EXHIBIT 10.1
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
BY AND BETWEEN
PRESTOLITE ELECTRIC INCORPORATED
AND
COMERICA BANK
DATED AS OF OCTOBER 31, 2001
================================================================================
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, made as of the 31st day of October, 2001, 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");
RECITALS:
A. Company and Bank are parties to the Letter Loan Agreement dated as
of December 26, 2000 ("Prior Credit Agreement").
B. Company has requested Bank to amend certain provisions of the Prior
Credit Agreement and increase the credit provided thereunder.
C. Company and Bank wish to amend and restate the Prior Credit
Agreement on the terms and conditions provided herein.
NOW, THEREFORE, Bank and Company agree that the Prior Credit Agreement
is amended and restated in its entirety as follows:
1. DEFINITIONS
For the purposes of this Agreement the following capitalized terms will
have the following meanings:
"Account" shall have the meaning assigned to it in the Michigan Uniform
Commercial Code on the date of this Agreement.
"Account Debtor" shall mean the party who is obligated on or under any
Account.
"Advance" shall mean a borrowing requested by Company and made by Bank
under Section 2 of this Agreement, including any refunding or conversions of
such borrowings pursuant to Section 6.3 hereof, and shall include a
Eurodollar-based Advance and a Prime-based Advance.
"Affiliate" shall mean, with respect to any Person, any other Person or
group acting in concert in respect of the first Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with such first Person. For purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any Person or group of Persons, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise. Unless otherwise specified to the contrary herein, or
the context requires otherwise, Affiliate shall refer to the Company's
Affiliates.
"Alternate Base Rate" shall mean for any day a rate per annum (rounded
upwards, if necessary, to the next higher 1/16 of 1%) equal to the Federal Funds
Effective Rate in effect on such day plus one percent (1%).
"Applicable Commitment Fee Percentage" shall mean as of the date of
determination thereof, the following per annum rate:
If Funded Debt Ratio ("x") is: The Applicable Commitment Fee Percentage is:
------------------------------------------------ -------------------------------------------------
x > 5.5 .625%
------------------------------------------------ -------------------------------------------------
5< x < 5.5 .50%
-
------------------------------------------------ -------------------------------------------------
4.5 < x < 5 .375%
-
------------------------------------------------ -------------------------------------------------
x < 4.5 .25%
-
------------------------------------------------ -------------------------------------------------
"Applicable Eurodollar Margin" shall mean, as of any date of
determination thereof, the following Margins:
If Funded Debt Ratio ("x")
is: The Applicable Eurodollar Margin is:
---------------------------------------------------------------------
Non-Margin
Margin Reduction Period Reduction Period
---------------------------- ----------------------------------- ---------------------------------
x > 5.5 3.25% 3.50%
---------------------------- ----------------------------------- ---------------------------------
5< x < 5.5 3.0% 3.25%
-
---------------------------- ----------------------------------- ---------------------------------
4.5 < x < 5 2.75% 3.0%
-
---------------------------- ----------------------------------- ---------------------------------
x < 4.5 2.50% 2.75%
-
---------------------------- ----------------------------------- ---------------------------------
"Applicable Interest Rate" shall mean the Eurodollar-based Rate or the
Prime-based Rate, as selected by Company from time to time subject to the terms
and conditions of this Agreement.
2
"Applicable Margin" shall mean the Applicable Eurodollar Margin or the
Applicable Prime-based Margin, as applicable.
"Applicable Prime-based Margin" shall mean as of any date of
determination thereof, the following margins:
If Funded Debt Ratio ("x")
is: The Applicable Prime-based Margin is:
---------------------------------------------------------------------
Non-Margin
Margin Reduction Period Reduction Period
---------------------------- ----------------------------------- ---------------------------------
x > 5.5 .50% .75%
---------------------------- ----------------------------------- ---------------------------------
5< x < 5.5 .25% .50%
-
---------------------------- ----------------------------------- ---------------------------------
4.5 < x < 5 0 .25%
-
---------------------------- ----------------------------------- ---------------------------------
x < 4.5 0 0
-
---------------------------- ----------------------------------- ---------------------------------
"Approved Account Debtors" shall mean Ford Motor Company, General
Motors Corporation, Chrysler Corporation, Freightliner Corporation, Caterpillar
Corporation, Cummins Corporation, Western Star Corporation, Navistar
Corporation, or Thermo King Corporation, or any subsidiary thereof, or any other
Person approved in writing by Bank in its sole discretion.
"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) 80% of Eligible
Accounts plus (b) the lesser of 30% of Eligible Inventory or $4,500,000, and
(ii) during any Margin Reduction Period, 80% of Eligible Accounts.
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business (including dealings in foreign exchange)
in Detroit, London and New York.
"Capital Expenditure" shall mean any payment made directly or
indirectly for the purpose of acquiring or constructing fixed assets, real
property or equipment which in accordance with GAAP would be added as a debit to
the fixed asset account of the Person making such expenditure, including,
without limitation, amounts paid or payable under any conditional sale or other
title retention agreement or under any lease or other periodic payment
arrangement which is of such a nature that payment obligations of the lessee or
obligor thereunder would be required by GAAP to be capitalized and shown as
liabilities on the balance sheet of such lessee or obligor.
3
"Collateral Documents" shall mean the Security Agreement and any other
document or instrument of security executed and delivered by Company or any
Domestic Subsidiary after the date hereof.
"Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more persons
of the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with GAAP. Unless otherwise indicated herein,
"Consolidated" shall mean the consolidated accounts of PEI and its Subsidiaries.
"Consolidated Capitalization" shall mean, as of any date of
determination, the sum of Consolidated Tangible Net Worth plus the principal
balance of the Senior Debt.
"Consolidated Income Taxes" shall mean for any period the aggregate
amount of taxes based on income or profits for such period of the operations of
PEI and its Subsidiaries determined in accordance with GAAP (to the extent such
income and profits were included in computing Consolidated Net Income).
"Consolidated Interest Expense" shall mean for any period the aggregate
gross interest expense (excluding amortization of original issue discount and
non-cash interest expense and including the interest component of capitalized
lease obligations) of PEI and its Subsidiaries for such period as determined in
accordance with GAAP (to the extent such interest expense was included in
computing Consolidated Net Income).
"Consolidated Net Income" shall mean the net income (or loss) of PEI
and its Subsidiaries for any period determined in accordance with GAAP but
excluding in any event any gains or losses on the sale or other disposition, not
in the ordinary course of business, of investments or fixed or capital assets,
and any taxes on the excluded gains and any tax deductions or credits on account
of any excluded losses.
"Default" shall mean any event or omission which, with the passage of
time, the giving of notice, or both, would constitute an Event of Default.
"Domestic Subsidiary" shall mean any Subsidiary of PEI that is
incorporated under the laws of any state of the United States of America. For
purposes of this Agreement, 756780 Ontario Limited shall be deemed to be a
Domestic Subsidiary.
"EBITDA" shall mean for any period the sum of Consolidated Net Income
for such period plus Consolidated Income Taxes, Consolidated Interest Expense
and Consolidated depreciation, amortization and other non-cash charges for such
period, plus the following charges to the extent they were taken during such
period: (a) severance charges incurred in 2001, (b) special charges associated
with actual or anticipated debt losses in Argentina incurred in 2001, (c)
charges related to the Thermadyne and/or AMETEK transactions incurred in
4
2001, and (d) any write-down associated with the sale of the manufacturing
facilities located in Decatur, Georgia, and San Xxxxxxx, Argentina; provided,
however, that the aggregate of all charges described in sub-sections (a) through
(c), shall not exceed $4,000,000.
"Eligible Account" shall mean an Account (but shall not include
interest and service charges) arising in the ordinary course of Company's
business which meets each of the following requirements:
(a) it is not owing more than sixty (60) days after the due date
of the original invoice or other writing evidencing such
Account;
(b) it is not owing by an Account Debtor (other than an Approved
Account Debtor) who has failed to pay twenty-five percent
(25%) or more of the aggregate amount of its Accounts owing to
Company within sixty (60) days after the due date of the
respective invoices or other writings evidencing such Accounts
(provided, however, that this sub-section (b) shall apply only
during the continuance of an Event of Default);
(c) it arises from the sale or lease of goods and such goods have
been shipped or delivered to the Account Debtor under such
Account; or it arises from services rendered and such services
have been performed;
(d) it is evidenced by an invoice, dated not later than the date
of shipment or performance, rendered to such Account Debtor or
some other evidence of billing acceptable to Bank;
(e) it is not evidenced by any note, trade acceptance, draft or
other negotiable instrument or by any chattel paper;
(f) it is a valid, legally enforceable obligation of the Account
Debtor thereunder, and is not subject to any offset,
counterclaim or other defense on the part of such Account
Debtor or to any claim on the part of such Account Debtor
denying liability thereunder in whole or as to any portion
greater than 25% of such Account (provided, however, that any
offset asserted by such Account Debtor [up to 25% of the
amount of such Account] shall decrease the amount of such
Eligible Account by the amount of such claimed offset);
(g) it is not subject to any sale of accounts, any rights of
offset, assignment, lien or security interest whatsoever other
than to Bank;
(h) it is not owing by a subsidiary or affiliate of Company nor by
an Account Debtor which (i) does not maintain its chief
executive office in the United States of America or is not
described in sub-section (ii) of this Section (h), (ii) is not
5
organized under the laws of the United States of America, or
any state thereof (unless the Account Debtor is an Approved
Account Debtor, or unless the Account is covered by FCIA
insurance or a letter of credit issued by a bank which is
acceptable to Bank in the exercise of its sole discretion), or
(iii) is the government of any foreign country or sovereign
state, or of any state, province, municipality or other
instrumentality thereof;
(i) it is not an Account owing by the United States of America or
any state or political subdivision thereof, or by any
department, agency, public body corporate or other
instrumentality of any of the foregoing, unless all necessary
steps are taken to comply with the Federal Assignment of
Claims Act of 1940, as amended, or with any comparable state
law, if applicable, and all other necessary steps are taken to
perfect Bank's security interest in such Account (provided,
however, that this sub-section (i) shall apply only during the
continuance of a Default or Event of Default);
(j) it is not owing by an Account Debtor for which Company has
received a notice of (i) the death of the Account Debtor or
any partner of the Account Debtor, (ii) the dissolution,
liquidation, termination of existence, insolvency or business
failure of the Account Debtor, (iii) the appointment of a
receiver for any part of the property of the Account Debtor,
or (iv) an assignment for the benefit of creditors, the filing
of a petition in bankruptcy, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or
against the Account Debtor;
(k) it is not an account billed in advance, payable on delivery,
for consigned goods, for guaranteed sales, for unbilled sales,
for progress xxxxxxxx, payable at a date more than ninety (90)
days after the invoice date in accordance with its terms,
subject to a retainage or holdback by the Account Debtor or
insured by a surety company; and
(l) it is not owing by any Account Debtor whose obligations Bank,
acting in its sole discretion, shall have notified Company are
not deemed to constitute Eligible Accounts.
(m) it is not a "core receivable", as currently identified on
Company's books and records.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.
"Eligible Inventory" shall be valued at the lesser of cost or present
market value in accordance with GAAP, on a first in/first out basis, and shall
mean all of Company's
6
Inventory which is in good and merchantable condition, is not obsolete or
discontinued, and which would properly be classified as "raw materials", "work
in process" or as "finished goods inventory" under GAAP, excluding (a) cores,
consigned goods, inventory located outside the United States of America, (b)
Inventory covered by or subject to a seller's right to repurchase, or any
consensual or nonconsensual lien or security interest (including without
limitation purchase money security interests) other than in favor of Bank,
whether senior or junior to Bank's security interest, and (c) Inventory that
Bank, acting in its reasonable discretion, after having notified Company,
excludes.
