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                                                                    EXHIBIT 10.5

                          COMMERCIAL VARIABLE RATE LOAN

                                   AGREEMENT

We, NATIONAL WESTMINSTER BANK PLC and any person to whom we transfer our rights
or duties under this agreement agree to offer you a loan under the terms and
conditions set out below and on the attached appendix. The first part of the
appendix explains some of the words and phrases used in this agreement.

1         DATE OF OFFER:        27TH DECEMBER 2000

2(A) YOUR NAME:     PRESTOLITE ELECTRIC LIMITED (REGISTERED NO. 1189048)
           CLEVELAND ROAD, LEYLAND, PRESTON, LANCASHIRE, PR5 1XB

2(B) YOUR PARENT: PRESTOLITE ELECTRIC INCORPORATED

3    LENDING BRANCH:    CHELTENHAM

4    AMOUNT:     (POUND STERLING)1,400,000 (ONE MILLION FOUR HUNDRED THOUSAND
                 POUNDS)

5    PURPOSE OF THE LOAN: TO REPAY ELEMENT OF PARENTAL LOAN/INTEREST LIABILITIES

6    PERIOD OF THE LOAN:        5 YEARS

7    INTEREST RATE:   You will pay interest at a rate equal to the sum of
     1.375% per year plus the Bank's base rate from time to time.

8    FEE: (pound sterling) 24,000 to include availability of the Overdraft
     facility per the concurrent Advice of Borrowing Terms.

9    DRAWING THE LOAN: You may draw the Loan in full in one amount or in
     stages. If stage drawings are required, these are permitted subject to
     minimum single drawings of (pound sterling)20,000. Full drawdown must be
     achieved within 12 months of the Agreement Date. If the Loan is not
     drawn in full within this period, the undrawn part of the Loan will be
     deemed to be cancelled and no longer available for drawing.

10   REPAYMENT: You must have repaid the Loan in full on the last day of the
     period shown in term 6 of this agreement (such period commencing on the
     earlier of the date on which the Loan is drawn in full and the date on
     which any undrawn part of the Loan is cancelled under term 9 of this
     agreement).

     Subject always to our rights under paragraph 12 of the appendix,

        You will repay the Loan by 60 instalments of principal and interest
        payable every one-month. We will tell you the amounts you need to
        pay to repay the Loan in full by the last day of the period shown in
        term 6 of this agreement together with interest which will be
        calculated in the manner referred to in paragraph 4 of the appendix.
        Such instalments will commence one month after the earlier of the
        date on which you draw the Loan in full and the date on which any
        undrawn part of the Loan is cancelled under term 9 of this
        agreement.

        From time to time we will tell you the instalments you must pay.

        From the date on which a drawing is first made under the Loan until
        such date as you commence your instalments of principal and interest
        hereunder, interest at the rate specified in this agreement may be
        debited to your loan account on our usual charging days in March,
        June, September and December.

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11  SECURITY:

    First legal mortgage over premises at Larden Road, Acton, London, W3 7RP
    Unlimited Composite cross guarantee structure & Mortgage debentures between;
    Prestolite Electric Limited
    Prestolite Wales Limited
    H B Switchgear (Contractors) Limited
    Butec Electrics Limited

12  FINANCIAL AGREEMENTS:

    You agree to the following:-

    PLEASE SEE paragraph 2 of the appendix for an explanation of the words and
    phrases used below.

    a.  You will not allow Total Borrowing to be more than 100% of Tangible Net
        Worth.
    b.  You will not allow Cash Generated to be less than 100% of Debt Service
        Costs.
    c.  You will not allow Profit to be less than 250% of Borrowing Costs.
    d.  Management Information to be provided monthly within 30 days of the
        month end to which the information relates. To include Profit & Loss and
        Balance Sheet statements aged debtor analysis, cash flow statement and
        specific commentary on working capital movements.
    e.  No preference shares or redeemable ordinary shares to be
        withdrawn/repaid during the term of this loan.
    f.  Acquisitions of more than (pound sterling)500,000 not to be made without
        the Bank's prior agreement.
    g.  You will not, without the prior approval of the Bank, make any
        repayments of loan principal to Prestolite Electric Incorporated.
    h.  You will not and you (and your Parent (if specified in term 2(b)) will
        procure that none of your (or if your Parent is specified in term 2(b)
        its) subsidiary undertakings as defined by S. 258 of the Companies Act
        1985 ("Subsidiary Undertakings") will, without our prior written consent
        either create, extend or increase any security interest on the whole or
        any part of your or the Group's undertaking, property or assets
        (including uncalled capital) whether present or future in aggregate
        above (pound sterling)250,000. Security interest includes (without
        limitation) liens, pledges, charges, mortgages or other encumbrances.
    i.  You will provide us with such financial and other information relating
        to you or to the Group as we may reasonably require including (without
        limitation) copies of the consolidated audited accounts of the Group not
        later than 6 months after the end of the accounting period to which they
        relate.

    In order to verify whether you are complying with these covenants, we will
    refer to your management accounts on a quarterly basis and audited accounts
    on an annual basis, for the consolidated accounts of Prestolite Electric
    Limited. In respect of the Cash Generated covenant (point b above), this
    will be tested quarterly on a rolling 12 month basis as follows;

    12 months ended 31/12/2000 and each rolling 12-month period thereafter.

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13  OVERDUE PAYMENTS:

    If you do not make any payment under this agreement on the date it is due,
    then, without prejudice to our other rights, we will charge interest on the
    overdue amount from the date it was due to the date upon which we receive
    payment (as well after as before judgement). This will be calculated (and
    compounded in accordance with our normal practice) on the basis of a year of
    365 days and the actual number of days elapsed.

