<PAGE>
 
                                                                    EXHIBIT 10.1

                        DELCO REMY INTERNATIONAL, INC.

                                 $145,000,000
                         8-5/8% Senior Notes Due 2007
                                        

                            Underwriting Agreement


                                                              New York, New York
                                                               December 17, 1997

Salomon Brothers Inc
Credit Suisse First Boston Corporation
Morgan Stanley & Co. Incorporated
In care of Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048

Ladies and Gentlemen:

          Delco Remy International, Inc., a Delaware corporation (the
"Company"), proposes to sell to you (the "Underwriters") $145,000,000 principal
amount of its 8-5/8% Senior Notes Due 2007 (the "Notes") to be unconditionally
guaranteed on a senior basis (the "Guarantees" and, together with the Notes, the
"Securities") by each of the Company's subsidiaries that are signatories hereto,
together with Ballantrae Corporation ("Ballantrae") and Tractech Inc.
("Tractech") following the Company's acquisition of Ballantrae (each
individually a "Guarantor", and collectively the "Guarantors"). The Securities
are to be issued under an indenture to be dated as of December 22, 1997 (the
"Indenture"), among the Company, the Guarantors and United States Trust Company
of New York, as trustee (the "Trustee").

          1.   Representations and Warranties.  The Company and the Guarantors
               -------------------------------                                
jointly and severally represent and warrant to, and agree with, each Underwriter
as set forth below in this Section 1.  Certain terms used in this Section 1 are
defined in Section 17 hereof.

          (a)  The Company and the Guarantors have filed with the Securities and
     Exchange Commission (the "Commission") a registration statement (file
     number 
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                                                                               2

     333-37703) on Form S-1, including a related preliminary prospectus, for the
     registration under the Act of the offering and sale of the Securities. The
     Company may have filed one or more amendments thereto, including a related
     preliminary prospectus, each of which has previously been furnished to you.
     The Company and the Guarantors will next file with the Commission either
     (i) prior to the effectiveness of such registration statement, a further
     amendment to such registration statement (including the form of final
     prospectus) or (ii) after the effectiveness of such registration statement,
     a final prospectus in accordance with Rules 430A and 424(b)(1) or (4). In
     the case of clause (ii), the Company and the Guarantors have included in
     such registration statement, as amended at the Effective Date, all
     information (other than Rule 430A Information) required by the Act and the
     rules thereunder to be included in such registration statement and the
     Prospectus. As filed, such amendment and form of final prospectus, or such
     final prospectus, shall contain all Rule 430A Information, together with
     all other such required information, and, except to the extent the
     Underwriters shall agree in writing to a modification, shall be in all
     substantive respects in the form furnished to them prior to the Execution
     Time or, to the extent not completed at the Execution Time, shall contain
     only such specific additional information and other changes (beyond that
     contained in the latest Preliminary Prospectus) as the Company has advised
     the Underwriters, prior to the Execution Time, will be included or made
     therein.

          (b)  On the Effective Date, the Registration Statement did or will,
     and when the Prospectus is first filed (if required) in accordance with
     Rule 424(b) and on the Closing Date (as defined in Section 3), the
     Prospectus (and any supplements thereto) will, comply in all material
     respects with the applicable requirements of the Act and the Trust
     Indenture Act and the respective rules thereunder; on the Effective Date,
     the Registration Statement did not or will not contain any untrue statement
     of a material fact or omit to state any material fact required to be stated
     therein or necessary in order to make the statements therein not
     misleading; on the Effective Date and on the Closing Date, the Indenture
     did or will comply in all material
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                                                                               3

     respects with the applicable requirements of the Trust Indenture Act and
     the rules thereunder; and, on the Effective Date, the Prospectus, if not
     filed pursuant to Rule 424(b), will not, and on the date of any filing
     pursuant to Rule 424(b) and on the Closing Date, the Prospectus (together
     with any supplement thereto) will not, include any untrue statement of a
     material fact or omit to state a material fact necessary in order to make
     the statements therein, in the light of the circumstances under which they
     were made, not misleading; provided, however, that the Company and the
                                --------  -------
     Guarantors make no representations or warranties as to (i) that part of the
     Registration Statement which shall constitute the Statement of Eligibility
     and Qualification (Form T-1) under the Trust Indenture Act of the Trustee
     or (ii) the information contained in or omitted from the Registration
     Statement or the Prospectus (or any supplement thereto) in reliance upon
     and in conformity with information furnished in writing to the Company by
     or on behalf of the Underwriters specifically for inclusion in the
     Registration Statement or the Prospectus (or any supplement thereto), it
     being understood that the only such information is that described in
     Section 8(b).

          (c)  Neither the Company nor any Guarantor has taken, nor will it
     take, directly or indirectly, any action prohibited by Regulation M under
     the Exchange Act in connection with any offering of the Securities.

          (d)  Each of the Company and the Guarantors has full corporate power
     and authority to enter into and deliver this Agreement, the Indenture, the
     Securities and the fourth amended and restated financing agreement
     (together with all other documents and agreements entered into in
     connection therewith, the "Credit Agreement") relating to the Senior Credit
     Facility (as defined in the Prospectus) and to perform the actions
     contemplated hereby and thereby and to perform the other Transactions (as
     defined in the Prospectus). This Agreement has been duly authorized,
     executed and delivered by the Company and each Guarantor and constitutes a
     valid and binding obligation of the Company and each Guarantor. The
     execution and delivery of the Indenture, the Securities and the Credit
     Agreement have been duly authorized by the
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                                                                               4

     Company and each Guarantor party thereto and, when duly executed and
     delivered by the parties thereto, will constitute valid and binding
     obligations of the Company and each such Guarantor, enforceable against the
     Company and each such Guarantor in accordance with their respective terms,
     subject to applicable bankruptcy, insolvency, reorganization, moratorium
     and similar laws affecting creditors' rights and remedies generally and to
     general principles of equity (regardless of whether enforcement is sought
     in a proceeding at law or in equity).

          (e)  Upon execution and delivery of the Indenture, and when the Notes
     are issued, authenticated and delivered in accordance with the Indenture
     and paid for in accordance with the terms of this Agreement, (i) the Notes
     will constitute valid and binding obligations of the Company enforceable
     against the Company in accordance with their terms and entitled to the
     benefits of the Indenture and (ii) the Guarantees will constitute valid and
     binding obligations of the Guarantors enforceable against the Guarantors in
     accordance with their terms, in each case subject to applicable bankruptcy,
     insolvency, reorganization, moratorium and similar laws affecting
     creditors' rights and remedies generally and to general principles of
     equity (regardless of whether enforcement is sought in a proceeding at law
     or in equity).

