passed for your winding up or that of any member of the Group or a petition is presented for an administration order to be made in relation to you or any member of the Group; or your directors or the directors of any member of the Group make a proposal for a voluntary arrangement with your creditors or the creditors of any member of the Group; or you are unable to pay your debts within the meaning of Section 123 of the Insolvency Act 1986 or any member of the Group is unable to pay its debts within the meaning of such section or an encumbrancer takes possession of or a receiver or an administrative receiver is appointed over any of your assets or over the assets of any member of the Group. (ii) If there shall occur in our opinion a material effective change of control (as defined by Section 840 of the Income and Corporation Taxes Act 1988) of you or your Parent. (ii) If there has occurred any change which in our reasonable opinion is a material adverse change in your business, assets or financial condition or in the business, assets or financial condition of the Group or any member of the Group which, in our reasonable opinion, may affect your ability to comply with your obligations under this agreement. (ii) If any judgement, distress, warrant of attachment, writ of execution or similar process is issued, levied or enforced upon any of your assets or the assets of any member of the Group or if any asset held by the Bank as security for the Loan is charged or becomes encumbered elsewhere. (ii) If you or any member of the Group ceases or threatens to cease to carry on its business or sells, transfers or otherwise disposes of in any one transaction or series of related transactions any substantial part of its assets. (ii) If you cease to be a Subsidiary Undertaking of Prestolite Electric Holding, Inc. (ii) Delay in exercising our rights ------------------------------ If we delay in giving any notice or exercising any of our rights under this agreement this should not be construed as a waiver of any of our rights. (ii) Demands and Notices ------------------- Any demand or notice to you will be made in writing and be signed by one of our officers and served either by personal delivery on you at any place or by post addressed to you at your place of business last known to us. Service by post on you shall be deemed to be effective on the next Business Day after the date of posting even if it is returned undelivered. Any notice to us under this agreement must be made in writing and signed by you or where you are a Page 44 company, by a duly authorised officer on your behalf. It must be delivered by hand or by post to the lending branch specified in term 3 of the agreement. (ii) Costs and Expenses ------------------ You will pay all costs, charges and expenses arising in connection with the Loan and the Security including the negotiation and preparation of this agreement and the Security and all costs, charges and expenses arising in connection with the preservation and/or enforcement of our rights under this agreement or under the Security and will indemnify us for any and all losses, costs and expenses occasioned by the occurrence of an Event of Default. 17 Increased Costs and Illegality ------------------------------ (a) If we determine in our opinion that as a result of any Requirement or compliance by us with any Requirement the cost to us of funding, maintaining or making available the Loan (or any undrawn amount of the Loan) is increased or the effective return to us on the Loan or on our capital is reduced, then you shall pay to us on demand such sums as may be certified to you by us as shall compensate us for the increased cost or reduction. `Requirement' means any law, regulation, directive or official request (whether or not having the force of law) and includes any change in its interpretation or application. It also includes any Requirement relating to a change in currency of a country. (ii) If the effect of the introduction of or any change in applicable law or directive or the interpretation of such law or directive is to make or purport to make the Loan unlawful then our obligations under this agreement shall cease and you will on demand pay to us all amounts outstanding under the Loan. 18 General Points -------------- (a) If at any time any one or more of the provisions in this agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions of this agreement shall not in any way be affected or impaired. (ii) Unless we expressly agree to do so in writing we do not hold ourselves out as providing advice on or considering the general suitability of this Loan for your particular circumstances (including tax circumstances) and neither we nor our employees shall be liable for any indications given as to such suitability. We make no warranties or representations about the advisability of any underlying transaction entered into by you. You should obtain independent professional advice on such matters, and upon any Security required by us. (ii) If more than one currency or currency unit are at the same time recognised by the Bank of England as the lawful currency of the United Kingdom then: any reference in this agreement to, and any obligations arising under this agreement in, the currency of the United Kingdom shall be translated into, or paid in, the currency or currency unit of the United Kingdom designated by us; and any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the Bank of England for the conversion of that currency or currency unit into the other, rounded up or down by us acting reasonably. (ii) If a change in any currency of the United Kingdom occurs, this agreement will be amended to the extent we specify to be necessary to reflect the change in currency and to put us in the same position, so far as possible, that we would have been in if no change in currency had occurred. (ii) We may assign or transfer all or any of our rights and obligations under the Loan. You may not assign or transfer any of your rights or obligations under the Loan. (ii) This agreement is governed by the laws of England. (ii) All expressions in this agreement bearing a plural meaning shall (where the context so admits) also bear the singular meaning and vice versa. Page 45 (ii) All references in this agreement to any