    You will pay interest to us at a rate which is equal to the sum of:-

        5% per year; and

        our base rate from time to time

    Any late payments may be debited to a separate account.

14  EARLY REPAYMENT:

    Paragraph 7 of the appendix gives details of how you may ask to repay the
    Loan before the specified repayment dates. In connection with paragraph 7 of
    the appendix, the prepayment fee is 0.5% of the amount which you prepay.

15       ENVIRONMENTAL LIABILITIES

         Paragraph 18 of the Appendix will apply.

16       Prestolite Electric Incorporated, a corporation incorporated under the
         laws of the State of Delaware in the United States of America
         ("Prestolite US"), joins in the execution of this Loan Agreement for
         the purpose of confirming its acknowledgement of and agreement with the
         terms and conditions of this Loan Agreement.

         Prestolite US is Primary Obligor. National Westminster Bank Plc,
         Prestolite UK and Prestolite US acknowledge and agree as follows with
         respect to the Loan established by this Loan Agreement;

     (a) Prestolite US is the primary obligor with respect to the Loan,
         notwithstanding any other provision of this Loan Agreement, which may
         imply otherwise.

     (b) As a matter of administrative convenience, Prestolite US has
         determined that its wholly owned subsidiary, Prestolite UK, will
         service the Loan as an accommodation to Prestolite US.

     (c) For purposes of Prestolite US's Senior Note Indenture, the Loan is
         intended to and shall be deemed to be "Indebtedness" permitted by
         Section 4.3.b (ix) of such Senior Note Indenture.

The above will not prejudice the rights and actions of National Westminster Bank
Plc to exercise the terms & conditions of the Loan Agreement with Prestolite
Electric Limited.

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 1       AGREEMENT

         This appendix forms part of the agreement between us.

         If we refer to a paragraph, this will mean a paragraph of this
         appendix. If we refer to a term this will mean a term of the agreement.

 2       MEANINGS AND WORDS AND PHRASED USED IN THIS AGREEMENT

              THE 'AGREEMENT DATE' means the date on which our offer is accepted
              in the way set out in paragraph 3 of the appendix.

              'BUSINESS DAY' shall mean a day on which banks in general are open
              in the City of London for the transaction of business of the
              nature set out in this agreement.

              'EVENT OF DEFAULT' shall mean any event specified in paragraph 12
              of the appendix.

              'THE GROUP' means you and your (or where your Parent is specified
              in term 2(b) your Parent and its) subsidiary undertakings (as
              defined by Section 258 of the Companies Act 1985) taken as a whole
              (and, save where the context does not admit, any of them
              individually); if there are no subsidiary undertakings for the
              time being, references to the Group shall be taken to be
              references to you and the word "consolidated" in relation to any
              accounts or other financial matters shall be ignored.

              THE 'LOAN' means the loan facility which we have agreed to provide
              under the terms and subject to the conditions of this agreement
              and, where necessary, it will mean all amounts owed under this
              agreement.

              'YOUR PARENT' is the company shown in term 2(b) of the agreement

              'THE OFFER DATE' is the date shown in term 1 of the agreement.
              This is the date on which we make the written offer of the Loan.

              'SECURITY' means the security shown in term 11 of the agreement
              and any other security which you provide under paragraph 5 of the
              appendix.

              'SUBSIDIARY UNDERTAKING' shall mean a subsidiary undertaking (as
              defined by S.258 of the Companies Act 1985).

                The following definitions apply to the financial agreements in
term 13 of the agreement.

                'BORROWING COSTS' means, in respect of any financial period, all
              continuing, regular or periodic costs, charges and expenses
              (including but not limited to, interest and any capitalised
              interest) incurred by the Group in effecting, servicing or
              maintaining Total Borrowing.

                'CAPITAL EXPENDITURE' means, in respect of any financial period,
              the aggregate expenditure of the Group on the purchase of fixed
              assets (as determined in accordance with generally accepted United
              Kingdom accounting principles (consistently applied)).

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     'CASH GENERATED' means, in respect of any financial period, the sum of:-

     (i)  Profit; plus

     (ii) an amount equal to the depreciation charged on fixed assets of the
     Group during such period and any other non-cash movements; plus

     (iii) an amount equal to any decrease in net working capital (being, in
     respect of any period, the net surplus (or deficit) of the aggregate stock
     in trade of the Group and the amount owed to members of the Group by
     debtors less the amount owed by them to creditors at the end of such
     period); plus (iv) the proceeds of new ordinary or other non-redeemable
     shares issued by you during such period

LESS the sum of:-

     (i)  an amount equal to the tax paid by the Group during such period; plus

     (ii) an amount equal to any increase in net working capital (as defined
     above) during such period; plus

     (iii) an amount equal to the Capital Expenditure (including investments) by
     the Group during such period less an amount equal to the net proceeds of
     disposal of fixed assets during such period; plus

     (iv) an amount equal to the aggregate amount of dividends on ordinary
     shares paid by you during such period; plus

     (v) any receipts of the Group by way of extraordinary items during such
     period;

 'CURRENT ASSETS' means all assets of the Group which would be classified, in
accordance with generally accepted United Kingdom accounting principles
(consistently applied) as current assets.

 'CURRENT LIABILITIES' means all liabilities of the Group which would be
classified, in accordance with generally accepted United Kingdom accounting
principles (consistently applied) as current liabilities.

