Exhibit 10.1

ASSET PURCHASE AGREEMENT

AMONG

CATERPILLAR INC., CATERPILLAR REMAN

ACQUISITION LLC,

AND

REMY INTERNATIONAL, INC.,

FRANKLIN POWER PRODUCTS, INC., AND

INTERNATIONAL FUEL SYSTEMS, INC.

January 29, 2007

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TABLE OF CONTENTS:

 

SECTION 1

   DEFINITIONS    1

SECTION 2

   BASIC TRANSACTION    14

SECTION 3

   SELLERS' REPRESENTATIONS AND WARRANTIES    17

SECTION 4

   BUYER'S REPRESENTATIONS AND WARRANTIES    37

SECTION 5

   PRE-CLOSING COVENANTS    38

SECTION 6

   POST-CLOSING COVENANTS    40

SECTION 7

   CONDITIONS TO OBLIGATION TO CLOSE    46

SECTION 8

   REMEDIES FOR BREACH OF THIS AGREEMENT; INDEMNITY    51

SECTION 9

   TERMINATION    55

SECTION 10

   MISCELLANEOUS    56

EXHIBITS

 

Exhibit A

   Acquired Assets

Exhibit B

   Assignment and Assumption Agreement

Exhibit C

   Expressly Assumed Liabilities

Exhibit D

   FPP/Navistar Agreement re Magnum Obligations

Exhibit E

   Expressly Excluded Assets

Exhibit F

   Financial Statements

Exhibit G

   Material Leased Property

Exhibit H

   Net Investment Methodologies and Principles

Exhibit I

   Calculation of Net Investment Peg Amount

Exhibit J

   Form of Outsourcing Supply Agreement

Exhibit K

   Parent Assets

Exhibit L

   Subsidiaries

Exhibit M

   Form of Transition Services Agreement

Exhibit N

   Form of Director and Officer Resignation Letter

Exhibit O

   Material Consents

Exhibit P

   Form of Opinion of Sellers’ Counsel

Exhibit Q

   Form of Opinion of Buyer’s Counsel

Exhibit R

   Reportable Transactions Schedule

Exhibit S

   Navistar Assignment and Assumption Agreement, Estoppel and Consent

Exhibit T

   Specific Ledger Accounts for Assumed Liabilities

Exhibit U

   Valuation Opinion Letter

Exhibit V

   Lien Releases

DISCLOSURE SCHEDULE

 

3(b)

   Authorization of Transaction

3(c)

   Non-contravention

3(f)

   Subsidiaries

3(g)

   Financial Statements

3(h)

   Events Subsequent to June 30, 2006 Financial Statements

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3(i)

   Undisclosed Liabilities

3(k)(iii)

   Tax Matters

3(k)(vii)

   Additional Subsidiary Information

3(l)(ii)

   Leased Real Property

3(l)(v)

   Leased Real Property Subleases

3(m)(iii)

   Intellectual Property

3(m)(iv)

   Licensed Intellectual Property

3(m)(x)

   Confidentiality

3(n)

   Tangible Assets

3(o)

   Inventory

3(p)(1)

   Material Contracts

3(p)(1)(viii)

   Employment Matters

3(p)(2)

   Exceptions to Enforceability, Full Force and Effect

3(q)

   Accounts Receivable

3(r)

   Powers of Attorney

3(s)

   Insurance

3(t)

   Litigation

3(u)

   Product Warranty

3(w)(i)

   Employment Complaint

3(w)(ii)

   Employment

3(w)(iv)

   Employee Compensation

3(x)

   Employee Benefit Plans

3(y)

   Guaranties

3(z)

   Environmental Matters

3(z)(ii)

   Permits, Licenses and Authorizations

3(bb)

   Customers and Suppliers

3(cc)

   Permits

3(dd)

   Bank Accounts

3(ee)

   Improper and Other Payments

3(ff)

   Accounting and Disclosure Controls

3(ii)

   Consents and Approvals

5(c)

   Operation of Business

6(g)(iv)

   Transferred Employees

7(b)(xi)

   Guarantees

7(b)(xii)

   Consents

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) is entered into as of
January 29, 2007, by and among Caterpillar Inc., a Delaware corporation
(“Buyer’s Parent”), Caterpillar Reman Acquisition LLC, a Delaware limited
liability company (“Buyer”) and a wholly owned subsidiary of Buyer’s Parent,
Franklin Power Products, Inc. (“FPP”), an Indiana corporation, International
Fuel Systems, Inc. (“IFS” and together with FPP, “Sellers”), an Indiana
corporation and Remy International, Inc. (“Remy” or “Sellers’ Parent”) a
Delaware corporation and the ultimate parent corporation of FPP and IFS.

This Agreement contemplates a transaction in which Buyer will purchase
substantially all of the assets (and assume certain of the liabilities) of FPP
and IFS in return for cash.

Now, therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree, intending to be legally bound, as follows:

SECTION 1  DEFINITIONS

In addition to terms defined elsewhere in this Agreement, the terms set forth on
in this Section 1, when utilized in this Agreement shall have the meanings
indicated in this Section 1, which meanings shall be equally applicable to both
the singular and plural forms of such terms:

“Accountants” means Deloitte & Touche LLP, certified public accountants, and if
such firms refuses to accept such engagement, then such other nationally or
regionally recognized independent accounting firm as is chosen by the mutual
agreement of Buyer and Sellers.

“Accounts Receivable” means all accounts, instruments, drafts, acceptances and
other forms of receivables relating to the business of Sellers, and all rights
earned under Sellers’ Contracts to sell goods or render services.

“Acquired Assets” means all right, title and interest in and to all of the
assets of FPP and IFS used by Sellers primarily in the operation of the Target
Business, including but not limited to (a) all of the assets listed on Exhibit
A, (b) certain defined Leased Real Property listed on Exhibit A, (c) tangible
personal property (such as machinery, equipment, inventories of raw materials
and supplies, manufactured and purchased parts, goods in process and finished
goods, furniture, automobiles, trucks, tractors, trailers, tools, jigs and dies)
used by Sellers in the operation of the Target Business, including but not
limited to all tangible personal property used in the Target Business and
located at the listed Leased Real Property as of June 30, 2006, and all tangible
personal property added for use in the Target Business and moved to the listed
Leased Real Property since June 30, 2006, but excluding tangible personal
property removed from use in the Target Business or removed from the listed
Leased Real Property in the ordinary course of business since June 30, 2006,
(d) Intellectual Property, including but not limited to all trademarks and trade
names, used by Sellers in the operation of the Target Business, goodwill
associated therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions,
(e) Leases and subleases used by Sellers in the operation of the Target
Business, and rights thereunder, (f) subject to Section 5(f), the Contracts,
Liens, guaranties and other similar arrangements used by Sellers in the
operation of the Target Business, and rights thereunder, (g) Accounts Receivable
arising from Sellers’ operation of the Target Business, (h) FPP’s membership
equity interest in Magnum, (i) claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of set-off, and rights of
recoupment related to the Acquired Assets (excluding any such item relating to
insurance or to the payment of Taxes) in each case arising from Sellers’
operation of the Target Business,

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(j) subject to Section 5(f), franchises, approvals, Permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies and used by Sellers in the operation of
the Target Business, (k) Bank Accounts, books, records, ledgers, files,
documents, correspondence, lists, plats, architectural plans, drawings, and
specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials to the extent arising
from Sellers’ operation of the Target Business), and (l) copiers, data cabling
and wiring, data communication circuits, desktop PCs, docking stations, external
hard drives and other such storage devices, facsimile machines, firewalls,
laptop PCs, printers, routers, servers, switches, wireless access points, and
other such devices located in buildings leased by the Target Business along with
the computer software, except where software licensing restrictions limit
assignment, loaded on or used by the immediately preceding devices; provided,
however, that the Acquired Assets shall not include (and shall specifically
exclude) the Expressly Excluded Assets.

“Affiliate” means, with respect to a Person, any legal entity directly or
indirectly controlling, controlled by or under common control with such Person,
where “control” means a direct or indirect ownership interest of more than 50%
in such legal entity.

“Affiliated Group” means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state,
local or foreign law.

“Agreement” means this Asset Purchase Agreement together with all exhibits and
schedules contemplated hereby.

“Applicable Rate” means the blended prime rate as published daily in the Wall
Street Journal.

“Asbestos Liabilities” means any Liabilities arising from, relating to, or based
on the presence or alleged presence of asbestos or asbestos-containing materials
in any product or item designed, manufactured, sold, marketed, installed,
stored, transported, handled, or distributed, or otherwise based on the presence
or alleged presence of asbestos or asbestos-containing materials at any property
or facility or in any structure, including any Liabilities arising from,
relating to or based on any personal or bodily injury or illness.

“Assigned Contract” means any Contract primarily related to the Target Business:
(i) under which either Seller has acquired or may acquire any rights or
benefits; (ii) under which either Seller has or may become subject to any
obligation or Liability; or (iii) by which either Seller or any of the Acquired
Assets is or may become bound, including all Material Contracts set forth on
Section 3(p)(1) of the Disclosure Schedule and any other Contract or agreement
necessary to conduct the Target Business, but excluding the Contracts designated
as Expressly Excluded Assets and as not being assigned or transferred to Buyer
at Closing.

“Assignment and Assumption Agreement” means that certain Assignment and
Assumption Agreement, by and between Sellers (as assignor) and Buyer (as
assignee) and attached hereto as Exhibit B, which will be executed and delivered
on the Closing Date.

“Assumed Liabilities” means (a) Liabilities of the Target Business incurred on
or before the date of the Most Recent Balance Sheet and set forth by specific
ledger account number on Exhibit T, which ledger accounts are included on the
Most Recent Balance Sheet(s), (b) Liabilities of the Target Business (of the
type set forth in the specific ledger accounts listed on Exhibit T) that have
arisen after the date of the Most Recent Balance Sheet(s) in the Ordinary Course
of Business and incurred in connection with the operation of the Target Business
(including breach of warranty but excluding any Liability resulting from,
arising out of, relating to, in the nature of or caused by any breach of
contract, tort, infringement,

 

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violation of law, Asbestos Liability, Silica Liability, Welding Rod Liability or
environmental matter, including those arising under Environmental, Health, and
Safety Requirements as in effect on the Closing Date), (c) obligations of the
Target Business under the Contracts and other arrangements referred to in the
definition of Acquired Assets, (d) the Knopf Trade Payables, (e) the liabilities
for accrued vacation pay, (f) any Liability for retention bonuses (for each
Transferred Employee as set out on Section 6(g)(iv) of the Disclosure Schedule)
and employee bonuses earned in 2006 but which are payable in 2007, (g) the
Permitted Encumbrances, (h) payment of all drafts and checks that have been
issued but have not been presented for payment to the extent the corresponding
payable to which such draft or check relates has been eliminated on the books
and records of Sellers; (i) all Liabilities to Sellers’ customers under written
warranty agreements given by Sellers to their customers in the Ordinary Course
of Business prior to the Closing Date; (j) all Liabilities included in the
calculation of the Final Net Investment; (k) all Liabilities and obligations
related to the portion of the Magnum Minority Interest that relates to
Navistar’s interest in Magnum’s net working capital and fixed assets (but,
expressly excluding the Liability for unpaid distributions through the Closing
Date which are due and payable to Navistar in respect of Navistar’s thirty
percent (30%) interest in Magnum, taking into account any applicable deductions
or reserves in accordance with the terms of the Limited Liability Company
Agreement of Magnum) and all Liabilities and obligations related to the Magnum
Minority Interest arising out of or related to transactions entered into or
events occurring after the Closing; and (l) all other Liabilities of the Target
Business set forth on Exhibit C under an express statement (that Buyer has
initialed) to the effect that the definition of Assumed Liabilities will include
the Liabilities so disclosed (the “Expressly Assumed Liabilities”); provided,
however, that, notwithstanding the above, the Assumed Liabilities shall not
include (i) any Liability of Sellers or Remy for Taxes, (ii) any Liability of
Sellers or Remy for the unpaid Taxes of any Person under Reg. Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise, (iii) any obligation of Sellers or Remy to
indemnify any Person by reason of the fact that such Person was a director,
officer, employee, or agent of Sellers or any of the Subsidiaries or was serving
at the request of any such entity as a partner, trustee, director, officer,
employee, or agent of another entity (whether such indemnification is for
judgments, damages, penalties, fines, costs, amounts paid in settlement, losses,
expenses, or otherwise and whether such indemnification is pursuant to any
statute, charter document, bylaw, agreement, or otherwise), (iv) any Liability
of Sellers or Remy for costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby; (v) any bonus related to
successful completion of this transaction; (vi) any liabilities related to
employees of the Target Business other than those included in Assumed
Liabilities, including but not limited to any liabilities under any Target
Business Employee Benefit Plan or Employee Pension Benefit Plan; (vii) any
incurred insurance claim liability and any incurred but not reported liability
for all claims incurred on or before the Closing Date; (viii) any liability for
any pending litigation, or threatened or potential litigation within Sellers’ or
Remy’s Knowledge; (ix) any Liability or obligation of Sellers or Remy under this
Agreement (or under any side agreement between Sellers on the one hand and Buyer
on the other hand entered into on or after the date of this Agreement); (x) any
Liability of the Sellers or Remy under any note, bond, loan, guarantee or any
other debt instrument of any kind; (xi) any Liability that both (a) results
from, arises out of, relates to, is in the nature of or was caused by any breach
of contract, tort, infringement, violation of law, Asbestos Liability, Silica
Liability, Welding Rod Liability, environmental matter, including those arising
under Environmental, Health, and Safety Requirements and (b) arises out of
products manufactured or events occurring or actions taken by Sellers on or
before the Closing Date; and (xii) any other Liability not expressly assumed
hereunder; provided further, however, that in the case of clauses (i) and
(ii) in the proviso above, Assumed Liabilities shall exclude such Taxes only to
the extent that such Taxes exceed the amount, if any, reserved for such Taxes of
Seller (excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) on the Closing Financial Statements and
taken into account in determining the Final Net Investment Adjustment.

 

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“Basis” means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could be reasonably expected to
form the basis for any specified consequence.

“Business Day” means any day other than Saturday, Sunday, and any day on which
commercial banks in Indiana or Illinois are authorized by Law to be closed.

“Buyer Indemnified Parties” means Buyer and its Affiliates and its and their
directors, officers, employees, successors, and assigns.

“Cash” means cash and cash equivalents (including marketable securities and
short-term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements; provided, however,
in no event shall any party be obligated to restore a negative balance to Cash
and any negative balance in Cash shall be classified as an accounts payable.

“Closing” means consummation of the transactions contemplated by this Agreement.

“Closing Date” means (i) the later of (A) the second (2nd) Business Day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself), and (B) January 31, 2007 or (ii) such other date as Buyer and
Sellers may mutually determine.

“Closing Financial Statements” means consolidated balance sheet and income
statement of the Target Business as of the Closing Date and for the period from
December 31, 2005 through the Closing Date, which Seller will prepare, all in
conformity with the preparation of the June 30, 2006 Financial Statements and in
accordance with GAAP (except the Closing Financial Statements (i) will not
include a statement of cash flows, (ii) will not include a statement of changes
in shareholders’ equity, (iii) will exclude footnote disclosures, (iv) will
exclude immaterial customary recurring year-end adjustments, and (v) will be
subject to the exceptions set forth on Section 3(g) of the Disclosure Schedule
and pursuant to agreed upon procedures (to be undertaken by Buyer’s accountants
at Buyer’s cost) needed to determine Net Investment). Sellers will provide a
consolidated Net Investment statement that will be derived from the Closing
Financial Statements.

“Closing Net Investment Adjustment” means the amount as reflected on the Closing
Financial Statements and the Net Investment on the Closing Date, on a
dollar-for-dollar basis, by which the Final Net Investment transferred at
Closing exceeds or falls short of the Net Investment Peg Amount.

“Closing Net Investment Adjustment Payment” means the amounts payable under the
definition of “Closing Payment” subsection (b) below.

“Closing Payment” means (a) One Hundred Fifty Million Dollars ($150,000,000),
(b) plus (the lesser of eighty percent (80%) of the Estimated Net Investment
Surplus or $3,200,000) or minus the Estimated Net Investment Deficiency, as
applicable (amounts payable under subsection (b) hereinafter referred to as the
“Closing Net Investment Adjustment Payment”).

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B and of any similar state law.

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

 

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“Confidential Information” means any information that is “Confidential
Information” pursuant to the terms and conditions of the Confidentiality
Agreement.

“Confidentiality Agreement” means that certain confidentiality letter by and
between the Parties dated as of August 5, 2006.

“Contract” means any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
insurance policy, commitment or other arrangement or agreement, whether written
or oral.

“Disclosure Schedule” means the disclosure schedule delivered by Sellers to
Buyer on the date hereof and initialed by the Parties as contemplated by
Section 3 hereof.

“Employee Benefit Plan” means any “employee benefit plan” (as such term is
defined in ERISA Section 3(3) and all applicable regulations) and any other
employee benefit plan, program or arrangement of any kind, including any defined
benefit or defined contribution plan, stock ownership plan, executive
compensation program or arrangement, bonus plan, incentive compensation plan or
arrangement, profit sharing plan or arrangement, deferred compensation plan,
agreement or arrangement, supplemental retirement plan or arrangement, vacation
pay, sickness, disability, or death benefit plan (whether provided through
insurance, on a funded or unfunded basis, or otherwise), medical or life
insurance plan providing benefits to employees, retirees, or former employees or
any of their dependents, survivors, or beneficiaries, employee stock option or
stock purchase plan, severance pay, termination, salary continuation or employee
assistance plan. For purposes of the definition of “Assumed Liability” the term
“Employee Benefit Plan” shall not include bonus plans (including retention
bonuses for Transferred Employees as listed on Section 6(g)(iv) of the
Disclosure Schedule) or plans with respect to vacation pay.

“Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2)
and all applicable regulations.

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1)
and all applicable regulations.

“Encumbrance Documents” means easements, covenants, conditions, restrictions,
Liens, guaranties or similar provisions in any instrument of record or other
unrecorded agreement affecting the Real Property.

“Environmental, Health, and Safety Requirements” means, as amended and as now in
effect, all federal, state, local, and foreign statutes, regulations,
ordinances, and other provisions having the force or effect of law, all judicial
and administrative orders and determinations, all contractual obligations, and
all common law concerning public health and safety, worker health and safety,
pollution or protection of the environment, including all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any Hazardous Materials,
substances, or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise, or radiation.

“Environmental Insurance Company” shall mean the insurance company (or
collectively the insurance companies) issuing the Environmental Insurance
Policy.

“Environmental Insurance Policy” shall mean the insurance policy (or
collectively the insurance policies) purchased by the Buyer pursuant to
Section 7(a)(xxx).

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and all applicable regulations.

“ERISA Affiliate” means each entity that is treated as a single employer with
Sellers for purposes of Code Section 414.

“Expressly Excluded Assets” shall mean those assets of Sellers listed on Exhibit
E which are not part of the sale and purchase contemplated by this Agreement and
which shall remain the property of Sellers after the Closing.

“Fiduciary” has the meaning set forth in ERISA Section 3(21) and all applicable
regulations.

“Final Net Investment” means the Net Investment as of the date of Closing as
determined pursuant to Section 2(g)(iv) hereto.

“Final Net Investment Adjustment” means the Net Investment Adjustment as
determined pursuant to Section 2(g)(iv) hereto.

“Financial Statements” means the following documents for FPP, IFS and their
Subsidiaries attached hereto as Exhibit F: (i) unaudited consolidated balance
sheets and statements of income, as of and for the fiscal years ended
December 31, 2004, and December 31, 2005 (the “Most Recent Fiscal Year End”);
(ii) the unaudited consolidated balance sheets and statement of income for the
six (6) months ending June 30, 2006; and (iii) the unaudited consolidated
balance sheets and statements of income for the eleven (11) months ending
November 30, 2006 (subsection (iii) above, the “Most Recent Financial
Statements”).

“GAAP” means United States generally accepted accounting principles as in effect
from time to time, consistently applied.

“Hart-Scott-Rodino Act” means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.

“Hazardous Materials” means any substances that are regulated under Law in
effect as of the Closing Date as contaminants, or as threats or potential
threats to human health, safety or the environment by any Environmental, Health,
and Safety Requirements.

“Improvements” means buildings, structures, fixtures, building systems and
equipment, and all components thereof, including the roof, foundation,
load-bearing walls and other structural elements thereof, heating, ventilation,
air conditioning, mechanical, electrical, plumbing and other building systems,
environmental control, remediation and abatement systems, sewer, storm and waste
water systems, irrigation and other water distribution systems, parking
facilities, fire protection, security and surveillance systems, and
telecommunications, computer, wiring and cable installations, utility
installations and landscaping included in the Real Property.

“Indemnified Party” means whomever of the Buyer Indemnified Parties, on the one
hand, or the Seller Indemnified Parties, on the other hand, is asserting a claim
of indemnification pursuant to Section 8.

“Indemnifying Party” means a Party against whom a claim of indemnification is or
may be asserted pursuant to Section 8.