statutory provision shall be deemed to include any statutory modification or re-enactment of such provision. (ii) Representations and Warranties ------------------------------ You represent and warrant that you have full power to accept and be bound by the terms and conditions set out in this agreement and to draw the Loan and that you have taken all necessary steps and obtained all necessary consents and authorisations to do so and that accordingly this agreement constitutes your legal, valid and binding obligations fully enforceable in accordance with their terms. You represent and warrant as follows:- (ii) You are duly incorporated and validly existing under the laws of England. (ii) No Event of Default has occurred or is outstanding and no event has occurred which with the giving of notice or the lapse of time would constitute an Event of Default. (ii) All information, exhibits and reports furnished to us in connection with this agreement were and remain true and accurate in all respects and do not omit any facts thereby rendering misleading any statement contained therein. (d) The representations and warranties set out above shall survive your acceptance of this agreement and the drawing of the Loan and shall be deemed to be repeated on each day throughout the period of the Loan with reference to the facts and circumstances existing at that time. (e) A suitably authorised officer of your Parent Company has seen and approved the terms of this agreement. 20 Environmental Matters --------------------- (a) We may at any time during the period of the Loan require you to obtain a written up-date of the environmental audit referred to in paragraph 3 of the appendix (or if no audit was required under paragraph 3, a written confirmation that neither your assets nor the use of those assets has broken or is likely to break any Environmental Law). This must be done by an environmental consultant acceptable to us and at your expense. (ii) You must notify us immediately if you receive any claim, notice or other communication in respect of any alleged breach of Environmental Law. (ii) You undertake to notify us immediately if any Environmental Licence is withdrawn or is not renewed. (ii) You must give us certified copies of any new Environmental Licence and any renewal of any Environmental Licences within twenty-eight days of issue and you must meet all associated costs and expenses. (ii) You represent and warrant to us that you have obtained all necessary Environmental Licences and you have at all times complied in all material respects with the terms and conditions of the Environmental Licences applicable to you and all other applicable Environmental Law. You also confirm that no Hazardous Materials (other than those incidental to your business and which are stored in full compliance with Environmental Licence(s)) have been used, disposed of, generated, stored, transported, deposited, buried or emitted at, on, from or under any premises (whether or not owned, leased, occupied or controlled by you) in circumstances where this might result in a liability on you. Page 46 (ii) You represent that you have not received any notices of withdrawal, violations and/or advisory action by regulatory agencies regarding environmental control matters or Environmental Licence compliance. (ii) You will indemnify and hold us and our respective officers, directors, employees and agents (the `Indemnified Parties') free and harmless from and against any and all actions, causes of action, losses, costs, liabilities and damages of any kind and every kind of character known or unknown, fixed or contingent, out of pocket or consequential and all expenses incurred in connection therewith including reasonable legal fees and disbursements (irrespective of whether any such Indemnified Parties are a party to the action for which indemnification is sought) (the "Indemnified Environmental Liabilities") incurred by the Indemnified Parties or any of them as a result of or arising out of or relating to:- (ii) The imposition or recording of any liens, pledges, charges or mortgages on or over any of your assets by any government agency or local governmental agency or authority pursuant to any Environmental Law or the removal of any such liens, pledges, charges or mortgages over any of your assets. (ii) The claims of any private parties or local government or government agency or authority regarding violations of Environmental Law in connection with your operations or the effect of the presence of any Hazardous Material on the value of the assets belonging to you or in connection with compliance by you or the Indemnified Parties with any regulation or order issued pursuant to Environmental Law. Your obligations to the Indemnified Parties shall continue after you have repaid the Loan. For the purposes of this agreement:- "Environmental Law" shall mean any law, regulation, code of practice, circular, guidance notes or the like (whether in the United Kingdom or elsewhere and whether now existing or subsequently enacted or promulgated) or any judicial or administrative interpretation thereof concerning the protection of human health or the environment or the conditions of the work place or the generation, transportation, storage, treatment and disposal of hazardous materials. "Hazardous Materials" shall mean any radioactive emissions and any natural or artificial substance (whether in solid or liquid form or in the form of a gas or vapour and whether alone or in combination with any other substance) which are defined, determined identified prohibited, limited or regulated by Environmental Law or any other chemical, material, substance or element existing now or in the future and which is capable of causing harm to man or any other living organism which is capable of damaging the environment or public health or welfare including any controlled, special, dangerous, toxic, radioactive or hazardous waste. "Environmental Licence" shall mean any permit, licence or authorisation, consent or other approval required by Environmental Law. /s/ Jon Hays ------------- For and on behalf of National Westminster Bank Plc FORM OF ACCEPTANCE ------------------ We accept the Loan on the terms and conditions set out in this agreement By: /s/ John Wilkinson ------------------- For