 'DEBT SERVICE COSTS' means in respect of any financial period :-

     (i) all interest, commission, periodic fees and other financial charges
     payable by any member of the Group during such period (including the
     interest element payable under finance leases) ; plus

     (ii) the aggregate amount of all dividend payments on redeemable preference
     shares (and other shares) made by you during such period; plus

     (iii) the aggregate amount of all debt repayments made by any member of the
     Group or due from any member of the Group (including redemption of any
     redeemable preference shares) during such period;

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                'NET CASH FLOW BEFORE FINANCING' means, in respect of any
              financial period, the sum  of :-

                  (i)  Profit; plus

                  (ii) an amount equal to the depreciation charged on fixed
                  assets of the Group during such period and any other non- cash
                  movements during such period; plus

                  (iii) an amount equal to any decrease in net working capital
                  (being, in respect of any period, the net surplus (or deficit)
                  of the aggregate stock in trade of the Group and the amount
                  owed to members of the Group by debtors less the amount owed
                  by them to creditors at the end of such period);

              LESS the sum of :-

                  (i) an amount equal to the tax paid by the Group during such
                  period; plus

                  (ii) an amount equal to any increase in net working capital
                  (as defined above) during such period; plus

                  (iii) an amount equal to the Capital Expenditure (including
                  investments) by the Group during such period less an amount
                  equal to the net proceeds of disposal of fixed assets during
                  such period; plus

                  (iv) an amount equal to the interest paid (less interest
                  received) by the Group for such period;

                  (v) an amount equal to the aggregate amount of dividends on
                  ordinary shares paid by you during such period; plus

                  (vi) any receipts of the Group by way of extraordinary items
                  during such period.

               'NET WORKING ASSETS' means, in respect of any period, the
              aggregate stock in trade of the Group and the amounts owed to
              members of the Group by trade debtors less the amounts owed by
              them to trade creditors at the end of such period.

               'PROFIT' means, in respect of any financial period, the amount of
              profit of the Group (excluding profit attributable to minority
              interests) before taxation, interest payable, and any unusual,
              extraordinary or exceptional items.

               'TANGIBLE NET WORTH' means the amount for the time being paid up
              or credited as paid up on your issued share capital plus all
              reserves of the Group which would, in accordance with generally
              accepted United Kingdom accounting principles consistently applied
              be classified as shareholders capital plus retained earnings but
              deducting assets of the Group which would, in accordance with such
              principles, be classified as intangible assets.

               'TOTAL BORROWING' means the total outstanding principal amount of
              all borrowings or monies otherwise raised by the Group from all
              sources whatever, whether by way of debenture, mortgage, unsecured
              loan, overdraft or in any other manner (including redeemable
              preference shares and inter company and parental loans) plus the
              aggregate face amount of all discounted acceptance credits.

 3       AVAILABILITY OF LOAN

         From the Agreement Date you will have 12 months in which you can draw
         the Loan. However, you can only accept this offer and draw the Loan if
         we have received the following items from you and are satisfied with
         them:-

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                   a) A copy of this agreement with the acceptance form signed
                   on your behalf (and if your Parent is specified in term 2(b)
                   on behalf of your Parent).

                   b) A certified copy of a resolution of your board of
                   directors (and if your Parent is specified in term 2(b)
                   a certified copy of a resolution of its board of directors)
                   showing that you (and if applicable your Parent)

                   -       accept the terms and conditions of the Loan;

                   -       agree to give the security set out in term 11 of the
                           agreement; and

                   -       authorise a person or persons to take such other
                           action on your behalf (and if applicable your
                           Parent's behalf) as may be necessary for the purpose
                           of the agreement.

         You must give us three days' notice of your intention to draw the Loan
         or any part of it. These days must be Business Days. We will credit
         your current account with the amount of your drawing.

         ACCEPTANCE OF THE OFFER CONTAINED IN THIS AGREEMENT MAY BE EFFECTED BY
         RECEIPT BY US AT THE LENDING BRANCH (PLEASE SEE TERM 3 OF THE
         AGREEMENT) WITHIN THIRTY DAYS OF THE DATE SPECIFIED IN TERM 1 OF THE
         AGREEMENT OF THE ITEMS SPECIFIED IN THIS PARAGRAPH.

 4       INTEREST

         We will work out interest on the balance of the Loan outstanding from
         day to day on the basis of the actual number of days elapsed and a 365
         day year.

         You must pay interest to us on our usual charging days in March, June,
         September and December or by combined interest and principal
         instalments (where specified under term 10) on such dates as are
         specified under term 10 of the agreement.

         You will pay interest at the rate shown in term 7 of the Agreement.

         We may charge interest to your current account or to your loan account.

         If you do not make any payments on the due date under this agreement,
         then the rate of interest specified in term 14 shall apply to any
         overdue amounts.

 5       SECURITY

         You must give us the security shown in term 11 of the agreement and
         this will be a continuing security for the discharge on demand of all
         your indebtedness and your other liabilities to us from time to time.

         You undertake to provide any extra security which we need to maintain
         the value of the Security at the level specified in term 12 of the
         agreement within such period as we may require. The open market value
         of the Security shall be determined at our option from time to time by
         an independent professional valuation. You will have to pay for this
         valuation.

 6       FEES AND COSTS

         We have the right to debit your current account with the fees set out
         in term 8 and 15 of the agreement.

 7       EARLY REPAYMENT

         We may (but are not obliged to) agree to let you repay the Loan early
         if you ask us in writing. You must give us five days notice in writing
         to do this. This notice shall be irrevocable and these days must be
         Business Days. If we allow you to repay the Loan early, the prepayment
         will be on such terms as we may

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         require including (without limitation) you indemnifying us against any
         funding or other costs, losses, expenses or liabilities (including loss
         of profit) sustained or incurred by us as a result of such prepayment.

         If we allow you to repay the Loan early you will also have to pay us
         the prepayment fee set out in term 15 of the agreement.