Inventory which is at any time Eligible Inventory, but which
subsequently fails to meet any of the foregoing requirements, shall forthwith
cease to be Eligible Inventory.
"Environmental Laws" shall mean all federal, state and local laws
including statutes, regulations, ordinances, codes, rules, and other
governmental restrictions and requirements, relating to environmental pollution,
contamination or other impairment of any nature, any hazardous or other toxic
substances of any nature, whether liquid, solid and/or gaseous, including smoke,
vapor, fumes, soot, acids, alkalis, chemicals, wastes, by-products, and recycled
materials. These Environmental Laws shall include but not be limited to the
Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976, the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act of 1986,
regulations of the Environmental Protection Agency, regulations of the Nuclear
Regulatory Agency, regulations of any state department of natural resources or
state environmental protection agency now or at any time hereafter in effect and
local health department ordinances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code.
"Eurodollar-based Advance" shall mean an Advance which bears interest
at the Eurodollar-based Rate.
"Eurodollar-based Rate" shall mean a per annum interest rate which is
equal to the sum of the Applicable Eurodollar Margin plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending
Office is offered deposits by other prime banks in the
eurodollar market in an amount comparable to the relevant
Eurodollar-based Advance and for a period equal to the
relevant Interest Period at approximately 11:00 a.m. Detroit
time two (2) Business Days prior to the first day of such
Interest Period; divided by
(b) a percentage equal to 100% minus the maximum rate on such date
at which Bank is required to maintain reserves on
"Euro-currency Liabilities"
7
as defined in and pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or, if such regulation
or definition is modified, and as long as Bank is required to
maintain reserves against a category of liabilities which
includes eurodollar deposits or includes a category of assets
which includes eurodollar loans, the rate at which such
reserves are required to be maintained on such category;
all as conclusively determined by Bank, such sum to be rounded upward, if
necessary, to the nearest whole multiple of 1/16th of 1%.
"Eurodollar Lending Office" shall mean Bank's office located at Grand
Cayman, British West Indies or such other branch of Bank, domestic or foreign,
as it may hereafter designate as its Eurodollar Lending Office by notice to
Company.
"Event of Default" shall mean any of the Events of Default specified in
Section 13.1 and 13.2 hereof.
"Facility Reserve" shall mean, as of any date, the principal balance
due to Bank under the $3,500,000 master Revolving Note dated December 26, 2000,
and the undrawn amount of all related letters of credit.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Bank from three Federal funds brokers of recognized standing
selected by it.
"Fixed Charge Coverage Ratio" shall mean as of any date of
determination, a ratio, the numerator of which is EBITDA for the four fiscal
quarters then ended and the denominator of which is the sum of all principal
payments paid or payable during such period with respect to any indebtedness
(including capital leases) of PEI and its Subsidiaries, plus Consolidated
Interest Expense for such period.
"Funded Debt" shall mean, as of any date of determination, all
indebtedness of PEI and its Subsidiaries for borrowed money or on account of
capitalized lease obligations as of such date, as determined in accordance with
GAAP, but excluding Company's indebtedness incurred in connection with the
closing of the MOSAL Transaction.
"Funded Debt Ratio" shall mean, as of any date of determination
thereof, a ratio, the numerator of which shall be Funded Debt as of such date
and the denominator of which shall be EBITDA for the four fiscal quarters then
ended.
8
"GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied, as in effect on
the date of this Agreement.
"Guaranty" shall mean the unconditional guaranty of the Indebtedness
dated October 25, 1994, executed and delivered by PEI to the Bank.
"Indebtedness" shall mean all loans, advances, fees, indebtedness,
obligations and liabilities of Company to Bank under this Agreement, together
with all other indebtedness, obligations and liabilities whatsoever of Company
to Bank arising under or in connection with this Agreement, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising.
"Interest Period" shall mean a period of one (1), two (2), or three (3)
months, as selected by Company pursuant to the provisions of this Agreement,
commencing on the day a Eurodollar-based Advance is made, or on the effective
date of an election of the Eurodollar-based Rate made under Section 6.
"Inventory" shall have the meaning assigned to it in the Michigan
Uniform Commercial Code on the date of this Agreement.
"Letter(s) of Credit" shall mean any standby and commercial letters of
credit issued by Bank for the account of Company pursuant to Section 2.7 hereof.
"Letter of Credit Reserve" shall mean, as of any applicable date of
determination, an amount equal to the aggregate undrawn amount of all Letters of
Credit minus all cash collateral held by Bank as security for Letters of Credit.
"Loan Documents" shall mean collectively, this Agreement, the Note, the
Security Agreement, the Letters of Credit, and any other instruments or
agreements executed at any time pursuant to or in connection with any such
documents.
"Margin Reduction Period" is defined in Section 3.1(c).
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on (a) the business, operations, property, or financial
condition of such Person, or (b) the ability of such Person to perform its
obligations under the Loan Documents.
"MOSAL Transaction" shall mean the purchase by Company, through its
Argentinian Subsidiary Prestolite Indiel Argentina S.A., of all of the stock of
Moteres de San Xxxx S.A. ("MOSAL"), in order to obtain certain tax benefits held
by MOSAL. If consummated, under the MOSAL Transaction, Company will pay to the
current owners of MOSAL (a) up to
9
$500,000 cash at closing, (b) up to $3,500,000 on a deferred basis pursuant to a
mutually agreed payment schedule, and (c) interest on the deferred amount of not
more than 12% per annum.
"Offering Circular" shall mean the Confidential Offering Circular dated
January 16, 1998, relating to the Senior Debt.
"PEI" shall mean Prestolite Electric Holding, Inc., a Delaware
corporation.
"Pension Plans" shall mean all pension plans of Company or any Domestic
Subsidiary which are subject to ERISA.
"Permitted Liens" shall mean with respect to any Person:
(a) liens for taxes not yet due and payable or which
are being contested in good faith by appropriate proceedings diligently pursued,
provided that provision for the payment of all such taxes has been made on the
books of such Person as may be required by GAAP;
(b) mechanics', materialmen's, banker's, carriers',
warehousemen's and similar liens and encumbrances arising in the ordinary course
of business and securing obligations of such Person that are not overdue for a
period of more than 60 days or are being contested in good faith by appropriate
proceedings diligently pursued, provided that in the case of any such contest
(i) any proceedings commenced for the enforcement of such liens and encumbrances
shall have been duly suspended; and (ii) such provision for the payment of such
liens and encumbrances has been made on the books of such Person as may be
required by GAAP;
(c) liens arising in connection with worker's
compensation, unemployment insurance, old age pensions and social security
benefits and similar statutory obligations which are not overdue or are being
contested in good faith by appropriate proceedings diligently pursued, provided
that in the case of any such contest (i) any proceedings commenced for the
enforcement of such liens shall have been duly suspended; and (ii) such
provision for the payment of such liens has been made on the books of such
Person as may be required by GAAP;
(d) (i) liens incurred in the ordinary course of
business to secure the performance of statutory obligations arising in
connection with progress payments or advance payments due under contracts with
the United States government or any agency thereof entered into in the ordinary
course of business and (ii) liens incurred or deposits made in the ordinary
course of business to secure the performance of statutory obligations, bids,
leases, fee and expense arrangements with trustees and fiscal agents and other
similar obligations (exclusive of obligations incurred in connection with the
borrowing of money, any lease-purchase
10
arrangements or the payment of the deferred purchase price of property),
provided that full provision for the payment of all such obligations set forth
in clauses (i) and (ii) has been made on the books of such Person as may be
required by GAAP;
(e) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use of real
properties, which do not materially interfere with the business of such Person;
and
(f) liens described in attached Schedule 11.7.
"Permitted Prepayments" shall mean (a) prepayments made while no
Default or Event of Default has occurred and is then continuing (either before
or after giving effect thereto) at any time that an asset distribution permitted
by Section 11.2, or as to which Bank has otherwise consented, requires a
mandatory prepayment of the Senior Debt and (b) prepayments of debt permitted by
Section 11.4(d) made while no Default or Event of Default has occurred and is
then continuing.
"Person" shall mean a natural person, corporation, limited liability
company, partnership, limited liability partnership, trust, incorporated or
unincorporated organization, joint venture, joint stock company, or a government
or any agency or political subdivision thereof or other entity of any kind.
"Prestolite China" shall mean Prestolite Electric (Beijing) Limited.
"Prime Rate" shall mean the per annum interest rate established by Bank
as its prime rate for its borrowers as such rate may vary from time to time,
which rate is not necessarily the lowest rate on loans made by Bank at any such
time.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Prime-based Rate" shall mean for any day a per annum interest rate
which is equal to the greater of (i) the Prime Rate plus the Applicable
Prime-based Margin, and (ii) the Alternate Base Rate.
"Request for Advance" shall mean a Request for Advance issued by
Company under this Agreement in the form annexed to this Agreement as Exhibit
"B".
"Revolving Credit" shall mean the revolving credit facility provided by
Bank to Company under Section 2 of this Agreement.
"Revolving Credit Maturity Date" shall mean July 31, 2003.
11
"Revolving Credit Note" shall mean the Note described in Section 2.1
hereof made by Company to Bank in the form annexed to this Agreement as Exhibit
"A".
"Senior Debt" shall mean the indebtedness of Company evidenced by the
Senior Notes.
"Security Agreement" shall mean the Security Agreement (Accounts,
Chattel Paper, and Inventory) dated October 25, 1994, executed and delivered by
Company to Bank.
"Senior Debt Documents" shall mean the Senior Notes, the Senior Debt
Indenture, and all other documents and agreements to evidence the Senior Debt,
as the same may be amended from time to time (subject to the terms of this
Agreement), and any and all other documents executed in exchange therefor or
replacement or renewal thereof.
"Senior Debt Indenture" shall mean the Indenture relating to the Senior
Notes.
"Senior Notes" shall mean the 9-_% Senior Notes of Company due February
1, 2008 in the original principal amount of $125,000,000, and the notes of
Company issued in exchange therefor pursuant to the Registration Rights
Agreement entered into in connection with the Senior Debt Documents.
"Subsidiary(ies)" shall mean any corporation, association, joint stock
company, business trust, limited liability company or any other business entity
of which more than fifty percent (50%) of the outstanding voting stock, share
capital, membership or other interests, as the case may be, is owned either
directly or indirectly by any Person or one or more of its Subsidiaries, or the
management of which is otherwise controlled, directly, or indirectly through one
or more intermediaries, or both, by any Person and/or its Subsidiaries. Unless
otherwise specified to the contrary herein, Subsidiary(ies) shall refer to PEI's
Subsidiary(ies) but shall not include Prestolite Electric (Beijing) Limited.
2. THE INDEBTEDNESS: REVOLVING CREDIT
2.1 Bank agrees to make Advances to Company at any time and from time
to time from the effective date hereof until the Revolving Credit Maturity Date,
not to exceed Ten Million Dollars ($10,000,000) in aggregate principal amount at
any one time outstanding. Advances under this Section 2 shall be evidenced by
the Revolving Credit Note under which advances, repayments and readvances may be
made, subject to the terms and conditions of this Agreement.