 

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“Intellectual Property” means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, Know-How,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including source code, executable code, data,
databases, and related documentation), (g) all advertising and promotional
materials, (h) all other proprietary rights, and (i) all copies and tangible
embodiments thereof (in whatever form or medium).

“Knopf Trade Payables” means the accounts payable owed by Sellers to M.&M. Knopf
Auto Parts, LLC, a Delaware limited liability company, with respect to purchases
of products made within the thirty (30) day period ending on the Closing Date.

“Knowledge” (i) when applied to Sellers or any Subsidiary means the actual
personal knowledge after reasonable investigation of David Key, John Kneebone,
Keith Walls, Bill Roberts and Brian Yoder, and those additional individual
employees identified herein as to specific representations and warranties,
(ii) when applied in Section 3(k), shall also mean the actual personal knowledge
after reasonable investigation of John Fitzenberger, (iii) when applied in
Section 3(m) shall also mean the actual personal knowledge after reasonable
investigation of Dennis Faggioni, (iv) when applied in Section 3(t) shall also
mean the actual personal knowledge after reasonable investigation of Quinn
Williams and Sheila D.D. Cannon, (v) when applied in Section 3(u) shall also
mean the actual personal knowledge after reasonable investigation of Craig Hart,
(vi) when applied in Section 3(v) shall also mean the actual personal knowledge
after reasonable investigation of Craig Hart, (vii) when applied in Section 3(w)
or Section 3(x) shall also mean the actual personal knowledge after reasonable
investigation of Joe Keever, (viii) when applied in Section 3(z) shall also mean
the actual personal knowledge after reasonable investigation of Bob O’Neill and
Jeff Nee, and (ix) when applied to the Sellers’ Parent means the actual personal
knowledge, after reasonable investigation, of Kerry Shiba, and (x) when applied
to Buyer or Buyer’s Parent means the actual personal knowledge, after reasonable
investigation, of the executive officers of Buyer and Buyer’s Parent.

“Know-How” means business and technical information used or developed for use by
or on behalf of Sellers in the operation of the Target Business, including
without limitation core management and remanufacturing processes such as
disassembly, cleaning, inspection, verification, salvage, reassembly, test and
paint, (and all Intellectual Property rights therein, whether patent or
unpatented).

“Labor Organization” means any organization of any kind, including any union or
any agency or employee representation committee or plan, in which employees
participate and which exists for the purpose, in whole or in part, of dealing
with employers concerning grievances, labor disputes, wages, rates of pay, hours
of employment, or conditions of work.

“Landlord Leases” means all Leased Real Property Subleases.

 

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“Law” means any law, statute, rule or regulation, and any judgment or order of
any federal, state, local or foreign governmental regulatory agency, commission,
bureau, authority, court or arbitration tribunal.

“Lease Consents” means written consents for the assignment of each of the
Leases, and, if requested, a waiver of landlord liens, collateral assignment of
lease or leasehold mortgage from the landlord or other party whose consent
thereto is required under each such Lease.

“Leased Real Property” means all leasehold or subleasehold estates and other
rights to use or occupy any land or Improvements held by Sellers or any of the
Subsidiaries in the operation of the Target Business, together with all Leased
Real Property Subleases, including the right to all security deposits and other
amounts and instruments deposited by or on behalf of Sellers or any of the
Subsidiaries thereunder.

“Leased Real Property Subleases” means all leases, subleases, licenses or other
agreements (written or oral) pursuant to which Seller or any of the Subsidiaries
has conveyed an interest in, or right to use, any portion of the Leased Real
Property.

“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties,
and other agreements with respect thereto, pursuant to which Sellers or any of
the Subsidiaries holds any Leased Real Property related to the Target Business,
including the right to all security deposits and other amounts and instruments
deposited by or on behalf of Sellers or any of the Subsidiaries thereunder.

“Liabilities” means any and all liabilities or obligations of whatever kind or
nature (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due).

“Lien” means any mortgage, pledge, lien, encumbrance, charge, or other security
interest other than (a) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings
that are properly reflected in the Financial Statements, (b) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(c) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.

“Losses” means losses, Liabilities, costs, claims, damages, actions, suits,
proceedings, hearings, investigations, charges, complaints, demands,
injunctions, judgments, orders, decrees, rulings, dues, penalties, fines,
amounts paid in settlement, Taxes, liens, expenses and fees, including court
costs and reasonable attorneys’ fees and expenses or any obligation to pay any
of the foregoing; provided, in no event shall “Losses” include (and “Losses”
shall specifically exclude) lost profits, diminution in value, amounts based on
multiples of earnings (unless actually paid to a third party as damages) and
consequential, indirect, punitive and other special damages, regardless of the
legal theory, that the subject Person may sustain.

“Magnum” means Magnum Power Products, LLC, the Delaware Limited Liability
Corporation formed by and between FPP (with a 70% equity interest therein) and
Navistar (with a 30% equity interest therein).

“Magnum Minority Interest” means the thirty percent (30%) ownership interest of
Navistar Aftermarket Products, Inc. in Magnum.

“Material Adverse Effect” or “Material Adverse Change” means any effect, change,
or state of facts that would be (or could reasonably be expected to be)
materially adverse to the business, assets,

 

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condition (financial or otherwise), operating results or operations of the
Target Business, taken as a whole, or to the ability of Sellers to consummate
timely the transactions contemplated hereby (regardless of whether or not such
adverse effect or change can be or has been cured at any time or whether either
Buyer has Knowledge of such effect or change on the date hereof), other than any
adverse circumstance, change or effect arising out of (A) changes, events or
developments affecting generally the industries or markets in which Sellers
operate, including changes in the national or international markets for diesel
engines or diesel engine components or in any other markets that supply raw
materials to Sellers, or changes or developments in the use, adoption or
non-adoption of technologies or industry standards, (B) changes in general
economic or political conditions or the financing, currency or capital markets
in general or changes in currency exchange rates or currency fluctuations,
(C) this Agreement or the consummation of the transactions contemplated hereby,
or the announcement hereof or thereof or any action taken by a party in
accordance with this Agreement, (D) the enactment, repeal or change in any law,
or any change in GAAP (or other applicable accounting standards) or any
interpretation of any of the foregoing, (E) the announcement by Buyer or any of
its Affiliates of its plans or intentions (including in respect of employees)
with respect to Sellers, (F) the resignation or termination of any employee of
Sellers, (G) any natural disaster, disease or pandemic, or any acts of
terrorism, sabotage, military action or war (whether or not declared) or any
escalation or worsening thereof, (H) any action required to be taken under this
Agreement, any Law or any existing Contract by which either of the Sellers is
bound or (I) any failure by Sellers to meet any internal projections or
forecasts. For purposes of this definition, “the enactment, repeal or change in
any Law” shall mean the adoption, implementation, promulgation, repeal,
modification, reinterpretation or proposal of any Law, order, protocol, practice
or measure or any other requirement of Law of or by any governmental authority
which occurs subsequent to the date hereof.

“Material Leased Real Property” means Leased Real Property set forth on Exhibit
G.

“Microbial Matter” means the presence of fungi or bacterial matter which
reproduces through the release of spores or the splitting of cells, including
mold and mildew, whether or not such Microbial Matter is living.

“Most Recent Balance Sheet” means the balance sheet contained within the Most
Recent Financial Statements.

“Most Recent Financial Statements” means unaudited consolidated and
consolidating balance sheets and statements of income as of and for the Most
Recent Fiscal Month End for Sellers and its Subsidiaries.

“Most Recent Fiscal Month End” means November 30, 2006.

“Most Recent Fiscal Year End” means December 31, 2005.

“Multiemployer Plan” has the meaning set forth in ERISA Section 3(37) and all
applicable regulations.

“Navistar” means Navistar Aftermarket Products, Inc., its Affiliates and any
successor corporations.

“Net Investment” is determined by subtracting Assumed Liabilities (including
minority interests) from Acquired Assets, all determined in accordance with GAAP
accounting policies and using the specific accounting policies and practices
historically employed by Sellers and consistently applied in preparing the
Target Business’ quarterly Financial Statements. The principles, procedures and
methodologies for determining Net Investment are set forth in Exhibit H hereto.

 

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“Net Investment Peg Amount” means $28,234,053.67, the Net Investment amount
calculated using the June 30, 2006 balance sheet, plus Two Million Five Hundred
Thousand Dollars ($2,500,000.00). The calculation of the Net Investment Peg
Amount is set forth in Exhibit I hereto.

“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practice of each of the Sellers and the Subsidiaries in the
operation of their respective businesses.

“Outsourcing Asset Purchase Agreement” means that certain Outsourcing Asset
Purchase Agreement, by and between Remy and Caterpillar Inc., pursuant to which
Caterpillar Inc. will purchase from Remy certain capital machinery, equipment
and specified inventory used in the remanufacture of heavy duty starters and
alternators, which will be executed and delivered on or before the Closing Date.

“Outsourcing Supply Agreement” means that certain Outsourcing Supply Agreement,
by and between Remy and Caterpillar Inc., in the form attached hereto as Exhibit
J, pursuant to which Remy will appoint Caterpillar Inc. as its exclusive
provider of remanufactured heavy duty starters and alternators which will be
executed and delivered on or before the Closing Date, and in conjunction with
which Remy and Caterpillar would also have entered into the Outsourcing Asset
Purchase Agreement.

“Owned Real Property” means all land, together with all Improvements thereon or
thereto, and all easements and other rights and interests appurtenant thereto
(including air, oil, gas, mineral, and water rights), owned by Sellers or any of
the Subsidiaries and used in the operation of the Target Business.

“Parent Assets” means the assets of Parent used in the operation of the Target
Business and which will not be transferred to Buyer at the Closing. A list of
the Parent Assets is included as Exhibit K.

“Party” means Buyer and Buyer’s Parent on the one hand, and Sellers and Sellers’
Parent on the other hand.

“Parties” means Buyer, Buyer’s Parent, Sellers and Sellers’ Parent,
collectively.

“PBGC” means the Pension Benefit Guaranty Corporation as described in ERISA
Section 4002 and all applicable regulations.

“Permits” means permits, approvals, consents or other authorizations required or
granted by any governmental authority.

“Permitted Encumbrances” means (i) with respect to each parcel of Real Property:
(a) real estate taxes, assessments and other governmental levies, fees, or
charges imposed with respect to such Real Property that are (i) not due and
payable as of the Closing Date or (ii) being contested in good faith and for
which appropriate reserves have been established in accordance with GAAP;
(b) mechanics’ liens and similar liens for labor, materials, or supplies
provided with respect to such Real Property incurred in the Ordinary Course of
Business for amounts that are (i) not due and payable as of the Closing Date or
(ii) being contested in good faith and for which appropriate reserves have been
established in accordance with GAAP; (c) zoning, building codes and other land
use Laws regulating the use or occupancy of such Real Property or the activities
conducted thereon which are imposed by any governmental authority having
jurisdiction over such Real Property and are not violated by the current use or
occupancy of such Real Property or the operation of the Target Business as
currently conducted by Sellers and the Subsidiaries thereon; and (d) easements,
covenants, conditions, restrictions, and other similar matters of record
affecting title to such Real Property that do not or would not impair the use or
occupancy of such Real Property in the operation of the Target Business as
currently conducted by Sellers and the Subsidiaries thereon, and (ii) with
respect to any personal property, the Liens set forth on Section 3(n) of the
Disclosure Schedule which are set forth under the heading “Permitted
Encumbrances”.

 

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“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, any other business entity, or a governmental entity
(or any department, agency, or political subdivision thereof).

“Prohibited Transaction” has the meaning set forth in ERISA Section 406 and all
applicable regulations and Code Section 4975 and all applicable regulations.

“Real Estate Impositions” means Taxes, assessments, fees, charges or similar
costs or expenses imposed by any governmental authority, association or other
entity having jurisdiction over the Real Property.

“Real Property” means all Owned Real Property and all Leased Real Property,
collectively.

“Real Property Laws” means applicable building, zoning, subdivision, health and
safety and other land use Laws, including the Americans with Disabilities Act of
1990, as amended, and all insurance requirements affecting the Real Property.

“Real Property Permits” means certificates of occupancy, Permits, licenses,
franchises, approvals and authorizations of all governmental authorities, boards
of fire underwriters, associations or any other entity having jurisdiction over
the Real Property that are required or appropriate to use or occupy the Real
Property or operate the Target Business as currently conducted thereon.

“Reportable Event” has the meaning set forth in ERISA Section 4043 and all
applicable regulations.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller Indemnified Parties” means Sellers, Sellers’ Affiliates and, to the
extent applicable, Sellers’ Subsidiaries and its and their directors, officers,
employees, successors, and assigns.

“Silica Liability” means any Liability arising from, relating to, or based on
the presence or alleged presence of silica in any product or item designed,
manufactured, sold, marketed, installed, stored, transported, handled, or
distributed at any time, or otherwise based on the presence or alleged presence
of silica at any property or facility or in any structure, including any
Liability arising from, relating to or based on any personal or bodily injury or
illness related to silica.

“Subsidiary” means each entity in which FPP or IFS has any ownership interest
and that is in any way used in and/or is necessary to the operation of the
Target Business as it is currently operated, all of which are listed on Exhibit
L. Subsidiaries of FPP or IFS that are not used in and/or are necessary to the
operation are assets excluded from this acquisition and are listed on Exhibit E
(Expressly Excluded Assets) and will not be included in the definition of
“Subsidiary” for any purpose under this Agreement.

“Surveys” means surveys prepared by a licensed surveyor in the jurisdiction
where the real property is located, satisfactory to Buyer, and conforming to
1999 ALTA/ACSM Minimum Detail Requirements for Land Title Surveys, including
Table A Items Nos. 1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(b)(2), 13,
14, 15, and 16, and such other standards as the Title Company and Buyer require
as a condition to the removal of any survey exceptions from the Title Policies,
and certified to Buyer and the Title Company, in a form and with a certification
satisfactory to each of such parties.

 

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“Systems” means all computer software, computer hardware (whether general or
special purpose), telecommunications capabilities (including all voice, data and
video networks) and other similar or related items of automated, computerized,
and/or software systems and any other networks or systems and related services
that are used by or relied on by Sellers and/or their Subsidiaries in the
conduct of the Target Business but excluding any Parent Assets.

“Target Business” means the diesel engine remanufacturing business, the diesel
engine component remanufacturing business, the distribution and packaging of new
engine component business, and other related businesses, as conducted as of the
Closing Date by FPP and IFS and their Subsidiaries.

“Tax” or “Taxes” means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code
Section 59A), customs, duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, ad valorem, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not
and including any obligations to indemnify or otherwise assume or succeed to the
Tax liability of any other Person.

“Tax Return” means any return, declaration, report, form, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

“Third-Party Claim” means a claim, suit, proceeding or investigation of a
third-party (including a federal, state or local government agency (or any
instrumentality thereof) concerning any matter that may give rise to a claim for
indemnification against a Party pursuant to the terms of Section 8.

“Title Commitments” means a commitment for a 1992 ALTA Owner’s Title Insurance
Policy or other form of policy acceptable to Buyer, issued by the Title Company,
together with a copy of all documents referenced therein.

“Title Company” means a title insurance company satisfactory to Buyer.

“Title Policies” means title insurance policies from the Title Company (which
may be in the form of a mark-up of a pro forma of the Title Commitments) meeting
the requirements set forth in Section 7(a).

“Transaction Agreements” means the Transition Services Agreement, the
Outsourcing Supply Agreement, the Outsourcing Asset Purchase Agreement and the
Assignment and Assumption Agreement.

“Transaction Insurance Company” shall mean the insurance company (or
collectively the insurance companies) issuing the Transaction Insurance Policy.

“Transaction Insurance Policy” shall mean the insurance policy (or collectively
the insurance policies) purchased by the Buyer pursuant to Section 7(a)(xxix).

“Transition Services Agreement” means that certain Transition Services
Agreement, by and between Buyer and Remy, in substantially the form attached
hereto as Exhibit M, which will be executed and delivered on the Closing Date.

“WARN Act” the Worker Adjustment and Retraining Notification Act of 1988, as
amended, or any similar foreign, state, or local Law, regulation, or ordinance.

 

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“Welding Rod Liability” means any Liability arising from, relating to, or based
on the presence or alleged presence of welding rods or welding rod fumes in any
product or item designed, manufactured, sold, marketed, installed, stored,
transported, handled, or distributed at any time, or otherwise based on the
presence or alleged presence of welding rods or welding rod fumes at any
property or facility or in any structure, including any Liability arising from,
relating to or based on any personal or bodily injury or illness related to
welding rods or welding rod fumes.

In addition to terms defined above, the following terms shall have the
respective meanings given to them in the sections set forth below:

 

Defined term

  

Section

“Allocation Schedule”

   Section 2(h)

“Bank Accounts”

   Section 3(dd)

“Bulk Sales Laws”

   Section 8(b)(vi)

“Buyer”

   Preface

“Buyer’s Parent”

   Preface

“Buyer’s Plans”

   Section 6(g)(v)

“Buyer’s 401(k) Plan”

   Section 6(g)(vi)

“Cap”

   Section 8(e)(i)

“CERCLA”

   Section 3(z)(v)

“COBRA”

   Section 6(g)(viii)

“Deductible”

   Section 8(e)(i)

“Distributions Due”

   Exhibit H

“Estimated Net Investment”

   Section 2(g)(i)

“Estimated Net Investment Deficiency”

   Section 2(g)(i)

“Estimated Net Investment Surplus”

   Section 2(g)(i)

“Final Disclosures”

   Section 5(f)(ii)

“Final Net Investment Deficiency”

   Section 2(g)(vi)(B)

“Final Net Investment Surplus”

   Section 2(g)(vi)(C)

“FPP”

   Preface

“IFS”

   Preface

“Interim Disclosures”

   Section 5(f)(i)

“Guarantees”

   Section 7(b)(xi)

“Magnum Minority Interest”

   Section 2(d)

“Material Consents”

   Section 7(a)(iii)

“Material Contracts”

   Section 3(p)

“Net Retained Earnings”

   Exhibit H

“Notice of Disagreement”

   Section 2(g)(iv)

“Original Excess”

   Exhibit H

“Other Consents”

   Section 6(b)(ii)

“Purchase Price”

   Section 2(c)

“Sellers”

   Preface

“Sellers’ Parent”

   Preface

“Sellers’ 401(k) Plan”

   Section 6(g)(vi)

“Sellers’ Transaction Representations and Warranties”

   Section 8(a)

“Straddle Period”

   Section 6(i)(i)

“SPCC”

   Section 7(a)(xxvi)

“SWDA”

   Section 3(z)(v)

“SWPPP”

   Section 7(a)(xxvi)

“Target Business Employee Benefit Plan”

   Section 3(x)(i)

“Termination Date”

   Section 9(a)(ii)(D)

“Transferred Employees”

   Section 6(g)(ii)

 

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SECTION 2  BASIC TRANSACTION

(a) Purchase and Sale of Assets. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Sellers, and Sellers agree to
sell, transfer, convey, and deliver to Buyer, all of the Acquired Assets at the
Closing for the consideration specified in this Section 2.

(b) Assumption of Liabilities. On and subject to the terms and conditions of
this Agreement, Buyer agrees to assume and become responsible for the Assumed
Liabilities from and after the Closing. Buyer will not assume or have any
responsibility, however, with respect to any other Liability of Sellers not
included within the definition of Assumed Liabilities.

(c) Purchase Price. Buyer agrees to pay to Sellers (i) One Hundred Fifty Million
Dollars ($150,000,000), (ii) plus or minus, as applicable, the Final Net
Investment Adjustment (collectively, the “Purchase Price”). Buyer agrees to pay
to Sellers at the Closing the Closing Payment by wire transfer or delivery of
other immediately available funds.

(d) Magnum Minority Interest. Prior to the Closing, FPP and Navistar shall enter
into an agreement (the “FPP/Navistar Agreement re Magnum Obligations”),
substantially in the form attached hereto as Exhibit D, whereby FPP shall agree
to cause Magnum to satisfy all obligations to Navistar as soon as reasonably
practicable following the Closing for unpaid distributions through the Closing
Date which are due and payable to Navistar in respect of Navistar’s thirty
percent (30%) interest in Magnum, taking into account any applicable deductions
or reserves in accordance with the terms of the Limited Liability Company
Agreement of Magnum. Buyer will assume as an Assumed Liability (i) all
Liabilities and obligations related to the portion of the Magnum Minority
Interest that relates to Navistar’s interest in Magnum’s net working capital and
fixed assets and (ii) all Liabilities and obligations related to the Magnum
Minority Interest arising out of or related to transactions entered into or
events occurring after the Closing

(e) Closing. The Closing shall take place at the offices of Ice Miller LLP, in
Indianapolis, Indiana, commencing at 9:00 a.m. local time on the Closing Date.