         You cannot reborrow any amount you have prepaid.

 8       LIABILITY

         If you are more than one person then the expression "you" shall mean
         all of such persons and (save where the context does not so admit) any
         of them and the obligation of those persons shall be joint and several.

         Each such person irrevocably appoints each other person as his agent
         for the service of any demand or notice under this agreement.

 9       CURRENT ACCOUNTS

         You agree to maintain a current account with us throughout the period
         of the Loan.

 10      PAYMENTS

         We may transfer amounts from your current account to meet the
         repayments set out in term 10 of the agreement.

         We may use any repayment instalment (including instalments of principal
         and interest) or any part of any repayment instalment to:

                  -        reduce the amount of principal outstanding on the
                           Loan.

                  -        pay interest accrued on the Loan.

                  -        discharge any other payment due under this agreement.

         You must make all payments under this agreement in full in pounds
         sterling without any deduction or withholding (whether in respect of
         set-off, counterclaim, duties, taxes, charges or otherwise howsoever).
         If you are compelled by law to make any deduction or withholding, you
         will promptly pay to us such additional amounts as will make the net
         amount received by us equal to the full amount payable by you had there
         been no deduction or withholding.

 11      SET-OFF

         We shall be entitled to set-off against any of your liabilities to us
         under this agreement (whether present, future, actual or contingent)
         any of your credit balances on any of your accounts with us or in your
         name. We do not have to give you any prior notice to do this.

 12      DEFAULT

         If any of the following events occur, WE MAY, by giving you written
         notice, cancel our outstanding commitments to you (including the
         availability of the Loan if you have not drawn it in full) and demand
         immediate repayment of your indebtedness to us and exercise our rights
         under any Security:-

         (a) If you breach any term or condition (including any covenant) of
             this agreement.

         (b) If you do not make any payment on the date it is due under this
             agreement and whether by way of principal, interest or otherwise.

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         (c) If you do not use the Loan for the purpose set out in term 5 of
             the agreement.

         (d) If the Security or any part of the Security shall cease to be fully
             enforceable in accordance with its terms or with effect from the
             date on which the determination of the continuing nature of the
             Security or any part thereof occurs, such continuing nature is
             determined whether such determination be by actual or constructive
             notice or be deemed to have occurred or any binding undertaking
             provided in the Security or any part of the Security shall be
             breached or any guarantor gives or purports to give notice to
             terminate its liabilities under any guarantee in respect of the
             Loan.

         (e) If you sell or dispose of any asset listed in term 11 of the
             agreement or it ceases to be in your sole possession.

         (f) If your current account becomes overdrawn after the debiting of any
             payment due from you under the Loan or it becomes overdrawn in
             excess of any limit agreed with us and you do not offer payment in
             cash to us when we inform you of this.

         (g) If any representation, warranty or statement made to us by you in
             connection with the Loan is breached or is false or if you fail to
             tell us anything which in our opinion is material to the Loan.

         (h) If you or any member of the Group make any default in the
             performance of any other agreement for borrowed money whether with
             us or any other lender whereby the due date of repayment thereunder
             is rendered capable of acceleration; or if any of your indebtedness
             or the indebtedness of any member of the Group becomes or is
             declared by the holder or the lender thereof to be due and payable
             prior to its stated maturity or such indebtedness is not repaid in
             full at its stated maturity; or if such indebtedness (including the
             indebtedness of any member of the Group) is repayable on demand and
             is not repaid in full immediately upon demand being made or if any
             guarantee or indemnity given by any giver of security in connection
             with any of your liabilities to us or any other lender is not
             honoured when due and called upon.

         (i) If a petition is presented or a resolution passed for your winding
             up or that of any member of the Group or a petition is presented
             for an administration order to be made in relation to you or any
             member of the Group; or your directors or the directors of any
             member of the Group make a proposal for a voluntary arrangement
             with your creditors or the creditors of any member of the Group;
             or you are unable to pay your debts within the meaning of
             Section 123 of the Insolvency Act 1986 or any member of the
             Group is unable to pay its debts within the meaning of such
             section or an encumbrancer takes possession of or a receiver or
             an administrative receiver is appointed over any of your assets
             or over the assets of any member of the Group;

         (j) If there shall occur in our opinion a material effective change of
             control (as defined by Section 840 of the Income and Corporation
             Taxes Act 1988) of you or your Parent;

         (k) If there has occurred any change which in our reasonable opinion is
             a material adverse change in your business, assets or financial
             condition or in the business, assets or financial condition of the
             Group or any member of the Group which, in our reasonable opinion,
             may affect your ability to comply with your obligations under this
             agreement.

         (l) If any judgement, distress, warrant of attachment, writ of
             execution or similar process is issued, levied or enforced upon
             any of your assets or the assets of any member of the Group or
             if any asset held by the Bank as security for the Loan is
             charged or becomes encumbered elsewhere.

         (m) If you or any member of the Group ceases or threatens to cease to
             carry on its business or sells, transfers or otherwise disposes of
             in any one transaction or series of related transactions any
             substantial part of its assets.

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         (n) If you cease to be a Subsidiary Undertaking of your Prestolite
             Electric Holding Incorporated.

 13      DELAY IN EXERCISING OUR RIGHTS

         If we delay in giving any notice or exercising any of our rights under
         this agreement this should not be construed as a waiver of any of our
         rights.

 14      DEMANDS AND NOTICES

         Any demand or notice to you will be made in writing and be signed by
         one of our officers and served either by personal delivery on you at
         any place or by post addressed to you at your place of business last
         known to us.

         Service by post on you shall be deemed to be effective on the next
         Business Day after the date of posting even if it is returned
         undelivered.