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
presumed correct absent manifest error. The Applicable Margins shall initially
be 3.25% for Eurodollar-based Advances and
12
.50% 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 on a semi-annual basis,
effective (i) on the first Business Day of the month
following delivery of Company's annual financial
statements and compliance certificate and (ii) on the
first Business Day of the month following delivery of
Company's quarterly financial statements and
compliance certificate for the second fiscal quarter
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 first Business Day of the month
following the date of delivery of such financial
statements and compliance certificate, 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
3.50%, as applicable, for Eurodollar-based Advances
and 0.50% or .75%, as applicable, for Prime-based
Advances for the number of days such financial
statements and certificate were not delivered within
the applicable time period specified in Section 11.1,
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 financial statements and
certificates, as aforesaid, demonstrating any change
in such Funded Debt Ratio or the occurrence of any
event which under the terms hereof causes 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; and
(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.
13
2.3 Company may request an Advance under this Section 2 upon the
delivery to Bank of a Request for Advance executed by an authorized officer of
Company, subject to the following:
(a) each such Request for Advance shall set forth the information
required on the Request for Advance form annexed hereto as
Exhibit "B";
(b) each such Request for Advance shall be delivered to Bank by
11:00 a.m. (Detroit, Michigan time) on the day of the proposed
date of Advance;
(c) the principal amount of such Advance, plus the amount of any
outstanding indebtedness to be then combined therewith having
the same Applicable Interest Rate and Interest Period, if any,
shall be, in the case of a Eurodollar-based Advance, at least
$250,000 or any larger amount in $100,000 increments; and
(d) a Request for Advance, once delivered to Bank, shall not be
revocable by Company after Bank has funded or committed in
accordance with Bank's internal procedures to fund the
applicable Advance.
Bank may, at its option, lend under this Section 2 upon Company's
telephone or facsimile request upon execution by Company of a Borrower's
Telephone and Facsimile Authorization in the form of Exhibit "E" attached
hereto.
2.4 The aggregate principal amount at any one time outstanding under
the Revolving Credit Note plus the Letter of Credit Reserve and the Facility
Reserve shall never exceed the Borrowing Base. Company shall immediately make
all payments necessary to comply with this provision.
2.5 Letters of Credit and proceeds of Advances under the Revolving
Credit Note shall be used solely for (a) general corporate and working capital
purposes and (b) investments permitted by Section 11.6 hereof.
2.6 Company shall pay to Bank a non-refundable revolving credit
commitment fee on the daily average amount by which $10,000,000 exceeds the
aggregate amount of Advances outstanding from time to time. The revolving credit
commitment fee shall initially be .50% 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, commencing January 1, 2002,
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. The
revolving credit commitment fee shall initially be .50% per annum. Adjustments
thereto shall be given prospective effect, effective on delivery of the
financial statements and compliance certificate referred to in Section 2.2(a)
establishing applicability of the appropriate adjustments, with no retroactivity
or claw-back; provided,
14
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.
2.7 In addition to Advances under the Revolving Credit Note to be
provided to Company by Bank under and pursuant to Section 2.1 of this Agreement,
Bank further agrees to issue, or commit to issue, from time to time, standby
Letters of Credit for the account of Company in aggregate undrawn amounts not to
exceed Two Million Dollars ($2,000,000) at any one time outstanding; provided,
however, that the sum of the aggregate amount of Advances outstanding under the
Revolving Credit Note plus the Letter of Credit Reserve shall not exceed the
lesser of Ten Million Dollars ($10,000,000) or the Borrowing Base at any time;
provided further, that except as described in the following proviso, no Letter
of Credit shall, by its terms, have an expiration date which extends beyond the
earlier to occur of one year after issuance or the Revolving Credit Maturity
Date; and provided further, that in the event any Letter of Credit has an
expiration date later than the Revolving Credit Maturity Date, Company shall
deliver to Bank on demand cash collateral in an amount equal to the maximum
undrawn amount of such Letter of Credit. In addition to the terms and conditions
of this Agreement, the issuance of any Letters of Credit shall also be subject
to the terms and conditions of any letter of credit applications and agreements
executed and delivered by Company to Bank with respect thereto. Company shall
pay to Bank annually in advance a fee of two percent (2%) per annum of the
amount of each Letter of Credit.
3. MARGIN REDUCTION OPTION
3.1 Margin Reduction Option. (a) From time to time and at any time
during which no Default or Event of Default has occurred and is then continuing,
Company may elect (the "Margin Reduction Option") to reduce the Applicable
Prime-based Margin and the Applicable Eurodollar-based Margin by delivery to
Bank of a notice in the form of Exhibit "C" attached hereto. From and after the
delivery of such notice, and until such notice is revoked as provided in
subsection (b), the "Applicable Prime-based Margin", the "Applicable Eurodollar
Margin" and the "Borrowing Base" shall be as described in such definitions.
(b) Company may revoke any effective exercise of the Margin Reduction
Option by delivery to Bank of a notice in the form of Exhibit "D" attached
hereto. From and after delivery of such notice, the "Applicable Prime-based
Margin", the "Applicable Eurodollar Margin" and the "Borrowing Base" shall be as
described in such definitions.
(c) Company may exercise the Margin Reduction Option no more frequently
than twice in any calendar year. Any period during which a Margin Reduction
Option shall be in effect is referred to herein as a "Margin Reduction Period."
15
4. [RESERVED]
5. [RESERVED]
6. INTEREST, INTEREST PERIODS, CONVERSIONS, PREPAYMENTS.
6.1 Interest. Advances under the Revolving Credit Note shall bear
interest from the date thereof on the unpaid principal balance thereof from time
to time outstanding, at a rate per annum equal to the Prime-based Rate or the
Eurodollar-based Rate, as the Company may elect subject to the provisions of
this Agreement. With respect to Prime-based Advances, interest shall be payable
monthly on the first day of each month, commencing on the first day of the month
following the month during which such Advance is made, and at maturity. With
respect to Eurodollar-based Advances, interest shall be payable on the last day
of each Interest Period applicable thereto. Notwithstanding the foregoing, from
and after the occurrence of any Event of Default, the Advances shall bear
interest, payable on demand, at a rate per annum equal to: (i) in the case of
Prime-based Advances, three percent (3%) above the Prime-based Rate; and (ii) in
the case of a Eurodollar-based Advance, three percent (3%) above the rate which
would otherwise be applicable under this Section 6.1 until the end of the then
current Interest Period, at which time such Advance shall bear interest at the
rate provided for in clause (i) of this Section 6.1. Interest on all Advances
shall be calculated on the basis of a 360 day year for the actual number of days
elapsed. The interest rate with respect to any Prime-based Advance shall change
on the effective date of any change in the Prime-based Rate.
6.2 Interest Periods. Each Interest Period for a Eurodollar-based
Advance shall commence on the date such Eurodollar-based Advance is made or is
converted from an Advance of another type pursuant to Section 6.3 hereof or on
the last day of the immediately preceding Interest Period for such
Eurodollar-based Advance, and shall end on the date one, two, or three months
thereafter, as the Company may elect as set forth below, subject to the
following:
(i) no Interest Period shall extend beyond the Revolving Credit
Maturity Date; and
(ii) any Interest Period which would otherwise end on a day which
is not a Business Day shall be extended to the next succeeding Business
Day unless the next succeeding Business Day falls in another calendar
month, in which case such Interest Period shall end on the immediately
preceding Business Day and when an Interest Period begins on a day
which has no numerically corresponding day in the calendar month during
which such Interest Period is to end, it shall end on the last Business
Day of such calendar month.
The Company shall elect the initial Interest Period applicable to a
Eurodollar-based Advance by its Request for Advance given to the Bank pursuant
to Section 2.3 or by its
16
notice of conversion given to the Bank pursuant to Section 6.3, as the case may
be. Provided that no Event of Default shall have occurred and be continuing, the
Company may elect to continue an Advance as a Eurodollar-based Advance by giving
irrevocable written, telephonic or telegraphic notice thereof to the Bank, not
later than 11:00 a.m. (Detroit, Michigan time) on the last day of the then
current Interest Period applicable to such Eurodollar-based Advance, specifying
the duration of the succeeding Interest Period therefor. If the Bank does not
receive timely notice of the election and the Interest Period elected by the
Company, the Company shall be deemed to have elected to convert such
Eurodollar-based Advance to a Prime-based Advance at the end of the then current
Interest Period.
6.3 Conversion of Advances. Provided that no Event of Default shall
have occurred and be continuing, the Company may, on any Business Day, convert
any outstanding Advance into an Advance of another type in the same aggregate
principal amount, provided that any conversion of a Eurodollar-based Advance
shall be made only on the last Business Day of the then current Interest Period
applicable to such Advance. If the Company desires to convert an Advance, it
shall give the Bank telephonic or telegraphic notice by 11:00 a.m. (Detroit,
Michigan time) on the proposed date of conversion, specifying the date of such
conversion, the Advances to be converted, the type of Advance elected and, if
the conversion is into a Eurodollar-based Advance, the duration of the first
Interest Period therefor.
6.4 Prepayments. Company may prepay all or part of the outstanding
balance of the Prime-based Advance(s) under the Revolving Credit Note at any
time without premium or penalty. Upon three (3) Business Days prior notice to
Bank, Company may prepay all or part of any Eurodollar-based Advance, provided
that the amount of any such partial prepayment shall be at least $250,000 and
the unpaid portion of such Advance which is refunded or converted under Section
6.3 shall be subject to the limitations of Section 2.3(c). Any prepayment of a
Prime-based Advance or any prepayment of a Eurodollar-based Advance on the last
day of the Interest Period therefor made in accordance with this Section shall
be without premium, penalty or prejudice to Company's right to reborrow under
the terms of this Agreement. Any other prepayment shall be subject to the
provisions of Section 7.1 hereof.
17
7. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION.
7.1 If Company makes any payment of principal with respect to any
Eurodollar-based Advance on any day other than the last day of the Interest
Period applicable thereto (whether voluntarily, by acceleration, or otherwise),
or if Company fails to borrow any Eurodollar-based Advance after notice has been
given by Company to Bank in accordance with the terms hereof requesting such
Advance, or if Company fails to make any payment of principal or interest when
due in respect of a Eurodollar-based Advance, Company shall reimburse Bank on
demand for any resulting loss, cost or expense incurred by Bank as a result
thereof, including, without limitation, any such loss, cost or expense incurred
in obtaining, liquidating, employing or redeploying deposits from third parties,
whether or not Bank shall have funded or committed to fund such Advance. Such
amount payable by Company to Bank may include, without limitation, an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, refunded or converted, for
the period from the date of such prepayment or of such failure to borrow, refund
or convert, through the last day of the relevant Interest Period, at the
applicable rate of interest for said Advance(s) provided under this Agreement,
over (b) the amount of interest (as reasonably determined by Bank) which would
have accrued to Bank on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market.
Calculation of any amounts payable to Bank under this paragraph shall be made as
though Bank shall have actually funded or committed to fund the relevant
Eurodollar-based Advance through the purchase of an underlying deposit in an
amount equal to the amount of such Advance and having a maturity comparable to
the relevant Interest Period; provided, however, that Bank may fund any
Eurodollar-based Advance in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of amounts
payable under this paragraph. Upon the written request of Company, Bank shall
deliver to Company a certificate setting forth the basis for determining such
losses, costs and expenses, which certificate shall be conclusively presumed
correct, absent manifest error.
7.2 For any Interest Period for which the Applicable Interest Rate is
the Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending Office
which maintains books separate from those of the rest of Bank, Bank shall have
the option of maintaining and carrying the relevant Advance on the books of such
Eurodollar Lending Office.
7.3 If with respect to any Interest Period Bank determines that, by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts are not being
offered to the Bank for such Interest Period, then Bank shall forthwith give
notice thereof to the Company. Thereafter, until Bank notifies Company that such
circumstances no longer exist, the
18
obligation of Bank to make Eurodollar-based Advances, and the right of Company
to elect the Eurodollar-based Rate for any Advance, shall be suspended.
