MILACRON, INC.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes þ No o

The aggregate market value of voting stock held by non-affiliates of the registrant was $104,469,158 at June 30, 2003.

*Voting stock held by officers, directors and principal holders is not included in the computation. The company, however, has not made a determination that such individuals are “affiliates” within the meaning of Rule 405 under the Securities Act of 1933.

Number of shares of Common Stock, $1.00 par value, outstanding as of March 1, 2004: 34,877,937

Milacron is a global company focused primarily on manufacturing and selling plastics processing equipment and supplies. We also blend and sell industrial fluids for metalworking applications on a worldwide basis. We operate four business segments:


	•	Machinery technologies — North America

	•	Machinery technologies — Europe

	•	Mold technologies

	•	Industrial fluids

Our first three segments provide plastics processors with a broad range of technologically advanced products and services — machinery, tooling, parts and applications expertise — required for today’s plastics processing techniques. Our fourth segment is a leading supplier of industrial fluids with unique formulations that meet many stringent performance, health and safety requirements in a wide variety of metalworking applications.

Starting out in the 1860s as a screw and tap maker in a small shop in downtown Cincinnati, the company was first incorporated in 1884. As a successor to that business, Milacron was most recently incorporated in Delaware in 1983. Known throughout most of our history as a leading machine tool maker serving metalworking industries, in the late 1990s we divested this business and in the past five years divested our metalcutting carbide insert and round tool businesses in order to focus exclusively on plastics technologies and industrial fluids.

Accounting for 86% of consolidated sales from continuing operations in 2003, our plastics technologies segments manufacture and sell equipment and turnkey systems for the three most common methods of processing plastic — injection molding, extrusion and blow molding — as well as related mold tooling and components, MRO (maintenance, repair and operating) supplies and value-added services for these same methods. Major global markets for our plastics technologies include packaging, automotive, building materials, components, consumer goods, housewares, medical, electrical and electronics.

In our industrial fluids segment, representing 14% of total sales from continuing operations, we develop, manufacture and sell coolants, lubricants, process cleaners, corrosion inhibitors and provide related value-added services to a variety of metalworking industries. Major global markets for our industrial fluids include automotive, industrial components, machinery, off-road equipment, appliances and housewares, aerospace, oil and primary metals.

In the late 1990s, Milacron benefited from a strong economy with high levels of sales and growing profitability. Strategic acquisitions allowed us to grow our core businesses faster than the general economy. Beginning in the second half of 2000 through the third quarter of 2003, Milacron experienced the most severe and prolonged downturn in the North American manufacturing sector since the 1930s. During this recession in North America, with both European and Asian markets also in decline, our global plastics technologies sales fell 30%, resulting in a 95% decrease in operating earnings. We responded quickly and dramatically, but despite our significant cost-cutting initiatives, the unprecedented industry slump had a major negative impact on our financial results and significantly impaired our liquidity and access to capital. For the 12 months ended December 31, 2003, Milacron generated consolidated sales of $740 million and a consolidated net loss of approximately $192 million.

Beginning in September 2003 and continuing through the end of the year, we began to see increases in plastic part production and in capacity utilization of plastics processors. Historically, a pickup in demand for machinery typically begins after two or three quarters of growth in production and utilization rates. So, while demand for our capital equipment remains at depressed levels at the beginning of 2004, there are signs of an

We maintain an Internet website at www.milacron.com. Our site provides company, product and service information, including our annual report and other filings, as well as our latest earnings and news releases, stock information, investor presentations and conference calls. The information contained on our website is not incorporated by reference in this report.

On March 12, 2004, we entered into two new financing arrangements to repay our 8 3/8% Notes due March 15, 2004, the outstanding debt under our revolving credit facility which was terminated on March 12, 2004, and our obligations under our receivables purchase agreement which was terminated on March 12, 2004 (see Liquidity and Sources of Capital — Refinancing Actions on page 35 and Subsequent Events on page 77.)

Milacron has made a number of key acquisitions and divestitures designed to strengthen our core businesses — plastics technologies and industrial fluids — on a global basis. In the last five years we have made seven acquisitions in plastics technologies and two in industrial fluids. During this time we have also divested six businesses, most of them metalworking product lines. In plastics, we have diversified into durable goods and consumable products, which are less sensitive to economic cycles and generally have higher margins than capital goods. In 2003, capital goods accounted for 41% of our plastics sales, compared to 69% in 1992. Through recent acquisitions we have also expanded our industrial fluids to include process cleaners and products for metalforming and heat treating.

Due to exceptionally weak business conditions we made no significant acquisitions in 2002 or 2003. Additions to our continuing operations in the last five years have been:

Milacron is committed to growing profitability in each of our business segments and we will seek to divest any operation or product line that is not critical to our core businesses or not likely to meet our growth targets. In 2002, we sold our large metalcutting carbide insert businesses in North America, Europe and Asia, and our

round metalcutting tool business in Germany. In 2003, we sold our North American round metalcutting tool businesses and continued to seek strategic alternatives for our grinding wheels business.

In the normal course of business, and especially during a prolonged period of depressed manufacturing activity in many world markets, we aggressively seek opportunities to reduce our cost structure and increase our overall efficiency and responsiveness to our customers.

Milacron’s cost reduction program in North America and Europe over the past three years has entailed closing nine manufacturing plants and eliminating approximately 1,200 manufacturing and administrative positions worldwide, while generating an annualized cost savings of $69 million.

In 2002, we consolidated the manufacture of our North American container blow molding and structural foam machines and our mold technologies manufacturing and support in North America. For these consolidations, substantially completed in 2003, Milacron recorded total pretax charges of $8.7 million and estimates annualized pretax cost savings in excess of $5 million. We took about half of these charges in 2002 and realized most of the annual cost savings in 2003. Cash costs for these initiatives were $3.6 million, most of which was spent in 2003. In 2003, we also completed the consolidation of our European mold technologies operations in Europe that had begun late in 2001. These actions resulted in the elimination of approximately 230 additional positions and expense of $9.8 million. Cash costs were $9.0 million over the three year period and the annualized savings will exceed $5 million.

In 2003, we initiated additional actions intended to further reduce our cost structure and improve operating efficiency and customer service. These actions included the further restructuring of our European blow molding operations and the discontinuation of certain of its lines and the closure of an additional mold technologies plant in Europe. In the third quarter we began to implement additional overhead cost reductions in each of our plastics technologies segments and at the corporate office. These actions involve the relocation of production, voluntary early retirement programs, the reorganization of our sales structure and general overhead reductions, and the elimination of an additional 300 positions in North America and Europe. In 2003 we charged $11.2 million to expense for these actions and spent $3.4 million in cash. Approximately $4 million of cash will be spent in 2004. The annualized cost savings are expected to be $20 million.

Milacron is committed to better serving our customers and to improving our competitive advantage through the implementation of Lean and Six Sigma processes. Since adopting these processes in mid-2001 as part of our total quality leadership business philosophy, over 40% of our employees have received Lean/ Six Sigma training and hundreds of cross-functional teams have solved problems and improved process efficiency. The goal of these efforts is to shorten customer response times and increase cash flow while reducing our overall working capital requirements.

We emphasize efficient investment in research and development and in new capital equipment to support rapid new product introductions, enhance our global competitive position and achieve sales growth. In 2003, we focused our investment on customer-driven development. To these ends we invested $17.8 million, or 2.4% of sales, in R&D in 2003, compared to $15.8 million, or 2.3% of sales, in 2002.

Milacron holds a number of patents pertaining to both plastics technologies and industrial fluids, none of which are material to their respective business segments.

The average number of employees from continuing operations at Milacron was 3,760 people in 2003. Of these, half were outside the U.S. As of year-end 2003, our employment from continuing operations was about 3,500 people.

Segment and geographic information for the years ended December 31, 2003, 2002 and 2001 is included in the notes to Milacron’s consolidated financial statements on pages 40 through 80 of this Form 10-K.

Products and Services. We believe Milacron is the world’s broadest-line supplier of machinery, mold bases and related tooling, supplies and services to process plastics. With combined 2003 sales of $636 million, our plastics technologies businesses are organized in three segments:


	•	Injection molding systems, parts and services supplied from North America and India

	•	Blow molding systems, parts, molds and services supplied from North America

	•	Extrusion systems, parts and services supplied from North America


	•	Injection molding systems, parts and services supplied from Europe.

	•	Blow molding systems, parts, molds and services supplied from Europe


	•	Injection mold bases, related components/tooling and services worldwide

	•	MRO — aftermarket parts and supplies worldwide

Milacron strives to be a one-stop source for the needs of plastics processors. We offer full lines of advanced injection molding, extrusion and blow molding equipment and systems, and specialty auxiliary equipment for all types of plastics processing, as well as of supplies and replacement parts. To maximize productivity and profitability, customers count on Milacron’s technology innovations, value-added services and comprehensive applications expertise. Milacron is also a leading maker and supplier of mold bases and related tooling, components and supplies for the injection mold-making industry, and we make complete molds for blow molding. We are also a supplier of aftermarket MRO items for plastics processing, and we provide retrofit and rebuild services for older equipment manufactured by Milacron and others.

Injection molding is a very versatile process that is used to make a wide variety of plastic products, ranging from auto components, toothbrushes and computer devices to mobile phones, toys, medical equipment and DVDs. We are leading the global industry shift to all-electric injection molding technology, which is cleaner, quieter, more accurate and more energy efficient compared to traditional hydraulic machines. Milacron is also a recognized technology leader in multi-material injection molding, offering systems that significantly reduce the customer’s cost per molded part. And our patented PC-based control technology for plastics molding machines assures high-quality part production and brings the power of the Internet and improved communications to the shop floor.

In blow molding, we believe Milacron is the number-one maker of systems to produce HDPE (high density polyethylene) containers, as well as the world’s largest producer of industrial blow molding equipment to make hollow or semi-hollow products such as automotive components, toys, furniture, luggage and storage and shipping containers. In addition to providing turnkey, state-of-the-art blow molding systems, we are an integrated supplier of molds, tooling, aftermarket parts and services, and applications support.

Our high-output, twin-screw extruders are sold in North America to produce a wide variety of PVC (polyvinyl chloride) and plastic composite products, such as siding, decking, fencing and pipe, used in commercial and home construction markets. Smaller models of our single-screw extruders serve such end markets as plastics film and medical tubing. We also supply a full line of new and rebuilt high-performance barrels and screws, which are the productivity and value components in the extrusion business, for all makes and models of extruders.

Milacron’s pre-engineered mold bases and components for injection molding are market leaders in their categories in North America and Europe. We offer the widest range of standard and special mold technologies and the latest advances in quick-change molds, hot runner systems and art-to-part metal printing of complex molds. Independent mold makers are our largest customer category.

We sell MRO supplies and services primarily through catalogs to OEM (original equipment manufacturer) and aftermarket customers around the world. Known for carrying high-quality products at competitive prices, we strive to become an extension of our customers’ businesses by meeting their day-to-day needs for small tools, gauges, temperature regulators, nozzles, screw tips, lubricants, safety supplies and thousands of other items.

Our service parts organization continues to grow worldwide. We supplement our own service technicians with a network of independent providers for 24-hour response across North and South America and in many European countries. Customers have the option of ordering parts and service over the phone or via the Internet.

Markets. One of the largest industries in the world, plastics processing is a major contributor to the vitality of industrialized economies and to the continuing growth of developing areas. Markets for plastics processing systems and supplies have grown steadily for over half a century, as plastics and plastic composites continue to replace traditional materials such as metal, wood, paper and glass. Plastics have increasingly become the material of choice in many, if not most, manufactured goods.

Advancements in material development and in processing equipment capabilities continue to make plastic products more functional and less expensive, thus spurring secular growth. Thanks to superior strength-to-weight ratios, plastics are increasingly used in transportation-related applications. And consumer demand for safer, more convenient products continues to drive general demand for plastic products.

Milacron competes in a global market, estimated to be $13 billion on an annualized basis, for plastics equipment and supplies. Our product mix generally parallels the major segments of this market. About two-thirds of the market consists of capital equipment, which is highly sensitive to general economic cycles and capital spending patterns. In addition, demand is often shaped by other factors such as fluctuations in resin pricing and availability, oil, gas and electricity prices, the impact of interest rates on new housing starts and auto sales, the introduction of new products or models, and consumer confidence and spending. Changes in currency exchange rates may also affect our customers’ businesses and, in turn, the demand for processing equipment. To reduce our dependency on capital goods cycles, we have focused on expanding our durable and consumable product offerings, as well as our after-market services and support.

It has been well known for many decades that, generally speaking, the use of plastics is environmentally friendly and actually conserves energy when compared to making the same products out of metal, wood, paper and glass. To further address environmental concerns, however, many polymer suppliers, machinery makers and processors are actively developing and improving methods of recycling. As a member of the trade association, The Society of the Plastics Industry, Milacron continues to work with other leading companies to make plastics a part of the solution to the challenges of energy and environmental conservation.

Geographic Sales. About 62% of our plastics technologies products and services in 2003 were sold to customers in North America. European sales made up about 27% of the total, with the remainder coming from Asia and the rest of the world.

Distribution. Milacron maintains sales, marketing and customer service facilities in major cities across North America, Europe and Asia. We also sell through large networks of distributors and/or sales and service offices in all major countries.

We sell our plastics machinery and systems through a combination of direct sales force and independent agents who are spread geographically throughout our key markets. We sell our mold bases, supplies and components through a direct distribution network in North America and Europe, through a large network of joint venture sales and service offices in Asia, over the Internet and via telemarketing. We market our MRO supplies in traditional printed catalogs, as well as through electronic catalogs and over the internet.

Customers. Our plastics technologies customers are involved in making a wide range of everyday products: from food and beverage containers to refrigerator liners; from electronic and medical components to digital cameras and razors; from milk bottles to plastic-lumber decking. Key end markets in order of 2003 sales were packaging, automotive and transportation, building materials, industrial components, consumer goods and toys, custom molders, appliances and housewares, medical devices, and electrical and electronics.

Production Facilities. For our three plastics technologies segments, Milacron maintains the following principal production facilities:

Competition. The markets for plastics technologies are global and highly competitive and include North American, European and Asian competitors. We believe Milacron has the number-one share of the North American market and the number-three share worldwide. A few of our competitors are larger than us, most

are smaller, and only a few compete in more than one product category. Principal competitive factors in the plastics technologies industry are product features, technology, performance, reliability, quality, delivery, price and customer service.

Products and Services. We provide metalworking industries worldwide with a wide variety of coolants, lubricants, forming fluids, process cleaners and corrosion inhibitors used in the shaping of metal products. Customers count on our extensive knowledge of chemistry and metalworking applications to maximize their productivity.


	•	Metalcutting and metalforming coolants and lubricants

	•	Process cleaners, corrosion inhibitors and specialty products

Coolants are required in the vast majority of metalworking operations, including cutting, grinding, stamping and forming, to achieve desired part quality and output through higher metal-removal rates and longer tool life. Our family of premium fluids meets the demands of today’s toughest metalworking operations, offering unmatched machining and grinding performance. One of our more popular blends, for example, can increase the life of grinding wheels by a hundredfold or more in certain applications compared to conventional fluids. For over 50 years, our specialty has been water-based synthetic fluids, which provide excellent lubricity and are generally more environmentally friendly than oil-based products. More recently, our new high-performance “green” fluids made from vegetable oils have been gaining acceptance, albeit limited, among metalworking customers concerned with environmental and/or disposal issues.

We add value for our customers by helping them maintain the safety and effectiveness of their fluids and by offering them our expertise in fluid/tool synergies in order to optimize their metalworking operations. Optimized fluid and tool selection can provide our customers with significant productivity gains and cost savings.

Our strength is in the area of metal removal (metalcutting and grinding), but we also blend and sell stamping and metalforming fluids, process cleaners, corrosion inhibitors and other specialty products for metalworking, all of which represent good growth opportunities for us.

Markets. Key markets for our industrial fluids include the whole spectrum of metalworking industries: from automotive, aircraft and machinery makers and job shops to manufacturers of appliances, agricultural equipment, and consumer and sporting goods. Milacron fluids are also used in the production of glass and mirrors and in high-tech processes such as silicon wafer slicing and polishing.

The markets in which our industrial fluids compete total $2.5 billion on an annualized, global basis. Over one-third of the market consists of metalcutting and grinding fluids, with metalforming fluids and process cleaners each accounting for about one-quarter of the market. Demand for our fluids is generally directly proportional to levels of industrial production, although we specifically target higher-growth areas such as machining and forming exotic alloys and aluminum. Factors affecting our customers’ production rates and ultimately demand for our fluids include auto and machinery sales, consumer spending and confidence, interest rates, energy prices and currency exchange rates.

Environmental, health and safety concerns could negatively affect demand for metalworking fluids. When it comes to industrial fluids, Milacron places very high importance on employee safety and environmental protection. In a proactive approach to continually improve the health and environmental effects of metalworking fluids, we work both locally and internationally with suppliers, customers and regulatory authorities and we support and participate in research and educational programs regarding metalworking fluids.

Geographic Sales. About 56% of our 2003 industrial fluid sales were made to customers in North America, while another 37% were to European customers. The remaining sales were to customers in Asia and the rest of the world.

Distribution. Milacron’s industrial fluids are sold primarily through industrial distributors, with some direct sales, as well as through traditional printed catalogs and electronic catalogs over the Internet. We produce most of what we sell, and most of what we make is sold under our own brand names. In addition, some of our fluids are sold under brand names of other companies through their own market channels.

Customers. Our metalworking fluids are involved in making all kinds of products: from automotive power train components to aluminum soft drink cans; from air conditioners and glass mirrors to bearings and golf clubs; not to mention a wide variety of industrial components.

Markets for our industrial fluids in order of importance based on 2003 sales were automotive and transportation, industrial components, industrial machinery, job shops, off-road and other heavy equipment, appliances and housewares, aerospace, oil and primary metals, and consumer goods. The largest customer category, automotive and transportation, accounted for 38% of fluid sales in 2003.

Production Facilities. For our industrial fluids segment, Milacron maintains the following principal production facilities:

Competition. We believe Milacron holds a leadership position in world markets for water-based or synthetic metalworking fluids. Our competitors range from large petrochemical companies to smaller companies specializing in similar fluids. Principal competitive factors in this business include market coverage, product performance, delivery, price and customer service.

The following information is included in accordance with the provisions for Part III, Item 10:


	The parenthetical figure below the name of each individual indicates his age at most recent birthday prior to December 31, 2003.

	There are no family relationships among the executive officers of the Registrant.

	Officers of the company are elected each year by the Board of Directors.

We lease our corporate headquarters building from a third party. This building is located in Cincinnati, Ohio.

The remaining information required by Item 2 is included in Part I on pages 7 and 9 of this Form 10-K.

Various lawsuits arising during the normal course of business are pending against the company and its consolidated subsidiaries. In several such lawsuits, some of which seek substantial amounts, multiple plaintiffs allege personal injury involving products, including metalworking fluids, supplied and/or managed by the company. The company is vigorously defending these claims and believes it has reserves and insurance coverage sufficient to cover potential exposures.

While, in the opinion of management, the liability resulting from these matters will not have a significant effect on the company’s consolidated financial position or results of operations, the outcome of individual matters cannot be predicted with reasonable certainty at this time.

There were no matters submitted to a vote of security holders during the fourth quarter of 2003.

The company’s common shares are listed on the New York Stock Exchange. Such shares are also traded on the Cincinnati Stock Exchange, Boston Stock Exchange, Pacific Stock Exchange, Philadelphia Stock Exchange and Midwest Stock Exchange, with options traded on the Philadelphia Stock Exchange. As of March 1, 2004, there were approximately 4,235 holders of record of the company’s common shares. The company’s Preferred shares are not actively traded.

The following table shows the price range of the common shares for 2002 and 2003, as reported by the New York Stock Exchange. Cash dividends of $.01 per common share were paid in each quarter of 2002 and in the first two quarters of 2003. No dividends were paid in the last two quarters of 2003. Our revolving credit facility (discussed on page 68 of this Form 10-K) limited the payment of cash dividends to $.01 per share in each quarter.

Milacron is a 120-year-old company, headquartered in Cincinnati, Ohio, and focused primarily on manufacturing and selling plastics processing equipment and supplies. We also manufacture and sell industrial

fluids for metalworking applications. We operate both businesses on a global basis. With 3,500 employees, we have major manufacturing facilities in the United States, Germany, Italy, Belgium and India, and we maintain sales and service offices in over 100 countries around the world.

We operate in four business segments: Machinery Technologies — North America, Machinery Technologies — Europe, Mold Technologies and Industrial Fluids. Our Machinery Technologies segments manufacture and sell plastics processing equipment, including the three most common types: injection molding, blow molding and extrusion machinery, as well as related tooling, parts and services throughout the world. Our Mold Technologies segment is the leading North American and a leading global supplier of mold bases and components used in the plastics injection molding process. Our Industrial Fluids segment blends and sells metalworking fluids globally for machining, stamping, grinding and cleaning applications.

Milacron has served the plastics processing industries since the late 1960s. Major customers for our plastics technologies are manufacturers of packaging, autos, building materials, industrial components, consumer goods, appliances and housewares, medical devices, and electrical products. The automotive industry is by far the largest customer of our industrial fluids, followed by makers of industrial components and machinery, off-road equipment, appliances and housewares, and aircraft. We have made and sold industrial fluids since the late 1940s.

Global consumption of plastics has grown steadily since the Second World War, as plastics and plastic composites continue to replace traditional materials such as metal, wood, glass and paper in an increasing number of manufactured products, particularly in the packaging, automotive, building materials, consumer goods, housewares, electrical and medical industries. From 1970 to 2002, global consumption of plastics grew at a compounded annual growth rate of 6%, compared with 1% for steel and 3% for aluminum (Source: BASF AG, Association of Plastics Manufacturers in Europe, International Iron & Steel Institute, U.S. Geological Survey).

Plastic part production, like industrial production in general, has historically shown solid, mildly cyclical growth. In every year from 1980 to 2000, plastic part production in the U.S. showed positive year-over-year increases, averaging 7% compound annual growth (Source: U.S. Federal Reserve Board). The increases in plastics consumption and corresponding plastic part production have historically created cyclical but growing demand for our plastics machinery and related supplies. In fact, between 1980 and 2000, our sales of plastics equipment and supplies in North America grew at 8% compounded annually excluding acquisitions or 11% including acquisitions.

In the 1990s, like many other U.S. companies, Milacron benefited from a strong, growing economy. Our plastics technologies sales were approaching $1 billion with good profitability. In 2000, for example, on sales of $835 million, our plastics technologies businesses generated over $125 million in EBITDA (earnings before interest, taxes, depreciation and amortization) and approximately $95 million in EBIT. However, beginning in late 2000 through the third quarter of 2003, the U.S. manufacturing sector experienced the most severe and prolonged downturn since the 1930s. U.S. industrial production, a key indicator of demand for our products, fell 6% from June, 2000 to June, 2003, a much steeper and longer decline than 4% in the prior downturn from June, 1990 to March, 1991 (Source: U.S. Federal Reserve Board). The plastics processing portion of the manufacturing sector was very severely impacted. As plastic part production slowed, capacity utilization rates of our customers, U.S. plastics processors, dropped from the previous peak of 86% to a low of 77% (Source: U.S. Federal Reserve Board), and shipments of injection molding machines in North America fell over 40% from a peak $1.2 billion 12-month moving total in 2000 to under $700 million by the end of 2001 and through 2003 (Source: The Society of Plastics Industry).

During this deep recession in North America, with both European and Asian markets also in decline, albeit more modestly, demand for many of our plastics machinery lines declined by 40% to 50% or more, and our total global plastics technologies sales fell 27%. Despite a series of responsive actions, including a number

Manufacturing in North America started to recover in the fourth quarter of 2003 when total U.S. manufacturing orders finally returned to their previous peak levels of 2000. And in January 2004, the Institute for Supply Management’s manufacturing index, traditionally a very strong leading indicator, rose to its highest level in twenty years. In the plastics sector, U.S. processors’ capacity utilization reached 81% for the first time since late 2000.

Historically, our experience has been that demand for machinery begins to grow two or three quarters after a pickup in production, when capacity utilization rates exceed 84%. In short, our customers need to return to sustained profitability before they can afford to significantly increase their investment in new equipment. So, while demand for our plastics machinery remained at depressed levels through the end of 2003, we are encouraged by recent economic developments and expect to benefit from a recovery in our plastics technologies businesses over time.

During the manufacturing recession of 2000-2003, overall demand for our metalworking fluids declined by about 10%, as our largest customer group, automakers, maintained reasonably good levels of production both in North America and worldwide. Profitability in this business, though impacted by lower sales volumes, held up fairly well throughout the recession, with earnings before interest and taxes in the range of 13% to 15% of sales.

Sales and new orders in 2003 were approximately even with those of 2002 after excluding currency translation effects, as the manufacturing recession continued in North America through the first three quarters of the year. Our net loss in 2003 was $192 million and included two non-cash charges — a $66 million charge for goodwill impairment and a $71 million tax provision to establish valuation allowances against a portion of our deferred tax credits — as well as $27 million in restructuring costs.

Entering 2004 there are many positive developments bolstering Milacron’s prospects for improved operating results as well as a number of challenges and risks. In the fourth quarter of 2003 there was a noticeable pickup in industrial production in general and in the plastics processing industries in particular, a sign that an economic recovery in North America might be taking hold. The economic outlook for Europe appears positive and the Asian markets are projected to show continued strong growth, especially in China, where we are working hard to expand our presence. While we expect a pickup in our machinery businesses to lag the overall recovery by two quarters or more, our non-machinery businesses — currently representing over 50% of total sales, should benefit more immediately. We believe we are well positioned to expand our share in the higher-margin after-market sales and services sectors of the business. Internally we continue to implement “Lean” manufacturing techniques and other efficiency measures to improve our profitability and cash flow. Finally, the weakening of the U.S. dollar and the strengthening of the euro in 2003 should be competitively advantageous to our U.S.-built products in the long run.

Although we ended the year with $93 million of cash, the biggest challenge we faced going into 2004 was the refinancing of our debt, as our revolving credit agreement and our receivables securitization program were both due to expire and $115 million of senior unsecured notes were due to mature — all in the first quarter. However, on March 12, 2004, we entered into two new financing arrangements that enabled us to repay these obligations by their scheduled maturity dates. These refinancing arrangements are discussed in depth on pages 35 through 37 of this Form 10-K and in notes to the Consolidated Financial Statements.

The biggest risk we still face is the possibility of a stall or setback in the economic recovery of the manufacturing sector in North America, perhaps as a result of geopolitical instability and/or rising energy prices.

As described more fully in the notes to the Consolidated Financial Statements, in the years 2001 through 2003 Milacron completed a total of five acquisitions of smaller companies that are now included in its plastics technologies segments. The most significant were the 2001 acquisitions of Reform Flachstahl (Reform) and EOC Normalien (EOC), two businesses headquartered in Germany that manufacture and distribute mold bases and components for injection molding. In the aggregate, the five newly acquired businesses had annual sales of approximately $63 million as of the respective acquisition dates. In 2003, we also purchased the remaining 25% of the shares of a consolidated subsidiary in Canada that also manufactures mold bases and components.

Beginning with the acquisition of Ferromatik in 1993, Milacron has significantly expanded its presence outside the U.S. and become more globally balanced. For 2003, markets outside the U.S. represented the following percentages of our consolidated sales: Europe 29%; Canada and Mexico 7%; Asia 7%; and the rest of the world 3%. As a result of this geographic mix, foreign currency exchange rate fluctuations affect the translation of our sales and earnings, as well as consolidated shareholders’ equity. During 2003, the weighted-average exchange rate of the euro was stronger in relation to the U.S. dollar than in 2002. As a result, Milacron experienced favorable currency translation effects on new orders and sales of $40 million and $39 million, respectively. The effect on earnings was not material.

Between December 31, 2002 and December 31, 2003, the euro strengthened against the dollar by approximately 21% which caused the majority of a $9 million favorable adjustment to consolidated shareholders’ equity.

If the euro should weaken against the U.S. dollar in future periods, we could experience a negative effect in translating our European new orders, sales and earnings when compared to historical results.

The Consolidated Financial Statements discussed herein have been prepared in accordance with generally accepted accounting principles in the United States, which require management to make estimates and assumptions that affect the amounts that are included therein. The following is a summary of certain accounting policies, estimates and judgmental matters that management believes are significant to Milacron’s reported financial position and results of operations. Additional accounting policies are described in the note captioned “Summary of Significant Accounting Policies” on pages 44 through 47 of this Form 10-K, which should be read in connection with the discussion that follows. Management regularly reviews its estimates and judgments and the assumptions regarding future events and economic conditions that serve as their basis. While management believes that the estimates used in the preparation of the Consolidated Financial Statements are reasonable in the circumstances, the recorded amounts could vary under different conditions or assumptions.

At December 31, 2003, Milacron had significant deferred tax assets related to U.S. and non-U.S. net operating loss and tax credit carryforwards and to charges that have been deducted for financial reporting purposes but which are not yet deductible for income tax reporting. These charges include the write-down of goodwill and a charge to equity related to minimum pension funding. At December 31, 2003, we have

provided valuation allowances against some of the deferred tax assets. Valuation allowances serve to reduce the recorded deferred tax assets to amounts reasonably expected to be realized in the future. The establishment of valuation allowances and their subsequent adjustment requires a significant amount of judgment because expectations as to the realization of deferred tax assets — particularly those assets related to net operating loss carryforwards — are generally contingent on the generation of taxable income, the reversal of deferred tax liabilities in the future and the availability of qualified tax planning strategies. In determining the need for valuation allowances, management considers its short-term and long-range internal operating plans, which are based on the current economic conditions in the countries in which Milacron operates, and the effect of potential economic changes on the company’s various operations.

At December 31, 2003, Milacron had non-U.S. net operating loss carryforwards — principally in The Netherlands, Germany and Italy — totaling $190 million and related deferred tax assets of $61 million. Valuation allowances totaling $51 million had been provided with respect to these assets as of that date. Management believes that it is more likely than not that portions of the net operating loss carryforwards in these jurisdictions will be utilized. However, there is currently insufficient positive evidence in some non-U.S. jurisdictions — primarily Germany and Italy — to conclude that no valuation allowances are required.

At December 31, 2003, Milacron had a U.S. federal net operating loss carryforward of $63 million, of which $17 million and $46 million expire in 2022 and 2023, respectively. Deferred tax assets related to this loss carryforward, as well as to federal tax credit carryforwards ($13 million) and additional state and local loss carryforwards ($10 million), totaled $45 million. Additional deferred tax assets totaling approximately $117 million had also been provided for book deductions not currently deductible for tax purposes including the writedown of goodwill, postretirement health care benefit costs and accrued pension liabilities. The deductions for financial reporting purposes are expected to be deducted for income tax purposes in future periods, at which time they will have the effect of decreasing taxable income or increasing the net operating loss carryforward. The latter will have the effect of extending its ultimate expiration beyond 2023.

The transaction entered into with Glencore Finance AG and Mizuho International plc on March 12, 2004 could substantially delay the timing of the utilization of certain of the U.S. loss carryforwards and other tax attributes that are discussed in the preceding paragraph in future years (see Liquidity and Sources of Capital — Refinancing Actions on page 35).

At December 31, 2002, no valuation allowances had been provided with respect to the U.S. deferred tax assets based on a “more likely than not” assessment of whether they would be realized. This decision was based on the availability of qualified tax planning strategies and the expectation of increased industrial production and capital spending in the U.S. plastics industry. The higher sales and order levels expected in 2003 and beyond, combined with the significant reductions in Milacron’s cost structure that had been achieved in recent years, were expected to result in improved operating results in relation to the losses incurred in 2002 and 2001.

At June 30, 2003, however, management concluded that a recovery in the plastics industry and the company’s return to profitability in the U.S. would be delayed longer than originally expected. As a result of these delays and the incremental costs of the restructuring initiatives announced in the third quarter of 2003, the company expected to incur a cumulative operating loss in the U.S. for the three year period ending December 31, 2003. In such situations, accounting principles generally accepted in the U.S. include a presumption that expectations of earnings in the future cannot be considered in assessing the need for valuation allowances. Accordingly, a charge to the tax provision of approximately $71 million was recorded in the second quarter of 2003 to establish valuation allowances with respect to a portion of the company’s U.S. deferred tax assets for which future income was previously assumed.

During the second half of 2003, we increased U.S. deferred tax assets by approximately $18 million due to continued losses from operations and a goodwill impairment charge, the effects of which were partially offset by taxable income related to dividends from non-U.S. subsidiaries. Valuation allowances were also increased by $18 million and as a result, there was no tax benefit for financial reporting purposes associated

with the losses and the impairment charge. As of December 31, 2003, U.S. deferred tax assets net of deferred tax liabilities totaled $162 million and U.S. valuation allowances totaled $89 million. We continue to rely on the availability of qualified tax planning strategies and tax carryforwards to conclude that valuation allowances are not required with respect to U.S. deferred tax assets totaling approximately $73 million at December 31, 2003.

Management will reassess its conclusions regarding the amount of valuation allowances that are required on a quarterly basis. Further delays in a recovery in the U.S., particularly in capital spending in the plastics industry, could result in changes in management’s estimates and the related assumptions and a requirement to record additional valuation allowances against the U.S. deferred tax assets. This could result in a further increase in income tax expense and a corresponding decrease in shareholders’ equity in the period of the change.

Milacron’s internal accounting policies require that each of its operations maintain appropriate reserves for uncollectible receivables, inventory obsolescence and warranty costs in accordance with generally accepted accounting principles. Because of the diversity of Milacron’s customers and product lines, the specific procedures used to calculate these reserves vary by location but in all cases must conform to company guidelines. Reserves are required to be reviewed and adjusted as necessary on a quarterly basis.

Allowances for doubtful accounts are generally established using specific percentages of the gross receivable amounts based on their age as of a particular balance sheet date. The amounts calculated through this process are then adjusted for known credit risks and collection problems. Write-offs of accounts receivable for Milacron’s continuing operations have averaged $2.8 million during the last three years. While management believes that the company’s reserves for doubtful accounts are reasonable in the circumstances, adverse changes in general economic conditions or in the financial condition of Milacron’s major customers could result in the need for additional reserves in the future.

Reserves for inventory obsolescence are generally calculated by applying specific percentages to inventory carrying values based on the level of usage and sales in recent years. These calculations are then adjusted based on current economic trends, expected product line changes, changes in customer requirements and other factors. In 2003, Milacron’s continuing operations recorded new inventory obsolescence reserves totaling $5.4 million and utilized $5.3 million of such reserves in connection with the disposal of obsolete inventory. Management believes that Milacron’s reserves are appropriate in light of its historical results and its assumptions regarding the future. However, adverse economic changes or changes in customer requirements could necessitate the recording of additional reserves through charges to earnings in the future.

Milacron’s warranty reserves are of two types — “normal” and “extraordinary.” Normal warranty reserves are intended to cover routine costs associated with the repair or replacement of products sold in the ordinary course of business during the warranty period. These reserves are accrued using a percentage-of-sales approach based on the ratio of actual warranty costs over a representative number of years to sales revenues from products sold with warranties over the same period. The percentages are required to be reviewed and adjusted as necessary at least annually. Extraordinary warranty reserves are intended to cover major problems related to a single machine or customer order or to problems related to a large number of machines or other type of product. These reserves are intended to cover the estimated costs of resolving the problems based on all relevant facts and circumstances. In recent years, costs related to extraordinary warranty problems have not been significant. In 2003, Milacron’s continuing operations accrued warranty reserves totaling $4.9 million and incurred warranty-related costs totaling $3.0 million. While management believes that the company’s warranty reserves are adequate in the circumstances, unforeseen problems related to unexpired warranty obligations could result in a requirement for additional reserves in the future.

In years prior to 2002, Milacron reviewed the carrying value of goodwill annually using estimated undiscounted future cash flows. Using this approach in 2001, the maximum period of time to recover the carrying value of recorded goodwill through undiscounted cash flows was determined to be approximately 12 years and the weighted-average recovery period was approximately 18% of the average remaining amortization period. However, effective January 1, 2002 Milacron adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142), which requires that goodwill be tested for impairment using probability–weighted cash flows discounted at market interest rates. The change from undiscounted to discounted cash flows resulted in a pretax goodwill impairment charge of $247.5 million ($187.7 million after tax) that was recorded as the cumulative effect of a change in accounting method as of January 1, 2002.

SFAS No. 142 requires that goodwill be tested for impairment annually or whenever certain indicators of impairment are determined to be present. Milacron conducted its first annual review of goodwill balances as of October 1, 2002. This review resulted in a pretax goodwill impairment charge related to the mold technologies segment of $1.0 million (with no tax benefit) that was recorded in the fourth quarter. In the third quarter of 2003, we tested the goodwill of two businesses included in the mold technologies segment for impairment due to the presence of certain indicators of impairment. This review resulted in a preliminary goodwill impairment charge of $52.3 million that was recorded in the third quarter and subsequently adjusted to $65.6 million in the fourth quarter after the completion of the independent appraisals of certain tangible and intangible assets that are required to determine their fair values. The charge resulted from a downward adjustment of the future cash flows expected to be generated by the businesses due to a delay in the general economic recovery in both North America and Europe. The largest decrease in cash flow expectations related to our European mold base and components business due to continued weakness in the markets it serves.

Our annual review of goodwill impairment as of October 1, 2003 did not result in additional impairment charges.

Milacron currently reviews the carrying values of its long-lived assets other than goodwill annually. These reviews are conducted by comparing the estimates of undiscounted future cash flows that are included in Milacron’s long-range internal operating plans to the carrying values of the related assets. No growth in operating cash flows beyond the third year is assumed. Under this methodology, impairment would be deemed to exist if the carrying values exceeded the expected future cash flow amounts. In 2003, Milacron reviewed the aggregate carrying values of selected groups of its long-lived assets under the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The assets included in these reviews consisted principally of property, plant and equipment and, where applicable, intangible assets other than goodwill. Based on these reviews, it was determined that the maximum period of time to recover the carrying values of the tested groups of assets through undiscounted cash flows is approximately 8 years and that the weighted-average recovery period is approximately 20% of the remaining average lives of the assets. Based on the results of the reviews, no impairment charges were recorded in 2003.

Through its wholly-owned insurance subsidiary, Milacron Assurance Ltd. (MAL), Milacron is primarily self-insured for many types of risks, including general liability, product liability, environmental claims and worker’s compensation for certain domestic employees. MAL, which is incorporated in Bermuda and is subject to the insurance laws and regulations of that jurisdiction, establishes reserves commensurate with known or estimated exposures under the policies it issues to Milacron. Exposure for general and product liability claims is supplemented by reinsurance coverage in some cases and by excess liability coverage in all policy years. Worker’s compensation claims in excess of certain limits are insured with commercial carriers. At December 31, 2003, MAL had reserves for known claims and incurred but not reported claims under all

MAL’s reserves are established based on known claims, including those arising from litigation, and management’s best estimates of the ultimate exposures thereunder (after consideration of excess carriers’ liabilities) and on estimates of the cost of incurred but not reported claims. For certain types of exposures, MAL and the company utilize actuarially calculated estimates prepared by outside consultants to ensure the adequacy of the reserves. Reserves are reviewed and adjusted quarterly based on all evidence available as of the respective balance sheet dates. While the ultimate amount of MAL’s exposure to claims is dependent on future events that cannot be predicted with certainty, management believes that the recorded reserves are adequate in the circumstances. However, claims in excess of the recorded amounts could adversely affect earnings in the future when additional information becomes available.

Milacron maintains defined benefit and defined contribution pension plans that provide retirement benefits to substantially all U.S. employees and certain non-U.S. employees. The most significant of these plans is the principal defined benefit plan for certain U.S. employees, which is also the only defined benefit plan that is funded. Excluding charges of $4.7 million for temporary supplemental retirement benefits that were offered in connection with restructuring actions, Milacron recorded pension income of $9.4 million related to this plan in 2002. In 2003, however, pension income decreased to $.6 million, once again excluding charges for supplemental benefits of $3.2 million. Moreover, we currently expect to record pension expense related to this plan of $7 to $8 million in 2004. Pension expense for 2005 and beyond is dependent on a number of factors including returns on plan assets and changes in the plan’s discount rate and therefore cannot be predicted with certainty at this time. The following paragraphs discuss the significant factors that affect the amount of recorded pension income or expense and the reasons for the reductions in income identified above.

A significant factor in determining the amount of income recorded for the funded U.S. plan is the expected long-term rate of return on plan assets. In 2002 and in several preceding years, Milacron used an expected long-term rate of return of 9 1/2%. However, the company began using a rate of return of 9% beginning in 2003 and will continue to do so in 2004. We develop the long-term rate of return assumption based on the current mix of equity and debt securities included in the plan’s assets and on the historical returns on those types of investments, judgmentally adjusted to reflect current expectations of future returns. In evaluating future returns on equity securities, the existing portfolio is stratified to separately consider large and small capitalization investments, as well as international securities. The change from the 9 1/2% rate of return assumption to the lower 9% rate had the effect of reducing the amount of pension income that would otherwise be reportable in 2003 by more than $2 million.

In determining the amount of pension income or expense to be recognized, the expected long-term rate of return is applied to a calculated value of plan assets that recognizes changes in fair value over a three-year period. This practice is intended to reduce year-to-year volatility in recorded pension income or expense but it can have the effect of delaying the recognition of differences between actual returns on assets and expected returns based on the long-term rate of return assumption. At December 31, 2003, the market value of Milacron’s pension assets was $371 million whereas the calculated value of these assets was $389 million. The difference arises because the latter amount includes two-thirds of the asset-related loss incurred in 2002 but only one-third of the gain realized in 2003. If significant asset-related losses are incurred in 2004, it will have the effect of increasing the amount of pension expense to be recognized in future years beginning in 2005.

In addition to the expected rate of return on plan assets, recorded pension income or expense includes the effects of service cost — the actuarial cost of benefits earned during a period — and interest on the plan’s liabilities to participants. These amounts are determined actuarially based on current discount rates and assumptions regarding matters such as future salary increases and mortality. Differences in actual experience in relation to these assumptions are generally not recognized immediately but rather are deferred together with asset-related gains or losses. When cumulative asset-related and liability-related gains or losses exceed the

greater of 10% of total liabilities or the calculated value of plan assets, the excess is amortized and included in pension income or expense. At December 31, 2001, the discount rate used to value the liabilities of the principal U.S. plan was reduced from 7 3/4% to 7 1/4%. The rate was further lowered to 6 1/2% at December 31, 2002 and to 6 1/4% at December 31, 2003. The combined effects of these changes and the variances in relation to the long-term rate of return assumption discussed above have resulted in cumulative losses in excess of the 10% corridor. Amortization of these losses adversely affected pension expense in 2003 by almost $3 million. Expense for amortization of previously unrecognized losses is expected to be in excess of $6 million in 2004.

Additional changes in the key assumptions discussed above would affect the amount of pension expense currently expected to be recorded for years subsequent to 2004. Specifically, a one-half percent increase in the rate of return on assets assumption would have the effect of decreasing pension expense by approximately $2 million. A comparable decrease in this assumption would have the opposite effect. In addition, a one-quarter percent increase or decrease in the discount rate would decrease or increase expense by approximately $.8 million.

Because of the significant decrease in the value of the assets of the funded plan for U.S. employees during 2001 and 2002 and decreases in the plan’s discount rate, Milacron recorded a minimum pension liability adjustment of $118 million effective December 31, 2002 and significantly reduced the carrying value of the pension asset related to the plan. This resulted in a $95 million after-tax reduction in shareholders’ equity. At December 31, 2003, shareholders’ equity was increased by $15 million (with no tax effect) due to an increase in plan assets in 2003 that was partially offset by an increase in liabilities that resulted from a lower discount rate. These adjustments were recorded as a component of accumulated other comprehensive loss and therefore did not affect reported earnings or loss. However, they resulted in $81 and $95 million after-tax reductions of shareholders’ equity at December 31, 2003 and December 31, 2002, respectively.

In an effort to help readers better understand the composition of Milacron’s operating results, certain of the discussions that follow include references to restructuring costs. Accordingly, those discussions should be read in connection with (i) the tables on pages 30 and 31 of this Form 10-K under the caption “Comparative Operating Results” and (ii) the Consolidated Financial Statements and notes thereto that are included herein on pages 40 through 80.

As discussed more fully in the notes to the Consolidated Financial Statements, in the third quarter of 2002 Milacron completed the sales of its Valenite, Widia and Werkö metalcutting tools businesses and began to explore strategic alternatives for the sale of its round metalcutting tools and grinding wheels businesses. The round metalcutting tools business was sold in two separate transactions in the third quarter of 2003 and the grinding wheels business is expected to be sold early in 2004. All of these businesses are reported as discontinued operations in the Consolidated Financial Statements. The comparisons of results of operations that follow exclude these businesses and relate solely to Milacron’s continuing operations unless otherwise indicated.

In 2002 and prior years, Milacron recorded significant amounts of income related to its defined benefit pension plan for certain U.S. employees. For all of 2002, results of continuing operations included income of $7.6 million related to this plan. However, because of a significant decrease in the value of the plan’s assets and changes in the rate-of-return on assets and discount rate assumptions (see Significant Accounting Policies and Judgments — Pensions), pension income related to continuing operations decreased to $.5 million in 2003. As discussed further below, the fluctuation between years has negatively affected margins, selling and administrative expense and earnings.

Consolidated new orders totaled $747 million in 2003 compared to $703 million in 2002. Currency translation effects resulting principally from the strength of the euro in relation to the U.S. dollar contributed substantially all of the $44 million increase. Consolidated sales increased from $693 million in 2002 to $740 million in 2003. As was the case with new orders, translation effects contributed most of the increase. Order and shipment levels showed improvement in the fourth quarter but continued to be penalized by low levels of industrial production in the U.S. and capital spending in the plastics processing industry.

Export orders totaled $73 million in 2003, an increase of $7 million from $66 million in 2002. Export sales increased from $71 million in 2002 to $73 million in 2003. Both increases related principally to higher export sales of U.S.-built blow molding systems. Total sales of all segments to non-U.S. markets, including exports, were $338 million, or 46% of consolidated sales, in 2003 compared to $296 million, or 43% of sales, in 2002. Sales of goods manufactured outside the U.S. totaled 41% in 2003 compared to 38% in 2002. The strength of the euro in relation to the dollar was a significant factor in both increases.

Our backlog of unfilled orders was $92 million at December 31, 2003 compared to $76 million at December 31, 2002. The increase reflects higher order levels for blow molding systems in the U.S. and injection molding machinery in Europe.

Including $3.3 million of restructuring costs related to product line discontinuation, the consolidated manufacturing margin was 17.7% in 2003. Excluding restructuring costs, the consolidated margin was 18.2%. In 2002, the consolidated manufacturing margin, including $1.9 million of restructuring costs, was 17.3%. Excluding restructuring costs, the 2002 margin was 17.5%. Margins remained low in relation to pre-recession historical levels due to reduced sales volume and the related underabsorption of manufacturing costs. Margins were also penalized by increased pricing pressure for plastics processing machinery in both North America and Europe and a $5.0 million decrease from 2002 in the amount of pension income included in the cost of products sold. However, margins benefited from the effects of our process improvement initiatives and our recent restructuring actions.

Total selling and administrative expense was $129 million in 2003 compared to $121 million in 2002. Selling expense increased from $93 million, or 13.4% of sales, in 2002 to $104 million, or 14.0% of sales, in 2003 due principally to variable selling costs associated with higher sales volume, increased bad debt expense and a $2.0 million reduction in pension income. Costs associated with the triennial National Plastics Exposition that was held in June of 2003 and currency effects also contributed to the increase in selling expense. Conversely, administrative expense decreased by more than $2 million due principally to the effects of our restructuring actions and cost containment efforts despite almost $2 million in adverse currency effects.

Other expense-net increased from income of $1.0 million in 2002 to expense of $1.5 million in 2003. The amount for 2003 includes income of $3.5 million from the settlement of warranty claims against a supplier and $.9 million of income from the licensing of patented technology. The 2002 amount includes income of $4.5 million from technology licensing.

As discussed more fully in the notes to the Consolidated Financial Statements, in 2002 and 2003 we announced additional restructuring initiatives intended to further reduce our cost structure as well as to improve operating efficiency and customer service. In the aggregate, these actions will ultimately result in the elimination of approximately 500 positions worldwide. Cost savings related to these actions were in excess of $15 million in 2003. On an annualized basis, the savings are expected to be in excess of $35 million in 2004

In the fourth quarter of 2002, we initiated the transfer of all manufacture of container blow molding machines and structural foam systems from the plant in Manchester, Michigan to our facility near Cincinnati, Ohio. The mold making operation in Manchester will also be moved to a smaller, more cost-effective location near the present facility early in 2004. In another action, the manufacture of special mold bases for injection molding at the Monterey Park, California plant was discontinued and transferred to other facilities in North America.

Early in 2003, we initiated a plan for the further restructuring of our European blow molding machinery operations, including the discontinuation of the manufacture of certain product lines at the Magenta, Italy plant. In the second quarter of 2003, we initiated a plan to close the special mold base machining operation in Mahlberg, Germany and relocate a portion of its manufacturing to another facility. Certain other production is being outsourced. In the third quarter of 2003, we began to implement additional restructuring initiatives that focus on further overhead cost reductions in each of Milacron’s plastics technologies segments and at the corporate office. These actions involve the relocation of production, closure of sales offices, voluntary early retirement programs and general overhead reductions.

In 2003 and 2002, restructuring costs also include amounts for the integration of EOC and Reform, two businesses acquired in 2001, with Milacron’s existing mold base and components business in Europe and costs associated with initiatives announced in 2001 and 2002 to consolidate manufacturing operations and reduce Milacron’s cost structure.

The costs and related cash effects of the actions described above are summarized in the table that follows.

The table that follows depicts the cost savings realized in 2002 and 2003 from the restructuring actions discussed above and the incremental savings of approximately $20 million that are expected to be realized in 2004.

In 2003, Milacron recorded a goodwill impairment charge of $65.6 million (with no tax benefit) to adjust the carrying value of the goodwill of two businesses included in the mold technologies segment. The charge was calculated by discounting estimated future cash flows and resulted from a downward adjustment of the cash flows expected to be generated by these businesses due to the delay in the general economic recovery in both North America and Europe. The largest decrease in cash flow expectations related to our European mold base and components business due to continued weakness in the markets it serves.

The following sections discuss the operating results of our business segments which are presented in tabular form on pages 74 though 76 of this Form 10-K. As presented therein, segment operating profit or loss excludes restructuring costs and goodwill impairment charges.

Machinery technologies — North America — New orders in the machinery technologies — North America segment were $325 million compared to $321 million in 2002. The segment’s sales also increased modestly from $314 million in 2002 to $321 million in 2003. Despite signs of increased capacity utilization in U.S. plastics processing industries in the fourth quarter, orders and shipments remained at low levels for the third consecutive year due to depressed capital spending by our customers. In addition, the segment’s results were penalized by weaker price realization and reduced pension income but benefited from our restructuring and cost reduction initiatives. Excluding restructuring costs, the segment had operating earnings of $6.7 million in 2003 compared to $8.0 million in 2002. The decrease was due entirely to a $6.1 million reduction in pension income and the absence of $4.5 million of royalty income from the licensing of patented technology that was received in 2002. Restructuring costs for the segment were $7.7 million in 2003 and $6.7 million in 2002. In both years, most of these costs related to the relocation of the North American blow molding systems business and to supplemental retirement benefits offered for the purpose of reducing the cost structure of the segment’s injection molding and extrusion machinery businesses. The restructuring actions initiated in 2002 and 2003 resulted in cost savings in excess of $8 million in 2003 and are expected to produce savings of almost $14 million in 2004. Including the actions that began in 2001, the segment’s savings in 2004 are expected to be almost $34 million.

Machinery technologies — Europe — The machinery technologies — Europe segment had new orders of $154 million and sales of $151 million in 2003 compared to orders of $122 million and sales of $117 million in 2002. Currency translation effects related to the strength of the euro in relation to the dollar contributed about two-thirds of both increases. Sales of blow molding systems were flat in relation to 2002 but orders and shipments of European-built injection molding machines increased as measured in local currency despite weaker price realization. The segment’s operating results improved significantly as a result of our recent restructuring of its blow molding systems business as its loss excluding restructuring costs decreased from $8.1 million in 2002 to $1.4 million in 2003. Restructuring costs totaled $6.5 million in 2003 and related principally to the restructuring of the blow molding business and the discontinuation of certain of its product lines and to overhead reductions in the segment’s injection molding machinery business. To date, these 2003 actions have resulted in savings in excess of $1 million but are expected to result in savings in excess of $6 million in 2004. Including the benefits of additional actions that began in 2001, the segment’s total savings in 2004 are expected to be approximately $14 million.

Mold technologies — In 2003, the mold technologies segment had new orders and sales of $169 million compared to $175 million of orders and sales in 2002. The decreases occurred despite favorable currency effects of approximately $10 million. The segment’s profitability was adversely affected by low levels of industrial production and capacity utilization in both North America and Europe. Inefficiencies associated with the consolidation of the segment’s European operations continued into 2003 and adversely affected its results as did reduced profitability in North America. Excluding restructuring costs, the segment had operating earnings of $1.8 million in 2003 compared to earnings of $5.3 million in 2002. Restructuring costs totaled $12.6 million in 2003 and related principally to overhead reductions in North America and to the further consolidation of the segment’s European operations. The actions in Europe included the closure of two

manufacturing plants and the reorganization and consolidation of the European marketing and sales structure. Restructuring costs of $6.4 million in 2002 related principally to the closure of a manufacturing plant in the U.S. and to costs to integrate two businesses acquired in 2001 with the segment’s existing European operations. The actions initiated in 2002 and 2003 resulted in savings in excess of $4 million and are expected to produce savings in excess of $12 million in 2004. Including the effects of actions that began in 2001, the segment’s 2004 savings will be approximately $19 million.

Industrial Fluids — The industrial fluids segment had new orders and sales of $104 million compared to orders and sales of $96 million in 2002. Both increases were due principally to currency effects related to the segment’s operations in Europe. The segment’s operating profit increased from $14.4 million in 2002 to $15.7 million in 2003. The improvement occurred despite a $.9 million reduction in pension income.

Our pretax loss was $111.8 million in 2003 compared to a loss of $36.6 million in 2002. The amount for 2003 includes restructuring costs of $27.1 million and the $65.6 million goodwill impairment charge. In 2002, restructuring costs were $13.9 million. The comparison between years was also adversely affected by a $7.1 million reduction in the amount of pension income related to continuing operations and the absence in 2003 of the previously discussed $4.5 million of royalty income.

As was previously discussed (see Significant Accounting Policies and Judgments — Deferred Tax Assets and Valuation Allowances), we recorded a $71 million charge in the second quarter tax provision to establish valuation allowances against a portion of the company’s U.S. deferred tax assets. Additional deferred tax assets and valuation allowances were recorded in the second half of the year. Due to the geographic mix of earnings and losses, the tax provision for 2003 also includes income tax expense related to profitable operations in non-U.S. jurisdictions. These factors resulted in a 2003 provision for income taxes of $72.7 million despite a pretax loss of $111.8 million.

In 2002, we recorded tax benefits related to losses in the U.S. at the federal statutory rate. We also had a favorable tax rate for non-U.S. operations due in part to permanent deductions in The Netherlands, the benefits of which were partially offset by increases in valuation allowances in Germany and Italy. The 2002 consolidated effective rate of almost 50% also benefited from the favorable resolution of tax contingencies in the U.S. and other jurisdictions.

Our 2003 loss from continuing operations was $184.5 million, or $5.49 per share, which includes after-tax restructuring costs of $25.5 million, the goodwill impairment charge of $65.6 million (with no tax benefit) and the $71 million tax adjustment to record U.S. valuation allowances. In 2002, our loss from continuing operations was $18.4 million, or $.56 per share. The loss for 2002 includes after-tax restructuring costs and royalty income of $8.8 million and $2.8 million, respectively. After-tax pension income was $.5 million in 2003 compared to $4.9 million in 2002.

In 2003 and 2002, the loss from discontinued operations includes our round metalcutting tools and grinding wheels businesses. The former was sold in two separate transactions in September 2003 and the grinding wheels business is expected to be sold early in 2004. In 2002, discontinued operations also includes the Valenite and Widia and Werkö metalcutting tools businesses that were sold in August of that year. The losses that were incurred in both years resulted from depressed levels of industrial production in North America and — in 2002 — Europe and India and from inefficiencies associated with managing businesses in the process of being sold.

As discussed more fully in the notes to the Consolidated Financial Statements, in 2002 we recorded a net gain of $8.4 million related to the divestitures of discontinued operations. In 2003, we recorded expense of $.8 million to adjust sale-related accruals and reserves to reflect current expectations.

Effective January 1, 2002, Milacron recorded a pretax goodwill impairment charge of $247.5 million ($187.7 after tax or $5.61 per share) as the cumulative effect of a change in method of accounting in connection with the adoption of Statement of Financial Accounting Standards No. 142. Approximately 75% of the pretax charge related to the company’s container blow molding and round metalcutting tools businesses, the latter of which was sold in 2003.

Our net loss for 2003 was $191.7 million, or $5.70 per share, compared to a loss of $222.9 million, or $6.67 per share, in 2002. The amount for 2003 includes the previously discussed restructuring costs, goodwill impairment charge, tax adjustment for valuation allowances and the losses from discontinued operations. The loss for 2002 includes restructuring costs, the net loss from discontinued operations and the cumulative effect adjustment.

In 2002, consolidated new orders for continuing operations totaled $703 million, a decrease of $19 million, or 3%, in relation to orders of $722 million in 2001. Sales decreased from $755 million to $693 million. The decreases occurred despite favorable currency effects and the contributions of the 2001 acquisitions. As was the case for much of 2001, low levels of industrial production and capital spending in the plastics processing industry penalized results in 2002. However, order levels and shipments increased modestly in the fourth quarter.

Export orders totaled $66 million in 2002 compared to $78 million in 2001 while export sales decreased from $82 million to $71 million. In both cases, the decreases resulted from reduced export volume for plastics processing machinery. Sales of all segments to non-U.S. customers, including exports, totaled $296 million, or 43% of sales, in 2002 compared to $307 million, or 41% of sales, in 2001. Sales of products manufactured outside the U.S. were $265 million in 2002 and $256 million in 2001.

Milacron’s backlog of unfilled orders was $76 million at December 31, 2002 and $61 million at December 31, 2001. The increase resulted principally from higher fourth quarter order levels for plastics processing machinery worldwide.

After deducting $1.9 million of restructuring costs related to product line discontinuation in 2002 and $3.1 million of such costs in 2001, the consolidated manufacturing margin increased modestly from 17.0% to 17.3%. Excluding these costs, margins were 17.5% in 2002 and 17.4% in 2001. Despite our aggressive cost reduction efforts, lower order and sales volume and reduced manufacturing cost absorption continued to depress the margins of certain segments as described below.

In 2002, total selling and administrative expense decreased in dollar amount due to our ongoing cost reduction initiatives and reduced variable selling costs that resulted from lower sales volume. As a percentage of sales, selling expense held steady at 13.4%. Administrative expense decreased by 5% in relation to 2001.

Other expense-net decreased from $12.9 million in 2001 to income of $1.0 million in 2002. The amount for 2002 includes $4.5 million of royalty income from the licensing of patented technology whereas the amount for 2001 includes goodwill amortization expense of $10.8 million and a gain of $2.6 million on the sale of surplus real estate.

In response to exceptionally low order levels, in the third and fourth quarters of 2001 we implemented plans to consolidate manufacturing operations and further reduce Milacron’s cost structure. These plans resulted in pretax charges to earnings from continuing operations of $17.8 million, including $14.1 million in 2001 and $3.7 million in 2002. In 2001, we also initiated a plan to integrate the operations of EOC and Reform, both of which were acquired in the second quarter of that year, with our existing mold base and components business in Europe. The total cost of completing the integration was originally expected to be $9.2 million but was ultimately increased to $11.0 million due to unanticipated costs related to the integration and lower than expected realizable values for surplus assets. Of the total cost, $1.2 million was included in reserves for employee termination benefits and facility exit costs that were established in the allocations of the EOC and Reform acquisition costs. The remainder was charged to expense, including $3.4 million in 2001 and $4.6 million in 2002.

In connection with the plans initiated in 2001, Milacron recorded pretax restructuring costs related to continuing operations of $8.3 million in 2002 compared to $17.5 million in 2001. Cash costs for the restructuring actions and the integration of EOC and Reform were $13.2 million in 2002. In the aggregate, the actions initiated in 2001 are generating over $35 million in annualized cost savings, most of which were realized in 2002.

In the third quarter of 2002, we approved additional restructuring plans for the purpose of further reducing the company’s cost structure in certain businesses and to reduce corporate costs as a result of the dispositions of Widia, Werkö and Valenite. These actions resulted in third quarter restructuring expenses of $1.3 million.

In November 2002, we announced additional restructuring initiatives intended to improve operating efficiency and customer service. The first action involved the transfer of all manufacturing of container blow molding machines and structural foam systems from the plant in Manchester, Michigan to our more modern and efficient facility near Cincinnati, Ohio. The mold making operation in Manchester will also be moved to a smaller, more cost-effective location near the existing facility. In the second initiative, the manufacture of special mold bases for injection molding at the Monterey Park, California plant was phased out and transferred to various other facilities in North America. These additional actions were expected to result in incremental restructuring costs of $7 to $8 million, of which $4.3 million was charged to expense in 2002 with a majority of the remainder to be recorded in 2003. The total cash cost of these initiatives was expected to be approximately $6 million, most of which was to be spent in 2003. The pretax annualized cost savings were expected to exceed $4 million, most of which was realized in 2003.

The following sections discuss the operating results of our business segments which are presented in tabular form on pages 74 through 76 of this Form 10-K. As presented therein, segment operating profit or loss excludes restructuring costs and goodwill impairment charges.

Machinery technologies — North America — In 2002, the machinery technologies — North America segment had orders and sales of $321 million and $314 million, respectively. In 2001, the segment’s orders totaled $337 million and sales were $362 million. While new business and shipment levels remained low for much of the year due to depressed capital spending levels in the plastics processing industry, volume increased modestly in the fourth quarter. Despite lower sales volume, the segment’s manufacturing margin improved in 2002 as a result of our cost reduction and restructuring efforts. Excluding restructuring costs of $6.7 million, the segment had operating earnings of $8.0 million in 2002 compared to a 2001 operating loss of $13.5 million which excludes $6.8 million of restructuring costs. The amount for 2002 includes the previously discussed $4.5 million of royalty income. Goodwill amortization expense included in the 2001 amount totaled $3.9 million.

Machinery technologies — Europe — New orders were $122 million in 2002, an increase of $8 million in relation to the prior year that was due principally to favorable currency effects. Sales decreased from

$123 million to $117 million despite favorable currency effects. Manufacturing margins also decreased slightly in 2002 and the segment’s results continued to be penalized by operating problems related to the consolidation of the segment’s European blow molding systems business that was completed in 2001. The segment had an operating loss of $8.1 million in 2002 compared to a loss of $9.1 million in 2001. The amount for 2002 excludes a credit of $.4 million related to the reversal of excess restructuring reserves that had been accrued in 2001 while the loss for 2001 excludes restructuring expense of $6.9 million. Goodwill amortization expense in 2001 was $1.4 million.

Mold technologies — The mold technologies segment had new orders of $174 million in 2002, a decrease of $10 million in relation to orders of $184 million in 2001. Sales also decreased by $10 million from $185 million to $175 million. The decreases were due in part to low levels of industrial production and capacity utilization in the North American plastics industry but order levels and shipments also decreased in the segment’s European operations. Due to reduced volume, the segment’s manufacturing margin decreased by approximately one percentage point. Excluding restructuring costs of $6.4 million, the segment had operating earnings of $5.3 million in 2002 compared to earnings of $12.1 million in 2001 which excludes restructuring costs of $3.5 million. The margin decrease and reduction in profitability were due principally to costs and inefficiencies related to the integration of EOC and Reform (see Acquisitions) with the segment’s existing European mold base business. The amount for 2002 includes a fourth quarter goodwill impairment charge of $1.0 million related to a small business unit in the segment. Goodwill amortization expense in 2001 was $5.2 million.

Industrial fluids — In the industrial fluids segment, new orders and sales both increased from $93 million in 2001 to $96 million in 2002. Approximately one-half of the increases resulted from favorable currency effects. The segment’s manufacturing margin decreased only modestly but its operating profit fell from $18.1 million, which excludes $.3 million of restructuring costs, to $14.4 million in 2002. The profitability decrease resulted principally from the absence of one-time favorable adjustments in 2001 that did not recur in 2002. Expense for goodwill amortization in 2001 was $.3 million.

Milacron’s pretax loss in 2002 was $36.6 million compared to a loss of $51.0 million in 2001. The 2002 amount includes restructuring costs of $13.9 million, partially offset by the previously discussed $4.5 million of royalty income. The amount for 2001 includes goodwill amortization expense of $10.8 million, $17.5 million of restructuring costs and the $2.6 million land sale gain.

During 2002, Milacron recorded a net benefit related to income taxes due to the combined effects of operating losses in the U.S. and a favorable effective tax rate for non-U.S. operations. The losses incurred by our U.S. operations resulted in tax benefits based on the federal statutory rate and the company’s effective tax rate for state and local tax purposes, in both cases adjusted for permanent differences and applicable credits. The favorable tax rate for non-U.S. operations was due in part to permanent deductions in The Netherlands partially offset by increases in valuation allowances (as discussed below) in Germany and Italy. The consolidated effective tax rate also benefited from the favorable resolution of tax contingencies related to the U.S. and other jurisdictions.

Milacron entered both 2002 and 2001 with significant net operating loss carryforwards in certain jurisdictions along with valuation allowances against the carryforwards and other deferred tax assets. Valuation allowances are evaluated periodically and revised based on a “more likely than not” assessment of whether the related deferred tax assets will be realized. Increases or decreases in these valuation allowances serve to unfavorably or favorably impact our effective tax rate.

Milacron’s 2002 loss from continuing operations was $18.4 million, or $.56 per share, compared to a loss of $28.7 million, or $.87 per share, in 2001. The amount for 2002 includes after-tax restructuring costs of

$8.8 million and after-tax royalty income of $2.8 million. The loss from continuing operations for 2001 includes after-tax goodwill amortization expense of $7.0 million, after-tax restructuring costs of $11.0 million, and the after-tax land sale gain of $1.6 million.

The company’s discontinued operations — Valenite, Widia, Werkö, grinding wheels and round metalcutting tools — had combined losses from operations of $25.2 million, or $.75 per share, in 2002 compared to losses of $7.0 million, or $.21 per share, in 2001. The adverse comparison to 2001 resulted from depressed levels of industrial production in North America, Europe and India as well as inefficiencies associated with managing businesses in the process of being sold.

As described more fully in the notes to the Consolidated Financial Statements, in 2002 discontinued operations includes a net gain of $8.4 million that resulted from a gain of $31.3 million on the sale of Valenite and a benefit of $1.9 million from adjustments of reserves related to the 1998 divestiture of the machine tools segment. These amounts were partially offset by losses on the sale of Widia and Werkö of $14.9 million and on the planned dispositions of the round metalcutting tools and grinding wheels businesses totaling $9.9 million. The latter amount was recorded as a charge to earnings in the fourth quarter. The amounts for the Valenite and the Widia and Werkö transactions were revised in the fourth quarter from the amounts previously recognized to reflect final purchase price adjustments and to adjust reserves and tax effects to reflect more recent estimates of expected liabilities or benefits.

Including the effects of discontinued operations and the change in method of accounting, Milacron had a net loss of $222.9 million, or $6.67 per share, in 2002 compared to a net loss of $35.7 million, or $1.08 per share, in 2001. The amount for 2002 includes the previously discussed restructuring costs and royalty income as well as losses from discontinued operations of $16.8 million and the $187.7 million cumulative effect adjustment. The net loss for 2001 includes the restructuring and goodwill amortization costs that are discussed above as well as $7.0 million of losses from discontinued operations.

Due to the significant effects of restructuring costs in recent years, the following tables are provided to assist the reader in better understanding Milacron’s operating earnings (loss) including these amounts.

Milacron uses foreign currency forward exchange contracts to hedge its exposure to adverse changes in foreign currency exchange rates related to firm commitments arising from international transactions. The company does not hold or issue derivative instruments for trading purposes. At December 31, 2003, Milacron had outstanding forward contracts totaling $4.7 million compared to $5.0 million at December 31, 2002. The annual potential loss from a hypothetical 10% adverse change in foreign currency exchange rates would not be material at either date.

At December 31, 2003, Milacron’s continuing operations had fixed interest rate debt of $270 million, including $115 million of 8 3/8% Notes due March 15, 2004, and €115 million ($143 million) of 7 5/8% Eurobonds due April 6, 2005. We also had floating rate debt totaling $53 million, with interest fluctuating based primarily on changes in LIBOR. At December 31, 2002, fixed rate debt related to continuing operations totaled $246 million, and floating rate debt totaled $55 million. We also had the ability to sell up to $40 million of accounts receivable under our receivables purchase agreement which resulted in financing fees that fluctuated based on changes in commercial paper rates. As a result, annual interest expense and financing fees fluctuated based on changes in short-term borrowing rates. The potential annual loss on floating rate debt from a hypothetical 10% increase in interest rates would be approximately $.3 million at December 31, 2003, and $.4 million at December 31, 2002 under the arrangements in effect at those dates.

On March 12, 2004, we entered into two new financing agreements to repay our 8 3/8% Notes due March 15, 2004, the outstanding debt under our revolving credit facility which was terminated on March 12, 2004, and our obligations under our receivables purchase agreement which was terminated on March 12, 2004. Effective as of March 12, 2004, our interest rate risk, including our exposure to floating interest rates, is based on the new financing arrangements. (See Liquidity and Sources of Capital — Refinancing Actions on page 35).

As discussed more fully in the notes to the Consolidated Financial Statements, Milacron has maintained a receivables purchase agreement with a third party financial institution for the last several years. Under this arrangement we sold, on a revolving basis, an undivided percentage ownership interest in designated pools of accounts receivable. As existing receivables were collected, undivided interests in new eligible receivables were sold. Accounts that became 60 days past due were no longer eligible to be sold and Milacron was at risk for any related credit losses. Credit losses have not been significant in the past and we maintained an allowance for doubtful accounts sufficient to cover our estimated exposures. At December 31, 2003, approximately $36 million of accounts receivable had been sold under this arrangement which expired on March 12, 2004. The average amount sold during 2003 was also approximately $36 million. On March 12, 2004 this facility was repaid (see Liquidity and Sources of Capital — Refinancing Actions on page 35).

Certain of Milacron’s non-U.S. subsidiaries also sell accounts receivable on an ongoing basis for purposes of improving liquidity and cash flows. Some of these sales are made with recourse, in which case appropriate reserves for potential losses are provided. At December 31, 2003, the gross amount of receivables sold totaled $3.8 million. The average amount sold during the year was approximately $5 million. Financing fees related to these arrangements were not material.

In years prior to 2003, our U.S. operations sold with recourse notes from its customers for the purchase of plastics processing machinery. In certain other cases, Milacron guaranteed the repayment of all or a portion of notes payable from its customers to third party lenders. These arrangements were entered into for the purpose of facilitating sales of machinery. New sales of notes and guarantees were not significant in 2003 but Milacron retains potential obligations under earlier arrangements. In the event a customer fails to repay a note, we generally regain title to the machinery. At December 31, 2003, our maximum exposure under these U.S. guarantees, as well as certain guarantees by certain of the company’s non-U.S. subsidiaries, totaled $11.6 million. Losses related to sales of notes and guarantees have not been material in the past.

Milacron’s contractual obligations for 2004 and beyond are shown as of December 31, 2003 in the table that follows.

The above table excludes the contingent liabilities of up to $15.4 million related to sales of receivables and loan guarantees that are discussed above. The above table also excludes contractual obligations arising from the refinancing arrangements entered into on March 12, 2004 discussed below on page 35 under “Liquidity and Sources of Capital — Refinancing Actions.”

At December 31, 2003, Milacron had cash and cash equivalents of $93 million, a decrease of $29 million from December 31, 2002. Approximately $24 million of the decrease resulted from the payment in 2003 of post-closing adjustments related to the divestitures for Valenite and Widia and Werkö which were sold in 2002. Of the $93 million of cash at December 31, 2003, approximately $3 million was used to collateralize sales of certain non-U.S. receivables. A substantial amount of the cash was held in foreign accounts in support of our non-U.S. operations. Were this non-U.S. cash to be repatriated, it could result in withholding taxes in foreign jurisdictions.

Operating activities provided $10 million of cash in 2003 due to reductions in inventories and trade receivables that resulted from our aggressive working capital management initiatives. Cash flows for 2003 also benefited from the receipt of $21 million of refunds of income taxes paid in prior years. These benefits were partially offset by reductions of certain current liabilities. In 2002, operating activities provided $36 million cash due principally to the results of our working capital management programs.

Investing activities used $31 million of cash in 2003, principally for post-closing adjustments related to the 2002 divestitures and for acquisitions and capital additions. In 2002, investing activities provided $301 million of cash due to the divestiture proceeds which were offset to some degree by capital expenditures and acquisition-related costs.

In 2003, financing activities used $6 million of cash, principally for debt repayments. In 2002, financing activities used $303 million of cash due to debt repayments using a portion of the divestiture proceeds.

Milacron’s current ratio related to continuing operations was 1.0 at December 31, 2003 compared to 1.6 at December 31, 2002. The change is due principally to the reclassification of $115 million of 8 3/8% Notes due March 15, 2004 from noncurrent liabilities at December 31, 2002 to current liabilities at December 31, 2003.

Total shareholders’ equity was a deficit of $34 million at December 31, 2003 a decrease of $168 million from December 31, 2002. The decrease resulted from the net loss incurred for the year which includes the effects of the $66 million goodwill impairment charge and the $71 million tax provision to establish U.S. valuation allowances.

Total debt was $323 million at December 31, 2003 compared to $302 million at December 31, 2002. The increase resulted entirely from currency effects and occurred despite $5 million of debt repayments during the year.

At December 31, 2003, Milacron had lines of credit with various U.S. and non-U.S. banks totaling approximately $94 million, including a $65 million committed revolving credit facility. At December 31, 2003, $54 million of the revolving credit facility was utilized, including outstanding letters of credit of $12 million. The facility matured on March 15, 2004.

The revolving credit facility included a number of financial and other covenants, the most significant of which required Milacron to achieve specified minimum levels of four quarter trailing cumulative consolidated EBITDA (earnings before interest, taxes, depreciation and amortization). At December 31, 2003, Milacron was in compliance with all covenants.

On March 12, 2004, all amounts borrowed under the revolving credit facility were repaid (see Liquidity and Sources of Capital — Refinancing Actions on page 35).

In addition to the revolving credit facility, as of December 31, 2003, we had a number of other credit lines totaling $29 million, of which approximately $15 million was available for use under various conditions. Under the terms of the revolving credit facility, increases in debt are primarily limited to current lines of credit and certain other indebtedness from other sources.

Milacron’s debt and credit are rated by Standard & Poor’s (S&P) and Moody’s Investors Service (Moody’s). On February 12, 2004, S&P announced it had lowered Milacron’s corporate credit rating to CCC and its senior unsecured rating to CCC-, in both cases with a “CreditWatch Developing” outlook. At the same time, the company’s senior secured bank facility was lowered to CCC. S&P’s ratings were reaffirmed on March 11, 2004 and the outlook was changed to “Credit Watch Negative.” On February 24, 2004, Moody’s announced that it had lowered Milacron’s senior unsecured rating to Caa2 and its senior implied rating to Caa1. The senior secured rating was affirmed at B3 and all ratings were placed on review for possible further downgrade. We believe the current ratings of Moody’s and S&P reflect uncertainty about our ability to refinance the financial obligations that were due on March 12 and March 15, 2004 (see Liquidity and Sources of Capital — Refinancing Actions on page 34) and expect that the ratings will be reconsidered in the near future.

None of the company’s debt instruments include rating triggers that would accelerate maturity or increase interest rates in the event of a ratings downgrade. Accordingly, any future rating downgrades would have no significant short-term effect, although they could potentially affect the types and cost of credit facilities and debt instruments available to the company in the future.

Our accounts receivable purchase program with a third party financial institution has been another important source of liquidity for the last several years. During the fourth quarter of 2003, the liquidity facility that supports the program was extended from the scheduled expiration date of December 31, 2003 to February 27, 2004. The receivables purchase agreement was also amended to mature at February 27, 2004. On February 27, 2004, the expiration of the liquidity facility and the maturity of the receivables purchase agreement were both extended to March 12, 2004. Including $2.9 million related to discontinued operations, $35.9 million of the $40.0 million facility was utilized at December 31, 2003.

On March 12, 2004, this facility was repaid (see Liquidity and Sources of Capital — Refinancing Actions on page 35).

Milacron expects to generate positive cash flow from operating activities during 2004, which will be partially offset by up to $15 to $17 million for capital expenditures. Assuming that we obtain the shareholder approval described below under “Liquidity and Sources of Capital — Refinancing Actions,” we believe that Milacron’s current cash position, cash flow from operations, available credit lines, including the new credit facility entered into on March 12, 2004 described below, will be sufficient to meet the company’s operating and capital requirements in 2004. If we do not obtain the required shareholder approval on or before July 29, 2004, our liquidity will be materially impaired as described more fully below.

On March 12, 2004, we entered into a definitive agreement whereby Glencore Finance AG and Mizuho International plc purchased $100 million in aggregate principal amount of Milacron’s new exchangeable debt securities. The proceeds from this transaction, together with existing cash balances, were used to repay the 8 3/8% Notes due March 15, 2004. The securities we issued were $30 million of 20% Secured Step-Up Series A Notes due 2007 and $70 million of 20% Secured Step-Up Series B Notes due 2007. The $30 million of Series A Notes are convertible into shares of our common stock at a conversion price of $2.00 per share and initially bear a combination of cash and pay-in-kind interest at a total rate of 20% per annum. The $70 million of Series B Notes initially bear a combination of cash and pay-in-kind interest at a total rate of 20% per annum. Both the Series A Notes and the Series B Notes are exchangeable for a new series of Milacron’s convertible preferred stock with a cumulative dividend rate of 6%. Upon receipt of shareholder approval of both (i) the authorization of additional shares of our common stock and (ii) the issuance of the new series of convertible preferred stock convertible into such common stock and for which the Series A Notes and the Series B Notes may be exchanged, the interest rate applicable to both the Series A Notes and the Series B Notes will be retroactively reset to 6% per annum from the date of issuance, payable in cash. Following receipt of shareholder approval, as soon as a condition requiring the execution of a refinancing of the €115 million of 7 5/8% Eurobonds due in April 2005 is satisfied or waived, all Series A Notes and Series B Notes (and any common stock into which any Series A Notes had been converted) will be exchanged for shares of the new series of convertible preferred stock. If shareholder approval is not obtained on or before July 29, 2004, the Series A Notes and Series B Notes will be in default and will remain outstanding until March 15, 2007 with an initial interest rate of 20% from the date of issuance, increasing to 24% over time, and any common stock into which any Series A Notes had previously been converted will be exchanged for shares of the company’s currently authorized, but unissued, serial preference stock with a 24% cumulative dividend rate.

Following exchange of the Series A Notes and the Series B Notes for convertible preferred stock, the holders of the convertible preferred stock would collectively own approximately between 40% and 60% of Milacron’s fully diluted equity (on an as-converted basis), depending on whether Milacron exercises an option to redeem a portion of the convertible preferred stock with the proceeds from a rights offering to its existing shareholders. After seven years, the convertible preferred stock would automatically be converted into common stock at a conversion price of $2.00 per share but may be converted prior to that time at the option of the holders. The conversion price would be subject to reset to $1.75 per share at the end of the second quarter of 2005 if a test based on Milacron’s financial performance for 2004 is not satisfied. In addition, as part of the transaction we have agreed to issue to holders of the convertible preferred stock contingent warrants to purchase an aggregate of one million shares of our common stock, subject to receiving shareholder approval to increase our authorized common stock, which contingent warrants will be exercisable only if a test based on Milacron’s financial performance for 2005 is not satisfied. Assuming that Milacron does not conduct a rights offering to its existing shareholders, and both the conversion price of the convertible preferred stock is reset to $1.75 and the contingent warrants are exercised, the holders of the convertible preferred stock would own approximately 62.5% of Milacron’s fully diluted equity (on an as-converted basis).

The events contemplated by the agreement with Glencore Finance AG and Mizuho International plc could result in an “ownership change” of Milacron for tax purposes. Were this to occur, the timing of our utilization of tax loss carryforwards and other tax attributes could be substantially delayed. Accordingly, this could affect income tax expense and cash income taxes in future years.

If we do not obtain shareholder approval of both the authorization of additional shares of our common stock and the issuance of the new series of convertible preferred stock convertible into such common stock on or before July 29, 2004, our liquidity will be materially impaired as the Series A Notes and the Series B Notes will go into default and the interest rates thereon will become significantly higher. If shareholder approval has not been obtained on or before July 29, 2004, the interest payable on the Series A Notes and the Series B Notes will no longer be eligible for retroactive reset to 6%. Instead, interest on the Series A Notes and the Series B Notes will be payable in arrears (a) on September 15, 2004 in cash at a rate of 12% per annum and in additional Series A Notes or Series B Notes, as applicable, at a rate of 8% per annum, (b) on March 15, 2005

in cash at a rate of 16% per annum and in additional Series A Notes or Series B Notes, as applicable, at a rate of 8% per annum, (c) on September 15, 2005 in cash at a rate of 20% per annum and in additional Series A Notes or Series B Notes, as applicable, at a rate of 4% per annum, and (d) on March 15, 2006, and through to maturity on March 15, 2007, in cash at a rate of 24% per annum.

Pursuant to the definitive agreement with Glencore Finance AG and Mizuho International plc, Milacron has agreed to use its commercially reasonable efforts to cause a number of persons selected by holders of the Series A Notes, acting together, to be appointed or elected to a number of directorships on Milacron’s board of directors in proportion to the percentage of Milacron’s fully diluted equity represented by the number of shares of common stock into which the Series A Notes may be converted, rounded up to the nearest whole number.

On March 12, 2004, Milacron also reached a separate agreement with Credit Suisse First Boston for a $140 million credit facility having a term of approximately one year. At close, extensions of credit under the facility in an aggregate amount of $84 million were utilized to repay and terminate Milacron’s existing revolving credit facility and its existing receivables purchase program.

This new credit facility consists of a $65 million revolving A facility, with a $25 million subfacility for letters of credit, and a $75 million term loan B facility. Milacron and certain of its wholly-owned domestic subsidiaries are joint and several borrowers under the new credit facility and the entire new credit facility is secured by first priority liens on substantially all assets of Milacron and its domestic subsidiaries and includes pledges of stock of various wholly-owned domestic subsidiaries and certain foreign subsidiaries.

Availability under the revolving A facility is limited by a borrowing base calculated based upon specified percentages of eligible receivables and eligible inventory, a $10 million minimum availability covenant (resulting in aggregate availability of no more than $55 million) and other reserve requirements. In addition, the borrowing base is subject to the customary ability of the administrative agent for the lenders to reduce advance rates, impose or change collateral value limitations, establish reserves and declare certain collateral ineligible from time to time in its reasonable discretion, any of which could reduce our borrowing availability under the revolving A facility at any time. At March 12, 2004, additional availability under the revolving A facility was approximately $20 million, after taking into account the minimum availability and existing reserve requirements.

With the exception of $4 million of domestic cash that may be held by Milacron outside the control of the administrative agent, all proceeds of Milacron’s domestic accounts receivable and other domestic collateral are subject to a daily cash “sweep.” Under the terms of the new credit facility, these proceeds are deposited in lockbox accounts under the control of the administrative agent and then transferred to blocked accounts under the control of the administrative agent. Each business day, the funds in the blocked accounts will be applied to pay down any outstanding borrowings under the revolving A facility. As a result, Milacron’s liquidity is likely to be dependent on its ability to continue to make borrowings under the new credit facility. If Milacron is unable to satisfy the conditions to borrowing under the new credit facility, which include, among other things, conditions related to the continued accuracy of our representations and warranties and the absence of any unmatured or matured defaults, or any material adverse change in our business or financial condition, without a waiver we would lose access to this important source of liquidity and our financial condition would be materially impaired.

Milacron has the ability to prepay the revolving A facility, in whole or in part, at any time without penalty. Milacron has the option to prepay the term loan B facility at any time, subject to a 2% prepayment fee on the principal amount prepaid, as follows: (i) in whole, to the extent concurrently therewith or prior thereto all revolving A loans have been repaid in full and all commitments under the revolving A facility have been terminated, or (ii) in whole or in part, if availability under the revolving A facility exceeds $10 million and no event of default exists. Prepayments of term loan B loans permanently reduce Milacron’s availability under the new credit facility. Milacron is also required to make prepayments in connection with, among other things, asset sales and casualty events and in connection with the issuance of debt or equity, tax refunds, proceeds from other “corporate events” and other extraordinary receipts. Additionally, there are limitations placed on the amounts that can be paid to the holders of the 7 5/8% Eurobonds due April 2005 without causing a prepayment event.

The new credit facility includes a number of affirmative and negative covenants, including, but not limited to, negative covenants limiting the ability of Milacron and its subsidiaries to incur additional debt, incur liens, make capital expenditures, issue or sell capital stock and make restricted payments (including a prohibition on the ability to make cash interest or dividend payments on debt or equity securities issued pursuant to the terms of the definitive agreement entered into on March 12, 2004 among Milacron, Mizuho International plc and Glencore Finance AG, unless availability under the revolving A facility exceeds $25 million before taking into account minimum availability requirements). The new credit facility also includes a financial covenant that requires the company to achieve specified minimum levels of monthly cumulative EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted to exclude certain restructuring costs and certain other items, each as specified in the financing agreement.

The new credit facility is subject to various events of default, including an event of default if the company does not obtain shareholder approval of both the authorization of additional shares of its common stock and the issuance of a new series of convertible preferred stock convertible into such common stock on or before July 29, 2004.

Borrowings under the new credit facility will bear interest, at Milacron’s option, based upon either (i) a LIBOR rate plus the applicable margin (as defined below) or (ii) a reference rate plus the applicable margin (as defined below). The “applicable margin,” with respect to revolver A LIBOR loans, is 3.25% per annum, and with respect to revolver A reference rate loans, is 1.5% per annum. The “applicable margin,” with respect to term loan B LIBOR loans, is 10.5% per annum, and with respect to term loan B reference rate loans, is 8.00% per annum. In no event will the interest rate of (a) revolver A LIBOR loans be less than 4.75% and (b) revolver A reference rate loans be less than 5.5%. In no event will the interest rate of term loan B LIBOR loans or term loan B reference rate loans be less than 12%.

After giving effect to the repayment and termination of the existing revolving credit facility and the accounts receivable liquidity facility and repayment of the senior U.S. notes, Milacron’s current cash balance was approximately $60 million at March 15, 2004.

Milacron wishes to caution readers about all of the forward-looking statements in the “Management’s Discussion and Analysis” section and elsewhere. These include all statements that speak about the future or are based on our interpretation of factors that might affect our businesses. Milacron believes the following important factors, among others, could affect its actual results in 2004 and beyond and cause them to differ materially from those expressed in any of our forward-looking statements:


	•	obtaining shareholder approval of both the authorization of additional shares of common stock and the issuance of preferred stock convertible into such common stock in connection with the refinancing arrangements entered into on March 12, 2004;

	•	global and regional economic conditions, consumer spending, capital spending levels and industrial production, particularly in segments related to the level of automotive production and spending in the plastics and construction industries;

	•	fluctuations in currency exchange rates of U.S. and foreign countries, including countries in Europe and Asia where Milacron has several principal manufacturing facilities and where many of our customers, competitors and suppliers are based;

	•	fluctuations in interest rates which affect the cost of borrowing;

	•	production and pricing levels of important raw materials, including plastic resins, which are a key material used by purchasers of Milacron’s plastics technologies products, as well as steel, oil, and industrial grains used in the production of grinding wheels;


	•	lower than anticipated levels of plant utilization resulting in production inefficiencies and higher costs, whether related to the delay of new product introductions, improved production processes or equipment, or labor relations issues;

	•	customer acceptance of new products introduced during 2003 and products expected to be introduced in 2004;

	•	any major disruption in production at key customer or supplier facilities or at Milacron’s facilities;

	•	disruptions in global or regional commerce due to wars, social, civil or political unrest in the non-U.S. countries in which Milacron operates and to acts of terrorism, continued threats of terrorism and military, political and economic responses (including heightened security measures) to terrorism;

	•	alterations in trade conditions in and between the U.S. and non-U.S. countries where Milacron does business, including export duties, import controls, quotas and other trade barriers;

	•	changes in tax, environmental and other laws and regulations in the U.S. and non-U.S. countries where Milacron does business;

	•	litigation, claims or assessments, including but not limited to claims or problems related to product liability, warranty or environmental issues; and

	•	fluctuations in stock market valuations of pension plan assets that could result in increased pension expense and reduced shareholders’ equity and require us to make significant cash contributions in the future.

The Information required by Item 7A is included in Item 7 on page 31 of this Form 10-K.

Beginning on page 40 and continuing through page 80 are the Consolidated Financial Statements with applicable notes and the related Report of Independent Auditors, and the supplementary financial information specified by Item 302 of Regulation S-K.

The management of Milacron Inc. has prepared the accompanying financial statements and is responsible for their integrity and objectivity. The statements, which include amounts that are based on management’s best estimates and judgments, have been prepared in conformity with generally accepted accounting principles and are free of material misstatement. Management also prepared the other information in this Form 10-K and is responsible for its accuracy and consistency with the financial statements.

Milacron Inc. maintains a system of internal control over financial reporting and over safeguarding of assets against unauthorized acquisition, use or disposition that is designed to provide reasonable assurance to the company’s management and Board of Directors regarding the preparation of reliable published annual and quarterly financial statements and such asset safeguarding. The system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified. Even an effective internal control system, no matter how well designed, has inherent limitations — including the possibility of the circumvention or overriding of controls — and therefore can provide only reasonable assurance with respect to financial statement preparation and such asset safeguarding. Further, because of changes in conditions, internal control system effectiveness may vary over time.

The company assessed its internal control system as of December 31, 2003 in relation to criteria for effective internal control over the preparation of its published annual and quarterly financial statements described in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the company believes that, as of December 31, 2003, its system of internal control over the preparation of its published annual and quarterly financial statements and over the safeguarding of assets against unauthorized acquisition, use or disposition met those criteria.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND SHAREHOLDERS’ EQUITY (DEFICIT)

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The Consolidated Financial Statements include the accounts of the company and its subsidiaries. All significant intercompany transactions are eliminated.

Assets and liabilities of the company’s non-U.S. operations are translated into U.S. dollars at period-end exchange rates. Net exchange gains or losses resulting from such translation are excluded from net earnings and accumulated in a separate component of shareholders’ equity. Income and expense accounts are translated at weighted-average exchange rates for the period. Gains and losses from foreign currency transactions are included in other expense-net in the Consolidated Statements of Operations and are not material in any year presented.

The company recognizes sales revenue when products are shipped to unaffiliated customers, legal title has passed and all significant contractual obligations of the company have been satisfied. The company provides for estimated post-sale warranty costs as revenue is recognized (see Summary of Significant Accounting Policies — Warranty Reserves). Appropriate provisions are also made for returns for credit and uncollectible accounts.

Advertising costs are charged to expense as incurred. Excluding amounts related to participation in trade shows, advertising costs totaled $5.4 million in 2003, $4.8 million in 2002 and $6.9 million in 2001.

The company provides deferred income taxes for cumulative temporary differences between the financial reporting basis and income tax basis of its assets and liabilities. Provisions are made for all currently payable federal and state and local income taxes at applicable tax rates. Provisions are also made for any additional taxes on anticipated distributions from subsidiaries.

Basic earnings per common share data are based on the weighted-average number of common shares outstanding during the respective periods. Diluted earnings per common share data are based on the weighted-average number of common shares outstanding adjusted to include the effects of potentially dilutive stock options and certain restricted shares.

The company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Inventories are stated at the lower of cost or market, including provisions for obsolescence commensurate with known or estimated exposures. The principal methods of determining costs are last-in, first-out (LIFO) for certain U.S. inventories and average or standard cost, which approximates first-in, first-out (FIFO), for other inventories.

Property, plant and equipment, including amounts related to capital leases, are stated at cost or, for assets acquired through business combinations, at fair value at the dates of the respective acquisitions. For financial reporting purposes, depreciation is generally determined on the straight-line method using estimated useful lives of the assets. Depreciation expense related to continuing operations was $20.3 million, $22.0 million and $23.7 million for 2003, 2002 and 2001, respectively.

Property, plant and equipment that are idle and held for sale are valued at the lower of historical cost less accumulated depreciation or fair value less cost to sell. Carrying costs through the expected disposal dates of such assets are accrued at the time expected losses are recognized. For assets expected to be sold at a gain, carrying costs are charged to expense as incurred.

In 2001 and prior years, goodwill, which represents the excess of acquisition cost over the fair value of net assets acquired in business combinations, was amortized on the straight-line method over periods ranging from 10 to 40 years. Amortization expense charged to earnings from continuing operations amounted to $10.8 million in 2001. Beginning in 2002, goodwill is no longer amortized but rather is reviewed annually for impairment. The company has elected to conduct its annual impairment reviews as of October 1 of each year and base its assessments of possible impairment on the discounted present value of the operating cash flows of its various reporting units. (see Summary of Significant Accounting Policies — Change in Method of Accounting and Goodwill Impairment Charge).

The company evaluates its long-lived assets for impairment annually or when facts and circumstances suggest that the carrying amounts of these assets might not be recoverable. Beginning in 2002, goodwill is excluded from these reviews and is tested for impairment on a stand-alone basis.

The company maintains warranty reserves intended to cover future costs associated with its warranty obligations. These reserves are based on estimates of the amounts of those costs. Warranty costs are classified into two groups — normal and extraordinary. Normal warranty costs represent repair costs incurred in the ordinary course of business and reserves are calculated using a percentage of sales approach consistent with past experience. Extraordinary warranty costs are unique major problems associated with a single machine, customer order, or a set of problems related to a large number of machines. Extraordinary warranty reserves are estimated based on specific facts and circumstances. The company’s policy is to adjust its warranty reserves quarterly.

The company maintains various defined benefit and defined contribution pension plans covering substantially all U.S. employees and certain non-U.S. employees. For defined benefit plans, pension benefits are based primarily on length of service and compensation. The company’s policy is to fund the plans in

accordance with applicable laws and regulations. The company also sponsors a defined benefit postretirement health care plan under which such benefits are provided to certain U.S. employees.

The benefit obligations related to defined benefit pension plans and the postretirement health care plan are actuarially valued as of January 1 of each year. The amounts so determined are then progressed to year end based on known or expected changes. The assets of the funded defined benefit pension plan for certain U.S. employees are valued as of December 31 of each year.

The company accounts for stock-based compensation, including stock options, under the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and the related interpretations. Because all stock options outstanding under the company’s 1997 Long-Term Incentive Plan and predecessor plans have exercise prices equal to the fair market value of the underlying common shares at the respective grant dates, no compensation expense is recognized in earnings. The following table illustrates on a pro forma basis the effect on net loss and loss per common share if the stock options granted from 1995 through 2003 had been accounted for based on their fair values as determined under the provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation.”

Additional information regarding stock options and expense related to restricted shares granted under the 1997 Long-Term Incentive Plan is included in the note captioned “Stock-Based Compensation.”

The company enters into foreign currency forward exchange contracts, which are a type of derivative financial instrument, on an ongoing basis commensurate with known or expected exposures. The purpose of this practice is to minimize the potentially adverse effects of foreign currency exchange rate fluctuations on the company’s operating results. The company does not currently hold other types of derivative financial instruments and does not engage in speculation.

Effective January 1, 2002, the company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” As required by this standard, during 2002 the company completed the transitional reviews of recorded goodwill balances as of January 1, 2002. These transitional reviews resulted in a pretax goodwill impairment charge of $247.5 million ($187.7 million after tax or $5.61 per share) that was recorded as the cumulative effect of a change in method of accounting as of January 1, 2002.

Approximately 75% of the pretax charge related to the company’s Uniloy and round metalcutting tools businesses, the latter of which was sold in 2003.

In 2002, the company announced a strategy of focusing its capital and resources on building its position as a premier supplier of plastics processing technologies and strengthening its worldwide industrial fluids business. In connection with this strategy, during 2002 the company sold two businesses that were included in its former metalworking technologies segment and initiated efforts to seek strategic alternatives for two other businesses of the segment.

On August 30, 2002, the company completed the sale of its Widia and Werkö metalcutting tools businesses to Kennametal, Inc. for €188 million in cash (approximately $185 million), subject to post-closing adjustments. In a separate but contingent transaction, the company purchased an additional 26% of the shares of Widia India, thereby increasing its ownership interest from 51% to 77%. The entire 77% of the Widia India shares was included in the sale transaction. After deducting post-closing adjustments that were paid in the first quarter of 2003, transaction costs and the cost to increase the company’s ownership interest in Widia India, the ultimate net cash proceeds from the sale were approximately $135 million, most of which was used to repay bank borrowings. The sale resulted in a 2002 after-tax loss of $14.9 million that was subsequently adjusted to $14.0 million in 2003. Approximately $7 million of the loss resulted from the recognition of the cumulative foreign currency translation adjustments that had been recorded in accumulated other comprehensive loss since the acquisition of Widia in 1995.

On August 9, 2002, the company completed the sale of its Valenite metalcutting tools business to Sandvik AB for $175 million in cash. After deducting post-closing adjustments that were paid in the first quarter of 2003, transaction costs and sale-related expenses, the net cash proceeds from the sale were approximately $145 million, a majority of which was used to repay bank borrowings. The company recorded an after-tax gain on the sale of $31.3 million in 2002. The amount of the gain was adjusted to $31.7 million in 2003.

During the third quarter of 2002, the company retained advisors to explore strategic alternatives for its round metalcutting tools and grinding wheels businesses and in the fourth quarter, initiated plans for their sale. The disposition of the round metalcutting tools business was completed in the third quarter of 2003 in two separate transactions. In the fourth quarter of 2002, the company had recorded an estimated loss on the sale of this business of $4.7 million which was increased to $6.9 million in 2003 based on the actual sales proceeds and transaction-related expenses. The sale of the grinding wheels business is expected to be completed early in 2004. In the fourth quarter of 2002, the company recorded an estimated loss on the sale of this business of $5.2 million. Based on revised expectations regarding the value of the assets to be sold and the sale-related costs and expenses, the estimated loss was reduced to $4.2 million in the fourth quarter of 2003.

All of the businesses discussed above are reported as discontinued operations and the Consolidated Financial Statements for all prior periods have been adjusted to reflect this presentation. Operating results for all of the businesses included in discontinued operations are presented in the following table.

As reflected in the preceding table, allocated interest expense includes interest on debt assumed by the respective buyers, interest on borrowings that were required to be repaid using a portion of the proceeds from the Widia and Werkö transaction and the Valenite transaction, interest on borrowings secured by assets of the businesses sold and an allocated portion of other consolidated interest expense based on the ratio of net assets sold or to be sold to consolidated assets.

As presented in the Consolidated Statements of Operations for 2003 and 2002, the line captioned “Net gain (loss) on divestitures” includes the following components.

The major classes of assets and liabilities of discontinued operations in the Consolidated Balance Sheets as of December 31, 2003 and December 31, 2002 are as follows:

In 2003, the company recorded a goodwill impairment charge of $65.6 million (with no tax benefit) to adjust the carrying value of the goodwill of two businesses included in the mold technologies segment. The charge resulted from a downward adjustment of the future cash flows expected to be generated by these businesses due to the delay in the general economic recovery both in North America and Europe. The largest decrease in cash flow expectations related to the company’s European mold base and components business due to continued weakness in the markets it serves.

In 2002, the company recorded an impairment charge of $1.0 million (with no tax benefit) related to a small business that is also included in the mold technologies segment.

The amounts of the charges recorded in 2003 and 2002 were determined based on a comparison of the present value of expected future cash flows to the historical carrying values of the businesses’ assets (including goodwill) and liabilities.

In 2001, the company’s management formally approved plans to consolidate certain manufacturing operations and reduce its cost structure. Implementation of these plans resulted in pretax charges to earnings from continuing operations of $17.8 million. Of the total cost of the plans, $14.1 million was recorded in 2001. An additional $3.7 million was charged to expense in continuing operations during 2002. The 2001 plans involved the closure of four manufacturing facilities in North America and the elimination of several sales and administrative locations worldwide. The consolidations and overhead reductions resulted in the elimination of approximately 450 manufacturing and administrative positions within the company’s continuing operations, principally in the U.S. and Europe. The cash cost of implementing the plans related to continuing operations was $12.5 million. Of the total cash cost, $5.8 million was spent in 2001, $5.4 million in 2002 and $1.3 million in 2003.

During 2001, the company’s management also approved a plan to integrate the operations of EOC and Reform (see Acquisitions) with the company’s existing European mold base and components business. The total cost of the integration was $11.0 million, of which $1.2 million was included in reserves for employee termination benefits and facility exit costs that were established in the allocations of the EOC and Reform acquisition costs. The remainder was charged to expense, including $3.4 million in 2001, $4.6 million in 2002 and $1.8 million in 2003. As approved by management, the plan involved the consolidation of the manufacturing operations of five facilities located in Germany and Belgium into three facilities, the reorganization of warehousing and distribution activities in Europe, and the elimination of approximately 230 manufacturing and administrative positions. The total cash cost of the integration was $9.0 million, of which $1.0 million was spent in 2001, $7.8 million in 2002 and $.2 million in 2003.

In the third quarter of 2002, the company’s management approved additional restructuring plans for the purpose of further reducing the company’s cost structure in certain businesses and to reduce corporate costs as a result of the disposition of Widia, Werkö and Valenite. These actions resulted in 2002 restructuring expense of $1.3 million and cash costs of $.3 million in 2002 and $.2 million in 2003.

In November 2002, the company announced additional restructuring initiatives intended to improve operating efficiency and customer service. The first action involved the transfer of all manufacturing of container blow molding machines and structural foam systems from the plant in Manchester, Michigan to the company’s more modern and efficient facility near Cincinnati, Ohio. The mold making operation in Manchester will also move to a smaller location near the existing facility early in 2004. In the second initiative, the manufacture of special mold bases for injection molding at the Monterey Park, California plant was phased out and transferred to various other facilities in North America. These additional actions are expected to result in incremental restructuring costs of approximately $9.8 million. Of the total cost of the actions, $4.3 million and $4.4 million was charged to expense in 2002 and 2003, respectively. An additional $1.1 million of expense is expected to be recorded in 2004, principally to complete the relocation of the mold making operation. The total cash cost of these initiatives is expected to be approximately $4.1 million, a majority of which was spent in 2003. The pretax annualized cost savings are expected to exceed $5 million, most of which was realized in 2003.

Early in 2003, the company initiated a plan for the further restructuring of its European blow molding machinery operations at a cost of $4.0 million. The restructuring involved the discontinuation of the manufacture of certain product lines at the plant in Magenta, Italy and the elimination of approximately 35 positions. The cash cost of the restructuring — the majority of which was spent in 2003 — will be approximately $.9 million. The annualized pretax savings are expected to be approximately $2 million, which began to be realized in the first quarter of 2003.

In the second quarter of 2003, the company initiated a plan to close its special mold base machining operation in Mahlberg, Germany and relocate a portion of its manufacturing to another location. Certain other production was outsourced. The closure resulted in restructuring costs of $5.7 million and the elimination of approximately 65 positions. Cash costs were $2.8 million and the annual cost savings are expected to be almost $4 million.

In the third quarter of 2003, the company announced additional restructuring initiatives that focus on further overhead cost reductions in each of its plastics technologies segments and at the corporate office. These actions, which involve the relocation of production, closure of sales offices, voluntary early retirement programs and general overhead reductions, are expected to result in the elimination of more than 300 positions worldwide at a cost of $11.2 million, all of which was recorded in 2003. Cash costs related to these initiatives will be approximately $7 to $8 million, of which $3.4 million was spent in 2003. The annual cost savings are expected to be approximately $20 million.

The following table presents the components of the line captioned “Restructuring costs” in the Consolidated Statements of Operations for the years 2003, 2002 and 2001.

The status of the reserves for the initiatives discussed above is summarized in the following tables. The amounts included therein relate solely to continuing operations. To the extent that any unused reserves that were established in the allocation of acquisition cost remain after the completion of the EOC and Reform integrations, those amounts will be applied as reductions of the goodwill arising from the respective acquisitions.

In the second quarter of 2001, the company acquired Reform Flachstahl (Reform) and EOC Normalien (EOC), two businesses headquartered in Germany that manufacture and distribute mold bases and components for plastics injection molding. The company also acquired Progress Precision, a Canadian manufacturer of barrels and screws and provider of related services for plastics extrusion, injection molding and blow molding. The combined annual sales of the three businesses as of their respective acquisition dates were approximately $53 million.

In February 2002, the company acquired the remaining 74% of the outstanding shares of Ferromatik Milacron A/ S, which sells and services Ferromatik injection molding machines in Denmark. Ferromatik Milacron A/ S, which has annual sales of approximately $4 million, was previously accounted for on the equity method but is now fully consolidated beginning in 2002.

In the first quarter of 2003, the company purchased the remaining 51% of the shares of Klockner Ferromatik AG, a Ferromatik sales office in Switzerland with annual sales of approximately $6 million. In addition, the company acquired the remaining 25% of 450500 Ontario Limited, a consolidated subsidiary that manufactures components for molds used in injection molding.

Progress Precision is included in the machinery technologies — North America segment while Reform, EOC and 450500 Ontario Limited are included in the mold technologies segment. Ferromatik Milacron A/ S and Klockner Ferromatik AG are included in machinery technologies — Europe.

All of the acquisitions were accounted for under the purchase method and were financed through the use of available cash and bank borrowings. The aggregate cost of the acquisitions, including professional fees and other related costs, totaled $1.1 million in 2003, $.9 million in 2002 and $32.1 million in 2001. The allocation of the aggregate cost of the acquisitions to the assets acquired and liabilities assumed is presented in the table that follows. The amounts for 2003 relate solely to Klockner Ferromatik AG.

Unaudited pro forma sales and earnings information is not presented because the amounts would not vary materially from the comparable amounts reflected in the company’s historical Consolidated Statements of Operations for any year.

Charges to operations for the research and development activities of continuing operations are summarized below.

Pension cost for all defined benefit plans is summarized in the following table. For all years presented, the table includes amounts for plans for certain employees in the U.S. and Germany.

The following table summarizes changes in the projected benefit obligation for all defined benefit plans.

The following table summarizes the changes in plan assets for the U.S. plans. Consistent with customary practice in Germany, the plan for employees in that country has not been funded.

The weighted allocations of plan assets at December 31, 2003 and 2002 are shown in the following table.

At December 31, 2003 and 2002, common shares of the company represented 4% and 6% of the plan’s equity securities. These common shares had a market value of $9.2 million at December 31, 2003 and $12.0 million at December 31, 2002.

At December 31, 2003, the company’s target allocation percentages for plan assets were approximately 60% to 65% equity securities and 35% to 40% debt securities. The targets may be adjusted periodically to reflect current market conditions and trends as well as inflation levels, interest rates and the trend thereof, and economic and monetary policy. The objective underlying this allocation is to achieve a long-term rate of return of inflation plus 6%. Under the current policy, the investment in equity securities may not be less than 35% or more than 80% of total assets. Investments in debt securities may not be less than 20% or more than 65% of total assets.

The expected long-term rates of return on plan assets for purposes of determining pension expense were 9.0% in 2003 and 9.5% in 2002 and 2001. The company will continue to use a 9.0% rate in 2004. Expected rates of return are developed based on the target allocation of debt and equity securities and on the historical returns on these types of investments judgmentally adjusted to reflect current expectations of future returns and value-added expectations based on historical experience of the plan’s investment managers. In evaluating future returns on equity securities, the existing portfolio is stratified to separately consider large and small capitalization investments as well as international and other types of securities.

The company currently expects to make a cash contribution to the plan of approximately $3 to $4 million in 2004.

The following table sets forth the funded status of the plans for U.S. employees at year-end 2003 and 2002.

The presentation of the amounts reflected in the previous table in the Consolidated Balance Sheets at December 31, 2003 and December 31, 2002 is reflected in the following table.

The intangible asset is included in other noncurrent assets in the Consolidated Balance Sheets as of the respective dates. Accrued pension cost is included in long-term accrued liabilities.

The following table sets forth the status of the company’s defined benefit pension plan for certain employees in Germany.

The following table presents the weighted-average actuarial assumptions used to determine pension income or expense for all defined benefit plans in 2003, 2002 and 2001.

The following table presents the weighted-average actuarial assumptions used to determine the projected benefit obligation for all defined benefit plans at December 31, 2003 and December 31, 2002.

The company also maintains certain defined contribution and 401(k) plans. Participation in these plans is available to certain U.S. employees. Costs included in continuing operations for these plans were $1.6 million, $1.6 million and $2.6 million in 2003, 2002 and 2001, respectively.

