10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM              TO             .

COMMISSION FILE NO. 1-13683

REMY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	35-1909253
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2902 Enterprise Drive Anderson, Indiana	46013
(Address of principal executive offices)	(Zip Code)

(765) 778-6499

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.    Yes  x    No  ¨

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT).    Yes  ¨    No  x

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT’S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

	Outstanding as of May 1, 2005
Common Stock – Class B	2,503,024.48

Remy International, Inc. and Subsidiaries

INDEX

			Page
PART I		FINANCIAL INFORMATION
	Item 1	Financial Statements
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4	Controls and Procedures	27
PART II		OTHER INFORMATION
	Item 1	Legal Proceedings	28
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 3	Defaults Upon Senior Securities	30
	Item 4	Submission of Matters to a Vote of Security Holders	30
	Item 5	Other Information	30
	Item 6	Exhibits	30
SIGNATURES			31
EXHIBIT INDEX			32

2

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Remy International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

IN THOUSANDS, At	March 31, 2005			December 31, 2004
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	23,085		$	62,545
Trade accounts receivable, net		176,097			154,333
Other receivables		22,219			19,097
Inventories		284,041			217,912
Assets of discontinued operations		296			356
Other current assets		10,274			11,214
Total current assets		516,012			465,457
Property, plant and equipment		355,305			329,637
Less accumulated depreciation		195,015			192,344
Property, plant and equipment, net		160,290			137,293
Deferred financing costs, net		14,257			14,842
Goodwill, net		168,245			106,400
Investments in joint ventures		5,790			5,706
Other assets		38,079			26,060
Total assets	$	902,673		$	755,758
Liabilities and Stockholders’ Deficit:
Current liabilities:
Accounts payable	$	206,483		$	170,776
Accrued interest		19,515			8,210
Accrued restructuring		11,553			6,451
Liabilities of discontinued operations		2,525			2,799
Deferred income taxes		2,611			3,065
Other liabilities and accrued expenses		116,499			84,157
Current maturities of long-term debt		28,539			22,890
Total current liabilities		387,725			298,348
Long-term debt, net of current portion		629,856			610,330
Post-retirement benefits other than pensions		16,537			16,302
Accrued pension benefits		13,831			13,511
Accrued restructuring		3,158			4,407
Other non-current liabilities		50,283			4,962
Commitments and contingencies
Minority interest		10,985			10,498
Stockholders’ deficit:
Common stock:
Class B shares		3			3
Paid-in capital		334,336			334,336
Retained deficit		(534,033	)		(531,136	)
Accumulated other comprehensive loss		(10,008	)		(5,803	)
Total stockholders’ deficit		(209,702	)		(202,600	)
Total liabilities and stockholders’ deficit	$	902,673		$	755,758

See notes to the condensed consolidated financial statements.

3

Remy International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

IN THOUSANDS, For the three months ended March 31,	2005			2004
Net sales	$	281,568		$	269,028
Cost of goods sold		236,209			218,758
Gross profit		45,359			50,270
Selling, general and administrative expenses		31,257			26,914
Restructuring (credit) charge		(799	)		813
Operating income		14,901			22,543
Interest expense		15,392			14,601
Income (loss) from continuing operations before income taxes, minority interest and loss from unconsolidated joint ventures		(491	)		7,942
Income tax expense		1,350			1,240
Minority interest		1,093			548
Loss (income) from unconsolidated joint ventures		(83	)		454
Net (loss) income from continuing operations		(2,851	)		5,700
Discontinued operations:
Loss from discontinued operations, net of tax		(201	)		(552	)
Gain on disposal of discontinued operations, net of tax		155			108
Net loss from discontinued operations, net of tax		(46	)		(444	)
Net (loss) income		(2,897	)		5,256
Accretion for redemption of preferred stock		—			8,552
Net loss attributable to common stockholders	$	(2,897	)	$	(3,296	)

See notes to the condensed consolidated financial statements.

4

Remy International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

IN THOUSANDS, For the three months ended March 31,	2005			2004
Cash Flows from Operating Activities:
Net loss attributable to common stockholders	$	(2,897	)	$	(3,296	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Discontinued operations		46			444
Depreciation and amortization		6,534			5,393
Non-cash interest expense		852			1,028
Accretion for redemption of preferred stock		—			8,552
Minority interest and loss from unconsolidated joint ventures		1,010			1,002
Deferred income taxes		(427	)		2
Accrued pension and post-retirement benefits, net		555			325
Restructuring (credit) charge		(799	)		813
Cash payments for restructuring charges		(509	)		(6,409	)
Changes in operating assets and liabilities, net of acquisitions and restructuring charges:
Accounts receivable		(11,182	)		(19,041	)
Inventories		(11,816	)		(15,481	)
Accounts payable		17,944			15,479
Other current assets and liabilities		7,031			2,068
Other non-current assets and liabilities, net		(3,775	)		984
Net cash provided by (used in) operating activities of continuing operations		2,567			(8,137	)
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired		(56,014	)		—
Net proceeds on sale of businesses		156			108
Purchases of property, plant and equipment		(10,860	)		(5,915	)
Net cash used in investing activities of continuing operations		(66,718	)		(5,807	)
Cash Flows from Financing Activities:
Net borrowings under revolving line of credit and other		25,176			11,678
Distributions to minority interests		—			(1,010	)
Net cash provided by financing activities of continuing operations		25,176			10,668
Effect of exchange rate changes on cash		(252	)		244
Cash flows of discontinued operations		(233	)		(1,050	)
Net decrease in cash and cash equivalents		(39,460	)		(4,082	)
Cash and cash equivalents at beginning of year		62,545			21,207
Cash and cash equivalents at end of period	$	23,085		$	17,125

See notes to the condensed consolidated financial statements.

5

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AMOUNTS IN THOUSANDS, EXCEPT AS INDICATED

Quarters Ended March 31, 2005 and 2004

(Unaudited)

1. Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. The unaudited, condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The Company reclassified operating results and cash flows in 2004 to reflect the classification of the Company’s transmission remanufacturing businesses, Williams Technologies, Inc. (“Williams”), JAX Reman, L.L.C. (“JAX”) and AutoMatic Transmission International A/S (“AMT”), as discontinued operations.

Operating results for the three-month period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the full year. The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The Company has not materially changed its significant accounting policies from those disclosed in its Form 10-K for the year ended December 31, 2004. For further information, refer to the consolidated financial statements and notes thereto for the year ended December 31, 2004.

2. Additional Balance Sheet Information

Inventories

The components of inventory were as follows:

	March 31, 2005		December 31, 2004
Raw material	$	141,639	$	116,807
Work-in-process		6,785		7,577
Finished goods		135,617		93,528
Total	$	284,041	$	217,912

Warranty

The Company provides an allowance for the estimated future cost of product warranties and other defective product returns based on management’s estimate of product failure rates and customer eligibility. If these factors differ from management’s estimates, revisions to the estimated warranty liability may be required. The specific terms and conditions of the warranties vary depending upon the customer and the product sold. The Company’s warranty liability is reflected in “Other liabilities and accrued expenses” in the accompanying condensed consolidated balance sheet. Changes to the Company’s warranty liability, excluding discontinued operations, are summarized as follows:

	Quarter Ended March 31, 2005			Year Ended December 31, 2004
Balance at beginning of period	$	17,633		$	20,471
Provision for warranty		10,575			39,665
Payments and charges against the accrual		(10,571	)		(42,503	)
Other (including acquisitions)		4,767			—
Balance at end of period	$	22,404		$	17,633

6

3. Acquisitions

On March 18, 2005, the Company acquired substantially all of the assets and assumed certain liabilities of Unit Parts Company (“UPC”). UPC is a major supplier to the automotive aftermarket for new and remanufactured starters and alternators, offering custom branding, packaging and logistics solutions as well as complete engineering and support services. The purchase price consisted of approximately $55,300 in cash and the assumption of approximately $69,200 in liabilities (including a preliminary estimate of $5,300 in exit costs). Additionally, the purchase agreement contains a contingent earn out to be paid over a four-year period if incremental financial performance objectives above the current performance of the combined electrical aftermarket business are attained. Contingent consideration earned and paid will increase the purchase price and result in additional goodwill. The Company funded this acquisition with cash on hand and borrowings available under its existing revolving credit facility.

Liabilities assumed include customer obligations related to several customer contracts acquired through the acquisition. These liabilities are reflected in “Other liabilities and accrued expenses” in the accompanying condensed consolidated balance sheet. These contracts designate the Company as the exclusive supplier to the respective customer and require the Company to issue credit memos to each respective customer over several years. The following table summarizes the net present value, as of March 31, 2005, of future payments due over the next five years under the customer obligation contracts:

2005	$	14,887
2006		13,719
2007		8,312
2008		6,596
2009		6,243
Thereafter		11,380
Total	$	61,137

In connection with this acquisition the Company entered into Amendment No. 2 to the Second Amended and Restated Loan and Security Agreement, more fully described in Note 7.

UPC’s results of operations are included in the Company’s statement of operations beginning March 18, 2005. The Company recorded approximately $5,000 in incremental revenue and approximately $300 in incremental operating income during the quarter ended March 31, 2005. The purchase price allocation has not been finalized. The preliminary purchase price allocation is summarized as follows:

Current assets	$	65,548
Intangible assets and goodwill		68,885
Other assets		23,070
Total assets	$	157,503
Total liabilities	$	102,225
Cash paid	$	55,278

The Company made no acquisitions during the three months ended March 31, 2004.

7

4. Accounts Receivable Programs

The Company participates in two programs that accelerate the collection of accounts receivable. Under one program, the Company sells the accounts of certain of its aftermarket customers to a bank, on a non-recourse basis, at a discount. At March 31, 2005 and 2004, the amount of receivables under this program was approximately $32,200 and $35,800, respectively. The second program is an early pay plan under which a third party acts as paying agent for one of the Company’s customers. The accounts are paid, at a discounted rate, in five to seven days after shipment instead of the regular terms. This program is also without recourse. The amount covered by this plan at March 31, 2005 and 2004 was approximately $10,100 and $13,600, respectively.

5. Discontinued Operations

Selected financial information for discontinued operations for the three months ended March 31 is as follows:

	2005			2004
Net sales	$	625		$	24,170
Interest expense		3			1,601
Loss before tax		(201	)		(355	)
Income tax expense		—			197
Net loss	$	(201	)	$	(552	)

6. Restructuring Charges

The Company’s restructuring activities are accounted for in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS No. 146”) and the Emerging Issues Task Force (“EITF”) Issue 95-03, Recognition of Liabilities in Connection with a Purchase Business Combination (“EITF 95-03”).

Continuing Operations

In the first quarter of 2005, the Company completed plans for the closure of a manufacturing facility in Europe. This action will result in a workforce reduction of sixteen employees.

8

The net restructuring credit of $799 in the first quarter of 2005 consisted of a $1,066 credit for the reversal of accrued maintenance expenses reflecting the Company’s utilization of a previously idled Anderson, Indiana facility and the renegotiation of other maintenance agreements. In addition, charges totaling $267 were recorded relative to the closure of operations in Anderson, Indiana in 2003 and the consolidation of operations in Europe.

The following table summarizes the activity in the restructuring accrual of continuing operations in the first quarter of 2005:

	Termination Benefits			Exit/ Impairment Costs			Total
Reserve at December 31, 2004	$	5,285		$	5,573		$	10,858
Provision		182			(1,066	)		(884	)(b)
Payments		(289	)		(221	)		(510	)
Other		5,254	(a)		(7	)		5,247
Reserve at March 31, 2005	$	10,432		$	4,279		$	14,711

(a) Includes a preliminary estimate of $5,250 for exit costs established in connection with the acquisition of UPC.

(b) Excludes a charge of $85 for the write-down of fixed assets.

Discontinued Operations

The restructuring charges, payments and liabilities relative to discontinued operations are classified as discontinued operations in the Company’s condensed consolidated financial statements.

The following table summarizes the activity in the restructuring accrual of discontinued operations in the first quarter of 2005 which relates to exit/impairment costs:

	Termination Benefits		Exit/ Impairment Costs			Total
Reserve at December 31, 2004	$	—	$	294		$	294
Provision		—		—			—
Payments		—		(79	)		(79	)
Other		—		—			—
Reserve at March 31, 2005	$	—	$	215		$	215

7. Long-Term Debt

In March 2005 the Company entered into Amendment No. 2 to the Second Amended and Restated Loan and Security Agreement (“Amendment”) to reflect, among other matters, the acquisition of substantially all of the assets and the assumption of certain liabilities of UPC. Additionally, the Amendment increases the maximum draw available (subject to a borrowing base calculation) under the asset based Senior Credit Facility from $120,000 to $145,000, eliminates the Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Fixed Charge covenants from the facility and extends the maturity of the facility to June 30, 2008 with provisions for annual extensions thereafter.

9

8. Employee Benefit Plans

The components of expense for the plans as of March 31 are as follows:

	Pension Benefits						Post-Retirement Health Care and Life Insurance Plans
Components of expense	2005			2004			2005		2004
Service costs	$	499		$	471		$	90	$	118
Interest costs		631			624			268		269
Expected return on plan assets		(482	)		(448	)		—		—
Amortization of prior service cost		56			24			—		—
Recognized net actuarial loss		101			97			17		36
Curtailments		—			—			—		—
Net periodic pension cost	$	805		$	768		$	375	$	423

Cash Flows

The Company contributed $775 in the first quarter of 2005 and plans to contribute between $3.9 and $5.0 million to its pension plans for all of 2005. The post-retirement health care plan is funded as benefits are paid.

9. Income Taxes

Income tax expense of $1,350 in the first quarter of 2005 consisted of provision for U.S. federal alternative minimum tax of $27, domestic state and local taxes of $134 and taxes in various foreign jurisdictions of $1,189. Income tax expense of $1,240 in the first quarter of 2004 consisted of provisions for domestic state and local taxes of $6 and taxes in various foreign jurisdictions of $1,234. In accordance with SFAS No. 109, Accounting for Income Taxes, the Company established a valuation allowance for domestic U.S. deferred tax assets in 2003, which resulted in no U.S. ordinary tax provision on first quarter 2005 domestic loss. Accordingly, the Company has recorded a valuation allowance related to the domestic net operating loss generated in the three months ended March 31, 2005.

10. Accumulated Other Comprehensive Income (Loss)

The Company’s other comprehensive income (loss) consists of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations, currency instruments and minimum pension liability adjustments. The before tax income (loss), related income tax effect and accumulated balance for the first quarter of 2005 are as follows:

	Foreign Currency Translation Adjustment			Unrealized Gains on Derivative Instruments		Minimum Pension Liability Adjustments			Accumulated Other Comprehensive Loss
Balances at December 31, 2004	$	1,964		$	439	$	(8,206	)	$	(5,803	)
Before tax income (loss)		(4,300	)		101		—			(4,199	)
Income tax effect		—			6		—			6
Other comprehensive income (loss)		(4,300	)		95		—			(4,205	)
Balances at March 31, 2005	$	(2,336	)	$	534	$	(8,206	)	$	(10,008	)

10

The Company’s total comprehensive income (loss) was as follows:

Three months ended March 31, 2005	$	(7,102	)
Three months ended March 31, 2004	$	7,841

11. Commitments and Contingencies

The Company is party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business, including those relating to commercial transactions, product liability, safety, health, taxes, environmental and other matters. The Company believes that the ultimate liability, if any, in excess of amounts already provided for in the financial statements or covered by insurance on the disposition of these matters and the matters discussed below will not have a material adverse effect on the financial position, results of operations or cash flows of the Company except as otherwise indicated.

UAW Litigation

On April 16, 2003, the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (“UAW”) and its Local Union 662 filed suit against the Company and Remy, Inc. (“RI”), in Federal District Court in the Southern District of Indiana, Indianapolis Division. The lawsuit was filed under Section 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, seeking enforcement of an expired Supplemental Unemployment Benefits plan (“SUB plan”). The plaintiffs allege that the SUB plan provides supplemental unemployment benefits for 52 weeks and separation pay in an amount exceeding $20,000 for employees who were terminated as a result of the closure of RI’s Anderson, Indiana production facilities at the end of March 2003. The plaintiffs also seek to enforce terminated provisions of a health care program, which the plaintiffs allege provides the terminated employees with 25 months of continued hospital, surgical, medical, hearing aid, prescription drug, mental health, substance abuse and vision insurance coverage. The terminated employees were represented by the UAW and its Local Union 662 under various agreements, which expired on March 31, 2003. The lawsuit was filed shortly after the UAW membership failed to ratify RI’s last, best and final offer for a Shutdown Agreement. The UAW filed an amended complaint on July 8, 2003 to which the Company filed an answer on July 24, 2003. The trial was previously expected to begin in January 2005, however, that date was continued and has been reset for October 10, 2005. The Company denies the material allegations of the complaint, denies any wrongdoing and intends to defend itself vigorously, but is unable to predict whether the proceedings will have a material adverse effect on the Company.

Prison Labor Matter

In January 2004, a class action on behalf of all prisoners who worked in a South Carolina Department of Corrections (“SCDC”) Services Training Program at Lieber Correctional Institute was brought against the SCDC and our former subsidiary Williams Technologies, Inc. (“Williams”), which was sold to Caterpillar, Inc., in September 2004. The Plaintiffs claim that (a) they should have been paid industry prevailing wage under a South Carolina prison industries authorization statute, (b) the SCDC and Williams violated the Payment of Wages Act and (c) the SCDC and Williams committed a tort under the South Carolina Tort Claims Act. Under the terms of the sale, the Company retained liability and responsibility for this claim. The Circuit Court for Dorchester County granted summary

11

judgment to the Company on April 21, 2005, and decertified the Plaintiff class. Plaintiff’s time to appeal or ask for reconsideration has not yet run. The Company continues to deny the material allegations of the complaint and any wrongdoing and intends to defend itself vigorously. However, at this time, the Company is unable to predict whether the proceedings will have a material adverse effect on the Company.

Import/Export Matters

During 2004 the Company continued to expand globally to take advantage of global economic conditions and related cost structures. The Company is subject to various duties and import/export taxes. The Company is in the process of reviewing its import/export processes in North America, Europe and parts of Asia to verify the appropriate import duty classification, value and duty rate, including import value added tax.

Remy Reman Facilities

The Remy Reman facilities in Mississippi identified certain possible violations of state air laws and notified the state environmental agency under the state voluntary audit disclosure rules. The Mississippi Department of Environmental Quality (MDEQ) issued Notices of Violation regarding alleged violations of state air laws by two of the Remy Reman facilities in Mississippi. Remy Reman resolved this liability through payment in January 2005 of approximately $170.

Franklin Power Products Facility

In September 2000, one of Franklin Power Products, Inc.’s Indiana facilities received a Finding of Violation and Order for Compliance from the EPA requiring the facility to correct violations of its wastewater discharge permits. Franklin Power Products, Inc. has installed wastewater treatment equipment and is in compliance with the terms of the Order and has eliminated the discharge. In July 2004, the Company and Franklin Power Products, Inc. entered into an agreement with the U.S. Department of Justice on behalf of the EPA, which tolled the statute of limitations on the EPA’s potential claim for penalties. Since that time, the Company has been cooperating with the EPA by providing additional information and has entered into settlement negotiations with EPA and the Department of Justice.

12. Financial Information for Subsidiary Guarantors and Non-Guarantor Subsidiaries

The Company conducts a significant portion of its business through its subsidiaries. The Company’s 8 5/8% Senior Notes Due 2007, 11% Senior Subordinated Notes Due 2009, Second Priority Senior Floating Rate Notes, and the 9 3/8% Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally, by certain direct and indirect subsidiaries of the Company (the “Subsidiary Guarantors”). Certain of the Company’s subsidiaries do not guarantee the notes (the “Non-Guarantor Subsidiaries”). The claims of creditors of Non-Guarantor Subsidiaries have priority over the rights of the Company to receive dividends or distributions from such subsidiaries.

Presented below is condensed consolidating financial information for the Company, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries at March 31, 2005 and December 31, 2004 and for the three-month periods ended March 31, 2005 and 2004.

12

The equity method has been used by the Company with respect to investments in subsidiaries. The equity method has been used by Subsidiary Guarantors with respect to investments in Non-Guarantor Subsidiaries. Separate financial statements for Subsidiary Guarantors are not presented.

The following table sets forth the Subsidiary Guarantors and direct Non-Guarantor Subsidiaries:

Subsidiary Guarantors	Non-Guarantor Subsidiaries
•      Ballantrae Corporation	•      AutoMatic Transmission International A/S
•      Franklin Power Products, Inc.	•      Central Precision Limited
•      International Fuel Systems, Inc.	•      Remy Automotive Germany GmbH
•      M & M Knopf Auto Parts, L.L.C.	•      Delco Remy International (Europe) GmbH, iL
•      Marine Corporation of America	•      Electro Diesel Rebuild BVBA
•      Nabco, Inc.	•      Electro-Rebuild Tunisia S.A.R.L.
•      Power Investments, Inc.	•      Magnum Power Products, L.L.C.
•      Power Investments Marine, Inc.	•      Publitech, Inc.
•      Powrbilt Products, Inc.	•      Remy Automotive Brasil Ltda.
•      Reman Holdings, L.L.C.	•      Remy Automotive Europe BVBA
•      Remy Inc.	•      Remy Automotive Mexico, S. de R.L. de C.V.
•      Remy International Holdings, Inc.	•      Remy Automotive Poland, Sp.zo.o.
•      Remy Powertrain, L.P.	•      Remy Automotive UK Limited
•      Remy Reman, L.L.C.	•      Remy Componentes S. de R. L. de C. V.
•      Unit Parts Company	•      Remy Automotive Hungary kft
•      World Wide Automotive, L.L.C.	•      Remy India Holdings, Inc.
	•      Remy Korea Holdings, Inc.
	•      Remy Remanufacturing de Mexico, S. de R.L. de C.V.
	•      World Wide Automotive Distributors, Inc.
	•      Remy Electricals Hubei Company Limited

13

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

(unaudited)

IN THOUSANDS, At March 31, 2005	Remy International, Inc. (Parent Company Only)			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS:
Current assets:
Cash and cash equivalents	$	273		$	674		$	22,138		$	—		$	23,085
Trade accounts receivable, net		—			132,584			43,513			—			176,097
Other receivables		1,589			4,568			16,062			—			22,219
Inventories		—			214,650			70,742			(1,351	)(c)		284,041
Assets of discontinued operations		—			—			296			—			296
Other currents assets		859			2,399			7,016			—			10,274
Total current assets		2,721			354,875			159,767			(1,351	)		516,012
Property, plant and equipment		23,766			182,228			149,311			—			355,305
Less accumulated depreciation		20,099			115,892			59,024			—			195,015
Property, plant and equipment, net		3,667			66,336			90,287			—			160,290
Deferred financing costs, net		14,257			—			—			—			14,257
Goodwill, net		—			156,100			12,145			—			168,245
Investments in subsidiaries and joint ventures		503,294			—			—			(497,504	)(a)		5,790
Other assets		3,247			25,621			9,211			—			38,079
Total assets	$	527,186		$	602,932		$	271,410		$	(498,855	)	$	902,673
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY:
Current liabilities:
Accounts payable	$	1,899		$	142,050		$	62,534		$	—		$	206,483
Intercompany accounts		69,194			(91,377	)		22,784			(601	)(c)		—
Accrued interest		19,390			—			125			—			19,515
Accrued restructuring		—			11,224			329			—			11,553
Liabilities of discontinued operations		—			338			2,187			—			2,525
Deferred income taxes		—			(144	)		2,755			—			2,611
Other liabilities and accrued expenses		9,404			93,798			13,297			—			116,499
Current maturities of long-term debt		—			1,571			26,968			—			28,539
Total current liabilities		99,887			157,460			130,979			(601	)		387,725
Long-term debt, net of current portion		604,023			14,806			11,027			—			629,856
Post-retirement benefits other than pensions		16,246			—			291			—			16,537
Accrued pension benefits		13,540			—			291			—			13,831
Accrued restructuring		—			3,158			—			—			3,158
Other non-current liabilities		1,390			47,945			948			—			50,283
Minority interest		—			3,127			7,858			—			10,985
Stockholders’ (deficit) equity:
Common stock:
Class B Shares		3			—			—			—			3
Paid-in capital		334,336			—			—			—			334,336
Retained (deficit) earnings		(534,033	)		49,592			3,060			(52,652	)(b)		(534,033	)
Subsidiary investment		—			327,325			118,277			(445,602	)(a)		—
Accumulated other comprehensive loss		(8,206	)		(481	)		(1,321	)		—			(10,008	)
Total stockholders’ (deficit) equity		(207,900	)		376,436			120,016			(498,254	)		(209,702	)
Total liabilities and stockholders’ (deficit) equity	$	527,186		$	602,932		$	271,410		$	(498,855	)	$	902,673

(a) Elimination of investments in subsidiaries.

(b) Elimination of investments in subsidiaries’ earnings.

(c) Elimination of intercompany profit in inventory.

14

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

IN THOUSANDS, December 31, 2004	Remy International, Inc. (Parent Company Only)			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS:
Current assets:
Cash and cash equivalents	$	40,740		$	689		$	21,116		$	—		$	62,545
Trade accounts receivable, net		—			109,923			44,410			—			154,333
Other receivables		1,685			3,584			13,828			—			19,097
Inventories		—			149,338			69,925			(1,351	)(c)		217,912
Assets of discontinued operations		—			(7	)		363			—			356
Other currents assets		1,700			1,919			7,595			—			11,214
Total current assets		44,125			265,446			157,237			(1,351	)		465,457
Property, plant and equipment		2,610			181,525			145,502			—			329,637
Less accumulated depreciation		203			134,842			57,299			—			192,344
Property, plant and equipment, net		2,407			46,683			88,203			—			137,293
Deferred financing costs, net		14,842			—			—			—			14,842
Goodwill, net		(12	)		94,255			12,157			—			106,400
Investment in subsidiaries and joint ventures		426,358			—			—			(420,652	)(a)		5,706
Other assets		4,531			12,456			9,073			—			26,060
Total assets	$	492,251		$	418,840		$	266,670		$	(422,003	)	$	755,758
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY:
Current liabilities:
Accounts payable	$	1,583		$	110,434		$	58,759		$	—		$	170,776
Intercompany accounts		64,243			(92,507	)		28,865			(601	)(c)		—
Accrued interest		8,105			—			105			—			8,210
Accrued restructuring		—			6,074			377			—			6,451
Liabilities of discontinued operations		—			436			2,363			—			2,799
Deferred income taxes		—			—			3,065			—			3,065
Other liabilities and accrued expenses		8,010			62,289			13,858			—			84,157
Current maturities of long-term debt		—			1,455			21,435			—			22,890
Total current liabilities		81,941			88,181			128,827			(601	)		298,348
Long-term debt, net of current portion		583,857			15,249			11,224			—			610,330
Post-retirement benefits other than pensions		16,302			—			—			—			16,302
Accrued pension benefits		13,510			—			1			—			13,511
Accrued restructuring		—			4,407			—			—			4,407
Other non-current liabilities		1,561			2,370			1,031			—			4,962
Minority interest		—			2,055			8,443			—			10,498
Stockholders’ (deficit) equity:
Common stock:
Class B Shares		3			—			—			—			3
Paid-in-capital		334,336			—			—			—			334,336
Retained (deficit) earnings		(531,136	)		37,002			(981	)		(36,021	)(b)		(531,136	)
Subsidiary investment		—			270,048			115,333			(385,381	)(a)		—
Accumulated other comprehensive loss		(8,123	)		(472	)		2,792			—			(5,803	)
Total stockholders’ (deficit) equity		(204,920	)		306,578			117,144			(421,402	)		(202,600	)
Total liabilities and stockholders’ (deficit) equity	$	492,251		$	418,840		$	266,670		$	(422,003	)	$	755,758

(a) Elimination of investments in subsidiaries.

(b) Elimination of investments in subsidiaries’ earnings.

(c) Elimination of intercompany profit in inventory.

15

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

(unaudited)

IN THOUSANDS, For the three months Ended March 31, 2005	Remy International, Inc. (Parent Company Only)			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	259,301		$	125,476		$	(103,209	)(a)	$	281,568
Cost of goods sold		(377	)		226,592			113,203			(103,209	)(a)		236,209
Gross profit		377			32,709			12,273			—			45,359
Selling, general and administrative expenses		5,224			19,467			6,566			—			31,257
Restructuring charges		28			(976	)		149			—			(799	)
Operating (loss) income		(4,875	)		14,218			5,558			—			14,901
Interest expense		14,392			579			421			—			15,392
Income (loss) from continuing operations before income taxes, minority interest and income from unconsolidated joint ventures		(19,267	)		13,639			5,137			—			(491	)
Income tax expense		261			167			922			—			1,350
Minority interest		—			1,071			22			—			1,093
Income from unconsolidated joint ventures		—			—			(83	)		—			(83	)
Equity in earnings of subsidiaries		(16,631	)		—			—			16,631	(b)		—
Net (loss) income from continuing operations		(2,897	)		12,401			4,276			(16,631	)		(2,851	)
Discontinued operations:
Income (loss) from discontinued operations, net of tax		—			34			(235	)		—			(201	)
Gain on disposal of discontinued operations, net of tax		—			155			—			—			155
Income (loss) from discontinued operations, net of tax		—			189			(235	)		—			(46	)
Net (loss) income		(2,897	)		12,590			4,041			(16,631	)		(2,897	)
Accretion for redemption of preferred stock		—			—			—			—			—
Net (loss) income attributable to common stockholders	$	(2,897	)	$	12,590		$	4,041		$	(16,631	)	$	(2,897	)

(a) Elimination of intercompany sales and cost of sales.

(b) Elimination of equity in net loss of consolidated subsidiaries.

16

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

(unaudited)

IN THOUSANDS, For the three months Ended March 31, 2004	Remy International, Inc. (Parent Company Only)			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	251,906		$	115,167		$	(98,045	)(a)	$	269,028
Cost of goods sold		—			211,766			105,037			(98,045	)(a)		218,758
Gross profit		—			40,140			10,130			—			50,270
Selling, general and administrative expenses		4,400			16,641			5,873			—			26,914
Restructuring charges		—			579			234			—			813
Operating (loss) income		(4,400	)		22,920			4,023			—			22,543
Interest expense		13,315			631			655			—			14,601
Income (loss) from continuing operations before income taxes, minority interest and loss from unconsolidated joint ventures		(17,715	)		22,289			3,368			—			7,942
Income tax expense		536			(470	)		1,174			—			1,240
Minority interest		—			248			300			—			548
Loss from unconsolidated joint ventures		—			—			454			—			454
Equity in earnings of subsidiaries		(23,507	)		—			—			23,507	(b)		—
Net income (loss) from continuing operations		5,256			22,511			1,440			(23,507	)		5,700
Discontinued operations:
Income (loss) from discontinued operations, net of tax		—			168			(720	)		—			(552	)
Gain on disposal of discontinued operations, net of tax		—			108			—			—			108
Income (loss) from discontinued operations, net of tax		—			276			(720	)		—			(444	)
Net income (loss)		5,256			22,787			720			(23,507	)		5,256
Accretion for redemption of preferred stock		8,552			—			—			—			8,552
Net (loss) income attributable to common stockholders	$	(3,296	)	$	22,787		$	720		$	(23,507	)	$	(3,296	)

(a) Elimination of intercompany sales and cost of sales.

(b) Elimination of equity in net loss of consolidated subsidiaries.

