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                                                                    EXHIBIT 10.2

                                December 26, 2000



Prestolite Electric Incorporated
2311 Green Road
Suite B
Ann Arbor, Michigan  48105

Ladies and Gentlemen:

         Reference is hereby made to the $5,000,000 Master Revolving Note dated
September 29, 2000 (together with all amendments thereto, the "Note"), from
Prestolite Electric Incorporated ("Company") as maker to Comerica Bank ("Bank")
as payee. This letter, when signed by you, will constitute our agreement
concerning advances under the Note and the issuance of standby or commercial
letters of credit for the account of the Company. As used in this letter, the
term "Indebtedness" shall mean all indebtedness and any other obligations of the
Company to the Bank under or in respect of the Note, any letters of credit
issued pursuant to this letter, and all other indebtedness or obligations of the
Company to the Bank of any kind or nature whatsoever, whether now owing or
hereafter created, and whether absolute or contingent.

         1. The Company and the Bank agree that so long as any Indebtedness
remains outstanding, the Company will furnish to the Bank:

            (a)   within ninety (90) days after and as of the end of each fiscal
                  year of Prestolite Electric Holding, Inc. ("PEI"), detailed
                  consolidated financial statements of PEI and its consolidated
                  subsidiaries, audited and certified by independent certified
                  public accountants satisfactory to Bank, and unaudited
                  consolidating financial statements of PEI and its consolidated
                  subsidiaries;

            (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 its subsidiaries presented in the
                  form previously submitted to Bank, certified (upon request of
                  Bank) by an authorized officer of Company as being correct and
                  accurate to the best of his knowledge;


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            (c)   within ninety (90) days after the beginning of each fiscal
                  year of PEI, financial projections for PEI and subsidiaries
                  (on a month by month basis) for such fiscal year;

            (d)   such information as required by the terms and conditions of
                  any security agreements or advance formula agreements;

            (e)   simultaneously with the delivery of any financial statements
                  or reports, certificates, notices of default or other material
                  correspondence to the holders of any senior debt of the
                  Company, copies thereof; and

            (f)   promptly, and in form to be satisfactory to Bank, such other
                  information as Bank may reasonably request from time to time.

         2. In addition to advances under the Note, the Bank may issue, from
time to time until January 31, 2002, standby letters of credit for the account
of the Company in an aggregate face amount not to exceed $5,000,000; provided,
however, that the sum of the aggregate amount of advances outstanding under the
Note plus the aggregate face amount of all outstanding letters of credit issued
pursuant to this letter shall not exceed the lesser of $5,000,000 or the advance
formula as set forth in the Advance Formula Agreement dated as of the date
hereof between the Company and the Bank; 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 January 31, 2002; and provided further, that in the event Bank
agrees to issue any letter of credit having an expiration date later than
January 31, 2002, Company shall deliver to Bank on demand cash collateral in an
amount equal to the maximum undrawn amount of such letter of credit. The
issuance of any letters of credit shall be subject to the terms and conditions
of any letter of credit applications and agreements executed and delivered by
the Company to the Bank with respect thereto. The Company shall pay to the Bank
annually in advance a fee of two percent (2%) per annum of the face amount of
each such letter of credit.

         3. The Company agrees to pay to the Bank a commitment fee on the
average daily balance of the unused portion of the Note at the rate of
one-quarter of one percent (1/4%) per annum computed on the actual number of day
elapsed using the year of 360 days. The commitment fee shall be payable
quarterly in arrears on the first day of January, April, July and October,
commencing January 1, 2001, and at the maturity of the Note, and shall be
non-refundable. For purposes calculating the commitment fee, the face amount of
all outstanding letters of credit issued pursuant to this letter shall be
considered to be outstanding advances under the Note.

         4. Any default by the Company under this Agreement shall constitute a
Default under the Note.

         5. This letter agreement amends and restates in its entirety that
certain Second Amended and Restated Credit Agreement dated as of December 31,
1998, as amended, between the Bank and the Company ("Original Credit
Agreement"). The Bank acknowledges that (a) the Company has previously repaid to
the Bank outstanding indebtedness under the Original Credit Agreement of
approximately $18,000,000 and (b) as a result of the amendment and restatement
of the Original Credit Agreement upon the terms and conditions set forth herein,
the maximum amount of credit available to the Company under the Original Credit
Agreement has been permanently reduced by $18,000,000, from $23,000,000 to
$5,000,000.

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         6. This letter agreement supersedes and replaces a similar letter
agreement dated September 29, 2000 (the "Original Letter Agreement") pertaining
to the $5,000,000 facility set forth herein, because the Original Letter
Agreement included certain errors and omissions. Accordingly, the Original
Letter Agreement shall be disregarded and of no effect and the $5,000,000
facility shall be governed solely by the terms and conditions of this letter
agreement.

         7. Company agrees to pay the Bank a non-refundable loan origination fee
in the amount of $5,000.

         If the foregoing clearly sets forth our understanding regarding these
matters, please sign this letter were indicated and return it to me.



                                                     Very truly yours,



                                                     Peggy A. Cummins
                                                     First Vice President


Acknowledged and agreed to as of the date set
forth above:

PRESTOLITE ELECTRIC INCORPORATED

By: ____________________________________

Its: ___________________________________



By:  ____________________________________

Its:  ____________________________________



                           REAFFIRMATION OF GUARANTY

         The undersigned reaffirms and ratifies all of its obligations to the
Bank under or in respect of the Guaranty dated October 25, 1994, executed and
delivered by the undersigned to the Bank.


                                      PRESTOLITE ELECTRIC HOLDING, INC.

                                      By: _____________________________________

                                      Its: ____________________________________