In addition to pension benefits, the company also provides varying levels of postretirement health care benefits to certain U.S. employees. Substantially all such employees are covered by the company’s principal plan, under which benefits are provided to employees who retire from active service after having attained age 55 and ten years of service. The plan is contributory in nature. For employees retiring prior to 1980, contributions are based on varying percentages of the current per-contract cost of benefits, with the company funding any excess over these amounts. For employees retiring after 1979, the dollar amount of the company’s current and future contributions is frozen.

The following table presents the components of the company’s postretirement health care cost under the principal U.S. plan.

The following table summarizes changes in the accumulated postretirement benefit obligation for the principal U.S. plan.

The following table presents the components of the company’s liability for postretirement health care benefits under the principal U.S. plan.

The following table presents the discount rates used to calculate the accumulated postretirement benefit obligation at December 31, 2003, December 31, 2002 and December 31, 2001 and the rates used to calculate postretirement health care cost for the years then ended.

For 2004, the assumed rate of increase in health care costs used to calculate the accumulated postretirement benefit obligation is 8.5%. This rate is assumed to decrease in varying degrees annually to 5.0% for years after 2010. Because the dollar amount of the company’s contributions for most employees is frozen, a one percent change in each year in relation to the above assumptions would not significantly change the accumulated postretirement benefit obligation or the total cost of the plan.

On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was enacted. Among other things, the Act created new federal subsidies for employers that provide

prescription drug coverage for their retirees beginning in 2006. Because the principal postretirement health care plan for certain U.S. employees provides such coverage, the company is currently evaluating the potential effects of the Act. However, the company has concluded that it is impossible at this time to estimate the extent to which the subsidies will reduce the plan’s accumulated postretirement benefit obligation. In addition, the Financial Accounting Standards Board (FASB) has not yet completed its evaluation of the accounting implications of the Act. Accordingly, no adjustment to the recorded obligation has been made at December 31, 2003 as permitted by FASB Staff Position 106-1.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the company’s deferred tax assets and liabilities as of year-end 2003 and 2002 are as follows:

Summarized in the following tables are the company’s earnings from continuing operations before income taxes, its provision for income taxes, the components of the provision for deferred income taxes and a reconciliation of the U.S. statutory rate to the tax provision rate.

As presented in the above table, loss from U.S. operations in 2003 includes restructuring costs of $9.7 million while loss from non-U.S. operations includes $17.4 million of such costs. Losses from U.S. and non-U.S. operations in 2002 include restructuring costs of $9.8 million and $4.1 million, respectively. In 2001, losses from U.S. operations and non-U.S. operations include restructuring costs of $6.7 million and $10.8 million, respectively. Loss from U.S. operations also includes goodwill impairment charges of $65.6 million in 2003 and $1.0 million in 2002.

The change in valuation allowances in 2003, as presented in the above table, represents $35.4 million related to 2003 activities and $69.2 million due to a change in circumstances and judgment related to deferred tax balances at December 31, 2002.

At year-end 2003 the company had a U.S. net operating loss carryforward of approximately $63 million that expires in 2023. The transaction entered into with Glencore Finance AG and Mizuho International plc on March 12, 2004 could substantially delay the timing of the utilization of these net operating loss carryforwards and other tax attributes in future years (see Subsequent Events). In addition, certain of the company’s non-U.S. subsidiaries had net operating loss carryforwards aggregating approximately $190 million, substantially all of which have no expiration dates.

Undistributed earnings of foreign subsidiaries which are intended to be indefinitely reinvested aggregated $95.5 million at the end of 2003. No deferred income taxes have been recorded with respect to this amount. The unrecorded deferred tax liability related to undistributed non-U.S. earnings was $33.4 million at December 31, 2003.

The company received net tax refunds of $17.0 million in 2003 and $14.2 million in 2002. Income taxes of $4.1 million were paid in 2001.

The following tables present the calculation of earnings available to common shareholders and a reconciliation of the shares used to calculate basic and diluted earnings per common share.

For all years, weighted-average shares assuming dilution excludes the effect of potentially dilutive stock options and restricted shares because their inclusion would result in a smaller loss per common share. Had they been included, weighted-average shares assuming dilution would have been 33,678 thousand in 2003, 33,513 thousand in 2002 and 33,340 thousand in 2001.

At December 31, 2003 and during several preceding years, the company maintained a receivables purchase agreement with a third party financial institution. As accounts receivable were generated from customer sales made by certain of the company’s consolidated U.S. subsidiaries, those receivables were sold to Milacron Commercial Corp (MCC), a wholly-owned consolidated subsidiary. MCC then sold, on a revolving basis, an undivided percentage interest in designated pools of accounts receivable to the financial institution. As existing receivables were collected, MCC sold undivided percentage interests in new eligible receivables. Accounts that became 60 days past due were no longer eligible to be sold and the company was at risk for credit losses for which it maintained an allowance for doubtful accounts.

As of December 31, 2003, the company could receive up to $40.0 million at a cost of funds linked to commercial paper rates. During the fourth quarter of 2003, the liquidity facility that supported the program was extended from its scheduled expiration date of December 31, 2003 to February 27, 2004. The receivables purchase agreement was also amended to mature on that date. However, on February 27, 2004, the expiration of the liquidity facility and the maturity of the receivables purchase agreement were both extended to March 12, 2004.

At December 31, 2003, December 31, 2002 and December 31, 2001, the undivided interest in the company’s gross accounts receivable from continuing operations that had been sold to the purchaser aggregated $33.0 million, $34.6 million and $36.3 million, respectively. The amounts sold are reflected as reductions of accounts receivable in the Consolidated Balance Sheets as of the respective dates. Increases and decreases in the amount sold are reported as operating cash flows in the Consolidated Statements of Cash Flows. Costs related to the sales were $1.5 in 2003, $1.2 million in 2002 and $2.2 million in 2001. These amounts are included in other expense-net in the Consolidated Statements of Operations.

On March 12, 2004, all amounts received under this facility were repaid (see Subsequent Events).

Certain of the company’s subsidiaries also sell accounts receivable on an ongoing basis. In some cases, these sales are made with recourse, in which case appropriate reserves for potential losses are recorded at the sale date. At December 31, 2003 and December 31, 2002, the gross amounts of accounts receivable that had been sold under these arrangements totaled $3.8 million and $5.0 million, respectively. At December 31, 2003, certain of these amounts were partially collateralized with approximately $3 million of cash deposits that are included in cash and cash equivalents in the Consolidated Balance Sheet at that date.

The company also periodically sells with recourse notes receivable arising from customer purchases of plastics processing machinery and, in a limited number of cases, guarantees the repayment of all or a portion of notes payable by its customers to third party lenders. At December 31, 2003 and December 31, 2002, the company’s maximum exposure under these arrangements totaled $11.6 million and $12.4 million, respectively.

In the event a customer were to fail to repay a note, the company would generally regain title to the machinery for later resale as used equipment. Costs related to sales of notes receivable and guarantees have not been material in the past.

Inventories amounting to $51.5 million in 2003 and $57.9 million in 2002 are stated at LIFO cost. If stated at FIFO cost, such inventories would be greater by approximately $17.2 million in 2003 and $15.7 million in 2002.

As presented in the Consolidated Balance Sheets, inventories are net of reserves for obsolescence of $27.0 million and $24.2 million in 2003 and 2002, respectively.

The carrying value of goodwill totaled $83.8 million and $143.3 million at December 31, 2003 and December 31, 2002, respectively. The decrease resulted principally from a goodwill impairment charge related to two businesses that are included in the mold technologies segment (see Goodwill Impairment Charge). The company’s other intangible assets, all of which are subject to amortization, are included in other noncurrent assets in the Consolidated Balance Sheets and totaled $6.5 million at December 31, 2003 and $7.8 million at December 31, 2002. Amortization expense related to these assets was $1.4 million in 2003, $1.0 million in 2002 and $.5 million in 2001.

Changes in goodwill during the years ended December 31, 2003 and December 31, 2002 are presented in the following table.

The following table presents the effects on net loss and basic and diluted loss per common share of excluding expense for the amortization of goodwill for all periods presented.

The components of property, plant and equipment, including amounts related to capital leases, are shown in the following table.

The components of other current assets and other noncurrent assets are shown in the tables that follow.

The components of accrued and other current liabilities are shown in the following tables.

The following table summarizes changes in the company’s warranty reserves. These reserves are included in accrued and other current liabilities in the Consolidated Balance Sheets.

The components of long-term accrued liabilities are shown in the following table.

On March 15, 2004, the 8 3/8% Notes due in 2004 were repaid (see Subsequent Events).

Except for the 8 3/8% Notes due 2004 and the 7 5/8% Eurobonds due 2005, the carrying amount of the company’s long-term debt approximates fair value. At year-end 2003, the fair value of the 8 3/8% Notes due 2004 was approximately $100 million and the fair value of the 7 5/8% Eurobonds due 2005 was approximately $130 million. These amounts are based on quoted prices on or about December 31, 2003.

The 7 5/8% Eurobonds due 2005 are a direct obligation of Milacron Capital Holdings B.V., a wholly-owned consolidated subsidiary, and have been guaranteed by the company.

Certain of the above long-term debt obligations contain various restrictions and financial covenants. Except for obligations under capital leases and certain non-U.S. bank borrowings, none of the company’s indebtedness is secured.

Total interest paid was $23.3 million in 2003, $35.8 million in 2002 and $40.5 million in 2001. Of these amounts, interest related to continuing operations was $22.0 million in 2003, $25.1 million in 2002 and $23.7 million in 2001.

Maturities of long-term debt excluding capital leases for the five years after 2003 are shown in the following table.

The company leases two manufacturing facilities under capital leases. The assets related to these leases are included in property, plant and equipment — net in the Consolidated Balance Sheets and had net book values of $16.6 million at December 31, 2003 and $15.8 million at December 31, 2002. Amortization of these assets is included in depreciation expense and interest on lease obligations is included in interest expense. Future minimum payments for capital leases during the next five years and in the aggregate thereafter are shown in the following table.

The company also leases certain equipment and facilities under operating leases, some of which include varying renewal and purchase options. Future minimum rental payments applicable to noncancellable operating leases during the next five years and in the aggregate thereafter are shown in the following table.

Rent expense related to continuing operations was $14.2 million, $13.7 million, and $11.2 million 2003, 2002 and 2001, respectively.

At December 31, 2003, the company had lines of credit with various U.S. and non-U.S. banks totaling approximately $94 million, including a $65 million committed revolving credit facility that was due to expire on March 15, 2004. These credit facilities support the discounting of receivables, letters of credit, guarantees and leases in addition to providing borrowings under varying terms. At December 31, 2003, $54 million of the revolving credit facility was utilized including outstanding letters of credit of $12 million.

The company pledged as collateral for borrowings under the revolving credit facility the capital stock of its principal domestic subsidiaries as well as the inventories of the company and all of its domestic subsidiaries and certain other domestic tangible and intangible assets. The facility limited the payment of cash dividends and the incurrence of new debt and imposed certain restrictions on share repurchases, capital expenditures and cash acquisitions.

The revolving credit facility included a number of financial and other covenants, the most significant of which required the company to achieve specified minimum levels of four quarter trailing cumulative consolidated EBITDA (earnings before interest, taxes, depreciation and amortization). At December 31, 2003, Milacron was in compliance with all covenants.

On March 12, 2004, all amounts borrowed under the revolving credit facility were repaid with the proceeds of a new credit facility (see Subsequent Events).

At December 31, 2003, the company had additional credit lines totaling $29 million, of which approximately $15 million was available for use under certain circumstances.

The weighted-average interest rate on borrowings under lines of credit outstanding was 4.8% as of December 31, 2003 and 5.2% as of December 31, 2002.

In 2001, the company repurchased a total of 260,000 treasury shares on the open market at a cost of $5.2 million. An additional 109,440 shares were repurchased in connection with stock option exercises, restricted stock grants and employee benefit programs. Stock option exercises also resulted in the issuance of 28,500 previously unissued shares. A total of 426,543 treasury shares were reissued in 2001 in connection with management incentive and employee benefit programs.

In 2002, a total of 221,250 treasury shares were reissued in connection with grants of restricted shares and stock option exercises. An additional 147,473 shares were reissued for contributions to employee benefit plans and for the purchase of technology rights from a German manufacturer of plastics extrusion machinery. These reductions in treasury shares were partially offset by the cancellation of 81,448 restricted shares that were added to the treasury share balance in lieu of their cancellation.

In 2003, a total of 1,168,531 treasury shares were reissued in connection with grants of restricted shares and contributions to employee benefit programs. This reduction in treasury shares was partially offset by the forfeiture of 98,287 restricted shares that were added to the treasury share balance. The net reduction in treasury shares includes 851,500 restricted stock awards made to certain key employees, including the chief executive officer and other corporate officers. These grants were made in connection with an employee retention program approved by the company’s board of directors after consideration of advice from independent compensation consultants.

As presented in the previous table, common shares outstanding are net of treasury shares of 4,783,063 in 2003 and 5,853,307 in 2002.

The company has authorized 10 million serial preference shares with $1 par value. None of these shares have been issued.

On May 23, 2003, the company’s shareholders adopted an amendment to the company’s certificate of incorporation to eliminate the right of holders of common shares to ten votes per share upon satisfaction of certain ownership tenure requirements. In the past, holders of common shares were entitled to cast ten votes for each share that had been beneficially owned for at least 36 consecutive calendar months. As a result of the change, each common share is now entitled to one vote irrespective of the period of time it has been owned.

The company has a stockholder rights plan which provides for the issuance of one nonvoting preferred stock right for each common share issued as of February 5, 1999 or issued subsequent thereto. Each right, if activated, will entitle the holder to purchase 1/1000 of a share of Series A Participating Cumulative Preferred Stock at an initial exercise price of $70.00. Each 1/1000 of a preferred share will be entitled to participate in dividends and vote on an equivalent basis with one whole common share. Initially, the rights are not exercisable. The rights will become exercisable if any person or group acquires, or makes a tender offer for, more than 15% of the company’s outstanding common shares. In the event that any party should acquire more than 15% of the company’s common shares, the rights entitle all other shareholders to purchase the preferred shares at a substantial discount. In addition, if a merger occurs with any potential acquirer owning more than 15% of the shares outstanding, holders of rights other than the potential acquirer will be able to purchase the acquirer’s common stock at a substantial discount. On March 11, 2004, the company amended its stockholder rights plan to exempt the acquisition by Glencore Finance AG and Mizuho International plc of securities issued by the company in connection with the financing arrangements entered into on March 12, 2004 from triggering the rights under the plan (see Subsequent Events). The rights plan expires in February 2009.

On March 12, 2004, the company issued $100 million of exchangeable debt, $30 million of which is convertible into the company’s common stock at the option of the holders. As soon as certain conditions described in “Subsequent Events” are fulfilled, all such exchangeable debt and any common stock into which any such exchangeable debt had been previously converted will be exchanged for a new series of the company’s convertible preferred stock. Following exchange of the exchangeable debt for convertible preferred stock, the holders of the convertible preferred stock would collectively own approximately between 40% and 60% of Milacron’s fully diluted equity (on an as-converted basis) (see Subsequent Events).

Total comprehensive income or loss represents the net change in shareholders’ equity during a period from sources other than transactions with shareholders and, as such, includes net earnings or loss for the period. The components of total comprehensive loss are shown in the table that follows.

The components of accumulated other comprehensive loss are shown in the following table.

The company is involved in remedial investigations and actions at various locations, including former plant facilities, and EPA Superfund sites where the company and other companies have been designated as potentially responsible parties. The company accrues remediation costs, on an undiscounted basis, when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Accruals for estimated losses from environmental remediation obligations are generally recognized no later than the completion of a remediation feasibility study. The accruals are adjusted as further information becomes available or circumstances change. Environmental costs have not been material in the past.

Various lawsuits arising during the normal course of business are pending against the company and its consolidated subsidiaries. In several such lawsuits, some of which seek substantial dollar amounts, multiple plaintiffs allege personal injury involving products, including metalworking fluids, supplied and/or managed by the company. The company is vigorously defending these claims and believes it has reserves and insurance coverage sufficient to cover potential exposures.

At December 31, 2003, the company had outstanding forward contracts totaling $4.7 million, which generally mature in periods of six months or less. These contracts require the company and its subsidiaries to exchange currencies on the maturity dates at exchange rates agreed upon at inception. Substantially all of these contracts have been designated as cash flow hedges with any gains or losses resulting from changes in their fair value being recorded as a component of other comprehensive income or loss pending completion of the transaction being hedged.

The 1997 Long-Term Incentive Plan (1997 Plan) permits the company to grant its common shares in the form of non-qualified stock options, incentive stock options, restricted stock and performance awards.

Under the 1997 Plan, non-qualified and incentive stock options are granted at market value, vest in increments over a four or five year period, and expire not more than ten years subsequent to the award. Of the 3,855,950 stock options outstanding at December 31, 2003, 246,000 are incentive stock options.

Summaries of stock options granted under the 1997 Plan and prior plans are presented in the following tables.

On April 21, 2003, the company’s executive officers waived all right and all interest to their options to purchase 465,900 common shares of the company. In all cases, the option prices were in excess of current market price of the company’s common shares as of the date of the waivers. These waivers were made without any promise of future options being offered to these officers. The purpose of the waivers was to allow the

company to make future grants to participants under the company’s long-term incentive plans without increasing shareholder dilution.

The following tables summarize information about stock options outstanding at December 31, 2003.

As discussed more fully in the Stock-Based Compensation section of the note captioned “Summary of Significant Accounting Policies,” the company does not expense stock options. For purposes of determining the pro forma amounts presented in that section, the weighted-average per-share fair value of stock options granted during 2003, 2002 and 2001 was $2.37, $5.35 and $7.61, respectively. The fair values of the options

were calculated as of the grant dates using the Black-Scholes option pricing model and the following assumptions:

Under the 1997 Plan, performance awards are granted in the form of shares of restricted stock which vest based on the achievement of specified earnings objectives over a three-year period. The 1997 Plan also permits the granting of other restricted stock awards, which also vest two or three years from the date of grant. During the restriction period, restricted stock awards entitle the holder to all the rights of a holder of common shares, including dividend and voting rights. Unvested shares are restricted as to disposition and subject to forfeiture under certain circumstances. Expense for restricted shares, including performance awards, was $.6 million in 2003 and $1.0 million in 2002. In 2001, reversals of prior years’ accruals for performance grants of $.3 million offset charges to expense totaling $.3 million for other restricted stock awards. Restricted stock award activity is as follows:

Restricted shares awarded as performance awards subject to contingent vesting totaled 38,000 in 2003, 46,000 in 2002 and 51,000 in 2001. Outstanding restricted shares subject to contingent vesting totaled 104,646, 141,795 and 159,493 at year-end 2003, 2002 and 2001, respectively. The amount outstanding at year-end 2003 includes 32,936 shares that will be cancelled in February 2004 because the basic earnings per common share objective for 2003 was not attained. In 2002 and 2001 restricted shares subject to contingent vesting of 52,519 and 52,806 respectively, were also cancelled.

Cancellations of restricted stock, including shares cancelled to pay employee withholding taxes at maturity, totaled 98,287 in 2003, 82,448 in 2002 and 73,133 in 2001.

Issuances of shares related to performance awards earned under a prior plan and to deferred directors’ fees totaled 19,903 in 2003, 1,003 in 2002, and 18,525 in 2001.

The company has four business segments: machinery technologies — North America, machinery technologies — Europe, mold technologies and industrial fluids.

The company’s segments conform to its internal management reporting structure and are based on the nature of the products they produce and the principal markets they serve. The machinery technologies — North America segment produces injection molding machines and extrusion and blow molding systems for distribution primarily in North America at the company’s principal plastics machinery plant located near Cincinnati, Ohio. The segment also sells specialty and peripheral equipment for plastics processing as well as replacement parts for its machinery products. The machinery technologies — Europe segment manufactures

injection molding machines and blow molding systems for distribution in Europe and Asia at its principal manufacturing plants located in Germany and Italy. The mold technologies segment — which has its major operations in North America and Europe — produces mold bases and components for injection molding and distributes maintenance, repair and operating supplies for all types of plastics processors. The industrial fluids segment is also international in scope with major blending facilities in the U.S. and The Netherlands and manufactures and sells coolants, lubricants, corrosion inhibitors and cleaning fluids used in metalworking.

The markets for all four segments tend to be cyclical in nature, especially in the two machinery segments where demand is heavily influenced by consumer confidence and spending levels, interest rates and general capital spending patterns, particularly in the automotive, packaging and construction industries. The markets for the mold technologies and industrial fluids are somewhat less cyclical and are influenced by industrial capacity utilization and consumer spending.

Financial data for the past three years for the company’s business segments are shown in the following tables. The accounting policies followed by the segments are identical to those used in the preparation of the company’s consolidated financial statements. The effects of intersegment transactions have been eliminated. The company incurs costs and expenses and holds certain assets at the corporate level which relate to its business as a whole. Certain of these amounts have been allocated to the company’s business segments by various methods, largely on the basis of usage. Management believes that all such allocations are reasonable.

Sales of U.S. operations include export sales of $73.0 million in 2003, $70.7 million in 2002 and $81.8 million in 2001.

Total sales of the company’s U.S. and non-U.S. operations to unaffiliated customers outside the U.S. were $338.2 million, $295.7 million and $306.7 million in 2003, 2002 and 2001, respectively.

On March 12, 2004, the company entered into a definitive agreement whereby Glencore Finance AG and Mizuho International plc purchased $100 million in aggregate principal amount of the company’s new exchangeable debt securities. The proceeds from this transaction, together with existing cash balances, were used to repay the 8 3/8% Notes due March 15, 2004. The securities the company issued were $30 million of 20% Secured Step-Up Series A Notes due 2007 and $70 million of 20% Secured Step-Up Series B Notes due 2007. The $30 million of Series A Notes are convertible into shares of the company’s common stock at a conversion price of $2.00 per share and initially bear a combination of cash and pay-in-kind interest at a total rate of 20% per annum. The $70 million of Series B Notes initially bear a combination of cash and pay-in-kind interest at a total rate of 20% per annum. Both the Series A Notes and the Series B Notes are exchangeable for a new series of the company’s convertible preferred stock with a cumulative dividend rate of 6%. Upon receipt of shareholder approval of both (i) the authorization of additional shares of the company’s common stock and (ii) the issuance of the new series of convertible preferred stock convertible into such common stock and for which the Series A Notes and the Series B Notes may be exchanged, the interest rate applicable to both the Series A Notes and the Series B Notes will be retroactively reset to 6% per annum from the date of issuance, payable in cash. Following receipt of shareholder approval, as soon as a condition requiring the execution of a refinancing of the €115 million of 7 5/8% Eurobonds due in April 2005 is satisfied or waived, all Series A Notes and Series B Notes (and any common stock into which any Series A Notes had been

converted) will be exchanged for shares of the new series of convertible preferred stock. If shareholder approval is not obtained on or before July 29, 2004, the Series A Notes and Series B Notes will be in default and will remain outstanding until March 15, 2007 with an initial interest rate of 20% from the date of issuance, increasing to 24% over time, and any common stock into which any Series A Notes had previously been converted will be exchanged for shares of the company’s currently authorized, but unissued, serial preference stock with a 24% cumulative dividend rate.

Following exchange of the Series A Notes and the Series B Notes for convertible preferred stock, the holders of the convertible preferred stock would collectively own approximately between 40% and 60% of the company’s fully diluted equity (on an as-converted basis), depending on whether the company exercises an option to redeem a portion of the convertible preferred stock with the proceeds from a rights offering to its existing shareholders. After seven years, the convertible preferred stock would automatically be converted into common stock at a conversion price of $2.00 per share but may be converted prior to that time at the option of the holders. The conversion price would be subject to reset to $1.75 per share at the end of the second quarter of 2005 if a test based on the company’s financial performance for 2004 is not satisfied. In addition, as part of the transaction the company has agreed to issue to holders of the convertible preferred stock contingent warrants to purchase an aggregate of one million shares of the company’s common stock, subject to receiving shareholder approval to increase its authorized common stock, which contingent warrants will be exercisable only if a test based on the company’s financial performance for 2005 is not satisfied. Assuming that the company does not conduct a rights offering to its existing shareholders, and both the conversion price of the convertible preferred stock is reset to $1.75 and the contingent warrants are exercised, the holders of the convertible preferred stock would own approximately 62.5% of the company’s fully diluted equity (on an as converted basis).

The events contemplated by the agreement with Glencore Finance AG and Mizuho International plc could result in an “ownership change” of the company for tax purposes. Were this to occur, the timing of the company’s utilization of tax loss carryforwards and other tax attributes could be substantially delayed. Accordingly, this could affect income tax expense and cash income taxes in future years.

If the company does not obtain shareholder approval of both the authorization of additional shares of its common stock and the issuance of the new series of convertible preferred stock convertible into such common stock on or before July 29, 2004, its liquidity will be materially impaired as the Series A Notes and the Series B Notes will go into default and the interest rates thereon will become significantly higher. If shareholder approval has not been obtained on or before July 29, 2004, the interest payable on the Series A Notes and the Series B Notes will no longer be eligible for retroactive reset to 6%. Instead, interest on the Series A Notes and the Series B Notes will be payable in arrears (a) on September 15, 2004 in cash at a rate of 12% per annum and in additional Series A Notes or Series B Notes, as applicable, at a rate of 8% per annum, (b) on March 15, 2005 in cash at a rate of 16% per annum and in additional Series A Notes or Series B Notes, as applicable, at a rate of 8% per annum, (c) on September 15, 2005 in cash at a rate of 20% per annum and in additional Series A Notes or Series B Notes, as applicable, at a rate of 4% per annum, and (d) on March 15, 2006, and through to maturity on March 15, 2007, in cash at a rate of 24% per annum.

Pursuant to the definitive agreement with Glencore Finance AG and Mizuho International plc, the company has agreed to use its commercially reasonable efforts to cause a number of persons selected by holders of the Series A Notes, acting together, to be appointed or elected to a number of directorships on the company’s board of directors in proportion to the percentage of the company’s fully diluted equity represented by the number of shares of common stock into which the Series A Notes may be converted, rounded up to the nearest whole number.

On March 12, 2004, the company also reached a separate agreement with Credit Suisse First Boston for a $140 million credit facility having a term of approximately one year. At close, extensions of credit under the

facility in an aggregate amount of $84 million were utilized to repay and terminate the company’s existing revolving credit facility and its existing receivables purchase program.

This new credit facility consists of a $65 million revolving A facility, with a $25 million subfacility for letters of credit, and a $75 million term loan B facility. The company and certain of its wholly-owned domestic subsidiaries are joint and several borrowers under the new credit facility and the entire new credit facility is secured by first priority liens on substantially all assets of the company and its domestic subsidiaries and includes pledges of stock of various wholly-owned domestic subsidiaries and certain foreign subsidiaries.

Availability under the revolving A facility is limited by a borrowing base calculated based upon specified percentages of eligible receivables and eligible inventory, a $10 million minimum availability covenant (resulting in aggregate availability of no more than $55 million) and other reserve requirements. In addition, the borrowing base is subject to the customary ability of the administrative agent for the lenders to reduce advance rates, impose or change collateral value limitations, establish reserves and declare certain collateral ineligible from time to time in its reasonable discretion, any of which could reduce the company’s borrowing availability under the revolving A facility at any time. At March 12, 2004, additional availability under the revolving A facility was approximately $20 million, after taking into account the minimum availability and existing reserve requirements.

With the exception of $4 million of domestic cash that may be held by the company outside the control of the administrative agent, all proceeds of the company’s domestic accounts receivable and other domestic collateral are subject to a daily cash “sweep.” Under the terms of the new credit facility, these proceeds are deposited in lockbox accounts under the control of the administrative agent and then transferred to blocked accounts under the control of the administrative agent. Each business day, the funds in the blocked accounts will be applied to pay down any outstanding borrowings under the revolving A facility. As a result, the company’s liquidity is likely to be dependent on its ability to continue to make borrowings under the new credit facility. If the company is unable to satisfy the conditions to borrowing under the new credit facility, which include, among other things, conditions related to the continued accuracy of its representations and warranties and the absence of any unmatured or matured defaults, or any material adverse change in its business or financial condition, without a waiver the company would lose access to this important source of liquidity and its financial condition would be materially impaired.

The company has the ability to prepay the revolving A facility, in whole or in part, at any time without penalty. The company has the option to prepay the term loan B facility at any time, subject to a 2% prepayment fee on the principal amount prepaid, as follows: (i) in whole, to the extent concurrently therewith or prior thereto all revolving A loans have been repaid in full and all commitments under the revolving A facility have been terminated, or (ii) in whole or in part, if availability under the revolving A facility exceeds $10 million and no event of default exists. Prepayments of term loan B loans permanently reduce the company’s availability under the new credit facility. The company is also required to make prepayments in connection with, among other things, asset sales and casualty events and in connection with the issuance of debt or equity, tax refunds, proceeds from other “corporate events” and other extraordinary receipts. Additionally, there are limitations placed on the amounts that can be paid to the holders of the 7 5/8% Eurobonds due April 2005 without causing a prepayment event.

The new credit facility includes a number of affirmative and negative covenants, including, but not limited to, negative covenants limiting the ability of the company and its subsidiaries to incur additional debt, incur liens, make capital expenditures, issue or sell capital stock and make restricted payments (including a prohibition on the ability to make cash interest or dividend payments on debt or equity securities issued pursuant to the terms of the definitive agreement entered into on March 12, 2004 among the company, Mizuho International plc and Glencore Finance AG, unless availability under the revolving A facility exceeds $25 million before taking into account minimum availability requirements). The new credit facility also includes a financial covenant that requires the company to achieve specified minimum levels of monthly

cumulative EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted to exclude certain restructuring costs and certain other items, each as specified in the financing agreement.

Borrowings under the new credit facility will bear interest, at the company’s option, based upon either (i) a LIBOR rate plus the applicable margin (as defined below) or (ii) a reference rate plus the applicable margin (as defined below). The “applicable margin”, with respect to revolver A LIBOR loans, is 3.25% per annum, and with respect to revolver A reference rate loans, is 1.5% per annum. The “applicable margin”, with respect to term loan B LIBOR loans, is 10.5% per annum, and with respect to term loan B reference rate loans, is 8.00% per annum. In no event will the interest rate of (a) revolver A LIBOR loans be less than 4.75% and (b) revolver A reference rate loans be less than 5.5%. In no event will the interest rate of term loan B LIBOR loans or term loan B reference rate loans be less than 12%.

After giving effect to the repayment and termination of the existing revolving credit facility and the accounts receivable liquidity facility and repayment of the senior U.S. notes, the company’s current cash balance was approximately $60 million at March 15, 2004.

We have audited the accompanying Consolidated Balance Sheets of Milacron Inc. and subsidiaries as of December 31, 2003 and 2002, and the related Consolidated Statements of Operations, Comprehensive Income and Shareholders’ Equity (Deficit), and Cash Flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Milacron Inc. and subsidiaries at December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

The accompanying financial statements have been prepared assuming that Milacron will continue as a going concern. As more fully discussed in the notes to the consolidated financial statements under the headings “Long-Term Debt”, “Receivables” and “Lines of Credit”, at December 31, 2003, the company had significant amounts of debt and its receivables purchase agreement due in 2004. As more fully discussed in the notes to the consolidated financial statements under the heading “Subsequent Events”, on March 12, 2004, the company entered into agreements to refinance these obligations due in 2004. The refinancing agreements contain a condition to obtain shareholder approval to convert the debt to equity securities of the company by July 29, 2004. The failure to satisfy this condition would result in an event of default under the terms of the debt. Because shareholder approval cannot be assured, there exists substantial doubt about the company’s ability to continue as a going concern. Management’s plans in regard to this matter are also described under the heading “Subsequent Events” in the notes to the consolidated financial statements. The accompanying financial statements do not include any adjustments to reflect the effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the failure to satisfy this condition.

As discussed under the heading “Change in Method of Accounting” in the notes to the consolidated financial statements, in 2002, the company changed its method of accounting for goodwill and other intangible assets.

As of the end of the period covered by this report, the company conducted an evaluation (under the supervision and with the participation of the company’s management, including the chief executive officer and chief financial officer), pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the effectiveness of the design and operation of the company’s disclosure controls and procedures. Based on this evaluation, the company’s chief executive officer and chief financial officer concluded that as of the end of the period covered by this report, such disclosure controls and procedures were reasonably designed to ensure that information required to be disclosed by the company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission.

Since the end of the period covered by this report, there have not been any significant changes in internal controls or in other factors that could significantly affect the internal controls.

The information required by the first part of Item 10 is (i) incorporated herein by reference to the “Election of Directors” section of the company’s proxy statement expected to be dated on or before April 29, 2004, (ii) included in Part I “Executive Officers of the Registrant,” on page 10 of this Form 10-K and (iii) presented below.

The company’s Audit Committee is comprised of Darryl F. Allen, David L. Burner and Harry A. Hammerly, with Mr. Hammerly serving as Chairperson. All members are independent under applicable SEC and NYSE rules. Messrs. Allen, Burner and Hammerly are “audit committee financial experts” in accordance with SEC rules.

The information required by the second part of Item 10 is incorporated herein by reference to the “Section 16(a) Beneficial Ownership Reporting Compliance” section of the company’s proxy statement expected to be dated on or before April 29, 2004.

The company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the Code of Ethics is available on the company’s website, www.milacron.com. A copy can also be obtained by calling the company’s world headquarters at 513.487.5000 or by writing to the following address:


	Milacron Inc.
	Attention: Investor Relations
	2090 Florence Avenue
	Cincinnati, OH 45206-2425

The company’s board of directors has approved Corporate Governance Guidelines and a Business Code of Conduct that conform to New York Stock Exchange requirements. Copies of these documents are available on the company’s website, www.milacron.com. Copies may also be obtained by calling the company’s world headquarters at 513.487.5000 or by writing to the following address:


	Milacron Inc.
	Attention: Investor Relations
	2090 Florence Avenue
	Cincinnati, OH 45206-2425

Copies of the following documents may also be obtained on the company’s website or as described above.


	Audit Committee Charter
	Personnel and Compensation Committee Charter
	Nominating and Corporate Governance Charter and the related appendix regarding Criteria for
	Selecting Board of Directors Candidates

The following sections of the company’s proxy statement expected to be dated on or before April 29, 2004 are incorporated herein by reference: “Board of Directors and Board Committees — Compensation and Benefits”, “Retirement Benefits”, “Executive Severance Agreements”, “Personnel and Compensation Committee Report on Executive Compensation”, “Summary Compensation Table”, “Option Grants in Last Fiscal Year”, “Aggregated Option Exercises in Last Year and Fiscal Year-End Option Values”, and “Performance Graph”.

The “Principal Holders of Voting Securities” section and the “Share Ownership of Directors and Executive Officers” sections of the company’s proxy statement expected to be dated on or before April 29, 2004 are incorporated herein by reference.

The “Certain Transactions” section of the company’s proxy statement expected to be dated on or before April 29, 2004 is incorporated herein by reference.

The following table presents fees for professional services rendered by Ernst & Young LLP, the company’s independent auditors, for the years ended December 31, 2003 and 2002.

The following consolidated financial statements of Milacron Inc. and subsidiaries are included in Item 8:

The following consolidated financial statement schedule of Milacron Inc. and subsidiaries for the years ended 2003, 2002 and 2001 is filed herewith pursuant to Item 15(d):

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.


	•	The company filed a current report on Form 8-K dated October 31, 2003 containing information pursuant to Items 7 and 12, concerning the company’s earnings release for the third quarter of 2003.

	•	The company filed a current report on Form 8-K dated November 26, 2003 containing information pursuant to Items 7 and 9, concerning information provided to a holder of the company’s debt.

	•	The company filed a current report on Form 8-K dated November 25, 2003 containing information pursuant to Items 5 and 7, concerning an amendment to the company’s revolving credit facility.

	•	The company filed a current report on Form 8-K dated December 22, 2003 containing information pursuant to Items 5 and 7, concerning the company’s sale of receivables program.

The responses to these portions of Item 15 are submitted as a separate section of this report.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BY:	/s/ RONALD D. BROWN



	RONALD D. BROWN
	Chairman, President and Chief Executive Officer, Director (Chief Executive Officer)


	By:	/s/ ROBERT P. LIENESCH



	Robert P. Lienesch
	Vice President — Finance and Chief Financial Officer (Chief Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in capacities and on the dates indicated.

Item 15(c) and (d) — Index to Certain Exhibits and Financial Statement Schedules

94 EX-10.48 3 y95183exv10w48.txt FINANCING AGREEMENT EXHIBIT 10.48 FINANCING AGREEMENT DATED AS OF MARCH 12, 2004 BY AND AMONG MILACRON INC. AND CERTAIN SUBSIDIARIES OF MILACRON INC. LISTED AS A BORROWER ON THE SIGNATURE PAGES HERETO, AS BORROWERS, CERTAIN SUBSIDIARIES OF MILACRON INC. LISTED AS A GUARANTOR ON THE SIGNATURE PAGES HERETO, AS GUARANTORS, THE LENDERS FROM TIME TO TIME PARTY HERETO, AS LENDERS, AND CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH, AS ADMINISTRATIVE AGENT, COLLATERAL AGENT, SOLE LEAD ARRANGER AND SOLE BOOK RUNNER TABLE OF CONTENTS

i ARTICLE VI. REPRESENTATIONS AND WARRANTIES....................................................................... 70 Section 6.01 Representations and Warranties............................................... 70 ARTICLE VII. COVENANTS OF THE LOAN PARTIES....................................................................... 80 Section 7.01 Affirmative Covenants........................................................ 80 Section 7.02 Negative Covenants........................................................... 91 Section 7.03 Financial Covenants......................................................... 99 ARTICLE VIII. MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL..................... 100 Section 8.01 Collection of Accounts; Management of Collateral............................ 100 Section 8.02 Accounts Documentation...................................................... 103 Section 8.03 Status of Accounts and Other Collateral..................................... 103 Section 8.04 Collateral Custodian........................................................ 104 Section 8.05 Collateral Reporting........................................................ 104 Section 8.06 Accounts Covenants.......................................................... 105 Section 8.07 Inventory Covenants......................................................... 106 ARTICLE IX. EVENTS OF DEFAULT................................................................................... 107 Section 9.01 Events of Default........................................................... 107 ARTICLE X. AGENT................................................................................................ 111 Section 10.01 Appointment................................................................. 111 Section 10.02 Nature of Duties............................................................ 111 Section 10.03 Rights, Exculpation, Etc.................................................... 112 Section 10.04 Reliance.................................................................... 113 Section 10.05 Indemnification............................................................. 113 Section 10.06 Agent Individually.......................................................... 114 Section 10.07 Successor Agent. (a)....................................................... 114 Section 10.08 Collateral Matters.......................................................... 114 Section 10.09 Agency for Perfection....................................................... 116 ARTICLE XI. GUARANTY............................................................................................ 116 Section 11.01 Guaranty.................................................................... 116 Section 11.02 Guaranty Absolute........................................................... 117 Section 11.03 Waiver...................................................................... 118 Section 11.04 Continuing Guaranty; Assignments............................................ 118 Section 11.05 Subrogation................................................................. 118 Section 11.06 Judgment.................................................................... 119 Section 11.07 Subordination and Intercreditor Agreement................................... 119

ii ARTICLE XII. MISCELLANEOUS...................................................................................... 119 Section 12.01 Notices, Etc................................................................ 120 Section 12.02 Amendments, Etc............................................................. 121 Section 12.03 No Waiver; Remedies, Etc.................................................... 121 Section 12.04 Expenses; Taxes; Attorneys' Fees............................................ 121 Section 12.05 Right of Set-off............................................................ 122 Section 12.06 Severability................................................................ 123 Section 12.07 Assignments and Participations.............................................. 123 Section 12.08 Counterparts................................................................ 125 Section 12.09 GOVERNING LAW............................................................... 125 Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE....................... 125 Section 12.11 WAIVER OF JURY TRIAL, ETC................................................... 126 Section 12.12 Consent by the Agent and Lenders............................................ 126 Section 12.13 No Party Deemed Drafter..................................................... 127 Section 12.14 Reinstatement; Certain Payments............................................. 127 Section 12.15 Indemnification............................................................. 127 Section 12.16 Parent as Agent for Borrowers............................................... 129 Section 12.17 Records..................................................................... 129 Section 12.18 Binding Effect.............................................................. 130 Section 12.19 Interest.................................................................... 130 Section 12.20 Confidentiality............................................................. 131 Section 12.21 Integration................................................................. 131 Section 12.22 Replacement of Lenders...................................................... 132 Section 12.23 Dutch Parallel Debt......................................................... 132

iii SCHEDULE AND EXHIBITS Schedule 1.01(A) Lenders and Lenders' Commitments Schedule 1.01(B) Initial Inventory Categories Schedule 6.01(e) Subsidiaries Schedule 6.01(f) Litigation; Commercial Tort Claims Schedule 6.01(i) ERISA Schedule 6.01(o) Real Property Schedule 6.01(q) Operating Lease Obligations Schedule 6.01(r) Environmental Matters Schedule 6.01(s) Insurance Schedule 6.01(u) Bank Accounts Schedule 6.01(v) Intellectual Property Schedule 6.01(w) Material Contracts Schedule 6.01(aa) Name; Jurisdiction of Organization; Organizational ID Number; Chief Place of Business; Chief Executive Office; FEIN Schedule 6.01(bb) Tradenames Schedule 6.01(cc) Collateral Locations Schedule 7.02(a) Existing Liens Schedule 7.02(b) Existing Indebtedness Schedule 7.02(c)(i) Permitted Dispositions Schedule 7.02(e) Existing Investments Schedule 7.02(k) Limitations on Dividends and Other Payment Restrictions Schedule 8.01 Cash Management Banks and Cash Management Accounts Exhibit A Form of Guaranty Exhibit B Form of Security Agreement Exhibit C Form of Pledge Agreement Exhibit D Form of Notice of Borrowing Exhibit E Form of Borrowing Base Certificate Exhibit F Form of Opinion of Counsel Exhibit G Form of Intercompany Subordination Agreement Exhibit H Form of Assignment and Acceptance Exhibit I Form of Contribution Agreement