and on behalf of Prestolite Electric Limited Date: /s/ 2/nd/ November, 1999 ------------------------ Page 47 SCHEDULE Indicative Calculation of Maximum Breakage Costs Actuarial Style (Reducing Capital and Interest) - ---------------------------------------------- Original Loan Amount (Pounds)500,000 Term of Loan 2 Years Fixed Rate 10.25% Term Expired 1 Year Loan Amount Outstanding (Pounds)251,505 Available Rate at Early Repayment Date 8.625% Breakage Costs (Pounds)4,401* As a guide only, the formula which will apply can be stated as follows: Current amount of loan outstanding ------- Multiplied by Remaining period (in years) to maturity of the fixed rate period Multiplied by Existing loan rate minus (Current available fixed rate for the remaining term ------- minus 0.125% ) Actual breakage costs will be confirmed on the day early redemption takes place *Note: The breakage cost payable is subject to a minimum of 0.125% and in addition to the 0.5% prepayment fee Page 48 Agreement We, National Westminster Bank Plc and any person to whom we transfer our rights or duties under this agreement agree to offer you a loan under the terms and conditions set out below and on the attached appendix. The first part of the appendix explains some of the words and phrases used in this agreement. (ii) Date of offer: 18/th/ October 1999 2 Your name: Prestolite Electric Limited ( Registered No. 1189048 ) Cleveland Road, Leyland, Preston, Lancs. (ii) Lending Branch: Cheltenham (ii) Amount: (Pounds)2,000,000 (two million pounds) 5 Purpose of the Loan: Repay element of Parental Loan (ii) Period of the Loan: 5 years 7 Interest rate: You will pay interest at a rate equal to the sum of 1.375% per year plus the Bank's base rate from time to time. (ii) Fee: (Pounds)60,000 to include availability of the overdraft facility per the Advice of Borrowing Terms of even date. (ii) Drawing the Loan: You may draw the Loan in full in one amount or in stages. If stage drawings are required, these are permitted subject to minimum single drawings of (Pounds)500,000. Full drawdown must be achieved within 12 months of the Agreement Date. If the Loan is not drawn in full within this period, the undrawn part of the Loan will be deemed to be cancelled and no longer available for drawing. (ii) Repayment: You must have repaid the Loan in full on the last day of the period shown in term 6 of this agreement (such period commencing on the earlier of the date on which the Loan is drawn in full and the date on which any undrawn part of the Loan is cancelled under term 9 of this agreement). Subject always to our rights under paragraph 12 of the appendix, You will repay the Loan by 60 instalments of principal and interest payable every one month. We will tell you the amounts you need to pay to repay the Loan in full by the last day of the period shown in term 6 of this agreement together with interest which will be calculated in the manner referred to in paragraph 4 of the appendix. Such instalments will commence 1 month after the earlier of the date on which you draw the Loan in full and the date on which any undrawn part of the Loan is cancelled under term 9 of this agreement. From time to time we will tell you the instalments you must pay. From the date on which a drawing is first made under the Loan until such date as you commence your instalments of principal and interest hereunder, interest at the rate specified in this agreement may be debited to your loan account on our usual charging days in March, June, September and December. Page 49 (ii) Security: First legal mortgage over Larden Road Premises, Acton, London. First legal mortgage over land off Ipswich Road, Cardiff (known as Royal Works). First legal mortgage over site at Cleveland Road, Leyland, Preston, Lancashire. Cross Guarantees and Mortgage Debentures from:- Prestolite Electric Limited, Prestolite Wales Limited, H B Switchgear (Contractors) Limited, Butec Electrics Limited. (ii) Value of Security: The first legal mortgages shown in term 11 of this agreement together with any security provided pursuant to paragraph 5 of the appendix must be worth (calculated on an Open Market Value basis) at least 125% of the total amount which you owe at any time on this Loan and the Commercial Fixed Rate Loan Agreement of even date. (ii) Financial agreements: You agree to the following for as long as any amounts remain outstanding under this loan. Please see paragraph 2 of the appendix for an explanation of the words and phrases used below. (ii) You will not allow Total Borrowing to be more than 125% of Tangible Net Worth in 1999, 100% of Tangible Net Worth in 2000, and 75% of Tangible Net Worth thereafter. (ii) You will not allow Cash Generated to be less than 100% of Debt Service Costs. (ii) You will not allow Profit to be less than 250% of Borrowing Costs. (ii) Management information to be provided monthly within 30 days of the month end to which the information relates. To include Profit & Loss and Balance Sheet statements, aged debtor analysis, funds flow statement and specific commentary on working capital movements. E No preference shares or redeemable ordinary shares to be withdrawn/repaid during the term of this loan. F Acquisitions of more than (Pounds)500,000 not to be made without the Bank's prior agreement. G You will not, without the prior approval of the Bank, make any repayments of principal to Prestolite Electric Inc. under the intra-group loan of (Pounds)6m or equivalent (this amount is after the (Pounds)6m reduction from the total of (Pounds)8m of banking facilities being put in place of even date by National Westminster Bank Plc). (ii) You will not and you (and your Parent (if specified in term 2(b)) will procure that none of your (or if your Parent is specified in term 2(b) its) subsidiary undertakings as defined by S.258 of the Companies Act 1985 ("Subsidiary Undertakings") will, without our prior written consent either create, extend or increase any security interest on the whole or any part of your or the Group's undertaking, property or assets (including uncalled capital) whether present or future in aggregate above (Pounds)250,000. Security interest includes (without limitation) liens, pledges, charges, mortgages or other encumbrances. (ii) You will provide us with such financial