          (f)  The execution, delivery and performance of this Agreement, the
     Indenture and the Credit Agreement by the Company and each Guarantor party
     thereto and the consummation of the actions contemplated hereby and thereby
     and of the other Transactions will not result in a breach or violation of
     any of the terms and provisions of, or constitute a default under, (i) the
     articles of incorporation, by-laws or other organizational documents of the
     Company or any of its subsidiaries, (ii) any material statute, rule or
     regulation applicable to the Company or any of its subsidiaries or any
     order of any court, regulatory body, administrative agency or other
     governmental body having jurisdiction over the Company or any of its
     subsidiaries or any of their respective properties, (iii) any agreement or
     instrument relating to borrowed money to which the Company or any of its
     subsidiaries is a party or by which the Company or any of its subsidiaries
     is bound or to which any of their respective properties is subject or (iv)
     any other material agreement or instrument to which the Company or any of
     its subsidiaries is a party or by which the Company or any of its
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                                                                               5

     subsidiaries is bound or to which any of their respective properties is
     subject. No consent, approval, authorization or other order of any court,
     regulatory body, administrative agency or other governmental body that has
     not already been obtained is required for the execution and delivery of
     this Agreement, the Indenture, the Securities, the Credit Agreement or the
     consummation of the actions contemplated hereby or thereby or of the other
     Transactions, except for compliance with the Act and state securities or
     blue sky laws. References in this Agreement to "subsidiaries" of the
     Company shall mean each person of which a majority of the voting equity
     securities or other interests is owned, directly or indirectly, by the
     Company, and as of the Closing Date, shall be deemed to include Ballantrae,
     Tractech and Kraftube, Inc., notwithstanding the fact that the Company may
     not have consummated its acquisition of Ballantrae prior to the Closing
     Date.

          (g)  Except as disclosed in the Prospectus, (i) there are no legal or
     governmental actions, suits or proceedings pending or, to the best of the
     Company's and the Guarantors' knowledge, threatened to which the Company or
     any of its subsidiaries is or is threatened to be made a party or of which
     property owned or leased by the Company or any of its subsidiaries is or is
     threatened to be made the subject, which actions, suits or proceedings
     could, individually or in the aggregate, have a material adverse effect on
     the condition (financial or otherwise), properties, business, results of
     operations or prospects of the Company and its subsidiaries, taken as a
     whole, or materially and adversely affect the ability of the Company or any
     of its subsidiaries to perform its obligations under this Agreement, the
     Indenture, the Securities or the Credit Agreement or to consummate the
     actions contemplated hereby or thereby or the other Transactions (in either
     case a "Material Adverse Effect"), and (ii) no labor disturbance by the
     employees of the Company or any of its subsidiaries exists or, to the best
     of the Company's and the Guarantors' knowledge, is imminent or 
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     threatened, in either case which could have a Material Adverse Effect.
     Neither the Company nor any of its subsidiaries is a party or subject to
     the provisions of any material injunction, judgment, decree or order of any
     court, regulatory body, administrative agency or other governmental body.

          (h)  Except as disclosed in or specifically contemplated by the
     Prospectus, the Company and its subsidiaries have sufficient trademarks,
     trade names, patent rights, copyrights, licenses, approvals and
     governmental authorizations to conduct their businesses as now conducted;
     the Company's and its subsidiaries' controlling persons, key employees and
     stockholders have all necessary permits, licenses and other authorizations
     required by applicable law for the Company and its subsidiaries to conduct
     their businesses as now conducted; and the expiration of any trademarks,
     trade names, patent rights, copyrights, licenses, approvals or governmental
     authorizations would not have a Material Adverse Effect.

          (i)  Except as disclosed in the Prospectus, the Company and its
     subsidiaries are conducting business in compliance with all applicable
     laws, rules and regulations of the jurisdictions in which they are
     conducting business, including, without limitation, all applicable local,
     state and federal environmental laws and regulations, except where the
     failure to be so in compliance would not have a Material Adverse Effect.

          (j)  Neither the Company nor any Guarantor is an "investment company"
     within the meaning of the Investment Company Act of 1940 (the "Investment
     Company Act"), without taking account of any exemption arising out of the
     number of holders of the Company's or such Guarantor's securities.

          (k)  Neither the Company nor any Guarantor has paid or agreed to pay
     to any person any compensation for soliciting another to purchase any
     securities of the Company or such Guarantor (except as contemplated by this
     Agreement).

          (l)  The Credit Agreement has been executed and delivered by the
     parties thereto and is in full force 
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                                                                               7

     and effect, and the Underwriters have received conformed counterparts of
     the Credit Agreement. There exists, and at and as of the Closing Date
     (after giving effect to the actions contemplated hereby and to the other
     Transactions) shall exist, no condition that would constitute a default (or
     an event that with notice or lapse of time, or both, would constitute a
     default) under the Senior Credit Facility.

          (m)  There are no contracts, agreements or understandings between the
     Company or any of its subsidiaries and any person granting such person the
     right to require the Company or any of its subsidiaries to file a
     registration statement under the Act with respect to any securities of the
     Company or any such subsidiary (except as described in the Prospectus
     (exclusive of any amendments or supplements thereto subsequent to the date
     of this Agreement)) or to require the Company or any of its subsidiaries to
     include such securities with the Securities registered pursuant to the
     Registration Statement.

          (n)  The Securities have been approved for listing on the New York
     Stock Exchange, subject to official notice of issuance.

     Any certificate signed by any officer of the Company or a Guarantor and
delivered to the Underwriters or counsel for the Underwriters in connection with
the offering of the Securities shall be deemed a representation and warranty by
the Company and the Guarantors to each Underwriter as to the matters covered
thereby.

          2.   Purchase and Sale.  Subject to the terms and conditions and in
               ------------------                                            
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 97.5% of the
principal amount thereof, plus accrued interest, if any, on the Securities from
December 22, 1997, to the Closing Date, the principal amount of the Securities
set forth opposite such Underwriter's name in Schedule I attached hereto.

          3.   Delivery and Payment.  Delivery of and payment for the Securities
               ---------------------                                            
shall be made at 10:00 AM, New York City 
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                                                                               8

time, on December 22, 1997, or at such time on such later date (not later than
December 30, 1997) as the Underwriters shall designate, which date and time may
be postponed by agreement between the Underwriters and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the respective accounts of the several Underwriters against
payment by the several Underwriters of the purchase price thereof to or upon the
order of the Company by wire transfer payable in same-day funds to an account
specified by the Company. Delivery of the Securities shall be made through the
facilities of The Depository Trust Company unless the Underwriters shall
otherwise reasonably designate at least one Business Day in advance of the
Closing Date.