(f) Deliveries at Closing. At the Closing:

(i) Sellers will deliver to Buyer the various certificates, instruments, and
documents referred to in Section 7(a);

(ii) Buyer will deliver to Sellers the various certificates, instruments, and
documents referred to in Section 7(b);

(iii) Sellers will execute, acknowledge (if appropriate), and deliver to Buyer
(A) assignments (including Real Property and Intellectual Property transfer
documents) and (B) such other instruments of sale, transfer, conveyance, and
assignment as Buyer and its counsel may reasonably request;

(iv) Buyer will execute, acknowledge (if appropriate), and deliver to Sellers
(A) the Assignment and Assumption Agreement and (B) such other instruments of
assumption as Sellers and its counsel may reasonably request; and

(v) Buyer will deliver to Sellers (or to such parties and in such amounts as
designated by Sellers in writing prior to the Closing) the Closing Payment.

 

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(g) Net Investment Adjustment.

(i) At least five (5) Business Days prior to the Closing Date, Sellers shall
deliver to Buyer a statement calculated in accordance with the policies,
procedures and methodologies outlined in Exhibit H attached hereto and the
schedule of accounts provided therein, setting forth their good faith estimate
of the Net Investment as of the Closing Date (the “Estimated Net Investment”).
If the Estimated Net Investment is greater than the Net Investment Peg Amount
(such excess, the “Estimated Net Investment Surplus”), the amount of the Closing
Payment shall be increased by an amount up to the lesser of eighty percent
(80%) of the Estimated Net Investment Surplus or $3,200,000. In the event that
the Estimated Net Investment is less than the Net Investment Peg Amount (such
deficiency, the “Estimated Net Investment Deficiency”), the amount of the
Closing Payment shall be reduced by the amount of such Estimated Net Investment
Deficiency.

(ii) Within sixty (60) days after the Closing Date, Sellers shall cause to be
prepared and shall deliver to Buyer: (a) Closing Financial Statements; (b) the
Net Investment as of the Closing Date; and (c) the Closing Net Investment
Adjustment. Buyer shall provide Sellers and their accountants full access to the
books and records of the Target Business, any other information, including
working papers of its accountants, and to any employees, to the extent necessary
for Sellers to prepare the Closing Financial Statements, Net Investment as of
the Closing Date and Closing Net Investment Adjustment. Buyer agrees that
following the Closing they shall not take any actions with respect to the books
and records of the Target Business on which the Closing Financial Statements,
Net Investment as of the Closing Date and Closing Net Investment Adjustment are
to be based that are inconsistent with the Target Business’ past practices and
the accounting methodologies used in calculating Net Investment Peg Amount.

(iii) Each of the Buyer and the Sellers agree that it will, and it will use
reasonable efforts to cause its respective agents and representatives to,
cooperate and assist in the preparation of the Closing Financial Statements, the
Net Investment as of the Closing Date and the Closing Net Investment Adjustment
and in the conduct of the reviews and dispute resolution process referred to in
this Section 2(g).

(iv) During the thirty (30)-day period following Buyer’s receipt of the Closing
Financial Statements, the Net Investment as of the Closing Date and the Closing
Net Investment Adjustment as calculated by Sellers, Buyer and its independent
accountants shall at their expense be permitted to review, and Sellers shall
make available to them, the supporting schedules, analyses, working papers and
other documentation of Sellers relating to the Closing Financial Statements, the
Net Investment as of the Closing Date and the Closing Net Investment Adjustment
and to ask questions, receive answers and request such other data and
information from each of them as shall be reasonable under the circumstances.
The Closing Financial Statements, the Net Investment as of the Closing Date and
the Closing Net Investment Adjustment shall become final and binding upon the
parties on the Business Day following the thirtieth (30th) day following
delivery thereof (and the Net Investment as of the Closing shall be deemed the
“Final Net Investment” and the Closing Net Investment Adjustment shall be deemed
the “Final Net Investment Adjustment”), unless Buyer gives written notice of its
good faith disagreement with Closing Financial Statements, the Net Investment as
of the Closing Date or the Closing Net Investment Adjustment within such thirty
(30) day period (“Notice of Disagreement”). Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted and the
disputed amount, and Buyer shall make available all supporting schedules,
analyses, working papers and other documentation.

 

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(v) During the fifteen (15)-day period following the delivery of a Notice of
Disagreement that complies with the preceding paragraph or such longer period as
Buyer and Sellers shall mutually agree in writing, Buyer and Sellers shall seek
in good faith to resolve in writing any differences that they may have with
respect to the matters specified in the Notice of Disagreement, and in the event
Buyer and Sellers are able to reach such resolution then the Net Investment as
of the Closing Date and Closing Net Investment Adjustment, so agreed by them in
writing shall be deemed the Final Net Investment and the Final Net Investment
Adjustment. If, at the end of such fifteen (15)-day period (or such longer
period as mutually agreed in writing between Buyer and Sellers), Buyer and
Sellers have not so resolved such differences, Buyer and Sellers shall submit
the dispute for resolution by the Accountants. If the issues in dispute are
submitted to the Accountants for resolution: (A) the Parties shall use
reasonable efforts to cause the Accountants to make their determination as soon
as possible, but in no event later than thirty (30) days after receipt of the
disputed matters; (B) each Party will furnish to the Accountants such workpapers
and other documents and information relating to the disputed issues as the
Accountants may request and are available to that Party or its Affiliates (or
its independent public accountants), and will be afforded the opportunity to
present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (C) the Accountants’
determination shall be limited to only the matters of dispute which are raised
in the Notice of Disagreement and the Accountants shall act solely as an
arbitrator to determine, based solely on the information presented by the
Parties and not by independent review, only those issues that remain in dispute;
(D) the determination by the Accountants, as set forth in a written report
delivered to the Parties by the Accountants, will be final, binding and
conclusive on the Parties; and (E) the fees and any expenses of the Accountants
be paid by Buyer and Sellers within fifteen (15) Business Days of such
determination as follows: (1) if the Accountants adopt the position of Sellers,
Buyer shall bear such fees and expenses; (2) if the Accountants adopt the
position of Buyer, Sellers shall bear such fees and expenses; or (3) if the
Accountants adopt a position within the range of the positions of Buyer and
Sellers, each Party shall bear that percentage of such fees and expenses deemed
reasonable by the Accountants in light of the final determination and the
original positions of Buyer and Sellers. In the event a Party does not comply
with the procedural and time requirements contained herein or such other
procedural or time requirements as the Parties otherwise elect in writing, the
Accountants shall render a decision based solely on the evidence they have which
was timely filed by the Parties.

(vi) On the tenth (10th) Business Day following the final determination of the
Final Net Investment as of the Closing Date:

(A) If the Final Net Investment is equal to the Net Investment Peg Amount plus
or minus, as applicable, the Closing Net Investment Adjustment Payment, then
there shall be no payments under this section;

(B) If the Final Net Investment is less than the Net Investment Peg Amount plus
or minus, as applicable, the Closing Net Investment Adjustment Payment, then
Sellers shall pay Buyer the amount by which the Net Investment Peg Amount, plus
or minus, as applicable, the Closing Net Investment Adjustment Payment exceeds
the Final Net Investment (the “Final Net Investment Deficiency”); and

(C) If the Final Net Investment is greater than the Net Investment Peg Amount
plus or minus, as applicable, the Closing Net Investment Adjustment Payment,
Buyer shall pay to Sellers the amount by which the Final Net Investment exceeds
the Net Investment Peg Amount, plus or minus, as applicable, Closing Net
Investment Adjustment Payment (the “Final Net Investment Surplus”).

 

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Payments to either Party will be made by wire transfer of immediately available
funds to such bank account as such other party will specify. In the event a
Notice of Disagreement is given in accordance with Section 2(g)(ii) above, all
sums paid by Buyer to Sellers or by Sellers to Buyer under this Section 2(g)
shall bear interest from any after the Closing Date until so paid, at the
Applicable Rate as of the Closing Date, on the basis of a 360-day year and
actual days elapsed.

(h) Allocation. Buyer shall prepare an allocation of the Purchase Price (and all
other capitalized costs) among the Acquired Assets and the covenant not to
compete in Section 6(f) in accordance with Code Section 1060 and the Treasury
regulations thereunder (and any similar provision of state, local or foreign
Law, as appropriate), the “Allocation Schedule”. Buyer shall deliver the
Allocation Schedule to Sellers within ninety (90) days after the Closing Date.
Sellers will have the right to raise reasonable objections to the Allocation
Schedule within forty-five (45) days after its receipt thereof, in which event
the Parties will negotiate in good faith to resolve such objections. If the
Parties have not resolved such objections within thirty (30) days after the
initiation of such attempts, such objections will be resolved by the
Accountants, whose fees and expenses will be borne equally by the Buyer and the
Sellers. The Parties will be bound by the determination of the Accountants.
Buyer and Sellers and their Affiliates shall report, act and file Tax Returns
(including Internal Revenue Service Form 8594) in all respects and for all
purposes consistent with the Allocation Schedule. Sellers shall timely and
properly prepare, execute, file and deliver all such documents, forms and other
information as Buyer may reasonably request to prepare such allocation. Neither
Buyer nor Sellers shall take any position (whether in audits, Tax returns or
otherwise) that is inconsistent with the Allocation Schedule unless required to
do so by applicable Law and only after notice to the other Party. In the event
such allocation is disputed by any Tax authority, the Party receiving notice of
such dispute shall promptly notify and consult with the other Party concerning
the dispute.

SECTION 3 SELLERS’ REPRESENTATIONS AND WARRANTIES

Sellers and Remy represent and warrant to Buyer that the statements contained in
this Section 3 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3), except as set forth in the Disclosure Schedule
accompanying this Agreement, as the same may be updated prior to the Closing in
accordance with the terms of this Agreement. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3, and items listed on any Section of the Disclosure
Schedule pursuant to this Section 3 shall be broken down by reference to the
applicable Seller or Subsidiary, as applicable. The inclusion of any information
in the Disclosure Schedule to this Agreement shall not be deemed to be an
admission or acknowledgment by either of Sellers, in and of itself, that such
information is required to be listed on the Disclosure Schedule or is material
to or outside the Ordinary Course of Business or that it has a Material Adverse
Effect on Sellers and the Target Business. Items disclosed under any particular
Section shall only be deemed as disclosed for that specific Section of the
Disclosure Schedule and not generally. The specification of any dollar amount in
the representations and warranties or otherwise in this Agreement or in the
Disclosure Schedule is not intended and shall not be deemed to be an admission
or acknowledgment of the materiality of such amounts or items, nor shall the
same be used in any dispute or controversy between the parties to determine
whether any obligation, item or matter (whether or not described herein or
included in any schedule) is or is not material for purposes of this Agreement.

 

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(a) Organization, Qualification and Corporate Power. FPP and IFS are
corporations duly organized and validly existing under the Laws of the State of
Indiana, for which all reports required to be filed with the Indiana Secretary
of State have been filed, and for which no articles of dissolution have been
filed with the Indiana Secretary of State. Remy is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.

(b) Authorization of Transaction. Each of the Sellers has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the boards of directors of each Seller and the
stockholders of each Seller have duly authorized the execution, delivery, and
performance of this Agreement by each Seller. This Agreement constitutes the
valid and legally binding obligation of each Seller, enforceable in accordance
with its terms and conditions. FPP and IFS have all requisite corporate power
and authority to own, lease and operate their respective properties and to
conduct their respective businesses in the manner where now conducted and each
of them is duly licensed or qualified to do business as a foreign corporation
and is in good standing (or its equivalent) in each jurisdiction in which the
nature of their respective properties and assets or the conduct of their
respective businesses requires them to be so licensed or qualified. Section 3(b)
of the Disclosure Schedule sets forth a list of each jurisdiction in which FPP
and IFS are licensed or qualified to do business as a foreign corporation.

(c) Non-contravention. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2, but subject to receiving
the Material Consents and the Other Consents), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Sellers or any of the Subsidiaries is subject or any provision of
the charter or bylaws of Sellers or any of the Subsidiaries or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any Contract to which Sellers or any of
the Subsidiaries is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Lien upon any of its
assets). None of Sellers or the Subsidiaries needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency, other than (i) such filings and consents as
may be required under the Hart-Scott-Rodino Act, in order for the Parties to
consummate the transactions contemplated by this Agreement, (ii) the Material
Consents, (iii) the Other Consents, (iv) the consents set forth in
Section 7(b)(xii) of the Disclosure Schedule, and (v) except as set forth on
Section 3(c) of the Disclosure Schedule.

(d) Brokers’ Fees. Sellers have no Liability to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which Buyer could become liable or obligated. No Subsidiary
has any Liability to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement. Except for
Sellers’ engagement of Brookwood Associates, LLC and for any transaction fee
payable to Brookwood Associates, LLC, Sellers have not employed any broker or
finder and have not incurred and will not incur any broker’s, finder’s or
similar fees, commissions or expenses in connection with the transactions
contemplated by this Agreement. Sellers will be responsible for paying all
costs, transaction fees and expenses related to Sellers’ engagement of Brookwood
Associates, LLC.

(e) Title to and Sufficiency of the Acquired Assets. Except as set forth in
Section 3(n) of the Disclosure Schedule, Sellers and the Subsidiaries have good
and marketable title to, or a valid and enforceable leasehold interest in the
Acquired Assets, free and clear of all Liens, except for the Permitted
Encumbrances. Except for the Parent Assets and the services to be provided to
Buyer pursuant to the Transition Services Agreement, the Acquired Assets and the
assets of the Subsidiaries are sufficient for the continued conduct of the
Target Business by Buyer after the Closing in substantially the same manner as
conducted by Sellers and the Subsidiaries prior to the Closing.

 

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(f) Subsidiaries. Except for as set forth in Section 3(f) of the Disclosure
Schedule, neither FPP nor IFS has any direct or indirect equity interest by
stock ownership or otherwise in any other corporation, limited liability
company, partnership, joint venture, firm association or business enterprise.
Additionally, Section 3(f) of the Disclosure Schedule sets forth for each
Subsidiary (i) its name and jurisdiction of incorporation, (ii) the number of
authorized shares for each class of its capital stock, (iii) the number of
issued and outstanding shares of each class of its capital stock, the names of
the holders thereof, and the number of shares held by each such holder, (iv) the
number of shares of its capital stock held in treasury, and (v) its directors
and officers. Each Subsidiary is a corporation duly organized, validly existing,
and in good standing under the Laws of the jurisdiction of its incorporation.
Each Subsidiary is duly authorized to conduct business and is in good standing
under the Laws of each jurisdiction where such qualification is required. Each
Subsidiary has full corporate power and authority and all licenses, Permits, and
authorizations necessary to carry on the business in which it is engaged and to
own and use the properties owned and used by it. Sellers have delivered to Buyer
correct and complete copies of the charter and bylaws of each Subsidiary (as
amended to date). All of the issued and outstanding shares of capital stock of
each Subsidiary have been duly authorized and are validly issued, fully paid,
and non-assessable. Except as set forth in Section 3(f) of the Disclosure
Schedule:

(i) FPP, IFS or one or more of the Subsidiaries hold of record and own
beneficially all of the outstanding shares (or equity interest) of each
Subsidiary, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities Laws), Taxes, Liens,
options, warrants, purchase rights, Contracts, commitments, equities, claims,
and demands.

(ii) There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other Contracts or
commitments that could require Sellers or any of the Subsidiaries to sell,
transfer or otherwise dispose of any capital stock (or equity interest) of any
of the Subsidiaries or that could require any Subsidiary to issue, sell or
otherwise cause to become outstanding any of its own capital stock or equity
interest (other than this Agreement).

(iii) There are no outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Subsidiary.

(iv) There are no voting trusts, proxies, or other agreements or understandings
with respect to the voting of any capital stock (or equity interest) of any
Subsidiary.

(v) There are no dividends which have accrued or have been declared but which
are unpaid on the equity interests of any joint venture or limited liability
corporation.

The minute books (containing the records of meetings of the stockholders (or
equity members), the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of each
Subsidiary are correct and complete. None of the Subsidiaries is in default
under or in violation of any provision of its charter or bylaws. Neither FPP,
IFS nor any of the Subsidiaries controls directly or indirectly or has any
direct or indirect equity participation in any corporation, partnership, trust,
or other business association that is not a Subsidiary. Except for the
Subsidiaries set forth in Section 3(f) of the Disclosure Schedule, neither FPP,
IFS nor any of the Subsidiaries owns or has any right to acquire, directly or
indirectly, any outstanding capital stock of, or other equity interests in, any
Person.

 

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(g) Financial Statements. The Financial Statements (A) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
(except the Financial Statements (i) do not include a statement of cash flows,
(ii) do not include a statement of changes in shareholders’ equity, (iii) are
subject to the exceptions set forth on Section 3(g) of the Disclosure Schedule,
(iv) exclude footnote disclosures, and (v) were prepared for the internal
management purposes of Sellers and the Target Business was not consistently
conducted on a full and complete stand-alone basis through separate entities),
(B) present fairly in all material respects the consolidated financial condition
of the Target Business including the Subsidiaries as of such dates and the
results of operations of the Target Business including the Subsidiaries for such
periods, and (C) are consistent with the books and records of the Target
Business including the Subsidiaries; provided, however, that the Most Recent
Financial Statements are subject to normal year-end and quarter-end adjustments
(which will not be material individually or in the aggregate) and lack footnotes
and other presentation items. Remy warrants that, at the time of its filing of
the applicable 10K, the audited December 31, 2005 financial statement of Remy
filed with the Securities and Exchange Commission did not contain any untrue
statement of material fact or omit to state any material fact necessary in order
to make the statements and information contained in the financial statement not
misleading as of the date filed.

(h) Events Subsequent to June 30, 2006 Financial Statements. Since June 30,
2006, there has not been any Material Adverse Change. Without limiting the
generality of the foregoing, since that date, except as set forth in
Section 3(h) of the Disclosure Schedule:

(i) neither FPP, IFS, nor any of the Subsidiaries has sold, leased, transferred,
or assigned any assets, tangible or intangible, involving more than $75,000;

(ii) neither FPP, IFS, nor any of the Subsidiaries has entered into any letter
of intent, Contract (or series of related letters of intent or Contracts) either
involving more than $75,000 or outside the Ordinary Course of Business;

(iii) no party (including Sellers and any of the Subsidiaries) has accelerated,
terminated, modified, or cancelled any Contract (or series of related Contracts)
involving more than $75,000 to which FPP, IFS or any of the Subsidiaries is a
party or by which any of them is bound;

(iv) neither FPP, IFS nor any of the Subsidiaries has imposed or permitted to
exist any Lien, other than Permitted Encumbrances, upon any of its assets,
tangible or intangible;

(v) neither FPP, IFS nor any of the Subsidiaries has made any capital
expenditure (or series of related capital expenditures) either involving more
than $75,000 or outside the Ordinary Course of Business;

(vi) neither FPP, IFS nor any of the Subsidiaries has made any capital
investment in, any loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $75,000 or outside the Ordinary Course
of Business;

(vii) neither FPP, IFS nor any of the Subsidiaries has issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either involving
more than $75,000 singly;

(viii) neither FPP, IFS nor any of the Subsidiaries has delayed or postponed the
payment of accounts payable or any other Liabilities outside the Ordinary Course
of Business;

 

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(ix) neither FPP, IFS nor any of the Subsidiaries has cancelled, compromised,
waived, or released any right or claim (or series of related rights and claims)
either involving more than $75,000 or outside the Ordinary Course of Business;

(x) neither FPP, IFS nor any of the Subsidiaries has transferred, assigned, or
granted any license or sublicense of any rights under or with respect to any
Intellectual Property;

(xi) neither FPP, IFS nor any of the Subsidiaries has issued, sold, or otherwise
disposed of any of its capital stock (or equity interest), or granted any
options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock (or equity
interest);

(xii) neither FPP, IFS nor any of the Subsidiaries has declared, set aside, or
paid any dividend or made any distribution with respect to its capital stock or
equity interest (whether in cash or in kind) or redeemed, purchased or otherwise
acquired any of its capital stock or equity interest;

(xiii) neither FPP, IFS nor any of the Subsidiaries has experienced any damage,
destruction or loss (whether or not covered by insurance) to its property in
excess of $75,000;

(xiv) neither FPP, IFS nor any of the Subsidiaries has made any loan to, or
entered into any other transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business;

(xv) neither Sellers nor any of the Subsidiaries has entered into any employment
Contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such Contract or agreement that relates to the Target
Business;

(xvi) neither Sellers nor any of the Subsidiaries has granted any increase in
the base compensation of any of its directors, officers, and employees of FPP,
IFS or any of the Subsidiaries outside the Ordinary Course of Business;

(xvii) neither Sellers nor any of the Subsidiaries has adopted, amended,
modified, or terminated any bonus, profit sharing, incentive, severance, or
other plan, Contract, or commitment for the benefit of any of FPP’s, IFS’ or any
Subsidiaries’ directors, officers, and employees (or taken any such action with
respect to any other Target Business Employee Benefit Plan);

(xviii) neither Sellers nor any of the Subsidiaries has made any other change in
the wages, rates of pay or other terms and conditions of employment of any of
FPP’s, IFS’ or any Subsidiaries’ directors, officers, and employees outside the
Ordinary Course of Business;

(xix) neither FPP, IFS nor any of the Subsidiaries has made or pledged to make
any charitable or other capital contribution outside the Ordinary Course of
Business;

(xx) there has not been any other material payment, occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving FPP, IFS or any of the Subsidiaries;

(xxi) neither FPP, IFS nor any of the Subsidiaries has discharged any material
Liability or Lien outside the Ordinary Course of Business;

 

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(xxii) neither FPP, IFS nor any of the Subsidiaries has made any loans or
advances of money in an amount exceeding $75,000;

(xxiii) neither Sellers nor any of the Subsidiaries has entered into any
agreement pertaining to the Target Business and concerning non-competition or
exclusive dealing; and

(xxiv) neither Sellers nor any of the Subsidiaries has agreed or committed to
any of the foregoing.