and other information relating to you or to the Group as we may reasonably require including (without limitation) copies of the consolidated audited accounts of the Group not later than 6 months after the end of the accounting period to which they relate. In order to verify whether you are complying with these covenants, we will refer to your management accounts on a quarterly basis and audited accounts on an annual basis, for the consolidated accounts of Prestolite Electric Limited. In respect of the Cash Generated covenant (point b above), this will be tested quarterly on a rolling 12 month basis as follows: 3 months ended 31/3/2000 6 months ended 30/6/2000 9 months ended 30/9/2000 Page 50 12 months ended 31/12/2000 12 months ended 31/3/2001 and each rolling 12 month period thereafter. (ii) Overdue payments: If you do not make any payment under this agreement on the date it is due, then, without prejudice to our other rights, we will charge interest on the overdue amount from the date it was due to the date upon which we receive payment (as well after as before judgement). This will be calculated (and compounded in accordance with our normal practice) on the basis of a year of 365 days and the actual number of days elapsed. You will pay interest to us at a rate which is equal to the sum of:- 5% per year; and our base rate from time to time Any late payments may be debited to a separate account. (ii) Early Repayment: Paragraph 7 of the appendix gives details of how you may ask to repay the Loan before the specified repayment dates. In connection with paragraph 7 of the appendix, the prepayment fee is 0.5% of the amount which you prepay. (ii) Environmental Liabilities ------------------------- Paragraph 18 of the Appendix will apply. Page 51 Appendix (ii) Agreement --------- This appendix forms part of the agreement between us. If we refer to a paragraph, this will mean a paragraph of this appendix. If we refer to a term this will mean a term of the agreement. (ii) Meanings of words and phrases used in this agreement: ---------------------------------------------------- the `Agreement Date' means the date on which our offer is accepted in the way set out in paragraph 3 of the appendix. `Business Day' shall mean a day on which banks in general are open in the City of London for the transaction of business of the nature set out in this agreement. `Event of Default' shall mean any event specified in paragraph 12 of the appendix. `the Group' means you and your (or where your Parent is specified in term 2(b), your Parent and its) subsidiary undertakings (as defined by Section 258 of the Companies Act 1985) taken as a whole (and, save where the context does not admit, any of them individually); if there are no subsidiary undertakings for the time being, references to the Group shall be taken to be references to you and the word "consolidated" in relation to any accounts or other financial matters shall be ignored. The `Loan' means the loan facility which we have agreed to provide under the terms and subject to the conditions of this agreement and, where necessary, it will mean all amounts owed under this agreement. `the Offer Date' is the date shown in term 1 of the agreement. This is the date on which we make the written offer of the Loan. `Security' means the security shown in term 11 of the agreement and any other security which you provide under paragraph 5 of the appendix. `Subsidiary Undertaking' shall mean a subsidiary undertaking (as defined by S.258 of the Companies Act 1985). The following definitions apply to the financial agreements in term 13 of the agreement. `Borrowing Costs' means, in respect of any financial period, all continuing, regular or periodic costs, charges and expenses (including but not limited to, interest and any capitalised interest) incurred by the Group in effecting, servicing or maintaining Total Borrowing. `Capital Expenditure' means, in respect of any financial period, the aggregate expenditure of the Group on the purchase of fixed assets (as determined in accordance with generally accepted United Kingdom accounting principles (consistently applied)). Page 52 `Cash Generated' means, in respect of any financial period, the sum of:- (ii) Profit; plus (ii) an amount equal to the depreciation charged on fixed assets of the Group during such period and any other non-cash movements; plus (iii) an amount equal to any decrease in net working capital (being, in respect of any period, the net surplus (or deficit) of the aggregate stock in trade of the Group and the amount owed to members of the Group by debtors less the amount owed by them to creditors at the end of such period); plus (iv) the proceeds of new ordinary or other redeemable shares issued by you during such period. LESS the sum of:- (ii) an amount equal to the tax paid by the Group during such period; plus (ii) an amount equal to any increase in net working capital (as defined above) during such period; plus (iii) an amount equal to the Capital Expenditure (including investments) by the Group during such period less an amount equal to the net proceeds of disposal of fixed assets during such period; plus (iv) an amount equal to the aggregate amount of dividends on ordinary shares paid by you during such period; plus (v) any receipts of the Group by way of extraordinary items during such period. `Current Assets' means all assets of the Group which would be classified, in accordance with generally accepted United Kingdom accounting principles (consistently applied) as current assets. `Current Liabilities' means all liabilities of the Group which would be classified, in accordance with generally accepted United Kingdom accounting principles (consistently applied) as current liabilities. `Debt Service Costs' means, in respect of any financial period:- (ii) all interest, commission, periodic fees and other financial charges payable by any member of the Group during such period (including the interest element payable under finance leases); plus (ii) the aggregate amount of all dividend payments on redeemable preference shares (and other redeemable shares) made by you during such period; plus (iii) the aggregate amount of all debt repayments made by any member of the Group or due from any member of the Group (including redemption of