          4.   Offering by Underwriters.  It is understood that the several
               -------------------------                                   
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.

          5.   Agreements.  The Company and the Guarantors jointly and severally
               -----------                                                      
agree with the several Underwriters that:

          (a)  The Company and the Guarantors will use their respective best
     efforts to cause the Registration Statement, if not effective at the
     Execution Time, and any amendment thereof, to become effective. Prior to
     the termination of the offering of the Securities, the Company and the
     Guarantors will not file any amendment of the Registration Statement or
     supplement to the Prospectus or any Rule 462(b) Registration Statement to
     which you reasonably object in writing within five Business Days after
     receipt of a copy of such proposed amendment, supplement or Rule 462(b)
     Registration Statement. Subject to the foregoing sentence, if the
     Registration Statement has become or becomes effective pursuant to Rule
     430A, or filing of the Prospectus is otherwise required under Rule 424(b),
     the Company and the Guarantors will cause the Prospectus, properly
     completed, and any supplement thereto to be filed with the Commission
     pursuant to the applicable paragraph of Rule 424(b) within the time period
     prescribed and will provide evidence satisfactory to the Underwriters of
     such timely filing. The Company will promptly advise
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                                                                               9

     the Underwriters (i) when the Registration Statement, if not effective at
     the Execution Time, and any amendment thereto, shall have become effective,
     (ii) when the Prospectus, and any supplement thereto, shall have been filed
     (if required) with the Commission pursuant to Rule 424(b) or when any Rule
     462(b) Registration Statement shall have been filed with the Commission,
     (iii) when, prior to termination of the offering of the Securities, any
     amendment to the Registration Statement shall have been filed or become
     effective, (iv) of any request by the Commission or its staff for any
     amendment of the Registration Statement, any Rule 462(b) Registration
     Statement or any supplement to the Prospectus or for any additional
     information, (v) of the issuance by the Commission of any stop order
     suspending the effectiveness of the Registration Statement or the
     institution or threatening of any proceeding for that purpose and (vi) of
     the receipt by the Company of any notification with respect to the
     suspension of the qualification of the Securities for sale in any
     jurisdiction or the initiation or threatening of any proceeding for such
     purpose. The Company and the Guarantors will use their respective best
     efforts to prevent the issuance of any such stop order or the suspension of
     any such qualification and, if issued, to obtain as soon as possible the
     withdrawal thereof.

          (b)  If, at any time when a prospectus relating to the Securities is
     required to be delivered under the Act, any event occurs as a result of
     which the Prospectus as then supplemented would include any untrue
     statement of a material fact or omit to state any material fact necessary
     to make the statements therein in the light of the circumstances under
     which they were made not misleading, or if it shall be necessary to amend
     the Registration Statement or supplement the Prospectus to comply with the
     Act or the rules thereunder, the Company and the Guarantors promptly will
     (i) prepare and file with the Commission, subject to the second sentence of
     paragraph (a) of this Section 5, an amendment or supplement which will
     correct such statement or omission or effect such compliance and (ii)
     supply any supplemented Prospectus to you in such quantities as you may
     reasonably request.
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                                                                              10

          (c)  As soon as practicable, the Company will make generally available
     to its security holders and to the Underwriters an earnings statement or
     statements of the Company and its subsidiaries that will satisfy the
     provisions of Section 11(a) of the Act and Rule 158 under the Act.

          (d)  The Company will furnish to the Underwriters and counsel for the
     Underwriters, without charge, signed copies of the Registration Statement
     (including exhibits thereto) and all correspondence to or from the
     Commission or its staff with respect to the Registration Statement and, so
     long as delivery of a prospectus by an Underwriter or dealer may be
     required by the Act, as many copies of each Preliminary Prospectus and the
     Prospectus and any supplement thereto as the Underwriters may reasonably
     request. The Company will pay the expenses of printing or other production
     of all documents relating to the offering of the Securities.

          (e)  The Company and the Guarantors will arrange for the qualification
     of the Securities for sale under the laws of such jurisdictions as the
     Underwriters may designate and will maintain such qualifications in effect
     so long as required for the distribution of the Securities; provided,
                                                                 -------- 
     however, neither the Company nor any Guarantor shall be required to qualify
     -------                                                                    
     to do business in any jurisdiction where it is not now so qualified, become
     subject to taxation where it is not now so subject, or to take any action
     which would subject it to general or unlimited service of process in any
     jurisdiction where it is not now so subject. Each of the Company and the
     Guarantors will promptly advise the Underwriters of the receipt by it of
     any notification with respect to the suspension of the qualification of the
     Securities for sale in any jurisdiction or the initiation or threatening of
     any proceeding for such purpose. The Company and the Guarantors will
     arrange for the determination of the legality of the Securities for
     purchase by institutional investors and will pay any fee of the National
     Association of Securities Dealers, Inc. in connection with its review of
     the offering of the Securities.
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                                                                              11

          (f)  The Company will not, for a period of 180 days following the
     Closing Date, offer, sell, contract to sell, grant an option to purchase or
     otherwise dispose of, directly or indirectly, or announce the offering of,
     or file a registration statement for, any debt securities issued or
     guaranteed by the Company or any Guarantor, or enter into any agreement to
     do any of the foregoing, without the prior written consent of Salomon
     Brothers Inc, other than (i) the offering of the Securities contemplated
     hereby, (ii) pursuant to the registration rights agreement for the
     Company's outstanding Senior Subordinated Notes (as defined in the
     Prospectus) or (iii) in connection with the negotiation, syndication or
     arrangement of the Senior Credit Facility.

          (g)  The Company and the Guarantors will use their best efforts in
     cooperation with the Underwriters to permit the Securities to be eligible
     for clearance and settlement through The Depository Trust Company.

          (h)  The Company will apply the net proceeds from the sale of the
     Securities sold by it, together with the net proceeds from the Equity
     Offering (as defined in the Prospectus), substantially in accordance with
     its statements under the caption "Use of Proceeds" in the Prospectus.

          (i)  Without limiting the other provisions of this Section 5 and
     elsewhere in this Agreement, on the Closing Date the Company shall file a
     post-effective amendment to the Registration Statement that registers the
     issuance on the Closing Date of the Guarantees by Ballantrae and Tractech.