17

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

(unaudited)

IN THOUSANDS, For the three months Ended March 31, 2005	Remy International, Inc. (Parent Company Only)			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net (loss) income attributable to common stockholders	$	(2,897	)	$	12,590		$	4,041		$	(16,631	)	$	(2,897	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Discontinued operations		—			(189	)		235			—			46
Depreciation and amortization		500			2,792			3,242			—			6,534
Non-cash interest expense		852			—			—			—			852
Minority interest and loss from unconsolidated joint ventures, net		—			1,071			(61	)		—			1,010
Equity in earnings of subsidiaries		(16,631	)		—			—			16,631			—
Deferred income taxes		—			(144	)		(283	)		—			(427	)
Post retirement benefits other than pensions and accrued pension benefits, net		(27	)		—			582			—			555
Restructuring charges (credits)		28			(976	)		149			—			(799	)
Cash payments for restructuring charges		(28	)		(379	)		(102	)		—			(509	)
Changes in operating assets and liabilities, net of acquisitions and restructuring charges:
Accounts receivable		—			(12,079	)		897			—			(11,182	)
Inventories		—			(11,000	)		(816	)		—			(11,816	)
Accounts payable		315			13,854			3,775			—			17,944
Intercompany accounts		4,951			1,130			(6,081	)		—			—
Other current assets and liabilities		14,355			(5,116	)		(2,208	)		—			7,031
Other non-current assets and liabilities, net		(5,441	)		5,182			(3,516	)		—			(3,775	)
Net cash (used in) provided by operating activities of continuing operations		(4,023	)		6,736			(146	)		—			2,567
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired		(56,014	)		—			—			—			(56,014	)
Net proceeds on sale of businesses		—			156			—			—			156
Purchases of property, plant and equipment		(596	)		(6,403	)		(3,861	)		—			(10,860	)
Net cash used in investing activities of continuing operations		(56,610	)		(6,247	)		(3,861	)		—			(66,718	)
Cash Flows from Financing Activities:
Net borrowings (repayments) under revolving line of credit and other		20,166			(326	)		5,336			—			25,176
Net cash provided by (used in) financing activities of continuing operations		20,166			(326	)		5,336			—			25,176
Effect of exchange rate changes on cash		—			—			(252	)		—			(252	)
Cash flows of discontinued operation		—			(178	)		(55	)		—			(233	)
Net (decrease) increase in cash and cash equivalents		(40,467	)		(15	)		1,022			—			(39,460	)
Cash and cash equivalents at beginning of year		40,740			689			21,116			—			62,545
Cash and cash equivalents at end of period	$	273		$	674		$	22,138		$	—		$	23,085

18

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

(unaudited)

IN THOUSANDS, For the three months Ended March 31, 2004	Remy International, Inc. (Parent Company Only)			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net (loss) income attributable to common stockholders	$	(3,296	)	$	22,787		$	720		$	(23,507	)(a)	$	(3,296	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Discontinued operations		—			(276	)		720			—			444
Depreciation and amortization		251			2,591			2,551			—			5,393
Non-cash interest expense		1,028			—			—			—			1,028
Accretion for redemption of preferred stock		8,552			—			—			—			8,552
Minority interest and loss from unconsolidated joint ventures, net		—			248			754			—			1,002
Equity in earnings of subsidiaries		(23,507	)		—			—			23,507	(a)		—
Deferred income taxes		—			—			2			—			2
Post retirement benefits other than pensions and accrued pension benefits, net		325			—			—			—			325
Restructuring charges		—			579			234			—			813
Cash payments for restructuring charges		—			(6,171	)		(238	)		—			(6,409	)
Changes in operating assets and liabilities, net of acquisitions and restructuring charges:
Accounts receivable		—			(12,973	)		(6,068	)		—			(19,041	)
Inventories		—			(19,742	)		4,261			—			(15,481	)
Accounts payable		(1,881	)		38,513			(21,153	)		—			15,479
Intercompany accounts		10,076			(45,585	)		35,509			—			—
Other current assets and liabilities		8,349			(1,700	)		(4,581	)		—			2,068
Other non-current assets and liabilities, net		(14,138	)		24,954			(9,832	)		—			984
Net cash (used in) provided by operating activities of continuing operations		(14,241	)		3,225			2,879			—			(8,137	)
Cash Flows from Investing Activities:
Net proceeds on sale of business		—			108			—			—			108
Purchases of property, plant and equipment		(70	)		(2,958	)		(2,887	)		—			(5,915	)
Net cash used in investing activities of continuing operations		(70	)		(2,850	)		(2,887	)		—			(5,807	)
Cash Flows from Financing Activities:
Net borrowings (repayments) under revolving line of credit and other		14,311			(274	)		(2,359	)		—			11,678
Distributions to minority interests		—			—			(1,010	)		—			(1,010	)
Net cash provided by (used in) financing activities of continuing operations		14,311			(274	)		(3,369	)		—			10,668
Effect of exchange rate changes on cash		—			—			244			—			244
Cash flows of discontinued operation		—			(277	)		(773	)		—			(1,050	)
Net decrease in cash and cash equivalents		—			(176	)		(3,906	)		—			(4,082	)
Cash and cash equivalents at beginning of year		1			249			20,957			—			21,207
Cash and cash equivalents at end of period	$	1		$	73		$	17,051		$	—		$	17,125

(a) Elimination of equity in earnings of consolidated subsidiaries.

19

Item 2. REMY INTERNATIONAL, INC. AND SUBSIDIARIES              

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the three month periods ended March 31, 2005 and 2004

Introduction

The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2004, including the financial statements and accompanying notes.

On March 18, 2005, we acquired substantially all of the assets and assumed certain liabilities of Unit Parts Company, which we refer to as UPC (see Note 3 to our financial statements in Item 1). The assets and liabilities of UPC are included in our condensed consolidated balance sheet at March 31, 2005. The operating results of UPC for the period March 18 through March 31, 2005 are included in our condensed consolidated statements of operations and cash flows for the quarter ended March 31, 2005 and are reflected in the Electrical aftermarket discussion of net sales and gross profit below. The operating results of UPC did not have a material effect on our results of operations and cash flows in the first quarter of 2005.

Results of operations and cash flows for 2005 and 2004 also reflect the classification of our remanufactured transmission business, retail gas engine business and contract remanufacturing gas engine business as discontinued operations.

Results of Operations

Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

Product Categories	2005		2004		Increase/ (Decrease)			%Change
Automotive OEM	$	72.6	$	78.9	$	(6.3	)	(8.0	)%
Heavy duty OEM		51.1		43.1		8.0		18.6
Electrical aftermarket		107.6		110.7		(3.1	)	(2.8	)
Powertrain		34.7		22.9		11.8		51.5
Core services		15.6		13.4		2.2		16.4
Total Net Sales	$	281.6	$	269.0	$	12.6		4.7	%

Net Sales

Net sales to Automotive Original Equipment Manufacturers, which we refer to as OEMs, declined due primarily to lower customer demand as a result of reduced production levels, particularly in North America. Heavy-duty OEM sales increased due to strong demand from Class 5 – 8 truck customers. Year over year OEM sales were also favorably impacted by the weak U.S. dollar. Electrical aftermarket sales were down due to a continuation of the soft market conditions experienced in 2004 and the loss of a U.S. retail customer in mid 2004, partially offset by the inclusion of sales from UPC ($5.0 million). Powertrain sales increased due to higher diesel engine, parts and locomotive product volume. Third party sales in the core services business increased due to general market conditions.

20

Gross Profit

Gross profit of $45.4 million in the first quarter of 2005 declined $4.9 million, or 9.8%, compared with the first quarter of 2004, and as a percentage of net sales was 16.1% in 2005 compared with 18.7% in 2004. Automotive OEM gross profit declined $10.9 million due to lower sales volume, higher material and fuel costs, price reductions and costs associated with new alternator product lines. Heavy-duty OEM gross profit increased $5.5 million primarily due to higher sales volume, partially offset by higher material and fuel costs. Electrical aftermarket gross profit declined $1.9 million primarily due to the decrease in sales volume. Powertrain gross profit increased $2.6 million as a result of higher sales and continued cost improvements. Gross profit on core services decreased $0.2 million due to unfavorable product mix, largely offset by higher sales volume.

Selling, General and Administrative Expenses

Selling, general and administrative, which we refer to as SG&A, expenses of $31.3 million in the first quarter of 2005 increased $4.3 million, or 16.1%, from $26.9 million in the first quarter of 2004. As a percentage of net sales, SG&A expenses were 11.1% in the first quarter of 2005 compared with 10.0% in the first quarter of 2004. The year over year increase in SG&A expenses reflects higher expenditures on product engineering, systems and marketing expenses, in part required to support future business including new hybrid technology and expansion in China.

Restructuring (Credit) Charge

A restructuring credit of $0.8 million in the first quarter of 2005 consisted of a $1.1 million credit for the reversal of accrued maintenance expenses reflecting our utilization of a previously idled Anderson, Indiana facility and the renegotiation of other maintenance agreements. Also, additional charges totaling $0.3 million were recorded relative to the closure of our starter and alternator manufacturing operations in Anderson, Indiana in 2003 and the consolidation of operations in Europe.

In the first quarter of 2004, we recorded a restructuring charge of $0.8 million relative to (i) the closure of our starter and alternator manufacturing operations in Anderson, Indiana; (ii) the closure of our electrical aftermarket remanufacturing and distribution facilities in Reed City, Michigan; (iii) the consolidation of our alternator and starter remanufacturing operations in Mississippi; (iv) the consolidation of certain operations in Europe; and (v) the closure and consolidation of certain manufacturing and distribution facilities at our operations in Mexico.

Operating Income

Operating income of $14.9 million in the first quarter of 2005 compares with operating income of $22.5 million in the first quarter of 2004 and reflects the net sales, gross profit, SG&A expense and restructuring charge factors discussed above.

Interest Expense

Interest expense of $15.4 million in the first quarter of 2005 increased $0.8 million from $14.6 million in the first quarter of 2004. This increase reflected $1.6 million of interest expense charged to continuing operations in 2005 that was charged to discontinued operations in 2004 and $2.0 million of interest on our Second Priority Senior Secured Floating Rate Notes issued in the second quarter of

21

2004, offset by a $1.9 million decrease in interest on our senior credit facility which was paid down in connection with the sale of Williams Technologies, Inc., which we refer to as Williams, and JAX Reman, L.L.C., which we refer to as JAX, in the third quarter of 2004 and a decrease in deferred amortization expense and other items totaling $0.9 million.

Income Taxes

Income tax expense of $1.4 million in the first quarter of 2005 consisted of provisions for U.S. federal alternative minimum tax of $0.02 million, domestic state and local taxes of $0.13 million and taxes in various foreign jurisdictions of $1.2 million. Income tax expense of $1.2 million in the first quarter of 2004 consisted primarily of taxes in various foreign jurisdictions. We established a valuation allowance for domestic U.S. deferred tax assets in 2003, which resulted in no domestic U.S. tax provision on first quarter 2005 domestic loss. Accordingly, we recorded a valuation allowance related to the domestic net operating loss generated in the three months ended March 31, 2005.

Minority Interest

Minority interest in income of subsidiaries of $1.1 million in the first quarter of 2005 consisted of minority shareholders’ interests in the earnings of our joint venture with International Truck and Engine Corporation and earnings of Hubei Delphi Automotive Generators Company, Ltd., which we refer to as Hubei. Minority interest in the first quarter of 2004 of $0.5 million included minority shareholders’ interests in the earnings of our joint venture with International Truck and Engine Corporation and earnings of Hubei and Remy Mexico, S. de R.L. de C.V., which we refer to as RM. We purchased the remaining minority shareholders’ interest in RM effective in the second quarter of 2004 after finalization of the Mexico arbitration.

Loss (Income) From Unconsolidated Joint Ventures

The income from unconsolidated joint ventures of $0.1 million in the first quarter of 2005 consisted of our share of income recorded by Sahney Paris Rhone Ltd., which we refer to as SPR. The loss from unconsolidated joint ventures of $0.5 million in the first quarter of 2004 consisted of our share of losses recorded by Hitachi Remy Automotive GmbH, which we refer to as Hitachi, and iPower Technologies, L.L.C., which we refer to as iPower, partially offset by income recorded by SPR. Our share of losses for Hitachi and iPower recorded in 2004 reduced the carrying value of these investments to zero. Accordingly, we discontinued recognition of losses related to these joint ventures effective in the fourth quarter of 2004. The business operations of iPower were assumed by our joint venture partner in 2004.

Discontinued Operations

The loss from discontinued operations of $0.2 million and $0.6 million in the first quarter of 2005 and 2004, respectively, consisted of losses recorded by our remanufactured transmission business in both years and, in 2004, expenses recorded by our contract and retail gas engine businesses. We recorded an additional gain of $0.2 million in 2005 and $0.1 million in 2004 relative to the sale of Tractech, Inc. and Kraftube, Inc. in 2003.

22

Liquidity and Capital Resources

Our short-term liquidity needs include required debt service (including capital lease payments), day-to-day operating expenses, working capital requirements, the funding of capital expenditures, acquisition payments (primarily related to machinery and equipment) for previously completed business acquisitions and restructuring actions. Long-term liquidity requirements consist primarily of principal payments of long-term debt and payments for contingent earn out arrangements relative to the acquisition of UPC. These contingent earn out payments are based on incremental financial performance objectives above the current performance of the combined electrical aftermarket business and are to be paid over a four-year period. The amount of contingent consideration, if any, is not currently determinable. Our contractual obligations are provided in the table under the section “Contractual Obligations, Contingent Liabilities and Commitments” appearing below. Our principal payments on long-term capital lease obligations are presented in Note 9 to our consolidated financial statements under Item 8 of our 2004 Form 10-K.

Our principal sources of cash to fund our short-term liquidity needs consist of cash generated by operations and borrowings under our senior credit facility. The senior credit facility is collateralized by liens on substantially all of our assets and substantially all of the assets of our domestic and certain of our foreign subsidiaries and by the capital stock of such subsidiaries. In connection with the acquisition of UPC on March 18, 2005, we entered into Amendment No. 2 to the Second Amended and Restated Loan and Security Agreement, which we refer to as the Amendment. Among other matters, the Amendment increases the maximum draw available (subject to a borrowing base calculation) under our senior credit facility from $120.0 million to $145.0 million, eliminates the Earnings Before Interest, Taxes, Depreciation and Amortization, which we refer to as EBITDA, and Fixed Charge covenants from the facility and extends the maturity of the facility to June 30, 2008 with provisions for annual extensions thereafter. At March 31, 2005, the rate for the revolving credit facility was 4.85%, borrowings were $20.1 million, and letters of credit totaled $7.2 million. Based on the collateral supporting the senior credit facility at March 31, 2005, $117.7 million was available, net of letters of credit.

We participate in two programs that accelerate the collection of accounts receivable. Under one program, we sell the accounts of certain of our aftermarket customers to banks, on a non-recourse basis, at a discount. At March 31, 2005, the amount of receivables under this program was approximately $32.2 million. The second program is an early pay plan under which a third party acts as paying agent for one of our customers. The accounts are paid, at a discounted rate, in five to seven days after shipment instead of the regular terms. This program is also without recourse. The amount covered by this plan at March 31, 2005 was approximately $10.1 million.

We believe that cash generated from operations, together with the amounts available under the senior credit facility and other borrowings, will be adequate to meet our debt service, capital expenditure, prior acquisition payments, restructuring and working capital requirements for at least the next twelve months, although no assurance can be given in this regard. We also continue to explore additional financing options, both in the U.S. and abroad, in an effort to further enhance liquidity.

Cash provided by operating activities of continuing operations of $2.6 million in the first quarter of 2005 reflected a $2.0 million decrease in net working capital (consisting of accounts receivable, inventory, accounts payable and other current assets and liabilities) from year end 2004 and cash restructuring payments of $0.5 million. Accounts receivable increased $11.2 million in the first quarter

23

of 2005 due primarily to stronger first quarter heavy duty OEM, diesel engine and locomotive shipments, partially offset by an increase in accelerated collections under the receivables programs discussed above. Inventories increased $11.8 million in the first quarter of 2005 due primarily to builds in support of anticipated higher Electrical Aftermarket sales in the second and third quarters. The $18.0 million increase in accounts payable reflected timing of vendor payments. The net decrease in other current assets and liabilities of $7.0 million primarily reflected timing of interest payments. Cash restructuring payments of $0.5 million in the first quarter of 2005 consisted of $0.3 million of employee termination benefits relative to the 2003, 2004 and 2005 restructuring actions and $0.2 million of other items. All other non-cash and reconciling items totaled $1.1 million.

Cash used in operating activities of continuing operations in the first quarter of 2004 of $8.1 million reflected a $17.0 million increase in net working capital from year end 2003 and cash restructuring payments of $6.4 million. Accounts receivable increased $19.0 million due primarily to strong first quarter shipments, partially offset by an increase in collections under the receivables programs. Inventories increased $15.5 million in the first quarter of 2004 due primarily to increases in support of anticipated higher future retail aftermarket and heavy-duty OEM sales. Accounts payable increased $15.5 million due primarily to higher productions levels and timing of vendor payments. Cash restructuring payments of $6.4 million consisted of $4.7 million and $1.1 million of employee termination benefits relative to the 2001 and 2003 restructuring actions, respectively, and $0.6 million of other items. All other non-cash and reconciling items totaled $15.3 million.

Cash used in investing activities of continuing operations of $66.7 million in the first quarter of 2005 compares with cash used of $5.8 million in the first quarter of 2004. Acquisition payments in the first quarter of 2005 consisted entirely of payments for the acquisition of UPC, including costs related thereto. Cash proceeds on the sale of Tractech and Kraftube of $0.2 million and $0.1 million were recorded in the first quarter of 2005 and 2004, respectively. Capital expenditures in both 2005 and 2004 were primarily for production, engineering and distribution equipment and include investments associated with the launch of new products and establishment of new technology centers.

Cash provided by financing activities of continuing operations of $25.2 million and $10.7 million in the first quarter of 2005 and 2004, respectively, consisted primarily of borrowings under our senior credit facility. Also during the first quarter of 2004, $1.0 million in cash dividends were paid to the minority shareholders of Hubei.

Contingencies

We are a party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business, including those relating to commercial transactions, product liability, safety, health, taxes, environmental and other matters. For a description of certain of our legal proceedings, see Note 11 to the Condensed Consolidated Financial Statements in Item 1 of Part I.

24

Contractual Obligations, Contingent Liabilities and Commitments

Our contractual obligations as of March 31, 2005 are provided in the following table (dollars in millions):

	Payments Due by Period
Contractual Obligations	Total		Balance of 2005			2006 - 2008		2009 - 2010		After 2010
Long-Term Debt (1)	$	643	$	19	(2)	$	182	$	292	$	150
Customer Obligations(3)		68		21			29		11		7
Capital Lease Obligations		16		1			7		5		3
Pension Funding (4)		4		4			—		—		—
Other Post Retirement Benefits Funding		10		—			3		2		5
Operating Leases		61		8			27		13		13
Acquisition Payments (5)		6		4			2		—		—
Employee Termination Benefits		10		5			5		—		—
Other		5		1			3		—		1
Total Contractual Cash Obligations	$	823	$	63		$	258	$	323	$	179

(1) These amounts include indebtedness outstanding under our senior notes, senior subordinated notes, senior secured floating rate notes and other debt.

(2) Includes $3 million related to foreign revolving credit agreements which will be renewed in 2005 with maturity dates of one year.

(3) Reported at present value; $61 million relates to the UPC acquisition.

(4) Amounts beyond 2005 are not currently estimable.

(5) Payments in connection with the acquisition of Delphi Corporation’s light vehicle alternator business, including purchasing its machinery and equipment.

In addition to the contractual obligations disclosed above, we have a variety of other contractual agreements related to the procurement of materials and other commitments. With respect to these agreements, we are not subject to any contracts that commit us to significant non-cancelable commitments. With respect to agreements related to the procurement of inventory used in our manufacturing and remanufacturing processes, we had approximately $70 million to $80 million of open purchase orders at March 31, 2005.

Seasonality

Our business is seasonal, as our major OEM customers historically have one to two week shutdowns of operations during July and December. Our sales results in the third and fourth quarters reflect the effects of these shutdowns. Our working capital requirements also are affected by seasonality, as we build inventory for the summer sales months in the aftermarket. Typically our working capital requirements are highest from April through August and the change from the highest month to the lowest month (typically December) for accounts receivable, inventory and accounts payable has averaged approximately $40.0 million over the past three years, excluding UPC.

Foreign Operations

Approximately 26% of our net sales in the three months ending March 31, 2005 were derived from net sales made in foreign countries. We also have manufacturing and other operations located in certain foreign countries. Because of these foreign sales and operations, our business is subject to the risks of doing business abroad, including currency exchange rate fluctuations, limits on repatriation of funds, transportation and delivery risks, compliance with foreign laws and other economic and political uncertainties.

25

Forward-Looking Statements

From time to time, we make oral and written statements that may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, which we refer to as the Act, or by the Securities and Exchange Commission, which we refer to as the SEC, in its rules, regulations and releases. We desire to take advantage of the “safe harbor” provisions in the Act for forward-looking statements made from time to time, including, but not limited to, the forward-looking statements relating to our future performance contained in this Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2004, and in other filings with the SEC. Any statements set forth in writing or orally by us, other than statements of current or historical fact, may constitute forward-looking statements. These statements relate to our future plans, objectives, expectations and intentions and may be identified by words like “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “will” and similar expressions. We caution readers that forward-looking statements involve risks, uncertainties, and other factors that may cause our actual results and performance to differ materially from any future results or performance expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others, the following:

• uncertainty of future financial results;

• acquisitions;

• additional financing requirements;

• development of new products and services;

• the effect of competitive products or pricing;

• costs and difficulties related to integrations of acquired businesses;

• pending and future legal proceedings, including environmental regulatory matters;

• reliance upon or loss of a major customer;

• international operating and supply risks;

• weather conditions, including their impact on demand for our aftermarket products;

• raw material and energy costs, including the cost of steel and availability;

• foreign exchange rate changes;

• transportation and related fuel costs;

• effectiveness of restructuring and cost saving initiatives;

• labor relations;

• the ability to obtain and maintain adequate prices for our products;

• our substantial indebtedness and limitations under debt agreements;

• costs for pension and post retirement benefit plans; and

• the effect of economic conditions and other uncertainties, including the current conditions in the Light-Duty OEM Market.

Due to these uncertainties, we cannot assure readers that any forward-looking statements will prove to have been correct. Our forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

26

Factors that May Affect Future Results

We believe that results for the remainder of 2005 will continue to be negatively impacted by year over year softness in the North American car and truck market, pricing pressures, higher commodity and fuel costs, adverse currency fluctuations and investments in engineering and systems.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2005, there have been no material changes in our market risk exposure as described in Item 7A contained in our Annual Report on Form 10-K for the year ended December 31, 2004.

Item 4. Controls and Procedures

(a) The Company carried out an evaluation, under the supervision and with the participation of its principal executive officer and principal financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting it to material information required to be included in the Company’s periodic SEC reports.

(b) In addition, the Company reviewed its internal controls, and, other than as described below, there have been no significant changes during the quarter ended March 31, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company is currently implementing a global Enterprise Resource Planning system. In the quarter ended March 31, 2005 the Company began the implementation at its facilities in Mexico.

27

PART II OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are a party to various legal actions in the normal course of our business, including those related to commercial transactions, product liability, safety, health, taxes, environmental and other matters.

UAW Litigation

On April 16, 2003, the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (“UAW”) and its Local Union 662 filed suit against the Company and Remy, Inc. (“RI”), in Federal District Court in the Southern District of Indiana, Indianapolis Division. The lawsuit was filed under Section 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, seeking enforcement of an expired Supplemental Unemployment Benefits plan (“SUB plan”). The plaintiffs allege that the SUB plan provides supplemental unemployment benefits for 52 weeks and separation pay in an amount exceeding $20 million for employees who were terminated as a result of the closure of RI’s Anderson, Indiana production facilities at the end of March 2003. The plaintiffs also seek to enforce terminated provisions of a health care program, which the plaintiffs allege provides the terminated employees with 25 months of continued hospital, surgical, medical, hearing aid, prescription drug, mental health, substance abuse and vision insurance coverage. The terminated employees were represented by the UAW and its Local Union 662 under various agreements, which expired on March 31, 2003. The lawsuit was filed shortly after the UAW membership failed to ratify RI’s last, best and final offer for a Shutdown Agreement. The UAW filed an amended complaint on July 8, 2003 to which the Company filed an answer on July 24, 2003. The trial was previously expected to begin in January 2005, however, that date was continued and has been reset for October 10, 2005. The Company denies the material allegations of the complaint, denies any wrongdoing and intends to defend itself vigorously, but is unable to predict whether the proceedings will have a material adverse effect on the Company.

Prison Labor Matter

In January 2004, a class action on behalf of all prisoners who worked in a South Carolina Department of Corrections (“SCDC”) Services Training Program at Lieber Correctional Institute was brought against the SCDC and our former subsidiary Williams Technologies, Inc. (“Williams”), which was sold to Caterpillar, Inc., in September 2004. The Plaintiffs claim that (a) they should have been paid industry prevailing wage under a South Carolina prison industries authorization statute, (b) the SCDC and Williams violated the Payment of Wages Act and (c) the SCDC and Williams committed a tort under the South Carolina Tort Claims Act. Under the terms of the sale, the Company retained liability and responsibility for this claim. The Circuit Court for Dorchester County granted summary judgment to the Company on April 21, 2005, and decertified the Plaintiff class. Plaintiff’s time to appeal or ask for reconsideration has not yet run. The Company continues to deny the material allegations of the complaint and any wrongdoing and intends to defend itself vigorously. However, at this time, the Company is unable to predict whether the proceedings will have a material adverse effect on the Company.

28

Remy Reman Facilities

The Remy Reman facilities in Mississippi identified certain possible violations of state air laws and notified the state environmental agency under the state voluntary audit disclosure rules. The MDEQ issued Notices of Violation regarding alleged violations of state air laws by two of the Remy Reman facilities in Mississippi. Remy Reman resolved this liability through payment in January 2005 of approximately $0.2 million.

Franklin Power Products Facility

In September 2000, one of Franklin Power Products, Inc.’s Indiana facilities received a Finding of Violation and Order for Compliance from the EPA requiring the facility to correct violations of its wastewater discharge permits. Franklin Power Products, Inc. has installed wastewater treatment equipment and is in compliance with the terms of the Order and has eliminated the discharge. In July 2004, the Company and Franklin Power Products, Inc. entered into an agreement with the U.S. Department of Justice on behalf of the EPA, which tolled the statute of limitations on the EPA’s potential claim for penalties. Since that time, we have been cooperating with the EPA by providing additional information and have entered into settlement negotiations with the EPA and the Department of Justice.

29

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

10.1	Asset Purchase Agreement, dated as of February 25, 2005, by and among the Company, UPC Acquisition Corporation, the Sellers Representative and each of the other signatories thereto.
10.2	Amendment No. 1 to the Asset Purchase Agreement, dated as of March 16, 2005, by and among the Company, UPC Acquisition Corporation and Jack Vollbrecht, as Sellers Representative.
10.3	Amendment No. 2 to the Second Amended and Restated Loan and Security Agreement, dated as of March 16, 2005, by and among the Company, certain subsidiaries of the Company, Congress Financial Corporation (Central), as agent, and the financial institutions party thereto.
31.1	Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Rajesh K. Shah, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Rajesh K. Shah, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

30

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	REMY INTERNATIONAL, INC.
	(Registrant)
Date: May 16, 2005	By:	/s/ Rajesh K. Shah
		Rajesh K. Shah
		Executive Vice President and
		Chief Financial Officer
Date: May 16, 2005	By:	/s/ Amitabh Rai
		Amitabh Rai
		Vice President and Corporate Controller
		Chief Accounting Officer

31

EXHIBIT INDEX

Exhibit No.	Description
10.1	Asset Purchase Agreement, dated as of February 25, 2005, by and among the Company, UPC Acquisition Corporation, the Sellers Representative and each of the other signatories thereto.
10.2	Amendment No. 1 to the Asset Purchase Agreement, dated as of March 16, 2005, by and among the Company, UPC Acquisition Corporation and Jack Vollbrecht, as Sellers Representative.
10.3	Amendment No. 2 to the Second Amended and Restated Loan and Security Agreement, dated as of March 16, 2005, by and among the Company, certain subsidiaries of the Company, Congress Financial Corporation (Central), as agent, and the financial institutions party thereto.
31.1	Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Rajesh K. Shah, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Rajesh K. Shah, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32

EX-10.1

Exhibit 10.1

[Execution Version]

ASSET PURCHASE AGREEMENT

by and among

REMY INTERNATIONAL, INC.,

UPC ACQUISITION CORP.,

UNIT PARTS COMPANY,

GHKR, INC.,

GHKR SRL,

AURRA INDUSTRIES, INC.,

QAPI S.A de C.V.,

UNIT PARTS COAHUILA S.A. de C.V.

PRESTADORA de SERVICIOS JALISCO S.A. de C.V,

THE STOCKHOLDER OF

UNIT PARTS COMPANY

and

THE OTHER PARTIES HERETO

Dated February 25, 2005

TABLE OF CONTENTS

			Page
ARTICLE I.		THE TRANSACTION	2
	1.1.	Sale and Purchase of Assets.	2
	1.2.	Assumption of Certain Liabilities	4
	1.3.	Consent of Third Parties	6
	1.4.	Purchase Price; Payment	7
	1.5.	Allocation	7
ARTICLE II.		CLOSING	8
	2.1.	Closing Date	8
	2.2.	Closing Deliveries	9
	2.3.	Sellers Representative.	11
ARTICLE III.		REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE UPC STOCKHOLDERS	12
	3.1.	Capitalization	12
	3.2.	Organization	12
	3.3.	Subsidiaries	12
	3.4.	Financial Statements; Undisclosed Liabilities	13
	3.5.	Absence of Certain Changes or Events	13
	3.6.	Condition of Assets	15
	3.7.	Real Estate	15
	3.8.	Title	18
	3.9.	Working Capital Assets	18
	3.10.	Patents, Trademarks, Etc.	19
	3.11.	Material Contracts	20
	3.12.	Litigation	21
	3.13.	Compliance with Laws	21
	3.14.	Environmental Matters	22
	3.15.	Employee Benefit Matters	24
	3.16.	Taxes	26
	3.17.	Consents	28
	3.18.	Authority; Effect of Agreement	29

- i-

TABLE OF CONTENTS

(continued)

			Page
	3.19.	Employee Relations	29
	3.20.	Product Liability	30
	3.21.	Transactions with Related Parties	30
	3.22.	Insurance	31
	3.23.	Brokers	31
	3.24.	Compensation Arrangements; Bank Accounts; Officers and Directors	31
	3.25.	Disclosure	32
	3.26.	Relationship with Significant Customers and Suppliers	32
	3.27.	Restrictions	33
	3.28.	Projections	33
	3.29.	All Assets	33
ARTICLE IV.		REPRESENTATIONS AND WARRANTIES OF BUYERS	33
	4.1.	Organization	33
	4.2.	Corporate Power and Authority; Effect of Agreement	33
	4.3.	Consents	34
	4.4.	Brokers	34
	4.5.	Litigation; Decrees	34
	4.6.	Sufficient Funds	34
ARTICLE V.		COVENANTS	34
	5.1.	Cooperation	34
	5.2.	Conduct of the Business Pending Closing	35
	5.3.	Access	35
	5.4.	Resignations	36
	5.5.	Estoppel and Nondisturbance Certificates and Consents	36
	5.6.	Notification and Cure	36
	5.7.	Insurance	36
	5.8.	Exclusivity	37
	5.9.	Non-Compete	37
	5.10.	Confidentiality	38
	5.11.	Tax Matters	38

-ii-

TABLE OF CONTENTS

(continued)

			Page
	5.12.	Hart-Scott-Rodino Act	41
	5.13.	Employees and Employee Benefit Plans	41
	5.14.	Monthly Financial Statements	43
	5.15.	Further Assurances	44
	5.16.	Surveys	44
	5.17.	Rebates and Discounts.	44
	5.18.	Collection of Receivables	45
	5.19.	Title Insurance	45
	5.20.	Use of Names	45
	5.21.	Supplements to Disclosure Schedules	45
ARTICLE VI.		CONDITIONS TO PARENT’S AND REMY’S OBLIGATIONS	46
	6.1.	Representations and Warranties True and Correct	46
	6.2.	Covenants and Agreements Performed	46
	6.3.	Sellers’ and UPC Stockholders’ Closing Certificate	46
	6.4.	No Prohibition	47
	6.5.	Third Party Consents	47
	6.6.	Governmental Consents	47
	6.7.	Proceedings	47
	6.8.	Opinion	47
	6.9.	Consent, Estoppel and Nondisturbance Certificates	47
	6.10.	Title Insurance and Affidavits	47
	6.11.	FIRPTA Certificate	47
	6.12.	Material Adverse Effect	47
	6.13.	Canadian Tire Transaction	47
	6.14.	Consent of Buyers’ Lenders	48
ARTICLE VII.		CONDITIONS TO THE SELLERS’ AND THE UPC STOCKHOLDERS’ OBLIGATIONS	48
	7.1.	Representations and Warranties True and Correct	48
	7.2.	Covenants and Agreements Performed	48
	7.3.	The Buyers Closing Certificate	48

-iii-

TABLE OF CONTENTS

(continued)

			Page
	7.4.	No Prohibition	48
	7.5.	Governmental Consents	48
	7.6.	Proceedings	48
	7.7.	Opinion	49
	7.8.	Patent Litigation	49
ARTICLE VIII.		TERMINATION PRIOR TO CLOSING	49
	8.1.	Termination	49
	8.2.	Effect on Obligations	49
ARTICLE IX.		SURVIVAL AND INDEMNIFICATION	49
	9.1.	Survival	50
	9.2.	General Indemnification	50
	9.3.	Right to Offset; Payment of Losses	53
	9.4.	Adjustment in Purchase Price	54
	9.5.	Sole Remedy	54
	9.6.	Investigation	54
	9.7.	Calculation of Losses; Tax Treatment of Additional Payments	54
ARTICLE X.		MISCELLANEOUS	54
	10.1.	Interpretive Provisions	54
	10.2.	Entire Agreement	55
	10.3.	Successors and Assigns	55
	10.4.	Headings	55
	10.5.	Modification and Waiver	55
	10.6.	Expenses	55
	10.7.	Notices	55
	10.8.	Governing Law; Consent to Jurisdiction	56
	10.9.	Public Announcements	57
	10.10.	No Third Party Beneficiaries	57
	10.11.	Counterparts	57
ARTICLE XI.		CERTAIN DEFINITIONS	57

-iv-

EXHIBITS

1.4A	Earn Out
2.2A	Form of Assignment and Assumption Agreement
2.2B	Form of Bill of Sale
2.2C	Form of Special Warranty Deeds
2.2D	Form of Leasehold Assignments
2.2E	Form of Employment Agreement
7.7	Form of Buyers’ Counsel’s Opinion
9.3	Form of Indemnity Note
DISCLOSURE SCHEDULES
1.1(b)	Acquired Assets
1.1(c)	Excluded Assets
1.2(b)(vii)	Environmental Liabilities
1.4(b)	Repaid Indebtedness
1.5	Allocation Schedule
3.1	Capitalization
3.2	Organization
3.3	Other Subsidiaries
3.4	Financial Statements; Undisclosed Liabilities
3.5	Absence of Certain Changes or Events
3.6	Condition of Assets
3.7	Lease Consents and Enforceability
3.9	Working Capital Assets
3.10	Patents, Trademark, Etc.
3.11	Material Contracts
3.12	Litigation
3.13	Compliance with Laws
3.14	Environmental Matters
3.15	Employee Benefit Matters
3.16	Taxes
3.17	Consents
3.19	Employee Relations
3.20	Products Liability
3.21	Transactions with Related Parties
3.22	Insurance
3.23	Brokers
3.24	Compensation Arrangements
3.27	Restrictions
3.29	All Assets
4.3	Consents
5.5	Required Consents
5.13	Employees and Employee Benefit Plans
11.16	POS Contracts
11.18	Tax Assumptions

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement“) is made and entered into as of February 25, 2005, by and among Remy International, Inc., a Delaware corporation (“Parent“), UPC Acquisition Corporation, a Delaware corporation (“Remy,” collectively, Parent and Remy are sometimes referred to herein as the “Buyers“), Unit Parts Company, a Delaware corporation (“UPC“), GHKR, Inc., a Nevada corporation and wholly owned subsidiary of UPC (“GHKR“), GHKR SRL, a company organized under Costa Rican law and wholly owned subsidiary of GHKR (“GHKR (Costa Rica) “), QAPI S.A. de C.V., a company organized under Mexican law (“QAPI“), Unit Parts Coahuila S.A. de C.V., a company organized under Mexican law (“Coahuila“), Prestadora de Servicios Jalisco S.A. de C.V., a company organized under Mexican law, (“Prestadora“), Aurra Industries, Inc., an Oklahoma corporation (“Aurra“), Vollbrecht Family Investments, a Limited Partnership, a Texas limited partnership and the sole stockholder of UPC, (the “Stockholder“), Jack Vollbrecht, Thomas Vollbrecht, Robin Constantine and Stephen Constantine (the “Other Selling Stockholders, “ collectively, the Stockholder and the Other Selling Stockholders are sometimes referred to herein as the “UPC Stockholders“) and Jack Vollbrecht, as the Sellers Representative. Each of UPC, GHKR, GHKR (Costa Rica) and Aurra are hereinafter sometimes referred to individually as a “Seller“ and collectively as the “Sellers“. Each of QAPI, Coahuila and Prestadora are sometimes hereinafter referred to individually as an “Acquired Subsidiary“ and collectively as the “Acquired Subsidiaries“. The Sellers and the Acquired Subsidiaries are sometimes hereinafter referred to as a “Company“ and collectively as the “Companies“.