any redeemable preference shares and inter company and parental loans) during such period. Page 53 `Net Cash Flow before Financing' means, in respect of any financial period, the sum of :- (ii) Profit; plus (ii) an amount equal to the depreciation charged on fixed assets of the Group during such period and any other non- cash movements during such period; plus (iii) an amount equal to any decrease in net working capital (being, in respect of any period, the net surplus (or deficit) of the aggregate stock in trade of the Group and the amount owed to members of the Group by debtors less the amount owed by them to creditors at the end of such period); LESS the sum of :- (ii) an amount equal to the tax paid by the Group during such period; plus (ii) an amount equal to any increase in net working capital (as defined above) during such period; plus (iii) an amount equal to the Capital Expenditure (including investments) by the Group during such period less an amount equal to the net proceeds of disposal of fixed assets during such period; plus (iv) an amount equal to the interest paid (less interest received) by the Group for such period; plus (v) an amount equal to the aggregate amount of dividends on ordinary shares paid by you during such period; plus (vi) any receipts of the Group by way of extraordinary items during such period. `Net Working Assets' means, in respect of any period, the aggregate stock in trade of the Group and the amounts owed to members of the Group by trade debtors less the amounts owed by them to trade creditors at the end of such period. `Profit' means, in respect of any financial period, the amount of profit of the Group (excluding profit attributable to minority interests) before taxation, interest payable, and any unusual, extraordinary or exceptional items. `Tangible Net Worth' means the amount for the time being paid up or credited as paid up on your (or where your Parent is specified in term 2(b), your Parent's) issued share capital plus all reserves of the Group which would, in accordance with generally accepted United Kingdom accounting principles (consistently applied) be classified as shareholders capital plus retained earnings of the Group but deducting assets of the Group which would, in accordance with such principles, be classified as intangible assets. `Total Borrowing' means the total outstanding principal amount of all borrowings or monies otherwise raised by the Group from all sources whatever, whether by way of debenture, mortgage, unsecured loan, overdraft or in any other manner (including redeemable preference shares and inter company and parental loans) plus the aggregate face amount of all discounted acceptance credits. (ii) Availability of Loan -------------------- From the Offer Date shown in term 1 of the agreement you will have 30 days in which you can draw the Loan. However, you can only accept this offer and draw the Loan if we have received the following items from you and are satisfied with them:- Page 54 a) A copy of this agreement with the acceptance form signed on your behalf (and if your Parent is specified in term 2(b) on behalf of your Parent). b) A certified copy of a resolution of your board of directors (and if your Parent is specified in term 2(b) a copy of a resolution of its board of directors) showing that you (and if applicable your Parent) . accept the terms and conditions of the Loan; . agree to give the security set out in term 11 of the agreement; and . authorise a person or persons to take such other action on your behalf (and if applicable your Parent's behalf) as may be necessary for the purpose of the agreement. c) Your (and if your Parent is specified in term 2(b) its) Certificate of Incorporation and such other evidence as we may require that you and ( if your Parent is specified in term 2(b)) your Parent are companies incorporated in England, Wales or Scotland under the Companies Act 1985 (or any predecessor Act) and that neither you nor your Parent are a charity. d) The security set out in term 11 of the Agreement together with certified copies of such board resolutions and shareholders resolutions from the giver of such security as we may require and, in the case of a corporate entity which is giving security to us which is either (I) a charity or (ii) a Non-Companies Act company, a certified copy of its Memorandum and Articles of Association rules or other equivalent constitutional documents certified by its Secretary or a Director as being up to date (including copies of all amending resolutions). A "Non-Companies Act Company" is any company other than a company incorporated in England, Wales or Scotland under the Companies Act 1985 (or any predecessor Act). e) Written confirmation from Prestolite Electric Inc. that it will not seek any repayment under its intra-group loan (after the (Pounds)6m reduction now to be effected by this and other facilities provided by National Westminster Bank Plc), until such time as no further amounts remain outstanding under this Facility. You must give us three days' notice of your intention to draw the Loan or any part of it. These days must be Business Days. We will credit your current account with the amount of your drawing Acceptance of the offer contained in this agreement may be effected by receipt by us at the lending branch (please see term 3 of the agreement) within thirty days of the date specified in term 1 of the agreement of the items specified in this paragraph. (ii) Interest -------- We will work out interest on the balance of the Loan outstanding from day to day on the basis of the actual number of days elapsed and a 365 day year. You must pay interest to us on our usual charging days in March, June, September and December or by combined interest and principal instalments (where specified under term 10) on such dates as are specified under term 10 of the agreement. You will pay a fixed rate of interest for the entire period of the Loan as specified in your Quotation. This rate of interest will be the rate shown in the Quotation. We may charge interest to your current account or to your loan account. If you do not make any payments on the due date under this agreement, then the rate of interest specified in term 14 shall apply to any overdue amounts. (ii) Security -------- You must