(i) Undisclosed Liabilities. Neither FPP, IFS nor any of the Subsidiaries has
any Liability (and to Sellers’ and Remy’s Knowledge there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, or demand against any of them giving rise to any Liability) of the
nature required to be disclosed as of the Closing Date in the liabilities column
of a balance sheet in accordance with GAAP, except for (i) Liabilities set forth
on the Most Recent Balance Sheet, (ii) Liabilities that have arisen after the
Most Recent Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, tort, infringement, or violation of law), (iii) items
disclosed in Section 3(i) of the Disclosure Schedule, (iv) Liabilities that will
be reflected on the Closing Financial Statements, (v) obligations arising under
the terms of this Agreement, and (vi) other non-material Liabilities.

(j) Legal Compliance. Each of the Sellers, the Subsidiaries, and their
respective predecessors and Affiliates has complied in all material respects
with all applicable Laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder and
including the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.

(k) Tax Matters. As of the Closing Date:

(i) Each of the Sellers and the Subsidiaries has timely filed all Tax Returns
that it was required to file under applicable Laws and regulations. All such Tax
Returns were correct and complete in all material respects and were prepared in
compliance with all applicable Laws and regulations. All Taxes due and owing by
Sellers or any of the Subsidiaries (as shown on any Tax Returns) have been paid.
Neither Sellers nor any of the Subsidiaries currently is the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where Sellers or any of the Subsidiaries
does not file Tax Returns that Sellers or any of the Subsidiaries is or may be
subject to taxation by that jurisdiction. There are no Liens for Taxes (other
than Taxes not yet due and payable) upon any of the assets of Sellers or any of
the Subsidiaries.

(ii) Each of the Sellers and the Subsidiaries has withheld and paid all Taxes
required to have been withheld and paid in connection with any amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party.

(iii) Neither Remy, Sellers nor any Subsidiary has Knowledge of any Basis on
which any authority may assess any additional Taxes for any period for which Tax
Returns have been filed. No foreign, federal, state, or local Tax audits or
administrative or judicial Tax proceedings are pending or being conducted with
respect to Sellers or any of the Subsidiaries. Except as set forth in
Section 3(k)(iii) of the Disclosure Schedule, neither Sellers nor any of the
Subsidiaries has received from any foreign, federal, state, or local taxing
authority (including jurisdictions where

 

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Sellers or the Subsidiaries have not filed Tax Returns) any (i) notice
indicating an intent to open an audit or other review, (ii) request for
information related to Tax matters, or (iii) notice of deficiency or proposed
adjustment for any amount of Tax proposed, asserted, or assessed by any taxing
authority against Sellers or any of the Subsidiaries. Section 3(k)(iii) of the
Disclosure Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to Sellers or any of the Subsidiaries for taxable
periods ended on or after December 31, 2002, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that currently are the
subject of audit. Sellers have delivered to Buyer correct and complete copies of
all income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by Sellers or any of the Subsidiaries filed or
received since December 31, 2002.

(iv) Neither Sellers nor any of the Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.

(v) The unpaid Taxes of Sellers and the Subsidiaries (A) did not, as of the Most
Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the Most Recent Balance Sheet and (B) should
not exceed that reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of Sellers and the
Subsidiaries in filing their Tax Returns.

(vi) Neither Sellers nor any of the Subsidiaries has made any payments, is
obligated to make any payments or is a party to any agreement that under certain
circumstances could obligate it to make any payments that are not deductible
under Code Section 280G. Neither Sellers nor any of the Subsidiaries has been a
United States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii). Each of the Sellers and the Subsidiaries has disclosed
on its federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the meaning of
Code Section 6662. Neither Sellers nor any of the Subsidiaries is a party to or
bound by any Tax allocation or sharing agreement. Neither Sellers nor any of the
Subsidiaries (A) has been a member of an Affiliated Group filing a consolidated
federal income Tax Return (other than a group the common parent of which was one
of Sellers) or (B) has any Liability for the Taxes of any Person (other than
Sellers or any of the Subsidiaries) under Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign Law), as a transferee or
successor, by contract, or otherwise.

(vii) Section 3(k)(vii) of the Disclosure Schedule sets forth the following
information with respect to each of the Subsidiaries as of the most recent
practicable date (as well as on an estimated pro forma basis as of the Closing
giving effect to the consummation of the transactions contemplated hereby):
(A) the basis of the Subsidiary in its assets; (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign Tax, or excess charitable contribution allocable to the Subsidiary;
(C) the amount of any deferred gain or loss allocable to the Subsidiary arising
out of any intercompany transaction; and (D) the amount of any Excess Loss
Account of the Subsidiary in the stock of another Subsidiary.

(viii) None of the Subsidiaries will be required to include any item of income
in, or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any:
(A) change in method of accounting for a taxable period ending on or prior to
the Closing Date, (B) “closing agreement” as described in Code Section 7121 (or
any corresponding or similar provision or administrative rule of state,

 

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local or foreign income Tax Law) executed on or prior to the Closing Date,
(C) intercompany transaction or excess loss account described in Treasury
Regulations under Code Section 1502 (or any corresponding or similar provision
or administrative rule of federal, state, local or foreign income Tax Law),
(D) installment sale or open transaction disposition made on or prior to the
Closing Date or (E) prepaid amount received on or prior to the Closing Date.

(ix) Neither Sellers nor any of the Subsidiaries has distributed stock of
another Person, or has had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part by
Code Section 355.

(x) FPP will be liable for reporting all distributable partnership income or
loss and paying any resulting taxes related to the Magnum partnership interest
owned for the taxable period ending on or prior to the Closing Date.

(xi) Sellers, in any year prior to, and including the year of Closing, have not
participated in any transaction that is similar to the transactions listed in
the “Reportable Transactions Schedule” attached hereto as Exhibit R.

(l) Real Property.

(i) There is no Owned Real Property used in the operation of the Target
Business.

(ii) Section 3(l)(ii) of the Disclosure Schedule sets forth the address of each
parcel of Leased Real Property, and a true and complete list of all Leases for
each such parcel of Leased Real Property (including the date and name of the
parties to such Lease document). Sellers have delivered to Buyer a true and
complete copy of each such Lease document and, in the case of any oral Lease, a
written summary of the material terms of such Lease. Except as set forth in
Section 3(l)(ii) of the Disclosure Schedule, with respect to each of the Leases:
(A) such Lease is legal, valid, binding, enforceable and in full force and
effect; (B) the transactions contemplated by this Agreement do not require the
consent of any other party to such Lease (except for those Leases for which
Lease Consents are obtained), will not result in a breach of or default under
such Lease, and will not otherwise cause such Lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing; (C) neither Sellers’ nor any of the Subsidiaries’ possession and
quiet enjoyment of the Leased Real Property under such Lease has been disturbed
and there are no disputes with respect to such Lease; (D) neither Sellers, nor
any of the Subsidiaries, nor any other party to the Lease is in breach of or
default under such Lease, and no event has occurred or circumstance exists that,
with the delivery of notice, the passage of time or both, would constitute such
a breach or default, or permit the termination, modification or acceleration of
rent under such Lease; (E) no security deposit or portion thereof deposited with
respect to such Lease has been applied in respect of a breach of or default
under such Lease that has not been redeposited in full; (F) neither Sellers nor
any of the Subsidiaries owes, or will owe in the future, any brokerage
commissions or finder’s fees with respect to such Lease; (G) the other party to
such Lease is not an Affiliate of, and otherwise does not have any economic
interest in, Sellers or any of the Subsidiaries; (H) neither Sellers nor any of
the Subsidiaries has subleased, licensed or otherwise granted any Person the
right to use or occupy the Leased Real Property or any portion thereof;
(I) neither Sellers nor any of the Subsidiaries has collaterally assigned or
granted any other Lien in such Lease or any interest therein; and (J) there are
no Liens on the estate or interest created by such Lease.

(iii) The Leased Real Property identified in Section 3(l)(ii) of the Disclosure
Schedule comprise all of the real property used or intended to be used in, or
otherwise related to, the Target Business; and neither Sellers nor any of the
Subsidiaries is a party to any agreement or option to purchase any real property
or interest therein.

 

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(iv) There is no Leased Real Property used in the Target Business located
outside the United States.

(v) Section 3(l)(v) of the Disclosure Schedule sets forth a true and complete
list of all Leased Real Property Subleases, including the date and name of the
parties to each Landlord Lease document. Seller has delivered to Buyer a true
and complete copy of each Landlord Lease document and, in the case of any oral
agreement, a written summary of the material terms of such agreement. Except as
set forth in Section 3(l)(v) of the Disclosure Schedule, with respect to each of
the Landlord Leases: (i) such Landlord Lease is legal, valid, binding,
enforceable and in full force and effect; (ii) neither Seller, nor any of the
Subsidiaries, nor any other party to such Landlord Lease is in breach of or
default thereunder, and no event has occurred or circumstance exists that, with
the delivery of notice, the passage of time or both, would constitute such a
breach of or default thereunder; (iii) no security deposit or portion thereof
deposited with respect to such Landlord Lease has been applied in respect of a
breach or default under such Landlord Lease that has not been redeposited in
full; (iv) neither Seller nor any of the Subsidiaries owes, or will owe in the
future, any brokerage commissions or finder’s fees with respect to such Landlord
Lease; (v) the other party to such Landlord Lease is not an Affiliate of, and
otherwise does not have any economic interest in, Seller or any of the
Subsidiaries; (vi) the other party to such Landlord Lease has not subleased,
licensed or otherwise granted any Person the right to use or occupy the premises
demised thereunder or any portion thereof; (vii) the other party has not
collaterally assigned or granted any other Lien in such Landlord Lease; and
(viii) there are no Liens on the estate or interest created by such Landlord
Lease.

(m) Intellectual Property.

(i) Sellers and the Subsidiaries own and possess or have the right to use
pursuant to a valid and enforceable written license, sublicense, agreement,
permission or other right, all Intellectual Property currently used for the
operation of the Target Business as presently conducted and as presently
proposed to be conducted by Sellers and the Subsidiaries. Each item of
Intellectual Property owned or used by Sellers or any of the Subsidiaries
immediately prior to the Closing will be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing.

(ii) Neither Sellers nor any of the Subsidiaries has received written notice
alleging that it has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties (including any claim that Sellers or any of the Subsidiaries must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of Sellers or any of the Subsidiaries, no third party
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of Sellers or any of the
Subsidiaries.

(iii) Section 3(m)(iii) of the Disclosure Schedule identifies each issued patent
(including utility, model and design patents, supplementary protection
certificates, certificates of invention and the like) and registered trademark
(including service marks) that has been issued to Sellers or any of the
Subsidiaries with respect to any of the Target Business’ Intellectual Property,
identifies each pending patent application (including utility, model and design
patents, supplementary design certificates, certificates of invention and the
like) and each application for trademark and service mark registration that
Sellers or any of the Subsidiaries has made with respect to any of

 

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the Target Business’ Intellectual Property, and identifies each license,
sublicense, agreement or other permission that Sellers or any of the
Subsidiaries has granted to any third party with respect to any of the Target
Business’ Intellectual Property (together with any exceptions). Sellers have
delivered to Buyer correct and complete copies of all such patents,
registrations, applications, licenses, sublicenses, agreements, and permissions
(as amended to date) and has made available to Buyer correct and complete copies
of all other written documentation evidencing ownership and prosecution (if
applicable) of each such item. Section 3(m)(iii) of the Disclosure Schedule also
identifies each material unregistered trademark, service mark, trade name,
corporate name, or Internet domain name used by Sellers or any of the
Subsidiaries in connection with the Target Business. With respect to each item
of Intellectual Property required to be identified in Section 3(m)(iii) of the
Disclosure Schedule: (A) Sellers and the Subsidiaries own or possess sufficient
right, title, and interest in and to the item necessary for the operation of the
Target Business as presently conducted and as presently proposed to be conducted
by Sellers and the Subsidiaries, free and clear of any Lien, license, or other
restriction or limitation regarding use or disclosure; (B) the item is not
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge; (C) to the Knowledge of Sellers or the Subsidiaries, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand is
pending or is threatened that challenges the legality, validity, enforceability,
use, or ownership of the item; and (D) no loss or expiration of the item is
threatened, pending or reasonably foreseeable, except for licenses expiring in
accordance with their terms, domain names expiring on applicable expiration
dates, or patents expiring at the end of their statutory terms (and not as a
result of any act or omission by Sellers or the Subsidiaries, including a
failure by Sellers or the Subsidiaries to pay any required maintenance fees).

(iv) Section 3(m)(iv) of the Disclosure Schedule identifies each item of
Intellectual Property, including computer software (other than commercially
available off-the-shelf software purchased or licensed for less than a total
licensing cost of $1,000 in the aggregate), that any third party owns and that
Sellers or any of the Subsidiaries use in the Target Business pursuant to
license, sublicense, agreement or permission. Sellers have delivered to Buyer
correct and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of Intellectual
Property required to be identified in Section 3(m)(iv) of the Disclosure
Schedule: (A) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and effect
(subject to creditors’ rights, generally); (B) subject to Section 6(b)(ii), the
license, sublicense, agreement, or permission will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
consummation of the transactions contemplated hereby; (C) to the Knowledge of
Sellers, no party to the license, sublicense, agreement, or permission is in
breach or default, and no event has occurred that with notice or lapse of time
would constitute a breach or default or permit termination, modification or
acceleration thereunder; (D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof; (E) with respect to each
sublicense, the representations and warranties set forth in subsections
(A) through (D) are true and correct with respect to the underlying license;
(F) to the Knowledge of Sellers and all of the Subsidiaries, the underlying item
of Intellectual Property is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge; (G) to the Knowledge of Sellers and the
Subsidiaries, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or is threatened that challenges the
legality, validity or enforceability of the underlying item of Intellectual
Property.

(v) Sellers and Sellers’ Parent agree to grant Buyer and Buyer’s Parent a
paid-up royalty-free license to copy, use and modify all custom software code
associated with MFG/Pro instance used in the Target Business, including but not
limited to CET, EDI Maps, customer reports and forms.

 

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(vi) To the Knowledge of Remy and/or Sellers (A) neither Sellers nor any of the
Subsidiaries has interfered with, infringed upon, or misappropriated, any
Intellectual Property rights of third parties as a result of the continued
operation of the Target Business as presently conducted; (B) there are no facts
that indicate a likelihood of any of the foregoing; and (C) no notices regarding
any of the foregoing (including any demands or offers to license any
Intellectual Property from any third party) have been received.

(vii) Sellers have no Knowledge of any new products, inventions, procedures or
methods of manufacturing or processing that any competitors or other third
parties have developed that reasonably could be expected to supersede or make
obsolete any material product or process of Sellers or any of the Subsidiaries
or to materially limit the Target Business as presently conducted.

(viii) Sellers and the Subsidiaries have taken all necessary and reasonably
appropriate actions to maintain and protect all of the issued or registered
Intellectual Property owned by Sellers and the Subsidiaries used in the Target
Business and will continue to maintain and protect all of the Intellectual
Property of Sellers and the Subsidiaries used in the Target Business prior to
Closing so as not to adversely affect the validity or enforceability thereof. To
the Knowledge of Sellers and the Subsidiaries, the owners of any of the
Intellectual Property used in the Target Business and licensed to Sellers and
the Subsidiaries have taken all necessary and reasonably appropriate actions to
maintain and protect the Intellectual Property covered by such license.

(ix) Sellers and the Subsidiaries have complied in all material respects with
and are presently in compliance in all material respects with all foreign,
federal, state, local, governmental (including the Federal Trade Commission and
State Attorneys General), administrative or regulatory laws, regulations,
guidelines and rules applicable to any Intellectual Property used in the Target
Business and Sellers shall take all steps necessary to ensure such compliance
until Closing.

(x) All commercially reasonable efforts have been taken to maintain the
confidentiality of all non-public Intellectual Property included in the Acquired
Assets, and all other information included in the Acquired Assets the value of
which is contingent upon the maintenance of the confidentiality thereof. Without
limiting the generality of the foregoing, except as set forth in Section 3(m)(x)
of the Disclosure Schedule, each current employee, officer and director of the
Sellers and the Subsidiaries who has had access to proprietary information with
respect to the Target Business and the Subsidiaries has entered into an
agreement for maintaining the confidential information of the Sellers and the
Subsidiaries.

(n) Tangible Assets. Other than the Remy Assets, FPP, IFS and the Subsidiaries
own or lease all buildings, machinery, equipment, and other tangible assets
necessary for the conduct of the Target Business as presently conducted and as
presently proposed to be conducted by Sellers and the Subsidiaries. Each such
tangible asset has been maintained in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and tear), and
is suitable for the purposes for which it presently is used. Except as set forth
in Section 3(n) of the Disclosure Schedule and except for Inventory disposed of
in the Ordinary Course of Business since the date of the Most Recent Balance
Sheet, FPP, IFS and the Subsidiaries have (i) good and marketable title to all
of the material tangible personal property and tangible assets which they own,
and (ii) valid leasehold interests in all leases of material tangible personal
property which they lease, in each case free and clear of any Liens, other than
Permitted Encumbrances.

 

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(o) Inventory. Except as set forth in Section 3(o) of the Disclosure Schedule,
the inventory of FPP, IFS and the Subsidiaries reflected on the Most Recent
Balance Sheet(s) consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is fit for
the purpose for which it was procured or manufactured and none of which is
slow-moving (except core inventory), obsolete, damaged (according to general
standards in the remanufacturing industry), or defective (according to general
standards in the remanufacturing industry), subject to the reserves for
inventory set forth on the Most Recent Balance Sheet in accordance with the past
custom and practice of Sellers and the Subsidiaries.

(p) Contracts. Section 3(p)(1) of the Disclosure Schedule lists the following
Contracts to which FPP, IFS or any of the Subsidiaries is a party (the “Material
Contracts”):

(i) any agreement (or group of related agreements) for the lease of personal
property to or from any Person providing for lease payments in excess of $75,000
per annum;

(ii) any agreement (or group of related agreements) for the purchase or sale of
raw materials, commodities, supplies, products, or other personal property, or
for the furnishing or receipt of services, the performance of which will extend
over a period of more than one year, result in a material loss to FPP, IFS or
any of the Subsidiaries, or involves consideration in excess of $250,000 in any
twelve (12) month period;

(iii) any agreement concerning a partnership, joint venture, or limited
liability company;

(iv) any agreement (or group of related agreements) under which it has created,
incurred, assumed, or guaranteed any indebtedness for borrowed money, or any
capitalized lease obligation, in excess of $75,000 or under which it has imposed
a Lien on any of its assets, tangible or intangible;

(v) any agreement concerning confidentiality or non-competition or exclusive
dealing entered into by Sellers in the Ordinary Course of Business;

(vi) any agreement involving any stockholder of Sellers and its Affiliates
(other than FPP, IFS and the Subsidiaries);

(vii) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other plan or arrangement for the benefit
of its current or former directors, officers, and employees;

(viii) any collective bargaining agreement;

(ix) any agreement for the employment of any individual on a full-time,
part-time, consulting, independent contractor or other basis providing annual
compensation in excess of $100,000 or providing severance benefits or providing
benefits under the terms of any Target Business Employee Benefit Plan;

(x) any agreement under which it has advanced or loaned any amount to any of its
directors, officers, and employees outside the Ordinary Course of Business;

 

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(xi) any agreement under which the consequences of a default or termination
could reasonably be expected to have a Material Adverse Effect;

(xii) any agreement under which it has granted any Person any registration
rights with respect to shares of stock of Sellers or any of the Subsidiaries
(including demand and piggyback registration rights);

(xiii) any settlement, conciliation or similar agreement, the performance of
which will involve payment after the Closing Date of consideration in excess of
$75,000;

(xiv) any agreement under which FPP, IFS or any of the Subsidiaries has advanced
or loaned any other Person amounts in the aggregate exceeding $75,000 during any
twelve (12)-month period;

(xv) any other agreement (or group of related agreements) the performance of
which involves consideration in excess of $250,000 during any twelve (12)-month
period;

(xvi) any undocumented supply or purchase agreement, or any undocumented
amendment to any supply or purchase agreement involving consideration in excess
of $75,000 during any twelve (12)-month period; or

(xvii) all Contracts that require the Consent of the other party to the Contract
in order for Buyer to assume the Contract.