RECITALS

A. The Stockholder owns all of the issued and outstanding shares of common stock, $100.00 par value per share, of UPC. Stockholder is the direct or indirect owner of all of the issued and outstanding shares of common stock of each other Company.

B. The Sellers engage in the business of manufacturing and selling new and remanufactured alternators and starters to the original equipment market and aftermarket for the automotive industry (the “Business“). The Buyers desire to purchase substantially all of the assets, properties and rights of the Business, and the Sellers desire to sell such assets, properties and rights on the terms and subject to the conditions set forth in this Agreement.

AGREEMENTS

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and upon the terms and subject to the conditions hereinafter set forth, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I.

THE TRANSACTION

1.1. Sale and Purchase of Assets.

(a) Subject to the terms and conditions of this Agreement, the Sellers shall sell, assign, transfer, deliver and convey to the Buyers or Buyers’ assignees or designees pursuant to Section 10.3 of this Agreement and Buyers shall purchase from Sellers, the Acquired Assets, free and clear of all Encumbrances of every kind, nature and description (except for the Permitted Encumbrances referred to in Section 3.8) for the Purchase Price specified below in Section 1.4

(b) As used herein, the term “Acquired Assets“ means all of the Sellers’, the UPC Stockholders’ or any of their Affiliates’ (as defined in Section 11.1), except the Acquired Subsidiaries’, right, title, and interest in, under and to all of the assets, properties and rights constituting, or primarily used or held primarily for use in, the Business as a going concern of every kind, nature and description existing on the Closing Date, wherever such assets, properties and rights are located and whether such assets, properties and rights are real, personal or mixed, tangible or intangible, and whether or not any of such assets, properties and rights have any value for accounting purposes or are carried or reflected on or specifically referred to in the Sellers’, the UPC Stockholders’ or any of their Affiliates’, except the Acquired Subsidiaries’, respective books or financial statements, except for the Excluded Assets, including, without limitation, all of the assets, properties and rights of the Business enumerated below:

(i) owned and leased real property, leaseholds and subleaseholds therein, together with all fixtures, fittings, buildings, structures and other improvements erected thereon, and easements, rights of way, water lines, uses, licenses, hereditaments, tenements, privileges and other appurtenances thereto (such as appurtenant rights in and to public streets), as more particularly described in Schedule 1.1(b)(i) hereto (the “Real Estate“);

(ii) all machinery, equipment motor vehicles (including trucks, tractors and trailers), goods, furnishings, jigs, tools, dies, furniture, fixtures, office equipment, office supplies, production and other supplies and spare and repair parts, tools, stores, rolling stock and other tangible personal property, whether located at or on the Real Estate, in transit or otherwise, including all such property more particularly described in Schedule 1.1(b)(ii) hereto;

(iii) all inventory, whether located at or on the Real Estate, in transit, at customer locations or otherwise, including finished goods and consigned goods, work-in-process, supplies, storehouse stocks, raw materials, scrap, containers, and spare parts (collectively, the “Inventory“);

(iv) accounts, notes, and other receivables;

(v) all cash and cash equivalents in transit, in hand or in bank accounts and all prepaid and similar items, including without limitation, expenses, advance payments, deferred charges, deposits, rights of offset and other prepaid items;

2

(vi) Intellectual Property, goodwill, licenses and sublicenses granted and obtained with respect thereto, and rights and remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions, including all such property more particularly described on Schedule 1.1(b)(vi) hereto;

(vii) subject to Sections 1.2 and 1.3 hereof, all rights under (a) contracts, agreements and instruments (written or oral) relating to the sale of any assets, services, properties, materials or products, including all customer, operating, distribution and sales representative contracts; (b) orders, contracts, supply agreements, manufacturing agreements and other agreements relating to the purpose of any assets, services, properties, materials, or products; and (c) all other contracts, agreements, and instruments (oral or written), including in each case all the Material Contracts (as defined in Section 11.13 hereto) (collectively, the “Contracts“);

(viii) to the extent transferable, the Permits;

(ix) books, records, ledgers, files, documents (including originally executed copies of all Contracts), correspondence, Tax Returns, memoranda, forms, lists, plats, architectural plans, drawings, and specifications, new product development materials, creative materials, marketing, advertising, sales and promotional materials, studies, reports, whether in hard copy or magnetic format, in each instance, to the extent relating to, or otherwise material to the conduct of, the Acquired Assets, the Business or the Transferring Employees;

(x) all capital stock of the Acquired Subsidiaries;

(xi) to the extent transferable, all rights or choses in action whether arising out of occurrences before or after the Closing Date, including third party warranties and guarantees and other similar contractual rights as to third parties held by or in favor of Seller, any Stockholder or any of their Affiliates, other than the Acquired Subsidiaries, with respect to any of the Acquired Assets; and

(xii) all rights to insurance and condemnation proceeds relating to the damage, destruction or impairment of assets, properties or other rights described in this Section 1.1(b), which damage, destruction or impairment occurs on, prior to or after the Closing.

(c) Excluded Assets. Notwithstanding any other provision of this Agreement, the Sellers shall retain and the Acquired Assets shall not include the following assets (collectively, the “Excluded Assets“):

(i) all of the rights, claims or causes of action of the Sellers against third parties to the extent they relate to the Retained Liabilities (as hereinafter defined);

(ii) any claim, right or interest of the Sellers in and to any refund of Taxes of any kind relating to any period prior to the Closing Date;

(iii) the Sellers’ stock books, minute books and other similar records; and

(iv) any assets listed on Schedule 1.1(c) hereto.

3

1.2. Assumption of Certain Liabilities.

(a) Subject to the terms and conditions of this Agreement, except as otherwise specifically provided in this Section 1.2 (including in respect of the Retained Liabilities, as set forth in paragraph (b) below), on the Closing Date, the Buyers will assume and agree to pay, discharge or perform, as appropriate, the following specific liabilities and obligations of the Sellers (the “Assumed Liabilities“):

(i) all executory liabilities and obligations of the Sellers arising under or relating to any Contract, including liabilities or obligations under any Contract arising in the ordinary course of business where the payment, discharge, fulfillment, or performance of such liability or obligation would normally occur after the Closing, except that the Buyers shall not assume or agree to pay, discharge or perform any liabilities or obligations arising out of any breach or default (including for this purpose any event which, with notice or lapse of time would constitute such a breach or default) by the Sellers, the UPC Stockholders or any of their Affiliates of any provision of any Contract, including liabilities or obligations arising out of the Sellers’, the UPC Stockholders’ or any of their Affiliates’ failure to perform any Contract in accordance with its terms prior to the Closing;

(ii) the accounts payable (other than the Retained Payables) of the Business as of the Closing Date and the accrued liabilities of the Business as of the Closing Date, in each case solely to the extent reflected on the Balance Sheet or incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date;

(iii) the liabilities and obligations expressly assumed by the Buyers pursuant to Section 5.13 hereof;

(iv) the excess, if any, of (i) any and all federal and state income Taxes of the Sellers that are incurred in connection with the receipt of $14,000,000 cash (the “Net Cash Amount“) by the Sellers and the Stockholder in connection with the receipt of the Net Cash Amount by the Sellers and the distribution of the Net Cash Amount to the Stockholder over (ii) the federal and state income Taxes that would have been incurred by the Stockholder if the Stockholder had received such Net Cash Amount directly from the Buyers in exchange for the stock of UPC (the “Assumed Tax Liabilities“); provided that for purposes of determining the Taxes incurred in connection with the Net Cash Amount, the value of the Earn Out shall be disregarded; and

(v) Any ad valorem taxes, property taxes or similar taxes related to the Acquired Assets which taxes are not yet due and payable as of the Closing even if the same may relate to periods prior to the Closing.

(b) The Buyers shall not assume any liabilities, commitments or obligations (known or unknown, contingent or absolute and whether or not determinable as of the Closing) of the Sellers, the UPC Stockholders or any of their Affiliates, other than the Acquired Subsidiaries, except for the Assumed Liabilities as specifically and expressly provided for above, whether such liabilities or obligations relate to payment, performance or otherwise, and all

4

liabilities, commitments or obligations (known or unknown, contingent or absolute and whether or not determinable as of the Closing) not expressly transferred to the Buyers hereunder as Assumed Liabilities are being retained by the Sellers, the UPC Stockholders or their Affiliates (the “Retained Liabilities“), who shall remain liable therefor unconditionally and without right of set-off. Each of the Sellers and the UPC Stockholders, on behalf of itself and its or their Affiliates, hereby irrevocably and unconditionally waives and releases the Buyers from all Retained Liabilities, including any Retained Liabilities created by statute or common law.

Without limitation to the foregoing, all of the following shall be considered Retained Liabilities and not Assumed Liabilities (except as specified below) for the purposes of this Agreement:

(i) except as set forth in Section 1.2(a)(v), any Taxes (i) attributable to the Sellers’ ownership of the Acquired Assets or operation of the Business for all taxable periods (or portions thereof) ending on or before the Closing Date (subject to the proration of certain Taxes as set forth in Section 5.11) or (ii) for which the Sellers may be otherwise liable for any taxable period prior to the Closing, including by reason of (A) being a successor to another person, (B) being a party to a tax sharing, tax indemnity or similar agreement, or (C) being a member of a consolidated, combined or unitary group of corporations for tax purposes;

(ii) any liabilities or obligations for any bank or other funded debt of the Sellers, the UPC Stockholders or any of their Affiliates, other than the Acquired Subsidiaries, including, without limitation, the loans, notes and indebtedness, obligations and liabilities of the Sellers, the UPC Stockholders or any of their Affiliates, other than the Acquired Subsidiaries, to Bank of Oklahoma, N.A., Local Oklahoma Bank, N.A., Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company, J. Romeo & Co., Principal Life Insurance Company and any transferees, but excluding obligations of the Companies arising under the POS Contracts;

(iii) any liability or obligation with respect to compensation or employee benefits of any nature owed to any employees, former employees, agents or independent contractors of the Sellers, the UPC Stockholders or any of their Affiliates, whether or not employed by the Buyers after the Closing, that (A) arises out of or relates to the employment or service provider relationship (including the termination of such employment or service provider relationship) between the Sellers, the UPC Stockholders or such Affiliates and any such individuals, (B) arises out of or relates to any Benefit Plan (including any grant of stock options or Company sponsored option plan) or (C) arises out of or relates to events or conditions occurring on or before the Closing Date, that are not explicitly assumed by Buyers under Section 5.13 hereof;

(iv) any liability or obligation with respect to any grant of stock options by any Company or option plan sponsored by any Company;

(v) any liability or obligation of the Sellers, the UPC Stockholders or their Affiliates, arising or incurred in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, and fees and expenses of counsel, accountants, brokers, finders and other experts;

5

(vi) any liability or obligation of the Sellers, the UPC Stockholders or any of their Affiliates existing as a result of any act, failure to act or other state of facts or occurrence which constitutes a breach or violation of the Sellers’ representations, warranties and covenants contained in this Agreement or the other Ancillary Agreements;

(vii) any Environmental Liability except as set forth on Schedule 1.2(b)(vii) (as defined in Section 11.8);

(viii) any liability of the Sellers or the Business to the UPC Stockholders or any of their Affiliates incurred prior to the Closing, including any intercompany payables or receivable credits;

(ix) any liability under applicable bulk transfer laws, or similar statutes, laws or regulations; provided, that the Buyers shall be responsible for the payment of any Transfer Taxes relating to the purchase of the Acquired Assets;

(x) any liability or obligation with respect to the payment of certain accounts payable of the Business as of the Closing Date to be identified by the Buyers not less than three business days prior to Closing in an amount equal to $10,000,000 (the “Retained Payables“); or

(xi) any other liability of the Sellers, the UPC Stockholders or their Affiliates, other than the Acquired Subsidiaries, whatsoever, including any liability arising out of or relating to the Excluded Assets, the ownership or operation of the Acquired Assets and the Business on or prior to the Closing Date (including any predecessor operations), including any claims, obligations or litigation arising out of or relating to events or conditions occurring on or before the Closing Date (including the threatened or pending litigation set forth on Schedule 3.12 hereto), regardless of when made or asserted, except for the Assumed Liabilities as specifically and expressly set forth herein.

1.3. Consent of Third Parties. On the Closing Date, the Sellers will assign to the Buyers, and the Buyers will assume, the Contracts which are to be transferred to the Buyers as and to the extent provided in this Agreement by means of the Assignment and Assumption Agreement referred to in Section 2.2. To the extent that the assignment of all or any portion of any Contract shall require the consent of the other party thereto or any other third party, this Agreement and the Assignment and Assumption Agreement shall not constitute an agreement to assign any such Contract included in the Acquired Assets if an attempted assignment without any such consent would constitute a breach or violation thereof. In order, however, to provide the Buyers the full realization and value of every Contract of the character described in the immediately preceding sentence, the Sellers agree that on and after the Closing, they will, at the request and under the direction of the Buyers, in the name of the Sellers or otherwise as the Buyers shall specify, take all reasonable actions (including the appointment of the Buyers or any of their Affiliates as attorney-in-fact for the Sellers) and do or cause to be done all such things as shall in the reasonable opinion of the Buyers or its counsel be necessary or proper (a) to assure that the rights of the Sellers under such Contracts shall be preserved for the benefit of or transferred or issued to the Buyers and (b) to facilitate receipt of the consideration to be received by the Sellers in and under every such Contract, which consideration shall be held for the benefit

6

of, and shall be delivered to, the Buyers. Nothing in this Section 1.3 shall in any way diminish the Sellers’ obligations under Section 5.5 with regard to consents and approvals and to take all such other actions prior to or at Closing as are necessary to enable the Sellers to convey or assign good and marketable title free and clear of Encumbrances (other than Permitted Encumbrances) to all the Acquired Assets to the Buyers.

1.4. Purchase Price; Payment.

(a) Purchase Price. The aggregate purchase price for all of the Acquired Assets purchased by Remy pursuant to Section 1.1 and the non-compete arrangements contemplated hereby (the “Purchase Price“) shall consist of (i) cash in an aggregate amount equal to the Net Cash Amount plus $10,000,000 (the “Aggregate Cash Amount“); plus (ii) the aggregate amount required to pay the Repaid Indebtedness (as defined in Section 1.4(b)) of the Companies on the Closing Date, which amount shall not exceed $30,000,000 (the Aggregate Cash Amount and the cash payment required pursuant to this Section 1.4(a)(ii) is referred to herein as “Closing Cash Consideration“; plus (iii) the potential right to receive additional cash consideration in accordance with the terms and conditions of Exhibit 1.4A attached hereto (the “Earn Out“); plus (iv) the assumption by the Buyers of the Assumed Liabilities.

(b) Repaid Indebtedness. It is contemplated by the Parties that, upon the Closing, all indebtedness of the Companies outstanding immediately prior to the Closing and expressly set forth on Schedule 1.4(b) will be fully repaid (the “Repaid Indebtedness“). To facilitate such repayment, no less than three (3) days prior to the Closing Date, the Sellers shall obtain payoff letters for all Repaid Indebtedness of the Companies, which payoff letters shall indicate the amount necessary to repay such creditors in full and that such creditors have agreed to release all Encumbrances in respect of such Repaid Indebtedness relating to the assets and properties of the Companies upon receipt of the amounts indicated in such payoff letters. Subject to the satisfaction of all of the conditions, covenants and obligations of the Sellers and the Companies to be satisfied prior to the Closing, in connection with the Closing, the Sellers and the Companies hereby instruct the Buyers to make the payments referenced in such payoff letters on the Closing Date to discharge the Indebtedness covered thereby.

(c) Payments. At the Closing, Remy shall pay to the Sellers (i) the Net Cash Amount, by wire transfer of immediately available funds to the account that has been designated by the Sellers to Remy at least three days prior to the Closing and (ii) $10,000,000 of the Aggregate Cash Amount, by wire transfer of immediately available funds to an account in the Sellers name, which amount shall be used solely to pay the Retained Payables.

1.5. Allocation.

(a) The consideration paid by the Buyers to the Sellers shall be allocated among the Acquired Assets and the non-compete arrangements in accordance with the principles set forth on Schedule 1.5 (the “Allocation Principles“). Within forty-five (45) days following the Closing, the Buyers shall deliver to the Sellers a proposed final allocation schedule (the “Allocation Schedule“) prepared in accordance with the Allocation Principles. Within 21 days following receipt of the Allocation Schedule, the Sellers shall notify the Buyers of any disputed amounts or items with respect to the Allocation Schedule, and the Buyers and the Sellers shall

7

attempt in good faith to promptly resolve such disputes. If the Buyers and the Sellers are unable to resolve such disputes within 21 days following the Sellers’ delivery of notice of any disputed items, such disputed items shall be submitted to Deloitte & Touche (such independent accounting firm being herein referred to as the “Third Accounting Firm“), which shall, within 30 days after such submission, determine and report to the parties upon such remaining disputed amounts, and such report shall be final, binding and conclusive on the parties hereto with respect to the amounts disputed; provided that any such final determination shall be in accordance with the Allocation Principles. The fees and disbursements of the Third Accounting Firm shall be allocated between the Buyers and the Sellers so that the Sellers’ share of such fees and disbursements shall be in the same proportion that the aggregate amount of such remaining disputed amounts so submitted by the Sellers to the Third Accounting Firm that is unsuccessfully disputed by the Sellers (as finally determined by the Third Accounting Firm) bears to the total amount of such remaining disputed amounts so submitted by the Sellers to the Third Accounting Firm, with all remaining fees to be paid by Buyers.

(b) The Buyers and the Sellers shall each report the federal, state and local income and other Tax consequences of the transactions contemplated by this Agreement (which for purposes of this Agreement includes the Transaction Documents) in a manner consistent with the final allocation as determined pursuant to Section 1.5(a), including the preparation and filing of Form 8594 under the Code (or any successor form or successor provision of any future Tax law, or any comparable provision of state, or local tax law) with their respective Tax returns for the taxable year that includes the Closing Date and shall not take any position contrary thereto in connection with any amended return.

(c) The Buyers shall pay the fees and expenses of the Buyers’ accountants (the “Buyers’ Accountants“) incurred in connection with this Section 1.5. The Sellers agree to cooperate, and agree to cause PricewaterhouseCoopers (“Sellers’ Accountants“) to cooperate, with the Buyers and the Buyers’ Accountants in connection with the preparation of the Allocation Schedule and related information, and shall provide to the Buyers and the Buyers’ Accountants books, records and information as may be reasonably requested from time to time. The Sellers shall pay the fees and expenses of the Sellers’ Accountants incurred in connection with this Section 1.5.

ARTICLE II.

CLOSING

2.1. Closing Date. The closing of the transactions contemplated hereby (the “Closing“) shall take place at the offices of Dechert LLP in Philadelphia, Pennsylvania at 9:30 a.m. EST on the later of March 17, 2005 and the second business day following the satisfaction of all of the conditions set forth in Articles VI and VII, or at such other place, time or date as Buyers and the Sellers may agree in writing (such time and date being referred to herein as the “Closing Date“). For financial accounting and tax purposes, to the extent permitted by Law, the Closing shall be deemed to have become effective as of 12:01 a.m. on the Closing Date.

8

2.2. Closing Deliveries.

(a) Deliveries by the Sellers and the Stockholder. At the Closing, the Sellers and the UPC Stockholders, as the case may be, shall deliver or cause to be delivered the following to Buyers:

(i) assignments of all transferable or assignable Contracts, Intellectual Property, Permits (including Environmental Permits), and warranties relating to the Acquired Assets, each duly executed and, where necessary or desirable, in recordable form substantially in the form of Exhibit 2.2A hereto (the “Assignment and Assumption Agreement“);

(ii) a bill of sale and instrument of assignment to the Acquired Assets, duly executed by the Sellers, substantially in the form of Exhibit 2.2B hereto (the “Bill of Sale“);

(iii) the shares of the capital stock of the Acquired Subsidiaries, duly endorsed for transfer or accompanied by duly executed stock transfer powers, free and clear of all Encumbrances (as hereinafter defined).

(iv) the Sellers’ Closing Certificates (as such term is defined in Section 6.3);

(v) the UPC Stockholders’ Closing Certificates (as such term is defined in Section 6.3);

(vi) title certificates to any motor vehicles or other certificated assets included in the Acquired Assets, duly executed by the Sellers (together with any other transfer forms necessary to transfer title to such vehicles);

(vii) special warranty deeds for the Owned Real Estate of the Sellers, duly executed and acknowledged by the Sellers and in recordable form, each substantially in the form of Exhibit 2.2C hereto;

(viii) assignments or subleases for all Leased Real Estate (excluding Leased Real Estate of the Acquired Subsidiaries) duly executed and acknowledged by the Sellers and in recordable form, each substantially in the form of Exhibit 2.2D hereto;

(ix) a duly endorsed power of attorney from the Sellers as contemplated by Section 5.19 hereof;

(x) the certificates, opinions and other documents required to be delivered by the Sellers pursuant to Article VI hereof and certified resolutions evidencing the authority of the Sellers as set forth in Section 2.2 hereof;

(xi) legal opinions of the Sellers’ Oklahoma, Nevada and Mexico counsel addressed to the Buyers in a form reasonably satisfactory to the Buyers;

(xii) a certificate of each Seller, reasonably satisfactory to the Buyers, prepared in accordance with Treasury regulations sections 1.1445-2(c) (3) promulgated under the Code and dated as of the Closing Date; and

9

(xiii) a receipt for the payment of the Closing Cash Consideration duly executed by Seller;

(xiv) the title commitments referenced in Section 5.19;

(xv) the surveys referenced in Section 5.16;

(xvi) the Consent Estoppel and Non-Disturbance Certificates;

(xvii) such other agreements, certificates and documents as may be reasonably requested by the Buyers;

(xviii) the release of liens under the Companies’ existing credit agreements and secured notes;

(xix) duly executed counterparts of the Employment Agreements for Jack and Thomas Vollbrecht substantially in the form set forth in Exhibit 2.2E (the “Employment Agreements“); and

(xx) all such other instruments of conveyance as shall, in the reasonable opinion of the Buyers and its counsel, be necessary to vest in the Buyers good, valid and, with respect to the Owned Real Estate, marketable, title to the Acquired Assets in accordance with Section 1.1 hereof, including time-stamped instruments and releases, in form and substance satisfactory to the Buyers, evidencing release and removal of all Encumbrances on the Acquired Assets other than Permitted Encumbrances, and standard owner’s affidavits required by the Buyers’ title insurance company.

(b) Deliveries by the Buyers to the Sellers. At the Closing, Parent and Remy shall deliver or cause to be delivered the following to the Sellers:

(i) the Closing Cash Consideration;

(ii) the Buyers’ Closing Certificate (as such term is defined in Section 7.3);

(iii) the Ancillary Agreements (as hereinafter defined) to which Buyers are a party, executed by the Buyers;

(iv) the duly executed Assignment and Assumption Agreement;

(v) duly executed counterparts of the Employment Agreements;

(vi) a legal opinion of the Buyers’ counsel addressed to the Sellers in the form of Exhibit 7.7 hereto; and

(vii) the certificates, opinions and other documents required to be delivered by the Buyers pursuant to Article VII hereof.

10

2.3. Sellers Representative.

(a) Jack Vollbrecht is hereby constituted and appointed by the Sellers and the UPC Stockholders as agent (the “Sellers Representative“) for and on behalf of the Sellers and the UPC Stockholders, with full and unqualified power to delegate to one or more Persons the authority granted to him hereunder, to act as each of their agent and attorney-in-fact, with full power of substitution, to take all actions called for by this Agreement and the Ancillary Agreements, on their individual and collective behalf, as such Sellers Representative shall deem necessary and appropriate in connection with the transactions contemplated under this Agreement, including, without limitation, the power:

(i) to execute and deliver all ancillary agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents required or permitted to be given in connection with the consummation of the transactions contemplated by this Agreement;

(ii) to give and receive all notices and communications to be given or received under this Agreement or the Ancillary Agreements and to receive service of process in connection with any claims under this Agreement or the Ancillary Agreements;

(iii) to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, and to take all actions necessary or appropriate in the judgment of the Sellers Representative for the accomplishment of the foregoing; and

(iv) to take all actions which under this Agreement and the Ancillary Agreements may be taken by the Sellers Representative and to do or refrain from doing any further act or deed on behalf of the Sellers or UPC Stockholders that the Sellers Representative deems necessary or appropriate in his sole discretion relating to the subject matter of this Agreement as fully and completely as such Sellers or UPC Stockholders could do if personally present.

All decisions and acts by the Sellers Representative shall be binding upon all of the Sellers and UPC Stockholders and no Seller or UPC Stockholder shall have the right to object, dissent, protest or otherwise contest the same. Without limiting the generality of the foregoing, any notice delivered by the Buyers to the Sellers Representative shall be treated as having been delivered to each Seller and UPC Stockholder entitled thereto, regardless of the actions taken by the Sellers Representative following receipt of such notice.

(b) The Buyers shall be entitled to deal exclusively with the Sellers Representative on all matters relating to this Agreement and the Ancillary Agreements, and shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Seller or UPC Stockholder by the Sellers Representative, and on any other action taken or purported to be taken on behalf of the Sellers or UPC Stockholders by the Sellers Representative, as fully binding upon such Sellers or UPC Stockholders.

(c) In the event of the death or permanent disability of the Sellers Representative, or his resignation, Thomas Vollbrecht, if alive and at his election, will be the

11

successor to the Sellers Representative. If Thomas Vollbrecht is not the successor, a successor to the Sellers Representative shall be appointed by a majority vote of the UPC Stockholders, with each such UPC Stockholder to be given an equal vote.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE UPC STOCKHOLDERS

The Companies and the UPC Stockholders jointly and severally represent and warrant to the Buyers as follows:

3.1. Capitalization. (a) The authorized and outstanding capital stock of each Company as of the date hereof is set forth on Schedule 3.1 of the Disclosure Schedules delivered by the Sellers and the UPC Stockholders to the Buyers in connection herewith (the “Disclosure Schedules“). As of the date hereof, all of the capital stock of each Company is owned of record and beneficially by the Stockholder, UPC or such other Seller, as the case may be, free and clear of all liens, security interests, pledges, equities, proxies, claims, charges, adverse claims, mortgages, rights of first refusal, preemptive rights, restrictions, encumbrances, easements, covenants, licenses, options or title defects of any kind whatsoever (“Encumbrances“). As of the date hereof, the capital stock set forth on Schedule 3.1 of the Disclosure Schedules (the “Seller Stock“) represents all of the issued and outstanding equity securities of the Companies, and all of the outstanding stock of the Acquired Subsidiaries is duly authorized, validly issued, fully paid, and non-assessable, was not issued in violation of the terms of any agreement or other understanding binding upon the Companies, or any UPC Stockholder, as the case may be, and was issued in compliance with all applicable federal and state securities or “blue-sky” laws and regulations. Except as disclosed on Schedule 3.1 of the Disclosure Schedules, there are outstanding no securities convertible into, exchangeable for or carrying the right to acquire equity securities of any of the Companies, or subscriptions, warrants, options, rights (including, without limitation, preemptive rights or stock appreciation rights), or other arrangements or commitments obligating any of the Companies to issue or dispose of any of their respective equity securities or any ownership interest therein. The consummation of the transactions contemplated hereby will not cause any Encumbrances to be created or suffered on the capital stock of the Acquired Subsidiaries, other than Encumbrances created or suffered by the Buyers.

3.2. Organization. Each Company is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization or incorporation, as the case may be, and has all requisite corporate power and authority to carry on its business as it now is being conducted. Each Company is duly qualified to do business and is in good standing as a foreign corporation in all jurisdictions listed on Schedule 3.2 of the Disclosure Schedules, which are the only jurisdictions where the failure to qualify to do business could have a material adverse effect. True and complete copies of the Articles of Incorporation, Bylaws or other organizational documents and corporate proceedings of each Company previously have been made available to the Buyers.

3.3. Subsidiaries. Except as set forth on Schedule 3.3 of the Disclosure Schedules, other than the Companies, none of the Sellers directly or indirectly owns any stock of, equity

12

interest in, or other investment in any other corporation, limited liability company, joint venture, partnership, trust or other person engaged in whole or in part in the Business. The Acquired Subsidiaries, do not directly or indirectly own any stock of, equity interest in, or other investment in any other corporation, limited liability company, joint venture, partnership, trust or other person.