          6.   Conditions to the Obligations of the Underwriters.  The
               --------------------------------------------------     
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company
and the Guarantors contained herein as of the Execution Time and the Closing
Date, to the accuracy of the statements of the Company and the Guarantors made
in any certificates pursuant to the provisions hereof, to the performance by the
Company and the Guarantors of their respective obligations hereunder and to the
following additional conditions:
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                                                                              12

          (a)  If the Registration Statement has not become effective prior to
     the Execution Time, unless the Underwriters agree in writing to a later
     time, the Registration Statement will become effective not later than (i)
     6:00 PM New York City time on the date of determination of the public
     offering price, if such determination occurred at or prior to 3:00 PM New
     York City time on such date or (ii) 9:30 AM on the Business Day following
     the day on which the public offering price was determined, if such
     determination occurred after 3:00 PM New York City time on such date; if
     filing of the Prospectus, or any supplement thereto, is required pursuant
     to Rule 424(b), the Prospectus, and any such supplement, will be filed in
     the manner and within the time period required by Rule 424(b); and no stop
     order suspending the effectiveness of the Registration Statement shall have
     been issued and no proceedings for that purpose shall have been instituted
     or threatened.

          (b)  The Company shall have furnished to the Underwriters the opinion
     of Dechert Price & Rhoads, counsel for the Company, dated the Closing Date,
     to the effect that:

               (i)  each of the Company and the Guarantors (other than the
          Relevant Subsidiaries (as hereinafter defined), the "Subject
          Guarantors") has been duly incorporated and is validly existing as a
          corporation in good standing under the laws of the jurisdiction in
          which it is chartered or organized, with full corporate power and
          corporate authority to own its properties and conduct its business as
          described in the Prospectus; and each of the Company and the
          Guarantors is duly qualified to do business as a foreign corporation
          and is in good standing under the laws of each jurisdiction set forth
          in a schedule to such opinion (which schedule shall identify, based
          solely on a certificate of an officer of the Company, each
          jurisdiction in which the Company or any Guarantor owns or leases
          material properties or conducts material business);

               (ii) all the outstanding shares of capital 
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                                                                              13

          stock of each Subject Guarantor have been duly and validly authorized
          and issued and are fully paid and nonassessable, and, except as
          otherwise set forth in the Prospectus, all outstanding shares of
          capital stock of the Guarantors are owned by the Company either
          directly or through wholly owned subsidiaries free and clear of any
          perfected security interest and, to the knowledge of such counsel,
          after due inquiry, any other security interests, claims, liens or
          encumbrances (other than the pledges of capital stock of the
          Guarantors pursuant to the Senior Credit Facility);

               (iii) the Company's authorized equity capitalization is as set
          forth in the Prospectus; the Securities conform to the description
          thereof contained in the Prospectus; and the Securities have been
          approved for listing on the New York Stock Exchange, subject to
          official notice of issuance;

               (iv)  the Indenture has been duly authorized, executed and
          delivered by the Company and each of the Subject Guarantors, has been
          duly qualified under and complies in all material respects with the
          requirements of the Trust Indenture Act and the rules and regulations
          of the Commission, and (assuming due authorization, execution and
          delivery thereof by the Trustee) constitutes a valid and legally
          binding instrument enforceable in accordance with its terms, subject
          to applicable bankruptcy, insolvency, reorganization, moratorium,
          fraudulent transfer and similar laws affecting creditors' rights and
          remedies generally and to general principles of equity (regardless of
          whether enforcement is sought in a proceeding at law or in equity);
          the Securities are in the form contemplated by the Indenture and have
          been duly authorized and executed by the Company and each Subject
          Guarantor and, upon the due authentication and delivery thereof by the
          Trustee pursuant to the Indenture, will be duly and validly issued and
          outstanding and will constitute valid and legally binding obligations
          entitled to the benefits of the Indenture and enforceable in
          accordance with
<PAGE>
 
                                                                              14

          their terms, subject to applicable bankruptcy, insolvency,
          reorganization, moratorium, fraudulent transfer and similar laws
          affecting creditors' rights and remedies generally and to general
          principles of equity (regardless of whether enforcement is sought in a
          proceeding at law or in equity);

               (v)   to the best knowledge of such counsel, there is no pending
          or threatened action or suit or judicial, arbitral or other
          administrative proceeding to which the Company or any of its
          subsidiaries is a party or of which any property or assets of the
          Company or any of its subsidiaries is the subject that, singly or in
          the aggregate, (A) questions the validity of this Agreement, the
          Indenture or the Credit Agreement or any action taken or to be taken
          pursuant hereto or thereto or pursuant to the other Transactions, or
          (B) if determined adversely to the Company or any of its subsidiaries,
          is reasonably likely to have a Material Adverse Effect, except as
          described in the Prospectus; and the summaries in the Registration
          Statement or the Prospectus, of statutes, legal and governmental
          proceedings and contracts and other documents accurately describe in
          all material respects the provisions purported to be so summarized;
          and the statements in the Prospectus under the caption "Description of
          Certain Federal Income Tax Consequences" accurately reflect in all
          material respects the United States tax consequences generally
          applicable to U.S. and Non-U.S. Holders (as such terms are defined in
          the Prospectus) (subject to the qualifications and assumptions set
          forth in such discussion and assuming the accuracy of the discussion
          in the Prospectus relating to the Company's business and activities);

               (vi)  the Registration Statement has become effective under the
          Act; any required filing of the Prospectus, and any supplements
          thereto, pursuant to Rule 424(b) has been made in the manner and
          within the time period required by Rule 424(b); to the best knowledge
          of such counsel, no stop order suspending the effectiveness of
<PAGE>
 
                                                                              15

          the Registration Statement has been issued and no proceedings for that
          purpose have been instituted or threatened; and the Registration
          Statement and the Prospectus (other than the financial statements and
          other financial information contained therein, as to which such
          counsel need express no opinion) comply as to form in all material
          respects with the applicable requirements of the Act and the Trust
          Indenture Act and the respective rules thereunder;

               (vii)  the Credit Agreement has been duly authorized, executed
          and delivered by the Company and each of the Subject Guarantors that
          is a party thereto, and constitutes a valid and legally binding
          agreement, enforceable in accordance with its terms subject to
          applicable bankruptcy, insolvency, reorganization, moratorium,
          fraudulent transfer and similar laws affecting creditors' rights and
          remedies generally and to general principles of equity (regardless of
          whether enforcement is sought in a proceeding at law or in equity);

              (viii)  this Agreement has been duly authorized, executed and
          delivered by the Company and each of the Subject Guarantors;

                (ix)  neither the Company nor any of its subsidiaries is, before
          or after the consummation of the actions contemplated by this
          Agreement, the Indenture, the Credit Agreement or the other
          Transactions, an "investment company" or a company "controlled" by an
          investment company within the meaning of the Investment Company Act
          and the rules and regulations of the Commission thereunder, without
          taking account of any exemption under the Investment Company Act
          arising out of the number of holders of the Company's securities;

