<PAGE>
                                                                    EXHIBIT 10.2

                          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: 29TH AUGUST 2002

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)4,066,000 (FOUR MILLION AND SIXTY SIX THOUSAND POUNDS)

5        PURPOSE OF THE LOAN: CONSOLIDATE EXISTING TERM LOANS AND ONE MILLION
         POUNDS OF HARDCORE FROM WITHIN THE GROUP OVERDRAFT.

6        PERIOD OF THE LOAN: FIVE 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)20,000 due on the date on which you accept our offer as set
         out in paragraph 3 of thE appendix.

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)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 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 date on which you draw the Loan

                  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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                          COMMERCIAL VARIABLE RATE LOAN

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

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 110% of Debt Service
    Costs.
(c) You will not allow Profit to be less than 250% of Borrowing Costs.
(d) You will not allow Capital Expenditure to be more than 100% of depreciation.
(e) Any Parental Loan plus all other payments to Parent to be subordinated to
    Bank Debt.
(f) Management Information to be provided monthly within 30 days of the month
    end to which the informtion relates. To include Profit & Loss, Balance
    Sheet, Aged Debtor Summary, Cash Flow Statements and specific commentary on
    Working Capital movements.
(g) The Bank's consent must be given prior to any non-trade related payments to
    the Parent or other group subsidery.
(h) No preference shares or redeemable ordinary shares to be withdrawn/repaid
    during the term of this loan.
(i) Acquisitions of more than (pound)500,000 not to be made without the Bank's
    prior agreement.
(j) 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. Security interest includes (without
    limitation) liens, pledges, charges, mortgages or other encumbrances.
(k) 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 six 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
         on an annual basis, for the consolidated accounts of Prestolite
         Electric Limited.
         In respect of the Cash Generated and Profit agreements (b & c detailed
         above), these will be tested quarterly on a tweleve month rolling basis
         (i.e. March to March, June to June, September to September and December
         to December).





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                          COMMERCIAL VARIABLE RATE LOAN

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 the 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;

         Prestolite US is the primary obligor with respect to the Loan, not
                  withstanding any other provision of this Loan Agreement, which
                  may imply otherwise.

         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.

         For purpose 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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                          COMMERCIAL VARIABLE RATE LOAN

                                    APPENDIX


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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                          COMMERCIAL VARIABLE RATE LOAN

                '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;



                                       5
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                          COMMERCIAL VARIABLE RATE LOAN

                '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 (or where your Parent is specified
              in term 2(b), your Parent's) issued share capital plus all
              reserves of the Group which would, in accordance with generally
              accepted United Kingdom accounting principles consistently applied
              be classified as shareholders capital plus retained earnings 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) 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.



                                       6
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                          COMMERCIAL VARIABLE RATE LOAN

              However, you can only accept this offer and draw the Loan if we
              have received the following items from you and are satisfied with
              them:-

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

                  b)A certified copy of a resolution of your board of directors
                  (and if your Parent is specified in term 2(b) a 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
              repay the existing loans and consolidate one million of the group
              overdraft hardcore.

              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.

              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.





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                          COMMERCIAL VARIABLE RATE LOAN

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 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:-




                                       8
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                          COMMERCIAL VARIABLE RATE LOAN

              (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.

              (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



                                       9
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                          COMMERCIAL VARIABLE RATE LOAN

                   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.

              (n)  If you cease to be a Subsidiary Undertaking of your Parent
                   ("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



                                       10
<PAGE>
                          COMMERCIAL VARIABLE RATE LOAN

              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

              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


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                          COMMERCIAL VARIABLE RATE LOAN

                  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.

              (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:-


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                          COMMERCIAL VARIABLE RATE LOAN

              "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.





              ------------------------------------
              For and on behalf of
              National Westminster Bank Plc

              Date
                  --------------------------------



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                          COMMERCIAL VARIABLE RATE LOAN

                               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 Prestolite Electric Incorporated


         Date:
              ------------------------------------------------------




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