3.4. Financial Statements; Undisclosed Liabilities.

(a) The books of account and related records of the Companies related to the Business fairly reflect in all material respects the assets, liabilities and transactions relating to the Business in accordance with GAAP. The (a) balance sheet for the Companies on a combined basis for the years ended on the Saturday closest to January 31, 2004, 2003 and 2002 and the related statements of income and retained earnings and cash flows for the years then ended, each of which has been audited by PricewaterhouseCoopers LLP, and (b) the unaudited balance sheet of the Business on a combined basis for the eleven-month period ended December 25, 2004, and the related statements of income and retained earnings and cash flows for the eight-month period ended December 25, 2004 (the “Unaudited Financial Statements“), have been previously delivered to Buyers and (i) are true and correct in all material respects, (ii) were prepared in accordance with GAAP (except as specifically otherwise noted therein or, in the case of the Unaudited Financial Statements, except for the absence of footnotes), and (iii) present fairly the financial position, results of operations and cash flows of the Business on a combined basis as of such dates and for the periods then ended in accordance with GAAP(except as specifically otherwise noted therein). The audited balance sheet of the Sellers on a combined basis as at January 31, 2004 is attached hereto as Schedule 3.4 of the Disclosure Schedules(the “Balance Sheet“).

(b) The Companies have no material liability or obligation of any nature, whether due or to become due, absolute, contingent or otherwise, except (a) to the extent fully reflected as a liability on the Balance Sheet, (b) liabilities incurred in the ordinary course of business after January 31, 2004 and not material in amount and (c) liabilities disclosed on Schedule 3.4 of the Disclosure Schedules.

3.5. Absence of Certain Changes or Events. Except as set forth on Schedule 3.5 of the Disclosure Schedules, since January 31, 2004 (the “Balance Sheet Date“), the Companies have conducted the Business only in the ordinary course consistent with past practice and there has been no Material Adverse Effect. Without limiting the foregoing, except as reflected in the Balance Sheet or as set forth on Schedule 3.5 of the Disclosure Schedules, since the Balance Sheet Date, the Companies have not:

(a) purchased or redeemed any shares of its stock (including, without limitation, the Acquired Subsidiaries Stock), or granted or issued any option, warrant or other right to purchase or acquire any such shares;

(b) incurred any liabilities or obligations (whether absolute, accrued, contingent or otherwise), except liabilities and obligations incurred in the ordinary course of business which would not have a Material Adverse Effect;

13

(c) encumbered any of its properties or assets, tangible or intangible, except for Encumbrances incurred in the ordinary course of business, consistent with past practice, such Encumbrances not having a Material Adverse Effect, neither individually nor in aggregate;

(d) granted any increase in the salaries or other compensation payable or to become payable to, or any advance (excluding advances for ordinary business expenses consistent with past practice) or loan to, any officer or employee of each Company (other than normal merit increases for employees averaging not more than two percent (2%) per annum per employee made in the ordinary course of business and consistent with past practice, or as required by collective bargaining agreements), or any increase in, or any addition to, other benefits (including any bonus, profit-sharing, pension or other plan) to which any of the officers and employees may be entitled, or any payments to any pension, retirement, profit-sharing, bonus or similar plan except payments in the ordinary course of business and consistent with past practice made pursuant to the Benefit Plans (as hereinafter defined), or any other payment of any kind to or on behalf of any officer or employee other than payment of base compensation and reimbursement for reasonable expenses in the ordinary course of business;

(e) suffered any change or, to the to Sellers’ or the UPC Stockholders’ knowledge, received any threat of any change in any of its relations with, or any loss or, to Sellers’ or the UPC Stockholders’ knowledge, threat of loss of, any of the suppliers, clients, distributors, customers or employees that are material to the Business, including any loss or change which may result from the transactions contemplated by this Agreement;

(f) suffered any strike or other material labor trouble, or has entered into any material agreement or material negotiation with any labor union or other collective bargaining representative or any employees;

(g) disposed of or has failed to keep in effect any rights in, to or for the use of any property, leasehold, easement, asset, franchise, license, permit or certificate material to the Business;

(h) changed any method of keeping of its books of account or accounting practices;

(i) disposed of or failed to keep in effect any rights in, to or for the use of any of the Intellectual Property (as hereinafter defined) material to the Business;

(j) sold, transferred or otherwise disposed of any assets, properties or rights of any of the Business, except inventory sold in the ordinary course of business consistent with past practice;

(k) entered into any transaction, agreement or event outside the ordinary course of the conduct of the Business;

(l) made nor authorized any single capital expenditure in excess of $50,000, or capital expenditures in excess of $100,000 in the aggregate;

14

(m) changed or modified in any manner its existing credit, collection and payment policies, procedures and practices with respect to accounts receivable and accounts payable, respectively, including without limitation, acceleration of collections of receivables, failure to make or delay in making collections of receivables (whether or not past due), acceleration of payment of payables or failure to pay or delay in payment of payables;

(n) incurred any damage, destruction, loss, condemnation, or encroachment, whether covered by insurance or not, that would have a Material Adverse Effect;

(o) made any declaration, payment or setting aside for payment of any dividend or other distribution (whether in cash, stock or property) with respect to any securities of the Companies; or

(p) waived or released any material right or claim of the Companies.

3.6. Condition of Assets. Except as set forth on Schedule 3.6 of the Disclosure Schedules, the buildings, machinery, equipment, tools, furniture, improvements and other tangible assets of the Business included in the Acquired Assets are in good operating condition and adequate for the purposes for which they are used in the Business, subject to normal maintenance requirements and normal wear and tear reasonably expected in the ordinary course of business, and shall be maintained by the Companies in such good operating condition and repair as of the Closing Date so as to have the capacity to permit the operation of the Business. Except as set forth on Schedule 3.6 of the Disclosure Schedules, all significant properties, leaseholds, easements, and assets used or useful in the operation of the Business, including those reflected on the Balance Sheet, are adequate for the purposes for which they are presently used in the conduct of such business.

3.7. Real Estate.

(a) Owned Real Estate.

(i) Schedule 1.1(b)(i) sets forth a list of all of the real estate owned by the Companies or one or more of their Affiliates (collectively, the “Business Entities“) or otherwise owned (beneficially or of record) and used or operated now or previously in the Business (such real estate, together with all beneficial, appurtenant easements and other appurtenances thereto and with all buildings, structures and other improvements thereon and all fixtures attached thereto or forming a part thereof, is collectively referred to herein as the “Owned Real Estate“), and includes the street address of each parcel of the Owned Real Estate. Except as set forth on Schedule 1.1(b)(i), the Sellers have good, valid, marketable and indefeasible fee simple title to, and are in actual, exclusive possession of, the Owned Real Estate. The Companies have made available to Buyer true, correct and complete copies of all (i) title reports, title insurance policies and commitments therefore, (ii) surveys, (iii) licenses, certificates of occupancy, plans, specifications and permits, pertaining to the Owned Real Estate that are in the possession or control of any of the Business Entities.

(ii) No portion of any of the Owned Real Estate is subject to a special ad valorem Tax valuation or rate that will be lost as a result of the transfer to the Buyers pursuant to the provisions hereof.

15

(iii) The Owned Real Estate and the use thereof by the Business Entities in connection with the Business as currently used and consistent with past practice complies with all covenants, easements and restrictions of record affecting the Owned Real Estate.

(iv) The Companies have not received any notice for assessments for public improvements against the Real Estate which remains unpaid, and, to Sellers’ or the UPC Stockholders’ knowledge, no such assessment has been proposed. There is no pending condemnation, expropriation, eminent domain or similar proceeding affecting all or any portion of any of the Real Estate and, to Sellers’ or the UPC Stockholders’ knowledge, no such proceeding is contemplated. None of the Real Estate is located within or abuts a 100-year floodplain or body of water, tideland, wetland, marshland or other area subject to state, federal or local regulation, control or protection. The water, gas, electricity and other utilities serving the Real Estate are adequate to service the normal operations of the Real Estate and are not subject to any pending or, to Sellers’ or the UPC Stockholders’ knowledge, threatened suspension, reduction or moratorium.

(v) The Companies have obtained all authorizations, Permits and rights of way, including proof of dedication, which are necessary to ensure vehicular and pedestrian ingress and egress to and from the Owned Real Estate. There are no restrictions on entrance to or exit from the Real Estate to adjacent public streets and, to Sellers’ or the UPC Stockholders’ knowledge, no conditions which will result in the termination of the present access from the Real Estate to existing highways and roads adjoining or shared on the Real Estate.

(vi) The Companies have not received written notice from any Authority that the assessed value of the Owned Real Estate has been determined to be greater than that upon which county, township or school tax was paid for the 2004 Tax year applicable to each such tax, or from any insurance carrier any Seller or their Affiliates of fire hazards with respect to the Owned Real Estate.

(b) Leased Real Estate.

(i) Schedule 1.1(b)(i) sets forth a list of all of the real property leases that are included in the Acquired Assets and Schedule 3.7(b) of the Disclosure Schedules sets forth a list of all of the real property leases of the Acquired Subsidiaries (collectively, as heretofore modified, amended or extended, the “Leases“), including the street addresses of all of the real estate demised under each of the Leases (collectively, the “Leased Real Estate“). Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, one or more of the Business Entities is the lessee under all Leases, and no party other than one or more of the Business Entities has any right to possession, occupancy or use of any of the Leased Real Estate. True and correct copies of (i) leasehold title insurance policies and commitments therefor, title reports, surveys, licenses, certificates of occupancy, plans, specifications, permits and other documents, pertaining to the Leased Real Estate that are in the possession or control of any of the Business Entities, and (ii) each of the Leases, including all amendments, modifications and extensions, and together with all subordination, non-disturbance and/or attornment agreements related thereto have been made available by the Business Entities to the Buyers. Each of the Leases is valid and in full force and effect and is binding and enforceable in accordance with its terms. Except as set forth

16

on Schedule 3.7(b) of the Disclosure Schedules, no Company has received any written notice of default under any provision of any of the Leases. Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, to Sellers’ and the UPC Stockholders’ knowledge, none of the Business Entities and none of the lessors under any of the Leases is in default under any of the Leases and no event has occurred that with notice, the passage of time of both would constitute such a default.

(ii) Except as set forth in Schedule 3.7(b) of the Disclosure Schedules, the Business Entities are in actual, exclusive possession of the Leased Real Estate. The Business Entities have good, valid and indefeasible title to all the leasehold estates conveyed under the Leases free and clear of all Encumbrances, except Permitted Encumbrances.

(iii) Except as set forth in Schedule 3.7(b) of the Disclosure Schedules, the basic rent, all additional rent and all other charges and amounts payable under the Leases by the lessee thereunder have been paid to date. All work required to be performed under the Leases by the lessors thereunder or by any of the Business Entities has been performed in all material respects, and, to the extent that any of the Business Entities is responsible for payment of such work, has been fully paid for, whether directly to the contractor performing such work or to such lessor as reimbursement therefor, except for items which any of the Companies is disputing in good faith (which items are set forth in Schedule 3.7(b) of the Disclosure Schedules).

(iv) Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, there are no brokerage commissions or finder’s fees due from any of the Business Entities which are unpaid with regard to any of the Leases or the Leased Real Estate, or which will become due at any time in the future with regard to the Leases or the Leased Real Estate.

(v) Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, there have been no casualties which could result in the termination of any of the Leases.

(vi) Except as set forth on Schedule 3.7(b) of the Disclosure Schedules: (i) no consent of any of the lessors under any of the Leases is required by reason of any of the transactions contemplated by this Agreement, and (ii) none of the rights of any of the Business Entities under any of the Leases will be impaired by the consummation of the transactions contemplated by this Agreement and all of such rights will be enforceable by the Buyers after the date of the Closing without the consent or agreement of any other party.

(c) General.

(i) Each parcel of the Real Estate has physical and, to Sellers’ or the UPC Stockholders’ knowledge, legal vehicular and pedestrian access to and from public roadways. To the Sellers’ or the UPC Stockholders’ knowledge, no fact or condition exists which would result in the termination of the current access from the Real Estate to any presently existing highways and roads adjoining or situated on the Real Estate.

(ii) Except as set forth on Schedule 3.7(c) of the Disclosure Schedules, no Business Entity has received any written or, to the Sellers’ or the UPC Stockholders’ knowledge, oral notice or order from any Authority, insurance company which has issued a

17

policy with respect to any of the Real Estate or any board of fire underwriters or other body performing similar functions or any other Person which (a) relates to or alleges a violation of or nonconformity with any zoning, building, safety, subdivision, wetlands or other similar law, code, rule, regulation, ordinance, permit, license, certificate, covenant, restriction or condition with respect to any of the Real Estate or the use thereof which violation of nonconformity could reasonably be expected to have a Material Real Estate Impairment, or (b) requests the performance of any material repairs, alterations or other work that have not yet been cured or performed, as applicable. None of the Sellers has received any written notice from any Authority or other Person of any condemnation action, eminent domain proceeding or other similar proceeding concerning any of the Real Estate. There is no pending condemnation, expropriation, eminent domain, or similar proceeding affecting any of the Real Estate and, to the Sellers’ or the UPC Stockholders’ knowledge, no such action, proceeding or litigation is threatened.

(iii) All of the buildings and improvements situated upon the Real Estate are operable and in good condition and repair, subject to ordinary wear and tear and to the items set forth on Schedule 3.7(c) of the Disclosure Schedules.

(iv) Other than: (i) the Owned Real Estate, and (ii) the Leased Real Estate, no other real estate or rights, titles, estates or interest therein is necessary to the conduct of the Business as currently conducted and consistent with past practice.

3.8. Title. The Sellers will convey to the Buyers at Closing (by special warranty deed in the case of Owned Real Estate and assignments in the case of Leased Real Estate), indefeasible, good and valid title to all of the Acquired Assets constituting personal property and good, valid and marketable fee simple absolute title and interest to all of the Acquired Assets constituting Owned Real Estate and a good, valid indefeasible and marketable leasehold interest in all Leased Real Estate, subject only to the Permitted Encumbrances. None of the Acquired Assets is subject to any Encumbrance (including any restriction, encumbrance, tenancy, license, encroachment, covenant, right of way, easement, or any other matter affecting title), except (a) in the case of real property, minor imperfections of title, none of which, individually or in the aggregate, materially detracts from the value of the affected property or impairs the use of the affected property or the conduct of the Business thereon as it is currently being used and conducted and as it has been used and conducted consistent with past practice or materially detracts from the value of such property or impairs any operations of the Business or the ability of the Buyers to obtain direct or indirect financing for the Acquired Assets, (b) in the case of real property, Encumbrances for current real estate Taxes not yet due and payable, (c) as to the Leased Real Estate only, the terms and conditions of the Leases with respect thereto, and (d) with respect to leased or licensed personal property, the terms and conditions of the lease or license applicable thereto, (collectively, the “Permitted Encumbrances“).

3.9. Working Capital Assets.

(a) Except as set forth on Schedule 3.9 of the Disclosure Schedules, all of the accounts and notes receivable of the Business represent amounts receivable for merchandise actually delivered or services actually provided (or, in the case of non-trade accounts or notes represent amounts receivable in respect of other bona-fide business transactions), have arisen in

18

the ordinary course of business, are not subject to any defenses, counterclaims or offsets and have been billed and are generally due within thirty (30) days after such billing. All such receivables are fully collectible in the normal and ordinary course of business, except to the extent of a reserve in an amount not in excess of the reserve for doubtful accounts reflected on the Balance Sheet. Schedule 3.9 of the Disclosure Schedules sets forth (a) the total amount of accounts receivable of the Business outstanding as of December 25, 2004 and (b) the agings of such receivables based on the following schedule: 0-30 days, 31-60 days, 61-90 days, and over 90 days, from the date of invoice.

(b) All of the inventories of the Business, including that reflected in the Balance Sheet, are valued at the lower of cost or market, the cost thereof being determined on a first-in, first-out basis, except as disclosed in the Balance Sheet. Except as disclosed on Schedule 3.9 of the Disclosure Schedules, all of the inventories of the Business reflected in the Balance Sheet and all inventories acquired since the Balance Sheet Date consist of items that are marketable and fit for their particular use, are not defective and are of a quality and quantity usable and saleable in the ordinary course of the Business within a reasonable period of time and at normal profit margins, and all of the raw materials and work in process inventory of the Business reflected on the Balance Sheet and all such inventories acquired since the Balance Sheet Date can reasonably be expected to be consumed in the ordinary course of business within a reasonable period of time. Except as disclosed on Schedule 3.9 of the Disclosure Schedules, none of the inventory of the Business is obsolete or slow moving. Schedule 3.9 of the Disclosure Schedules is a summary of the Business’ inventory of finished goods, work in process and raw materials as of December 25, 2004.

3.10. Patents, Trademarks, Etc.

(a) Schedule 3.10 of the Disclosure Schedules sets forth a list of all United States or foreign: (i) patents and patent applications; (ii) trademarks, service marks, trade names, domain names, trade dress, logos and other indicators of source and all applications for and registrations of any of the foregoing; and (iii) registered copyrights and all applications for the registration of copyrightable works (including without limitation, computer software, proprietary databases, catalogues and other works of authorship); all of the foregoing of which are owned or used by the Companies in, and which are material to, the conduct of the Business (specifying as to each such item, as applicable (A) the owner of the item, (B) the jurisdiction in which the item is issued or registered or in which any application for issuance or registration has been filed, where applicable, including the respective issuance, registration or application number, (C) the date of application and issuance or registration of the item, and (D) with respect to any registrations and applications for registration of trademarks or service marks, the class and classes of goods or services on which each such trademark or service mark is or is intended to be used) (“Patent Trademark and Copyright Rights“).

(b) Except as set forth on Schedule 3.10 of the Disclosure Schedules: (i) the Companies own or possess adequate licenses or other valid rights to use all Patent Trademark and Copyright Rights and all material know-how, trade secrets (including, without limitation, all results of research and development), product formulas, franchises, inventions, rights-to-use, unregistered copyrights, publicity rights, and all other industrial and intellectual property rights (together with Patent Trademark and Copyright Rights, “Intellectual Property“) used in the

19

Business by the Companies, (ii) the conduct of the Business by the Companies as now being conducted does not knowingly misappropriate, violate or conflict with any intellectual property of others and there are no pending claims, suits, judgments, settlements or allegations by others that the operation of the Business by the Companies infringe, misappropriate, violate or otherwise conflict with such other party’s intellectual property, (iii) no current or former employee of the Companies and no other person owns or has claimed any material proprietary, financial or other interest, direct or indirect, in whole or in part, and including any rights to royalties or other compensation, in any of the Intellectual Property, (iv) there is no agreement or other contractual restriction affecting the use by any Company of any of the Intellectual Property, (v) the Intellectual Property (other than the patents) is, and the Companies’ patents are believed to be, valid and in full force, held of record in the Sellers’ name and is not subject to any cancellation or reexamination proceeding or any other proceeding challenging the extent or validity of the Intellectual Property (or any item of the Intellectual Property), (vi) a Company is the applicant of record in all patent applications and applications for trademarks, and no opposition, extension of time to oppose, interference, rejection, or refusal to register has been received in connection with any such applications, and (vii) neither the Companies nor the UPC Stockholders are aware of any present infringement or misappropriation of any of the Intellectual Property by any person, neither the Companies nor the UPC Stockholders have asserted or threatened any claim or objection against any person for any such infringement or misappropriation nor is there any basis in fact for any such objection or claim. No Intellectual Property other than the Intellectual Property comprising part of the Acquired Assets is required to conduct the Business in the ordinary course consistent with past practices.

(c) The information technology and process automation systems owned, licensed, leased, operated on behalf of, or otherwise held for use in the business of the Sellers, including all computer hardware, software, firmware and telecommunications systems used in the Business by the Companies, perform reliably and in material conformance with the appropriate specifications or documentation for such systems. Except for scheduled or routine maintenance and occasional, expected disruptions, the information technology and process automation systems of the Companies are fully available for use in the Business and, as applicable, by the customers and clients of the Companies, 24 hours a day, 7 days a week. The Companies have taken commercially reasonable steps to provide for the archival, back-up, recovery and restoration of the critical business data of the Business.

3.11. Material Contracts. Schedule 3.11 of the Disclosure Schedules contains a complete and accurate list of all outstanding Material Contracts (classified (a) through (m), as applicable, based on the definition of Material Contracts set forth in Section 11.13 hereof). Each such Contract is valid, binding and enforceable against any Seller and the other parties thereto in accordance with its terms and is in full force and effect. Except as set forth in Schedule 3.11 of the Disclosure Schedules, the Companies, and to the knowledge of the Sellers and the UPC Stockholders, each of the other parties thereto, have performed in all material respects all obligations required to be performed by them under, and are not in material default under, any of such Material Contracts and no event has occurred which, with notice or lapse of time, or both, would constitute such a default. The Companies have not received any written claim from any other party to any Material Contract that any Company has breached any obligations to be performed by it thereunder, or is otherwise in default or delinquent in performance thereunder.

20

3.12. Litigation. Except as set forth in Schedule 3.12 of the Disclosure Schedules, there is no action, suit, review, proceeding or investigation in any court or before any governmental agency or authority (“Litigation“) pending or, to the Sellers’ or the UPC Stockholders’ knowledge, threatened against any Company or, with respect to the Stockholder, pertaining to the ownership of the Seller Stock or the relationship of the Stockholder with the Companies. Except as set forth in Schedule 3.12 of the Disclosure Schedules, none of the Sellers is a party to, or bound by, any outstanding orders, rulings, judgments, settlements, arbitration awards or decrees (or agreement entered into or any administrative, judicial or arbitration award with any governmental authority) with respect to or affecting the properties, assets, personnel or business of the Companies, the enforcement of which or compliance with which (a) could have a Material Adverse Effect, or (b) could reasonably be expected to affect the (i) validity of this Agreement or its enforceability against the Sellers, (ii) consummation by the Companies of the transactions contemplated by this Agreement, or (iii) compliance by the Companies with the terms of this Agreement. The Companies have provided the Buyers with a list setting forth a general description of settlements occurring since January 1, 2002 regarding actual threatened lawsuits (excluding worker’s compensation claims) binding on any Company.

3.13. Compliance with Laws.

(a) Set forth on Schedule 3.13(a)(i) of the Disclosure Schedules is a list of all franchises, approvals, permits, authorizations, applications, licenses, orders, registrations, certificates, variances and other similar permits or rights obtained from any Authority and all pending applications therefor necessary for the conduct of the Business as currently conducted (the “Permits“). The Companies possess and are in compliance with all Permits required to operate the Business and own, lease or otherwise hold the Acquired Assets under all applicable laws, rules, regulations, ordinances and codes. The Companies have conducted the Business and are now doing so in material compliance with all applicable laws, zoning, building and similar laws, rules, regulations, ordinances, codes, judgments and orders (including the Occupational Safety and Health Act and the rules and regulations thereunder (“OSHA“) and the Americans with Disabilities Act and the rules and regulations thereunder. All Permits of the Companies relating to the operation of the Business are in full force and effect, and there are no proceedings pending or, to the Sellers’ and the UPC Stockholders’ knowledge, threatened that seek the revocation, cancellation, suspension or any adverse modification of any such Permits presently possessed by the Companies. The Permits set forth on Schedule 3.13(a)(ii) of the Disclosure Schedules are the Permits that are transferable and will be transferred to the Buyers as part of the Acquired Assets.

(b) Other than as disclosed on Schedule 3.13, no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending or, to the Sellers’ or the UPC Stockholders’ knowledge, threatened, by any Authority or other Person with respect to any alleged (i) violation by any Company, any Affiliate of the Companies or any other Person relating to the Business of any law, ordinance, rule, regulation, code or order of any Authority; or (ii) failure by any Company, any Affiliate of the Companies or any other Person to have any Permit required in connection with the conduct of the Business or otherwise applicable to the Business. Except as may be otherwise disclosed on Schedule 3.13 of the Disclosure Schedules, neither the Sellers nor the UPC Stockholders have knowledge of any claims or violations of any such law, regulation,

21

ordinance, order, covenant, condition, restriction or easement. Except as may be otherwise disclosed on Schedule 3.13 of the Disclosure Schedules, there is no proceeding pending or, to Sellers’ or the UPC Stockholders’ knowledge, threatened which is reasonably likely to materially and adversely affect, as to any material portion of the Acquired Assets, the zoning classification in effect or the Sellers’ right to own, operate and occupy the Real Estate and use and possess the other Acquired Assets in the manner in which it currently owns, operates and occupies the Real Estate and uses and possesses the other Acquired Assets, and no zoning, building or similar law, regulation, ordinance or order is, or on the Closing Date will be, violated in any material respect.

3.14. Environmental Matters.

(a) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, the Companies have conducted and are now conducting their operations in compliance in all material respects with all applicable Environmental Laws.

(b) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, the Companies hold and have been and are in compliance with all permits, certificates, licenses, approvals, registrations and authorizations required under applicable Environmental Laws with respect to the Acquired Assets and the Acquired Subsidiaries (“Environmental Permits“), all such Environmental Permits are in full force and effect, and, if assignable or transferable, will remain in full force and effect after the approval of that assignment or transfer is obtained from the applicable governmental authority, so as to allow the Business and the Acquired Subsidiaries to operate their business after that approval is obtained as it is currently operating such business without interruption. The Companies have made or will make before the Closing timely application or notification for the renewal of all Environmental Permits for which Environmental Laws require that applications or notices must be filed on or before the Closing to maintain the Environmental Permits in full force and effect up to, through and after the Closing. Schedule 3.14 of the Disclosure Schedules lists all Environmental Permits.

(c) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, the Companies have not in the past nor do the Companies presently use, possess, generate, treat, manufacture, process, handle, store, recycle, transport or dispose of (“Manages“ or “Management,” as the context requires) hazardous or toxic materials, substances, wastes, pollutants or contaminants (including, without limitation, petroleum, petroleum products, polychlorinated biphenyls (“PCBs“), radioactive materials, asbestos, or asbestos-containing materials) (“Hazardous Materials“) in quantities or in a manner which requires Environmental Permits or in a manner which has caused, causes or threatens to cause a Release (as hereinafter defined).

(d) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, neither the Companies nor the UPC Stockholders have received any notice, citation, summons, order or complaint, no penalty has been assessed or is pending or, to the knowledge of the Sellers and the UPC Stockholders, after due inquiry, threatened by any third party (including, without limitation, any governmental agency) with respect to (i) the Management, Release or threatened Release of Hazardous Materials by or on behalf of the Companies or any of their predecessors or in relation to its past or present operations or with respect to exposure to

22

Hazardous Materials, (ii) non-compliance with Environmental Laws or (iii) failure to hold or comply with Environmental Permits. Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, neither the Sellers nor the UPC Stockholders have received and, to the best of their respective knowledge after due inquiry, no one else has received, any request for information, notice of claims, demand or other notification that the Sellers or the UPC Stockholders (or any of their respective predecessors) are or may be potentially responsible with respect to any investigation, cleanup, remedial action or other response action (“Remediation“) of Hazardous Materials with respect to presence, release or threatened release of any Hazardous Materials at or from any Acquired Asset or any of the properties, assets or facilities of any Acquired Subsidiary.

(e) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, none of the Owned Real Estate, the Leased Real Estate nor any property owned, operated or leased or, to the Sellers’ or the UPC Stockholders’ knowledge, formerly owned, operated or leased by any of the Acquired Subsidiaries or any of their predecessors or in connection with operation of the Companies or any of its business, is listed or proposed for listing on any list maintained by any governmental agency of sites requiring Remediation, and no Hazardous Materials generated or Managed by or on behalf of any Acquired Subsidiary or any of their predecessors has come to be located at any site identified on such list or otherwise requiring Remediation.

(f) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, there are no underground storage tanks, above ground storage tanks, asbestos containing materials or PCB-containing equipment located at, on or under the Owned Real Estate, the Leased Real Estate or, to the Sellers’ or the UPC Stockholders’ knowledge, after due inquiry, at any property formerly owned, operated or leased by the Companies or the UPC Stockholders or any of their respective predecessors. Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, any underground storage tanks, above ground storage tanks or wastewater treatment systems which have been removed or closed by or on behalf of the Companies or the UPC Stockholders or any of their respective predecessors or for which any of them is or may be responsible have been removed or closed in compliance with applicable Environmental Laws and require no further Remediation under Environmental Laws.

(g) No Hazardous Materials have been, to the Companies’ knowledge, or threaten to be released, spilled, leaked, discharged, disposed of, pumped, poured, emitted, emptied, injected, leached, dumped or allowed to escape (“Release“) or are present in an uncontained state at, on, about, under or from the Owned Real Estate, the Leased Real Estate, any property owned, operated or leased or, to the Sellers’ or the UPC Stockholders’ knowledge, formerly owned, operated or leased by any of the Acquired Subsidiaries or any of their predecessors or in connection with operation of the Companies or any of their business, except when such Release or presence would not have a Material Adverse Effect.

(h) All environmental inspections, investigations, studies, audits, tests, reviews or other analysis conducted in relation to the Companies, the Owned Real Estate, the properties subject to the Real Estate Leases or any property formerly owned, operated or leased by the Companies or the UPC Stockholders or any of their respective predecessors or the operation of their business (collectively, “Environmental Audits“) in the possession or control of the Companies or the UPC Stockholders have been provided or made available to the Buyers, and all such Environmental Audits are listed on Schedule 3.14 of the Disclosure Schedules.

23

(i) Neither the Companies nor the UPC Stockholders know of any facts or circumstances related to environmental matters concerning the Owned Real Estate, the properties subject to the Real Estate Leases or any property formerly owned, operated or the leased by the Companies or the UPC Stockholders or any of their respective predecessors or the operation of the Business that could lead to any future environmental claims, liabilities, expenses or responsibilities against the Buyers, the Acquired Assets or the Acquired Subsidiaries, and, except as disclosed on Schedule 3.14 of the Disclosure Schedules, neither the Companies nor the UPC Stockholders have retained or assumed, by contract, law or otherwise, any liability or responsibility for any environmental claims or conditions, including, but not limited to, in connection with a Release or Remediation of Hazardous Materials, that affect or relate to the Acquired Assets, the Acquired Subsidiaries or any liability of Buyers following the Closing Date.

3.15. Employee Benefit Matters.

(a) Schedule 3.15 of the Disclosure Schedules lists all “employee benefit plans,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA“) and all retirement, stock, stock option, welfare benefit, savings, deferred compensation, incentive compensation, paid time off, severance pay, salary continuation, disability, fringe benefit and other employee benefit arrangements, plans, policies, or practices maintained, contributed to, or required to be contributed by the Companies or any ERISA Affiliate (as hereinafter defined) or with respect to which the Companies or any ERISA Affiliate may have any liability (the “Benefit Plans“). None of the Benefit Plans is maintained, contributed to or required to be contributed to by the Sellers or any ERISA Affiliate outside the United States. For purposes of this Section 3.15, the term “ERISA Affiliate“ means any person, entity, any trade or business (whether or not incorporated) that is treated as a single employer with the Sellers under Section 414 of the Code.

(b) As applicable, with respect to each of the Benefit Plans, the Sellers have delivered to the Buyers true and complete copies of (i) all plan documents (including all amendments and modifications thereof) and in the case of an unwritten Benefit Plan, a written description thereof, and in either case all material related agreements including the trust agreement and amendments thereto, insurance contracts, and investment management agreements; (ii) the last three filed Form 5500 series and all schedules thereto; (iii) the current summary plan descriptions and all material modifications thereto; (iv) the three most recent actuarial reports, financial statements and trustee reports; and (v) copies of all private letter rulings, requests and determination letters issued with respect to the Benefit Plans and filings, summaries of self-corrections or applications made under the Employee Plans Compliance Resolution System (as set forth in Revenue Procedure 2003-44, and any successor thereto) or the Voluntary Fiduciary Correction or Delinquent Filer Voluntary Compliance programs with respect to the Benefit Plans within the past five years.

(c) The Companies and each ERISA Affiliate are in compliance in all material respects with the provisions of ERISA and the Code applicable to the Benefit Plans. Each Benefit Plan has been maintained, operated and administered in compliance in all material respects with its terms and any related documents or agreements and the applicable provisions of ERISA and the Code.

24

(d) No Benefit Plan is (or at any time has been) subject to Title IV of ERISA and no Benefit Plan is (or at any time has been) a “multiemployer plan” as defined in Section 3(37) of ERISA, and neither the Sellers nor any ERISA Affiliate has incurred any withdrawal liability with respect to any multiemployer plan.

(e) All Benefit Plans which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Section 401(a) of the Code (each a “Pension Plan“) have at all times met the qualification requirements of Section 401(a) of the Code, and each related trust has at all times been exempt from taxation under Section 501(a) of the Code. All contributions required to be made under the terms of any Benefit Plan have been timely made or have been reflected in the Sellers’ audited financial statements.