                 (x)  no authorization, approval, consent or order of, or filing
          or registration with, any court, regulatory body, administrative
          agency or other governmental body is required for the execution,
          delivery and performance of this
<PAGE>
 
                                                                              16

          Agreement, the Indenture or the Credit Agreement or for the
          consummation of the actions contemplated hereby or thereby or of the
          other Transactions, except as contemplated by Section 5(e);

                (xi)  the execution, delivery and performance of this Agreement,
          the Indenture, the Securities and the Credit Agreement by the Company
          and each Guarantor party hereto or thereto and the consummation of the
          actions contemplated hereby or thereby and of the other Transactions
          will not result in a breach or violation of any of the terms and
          provisions of, or constitute a default under, (A) the articles of
          incorporation, by-laws or other organizational documents of the
          Company or any Subject Guarantor, (B) any material statute, rule or
          regulation applicable to the Company or any Guarantor or any order of
          any court, regulatory body, administrative agency or other
          governmental body having jurisdiction over the Company or any of its
          subsidiaries or any of their respective properties and which order is
          known to such counsel or (C) any agreement or instrument known to such
          counsel to which the Company or any of its subsidiaries is a party or
          by which the Company or any of its subsidiaries is bound or to which
          any of their respective properties is subject; and the Company and
          each of the Subject Guarantors that is a party thereto has full
          corporate power and corporate authority to execute and deliver this
          Agreement, the Indenture, the Securities and the Credit Agreement and
          to perform its respective obligations hereunder and thereunder and to
          consummate the other Transactions; and all corporate action required
          to be taken for the due and proper authorization, execution and
          delivery of this Agreement, the Indenture, the Securities and the
          Credit Agreement and the consummation of the actions contemplated
          hereby or thereby and of the other Transactions have been duly and
          validly taken; and

               (xii)  no holders of securities of the Company or any of its
          subsidiaries have rights to the registration of such securities under
          the
<PAGE>
 
                                                                              17

          Registration Statement.

     Such opinion may be limited to the laws of the United States of America,
     the States of New York and New Jersey and the Delaware General Corporation
     Law. In rendering such opinion, such counsel may rely as to matters of
     fact, to the extent they deem proper, on certificates of responsible
     officers of the Company and public officials. References to the Prospectus
     in this paragraph (b) include any supplements thereto at the Closing Date.

          Such counsel shall also state, in a separate letter, that, in the
     course of preparation by the Company of the Prospectus, such counsel has
     participated in conferences with directors, officers and other
     representatives of the Company, representatives of the independent public
     accountants for the Company, representatives of the Underwriters and
     representatives of counsel for the Underwriters, at which conferences the
     contents of the Prospectus and related matters were discussed and, although
     such counsel has not independently verified and is not passing upon and
     assumes no responsibility for the accuracy, completeness or fairness of the
     statements contained in the Prospectus (except as expressly provided
     above), and noting that they have relied as to materiality to a large
     extent upon the statements of directors, officers and other representatives
     of the Company, no facts have come to such counsel's attention which have
     caused such counsel to believe that at the Effective Date the Registration
     Statement contained an untrue statement of a material fact or omitted to
     state any material fact required to be stated therein or necessary in order
     to make the statements therein not misleading or that the Prospectus
     includes an untrue statement of a material fact or omits to state a
     material fact necessary in order to make the statements therein, in the
     light of the circumstances under which they were made, not misleading (it
     being understood that such counsel need express no view with respect to the
     financial statements and the notes related thereto and other financial and
     accounting data included in the Prospectus).

          (c) The Company shall have furnished to the 
<PAGE>
 
                                                                              18

     Underwriters the opinions of the following local counsels, or such other
     local counsels as shall be reasonably acceptable to the Underwriters: (1)
     Stephen Plopper & Associates, local counsel to Power Investments, Inc.,
     Franklin Power Products, Inc., International Fuel Systems, Inc. and Marine
     Corporation of America, each an Indiana corporation; (2) Young, Williams,
     Henderson & Fuselier, local counsel to the A&B Group, Inc., A&B
     Enterprises, Inc., Dalex, Inc., A&B Cores, Inc., R&L Tool Company, Inc. and
     MCA, Inc. of Mississippi, each a Mississippi corporation; (3) Porteous &
     White, local counsel to Nabco, Inc., a Michigan corporation; (4) Jenkens &
     Gilchrist, local counsel to Powrbilt Products, Inc., a Texas corporation;
     and (5) Hunton & Williams, local counsel to World Wide Automotive, Inc., a
     Virginia corporation (each such Guarantor, with respect to the applicable
     local counsel, a "Relevant Subsidiary"), each dated as of the Closing Date
     and to the effect that:

               (i)   each of the Relevant Subsidiaries has been duly
          incorporated and is validly existing as a corporation in good standing
          under the laws of the jurisdiction in which it is chartered or
          organized, with full corporate power and corporate authority to own
          its properties and conduct its business as described in the
          Prospectus;

               (ii)  all the outstanding shares of capital stock of each
          Relevant Subsidiary have been duly and validly authorized and issued
          and are fully paid and nonassessable;

               (iii) each of this Agreement, the Indenture and the Credit
          Agreement has been duly authorized, executed and delivered by each of
          the Relevant Subsidiaries that is a party hereto or thereto; and

               (iv)  the execution, delivery and performance of this Agreement,
          the Indenture and the Credit Agreement by each Relevant Subsidiary
          that is a party hereto or thereto and the consummation of the actions
          contemplated hereby or thereby and of the other Transactions will not
          result in a breach or violation of any of the terms and provisions
<PAGE>
 
                                                                              19

          of, or constitute a default under, the articles of incorporation, 
          by-laws or other organizational documents of the Relevant Subsidiary;
          each of the Relevant Subsidiaries that is a party hereto or thereto
          has full corporate power and corporate authority to execute and
          deliver this Agreement, the Indenture and the Credit Agreement and to
          perform its respective obligations hereunder and thereunder and to
          consummate the other Transactions; and all corporate action required
          to be taken by the Relevant Subsidiaries party hereto or thereto for
          the due and proper authorization, execution and delivery of this
          Agreement, the Indenture and the Credit Agreement and the consummation
          of the actions contemplated hereby or thereby and of the other
          Transactions have been duly and validly taken.