give us the security shown in term 11 of the agreement and this will be a continuing security for the discharge on demand of all your indebtedness and your other liabilities to us from time to time. Page 55 You undertake to provide any extra security which we need to maintain the value of the Security at the level specified in term 12 of the agreement within such period as we may require. The open market value of the Security shall be determined at our option from time to time by an independent professional valuation. You will have to pay for this valuation. (ii) Fees and Costs -------------- We have the right to debit your current account with the fees set out in term 8 and 15 of the agreement. (ii) Early Repayment --------------- We may (but are not obliged to) agree to let you repay the Loan early if you ask us in writing. You must give us five days notice in writing to do this. This notice shall be irrevocable and these days must be Business Days. If we allow you to repay the Loan early, the prepayment will be on such terms as we may require including (without limitation) you indemnifying us against any funding or other costs, losses, expenses or liabilities (including loss of profit) sustained or incurred by us as a result of such prepayment. If we allow you to repay the Loan early you will also have to pay us the prepayment fee set out in term 15 of the agreement. You cannot reborrow any amount you have prepaid. (ii) Liability --------- If you are more than one person then the expression "you" shall mean all of such persons and (save where the context does not so admit) any of them and the obligation of those persons shall be joint and several. Each such person irrevocably appoints each other person as his agent for the service of any demand or notice under this agreement. (ii) Current Accounts ---------------- You agree to maintain a current account with us throughout the period of the Loan. (ii) Payments -------- We may transfer amounts from your current account to meet the repayments set out in term 10 of the agreement. We may use any repayment instalment (including instalments of principal and interest) or any part of any repayment instalment to: . reduce the amount of principal outstanding on the Loan. . pay interest accrued on the Loan. . discharge any other payment due under this agreement. You must make all payments under this agreement in full in pounds sterling without any deduction or withholding (whether in respect of set-off, counterclaim, duties, taxes, charges or otherwise howsoever). If you are compelled by law to make any deduction or withholding, you will promptly pay to us such additional amounts as will make the net amount received by us equal to the full amount payable by you had there been no deduction or withholding. (ii) Set-Off ------- We shall be entitled to set-off against any of your liabilities to us under this agreement (whether present, future, actual or contingent) any of your credit balances on any of your accounts with us or in your name. We do not have to give you any prior notice to do this. Page 56 (ii) Default ------- If any of the following events occur, we may, by giving you written notice, cancel our outstanding commitments to you (including the availability of the Loan if you have not drawn it) and demand immediate repayment of your indebtedness to us and exercise our rights under any Security:- (ii) If you breach any term or condition (including any covenant) of this agreement. (ii) If you do not make any payment on the date it is due under this agreement and whether by way of principal, interest or otherwise. (ii) If you do not use the Loan for the purpose set out in term 5 of the agreement. (ii) If the Security or any part of the Security shall cease to be fully enforceable in accordance with its terms or with effect from the date on which the determination of the continuing nature of the Security or any part of the Security occurs, such continuing nature is determined whether such determination be by actual or constructive notice or be deemed to have occurred or any binding undertaking provided in the Security or any part of the Security shall be breached or any guarantor gives or purports to give notice to terminate its liabilities under any guarantee in respect of the Loan. (ii) If you sell or dispose of any asset listed in term 11 of the agreement or it ceases to be in your sole possession. (ii) If your current account becomes overdrawn after the debiting of any payment due from you under the Loan or it becomes overdrawn in excess of any limit agreed with us and you do not offer payment in cash to us when we inform you of this. (ii) If any representation, warranty or statement made to us by you in connection with the Loan is breached or is false or if you fail to tell us anything which in our opinion is material to the Loan. (ii) If you or any member of the Group make any default in the performance of any other agreement for borrowed money whether with us or any other lender whereby the due date of repayment thereunder is rendered capable of acceleration; or if any of your indebtedness or the indebtedness of any member of the Group becomes or is declared by the holder or the lender thereof to be due and payable prior to its stated maturity or such indebtedness is not repaid in full at its stated maturity; or if such indebtedness (including the indebtedness of any member of the Group) is repayable on demand and is not repaid in full immediately upon demand being made or if any guarantee or indemnity given by any giver of security in connection with any of your liabilities to us or the liabilities of any member of the Group to us or any other lender is not honoured when due and called upon. (ii) If a petition is presented or a resolution passed for your winding up or that of any member of the Group or a petition is presented for an administration order to be made in relation to you or any member of the Group; or your directors or the directors of any member of the Group make a proposal for a voluntary arrangement with your creditors or the creditors of any member of the Group; or you are unable to pay your debts within the meaning of Section 123 of the Insolvency Act 1986 or any member of the Group is unable to pay its debts within the meaning of such