(f) Each Pension Plan has received determination letters from the Internal Revenue Service (“IRS“) to the effect that each such Pension Plan is qualified and the related trusts are exempt from federal income taxes and no determination letter received with respect to any Pension Plan has been revoked nor, is there any reason for such revocation, nor has any Pension Plan been amended since the date of its most recent determination letter in any respect which would adversely affect its qualification.

(g) There are no pending audits or investigations by any governmental agency involving the Benefit Plans, and no threatened or pending claims (except for individual claims for benefits payable in the normal operation of the Benefit Plans), suits or proceedings involving any Benefit Plan, any fiduciary thereof or service provider thereto, nor to the knowledge of the Companies or any ERISA Affiliate is there any reasonable basis for any such claim, suit or proceeding.

(h) Neither the Companies, any ERISA Affiliate, any employee of the Sellers or any ERISA Affiliate, nor the Sellers has engaged in a “prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Code, nor has any such person breached any duty imposed by Title I of ERISA, with respect to any Benefit Plan. To the knowledge of the Companies or any ERISA Affiliate, no other person has engaged in such a prohibited transaction or breach.

(i) Any insurance premium under any insurance policy related to a Benefit Plan for any period up to and including the Closing Date has been paid, or accrued and booked on or before the Closing Date, and, with respect to any such insurance policy or premium payment obligation, neither the Companies nor any ERISA Affiliate are subject to a retroactive rate adjustment, loss sharing arrangement or other actual or contingent liability.

(j) With respect to each Benefit Plan that is a “group health plan” within the meaning of Section 607 of ERISA and that is subject to Section 4980B of the Code, each Company and each ERISA Affiliate complies in all material respects with the continuation coverage requirements of the Code and ERISA.

25

(k) Except as specifically set forth in Schedule 3.15 of the Disclosure Schedules, no Benefit Plan or other employment-related agreement provides benefits, including, without limitation, death or medical benefits, beyond termination of service or retirement (to former employees or service providers or their spouses or dependents) other than (i) coverage mandated by Section 4980B of the Code or (ii) death or retirement benefits under a Benefit Plan qualified under Section 401(a) of the Code.

(l) Within the six-month period preceding the Closing Date, there has been no amendment to, announcement by the Companies or any of their ERISA Affiliates relating to, or change in employee participation or coverage under, any Benefit Plan which would increase materially the expense of maintaining such Benefit Plan above the level of the expense incurred therefor for the most recent fiscal year, except for increases directly resulting from an increase in the number of persons employed by the Companies or any ERISA Affiliate or promotions of existing employees in the ordinary course of business consistent with past practice.

(m) None of the Companies or any ERISA Affiliate has a contract, plan or commitment, whether legally binding or not, to create any additional Benefit Plan or to modify any existing Benefit Plan.

(n) Any individual who performs services for any Company or any ERISA Affiliate (other than through a contract with an organization other than such individual) and who is not treated as an employee of such Company or ERISA Affiliate for Federal income tax purposes by such Seller is not an employee for such purposes.

(o) Schedule 3.15 of the Disclosure Schedules lists, as of the Closing Date, each of the known liabilities or claims for benefits under each Benefit Plan.

(p) No condition, fact, or circumstance exists which would prevent any Company or any ERISA Affiliate from amending or terminating any Benefit Plan with respect to any future, current, former or retired employee, independent contractor or agent of the Companies or any ERISA Affiliate.

(q) Except as set forth on Schedule 3.15 of the Disclosure Schedules, the execution of, and performance of the transactions contemplated by this Agreement will not constitute an event under any Benefit Plan or other employment-related agreement that will result in any payment (whether as severance pay or otherwise), acceleration, vesting or increase in benefits with respect to any employee. No Benefit Plan provides for “parachute payments” within the meaning of Section 280G of the Code.

3.16. Taxes.

(a) Except as set forth in Schedule 3.16 of the Disclosure Schedules, the Companies have timely filed with the appropriate federal, state, local, and foreign governmental entity or other authority (individually or collectively, “Taxing Authority“) all Tax Returns (as defined in Section 3.16(b) hereof) required to be filed and have timely paid in full all Taxes (as

26

defined in Section 3.16(b) hereof), if any, due with respect to such Tax Returns and all other Taxes for which a notice of assessment or demand for payment has been received. All Tax Returns are true, correct and complete; have been prepared in accordance with all applicable laws and requirements; and accurately reflect the taxable income (or other measure of tax) of the corporation filing the tax return. There are no liens for Taxes upon the Sellers or their assets, except liens for current Taxes not yet due. Except as set forth on Schedule 3.16 of the Disclosure Schedules, the Companies have not granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any Taxes.

(b) As used in this Agreement: (i) “Tax“ means any of the Taxes, where “Taxes“ means all income taxes (including any tax on or based upon net income, or gross income, or income as specially defined, or earnings, or profits, or selected items of income, earnings, or profits) and all gross receipts, estimated, sales, use, ad valorem, transfer, franchise, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, or windfall profit taxes, environment, alternative, or add-on minimum taxes, custom duties or other taxes, fees, assessments, or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any Taxing Authority on the Companies, and (ii) “Tax Return“ means any return, report, information return or other document (including any related or supporting information) filed or required to be filed with any Taxing Authority or other authority in connection with the determination, assessment, or collection of any Tax paid or payable by the Companies or the administration of any laws, regulations, or administrative requirements relating to any such Tax.

(c) Except as set forth on Schedule 3.16 of the Disclosure Schedules, there is no action, suit, proceeding, investigation, audit, claim, assessment or judgment now pending against any Company in respect of any Tax, and no notification of an intention to examine has been received from any Taxing Authority.

(d) Except as set forth on Schedule 3.16 of the Disclosure Schedules, no Company is a party to any agreement, contract, arrangement or plan that would result, separately or in the aggregate, in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code.

(e) Except as set forth on Schedule 3.16 of the Disclosure Schedules, none of the Companies nor any predecessor thereto by way of merger, liquidation or similar transaction: (i) has been a member of an affiliated group of corporations (as defined in Section 1504(a) of the Code) other than the group in which UPC is the common parent or (ii) has filed or been required to file or been included in a combined, consolidated, or unitary federal, state, local or foreign income tax return other than with any Company. There is no agreement or arrangement with any person or entity pursuant to which any Company would have an obligation with respect to Taxes of another person or entity following the Closing.

(f) The accruals for Taxes contained in the Balance Sheet are adequate to cover all liabilities for Taxes of the Sellers for all periods ending on or before the Balance Sheet Date (include adequate provision for all deferred Taxes) and nothing has occurred subsequent to the Balance Sheet Date to make any of such accruals inadequate. All Taxes of the Companies for periods subsequent to the Balance Sheet Date have been paid or adequately reflected on the

27

books and records of the Companies. Each Company has on a timely basis filed all information returns or reports, including Forms 1099, that are required to be filed and has accurately reported all information required to be included on such returns or reports. All Taxes that the Companies are or were required by law to withdraw or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Taxing Authority.

(g) True copies of federal, state and foreign income Tax Returns of each Company for each of the fiscal years ending January 31, 1999 through January 31, 2004 have been delivered or made available to Remy. Except as disclosed on Schedule 3.16 of the Disclosure Schedules, each Tax Return of each Company has been audited by the relevant Taxing Authority (and all deficiencies or proposed deficiencies resulting from such audits have been paid or are adequately provided for in the Closing Statement), or the statute of limitations with respect to each Tax Return has expired. No claim has been made by a Taxing Authority in a jurisdiction where any Seller does not file Tax Returns that such Seller is or may be subject to taxation by that jurisdiction.

(h) Except as disclosed on Schedule 3.16 of the Disclosure Schedules, the Companies have not ever (a) been the subject of a Tax ruling that has continuing effect, (b) been the subject of a closing agreement with any Taxing Authority that has continuing effect, (c) filed or been the subject of an election under Section 338(g) or Section 338(h)(10) of the Code or caused or been the subject of a deemed election under Section 338(e) thereof or (d) granted a power of attorney with respect to any Tax matters that has continuing effect. No Company has agreed to make, nor is any Company required to make, any adjustment under Section 481 of the Code.

(i) Except as disclosed on Schedule 3.16 of the Disclosure Schedules, the Companies do not own any interest in an entity characterized as a partnership for federal income tax purposes.

(j) The sale of the Acquired Assets by the Sellers will not constitute the disposition of United States real property interest by a non-resident alien individual or a foreign corporation for the purposes of Section 897 of the Code nor by a foreign person for the purposes of Section 1445 of the Code.

(k) Each of the Acquired Subsidiaries is classified as a corporation for United States federal income tax purposes.

(l) The Companies have not engaged in any transaction that is required to be disclosed to the IRS by reason of Treas. Reg. Section 1.6011-4.

3.17. Consents. Except as set forth on Schedule 3.17 of the Disclosure Schedules, no consent, approval, or authorization is required to be obtained or made by the Companies or the UPC Stockholders in connection with the execution, delivery, and performance by the Companies or the UPC Stockholders of this Agreement, or any Ancillary Agreement to which any Company or UPC Stockholder is a party or the taking by the Companies or the UPC Stockholders of any other action contemplated hereby or thereby or the continuation after the Closing of the Business, including the continued use of the Owned Real Estate and the Leased Real Estate.

28

3.18. Authority; Effect of Agreement.

(a) The execution, delivery and performance by the Companies of this Agreement and the Ancillary Agreements to which any Company or a UPC Stockholder is a party and the consummation by the Companies of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Companies and the UPC Stockholders. This Agreement has been, and each Ancillary Agreement to which the Companies or the UPC Stockholders are a party will be, duly and validly executed and delivered by the Companies and the UPC Stockholders and constitutes, and will constitute, the valid and binding obligation of each of them, enforceable against each of them in accordance with its respective terms. If any UPC Stockholder is a trust, such UPC Stockholder has been duly created and is validly existing under the laws of the jurisdiction of its creation, and such UPC Stockholder has all requisite power and authority to perform the obligations of such UPC Stockholder hereunder.

(b) The execution, delivery and performance by any Company and the UPC Stockholders of this Agreement and any Ancillary Agreement to which any Company or UPC Stockholder is party thereto, and the consummation by the Companies and the UPC Stockholders of the transactions contemplated hereby and thereby do not and will not, with or without the giving of notice or the lapse of time, or both, (i) violate any provision of law, rule, or regulation to which the Companies or the UPC Stockholders are subject, (ii) violate any order, judgment, or decree applicable to the Companies or the UPC Stockholders, (iii) violate any provision of the articles of incorporation, bylaws or other corporate governance documents of the Companies, or (iv) violate or result in a breach of or constitute a default (or an event which might, with the passage of time or the giving of notice, or both, constitute a default) under, or require the consent of any third party under, or result in or permit the termination or amendment of any provision of, or result in or permit the acceleration of the maturity or cancellation of performance of any obligation under, or result in the creation or imposition of any Encumbrance of any nature whatsoever upon any assets or property or give to others any interests or rights therein under any indenture, deed of trust, mortgage, loan or credit agreement, license, Permit, contract, lease, or other agreement, instrument or commitment to which any Company or any of the UPC Stockholders is a party or by which any of them may be bound or affected, except for any such violations that in the aggregate would not materially hinder or impair the consummation of the transactions contemplated hereby and would not have a Material Adverse Effect.

3.19. Employee Relations.

(a) Except as disclosed in Schedule 3.19 of the Disclosure Schedules, none of Companies or any of their employees are: (i) a party to or otherwise bound by any collective bargaining or other type of union agreement, (ii) a party to, involved in or, to the knowledge of the Sellers or the UPC Stockholders, threatened by, any labor dispute or unfair labor practice charge, or (iii) currently negotiating any collective bargaining agreement, and none of the Companies have experienced any work stoppage during the last five (5) years. Furthermore, except as disclosed in Schedule 3.19 of the Disclosure Schedules, none of the Companies are parties to any contracts of employment with any of their employees.

29

(b) Each Company is in material compliance with all applicable federal, state, municipal and common laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practice. Except as disclosed on Schedule 3.19 of the Disclosure Schedules, there are no outstanding claims against any Company (whether under statute, ordinance, order rule, regulation, collective bargaining agreement, contract, policy or otherwise) asserted by or on behalf of any present or former employee or job applicant of any Company on account of or for (i) overtime pay, other than overtime pay for work done in the current payroll period, (ii) wages or salary for a period other than the current payroll period, (iii) any amount of vacation pay or pay in lieu of vacation time off, other than vacation time off or pay in lieu thereof earned in or in respect of the current fiscal year, (iv) any amount of severance pay or similar benefits, (v) unemployment insurance benefits, (vi) workers’ compensation or disability benefits, (vii) any violation of any statute, ordinance, order, rule or regulation relating to plant closings, employment terminations or layoffs, including but not limited to The Workers Adjustment and Retraining Act, and the National Labor Relations Act, as amended (viii) any violation of any statute, ordinance, order, rule or regulation relating to employee “whistleblower”, anti-retaliation, or “right-to-know” rights and protections, (ix) any violation of any statute, ordinance, order, rule or regulations relating to the employment obligations of federal contractors or subcontractors or (x) any violation of any regulation relating to minimum wages or maximum hours of work, or (xi) grievances concerning any alleged violation of any collective bargaining agreement; or (xii) any violation of any other employment-related statute, ordinance, order, rule, regulation, or common law, and the Companies are not aware of any such claims which have not been asserted. No person (including any governmental body) has asserted or threatened any claims against any Company under or arising out of any federal, state, or municipal statute, ordinance, order, rule, or regulation relating to discrimination or occupational safety in employment or employment practices.

3.20. Product Liability. Except as disclosed on Schedule 3.20 of the Disclosure Schedules, there are no: (i) liabilities of any Company, fixed or contingent, asserted or, to the knowledge of the Sellers or the UPC Stockholders, unasserted, with respect to any product liability or any similar claim that relates to any product manufactured by any Company on or prior to the Closing Date; or (ii) liabilities of any Company, fixed or contingent, asserted or, to the knowledge of the Sellers or the UPC Stockholders, unasserted, with respect to any claim for the breach of any express or implied product warranty or any other similar claim with respect to any product manufactured by any Company on or prior to the Closing Date, other than standard warranty obligations (to replace, repair or refund) in the ordinary course of the conduct of the Business, none of which involves a claim for money, property or services in excess of the amounts specifically reserved therefor on the Balance Sheet.

3.21. Transactions with Related Parties. Except as described in Schedule 3.21 of the Disclosure Schedules, since February 1, 2002, no UPC Stockholder or Affiliate of the Companies or person under the control of the UPC Stockholders or the Companies, has or has had:

(a) borrowed money from or loaned money to any Company or any of its Affiliates for the benefit of their respective businesses;

30

(b) any contractual or other claims, express or implied, or of any kind whatsoever against any Company or relating to the Business or the Acquired Assets or the Assumed Liabilities;

(c) any interest in the Acquired Assets or any property or assets used by any Company in the Business; or

(d) engaged in any other transaction with any Company or the Acquired Assets (other than employment relationships at the salaries disclosed in the Disclosure Schedules).

3.22. Insurance. Schedule 3.22 of the Disclosure Schedules contains a complete and correct list of all policies and contracts for property and casualty insurance covering any of the Acquired Assets or the Business. All such policies are outstanding and in full force and effect. There is no default with respect to any provision contained in any such policy, nor has there been any failure to give any notice or present any claim under any such policy in a timely fashion or in the manner or detail required by the policy. Except as set forth on Schedule 3.22 of the Disclosure Schedules: (a) all of such coverages are provided on an “occurrence” (as opposed to “claims made”) basis; (b) there are no outstanding claims under such policies; (c) there are no premiums or claims due under such policies which remain unpaid; (d) in the past two years, no notice of cancellation or non-renewal with respect to, or disallowance (other than reservation of rights by the insurer) of any material claim under, any such policy has been received; and (e) none of the Sellers has been refused any property and casualty insurance, nor have any of its coverages been limited by any insurance carrier to which it has applied for insurance or with which it has carried insurance during the last two years. The amounts of coverage under such policies of insurance for the Acquired Assets and properties of the Business are (a) adequate against risks usually insured against by persons operating similar businesses and operating similar properties and (b) in compliance in all respects with all foreign, federal, state and local laws, ordinances, regulations and orders applicable to their respective businesses that govern such amounts. There is no default with respect to any provisions contained in any insurance policy, nor has there been any failure to give any notice or present any claim under any insurance policy in a timely fashion or in the manner or detail required by the policy.

3.23. Brokers. Except as set forth on Schedule 3.23 of the Disclosure Schedules, none of the Companies, the UPC Stockholders or any of their Affiliates has retained any broker, finder or investment banking firm to act on its behalf in connection with the transactions contemplated by this Agreement and, to the Sellers’ or the UPC Stockholders’ knowledge, no other person is entitled to receive any brokerage commission, finder’s fee or other similar compensation in connection with the transactions contemplated by this Agreement.

3.24. Compensation Arrangements; Bank Accounts; Officers and Directors. Schedule 3.24 of the Disclosure Schedules sets forth (a) the names, titles and current annual salary, including any bonus, if applicable, of all present directors, officers, employees, consultants and agents of the Companies whose rate of annual compensation, including any promised, expected or customary bonus, equals or exceeds $75,000, together with a statement of the full amount of all remuneration paid by the Companies to each such person and to any director of any Company, during the twelve (12)-month period preceding the date hereof, (b) the name of each

31

bank in which the Companies have an account or safe deposit box, the identifying numbers or symbols thereof and the names of all persons authorized to draw thereon or to have access thereto, and each credit card issued to any Company or any other person for which any Company is responsible for charges made thereon, the issuer of such credit cards, the identifying numbers or symbols thereof and the names of all persons to which such cards have been issued or to whom access to such cards has been given, and (c) the names and titles of all directors and officers of the Acquired Subsidiaries and of each trustee, fiduciary or plan administrators of each employee benefit plan of the Companies.

3.25. Disclosure.

(a) No representation or warranty by the Companies in this Agreement, and no Ancillary Agreement, exhibit, document, statement, certificate or schedule furnished or to be furnished to the Buyers pursuant hereto, or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact or fails to state a fact necessary to make the statements made therein correct in all material respects. Neither the Companies nor the UPC Stockholders have knowledge of any fact or condition (other than general economic conditions) which has or could in the future have a Material Adverse Effect which has not been set forth in detail herein or in the Disclosure Schedules.

(b) There is no fact, development or threatened development with respect to the markets, products, services, clients, customers, facilities, computer software, data bases, personnel, vendors, suppliers, operations, assets or prospects of the Business (i) which is known to the Companies and (ii) which could reasonably be expected to materially adversely affect the Business or the Acquired Assets, other than such conditions as may affect as a whole the industry in which the Companies operate generally, and (iii) which is not disclosed in this Agreement. The Companies have no reason to believe that any loss of any employee, agent, customer or supplier or other advantageous arrangement will result because of the consummation of the transactions contemplated hereby.

3.26. Relationship with Significant Customers and Suppliers.

(a) None of the Companies has received any written or, to Sellers’ or the UPC Stockholders’ knowledge, oral communication or notice from any Significant Customer stating that such Significant Customer, or otherwise knows of any reason why such Significant Customer (except in connection with the termination of outstanding jobs upon their completion in the ordinary course or the expiration of existing contracts in accordance with their terms) (a) has ceased, or will cease, to use the products or services of the Business, (b) has substantially reduced, or will substantially reduce, the use of such products or services at any time or (c) will otherwise materially and adversely modify its business relationship with the Companies. “Significant Customer“ shall mean any customer, or group of affiliated customers, to whom any Seller has made sales in excess of $25,000 since February 1, 2003.

(b) None of the Companies has received any written or to the knowledge of UPC management after reasonable inquiry, oral communication or notice from any Significant Supplier of the Companies stating that such Significant Supplier, or otherwise knows of any reason why such Significant Supplier (except in connection with the termination of outstanding

32

jobs upon their completion in the ordinary course or the expiration of existing contracts in accordance with their terms) (a) has ceased, or will cease, to provide products or services of the Business, (b) has substantially reduced, or will substantially reduce, the provision of such products or services at any time or (c) will otherwise materially and adversely modify its business relationship with any Company. “Significant Supplier“ shall mean any supplier, or group of affiliated suppliers, from whom any Seller has made purchases in excess of $25,000 since February 1, 2003.

3.27. Restrictions. Except as set forth in Schedule 3.27 of the Disclosure Schedules, none of the Companies is a party to any indenture, agreement, contract, commitment, lease, plan, license, Permit, authorization or other instrument, document or other understanding, oral or written, or subject to any charter or other restriction or any judgment, order, writ, injunction, decree or award which materially adversely affects or materially restricts or, to the Sellers’ or the UPC Stockholders’ knowledge, may in the future materially adversely affect or materially restrict, the business, operations, assets, properties, rights, prospects or condition (financial or otherwise) of the Business after consummation of the transactions contemplated hereby.

3.28. Projections. The forecasts and projections of future financial results supplied by the Companies to the Buyers were prepared by the Sellers in good faith based upon expectations and assumptions that the Companies believed, as of the date such forecasts and projections were prepared, and still do believe, as of the date hereof and as of the Closing Date, to be reasonable.

3.29. All Assets. Except as set forth in Schedule 3.29 of the Disclosure Schedule, the Acquired Assets include all assets, rights, properties and contracts the use of which is necessary to the continued conduct of the Business by the Buyers substantially in the manner as it was conducted prior to the Closing Date.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF BUYERS

The Buyers jointly and severally hereby represent and warrant to the Sellers as follows:

4.1. Organization. Parent and Remy are corporations duly organized, validly existing, and in good standing under the laws of the jurisdictions of their incorporation, and have all requisite corporate power and authority to carry on their business as it is now being conducted, and to execute, deliver, and perform this Agreement and the Ancillary Agreements to which each of them is a party, and to consummate the transactions contemplated hereby and thereby.

4.2. Corporate Power and Authority; Effect of Agreement. The execution, delivery, and performance by the Buyers of this Agreement, and each Ancillary Agreement to which the Buyers are a party, and the consummation by the Buyers of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Buyers. This Agreement has been, and each Ancillary Agreement to which the Buyers are a party will be, duly and validly executed and delivered by the Buyers and constitutes, or will constitute, the valid and

33

binding obligation of the Buyers, enforceable against the Buyers in accordance with its terms. The execution, delivery, and performance by the Buyers of this Agreement, and each Ancillary Agreement to which the Buyers are a party, and the consummation by the Buyers of the transactions contemplated hereby and thereby does not and will not, with or without the giving of notice or the lapse of time, or both, (i) violate any provision of law, rule, or regulation to which the Buyers are subject, (ii) violate any order, judgment, or decree applicable to the Buyers or (iii) violate any provision of the charter, the regulations or other corporate governance documents of the Buyers; except, in each case, for violations that in the aggregate would not materially hinder or impair the consummation of the transactions contemplated hereby.

4.3. Consents. Except as set forth on Schedule 4.3 of the Disclosure Schedules, no consent, approval, or authorization of, or exemption by, or filing with, or payment of any transfer tax to, any governmental authority is required to be obtained or made by the Buyers in connection with the execution, delivery and performance by the Buyers of this Agreement or any Ancillary Agreement to which the Buyers are a party or the taking by the Buyers of any other action contemplated hereby or thereby.

4.4. Brokers. Neither Parent nor Remy has retained a broker, finder or investment banking firm to act on its behalf in connection with the transactions contemplated by this Agreement and, to Parent’s and Remy’s knowledge, no person is entitled to receive any brokerage commission, finder’s fee or other similar compensation in connection with the transactions contemplated by this Agreement.

4.5. Litigation; Decrees. There are no lawsuits, claims, proceedings, investigations, injunctions, judgments, orders or decrees pending or, to the knowledge of the Buyers, threatened which challenge or seek to enjoin or delay this Agreement or the transactions contemplated hereby or which would materially adversely affect the Parent’s and Remy’s ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

4.6. Sufficient Funds. Remy has cash available and existing committed borrowing facilities which together are sufficient to enable it to consummate the transactions contemplated hereby.

ARTICLE V.

COVENANTS

5.1. Cooperation. From the date hereof and prior to the Closing, the Companies and the Buyers will use their respective reasonable best efforts, and will cooperate with each other, to secure all necessary consents, approvals, authorizations, exemptions, and waivers from third parties or governmental authorities (including any required pursuant to the Hart-Scott-Rodino Antitrust Improvements act of 1974, as amended (the “HSR Act“)), as shall be required in order to enable the parties to effect the transactions contemplated hereby, and will otherwise use their respective reasonable best efforts to cause the consummation of such transactions, in accordance with the terms and conditions hereof. Notwithstanding the forgoing, no Company shall amend or modify any agreement or contract to obtain any consents required pursuant to Section 6.5 hereof or otherwise without the prior written consent of the Buyers except for amendments or modifications to agreements or contracts that will not have an adverse operational or economic consequence to the Buyers or any Company.

34

5.2. Conduct of the Business Pending Closing. From the date of this Agreement to the Closing Date:

(a) The Companies shall conduct, carry on and maintain and preserve the Business intact, maintain the inventory and insurance of the Business at adequate levels, comply with all material laws, preserve the goodwill of suppliers, customers and others having business relations with the Sellers and maintain the Business, as well as the Companies’ books of account, records and files related to the conduct of the Business and the Employees, all in the ordinary course of business and consistent with prior practice to make the same available to the Buyers as of the Closing.

(b) The Companies shall inform the Buyers in writing of any event or circumstance that has or could reasonably be expected to have a Material Adverse Effect immediately and in no event later than three days after the Companies or any of their Affiliates has knowledge of such an event or circumstance.

(c) None of the Companies, the UPC Stockholders nor their respective Affiliates shall, without the prior written consent of the Buyers, take or omit to take any action which if taken or omitted prior to the date hereof would constitute a breach of any representations or warranties set forth in this Agreement, or which would result in any of the occurrences or events set forth in Section 3.5 hereof.

(d) The Companies shall not make any changes to the existing capital structure or ownership of any of the Companies, whether by merger, distribution, dividend or otherwise.

(e) The Companies shall not enter into any new POS Contracts with any customers or vendors and shall inform the Buyers in writing of any changes in their current POS Contracts.

5.3. Access. The Companies shall allow the Buyers and their representatives full and complete access during normal business hours and upon reasonable notice to the books, records, documents and facilities of the Companies including, among other things, for the purposes of conducting environmental investigations and will on the same condition use best efforts to endeavor to (a) make the officers, employees, contract employees, consultants, attorneys, agents, independent accounts and actuaries of the Companies available to discuss such aspects of the business, financial condition or prospects of the Companies as may be reasonably necessary and (b) provide full and complete access during normal business hours and upon reasonable notice to the facilities of third parties where manufacturing, warehousing or distributing of products or inventories of the Companies, or supplying of raw materials to the Companies, is conducted. The Companies authorize the Buyers to, and will cooperate so that the Buyers may, obtain information concerning the Business, Acquired Assets and the Real Estate from all government agencies or Authorities having enforcement responsibility for environmental, health, safety, building and zoning and other laws and regulations.

35

5.4. Resignations. At the Closing, the Sellers will cause to be delivered to the Buyers written resignations of each officer or director of each of the Acquired Subsidiaries as to which such resignation has been requested by the Buyers.

5.5. Estoppel and Nondisturbance Certificates and Consents.

(a) Immediately upon its execution of this Agreement and up to and including Closing, each Seller shall exercise its, and shall cause the other Business Entities to cooperate with the Buyers and to exercise their, commercially reasonable efforts to obtain and deliver to the Buyers at the Closing estoppel certificates and lessor and lessor mortgagee consents and waivers (such consents not to be conditioned on any increased rental, other payment, reduced term, or other change of lease terms), in a form acceptable to the Buyers and their senior lenders (the “Consent, Estoppel and Nondisturbance Certificates“), from each real property lessor and lessor mortgagee listed on Schedule 1.1(b) of the Disclosure Schedules.

(b) From the date hereof and up to and including the Closing, the Companies shall use their commercially reasonable efforts to obtain (and furnish to the Buyers evidence thereof reasonably satisfactory to the Buyers) any approvals, waivers, and consents from the parties set forth on Schedule 5.5 of the Disclosure Schedules in respect of the Contracts and other commitments of the Companies contained therein in order for such Contracts and other commitments of the Companies to remain in effect for the benefit of the Buyers following the consummation of the transactions contemplated hereby on the same terms as in effect prior to the Closing. The Companies shall not permit any such approvals, waivers and consents to expire or be withdrawn as of the Closing Date.

5.6. Notification and Cure. The Sellers and the UPC Stockholders shall promptly notify the Buyers of any event or fact coming to the Sellers’ attention prior to Closing which causes the Sellers’ representations, warranties, covenants or agreements contained under this Agreement to be inaccurate. The Sellers and the UPC Stockholders shall use their reasonable best efforts to cure before the Closing, to the extent curable and within their control, any event, transaction or circumstance occurring after the date of this Agreement that causes or will cause any such covenant or agreement of the Sellers and the UPC Stockholders under this Agreement to be breached or that renders or will render inaccurate any such representation or warranty of the Sellers and the UPC Stockholders contained in this Agreement. No notice given pursuant to this Section 5.6 shall have any effect on (i) the representations, warranties, covenants or agreements contained in this Agreement for purposes of determining the satisfaction of any condition contained herein or (ii) any right to indemnity hereunder.

5.7. Insurance. From the date hereof and prior to the Closing, each Seller shall maintain in full force and effect the policies of insurance listed on Schedule 3.22 of the Disclosure Schedules, subject only to variations required by the ordinary operations of its business, or else will obtain, prior to the lapse of any such policy, substantially similar coverage with insurers of recognized standing and approved in writing by the Buyers. Each Seller and the UPC Stockholders shall promptly advise the Buyers in writing of any change of insurer or type of coverage in respect of the policies listed on Schedule 3.22 of the Disclosure Schedules.

36

5.8. Exclusivity. None of the Sellers, the UPC Stockholders or any of their respective Affiliates will, directly or indirectly, encourage, initiate or solicit offers for, furnish information regarding or engage in any negotiations, meetings or other communications with any third party concerning, or enter into any agreements with respect to, any acquisition of any Seller or any of the Business, by any party other than the Buyers, and in the event that during such period any offers or other such communications are received, the Sellers and the UPC Stockholders will promptly communicate to the Buyers their existence and terms, and the identity of the party making such offer or contact.

5.9. Non-Compete.

(a) During the period beginning on the Closing Date and ending on the later of (i) the fifth (5^th) anniversary of the Closing Date and (ii) two years following the date of termination of all employment of any UPC Stockholder’s employment with the Buyers (the “Non-Compete Period“), each Seller and UPC Stockholder jointly and severally covenants and agrees not to, and shall cause its Affiliates not to, directly or indirectly and anywhere in any state of the United States, Canada, Mexico, Central America, South America and Europe, conduct, manage, operate, engage in, have an ownership interest in any business or enterprise engaged in (i) manufacturing and selling new and remanufactured alternators and starters for the automotive industry, (ii) any business that uses any trademark, tradenames or slogans similar to Sellers’ or their Affiliates’ trademarks, tradenames or slogans, or (iii) any activities that are otherwise competitive with the Business as conducted as of the Closing Date or the termination of such UPC Stockholder’s employment (collectively, the “Restricted Business“).

(b) During the Non-Compete Period, each such Seller and UPC Stockholder shall not, and shall cause its affiliates not to, directly or indirectly, call-on, solicit or induce, or attempt to solicit or induce, any customer or other business relation of any Seller for the provision of products or services related to the Restricted Business or in any other manner that would otherwise interfere with business relationship between any Seller and its respective customers and other business relations.

(c) During the Non-Compete Period, each such Seller and UPC Stockholder shall not, and shall cause its affiliates not to, directly or indirectly, call-on, solicit or induce, or attempt to solicit or induce, any Transferred Employee or any other employee or staff of the Sellers, the Buyers, or any Affiliate of the Sellers or the Buyers to leave the employ of any such Seller, Buyer or Affiliate for any reason whatsoever, nor shall any Seller or UPC Stockholder offer or provide employment (whether such employment is for such Seller or any other business or enterprise), either on a full-time basis or part-time or consulting basis, to any person who then currently is, or who within six months immediately prior thereto was, an employee of or staffed with any Seller, Buyer, or Affiliate.