iv FINANCING AGREEMENT Financing Agreement, dated as of March 12, 2004, by and among Milacron Inc., a Delaware corporation (the "Parent"), each subsidiary of the Parent listed as a "Borrower" on the signature pages hereto (together with the Parent, each a "Borrower" and collectively, the "Borrowers"), each subsidiary of the Parent listed as a "Guarantor" on the signature pages hereto (each, a "Guarantor" and collectively, the "Guarantors"), the lenders from time to time party hereto (each, a "Lender" and collectively, the "Lenders"), Credit Suisse First Boston, acting through its Cayman Islands Branch ("CSFB"), as administrative agent and collateral agent for the Lenders (in each such capacity, the "Administrative Agent" and the "Collateral Agent", respectively, and, in either or both such capacities, the "Agent"). RECITALS The Borrowers have asked the Lenders to extend credit to the Borrowers consisting of a $65,000,000 secured revolving credit facility and a $75,000,000 secured term loan facility. The revolving credit facility will include a $25,000,000 subfacility for the issuance of letters of credit. The proceeds of the loans made under the credit facilities shall be used to refinance existing indebtedness of the Borrowers and the Guarantors, to repay the Borrowers' and the Guarantors' receivables securitization facility (including through the repurchase of receivables), for general corporate purposes of the Borrowers and the Guarantors and to pay fees and expenses related to this Agreement. The letters of credit will be used for general corporate and working capital purposes. The Lenders are severally, and not jointly, willing to extend such credit to the Borrowers subject to the terms and conditions hereinafter set forth. In consideration of the premises and the covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I. DEFINITIONS; CERTAIN TERMS Section 1.01 Definitions. As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms: "Acceptable Guaranty" means any guarantee contemplated by the Mizuho/Glencore Transaction Documents or an unsecured guaranty made by any Loan Party in favor of any of the holders of any New US Securities or New Euro Securities which guaranty is (i) unless otherwise agreed to by the Agent, subordinated in right of payment to all of the Obligations on terms and conditions reasonably satisfactory to the Agent and (ii) on other terms and conditions reasonably satisfactory to the Agent. "Account Debtor" means each debtor, customer or obligor in any way obligated on or in connection with any Account. "Accounts" means, as to each Domestic Loan Party, all present and future rights of such Domestic Loan Party to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, assigned or otherwise disposed of, (b) for services rendered or to be rendered, or (c) for a secondary obligation incurred or to be incurred. "Action" has the meaning specified therefor in Section 12.12. "Adjusted LIBOR" shall mean, with respect to any LIBOR Loan for any Interest Period, an interest rate per annum equal to the product of (a) the LIBOR in effect for such Interest Period and (b) the Reserve Percentage. "Administrative Agent" has the meaning specified therefor in the preamble hereto. "Administrative Agent's Account" means an account at a bank designated by the Administrative Agent from time to time as the account into which the Loan Parties shall make all payments to the Administrative Agent for the benefit of the Agent and the Lenders under this Agreement and the other Loan Documents. "Administrative Borrower" has the meaning specified therefor in Section 12.16. "Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (i) vote 10% or more of the Capital Stock having ordinary voting power for the election of directors of such Person or (ii) direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Notwithstanding anything herein to the contrary, in no event shall any Agent or any Lender be considered an "Affiliate" of any Loan Party. "After Acquired Property" has the meaning specified therefor in Section 7.01(n). "Agent" has the meaning specified therefor in the preamble hereto. "Agent Advances" has the meaning specified therefor in Section 10.08(a). "Agreement" means this Financing Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. "Approved Fund" means (a) a CLO and (b) with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit in the ordinary course of its business, any other fund that invests in bank loans and similar extensions of credit in the ordinary course of its business and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. 2 "Assignment and Acceptance" means an assignment and acceptance entered into by an assigning Lender and an assignee, and accepted by the Collateral Agent or the Administrative Agent, in each case, to the extent applicable, in accordance with Section 12.07 hereof and substantially in the form of Exhibit H hereto or such other form acceptable to the Collateral Agent. "Authorized Officer" means, with respect to any Person, the chief executive officer, the chief financial officer, the president, any executive vice president, the treasurer, any assistant treasurer, any vice president, the secretary or the general counsel of such Person. "Availability" means, at any time, an amount equal to the difference between (i) the lesser of (A) the Borrowing Base and (B) the Total Revolving A Credit Commitment and (ii) the sum of (A) the aggregate outstanding principal amount of all Revolving A Loans and (B) all Letter of Credit Obligations. "B-Commitment" means, with respect to each Lender, the commitment of such Lender to make a B-Loan to the Borrowers on the Effective Date in the amount set forth opposite such Lender's name in Schedule 1.01(A) hereto. "B-Loan" means a term loan made by a Lender to the Borrowers pursuant to Section 2.01(a)(ii). "B-Lender" means a Lender with a B-Commitment or a B-Loan. "Bailee's Letter" means a letter in form and substance reasonably acceptable to the Agent and executed by any Person (other than a Loan Party) that is in possession of any Collateral on behalf of such Loan Party pursuant to which such Person acknowledges the Lien of the Collateral Agent for the benefit of the Agent and the Lenders with respect thereto. "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C. Section 101, et seq.), as amended, and any successor statute. "Board" means the Board of Governors of the Federal Reserve System of the United States. "Board of Directors" means, with respect to any Person, the board of directors (or comparable managers) of such Person or any committee thereof duly authorized to act on behalf of the board. "Book Value" means, with respect to any Inventory of any Person, the lower of (i) cost (as reflected in the general ledger of such Person in accordance with GAAP) computed in the same manner and consistent with the most recent appraisals of Inventory conducted by Hilco or such other appraiser reasonably acceptable to the Agent after consulting with the Borrowers (which appraisals by such other appraiser will be on a basis consistent with the appraisals conducted by Hilco), and (ii) market value, in each case, determined in accordance with GAAP calculated on a first-in first-out basis. 3 "Borrower" and "Borrowers" have the respective meanings specified therefor in the preamble hereto. "Borrowing Base" means, at any time (i) the sum of (A) 85% of the value of the Net Amount of Eligible Accounts at such time plus (B) the least of (x) 35% of the Book Value of the Eligible Inventory at such time; provided, however, that the aggregate amount of this clause (x) attributable to Eligible Inventory described in clause (xi) of such definition shall not exceed $500,000, (y) 85% of the aggregate Net Liquidation Values for all Inventory Categories and (z) $25,000,000, minus (ii) Reserves. "Borrowing Base Certificate" means a certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Administrative Borrower and setting forth the calculation of the Borrowing Base in compliance with Section 7.01(a)(vi), substantially in the form of Exhibit E. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or Chicago, Illinois are authorized or required to close; provided, that, with respect to the borrowing, payment or continuation of, or determination of interest rate on LIBOR Loans, Business Day shall mean any Business Day on which dealings in Dollars may be carried on in the interbank eurodollar markets in New York City and London. "Business Trade Secrets" has the meaning specified therefor in Section 6.01(v)(ii). "Capital Expenditures" means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that in accordance with GAAP are or should be included in "property, plant and equipment" or in a similar fixed asset account on its balance sheet, whether such expenditures are paid in cash or financed and including all Capitalized Lease Obligations paid or payable during such period, other than expenditures made from the insurance proceeds or condemnation awards. "Capital Guideline" means any law, rule, regulation, policy, guideline or directive (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) of any central bank or Governmental Authority (i) regarding capital adequacy, capital ratios, capital requirements, the calculation of a bank's capital or similar matters, or (ii) affecting the amount of capital required to be obtained or maintained by any Lender, any Person controlling any Lender, or the L/C Issuer or the manner in which any Lender, any Person controlling any Lender, or the L/C Issuer allocates capital to any of its contingent liabilities (including letters of credit), advances, acceptances, commitments, assets or liabilities. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person. "Capitalized Lease" means, with respect to any Person, any lease of real or personal property by such Person as lessee which is (i) required under GAAP to be capitalized on the balance sheet of such Person or (ii) a transaction of a type commonly known as a "synthetic 4 lease" (i.e., a lease transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income tax purposes). "Capitalized Lease Obligations" means, with respect to any Person, obligations of such Person and its Subsidiaries under Capitalized Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP. "Cash Management Accounts" means those bank accounts of each Loan Party listed on Schedule 8.01 that are maintained at one or more Cash Management Banks listed on Schedule 8.01. "Cash Management Agreements" means those certain cash management service agreements, in form and substance reasonably satisfactory to the Administrative Agent, each of which is among the applicable Loan Party, the Administrative Agent and one of the Cash Management Banks. "Cash Management Bank" has the meaning specified therefor in Section 8.01(a). "Change of Control" means each occurrence of any of the following: (a) other than pursuant to the Note Restructuring Transactions, the acquisition, directly or indirectly, by any Person or group (within the meaning of Section 13(d)(3) of the Exchange Act), other than a Permitted Holder, of beneficial ownership of more than 20% of the aggregate outstanding ordinary voting power of the Capital Stock of the Parent; (b) other than pursuant to the Note Restructuring Transactions, during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Parent (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Parent was approved by a vote of at least a majority the directors of the Parent then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously approved) cease for any reason to constitute a majority of the Board of Directors of the Parent; (c) the Parent shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 100% of the aggregate voting power of the Capital Stock of each other Loan Party, free and clear of all Liens (other than any Liens granted under the Loan Documents and Permitted Liens), except to the extent resulting from a transaction specifically permitted under Section 7.02(c); or (d) (i) any Loan Party consolidates or amalgamates with or merges into another entity or conveys, transfers or leases all or substantially all of its property and assets to another Person, or (ii) any entity consolidates or amalgamates with or merges into any Loan Party in a transaction pursuant to which the outstanding voting Capital Stock of such Loan Party is reclassified or changed into or exchanged for cash, securities or other property, other than any 5 such transaction described in this clause (ii) in which either (A) in the case of any such transaction involving the Parent, no Person or group (within the meaning of Section 13(d)(3) of the Exchange Act), other than a Permitted Holder, has, directly or indirectly, acquired beneficial ownership of more than 20% of the aggregate outstanding ordinary voting Capital Stock of the Parent or (B) in the case of any such transaction involving a Loan Party other than the Parent, the Parent has beneficial ownership, directly or indirectly, of 100% of the aggregate voting power of all Capital Stock of the resulting, surviving or transferee entity. "Change in Law" has the meaning specified therefor in Section 4.05(a). "CLO" means any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender. "Collateral" means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations. "Collateral Agent" has the meaning specified therefor in the preamble hereto. "Collections" means all cash, checks, notes, instruments and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds and tax refunds) of the Domestic Loan Parties. "Commitment" means, with respect to each Lender, such Lender's Revolving A Credit Commitment and B-Commitment. "Concentration Account" means an account of the Loan Parties to be maintained at the Concentration Account Bank into which cash received from the Cash Management Banks is wired as provided in Section 8.01. "Concentration Account Agreement" means a Control Agreement among the Domestic Loan Parties, the Concentration Account Bank and the Administrative Agent, in form and substance reasonably satisfactory to the Agent, applicable to the Concentration Account. "Concentration Account Bank" means Bank of New York, or such other Person or Persons as the Administrative Borrower (with the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld) may designate from time to time. "Consolidated EBITDA" means, for any period, the Consolidated Net Income of Parent and its Consolidated Subsidiaries for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Expense; plus (ii) all income tax expense of Parent and its Consolidated Subsidiaries; plus (iii) depreciation and amortization expense of Parent and its Consolidated Subsidiaries; plus (iv) all losses attributable to discontinued operations; plus (v) restructuring charges and related severance and other expenses not to exceed $1,500,000 while any Loan remains outstanding; plus (vi) all other non-cash charges of Parent and its Consolidated Subsidiaries (excluding any such non-cash charge to 6 the extent that it represents an accrual of or reserve for cash expenditures in any future period); plus (vii) expenses related to debt refinancing; plus (viii) any extraordinary or nonrecurring items of loss for such period as calculated by Parent and acceptable to the Administrative Agent in its reasonable discretion, based upon and derived from financial information delivered to the Administrative Agent; plus (ix) any payment of fees and expenses under the Existing Receivables Facility (as the same may be amended, extended, renewed, refinanced, replaced, supplemented or modified from time to time) or any replacement receivables liquidity facility; plus (x) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; minus (xi) all gains attributable to discontinued operations; minus (xi) any extraordinary or nonrecurring items of gain for such period; in each case determined on a consolidated basis for such period in conformity with GAAP. "Consolidated Interest Expense" means, for any period, the total interest expense of Parent and its Consolidated Subsidiaries, whether paid in cash or accrued as a liability, plus, to the extent not included in such total interest expense, and to the extent deducted in determining Consolidated Net Income, without duplication: (i) the interest component of all payments associated with Capitalized Lease Obligations; plus (ii) amortization of debt discount and debt issuance cost; plus (iii) capitalized interest; plus (iv) losses and upfront costs on Hedging Agreements; plus (v) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is a primary obligation in respect of a Contingent Obligation of (or secured by the assets of) Parent or any Consolidated Subsidiary; minus (vi) interest income for such period; minus (vii) gains for such period on Hedging Agreements; in each case determined on a consolidated basis for such period in conformity with GAAP. "Consolidated Net Income" means, for any period, the net income of Parent and its Consolidated Subsidiaries, excluding the cumulative effect of a change in accounting principles. "Consolidated Subsidiaries" means, with respect to Parent, each subsidiary consolidated with Parent in its financial statements prepared in accordance with GAAP. "Contingent Obligation" means, with respect to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, (i) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (ii) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (iii) any obligation of such Person, whether or not contingent, (A) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (B) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (C) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (D) otherwise to assure or hold harmless the holder of 7 such primary obligation against loss in respect thereof; provided, however, that the term "Contingent Obligation" shall not include any product warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith. "Contribution Agreement" means the Contribution Agreement, dated as of the Effective Date, among the Loan Parties, substantially in the form of Exhibit I. "Control Agreement" means a control agreement, in form and substance reasonably satisfactory to the Agent, executed and delivered by the applicable Loan Party, the Administrative Agent, and the applicable bank with respect to a deposit account. "CSFB" has the meaning specified therefor in the preamble hereto. "Current Asset Collateral" means all Collateral other than Fixed Asset Collateral. "Current Value" has the meaning specified therefor in Section 7.01(n). "Default" means an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "Defaulting Lender" has the meaning specified therefor in Section 3.04(d). "Designated Business" means the line of business of the Loan Parties identified as the "Designated Business" in Part A of Schedule 7.02(c)(i). "Designated Business Disposition" has the meaning specified therefor in Section 7.02(c)(i). "Designated Disposition" means the Designated Business Disposition and the Designated Real Property Disposition. "Designated Real Property" means the real property identified as the "Designated Real Property" in Part B of Schedule 7.02(c)(i). "Designated Real Property Disposition" has the meaning specified therefor in Section 7.02(c)(i). "Disposition" means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person, excluding any (x) sales of Inventory in the ordinary course of business on 8 ordinary business terms and (y) dispositions of cash or sales or liquidations of Permitted Investments or other similar cash equivalents that are not otherwise in violation of the terms of this Agreement. "Dollar," "Dollars" and the symbol "$" each means lawful money of the United States of America. "Domestic Loan Party" means any Loan Party that is organized under the laws of the United States or any state thereof. "Domestic Subsidiary" means any Subsidiary of a Loan Party that is organized under the laws of the United States or any state thereof. "Effective Date" means the date, on or before March 12, 2004, on which all of the conditions precedent set forth in Section 5.01 are satisfied or waived and the initial Loans are made and/or the initial Letter of Credit Accommodations are issued. "Eligible Accounts" means, at any time, Accounts of a Domestic Loan Party which at such time meet all of the following specifications; provided, that such specifications may be fixed and revised from time to time by the Administrative Agent in a customary manner in the exercise of its reasonable credit judgment to account for events, conditions, contingencies or risks which adversely affect or could reasonably be expected to adversely affect any Accounts in the reasonable credit judgment of the Administrative Agent: (i) delivery of the merchandise or the rendition of the services has been completed with respect to such Account and the Account Debtor has been invoiced therefor; (ii) the Account Debtor has not asserted any setoff, defense or counterclaim with respect to such Account, and there has not occurred any extension of the time for payment with respect to such Account without the consent of the Administrative Agent, provided that, in the case of any dispute, setoff, defense or counterclaim with respect to an Account, the portion of such Account not subject to such dispute, setoff, defense or counterclaim will not be ineligible solely by reason of this clause (ii); (iii) such Account is lawfully owned by a Domestic Loan Party free and clear of any Lien other than Liens permitted by Section 8.03 and otherwise continues to be in conformity in all material respects with all representations and warranties made by a Domestic Loan Party to the Agent and the Lenders with respect thereto in the Loan Documents; (iv) such Account is unconditionally payable in Dollars within 90 days from the invoice date and is not evidenced by a promissory note, chattel paper or any other instrument or other document; (v) no more than 60 days have elapsed from the invoice due date and no more than 120 days have elapsed from the invoice date with respect to such Account; (vi) such Account is not due from an Affiliate of a Domestic Loan Party; (vii) such Account does not constitute an obligation of the United States or any other Governmental Authority (unless all steps reasonably required by the Administrative Agent in connection therewith, including notice to the United States Government under the Federal Assignment of Claims Act or any action under any state statute comparable to the Federal Assignment of Claims Act, have been duly taken in a manner reasonably satisfactory to the Administrative Agent); (viii) the Account Debtor (or the applicable office of the Account Debtor) with respect to such Account is located in the continental United States, unless such Account is supported by a letter of credit, export insurance or other similar obligation the terms and conditions of which are reasonably satisfactory to the Administrative Agent; (ix) the Account Debtor with respect to such Account is 9 not also a supplier to or creditor of a Domestic Loan Party, unless such Account Debtor has executed a no-offset letter satisfactory to the Administrative Agent; (x) not more than 50% of the aggregate amount of all Accounts of the Account Debtor with respect to such Account are not Eligible Accounts; (xi) to the knowledge of the Borrowers, the Account Debtor with respect to such Account (A) has not filed a petition for bankruptcy or any other relief under the Bankruptcy Code or any other law relating to bankruptcy, insolvency, reorganization or relief of debtors, made an assignment for the benefit of creditors, had filed against it any petition or other application for relief under the Bankruptcy Code or any such other law, (B) has not failed, suspended business operations or become insolvent or (C) has not had or suffered to be appointed a receiver or a trustee for all or a significant portion of its assets or affairs; (xii) such Accounts are not subject to collection by an outside claims processor; (xiii) the otherwise Eligible Accounts of any Account Debtor do not exceed 10% of all Eligible Accounts; (xiv) such Account does not arise in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional; (xv) such Account is not from an Account Debtor that is located in a state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia) that requires, as a condition to access to the courts of such jurisdiction, that a creditor qualify to transact business, file a business activities report or other report or form, or take one or more other actions, unless the applicable Domestic Loan Party has so qualified, filed such reports or forms, or taken such actions (and, in each case, paid any required fees or other charges), except to the extent such Domestic Loan Party may qualify subsequently as a foreign entity authorized to transact business in such state or jurisdiction and gain access to such courts, without incurring any cost or penalty reasonably viewed by the Administrative Agent to be material in amount, and such later qualification cures any access to such courts to enforce payment of such Account; (xvi) such Accounts do not consist of progress billings (such that the obligation of the Account Debtors with respect to such Accounts is conditioned upon the applicable Domestic Loan Party's satisfactory completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if the Administrative Agent shall have received an agreement in writing from the Account Debtor, in form and substance satisfactory to the Administrative Agent, confirming the unconditional obligation of the Account Debtor to take the goods related thereto and pay such invoice; (xvii) such Accounts are not owned or otherwise generated by the Designated Business; and (xviii) the Administrative Agent is, and continues to be, reasonably satisfied with the credit standing of the Account Debtor in relation to the amount of credit extended and the Administrative Agent does not believe, in its reasonable discretion, that the prospect of collection of such Account is impaired for any reason. "Eligible Inventory" means all finished goods and raw materials Inventory of a Domestic Loan Party which at any time meets all of the following specifications, provided that such specifications may be fixed and revised from time to time by the Administrative Agent in a customary manner in the exercise of its reasonable credit judgment to account for events, conditions, contingencies or risks which adversely affect or could reasonably be expected to adversely affect any Inventory in the reasonable credit judgment of the Administrative Agent: (i) such Inventory is lawfully owned by a Domestic Loan Party free and clear of any existing Lien and otherwise continues to be in full conformity in all material respects with all representations and warranties made by a Domestic Loan Party to the Agent and the Lenders with respect thereto in the Loan Documents; (ii) such Inventory is not held on consignment and 10 may be lawfully sold; (iii) a Domestic Loan Party has the right to grant Liens on such Inventory; (iv) such Inventory arose or was acquired in the ordinary course of the business of a Domestic Loan Party and does not represent damaged, obsolete or unsalable goods; (v) no Account or document of title has been created or issued with respect to such Inventory; (vi) such Inventory is located in one of the locations in one of the continental United States that is either owned by a Loan Party or listed on Schedule 6.01(cc) or such other locations in the continental United States as the Agent may approve in writing from time to time (such approval not to be unreasonably withheld); (vii) such Inventory does not consist of goods returned or rejected by a Domestic Loan Party's customers (other than goods that are undamaged and resalable in the normal course of business); (viii) such Inventory is not in-transit (except between locations specified on Schedule 6.01(cc)); (ix) such Inventory does not consist of goods that are slow moving, work-in-process (including, without limitation, machines in the process of completion), supplies or goods that constitute packaging and shipping materials, bill and hold goods or defective goods; (x) in the case of raw materials used in the manufacture of finished goods, such raw materials have been acquired by the Domestic Loan Parties during the previous twelve months; (xi) such Inventory has not been consigned to a Domestic Loan Party's customer, unless (a) such consigned Inventory with such customer at a particular location has an aggregate Book Value in excess of $100,000, (b) such consigned Inventory has been delivered to a customer location in respect of which a satisfactory access agreement has been executed in favor of and received by the Collateral Agent, (c) such consigned Inventory is segregated or otherwise separately identifiable from any goods of any other Person at the applicable customer location, (d) a UCC-1 financing statement has been filed in the jurisdiction of the applicable customer's organization, which names such customer as debtor, the applicable Domestic Loan Party as secured party and the Collateral Agent as assignee of secured party and which identifies such consigned Inventory in the possession of such customer as the collateral and (e) a notice that complies with the terms of Section 9-324 of the Uniform Commercial Code has been delivered to the secured creditors, if any, of the applicable customer that have a perfected Lien in the Inventory of such customer; (xii) such Inventory is not owned by the Designated Business; and (xiii) if such Inventory consists of finished goods Inventory sold under a licensed trademark or if such Inventory contains or uses a medium subject to a copyright (A) the Collateral Agent shall have entered into a waiver letter, in form and substance satisfactory to the Collateral Agent, with the licensor with respect to the rights of the Collateral Agent to use the licensed trademark or copyright to sell or otherwise dispose of such Inventory or (B) the Collateral Agent shall otherwise be satisfied, in its reasonable discretion, that the Collateral Agent has rights to sell or dispose of such Inventory. "Employee Plan" means an employee pension benefit plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained (or that was maintained at any time during the five (5) calendar years preceding the date of any borrowing hereunder) for employees of any Loan Party or any of its ERISA Affiliates or was contributed to (or was required to be contributed to at any time during the five (5) calendar years preceding the date of any borrowing hereunder) by a Loan Party or any of its ERISA Affiliates. "Environmental Actions" means any complaint, summons, citation, written notice of violation, directive, order, claim, litigation, investigation, judicial or administrative proceeding or judgment by or letter or other written communication from any Person or Governmental Authority resulting or arising from any violations of Environmental Laws or Releases of Hazardous Materials (i) from any assets, properties or businesses owned or operated by any Loan 11 Party or any of its Subsidiaries or any predecessor in interest; (ii) from adjoining properties; or (iii) onto any facilities which received Hazardous Materials generated by any Loan Party or any of its Subsidiaries or any predecessor in interest. "Environmental Laws" means the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., as amended; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. 6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq., as amended; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq., as amended; Toxic Substances Control Act ("TOSCA"), 15 U.S.C. 2601 et seq., as amended; Hazardous Materials Transportation Act, 49 U.S.C. 5101 et seq., as amended; the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. 136-136y et seq., as amended; the Emergency Planning and Community Right-to-Know Act of 1986 (Title III of SARA or "EPCRA"), 42 U.S.C. 11001, et seq., as amended; and any other foreign, federal, state, local or municipal laws, statutes, regulations, guidance documents, rules having the force of law or ordinances imposing liability or establishing standards of conduct for the Release or Handling of Hazardous Materials and the protection of the health, safety and the environment and, to the extent relating to the Release or Handling of Hazardous Materials, healthy and safety. "Environmental Liabilities and Costs" means any monetary obligations, losses, liabilities (including strict liability), damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable out-of-pocket fees, disbursements and expenses of counsel, out-of-pocket expert and consulting fees and out-of pocket costs for environmental site assessments, remedial investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any Environmental Action filed by any Governmental Authority, Person or any third party which relate to any violations of Environmental Laws, Handling of Hazardous Materials, Remedial Actions, Releases or threatened Releases of Hazardous Materials from or onto (i) any property presently or, during the period of ownership or operation by any Loan Party, formerly owned by any Loan Party or any of its Subsidiaries or a predecessor in interest, or (ii) any facility that received Hazardous Materials that were generated or Handled by any Loan Party or any of its Subsidiaries or a predecessor in interest. "Environmental Lien" means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs. "Environmental Permits" means any permits, licenses, certificates, exemptions, authorizations, registrations or approvals required by any Governmental Authority or under Environmental Laws. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute and regulations thereunder, in each case, as in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA Affiliate" means, with respect to any Person, any trade or business (whether or not incorporated) which is treated as a single employer with such Person and which 12 would be deemed to be a "controlled group" within the meaning of Sections 414(b), (c), (m) and (o) of the Internal Revenue Code. "Euro" or "(euro)" means the single currency of participating member states of the European Union. "Euro Indenture" means the Fiscal Agency Agreement, dated as of April 6, 2000, by and among Milacron Capital, as issuer, the Parent, as guarantor, Deutsche Bank AG London, as fiscal agent and Deutsche Bank Luxembourg S.A., as paying agent, as the same may be amended, restated or otherwise modified in accordance with the terms hereof. "Euro Note Holders" means the Persons from time to time holding the Euro Notes. "Euro Note Restructuring Transaction" means a transaction that refinances, restructures, replaces, exchanges, redeems, repays or modifies the Euro Notes or the obligations owing under the Euro Indenture and in respect of which any new and/or restructured notes or other unsecured and/or subordinated Indebtedness, common Capital Stock (or rights exercisable solely to acquire common Capital Stock) or preferred Capital Stock, or any combination thereof, are issued in accordance with the terms and conditions set forth in the definition of "New Euro Securities"; provided, that in the case of all payments made in connection with the consummation of such transaction (including without limitation, payment of principal, interest, fees, costs, expenses or other obligations related thereto), the Borrowers may use proceeds of Revolving Loans in an aggregate principal amount not exceeding $5,000,000 to fund all such payments in respect of such transaction to the extent that after making all such payments from such proceeds of Revolving Loans, Excess Availability exceeds Required Availability. "Euro Notes" means, collectively, the 7.625% Guaranteed Fixed Rate Bonds due 2005 of Milacron Capital in the original aggregate principal amount of (euro)115,000,000 issued pursuant to the Euro Indenture, as the same may from time to time be amended, restated or otherwise modified in accordance with the terms hereof other than amendments, restatements or other modifications by which such notes become New Euro Securities. "Event of Default" means any of the events set forth in Section 9.01. "Excess Availability" means, at any time, an amount equal to the difference between (a) the difference between (i) the lesser of (A) the Borrowing Base and (B) the Total Revolving A Credit Commitment and (ii) the sum of (A) the aggregate outstanding principal amount of all Revolving A Loans and (B) all Letter of Credit Obligations, and (b) the aggregate amount of accounts payable of the Loan Parties that are past due beyond historical levels. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Note Event" means any actual or alleged "Default" or "Event of Default" (or any similar defined terms or concept) under, and as defined in, or any other actual or alleged breach or violation of the terms or conditions of, any of the Euro Notes or the Euro Indenture, whether or not resulting in acceleration of any or all of the Euro Notes, or any action by any Euro Note Holder and/or any agent under the Euro Indenture, in respect of the Euro 13 Notes, including the acceleration of the Euro Notes or the commencement of the exercise of enforcement rights or remedies in respect of the Euro Notes (including any actions of the type specified in clauses (x), (y) and (z) of Section 9.01(u)). "Existing Agent" means Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), as administrative agent under the Existing Credit Facility. "Existing Credit Facility" means the Amended and Restated Revolving Credit Agreement, dated as of November 30, 1998 (as amended by Amendment No. 1 thereto dated as of March 31, 1999, Amendment No. 2 thereto dated as of January 31, 2000, Amendment No. 3 thereto dated as of July 13, 2000, Amendment No. 4 thereto dated as of August 8, 2001, Amendment No. 5 thereto dated as of September 30, 2001, Amendment No. 6 thereto dated as of March 14, 2002, the letter agreement, dated as of May 3, 2002, the two letter agreements, dated as of June 17, 2002, Amendment No. 7 thereto dated as of November 6, 2002, the Waiver and Agreement dated as of December 30, 2002, Amendment No. 8 thereto dated as of February 11, 2003, Amendment No. 9 thereto dated as of August 13, 2003, and Amendment No. 10 thereto dated as of November 25, 2003), among the Parent, Milacron Kunststoffmaschinen Europa GmbH, and Milacron B.V, as borrowers, the Existing Lenders, the Existing Agent and PNC Bank, as documentation agent, as amended to date. "Existing Lenders" means the lenders party to the Existing Credit Facility. "Existing Receivables Facility" means the Third Amended and Restated Receivables Purchase Agreement dated as of November 15, 2001 (as amended by Amendment No. 1 thereto dated as of June 7, 2002, Amendment No. 2 thereto dated as of August 1, 2002, Amendment No. 3 thereto dated as of December 31, 2002, Amendment No. 4 thereto dated as of January 31, 2003, Amendment No. 5 thereto dated as of September 12, 2003, Amendment No. 6 thereto dated as of October 30, 2003 and Amendment No. 7 thereto dated as of December 22, 2003), among the Parent and Milacron Commercial Corp., as sellers, D-M-E Company, as DME subservicer, Uniloy Milacron Inc., as subservicer, Milacron Marketing Company, as initial servicer, Market Street Funding Corporation, as purchaser, and PNC Bank, National Association, as administrator. "Extraordinary Receipts" means any Net Cash Proceeds, received by any Loan Party or any of its Domestic Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.05(c)(iii) or (iv) hereof), including, without limitation, (i) foreign, United States, state or local tax refunds, (ii) pension plan reversions, (iii) proceeds of insurance, (iv) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (v) condemnation awards (and payments in lieu thereof), (vi) indemnity payments and (vii) any purchase price adjustment received in connection with any purchase agreement. "Facility" means each parcel of real property identified as a "Facility" on Schedule 6.01(o) that is owned by a Loan Party on the Effective Date, including, without limitation, the land on which such facility is located, all buildings and other improvements thereon, all fixtures located at or used in connection with such facility, all whether now or hereafter existing. 14 "Fanuc Agreement" means the Distributorship Agreement, dated as of April 1, 1995, by and between Fanuc Ltd. and Milacron Marketing Company (formerly known as Cincinnati Milacron Marketing Company). "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fee Letter" means that certain Fee Letter dated as of March 12, 2004 by and between CSFB and the Parent. "Field Survey and Audit" means a field survey and audit of the Loan Parties and an appraisal of the Collateral performed by auditors, examiners and/or appraisers selected by the Agent, at the sole cost and expense of the Borrowers. "Final Maturity Date" means the earlier to occur of (i) February 28, 2005, or (ii) such earlier date on which any Loan shall become due and payable in accordance with the terms of this Agreement and the other Loan Documents. "Financial Statements" means (i) the audited consolidated balance sheet of the Parent and its Subsidiaries for the Fiscal Year ended December 31, 2002, and the related consolidated statement of operations, shareholders' equity and cash flows for the Fiscal Year then ended, and (ii) the most recent unaudited consolidated balance sheet of the Parent and its Subsidiaries for the twelve months ended December 31, 2003, and the related consolidated statement of operations, shareholder's equity and cash flows for the twelve months then ended delivered to the Agent on the Effective Date pursuant to Section 5.01(d)(xvi). "Fiscal Year" means the fiscal year of the Parent and its Subsidiaries ending on December 31 of each year. "Fixed Asset Collateral" means that portion of the Collateral consisting of real property, fixtures, equipment, Capital Stock and the proceeds and insurance proceeds thereof; provided, however, that at any time while any Revolving A Loans remain outstanding or any Letter of Credit Obligations remain unpaid or are not cash-collateralized in an amount equal to 105% of the aggregate face amount of Letters of Credit outstanding, "Fixed Asset Collateral" shall not include that portion of the proceeds of any Disposition of Capital Stock of any Person to the extent such Person's Accounts and Inventory are included in the Borrowing Base supporting Revolving A Loans or Letter of Credit Obligations. "Foreign Insurance Prepayment" has the meaning specified therefor in clause (j) of the definition of Permitted Indebtedness. 15 "Foreign Subsidiary" means any Subsidiary of a Loan Party that is not a Domestic Subsidiary (other than Milacron Capital). For purposes of this Agreement, no Loan Party shall be deemed to be a Foreign Subsidiary. "GAAP" means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, provided that for the purpose of Section 7.03 hereof and the definitions used therein, "GAAP" shall mean generally accepted accounting principles in effect on the date hereof and consistent with those used in the preparation of the Financial Statements, provided, further, that if there occurs after the date of this Agreement any change in GAAP that affects in any respect the calculation of any covenant contained in Section 7.03 hereof, the Collateral Agent and the Administrative Borrower shall negotiate in good faith amendments to the provisions of this Agreement that relate to the calculation of such covenant with the intent of having the respective positions of the Lenders and the Borrowers after such change in GAAP conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon, the covenants in Section 7.03 hereof shall be calculated as if no such change in GAAP has occurred. "Governmental Authority" means any nation or government, any Federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guaranteed Obligations" has the meaning specified therefor in Section 11.01. "Guarantor" means (i) each Subsidiary of the Parent listed as a "Guarantor" on the signature pages hereto, and (ii) each other Person which guarantees, pursuant to Section 7.01(b) or otherwise, all or any part of the Obligations. "Guaranty" means (i) the guaranty of each Guarantor party hereto contained in ARTICLE XI hereof, and (ii) each guaranty substantially in the form of Exhibit A, made by any other Guarantor in favor of the Collateral Agent for the benefit of the Agent and the Lenders pursuant to Section 7.01(b) or otherwise. "Handle" means any manner of generating, accumulating, storing, treating, disposing of, transporting, transferring, handling, manufacturing or using, as any of such terms may further be defined in any Environmental Law, any Hazardous Materials. "Hazardous Material" means (a) any element, compound or chemical that is defined, listed or otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous substance or chemical, hazardous waste, special waste, or solid waste under Environmental Laws or that is likely to cause immediately, or at some future time, harm to or have an adverse effect on, the environment or risk to human health or safety, including, without limitation, any pollutant, contaminant, waste, hazardous waste, toxic substance or dangerous good which is defined or identified in any Environmental Law and which is present in the environment in such quantity or state that it contravenes any Environmental Law; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d) any substance 16 exhibiting a hazardous waste characteristic under any Environmental Law, including, without limitation, corrosivity, ignitability, toxicity or reactivity as well as any radioactive or explosive materials; and (e) any asbestos-containing materials and manufactured products containing hazardous substances listed or classified as such under Environmental Laws. "Hedging Agreement" means any interest rate, foreign currency, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or currency, commodity or equity values (including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement. "Highest Lawful Rate" means, with respect to the Agent or any Lender, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Obligations under laws applicable to such Agent or such Lender which are currently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow. "Hilco" means Hilco Appraisal Services, LLC. "Inactive Subsidiaries" means Amertool Services Corp., Amertool Services Inc., Milacron DISC Corp., Milacron International Sales Co., Cincinnati Grinders Inc., Cincinnati Milling and Grinding, Cincinnati Milling Machine Co., Cincinnati Milacron UK Holdings Co. and Cincinnati Holding Company. "Indebtedness" means, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money; (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables or other accounts payable incurred in the ordinary course of such Person's business and not outstanding for more than 120 days after the date such payable was due, unless (if outstanding more than 120 days after the date such payable was due) they are being contested in good faith and by appropriate proceedings promptly initiated and diligently conducted); (iii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (iv) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (v) all Capitalized Lease Obligations of such Person; (vi) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities; (vii) all obligations and liabilities, calculated on a basis satisfactory to the Collateral Agent and in accordance with accepted practice, of such Person under Hedging Agreements; (viii) all Contingent Obligations; and (ix) all obligations referred to in clauses (i) through (x) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include the 17 Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer except to the extent such Person is not liable for such Indebtedness. "Indemnified Matters" has the meaning specified therefor in Section 12.15. "Indemnitees" has the meaning specified therefor in Section 12.15. "Indenture Deficit" has the meaning specified therefor in Section 2.01(c). "Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. "Intercompany Subordination Agreement" means an Intercompany Subordination Agreement made by a Loan Party or any Subsidiary of a Loan Party in favor of the Collateral Agent, for the benefit of the Agent and the Lenders, substantially in the form of Exhibit G. "Interest Period" means, with respect to any LIBOR Loan, the period commencing on the borrowing date or the date of any continuation of such LIBOR Loan, as the case may be, and ending one, two or three months thereafter, as selected by the Administrative Borrower in the applicable notice given to the Administrative Agent pursuant to Sections 2.02 or 2.11 hereof, provided that (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) no Interest Period for any LIBOR Loan shall end after the Final Maturity Date, and (iii) in the case of the Revolving A Loans, no more than eight (8) Interest Periods in the aggregate for the Borrowers may exist at any one time, and in the case of the B-Loans, no more than two (2) Interest Periods in the aggregate for the Borrowers may exist at any one time. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended (or any successor statute thereto) and the regulations thereunder. "Inventory" means, with respect to any Person, all goods and merchandise of such Person, including, without limitation, all raw materials, work-in-process, packaging, supplies, materials and finished goods of every nature used or usable in connection with the shipping, storing, advertising or sale of such goods and merchandise, whether now owned or hereafter acquired, and all such other property the sale or other disposition of which would give rise to an Account or cash. "Inventory Category" means a category of Inventory consisting of raw materials or finished goods that has been established by the Administrative Agent in its reasonable credit judgment; it being agreed and understood that the initial Inventory Categories shall be as set forth on Schedule 1.01(B). "Judgment Currency" has the meaning specified therefor in Section 11.06. 18 "Landlord Waiver" means a letter in form and substance reasonably acceptable to the Agent and executed by a landlord or mortgagee in respect of Collateral of the Loan Parties located at any leased premises of the Loan Parties, pursuant to which such landlord or mortgagee, as the case may be, among other things, waives or subordinates any Lien such landlord or mortgagee may have in respect of any Collateral. "L/C Issuer" means CSFB, its successors, or such other bank as selected by the Administrative Agent and reasonably acceptable to the Administrative Borrower. "Lease" means any lease of real property to which any Loan Party or any of its Subsidiaries is a party as lessor or lessee. "Lender" and "Lenders" have the respective meanings specified therefor in the preamble hereto. "Letter of Credit Accommodations" means, collectively, the letters of credit, merchandise purchase or other guaranties issued under the Total Revolving A Credit Commitment which are from time to time either (a) issued or opened by the Administrative Agent for the account of any Borrower pursuant to this Agreement, or (b) with respect to which the Administrative Agent has agreed to indemnify the L/C Issuer or guaranteed to the L/C Issuer the performance by any Borrower of its obligations to such L/C Issuer; sometimes being referred to herein individually as a "Letter of Credit Accommodation". "Letter of Credit Collateral Account" means a deposit account with a bank reasonably acceptable to the Administrative Agent, which account shall be under the sole dominion and control of the Collateral Agent or the Administrative Agent and subject to a perfected, first priority security interest in favor of the Collateral Agent or the Administrative Agent, for the benefit of the Agent and the Lenders. "Letter of Credit Fees" have the meaning specified therefor in Section 3.01(b). "Letter of Credit Obligations" means, at any time and without duplication (i) all amounts for which the Administrative Agent may be liable with respect to Letter of Credit Accommodations and (ii) the obligations of Borrowers to reimburse the Administrative Agent or any Lender with respect to Letter of Credit Accommodations. "LIBOR" means, with respect to any LIBOR Loan for any Interest Period, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of the relevant Interest Period by reference to the British Bankers' Association Interest Settlement Rates for deposits in Dollars (as set forth by the Bloomberg Information Service or any successor thereto or any other service selected by the Administrative Agent which has been nominated by the British Bankers' Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the "LIBOR" shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at 19 approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period. "LIBOR Loan" means a Loan bearing interest calculated based upon the Adjusted LIBOR Rate. "Lien" means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any Capitalized Lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security. "Loan" means a Revolving A Loan or a B-Loan. "Loan Account" means an account maintained hereunder by the Administrative Agent on its books of account at the Payment Office, and with respect to the Borrowers, in which the Borrowers will be charged with all Loans made to, and all other Obligations incurred by, the Borrowers and may include sub-accounts for each of the Revolving A Loans and the B-Loans. "Loan Document" means this Agreement, any Guaranty, the Fee Letter, any Security Agreement, any Pledge Agreement, any Mortgage, any Cash Management Agreement, any Concentration Account Agreement, any Control Agreement, any UCC Filing Authorization Letter, the Contribution Agreement, the Intercompany Subordination Agreement and any other agreement, promissory note, other instrument and other document executed and delivered pursuant hereto or thereto or otherwise evidencing or securing any Loan, any Letter of Credit Obligation or any other Obligation. "Loan Party" means any Borrower and any Guarantor. "Material Adverse Effect" means a material adverse effect on any of (i) the operations, business, assets, properties, condition (financial or otherwise) or liabilities of the Loan Parties taken as a whole, (ii) the ability of any Loan Party to perform any of its obligations under any Loan Document to which it is a party, (iii) the legality, validity or enforceability of this Agreement or any other Loan Document, (iv) the rights and remedies of any Agent or any Lender under any Loan Document, or (v) the validity, perfection or priority of any and all Liens in favor of the Collateral Agent for the benefit of the Agent and the Lenders on any of the Collateral with an aggregate fair market value in excess of $3,000,000; provided, that a material adverse effect on any of the items described in clauses (i) or (ii) shall not constitute a Material Adverse Effect to the extent it is or results directly from an Excluded Note Event. "Material Contract" means, with respect to any Person, (i) each contract or agreement to which such Person or any of its Subsidiaries is a party involving aggregate annual consideration payable to or by such Person or such Subsidiary of $1,000,000 or more (other than purchase orders in the ordinary course of the business of such Person or such Subsidiary and other than contracts that by their terms may be terminated by such Person or Subsidiary in the ordinary course of its business upon less than 60 days' notice without penalty or premium) and (ii) all other contracts or agreements material to the business, operations, condition (financial or 20 otherwise), performance, properties or liabilities of such Person or any of its Subsidiaries, taken as a whole, and, in the case of any Loan Party, of the Loan Parties, taken as a whole. "Milacron Assurance" means Milacron Assurance Ltd., a Bermuda company. "Milacron Capital" means Milacron Capital Holdings B.V., a Dutch private company with limited liability. "Mizuho/Glencore Transactions" means the transactions contemplated by the Mizuho/Glencore Transaction Documents. "Mizuho/Glencore Transaction Documents" means the Note Purchase Agreement, dated as of March 12, 2004, by and among Milacron Inc., Mizuho International, plc ("Mizuho") and Glencore Finance AG ("Glencore"), the securities to be sold by Milacron Inc. pursuant to the terms of such agreement, the securities into which or for which such securities may be converted or exchanged and/or further exchanged pursuant to the terms thereof and/or of such agreement, the security documents, registration rights agreement and other documents and instruments related thereto and the Subordination and Intercreditor Agreement of even date herewith by and among Mizuho, Glencore, the Administrative Borrower, and the Administrative Agent. "Moody's" means Moody's Investors Service, Inc. and any successor thereto. "Mortgage" means a mortgage (including, without limitation, a leasehold mortgage), deed of trust or deed to secure debt, in form and substance reasonably satisfactory to the Collateral Agent, made by a Loan Party in favor of the Collateral Agent for the benefit of the Agent and the Lenders, securing the Obligations and delivered to the Collateral Agent pursuant to Section 5.01(d), Section 7.01(b), Section 7.01(n) or otherwise. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA Affiliates has contributed to, or has been obligated to contribute, at any time during the preceding six (6) calendar years. "Net Amount of Eligible Accounts" means the aggregate unpaid invoice amount of Eligible Accounts less, without duplication, sales, excise or similar taxes, returns, discounts, chargebacks, claims, advance payments, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect to such Eligible Accounts. "Net Cash Proceeds" means, (i) with respect to any Disposition by any Loan Party or any of its Domestic Subsidiaries, the amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Person or such Subsidiary, in connection therewith after deducting therefrom only (A) the amount of any Indebtedness secured by any Lien permitted by Section 7.02(a) on any asset (other than Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such Disposition (other than Indebtedness under this Agreement), (B) expenses related thereto incurred by such Person or such Subsidiary in connection therewith, (C) transfer taxes paid (or payable within 30 days after the consummation of such Disposition) to any taxing authorities by such Person or such Subsidiary in connection therewith, (D) net income taxes to be paid in connection with such 21 Disposition (after taking into account any tax credits or deductions and any tax sharing arrangements), (E) liabilities related to the assets sold (and not assumed by any other Person) in an amount equal to such Person's good faith and reasonable determination that such liabilities are payable by such Person within 30 days after the consummation of such Disposition, and (F) any reserves for adjustments in respect of the sale price of such assets and for future liabilities established in accordance with GAAP, (ii) with respect to the issuance or incurrence of any Indebtedness by any Loan Party or any of its Domestic Subsidiaries, or the sale or issuance by any Loan Party or any of its Domestic Subsidiaries of any shares of its Capital Stock, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Person or such Subsidiary in connection therewith, after deducting therefrom only (A) expenses related thereto incurred by such Person or such Subsidiary in connection therewith, (B) transfer taxes paid (or payable within 30 days after the consummation of such issuance or incurrence) by such Person or such Subsidiary in connection therewith and (C) net income taxes to be paid in connection therewith (after taking into account any tax credits or deductions and any tax sharing arrangements), and (iii) with respect to Extraordinary Receipts received by any Loan Party or any of its Domestic Subsidiaries, the amount of cash proceeds received (directly or indirectly) from time to time by or on behalf of such Loan Party or such Domestic Subsidiary after deducting therefrom only (A) expenses related thereto incurred by such Person or such Subsidiary in connection therewith, (B) transfer taxes paid (or payable within 30 days after the consummation of such issuance or incurrence) by such Person or such Subsidiary in connection therewith and (C) net income taxes to be paid in connection therewith (after taking into account any tax credits or deductions and any tax sharing arrangements); in each case of clauses (i), (ii) and (iii) to the extent, but only to the extent, that the amounts so deducted are (x) actually paid to a Person that, except in the case of out-of-pocket expenses, is not an Affiliate of such Person or any of its Subsidiaries and (y) properly attributable to such transaction or to the asset that is the subject thereof. "Net Liquidation Percentage" means, for each Inventory Category, the percentage of the Book Value of Eligible Inventory included in such Inventory Category that is estimated to be recoverable in an orderly liquidation of such Eligible Inventory, net of liquidation expenses and commissions, such percentage to be as determined from time to time by the most recent appraisal conducted by Hilco or such other appraiser reasonably acceptable to the Agent after consulting with the Borrowers (which appraisals by such other appraiser will be on a basis consistent with the appraisals conducted by Hilco). "Net Liquidation Value" means, for each Inventory Category at any time, the Net Liquidation Percentage for such Inventory Category times the Book Value of Eligible Inventory included in such Inventory Category at such time. "New Lending Office" has the meaning specified therefor in Section 2.08(d). "New Euro Securities" means notes or other unsecured and/or subordinated Indebtedness of the Parent and/or Milacron Capital or Capital Stock (or rights exercisable solely to acquire common Capital Stock) or preferred Capital Stock of the Parent, or any combination thereof, issued in connection with or resulting from a refinancing, replacement or other restructuring of the Euro Notes and the obligations under the Euro Indenture pursuant to a 22 refinancing, replacement or other restructuring transaction that complies with the following terms and conditions (to the extent applicable): (i) the maturity date of the New Euro Securities occurs on a date after the Final Maturity Date, (ii) prior to the Final Maturity Date, no Liens or security interests on the assets or properties of the Parent or any of its Subsidiaries are granted to the holders of the New Euro Securities, (iii) prior to the Final Maturity Date, any guaranty of the New Euro Securities is pursuant to an Acceptable Guaranty, (iv) the principal amount or the aggregate stated value of the New Euro Securities, issued in exchange for, or resulting from the amendment, restatement, modification or refinancing of, the Euro Notes or the Euro Indenture, will not exceed the principal amount of the Euro Notes outstanding immediately prior to the refinancing, replacement or other restructuring of the Euro Notes plus any accrued interest on such Euro Notes, (v) any interest, dividends or other payments (other than a demand for payment as a result of an acceleration) due on or prior to the Final Maturity Date will either (x) not be payable in cash on or prior to the Final Maturity Date or (y) be payable in cash, and, if payable in cash only if, before and after giving effect thereto, Excess Availability exceeds Required Availability, and (vi) the additional terms and conditions (other than as set forth in clauses (i) through (v) above) applicable prior to the Final Maturity Date, taken as a whole, under the New Euro Securities are not materially less favorable to the Lenders than the terms and conditions of the Euro Notes or the Euro Indenture or such additional terms and conditions are otherwise reasonable acceptable to the Agent. "New US Securities" means the convertible debt and the equity securities contemplated by the Mizuho/Glencore Transactions. "Non-Core Assets" means the Designated Business and the Designated Real Property. "Non-U.S. Lender" has the meaning specified therefor in Section 2.08(d). "Note Restructuring Transaction" means any Mizuho/Glencore Transaction or a Euro Note Restructuring Transaction. "Notice of Borrowing" has the meaning specified therefor in Section 2.02(a). "Obligation Currency" has the meaning specified therefor in Section 11.06. "Obligations" means all present and future indebtedness, obligations, and liabilities of each Loan Party to the Agent and the Lenders, whether or not the right of payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 9.01, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letter of Credit Accommodations, or any other document, made, delivered or given in connection herewith or therewith. Without limiting the generality of the foregoing, the Obligations of each Loan Party under the Loan Documents include (a) the obligation to pay principal, interest (including, without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of any Loan Party, whether or not a claim for post-filing interest is allowed in such proceeding), charges, expenses, fees, attorneys' fees and disbursements, 23 indemnities and other amounts payable by such Person under the Loan Documents, and (b) the obligation of such Person to reimburse any amount in respect of any of the foregoing that the Agent or any Lender (in its sole discretion) may elect to pay or advance on behalf of such Person. "Operating Lease Obligations" means all obligations for the payment of rent for any real or personal property under leases or agreements to lease, other than Capitalized Lease Obligations. "Other Taxes" has the meaning specified therefor in Section 2.08(b). "Paid in Full" means (i) the Total Commitments shall have been terminated, (ii) all principal of the Loans, interest thereon and all other Obligations shall have been paid in full in cash (other than contingent obligations or indemnification obligations for which no claim has been asserted), and (iii) the Administrative Agent shall have received cash collateral (or, at the Administrative Agent's option, a letter of credit issued for the account of the relevant Borrower and at such Borrower's expense in form and substance reasonably satisfactory to the Administrative Agent, by an issuer reasonably acceptable to the Administrative Agent and payable to the Administrative Agent as beneficiary) in such amounts as the Administrative Agent determines are reasonably necessary to secure the Administrative Agent and the Lenders from loss, cost, damage or expense, including reasonable attorneys' fees and expenses, in connection with outstanding Letter of Credit Accommodations and checks, remittances or other similar payments provisionally credited to the Obligations and/or as to which the Administrative Agent or any Lender has not yet received final payment in full and in cash. All Letter of Credit Accommodations shall be cash collateralized (or supported by a letter of credit as described in the preceding sentence) by an amount equal to one hundred five percent (105%) of the amount of the Letter of Credit Accommodations then existing. "Parent" has the meaning specified therefor in the preamble hereto. "Participant Register" has the meaning specified therefor in Section 12.07(b)(v). "Payment Office" means the Administrative Agent's office located at Eleven Madison Avenue, New York, NY 10010, or at such other office or offices of the Administrative Agent as may be designated in writing from time to time by the Administrative Agent to the Administrative Borrower. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "Permitted Holder" means (i) any employee stock ownership plan or other employee benefit plan of the Parent and (ii) each officer and director of the Parent as of the Effective Date and their spouses and lineal descendants. "Permitted Indebtedness" means: (a) any Indebtedness owing to the Agent and any Lender under this Agreement and the other Loan Documents; 24 (b) any other Indebtedness listed on Schedule 7.02(b), and the extension of maturity, refinancing or modification of the terms thereof; provided, however, that (i) such extension, refinancing or modification is pursuant to terms that, taken as a whole, are not less favorable to the Loan Parties and the Lenders than the terms of the Indebtedness being extended, refinanced or modified or are otherwise reasonably satisfactory to the Agent and (ii) after giving effect to such extension, refinancing or modification, the amount of such Indebtedness is not greater than the amount of Indebtedness outstanding immediately prior to such extension, refinancing or modification; (c) Indebtedness evidenced by Capitalized Lease Obligations entered into in order to finance Capital Expenditures made by the Loan Parties in accordance with the provisions of Section 7.02(g), which Indebtedness, when aggregated with the principal amount of all Indebtedness incurred under this clause (c) and clause (d) of this definition, does not exceed $3,000,000 at any time outstanding; (d) Indebtedness secured by a Lien permitted by clause (e) of the definition of "Permitted Lien"; (e) Indebtedness permitted under Section 7.02(e); (f) Indebtedness arising out of or in connection with the Mizuho/Glencore Transaction Documents; (g) Indebtedness evidenced by the Euro Notes, and the extension of maturity, refinancing or modification of the terms thereof to the extent such extension, refinancing or modification is pursuant to the Euro Note Restructuring Transaction; (h) Acceptable Guaranties in respect of the Indebtedness (if any) evidenced by the New US Securities or the New Euro Securities; (i) Indebtedness of the Foreign Subsidiaries under any financing, factoring or similar arrangements under non-U.S. law, (but not including Indebtedness of the Foreign Subsidiaries permitted under clause (o) of this definition) the aggregate outstanding principal amount not at any time exceeding $20,000,000 and the extension of maturity, refinancing or modification of the terms thereof; provided however, that the terms and conditions of such arrangements, taken as a whole, are not less favorable to the Loan Parties and the Lenders than the terms and conditions of such Indebtedness existing on the Effective Date, or are otherwise reasonably acceptable to the Agent and the Required Lenders; and (j) the following intercompany Indebtedness: (i) Indebtedness of any Domestic Loan Party to any other Domestic Loan Party, to the extent such Indebtedness is (A) evidenced by a promissory note with terms and provisions reasonably acceptable to the Collateral Agent, (B) promptly pledged to the Collateral Agent pursuant to the Pledge Agreement, and (C) subject to an Intercompany Subordination Agreement or such other subordination provisions acceptable to the Collateral Agent; (ii) Indebtedness of any Foreign Subsidiary of Milacron Capital to any other Foreign Subsidiary of Milacron Capital; (iii) Indebtedness of any Foreign Subsidiary (other than any Subsidiary of Milacron Capital) to any other Foreign Subsidiary (other than any Subsidiary of Milacron Capital); (iv) Indebtedness of 25 any Domestic Subsidiary that is not a Loan Party to any other Domestic Subsidiary that is not a Loan Party to the extent that the aggregate principal amount of such Indebtedness outstanding at any time does not exceed $250,000; (v) unsecured Indebtedness of any Loan Party owing to any Foreign Subsidiary resulting from loans or advances made by a Foreign Subsidiary to a Loan Party, to the extent such Indebtedness is subject to an Intercompany Subordination Agreement or such other subordination provisions acceptable to the Collateral Agent; (vi) unsecured Indebtedness of the Parent owing to Milacron Assurance in connection with the self-insurance program of the Parent and its Subsidiaries to the extent such Indebtedness (A) is evidenced by a promissory note with terms and provisions reasonably acceptable to the Collateral Agent, (B) is subject to an Intercompany Subordination Agreement or such other subordination provisions acceptable to the Collateral Agent, (C) will not be repaid in amounts in excess of the amounts necessary to pay the obligations of Milacron Assurance under the self-insurance program for the benefit of the Parent and the Subsidiaries permitted under Section 7.01(h) and (D) to the extent repaid by the Parent to Milacron Assurance for Milacron Assurance to make available to a Foreign Subsidiary in respect of such self-insurance program, will result, prior to or concurrently with such repayment, in Foreign Subsidiaries remitting, transferring or otherwise repatriating funds to a Loan Party in an aggregate US dollar amount equal to the amount repaid by the Parent for such purpose (the "Foreign Insurance Repayment"); and (vii) Indebtedness of any Foreign Subsidiary owing to any Loan Party existing as of the Effective Date (but not the increase, extension of maturity, refinancing or other modification thereof), which, on the Effective Date, the aggregate outstanding principal amount is equal to approximately $11,000,000; (k) (i) Indebtedness incurred by any Loan Party under Hedging Agreements provided by the Agent, any Lender or any Affiliate of the Agent or any Lender entered into the ordinary course of financial management and not for speculative purposes; provided, however, that not more than $2,000,000 of such Indebtedness may be secured by the Current Asset Collateral if and to the extent permitted under the Euro Note Indenture and (ii) Indebtedness incurred by any Loan Party under Hedging Agreements entered into the ordinary course of financial management and not for speculative purposes; (l) Indebtedness arising from judgments, orders or other awards to the extent not constituting an Event of Default; (m) Contingent Obligations to the extent the "primary obligations" of the "primary obligor" are not prohibited by this Agreement or any other Loan Agreement, but excluding Contingent Obligations with respect to the Euro Notes or the New US Securities or New Euro Securities; (n) letters of credit that are set forth on Schedule 7.02(b) issued under the Existing Credit Facility; (o) unsecured Indebtedness in respect of customer financing programs (including lease transactions) in an aggregate principal amount outstanding not at any time exceeding $15,000,000; and (p) Indebtedness evidenced by the Securities. 26 "Permitted Investments" means (i) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case, maturing within six months from the date of acquisition thereof; (ii) commercial paper, maturing not more than 270 days after the date of issue rated P-1 by Moody's or A-1 by Standard & Poor's; (iii) certificates of deposit maturing not more than 270 days after the date of issue, issued by commercial banking institutions and money market or demand deposit accounts maintained at commercial banking institutions, each of which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000; (iv) repurchase agreements having maturities of not more than 90 days from the date of acquisition which are entered into with major money center banks included in the commercial banking institutions described in clause (iii) above and which are secured by readily marketable direct obligations of the United States Government or any agency thereof, (v) money market accounts maintained with mutual funds having assets in excess of $2,500,000,000; and (vi) tax exempt securities rated A or higher by Moody's or A+ or higher by Standard & Poor's. "Permitted Liens" means: (a) Liens securing the Obligations; (b) Liens for taxes, assessments and governmental charges the payment of which is not required under Section 7.01(c); (c) Liens imposed by law, such as carriers', warehousemen's, mechanics', materialmen's and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money) that are not overdue by more than 30 days or are being contested in good faith and by appropriate proceedings promptly initiated and diligently conducted, and a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor; (d) Liens described on Schedule 7.02(a), and the extension of maturity, refinancing or other modification of the terms thereof, but not the extension of coverage thereof to other property or the extension, refinancing or other modification of the terms thereof to increase the amount of the Indebtedness secured thereby; (e) (i) purchase money Liens (including precautionary Lien filings made under the Uniform Commercial Code of any jurisdiction) on equipment acquired or held by any Loan Party or any of its Subsidiaries in the ordinary course of its business to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition of such equipment or (ii) Liens existing on such equipment at the time of its acquisition; provided, however, that (A) no such Lien shall extend to or cover any other property of any Loan Party or any of its Subsidiaries, and (B) the aggregate principal amount of Indebtedness secured by any or all such Liens shall not exceed at any one time outstanding $1,000,000; (f) deposits and pledges of cash securing (i) obligations incurred in respect of workers' compensation, unemployment insurance, automobile liability or other forms of 27 governmental insurance or benefits, (ii) the performance of bids, tenders, leases, contracts (other than for the payment of money) and statutory obligations, (iii) obligations on surety or appeal bonds, but only to the extent such deposits or pledges are made or otherwise arise in the ordinary course of business and secure obligations not past due, (iv) the letters of credit permitted under clause (n) of the definition of Permitted Indebtedness, or (v) obligations to suppliers and service providers (including lessors in respect of operating leases) of the Loan Parties made in the ordinary course of business and securing obligations not past due, to the extent the aggregate amount of such cash deposited or pledged at any time does not exceed $2,500,000; (g) (i) easements, zoning restrictions, rights of way, survey exceptions, leases and subleases and similar encumbrances on real property and minor irregularities in the title thereto that do not (x) secure obligations for the payment of money or (y) materially impair the value of such property or its use by any Loan Party or any of its Subsidiaries in the normal conduct of such Person's business, and any other Lien described in a Title Insurance Policy with respect to any real property subject to a Mortgage and (ii) Liens limited to the real property subject to a Lease of any Loan Party affecting the interest of the landlord of any such Lease (and any underlying landlord in the case of a ground lease); (h) Liens securing Indebtedness permitted by subsection (c) of the definition of Permitted Indebtedness, and Liens securing Hedging Agreements permitted by subsection (k) of the definition of Permitted Indebtedness, to the extent permitted therein, to the extent such Hedging Agreements are with the Agent, a Lender or any Affiliates of the foregoing; (i) Liens of landlords arising under real property Leases to the extent (x) the real property subject to such Liens is subject to a Landlord Waiver to the extent required pursuant to Section 7.01(m), and (y) such Liens arise in the ordinary course of business and do not serve and do not secure any past due obligation for the payment of money; (j) bankers' Liens with respect to depository account arrangements entered into in the ordinary course of business securing obligations not past due; (k) Liens in favor of any Loan Party in the assets or property of a Subsidiary of the Parent that is not a Loan Party; (l) Liens arising from judgments, orders, or other awards not constituting an Event of Default; (m) Liens constituting precautionary Lien filings made under the Uniform Commercial Code of any jurisdiction by PNC Bank, National Association, pursuant to the Purchase Agreement, dated as of September 24, 1999, between PNC Bank, National Association, and the Parent; (n) Liens of the L/C Issuer required to be granted in connection with Letter of Credit Accommodations; (o) Liens securing indebtedness permitted by subsection (f) or (p) of the definition of Permitted Indebtedness; and 28 (p) other Liens of the Loan Parties securing obligations not exceeding $500,000, provided, that, to the extent that such Liens are consensual, such Liens are not on any Accounts or Inventory of any Loan Party or on any Capital Stock or other instruments pledged under the Pledge Agreement. "Person" means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority. "Plan" means any Employee Plan or Multiemployer Plan. "Pledge Agreement" means (i) a Pledge and Security Agreement made by a Loan Party in favor of the Collateral Agent for the benefit of the Agent and the Lenders, substantially in the form of Exhibit C, securing the Obligations and delivered to the Collateral Agent and (ii) any pledge agreement or similar agreement or instrument made by a Loan Party in favor of the Collateral Agent for the benefit of the Agent and the Lenders providing for the pledge of the Capital Stock of any Foreign Subsidiary in accordance with the requirements of law of a foreign jurisdiction. "Post-Default Rate" means a rate of interest per annum equal to the rate of interest otherwise in effect from time to time pursuant to the terms of this Agreement plus 2.0%, or, if a rate of interest is not otherwise in effect, the greater of (i) the Reference Rate plus 10.0% and (ii) 14.0%. "Pro Rata Share" means: (a) with respect to a Lender's obligation to make Revolving A Loans and receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (i) such Lender's Revolving A Credit Commitment, by (ii) the Total Revolving A Credit Commitment, provided, that, if the Total Revolving A Credit Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's Revolving A Loans (including Agent Advances) and its interest in the Letter of Credit Obligations and the denominator shall be the aggregate unpaid principal amount of all Revolving A Loans (including Agent Advances) and Letter of Credit Obligations, (b) with respect to a Lender's obligation to make B-Loans and receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (i) such Lender's B-Commitment, by (ii) the Total B-Commitment, provided, that, if the Total B-Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's B-Loans and the denominator shall be the aggregate unpaid principal amount of all B-Loans, and (c) with respect to all other matters (including, without limitation, the indemnification obligations arising under Section 10.05), the percentage obtained by dividing (i) the sum of such Lender's Revolving A Credit Commitment and B-Commitment, by (ii) the sum of the Total Revolving A Credit Commitment and Total B-Commitment, provided, that, if any of such Lender's Revolving A Credit Commitment or B-Commitment shall have been reduced to zero, such Lender's Revolving A Credit Commitment or B-Commitment, as the case 29 may be, shall be deemed to be the aggregate unpaid principal amount of such Lender's Revolving A Loans or B-Loans, as the case may be (including Agent Advances) and its interest in the Letter of Credit Obligations and if any of the Total Revolving A Credit Commitment or Total B-Commitment shall have been reduced to zero, the Total Revolving A Credit Commitment or Total B-Commitment, as the case may be, shall be deemed to be the aggregate unpaid principal amount of all Revolving A Loans (including Agent Advances) and Letter of Credit Obligations or B-Loans. "Rating Agencies" has the meaning specified therefor in Section 2.07. "Receivables" means all of the following now owned or hereafter arising or acquired property of each Loan Party: (i) all Accounts; (ii) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (iii) all payment intangibles of such Loan Party; (iv) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Loan Party or otherwise in favor of or delivered to any Loan Party in connection with any Account; or (v) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Loan Party, whether from the sale and lease of goods or other property, licensing of any property (including intellectual property or other general intangibles), rendition of services or from loans or advances by any Loan Party or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Loan Party) or otherwise associated with any Accounts, Inventory or general intangibles of any Loan Party (including, without limitation, chooses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Loan Party in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Loan Party from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Loan Party is a beneficiary). "Reference Rate" means the rate of interest publicly announced by CSFB in New York, New York from time to time as its reference rate, base rate or prime rate. The reference rate, base rate or prime rate is determined from time to time by CSFB as a means of pricing some loans to its borrowers and neither is tied to any external rate of interest or index nor necessarily reflects the lowest rate of interest actually charged by CSFB to any particular class or category of customers. Each change in the Reference Rate shall be effective from and including the date such change is publicly announced as being effective. "Reference Rate Loan" means a Loan bearing interest based upon the Reference Rate. "Register" has the meaning specified therefor in Section 12.07(b)(ii). "Registered Loan" has the meaning specified therefor in Section 12.07(b)(ii). 30 "Regulation T", "Regulation U" and "Regulation X" mean, respectively, Regulations T, U and X of the Board or any successor, as the same may be amended or supplemented from time to time. "Related Parties" shall mean, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, trustees, employees, agents and advisors of such Person and such Person's Affiliates. "Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material) into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through or in the ambient air, soil or surface or ground water. "Remedial Action" means all actions taken pursuant to Environmental Laws to (i) clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the indoor or outdoor environment; (ii) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities; or (iv) perform any other actions authorized by 42 U.S.C. Section 9601. "Reportable Event" means an event described in Section 4043 of ERISA (other than an event for which notice to the PBGC is waived under the regulations promulgated under such Section). "Required A Lenders" means the Revolving A Lenders whose Pro Rata Share (as defined under clause (a) of such definition) of the Revolving A Credit Commitments aggregate more than 50%. "Required Availability" means an amount equal to $25,000,000. "Required B Lenders" means the B-Lenders whose Pro Rata Share (as defined under clause (b) of such definition) of the B-Commitments aggregate more than 50%. "Required Lenders" means the Required A Lenders and the Required B Lenders. "Reserve Percentage" means, on any day, for any Lender, the maximum percentage prescribed by the Board (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as "eurocurrency liabilities") of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero. "Reserves" means as of any date of determination, such amounts as the Administrative Agent may from time to time establish and revise in its reasonable credit judgment reducing the amount of Revolving A Loans and Letter of Credit Accommodations 31 which would otherwise be available to the Borrowers under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by the Administrative Agent in its reasonable credit judgment, adversely affect, or have a reasonable likelihood of adversely affecting, either (i) the Collateral or any other property which is security for the Obligations or its value, (ii) the assets or business of any Loan Party or (iii) the security interests and other rights of the Agent and the Lenders in the Collateral (including the enforceability, perfection and priority (including, without limitation, in respect of any Liens, whether or not permitted by Section 8.03, which may have priority over the Liens securing the Obligations) thereof), (b) to reflect the Administrative Agent's reasonable belief that any collateral report or financial information furnished by or on behalf of any Borrower to the Administrative Agent is incomplete, inaccurate or misleading in any material respect, (c) if the dilution with respect to the Accounts for any period has increased or may be reasonably anticipated to increase above historical levels or (d) in respect of unpaid medical claims associated with the Borrowers' self-insurance program in excess of historical amounts. To the extent the Administrative Agent may establish new criteria or revise existing criteria for Eligible Accounts or Eligible Inventory so as to address any circumstances, condition, event or contingency in a manner reasonably satisfactory to the Administrative Agent, the Administrative Agent shall not establish a Reserve for the same purpose. The amount of any Reserve established by the Administrative Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such reserve as determined by the Administrative Agent in its reasonable credit judgment and shall promptly be reduced or eliminated to the extent such event, condition or other matter no longer reasonably justifies such reserve. Without limiting the foregoing, the Administrative Agent shall be entitled to establish reserves in accordance with Section 2.05(f). "Revolving A Credit Commitment" means, with respect to each Lender, the commitment of such Lender to make Revolving A Loans to the Borrowers in the amount set forth opposite such Lender's name in Schedule 1.01(A) hereto, as such amount may be terminated or reduced from time to time in accordance with the terms of this Agreement. "Revolving A Loan" means a loan made by a Lender to the Borrowers pursuant to Section 2.01(a)(i). "Revolving A Lender" means a Lender with a Revolving A Credit Commitment, a Revolving A Loan or a Letter of Credit Obligation. "SEC" means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act. "Securities" has the meaning specified in Section 5.01(l). "Securities Act" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time. "Securitization" has the meaning specified therefor in Section 2.07. 32 "Security Agreement" means a Security Agreement made by a Loan Party in favor of the Collateral Agent for the benefit of the Agent and the Lenders, substantially in the form of Exhibit B, securing the Obligations and delivered to the Collateral Agent. "Settlement Period" has the meaning specified therefor in Section 3.04(b) hereof. "Standard & Poor's" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto. "Stockholder Approval" has the meaning specified in the Mizuho/Glencore Transaction Documents. "Subordination and Intercreditor Agreement" means that certain Subordination and Intercreditor Agreement dated as of March 12, 2004 by and among the Agent, Mizuho, Glencore, the Administrative Borrower, and Milacron Capital Holdings B.V. "Subsidiary" means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (i) the accounts of which would be consolidated with those of such Person in such Person's consolidated financial statements if such financial statements were prepared in accordance with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such Person, (B) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (C) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person. "Taxes" has the meaning specified therefor in Section 2.08(a). "Termination Event" means (i) a Reportable Event with respect to any Employee Plan, (ii) any event that causes any Loan Party or any of its ERISA Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the Internal Revenue Code, (iii) the filing of a notice of intent to terminate an Employee Plan or the treatment of an Employee Plan amendment as a termination under Section 4041 of ERISA, (iv) the institution of proceedings by the PBGC to terminate an Employee Plan, or (v) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Employee Plan. "Title Insurance Policy" means a mortgagee's loan policy, in form and substance satisfactory to the Collateral Agent, together with all endorsements made from time to time thereto, issued by or on behalf of First American Title Insurance Company, insuring the Lien created by a Mortgage in an amount and on terms reasonably satisfactory to the Collateral Agent, delivered to the Collateral Agent. "Transferee" has the meaning specified therefor in Section 2.08(a). 33 "Total Revolving A Credit Commitment" means the sum of the amounts of the Lenders' Revolving A Credit Commitments. "Total B-Commitment" means the sum of the amounts of the Lenders' B-Commitments. "Total Commitment" means the sum of the Total Revolving A Credit Commitment and the Total B-Commitment. "UCC Filing Authorization Letter" means a letter duly executed by each Loan Party authorizing the Collateral Agent to file appropriate financing statements on Form UCC without the signature of such Loan Party in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Agreement, each Pledge Agreement and each Mortgage. "Uniform Commercial Code" has the meaning specified therefor in Section 1.03. "Unused Line Fee" has the meaning specified therefor in Section 2.06(b). "WARN" has the meaning specified therefor in Section 6.01(y). Section 1.02 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. References in this Agreement to "determination" by the Agent include good faith estimates by the Agent (in the case of quantitative determinations) and good faith beliefs by the Agent (in the case of qualitative determinations). Section 1.03 Accounting and Other Terms. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP applied on a basis consistent with those used in preparing the Financial Statements. All terms used in this Agreement which are defined in Article 8 or Article 9 of the Uniform Commercial Code as in effect from time to time in the State of New York (the "Uniform Commercial Code") and which are not otherwise defined herein shall have the same meanings herein as set forth therein, 34 provided that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Agent may otherwise determine. Section 1.04 Time References. Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding"; provided, however, that with respect to a computation of fees or interest payable to the Agent, any Lender or the L/C Issuer, such period shall in any event consist of at least one full day. ARTICLE II. THE LOANS Section 2.01 Commitments. (a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth: (i) each Revolving A Lender severally agrees to make Revolving A Loans to the Borrowers at any time and from time to time from the Effective Date to the Final Maturity Date, or until the earlier reduction of its Revolving A Credit Commitment to zero in accordance with the terms hereof, in an aggregate principal amount of Revolving A Loans at any time outstanding not to exceed the amount of such Lender's Revolving A Credit Commitment; and (ii) each B-Lender severally agrees to make a B-Loans] to the Borrowers on the Effective Date in the amount of such Lender's B-Commitment. (b) Notwithstanding the foregoing: (i) The aggregate principal amount of the Revolving A Loans outstanding at any time to the Borrowers shall not exceed the difference between (A) the lesser of (x) the Total Revolving A Credit Commitment and (y) the then current Borrowing Base and (B) the aggregate Letter of Credit Obligations. (ii) Any principal amount of the B-Loans which is repaid or prepaid may not be reborrowed. Upon funding of the B-Loans, the B-Commitment of each B-Lender shall automatically and permanently be reduced to zero on the Effective Date.. (iii) [Reserved] (iv) The Revolving A Credit Commitment shall automatically and permanently be reduced to zero on the Final Maturity Date. Within the foregoing limits, the Borrowers may borrow, repay and reborrow the Revolving A Loans, on or after the Effective Date and prior to the Final Maturity Date, subject to the terms, provisions and limitations set forth herein. 35 (c) The Lenders shall have no obligation to make any Loans if, either immediately before or after giving effect to such Loans, the aggregate amount of the Loans plus the Letter of Credit Obligations exceeds or will exceed the amount of Indebtedness permitted to be incurred under the Euro Indenture (the amount of any such excess is hereafter referred to as the "Indenture Deficit"), if such Indenture is in effect. Section 2.02 Making the Loans. (a) The Administrative Borrower shall give the Administrative Agent prior telephonic notice (promptly confirmed in writing, in substantially the form of Exhibit D hereto (a "Notice of Borrowing")), not later than (i) in the case of a borrowing consisting of Reference Rate Loans, 12:00 noon (New York City time) on the borrowing date of the proposed Reference Rate Loan and (ii) in the case of a borrowing consisting of LIBOR Loans, 12:00 noon (New York City time) on the date that is three Business Days prior to the proposed borrowing). Such Notice of Borrowing shall be irrevocable and shall specify (i) the principal amount of the proposed Loan, (ii) whether such Loan is requested to be a Reference Rate Loan or a LIBOR Loan and, in the case of a LIBOR Loan, the initial Interest Period with respect thereto, (iii) the proposed borrowing date, which must be a Business Day, and (iv) whether such Loan is requested to be a Revolving A Loan or a B-Loan. The Administrative Agent and the Lenders may act without liability upon the basis of written, telecopied or telephonic notice believed by the Administrative Agent in good faith to be from the Administrative Borrower (or from any Authorized Officer thereof designated in writing purportedly from the Administrative Borrower to the Administrative Agent). Each Borrower hereby waives the right to dispute the Administrative Agent's record of the terms of any such telephonic Notice of Borrowing absent manifest error. The Administrative Agent and each Lender shall be entitled to rely conclusively on any Authorized Officer's authority to request a Loan on behalf of the Borrowers until the Administrative Agent receives written notice to the contrary. The Administrative Agent and the Lenders shall have no duty to verify the authenticity of the signature appearing on any written Notice of Borrowing. (b) Each Notice of Borrowing pursuant to this Section 2.02 shall be irrevocable and the Borrowers shall be bound to make a borrowing in accordance therewith. Each Revolving A Loan that is a LIBOR Loan shall be made in a minimum amount of $1,000,000 and in integral multiples of $500,000 in excess thereof; it being agreed and understood that no such minimum amounts shall apply with respect to Revolving A Loans that are Reference Rate Loans. Each B-Loan shall be made in a minimum amount of $2,500,000. Section 2.03 Repayment of Loans; Evidence of Debt. (a) The outstanding principal of all Loans shall be due and payable on the Final Maturity Date. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the 36 amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrowers shall execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in a form furnished by the Collateral Agent and reasonably acceptable to the Administrative Borrower. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 12.07) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). Section 2.04 Interest. (a) Loans. (i) Subject to the terms of this Agreement, at the option of the Borrowers, each Revolving A Loan will either be a LIBOR Loan or a Reference Rate Loan. Each Revolving A Loan that is a LIBOR Loan shall bear interest on the principal amount thereof from time to time outstanding from the date of such Loan until such principal amount becomes due, at a rate per annum equal to the greater of (A) the Adjusted LIBOR Rate for the Interest Period in effect for such Revolving A Loan plus 3.25% and (B) 4.75%. Each Revolving A Loan which is a Reference Rate Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of such Loan until such principal amount becomes due, at a rate per annum equal to the greater of (x) the Reference Rate plus 1.50% and (y) 5.5%. (ii) Subject to the terms of this Agreement, at the option of the Borrowers, each B-Loan will either be a LIBOR Loan or a Reference Rate Loan. Each B-Loan that is a LIBOR Loan shall bear interest on the principal amount thereof from time to time outstanding from the date of such Loan until such principal amount becomes due, at a rate per annum equal to the greater of (A) the Adjusted LIBOR Rate for the Interest Period in effect for such B-Loan plus 10.5% and (B) 12.0%. Each B-Loan which is a Reference Rate Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of such Loan until such principal amount becomes due, at a rate per annum equal to the greater of (x) the Reference Rate plus 8.0% and (y) 12.0%. (b) Default Interest. To the extent permitted by law, upon the occurrence and during the continuance of an Event of Default, the principal of, and all accrued and unpaid interest on, all Loans, fees, indemnities or any other Obligations of the Loan Parties under this Agreement and the other Loan Documents, shall bear interest, from the date such Event of 37 Default occurred until the date such Event of Default is cured or waived in writing in accordance herewith, at a rate per annum equal at all times to the Post-Default Rate. (c) Interest Payment. Interest on each Loan shall be payable monthly, in arrears, on the first day of each month, commencing on the first day of the month following the month in which such Loan is made and at maturity (whether upon demand, by acceleration or otherwise). Interest at the Post-Default Rate shall be payable on demand. Each Borrower hereby authorizes the Administrative Agent to, and the Administrative Agent may, from time to time, charge the Loan Account pursuant to Section 4.02 with the amount of any interest payment due hereunder. (d) General. All interest shall be computed on the basis of a year of 360 days for the actual number of days, including the first day but excluding the last day, elapsed. Section 2.05 Reduction of Commitment; Prepayment of Loans. Reduction of Commitments. (i) The Total Revolving A Credit Commitment shall terminate on the Final Maturity Date. The Borrowers may, without premium or penalty, reduce the Total Revolving A Credit Commitment to an amount (which may be zero) not less than the sum of (I) the aggregate unpaid principal amount of all Revolving A Loans then outstanding, (II) the aggregate principal amount of all Revolving A Loans not yet made as to which a Notice of Borrowing has been given by the Administrative Borrower under Section 2.02, (III) the Letter of Credit Obligations at such time and (IV) the stated amount of all Letter of Credit Accommodations not yet issued as to which a request has been made and not withdrawn.. (ii) Each such reduction shall be in an amount which is an integral multiple of $1,000,000 (unless the Total Revolving A Credit Commitment in effect immediately prior to such reduction is less than $1,000,000), shall be made by providing not less than three (3) Business Days' prior written notice to the Administrative Agent and shall be irrevocable. Once reduced, the applicable Total Revolving A Credit Commitment may not be increased. (iii) Each such reduction of the Total Revolving A Credit Commitment shall reduce the applicable Commitment of each Revolving A Lender proportionately in accordance with its Pro Rata Share thereof. (b) Optional Prepayment. (i) Revolving A Loans. The Borrowers may prepay without penalty or premium the principal of any Revolving A Loan, in whole or in part, at any time. (ii) B-Loans. The Borrowers may, upon at least three (3) Business Days' prior written notice to the Administrative Agent, prepay without penalty or premium, the principal of any B-Loan, in whole or in part; provided, that, notwithstanding the foregoing, except in connection with the repayment in full of all of the Obligations, the Borrowers may not (A) voluntarily prepay in full the outstanding B-Loans unless (x) all of the outstanding Revolving A Loans have been repaid in full and (y) the Total Revolving A Credit Commitment has been, or is substantially concurrently being, reduced to zero or (B) voluntarily prepay all or 38 any portion of the outstanding B-Loans unless (x) immediately after giving effect to such prepayment, Availability (calculated without giving effect to any other adjustment or threshold, including, without limitation, the requirements of Section 7.03(c)) would be at least $10,000,000 and (y) immediately before and immediately after giving effect to such prepayment, no Event of Default shall have occurred and be continuing. (iii) Prepayment In Full. The Borrowers may, upon at least five (5) days prior written notice to the Administrative Agent, terminate this Agreement by paying to the Administrative Agent, in cash, the Obligations (including either (A) providing cash collateral to be held by the Administrative Agent in an amount equal to 105% of the aggregate undrawn amount of all outstanding Letter of Credit Accommodations or (B) causing the original Letter of Credit Accommodations to be returned to the Administrative Agent), in full. If the Administrative Borrower has sent a notice of termination pursuant to this clause (iii), then the Lenders' obligations to extend credit hereunder shall terminate and the Borrowers shall be obligated to repay the Obligations (including either (A) providing cash collateral to be held by the Administrative Agent in an amount equal to 105% of the aggregate undrawn amount of all outstanding Letter of Credit Accommodations or (B) causing the original Letter of Credit Accommodations to be returned to the Administrative Agent), in full (other than contingent indemnifications and contingent obligations (including, without limitation, fees and expenses with respect to which the Borrowers have not received an invoice) for which no claim has been asserted hereunder which survive the termination hereof), on the date set forth as the date of termination of this Agreement in such notice. (iv) Prepayment Fee on B-Loans. If all or any portion of the B Loans is prepaid pursuant to Section 2.05(a) or this Section 2.05(b), the Borrowers, jointly and severally, agree to pay a fully-earned and non-refundable prepayment fee on the principal amount prepaid equal to 2% of the principal amount prepaid. (c) Mandatory Prepayment. (i) The Borrowers will immediately prepay the Revolving A Loans at any time when the aggregate principal amount of all Revolving A Loans plus the outstanding amount of all Letter of Credit Obligations exceeds the Borrowing Base, to the full extent of any such excess. On each day that any Revolving A Loans or Letter of Credit Obligations are outstanding, the Borrowers shall hereby be deemed to represent and warrant to the Agent and the Lenders that the Borrowing Base calculated as of such day equals or exceeds the aggregate principal amount of all Revolving A Loans and Letter of Credit Obligations outstanding on such day. If at any time after the Borrowers have complied with the first sentence of this Section 2.05(c)(i), the aggregate Letter of Credit Obligations is greater than the then current Borrowing Base, the Borrowers shall provide cash collateral to the Administrative Agent in an amount equal to 105% of such excess, which cash collateral shall be deposited in the Letter of Credit Collateral Account and if no Event of Default shall have occurred and be continuing, all or a portion of such cash collateral shall be returned to the Borrowers at such time as the aggregate Letter of Credit Obligations plus the aggregate principal amount of all outstanding Revolving A Loans no longer exceeds the then current Borrowing Base. 39 (ii) The Administrative Agent shall on each Business Day apply all funds transferred to or deposited in the Administrative Agent's Account, to the payment, in whole or in part, of the outstanding principal amount of the Revolving A Loans; provided that (A) such funds shall be applied to the outstanding principal amount of the B-Loans (x) in the absence of a continuing Event of Default, to the extent such application is specifically provided for in Section 2.05(d), and (y) during the existence of an Event of Default, in accordance with Section 4.04(b), and (B) if no Revolving A Loans remain outstanding after the application of such funds to repay any outstanding Revolving A Loans, such funds are not required to be applied to the B-Loans pursuant to clause (A) of this proviso and no Event of Default exists, the Borrowers shall be permitted to use the funds received in the Administrative Agent's Account or any other account subject to the control of the Administrative Agent for general corporate and working capital purposes of the Borrowers subject to (x) Section 6.01(t) and (y) the requirement that cash and cash equivalents of the Domestic Loan Parties and their Domestic Subsidiaries in the aggregate amount in excess of $4,000,000 shall be in bank accounts subject to a Cash Management Agreement or applied to reduction of the Revolving A Loans. (iii) Upon any Disposition by any Loan Party or its Domestic Subsidiaries, the Borrowers shall promptly (and, in no event, later than one (1) Business Day after any such Disposition) prepay the Loans in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition. Nothing contained in this subsection (iii) shall permit any Loan Party or any of its Subsidiaries to make a Disposition of any property other than in accordance with Section 7.02(c). Any payments required to be made under this subsection (c)(iii) shall be applied as set forth in Section 2.05(d). Upon the issuance or incurrence by any Loan Party or any of its Domestic Subsidiaries of any Indebtedness (other than Permitted Indebtedness), or the sale or issuance by any Loan Party or any of its Domestic Subsidiaries of any shares of its Capital Stock, in each case, other than issuances and incurrences contemplated by the Mizuho/Glencore Transactions, the Borrowers shall promptly (and, in no event, later than one (1) Business Day after any such issuance or incurrence) prepay the outstanding amount of the Loans in an amount equal to, (x) in the case of a "Rights Offering" (as such term is defined in the Mizuho/Glencore Transaction Documents), the lesser of (1) 65% of the Net Cash Proceeds received by such Person in connection therewith and (2) the Net Cash Proceeds received by such Person in connection therewith minus the lesser of (A) $30,000,000 and (B) the amount of such Net Cash Proceeds used to redeem preferred stock in accordance with the Mizuho/Glencore Transaction Documents and (y) in all other cases, 65% (or, in the case of an offering of Securities, an amount equal to the aggregate principal amount of B Loans) of the Net Cash Proceeds received by such Person in connection therewith. The provisions of this subsection (iv) shall not be deemed to be implied consent to any such issuance, incurrence or sale otherwise prohibited by the terms and conditions of this Agreement. Any payments required to be made under this subsection (c)(iv) shall be applied as set forth in Section 2.05(d). (iv) Upon the receipt by any Loan Party or any of its Domestic Subsidiaries of any Extraordinary Receipts, the Borrowers shall promptly (and in no event, later than one (1) Business Day after the receipt thereof) prepay the outstanding principal of the Loans in an amount equal to 65% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts, provided, however, an aggregate amount 40 equal to $2,000,000 of Extraordinary Receipts from royalty payments from the settlement of license infringement claims of in connection with Parent's "XTL" patent relating to computer-based controls for plastic molding machines and warranties or other related claims against suppliers in connection with products and services provided to the Loan Parties shall not be required to be applied to repay the Loans. Any payments required to be made under this subsection (c)(v) shall be applied as set forth in Section 2.05(d). (v) If on any day an Indenture Deficit exists, the Borrowers shall pay to the Administrative Agent an amount equal to such Indenture Deficit to be applied to the outstanding principal amount of the Revolving A Loans and/or B-Loans which payment shall be made immediately as a result of an Indenture Deficit pursuant to an event described under Section 2.01(c). Any payments required to be made under this subsection (c)(vi) shall be applied as set forth in Section 2.05(d). (vi) Immediately prior to the making of any payment in cash by any Loan Party to the Euro Note Holders in respect of any obligations under the Euro Notes, the Borrowers shall prepay the outstanding principal amount of the Loans in an amount equal to five times the amount of such payment to be made to the Milacron Note Holders; provided, that no such prepayment shall be required if (A) such payments are not prohibited by the terms of the proviso in the definition of Euro Note Restructuring Transaction or (B) in the case of the interest payment due on April 6, 2004 to the Euro Note Holders, such interest payment is made by Milacron Capital solely from cash received by it from the Foreign Subsidiaries. Any payments required to be made under this subsection (c)(vii) shall be applied as set forth in Section 2.05(d). (vii) Immediately upon the receipt of a Foreign Insurance Repayment, the Borrowers shall pay to the Administrative Agent an amount equal to such Foreign Insurance Repayment to be applied to the outstanding principal amount of the Loans. Any payments required to be made under this subsection (c)(viii) shall be applied as set forth in Section 2.05(d). (viii) Immediately prior to the making of any payment in cash by any Loan Party in respect of its guaranties of the Indebtedness of any Foreign Subsidiary, the Borrowers shall prepay the outstanding principal amount of the Loans in an amount equal to the amount of such payment. Any payments required to be made under this subsection (c)(ix) shall be applied as set forth in Section 2.05(d). (ix) Notwithstanding the foregoing, in connection with a Disposition under Section 2.05(c)(iii) or receipt of insurance proceeds or condemnation awards pursuant to Section 2.05(c)(v), up to $1,000,000 in the aggregate of the Net Cash Proceeds from such Disposition and up to $5,000,000 in the aggregate of the Net Cash Proceeds from Extraordinary Receipts from such insurance proceeds or condemnation awards, as the case may be, received by any Loan Party or any of its Domestic Subsidiaries in connection therewith shall not be required to be applied to the prepayment of the Loans to the extent an amount equal to such proceeds are used, in the case of proceeds related to any Disposition, to fund Capital Expenditures of the Loan Parties or any of its Domestic Subsidiaries, or, in the case of proceeds related to any Extraordinary Receipts, to replace, repair or restore the properties or assets used in such Loan Party's or any of its Domestic Subsidiaries' business in respect of which such Net Cash Proceeds or Extraordinary Receipts, as the case may be, were paid, provided that, (A) no Default or Event 41 of Default has occurred and is continuing on the date such Person receives such Net Cash Proceeds or such Extraordinary Receipts, (B) the Administrative Borrower delivers a certificate to the Agent within 3 Business Days after such Disposition or 3 Business Days after the date of such loss, destruction or taking, as the case may be, stating that such proceeds shall be used, in the case of such proceeds related to any Disposition, to fund Capital Expenditures of the Loan Parties or any of its Domestic Subsidiaries, or, in the case of such proceeds related to any Extraordinary Receipts, to replace, repair or restore any such properties or assets to be used in such Loan Party's business within a period specified in such certificate not to exceed 60 days after the receipt of such proceeds (which certificate shall set forth estimates of the proceeds to be so expended) and (C) such proceeds are deposited in an account subject to the sole dominion of the Administrative Agent. If all or any portion of such proceeds not so applied to the prepayment of the Loans are not used in accordance with the preceding sentence within the period specified in the relevant certificate furnished pursuant hereto or there shall occur a Default or Event of Default, such remaining portion shall be applied to the Loans as required by Section 2.05(c)(iii) or Section 2.05(c)(v), as applicable, on the last day of such specified period or immediately, in the case of a Default or Event of Default. (d) Application of Payments. At any time when no Event of Default exists, the proceeds of the prepayments required under Section 2.05(c) shall be applied as follows (it being agreed and understood that if an Event of Default does exist then prepayments shall be applied in the manner set forth in Section 4.04(b)): (i) the proceeds from any prepayment pursuant to any Disposition of any Account or Inventory or any insurance policy or condemnation award with respect to Inventory, shall be applied to the Revolving A Loans until paid in full; (ii) the proceeds from any prepayment pursuant to a Disposition of all or substantially all of the assets or Capital Stock of any Person or any insurance policy or award or condemnation award which Disposition or proceeds of insurance includes both (x) Accounts or Inventory and (y) other assets (in each case, other than from the proceeds of any Designated Disposition), shall be applied as follows: (A) an amount equal to the amount of Revolving A Loans supported by such assets determined using the effective advance rate under the Borrowing Base against such Accounts and Inventory (determined at the time of such Disposition or event resulting in such insurance proceeds) shall be applied to the Revolving A Loans until paid in full, and (B) the remaining proceeds shall be applied first, to the B-Loans until paid in full, second, to the Revolving A Loans until paid in full; (iii) the proceeds from any prepayment pursuant to a Designated Business Disposition or any insurance policy or condemnation award with respect to the Designated Business which Disposition or proceeds of insurance or award includes both (x) Accounts or Inventory and (y) other assets, shall be applied as follows: (A) an amount equal to the amount of Revolving A Loans supported by such assets determined using the effective advance rate under the Borrowing Base against such Accounts and Inventory (determined at the time of such Disposition or event resulting in such insurance proceeds) shall be applied to the Revolving A Loans until paid in full, and (B) the remaining proceeds shall be applied to the B-Loans until paid in full; 42 (iv) the proceeds from any prepayment pursuant to a Designated Real Property Disposition or any insurance policy or condemnation award with respect to the Designated Real Property shall be applied as follows: (A) 100% of the proceeds shall be applied to the B-Loans until paid in full and (B) thereafter, the proceeds shall be applied to the Revolving A Loans until paid in full; (v) (x) with respect to the first $5,000,000 of proceeds from prepayment events set forth in Section 2.05(c) (iii) with respect to Dispositions (other than with respect to Dispositions described in paragraphs (i), (ii), (iii) or (iv) above) to be applied pursuant to this clause, such proceeds shall be applied to the Revolving A Loans until paid in full (with any excess proceeds not being required to be applied pursuant to this clause (v)) and (y) with respect to any other proceeds from any prepayment event set forth in Section 2.05(c)(iii) (other than with respect to Dispositions described in paragraphs (i), (ii), (iii) or (iv) above), Section 2.05(c)(iv), or Section 2.05(c)(v) (other than proceeds from any insurance policy or condemnation award with respect to Inventory) shall be applied first, to the B-Loans until paid in full, and, second, to the Revolving A Loans until paid in full; (vi) the proceeds from any prepayment event set forth in Section 2.05(c)(vi) or Section 2.05(c)(viii) shall be applied first, to the Revolving A Loans until paid in full, and, second, to the B-Loans until paid in full; and (vii) the proceeds from any prepayment event set forth in Section 2.05(c)(vii) or Section 2.05(c)(ix) shall be applied first, to the B-Loans until paid in full, and, second, to the Revolving A Loans until paid in full. (e) Cumulative Prepayments. Except as otherwise expressly provided in this Section 2.05, payments with respect to any subsection of this Section 2.05 are in addition to payments made or required to be made under any other subsection of this Section 2.05, and, in no event, shall proceeds be required to be applied under more than one subsection of Section 2.05(d). (f) (i) Availability Requirements. Notwithstanding anything to the contrary contained herein, if Availability (without giving effect to any other adjustment or threshold, including, without limitation, the requirements of Section 7.03(c)) would be less than $10,000,000 immediately after giving effect to any prepayment of the B-Loans pursuant to Section 2.05(d)(ii), Section 2.05(d)(iii), Section 2.05(d)(iv) or Section 2.05(d)(v), no such prepayment of the B-Loans shall be made and such amounts shall be applied to the repayment of the Revolving A Loans. Concurrently with such repayment of the Revolving A Loans, the Administrative Agent shall establish and maintain a corresponding reserve against both the Borrowing Base and the Total Revolving A Credit Commitment in an amount equal to the amount that would have otherwise been applied as a prepayment of the B-Loans, and the B-Loans may be prepaid by such amount at such time and from time to time if no Event of Default would exist and Availability (calculated without giving effect to these reserves or any other adjustment or threshold, including, without limitation, the requirements of Section 7.03(c)) would exceed $10,000,000 immediately after giving effect to such prepayment of the B-Loan by such amount and the corresponding reserve established pursuant to the first sentence of this Section 2.05(f) against both the Borrowing Base and the Total Revolving A Credit Commitment 43 shall be released in an amount equal to such prepayment at such time and from time to time as each such prepayment is made. Section 2.06 Fees. From and after the Effective Date and until the Final Maturity Date, the Borrowers shall pay to the Administrative Agent (a) for the account of the Lenders, [in accordance with a written agreement among the Agent and the Lenders,] an unused line fee (the "Unused Line Fee"), which shall accrue at the rate per annum of 0.75% on the excess, if any, of the Total Commitment over the sum of the average principal amount of all Loans and Letter of Credit Obligations outstanding from time to time and shall be payable monthly in arrears on the first day of each month hereafter, and (b) such other fees as may be specified in the Fee Letter when and as due in accordance with the terms thereof. 44 Section 2.07 Securitization. The Loan Parties hereby acknowledge that the Lenders and their Affiliates may sell or securitize the Loans (a "Securitization") through the pledge of the Loans as collateral security for loans to the Lenders or their Affiliates or through the sale of the Loans or the issuance of direct or indirect interests in the Loans, which loans to the Lenders or their Affiliates or direct or indirect interests will be rated by Moody's, Standard & Poor's or one or more other rating agencies (the "Rating Agencies"). The Loan Parties shall cooperate with the Lenders and their Affiliates to effect the Securitization including, without limitation, by (a) amending this Agreement and the other Loan Documents, and executing such additional documents, as reasonably requested by the Lenders in connection with the Securitization, provided that (i) any such amendment or additional documentation does not impose material additional costs on the Loan Parties and (ii) any such amendment or additional documentation does not materially adversely affect the rights, or materially increase the obligations, of the Loan Parties under the Loan Documents or change or affect in a manner adverse to the Loan Parties the financial terms of the Loans, (b) providing such information as may be reasonably requested by the Lenders in connection with the rating of the Loans or the Securitization, and (c) providing in connection with any rating of the Loans a certificate. Section 2.08 Taxes. (a) Any and all payments by any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding (i) taxes imposed on (or measured by) the net income of the Agent, any Lender or the L/C Issuer (or any transferee or assignee thereof, including a participation holder (any such entity, a "Transferee")) solely as a result of any present or former connection between the Agent, such Lender or the L/C Issuer (or Transferee) and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision thereof or therein (other than as a result of entering into this Agreement or any other Loan Document, performing any obligations hereunder or under any other Loan Document, receiving any payments hereunder or under any other Loan Document, taking any other action in connection with this Agreement or any other Loan Document or enforcing any rights hereunder or under any other Loan Document and (ii) any branch profits taxes or any similar tax imposed by the United States of America or by the jurisdiction in which the Agent, such Lender or the L/C Issuer is organized or has its principal lending office (all such nonexcluded taxes, levies, imposts, deductions, charges withholdings and liabilities, collectively or individually, "Taxes"). If any Loan Party shall be required to deduct any Taxes from or in respect of any sum payable hereunder to the Agent, any Lender or the L/C Issuer (or any Transferee), (A) the sum payable shall be increased by the amount (an "additional amount") necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.08) the Agent, such Lender or the L/C Issuer (or such Transferee) shall receive an amount equal to the sum it would have received had no such deductions been made, (B) such Loan Party shall make such deductions and (C) such Loan Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, each Loan Party agrees to pay to the relevant Governmental Authority in accordance with applicable law any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made 45 hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Letter of Credit Accommodations or any other Loan Document ("Other Taxes"). Each Loan Party shall deliver to the Administrative Agent official receipts or other evidence of such payment reasonably satisfactory to the Administrative Agent in respect of any Taxes or Other Taxes payable hereunder promptly after payment of such Taxes or Other Taxes. (c) The Loan Parties hereby jointly and severally indemnify and agree to hold the Agent, each Lender and the L/C Issuer harmless from and against Taxes and Other Taxes (including, without limitation, Taxes and Other Taxes imposed on any amounts payable under this Section 2.08) paid by such Lender, the Agent or the L/C Issuer (or such Transferee), whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be paid within 10 days from the date on which any such Lender, the Agent or the L/C Issuer makes written demand therefor specifying in reasonable detail the nature and amount of such Taxes or Other Taxes. (d) Each Lender (or Transferee) that is organized under the laws of a jurisdiction other than the United States, any State thereof or the District of Columbia (a "Non-U.S. Lender") shall deliver to the Agent and the Administrative Borrower two properly completed and duly executed copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, and, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments of "portfolio interest", a Form W-8BEN, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of any Borrower and is not a controlled foreign corporation related to a Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code)), in each case claiming complete exemption from U.S. Federal withholding tax on payments by the Loan Parties under this Agreement. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of a Transferee that is a participation holder, on or before the date such participation holder becomes a Transferee hereunder) and on or before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating a different lending office (a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms within 20 days after receipt of a written request therefor from the Administrative Borrower or the Agent. Notwithstanding any other provision of this Section 2.08, a Non-U.S. Lender shall not be required to deliver after the date hereof or, if applicable, the date a Transferee becomes a party to this Agreement or the Non-U.S. Lender designates a New Lending Office any form pursuant to this Section 2.08 that such Non-U.S. Lender is not legally able to deliver. (e) The Loan Parties shall not be required to indemnify any Non-U.S. Lender, or pay any additional amounts to any Non-U.S. Lender, in respect of United States Federal withholding tax pursuant to this Agreement to the extent that (i) the obligation to withhold amounts with respect to United States Federal withholding tax existed on the date such Non-U.S. Lender became a party to this Agreement (or, in the case of a Transferee that is a participation holder, on the date such participation holder became a Transferee hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S. Lender designated such New 46 Lending Office with respect to a Loan; provided, however, that this clause (i) shall not apply to the extent the indemnity payment or additional amounts any Transferee, or any Lender (or Transferee) through a New Lending Office, would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or additional amounts that the Person making the assignment, participation or transfer to such Transferee, or such Lender (or Transferee) making the designation of such New Lending Office, would have been entitled to receive in the absence of such assignment, participation, transfer or designation, (ii) the obligation to pay such additional amounts would not have arisen but for a failure by such Non-U.S. Lender to comply with the provisions of paragraph (d) above or (iii) the obligation to pay such additional amounts does not result from a change in applicable tax law (including, without limitation, applicable judicial decisions, statutes, regulations or other administrative interpretations) occurring after the date hereof. (f) Any Lender, the Agent or the L/C Issuer (or Transferee) claiming any indemnity payment or additional payment amounts payable pursuant to this Section 2.08 shall use its reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested in writing by the Administrative Borrower or to change the jurisdiction of its applicable lending office or assign its rights and obligations hereunder to another of its offices, branches or affiliates if the making of such a filing, change or assignment would avoid the need for or reduce the amount of any such indemnity payment or additional amount which may thereafter accrue, would not require such Lender, the Agent or the L/C Issuer (or Transferee) to disclose any information such Lender, the Agent or the L/C Issuer (or Transferee) deems confidential and would not, in the sole determination of such Lender, the Agent or the L/C Issuer (or Transferee), be otherwise disadvantageous to such Lender, the Agent or the L/C Issuer (or Transferee). (g) If any Lender, the Agent or the L/C Issuer (or a Transferee) shall become aware that it is entitled to claim a refund from a Governmental Authority in respect of Taxes or Other Taxes with respect to which any Loan Party has paid additional amounts, pursuant to this Section 2.08, it shall promptly notify the Administrative Borrower of the availability of such refund claim and shall, within 30 days after receipt of a request by the Administrative Borrower, make a claim to such Governmental Authority for such refund at the Loan Parties' expense. If any Lender, the Agent or the L/C Issuer (or a Transferee) receives a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) in respect of any Taxes or Other Taxes with respect to which any Loan Party has paid additional amounts pursuant to this Section 2.08, it shall within 30 days from the date of such receipt pay over such refund to the Administrative Borrower, net of all out-of-pocket expenses of such Lender, the Agent or the L/C Issuer (or Transferee). (h) The obligations of the Loan Parties under this Section 2.08 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. Section 2.09 LIBOR Not Determinable; Illegality or Impropriety. In the event, and on each occasion, that on or before the day on which LIBOR is to be determined for a borrowing that is to include LIBOR Loans, the Administrative Agent has determined in good faith that, or has been advised by the Collateral Agent or the Required Lenders that, (i) LIBOR 47 cannot be reasonably determined for any reason, (ii) LIBOR will not adequately and fairly reflect the cost of maintaining LIBOR Loans or (iii) Dollar deposits in the principal amount of the applicable LIBOR Loans are not available in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of the Lenders' LIBOR Loans are then being conducted, the Administrative Agent shall, as soon as practicable thereafter, give written notice of such determination to the Administrative Borrower and the other Lenders. In the event of any such determination, any request by the Administrative Borrower for a LIBOR Loan pursuant to Section 2.02 shall, until, the Administrative Agent has advised the Administrative Borrower and the other Lenders that, the circumstances giving rise to such notice no longer exist, be deemed to be a request for a Reference Rate Loan. Each determination by the Administrative Agent hereunder shall be conclusive and binding absent manifest error. (b) In the event that, as a result of any Change in Law, it shall be unlawful or improper for any Lender to make, maintain or fund any LIBOR Loan as contemplated by this Agreement, then such Lender shall forthwith give notice thereof to the Administrative Agent and the Administrative Borrower describing such illegality or impropriety in reasonable detail. Effective immediately upon the giving of such notice, the obligation of such Lender to make LIBOR Loans shall be suspended for the duration of such illegality or impropriety and, if and when such illegality or impropriety ceases to exist, such suspension shall cease, and such Lender shall notify the Administrative Agent and the Administrative Borrower. If any such Change in Law shall make it unlawful or improper for any Lender to maintain any outstanding LIBOR Loan as a LIBOR Loan, such Lender shall, upon the happening of such Change in Law, notify the Administrative Agent and the Administrative Borrower, and the Administrative Borrower shall immediately, or if permitted by applicable law, rule, regulation, order, decree, interpretation, request or directive, at the end of the then current Interest Period for such LIBOR Loan, convert each such LIBOR Loan into a Reference Rate Loan. Section 2.10 Indemnity. (a) The Borrowers hereby jointly and severally indemnify each Lender against any loss or expense that such Lender actually sustains or incurs (including, without limitation, any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain any LIBOR Loan, but excluding loss of anticipated profits) as a consequence of (i) any failure by the Borrowers to fulfill on the date of any borrowing hereunder the applicable conditions set forth in Article V, (ii) any failure by the Borrowers to borrow any LIBOR Loan hereunder, to convert any Reference Rate Loan into a LIBOR Loan or to continue a LIBOR Loan as such after notice of such borrowing, conversion or continuation has been given pursuant to Section 2.02 or 2.11 hereof, (iii) any payment, prepayment (mandatory or optional) or conversion of a LIBOR Loan required by any provision of this Agreement or otherwise made on a date other than the last day of the Interest Period applicable thereto, (iv) any default in payment or prepayment of the principal amount of any LIBOR Loan or any part thereof or interest accrued thereon, as and when due and payable (at the due date thereof, by notice of prepayment or otherwise), or (v) the occurrence of any Event of Default, including, in each such case, any loss (but excluding loss of anticipated profits) or reasonable expense sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such Loan or any part thereof as a LIBOR Loan. Such loss or 48 reasonable expense shall include but not be limited to an amount equal to the excess, if any, as reasonably determined by such Lender, of (i) its cost of obtaining the funds for the Loan being paid or prepaid or converted or continued or not borrowed or converted or continued (based on LIBOR applicable thereto) for the period from the date of such payment, prepayment, conversion, continuation or failure to borrow, convert or continue on the last day of the Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the last day of the Interest Period for such Loan that would have commenced on the date of such failure to borrow, convert or continue) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in re-employing the funds so paid, prepaid, converted or continued or not borrowed, converted or continued for such Interest Period. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.10 and the basis for the determination of such amount or amounts shall be delivered to the Administrative Borrower and shall be conclusive and binding absent manifest error. (b) Notwithstanding paragraph (a) of this Section 2.10, the Administrative Agent will use reasonable efforts to minimize or reduce any such loss or expense resulting from the mandatory prepayments required by Section 2.05 of this Agreement by applying all payments and prepayments to Reference Rate Loans prior to any application of payments to LIBOR Loans before the last day of the Interest Period therefor. Section 2.11 Continuation and Conversion of Loans. Subject to Section 2.09 hereof, the Borrowers shall have the right, at any time, on three (3) Business Days' prior irrevocable written or telecopy notice to the Administrative Agent, to continue any LIBOR Loan, or any portion thereof, into a subsequent Interest Period or to convert any Reference Rate Loan or portion thereof into a LIBOR Loan, or on one (1) Business Day's prior irrevocable written or telecopy notice to the Administrative Agent, to convert any LIBOR Loan or portion thereof into a Reference Rate Loan, subject to the following: (a) no LIBOR Loan may be continued as such and no Reference Rate Loan may be converted into a LIBOR Loan, when any Event of Default or Default shall have occurred and be continuing at such time; (b) in the case of a continuation of a LIBOR Loan as such or a conversion of a Reference Rate Loan into a LIBOR Loan, the aggregate principal amount of such LIBOR Loan shall not be less than $1,000,000 and in multiples of $500,000 if in excess thereof; (c) any portion of a Loan maturing or required to be repaid in less than one month may not be converted into or continued as a LIBOR Loan; and (d) if any conversion of a LIBOR Loan shall be effected on a day other than the last day of an Interest Period, the Borrowers shall reimburse each Lender on demand for any loss incurred or to be incurred or to be incurred by it in the reemployment of the funds released by such conversion as provided in Section 2.10 hereof. 49 In the event that the Administrative Borrower shall not give notice to continue any LIBOR Loan into a subsequent Interest Period, such Loan shall automatically become a Reference Rate Loan at the expiration of the then current Interest Period. ARTICLE III. LETTER OF CREDIT ACCOMMODATIONS AND OTHER MATTERS Section 3.01 Letter of Credit Accommodations. (a) Subject to and upon the terms and conditions contained herein, at the request of the Administrative Borrower on behalf of a Borrower, the Administrative Agent agrees, for the ratable risk of each Revolving A Lender according to its Pro Rata Share (as determined under clause (a) of such definition), to provide or arrange for Letter of Credit Accommodations for the account of such Borrower containing terms and conditions reasonably acceptable to the Administrative Agent and acceptable to the issuer thereof. Any payments made by or on behalf of the Administrative Agent or any Revolving A Lender to the L/C Issuer and/or any related party in connection with the Letter of Credit Accommodations provided to or for the benefit of a Borrower shall constitute Revolving A Loans to such Borrower (or Agent Advances as the case may be). (b) In addition to a fee to the L/C Issuer of not less than 0.25% of the face amount of any Letter of Credit Accommodation as a condition to issuance thereof, the Borrowers shall pay to the Administrative Agent for the account of the Revolving A Lenders, in accordance with a written agreement among the Agent and the Lenders, (i) for any Letter of Credit Accommodation issued hereunder, a non-refundable fee equal to 3.625% per annum, of the stated amount of such Letter of Credit Accommodation, payable on the date such Letter of Credit Accommodation is issued and (ii) for any amendment to an existing Letter of Credit Accommodation that increases the stated amount of such Letter of Credit Accommodation, a non-refundable fee equal to 3.625% per annum of the increase in the stated amount of such Letter of Credit Accommodation, payable on the date of such increase (the "Letter of Credit Fees"), except that the Administrative Agent may, and upon the written direction of the Required A Lenders shall, require the Borrowers to pay to the Administrative Agent such Letter of Credit Fee, at a rate equal to 4.75% plus the per annum rate otherwise applicable thereto on such daily outstanding balance for: (A) the period from and after the date of termination hereof until all Obligations shall have been Paid in Full (notwithstanding entry of a judgment against any Borrower) and (B) the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing as determined by the Agent. Such Letter of Credit Fee shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of the Borrowers to pay such fee shall survive the termination of this Agreement. (c) The Administrative Borrower requesting such Letter of Credit Accommodation shall give the Administrative Agent ten (10) Business Days' (or such shorter period as may be agreed by the Administrative Agent) prior written notice of such Borrower's request for the issuance of a Letter of Credit Accommodation. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit Accommodation requested, the effective date (which date shall be a Business Day) of issuance of such requested Letter of Credit Accommodation, whether such Letter of Credit Accommodation may be drawn in a single draw 50 or in partial draws, the date on which such requested Letter of Credit Accommodation is to expire (which date shall be a Business Day and which shall not be later than February 18, 2005), the purpose for which such Letter of Credit Accommodation is to be issued, and the beneficiary of the requested Letter of Credit Accommodation. The Administrative Borrower requesting the Letter of Credit Accommodation shall attach to such notice the proposed terms of the Letter of Credit Accommodation. (d) In addition to being subject to the satisfaction of the applicable conditions precedent contained in this Agreement, no Letter of Credit Accommodations shall be available unless each of the following conditions precedent have been satisfied in a manner satisfactory to the Agent: (i) the Borrower requesting such Letter of Credit Accommodation (or the Administrative Borrower on behalf of such Borrower) shall have delivered to the L/C Issuer of such Letter of Credit Accommodation at such times and in such manner as such L/C Issuer may require, an application, in form and substance satisfactory to such L/C Issuer and in form and substance reasonably satisfactory to the Administrative Agent, for the issuance of the Letter of Credit Accommodation and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit Accommodation shall be satisfactory to such L/C Issuer in form and substance reasonably satisfactory to the Administrative Agent, and (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit Accommodation, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the L/C Issuer of such Letter of Credit Accommodation refrain from, the issuance of letters of credit generally or the issuance of such Letter of Credit Accommodation. (e) Except in the Administrative Agent's discretion, with the consent of all of the Revolving A Lenders, the amount of all outstanding Letter of Credit Accommodations and all other commitments and obligations made or incurred by the Administrative Agent or any Revolving A Lender in connection therewith shall not at any time exceed the lowest of (i) the difference between (A) the Total Revolving A Credit Commitment and (B) the aggregate principal amount of the Revolving A Loans then outstanding, (ii) the difference between (A) the Borrowing Base and (B) the aggregate principal amount of the Revolving A Loans then outstanding and (iii) $25,000,000. In no event shall any Letter of Credit Accommodations or other commitments or obligations be requested if the making or incurrence thereby would result in an Indenture Deficit. (f) The Loan Parties shall indemnify and hold the Agent and Lenders harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which any Agent or any Lender may suffer or incur in connection with any Letter of Credit Accommodations and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by any issuer or correspondent with respect to any Letter of Credit Accommodation, except for such losses, claims, damages, liabilities, costs or expenses that are a direct result of the gross negligence or willful misconduct of any Agent or Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. Each Loan Party assumes all risks with respect to the 51 acts or omissions of the drawer under or beneficiary of any Letter of Credit Accommodation and for such purposes the drawer or beneficiary shall be deemed such Borrower's agent. Each Loan Party assumes all risks for, and agrees to pay, all foreign, Federal, state and local taxes, duties and levies relating to any goods subject to any Letter of Credit Accommodations or any documents, drafts or acceptances thereunder. Each Loan Party hereby releases and holds the Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions, whether caused by any Loan Party, by any issuer or correspondent or otherwise with respect to or relating to any Letter of Credit Accommodation, except for the gross negligence or willful misconduct of any Agent or Lender as determined pursuant to a final, non-appealable order of a court of competent jurisdiction. The provisions of this Section 3.01(f) shall survive the payment of Obligations and the termination of this Agreement. (g) In connection with Inventory purchased pursuant to Letter of Credit Accommodations, the Domestic Loan Parties shall, at the Administrative Agent's request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which the Collateral Agent or the Administrative Agent holds a security interest to deliver them to the Administrative Agent and/or subject to the Administrative Agent's order, and if they shall come into such Domestic Loan Party's possession, to deliver them, upon the Administrative Agent's request, to the Administrative Agent in their original form. The Domestic Loan Parties shall also, at the Administrative Agent's request, designate the Administrative Agent as the consignee on all bills of lading and other negotiable and non-negotiable documents. (h) Each Borrower hereby irrevocably authorizes and directs any issuer of a Letter of Credit Accommodation to name such Borrower as the account party therein and to deliver to the Administrative Agent all instruments, documents and other writings and property received by the issuer pursuant to the Letter of Credit Accommodations and to accept and rely upon the Administrative Agent's instructions and agreements with respect to all matters arising in connection with the Letter of Credit Accommodations or the applications therefor. Nothing contained herein shall be deemed or construed to grant any Borrower any right or authority to pledge the credit of any Agent or any Lender in any manner. The Agent and Lenders shall have no liability of any kind with respect to any Letter of Credit Accommodation provided by an issuer other than the Administrative Agent or any Lender unless the Administrative Agent has duly executed and delivered to such issuer the application or a guarantee or indemnification in writing with respect to such Letter of Credit Accommodation. The Borrowers shall be bound by any reasonable interpretation made in good faith by the Administrative Agent, or any other issuer or correspondent under or in connection with any Letter of Credit Accommodation or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of any Borrower. (i) As long as no Event of Default has occurred and is continuing, a Borrower may (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, (iv) with the Administrative Agent's prior written consent, grant any extensions of the maturity of, time of payment for, or time of presentation of, any drafts, acceptances, or documents, and (v) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the 52 terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral; provided, that no Borrower may extend the expiry date of any Letter of Credit Accommodation to a date that is later than 5 days prior to the Final Maturity Date except as provided in Section 3.01(c). (j) At any time an Event of Default has occurred and is continuing, the Administrative Agent shall have the right and authority to, and the Borrowers shall not, without the prior written consent of the Administrative Agent, (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, (iv) grant any extensions of the maturity of, time of payments for, or time of presentation of, any drafts, acceptances, or documents, and (v) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral. The Administrative Agent may take such actions either in its own name or in any Loan Party's name. (k) Any rights, remedies, duties or obligations granted or undertaken by any Borrower to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement in favor of any issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed to have been granted or undertaken by such Borrower to the Administrative Agent for the ratable benefit of the Revolving A Lenders. Any duties or obligations undertaken by the Administrative Agent to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement by the Administrative Agent in favor of any issuer or correspondent to the extent relating to any Letter of Credit Accommodation, shall be deemed to have been undertaken by the Borrowers to the Administrative Agent for the ratable benefit of the Revolving A Lenders and to apply in all respects to the Borrowers. (l) Immediately upon the issuance or amendment of any Letter of Credit Accommodation, each Revolving A Lender shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided interest and participation to the extent of such Lender's Pro Rata Share (determined pursuant to clause (a) of such definition) of the liability with respect to such Letter of Credit Accommodation (including, without limitation, all Obligations with respect thereto). (m) In the event of a payment under any Letter of Credit Accommodation to the beneficiary thereof, the Administrative Agent shall notify the Administrative Borrower reasonably promptly following such payment. The Borrowers shall reimburse the Administrative Agent, for the benefit of the issuer of the Letter of Credit Accommodation, on the date which such payment is made in an amount in immediately available funds equal to the payment amount. It being further provided that (i) the Administrative Borrower shall be deemed to have given a timely Notice of Borrowing to the Administrative Agent requesting Revolving A Lenders to make Revolving A Loans that are Reference Rate Loans on the payment date in an amount equal to the payment amount, and (ii) the Revolving A Lenders shall, on the payment date, make Revolving A Loans equal to the payment amount. Notwithstanding the foregoing, each Borrower is irrevocably and unconditionally obligated, without presentment, demand or 53 protest, to pay to the Administrative Agent any amounts paid by an issuer of a Letter of Credit Accommodation with respect to such Letter of Credit Accommodation (whether through Revolving A Loans or otherwise). In the event that any Borrower fails to pay the Administrative Agent on the date of any payment under a Letter of Credit Accommodation in an amount equal to the amount of such payment, the Administrative Agent (to the extent it has actual notice thereof) shall promptly notify each Revolving A Lender of the unreimbursed amount of such payment and each Revolving A Lender agrees, upon one (1) Business Day's notice, to fund to the Administrative Agent the purchase of its participation in such Letter of Credit Accommodation in an amount equal to its Pro Rata Share of the unpaid amount. The obligation of each Revolving A Lender to deliver to the Administrative Agent an amount equal to its respective participation pursuant to the foregoing sentence is absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuance of any Event of Default, the failure to satisfy any other condition set forth in Section 5.02 or any other event or circumstance. If such amount is not made available by a Revolving A Lender when due, the Administrative Agent shall be entitled to recover such amount on demand from such Revolving A Lender with interest thereon, for each day from the date such amount was due until the date such amount is paid to the Administrative Agent at the interest rate then payable by any Borrower in respect of Revolving A Loans. (n) The Administrative Agent shall not make any Revolving A Loan or provide any Letter of Credit Accommodation to the Borrowers on behalf of the Revolving A Lenders intentionally and with actual knowledge that such Revolving A Loan or Letter of Credit Accommodation would cause the aggregate amount of the total outstanding Revolving A Loans and Letter of Credit Accommodations to the Borrowers to exceed the Borrowing Base, except that the Administrative Agent may, pursuant to the terms set forth in Section 10.08(a), make such additional Revolving A Loans or provide such additional Letter of Credit Accommodations on behalf of the Revolving A Lenders, intentionally and with actual knowledge that such Revolving A Loans or Letter of Credit Accommodations will cause the total outstanding Revolving A Loans and Letter of Credit Accommodations to the Borrowers to exceed the Borrowing Base, as the Administrative Agent may deem necessary or advisable in its discretion, provided that: (i) the aggregate principal amount of the additional Revolving A Loans or additional Letter of Credit Accommodations to any Borrower which the Administrative Agent may make or provide (after obtaining such actual knowledge that the aggregate principal amount of the Revolving A Loans plus the outstanding Letter of Credit Accommodations equal or exceed the Borrowing Base), plus the amount of Agent Advances made pursuant to Section 10.08(a) then outstanding, shall not at any time exceed the amount set forth in a separate written agreement among the Agent and the Lenders and shall not cause the total principal amount of the Revolving A Loans and Letter of Credit Accommodations to exceed the Total Revolving A Credit Commitment and (ii) no such additional Revolving A Loan or Letter of Credit Accommodation shall be outstanding more than ninety (90) days after the date such additional Revolving A Loan or Letter of Credit Accommodation is made or issued (as the case may be), except as the Lenders may otherwise agree. Each Revolving A Lender shall be obligated to pay the Administrative Agent the amount of its Pro Rata Share of any such additional Revolving A Loans or Letter of Credit Accommodations. 54 Section 3.02 Collection of Accounts. (a) The Borrowers shall establish and maintain, at their expense, Cash Management Accounts pursuant to Section 8.01(a) into which the Borrowers shall promptly deposit and shall direct their respective Account Debtors to directly remit all payments on Receivables and all payments constituting proceeds of Inventory or other Collateral in the identical form in which such payments are made, whether by cash, check or other manner. (b) For purposes of calculating the amount of Loans available to the Borrowers, subject to Section 4.04, such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by the Administrative Agent of immediately available funds in the Administrative Agent's Account, provided such payments and notice thereof are received in accordance with the Administrative Agent's usual and customary practices as in effect from time to time and within sufficient time to credit the Borrowers' Loan Account on such day, and if not, then on the next Business Day. (c) Each Loan Party and its respective directors, employees, agents or Subsidiaries shall, acting as trustee for the Administrative Agent, receive, as the property of the Administrative Agent, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Accounts or Inventory which come into their possession or under their control and immediately upon receipt thereof, shall deposit or cause the same to be deposited in the Cash Management Accounts, or remit the same or cause the same to be remitted, in kind, to the Administrative Agent. In no event shall the same be commingled with any Loan Party's own funds. The Borrowers agree to reimburse the Administrative Agent on demand for any amounts owed or paid to any bank or other financial institution at which a Cash Management Account or any other deposit account or investment account is established or any other bank, financial institution or other Person involved in the transfer of funds to or from the Cash Management Accounts arising out of the Administrative Agent's payments to or indemnification of such bank, financial institution or other Person. The obligations of the Borrowers to reimburse the Administrative Agent for such amounts pursuant to this Section 3.02 shall survive the termination of this Agreement. Section 3.03 Payments. All Obligations shall be payable to the Administrative Agent's Payment Office or such other place as the Administrative Agent may designate from time to time. Section 3.04 Settlement Procedures. (a) In order to administer the financing facility under this Agreement in an efficient manner and to minimize the transfer of funds between the Administrative Agent and the Revolving A Lenders, the Administrative Agent may, at its option, subject to the terms of this Section, make available, on behalf of the Revolving A Lenders, the full amount of the Revolving A Loans requested or charged to the Borrowers' Loan Account(s) or otherwise to be advanced by the Revolving A Lenders pursuant to the terms hereof, without requirement of prior notice to the Revolving A Lenders of the proposed Revolving A Loans. (b) With respect to all Revolving A Loans made by the Administrative Agent on behalf of the Revolving A Lenders as provided in this Section, the amount of each Revolving 55 A Lender's Pro Rata Share of the outstanding Revolving A Loans shall be computed weekly, and shall be adjusted upward or downward on the basis of the amount of the outstanding Revolving A Loans as of 5:00 p.m. New York time on the Business Day immediately preceding the date of each settlement computation; provided, that, the Administrative Agent retains the absolute right at any time or from time to time to make the above described adjustments at intervals more frequent than weekly, but in no event more than twice in any week. The Administrative Agent shall deliver to each of the Revolving A Lenders after the end of each week, or at such lesser period or periods as the Administrative Agent shall determine, a summary statement of the amount of outstanding Revolving A Loans for such period (such week or lesser period or periods being hereinafter referred to as a "Settlement Period"). If the summary statement is sent by the Administrative Agent and received by a Revolving A Lender prior to 12:00 noon New York time, then such Revolving A Lender shall make the settlement transfer described in this Section by no later than 3:00 p.m. New York time on the same Business Day and if received by a Revolving A Lender after 12:00 noon New York time, then such Revolving A Lender shall make the settlement transfer by not later than 3:00 p.m. New York time on the next Business Day following the date of receipt. If, as of the end of any Settlement Period, the amount of a Revolving A Lender's Pro Rata Share of the outstanding Revolving A Loans is more than such Revolving A Lender's Pro Rata Share of the outstanding Revolving A Loans as of the end of the previous Settlement Period, then such Revolving A Lender shall forthwith (but in no event later than the time set forth in the preceding sentence) transfer to the Administrative Agent by wire transfer in immediately available funds the amount of the increase. Alternatively, if the amount of a Revolving A Lender's Pro Rata Share of the outstanding Revolving A Loans in any Settlement Period is less than the amount of such Revolving A Lender's Pro Rata Share of the outstanding Revolving A Loans for the previous Settlement Period, the Administrative Agent shall forthwith transfer to such Revolving A Lender by wire transfer in immediately available funds the amount of the decrease. The obligation of each of the Revolving A Lenders to transfer such funds and effect such settlement shall be irrevocable and unconditional and without recourse to or warranty by the Administrative Agent. The Administrative Agent and each Revolving A Lender agrees to mark its books and records at the end of each Settlement Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Revolving A Loans and Letter of Credit Accommodations. Each Revolving A Lender shall only be entitled to receive interest on its Pro Rata Share of the Revolving A Loans to the extent such Revolving A Loans have been funded by such Revolving A Lender. Because the Administrative Agent on behalf of Revolving A Lenders may be advancing and/or may be repaid Revolving A Loans prior to the time when such Revolving A Lenders will actually make Revolving A Loans and/or be repaid such Revolving A Loans, interest with respect to Revolving A Loans shall be allocated by the Administrative Agent in accordance with the amount of Revolving A Loans actually advanced by and repaid to each Revolving A Lender and the Administrative Agent and shall accrue from and including the date such Revolving A Loans are so advanced to but excluding the date such Revolving A Loans are either repaid by the Borrowers or actually settled with the applicable Revolving A Lender as described in this Section. (c) To the extent that the Administrative Agent has made any such amounts available and the settlement described above shall not yet have occurred, upon repayment of any Revolving A Loans by a Borrower, the Administrative Agent may apply such amounts repaid directly to any amounts made available by the Administrative Agent pursuant to this Section. In lieu of weekly or more frequent settlements, the Administrative Agent may, at its option, at any 56 time require each Revolving A Lender to provide the Administrative Agent with immediately available funds representing its Pro Rata Share of each Revolving A Loans, prior to the Administrative Agent's disbursement of such Revolving A Loans to such Borrower. In such event, all Revolving A Loans shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares. No Revolving A Lender shall be responsible for any default by any other Revolving A Lender in the other Revolving A Lender's obligation to make any Revolving A Loans requested hereunder nor shall the Revolving A Credit Commitment of any Revolving A Lender be increased or decreased as a result of the default by any other Revolving A Lender in the other Revolving A Lender's obligation to make any Revolving A Loans hereunder. (d) If the Administrative Agent is not funding a particular Revolving A Loan to the Borrowers (or to the Administrative Borrower for the benefit of such Borrowers) pursuant to this Section on any day, the Administrative Agent may assume that each Revolving A Lender will make available to the Administrative Agent such Revolving A Lender's Pro Rata Share of the Revolving A Loan requested or otherwise made on such day and the Administrative Agent may, in its discretion, but shall not be obligated to, cause a corresponding amount to be made available to or for the benefit of such Borrowers on such day. If the Administrative Agent makes such corresponding amount available to the Borrowers and such corresponding amount is not in fact made available to the Administrative Agent by such Revolving A Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Revolving A Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to the Administrative Agent at the Federal Funds Rate for each day during such period and if such amounts are not paid within three (3) days of the Administrative Agent's demand, at the interest rate then applicable to Revolving A Loans. During the period in which such Revolving A Lender has not paid such corresponding amount to the Administrative Agent, notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, the amount of the Revolving A Loans so advanced by the Administrative Agent to or for the benefit of any Borrower shall, for all purposes hereof, be deemed a Revolving A Loan made by the Administrative Agent for its own account. Upon any such failure by a Revolving A Lender to pay the Administrative Agent, the Administrative Agent shall promptly thereafter notify the Administrative Borrower of such failure and the Borrowers shall pay such corresponding amount to the Administrative Agent for its own account within five (5) Business Days of the Administrative Borrower's receipt of such notice. A Revolving A Lender who fails to pay the Administrative Agent its Pro Rata Share of any Revolving A Loans made available by the Administrative Agent on such Revolving A Lender's behalf, or any Revolving A Lender who fails to pay any other amount owing by it to the Administrative Agent, is a "Defaulting Lender". The Administrative Agent shall not be obligated to transfer to a Defaulting Lender any payments received by the Administrative Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to, or retained by, the Administrative Agent. The Administrative Agent may hold and, in its discretion, relend to a Borrower the amount of all such payments received or retained by it for the account of such Defaulting Lender. For purposes of voting or consenting to matters with respect to this Agreement and the other Loan Documents, and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Revolving A Credit Commitment shall be deemed to be zero. This Section shall remain effective with respect to a Defaulting Lender until such default is cured. The operation of this Section shall not be 57 construed to increase or otherwise affect the Revolving A Credit Commitment of any Revolving A Lender, or relieve or excuse the performance by any Loan Party of its duties and obligations hereunder. (e) Nothing in this Section or elsewhere in this Agreement or the other Loan Documents, shall be deemed to require the Administrative Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that the Borrowers may have against any Lender as a result of any default by any Lender hereunder in fulfilling its Commitment. ARTICLE IV. FEES, PAYMENTS AND OTHER COMPENSATION Section 4.01 Audit and Collateral Monitoring Fees. The Borrowers acknowledge that pursuant to Section 7.01(f), representatives of the Agent may visit any or all of the Loan Parties and/or conduct audits, inspections, valuations and/or field examinations of any or all of the Loan Parties at any time and from time to time in a manner so as to not unduly disrupt the business of the Loan Parties. The Borrowers agree to pay (i) $1,000 per day per examiner plus the examiner's reasonable out-of-pocket costs and expenses incurred in connection with all such visits, audits, inspections, valuations and field examinations and (ii) the reasonable cost of all visits, audits, inspections, valuations and field examinations conducted by a third party on behalf of the Agent. Section 4.02 Payments; Computations and Statements. The Borrowers will make each payment under this Agreement not later than 12:00 noon (New York City time) on the day when due, in lawful money of the United States of America and in immediately available funds, to the Administrative Agent's Account. All payments received by the Administrative Agent after 12:00 noon (New York City time) on any Business Day will be credited to the Loan Account on the next succeeding Business Day. All payments shall be made by the Borrowers without set-off, counterclaim, deduction or other defense to the Agent and the Lenders. Except as provided in Section 3.04, after receipt, the Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal ratably to the Lenders in accordance with their Pro Rata Shares and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement, provided that the Administrative Agent will cause to be distributed all interest and fees received from or for the account of the Borrowers not less than once each month and in any event promptly after receipt thereof. The Lenders and the Borrowers hereby authorize the Administrative Agent to, and the Administrative Agent may, from time to time, charge the Loan Account of the Borrowers with any amount due and payable by the Borrowers under any Loan Document. Each of the Lenders and the Borrowers agrees that the Administrative Agent shall have the right to make such charges whether or not any Default or Event of Default shall have occurred and be continuing or whether any of the conditions precedent in Section 5.02 have been satisfied. Any amount charged to the Loan Account of the Borrowers shall be deemed a Revolving A Loan hereunder made by the Revolving A Lenders to the Borrowers, funded by the Administrative Agent on behalf of the Lenders and subject to Section 3.04 of this Agreement. The Lenders and the Borrowers confirm that any charges which the Administrative Agent may 58 so make to the Loan Account of the Borrowers as herein provided will be made as an accommodation to the Borrowers and solely at the Administrative Agent's discretion, provided that the Administrative Agent shall from time to time upon the request of the Collateral Agent (to the extent that (i) there exists no Event of Default, (ii) such charge does not exceed the current Availability and (iii) the applicable amount is otherwise permitted to be made in accordance with the terms of this Agreement or any other Loan Document), charge the Loan Account of the Borrowers with any amount due and payable under any Loan Document. Whenever any payment to be made under any such Loan Document shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. All computations of fees shall be made by the Administrative Agent on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such fees are payable. Each determination by the Administrative Agent of an interest rate or fees hereunder shall be conclusive and binding for all purposes in the absence of manifest error. (b) The Administrative Agent shall provide the Administrative Borrower, promptly after the end of each calendar month, a summary statement (in the form from time to time used by the Administrative Agent) of the opening and closing daily balances in the Loan Account of the Borrowers during such month, the amounts and dates of all Loans made to the Borrowers during such month, the amounts and dates of all payments on account of the Loans to the Borrowers during such month and the Loans to which such payments were applied, the amount of interest accrued on the Loans to the Borrowers during such month, any Letter of Credit Accommodations issued by the L/C Issuer for the account of the Borrowers during such month, specifying the face amount thereof, the amount of charges to the Loan Account and/or Loans made to the Borrowers during such month to reimburse the Lenders for drawings made under Letter of Credit Accommodations, and the amount and nature of any charges to the Loan Account made during such month on account of fees, commissions, expenses and other Obligations. All entries on any such statement shall be presumed to be correct and, thirty (30) days after the same is sent, shall be final and conclusive absent manifest error. Section 4.03 Sharing of Payments, Etc. Except as provided in Section 3.04 hereof, if any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of any Obligation in excess of its ratable share of payments on account of similar obligations obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in such similar obligations held by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender of any interest or other amount paid by the purchasing Lender in respect of the total amount so recovered). The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 4.03 may, to the fullest extent permitted by law, exercise all of its rights (including the Lender's right of set-off) with 59 respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation. Section 4.04 Apportionment of Payments. Subject to Section 3.04 hereof and to any written agreement among the Agent and/or the Lenders: (a) All payments of principal and interest in respect of outstanding Loans, all payments in respect of the Letter of Credit Accommodations, all payments of fees (other than the fees set forth in Section 2.06 hereof, fees with respect to Letter of Credit Accommodations provided for in Section 3.01(b) and the audit and collateral monitoring fee provided for in Section 4.01, in each case, to the extent set forth in a written agreement among the Agent and the Lenders) and all other payments in respect of any other Obligations, shall be allocated by the Administrative Agent among such of the Lenders as are entitled thereto, in proportion to their respective Pro Rata Shares or otherwise as provided herein or, in respect of payments not made on account of Loans or Letter of Credit Obligations, as designated by the Person making payment when the payment is made. (b) (1) After the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and upon the direction of the Required A Lenders shall, notwithstanding any terms to the contrary set for in this Agreement or any other Loan Document apply all payments in respect of any Obligations (other than proceeds of Fixed Asset Collateral) and all proceeds of the Current Asset Collateral, (i) first, ratably to pay the Obligations in respect of any fees (including any fees or charges assessed by the L/C Issuer), expense reimbursements, indemnities and other amounts then due to the Agent or the L/C Issuer until paid in full; (ii) second, ratably to pay the Obligations in respect of any fees (including Letter of Credit Fees payable to the Revolving A Lenders), expense reimbursements and indemnities then due to the Revolving A Lenders until paid in full; (iii) third, ratably to pay interest due in respect of the Agent Advances until paid in full; (iv) fourth, ratably to pay principal of the Agent Advances until paid in full; (v) fifth, ratably to pay interest due in respect of the Revolving A Loans and Letter of Credit Obligations until paid in full; (vi) sixth, ratably to pay principal of the Revolving A Loans and Letter of Credit Obligations (or, to the extent such Letter of Credit Obligations are contingent to provide cash collateral in an amount up to 105% of such Letter of Credit Obligations which collateral shall be released upon all such Events of Default ceasing to continue) until paid in full; (vii) seventh, ratably to pay the Obligations in respect of any fees, expense reimbursements and indemnities then due to the B-Lenders until paid in full; (viii) eighth, ratably to pay interest due in respect of the B-Loans until paid in full; (ix) ninth, ratably to pay principal of the B-Loans until paid in full; and (x) tenth, to the ratable payment of all other Obligations then due and payable. (2) After the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and upon the direction of the Required B Lenders shall, notwithstanding any terms to the contrary set for in this Agreement or any other Loan Document apply all proceeds of the Fixed Asset Collateral: (i) first, ratably to pay interest due in respect of the B-Loans until paid in full; (ii) second, ratably to pay principal of the B-Loans until paid in full, (iii) third, ratably to pay the Obligations in respect of any fees, expense reimbursements and indemnities then due to the B-Lenders until paid in full; and (iv) thereafter, in the order specified in Section 4.02(b)(i). 60 (c) In each instance, so long as no Event of Default has occurred and is continuing, Section 4.04(b) shall not be deemed to apply to any payment by the Borrowers specified by the Administrative Borrower to the Administrative Agent to be for the payment of the principal of or interest on the B-Loans or other related Obligations then due and payable under any provision of this Agreement or the payment of all or part of the principal of the B-Loans in accordance with the terms and conditions of Section 2.05. (d) For purposes of Section 4.04(b) (other than clause (x) of Section 4.04(b)), "paid in full" means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, except to the extent that default or overdue interest (but not any other interest), loan fees, service fees, professional fees, expense reimbursements, or other fees and expenses, each arising from or related to a default are disallowed in any Insolvency Proceeding, and, for purposes of clause (x) of Section 4.04(b), "paid in full" means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding. Section 4.05 Increased Costs and Reduced Return. (a) If any Lender, the Agent or the L/C Issuer shall have determined that the adoption or implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in, the interpretation or administration thereof by, any court, central bank or other administrative or Governmental Authority, or compliance by any Lender, the Agent or the L/C Issuer or any Person controlling any such Lender, the Agent or the L/C Issuer with any directive of, or guideline from, any central bank or other Governmental Authority or the introduction of, or change in, any accounting principles applicable to any Lender, the Agent or the L/C Issuer or any Person controlling any such Lender, the Agent or the L/C Issuer (in each case, whether or not having the force of law) (each, a "Change in Law"), shall (i) subject such Lender, the Agent or the L/C Issuer, or any Person controlling such Lender, the Agent or the L/C Issuer to any tax, duty or other charge with respect to this Agreement or any Loan made by such Lender or the Agent or any Letter of Credit Accommodation issued by the L/C Issuer, or change the basis of taxation of payments to such Lender, the Agent or the L/C Issuer or any Person controlling any such Lender, the Agent or the L/C Issuer of any amounts payable hereunder (except for taxes on the overall net income of such Lender, the Agent or the L/C Issuer or any Person controlling such Lender, the Agent or the L/C Issuer), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan, any Letter of Credit Accommodation or against assets of or held by, or deposits with or for the account of, or credit extended by, such Lender, the Agent or the L/C Issuer or any Person controlling such Lender, the Agent or the L/C Issuer or (iii) impose on such Lender, the Agent or the L/C Issuer or any Person controlling such Lender, the Agent or the L/C Issuer any other condition regarding this Agreement or any Loan or Letter of Credit Accommodation, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to such Lender, the Agent or the L/C Issuer of making any Loan, issuing, guaranteeing or 61 participating in any Letter of Credit Accommodation, or agreeing to make any Loan or issue, guaranty or participate in any Letter of Credit Accommodation, or to reduce any amount received or receivable by such Lender, the Agent or the L/C Issuer hereunder, then, upon demand by such Lender, the Agent or the L/C Issuer, the Borrowers shall pay to such Lender, the Agent or the L/C Issuer such additional amounts as will compensate such Lender, the Agent or the L/C Issuer for such increased costs or reductions in amount. (b) If any Lender, the Agent or the L/C Issuer shall have determined that any Change in Law related to any Capital Guideline, either (i) affects or would affect the amount of capital required or expected to be maintained by such Lender, the Agent or the L/C Issuer or any Person controlling such Lender, the Agent or the L/C Issuer, and such Lender, the Agent or the L/C Issuer determines that the amount of such capital is increased as a direct or indirect consequence of any Loans made or maintained, Letter of Credit Accommodations issued or any guaranty or participation with respect thereto, such Lender's, the Agent's or the L/C Issuer's or any such other controlling Person's other obligations hereunder, or (ii) has or would have the effect of reducing the rate of return on such Lender's, the Agent's or the L/C Issuer's any such other controlling Person's capital to a level below that which such Lender, the Agent or the L/C Issuer or such controlling Person could have achieved but for such circumstances as a consequence of any Loans made or maintained, Letter of Credit Accommodations issued, or any guaranty or participation with respect thereto or any agreement to make Loans, to issue Letter of Credit Accommodations or such Lender's, the Agent's or the L/C Issuer's or such other controlling Person's other obligations hereunder (in each case, taking into consideration, such Lender's, the Agent's or the L/C Issuer's or such other controlling Person's policies with respect to capital adequacy), then, upon demand by such Lender, the Agent or the L/C Issuer, the Borrowers shall pay to such Lender, the Agent or the L/C Issuer from time to time such additional amounts as will compensate such Lender, the Agent or the L/C Issuer for such cost of maintaining such increased capital or such reduction in the rate of return on such Lender's, the Agent's or the L/C Issuer's or such other controlling Person's capital. (c) All amounts payable under this Section 4.05 shall bear interest from the date that is ten (10) days after the date of demand by any Lender, the Agent or the L/C Issuer until payment in full to such Lender, the Agent or the L/C Issuer at the Reference Rate. A certificate of such Lender, the Agent or the L/C Issuer claiming compensation under this Section 4.05, specifying the event herein above described and the nature of such event shall be submitted by such Lender, the Agent or the L/C Issuer to the Administrative Borrower, setting forth the additional amount due (the calculation thereof to be in reasonable detail) and an explanation of the calculation thereof, and such Lender's, the Agent's or the L/C Issuer's reasons for invoking the provisions of this Section 4.05, and shall be final and conclusive absent manifest error. (d) If any Lender, the Agent or the L/C Issuer requests compensation under this Section 4.05, or if the Borrowers are or would be required to pay any additional amount to any Lender, the Agent or the L/C Issuer pursuant to this Section 4.05, then such Lender, the Agent or the L/C Issuer shall use commercially reasonable efforts to designate a different lending office for funding or booking its Loans and/or Letter of Credit Accommodations hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, the Agent or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to this Section 4.05 in the future and (ii) 62 would not subject such Lender, the Agent or the L/C Issuer to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender, the Agent or the L/C Issuer. The Borrowers hereby agree to pay all reasonable cost and expenses incurred by any Lender, the Agent or the L/C Issuer in connection with any such designation or assignment. Section 4.06 Joint and Several Liability of the Borrowers. Notwithstanding anything in this Agreement or any other Loan Document to the contrary, each of the Borrowers hereby accepts joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Agent and the Lenders under this Agreement and the other Loan Documents, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations. Each of the Borrowers, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 4.06), it being the intention of the parties hereto that all of the Obligations shall be the joint and several obligations of each of the Borrowers without preferences or distinction among them. If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrowers will make such payment with respect to, or perform, such Obligation. Subject to the terms and conditions hereof, the Obligations of each of the Borrowers under the provisions of this Section 4.06 constitute the absolute and unconditional, full recourse Obligations of each of the Borrowers, enforceable against each such Person to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement, the other Loan Documents or any other circumstances whatsoever. (b) The provisions of this Section 4.06 are made for the benefit of the Agent, the Lenders and their successors and assigns, and may be enforced by them from time to time against any or all of the Borrowers as often as occasion therefor may arise and without requirement on the part of the Agent, the Lenders or such successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any of the other Borrowers or to exhaust any remedies available to it or them against any of the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 4.06 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. (c) Each of the Borrowers hereby agrees that it will not enforce any of its rights of contribution or subrogation against the other Borrowers with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to the Agent or the Lenders with respect to any of the Obligations or any Collateral, until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to the Agent or the Lenders hereunder or under any other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations. 63 ARTICLE V. CONDITIONS TO LOANS Section 5.01 Conditions Precedent to Effectiveness. This Agreement shall become effective as of the Business Day (the "Effective Date") when each of the following conditions precedent shall have been satisfied in a manner satisfactory to the Agent or waived by the Agent: (a) Payment of Fees, Etc. The Borrowers shall have paid on or before the date of this Agreement (i) all invoiced fees, costs, expenses and taxes then payable pursuant to Section 2.06 and Section 12.04 (including, without limitation, the invoiced fees and expenses of Hilco and First America Title Insurance Company). (b) Representations and Warranties; No Event of Default. The following statements shall be true and correct: (i) the representations and warranties contained in ARTICLE VI and in each other Loan Document, certificate or other writing delivered to the Agent, any Lender or the L/C Issuer pursuant hereto or thereto on or prior to the Effective Date are true and correct on and as of the Effective Date as though made on and as of such date and (ii) no Default or Event of Default shall have occurred and be continuing on the Effective Date or would result from this Agreement or the other Loan Documents becoming effective in accordance with its or their respective terms. (c) Legality. The making of the initial Loans or the issuance of any Letter of Credit Accommodations shall not contravene any law, rule or regulation applicable to the Agent, any Lender or the L/C Issuer. (d) Delivery of Documents. The Collateral Agent shall have received on or before the Effective Date the following, each in form and substance reasonably satisfactory to the Collateral Agent and, unless indicated otherwise, dated the Effective Date: (i) a Security Agreement, duly executed by each Domestic Loan Party (which shall include a grant of a Lien on all of the Domestic Loan Parties' joint venture, partnership or limited liability company interests of such Domestic Loan Party in Persons that are not its Subsidiaries directly owned by such Domestic Loan Party, in each case to the extent such Lien is permitted taking into account applicable law, including, without limitation, the Uniform Commercial Code); (ii) (A) a Pledge Agreement, duly executed by each Loan Party, together with the original stock certificates representing (x) all of the Capital Stock of (I) such Loan Party's wholly-owned Domestic Subsidiaries (other than Inactive Subsidiaries) and (II) Milacron Capital and (y) 65% of the voting Capital Stock of such Loan Party's directly owned Foreign Subsidiaries (to the extent permissible taking into account applicable law), other than D-M-E (Hong Kong) Limited, Japan D-M-E Corporation and Ferromatik Milacron India Limited, and all intercompany promissory notes of such Loan Parties, accompanied by undated stock powers executed in blank and/or other proper instruments of transfer and (B) a Pledge Agreement, duly executed by Milacron Capital in respect of its pledge of 65% of the voting 64 Capital Stock of Milacron B.V., which, in the case of this clause (B) complies with the requirements of law of The Netherlands; (iii) a Mortgage, duly executed by the applicable Loan Party, with respect to each Facility and in a suitable form for recording in an appropriate office; (iv) a Title Insurance Policy with respect to each Mortgage, dated as of the Effective Date; (v) a survey of each Facility subject to a Mortgage, in form and substance reasonably satisfactory to the Collateral Agent; provided that a survey shall not be required for the Facilities located at 6328 Ferry Avenue, Charlevoix, Michigan and 558 Leo Street, Dayton, Ohio; (vi) a UCC Filing Authorization Letter, duly executed by each Loan Party, together with appropriate financing statements on Form UCC (or similar financing statements or filings in any foreign jurisdiction) duly filed in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Agreement and each Pledge Agreement; (vii) certified copies of information listing all effective financing statements which name as debtor any Loan Party and which are filed in the offices referred to in paragraph (vii) above, together with copies of such financing statements (or similar filings in any foreign jurisdiction), none of which, except as otherwise agreed in writing by the Agent, shall cover any of the Collateral and the results of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Agent, shall not show any such Liens other than Permitted Liens; (viii) a copy of the resolutions of each Loan Party, certified as of the Effective Date by an Authorized Officer thereof, authorizing (A) the borrowings hereunder (in the case of the Borrowers) and the transactions contemplated by the Loan Documents to which such Loan Party is or will be a party, and (B) the execution, delivery and performance by such Loan Party of each Loan Document to which such Loan Party is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith; (ix) a certificate of an Authorized Officer of each Loan Party, certifying the names and true signatures of the representatives of such Loan Party authorized to sign each Loan Document to which such Loan Party is or will be a party and the other documents to be executed and delivered by such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such authorized officers; (x) a certificate of the appropriate official(s) of the state or other applicable jurisdiction of organization certifying as to the good standing of, and the payment of taxes by (if issued by such state or other applicable jurisdiction), such Loan Party in such state or other applicable jurisdiction, and each material state of foreign qualification of each Loan Party certifying as to the qualification of such Loan Party to do business in each such state and, in each case, certified as of a recent date not more than 30 days prior to the Effective Date, together, if 65 requested by the Collateral Agent, with confirmation by telephone or telecopy (where available) on the Effective Date from such official(s) as to such matters; (xi) a true and complete copy (or abstract, as applicable) of the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of each Loan Party and Milacron B.V. certified as of a recent date not more than 30 days prior to the Effective Date by an appropriate official of the state or other applicable jurisdiction of organization of such Loan Party which shall set forth the same complete name of such Person as is set forth herein and the organizational number of such Person, if an organizational number is issued in such jurisdiction; (xii) a copy of the charter and by-laws, limited liability company agreement, operating agreement, agreement of limited partnership or other organizational document of each Loan Party and Milacron B.V., together with all amendments thereto, certified as of the Effective Date by an Authorized Officer of such Loan Party; (xiii) (A) an opinion of Cravath, Swaine & Moore LLP, special New York counsel to the Administrative Borrower, substantially in the form of Exhibit F (including, without limitation, an opinion that the incurrence of the Indebtedness evidenced by this Agreement and the granting of the Liens in favor of the Collateral Agent to secure such Indebtedness (including, without limitation, the granting of Liens on the Facilities) does not require the granting of an equal and ratable Lien with any agent under the Euro Indenture for the benefit of the Euro Note Holders pursuant to the express terms and conditions thereof), (B) an opinion of Hugh O'Donnell, general counsel of the Administrative Borrower, (C) an opinion of John Gregg, patent counsel of the Administrative Borrower, (D) an opinion of local counsel in respect of UCC filings to be made pursuant to Section 5.01(d)(vii) and other appropriate matters in Delaware, Illinois, Michigan, Massachusetts, Minnesota and Ohio, (E) an opinion of local counsel to the applicable Loan Parties, in the local jurisdictions where the Facilities are located, and (F) an opinion of Baker & McKenzie, counsel to the applicable Loan Parties in respect of the Pledge Agreements to be executed and delivered pursuant to Section 5.01(d)(ii)(B), in each case as to such other customary matters as the Collateral Agent may reasonably request; (xiv) a certificate of an Authorized Officer of each Loan Party, certifying as to the matters set forth in subsection (b) of this Section 5.01; (xv) a copy of the Financial Statements and the financial projections described in Section 6.01(g)(ii) hereof, certified as of the Effective Date as true and correct, in all material respects, by the chief financial officer of the Parent, and, in the case of such financial projections, that such projections are believed at the time to be reasonable, are prepared in good faith and are based on assumptions, methods and tests stated therein which were believed to be reasonable at the time prepared and upon information believed to have been accurate based upon the information available at the time such projections were prepared and that there are no facts or information that would lead the Person certifying to such projections, to believe that such projections are in correct or misleading in any material respect; (xvi) evidence of the insurance coverage required by Section 7.01(h) and the terms of each Security Agreement and each Mortgage and such other insurance coverage 66 with respect to the business and operations of the Loan Parties as the Collateral Agent may reasonably request, in each case, where requested by the Collateral Agent, with such endorsements as to the named insureds or loss payees thereunder (in the case of liability and property insurance) as the Collateral Agent may request and providing that such policy may be terminated or canceled (by the insurer or the insured thereunder) only upon 30 days' prior written notice to the Collateral Agent and each such named insured or loss payee, together with evidence of the payment of all premiums due in respect thereof for such period as the Collateral Agent may request; (xvii) a certificate of an Authorized Officer of the Administrative Borrower, certifying the names and true signatures of the persons that are authorized to provide Notices of Borrowing and all other notices under this Agreement and the other Loan Documents; (xviii) Landlord Waiver, Bailee Letter and/or similar collateral access agreements, in each case, in form and substance reasonably satisfactory to the Agent and which may be included as a provision contained in the relevant Lease or other agreement, executed by each landlord and/or bailee with respect to each of the Leases set forth on Schedule 6.01(o), it being understood that (A) the failure to obtain such waivers, letters and/or agreements on or prior to the Effective Date will not result in a failure to satisfy a condition precedent to the effectiveness of this Agreement or an Event of Default, provided, that the Borrowers have used reasonable effects to obtain such waivers, letters and/or agreements, and (B) the Administrative Agent shall have the right to establish customary Reserves for the failure to obtain such waivers, letters and/or agreements; (xix) copies of the Euro Indenture and the other Material Contracts as in effect on the Effective Date, certified as true and correct copies thereof by an Authorized Officer of the Administrative Borrower, together with a certificate of an Authorized Officer of the Administrative Borrower stating that such agreements remain in full force and effect, have not been otherwise amended or modified, and that none of the Loan Parties is in breach or default in any of its obligations under such agreements, other than breaches or defaults that, individually and in the aggregate, are of immaterial obligations thereunder; (xx) a termination and release agreement with respect to the Existing Credit Facility and all related documents, duly executed by the applicable Loan Parties and the Existing Agent, on behalf of itself and the Existing Lenders and authorization by the Existing Agent to the Agent to file UCC termination statements for all UCC financing statements filed by the Existing Agent, on behalf of the Existing Lenders, and covering any portion of the Collateral; (xxi) a termination and release agreement with respect to the Existing Receivables Facility and all related agreements, instruments or other documents, duly executed by the parties necessary to terminate such facility; (xxii) the Intercompany Subordination Agreement, duly executed by each Loan Party and its Subsidiaries; and 67 (xxiii) such other agreements, instruments, approvals, opinions and other documents, each reasonably satisfactory to the Collateral Agent in form and substance, as the Collateral Agent may reasonably request. (e) Availability. After giving effect to all Loans to be made on the Effective Date and the Letter of Credit Accommodations to be issued on the Effective Date, after giving effect to the Mizuho/Glencore Transactions and the refinancing of the Parent's 8-3/8% Notes due 2004, (i) the sum of (A) Availability plus (B) unrestricted cash and cash equivalents (as defined in the Parent's most recent financial statements) of the Parent and its consolidated Subsidiaries, shall not be less than $50,000,000, (ii) the sum of (A) Availability plus (B) cash and cash equivalents of the Loan Parties in the United States shall not be less than $20,000,000 and (iii) all reserves established for accounts payable of the Loan Parties that are past due shall be in accordance with recent historical standards. The Parent shall deliver to the Collateral Agent a certificate of the chief financial officer of the Parent certifying as to the matters set forth in clauses (i), (ii) and (iii) above and containing the calculation of Availability. (f) Material Adverse Effect. The Collateral Agent shall have determined, in its reasonable discretion, that since December 31, 2003, no Material Adverse Effect shall have occurred or become known to the Agent. (g) Approvals. (i) All necessary consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with the making of the Loans shall have been obtained and shall be in full force and effect (other than consents, authorizations and approval of, and filings and registrations with, and all other actions in respect of any Person in connection with the granting of a Lien on immaterial (A) joint venture interests, (B) intellectual property licenses and (C) other contractual rights of the Loan Parties) and (ii) all necessary consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority and all material consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any other Person required in connection with the conduct of the Loan Parties' business. (h) Proceedings; Receipt of Documents. All proceedings in connection with the making of the initial Loans or the issuance of the initial Letter of Credit Accommodations and the other transactions contemplated by this Agreement and the other Loan Documents, and all documents incidental hereto and thereto, shall be reasonably satisfactory to the Collateral Agent and its counsel, and the Collateral Agent and such counsel shall have received all such information and such counterpart originals or certified or other copies of such documents as the Collateral Agent or such counsel may reasonably request. (i) Due Diligence. The Agent shall have completed their legal and collateral due diligence with respect to each Loan Party and the results thereof shall be reasonably satisfactory to the Agent. (j) Financial Assistance. The Administrative Borrower shall deliver to the Collateral Agent a certificate of an Authorized Officer of the Administrative Borrower certifying that (i) the Loans are not being used to subscribe for or acquire shares of Milacron Capital or 68 Milacron B.V. or to refinance existing Indebtedness used for such purpose. The Agent shall be reasonably satisfied that the Dutch financial assistance rules do not apply to the pledge of the Capital Stock of Milacron Capital or Milacron B.V. (k) Fanuc. The Collateral Agent shall have received a certificate of the Parent certifying that the Fanuc Agreement shall be in full force and effect and existing on terms and conditions that are consistent in all material respects with the existing terms and conditions applicable thereto on or prior to December 23, 2003. (l) Investment Banker. The Parent shall have engaged an investment banker reasonably acceptable to the Agent in connection with the proposed issuance of debt or equity securities (the "Securities") in order to, among other things, repay the B-Loans. (m) Mizuho/Glencore Transactions. The Parent shall have received cash proceeds pursuant to the Mizuho/Glencore Transaction Documents of $100,000,000 (before taking into account any debt or expenses to be paid with the proceeds thereof). Section 5.02 Conditions Precedent to All Loans and Letter of Credit Accommodations. The obligation of the Agent or any Lender to make any Loan or of the Administrative Agent to assist the Borrowers in establishing or opening any Letter of Credit Accommodation on or after the Effective Date is subject to the fulfillment, in a manner satisfactory to the Administrative Agent, of each of the following conditions precedent: (a) Payment of Fees, Etc. The Borrowers shall have paid all fees, costs, expenses and taxes then payable by the Borrowers pursuant to this Agreement and the other Loan Documents, including, without limitation, Section 2.06 and Section 12.04 hereof. (b) Representations and Warranties; No Event of Default. The following statements shall be true and correct, and the submission by the Administrative Borrower to the Administrative Agent of a Notice of Borrowing with respect to each such Loan, and the Borrowers' acceptance of the proceeds of such Loan, and the issuance of each Letter of Credit Accommodation, shall each be deemed to be a representation and warranty by each Loan Party on the date of such Loan or the date of issuance of such Letter of Credit Accommodation that: (i) the representations and warranties contained in ARTICLE VI and in each other Loan Document, certificate or other writing delivered to any Agent or any Lender pursuant hereto or thereto on or prior to the date of such Loan or such Letter of Credit Accommodation are true and correct on and as of such date as though made on and as of such date, (ii) at the time of and after giving effect to the making of such Loan and the application of the proceeds thereof or at the time of issuance of such Letter of Credit Accommodation, no Default or Event of Default has occurred and is continuing or would result from the making of the Loan to be made, or the issuance of such Letter of Credit Accommodation to be issued, on such date and (iii) the conditions set forth in this Section 5.02 have been satisfied as of the date of such request. (c) Legality. The making of such Loan or the issuance of such Letter of Credit Accommodation shall not contravene any law, rule or regulation applicable to the Agent, any Lender or the L/C Issuer. 69 (d) Notices. The Administrative Agent shall have received a Notice of Borrowing pursuant to Section 2.02 hereof. ARTICLE VI. REPRESENTATIONS AND WARRANTIES Section 6.01 Representations and Warranties. Each Loan Party hereby represents and warrants to the Agent, the Lenders and the L/C Issuer as follows: (a) Organization, Good Standing, Etc. Each Loan Party (i) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the state, province or other applicable jurisdiction of its organization, (ii) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder, and to execute and deliver each Loan Document to which it is a party, and to consummate the transactions contemplated thereby, and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the absence of any such qualification could not reasonably be expected to result in a Material Adverse Effect. (b) Authorization, Etc. The execution, delivery and performance by each Loan Party of each Loan Document to which it is or will be a party, (i) have been duly authorized by all necessary action, (ii) do not and will not contravene its (x) charter or by-laws, its limited liability company or operating agreement or its certificate of partnership or partnership agreement, as applicable, or (y) any material applicable law or any material contractual restriction binding on or otherwise affecting it or any of its properties (including, without limitation, the Euro Indenture), (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Loan Document) upon or with respect to any of its properties, other than Liens securing obligations in an aggregate amount not exceeding $100,000, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to its operations or any of its properties. (c) Governmental Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required in connection with the due execution, delivery and performance by any Loan Party of any Loan Document to which it is or will be a party, other than (i) those that have been obtained or made and are in full force and effect and (ii) filings necessary to perfect Liens on the Collateral. (d) Enforceability of Loan Documents. This Agreement is, and each other Loan Document to which any Loan Party is or will be a party, when delivered hereunder, will be, a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. 70 (e) Subsidiaries. Schedule 6.01(e) is a complete and correct description of the name, jurisdiction of incorporation and ownership of the outstanding Capital Stock of the Subsidiaries of the Parent in existence on the date of this Agreement. Except as described in Schedule 6.01(e), all of the issued and outstanding shares of Capital Stock of such Subsidiaries have been validly issued and are fully paid and nonassessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. Except as indicated on such Schedule, all such Capital Stock is owned by the Parent or one or more of its wholly-owned Subsidiaries, free and clear of all Liens and there are no outstanding debt or equity securities of the Parent or any of its Subsidiaries and no outstanding obligations of the Parent or any of its Subsidiaries convertible into or exchangeable for, or warrants, options or other rights for the purchase or acquisition from the Parent or any of its Subsidiaries, or other obligations of any Subsidiary to issue, directly or indirectly, any shares of Capital Stock of any Subsidiary of the Parent. (f) Litigation; Commercial Tort Claims. Except as set forth in Schedule 6.01(f), (i) there is no pending or, to the best knowledge of any Loan Party, threatened action, suit or proceeding affecting any Loan Party or its properties before any court or other Governmental Authority or any arbitrator (other than any action, suit or proceeding that is an Excluded Note Event and except with respect to any action, suit or proceeding expressly addressed in Section 6.01(r)) that (A) could reasonably be expected to have a Material Adverse Effect or (B) relates to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby and (ii) as of the Effective Date, none of the Loan Parties holds any commercial tort claims, with a claim exceeding $100,000, in respect of which a claim has been filed in a court of law or a written notice by an attorney has been given to a potential defendant. (g) Financial Condition. (i) The Financial Statements, copies of which have been delivered to the Agent and each Lender, fairly present, in all material respects, the consolidated financial condition of the Parent and its Subsidiaries as at the respective dates thereof and the consolidated results of operations of the Parent and its Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP, and since December 30, 2002, no event or development has occurred that has had or could reasonably be expected to have a Material Adverse Effect. (ii) The Parent has heretofore furnished to each Agent and each Lender (A) projected monthly balance sheets, income statements and statements of cash flows of the Parent and its Subsidiaries for the period from October 2003 through December 2004, and (B) projected annual balance sheets, income statements and statements of cash flows of the Parent and its Subsidiaries for the Fiscal Year ending in 2005. Such projections were believed by the Loan Parties at the time furnished to be reasonable, were prepared and in good faith by the Loan Parties, and were based on assumptions, methods and tests stated therein which were believed by the Loan Parties to be reasonable at the time prepared and upon information believed by the Loan Parties to have been accurate based upon the information available to the Loan Parties at the time such projections were prepared, and the Parent shall not be aware of any facts or 71 information that would lead it to believe that such projections are incorrect or misleading in any material respect. (h) Compliance with Law, Etc. No Loan Party is in violation of its organizational documents, any law, rule, regulation, judgment or order of any Governmental Authority applicable to it or any of its property or assets, or any material term of any material agreement or instrument (excluding any agreement or instrument in respect of Indebtedness but including any other Material Contract) binding on or otherwise affecting it or any of its properties, and no Default or Event of Default has occurred and is continuing. Notwithstanding the foregoing, this Section shall not be deemed to address any matters expressly addressed in Sections 6.01(i), 6.01(j), 6.01(n) or 6.01(r), such matters being subject solely to such Sections. (i) ERISA. Except as set forth on Schedule 6.01(i), (i) each Employee Plan is in substantial compliance in all substantial respects with ERISA and the Internal Revenue Code, (ii) no Termination Event has occurred nor is reasonably expected to occur with respect to any Employee Plan, (iii) since the date of the most recent annual report (Form 5500 Series) with respect to each Employee Plan, including any required Schedule B (Actuarial Information) thereto, copies of which have been filed with the Internal Revenue Service and delivered or made available upon request to the Agent, there has been no material adverse change in such funding status, (iv) copies of each agreement entered into with the PBGC, the U.S. Department of Labor or the Internal Revenue Service with respect to any Employee Plan have been delivered to the Agent, (v) no Employee Plan had an accumulated funding deficiency (whether or not waived) or has applied for an extension of any amortization period within the meaning of Section 412 of the Internal Revenue Code at any time during the previous 60 months, and (vi) no Lien imposed under Section 412 of the Internal Revenue Code or Section 4068 of ERISA exists or is reasonably expected to arise on account of any Employee Plan. Except as set forth on Schedule 6.01(i), no Loan Party or any of its ERISA Affiliates has incurred any withdrawal liability under ERISA with respect to any Multiemployer Plan, or is reasonably expected in the future to incur any such withdrawal liability. No Loan Party or any of its ERISA Affiliates or any fiduciary of any Employee Plan has (i) engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of the Internal Revenue Code, (ii) failed to pay any required installment or other payment required under Section 412 of the Internal Revenue Code on or before the due date for such required installment or payment, (iii) engaged in a transaction within the meaning of Section 4069 of ERISA or (iv) incurred any material liability to the PBGC which remains outstanding other than the payment of premiums, and there are no such premium payments which have become due which are unpaid. There are no pending or, to the best knowledge of any Loan Party, threatened material claims, actions, proceedings or lawsuits (other than claims for benefits in the normal course) asserted or instituted against (i) any Employee Plan or its assets, (ii) any fiduciary with respect to any Employee Plan, or (iii) any Loan Party or any of its ERISA Affiliates with respect to any Employee Plan. Except as set forth on Schedule 6.01(i) and except as required by Section 4980B of the Internal Revenue Code, no Loan Party or any of its ERISA Affiliates maintains an employee welfare benefit plan (as defined in Section 3(1) of ERISA) which provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Loan Party or any of its ERISA Affiliates or coverage after a participant's termination of employment. 72 (j) Taxes, Etc. All Federal and material foreign, state and local tax returns and other reports required by applicable law to be filed by any Loan Party have been filed, or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon any Loan Party or any property of any Loan Party and which have become due and payable on or prior to the date hereof have been paid, except such taxes, assessments and governmental charges in an aggregate amount not exceeding $100,000 or to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves, if any, have been set aside for the payment thereof on the Financial Statements to the extent required by and in accordance with GAAP. (k) Regulations T, U and X. No Loan Party is or will be engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation T, U or X), and no proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. (l) Nature of Business. (i) As of the Effective Date, except with respect to Milacron Capital, no Loan Party is engaged in any business other than as described in the Parent's Form 10-K for the period ending December 31, 2002 with the SEC. (ii) Immediately prior to the Effective Date, Milacron Capital (x) does not conduct and is not engaged in any business or operations other than such business and operations related to the ownership of the Capital Stock of its Subsidiaries and the performance of any other business and operations customarily performed by a holding company, (y) has an aggregate book value of its assets and properties (other than its Subsidiaries) of not greater than $1,000,000 and has aggregate liabilities (other than liabilities related to the Euro Notes and the Existing Credit Facility) of not greater than $100,000, and (z) has revenues (on a non-consolidated basis) for the four fiscal quarters ending immediately prior to the Effective Date of not greater than $0. (iii) As of the Effective Date, with respect to the Domestic Subsidiaries that are not a Loan Party, (x) no such Domestic Subsidiary conducts or engages in any business or operations, and (y) the aggregate book value of their assets and properties is not greater than $0, the aggregate amount of their liabilities is not greater than $0 and (z) the aggregate amount of their revenues for the four fiscal quarters ending immediately prior to the Effective Date is not greater than $0. (iv) As of the Effective Date, Milacron Assurance has no assets or liabilities other than those associated with the provision of self-insurance to the Parent and its other Subsidiaries and services related thereto, and does not conduct and is not engaged in any business or operations other than such business and operations related to the provision of such insurance and services related thereto all of which insurance and related services are provided solely for the benefit of the Parent or its Subsidiaries. 73 (m) Adverse Agreements, Etc. No Loan Party is a party to any agreement or instrument, or subject to any charter, limited liability company agreement, partnership agreement or other corporate, partnership or limited liability company restriction or any judgment, order, regulation, ruling or other requirement of a court or other Governmental Authority, which has, or in the future could reasonably be expected to have, a Material Adverse Effect, except if the Loan Parties are unable to satisfy their payment obligations under the Euro Notes. (n) Permits, Etc. Each Loan Party has, and is in compliance with all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each business currently owned, leased, managed or operated, or to be acquired, by such Person, which, if not obtained, could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license, authorization, approval, entitlement or accreditation, and there is no claim that any thereof is not in full force and effect, except, to the extent any such condition, event or claim could not be reasonably be expected to have a Material Adverse Effect. (o) Properties. (i) Each Loan Party has good and marketable title to, valid leasehold interests in, or valid licenses to use, all property and assets material to its business, free and clear of all Liens, except Permitted Liens. All such properties and assets are in working order and condition, ordinary wear and tear excepted. (ii) Schedule 6.01(o) sets forth a complete and accurate list, as of the Effective Date, of the location, by state and street address, of all real property owned or leased by each Loan Party. As of the Effective Date, each Loan Party has valid leasehold interests in the Leases described on Schedule 6.01(o) to which it is a party. Schedule 6.01(o) sets forth with respect to each such Lease, termination date and annual base rents. Each such Lease is valid and enforceable in accordance with its terms in all material respects and is in full force and effect. No consent or approval of any landlord or other third party in connection with any such Lease is necessary for any Loan Party to enter into and execute the Loan Documents to which it is a party, except as set forth on Schedule 6.01(o). To the best knowledge of any Loan Party, no other party to any such Lease is in default of its material obligations thereunder, and no Loan Party (or any other party to any such Lease) has at any time delivered or received any notice of default which remains uncured under any such Lease and, as of the Effective Date, no event has occurred which, with the giving of notice or the passage of time or both, would constitute a default under any such Lease. (p) Full Disclosure. Each Loan Party has disclosed to the Agent all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the other reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Agent in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any 74 material fact necessary to make the statements therein, in the light of the circumstances under which it was made, not misleading; provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time prepared. There is no contingent liability or fact that could reasonably be expected to have a Material Adverse Effect which has not been set forth in a footnote included in the Financial Statements or a Schedule hereto. (q) Operating Lease Obligations. On the Effective Date, none of the Loan Parties has any Operating Lease Obligations with annual payments exceeding $100,000 other than the Operating Lease Obligations set forth on Schedule 6.01(q). (r) Environmental Matters. Except as set forth on Schedule 6.01(r), specific to each of the following subsections: (i) each Loan Party's businesses, Facilities, operations, properties and assets are in material compliance with all Environmental Laws; (ii) each Loan Party has obtained and is in material compliance with all material Environmental Permits necessary to operate, use or occupy all of such Loan Party's businesses, Facilities, operations, properties and assets; (iii) each Loan Party has obtained and is in material compliance with any applicable financial assurance requirements under RCRA and any similar Environmental Law, as specifically set forth but not limited to 40 C.F.R. 264 and 265, necessary, to operate, use or occupy all of such Loan Party's businesses, or occupy all of such Loan Party's Facilities and properties; (iv) each Loan Party is in material compliance with all applicable writs, orders, consent decrees, judgments, and injunctions, decrees, informational requests or demands issued by any Governmental Authority or Person pursuant to, or under, any Environmental Laws; (v) there are no material Environmental Liens associated or, to the best knowledge of each Loan Party, threatened to be associated with any Loan Parties' businesses, Facilities, operations, properties and assets; (vi) there has been no Release at any of the properties currently or, during the period of ownership or operation by any Loan Party, previously owned or operated by any Loan Party or a predecessor in interest which could reasonably be expected to have a Material Adverse Effect; (vii) to the knowledge of any Loan Party, there has been no Release at any disposal or treatment facility which received Hazardous Materials Handled by any Loan Party or any predecessor in interest which could reasonably be expected to have a Material Adverse Effect; (viii) no Environmental Action has been asserted against any Loan Party or any predecessor in interest nor does any Loan Party have knowledge or notice of any 75 threatened or pending Environmental Action against any Loan Party or any predecessor in interest which, in any case, could reasonably be expected to have a Material Adverse Effect; (ix) to the knowledge of any Loan Party, no Environmental Actions have been asserted against any facilities that may have received Hazardous Materials Handled by any Loan Party or any predecessor in interest which could reasonably be expected to have a Material Adverse Effect; (x) no property now or, during the period of ownership or operation by any Loan Party, formerly owned or operated by a Loan Party has been used as a treatment, storage or disposal site for any Hazardous Material, except as could not reasonably be expected to have a Material Adverse Effect; (xi) during the past 3 years, no Loan Party has failed to report to the proper Governmental Authority any Release which is required to be so reported by any Environmental Laws, except as could not reasonably be expected to have a Material Adverse Effect; and (xii) no Loan Party has received any written notification pursuant to any Environmental Laws that (A) any work, repairs, construction or Capital Expenditures are required to be made in respect as a condition of continued compliance with any Environmental Law or Environmental Permit or (B) any Environmental Permit referred to above is about to be reviewed, made, subject to limitations or conditions, revoked, withdrawn or terminated, in each case, except as could not reasonably be expected to have a Material Adverse Effect. (s) Insurance. Each Loan Party keeps its property adequately insured and maintains (i) insurance to such extent and against such risks, including fire, as is customary with companies of similar size and in the same or similar businesses, (ii) workmen's compensation insurance in the amount required by applicable law, (iii) public liability insurance, which shall include product liability insurance, in the amount customary with companies of similar size and in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (iv) such other insurance as may be required by law. Schedule 6.01(s) sets forth a list of all insurance maintained by each Loan Party on the Effective Date. (t) Use of Proceeds. (i) On the Effective Date, the proceeds of the Loans, together with cash and cash equivalents of the Parent and its Subsidiaries in the United States, shall be used to (A) refinance existing Indebtedness of the Loan Parties under the Existing Credit Facility, (B) repay the Existing Receivables Facility, which will result in the termination of that facility (including by repurchasing receivables sold under Milacron Commercial Corp.'s receivables sale facility upon its termination), and (C) pay fees and expenses in connection with the transactions contemplated hereby. (ii) After the Effective Date, the proceeds of the Loans will be used to fund general corporate purposes of the Loan Parties and their Subsidiaries and may be used as contemplated by the Mizuho/Glencore Transactions and in accordance with the proviso in the 76 definition of Euro Note Restructuring Transaction. The Letter of Credit Accommodations will be used for general corporate and working capital purposes. (u) Location of Bank Accounts. Schedule 6.01(u) sets forth a complete and accurate list as of the Effective Date of all deposit, checking and other bank accounts, all securities and other accounts maintained with any broker dealer and all other similar accounts maintained by each Loan Party, together with a description thereof (i.e., the bank or broker dealer at which such deposit or other account is maintained and the account number and the purpose thereof). As of the Effective Date, no Loan Party maintains any other accounts other than those set forth on Schedule 6.01(u). (v) Intellectual Property. (i) Except as set forth on Schedule 6.01(v) each Loan Party owns or licenses or otherwise has the right to use all material licenses, permits, patents, patent applications, trademarks, trademark applications, service marks, tradenames, trade secrets, copyrights, copyright applications, franchises, authorizations and other intellectual property rights that are necessary for the operation of its business, without infringement upon or conflict with the rights of any other Person with respect thereto. Set forth on Schedule 6.01(v) is a complete and accurate list as of the Effective Date of all such material licenses, permits, patents, patent applications, trademarks, trademark applications, service marks, tradenames, trade secrets, copyrights, copyright applications, franchises, authorizations, non-governmental licenses and permits and other intellectual property rights of each Loan Party. Except as set forth on Schedule 6.01(v), no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party infringes upon or conflicts with any rights owned by any other Person, and no claim or litigation regarding any of the foregoing is pending or threatened in writing. To the best knowledge of each Loan Party, no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or proposed, which, individually or in the aggregate, could have a Material Adverse Effect. (ii) Each Loan Party has taken reasonable measures to protect the secrecy, confidentiality and value of all trade secrets used in its business (collectively, the "Business Trade Secrets"). To the best knowledge of any Loan Party, none of the Business Trade Secrets have been disclosed to any Person other than employees or contractors of the Loan Parties who had a need to know and use such Business Trade Secrets in the ordinary course of employment or contract performance and who executed appropriate confidentiality agreements prohibiting the unauthorized use or disclosure of such Business Trade Secrets and containing other terms reasonably necessary or appropriate for the protection and maintenance of such Business Trade Secrets. To the best knowledge of any Loan Party, no unauthorized disclosure of any Business Trade Secrets has been made. (w) Material Contracts. Set forth on Schedule 6.01(w) is a complete and accurate list as of the Effective Date of all Material Contracts of each Loan Party, showing the parties and subject matter thereof and amendments and modifications thereto. Each such Material Contract (i) is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the best knowledge of such Loan Party, all other parties 77 thereto in accordance with its terms, (ii) has not been otherwise amended or modified (other than pursuant to the Euro Note Restructuring Transaction with respect to the Euro Notes and the Euro Note Indenture), and (iii) is not in default due to the action of any Loan Party or, to the best knowledge of any Loan Party, any other party thereto, other than a default that may arise that constitutes or results directly from an Excluded Note Event. (x) Holding Company and Investment Company Acts. None of the Loan Parties is (i) a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. (y) Employee and Labor Matters. There is (i) no unfair labor practice complaint pending or, to the best knowledge of any Loan Party, threatened against any Loan Party before any Governmental Authority and no grievance or arbitration proceeding pending or, to the best knowledge of any Loan Party, threatened against any Loan Party which arises out of or under any collective bargaining agreement that would affect a material portion of the business of any Loan Party, (ii) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened against any Loan Party or (iii) to the best knowledge of any Loan Party, no union representation question existing with respect to the employees of any Loan Party and no union organizing activity taking place with respect to any of the employees of any Loan Party. No Loan Party or any of its ERISA Affiliates has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act ("WARN") or similar state or foreign law, which remains unpaid or unsatisfied. The hours worked and payments made to employees of any Loan Party have not been in violation of the Fair Labor Standards Act or any other applicable legal requirements other than violations of immaterial obligations of any Loan Party resulting in immaterial liability incurred by any Loan Party. All material payments due from any Loan Party on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of such Loan Party. (z) Customers and Suppliers. There exists no actual or threatened termination, cancellation or limitation of, or modification to or change in, the business relationship between (i) any Loan Party, on the one hand, and any customer or any group thereof, on the other hand, whose agreements with any Loan Party are individually or in the aggregate material to the business or operations of the Loan Parties taken as a whole, or (ii) any Loan Party, on the one hand, and any material supplier thereof, on the other hand, whose agreements with any Loan Party are individually or in the aggregate material to the business or operations of the Loan Parties taken as a whole, and there exists no present state of facts or circumstances that could give rise to or result in any such termination, cancellation, limitation, modification or change which would, individually or in the aggregate, be material to the business or operations of the Loan Parties taken as a whole. (aa) Name; Jurisdiction of Organization; Organizational ID Number; Chief Place of Business; Chief Executive Office; FEIN. Schedule 6.01(aa) sets forth a complete and accurate list as of the date hereof of (i) the full and correct legal name of each Loan Party, (ii) the jurisdiction of organization of each Loan Party, (iii) the organizational identification number of each Loan Party (or indicates that such Loan Party has no organizational identification number), 78 (iv) each place of business of each Loan Party, (v) the chief executive office of each Loan Party and (vi) the federal employer identification number of each Loan Party. (bb) Tradenames. Schedule 6.01(bb) hereto sets forth a complete and accurate list as of the Effective Date of all tradenames, business names or similar appellations used by each Loan Party or any of its divisions or other business units during the past five years. (cc) Locations of Collateral. There is no location at which any Loan Party has any Collateral (except for Inventory in transit and Inventory in locations not within the United States with an aggregate Book Value not exceeding $650,000) other than (i) those locations listed on Schedule 6.01(cc) and (ii) any other locations approved in writing by the Collateral Agent (and with respect to Inventory, the Administrative Agent) from time to time. Schedule 6.01(cc) hereto contains a true, correct and complete list, as of the Effective Date, of the legal names and addresses of each warehouse at which Collateral of each Loan Party is stored. None of the receipts received by any Loan Party from any warehouse states that the goods covered thereby are to be delivered to bearer or to the order of a named Person or to a named Person and such named Person's assigns. (dd) Security Interests. Each Security Agreement creates in favor of the Collateral Agent, for the benefit of the Agent and the Lenders, a legal, valid and enforceable security interest in the Collateral secured thereby. To the extent governed by the Uniform Commercial Code, upon the filing of the UCC financing statements described in Section 5.01(d)(vii) and the recording of the Collateral Assignments for Security referred to in each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, such security interests in and Liens on the Collateral granted thereby that may be perfected by such aforementioned filings or recordings shall be perfected, first priority security interests (subject only to the Permitted Liens that, as a matter of law (including, without limitation, the priority rules of the Uniform Commercial Code), would be prior to the Liens of the Collateral Agent), and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than (i) the filing of continuation statements in accordance with applicable law, (ii) the recording of the Collateral Assignments for Security pursuant to each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, with respect to after-acquired U.S. patent and trademark applications and registrations and U.S. copyrights and (iii) the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign intellectual property. (ee) Euro Indenture. All Obligations, including, without limitation, those to pay principal of and interest on the Loans and the Letter of Credit Obligations and fees and expenses in connection therewith, are permitted to be incurred under the Euro Indenture (or are not otherwise prohibited by the Euro Indenture). (ff) Financial Assistance. (i) No proceeds of any Loan have been made or will be used to subscribe for or acquire Capital Stock of Milacron Capital or Milacron B.V. or to refinance existing Indebtedness used for such purpose and (ii) the Dutch financial assistance rules do not apply to the pledge of the Capital Stock of Milacron Capital or Milacron B.V. 79 (gg) Schedules. All of the information which is required to be scheduled to this Agreement is set forth on the Schedules attached hereto, is correct and accurate and does not omit to state any information material thereto. ARTICLE VII. COVENANTS OF THE LOAN PARTIES Section 7.01 Affirmative Covenants. So long as any principal of or interest on any Loan, Letter of Credit Obligation (other than any Letter of Credit Obligation that is cash collateralized in accordance with the terms of this Agreement) or any other Obligation (whether or not due), other than contingent obligations and indemnification obligations for which no claim has been asserted, shall remain unpaid or any Lender shall have any Commitment hereunder, each Loan Party will, unless the Required Lenders shall otherwise consent in writing: (a) Reporting Requirements. Furnish to the Agent and each Lender: (i) as soon as available and in any event within 45 days after the end of each fiscal quarter of the Parent and its Subsidiaries commencing with the first fiscal quarter of the Parent and its Subsidiaries ending after the Effective Date, balance sheets on a consolidated and business unit basis (on a basis consistent with the business unit financial projections provided to the Agent on the Effective Date), statements of operations and retained earnings on a consolidated and business unit basis (on a basis consistent with the business unit financial projection provided to the Agent on the Effective Date) and statements of cash flows on a consolidated and business unit basis (on a basis consistent with the business unit financial projections provided to the Agent on the Effective Date) of the Parent and its Subsidiaries as at the end of such quarter, and for the period commencing at the end of the immediately preceding Fiscal Year and ending with the end of such quarter, setting forth in each case in comparative form the figures for the corresponding date or period of the immediately preceding Fiscal Year, all in reasonable detail and, in the case of consolidated information, certified by an Authorized Officer of the Parent as fairly presenting, in all material respects, the financial position of the Parent and its Subsidiaries as of the end of such quarter and the results of operations and cash flows of the Parent and its Subsidiaries for such quarter, in accordance with GAAP applied in a manner consistent with that of the most recent audited financial statements of the Parent and its Subsidiaries furnished to the Agent and the Lenders, subject to normal year-end adjustments and the absence of footnotes; (ii) as soon as available, and in any event within 90 days after the end of the Fiscal Year 2003 of the Parent and its Subsidiaries, balance sheets on a consolidated and business unit basis (on a basis consistent with the business unit financial projections provided to the Agent on the Effective Date), statements of operations and retained earnings on a consolidated and business unit basis (on a basis consistent with the business unit financial projections provided to the Agent on the Effective Date) and statements of cash flow on a consolidated and business unit basis (on a basis consistent with the business unit financial projections provided to the Agent on the Effective Date) of the Parent and its Subsidiaries as at the end of the Fiscal Year 2003, setting forth in each case in comparative form the corresponding figures for the immediately preceding Fiscal Year, all in reasonable detail and, in the case of 80 consolidated information, prepared in accordance with GAAP, and accompanied by a report and an unqualified opinion, prepared in accordance with generally accepted auditing standards, of independent certified public accountants of recognized standing selected by the Parent and satisfactory to the Agent (which opinion on such consolidated information shall be without (A) any qualification or exception as to the scope of such audit, or (B) any qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of Section 7.03), together with a written statement of such accountants (1) to the effect that, in making the examination necessary for their certification of such financial statements, they have not obtained any knowledge of the existence of an Event of Default or a Default and (2) if such accountants shall have obtained any knowledge of the existence of an Event of Default or such Default, describing the nature thereof; (iii) as soon as available, and in any event within 30 days after the end of each fiscal month of the Parent and its Subsidiaries commencing with the first fiscal month of the Parent and its Subsidiaries ending after the Effective Date, internally prepared consolidated and consolidating balance sheets, consolidated and consolidating statements of operations and retained earnings and consolidated and consolidating statements of cash flows as at the end of such fiscal month, and for the period commencing at the end of the immediately preceding Fiscal Year and ending with the end of such fiscal month, all in reasonable detail and certified by an Authorized Officer of the Parent as fairly presenting, in all material respects, the financial position of the Parent and its Subsidiaries as at the end of such fiscal month and the results of operations, retained earnings and cash flows of the Parent and its Subsidiaries for such fiscal month, in accordance with GAAP applied in a manner consistent with that of the most recent audited financial statements furnished to the Agent and the Lenders, subject to normal year-end adjustments and the absence of footnotes; (iv) simultaneously with the delivery of the financial statements of the Parent and its Subsidiaries required by clauses (i), (ii) and (iii) of this Section 7.01(a), a certificate of an Authorized Officer of the Parent (A) stating that such Authorized Officer has reviewed the provisions of this Agreement and the other Loan Documents and has made or caused to be made under his or her supervision a review of the condition and operations of the Parent and its Subsidiaries during the period covered by such financial statements with a view to determining whether the Parent and its Subsidiaries were in compliance with all of the provisions of this Agreement and such Loan Documents at the times such compliance is required hereby and thereby, and that such review has not disclosed, and such Authorized Officer has no knowledge of, the existence during such period of an Event of Default or Default or, if an Event of Default or Default existed, describing the nature and period of existence thereof and the action which the Parent and its Subsidiaries propose to take or have taken with respect thereto and (B) attaching a schedule showing the calculations specified in Section 7.03; (v) as soon as available and in any event within 15 days after the end of each fiscal month of the Parent commencing with the first fiscal month of the Parent and its Subsidiaries ending after the Effective Date, reports as required by Section 8.05(a)(ii), in form and detail reasonably satisfactory to the Agent and certified by an Authorized Officer of the Administrative Borrower as being accurate and complete in all material respects; 81 (vi) (A) as soon as available and in any event within 15 days after the end of each month commencing with the first month ending after the Effective Date, or (B) no later than 12:00 noon (New York time) Thursday of each calendar week, if requested by the Administrative Agent when Availability would be less than $25,000,000, a Borrowing Base Certificate, current as of the close of business on Friday of the immediately preceding week, supported by schedules showing the derivation thereof and containing such detail and other information as the Agent may reasonably request from time to time, provided that (I) the Borrowing Base set forth in the Borrowing Base Certificate shall be effective from and including the date such Borrowing Base Certificate is duly received by the Agent but not including the date on which a subsequent Borrowing Base Certificate is received by the Agent, unless the Agent disputes the eligibility of any property included in the calculation of the Borrowing Base or the valuation thereof by notice of such dispute to the Administrative Borrower, (II) in the event of any dispute about the eligibility of any property included in the calculation of the Borrowing Base or the valuation thereof, the Agent's reasonable judgment shall control until such dispute is resolved and (III) in the case of Borrowing Base Certificates delivered on a weekly basis, the Inventory component may be updated on a monthly basis; (vii) promptly after submission to any Governmental Authority, all documents and information furnished to such Governmental Authority in connection with any investigation of any Loan Party other than routine inquiries by such Governmental Authority; (viii) as soon as possible, and in any event within 3 Business Days after the occurrence of an Event of Default or Default or the occurrence of any event or development that could have a Material Adverse Effect, the written statement of an Authorized Officer of the Administrative Borrower setting forth the details of such Event of Default or Default or other event or development having a Material Adverse Effect and the action which the affected Loan Party proposes to take with respect thereto; (ix) (A) as soon as possible and in any event within 15 days after any Loan Party or any ERISA Affiliate thereof knows or has reason to know that (1) any Reportable Event with respect to any Employee Plan has occurred, (2) any other Termination Event with respect to any Employee Plan has occurred, or (3) an accumulated funding deficiency has been incurred or an application has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including installment payments) or an extension of any amortization period under Section 412 of the Internal Revenue Code with respect to an Employee Plan, a statement of an Authorized Officer of the Administrative Borrower setting forth the details of such occurrence and the action, if any, which such Loan Party or such ERISA Affiliate proposes to take with respect thereto, (B) promptly and in any event within 10 days after receipt thereof by any Loan Party or any ERISA Affiliate thereof from the PBGC, copies of each notice received by any Loan Party or any ERISA Affiliate thereof of the PBGC's intention to terminate any Plan or to have a trustee appointed to administer any Plan, (C) promptly and in any event within 15 days after the filing thereof with the Internal Revenue Service if requested by the Agent, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Employee Plan and Multiemployer Plan, (D) promptly and in any event within 15 days after any Loan Party or any ERISA Affiliate thereof knows or has reason to know that a required installment within the meaning of Section 412 of the Internal Revenue Code has not been made when due with respect to an Employee Plan, (E) promptly and in any 82 event within 10 days after receipt thereof by any Loan Party or any ERISA Affiliate thereof from a sponsor of a Multiemployer Plan or from the PBGC, a copy of each notice received by any Loan Party or any ERISA Affiliate thereof concerning the imposition or amount of withdrawal liability under Section 4202 of ERISA or indicating that such Multiemployer Plan may enter reorganization status under Section 4241 of ERISA and (F) promptly and in any event within 15 days after any Loan Party or any ERISA Affiliate thereof sends notice of a plant closing or mass layoff (as defined in WARN) to employees, copies of each such notice sent by such Loan Party or such ERISA Affiliate thereof, in each case under the immediately preceding clauses (A) through (F), to the extent any such event or occurrence would reasonably be expected to result in liability of any Loan Party or any ERISA Affiliate thereof in an amount in excess of $500,000; (x) promptly after the commencement thereof but in any event not later than 5 Business Days after service of process with respect thereto on, or the obtaining of knowledge thereof by, any Loan Party, notice of each action, suit or proceeding before any court or other Governmental Authority or other regulatory body or any arbitrator which, if adversely determined, could reasonably be expected to have a Material Adverse Effect; (xi) as soon as possible and in any event within 5 days after execution, receipt or delivery thereof, copies of any notices that any Loan Party executes or receives in connection with any Material Contract (other than Indebtedness) that such Loan Party determines in good faith to be material to the Agent of the Lenders; (xii) as soon as possible and in any event within 5 days after execution, receipt or delivery thereof, copies of any notices that any Loan Party executes or receives in connection with any Designated Disposition or the sale or other Disposition of the Capital Stock of, or all or substantially all of the assets of, any Loan Party that, in each case, such Loan Party determines in good faith to be material to such transaction or to the Agent or the Lenders; (xiii) as soon as possible and in any event within 5 days after execution, receipt or delivery thereof, copies of (x) all statements, reports and other information any Loan Party sends to any holders of its Indebtedness with an aggregate principal amount exceeding $4,000,000 (other than to any Euro Note Holder, or any agent in connection therewith) or its securities (other than the Euro Notes) or files with the SEC or any national (domestic or foreign) securities exchange and (y) all term sheets, proposals, counterproposals, commitment letters, letters of intent, memorandum of understanding, outlines of terms and conditions and presentations thereto and other similar information any Loan Party sends to any of the Euro Note Holders and any written responses, notices and other correspondences received by any Loan Party from any of the Euro Note Holders in connection therewith and any documents related to any action taken or threatened to be taken by any Euro Note Holder related to any Excluded Note Event or any actions described in Section 9.01(u); (xiv) promptly upon receipt thereof, copies of all financial reports (including, without limitation, management letters), if any, submitted to any Loan Party by its auditors in connection with any annual or interim audit of the books thereof; and 83 (xv) promptly upon request, such other information concerning the condition or operations, financial or otherwise, of any Loan Party as the Agent may from time to time may reasonably request. (b) Additional Guaranties and Collateral Security. Cause: (i) each Subsidiary of any Loan Party not in existence on the Effective Date, to execute and deliver to the Collateral Agent promptly and in any event within 3 Business Days after the formation, acquisition or change in status thereof (A) a Guaranty guaranteeing the Obligations, (B) a Security Agreement, (C) if such Subsidiary has any Subsidiaries, a Pledge Agreement together with (x) certificates evidencing all of the Capital Stock of any Person owned by such Subsidiary (other than a Foreign Subsidiary) and, in the case of a Foreign Subsidiary, all of the non-voting Capital Stock and 65% of the voting Capital Stock of such Foreign Subsidiary, (y) undated stock powers executed in blank with signature guaranteed, and (z) such opinion of counsel and such approving certificate of such Subsidiary as the Collateral Agent may reasonably request in respect of complying with any legend on any such certificate or any other matter relating to such shares, (D) if reasonably requested by the Collateral Agent, one or more Mortgages creating on the real property of such Subsidiary a perfected, first priority Lien on such real property, a Title Insurance Policy covering such real property, a current ALTA survey thereof and a surveyor's certificate, each in form and substance reasonably satisfactory to the Collateral Agent, together with such other agreements, instruments and documents as the Collateral Agent may require whether comparable to the documents required under Section 7.01(n) or otherwise, and (E) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by the Collateral Agent in order to create, perfect, establish the first priority of or otherwise protect any Lien purported to be covered by any such Security Agreement, Pledge Agreement or Mortgage or otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that all property and assets of such Subsidiary shall become Collateral for the Obligations; provided, however, that in no event shall any Foreign Subsidiary be required to guaranty the Obligations or grant a Lien on any of its assets to secure the Obligations if such guaranty or Lien shall result in a "deemed dividend" to any of the Loan Parties; and (ii) each owner of the Capital Stock of any such Subsidiary to execute and deliver promptly and in any event within 3 Business Days after the formation or acquisition of such Subsidiary a Pledge Agreement, together with (A) certificates evidencing, (x) in the case such Subsidiary is a Domestic Subsidiary, all of the Capital Stock of such Subsidiary, and (y) in the case such Subsidiary is a directly owned Foreign Subsidiary, all of the non-voting Capital Stock and 65% of the voting Capital Stock of such Subsidiary, (B) undated stock powers or other appropriate instruments of assignment executed in blank with signature guaranteed, (C) such opinion of counsel and such approving certificate of such Subsidiary as the Collateral Agent may reasonably request in respect of complying with any legend on any such certificate or any other matter relating to such shares and (D) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by the Collateral Agent. (c) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders (including, without limitation, all Environmental Laws) and with all material agreements 84 (excluding agreements in respect of Indebtedness), such compliance to include, without limitation, (i) paying before the same become delinquent all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any of its properties, and (ii) paying all lawful claims which if unpaid might become a Lien or charge upon any of its properties, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP, other than in the case of clauses (i) and (ii) above, taxes, assessments and governmental charges and levies and other lawful claims described therein, the aggregate amount of which does not at any time exceed $100,000. (d) Preservation of Existence, Etc. Except as permitted by Section 7.02(c), maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges in all material respects, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the absence of any such qualification could not reasonably be expected to result in a Material Adverse Effect. (e) Keeping of Records and Books of Account. Keep, and cause each of its Subsidiaries to keep, adequate records and books of account, with adequate and sufficient entries made to permit the preparation by the Parent of its financial statements in accordance with GAAP. (f) Inspection Rights. Permit, and cause each of its Subsidiaries to permit, the agents and representatives of any Agent at any time and from time to time during normal business hours, at the expense of the Borrowers, to examine and make copies of and abstracts from its records and books of account, to visit and inspect its properties, to verify materials, leases, notes, accounts receivable, deposit accounts and its other assets, to conduct audits, physical counts, valuations, appraisals, Phase I Environmental Site Assessments reasonably necessary to determine compliance with or liabilities under Environmental Laws or examinations and to discuss its affairs, finances and accounts with any of its directors, officers, managerial employees, independent accountants or any of its other representatives. In furtherance of the foregoing, each Loan Party hereby authorizes its independent accountants, and the independent accountants of each of its Subsidiaries, to discuss the affairs, finances and accounts of such Person (independently or together with representatives of such Person) with the agents and representatives of any Agent in accordance with this Section 7.01(f). (g) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are, in any material respects, necessary or useful in the proper conduct of its business in working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all material leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder. (h) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations 85 (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies of similar size and in similar businesses similarly situated and in any event in amount, adequacy and scope reasonably satisfactory to the Collateral Agent; provided, however, the Parent and its Subsidiaries may maintain self-insurance (which shall include insurance maintained through Milacron Assurance) in connection with the insurance requirements set forth above to the extent reasonably prudent and consistent with past practices. All policies covering the Collateral are to be made payable to the Collateral Agent for the benefit of the Agent and the Lenders, as its interests may appear, in case of loss, under a standard non-contributory "lender" or "secured party" clause and are to contain such other provisions as the Collateral Agent may require to fully protect the Lenders' interest in the Collateral and to any payments to be made under such policies. All certificates of insurance are to be delivered to the Collateral Agent and the policies are to be premium prepaid, with the loss payable and additional insured endorsement in favor of the Collateral Agent and such other Persons as the Collateral Agent may designate from time to time, and shall request of its insurance providers to, and use commercially reasonable efforts to cause them to, provide for not less than 30 days' prior written notice to the Collateral Agent of the exercise of any right of cancellation. If any Loan Party or any of its Subsidiaries fails to maintain such insurance, the Collateral Agent may arrange for such insurance, but at the Borrowers' expense and without any responsibility on the Collateral Agent's part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the sole right, in the name of the Lenders, any Loan Party and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies. (i) Obtaining of Permits, Etc. Obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all material permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business. (j) Environmental. (i) Keep any property either owned or operated by it or any of its Subsidiaries free of any Environmental Liens; (ii) comply, and cause each of its Subsidiaries to comply, in all material respects with Environmental Laws and provide to the Collateral Agent any documentation of such compliance which the Collateral Agent may reasonably request; (iii) provide the Agent written notice within ten (10) days of any Loan Party obtaining knowledge of any Release of a Hazardous Material in excess of any reportable quantity from or onto property currently or during the period of ownership or operation by any Loan Party, formerly owned or operated by it or any of its Subsidiaries and take any Remedial Actions required under Environmental Laws to abate said Release; provided, however, that no Loan Party shall be required to undertake any Remedial Action required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-performance 86 thereof and adequate reserves, if any, are being maintained with respect to such circumstances in accordance with GAAP; (iv) provide the Agent with written notice within ten (10) days of the receipt of any of the following: (A) notice that an Environmental Lien has been filed against any property of any Loan Party or any of its Subsidiaries; (B) commencement of any Environmental Action or written notice that an Environmental Action will be filed against any Loan Party or any of its Subsidiaries which, if adversely determined, could be reasonably expected to have a Material Adverse Effect; and (C) notice of a violation, citation or other administrative order which could have a Material Adverse Effect; (v) defend, indemnify and hold harmless the Agent and the Lenders and their transferees, and their respective employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses (including, without limitation, attorney and consultant fees, investigation and laboratory fees, court costs and litigation expenses) arising out of (A) the Handling, presence, disposal, Release or threatened Release of any Hazardous Materials on, under, in, originating or emanating from any property at any time owned or operated by any Loan Party or any of its Subsidiaries (or its predecessors in interest or title), (B) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to the presence, Handling or Release of such Hazardous Materials, (C) any request for information, investigation, lawsuit brought or threatened, settlement reached or order by a Governmental Authority relating to the presence, Handling or Release of such Hazardous Materials, (D) any violation of any Environmental Law by any Loan Party or any of its Subsidiaries and/or (E) any Environmental Action relating to any Loan Party or any of its Subsidiaries filed against the Agent or any Lender; provided that, the Loan Parties shall not have any obligation to indemnify and hold harmless the Agent, Lender or other party under this subsection 7.01(j)(v) regarding any environmental matter covered hereunder which is caused by the gross negligence or willful misconduct of the Agent or Lender as determined by a final judgment of a court of competent jurisdiction; (vi) maintain and preserve, in all material respects, all Environmental Permits necessary to operate, use or occupy each of the Loan Parties' businesses, Facilities, operations, properties and assets; (vii) maintain and comply, in all material respects, with any applicable financial assurance requirements under RCRA and any similar Environmental Law, as specifically set forth but not limited to 40 C.F.R. 264 and 265, necessary to operate, use or occupy each of the Loan Parties' businesses, Facilities, operations, properties and assets; (viii) comply, in all material respects, with all applicable writs, orders, consent decrees, judgments, injunctions, communications by any Governmental Authority, decrees, informational requests or demands issued pursuant to, or arising under, any Environmental Laws; (ix) provide the Agent with prompt written notice in the event any Loan Party is required to spend more than $100,000 individually or $500,000 in the aggregate to comply with any Environmental Laws that have been promulgated and enacted by a Governmental Authority throughout the term of this Agreement; and (x) file and submit truthful and complete representations, including, without limitation, applications, warranty statements and accompanying materials provided in support of such representations, submitted by the Loan Parties to obtain insurance. Without limiting the generality of the foregoing, whenever the Agent reasonably determine that there is non-compliance, or any condition which requires any action by or on behalf of any Loan Party in order to avoid any material non-compliance, with any Environmental Law which could reasonably be expected to result in the imposition of material fines or penalties or otherwise materially and adversely affect the business, assets or prospects of the Loan Parties 87 on a consolidated basis, the Loan Parties shall, at the Agent's request and Borrowers' expense: (i) cause an independent environmental engineer reasonably acceptable to the Agent to conduct, as applicable, such reasonable assessments, investigations or tests of the site where any Loan Party's non-compliance or alleged non-compliance with such Environmental Laws has occurred as to such non-compliance and prepare and deliver to the Agent a report as to such non-compliance setting forth the results of such assessments, investigations or tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to the Agent a supplemental report of such engineer whenever the scope of such non-compliance, or the applicable Loan Party's response thereto or the estimated costs thereof, shall change in any material respect. The Loan Parties acknowledge and agree that neither the Loan Documents nor the actions of the Agent or any Lender pursuant thereto shall operate or be deemed (i) to place upon the Agent or any Lender any responsibility for the operation, control, care, service, management, maintenance or repair of property or facilities of the Loan Parties or (ii) to make the Agent or any Lender the "owner" or "operator" of any property or facilities of the Loan Parties or a "responsible party" within the meaning of applicable Environmental Laws. The indemnification provisions of this Section 7.01(j) shall survive the repayment of the Obligations and discharge of any Liens granted under the Loan Documents. (k) Further Assurances. Take such action and execute, acknowledge and deliver, and cause each of its Subsidiaries to take such action and execute, acknowledge and deliver, at its sole cost and expense, such agreements, instruments or other documents as the Agent may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (ii) to subject to valid and perfected first priority Liens any of the Collateral or any other property of any Loan Party and its Subsidiaries (subject to the limitations contained in Section 7.01(b)), but, in the case of the common stock (or other equity interests) of a Foreign Subsidiary, such Liens shall be limited to all of the non-voting Capital Stock and 65% of the voting Capital Stock of such Foreign Subsidiary, (iii) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer and confirm unto the Agent, each Lender and the L/C Issuer the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Loan Party (i) authorizes the Agent to execute any such agreements, instruments or other documents in such Loan Party's name and to file such agreements, instruments or other documents in any appropriate filing office, (ii) authorizes the Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Loan Party (including, without limitation, any such financing statements that indicate the Collateral as "all assets" or words of similar import), and (iii) ratifies the filing of any financing statement, and any continuation statement or amendment with respect thereto, filed without the signature of such Loan Party prior to the date hereof. (l) Change in Collateral; Collateral Records. (i) Give the Collateral Agent not less than 30 days' prior written notice of any change in the location of any Collateral with an aggregate book value exceeding $100,000, other than to locations set forth on Schedule 6.01(cc) 88 and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of the Agent and the Lenders from time to time, solely for the Collateral Agent's convenience in maintaining a record of Collateral, such written statements and schedules as the Collateral Agent may reasonably require, designating, identifying or describing the Collateral. (m) Landlord Waivers; Collateral Access Agreements. (i) (i) At any time any Collateral with a book value in excess of $100,000 (when aggregated with all other Collateral at the same location) is located on any real property of a Loan Party (whether such real property is now existing or acquired after the Effective Date) which is not owned by a Loan Party, use reasonable efforts to obtain a Landlord Waiver; provided, that in the event the Loan Parties are unable to obtain any such Landlord Waiver the Administrative Agent may establish Reserves to the Borrowing Base as it deems necessary with respect to any such Collateral; and (ii) Use reasonable efforts to obtain Bailee Letters or similar collateral access agreements, in form and substance reasonably satisfactory to the Collateral Agent, providing access to Collateral located on any premises not owned by a Loan Party in order to remove such Collateral from such premises during an Event of Default; provided, that in the event the Loan Parties are unable to obtain any such written access agreements, the Administrative Agent may establish Reserves to the Borrowing Base as it deems necessary with respect to any such Collateral. (n) After Acquired Real Property. Upon the acquisition by it or any of its Domestic Subsidiaries after the date hereof of any interest (whether fee or leasehold) in any real property (wherever located) (each such interest being an "After Acquired Property") (x) with a Current Value (as defined below) in excess of $250,000 in the case of a fee interest, or (y) requiring the payment of annual rent exceeding in the aggregate $100,000 in the case of a leasehold interest, promptly so notify the Collateral Agent, setting forth with specificity a description of the interest acquired, the location of the real property, any structures or improvements thereon and either an appraisal or such Loan Party's good-faith estimate of the current value of such real property (for purposes of this Section, the "Current Value"). The Collateral Agent shall notify such Loan Party whether it intends to require a Mortgage and the other documents referred to below (subject to the limitations contained in Section 7.01(b)) or in the case of leasehold, a leasehold Mortgage or Landlord's Waiver (pursuant to Section 7.01(m) hereof). Upon receipt of such notice requesting a Mortgage, the Person which has acquired such After Acquired Property shall promptly furnish to the Collateral Agent the following, each in form and substance reasonably satisfactory to the Collateral Agent: (i) a Mortgage with respect to such real property and related assets located at the After Acquired Property, each duly executed by such Person and in recordable form, (ii) evidence of the recording of the Mortgage referred to in clause (i) above in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to create and perfect a valid and enforceable first priority lien on the property purported to be covered thereby or to otherwise protect the rights of the Agent and the Lenders thereunder, (iii) a Title Insurance Policy, (iv) a survey of such real property, certified to the Collateral Agent and to the issuer of the Title Insurance Policy by a licensed professional 89 surveyor reasonably satisfactory to the Collateral Agent, (v) at the Agent's reasonable request, Phase I Environmental Site Assessments, or such other non-intrusive and non-Phase II environmental assessment as the Agent may reasonably request, with respect to such real property, by a consultant reasonably satisfactory to the Collateral Agent, (vi) in the case of a leasehold interest, a certified copy of the lease between the landlord and such Person with respect to such real property in which such Person has a leasehold interest, and the certificate of occupancy with respect thereto, (vii) in the case of a leasehold interest, an attornment and nondisturbance agreement between the landlord (and any fee mortgagee) with respect to such real property and the Collateral Agent, and (viii) such other documents or instruments (including guarantees and opinions of counsel) as the Collateral Agent may reasonably require. The Borrowers shall pay all reasonable fees and expenses, including reasonable attorneys' fees and expenses, and all title insurance charges and premiums, in connection with each Loan Party's obligations under this Section 7.01(n). (o) Fiscal Year. Cause the Fiscal Year of the Parent and its Subsidiaries to end on December 31 of each calendar year unless the Agent consent to a change in such Fiscal Year (and appropriate related changes to this Agreement). (p) Borrowing Base. Maintain all Revolving A Loans and Letter of Credit Obligations in compliance with the then current Borrowing Base. (q) Use of Proceeds. Use the proceeds of the Loans and the Letter of Credit Accommodations in accordance with Section 6.01(t). (r) Post-Closing Actions. (i) Cause, within 5 Business Days after the Effective Date (or such longer period as may be agreed upon by the Collateral Agent in its sole discretion), an amendment to the Articles of Association of each of Milacron B.V. and Milacron Capital to permit voting rights attached to its Capital Stock being pledged to the Collateral Agent to be transferred to the Collateral Agent, as pledgee, and taking such other actions as may be necessary or desirable to effect each such amendment, and deliver to the Agent, not later than 10 Business Days after the Effective Date (or such longer period to which the Agent may agree), (A) the Concentration Account Agreement, duly executed by the Concentration Account Bank and the Loan Parties, (B) such Cash Management Agreements and depository account, blocked account, lockbox account and similar agreements and other documents, each in form and substance reasonably satisfactory to the Agent, as the Agent may request with respect to the Loan Parties' cash management system. (ii) Cause, not later than March 25, 2004 (or such longer period as may be agreed upon by the Agent in its sole discretion) an updated Field Survey and Audit, dated not earlier than 7 days prior to the Effective Date. (iii) Cause, not later than March 25, 2004 (or such longer period as may be agreed upon by the Agent in its sole discretion), the delivery to Agent of an updated appraisal report by Hilco with respect to Inventory. 90 (iv) Cause, not later than March 25, 2004 (or such longer period as may be agreed upon by the Collateral Agent in its sole discretion), delivery of a re-certified survey to the Collateral Agent and to the issuer of the applicable Title Insurance Policy for the Facilities located at 6328 Ferry Avenue, Charlevoix, Michigan and 558 Leo Street, Dayton, Ohio. (s) Conference Calls. If requested by the Agent upon reasonable advance notice, conduct a monthly conference call to update the Agent and the Lenders on the progress of the Parent's proposed issuance of Securities and the Borrowers' and their Subsidiaries' consolidated financial condition, operations, prospects and respective businesses. Section 7.02 Negative Covenants. So long as any principal of or interest on any Loan, Letter of Credit Obligation (other than any Letter of Credit Obligation that is cash collateralized in accordance with the terms of this Agreement) or any other Obligation (whether or not due), other than contingent obligations or indemnification obligations for which no claim has been asserted, shall remain unpaid or any Lender shall have any Commitment hereunder, each Loan Party shall not, unless the Required Lenders shall otherwise consent in writing: (a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien upon or with respect to any of its properties, whether now owned or hereafter acquired; file or suffer to exist under the Uniform Commercial Code or any similar law or statute of any jurisdiction, an effective financing statement (or the equivalent thereof) creating an effective Lien thereto that names it or any of its Subsidiaries as debtor; sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement (or the equivalent thereof); sell any of its property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of Accounts) with recourse to it or any of its Subsidiaries or assign or otherwise transfer, or permit any of its Subsidiaries to assign or otherwise transfer, any account or other right to receive income; other than, as to all of the above, Permitted Liens; provided that the existence of any Lien that results from an Excluded Note Event shall not be a violation of this clause (a) if (x) such was not consented to by any Loan Party and (y) such Lien does not involve assets of the Loan Parties with an aggregate fair market value in excess of $4,000,000. (b) Indebtedness. Create, incur, assume, guarantee or suffer to exist, or otherwise become or remain liable with respect to, or permit any of its Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise become or remain liable with respect to, any Indebtedness other than Permitted Indebtedness. (c) Fundamental Changes; Dispositions. Wind-up, liquidate or dissolve, or merge, consolidate or amalgamate with any Person, or convey, sell, lease or sublease, transfer or otherwise dispose of, whether in one transaction or a series of related transactions, all or any part of its business, property or assets, whether now owned or hereafter acquired (or agree to do any of the foregoing), or purchase or otherwise acquire, whether in one transaction or a series of related transactions, all or substantially all of the assets of any Person (or any division thereof) (or agree to do any of the foregoing), or permit any of its Subsidiaries to do any of the foregoing; provided, however, that 91 (i) any Loan Party and its Subsidiaries may (A) sell Inventory in the ordinary course of business, (B) dispose of excess, obsolete or worn-out equipment in the ordinary course of business, (C) sell or otherwise dispose of other property or assets for cash in an aggregate amount not less than the fair market value of such property or assets, (D) sell or otherwise dispose of their properties and assets related to the Designated Business of such Persons to a third party (the "Designated Business Disposition"), (E) sell or otherwise dispose of the Designated Real Property to a third party (the "Designated Real Property Disposition"), (F) dispose of cash or sell or liquidate Permitted Investments or other cash equivalents, (G) enter, in the ordinary course of business, into operating leases and subleases or licenses or sublicenses of any property, provided that the Net Cash Proceeds of any disposition (x) in the case of clause (B) above, do not exceed $1,000,000 in the aggregate, (y) in the case of clause (C) above, do not exceed $5,000,000 in the aggregate and (z) in all cases, are paid to the Administrative Agent for the benefit of the Agent and the Lenders to be applied, to the extent required, pursuant to the terms of Section 2.05(c)(iii); (ii) any Guarantor (x) may be merged into any Loan Party, or may be consolidated or amalgamated with another Loan Party, so long as (A) no other provision of this Agreement would be violated thereby, (B) such Guarantor gives the Agent at least 30 days' prior written notice of such merger, consolidation or amalgamation, (C) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, (D) the Lenders' rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such merger, consolidation or amalgamation and (E) the surviving Person's Capital Stock is the subject of a Pledge Agreement, in each case, which is in full force and effect on the date of and immediately after giving effect to such merger, consolidation or amalgamation, or (y) may sell or otherwise dispose of, all or any part of its business, property or assets, whether now owned or hereafter acquired to any other Loan Party so long as (A) no other provision of this Agreement would be violated thereby, (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction and (C) the Lenders' rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such sale or other disposition; (iii) any wholly-owned Domestic Subsidiary that is not a Loan Party (x) may be merged into any other wholly-owned Domestic Subsidiary, or may be consolidated or amalgamated with another wholly-owned Domestic Subsidiary, so long as (A) no other provision of this Agreement would be violated thereby, (B) such Loan Party gives the Agent at least 30 days' prior written notice of such merger, consolidation or amalgamation, (C) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, (D) the Lenders' rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such merger, consolidation or amalgamation and (E) the surviving Domestic Subsidiary, if any, is joined as a Loan Party hereunder and is a party to a Guaranty and a Security Agreement and the Capital Stock of such surviving Domestic Subsidiary is the subject of a Pledge Agreement, in each case, which is in full force and effect on the date of and immediately after giving effect to such merger, consolidation or amalgamation, or (y) may sell or otherwise dispose of, all or any part of its business, property or assets, whether now owned or hereafter acquired to any other wholly-owned Domestic Subsidiary so long as (A) no other provision of this Agreement would be 92 violated thereby, (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction and (C) the Lenders' rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such sale or other disposition; (iv) any Foreign Subsidiary (other than any Foreign Subsidiary of Milacron Capital ) (x) may be merged into any other Foreign Subsidiary (other than any Foreign Subsidiary of Milacron Capital), or may be consolidated or amalgamated with another Foreign Subsidiary (other than any Foreign Subsidiary of Milacron Capital), so long as (A) no other provision of this Agreement would be violated thereby, (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, and (C) to the extent such Foreign Subsidiary is owned directly by a Loan Party, all of the non-voting Capital Stock and 65% of the voting Capital Stock of the surviving Foreign Subsidiary is the subject of a Pledge Agreement, which is in full force and effect on the date of and immediately after giving effect to such merger, consolidation or amalgamation or (y) may sell or otherwise dispose of, all or any part of its business, property or assets, whether now owned or hereafter acquired to any other Foreign Subsidiary (other than any Foreign Subsidiary of Milacron Capital) so long as (A) no other provision of this Agreement would be violated thereby, and (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction; and (v) any Foreign Subsidiary of Milacron Capital (other than Milacron B.V.) (x) may be merged into any other Foreign Subsidiary of Milacron Capital, or may be consolidated or amalgamated with another Foreign Subsidiary of Milacron Capital, so long as (A) no other provision of this Agreement would be violated thereby, (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, and (C) to the extent such Foreign Subsidiary is owned directly by Milacron Capital, all of the non-voting Capital Stock and 65% of the voting Capital Stock of the surviving Foreign Subsidiary is the subject of a Pledge Agreement, which is in full force and effect on the date of and immediately after giving effect to such merger, consolidation or amalgamation or (y) may sell or otherwise dispose of, all or any part of its business, property or assets, whether now owned or hereafter acquired to any other Foreign Subsidiary of Milacron Capital so long as (A) no other provision of this Agreement would be violated thereby, and (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction. (d) Change in Nature of Business. Make, or permit any of its Subsidiaries to make, any change in the nature of its business as described in Section 6.01(l). (e) Loans, Advances, Investments, Etc. Make or commit or agree to make any loan, advance, guarantee of obligations, other extensions of credit or capital contributions to, or hold or invest in or commit or agree to hold or invest in, or purchase or otherwise acquire or commit or agree to purchase or otherwise acquire any shares of the Capital Stock, bonds, notes, debentures or other securities of, or make or commit or agree to make any other investment in, any other Person, or purchase or own any futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, or permit any of its Subsidiaries to do any of the foregoing, except for: 93 (i) investments existing on the date hereof, as set forth on Schedule 7.02(e) hereto, but not any increase in the amount thereof as set forth in such Schedule or any other material modification of the terms thereof, (ii) investments permitted under clause (j) of the definition of "Permitted Indebtedness", (iii) Permitted Investments, (iv) investments not constituting loans or advances by any Domestic Loan Party in any other Domestic Loan Party, (v) loans and advances to directors, officers and employees of the Parent and its Subsidiaries in the ordinary course of business in an aggregate principal amount not to exceed $250,000 at any one time outstanding, (vi) investments under Hedging Agreements entered into in the ordinary course of financial management and not for speculative purposes, (vii) pledges and deposits permitted under clause (f) of the definition of Permitted Liens, (viii) investments in deposit accounts in the ordinary course of business, (ix) investments received in connection with an Insolvency Proceeding of any supplier, customer or other Person having an obligation in favor of any Loan Party as a result of a settlement of delinquent accounts and deposits with, such customers, suppliers or other Persons arising in the ordinary course of business, (x) investments existing on the Effective Date not constituting loans or advances in the Subsidiaries of the Loan Parties and the creation of new Subsidiaries by any Loan Party so long as such creation is in compliance with Section 7.01(b), (xi) investments by the Parent the consideration of which consists solely of the issuance of the Parent's common Capital Stock to the third party to the extent (w) the aggregate market value of all such issuances (measured at the time of each such issuance) does not exceed $5,000,000, (x) immediately before and after the making of any such investment, there shall exist no Event of Default, (y) the Loan Parties do not incur any material liabilities related to such investment, and (z) the rights of the Agent and the Lenders are not adversely affected by any such investment, (xii) investments in China JV by any Subsidiary of the Parent that is not a Loan Party to the extent that such investment will not involve, require, result in or otherwise obligate any cash or cash consideration made or to be made by the Loan Parties in an aggregate amount exceeding $1,000,000, 94 (xiii) other investments not otherwise permitted under clauses (i) through (xii) above or (xiv) through (xv) below in an aggregate amount not exceeding $500,000 and to the extent such investments are made within the United States, (xiv) investments constituting Contingent Obligations to the extent permitted under clause (h) or (m) of the definition of Permitted Indebtedness, (xv) investments constituting Accounts arising in the ordinary course of business, and (xvi) the acquisition by D-M-E Company of all the shares of Capital Stock owned by D-M-E U.S.A. Inc. in (x) Amalgamated Diemold D-M-E Pty. Ltd. (Australia), (y) D-M-E Company (India) Pvt. Ltd. and (z) D-M-E Engineering Pty. Ltd. (Singapore). (f) Lease Obligations. Create, incur or suffer to exist, or permit any of its Subsidiaries to create, incur or suffer to exist, any obligations as lessee (i) for the payment of rent for any real or personal property in connection with any sale and leaseback transaction, or (ii) for the payment of rent for any real or personal property under leases or agreements to lease other than (A) Capitalized Lease Obligations which would not cause the aggregate amount of all obligations under Capitalized Leases entered into after the Effective Date owing by all Loan Parties and their Subsidiaries to exceed the amounts set forth in subsection (g) of this Section 7.02, and (B) Operating Lease Obligations which would not cause the aggregate amount of annual payments under all Operating Lease Obligations owing by all Loan Parties and their Subsidiaries to exceed $16,500,000 (exclusive of renewals and extensions, no more than $2,300,000 of which, on an annualized basis, will be incurred after the Effective Date). (g) Capital Expenditures. Make, or permit any of its Subsidiaries to make, any Capital Expenditure (by purchase or Capitalized Lease) that would cause the aggregate amount of all Capital Expenditures made by the Loan Parties and their Subsidiaries to exceed $2,500,000 for the fiscal quarter ending March 31, 2004, $7,500,000 for the two fiscal quarters ending June 30, 2004, $12,500,000 for the three fiscal quarters ending September 30, 2004, $16,500,000 for the four fiscal quarters ending December 31, 2004 and $2,000,000 for the period from January 1, 2005, through the Final Maturity Date. (h) Restricted Payments. (i) Declare or pay any dividend or other distribution, direct or indirect, on account of any Capital Stock of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (ii) make any repurchase, redemption, retirement, defeasance, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Capital Stock of any Loan Party or any direct or indirect parent of any Loan Party, now or hereafter outstanding, (iii) make any payment to retire, or to obtain the surrender of, any outstanding warrants, options or other rights for the purchase or acquisition of shares of any class of Capital Stock of any Loan Party, now or hereafter outstanding, (iv) return any Capital Stock to any shareholders or other equity holders of any Loan Party or any of its Subsidiaries, or make any other distribution of property, assets, shares of Capital Stock, warrants, rights, options, obligations or securities thereto as such or (v) pay any management fees or any other fees or expenses (including the reimbursement thereof by any Loan Party or any of its Subsidiaries) pursuant to any management, consulting or other services agreement to any of the shareholders 95 or other equityholders of any Loan Party or any of its Subsidiaries or other Affiliates, or to any other Subsidiaries or Affiliates of any Loan Party; provided, however, (A) any Subsidiary of any Loan Party may pay dividends or make other distributions to any Loan Party, (B) the Parent may pay dividends in the form of common Capital Stock, (C) the Parent may pay dividends or other payments on its existing preferred stock or the New Euro Securities issued pursuant to the applicable Note Restructuring Transaction, (D) any Subsidiary that is not a Loan Party may pay dividends or make other distributions to any Loan Party or any Subsidiary of a Loan Party, (E) any non-wholly owned Subsidiary of a Loan Party may pay dividends or make other distributions to its shareholders generally so long as the Loan Party or its respective Subsidiary which owns Capital Stock in the Subsidiary paying such dividends or making such other distributions receives at least its proportionate share thereof (based upon its relative holdings of Capital Stock in the Subsidiary paying such dividends and taking into account relative preferences, if any, of the various classes of Capital Stock in such Subsidiary), (F) the Parent may retire, acquire or terminate any warrant, option or other right in its Capital Stock upon exercise in a transaction in which neither Parent nor any of its Subsidiaries makes any cash payment in respect of such exercise, (G) the Parent may issue New US Securities in exchange for or upon conversion of New US Securities to the extent required by the Mizuho/Glencore Transaction Documents, (H) the Parent may use up to $30,000,000 of the Net Cash Proceeds of a "Rights Offering" (as defined in the Mizuho/Glencore Transaction Documents as in effect on the date hereof) to redeem preferred stock in accordance with the terms of the Mizuho/Glencore Transaction Documents (a "Rights Offer Redemption") and (I) Parent may make semi-annual interest payments on the New US Securities that constitute debt and quarterly dividend payments on the New US Securities that are equity if, before and after giving effect thereto, Excess Availability exceeds Required Availability. (i) Federal Reserve Regulations. Permit any Loan or the proceeds of any Loan under this Agreement to be used for any purpose that would cause such Loan to be a margin loan under the provisions of Regulation T, U or X of the Board. (j) Transactions with Affiliates. Enter into, renew, extend or be a party to, or permit any of its Subsidiaries to enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except (i) in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof, (ii) transactions with another Loan Party, (iii) transactions permitted by Section 7.02(e), (iv) to the extent any Euro Note Holder is an Affiliate of the Parent or any of its Subsidiaries, transactions in connection with the Euro Restructuring Transaction, (v) the Mizuho/Glencore Transactions (including any Rights Offer Redemption), and (vi) compensation, expense reimbursement and indemnification arrangements with directors, officers, employees or consultants in the ordinary course of business, including the issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of employment arrangements, stock options and stock ownership plans approved by the Board of Directors of the Parent made in the ordinary course of business consistent with past practices. 96 (k) Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries. Create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of any Loan Party (i) to pay dividends or to make any other distribution on any shares of Capital Stock of such Subsidiary owned by any Loan Party or any of its Subsidiaries, (ii) to pay or prepay or to subordinate any Indebtedness owed to any Loan Party or any of its Subsidiaries, (iii) to make loans or advances to any Loan Party or any of its Subsidiaries or (iv) to transfer any of its property or assets to any Loan Party or any of its Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing; provided, however, that nothing in any of clauses (i) through (iv) of this Section 7.02(k) shall prohibit or restrict compliance with: (A) this Agreement and the other Loan Documents; (B) any agreements in effect on the date of this Agreement and described on Schedule 7.02(k) and any renewal, extension, refinance or replacement thereof that does not expand the scope of any such encumbrance or restriction; (C) any applicable law, rule or regulation (including, without limitation, applicable currency control laws and applicable state corporate statutes restricting the payment of dividends in certain circumstances); (D) in the case of clause (iv) any agreement setting forth customary restrictions on the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or similar contract in respect of such property or assets; (E) in the case of clause (iv) any agreement, instrument or other document evidencing a Permitted Lien from restricting on customary terms the transfer of any property or assets subject thereto; (F) agreements related to the Indebtedness permitted under clause (i) of the definition of Permitted Indebtedness to the extent any such restrictions are limited to the Foreign Subsidiaries that are parties to such agreements; or (G) the Mizuho/Glencore Transaction Documents and any New US Securities. (l) Limitation on Issuance of Capital Stock. Issue or sell or enter into any agreement or arrangement for the issuance and sale of, or permit any of its Subsidiaries to issue or sell or enter into any agreement or arrangement for the issuance and sale of, any shares of its Capital Stock, any securities convertible into or exchangeable for its Capital Stock or any warrants other than the issuance of common Capital Stock of the Parent or warrants or options to acquire any such common Capital Stock to the extent such issuances are permitted pursuant to Section 7.02(e)(xi) or Section 7.02(m)(iv) (including, without limitation, issuances pursuant to the Mizuho/Glencore Transaction Documents or New Euro Securities). 97 (m) Modifications of Indebtedness, Organizational Documents and Certain Other Agreements; Etc. (i) Amend, modify or otherwise change (or permit the amendment, modification or other change in any manner of) any of the provisions of any of its or its Subsidiaries' Indebtedness or of any instrument or agreement (including, without limitation, any purchase agreement, indenture, loan agreement, guaranty or security agreement) relating to any such Indebtedness if such amendment, modification or change would shorten the final maturity or average life to maturity of, or require any payment to be made earlier than the date originally scheduled on, such Indebtedness, would increase the interest rate applicable to such Indebtedness, would change the subordination provision, if any, of such Indebtedness, or would otherwise be adverse to the Agent or the Lenders or the issuer of such Indebtedness in any respect, provided that, in the case of the Euro Indenture, the Euro Notes, the New US Securities, no amendment, modification or other change shall be made to any of such documents, except as otherwise permitted under the definition of Permitted Indebtedness, (ii) except for the Obligations and Indebtedness permitted under clause (j) of the definition Permitted Indebtedness, make any voluntary or optional payment, prepayment, redemption, defeasance, sinking fund payment or other acquisition for value of any of its or its Subsidiaries' Indebtedness (including, without limitation, by way of depositing money or securities with the trustee therefor before the date required for the purpose of paying any portion of such Indebtedness when due), or refund, refinance, replace or exchange any other Indebtedness for any such Indebtedness (except to the extent any such optional payment, prepayment, redemption, defeasance, sinking fund payment, acquisition, refund, refinancing, replacement or exchange is otherwise expressly permitted by the definition of Permitted Indebtedness, the Subordination and Intercreditor Agreement or referred to in Section 2.05(c)(vii) or Section 2.05(c)(ix) (whether or not requiring a prepayment of the Loans pursuant to either such section) or contemplated by the Mizuho/Glencore Transactions or in the proviso to the definition of Euro Note Restructuring Transaction), or make any payment, prepayment, redemption, defeasance, sinking fund payment or repurchase of any outstanding Indebtedness as a result of any asset sale, change of control, issuance and sale of debt or equity securities or similar event, or give any notice with respect to any of the foregoing, (iii) except as permitted by Section 7.02(c), amend, modify or otherwise change its name, jurisdiction of organization, organizational identification number or FEIN or (iv) amend, modify or otherwise change its certificate of incorporation or bylaws (or other similar organizational documents), including, without limitation, by the filing or modification of any certificate of designation, or any agreement or arrangement entered into by it, with respect to any of its Capital Stock (including any shareholders' agreement), or enter into any new agreement with respect to any of its Capital Stock, except any such amendments, modifications or changes or any such new agreements or arrangements pursuant to this clause (iv) that (A) are in connection with the Mizuho/Glencore Transactions or the Euro Note Restructuring Transaction or (B) either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (n) Investment Company Act of 1940. Engage in any business, enter into any transaction, use any securities or take any other action or permit any of its Subsidiaries to do any of the foregoing, that would cause it or any of its Subsidiaries to become subject to the registration requirements of the Investment Company Act of 1940, as amended, by virtue of being an "investment company" or a company "controlled" by an "investment company" not entitled to an exemption within the meaning of such Act. 98 (o) Compromise of Accounts. Compromise or adjust any Account (or extend the time of payment thereof) or grant any discounts, allowances or credits or permit any of its Subsidiaries to do so other than, provided no Default or Event of Default has occurred and is continuing, in the ordinary course of its business. (p) ERISA. (i) Engage, or permit any ERISA Affiliate to intentionally engage, in any transaction described in Section 4069 of ERISA; (ii) engage, or permit any ERISA Affiliate to intentionally engage, in any prohibited transaction described in Section 406 of ERISA or 4975 of the Internal Revenue Code for which a statutory or class exemption is not available or a private exemption has not previously been obtained from the U.S. Department of Labor; (iii) adopt or permit any ERISA Affiliate to adopt any employee welfare benefit plan within the meaning of Section 3(1) of ERISA which provides benefits to employees after termination of employment other than as (x) set forth in Schedule 6.01(i) in accordance with the terms of such plans, (y) provided to certain employees upon the termination of employment of any such employee in the ordinary course of business, or (z) required by Section 601 of ERISA Section 4980B of the Internal Revenue Code or applicable law; (iv) fail to make any contribution or payment to any Multiemployer Plan which it or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; or (v) fail, or permit any ERISA Affiliate to fail, to pay any required installment or any other payment required under Section 412 of the Internal Revenue Code on or before the due date for such installment or other payment. (q) Environmental. Permit Handling, Release or disposal of Hazardous Materials at any property owned or leased by it or any of its Subsidiaries, except in compliance with Environmental Laws and except for such Handling, Release or disposal of Hazardous Materials that could not reasonably be expected to result in a Material Adverse Effect. (r) Certain Agreements. Agree to any material amendment or other material change to or material waiver of any of its rights under any Material Contract if such amendment, change or waiver is adverse to the interests of any Loan Party other than any such material amendment, change or waiver to the Euro Notes or the Euro Indenture pursuant to the Euro Note Restructuring Transaction. Section 7.03 Financial Covenants. So long as any principal of or interest on any Loan, Letter of Credit Obligation (other than any Letter of Credit Obligation that is cash collateralized in accordance with the terms of this Agreement) or any other Obligation (whether or not due), other than contingent obligations or indemnification obligations for which no claim has been asserted, shall remain unpaid or any Lender shall have any Commitment hereunder, each Loan Party shall not, unless the Required Lenders shall otherwise consent in writing: (a) Cumulative Consolidated EBITDA. Permit Consolidated EBITDA of the Parent on a cumulative basis for any period set forth in the table below to be less than the applicable amount corresponding to such fiscal month set forth below: 99
Cumalative Consolidated ----------------------- Period EBITDA ------ ------ March 1, 2004 - March 31, 2004 $ 5,603,000 March 1, 2004 - April 30, 2004 $ 4,468,000 March 1, 2004 - May 31, 2004 $ 5,824,000 March 1, 2004 - June 30, 2004 $15,174,000 March 1, 2004 - July 31, 2004 $14,219,000 March 1, 2004 - August 31, 2004 $16,654,000 March 1, 2004 - September 30, 2004 $27,991,000 March 1, 2004 - October 31, 2004 $27,929,000 March 1, 2004 - November 30, 2004 $30,848,000 March 1, 2004 - December 31, 2004 $44,730,000 March 1, 2004 - January 31, 2005 $44,069,000 March 1, 2004 - February 28, 2005 $46,238,000
(b) Minimum Availability. At any time, permit Availability to be less than $10,000,000. ARTICLE VIII. MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL Section 8.01 Collection of Accounts; Management of Collateral. (a) Within 10 Business Days after the Effective Date (or such later time as may be agreed to by the Agent), the Domestic Loan Parties shall (i) establish and maintain cash management services of a type and on terms satisfactory to the Administrative Agent at one or more of the banks set forth on Schedule 8.01 (each a "Cash Management Bank"), and shall take such reasonable steps to enforce, collect and receive all amounts owing on the Accounts of the Domestic Loan Parties or any of their Domestic Subsidiaries, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all proceeds in respect of any Collateral and all Collections and other amounts received by any Domestic Loan Party (including payments made by the Account Debtors directly to any Domestic Loan Party) into a Cash Management Account or the Concentration Account. The Administrative Agent shall charge the Loan Account on the last day of each month with one (1) collection day for all such Collections. (b) Within 10 Business Days after the Effective Date (or such later time as may be agreed to by the Agent), the Domestic Loan Parties shall, with respect to each Cash Management Account, deliver to the Administrative Agent a Cash Management Agreement with respect to such Cash Management Account. Notwithstanding the foregoing, promptly upon the request of the Administrative Agent, each Loan Party shall deliver a Cash Management Agreement to the Administrative Agent with respect to any Cash Management Account identified by the Administrative Agent. Each Cash Management Agreement shall provide, 100 among other things, that all cash deposited into the Cash Management Accounts covered thereby shall be sent by electronic funds transfer (including, but not limited to, ACH transfers) on each Business Day to the Concentration Account. (c) So long as no Default or Event of Default has occurred and is continuing, the Administrative Borrower may amend Schedule 8.01 to add or replace a Cash Management Account Bank or Cash Management Account; provided, however, that (i) such prospective Cash Management Bank shall be reasonably satisfactory to the Administrative Agent and the Administrative Agent shall have consented in writing in advance to the opening of such Cash Management Account with the prospective Cash Management Bank, and (ii) prior to the time of the opening of such Cash Management Account, each Domestic Loan Party and such prospective Cash Management Bank shall have executed and delivered to the Administrative Agent a Cash Management Agreement. Each Domestic Loan Party shall close any of its Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of notice from the Administrative Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in the Administrative Agent's reasonable judgment, or as promptly as practicable and in any event within 60 days of notice from the Administrative Agent that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or the Administrative Agent's liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in the Administrative Agent's reasonable judgment. (d) The Cash Management Accounts shall be cash collateral accounts, with all cash, checks and similar items of payment in such accounts securing payment of the Obligations, and in which the Domestic Loan Parties are hereby deemed to have granted a Lien to the Administrative Agent for the benefit of the Agent and the Lenders. All checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness received directly by any Domestic Loan Party as proceeds of any Collateral shall be held by such Loan Party in trust for the Agent and the Lenders and upon receipt be deposited by such Loan Party in original form and no later than the next Business Day after receipt thereof into the Concentration Account; provided, however, all Net Cash Proceeds received directly by such Domestic Loan Party pursuant to an event described in Section 2.05(c)(iii), (iv) or (v) shall be held by such Loan Party in trust for the Agent and the Lenders and upon receipt be deposited by the Loan Party in original form and no later than the next Business Day after receipt thereof into the Administrative Agent's Account. A Domestic Loan Party shall not commingle such collections with such Loan Party's own funds or the funds of any Subsidiary or Affiliate of such Loan Party or with the proceeds of any assets not included in the Collateral. No checks, drafts or other instruments received by the Administrative Agent shall constitute final payment to the Administrative Agent unless and until such checks, drafts or other instruments have actually been collected. (e) After the occurrence and during the continuance of an Event of Default, the Collateral Agent may send a notice of assignment and/or notice of the Lenders' security interest to any and all Account Debtors or third parties holding or otherwise concerned with any of the Collateral, and thereafter the Collateral Agent shall have the sole right to collect the Accounts and/or take possession of the Collateral and the books and records relating thereto. The Domestic Loan Parties shall not, without prior written consent of the Collateral Agent, grant 101 any extension of time of payment of any Account, compromise or settle any Account for less than the full amount thereof, release, in whole or in part, any Person or property liable for the payment thereof, or allow any credit or discount whatsoever thereon, except, in the absence of a continuing Event of Default, as permitted by Section 7.02(o). (f) Each Domestic Loan Party hereby appoints the Agent or its designee on behalf of such Agent as the Domestic Loan Parties' attorney-in-fact with power exercisable only during the continuance of an Event of Default to endorse any Domestic Loan Party's name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Accounts, to sign any Domestic Loan Party's name on any invoice or bill of lading relating to any of the Accounts, drafts against Account Debtors with respect to Accounts, assignments and verifications of Accounts and notices to Account Debtors with respect to Accounts, to send verification of Accounts, and to notify the Postal Service authorities to change the address for delivery of mail addressed to any Domestic Loan Party to such address as the Agent may designate and to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction), or for any error of judgment or mistake of fact or law; this power being coupled with an interest is irrevocable until all of the Loans Letter of Credit Obligations (other than Letter of Credit Obligations that are cash collateralized pursuant to the terms of this Agreement) and other Obligations under the Loan Documents are Paid in Full and all of the Loan Documents are terminated. (g) Nothing herein contained shall be construed to constitute the Agent as agent of any Loan Party for any purpose whatsoever, and the Agent shall not be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof (other than from acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction). The Agent shall not, under any circumstance or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Accounts or any instrument received in payment thereof or for any damage resulting therefrom (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction). The Agent, by anything herein or in any assignment or otherwise, does not assume any of the obligations under any contract or agreement assigned to the Agent and shall not be responsible in any way for the performance by any Loan Party of any of the terms and conditions thereof. (h) If any Account includes a charge for any tax payable to any Governmental Authority, the Agent is hereby authorized (but in no event obligated) in its discretion to pay the amount thereof to the proper taxing authority for the Loan Parties' account and to charge the Loan Parties therefor. (i) Notwithstanding any other terms set forth in the Loan Documents, the rights and remedies of the Agent and the Lenders herein provided, and the obligations of the Loan Parties set forth herein, are cumulative of, may be exercised singly or concurrently with, 102 and are not exclusive of, any other rights, remedies or obligations set forth in any other Loan Document or as provided by law. Section 8.02 Accounts Documentation. The Domestic Loan Parties will at such intervals as the Agent may reasonably require, execute and deliver confirmatory written assignments of the Accounts to the Agent and furnish such further schedules and/or information as the Agent may reasonably require relating to the Accounts, including, without limitation, sales invoices or the equivalent, credit memos issued, remittance advices, reports and copies of deposit slips and copies of original shipping or delivery receipts for all merchandise sold. In addition, the Domestic Loan Parties shall notify the Agent of any non-compliance in respect of the representations, warranties and covenants contained in Section 8.03. The items to be provided under this Section 8.02 are to be in form reasonably satisfactory to the Agent and are to be executed and delivered to the Agent from time to time solely for their convenience in maintaining records of the Collateral. The Domestic Loan Parties' failure to give any of such items to the Agent shall not affect, terminate, modify or otherwise limit the Collateral Agent's Lien on the Collateral. The Domestic Loan Parties shall not re-date any invoice or sale or make sales on extended dating beyond that customary in such Loan Parties' industry, and shall not re-bill any Accounts without promptly disclosing the same to the Agent and providing the Agent with a copy of such re-billing, identifying the same as such. If the Domestic Loan Parties become aware of anything materially detrimental to any of such Loan Parties' material customers' credit, such Loan Parties will promptly advise the Agent thereof. Section 8.03 Status of Accounts and Other Collateral. With respect to any Account of any Domestic Loan Party that is included by the Borrowers as an Eligible Account in the calculation of the Borrowing Base, each Domestic Loan Party covenants, represents and warrants: (a) such Loan Party shall be the sole owner, free and clear of all Liens (except for the Liens granted in the favor of the Collateral Agent for the benefit of the Agent and the Lenders and Permitted Liens), and shall be fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said Collateral; (b) each such Account shall be a good and valid account representing an undisputed bona fide indebtedness incurred or an amount indisputably owed by the Account Debtor therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold or services rendered by such Loan Party; (c) no such Account shall be subject to any defense, offset, counterclaim, discount or allowance except as may be stated in the invoice relating thereto, discounts and allowances as may be customary in such Loan Party's business and as otherwise disclosed to the Agent; (d) none of the transactions underlying or giving rise to any such Account shall violate any applicable state or federal laws or regulations, and all documents relating thereto shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) no agreement under which any deduction or offset of any kind, other than normal trade discounts, may be granted or shall have been made by such Loan Party at or before the time such Account is created; (f) all agreements, instruments and other documents relating to any Account shall be true and correct and in all material respects what they purport to be; (g) such Loan Party shall maintain books and records pertaining to said Collateral in such detail, form and scope as the Agent shall reasonably require; (h) such Loan Party shall promptly notify the Agent if any Account arises out of contracts with any Governmental Authority, and will execute any instruments and take any steps reasonably required by the Agent in order that all monies due or to become due under any such contract 103 shall be assigned to the Collateral Agent and notice thereof given to such Governmental Authority under the Federal Assignment of Claims Act or any similar state or local law; (i) such Loan Party will, immediately upon learning thereof, report to the Agent any material loss or destruction of, or substantial damage to, any of the Collateral, and any other matters affecting the value, enforceability or collectibility of any of the Collateral; (j) if any amount payable under or in connection with any such Account is evidenced by a promissory note or other instrument, such promissory note or instrument shall be promptly pledged, endorsed, assigned and delivered to the Collateral Agent for the benefit of the Agent and the Lenders as additional Collateral; and (k) such Loan Party is not and shall not be entitled to pledge any Agent's or any Lender's credit on any purchases or for any purpose whatsoever. Section 8.04 Collateral Custodian. Upon the occurrence and during the continuance of any Default or Event of Default, the Collateral Agent may at any time and from time to time employ and maintain on the premises of any Loan Party a custodian selected by the Collateral Agent who shall have full authority to do all acts necessary to protect the Agent's and the Lenders' interests. Each Loan Party hereby agrees to, and to cause its Subsidiaries to, cooperate with any such custodian and to do whatever the Collateral Agent may reasonably request to preserve the Collateral. All reasonable costs and expenses incurred by the Collateral Agent by reason of the employment of the custodian shall be the responsibility of the Borrowers and charged to the Loan Account. Section 8.05 Collateral Reporting. (a) The Borrowers shall provide the Administrative Agent with the following documents in a form reasonably satisfactory to the Administrative Agent: (i) on a regular basis as required by the Administrative Agent, schedules of sales made, credits issued and cash received; (ii) as soon as possible after the end of each fiscal month (but in any event within fifteen (15) days after the end thereof), on a monthly basis or more frequently as the Administrative Agent may reasonably request: (A) perpetual inventory reports for each location of Inventory of the Loan Parties, but only to the extent such Loan Parties are capable of providing such reports for such location, and if not capable, such other inventory reports as are consistent with the reports provided to Hilco in connection with the initial appraisal of the Inventory, (B) inventory reports by location and Inventory Category (and including the amounts of Inventory and the value thereof at any leased locations and at premises of warehouses, processors or other third parties), (C) agings of Accounts (together with a reconciliation to the previous month's aging and general ledger), (D) agings of accounts payable (and including information indicating the amounts owing to owners and lessors of leased premises, warehouses, processors and other third parties from time to time in possession of any Collateral) and (E) a report setting forth all issued and outstanding letters of credit; (iii) upon the Administrative Agent's request, (A) copies of customer statements, purchase orders, sales invoices, credit memos, remittance advices and reports, and copies of deposit slips and bank statements, (B) copies of shipping and delivery documents, and 104 (C) copies of purchase orders, invoices and delivery documents for Inventory and Equipment acquired by any Borrower or Guarantor; and (iv) such other reports as to the portion of the Collateral comprised of Inventory, Accounts and Receivables of Domestic Loan Parties as the Administrative Agent shall reasonably request from time to time. (b) If any Loan Party's records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or other agent, such Loan Party hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports, and related documents to the Administrative Agent and to follow the Administrative Agent's instructions with respect to further services at any time that an Event of Default has occurred and is continuing. Section 8.06 Accounts Covenants. (a) With respect to any Account of any Domestic Loan Party that is included by the Borrowers as an Eligible Account in the calculation of the Borrowing Base, the Borrowers shall notify the Administrative Agent promptly of: (i) any material delay in any Domestic Loan Party's performance of any of its material obligations to any Account Debtor or the assertion of any material claims, offsets, defenses or counterclaims by any Account Debtor, or any material disputes with Account Debtors, or any settlement, adjustment or compromise thereof, (ii) all material adverse information known to any Borrower or Guarantor relating to the financial condition of any Account Debtor and (iii) any event or circumstance which, to the best of any Domestic Loan Party's knowledge, would cause the Administrative Agent to consider any then existing Accounts as no longer constituting Eligible Accounts. No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any Account Debtor without the Administrative Agent's consent (which consent shall not be unreasonably withheld), except in the ordinary course of a Domestic Loan Party's business in accordance with its practices and policies. Subject to Section 7.02(o), as long as no Event of Default has occurred and is continuing, Domestic Loan Parties shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any Account Debtor. At any time that an Event of Default has occurred and is continuing, the Administrative Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with Account Debtors or grant any credits, discounts or allowances. (b) With respect to each Account of any Domestic Loan Party that is included in the Borrowers as an Eligible Account in the calculation of the Borrowing Base: (i) the amounts shown on any invoice delivered to the Administrative Agent or schedule thereof delivered to the Administrative Agent shall be true and complete in all material respects, (ii) any payments made thereon shall be promptly delivered to the Administrative Agent pursuant to the terms of this Agreement, (iii) no credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any Account Debtor except as reported to the Administrative Agent in accordance with this Agreement and except for credits, discounts, allowances or extensions made or given in the ordinary course of each such Loan Party's business in accordance with its practices and policies, (iv) there shall be promptly reported to the Administrative Agent in accordance with the terms of this Agreement any setoffs, deductions, 105 contras, defenses, counterclaims or disputes existing or asserted with respect thereto, (v) none of the transactions giving rise thereto will violate any applicable foreign, Federal, state or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms. (c) The Administrative Agent shall have the right at any time or times, in the Administrative Agent's name or in the name of a nominee of the Administrative Agent, to verify the validity, amount or any other matter relating to any Receivables, Inventory or Accounts, by mail, telephone, facsimile transmission or otherwise. Section 8.07 Inventory Covenants. With respect to the Inventory of any Domestic Loan Party that is included by the Borrowers as Eligible Inventory in the calculation of the Borrowing Base: (a) each such Loan Party shall at all times maintain inventory records reasonably satisfactory to the Administrative Agent, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of such Inventory, such Loan Party's cost therefor and daily withdrawals therefrom and additions thereto; (b) such Loan Parties shall conduct a physical count of such the Inventory at any time the Administrative Agent may reasonably request, and promptly following such physical inventory shall supply the Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to the Administrative Agent concerning such physical count; (c) such Loan Parties shall not remove any such Inventory from the locations set forth or permitted herein, without the prior written consent of the Administrative Agent, except for sales of such Inventory in the ordinary course of its business and except to move such Inventory directly from one location set forth or permitted herein to another such location and except for such Inventory shipped from the manufacturer thereof to such Loan Party which is in transit to the locations set forth or permitted herein; (d) upon the Administrative Agent's request, the Borrowers shall, at their expense, deliver or cause to be delivered to the Administrative Agent written appraisals as to such Inventory in form, scope and methodology reasonably acceptable to the Administrative Agent (and consistent with the methodology used by Hilco) by Hilco or an appraiser reasonably acceptable to the Administrative Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (e) such Loan Parties shall produce, use, store and maintain such Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of such Inventory constitutes farm products or the proceeds thereof; (g) each such Loan Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of such Inventory; (h) such Loan Parties shall not sell such Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any such Loan Party to repurchase such Inventory (unless such Inventory may be returned only if it is not damaged and is resalable in the normal course of business); (i) such Loan Parties shall keep such Inventory in good and marketable condition; and (j) such Loan Parties shall not, without prior written notice to the Administrative Agent or the specific identification of such Inventory in a report with respect thereto provided by the Administrative Borrower to the Administrative Agent pursuant to Section 8.05(a) hereof, acquire or accept any such Inventory on consignment or approval. 106 ARTICLE IX. EVENTS OF DEFAULT Section 9.01 Events of Default. If any of the following Events of Default shall occur and be continuing: (a) any Borrower shall fail to pay any principal of or interest on any Loan, any Agent Advance or any fee, indemnity or other amount payable under this Agreement or any other Loan Document when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); (b) any representation or warranty made or deemed made by or on behalf of any Loan Party or by any officer of the foregoing under or in connection with any Loan Document or under or in connection with any report, certificate, or other document delivered to the Agent, any Lender or the L/C Issuer pursuant to any Loan Document shall have been incorrect in any material respect when made or deemed made; (c) any Loan Party shall fail to perform or comply with any covenant or agreement contained in (i) clauses (a)(vi) (at a time when Borrowing Base Certificates are required to be delivered on a weekly basis), (b), (c), (d), (f), (h), (k), (l), (m), (n), (o), (p), (q) or (r) of Section 7.01, Section 7.02, Section 7.03, Section 8.01, Section 8.02, Section 8.03, Section 8.04, Section 8.06 and Section 8.07, or any Loan Party shall fail to perform or comply with any covenant or agreement contained in any Security Agreement to which it is a party, any Pledge Agreement to which it is a party, or any Mortgage to which it is a party, (ii) clauses (e), (g), and (i) of Section 7.01 and such failure, if capable of being remedied, shall remain unremedied for 15 days, after the earlier of the date a senior officer of any Loan Party shall become aware of such failure and the date written notice of such default shall have been given by any Agent to such Loan Party, (iii) clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) or (a)(vii) of Section 7.01 and such failure shall remain unremedied for 5 days, (iv) clauses (a)(v) and (a)(x) of Section 7.01 and such failure shall remain unremedied for 3 Business Days, (iv) clauses (a)(vi) (at a time when Borrowing Base Certificates are required to be delivered on a monthly basis), (a)(viii), (a)(ix), (a)(xi), (a)(xii), (a)(xiii), (a)(xiv) and (a)(xv) of Section 7.01 or Section 8.05 and such failure shall remain unremedied for 3 Business Days and (v) clause (j) of Section 7.01, and such failure shall continue for more than 10 days without any Loan Party commencing activities reasonably likely to cure the environmental matter which is the subject of such failure, provided that, in the case of any Loan Party commencing such activities, such Loan Party shall provide Agent, as and to the extent Agent reasonably requests, with regular updates or other supporting documentation regarding such activities for so long as such activities are conducted or until such environmental matter is otherwise cured or resolved; (d) any Loan Party shall fail to perform or comply with any other term, covenant or agreement contained in any Loan Document to be performed or observed by it and, except as set forth in subsections (a), (b) and (c) of this Section 9.01, such failure, if capable of being remedied, shall remain unremedied for 15 days after the earlier of the date a senior officer of any Loan Party becomes aware of such failure and the date written notice of such default shall have been given by the Agent to the Administrative Borrower; 107 (e) the Parent or any of its Subsidiaries shall fail to pay any principal of or interest on any of its Indebtedness (excluding Indebtedness evidenced by this Agreement or the Euro Notes) in excess of $4,000,000, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or any other default under any agreement or instrument relating to any such Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; provided, that, if any such event shall occur as the direct and sole result of an Excluded Note Event, such event shall not constitute an Event of Default under this clause (e) until the acceleration of the maturity of such Indebtedness or the commencement of the exercise of enforcement rights and remedies of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease such Indebtedness shall be required to be made, in each case, prior to the stated maturity thereof; (f) any Loan Party or any Subsidiary of Milacron Capital (i) shall institute any proceeding or voluntary case seeking to adjudicate it bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for any such Person or for any substantial part of its property, (ii) shall be generally not paying its debts as such debts become due or shall admit in writing its inability to pay its debts generally, (iii) shall make a general assignment for the benefit of creditors, or (iv) shall take any action to authorize or effect any of the actions set forth above in this subsection (f); (g) any proceeding shall be instituted against any Loan Party or any Subsidiary of Milacron Capital seeking to adjudicate it bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for any such Person or for any substantial part of its property, and either such proceeding shall remain undismissed or unstayed for a period of 30 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against any such Person or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property) shall occur; (h) any provision of any Loan Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against any Loan Party intended to be a party thereto other than the Agent or the Lenders, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by any Loan Party or any Governmental Authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or any Loan Party shall deny in writing that it has any liability or obligation purported to be created under any Loan Document; 108 (i) any Security Agreement, any Pledge Agreement, any Mortgage, any Cash Management Agreement or any other security document, after delivery thereof pursuant hereto, shall for any reason fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien in favor of the Collateral Agent for the benefit of the Agent and the Lenders on any Collateral purported to be covered thereby; (j) except solely with respect to an Excluded Note Event, one or more judgments, orders or awards for the payment of money exceeding $4,000,000 in the aggregate shall be rendered against the Parent or any of its Subsidiaries and remain unsatisfied and either (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment, order or award, or (ii) there shall be a period of 10 consecutive days after entry thereof during which a stay of enforcement of any such judgment, order or award, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment, order or award shall not give rise to an Event of Default under this subsection (j) if and for so long as (A) the amount of such judgment, award or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering full payment thereof and (B) such insurer has been notified, and has not disputed the claim made for payment, of the amount of such judgment, order or award; (k) for more than fifteen (15) days, the Parent or any of its Subsidiaries is enjoined, restrained or in any way prevented by the order of any court or any Governmental Authority from conducting all or any part of its business that is material to the Loan Parties taken as a whole; (l) any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of any Loan Party, if any such event or circumstance could reasonably be expected to have a Material Adverse Effect; (m) any cessation of a substantial part of the business of the Parent or any of its Subsidiaries for a period which materially and adversely affects the ability of the Loan Parties, taken as a whole, to continue its business on a profitable basis; (n) the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by the Parent or any of its Subsidiaries, if such loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect; (o) the indictment, or the threatened indictment of the Parent or any of its Subsidiaries under any criminal statute, or commencement or threatened commencement of criminal or civil proceedings against any Loan Party, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture to any Governmental Authority of any material portion of the property of the Loan Parties taken as a whole; 109 (p) any Loan Party or any of its ERISA Affiliates shall have made a complete or partial withdrawal from a Multiemployer Plan, and, as a result of such complete or partial withdrawal, any Loan Party or any of its ERISA Affiliates incurs a withdrawal liability in an annual amount exceeding $500,000; or a Multiemployer Plan enters reorganization status under Section 4241 of ERISA, and, as a result thereof any Loan Party's or any of its ERISA Affiliates' annual contribution requirements with respect to such Multiemployer Plan increases in an annual amount exceeding $500,000; (q) any Termination Event with respect to any Employee Plan shall have occurred which could reasonably be expected to have a Material Adverse Effect; (r) the Parent or any of its Subsidiaries shall be liable for any Environmental Liabilities and Costs the payment of which could reasonably be expected to have a Material Adverse Effect; (s) a Change of Control shall have occurred; (t) an event or development occurs which could reasonably be expected to have a Material Adverse Effect; (u) the following events shall occur: (i) an "Event of Default" (or any similar defined term or concept) under, and as defined in, any of the Euro Notes or the Euro Indenture, shall exist (including as a result of the failure to repay obligations thereunder, whether at maturity or upon acceleration), whether or not resulting in an acceleration thereof, (ii) the Euro Notes shall have become due and payable at maturity or upon acceleration and (iii) the Euro Note Holders holding in excess of 25% of the Euro Notes and/or any agent under the Euro Indenture, in each case in accordance with the Euro Indenture, causes the commencement of the exercise of enforcement rights and remedies under the applicable Indenture governing the Euro Notes by (x) instituting or otherwise commencing any legal proceeding seeking a judgment or decree for the payment of monies due, including, without limitation, commencing any Insolvency Proceeding, (y) attaching, seizing, levying upon or subjecting to a writ or distress warrant all or a substantial portion of the assets of the Loan Parties, or allowing such assets to come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors or (z) instituting liquidation or similar proceedings for all or a substantial portion of the assets or property of the Loan Parties; or (v) Stockholder Approval is not obtained on or prior to July 29, 2004; then, and in any such event, the Collateral Agent may, and shall at the request of the Required Lenders, by notice to the Administrative Borrower, (i) terminate or reduce all Commitments, whereupon all Commitments shall immediately be so terminated or reduced, (ii) declare all or any portion of the Loans then outstanding to be due and payable, whereupon all or such portion of the aggregate principal of all Loans, all accrued and unpaid interest thereon, all fees and all other amounts payable under this Agreement and the other Loan Documents shall become due and payable immediately, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party and (iii) exercise any and all of its other rights and remedies under applicable law, hereunder and under the other Loan Documents; 110 provided, however, that upon the occurrence of any Event of Default described in subsection (f) or (g) of this Section 9.01 with respect to any Loan Party, without any notice to any Loan Party or any other Person or any act by any Agent or any Lender, all Commitments shall automatically terminate and all Loans then outstanding, together with all accrued and unpaid interest thereon, all fees and all other amounts due under this Agreement and the other Loan Documents shall become due and payable automatically and immediately, without presentment, demand, protest or notice of any kind, all of which are expressly waived by each Loan Party. Subject to Section 4.04(b), the Administrative Agent may, after the occurrence and during the continuation of any Event of Default, require the Borrowers to deposit with the Administrative Agent with respect to each Letter of Credit Accommodation then outstanding cash in an amount equal to 105% of the greatest amount for which such Letter of Credit Accommodation may be drawn. Such deposits shall be held by the Administrative Agent in the Letter of Credit Collateral Account as security for, and to provide for the payment of, the Letter of Credit Obligations. ARTICLE X. AGENT Section 10.01 Appointment. Each Lender (and each subsequent maker of any Loan by its making thereof) hereby irrevocably appoints CSFB as it agent under the Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent or the Collateral Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Agent is hereby expressly authorized by the Lenders to execute any and all documents (including releases, the Cash Management Agreements and the Subordination and Intercreditor Agreement) with respect to the Collateral and the rights of the Lenders with respect thereto. Each of the Lenders and the L/C Issuer hereby agrees to be bound by the priority of the security interests and allocation of the benefits of the Collateral and proceeds thereof set forth in this Agreement and the Subordination and Intercreditor Agreement. Section 10.02 Nature of Duties. The Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing, (b) the Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent or the Collateral Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02), and (c) except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to the Company or any of the Subsidiaries that is communicated to or obtained by the bank serving as any Agent or any of its Affiliates in any capacity. The Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02), in each case, in the absence of its own gross negligence or willful misconduct. The Agent shall not be deemed to have knowledge of any 111 Default or Event of Default unless and until written notice thereof is given to the Agent by any Loan Party or a Lender, and the Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article V or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Agent. Section 10.03 Rights, Exculpation, Etc. (a) The Agent and its directors, officers, agents or employees shall not be liable for any action taken or omitted to be taken by them under or in connection with this Agreement or the other Loan Documents, except for their own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. Without limiting the generality of the foregoing, the Agent (i) may treat the payee of any Loan as the owner thereof until the Administrative Agent receives written notice of the assignment or transfer thereof, pursuant to Section 12.07 hereof, signed by such payee and in form satisfactory to the Administrative Agent; (ii) may consult with legal counsel (including, without limitation, counsel to the Agent or counsel to the Loan Parties), independent public accountants, and other experts selected by any of them and shall not be liable for any action taken or omitted to be taken in good faith by any of them in accordance with the advice of such counsel or experts; (iii) make no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, certificates, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Person, the existence or possible existence of any Default or Event of Default, or to inspect the Collateral or other property (including, without limitation, the books and records) of any Person; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made any representation or warranty regarding the existence, value or collectibility of the Collateral, the existence, priority or perfection of the Administrative Agent's Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral. The Agent shall not be liable for any apportionment or distribution of payments made in good faith pursuant to Section 2.05, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders any payment in excess of the amount which they are determined to be entitled. The Agent may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the other Loan Documents the Agent are permitted or required to take or to grant, and if such instructions are promptly requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval under any of the Loan Documents until they shall have received such instructions from the Required Lenders. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of 112 the Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder. (b) To the extent required by any applicable law, the Administrative Agent may withhold from any interest payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred. Section 10.04 Reliance. The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper person. The Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. The Agent may consult with legal counsel, independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. In addition, the Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of the preceding subsections of this Article X shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent Section 10.05 Indemnification. To the extent that the Agent or the L/C Issuer is not reimbursed and indemnified by any Loan Party, the Lenders will reimburse and indemnify the Agent and the L/C Issuer from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent or the L/C Issuer in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by the Agent or the L/C Issuer under this Agreement or any of the other Loan Documents, in proportion to each Lender's Pro Rata Share, including, without limitation, advances and disbursements made pursuant to Section 10.08; provided, 113 however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements for which there has been a final judicial determination that such liability resulted from the Agent's or the L/C Issuer's gross negligence or willful misconduct. The obligations of the Lenders under this Section 10.05 shall survive the payment in full of the Loans and the termination of this Agreement. Section 10.06 Agent Individually. With respect to its Pro Rata Share of each Commitment and the Total Commitment hereunder and the Loans made by it, the Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or maker of a Loan. The terms "Lenders", "Required A Lenders", "Required B Lenders" or "Required Lenders" or any similar terms shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity as a Lender or one of the Required A Lenders, the Required B Lenders, or the Required Lenders. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with any Borrower as if it were not acting as an Agent pursuant hereto without any duty to account to the other Lenders. Section 10.07 Successor Agent. (a)The Agent may resign from the performance of all its functions and duties hereunder and under the other Loan Documents at any time by giving at least thirty (30) Business Days' prior written notice to the Administrative Borrower and each Lender. Such resignation shall take effect upon the acceptance by a successor Agent of appointment pursuant to clauses (b) and (c) below or as otherwise provided below. (b) Upon any such notice of resignation, the Required Lenders shall appoint a successor Agent, after consultation with the Administrative Borrower. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After the Agent's resignation hereunder as an Agent, the provisions of this ARTICLE X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement and the other Loan Documents. (c) If a successor Agent shall not have been so appointed within said thirty (30) Business Day period, the retiring Agent shall then appoint a successor Agent (after consultation with the Administrative Borrower) who shall serve as an Agent until such time, if any, as the Required Lenders appoint a successor Agent as provided above. Section 10.08 Collateral Matters. (a) Subject to the terms of a separate written agreement among the Agent and the Lenders, the Agent may from time to time make such disbursements and advances ("Agent Advances") which the Agent, in its sole discretion, deems necessary or desirable to preserve, protect, prepare for sale or lease or dispose of the Collateral or any portion thereof, to enhance the likelihood or maximize the amount of repayment by the Borrowers of the Loans, Letter of Credit Obligations and other Obligations or to pay any other amount chargeable to the Borrowers 114 pursuant to the terms of this Agreement, including, without limitation, costs, fees and expenses as described in Section 12.04. The Agent Advances shall bear interest at the maximum rate set forth in this Agreement and shall be repayable on demand and be secured by the Collateral. The Agent Advances shall constitute Obligations hereunder which may be charged to the Loan Account in accordance with Section 4.02. The Agent making an Agent Advance shall notify each Lender and the Administrative Borrower in writing of each such Agent Advance, which notice shall include a description of the purpose of such Agent Advance. Without limitation to its obligations pursuant to Section 10.05, each Lender agrees that it shall make available to the Agent making the Agent Advance, upon such Agent's demand, in Dollars in immediately available funds, the amount equal to such Lender's Pro Rata Share of each such Agent Advance. If such funds are not made available to the Agent making an Agent Advance by such Lender, the Agent shall be entitled to recover such funds on demand from such Lender, together with interest thereon for each day from the date such payment was due until the date such amount is paid to the Agent, at the Federal Funds Rate for three Business Days and thereafter at the Reference Rate. (b) The Lenders hereby irrevocably authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral upon termination of the Total Commitment and payment and satisfaction of all Loans, Letter of Credit Obligations, and all other Obligations which have matured and which the Collateral Agent has been notified in writing are then due and payable; or constituting property being sold or disposed of in the ordinary course of any Loan Party's business and in compliance with the terms of this Agreement and the other Loan Documents; or constituting property in which the Loan Parties owned no interest at the time the Lien was granted or at any time thereafter; or if approved, authorized or ratified in writing by the Lenders. Upon request by the Collateral Agent at any time, the Lenders will confirm in writing the Collateral Agent's authority to release particular types or items of Collateral pursuant to this Section 10.08(b). (c) Without in any manner limiting the Collateral Agent's authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 10.08(b)), each Lender agrees to confirm in writing, upon request by the Collateral Agent, the authority to release Collateral conferred upon the Collateral Agent under Section 10.08(b). Upon receipt by the Collateral Agent of confirmation from the Lenders of its authority to release any particular item or types of Collateral, and upon prior written request by any Loan Party, the Collateral Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Collateral Agent for the benefit of the Agent and the Lenders upon such Collateral; provided, however, that (i) the Collateral Agent shall not be required to execute any such document on terms which, in the Collateral Agent's opinion, would expose the Collateral Agent to liability or create any obligations or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon (or obligations of any Loan Party in respect of) all interests in the Collateral retained by any Loan Party. (d) The Collateral Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists or is owned by the Loan Parties or is cared for, protected or insured or has been encumbered or that the Lien granted to the Collateral Agent pursuant to this 115 Agreement or any other Loan Document has been properly or sufficiently or lawfully created, perfected, protected or enforced or is entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 10.08 or in any other Loan Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent's own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to any other Lender, except as otherwise provided herein. Section 10.09 Agency for Perfection. The Agent and each Lender hereby appoints each other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral in assets which, in accordance with Article 9 of the Uniform Commercial Code, can be perfected only by possession or control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) and the Agent and each Lender hereby acknowledges that it holds possession of or otherwise controls any such Collateral for the benefit of the Agent and the Lenders as secured party. Should the Administrative Agent or any Lender obtain possession or control of any such Collateral, the Administrative Agent or such Lender shall notify the Collateral Agent thereof, and, promptly upon the Collateral Agent's request therefor shall deliver such Collateral to the Collateral Agent or in accordance with the Collateral Agent's instructions. In addition, the Collateral Agent shall also have the power and authority hereunder to appoint such other sub agents as may be necessary or required under applicable state law or otherwise to perform its duties and enforce its rights with respect to the collateral and under the Loan Documents. Each Loan Party by its execution and delivery of this Agreement hereby consents to the foregoing. ARTICLE XI. GUARANTY Section 11.01 Guaranty. Each Guarantor hereby jointly and severally and unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the Borrowers now or hereafter existing under any Loan Document, whether for principal, interest (including, without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of any Borrower, whether or not a claim for post-filing interest is allowed in such proceeding), Letter of Credit Obligations, fees, commissions, expense reimbursements, indemnifications or otherwise (such obligations, to the extent not paid by or on behalf of the Borrowers, being the "Guaranteed Obligations"), and agrees to pay any and all reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) incurred by the Agent, the Lenders and the L/C Issuer in enforcing any rights under the guaranty set forth in this ARTICLE XI. Without limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrowers to the Agent, the Lenders and the L/C Issuer under any Loan Document but for the fact that they are 116 unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Borrower. Section 11.02 Guaranty Absolute. Each Guarantor, jointly and severally, guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent, the Lenders or the L/C Issuer with respect thereto. Each Guarantor agrees that this ARTICLE XI constitutes a guaranty of payment when due and not of collection and waives any right to require that any resort be made by the Agent or any Lender to any Collateral. The obligations of each Guarantor under this ARTICLE XI are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce such obligations, irrespective of whether any action is brought against any Loan Party or whether any Loan Party is joined in any such action or actions. The liability of each Guarantor under this ARTICLE XI shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following: (a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or otherwise; (c) any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations; (d) the existence of any claim, set-off, defense or other right that the Guarantors may have at any time against any Person, including, without limitation, any Agent, any Lender or the L/C Issuer; (e) any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Loan Party; or (f) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent, the Lenders or the L/C Issuer that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety. This ARTICLE XI shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Agent, the Lenders, the L/C Issuer or any other Person upon the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as though such payment had not been made. 117 Section 11.03 Waiver. Each Guarantor hereby waives (i) promptness and diligence, (ii) notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this ARTICLE XI and any requirement that the Agent, the Lenders or the L/C Issuer exhaust any right or take any action against any Loan Party or any other Person or any Collateral (iii) any right to compel or direct the Agent, any Lender or the L/C Issuer to seek payment or recovery of any amounts owed under this ARTICLE XI from any one particular fund or source or to exhaust any right or take any action against any other Loan Party or any other Person or any Collateral, (iv) any requirement that the Agent, any Lender or the L/C Issuer protect, secure, perfect or insure any security interest or Lien on any property subject thereto or exhaust any right to take any action against any Loan Party or any other Person or any Collateral, and (v) any other defense available to the Guarantors. The Guarantors agree that the Agent, the Lenders and the L/C Issuer shall have no obligation to marshal any assets in favor of the Guarantors or against, or in payment of, any or all of the Obligations. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 11.03 is knowingly made in contemplation of such benefits. Each Guarantor hereby waives any right to revoke this ARTICLE XI, and acknowledges that this ARTICLE XI is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. Section 11.04 Continuing Guaranty; Assignments. This ARTICLE XI is a continuing guaranty and shall (a) remain in full force and effect until the later of the date on which all of the Guaranteed Obligations and all other amounts payable under this ARTICLE XI shall have been Paid in Full in cash, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent, the Lenders and the L/C Issuer and their successors, pledgees, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, its Loans and the Letter of Credit Obligations owing to it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, in each case as provided in Section 12.07. Section 11.05 Subrogation. No Guarantor will exercise any rights that it may now or hereafter acquire against any Loan Party or any other guarantor that arise from the existence, payment, performance or enforcement of such Guarantor's obligations under this ARTICLE XI, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Agent, the Lenders and the L/C Issuer against any Loan Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Loan Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this ARTICLE XI shall have been Paid in Full in cash. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the later of the date on which all of the Guaranteed Obligations and all other amounts payable under this ARTICLE XI shall have been Paid in Full in cash and the Final Maturity Date, such amount shall be held in trust for the 118 benefit of the Agent, the Lenders and the L/C Issuer and shall forthwith be paid to the Agent, the Lenders and the L/C Issuer to be credited and applied to the Guaranteed Obligations and all other amounts payable under this ARTICLE XI, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this ARTICLE XI thereafter arising. If (i) any Guarantor shall make payment to the Agent, the Lenders and the L/C Issuer of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this ARTICLE XI shall be Paid in Full in cash and (iii) the Final Maturity Date shall have occurred, the Agent, the Lenders and the L/C Issuer will, at such Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor. Section 11.06 Judgment. The specification under the Loan Documents of Dollars and payment in New York City is of the essence. Each Loan Party's obligations hereunder and under the other Loan Documents to make payments in Dollars (the "Obligation Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Agent, the Lenders or the L/C Issuer of the full amount of the Obligation Currency expressed to be payable to the Agent, the Lenders or the L/C Issuer under this Agreement or the other Loan Documents. If, for the purpose of obtaining or enforcing judgment in any court, it is necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "Judgment Currency") an amount due in the Obligation Currency, the rate of exchange used shall be that at which the Agent, the Lenders or the L/C Issuer could, in accordance with normal banking procedures, purchase Dollars with the Other Currency on the Business Day preceding that on which final judgment is given. The obligation of a Loan Party in respect of any such sum due from it to the Agent, the Lenders or the L/C Issuer hereunder shall, notwithstanding any judgment in such Other Currency, be discharged only to the extent that, on the Business Day immediately following the date on which the Agent, the Lenders or the L/C Issuer receives any sum adjudged to be so due in the Other Currency, the Agent, the Lenders or the L/C Issuer may, in accordance with normal banking procedures, purchase Dollars with the Other Currency. If the Dollars so purchased are less than the sum originally due to the Agent, the Lenders or the L/C Issuer in Dollars, such Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Agent, the Lenders or the L/C Issuer against such loss, and if the Dollars so purchased exceed the sum originally due to the Agent, the Lenders or the L/C Issuer in Dollars, the Agent, the Lenders or the L/C Issuer agrees to remit to such Loan Party such excess. Section 11.07 Subordination and Intercreditor Agreement. Each of the Loan Parties hereby acknowledges that it is familiar with the terms of such Subordination and Intercreditor Agreement, and agrees to make payments in accordance with, and otherwise be bound by, the terms thereof as though such Guarantor were a direct signatory thereto. ARTICLE XII. MISCELLANEOUS 119 Section 12.01 Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed, telecopied or delivered: if to any Loan Party, at the following address: Milacron Inc. 2090 Florence Avenue Cincinnati, Ohio 45206 Attention: John Francy Telephone: 513-487-5912 Telecopier: 513-487-5586 with a copy to: Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019 Attention: Paul Michalski, Esq. Telephone: 212-474-1000 Telecopier: 212-474-3700 if to CSFB, to it at the following address: Credit Suisse First Boston One Madison Avenue, 2nd floor New York, NY 10010 Attention: Agency Administration Telecopier: 212-325-8321 with a copy to: Latham & Watkins LLP 5800 Sears Tower Chicago, IL 60606 Telephone: 312-876-7618 Telecopier: 312-993-9767 Attention: Nancy L. Schimmel, Esq. or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 12.01. All such notices and other communications shall be effective, (i) if mailed, when received or three days after deposited in the mails, whichever occurs first, (ii) if telecopied, when transmitted and confirmation is received, or (iii) if delivered, upon delivery, except that notices to the Agent or the L/C Issuer pursuant to ARTICLE II and ARTICLE III shall not be effective until received by the Agent or the L/C Issuer, as the case may be. 120 Section 12.02 Amendments, Etc. No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders or by the Agent with the consent of the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given, provided, however, that no amendment, waiver or consent shall (i) increase the Revolving A Credit Commitment or the B-Commitment of any Lender, reduce the principal of, or interest on, the Loans payable to any Lender, reduce the amount of any fee payable for the account of any Lender, or postpone or extend the Final Maturity Date or any date fixed for any payment of principal of, or interest or fees on, the Loans or Letter of Credit Obligations payable to any Lender, in each case without the written consent of each Lender, (ii) increase the Total Revolving A Credit Commitment or Total B-Commitment without the written consent of each Lender, (iii) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that is required for the Lenders or any of them to take any action hereunder without the written consent of each Lender, (iv) amend the definition of "Required A Lenders", "Required B Lenders", Required Lenders" or "Pro Rata Share" without the written consent of each Lender, (v) release all or a substantial portion of the Collateral (except as otherwise provided in this Agreement and the other Loan Documents), subordinate any Lien granted in favor of the Collateral Agent for the benefit of the Agent and the Lenders, or release any Borrower or any Guarantor without the written consent of each Lender, (vi) amend, modify or waive Section 4.04 or this Section 12.02 of this Agreement without the written consent of each Lender, or (vii) amend the definition of "Book Value", "Borrowing Base", "Eligible Accounts", "Eligible Inventory", "Inventory Category", "Net Amount of Eligible Accounts", "Net Liquidation Percentage", "Net Liquidation Value", "Reserves" or "Total Commitment", without the written consent of each Lender. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent (but not in its capacity as a Lender) under this Agreement or the other Loan Documents. Section 12.03 No Waiver; Remedies, Etc. No failure on the part of the Agent or any Lender to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Agent and the Lenders provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Agent and the Lenders under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Agent and the Lenders to exercise any of their rights under any other Loan Document against such party or against any other Person. Section 12.04 Expenses; Taxes; Attorneys' Fees. The Borrowers will pay on demand, all reasonable out-of-pocket costs and expenses incurred by or on behalf of the Agent (and, in the case of clauses (b) through (j) below, each Lender), regardless of whether the transactions contemplated hereby are consummated, including, without limitation, reasonable fees, costs, client charges and expenses of counsel for the Agent (and, in the case of clauses (b) through (j) below, each Lender), accounting, due diligence, periodic field audits, physical counts, valuations, investigations, searches and filings, monitoring of assets, appraisals of Collateral, title searches and reviewing environmental assessments, miscellaneous disbursements, examination, 121 travel, lodging and meals, arising from or relating to: (a) the negotiation, preparation, execution, delivery, performance and administration of this Agreement and the other Loan Documents (including, without limitation, the preparation of any additional Loan Documents pursuant to Section 7.01(b) or the review of any of the agreements, instruments and documents referred to in Section 7.01(f)), (b) any requested amendments, waivers or consents to this Agreement or the other Loan Documents whether or not such documents become effective or are given, (c) the preservation and protection of any of the Agent's or the Lenders' rights under this Agreement or the other Loan Documents, (d) the defense of any claim or action asserted or brought against any Agent or any Lender by any Person that arises from or relates to this Agreement, any other Loan Document, the Agent's or the Lenders' claims against any Loan Party, or any and all matters in connection therewith to the extent not otherwise provided in Section 12.15, (e) the commencement or defense of, or intervention or participation in, any court or judicial proceeding arising from or related to this Agreement or any other Loan Document, including, without limitation, in connection with any Insolvency Proceeding related to any Loan Party or the Collateral, including in any adversary proceeding or contested matter commenced or continued by, on behalf of, or against any Loan Party or its estate, and any appeal or review thereof, (f) the filing of any petition, complaint, answer, motion or other pleading by any Agent or any Lender, or the taking of any action in respect of the Collateral or other security, in connection with this Agreement or any other Loan Document, (g) the protection, collection, lease, sale, taking possession of or liquidation of, any Collateral or other security in connection with this Agreement or any other Loan Document, (h) any attempt to enforce any Lien or security interest in any Collateral or other security in connection with this Agreement or any other Loan Document, (i) any attempt to collect from any Loan Party, or (j) the receipt by the Agent or any Lender of any advice from professionals with respect to any of the foregoing. Without limitation of the foregoing or any other provision of any Loan Document: (x) the Borrowers agree to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Agent or any Lender to be payable in connection with this Agreement or any other Loan Document, and the Borrowers agree to save the Agent and each Lender harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, (y) the Borrowers agree to pay all broker fees that may become due in connection with the transactions contemplated by this Agreement and the other Loan Documents, of which, on the Effective Date, there are none, and (z) if the Borrowers fail to perform any covenant or agreement contained herein or in any other Loan Document, the Agent may itself perform or cause performance of such covenant or agreement in accordance with the terms of this Agreement or any other Loan Document, and the expenses of the Agent incurred in connection therewith shall be reimbursed on demand by the Borrowers. Section 12.05 Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, the Agent or any Lender may, and is hereby authorized to, at any time and from time to time, without notice to any Loan Party (any such notice being expressly waived by the Loan Parties) and to the fullest extent permitted by law, set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by the Agent or such Lender to or for the credit or the account of any Loan Party against any and all obligations of the Loan Parties either now or hereafter existing under any Loan Document, irrespective of whether or not the Agent or such Lender shall have made any demand hereunder or thereunder and although such obligations may be 122 contingent or unmatured. The Agent and each Lender agrees to notify such Loan Party promptly after any such set-off and application made by the Agent or such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Agent and the Lenders under this Section 12.05 are in addition to the other rights and remedies (including, without limitation, other rights of set-off) which the Agent and the Lenders may have under this Agreement or any other Loan Documents in law or otherwise. Section 12.06 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 12.07 Assignments and Participations. (a) This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of each Loan Party and the Agent and each Lender and their respective successors and assigns; provided, however, that none of the Loan Parties may assign or transfer any of its rights hereunder without the prior written consent of each Lender and any such assignment without the Lenders' prior written consent shall be null and void. (b) Subject to the conditions set forth in paragraph (c)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments, Letter of Credit Obligations and the Loans at the time owing to it), with the prior written consent (such consent not to be unreasonably withheld) of the Administrative Agent, and in the case of an assignment of all or a portion of a Revolving A-Commitment or any Lender's obligations in respect of Letter of Credit Accommodations, the L/C Issuer. (c) Assignments shall be subject to the following conditions: (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Revolving A Lender's Revolving A-Commitment, the amount of the Revolving A-Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 unless the Administrative Agent otherwise consent; (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of either (A) its Revolving A-Commitment, Revolving A Loans and Letter of Credit Obligations, or (B) its B-Loan; (iii) the parties to each assignment shall (1) electronically execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent or (2) manually execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and 123 recordation fee of $5,000; provided that only one such fee shall be payable in connection with simultaneous assignments to or by two or more Approved Funds; (iv) the assignee, if it shall not already be a Lender, shall deliver to the Administrative Agent a completed administrative questionnaire and appropriate tax forms, if applicable; and (v) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, each assignment shall be subject to the prior written consent of the Administrative Borrower (such consent not to be unreasonably withheld) except if an Event of Default has occurred and is continuing. (d) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.10, 12.14 and 12.15). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 12.07 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (g) of this Section. (e) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment(s) of, and principal amount of the Loans and Letter of Credit Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive in the absence of clearly demonstrable error, and the Borrowers, the Administrative Agent, the L/C Issuer and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, the L/C Issuer and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (f) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed administrative questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (c)(iii) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. Any foreign Person who purchases or is assigned or participates in any portion of such Registered Loan shall comply with Section 2.08(d). 124 (g) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of its Commitments, the Loans made by it and its Pro Rata Share of the Letter of Credit Obligations); provided, that (i) such Lender's obligations under this Agreement (including without limitation, its Commitments hereunder) and the other Loan Documents shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and the Borrowers, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents; and (iii) a participant shall not be entitled to require such Lender to take or omit to take any action hereunder except (A) action directly effecting an extension of the maturity dates or decrease in the principal amount of the Loans or Letter of Credit Obligations, (B) action directly effecting an extension of the due dates or a decrease in the rate of interest payable on the Loans or the fees payable under this Agreement, or (C) actions directly effecting a release of all or a substantial portion of the Collateral or any Loan Party (except as set forth in Section 10.08 of this Agreement or any other Loan Document). The Loan Parties agree that each participant shall be entitled to the benefits of Section 2.08 and Section 4.05 of this Agreement with respect to its participation in any portion of the Commitments and the Loans as if it were a Lender, but shall not be entitled to receive any greater payments under Section 2.08 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation is made with the Administrative Borrower's written consent. Section 12.08 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by telecopier shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telecopier also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis. Section 12.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK. Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY 125 AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, LOCATED AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011 AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN Section 12.01 AND TO CT CORPORATION SYSTEM, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. Section 12.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, EACH AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT. Section 12.12 Consent by the Agent and Lenders. Except as otherwise expressly set forth herein to the contrary, if the consent, approval, satisfaction, determination, judgment, 126 acceptance or similar action (an "Action") of the Agent or any Lender shall be permitted or required pursuant to any provision hereof or any provision of any other agreement to which any Loan Party is a party and to which the Agent or any Lender has succeeded thereto, such Action shall be required to be in writing and may be withheld or denied by the Agent or such Lender, in its sole discretion, with or without any reason, and without being subject to question or challenge on the grounds that such Action was not taken in good faith. Section 12.13 No Party Deemed Drafter. Each of the parties hereto agrees that no party hereto shall be deemed to be the drafter of this Agreement. Section 12.14 Reinstatement; Certain Payments. If any claim is ever made upon the Agent, any Lender or the L/C Issuer for repayment or recovery of any amount or amounts received by the Agent, such Lender or the L/C Issuer in payment or on account of any of the Obligations, the Agent, such Lender or the L/C Issuer shall give prompt notice of such claim to each other Lender and the Administrative Borrower, and if the Agent, such Lender or the L/C Issuer repays all or part of such amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Agent, such Lender or the L/C Issuer or any of its property, or (ii) any good faith settlement or compromise of any such claim effected by the Agent, such Lender or the L/C Issuer with any such claimant, then and in such event each Loan Party agrees that (A) any such judgment, decree, order, settlement or compromise shall be binding upon it notwithstanding the cancellation of any Indebtedness hereunder or under the other Loan Documents or the termination of this Agreement or the other Loan Documents, and (B) it shall be and remain liable to the Agent, such Lender or the L/C Issuer hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Agent, such Lender or the L/C Issuer. Section 12.15 Indemnification. (a) The Loan Parties agree, jointly and severally, to pay all reasonable out-of-pocket expenses incurred by the Agent and the L/C Issuer, including the reasonable fees, charges and disbursements of Latham & Watkins LLP, counsel for the Agent, in connection with the syndication of the credit facilities provided for herein and the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated); provided that the Loan Parties shall not be responsible for the reasonable fees, charges and disbursements of more than one separate law firm (in addition to Dutch counsel, local counsel or other special counsel, including special workout counsel) pursuant to its obligations under this sentence only. The Loan Parties also agree, jointly and severally, to pay all reasonable out-of-pocket expenses incurred by the Agent, the L/C Issuer or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made or Letters of Credit Accommodations issued hereunder, including the reasonable fees, charges and disbursements of Latham & Watkins LLP, counsel for the Agent, and, in connection with any such enforcement or protection, the reasonable fees, charges and disbursements of any other counsel (including special workout counsel) for the Agent, the L/C Issuer or any Lender. 127 (b) The Borrowers agree, jointly and severally, to indemnify the Agent, each Lender, the L/C Issuer and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related reasonable out-of-pocket expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of Letter of Credit Accommodations, and (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. (c) To the extent permitted by applicable law, no Loan Party shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, any Loan or Letter of Credit Accommodation or the use of the proceeds thereof. (d) Without limiting any other subsection of this Section 12.15, each Loan Party agrees to, jointly and severally, defend, indemnify, and hold harmless the Agent, each Lender, the L/C Issuer and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against any and all Environmental Liabilities and Costs and all other claims, demands, penalties, fines, liability (including strict liability), losses, damages, costs and expenses (including without limitation, reasonable legal fees and expenses, consultant fees and laboratory fees), arising out of (i) any Releases or threatened Releases (x) at any property presently or formerly owned or operated by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest, or (y) of any Hazardous Materials Handled by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; (ii) any violations of Environmental Laws relating to any Loan Party or any Subsidiary of any Loan Party or for which any Loan Party or any Subsidiary of any Loan Party may legally be held liable; (iii) any Environmental Action relating to any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; (iv) any personal injury (including wrongful death) or property damage (real or personal) arising out of exposure to Hazardous Materials Handled by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; and (v) any breach of any warranty or representation regarding environmental matters made by the Loan Parties in Section 6.01(r) or the breach of any covenant made by the Loan Parties in Section 7.01(j). Notwithstanding the foregoing, the Loan Parties shall not have any obligation to any Indemnitee under this subsection (b) regarding any potential environmental matter covered hereunder which is caused by the gross negligence or willful misconduct of such Indemnitee, as determined by a final judgment of a court of competent jurisdiction. 128 (e) The provisions of this Section 12.15 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Revolving A Credit Commitments, the B-Commitments, the expiration of any Letter of Credit Accommodation, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Agent, any Lender or the L/C Issuer. All amounts due under this Section 12.15 shall be payable on written demand therefor. (f) The indemnification for all of the foregoing losses, damages, fees, costs and expenses of the Indemnitees are chargeable against the Loan Account. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 12.15 may be unenforceable because it is violative of any law or public policy, each Loan Party shall, jointly and severally, contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. Section 12.16 Parent as Agent for Borrowers. Each Borrower hereby irrevocably appoints the Parent as the borrowing agent and attorney-in-fact for the Borrowers (the "Administrative Borrower") which appointment shall remain in full force and effect unless and until the Agent shall have received prior written notice signed by all of the Borrowers that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide to the Agent and receive from the Agent all notices with respect to Loans obtained for the benefit of any Borrower and all other notices and instructions under the Loan Documents and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Loans and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral of the Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to the Borrowers in order to utilize the collective borrowing powers of the Borrowers in the most efficient and economical manner and at their request, and that neither the Agent nor the Lenders shall incur liability to the Borrowers as a result hereof. Each of the Borrowers expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Agent and the Lenders to do so, and in consideration thereof, each of the Borrowers hereby jointly and severally agrees to indemnify the Indemnitees and hold the Indemnitees harmless against any and all liability, expense, loss or claim of damage or injury, made against such Indemnitee by any of the Borrowers or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral of the Borrowers as herein provided, (b) the Agent and the Lenders relying on any instructions of the Administrative Borrower, or (c) any other action taken by the Agent or any Lender hereunder or under the other Loan Documents. Section 12.17 Records. The unpaid principal of and interest on the Loans, the interest rate or rates applicable to such unpaid principal and interest, the duration of such applicability, the Commitments, and the accrued and unpaid fees (including, without limitation, 129 the Unused Line Fee and Letter of Credit Fee) payable pursuant to the terms hereof, shall at all times be ascertained from the records of the Agent, which shall be conclusive and binding absent manifest error. Section 12.18 Binding Effect. This Agreement shall become effective when it shall have been executed by each Loan Party, the Agent and each Lender and when the conditions precedent set forth in Section 5.01 hereof have been satisfied or waived in writing by the Agent, and thereafter shall be binding upon and inure to the benefit of each Loan Party, the Agent and each Lender, and their respective successors and assigns, except that the Loan Parties shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of each Lender, and any assignment by any Lender shall be governed by Section 12.07 hereof. Section 12.19 Interest. It is the intention of the parties hereto that the Agent and each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby or by any other Loan Document would be usurious as to the Agent or any Lender under laws applicable to it (including the laws of the United States of America and the State of New York or any other jurisdiction whose laws may be mandatorily applicable to the Agent or such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document or any agreement entered into in connection with or as security for the Obligations, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to the Agent or any Lender that is contracted for, taken, reserved, charged or received by the Agent or such Lender under this Agreement or any other Loan Document or agreements or otherwise in connection with the Obligations shall under no circumstances exceed the maximum amount allowed by such applicable law, any excess shall be canceled automatically and if theretofore paid shall be credited by the Agent or such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be Paid in Full, refunded by the Agent or such Lender, as applicable, to the Borrowers); and (ii) in the event that the maturity of the Obligations is accelerated by reason of any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to the Agent or any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by the Agent or such Lender, as applicable, as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by the Agent or such Lender, as applicable, on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be Paid in Full, refunded by the Agent or such Lender to the Borrowers). All sums paid or agreed to be paid to the Agent or any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to the Agent or such Lender, be amortized, prorated, allocated and spread throughout the full term of the Loans until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (x) the amount of interest payable to the Agent or any Lender on any date shall be computed at the Highest Lawful Rate applicable to the Agent or such Lender pursuant to this Section 12.19 and (y) in respect of any subsequent interest computation period the amount of interest otherwise payable to the Agent or such Lender would be less than the 130 amount of interest payable to the Agent or such Lender computed at the Highest Lawful Rate applicable to the Agent or such Lender, then the amount of interest payable to the Agent or such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to the Agent or such Lender until the total amount of interest payable to the Agent or such Lender shall equal the total amount of interest which would have been payable to the Agent or such Lender if the total amount of interest had been computed without giving effect to this Section 12.19. For purposes of this Section 12.19, the term "applicable law" shall mean that law in effect from time to time and applicable to the loan transaction between the Borrowers, on the one hand, and the Agent and the Lenders, on the other, that lawfully permits the charging and collection of the highest permissible, lawful non-usurious rate of interest on such loan transaction and this Agreement, including laws of the State of New York and, to the extent controlling, laws of the United States of America. The right to accelerate the maturity of the Obligations does not include the right to accelerate any interest that has not accrued as of the date of acceleration. Section 12.20 Confidentiality. The Agent and each Lender agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with its customary procedures for handling confidential information of this nature and in accordance with safe and sound practices of comparable commercial finance companies, any non-public information supplied to it by the Loan Parties pursuant to this Agreement or the other Loan Documents which, in the case of information provided after the Effective Date, is identified in writing by the Loan Parties as being confidential at the time the same is delivered to such Person (and which at the time is not, and does not thereafter become, publicly available or available to such Person from another source not known to be subject to a confidentiality obligation to such Person not to disclose such information), provided that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for the Agent or any Lender on a confidential basis, (iii) to examiners, auditors or accountants on a confidential basis, (iv) in connection with any litigation to which the Agent or any Lender is a party or (v) to any assignee or participant (or prospective assignee or participant) or party to a Securitization so long as such assignee or participant or party (or prospective assignee or participant) first agrees, in writing, to be bound by confidentiality provisions similar in substance to this Section 12.20. The Agent and each Lender agrees that, upon receipt of a request or identification of the requirement for disclosure pursuant to clause (iv) hereof, it will make reasonable efforts to keep the Loan Parties informed of such request or identification; provided that each Loan Party acknowledges that the Agent and each Lender may make disclosure as required or requested by any Governmental Authority or representative thereof and that the Agent and each Lender may be subject to review by or other regulatory agencies and may be required to provide to, or otherwise make available for review by, the representatives of such parties or agencies any such non-public information. Section 12.21 Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions 131 contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. Section 12.22 Replacement of Lenders. If any Lender, the Agent or the L/C Issuer requests compensation under Section 4.05, or if the Borrowers are required to pay any additional amount to any Lender, the Agent or the L/C Issuer or any Governmental Authority for the account of any Lender pursuant to Section 2.08, or if any Lender defaults in its obligation to fund Revolving A Loans hereunder, then the Borrowers may, at their sole expense and effort, upon notice by the Administrative Borrower to such Lender, such Agent or the L/C Issuer, as applicable, and the Agent, require such Lender, the Agent or L/C Issuer, as applicable, to assign and delegate without recourse (in accordance with and subject to the restrictions contained in Section 12.07) all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender if such Lender, the Agent or the L/C Issuer accepts such assignment, or any other Person); provided that (i) the Borrowers shall have received the prior written consent of the Agent, which consent shall not be unreasonably withheld, (ii) such Lender, the Agent or the L/C Issuer shall have received payment of an amount equal to the outstanding principal of its Loans and Pro Rata Share of Letter of Credit Obligations, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts), (iii) in the case of any such assignment resulting from a claim for compensation under Section 4.05 or payments required to be made pursuant to Section 2.08, such assignment will result in a reduction in such compensation or payments, and (iv) such assignee shall be subject to Section 12.07. Section 12.23 Dutch Parallel Debt. Solely for purposes of the Loan Documents governed by the laws of The Netherlands: (a) Each of the Loan Parties hereby irrevocably and unconditionally agrees to pay to the Collateral Agent an amount equal to the aggregate amount of obligations payable by each such Loan Party in respect of its Corresponding Obligations as they may exist from time to time (each obligation undertaken by any Loan Party being referred to herein as "Parallel Debt"). The Parallel Debt of each Loan Party will be payable in US Dollars. (b) The Parallel Debt of each Loan Party will become due and payable (opeisbaar) as and when one or more of the Corresponding Obligations of such Loan Party become due and payable under the Loan Documents. (c) Each of the Loan Parties hereby acknowledges that: (i) its Parallel Debt constitutes an undertaking, obligation and liability of the relevant Loan Party to the Collateral Agent which is separate and independent from, and without prejudice to, the Corresponding Obligations; and (ii) its Parallel Debt represents the Collateral Agent's own separate and independent claim (eigen en zelfstandige vordering) to receive payment of such Parallel Debt from such Loan Party, 132 it being understood, in each case, that pursuant to this Section 12.23, the amount which may become payable by any Loan Party as its Parallel Debt shall not exceed the total of the amounts which are payable under the Corresponding Obligations of such Loan Party. (d) For the avoidance of doubt, the parties confirm that the claim of the Collateral Agent against any Loan Party in respect of its Parallel Debt and the claims of any one or more of the Agent or the Lenders against such Loan Party in respect of the Corresponding Obligations payable by such Loan Party to the Agent or Lenders do not constitute common property (gemeenschap) within the meaning of article 3:166 of the Netherlands Civil Code and that the provisions relating to common property shall not apply to the Corresponding Obligations. If, however, the claim of the Collateral Agent and the claims of any one or more of the Agent and the Lenders constitute common property and the provisions of common property are applicable, the parties agree that this Section 12.23 shall constitute the administration agreement (beheersregeling) within the meaning of article 3:168 of the Netherlands Civil Code. (e) To the extent the Collateral Agent irrevocably (onaantastbaar) receives any amount in payment of the Parallel Debt of any Loan Party, the Collateral Agent shall distribute that amount among the Agent and the Lenders in accordance with the other provisions of the Loan Documents. Upon irrevocable receipt by the Collateral Agent of any amount so distributed to it in payment of such Parallel Debt (a "Received Amount"), the Corresponding Obligations of such Loan Party to the Agent and Lenders shall be reduced on the date of receipt by the Collateral Agent by an amount equal to the Received Amount in a manner as if the Deductible Amount were received as payment of the Corresponding Obligations. (f) Solely for purposes of this Section 12.23, a "Corresponding Obligation" means the Obligations. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 133 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWERS: MILACRON INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Vice President - Finance and Chief Financial Officer CIMCOOL INDUSTRIAL PRODUCTS INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer D-M-E MANUFACTURING INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer D-M-E U.S.A. INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer MILACRON INDUSTRIAL PRODUCTS, INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer 134 MILACRON MARKETING COMPANY By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer MILACRON PLASTICS TECHNOLOGIES GROUP INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer NICKERSON MACHINERY CHICAGO, INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer NORTHERN SUPPLY COMPANY, INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer OAK INTERNATIONAL INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer 135 PLIERS INTERNATIONAL, INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer UNILOY MILACRON INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer UNILOY MILACRON U.S.A. INC. By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer GUARANTORS: D-M-E COMPANY By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Vice President MILACRON CAPITAL HOLDINGS B.V. By: /s/ Gerard van Deventer ------------------------------------------- Name: Gerard van Deventer Title: Managing Director 136 MILACRON INTERNATIONAL MARKETING COMPANY By: /s/ R. P. Lienesch ------------------------------------------- Name: R. P. Lienesch Title: Treasurer and Assistant Secretary MILACRON RESIN ABRASIVES INC. By: /s/ R.D. Brown ------------------------------------------- Name: R.D. Brown Title: Treasure and Assistant Secretary ADMINISTRATIVE AGENT, COLLATERAL AGENT AND LENDER: CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH By: /s/ S. William Fox ------------------------------------------- Name: S. William Fox Title: Director By: /s/ David J. Dodd ------------------------------------------- Name: David J. Dodd Title: Associate 137 EX-10.49 4 y95183exv10w49.txt NOTE PURCHASE AGREEMENT EXHIBIT 10.49 ================================================================================ MILACRON INC. $30,000,000 20% Secured Step-Up Series A Notes due 2007 $70,000,000 20% Secured Step-Up Series B Notes due 2007 --------------------------------- NOTE PURCHASE AGREEMENT --------------------------------- Dated as of March 12, 2004 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS ARTICLE II PURCHASE AND SALE OF THE NOTES; CLOSING ARTICLE III INTEREST AND REPAYMENT Section 3.1 Series A Notes.................................................................. 16 Section 3.2 Series B Notes.................................................................. 18 ARTICLE IV REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY Section 4.1 Incorporation, Standing, Etc.................................................... 19 Section 4.2 Subsidiaries; Capitalization.................................................... 20 Section 4.3 SEC Reports; Financial Statements............................................... 20 Section 4.4 Qualification................................................................... 20 Section 4.5 Authorization of Agreement and Notes............................................ 21 Section 4.6 Absence of Defaults and Conflicts............................................... 21 Section 4.7 Absence of Proceedings.......................................................... 22 Section 4.8 Possession of Licenses and Permits.............................................. 22 Section 4.9 No Violations of Laws........................................................... 22 Section 4.10 Internal Accounting Controls................................................... 22 Section 4.11 Tax Returns and Payments....................................................... 22 Section 4.12 Title to Properties; Liens..................................................... 23 Section 4.13 Patents, Trademarks, Authorizations, etc....................................... 23 Section 4.14 Governmental Consents.......................................................... 23 Section 4.15 Material Events................................................................ 23 Section 4.16 No Undisclosed Fees............................................................ 23 Section 4.17 No Transactions with Affiliates ............................................... 23 Section 4.18 Registration Rights............................................................ 23 Section 4.19 Private Placement.............................................................. 24 Section 4.20 Vote Required.................................................................. 24
-i- ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INVESTORS Section 5.1 Risks of Investment............................................................. 24 Section 5.2 Investment Experience........................................................... 25 Section 5.3 Ability to Bear Risk............................................................ 25 Section 5.4 Receipt and Review of Documentation............................................. 25 Section 5.5 Acquisition for Own Account..................................................... 25 Section 5.6 No Public Market; Rule 144...................................................... 25 Section 5.7 Organization, Good Standing, Authority.......................................... 25 Section 5.8 Due Authorization............................................................... 25 Section 5.9 Accredited Investor............................................................. 26 Section 5.10 Acknowledgement Regarding Investors' Purchases of Notes........................ 26 Section 5.11 Legend......................................................................... 26 ARTICLE VI COVENANTS Section 6.1 Payment of Notes and Maintenance of Office...................................... 27 Section 6.2 Reports......................................................................... 27 Section 6.3 Taxes........................................................................... 27 Section 6.4 Stay, Extension and Usury Laws ................................................. 27 Section 6.5 Restricted Payments............................................................. 28 Section 6.6 Incurrence of Secured Funded Debt; Sale and Leaseback Transactions.............. 28 Section 6.7 Limitation on Restricted Subsidiary Indebtedness................................ 29 Section 6.8 Limitation on Asset Sales....................................................... 30 Section 6.9 Consolidation, Merger, Conveyance or Transfer................................... 31 Section 6.10 Corporate Existence............................................................ 31 Section 6.11 Limitation on Issuances of Common Stock........................................ 31 Section 6.12 Confidentiality................................................................ 32 Section 6.13 Stockholder Approval........................................................... 32 Section 6.14 Access to Information.......................................................... 32 Section 6.15 Voting Rights of Holders of the Series A Notes................................. 32 Section 6.16 Management Incentive Package .................................................. 33 Section 6.17 Business Interruption Insurance ............................................... 33 Section 6.18 Property Insurance............................................................. 33 Section 6.19 Liability Insurance............................................................ 33 ARTICLE VII PREPAYMENT OF THE NOTES Section 7.1 Optional Prepayments with Make-Whole Amount..................................... 33 Section 7.2 Maturity; Surrender, Etc........................................................ 34 Section 7.3 [INTENTIONALLY OMITTED]......................................................... 34