section or an encumbrancer takes possession of or a receiver or an administrative receiver is appointed over any of your assets or over the assets of any member of the Group. (ii) If there shall occur in our opinion a material effective change of control (as defined by Section 840 of the Income and Corporation Taxes Act 1988) of you or your Parent. (ii) If there has occurred any change which in our reasonable opinion is a material adverse change in your business, assets or financial condition or in the business, assets or financial condition of the Page 57 Group or any member of the Group which, in our reasonable opinion, may affect your ability to comply with your obligations under this agreement. (ii) If any judgement, distress, warrant of attachment, writ of execution or similar process is issued, levied or enforced upon any of your assets or the assets of any member of the Group or if any asset held by the Bank as security for the Loan is charged or becomes encumbered elsewhere. (ii) If you or any member of the Group ceases or threatens to cease to carry on its business or sells, transfers or otherwise disposes of in any one transaction or series of related transactions any substantial part of its assets. (ii) If you cease to be a Subsidiary Undertaking of Prestolite Electric Holding, Inc. (ii) Delay in exercising our rights ------------------------------ If we delay in giving any notice or exercising any of our rights under this agreement this should not be construed as a waiver of any of our rights. (ii) Demands and Notices ------------------- Any demand or notice to you will be made in writing and be signed by one of our officers and served either by personal delivery on you at any place or by post addressed to you at your place of business last known to us. Service by post on you shall be deemed to be effective on the next Business Day after the date of posting even if it is returned undelivered. Any notice to us under this agreement must be made in writing and signed by you or where you are a company, by a duly authorised officer on your behalf. It must be delivered by hand or by post to the lending branch specified in term 3 of the agreement. (ii) Costs and Expenses ------------------ You will pay all costs, charges and expenses arising in connection with the Loan and the Security including the negotiation and preparation of this agreement and the Security and all costs, charges and expenses arising in connection with the preservation and/or enforcement of our rights under this agreement or under the Security and will indemnify us for any and all losses, costs and expenses occasioned by the occurrence of an Event of Default. (ii) General Points -------------- (ii) If at any time any one or more of the provisions in this agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. (ii) Unless we expressly agree to do so in writing we do not hold ourselves out as providing advice on or considering the general suitability of this Loan for your particular circumstances (including tax circumstances) and neither we nor our employees shall be liable for any indications given as to such suitability. We make no warranties or representations about the advisability of any underlying transaction entered into by you. You should obtain independent professional advice on such matters, and upon any Security required by us. (ii) If we determine in our opinion that as a result of any Requirement or compliance by us with any Requirement the cost to us of funding, maintaining or making available the Loan (or any undrawn amount of the Loan) is increased or the effective return to us on the Loan or on our capital is Page 58 reduced, then you shall pay to us on demand such sums as may be certified to you by us as shall compensate us for the increased cost or reduction. 'Requirement' means any law, regulation, directive or official request(whether or not having the force of law) and includes any change in its interpretation or application. It also includes any Requirement relating to a change in currency of a country. (ii) If more than one currency or currency unit are at the same time recognised by the Bank of England as the lawful currency of the United Kingdom then: any reference in this agreement to, and any obligations arising under this agreement in, the currency of the United Kingdom shall be translated into, or paid in, the currency or currency unit of the United Kingdom designated by us; and any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the Bank of England for the conversion of that currency or currency unit into the other, rounded up or down by us acting reasonably. (ii) If a change in any currency of the United Kingdom occurs, this agreement will be amended to the extent we specify to be necessary to reflect the change in currency and to put us in the same position, so far as possible, that we would have been in if no change in currency had occurred. (ii) We may assign or transfer all or any of our rights and obligations under the Loan. You may not assign or transfer any of your rights or obligations under the Loan. (ii) This agreement is governed by the laws of England. (ii) All expressions in this agreement bearing a plural meaning shall (where the context so admits) also bear the singular meaning and vice versa. (ii) All references in this agreement to any statutory provision shall be deemed to include any statutory modification or re-enactment of such provision. (ii) If the effect of the introduction of or any change in applicable law or directive or the interpretation of such law or directive is to make or purpose to make the Loan unlawful then our obligations under this agreement shall cease and you will on demand pay to us all amounts ourstanding under the Loan (ii) Representations and Warranties ------------------------------ You represent and warrant that you have full power to accept and be bound by the terms and conditions set out in this agreement and to draw the Loan and that you have taken all necessary steps and obtained all necessary consents and authorisations to do so and that accordingly this agreement constitutes your legal, valid and binding obligations fully enforceable in accordance with their terms. You represent and warrant as follows:- (ii) You are duly incorporated and validly existing under the laws of England. (ii) No Event of Default has occurred or is outstanding and no event has occurred which with the giving of notice or the lapse of time would constitute an Event of Default. (ii) All information, exhibits and reports furnished to us in connection with this agreement were and remain true and accurate in all respects and do not omit any facts thereby rendering misleading any statement contained therein. (d) The representations and warranties set out above shall survive your acceptance of this agreement and the drawing of the Loan and shall be deemed to be repeated on each day throughout the period of the Loan with reference to the facts and circumstances existing at that time. Page 59 (e) A suitably authorised officer of your Parent Company has seen and approved the terms of this agreement. 