Sellers have delivered to Buyer a correct and complete copy of each written
agreement (as amended to date) listed in Section 3(p)(1) of the Disclosure
Schedule and a written summary setting forth the terms and conditions of each
oral agreement listed in Section 3(p)(1) of the Disclosure Schedule. Except as
set forth in Section 3(p)(2) of the Disclosure Schedule, with respect to each
such agreement: (A) the agreement is legal, valid, binding, enforceable, and in
full force and effect (subject to creditors’ rights, generally); (B) subject to
the provisions of Section 6(b)(ii), the agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby (including
the assignments and assumptions referred to in Section 2); (C) Sellers are not
in breach of the agreement and, to Seller’s Knowledge, no other party is in
breach or default and no event has occurred that with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement. Sellers represent and warrant that the Contracts listed on
Exhibit E, Annex E-4, have been fully performed and have no remaining benefit,
financial or otherwise, to the Target Business, and that the only remaining
financial obligations for the Target Business under those Contracts are those
expressly listed on Exhibit E, Annex E-4.

(q) Accounts Receivable. All Accounts Receivable of Sellers set forth on the
Most Recent Balance Sheet represent, as of the respective dates thereof, valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business (net of reserves shown on the Most Recent
Balance Sheet for bad debt, sales allowances and sales returns). The Accounts
Receivable of Sellers created since the Most Recent Fiscal Month End have been
created in the Ordinary Course of Business consistent with past practice.
Section 3(q) of the Disclosure Schedule sets forth a complete and accurate list
of the Accounts Receivable of Sellers as of November 30, 2006 (or such later
date identified in such list), which list sets forth the aging of such Accounts
Receivable.

(r) Powers of Attorney. Other than as set forth in Section 3(r) of the
Disclosure Schedule, there are no outstanding powers of attorney executed on
behalf of FPP, IFS or any of the Subsidiaries.

 

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(s) Insurance. Section 3(s) of the Disclosure Schedule sets forth a list of all
material insurance policies currently in effect which inure to the benefit of
Sellers and the Subsidiaries, insuring the products, properties, assets,
business and operations of the Target Business and their potential liabilities
to third parties, and all general liability policies maintained by or for the
benefit of the Target Business. With respect to each such insurance policy, the
policy is in full force and effect and will not cease to be in full force and
effect by virtue of the consummation of this transaction contemplated by this
Agreement. Section 3(s) of the Disclosure Schedule describes any self-insurance
arrangements affecting Sellers or any of the Subsidiaries covering or relating
to the Target Business.

(t) Litigation. Section 3(t) of the Disclosure Schedule sets forth each instance
in which FPP, IFS or any of the Subsidiaries (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to or,
to the Knowledge of Sellers or the Subsidiaries, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations set forth in
Section 3(t) of the Disclosure Schedule could reasonably be expected to result
in any Material Adverse Change. Neither, Remy nor Seller has any Knowledge that
any action, suit, proceeding, hearing, or investigation may be brought or
threatened against FPP, IFS or any of the Subsidiaries or that there is any
Basis for the foregoing. There are no actions, suits, claims or proceedings
pending or threatened against or involving Sellers or any of their assets or
properties by or before any Authority that question the validity of this
Agreement or seek to prohibit, enjoin or otherwise challenge the consummation of
the transactions contemplated hereby. There are no outstanding orders,
judgments, injunctions, stipulations, awards or decrees of any Authority against
Sellers or any of their assets or properties which prohibit or enjoin the
consummation of the transactions contemplated hereby.

(u) Product Warranty. Each product manufactured, sold, leased, or delivered by
FPP, IFS or any of the Subsidiaries has been in conformity in all material
respects with all applicable contractual commitments and all express and implied
warranties, and neither FPP, IFS nor any of the Subsidiaries has any Liability
(and, to the Knowledge of Sellers there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against any of them giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith, subject to the reserve
for product warranty claims set forth on the Most Recent Balance Sheet as
adjusted for the passage of time through the Closing Date in accordance with the
past custom, policy and practice of FPP, IFS and the Subsidiaries. Such reserve
for product warranty claims was established in good faith and was determined to
be sufficient as to exposure in accordance with the past custom, policy and
practice of FPP, IFS and the Subsidiaries. Section 3(u) of the Disclosure
Schedule includes copies of the standard terms and conditions of sale or lease
for FPP, IFS and each of the Subsidiaries (containing applicable guaranty,
warranty, and indemnity provisions). No product manufactured, sold, leased, or
delivered by FPP, IFS or any of the Subsidiaries is subject to any guaranty,
warranty, or indemnity beyond any applicable standard terms and conditions of
sale or lease set forth in Section 3(u) of the Disclosure Schedule.

(v) Product Liability. Neither Remy, FPP, IFS nor any of the Subsidiaries has
any Liability (and, to the Knowledge of Remy or Sellers there is no Basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any Liability)
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by FPP, IFS or any of the Subsidiaries, subject to the reserve for
product warranty claims set forth on the Most Recent Balance Sheet as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of FPP, IFS and the Subsidiaries. .

 

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(w) Employees.

(i) With respect to the Target Business: (A) other than as set forth in
Section 3(p)(viii) of the Disclosure Schedule, there is no collective bargaining
agreement with any Labor Organization, and to the Knowledge of Remy, Sellers, or
any of the Subsidiaries, no Labor Organization has, following an election or by
any other means, been recognized or certified as the exclusive representative of
all the employees in any unit deemed appropriate for purposes of collective
bargaining; (B) to the Knowledge of Remy, Sellers or any of the Subsidiaries, no
executive or manager of Sellers or any of the Subsidiaries (1) has any present
intention to terminate his or her employment, or (2) is a party to any
confidentiality, non-competition, proprietary rights or other such agreement
between such employee and any Person besides such entity that would be material
to the performance of such employee’s employment duties, or the ability of such
entity or Buyer to conduct the Target Business; (C) no Labor Organization or
group of employees has filed any representation petition or made any written or
oral demand for recognition; (D) to the Knowledge of Remy, Sellers or any of the
Subsidiaries, no organizing campaign or decertification efforts involving any
Labor Organization are underway or threatened and no other question concerning
representation or recognition of the bargaining status of any Labor Organization
exists; (E) no labor strike, work stoppage, slowdown, or other material labor
dispute has occurred, and none is underway or, to the Knowledge of Remy, Sellers
or any of the Subsidiaries, threatened; (F) there is no workmen’s compensation
liability, experience, or matter that could reasonably be expected to have a
Material Adverse Effect; (G) except as set forth in Section 3(w)(i) of the
Disclosure Schedule, there is no charge, complaint, grievance, investigation,
inquiry, or obligation of any kind, pending or threatened in any forum,
involving a current or former employee and relating to an alleged violation or
breach by Sellers or any of the Subsidiaries (or its or their officers or
directors) of any Law, regulation, or Contract; and (H) no employee or agent of
Sellers or any of the Subsidiaries has committed any act or omission giving rise
to material liability for any violation or breach identified in subsection
(G) above.

(ii) Except as set forth in Section 3(w)(ii) of the Disclosure Schedule, in
relationship to the Target Business (A) there are no employment Contracts or
severance agreements with any employees of Sellers or any of the Subsidiaries,
and (B) there are no written personnel policies, rules, or procedures applicable
to employees of Sellers or any of the Subsidiaries.

(iii) With respect to this transaction and the Target Business, any notice
required under any Law or collective bargaining agreement has been given, and
all bargaining obligations with any employee representative have been, or prior
to the Closing Date will be, satisfied. Within the past three (3) years, neither
Sellers nor any of the Subsidiaries has implemented any plant closing or layoff
of employees that could implicate the WARN Act, and no such action will be
implemented without advance notification to Buyer.

(iv) Section 3(w)(iv) of the Disclosure Schedule sets forth (i) the name and
total compensation (including accrued bonuses) of each officer working in the
day-to-day operations of FPP, IFS and the Subsidiaries and each other employee
of FPP, IFS and the Subsidiaries whose total compensation for 2006 is expected
to exceed $100,000, (ii) all wage or salary increases or bonuses received by
such persons since December 31, 2005, and any accrual for such increases or
bonuses (however, excluding the amount of any bonuses to be paid to any
personnel from Remy or an Affiliate related to the consummation of the
transactions contemplated hereby), and (iii) all commitments or agreements by
FPP, IFS and the Subsidiaries to increase the wages or modify the conditions or
terms of employment of any of their respective employees other than in the
Ordinary Course of Business.

 

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(x) Employee Benefits.

(i) Section 3(x) of the Disclosure Schedule lists each Employee Benefit Plan
that Remy, Sellers or any of the Subsidiaries maintains or has maintained in the
six (6)-year period immediately preceding the Closing (i) for the benefit of the
employees, retirees or former employees of the Target Business or any of their
dependents, survivors or beneficiaries, (ii) to which FPP, IFS or any of the
Subsidiaries contributes or has any obligation to contribute, or (iii) with
respect to which FPP, IFS or any of the Subsidiaries contributes, has
contributed or has any obligation to contribute, or with respect to which FPP,
IFS or any of the Subsidiaries has any Liability (collectively, the “Target
Business Employee Benefit Plans” or individually, a “Target Business Employee
Benefit Plan”).

(A) Each such Target Business Employee Benefit Plan (and each related trust,
insurance Contract, or fund) has been maintained, funded and administered in all
material respects in accordance with the terms of such Employee Benefit Plan and
the terms of any applicable collective bargaining agreement and complies in form
and in operation in all material respects with the applicable requirements of
ERISA, the Code, and other applicable Laws and regulations.

(B) All required reports and descriptions (including Form 1099-R, Form PBGC-1,
Form 5500 annual reports and required attachments (including any required
independent audit report, summary annual reports, and summary plan descriptions)
have been timely filed and/or distributed in accordance with the applicable
requirements of ERISA and the Code and all applicable regulations with respect
to each such Target Business Employee Benefit Plan. The requirements of COBRA
have been met with respect to each such Target Business Employee Benefit Plan
and each Employee Benefit Plan maintained by an ERISA Affiliate that is an
Employee Welfare Benefit Plan subject to COBRA. All required Tax filings with
respect to each Target Business Employee Benefit Plan have been made, including
IRS Form 990-T and 5330, and any Taxes due in connection with each such filing
have been paid.

(C) All premiums, contributions (including all employer contributions and
employee salary reduction contributions), or other payments that are required to
be made to or with respect to each Target Business Employee Benefit Plan with
respect to the service of employees or former employees of the Target Business
as of the Closing Date have been made within the time periods prescribed by
ERISA and the Code and all applicable regulations to each such Employee Benefit
Plan and all contributions for any period ending on or before the Closing Date
that are not yet due have been made to each such Employee Benefit Plan or
accrued in accordance with the past custom and practice of Sellers and the
Subsidiaries.

(D) Each such Target Business Employee Benefit Plan that is intended to meet the
requirements of a “qualified plan” under Code Section 401(a) has received a
determination from the Internal Revenue Service that such Target Business
Employee Benefit Plan is so qualified, and nothing has occurred since the date
of such determination that could adversely affect the qualified status of any
such Target Business Employee Benefit Plan. All such Target Business Employee
Benefit Plans have been or will be timely amended for the requirements of the
Tax legislation commonly known as “GUST” and “EGTRRA” and have been or will be
submitted to the Internal Revenue Service for a favorable determination letter
on the GUST requirements within the remedial amendment period prescribed by
GUST.

 

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(E) There have been no Prohibited Transactions with respect to any such Target
Business Employee Benefit Plan or any Target Business Employee Benefit Plan
maintained by an ERISA Affiliate. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such Target Business Employee
Benefit Plan. No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of any such Target
Business Employee Benefit Plan (other than routine claims for benefits) is
pending or, to the Knowledge of Remy, Sellers or the Subsidiaries, threatened.
Neither Remy, nor Sellers has any Knowledge of any Basis for any such action,
suit, proceeding, hearing, or investigation. None of the Target Business
Employee Benefit Plans nor any Fiduciary thereof has ever been the direct or
indirect subject of a cause of action, order, investigation or examination of
any kind. There are no matters pending before the Internal Revenue Service, the
Department of Labor, the PBGC, any court of any jurisdiction, or any other
governmental agency with respect to any Target Business Employee Benefit Plan.

(F) Sellers have delivered to Buyer correct and complete copies of the plan
documents and summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent annual report (Form
5500, with all applicable attachments), the most recent actuarial report, the
most recent actuarial valuation, and all related trust agreements, insurance
Contracts, claims, data and other funding arrangements that implement each such
Target Business Employee Benefit Plan.

(ii) Except as set forth on Section 3(x) of the Disclosure Schedule, neither
Remy, Sellers, nor any of the Subsidiaries, nor any ERISA Affiliate contributes
to, has any obligation to contribute to, or has any Liability under or with
respect to any Employee Pension Benefit Plan that is a “defined benefit plan”
(as defined in ERISA Section 3 (35) and all applicable regulations) in
relationship to the employees of the Target Business. No asset of Sellers or any
of the Subsidiaries used in the Target Business is subject to any Lien under
ERISA or the Code or any applicable regulations.

(iii) Neither Remy, Sellers, nor any of the Subsidiaries, nor any ERISA
Affiliate contributes to, has any obligation to contribute to, or has any
Liability (including withdrawal liability as defined in ERISA Section 4201 and
all applicable regulations) under or with respect to any Multiemployer Plan with
respect to the employees of the Target Business.

(iv) Except as set forth on Section 3(x) of the Disclosure Schedule, neither
Remy, FPP, IFS nor any of the Subsidiaries maintains, contributes to or has an
obligation to contribute to, or has any Liability with respect to, any Target
Business Employee Benefit Plan that is an Employee Welfare Benefit Plan
providing health or life insurance or other welfare-type benefits for current or
future retired or terminated directors, officers or employees (or any spouse or
other dependent thereof) of FPP, IFS or any of the Subsidiaries or of any other
Person other than in accordance with COBRA. Neither Sellers nor any Subsidiary
has an obligation to provide post-retirement medical or other benefits to any of
the employees or former employees of the Target Business or their survivors,
dependents or beneficiaries. Sellers and its Subsidiaries may terminate any such
post-retirement medical, life insurance or other benefits upon thirty (30) days’
notice or less without any liability therefor.

(v) None of Buyer, Sellers or any of its Subsidiaries shall incur any liability
under any Target Business Employee Benefit Plan, including any severance
agreement, deferred compensation agreement, or employment agreement, as a result
of the consummation of the transactions contemplated by this Agreement.

 

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(vi) All executive compensation plans (formal or informal) that constitute
Target Business Employee Benefit Plans comply with the executive compensation
Laws under Code Section 409A, as amended, and the regulations promulgated
thereunder.

(y) Guaranties. Except as set forth in Section 3(y) of the Disclosure Schedule,
neither FPP, IFS nor any of the Subsidiaries is a guarantor or otherwise is
liable for any Liability (including indebtedness) of any other Person.

(z) Environmental, Health, and Safety Matters. Except as disclosed in
Section 3(z) of the Disclosure Schedule:

(i) Each of the Sellers and the Subsidiaries has complied and is in compliance
with all Environmental, Health, and Safety Requirements.

(ii) Without limiting the generality of the foregoing, each of the Sellers and
the Subsidiaries has obtained and complied with, and is in compliance with, all
Permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of the Target Business; and a list of all such
Permits, licenses and other authorizations is set forth on Section 3(z)(ii) of
the Disclosure Schedule.

(iii) Neither Remy, Sellers nor any of the Subsidiaries have received any
written, or oral (to the Knowledge of Remy or Sellers), notice, report or other
information regarding any actual or alleged violation of Environmental, Health,
and Safety Requirements, or any Liabilities, including any investigatory,
remedial or corrective obligations, relating to the Target Business or the
Subsidiaries or their facilities arising under Environmental, Health, and Safety
Requirements.

(iv) None of the following exists or has existed at any property or facility
currently owned or operated by the Target Business, FPP, IFS or the Subsidiaries
and, to the Knowledge of Remy and Sellers: (A) underground storage tanks,
(B) asbestos-containing material in any form or condition, (C) materials or
equipment containing polychlorinated biphenyls, (D) landfills, surface
impoundments, or disposal areas, or (E) Microbial Matter or water intrusion that
could lead to the formation of Microbial Matter.

(v) Neither the Target Business, FPP, IFS nor any of the Subsidiaries have
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, manufactured, distributed, or released any substance,
including any Hazardous Material, or owned or operated any property or facility
(and no such property or facility is contaminated by any such Hazardous
Material) in noncompliance of any Environmental, Health and Safety Requirements
so as to give rise to any current or future Liabilities, including any Liability
for fines, penalties, response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorneys’ fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., as amended (“CERCLA”), the Solid Waste Disposal
Act, 42 U.S.C. Section 6901 et seq., as amended (“SWDA”), or any other
Environmental, Health, and Safety Requirements.

(vi) Neither this Agreement nor the consummation of the transactions that are
contemplated by this Agreement will result in any obligations for site
investigation or clean up, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called “transaction-triggered” or
“responsible property transfer” Environmental, Health, and Safety Requirements.

 

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(vii) Neither FPP, IFS nor any of the Subsidiaries have designed, manufactured,
sold, marketed, installed, or distributed products or other items containing
asbestos, and none of such entities is or will become subject to any Asbestos
Liabilities.

(viii) Neither FPP, IFS nor any of the Subsidiaries have assumed, undertaken or,
to the Knowledge of Sellers or Remy, otherwise become subject to any Liability,
including any obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements.

(ix) No facts, events or conditions relating to the present facilities,
properties or operations of FPP, IFS or the Subsidiaries will prevent, hinder or
limit continued compliance with Environmental, Health, and Safety Requirements,
give rise to any investigatory, remedial or corrective obligations pursuant to
Environmental, Health, and Safety Requirements, or give rise to any other
Liabilities pursuant to Environmental, Health, and Safety Requirements,
including any relating to on-site or off-site releases or threatened releases of
Hazardous Materials, wastes, personal injury, property damage or natural
resources damage.

(x) FPP, IFS and the Subsidiaries have furnished to Buyer all environmental
audits, reports and other material environmental documents relating to their or
their respective predecessors’ or Affiliates’ past or current properties,
facilities, or operations that are in their possession or under their reasonable
control.

(xi) Neither FPP, IFS nor any of the Subsidiaries have designed, manufactured,
sold, marketed, installed or distributed products or other items containing
welding rods or that could result in fumes from welding rods and none of such
entities is or will become subject to any Welding Rod Liability.

(xii) Neither FPP, IFS nor any of the Subsidiaries have designed, manufactured,
sold, marketed, installed or distributed products or other items containing
silica and none of such entities is or will become subject to any Silica
Liability.

(xiii) There are no environmental Liens on any of the Real Property arising as a
result of any actions taken or omitted to be taken by FPP, IFS or the
Subsidiaries and, to the Knowledge of Sellers, no actions have been taken by any
Authority with respect to any of the Real Property or are in process or pending,
to impose an environmental Lien with respect to the Real Property as a result of
any such actions.

(xiv) No Real Property presently or heretofore owned or operated by the Target
Business, FPP, IFS or the Subsidiaries is currently listed on the National
Priorities List or the Comprehensive Environmental Response, Compensation and
Liability Information System, both promulgated under CERCLA, or on any
comparable state list, and neither Sellers nor any of the Subsidiaries has
received any written notice of potential liability from any Person under or
relating to CERCLA or any comparable state or local Law.

(xv) To the Knowledge of Sellers or Remy, no off-site location at which FPP, IFS
or the Subsidiaries has disposed or arranged for the disposal of any Hazardous
Materials or waste is listed on the National Priorities List or on any
comparable state list and neither Sellers nor the

 

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Subsidiaries has received any written notice from any Person with respect to any
such off-site location, of potential or actual liability or a written request
for information from any Person under or relating to CERCLA or any comparable
state or local Law.

(aa) Certain Business Relationships with Sellers and the Subsidiaries. None of
the stockholders of Sellers nor any of their Affiliates, directors, officers,
employees or stockholders of any stockholder of Sellers, nor any of Sellers’ and
the Subsidiaries’ directors, officers, employees, or stockholders have been
involved in any business arrangement or relationship with Sellers or any of the
Subsidiaries within the past twelve (12) months, and none of the stockholders of
Sellers and their Affiliates, directors, officers, employees and stockholders of
Sellers, and Sellers’ and the Subsidiaries’ directors, officers, employees, and
stockholders owns any asset, tangible or intangible, that is used in the Target
Business.

(bb) Customers and Suppliers.

(i) Section 3(bb) of the Disclosure Schedule lists the customers of Sellers
generating revenue of greater than One Million Dollars ($1,000,000) for the nine
(9) months ended September 30, 2006, and sets forth opposite their name the
revenue generated from such customer.

(ii) Since September 30, 2006, no supplier of FPP, IFS or any of the
Subsidiaries has notified Sellers that it shall stop, or decrease the rate of,
supplying materials, products or services to FPP, IFS or any of the
Subsidiaries, and none of the Sellers’ customers listed on Section 3(bb) of the
Disclosure Schedule has indicated to Sellers that it shall stop, or materially
decrease the rate of, buying materials, products or services from FPP, IFS or
any of the Subsidiaries.