-ii- Section 7.4 Make-Whole Amount............................................................... 34 ARTICLE VIII DEFAULTS AND REMEDIES Section 8.1 Events of Default............................................................... 35 Section 8.2 Acceleration.................................................................... 37 Section 8.3 Other Remedies.................................................................. 38 Section 8.4 Waiver of Past Defaults......................................................... 38 Section 8.5 Control by Majority............................................................. 38 Section 8.6 Rights of Holders to Receive Payment............................................ 38 ARTICLE IX CONVERSION/EXCHANGE PROVISIONS Section 9.1 Conversion/Exchange of Series A Notes........................................... 38 Section 9.2 Exchange of Series B Notes...................................................... 40 Section 9.3 Issuance of Certificates........................................................ 40 Section 9.4 No Fractional Shares............................................................ 41 Section 9.5 Adjustment of Exchange Price.................................................... 41 Section 9.6 Reservation of Common Stock..................................................... 41 Section 9.7 Taxes........................................................................... 41 ARTICLE X REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES Section 10.1 Note Register.................................................................. 42 Section 10.2 Transfer, Conversion and Exchange of Notes..................................... 42 Section 10.3 Replacement of Notes........................................................... 42 ARTICLE XI GUARANTEES Section 11.1 Execution and Delivery of Guarantee Agreements................................. 42 Section 11.2 Subsidiary Guarantors May Consolidate, etc., on Certain Terms.................. 42 Section 11.3 Releases Following Sale of Assets.............................................. 43 Section 11.4 Application of Certain Terms and Provisions to the Subsidiary Guarantors....... 43 Section 11.5 Subordination.................................................................. 43 ARTICLE XII CONDITIONS TO CLOSING Section 12.1 Conditions to Obligations of the Investors..................................... 44