         Any notice to us under this agreement must be made in writing and
         signed by you or where you are a company, by a duly authorised officer
         on your behalf. It must be delivered by hand or by post to the Lending
         Branch specified in term 3 of the agreement.

 15      COSTS AND EXPENSES

         You will pay all costs, charges and expenses arising in connection with
         the Loan and the Security including the negotiation and preparation of
         this agreement and the Security and all costs, charges and expenses
         arising in connection with the preservation and/or enforcement of our
         rights under this agreement or under the Security and will indemnify us
         for any and all losses, costs and expenses occasioned by the occurrence
         of an Event of Default.

 16      GENERAL POINTS

         (a) If at any time any one or more of the provisions in this agreement
         is or becomes invalid, illegal or unenforceable in any respect, the
         validity, legality or enforceability of the remaining provisions
         hereof shall not in any way be affected or impaired thereby.

         (b) Unless we expressly agree to do so in writing we do not hold
         ourselves out as providing advice on or considering the general
         suitability of this Loan for your particular circumstances (including
         tax circumstances ) and neither we nor our employees shall be liable
         for any indications given as to such suitability. We make no
         warranties or representations about the advisability of any underlying
         transaction entered into by you. You should obtain independent
         professional advice on such matters and upon any Security required by
         us.

         (c) If we determine in our opinion that as a result of any Requirement
         or compliance by us with any Requirement the cost to us of funding,
         maintaining or making available the Loan (or any undrawn amount of the
         Loan) is increased or the effective return to us on the Loan or on our
         capital is reduced, then you shall pay to us on demand such sums as
         may be certified to you by us as shall compensate us for the increased
         cost or reduction. `Requirement' means any law, regulation, directive
         or official request (whether or not having the force of law) and
         includes any change in its interpretation or application. It also
         includes any Requirement relating to a change in currency of a
         country.

         (d) If more than one currency or currency unit are at the same time
         recognised by the Bank of England as the lawful currency of the United
         Kingdom then: any reference in this agreement to, and any obligations
         arising under this agreement in, the currency of the United Kingdom
         shall be translated into, or paid in, the currency or currency unit of
         the United Kingdom designated by us; and

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         any translation from one currency or currency unit to another shall be
         at the official rate of exchange recognised by the Bank of England for
         the conversion of that currency or currency unit into the other,
         rounded up or down by us acting reasonably.

         (e) If a change in any currency of the United Kingdom occurs, this
         agreement will be amended to the extent we specify to be necessary to
         reflect the change in currency and to put us in the same position, so
         far as possible, that we would have been in if no change in currency
         had occurred.

         (f) We may assign or transfer all or any of our rights and obligations
         under the Loan. You may not assign or transfer any of your rights or
         obligations under the Loan.

         (g) This agreement is governed by the laws of England.

         (h) All expressions in this letter bearing a plural meaning shall
         (where the context so admits) also bear the singular meaning and vice
         versa.

         (i) All references in this letter to any statutory provision shall be
         deemed to include any statutory modification or re-enactment of such
         provision.

         (j) If the effect of the introduction of or any change in applicable
         law or directive or the interpretation of such law or directive is to
         make or purport to make the Loan unlawful then our obligations under
         this agreement shall cease and you will on demand pay to us all
         amounts outstanding under the Loan.

 17      REPRESENTATIONS AND WARRANTIES

         You represent and warrant that you have full power to accept and be
         bound by the terms and conditions set out in this agreement and to draw
         the Loan and that you have taken all necessary steps and obtained all
         necessary consents and authorisations to do so and that accordingly
         this agreement constitutes your legal, valid and binding obligations
         fully enforceable in accordance with their terms.

         You represent and warrant as follows:-

         (a) You are duly incorporated and validly existing under the laws of
         England.

         (b) No Event of Default has occurred or is outstanding and no event has
         occurred which with the giving of notice or the lapse of time would
         constitute an Event of Default.

         (c) All information, exhibits and reports furnished to us in connection
         with this agreement were and remain true and accurate in all respects
         and do not omit any facts thereby rendering misleading any statement
         contained therein.

         (d) The representations and warranties set out above shall survive your
         acceptance of this agreement and the drawing of the Loan and shall be
         deemed to be repeated on each day throughout the period of the Loan
         with reference to the facts and circumstances existing at that time.

 18      Environmental Matters

         (a) We may at any time during the period of the Loan require you to
         obtain a written up-date of the environmental audit referred to in
         paragraph 3 of the appendix (or if no audit was required under
         paragraph 3, a written confirmation that neither your assets nor the
         use of those assets has broken or is likely to break any Environmental
         Law). This must be done by an environmental consultant acceptable to us
         and at your expense.

         b) You must notify us immediately if you receive any claim, notice or
         other communication in respect of any alleged breach of Environmental
         Law.

<PAGE>   12

         (c) You undertake to notify us immediately if any Environmental
         Licence is withdrawn or is not renewed.

         (d) You must give us certified copies of any new Environmental Licence
         and any renewal of any Environmental Licences within twenty-eight days
         of issue and you must meet all associated costs and expenses.

         (e) You represent and warrant to us that you have obtained all
         necessary Environmental Licences and you have at all times complied in
         all material respects with the terms and conditions of the
         Environmental Licences applicable to you and all other applicable
         Environmental Law.
         You also confirm that no Hazardous Materials (other than those
         incidental to your business and which are stored in full compliance
         with Environmental Licence(s)) have been used, disposed of, generated,
         stored, transported, deposited, buried or emitted at, on, from or
         under any premises (whether or not owned, leased, occupied or
         controlled by you) in circumstances where this might result in a
         liability on you.

