Document:

<PAGE>   1
                                                                    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;

<PAGE>   2
            (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.

<PAGE>   3

         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: ____________________________________<PAGE>   1

                                                                    EXHIBIT 10.3

                                December 26, 2000

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

Re:      Second Amended and Restated Credit Agreement dated as of December 31,
         1998, as amended ("Credit Agreement"), between Comerica Bank and
         Prestolite Electric Incorporated

Ladies and Gentlemen:

         Reference is hereby made to that certain letter agreement dated
September 29, 2000 (the "Termination Letter"), pursuant to which we agreed to
and acknowledged termination of the Credit Agreement. As we have discussed, the
Termination Letter was inadvertently executed. In fact, we have separately
agreed to in another letter agreement dated December 26, 2000 that the Credit
Agreement shall be and has been amended and restated such that the maximum
amount of credit available thereunder has been permanently reduced from
$23,000,000 to $5,000,000 upon the terms and conditions set forth therein.
Accordingly, the Termination Letter is hereby rescinded and shall be of no force
and effect.

                                                     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: ________________________________<PAGE>   1
                                                                    EXHIBIT 10.4

[COMERICA LOGO]       MASTER REVOLVING NOTE
                      Variable Rate-Maturity Date-Optional Advances (Business
                      and Commercial Loans Only)

<TABLE>
<CAPTION>
AMOUNT        NOTE DATE            MATURITY DATE       TAX IDENTIFICATION NUMBER
<S>           <C>                  <C>                 <C>
$3,500,000    December 26, 2000    January 31, 2002    94-3142032
</TABLE>

ON THE MATURITY DATE, as stated above, for value received, the undersigned
promise(s) to pay to the order of Comerica Bank ("Bank"), at any office of the
Bank in the State of Michigan, Three Million Five Hundred Thousand Dollars
(U.S.) (or that portion of it advanced by the Bank and not repaid as later
provided) with interest until maturity, whether by acceleration or otherwise, or
until Default, as later defined, at a per annum rate equal to the Bank's prime
rate from time to time in effect per annum, and after that at a rate equal to
the rate of interest otherwise prevailing under this Note plus three percent
(3%) per annum (but in no event in excess of the maximum rate permitted by law).
The Bank's "prime rate" is that annual rate of interest so designated by the
Bank and which is changed by the Bank from time to time. Interest rate changes
will be effective for interest computation purposes as and when the Bank's prime
rate changes. Interest shall be calculated on the basis of a 360-day year for
actual number of days the principal is outstanding. Accrued interest on this
Note shall be payable on the first day of each month commencing January 1, 2001,
until the Maturity Date (set forth above) when all amounts outstanding under
this Note shall be due and payable in full. If the frequency of interest
payments is not otherwise specified, accrued interest on this Note shall be
payable monthly on the first day of each month. If any payment of principal or
interest under this Note shall be payable on a day other than a day on which the
Bank is open for business, this payment shall be extended to the next succeeding
business day and interest shall be payable at the rate specified in this Note
during this extension. A late payment charge equal to five percent (5%) of each
late payment may be charged on any payment not received by the Bank within ten
(10) calendar days after the payment due date, but acceptance of payment of this
charge shall not waive any Default under this Note.

The principal amount payable under this Note shall be the sum of all advances
made by the Bank to or at the request of the undersigned, less principal
payments actually received in cash by the Bank. The books and records of the
Bank shall be the best evidence of the principal amount and the unpaid interest
amount owing at any time under this Note and shall be conclusive absent manifest
error. No interest shall accrue under this Note until the date of the first
advance made by the Bank; after that interest on all advances shall accrue and
be computed on the principal balance outstanding from time to time under this
Note until the same is paid in full. The Bank shall be under no obligation to
make any advances to the undersigned pursuant to this Note during the
continuance of a Default.

This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness"), are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral, rights and properties described in each and every deed of trust,
mortgage, security agreement, pledge, assignment and other security or
collateral agreement which has been, or will at any time(s) later be, executed
by any (or all) of the undersigned to or for the benefit of the Bank
(collectively "Collateral"). Notwithstanding the above, (i) to the extent that
any portion of the Indebtedness is a consumer loan, that portion shall not be
secured by any deed of trust, mortgage on or other security interest in any of
the undersigned's principal dwelling or in any of the undersigned's real
property which is not a purchase money security interest as to that portion,
unless expressly provided to the contrary in another place, or (ii) if the
undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or
mortgage covering California real property, that deed of trust or mortgage shall
not secure this Note or any other indebtedness of the undersigned (or any of
them), unless expressly provided to the contrary in another place.