-iii- Section 12.2 Conditions to the Obligations of the Company................................... 45 ARTICLE XIII COLLATERAL AGENT Section 13.1 Appointment of Collateral Agent ............................................... 46 Section 13.2 Collateral Agent's Resignation ................................................ 46 Section 13.3 Standard of Conduct............................................................ 46 Section 13.4 Nature of Duties............................................................... 46 Section 13.5 Indemnification................................................................ 46 Section 13.6 Collateral Matters............................................................. 47 ARTICLE XIV MISCELLANEOUS Section 14.1 Expenses....................................................................... 47 Section 14.2 Survival....................................................................... 48 Section 14.3 Amendments and Waivers......................................................... 48 Section 14.4 Notices........................................................................ 49 Section 14.5 Regulatory Approvals........................................................... 49 Section 14.6 Pledge Agreements.............................................................. 50 Section 14.7 Execution in Counterparts...................................................... 50 Section 14.8 Binding Effect................................................................. 50 Section 14.9 Choice of Law; Choice of Forum; Jury Trial Waiver.............................. 50 Section 14.10 Severability.................................................................. 50 Section 14.11 No Waiver..................................................................... 51 Section 14.12 Further Assurances............................................................ 51 Section 14.13 Construction.................................................................. 51 Exhibit A Form of Series A Note Exhibit B Form of Series B Note Exhibit C Form of Registration Rights Agreement Exhibit D Form of Warrant Agreement Exhibit E Form of Guarantee Agreement Exhibit F Form of Milacron Pledge Agreement Exhibit G Form of Milacron Dutch Pledge Agreement Exhibit H Form of Milacron Capital Holdings B.V. Pledge Agreement Exhibit I Form of Preferred Stock Certificate of Designation Exhibit J Form of Serial Preference Stock Certificate of Designation

-iv- NOTE PURCHASE AGREEMENT NOTE PURCHASE AGREEMENT, dated as of March 12, 2004, by and among MILACRON INC., a Delaware corporation (the "Company"), and each of the investors set forth on the signature page hereto (each, an "Investor," and collectively, the "Investors," and together with the Company, the "Parties," and each, a "Party"). W I T N E S S E T H: WHEREAS, the Company is engaged in the manufacturing and selling of (i) plastics-processing equipment and supplies and (ii) industrial fluids for metalworking applications; WHEREAS, the Company requires additional capital to repay the aggregate principal amount of its $115 million 8.375% Senior Notes due March 15, 2004; WHEREAS, the Company desires to consummate a financing of newly invested funds by issuing to the Investors 20% Secured Step-Up Series A Notes due 2007, substantially in the form attached hereto as Exhibit A (the "Series A Notes") and 20% Secured Step-Up Series B Notes due 2007, substantially in the form attached hereto as Exhibit B (the "Series B Notes," and together with the Series A Notes, the "Notes"); WHEREAS, as an inducement to the Investors to purchase the Notes, the Company hereby agrees to (a) enter into the Registration Rights Agreement, substantially in the form attached hereto as Exhibit C; (b) enter into the Warrant Agreement, substantially in the form attached hereto as Exhibit D; (c) cause its subsidiary, Milacron Capital Holdings B.V., to enter into the Guaranty Agreement, substantially in the form attached hereto as Exhibit E; (d) enter into the Milacron Pledge Agreement, substantially in the form attached hereto as Exhibit F and the Milacron Dutch Pledge Agreement, substantially in the form attached hereto as Exhibit G; and (e) cause its Subsidiary, Milacron Capital Holdings B.V., to enter into the Milacron Capital Holdings B.V. Pledge Agreement, substantially in the form attached hereto as Exhibit H; WHEREAS, on the terms and subject to the conditions set forth herein, each of the Investors is willing to purchase the Series A Notes and the Series B Notes for the aggregate purchase price set forth next to its name on Attachment 1 hereto; and WHEREAS, the Parties desire to set forth the terms and conditions of and to provide for the issuance by the Company of the Notes described herein. NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS The following terms when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Accredited Investor" has the meaning set forth in Rule 501(a) under the Securities Act. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control", as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" shall have correlative meanings. "Agreement" means this Note Purchase Agreement (including any Schedules, Exhibits and Attachments hereto), as it may from time to time be amended, supplemented or modified in accordance with its terms. "Agreements and Instruments" has the meaning set forth in Section 4.6(a) hereof. "Attributable Debt" in respect of a Sale and Leaseback Transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. "Bankruptcy Law" means Title 11 of the U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the board of directors of the Company. "Board Resolution" means a resolution duly adopted by the Board of Directors of the Company, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted and to be in full force and effect on the date of such certification. "Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. -2- "Capital Stock" means: (i) in the case of a corporation, corporate stock; (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means: (i) United States dollars; (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition; (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500,000,000; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above; (v) commercial paper having one of the two highest ratings obtainable from Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in each case maturing within six months after the date of acquisition; and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (v) of this definition. "Certificate of Incorporation" means the Certificate of Incorporation of the Company. -3- "Closing" means the consummation of the transactions contemplated by this Agreement, including the sale and purchase of the Notes. "Closing Date" means the date of the Closing. "Collateral" means, collectively, all of the securities that are from time to time pledged to the Holders pursuant to any Transaction Document. "Collateral Agent" means Mizuho and any successor thereto in such capacity. "Collateral Agent Advances" has the meaning set forth in Section 13.6 hereof. "Common Stock" means the common stock, par value $1.00 per share, of the Company. "Company" has the meaning set forth in the Preamble hereof. "Company Recommendation" has the meaning set forth in Section 6.13 hereof. "Consolidated Net Tangible Assets" means, at any date, the total assets appearing on the most recent consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of a fiscal quarter of the Company, prepared in accordance with GAAP, less (i) all current liabilities (due within one year) as shown on such balance sheet, (ii) applicable reserves, (iii) investments in and advances to Unrestricted Subsidiaries which are not Subsidiaries at the time of such balance sheet or other entities accounted for on the equity method of accounting, and (iv) Intangible Assets and liabilities relating thereto. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Dilutive Issuance" has the meaning set forth in Section 9.5 hereof. "Disposition" means, with respect to any Person, any merger, consolidation or other business combination involving such Person (whether or not such Person is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of such Person's assets. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the Series A Maturity Date or the Series B Maturity Date. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). -4- "Euro Note Refinancing Condition" means the condition that either (i) the aggregate principal amount of Euro Notes have been repaid, repurchased, refinanced, redeemed, exchanged or otherwise retired or (ii) sufficient proceeds from a financing have been placed into escrow to repay, repurchase, refinance, redeem, exchange or otherwise retire the aggregate principal amount of Euro Notes, subject to release from escrow to the Company only for the purpose of such repayment, repurchase, refinancing, redemption, exchange or other retirement. "Euro Notes" means the 7.625% Guaranteed Bonds due 2005, issued by Milacron Capital Holdings B.V., and guaranteed by the Company. "Event of Default" has the meaning set forth in Section 8.1 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Act Filings" has the meaning set forth in Section 4.3(a) hereof. "Exchange Rate" means the Series A Exchange Rate or the Series B Exchange Rate, as the case may be. "Existing Indebtedness" means all Indebtedness in existence on date of the issue of the Notes. "Expenses" means all reasonable out-of-pocket expenses incurred by the Investors in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby, including, but not limited to, (i) all fees and expenses of counsel to the Investors, (ii) all travel and other expenses related to due diligence by the Investors and (iii) all fees incurred with respect to filings, applications and notice required to be made pursuant to Section 14.5 hereof. "Fair Market Value" means, (i) with respect to Common Stock and other securities listed on any national securities exchange or quoted on the Nasdaq Stock Market or the over-the-counter market, the average, calculated to two decimal places, of the weighted average daily trading prices of such stock over the ten Trading Day period ending on the Trading Day prior to calculation thereof as reported on Bloomberg, and (ii) with respect to assets or securities not listed on any national securities exchange or quoted on the Nasdaq Stock Market or the over-the-counter market, the fair value thereof as determined by the Board of Directors in good faith. "Financing Agreements" means the U.S. Notes Indenture, the Fiscal Agency Agreement, the Revolving Credit Facility and the Senior Secured Debt Facility. "Fiscal Agency Agreement" means that certain agreement, dated April 6, 2000, by and among Milacron Capital Holdings B.V., the Company, Deutsche Bank AG London and Deutsche Bank Luxembourg S.A. with respect to the Euro Notes. "4% Cumulative Preferred Stock" means the 60,000 shares of 4% Cumulative Preferred Stock of the Company, par value $100 per share. -5- "4% Cumulative Preferred Stockholder Consent" has the meaning set forth in Section 4.20(b) hereof. "Funded Debt" means any indebtedness maturing more than twelve months after the time of computation thereof, guarantees of Funded Debt or of dividends of others (except guarantees in connection with the sale or discount of accounts receivable, trade acceptances and other paper arising in the ordinary course of business), and in the case of any Restricted Subsidiary all preferred stock of such Restricted Subsidiary, and all Capital Lease Obligations. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Governmental Entity" means any international body or any nation or government, any state of political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government any corporation or other entity owned or controlled, through stock or capital or otherwise, by any of the foregoing. "Governmental Licenses" has the meaning set forth in Section 4.8 of this Agreement. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Guarantee Agreement" means the Guarantee Agreement, dated as of the Closing Date, entered into by Milacron Capital Holdings B.V. in favor of the Holders. "Holder" means a Person in whose name a Note is registered. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "HSR Approval" means the expiration or early termination of any applicable waiting period after any filing required by the HSR Act with respect to the acquisition of Preferred Stock contemplated by this Agreement. "Indebtedness" means at any time, without duplication, (i) all obligations for borrowed money, evidenced by bonds, debentures, notes, or other similar instruments, including bank loans, letters of credit and banker's acceptances, and (ii) Funded Debt. "Intangible Assets" shall mean the value (net of any applicable reserves), as shown on or reflected in such balance sheet, of: (i) all trade names, trademarks, licenses, patents, copyrights, service marks, goodwill and other like intangibles; (ii) organizational and -6- development costs; (iii) deferred charges (other than prepaid items such as insurance, taxes, interest, commissions, rents and similar items and tangible assets being amortized); and (iv) unamortized debt discount and expense, less unamortized premium. "Intercreditor Agreement" means the Agreement, dated as of March 12, 2004, by and among Credit Suisse First Boston, acting through its Cayman Islands branch, as Administrative Agent and Collateral Agent under the Senior Secured Debt Facility, and each of the Investors. "Interest Rate" means the Series A Interest Rate or the Series B Interest Rate, as the case may be. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. "Investments" means, all direct or indirect investments by the Company in other Persons (including Affiliates) in the form of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers, directors and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Investor" has the meaning set forth in the Preamble hereof. "Issue Date" means the date on which the Notes are originally issued pursuant to this Agreement. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Majority Holders" means the Holders of a majority in aggregate principal amount of the then outstanding Series A Notes and Series B Notes. "Make-Whole Amount" has the meaning set forth in Section 7.4 hereof. "Management Incentive Plan" means a new management incentive package which values the Company's Common Stock at $2.00 per share. "Material Adverse Effect" means, with respect to any Person, any change affecting, or condition having an effect on, such Person and its Subsidiaries, if any, (i) that is, or would reasonably be expected to be, materially adverse to the business, assets, liabilities, results of operations or condition (financial or otherwise) of such Person and its Subsidiaries, if any, taken as a whole, (ii) that will, or would reasonably be expected to, prevent or materially impair the ability of such Person to consummate the transactions contemplated by this Agreement, -7- provided, however, that any such change or effect having the results described in the foregoing (i) or (ii) that results from events or conditions which could reasonably be expected to arise from or be related to the maturity or termination of, or any default under, the Company's Indebtedness or receivables financing program shall not be considered when determining whether a Material Adverse Effect on such Person or its Subsidiaries has occurred. "Material Subsidiary" means a Subsidiary of the Company (i) the business, operations, affairs, assets, liabilities, financial condition, or properties of which are material to the business, operations, affairs, assets, liabilities, financial condition, or properties of the Company and its Subsidiaries taken as a whole, (ii) owning assets having an aggregate book value greater than $5,000,000, or (iii) that has been designated by the Board of Directors as a Material Subsidiary. "Milacron Capital Holdings B.V. Pledge Agreement" has the meaning set forth in Section 12.1(m) hereof. "Milacron Dutch Pledge Agreement" has the meaning set forth in Section 12.1(l). "Milacron Pledge Agreement" has the meaning set forth in Section 12.1(l) hereof. "Mizuho" means Mizuho International plc. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means, with respect to any Person, a certificate signed on behalf of such Person by two Officers of such Person. "Party" has the meaning set forth in Section Preamble hereof. "Patel Agreement" means the Exchange Agreement dated as of November 27, 2001 among the Company, Mahendra N. Patel, Nayana M. Patel and Manata Machinery Pvt. Ltd., as supplemented by the Supplementary Agreement thereto dated October 10, 2002, and as may be further amended or supplemented from time to time. "Payment Default" has the meaning set forth in Section 8.1(d) hereof. "Permitted Acquisition" means (1) the merger or consolidation of any Person into or with the Company or into or with any wholly-owned Restricted Subsidiary of the Company, or (2) the acquisition by the Company or any of its wholly-owned Restricted Subsidiaries of all or substantially all of the assets of any Person (or all or substantially all of the assets of a product line or division of any Person) not already a Restricted Subsidiary of the Company or 90% or -8- more of the capital stock of any such Person; provided that any such merger, consolidation or acquisition shall only be a Permitted Acquisition so long as no Default or Event of Default exists (or will result from such acquisition). "Permitted Investments" means (i) any Investment in the Company or any Restricted Subsidiary; (ii) any Investments in Cash Equivalents; (iii) any Investment in a Person (an "Acquired Person") if, as a result of such Investment, (a) the Acquired Person becomes a Restricted Subsidiary, or (b) the Acquired Person either (1) is merged, consolidated or amalgamated with or into the Company or a Restricted Subsidiary and the Company or such Restricted Subsidiary is the Surviving Person, or (2) transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (iv) Investments in accounts and notes receivable acquired in the ordinary course of business; and (v) any other Investments in an aggregate amount up to $5,000,000 plus, in the case of the disposition or repayment of any such Investment made pursuant to this clause (v) for cash, an amount equal to the lesser of the return of capital with respect to such Investment and the cost of such Investment, in either case, reduced (but not below zero) by the excess, if any, of the cost of the disposition of such Investment over the gain, if any, realized by the Company or Restricted Subsidiary, as the case may be, in respect of such disposition. "Permitted Liens" means (i) Liens on property of any corporation existing at the time such corporation becomes a Subsidiary; (ii) Liens on property existing at the time of acquisition thereof or incurred within 180 days of the time of acquisition thereof (including, without limitation, acquisition through merger or consolidation) by the Company or any Restricted Subsidiary; (iii) Liens on property hereafter acquired (or constructed) by the Company or any Restricted Subsidiary and created prior to, at the time of, or within 270 days after such acquisition through merger or consolidation (or the completion of such construction or commencement of commercial operation of such property, whichever is later) to secure or provide for the payment of all or any part of the purchase price (or the construction price) thereof; (iv) Liens in favor of the Company or any Restricted Subsidiary; (v) Liens in favor of the United States, any State or possession thereof or the District of Columbia, or any agency, department or other instrumentality thereof, to secure partial, progress, advance or other payments pursuant to any contract or provision of any statute; (vi) Liens incurred or assumed in connection with an issuance of revenue bonds the interest on which is exempt from Federal income taxation pursuant to Section 103(b) of the Internal Revenue Code; (vii) Liens securing the performance of any contract or undertaking not directly or indirectly in connection with the borrowing of money, the obtaining of advances or -9- credit or the securing of Funded Debt, if made and continuing in the ordinary course of business; (viii) Liens incurred (no matter when created) in connection with the Company's or a Restricted Subsidiary's engaging in leveraged or single investor lease transactions, provided that the instrument creating or evidencing any borrowings secured by such Lien shall provide that such borrowings are payable solely out of the income and proceeds of the property subject to such Lien and are not a general obligation of the Company or such Restricted Subsidiary; (ix) Liens held by banks to secure amounts due to such banks in the ordinary course of business or Liens under workers' compensation laws, unemployment insurance law or similar legislation, or good faith deposits in connection with bids, tenders, contracts or deposits to secure public or statutory obligations of the Company or any Restricted Subsidiary, or deposits of cash or obligations of the United States to secure surety and appeal bonds to which the Company or any Restricted Subsidiary is a party or in lieu of such bonds, or pledges or deposits for similar purposes in the ordinary course of business, or Liens imposed by law, such as laborers' or other employees', carriers', warehousemen's, mechanics', materialmen's and vendors' Liens and Liens arising out of judgments or awards against the Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary at the time shall be prosecuting an appeal or proceedings for review and with respect to which it shall have secured a stay of execution pending such appeal or proceedings for review, or Liens for taxes not yet subject to penalties for nonpayment or the amount or validity of which is being in good faith contested by appropriate proceedings by the Company or any Restricted Subsidiary, as the case may be, or minor survey exceptions, minor encumbrances, easements or reservations of, rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions or Liens as to the use of real properties, which Liens, exceptions, encumbrances, easements, reservations, rights and restrictions do not, in the opinion of the Company, in the aggregate materially detract from the value of said properties or materially impair their use in the operation of the business of the Company and its Restricted Subsidiaries; (x) Liens incurred to finance construction, alteration or repair of any Principal Property and improvements thereto prior to or within 270 days after completion of such construction, alteration or repair; (xi) any extension, renewal, refunding or replacement (or successive extensions, renewals, refundings or replacements), as a whole or in part, of any Lien referred to in the foregoing clauses (i) to (x), inclusive; provided however, that (I) such extension, renewal, refunding or replacement Lien shall be limited to all or a part of the same property that secured the Lien extended, renewed, refunded or replaced (plus improvements on such property) and (II) the Funded Debt secured by such Lien at such time is not increased; (xii) Liens securing the Senior Secured Debt Facility; or (xiii) Liens securing the Notes. -10- "Permitted Refinancing Indebtedness" means any Indebtedness that refinances any other Indebtedness, including any successive refinancings, so long as (a) such Indebtedness is in an aggregate principal amount (or if incurred with original issue discount, an aggregate issue price) not in excess of the sum of (i) the aggregate principal amount (or if incurred with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced, and (ii) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such refinancing, (b) the stated maturity of such Indebtedness is no earlier than the stated maturity of the Indebtedness being refinanced, and (c) the new Indebtedness shall not be senior in right of payment to the Indebtedness that is being refinanced. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Preferred Stock" means the 6.0% Series B Convertible Preferred Stock of the Company, par value $.01 per share. "Preferred Stock Certificate of Designation" means that certain Certificate of Designation of the Preferred Stock, setting forth the voting powers, designations, preferences, and other rights of the Preferred Stock and the qualifications, limitations and restrictions of such preferences and rights, substantially in the form attached hereto as Exhibit I. "Principal Property" shall mean any manufacturing plant located in the United States and owned and operated by the Company or any Restricted Subsidiary on or after the date hereof, and any manufacturing equipment owned by the Company or any Restricted Subsidiary on or after the date hereof in such manufacturing plant. For purposes of this definition, "Manufacturing equipment" is understood to be manufacturing equipment in such manufacturing plant directly used in the production of the Company's products and parts and components thereof, and not to include office equipment, computer equipment, rolling stock and other equipment not directly used in the production of the Company's products. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Closing Date, by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Payment" means (i) any dividend or other distribution declared or paid on any Capital Stock of the Company or any of its Restricted Subsidiaries (other than dividends or distributions payable solely in Capital Stock (other than Disqualified Stock) of the Company or such Restricted Subsidiary or dividends or distributions payable to the Company or any Restricted Subsidiary); (ii) any payment to purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any Restricted Subsidiary of the Company or other Affiliate of the Company (other than any Capital Stock owned by the Company or any Restricted Subsidiary); (iii) any payment to purchase, redeem, defease or otherwise acquire or retire, prior to maturity thereof, for value any Indebtedness that is subordinated in right of -11- payment or pari passsu to the Notes (not including any payments of revolving credit Indebtedness) ; or (iv) any Restricted Investment. "Restricted Subsidiary" means each Subsidiary other than Unrestricted Subsidiaries. "Revolving Credit Facility" means the credit facilities governed by the Amended and Restated Revolving Credit Agreement dated as of November 30, 1998 by and among the Company, Cincinnati Milacron Kunststoffmaschinen Europe GmbH, the lenders listed therein and Bankers Trust Company, as Agent, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced or replaced. "Rights Offering" means that certain rights offering with respect to the Company's outstanding Common Stock which may be consummated no later than the date that is 270 days after the date by which all outstanding Notes have been exchanged for shares of Preferred Stock pursuant to Article IX hereof. "Sale and Leaseback Transaction" has the meaning set forth in Section 6.6(b) hereof. "SEC" means the Securities and Exchange Commission. "Secured Funded Debt" means Funded Debt which is secured by any pledge of, or mortgage, security interest or other lien on any Principal Property of the Company or any Restricted Subsidiary. "Securities" has the meaning set forth in Section 5.1 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Senior Financial Officer" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. "Senior Secured Debt Facility" means the credit facilities governed by the Financing Agreement dated as of March 12, 2004 among the Company, each subsidiary of the Company listed as a "Borrower" on the signature pages thereto, each subsidiary of the Company listed as a "Guarantor" on the signature pages thereto, the lenders from time to time parties thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as administrative agent and collateral agent for the lenders, as amended, modified, extended, renewed, refunded or refinanced in whole or in part from time to time, whether by the same or any other lender or group of lenders. "Serial Preference Stock" means the authorized but unissued Serial Preference Stock of the Company, par value $1.00 per share. "Serial Preference Stock Certificate of Designation" means that certain Certificate of Designation of the Serial Preference Stock, dated as of the Closing Date, setting forth the voting powers, designations, preferences, and other rights of the Serial Preference Stock and the qualifications, limitations and restrictions of such preferences and rights, attached hereto as Exhibit I. -12- "Series A Conversion Date" has the meaning set forth in Section 9.1(a)(ii) hereof. "Series A Conversion Notice" has the meaning set forth in Section 9.1(a)(i) hereof. "Series A Conversion Price" means $2.00 per share of Common Stock. "Series A Directors" has the meaning set forth in Section 6.15 hereof. "Series A Exchange Rate" means, with respect to Series A Notes, a price of $200.00 per share of Preferred Stock, and with respect to Common Stock held by Holders upon conversion of Series A Notes, a ratio of one share of Preferred Stock for each one hundred shares of Common Stock exchanged. "Series A Interest Payment Date" means March 15 and September 15 of each year, commencing on September 15, 2004. "Series A Interest Rate" has the meaning set forth in Section 3.1(a)(i) hereof. "Series A Majority Holders" means the Holders of a majority in aggregate principal amount of the then outstanding Series A Notes. "Series A Maturity Date" has the meaning set forth in Section 2(a) hereof. "Series A Notes" has the meaning set forth in the Preamble hereof. "Series B Exchange Rate" means $200.00 per share of Preferred Stock. "Series B Interest Payment Date" means March 15 and September 15 of each year, commencing September 15, 2004. "Series B Interest Rate" has the meaning set forth in Section 3.2(a)(i) hereof. "Series B Majority Holders" means the Holders of a majority in aggregate principal amount of the then outstanding Series B Notes. "Series B Maturity Date" has the meaning set forth in Section 2(a) hereof. "Series B Notes" has the meaning set forth in the Preamble hereof. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. -13- "Stockholder Approval" has the meaning set forth in Section 4.22(a) hereof. "Subsidiary" means, with respect to any specified Person: (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (ii) any partnership, trust or limited liability company (a) the sole general partner or the managing general partner, manager or trustee of which is such Person or a Subsidiary of such Person or (b) the only general partners or managing members of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "Subsidiary Guarantor" means the subsidiary of Milacron Inc. that enters into a Guarantee Agreement pursuant to Section 11.1 hereof. "Surviving Person" means, with respect to any Person involved in or that makes any Disposition, the Person formed by or surviving such Disposition or the Person to which such Disposition is made. "Tax" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Internal Revenue Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax, fee, levy, duty, tariff, impost and other charges of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not imposed by any governing or taxing authority. "Trading Day" means any day on which the Common Stock is traded on the New York Stock Exchange or such other primary national securities exchange on which the Common Stock is then listed or quoted. "Transaction Documents" means all documents delivered in connection with the transactions contemplated by this Agreement, including the Registration Rights Agreement, the Warrant Agreement, the Milacron Pledge Agreement and the Milacron Capital Holdings B.V. Pledge Agreement. "Transaction Fee" means a one-time transaction fee equal to 2.0% of the aggregate principal amount of the Notes, less the amount of the $250,000 work fee paid to the Investors prior to the Closing Date. "Unrestricted Subsidiary" means Milacron Commercial Corp., Milacron Assurance Ltd., Amertool Services, Inc., Subsidiaries of the foregoing, and other Subsidiaries designated as Unrestricted Subsidiaries from time to time by the Board of Directors. -14- "U.S. Notes" means the 8.375% Notes due 2004, issued by the Company. "U.S. Notes Indenture" means that certain agreement, dated March 16, 1994, by and among the Company and Bankamerica National Trust Company, as indenture trustee, with respect to the U.S. Notes. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of directors, general partners, managers or trustees of such Person. "Warrant Agreement" means that certain Contingent Warrant Agreement, dated as of the Closing Date, by and among the Company and the Investors. "Warrants" means the contingent warrants that may be issued pursuant to the Warrant Agreement. ARTICLE II PURCHASE AND SALE OF THE NOTES; CLOSING (a) The Company has duly authorized $30,000,000 in aggregate principal amount of the Series A Notes and $70,000,000 in aggregate principal amount of the Series B Notes for issuance to the Investors on the terms and subject to the conditions set forth in this Agreement. The Series A Notes will bear interest at the Series A Interest Rate on the principal amount of the Series A Notes and will mature on March 15, 2007 (the "Series A Maturity Date"), unless earlier converted, exchanged or prepaid in accordance with the terms hereof, and will be in substantially the form of Exhibit A attached hereto. The Series B Notes will bear interest at the Series B Interest Rate on the principal amount of the Series B Notes and will mature on March 15, 2007 (the "Series B Maturity Date"), unless earlier exchanged or prepaid in accordance with the terms hereof, and will be in substantially the form of Exhibit B attached hereto. (b) Subject to the terms and conditions of this Agreement, each of the Investors agrees, severally and not jointly, to purchase at a purchase price of 100% of the principal amount thereof for cash from the Company at the Closing, and the Company agrees to sell and issue to each of the Investors at the Closing, (i) an aggregate principal amount of Series A Notes equal to the amount set forth opposite such Investor's name on Attachment 1 hereto and (ii) an aggregate principal amount of Series B Notes equal to the amount set forth opposite such Investor's name on Attachment 1 hereto. The Company's agreements with each of the Investors are separate agreements, and the sale of Notes to each of the Investors is a separate sale. The Closing shall take place as of 10:00 a.m., New York City time, on the Closing Date, which shall be the Business Day upon which the conditions set forth in Article 12 (other than delivery of items to be delivered at the Closing and other than satisfaction of those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the delivery of such items and the satisfaction or waiver of such conditions at the Closing) are first satisfied or waived or such later date as may be mutually agreed upon in writing by the Company and the Investors. -15- (c) Each Note shall be governed by, and the rights and the benefits of the Investors determined in accordance with, the terms and conditions of this Agreement. (d) At the Closing, (i) each Party will deliver executed counterparts of each Transaction Document to which it is a party; (ii) the Company shall deliver to each Investor (A) a Series A Note in the principal amount stated on Attachment 1 opposite such Investor's name and (B) a Series B Note in the principal amount stated on Attachment 1 opposite such Investor's name; and (iii) each Investor shall deliver by wire transfer, to an account or accounts designated by the Company, immediately available funds equal to the aggregate purchase price stated on Attachment 1 opposite such Investor's name. The Company shall provide each of the Investors with information as to such wire transfers, including information as to the account or accounts to which funds are to be transferred and the amount of funds to be transferred to each such account, no later than the Business Day prior to the Closing. (e) The obligations of each Investor hereunder and under each of the Transaction Documents are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor hereunder or under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby or by the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including the rights arising out of this Agreement and out of each of the Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. ARTICLE III INTEREST AND REPAYMENT Section 3.1 Series A Notes. (a) Interest on the Series A Notes. (i) All interest on the Series A Notes will be payable semi-annually in arrears on each Series A Interest Payment Date. Subject to Section 3.1(a)(iii) below, interest on the Series A Notes shall be paid as follows (the "Series A Interest Rate"): (A) on the first Series A Interest Payment Date, (i) cash at a rate of 12% per annum and (ii) additional Series A Notes with a principal amount equal to the interest accrued from the Issue Date at a rate of 8% per annum; (B) on the next following Series A Interest Payment Date, (i) cash at a rate of 16% per annum and (ii) additional Series A Notes with a principal amount equal to the interest accrued from the last Series A Interest Payment Date at a rate of 8% per annum; -16- (C) on the next following Series A Interest Payment Date, (i) cash at a rate of 20% per annum and (ii) additional Series A Notes with a principal amount equal to the interest accrued from the last Series A Interest Payment Date at a rate of 4% per annum; and (D) on the next following Series A Interest Payment Date and thereafter until the Series A Maturity Date, cash at a rate of 24% per annum. (ii) If the Company is prohibited at any time by the terms of any of its Financing Agreements from paying interest on the Series A Notes in cash, any such interest shall be payable in kind at a rate that is 2.0% per annum in excess of the portion of the then applicable Series A Interest Rate payable in cash; provided however, that in no event shall the interest payable on the Series A Notes exceed 24.99% at any time. (iii) Notwithstanding any other provision contained herein, if the Company obtains the Stockholder Approval on or before July 29, 2004, the Series A Interest Rate shall be reset, retroactively from the Issue Date, to 6% per annum, payable in cash. (iv) Each payment of cash interest on the Series A Notes will be made to each Holder by certified or bank cashier's check or wire transfer of immediately available funds to such account as such Holder specifies in writing to the Company at least five Business Days before such payment is to be made. Any such written instructions may provide that the information contained therein shall continue to be in effect with respect to subsequent interest payments until thereafter modified by written instructions of such Holder, which modified instructions shall take effect as of the next Series A Interest Payment Date occurring more than five Business Days after delivery of such modified instructions. (b) Payments and Computations. (i) The Company will pay all sums becoming due on each Series A Note for interest or principal, without the presentation or surrender of the Series A Note or the making of any notation thereon, except that if a Series A Note is paid in full, following such payment, the Series A Note shall be surrendered to the Company at its principal office for cancellation. (ii) Interest on each Series A Note shall be calculated for the actual number of days (including the first day but excluding the last day of any relevant period) elapsed and shall be computed on the basis of a 360-day year of twelve 30-day months. (iii) If a payment date is not a Business Day at a place of payment, then (notwithstanding any other provision of this Agreement or the Series A Notes) payment of interest or principal otherwise due on such date shall instead be made at that place on the next succeeding Business Day and no interest shall accrue on such payment for the intervening period. (c) Payment at Maturity, Prepayment or Upon Conversion/Exchange. The principal amount of each Series A Note, together with any accrued interest thereon, shall be due and payable in full in cash on the earlier of (i) the Series A Maturity Date, or (ii) such other date as the Series A Note becomes due and payable pursuant to this Agreement. Payment of principal -17- of the Series A Notes will be made to each Holder by certified or bank cashier's check or wire transfer of immediately available funds, at such address and to such account as such Holder shall specify in writing to the Company at least five Business Days before such payment is to be made. Section 3.2 Series B Notes. (a) Interest on the Series B Notes. (i) All interest on the Series B Notes will be payable semi-annually in arrears on each Series B Interest Payment Date. Subject to Section 3.2(a)(iii) below, interest on the Series B Notes shall be paid as follows (the "Series B Interest Rate"): (A) on the next first Series B Interest Payment Date, (i) cash at a rate of 12% per annum and (ii) additional Series B Notes with a principal amount equal to the interest accrued from the Issue Date at a rate of 8% per annum; (B) on the next following Series B Interest Payment Date, (i) cash at a rate of 16% per annum and (ii) additional Series B Notes with a principal amount equal to the interest accrued the last Series B Interest Payment Date at a rate of 8% per annum; (C) on the next following Series B Interest Payment Date, (i) cash at a rate of 20% per annum and (ii) additional Series B Notes with a principal amount equal to the interest accrued from the last Series B Interest Payment Date at a rate of 4% per annum; and (D) on the following Series B Interest Payment Date and thereafter until the Series B Maturity Date, cash at a rate of 24% per annum. (ii) If the Company is prohibited at any time by the terms of any of its Financing Agreements from paying interest on the Series B Notes in cash, any such interest shall be payable in kind at a rate that is 2.0% per annum in excess of the portion of the then applicable Series B Interest Rate payable in cash; provided however, that in no event shall the interest payable on the Series B Notes exceed 24.99% at any time. (iii) Notwithstanding any other provision contained herein, if the Company obtains the Stockholder Approval on or before July 29, 2004, the Series B Interest Rate shall be reset, retroactively from the Issue Date, to 6% per annum, payable in cash. (iv) Each payment of cash interest on the Series B Notes will be made to each Holder by certified or bank cashier's check or wire transfer of immediately available funds to such account as such Holder specifies in writing to the Company at least five Business Days before such payment is to be made. Any such written instructions may provide that the information contained therein shall continue to be in effect with respect to subsequent interest payments until thereafter modified by written instructions of such Holder, which modified instructions shall take effect as of the next Series B Interest -18- Payment Date occurring more than five Business Days after delivery of such modified instructions. (b) Payments and Computations. (i) The Company will pay all sums becoming due on each Series B Note for interest or principal, without the presentation or surrender of the Series B Note or the making of any notation thereon, except that if a Series B Note is paid in full, following such payment, the Series B Note shall be surrendered to the Company at its principal office for cancellation. (ii) Interest on each Series B Note shall be calculated for the actual number of days (including the first day but excluding the last day of any relevant period) elapsed and shall be computed on the basis of a 360-day year of twelve 30-day months. (iii) If a payment date is not a Business Day at a place of payment, then (notwithstanding any other provision of this Agreement or the Series B Notes) payment of interest or principal otherwise due on such date shall instead be made at that place on the next succeeding Business Day and no interest shall accrue on such payment for the intervening period. (c) Payment at Maturity, Prepayment or Upon Exchange. The principal amount of each Series B Note, together with any accrued interest thereon, shall be due and payable in full in cash on the earlier of (i) the Series B Maturity Date, or (ii) such other date as the Series B Note becomes due and payable pursuant to this Agreement. Payment of principal on the Series B Notes will be made to each Holder by certified or bank cashier's check or wire transfer of immediately available funds, at such address and to such account as such Holder shall specify in writing to the Company at least five Business Days before such payment is to be made. ARTICLE IV REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY The Company hereby represents and warrants to and agrees with the Investors as follows as of the date hereof: Section 4.1 Incorporation, Standing, Etc. Each of the Company and its Material Subsidiaries is duly organized, validly existing and, to the extent that such concept is known in the jurisdiction of its incorporation or organization, in good standing under the laws of its jurisdiction of incorporation or organization, has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, to enter into this Agreement and the other Transaction Documents to which each is a party and, except to the extent Stockholder Approval will be required to do so, to perform its obligations hereunder and thereunder. The Company has the corporate power and authority to issue the Notes and, except to the extent Stockholder Approval will be required to do so, perform its obligations thereunder. The Company has, by all necessary corporate action, except to the extent Stockholder Approval will be required to do so, duly authorized the execution and delivery of this Agreement and the other Transaction Documents and the performance of its obligations hereunder and thereunder. The Company has, by all necessary corporate action, duly -19- authorized the execution and delivery of the Notes and, except to the extent Stockholder Approval will be required to do so, the performance of its obligations thereunder. Section 4.2 Subsidiaries; Capitalization. (a) Schedule 4.2(a) sets forth a list of each Subsidiary of the Company. (b) All of the outstanding shares of Capital Stock of the Company are duly authorized, validly issued, fully paid and non-assessable. Except as disclosed on Schedule 4.2(b), all of the outstanding Capital Stock or Equity Interests of the Company's Subsidiaries are duly authorized, validly issued, fully paid and non-assessable, and all such Capital Stock or Equity Interests are owned beneficially and of record by the Company, either directly or through wholly-owned Subsidiaries, free and clear of any Lien other than Liens securing the Senior Secured Debt Facility and the Notes. (c) Except as disclosed on Schedule 4.2(c), neither the Company nor any of its Subsidiaries has outstanding any securities convertible into or exchangeable for any of its Capital Stock nor does it have outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, any of its Capital Stock or securities convertible into or exchangeable for any of its Capital Stock. All shares of Common Stock, Preferred Stock and Serial Preference Stock will, if and when issued in accordance with the terms of this Agreement and the Notes, be duly and validly issued, fully paid and non-assessable and free from all Liens (other than any Liens created by Holders). Section 4.3 SEC Reports; Financial Statements. (a) The Annual Report on Form 10-K for the year ended December 31, 2002 filed by the Company, and all other reports filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since December 31, 2002 (collectively, the "Exchange Act Filings") through the Closing Date, complied and will comply (as the case may be) as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder. (b) The financial statements of the Company and its consolidated subsidiaries included in the Exchange Act Filings present fairly in all material respects the consolidated financial condition of the Company and its consolidated Subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries for the respective periods covered thereby, all in conformity with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and subject, in the case of unaudited statements, to normal year-end audit adjustments). Section 4.4 Qualification. Each of the Company and its Subsidiaries is duly qualified and, to the extent that such concept is known in the applicable jurisdiction, in good standing as a foreign corporation or organization authorized to do business in each jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business makes such qualification necessary, except where the failure to be so qualified and in good standing could not, individually or in the aggregate, result in a Material Adverse Effect. -20- Section 4.5 Authorization of Agreement and Notes. (a) This Agreement has been duly executed and delivered by the Company and constitutes a valid, binding and enforceable obligation of the Company, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (b) When, on the Closing Date, the Notes and the Transaction Documents have been duly executed and delivered by the Company and the Notes have been paid for by the Investors in accordance with the terms of this Agreement, the Notes and the Transaction Documents will constitute valid, binding and enforceable obligations of the Company, except to the extent Stockholder Approval will be required to perform certain obligations, and subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). Section 4.6 Absence of Defaults and Conflicts. (a) Neither of the Company nor any of its Material Subsidiaries is in violation of its respective certificate of incorporation, bylaws or other charter documents or is in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which any of them is a party or by which any of them may be bound, or to which any of the property or assets of the Company or its Material Subsidiaries is subject (collectively, "Agreements and Instruments"); and the execution, delivery and performance of this Agreement and the Transaction Documents by the Company in connection with the transactions contemplated hereby and thereby, and the consummation of the transactions contemplated herein and therein (including the issuance of the Notes) and compliance by the Company and its Subsidiaries with their respective obligations hereunder and thereunder, do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default (or an event that with notice of lapse of time or both would become a default) under, require the Company to conduct an offer to repurchase any outstanding Obligations in accordance with the documents establishing the terms under which such Obligations were incurred, give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to such Agreements and Instruments, and, following Stockholder Approval, nor will such action result in any violation of the provisions of the certificate of incorporation, bylaws or other charter documents of the Company or any of its Subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality, stock exchange or court, domestic or foreign, having jurisdiction over either of the Company, any of its Subsidiaries or any of the assets or properties of the Company and its Subsidiaries. (b) There are no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provisions, in each case, where applicability depends on the ownership level of a stockholder or group, under the Company's certificate of incorporation or the laws of the State of Delaware that would be violated by, or that, except as disclosed in Schedule 4.6(b), is or reasonably could be expected to -21- become applicable to the Investors as a result of, the Investors and the Company fulfilling their obligations or exercising their rights under the Notes or the Transaction Documents. Section 4.7 Absence of Proceedings. Except as disclosed in Schedule 4.7, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or to the knowledge of the Company threatened, against or affecting the Company or any of its Subsidiaries, or any of the property or assets of the Company or Material Subsidiaries that, if determined adversely to the Company or any of its Subsidiaries, would individually or in the aggregate have a Material Adverse Effect. There has not been, and to the knowledge of the Company there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act within the last five years. Section 4.8 Possession of Licenses and Permits. Except as disclosed in Schedule 4.8: (i) each of the Company and its Subsidiaries possesses such material permits, certificates, licenses, approvals, consents, orders and other authorizations (collectively, "Governmental Licenses") issued by the appropriate Federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by it or planned to be conducted by it; (ii) each of the Company and its Subsidiaries is in material compliance with the terms and conditions of all of its Governmental Licenses; (iii) all of the Governmental Licenses are valid and in full force and effect; and (iv) neither the Company nor any of its Subsidiaries has received any notice of, nor do any of them have any knowledge of any pending or threatened (or any basis therefor), proceedings relating to the revocation, withdrawal, cancellation, modification, suspension or non-renewal of any Governmental Licenses, in each case except where the failure to be in compliance, individually or in the aggregate, would not result in a Material Adverse Effect. Section 4.9 No Violations of Laws. Neither of the Company nor any of its Subsidiaries has violated any law, in each case the violation of which, together with any other such violations, would have a Material Adverse Effect. Section 4.10 Internal Accounting Controls. The books, records and accounts of each of the Company and its Subsidiaries accurately and fairly reflect, in all material respects, in reasonable detail, the transactions in and dispositions of the assets of the Company and its Subsidiaries, respectively. Each of the Company and its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded amount for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Section 4.11 Tax Returns and Payments. The Company and its Subsidiaries have filed all income tax returns required by law to be filed by them and have paid all Taxes shown as due on such returns and all other material Taxes and other governmental charges levied upon -22- them and their respective properties, assets, income and franchises, to the extent such Taxes have become due and payable and before they have become delinquent, except for any Taxes the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or its Subsidiaries, as the case may be, have established adequate reserves in accordance with GAAP. Section 4.12 Title to Properties; Liens. Except as disclosed in Schedule 4.12, each of the Company and its Subsidiaries has good and marketable title to all of its material properties and assets, free and clear of all Liens, except for Permitted Liens. Section 4.13 Patents, Trademarks, Authorizations, etc. Except as disclosed in Schedule 4.13, each of the Company and its Subsidiaries owns, possesses or has the right to use (without any known material conflict with the rights of others) all patents, trademarks, service marks, trade names, copyrights, licenses and authorizations which are necessary to the conduct of its business as currently conducted. Section 4.14 Governmental Consents. Except as may be required to be obtained or made under the Securities Act and applicable state securities laws in connection with the exercise of any registration rights of a Holder provided for in the Registration Rights Agreement, and except for filings to obtain the HSR Approval, neither the Company nor any of its Subsidiaries is required to procure, make or file any consent, approval or authorization of, or any notice to, of filing, registration or qualification with, any court or administrative or governmental body in order to execute and deliver this Agreement and the Notes and to perform its obligations hereunder and under any and all Transaction Documents. Section 4.15 Material Events. Except as disclosed in the Exchange Act Filings, since September 30, 2003, there has not been with respect to the Company and its Subsidiaries any event which could reasonably be expected to result in a Material Adverse Effect. Section 4.16 No Undisclosed Fees. Except as disclosed on Schedule 4.16, there are no fees or payments to be made by the Company to bankers, brokers or agents with regard to the issue and delivery of the Notes. Section 4.17 No Transactions with Affiliates. Except as disclosed in Schedule 4.17 and except for transactions between or among the Company and any of its Subsidiaries or among the Company's Subsidiaries, neither the Company nor any of its Subsidiaries is presently party to any material transaction with an Affiliate thereof on terms any less favorable to the Company or such Subsidiary than would have been obtainable in arm's length dealing with a Person not an Affiliate. Section 4.18 Registration Rights. Except as disclosed on Schedule 4.18, there are no contracts, agreements or understandings between the Company and any other Person granting such Person the right to require the Company to file a registration statement under the Securities Act with respect to any securities owned or to be owned by such a Person or to require the Company to include such securities in the securities registered pursuant to any of the registration statements filed by the Company under the Securities Act. -23- Section 4.19 Private Placement. Neither the Company nor any Person acting on the Company's behalf has sold or offered to sell or solicited any offer to buy the Notes by means of any form of general solicitation or advertising. Neither the Company nor any of its Affiliates nor any Person acting on the Company's behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of an exemption from registration under the Securities Act in connection with the offer and sale of the Notes as contemplated hereby or (ii) cause the offering of the Notes pursuant to this Agreement to be integrated with other securities offerings by the Company for purposes of any applicable law, regulation or shareholder approval provisions, including under the rules and regulations of the New York Stock Exchange. Section 4.20 Vote Required. (a) The affirmative vote of (i) the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon is the only vote of the holders of any class or series of the Company's Equity Interests necessary to increase the number of shares of the Company's authorized Common Stock to underlie the Preferred Stock, the Warrants and the Rights Offering, and (ii) the holders of a majority of the outstanding shares of Common Stock and 4% Cumulative Preferred Stock, voting together as a single class, is the only vote of the holders of any class or series of the Company's Equity Interests necessary to approve the issuance of the Preferred Stock under the shareholder approval policy of the New York Stock Exchange (the affirmative votes described in clauses (i) and (ii) of this sentence, collectively the "Stockholder Approval"). (b) The affirmative consent of the holders of two-thirds of the outstanding shares of 4% Cumulative Preferred Stock entitled to vote thereon ("4% Cumulative Preferred Stockholder Consent") is the only vote of the holders of any class or series of the Company's Equity Interests necessary to enable the Preferred Stock to be ranked senior in right of dividends and payment upon liquidation to the 4% Cumulative Preferred Stock. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INVESTORS Each of the Investors, severally and not jointly and as to itself only, represents and warrants to and agrees with the Company that as of the date hereof: Section 5.1 Risks of Investment. Such Investor recognizes that the purchase of the Notes and any securities which may be issued upon the conversion or exchange thereof (collectively, the "Securities") involves a high degree of risk including the following: (i) an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in the Company and purchasing the Securities; (ii) the Investor may not be able to liquidate its investment; (iii) transferability of the Securities is restricted; and (iv) in the event of a disposition of the Securities, the Investor could sustain the loss of its entire investment. -24- Section 5.2 Investment Experience. Such Investor has prior investment experience. To the extent it has deemed appropriate, such Investor has retained and relied upon professional advice regarding the investment, tax and legal merits and consequences of this Agreement and its purchase of Notes hereunder. Section 5.3 Ability to Bear Risk. By reason of its management's business or financial experience, such Investor has the capacity to protect its own interests in connection with the transaction contemplated hereby, and is able to bear the economic risk which it hereby assumes. Section 5.4 Receipt and Review of Documentation. Such Investor has been furnished by the Company during the course of this transaction with information regarding the Company which such Investor's management has requested, has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the terms and conditions of the Securities, and has received any additional information which its management has requested. Section 5.5 Acquisition for Own Account. Such Investor is acquiring the Securities for its own account for investment only, and not with a view towards their distribution in violation of applicable securities laws. Section 5.6 No Public Market; Rule 144. (a) Such Investor understands that there currently is no public market for the Notes, the Preferred Stock or the Serial Preference Stock. (b) Such Investor acknowledges and agrees that the shares of Common Stock, Preferred Stock or Serial Preference Stock such Investor may receive upon a conversion or exchange of the Notes must be held indefinitely unless such shares are subsequently registered under the Securities Act or an exemption from such registration is available. Such Investor has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Exchange Act) and the number of shares being sold during any three-month period not exceeding specified limitations. Section 5.7 Organization, Good Standing, Authority. Such Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with requisite power and authority to enter into this Agreement and the Transaction Documents to which it is to be a party and to consummate the transactions contemplated hereby and thereby, including the purchase of the Notes to be acquired by it hereunder. Section 5.8 Due Authorization. The execution and delivery of, and the performance by such Investor of its obligations under, this Agreement and the other Transaction Documents to which it is a party have been duly and validly authorized and, upon execution and -25- delivery thereof, this Agreement and the other Transaction Documents to which it is a party will constitute the legal, valid, binding obligations of such Investor, enforceable against such Investor in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). Section 5.9 Accredited Investor. Such Investor is: (a) an institutional Accredited Investor, and (b) aware that the sale of Securities to it is being made in reliance on the exemption from the registration requirements provided by Section 4(2) of the Securities Act and the regulations promulgated thereunder. Section 5.10 Acknowledgement Regarding Investors' Purchases of Notes. Such Investor acknowledges that it is not relying upon any person, firm or corporation other than the Company in making its investment or decision to invest in the Notes. Such Investor represents to the other Investor and the Company that it has been solely responsible for its own "due diligence" investigation of the Company and its management personnel and business, and for its own analysis of the merits and risks of this investment. Such Investor agrees that neither of the Investors nor its controlling persons, officers, directors, partners, agents or employees shall be liable to the other Investor for any actions taken in connection with the purchase of Notes in accordance with the terms of this Agreement. Section 5.11 Legend. Each Investor acknowledges that each certificate representing Securities will contain a legend substantially to the following effect: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR FOREIGN SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. Certificates evidencing Securities shall not be required to contain such legend (i) following any sale of such Securities pursuant to an effective registration statement covering the resale of such Securities under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144 under the Securities Act, (iii) if such Securities are eligible for sale under Rule 144(k), or (iv) if such legend is not, in the opinion of counsel to the Company, required in the circumstances under applicable requirements of the Securities Act. -26- ARTICLE VI COVENANTS The Company hereby covenants and agrees for the benefit of each Holder so long as any of the Notes remain outstanding as follows: Section 6.1 Payment of Notes and Maintenance of Office. The Company will punctually pay or cause to be paid the principal and interest due in respect of each Note according to the terms thereof and hereof and will maintain an office within the continental boundaries of the United States where notices, presentations and demands in respect of this Agreement and the Notes may be made upon them and will notify the Holders of such Notes of any change of location of such office. Such office is presently maintained at 2090 Florence Avenue, Cincinnati, Ohio 45206. Section 6.2 Reports. Whether or not required by the SEC, the Company shall file with or furnish to the SEC, within the time periods specified in the SEC's rules and regulations, periodic reports on Forms 10-Q and 10-K and current reports on Form 8-K (or any successor forms). Section 6.3 Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders. Section 6.4 Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any rights of the Holders, but shall suffer and permit the execution of every such right as though no such law has been enacted. Notwithstanding any provision to the contrary contained in any Note or Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Notes for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law, and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Notes exceed such maximum lawful rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Notes is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the maximum lawful rate of interest applicable to the Notes from the effective date forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the maximum lawful rate is paid by the Company to any Investor with respect to indebtedness evidenced by the Notes, such excess shall be applied by such Investor to the unpaid principal -27- balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Investor's election. Section 6.5 Restricted Payments. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment, unless at the time of and immediately after giving effect to the proposed Restricted Payment (with the value of any such Restricted Payment, if other than cash, to be determined by the Board of Directors, whose determination shall be conclusive and evidenced by a board resolution), (i) no Default or Event of Default (and no event that, after notice or lapse of time, or both, would become an "event of default" under the terms of any Indebtedness of the Company or its Restricted Subsidiaries) shall have occurred and be continuing or would occur as a consequence thereof and (ii) the aggregate amount of all Restricted Payments made after the Issue Date shall not exceed $5,000,000; provided, however, that this Section 6.5 shall not prohibit the Company or any Restricted Subsidiary from making Restricted Payments (x) in respect of the 4% Cumulative Preferred Stock, (y) in connection with employee stock incentive programs, other employee benefit arrangements or director compensation commitments or (z) in respect of the Euro Notes. Section 6.6 Incurrence of Secured Funded Debt; Sale and Leaseback Transactions. (a) The Company will not itself, and will not permit any Restricted Subsidiary to, incur, issue, assume, guarantee or create any Secured Funded Debt, without effectively providing concurrently with the incurrence, issuance, assumption, guaranty or creation of any such Secured Funded Debt that the Notes shall be secured equally and ratably with (or prior to) such Secured Funded Debt, so long as such Secured Funded Debt shall be secured by a Lien, unless, after giving effect thereto, the sum of the aggregate amount of all outstanding Secured Funded Debt of the Company and its Restricted Subsidiaries together with all Attributable Debt in respect of Sale and Leaseback Transactions relating to a Principal Property (with the exception of Attributable Debt which is excluded pursuant to clauses (b)(i) to (vi) below), would not exceed 10% of Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries; provided, however, that this paragraph shall not apply to, and there shall be excluded from Secured Funded Debt in any computation under this clause (a), Funded Debt secured by Permitted Liens or (b) Funded Debt in an aggregate principal amount not to exceed $250,000,000. (b) The Company will not, nor will it permit any Restricted Subsidiary to, enter into any arrangement with any person providing for the leasing by the Company or any Restricted Subsidiary of any Principal Property of the Company or any Restricted Subsidiary, which Principal Property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such person (a "Sale and Leaseback Transaction") unless, after giving effect thereto, the aggregate amount of all Attributable Debt with respect to all such Sale and Leaseback Transactions plus all Secured Funded Debt (with the exception of Funded Debt secured by Permitted Liens) would not exceed 10% of Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries. This covenant shall not apply to, and there shall be excluded from Attributable Debt in any computation under clause (a) or this clause (b), Attributable Debt with respect to, any Sale and Leaseback Transaction if: -28- (i) the Company or a Restricted Subsidiary is permitted to create Funded Debt secured by a Permitted Lien on the Principal Property to be leased, in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction, without equally and ratably securing the Notes; (ii) the Company or a Restricted Subsidiary within 270 days after the sale or transfer shall have been made by the Company or a Restricted Subsidiary shall apply an amount in cash equal to the greater of (I) the net proceeds of the sale or transfer of the Principal Property leased pursuant to such arrangement or (II) the Fair Market Value of the Principal Property so leased at the time of entering into such arrangement to the retirement of Secured Funded Debt of the Company or any Restricted Subsidiary (other than Secured Funded Debt owned by the Company or any Restricted Subsidiary); provided, that the amount to be applied to such retirement shall be reduced by the aggregate principal amount of other Secured Funded Debt voluntarily retired by the Company within 270 days after such sale or transfer (notwithstanding the foregoing, no retirement referred to in this item (ii) may be effected by payment at maturity or pursuant to any mandatory sinking fund payment or any mandatory prepayment provision); (iii) the Company or a Restricted Subsidiary applies the net proceeds of the sale or transfer of the Principal Property leased pursuant to such transaction to investment in another Principal Property within 270 days prior or subsequent to such sale or transfer; provided that this exception shall apply only if such proceeds invested in such other Principal Property shall not exceed the total acquisition, repair, alteration and construction cost of the Company or any Restricted Subsidiary in such other Principal Property less amounts secured by any purchase money or construction mortgages on such Principal Property; (iv) the effective date of any such arrangement is within 270 days of the acquisition of the Principal Property (including, without limitation, acquisition by merger or consolidation) or the completion of construction and commencement of operation thereof, whichever is later; (v) the lease in such Sale and Leaseback Transaction is for a term, including renewals, of not more than three years; or (vi) such Sale and Leaseback Transaction is entered into between the Company and a Restricted Subsidiary or between Restricted Subsidiaries. Section 6.7 Limitation on Restricted Subsidiary Indebtedness. (a) The Company will not permit any of its Restricted Subsidiaries to contract, create, incur, assume or suffer to exist any Indebtedness, except: (i) The Notes and any other Indebtedness of the Company and the Subsidiary Guarantor whether now existing or incurred hereafter; (ii) Existing Indebtedness of Restricted Subsidiaries (other than the Subsidiary Guarantor); -29- (iii) Indebtedness of a Restricted Subsidiary (other than the Subsidiary Guarantor) owing to and held by the Company or another Restricted Subsidiary; (iv) Any undrawn amounts under the Revolving Credit Facility; (v) Indebtedness of a Restricted Subsidiary (other than the Subsidiary Guarantor) acquired as a result of a Permitted Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition of an asset securing such Indebtedness); provided that (i) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition, (ii) at the time of such Permitted Acquisition, such Indebtedness does not exceed 50% of the then total Fair Market Value of the Subsidiary, or of the asset so acquired, as the case may be, (iii) so long as, before and after giving effect to such Permitted Acquisition, no Default or Event of Default shall have occurred or would result therefrom, and (iv) such Indebtedness is not recourse to any assets of the Company or its Subsidiaries other than the Subsidiary and assets so acquired; (vi) additional Indebtedness of the Restricted Subsidiaries (other than the Subsidiary Guarantor) not otherwise permitted hereunder not exceeding $250,000,000 in aggregate principal amount at any time outstanding; (vii) Indebtedness incurred by a Restricted Subsidiary (other than the Subsidiary Guarantor) in connection with any cash management credit facility agreements entered into between the Restricted Subsidiaries and banks providing for the zero balancing between cash accounts held by any of the Restricted Subsidiaries and any rights of set off of credits and debits of any of the Restricted Subsidiaries with the bank, provided that the debt outstanding at any one time does not exceed $20,000,000; (viii) Indebtedness incurred by a Restricted Subsidiary (other than the Subsidiary Guarantor) under interest rate agreements, currency exchange agreements, commodity price protection agreements or other similar agreements entered into for the purpose of limiting risk in the ordinary course of the financial management of the Restricted Subsidiary and not for speculative purposes; (ix) Indebtedness of the Restricted Subsidiaries under the Senior Secured Debt Facility; or (x) Permitted Refinancing Indebtedness incurred in respect of Indebtedness incurred pursuant to clauses (i), (ii), (iv), (v) and (vi). Section 6.8 Limitation on Asset Sales. Neither the Company nor any of its Restricted Subsidiaries shall acquire, sell, lease, exchange, sell and leaseback, sublease or otherwise dispose of its assets (or become contractually committed to do so) in any transaction or series of transactions involving $50,000,000 or more; provided however, that the Company and any of its Restricted Subsidiaries may sell or otherwise dispose of (i) inventory and Cash Equivalents in the ordinary course of business; (ii) assets that will (A) be replaced in the ordinary course of business within 12 months by other assets of equal or greater value or (B) are no longer used or useful in the business of the Company or such Restricted Subsidiary. -30- Section 6.9 Consolidation, Merger, Conveyance or Transfer. (a) Neither the Company nor the Subsidiary Guarantor shall consolidate with or merge with another Person or convey or transfer its properties and assets substantially as an entirety to any person, unless (i) either the Company or the Subsidiary Guarantor shall be the Surviving Person, or the corporation formed by such consolidation or into which the Company or the Subsidiary Guarantor is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company or the Subsidiary Guarantor substantially as an entirety shall be a corporation organized and existing under the laws of the United States or any State or the District of Columbia or of the Netherlands, as the case may be, and shall expressly assume payment of the principal of and interest on the Notes and the performance or observance of every covenant in this Article 6 on the part of the Company to be performed or observed; and (ii) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing. (b) Upon any consolidation or merger, or any conveyance or transfer of the properties and assets of the Company or any Subsidiary Guarantor substantially as an entirety in accordance with Section 6.9(a) above, the successor corporation formed by such consolidation or into which the Company or the Subsidiary Guarantor is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Subsidiary Guarantor under this Agreement with the same effect as if such successor corporation had been named as the Company or the Subsidiary Guarantor herein. Section 6.10 Corporate Existence. Subject to Section 6.9 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents thereof and (as the same may be amended from time to time) and (ii) the rights (charter and statutory) licenses thereof; provided, however, that the Company shall not be required to preserve any such right or license, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company, taken as a whole with its Subsidiaries, and that the loss thereof is not adverse in any material respect to the Holders. Section 6.11 Limitation on Issuances of Common Stock. The Company shall not issue or sell or enter into any agreement for the issuance and sale of, or permit and of its Subsidiaries to issue or sell or enter into any agreement or arrangement for the issuance and sale of, any shares of its Capital Stock or any securities convertible into or exchangeable for its Capital Stock; provided, however, that (a) the Company may issue Capital Stock or securities convertible into or exchangeable for Capital Stock under employee stock incentive programs, other employee benefit arrangements or director compensation commitments and (b) the Company may issue 37,000 shares of its common stock pursuant to the Patel Agreement. -31- Section 6.12 Confidentiality. The Company shall not, prior to the Closing, disclose the material terms of (i) the transactions contemplated hereby or (ii) any Transaction Documents to any Person without the prior approval of the Investors. Section 6.13 Stockholder Approval. (a) The Company shall use its commercially reasonable efforts to obtain Stockholder Approval on or before July 29, 2004. Subject to applicable fiduciary duties, the Company shall recommend approval of the Stockholder Approval by the stockholders of the Company so as to effect the transactions contemplated by this Agreement (the "Company Recommendation") and shall not withdraw, modify or qualify (or propose to withdraw, modify or qualify) in a manner adverse in any material way to the interests of the Investors the Company Recommendation or take any action or make any statement in connection with its next annual meeting of stockholders in any material way inconsistent with the Company Recommendation. (b) The Company shall use its commercially reasonable efforts to obtain the 4% Cumulative Preferred Stockholder Consent to the ranking of the Preferred Stock senior in right of dividends and payment upon liquidation to the 4% Cumulative Preferred Stock. In the event that 4% Cumulative Preferred Stockholder Consent is not obtained concurrently with Stockholder Approval, then the 4% Cumulative Preferred Stock shall be senior in right of dividends and payment upon liquidation to the Preferred Stock, and the Preferred Stock Certificate of Designation shall be modified, mutatis mutandis, to accommodate the rights of the 4% Cumulative Preferred Stock. Section 6.14 Access to Information. The Company shall afford to the Investors reasonable access during normal business hours to its books, records, personnel and representatives, upon reasonable notice and in such a manner as will not unreasonably interfere with the conduct of the Company's business. The Investors shall be entitled to receive copies of all confidential financial information and reports prepared for the Company's lenders promptly upon furnishing such information to such lenders; provided however, that the foregoing information rights shall terminate with respect to any Investor once its holdings of the Notes fall below 15% of the aggregate outstanding principal amount of the Notes, and shall not be transferable. Section 6.15 Voting Rights of Holders of the Series A Notes. (a) The Company agrees to use commercially reasonable efforts to cause up to a number of persons selected by Holders of the Series A Notes, acting together, to be appointed or elected to a number of directorships on the Board of Directors in proportion to the percentage of fully diluted Common Stock represented by their outstanding Series A Notes (on an as-converted basis), rounded up to the nearest whole number (the "Series A Directors"); provided, however, that the number of directors that the Holders of Series A Notes may select to be so appointed or elected to the Board of Directors shall not exceed two-thirds of the total number of directors sitting on the Board of Directors at any time, less one directorship. The initial Series A Directors shall be as designated by written notice to the Company from the Series A Majority Holders. Any person nominated by the Series A Majority Holders to serve as a Series A Director shall be reasonably qualified to serve as director and meet the requirements of the definition of "independent" under the rules of the New York Stock Exchange. The Series A Majority Holders shall have the right to select the -32- successor to any Series A Director who resigns or is removed from the Board of Directors. The Company agrees that, at the option of the Series A Majority Holders, at least one Series A Director designated by the Series A Majority Holders shall be nominated to serve on each of the committees of the Board of Directors, subject to any restrictions under applicable law or the rules and requirements of any securities exchange upon which any of the Company's securities may be listed. (b) Within 5 Business Days of the Closing Date, the Board of Directors shall pass a resolution increasing the size of the Board of Directors to eleven (11). Reasonably promptly thereafter, the Board of Directors shall appoint two (2) persons selected by the Holders of the Series A Notes to the vacant directorships on the Board of Directors in accordance with clause (a) above. If such persons are appointed to the Board of Directors, the Company shall use commercially reasonable efforts to cause such persons to be elected as directors at the next stockholder meeting called for the purpose of electing directors. Section 6.16 Management Incentive Plan. As soon as practicable after the Closing Date, the Board of Directors may approve the Management Incentive Plan. The material terms of the Management Incentive Package shall be acceptable to the Investors and be unanimously approved by the compensation committee of the Board of Directors prior to presentation to the Board of Directors. Section 6.17 Business Interruption Insurance. Each of the Company and its Subsidiaries shall maintain with financially sound and reputable insurers insurance related to interruption of business, either for loss of revenues or for extra expense, in the manner customary for businesses of similar size engaged in similar activities. Section 6.18 Property Insurance. Each of the Company and its Subsidiaries shall keep its assets which are of an insurable character insured by financially sound and reputable insurers against theft and fraud and against loss or damage by fire, explosion and hazards insured against by extended coverage to the extent, in amounts and with deductibles at least as favorable as those generally maintained by businesses of similar size engaged in similar activities. Section 6.19 Liability Insurance. Each of the Company and its Subsidiaries shall maintain with financially sound and reputable insurers insurance against liability for hazards, risks and liability to persons and property, including product liability insurance, to the extent, in the amounts and with deductibles at least as favorable as those generally maintained by businesses of similar size engaged in similar activities; provided however, that it may effect workers' compensation insurance or similar coverage with respect to operations in any particular state or other jurisdiction through an insurance fund operated by such state or jurisdiction or by meeting the self-insurance requirements of such state or jurisdiction. ARTICLE VII PREPAYMENT OF THE NOTES Section 7.1 Optional Prepayments with Make-Whole Amount. At any time that is more than one year after the Issue Date, the Company may, at its option, upon notice as -33- provided below, prepay all, but not less than all, of the aggregate principal amount of the Notes then outstanding, at 100% of the aggregate principal amount so prepaid, together with interest accrued and unpaid thereon to the date of such prepayment, plus the Make-Whole Amount determined for the prepayment date with respect to such aggregate principal amount. The Company shall give each Holder written notice of prepayment under this Section 7.1 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment (which shall be a Business Day). Each such notice shall specify such date and the interest to be paid on the prepayment date with respect to such aggregate principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. Section 7.2 Maturity; Surrender, Etc. In the case of prepayment of Notes pursuant to this Article 7, the aggregate principal amount of each Note shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, as aforesaid, interest on such aggregate principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. Section 7.3 [INTENTIONALLY OMITTED] Section 7.4 Make-Whole Amount. The term "Make-Whole Amount" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal; provided however, that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "Called Principal" means, with respect to any Note, the aggregate principal amount of such Note that is to be prepaid pursuant to Section 7.1. "Discounted Value" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" means, with respect to the Called Principal of any Note, .25% over the yield to maturity implied by (a) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called -34- Principal, on the display designated as "Page USD" of the Bloomberg Financial Markets Services Screen (or, if not available, any other national recognized trading screen reporting on-line intraday trading in the U.S. Treasury securities) for actively traded on-the-run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (b) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (i) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (ii) interpolating linearly between (A) the actively traded on-the-run U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (B) the actively traded on-the-run U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. "Remaining Average Life" means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (i) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (ii) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date. "Settlement Date" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 7.1. ARTICLE VIII DEFAULTS AND REMEDIES Section 8.1 Events of Default. An "Event of Default" shall occur with respect to both the Series A Notes and the Series B Notes if: (a) the Company defaults in the payment when due of interest on either the Series A Notes or the Series B Notes and such default continues for a period of 30 days; (b) the Company defaults in the payment when due of principal of either the Series A Notes or the Series B Notes when the same becomes due and payable at maturity or otherwise; -35- (c) the Company or any of its Subsidiaries fails, in any material way, to observe or perform any covenant or other agreement in this Agreement; (d) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Material Subsidiaries (or the payment of which is guaranteed by the Company or any of its Material Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the date hereof, which default results in the acceleration of such Indebtedness prior to its Stated Maturity or is caused by a failure to pay principal of, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") and, in each case, the amount of such Indebtedness that is overdue, together with the amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $2,000,000 or more; (e) a final non-appealable judgment or final non-appealable judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Material Subsidiaries and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $2,000,000 (net of any amounts with respect to which a reputable and creditworthy insurance company has acknowledged liability in writing); or a final non-appealable judgment or final non-appealable judgments for the payment of money or for the rescission of the sale of securities of the Company is entered by a court or courts of competent jurisdiction against the Company, or the Company enters into a settlement arrangement that includes the redemption, repurchase or cancellation of any of its securities, in either case with respect to an action filed by a security holder of the Company (other than a Holder of Notes in its capacity as such) alleging that the Company violated Section 5 of the Securities Act in connection with the offering and sale of the Notes hereunder; (f) the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally can not pay its debts as they become due; or (g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: -36- (i) is for relief against the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a custodian of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; (h) any Guarantee Agreement shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect (except pursuant to its terms), or any Subsidiary Guarantor shall deny or disaffirm its obligations under its Guarantee Agreement; or (i) the Company shall have failed to obtain Stockholder Approval on or before July 29, 2004. The Company shall deliver written notice to the Holders within five days after any Officer of the Company has knowledge of the occurrence of any event that with the giving of notice or the lapse of time or both would become an Event of Default under this Section 8.1. Section 8.2 Acceleration. If any Event of Default (other than an Event of Default specified in clause (f) or (g) of Section 8.1 hereof with respect to the Company, any Significant Subsidiary or any group of Significant Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Holders of at least 25% in principal amount of the then outstanding Series A Notes or Series B Notes, as applicable, may declare aggregate principal amount of the Series A Notes or Series B Notes, as applicable, to be due and payable immediately. Upon any such declaration, the principal amount of the Series A Notes or Series B Notes, as applicable, together with any accrued interest thereon, shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (f) or (g) of Section 8.1 hereof occurs with respect to the Company, any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, the aggregate principal amount of all Series A Notes and Series B Notes, together with any accrued interest thereon, shall be due and payable immediately without further action or notice. The Series A Majority Holders or the Series B Majority Holders, as applicable, may on behalf of all of the Holders of the Series A Notes or the Series B Notes, as applicable, rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal and interest that has become due solely because of the acceleration) have been cured or waived. -37- Section 8.3 Other Remedies. (a) If an Event of Default occurs and is continuing, the Holder may pursue any available remedy to collect the payment of the principal amount of, and any accrued interest on, the Notes or to enforce the performance of any provision of the Notes or this Agreement. (b) A Holder may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 8.4 Waiver of Past Defaults. The Series A Majority Holders or the Series B Majority Holders, as applicable, may on behalf of the Holders of all of the Series A Notes or Series B Notes, as applicable, waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of or accrued interest on, the Series A Notes or the Series B Notes, as applicable, (including in connection with an offer to purchase), provided however, that the Series A Majority Holders or the Series B Majority Holders, as applicable, may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Agreement; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 8.5 Control by Majority. The Series A Majority Holders or the Series B Majority Holders, as applicable, may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Holders of Series A Notes or the Holders of Series B Notes, as applicable, or exercising any trust or power conferred on them. Section 8.6 Rights of Holders to Receive Payment. Notwithstanding any other provision of this Agreement, the right of any Holder of a Note to receive payment of the principal amount of, and any accrued interest on, the Note on the Stated Maturity expressed in the Note or this Agreement (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder; provided however, that a Holder shall not have the right to institute any such suit for the enforcement of payment if and to the extent that the institution or prosecution thereof or the entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the Lien of this Agreement upon any property subject to such Lien. ARTICLE IX CONVERSION/EXCHANGE PROVISIONS Section 9.1 Conversion/Exchange of Series A Notes. (a) Conversion at the Option of Holders. -38- (i) Each Holder of the Series A Notes shall have the right, at any time, at its option, subject to the terms and provisions of this Agreement, to convert the aggregate principal amount of the Series A Notes or any portion thereof held by such Holder into shares of Common Stock at the Series A Conversion Price, up to a maximum of 15 million shares for all Series A Notes. (ii) The conversion right of a Holder of Series A Notes shall be exercised by such Holder by the surrender of the Series A Notes to be converted to the Company at any time during usual business hours at the Company's principal place of business, accompanied by written notice of conversion (with respect to such conversion, a "Series A Conversion Notice") specifying the principal amount thereof to be converted (together with such interest) duly executed and, if so required by the Company, accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, duly executed by such Holder or its attorney duly authorized in writing. Holders of Series A Notes shall specify the name or names in which a certificate or certificates for shares of Common Stock are to be issued. The date on which a Series A Conversion Notice is delivered to the Company (as determined in accordance with Section 14.4 hereof) shall be the "Series A Conversion Date" with respect thereto. (iii) In the event that the Company does not obtain Stockholder Approval on or before July 29, 2004, then (i) the Series A Notes that have not, as of such date, been converted into shares of Common Stock pursuant to Section 9.1(a)(i) shall not be convertible and shall remain outstanding until the Series A Maturity Date and (ii) any Common Stock into which the Series A Notes have been converted shall be exchanged for shares of the Company's Serial Preference Stock with an aggregate liquidation preference of $2.00 per share of the Common Stock exchanged therefor. (b) If the Company receives Stockholder Approval on or before July 29, 2004, at any time thereafter, if the Series B Majority Holders make a concurrent similar election with respect to the Series B Notes pursuant to Section 9.2(a), the Series A Majority Holders may, on behalf of all the Holders of the Series A Notes, elect upon 10 days prior written notice to the Company, to exchange the aggregate principal amount of the Series A Notes, together with all shares of Common Stock held by Holders as a result of conversion thereof, into an aggregate of $30 million in liquidation preference of Preferred Stock at the Series A Exchange Rate. (c) Mandatory Exchange of Series A Notes. (i) If (A) the Company receives Stockholder Approval on or before July 29, 2004 and (B) the Euro Note Refinancing Condition is satisfied at any time, then upon the occurrence of the events described in the foregoing clauses (A) and (B), the aggregate principal amount of the Series A Notes, together with all shares of Common Stock held by Holders as a result of conversion thereof, shall be exchanged for an aggregate of $30 million in liquidation preference of Preferred Stock at the Series A Exchange Rate. (ii) Holders of Series A Notes shall surrender their Series A Notes or Common Stock, as the case may be, to the Company during usual business hours at the office of -39- the Company. Holders of Series A Notes shall specify the name or names in which a certificate or certificates for shares of Preferred Stock are to be issued. Section 9.2 Exchange of Series B Notes. (a) If (i) the Company receives Stockholder Approval on or before July 29, 2004, and (ii) any required HSR Approval has occurred, then at any time following the occurrence of the events described in the foregoing clauses (i) and (ii), if the Series A Majority Holders make a concurrent similar election with respect to the Series A Notes pursuant to Section 9.1(b), the Series B Majority Holders may, on behalf of all the Holders of the Series B Notes, elect, upon 10 days prior written notice to the Company, to exchange the aggregate principal amount of the Series B Notes into an aggregate of $70 million in liquidation preference of Preferred Stock at the Series B Exchange Rate. (b) If (i) the Company obtains Stockholder Approval on or before July 29, 2004, (ii) any required HSR Approval has occurred and (iii) the Euro Note Refinancing Condition is satisfied at any time, then, upon the occurrence of the events described in the foregoing clauses (i), (ii) and (iii), the aggregate principal amount of the Series B Notes shall be exchanged for an aggregate of $70 million in liquidation preference of Preferred Stock at the Series B Exchange Rate. (c) Holders of Series B Notes may surrender their Series B Notes to the Company during usual business hours at the office of the Company. Holders of Series B Notes shall specify the name or names in which a certificate or certificates for shares of Preferred Stock are to be issued. (d) In the event that (i) the Company does not obtain Stockholder Approval on or before July 29, 2004 or (ii) any required HSR Approval does not occur, the Series B Notes shall not be exchangeable and shall remain outstanding until the Series B Maturity Date. Section 9.3 Issuance of Certificates. The Holder surrendering a Note for conversion or exchange pursuant to the terms of this Section 9.3, in whole or in part, in a transaction that would require approval by any Governmental Entity, shall promptly make all filings which (i) may be required in connection with such conversion or exchange under applicable laws, rules or regulations or (ii) are required pursuant to Section 13.5 hereof. Any such Holder shall provide each other Holder with such necessary information and assistance as may reasonably be requested in connection with such filings. As promptly as practicable after the surrender of a Note for conversion or exchange (or, if applicable, the receipt of required approvals from Governmental Entities) (but in no event later than three Trading Days after such surrender, in the absence of any required approvals from Governmental Entities), the Company at its expense shall deliver or cause to be delivered at its principal office to or upon the written order of the Holder of such Note so surrendered (a) certificates bearing, if required by the terms hereof, the restrictive legends set forth in Section 5.11 hereof, representing the number of fully paid and non-assessable shares of Preferred Stock or Common Stock, as the case may be, into which such Note is being converted or exchanged in accordance with the provisions hereof, and (b) in the case of conversion of a Series A Note pursuant to Section 9.1(a)(i), a Series A Note, registered in the name of such Holder, representing the portion of the principal amount, if any, of -40- the surrendered Series A Note that is not being exchanged at such time, dated so that there will be no loss of interest on such principal amount and otherwise of like tenor. Section 9.4 No Fractional Shares. If, but for the provisions of this Section 9.4, the conversion or exchange of any Note for Preferred Stock or Common Stock, as the case may be, were to result in the issuance by the Company of a fraction of a share of Preferred Stock or Common Stock, as the case may be, the Company, at its option, shall either (a) round up such fraction to the nearest whole share, or (b) pay an amount in cash equal to the product of (i) such fraction, multiplied by (ii) the Fair Market Value of a share of Preferred Stock or Common Stock, as the case may be, on (x) the Series A Conversion Date, with respect to conversion pursuant to Section 9.1(a)(i) or (y) Stockholder Approval, with respect to exchange pursuant to Section 9.1(c)(i) or Section 9.2(a), in each case computed to the nearest whole cent, in lieu of issuing a fractional share. Section 9.5 Adjustment of Exchange Price. If, after the date hereof, the Company grants or sells any Common Stock or securities convertible or exchangeable or exercisable for any Common Stock at a price below the then applicable Series A Conversion Price or 1% of the then applicable Series A Exchange Rate or Series B exchange Rate (a "Dilutive Issuance"), then (i) the Series A Conversion Price shall be adjusted to equal the consideration paid per share of Common Stock or securities convertible or exchangeable or exercisable for any Common Stock in the Dilutive Issuance and (ii) the Series A Exchange Rate and Series B Exchange Rate shall be adjusted to equal the product of (a) the consideration paid per share of Common Stock or securities convertible or exchangeable or exercisable for any Common Stock in the Dilutive Issuance and (b) 100; provided, however, that no adjustment shall be made to the Series A Conversion Price, the Series A Exchange Rate or the Series B Exchange Rate as a result of any issue or sale of any Capital Stock or any securities convertible into or exchangeable for Capital Stock not prohibited by Section 6.11. Section 9.6 Reservation of Common Stock. The Company shall have reserved 15,000,000 shares of Common Stock for issuance to Holders of Series A Notes upon conversion thereof pursuant to Section 9.1(a)(i), which will be sufficient to allow the aggregate principal amount of Series A Notes to be converted into Common Stock. The Company covenants that all shares of Common Stock which shall be so issuable shall be duly and validly issued and fully paid and non-assessable, free from preemptive or similar rights on the part of the holders of any shares of Capital Stock or securities of the Company, and free from all Liens or other charges with respect to the issuance thereof. The Company will take all such action as may be necessary to assure that such shares of Common Stock, as the case may be, may be so issued without violation by the Company of any applicable law or regulation. Section 9.7 Taxes. The issuance of certificates for shares of Preferred Stock or Common Stock, as the case may be, upon the exchange of any Note shall be made without charge to the Holder for any documentary, stamp or similar issue Tax due in respect of the issuance of such certificates, and such certificates shall be issued in the name of, or in such name as may be directed by, the Holder of such Note; provided however, that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the Holder of such Note, and the Company shall not be required to issue or deliver such certificates unless or until -41- the Person or Persons requiring the issuance thereof shall have paid to the Company the amount of such Tax or shall have established to the satisfaction of the Company that such Tax has been paid. The Holder of a Note shall be responsible for the payment of all applicable income Taxes in connection with the conversion or exchange of such Note. ARTICLE X REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES Section 10.1 Note Register. The Company will keep at its principal office a register in which the Company will provide for the registration of the Notes and the registration of transfers of the Notes. The Company may treat the Person in whose name the Note is registered on such register as the owner and holder thereof for the purpose of receiving payment of the principal of and interest on the Note and for all other purposes, whether or not the Note shall be overdue, and the Company shall not be affected by any notice to the contrary. Section 10.2 Transfer, Conversion and Exchange of Notes. Upon surrender of one or more Notes for registration of transfer or for conversion or exchange to the Company at its principal office with evidence that all applicable transfer taxes have been paid, the Company at its expense will execute and deliver in exchange therefor one or more Notes in the aggregate unpaid principal amount(s) of such surrendered Note(s). Each such new Note shall be registered in the name of such Person, or its nominee, as such Holder or transferee may request, dated so that there will be no loss of interest on such surrendered Note and otherwise of like tenor. Any Holder who transfers a Note shall notify the Company within three (3) days of such transfer. Section 10.3 Replacement of Notes. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of a Note and, in the case of any such loss, theft or destruction, upon delivery of an indemnity bond in such reasonable amount and form as the Company may determine (or of an indemnity agreement from the Holder reasonably satisfactory to the Company), or, in the case of any such mutilation, upon the surrender of such Holder for cancellation to the Company at its principal office, the Company at its expense will execute and deliver, in lieu thereof, a new Note of like tenor, dated so that there will be no loss of interest on such lost, stolen, destroyed or mutilated Note. Any Note in lieu of which any such new Note has been so executed and delivered by the Company shall not be deemed to be an outstanding Note for any purpose of this Agreement. ARTICLE XI GUARANTEES Section 11.1 Execution and Delivery of Guarantee Agreements. The Company shall cause Milacron Capital Holdings B.V. to execute and deliver at the Closing to the Investors a Guarantee Agreement substantially in the form attached as Exhibit E hereto, duly executed on behalf of Milacron Capital Holdings B.V. by an Officer thereof. Section 11.2 Subsidiary Guarantors May Consolidate, etc., on Certain Terms. (a) Nothing contained in this Agreement, in any Guarantee Agreement or in the Notes shall -42- prevent any consolidation or merger of a Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor, or shall prevent the transfer of all or substantially all of the assets of a Subsidiary Guarantor to the Company or another Subsidiary Guarantor. Upon any such consolidation, merger, transfer or sale, the Guarantee Agreement of the Subsidiary Guarantor being consolidated or merged or into the Company or such other Subsidiary Guarantor (or the assets of which are being so transferred) shall no longer have any force or effect. (b) Nothing contained in this Agreement or in any of the Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with or into a corporation or corporations other than the Company or another Subsidiary Guarantor (whether or not affiliated with the Subsidiary Guarantor), or successive consolidations or mergers in which a Subsidiary Guarantor or its successor or successors shall be a party or parties, or shall prevent the transfer of all or substantially all of the assets of a Subsidiary Guarantor, to a corporation other than the Company or another Subsidiary Guarantor (whether or not affiliated with the Subsidiary Guarantor) authorized to acquire and operate the same in the event that such consolidation, merger or transfer complies with the terms and conditions of this Agreement and any Guarantee Agreement. Section 11.3 Releases Following Sale of Assets. Concurrently with any sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantor or all of the Capital Stock of any Subsidiary Guarantor, in each case, in compliance with the terms hereof, then such Subsidiary Guarantor (in the event of a sale or other disposition of all of the Capital Stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of a Subsidiary Guarantor) shall be released from and relieved of its obligations under its Guarantee Agreement and this Article 11, as the case may be. Any Subsidiary Guarantor not released from its obligations under its Guarantee Agreement shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Subsidiary Guarantor under the Guarantee Agreement as provided in this Article 11. Section 11.4 Application of Certain Terms and Provisions to the Subsidiary Guarantors. (a) For purposes of any provision of this Agreement that provides for the delivery by any Subsidiary Guarantor of an Officers' Certificate, the definitions of such terms in Section 1 shall apply to such Subsidiary Guarantor, as if references therein to the Company were references to such Subsidiary Guarantor. (b) Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Holders to or on any Subsidiary Guarantor may be given or served as described in this Agreement as if references therein to the Company were references to such Subsidiary Guarantor. Section 11.5 Subordination. The Guarantee Agreement shall be subordinated pursuant to its terms and the terms of the Intercreditor Agreement. -43- ARTICLE XII CONDITIONS TO CLOSING Section 12.1 Conditions to Obligations of the Investors. The obligation of each of the Investors to acquire Notes at the Closing is subject to the fulfillment on or prior to the Closing of the following conditions: (a) The representations and warranties made by the Company in Article 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects at the Closing Date with the same force and effect as if they had been made on and as of said date (unless any representation or warranty refers to a specific earlier date, in which case it shall have been true and correct in all material respects at such date). (b) All covenants, agreements and conditions to be performed by the Company or its Subsidiaries on or prior to the Closing contained in this Agreement and the other Transaction Documents to which either is a party shall have been performed or complied with in all material respects. (c) There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement and the other Transaction Documents. (d) There shall not be in effect any law, rule or regulation prohibiting or restricting such purchase or requiring any consent or approval of any Person which shall not have been obtained to issue the Notes (except as otherwise provided in this Agreement). (e) The Investors shall have received an opinion of Cravath, Swaine & Moore LLP, counsel to the Company, with respect to the enforceability of the Notes and such other matters as may be customary for transactions of this type, including, without limitation, the enforceability of the Guarantee Agreement and the Milacron Pledge Agreement, in each case in form and substance reasonably satisfactory to the Investors. (f) The Investors shall have received an opinion of Stibbe P.C., Dutch counsel to the Company, with respect to the legality, validity and enforceability of the Milacron Dutch Pledge Agreement and the Milacron Capital Holdings B.V. Pledge Agreement. (g) The Company and any other Person (other than an Investor) shall have entered into the Transaction Documents to which it is a party. (h) The Investors shall have received a completely executed copy of each of the Transaction Documents to which it is a party. (i) The Board of Directors shall have adopted a Board Resolution approving the issuance of shares of Serial Preference Stock and, subject to Stockholder Approval, Preferred Stock and Common Stock by the Company pursuant to the transactions contemplated by this Agreement. -44- (j) The Senior Secured Debt Facility shall have become effective, and the conditions to borrowing thereunder shall have been satisfied. (k) The Company shall have paid to the Investors the Transaction Fee. (l) The Company shall have entered into (i) a pledge agreement (the "Milacron Pledge Agreement"), in form and substance satisfactory to the Investors, granting the Holders a silent second-priority pledge of 100% of the capital stock of each of the following wholly-owned Subsidiaries of the Company: (A) Uniloy Milacron U.S.A. Inc.; (B) Milacron Plastics Technologies Group Inc.; (C) Milacron Marketing Company; (D) Milacron Industrial Products, Inc.; (E) Cimcool Industrial Products Inc.; (F) Uniloy Milacron Inc.; (G) D-M-E Company; and (H) Milacron Resin Abrasives Inc.; and (ii) a pledge agreement (the "Milacron Dutch Pledge Agreement") in form and substance satisfactory to the Investors granting the Holders a third-priority pledge of 100% of the capital stock of Milacron Capital Holdings B.V. (m) Milacron Capital Holdings B.V. shall have entered into a pledge agreement (the "Milacron Capital Holdings B.V. Pledge Agreement"), in form and substance satisfactory to the Investors, granting the Holders a second-priority pledge of 65% of the capital stock of Milacron B.V. (n) The Company shall have delivered to the Investors an Officers' Certificate, dated the Closing Date, certifying that the conditions specified in clauses (a) and (b) of this Section 12.1 have been fulfilled. Section 12.2 Conditions to the Obligations of the Company. The obligation of the Company to issue the Notes at the Closing is subject to the fulfillment on or prior to Closing of the following conditions, each of which may be waived in writing by the Company to the extent permitted by law: (a) The representations and warranties made by each of the Investors in Article 5 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects at the Closing Date with the same force and effect as if they had been made on and as of said date (unless any representation or warrant refers to a specific earlier date, in which case it shall have been true and correct in all material respects at such date). (b) There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement and the other Transaction Documents. (c) Each of the Investors shall have entered into the Transaction Documents to which it is a party. (d) The Investors shall have paid to the Company the aggregate purchase price for the Notes. -45- ARTICLE XIII COLLATERAL AGENT Section 13.1 Appointment of Collateral Agent. The Holders hereby appoint and authorize Mizuho to act for the Holders as the Collateral Agent in connection with the transactions contemplated by this Agreement and the other Transaction Documents on the terms set forth herein. The duties of the Collateral Agent are to (i) maintain, in accordance with its customary business practices, records reflecting the status of the Collateral and related matters and (ii) perform, exercise and enforce any and all rights and remedies of the Holders with respect to the Collateral. Section 13.2 Collateral Agent's Resignation. The Collateral Agent may resign at any time by giving at least 30 days' prior written notice of its intention to do so to each Holder and upon the appointment by the Holders of a successor Collateral Agent. If no successor Collateral Agent shall have been appointed and shall have accepted such appointment within 45 days after the resigning Collateral Agent's giving of such notice of resignation, then the resigning Collateral Agent may appoint a successor Collateral Agent which shall be a bank or a trust company having a combined capital, surplus and undivided profit of at least $500,000,000. Upon the appointment of a new Collateral Agent hereunder, the term "Collateral Agent" shall for all purposes of this Agreement thereafter mean such successor. After any resigning Collateral Agent's resignation hereunder as Collateral Agent, the provisions of this Agreement shall continue to inure to the benefit of such resigning Collateral Agent as to any actions taken or omitted to be taken by it while it was Collateral Agent under this Agreement. Section 13.3 Standard of Conduct. (a) The Collateral Agent shall not be liable for any loss or damage, including fees and expenses of counsel, resulting from its action or omission to act or otherwise, as Collateral Agent, except for any loss, damage, claim or expense arising out of its own gross negligence or willful misconduct. The Collateral Agent may, with respect to questions of law, apply for and obtain the advice and opinion of competent counsel and shall be fully protected with respect to anything done or omitted by it in good faith and conformity with such advice or opinion. (b) The Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person. Section 13.4 Nature of Duties. The Collateral Agent shall have no duties or responsibilities whatsoever, as Collateral Agent, except such duties and responsibilities as are specifically set forth in this Agreement and no covenant or obligation shall be implied against the Collateral Agent in connection with this Agreement. Section 13.5 Indemnification. The Company agrees to indemnify the Collateral Agent and to hold it harmless against any and all costs, expenses, damages, liabilities or claims, including reasonable fees and expenses of counsel, which the Collateral Agent may sustain or incur or which may be asserted against the Collateral Agent by reason of or as a result of any -46- action taken or omitted by the Collateral Agent in connection with operating under this Agreement or any Transaction Document, except those costs, expenses, damages, liabilities or claims arising out of the negligence or willful misconduct of the Collateral Agent or any of its employees. This indemnity shall be a continuing obligation of the Company notwithstanding the termination of this Agreement or any Transaction Document. Section 13.6 Collateral Matters. (a) The Collateral Agent may from time to time make such disbursements and advances ("Collateral Agent Advances") which the Collateral Agent, in its sole discretion, deems necessary or desirable to preserve, protect, prepare for sale or dispose of the Collateral or any portion thereof or to enhance the likelihood or maximize the amount of repayment by the Company of amounts due pursuant to the terms of this Agreement or the Notes. The Collateral Agent Advances shall be repayable on demand by the Company, be secured by the Collateral and shall bear interest at a rate per annum equal to the rate of interest then applicable for the Notes. The Collateral Agent shall notify each Holder and the Company in writing of each such Collateral Agent Advance, which notice shall include a description of the purpose of such Collateral Agent Advance. (b) The Holders hereby irrevocably authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral upon payment by the Company of all amounts due under this Agreement and the Notes. (c) The Collateral Agent shall have no obligation whatsoever to any Holder to assure that the Collateral exists or is owned by the Company or Milacron Capital Holdings B.V. or is cared for, protected or insured or has been encumbered or that the Liens granted to the Collateral Agent pursuant to this Agreement or any other Transaction Document have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Collateral Agent in this Article 13 or in any other Transaction Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent's own interest in the Collateral as one of the Holders. ARTICLE XIV MISCELLANEOUS Section 14.1 Expenses. All Expenses incurred in connection with this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby shall be paid by the Company. Section 14.2 Survival. All express representations and warranties contained in this Agreement or made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall survive the execution and delivery of this -47- Agreement, any investigation at any time made by the Investors or on behalf of the Investors, the issuance of the Notes hereunder, and any disposition, payment, conversion or redemption of the Notes. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement or in connection with the transactions contemplated hereby shall be deemed representations and warranties of the Company under this Agreement. Section 14.3 Amendments and Waivers. Except as expressly provided elsewhere herein or in the Notes, any term of this Agreement or of the Notes may be amended or modified, and the observance of any term of this Agreement or of the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (i) the Company and (ii) the Majority Holders; provided, however, that any term of this Agreement or of the Notes that affects the rights or duties of only Holders of the Series A Notes (but not Holders of the Series B Notes) or Holders of the Series B Notes (but not Holders of the Series A Notes) may be amended or modified, and the observance of any term of this Agreement or of the Notes that affects the rights or duties of only Holders of the Series A Notes (but not Holders of the Series B Notes) or Holders of the Series B Notes (but not Holders of the Series A Notes) may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of (i) the Company and (ii) the Series A Majority Holders or the Series B Majority Holders, as applicable. Any provision of this Agreement or the Notes that expressly provides for waiver or consent by a specified group or percentage of the Investors or Holders may be amended or waived only by such specified group or percentage of the Investors or Holders. Any amendment or waiver effected in accordance with this Section 14.3 shall be binding upon each Holder of the Notes, each future Holder of the Notes and the Company. Notwithstanding the foregoing, this Agreement or the Notes may be amended or supplemented, without the consent of any Holder of a Note, to cure any ambiguity, defect or inconsistency in a manner that does not materially adversely affect any Holder, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights of any such Holder. Further, notwithstanding any of the foregoing, without the consent of each Holder affected, an amendment or waiver under this Section 14.3 may not, with respect to any Note held by a non-consenting Holder: (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal amount of, or change the scheduled maturity of, such Note; (c) reduce the Interest Rate applicable to such Note, or change the time for payment of interest on such Note; (d) waive a Default or Event of Default in the payment of interest or principal on such Note (except a rescission of acceleration of the Notes by the Majority Holders and a waiver of the payment default that resulted from such acceleration); (e) make the principal of, or interest on, such Note payable in currency or assets other than that stated in this Agreement or the Notes; (f) except as expressly provided herein or in the Notes, increase the Series A Conversion Price or the Exchange Rate, limit the times at which or amounts for which Notes may be converted or exchanged into Preferred Stock or Common Stock or change the nature of the consideration to be received upon a conversion or exchange of Notes; or (g) make any change in the provisions of this Agreement relating to waivers of past Defaults or the rights of the Holder of such Note to receive payments of principal of or interest on such Note. -48- Section 14.4 Notices. Except as otherwise provided in this Agreement, notices and other communications under this Agreement shall be in writing and shall be deemed properly served if: (i) mailed by registered or certified mail, return receipt requested, (ii) delivered by a recognized overnight courier service, (iii) delivered personally, or (iv) sent by facsimile transmission, addressed to the general counsel for each Party at the address set forth below for such Party or at such other address or to the attention of such other officers as such Party shall have furnished in writing pursuant to this Section 14.4. Such notice shall be deemed to have been received: (i) three (3) days after the date of mailing if sent by certified or registered mail, (ii) one (1) day after the date of delivery if sent by overnight courier, (iii) the date of delivery if personally delivered, or (iv) the next succeeding business day after transmission by facsimile. If to the Company: Milacron Inc. 2090 Florence Avenue Cincinnati, OH 45206 Telephone: (513) 487-5000 Facsimile: (513) 487-5057 Attention: Ronald D. Brown with a copy to: Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Tel: (212) 474-1000 Fax: (212) 474-3700 Attention: Mark I. Greene, Esq. If to the Investors: As set forth on Attachment 1 hereto with a copy to: Cadwalader, Wickersham & Taft LLP 100 Maiden Lane New York, NY 10038 Telephone: (212) 504-6000 Facsimile: (212) 504-6666 Attention: Gregory M. Petrick, Esq. Section 14.5 Regulatory Approvals. (a) The Company and each Holder required to file notification under the HSR Act with respect to the transactions contemplated by this Agreement shall file all necessary -49- documentation pursuant to the HSR Act within 10 Business Days after the Closing. The Parties hereto shall provide each other with such necessary information and assistance as may reasonably be requested in connection with such filings. (b) The Company and each Holder shall make all filings, applications and notices required to effectuate the transactions contemplated by this Agreement pursuant to applicable law or regulation or New York Stock Exchange rule within 10 Business Days after the Closing. The Parties hereto shall provide each other with such necessary information and assistance as may reasonably be requested in connection with such filings, applications and notices. Section 14.6 Pledge Agreements. The parties hereto agree with the terms and conditions of the "Covenant to Pay" as included in Section 1 of each of the Milacron Capital Holdings B.V. Pledge Agreement and the Milacron Dutch Pledge Agreement. Section 14.7 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 14.8 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns, except that the Company shall not have the right to assign its rights or obligations hereunder or any interest herein without the prior written consent of all of the Holders. Section 14.9 Choice of Law; Choice of Forum; Jury Trial Waiver. (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PROVISIONS THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402. (b) IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE COURTS. THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE. (c) THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. Section 14.10 Severability. The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect. If any provision of this -50- Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein. Section 14.11 No Waiver. It is agreed that a waiver by any Party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach by the breaching Party. Section 14.12 Further Assurances. The Parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement, including entering into the other Transaction Documents to which each is a Party. Section 14.13 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. The word "including" as used herein shall not be construed so as to exclude any other thing not referred to or described. -51- IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly signed as of the date first above written. MILACRON INC., By: /s/ Ronald D. Brown -------------------------------------- Name: Ronald D. Brown Title: Chairman, President and Chief Financial Officer GLENCORE FINANCE AG By: /s/ Steven Isaacs -------------------------------------- Name: Steven Isaacs Title: Director MIZUHO INTERNATIONAL PLC By: /s/ Matthew M. Weber -------------------------------------- Name: Matthew M. Weber Title: Attorney ATTACHMENT 1
AGGREGATE AGGREGATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT OF SERIES A NOTES OF SERIES B NOTES AGGREGATE INVESTOR PURCHASED PURCHASED PURCHASE PRICE - --------------------------- ----------------- ----------------- --------------- Glencore Finance AG $21,000,000 $49,000,000 $70,000,000 Baarermattstrasse 3 CH-6341 Baar SWITZERLAND Tel: 011 41 41 709 2340 Fax: 011 41 41 709 2848 Attention: Steven Isaacs Mizuho International plc $ 9,000,000 $21,000,000 $30,000,000 Bracken House One Friday Street London EC4M 9JA UNITED KINGDOM Tel: 011 44 207 236 1090 Fax: 011 44 207 090 6806 Attention: Patrick Collins
EXHIBIT A [Form of Series A Note] - -------------------------------------------------------------------------------- 20% Secured Step-Up Series A Notes due 2007 No. [ ] $____________ MILACRON INC. promises to pay to or registered assigns, the principal sum of ________ Dollars on March 15, 2007. Interest Payment Dates: March 15 and September 15 (commencing on September 15, 2004) Record Dates: February 28 and August 31 Dated: March 12, 2004 MILACRON INC. By: ___________________________ Name: Title: By: ___________________________ Name: Title: A-1 [Back of Note] 20% Secured Step-Up Series A Notes due 2007 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR FOREIGN SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. This Instrument and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination and Intercreditor Agreement (the "Subordination Agreement") dated as of March 12, 2004 among Glencore Finance AG, Mizuho International plc, Milacron Inc. (the "Company") Milacron Capital Holdings B.V. ("Dutch Holdco") and Credit Suisse First Boston, acting through its Cayman Islands Branch, as agent (the "Agent") to the indebtedness (including interest) owed by the Company and Dutch Holdco (collectively, the "Credit Parties") pursuant to that certain Financing Agreement dated as of March 12, 2004 among the Credit Parties, the Agent and the lenders from time to time party thereto, as such Financing Agreement has been and hereafter may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under that agreement as contemplated by the Subordination Agreement, and each holder of this Instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement. Capitalized terms used herein shall have the meanings assigned to them in the Note Purchase Agreement dated as of March 12, 2004 by and among Milacron Inc., Glencore Finance AG and Mizuho International plc (the "Note Purchase Agreement"). 1. INTEREST. Milacron Inc., a Delaware corporation (the "Company"), promises to pay interest semi-annually on March 15 and September 15 of each year, commencing September 15, 2004, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Subject to the last sentence of this Section 1, interest on the Series A Notes shall be paid as follows: (a) on the first Series A Interest Payment Date, (i) cash at a rate of 12% per annum and (ii) additional Series A Notes with a principal amount equal to the interest accrued from the Issue Date at a rate of 8% per annum; (b) on the next following Series A Interest Payment Date, (i) cash at a rate of 16% per annum and (ii) additional Series A Notes with a principal amount equal to the interest accrued from the last Series A Interest Payment Date at a rate of 8% per annum; A-2 (c) on the next following Series A Interest Payment Date, (i) cash at a rate of 20% per annum and (ii) additional Series A Notes with a principal amount equal to the interest accrued from the last Series A Interest Payment Date at a rate of 4% per annum; and (d) on the next following Series A Interest Payment Date and thereafter until the Series A Maturity Date, cash at a rate of 24% per annum. If the Company is prohibited at any time by the terms of any of its Financing Agreements from paying interest on the Series A Notes in cash, any such interest shall be payable in kind at a rate that is 2.0% per annum in excess of the portion of the then applicable Series A Interest Rate payable in cash; provided however, that in no event shall the interest payable on the Series A Notes exceed 24.99% at any time. Notwithstanding the foregoing, if the Company obtains Stockholder Approval on or before July 29, 2004, the Series A Interest Rate shall be reset, retroactively from the Issue Date, to 6% per annum, payable in cash. 2. METHOD OF PAYMENT. The Company will pay interest on the Series A Notes to the Persons who are registered Holders at the close of business on the February 28 or August 31 next preceding an Interest Payment Date, even if such Series A Notes are canceled after such record date and on or before such Interest Payment Date. Each payment of interest on the Series A Notes will be made to the Holder by certified or bank cashier's check or wire transfer of immediately available funds, or by the issuance of additional Series A Notes, as and to the extent applicable, at such address or to such account as the Holder specifies in writing to the Company at least five Business Days before such payment is to be made. Any such written instructions may provide that the information contained therein shall continue to be in effect with respect to subsequent interest payments until thereafter modified by written instructions of such Holder, which modified instructions shall take effect as of the next Interest Payment Date occurring more than five Business Days after delivery of such modified instructions. Any Series A Note issued to a Holder as payment of interest due on an Interest Payment Date will be issued in a principal amount equal to the amount of such interest, will commence accruing interest as of the calendar day immediately following such Interest Payment Date, will otherwise have the same terms as the Series A Notes issued at Closing and will be subject to the provisions and have the benefits of the Note Purchase Agreement. 3. SUBSIDIARY GUARANTOR. Payment of principal and interest on the Series A Notes is guaranteed by the Subsidiary Guarantor as described in Article 11 of the Note Purchase Agreement. By acceptance of this Series A Note, the Holder agrees that such guarantee is subordinated in full to the rights of the lenders under the Senior Secured Debt Facility as described in Section 11.5 of the Note Purchase Agreement. 4. SECURITY. The Series A Notes are secured obligations of the Company and the Subsidiary Guarantor. The Series A Notes are secured by: (i) a second-priority pledge of 100% of the capital stock of Milacron Capital Holdings B.V. and 65% of the capital stock of Milacron B.V.; and (ii) a second-priority pledge of 100% of the capital stock of each directly wholly-owned domestic Subsidiary of the Company. A-3 5. CONVERSION/EXCHANGE. Each Holder of the Series A Notes shall have the right, at any time, at its option, subject to the terms and provisions of the Note Purchase Agreement, to convert the aggregate principal amount of the Series A Notes or any portion thereof held by such Holder into shares of Common Stock at the Series A Conversion Price, up to a maximum of 15 million shares for all Series A Notes. If (A) the Company receives Stockholder Approval on or before July 29, 2004 and (B) the Euro Note Refinancing Condition is satisfied at any time, then, upon the occurrence of the events described in the foregoing clauses (A) and (B), the aggregate principal amount of the Series A Notes, together with all shares of Common Stock held by Holders as a result of conversion thereof, shall be exchanged for an aggregate of $30 million in liquidation preference of Preferred Stock at the Series A Exchange Rate. If the Company receives Stockholder Approval on or before July 29, 2004, at any time thereafter, if the Series B Majority Holders make a similar concurrent election with respect to the Series B Notes pursuant to Section 9.2(a) of the Note Purchase Agreement, the Series A Majority Holders may, on behalf of all the Holders of the Series A Notes, elect, upon 10 days prior written notice to the Company, to exchange the aggregate principal amount of the Series A Notes, together with all shares of Common Stock held by Holders as a result of conversion thereof, into an aggregate of $30 million in liquidation preference of Preferred Stock at the Series A Exchange Rate. In the event that the Company does not obtain Stockholder Approval on or before July 29, 2004, then (i) the Series A Notes that have not, as of such date, been converted into shares of Common Stock pursuant to Section 9.1(a)(i) of the Note Purchase Agreement shall not be convertible and shall remain outstanding until the Series A Maturity Date and (ii) any Common Stock into which the Series A Notes have been converted shall be exchanged for shares of the Company's Serial Preference Stock with an aggregate liquidation preference of $2.00 per share of the Common Stock exchanged therefor. 6. DENOMINATIONS, TRANSFER. The Series A Notes are in registered form without coupons in minimum denominations of $5,000 and integral multiples of $1,000. The transfer of Series A Notes may be registered as provided in the Note Purchase Agreement. The Company may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law in connection with a transfer or conversion. 7. PERSONS DEEMED OWNERS. The registered Holder of a Series A Note may be treated as its owner for all purposes. 8. AMENDMENT, SUPPLEMENT AND WAIVER. Except as expressly provided elsewhere herein or in the Note Purchase Agreement, any term of the Notes or of the Note Purchase Agreement may be amended or modified, and the observance of any term of the Notes or of the Note Purchase Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (i) the Company and (ii) the Majority Holders; provided, however, that any term of the Notes or the Note Purchase Agreement that affects the rights or duties of only Holders of the Series A Notes (but not Holders of the Series B Notes) or Holders of the Series B Notes (but not Holders of the Series A Notes) may be amended or modified, and the observance of any term of the Notes or of the Note Purchase Agreement that affects the rights or duties of only Holders of the Series A Notes (but not Holders of the Series B Notes) or Holders of the Series B Notes (but not Holders of the Series A Notes) may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of (i) the Company and (ii) the Series A Majority Holders or the Series B Majority Holders, as applicable. Any provision of this Series A Note or the Note Purchase Agreement that expressly provides for waiver or consent by a specified group or percentage of the Investors or Holders may be amended or waived only by such specified group or percentage of the Investors or Holders. Any amendment or waiver effected in accordance with this Section 8 shall be binding upon each Holder of the Series A Notes, each future Holder and the Company. Notwithstanding the foregoing, the Series A Notes (including this Series A Note) or the Note Purchase Agreement may be amended or supplemented, without the consent of A-4 any Holder of this Series A Note, to cure any ambiguity, defect or inconsistency in a manner that does not materially adversely affect any Holder of the Series A Notes, to make any change that would provide any additional rights or benefits to the Holders of the Series A Notes or that does not adversely affect the legal rights of any such Holder. Further, notwithstanding any of the foregoing, without the consent of each Holder affected, an amendment or waiver under this Section 8 or Section 14.3 of the Note Purchase Agreement may not, with respect to any Series A Note held by a non-consenting Holder: (a) reduce the principal amount of Series A Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal amount of, or change the scheduled maturity of, such Series A Note; (c) reduce the Interest Rate applicable to such Series A Note or change the time for payment of interest on such Note; (d) waive a Default or Event of Default in the payment of interest or principal on such Series A Note (except a rescission of acceleration of the Series A Notes by the Series A Majority Holders and a waiver of the payment default that resulted from such acceleration); (e) make the principal of, or interest on, such Series A Note payable in currency or assets other than that stated in such Series A Note or the Note Purchase Agreement; (f) except as expressly provided in such Series A Note or the Note Purchase Agreement, increase the Series A Conversion Price or the Series A Exchange Rate, limit the times at which or amounts for which such Series A Note may be converted or exchanged into Preferred Stock or Common Stock or change the nature of the consideration to be received upon a conversion or exchange of a Series A Note; or (g) make any change in the provisions of the Note Purchase Agreement relating to waivers of past Defaults or the rights of the Holder of such Series A Note to receive payments of principal of or interest on such Series A Note. 9. DEFAULTS AND REMEDIES. Defaults and remedies are set forth in Article 8 of the Note Purchase Agreement. 10. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder of the Company, as such, shall not have any liability for any obligations of the Company under the Series A Notes or the Note Purchase Agreement for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Series A Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Series A Notes. A-5 EXHIBIT B [Form of Series B Note] - -------------------------------------------------------------------------------- 20% Secured Step-Up Series B Notes due 2007 No. [ ] $____________ MILACRON INC. promises to pay to or registered assigns, the principal sum of ________ Dollars on March 15, 2007. Interest Payment Dates: March 15 and September 15 (commencing on September 15, 2004) Record Dates: February 28 and August 31 Dated: March 12, 2004 MILACRON INC. By: ___________________________ Name: Title: By: ___________________________ Name: Title: B-1 [Back of Note] 20% Secured Step-Up Series B Notes due 2007 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR FOREIGN SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. This Instrument and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination and Intercreditor Agreement (the "Subordination Agreement") dated as of March 12, 2004 among Glencore Finance AG, Mizuho International plc, Milacron Inc. (the "Company") Milacron Capital Holdings B.V. ("Dutch Holdco") and Credit Suisse First Boston, acting through its Cayman Islands Branch, as agent (the "Agent") to the indebtedness (including interest) owed by the Company and Dutch Holdco (collectively, the "Credit Parties") pursuant to that certain Financing Agreement dated as of March 12, 2004 among the Credit Parties, the Agent and the lenders from time to time party thereto, as such Financing Agreement has been and hereafter may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under that agreement as contemplated by the Subordination Agreement, and each holder of this Instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement. Capitalized terms used herein shall have the meanings assigned to them in the Note Purchase Agreement dated as of March 12, 2004 by and among Milacron Inc., Glencore Finance AG and Mizuho International plc (the "Note Purchase Agreement"). 1. INTEREST. Milacron Inc., a Delaware corporation (the "Company"), promises to pay interest semi-annually on March 15 and September 15 of each year, commencing September 15, 2004, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Subject to the last sentence of this Section 1, interest on the Series B Notes shall be paid as follows: (a) on the first Series B Interest Payment Date, (i) cash at a rate of 12% per annum and (ii) additional Series B Notes with a principal amount equal to the interest accrued from the Issue Date at a rate of 8% per annum; (b) on the next following Series B Interest Payment Date, (i) cash at a rate of 16% per annum and (ii) additional Series B Notes with a principal amount equal to the interest accrued from the last Series B Interest Payment Date at a rate of 8% per annum; B-2 (c) on the next following Series B Interest Payment Date, (i) cash at a rate of 20% per annum and (ii) additional Series B Notes with a principal amount equal to the interest accrued from the last Series B Interest Payment Date at a rate of 4% per annum; and (d) on the next following Series B Interest Payment Date and thereafter until the Series B Maturity Date, cash at a rate of 24% per annum. If the Company is prohibited at any time by the terms of any of its Financing Agreements from paying interest on the Series B Notes in cash, any such interest shall be payable in kind at a rate that is 2.0% per annum in excess of the portion of the then applicable Series B Interest Rate payable in cash; provided however, that in no event shall the interest payable on the Series B Notes exceed 24.99% at any time. Notwithstanding the foregoing, if the Company obtains Stockholder Approval on or before July 29, 2004, the Series B Interest Rate shall be reset, retroactively from the Issue Date, to 6% per annum, payable in cash. 2. METHOD OF PAYMENT. The Company will pay interest on the Series B Notes to the Persons who are registered Holders at the close of business on the February 28 or August 31 next preceding an Interest Payment Date, even if such Series B Notes are canceled after such record date and on or before such Interest Payment Date. Each payment of interest on the Series B Notes will be made to the Holder by certified or bank cashier's check or wire transfer of immediately available funds, or by the issuance of additional Series B Notes, as and to the extent applicable, at such address or to such account as the Holder specifies in writing to the Company at least five Business Days before such payment is to be made. Any such written instructions may provide that the information contained therein shall continue to be in effect with respect to subsequent interest payments until thereafter modified by written instructions of such Holder, which modified instructions shall take effect as of the next Interest Payment Date occurring more than five Business Days after delivery of such modified instructions. Any Series B Note issued to a Holder as payment of interest due on an Interest Payment Date will be issued in a principal amount equal to the amount of such interest, will commence accruing interest as of the calendar day immediately following such Interest Payment Date, will otherwise have the same terms as the Series B Notes issued at Closing and will be subject to the provisions and have the benefits of the Note Purchase Agreement. 3. SUBSIDIARY GUARANTOR. Payment of principal and interest on the Series B Notes is guaranteed by the Subsidiary Guarantor as described in Article 11 of the Note Purchase Agreement. By acceptance of this Series B Note, the Holder agrees that such guarantee is subordinated in full to the rights of the lenders under the Senior Secured Debt Facility as described in Section 11.5 of the Note Purchase Agreement. 4. SECURITY. The Series B Notes are secured obligations of the Company and the Subsidiary Guarantor. The Series B Notes are secured by (i) a second-priority pledge of 100% of the capital stock of Milacron Capital Holdings B.V. and 65% of the capital stock of Milacron B.V.; and (ii) a second-priority pledge of 100% of the capital stock of each directly wholly-owned domestic Subsidiary of the Company. B-3 5. EXCHANGE. If (i) the Company obtains Stockholder Approval on or before July 29, 2004, (ii) any required HSR Approval has occurred and (iii) the Euro Note Refinancing Condition is satisfied at any time, then, upon the occurrence of the events described in the foregoing clauses (i), (ii), and (iii), the aggregate principal amount of the Series B Notes shall be exchanged for an aggregate of $70 million in liquidation preference of Preferred Stock at the Series B Exchange Rate. If (i) the Company receives Stockholder Approval on or before July 29, 2004 and (ii) any required HSR Approval has occurred, then at any time following the occurrence of the events described in the foregoing clauses (i) and (ii), if the Series A Majority Holders make a concurrent similar election with respect to the Series A Notes pursuant to Section 9.1(b) of the Note Purchase Agreement, the Series B Majority Holders may, on behalf of all the Holders of the Series B Notes, elect, upon 10 days prior written notice to the Company, to exchange the aggregate principal amount of the Series B Notes into an aggregate of $70 million in liquidation preference of Preferred Stock at the Series B Exchange Rate. In the event that (i) the Company does not obtain Stockholder Approval on or before July 29, 2004 or (ii) any required HSR Approval does not occur, the Series B Notes shall not be exchangeable and shall remain outstanding until the Series B Maturity Date. 6. DENOMINATIONS, TRANSFER. The Notes are in registered form without coupons in minimum denominations of $5,000 and integral multiples of $1,000. The transfer of Series B Notes may be registered as provided in the Note Purchase Agreement. The Company may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law in connection with a transfer or conversion. 7. PERSONS DEEMED OWNERS. The registered Holder of a Series B Note may be treated as its owner for all purposes. 8. AMENDMENT, SUPPLEMENT AND WAIVER. Except as expressly provided elsewhere herein or in the Note Purchase Agreement, any term of the Notes or of the Note Purchase Agreement may be amended or modified, and the observance of any term of the Notes or of the Note Purchase Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (i) the Company and (ii) the Majority Holders; provided, however, that any term of the Notes or the Note Purchase Agreement that affects the rights or duties of only Holders of the Series A Notes (but not Holders of the Series B Notes) or Holders of the Series B Notes (but not Holders of the Series A Notes) may be amended or modified, and the observance of any term of the Notes or of the Note Purchase Agreement that affects the rights or duties of only Holders of the Series A Notes (but not Holders of the Series B Notes) or Holders of the Series B Notes (but not Holders of the Series A Notes) may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of (i) the Company and (ii) the Series A Majority Holders or the Series B Majority Holders, as applicable. Any provision of this Series B Note or the Note Purchase Agreement that expressly provides for waiver or consent by a specified group or percentage of the Investors or Holders may be amended or waived only by such specified group or percentage of the Investors or Holders. Any amendment or waiver effected in accordance with this Section 8 shall be binding upon each Holder of the Series B Notes, each future Holder and the Company. Notwithstanding the foregoing, the Series B Notes (including this Series B Note) or the Note Purchase Agreement may be amended or supplemented, without the consent of any Holder of this Series B Note, to cure any ambiguity, defect or inconsistency in a manner that does not materially adversely affect any Holder of the Series B Notes, to make any change that would provide any additional rights or benefits to the Holders of the Series B Notes or that does not adversely affect the legal rights of any such Holder. Further, notwithstanding any of the foregoing, without the consent of each Holder affected, an amendment or waiver under this Section 8 or Section 14.3 of the Note Purchase Agreement may not, with respect to any Series B Note held by a non-consenting Holder: B-4 (a) reduce the principal amount of Series B Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal amount of, or change the scheduled maturity of, such Series B Note; (c) reduce the Interest Rate applicable to such Series B Note or change the time for payment of interest on such Series B Note; (d) waive a Default or Event of Default in the payment of interest or principal on such Series B Note (except a rescission of acceleration of the Series B Notes by the Series B Majority Holders and a waiver of the payment default that resulted from such acceleration); (e) make the principal of, or interest on, such Series B Note payable in currency or assets other than that stated in such Series B Note or the Note Purchase Agreement; (f) except as expressly provided in such Series B Note or the Note Purchase Agreement, increase the Series B Exchange Rate, limit the times at which or amounts for which such Series B Note may be exchanged for Preferred Stock or change the nature of the consideration to be received upon an exchange of such Series B Note; or (g) make any change in the provisions of the Note Purchase Agreement relating to waivers of past Defaults or the rights of the Holder of such Series B Note to receive payments of principal of or interest on such Series B Note. 9. DEFAULTS AND REMEDIES. Defaults and remedies are set forth in Article 8 of the Note Purchase Agreement. 10. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder of the Company, as such, shall not have any liability for any obligations of the Company under the Series B Notes or the Note Purchase Agreement for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Series B Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Series B Notes. B-5 EXHIBIT C [Form of Registration Rights Agreement] C-1 EXHIBIT D [FORM OF] CONTINGENT WARRANT AGREEMENT BY AND AMONG MILACRON INC., GLENCORE FINANCE AG AND MIZUHO INTERNATIONAL PLC DATED AS OF MARCH 12, 2004 TABLE OF CONTENTS
Page ---- ARTICLE I CERTAIN DEFINITIONS ARTICLE II CONTINGENT WARRANT CERTIFICATES Section 2.1 Issuance of Contingent Warrants............................................. 6 Section 2.2 Forms of Contingent Warrant Certificates.................................... 6 Section 2.3 Execution of Contingent Warrant Certificates................................ 6 Section 2.4 Registration of Contingent Warrant Certificates............................. 7 Section 2.5 Exchange and Transfer of Contingent Warrant Certificates.................... 7 Section 2.6 Lost, Stolen, Mutilated or Destroyed Contingent Warrant Certificates........ 7 Section 2.7 Cancellation of Contingent Warrant Certificates............................. 7 ARTICLE III CONTINGENT WARRANT EXERCISE PRICE AND EXERCISE OF CONTINGENT WARRANTS Section 3.1 Exercise Price.............................................................. 8 Section 3.2 Procedure for Exercise of Contingent Warrants............................... 8 Section 3.3 Issuance of Warrant Shares.................................................. 8 Section 3.4 Certificates for Unexercised Contingent Warrants............................ 9 Section 3.5 Reservation of Shares....................................................... 9 Section 3.6 No Impairment............................................................... 9 Section 3.7 Expiration of Contingent Warrants........................................... 9 ARTICLE IV ADJUSTMENTS AND NOTICE PROVISIONS Section 4.1 Adjustment of Exercise Price................................................ 9 Section 4.2 Adjustment of Number of Shares.............................................. 10 Section 4.3 Reorganizations............................................................. 10 Section 4.4 Verification of Computations................................................ 11 Section 4.5 Notice of Certain Actions................................................... 11 Section 4.6 Certificate of Adjustments.................................................. 11 Section 4.7 Contingent Warrant Certificate Amendments................................... 11 Section 4.8 Fractional Shares........................................................... 12
D-i ARTICLE V MISCELLANEOUS Section 5.1 Payment of Taxes and Charges................................................ 12 Section 5.2 Amendment and Waiver........................................................ 12 Section 5.3 Assignment.................................................................. 12 Section 5.4 Term ....................................................................... 13 Section 5.5 Successor to Company........................................................ 13 Section 5.6 Notices..................................................................... 13 Section 5.7 Defects in Notice........................................................... 14 Section 5.8 Governing Law............................................................... 14 Section 5.9 Remedies.................................................................... 14 Section 5.10 Standing................................................................... 15 Section 5.11 Headings................................................................... 15 Section 5.12 Counterparts............................................................... 15 Section 5.13 Severability............................................................... 15 Section 5.14 Entire Agreement........................................................... 15 Exhibit A - Form of Contingent Warrant Certificate...................................... A-1 Exhibit B - Form of Accountant's Certificate ........................................... B-1