(d) Each of the Sellers and the UPC Stockholders acknowledges and agrees that the provisions of this Section 5.9 are reasonable and necessary to protect the legitimate business interests of the Buyers and its investment in the Business. None of the Sellers or the UPC Stockholders shall contest that the Buyers’ and the Business’ remedies at law for any breach or threat of breach by such Seller or UPC Stockholder or any of their Affiliates of the provisions of this Section 5.9 will be inadequate, and that the Buyers shall be entitled to an

37

injunction or injunctions to prevent breaches of the provisions of this Section 5.9 and to enforce specifically such terms and provisions, in addition to any other remedy to which the Buyers may be entitled at law or equity. The restrictive covenants contained in this Section 5.9 are covenants independent of any other provision of this Agreement or any other agreement between the parties hereunder and the existence of any claim which any Seller or UPC Stockholder may allege against the Buyers under any other provision of the Agreement or any other agreement will not prevent the enforcement of these covenants.

(e) If any of the provisions contained in this Section 5.9 shall for any reason be held to be excessively broad as to duration, scope, activity or subject, then such provision shall be construed by limiting and reducing it, so as to be valid and enforceable to the extent compatible with the applicable law or the determination by a court of competent jurisdiction.

5.10. Confidentiality. The Sellers and each UPC Stockholder shall, and shall cause their respective Affiliates to, keep confidential and not disclose to any other person or entity or use for their own benefit or the benefit of any other person or entity any confidential proprietary information, technology, know-how, trade secrets (including, without limitation, all results of research and development), product formulas, industrial designs, franchises, inventions or other industrial and intellectual property in his, her or their possession or control regarding the Business. The obligations of the Sellers and the UPC Stockholders under this Section 5.10 shall not apply to information which (i) is or becomes generally available to the public without breach of the commitment provided for in this Section; or (ii) is required to be disclosed by law, order or regulation of a court or tribunal or governmental authority; provided, however, that, in any such case, the Sellers and the UPC Stockholders, subject to such requirement, shall notify the Buyers as early as reasonably practicable prior to disclosure to allow the Buyers to take appropriate measures to preserve the confidentiality of such information at the cost of the Sellers.

5.11. Tax Matters.

(a) Pre-Closing Tax Returns. The Sellers shall prepare and timely file or cause to be prepared and timely filed all Tax Returns required or permitted to be filed by the Acquired Subsidiaries on or prior to the Closing Date and all income Tax Returns of the Acquired Subsidiaries required to be filed with respect to taxable periods ending on or before the Closing Date (the “Pre-Closing Returns“). The Pre-Closing Returns shall be prepared, where relevant, in a manner consistent with the Companies’ past practices except as otherwise required by applicable law. The Sellers shall allow the Buyers the opportunity to review and comment on the Pre-Closing Returns to be filed after the date hereof for a reasonable period prior to the intended filing date. The Sellers shall timely pay or cause to be timely paid and shall be responsible for all Taxes due with respect to the Pre-Closing Returns.

The Buyers shall cause all other Tax Returns of the Acquired Subsidiaries required to be prepared and filed following the Closing Date and shall pay all Taxes shown thereon, without regard to whether any such Tax Return that includes a period beginning on or prior to the Closing Date to be timely prepared and filed(the “Straddle Period Returns“). The Buyers shall deliver such return (and a calculation of the portion of the Taxes shown on such return that are apportioned, as determined in Section 5.11(b), to the portion of the Tax period ending on the Closing Date) to the Sellers, for review and comment, a reasonable period prior to

38

the applicable filing deadline for such return and shall make changes to such Straddle Period Returns as reasonably requested by the Stockholder no later than 21 days prior to the filing deadline of such Straddle Period Return.

(b) Assumed Tax Liabilities. No later than one hundred twenty (120) days following the Closing, the Sellers shall deliver to the Buyers for their review and comment a proposed calculation of the amount of the Assumed Tax Liabilities, together with accompanying schedules setting forth in reasonable detail the basis for such calculation (the “Proposed Calculation“). Within thirty (30) days following receipt of the Proposed Calculation, the Buyers shall provide to the Sellers written notice of any disagreement with respect to the Proposed Calculation. The Buyers and the Sellers shall attempt in good faith to promptly resolve any disputes with respect to the calculation of the Assumed Tax Liabilities; provided that if they are unable to resolve such disputes within thirty (30) days following the Sellers receipt of the notice of disputed items, such disputed items shall be delivered to the Third Accounting Firm (either previously selected pursuant to Section 1.5 or, if not so previously selected, to be selected in accordance with the procedures of Section 1.5) for final determination, which final determination shall be binding upon the parties. The Sellers agree to provide the Buyers with such cooperation as the Buyers shall reasonably request in connection with its review and analysis of the Proposed Calculations. The Sellers shall promptly notify the Buyer of the commencement of any audit or examination with respect to any income tax return of the Sellers for the taxable period that includes the Closing Date or for any other taxable period of the Sellers to the extent that such audit or examination could reasonably impact the amount of the Assumed Tax Liability hereunder. The Sellers shall keep Buyers fully informed with respect to the progress of any such Tax proceeding, including but not limited to, notifying Buyers of any inquiries or proposed adjustments regarding any material issues that could impact the Tax Attributes of the Sellers. Buyers shall have the right to participate in any such audit or examination at its own expense to the extent reasonably practicable, and Sellers shall neither settle or compromise any such contested matters arising out of such audit or examination without the consent of Buyer, which consent shall not be unreasonably withheld.

(c) Tax Indemnification. After the Closing Date, the Sellers shall indemnify and hold harmless the Buyers and the Companies from and against (i) all Taxes of the Sellers attributable to the Sellers’ ownership of the Acquired Assets or the operation of the Business on or before the Closing Date other that the Assumed Tax Liabilities, (ii) any increase in the Assumed Tax Liabilities that results from the Tax Attributes being different from the Tax Assumptions, (iii) any Taxes of the Acquired Subsidiaries attributable to any taxable period (or portion thereof) ending on or before the Closing Date, (iv) any increase in Tax liability resulting from any Company being liable for any Taxes (1) of any consolidated group of which any Company was a member on or before the Closing Date pursuant to Section 1.1502-6 of the Treasury Regulations or any analogous state, local or foreign provisions and (2) of any Person as transferee or successor, by contract or otherwise for any taxable period (or portion thereof) ending on or before the Closing Date and (v) any sales, use or similar Taxes the Companies or the Buyers are required to impose, collect or pay, whether or not such Taxes are payable before or after the Closing, to the extent such Taxes must be imposed, collected or paid on equipment, products or services sold or contracted for lease by the Companies prior to Closing. In the event a taxable period includes a period prior to the Closing Date, Taxes shall, in the case of real and personal property Taxes, be apportioned ratably to such taxable period on a daily basis and, in the case of other Taxes, be apportioned to such taxable period based on a closing of the books on the Closing Date.

39

(d) Income Tax Refunds. With respect to any pending or subsequently filed claim for refund of any income Taxes of the Acquired Subsidiaries in respect of any taxable period, or portion thereof, ending on or prior to the Closing Date, or any claims or actions for refund of such income Taxes by the Sellers, the Buyers agree that the Sellers will retain the right, with the cooperation of the Acquired Subsidiaries, to prosecute, settle or abandon, on behalf of themselves or any Acquired Subsidiary, each of such claims or actions at the Sellers’ expense; provided, however, that the Sellers shall not prosecute, settle or abandon any such claim or action in a manner that may have adverse effect on the other parties’ tax position or indemnification obligations under this Agreement. The Buyers further agree to use their reasonable efforts to cause the Acquired Subsidiaries to provide the Sellers with all reasonable cooperation in obtaining such refunds and to make the records and personnel of the Acquired Subsidiaries available to assist the Sellers to prosecute any such claim or action for refund. In the event that any income Tax refund is received by any Acquired Subsidiary in respect of any period, or portion thereof, ending on or prior to the Closing Date, such Acquired Subsidiary shall pay to the Sellers an amount equal to such refund plus any interest earned on such refund, except to the extent such refund is reflected as an asset on the Balance Sheet, the books and records of the Companies at Closing.

(e) The Buyers agree to pay all Transfer Taxes relating to the purchase of the Acquired Assets. The Buyers and the Sellers will use their reasonable best efforts to obtain any certificate or other document from any Governmental Entity or any other person as may be necessary to mitigate, reduce or eliminate any Transfer Taxes, to the extent that such certificate or other document would not increase the Taxes of the Sellers.

(f) The Sellers or the Buyers, as the case may be, shall provide reimbursement for any Tax paid by one party all or a portion of which is the responsibility of the other party. Within a reasonable time prior to the payment of any said Tax, the party paying such Tax shall give notice to the other party of the Tax payable and the portion that is the liability of each party, although failure to do so will not relieve the other party from its liability hereunder. Real property, personal property and similar ad valorem Taxes shall be accrued as of the close of business on the date hereof and an adjustment shall be made to the Purchase Price to reflect such accruals and, if applicable, related prepaid Taxes.

(g) The Buyers and the Sellers each agree, with respect to persons who may be employed by both of them for the calendar year that includes the date hereof, to follow the Standard Procedure set forth in Revenue Procedure 96-60, 1996-2 C.B. 399, whereby the Sellers shall be responsible for employment tax reporting for such persons for all times during which they were employed by the Sellers.

(h) The Buyers and the Sellers agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Acquired Assets, including, without limitation, access to books and records, as is reasonably necessary for the filing of all Tax Returns by the Buyers or the Sellers, the making of any election relating to Taxes, the preparation for any audit with respect to Taxes, and the

40

prosecution or defense of any claim, suit or proceeding relating to any Tax. Each of the Buyers and the Sellers shall retain all books and records with respect to Taxes pertaining to the Acquired Assets until the later of six (6) years following the date hereof or the expiration of the statute of limitations period (including, to the extent notified by the Buyers or the Sellers, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Governmental Body. At the end of the period, each party shall provide the other with at least thirty (30) days prior written notice before transferring, destroying or discarding any such books and records, during which period the party receiving such notice can elect to take possession, at its own expense, of such books and records. The Buyers and the Sellers shall cooperate fully with each other in the conduct of any audit, litigation or other proceeding relating to Taxes involving the Acquired Assets, provided that the Sellers or the Buyers, as appropriate, shall reimburse the Buyers or the Sellers for reasonable costs associated with its cooperation.

(i) In the event that, in connection with the filing of the federal or state income tax returns of the Sellers for the taxable year that includes the Closing Date, the Sellers are required to pay an amount of income Taxes in excess of the Assumed Tax Liability (an “Excess Tax Liability“), the Buyers shall advance to the Sellers an amount equal to the Excess Tax Liability for use by the Sellers in paying such Taxes. Any amounts payable pursuant to the Earn Out hereunder shall be reduced dollar-for-dollar by the amount of any advances made pursuant to this Section 5.11(i). The Buyers shall have no obligation to make advances pursuant this Section 5.11(i) to the extent that any Excess Tax Liability arises as a result of the Tax Attributes being different from the Tax Assumptions.

5.12. Hart-Scott-Rodino Act. If not previously filed, as soon as practicable after the date of this Agreement, the Buyers, the Sellers and the UPC Stockholders shall, in cooperation with each other, file (or cause to be filed) with each of the United States Department of Justice (the “DOJ“) and the Federal Trade Commission (“FTC“) any reports or notifications that may be required to be filed by them under the HSR Act in connection with the transactions contemplated by this Agreement. Any fees due from any party to the FTC or DOJ under the HSR Act in connection with the filing of any of those reports or notifications shall be shared equally by the Company and the Buyers.

5.13. Employees and Employee Benefit Plans.

(a) The Buyers shall offer employment (at the base compensation and wage levels and on other terms and conditions as the Buyers shall determine) to each of the employees listed on Schedule 5.13. All such employees who accept the Buyers’ offer of employment and actually perform services for the Buyers on or after the Closing Date are hereinafter referred to as the “Transferring Employees.” The employment of the Transferring Employees with the Buyers shall be considered effective and their employment by the Sellers shall terminate and transfer to the Buyers on the date they first perform services for the Buyers (the “Employment Date“). Notwithstanding anything set forth below or herein to the contrary, (i) nothing in this Agreement shall create any obligation on the part of the Buyers to continue the employment of any employee for any definite period following the Employment Date, and (ii) nothing in this Agreement shall preclude the Buyers from altering, amending, or terminating any of its employee benefit plans, or the participation of any of its employees in such plans, at any time. The Buyers will assume the liabilities and obligations set forth on Schedule 5.13 of the Disclosure Schedules with respect to compensation and employee benefits owed to any employees, former employees, agents or independent contractors of the Sellers.

41

(b) Schedule 5.13 of the Disclosure Schedules sets forth any earned, unused vacation and (if applicable) sick days of the Transferring Employees accrued on the books of the Sellers as of the Employment Date in accordance with the Sellers’ vacation and sick pay policy. The Sellers shall retain all liability for any and all earned, unused vacation and sick days of the Transferring Employees that is not specifically disclosed on Schedule 5.13 of the Disclosure Schedules, but all such earned and unused vacation and sick days which are disclosed shall become the sole and exclusive liability of the Buyers.

(c) Except as disclosed in Schedule 3.19 of the Disclosure Schedules and as expressly assumed by the Buyers under this Section 5.13, the Sellers shall be liable for, and indemnify and hold the Buyers harmless from, all claims, demands, costs or other liabilities, including reasonable attorneys’ fees: (i) related to the employees of the Buyers who do not become Transferring Employees; including individuals who may be covered by Section 5.4, above; (ii) to the extent such liability arises from any action, event or course of conduct (except for any action, event or course of conduct by the Buyers) that occurs prior to the Employment Date; or (iii) to the extent such liability arises under or relates to any employee benefit plan, program or arrangement of the Sellers. This provision is intended to cover all employment claims asserted by the Sellers’ employees (other than those disclosed on Schedule 3.19 or Schedule 5.13 of the Disclosure Schedules) that arose out of, or in connection with, their employment by the Sellers, including claims or actions based on allegations of wrongful discharge, retaliatory discharge, breach of contract, promissory estoppel, intentional infliction of emotional distress, defamation and/or other common law claims; claims or actions alleging discrimination on the basis of race, color, sex, religion, national origin, age, disability or handicap under 42 U.S.C. § 1981, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967 (“ADEA“), the Rehabilitation Act of 1973, the Equal Pay Act of 1963, the Americans with Disabilities Act of 1990, and the Civil Rights Act of 1991; claims or actions alleging a failure to make reasonable accommodations under the Americans with Disabilities Act of 1990 or the Rehabilitation Act of 1973; claims or actions arising under the National Labor Relations Act, the Family and Medical Leave Act of 1993, the Occupational Safety and Health Act, and the Employee Retirement Income Security Act of 1974 (all as amended); and claims or actions arising under any other federal, state or local law, ordinance, rule or regulation.

(d) Except as otherwise required by the terms of any such plan or applicable law or except with respect to the Assumed Plans, if any, as of the Employment Date all Transferring Employees shall cease active participation in any Benefit Plan or benefit arrangement sponsored or maintained by the Sellers.

(e) Except with respect to those individuals that are currently continuing group health plan coverage under Section 4980B of the Code (“COBRA“) as of the Employment Date and those that are or may become eligible to elect to continue group health plan coverage under COBRA under any Benefit Plan on or after the Employment Date, and in each case as specifically disclosed on Schedule 5.13 of the Disclosure Schedules and notwithstanding the allocation of COBRA obligations under IRS Regulation Section 54.4980B-9 (Q&A-8(c)), the

42

Sellers shall be and remain responsible for providing continuation coverage to employees (and their covered dependents) who do not become Transferring Employees and to Transferring Employees (and their covered dependents) under each of its applicable health plans with respect to all qualifying events under COBRA and comparable state law which occur on or before the Employment Date.

(f) With respect to each Transferring Employee, to the extent not disclosed in Schedule 3.19 or Schedule 5.13 of the Disclosure Schedules, the Sellers shall retain the obligation and liability for any workers’ compensation or similar workers’ protection claims with respect to any such individual, whether incurred prior to, on or after the Employment Date which are the result of an injury or illness originating prior to or on the Employment Date.

(g) Complete copies of the personnel records of Transferring Employees shall be transferred to the Buyers on the Employment Date.

(h) Unless such obligation is waived by the Buyers on or prior to the Employment Date, the Sellers agree to transfer sponsorship, and the Buyers agree to assume sponsorship, as of the Employment Date, of those Benefit Plans that are “employee welfare benefit plans” within the meaning of Section 3(1) of ERISA and related other agreements, as applicable, of the Sellers which are specifically identified on Schedule 5.13 (collectively, the “Assumed Plans“), subject to the consent and agreement of all related parties (i.e., insurance companies, third-party administrators, etc.), which the parties agree to use their reasonable efforts to obtain prior to the Employment. The Sellers shall transfer or cause to be transferred any assets associated with the Assumed Plans simultaneously with the transfer of sponsorship contemplated in this Section 5.13. The Sellers shall be and remain solely responsible for (i) all reporting and disclosure obligations and funding obligations, if any, related to the Assumed Plans through and including the Employment Date, (ii) any and all liabilities and obligations that were incurred by any covered person under any of the Assumed Plans on or prior to the Employment Date unless specifically disclosed on Schedule 5.13, and (iii) all other obligations required by any and all laws (including, but not limited to the Code and ERISA) relating to such Assumed Plans through and including the Employment Date unless such liabilities are specifically disclosed on Schedule 5.13. The Seller shall provide the Purchaser with all requested information concerning the administration of such Assumed Plans prior to and following the Employment Date.

(i) No Transferring Employee or other current or former employee of the Sellers including any beneficiary or dependent thereof, or any other person not a party to this Agreement, shall be entitled to assert any claim hereunder as a third-party beneficiary to this Agreement.

5.14. Monthly Financial Statements. The Sellers will deliver to the Buyers, as soon as available and in any event within fifteen (15) calendar days after the end of each calendar month ending on or after the date of this Agreement and prior to Closing, but excluding the calendar month in which Closing, statements of operations of the Business for such month and for that part of the fiscal year ending with such month, and the related balance sheet as at the end of such month, certified by the chief financial officer of each Seller to present fairly the financial position of the Business as at the end of such month and the results of its operations for the periods then ended and to have been prepared in accordance with GAAP Consistently Applied.

43

5.15. Further Assurances. The Sellers and the UPC Stockholders from time to time after the Closing, at the Buyers’ request, will execute, acknowledge and deliver to the Buyers such other instruments of conveyance and transfer and will take such other actions and execute such other documents, certifications, and further assurances as the Buyers may reasonably require in order to vest more effectively in the Buyers or to put the Buyers more fully in possession of the Acquired Assets or better enable the Buyers to complete, perform and discharge any of the Assumed Liabilities. Each party shall cooperate and deliver such instruments and take such action as may be reasonably requested by the other party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.

5.16. Surveys. The Sellers shall cooperate with the Buyers and use their commercially reasonable efforts to cause to be delivered to the Buyers, at the Buyers’ sole cost and expense, no later than fifteen (15) days prior to Closing, as-built surveys of each parcel of Owned Real Estate (collectively, the “Surveys“) in accordance with (i) the 1999 minimum standard detail requirements for ALTA/ACSM Land Title Surveys, including, without limitation, Table A items 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 and such additional or different Table A Items as the Buyers may, in its discretion, require, (ii) with the Accuracy Standards (as adopted by ALTA and ACSM) of an Urban Survey, and (iii) local standards required by the Buyers, in its discretion, dated after the date hereof, and showing, without limiting the foregoing, with respect to each parcel of the Owned Real Estate, all easements and other appurtenances benefiting and all easements and other encumbrances burdening such parcel. Each Survey shall be certified to any lender providing financing to the Buyers for the transactions contemplated hereby, the Buyers, the title company providing the Title Insurance (the “Title Company“) and any other person reasonably requested by the Buyers and shall comply with any requirements imposed by the Title Company as a condition to the removal of any survey exception from the general exceptions to the Title Insurance covering the Owned Real Estate shown on such survey.

5.17. Rebates and Discounts.

(a) In the event that any Contract for the sale of finished goods to customers of the Sellers which is assumed by the Buyers provides for quantity price discounts, rebates or other allowances for the purchaser based upon purchases for the calendar year or other period in which the Closing occurs, the discount, rebate or allowance shall be determined by the Sellers and the Buyers at the end of such period and an allocation thereof shall be made as between the Sellers and the Buyers, based upon the dollar volume or number of units of sales on which such discount, rebate or allowance is based, allocated pro rata between sales under the contract before and after the Closing Date during the relevant contract period.

(b) Any payments required to be made by the parties pursuant to this Section 5.17 shall be paid, with respect to each Contract, by certified or official bank check within five Business Days after the allocation of the discount, rebate or other allowance has been finally determined.

44

5.18. Collection of Receivables. The Sellers shall, by letter prepared by the Buyers (the “Letter“), irrevocably authorize, instruct and direct that the account parties of all accounts, notes and receivables (including insurance proceeds) constituting Acquired Assets (such parties, the “Seller Account Parties“) shall make and deliver all payments relating thereto on or after the Closing to such location, bank and account (the “Lockbox Account“) as the Buyers shall specify. The Letter shall cover all such matters as Buyer shall reasonably determine. If, notwithstanding such Letter, any of the Seller Account Parties remits payments on or after the Closing directly or indirectly to the Sellers or their Affiliates instead of to the Lockbox Account, the Sellers agree that Sellers shall promptly (and in any event no later than two Business Days following receipt) deliver all such payments (including but not limited to negotiable instruments which shall be duly endorsed by the Sellers to the order of the Buyers) to the Buyers. The Sellers hereby irrevocably designate, make, constitute and appoint the Buyers (and all persons designated by the Buyers) as Sellers’ true and lawful attorneys-in-fact to do any of the following in the sole discretion of the Buyers: to receive, give receipts for, take, endorse, assign, deliver, deposit, demand, collect, sue on, compound, and give acquittance for any and all information, documents, payments forms (including negotiable and non-negotiable instruments) and proceeds received by Buyers via the Lockbox Account or from the Sellers that relate to the accounts, notes and receivables (including insurance proceeds) of the Seller Account Parties constituting Acquired Assets. Each of the Sellers shall use its best efforts to assist the Buyers in collecting in full from Seller Account Parties all amounts owed pursuant to all accounts, notes and receivables constituting Acquired Assets.

5.19. Title Insurance. The Buyers shall obtain and Sellers shall use its commercially reasonable efforts to cause to be delivered to Buyers, at the Buyers’ sole expense but at standard rates, good and valid title insurance policies or, in final form, irrevocable ALTA title insurance binders or commitments, from the Title Company reasonably acceptable to the Buyers and its senior lenders (the “Title Insurance“), dated as of the open of business of the Closing Date, insuring such Buyer as the fee owner of such Seller’s parcels of Owned Real Estate as of Closing and in connection with the issuance of the policies of Title Insurance, execute and deliver, or cause to be executed and delivered, to the Title Company any affidavits reasonably requested by the Title Company or the Buyers in connection with the issuance of the policies as required hereunder so that such insurance shall be endorsed to waive the title companies’ rights to raise the Buyers’ imputed knowledge of the Sellers as a defense to insurance if Buyer is acquiring the entity which owns the Owned Real Estate. Each such policy or binder, as to the insurer, the insured, the dollar limit and amount of coverage and the exceptions and conditions thereof shall be reasonably satisfactory to the Buyers and their senior lenders, with such endorsements thereto, including a zoning endorsement, as may reasonably be requested by the Buyers or their senior lenders.

5.20. Use of Names. On or before the Closing Date, UPC shall amend its charter to remove “Unit Parts Company” and any similar words from its corporate name. On and after the Closing Date, UPC shall, and shall cause its Affiliates to, discontinue all use of the names and marks listed on Schedule 1.1 of the Disclosure Schedules alone or in any combination of any words or marks confusingly similar thereto.

5.21. Supplements to Disclosure Schedules. The Sellers shall have the right from and after the date hereof until the seventh day prior to the Closing Date to amend or written

45

supplement the Disclosure Schedules attached to this Agreement for any event which first occurs after the date hereof. As promptly as practicable after any event described below which first occurs after the date hereof, the Sellers will provide the Buyers with a supplement or amendment to the Disclosure Schedules with respect to any matter, condition or occurrence hereafter arising which, if existing or occurring on the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedules. No claim for breach of this Agreement may be made by the Buyers based on any disclosure made by Sellers in any such amended or supplemented Disclosure Schedules. In connection with the delivery of any amended or supplemented Disclosure Schedules, the Sellers shall promptly provide to the Buyers all additional information reasonably requested by the Buyers in order to make a determination as to whether the Buyers shall accept such supplement of the Disclosure Schedules. Promptly after making such determination, the Buyers shall, in their sole discretion, either (i) accept such amended or supplemented Disclosure Schedules, in which case the Buyers shall be deemed at Closing to have waived any claim with respect to the contents thereof, or (ii) terminate this Agreement.

ARTICLE VI.

CONDITIONS TO PARENT’S AND REMY’S OBLIGATIONS

The obligation of Parent and Remy to consummate the transactions contemplated hereby at the Closing shall be subject to the satisfaction (or waiver) on or prior to the Closing Date of all of the following conditions:

6.1. Representations and Warranties True and Correct. All of the representations and warranties of the Sellers and the UPC Stockholders contained in this Agreement or in any written certificate delivered pursuant to this Agreement (i) that are qualified by materiality shall be true and correct in all respects on the date of this Agreement and on and as of the Closing Date as though made on and as of that date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date subject to such qualification), and (ii) that are not qualified by materiality shall be true and correct in all material respects on the date of this Agreement and on and as of the Closing Date as though made on and as of that date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

6.2. Covenants and Agreements Performed. The Sellers and the UPC Stockholders shall have performed or complied with, in all material respects, or delivered, all covenants, agreements, conditions or document required by this Agreement to be performed, complied with, or delivered by the Sellers or the UPC Stockholders prior to or on the Closing Date.

6.3. Sellers’ and UPC Stockholders’ Closing Certificate. The Buyers shall have been furnished with a certificate executed by each Seller (the “Sellers’ Closing Certificate“) and each UPC Stockholder (the “UPC Stockholders’ Closing Certificates“), dated the Closing Date, certifying that the conditions set forth in Sections 6.1 and 6.2 have been fulfilled at or prior to the Closing Date.

46

6.4. No Prohibition. No statute, rule or regulation, or order of any court or administrative agency shall be in effect that prohibits the Buyers from consummating the transactions contemplated hereby or the ability of the Business to be conducted in substantially the manner that the Business was being conducted prior to the Closing.

6.5. Third Party Consents. The Sellers and the UPC Stockholders shall have received the consents from third parties, if any, set forth on Schedule 3.17 of the Disclosure Schedules in forms reasonably acceptable to the Buyers.

6.6. Governmental Consents. The waiting period under the HSR Act, if applicable, shall have expired or been terminated and all other consents, approvals, authorizations, exemptions, and waivers from governmental agencies, if any, that shall be required in order to consummate the transactions contemplated hereby, shall have been obtained.

6.7. Proceedings. No action or proceeding shall be pending or threatened to restrain or prevent the consummation of the transactions contemplated hereby or that substantially interferes with the ability of the Business to be conducted in substantially the manner that such business was being conducted prior to the Closing.

6.8. Opinion. The Buyers shall have received a written opinions, dated the Closing Date, of (i) McAfee & Taft, (ii) the Sellers’ Nevada counsel and (iii) the Sellers Mexico counsel containing such matters reasonably requested by the Buyers.

6.9. Consent, Estoppel and Nondisturbance Certificates. The Buyers shall have received the duly executed Consent, Estoppel and Nondisturbance Certificates from the landlords of Leased Real Estate.

6.10. Title Insurance and Affidavits. On or prior to the Closing Date, as a condition precedent to the obligations of the Buyers hereunder, Buyer shall have received a mark up of the title commitment providing for the Title Insurance and, in connection with the issuance of the policies of Title Insurance, Sellers shall execute and deliver, or cause to be executed and delivered, to the Title Company any affidavits reasonably requested by the Title Company or the Buyers in connection with the issuance of the policies as required under Section 5.21 hereof and hereunder so that such insurance shall be endorsed to waive the Title Company’s rights to raise the Buyers’ imputed knowledge of the Sellers as a defense to insurance.

6.11. FIRPTA Certificate. The Sellers shall have delivered to the Buyers a certificate of each Seller, reasonably satisfactory to the Buyers, prepared in accordance with Treasury regulations sections 1.1445-2(c)(3) promulgated under the Code and dated as of the Closing Date.

6.12. Material Adverse Effect. Between the date hereof and the Closing Date, there shall have occurred no event that would have a Material Adverse Effect.

6.13. Canadian Tire Transaction. The Companies shall have entered into a contract for either (a) the purchase and distribution of alternators and starters with Hitachi Automotive Products and Canadian Tire Corporation, Limited or (b) the core reduction program with Canadian Tire Corporation, in either case, on terms and conditions reasonably satisfactory to the Buyers.

47

6.14. Consent of Buyers’ Lenders. The Buyers shall have received written consent to the transactions contemplated hereby from Congress Financial Corporation (Central), as Administrative Agent under the Buyers’ Second Amended and Restated Loan and Security Agreement dated April 23, 2004 among Parent, certain subsidiaries of Parent, Congress Financial Corporation (Central) as Administrative Agent and US Collateral Agent and the lenders named therein.

ARTICLE VII.

CONDITIONS TO THE SELLERS’ AND THE UPC STOCKHOLDERS’ OBLIGATIONS

The obligations of the Sellers and the UPC Stockholders to consummate the transactions contemplated hereby at the Closing shall be subject to the satisfaction (or waiver) on or prior to the Closing Date of all of the following conditions:

7.1. Representations and Warranties True and Correct. All of the representations and warranties of the Buyers contained in this Agreement or in any written certificate delivered pursuant to this Agreement shall be true and correct on the date of this Agreement or such certificate, as the case may be, and shall be true and correct on and as of the Closing Date as if made on and as of the Closing Date (except for representations and warranties that expressly relate to a date earlier than the Closing Date, which shall continue to be true and correct as of the specified date).

7.2. Covenants and Agreements Performed. The Buyers shall have performed or complied with, or delivered, all covenants, agreements, conditions or documents required by this Agreement to be performed, complied with, or delivered by the Buyers prior to or on the Closing Date.

7.3. The Buyers Closing Certificate. The Sellers shall have been furnished with a certificate executed by an officer of each of Parent and Buyer (the “Buyers’ Closing Certificate“), dated the Closing Date, certifying that the conditions set forth in Sections 7.1 and 7.2 have been fulfilled at or prior to the Closing Date.

7.4. No Prohibition. No statute, rule or regulation, or order of any court or administrative agency shall be in effect that prohibits the Sellers from consummating the transactions contemplated hereby.

7.5. Governmental Consents. The waiting period under the HSR Act, if applicable, shall have expired or been terminated and all consents, approvals, authorizations, exemptions, and their waivers from governmental agencies that shall be required in order to consummate the transactions contemplated hereby, if any, shall have been obtained.

7.6. Proceedings. No action or proceeding shall be pending or threatened to restrain or prevent the consummation of the transactions contemplated hereby.

48

7.7. Opinion. The Sellers shall have received a written opinion, dated as of the Closing Date of Dechert LLP, substantially to the effect set forth on Exhibit 7.7 attached hereto and containing such other matters as may be reasonably requested by the Sellers.

7.8. Patent Litigation. The Buyers shall have released or dismissed with prejudice the Sellers from any claims relating to infringement by the Companies of U.S. Patent Numbers 4,604,538, 5,268,605, 5,307,000 and 5,252,878, each of which cover various features of automotive starters and alternators.

ARTICLE VIII.

TERMINATION PRIOR TO CLOSING

8.1. Termination. This Agreement may be terminated at any time prior to the Closing:

(a) By the mutual written consent of the Buyers and UPC; or

(b) By UPC or the Buyers by written notice given to the other, if the Closing has not occurred on or before April 1, 2005 through no fault of (i) Parent and Remy, in the case of notice from Parent or Remy, or (ii) the Stockholder or the Sellers, in the case of notice from the UPC; or

(c) By either UPC or the Buyers by written notice given to the other, if there has been a material breach by (i) Parent and Remy, in the case of notice from UPC, or (ii) the Sellers, in the case of notice from Parent and Remy, of any of the representations, warranties, covenants or agreements made by such person in this Agreement.

(d) By Parent or Remy by written notice to UPC of the failure of any condition of Article VI.

(e) By UPC or the Sellers by written notice to the Buyers of the failure of any condition of Article VII.

(f) by Parent or Remy pursuant to Section 5.21.