         (f) You represent that you have not received any notices of
         withdrawal, violations and/or advisory action by regulatory agencies
         regarding environmental control matters or Environmental Licence
         compliance.

         (g) You will indemnify and hold us and our respective officers,
         directors, employees and agents (the 'Indemnified Parties') free and
         harmless from and against any and all actions, causes of action,
         losses, costs, liabilities and damages of any kind and every kind of
         character known or unknown, fixed or contingent, out of pocket or
         consequential and all expenses incurred in connection therewith
         including reasonable legal fees and disbursements irrespective of
         whether any such Indemnified Parties are a party to the action for
         which indemnification is sought) (the "Indemnified Environmental
         Liabilities") incurred by the Indemnified Parties or any of them as a
         result of or arising out of or relating to:-

         (i)   The imposition or recording of any liens, pledges, charges or
               mortgages on or over any of your assets by any government agency
               or local governmental agency or authority pursuant to any
               Environmental Law or the removal of any such liens, pledges,
               charges or mortgages over any of your assets.

         (ii)  The claims of any private parties or local government or
               government agency or authority regarding violations of
               Environmental Law in connection with your operations or the
               effect of the presence of any Hazardous Material on the value of
               the assets belonging to you or in connection with compliance by
               you or the Indemnified Parties with any regulation or order
               issued pursuant to Environmental Law. Your obligations to the
               Indemnified Parties shall continue after you have repaid the
               Loan. For the purposes of this agreement:-

            "Environmental Law" shall mean any law, regulation, code of
            practice, circular, guidance notes or the like (whether in the
            United Kingdom or elsewhere and whether now existing or subsequently
            enacted or promulgated) or any judicial or administrative
            interpretation thereof concerning the protection of human health or
            the environment or the conditions of the work place or the
            generation, transportation, storage, treatment and disposal of
            hazardous materials.

            "Hazardous Materials" shall mean any radioactive emissions and any
            natural or artificial substance (whether in solid or liquid form or
            in the form of a gas or vapour and whether alone or in combination
            with any other substance) which are defined, determined identified
            prohibited, limited or regulated by Environmental Law or any other
            chemical, material, substance or element existing now or in the
            future and which is capable of causing harm to man or any other
            living organism which is capable of damaging the environment or
            public health or welfare including any controlled, special,
            dangerous, toxic, radioactive or hazardous waste.

            "Environmental Licence" shall mean any permit, licence or
            authorisation, consent or other approval required by Environmental
            Law.

<PAGE>   13

         _______________________________
         For and on behalf of
         National Westminster Bank Plc

         Date___________________________

                               FORM OF ACCEPTANCE

         We accept the Loan on the terms and conditions set out in this letter

         By:_______________________________
         For and on behalf of Prestolite Electric Limited

         Date: ______________________________

         By: ________________________________
         For and on behalf of the Prestolite Electric Incorporated

         Date: _______________________________<PAGE>   1

                                                                    EXHIBIT 10.6

                                    CORPORATE

                                    BANKING

                                    SERVICES

                            ADVICE OF BORROWING TERMS
                                       FOR
                           PRESTOLITE ELECTRIC LIMITED

                                      FROM:
                          SEVERNSIDE CORPORATE BUSINESS
                                     CENTRE

                               27TH DECEMBER 2000

<PAGE>   2

                            ADVICE OF BORROWING TERMS

RELATIONSHIP        Severnside Corporate Business      DATE: 27th December 2000
OFFICE:             Centre

                     BORROWER(S)                         REGISTERED NUMBER:
             Prestolite Electric Limited                     1189048

We intend that the facilities listed in Part 1 of the attached Facility Schedule
(the "on-demand facilities") should remain available to the borrower(s) until 2
January 2002 and all facilities should be reviewed on or before that date. The
facilities are, however, subject to the following:-

-    the terms and conditions below,

-    the specific conditions applicable to an individual facility as detailed in
     the Facility Schedule,

-    the Security detailed in the attached Security Schedule, and

-    the attached General Terms.

ALL AMOUNTS OUTSTANDING ARE REPAYABLE ON DEMAND WHICH MAY BE MADE BY US AT OUR
DISCRETION AT ANY TIME AND THE FACILITIES MAY BE WITHDRAWN, REDUCED, MADE
SUBJECT TO FURTHER CONDITIONS OR OTHERWISE VARIED BY US GIVING NOTICE IN
WRITING.

                                 PRECONDITIONS:

Preconditions that must be satisfied before the `Base Rate Loan' can be
utilised:

-    A signed copy of this Advice of Borrowing Terms to be returned to us.
-    Receipt of a certified copy of a resolution of your board of directors
     confirming:-

          -    certification by the chairman of the meeting that a valid quorum
               was present and the meeting was duly convened
          -    acceptance of the terms and conditions of the facility/facilities
          -    authorisation of a person or persons to sign the Form of
               Acceptance in this Advice of Borrowing Terms and to take such
               other action as may be necessary for the purpose of the
               facility/facilities

-    We require written confirmation from the lawyers of Prestolite Electric
     Incorporated that the (pound sterling)2.8m Base Rate Loan facility does not
     breach any of the terms & conditions attached to the $125m Senior Notes
     issue and that no other facility or agreement would be in default as a
     result of this transaction.

                                   CONDITIONS:
The following conditions must be satisfied at all times while the facilities are
outstanding, but this will not affect our right to demand repayment at any time:

<PAGE>   3

1.   Monthly management accounts to include Profit and Loss, Balance sheet, and
     Schedule of aged debtors, to be provided to us within 30 days of the end of
     the month to which they relate.
2.   Prestolite Electric Limited hereby confirm that no further payments in
     reduction of both interest & loan liabilities outstanding to Prestolite
     Electric Incorporated will be made without the prior approval of the Bank.
3.   LENDING FORMULA;
     -  Net overdraft utilisation to be covered 200% by trade debtors
     (excluding inter-company positions) less than 90 days. This formula to
     be tested on a monthly basis against the aged debtor summary listings
     provided.