D-ii CONTINGENT WARRANT AGREEMENT THIS CONTINGENT WARRANT AGREEMENT (the "Agreement"), dated as of March 12, 2004, is entered into by and among Milacron Inc., a Delaware corporation (the "Company"), Glencore Finance AG ("Glencore"), and Mizuho International plc ("Mizuho", and together with Glencore, the "Purchasers"). W I T N E S S E T H: WHEREAS, the Company consummated a financing of newly invested funds by entering into that certain Note Purchase Agreement (the "Note Purchase Agreement"), dated as of March 12, 2004, by and among the Company and the Purchasers, pursuant to which the Company has issued to the Purchasers the Notes (as defined herein); WHEREAS, upon the receipt of Stockholder Approval (as defined herein) and the satisfaction or waiver of the Euro Note Refinancing Condition (as defined herein), the Notes are exchangeable for shares of Preferred Stock (as defined herein); WHEREAS, upon the exchange of the Notes for shares of Preferred Stock, the Company proposes to issue warrants ("Contingent Warrants") to the holders of Preferred Stock to purchase up to an aggregate of one million shares (subject to adjustment) of the Company's common stock, par value $0.01 per share ("Common Stock") (the Common Stock issuable upon exercise of the Contingent Warrants being referred to herein as the "Contingent Warrant Shares"); WHEREAS, the Contingent Warrants shall be exercisable in the event of a Cash Flow Default (as defined herein); and WHEREAS, upon exercise of any Contingent Warrants, the holders of Preferred Stock shall own Contingent Warrant Shares. NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS "Accountant's Certificate" has the meaning set forth in Section 3.2(b) hereof. "Agreement" has the meaning set forth in the Preamble hereof. "Assignment" has the meaning set forth in Section 2.2 hereof. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Cash Flow Default" has the meaning set forth in Section 3.2(a) hereof. "Closing Price" for any date shall mean the last sale price reported in The Wall Street Journal or, in case no such reported sale takes place on such date, the average of the last reported bid and asked prices, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed if that is the principal market for the Common Stock or, if not listed or admitted to trading on any national securities exchange or if such national securities exchange is not the principal market for the Common Stock, the last sale price as reported on Nasdaq or its successor, if any, or if the Common Stock is not so reported, the average of the reported bid and asked prices in the over-the-counter market, as furnished by the National Quotation Bureau, Inc., or if such firm is not then engaged in the business of reporting such prices, as furnished by any similar firm then engaged in such business and selected by the Company or, if there is no such firm, as furnished by any member of the National Association of Securities Dealers, Inc. selected by the Company or, if the Common Stock is not quoted in the over-the-counter market, the fair value thereof determined in good faith by the Company's Board of Directors as of a date which is within 15 days of the date as of which the determination is to be made. "Common Stock" has the meaning set forth in the Recitals hereof. "Company" has the meaning set forth in the Preamble hereof. "Consolidated Cash Flow" means, for any period, the Consolidated Net Income of the Company and its Consolidated Subsidiaries for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Expense; plus (ii) all income tax expense of the Company and its Consolidated Subsidiaries; plus (iii) depreciation and amortization expense of the Company and its Consolidated Subsidiaries; plus (iv) all losses attributable to grinding wheels operations; plus (v) restructuring charges and related severance and other expenses in an aggregate amount not to exceed $1.5 million; plus (vi) all other non-cash charges of the Company and its Consolidated Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period); plus (vii) expenses related to debt refinancing; plus (viii) any payment of fees and expenses under any Receivables Liquidity Facility; plus D-2 (ix) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; minus (x) all gains attributable to grinding wheels operations; in each case determined on a consolidated basis for such period in conformity with GAAP. "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its Consolidated Subsidiaries, whether paid in cash or accrued as a liability, plus, to the extent not included in such total interest expense, and to the extent deducted in determining Consolidated Net Income, without duplication: (i) the interest component of all payments associated with Capital Lease Obligations; plus (ii) amortization of debt discount and debt issuance cost; plus (iii) capitalized interest; plus (iv) losses and upfront costs on Hedging Obligations; plus (v) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Company or any Consolidated Subsidiary; minus (vi) interest income for such period; in each case determined on a consolidated basis for such period in conformity with GAAP. "Consolidated Net Income" means, for any period, the net income of the Company and its Consolidated Subsidiaries, excluding the cumulative effect of a change in accounting principles. "Consolidated Subsidiaries" means, with respect to the Company, each subsidiary consolidated with the Company in its financial statement prepared in accordance with GAAP. "Contingent Warrant Certificates" means the certificates evidencing the Contingent Warrants. "Contingent Warrants" has the meaning set forth in the Recitals hereof. "Contingent Warrant Shares" has the meaning set forth in the Recitals hereof. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values. D-3 "Date of Exercise" means with respect to any Contingent Warrant the date on which such Contingent Warrant is exercised as provided herein. "Election to Purchase" has the meaning set forth in Section 2.2 hereof. "Euro Note Refinancing Condition" has the meaning ascribed to it in the Note Purchase Agreement. "Exercise Price" means the purchase price of one Contingent Warrant Share, reflecting all appropriate adjustments made in accordance with the provisions of Article IV hereof. "Expiration Date" means 5:00 P.M., New York City time, on March 15, 2011. "Fair Market Value" means, on a per share basis, the average of the daily Closing Prices of the Common Stock for the five (5) consecutive Trading Days ending the Trading Day immediately preceding the Date of Exercise. "GAAP" means generally accepted accounting principles in the United States of America, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. "Glencore" has the meaning set forth in the Preamble hereof. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing the Indebtedness of any Person and any obligations, direct or indirect, contingent or otherwise, of such Person: (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. "Holder" means a holder of a Contingent Warrant Certificate. D-4 "Indebtedness" means, with respect to any Person, indebtedness of such Person (i) for money borrowed or (ii) evidenced by notes, debentures, bonds or other similar instruments. "Initial Exercise Price" has the meaning set forth in Section 3.1 hereof. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement with respect to exposure to interest rates. "Mizuho" has the meaning set forth in the Preamble hereof. "Nasdaq" means The Nasdaq Stock Market, Inc.'s National Market. "Note Purchase Agreement" has the meaning set forth in the Recitals hereof. "Notes" has the meaning set forth in the Recitals hereof. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Person" means and includes any person, firm, corporation, association, trust or other enterprise or any governmental or political subdivision or agency, department or instrumentality thereof, including the Company and the Purchasers. "Preferred Stock" means the 6% Series B Convertible Preferred Stock of the Company. "Purchasers" has the meaning set forth in the Preamble hereof. "Receivables Liquidity Facility" means the Amended and Restated Receivables Purchase Agreement dated as of January 26, 1996, as amended, among the Company, Cincinnati Milacron Marketing Company, Cincinnati Milacron Commercial Corp., Valenite Inc., DME Company, Market Street Funding Corporation and PNC Bank, National Association, as the same may be amended, extended, renewed, refinanced, replaced, supplemented or modified from time to time or any replacement receivables liquidity facility. "Reorganizations" has the meaning set forth in Section 4.3 hereof. "Stockholder Approval" has the meaning ascribed to it in the Note Purchase Agreement. "Subsidiary" of any Person means (i) a corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned or controlled by such Person, directly or indirectly through Subsidiaries, and (ii) any partnership, association, joint venture or other entity in which such Person, directly or indirectly through Subsidiaries, has more than a 50% equity interest at the time. D-5 "Trading Days" with respect to the Common Stock means (i) if the Common Stock is listed or admitted for trading on any national securities exchange, days on which such national securities exchange is open for business or (ii) if the Common Stock is quoted on Nasdaq or any similar system of automated dissemination of quotations of securities prices, days on which trades may be made on such system. ARTICLE II CONTINGENT WARRANT CERTIFICATES Section 2.1 Issuance of Contingent Warrants. (a) Immediately after (i) the receipt of Stockholder Approval, (ii) satisfaction or waiver of the Euro Note Refinancing Condition and (iii) exchange of the Notes into shares of Preferred Stock pursuant to the terms of the Note Purchase Agreement, the Company shall issue to each holder of Preferred Stock a Contingent Warrant to purchase two Contingent Warrant Shares per share of Preferred Stock held by such holder. The Contingent Warrants shall not be separately transferable from the Preferred Stock unless a Cash Flow Default shall have occurred and the Contingent Warrants have been exercised pursuant to the terms hereof. (b) Each Contingent Warrant Certificate shall evidence the number of Contingent Warrants specified therein, and each Contingent Warrant evidenced thereby shall represent the right, subject to the provisions contained herein, to purchase from the Company two Contingent Warrant Shares. Section 2.2 Forms of Contingent Warrant Certificates. The Contingent Warrant Certificates shall be issued in the form of Exhibit A attached hereto, together with the form of the election to purchase (the "Election to Purchase") and assignment (the "Assignment") to be attached thereto, and, in addition, may have such letters, numbers or other marks of identification or designation and such legends, summaries, or endorsements stamped, printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as, in any particular case, may be required in the opinion of counsel for the Company, to comply with any law or with any rule or regulation of any regulatory authority or agency, or to conform to customary usage. Section 2.3 Execution of Contingent Warrant Certificates. The Contingent Warrant Certificates shall be executed on behalf of the Company by an Officer thereof, either manually or by facsimile signature printed thereon. In case any Officer of the Company who shall have signed any of the Contingent Warrant Certificates shall cease to be an Officer of the Company either before or after delivery thereof by the Company to any Holder, the signature of such Person on such Contingent Warrant Certificates shall be valid nevertheless and such Contingent Warrant Certificates may be issued and delivered to those persons entitled to receive the Contingent Warrants represented thereby with the same force and effect as though the Person who signed such Contingent Warrant Certificates had not ceased to be an Officer of the Company. D-6 Section 2.4 Registration of Contingent Warrant Certificates. The Company shall number and keep a registry of the Contingent Warrant Certificates in a register as they are needed. The Company may deem and treat the Holders as the absolute owners thereof for all purposes. Section 2.5 Exchange and Transfer of Contingent Warrant Certificates. (a) The Contingent Warrants (and any Contingent Warrant Shares issued upon exercise of the Contingent Warrants) shall bear such restrictive legend or legends as may be required by law and shall be transferable only in accordance with the terms of this Agreement. (b) The Company may from time to time note the transfer of any outstanding Contingent Warrant Certificates in a warrant register to be maintained by the Company upon surrender thereof accompanied by a written instrument or instruments of transfer in form satisfactory to the Company duly executed by the Holder or Holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney. Upon any such registration of transfer, a new Contingent Warrant Certificate shall be issued to the transferee(s). (c) Contingent Warrant Certificates may be exchanged at the option of the Holder(s) thereof, when surrendered to the Company at the address set forth in Section 5.6 hereof for another Contingent Warrant Certificate or Contingent Warrant Certificates of like tenor and representing in the aggregate a like number of Contingent Warrant Shares; provided, however, that the Company shall not be required to issue any Contingent Warrant Certificate representing any fractional Contingent Warrant Shares. Section 2.6 Lost, Stolen, Mutilated or Destroyed Contingent Warrant Certificates. If any Contingent Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company shall issue, execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Contingent Warrant Certificate, or in lieu of or in substitution for a lost, stolen or destroyed Contingent Warrant Certificate, a new Contingent Warrant Certificate representing an equivalent number of Contingent Warrants or Contingent Warrant Shares. If required by the Company, the Holder of the mutilated, lost, stolen or destroyed Contingent Warrant Certificates must provide indemnity sufficient to protect the Company from any loss which it may suffer if the Contingent Warrant Certificate is replaced. Any such new Contingent Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Contingent Warrant Certificate shall be at any time enforceable by anyone. Section 2.7 Cancellation of Contingent Warrant Certificates. Any Contingent Warrant Certificate surrendered upon the exercise of Contingent Warrants or for exchange or transfer shall be canceled and shall not be reissued by the Company; and, except as provided in Section 3.4 hereof in case of the exercise of less than all of the Contingent Warrants evidenced by a Contingent Warrant Certificate or in Section 2.4 in an exchange or transfer, no Contingent Warrant Certificate shall be issued hereunder in lieu of such canceled Contingent Warrant Certificate. Any Contingent Warrant Certificate so canceled shall be destroyed by the Company. D-7 ARTICLE III CONTINGENT WARRANT EXERCISE PRICE AND EXERCISE OF CONTINGENT WARRANTS Section 3.1 Exercise Price. Each Contingent Warrant Certificate shall, when signed by an Officer of the Company, entitle the Holder thereof to purchase from the Company, subject to the terms and conditions of this Agreement, the number of fully paid and nonassessable Contingent Warrant Shares evidenced thereby at a purchase price of $0.01 per share (the "Initial Exercise Price") or such adjusted number of Contingent Warrant Shares at such adjusted purchase price as may be established from time to time pursuant to the provisions of Article IV hereof, payable in full in accordance with Section 3.2 hereof, at the time of exercise of the Contingent Warrant. Section 3.2 Procedure for Exercise of Contingent Warrants. (a) The Contingent Warrants may be exercised prior to the Expiration Date at the Exercise Price if, but only if, the Company's Consolidated Cash Flow for the fiscal year ended December 31, 2005 is less than $60 million (such occurrence, a "Cash Flow Default"). If the Company's Consolidated Cash Flow for the fiscal year ended December 31, 2005 is $60 million or more, then the Contingent Warrants shall immediately terminate and shall not be exerciseable. (b) The Company shall deliver to the Holders not later than the 90th day following the end of the Company's fiscal year ended December 31, 2005, a certificate of the Company's chief financial officer setting forth the calculation of Consolidated Cash Flow (together with such supporting information as the Holders may reasonably request to verify Consolidated Cash Flow) for such fiscal year and certifying that such calculations are true and correct to the best of the Company's knowledge (such letter and certificate is referred to as an "Accountant's Certificate"). (c) In the event the Contingent Warrants become exercisable, the Company shall promptly provide written notice to each Holder of the exercisability of the Contingent Warrants at the addresses set forth in Section 5.6 hereof. The Contingent Warrants shall expire at 5:00 p.m., New York City time, on the Expiration Date. The Contingent Warrants may be exercised by surrendering the Contingent Warrant Certificates representing such Contingent Warrants to the Company at its address set forth in Section 5.6 hereof, together with the Election to Purchase duly completed and executed, accompanied by payment in full, as set forth below, to the Company of the Exercise Price for each Contingent Warrant Share in respect of which such Contingent Warrants are being exercised. Such Exercise Price shall be paid in full by (i) cash or a certified check or a wire transfer in same day funds in an amount equal to the Exercise Price multiplied by the number of Contingent Warrant Shares then being purchased or (ii) delivery to the Company of that number of shares of Common Stock having a Fair Market Value equal to the Exercise Price multiplied by the number of Contingent Warrant Shares then being purchased. Section 3.3 Issuance of Warrant Shares. As soon as practicable after the Date of Exercise of any Contingent Warrants, the Company shall issue, or cause its transfer agent to issue, a certificate or certificates for the number of full Contingent Warrant Shares, registered in D-8 accordance with the instructions set forth in the Election to Purchase, together with cash for fractional shares as provided in Section 4.8. All Contingent Warrant Shares issued upon the exercise of any Contingent Warrants shall be validly authorized and issued, fully paid, nonassessable, free of preemptive rights and (subject to Section 5.1 hereof) free from all taxes, liens, charges and security interests in respect of the issuance thereof. Each person in whose name any such certificate for Contingent Warrant Shares is issued shall be deemed for all purposes to have become the holder of record of the Common Stock represented thereby on the Date of Exercise of the Contingent Warrants resulting in the issuance of such shares, irrespective of the date of issuance or delivery of such certificate for Contingent Warrant Shares. Section 3.4 Certificates for Unexercised Contingent Warrants. In the event that, prior to the Expiration Date, a Contingent Warrant Certificate is exercised in respect of fewer than all of the Contingent Warrant Shares issuable on such exercise, a new Contingent Warrant Certificate representing the remaining Contingent Warrant Shares shall be issued and delivered pursuant to the provisions hereof; provided, however, that the Company shall not be required to issue any Contingent Warrant Certificate representing any fractional Contingent Warrant Shares. Section 3.5 Reservation of Shares. The Company shall at all times reserve and keep available, free from preemptive rights, for issuance upon the exercise of Contingent Warrants, the maximum number of its authorized but unissued shares of Common Stock which may then be issuable upon the exercise in full of all outstanding Contingent Warrants. Section 3.6 No Impairment. The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Contingent Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holders against impairment. Section 3.7 Expiration of Contingent Warrants. Each Contingent Warrant not exercised prior to 5:00 p.m., New York City time, on the Expiration Date shall become void and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of such time. The Company shall give written notice of the Expiration Date to the registered holders of the then outstanding Contingent Warrants not less than 90 nor more than 120 days prior to the Expiration Date; provided, however, that if the Company fails to give such notice, the Contingent Warrants shall still terminate and become void on the applicable Expiration Date. ARTICLE IV ADJUSTMENTS AND NOTICE PROVISIONS Section 4.1 Adjustment of Exercise Price. Subject to the provisions of this Article IV, the Exercise Price in effect from time to time shall be subject to adjustment in the following manner. In case the Company shall (i) declare a dividend or make a distribution on the outstanding shares of its Common Stock in shares of its Common Stock, (ii) subdivide or reclassify the outstanding shares of its Common Stock into a greater number of shares, or D-9 (iii) combine or reclassify the outstanding shares of its Common Stock into a smaller number of shares, the Exercise Price in effect immediately after the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be adjusted so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding immediately before such dividend, distribution, subdivision, combination or reclassification, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such dividend, distribution, subdivision, combination or reclassification. Such adjustment shall be made successively whenever any event specified above shall occur. Section 4.2 Adjustment of Number of Shares. Upon each adjustment of the Exercise Price pursuant to Section 4.l hereof, each Contingent Warrant shall thereupon evidence the right to purchase that number of Contingent Warrant Shares (calculated to the nearest hundredth of a share) obtained by multiplying the number of Contingent Warrant Shares purchasable immediately prior to such adjustment upon exercise of the Contingent Warrant by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price in effect immediately after such adjustment. Section 4.3 Reorganizations. In case of any capital reorganization, other than in the cases referred to in Section 4.1 hereof, or the consolidation or merger of the Company with or into another corporation (other than a merger or consolidation in which the Company is the continuing corporation and which does not result in any reclassification of the outstanding shares of Common Stock or the conversion of such outstanding shares of Common Stock into shares of other stock or other securities or property), or the sale or conveyance of the property of the Company as an entirety or substantially as an entirety (collectively such actions being hereinafter referred to as "Reorganizations"), there shall thereafter be deliverable upon exercise of any Contingent Warrant (in lieu of the number of Contingent Warrant Shares theretofore deliverable) the number of shares of stock or other securities or property to which a holder of the number of Contingent Warrant Shares which would otherwise have been deliverable upon the exercise of such Contingent Warrant would have been entitled upon such Reorganization if such Contingent Warrant had been exercised in full immediately prior to such Reorganization. In case of any Reorganization, appropriate adjustment, as determined in good faith by the Board of Directors of the Company, shall be made in the application of the provisions herein set forth with respect to the rights and interests of Holders so that the provisions set forth herein shall thereafter be applicable, as nearly as possible, in relation to any shares or other property thereafter deliverable upon exercise of Contingent Warrants. Any such adjustment shall be made by and set forth in a supplemental agreement prepared by the Company or any successor thereto, between the Company and any successor thereto, and shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The Company shall not effect any such Reorganization, unless upon or prior to the consummation thereof the successor corporation, or if the Company shall be the surviving corporation in any such Reorganization and is not the issuer of the shares of stock or other securities or property to be delivered to holders of shares of the Common Stock outstanding at the effective time thereof, then such issuer shall assume by written instrument the obligation to deliver to the Holder of any Contingent Warrant Certificate such shares of stock, securities, cash or other property as such holder shall be entitled to purchase in accordance with the foregoing provisions. D-10 Section 4.4 Verification of Computations. The Company shall select a firm of independent public accountants (which may be its outside auditors), which selection may be changed from time to time, to verify each adjustment made in accordance with this Article IV. The certificate, report or other written statement of any such firm shall be conclusive evidence of the correctness of any adjustment made under this Article IV. Promptly upon its receipt of such certificate, report or statement from such firm of independent public accountants, the Company shall deliver a copy thereof to each Holder. Section 4.5 Notice of Certain Actions. In the event the Company shall (a) declare any dividend payable in stock to the holders of its Common Stock or make any other distribution in property other than cash to the holders of its Common Stock, (b) offer to the holders of its Common Stock rights to subscribe for or purchase any shares of any class of stock or any other rights or options, or (c) effect any reclassification of its Common Stock (other than a reclassification involving merely the subdivision or combination of outstanding shares of Common Stock) or any capital reorganization or any consolidation or merger (other than a merger in which no distribution of securities or other property is made to holders of Common Stock) or any sale, transfer or other disposition of its property, assets and business substantially as an entirety, or the liquidation, dissolution or winding up of the Company; then, in each such case, the Company shall cause notice of such proposed action to be mailed to each Holder at least thirty (30) days prior to such action; provided, however, that in the event that the Company provides public notice of such action specifying the information set forth below at least fifteen (15) days prior to such action, the Company shall be deemed to have satisfied its obligation to provide notice pursuant to this Section 4.5. Such notice shall specify the date on which the books of the Company shall close, or a record be taken, for determining holders of Common Stock entitled to receive such stock dividend or other distribution or such rights or options, or the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, dissolution, winding up or exchange shall take place or commence, as the case may be, and the date as of which it is expected that holders of record of Common Stock shall be entitled to receive securities or other property deliverable upon such action, if any such date has been fixed. Such notice shall be mailed in the case of any action covered by paragraph (a) or (b) of this Section 4.5, at least ten (10) days prior to the record date for determining holders of the Common Stock for purposes of receiving such payment or offer, and in the case of any action covered by this paragraph (c), at least ten (10) days prior to the earlier of the date upon which such action is to take place or any record date to determine holders of Common Stock entitled to receive such securities or other property. Section 4.6 Certificate of Adjustments. Whenever any adjustment is to be made pursuant to this Article IV, the Company shall prepare a certificate executed by the Chief Financial Officer of the Company, setting forth such adjustments to be mailed to each Holder at least fifteen (15) days prior thereto, such notice to include in reasonable detail (a) the events precipitating the adjustment, (b) the computation of any adjustments, and (c) the Exercise Price and the number of shares or the securities or other property purchasable upon exercise of each Contingent Warrant after giving effect to such adjustment. Such Certificate shall be accompanied by the accountant's verification required by Section 4.4 hereof. Section 4.7 Contingent Warrant Certificate Amendments. Irrespective of any adjustments pursuant to this Article IV, Contingent Warrant Certificates theretofore or thereafter D-11 issued need not be amended or replaced, but certificates thereafter issued shall bear an appropriate legend or other notice of any adjustments; provided, however, that the Company may, at its option, issue new Contingent Warrant Certificates evidencing Contingent Warrants in such form as may be approved by its Board of Directors of the Company to reflect any adjustment in the Exercise Price and number of Contingent Warrant Shares purchasable under the Contingent Warrants. Section 4.8 Fractional Shares. The Company shall not be required upon the exercise of any Contingent Warrant to issue fractional Contingent Warrant Shares which may result from adjustments in accordance with this Article IV to the Exercise Price or number of Contingent Warrant Shares purchasable under each Contingent Warrant. If more than one Contingent Warrant is exercised at one time by the same Holder, the number of full Contingent Warrant Shares which shall be issuable upon the exercise thereof shall be computed based on the aggregate number of Contingent Warrant Shares purchasable upon exercise of such Contingent Warrants. With respect to any final fraction of a share called for upon the exercise of any Contingent Warrant or Contingent Warrants, the Company shall pay an amount in cash to the Holder of the Contingent Warrants in respect of such final fraction in an amount equal to the Fair Market Value of a share of Common Stock as of the Date of Exercise of such Contingent Warrants, multiplied by such fraction. All calculations under this Section 4.8 shall be made to the nearest hundredth of a share. ARTICLE V MISCELLANEOUS Section 5.1 Payment of Taxes and Charges. The Company will pay all taxes (other than income taxes) and other government charges in connection with the issuance or delivery of the Contingent Warrants and the initial issuance or delivery of Contingent Warrant Shares upon the exercise of any Contingent Warrants and payment of the Exercise Price. The Company shall not, however, be required to pay any additional transfer taxes in connection with the subsequent transfer of Contingent Warrants or any transfer involved in the issuance and delivery of Contingent Warrant Shares in a name other than the name in which the Contingent Warrants to which such issuance relates were registered, and, if any such tax would otherwise be payable by the Company, no such issuance or delivery shall be made unless and until the person requesting such issuance has paid to the Company the amount of any such tax, or it is established to the reasonable satisfaction of the Company that any such tax has been paid. Section 5.2 Amendment and Waiver. No modification, amendment or waiver of any provision of this Agreement will be effective unless such modification, amendment or waiver is approved in writing by the Company and the Holders of at least a majority of the Contingent Warrants. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement. Section 5.3 Assignment. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Holders shall bind and inure to the benefit of their respective successors and assigns. D-12 Section 5.4 Term. This Agreement shall commence on the date hereof and end on March 15, 2011. Section 5.5 Successor to Company. In the event that the Company merges or consolidates with or into any other corporation or sell or otherwise transfers its property, assets and business substantially as an entirety to a successor corporation, the Company shall use reasonable commercial efforts to have such successor corporation assume each and every covenant and condition of this Agreement to be performed and observed by the Company. Section 5.6 Notices. Any notice or demand required by this Agreement to be given or made by any Holder to or on the Company shall be sufficiently given or made if sent by first-class or registered mail, postage prepaid, addressed as follows: if to the Company: Milacron Inc. 2090 Florence Avenue Cincinnati, OH 45206 Telephone: (513) 487-5000 Facsimile: (513) 487-5057 Attention: Ronald D. Brown with a copy to: Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Telephone: (212) 474-1000 Facsimile: (212) 474-3700 Attention: Mark I. Greene, Esq. if to Mizuho: Mizuho International plc Bracken House One Friday Street London EC4M 9JA UNITED KINGDOM Telephone: 011 44 207 236 1090 Facsimile: 011 44 207 090 6806 Attention: Patrick Collins With a copy to: Cadwalader, Wickersham & Taft LLP D-13 100 Maiden Lane New York, NY 10038 Telephone: (212) 504-6000 Facsimile: (212) 504-6666 Attention: Gregory M. Petrick, Esq. if to Glencore: Glencore Finance AG Baarermattstrasse 3 CH-6341 Baar SWITZERLAND Telephone: 011 41 41 709 2340 Facsimile: 011 41 41 709 2848 Attention: Steven Isaacs With a copy to: Cadwalader, Wickersham & Taft LLP 100 Maiden Lane New York, NY 10038 Telephone: (212) 504-6000 Facsimile: (212) 504-6666 Attention: Gregory M. Petrick, Esq. Any notice or demand required by this Agreement to be given or made by the Company to or on any Holder shall be sufficiently given or made, whether or not such holder receives the notice, five (5) days after mailing, if sent by first- class or registered mail, postage prepaid, addressed to such Holder at its last address as shown on the books of the Company. Otherwise, such notice or demand shall be deemed given when received by the party entitled thereto. Section 5.7 Defects in Notice. Failure to file any certificate or notice or to mail any notice, or any defect in any certificate or notice pursuant to this Agreement shall not affect in any way the rights of any Holder or the legality or validity of any adjustment made pursuant to Section 4.1 hereof, or any transaction giving rise to any such adjustment, or the legality or validity of any action taken or to be taken by the Company. Section 5.8 Governing Law. This Agreement and each Contingent Warrant Certificate issued hereunder shall be governed by the laws of the State of New York without regard to principles of conflicts of laws thereof. Section 5.9 Remedies. The Company stipulates that the remedies at law of Holders in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Agreement are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific enforcement of any agreement contained herein or by an injunction against a violation of any of the terms hereof. D-14 Section 5.10 Standing. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the Company and the Holders of any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement contained herein; and all covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the Company and its successors, and the Holders. Section 5.11 Headings. The descriptive headings of the articles and sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 5.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and all of which together shall constitute one and the same instrument. Section 5.13 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Section 5.14 Entire Agreement. This Agreement, including the Exhibits referred to herein and the other writings specifically identified herein or contemplated hereby, is complete, reflects the entire agreement of the parties with respect to its subject matter, and supersedes all previous written or oral negotiations, commitments and writings. D-15 IN WITNESS WHEREOF, this Contingent Warrant Agreement has been duly executed by the parties as of the day and year first above written. MILACRON INC. By: _____________________________ Name: Title: GLENCORE FINANCE.AG By: _____________________________ Name: Title: MIZUHO INTERNATIONAL PLC By: _____________________________ Name: Title: D-16 EXHIBIT A [Form of] Contingent Warrant Certificate THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES LAWS OF ANY STATE OR FOREIGN JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES. No. ________ Certificate for [ ] Warrants NOT EXERCISABLE AFTER 5:00 P.M., NEW YORK CITY TIME, ON MARCH 15, 2011 MILACRON INC. COMMON STOCK PURCHASE CONTINGENT WARRANT CERTIFICATE THIS CERTIFIES that [Investor] or its registered assigns is the registered holder (the "Registered Holder") of Contingent Warrants set forth above, each of which represents the right to purchase two fully paid and nonassessable share of common stock, par value $0.01 per share (the "Common Stock"), of Milacron Inc., a Delaware corporation (the "Company"), at the Exercise Price at the times specified in the Contingent Warrant Agreement (as hereinafter defined), by surrendering this Contingent Warrant Certificate, with the form of Election to Purchase attached hereto duly executed and by paying in full the Exercise Price. Payment of the Exercise Price shall be made as set forth in the Contingent Warrant Agreement. No Contingent Warrant may be exercised after 5:00 P.M., New York City time, on March 15, 2011 (the "Expiration Date"). All Contingent Warrants evidenced hereby shall thereafter become void, subject to the terms of the Contingent Warrant Agreement hereinafter referred to. Prior to the Expiration Date, subject to any applicable laws, rules or regulations restricting transferability and to any restriction on transferability that may appear on this Contingent Warrant Certificate and in accordance with the terms of the Contingent Warrant Agreement hereinafter referred to, the Registered Holder shall be entitled to transfer this Contingent Warrant Certificate, in whole or in part, upon surrender of this Contingent Warrant Certificate at the principal office of the Company with the form of assignment set forth hereon duly executed. Upon any such transfer, a new Contingent Warrant Certificate or Contingent Warrant Certificates representing the same aggregate number of Contingent Warrants to D-17 purchase the shares of the Common Stock will be issued in accordance with instructions in the form of assignment. Upon the exercise of less than all of the Contingent Warrants to purchase the shares of the Common Stock evidenced by this Contingent Warrant Certificate, there shall be issued to the Registered Holder a new Contingent Warrant Certificate in respect of the Contingent Warrants not exercised. Prior to the Expiration Date, the Registered Holder shall be entitled to exchange this Contingent Warrant Certificate, with or without other Contingent Warrant Certificates, for another Contingent Warrant Certificate or Contingent Warrant Certificates for the same aggregate number of Contingent Warrants to purchase the shares of the Common Stock, upon surrender of this Contingent Warrant Certificate at the principal office of the Company. Upon certain events provided for in the Contingent Warrant Agreement, the Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Contingent Warrant are required to be adjusted. No fractional shares will be issued upon the exercise of Contingent Warrants. As to any final fraction of a share of Common Stock which the Registered Holder of one or more Contingent Warrant Certificates, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay the cash value thereof determined as provided in the Contingent Warrant Agreement. No Contingent Warrant Certificate representing any fractional Contingent Warrant Shares will be issued. This Contingent Warrant Certificate is issued under and in accordance with the Contingent Warrant Agreement dated as of March 12, 2004 (the "Contingent Warrant Agreement") by and among the Company and the Purchasers (as defined in the Contingent Warrant Agreement) and is subject to the term and provisions contained in the Contingent Warrant Agreement. All capitalized terms not defined herein shall have the meanings given such terms as set forth in the Contingent Warrant Agreement. This Contingent Warrant Certificate shall not entitle the Registered Holder to any of the rights of a stockholder of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, or to attend or receive any notice of meetings of stockholders or any other proceedings of the Company. D-18 IN WITNESS WHEREOF, the Company has caused this Contingent Warrant Certificate to be duly executed under its facsimile corporate seal. MILACRON INC. By: _______________________________ Name: Title: [Seal] Attest: By: _______________________________ Name: Title: Secretary D-19 [Form of Assignment] FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned represented by the within Contingent Warrant Certificate, with respect to the number of Contingent Warrants to purchase the shares of the Common Stock set forth below:
NO. OF CONTINGENT NAME OF ASSIGNEE ADDRESS WARRANTS - ---------------- ------- -----------------
and does hereby irrevocably constitute and appoint _____________________ true and lawful Attorney, to make such transfer on the books of Milacron Inc., maintained for that purpose, with full power of substitution in the premises. Dated: ___________________________________________ Signature (Signature must conform in all respects to name of holder as specified on the face of the Contingent Warrant Certificate.) D-20 [Form of Election To Purchase] The undersigned hereby irrevocably elects to exercise ____________ of the Contingent Warrants represented by this Contingent Warrant Certificate and to purchase the shares of Common Stock issuable upon the exercise of said Contingent Warrants, and requests that certificates for such shares be issued and delivered as follows: ISSUE TO: _____________________________________________________________________ (NAME) ________________________________________________________________________________ (ADDRESS, INCLUDING ZIP CODE) ________________________________________________________________________________ (SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER) DELIVER TO: ____________________________________________________________________ (NAME) at _____________________________________________________________________________ (ADDRESS, INCLUDING ZIP CODE) In full payment of the purchase price with respect to the exercise of Contingent Warrants to purchase shares of the Common Stock, the undersigned: [ ] hereby tenders payment of $________ by cash, certified check, cashier's check or money order payable in United States currency to the order of the Company; or [ ] hereby delivers to the Company that number of shares of Common Stock having a Fair Market Value (as defined in the Contingent Warrant Agreement) equal to the Exercise Price multiplied by the number of Contingent Warrant Shares being purchased. D-21 If the number of Contingent Warrants to purchase the shares of the Common Stock hereby exercised is less than all the Contingent Warrants represented by this Contingent Warrant Certificate, the undersigned requests that a new Contingent Warrant Certificate representing the number of such full Contingent Warrants not exercised be issued and delivered as follows: ISSUE TO: _____________________________________________________________________ (NAME) ________________________________________________________________________________ (ADDRESS, INCLUDING ZIP CODE) ________________________________________________________________________________ (SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER) DELIVER TO: ____________________________________________________________________ (NAME) at _____________________________________________________________________________ (ADDRESS, INCLUDING ZIP CODE) Date: ________ ___, ______ ___________________________________________ Signature (Signature must conform in all respects to name of holder as specified on the face of the Contingent Warrant Certificate.) PLEASE INSERT SOCIAL SECURITY OR TAX I.D. NUMBER OF HOLDER ___________________________________________ D-22 EXHIBIT E [Form of] Guarantee Agreement This Guarantee Agreement is delivered by the undersigned (the "Subsidiary Guarantor") with respect to the 20% Secured Step-Up Series A Notes due 2007 and the 20% Secured Step-Up Series B Notes due 2007 issued by Milacron Inc. (the "Company") from time to time pursuant to the Note Purchase Agreement dated as of March 12, 2004 among the Company and the several investors named therein (the "Note Purchase Agreement"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Note Purchase Agreement. For value received, the Subsidiary Guarantor hereby fully, irrevocably and unconditionally guarantees to each Holder of a Note that: (a) the interest and principal on the Notes will be duly and punctually paid in full when due, whether at maturity, by acceleration or otherwise, and all other obligations of the Company to the Holders under the Note Purchase Agreement, the Notes and the Transaction Documents (including Expenses) (all the foregoing collectively called the "Guaranteed Obligations") will be promptly paid in full or performed, as the case may be, all in accordance with the terms hereof and thereof (including, but not limited to applicable grace periods). The Subsidiary Guarantor agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from the Subsidiary Guarantor and that the Subsidiary Guarantor will remain bound by this Guarantee Agreement notwithstanding any extension or renewal of any Guaranteed Obligation. Any term or provision of this Guarantee Agreement to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder shall not exceed the maximum amount that can be hereby guaranteed without rendering this Guarantee Agreement voidable as a fraudulent transfer or conveyance or ultra virus for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law or other laws, including the laws of the Netherlands. Failing payment or performance within applicable grace periods of any Guaranteed Obligation, for whatever reason, the Subsidiary Guarantor, upon notice from the Majority Holders under either or both the Series A Notes and/or the Series B Notes, as applicable, will be obligated to pay, or cause to be paid, the unpaid amount of such Guaranteed Obligations. To the extent permitted by applicable law, the Subsidiary Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, legality or enforceability of the Notes or the Note Purchase Agreement, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to thereto, the entry of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Subsidiary Guarantor, other than the payment in full of all the Guaranteed Obligations. E-1 The Subsidiary Guarantor hereby waives and relinquishes: (a) any right to require the Holders (each, a "Benefited Party") to proceed against the Company, any other Subsidiary thereof or any other Person or to proceed against or exhaust any security held by or on behalf of a Benefited Party or to pursue any other remedy in any party's power before proceeding against the Subsidiary Guarantor; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of a Benefited Party to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person or Persons; (c) demand, protest and notice of any kind, other than as required under the Guarantee Agreement, including but not limited to notice of the existence, creation or incurring of any new or additional Guaranteed Obligation or of any action or non action on the part of the Company, any Benefited Party or any creditor of the Company or on the part of any other Person whomsoever in connection with any of the Guaranteed Obligations; and (d) any defense based upon an election of remedies by a Benefited Party, including but not limited to an election to proceed against the Subsidiary Guarantor for reimbursement. The Subsidiary Guarantor hereby agrees that this Guarantee Agreement will not be discharged except by payment in full of all principal and interest on the Notes and all other monetary obligations under the Note Purchase Agreement. If any Holder is required by any court or otherwise to return to either the Company or the Subsidiary Guarantor, or any custodian, trustee, or similar official acting on the behalf of the Company or the Subsidiary Guarantor, any amount paid by the Company or the Subsidiary Guarantor to such Holder, this Guarantee Agreement, if and to the extent theretofore discharged, shall be reinstated in full force and effect. The Subsidiary Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all the Guaranteed Obligations. The Subsidiary Guarantor agrees that, as between it, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guaranteed Obligations may be accelerated as provided in Section 8.2 of the Note Purchase Agreement for the purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such acceleration, and (y) in the event of any acceleration of the Guaranteed Obligations as provided in Section 8.2 of the Note Purchase Agreement, such obligations shall, upon notice from the Majority Holders under either or, both the Series A Notes and/or the Series B Notes, as applicable, become due and payable by the Subsidiary Guarantor for the purpose of this Guarantee Agreement. The Subsidiary Guarantor hereby acknowledges that it shall not consolidate or merge with or into any corporation or other Person other than the Company or another Subsidiary Guarantor, or transfer all or substantially all of its assets to any corporation or other Person other than the Company or another Subsidiary Guarantor, unless this Guarantee Agreement shall be expressly assumed (in the event that the Subsidiary Guarantor is not the surviving corporation in the merger) or a new Guarantee Agreement (as defined in the Note Purchase Agreement) shall be signed by such successor corporation or other Person and delivered to each Investor. Any Guarantee Agreement so issued shall in all respects have the same legal rank and benefit under the Note Purchase Agreement as any Guarantee Agreement E-2 theretofore or thereafter issued in accordance with the terms of the Note Purchase Agreement as though all of such Guarantee Agreements had been issued at the date of the execution thereof. All payment obligations provided for under this Guarantee Agreement shall be subordinated in right of payment as provided for in the Intercreditor Agreement (as defined in the Note Purchase Agreement). This Guarantee Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof. IN WITNESS WHEREOF, the undersigned Subsidiary Guarantor has caused this Guarantee Agreement to be duly executed as of March 12, 2004. MILACRON CAPITAL HOLDINGS B.V. By: ___________________________________ Name: Title: E-3 EXHIBIT F [Form of Milacron Pledge Agreement] F-1 EXHIBIT G [Form of Milacron Dutch Pledge Agreement] G-1 EXHIBIT H [Form of Milacron Capital Holdings B.V. Pledge Agreement] H-1 EXHIBIT I [FORM OF] CERTIFICATE OF DESIGNATION OF VOTING POWERS, DESIGNATION, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS, OF 6.0% SERIES B CONVERTIBLE PREFERRED STOCK OF MILACRON INC. ------------------------ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ------------------------ Milacron Inc., a Delaware corporation (the "Company"), certifies that pursuant to the authority contained in Article FOURTH of its Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Company (the "Board") at a meeting duly called and held on [ ], 2004 duly approved and adopted the following resolution, which resolution remains in full force and effect on the date hereof: RESOLVED, that, pursuant to the authority vested in the Board of Directors in accordance with the provisions of the Certificate of Incorporation, a series of Serial Preference Stock of the Company is hereby created and that the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of such series, and qualifications, limitations and restrictions thereof are as follows: 1. Designation and Number of Shares. The shares of such series shall be designated as "6.0% Series B Convertible Preferred Stock" (the "Series B Preferred Stock"). The authorized number of shares of Series B Preferred Stock shall be eight hundred thousand (800,000). The Company shall be permitted to issue fractional shares. 2. Ranking. The Series B Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company, I-1 rank (i) senior to the Common Stock and to any and all other classes and series of capital stock of the Company the terms of which do not expressly provide that it ranks senior to or on a parity with the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company (collectively referred to with the Common Stock of the Company as "Junior Securities"); (ii) on a parity with any additional shares of Series B Preferred Stock issued by the Company in the future, and any other class or series of capital stock issued by the Company and approved by the holders of the Series B Preferred Stock as required by Sections 10(vii) and 10(viii) hereof the terms of which expressly provide that such class or series will rank on a parity with the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company (collectively referred to as "Parity Securities"); and (iii) junior to any class or series of capital stock issued by the Company and approved by the holders of the Series B Preferred Stock as required by Sections 10(vii) and 10(viii) hereof the terms of which expressly provide that such class or series will rank senior to the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company (collectively referred to as "Senior Securities"). 3. Dividends. (i) The holders of shares of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board out of assets of the Company legally available therefor, cumulative dividends accruing at the rate per annum of $12.00 per share, payable quarterly in arrears on the first days of March, June, September and December in each year, commencing on the first day of [ ], 2004 (each a "Dividend Payment Date" and each such quarterly period being a "Dividend Period"); provided, that (a) if any such Dividend Payment Date is not a Business Day, such payment shall be made on the next succeeding Business Day and (b) accumulated and unpaid dividends for any prior Dividend Period may be paid at any time. Except as provided in Sections 3(ii) and 5(iii) hereof, dividends will be payable in cash. (ii) If the Company is prohibited on any Dividend Payment Date by the terms of its Financing Agreements from paying dividends in cash, the Company may elect, when, as and if declared by the Board out of assets of the Company legally available therefor, to pay dividends through the issuance of additional shares of Series B Preferred Stock at a rate per annum of $16.00 per share. The number of additional shares of Series B Preferred Stock that are issued to holders of Series B Preferred Stock will be the number obtained by dividing (a) the total dollar amount of cumulative dividends due and payable on the applicable Dividend Payment Date by (b) the Liquidation Preference; provided, that the Company shall not be required to issue fractional shares of Series B Preferred Stock, but in lieu thereof may, if not restricted by its Financing Agreements, elect to pay in cash the portion of any dividend payable in shares of Series B Preferred Stock that would otherwise require the issuance of a fractional share. (iii) Dividends on the Series B Preferred Stock shall accrue whether or not the Company has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate to the extent they are not paid on the Dividend Payment Date for the Dividend Period to which they relate. I-2 (iv) No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series B Preferred Stock with respect to any Dividend Period unless all dividends for all preceding Dividend Periods have been declared and paid upon, or declared and a sufficient sum set apart for the payment of such dividends upon, all outstanding shares of Series B Preferred Stock. Unless full cumulative dividends on all outstanding shares of Series B Preferred Stock for all past Dividend Periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart, then: (a) no dividend (other than a dividend payable solely in shares of any Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities or Parity Securities, except dividends paid ratably on the Series B Preferred Stock and all such Parity Securities on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (b) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities, other than a distribution consisting solely of Junior Securities; (c) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of Junior Securities) by the Company or any of its subsidiaries; and (d) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities by the Company or any of its subsidiaries. Other than dividends which may, at the option of the Company, be declared (and in such case only if, and to the extent that, any such dividends are declared) pursuant to Section 4(xiv) hereof, holders of the Series B Preferred Stock will not be entitled to any dividends, whether payable in cash, property or stock, in excess of the full cumulative dividends as herein described. (v) Accrued but unpaid dividends shall not bear interest. 4. Conversion Rights. (i) A holder of shares of Series B Preferred Stock may convert such shares at any time, unless previously redeemed, at the option of the holder thereof, into shares of Common Stock. For the purposes of conversion, each share of Series B Preferred Stock shall be valued at an amount equal to its Liquidation Preference, which amount shall be divided by the Conversion Price in effect on the applicable Conversion Date (as defined in Section 4(ii) hereof) to determine the number of shares of Common Stock issuable upon conversion. The right to convert shares of Series B Preferred Stock called for redemption pursuant to Section 7 hereof shall terminate at the close of business on the Business Day preceding the Applicable Redemption Date and shall be lost if not exercised prior to that time, unless the Company shall default in payment of the Applicable Redemption Price. Immediately following conversion, the rights of the holder of any shares of converted Series B Preferred Stock shall cease and the person(s) entitled to receive the Common Stock upon the conversion of such shares of Series B Preferred Stock shall be treated for all purposes as having become the owners of such Common Stock. (ii) To convert Series B Preferred Stock, a holder must (A) surrender the certificate or certificates evidencing the shares of Series B Preferred Stock to be converted, duly endorsed in a form satisfactory to the Company, at the office of the Company or the Transfer Agent, (B) notify the Company at such office that such holder elects to convert Series B I-3 Preferred Stock and the number of shares such holder wishes to convert, (C) state in writing the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued, and (D) pay any transfer or similar tax, if required. In the event that a holder fails to notify the Company of the number of shares of Series B Preferred Stock which such holder wishes to convert, such holder shall be deemed to have elected to convert all shares represented by the certificate or certificates surrendered for conversion. The date on which the holder satisfies all the requirements in the first section of this Section 4(ii) is the "Conversion Date". As soon as practical after the applicable Conversion Date, the Company shall deliver a certificate for the number of shares of Common Stock issuable upon the conversion, and a new certificate representing the unconverted portion, if any, of the shares of Series B Preferred Stock represented by the certificate or certificates surrendered for conversion. The person in whose name the Common Stock certificate is registered shall be treated as the stockholder of record on and after the applicable Conversion Date. No payment or adjustment will be made for accrued and unpaid dividends on converted shares of Series B Preferred Stock or for dividends on any Common Stock issued upon such conversion. The holder of record of a share of Series B Preferred Stock at the close of business on a record date with respect to the payment of dividends on the Series B Preferred Stock will be entitled to receive such dividends with respect to such share of Series B Preferred Stock on the corresponding Dividend Payment Date, notwithstanding the conversion of such share after such record date and prior to such Dividend Payment Date. No payment or adjustment will be made upon conversion of shares of Series B Preferred Stock for dividends with respect to the Common Stock issued upon such conversion. If a holder of Series B Preferred Stock converts more than one share at a time, the number of full shares of Common Stock issuable upon conversion shall be based on the total conversion value of all shares of Series B Preferred Stock converted. If the last day on which Series B Preferred Stock may be converted is not a Business Day, Series B Preferred Stock may be surrendered for conversion on the next succeeding Business Day. (iii) The Company shall not be required to issue any fractional shares of Common Stock upon conversion of Series B Preferred Stock, but in lieu thereof may elect to pay a cash adjustment based upon the closing price of the Common Stock on the Business Day prior to the Conversion Date. (iv) If a holder converts shares of Series B Preferred Stock, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the holder shall pay any such tax that is due because the shares are issued in a name other than the holder's name. (v) The Company has reserved and shall continue to reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to permit the conversion of the Series B Preferred Stock in full. All shares of Common Stock that may be issued upon conversion of Series B Preferred Stock shall be fully paid and nonassessable. (vi) In case the Company shall pay or make a dividend or other distribution on any class of capital stock of the Company in Common Stock, other than any regularly scheduled dividend on any other preferred stock which does not trigger any anti-dilution provisions in any other security, the Conversion Price in effect at the opening of business on the day following the I-4 date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for determination of the holders entitled to such dividends and distributions. For the purposes of this Section 4(vi), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (vii) In case the Company shall issue rights, options or warrants to all holders of its Common Stock (other than pursuant to the Rights Offering) entitling them to subscribe for, purchase or acquire shares of Common Stock at a price per share less than the current market price per share (determined as provided in Section 4(xi) hereof) of the Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants, the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such Conversion Price by a fraction the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription, purchase or acquisition would purchase at such current market price and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription, purchase or acquisition, such reduction to become effective immediately after the opening of business on the day following the date fixed for determination of the holders entitled to such rights, options or warrants. However, upon the expiration of any right, option or warrant to purchase Common Stock, the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section 4(vii), if any such right, option or warrant shall expire and shall not have been exercised, the Conversion Price shall be recomputed immediately upon such expiration and effective immediately upon such expiration shall be increased to the price it would have been (but reflecting any other adjustments to the Conversion Price made pursuant to the provisions of this Section 4 after the issuance of such rights, options or warrants) had the adjustment of the Conversion Price made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of Common Stock actually purchased upon the exercise of such rights, options or warrants. No further adjustment shall be made upon exercise of any right, option or warrant if any adjustment shall be made upon the issuance of such security. For the purposes of this Section 4(vii), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company will not issue any rights, options or warrants in respect of shares of Common Stock held in the treasury of the Company. (viii) In case the outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be reduced, and, conversely, in case the outstanding shares of Common Stock shall each be I-5 combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be increased, to equal the product of the Conversion Price in effect on such date and a fraction the numerator or which shall be the number of shares of Common Stock outstanding immediately prior to such subdivision or combination, as the case may be, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such subdivision or combination, as the case may be. Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (ix) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock (A) evidences of its indebtedness or (B) shares of any class of capital stock, cash or other assets (including securities, but excluding (x) any rights, options or warrants referred to in Section 4(vii) hereof, (y) any dividends or distributions referred to in Sections 4(vi) or 4(viii) hereof, and (z) cash dividends paid from the Company's retained earnings), then, in each case, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of holders of Common Stock entitled to receive such distribution shall be adjusted by multiplying such Conversion Price by a fraction of which the numerator shall be the current market price per share (determined as provided in Section 4(xi) hereof) of the Common Stock on such date of determination (or, if earlier, on the date on which the Common Stock goes "ex-dividend" in respect of such distribution) less the then fair market value as determined by the Board (whose determination shall be conclusive and shall be described in a statement filed with the Transfer Agent) of the portion of the capital stock, cash or other assets or evidences of indebtedness so distributed (and for which an adjustment to the Conversion Price has not previously been made pursuant to the terms of this Section 4) applicable to one share of Common Stock, and the denominator shall be such current market price per share of the Common Stock, such adjustment to become effective immediately after the opening of business on the day following the date of determination of the holders entitled to such distribution. (x) The reclassification or change of Common Stock into securities, including securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 4(xviii) hereof shall apply) shall be deemed to involve (A) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of holders of Common Stock entitled to receive such distribution" within the meaning of Section 4(ix) hereof), and (B) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of Common Shares outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective," as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of Section 4(viii) hereof). (xi) For the purpose of any computation under Sections 4(vii) or 4(ix) above, the current market price per share of Common Stock on any day shall be deemed to be the average of the Closing Prices of the Common Stock for the 20 consecutive Trading Days ending the day before the day in question; provided, that, in the case of Section 4(ix), if the period between the I-6 date of the public announcement of the dividend or distribution and the date for the determination of holders of Common Stock entitled to receive such dividend or distribution (or, if earlier, the date on which the Common Stock goes "ex-dividend" in respect of such dividend or distribution) shall be less than 20 Trading Days, the period shall be such lesser number of Trading Days but, in any event, not less than five Trading Days. (xii) No adjustment in the Conversion Price need be made until all cumulative adjustments amount to 1% or more of the Conversion Price as last adjusted. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 4 shall be made to the nearest 1/10,000th of a cent or to the nearest 1/10,000th of a share, as the case may be. (xiii) For purposes of this Section 4, "Common Stock" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of Section 4(xviii) below, shares issuable on conversion of shares of Series B Preferred Stock shall include only shares of the class designated as Common Stock of the Company on the Issuance Date or shares of any class or classes resulting from any reclassification thereof and which have no preferences in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided, that, if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. (xiv) No adjustment in the Conversion Price shall reduce the Conversion Price below the then par value of the Common Stock. No adjustment in the Conversion Price need be made under Section 4(vi), 4(vii) and 4(ix) above if the Company issues or distributes to each holder of Series B Preferred Stock the shares of Common Stock, evidences of indebtedness, assets, rights, options or warrants referred to in those Sections which each holder would have been entitled to receive had Series B Preferred Stock been converted into Common Stock prior to the happening of such event or the record date with respect thereto. (xv) Whenever the Conversion Price is adjusted, the Company shall promptly mail to holders of Series B Preferred Stock, first class, postage prepaid, a notice of the adjustment. The Company shall file with the Transfer Agent a certificate from the Company's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. Subject to Section 4(xvi) hereof, the certificate shall be conclusive evidence that the adjustment is correct. (xvi) The Company from time to time may reduce the Conversion Price if it considers such reductions to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of Common Stock by any amount, but in no event may the Conversion Price be less than the par value of a share of Common Stock. Whenever the Conversion Price is reduced, the Company shall mail to holders of Series B Preferred Stock a notice of the reduction. The Company shall mail, first I-7 class, postage prepaid, the notice at least 15 days before the date the reduced Conversion Price takes effect. The notice shall state the reduced Conversion Price and the period it will be in effect. A reduction of the Conversion Price does not change or adjust the Conversion Price otherwise in effect for purposes of Sections 4(vi), 4(vii), 4(viii) and 4(ix) hereof. (xvii) If: (A) the Company takes any action which would require an adjustment in the Conversion Price pursuant to Sections 4(vii), 4(ix) or 4(x) hereof; (B) the Company consolidates or merges with, or transfers all or substantially all of its assets to, another Person, and stockholders of the Company must approve the transaction; or (C) there is a dissolution or liquidation of the Company; the Company shall mail to holders of the Series B Preferred Stock, first class, postage prepaid, a notice stating the proposed record or effective date, as the case may be. The Company shall mail the notice at least 10 days before such date. However, failure to mail the notice or any defect in it shall not affect the validity of any transaction referred to in clause (A), (B) or (C) of this Section 4(xvii). (xviii) In the case of any consolidation of the Company or the merger of the Company with or into any other Person or the sale or transfer of all or substantially all the assets of the Company pursuant to which the Company's Common Stock is converted into other securities, cash or assets, upon consummation of such transaction, any share of Series B Preferred Stock then remaining outstanding shall automatically become convertible into the kind and amount of securities, cash or other assets receivable upon the consolidation, merger, sale or transfer by a holder of the number of shares of Common Stock into which such share of Series B Preferred Stock might have been converted immediately prior to such consolidation, merger, transfer or sale (assuming such holder of Common Stock failed to exercise any rights of election and received per share the kind and amount of consideration receivable per share by a plurality of non-electing shares). Appropriate adjustment (as determined by the Board) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of Series B Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustment of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of Series B Preferred Stock. If this Section 4(xviii) applies, Sections 4(vi), 4(viii) and 4(x) hereof do not apply. (xix) The initial Conversion Price shall be subject to a one-time adjustment to $1.75 effective immediately after the open of business on June 30, 2005 if and only if the Company's Consolidated Cash Flow for its fiscal year ending December 31, 2004 is less than $50,000,000. If such one-time adjustment is required to be made, and any other adjustments to the Conversion Price have been made pursuant to this Section 4 prior to such one-time adjustment, in order to effectuate such one-time adjustment the Conversion Price in effect immediately prior to such one-time adjustment shall be reduced by multiplying such Conversion Price by a fraction the numerator of which shall be 1.75 and the denominator of which shall be I-8 2.00 effective immediately after the open of business on June 30, 2005 and no other adjustment shall be required pursuant to this paragraph 4(xix). (xx) In any case in which this Section 4 shall require that an adjustment as a result of any event becomes effective from and after a record date, the Company may elect to defer until after the occurrence of such event the issuance to the holder of any shares of Series B Preferred Stock converted after such record date and before the occurrence of such event of the additional shares of Common Stock issuable upon such conversion over and above the shares issuable on the basis of the Conversion Price in effect immediately prior to adjustment; provided, however, that if such event shall not have occurred and authorization of such event shall be rescinded by the Company, the Conversion Price shall be recomputed immediately upon such rescission to the price that would have been in effect had such event not been authorized, provided, that such rescission is permitted by and effective under applicable laws. 5. Mandatory Conversion. (i) Each share of Series B Preferred Stock not previously converted will automatically convert into shares of Common Stock on [anniversary of Issuance Date], 2011 or, if a Conversion Date Deferral has occurred in accordance with Section 5(iv) hereof, the New Conversion Date (either [anniversary of Issuance Date], 2011 or the New Conversion Date, as applicable, the "Mandatory Conversion Date"). For the purposes of such conversion, each share of Series B Preferred Stock shall be valued at an amount equal to its Liquidation Preference, which amount shall be divided by the Conversion Price in effect on the Mandatory Conversion Date to determine the number of shares of Common Stock issuable upon conversion of such share of Series B Preference Stock, provided, that the Company shall not be required to issue any fractional shares of Common Stock, but in lieu thereof may elect to pay a cash adjustment based upon the Closing Price of the Common Stock on the Business Day prior to the Mandatory Conversion Date. Immediately following such automatic conversion, dividends on each share of Series B Preferred Stock not previously converted shall cease to accumulate, the rights of the holders of all Series B Preferred Stock shall cease and the persons entitled to receive Common Stock upon such automatic conversion of Series B Preferred Stock shall be treated for all purposes as being the owners of such Common Stock. (ii) On the Mandatory Conversion Date, each holder of shares of Series B Preferred Stock shall be entitled to receive, in addition to the number of shares of Common Stock determined pursuant to Section 5(i) hereof, an amount equal to accrued and unpaid dividends, if any, on such holder's Series B Preferred Stock. (iii) If the Company is prohibited on the Mandatory Conversion Date by the terms of its Financing Agreements from paying accrued and unpaid dividends pursuant to Section 5(ii) hereof in cash, the Company may pay such accrued and unpaid dividends with shares of Common Stock. The number of shares of Common Stock to be issued in payment for such accrued and unpaid dividends will be the number obtained by dividing (x) the total dollar amount of dividends being paid with Common Stock by (y) the Conversion Price in effect on the Mandatory Conversion Date. I-9 (iv) If the Board determines that there are not assets legally available for the payment of dividends in either cash or Common Stock in respect of all accrued and unpaid dividends on the Series B Preferred Stock on [anniversary of Issuance Date], 2011, then the Mandatory Conversion Date shall not occur on such date but shall be deferred (a "Conversion Date Deferral") and the Company shall provide prompt notice of such Conversion Date Deferral to each holder of shares of Series B Preferred Stock. Subsequent to any Conversion Date Deferral, promptly after any determination by the Board that there are assets legally available for the payment in either cash or Common Stock of all accrued and unpaid dividends, the Board shall declare a new conversion date (the "New Conversion Date"). Upon such declaration, the Company shall provide notice of the New Conversion Date to each holder of shares of Series B Preferred Stock at least 30 days but not more than 60 days before the New Conversion Date. The New Conversion Date shall be the first Dividend Payment Date that is at least 30 days after the delivery of such notice. Notwithstanding any Conversion Date Deferral, dividends on the Series B Preferred Stock shall continue to accrue until the Mandatory Conversion Date. (v) The Company shall make such arrangements as it deems appropriate for the issuance of certificates, if any, representing shares of Common Stock and for any payment of cash for accrued and unpaid dividends, if any, or cash in lieu of fractional shares of Common Stock, if any, in exchange for and contingent upon the surrender of certificates representing the shares of Series B Preferred Stock (if such shares are held in certificated form); provided, that the Company shall give the holders of Series B Preferred Stock such notice of any such actions as the Company deems appropriate and upon such surrender such holders of Series B Preferred Stock shall be entitled to receive certificates, if any, representing shares of Common Stock and any payment of cash for accrued and unpaid dividends, if any, or cash in lieu of fractional shares of Common Stock, if any. Amounts payable in cash in respect of the shares of Series B Preferred Stock shall not bear interest. (vi) The Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the mandatory conversion. However, the holders shall pay any tax that is due because the shares are issued in a name other than the holder's name. 6. Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, each holder of shares of the Series B Preferred Stock will be entitled to payment out of the assets of the Company available for distribution of an amount equal to the Liquidation Preference per share of Series B Preferred Stock held by such holder, plus an amount equal to accrued and unpaid dividends, if any, to the date fixed for liquidation, dissolution or winding-up (including an amount equal to a prorated dividend for the period from the last Dividend Payment Date to the date fixed for liquidation, dissolution, winding up or reduction or decrease in capital stock), before any distribution is made on any Junior Securities. After payment in full of the Liquidation Preference and all accrued dividends, if any, to which holders of Series B Preferred Stock are entitled, such holders will not be entitled to any further participation in any distribution of assets of the Company. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, the amounts payable with respect to the Series B Preferred Stock and all other Parity Securities are not paid in full, the holders of the Series B Preferred Stock and the Parity Securities will share equally and ratably in any distribution of assets of the Company in proportion to the full liquidation preference and I-10 accumulated and unpaid dividends, if any, to which each is entitled. However, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Company nor the consolidation or merger of the Company with or into one or more Persons will be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Company unless such sale, conveyance, exchange or transfer shall be in connection with a liquidation, dissolution or winding-up of the business of the Company. 7. Optional Redemption. (i) Other than pursuant to Section 8 hereof, the Series B Preferred Stock may not be redeemed at the option of the Company before [anniversary of Issuance Date], 2008. During any period set forth in the table below, a number of shares of Series B Preferred Stock equal to the Applicable Redemption Amount (as defined in Section 7(ii) hereof) for such period may be redeemed for cash at the option of the Company at the redemption price per share for such period set forth in the table below, together with an amount equal to accumulated and unpaid dividends, if any, to the date of redemption (the "Applicable Redemption Price"), upon not less than 30 nor more than 60 days' prior written notice.
PERIOD REDEMPTION PRICE - ------------------------ ---------------- [anniversary of Issuance $224.00 Date], 2008 through [day before anniversary of Issuance Date], 2009 [anniversary of Issuance $220.00 Date], 2009 through [day before anniversary of Issuance Date], 2010 [anniversary of Issuance $216.00 Date], 2010 through [day before anniversary of Issuance Date], 2011
To the extent that the right of the Company to redeem Series B Preferred Stock is not exercised with respect to any number of shares during any of the periods set forth in the table above, such right shall not carry over into subsequent periods. (ii) "Applicable Redemption Amount" means with respect to any period set forth in the table set forth in Section 7(i) hereof, the number of shares equal to 25% of the total number of shares, rounded up to the nearest whole number, of Series B Preferred Stock outstanding at the beginning of such period less the number of shares of Series B Preferred Stock I-11 converted pursuant to Section 4 hereof during the portion of such period elapsing prior to the then Applicable Redemption Record Date (as defined in Section 7(iv) hereof) during such period. (iii) The shares to be redeemed shall be selected pro rata. (iv) Notice of any redemption shall be sent by or on behalf of the Company not less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the "Applicable Redemption Date"), by public announcement and first class mail, postage prepaid, to all holders of record of the Series B Preferred Stock on the date 60 days prior to the Applicable Redemption Date (the "Applicable Redemption Record Date") at their last addresses as they shall appear on the books of the Company; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series B Preferred Stock except as to the holder to whom the Company has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which the Series B Preferred Stock may be listed or admitted to trading, such notice shall state: (a) that such redemption is being made pursuant to the optional redemption provisions hereof; (b) the Redemption Date; (c) the Applicable Redemption Price; (d) the number of shares of Series B Preferred Stock to be redeemed and the number of shares held by such holder to be redeemed; (e) the place or places where certificates for such shares are to be surrendered for payment of the Applicable Redemption Price, including any procedures applicable to redemptions to be accomplished through book-entry transfers; and (f) that dividends on the shares to be redeemed will cease to accumulate on the Applicable Redemption Date. Upon the mailing of any such notice of redemption, the Company shall become obligated to redeem at the time of redemption specified thereon all shares called for redemption. (v) If notice has been mailed in accordance with Section 7(iv) hereof and provided that on or before the Redemption Date specified in such notice, all funds necessary for such redemption shall have been set aside by the Company, separate and apart from its other funds in trust for the pro rata benefit of the holders of the shares so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Applicable Redemption Date, unless the Company defaults in the payment of the Applicable Redemption Price, dividends on the shares of the Series B Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series B Preferred Stock, and all rights of the holders thereof as stockholders of the Company (except the right to receive from the Company the Applicable Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Company shall so require and the notice shall so state), such shares shall be redeemed by the Company at the Applicable Redemption Price. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof. (vi) Any deposit of funds in with a bank or trust company for the purpose of redeeming Series B Preferred Stock pursuant to this Section 7 shall be irrevocable except that: I-12 (a) the Company shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (b) any balance of monies so deposited by the Company and unclaimed by the holders of the Series B Preferred Stock entitled thereto at the expiration of one year from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Company, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Company shall look only to the Company for payment without interest or other earnings. (vii) No Series B Preferred Stock may be redeemed except with funds legally available for such purpose. 8. Rights Offering Call Provision. (i) Up to 150,000 shares of the Series B Preferred Stock may be redeemed for cash, with the proceeds of the Rights Offering, at the option of the Company, on or before the date that is 270 days after the Issuance Date, at a redemption price of $210.00 per share, together with an amount equal to accumulated and unpaid dividends, if any, to the date of redemption (the "Rights Offering Call Price") upon not less than 5 nor more than 30 days' prior written notice. (ii) The shares to be redeemed shall be selected pro rata. (iii) Notice of any redemption shall be sent by or on behalf of the Company not less than 5 nor more than 30 days prior to the date specified for redemption in such notice (the "Rights Offering Call Date"), by first class mail, postage prepaid, to all holders of record of the Series B Preferred Stock at their last addresses as they shall appear on the books of the Company; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series B Preferred Stock except as to the holder to whom the Company has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which the Series B Preferred Stock may be listed or admitted to trading, such notice shall state: (A) that such redemption is being made pursuant to the optional redemption provisions hereof; (B) the Rights Offering Call Date; (C) the Rights Offering Call Price; (D) the number of shares of Series B Preferred Stock to be redeemed and the number of shares held by such holder to be redeemed; (E) the place or places where certificates for such shares are to be surrendered for payment of the Rights Offering Call Price, including any procedures applicable to redemptions to be accomplished through book-entry transfers; and (F) that dividends on the shares to be redeemed will cease to accumulate on the Rights Offering Call Date. Upon the mailing of any such notice of redemption, the Company shall become obligated to redeem at the time of redemption specified thereon all shares called for redemption. (iv) If notice has been mailed in accordance with Section 8(iii) hereof and provided that on or before the Rights Offering Call Date specified in such notice, all funds necessary for such redemption shall have been set aside by the Company, separate and apart I-13 from its other funds in trust for the pro rata benefit of the holders of the shares so called for redemption, so as to be, and to continue to be, available therefor, then, from and after the Rights Offering Call Date, unless the Company defaults in the payment of the Rights Offering Call Price, dividends on the shares of the Series B Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series B Preferred Stock, and all rights of the holders thereof as stockholders of the Company (except the right to receive from the Company the Rights Offering Call Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Company shall so require and the notice shall so state), such shares shall be redeemed by the Company at the Rights Offering Call Price. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof. (v) Any deposit of funds in trust with a bank or trust company for the purpose of redeeming Series B Preferred Stock pursuant to this Section 8 shall be irrevocable except that: (a) the Company shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (b) any balance of monies so deposited by the Company and unclaimed by the holders of the Series B Preferred Stock entitled thereto at the expiration of three months from the Rights Offering Call Date shall be repaid, together with any interest or other earnings earned thereon, to the Company, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Company shall look only to the Company for payment without interest or other earnings. (vi) No Series B Preferred Stock may be redeemed except with funds legally available for such purpose. 9. Special Redemption Rights Upon a Change of Control. (i) Upon the occurrence of a Change of Control, each holder of Series B Preferred Stock shall have the option, during the period commencing on the date the applicable Change of Control Notice (as defined below) is mailed to holders of the Series B Preferred Stock and ending at the close of business on the 45th day thereafter (the "Special Redemption Date"), to require the Company to redeem all, or any portion, of such holder's shares of Series B Preferred Stock at the redemption price per share for the period set forth in the table below during which such Special Redemption Date occurs, together with an amount equal to accumulated and unpaid dividends, if any, to the Special Redemption Date (the "Special Redemption Price"): I-14
Period Special Redemption Price - ------------------------ ------------------------ [Issuance Date], 2004 $240.00 through [day before anniversary of Issuance Date], 2005 [anniversary of Issuance $236.00 Date], 2005 through [day before anniversary of Issuance Date], 2006 [anniversary of Issuance $232.00 Date], 2006 through [day before anniversary of Issuance Date], 2007 [anniversary of Issuance $228.00 Date], 2007 through [day before anniversary of Issuance Date], 2008 [anniversary of Issuance $224.00 Date], 2008 through [day before anniversary of Issuance Date], 2009 [anniversary of Issuance $220.00 Date], 2009 through [day before anniversary of Issuance Date], 2010 [anniversary of Issuance $216.00 Date], 2010 through [day before anniversary of Issuance Date], 2011
(ii) Within 30 days following a Change of Control, the Company shall mail to each holder of shares of the Series B Preferred Stock a notice (the "Change of Control Notice") setting forth the details of the Change of Control and the special redemption rights occasioned thereby. In addition to any information required by law or by the applicable rules of any exchange upon which the Series B Preferred Stock may be listed or admitted to trading, such notice shall state: (A) the Special Redemption Date; (B) the Special Redemption Price; (C) the place or places where certificates for shares may be surrendered for payment of the Special I-15 Redemption Price, including any procedures applicable to redemption to be accomplished through book-entry transfers; (D) the procedures that the holder of Series B Preferred Stock must follow to exercise such holder's rights under this Section 9; and (E) that dividends on the shares tendered for redemption will cease to accumulate on the Special Redemption Date. (iii) To exercise such holder's special redemption right under this Section 9, a holder must (A) surrender the certificate or certificates evidencing the shares of Series B Preferred Stock to be redeemed, duly endorsed in a form satisfactory to the Company, at the office of the Company or the Transfer Agent and (B) notify the Company at such office that such holder elects to exercise such holder's special redemption rights and the number of shares such holder wishes to have redeemed. In the event that a holder fails to notify the Company of the number of shares of Series B Preferred Stock which such holder wishes to have redeemed, such holder shall be deemed to have elected to have redeemed all shares represented by the certificate or certificates surrendered for conversion. (iv) Exercise by a holder of such holder's special redemption right following a Change of Control is irrevocable, except that a holder may withdraw its election to exercise such holder's special redemption right at any time on or before the Special Redemption Date by delivering a written or facsimile transmission notice to the Transfer Agent at the address or facsimile number specified in the Change of Control Notice. Such notice, to be effective, must be received by the Transfer Agent prior to the close of business on the Special Redemption Date. All shares of Series B Preferred Stock tendered for redemption pursuant to the holders' special redemption rights as described herein and not withdrawn shall be redeemed at the close of business on the Special Redemption Date. From and after the Special Redemption Date, unless the Company defaults in payment of the Special Redemption Price, dividends on the shares of Series B Preferred Stock tendered for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series B Preferred Stock, and all rights of holders thereof as stockholders of the Company (except the right to receive from the Company the Special Redemption Price) shall cease. As soon as practical after the Special Redemption Date, the Company shall deliver a new certificate representing the unredeemed portion, if any, of the shares of Series B Preferred Stock represented by the certificate or certificates surrendered for redemption. (v) No Series B Preferred Stock may be redeemed except with funds legally available for such purpose. The Company shall take all action required or permitted under the Delaware General Corporate Law to permit any such redemption. 10. Voting Rights. (i) Except as otherwise required by law or by the Company's certificate of incorporation or expressly provided herein, the holders of record of shares of the Series B Preferred Stock shall have full voting rights and powers, and shall be entitled to vote on all matters put to a vote or consent of stockholders of the Company, voting together with the holders of the Common Stock and the Existing Preferred Stock as a single class, with each holder of shares of Series B Preferred Stock having the number of votes equal to the number of shares of Common Stock into which such shares of Series B Preferred Stock could be converted in I-16 accordance with Section 4 hereof as of the record date for the vote or consent which is being taken. (ii) Notwithstanding any other provision of this Section 10, in the event that the voting provisions set forth in this Section 10 violate or conflict with the rules or regulations of the New York Stock Exchange or any other securities exchange on which the Common Stock is then listed or traded, then the manner of voting and/or number of votes to which each share of Series B Preferred Stock is entitled shall be modified and/or reduced to the extent required to comply with such rule. (iii) The holders of record of shares of the Series B Preferred Stock shall have the right, voting separately as a class, to elect a number of directors to the Board in proportion to the percentage of fully diluted Common Stock represented by their outstanding Series B Preferred Stock (on an as-converted basis), rounded up to the nearest whole number (such directors, the "Series B Directors"); provided, however, that the number of Series B Directors shall at no time exceed a number equal to two-thirds of the total number of directors on the entire Board, less one. Subject to the provisions of applicable law, the rules or regulations of the New York Stock Exchange or any other securities exchange on which the Common Stock is then listed or traded and the fiduciary duties of the members of the Board, at least one Series B Director shall be nominated to serve on each of the committees of the Board. All Series B Directors shall meet the requirements of the definition of "independent" under the rules of the New York Stock Exchange. In addition, no Series B Director shall be entitled to vote in any vote by the Board in any action by the Board with respect to an exercise of the Company's option to redeem shares of the Series B Preferred Stock pursuant to Sections 7 or 8 hereof. The Series B Directors shall be elected at meetings called for the purpose of electing directors as described in Section 10(v) hereof. (iv) If an event of default exists with respect to the Company's then outstanding Indebtedness constituting a failure to pay in excess of $2,000,000 in principal when due or resulting in the acceleration of the due date for a principal amount in excess of $2,000,000, and such event of default is not cured or waived within 45 days (a "Voting Rights Triggering Event"), then the holders of the outstanding shares of Series B Preferred Stock, voting as a class, shall, if they are not otherwise electing a majority of the Board pursuant to Section 10(iii) hereof, be entitled to elect that number of additional directors which, together with any Series B Directors then on the Board, will constitute a majority of the Board. Any additional Series B Directors shall be elected at meetings called for the purpose of electing directors as described in Section 10(v) hereof. (v) At each meeting called for the purpose of electing directors, the holders of Series B Preferred Stock, subject to the next sentence hereof, shall have the right, voting separately as a class, to elect the number of directors then up for election, if any, which, together with any Series B Directors then on the Board and not up for election at such meeting, will constitute the number of directors the holders of the Series B Preferred Stock are entitled to elect pursuant to Sections 10(iii) and 10(iv) hereof; provided, that if the number of directors which the holders of Series B Preferred Stock are entitled to elect pursuant to Sections 10(iii) and 10(iv) hereof is greater than the number of directors up for election at such meeting, the holders of Series B Preferred Stock, subject to the next sentence hereof, shall have the right, voting I-17 separately as a class, to elect all the directors up for election at such meeting. Notwithstanding any other provision in this Section 10, the holders of Series B Preferred Stock shall not have the right to elect any directors which the holders of the Existing Preferred Stock, voting separately as a class, have a right to elect under Section A(VI) of Clause FOURTH of the Company's Certificate of Incorporation. (vi) If any director so elected by the holders of Series B Preferred Stock shall cease to serve as a director before his or her term shall expire, the resulting vacancy shall be filled for the unexpired term in the manner provided in the by-laws of the Company. (vii) The Company shall not, without the affirmative vote or consent of the holders of at least a majority of the shares of Series B Preferred Stock then outstanding (with shares held by the Company or any of its affiliates (other than the Initial Investors) not being considered to be outstanding for this purpose) voting or consenting as the case may be, as one class: (a) authorize or create (by way of reclassification or otherwise) any Parity Securities or Senior Securities; (b) amend, waive or otherwise alter any provision of this Certificate of Designation (including the provisions of Section 10 hereof) in a manner materially adverse to the interests of the holders of Series B Preferred Stock; or (c) amend or otherwise alter the bylaws or the Certificate or Incorporation of the Company in a manner materially adverse to the interests of the holders of the Series B Preferred Stock; (viii) The Company shall not, without either (i) the affirmative vote of holders of at least a majority of the shares held by holders of Series B Preferred Stock who own at least 50,000 shares of Series B Preferred Stock and who vote on the matter or (ii) the consent of holders of at least a majority of the shares held by holders of Series B Preferred Stock who own at least 50,000 shares of Series B Preferred Stock: (a) issue any Equity Interests, except (1) Common Stock issued upon conversion of Series B Preferred Stock, (2) Common Stock issued pursuant to the Rights Offering, (3) Common Stock issued pursuant to the Patel Agreement and (4) any Equity Interests issued pursuant to a Restricted Payment permitted by Section 10(viii)(b) hereof; (b) declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (1) Restricted Payments in respect of the Series B Preferred Stock, (2) the redemption of all, or any portion, of the Existing Preferred Stock, (3) the issuance the Contingent Warrants and any Common Stock issued upon the exercise thereof, (4) the declaration and payment of dividends on Junior Securities payable solely in additional shares of Junior Securities, (5) the declaration and payment of dividends on the Existing Preferred Stock, (6) Restricted Payments pursuant to and in accordance with stock option plans or other employee benefit arrangements of the Company and its subsidiaries, (7) Restricted Payments in connection with the Rights Offering, (8) the declaration and payment of dividends on Junior Securities in an amount not to exceed $5,000,000 in any I-18 fiscal year, (9) the purchase of fractional shares arising out of stock dividends, splits or combinations or business combinations and (10) other Restricted Payments not to exceed $25,000,000 in the aggregate or $10,000,000 in any fiscal year under this clause (b)(10); (c) create, incur or assume any Indebtedness, other than (1) Indebtedness existing or committed to on the Issuance Date and extensions, renewals, refinancings and replacements of any such Indebtedness or commitment (whether by the same or any other lender or groups of lenders) that do not increase the outstanding or committed principal amount thereof, (2) Indebtedness of the Company to any subsidiary of the Company, (3) Guarantees by the Company of Indebtedness of any subsidiary of the Company, (4) Indebtedness of the Company incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations, mortgage financings, purchase money obligations and any Indebtedness assumed in connection with the acquisition of such assets prior to the acquisition thereof, and extensions, renewals, refinancings and replacements of any such Indebtedness, (5) Indebtedness of, or Guarantees of Indebtedness of, any other person existing at the time such other person is merged with or into the Company or any subsidiary of the Company, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other person merging with or into the Company, or becoming a subsidiary of the Company, (6) Indebtedness of the Company as an account party in respect of trade letters of credit, (7) Hedging Obligations, (8) obligations in respect of performance bid and surety bonds and completion guarantees provided in the ordinary course of business, (9) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business and (10) other Indebtedness created, incurred or assumed pursuant to this clause (c)(10) in an aggregate principal amount not to exceed $50,000,000 (the categories of Indebtedness described in the foregoing clauses (c)(1) through (c)(9) are referred to collectively as "Permitted Debt"); (d) change the size of the Board, other than changes resulting from the appointment or election of Board members by holders of the Series B Preferred Stock or the Existing Preferred Stock; (e) acquire, through acquisition of capital stock or assets, any Person or line of business or sell, transfer, lease or otherwise dispose of all or any substantial part of its assets, other than any transaction involving $50,000,000 or less in value. For purposes of determining whether any approval of the holders of Series B Preferred Stock is required in connection with the Company's creation, incurrence or assumption of any Indebtedness, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in Section 10(viii)(c) hereof, the Company shall be entitled to divide and classify such item of Indebtedness on the date of its creation, incurrence or assumption, or later reclassify all or a portion of such item of Indebtedness, in any manner among the categories of Permitted Debt. 11. Reports and Information Rights. The Company shall afford the Initial Investors reasonable access to its books, records, personnel and representatives, upon reasonable I-19 notice and in such manner as will not unreasonably interfere with the conduct of the Company's business. Subject to compliance with customary confidentiality obligation and applicable law, the Initial Investors shall also be entitled to receive copies of all confidential financial information and reports prepared for the Company's lenders promptly upon furnishing such information to such lenders. The information rights of each Initial Investor pursuant to this Section 11 shall terminate on the first date on which such Initial Investor holds shares of Series B Preferred Stock convertible into less than 15% of the total number of shares of Common Stock which would be outstanding on such date assuming the exercise of all outstanding options and warrants (other than those issued under the Company's stock incentive program) and the conversion of all convertible securities. The information rights of each Initial Investor under this Section 11 are personal to such Initial Investor and shall not be transferable to any other Person and any attempted transfer shall be invalid. 12. Transferability. The transfer of the Series B Preferred Stock by the holders thereof shall not be restricted other than pursuant to the requirements of applicable law; provided, that each Initial Investor shall provide written notice to the Company within three days of any transfer of Series B Preferred Stock by such Initial Investor. 13. Exclusion of Other Rights. Except as may otherwise be required by law, the shares of Series B Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this resolution (as such resolution may be amended from time to time) and in the Certificate of Incorporation. The shares of Series B Preferred Stock shall have no preemptive or subscription rights. 14. Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 15. Severability of Provisions. If any voting powers, preferences and relative, participating, optional and other special rights of the Series B Preferred Stock and qualifications, limitations and restrictions thereof set forth in this resolution (as such resolution may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series B Preferred Stock and qualifications, limitations and restrictions thereof set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional or other special rights of Series B Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect and no voting powers, preferences and relative, participating, optional or other special rights of Series B Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Series B Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein. 16. Re-issuance of Series B Preferred Stock. Shares of Series B Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or I-20 exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Delaware) have the status of authorized but unissued shares of Serial Preference Stock of the Company undesignated as to series and may be designated or re-designated and issued or reissued, as the case may be, as part of any series of Serial Preference Stock of the Company, provided, that any issuance of such shares as Series B Preferred Stock must be in compliance with the terms hereof. 17. Mutilated or Missing Series B Preferred Stock Certificates. If any of the Series B Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Company shall issue, in exchange and in substitution for and upon cancellation of the mutilated Series B Preferred Stock certificate, or in lieu of and substitution for the Series B Preferred Stock certificate lost, stolen or destroyed, a new Series B Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Series B Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Series B Preferred Stock certificate and indemnity, if requested, satisfactory to the Company and the transfer agent (if other than the Company). 18. Certain Definitions. As used in this Certificate of Designation, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires: "Applicable Redemption Date" has the meaning given thereto in Section 7(iv) hereof. "Applicable Redemption Price" has the meaning given thereto in Section 7(i) hereof. "Business Day" means any day except a Saturday, a Sunday, or any day on which banking institutions in New York, New York are required or authorized by law or other governmental action to be closed. "Change of Control" means the occurrence of either of the following events: any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or both Initial Investors, is or becomes the "beneficial owner" (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the outstanding voting stock of the Company; or the merger or consolidation of the Company with or into another Person, or the sale of all or substantially all the assets of the Company (determined on a consolidated basis) to another Person, other than (a) a transaction in which the surviving Person or transferee is a Person that is controlled by the Company or (b) in the case of a merger or consolidation transaction, a transaction following which holders of the outstanding voting stock of the Company immediately prior to such transaction own directly or indirectly at least a majority of the total voting power of the surviving Person in such transaction and in substantially the same proportion as before the transaction. I-21 "Closing Price" means, as of any date of determination, the closing sale price or, if no closing sale price is reported, the last reported sale price of the Common Stock on the New York Stock Exchange on that date. If the Common Stock is not then traded on the New York Stock Exchange on any date of determination, the Closing Price of the Common Stock on any date of determination means the closing sale price as reported in the composite transactions for the principal U.S. securities exchange on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a U.S. national or regional securities exchange, as reported by the Nasdaq stock market, or, if no closing price for the Common Stock is so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization or, if that bid price is not available, the market value of the Common Stock on that date as determined by a nationally recognized independent investment banking firm retained by the Company for this purpose. "Common Stock" means the Common Stock, par value $[ ] per share, of the Company. "Consolidated Cash Flow" means, for any period, the Consolidated Net Income of the Company and its Consolidated Subsidiaries for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Expense; plus (ii) all income tax expense of the Company and its Consolidated Subsidiaries; plus (iii) depreciation and amortization expense of the Company and its Consolidated Subsidiaries; plus (iv) all losses attributable to grinding wheels operations; plus (v) restructuring charges and related severance and other expenses in an aggregate amount not to exceed $1.5 million; plus (vi) all other non-cash charges of the Company and its Consolidated Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period); plus (vii) expenses related to debt refinancing; plus (viii) any payment of fees and expenses under any Receivables Liquidity Facility; plus (ix) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; minus (x) all gains attributable to grinding wheel operations; I-22 in each case determined on a consolidated basis for such period in conformity with GAAP. "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its Consolidated Subsidiaries, whether paid in cash or accrued as a liability, plus, to the extent not included in such total interest expense, and to the extent deducted in determining Consolidated Net Income, without duplication: (i) the interest component of all payments associated with Capital Lease Obligations; plus (ii) amortization of debt discount and debt issuance cost; plus (iii) capitalized interest; plus (iv) losses and upfront costs on Hedging Obligations; plus (v) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Company or any Consolidated Subsidiary; minus (vi) interest income for such period; in each case determined on a consolidated basis for such period in conformity with GAAP. "Consolidated Net Income" means, for any period, the net income of the Company and its Consolidated Subsidiaries, excluding the cumulative effect of a change in accounting principles. "Consolidated Subsidiaries" means, with respect to the Company, each subsidiary consolidated with the Company in its financial statement prepared in accordance with GAAP. "Contingent Warrants" means the contingent warrants issued by the Company to the Initial Investors pursuant to the Contingent Warrant Agreement dated as of March 12, 2004 by and among Milacron Inc., Glencore Finance AG and Mizuho International plc, as it may be amended, supplemented or otherwise modified from time to time. "Conversion Price" shall initially mean $2.00 per share and thereafter shall be subject to adjustment from time to time pursuant to the terms of Section 4 hereof. "Credit Facility" means one or more debt facilities (including, without limitation, the credit facilities governed by the Financing Agreement dated as of March 12, 2004 among the Company, each subsidiary of the Company listed as a "Borrower" on the signature pages thereto, each subsidiary of the Company listed as a "Guarantor" on the signature pages thereto, the lenders from time to time parties thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as administrative agent and collateral agent for the lenders) or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders I-23 against such receivables) or letters of credit, in each case, as amended, restated, supplemented or otherwise modified from time to time, and any debt facilities incurred to refinance, in whole or in part, the borrowings and commitments then outstanding under such debt facilities or successor debt facilities, whether by the same or any other lender or group of lenders. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values. "Dividend Payment Date" has the meaning given thereto in Section 3(i) hereof. "Equity Interests" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Preferred Stock" means the existing 4% Cumulative Preferred Stock, par value $100.00 per share, of the Company. "Financing Agreements" means any credit agreements, notes, debentures, bonds, guarantees, indentures or other documents or instruments governing Indebtedness of the Company. "GAAP" means generally accepted accounting principles in the United States of America, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing the Indebtedness of any Person and any obligations, direct or indirect, contingent or otherwise, of such Person: (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. I-24 "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. "Indebtedness" means, with respect to any Person, indebtedness of such Person (i) for money borrowed or (ii) evidenced by notes, debentures, bonds or other similar instruments. "Initial Investors" means Glencore Finance AG and Mizuho International plc. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement with respect to exposure to interest rates. "Issuance Date" means the date on which the Series B Preferred Stock is originally issued by the Company. "Liquidation Preference" means $200.00 per share. "Parity Securities" has the meaning given thereto in Section 2 hereof. "Patel Agreement" means the Exchange Agreement dated as of November 27, 2001 among Milacron Inc., Mahendra N. Patel, Nayana M. Patel and Manata Machinery Pvt. Ltd., as supplemented by the Supplementary Agreement thereto dated October 10, 2002 and as may be further amended or supplemented from time to time. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Receivables Liquidity Facility" means the Amended and Restated Receivables Purchase Agreement dated as of January 26, 1996, as amended, among the Company, Cincinnati Milacron Marketing Company, Cincinnati Milacron Commercial Corp., Valenite Inc., DME Company, Market Street Funding Corporation and PNC Bank, National Association, as the same may be amended, extended, renewed, refinanced, replaced, supplemented or modified from time to time or any replacement receivables liquidity facility. "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property), with respect to any Equity Interests in the Company, or any payment whether in cash, securities or other property, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any such Equity Interests in the Company or any option, warrant or other right to acquire any such Equity Interests in the Company. "Rights Offering" means a rights offering conducted by the Company with respect to Common Stock no later than 270 days following the first issuance of shares of Series B Preferred Stock, pursuant to which each holder of Common Stock (other than any Common Stock received upon conversion of Series B Preferred Stock) shall be entitled to purchase 0.452 newly issued shares of Common Stock at a purchase price of $2.00 per share. I-25 "Rights Offering Call Provision" means the right of the company to call up to 15,000,000 shares of the Series B Preferred Stock pursuant to Section 7 hereof. "Senior Securities" has the meaning given thereto in Section 2 hereof. "Trading Day" means any day on which the New York Stock Exchange or other applicable stock exchange or market is open for business. "Transfer Agent" shall be Mellon Investor Services LLC unless and until a successor is selected by the Company. I-26 IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed this [ ] day of [ ] 2004. MILACRON INC. By ________________________ Name Title: ATTEST: By ________________________ Name Title: I-27 EXHIBIT J [FORM OF] CERTIFICATE OF DESIGNATION OF VOTING POWERS, DESIGNATION, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS OF SERIES C PREFERRED STOCK OF MILACRON INC. ------------------------ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ------------------------ Milacron Inc., a Delaware corporation (the "Company"), certifies that pursuant to the authority contained in Article FOURTH of its Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Company (the "Board") at a meeting duly called and held on March 11, 2004, duly approved and adopted the following resolution, which resolution remains in full force and effect on the date hereof: RESOLVED, that, pursuant to the authority vested in the Board in accordance with the provisions of the Certificate of Incorporation, a series of Serial Preference Stock of the Company is hereby created and that the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of such series, and qualifications, limitations and restrictions thereof are as follows: 1. Designation and Number of Shares. The shares of such series shall be designated as "Series C Preferred Stock," par value $1.00 per share, with a liquidation preference of $60,000 per share (the "Liquidation Preference"). The authorized number of shares of Series C Preferred Stock shall be 1500. The Company shall be permitted to issue fractional shares of Series C Preferred Stock that shall entitle the holder thereof, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series C Preferred Stock. 2. Ranking. The Series C Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company, J-1 rank (i) senior to the Common Stock and to any and all other classes and series of capital stock of the Company the terms of which do not expressly provide that it ranks senior to or on a parity with the Series C Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company (collectively referred to with the Common Stock of the Company as "Junior Securities"); (ii) on a parity with any additional shares of Series C Preferred Stock or shares of any other series of Serial Preference Stock issued by the Company in the future, and any other class or series of capital stock issued by the Company and approved by the holders of the Series C Preferred Stock as required by Section 6(v) hereof the terms of which expressly provide that such class or series will rank on a parity with the Series C Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company (collectively referred to as "Parity Securities"); and (iii) junior to the Company's 4% Cumulative Preferred Stock (the "Existing Preferred Stock") and any class or series of capital stock issued by the Company and approved by the holders of the Series C Preferred Stock as required by Section 6(v) hereof the terms of which expressly provide that such class or series will rank senior to the Series C Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company (collectively referred to as "Senior Securities"). 3. Dividends. (i) Subject to the prior and superior rights of the holders of any Senior Securities, the holders of shares of Series C Preferred Stock, in preference to the holders of shares of any Junior Securities, shall be entitled to receive, when, as and if declared by the Board out of assets of the Company legally available therefor, cumulative dividends payable quarterly in arrears on the first days of March, June, September and December, in each year (each a "Dividend Payment Date" and each such quarterly period being a "Dividend Period"), commencing on the first Dividend Payment Date after the first issuance of any shares of Series C Preferred Stock; provided, that (a) if any such Dividend Payment Date is not a Business Day (any day except a Saturday, a Sunday, or any day on which banking institutions in New York, New York are required or authorized by law or other governmental action to be closed), such payment shall be made on the next succeeding Business Day and (b) accumulated and unpaid dividends for any prior quarterly period may be paid at any time. (ii) Dividends on each share of Series C Preferred Stock shall accrue annually in arrears at a rate of $14,400 per annum. The Company shall make dividend payments on each Dividend Payment Date in accordance with the following provisions: (a) Dividends that accrue during the period commencing on the date of the first issuance of any shares of Series C Preferred Stock and ending on December 31, 2004 (the "First Period") shall be paid, in part, in cash and, in part, through the issuance of additional shares of Series C Preferred Stock, at a rate per share of $9,600 per annum in cash and $4,800 per annum through the issuance of additional shares of Series C Preferred Stock. To the extent the Company is prohibited by the terms of any credit agreements, notes, indentures or other documents governing indebtedness of the Company from paying the cash dividends accrued during the First Period, the Company may elect, when, as and if declared by the Board out of assets of the Company legally available therefor, to pay the cash portion of the dividends through the issuance of J-2 additional shares of Series C Preferred Stock at a rate per share of $10,800 in Liquidation Preference per annum. (b) Dividends that accrue during the period commencing on January 1, 2005, and ending on June 30, 2005 (the "Second Period") shall be paid, in part, in cash and, in part, through the issuance of additional shares of Series C Preferred Stock, at a rate per share of $12,000 per annum in cash and $2,400 per annum through the issuance of additional shares of Series C Preferred Stock. To the extent the Company is prohibited by the terms of any credit agreements, notes, indentures or other documents governing indebtedness of the Company from paying the cash dividends accrued during the Second Period, the Company may elect, when, as and if declared by the Board out of assets of the Company legally available therefor, to pay the cash portion of the dividends through the issuance of additional shares of Series C Preferred Stock at a rate per share of $13,200 in Liquidation Preference per annum. (c) Dividends that accrue on and after July 1, 2005 (the "Third Period") shall be paid at a rate per share of $14,400 per annum in cash. To the extent the Company is prohibited by the terms of any credit agreements, notes, indentures or other documents governing indebtedness of the Company from paying the cash dividends accrued during the Third Period, the Company may elect, when, as and if declared by the Board out of assets of the Company legally available therefor, to pay the dividends through the issuance of additional shares of Series C Preferred Stock at a rate per share of $15,600 in Liquidation Preference per annum. (d) When the Company pays dividends through the issuance of additional shares of Series C Preferred Stock, the number of additional shares of Series C Preferred Stock issued as dividends will be determined by dividing (a) the total dollar amount of cumulative dividends due and payable in additional shares of Series C Preferred Stock on the applicable Dividend Payment Date by (b) the Liquidation Preference, provided that the Company shall not be required to issue fractional shares of Series C Preferred Stock but in lieu thereof may elect to pay in cash the portion of any dividend payable in shares of Series C Preferred Stock that would otherwise require the issuance of a fractional share. (iii) Dividends shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock on the date of issue of such shares, unless the date of issue is a Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from the day after such Dividend Payment Date. The Board may fix a record date for the determination of holders of shares of Series C Preferred Stock entitled to receive payment of a dividend declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof. (iv) Dividends on the Series C Preferred Stock shall accrue whether or not the Company has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate to the J-3 extent they are not paid on the Dividend Payment Date for the Dividend Period to which they relate. (v) No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series C Preferred Stock with respect to any Dividend Period unless all dividends for all preceding Dividend Periods have been declared and paid upon, or declared and a sufficient sum set apart for the payment of such dividends upon, all outstanding shares of Series C Preferred Stock. Unless full cumulative dividends on all outstanding shares of Series C Preferred Stock for all past Dividend Periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart, then: (a) no dividend (other than a dividend payable solely in shares of any Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities or Parity Securities, except dividends paid ratably on the Series C Preferred Stock and all such Parity Securities on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (b) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities or Parity Securities, other than a distribution consisting solely of Junior Securities; (c) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of Junior Securities) by the Company or any of its subsidiaries; and (d) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities by the Company or any of its subsidiaries. Holders of the Series C Preferred Stock will not be entitled to any dividends, whether payable in cash, property or stock, in excess of the full cumulative dividends as herein described. (vi) Accrued but unpaid dividends shall not bear interest. (vii) Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. (viii) As set forth in Section A.II of the Certificate of Incorporation, so long as any Existing Preferred Stock shall be outstanding, in no event shall any dividends (other than dividends payable in Series C Preferred Stock) be declared or paid upon or set apart for, or any other distribution be ordered to be made in respect of, the Series C Preferred Stock, or any expenditures be made by the Company for the purchase, retirement or other acquisition of any shares of Series C Preferred Stock, if at the time such dividend is so declared or such distribution is so ordered or such expenditures are so made: (a) consolidated net current assets (as defined in the Certificate of Incorporation) remaining after deducting the amount of such dividend or distribution or expenditure would be less than $100 for each share of Preferred Stock outstanding; or (b) consolidated net tangible assets (as defined in the Certificate of Incorporation) remaining after deducting the amount of such dividend or distribution or expenditure would be less than $200 for each share of Preferred Stock outstanding. J-4 4. Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, each holder of shares of the Series C Preferred Stock will be entitled to payment out of the assets of the Company available for distribution of an amount equal to the Liquidation Preference per share of Series C Preferred Stock held by such holder, plus an amount equal to accrued and unpaid dividends, if any, to the date fixed for liquidation, dissolution or winding-up (including an amount equal to a prorated dividend for the period from the last Dividend Payment Date to the date fixed for liquidation, dissolution, winding-up or reduction or decrease in capital stock), before any distribution is made on any Junior Securities. After payment in full of the Liquidation Preference and all accrued dividends, if any, to which holders of Series C Preferred Stock are entitled, such holders will not be entitled to any further participation in any distribution of assets of the Company. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, the amounts payable with respect to the Series C Preferred Stock and all other Parity Securities are not paid in full, the holders of the Series C Preferred Stock and the Parity Securities will share equally and ratably in any distribution of assets of the Company in proportion to the full liquidation preference and accumulated and unpaid dividends, if any, to which each is entitled. However, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Company nor the consolidation or merger of the Company with or into one or more entities will be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Company unless such sale, conveyance, exchange or transfer shall be in connection with a liquidation, dissolution or winding-up of the business of the Company. 5. Optional Redemption. (i) At any time on or after March 15, 2007, the Series C Preferred Stock shall be redeemable at the option of the Company for cash, in whole or in part out of funds legally available therefor, upon notice as provided below, at a redemption price per share of 100% of the Liquidation Preference, together with an amount equal to accumulated and unpaid dividends, if any, to the date of redemption (the "Applicable Redemption Price"). (ii) At any time after the date of the first issuance of any shares of Series C Preferred Stock and prior to March 15, 2007, the Series C Preferred Stock shall be redeemable at the option of the Company for cash, in whole or in part out of funds legally available therefor, upon notice as provided below, at the Applicable Redemption Price plus the Make-Whole Amount (as defined below). For purposes of this provision, the term "Make-Whole Amount" means, with respect to any shares of Series C Preferred Stock that are to be redeemed pursuant to this Section 5(ii), an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Liquidation Preference of such shares over the amount of such Called Liquidation Preference; provided however, that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: (a) "Called Liquidation Preference" means, with respect to any shares of Series C Preferred Stock that are to be redeemed pursuant to Section 5(ii), the aggregate Liquidation Preference of such shares. J-5 (b) "Discounted Value" means, with respect to the Called Liquidation Preference of any shares of Series C Preferred Stock that are to be redeemed pursuant to Section 5(ii), the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Liquidation Preference from their respective scheduled due dates to the Settlement Date with respect to such Called Liquidation Preference, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which dividends on the Series C Preferred Stock are payable) equal to the Reinvestment Yield with respect to such Called Liquidation Preference. (c) "Reinvestment Yield" means, with respect to the Called Liquidation Preference of any shares of Series C Preferred Stock that are to be redeemed pursuant to Section 5(ii), .25% over the yield to maturity implied by (a) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Liquidation Preference, on the display designated as "Page USD" of the Bloomberg Financial Markets Services Screen (or, if not available, any other national recognized trading screen reporting on-line intraday trading in the U.S. Treasury securities) for actively traded on-the-run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Liquidation Preference as of such Settlement Date, or (b) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Liquidation Preference, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Liquidation Preference as of such Settlement Date. Such implied yield will be determined, if necessary, by (i) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (ii) interpolating linearly between (1) the actively traded on-the-run U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the actively traded on-the-run U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. (d) "Remaining Average Life" means, with respect to any Called Liquidation Preference, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Liquidation Preference into (b) the sum of the products obtained by multiplying (i) the Liquidation Preference component of each Remaining Scheduled Payment with respect to such Called Liquidation Preference by (ii) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Liquidation Preference and the scheduled due date of such Remaining Scheduled Payment. (e) "Remaining Scheduled Payments" means, with respect to the Called Liquidation Preference of any shares of Series C Preferred Stock that are to be redeemed pursuant to Section 5(ii), all payments of such Called Liquidation Preference and dividends thereon that would be made after the Settlement Date with respect to such Called Liquidation Preference assuming (i) the declaration and payment of all dividends J-6 on such shares on each Dividend Payment Date occurring after such Settlement Date and prior to March 15, 2007 and (ii) that the Company would exercise its option to redeem such shares on March 15, 2007 pursuant to Section 5(i). (f) "Settlement Date" means, with respect to the Called Liquidation Preference of any shares of Series C Preferred Stock that are to be redeemed pursuant to Section 5(ii), the date on which such Called Liquidation Preference is to be paid pursuant to this Section 5(ii). (iii) The shares to be redeemed shall be selected pro rata or by lot as determined by the Company in its sole discretion. (iv) Notice of any redemption shall be sent by or on behalf of the Company not less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the "Applicable Redemption Date"), by first class mail, postage prepaid, to all holders of record of the Series C Preferred Stock on the date 60 days prior to the Applicable Redemption Date at their last addresses as they shall appear on the books of the Company; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series C Preferred Stock except as to the holder to whom the Company has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which the Series C Preferred Stock may be listed or admitted to trading, such notice shall state: (a) that such redemption is being made pursuant to Section 5(i) or Section 5(ii) hereof; (b) the Applicable Redemption Date; (c) the Applicable Redemption Price (and in the case of redemption pursuant to Section 5(ii), a certificate of the chief financial officer, principal accounting officer, treasurer or comptroller of the Company (each a "Senior Financial Officer") as to the estimated Make-Whole Amount due in connection with the payment of such Applicable Redemption Price (calculated as if the date of such notice were the Applicable Redemption Date), setting forth the details of such computation. Two Business Days prior to such payment, the Company shall deliver to each holder of shares of Series C Preferred Stock a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the Applicable Redemption Date); (d) the number of shares of Series C Preferred Stock to be redeemed and the number of shares held by such holder to be redeemed; (e) the place or places where certificates for such shares are to be surrendered for payment of the Applicable Redemption Price (and in the case of redemption pursuant to Section 5(ii), the Make-Whole Amount, if any), including any procedures applicable to redemptions to be accomplished through book-entry transfers; and (f) that dividends on the shares to be redeemed will cease to accumulate on the Applicable Redemption Date. Upon the mailing of any such notice of redemption, the Company shall become obligated to redeem on the Applicable Redemption Date all shares called for redemption. (v) If notice has been mailed in accordance with Section 5(iv) hereof and provided that on or before the Applicable Redemption Date, all funds necessary for such redemption shall have been set aside by the Company, separate and apart from its other funds in trust for the pro rata benefit of the holders of the shares so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Applicable Redemption Date, unless the Company defaults in the payment of the Applicable Redemption Price (and in the case of J-7 redemption pursuant to Section 5(ii), the Make-Whole Amount, if any), dividends on the shares of the Series C Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series C Preferred Stock, and all rights of the holders thereof as stockholders of the Company (except the right to receive from the Company the Applicable Redemption Price (and in the case of redemption pursuant to Section 5(ii), the Make-Whole Amount, if any)) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Company shall so require and the notice shall so state), such shares shall be redeemed by the Company at the Applicable Redemption Price (and in the case of redemption pursuant to Section 5(ii), the Make-Whole Amount). In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof. (vi) Any deposit of funds with a bank or trust company for the purpose of redeeming Series C Preferred Stock pursuant to this Section 5 shall be irrevocable except that: (a) the Company shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (b) any balance of monies so deposited by the Company and unclaimed by the holders of the Series C Preferred Stock entitled thereto at the expiration of one year from the Applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Company, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Company shall look only to the Company for payment without interest or other earnings. 6. Voting Rights. (i) Except as otherwise required by law or by the Company's Certificate of Incorporation or expressly provided herein, the holders of record of shares of the Series C Preferred Stock shall have full voting rights and powers, and shall be entitled to vote on all matters put to a vote or consent of stockholders of the Company, voting together with the holders of the Common Stock and the Existing Preferred Stock as a single class, with each holder of shares of Series C Preferred Stock (subject to the provision for adjustment hereinafter set forth) entitled to 30,000 votes for each such share of Series C Preferred Stock held as of the record date for the vote or consent which is being taken. In the event the Company shall, at any time after the issuance of any shares of Series C Preferred Stock, declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the number of votes per share of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. J-8 (ii) Notwithstanding any other provision of this Section 6, in the event that the voting provisions set forth in this Section 6 violate or conflict with the rules or regulations of the New York Stock Exchange or any other securities exchange on which the Common Stock is then listed or traded, then the manner of voting and/or number of votes to which each share of Series C Preferred Stock is entitled shall be modified and/or reduced to the extent required to comply with such rule. (iii) The holders of record of shares of the Series C Preferred Stock shall have the right, voting separately as a class, to elect a number of directors to the Board in proportion to the percentage of (A) the sum of (x) the number of shares of Common Stock outstanding on the record date for such vote (on a diluted basis to the extent holders of any other securities convertible or exercisable for Common Stock are entitled to vote on the election of directors) and (y) the number of votes to which all holders of Series C Preferred Stock are entitled on such record date pursuant to Section 6(i) hereof, represented by (B) the aggregate number of votes to which all holders of Series C Preferred Stock are entitled on such record date pursuant to Section 6(i) hereof, rounded up to the nearest whole number (such directors, the "Series C Directors"); provided, however, that the number of Series C Directors shall at no time exceed a number equal to two-thirds of the total number of directors on the entire Board, less one. All Series C Directors shall meet the requirements of the definition of "independent" under the rules of the New York Stock Exchange. The Series C Directors shall be elected at meetings called for the purpose of electing directors as described in Section 5(iv) hereof. (iv) At each meeting called for the purpose of electing directors, the holders of Series C Preferred Stock shall have the right, voting separately as a class, to elect the number of directors then up for election, if any, which, together with any Series C Directors then on the Board and not up for election at such meeting, will constitute the number of directors the holders of the Series C Preferred Stock are entitled to elect pursuant to Section 6(iii) hereof; provided, that if the number of directors which the holders of Series C Preferred Stock are entitled to elect pursuant to Sections 6(iii) hereof is greater than the number of directors up for election at such meeting, the holders of Series C Preferred Stock, subject to the next sentence hereof, shall have the right, voting separately as a class, to elect all the directors up for election at such meeting. Notwithstanding any other provision in this Section 6, the holders of Series C Preferred Stock shall not have the right to elect any directors which the holders of the Existing Preferred Stock, voting separately as a class, have a right to elect under Section A(VI) of Clause FOURTH of the Company's Certificate of Incorporation. (v) The Company shall not, without the affirmative vote or consent of the holders of at least a majority of the shares of Series C Preferred Stock then outstanding (with shares held by the Company or any of its affiliates not being considered to be outstanding for this purpose) voting or consenting as the case may be, as one class: (a) authorize or create (by way of reclassification or otherwise) any Parity Securities or Senior Securities; (b) amend, waive or otherwise alter any provision of this Certificate of Designation (including the provisions of Section 6 hereof) in a manner materially adverse to the interests of the holders of Series C Preferred Stock; or J-9 (c) amend or otherwise alter the bylaws or the Certificate or Incorporation of the Company in a manner materially adverse to the interests of the holders of the Series C Preferred Stock. 7. Consolidation, Merger, Etc. In case the Company shall enter into any consolidation, merger, combination or other transaction in which the outstanding shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series C Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 30,000 times the aggregate amount of stock, securities, cash and/or any other property, as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Company shall, at any time after the issuance of any shares of Series C Preferred Stock, declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. 8. Transferability. The transfer of the Series C Preferred Stock by the holders thereof shall not be restricted other than pursuant to the requirements of applicable law; provided, that Glencore AG and Mizuho International plc (each an "Initial Investor") shall provide written notice to the Company within three days of any transfer of Series C Preferred Stock by such Initial Investor. 9. Exclusion of Other Rights. Except as may otherwise be required by law, the shares of Series C Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this resolution (as such resolution may be amended from time to time) and in the Certificate of Incorporation. The shares of Series C Preferred Stock shall have no preemptive or subscription rights. 10. Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 11. Severability of Provisions. If any voting powers, preferences and relative, participating, optional and other special rights of the Series C Preferred Stock and qualifications, limitations and restrictions thereof set forth in this resolution (as such resolution may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series C Preferred Stock and qualifications, limitations and restrictions thereof set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, J-10 optional or other special rights of Series C Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect and no voting powers, preferences and relative, participating, optional or other special rights of Series C Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Series C Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein. 12. Re-issuance of Series C Preferred Stock. Shares of Series C Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Delaware) have the status of authorized but unissued shares of Serial Preference Stock of the Company undesignated as to series and may be designated or re-designated and issued or reissued, as the case may be, as part of any series of Serial Preference Stock of the Company, provided, that any issuance of such shares as Series C Preferred Stock must be in compliance with the terms hereof. 13. Mutilated or Missing Series C Preferred Stock Certificates. If any of the Series C Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Company shall issue, in exchange and in substitution for and upon cancellation of the mutilated Series C Preferred Stock certificate, or in lieu of and in substitution for the Series C Preferred Stock certificate lost, stolen or destroyed, a new Series C Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Series C Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Series C Preferred Stock certificate and indemnity, if requested, satisfactory to the Company and the transfer agent (if other than the Company). J-11 IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed on this [ ] day of [ ]. MILACRON INC., By: ____________________________ Name: Title: ATTEST: By: ____________________________ Name: Title: J-12 EX-10.50 5 y95183exv10w50.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 10.50 ================================================================================ REGISTRATION RIGHTS AGREEMENT BY AND AMONG MILACRON INC., GLENCORE FINANCE AG, AND MIZUHO INTERNATIONAL PLC DATED AS OF MARCH 12, 2004 ================================================================================ TABLE OF CONTENTS
Page ---- Section 1. Certain Definitions................................ 1 Section 2. Demand Registration Rights......................... 4 Section 3. Piggy-Back Registration Rights..................... 7 Section 4. Selection of Underwriters.......................... 8 Section 5. Blackout Periods................................... 8 Section 6. Holdback........................................... 9 Section 7. Registration Procedures............................ 10 Section 8. Registration Expenses.............................. 13 Section 9. Rule 144........................................... 13 Section 10. Covenants of Holders............................... 14 Section 11. Indemnification; Contribution...................... 14 Section 12. Injunctions........................................ 16 Section 13. Amendments and Waivers............................. 16 Section 14. Notices............................................ 16 Section 15. Successors and Assigns............................. 18 Section 16. Representations and Warranties of the Company...... 18 Section 17. Counterparts....................................... 18 Section 18. Descriptive Headings............................... 19 Section 19. Choice of Law...................................... 19 Section 20. Severability....................................... 19 Section 21. Entire Agreement................................... 19 Section 22. Further Actions; Reasonable Best Efforts........... 19
-i- REGISTRATION RIGHTS AGREEMENT This Agreement (this "Agreement") is made as of this 12th day of March, 2004 by and among Milacron Inc., a Delaware corporation (the "Company"), Glencore Finance AG ("Glencore") and Mizuho International plc ("Mizuho", and together with Glencore, the "Holders"). RECITALS: WHEREAS, pursuant to that certain Note Purchase Agreement, dated as of March 12, 2004, by and among the Company and the Holders (the "Note Purchase Agreement"), the Company has agreed to issue and sell to the Holders $30,000,000 aggregate principal amount of the Company's 20% Secured Step-Up Series A Notes due 2007 ("Series A Notes") and $70,000,000 aggregate principal amount of the Company's 20% Secured Step-Up Series B Notes due 2007 ("Series B Notes", and together with the Series A Notes, the "Notes"); WHEREAS, the Series A Notes are convertible, at any time, into shares of Common Stock of the Company, par value $1.00 per share (the "Common Stock"); WHEREAS, the Notes are exchangeable into shares of the 6% Series B Convertible Preferred Stock, par value $[ ] per share, of the Company (the "Series B Preferred Stock"), in accordance with the terms and conditions set forth in the Note Purchase Agreement and the Notes, which in turn are convertible into shares of the Company's Common Stock, upon the terms and subject to the limitations and conditions set forth in the Certificate of Designation with respect to such Series B Preferred Stock; and WHEREAS, the Company has agreed to grant to the Holders the registration rights described in this Agreement with respect to the Registrable Securities (as defined herein). NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the following meanings: (a) "Affiliate" has the meaning ascribed to such term in Rule 12b-2 of the Exchange Act. (b) "Agreement" has the meaning specified in the Preamble hereof. (c) "Beneficially Own" has the meaning ascribed to such term in Rule 13d-3 of the Exchange Act. (d) "Blackout Period" has the meaning specified in Section 5 hereof. (e) "Board" has the meaning specified in Section 5 hereof. (f) "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of the State of New York and the United States of America. (g) "Common Stock" has the meaning specified in the Recitals hereof. (h) "Company" has the meaning specified in the Preamble hereof. (i) "Conversion Shares" means, collectively, the shares of Common Stock of the Company received by Holders upon conversion of the Series B Preferred Stock. (j) "Damages" has the meaning specified in Section 11(a) hereof. (k) "Demand" has the meaning specified in Section 2(a) hereof. (l) "Demand Registration" has the meaning specified in Section 2(a) hereof. (m) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made thereto. (n) "Glencore" has the meaning specified in the Preamble hereof. (o) "Holder" has the meaning specified in the Preamble hereof. (p) "Inspectors" has the meaning specified in Section 7(k) hereof. (q) "Material Adverse Effect" means, with respect to any Person, any condition having an effect on such Person that will, or would reasonably be expected to, prevent or materially impair the ability of the Company to fulfill its obligations under this Agreement. (r) "Mizuho" has the meaning specified in the Preamble hereof. (s) "NASD" means the National Association of Securities Dealers, Inc. (t) "Note Purchase Agreement" has the meaning specified in the Recitals hereof. (u) "Notes" has the meaning specified in the Recitals hereof. (v) "NYSE" means the New York Stock Exchange, Inc. (w) "Other Rights Holders" has the meaning specified in Section 2(f) hereof. (x) "Person" means any individual, firm, partnership, corporation (including, without limitation, a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, and shall include any successor (by merger or otherwise) of any such entity. -2- (y) "Piggy-Back Request" has the meaning specified in Section 3(b) hereof. (z) "Piggy-Back Rights" has the meaning specified in Section 3(a) hereof. (aa) "Prospectus" means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by any Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. (bb) "Records" has the meaning specified in Section 7(k) hereof. (cc) "Registrable Securities" means any and all of (i) Common Stock received by Holders upon conversion of the Series A Notes; (ii) the Series B Preferred Stock received by Holders upon exchange of the Notes; (iii) the Conversion Shares; (iv) if the Company has not received Stockholder Approval on or before July 29, 2004, (A) the Notes and (B) the shares of Serial Preference Stock into which shares of Common Stock received by Holders of Series A Notes upon conversion thereof are exchangeable and (v) any securities issued or distributed in respect of any of the securities identified in clauses (i), (ii), (iii) or (iv)(B) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise. Registrable Securities shall cease to be Registrable Securities when and to the extent that they (i) shall have been Transferred by Holders pursuant to an effective Registration Statement; (ii) shall have been sold or transferred in accordance with the requirements of Rule 144 or Rule 144A; (iii) are otherwise transferred, if new certificates or other evidences of ownership for them not bearing a legend restricting further transfer and not subject to any stop-transfer order or other restrictions on transfer have been delivered by the Company and subsequent disposition of such securities does not require registration or qualification of such securities under the Securities Act or any state securities laws then applicable or (iv) are no longer outstanding. (dd) "Registration Expenses" means any and all reasonable out-of-pocket expenses incident to performance of or compliance with this Agreement, including, without limitation, (i) all SEC, NASD and securities exchange registration and filing fees, (ii) all fees and expenses of complying with state securities or "blue sky" laws (including fees and disbursements of counsel for any underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all processing, printing, copying, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange pursuant to Section 7(h) hereof, (v) all fees and disbursements of counsel for the Company and of its independent public accountants (including the expenses of any special audits or comfort letters), and (vi) the reasonable fees and expenses of any special experts retained in connection with a registration under this Agreement, but excluding any underwriting discounts and commissions and transfer taxes relating to the sale or disposition of Registrable Securities pursuant to a Registration Statement. (ee) "Registration Statement" means any registration statement (including a Shelf Registration) of the Company referred to in Section 2 or Section 3 hereof, including any Prospectus, amendments and supplements to any such registration statement, including -3- post-effective amendments, and all exhibits and all material incorporated by reference in any such registration statement. (ff) "Rights Offering Period" means the 270-day period beginning on the date immediately following the date on which the Notes are exchanged for shares of Series B Preferred Stock pursuant to the terms of the Note Purchase Agreement. (gg) "Rule 144" means Rule 144 under the Securities Act, or any similar or successor rules or regulations hereafter adopted by the SEC. (hh) "Rule 144A" means Rule 144A under the Securities Act, or any similar or successor rules or regulations hereafter adopted by the SEC. (ii) "SEC" means the United States Securities and Exchange Commission and any successor federal agency having similar powers. (jj) "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made thereto. (kk) "Series A Notes" has the meaning specified in the Recitals hereof. (ll) "Series B Notes" has the meaning specified in the Recitals hereof. (mm) "Series B Preferred Stock" has the meaning specified in the Recitals hereof. (nn) "Shelf Registration" means a "shelf" registration statement on an appropriate form pursuant to Rule 415 under the Securities Act (or any successor rule that may be adopted by the SEC). (oo) "Stockholder Approval" has the meaning specified in the Note Purchase Agreement. (pp) "Transfer" means, with respect to any security, any direct or indirect sale, transfer, assignment, hypothecation, pledge or any other disposition of such security or any interest therein. (qq) "Uncontrolled Event" has the meaning specified in Section 5 hereof. (rr) "Underwritten Offering" means an offering in which securities of the Company are sold to an underwriter for reoffering to the public pursuant to an effective Registration Statement under the Securities Act. Section 2. Demand Registration Rights. (a) Any Holder may, at any time after the expiration of the Rights Offering Period, request the Company in writing (each such request, a "Demand") to effect a registration -4- with the SEC under and in accordance with the provisions of the Securities Act of all or part of the Registrable Securities Beneficially Owned by such Holder (each such registration, a "Demand Registration"). The Demand shall specify the aggregate number of shares of Registrable Securities requested to be so registered on behalf of such Holder. Any request received by the Company from a Holder as provided in this Section 2(a) shall be deemed to be a "Demand" for purposes of this Agreement, unless the Company, in accordance with the terms of this Agreement, shall have notified such Holder in writing, prior to its receipt of such request from such Holder, of its intention to register securities with the SEC, in which case the request from such Holder shall be governed by Section 3 hereof, not this Section 2. All Demands to be made by a Holder pursuant to this Section 2(a) and any notifications by the Company pursuant to the preceding sentence must be based upon a good faith intent of such Holder or the Company, as the case may be, to effect the sale of securities pursuant to such registrations as promptly as practicable after the date of the Demand or notification, as the case may be, in accordance with the terms of this Agreement. Each Holder shall be entitled to two (2) Demands. (b) After receipt of a Demand from a Holder, the Company shall promptly prepare and file a Registration Statement for the Registrable Securities so requested to be registered and use its commercially reasonable efforts to cause such Registration Statement to become effective. (c) Notwithstanding anything in this Agreement to the contrary, the Company shall not be required to file a Registration Statement for Registrable Securities pursuant to a Demand: (i) if the Company shall have previously effected a Demand Registration at any time during the immediately preceding one hundred twenty (120) day period; (ii) if the Company shall have previously effected a registration of Registrable Securities to be issued and sold by the Company at any time during the immediately preceding one hundred twenty (120) day period (other than a registration on Form S-4, Form S-8 or Form S-3 (with respect to dividend reinvestment plans and similar plans) or any successor forms thereto); (iii) during the pendency of any Blackout Period; (iv) if the Company shall have previously effected four (4) Demand Registrations pursuant to the terms of this Agreement; (v) if the Registrable Securities that are the subject of the Demand are the subject of an effective Shelf Registration. (d) The Company shall be permitted to satisfy its obligations under this Section 2 by amending (to the extent permitted by applicable law) any Shelf Registration previously filed by the Company under the Securities Act so that such Shelf Registration (as amended) shall permit the disposition (in accordance with the intended methods of disposition specified as aforesaid) of all of the Registrable Securities for which a Demand shall have been -5- made. Notwithstanding the foregoing, the Company shall have no obligation under this Agreement to file any Shelf Registration. (e) A requested Demand Registration shall not be deemed to count as a Demand Registration described in the last sentence of Section 2(a), Section 2(c)(i) or 2(c)(iv) hereof if: (i) such registration has not been declared effective by the SEC or does not become effective in accordance with the Securities Act, (ii) after becoming effective, such registration is terminated by any stop order, injunction or similar order or requirement of the SEC or other governmental agency or court for any reason not attributable to a Holder and does not thereafter become effective, (iii) the conditions to closing specified in any underwriting agreement entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of an act or omission on the part of a Holder, or (iv) the Holder making a Demand shall have withdrawn its Demand or otherwise determined not to pursue such registration, provided that, in the case of this clause (iv), such Holder shall have reimbursed the Company for all of its out-of-pocket expenses incurred in connection with such Demand. (f) If the lead managing underwriters of an Underwritten Offering made pursuant to a Demand shall advise the Holder making a Demand in writing (with a copy to the Company) that marketing or other factors require a limitation on the number of shares of Registrable Securities which can be sold in such offering within a price range acceptable to the Holder, then (i) if the Company shall have elected to include any securities to be issued and sold by the Company or sold on behalf of any of the Company's security holders excluding such Holder ("Other Rights Holders") in such Registration Statement, then the Company shall reduce the number of securities the Company shall intend to issue and sell (and, if applicable, the number of securities being sold on behalf of the Other Rights Holders) pursuant to such Registration Statement such that the total number of securities being sold by each such party shall be equal to the number which can be sold in such offering within a price range acceptable to such Holder, and (ii) if the Company shall not have elected to include any securities to be issued and sold by the Company or sold on behalf of Other Rights Holders in such Registration Statement or if the reduction referred to in the previous clause (i) shall not be sufficient, then, the Holder shall reduce the number of Registrable Securities requested to be included in such offering to the number that the lead managing underwriter advises can be sold in such offering within a price range acceptable to the Holder. The Holder shall not be required to reduce the number of Registrable Securities requested to be included in any such offering until the number of securities referred to in the previous clause (i) shall have been reduced to zero (0); provided, however, that if (A) the number of securities to be issued and sold by the Company in an Underwritten Offering made pursuant to a Demand has been reduced to zero (0) pursuant to clause (i) of this paragraph and (B) the lead managing underwriters of an Underwritten Offering made pursuant to a Demand shall advise the Holder making a Demand in writing (with a copy to the Company) that the inclusion of securities to be issued and sold by the Company in the offering would materially improve the marketing or pricing of the offering, the lead managing underwriters may, in their sole reasonable discretion, include in such offering securities to be issued and sold by the Company and reduce the number of securities to be sold on behalf of the Holder making a Demand. A requested Demand reduced pursuant to this Section 2(f) shall count as a Demand Registration described in the last sentence of Section 2(a), Section 2(c)(i) or 2(c)(iv) hereof. In the event that a requested Demand Registration so reduced does not result in at least $5,000,000 in aggregate gross sales proceeds being received by the Holder, such -6- requested Demand Registration shall not be deemed to count as a Demand Registration described in the last sentence of Section 2(a), Section 2(c)(i) or 2(c)(iv) hereof, provided that the Holders shall have reimbursed the Company for all of its out-of-pocket expenses incurred in the preparation, filing and processing of the Registration Statement. (g) Except for exchange and shelf registration rights granted in connection with private debt transactions made under Rule 144A under the Securities Act, without the prior consent of a majority in the interest of the Holders, the Company shall not, from and after the date hereof until the Registrable Securities are no longer entitled to registration rights hereunder, grant demand registration rights to any purchaser of the Company's Registrable Securities or Common Stock that are superior to or pari passu with the rights of Holders as set forth in this Agreement. (h) No Holder may participate in any Registration Statement hereunder unless such Holder (i) agrees to sell its Registrable Securities on the basis provided in any arrangements approved by the Company and (ii) completes and executes all reasonable and customary questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such arrangements. Section 3. Piggy-Back Registration Rights. (a) At any time on or after the expiration of the Rights Offering Period, whenever the Company shall propose to file a Registration Statement under the Securities Act relating to the public offering of securities for sale for cash, the Company shall give written notice to the Holders as promptly as practicable, but in no event less than fifteen (15) days prior to the anticipated filing thereof, specifying the approximate date on which the Company proposes to file such Registration Statement and the intended method of distribution in connection therewith, and advising Holders of their right to have any or all of the Registrable Securities then Beneficially Owned by them included among the securities to be covered by such Registration Statement (the "Piggy-Back Rights"). (b) Subject to Section 3(c) and Section 3(d) hereof, in the event that Holders have and shall elect to utilize their Piggy-Back Rights, the Company shall include in the Registration Statement the Registrable Securities identified by the Holders in a written request (a "Piggy-Back Request") given to the Company not later than ten (10) Business Days prior to the proposed filing date of the Registration Statement. The Registrable Securities identified in a Piggy-Back Request shall be included in the Registration Statement on the same terms and conditions as the other securities included in the Registration Statement. (c) Notwithstanding anything in this Agreement to the contrary, Holders shall not have Piggy-Back Rights with respect to (i) a Registration Statement on Form S-4 or Form S-8 or Form S-3 (with respect to dividend reinvestment plans and similar plans) or any successor forms thereto or (ii) a Registration Statement filed in connection with an exchange offer or an offering of securities solely to employees of the Company. (d) If the lead managing underwriters selected by the Company for an Underwritten Offering for which Piggy-Back Rights are requested shall advise the Company in -7- writing that marketing or other factors require a limitation on the number of shares of securities which can be sold in such offering within a price range acceptable to the Company, then, (i) such underwriters shall provide written notice thereof to the Holders and (ii) there shall be included in the offering, (A) first, all securities proposed by the Company to be sold for its account (or such lesser amount as shall equal the maximum number determined by the lead managing underwriters as aforesaid); (B) second, all Registrable Securities requested to be included in such Registration Statement by Holders, or such lesser number as shall equal, together with the amount referred to in (A), the maximum number determined by the lead managing underwriters as aforesaid; and (C) third, only that number of securities requested to be included by any Other Rights Holders that such lead managing underwriters reasonably and in good faith believe will not substantially interfere with (including, without limitation, adversely affecting the pricing of) the offering of all the securities that the Company desires to sell for its own account and all the Registrable Securities that the Holders desire to sell for their own accounts. (e) Nothing contained in this Section 3 shall create any liability on the part of the Company to the Holders if the Company for any reason should decide not to file a Registration Statement for which Piggy-Back Rights are available or to withdraw such Registration Statement subsequent to its filing, regardless of any action whatsoever Holders may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise. (f) A request made by Holders pursuant to their Piggy-Back Rights to include Registrable Securities in a Registration Statement shall not be deemed to be a Demand Registration described in the last sentence of Section 2(a), Section 2(c)(i) or 2(c)(iv) hereof. Section 4. Selection of Underwriters. (a) In connection with any Underwritten Offering made pursuant to a Demand, the Company may, at its sole discretion, select a nationally recognized book running managing underwriter to manage the Underwritten Offering with the prior written consent of the Holders (which consent shall not be unreasonably delayed or withheld); provided, however, that the Company shall have no obligation to use an underwriter in connection with any registration made pursuant to a Demand. (b) In connection with any Underwritten Offering made pursuant to a Piggy-Back Right, the Company may, at its sole discretion, select a nationally recognized book running managing underwriter to manage the Underwritten Offering after consultation in good faith with the Holders; provided, however, that the Company shall have no obligation to use an underwriter in connection with any registration made pursuant to a Piggy-Back Right. Section 5. Blackout Periods. If (i) within five (5) Business Days following the exercise by a Holder of a Demand, the Company determines in good faith and notifies such Holder in writing that the registration and distribution of Registrable Securities (or the use of the Registration Statement or related Prospectus) resulting from a Demand received from such Holder would materially and adversely interfere with any planned or proposed business -8- combination transaction involving the Company, or any pending financing, acquisition, corporate reorganization or any other corporate development involving the Company or any of its subsidiaries, (ii) following the exercise by such Holder of a Demand but before the effectiveness of the Registration Statement, (A) a business combination, tender offer, acquisition or other corporate event involving the Company is proposed, initiated or announced by another Person beyond the control of the Company (an "Uncontrolled Event"), (B) in the reasonable judgment of at least a majority of the members of the Board of Directors of the Company (the "Board"), the filing or seeking the effectiveness of the Registration Statement would materially and adversely interfere with such Uncontrolled Event or would otherwise materially and adversely affect the Company and (C) the Company promptly so notifies such Holder, or (iii) following effectiveness of a Registration Statement with respect to a Shelf Registration, the Company determines in good faith and notifies such Holder in writing that there is a valid purpose for the suspension of such Registration Statement, then, in each case, the Company shall be entitled to (x) postpone the filing of the Registration Statement otherwise required to be filed by the Company pursuant to Section 2 hereof, or (y) elect that the effective Registration Statement not be used, in either case for a reasonable period of time, but not to exceed sixty (60) days after the date that (1) the Demand was made (in the case of an clause (i) above) or (2) the Company so notifies such Holder of such determination (in the case of clauses (ii) and (iii) above) (each, a "Blackout Period"). Any such written notice shall contain a general statement of the reasons for such postponement or restriction on use and an estimate of the anticipated delay. The Company shall (a) promptly notify the Holder making a Demand of the expiration or earlier termination of such Blackout Period and (b) use its commercially reasonable efforts to effect the Demand Registration as promptly as practicable after the end of the Blackout Period. Section 6. Holdback. (a) If (i) at any time after the expiration of the Rights Offering Period, the Company shall file a Registration Statement (other than a registration on Form S-4, Form S-8 or Form S-3 (with respect to dividend reinvestment plans and similar plans) or any successor forms thereto) with respect to any shares of its capital stock, and (ii) upon reasonable prior notice the managing underwriter or underwriters (in the case of an Underwritten Offering) advise the Company and the Holders in writing that a sale or distribution of Registrable Securities would adversely impact such offering, then the Holders shall, to the extent not inconsistent with applicable law, refrain from effecting any sale or distribution of Registrable Securities during the period commencing on the effective date of such Registration Statement and continuing until the sixtieth (60th) day after the effective date of such Registration Statement; provided, however, that such restriction shall apply to the Holders only if in connection with such offering, the underwriters require the directors and executive officers of the Company to refrain from selling the Company's securities for a like period and on like terms. (b) If requested by the underwriter or managing underwriter, as applicable, in any Underwritten Offering, each party hereto shall agree not to effect any public sale or distribution of such securities as such underwriter or managing underwriter shall deem advisable during any period set forth in a lock-up or market stand-off agreement approved by the Company; provided such agreement is no less favorable to such party than lock-up or market stand-off agreements entered into by the Company's directors and executive officers. -9- Section 7. Registration Procedures. If and whenever the Company shall be required to use its commercially reasonable efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company shall and, with respect to Section 7(m) and Section 7(n), the Holders shall: (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities on any form for which the Company then qualifies or that counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its commercially reasonable efforts to cause such Registration Statement to become and remain effective for a period of time necessary to sell Registrable Securities registered on such Registration Statement or until such Registrable Securities have been sold; (b) prepare and file with the SEC amendments and post-effective amendments to such Registration Statement and such amendments and supplements to the Prospectus used in connection therewith as may be necessary to maintain the effectiveness of such registration or as may be required by the rules, regulations or instructions applicable to the registration form utilized by the Company or by the Securities Act for a Shelf Registration or otherwise necessary to keep such Registration Statement effective for at least one hundred eighty (180) days and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to otherwise comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until the earlier of (x) such 180th day or (y) such time as all Registrable Securities covered by such Registration Statement shall have ceased to be Registrable Securities (it being understood that the Company at its option may determine to maintain such effectiveness for a longer period, whether pursuant to a Shelf Registration or otherwise); provided, however, that a reasonable time before filing a Registration Statement or Prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act), the Company shall furnish to the Holders, the managing underwriter and their respective counsel for review and comment, copies of all documents proposed to be filed; (c) furnish, without charge, to the Holders and to any underwriter in connection with an Underwritten Offering such reasonable number of conformed copies of such Registration Statement and of each amendment and post-effective amendment thereto (in each case including all exhibits) and such reasonable number of copies of any Prospectus or Prospectus supplement and such other documents as Holders or such underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by the Holders or the underwriter (the Company hereby consenting to the use (subject to the limitations set forth in Section 7(n) hereof) of the Prospectus or any amendment or supplement thereto in connection with such disposition); (d) use its commercially reasonable efforts to register or qualify such Registrable Securities covered by such Registration Statement under such other securities or "blue sky" laws of such jurisdictions as Holders shall reasonably request, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 7(d), it -10- would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; (e) as promptly as practicable, notify the managing underwriters (if any) and Holders, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act within the appropriate period mentioned in Section 7(b) hereof, of the Company's becoming aware that the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and, as promptly as practicable, prepare and furnish to the Holders a reasonable number of copies of an amendment or supplement to such Registration Statement or related Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (f) promptly notify the Holders at any time: (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or any order preventing the use of a related Prospectus, or the initiation (or any overt threats) of any proceedings for such purposes; (iv) of the receipt by the Company of any written notification of the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation (or overt threats) of any proceeding for that purpose; and (v) if at any time the representations and warranties of the Company contemplated by Section 7(i) below cease to be true and correct in all material respects; (g) otherwise comply with all applicable rules and regulations of the SEC, and make available to Holders an earnings statement that shall satisfy the provisions of Section 11(a) of the Securities Act, provided that the Company shall be deemed to have complied with this Section 7(g) if it shall have complied with Rule 158 under the Securities Act; (h) use its commercially reasonable efforts to cause all such Registrable Securities to be listed on the NYSE or any other national securities exchange or automated quotation system on which the class of Registrable Securities being registered is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and to provide a transfer agent and registrar for such Registrable Securities covered by such Registration Statement no later than the effective date of such Registration Statement; -11- (i) enter into agreements (including, if applicable, an underwriting agreement and other customary agreements in the form customarily entered into by other companies in comparable underwritten offerings) and take all other appropriate and all commercially reasonable actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement shall be entered into and whether or not the registration shall be an underwritten registration: (i) make such representations and warranties to the Holders and the underwriters, if any, in form, substance and scope as are customarily made by companies to underwriters in comparable underwritten offerings; (ii) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions shall be reasonably satisfactory (in form, scope and substance) to the managing underwriters) addressed to the underwriters covering the matters customarily covered in opinions requested in comparable underwritten offerings by the Company; (iii) obtain "comfort letters" and updates thereof from the Company's independent certified public accountants addressed to the Board and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "comfort letters" by independent accountants in connection with comparable underwritten offerings on such date or dates as may be reasonably requested by the managing underwriters, or if such offering is not an Underwritten Offering, the Board; (iv) provide the indemnification in accordance with the provisions and procedures of Section 11 hereof to all parties to be indemnified pursuant to such Section 11 and any other indemnification customarily required in underwritten public offerings; and (v) deliver such documents and certificates as may be reasonably requested by the Holders and the managing underwriters, if any, to evidence compliance with Section 7(f) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company; (j) cooperate with the Holders and the managing underwriter or underwriters, if any, to facilitate, to the extent reasonable under the circumstances, the timely preparation and delivery of certificates representing the securities to be sold under such Registration Statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or the Holders may request and/or in a form eligible for deposit with the Depository Trust Company; (k) make available to the Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the Holders or such underwriter (collectively, the "Inspectors"), reasonable access to appropriate officers and employees of the Company and the Company's subsidiaries to ask questions and to obtain information reasonably requested by such Inspector and financial and other records and other information, pertinent corporate documents and properties of any of the -12- Company and its subsidiaries and Affiliates (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility; provided, however, that the Records that the Company determines, in good faith, to be confidential shall not be disclosed to any Inspector unless such Inspector signs a confidentiality agreement in form reasonably satisfactory to the Company or either (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission of a material fact in such Registration Statement, or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction; provided, further, that any decision regarding the disclosure of information pursuant to subclause (i) shall be made only after consultation with counsel for the applicable Inspectors; and provided, further, that the Holders agree that they shall, promptly after learning that disclosure of such Records is sought in a court having jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of such Records; (l) in the event of the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in the Registration Statement for sale in any jurisdiction, the Company shall use its commercially reasonable efforts promptly to obtain its withdrawal; (m) the Holders shall furnish the Company with such information regarding them and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request or as shall be required in connection with the action to be taken by the Company hereunder; and (n) the Holders shall, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 7(e) hereof, forthwith discontinue disposition of Registrable Securities pursuant to the Prospectus or Registration Statement covering such Registrable Securities until the Holders shall have received copies of the supplemented or amended Prospectus contemplated by Section 7(e) hereof, and, if so directed by the Company, the Holders shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in their possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Section 8. Registration Expenses. Except as otherwise provided herein, in connection with all registrations of Registrable Securities made pursuant to a Demand Registration or Piggy-Back Rights, the Company shall pay all Registration Expenses; provided, however, that the Holders shall pay, and shall hold the Company harmless from, (i) any underwriting discounts and commissions and transfer taxes relating to the sale or disposition of Registrable Securities and (ii) any fees, expenses or disbursements of its counsel and other advisors. Section 9. Rule 144. From and after the date hereof, the Company shall, at all times when the Holders Beneficially Own any Registrable Securities, take such measures and file and/or make available such information, documents and reports as shall be required by the SEC as a condition to the availability of Rule 144. -13- Section 10. Covenants of Holders. Each Holder hereby covenants and agrees that it shall not sell any Registrable Securities in violation of the Securities Act or this Agreement. Section 11. Indemnification; Contribution. (a) The Company shall indemnify and hold harmless each Holder, their respective officers and directors, and each Person, if any, who controls such Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and any agents, representatives or advisers thereof against all losses, claims, damages, liabilities and expenses (including reasonable attorneys' fees and expenses and reasonable costs of investigation) (collectively, "Damages") incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation arising out of or based upon (i) any untrue or alleged untrue statement of material fact contained in any Registration Statement, any Prospectus, or any amendment or supplement to any of the foregoing, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in light of the circumstances then existing) not misleading, or (iii) any violation or alleged violation by the Company of any United States federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration except in each case insofar as the same arise out of or are based upon any such untrue statement or omission made in reliance on and in conformity with information with respect to the Holders furnished to the Company by the Holders or their counsel expressly for use therein. Notwithstanding anything in this Agreement to the contrary, the Company shall not be required to indemnify any Person whose conduct has been determined by a final non-appealable judgment of a court of competent jurisdiction to constitute bad faith, gross negligence or willful misconduct. Subject to Section 11(b) hereof, the Company shall not be responsible hereunder for the fees and expenses of more than one counsel (together with local counsel, if any) for the indemnified parties. In connection with an Underwritten Offering, the Company shall indemnify the underwriters thereof, their officers, directors and agents and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders. (b) Any Person entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such indemnified party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party may claim indemnification or contribution pursuant to this Section 11 (provided that failure to give such notification shall not affect the obligations of the indemnifying party pursuant to this Section 11 except to the extent the indemnifying party shall have been materially prejudiced as a result of such failure). In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such -14- indemnified party under this Section 11 for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding the foregoing, if (i) the indemnifying party shall not have employed counsel reasonably satisfactory to such indemnified party to take charge of the defense of such action within a reasonable time after notice of commencement of such action (so long as such failure to employ counsel is not the result of an unreasonable determination by such indemnified party that counsel selected pursuant to the immediately preceding sentence is unsatisfactory) or if the indemnifying party shall not have demonstrated to the reasonable satisfaction of the indemnified party its ability to finance such defense, or (ii) the indemnified party shall have reasonably concluded or been advised by counsel that there may be legal defenses available to such indemnified party which could result in a conflict of interest for such counsel or prejudice the prosecution of the defenses available to such indemnified party, then such indemnified party shall have the right to employ separate counsel of its choosing, at the expense of the indemnifying party. No indemnifying party shall consent to entry of any judgment or enter into any settlement without the consent (which consent, in the case of an action, suit, claim or proceeding exclusively seeking monetary relief, shall not be unreasonably withheld) of the applicable indemnified party. (c) If the indemnification from the indemnifying party provided for in this Section 11 is unavailable to an indemnified party hereunder in respect of any Damages referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Damages in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions or omissions which resulted in such Damages, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action or omission. The amount paid or payable by a party as a result of the Damages referred to above shall be deemed to include, subject to the limitations set forth in Section 11(b) hereof, any legal and other fees and expenses reasonably incurred by such indemnified party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 11(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 11(c). Any underwriter's obligations in this Section 11(c) to contribute shall be several in proportion to the number of Registrable Securities underwritten by them and not joint. Notwithstanding the provisions of this Section 11(c), no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any Damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. If indemnification is available under this Section 11, the indemnifying parties shall indemnify each indemnified party to the fullest extent provided in Section 11(a) hereof -15- without regard to the relative fault of such indemnifying parties or indemnified party or any other equitable consideration provided for in this Section 11(c). (d) The provisions of this Section 11 shall be in addition to any liability which any party may have to any other party and shall survive any termination of this Agreement. The indemnification provided by this Section 11 shall survive the Transfer of such Registrable Securities by the Holders and shall remain in full force and effect irrespective of any investigation made by or on behalf of an indemnified party. Section 12. Injunctions. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH ITS SPECIFIC TERMS OR WERE OTHERWISE BREACHED. THEREFORE, EACH PARTY SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THE PROVISIONS OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT HAVING JURISDICTION, SUCH REMEDY BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH SUCH PARTY MAY BE ENTITLED AT LAW OR IN EQUITY. Section 13. Amendments and Waivers. No amendment, modification, supplement, termination, consent or waiver of any provision of this Agreement, nor consent to any departure herefrom, shall in any event be effective unless the same is in writing and is signed by the party against whom enforcement of the same is sought. Any waiver of any provision of this Agreement and any consent to any departure from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which given. Section 14. Notices. All notices, consents, requests, demands and other communications hereunder must be in writing, and shall be deemed to have been duly given or made: (i) when delivered in person; (ii) three (3) days after deposited in the United States mail, first class postage prepaid; (iii) in the case of telegraph or overnight courier services, one (1) Business Day after delivery to the telegraph company or overnight courier service with payment provided; or (iv) in the case of telex or telecopy or fax, when sent, verification received; in each case addressed as follows: if to the Company: Milacron Inc. 2090 Florence Avenue Cincinnati, OH 45206 Tel: (513) 487-5000 Fax: (513) 487-5057 Attention: Ronald D. Brown with a copy to: -16- Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Tel: (212) 474-1000 Fax: (212) 474-3700 Attention: Mark I. Greene, Esq. if to Glencore Finance AG: Glencore Finance AG Baarermattstrasse 3 CH-6341 Baar SWITZERLAND Tel: 011 41 41 709 2340 Fax: 011 41 41 709 2848 Attention: Steven Isaacs with a copy to: Cadwalader, Wickersham & Taft LLP 100 Maiden Lane New York, NY 10038 Tel: (212) 504-6000 Fax: (212) 504-6666 Attention: Gregory M. Petrick, Esq. if to Mizuho International plc Mizuho International plc Bracken House One Friday Street London EC4M 9JA UNITED KINGDOM Tel: 011 44 207 236 1090 Fax: 011 44 207 090 6806 Attention: Patrick Collins with a copy to: Cadwalader, Wickersham & Taft LLP 100 Maiden Lane New York, NY 10038 Tel: (212) 504-6000 Fax: (212) 504-6666 Attention: Gregory M. Petrick, Esq. -17- Section 15. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including, without the need for an express assignment or any consent by the Company thereto, subsequent holders of Registrable Securities. The Company hereby agrees to extend the benefits of this Agreement to any holder of Registrable Securities and any such holder of Registrable Securities may specifically enforce the provisions of this Agreement as if an original party hereto. Section 16. Representations and Warranties of the Company. The Company represents and warrants to the other parties hereto as follows: (a) Such party is duly organized and validly existing under the laws of the State of Delaware. (b) Such party has full corporate power and authority to enter into this Agreement and to carry out and perform its obligations hereunder. The execution, delivery and performance by such party of this Agreement have been duly authorized and approved by all necessary corporate action. This Agreement has been duly authorized, executed and delivered by such party and constitutes the legal, valid and binding obligation of such party enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law. (c) The execution, delivery and performance by such party of its obligations under this Agreement, and compliance by such party with the terms and conditions hereof will not (i) violate, with or without the giving of notice or the lapse of time, or both, or require any registration, qualification, approval or filing (other than registrations, qualifications, approvals and filings that have already been made or obtained) under, any provision of law, statute, ordinance or regulation applicable to it or any of its subsidiaries other than those that would not have a Material Adverse Effect and (ii) conflict with, or require any consent or approval under, or result in the breach or termination of any provision of, or constitute a default under, or result in the acceleration of the performance of the obligations of such party or any of its subsidiaries under, or result in the creation of any claim, lien, charge or encumbrance upon any of the properties, assets or businesses of such party or any of its subsidiaries pursuant to (x) its organizational documents, (y) to the best of the Company's knowledge, any order, judgment, decree, law, ordinance or regulation applicable to it or any of its subsidiaries or (z) any material contract, instrument, agreement or restriction to which it or any of its subsidiaries is a party or by which it or any of its subsidiaries or any of its respective assets or properties is bound. Section 17. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. -18- Section 18. Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Section 19. Choice of Law. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. Section 20. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, shall be held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all remaining provisions contained herein shall not be in any way impaired thereby. Section 21. Entire Agreement. This Agreement, including any schedules, exhibits or attachments referred to herein, is intended by the parties as a final expression and a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter hereof. There are no restrictions, promises, warranties or undertakings with respect to the subject matter hereof, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Section 22. Further Actions; Reasonable Best Efforts. Each Holder shall use its reasonable best effort to take or cause to be taken all appropriate action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable law and regulations to assist the Company in the performance of its obligations hereunder, including, without limitation, the preparation and filing of any Registration Statements pursuant to any Demand. -19- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. MILACRON INC., By: /s/ Robert P. Lienesch ----------------------------------- Name: Robert P. Lienesch Title: Vice President-Finance and Chief Financial Officer GLENCORE FINANCE AG By: /s/ Steven Isaacs ---------------------------------------- Name: Steven Isaacs Title: Director MIZUHO INTERNATIONAL PLC By: /s/ Matthew M. Weber ---------------------------------- Name: Matthew M. Weber Title: Attorney EX-10.51 6 y95183exv10w51.txt AMENDMENT NO. 1 TO RIGHTS AGREEMENT EXHIBIT 10.51 AMENDMENT NO. 1 TO RIGHTS AGREEMENT THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment"), dated as of March 11, 2004, is between Milacron Inc., a Delaware corporation (the "Company"), and Mellon Investor Services LLC (formerly known as ChaseMellon Shareholder Services, L.L.C.), a New Jersey limited liability company, as rights agent (the "Rights Agent"). WHEREAS, the Company and the Rights Agent are parties to a Rights Agreement, dated as of February 5, 1999, between the Company and the Rights Agent (the "Rights Agreement"); and WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company and the Rights Agent desire to amend the Rights Agreement as set forth below; NOW, THEREFORE, the Rights Agreement is hereby amended as follows: 1. Amendment of Section 1. Section 1 of the Rights Agreement is amended by adding thereto the following definition which shall read as follows: "Note Purchase Agreement" shall mean the Note Purchase Agreement, to be dated as of March 12, 2004, between the Company, Glencore Finance AG and Mizuho International plc, as the same may be amended from time to time." 2. Addition of New Section 33. The Rights Agreement is amended by adding a Section 33 thereof which shall read as follows: "Section 33. Exception for Note Purchase Agreement. Notwithstanding any provision of this Rights Agreement to the contrary, a Distribution Date shall not be deemed to have occurred, none of the rights under Section 11 of this Rights Agreement shall be deemed to have been triggered, none of Glencore Finance AG ("Glencore"), Mizuho International plc ("Mizuho"), or any of their Affiliates or Associates shall be deemed to have become an Acquiring Person and no holder of any Rights shall be entitled to exercise such Rights under, or be entitled to any rights pursuant to, any of Sections 3, 7 or 11 of this Agreement, in any such case by reason of (a) the approval, execution or delivery of the Note Purchase Agreement or any amendments thereof approved in advance by the Board of Directors of the Company or (b) the commencement or the consummation of the acquisition by Glencore and Mizuho of any securities issued by the Company contemplated by the Note Purchase Agreement in accordance with the provisions thereof." 4. Effectiveness. This Amendment shall be deemed effective as of March 11, 2004 as if executed by both parties hereto on such date. Except as amended hereby, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby. Upon the effectiveness of this Amendment, the term "Rights Agreement" as used in the Rights Agreement shall refer to the Rights Agreement as amended hereby. 5. Miscellaneous. This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state. This Amendment may be executed in any number of counterparts, each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. If any term, provision, covenant or restriction of this Amendment is held by a court of competent jurisdiction or other authority to be invalid, illegal, or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in full force and effect and shall in no way be affected, impaired or invalidated. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date set forth above. MILACRON INC., By: /s/ Ronald D. Brown ------------------------------------- Name: Ronald D. Brown Title: Chairman, President and Chief Executive Officer MELLON INVESTOR SERVICES LLC, as Rights Agent, By: /s/ Linda D. Fuhrer --------------------------------------- Name: Linda D. Fuhrer Title: Assistant Vice President EX-10.52 7 y95183exv10w52.txt 1994 LONG-TERM INCENTIVE PLAN EXHIBIT 10.52 CINCINNATI MILACRON INC. 1994 LONG-TERM INCENTIVE PLAN AS AMENDED FEBRUARY 10, 2004 SECTION 1. GENERAL PROVISIONS 1.1 PURPOSES The purposes of the 1994 Long-Term Incentive Plan (the "Plan") of Cincinnati Milacron Inc. (the "Company") are to promote the interests of the Company and its shareowners by (i) helping to attract and retain individuals of outstanding ability; (ii) strengthening the Company's capability to develop, maintain and direct a competent management team; (iii) motivating key employees, by means of performance-related incentives; (iv) providing incentive compensation opportunities which are competitive with those of other major corporations; and (v) enabling such individuals to participate in the long-term growth and financial success of the Company. 1.2 DEFINITIONS "Affiliate" - means any corporation or other entity which is not a Subsidiary but as to which the Company possesses a direct or indirect ownership interest and has power to exercise management control. "Award" - means a Stock Option grant, a Restricted Stock grant and/or a Performance Award under the Plan. "Board of Directors" - means the board of directors of the Company. "Code" - means the Internal Revenue Code of 1986, as it may be amended from time to time. "Committee" - means those members of the Personnel and Compensation Committee of the Board of Directors, none of whom are Participants except under Section 5 herein, who are disinterested with regard to the Plan as set forth in Rule 16b of the Exchange Act and who qualify as an outside director pursuant to Code Section 162(m) and any regulations issued thereunder. "Common Stock" - means the common shares of the Company. "Corporation" - means the Company, its divisions, Subsidiaries and Affiliates. "Cost of Capital" - means dividends paid by the Company on its preferred and common stock adjusted to a pre-tax basis plus consolidated pre-tax interest expense. "Director" - means a member of the Board of Directors of the Company. "Disability Date" - means the date on which a Participant is deemed disabled under the employee benefit plans of the Corporation applicable to the Participant. "Employee" - means any salaried employee of the Corporation. "EVA" - means Economic Value Added, which is the amount by which the before-tax earnings before interest costs exceeds or is less than the Cost of Capital as approved by the Board of Directors and the Company's independent auditors. "Exchange Act" - means the Securities Exchange Act of 1934, as amended. "Fair Market Value" - means the average of the high and low prices of the Common Stock on the date on which it is to be valued hereunder, as reported for New York Stock Exchange-Composite Transactions, or if there were no sales of Common Stock on that day, the next preceding day on which there were sales. "Incentive Stock Options" - means Stock Options which constitute "incentive stock options" under Section 422 (or any successor section) of the Code. "Non-Employee Director" - means a Director who is not an Employee. "Non-Qualified Stock Options" - means Stock Options which do not constitute Incentive Stock Options. "Participant" - means an Employee who is selected by the Committee to receive an Award under the Plan. "Performance Award" - means an award of cash or Common Stock pursuant to Section 4. "Performance Cycle" - means a fiscal year of the Company in which this Plan is in effect. "Restricted Period" - means the period of up to three (3) years selected by the Committee during which a grant of Restricted Stock may be forfeited to the Company. "Restricted Stock" - means shares of Common Stock contingently granted to a Participant under Sections 3, 4 or 5 of the Plan. "Retirement Date" - means the actual date of retirement from the Company (i) for those Participants who have attained age 55 and have at least ten Years of Credited Service (as that term is defined in the Cincinnati Milacron Retirement Plan); or, (ii) as may be determined under a temporary early retirement program. "Return on Capital" - means the pre-tax earnings of the Corporation as approved by the Committee plus consolidated pre-tax interest expense. "Share Value" - means the average of the Fair Market Value of the Common Stock for the two month period following the end of the Performance Cycle. "Stock Options" - means an Incentive Stock Option and/or a Non-Qualified Stock Option granted under Section 2 of the Plan. 2 "Subsidiary" - means any corporation in which the Company possesses directly or indirectly fifty percent (50%) or more of the total combined voting power of all classes of its stock. 1.3 ADMINISTRATION The Plan shall be administered by the Committee, which shall at all times consist of three or more members. The Committee shall have sole and complete authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time deem advisable, and to interpret the terms and provisions of the Plan. The Committee's decisions are binding upon all parties. 1.4 ELIGIBILITY All Employees who have demonstrated significant management potential or who have contributed in a substantial measure to the successful performance of the Corporation, as determined by the Committee, are eligible to be Participants in the Plan. Also, in instances where another corporation or other business entity is being acquired by the Company, and the Company has assumed outstanding employee option grants and/or the obligation to make future or potential grants under a prior existing plan of the acquired entity, adjustments are permitted at the discretion of the Committee subject to Section 1.5(a) below. Awards to Employees are made at the discretion of the Committee. Non-Employee Directors shall also participate pursuant to Section 5 herein. 1.5 SHARES RESERVED (a) There shall be reserved for grant pursuant to the Plan a total of 2,000,000 shares of Common Stock. In the event that (i)a Stock Option expires or is terminated unexercised as to any shares covered thereby, or (ii) Restricted Stock grants, other than those to the Company's officers and Non-Employee Directors, are forfeited or unearned for any reason under the Plan, such shares shall thereafter be again available for grant pursuant to the Plan. (b) In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other corporate change, or any distributions to common shareholders other than cash dividends, the Committee shall make such substitution or adjustment, if any, as it deems to be equitable, as to the number or kind of shares of Common Stock or other securities granted or reserved for grant pursuant to the Plan, the number of outstanding Stock Options and the option price thereof, and the number of payable Performance Awards and shares of Restricted Stock. 1.6 CHANGE OF CONTROL Change of Control shall mean - o a Person or Group other than a trustee or other fiduciary of securities held under an employee benefit plan of the Company or any of its subsidiaries, is or becomes a Beneficial Owner, directly or indirectly, of stock of the Company representing 20% or more of the total voting power of the Company's then outstanding stock and securities; 3 provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clause (i) of section (c) of this section; o individuals who, as of the date hereof, constitute the Board (the "Incumbent Board"), cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least 60% of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person or Group other than the Board; o there is consummated a merger, consolidation or other corporate transaction, other than (i) a merger, consolidation or transaction that would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 66?% of the combined voting power of the stock and securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or transaction, or (ii) a merger, consolidation or transaction effected to implement a recapitalization of the Company (or similar transaction) in which no Person or Group is or becomes the Beneficial Owner, directly or indirectly, of stock and securities of the Company representing more than 20% of the combined voting power of the Company's then outstanding stock and securities; o the sale or disposition by the Company of all or substantially all of the Company's assets other than a sale or disposition by the Company of all or substantially all of the assets to an entity at least 66?% of the combined voting power of the stock and securities of which is owned by Persons in substantially the same proportions as their ownership of the Company's voting stock immediately prior to such sale; or o the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company. "Person" shall mean any person (as defined in Section 3(a)(9) of the Securities Exchange Act (the "Exchange Act"), as such term is modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) any employee plan established by the Company, (ii) any affiliate (as defined in Rule 12b-2 promulgated under the Exchange Act) of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company. "Group" shall mean any group as defined in Section 14(d)(2) of the Exchange Act. "Beneficial Owner" shall mean beneficial owner as defined in Rule 13d-3 under the Exchange Act. 4 In the event of a Change of Control of the Company (1) all time periods relating to the exercise or realization of Awards shall be accelerated so that such Awards may be exercised or realized in full beginning immediately following the Change of Control and extending for the remaining normal exercise period, (ii) all Common Stock deferred pursuant to Section 4(c) herein shall be released to the participant, and (iii) all Performance Awards eligible to be earned for the outstanding Performance Cycle will be immediately payable in full. Notwithstanding any other provision of this Plan to the contrary, and only with respect to Awards granted on or after February 10, 2004, a "Change of Control" shall not occur solely as a result of a financial restructuring or recapitalization of the Company that may occur during 2004 (the "2004 Restructuring") and, accordingly, the occurrence of the 2004 Restructuring shall not result in, among other things, (a) the accelerated vesting, exercisability, release, realization or payment of any such Awards and (b) the deemed satisfaction of any performance criteria related to any such Awards. 1.7 WITHHOLDING The Corporation shall have the right to deduct from all amounts paid in cash any taxes required by law to be withheld therefrom. In the case of payments of Awards in the form of Common Stock, the amount of any taxes required to be withheld with respect to such Common Stock from the Participant may, at the Committee's discretion, be paid in cash, by tender by the Employee of the number of shares of Common Stock whose Fair Market Value equals the amount required to be withheld or, except for Non-Employee Directors receiving Awards of Common Stock pursuant to Section 5 herein, use of the Company's Key Employee Withholding Tax Loan Program. 1.8 NONTRANSFERABILITY No Award shall be assignable or transferable except by will or the laws of descent and distribution, and no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. 1.9 NO RIGHT TO EMPLOYMENT No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Corporation. Further, the Corporation expressly reserves the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in a Stock Option or Restricted Stock agreement. 1.10 CONSTRUCTION OF THE PLAN The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of Ohio. 5 1.11 AMENDMENT (a) The Board of Directors may amend, suspend or terminate the Plan or any portion thereof at anytime, provided that no amendment shall be made without stockholder approval which shall (i) increase (except as provided in Section 1.5(b) hereof) the total number of shares reserved for grant pursuant to the Plan, (ii) change the class of Employees eligible to be Participants, (iii) decrease the minimum option prices stated in Section 2.1 hereof (other than to change the manner of determining Fair Market Value to conform to any then applicable provision of the Code or regulations thereunder), or (iv) extend the maximum period during which Non-Qualified Stock Options or Incentive Stock Options may be exercised or reduce the restriction period for Restricted Stock Awards (except as provided in Section 1.6 hereof). (b) With the consent of the Participant adversely affected thereby, the Committee may amend or modify any outstanding Award in any manner not inconsistent with the terms of the Plan, including without limitation, to change the date or dates as of which (i) a Stock Option becomes exercisable, (ii) the restrictions on shares of Restricted Stock are removed or (iii) a Performance Award is payable. 1.12 AUTHORITY OF COMMITTEE Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine the Employees to receive Awards, and: (a) Stock Options. The number of shares to be covered by each Stock Option and the conditions and limitations, if any. in addition to those set forth in Section 2.2 hereof, applicable to the exercise of the Stock Option shall be determined by the Committee. The Committee shall have the authority to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of Stock Options. In the case of Incentive Stock Options, the maximum aggregate Fair Market Value (at the date of grant) of the shares, under this Plan or any other plan of the Company or a corporation which (at the date of grant) is a parent of the Company or a Subsidiary, which are exercisable by an Employee for the first time during any calendar year shall not exceed $100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422 of the Code, or any successor provision. (b) Restricted Stock. The number of shares of Restricted Stock to be granted to each Participant, the duration of the Restricted Period during which and the conditions under which the Restricted Stock may be forfeited to the Company, and the terms and conditions of the Award in addition to those contained in Section 3.1 shall be determined by the Committee. Such determinations shall be made by the Committee at the time of the grant. 1.13 EFFECTIVE DATES The Plan shall be effective on January 2, 1994, and shall expire on the earlier of (i) a date determined by the Board of Directors, or (ii) the full use of the shares reserved for grant pursuant to the Plan, provided however, that the Plan shall be null and void unless approved at the 1994 annual meeting of the shareholders of the Company. 6 1.14 GOVERNMENT AND OTHER REGULATIONS The obligation of the Company with respect to Awards shall be subject to all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of any registration statement required under the Securities Act of 1933, and the rules and regulations of any securities exchange on which the Common Stock may be listed. For so long as the Common Stock is registered under the Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (a) to maintain a registration statement in effect under the Securities Act of 1933 with respect to all shares of Common Stock that may be issued to Holders under the Plan, and (b) to file in a timely manner all reports required to be filed by it under the Exchange Act. 1.15 NON-EXCLUSIVITY Neither the adoption of the Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 1.16 FORFEITURE PROVISION If the Employee has (i) used for profit or disclosed confidential information or trade secrets of the Company to unauthorized persons, or (ii) breached any contract with or violated any legal obligations to the Company, or (iii) failed to make himself or herself available to consult with, supply information to, or otherwise cooperate with the Company at reasonable times and upon a reasonable basis, or (iv) engaged in any other activity which would constitute grounds for his or her discharge for cause by the Company or a Subsidiary, the Employee will forfeit all undelivered portions of an Award. SECTION 2: STOCK OPTIONS 2.1 OPTION PRICE The Committee shall establish the option price at the time each Stock Option is granted, which price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant. The option price shall be subject to adjustment in accordance with the provisions of Section 1.5(b) hereof. 2.2 EXERCISE OF OPTIONS (a) Except as stated in Section 2.2(c), each Stock Option by its terms shall require the Participant to remain in the continuous employ, or service to the Board of Directors if the individual is a Non-Employee Director and awarded Stock Options under Section 5 herein, of the Corporation for at least two years from the date of grant of the Stock Option before any part of the Stock Option shall be exercisable. Non-Qualified Stock 7 Options and Incentive Stock Options may not be exercisable later than ten years after their date of grant. (b) Stock Options shall become exercisable in installments with twenty-five percent (25%) becoming exercisable upon the second anniversary of the date of grant of the Stock Option and additional increments of twenty-five percent (25%) of the Stock Option shall become exercisable on each anniversary thereafter until the entire Stock Option is exercisable. (c) In the event a Participant ceases to be an Employee or a Non-Employee Director as a result of his death, all time periods related to the exercise of any outstanding Stock Options shall be accelerated and the Stock Options shall become exercisable immediately following the Participant's death and extending for the remaining normal exercise period. In the event a Participant ceases to be an Employee or a Non-Employee Director upon the occurrence of his Retirement Date, Disability Date, or otherwise with the consent of the Committee, his Stock Options shall be exercisable as described in 2.2(b) above as if the individual had remained as an Employee or Non-Employee Director. The Committee may at any time and with regard to all Participants or any individual Participant accelerate time periods related to the exercise of any outstanding Stock Options, and the Stock Option shall become exercisable immediately thereafter and extending for the remaining normal exercise period. In all other circumstances when a Participant ceases to be an Employee or a Non-Employee Director, his rights under all Stock Options shall terminate immediately. (d) Each Stock Option shall be confirmed by a Stock Option agreement executed by the Company and by the Participant which agreement shall designate the Stock Options granted as Incentive Stock Options or Non-Qualified Stock Options. The option price of each share as to which an Option is exercised shall be paid in full five (5) days from the date of such exercise, but in no event shall the shares issued pursuant to said option exercise be delivered to the Participant until said payment has been received by the Company. Such payment shall be made in cash, by tender of shares of Common Stock owned by the Participant valued at Fair Market Value as of the date of exercise, subject to such limitations on the tender of Common Stock as the Committee may impose, pursuant to the provisions of the Company's Key Employee Stock Option Loan Program, if applicable, (or any other loan program or arrangement which may be established by the Company under this Plan, or otherwise) or by a combination of the foregoing. 2.3 MAXIMUM NUMBER OF SHARES The maximum number of shares that may be granted to any Participant under all Stock Option Awards under this Plan during any one year shall not exceed 100,000 shares. SECTION 3: RESTRICTED STOCK GRANTS 3.1 The terms and conditions regarding Restricted Stock grants are as follows: (a) Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as herein provided, during the Restricted Period. 8 Certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant and deposited by him, together with a stock power endorsed in blank, with the Company. At the expiration of the Restricted Period, the Company shall deliver such certificates to the Participant or his legal representative, except that the Participant may defer receipt of his Restricted Stock under terms established by the Committee by extending the Restricted Period. (b) Except as provided in subsection (a) hereof, the Participant shall have all the rights of a holder of Common Stock, including but not limited to the rights to receive dividends and to vote during the Restricted Period. (c) In the event a Participant ceases to be an Employee or a Non-Employee Director during the Restricted Period as a result of his death, the restrictions imposed hereunder shall immediately lapse with respect to such shares of Restricted Stock. In the event a Participant ceases to be an Employee or a Non-Employee Director during the Restricted period and upon the occurrence of his Retirement Date, Disability Date, or with the consent of the Committee, the restrictions imposed hereunder shall continue as if the individual had remained as an Employee or Non-Employee Director. The Committee may at any time and with regard to all Participants or any individual Participant lapse any restrictions imposed hereunder with respect to shares of Restricted Stock. In all other circumstances in which a Participant ceases to be an Employee or Non-Employee Director, all shares of Restricted Stock shall thereupon be forfeited to the Company and the certificate or certificates representing such Restricted Stock shall be immediately canceled. (d) Each grant shall be confirmed by a Restricted Stock agreement executed by the Company and by the Participant. SECTION 4: PERFORMANCE AWARD (a) The Committee shall determine which Participants are eligible to receive Performance Awards. Performance Awards will be based on a positive EVA for the Company. At the end of each Performance Cycle, EVA shall be determined. In the event EVA for the Company is large enough to enable all Participants to achieve 50% of the maximum EVA award possible under the Cincinnati Milacron Short-Term Incentive Plan, then the Participant shall receive a performance award of 25% of his base income. (b) At the Participant's election the Performance Award may be in cash or Common Stock. In the event the Participant elects to receive the payment in Common Stock, the Participant will receive, via deferral account with the Company, an amount equal to the Share Value of the number of shares equal to the Award. The shares shall be deferred until the earlier of the Participant's Retirement Date or the Participant's termination from the Company. In the event the Participant elects to receive the payment in Common Stock the Participant will also receive an additional and equal number of shares of Restricted Stock. Payment will be made as soon as possible after the Company receives and the Committee approves the report of the Company's independent auditors. 9 (c) In the event that a potential recipient of a Performance Award ceases to be an Employee upon the occurrence of his death, Retirement Date or Disability Date prior to the end of the Performance Cycle, then the Performance Award under Section 4(a) above shall be payable to the Participant or such Participant's heirs or legal representatives at the end of the applicable Performance Cycle. In all other circumstances in which a Participant ceases to be an Employee, Performance Awards shall terminate and no amounts shall be payable at any time. (d) Recipients of Performance Awards may elect to defer a portion or all of a Performance Award payment provided that the Participant's election to defer is made prior to the first day of the Performance Cycle (April 1 for the Performance Cycle commencing in 1994). Amounts so deferred shall have interest credited to the Participant's account at rates determined by the Committee from time to time. Such election shall be irrevocable and shall specify the date as of which deferred amounts are to be paid. SECTION 5: NON-EMPLOYEE DIRECTORS (a) Each individual who first is elected a Non-Employee Director after the effective date of the Plan, but before the expiration of the Plan, shall be granted automatically upon election an Award of 500 shares of Restricted Stock. Each individual then serving as a Non-Employee Director shall receive a Non-Qualified Stock Option of 1,000 shares at or about the effective date of the Plan and at the beginning of each of the Company's fiscal years thereafter so long as the Plan is in effect. This formula may not be amended more than once within any six month period other than to comport with changes in the Code. 10 EX-10.53 8 y95183exv10w53.txt 1997 LONG-TERM INCENTIVE PLAN EXHIBIT 10.53 MILACRON INC. 1997 Long-Term Incentive Plan As Amended February 10, 2004 Section 1. GENERAL PROVISIONS 1.1 Purposes The purposes of the 1997 Long-Term Incentive Plan (the "Plan") of Milacron Inc. (the "Company") are to promote the interests of the Company and its shareowners by (i) helping to attract and retain individuals of outstanding ability; (ii) strengthening the Company's capability to develop, maintain and direct a competent management team; (iii) motivating key employees by means of performance-related incentives; (iv) providing incentive compensation opportunities which are competitive with those of other major corporations; and (v) enabling such individuals to participate in the long-term growth and financial success of the Company. 1.2 Definitions "Affiliate"- means any corporation or other entity which is not a Subsidiary but as to which the Company possesses a direct or indirect ownership interest and has power to exercise management control. "Award"- means a Stock Option grant, a Restricted Stock grant and/or a Performance Share Grant under the Plan. "Board of Directors"- means the board of directors of the Company. "Code"- means the Internal Revenue Code of 1986, as it may be amended from time to time. "Committee"- means those members of the Personnel and Compensation Committee of the Board of Directors who qualify as "Non-Employee Directors" pursuant to Rule 16b-3(b)(3) issued under the Exchange Act and who qualify as outside directors pursuant to Code Section 162(m) and any regulations issued thereunder. "Common Stock"- means the common shares of the Company. "Corporation"- means the Company, its divisions, Subsidiaries and Affiliates. "Director"- means a member of the Board of Directors of the Company. "Disability Date"- means the date on which a Participant is deemed disabled under the employee benefit plans of the Corporation applicable to the Participant. "Earnings Per Share"- shall mean earnings from continuing operations before extraordinary items and cumulative effect of changes in methods of accounting, but including or excluding any income or expense items which, in the opinion of the Committee, are properly includable or excludable in the determination of earnings within the intent of the Plan, reduced by the preferred dividend requirement, divided by the number of common share used to calculate "basic earnings per share" as that term is defined in Statement of Financial Accounting Standards No. 128. In the event that generally accepted accounting principles for the calculation of Earnings Per Share change during the term of a Performance Period, the number of common shares used to calculate Earnings Per Share at the beginning and end of the Performance Period shall be determined by a method, to be chosen at the Committee's discretion, which shall be applied consistently throughout the Performance Period. "Employee"- means any salaried employee of the Corporation. "Exchange Act" - means the Securities Exchange Act of 1934, as amended. "Fair Market Value"- means the average of the high and low prices of the Common Stock on the date on which it is to be valued hereunder, as reported for New York Stock Exchange-Composite Transactions, or if there were no sales of Common Stock on that day, the next preceding day on which there were sales. 2 "Incentive Stock Options"- means Stock Options which constitute "incentive stock options" under Section 422 (or any successor section) of the Code. "Initial Performance Period"- shall mean the Performance Period beginning December 29, 1996. "Non-Employee Director"- means a Director who is not an Employee. "Non-Qualified Stock Options" means Stock Options which do not constitute Incentive Stock Options. "Participant"- means an Employee who is selected by the Committee to receive an Award under the Plan. "Performance Cycle"- means a fiscal year of the Company in which this Plan is in effect. "Performance Period"- shall mean the three year period following the beginning of the fiscal year in which the Performance Share Grant is awarded. "Performance Share Grant"- shall mean a number of shares of Restricted Stock granted to the Participant at the beginning of a Performance Period that ranges from 20% to 100%, as determined by the Committee, of the Participant's base earnings, not to exceed $1,000,000 for purposes of this Plan, during the year of award divided by the average of the closing prices per share of Common Stock during the month immediately preceding the Performance Period. "Performance Share Multiple"- shall mean a percentage of 0%, 100%, 150% or 200% which, when multiplied by the Performance Share Grant, results in the final number of Performance Shares Earned by the Participant for a specific Performance Period. "Performance Shares Earned"- shall mean the product of the Performance Share Multiple multiplied by the Performance Share Grant. "Restricted Period"- means the period of up to three (3) years selected by the Committee during which a grant of Restricted Stock may be forfeited to the Company. 3 "Restricted Stock"- means shares of Common Stock contingently granted to a Participant under Sections 3, 4 or 5 of the Plan. "Retirement Date" - means the actual date of retirement from the Company (i) for those Participants who have attained age 55 and have at least ten Years of Credited Service (as that term is defined in the Cincinnati Milacron Retirement Plan); or, (ii) as may be determined under a temporary early retirement program. "Stock Options" - means an Incentive Stock Option and/or a Non-Qualified Stock Option granted under Section 2 of the Plan. "Subsidiary"- means any corporation in which the Company possesses directly or indirectly fifty percent (50%) or more of the total combined voting power of all classes of its stock. "Total Growth Rate"- shall mean the percentage increase in Earnings Per Share for threshold, target and maximum levels of attainment in the third year of the Performance Period divided by the Earnings Per Share in the year immediately prior to that Performance Period, and will be the result of the annual compound growth rate over the three year Performance Period. 1.3 Administration The Plan shall be administered by the Committee, which shall at all times consist of three or more members. The Committee shall have sole and complete authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time deem advisable, and to interpret the terms and provisions of the Plan. The Committee's decisions are binding upon all parties. 1.4 Eligibility All Employees who have demonstrated significant management potential or who have contributed in a substantial measure to the successful performance of the Corporation, as determined by the Committee, are eligible to be Participants in the Plan. Also, in instances where another corporation or other business entity is being acquired by the Company, and the Company has assumed outstanding employee option grants and/or the obligation to make future or potential grants under a prior existing plan of the acquired entity, adjustments are permitted at the discretion of the Committee subject to Section 1.5(a) below. 4 Awards to Employees are made at the discretion of the Committee. Non-Employee Directors shall also participate pursuant to Section 5 herein. 1.5 Shares Reserved (a) There shall be reserved for grant pursuant to the Plan a total of 4,400,000 shares of Common Stock. In the event that (i) a Stock Option expires or is terminated unexercised as to any shares covered thereby, or (ii) Restricted Stock grants, are forfeited or unearned for any reason under the Plan, such shares shall thereafter be again available for grant pursuant to the Plan. (b) In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other corporate change, or any distributions to common shareholders other than cash dividends, the Committee shall make such substitution or adjustment, if any, as it deems to be equitable, as to the number or kind of shares of Common Stock or other securities granted or reserved for grant pursuant to the Plan, the number of outstanding Stock Options and the option price thereof, and the number of payable Performance Share Grants and shares of Restricted Stock. 1.6 Change of Control "Change of Control" shall mean - o a Person or Group other than a trustee or other fiduciary of securities held under an employee benefit plan of the Company or any of its subsidiaries, is or becomes a Beneficial Owner, directly or indirectly, of stock of the Company representing 20% or more of the total voting power of the Company's then outstanding stock and securities; provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clause (i) of section (c) of this section; 5 o individuals who, as of the date hereof, constitute the Board (the "Incumbent Board"), cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least 60% of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person or Group other than the Board; o there is consummated a merger, consolidation or other corporate transaction, other than (i) a merger, consolidation or transaction that would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 66-2/3% of the combined voting power of the stock and securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or transaction, or (ii) a merger, consolidation or transaction effected to implement a recapitalization of the Company (or similar transaction) in which no Person or Group is or becomes the Beneficial Owner, directly or indirectly, of stock and securities of the Company representing more than 20% of the combined voting power of the Company's then outstanding stock and securities; o the sale or disposition by the Company of all or substantially all of the Company's assets other than a sale or disposition by the Company of all or substantially all of the assets to an entity at least 66-2/3% of the combined voting power of the stock and securities of which is owned by Persons in substantially the same proportions as their ownership of the Company's voting stock immediately prior to such sale; or o the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company. 6 "Person" shall mean any person (as defined in Section 3(a)(9) of the Securities Exchange Act (the "Exchange Act"), as such term is modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) any employee plan established by the Company, (ii) any affiliate (as defined in Rule 12b-2 promulgated under the Exchange Act) of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company. "Group" shall mean any group as defined in Section 14(d)(2) of the Exchange Act. "Beneficial Owner" shall mean beneficial owner as defined in Rule 13d-3 under the Exchange Act. " In the event of a Change of Control of the Company (i) all time periods relating to the exercise or realization of Awards shall be accelerated so that such Awards may be exercised or realized in full beginning immediately following the Change of Control and extending for the remaining normal exercise period, and (ii) Performance Share Grants shall be paid and shares related thereto distributed as set forth in Sections 4 (d) and (h). Notwithstanding any other provision of this Plan to the contrary, and only with respect to Awards granted on or after February 10, 2004, a "Change of Control" shall not occur solely as a result of a financial restructuring or recapitalization of the Company that may occur during 2004 (the "2004 Restructuring") and, accordingly, the occurrence of the 2004 Restructuring shall not result in, among other things, (a) the accelerated vesting, exercisability, release, realization or payment of any such Awards and (b) the deemed satisfaction of any performance criteria related to any such Awards; provided, however, that in the event that the 2004 Restructuring would otherwise constitute a Change of Control but for this paragraph, any Performance Share Grants hereunder that are outstanding as of the date of the 2004 Restructuring shall, upon a Qualifying Termination (as defined in Section 4(h) hereof) of the recipient of such Performance Share Grant within 24 months of the 2004 Restructuring, be paid in a lump sum cash payment (calculated assuming attainment of the applicable maximum Total Growth Rate as provided in Section 4(h) hereunder). 1.7 Withholding The Corporation shall have the right to deduct from all amounts paid in cash any taxes required by law to be withheld therefrom. In the case of payments of Awards in the form of Common Stock, 7 the amount of any taxes required to be withheld with respect to such Common Stock from the Participant may, at the Committee's discretion, be paid in cash, by tender by the Employee of the number of shares of Common Stock whose Fair Market Value equals the amount required to be withheld or, except for Non-Employee Directors receiving Awards of Common Stock pursuant to Section 5 herein, use of the Company's Key Employee Withholding Tax Loan Program. 1.8 Nontransferability No Award shall be assignable or transferable except by will or the laws of descent and distribution, and no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. 1.9 No Right to Employment No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Corporation. Further, the Corporation expressly reserves the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in a Stock Option or Restricted Stock agreement. 1.10 Construction of the Plan The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of Ohio. 1.11 Amendment (a) The Board of Directors may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval which shall (i) increase (except as provided in Section 1.5(b) hereof) the total number of shares reserved for grant pursuant to the Plan, (ii) change the class of Employees eligible to be Participants, (iii) decrease the minimum option prices stated in Section 2.1 hereof (other than to change the manner of determining Fair Market Value to conform to any then applicable provision of the Code or regulations thereunder) (iv) extend the maximum period 8 during which Non-Qualified Stock Options or Incentive Stock Options may be exercised, or (v) reduce the restriction period for Restricted Stock Awards (except as provided in Section 1.6 hereof). (b) With the consent of the Participant adversely affected thereby, the Committee may amend or modify any outstanding Award in any manner not inconsistent with the terms of the Plan, including without limitation, to change the form of payment or the date or dates as of which (i) a Stock Option becomes exercisable, (ii) the restrictions on shares of Restricted Stock are removed, or (iii) a Performance Share Grant is payable. (c) In no event shall any outstanding Award be modified in such a manner as to re-price any Stock Option by (i) decreasing the purchase price thereof, or (ii) cancellation of any Stock Option prior to its established terms of expiration for the purpose of replacement by a lower-priced Stock Option, nor shall an outstanding Award of Restricted Stock be modified in a manner which will reduce the restriction period related to the Restricted Stock. 1.12 Authority of Committee Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine the Employees to receive Awards, and: (a) Stock Options. The number of shares to be covered by each Stock Option and the conditions and limitations, if any, in addition to those set forth in Section 2.2 hereof, applicable to the exercise of the Stock Option shall be determined by the Committee. The Committee shall have the authority to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of Stock Options. In the case of Incentive Stock Options, the maximum aggregate Fair Market Value (at the date of grant) of the shares, under this Plan or any other plan of the Company or a corporation which (at the date of grant) is a parent of the Company or a Subsidiary, which are exercisable by an Employee for the first time during any calendar year shall not exceed $100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422 of the Code, or any successor provision. 9 (b) Restricted Stock. The number of shares of Restricted Stock to be granted to each Participant, the duration of the Restricted Period during which and the conditions under which the Restricted Stock may be forfeited to the Company, and the terms and conditions of the Award in addition to those contained in Section 3.1 shall be determined by the Committee. Such determinations shall be made by the Committee at the time of the grant. 1.13 Effective Dates The Plan shall be effective on December 29, 1996, and shall expire on the earlier of (i) a date determined by the Board of Directors, or (ii) the full use of the shares reserved for grant pursuant to the Plan, provided however, that the Plan shall be null and void unless approved at the 1997 annual meeting of the shareholders of the Company. 1.14 Government and Other Regulations The obligation of the Company with respect to Awards shall be subject to all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of any registration statement required under the Securities Act of 1933, and the rules and regulations of any securities exchange on which the Common Stock may be listed. For so long as the Common Stock is registered under the Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (a) to maintain a registration statement in effect under the Securities Act of 1933 with respect to all shares of Common Stock that may be issued to Holders under the Plan, and (b) to file in a timely manner all reports required to be filed by it under the Exchange Act. 1.15 Non-Exclusivity Neither the adoption of the Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 10 \ 1.16 Forfeiture Provision If the Employee has (i) used for profit or disclosed confidential information or trade secrets of the Company to unauthorized persons, or (ii) breached any contract with or violated any legal obligations to the Company, or (iii) failed to make himself or herself available to consult with, supply information to, or otherwise cooperate with the Company at reasonable times and upon a reasonable basis, or (iv) engaged in any other activity which would constitute grounds for his or her discharge for cause by the Company or a Subsidiary, the Employee will forfeit all undelivered portions of an Award. Section 2: STOCK OPTIONS 2.1 Option Price The Committee shall establish the option price at the time each Stock Option is granted, which price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant. The option price shall be subject to adjustment in accordance with the provisions of Section 1.5(b) hereof. 2.2 Exercise of Options (a) Except as stated in Section 2.2(c), each Stock Option by its terms shall require the Participant to remain in the continuous employ, or service to the Board of Directors if the individual is a Non-Employee Director and awarded Stock Options under Section 5 herein, of the Corporation for at least one year from the date of grant of the Stock Option before any part of the Stock Option shall be exercisable. Non-Qualified Stock Options and Incentive Stock Options may not be exercisable later than ten years after their date of grant. (b) Stock Options shall become exercisable in installments with twenty-five percent (25%) of the total Stock Option becoming exercisable upon the first anniversary of the date of grant of the Stock Option and additional increments of twenty-five percent (25%) of the total Stock Option grant shall become exercisable on each anniversary thereafter until the entire Stock Option is exercisable. 11 (c) In the event a Participant ceases to be an Employee or a Non-Employee Director as a result of his death, all time periods related to the exercise of any outstanding Stock Options shall be accelerated and the Stock Options shall become exercisable immediately following the Participant's death and extending for the remaining normal exercise period. In the event a Participant ceases to be an Employee or a Non-Employee Director upon the occurrence of his Retirement Date, Disability Date, or otherwise with the consent of the Committee, his Stock Options shall be exercisable as described in 2.2(b) above as if the individual had remained as an Employee or Non-Employee Director and extending for the normal exercise period. The Committee may at any time and with regard to all Participants or any individual Participant accelerate time periods related to the exercise of any outstanding Stock Options, and the Stock Option shall become exercisable immediately thereafter and extending for the remaining normal exercise period. In all other circumstances when a Participant ceases to be an Employee or a Non-Employee Director, his rights under all Stock Options shall terminate immediately. (d) Each Stock Option shall be confirmed by a Stock Option agreement executed by the Company and by the Participant which agreement shall designate the Stock Options granted as Incentive Stock Options or Non-Qualified Stock Options. The option price of each share as to which an Option is exercised shall be paid in full five (5) days from the date of such exercise, but in no event shall the shares issued pursuant to said option exercise be delivered to the Participant until said payment has been received by the Company. Such payment shall be made in cash, by tender of shares of Common Stock owned by the Participant valued at Fair Market Value as of the date of exercise, subject to such limitations on the tender of Common Stock as the Committee may impose, pursuant to the provisions of the Company's Key Employee Stock Option Loan Program, if applicable, (or any other loan program or arrangement which may be established by the Company under this Plan, or otherwise) or by a combination of the foregoing. 2.3 Maximum Number of Shares The maximum number of shares that may be granted to any Participant under all Stock Option Awards under this Plan during any one year shall not exceed 100,000 shares. 12 Section 3: RESTRICTED STOCK GRANTS 3.1 The terms and conditions regarding Restricted Stock grants are as follows: (a) Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as herein provided, during the Restricted Period. Certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant and deposited by him, together with a stock power endorsed in blank, with the Company. At the expiration of the Restricted Period, the Company shall deliver such certificates to the Participant or his legal representative, except that the Participant may defer receipt of his Restricted Stock under terms established by the Committee by extending the Restricted Period. (b) Except as provided in subsection (a) hereof, the Participant shall have all the rights of a holder of Common Stock, including but not limited to the rights to receive dividends and to vote during the Restricted Period. (c) In the event a Participant ceases to be an Employee or a Non-Employee Director during the Restricted Period as a result of his death, the restrictions imposed hereunder shall immediately lapse with respect to such shares of Restricted Stock. In the event a Participant ceases to be an Employee or a Non-Employee Director during the Restricted period and upon the occurrence of his Retirement Date, Disability Date, or with the consent of the Committee, the restrictions imposed hereunder shall continue as if the individual had remained as an Employee or Non-Employee Director. The Committee may at any time and with regard to all Participants or any individual Participant lapse any restrictions imposed hereunder with respect to shares of Restricted Stock. In all other circumstances in which a Participant ceases to be an Employee or Non-Employee Director, all shares of Restricted Stock shall thereupon be forfeited to the Company and the certificate or certificates representing such Restricted Stock shall be immediately canceled. (d) Each grant shall be confirmed by a Restricted Stock agreement executed by the Company and by the Participant. 13 Section 4: PERFORMANCE SHARE GRANTS (a) Not later than May 1 of each calendar year in which this Plan is in effect, the Committee may make a Performance Share Grant, effective as of the beginning of the year, to any Participant selected by the Committee. The Committee may make a Performance Share Grant to a Participant in any given year which relates to a Performance Period already in progress. In such event, (i) the Performance Share Grant determined under Section 4(b) shall be prorated based on the remaining whole years of the relevant Performance Period as of the date of grant compared to the entire length of the relevant Performance Period, (ii) the Participant shall receive Restricted Shares immediately upon the date of grant, and, (iii) the Total Growth Rate and level of attainment factors determined by the Committee at the beginning of the relevant Performance Period shall be used to determine the Participant's ultimate payout under Section 4(d) herein. If awarded not later than May 1, the Performance Share Grant shall relate back to the beginning of the year in which made for purposes of proration. (b) The Committee shall, at the beginning of each Performance Period or not later than 90 days thereafter, determine the Performance Share Grant to be made to each Participant in Restricted Stock and establish the threshold, target and maximum levels of attainment for Total Growth Rate during the Performance Period. (c) If Earnings Per Share during the third year of a Performance Period are equal to or exceed the threshold for a Total Growth Rate set by the Committee at the beginning of a Performance Period, a Performance Share Multiple of 100%, 150% or 200% will be applied to the Performance Share Grant. If Earnings Per Share are below the threshold level of attainment, the Performance Share Multiple will be 0%. Below is the Total Growth Rate and the threshold, target and maximum levels of attainment for the Initial Performance Period. 14
Earnings Per Share Total Performance Compounded Growth Level of Share Annually Rate Attainment Multiple - ------------------ ------ ---------- ----------- Less than 12% Less than 40.5% 0% At least 12%, At least but less than 15% 40.5% but Threshold 100% less than 52.1% At least 15%, At least Target 150% but less than 18% 52.1% but less than 64.3% Equal to or greater 64.3% or Maximum 200% than 18% greater
(d) Payment for the value of Performance Shares Earned shall be made to a Participant not later than three months following the end of a Performance Period. If the threshold Total Growth Rate during the Performance Period is not attained in the third year the performance goals attached to the Performance Share Grant will not have been met and the Participant shall forfeit his Restricted Stock. Payment related to a Performance Share Multiple of 100% shall be the lapse of restrictions for the Participant's Performance Share Grant and he shall receive the certificate for unrestricted ownership of such shares. Payment related to that portion, if any, of a Performance Share Multiple of 150% or 200% shall be as follows: a) for the first 100%, payment shall be the transfer of unrestricted share certificates as a result of the lapse of restrictions on the Performance Share Grant and b) for the 50% or 100% premium, payment shall be an amount of cash equal to the value of the Performance Shares Earned in excess of the 100% multiplied by the average of the closing prices per share of the Common Stock for the last month in the Performance Period. In the event of a Change of Control (as defined in Section 1.6), payment shall be made as if the maximum targets for the three year performance period had been met and shall be paid within thirty days following the Change of Control. Such payment shall be in a cash amount equal to the Performance Share Grant multiplied by the higher of (i) the highest average of the high and low prices per share of the Common Stock on any date within the period commencing 30 days prior to the Change in Control or (ii) if the Change in Control occurs as a result of a tender or exchange offer or consummation of a corporate transaction, the highest price paid per share of Common Stock pursuant thereto. 15 (e) The Committee may make adjustments from time to time in the Performance Share Multiple, in the Total Growth Rate or in Earnings Per Share in such reasonable manner as the Committee may determine to reflect (i) any increase or decrease in the number of issued shares of Common Stock of the Company resulting from a subdivision or consolidation of shares or any other capital adjustment, the payment of stock dividends or other increases or decreases in such shares effected without receipt of consideration by the Company, (ii) material changes in the Company's accounting practices or principles, the effect of which would be to cause inconsistency in reporting earnings per share, (iii) material acquisitions or dispositions, the effect of which would be to cause fluctuations in reported earnings per share which are not within the intent of the Plan, or (iv) extraordinary, unusual and nonrecurring items (such as restructuring charges or a disposal of a business) which are disclosed in the published, audited financial statements; provided, however, that no such adjustments shall be made to the extent that the Committee determines that the adjustment would cause payment in respect of Performance Share Grant to fail to be fully deductible by the Company on account of Section 162(m) of the Code. (f) With respect to a Performance Share Grant, the Participant shall have the rights of a holder of Common Stock, including but not limited to the rights to receive dividends and to vote during the Restricted Period until such Participant ceases to be an Employee of the Corporation for any reason other than death or termination of Employment on a Disability Date or Retirement Date. (g) In the event a Participant ceases to be an Employee upon the occurrence of his death, Retirement Date or Disability Date prior to the end of a Period, payment for the value of Performance Shares Earned shall be prorated for the amount of time the Participant remained an Employee compared to the length of the Performance Period, provided the Participant has completed at least the first full year of the Performance Period. In such event, any prorated payment for Performance Shares Earned shall be distributed in unrestricted share certificates or paid in cash (depending on whether the threshold, target or maximum Total Growth Rate is attained) in accordance with Paragraphs (c) and (d) above. In all other circumstances in which a Participant ceases to be an Employee, 16 Performance Share Grant shall terminate and no amounts shall be payable at any time. (h) If there is an event constituting a Change of Control (as defined in Section 1.6), any outstanding Performance Share Grant shall immediately vest in the Participant to whom such Performance Share Grant has been awarded as of the date such Change of Control occurs. If the Participant's employment is terminated in a Qualifying Termination within 24 months following the Change of Control, then the Participant shall receive a lump sum cash payment equal to all cash payments possible related to outstanding Performance Share Grants made to the Participant, as if there has been attainment of the applicable maximum Total Growth Rate. For purposes hereof, a "Qualifying Termination" shall mean (i) a termination of the Participant's employment for any reason other than for cause or disability or due to the Participant's death, or (ii) the Participant's termination of employment for Good Reason. "Good Reason" shall exist in the event of the occurrence of any of the following without the Participant's express prior written consent: (i) any diminution of, or the assignment to the Participant of duties inconsistent with, the Participant's position, duties, responsibilities and status with the Corporation immediately prior to a Change in Control, an adverse change in the Participant's titles or offices as in effect immediately prior to a Change in Control, or any removal of the Participant from, or any failure to reelect the Participant to, any of such positions, except in connection with the Participant's termination of employment for disability or cause or as a result of the Participant's death or by the Participant other than for Good Reason; (ii) a reduction by the Corporation in the Participant's base salary as in effect on the date of a Change in Control or as the same may be increased from time to time during the 24 months following a Change of Control; (iii) the Corporation's failure to continue any benefit plan or arrangement (including, without limitation, the Corporation's life insurance, post-retirement benefits, and comprehensive medical plan coverage) in which the Participant participated at the time of a Change in Control (or any other plans providing the Participant with 17 substantially similar benefits) (hereinafter referred to as "Benefit Plans"), or any action by the Corporation that would adversely affect the Participant's participation in or materially reduce the Participant's benefits under any such benefit plan or deprive the Participant of any material fringe benefit enjoyed by the Participant at the time of a Change in Control; (iv) the Corporation's failure to continue in effect, or continue payments under, any incentive plan or arrangement (including, without limitation, any equity-based plan or arrangement) in which the Participant participated at the time of a Change in Control (hereinafter referred to as "Incentive Plans") or any action by the Company that would adversely affect the Participant's participation in any such Incentive Plans or reduce the Participant's benefits under any such Incentive Plans; (v) a relocation of the Corporation's principal executive offices to a location outside the Cincinnati, Ohio metropolitan area or relocation of the Participant's primary workplace to any place other than the location at which the Participant performed the Participant's duties immediately prior to a Change in Control; (vi) the Corporation's failure to provide the Participant with the number of paid vacation days to which the Participant was entitled at the time of a Change in Control; (vii) the Corporation's material breach of any Agreement entered into with the Participant; or (viii) the Company's failure to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Participant, to expressly assume and agree to perform this Plan in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. 18 Section 5: NON-EMPLOYEE DIRECTORS (a) Each individual then serving as a Non-Employee Director shall receive a Non-Qualified Stock Option of 2,000 shares at or about the effective date of the Plan and at the beginning of each of the Company's fiscal years thereafter so long as the Plan is in effect. As a portion of their compensation, the Committee may also award to Non-Employee Directors shares of Restricted Stock, as it may determine, not to exceed 2,000 shares per individual every three years. 19 EX-10.54 9 y95183exv10w54.txt 2002 SHORT-TERM INCENTIVE PLAN EXHIBIT 10.54 COMPANY CONFIDENTIAL MILACRON INC. 2002 SHORT - TERM INCENTIVE PLAN (AS AMENDED FEBRUARY 10, 2004) 1. PURPOSE 1.1. The purpose of the Milacron Inc. 2002 Short - Term Incentive Plan (the "Plan") is to provide greater incentive to key employees by rewarding them with additional compensation for earning a return on capital in excess of the cost of capital and meeting or exceeding predetermined Critical Success Factors, and thereby adding economic value to the Company. The intent of the Plan is to establish goals for Participants with a portion of their ultimate award under the Plan to be determined by the achievement of economic value added targets and a portion of the award to be determined by the achievement of Critical Success Factor targets. The economic value added targets and the Critical Success Factor targets will be established on an annual basis and may change from year to year allowing the Company the flexibility to provide incentives in specific areas as needed. The Plan shall also assist in providing competitive compensation in order to allow the Company to attract and retain an outstanding management group. 2. DEFINITIONS 2.1. "Assigned Percentage" shall have the meaning assigned in Article 6.3. 2.2. "Award" shall mean the benefit under this Plan earned by a Participant. 2.3. "Award Percentage" shall have the meaning assigned in Article 7.5. 2.4. "Base Incentive Award" shall be as set forth in Article 5.1 of this Plan. 2.5. "Beneficial Owner" shall have the meaning assigned in Article 19.2. 2.6. "Business Unit" shall mean such subgroups of the Company as designated by the Management Team from time to time and may consist of the entire operating groups, divisions, subsidiaries or subparts thereof. 2.7. "Business Unit Cost of Capital" is calculated by multiplying the Business Unit's Operating Capital by the Weighted Average Cost of Capital. 2.8. "Business Unit Operating Capital" shall consist of the following with respect to each Business Unit: 2.8.1. beginning of the Plan Year property, plant and equipment (including any asset recorded from the capitalization of leases, as required under SFAS Statement No. 13), plus 2.8.2. Average inventory and accounts receivable exclusive of any reserve for doubtful accounts, plus 2.8.3. Average goodwill, plus 2.8.4. Average other assets, minus 2.8.5. Average advance payment - customer down payments and progress payments on unshipped orders, minus 2.8.6. Average trade accounts payable, minus 2.8.7. Average other liabilities. Articles 2.8.2 through 2.8.7 above shall be determined by averaging the amounts of each Article at the end of the 12 accounting periods for the current Plan Year. Also, in the event a joint venture contributes to Business Unit Operating Capital, the joint venture contribution shall be adjusted downward by the percentage of ownership of the Company's joint venture partner. 2.9. "CEO" shall mean the Chief Executive Officer of Milacron Inc. 2.10. "Committee" shall mean the Personnel and Compensation Committee of the Board of Directors of Milacron Inc. 2.11. "Company" shall mean Milacron Inc., and its consolidated subsidiaries. 2.12. "Company Capital" is average shareholders' equity of Milacron Inc. plus the average outstanding short-term and long-term consolidated debt (net of average cash and equivalents), including liabilities related to capitalized leases as required under FASB Statement No. 13 less the average goodwill accounted for on the books of the Company arising from acquisitions and less the net present value of the tax benefit arising from such goodwill. The average shareholders' equity and the average short-term and long-term debt shall be determined by averaging the shareholders' equity and the average short-term and long-term debt outstanding (net of average cash and equivalents) at the end of the preceding year with the shareholder's equity and short-term and long-term debt outstanding (net of cash and equivalents) at the end of each quarter of the current Plan Year. 2.13. "Company Cost of Capital" shall mean the product of Company Capital multiplied by Weighted Average Cost of Capital. 2.14. "Critical Success Factor(s)" shall mean one or more measures established by the Committee for the Company or individual Participants therein or by the 2 Management Team for each Business Unit or individual Participants therein which will be used to determine if Awards under this Plan have been earned. Different Critical Success Factors may be assigned to different Business Units and different Participants. 2.15. "Discretionary Adjustments" shall mean an adjustment that may be made by the Committee to one or more Awards based upon individual, team, or Measurement Group performance. Adjustments can range from up to plus 30% or a reduction of 30%, or any percentage in between. 2.16. "Earnings before Net Interest and Taxes on Income (EBIT)" - EBIT for a Business Unit shall mean the Business Unit's reported operating profit (internal basis) minus any amount of earnings appropriately apportioned to a partner's interest in a joint venture, and excluding the expense related to the current year's short term incentive plan payout, and plus or minus such items of income or expense as the Committee may deem to be extraordinary or not appropriately included in the Plan. The projected Awards under this Plan shall be charged to each Business Unit and the Company for purposes of determining that Business Unit's and the Company's operating profit. 2.17. "Economic Value Added (EVA)" - 2.17.1. For the Company, EVA shall mean the amount by which EBIT exceeds Company Cost of Capital. (EVA for Company = Company EBIT - Company Cost of Capital) 2.17.2. For a Business Unit other than the Company, EVA shall mean the amount by which the Business Unit's EBIT exceeds Business Unit Cost of Capital. (EVA for Business Unit other than the Company = Business Unit EBIT - Business Unit Cost of Capital) 2.18. "Group" shall have the meaning assigned in Article 19.2. 2.19. "Management Team" shall mean a group appointed by the CEO for the purpose of establishing EVA and Critical Success Factor targets for Business Units. 2.20. "Measurement Group" shall mean the Company or Business Unit to which a Participant is assigned in accordance with Article 4.1 and whose financial results will determine if the Participant will receive an Award. 2.21. "Participant Category" shall mean the categories described in Article 5.1. 3 2.22. "Participants" shall mean those individuals meeting the criteria set forth in Article 4.1. 2.23. "Participants' Award Percentage" shall have the meaning given in Article 5.1. 2.24. "Person" shall have the meaning assigned in Article 19.2. 2.25. "Performance Percentage" shall have the meaning assigned in Article 7.4. 2.26. "Plan Year": The Plan Year shall coincide with the Company's fiscal year. 2.27. "Salary": A Participant's annual base wages paid during the Plan Year. Annual base pay does not include salary adjustments or other payments made because of overseas employment, payment made from incentive plans, ad hoc bonuses, commission bonus payments, relocation expenses or any payment made from any employee benefit plan. 2.28. "Weighted Average Cost of Capital" shall mean the cost of capital experienced by the Company during the Plan Year as determined by the Treasurer using the formula set forth in Exhibit A. 3. EFFECTIVE DATE 3.1. The Plan shall be effective for the Company's fiscal years beginning after December 31, 2001. This Plan supersedes the Cincinnati Milacron 1996 Short-Term Management Incentive Plan (the "1996 Plan") which is terminated as of January 1, 2002, with any payment earned by participants therein to be made in due course pursuant to the terms of the 1996 Plan. 4. PARTICIPATION 4.1. Participants shall be those key employees of the Company as identified by the Committee and shall include the officers of Milacron Inc. The Awards for a Participant shall be based on the results of the Measurement Group to which the Participant is assigned. The Committee shall designate the Participants to be assigned to the Company. The Management Team shall designate all other Participants for assignment to Business Units. If a Participant has simultaneous responsibilities in more than one Measurement Group, the award shall be determined by percentage allocation as determined by the Committee or the Management Team. 4 5. BASE INCENTIVE AWARD 5.1. Participant Categories appear below. The Committee shall determine to which Participant Category each Participant shall be assigned. The potential Base Incentive Award for each Participant shall be determined by the Participant Category to which the Participant is assigned. Each Participant's potential Base Incentive Award shall be determined by multiplying the percentage below (the "Participant's Award Percentage") corresponding to the appropriate Participant Category by the Participant's Salary.
Participant Base Incentive Award Expressed Category As A Percentage of Salary -------- ------------------------------ CEO 80% COO 60% I 50% II 40% III 25% IV 15%
The Committee shall have sole discretion as to assignment of Participants to Participant Categories. The following sets forth guidelines as to Participant assignment: CEO: Chief Executive Officer COO: Chief Operating Officer Participant Category I: Key Officers of the Company and leaders of major Business Units. Participant Category II: Key Directors of Business Units or Corporate Functions. Participant Category III: Key Managers of Business Units or Corporate Functions. Participant Category IV: Key Contributors of Business Units or Corporate Functions. 6. ESTABLISHING EVA AND CRITICAL SUCCESS FACTORS 6.1. Not later than 60 days following the commencement of each Plan Year, the Committee shall establish the EVA Range and the Critical Success Factor Range for the Company. The EVA Range and the Critical Success Factor Range shall each consist of a lower goal, a target goal and an upper goal established by the Committee. The Committee shall also establish the relative 5 weight to be assigned to the EVA and Critical Success Factor portions of the measurement with the combination thereof equal to 100%. In the event the Critical Success Factor is composed of more than 1 component, the Committee shall assign a relative weight in percentage terms to each component thereof. 6.2. Not later than 60 days following the commencement of each Plan Year, the Management Team shall establish the EVA Range and the Critical Success Factor Range for the Business Units and/or individual Participants. The EVA Range and the Critical Success Factor Range shall each consist of a lower goal, a target goal and an upper goal established by the Management Team. The Management Team shall also establish the relative weight to be assigned to the EVA and Critical Success Factor portions of the measurement with the combination thereof equal to 100%. In the event the Critical Success Factor is composed of more than 1 component, the Management Team shall assign a relative weight in percentage terms to each component thereof. 6.3. The relative percentages assigned to the EVA and Critical Success Factor portions of the measurement shall each be an "Assigned Percentage". 7. AWARDS 7.1. Award amounts are subject to adjustment as described in Article 8 herein, and may be earned by the achievement of the EVA and/or the Critical Success Factor goals established pursuant to Article 6. A Participant's Award shall be an amount that is determined based on the linear progression calculated by the Company. 7.2. At the end of the Plan Year, the Company shall calculate a Participant's potential Base Incentive Award. The Company shall also calculate a linear progression relating the EVA lower goal to the EVA target goal, and a linear progression relating the EVA target goal to the EVA upper goal. For purposes of the linear progression, the lower goal shall be assigned a value of 0%, the target goal shall be assigned a value of 100% and the upper goal shall be assigned a value of 200%. 7.3. The Company shall calculate linear progressions for the Critical Success Factor in the same manner as calculated for EVA. 7.4. The Company shall determine the EVA and Critical Success Factor performance of each Measurement Group through comparison to the appropriate linear progression and stating that performance in terms of a percentage (the "Performance Percentage"). 6 7.5. The Performance Percentages for each Measurement Group shall be multiplied by the appropriate "Assigned Percentage" and the products thereof shall be added together (the "Award Percentage"). 7.6. Each Participant shall, subject to adjustment as stated in Article 8 herein, receive an Award equal to the Award Percentage of the Participant's Measurement Group multiplied by the Participant's Base Incentive Award. 7.7. 7.7.1.1. For Participants assigned to the CEO and levels I, II and III Participant Categories, there shall be no upper limit to the portion of the Award associated with the Critical Success Factor provided that the Company is generating positive cash flow net of Awards paid hereunder. Otherwise, the portion of the Award associated with the Critical Success Factor is capped at 200% of the portion of the Base Incentive Award attributable to Critical Success Factor performance. 7.7.1.2. For Participants assigned to the level IV Participant Category, the portion of the Award associated with the Critical Success Factor is capped at 400% of the portion of the Base Incentive Award attributable to Critical Success Factor performance. 7.7.1.3. For all Participants, the portion of the Award associated with EVA shall be capped at 200% of the portion of the Base Incentive Award attributable to EVA performance. 8. ADJUSTMENTS 8.1. The Committee may apply a Discretionary Adjustment at any time to increase or decrease a Participant's Award under this Plan. Such Discretionary Adjustment shall be recommended for Committee consideration by the CEO. 8.2. The Committee shall have the right to adjust earnings and/or assets and or cash flow of the Company and/or Business Units as it may deem appropriate for any unusual or non-recurring items. 8.3. The Committee shall have the right to adjust target goals as it may deem appropriate for any unusual or non-recurring items. 9. OTHER ANNUAL AWARDS NOT INCLUDED IN THE PLAN 9.1. In addition to Awards under this Plan, the CEO can, subject to approval by the Committee, make discretionary bonus grants to individuals, not included in this Plan, for specific outstanding performances during the year. It shall be the responsibility of the Milacron Inc. officers to recommend individuals for these bonuses each year, giving detailed information on the performance being recognized. 7 10. TIME AND FORM OF PAYMENT OF AWARD 10.1. Payments shall be made in the first quarter following the end of the Plan Year after the Company's consolidated financial statements are audited by its independent auditors. 10.2. Awards shall be paid in one lump sum to Participants, unless deferred in whole or part pursuant to Article 11.1. The amounts calculated pursuant to the terms herein shall be the gross amount payable to the Participant. The Company shall make all withholdings required by law. Participants shall not be allowed to elect any type of voluntary deductions from bonus amounts. 10.3. For those Business Units reporting in a currency other than U.S. dollars, Awards will be calculated in the Business Units' local currency. 11. DEFERRALS 11.1. Should tax laws allow individuals to defer receipt and taxation on compensation, Participants may be allowed to request deferral of all or a portion of their Awards pursuant to any plan for the deferral of compensation which the Company may have in effect from time to time. 12. TERMINATION 12.1. In the event a Participant ceases to be a Participant as a result of death, retirement or disability (as those terms are defined in the Milacron Retirement Plan), the individual or the individual's estate shall receive any Award under this Plan at the time stated in Article 10 above if an Award becomes earned at the end of the Plan Year in which the Participant died, retired or became disabled, except that the amount of Award shall be prorated for the amount of time during the Plan Year that the individual was employed by the Company. 12.2. Unless otherwise determined by the Committee, in the event a Participant ceases to be a Participant for any reason other than stated in Article 12.1, the individual shall immediately cease to be an eligible employee under this Plan and the individual shall not receive an Award hereunder related to the Plan Year in which the individual ceased to be a Participant. If the individual ceased to be a Participant as stated in this Article 12.2 after the end of a Plan Year, but prior to the pay-out of the Award, if any was earned, the individual will receive payment of the Award at the same time as if the individual had remained employed by the Company. 8 13. TRANSFERS 13.1. In the event the EVA or Critical Success Factors used to determine a Participant's Award under this Plan change during a Plan Year due to the Participant transferring from one Measurement Group to another or otherwise, all calculations under this Plan shall be prorated for the amount of the Plan Year in which each EVA or Critical Success Factor applied to the Participant. 14. MID YEAR PARTICIPANTS 14.1. In the event an individual becomes a Participant during the Plan Year, amounts payable hereunder shall be prorated for the portion of the Plan Year in which the individual was a Participant. 15. ADMINISTRATION 15.1. The Plan shall be administered by the Committee. The Committee shall have sole and complete authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time deem advisable and to interpret the terms and provisions of the Plan. 16. REVIEW OF CALCULATIONS 16.1. At the request of the Committee, the calculations under this Plan shall be reviewed for accuracy by the Company's independent auditors using such procedures as necessary under the circumstances. 17. TERMINATION OF THE PLAN 17.1. The Committee may suspend, terminate or amend this Plan at any time. Amendments may be applied retrospectively to the beginning of the then current Plan Year, but shall not affect Awards related to Plan Years that were completed prior to the time of the amendment. 18. MISCELLANEOUS 18.1. Nothing contained in this Plan guarantees the continued employment of a Participant with the Company. 18.2. No award hereunder may be assigned, pledged, mortgaged or hypothecated and, to the extent permitted by law, no such award shall be subject to legal process or 9 attachment for the payment of any claims against any Participant entitled to receive the same. 18.3. Payments made under this Plan shall be subject to withholding as shall at the time be required under any income tax or other laws, whether of the United States or any other jurisdiction. 18.4. The provisions of the Plan shall be construed according to the laws of the State of Ohio. 19. CHANGE OF CONTROL 19.1. In the event of a Change of Control and within 60 days thereafter, Participants shall receive a lump sum cash amount equal to the Participant's Base Incentive Award for the year in which such Change in Control occurs as calculated pursuant to the terms herein. A "Change in Control" occurs if: 19.1.1. a Person or Group other than a trustee or other fiduciary of securities held under an employee benefit plan of the Company or any of its subsidiaries, is or becomes a Beneficial Owner, directly or indirectly, of stock of the Company representing 20% or more of the total voting power of the Company's then outstanding stock and securities; provided, however, that for purposes of this Article 19.1.1, the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) of Article 19.1.3; 19.1.2. individuals who, as of the date hereof, constitute the Board of Directors of Milacron Inc. (the "Incumbent Board"), cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least 60% of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or 10 removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person or Group other than the Board; 19.1.3. there is consummated a merger, consolidation or other corporate transaction, other than (i) a merger, consolidation or transaction that would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 66% of the combined voting power of the stock and securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or transaction, or (ii) a merger, consolidation or transaction effected to implement a recapitalization of the Company (or similar transaction) in which no Person or Group is or becomes the Beneficial Owner, directly or indirectly, of stock and securities of the Company representing more than 20% of the combined voting power of the Company's then outstanding stock and securities; 19.1.4. the sale or disposition by the Company of all or substantially all of the Company's assets other than a sale or disposition by the Company of all or substantially all of the assets to an entity at least 66% of the combined voting power of the stock and securities which is owned by Persons in substantially the same proportions as their ownership of the Company's voting stock immediately prior to such sale; or 19.1.5. the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company. 19.2. "Person" shall mean any person (as defined in Section 3(a)(9) of the Securities Exchange Act (the "Exchange Act"), as such term is modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) any employee plan established by the Company, (ii) any affiliate (as defined in Rule 12b-2 promulgated under the Exchange Act) of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company. "Group" shall mean any group as defined in Section 14(d)(2) of the Exchange Act. "Beneficial Owner" shall mean beneficial owner as defined in Rule 13d-3 under the Exchange Act. 11 19.3 Notwithstanding any other provision of this Plan to the contrary, a "Change of Control" shall not occur solely as a result of a financial restructuring or recapitalization of the Company that may occur during 2004. [END] 12 EX-10.55 10 y95183exv10w55.txt RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS EXHIBIT 10.55 Effective September 12, 1989 Revised February 6, 1998 April 23, 2003 February 10, 2004 MILACRON RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS ARTICLE I PURPOSE 1.1 The purpose of this Plan is to provide retirement benefits to Directors of Milacron Inc. (the "Company") who meet the eligibility requirements of the Plan. ARTICLE II DEFINITIONS 2.1 "Base Retainer" means the basic annual retainer for non-employee Directors in effect as of an Eligible Director's last date of service on the Milacron Inc. Board of Directors. As used herein, Base Retainer shall not include any additional annual retainer available as a result of a Director acting as chairman of any committee nor shall it include any fees available as a result of attendance at Board of Directors' or its committees' meetings, or other payments made for other services a Director may render. 2.2 "Board of Directors" means the Board of Directors of Milacron Inc. 2.3 "Company" means Milacron Inc. - 1 - 2.4 "Compensation Committee" means the Compensation Committee of the Board of Directors. 2.5 "Director" means a duly-elected member of the Board of Directors. 2.6 "Eligible Director" means a Director or former Director who has served on the Board of Directors on or after the Effective Date of this Plan as set forth in Item 3.1, who is not an employee of the Company and who does not qualify to receive a retirement benefit under any pension plan of the Company or its subsidiaries other than this Plan. 2.7 "Employee" means a person employed by the Company or its subsidiaries in any capacity other than as a Director. 2.8 "Plan" means this Retirement Plan for Non-Employee Directors. 2.9 "Service" means service as an Eligible Director. ARTICLE III EFFECTIVE DATE 3.1 This Plan shall be effective as of September 12, 1989 (the "Effective Date"). ARTICLE IV PARTICIPATION 4.1 Each Eligible Director serving on the Board of Directors on or after the Effective Date and prior to February 6, 1998, who does not elect to cease participation under the Plan as set forth in Item 4.2, shall participate in the Plan. - 2 - 4.2 During the period of February 6, 1998 to April 6, 1998, an Eligible Director who is currently serving on the Board of Directors may make an irrevocable one time election to cease participation under the Plan effective January 1, 1998 and have the current value of the Eligible Director's projected benefit under the Plan, as determined by the Board of Directors, credited to a special account under the Milacron Plan for the Deferral of Directors' Compensation, to be held and paid in accordance with the terms of such plan, as amended effective February 6, 1998. No benefits shall be payable from the Plan after the date of the election. ARTICLE V RETIREMENT BENEFITS/VESTING 5.1 An Eligible Director's annual retirement benefit under this Plan shall be vested when he has six (6) years of Service and shall be equal to a percentage of that Director's Base Retainer in accordance with the table below:
Years of Service Percentage of Base Retainer ---------------- --------------------------- Less than 6 years 0% 6 years 60% 7 years 70% 8 years 80% 9 years 90% 10 years and above 100%
In no event shall an Eligible Director's percentage of benefit under this Plan exceed One Hundred Percent (100%) of the Eligible Director's Base Retainer. - 3 - ARTICLE VI YEARS OF SERVICE 6.1 For purposes of this Plan, one year of Service shall mean 365 days of Service as an Eligible Director beginning with an Eligible Director's initial election or appointment to the Board of Directors. 6.2 In the event of a break in Service, a Director's Service as an Eligible Director before and after the break in Service shall be combined to determine years of service for vesting as set forth in Item 5.1. 6.3 A Director's Service as an Eligible Director prior to the Effective Date of this Plan shall count toward the vesting rules of Item 5.1. ARTICLE VII PAYMENT OF RETIREMENT BENEFITS 7.1 An Eligible Director will be entitled to receive retirement benefits upon (i) the vesting of the benefit as set forth in Item 5.1 and (ii) the Eligible Director reaching age seventy (70). An Eligible Director who has met the two requirements in the preceding sentence shall be entitled to receive retirement benefits whether or not the Eligible Director is a member of the Board of Directors on his seventieth (70th) birthday. 7.2 All retirement benefits hereunder shall be payable in monthly installments equal to one-twelfth (1/12th) of the annual amounts determined under this Plan. An Eligible - 4 - Director's vested retirement benefit hereunder, if any, shall be payable for the life of the Eligible Director, commencing on the month next following the Eligible Director's seventieth (70th) birthday. ARTICLE VIII DEATH BENEFIT 8.1 Notwithstanding anything herein to the contrary, in the event an Eligible Director whose benefit under this Plan is vested dies prior to age seventy (70), his estate shall receive thirty-six (36) monthly payments in an amount equal to one-twelfth (1/12th) of his annual vested benefit on the date of his death. In the event an Eligible Director whose benefit under this Plan is vested dies after attaining age seventy (70) but prior to receiving thirty-six (36) monthly retirement payments, the Eligible Director's estate shall receive monthly payments in an amount equal to the last monthly payment received hereunder by the Eligible Director before his death and for a number of months which, when added with the number of payments the Eligible Director received during life, equal thirty-six (36). The Company may, at its option, make the payments above to the Director's estate in a lump sum payment calculated on a present value basis. ARTICLE IX FUNDING 9.1 This Plan shall be unfunded. - 5 - ARTICLE X PLAN ADMINISTRATION 10.1 The general administration of this Plan and the responsibility for carrying out the provisions hereof shall be vested in the Compensation Committee. The Compensation Committee may adopt such rules and regulations as it may deem necessary for the proper administration of this Plan, which are not inconsistent with the provisions hereof, and its decision in all matters shall be final, conclusive and binding. ARTICLE XI AMENDMENT AND TERMINATION 11.1 The Board of Directors reserves in its sole and exclusive discretion the right at any time and from time to time to amend this Plan in any respect or terminate this Plan without restriction and without the consent of any Eligible Director, provided, however, that no amendment or termination of this Plan shall impair the right of any Eligible Director to receive benefits which have become vested pursuant to Item 5.1 prior to such amendment or termination, except as provided in Item 4.2. ARTICLE XII MISCELLANEOUS PROVISIONS 12.1 Nothing contained in this Plan guarantees the continued retention of a Director on the Board of Directors, nor does this Plan limit the right to terminate a Director's Service on the Board of Directors. - 6 - 12.2 No retirement benefit payable hereunder may be assigned, pledged, mortgaged or hypothecated and, to the extent permitted by law, no such retirement benefit shall be subject to legal process or attachment for the payment of any claims against any person entitled to receive the same. 12.3 If an Eligible Director entitled to receive any retirement benefit payments hereunder is deemed by the Compensation Committee or is adjudged by a court of competent jurisdiction to be legally incapable of giving valid receipt and discharge for such retirement benefit, such payments shall be paid to such person or persons as the Compensation Committee shall designate or to the duly appointed guardian or other legal representative of such Eligible Director. Such payments shall, to the extent made, be deemed a complete discharge for such payments under this Plan. 12.4 Payments made by the Company under this Plan to any Eligible Director shall be subject to withholding as shall, at the time for such payment, be required under any income tax or other laws, whether of the United States or any other jurisdiction. 12.5 All expenses and costs in connection with the operation of this Plan shall be borne by the Company. 12.6 The provisions of this Plan will be construed according to the laws of the State of Ohio. 12.7 The masculine pronoun wherever used herein shall include the feminine gender and the feminine the masculine and the singular number as used herein shall include the plural and the plural the singular unless the context clearly indicates a different meaning. - 7 - 12.8 The titles to articles and headings of sections of this Plan are for convenience of reference only and in case of any conflict, the text of the Plan, rather than such titles and headings, shall control. ARTICLE XIII CHANGE OF CONTROL 13.1 The provisions of Section 13.3 shall become effective immediately upon the occurrence of a Change of Control (as defined in Section 13.2). 13.2 "Change of Control" - shall mean any one of the following: (a) A Person or Group other than a trustee or other fiduciary of securities held under an employee benefit plan of the Company or any of its subsidiaries, is or becomes a Beneficial Owner, directly or indirectly, of stock of the Company representing 20% or more of the total voting power of the Company's then outstanding stock and securities; provided, however, that for purposes of this subparagraph (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clause (i) of subparagraph (c) of this paragraph; (b) individuals who, as of the date hereof, constitute the Board of Directors - 8 - (the "Incumbent Board"), cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least 60% of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person or Group other than the Board of Directors; (c) there is consummated a merger, consolidation or other corporate transaction, other than (i) a merger, consolidation or transaction that would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 66-2/3% of the combined voting power of the stock and securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or transaction, or (ii) a merger, consolidation or transaction effected to implement a recapitalization of the Company (or similar transaction) in which no - 9 - Person or Group is or becomes the Beneficial Owner, directly or indirectly, of stock and securities of the Company representing more than 20% of the combined voting power of the Company's then outstanding stock and securities; (d) the sale or disposition by the Company of all or substantially all of the Company's assets other than a sale or disposition by the Company of all or substantially all of the assets to an entity at least 66-2/3% of the combined voting power of the stock and securities which is owned by Persons in substantially the same proportions as their ownership of the Company's voting stock immediately prior to such sale; or (e) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company. For purposes of this paragraph 1.04-1, "Person" shall mean any person (as defined in Section 3(a)(9) of the Securities Exchange Act (the "Exchange Act"), as such term is modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) any employee plan established by the Company, (ii) any affiliate (as defined in Rule 12b-2 promulgated under the Exchange Act) of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company; "Group" shall mean any group as defined in Section 14(d)(2) of the Exchange Act; and "Beneficial Owner" shall mean beneficial owner as defined - 10 - in Rule 13d-3 under the Exchange Act. 13.3 (a) Section 7.2 is deleted and the following is inserted in lieu thereof: "All vested retirement benefits hereunder shall be immediately payable upon a Change of Control in one lump sum payment. The lump sum shall be the present value actuarially determined with reference to the life expectancy of the Eligible Director whose benefits have vested pursuant to this Plan and prevailing interest rates". (b) Section 12.4 is deleted. (c) New Section 12.9 is inserted as follows: "Notwithstanding any other provisions of the Plan to the contrary: (i) the vested benefit hereunder of any Eligible Director as of the date of a Change of Control may not be reduced; (ii) any Service accrued by an Eligible Director as of the date of a Change of Control cannot be reduced". 13.4 Notwithstanding any other provision of this Plan to the contrary, a "Change of Control" shall not occur solely as a result of a financial restructuring or recapitalization of the Company that may occur during 2004. - 11 - EX-10.56 11 y95183exv10w56.txt COMPENSATION DEFERRAL PLAN EXHIBIT 10.56 January 1, 1995 Amended July 15, 1997 Amended October 29, 1998 Amended February 5, 1999 Amended April 23, 2003 February 26, 2004 MILACRON COMPENSATION DEFERRAL PLAN The purpose of the Milacron Compensation Deferral Plan(the "Plan"), originally effective January 1, 1995 and revised and restated as of January 1, 1995, is to aid Milacron Inc. (the "Company") and its subsidiaries in attracting high quality executives and promoting in its executives increased efficiency and an interest in the successful operation of the Company by restoring some of the deferral opportunities and employer-provided benefits that are lost under certain other plans due to legislative limits. The benefits provided under the Plan shall be provided in consideration for services to be performed after the executive has become eligible to participate in the Plan, but prior to the executives retirement. ARTICLE 1 DEFINITIONS 1.1 ACCOUNT shall mean the notional account or accounts established for record keeping purposes for a Participant pursuant to Article 6 of the Plan. 1.2 ADMINISTRATOR shall mean the Personnel and Compensation Committee of the Company's Board of Directors or its delegate. 1.3 ANNUAL DEFERRAL shall mean the amount of Compensation which the Participant actually defers during a Plan Year. The Annual Deferral may differ from Plan Year to Plan Year. 1.4 ANNUAL DEFERRAL COMMITMENT shall mean the amount of Compensation which the Participant elects to defer for a Plan Year pursuant to Articles 2 and 3 of the Plan. 1.5 BASE SALARY shall mean the Participant's annual basic rate of pay from the Company or its subsidiaries (excluding EVA Awards, commissions, severance pay, and other non-regular forms of compensation) before any reductions for pre-tax deferrals, or deferrals under this Plan. 1.6 BASIC CREDIT shall mean the Employer Basic Contribution under the Savings Plan that is credited to the Participant's Deferral Account as described in Article 4. 1.7 BENEFICIARY shall mean the person or persons or entity designated as such in accordance with Article 16 of the Plan. 1.8 CHANGE IN CONTROL shall have the meaning set forth in Schedule C. 1.9 COMPENSATION shall mean the sum of the Participant's Base Salary and EVA Awards for a Plan Year before reductions for deferrals under the Plan or the Savings Plan, or other benefit plans sponsored by the Company or its subsidiaries. 1.10 COMPENSATION DEFERRAL PLAN shall mean the Milacron Compensation Deferral Plan. 1.11 CREDITING RATE shall mean any notional gains or losses equal to those generated as if the Account balances had been invested in one or more of the investment portfolios designated as available by the Administrator, less separate account fees and less applicable investment management and administrative charges determined annually by the Administrator, or gains or losses as otherwise determined by the Administrator. 1.12 DEFERRAL ACCOUNT shall mean the notional account established for record keeping purposes for a Participant's Annual Deferrals, Matching Credits and Basic Credits pursuant to Article 6 of the Plan. 1.13 DISABILITY shall mean any long-term disability as defined under the Company's or its subsidiaries, long-term disability plan. 1.14 DISCRETIONARY ACCOUNT shall mean the notional account established for record keeping purposes for a Participant's Discretionary Credits pursuant to Article 6 of the Plan. 1.15 DISCRETIONARY CREDIT shall mean the Company's credit to the Participant's Discretionary Account as described in Article 5. 1.16 EARLY RETIREMENT DATE shall mean age 55 with ten or more years of service with the Company or its subsidiaries. 1.17 ELIGIBLE EMPLOYEE shall mean a key employee of the Company or any of its subsidiaries who (i) is subject to U.S. personal income taxes, (ii) is designated by the Administrator as eligible to participate in all or a portion of the Plan (subject to the restriction in Sections 11.2, 12.2.2 and 14.2 of the Plan), and (iii) qualifies as a member of the "select group of management or highly compensated employees" under ERISA. 1.18 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended. 1.19 EVA AWARDS shall mean amounts paid in cash to the Participant by the Company or its subsidiaries pursuant to the Milacron Short Term Management Incentive Plan or such other bonus plan or program designated by the Administrator, before reductions for deferrals under the Plan or the Savings Plan. 1.20 FINANCIAL HARDSHIP shall mean an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal, or other such unforeseeable occurrence as determined by the Administrator. Cash needs arising from foreseeable events such as the purchase of a residence or education expenses for children shall not, alone, be considered a Financial Hardship. 1.21 MATCHING CREDIT shall mean the Employer Matching Contribution or Salary Deferral Matching Contribution under the Savings Plan that is credited to the Participant's Deferral Account as described in Article 4. - 3 - 1.22 NORMAL RETIREMENT DATE shall mean the date on which a Participant attains age 65. 1.23 PARTICIPANT shall mean an Eligible Employee who has either elected to participate and has completed a Participation Election pursuant to Article 2 of the Plan or is eligible for Basic Credits pursuant to Article 4 of the Plan or Discretionary Credits pursuant to Article 5 of the Plan. 1.24 PARTICIPATION ELECTION shall mean the Participant's written election to participate in the Plan. 1.25 PLAN YEAR shall mean the calendar year, with the first Plan Year commencing January 1, 1995. 1.26 RETIREMENT shall mean a termination of employment following Normal or Early Retirement Date. 1.27 RETIREMENT PLAN shall mean the Milacron Retirement Plan. 1.28 SAVINGS PLAN shall mean the Milacron Performance Dividend and Savings Plan and the Milacron Retirement Savings Plan as they currently exist and as they may subsequently be amended. 1.29 SCHEDULED WITHDRAWAL shall mean a distribution of all or a portion of the Participant's Deferral Account attributable to Annual Deferrals as elected by the Participant pursuant to the provisions of Article 12 of the Plan. 1.30 TERMINATION OF EMPLOYMENT shall mean the Participant's employment with the Company or its subsidiaries ceases for any reason whatsoever, whether voluntary or involuntary, other than Retirement or death. 1.31 UNSCHEDULED WITHDRAWAL shall mean a distribution of all or a portion of the vested amount credited to the Participant's Deferral Account as requested by the Participant pursuant to the provisions of Article 12 of the Plan. 1.32 VALUATION DATE shall mean the last business day of the month in which Termination of Employment, Retirement, - 4 - death, Scheduled Withdrawal, or an Unscheduled Withdrawal request occurs. For purposes of calculating installment payments, the Valuation Date shall mean the November 30 of the year preceding the Plan Year in which benefit payments are to be made. ARTICLE 2 PARTICIPATION - EMPLOYEE DEFERRALS 2.1 Participation Election. Unless otherwise provided by the Administrator, an Eligible Employee who desires to defer all or part of his Compensation pursuant to the Plan must complete and deliver a Participation Election to the Administrator before the first day of the Plan Year for which such Compensation would otherwise be paid. Notwithstanding the preceding sentence, in the event that an individual first becomes an Eligible Employee during a Plan Year, the individual's Participation Election must be filed no later than thirty (30) days following the date he first becomes an Eligible Employee, and such Participation Election shall be effective only with regard to Compensation earned following the filing of the Participation Election with the Administrator. 2.2 Annual Deferral Commitment. In the Participation Election, and subject to the restrictions in Article 3, the Eligible Employee shall designate the percentage rate of Compensation as the Annual Deferral Commitment for the covered Plan Year. 2.3 Continuation of Participation. An Eligible Employee who has participated in the Plan by making an Annual Deferral shall continue as a Participant in the Plan until such employee's Termination of Employment or all benefits under the Plan are paid. A Participant shall not be eligible to elect a new Annual Deferral Commitment unless the Participant is an Eligible Employee for the Plan Year for which the election is made. In the event a Participant transfers to a subsidiary of the Company and that subsidiary does not participate in the Plan, the Participant's Annual Deferral shall cease and the Participant's Deferral Account shall remain in effect until such time as the benefits are distributed as originally elected by the Participant in the Participation Election or until the Participant experiences Termination of Employment. - 5 - ARTICLE 3 EMPLOYEE DEFERRALS 3.1 Deferral Election. Employees designated as eligible to participate in the Plan may elect an Annual Deferral Commitment. Such election shall designate a specified percentage of either Base Salary and/or EVA Awards to be deferred. Annual Deferral Commitments under this Plan shall be irrevocable, except as provided under Sections 2.3, 11.2, 12.2.2 and 14.2 of the Plan. 3.2 Minimum Annual Deferral Commitment. The Annual Deferral Commitment must equal or exceed an amount determined by the Administrator. 3.3 Maximum Annual Deferral Commitment. The Annual Deferral Commitment from Base Salary for a Plan Year may not exceed seventy-five percent (75%) of Base Salary. The Annual Deferral Commitment from EVA Awards for a Plan Year may be less than or equal to one hundred percent (100%). Notwithstanding the foregoing, a Participant may not reduce Base Salary after deferrals to this Plan to an amount less than the OASDI Wage Base under FICA. 3.4 Vesting. The Participant's right to receive Compensation deferred under this Article 3 and earnings thereon shall be one hundred percent (100%) vested at all times. ARTICLE 4 COMPANY MATCHING AND BASIC CREDITS 4.1 Amount. In the discretion of the Administrator, in the event a deferral under this Plan or a non-discrimination rule or limitation applicable to the Savings Plan causes a Participant to lose a Matching Credit and/or Basic Credit under the Savings Plan, the amount of the lost Matching Credit and/or Basic Credit will be credited to the Participant's Deferral Account under this Plan in such amounts as determined in accordance with the rules and procedures established by the Administrator. - 6 - 4.2 Vesting. The Participant's right to receive Matching and/or Basic Credits and earnings thereon earned in any Plan Year shall be one hundred percent (100%) vested at all times. ARTICLE 5 DISCRETIONARY CREDITS 5.1 Eligibility and Amount. An Eligible Employee who is set forth in the attached Schedule A shall become a Participant in the Plan with respect to Discretionary Credits as of the date set forth in Schedule A and shall have Discretionary Credits credited to his Discretionary Account at such times and in such amounts as set forth in Schedule A. 5.2 Vesting. The Participant's right to receive Discretionary Credits under this Article 5 and earnings thereon shall be subject to the vesting schedule set forth in Schedule A that is applicable to such Participant. Notwithstanding the vesting schedule set forth in Schedule A, a Participant's right to receive Discretionary Credits under this Article 5 and earnings thereon earned in any Plan Year shall be one hundred percent (100%) vested upon the date of a "Qualifying Termination" (as defined in Schedule B, attached hereto) following a Change in Control. ARTICLE 6 ACCOUNTS 6.1 Accounts. Solely for record keeping purposes, the Company shall maintain a Deferral Account and a Discretionary Account for each Participant, as applicable. 6.2 Timing of Credits -- Pre-Termination. 6.2.1 Annual Deferrals. The Company shall credit to the Deferral Account the Annual Deferrals specified under Article 3, or otherwise allowed as set forth in Article 2.1, at the time the deferrals would otherwise have been paid to the Participant but for the Participation Election. - 7 - 6.2.2 Matching and Basic Credits. Matching and Basic Credits under Article 4 shall be credited to the Deferral Account as of January 1 of the following Plan Year. 6.2.3 Discretionary Credits. Discretionary Credits under Article 5 shall be credited to the Discretionary Account as of January 1 of the following Plan Year, unless otherwise provided in Schedule A. 6.2.4 Assets. The Company shall be under no obligation to purchase any investments designated by the Participant. The Company shall credit gains or losses to the Accounts based on the Crediting Rate as of the date or dates specified by the Administrator. 6.3 Statement of Accounts. The Administrator shall provide periodically to each Participant a statement setting forth the balance of the Accounts maintained for such Participant. ARTICLE 7 RETIREMENT BENEFITS 7.1 Amount. Upon Retirement, the Company shall pay to the Participant the amount of his vested Accounts in the form provided in Section 7.2 of the Plan, based on the balance of the vested Accounts as of the Valuation Date. If paid as a lump sum, the retirement benefit shall be equal to such balance. If paid in installments, the installments shall be paid in amounts that will amortize such balance with interest credited at the Crediting Rate over the period of time benefits are to be paid. For purposes of calculating installments, the Account shall be valued as of November 30 each year, and the subsequent installments will be adjusted for the next Plan Year according to procedures established by the Administrator. 7.2 Form of Retirement Benefits. The entire vested Accounts shall be paid monthly over a period of one hundred eighty (180) months or the number of whole months required to result in a monthly benefit of three hundred dollars ($300.00), if less. Notwithstanding anything herein to the contrary, the Participant may elect one of the following alternative forms of payment: - 8 - (i) In a lump sum, or (ii) In installments paid monthly over a period of sixty (60), one hundred twenty (120), or one hundred eighty (180) months, or (iii) In a lump sum of a portion of the vested Accounts upon Retirement with the balance in installments paid monthly over a period of sixty (60), one hundred twenty (120), or one hundred eighty (180) months, or (iv) In installments paid annually over a period of five (5), ten (10), or fifteen (15) years, or (v) In a lump sum of a portion of the vested Accounts upon Retirement with the balance in installments paid annually over a period of five (5), ten (10), or fifteen (15) years. A Participant's election of an alternative form of payment must be made in the Participation Election or in such other form as designated by the Administrator. A Participant may make a separate election with respect to the Participant's Deferral Account and Discretionary Account. 7.3 Commencement of Benefits. Payments will commence within ninety (90) days following the last business day of the month in which Retirement occurs, unless a later date is otherwise elected by the Participant, which date shall not be later than the earlier of five (5) years after the Plan Year in which Retirement occurs or age seventy (70). Participants may elect an alternative form and time of payment as available under Section 7.2 or 7.3 by written election filed with the Administrator; provided, however, that if the Participant files the election less than thirteen (13) months (or such other time as determined by the Administrator) prior to the date benefit payments are to commence, that portion of the Participant's vested Account that is subject to such election shall be reduced by ten percent (10%). 7.4 Small Benefit Exception. Notwithstanding any of the foregoing, if the sum of all vested benefits payable to the Participant is less than or equal to ten thousand dollars - 9 - ($10,000), the Company may, in its sole discretion, elect to pay such benefits in a single lump sum. ARTICLE 8 TERMINATION BENEFITS 8.1 If Termination of Employment occurs prior to Retirement, the Company shall pay to the Participant a termination benefit equal to the balance of the vested Accounts as of the Valuation Date. The Company shall pay the termination benefits in a single lump sum within ninety (90) days following the last business day of the month in which such Termination of Employment occurs. ARTICLE 9 SURVIVOR BENEFITS 9.1 Pre-Retirement Survivor Benefit. If the Participant dies prior to the date Retirement benefits commence, the Company shall pay to the Participant's Beneficiary within ninety (90) days after the last business day of the month in which the Participant's death occurs, a benefit equal to the balance of the Participant's vested Accounts as of the Valuation Date. 9.2 Post-Retirement Survivor Benefit. If the Participant dies after the time Retirement Benefits have commenced, the Company shall pay to the Participant's Beneficiary an amount equal to the remaining vested benefits payable to the Participant under the Plan over the same period such benefits would have been paid to the Participant, in which event the Company shall credit interest on the unpaid balance of the vested Accounts at the Crediting Rate in effect during such period. 9.3 Changing Form of Benefit. Beneficiaries may petition the Company once, and only after the death of the Participant, for a change in the form of Retirement Benefits. The Company may, in its sole and absolute discretion, choose to grant or deny such a petition, and in the case of installment payments, reduce the period to the number of whole months required to result in a monthly benefit of at least three hundred dollars ($300.00). - 10 - 9.4 Small Benefit Exception. Notwithstanding any of the foregoing, in the event the sum of all vested benefits payable to the Beneficiary is less than or equal to ten thousand dollars ($10,000), the Company may, in its sole discretion, elect to pay such benefits in a single lump sum. ARTICLE 10 DISABILITY 10.1 For purposes of the Plan, a Participant shall be considered to have entered Retirement upon a determination by the Administrator that the Participant has suffered a Disability, and the Company shall pay the benefit described in Article 7. ARTICLE 11 CHANGE IN CONTROL 11.1 Election. At the time a Participant is completing the initial Participation Election, the Participant may elect that, if a Change in Control occurs, the Participant (or after the Participant's death the Participant's Beneficiary) shall receive a lump sum payment of the balance of the Accounts within thirty (30) days after the Change of Control. Such balance shall be determined as of the last business day of the month thirty (30) days prior to the month in which the Change of Control occurs. Notwithstanding the foregoing, a Participant may make or revoke an election under this Section 11.1 at the times and upon the terms and conditions established by the Administrator from time to time. 11.2 Benefit Reduction on Withdrawal. If a Participant has not made the election described in Section 11.1 above and, within two (2) years after a Change of Control, the Participant (or Beneficiary) elects to receive a distribution of the balance of the vested Accounts (determined as of the last business day of the month in which such election is received by the Administrator), the lump sum payment shall be reduced by an amount equal to five percent (5%) of the total balance of the vested Accounts (instead of the ten percent (10%) reduction otherwise provided for in Section 12.2, which amounts shall be forfeited to the Company) and shall be paid within ninety (90) - 11 - days following the last business day of the month in which such election is received by the Administrator. If a Participant elects such a withdrawal, any ongoing Annual Deferral shall cease, and the Participant may not again be designated as an Eligible Employee with respect to Annual Deferrals until one entire Plan Year following the Plan Year in which such withdrawal was made has elapsed. ARTICLE 12 SCHEDULED AND UNSCHEDULED WITHDRAWALS OF EMPLOYEE DEFERRALS 12.1 Scheduled Withdrawals. 12.1.1 Election. A Participant may, when making a Participation Election, elect to receive at a specified year in the future, a distribution while employed of all or a percentage of the Participant's Deferral Account attributable to Annual Deferrals, excluding earnings, to be made in subsequent Plan Years. The election of a Scheduled Withdrawal shall apply only to prospective Annual Deferrals, excluding earnings, and not to any previous Annual Deferrals or earnings thereon. 12.1.2 Timing and Form of Withdrawal. The year specified for the Scheduled Withdrawal must be at least two (2) entire Plan Years after the commencement of Annual Deferral Commitments covered by the Participation Election. The Company shall make a lump sum distribution of the amount elected in February of the Plan Year specified. 12.1.3 Remaining Deferral Account. The remainder, if any, of the Participant's Deferral Account shall continue in effect and shall be distributed in the future according to the terms of the Plan. 12.2 Unscheduled Withdrawals. 12.2.1 Election. A Participant (or Beneficiary if the Participant is deceased) may request an Unscheduled Withdrawal of all or a portion of the entire vested amount credited to the Participant's Deferral Account, which shall be paid in a single lump sum within ninety (90) days following the last business day of the month in which such election is received - 12 - by the Administrator; provided, however, that (i) the minimum withdrawal shall be twenty-five percent (25%) of the Deferral Account balance, (ii) an election to withdraw seventy-five percent (75%) or more of the balance shall be deemed to be an election to withdraw the entire balance, (iii) such an election may be made only once in a Plan Year, and (iv) such Deferral Account shall be valued as of the last business day of the month in which the request was received by the Administrator. 12.2.2 Withdrawal Penalty. There shall be a forfeiture from the Deferral Account prior to an Unscheduled Withdrawal equal to ten percent (10%) of the Unscheduled Withdrawal (which amount shall be forfeited to the Company). If a Participant elects such a withdrawal, any ongoing Annual Deferrals shall cease, and the Participant may not again be designated as an Eligible Employee with respect to Annual Deferrals until one entire Plan Year following the Plan Year in which such withdrawal was made has elapsed. 12.2.3 Small Benefit Exception. Notwithstanding any of the foregoing, if the sum of all benefits payable to the Participant or Beneficiary who has requested the Unscheduled Withdrawal is less than or equal to ten thousand dollars ($10,000), the Company may, in its sole discretion, elect to pay out the entire Deferral Account (reduced by the ten percent (10%) penalty) in a single lump sum. ARTICLE 13 RESTORATION OF BENEFITS 13.1 Purpose. The purpose of this Article 13 is to restore retirement benefits to certain Participants whose benefit under the Retirement Plan is reduced due to participation in the Plan. The benefits under this Article 13 shall be determined without reference to Articles 2 through 12 and Article 16 unless otherwise specifically referenced in this Article 13. 13.2 Eligibility. A Participant shall be eligible for a benefit under this Article 13 if: (i) The Participant is also a participant in the Retirement Plan; - 13 - (ii) The Participant has made employee deferrals under Articles 2 and 3; and (iii) The Participant is not eligible to participate in the Milacron Supplemental Pension Plan, Milacron Supplemental Retirement Plan, Milacron Supplemental Executive Retirement Plan or the Milacron Supplemental Executive Pension Plan. 13.3 Benefit. A Participant's vested benefit under this Article 13 shall be a monthly amount equal to the amount determined under the terms of the Retirement Plan as of the Participant's or surviving spouse's "benefit commencement date" (as defined in the Retirement Plan) in the form of payment as elected or determined under the Retirement Plan, calculated using the Participant's "highest average compensation" (as defined under the Retirement Plan, except that "compensation" for a year shall include employee deferrals made under Articles 2 and 3 of the Plan with respect to that year) reduced by the monthly amount determined as of the Participant's or surviving spouse's benefit commencement date under the Retirement Plan, in the form of payment as elected or determined under the Retirement Plan, calculated without regard to this Article 13. 13.4 Benefit Commencement Date and Payment Options. Benefits under this Article 13 shall commence at the same time and in the same payment form as the Participant or surviving spouse has elected under the Retirement Plan and shall cease at the time benefits cease under the Retirement Plan. Notwithstanding the foregoing, the Company may, in its sole discretion, elect to pay such benefits in a single lump sum determined using the actuarial assumptions used to calculate lump sum amounts as set forth in the Retirement Plan. 13.5 Vesting. Unless forfeited pursuant to Sections 13.6 or 13.7, a Participant's benefit under the Article 13 shall become vested at the same time the Participant's benefit under the Retirement Plan becomes vested. 13.6 Fraud. In the event that a Participant shall at any time be dismissed for, or convicted of a crime involving, dishonesty or fraud on his part in his relationship with the Company and its subsidiaries, all benefits which would otherwise be payable to him under this Article 13 shall be forfeited. - 14 - 13.7 Competition. By accepting payment of any benefit under this Article 13, the Participant agrees not to be employed, or consult, in any business which is, or is about to be, engaged in a business of the same or substantially the same nature as the businesses of the Company and its subsidiaries without prior written consent of the Company, and breach of this agreement by the Participant shall be cause for termination of payment of benefits under this Article 13. ARTICLE 14 CONDITIONS RELATED TO BENEFITS 14.1 Nonassignability. The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or any manner whatsoever. These benefits shall be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishment or executions against any Participant to the fullest extent allowed by law. 14.2 Financial Hardship Distribution. Upon a petition from the Participant to the Administrator and a subsequent finding by the Administrator that the Participant or the Beneficiary has suffered a Financial Hardship, the Administrator may in its sole discretion, permit the Participant to cease any ongoing deferrals and accelerate distribution of the Participant's Deferral Account under the Plan in the amount reasonably necessary to alleviate such Financial Hardship with such amount paid within ninety (90) days following the last business day of the month in which the petition is received by the Administrator. If a distribution is to be made to a Participant on account of Financial Hardship, the Participant may not make deferrals under the Plan until one entire Plan Year following the Plan Year in which a distribution based on Financial Hardship was made has elapsed. 14.3 No Right to Company Assets. The benefits paid under the Plan shall be paid from the general funds of the Company, and the Participant and any Beneficiary shall be no more than unsecured general creditors of the Company with no special or prior right to any assets of the Company for payment of any obligations hereunder. - 15 - 14.4 Protective Provisions. The Participant shall cooperate with the Company by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Administrator may deem necessary and taking such other actions as may be requested by the Administrator. If the Participant refuses to cooperate, the Company shall have no further obligation to the Participant under the Plan. 14.5 Withholding. The Participant or the Beneficiary shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employee tax requirements applicable to the payment of benefits under the Plan. If no other arrangements are made, the Company may provide, at its discretion, for such withholding and tax payments as may be required. ARTICLE 15 ADMINISTRATION OF PLAN 15.1 The Administrator shall administer the Plan and interpret, construe and apply its provisions in accordance with its terms. The Administrator shall further establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. All decisions of the Administrator shall be final and binding. The individuals serving on the Personnel and Compensation Committee of the Company's Board of Directors, and their designees for purposes of administering the Plan, shall, except as prohibited by law, be indemnified and held harmless by the Company from any and all liabilities, costs, and expenses (including legal fees), to the extent not covered by liability insurance arising out of any action taken by any member of the Committee with respect to the Plan, unless such liability arises from the individual's own gross negligence or willful misconduct. ARTICLE 16 BENEFICIARY DESIGNATION 16.1 Designation. The Participant shall have the right, at any time, to designate any person or persons as - 16 - Beneficiary (both primary and contingent) to whom payment under the Plan shall be made in the event of the Participant's death. The Beneficiary designation shall be effective when it is submitted in writing to the Administrator during the Participant's lifetime on a form prescribed by the Administrator, 16.2 Revocation. The submission of a new Beneficiary designation shall cancel all prior Beneficiary designations. Any finalized divorce or marriage of a Participant subsequent to the date of a Beneficiary designation shall revoke such designation, unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant's new spouse has previously been designated as Beneficiary. The spouse of a married Participant shall consent to any designation of a Beneficiary other than the spouse. 16.3 Failure to Designate. If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if every person designated as Beneficiary predeceases the Participant or dies prior to complete distribution of the Participant's benefits, then the Administrator shall direct the distribution of such benefits to the Participant's estate. ARTICLE 17 AMENDMENT AND TERMINATION OF PLAN 17.1 Amendment of Plan. Subject to the terms of Article 17.3, the Company may at any time amend the Plan in whole or in part, provided, however, that such amendment (i) shall not decrease the balance of the Participant's Account at the time of such amendment and (ii) shall not retroactively decrease the applicable Crediting Rates of the Plan prior to the time of such amendment. The Company may amend the Crediting Rates of the Plan prospectively, or the method used for the determination of Crediting Rates, in which case the Company shall notify the Participant of such amendment in writing within thirty (30) days after such amendment. - 17 - 17.2 Termination of Plan. Subject to the terms of Section 17.3, the Company may at any time terminate the Plan. If the Company terminates the Plan, the date of such termination shall be treated as the date of Termination of Employment for the purpose of calculating Plan benefits, and the Company shall pay to the Participant the vested benefits the Participant is entitled to receive under the Plan in either a lump sum within ninety (90) days or in installments over three (3) years, as determined by the Administrator. 17.3 Amendment or Termination After a Change in Control. Notwithstanding the foregoing, the Company shall not amend or terminate the Plan without the prior written consent of affected Participants for a period of two calendar years following a Change in Control and shall not thereafter terminate the Plan or amend those provisions of the Plan that affect the Crediting Rate or the form or commencement of payment of any Participant's or Beneficiary's Accounts, including but not limited to Articles 7 thru 10 and Article 12, without the prior written consent of affected Participants and Beneficiaries of deceased Participants. 17.4 Company Action. Except as provided in Section 17.3, the Company's power to amend or terminate the Plan shall be exercisable by the Company's Board of Directors or by the Administrator. 17.5 Constructive Receipt Termination. In the event the Administrator determines that amounts deferred under the Plan have been constructively received by Participants and must be recognized as income for federal income tax purposes, the Plan shall terminate and distributions shall be made to Participants in accordance with the provisions of Section 17.2 or as may be determined by the Administrator. The determination of the Administrator under this Section 17.5 shall be binding and conclusive. - 18 - ARTICLE 18 MISCELLANEOUS 18.1 Successors of the Company. The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company. 18.2 ERISA Plan. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA. 18.3 Trust. The Company shall be responsible for the payment of all benefits under the Plan. At its discretion, the Company may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company's creditors. Benefits paid to the Participant from any such trust shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan. 18.4 Employment Not Guaranteed. Nothing contained in the Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to continued employment with the Company or its subsidiaries. 18.5 Gender, Singular and Plural. All pronouns and variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular. 18.6 Captions. The captions of the articles and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 18.7 Validity. If any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any - 19 - respect whatsoever, the validity of any other provisions of the Plan. 18.8 Waiver of Breach. The waiver by the Company of any breach of any provision of the Plan by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant. 18.9 Applicable Law. The Plan shall be governed and construed in accordance with the laws of Ohio except where the laws of Ohio are preempted by ERISA. 18.10 Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in writing and hand-delivered, or sent by first class mail to the principal office of the Company, directed to the attention of the Administrator. Such notice shall be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark. 18.11 Incapacity. If a Participant entitled to receive a benefit under this Plan is deemed by the Company or is adjudged by a court of competent jurisdiction to be legally incapable of giving valid receipt and discharge for such benefit, such benefit shall be paid to such person or persons as the Company shall designate or to the duly appointed guardian or other legal representative of such Participant. The payment of such benefit shall, to the extend made, be deemed a complete discharge for such benefit payment under this Plan. ARTICLE 19 CLAIMS AND REVIEW PROCEDURE 19.1 Claims Procedure. The Company shall notify a Participant in writing, within ninety (90) days after his or her written application for benefits, of his or her eligibility or noneligibility for benefits under the Plan. If the Company determines that a Participant is not eligible for benefits or full benefits, the notice shall set forth (i) the specific reasons for such denial, (ii) a specific reference to the provisions of the Plan on which the denial is based, (iii) a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description - 20 - of why it is needed, and (iv) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Company determines that there are special circumstances requiring additional time to make a decision, the Company shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional ninety-day period. 19.2 Review Procedure. If a Participant is determined by the Company not to be eligible for benefits, or if the Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have such claim reviewed by the Company by filing a petition for review with the Company within sixty (60) days after receipt of the notice issued by the Company. Said petition shall state the specific reasons which the Participant believes entitle him or her to benefits or to greater or different benefits. Within sixty (60) days after receipt by the Company of the petition, the Company shall afford the Participant (and counsel, if any) an opportunity to present his or her position to the Company orally or in writing, and the Participant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Participant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If, because of the need for a hearing, the sixty-day period is not sufficient, the decision may be deferred for up to another sixty-day period at the election of the Company, but notice of this deferral shall be given to the Participant. In the event of the death of the Participant, the same procedures shall apply to the Participant's Beneficiaries. - 21 - SCHEDULE A
Eligible Employee Amount Vesting - ----------------- ------ ------- 1. Jerry R. Lirette An amount equal to the 4% times the The January 1 of the year in Participant's "Covered Compensation" (as defined which the Eligible Employee under the Milacron Retirement Savings Plan as attains age 55 and 10 years modified by paragraph F-3 of Supplement F, of "Vesting Service" (as including employee deferrals under the Plan) for defined under the Milacron the Plan Year in excess of the compensation Retirement Savings Plan), limit under Section 401(a)(17) of the Internal dies or incurs a Disability. Revenue Code of 1986, as amended, to be credited annually with respect to Covered Compensation received from January 28, 1996 to July 30, 1998.
- 22 - MILACRON COMPENSATION DEFERRAL PLAN RULES AND PROCEDURES Effective January 1, 1995 ARTICLE 4 COMPANY MATCHING AND BASE CREDITS 1. Participants who are also participants under the Milacron Retirement Savings Plan and who lose "Employer Matching Contributions" or "Salary Deferral Matching Contributions" under the plan due to employee deferrals under this Plan, will receive matching credits equal to the amount of matching contributions lost under such plan, as determined by the Administrator. 2. Basic Credits will be made to the Plan, as follows: a. Participants who are also participants under the Milacron Retirement Savings Plan and who lose "Employer Basic Contributions" under the Milacron Retirement Savings Plan due to employee deferrals under this Plan, will receive Basic Credits equal to the amount of Employer Basic Contributions lost under such plan, as determined by the Administrator. b. Participants who are also participants under the Supplement of the Milacron Retirement Savings Plan applicable to DME Company or Uniloy Milacron and who are entitled to but do not receive the additional 1 1/2% or 2%, as applicable, additional "Employer Basic Contribution" pursuant to such Supplements, will receive Basic Credits equal to such amount, as determined by the Administrator. -23- SCHEDULE B A "Qualifying Termination" shall mean (i) a termination of the individual's employment by the Company for any reason other than for "Cause" or "Disability" (as defined below) during the "Protection Period" (as defined below), or (ii) the individual's termination of employment for "Good Reason" (as defined below) during the Protection Period. (a) Disability. If the individual is absent from duties with the Company on a full-time basis for eighteen consecutive months due to a physical or mental incapacity, and the individual has not returned to the full-time performance of the individual's duties within thirty (30) days after written Notice of Termination is given to the individual by the Company, such termination shall be considered to be termination by the Company for "Disability" for purposes of this Exhibit. (b) Cause. The Company may terminate the individual's employment for Cause. For purposes of this Schedule only, the Company shall have "Cause" to terminate the individual's employment hereunder only on the basis of (i) the individual's fraud on, or misappropriation or embezzlement of assets of, the Company that causes material harm to the Company or (ii) the individual's willful and continued failure to substantially perform the individual's duties hereunder (other than any such failure resulting from the individual's mental or physical incapacity or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination, as defined in Paragraph (d), by the individual for Good Reason, as defined below); provided, however, that "Cause" shall occur with respect to clause (ii) of this sentence only if such action constituting Cause has not been corrected or cured by the individual within 30 days after the individual has received written notice from the Company of the Company's intent to terminate the individual's employment for Cause and specifying in detail the basis for such termination. For purposes of this Paragraph, no act, or failure to act, on the individual's part shall be considered "willful" unless done, or omitted to be done, by the individual in bad -24- faith and without reasonable belief that the individual's action or omission was in the best interests of the Company. Notwithstanding the foregoing, the individual shall not be deemed to have been terminated for Cause unless and until delivery to the individual of a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the individual and an opportunity for the individual, together with the individual's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the individual was guilty of conduct set forth in clause (i) or (ii) of this Paragraph and specifying the particulars thereof in detail. (c) Good Reason. The individual shall be entitled to terminate the individual's employment for Good Reason at any time following a Change in Control. For purposes of this Schedule, "Good Reason" shall exist in the event of the occurrence of any of the following without the individual's express prior written consent: (i) any diminution of, or the assignment to the individual of duties inconsistent with, the individual's position, duties, responsibilities and status with the Company immediately prior to a Change in Control, an adverse change in the individual's titles or offices as in effect immediately prior to a Change in Control, or any removal of the individual from, or any failure to reelect the individual to, any of such positions, except in connection with the individual's termination of employment for Disability or Cause or as a result of the individual's death or by the individual other than for Good Reason; (ii) a reduction by the Company in the individual's base salary as in effect on the date of a Change in Control or as the same may be increased from time to time during the term of any agreement between the Company and the individual; -25- (iii) the Company's failure to continue any benefit plan or arrangement (including, without limitation, the Company's life insurance, post-retirement benefits, and comprehensive medical plan coverage) in which the individual participated at the time of a Change in Control (or any other plans providing the individual with substantially similar benefits) (hereinafter referred to as "Benefit Plans"), or any action by the Company that would adversely affect the individual's participation in or materially reduce the individual's benefits under any such Benefit Plan or deprive the individual of any material fringe benefit enjoyed by the individual at the time of a Change in Control; (iv) the Company's failure to continue in effect, or continue payments under, any incentive plan or arrangement (including, without limitation, any equity-based plan or arrangement) in which the individual participated at the time of a Change in Control (hereinafter referred to as "Incentive Plans") or any action by the Company that would adversely affect the individual's participation in any such Incentive Plans or reduce the individual's benefits under any such Incentive Plans; (v) a relocation of the Company's principal executive offices to a location outside the Cincinnati, Ohio metropolitan area or relocation of the individual's primary workplace to any place other than the location at which the individual performed the individual's duties immediately prior to a Change in Control; (vi) the Company's failure to provide the individual with the number of paid vacation days to which the individual was entitled at the time of a Change in Control; (vii) the Company's material breach of any provision of any agreement between the Company and the individual regarding severance benefits following a Change in Control; (viii) the Company's purported termination of the individual which is not effected pursuant to a Notice of Termination satisfying the requirements of Paragraph (d); -26- (d) Notice of Termination. Any purported termination of the individual by the Company or by the individual shall be communicated by written Notice of Termination to the other party in accordance with Paragraph (f) hereof. For purposes of this Schedule, a "Notice of Termination" shall mean a notice that indicates the specific termination provision in this Schedule relied upon and the facts, if any, supporting application of such provision. (e) Date of Termination: Dispute Concerning Termination. "Date of Termination" shall mean (i) if the individual's employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the individual has not returned to the performance of the individual's duties on a full-time basis during such thirty (30) day period) or (ii) if the individual's employment is terminated by the Company for any reason other than Disability or by the individual for any reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company shall not be less than thirty (30) days, and in the case of a termination by the individual shall not be more than sixty (60) days, respectively, from the date such Notice of Termination is given); provided, however, that if the party receiving the Notice of Termination notifies the other party within thirty (30) days after the date such Notice of Termination is given that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a binding arbitration award referred to in Paragraph (g); and provided, further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice shall pursue the resolution of such dispute with reasonable diligence. The Company shall continue the individual as a participant in the plan until the dispute is finally resolved in accordance with this Schedule. For purposes of determining whether any Qualifying Termination has occurred during the Protection Period, the date a Notice of Termination is -27- given pursuant to this Schedule shall be deemed the date of the individual's Qualifying Termination. (f) Notice. For the purposes of this Schedule, notices and all other communications provided for in the Schedule shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: (i) if, to the individual, to the individual's current address on file with the Company; (ii) if, to the Company, to: Milacron Inc. 4701 Marburg Avenue Cincinnati, Ohio 45209 Attn: Secretary or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. (g) Arbitration. Any dispute or controversy arising under or in connection with this Schedule shall be settled exclusively by arbitration in Cincinnati, Ohio in accordance with the rules of (but not necessarily appointed by) the American Arbitration Association then in effect except as provided herein. Judgment may be entered on the arbitrator's award in any court having jurisdiction. No such arbitration proceedings shall be commenced or conducted until at least sixty (60) days after the parties, in good faith, shall have attempted to resolve such dispute by mutual agreement; and the parties hereby agree to endeavor in good faith to resolve any dispute by mutual agreement. If mutual agreement cannot be attained, any disputing party, by written notice to the other ("Arbitration Notice") may commence arbitration proceedings. Such arbitration shall be conducted before a panel of three arbitrators, one appointed by each party within thirty (30) days after the date of the Arbitration Notice, and one chosen within sixty (60) days after the date of the Arbitration Notice by the two arbitrators appointed by the -28- disputing parties. Any Cincinnati, Ohio court of competent jurisdiction shall appoint any arbitrator that has not been appointed within such time periods. Judgment may include costs and attorneys fees and may be entered in any court of competent jurisdiction. (h) Definitions. For purposes of this Schedule, "Company" shall mean Milacron Inc., "Protection Period" shall mean the 24-month period beginning on the date of a Change in Control, and "Board" shall mean the Board of Directors of Milacron Inc. and "Change in Control" shall have the meaning set forth in Schedule C. -29- SCHEDULE C A "Change in Control" occurs if: (a) a Person or Group other than a trustee or other fiduciary of securities held under an employee benefit plan of the Company or any of its subsidiaries, is or becomes a Beneficial Owner, directly or indirectly, of stock of the Company representing 20% or more of the total voting power of the Company's then outstanding stock and securities; provided, however, that for purposes of this Paragraph (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clause (i) of Paragraph (c) of this Schedule. (b) individuals who, as of the date hereof, constitute the Board of Directors of the Company (the "Incumbent Board"), cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least 60% of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person or Group other than the Board of Directors of the Company; (c) there is consummated a merger, consolidation or other corporate transaction, other than (i) a merger, consolidation or transaction that would result in the voting securities of the Company outstanding immediately prior to such merger, -30- consolidation or transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 66 2/3% of the combined voting power of the stock and securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or transaction, or (ii) a merger, consolidation or transaction effected to implement a recapitalization of the Company (or similar transaction) in which no Person or Group is or becomes the Beneficial Owner, directly or indirectly, of stock and securities of the Company representing more than 20% of the combined voting power of the Company's then outstanding stock and securities; (d) the sale or disposition by the Company of all or substantially all of the Company's assets other than a sale or disposition by the Company of all or substantially all of the assets to an entity at least 66 2/3% of the combined voting power of the stock and securities which is owned by Persons in substantially the same proportions as their ownership of the Company's voting stock immediately prior to such sale; or (e) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company. "Company" shall mean Milacron Inc. "Person" shall mean any person (as defined in Section 3(a)(9) of the Securities Exchange Act (the "Exchange Act"), as such term is modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) any employee plan established by the Company, (ii) any affiliate (as defined in Rule 12b-2 promulgated under the Exchange Act) of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company. "Group" shall mean any group as defined in Section 14(d)(2) of the Exchange Act. "Beneficial Owner" shall mean beneficial owner as defined in Rule 13d-3 under the Exchange Act. -31- EX-10.57 12 y95183exv10w57.txt AMENDMENT TO EXECUTIVE SEVERANCE AGREEMENT EXHIBIT 10.57 AMENDMENT TO EXECUTIVE SEVERANCE AGREEMENT ------------------------------------------ The Executive Severance Agreement between MILACRON INC., a Delaware Corporation (the "Company") and [___________] (the "Executive") dated as of _______, 2003 (the "Agreement") is hereby amended effective as of February 10, 2004. AMENDMENTS 1. Section 2 of the Agreement is hereby amended by adding the following new subsection (f) at the end thereof: "(f) Notwithstanding any other provision of this Agreement to the contrary, a financial restructuring or recapitalization of the Company that may occur during 2004 (the "2004 Restructuring") shall not result in a "Change in Control" solely for purposes of determining the Executive's benefits under Section 3(a) of this Agreement (but only with respect to equity based awards granted to the Executive on or after February 10, 2004) and Section 3(b) of this Agreement." 2. Section 5(d) of the Agreement is hereby amended by adding the following new subsection (viii) at the end thereof: "(viii) if the Executive's Qualifying Termination occurs in the 2004 calendar year and on or after the occurrence of the 2004 Restructuring (as defined in Section 2(f)), a lump sum cash payout of the Executive's annual bonus under the Company's Annual Bonus Program (as defined in Section 3(b)) for such year, the amount of which shall be equal to the Executive's target or base incentive bonus possible under the Annual Bonus Program for that year." IN WITNESS WHEREOF, the Executive and the Company have caused this Amendment to the Agreement to be executed as of the date first specified above. MILACRON INC. By:___________________________________ EXECUTIVE_____________________________ EX-11 13 y95183exv11.txt STATEMENT RE COMPUTATION OF PER-SHARE EARNINGS . . . EXHIBIT 11 MILACRON INC. AND SUBSIDIARIES COMPUTATION OF PER-SHARE EARNINGS
2003 2002 2001 ------------ ------------ ----------- (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS) Loss from continuing operations............................ $(184,532) $ (18,411) $(28,734) Loss from discontinued operations.......................... (7,174) (16,817) (6,926) Cumulative effect of change in method of accounting........ -- (187,713) -- --------- --------- -------- Net loss................................................. (191,706) (222,941) (35,660) Less preferred dividends................................. (240) (240) (240) --------- --------- -------- Net loss available to common shareholders................ $(191,946) $(223,181) $(35,900) ========= ========= ======== Basic loss per share: Weighted-average common shares outstanding............... 33,660 33,482 33,222 ========= ========= ======== Per share amount: Continuing operations................................. $ (5.49) $ (.56) $ (.87) Discontinued operations............................... (.21) (.50) (.21) Cumulative effect of change in method of accounting... -- (5.61) -- --------- --------- -------- Net loss............................................ $ (5.70) $ (6.67) $ (1.08) ========= ========= ======== Diluted loss per share: Weighted-average common shares outstanding(a)............ 33,660 33,482 33,222 ========= ========= ======== Per share amount: Continuing operations................................. $ (5.49) $ (.56) $ (.87) Discontinued operations............................... (.21) (.50) (.21) Cumulative effect of change in method of accounting... -- (5.61) -- --------- --------- -------- Net loss............................................ $ (5.70) $ (6.67) $ (1.08) ========= ========= ========
- --------------- (a) In all years presented, potentially dilutive stock options and restricted shares are excluded because their inclusion would result in a smaller loss per common share. EX-21 14 y95183exv21.txt SUBSIDIARIES OF THE REGISTRANT . . . EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT MILACRON INC.
DATE INCORPORATED OR (IF LATER) INCORPORATED DATE PERCENTAGE STATE OR COUNTRY ACQUIRED OWNED -------------------- ------------- ---------- MILACRON INC...................................... Delaware 1983 (Registrant) Milacron Capital Holdings B.V. ................. The Netherlands 2000 100% Milacron Investments B.V. ................... The Netherlands 2000 100% Milacron B.V. ............................... The Netherlands 1952 100% Milacron Nederland B.V. ................... The Netherlands 1998 100% Cimcool Europe B.V. .................... The Netherlands 1989 100% Ferromatik Milacron Benelux B.V. ......................... The Netherlands 1993 100% Cimcool Industrial Products B.V. ....... The Netherlands 1960 100% Oak International Europe Ltd. ........ England 1999 100% Milacron Kunststoffmaschinen Europa GmbH............................. Germany 1990 100% Uniloy Milacron Germany GmbH.......... Germany 1998 100% Indu Tecnospol s.r.o. .............. Czech Republic 1998 100% Ferromatik Milacron Maschinenbau GmbH.................. Germany 1993 100% Ferromatik Milacron.............. South Africa 1994 100% Ferromatik Milacron A/S.......... Denmark 2002 100% Klockner Ferromatik AG........... Switzerland 2003 100% D-M-E Normalien GmbH.................. Germany 1996 100% EOC France S.A.R.L. ............... France 2001 99% EOC Normalien Praha s.r.o. ........ Czech Republic 2001 100% D-M-E Belgium CVBA......................... Belgium 1996 100% VSI International N.V. ................. Belgium 1996 100% Milacron France SAS........................ France 2002 100% Milacron U.K. Ltd. ........................ England 2002 100% Uniloy Milacron Italy S.R.L. .............. Italy 1998 100% Milacron Plastics Iberica S.L. ............ Spain 2002 100% Milacron Assurance Ltd. ........................ Bermuda 1977 100% Milacron-Holdings Mexico S.A. de C.V. .......... Mexico 1992 100% Milacron Marketing Company...................... Ohio 1931 100% Milacron Commercial Corp. ................... Delaware 1993 100% Milacron International Marketing Company.......................... Delaware 1966 100% Milacron Equipamentos Plasticos Ltd. ... Brazil 1997 100%