     In rendering such opinion, such counsel may rely (A) as to matters
     involving the application of laws of any jurisdiction other than the
     jurisdiction in which the Relevant Subsidiaries are chartered or organized
     or the United States, to the extent they deem proper and specified in such
     opinion, upon the opinion of other counsel who are satisfactory to counsel
     for the Underwriters, and (B) as to matters of fact, to the extent they
     deem proper, on certificates of responsible officers of the Relevant
     Subsidiaries and public officials. References to the Prospectus in this
     paragraph (d) include any supplements thereto at the Closing Date.

          (d)  The Underwriters shall have received from Cravath, Swaine &
     Moore, counsel for the Underwriters, such opinion or opinions, dated the
     Closing Date, with respect to the issuance and sale of the Securities, the
     Indenture, the Registration Statement, the Prospectus (together with any
     supplement thereto) and other related matters as the Underwriters may
     reasonably require, and the Company shall have furnished to such counsel
     such documents as they request for the purpose of enabling them to pass
     upon such matters.

          (e)  The Company shall have furnished to the Underwriters a
     certificate of the Company, signed by the Chairman of the Board or the
     President and the 
<PAGE>
 
                                                                              20


     principal financial or accounting officer of the Company, dated the Closing
     Date, to the effect that the signers of such certificate have carefully
     examined the Registration Statement, the Prospectus, any supplement to the
     Prospectus and this Agreement and that:

               (i)    the representations and warranties of the Company and the
          Guarantors in this Agreement are true and correct in all material
          respects on and as of the Closing Date with the same effect as if made
          on the Closing Date and the Company and the Guarantors have complied
          with all the agreements and satisfied all the conditions on their part
          to be performed or satisfied at or prior to the Closing Date;

               (ii)   no stop order suspending the effectiveness of the
          Registration Statement has been issued and no proceedings for that
          purpose have been instituted or, to the Company's knowledge, 
          threat ened; and

               (iii)  since the date of the most recent financial statements
          included in the Prospectus (exclusive of any supplement thereto),
          there has been no material adverse change in the condition (financial
          or other), earnings, business or properties of the Company and its
          subsidiaries, which is material to the Company and its subsidiaries
          taken as a whole, whether or not arising from transactions in the
          ordinary course of business, except as set forth in or contemplated in
          the Prospectus (exclusive of any supplement thereto).

          (f)  At the Execution Time and at the Closing Date, Ernst & Young LLP
     shall have furnished to the Underwriters a letter or letters, dated
     respectively as of the Execution Time and as of the Closing Date, in form
     and substance satisfactory to the Underwriters, stating in effect that:

               (i)    they are independent certified public accountants with
          respect to the Company, World Wide Automotive, Inc. ("World Wide"),
          the Tractech Division of Titan Wheel International, Inc. and
          Ballantrae, in each such case within the meaning
<PAGE>
 
                                                                              21

          of Rule 101 of the American Institute of Certified Public Accountants'
          Code of Professional Conduct and its interpretations and rulings;

               (ii)   in their opinion the audited consolidated financial
          statements included in the Prospectus and reported on by them comply
          in form in all material respects with the accounting requirements of
          the Act and the Exchange Act and the related published rules and
          regulations thereunder;

               (iii)  based upon a reading of the latest unaudited consolidated
          financial statements made available by the Company, the procedures of
          the American Institute of Certified Public Accountants for a review of
          interim financial information as described in Statement of Auditing
          Standards No. 71, reading of minutes and inquiries of certain
          officials of the Company who have responsibility for financial and
          accounting matters and certain other limited procedures requested by
          the Underwriters and described in detail in such letter, nothing has
          come to their attention that causes them to believe that:

                      (1)  any unaudited financial statements included in the
               Prospectus do not comply in form in all material respects with
               applicable accounting requirements and with the published rules
               and regulations of the Commission with respect to financial
               statements included or incorporated by reference in quarterly
               reports on Form 10-Q under the Exchange Act;

                      (2)  said unaudited financial statements are not in
               conformity with generally accepted accounting principles applied
               on a basis substantially consistent with that of the audited
               financial statements included in the Prospectus; or

                      (3)  the consolidated financial and other information
               included under the headings "Pro Forma Condensed Consolidated
               Financial Data", 
<PAGE>
 
                                                                              22

               "Selected Consolidated Historical Financial Data", "Prospectus
               Summary--Summary Consolidated Historical and Pro Forma Financial
               Data", "Management's Discussion and Analysis of Financial
               Condition and Results of Operations" and "Management" is not in
               conformity with the disclosure requirements of Regulation S-K
               under the Act;

               (iv)   based upon the procedures detailed in such letter with
          respect to the period subsequent to the date of the last available
          balance sheet, including the reading of minutes and inquiries of
          certain officials of the Company who have responsibility for financial
          and accounting matters, nothing has come to their attention that
          causes them to believe that:

                      (1)  at a specified date not more than five days prior to
               the date of the letter, there were any changes in the capital
               stock of the Company, increases in the long-term debt of the
               Company or decreases in the stockholders' equity or net current
               assets of the Company, in each case on a consolidated basis, as
               compared with the amounts shown in the October 31, 1997,
               unaudited consolidated balance sheet included in the Prospectus;
               or

                      (2)  for the period from October 31, 1997, to a specified
               date not more than five days prior to the date of the letter,
               there were any decreases, as compared with the corresponding
               period in the immediately preceding fiscal quarter, in net sales,
               income from continuing operations, net income or EBITDA (as
               defined under "Prospectus Summary" in the Prospectus), or
               increases in costs of goods sold, of the Company and its
               subsidiaries on a consolidated basis, except in all instances for
               increases or decreases that the Prospectus discloses have
               occurred or which are set forth in such letter, in which case the
               letter shall be accompanied by an explanation by the Company as
               to the significance thereof unless said explanation
<PAGE>
 
                                                                              23

               is not deemed necessary by the Underwriters;

               (v)  they have performed certain other specified procedures as a
          result of which they determined that certain information of an
          accounting, financial or statistical nature (which is limited to
          accounting, financial or statistical information derived from the
          general accounting records of the Company and its subsidiaries) set
          forth in the Prospectus agrees with the accounting records of the
          Company and its subsidiaries excluding any questions of legal
          interpretation; and

               (vi) on the basis of a reading of the unaudited pro forma
          financial statements included in the Prospectus (the "pro forma
          financial statements"); carrying out certain specified procedures;
          reading of minutes and inquiries of certain officials of the Company,
          World Wide, Tractech, Ballantrae and Kraftube who have responsibility
          for financial and accounting matters; and proving the arithmetic
          accuracy of the application of such pro forma adjustments to the
          historical amounts in the pro forma financial statements, nothing came
          to their attention which caused them to believe that the pro forma
          financial statements do not comply in form in all material respects
          with the applicable accounting requirements of Rule 11-02 of
          Regulation S-X or that the pro forma adjustments have not been
          properly applied to the historical amounts in the compilation of such
          statements.