Steve Carter
Senior Corporate Manager
For and on behalf of
National Westminster Bank Plc

<PAGE>   4

ACCEPTANCE:
To signify your agreement to the terms and conditions outlined above please sign
and return the enclosed copy of this Advice of Borrowing Terms within 28 days.

                               FORM OF ACCEPTANCE

I accept the facility/facilities on the above terms and conditions and confirm
that I have been authorised by the Board(s) of Directors of the Borrower(s) to
sign this Form of Acceptance on behalf of the Borrower(s).

Signed By (name and title):  ................................           Date

                FOR AND ON BEHALF OF: PRESTOLITE ELECTRIC LIMITED

Prestolite Electric Incorporated, a corporation incorporated under the laws of
the State of Delaware in the United States of America ("Prestolite US"), joins
in the execution of this Loan Agreement for the purpose of confirming its
acknowledgement of and agreement with the terms and conditions of this Loan
Agreement "(pound sterling)2.8m Base Rate Loan".

Prestolite US is Primary Obligor. National Westminster Bank Plc, Prestolite UK
and Prestolite US acknowledge and agree as follows with respect to the Loan
"(pound sterling)2.8m Base Rate Loan" established by this Loan Agreement;

(a)  Prestolite US is the primary obligor with respect to the Loan "(pound
     sterling)2.8m Base Rate Loan", notwithstanding any other provision of this
     Loan Agreement which may imply otherwise.

(b)  As a matter of administrative convenience, Prestolite US has determined
     that its wholly owned subsidiary, Prestolite UK, will service the Loan
     "(pound sterling)2.8m Base Rate Loan" as an accommodation to Prestolite US.

(c)  For purposes of Prestolite US's Senior Note Indenture, the Loan
     "(pound sterling)2.8m Base Rate" is intended to and shall be deemed to be
     "Indebtedness" permitted by Section 4.3.b (ix) of such Senior Note
     Indenture.

The above will not prejudice the rights and actions of National Westminster Bank
Plc to exercise the terms & conditions of the Loan Agreement with Prestolite
Electric Limited.

<PAGE>   5

                            ACKNOWLEDGEMENT AND AGREEMENT

Signed By (name and title):  ................................             Date

PRESTOLITE ELECTRIC INCORPORATED

<PAGE>   6

FACILITY SCHEDULE

PART 1 - FACILITIES REPAYABLE ON DEMAND:

<TABLE>
                                       GROUP OVERDRAFT
                                          FACILITY
---------------------------------------------------------------------------------------------------

<S>                      <C>                            <C>
ACCOUNTS INCLUDED IN                     NAME:                      ACCOUNT NUMBER:
THE GROUP FACILITY      ---------------------------------------------------------------------------
ARRANGEMENT:                 Prestolite Electric Limited               04233204
                                                                       24475637
                                                                       24475645
---------------------------------------------------------------------------------------------------
LIMIT: GROSS             (pound sterling)2,800,000      Inclusive of any Sub limits detailed below
                                                        for individual Accounts

LIMIT:  NET              (pound sterling)2,800,000
PURPOSE:                 To finance working capital
---------------------------------------------------------------------------------------------------
REPAYMENT:               Fully fluctuating
---------------------------------------------------------------------------------------------------
1ST DEBIT INTEREST       1.25% above the Bank's Base rate
RATE:
---------------------------------------------------------------------------------------------------
2ND DEBIT INTEREST       4.25% above the Bank's Base rate for borrowing over
RATE:                    (pound sterling)2,800,000
INTEREST PAYABLE:        Quarterly
EXCESS FEES:             We will be entitled to charge an excess fee at the Bank's
                         published rate for each day any agreed limit is exceeded (see
                         our "Services & Charges for Business Customers" brochure for details).
ARRANGEMENT FEE:         Not applicable
---------------------------------------------------------------------------------------------------

<CAPTION>
                     INTEREST SET-OFF ARRANGEMENT - STERLING

<S>                   <C>                                          <C>
---------------------------------------------------------------------------------------------------
THE INTEREST SET-OFF                NAME:                           ACCOUNT NUMBER:
                        ---------------------------------------------------------------------------
ACCOUNTS:                Prestolite Electric Limited                   04233204
                                                                       24475637
                                                                       24475645
---------------------------------------------------------------------------------------------------
1ST DEBIT INTEREST       1.25% above the Bank's Base rate
RATE:
---------------------------------------------------------------------------------------------------
2ND DEBIT INTEREST       4.25% above the Bank's Base rate for borrowing over
RATE:                    (pound sterling)2,800,000
---------------------------------------------------------------------------------------------------
SET OFF RATE:            0% per annum
---------------------------------------------------------------------------------------------------
INTEREST/SET OFF         Quarterly
PAYABLE:
---------------------------------------------------------------------------------------------------
ACCOUNT TO BE            04233204
DEBITED:
---------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>   7

                                INTEREST SET OFF:

Debit and cleared credit balances in the same currency on non-interest bearing
current and loan accounts repayable on demand (the "Interest Set Off Accounts")
will be used to calculate, on a daily basis, the net debit balance of the
Interest Set Off Accounts. The Interest Set Off accounts, which we have agreed
are to be set off for interest calculation purposes, are detailed in the
attached Facility Schedule which also specifies the frequency at which interest
will be payable and the rate or rates at which it will be charged on the net
debit balance

Debit balances which are set off on a daily basis by cleared credit balances on
the Interest Set Off Accounts will incur interest at the Set Off Rate specified
in the attached Facility Schedule.