DATE INCORPORATED OR (IF LATER) INCORPORATED DATE PERCENTAGE STATE OR COUNTRY ACQUIRED OWNED -------------------- ------------- ---------- Northern Supply Company, Inc. ............... Minnesota 1998 100% Ferromatik Milacron India Limited............ India 1995 86% Nickerson Machinery Chicago, Inc. ........... Illinois 1999 100% Pliers International, Inc. .................. Delaware 1999 100% Cincinnati Milacron Trading Co. LTD.......... Shanghai 1998 100% Milacron Resin Abrasives Inc. .................. Delaware 1991 100% D-M-E Company................................... Delaware 1996 100% D-M-E USA.................................... Michigan 1998 100% D-M-E of Canada Limited.................... Canada 1996 100% Progress Precision...................... Canada 2001 100% 450500 Ontario Limited.................. Canada 1996 100% Ontario Heater and Supply Company....... Canada 2000 100% Rite-Tek Canada......................... Canada 2000 100% Japan D-M-E Corporation.................... Japan 1996 51% D-M-E Hong Kong Ltd. ...................... Hong Kong 1996 51% D-M-E Manufacturing Inc. .................... Delaware 1999 100% Uniloy Milacron Inc. ........................... Delaware 1998 100% Uniloy Milacron Machinery -- Mexico, S.A. de C.V. ................................... Mexico 1998 100% Uniloy Milacron Services -- Mexico, S.A. de C.V. ................................... Mexico 1998 100% Uniloy Milacron U.S.A. ......................... Michigan 1998 100% Milacron Industrial Products, Inc. ............. Michigan 1999 100% Oak International Inc. ...................... Michigan 1999 100% Cimcool Industrial Products Inc. ............... Delaware 1999 100% Cincinnati Milacron IPK, Inc. ............... Korea 1993 100% Milacron Canada, Inc. ....................... Ontario 1997 100% Milacron-Mexicana Sales S.A. de C.V. ...... Mexico 1993 100% Milacron Plastics Technologies Group Inc. ...... Delaware 1999 100%
EX-23 15 y95183exv23.txt CONSENT OF EXPERTS AND COUNSEL EXHIBIT 23 CONSENT OF EXPERTS AND COUNSEL CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-44423) pertaining to the 1991 Long-term Incentive Plan, in the Registration Statement (Form S-8 No. 33-56403) pertaining to the 1994 Long-term Incentive Plan, in the Registration Statement (Form S-8 No. 333-36743) pertaining to the 1997 Long-term Incentive Plan of Milacron Inc., and in the Registration Statement (Form S-8 No. 333-70733) pertaining to the Milacron Inc. Plan for the Deferral of Director's Compensation, of our report dated February 10, 2004, except for the "Subsequent Events" note as to which the date is March 13, 2004, with respect to the consolidated financial statements and schedule included in this Annual Report (Form 10-K) of Milacron Inc. for the year ended December 31, 2003. /s/ Ernst & Young LLP Cincinnati, Ohio March 15, 2004 EX-31.1 16 y95183exv31w1.htm 302 CERTIFICATION 302 CERTIFICATION