          References to the Prospectus in this paragraph (f) include any
     amendment or supplement thereof or thereto at the date of the letter.

          (g)  Subsequent to the Execution Time or, if earlier, the dates as of
     which information is given in the Registration Statement (exclusive of any
     amendment thereof) and the Prospectus (exclusive of any supplement
     thereto), there shall not have been (i) any change, decrease or increase
     specified in the letter or letters referred to in paragraph (f) of this
     Section 6 or (ii) any change, or any development involving a
<PAGE>
 
                                                                              24

     prospective change, in or affecting the business or properties of the
     Company and its subsidiaries the effect of which, in any case referred to
     in clause (i) or (ii) above, is, in the judgment of the Underwriters, so
     material and adverse as to make it impractical or inadvisable to proceed
     with the offering or delivery of the Securities as contemplated by the
     Registration Statement (exclusive of any amendment thereof) and the
     Prospectus (exclusive of any supplement thereto).

          (h)  Subsequent to the Execution Time, there shall not have been (i)
     any decrease in the rating of the Securities or any of the Company's or any
     Guarantor's other debt securities by any "nationally recognized statistical
     rating organization" (as defined for purposes of Rule 436(g) under the Act)
     or (ii) any notice given of any intended or potential decrease in any such
     rating or that such organization has under surveillance or review (other
     than any such notice with positive implications of a possible upgrading)
     its rating of the Securities or any of the Company's or any Guarantor's
     other debt securities.

          (i)  The Equity Offering (as defined in the Prospectus), the Company's
     acquisition of Ballantrae and each of the other Transactions shall have
     been consummated on the terms described in the Prospectus.

          (j)  World Wide and Power Investments, Inc. shall have been
     recapitalized so that all of their respective voting interests are owned by
     the Company.

          (k)  All conditions precedent to the obligations of the lenders to
     extend loans and issue letters of credit under the Credit Agreement shall
     have been fully satisfied or waived.

          (l)  Prior to the Closing Date, the Company shall have furnished to
     the Underwriters such further information, certificates and documents as
     the Underwriters may reasonably request.

          If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere
<PAGE>
 
                                                                              25

in this Agreement shall not be in all material respects reasonably satisfactory
in form and substance to the Underwriters and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancelation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.

          The documents required to be delivered by this Section 6 shall be
delivered at the office of Dechert, Price & Rhoads, counsel for the Company, at
30 Rockefeller Plaza, New York, New York, on the Closing Date.

          7.   Reimbursement of Underwriters' Expenses.  If the sale of the
               ----------------------------------------                    
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company or any Guarantor to
perform any agreement herein or comply with any provision hereof in each case
other than by reason of a default by any of the Underwriters, the Company and
the Guarantors jointly and severally will reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.

          8.   Indemnification and Contribution.  (a)  The Company and the
               ---------------------------------                          
Guarantors jointly and severally agree to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement for the registration of the
Securities as originally filed or in any amendment thereof, or in any
<PAGE>
 
                                                                              26

Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that neither
                                               --------  -------              
the Company nor any Guarantor will be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Underwriters
specifically for inclusion therein, it being understood that the only such
information is that described in Section 8(b); and provided further, however,
                                                   -------- -------  ------- 
that such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of the Underwriter (or any of the directors, officers, employees
and agents of such Underwriter or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
the Securities which are the subject thereof if such person did not receive a
copy of the Prospectus at or prior to the confirmation of the sale of such
Securities to such person in any case where such delivery is required by the Act
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus included in the Registration Statement at the time
it was declared effective by the Commission and it is finally judicially
determined that such delivery was required to be made under the Act and was not
so made.

          (b)  The Underwriters severally and not jointly agree to indemnify and
hold harmless each of the Company and the Guarantors, each of their respective
directors, each of their respective officers who sign the Registration Statement
and each person who controls the Company or any Guarantor within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company and the Guarantors to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such
<PAGE>
 
                                                                              27

Underwriter specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company and the
Guarantors acknowledge that the statements set forth in the last paragraph of
the cover page, the second paragraph on page three and under the heading
"Underwriting" in any Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the registration statement for the registration of
the Securities, any Preliminary Prospectus, the Prospectus or any amendment
thereof or supplement thereto.

          (c)  Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above.  The indemnifying party shall be entitled to appoint
as counsel one firm of attorneys of the indemnifying party's choice at the
indemnifying party's expense, which counsel, together with one local counsel in
each jurisdiction, shall act on behalf of all the indemnified parties in any
action for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except as set
forth below); provided, however, that such counsel shall be satisfactory to the
              --------  -------                                                
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel, if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would
<PAGE>
 
                                                                              28

present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.

          (d)  In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Guarantors on the one hand
and the Underwriters on the other hand agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending the same)
(collectively "Losses") to which the Company and the Guarantors or one or more
of the Underwriters, as applicable, may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors or by the Underwriters, as applicable, from the offering of the
Securities; provided,
            --------
<PAGE>
 
                                                                              29

however, that in no case shall any Underwriter be responsible for any amount in
-------
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Guarantors on the one hand and the Underwriters on the other hand shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Guarantors
or of the Underwriters, as applicable, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Guarantors shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Underwriters shall be deemed to be equal
to the total underwriting discounts and commissions, in each case as set forth
on the cover page of the Prospectus. Relative fault shall be determined by
reference to whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information provided by the Company or any Guarantor on the one hand or the
Underwriters on the other hand. The Company, the Guarantors and the Underwriters
agree that it would not be just and equitable if contribution were determined
by pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of an Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls the
Company or any Guarantor within the meaning of either the Act or the Exchange
Act, each officer of the Company or any Guarantor who shall have signed the
Registration Statement and each director of the Company or any Guarantor shall
have the same rights to contribution as the Company and the Guarantors, subject
in each case to the applicable terms and conditions of this paragraph (d).

          9.   Default by an Underwriter.  If any one or more 
               -------------------------
<PAGE>
 
                                                                              30

Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
principal amount of Securities set forth opposite their names in Schedule I
attached hereto bears to the aggregate principal amount of Securities set forth
opposite the names of all the remaining Underwriters) the Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
                                                                      --------
however, that in the event that the aggregate principal amount of Securities
-------
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Company or any Guarantor. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date shall be postponed for such period,
not exceeding five Business Days, as the Underwriters shall determine in order
that the required changes in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.