7.4 If, after the date hereof, the introduction or implementation of,
or any change in, any applicable law, rule or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, shall make it unlawful or impossible
for the Bank (or its Eurodollar Lending Office) to honor its obligations
hereunder to make or maintain any Advance with interest at the Eurodollar-based
Rate, Bank shall forthwith give notice thereof to Company. Thereafter (a) the
obligation of Bank to make Eurodollar-based Advances and the right of Company to
elect the Eurodollar-based Rate for any Advance shall be suspended and
thereafter Company may select as Applicable Interest Rates only those which
remain available, and (b) if Bank may not lawfully continue to maintain an
Advance at the Eurodollar-based Rate to the end of the then current Interest
Period applicable thereto, the Prime-based Rate shall be the Applicable Interest
Rate for the remainder of such Interest Period.
7.5 If the adoption or implementation after the date hereof of, or any
change after the date hereof in, any applicable law, rule or regulation of any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not having
the force of law) made by any such authority, central bank or comparable agency
after the date hereof:
(a) shall subject Bank (or its Eurodollar Lending Office) to any
tax, duty or other charge with respect to any Advance or the
Revolving Credit Note or shall change the basis of taxation of
payments to Bank (or its Eurodollar Lending Office) of the
principal of or interest on any Advance or the Revolving
Credit Notes or any other amounts due under this Agreement in
respect thereof (except for changes in the rate of tax on the
overall net income of Bank or its Eurodollar Lending Office
imposed by any jurisdiction in which Bank is organized or
engaged in business); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by Bank (or its Eurodollar
Lending Office) or shall impose on Bank (or its Eurodollar
Lending Office) or the foreign exchange and interbank markets
any other condition affecting any Advance or the Revolving
Credit Note;
and the result of any of the foregoing is to increase the costs to Bank of
maintaining any part of the Indebtedness or to reduce the amount of any sum
received or receivable by
19
Bank under this Agreement or the Revolving Credit Note, by an amount deemed by
the Bank to be material, then, within fifteen days after demand by Bank, Company
agrees to pay to Bank such additional amount or amounts as will compensate Bank
for such increased cost or reduction. A certificate of Bank setting forth the
basis for determining such additional amount or amounts necessary to compensate
Bank shall be presumed to be correct save for manifest error.
7.6 In the event that at any time after the date of this Agreement any
change in law such as described in Section 7.5 hereof shall, in the opinion of
Bank, require that the credit provided under this Agreement be treated as an
asset or otherwise be included for purposes of calculating the appropriate
amount of capital to be maintained by Bank or any corporation controlling Bank
and such change has or would have the effect of reducing the rate of return on
Bank's or Bank's parent's capital or assets as a consequence of the Bank's
obligations hereunder to a level below that which Bank or Bank's parent would
have achieved but for such change, then Bank shall notify Company and demand
compensation therefor and, within fifteen days after demand by Bank, Company
agrees to pay to Bank such additional amount or amounts as will compensate Bank
for such reduction. A certificate of Bank setting forth the basis for
determining such additional amount or amounts necessary to compensate Bank shall
be presumed to be correct save for manifest error.
8. CONDITIONS; SECURITY
8.1 Company agrees to furnish Bank prior to the initial borrowing under
this Agreement, in form and substance to be satisfactory to Bank, with (i)
certified copies of resolutions of the Board of Directors of Company evidencing
approval of the borrowings and transactions contemplated hereunder; (ii) a
certificate of good standing from the states of Michigan and Delaware; (iii) an
opinion of counsel to Company; and (iv) such other documents and instruments as
Bank may reasonably require.
8.2 Company reaffirms and ratifies all of its obligations to Bank under
the Collateral Documents, and agrees that the Collateral Documents shall secure
the Indebtedness in accordance with their terms.
8.3 Concurrently with the execution of this Agreement, Company pays to
Bank (a) a non-refundable loan extension fee in the amount of $10,000 and (b) a
non-refundable loan origination fee in the amount of $25,000 (in connection with
the $5,000,000 increase in availability).
9. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and warranties
shall be deemed to be continuing representations and warranties during the
entire life of this Agreement:
20
9.1 Company and each Domestic Subsidiary is a corporation duly
organized and existing in good standing under the laws of the jurisdiction of
its incorporation; Company and each Domestic Subsidiary is in good standing in
each jurisdiction in which it is required to be qualified to do business;
execution, delivery and performance of this Agreement and other documents and
instruments required under this Agreement, and the issuance of the Revolving
Credit Note by Company, are within its 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 Agreement and
other documents and instruments required under this Agreement and the Revolving
Credit Note, when issued and delivered, will be valid and binding on the Company
in accordance with their terms.
9.2 The execution, delivery and performance of this Agreement and any
other documents and instruments required under this Agreement, and the issuance
of the Revolving Credit Note by Company, are not in contravention of the
unwaived terms of any indenture, agreement or undertaking to which Company is a
party or by which it is bound.
9.3 No litigation or other proceeding before any court or
administrative agency is pending, or to the knowledge of the officers of Company
is threatened against Company or any Domestic Subsidiary, the outcome of which
could materially impair Company's or any Domestic Subsidiary's financial
condition or the ability of Company or any Domestic Subsidiary to carry on its
business.
9.4 There are no security interests in, liens, mortgages, or other
encumbrances on any of Company's or any Domestic Subsidiary's assets, except to
Bank or as otherwise permitted by this Agreement.
9.5 Neither Company nor any Domestic Subsidiary maintains or
contributes to any employee pension benefit plan subject to title IV of the
"Employee Retirement Income Security Act of 1974" (herein called "ERISA"),
except those set forth in attached Schedule 9.5. Except as set forth on Schedule
9.5, there was no unfunded past service liability of any Pension Plan as of
September 30, 2001, and there is no accumulated funding deficiency within the
meaning of ERISA, or any existing material liability with respect to any pension
plan owed to the Pension Benefit Guaranty Corporation ("PBGC") or any successor
thereto, except any funding deficiency for which an application to the PBGC for
waiver is pending or for which a waiver has been granted by the PBGC.
9.6 The audited financial statements of PEI and its consolidated
Subsidiaries dated December 31, 2000, previously furnished Bank, are complete
and correct and fairly present the financial condition of PEI and its
consolidated Subsidiaries in accordance with GAAP as of such date; the unaudited
financial statements of PEI and its consolidated Subsidiaries dated June 30,
2001, previously furnished Bank, are complete and correct and, to the best of
the knowledge of Company's officers, fairly present the financial condition of
PEI and its
21
consolidated Subsidiaries as of such date; since June 30, 2001 there has been no
material adverse change in the financial condition of PEI and its Subsidiaries
(taken as a whole); and to the best of the knowledge of Company's officers,
neither Company nor any Subsidiary has any material contingent obligations
(including any liability for taxes) not disclosed by or reserved against in said
balance sheets, and at the present time there are no material unrealized or
anticipated losses from any present commitment of Company or any Subsidiary.
9.7 Reserved.
9.8 All tax returns and tax reports of Company and each Domestic
Subsidiary required by law to have been filed have been duly filed or extensions
obtained, and all taxes, assessments and other governmental charges or levies
(other than those presently payable without penalty and those currently being
contested in good faith for which adequate reserves have been established) upon
Company or any Domestic Subsidiary (or any of its properties) which are due and
payable have been paid. The charges, accruals and reserves on the books of
Company and the Domestic Subsidiaries in respect of the Federal income tax for
all periods are adequate in the opinion of Company.
9.9 There are no Subsidiaries of PEI, except as set forth in attached
Schedule 9.9.
9.10 Company and each Domestic Subsidiary are, in the conduct of their
business, in compliance in all material respects with all federal, state or
local laws, statutes, ordinances and regulations applicable to any of them, the
enforcement of which, if Company or any Domestic Subsidiary were not in
compliance, would have a Material Adverse Effect on Company and the Domestic
Subsidiaries (taken as a whole). Company and each Domestic Subsidiary have all
approvals, authorizations, consents, licenses, orders and other permits of all
governmental agencies and authorities, whether federal, state or local, required
to permit the operation of their business as presently conducted, except such
approvals, authorizations, consents, licenses, orders and other permits with
respect to which the failure to have can be cured without having a Material
Adverse Effect on Company and the Domestic Subsidiaries (taken as a whole).
9.11 Neither Company nor any Domestic Subsidiary is a party to any
litigation or administrative proceeding, nor so far as is known by Company is
any litigation or administrative proceeding threatened against Company or any
Domestic Subsidiary, the outcome of which could have a Material Adverse Effect
on Company and the Domestic Subsidiaries (taken as a whole) which in either case
(A) asserts or alleges that Company or any Domestic Subsidiary violated
Environmental Laws, (B) asserts or alleges that Company or any Domestic
Subsidiary is required to clean up, remove, or take remedial or other response
action due to the disposal, depositing, discharge,
22
leaking or other release of any hazardous substances or materials, (C) asserts
or alleges that Company or any Domestic Subsidiary is required to pay all or a
portion of the cost of any past, present, or future cleanup, removal or remedial
or other response action which arises out of or is related to the disposal,
depositing, discharge, leaking or other release of any hazardous substances or
materials by Company or any Domestic Subsidiary.
9.12 Neither Company nor any Domestic Subsidiary is in violation of any
Environmental Laws which would subject Company or any Domestic Subsidiary to
damages, penalties, injunctive relief or cleanup costs under any applicable
Environmental Laws or which require or are likely to require cleanup, removal,
remedial action or other response pursuant to applicable Environmental Laws by
Company or any Domestic Subsidiary, except for such violations which are not
likely to have a Material Adverse Effect on Company and the Domestic
Subsidiaries (taken as a whole).
9.13 Neither Company nor any Domestic Subsidiary is subject to any
judgment, decree, order or citation related to or arising out of applicable
Environmental Laws which could have a Material Adverse Effect on Company and the
Domestic Subsidiaries (taken as a whole) and to the best knowledge of the
Company, neither Company nor any Domestic Subsidiary has been named or listed as
a potentially responsible party by any governmental body or agency in a matter
arising under any applicable Environmental Laws, the result of which is likely
to have a Material Adverse Effect on Company and the Domestic Subsidiaries
(taken as a whole).
9.14 Company and each Domestic Subsidiary has all permits, licenses and
approvals required under applicable Environmental Laws.
9.15 Neither Company nor any Domestic Subsidiary is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Neither Company nor any Domestic Subsidiary is engaged principally, or as one of
its important activities, directly or indirectly, in the business of extending
credit for the purpose of purchasing or carrying margin stock, and none of the
proceeds of any of the loans hereunder will be used, directly or indirectly, for
any purpose which would violate the provisions of Regulation U or X of the Board
of Governors of the Federal Reserve System. Terms for which meanings are
provided in Regulation U of the Board of Governors of the Federal Reserve System
or any regulations substituted therefor, as from time to time in effect, are
used in this paragraph with such meanings.
9.16 Company has good and valid title to the collateral covered by the
Collateral Documents, subject only to Permitted Liens.
10. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, so long as Bank may make any
Advance under this Agreement and thereafter so long as any Indebtedness remains
outstanding under this Agreement:
23
10.1 Furnish Bank:
(a) within ninety (90) days after and as of the end of each fiscal
year of PEI, detailed consolidated and consolidating financial
statements of PEI and its consolidated Subsidiaries, audited
and certified by independent certified public accountants
satisfactory to Bank;
(b) within thirty (30) days after and as of the end of each month
other than December, and within sixty (60) days after the end
of each December, a consolidated balance sheet and
consolidated statement of profit and loss and surplus
reconciliation of PEI and the Subsidiaries presented in the
form previously submitted to Bank, certified by an authorized
officer of Company as being correct and accurate to the best
of his knowledge;
(c) within twenty (20) days after and as of the end of each month,
including the last month of each fiscal year, the monthly
aging of Company's Accounts and accounts payable and an
ineligible Accounts report and an inventory report;
(d) during any Margin Reduction Period, within twenty (20) days
after and as of the end of each month (and at such other times
as Bank may request), a schedule identifying each Eligible
Account as of the end of such month and any such schedule
shall be accompanied, if so requested by Bank, by a true and
correct copy of the invoices evidencing such Eligible Account
and by evidence of shipment or performance;
(e) at all times other than during a Margin Reduction Period, on
or before Wednesday of each week and as of Friday of the
preceding week (and at such other times as Bank may request),
a schedule identifying each Eligible Account as of such Friday
and any such schedule shall be accompanied, if so requested by
Bank, by a true and correct copy of the invoices evidencing
such Eligible Account and by evidence of shipment or
performance;
(f) within ninety (90) days after the beginning of each fiscal
year of PEI, financial projections for PEI and the
Subsidiaries (on a month by month basis) for such fiscal year;
(g) such information as required by the terms and conditions of
any security agreements referred to in this Agreement;
(h) simultaneously with the delivery of any financial statements
or reports, certificates, notices of default or other material
correspondence to the holders of the Senior Debt, copies
thereof; and
24
(i) promptly, and in form to be satisfactory to Bank, such other
information as Bank may reasonably request from time to time.
10.2 Pay and discharge, and cause each Domestic Subsidiary to pay and
discharge, all taxes and other governmental charges before the same shall become
overdue, unless and to the extent only that such payment is being contested in
good faith.
10.3 Maintain, and cause each Domestic Subsidiary to maintain,
insurance coverage on their physical assets and against other business risks in
such amounts and of such types as are customarily carried by companies similar
in size and nature, and in the event of acquisition of additional property, real
or personal, or of incurrence of additional risks of any nature, increase such
insurance coverage in such manner and to such extent as prudent business
judgment and present practice would dictate; and in the case of all policies
covering property hereafter mortgaged or pledged to Bank or property in which
Bank shall have a security interest of any kind whatsoever, other than those
policies protecting against casualty liabilities to strangers, all such
insurance policies shall provide that the loss payable thereunder shall be
payable to Company (or the Domestic Subsidiary) and Bank (as mortgagee) as their
respective interests may appear, all said policies or copies thereof, including
all endorsements thereon and those required hereunder, to be deposited with
Bank.
10.4 Permit, and cause each Domestic Subsidiary to permit, Bank through
its authorized attorneys, accountants and representatives, to examine Company's
and each Domestic Subsidiary's books, accounts, records, ledgers and assets of
every kind and description at all reasonable times upon oral or written request
of Bank, which shall include but shall not be limited to collateral audits of
Company conducted by Bank or representatives of Bank, at Company's cost and
expense (provided that so long as Company shall not be in default, Company shall
be obligated to pay for no more than two (2) collateral audits of its North
American operations per year).
10.5 Promptly notify Bank of any Default or Event of Default, and
promptly inform Bank of the existence or occurrence of any condition or event
(other than conditions having an effect on the economy in general) which could
have a material adverse effect upon Company's or any Subsidiary's financial
condition.
10.6 Maintain, and cause each Domestic Subsidiary to maintain, in good
standing all licenses required by any state or any agency thereof, or other
governmental authority that may be necessary or required for Company and the
Domestic Subsidiaries to carry on their general business objects and purposes.
10.7 Reserved.
25
10.8 Comply, and cause each Domestic Subsidiary to comply, with all
material requirements imposed by ERISA as presently in effect or hereafter
promulgated, including but not limited to, the minimum funding requirements of
any Pension Plan.
10.9 Promptly notify Bank after the occurrence thereof in writing of
any of the following events:
(a) the termination of a Pension Plan pursuant to Subtitle C of
Title IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States District Court
to administer a Pension Plan;
(c) the commencement by the Pension Benefit Guaranty Corporation,
or any successor thereto of any proceeding to terminate a
Pension Plan;
(d) the failure of a Pension Plan to satisfy the minimum funding
requirements for any plan year as established in Section 412
of the Internal Revenue Code of 1954, as amended or any
similar provision under the Internal Revenue Code of 1986, as
amended;
(e) the withdrawal of Company or any Domestic Subsidiary from a
Pension Plan; or
(f) a reportable event, within the meaning of Title IV of ERISA.
10.10 Furnish to the Bank concurrently with the delivery of each of the
financial statements required by Section 10.1(a) and each financial statement
required by Section 10.1(b) for the months of March, June, September and
December, a statement prepared and certified by the chief financial officer of
Company (or in his absence, a responsible senior officer of Company) (a) setting
forth all computations necessary to show compliance by Company with the
financial covenants contained in Sections 10.11 10.12 hereof, (b) stating that
as of the date thereof, no Default or Event of Default hereunder has occurred
and is continuing, or if any such event or condition has occurred and is
continuing or exists, specifying in detail the nature and period of existence
thereof and any action taken with respect thereto taken or contemplated to be
taken by Company and (c) stating that the signer has personally reviewed this
Agreement and that such certificate is based on an examination sufficient to
assure that such certificate is accurate.
10.11 Maintain, as of the last day of each fiscal quarter, a Fixed
Charge Coverage Ratio of not less than 1 to 1.
10.12 Maintain, as of the last day of each fiscal quarter, a Funded
Debt Ratio of not more than 7 to 1 until (and including) the quarter ending on
September 30, 2002, and 6.5 to 1 thereafter.
26
10.13 Except as otherwise agreed by Bank in writing, maintain, and
cause the Domestic Subsidiaries to maintain, all cash collection and general
disbursement accounts with Bank, other than the existing disbursement accounts
with NBD Bank/Toronto.
10.14 Comply, and cause each Domestic Subsidiary to comply, in all
material respects with all applicable laws, rules, regulations and orders of any
governmental authority (such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property), except to the extent that
compliance with any of the foregoing is then being contested in good faith by
appropriate legal proceedings and with respect to which adequate financial
reserves have been established on the books and records of the Company or such
Domestic Subsidiary.
10.15 Pay and discharge, and cause each Domestic Subsidiary to pay and
discharge, all contractual obligations calling for the payment of money (other
than trade payables incurred in the ordinary course of business) before the same
shall become overdue, unless and to the extent only that such payment is being
contested in good faith.
10.16 In the event that, at any time while this Agreement is in effect,
Company shall issue any indebtedness for borrowed money which is not by its
terms subordinate and junior to the Indebtedness and such indebtedness shall
include, or be issued pursuant to a trust indenture or other agreement which
includes, financial covenants which are not substantially identical to the
financial covenants set forth in this Agreement, or in the event Company desires
to amend the Senior Debt Documents to revise any financial covenants or to add
any new financial covenants, Company shall so advise Bank in writing. Such
notice shall be accompanied by a copy of the applicable agreement containing
such financial covenants. If Bank determines in its sole discretion that some or
all of the financial covenants set forth in such agreement are more favorable to
the lender thereunder than the financial covenants set forth in this Agreement
("More Favorable Terms") and that Bank desires that this Agreement be amended to
incorporate the More Favorable Terms, then Bank shall give written notice of
such determination to Company. Thereupon, and in any event within thirty (30)
days following the date of notice by Bank to Company, Company and Bank shall
enter into an amendment to this Agreement incorporating, on terms and conditions
acceptable to Bank, the More Favorable Terms.
11. NEGATIVE COVENANTS
Company covenants and agrees that, so long as Bank may make any
Advances under this Agreement and thereafter so long as any Indebtedness remains
outstanding under this Agreement, it will not, and it will not permit any of the
Domestic Subsidiaries to, without the prior written consent of Bank:
27
11.1 Purchase, acquire or redeem any of its capital stock or other
securities or make any material change in its capital structure or general
business objectives or purpose, except that Company may redeem stock options, or
capital stock issued as a result of the exercise of such options, or capital
stock purchased by Company's management, in an amount not to exceed $1,000,000
in any fiscal year if no Event of Default has occurred and is then continuing,
either before or as a result of such redemption.
11.2 Enter into any merger or consolidation or sell, lease, transfer,
or dispose of all, substantially all, or any material part of its assets, except
in the ordinary course of its business.
11.3 Guarantee, endorse, or otherwise become secondarily liable for or
upon the obligations of others, except by endorsement for deposit in the
ordinary course of business and guaranties in favor of Bank and except for
guaranties incurred while no Default or Event of Default has occurred and is
then continuing of liabilities not to exceed $1,000,000 in the aggregate at any
time.
11.4 Become or remain obligated for any indebtedness for borrowed
money, or for any indebtedness incurred in connection with the acquisition of
any property, real or personal, tangible or intangible, except:
(a) indebtedness to Bank;
(b) current unsecured trade, utility or non-extraordinary accounts
payable arising in the ordinary course of Company's or any
Domestic Subsidiary's business; and
(c) Senior Debt, and any renewals, refundings or refinancings
thereof in amounts not exceeding the original Senior Debt less
all permitted prepayments thereof;
(d) other indebtedness incurred while no Default or Event of
Default has occurred and is continuing, not to exceed
$1,000,000 in the aggregate at any time; and
(e) indebtedness described in attached Schedule 11.4.
11.5 Purchase or otherwise acquire or become obligated for the purchase
of all or substantially all of the assets or business interests of any person,
firm or corporation or any shares of stock of any corporation, trusteeship or
association or in any other manner effectuate an expansion of present business
by acquisition, other than any acquisition of a domestic (U.S.) Person in which
the sum of the total consideration paid by Company and the Domestic Subsidiaries
(including cash paid, indebtedness assumed and all other consideration), plus
the total consideration paid in connection
28
with all other acquisitions consummated during the same fiscal year, does not
exceed $1,000,000.
11.6 Make or allow to remain outstanding any investment (whether such
investment shall be of the character of investment in shares of stock, evidences
of indebtedness or other securities or otherwise) in, or any loans or advances
to, any Person, except (a) Company's existing investment in the Subsidiaries
(including (i) investments in equity stock of Auto Ignition, Ltd. in India, not
to exceed $730,000 and (ii) technology contributions and cash investments in
stock of Prestolite China in amounts which do not exceed $2,600,000 in the
aggregate), (b) investments in the stock of MOSAL in connection with Company's
contemplated closing of the MOSAL Transaction, and (c) other investments made
while no Default or Event of Default has occurred and is continuing, not to
exceed $2,000,000 in the aggregate at any time; provided, however, that Company
shall not invest more than $1,000,000 in any Person (directly or indirectly).
Transactions expressly permitted by the provisions of Sections 11.5 and 11.10
shall be excluded in determining Company's compliance with the investment
limitations in this Section 11.6.
11.7 Affirmatively pledge or mortgage any of its assets, whether now
owned or hereafter acquired, or create, suffer or permit to exist any lien,
security interest in, or encumbrance thereon, except:
(a) to Bank; and
(b) the Permitted Liens.
11.8 Sell, assign, transfer or confer a security interest in any
account, contract, note, trade acceptance or other receivable, except to Bank.
11.9 Enter into, maintain, or make contribution to, directly or
indirectly, any employee pension plan that is subject to Title IV of ERISA,
except the Pension Plans.