(cc) Permits. Section 3(cc) of the Disclosure Schedule sets forth a true,
correct and complete list of all Permits held by FPP, IFS or any of the
Subsidiaries. All of the Permits so listed are in full force and effect and none
of FPP, IFS or any of the Subsidiaries has received any written notice that any
such Permit may be revoked or canceled. None of the Permits have been modified
in any way that could reasonably be expected to have a Material Adverse Effect.
Except for the Permits set forth on Section 3(cc) of the Disclosure Schedule,
there are no Permits, whether federal, state, local or foreign, that are
necessary for the lawful operation of the Target Business.

(dd) Bank Accounts. Section 3(dd) of the Disclosure Schedule sets forth a true,
correct and complete list of the names and locations of each bank or other
financial institution at which Sellers or any of the Subsidiaries has an account
(giving the account numbers) or safe deposit box related to the Target Business
(the “Bank Accounts”) and the names of all Persons authorized to draw thereon or
have access thereto, and the names of all Persons, if any, now holding powers of
attorney or comparable delegation of authority from Sellers or any Subsidiary.

(ee) Improper and Other Payments. Except as set forth on Section 3(ee) of the
Disclosure Schedule, (a) none of FPP, IFS or any of the Subsidiaries, or any
director, officer, employee, agent or representative of FPP, IFS or any of the
Subsidiaries, or Person acting on behalf of any of them, has made, paid or
received any bribes, kickbacks or other similar payments to or from any Person,
whether lawful or unlawful, (b) no contributions have been made by FPP, IFS or
any of the Subsidiaries to a domestic or foreign political party or candidate,
(c) no improper foreign payment (as defined in the Foreign Corrupt Practices
Act, 15 U.S.C. 78dd-1 et seq.) has been made by FPP, IFS or any of the
Subsidiaries or any director, officer, employee, agent or representative of FPP,
IFS or any of the Subsidiaries, or any Person acting on behalf of any of them,
and (d) the internal accounting controls of Sellers and Subsidiaries are
adequate to detect any of the foregoing.

 

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(ff) Accounting and Disclosure Controls. Except as set forth on Section 3(ff) of
the Disclosure Schedule, FPP, IFS and each of the Subsidiaries maintains and
complies with a system of controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of the consolidated balance sheet and income statement of the Target
Business, in conformity with GAAP, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, (iv) the
reported assets of FPP, IFS and each Subsidiary is compared with existing assets
at regular intervals and appropriate action is taken with respect to any
differences; (v) material weaknesses or any fraud, whether or not material that
involves management or other employees, of the Target Business is promptly made
known to the management of FPP, IFS, and/or to the officers of Remy.

(gg) No Additional Representations. Buyer acknowledges that neither of the
Sellers nor any other Person has made any representation or warranty, express or
implied, as to the accuracy or completeness of any information regarding
Sellers, the Subsidiaries or the Target Business, except as expressly set forth
in this Agreement and Buyer further agrees that neither of Sellers nor any other
Person will have or be subject to any liability to Buyer or any other Person
resulting from the distribution to Buyer, or Buyer’s use of, any such
information, including, without limitation, the Confidential Memorandum dated
May 2006 and any information document or material made available to Buyer and
its representatives in the “data room”, management presentations or any other
form in expectation of the transactions contemplated by this Agreement.

(hh) Disclaimer Regarding Estimates and Projections. In connection with Buyer’s
investigation of Sellers, Buyer has received from or on behalf of Sellers and/or
the Target Business certain estimates, forecasts, plans and financial
projections. Buyer acknowledges that there are uncertainties inherent in
attempting to make such estimates, forecasts, plans and financial projections,
that Buyer is familiar with such uncertainties, that Buyer is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
estimates, forecasts, plans and financial projections so furnished to them
(including the reasonableness of the assumptions underlying such estimates,
forecasts, plans and financial projections), and that Buyer shall have no claim
against Sellers with respect thereto. Accordingly, Sellers make no
representation or warranty with respect to such estimates, forecasts, plans and
financial projections (including any such underlying assumptions).

(ii) Consents and Approvals. Except as set forth in Section 3(ii) of the
Disclosure Schedule, and except for filings under the Hart-Scott-Rodino Act, no
filing with, and no permit, authorization, consent or approval of any Authority
or any other Person is necessary for the consummation by the Sellers of the
transactions contemplated hereby.

SECTION 4 BUYER’S REPRESENTATIONS AND WARRANTIES

Buyer represents and warrants to Sellers that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4).

(a) Organization of Buyer. Buyer is a corporation duly organized, validly
existing, and in good standing under the Laws of the jurisdiction of its
incorporation (or other formation).

(b) Authorization of Transaction. Buyer has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Buyer, enforceable in accordance with its terms
and conditions. The execution, delivery and performance of this Agreement and
all other agreements contemplated hereby have been duly authorized by Buyer.

 

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(c) Non-contravention. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Buyer is subject or any provision of its charter, bylaws, or
other governing documents or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any Contract to which Buyer is a party or by which it is bound or to which
any of its assets are subject. Buyer does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2).

(d) Brokers’ Fees. Buyer has no Liability to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which Sellers could become liable or obligated.

SECTION 5 PRE-CLOSING COVENANTS

The Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing:

(a) General. Each of the Parties will use his, her, or its reasonable efforts to
take all actions and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the Closing conditions set forth in Section 7).
Notwithstanding anything herein to the contrary, the Parties shall not be
required to make any material cash expenditure, commence or be a plaintiff in a
litigation or grant any material accommodation in order to consummate the
transactions contemplated by this Agreement or the other Transaction Agreements.

(b) Notices and Consents. Sellers will give (and will cause each of the
Subsidiaries to give) any notices to third parties, and Sellers will use their
reasonable efforts (and will cause each of the Subsidiaries to use its
reasonable efforts) to obtain the Material Consents and Other Consents (each as
defined in this Agreement). Each of the Parties will (and Sellers will cause
each of the Subsidiaries to) give any notices to, make any filings with, and use
its reasonable best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in connection with this
Agreement. Without limiting the generality of the foregoing, each of the Parties
will file (and Sellers will cause each of the Subsidiaries to file), if it has
not already filed, any Notification and Report Forms and related material that
it may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the Hart-Scott-Rodino
Act, and will make (and Sellers will cause each of the Subsidiaries to make) any
further filings pursuant thereto that may be necessary in connection therewith.

(c) Operation of Business. As related to the Target Business and except (1) as
otherwise permitted or required by this Agreement, (2) with the prior consent of
Buyer or (3) except as set forth in Section 5(c) of the Disclosure Schedule,
Sellers will not (and will not cause or permit any of the Subsidiaries to)
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality of the
foregoing, Sellers will not (and will not cause or permit any of the
Subsidiaries to) (i) declare, set aside, or pay any dividend or make any
distribution

 

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with respect to its capital stock or redeem, purchase, or otherwise acquire any
of its capital stock or (ii) otherwise engage in any practice, take any action,
or enter into any transaction of the sort described in Section 3(h). With
respect to any permitted or required practice, action or transaction under this
Section 5(c) (including but not limited to the consent by Buyer pursuant to this
Section 5(c)(2)), Sellers shall amend the Disclosure Schedule pursuant to
Section 5(f)(ii) below prior to Closing to reflect such updates.

(d) Preservation of Business. Sellers and Remy will use their reasonable efforts
to keep (and will cause each of the Subsidiaries to keep) FPP’s, IFS’, and the
Subsidiaries’ businesses and properties substantially intact, including their
present operations, physical facilities, working conditions, insurance policies,
and relationships with lessors, licensors, suppliers, customers, and employees.

(e) Access to Information. Sellers and Remy will permit (and will cause each of
the Subsidiaries to permit) authorized representatives of Buyer (including legal
counsel and accountants) to have reasonable access during normal business hours
to its premises, properties, personnel, books, records (including Tax records),
Contracts, and documents of or pertaining to FPP, IFS and each of the
Subsidiaries, as they may reasonably request; provided, however, that the
activities of Buyer and its authorized representatives shall be conducted in
such a manner as not to interfere unreasonably with the operation of the Target
Business. Notwithstanding anything to the contrary contained herein, the Parties
acknowledge that the conduct of Buyer’s due diligence shall be conducted in
accordance with the terms and conditions of the Confidentiality Agreement.

(f) Notice of Developments; Updates to Disclosure Schedule; Additional Financial
Statements.

(i) From the period beginning on the date of execution of this Agreement until
five (5) days prior to the Closing, Sellers may (but shall not be required to)
give written notice to Buyer of any development causing a breach of any material
covenant, representation or warranty contained in this Agreement in any material
respect (the “Interim Disclosures”). Unless Buyer terminates this Agreement
pursuant to Section 9(a)(ii)(B) hereof by reason of the Interim Disclosures and
exercises that right in accordance with Section 9(a)(ii)(B) hereof, any Interim
Disclosure pursuant to this Section 5(f)(i) will be deemed to have amended the
Disclosure Schedule, to have qualified the representations and warranties
contained in Section 3 hereof and to have cured any misrepresentation or breach
of warranty that may have otherwise existed hereunder by reason of the
development.

(ii) No later than five (5) days prior to the Closing Date, Seller shall provide
a written update to the Disclosure Schedule (which shall incorporate all
information to be included therein pursuant to Sections 5(c) and 5(f)(i) above).
In addition, Sellers shall include any development causing a breach of any
material covenant, representation or warranty contained in this Agreement in any
material respect which are not covered by the updates of Sections 5(c) and
5(f)(i) above (such additions under the second sentence of this
Section 5(f)(ii), the “Final Disclosures”). Unless Buyer terminates this
Agreement pursuant to Section 9(a)(ii)(C) hereof by reason of the Final
Disclosures and exercises that right in accordance with Section 9(a)(ii)(C)
hereof, the Final Disclosures will be deemed to have amended the Disclosure
Schedule, to have qualified the representations and warranties contained in
Section 3 hereof and to have cured any misrepresentation or breach of warranty
that may have otherwise existed hereunder by reason of the development.

(iii) Sellers will provide monthly Financial Statements as they become available
up to the Closing Date.

 

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(g) Exclusivity. From the date of this Agreement until the earlier of the
(1) the Closing Date or (2) the termination of this Agreement, Sellers and Remy
will not (and Sellers will not cause or permit any of the Subsidiaries to)
directly or indirectly (i) solicit, entertain, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of FPP, IFS or any of the Subsidiaries (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. Sellers and Remy will
notify Buyer immediately if any Person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.

(h) Assignment of Contracts and Permits. If required by applicable Law or the
terms thereof to properly assign any Assigned Contract or Permit without breach
or violation thereof, Sellers agree to use their reasonable efforts to obtain
the consent of each other party to any such Assigned Contract or Permit prior to
the Closing; provided, however, that no material modification of any such
Assigned Contract or Permit shall be made without Buyer’s prior written consent,
which consent shall not unreasonably be withheld, delayed or conditioned, and
the form of the consent to assignment shall be subject to prior written approval
of Buyer, which such approval shall not unreasonably be withheld, conditioned or
delayed.

(i) Maintenance of Leased Real Property. Sellers and the Subsidiaries shall
maintain the Leased Real Property, including all of the Improvements, in
substantially the same condition as existed on the date of this Agreement,
ordinary wear and tear excepted, and shall not demolish or remove any of the
existing Improvements, or erect new improvements on the Leased Real Property or
any portion thereof, without the prior written consent of Buyer.

(j) Leases. Neither Sellers nor any of the Subsidiaries shall amend, modify,
extend, renew or terminate the Lease of any Leased Real Property, nor shall FPP,
IFS or any of the Subsidiaries enter into any new lease, sublease, license or
other agreement for the use or occupancy of any Leased Real Property, without
the prior written consent of Buyer.

(k) Title Insurance, Surveys, Estoppels and Non-Disturbance Agreements. Sellers
and the Subsidiaries shall use their reasonable efforts to assist Buyer in
obtaining surveys, title commitments, title policies, estoppel certificates and
non-disturbance agreements for the Leased Properties, including removing from
title any Liens or encumbrances that are not Permitted Encumbrances. Sellers and
the Subsidiaries will use reasonable efforts to provide the Buyer’s title
company with any required affidavits, indemnities, memoranda or other assurances
requested by Buyer’s title company to issue title policies.

SECTION 6 POST-CLOSING COVENANTS

The Parties agree as follows with respect to the period following the Closing:

(a) General. In case at any time after the Closing any further actions are
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further actions (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8).
Sellers and Remy acknowledge and agree that from and after the Closing, Buyer
will be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Target
Business other than documents, books, records (including Tax records),
agreements, and financial data which are included in or related to the Excluded
Assets.

 

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(b) Assignment.

(i) Notwithstanding anything contained herein or otherwise to the contrary, this
Agreement shall not constitute an agreement to assign any Contract, permit, or
license or any claim or right or any benefit or obligation thereunder or
resulting therefrom if an assignment thereof, without the consent of a third
party thereto, would constitute a breach or violation thereof and if such a
consent is not obtained at or prior to the Closing.

(ii) If there are any consents or approvals required to be obtained to assign
any Contract, permit, or license or any claim or right or any benefit or
obligation thereunder or resulting therefrom other than the Material Consents
(the “Other Consents”) that have not yet been obtained (or otherwise are not in
full force and effect) as of the Closing, the applicable Seller will continue to
use its reasonable efforts to obtain the Other Consents. Prior to the obtaining
of such Other Consents, the parties shall cooperate with each other in any
reasonable and lawful arrangements designed to provide to Buyer the benefits of
use of any and all Contracts, permits or licenses to which such Other Consents
relate for their respective terms (or any right or benefit arising thereunder,
including the enforcement for the benefit of Buyer of any and all rights of the
applicable Seller against a third party thereunder). To the extent that Buyer is
provided the benefits pursuant to this Section 6(b)(ii) of any Assigned
Contract, permit or license, Buyer shall perform for the benefit of the other
Persons that are party thereto the obligations of the applicable Seller
thereunder and pay, discharge and satisfy any related liabilities that, but for
the lack of an authorization, approval, consent or waiver to assign such
liabilities to Buyer, would be Assumed Liabilities. When consent for the sale,
assignment, assumption, transfer, conveyance and delivery of an Assigned
Contract, permit or license is obtained, the applicable Seller shall promptly
assign, transfer, convey and deliver such Assigned Contract, permit or license
to Buyer, and Buyer shall assume the obligations under such Assigned Contract,
permit or license from and after the date of assignment pursuant to a
special-purpose assignment and assumption agreement substantially similar in
terms to those of the Assignment and Assumption Agreement, as applicable (which
special-purpose agreement the parties shall prepare, execute and deliver in good
faith at the time of such transfer, all at no additional cost to Buyer).

(c) Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Target Business, each of the other Parties will take reasonable
actions to cooperate with him, her, or it and his, her, or its counsel in the
contest or defense, make available his, her, or its personnel, and provide such
testimony and access to his, her, or its books, records and other items and
materials as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8).

(d) Transition. Neither Sellers nor Remy will take, nor shall Sellers permit any
Subsidiary to take, any action that is designed or intended to have the effect
of discouraging any lessor, licensor, customer, supplier, or other business
associate of Sellers or any of the Subsidiaries from maintaining the same
business relationships with the Target Business after the Closing as it
maintained with the Target Business prior to the closing.

(e) Confidentiality. Sellers and Remy will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to Buyer or
destroy, at the request and option of Buyer, all tangible

 

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embodiments (and all copies) of the Confidential Information that are in
Sellers’ or Remy’s possession. In the event that Sellers or Remy are requested
or required pursuant to written or oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process to disclose any Confidential Information, Sellers or
Remy will notify Buyer promptly of the request or requirement so that Buyer may
seek an appropriate protective order or waive compliance with the provisions of
this Section 6(e). If, in the absence of a protective order or the receipt of a
waiver hereunder, Sellers or Remy are, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, Sellers or Remy may disclose the Confidential Information to the
tribunal; provided, however, that Sellers or Remy shall use their best efforts
to obtain, at the request of Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Buyer shall designate. The foregoing
provisions shall not apply to any Confidential Information that is generally
available to the public immediately prior to the time of disclosure unless such
Confidential Information is so available due to the actions of Sellers or Remy.

(f) Covenant Not to Compete. For a period of five (5) years from and after the
Closing Date, neither Remy, Sellers nor any of their respective Affiliates will
directly or indirectly engage in, or own any ownership interest in, any business
which engages or plans to engage in any business substantially similar to the
Target Business; provided, however, that ownership of less than five percent
(5%) of the outstanding stock of any publicly traded corporation shall not be
restricted by this Section 6(f). If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6(f) is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.

(g) Employment and Benefit Arrangements.

(i) Prior to the Closing, Buyer shall offer employment to substantially all
employees of Sellers and the Subsidiaries. Each employee of Sellers that is
offered employment shall be offered such employment on terms and conditions
(including employee benefits) that will be communicated by the Buyer at its
earliest opportunity. Such individuals employed by Buyer as of the Closing Date
shall be referred to herein as “Transferred Employees.” The Buyer will agree to
consider for employment, subject to standard Buyer employment checks, employees
not actively at work at the date of Closing.

(ii) Except as described in the next sentence of this Section 6(g)(ii), the
employment of each Transferred Employee with Sellers shall be terminated, and
the employment of each such Transferred Employee with Buyer shall commence,
immediately upon the Closing. In the case of any employee who is absent from
active employment as of the date of the Closing due to an approved leave of
absence, the employment of such individual shall remain with Seller post-Closing
until the date of his or her return to active work from approved leave of
absence, and such employee shall then be eligible for an offer of employment
with Buyer, who if offered and accepts such employment, shall become a
Transferred Employee as of such date.

(iii) Sellers shall pay the Transferred Employees within ten (10) calendar days
after the Closing (and sooner if required under its policies or applicable Law)
for all wages and salary earned through and including the Closing Date and
Sellers shall timely discharge the liability for payroll Taxes related thereto.

 

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(iv) Buyer shall assume the Liability for employee bonuses (including retention
bonuses for each Transferred Employee as set out on Section 6(g)(iv) of the
Disclosure Schedule) earned in 2006 but which are payable in 2007. Sellers shall
retain and honor all other bonus or incentive plans and all employment,
severance, termination and retirement agreements to which any of Sellers or
Subsidiaries is a party, as such agreements are in effect on the date hereof.
Section 6(g)(iv) of the Disclosure Schedule provides: (1) a full listing of
Transferred Employees qualified for retention bonuses and the amounts of those
bonuses; and (2) the formula used in determining employee bonuses for 2006 and
an estimate of the total employee bonus amount for 2006.

(v) With respect to any Employee Benefit Plan in which any Transferred Employee
first becomes eligible to participate on or after the Closing Date (the “Buyer
Plans”), Buyer will recognize service of Transferred Employees (or otherwise
credited by the Target Business) accrued on or prior to the Closing Date for
purposes of eligibility to participate provided, however, that in no event will
any credit be given to the extent it would result in the duplication of benefits
for the same period of service.

(vi) With respect to Transferred Employees who are participants in Remy’s 401(k)
Savings Plan (“Sellers’ 401(k) Plan”) immediately prior to the Closing,
(i) Buyer’s tax-qualified Code Section 401(k) plan (“Buyer’s 401(k) Plan”) shall
accept “eligible roll-over distributions” (within the meaning of Code
Section 402(c)(4)) from Seller’s 401(k) Plan and, (ii) with respect to each
Transferred Employee who elects an eligible roll-over distribution to the
Buyer’s 401(k) plan and who has an outstanding plan loan under the terms and
conditions of the Seller’s 401(k) Plan, Buyer’s 401(k) Plan shall accept a
direct roll-over of the related participant note for a plan loan from the
Buyer’s 401(k) Plan consistent with the provisions of Treasury Regulation
Section 1.401(a)(31)-1 (Q&A-16).

(vii) Buyer shall assume as an Assumed Liability and be responsible for, and
shall give full credit for, all 2007 vacation benefits of the Transferred
Employees accrued but not taken as of the Closing Date. Sellers shall have no
responsibility or liability for any 2007 vacation benefits of the Transferred
Employees on or after the Closing Date, including 2007 vacation benefits accrued
prior to the Closing Date.

(viii) Pursuant to Treasury Regulation Section 54.4980B-9 Q&A-7, after the
Closing Date, Buyer shall assume responsibility for providing and administering
all required notices and benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) to all Transferred Employees who incur a
COBRA qualifying event and are thus entitled by Law to such notices and/or
benefits with respect to periods after the Closing Date.

(ix) During the period expiring sixty (60) days after the Closing Date, Buyer
shall not cause an employment loss, as defined in the WARN Act, in sufficient
numbers such that the notice requirement of the WARN Act is applicable to
Sellers.

 

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(h) Continued Corporate Existence and General Liability Insurance Coverage.
Sellers covenant to continue the corporate existence of FPP and IFS for a period
of three (3) years from and after the Closing Date. Sellers further covenant to
continue general liability insurance coverage for FPP and IFS for that
three-year period.