          10.  Termination.  This Agreement shall be subject to termination in
               ------------                                                   
the absolute discretion of the Underwriters, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in securities generally on the New York Stock Exchange or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") shall
have been suspended or limited or minimum prices shall have been established on
either of such Exchange or NASDAQ, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or
<PAGE>
 
                                                                              31

war or other calamity or crisis the effect of which on financial markets is such
as to make it, in the sole judgment of the Underwriters, impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Prospectus (exclusive of any supplement thereto).

          11.  Representations and Indemnities to Survive. The respective
               -------------------------------------------               
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.

          12.  Notices.  All communications hereunder will be in writing and
               --------                                                     
effective only on receipt, and, if sent to the Underwriters, will be mailed,
delivered or sent by fax (212-783-2274) and confirmed to them in care of Salomon
Brothers Inc, Seven World Trade Center, New York, New York, 10048; or, if sent
to the Company or any Guarantor, will be mailed, delivered or sent by fax (765-
778-6424) and confirmed to it, in care of Delco Remy International, Inc., 2902
Enterprise Drive, Anderson, Indiana 46013, Attention: Chief Financial Officer,
with a copy mailed, delivered or sent by fax (215-994-2222) and confirmed to
Christopher G. Karras, Esq., Dechert Price & Rhoads, 4000 Bell Atlantic Tower,
1717 Arch Street, Philadelphia, Pennsylvania 19103.

          13.  Successors.  This Agreement will inure to the benefit of and be
               -----------                                                    
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.

          14.  APPLICABLE LAW.  THIS AGREEMENT WILL BE GOVERNED BY AND
               ---------------                                         
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO THE CONFLICT OF LAW PROVISIONS THEREOF).

          15.  Counterparts.  This Agreement may be signed 
               ------------
<PAGE>
 
                                                                              32

in one or more counterparts, each of which shall constitute an original and all
of which together shall constitute one and the same agreement.

          16.  Headings.  The Section headings used herein are for convenience
               ---------                                                      
only and shall not affect the construction hereof.

          17.  Definitions.  The terms which follow, when used in this
               ------------                                           
Agreement, shall have the meanings indicated.

          "Act" shall mean the Securities Act of 1933.

          "Business Day" shall mean any day other than a Saturday, a Sunday or a
     federal legal holiday.

          "Effective Date" shall mean each date and time that the Registration
     Statement, any post-effective amendment or amendments thereto and any Rule
     462(b) Registration Statement became or become effective.

          "Exchange Act" shall mean the Securities Exchange Act of 1934.

          "Execution Time" shall mean the date and time that this Agreement is
     executed and delivered by the parties hereto.

          "Preliminary Prospectus" shall mean any preliminary prospectus
     referred to in Section 1(a) above and any preliminary prospectus included
     in the Registration Statement at the Effective Date that omits Rule 430A
     Information.

          "Prospectus" shall mean the prospectus relating to the Securities that
     is first filed pursuant to Rule 424(b) after the Execution Time or, if no
     filing pursuant to Rule 424(b) is required, shall mean the form of final
     prospectus relating to the Securities included in the Registration
     Statement at the Effective Date.

          "Registration Statement" shall mean the registration statement
     referred to in Section 1(a) above, including exhibits and financial
     statements, as amended at the Execution Time (or, if not effective at the
<PAGE>
 
                                                                              33

     Execution Time, in the form in which it shall become effective) and, in the
     event any post-effective amendment thereto or any Rule 462(b) Registration
     Statement becomes effective prior to the Closing Date, shall also mean such
     registration statement as so amended or such Rule 462(b) Registration
     Statement, as the case may be. Such term shall include any Rule 430A
     Information deemed to be included therein at the Effective Date as provided
     by Rule 430A.

          "Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
     Act.

          "Rule 430A Information" shall mean information with respect to the
     Securities and the offering thereof permitted to be omitted from the
     Registration Statement when it becomes effective pursuant to Rule 430A.

          "Rule 462(b) Registration Statement" shall mean a registration
     statement and any amendments thereto filed pursuant to Rule 462(b) relating
     to the offering covered by the initial registration statement.

          "Trust Indenture Act" shall mean the Trust Indenture Act of 1939.
<PAGE>
 
                                                                              34

          If the foregoing is in accordance with your under  standing of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Guarantors and the several Underwriters.


                                             Very truly yours,

                                             DELCO REMY INTERNATIONAL, INC.,

                                              by
 
                                                Name:  Thomas J. Snyder
                                                Title: President


                                             SUBSIDIARY GUARANTORS:

                                             DELCO REMY AMERICA, INC.,

                                              by
 
                                                Name:  Thomas J. Snyder
                                                Title: President

                                             REMY INTERNATIONAL, INC.,

                                              by
 
                                                Name:  Thomas J. Snyder
                                                Title: President

                                             REMAN HOLDINGS, INC.,

                                              by
 
                                                Name:  Thomas J. Snyder
                                                Title: President

                                             NABCO, INC.,

                                              by
 
<PAGE>
 
                                                                              35


                                                Name:  David L. Harbert
                                                Title: Vice President

                                             THE A&B GROUP, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President

                                             A&B ENTERPRISES, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President


                                             DALEX, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President

                                             A&B CORES, INC.,

                                              by

                                                Name:  David L. Harbert
                                                Title: Vice President


                                             R&L TOOL COMPANY, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President

                                             MCA, INC. OF MISSISSIPPI,
<PAGE>
 
                                                                              36

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President

                                             POWER INVESTMENTS, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President


                                             FRANKLIN POWER PRODUCTS, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President

                                             INTERNATIONAL FUEL SYSTEMS, 
                                             INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President

                                             MARINE DRIVE SYSTEMS, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President


                                             MARINE CORPORATION OF AMERICA,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President
<PAGE>
 
                                                                              37

                                             POWRBILT PRODUCTS, INC.,

                                              by
 
                                                Name:  David L. Harbert
                                                Title: Vice President


                                             WORLDWIDE AUTOMOTIVE, INC.,

                                              by
                                                                   ---
                                                Name:  David L. Harbert
                                                Title: Vice President

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

SALOMON BROTHERS INC
CREDIT SUISSE FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED

by SALOMON BROTHERS INC,

  by
   ____________________________
   Name:
   Title:
<PAGE>
 
                                                                              38


                                  SCHEDULE I

<TABLE>
<CAPTION>
Underwriters                                            Principal Amount
------------                                            of Securities to
                                                          be Purchased
                                                       -----------------
<S>                                                    <C>
Salomon Brothers Inc...................................     $ 87,000,000
Credit Suisse First Boston Corporation.................       29,000,000
Morgan Stanley & Co. Incorporated......................       29,000,000
                                                            ------------
          Total........................................     $145,000,000
                                                            ============
</TABLE>