11.10 Make loans, advances of credit or extensions of credit to any of
its Affiliates or to its officers, directors or shareholders or any member of
their immediate families or any entity controlled by any of the foregoing or to
any other Person, except for (a) sales on open account or in the ordinary course
of business, (b) advances to employees in an amount not exceeding $100,000 at
any time outstanding (provided that loans made to employees of Company with
respect to their purchase of equity interests of PEI shall not be considered
loans within the meaning of this Section 11.10 if such loans are accounted for
in a manner consistent with the accounting treatment of such loans in PEI's
Consolidated financial statements for the year ended December 31, 1997), (c)
loans or advances made pursuant to and included under Section 11.6, (d) loans or
advances to Prostolite Indiel Argentina S.A. to refinance any of its existing
debt, and (e) loans or advances to Subsidiaries made after September 29, 2001
while
29
no Default or Event of Default is then continuing, not to exceed $4,000,000 in
the aggregate at any time outstanding.
11.11 Declare or pay any dividends or make any other distribution upon
its shares of capital stock, except (a) dividends payable in the capital stock
of Company, and (b) dividends by Subsidiaries to Company.
11.12 Make any Capital Expenditure during any fiscal year if, after
giving effect thereto, the aggregate amount of all Capital Expenditures made by
PEI and its Subsidiaries during such calendar year would exceed $15,000,000.
11.13 Pay any management, consulting or similar fees to Genstar Capital
Corporation or Genstar Investment Corporation or any of their Affiliates during
any fiscal year if, after giving effect thereto, the aggregate amount of such
payments during such calendar year would exceed the greater of $900,000 or
three-tenths of one percent (0.3%) of PEI's Consolidated net sales for the
preceding fiscal year.
11.14 Enter into any transaction with any of its stockholders or
officers, or its or their Affiliates, except in the ordinary course of business
and on terms not materially less favorable than would be usual and customary in
similar transactions between Persons dealing at arm's length, and except as
permitted by Section 11.13 and Section 11.10(b).
11.15 Enter into or become subject to any agreement (other than loan
documents evidencing or otherwise related to the Senior Debt) (i) prohibiting
the guaranteeing by Company or any Subsidiary of any obligations, (ii)
prohibiting the creation or assumption of any lien or encumbrance upon the
properties or assets of Company or any Subsidiary, whether now owned or
hereafter acquired, or (iii) requiring an obligation to become secured (or
further secured) if another obligation is secured or further secured.
11.16 Except for Permitted Prepayments, prepay, purchase, redeem or
defease any debt for money borrowed, excluding, subject to the terms hereof, the
Indebtedness.
11.17 Amend, modify or otherwise alter (or suffer to be amended,
modified or altered) or waive (or permit to be waived) in any material respect,
any documents or instruments evidencing or otherwise related to Senior Debt so
as to shorten the original maturity date or amortization thereof or increase the
interest rate applicable thereto, or amend, modify or otherwise alter (or suffer
to be amended, modified or altered) any documents or instruments evidencing or
otherwise related to Senior Debt to limit the maximum amount of the Indebtedness
to an amount less than the amount permitted by the Senior Debt Documents as in
effect on the date hereof or to include any covenants or other provisions, that
require, for the amendment of any term or provision of this Agreement, or the
waiver of any term or provision hereof, the approval or consent of any other
creditor of Company or any Subsidiary; provided, however, that any increase
30
in the interest rate applicable to the Senior Debt (not in excess of 0.5% per
annum) as a result of the failure to file or lack of effectiveness of the Shelf
Registration Statement or the Exchange Offer Registration Statement described in
the Offering Circular shall not be a violation of this Section 11.17.
12. ENVIRONMENTAL PROVISIONS
12.1 Company shall comply, and cause the Domestic Subsidiaries to
comply, in all material respects with all applicable Environmental Laws.
12.2 Company shall provide to Bank, immediately upon receipt, copies of
any correspondence, notice, pleading, citation, indictment, complaint, order,
decree, or other document from any source asserting or alleging a circumstance
or condition which requires or may require a financial contribution by Company
or any Domestic Subsidiary in respect of a cleanup, removal, remedial action, or
other response by or on the part of Company or any Domestic Subsidiary under
applicable Environmental Laws or which seeks damages or civil, criminal or
punitive penalties from Company or any Domestic Subsidiary for an alleged
violation of Environmental Laws; provided, however, that no such copies shall be
required to be delivered unless it reasonably appears that the matter may result
in a Material Adverse Effect on Company and the Domestic Subsidiaries (taken as
a whole).
12.3 Company shall promptly notify Bank in writing as soon as Company
becomes aware of the occurrence or existence of any condition or circumstance
which makes the environmental warranties contained in this Agreement incomplete
or inaccurate in any material respect as of any date.
12.4 In the event of any condition or circumstance that makes any
environmental warranty, representation and/or agreement incomplete or inaccurate
in any material respect as of any date, Company shall, at the request of Bank
(but only in cases in which Bank reasonably believes there may be a Material
Adverse Effect on Company and the Domestic Subsidiaries (taken as a whole)), at
its sole expense, retain an environmental professional consultant, reasonably
acceptable to Bank, to conduct a thorough and complete investigation regarding
the changed condition and/or circumstance and any environmental concerns arising
from that changed condition and/or circumstance. A copy of the environmental
consultant's report will be promptly delivered to both Bank and Company upon
completion.
12.5 At any time Company or any Domestic Subsidiary, directly or
indirectly through any professional consultant or other representative,
determines to undertake an environmental audit, assessment or investigation,
Company shall promptly provide Bank with written notice of the initiation of the
environmental audit, fully describing the purpose and intended scope of the
environmental audit. Upon receipt, Company will promptly provide to Bank copies
of all final findings and conclusions of any such environmental investigation.
31
12.6 Company hereby indemnifies, saves and holds Bank and any of its
past, present and future officers, directors, shareholders, employees,
representatives and consultants harmless from any and all loss, damages, suits,
penalties, costs, liabilities and expenses (including but not limited to
reasonable investigation, environmental audit(s), and legal expenses) arising
out of any claim, loss or damage of any property, injuries to or death of
persons, contamination of or adverse affects on the environment, or any
violation of any applicable Environmental Laws, caused by or in any way related
to any property owned or operated by Company or any Subsidiary, or due to any
acts of Company or any Subsidiary or such person's, officers, directors,
shareholders, employees, consultants and/or representatives; provided, however,
that the foregoing indemnification shall not be applicable when arising from
events or conditions occurring while the Bank is in sole possession (subject to
the rights of any creditors of Company) of such property. In no event shall
Company be liable hereunder for any loss, damages, suits, penalties, costs,
liabilities or expenses arising from any act of gross negligence of Bank, or its
agents or employees.
It is expressly understood and agreed that the indemnifications granted
herein are intended to protect Bank, its past, present and future officers,
directors, shareholders, employees, consultants and representatives from any
claims that may arise by reason of the security interest, liens and/or mortgages
granted to Bank, or under any other document or agreement given to secure
repayment of any indebtedness from Company, whether or not such claims arise
before or after Bank has foreclosed upon and/or otherwise become the owner of
any such property. All obligations of indemnity as provided hereunder shall be
secured by the Collateral Documents until payment in full of all indebtedness of
Company to Bank, unless there is a then known violation of the Environmental
Laws and Bank has asserted in writing a claim for indemnification from Company,
in which event the same shall continue until the violation is remediated.
It is expressly agreed and understood that the provisions hereof shall
and are intended to be continuing and shall survive the repayment of any
indebtedness from Company to Bank.
12.7 Company and the Domestic Subsidiaries shall maintain all permits,
licenses and approvals required under applicable Environmental Laws.
13. EVENTS OF DEFAULT
13.1 Upon non-payment of any installment of the principal or interest
on the Note when due in accordance with the terms thereof, or upon non-payment
of any other outstanding Indebtedness when due in accordance with the terms
thereof, and continuance in either case of such non-payment for five (5) days or
more, the Note may at Bank's option become immediately due and payable, and
thereafter Bank's
32
commitment to make further Advances and to issue additional Letters of Credit
under this Agreement shall automatically terminate.
13.2 Upon occurrence of any of the following events of default:
(a) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in
Sections 2.4, 10.2, 10.3, 10.4, 10.5, 10.9, 10.11, 10.12, 11
or 12 herein;
(b) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in
Sections 10.1 or 10.10, and continuance thereof for five (5)
Business Days after written notice to Company by Bank;
(c) default in the observance or performance of any of the other
conditions, covenants or agreements of Company herein set
forth, and continuance thereof for thirty (30) days after
written notice to Company by Bank;
(d) any material representation or warranty made by Company herein
or in any instrument submitted pursuant hereto proves untrue
in any material respect when made or deemed made;
(e) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in
any collateral document of security which may be given to
secure the indebtedness hereunder or in any other collateral
document related to or connected with this Agreement or the
indebtedness hereunder and lapse of any applicable notice or
cure period;
(f) default in the payment of any other obligation of Company or
any Subsidiary for borrowed money in an aggregate amount in
excess of One Hundred Thousand Dollars ($100,000), or in the
observance or performance of any conditions, covenants or
agreements related or given with respect thereto, and lapse of
any applicable notice, grace or cure period;
(g) judgment(s) for the payment of money in excess of the sum of
One Hundred Thousand Dollars ($100,000) in the aggregate shall
be rendered against Company or any Subsidiary and any such
judgment(s) shall remain unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of thirty (30)
consecutive days from the date of its entry and such judgment
is not covered by insurance from a solvent insurer who is
defending such action without reservation of rights;
33
(h) the occurrence of any "reportable event", as defined in the
Employee Retirement Income Security Act of 1974 and any
amendments thereto, which is determined to constitute grounds
for termination by the Pension Benefit Guaranty Corporation of
any employee pension benefit plan maintained by or on behalf
of Company or any Subsidiary for the benefit of any of its
employees or for the appointment by the appropriate United
States District Court of a trustee to administer such plan and
such reportable event is not corrected and such determination
is not revoked within thirty (30) days after notice thereof
has been given to the plan administrator or Company; or the
institution of proceedings by the Pension Benefit Guaranty
Corporation to terminate any such employee benefit pension
plan or to appoint a trustee to administer such plan; or the
appointment of a trustee by the appropriate United States
District Court to administer any such employee benefit pension
plan;
(i) if there shall be any change for any reason whatsoever in the
ownership of Company or any Subsidiary which shall in the
reasonable judgment of Bank adversely affect future prospects
for the successful operation of Company or any Subsidiary;
(j) if PEI shall revoke its Guaranty or disavow any of its
obligations thereunder;
(k) if Company shall, or become obligated to, redeem, repurchase
or prepay any Senior Debt as a result of or in connection with
an actual or proposed change in control of Company, PEI or any
Subsidiary;
then, or at any time thereafter, unless such default is remedied, Bank may give
notice to Company declaring all outstanding indebtedness hereunder and under the
Note to be due and payable, whereupon all indebtedness then outstanding
hereunder and under the Note shall immediately become due and payable without
further notice or demand, and Bank shall not be obligated to make any further
Advances or issue any Letter of Credit hereunder.
13.3 If a creditors' committee shall have been appointed for the
business of Company or any Subsidiary; or if Company or any Subsidiary shall
have made a general assignment for the benefit of creditors or shall have been
adjudicated bankrupt, or shall have filed a voluntary petition in bankruptcy or
for reorganization or to effect a plan or arrangement with creditors; or shall
file an answer to a creditor's petition or other petition filed against it,
admitting the material allegations thereof for an adjudication in bankruptcy or
for reorganization; or shall have applied for or permitted the appointment of a
receiver, or trustee or custodian for any of its property or assets; or such
receiver, trustee or custodian shall have been appointed for any of its property
or assets (otherwise than upon application or consent of Company or a
Subsidiary, as applicable) and such receiver, trustee or custodian so appointed
shall not have been discharged
34
within sixty (60) days after the date of his appointment or if an order shall be
entered and shall not be dismissed or stayed within sixty (60) days from its
entry, approving any petition for reorganization of Company or any Subsidiary;
then the Note and all indebtedness then outstanding hereunder shall
automatically become immediately due and payable, and Bank shall not be
obligated to make any further Advances or issue any Letters of Credit under this
Agreement.