                                LOAN: - BASE RATE

ACCOUNT NUMBER:          Not yet opened known as "Base Rate Loan"
NAME OF BORROWER         Prestolite Electric Limited
LIMIT:                   (pound sterling)2,800,000
PURPOSE:                 Injection of Working Capital
CURRENT REPAYMENT:       Within 7 days from draw-down of the Loan
INTEREST:                1.375% above the Bank's Base rate.
ACCOUNT TO BE            04233204
DEBITED:
INTEREST PAYABLE:        Quarterly
ARRANGEMENT FEE:         Not applicable

                                   TERMINABLE
                                  INDEMNITIES

NAME OF BORROWER:        Prestolite Electric Limited
LIMIT:                   (pound sterling)300,000
TYPE AND PURPOSE:        HM Customs & Excise duty deferment bond
INDEMNITY FEE:           1% p.a. payable quarterly in advance, to be debited to
                         account number 04233204.

                                   DOCUMENTARY
                                     CREDITS

NAME OF BORROWER:        Prestolite Electric Limited
LIMIT:                   (pound sterling)300,000
PURPOSE:                 Importation of stock
DOCUMENTS REQUIRED:      Full Set Clean On-Board Marine Bills of Lading to
                         order & blank endorsed
FEES:                    Subject to separate tariff which will have been agreed
                         with you in advance.

<PAGE>   8

                                 SETTLEMENT RISK

NAME OF BORROWER:         Prestolite Electric Limited
LIMIT/FREQUENCY:          (pound sterling)1,600,000 per month
TYPE AND PURPOSE:         BACS User No. 764510 - To facilitate automated
                          salary & supplier payments.

                                 SETTLEMENT RISK

NAME OF BORROWER:         Prestolite Electric Limited
LIMIT/FREQUENCY:          (pound sterling)80,000 any one time
TYPE AND PURPOSE:         Documents released in trust.

PART 2 - FACILITIES SUBJECT TO SEPARATE DOCUMENTATION:

The following facilities are made available on the terms of the separate
documentation between us.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------
     NAME OF BORROWER                  FACILITY AND PURPOSE       AMOUNT            DATE
                                                              (POUND STERLING)    AGREEMENT
                                                                                   SIGNED
--------------------------------------------------------------------------------------------------
<S>                            <C>                            <C>                <C>
Prestolite Electric Limited     Commercial Fixed Rate            2,000,000       2 November
                                Loan - To repay element of                       1999
                                Parental Loan
--------------------------------------------------------------------------------------------------
Prestolite Electric Limited     Commercial Variable Rate         2,000,000       2 November
                                Loan - To repay element of                       1999
                                Parental Loan
--------------------------------------------------------------------------------------------------
Prestolite Electric Limited     Commercial Variable Rate         1,400,000       To be signed
                                Loan - To repay element of
                                Parental Loan/Interest
                                Liabilities
--------------------------------------------------------------------------------------------------
</TABLE>

                                SECURITY SCHEDULE

We rely on the security detailed below (and require additional security where
specified) to repay, on demand, all your current and future liabilities (both
actual and contingent) to us. These liabilities include, without limitation,
those incurred by you under the facility(ies) specified in the Facility
Schedule.

<PAGE>   9

<TABLE>
<CAPTION>

      DATE                               SECURITY:                                    GIVEN/TO BE GIVEN BY:
  EXECUTED/NEW:
--------------------------------------------------------------------------------------------------------------
<S>                         <C>                                               <C>
22/01/1987                   Unscheduled Mortgage Debenture                    Prestolite Electric Limited
29/01/1987                   Composite Cross Guarantee structure               Prestolite Electric Limited
                                                                               Prestolite Wales Limited
                                                                               HB Switchgear (Contactors)
                                                                               Limited
--------------------------------------------------------------------------------------------------------------
26/10/1995                   First legal mortgage over National                Prestolite Electric Limited
                             Westminster Life Assurance Policy No.
                             0353668C(pound sterling)500,000 covering the
                             life of M Lea
--------------------------------------------------------------------------------------------------------------
22/01/1988                   Composite Cross Guarantee Structure               Prestolite Electric Limited
                                                                               Prestolite Wales Limited
                                                                               HB Switchgear (Contactors)
                                                                               Limited
                                                                               Butec Electrics Limited
--------------------------------------------------------------------------------------------------------------
15/11/1999                   First legal mortgage over Larden Road             Prestolite Electric Limited
                             site, Acton, London
--------------------------------------------------------------------------------------------------------------
04/04/1986                   700 HB Switchgear (Contractors) Ltd               Prestolite Wales Limited
                             (poundlife of)1 fully paid shares
--------------------------------------------------------------------------------------------------------------
29/01/1987                   Unscheduled Mortgage Debenture                    Prestolite Wales Limited
--------------------------------------------------------------------------------------------------------------
22/01/1988                   Unscheduled Mortgage Debenture                    Butec Electrics Limited
--------------------------------------------------------------------------------------------------------------
22/01/1988                   Unlimited Guarantee in favour of Butec            Prestolite Electric Limited
                             Electrics Limited
--------------------------------------------------------------------------------------------------------------
22/01/1988                   Unlimited Guarantee in favour of Butec            Prestolite Wales Limited
                             Electrics Limited
--------------------------------------------------------------------------------------------------------------
22/01/1988                   Unlimited Guarantee in favour of Butec            HB Switchgear (Contactors)
                             Electrics Limited                                 Limited
--------------------------------------------------------------------------------------------------------------
</TABLE>

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