18 Environmental Matters --------------------- (a) We may at any time during the period of the Loan require you to obtain a written up-date of the environmental audit referred to in paragraph 3 of the appendix (or if no audit was required under paragraph 3, a written confirmation that neither your assets nor the use of those assets has broken or is likely to break any Environmental Law). This must be done by an environmental consultant acceptable to us and at your expense. (ii) You must notify us immediately if you receive any claim, notice or other communication in respect of any alleged breach of Environmental Law. (ii) You undertake to notify us immediately if any Environmental Licence is withdrawn or is not renewed. (ii) You must give us certified copies of any new Environmental Licence and any renewal of any Environmental Licences within twenty-eight days of issue and you must meet all associated costs and expenses. (ii) You represent and warrant to us that you have obtained all necessary Environmental Licences and you have at all times complied in all material respects with the terms and conditions of the Environmental Licences applicable to you and all other applicable Environmental Law. You also confirm that no Hazardous Materials (other than those incidental to your business and which are stored in full compliance with Environmental Licence(s)) have been used, disposed of, generated, stored, transported, deposited, buried or emitted at, on, from or under any premises (whether or not owned, leased, occupied or controlled by you) in circumstances where this might result in a liability on you. (ii) You represent that you have not received any notices of withdrawal, violations and/or advisory action by regulatory agencies regarding environmental control matters or Environmental Licence compliance. (ii) You will indemnify and hold us and our respective officers, directors, employees and agents (the `Indemnified Parties') free and harmless from and against any and all actions, causes of action, losses, costs, liabilities and damages of any kind and every kind of character known or unknown, fixed or contingent, out of pocket or consequential and all expenses incurred in connection therewith including reasonable legal fees and disbursements (irrespective of whether any such Indemnified Parties are a party to the action for which indemnification is sought) (the "Indemnified Environmental Liabilities") incurred by the Indemnified Parties or any of them as a result of or arising out of or relating to:- (ii) The imposition or recording of any liens, pledges, charges or mortgages on or over any of your assets by any government agency or local governmental agency or authority pursuant to any Environmental Law or the removal of any such liens, pledges, charges or mortgages over any of your assets. (ii) The claims of any private parties or local government or government agency or authority regarding violations of Environmental Law in connection with your operations or the effect of the presence of any Hazardous Material on the value of the assets belonging to you or in connection with compliance by you or the Indemnified Parties with any regulation or order issued pursuant to Environmental Law. Your obligations to the Indemnified Parties shall continue after you have repaid the Loan. For the purposes of this agreement:- "Environmental Law" shall mean any law, regulation, code of practice, circular, guidance notes or the like (whether in the United Kingdom or elsewhere and whether now existing or subsequently enacted or promulgated) or any judicial or administrative interpretation thereof concerning the protection of Page 60 human health or the environment or the conditions of the work place or the generation, transportation, storage, treatment and disposal of hazardous materials. "Hazardous Materials" shall mean any radioactive emissions and any natural or artificial substance (whether in solid or liquid form or in the form of a gas or vapour and whether alone or in combination with any other substance) which are defined, determined identified prohibited, limited or regulated by Environmental Law or any other chemical, material, substance or element existing now or in the future and which is capable of causing harm to man or any other living organism which is capable of damaging the environment or public health or welfare including any controlled, special, dangerous, toxic, radioactive or hazardous waste. "Environmental Licence" shall mean any permit, licence or authorisation, consent or other approval required by Environmental Law. By: /s/ Jon Hays ------------- For and on behalf of National Westminster Bank Plc Date 25 October, 1999 ---------------- FORM OF ACCEPTANCE ------------------ We accept the Loan on the terms and conditions set out in this agreement By:/s/ John Wilkinson ------------------- For and on behalf of Prestolite Electric Limited Date: 2/nd/ November, 1999 -------------------- Page 61 EX-27.1 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED INCOME STATEMENTS FOR PRESTOLITE ELECTRIC HOLDINGS, INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001057053 PRESTOLITE ELECTRIC HOLDING, INC. 1,000 9-MOS DEC-31-1999 JAN-01-1999 OCT-02-1999 832 0 54,790 (3,185) 55,556 113,094 94,167 (38,186) 191,517 59,064 143,114 0 0 2 16,623 191,517 195,952 195,952 156,878 185,664 0 0 11,915 (538) 1,082 (1,620) 0 0 0 (1,620) (0.81) (0.81)
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