8.2. Effect on Obligations. Termination of this Agreement pursuant to Section 8.1 hereof shall terminate all obligations of the parties hereunder, except for their obligations under Article IX hereof (regarding indemnification) and Section 10.9 (regarding public announcements) hereof; provided, however, that termination pursuant to Section 8.1(c) hereof by reason of a breach of any covenant or agreement shall not relieve the breaching party (whether or not it is the terminating party) from any liability to the other party hereto arising from or related to such breach.

49

ARTICLE IX.

SURVIVAL AND INDEMNIFICATION

9.1. Survival. The representations and warranties and covenants under this Agreement or in any statement or certificate furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby shall survive until the expiration of the two (2)-year period following the Closing Date (the “Survival Period“) and no action or claim for Losses (as hereinafter defined) resulting from any misrepresentation or breach of warranty shall be brought or made after the Survival Period, except that such time limitation shall not apply to:

(a) claims for misrepresentations and breach of warranties relating to Section 3.1, Sections 3.2 and 4.1 hereof (relating to organization), Section 3.3 hereof (relating to subsidiaries), Section 3.8 (relating to title) and Section 3.18 and 4.2 hereof (relating to authority), or claims relating to breaches of the covenants set forth in Section 5.5(b) (relating to consents), Section 5.9 (non-compete), Section 5.10 (confidentiality), Section 5.11 (tax matters), Section 5.13 (relating to employees), Section 5.15 (further assurances) and 5.20 (use of names), all of which may be asserted without limitation;

(b) claims for misrepresentations and breach of warranties relating to Section 3.14 hereof (relating to environmental matters), Section 3.15 hereof (relating to employee benefit matters) and Section 3.16 hereof (relating to tax matters), which may be asserted until sixty (60) days after the running of the applicable statute of limitations (giving effect to any waiver or extension thereof); and

(c) any claims which have been asserted and which are the subject of a written notice from any Seller or the Stockholder to the Buyers or from the Buyers to the Sellers or any UPC Stockholder, as may be applicable, prior to the expiration of the Survival Period, which notice specifies in reasonable detail the nature of the claim.

9.2. General Indemnification.

(a) Each of the Sellers and the UPC Stockholders, jointly and severally, shall indemnify and defend the Buyers and each of their respective directors, officers, employees, consultants, representatives, agents and other Affiliates and shall hold each of them harmless from and against all Losses that are incurred or suffered by any of them in connection with or resulting from:

(i) any misrepresentation or breach of, or inaccuracy in, any representation or warranty made by the Companies or the UPC Stockholders in this Agreement, any Ancillary Agreement or any schedule or Disclosure Schedule furnished or to be furnished to the Buyers in connection with or as contemplated by this Agreement;

(ii) any breach of any covenant made by the Companies or the UPC Stockholders in this Agreement, any Ancillary Agreement or any schedule or Disclosure Schedule furnished or to be furnished to the Buyers in connection with or as contemplated by this Agreement, whether such covenant requires performance prior to or after the Closing, or any breach of any covenant made by the Companies or the UPC Stockholders in this Agreement, any Ancillary Agreement or any schedule or Disclosure Schedule furnished or to be furnished to the Buyers in connection with or as contemplated by this Agreement, which covenant of the Companies or the UPC Stockholders requires performance prior to the Closing;

50

(iii) any Losses created by any by-law or certificate of incorporation provision, agreements, or insurance policy provisions relating to the indemnification of any person who was an officer or director of any Seller prior to the Closing and any Losses created by any by-law or certificate of incorporation provision, agreements, or insurance policy provisions relating to the indemnification of any person who was an officer or director of any Acquired Subsidiary prior to the Closing to the extent such Losses were occasioned by events or omissions occurring prior to the Closing;

(iv) any Retained Liabilities; and

(v) the enforcement by the Buyers of its indemnification rights under this Agreement.

(b) Each of the Buyers shall, jointly and severally, indemnify the Sellers, the Stockholder and the UPC Stockholders and each of their respective directors, partners, officers, employees, consultants, representatives, agents and other affiliates, and shall hold each of them harmless from and against all Losses that are incurred or suffered by them in connection with or resulting from:

(i) any misrepresentation or breach of any representation or warranty made by the Buyers in this Agreement, any Ancillary Agreement or any schedule furnished or to be furnished to the Sellers and the UPC Stockholders in connection with or as contemplated by this Agreement;

(ii) any breach of any covenant made by the Buyers in this Agreement, any Ancillary Agreement or any schedule furnished or to be furnished to the Sellers and the UPC Stockholders in connection with or as contemplated by this Agreement;

(iii) any Assumed Liabilities; and

(iv) the enforcement by the Sellers and the UPC Stockholders of their indemnification rights under this Agreement.

(c) Notwithstanding the foregoing, (i) the Sellers shall not be obligated to provide any such indemnification for Losses pursuant to claims (other than third party claims) under Section 9.2(a)(i) hereof, and (ii) the Buyers shall not be obligated to provide any such indemnification for Losses pursuant to claims (other than third party claims) under Section 9.2(b)(i) hereof, unless the aggregate amount that the Sellers, the UPC Stockholders or the Buyers, as applicable, are entitled to recover in respect of all such claims exceeds $325,000 (the “Deductible“), in which case the indemnitor shall be liable only for such Losses in excess of the Deductible.

No limitation or condition of liability provided in this Article IX shall apply (i) to any misrepresentation or breach of warranty contained herein if such misrepresentation or breach of warranty was made with actual knowledge that it contained an untrue statement or omitted to state a material fact necessary to make the statements therein not misleading, or with intent to deceive or defraud, (ii) to any matters set forth in Section 5.11 hereof or (iii) to any breaches of the covenants and agreements under this Agreement or in any statement or certificate furnished

51

or to be furnished pursuant hereto or in connection with the transactions contemplated hereby. For purposes of determining the existence of any misrepresentation, breach of warranty, or nonfulfillment of any covenant or agreement, and calculating the amount of any Losses incurred in connection with any such misrepresentation, breach of warranty, or nonfulfillment of any covenant or agreement, any and all references to material or Material Adverse Effect (or other correlative terms) shall be disregarded.

(d) (i) A party entitled to indemnification hereunder shall herein be referred to as an “Indemnitee.” A party obligated to indemnify an Indemnitee hereunder shall herein be referred to as an “Indemnitor.” As soon as is reasonable after an Indemnitee either (a) receives notice of any claim or the commencement of any action by any third party which such Indemnitee reasonably believes may give rise to a claim for indemnification from an Indemnitor hereunder or (b) sustains any Loss not involving a third-party claim or action which such Indemnitee reasonably believes may give rise to a claim for indemnification from an Indemnitor hereunder, such Indemnitee shall, if a claim in respect thereof is to be made against an Indemnitor under Article IX hereof, notify such Indemnitor in writing in reasonable detail of such claim, action or Loss, as the case may be; provided, however, that failure to notify Indemnitor shall not relieve Indemnitor of its indemnity obligation, except to the extent Indemnitor is actually prejudiced in its defense of the action by such failure. Any such notification must be in writing and must state in reasonable detail the nature and basis of the claim, action or Loss, to the extent known. Except as provided in this Section 9.2, Indemnitor shall have the right, using counsel reasonably acceptable to the Indemnitee, to contest, defend, litigate or settle any such third-party claim which involves (and continues to involve) solely monetary damages; provided that the Indemnitor shall have notified the Indemnitee in writing of its intention to do so within fifteen (15) days of the Indemnitee having given notice of the third-party claim to the Indemnitor and; provided, further, that (1) the Indemnitor expressly agrees in such notice to the Indemnitee that, as between the Indemnitor and the Indemnitee, the Indemnitor shall be solely obligated to fully satisfy and discharge the third-party claim notwithstanding any limitation with respect to indemnification included in this Agreement; (2) if reasonably requested to do so by the Indemnitee, the Indemnitor shall have made reasonably adequate provision to ensure the Indemnitee of the financial ability of the Indemnitor to satisfy the full amount of any adverse monetary judgment that may result from such third party claim; (3) assumption by the Indemnitor of such Third Party Claim could not reasonably be expected to cause a material adverse effect on the Indemnitee’s business; and (4) the Indemnitor shall diligently contest the third-party claim (the conditions set forth in clauses (1), (2), (3) and (4) being collectively referred to as the “Litigation Conditions“). The Indemnitee shall have the right to participate in, and to be represented by counsel (at its own expense) in any such contest, defense, litigation or settlement conducted by the Indemnitor; provided, that the Indemnitee shall be entitled to reimbursement therefor if the Indemnitor shall lose its right to contest, defend, litigate and settle the third-party claim. The Indemnitor shall not be entitled, or shall lose its right, to contest, defend, litigate and settle the third-party claim if the Indemnitee shall give written notice to the Indemnitor of any objection thereto based upon the Litigation Conditions.

(ii) The Indemnitor, if it shall have assumed the defense of any third-party claim as provided in this Agreement, shall not consent to a settlement of, or the entry of any judgment arising from, any such third-party claim without the prior written consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed). The Indemnitor shall

52

not, without the prior written consent of the Indemnitee, enter into any compromise or settlement which commits the Indemnitee to take, or to forbear to take, any action or which does not provide for a complete release by such third party of the Indemnitee. The Indemnitee shall have the sole and exclusive right to settle any third-party claim, on such terms and conditions as it deems reasonably appropriate, to the extent such third-party claim involves equitable or other non-monetary relief, and shall have the right to settle any third-party claim involving monetary damages with the written consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. All expenses (including without limitation attorneys’ fees) incurred by the Indemnitor in connection with the foregoing shall be paid by the Indemnitor. No failure by an Indemnitor to acknowledge in writing its indemnification obligations under this Article IX shall relieve it of such obligations to the extent such obligations exist.

(iii) If an Indemnitee is entitled to indemnification against a third-party claim, and the Indemnitor fails to accept a tender of, or assume the defense of, a third-party claim pursuant to this Section 9.2, the Indemnitor shall not be entitled, or shall lose its right, to contest, defend, litigate and settle such a third-party claim, and the Indemnitee shall have the right, without prejudice to its right of indemnification hereunder, in its discretion exercised in good faith, to contest, defend and litigate such third-party claim, and may settle such third-party claim either before or after the initiation of litigation, at such time and upon such terms as the Indemnitee deems fair and reasonable, provided that at least ten (10) days prior to any such settlement, written notice of its intention to settle is given to the Indemnitor. If, pursuant to this Section 9.2, the Indemnitee so contests, defends, litigates or settles a third-party claim for which it is entitled to indemnification hereunder, the Indemnitee shall be reimbursed by the Indemnitor for the reasonable attorneys’ fees and other expenses of contesting, defending, litigating and/or settling the third-party claim which are incurred from time to time.

9.3. Right to Offset; Payment of Losses.

(a) Without limiting any other remedies available at law or in equity, the Buyers shall have the right to set off against any payments due and owing from the Buyers to the Sellers or the UPC Stockholders, to the extent the Buyers have suffered a Loss and made a claim for indemnity against the Sellers or the UPC Stockholders under this Article IX, including, without limitation, the right to set off against or withhold amounts owed under the Earn Out.

(b) From and after the Closing, any indemnification to which the Buyers are entitled under this Agreement as a result of any Losses pursuant to Claims under Sections 9.2(a)(i), (ii), (iii) and (v) shall first be satisfied by set off against the Sellers’ Earn Out payments; provided, that Losses incurred by the Buyers pursuant to Section 5.11(c)(ii) may only be set off against or withheld from amounts owed under the Earn Out; provided, further that the maximum amount recoverable by the Buyers for Losses under the foregoing Sections 9.2(a)(i), (ii), (iii) and (v) shall not exceed the Net Cash Amount plus the aggregate Earn Out consideration paid to the Sellers. The Sellers shall deliver to the Buyers a promissory note in the form of Exhibit 9.3 which note shall evidence the Sellers obligation to pay the Buyers for the Losses and shall be due and payable concurrently with the next payment of Earn Out consideration. In the event that the Earn Out consideration paid to the Sellers is not sufficient to satisfy the full amount of the Losses then owed to the Buyers, such remaining amounts shall be due and payable in connection with the final payment of Earn Out consideration; provided, that if

53

the Buyers have no additional payment obligations pursuant to the Earn Out, all Losses shall be due and payable immediately by the Sellers. For the avoidance of doubt, in no event shall the Sellers be entitled to set off Losses against the Earn Out with respect to Claims made under Section 9.2(a)(iv) and all such Losses shall be due and payable immediately.

9.4. Adjustment in Purchase Price. Any indemnification payments made to Sellers or the UPC Shareholders by the Buyers under this Article IX shall be treated as an increase in the Purchase Price and any payments made by the Sellers or the UPC Shareholders to the Buyers hereunder shall be treated as a reduction in Purchase Price.

9.5. Sole Remedy. Subject to Section 9.3, the indemnification provided for in this Article IX shall be the sole remedy of the parties hereto and their respective successors or assigns in respect of any claim for monetary damages arising under or out of this Agreement or any Ancillary Agreement; provided, however, that this Section 9.5 shall not apply to Losses resulting from willful or intentional misrepresentations or fraud.

9.6. Investigation. No right to indemnification under this Article IX shall be limited by reason of any investigation or audit conducted before or after the Closing of any party hereto or the knowledge of such party of any breach of any representation, warranty, agreement or covenant by the other party at any time, or the decision by such party to complete the Closing.

9.7. Calculation of Losses; Tax Treatment of Additional Payments. The rights of any Indemnitee under this Article IX shall be limited as follows:

(a) The amount of any Losses incurred by such parties shall be reduced by the net amount of the Tax benefits actually realized by such parties or any of their Affiliates by reason of such Loss; and

(b) The amount of any Losses incurred by such parties shall be reduced by the net amount such parties actually recover (after deducting all attorney’s fees, expenses and other costs of recovery) from any insurer and such parties shall use reasonable efforts to effect any such recovery; provided, that the amounts of any increase in insurance premium or retroactive premiums or premium adjustments resulting from the making of a claim or claims against insurers shall, for this purpose, be deemed to be deducted from the amount so paid by such insurers.

ARTICLE X.

MISCELLANEOUS

10.1. Interpretive Provisions. Whenever used in this Agreement, (i) “including” (or any variation thereof) means including without limitation and (ii) any reference to gender shall include all genders. For purposes of this Agreement, the Business shall be deemed to be an Affiliate of the Sellers prior to the Closing and an Affiliate of the Buyers after the Closing.The parties acknowledge and agree that (i) each party and its counsel have reviewed the terms and provisions of this Agreement and have contributed to its drafting, (ii) the normal rule of construction, to the effect that any ambiguities are resolved against the drafting party, shall not be employed in the interpretation of it, and (iii) the terms and provisions of this Agreement shall be construed fairly as to all parties hereto and not in favor of or against any party, regardless of which party was generally responsible for the preparation of this Agreement.

54

10.2. Entire Agreement. This Agreement (including the Disclosure Schedules and the exhibits attached hereto) constitutes the sole understanding of the parties with respect to the subject matter hereof.

10.3. Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto; provided however, that this Agreement may not be assigned by the Sellers without the prior written consent of the Buyers or be assigned by the Buyers without the prior written consent of the Sellers, except that (i) the Buyers may, at their election, assign this Agreement or any part thereof or any of its rights hereunder to one or more direct or indirect wholly owned subsidiaries, and (ii) the Buyers or any such assignee may make a collateral assignment of its rights (but not its obligations) under this Agreement to any lender providing financing to the Buyers after the Closing.

10.4. Headings. The headings of the Articles, Sections, and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

10.5. Modification and Waiver. No amendment, modification, or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the Buyers, on the one hand, and the Sellers Representative, on behalf of the Sellers on the other hand, except that any of the terms or provisions of this Agreement may be waived in writing at any time by the party that is entitled to the benefits of such waived terms or provisions. No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar). No delay on the part of any party in exercising any right, power, or privilege hereunder shall operate as a waiver thereof.

10.6. Expenses. Except as otherwise expressly provided herein, each of the parties hereto shall bear the expenses incurred by that party incident to this Agreement and the transactions contemplated hereby, including, without limitation, all fees and disbursements of counsel and accountants retained by such party, whether or not the transactions contemplated hereby shall be consummated; provided, however, that the UPC Stockholders shall pay all expenses of the Sellers incident to the Agreement and the consummation of the transactions contemplated hereby.

10.7. Notices. Any notice, request, instruction, or other document to be given hereunder by any party hereto to any other party shall be in writing and shall be given by delivery in person, by electronic facsimile transmission, by overnight courier or by registered or certified mail, postage prepaid (and shall be deemed given when, delivered if delivered by hand, when transmission confirmation is received if telecopied, three days after mailing if mailed, and one business day after deposited with an overnight courier service if delivered by overnight courier), as follows:

if to the Sellers to:

Unit Parts Company

4600 S.E. 59^th Street

Oklahoma City, Oklahoma 73126

Attention: Jack Vollbrecht

Telecopy: (405) 672-9979

55

with a copy to:

McAfee & Taft

Tenth Floor

Two Leadership Square

Oklahoma City, Oklahoma 73102-7103

Attention: Dee A. Replogle, Esq. or Robert L.Garbrecht

Telecopy: (405) 228-7454

if to the Buyers to:

Remy International, Inc.

2902 Enterprise Drive

Anderson, Indiana 46013

Attention: Chief Financial Officer

Telecopy: (765) 778-6424

with a copy to:

Dechert LLP

4000 Bell Atlantic Tower

1717 Arch Street Philadelphia Pennsylvania 19103-2793

Attention: Gil C. Tily, Esq.

Telecopy: (215) 655-2224

or at such other address for a party as shall be specified by like notice.

10.8. Governing Law; Consent to Jurisdiction. This Agreement shall be construed in accordance with and governed by the laws of the State of Indiana applicable to agreements made and to be performed wholly within that jurisdiction. Each party hereto, for itself and its successors and assigns, irrevocably agrees that any suit, action or proceeding arising out of or relating to this Agreement shall be instituted only in the United States District Court sitting in the State of Indiana, United States of America or in the absence of jurisdiction, the state courts located in Marion County, State of Indiana, and generally and unconditionally accepts and irrevocably submits to the exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any final judgment rendered thereby from which no appeal has been taken or is available in connection with this Agreement. Each party, for itself and its successors and assigns, irrevocably waives any objection it may have now or hereafter to the laying of the venue of any such suit, action or proceeding, including, without limitation, any objection based on the

56

grounds of forum non convenes, in the aforesaid courts. Each of the parties, for itself and its successors and assigns, irrevocably agrees that all process in any such proceedings in any such court may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address set forth in Section 10.7 hereof or at such other address of which the other parties shall have been notified in accordance with the provisions of Section 10.7 hereof, such service being hereby acknowledged by the parties to be effective and binding service in every respect. Nothing herein shall affect the right to serve process in any other manner permitted by law.

10.9. Public Announcements. None of the Sellers, the UPC Stockholders or the Buyers shall make any public statements, including, without limitation, any press releases, with respect to this Agreement and the transactions contemplated hereby without the prior written consent of the other party (which consent shall not be unreasonably withheld) except as may be required by law. If a public statement is required to be made by law, the parties shall consult with each other in advance as to the contents and timing thereof.

10.10. No Third Party Beneficiaries. This Agreement is intended and agreed to be solely for the benefit of the parties hereto, and no other party shall be entitled to rely on this Agreement or accrue any benefit, claim, or right of any kind whatsoever pursuant to, under, by, or through this Agreement.

10.11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

ARTICLE XI.

CERTAIN DEFINITIONS

11.1. “Affiliate” of any Person means any Person, directly or indirectly controlling, controlled by or under common control with such Person.

11.2. “Ancillary Agreement” means any agreement, exhibit, statement, document or certificate executed and delivered in accordance with or required by this Agreement, and any other agreement or certificate specifically identified as an Ancillary Agreement for purposes of this Agreement.

11.3. “Authority” means any federal, state, local or foreign governmental or regulatory entity (or any department, agency, authority or political subdivision thereof).

11.4. “business day” means any day other than a day on which banks in the State of New York and the Commonwealth of Pennsylvania are required or authorized to be closed.

11.5. “Code” means the Internal Revenue Code of 1986, as amended.

11.6. “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise;

57

11.7. “Environmental Laws” shall mean all foreign, federal, state and local governmental laws, rules, regulations, ordinances, the common law, judgments, orders, and consent agreements relating to (i) the protection of the environment (including air, surface and subsurface water, drinking water supplies, surface and subsurface land, the interior of any building or building component, soil and natural resources) or human health or (ii) the presence, Management, Release or threat of Release of or exposure to Hazardous Substances.

11.8. “Environmental Liability“ means, regardless of whether any of the following are contained in any disclosure schedule to this Agreement or otherwise disclosed to the Buyers prior to the Closing Date, any and all Losses known or unknown, foreseen or unforeseen, whether contingent or otherwise, fixed or absolute, present or arising in the future, asserted against or reasonably incurred by the Buyers arising out of or related to (1) environmental conditions, including without limitation, the presence, Release, threat of Release, Management of or exposure to Hazardous Materials and Environmental Defects first occurring prior to the Closing Date at, on, in, or under any property now or previously owned, operated or leased by the Sellers, the UPC Stockholders or any of their Affiliates in connection with the Business, Real Estate or Acquired Assets, whether into the air, soil, ground or surface waters on-site or off-site; provided, however, that Sellers shall not be responsible for the exacerbation or aggravation of any condition after the Closing to the extent resulting from the actions of the Buyer after the Closing Date ; or (2) the off-site transportation, storage, treatment, recycling, disposal or arrangement for disposal of or distribution prior to the Closing Date of Hazardous Materials Managed or Released by or on behalf of the Companies, the UPC Stockholders or any Affiliate or any of the respective predecessors in interest with respect to the Business, the Real Estate or Acquired Assets or at or from any property now or previously owned, operated or leased by the Companies, the UPC Stockholders or any of their Affiliates in connection with the Business or Acquired Assets; or (3) any violation of any Environmental Law first existing prior to the Closing Date (including, without limitation, cost and expenses for pollution control or monitoring equipment required to bring the Business in to compliance with Environmental Laws and fines, penalties and defense costs incurred for such reasonable time after the Closing as it takes the Buyers to come into compliance with Environmental Laws).

11.9. “GAAP” means United States generally accepted accounting principles.

11.10. “knowledge”, “to the knowledge” or “known” and words of similar import shall mean the actual or constructive knowledge of a natural person or, with respect to a Person that is not a natural person, the actual or constructive knowledge of the officers and management of such Person which such Person could have known after due inquiry.

11.11. “Losses” shall mean any and all losses, liabilities, damages (including without limitation, punitive, consequential, and special damages, and lost profits or diminution in value), penalties (including, without limitation, governmental penalties,) obligations, awards, fines, deficiencies, interest, claims (including third party claims (including, without limitation, whether or not meritorious), costs and expenses whatsoever (including reasonable attorneys’, consultants’ and other professional fees and disbursements of every kind, nature and description) resulting from, arising out of or incident to (y) any matter for which indemnification is provided under this Agreement, or (z) the enforcement by an indemnified party of its rights to indemnification under this Agreement.

58

11.12. “Material Adverse Effect” means and the correlative terms “material” and “materiality” means any circumstance or event which, individually or in the aggregate with any other circumstance or event is reasonably likely to be material and adverse to the business, properties, operations, earnings, prospects, condition (financial or otherwise), products, assets, results of operations or liabilities of the Business, the Acquired Assets or the Assumed Liabilities. For the purposes of this Agreement, the determination of whether a breach of a representation and warranty or covenant of this Agreement shall be deemed to be material or to give rise to a Material Adverse Effect shall be determined on a cumulative basis by adding the effect of the breach of any such representation and warranty or covenant (determined without regard to any materiality or Material Adverse Effect qualifiers) to the effect of all other breaches of representations and warranties and covenants of this Agreement (determined without regard to any materiality or Material Adverse Effect qualifiers) for each of the applicable period or periods to which each such representation, warranties or covenants relate, in all cases before applying the materiality standard set forth in the preceding sentence, and then determining whether, for any of the applicable periods, such aggregate sum exceeds the materiality standard set forth in the preceding sentence. For purposes of this definition of Material Adverse Effect, the effect of any matter as to any past period shall be determined based on its actual effect, and its effect as to any future period shall be determined based on the effect that such matter is reasonably likely to have.

11.13. “Material Contracts” means all written or oral agreements, contracts or commitments of the following types relating to the Business or by which the Companies or any assets or properties of the Business (including any Acquired Assets or Assumed Liabilities) is bound as of the date hereof and between the date hereof and the Closing Date: (a) any real property leases; (b) any labor or employment-related agreements; (c) any joint venture and limited partnership agreements; (d) mortgages, indentures, loan or credit agreements, security agreements and other agreements and instruments relating to the borrowing of money or extension of credit; (e) agreements for the sale of goods or products or performance of services by or with any vendor (or any group of related vendors) that had annual aggregate payments exceeding $25,000 in any of the last three calendar years; (f) lease agreements for machinery and equipment, motor vehicles, or furniture and office equipment or other personal property by or with any vendor (or any group of related vendors) that had annual aggregate payments exceeding $10,000 in any of the last three calendar years; (g) agreements restricting in any manner the right of any Company or the Business to compete with any other person, or restricting the right of any Company or the Business to sell to or purchase from any other person; (h) agreements between any Company and any of its affiliates; (i) guaranties, performance, bid or completion bonds, surety and appeal bonds, return of money bonds, and surety or indemnification agreements; (j) custom bonds and standby letters of credit; (k) any license agreement or other agreements regarding any intellectual property of others used by any Company in the Business, or by which any Company permits any third party to use the Intellectual Property; (l) other agreements, contracts and commitments which cannot be terminated by any Seller on notice of thirty (30) days or less and without payment by any Company of less than $10,000 upon such termination and (m) powers of attorney.

11.14. “Material Real Estate Impairment” shall mean: (1) a material adverse effect upon the value of the individual Owned Real Estate so affected, or (2) a material impairment of the use of, or the conduct of the Business at, any of the individual Owned Real Estate so affected.

59

11.15. “Person” or “person” means an individual, corporation, partnership, association, limited liability company, trust, unincorporated organization, other entity or group (as group is defined in Section 13(d)(3) of the Exchange Act).

11.16. “POS Contracts” means the agreements set forth on Schedule 11.16 hereto.

11.17. “Subsidiary” means with respect to the Sellers, any person or other business entity of which any Seller owns, directly or indirectly, more than 50% (i) of the capital stock or other equity interests or (ii) of the voting stock or other ownership interests having ordinary voting power for the election of directors (or the equivalent).

11.18. “Tax Assumptions” means the assumptions regarding Tax Attributes as reflected on Schedule 11.18.

11.19. “Tax Attributes” means tax basis, net operating loss carryovers and other items relevant to determining the taxable income of Seller for the taxable year that includes the Closing Date.

11.20. “Transfer Taxes” means sales, use, transfer, value-added, or similar Taxes imposed in connection with the sale or transfer of property.

OTHER DEFINED TERMS

	Page
Acquired Assets	2
Acquired Subsidiaries	1
Acquired Subsidiary	1
ADEA	43
Aggregate Cash Amount	7
Agreement	1
Allocation Principles	8
Allocation Schedule	8
Assignment and Assumption Agreement	9
Assumed Liabilities	4
Assumed Plans	44
Assumed Tax Liabilities	5
Aurra	1
Balance Sheet	14
Balance Sheet Date	14
Benefit Plans	25
Bill of Sale	9
Business	1
Business Entities	16
Buyers	1
Buyers’ Accountants	8
Buyers’ Closing Certificate	49
Closing	9
Closing Cash Consideration	7
Closing Date	9
Coahuila	1
COBRA	43
Companies	1

60

Company	1
Consent, Estoppel and Nondisturbance Certificates	36
Contracts	3
Deductible	52
Disclosure Schedules	12
DOJ	42
Earn Out	7
Employment Agreements	10
Employment Date	42
Encumbrances	12
Environmental Audits	24
Environmental Liability	58
Environmental Permits	23
ERISA	25
ERISA Affiliate	25
Excess Tax Liability	42
Excluded Assets	4
FTC	42
GHKR	1
GHKR (Costa Rica)	1
Hazardous Materials	23
HSR Act	35
Indemnitee	52
Indemnitor	52
Intellectual Property	20
Inventory	3
IRS	26
Leased Real Estate	17
Leases	17
Letter	45
Litigation	21
Litigation Conditions	53
Lockbox Account	45
Management	23
Manages	23
Net Cash Amount	4
Non-Compete Period	38
OSHA	22
Other Selling Stockholders	1
Owned Real Estate	16
Parent	1
Patent Trademark and Copyright Rights	20
PCBs	23
Pension Plan	25
Permits	22
Permitted Encumbrances	19
Pre-Closing Returns	39
Prestadora	1
Proposed Calculation	39
Purchase Price	7
QAPI	1
Real Estate	2
Release	24
Remediation	23
Remy	1
Repaid Indebtedness	7

61

Restricted Business	38
Retained Liabilities	5
Retained Payables	6
Seller	1
Seller Account Parties	45
Seller Stock	12
Sellers	1
Sellers Representative	11
Sellers’ Accountants	8
Sellers’ Closing Certificates	47
Significant Customer	33
Significant Supplier	33
Stockholder	1
Straddle Period Returns	39
Surveys	45
Survival Period	50
Tax	27
Tax Return	28
Taxes	27
Taxing Authority	27
Third Accounting Firm	8
Title Company	45
Title Insurance	46
Transferring Employees	42
Unaudited Financial Statements	13
UPC	1
UPC Stockholders	1
UPC Stockholders’ Closing Certificates	47

62

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on its behalf as of the date first above written.

REMY INTERNATIONAL, INC.
By:	/s/ Thomas J. Snyder
Name:	Thomas J. Snyder
Title:	President, Chief Executive Officer
UPC ACQUISITION CORP.
By:	/s/ Thomas J. Snyder
Name:	Thomas J. Snyder
Title:	President
UNIT PARTS COMPANY
By:	/s/ Jack D. Vollbrecht
Name:	Jack D. Vollbrecht
Title:	President
GHKR, INC.
By:	/s/ Glynn Hatley
Name:	Glynn Hatley
Title:	V. P.
QAPI S.A.de C.V.
By:	/s/ Glynn Hatley
Name:	Glynn Hatley
Title:	Attorney in Fact

63

UNIT PARTS COAHUILA S.A. de C.V.
By:	/s/ Glynn Hatley
Name:	Glynn Hatley
Title:	Director/Attorney in Fact
PRESTADORA de SERVICIOS JALISCO S.A. de C.V.
By:	/s/ Glynn Hatley
Name:	Glynn Hatley
Title:	Attorney in Fact
GHKR SRL
By:	/s/ Glynn Hatley
Name:	Glynn Hatley
Title:	Manager
AURRA INDUSTRIES, INC.
By:	/s/ Douglas Franklin
Name:	Douglas Franklin
Title:	Vice President
VOLLBRECHT FAMILY INVESTMENTS, A LIMITED PARTNERSHIP
By: Vollbrecht Capital, LLC, sole General Partner
By:	/s/ Jack D. Vollbrecht
Name:	Jack D. Vollbrecht
Title:	Manager

64

OTHER SELLING STOCKHOLDERS:
	/s/ Jack Vollbrecht Jack Vollbrecht
	/s/ Thomas Vollbrecht Thomas Vollbrecht
	/s/ Robin Constantine Robin Constantine
	/s/ Stephen Constantine Stephen Constantine
SELLERS REPRESENTATIVE:
	/s/ Jack D. Vollbrecht Name: Jack D. Vollbrecht

65

EX-10.2

Exhibit 10.2

[Execution Version]

AMENDMENT NO. 1 TO

ASSET PURCHASE AGREEMENT

THIS AMENDMENT to the Asset Purchase Agreement (the “Amendment”) dated as of March 16, 2005 by and among Remy International, Inc., a Delaware corporation (“Parent”), UPC Acquisition Corp., a Delaware corporation (“Remy”) and Jack Vollbrecht, as Sellers Representative amends the Asset Purchase Agreement dated as of February 25, 2005 (the ”Purchase Agreement”) by and among Parent, Remy, the Sellers Representative and each of the other signatories thereto.

Background

The parties hereto are parties to the Agreement and desire to amend the Agreement in accordance with the requirements of Section 10.5 thereof and upon the terms and conditions and in the manner set forth below.

Terms

In consideration of the respective covenants contained herein and intending to be legally bound hereby, the parties hereto agree as follows:

1. Definitions; References. Unless otherwise defined herein, capitalized terms used herein without definition shall have the meanings ascribed to them in the Purchase Agreement. Each reference to “hereof” “hereunder,” “herein,” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Agreement shall from and after the date hereof refer to the Agreement as amended by this Amendment No. 1.