(i) Cooperation on Tax Matters.

(i) Sellers shall prepare and file any Tax Returns with respect to Tax periods
that end (or are deemed to end) on or before the Closing Date. Buyer shall
prepare all Tax Returns for all periods that begin before the Closing Date and
end after the Closing Date (“Straddle Period”) in a manner consistent with prior
filings of such Tax Returns. At least thirty (30) days prior to filing any Tax
Returns with respect to the Straddle Periods, Buyer shall furnish to Sellers
copies of Tax Returns with respect to the Straddle Periods and a computation
reasonable detail of the Taxes to be reported on such Tax returns for the
portion of the Straddle Period ending on and including the Closing Date, and
shall not file such Tax Returns without approval of Sellers; provided, however,
that if the parties continue to dispute the treatment of any item five (5) days
before the due date for filing such Tax return the position of Sellers shall be
followed in connection with the Tax return that is filed, and the matter shall
be submitted to a nationally recognized Tax counsel acceptable to Sellers and
Buyer for resolution. Sellers shall be responsible for the timely filing and
distribution (taking into account any extensions received from the relevant tax
authorities) of any wage, wage-related Tax Returns for the period covering
January 1, 2007 through the Closing Date, which are required to meet federal,
state and local requirements; including, but not limited to, federal forms 940,
941, W-2s and corresponding W-3s and state unemployment quarterly and annual
returns, whether due to be filed prior to, or after, the Closing Date and shall
be responsible for payment of Taxes, if any, shown thereon. Buyer and Sellers
agree to utilize the standard method set forth in Revenue Procedure 2004-53,
2004-34 I.R.B. 320 with respect to wage reporting.

(ii) The Parties intend that the following provisions are intended to clarify
the manner in which Taxes are to be accrued and shall apply only to the extent
that such Taxes are not also included in the determination of Assumed
Liabilities:

(A) Sellers shall be responsible for and shall pay all Taxes arising or
resulting from the ownership, use, or possession of the Acquired Assets prior to
the Closing Date (without regard to the date on which such Taxes become due and
payable), and the sale of the Acquired Assets on the Closing Date, pursuant to
this Agreement. Buyer shall be responsible for and shall pay all Taxes arising
or resulting from the ownership, use, or possession of the Acquired Assets on or
after the Closing Date (excluding the sale of the Acquired Assets on the Closing
Date pursuant to this Agreement). All Taxes attributable to a period beginning
before and ending after the Closing Date shall be apportioned between the
Parties pro rata on a per diem basis; provided, that in the case of Taxes that
are based on income or receipts, or imposed in connection with a sale, transfer,
or assignment of property, the portion allocable to the period ending on the
Closing Date shall be the amount that would be payable if the Tax period ended
on the Closing Date.

(B) Notwithstanding the foregoing, Sellers shall be responsible for and shall
pay all personal property Taxes that are assessed prior to the Closing Date
(without regard to the date on which such Taxes become due and payable), and
Buyer shall be responsible for and shall pay all such Taxes that are assessed on
or after the Closing Date. Real property Taxes, if any, that relate to a lease
of real property shall be apportioned

 

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between the Parties based upon the number of days in calendar year 2007 that
such Party was the lessee of such property (without regard to the date on which
such Taxes become due and payable).

(iii) From time to time after the Closing Date, each Party shall permit
reasonable access, and shall cause its accountants and other representatives to
permit reasonable access to the other Party, the information that it or its
accountants or other representatives have within their control and that may be
reasonably necessary in connection with the preparation of any Tax Return or the
examination by any taxing authority or other administrative or judicial
proceeding relating to any Tax Return. Each Party shall retain or cause to be
retained, until the applicable statutes of limitations (including any
extensions) have expired, copies of all Tax Returns for all Tax periods
beginning before the Closing Date, together with supporting work schedules and
other records or information that may be relevant to such returns. No new
elections with respect to Taxes, or any changes in current elections with
respect to Taxes, affecting any of the Acquired Assets shall be made by Sellers
after the date of this Agreement without the prior written consent of Buyer.

(iv) The parties hereto shall cooperate, and shall cause their respective
representatives to cooperate in handling audits, examinations, investigations
and administrative, court or other proceedings relating to Taxes, in resolving
all disputes, audits and refund claims with respect to such Tax returns and
Taxes, and any earlier Tax returns and Taxes of Sellers, and in all other
appropriate Tax matters, in each case including making employees available to
assist the requesting party, timely providing information reasonably requested,
maintaining and making available to each other all records necessary in
connection therewith, and the execution and delivery of appropriate and
customary forms and authorizations, including Federal Form 2848, Power of
Attorney and Declaration of Representative (or a successor form or forms), and
comparable forms for foreign, state and local Tax purposes, as appropriate, when
the requesting party reasonably requires such forms in connection with any Tax
dispute or claim for refund. Any information obtained by any party or its
Affiliates from another party or its Affiliates in connection with any Tax
matters to which this Agreement relates shall be kept confidential, except:
(i) as may be otherwise necessary in connection with the filing of Tax Returns
or claims for refund or in conducting an audit or other proceeding relating to
Taxes or as may be otherwise reasonably required by applicable Law, to enforce
rights under this Agreement or to pursue any claim for refund or contest any
proposed Tax assessment; or (ii) for any external disclosure in audited
financial statements or regulatory filings which a party reasonably believes is
required by applicable Law or stock exchange or similar applicable rules.
Sellers agree to provide Tax information and data necessary for the filing of
Tax Returns in a reportable format and in a timely manner. Sellers shall respond
to requests for information and for corrections regarding the information
necessary to file Tax Returns in a timely manner.

(v) Notwithstanding the foregoing, and in addition to all other obligations
imposed by this Section 6(i): (i) Sellers and Buyer agree to give the other
party reasonable written notice prior to transferring, destroying or discarding
any files and records with respect to Tax matters and, if the other party so
requests, shall allow the other party to take possession of such files and
records; and (ii) Sellers shall retain (or cause Sellers’ Affiliates to retain)
all such files and records of Sellers until the expiration of any applicable
statute of limitations (including any extension thereof) with respect to Tax
Returns filed on behalf of Sellers or their respective Affiliates.

(j) Notifications. After the Closing, Buyer and Sellers will each make all
required notifications to the Indiana Department of Management and other
agencies in order to effect the transfer from Sellers to Buyer of the Permits
set forth on Section 3(z)(ii) of the Disclosure Schedule.

 

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(k) Environmental Permits. Sellers will provide Buyer and the appropriate
governmental agencies all information and/or documents necessary to effect
transfer to Buyer of all environmental permits at the Leased Properties,
including but not limited to the following permit applications related to the
Franklin, Indiana facility: Industrial Wastewater Pretreatment Permit
(IN000257), Air Permit (F081-20601-00056) and NPDES General Storm Water
Discharge (IDEM Rule 6) Permit for which Sellers applied on December 8, 2006.

(l) Use of Proceeds. Prior to making any payment to its stockholders, Remy
covenants and agrees that it will (and will cause the Sellers to) use the
proceeds received by Sellers in the transactions contemplated by this Agreement
(i) to pay such amounts to its creditors as mutually agreed upon by Remy and its
creditors or (ii) for use by Remy for other purposes as permitted or not
prohibited by its creditors (including but not limited to payment of expenses
for the transactions contemplated by this Agreement and other general corporate
purposes).

SECTION 7 CONDITIONS TO OBLIGATION TO CLOSE

(a) Conditions to Buyer’s Obligation. Buyer’s obligation to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:

(i) the representations and warranties set forth in Section 3 shall be true and
correct in all material respects at and as of the Closing Date, except to the
extent that such representations and warranties are qualified by the term
“material,” or contain terms such as “Material Adverse Effect” or “Material
Adverse Change,” in which case such representations and warranties (as so
written, including the term “material” or “Material Adverse Change” or “Material
Adverse Effect”) shall be true and correct in all respects at and as of the
Closing Date;

(ii) Sellers and Remy shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by the term “material,” or contain
terms such as “Material Adverse Effect” or “Material Adverse Change,” in which
case Sellers and Remy shall have performed and complied with all of such
covenants (as so written, including the term “material” or “Material Adverse
Change” or “Material Adverse Effect”) in all respects through the Closing;

(iii) Remy, Sellers and the Subsidiaries shall have procured all the material
consents specified on Exhibit O hereto (the “Material Consents”);

(iv) Remy, Sellers and the Subsidiaries shall have obtained and delivered to
Buyer evidence, which shall include written instruments satisfactory to Buyer,
that the Acquired Assets have been fully released from all Liens other than
Permitted Encumbrances, including but not limited to, all Liens and security
interests in the Acquired Assets that relate to any agreement or obligation set
forth on Exhibit V (the “Lien Releases”);

(v) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation; (C) materially adversely affect the right of Buyer to own the
Acquired Assets, to operate the Target Business, and to control the
Subsidiaries, or (D) materially adversely affect the right of any of the
Subsidiaries to own its assets and to operate its business (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);

 

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(vi) Sellers and Remy shall have delivered to Buyer a certificate to the effect
that each of the conditions specified above in Section 7(a)(i)-( v) has been
satisfied;

(vii) all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Act shall have expired or otherwise been terminated and
Sellers, the Subsidiaries, and Buyer shall have received all required
authorizations, consents, and approvals of governments and governmental
agencies;

(viii) the relevant Parties shall have entered into the Transaction Agreements
and the same shall be in full force and effect;

(ix) Buyer shall have received from counsel to Sellers and Remy the opinion
attached hereto as Exhibit P, addressed to Buyer, and dated as of the Closing
Date;

(x) Buyer shall have received the resignations, effective as of the Closing, of
each officer and each members committee member of Magnum, other than those
appointed at the direction of Navistar or whom Buyer shall have specified in
writing at least five (5) business days prior to the Closing, in the form
attached hereto as Exhibit N;

(xi) Sellers will have terminated the employment of all employees engaged in the
Target Business effective as of 11:59 p.m. on the Closing Date;

(xii) Sellers shall deliver to Buyer a non-foreign affidavit dated as of the
Closing Date, sworn under penalty of perjury and in form and substance required
under the Treasury Regulations issued pursuant to Code Section 1445 stating that
Sellers are not a “foreign person” as defined in Code Section 1445;

(xiii) all actions to be taken by Sellers and Remy in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Buyer;

(xiv) Buyer shall have obtained, no later than ten (10) days prior to the
Closing, Title Commitments for each Material Leased Real Property, issued by the
Title Company;

(xv) at Closing, Buyer shall have obtained Title Policies in accordance with the
Title Commitments, insuring Buyer’s legal, valid, binding and enforceable
leasehold interest in each Material Leased Real Property as of the Closing Date
(including all recorded appurtenant easements, insured as separate legal
parcels), with gap coverage from Sellers through the date of recording, subject
only to Permitted Encumbrances, in such amount as Buyer reasonably determine to
be the value of the Real Property insured thereunder, and Buyer shall pay all
fees, costs and expenses with respect to the Title Commitments and Title
Policies;

(xvi) Buyer shall have obtained, no later than ten (10) days prior to the
Closing, Surveys for each Material Leased Real Property, dated no earlier than
the date of this Agreement; the Surveys shall not disclose any encroachment from
or onto any of the Real Property or any portion thereof or any other survey
defect that has not been cured or insured over to Buyer’s reasonable
satisfaction prior to the Closing; and Buyer shall have paid or committed to pay
all fees, costs and expenses with respect to the Surveys;

 

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(xvii) Sellers and the Subsidiaries shall have obtained and delivered to Buyer
an estoppel certificate with respect to each Material Leased Property, dated no
more than thirty (30) days prior to the Closing Date, from the other party to
such Lease and/or Sublease, in form and substance satisfactory to Buyer;

(xviii) Sellers and the Subsidiaries shall have obtained and delivered to Buyer
a non-disturbance agreement with respect to each Material Leased Real Property,
in form and substance satisfactory to Buyer, from each lender encumbering any
real property underlying the Leased Real Property for such Lease or Sublease;

(xix) no damage or destruction or other change has occurred with respect to any
of the Real Property or any portion thereof that, individually or in the
aggregate, would materially impair the use or occupancy of the Real Property or
the operation of the Target Business as currently conducted thereon;

(xx) Sellers shall have delivered to Buyer copies of the certificate of
incorporation (or formation) of FPP, IFS and each of the Subsidiaries certified
on or within ten (10) days before the Closing Date by the Secretary of State (or
comparable officer) of the jurisdiction of each such Person’s incorporation (or
formation);

(xxi) Sellers shall have delivered to Buyer copies of the certificate of good
standing of FPP, IFS, and each of the Subsidiaries issued on or within ten
(10) days before the Closing Date by the Secretary of State (or comparable
officer) of the jurisdiction of each such Person’s organization and of each
jurisdiction in which each such Person is qualified to do business;

(xxii) Sellers shall have delivered to Buyer a certificate of the secretary or
an assistant secretary of FPP, IFS and each of the Subsidiaries, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer, as to:
(i) no amendments to the certificate of incorporation (or other formation) of
such Person since the date specified above; (ii) the bylaws (or other governing
documents) of such Person; (iii) the resolutions of the shareholder, board of
directors or other authorizing body (or a duly authorized committee thereof), as
applicable, of such Person party to this Agreement authorizing the execution,
delivery, and performance of this Agreement and the transactions contemplated
hereby; and (iv) incumbency and signatures of the officers of such Person party
to this Agreement executing this Agreement or any other agreement contemplated
by this Agreement;

(xxiii) [Intentionally Omitted];

(xxiv) Seller shall have provided to Buyer the Assignment and Assumption
Agreement, Estoppel and Consent substantially in the form attached hereto as
Exhibit S, executed by Navistar Aftermarket Products, Inc. and Navistar
International Transportation Corp.;

(xxv) Buyer shall have reviewed and approved the Final Disclosures pursuant to
Section 5(f)(ii);

(xxvi) Sellers will have provided (a) proof of filing with the Indiana
Department of Environmental Management a Notice of Intent to obtain a storm
water discharge permit, or a copy of the granted permit itself; (b) completed
Storm Water Pollution Prevention Plan

 

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(“SWPPP”) and Spill Prevention, Control and Countermeasures (“SPCC”) plan for
the Leased Real Property and facility located at 751 International Drive,
Franklin, Indiana, each of which must be signed by a licensed environmental
professional; (c) proof a hazardous waste Generator I.D. number from the U.S.
EPA, with respect to the sandblast stream generated at the Leased Real Property
at Toledo, Ohio, along with a copy of a contract between Sellers and a licensed
third-party waste hauler for removal and disposal of such waste stream;

(xxvii) Sellers shall have conducted a full physical inventory of all product
and component inventory after December 10, 2006 but prior to the Closing Date,
and as part of that physical inventory, Sellers shall have also performed a
lower of cost or market testing on all cores inventory, and at Buyer’s election,
Buyer’s representatives shall observe and perform test counts during the
physical inventory;

(xxviii) Sellers shall have revoked the powers of attorney related to Bank
Accounts and lockboxes used by the Target Business, shall have cancelled all
cash sweeps on the Bank Accounts and lockboxes, and shall have transferred all
ownership over the Bank Accounts and lockboxes to Buyer;

(xxix) Buyer shall have contracted for an insurance policy (the “Transaction
Insurance Policy”) providing for coverage of any and all claims or Losses that
would otherwise be made by Buyer pursuant to Sections 8(b)(i) (other than for
breaches of representations and warranties under Sections 3(o), 3(q) and 3(z)),
8(b)(iii) and 8(b)(iv).

(xxx) Buyer shall have contracted for an insurance policy (the “Environmental
Insurance Policy”) providing for coverage of any and all claims or Losses that
would otherwise be made by Buyer pursuant to Section 8(b)(i) for breaches of
representations and warranties under Section 3(z);

(xxxi) Sellers shall have provided to Buyer the FPP/Navistar Agreement re Magnum
Obligations, substantially in the form attached hereto as Exhibit D, executed by
Sellers, Navistar Aftermarket Products, Inc. and Navistar International
Transportation Corporation;

(xxxii) Buyer shall have received from Buyer’s valuation expert an executed
valuation opinion letter (the “Valuation Opinion Letter”), substantially in the
form attached hereto as Exhibit U; and

(xxxiii) Sellers shall have provided to Buyer the executed Factual Certificates
of (1) Brookwood Associates, LLC (2) the Chief Financial Officer of Seller’s
Parent, and (3) the Chief Executive Officer of Seller’s Parent; each in form and
substance reasonably satisfactory to Buyer.

Buyer may waive any condition specified in this Section 7(a) if it executes a
writing so stating at or prior to the Closing.

(b) Conditions to Sellers’ Obligation. Sellers’ obligation to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:

(i) the representations and warranties set forth in Section 4 shall be true and
correct in all material respects at and as of the Closing Date, except to the
extent that such representations and warranties are qualified by the term
“material,” or contain terms such as “Material Adverse Effect” or “Material
Adverse Change,” in which case such representations and warranties (as so
written, including the term “material” or “Material Adverse Effect” or “Material
Adverse Change”) shall be true and correct in all respects at and as of the
Closing Date;

 

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(ii) Buyer shall have performed and complied with all of its covenants hereunder
in all material respects through the Closing, except to the extent that such
covenants are qualified by the term “material,” or contain terms such as
“Material Adverse Effect” or “Material Adverse Change,” in which case Buyer
shall have performed and complied with all of such covenants (as so written,
including the term “material” or “Material Adverse Effect” or “Material Adverse
Change”) in all respects through the Closing;

(iii) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation;

(iv) Buyer shall have delivered to Sellers a certificate to the effect that each
of the conditions specified above in Section 7(b)(i)-(iii) is satisfied in all
respects;

(v) all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Act shall have expired or otherwise been terminated and
Sellers, the Subsidiaries, and Buyer shall have received all required
authorizations, consents and approvals of governments and governmental agencies;

(vi) the relevant Parties shall have entered into Transaction Agreements;

(vii) Sellers shall have received from counsel to Buyer an opinion in form
attached hereto as Exhibit Q, addressed to Sellers, and dated as of the Closing
Date;

(viii) Buyer shall have delivered to Sellers a copy of the certificate of
formation of Buyer on or within ten (10) days before the Closing Date by the
Secretary of State (or comparable officer) of the jurisdiction of Buyer’s
formation;

(ix) Buyer shall have delivered to Sellers a copy of the certificate of good
standing of Buyer issued on or within ten (10) days before the Closing Date by
the Secretary of State (or comparable officer) of the jurisdiction of Buyer’s
organization and of each jurisdiction in which Buyer is qualified to do
business;

(x) Buyer shall have delivered to Sellers a certificate of the Manager of Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to
Sellers, as to: (i) no amendments to the certificate of incorporation (or other
formation) of such Person since the date specified in clause (xxii) above;
(ii) the bylaws (or other governing documents) of such Person; and (iii) any
resolutions of the board of directors or other authorizing body (or a duly
authorized committee thereof) of such Person relating to this Agreement and the
transactions contemplated hereby;

(xi) Buyer shall have caused Buyer or one or more of its Affiliates to be
substituted in all respects for Sellers’ Parent (or the applicable Affiliate of
Sellers’ Parent) with respect to each of the guarantees set forth in
Section 7(b)(xi) of the Disclosure Schedule (the “Guarantees”) or in lieu
thereof, cause the beneficiary thereof to terminate the Guarantee;

 

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(xii) Sellers and the Subsidiaries shall have procured all Board, shareholder,
lender and other consents specified in Section 7(b)(xii) of the Disclosure
Schedule; and

(xiii) Buyer shall have purchased the Transaction Insurance Policy and the
Environmental Insurance Policy. The Transaction Insurance Policy will provide
coverage to the amount of the Cap and shall remain in effect for for the period
specified in Section 8(a)(iii) with respect to the representations set forth in
Section 3(k) and Section 3(x) and for twenty-four (24) months from the Closing
Date with respect to all other matters. The Environmental Insurance Policy will
provide ten million dollars ($10,000,000) in coverage and shall remain in effect
for the period specified in Section 8(a)(ii) with respect to representations set
forth in Section 3(z). The insurance companies issuing the Transaction Insurance
Policy and the Environmental Insurance Policy will be reasonably acceptable to
Sellers and shall have a minimum rating of A- by A.M. Best. Buyer shall provide
Sellers with a copies of the binder agreement with the Transaction Insurance
Company and the Environmental Insurance Company, including drafts of the
Transaction Insurance Policy and the Environmental Insurance Policy, five
(5) Business Days preceding the Closing and satisfaction of the condition set
forth in this Section 7 (b)(xiii) shall be subject to Sellers’ approval of such
binder agreements and draft policies, which approval shall not unreasonably be
withheld.

Sellers may waive any condition specified in this Section 7(b) if it executes a
writing so stating at or prior to the Closing.