13.4 Upon the occurrence of an Event of Default, unless all of the
Indebtedness is then immediately fully paid, Bank shall have and may exercise
any one or more of the rights and remedies for which provision is made for a
secured party under the UCC, under the Collateral Documents, or under any other
document contemplated hereby or for which provision is provided by law or in
equity, including, without limitation, the right to take possession and sell,
lease or otherwise dispose of any or all of the collateral and to set off
against the Indebtedness any amount owing by Bank to Company and/or any property
of Company in possession of Bank. Company agrees, upon request of Bank, to
assemble the collateral and make it available to Bank at any place designated by
Bank which is reasonably convenient to Bank and Company.
13.5 All of the Indebtedness shall constitute one loan secured by
Bank's security interest in the collateral and by all other security interests,
mortgages, liens, claims, and encumbrances now and from time to time hereafter
granted from Company to Bank. Upon the occurrence of an Event of Default, Bank
may in its sole discretion apply the collateral to any portion of the
Indebtedness. The proceeds of any such sale or other disposition of the
Collateral authorized by this Agreement shall be applied by Bank, first upon all
expenses authorized by the Michigan Uniform Commercial Code (or other applicable
law) or otherwise in connection with the sale and all reasonable attorneys' fees
and legal expenses incurred by Bank; the balance of the proceeds of such sale or
other disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to other Indebtedness and the surplus, if any,
shall be paid over to Company or to such other Person or Persons as may be
entitled thereto under applicable law. Company shall remain liable for any
deficiency, which Company shall pay to Bank immediately upon demand.
13.6 The remedies provided for herein are cumulative to the remedies
for collection of the Indebtedness as provided by law, in equity or by any
mortgage, security agreement or other document contemplated hereby. Nothing
herein contained is intended, nor shall it be construed, to preclude Bank from
pursuing any other remedy for the recovery of any other sum to which Bank may be
or become entitled for the breach of this Agreement by Company.
13.7 Upon the occurrence of any Event of Default, Company shall
immediately upon demand by Bank deposit with Bank cash collateral in the amount
equal to the maximum amount available to be drawn at any time under any Letter
of Credit then outstanding.
35
14. MISCELLANEOUS
14.1 This Agreement shall be binding upon and shall inure to the
benefit of Company and Bank and their respective successors and assigns, except
that the credit provided for under this Agreement and no part thereof and no
obligation of Bank hereunder shall be assignable or otherwise transferable by
Company.
14.2 Company shall pay all closing costs and expenses, including, by
way of description and not limitation, reasonable outside attorney fees, audit
and appraisal fees, lien search fees, approval fees and title policy fees
incurred by Bank in connection with the commitment, consummation and closing of
this Agreement. All of said amounts required to be paid by Company may, at
Bank's option, be charged by Bank as an advance against the proceeds of the
Revolving Credit Note. All costs, including reasonable attorney fees incurred by
Bank in protecting or enforcing any of its or any of the Bank's rights against
Company or any Guarantor or any collateral or in defending Bank from any claims
or liabilities by any party or otherwise incurred by Bank in connection with an
event of default or the enforcement of this Agreement or the related documents,
including by way of description and not limitation, such charges in any court or
bankruptcy proceedings or arising out of any claim or action by any person
against Bank which would not have been asserted were it not for Bank's
relationship with Company hereunder, shall also be paid by Company.
14.3 Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP unless otherwise agreed to
by Company and Bank.
14.4 No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall any
single or partial exercise thereof preclude any further exercise thereof, or the
exercise of any other power, right or privilege. The rights of Bank under this
Agreement are cumulative and not exclusive of any right or remedies which Bank
would otherwise have.
14.5 All notices with respect to this Agreement shall be deemed to be
completed upon mailing by certified mail to the following or to such other
address as may be designated by Company or Bank in a notice that complies as to
delivery with the terms of this Section 14.5:
To Company:
0000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
To Bank:
36
One Detroit Center
000 Xxxxxxxx Xxxxxx
Mail Code 3259
Xxxxxxx, Xxxxxxxx 00000
Attention: Comerica Business Credit--S.E. Michigan
14.6 This Agreement and the other Loan Documents have been delivered at
Detroit, Michigan, and shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
14.7 No amendments or waiver of any provisions of this Agreement nor
consent to any departure by Company therefrom shall in any event be effective
unless the same shall be in writing and signed by the Bank, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment, waiver or consent
with respect to any provision of this Agreement shall affect any other provision
of this Agreement.
14.8 All sums payable by Company to Bank under this Agreement or the
other documents contemplated hereby shall be paid directly to Bank at its
principal office set forth in Section 14.5 hereof in immediately available
United States funds, without set off, deduction or counterclaim. Bank may charge
any and all deposit or other accounts (including without limit an account
evidenced by a certificate of deposit) of Company with Bank for all or a part of
any Indebtedness then due; provided, however, that this authorization shall not
affect Company's obligation to pay, when due, any Indebtedness whether or not
account balances are sufficient to pay amounts due.
14.9 Any payment of the Indebtedness made by mail will be deemed
tendered and received only upon actual receipt by Bank at the address designated
for such payment, whether or not Bank has authorized payment by mail or any
other manner, and shall not be deemed to have been made in a timely manner
unless received on the date due for such payment, time being of the essence.
Company expressly assumes all risks of loss or liability resulting from
non-delivery or delay of delivery of any item of payment transmitted by mail or
in any other manner. Acceptance by Bank of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default, and at any time thereafter and until the entire amount then due has
been paid, Bank shall be entitled to exercise any and all rights conferred upon
it herein upon the occurrence of an Event of Default. Company waives the right
to direct the application of any and all payments at any time or times hereafter
received by Bank from or on behalf of Company. Company agrees that Bank shall
have the
37
continuing exclusive right to apply and to reapply any and all payments received
at any time or times hereafter against the Indebtedness in such manner as Bank
may deem advisable, notwithstanding any entry by Bank upon any of its books and
records. Company expressly agrees that to the extent that Bank receives any
payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or is required to be repaid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment or benefit, the Indebtedness or part thereof intended to
be satisfied shall be revived and continued in full force and effect as if such
payment or benefit had not been made and, further, any such repayment by Bank,
to the extent that Bank did not directly receive a corresponding cash payment,
shall be added to and be additional Indebtedness payable upon demand by Bank.
14.10 In the event Company's obligation to pay interest on the
principal balance of any of the Notes is or becomes in excess of the maximum
interest rate which Company is permitted by law to contract or agree to pay,
giving due consideration to the execution date of this Agreement, then, in that
event, the rate of interest applicable shall be deemed to be immediately reduced
to such maximum rate and all previous payments in excess of such maximum rate
shall be deemed to have been payments in reduction of principal and not of
interest.
14.11 This Agreement shall become effective upon the execution hereof
by Bank and Company.
14.12 This Agreement constitutes an amendment and restatement of the
Prior Credit Agreement, which is fully superceded and amended and restated in
its entirety hereby; provided, however, that the Indebtedness governed by the
Prior Credit Agreement shall remain outstanding and in full force and effect and
provided further that this Agreement does not constitute a novation of such
Indebtedness.
14.13 COMPANY AND BANK HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS AT ANY TIME IN WHICH
COMPANY AND BANK ARE PARTIES ARISING OUT OF THIS AGREEMENT OR THE OTHER
DOCUMENTS CONTEMPLATED HEREBY.
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK PRESTOLITE
ELECTRIC INCORPORATED
38
By: By:
---------------------------------------- --------------------------------
Its: Its:
---------------------------------------- -------------------------------
By:
--------------------------------
Its:
-------------------------------
39
CONSENT OF GUARANTOR
The undersigned Guarantor hereby consents to the execution and delivery
by Company of the attached Credit Agreement and reaffirms and ratifies all of
its obligations to the Bank under or in respect of the Guaranty.
PRESTOLITE ELECTRIC HOLDING, INC.
By:
--------------------------------
Its:
-------------------------------
By:
--------------------------------
Its:
-------------------------------
40
LIST OF SCHEDULES
Schedule 9.5 - Pension Plans
Schedule 9.9 - Subsidiaries
Schedule 9.4 - Permitted Debt
Schedule 9.7 - Permitted Liens
Schedule 9.9 - Subsidiaries
LIST OF EXHIBITS
Exhibit A - Revolving Credit Note
Exhibit B - Request for Advance
Exhibit C - Notice of Election of Margin Reduction Option
Exhibit D - Notice of Revocation of Margin Reduction Option
SCHEDULE 9.4
PERMITTED DEBT
1. Capital Leases. Capital Leases as allowed under the definition of
Capital Expenditures for fixed assets, real property or equipment which
in accordance with GAAP are to be capitalized and shown as liabilities
on the balance sheet. Current Leases outstanding as of September 29,
2001 are as follows:
(a) Equipment Leases.
Lathe and Turning Center at Arcade - Lessor: Bank One
(b) Real Property Leases.
Arcade, New York - Agency Lease Agreement dated February 28,
1994 with Wyoming County Industrial Development Agency.
Ann Arbor, Michigan - Lease Agreement dated September 3, 1993
with First Properties Associates Limited Partnership
(administrative offices). This facility has been subleased to
Unigraphics Solutions, Inc.
Ann Arbor, Michigan - Lease Agreement dated March 8, 1994 with
Green Road Associates Limited Partnership (research and
development).
Dearborn Heights, Michigan - Lease with Xxxxxxx and Xxxxx
Xxxx.
Florence, Kentucky - Lease Agreement dated June 28, 1996 with
Duke Realty Limited Partnership.
Garfield, New Jersey - Lease Agreement dated January 13, 1999
with Xxxxxx X. XxXxxxx. The lease contemplated relocation of
the operation from a facility owned by the landlord in Saddle
Brook, New Jersey to another facility owned by the landlord in
Garfield, New Jersey.
2. Other.
(a) Indebtedness related to deferred compensation agreements with
certain executive employees.
(b) Promissory Note to the Wyoming County Industrial Development
Agency dated February 28, 1994 for the sum of One Hundred
Eighty-Five Thousand and No/100 Dollars ($185,000.00) payable
as follows: Ninety-Six (96) monthly installments commencing
April 1, 1994.
(c) The New York State Urban Development Corporation
infrastructure loan in the amount of $72,704 for the
Improvements to the Arcade facility.
(d) Annual or periodic financing arrangements required for the
financing of insurance premiums.
(e) Loans or advances permitted by Section 11.10.
(f) Guaranty Agreement dated May 22, 2001 with respect to the
obligations of Thermal Arc, Inc. under a Lease Agreement dated
May 22, 2001 with MV Limited One LLC for 105,550 square feet
in the Troy, Ohio facility. (As part of the AMETEK
Transaction, Company's 1996 and 1997 leases were terminated,
AMETEK entered into its own direct lease with the landlord for
its space, and Thermal Arc, Inc. entered into its own direct
lease with the landlord for its space. Company was required by
the landlord to guaranty the Thermal Arc lease - in essence,
the form of Company's exposure regarding Thermal Arc was
changed from landlord/tenant to Guarantor, but the extent of
the exposure remained the same.)
(g) Transition, indemnification and other obligations of Company
to AMETEK arising in connection with that certain asset
purchase agreement dated as of August 4, 2000 between Company
and AMETEK.