2. Section 1.2(a) of the Agreement. Subsection 1.2(a)(iv) of the Agreement is hereby amended to read, in its entirety, as follows:

“(iv) the excess, if any, of (i) any and all federal and state income Taxes of the Sellers that are incurred in connection with the receipt of $13,272,000 cash (the “Net Cash Amount”) by the Sellers and the Stockholder in connection with the receipt of the Net Cash Amount by the Sellers and the distribution of the Net Cash Amount to the Stockholder over (ii) the federal and state income Taxes that would have been incurred by the Stockholder if the Stockholder had received such Net Cash Amount directly from the Buyers in exchange for the stock of UPC (the “Assumed Tax Liabilities”); provided that for purposes of determining the Taxes incurred in connection with the Net Cash Amount, the value of the Earn Out shall be disregarded; and”

3. Section 1.2(b) of the Agreement. Subsection 1.2(b)(x) of the Agreement is hereby amended to read, in its entirety, as follows:

“(x) any liability or obligation with respect to the payment of certain accounts payable of the Business as of the Closing Date to be identified by the Buyers not less than three business days prior to Closing in an amount equal to $12,000,000 (the “Retained Payables”); or”

4. Section 1.4(a) of the Agreement. Section 1.4(a) of the Agreement is hereby amended to read, in its entirety, as follows:

“(a) Purchase Price. The aggregate purchase price for all of the Acquired Assets purchased by Remy pursuant to Section 1.1 and the non-compete arrangements contemplated hereby (the “Purchase Price”) shall consist of (i) cash in an aggregate amount equal to the Net Cash Amount plus $12,000,000 (the “Aggregate Cash Amount”); plus (ii) the aggregate amount required to pay the Repaid Indebtedness (as defined in Section 1.4(b)) of the Companies on the Closing Date, which amount shall not exceed $30,000,000 (the Aggregate Cash Amount and the cash payment required pursuant to this Section 1.4(a)(ii) is referred to herein as “Closing Cash Consideration”; plus (iii) the potential right to receive additional cash consideration in accordance with the terms and conditions of Exhibit 1.4A attached hereto (the “Earn Out”); plus (iv) the assumption by the Buyers of the Assumed Liabilities.”

5. Section 1.4(c) of the Agreement. Section 1.4(c) of the Agreement is hereby amended to read, in its entirety, as follows:

“(c) Payments. At the Closing, Remy shall pay to the Sellers (i) the Net Cash Amount, by wire transfer of immediately available funds to the account that has been designated by the Sellers to Remy at least three days prior to the Closing and (ii) $12,000,000 of the Aggregate Cash Amount, by wire transfer of immediately available funds to an account in the Sellers name, which amount shall be used solely to pay the Retained Payables.”

6. Continued Effectiveness of Agreement. Except as specifically amended above, all terms of the Agreement shall remain unchanged and in full force and effect.

7. Counterparts. This Amendment may be executed in two or more counterparts (including by means of telecopied signature pages), all of which shall be considered one and the same agreement.

8. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Indiana without giving effect to the principles of conflicts of law thereof or of any other jurisdiction.

IN WITNESS WHEREOF, Parent, Remy and the Sellers Representative have caused this Amendment to be signed by their respective officers thereunto duly authorized as of the date first written above.

REMY INTERNATIONAL, INC.
By:	/s/ Allen Wilkie
Name:	Allen Wilkie
Title:	Vice President
UPC ACQUISITION CORP.
By:	/s/ Allen Wilkie
Name:	Allen Wilkie
Title:	Vice President
SELLERS REPRESENTATIVE
	/s/ Jack D. Vollbrecht
	Jack D. Vollbrecht

EX-10.3

EXHIBIT 10.3

AMENDMENT NO. 2 TO SECOND AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of March 16, 2005 is by and among Remy International, Inc. (f/k/a Delco Remy International Inc.), a Delaware corporation (“Parent”), the following Subsidiaries of Parent: Remy Inc. (f/k/a Delco Remy America, Inc.), a Delaware corporation, Remy Sales, Inc. (f/k/a DR Sales, Inc.), a Delaware corporation, Franklin Power Products, Inc., an Indiana corporation, HSG I, Inc, a Delaware corporation, HSG II, Inc, a Delaware corporation, International Fuel Systems, Inc., an Indiana corporation, M. & M. Knopf Auto Parts, L.L.C., a Delaware limited liability company, Nabco, Inc., a Michigan corporation, Powrbilt Products, Inc., a Texas corporation, Remy Logistics, L.L.C., a Delaware limited liability company, Remy Reman, L.L.C., a Delaware limited liability company, Western Reman Industrial, LLC, a Delaware limited liability company (“Western Reman”), World Wide Automotive, L.L.C., a Virginia limited liability company, UPC Acquisition Corp., a Delaware corporation (to be renamed Unit Parts Company, “UPC”) (each individually, together with the Parent, a “Borrower” and collectively, the “Borrowers”), Congress Financial Corporation (Central), an Illinois corporation, as agent for Lenders referenced below (in such capacity and as US Collateral Agent, as defined in the Loan Agreement referenced below, the “Agent”), and the financial institutions (each individually, a “Lender” and collectively, the “Lenders”) party to that certain Second Amended and Restated Loan and Security Agreement, dated as of April 23, 2004 (as amended or otherwise modified prior to the date hereof, the “Loan Agreement”). Capitalized terms used and not defined herein shall have the meanings assigned to them in the Loan Agreement.

R E C I T A L S:

WHEREAS, Borrowers have requested that Agent and Lenders agree to certain amendments to the Loan Agreement as set forth herein; and

WHEREAS, Agent and Lenders have agreed to such amendments upon the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the premises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1 Amendments to the Loan Agreement. Immediately upon the satisfaction of each of the conditions precedent set forth in Section 2 below, the Loan Agreement is hereby amended as follows:

(a) Section 1 of the Loan Agreement is hereby amended by amending and restating the definition of “Applicable Margin” to read as follows:

“Applicable Margin” shall mean, at any time, as to the Interest Rate for Prime Rate Loans, Eurodollar Rate Loans and Letter of Credit Accommodations, the applicable row of percentages set forth below if the Monthly Excess Availability as of the last Business Day of the immediately preceding calendar month is at or within the amounts indicated for such row:

Monthly Excess Availability	Applicable Margin for Prime Rate Loans	Applicable Margin for Eurodollar Rate Loans	Letter of Credit Accommodations
(a)    $75,000,000 or more	0.00%	2.00%	1.75%
(b)    Greater than or equal to $50,000,000 and less than $75,000,000	0.00%	2.25%	2.00%
(c)    Greater than or equal to $25,000,000 and less than $50,000,000	0.25%	2.50%	2.25%
(d)    Less than $25,000,000	0.50%	2.75%	2.50%

provided, that, the Applicable Margin shall be calculated and established on the first Business Day following the end of each calendar month in accordance with the definition of “Interest Rate”.

(b) Section 1 of the Loan Agreement is hereby amended by amending and restating clause (d) of the definition of “Borrowing Base” and adding a new clause (e) therein, in each case to read as follows:

(d) Reserves established by Agent; minus

(e) $15,000,000; provided, that for purposes of determining Excess Availability under the definition of “Applicable Margin” and for purposes of determining Average Excess Availability under the definition of “Trigger Event”, such amount shall be $0.”

(c) Section 1 of the Loan Agreement is hereby amended by amending the definition of “Financing Agreements” to add the following new sentence at the end thereof to read as follows:

“Notwithstanding the foregoing, in no event shall the term Financing Agreements be deemed to include any Hedging Agreements.”

2

(d) Section 1 of the Loan Agreement is hereby amended by amending the definition of “Obligations” to add the following new sentence at the end hereof to read as follows:

“Notwithstanding the foregoing, the term “Obligations” shall include, for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers to Agent, any Lender, any Affiliate of any Lender or any other financial institution acceptable to Agent (and in each case as to any such Lender, Affiliate of any Lender or other financial institution only to the extent approved by Agent) arising under or pursuant to a Hedging Agreement, whether now existing or hereafter arising, provided, that, (i) such obligations, liabilities and indebtedness shall only be included within the Obligations upon Parent’s request and if upon Agent’s request, Agent shall have entered into an agreement, in form and substance satisfactory to Agent, with any Lender, any Affiliate of any Lender or any other financial institution acceptable to Agent that is a counterparty to such Hedging Agreement, as acknowledged and agreed to by Borrowers, providing for the delivery to Agent by such counterparty of information with respect to the amount of such obligations and providing for the other rights of Agent and such Lender, Affiliate of any Lender or any other financial institution acceptable to Agent, as the case may be, in connection with such arrangements and (ii) in no event shall the party to such Hedging Agreement to whom such obligations, liabilities or indebtedness are owing be deemed a Lender for purposes hereof to the extent of and as to such obligations, liabilities or indebtedness other than for purposes of Section 5.1 hereof and other than for purposes of Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9 and 12.12 hereof and in no event shall the approval of any such Person be required in connection with the release or termination of any security interest or lien of Agent.”

(e) Section 1 of the Loan Agreement is hereby amended by amending the definition of “Reserves” to add the following new language at the end of the first sentence therein (before the period) to read as follows:

“or (h) to reflect obligations, liabilities or indebtedness (contingent or otherwise) of Borrowers to Agent, any Lender, any Affiliate of any Lender or any other financial institution acceptable to Agent (and in each case as to any such, Lender, Affiliate of any Lender or other financial institution only to the extent approved by Agent) arising under or in connection with any Hedging Agreement of any Borrower with Agent, any Lender, any Affiliate of any Lender or

3

any other financial institution acceptable to Agent or as such Person may otherwise require in connection therewith to the extent that such obligations, liabilities or indebtedness constitute Obligations as such term is defined herein.”

(f) Section 1 of the Loan Agreement is hereby amended by adding two new definitions of “UPC” and “Vendor Purchase Arrangements” in their proper alphabetical places to read as follows:

“UPC” shall mean UPC Acquisition Corp., a Delaware corporation, to be renamed Unit Parts Company.

“Vendor Purchase Arrangements” shall mean Inventory of UPC that is subject to (a) those certain vendor agreements between UPC and O’Reilly Automotive, Inc. dated as of June 23, 2003 (as amended or modified from time to time) and (b) those certain vendor agreements between UPC and Autozone Parts, Inc. dated as of June 11, 2003 (as amended or modified from time to time), in each case pursuant to which UPC has purchased Inventory on credit from such vendors to be sold by such vendors on a consignment basis.”

(g) Section 2.1(a) of the Loan Agreement is hereby amended by amending and restating clause (iii) therein to read as follows:

“(iii) $145,000,000 or”

(h) Section 2.1(c) of the Loan Agreement is hereby amended by amending and restating clause (i)(C) therein to read as follows:

“(C) $145,000,000 or”

(i) Section 5.1 of the Loan Agreement is hereby amended by adding the following new sentence to the end of the last paragraph in Section 5.1 to read as follows:

“Notwithstanding the foregoing, the definition of Collateral shall not include the Capital Stock of iPower Technologies, Inc.”

4

(j) Section 6.4 of the Loan Agreement is hereby amended by amending and restating the first paragraph sentence only of Section 6.4 to read as follows:

“All Obligations shall be payable to the Agent Payment Account as provided in Section 6.3 or such other place as Agent may designate from time to time in writing to Administrative Borrower. Agent shall apply payments received or collected from any Borrower for the account of any Borrower (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to pay any fees, indemnities or expense reimbursements then due to Agent and Lenders from any Borrower; second, to pay interest due in respect of any Loans (and including Special Agent Advances); third, to pay principal due in respect of the Special Agent Advances; fourth, to pay principal in respect of the Loans and to pay or prepay Obligations arising under or pursuant to any Hedging Agreement of a Borrower with Agent, any Lender, any Affiliate of any Lender or any other financial institution acceptable to Agent (up to the amount of any then effective Reserve established in respect of such Obligations), on a pro rata basis; and fifth, to pay or prepay any other Obligations whether or not then due, in such order and manner as Agent determines or to be held as cash collateral in connection with any Letter of Credit Accommodations or other contingent Obligations (but not including for this purpose any Obligations arising under or pursuant to any Hedging Agreements); and sixth, to pay or prepay any Obligations arising under or pursuant to Hedging Agreements (other than to the extent provided for above) on a pro rata basis.”

(k) Section 7.3 of the Loan Agreement is hereby amended by amending and restating clause (d) therein to read as follows:

“(d) upon Agent’s request, Borrower shall, at their expense, no more than one (1) time in any twenty-four (24) month period (or once in any twelve (12) month period in respect of core Inventory), but at any time or times as Agent may request during the existence of a Trigger Event, deliver or cause to be delivered to Agent written appraisals as to the Inventory by an independent appraiser acceptable to Agent applying an approach to valuation which is consistent to the approach used in the appraisals of Borrowers’ Inventory prepared for Agent prior to Original Closing Date, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely;”

(l) Section 8.4 of the Loan Agreement is hereby amended by amending and restating clause (c) therein to read as follows:

“(c) liens and encumbrances described in Section 9.8(j) with respect to real property acquired after the date hereof and other liens and encumbrances permitted under Section 9.8 which are junior to the Agent’s liens in the Collateral.”

5

(m) Section 9.8 of the Loan Agreement is hereby amended by (i) adding the language; “; and” in place of the period at the end of clause (o) therein and (ii) adding a new clause (p) at the end of such Section 9.8 to read as follows:

“(p) liens consisting of (i) purchase money security interests in Inventory of UPC located at locations owned or controlled by O’Reilly Automotive, Inc. or Autozone Parts, Inc. and (ii) Accounts owing to UPC from O’Reilly Automotive, Inc. or Autozone Parts, Inc., arising from Indebtedness permitted under Section 9.9(s) hereof; provided such Inventory and Accounts shall be excluded from the Borrowing Base.”

(n) Section 9.9 of the Loan Agreement is hereby amended by (i) adding the language “; and” in place of the period at the end of clause (r) therein ad (ii) adding a new clause (s) at the end of such Section 9.9 to read as follows:

“(s) purchase money Indebtedness not to exceed $50,000,000 in the aggregate outstanding under the Vendor Purchase Arrangements.”

(o) Section 9.17 of the Loan Agreement is hereby deleted and replaced with the phrase “Intentionally Deleted.”

(p) Section 9.18 of the Loan Agreement is hereby deleted and replaced with the phrase “Intentionally Deleted.”

(q) Section 11.3(a) of the Loan Agreement is hereby amended by (i) adding the language “, or” in place of the period at the end of clause (vii) therein and (ii) adding a new clause (viii) at the end of such Section 11.3(a) to read as follows:

“(viii) decrease the availability block set forth in clause (e) of the definition of Borrowing Base, without the consent of Agent and all Lenders.

(r) Section 12.8 of the Loan Agreement is hereby amended by deleting reference to “$120,000,000” set forth therein and replacing it with the amount of “$145,000,000”.

6

(s) Section 13.1(a) of the Loan Agreement is hereby amended by replacing the date “June 30, 2007” set forth in clause (a) of Section 13.1 with the date “June 30, 2008”.

(t) Section 13.1(a) of the Loan Agreements is hereby amended by amending the fourth sentence set forth in such Section 13.1(a) to add the following new language at the end of such sentence (before the period) to read as follows:

“and for any of the Obligations arising under or in connection with any Hedging Agreement in such amounts as the other party to such Hedging Agreement may require (unless such Obligations arising under or in connection with any Hedging Agreement are paid in full in cash and terminated in a manner satisfactory to such other party).”

(u) Section 13.1(c) of the Loan Agreement is hereby amended by amending and restating the calculation of the termination fee to read as follows:

“Amount	Period
(i) 1.0% of Maximum Credit	From March 16, 2005 to and including March 16, 2006
(ii) 0.25% of Maximum Credit	From and after March 16, 2006 to and including March 16, 2007”

(v) Pursuant to Section 9.10(j) of the Loan Agreement, Agent hereby approves of the inclusion by UPC of its assets into the Borrowing Base subject to all terms and conditions of the Loan Agreement.

(w) Upon effectiveness of the name change of UPC Acquisition Corp. to Unit Parts Company, all references in the Financing Agreements to UPC Acquisition Corp., a Delaware corporation, shall be deemed a reference to Unit Parts Company, a Delaware corporation.

Section 2 Conditions to Effectiveness. The effectiveness of the amendments set forth in Section 1 above are subject to the satisfaction of each of the following conditions:

(a) Agent shall have received a duly executed counterpart of this Amendment from Borrowers and the Lenders;

(b) Agent shall have received a reaffirmation of guaranty from each guarantor of the Obligations in form and substance satisfactory to the Agent;

(c) In consideration of the amendments provided herein, Borrowers shall have paid to Agent, for the ratable benefit of the Lenders executing this Amendment, an amendment fee equal to $275,000;

7

(d) Agent shall have received an executed copy of the Asset Purchase Agreement (“APA”) among Parent, UPC and the Sellers named therein (“Sellers”), together with all exhibits and schedules thereto, in each case in form and substance satisfactory to Agent;

(e) Agent shall have received a Joinder Agreement executed by UPC in favor of Agent, together with amendments to the Information Certificate relating to UPC and Western Reman, in each case in form and substance satisfactory to Agent;

(f) Agent shall have received Uniform Commercial Code, tax, judgment and bankruptcy searches against UPC and each of the domestic “Sellers” under the APA, with results satisfactory to Agent;

(g) Agent shall have received executed trademark, patent and copyright security agreements, as applicable, with respect to all registered intellectual property owned by UPC, in each case in form and substance satisfactory to Agent;

(h) Agent shall have received evidence that a UCC-1 financing statement has been properly filed against UPC and Western Reman with the Delaware Secretary of State’s office;

(i) Agent shall have received an executed amendment to the existing Pledge Agreement of June 28, 2002 among Parent, the other “Pledgors” named therein and Agent, pursuant to which all the Capital Stock of UPC and the membership interests of Western Reman together with delivery of stock certificates and executed stock powers for UPC shall be pledged to Agent as security for the Obligations;

(j) Agent shall have received executed Deposit Account Control Agreements with respect to all bank accounts maintained by UPC, in each case in form and substance satisfactory to Agent;

(k) Agent shall have received executed Collateral Access Agreements with respect to each leased location or processor location where UPC maintains Inventory, in each case in form and substance satisfactory to Agent; provided, that if such Collateral Access Agreements are not received, Agent may elect to exclude (or include with appropriate Reserves) Inventory at such locations from the Borrowing Base.

(l) Agent shall have received payoff letters from any prior lenders to the Sellers along with evidence that all liens held by such Sellers on the assets acquired by UPC have been terminated and released;

(m) Agent shall have received any existing environmental reports with respect to the real property acquired by UPC, which shall be in form and substance satisfactory to Agent; and

(n) Agent shall have received (i) good standing certificates as of a recent date from each jurisdiction where UPC and Western Reman is incorporated or formed, as applicable, and qualified to do business and (ii) an executed officer’s

8

certificate certifying and attaching (A) certified copy of UPC’s Certificate of Incorporation or formation, as applicable, (B) bylaws or operating agreement, as applicable, (C) resolutions adopted by the board of directors of UPC and the sole stockholder of Western Reman authorizing the transactions described herein and (D) incumbency of officers of UPC and Western Reman.

Section 3 Representations, Warranties and Covenants. In order to induce Agent and Lenders to enter into this Amendment, Borrowers represent, warrant and covenant to Agent and Lenders, upon the effectiveness of this Amendment, which representations, warranties and covenants shall survive the execution and delivery of this Amendment that:

(a) No Default; etc. No Default or Event of Default has occurred and is continuing after giving effect to this Amendment or would result from the execution or delivery of this Amendment or the consummation of the transactions contemplated hereby.

(b) Corporate or Limited Liability Company Power and Authority; Authorization. Each Borrower has the power and authority to execute and deliver this Amendment and to carry out the terms and provisions of the Financing Agreements, as amended by this Amendment, to which it is a party and the execution and delivery by such Borrower of this Amendment, and the performance by such Borrower of its obligations hereunder have been duly authorized by all requisite action by such Borrower.

(c) Execution and Delivery. Each Borrower has duly executed and delivered this Amendment.

(d) Enforceability. This Amendment and the Financing Agreements, as amended by this Amendment, constitute the legal, valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ right generally, and by general principles of equity.

(e) Representations and Warranties. All of the representations and warranties contained in the Financing Agreements (other than those which speak expressly only as of a different date) are true and correct as of the date hereof after giving effect to this Amendment and the transactions contemplated hereby.

Section 4 Miscellaneous.

(a) Effect; Ratification. Borrowers acknowledge that all of the reasonable legal expenses incurred by Agent in connection herewith shall be reimbursable under Section 9.21 of the Loan Agreement. The amendments set forth herein are effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to any amendment, waiver or modification of any other term or condition of any Financing Agreement or (ii) prejudice any right or rights that any Lender may now have or may have in the future under or in

9

connection with any Financing Agreement. Each reference in the Financing Agreements to “this Agreement”, “herein”, “hereof” and words of like import shall mean such Financing Agreement as amended hereby. This Amendment shall be construed in connection with and as part of the Financing Agreements and all terms, conditions, representations, warranties, covenants and agreements set forth in the Financing Agreements, except as herein amended are hereby ratified and confirmed and shall remain in full force and effect.

(b) Counterparts; etc. This Amendment may be executed in any number of counterparts, each such counterpart constituting an original but all together one and the same instrument. Delivery of an executed counterpart of this Amendment by fax shall have the same force and effect as the delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by fax shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of this Amendment.

(c) Governing Law. This Amendment shall be deemed a Financing Agreement and shall be governed by, and construed and interpreted in accordance with the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

Section 5 Post Closing Matters. Within thirty (30) days after the date hereof Borrowers agree (a) to execute and deliver to Agent such mortgages and/or deeds of trust, as applicable, with respect to all real property owned by UPC, together with appropriate title insurance, surveys and related documents as Agent shall require, in each case in form and substance satisfactory to Agent and (b) to deliver to Agent Uniform Commercial Code, tax, judgment and bankruptcy searches against Western Reman with results satisfactory to Agent.

Section 6 Subordination Agreements. Each of the Lenders authorizes Agent to enter into subordination agreements with O’Reilly Automotive, Inc. and Autozone Parts, Inc., on behalf of such Lenders (including any and all modifications of amendments thereto), pursuant to which the Agent’s Liens on Inventory and Accounts subject to Vendor Purchase Arrangements will be subordinate to liens of such vendors and each Lender agrees to be bound by the terns of such subordination agreements.

[Signature Pages Follow]

10

IN WITNESS WHEREOF, Agent, Lenders, and Borrowers have caused these presents to be duly executed as of the day and year first above written.

BORROWERS
REMY INTERNATIONAL, INC. (f/k/a Delco Remy International Inc.) M. & M. KNOPF AUTO PARTS, L.L.C. NABCO, INC. REMY REMAN, L.L.C. REMY INC. (f/k/a Delco Remy America, Inc.)	FRANKLIN POWER PRODUCTS, INC. INTERNATIONAL FUEL SYSTEMS, INC. POWRBILT PRODUCTS, INC. REMY LOGISTICS, L.L.C. WORLD WIDE AUTOMOTIVE, L.L.C. WESTERN REMAN INDUSTRIAL, LLC
REMY SALES, INC. (f/k/a DR SALES, INC.) HSG I, INC. HSG II, INC. UPC ACQUISITION CORP.	For each of the entities above, by Craig Hart, as Treasurer for each entity
	By:	/s/ Craig Hart
		Craig Hart

[Signature Page to Amendment No. 2 to

Second Amended and Restated Loan and Security Agreement]

		AGENT
		CONGRESS FINANCIAL CORPORATION (Central), as Administrative Agent and US Collateral Agent
		By:	/s/Anthony Vizgirda
		Title:	First Vice President
LENDERS		LENDERS
THE CIT GROUP/BUSINESS CREDIT, INC.		WACHOVIA BANK, NATIONAL ASSOCIATION
By:	/s/ Carmen Caporrino	By:	/s/ Mark Fagnani
Title:	Vice President	Title:	Executive Vice President
WELLS FARGO FOOTHILL		GMAC BUSINESS CREDIT, LLC
By:	/s/ Sanat S. Amladi	By:	/s/ Daniel J. Manella
Title:	Vice President	Title:	Senior Vice President
NATIONAL CITY BANK		UPS CAPITAL CORPORATION
By:	/s/ Christopher A. Susott	By:	/s/ John P. Holloway
Title:	Vice President	Title:	Director of Portfolio Management
RZB FINANCE LLC
By:	/s/ Christoph Hoedl and Nicolas Moriatis
Title:	Group Vice President

[Signature Page to Amendment No. 2 to

Second Amended and Restated Loan and Security Agreement]

REAFFIRMATION OF GUARANTY

{U.S. Subsidiaries of Remy International, Inc. (f/k/a Delco Remy International Inc.)}

March 16, 2005

Congress Financial Corporation (Central),

    as Agent

150 S. Wacker Drive

Chicago, Illinois 60606

Re: Guaranty

Please refer to (1) the Second Amended and Restated Loan and Security Agreement dated as of April 23, 2004 (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”), by and among Remy International, Inc. (f/k/a Delco Remy International Inc.), a Delaware corporation, Remy Inc. (f/k/a Delco Remy America, Inc.), a Delaware corporation, Remy Sales, Inc. (f/k/a DR Sales, Inc.), a Delaware corporation, Franklin Power Products, Inc., an Indiana corporation, HSG I, Inc, a Delaware corporation, HSG II, Inc, a Delaware corporation, International Fuel Systems, Inc., an Indiana corporation, M. & M. Knopf Auto Parts, L.L.C., a Delaware limited liability company, Nabco, Inc., a Michigan corporation, Powrbilt Products, Inc., a Texas corporation, Remy Logistics, L.L.C., a Delaware limited liability company, Remy Reman, L.L.C., a Delaware limited liability company, Western Reman Industrial, LLC, a Delaware limited liability company, World Wide Automotive, L.L.C., a Virginia limited liability company, UPC Acquisition Corp., a Delaware corporation (to be renamed Unit Parts Company, “UPC”) (each individually a “Borrower” and collectively, “Borrowers”), Congress Financial Corporation (Central), an Illinois corporation, as agent for Lenders referenced below (in such capacity and as US Collateral Agent, “Agent”), the financial institutions (each individually, a “Lender” and collectively, “Lenders”) which are party thereto (capitalized terms used and not defined herein shall have the meanings assigned to them in the Loan Agreement) and (2) the Guaranty dated June 28, 2002 (as amended, supplemented, restated or otherwise modified from time to time, “Guaranty”) by each of the undersigned, as guarantors (collectively “Guarantors”), in favor of Agent. Pursuant to an Amendment No. 2 to Second Amended and Restated Loan and Security Agreement and the other Financing Agreements dated as of the date hereof (the “Amendment”) among Agent, Lenders and Borrowers, the Financing Agreements have been amended in accordance with the terms and conditions of the Amendment.

Each Guarantor hereby (i) acknowledges and reaffirms all of its obligations and undertakings under the Guaranty, and (ii) acknowledges and agrees that subsequent to, and taking into account all of the terms and conditions of the Amendment, the Guaranty is and shall remain in full force and effect in accordance with the terms thereof.

[Signature Page Follows]

IN WITNESS WHEREOF, each Guarantor has executed and delivered this Reaffirmation of Guaranty as of the day and year first above written.

REMY INTERNATIONAL, INC. (f/k/a Delco Remy International Inc.) M. & M. KNOPF AUTO PARTS, L.L.C. NABCO, INC. REMY REMAN, L.L.C. REMY INC. (f/k/a Delco Remy America, Inc.) REMY SALES, INC. (f/k/a DR SALES, INC.) HSG I, INC. HSG II, INC. UPC ACQUISITION CORP. FRANKLIN POWER PRODUCTS, INC. INTERNATIONAL FUEL SYSTEMS, INC. POWRBILT PRODUCTS, INC. REMY LOGISTICS, L.L.C. WORLD WIDE AUTOMOTIVE, L.L.C. WESTERN REMAN INDUSTRIAL, LLC	BALLANTRAE CORPORATION, a Delaware corporation REMAN HOLDINGS, L.L.C., a Delaware limited liability company REMY KOREA HOLDINGS, L.L.C., a Delaware limited liability company REMY INTERNATIONAL HOLDINGS, INC. (f/k/a Remy International, Inc.), a Delaware corporation REMY POWERTRAIN, L.P., a Delaware limited partnership, by its general partner HSG I, Inc., a Delaware corporation MARINE CORPORATION OF AMERICA, an Indiana corporation REMY LOGISTICS, L.L.C., a Delaware limited liability company POWER INVESTMENTS, INC., an Indiana corporation POWER INVESTMENTS MARINE, INC., a New Jersey corporation
	For each of the entities above, by Craig Hart, as Treasurer for each entity
	By:	/s/ Craig Hart
		Craig Hart

[Signature Page to the Reaffirmation of Guarantee]

REAFFIRMATION OF GUARANTY

{Remy International, Inc. (f/k/a Delco Remy International Inc.)}

March 16, 2005

Congress Financial Corporation (Central),

    as Agent

150 S. Wacker Drive

Chicago, Illinois 60606

Re: Guaranty

Please refer to (1) the Second Amended and Restated Loan and Security Agreement dated as of April 23, 2004 (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”), by and among Remy International, Inc. (f/k/a Delco Remy International Inc.), a Delaware corporation, Remy Inc. (f/k/a Delco Remy America, Inc.), a Delaware corporation, Remy Sales, Inc. (f/k/a DR Sales, Inc.), a Delaware corporation, Franklin Power Products, Inc., an Indiana corporation, HSG I, Inc, a Delaware corporation, HSG II, Inc, a Delaware corporation, International Fuel Systems, Inc., an Indiana corporation, M. & M. Knopf Auto Parts, L.L.C., a Delaware limited liability company, Nabco, Inc., a Michigan corporation, Powrbilt Products, Inc., a Texas corporation, Remy Logistics, L.L.C., a Delaware limited liability company, Remy Reman, L.L.C., a Delaware limited liability company, Western Reman Industrial, LLC, a Delaware limited liability company, World Wide Automotive, L.L.C., a Virginia limited liability company, UPC Acquisition Corp., a Delaware corporation (to be renamed Unit Parts Company, “UPC”) (each individually a “Borrower” and collectively, “Borrowers”), Congress Financial Corporation (Central), an Illinois corporation, as agent for Lenders referenced below (in such capacity and as US Collateral Agent, “Agent”), the financial institutions (each individually, a “Lender” and collectively, “Lenders”) which are party thereto (capitalized terms used and not defined herein shall have the meanings assigned to them in the Loan Agreement) and (2) the Guaranty dated June 28, 2002 (“Guaranty”) by the undersigned, as guarantor (“Guarantor”), in favor of Agent. Pursuant to an Amendment No. 2 to Second Amended and Restated Loan and Security Agreement and the other Financing Agreements dated as of the date hereof (the “Amendment”) among Agent, Lenders and Borrowers, the Financing Agreements have been amended in accordance with the terms and conditions of the Amendment.

Guarantor hereby (i) acknowledges and reaffirms all of its obligations and undertakings under the Guaranty, and (ii) acknowledges and agrees that subsequent to, and taking into account all of the terms and conditions of the Amendment, the Guaranty is and shall remain in full force and effect in accordance with the terms thereof.

[Signature Page Follows]

IN WITNESS WHEREOF, Guarantor has executed and delivered this Reaffirmation of Guaranty as of the day and year first above written.

REMY INTERNATIONAL, INC. (f/k/a Delco Remy International Inc.), a Delaware corporation
By:	/s/ Craig Hart
	Craig Hart
Title:	Treasurer

[Signature Page to the Reaffirmation of Guarantee]

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Thomas J. Snyder, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Remy International, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether, or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 16, 2005	/s/ Thomas J. Snyder
	Thomas J. Snyder
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Rajesh K. Shah, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Remy International, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether, or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 16, 2005	/s/ Rajesh K. Shah
	Rajesh K. Shah
	Executive Vice President and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Remy International, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas J. Snyder, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial position and results of operations of the Company.

/s/ Thomas J. Snyder

Thomas J. Snyder

President and Chief Executive Officer

May 16, 2005

A signed original of this written statement required by Section 906 has been provided to Remy International, Inc. and will be retained by Remy International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Remy International, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rajesh K. Shah, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial position and results of operations of the Company.

/s/ Rajesh K. Shah

Rajesh K. Shah

Executive Vice President and

Chief Financial Officer

May 16, 2005

A signed original of this written statement required by Section 906 has been provided to Remy International, Inc. and will be retained by Remy International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.