SECTION 8 REMEDIES FOR BREACH OF THIS AGREEMENT; INDEMNITY

(a) Survival. The representations and warranties of the Parties contained herein
and in the Transaction Agreements shall survive the Closing for a period of
eighteen (18) months after the Closing Date; provided that (i) the
representations and warranties contained in Sections 3(a), 3(b), 3(c) and 3(e)
(the “Sellers’ Transaction Representations and Warranties”) shall survive in
perpetuity and not expire, (ii) the representations and warranties contained in
Section 3(z) shall survive until the date which is seven (7) years after the
Closing Date and (iii) the representations and warranties contained in Sections
3(k) and 3(x) and shall survive until the expiration of any applicable statute
of limitations plus sixty (60) days. Subject to the last sentence of
Section 8(e), neither Buyer nor Sellers shall have any liability with respect to
claims first asserted in connection with any representation or warranty after
the survival period specified therefor in this Section 8(a).

(b) Indemnification by Sellers. Subject to all limitations set forth in
Section 8(e), Sellers’ Parent and Sellers, jointly and severally, agree to
defend and indemnify the Buyer Indemnified Parties against, and to hold the
Buyer Indemnified Parties harmless from, any and all Losses incurred or suffered
by any of them arising out of or resulting from any of the following:

(i) any breach of or any inaccuracy in any representation or warranty made by
Sellers in this Agreement;

(ii) any breach of or failure by Sellers to perform any covenant or obligation
of Sellers set out in this Agreement;

(iii) any asset of the Sellers or any of their Affiliates that is not an
Acquired Asset;

(iv) any liability of Sellers or any of their Affiliates that is not an Assumed
Liability, or other than the Assumed Liabilities, any other obligations or
liabilities relating to or arising our of the ownership or operation of FPP,
IFS, any of the Subsidiaries, the Target Business or the Acquired Assets on
prior to the Closing Date;

 

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(v) all noncompliance with Environmental, Health and Safety Requirements,
including but not limited to all penalties and costs (including investigatory,
remediation and monitoring costs) related to use of Hazardous Materials or the
lack of required environmental Permits at any Owned Real Property or Leased Real
Property (to the extent such noncompliance or uses of Hazardous Materials
occurred prior to or on the Closing Date); and

(vi) any alleged violation of, or failure to comply with any provision of, or to
give any notice or make any filing pursuant to, any bulk-transfer provision of
any Law enacted by any state or other jurisdiction (collectively, the “Bulk
Sales Laws”), whether or not Buyer or Sellers attempt to comply with such Laws.

(c) Indemnification by Buyer. Buyer agrees to defend and indemnify the Seller
Indemnified Parties against, and to hold the Seller Indemnified Parties harmless
from, any and all Losses incurred or suffered by them arising out of or relating
to any of the following:

(i) any breach of or any inaccuracy in any representation or warranty made by
Buyer in this Agreement;

(ii) any breach of or failure by Buyer to perform any covenant or obligation of
Buyer set out in this Agreement;

(iii) except with respect to Liabilities expressly excluded herein, any
liability of Buyer relating to the Acquired Assets or the operation of the
Target Business arising out of or related to transactions entered into or events
occurring after the Closing; and

(iv) the Assumed Liabilities.

(d) No Materiality Qualifiers. For purposes of determining the amount of a Loss,
the representations and warranties in this Agreement shall be deemed to have
been made without qualification as to materiality and, accordingly, all
references in Sections 3 and 4 to “material”, “Material Adverse Effect”, “in all
material respects” and similar qualifications as to materiality shall be deemed
deleted for purposes of this Section 8.

(e) Limitations on Liability. Notwithstanding any other provision of this
Agreement:

(i) The Buyer Indemnified Parties shall have the right to payment by Sellers
under Section 8(b) only if and to the extent that the Buyer Indemnified Parties
shall have incurred indemnifiable Losses in excess of $3,000,000.00 (the
“Deductible”); provided, further, that the maximum aggregate obligation of
Sellers to the Buyer Indemnified Parties under this Section 8(e) shall not
exceed $20,000,000.00 (the “Cap”). Solely for purposes of determining whether
Buyer shall have incurred indemnifiable Losses in excess of the Deductible or
whether such Losses are in excess of the Cap, Losses indemnifiable under the
terms of the Outsourcing Asset Purchase Agreement shall be deemed to be Losses
indemnifiable under the terms of this Agreement. Notwithstanding anything to the
contrary herein, the limitations contained in the provisos above shall not apply
to (A) any indemnification for any Losses incurred by the Buyer Indemnified
Parties for any intentional misrepresentation or fraudulent breach of a
representation or warranty, (B) any indemnification for any Losses incurred by
the Buyer Indemnified Parties in connection with any Liability indemnified by
Sellers under Sections 8(b)(ii)-(vi), or (C) any indemnification for Losses
incurred by the Buyer Indemnified Parties in connection with any Liability for
breaches of any of the Sellers’ Transaction Representations and Warranties.

 

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(ii) Neither Buyer nor Sellers shall have any liability under this Agreement for
any breach of or inaccuracy in any representation or warranty in excess of the
Purchase Price in the aggregate.

(iii) The amount of any Loss for which indemnification is provided under
Section 8 shall be net of an amount equal to the Tax benefit actually realized,
if any, attributable to such Loss. If the amount to be netted hereunder from any
payment required under Section 8(b) or 8(c) is determined after payment by the
Indemnifying Party of any amount otherwise required to be paid to an Indemnified
Party pursuant to Section 8, the Indemnified Party shall repay to the
Indemnifying Party, promptly after such determination, any amount that the
Indemnifying Party would not have had to pay pursuant to this Section 8 had such
determination been made at the time of such payment.

(iv) Notwithstanding anything to the contrary contained in this Agreement, Buyer
shall reduce its claim for indemnification under Section 8 with respect to any
Losses or alleged Losses by the amount that the Buyer shall have received as a
result of a reduction in the Closing Net Investment reflected in the Closing
Financial Statements on account of any matter applicable to this Section 8
forming the basis for such Losses or alleged Losses.

(v) It is the parties’ intention that claims against the Transaction Insurance
Policy, and the Environmental Insurance Policy (as to breaches for
representations and warranties under Section 3(z) of this Agreement), shall be
the sole sources of payment with respect to indemnifiable Losses claimed by
Buyer under Section 8(b)(i) (other than for breaches of representations and
warranties under Sections 3(o), and 3(q)), 8(b)(iii) and (iv) of this Agreement.
Buyer shall provide Sellers with copies of the Transaction Insurance Policy and
the Environmental Insurance Policy as well as any and all amendments or
supplements thereto. In the event of a claim, Buyer shall provide Sellers with a
copy of all correspondence and documents with respect to the claim. In the event
that the Transaction Insurance Company or the Environmental Insurance Company
denies the claim, the Sellers shall remain obligated to indemnify Buyer with
respect to such Losses provided, however, that such obligation shall be
conditioned upon the Buyer’s diligent good faith and commercially reasonable
efforts to assert its claim under the Transaction Insurance Policy or the
Environmental Insurance Policy, respectively, and its exhaustion of all
procedures set forth in the Transaction Insurance Policy or the Environmental
Insurance Policy with respect to appeal of any denial of claim or reservation of
rights by the Transaction Insurance Company or the Environmental Insurance
Company, respectively. The parties shall cooperate in resolving any Loss with
respect to which the Transaction Insurance Company or the Environmental
Insurance Company has denied coverage, including the assignment of rights from
the Buyer to the Sellers upon request.

(vi) Notwithstanding anything contained herein or otherwise to the contrary,
including Sections 8(a), 8(e)(i), 8(e)(ii), and 8(e)(iii), nothing herein shall
be deemed to limit any Party’s rights to recover any or all Losses incurred or
suffered by it relating to or arising out of or in connection with fraud, it
being understood and agreed that the right to recover such Losses shall survive
forever; provided, however, in no event shall either Buyer or Sellers have any
liability for indemnification under Section 8 in excess of the Purchase Price in
the aggregate.

(vii) Notwithstanding anything contained herein or otherwise to the contrary,
Buyer may recover for a Loss related to an Assumed Liability only to the extent
that such Loss results from a breach of a representation or warranty by Sellers
or Remy hereunder, or to the extent such Loss results from the intentional
misrepresentation or fraud of Sellers or Remy.

 

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(f) Matters Involving Third Parties.

(i) If any third party notifies an Indemnified Party with respect to a
Third-Party Claim, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party is thereby prejudiced.

(ii) Any Indemnifying Party will have the right to defend the Indemnified Party
against the Third-Party Claim with counsel of its choice reasonably satisfactory
to the Indemnified Party so long as (A) the Indemnifying Party notifies the
Indemnified Party in writing within thirty (30) days after the Indemnified Party
has given notice of the Third-Party Claim (or sooner if such claim so requires)
that the Indemnifying Party will indemnify the Indemnified Party from and
against any and all Losses the Indemnified Party may suffer arising out of or
relating to the Third-Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend against
the Third-Party Claim and fulfill its indemnification obligations hereunder,
(C) the Third-Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse judgment
with respect to, the Third-Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice adverse
to the continuing business interests or the reputation of the Indemnified Party,
and (E) the Indemnifying Party conducts the defense of the Third-Party Claim
actively and diligently. This provision shall not apply to the extent that the
Transaction Insurance Company or the Environmental Insurance Company elects to
defend the Third Party Claim.

(iii) So long as the Indemnifying Party is conducting the defense of the
Third-Party Claim in accordance with Section 8(f)(ii), (A) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third-Party Claim, (B) the Indemnified Party will not consent
to the entry of any judgment on or enter into any settlement with respect to the
Third-Party Claim without the prior written consent of the Indemnifying Party
(not to be unreasonably withheld), and (C) the Indemnifying Party will not
consent to the entry of any judgment on or enter into any settlement with
respect to the Third-Party Claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld).

(iv) In the event any of the conditions in Section 8(f)(ii) is or becomes
unsatisfied (after notice to the Indemnifying Party and after the Indemnifying
Party’s failure to cure such conditions), (A) the Indemnified Party may defend
against, and consent to the entry of any judgment on or enter into any
settlement with respect to, the Third-Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third-Party Claim (including
attorneys’ fees and expenses), and (C) the Indemnifying Party will remain
responsible for any Losses the Indemnified Party may suffer arising out of or
relating to the Third-Party Claim to the fullest extent provided in this
Section 8.

(g) Limitation of Recourse. Except in any case involving actual fraud, the
rights of the Parties for indemnification relating to this Agreement or the
transactions contemplated hereby shall be strictly limited to those contained in
Section 8 hereof and such indemnification rights shall be the exclusive remedies
of the parties subsequent to the Closing Date with respect to any matter in any
way relating to this Agreement or arising in connection herewith.

 

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(h) Purchase Price Adjustments. To the extent permitted by Law, any amounts
payable under Section 8(b) or 8(c) shall be treated by Buyer and Sellers as an
adjustment to the Purchase Price.

SECTION 9 TERMINATION

(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:

(i) Buyer and Sellers may terminate this Agreement by mutual written consent at
any time prior to the Closing;

(ii) Buyer may terminate this Agreement by giving written notice to Sellers at
any time prior to the Closing:

(A) in the event Sellers have breached any material covenant, representation or
warranty contained in this Agreement in any material respect, Buyer has notified
Seller in writing of such breach, and the breach has continued without cure for
a period of fifteen (15) days after notice of such breach (which agreement of
Buyer that the breach has been cured shall not be unreasonably conditioned,
delayed or withheld);

(B) in the event Sellers have breached any material representation, warranty or
covenant contained in this Agreement in any material respect, Sellers have
notified Buyer in writing of such breach by way of providing an Interim
Disclosure, and the breach has continued without cure for a period of fifteen
(15) days after delivery of the Interim Disclosure (which agreement of Buyer
that the breach has been cured shall not be unreasonably conditioned, delayed or
withheld);

(C) in the event Sellers have breached any material representation, warranty or
covenant contained in this Agreement in any material respect, Sellers have
notified Buyer in writing of such breach by way of providing the Final
Disclosure, and the breach has continued without cure for a period of five
(5) days after providing the Final Disclosure (which agreement of Buyer that the
breach has been cured shall not be unreasonably conditioned, delayed or
withheld); or

(D) at any time on or after April 30, 2007 (the “Termination Date”) if the
Closing shall not have occurred on or before the Termination Date, by reason of
the failure of any condition precedent under Section 7(a) (unless the failure
results primarily from Buyer breaching any representation, warranty, or covenant
contained in this Agreement); and

(iii) Sellers may terminate this Agreement by giving written notice to Buyer at
any time prior to Closing:

(A ) in the event Buyer has breached any material covenant, representation or
warranty contained in this Agreement in any material respect, Sellers have
notified Buyer in writing of such breach, and the breach has continued without
cure for a period of fifteen (15) days after notice of such breach (which
agreement of Sellers that the breach has been cured shall not be unreasonably
conditioned, delayed or withheld); or

 

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(B) if the Closing shall not have occurred on or before the Termination Date, by
reason of the failure of any condition precedent under Section 7(b) (unless the
failure results primarily from Sellers breaching any representation, warranty,
or covenant contained in this Agreement).

(iv) Buyer or Sellers may terminate this Agreement on or after April 30, 2007,
if the Closing has not occurred for any reason on or before such date. Such
termination may be made by giving written notice to the other party.

(b) Effect of Termination. If any Party terminates this Agreement pursuant to
Section 9, all rights and obligations of the Parties hereunder shall terminate
without any Liability of any Party (except for any Liability of any Party then
in breach); provided, however, all obligations of the Parties under the
Confidentiality Agreement shall survive in accordance with its terms.

SECTION 10 MISCELLANEOUS

(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable Law or any listing or trading agreement concerning its
publicly traded securities (in which case the disclosing Party must first
provide to the other Parties the content of the proposed disclosure, after
consulting with the other party and its counsel as to the wording of such
disclosure, the reasons that such disclosure is required, and the time and place
that the disclosure will be made). The disclosing Party will use reasonable
efforts to obtain confidential treatment for such disclosure.

(b) No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties, and to the extent expressly set
forth herein, their Affiliates, the Buyer Indemnified Parties, the Seller
Indemnified Parties, and all of their respective successors and permitted
assigns.

(c) Entire Agreement. This Agreement, the Transaction Agreements, the
Confidentiality Agreement and any other documents referred to herein,
constitutes the entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter hereof.

(d) Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder and the
guaranty of Seller’s Parent contained on the signature page hereto shall remain
in full force and effect).

(e) Counterparts. This Agreement may be executed in one or more counterparts
(including by means of facsimile), each of which shall be deemed an original but
all of which together will constitute one and the same instrument. Facsimile
transmission of a counterpart hereto shall constitute an original hereof.

 

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(f) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

(g) Notices. Any notice, request, instruction or other document to be given
hereunder by a Party shall be in writing and shall be deemed to have been given
(i) when received if given in person or by courier or courier service, (ii) on
the date of transmission if sent by telex, facsimile, electronic mail or other
wire transmission (receipt confirmed) or (iii) three (3) Business Days after
being deposited in the mail, certified or registered, postage prepaid:

If to Buyer:

Caterpillar Reman Acquisition LLC

Caterpillar Inc. – Remanufacturing Services Division

100 N.E. Adams Street

Peoria, IL 61629

Attn: Vice President

Facsimile: (309) 675-9135

with a copy to:

Caterpillar Inc.

100 N.E. Adams St.

Peoria, Illinois 61629-9600

Attn: Deputy General Counsel

Facsimile: (309) 675-1795

If to Sellers:

Remy International, Inc.

World Headquarters

2902 Enterprise Drive Anderson, IN 46013

Attn: Chief Financial Officer

Facsimile: (765) 778-6760

With a copies to:

Remy International, Inc.

World Headquarters

2902 Enterprise Drive

Anderson, IN 46013

Attn: Legal Department

Facsimile: (765) 778-6760

 

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Ice Miller LLP

One American Square, Suite 3100

Indianapolis, IN 46282-0200

Attn: Steven K. Humke, Esq.

         Michelle M. Molin, Esq.

Facsimile: (317) 236-2219

or such other address as any Party may from time to time specify by notice to
the other Parties. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.

(h) Applicable Law; Choice of Forum. This Agreement shall be governed by and
construed and enforced in accordance with the domestic Laws of the State of
Illinois, United States of America, without giving effect to any choice or
conflict of Law provision or rule (whether the State of Illinois or any other
jurisdiction) that would cause the application of Laws of any jurisdiction other
than the State of Illinois, United States of America. The Parties agree that any
suit, action or proceeding brought by the Parties in connection with or arising
out of this Agreement shall be brought solely in the United States District
Court of the Northern District of Illinois or, if such court lacks jurisdiction,
in the Circuit Court of Peoria County, Illinois. Each Party consents to the
jurisdiction and venue of such court.

(i) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by Buyer and
Sellers. No waiver by any Party of any provision of this Agreement or any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver nor shall such waiver be deemed to extend
to any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such default, misrepresentation, or breach of warranty or
covenant.

(j) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.

(k) Expenses. Each of Buyer, the stockholders of Sellers, Sellers, and each
Subsidiary will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby; provided, however, that the stockholders of Sellers shall
also bear the costs and expenses of Sellers and the Subsidiaries (including all
of their legal fees and expenses) in connection with this Agreement and the
transactions contemplated hereby in the event that the transactions contemplated
by this Agreement are consummated. Buyer and Sellers shall share equally the fee
for any filing required under the Hart-Scott-Rodino Act. Each Party shall be
responsible for its own costs related to the Closing Financial Statements.

(l) Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or Law shall mean such statute or Law, as amended, codified, replaced, or
re-enacted, in whole or in part, and shall also be deemed to refer to all rules
and regulations promulgated thereunder, unless the context requires otherwise.
Unless the context requires otherwise, singular includes plural and vice versa
and any gender includes every gender, and where any word or phrase is given a
defined meaning, any other grammatical form of that word or phrase

 

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will have a correlative meaning. The word “including” shall mean including
without limitation. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with particularity and adequately
describes the relevant facts. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself). The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) that the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant. All references to “$”, “dollars” and
“Dollars” in this Agreement shall be references to United States dollars.

(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

(n) Specific Performance. Each Party acknowledges and agrees that the other
Party would be damaged irreparably in the event any provision of this Agreement
is not performed in accordance with its specific terms or otherwise is breached,
so that a Party shall be entitled to injunctive relief to prevent breaches of
this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in addition to any other remedy to which such Party may be
entitled, at Law or in equity. In particular, the Parties acknowledge that the
Target Business is unique and recognize and affirm that in the event Sellers
breach this Agreement, money damages would be inadequate and Buyer would have no
adequate remedy at Law, so that Buyer shall have the right, in addition to any
other rights and remedies existing in its favor, to enforce its rights and the
other Parties’ obligations hereunder not only by action for damages but also by
action for specific performance, injunctive, and/or other equitable relief.
Buyer shall not be required to post bond or any other security in connection
with any action for specific performance, injunctive, and/or other equitable
relief.

(o) Governing Language. This Agreement has been negotiated and executed by the
Parties in English. In the event any translation of this Agreement is prepared
for convenience or any other purpose, the provisions of the English version
shall prevail.

(p) Bulk Sales Laws. In the event any claim should be asserted against Buyer
relating to the Acquired Assets pursuant to any Bulk Sales Law, Buyer will,
within thirty (30) days receipt of such notice, furnish a copy thereof to
Sellers and tender the defense of such claim to Seller, which shall assume the
defense thereof and shall further indemnify Buyer from liability for any and all
such claims pursuant to Section 8 of this Agreement.

(q) Remittances. All remittances, payments, mail and other communications
relating to the Acquired Assets or the Assumed Liabilities received by Sellers
at any time after the Closing Date shall be promptly turned over to Buyer by
Sellers. All remittances, payments, mail and other communications relating to
any asset that is not an Acquired Asset or any liability that is not an Assumed
Liability received by Buyer at any time after the Closing Date shall be promptly
turned over to Sellers by Buyer.

[Remainder of Page Intentionally Blank]

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.

 

REMY INTERNATIONAL, INC.     INTERNATIONAL FUEL SYSTEMS, INC. By:   /S/ JOHN H.
WEBER     By:   /S/ CRAIG J. HART Title:   President & CEO     Title:  
Treasurer Name:   John H. Weber     Name:   Craig J. Hart

FRANKLIN POWER PRODUCTS, INC. By:   /S/ CRAIG J. HART Title:   Treasurer Name:  
Craig J. Hart CATERPILLAR REMAN ACQUISITION LLC By:   /S/ STEVEN L. FISHER
Title:   Manager Name:   Steven L. Fisher

[Signatures Continued on Following Page]

 

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IN WITNESS WHEREOF, Caterpillar Inc. unconditionally guarantees the full and
prompt payment and performance of all obligations and duties of Buyer under and
pursuant to this Agreement.

 

CATERPILLAR INC. By:   /S/ STEVEN L. FISHER Title:   Vice-President Name:  
Steven L. Fisher

IN WITNESS WHEREOF, Remy International, Inc., in addition to being a Party
hereto, unconditionally guarantees the full and prompt payment and performance
of all obligations and duties of Sellers and the Subsidiaries under and pursuant
to this Agreement.

 

REMY INTERNATIONAL, INC. By:   /S/ JOHN H. WEBER Title:   President & CEO Name:
  John H. Weber

 

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