      1. I have reviewed this annual report on Form 10-K of Milacron Inc.;

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

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

      4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

      (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

      (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

By: /s/ RONALD D. BROWN

Ronald D. Brown

Chairman, President and

Chief Executive Officer

By: /s/ ROBERT P. LIENESCH

Robert P. Lienesch

Vice President — Finance

and Chief Financial Officer


Title of Each Class:		Name of Each Exchange on Which Registered:
Common Shares — Par Value $1.00		New York Stock Exchange, Inc.


Divestiture	Date		Product Lines

European extrusion		1999		Plastics extrusion systems
Widia magnet engineering		2000		Industrial magnets
Valenite/ Widia		2002		Carbide inserts, tool holders
Werkö		2002		Round metalcutting tools
Talbot/ Minnesota Twist Drill		2003		Round metalcutting tools


Facility Location		Products

Ahmedabad, India		Injection molding machines
Batavia, Ohio		Injection molding machines, blow molding machines, extrusion systems
Charlevoix, Michigan		Mold components
Corby, England		Injection molding components
Fulda, Germany		Mold bases
Greenville, Michigan*		Mold bases
Lewistown, Pennsylvania		Mold components
Madison Heights, Michigan		Hot runner systems
Magenta, Italy*		Blow molding machines
Malterdingen, Germany		Injection molding machines
Manchester, Michigan(a)		Molds for blow molding
McPherson, Kansas*		Extrusion screws and barrels
Mechelen, Belgium		Mold components
Melrose Park, Illinois		Mold bases
Mississauga, Ontario, Canada		Extrusion screws
Mt. Orab, Ohio		Plastics machinery parts
Policka, Czech Republic		Blow molding machines
Windsor, Ontario, Canada		Mold bases
Youngwood, Pennsylvania		Mold bases and components


Facility Location		Products

Cincinnati, Ohio		Metalworking fluids
Corby, England*		Metalworking fluids
Grenada, Mississippi*		Metalforming fluids
Livonia, Michigan*		Process cleaners, corrosion inhibitors, specialty products
Sturgis, Michigan		Metalforming fluids
Ulsan, South Korea		Metalworking fluids
Vlaardingen, The Netherlands		Metalworking fluids


Name and Age	Position	Positions Held During Last Five Years

Ronald D. Brown (50)	Chairman, President and Chief Executive Officer	Elected Chairman and Chief Executive Officer in 2001. Also served as President and Chief Operating Officer from 1999 to 2002 and in 2003. Prior thereto was Vice President — Finance and Administration and Chief Financial Officer from 1997. Has served as a Director since 1999.
Robert P. Lienesch (58)	Vice President — Finance and Chief Financial Officer	Elected Vice President — Finance and Chief Financial Officer in 1999. Also served as Treasurer until 2001. Elected Vice President and Treasurer in 1998.
Hugh C. O’Donnell (52)	Vice President, General Counsel and Secretary	Elected Vice President, General Counsel and Secretary in 1999. Prior thereto was Corporate Counsel from 1992.
Ross A. Anderson (47)	Controller	Elected Controller in 2002. Prior thereto was Group Controller, Plastics Technologies from 1998.
John C. Francy (39)	Treasurer	Elected Treasurer in 2001. Prior thereto was Assistant Treasurer from 1998.


		Page

PART I
Item 1.	Business		2
	Executive Officers of the Registrant		10
Item 2.	Properties		10
Item 3.	Legal Proceedings		10
Item 4.	Submission of Matters to a Vote of Security Holders		11
PART II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters		11
Item 6.	Selected Financial Data		11
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		38
Item 8.	Financial Statements and Supplementary Data		38
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		83
Item 9A.	Controls and Procedures		83
PART III
Item 10.	Directors and Executive Officers of the Registrant		83
Item 11.	Executive Compensation		84
Item 12.	Security Ownership of Certain Beneficial Owners and Management		84
Item 13.	Certain Relationships and Related Transactions		84
Item 14.	Principal Accountant Fees and Services		85
PART IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		85
	Schedule II — Valuation and Qualifying Accounts and Reserves		92
	Signatures		93
	Index to Certain Exhibits and Financial Statement Schedules		94
FINANCING AGREEMENT
NOTE PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
1994 LONG-TERM INCENTIVE PLAN
1997 LONG-TERM INCENTIVE PLAN
2002 SHORT-TERM INCENTIVE PLAN
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
COMPENSATION DEFERRAL PLAN
AMENDMENT TO EXECUTIVE SEVERANCE AGREEMENT
STATEMENT RE COMPUTATION OF PER-SHARE EARNINGS
SUBSIDIARIES OF THE REGISTRANT
CONSENT OF EXPERTS AND COUNSEL
302 CERTIFICATION
302 CERTIFICATION
906 CERTIFICATION


Acquisition	Date		Product Lines

Nickerson Machinery		1999	Plastics tooling and supplies
Producto Chemicals		1999	Metalworking cleaning fluids
Oak International		1999	Metalforming fluids
Akron Extruders		2000	Single-screw extruders
Rite-Tek Canada		2000	Plastics MRO supplies
Ontario Heater and Supply		2000	Plastics MRO supplies
Progress Precision		2001	Extrusion feed screws
Reform Flachstahl		2001	Mold bases and components
EOC Normalien		2001	Mold bases and components


(a)		The operations of this facility will be relocated in 2004.

*		Leased


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


Item 5.	*Market for the Registrant’s Common Equity and Related Stockholder Matters*


		High		Low

2002, quarter ended
	March 31	$	16.60	$	10.92
	June 30		14.63		9.65
	September 30		10.31		4.20
	December 31		8.15		3.10
2003, quarter ended
	March 31	$	6.55	$	3.76
	June 30		5.59		4.08
	September 30		5.00		2.00
	December 31		4.47		2.23


			2003			2002			2001			2000			1999


			(Dollars in millions, except per-share amounts)
Summary of Operations
Sales			$	739.7		$	693.2		$	755.2		$	974.5		$	994.3
Earnings (loss) from continuing operations before cumulative effect of change in method of accounting				(184.5	)(a)		(18.4	)(a)		(28.7	)(a)		48.8	(a)		60.6	(a)
	Per common share
		Basic		(5.49	)		(.56	)		(.87	)		1.39			1.64
		Diluted		(5.49	)(b)		(.56	)(b)		(.87	)(b)		1.39			1.63
Earnings (loss) from discontinued operations				(7.2	)(c)		(16.8	)(c)		(7.0	)		23.5			9.5
	Per common share
		Basic		(.21	)		(.50	)		(.21	)		.67			.26
		Diluted		(.21	)(b)		(.50	)(b)		(.21	)(b)		.67			.26


(a)		Includes restructuring costs of $27.1 million ($25.5 million after tax) in 2003, $13.9 million ($8.8 million after tax) in 2002, $17.5 million ($11.0 million after tax) in 2001, $1.4 million ($.9 million after tax) in 2000 and $7.2 million ($4.8 million after tax) in 1999. In 2003 and 2002, also includes goodwill impairment charges of $65.6 million and $1.0 million, respectively, with no tax benefit. In 1999, includes a gain of $13.1 million ($10.1 million after tax) on the sale of the European extrusion systems business.

(b)		For 2003, 2002 and 2001, diluted earnings per common share is equal to basic earnings per share because the inclusion of potentially dilutive securities would result in a smaller loss per common share.

(c)		In 2003, includes net expense of $.8 million related to adjustments of previously recorded gains and losses on divestitures of discontinued operations. In 2002, includes a net gain of $8.4 million on the divestiture of the Valenite and Widia and Werkö metalcutting tools businesses, the planned divestiture of the round metalcutting tools and grinding wheels businesses and adjustments of reserves related to the 1998 sale of the machine tools segment.

(d)		Represents a goodwill impairment charge related to the adoption of a new accounting standard.


Item 7.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*



				Restructuring Costs							Cash Costs

		Year Initiated		2003		2002			2001		2003			2002		2001


				(In millions)
Machinery technologies — North America
	Injection molding and blow molding employment reductions		2003	$	3.8	$	—		$	—	$	.7		$	—	$	—
	Blow molding machinery and mold making relocations		2002		3.9		3.4			—		3.4			.4		—
	Southwest Ohio reorganization		2002		—		.6			—		—			.1		—
	Injection molding and extrusion early retirement program and general overhead reductions		2001		—		2.3			.8		—			.6		.4
	Injection molding and blow molding facilities and product line rationalization		2001		—		.4			4.8		—			.2		3.6
	Other 2001 actions		2001		—		—			1.2		—			.2		1.0

					7.7		6.7			6.8		4.1			1.5		5.0
Machinery technologies — Europe
	Blow molding product line rationalization and employment reductions		2003		4.5		—			—		.7			—		—
	Injection molding sales office and employment reductions		2003		2.0		—			—		.5			—		—
	Injection molding and blow molding overhead reductions		2001		—		(.4	)		6.9		1.3			4.0		.6

					6.5		(.4	)		6.9		2.5			4.0		.6
Mold technologies
	Mahlberg plant closure		2003		5.7		—			—		2.8			—		—
	North American employment reductions		2003		1.0		—			—		.6			—		—
	European sales reorganization		2003		3.6		—			—		1.3			—		—
	Monterey Park plant closure		2002		.5		.9			—		(.2	)		—		—
	EOC and Reform integration		2001		1.8		4.6			3.4		.2			7.8		1.0
	North American overhead and general employment reductions		2001 & 2002		—		.9			.1		—			.3		—

					12.6		6.4			3.5		4.7			8.1		1.0
Industrial fluids and corporate
	Early retirement program and general overhead reductions		2003		.3		—			—		.1			—		—
	Early retirement program and general overhead reductions		2001 & 2002		—		1.2			.3		.2			.3		—

					.3		1.2			.3		.3			.3		—

				$	27.1	$	13.9		$	17.5	$	11.6		$	13.9	$	6.6


Incorporated in Delaware		I.R.S. No. 31-1062125


Item 1.	*Business*


Item 2.	*Properties*


Item 3.	*Legal Proceedings*



						Cost Savings

				Headcount						Incremental		Total
		Year Initiated		Reductions		2002		2003		2004		2004


				(In millions)
Machinery technologies — North America
	Injection molding and blow molding employment reductions		2003		102	$	—	$	2.1	$	4.4	$	6.5
	Blow molding machinery and mold making relocations		2002		42		—		3.7		1.0		4.7
	Southwest Ohio reorganization		2002		24		.8		2.7		—		2.7
	Injection molding and extrusion early retirement program and general overhead reductions		2001		165		9.9		10.7		—		10.7
	Injection molding and blow molding facilities and product line rationalization		2001		64		4.4		4.2		—		4.2
	Other 2001 actions		2001		52		5.0		5.0		—		5.0

					449		20.1		28.4		5.4		33.8
Machinery technologies — Europe
	Blow molding product line rationalization and employment reductions		2003		47		—		1.0		1.8		2.8
	Injection molding sales office and employment reductions		2003		70		—		.4		3.8		4.2
	Injection molding and blow molding overhead reductions		2001		133		5.0		6.8		—		6.8

					250		5.0		8.2		5.6		13.8
Mold technologies
	Mahlberg plant closure		2003		67		—		2.1		1.8		3.9
	North American employment reductions		2003		37		—		1.0		1.9		2.9
	European sales reorganization		2003		75		—		.1		4.3		4.4
	Monterey Park plant closure		2002		12		—		.6		.2		.8
	EOC and Reform integration		2001		233		3.0		5.2		—		5.2
	North American overhead and general employment reductions		2001 & 2002		47		1.9		2.0		—		2.0

					471		4.9		11.0		8.2		19.2
Industrial fluids and corporate
	Early retirement program and general overhead reductions		2003		11		—		.5		.9		1.4
	Early retirement program and general overhead reductions		2001 & 2002		16		.5		1.0		—		1.0

					27		.5		1.5		.9		2.4

					1,197	$	30.5	$	49.1	$	20.1	$	69.2


						2005-		2007-		Beyond
		Total		2004		2006		2008		2008


		(In millions)
Contractual Obligations
Long-term debt		$	263.7	$	115.6	$	147.2	$	.5	$	.4
Capital lease obligations			17.1		1.7		3.7		4.2		7.5
Operating leases			34.6		11.8		14.2		6.2		2.4
Revolving credit facility(a)			42.0		42.0		—		—		—
Receivables purchase agreement(a)			35.9		35.9		—		—		—
Purchase obligations(b)			—		—		—		—		—
Other long-term liabilities(c)
	Pension plan contributions		41.8		3.1		5.4		30.2		3.1
	Unfunded pension benefits(d)		78.5		2.8		5.8		6.2		63.7
	Postretirement medical benefits		48.7		3.1		5.2		4.7		35.7
	Insurance reserves		22.9		4.4		4.7		3.6		10.2

Total		$	585.2	$	220.4	$	186.2	$	55.6	$	123.0


(a)		The revolving credit facility was repaid on March 12, 2004. Amounts received under the receivables purchase agreement were also repaid on March 12, 2004.

(b)		Milacron did not have any significant purchase obligations as of December 31, 2003.

(c)		Milacron will be required to make contributions to its defined benefit pension plan for certain U.S. employees beginning in 2004. The amounts shown above are estimates based on the current funded status of the plan. The amounts of actual contributions can be expected to vary based on factors such as returns on plan assets, changes in the plan’s discount rate and actuarial gains and losses. The amounts presented for unfunded pension benefits, other postretirement benefits and insurance reserves are also estimates and actual annual payments related to these obligations can be expected to differ from the amounts shown.

(d)		Represents liabilities related to unfunded pension plans in the U.S. and Germany.


Item 7A.	*Quantitative and Qualitative Disclosures About Market Risk*


Item 8.	*Financial Statements and Supplementary Data*


Ronald D. Brown Chairman, President and Chief Executive Officer		Robert P. Lienesch Vice President — Finance and Chief Financial Officer


				2003			2002


				(In millions, except
				par value)
ASSETS
Current assets
	Cash and cash equivalents			$	92.8		$	122.3
	Notes and accounts receivable, less allowances of $15.1 in 2003 and $12.4 in 2002				93.8			89.3
	Inventories
	Raw materials				8.1			7.1
	Work-in-process and finished parts				57.1			65.5
	Finished products				67.1			75.0

			Total inventories		132.3			147.6
	Other current assets				45.2			69.6

		Current assets of continuing operations			364.1			428.8
	Assets of discontinued operations				7.2			16.0

		Total current assets			371.3			444.8
Property, plant and equipment — net					140.8			149.8
Goodwill					83.8			143.3
Other noncurrent assets					115.6			177.8

Total assets				$	711.5		$	915.7


LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Borrowings under lines of credit			$	42.6		$	45.0
	Long-term debt and capital lease obligations due within one year				117.3			1.1
	Trade accounts payable				67.9			68.8
	Advance billings and deposits				15.2			17.5
	Accrued and other current liabilities				109.3			138.9

		Current liabilities of continuing operations			352.3			271.3
	Liabilities of discontinued operations				1.8			10.9

		Total current liabilities			354.1			282.2
Long-term accrued liabilities					227.8			244.1
Long-term debt					163.5			255.4

		Total liabilities			745.4			781.7
Commitments and contingencies					—			—
Shareholders’ equity (deficit)
	4% Cumulative Preferred shares				6.0			6.0
	Common shares, $1 par value (outstanding: 34.8 in 2003 and 33.8 in 2002)				34.8			33.8
	Capital in excess of par value				284.0			283.5
	Accumulated deficit				(252.0	)		(59.5	)
	Accumulated other comprehensive loss				(106.7	)		(129.8	)

		Total shareholders’ equity (deficit)			(33.9	)		134.0

Total liabilities and shareholders’ equity (deficit)				$	711.5		$	915.7


					Other					Common									Total
		Comprehensive			Comprehensive			4% Cumulative		Shares			Capital in			Reinvested			Shareholders’
		Income			Income			Preferred		$1 Par			Excess of			Earnings			Equity
		(Loss)			(Loss)			Shares		Value			Par Value			(Deficit)			(Deficit)


		(In millions, except per-share amounts)
Balance at year-end 2000					$	(49.7	)	$	6.0	$	33.3		$	281.5		$	213.3		$	484.4
Stock options exercised and net restricted stock activity											.5			6.7						7.2
Purchases of treasury and other common shares											(.3	)		(6.8	)					(7.1	)
Net loss for the year		$	(35.7	)													(35.7	)		(35.7	)
Other comprehensive loss			(1.3	)		(1.3	)													(1.3	)

Total comprehensive loss		$	(37.0	)

Cash dividends
	Preferred shares ($4.00 per share)																(.2	)		(.2	)
	Common shares ($.37 per share)																(12.4	)		(12.4	)

Balance at year-end 2001						(51.0	)		6.0		33.5			281.4			165.0			434.9
Stock options exercised and net restricted stock activity											.1			.4						.5
Reissuance of treasury shares											.2			1.7						1.9
Net loss for the year		$	(222.9	)													(222.9	)		(222.9	)
Other comprehensive loss			(78.8	)		(78.8	)													(78.8	)

Total comprehensive loss		$	(301.7	)

Cash dividends
	Preferred shares ($4.00 per share)																(.2	)		(.2	)
	Common shares ($.04 per share)																(1.4	)		(1.4	)

Balance at year-end 2002						(129.8	)		6.0		33.8			283.5			(59.5	)		134.0
Net restricted stock activity											.8			(.6	)					.2
Reissuance of treasury shares											.2			1.1						1.3
Net loss for the year		$	(191.7	)													(191.7	)		(191.7	)
Other comprehensive income			23.1			23.1														23.1

Total comprehensive loss		$	(168.6	)

Cash dividends
	Preferred shares ($2.00 per share)																(.1	)		(.1	)
	Common shares ($.02 per share)																(.7	)		(.7	)

Balance at year-end 2003					$	(106.7	)	$	6.0	$	34.8		$	284.0		$	(252.0	)	$	(33.9	)



		2003

		Beginning				Usage and			Ending
		Balance		Additions		Other			Balance


		(In millions)
EOC and Reform integration
	Termination benefits	$	1.7	$	—	$	(.4	)	$	1.3
	Facility exit costs		—		.3		—			.3

			1.7		.3		(.4	)		1.6
Restructuring costs
	Termination benefits		3.1		8.7		(7.3	)		4.5
	Facility exit costs		.6		.4		(.6	)		.4

			3.7		9.1		(7.9	)		4.9

Total reserves related to continuing operations		$	5.4	$	9.4	$	(8.3	)	$	6.5


(a)		In 2003, the entire amount is included in the line captioned “Restructuring costs” in the Consolidated Statement of Operations for that year. In 2002, $2.9 million is included in restructuring costs and $1.8 million is included in results of discontinued operations. In 2001, $.5 million is included in restructuring costs.


(a)		Represents the pretax amount of an after-tax charge to accumulated other comprehensive loss of $80.8 million in 2003 and $95.4 million in 2002.


	2003		2002

Discount rate		6.24%		6.49%
Rate of increase on future compensation levels		3.69%		2.41%


	*Components of the Provision (Benefit) for Deferred Income Taxes*


	*Reconciliation of the U.S. Statutory Rate to the Tax Provision Rate*



	2003

	Machinery
	Technologies		Machinery
	North		Technologies		Mold			Industrial
	America		Europe		Technologies			Fluids		Total


	(In millions)
Balance at beginning of year	$	17.3	$	.5	$	115.3		$	10.2	$	143.3
Goodwill acquired		—		—		.2			—		.2
Impairment charges		—		—		(65.6	)		—		(65.6	)
Foreign currency translation adjustments		.2		.2		5.5			—		5.9

Balance at end of year	$	17.5	$	.7	$	55.4		$	10.2	$	83.8


(a)		Excludes an additional impairment charge of $29.6 million related to discontinued operations.


(a)		In 2001 includes $1.5 million related to discontinued operations.


	(In millions)
2004	$	2.7
2005		2.7
2006		2.7
2007		2.7
2008		2.7
After 2008		8.2

Total capital lease payments		21.7
Less interest component(a)		(4.6	)

Capital lease obligations	$	17.1


	*Shareholders’ Equity — Preferred and Common Shares*


(a)		In 2003, includes no tax effect. In 2002, includes a tax benefit of $51.4 million.