If the undersigned (or any of them) or any guarantor under a guaranty of all or
part of the Indebtedness ("guarantor") (a) fail(s) to pay any of the
Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to pay
any Indebtedness owing on a demand basis upon demand; or (b) fail(s) to comply
with any of the terms or provisions of any agreement between the undersigned (or
any of them) or any such guarantor and the Bank; or (c) become(s) insolvent or
the subject of a voluntary or involuntary proceeding in bankruptcy, or a
reorganization, arrangement or creditor composition proceeding, (if a business
entity) cease(s) doing business as a going concern, (if a natural person) die(s)
or become(s) incompetent, (if a partnership) dissolve(s) or any general partner
of it dies, becomes incompetent or becomes the subject of a bankruptcy
proceeding or (if a corporation or a limited liability company) is the subject
of a dissolution, merger or consolidation; or (d) if any warranty or
representation made by any of the undersigned or any guarantor in connection
with this Note or any of the Indebtedness shall be discovered to be untrue or
incomplete; or (e) if there is any termination, notice of termination, or breach
of any guaranty, pledge, collateral assignment or subordination agreement
relating to all or any part of
<PAGE>   2

the Indebtedness; or (f) if there is any failure (beyond any applicable notice,
grace/or cure period) by any of the undersigned or any guarantor to pay when due
any of its indebtedness (other than to the Bank) or in the observance or
performance of any term, covenant or condition in any document evidencing,
securing or relating to such indebtedness; or (g) if the Bank deems itself
insecure believing that the prospect of payment of this Note or any of the
Indebtedness is impaired or shall fear deterioration, removal or waste of any of
the Collateral; or (h) if there is filed or issued a levy or writ of attachment
or garnishment or other like judicial process upon the undersigned (or any of
them) or any guarantor or any of the Collateral, including without limit, any
accounts of the undersigned (or any of them) or any guarantor with the Bank,
then the Bank, upon the occurrence of any of these events (each a "Default"),
may at its option and without prior notice to the undersigned (or any of them),
declare any or all of the Indebtedness to be immediately due and payable
(notwithstanding any provisions contained in the evidence of it to the
contrary), sell or liquidate all or any portion of the Collateral, set off
against the Indebtedness any amounts owing by the Bank to the undersigned (or
any of them), charge interest at the default rate provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the rights
and remedies granted to the Bank by any agreement with the undersigned (or any
of them) or given to it under applicable law. All payments under this Note shall
be in immediately available United States funds, without setoff or counterclaim.

If this Note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns. The undersigned waive(s) presentment, demand, protest, notice of
dishonor, notice of demand or intent to demand, notice of acceleration or intent
to accelerate, and all other notices and agree(s) that no extension or
indulgence to the undersigned (or any of them) or release, substitution or
nonenforcement of any security, or release or substitution of any of the
undersigned, any guarantor or any other party, whether with or without notice,
shall affect the obligations of any of the undersigned. The undersigned waive(s)
all defenses or right to discharge available under Section 3-605 of the Michigan
Uniform Commercial Code and waive(s) all other suretyship defenses or right to
discharge. The undersigned agree(s) that the Bank has the right to sell, assign,
or grant participations or any interest in, any or all of the Indebtedness, and
that, in connection with this right, but without limiting its ability to make
other disclosures to the full extent allowable, the Bank may disclose all
documents and information which the Bank now or later has relating to the
undersigned or the Indebtedness. The undersigned agree(s) that the Bank may
provide information relating to this Note or relating to the undersigned to the
Bank's parent, affiliates, subsidiaries and service providers.

The undersigned agree(s) to reimburse the holder or owner of this Note upon
demand for any and all costs and expenses (including without limit, court costs,
legal expenses and reasonable attorney fees, whether inside or outside counsel
is used, whether or not suit is instituted and, if suit is instituted, whether
at the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or incurred in any other matter or proceeding relating to this
Note.

The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, indorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF MICHIGAN AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLE.

THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25% PER ANNUM, OR THE HIGHEST
APPLICABLE USURY CEILING, WHICHEVER IS LESS.

<PAGE>   3

THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

<TABLE>
<S><C>
PRESTOLITE ELECTRIC INCORPORATED                    By:                                     Its:
--------------------------------                       ------------------------------------
    OBLIGOR NAME TYPED/PRINTED                                  SIGNATURE OF                      TITLE (if applicable)

                                                    By:                                     Its:
                                                        -----------------------------------
                                                                SIGNATURE OF                      TITLE (if applicable)

2311 Green Road, Suite B                            Ann Arbor                   Michigan          48105
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STREET ADDRESS                                      CITY                        STATE           ZIP CODE

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FOR BANK USE ONLY                                                               CCAR #

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LOAN OFFICER INITIALS          LOAN GROUP NAME      OBLIGOR NAME

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LOAN OFFICER ID. NO.           LOAN GROUP NO.       OBLIGOR NO. NOTE NO.                    AMOUNT

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</TABLE>

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