2
SCHEDULE 9.5
PENSION PLANS
PLAN EIN NO. PLAN NAME
---- ------- ---------
001 00-0000000 Prestolite Incorporated Retirement Savings Plan for
Non-Union Employees (data as of 12/31/2000)
Active Participants 507
Net Trust Assets as of 12/31/2000 $35,600,977
Retired or separated receiving benefits 1
Retired or separated entitled to future benefits 105
Deceased whose beneficiaries are receiving or are entitled 4
to receive benefits
Participants with account balances 578
Participants terminated during the plan year
with accrued benefits less than 100% vested 11
007 00-0000000 Prestolite Electric Incorporated Pension Plan for Union
Employees
No. Participants
Active -
Retirees/Beneficiaries 216
Vested Terminations 333
Note: Effective December 31, 1998, the Cleveland Plan (No. 006), the Gainesville
Plan (No. 008), and the OPEIU Plan (No. 003) were merged into one plan, the
Xxxxxxxxx Xxxxxx Plan (No. 007) and the plan was renamed The Prestolite Electric
Incorporated Pension Plan for Union Employees.
Projected Assets as Market Value Excess of Assets
Benefit ---------------------- over Projected
Obligation Benefit Obligation
---------- ------------------
1-Jan-01 2,808,801 3,020,724 211,923
Note: Data from Actuarial Valuation as of 1-January-2001
SCHEDULE 9.7
LIENS
1. Leases as described in Schedule 7.4
2. The following described Uniform Commercial Code lease filings:
A. Michigan Secretary of State
======================================== ===================================== =====================================
Secured Party/Lessor Filing Number Covered Property
---------------------------------------- ------------------------------------- -------------------------------------
Banc One Leasing D670099 Specific Equipment
---------------------------------------- ------------------------------------- -------------------------------------
Banc One Leasing D769960 Specific Equipment
======================================== ===================================== =====================================
B. Cuyahoga County, Ohio
=============================================== ============================== =====================================
Secured Party/Lessor Filing Number Covered Property
----------------------------------------------- ------------------------------ -------------------------------------
Xxxxxxxx/XxXxxxxx Associates, Inc. 1213966 and 1351150 Computer, data processing and other
equipment referred to in Master
Lease
----------------------------------------------- ------------------------------ -------------------------------------
NBD Bank assignee of NBD Equipment Finance, 1306646 Computer Equipment
Inc.
=============================================== ============================== =====================================
C. Ohio Secretary of State
=============================================== ============================== =====================================
Secured Party/Lessor Filing Number Covered Property
----------------------------------------------- ------------------------------ -------------------------------------
A T & T Credit Corp. AK86479 A T & T System 75 /Merlin Legend
----------------------------------------------- ------------------------------ -------------------------------------
Xxxxxxxx/XxXxxxxx Associates, Inc. AH14387 and 8089601709 Computer, data processing and other
equipment referred to in Master
Lease
----------------------------------------------- ------------------------------ -------------------------------------
NBD Bank, N.A., assignee of AL67983 Computer Equipment
NBD Equipment Finance, Inc.
=============================================== ============================== =====================================
D. Alabama Secretary of State
=============================================== ============================== =====================================
Secured Party/Lessor Filing Number Covered Property
----------------------------------------------- ------------------------------ -------------------------------------
Xxxxxxxx/XxXxxxxx Associates, Inc. 9200597 Computer equipment
----------------------------------------------- ------------------------------ -------------------------------------
Fullerton Metals Co. 9312739 Stainless steel
=============================================== ============================== =====================================
Xxxxx Leasing Company B 94-33855 2 CNC Machines
=============================================== ============================== =====================================
NBD Bank B 94-45232 Computer Equipment
=============================================== ============================== =====================================
NBD Equipment Finance B 95-16620 Forklift
=============================================== ============================== =====================================
Comerica Leasing Corp. B 95-29132 Telephone System
=============================================== ============================== =====================================
LCA Division of Associates Commercial Corp. B 96-32296 2 Air Compressors
=============================================== ============================== =====================================
E. New York Department of State
3
============================================= ============================ =========================================
Secured Party/Lessor Filing Number Covered Property
--------------------------------------------- ---------------------------- -----------------------------------------
Xxxxxxxx XxXxxxxx Associates, Inc. 010412 and 157495 Computer Equipment
--------------------------------------------- ---------------------------- -----------------------------------------
U.S. Bancorp Leasing & Financial 219228 and 007056 Tooling Equipment
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 057661 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 057662 Forklift
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 057663 Forklift Truck, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 057667 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 057669 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 057672 Forklift, Battery & Charger
============================================= ============================ =========================================
Clarklift of Buffalo, Inc. 057674 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
NBD Bank, N.A., assignee of NBD Equipment 241495 Computer Equipment
Finance, Inc.
--------------------------------------------- ---------------------------- -----------------------------------------
Xerox Corporation 118636 Photocopier
============================================= ============================ =========================================
X. Xxxxx County, Kentucky
============================================= ============================ =========================================
Secured Party/Lessor Filing Number Covered Property
--------------------------------------------- ---------------------------- -----------------------------------------
Xxxxxxxx XxXxxxxx Associates, Inc.. 187970 Computer equipment
--------------------------------------------- ---------------------------- -----------------------------------------
Xxxx Leasing Co. 209329 Scale and computer equipment
--------------------------------------------- ---------------------------- -----------------------------------------
Pitney Xxxxx Credit Corp. 213757 Office equipment
--------------------------------------------- ---------------------------- -----------------------------------------
NBD Bank, N.A., assignee of NBD Equipment 221976 Computer Equipment
Finance, Inc.
--------------------------------------------- ---------------------------- -----------------------------------------
NBD Equipment Finance 229287 Duplicator, Controller, Cabinet,
Feeder, Module and Interface Kit
============================================= ============================ =========================================
4
X. Xxxxxxx County, Oklahoma
============================================= ============================ =========================================
Secured Party/Lessor Filing Number Covered Property
--------------------------------------------- ---------------------------- -----------------------------------------
El Camino Resources, Ltd. 649 IBM Controller
--------------------------------------------- ---------------------------- -----------------------------------------
Salem Group, Inc. 149 IBM Controller
============================================= ============================ =========================================
H. Kentucky Secretary of State
============================================= ============================ =========================================
Secured Party/Lessor Filing Number Covered Property
--------------------------------------------- ---------------------------- -----------------------------------------
Xxxxxxxx/XxXxxxxx Associates, Inc. 130814 Computer Equipment
============================================= ============================ =========================================
I. Wyoming County, New York
============================================= ============================ =========================================
Secured Party/Lessor Filing Number Covered Property
--------------------------------------------- ---------------------------- -----------------------------------------
U. S. Bancorp Leasing & Financial 931363 Tooling Equipment
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 96301 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 96302 Forklift
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 96303 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 96304 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 96305 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 96306 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Clarklift of Buffalo, Inc. 96307 Forklift, Battery & Charger
--------------------------------------------- ---------------------------- -----------------------------------------
Xerox Corporation 97651 Photocopier
============================================= ============================ =========================================
5
SCHEDULE 9.9
See Attached Chart
EXHIBIT "A"
REVOLVING CREDIT NOTE
Detroit, Michigan
$10,000,000 October __, 2001
On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED,
Prestolite Electric Incorporated, a Delaware corporation (herein called
"Company") promises to pay to the order of COMERICA BANK, a Michigan banking
corporation (herein called "Bank") at its Main Office at 000 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, in lawful money of the United States of America the
indebtedness or so much of the sum of Ten Million Dollars ($10,000,000) as may
from time to time have been advanced and then be outstanding hereunder pursuant
to the Second Amended and Restated Credit Agreement dated as of October 31,
2001, made by and between Company and Bank (herein called "Agreement"), together
with interest thereon as hereinafter set forth.
Each of the Advances hereunder shall bear interest at the Applicable
Interest Rate from time to time applicable thereto under the Agreement or as
otherwise determined thereunder, and interest shall be computed, assessed and
payable as set forth in the Agreement.
This Note is a note under which advances, repayments and readvances may
be made from time to time, subject to the terms and conditions of the Agreement.
This Note evidences borrowing under, is subject to, is secured in accordance
with, and may be matured under, the terms of the Agreement, to which reference
is hereby made. As additional security for this Note, Company grants Bank a lien
on all property and assets including deposits and other credits of the Company,
at any time in possession or control of or owing by Bank for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon. Any transferees of, or endorser, guarantor or surety paying this
Note in full shall succeed to all rights of Bank, and Bank shall be under no
further responsibility for the exercise thereof or the loan evidenced hereby.
Nothing herein shall limit any right granted Bank by other instrument or by law.
All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
PRESTOLITE ELECTRIC INCORPORATED
By:
--------------------------------
Its:
-------------------------------
By:
--------------------------------
Its:
-------------------------------
EXHIBIT "B"
REQUEST FOR ADVANCE
Pursuant to the Second Amended and Restated Credit Agreement dated as
of October 31, 2001 (herein called "Agreement"), the undersigned hereby requests
COMERICA BANK ("Bank") to make a(an) (1) Advance to the undersigned on
, 200 , in the amount of TEN MILLION DOLLARS, ($ ) under the $10,000,000
Revolving Credit Note dated October 31, 2001 issued by the undersigned to Bank
(herein called "Note"). The Interest Period for the requested Advance, if
applicable, shall be (2). The last day of the Interest Period for the
amounts being converted or refunded hereunder, if applicable, is , 200 .
The undersigned certifies that no event has occurred or condition
exists which constitutes, or with the passage of time and/or giving of notice
would constitute, a default under the Agreement or the Note, and none will exist
upon the making of the Advance requested hereunder. The undersigned further
certifies that upon advancing the sum requested hereunder, the aggregate
principal amount outstanding under the Note will not exceed the face amount
thereof or any advance formula applicable to Advances under such Note. If the
amount advanced to the undersigned under the Note shall at any time exceed the
face amount thereof or any advance formula applicable to Advances under such
Note, the undersigned will pay such excess amount on demand.
The undersigned hereby authorizes said Bank to disburse the proceeds of
this Request for Advance by crediting the account of the undersigned with Bank
separately designated by the undersigned or as the undersigned may otherwise
direct, unless this Request for Advance is being submitted for a conversion or
refunding, in which case it shall refund or convert that portion stated above of
the existing outstandings under the Note.
Dated this _____ day of _______________, 200___.
PRESTOLITE ELECTRIC INCORPORATED
By:
--------------------------------
Its:
-------------------------------
--------
(1) Insert, as applicable, "Eurodollar-based", or "Prime-based".
(2) For a Eurodollar-based Advance insert, as applicable, "1, 2, or 3
months".
EXHIBIT "C"
NOTICE OF ELECTION OF MARGIN REDUCTION OPTION
To: Comerica Bank
Pursuant to Section 3.1(a) of the Credit Agreement dated as of October
31, 2001, between the undersigned and the Bank, the undersigned hereby elects
the Margin Reduction Option as provided therein. The undersigned hereby
certifies that no Default or Event of Default has occurred and is continuing as
of the date hereof.
Dated this _____ day of _______________, 200__.
PRESTOLITE ELECTRIC INCORPORATED
By:
--------------------------------
Its:
-------------------------------
EXHIBIT "D"
NOTICE OF REVOCATION OF MARGIN REDUCTION OPTION
To: Comerica Bank
Pursuant to Section 3.1(b) of the Second Amended and Restated Credit
Agreement dated as of October 31, 2001 between the undersigned and the Bank, the
undersigned hereby revokes the Notice of Election of Margin Reduction Option
dated _________, 200___, delivered by the undersigned to the Bank.
Dated this _____ day of _______________, 200___.
PRESTOLITE ELECTRIC INCORPORATED
By:
--------------------------------
Its:
-------------------------------
Page 2